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"Effective Government in a Time of Significant Challenges" 

by Gene L. Dodaro: 
Comptroller General of the United States: 

Before the National Academy of Public Administration: 
Washington, D.C. 

November 17, 2011: 

Good morning. It's an honor to be here today to deliver the keynote 
remarks for the Academy's fall meeting. The meeting agenda reflects 
many of the difficult and pressing challenges facing our nation. 

Long-Term Fiscal Outlook: 

Central among them is the struggle to place our national government on 
a more sustainable long term fiscal path. The financial market crisis 
and the resulting economic downturn occurred against a backdrop of 
fiscal trends that were unsustainable even before these shocks. For 
several years, GAO has published long-term fiscal simulations 
illustrating this structural imbalance. GAO's most recent update on 
the government's long-term fiscal outlook showed the provisions of the 
Budget Control Act of 2011 have improved the federal government's 
fiscal outlook. The Act requires at least $2.1 trillion in deficit 
reduction from 2012-2021. But even with the Act, our simulations 
demonstrate there still is a longer term problem that needs sustained 

Moving to a more sustainable, long-term fiscal path will not be easy. 
We don't know yet what actions the Joint Select Committee on Deficit 
Reduction, better known as the "Super Committee," may take. 
Additionally, reaching a sustainable path over the long term will 
require addressing the major drivers of the federal budget--
demographics, rising health care costs, and revenues. 

The major policy decisions about fiscal policy and the shape and the 
role of the federal government will-—and should-—be made by elected 
officials. That does not mean there is no role for federal, state, and 
local managers. In fact, managers should look for ways to provide even 
greater service to elected officials when they face a challenging 

The Challenges We Face: Roles for Managers: 

Let me talk about a few ways in which managers can contribute. First, 
we must pay attention to people. Budget cuts and workforce reductions 
can make employees, who came into government because they cared about 
the public good, feel devalued. Engaging them in the effort to improve 
government operations will be good both for morale and for government 

In addition to keeping up staff morale, there are a number of ways in 
which managers can help elected officials address the challenges 
facing our government and the American people. Some challenges are 
long standing, others are newly emerging. 


One of the trends we have long included in our strategic plans is 
global interdependence. As all of you know, economies, politics, 
information sharing, public health, and many other human activities 
are now linked in ways that were unimaginable a generation or two ago. 

Some of these capabilities have led to significant improvements in the 
standard of living of U.S. citizens and others around the world. 
However, some of the more challenging implications of globalization 
are also apparent, such as the recent problems seen in the U.S. and 
the world financial markets. In terms of the crisis in the United 
States, the U.S. financial regulatory system simply failed to keep up 
with this trend and the systemic risks it posed. 

Today, GAO is playing an expanded role in this area. We've issued 
reports on emergency lending by the Federal Reserve and the costs and 
benefits of future financial regulation. We also are working on a 
series of reports on the implementation of rules designed to address 
some of the earlier weaknesses. 

In addition, on the international side, we’ve seen progress on 
financial regulation and capital standards. Notably, there’s the Basel 
III accord, which strengthens bank capital requirements and introduces 
new regulatory requirements for bank liquidity and bank leverage. GAO 
is also working with other national audit offices around the world to 
increase understanding and cooperation on financial issues and to help 
shape international auditing and accounting standards. 
Of course, it is not just financial markets that have become more 
global. For example, most countries now ship food and medical products 
to the United States. From 1998 to 2008, the volume of these imports 
more than tripled. While these have undoubtedly had benefits to U.S. 
consumers, risks associated with these products also underscore the 
regulatory challenge that occurs when these major shifts occur in the 
patterns of production and trade. 

In the case of food, the system for ensuring food safety in this 
country remains fragmented among 15 agencies that administer more than 
30 food-related laws. Many of these systems were designed at a time 
when imports were not such a significant part of U.S. consumption. 

Similar challenges exist in ensuring that drugs and medical devices 
are safe and effective. According to FDA, as much as 80 percent of the 
ingredients that go into our prescription drugs come from overseas. At 
the present time, thousands of foreign drug and medical device 
manufacturers are registered to market their products in this country. 
Unfortunately, the FDA has had an uphill battle in addressing foreign 
production. In 2008, GAO reported that the agency inspected just eight 
percent of such foreign establishments. At that rate, it would take 
FDA 13 years to inspect all of them. FDA has made some improvement but 
has a long way to go. 

We believe that these kinds of reports can be a catalyst for greater 
Congressional and public awareness of the rapid changes in the 
external environment and the implications for the United States. They 
can also contribute to discussions on how to address these problems. 

Beyond financial and other markets, globalization is also having an 
effect on how we ensure homeland security. GAO just issued a report on 
the 10th anniversary of September 11. While the Department of Homeland 
Security has made real progress in protecting this country from 
terrorist attacks, a lot more work remains before the Department 
realizes its full potential. Shortcomings persist in such key areas as 
border security, airline screenings, and emergency preparedness and 

Visa overstays are a case in point. While visas issued to enter our 
country have received increased attention, our government still does 
not have a comprehensive system to track who leaves the country, when 
they do so, and to assure people comply with the terms of their visa. 
We're continuing to work with Congress and DHS to strengthen 
management and data collection to help mitigate these risks. 

In all of these areas, federal managers can bring their experience and 
expertise to bear to help spur progress. And in a time of fiscal 
challenges, it is particularly important that federal managers also 
help address a series of known, long-standing shortcomings in 
government operations. High on that list are federal contracting, 
overpayments, and tax administration and the tax gap. 

Contract Management: 

As GAO's High-Risk List pointed out earlier this year, contract 
management is a government-wide problem. Over the years, GAO has 
raised concerns about contracting practices at agencies ranging from 
NASA to the Department of Energy to the Department of Defense. In 
fiscal 2010, the federal government spent about $535 billion to 
acquire goods and services. On far too many of these contracts, 
significant shortcomings occur. 

The Administration deserves credit for its contracting reform 
initiatives, and I also want to acknowledge the important efforts of 
the Commission on Wartime Contracting. 

When it comes to contract management, GAO has identified four changes 
that could yield significant cost savings. First, minimize unnecessary 
duplication among interagency contracts. Second, introduce greater 
competition in awarding contracts. Third, use award fees more 
appropriately to promote improved contractor performance. And fourth, 
leverage the government's vast buying power through greater use of 
strategic sourcing. 

Improper Payments: 

Reducing improper payments could also yield significant savings. 
Congress and the Administration have both focused attention on this 
issue, but now we need to see results. 

Estimated levels of improper payments across government have been 
rising steadily for years. In fiscal year 2010, improper payments 
jumped an estimated $16 billion to $125 billion, largely because of 
significant increases in the outlays associated with unemployment 
insurance and the earned income tax credit program, both of which 
continued to exhibit very high error rates. 

Ten programs accounted for 94 percent of the $125 billion in improper 
payments. The problems for Medicare and Medicaid were particularly 

The Tax Gap: 

Billions more could flow to the Treasury by closing the difference 
between taxes owed and taxes paid. IRS last estimated the net tax gap 
in 2001at $290 billion. Many experts believe that the current tax gap 
is larger than that. 

No single approach will fully address the tax gap, but several 
strategies could boost taxpayer compliance. For example, Congress 
could simplify the tax code. In addition, IRS and Congress could act 
to enhance information reporting by third parties, expand compliance 
checking before refunds are issued, and improve data matching. We’ll 
also need to bring tax expenditures—preferences in the tax code - and 
the size of their foregone revenue under review. 

By themselves, the numbers I’ve just mentioned won’t close our fiscal 
gap, but they’re big numbers. We can’t afford to not solve these 
issues. Such waste and inefficiency undermine confidence in government 
and the public’s willingness to accept needed policy changes in other 

Information Technology Investment: 

It’s also time for government to become more consistent and successful 
in harnessing the power of technology. Wise technology investments can 
go a long way to help leverage scarce resources and maximize results. 
The government’s planning, implementation, and use of IT all continue 
to need further attention. Again, federal managers are essential to 
achieving progress in all of these areas. 

Performance Management: 

Additionally, shortcomings in the government’s ability to address 
issues in a holistic way over time have led to overlap and duplication 
in federal programs and activities. GAO’s recent report on 
duplication, overlap, and fragmentation cites a number of areas where 
such a holistic approach is needed. These include teacher quality 
programs, the military health system, surface transportation, and 
economic development initiatives. For many of the issues that we cited 
agencies need to collect more accurate and complete data on program 
outcomes and use the information to assess and compare programs' 

The GPRA Modernization Act of 2010 offers promise because it 
encourages a more coordinated and cross-cutting approach to achieving 
common goals. The Act requires the Office of Management and Budget to 
develop long-term priority goals for the federal government in a 
limited number of cross-cutting policy or program areas and in areas 
needing management improvement across government. Many of these 
management areas can be found on GAO’s High Risk List. They include 
financial management, human capital, information technology, 
procurement and acquisition, and real property. 

For performance information to be useful and used, it must be 
reliable. Transparency also matters. The Act requires agencies to 
disclose more on the accuracy and reliability of their performance 
data. It also requires quarterly rather than annual reporting on 
priority goals. And that information must be posted on a public 

Best Practices: 

In a constrained budgetary environment, adopting best practices is 
more important than ever. Two years ago GAO issued its first cost-
estimating guide to help federal, state, and local officials develop 
more reliable cost estimates for government projects of all sizes. The 
federal cost-estimating community in particular has long needed better 
tools for preparing cost projections. GAO's new manual will go a long 
way to bridge that gap. 

Following the broad success of our cost-estimating guide, we plan to 
also release one concerning best practices in scheduling next year. 
Our hope is that government agencies will be better able to avoid 
common problems, such as cost overruns, missed deadlines, and 
performance shortfalls. 

GAO's Experience: 

In fiscal times like these, leading and motivating agency workforces 
also takes on a greater urgency and presents a greater challenge. How 
do you keep your employees focused and motivated in the face of 
dramatic, sometimes painful, changes? How can you ensure that your 
agency continues to fulfill its mission and deliver results? Is it
possible to lead and alter the discussion from challenges to 

I offer a few insights from GAO's recent experience in dealing with 
budget reductions. By looking ahead and being prepared, GAO was able 
to lessen the impact of these changes on the agency, its mission, and 
its employees. 

Our first priority was to ensure the continued high-quality of our 
reports and testimonies to Congress. Quality is GAO's trademark. Our 
credibility depends on the quality of our work and is at the heart of 
what we do for Congress and the nation. 

At the same time, people are key to carrying out GAO's mission. We 
recognized that the anxiety level at the agency was extremely high and 
potentially distracting. 

We identified four areas that we needed to focus on and that ended up 
being extremely helpful to GAO during this process. 

First, employee engagement was essential. We met regularly with our 
union, employee advisory groups, and staff at all levels of the 
agency. During this process, we sought everyone's input on the choices 
we faced and on GAO's future direction and shape. We even set up an 
internal process where every employee could submit ideas on where we 
could cut spending. 

Second, GAO placed a premium on communications and dialogue with our 
staff. We kept them informed, listened to their concerns, and tried to 
counteract the rumor mill. In all our communications, we tried to set 
forth the principles we would follow and the goals we would strive to 

I also visited every field office and met with GAO's teams. We posted 
regular notices on GAO's intranet, and answers to a series of 
frequently asked questions on our intranet page. 

These efforts culminated in an Oct. 19 presentation to all GAO 
employees, which fully outlined GAO's budget challenges and the steps 
we were taking to deal with them. 

GAO employees came away with a clear understanding of what was 
happening, what we planned to do, and how that might affect them. 

Third, the choices GAO made were data-driven. We reviewed our budget 
line by line, expenditure by expenditure. 

Fourth, we explored new ways of doing business. We've begun a complete 
review of GAO's business processes and we are considering two new 
pilot projects. We're hoping to introduce a much more liberal telework 
policy in two of our field offices. The pilot will likely include an 
office-sharing, hoteling model similar to those used by many 
professional services organizations in the private sector. To help 
reduce travel costs, GAO is also looking at bringing video 
conferencing to every worker's desktop. 

The Changes That Are Coming: 

The bottom line is that there is no standard, government-wide approach 
to the budgetary and other changes that are coming. Agencies will need 
to tailor their solutions to their specific needs. In some cases, this 
might involve the use of new technologies or employment strategies to 
gain efficiencies. 

Human capital management is especially important in this environment. 
GAO has raised concerns about this issue for years. Given the 
impending wave of federal retirements, strong succession plans are 
urgently needed. At the same time, the pool of younger workers is 
shrinking and the federal government faces more competition for the 
skilled workers it needs. 

In difficult times, a broad, strategic perspective is essential to 
governing well. 

Managers will need to take responsibility for developing innovative 
approaches and creative solutions to many of the challenges I've 
discussed today. By being proactive, managers can, to a great extent, 
manage the changes that are coming, rather than letting those changes 
manage them. 

The reality is that lean budgets are likely for some time to come. 
Clearly, difficult policy choices lie ahead. If our federal workforce 
is to remain effective and relevant, foresight, innovation, optimism, 
determination, and strategic thinking must be part of that process.
The challenges are squarely before us, and I believe managers are up 
to the challenges. Our nation's future depends on it. 

Thank you all for your time and attention. I would be happy to take 
some questions. 

[End of presentation]