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GAO-11-815CG entitled 'Meeting the Fiscal and Management Challenges 
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Meeting the Fiscal and Management Challenges Facing Government: 

AGA Professional Development Conference: 
Atlanta, GA: 
July 11, 2011: 

Gene L. Dodaro: 
Comptroller General of the United States: 
U.S. Government Accountability Office: 



* Long Term Fiscal Projections: 
* GPRA Modernization Act Goals: 
* Financial Management Challenges: 
* Overlap, Fragmentation, and Duplication: 
* GAO's High-Risk List An Update: 

Long Term Fiscal: 

Figure: Federal Budget Trends under Different Fiscal Policy 

[Refer to PDF for image: multiple line graph] 

Percentage of GDP: 

Year: 2000; 
Baseline extended: 2.405%; 
Alternative: 2.405%. 

Year: 2001; 
Baseline extended: 1.254%; 
Alternative: 1.254%. 

Year: 2002; 
Baseline extended: -1.497%; 
Alternative: -1.497%. 

Year: 2003; 
Baseline extended: -3.439%; 
Alternative: -3.439%. 

Year: 2004; 
Baseline extended: -3.532%; 
Alternative: -3.532%. 

Year: 2005; 
Baseline extended: -2.558%; 
Alternative: -2.558%. 

Year: 2006; 
Baseline extended: -1.877%; 
Alternative: -1.877%. 

Year: 2007; 
Baseline extended: -1.157%; 
Alternative: -1.157%. 

Year: 2008; 
Baseline extended: -3.186%; 
Alternative: -3.186%. 

Year: 2009; 
Baseline extended: -10.021%; 
Alternative: -10.021%. 

Year: 2010; 
Baseline extended: -8.917%; 
Alternative: -8.917%. 

Year: 2011; 
Baseline extended: -9.843%; 
Alternative: -9.843%. 

Year: 2012; 
Baseline extended: -7.008%; 
Alternative: -7.14%. 

Year: 2013; 
Baseline extended: -4.294%; 
Alternative: -6.41%. 

Year: 2014; 
Baseline extended: -3.091%; 
Alternative: -6.421%. 

Year: 2015; 
Baseline extended: -3.027%; 
Alternative: -6.806%. 

Year: 2016; 
Baseline extended: -3.441%; 
Alternative: -7.523%. 

Year: 2017; 
Baseline extended: -3.078%; 
Alternative: -7.492%. 

Year: 2018; 
Baseline extended: -2.915%; 
Alternative: -7.666%. 

Year: 2019; 
Baseline extended: -3.182%; 
Alternative: -8.232%. 

Year: 2020; 
Baseline extended: -3.237%; 
Alternative: -8.635%. 

Year: 2021; 
Baseline extended: -3.206%; 
Alternative: -8.954%. 

Year: 2022; 
Baseline extended: -3.537%; 
Alternative: -9.63%. 

Year: 2023; 
Baseline extended: -3.702%; 
Alternative: -10.357%. 

Year: 2024; 
Baseline extended: -3.977%; 
Alternative: -11.115%. 

Year: 2025; 
Baseline extended: -4.375%; 
Alternative: -11.911%. 

Year: 2026; 
Baseline extended: -4.553%; 
Alternative: -12.513%. 

Year: 2027; 
Baseline extended: -4.837%; 
Alternative: -13.125%. 

Year: 2028; 
Baseline extended: -5.231%; 
Alternative: -13.851%. 

Year: 2029; 
Baseline extended: -5.527%; 
Alternative: -14.491%. 

Year: 2030; 
Baseline extended: -5.816%; 
Alternative: -15.131%. 

Year: 2031; 
Baseline extended: -6.103%; 
Alternative: -15.775%. 

Year: 2032; 
Baseline extended: -6.504%; 
Alternative: -16.422%. 

Year: 2033; 
Baseline extended: -6.677%; 
Alternative: -17.075%. 

Year: 2034; 
Baseline extended: -6.958%; 
Alternative: -17.735%. 

Year: 2035; 
Baseline extended: -7.234%; 
Alternative: -18.396%. 

Year: 2036; 
Baseline extended: -7.509%; 
Alternative: -19.063 

Year: 2037; 
Baseline extended: -7.9%; 
Alternative: -19.849%. 

Year: 2038; 
Baseline extended: -8.159%. 

Year: 2039; 
Baseline extended: -8.413%. 

Year: 2040; 
Baseline extended: -8.661%. 

Year: 2041; 
Baseline extended: -8.908%. 

Year: 2042; 
Baseline extended: -9.153%. 

Year: 2043; 
Baseline extended: -9.398%. 

Year: 2044; 
Baseline extended: -9.645%. 

Year: 2045; 
Baseline extended: -9.897%. 

Year: 2046; 
Baseline extended: -10.286%. 

Year: 2047; 
Baseline extended: -10.547%. 

Year: 2048; 
Baseline extended: -10.806%. 

Year: 2049; 
Baseline extended: -11.064%. 

Year: 2050; 
Baseline extended: -11.192%. 

Year: 2051; 
Baseline extended: -11.597%. 

Year: 2052; 
Baseline extended: -11.876%. 

Year: 2053; 
Baseline extended: -12.159%. 

Year: 2054; 
Baseline extended: -12.45%. 

Year: 2055; 
Baseline extended: -12.752%. 

Year: 2056; 
Baseline extended: -13.061%. 

Year: 2057; 
Baseline extended: -13.229%. 

Year: 2058; 
Baseline extended: -13.679%. 

Year: 2059; 
Baseline extended: -13.993%. 

Year: 2060; 
Baseline extended: -14.166%. 

Source: GAO. 

Note: Data are from GAO's January 2011 simulations based on the 
Trustees' assumptions for Social Security and the Trustees' and the 
CMS Actuary's assumptions for Medicare. 

[End of figure] 

Figure: Debt Held by the Public Under Two Fiscal Policy Simulations: 

[Refer to PDF for image: multiple line graph] 

Percent of GDP: 

Historical high: 109 percent in 1946. 

Fiscal year: 2000; 
Baseline extended: 34.7%; 
Alternative: 34.7%. 

Fiscal year: 2001; 
Baseline extended: 32.5%; 
Alternative: 32.5%. 

Fiscal year: 2002; 
Baseline extended: 33.6%; 
Alternative: 33.6%. 

Fiscal year: 2003; 
Baseline extended: 35.6%; 
Alternative: 35.6%. 

Fiscal year: 2004; 
Baseline extended: 36.8%; 
Alternative: 36.8%. 

Fiscal year: 2005; 
Baseline extended: 36.9%; 
Alternative: 36.9%. 

Fiscal year: 2006; 
Baseline extended: 36.5%; 
Alternative: 36.5%. 

Fiscal year: 2007; 
Baseline extended: 36.2%; 
Alternative: 36.2%. 

Fiscal year: 2008; 
Baseline extended: 40.2%; 
Alternative: 40.2%. 

Fiscal year: 2009; 
Baseline extended: 53.52%; 
Alternative: 53.52%. 

Fiscal year: 2010; 
Baseline extended: 62.14%; 
Alternative: 62.14%. 

Fiscal year: 2011; 
Baseline extended: 69.38%; 
Alternative: 69.38%. 

Fiscal year: 2012; 
Baseline extended: 73.90%; 
Alternative: 74.04%. 

Fiscal year: 2013; 
Baseline extended: 75.52%; 
Alternative: 77.77%. 

Fiscal year: 2014; 
Baseline extended: 75.30%; 
Alternative: 80.77%. 

Fiscal year: 2015; 
Baseline extended: 74.88%; 
Alternative: 83.84%. 

Fiscal year: 2016; 
Baseline extended: 75.01%; 
Alternative: 87.61%. 

Fiscal year: 2017; 
Baseline extended: 75.20%; 
Alternative: 91.65%. 

Fiscal year: 2018; 
Baseline extended: 75.31%; 
Alternative: 95.81%. 

Fiscal year: 2019; 
Baseline extended: 75.75%; 
Alternative: 100.43%. 

Fiscal year: 2020; 
Baseline extended: 76.22%; 
Alternative: 105.26%. 

Fiscal year: 2021; 
Baseline extended: 76.66%; 
Alternative: 110.24%. 

Fiscal year: 2022; 
Baseline extended: 77.45%; 
Alternative: 115.73%. 

Fiscal year: 2023; 
Baseline extended: 78.1%; 
Alternative: 121.48%. 

Fiscal year: 2024; 
Baseline extended: 79.19%; 
Alternative: 127.72%. 

Fiscal year: 2025; 
Baseline extended: 80.59%; 
Alternative: 134.58%. 

Fiscal year: 2026; 
Baseline extended: 82.15%; 
Alternative: 141.82%. 

Fiscal year: 2027; 
Baseline extended: 83.91%; 
Alternative: 149.33%. 

Fiscal year: 2028; 
Baseline extended: 86.00%; 
Alternative: 157.28%. 

Fiscal year: 2029; 
Baseline extended: 88.39%; 
Alternative: 165.64%. 

Fiscal year: 2030; 
Baseline extended: 90.96%; 
Alternative: 174.36%. 

Fiscal year: 2031; 
Baseline extended: 93.70%; 
Alternative: 183.32%. 

Fiscal year: 2032; 
Baseline extended: 96.74%; 
Alternative: 192.57%. 

Fiscal year: 2033; 
Baseline extended: 99.84%. 

Fiscal year: 2034; 
Baseline extended: 103.11%. 

Fiscal year: 2035; 
Baseline extended: 106.5%. 

Fiscal year: 2036; 
Baseline extended: 110.12%. 

Fiscal year: 2037; 
Baseline extended: 113.95%. 

Fiscal year: 2038; 
Baseline extended: 117.85%. 

Fiscal year: 2039; 
Baseline extended: 121.90%. 

Fiscal year: 2040; 
Baseline extended: 126.05%. 

Fiscal year: 2041; 
Baseline extended: 130.30%. 

Fiscal year: 2042; 
Baseline extended: 134.63%. 

Fiscal year: 2043; 
Baseline extended: 139.05%. 

Fiscal year: 2044; 
Baseline extended: 143.54%. 

Fiscal year: 2045; 
Baseline extended: 148.12%. 

Fiscal year: 2046; 
Baseline extended: 152.91%. 

Fiscal year: 2047; 
Baseline extended: 157.78%. 

Fiscal year: 2048; 
Baseline extended: 162.72%. 

Fiscal year: 2049; 
Baseline extended: 167.73%. 

Fiscal year: 2050; 
Baseline extended: 172.76%. 

Fiscal year: 2051; 
Baseline extended: 178.04%. 

Fiscal year: 2052; 
Baseline extended: 183.39%. 

Fiscal year: 2053; 
Baseline extended: 188.83%. 

Fiscal year: 2054; 
Baseline extended: 194.36%. 

Fiscal year: 2055; 
Baseline extended: 199.97%. 

Source: GAO. 

Note: Data are from GAO's January 2011 simulations based on the Social 
Security Trustees' assumptions for Social Security and the Medicare 
Trustees' and the Centers for Medicare & Medicaid Services Office of 
the Actuary's assumptions for Medicare. 

[End of figure] 

Figure: Potential Fiscal Outcomes: Revenues and Composition of 
Spending under Baseline Extended Simulation: 

[Refer to PDF for image: combined stacked vertical bar and line graph] 

Percentage of GDP: 

Fiscal year: 2010; 
Net interest: 1.4%; 
Social Security: 4.8%; 
Medicare & Medicaid[A]: 5%; 
All other spending: 12.6%; 
Revenue: 14.9%. 

Fiscal year: 2020; 
Net interest: 3.3%; 
Social Security: 5.2%; 
Medicare & Medicaid[A]: 6.3%; 
All other spending: 9.1%; 
Revenue: 20.7%. 

Fiscal year: 2030; 
Net interest: 4.2%; 
Social Security: 6%; 
Medicare & Medicaid[A]: 7.6%; 
All other spending: 8.9%; 
Revenue: 20.8%. 

Fiscal year: 2040; 
Net interest: 5.7%; 
Social Security: 6.2%; 
Medicare & Medicaid[A]: 8.7%; 
All other spending: 8.9%; 
Revenue: 20.8%. 

Note: Data are from GAO's January 2011 simulations based on the 
Trustees' assumptions for Social Security and Medicare. 

[A] This also includes spending for insurance exchange subsidies and 

Source: GAO. 

[End of figure] 

Figure: Potential Fiscal Outcomes: Revenues and Composition of 
Spending under Alternative Simulation: 

[Refer to PDF for image: combined stacked vertical bar and line graph] 

Percentage of GDP: 

Fiscal year: 2010; 
Net interest: 1.4%; 
Social Security: 4.8%; 
Medicare & Medicaid[A]: 5%; 
All other spending: 12.6%; 
Revenue: 14.9%. 

Fiscal year: 2020; 
Net interest: 4.4%; 
Social Security: 5.2%; 
Medicare & Medicaid[A]: 6.7%; 
All other spending: 10.7%; 
Revenue: 18.3%. 

Fiscal year: 2030; 
Net interest: 7.8%; 
Social Security: 6%; 
Medicare & Medicaid[A]: 8.6%; 
All other spending: 10.8%; 
Revenue: 18%. 

Fiscal year: 2040; 
Net interest: 12.5%; 
Social Security: 6.2%; 
Medicare & Medicaid[A]: 10.4%; 
All other spending: 10.8%; 
Revenue: 18%. 

Source: GAO. 

Note: Data are from GAO's January 2011 simulations based on the 
Trustees' assumptions for Social Security and the CMS Actuary's 
assumptions for Medicare. 

[A] This also includes spending for insurance exchange subsidies and 

[End of figure] 

Figure: State and Local Operating Balance Measure, as a Percentage of 
Gross Domestic Product: 

[Refer to PDF for image: multiple line graph] 

Positive Balance: Surplus. 
Negative Balance: Deficit. 

Year: 2005; 
Balance: 0.1%. 

Year: 2006; 
Balance: 0.3%. 

Year: 2007; 
Balance: 0.1%. 

Year: 2008; 
Balance: -0.4%. 

Year: 2009; 
Balance: 0%. 

Year: 2010; 
Balance: 0%. 

Year: 2011; 
Balance: -0.4%. 

Year: 2012; 
Balance: -0.7%. 

Year: 2013; 
Balance: -0.9%. 

Year: 2014; 
Balance: -1%. 

Year: 2015; 
Balance: -1.1%. 

Year: 2016; 
Balance: -1.2%. 

Year: 2017; 
Balance: -1.3%. 

Year: 2018; 
Balance: -1.4%. 

Year: 2019; 
Balance: -1.5%. 

Year: 2020; 
Balance: -1.6%. 

Year: 2021; 
Balance: -1.7%. 

Year: 2022; 
Balance: -1.8%. 

Year: 2023; 
Balance: -1.7%. 

Year: 2024; 
Balance: -1.8%. 

Year: 2025; 
Balance: -1.9%. 

Year: 2026; 
Balance: -1.9%. 

Year: 2027; 
Balance: -1.9%. 

Year: 2028; 
Balance: -2%. 

Year: 2029; 
Balance: -2.1%. 

Year: 2030; 
Balance: -2.1%. 

Year: 2031; 
Balance: -2.2%. 

Year: 2032; 
Balance: -2.2%. 

Year: 2033; 
Balance: -2.2%. 

Year: 2034; 
Balance: -2.3%. 

Year: 2035; 
Balance: -2.3%. 

Year: 2036; 
Balance: -2.4%. 

Year: 2037; 
Balance: -2.5%. 

Year: 2038; 
Balance: -2.5%. 

Year: 2039; 
Balance: -2.6%. 

Year: 2040; 
Balance: -2.6%. 

Year: 2041; 
Balance: -2.7%. 

Year: 2042; 
Balance: -2.7%. 

Year: 2043; 
Balance: -2.7%. 

Year: 2044; 
Balance: -2.8%. 

Year: 2045; 
Balance: -2.8%. 

Year: 2046; 
Balance: -2.9%. 

Year: 2047; 
Balance: -3%. 

Year: 2048; 
Balance: -3%. 

Year: 2049; 
Balance: -3%. 

Year: 2050; 
Balance: -3%. 

Year: 2051; 
Balance: -3.1%. 

Year: 2052; 
Balance: -3.2%. 

Year: 2053; 
Balance: -3.2%. 

Year: 2054; 
Balance: -3.2%. 

Year: 2055; 
Balance: -3.3%. 

Year: 2056; 
Balance: -3.3%. 

Year: 2057; 
Balance: -3.3%. 

Year: 2058; 
Balance: -3.4%. 

Year: 2059; 
Balance: -3.4%. 

Year: 2060; 
Balance: -3.4%. 

Source: GAO simulations, updated April 2011. 

Note: Historical data are from the Bureau of Economic Analysis's 
National Income and Product Accounts from 1980 to 2009. Data in 2010 
are GAO estimates aligned with published data where available. GAO 
simulations are from 2011 to 2060, using many Congressional Budget 
Office projections and assumptions, particularly for the next 10 
years. Simulations are based on current policy. 

[End of figure] 

GPRA Modernization Act Goals: 

* Adopting a more coordinated and crosscutting approach to achieving 
common goals, 

* Addressing weaknesses in major management functions. 

* Ensuring performance information is both useful and used in decision 

* Instilling sustained leadership commitment and accountability for 
achieving results. 

* Engaging Congress in identifying management and performance issues 
to address. 

Coordinated and Crosscutting Approaches to Achieve Common Goals: 

The act requires OMB, in coordination with 13 agencies, to: 

* Develop long-term, outcome-oriented goals for a limited number of 
crosscutting policy areas. 

* Provide information annually on how these crosscutting goals will be 

Effective implementation of these requirements could help inform 
reexamination or restructuring efforts. 

Addressing Weaknesses in Major Management Functions: 

Agencies need more effective management capabilities to better 
implement programs and policies. 

The act requires OMB to develop goals to improve management functions 
across the government, including in the following areas: 

* Financial management. 

* Human capital. 

* Information technology. 

* Procurement and acquisition. 

* Real property. 

Ensuring Performance Information is Useful and Used: 

To ensure performance information will be both useful 15 and used, it 
must meet various users' needs for completeness, accuracy, validity, 
timeliness, and ease of use. 

The act has several requirements that could help meet these needs: 

* Agencies to disclose more information on the accuracy and validity 
of their performance data, such as data sources. 

* Quarterly, rather than annual, reporting for priority goals. 

* Information to be posted on a governmentwide website. 

To ensure that federal officials have the knowledge and 16 skills 
necessary to use the information they are gathering, the act requires 
OPM to: 

* Identify key skills and competencies needed to carry out performance 
management activities. 

* Incorporate those skills and competencies into relevant position 
classifications and agency training. 

The Need for Reliable Cost Information: 
Greater need than ever for timely and accurate information about costs 
of specific programs and services for use in performance metrics. 
Reliable cost information can help: 

* Provide accurate comparisons on costs/benefits;  

* Inform budgets and proposals for reorganization/consolidation;  

* Identify potential cost control, efficiencies, and waste; 
* Benchmark programs and activities;  

* Set appropriate fees to recover the costs of services;  

* Measure program and managers' performance.  

Sustained Leadership Commitment and Accountability for Results: 

The act creates several new leadership structures and 17 
responsibilities aimed at sustaining attention on improvement efforts: 

* At the agency level, a Chief Operating Officer and Performance 
Improvement Officer at each agency. 

* A governmentwide Performance Improvement Council to assist in 
carrying out the governmentwide performance and reporting requirements 
of the act. 

* Quarterly reviews for the governmentwide and agency priority goals 
that involve top leadership. 

Engaging Congress: 

The act significantly enhances requirements for agencies to consult 
with Congress when establishing or adjusting governmentwide and agency 

* OMB and agencies are to consult with relevant committees, obtaining 
majority and minority views, about proposed goals at least once every 
2 years. 

* In addition, OMB and agencies are to describe how they incorporated 
congressional input into their goals. 

* OMB is required to report on unmet agency goals each year, and where 
a goal has been unmet for 3 years, OMB can propose the program for 
termination or restructuring, among other actions.  

GPRA Modernization Act Implementation Timelines: 

* June 30, 2011 — Quarterly agency priority progress reviews, consistent
with the Act, begin for the goals listed in the FY11 Budget 

* February 6, 2012 — 
- OMB publishes interim federal government priority goals and prepares 
federal government performance plans, consistent with the Act; 

- Agencies adjust their current strategic plans, prepare performance
plans, and identify new or update existing agency priority goals to
make them consistent with the Act. 

* No later than February 27, 2012 — Agencies make performance 
reporting updates on FY2011 performance consistent with the Act. 

* June 30, 2012 — Quarterly federal government priority progress
reviews begin. 

* No later than October 1, 2012 — Governmentwide performance website

* February 3, 2014 — Full Implementation with a new strategic planning

Financial Management Challenges: 

CFO Act Key Accomplishments and Progress Made: 

* Cultural change — accountability. 

* Governmentwide leadership structure and agency CFOs. 

* New accounting and reporting standards. 

* Preparing timely, auditable financial statements. 

* Strengthening internal control. 

* Improving financial management systems. 

* Improving performance information. 

* Establishing fiscal sustainability reporting. 

* Issuing summarized financial reports, including the governmentwide 
Citizen's Guide. 

Results of the FY 2010 Financial Audits: 

20 of 24 CFO Act Agencies received unqualified audit opinions on their 
accrual-based financial statements. (Only 6 did in 1996.) 

Three major impediments continue to prevent GAO from rendering an 
opinion on the U.S. government's accrual-based consolidated financial 

* Financial management problems at the Department of Defense (DOD). 

* Inability to adequately account for and reconcile intragovernmental 
activity and balances between federal entities. 

* Ineffective process for preparing the consolidated financial 

U.S. Government's Consolidated Financial Statements - Getting to a 
Clean Opinion: 

Department of Defense (DOD): 

* Several entities have received a clean opinion:  

- U.S. Army Corp of Engineers, Defense Finance and Accounting Service, 
Defense Commissary Agency, Defense Contract Audit Agency, Military 
Retirement Fund.  

* U.S. Marine Corps working toward an auditable Statement of Budgetary 
Resources as a first step. Lessons learned may pave the way for other 
military services.  

* DOD focus on improving business systems, ensuring reliability of 
budget information, and existence and completeness of all mission-
critical assets.  

* Financial Improvement and Audit Readiness plan (FIAR) defines path 
for DOD's plans to achieve auditability by 2017. 

Intragovernmental activity & balances between federal entities: 

Key actions taken/planned by Treasury: 

* Developed and issued Intragovernmental Business Rules. 

* Established various focus groups, consisting of Treasury and
federal entity personnel. 

* Developed and implemented intragovernmental confirmation
and reporting and analysis systems. 

* Developing financial statements for the General Fund of the U.S. 
Government to help address unreconciled differences existing between 
the General Fund and federal entity trading partners related to 
appropriation and other intragovernmental transactions. 

Consolidated financial statements (CFS) preparation process: 

Key actions taken/planned by Treasury: 

* Developed, documented, and implemented numerous standard operating 

* Hired contractors to assist in addressing certain control 

* Continuing to execute and implement corrective action plans to 
address previously identified control deficiencies. 

* Considering obtaining personnel from certain other entities, with 
additional financial reporting expertise, to assist Treasury during 
the year-end CFS preparation process. 

Increases in Improper Payment Estimates: 

Improper payment estimated amounts have been steadily rising over the 
years, primarily due to expansion in the number of programs being 

However, the fiscal year 2010 increase in the estimates was primarily 
related to an increase in reported outlays and, for the Unemployment 
Insurance and Earned Income Tax Credit programs, increases in reported 
error rates. 

The fiscal year 2010 $125.4 billion improper payment estimate rose 
$16.2 billion from the prior year estimate of $109.2 billion. 

Fiscal Year 2010 Improper Payment Estimates by Program: 

Figure: 10 programs account for 94 percent of the fiscal year 2010 
$125.4 billion estimate: 

[Refer to PDF for image: vertical bar graph] 

Program: Medicare Fee-for-Service; 
Improper Payment Estimate: $34.3 billion. 

Program: Medicaid (state administered program); 
Improper Payment Estimate: $22.5 billion. 

Program: Unemployment insurance (state administered program); 
Improper Payment Estimate: $17.5 billion. 

Program: Earned Income Tax Credit; 
Improper Payment Estimate: $16.9 billion. 

Program: Medicare Advantage; 
Improper Payment Estimate: $13.6 billion. 

Program: Supplemental Security Income Program; 
Improper Payment Estimate: $4.8 billion. 

Program: Old Age and Survivor's Insurance; 
Improper Payment Estimate: $3.2 billion. 

Program: Supplemental Nutrition Assistance Program (state administered 
Improper Payment Estimate: $3.2 billion. 

Program: National School Lunch Program (state administered program); 
Improper Payment Estimate: $1.5 billion. 

Program: Federal Student Aid--Pell Grant; 
Improper Payment Estimate: $1.0 billion. 

Program: Other; 
Improper Payment Estimate: $7.9 billion. 
Source: GAO analysis. 

[End of figure] 
Improper Payments Elimination and Recovery Act of 2010: 

In July 2010, the President set goals under the Accountable Government 
Initiative which include (1) reducing overall improper payments by $50 
billion by fiscal year 2012 and (2) recapturing at least $2 billion in 
actual improper payments by fiscal year 2012. 

On July 22, 2010, the Improper Payments Elimination and Recovery
Act (IPERA) was enacted. 

IPERA establishes additional requirements related to (1) manager
accountability, (2) recovery auditing, (3) compliance and
noncompliance determinations and reporting, and (4) an opinion on
internal controls over improper payments. 

IPERA requirements related to agencies' improper payment estimating
and reporting, manager accountability, recovery auditing, and
compliance determinations and reporting, became effective for fiscal
year 2011 under OMB's April 14, 2011, implementing guidance. 

OMB expects to issue guidance related to providing an opinion on
internal controls over improper payments in the future. 

Challenges to a More Comprehensive Picture of Improper Payments: 

Full extent of improper payments is still unknown because some 
agencies have not yet reported estimates for all risk-susceptible 

Categories of improper payments and the root causes are not 
consistently identified in programs' improper payment estimates or 
included in aggregate estimates.  

Corrective actions are unique to specific entities and programs across 
the federal government.  

Need to increase the use of technology and tools to prevent, reduce, 
and recover improper payments.  

Overlap, Fragmentation, and Duplication: 

GAO Reporting on Overlap, Fragmentation and Duplication in Federal 
Section 21 of P.L. 111-139, enacted in February 2010, required that 
the Comptroller General:  

* conduct routine investigations to identify programs, agencies, 
offices, and initiatives with duplicative goals and activities within 
Departments and government-wide, and;  

* report annually to Congress on the findings, including the cost of 
such duplication and with recommendations for consolidation and 
elimination to reduce duplication.  

GAO drew on a variety of sources to identify potential areas of focus: 


* Over 200 reports that highlight the potential for duplication, 
overlap, or fragmentation. 

* Major cost saving opportunities identified on GAO Web site. 

* GAO High Risk series. 

* Previous GAO work on government restructuring and reorganization. 

External Sources: 

* OMB’s Program Assessment Rating Tool (PART). 

* President’s Budget Terminations, Reductions, and Savings list. 

* CBO Budget Options. 

* Academia, public policy organizations, think tanks. 

Summary of 2011 report (GAO-11-318SP): 

* 34 areas where agencies, offices, or initiatives have similar or 
overlapping objectives or provide similar services to the same 
populations; or where government missions are fragmented across 
multiple agencies or programs. 

* 47 additional areas describing other opportunities for agencies or 
Congress to consider taking action that could either reduce the cost 
of government operations or enhance revenue collections for the 

* Depending on the extent of actions taken, these savings and revenues 
could collectively result in tens of billions of dollars in annual 

Examples of DOD-Related Duplication and Cost Savings or Revenue 
Enhancement Issues: 

Duplication, Overlap, or Fragmentation: 
* Military medical command structures; 
* Counter-IED Efforts; 
* Intelligence, Surveillance, and Reconnaissance Capabilities; 
* Warfighter Urgent Needs Processes; 
* Tactical Wheeled Vehicles Purchases; 
* Prepositioning Programs; 
* Business System Modernization Efforts. 

Cost Savings or Revenue Enhancement: 
* Assessing Costs and Benefits of Overseas Military Presence Options; 
* Developing a Total Compensation Approach to Manage Growth in 
Military Personnel Costs; 
* Opportunities to Better Manage DOD's Spare Parts Inventory and 
Weapons Systems Acquisition; 
* Improving the Cost-Effectiveness of Sustaining Weapon Systems; 
* Improving Corrosion Prevention and Control Practices. 

GAO High Risk List-An Update: 

2011 High-Risk Update (GAO-11-278): 

2011 List — 30 areas total 

* One DOD-specific area removed: 
- Personnel Security Clearances. 

* Seven DOD-specific areas related to business operations: 
- Management Approach to Business Transformation; 
- Business Systems Modernization; 
- Support Infrastructure Management (Narrowed in Scope); 
- Financial Management; 
- Supply Chain Management; 
- Weapon Systems Acquisition; 
- Contract Management. 

Removing High-Risk Designations: 

Five criteria for determining whether a high-risk area can be removed: 

* Demonstrated top leadership commitment to addressing the problems. 

* Capacity (people and resources). 

* Corrective action plan. 

* Demonstrated progress that is sustainable. 

* A program to monitor corrective measures. 

Closing Thoughts: 

The nation is facing the daunting challenges of recovering from a 28 
serious recession while facing serious long-term fiscal challenges 
that simulations show —absent significant policy changes—growing 
deficits accumulating to an unsustainable increase in debt. 

In this fiscal environment, DOD cannot afford to miss opportunities to 
address inefficiencies in its key business areas as well as across the 

In many areas, some of which I have outlined today, DOD can achieve 
tangible and sustainable outcomes that will ultimately provide better 
support to the warfighter and free up resources for higher priority 

To do so, it will take strong leadership, sound plans, valid 
performance metrics and reliable data to measure progress, and tough 
choices to alter course if programs aren't performing. 

On the Web: 

Web site: [hyperlink,]. 


Chuck Young, Managing Director, Public Affairs, 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 


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