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GAO: 

United States Government Accountability Office: 

Serving the Congress and the Nation: 

Performance & Accountability Report: 

Fiscal Year 2005: 

Accountability: 

Reliability: 

Integrity: 

[See PDF for image] - graphic text: 

SERVING THE CONGRESS: 

GAO’S 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. 

SCOPE OF WORK: 

GAO performs a range of oversight-, insight-, and foresight-related 
engagements, a vast majority of which are conducted in response to 
congressional mandates or requests. GAO’s engagements include 
evaluations of federal programs; performance, financial and management 
audits; policy analyses; legal opinions; bid protest adjudications; and 
investigations. 

CORE VALUES: ACCOUNTABILITY: 

We help the Congress oversee federal programs and operations to ensure 
accountability to the American people. GAO’s analysts, auditors, 
lawyers, economists, information technology specialists, investigators, 
and other multidisciplinary professionals seek to enhance the economy, 
efficiency, effectiveness, and credibility of the federal government 
both in fact and in the eyes of the American people. 

CORE VALUES: INTEGRITY: 

We set high standards for ourselves in the conduct of GAO’s work. Our 
agency takes a professional, objective, fact-based, nonpartisan, 
nonideological, fair, and balanced approach to all activities. 
Integrity is the foundation of reputation, and GAO’s approach to work 
ensures both. 

CORE VALUES: RELIABILITY: 

We at GAO want our work to be viewed by the Congress and the American 
public as reliable. We produce high quality reports, testimony, 
briefings, legal opinions, and other products and services that are 
timely, accurate, useful, clear, and candid. 

Source: GAO. 

[End of figure] 

Contents: 

Abbreviations: 

How to Use This Report: 

Introduction: 

From the Comptroller General: 

Financial Reporting Assurance Statements: 

About GAO: 

Mission: 

Strategic Planning and Management Process: 

Organizational Structure: 

How We Measure Our Performance: 

Part I: Management's Discussion and Analysis: 

Providing Information That Improves Federal Programs Now and in the 
Future: 

Focusing on Results: 

Focusing on Our Clients: 

Focusing on Our People: 

Focusing on Our Internal Operations: 

21st Century Challenges: 

GAO's High-Risk Program: 

Building Partnerships: 

Managing Our Resources: 

Strategies for Achieving Our Goals: 

Addressing Management Challenges That Could Affect Our Performance: 

Mitigating External Factors That Could Affect Our Performance: 

Part II: Performance Information: 

Performance Information by Strategic Goal: 

Goal 1 Overview: 

Financial Benefits: 

Other Benefits: 

Testimonies: 

Multiyear Performance Goals: 

Goal 2 Overview: 

Financial Benefits: 

Other Benefits: 

Testimonies: 

Multiyear Performance Goals: 

Goal 3 Overview: 

Financial Benefits: 

Other Benefits: 

Testimonies: 

Multiyear Performance Goals: 

Goal 4 Overview: 

Multiyear Performance Goals: 

Data Quality and Program Evaluation: 

Verifying and Validating Performance Data: 

Program Evaluation: 

Part III: Financial Information: 

From the Chief Financial Officer: 

Overview of Financial Statements: 

Financial Systems and Internal Controls: 

Audit Advisory Committee's Report: 

Independent Auditor's Report: 

Purpose of Each Financial Statement: 

Balance Sheets: 

Statements of Net Cost: 

Statements of Changes in Net Position: 

Statements of Budgetary Resources: 

Statements of Financing: 

Notes to Financial Statements: 

Part IV: Appendixes: 

1. Accomplishments and Other Contributions: 

2. From the Inspector General: 

3. GAO's Report on Personnel Flexibilities: 

4. GAO's Federal Information Security Management Act Efforts: 

Image Sources: 

Providing Comments on This Report: 

Obtaining Copies of GAO Documents: 

[End of Contents] 

Abbreviations: 

BPA: Bonneville Power Administration: 

CAO: Chief Administrative Office: 

CMS: Centers for Medicare & Medicaid Services: 

CSRS: Civil Service Retirement System: 

DHS: Department of Homeland Security: 

DISA: Defense Information Systems Agency: 

DOD: Department of Defense: 

DOE: Department of Energy: 

DOL: Department of Labor: 

EPA: Environmental Protection Agency: 

FAA: Federal Aviation Administration: 

FECA: Federal Employees' Compensation Act: 

FEGLIP: Federal Employees' Group Life Insurance Program: 

FEHBP: Federal Employees Health Benefits Program: 

FEMA: Federal Emergency Management Agency: 

FERS: Federal Employees Retirement System: 

FFMIA: Federal Financial Management Improvement Act: 

FHA: Federal Housing Administration: 

FICA: Federal Insurance Contributions Act: 

FISMA: Federal Information Security Management Act: 

FTE: full-time equivalent: 

GAO: Government Accountability Office: 

GSA: General Services Administration: 

HCTC: Health Coverage Tax Credit: 

HHS: Department of Health and Human Services: 

HIPAA: Health Insurance Portability and Accountability Act: 

HUD: Department of Housing and Urban Development: 

IG: Office of Inspector General: 

INTOSAI: International Organization of Supreme Audit Institutions: 

IRS: Internal Revenue Service: 

IT: information technology: 

MFO: multinational force observer: 

NASA: National Aeronautics and Space Administration: 

NFC: National Finance Center: 

NHTSA: National Highway Transportation Safety Administration: 

NIH: National Institutes of Health: 

OMB: Office of Management and Budget: 

OOI: Office of Opportunity and Inclusiveness: 

OPM: Office of Personnel Management: 

PART: Program Assessment Rating Tool: 

QCI: Quality and Continuous Improvement: 

SBA: Small Business Administration: 

SEC: Securities and Exchange Commission: 

SSA: Social Security Administration: 

TSA: Transportation Security Administration: 

UNHCR: United Nations High Commissioner for Refugees: 

USACE: U.S. Army Corps of Engineers: 

USAID: U.S. Agency for International Development: 

USCIS: U.S. Citizenship and Immigration Services: 

USDA: U.S. Department of Agriculture: 

US-VISIT: United States Visitor and Immigrant Status Indicator 
Technology: 

VA: Department of Veterans Affairs: 

[End of Abbreviations] 

How to Use This Report: 

This report describes the U.S. Government Accountability Office's (GAO) 
performance measures, results, and accountability processes for fiscal 
year 2005. In assessing our performance, we compared actual results 
against targets and goals that were set in our annual performance plan 
and were developed to help carry out our strategic plan. Our complete 
set of strategic planning and performance and accountability reports is 
available on our Web site at [Hyperlink, http://www.gao.gov/sp.html]. 

This report has an introduction, four major parts, and supplementary 
appendixes as follows: 

* Introduction: 

Look here for the letter from the Comptroller General and a statement 
attesting to the completeness and accuracy of the data in this report. 
Also, look here for a discussion of our mission, organizational 
structure, strategic planning process, and process for assessing our 
performance. 

* Management's Discussion and Analysis: 

Look here for our agencywide performance results and use of resources 
in fiscal year 2005. Look here also for information on the strategies 
we use to achieve our goals and the management challenges and external 
factors that affect our performance. 

* Performance Information: 

Look here for details on our performance results by strategic goal in 
fiscal year 2005 and the targets we are aiming for in fiscal year 2006. 
Look here also for an explanation of how we ensure the completeness and 
reliability of the performance data used in this report. 

* Financial Information: 

Look here for details on our finances in fiscal year 2005, including a 
letter from our Chief Financial Officer, audited financial statements 
and notes, and the reports from our external auditor and audit advisory 
committee. Look here also for information on our internal controls and 
for an explanation of the kind of information each of our financial 
statements conveys. 

* Appendixes: 

Look here for detailed write-ups about our most significant 
accomplishments and contributions recorded in fiscal year 2005, for our 
Inspector General's assessment of our agency's management challenges, 
and for information on certain human capital management flexibilities 
and on information security reform efforts. 

[End of How to Use This Report] 

Introduction: 

"The government being the people's business, it necessarily follows 
that its operations should be at all times open to the public view." 

- William Jennings Bryan: 

From the Comptroller General: 

November 15, 2005: 

By nearly every measure, GAO has once again produced excellent results 
in serving the Congress and the American people and, through this 
performance and accountability report, I am proud to share with you our 
assessment of how well we performed during fiscal year 2005. Our 
business involves helping to improve performance and ensure 
accountability in connection with a broad range of federal programs, 
policies, and activities. Simply put, we try to help improve the way 
the federal government works for the benefit of all of our nation's 
citizens both now and in the future. To determine our success, we set 
performance targets and follow financial management and quality control 
practices that help ensure that we are making the best use of the 
federal funds invested in us. In addition, I am very pleased to report 
that we received clean opinions from external, independent auditors on 
our financial statements and on our performance audit and financial 
audit quality assurance systems. We also identified a broad range of 
issues that could seriously affect the stability and prosperity of the 
nation in the years to come. The following paragraphs highlight our 
performance in each of these areas. 

With respect to our performance measures, I am especially pleased to 
report that we met or exceeded targets for 10 of our 14 performance 
measures, while setting or matching all-time records for 3 measures. We 
documented $39.6 billion in financial benefits--a return of $83 for 
every dollar we spent--and over 1,400 nonfinancial benefits--a record 
for us. The work we did to produce these benefits helped to shape 
important legislation, such as the Intelligence Reform and Terrorism 
Prevention Act of 2004 (Pub. L. No. 108-458), and increase the 
efficiency of various federal programs, thus improving the lives of 
millions of Americans. In addition, the rate at which our 
recommendations were implemented by the Congress or federal agencies 
rose to 85 percent in fiscal year 2005, and the percentage of our 
fiscal year 2005 products containing recommendations increased to 63 
percent--exceeding the targets we set for both of these measures this 
year. Our performance in these two areas also set an all-time record 
for recommendations implemented and matched the record we set in fiscal 
year 2004 for the percentage of new products with recommendations. We 
delivered 179 testimonies, slightly missing our target of 185. We also 
just missed our target of providing 98 percent of our products to the 
Congress when promised. In addition, in the first year that we are 
reporting our progress on our 8 new measures related to our people, we 
met or exceeded the targets for 6 of them related to retention and 
employee satisfaction. We came close to, but did not achieve, the 
targeted performance related to our new hire rate--the ratio of the 
number of people hired to the number of people we planned to hire--and 
the percentage of people that accepted our employment offers. 

As in past years, during fiscal year 2005, our work covered a number of 
major topics of concern to the nation and, in some cases, the world. 
For example, we reported on the nation's long-term fiscal challenges, 
the financial condition of the airline industry, spending and 
reconstruction activities related to Iraq and Afghanistan, and 
strengthening the visa process as an antiterrorism tool. As the war in 
Iraq continued, we examined how the Department of Defense supplied 
vehicles, body armor, and other materiel to the troops in the field. We 
also examined the Department of Defense's transformation challenges, 
base realignment and closure issues, increasing the strategic focus of 
federal acquisitions, protecting against identity theft, the oversight 
of electricity markets, zero down payment mortgages, and immigration 
enforcement. We testified many times before the Congress, contributing 
to the public debate on a variety of topics that included Social 
Security reform, wildland fire management, gasoline prices, the flu 
vaccine, veterans' health care, benefits for members of the Reserves 
and National Guard, digital broadcast television, long-term health care 
financing, passport fraud detection, reducing the tax gap, information 
security, and a range of financial management and accountability 
issues. These and other topics on which we testified are listed on page 
36 of this report. 

The American people benefited this year as federal agencies took a wide 
range of actions based on our analyses and recommendations, while our 
efforts also heightened the visibility of issues needing attention. For 
example, adoption of our recommendations helped improve home health 
care performance standards, increase the collection of delinquent 
taxes, and improve the efficiency of federal acquisitions. It is 
important for our nation and citizens not only that these issues are 
made visible, but also that the nation's leaders address them. We feel 
fortunate and honored that in a significant majority of cases, our 
clients and federal agencies listen to what we have to say and act on 
our recommendations. Furthermore, virtually all of our reports are 
published and available on our Web site ([Hyperlink, 
http://www.gao.gov]), keeping us accountable to the American people. 

Once again we have received a clean audit opinion on our financial 
statements, and in part III of this report we have included the 
external auditor's report stating that we presented our financial 
statements fairly and maintained effective internal control processes. 
The auditors also reported no instances of noncompliance with 
applicable laws and regulations. Additionally, I am most pleased to 
report the results of the first ever review of our quality assurance 
system used to conduct our performance audits, which involves work 
performed in virtually all parts of GAO. This review--which was 
performed by an international team of auditors from seven countries led 
by the Office of the Auditor General of Canada--assessed whether our 
quality assurance policies and procedures were suitably designed and 
operating effectively; the review resulted in a clean opinion. Their 
April 2005 audit report also cited a number of exemplary practices at 
GAO, such as our strategic planning process, proactive working 
relationship with the Congress, quality assurance framework, and audit 
risk assessment process, and offered us some suggestions for 
improvement, including streamlining certain requirements for low-risk 
assignments, a suggestion that we are already working to implement. 
Similarly, we received a clean opinion resulting from a separate audit 
of our quality assurance system for our financial audits. This opinion 
was in line with previous such audits that have been conducted every 3 
years. The auditors concluded that our system of quality control for 
the accounting and auditing practice was designed to meet applicable 
quality control standards and was complied with for the period 
reviewed, providing us reasonable assurance of conforming to applicable 
professional standards. 

In fiscal year 2005, we issued two products that will assist the 
Congress as it addresses a broad range of future challenges. Our report 
entitled 21st Century Challenges: Reexamining the Base of the Federal 
Government provides a series of illustrative questions related to 12 
areas of federal activity as well as our perspective on various 
strategies and approaches that should be considered as a possible means 
to address the issues and questions raised in the report. Drawing on 
our institutional knowledge and extensive program evaluation and 
performance assessment work for the Congress, we presented over 200 
specific 21st century questions illustrating the types of hard choices 
our nation needs to face as it reexamines what the federal government 
should do, how it should do it, and how it should be financed. (see p. 
42 for more information about our 21st century challenges report.) We 
also issued our High-Risk Series: An Update, which identifies federal 
areas and programs at risk of fraud, waste, abuse, and mismanagement 
and those in need of broad-based transformations. The issues affecting 
many of these areas and programs may take years to address, and the 
report will serve as a useful guide for the Congress's future 
programmatic deliberations and oversight activities. The current 
administration has looked to our high-risk program in shaping 
governmentwide initiatives such as the President's Management Agenda, 
which has at its base many of the areas we had previously identified as 
high risk. The Office of Management and Budget, in consultation with 
us, is currently working to ensure that agencies develop detailed 
action plans to address high-risk areas, with the ultimate objective, 
over time, of seeing these items removed from our high-risk list. 

This year we also continued to take steps internally to be a model 
federal agency and a world-class professional services organization. 
These steps helped us to address our three major management challenges-
-human capital, physical security, and information security. Through 
the GAO Human Capital Reform Act of 2004, the Congress granted GAO 
several additional human capital flexibilities that will allow us, 
among other things, to move to an even more performance-oriented and 
market-based compensation system. Our most valuable asset continues to 
be our people, and the flexibilities granted in this act will help us 
to continue to modernize our people-related policies and strategies, 
which, in turn, will help to ensure that we are well equipped to serve 
the Congress and the American people in the years to come. As a result, 
we are continuing to take a range of actions designed to modernize our 
human capital policies and practices. In fiscal year 2005, we adopted a 
broad pay band approach and a more performance-oriented pay system for 
our administrative staff. We also made considerable progress in moving 
to a more market-based and skills-, knowledge-, and performance- 
oriented classification and pay system for all of our employees. 

In today's world, we should partner for progress with other key 
players. We believe strongly in doing so in order to maximize our value 
and mitigate risk within current and expected resource levels. Fiscal 
year 2005 included several major milestones in GAO's outreach efforts. 
Most notably, we led the adoption of the first-ever strategic plans for 
the International Organizational of Supreme Audit Institutions 
(INTOSAI) and the National Intergovernmental Audit Forum. 

In short, fiscal year 2005 was a very successful year for us. This 
report describes our many contributions toward improving the 
government, and I am confident that the performance data and financial 
information in this report are complete and reliable, as noted in the 
statement of assurance that appears just after this letter. I believe 
that GAO remained true to its core values of accountability, integrity, 
and reliability throughout the year and that those who read this report 
will agree that the taxpayers received an excellent return on their 
investment in us. 

Signed by: 

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

[End of From the Comptroller General of the United States] 

Financial Reporting Assurance Statements: 

November 15, 2005: 

We, as GAO's executive committee, are responsible for preparing and 
presenting the financial statements and other information included in 
this performance and accountability report. The financial statements 
included herein are presented in conformity with U.S. generally 
accepted accounting principles; incorporate management's reasonable 
estimates and judgments, where applicable; and contain appropriate and 
adequate disclosures. Based on our knowledge, the financial statements 
are presented fairly in all material respects, and other financial 
information included in this report is consistent with the financial 
statements. 

On the basis of GAO's comprehensive management control program, we are 
pleased to certify, with reasonable assurance, that: 

* Our financial reporting is reliable--transactions are properly 
recorded, processed, and summarized to permit the preparation of 
financial statements in accordance with U.S. generally accepted 
accounting principles, and assets are safeguarded against loss from 
unauthorized acquisition, use, or disposition. 

* GAO is in compliance with all applicable laws and regulations-- 
transactions are executed in accordance with (1) laws governing the use 
of budget authority and other laws and regulations that could have a 
direct and material effect on the financial statements and (2) any 
other laws, regulations, and governmentwide policies applicable to GAO. 

* Our performance reporting is reliable--transactions and other data 
that support reported performance measures are properly recorded, 
processed, and summarized to permit the preparation of performance 
information in accordance with the criteria stated by GAO's management. 

We also believe these same systems of accounting and internal controls 
provide reasonable assurance that GAO is in compliance with the spirit 
of 31 U.S.C. 3512 (commonly referred to as the Federal Managers' 
Financial Integrity Act). This is an objective that we set for 
ourselves even though, as part of the legislative branch of the federal 
government, we are not technically required to do so. 

Signed by: 

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

Signed by: 

Gene L. Dodaro: 
Chief Operating Officer: 

Signed by: 

Sallyanne Harper: 
Chief Financial Officer: 

Signed by: 

Anthony H. Gamboa: 
General Counsel: 

[End of Financial Reporting Assurance Statements] 

About GAO: 

GAO is an independent, nonpartisan, professional services agency in the 
legislative branch of the federal government. Commonly known as the 
"audit and investigative arm of the Congress" or the "congressional 
watchdog," we examine how taxpayer dollars are spent and advise 
lawmakers and agency heads on ways to make government work better. As a 
legislative branch agency, we are exempt from many laws that apply to 
the executive branch agencies. However, we generally hold ourselves to 
the spirit of many of the laws, including 31 U.S.C. 3512 (commonly 
referred to as the Federal Managers' Financial Integrity Act), the 
Government Performance and Results Act of 1993, and the Federal 
Financial Management Improvement Act of 1996.[Footnote 1] Accordingly, 
this performance and accountability report for fiscal year 2005 
supplies what we consider to be information that is at least equivalent 
to that supplied by executive branch agencies in their annual 
performance and accountability reports. 

Mission: 

Our mission is to support the Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the federal government for the benefit of the 
American people. The strategies and means that we use to accomplish 
this mission are described in the following pages. In short, we 
accomplish our mission by providing reliable information and informed 
analysis to the Congress, to federal agencies, and to the public; and 
we recommend improvements, when appropriate, on a wide variety of 
issues. Three core values--accountability, integrity, and reliability-
-form the basis for all of our work, regardless of its origin. These 
are described on the inside front cover of this report. 

GAO's History: 

The Budget and Accounting Act of 121 required the President to issue an 
annual federal budget and established GAO as an independent agency to 
investigate how federal dollars are spent. In the early years, we 
mainly audited vouchers, but after World War II we started to perform 
more comprehensive financial audits that examined the economy and 
efficiency of government operations. By the 1960s, GAO, which is in the 
legislative branch of the federal government, had begun to perform the 
type of work we are noted for today-program evaluation--which examines 
whether government programs are meeting their objectives. Our name--the 
U.S. Government Accountability Office-reflects our people, our work, 
and our reputation. 

Strategic Planning and Management Process: 

To accomplish our mission, we use a strategic planning and management 
process that is based on a hierarchy of four elements (see fig. 1), 
beginning at the highest level with the following four strategic goals: 

* Strategic Goal 1: 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: 

* Strategic Goal 2: Provide Timely, Quality Service to the Congress and 
the Federal Government to Respond to Changing Security Threats and the 
Challenges of Global Interdependence: 

* Strategic Goal 3: Help Transform the Federal Government's Role and 
How It Does Business to Meet 21st Century Challenges: 

* Strategic Goal 4: Maximize the Value of GAO by Being a Model Federal 
Agency and a World-Class Professional Services Organization: 

Figure 1: GAO's Strategic Planning Hierarchy: 

[See PDF for image] - graphic text: 

A four step pyramid illustrating GAO's strategic planning hierarchy. 

Step 1: Strategic Goals (4); 
Step 2: Strategic Objectives (21); 
Step 3: Performance Goals (99); 
Step 4: Key Efforts (400+); 

Source: GAO. 

[End of figure] 

Our work is primarily aligned under the first three strategic goals, 
which span issues that are both domestic and international, affect the 
lives of all Americans, and influence the extent to which the federal 
government serves the nation's current and future interests. The fourth 
goal is our only internal one and is aimed at maximizing our 
productivity through such efforts as investing steadily in information 
technology (IT) to support our work; ensuring the safety and security 
of our people, information, and assets; pursuing human capital 
transformation; and leveraging our knowledge and experience. Figure 2 
lists by goal some examples of our work during fiscal year 2005; this 
work relates to a variety of specific strategic objectives. We revisit 
the focus and appropriateness of these four strategic goals each time 
that we update our strategic plan. 

Figure 2: Examples of How GAO Assisted the Nation: 

GAO strategic goal 1; 
Description: 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; 
In fiscal year 2005, GAO provided information that helped to...
* Improve the transition from active duty to civilian status for 
veterans with serious war-related injuries; 
* Address long-term health care financing pressures on state and local 
government budgets; 
* Identify challenges with transferring the Medicare appeals process 
from the Social Security Administration (SSA) and the Department of 
Health and Human Services (HHS); 
* Improve patient safety at Department of Veterans Affairs hospitals; 
* Improve the security of Social Security numbers; 
* Address the challenges of pension reform; 
* Strengthen the security screening process for passengers and checked 
baggage at the nation's airports; 
* Improve the oversight of Federal Housing Administration single-family 
and multifamily lenders; 
* Improve the oversight of electricity markets by the Federal Energy 
Regulatory Commission; 
* Identify challenges associated with the Department of Energy's (DOE) 
nuclear facility designs; 
* Monitor the growth in the digital television market; 
* Analyze issues contributing to the declining financial condition of 
the airline industry. 

GAO strategic goal 2; 
Description: Provide timely, quality service to the Congress and the 
federal government to respond to changing security threats and the 
challenges of global interdependence; 
In fiscal year 2005, GAO provided information that helped to...
* Improve the management of funds for the Global War on Terrorism; 
* Increase the security of cargo containers to prevent terrorist 
activity; 
* Alert the Congress to issues affecting the Department of Defense's 
(DOD) major weapon systems; 
* Analyze funding options for a new federal foreign assistance program--
the Millennium Challenge Account; 
* Promote government efforts to address threats to the security of the 
nation's information systems; 
* Strengthen the visa process as an antiterrorism tool; 
* Improve management of the U.S. Coast Guard's Deepwater program; 
* Shape the debate on improving military pay and benefits; 
* Strengthen the U.S. strategic export control system; 
* Identify improvements needed to secure the telecommunications and 
information systems used by U.S. financial markets. 

GAO strategic goal 3; 
Description: Help transform the federal government's role and how it 
does business to meet 21st century challenges; 
In fiscal year 2005, GAO provided information that helped to...
* Increase the public's understanding of the federal government's long-
term fiscal challenges; 
* Implement governmentwide civil service reforms; 
* Oversee federal tax policy; 
* Increase debts collected from criminals; 
* Decrease improper payments made by the U.S. Department of 
Agriculture's (USDA) Food Stamp Program and other federal agencies; 
* Manage multibillion-dollar IT modernizations and investments at the 
Department of Homeland Security (DHS) and Office of Personnel 
Management; 
* Improve agencies' strategic purchasing practices; 
* Examine changes in key areas of federal activity that could affect 
the federal government's fiscal future; 
* Enhance the knowledge base on comprehensive national indicators. 

GAO strategic goal 4; 
Description: Maximize the value of GAO by being a model federal agency 
and a world-class professional services organization; 
In fiscal year 2005, GAO provided information that helped to...
* Foster among other federal agencies GAO's innovative human capital 
practices, such as broad pay bands; performance-based compensation; and 
workforce planning and staffing strategies, policies, and processes; 
* Share GAO's model business and management processes with counterpart 
organizations in the United States and abroad. 

Source: GAO. 

[End of table] 

The four strategic goals are supported by strategic objectives that are 
in turn supported by and achieved through numerous performance goals 
and key efforts. Our strategic planning framework for serving the 
Congress, which lists the strategic objectives under each goal, is 
depicted in the graphic described later in this section. This framework 
not only shows the relationship between our strategic goals and 
strategic objectives, but also shows major themes that could 
potentially affect our work. 

An Example of Our Strategic Planning Elements: 

Strategic Goal 1: 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. 

Strategic Objective: A Secure Retirement for Older Americans. 

Performance Goal: Identify Opportunities to Improve the Ability of 
Government Agencies to Administer and Protect Workers' Retirement 
Benefits. 

Key Efforts: 

* Evaluate pension, pension insurance, and tax oversight programs to 
determine whether workers' private pension retirement benefits are 
effectively protected. 

* Evaluate SSA's service-delivery systems and program operations to 
determine whether they are being implemented fairly, effectively, 
efficiently, and securely. 

* Assess the adequacy and management of public service retirement 
systems, including the federal, state, and local government employee 
systems, in serving participants and in protecting and providing 
benefits. 

Complete descriptions of the steps in our strategic planning and 
management process are included in our strategic plan for fiscal years 
2004 through 2009, which is available on our Web site at [Hyperlink, 
http://www.gao.gov]. This site also provides access to our annual 
performance plans since fiscal year 1999 and our performance and 
accountability reports since fiscal year 2001. 

To ensure that we are well positioned to meet the Congress's current 
and future needs, we update our 6-year strategic plan every 3 years, 
consulting extensively during the update with our clients on Capitol 
Hill and with other experts (see our complete strategic plan on 
[Hyperlink, http://www.gao.gov/sp/d04534sp.pdf]). Using the plan as a 
blueprint, we lay out the areas in which we expect to conduct research, 
audits, analyses, and evaluations to meet our clients' needs, and we 
allocate the resources we receive from the Congress accordingly. Given 
the increasingly fast pace with which crucial issues emerge and evolve, 
we design a certain amount of flexibility into our plans and staffing 
structure so that we can respond readily to the Congress's changing 
priorities. When we revise our plans or our allocation of resources, we 
disclose those changes in annual performance plans, which are posted--
like our strategic plan--on the Web for public inspection ([Hyperlink, 
http://www.gao.gov/sp.html]). For example, we issued our performance 
plan for fiscal year 2006 in June 2005. 

Each year, we hold ourselves accountable to the Congress and to the 
American people for our performance, primarily through the annual 
performance and accountability report. However, we have included some 
information about future plans in this report to provide as cohesive a 
view as possible of what we have done, what we are doing, and what we 
expect to do to support the Congress and to serve the nation. Last 
year, the Association of Government Accountants awarded us for the 
fourth consecutive year its Certificate of Excellence in Accountability 
Reporting for our fiscal year 2004 performance and accountability 
report. According to the association, this certificate means that we 
produced an interesting and informative report that achieved the goal 
of complete and fair reporting. 

[See PDF for image] - graphic text: 

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: 

* Long-Term Fiscal Imbalance; 

* National Security; 

* Global Interdependence; 

* Changing Economy; 

* Demographics; 

* Science and Technology; 

* Quality of Life; 

* Governance; 

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 2004-2009. 

Source: GAO. 

[End of GAO's Strategic Plan Framework] 

[See PDF for image] - graphic text: 

A picture showing the certificate of excellence and the cover of the 
Performance and Accountability Report for fiscal year 2004. 

[End of figure] 

Organizational Structure: 

As the Comptroller General of the United States, David M. Walker is the 
head of GAO and is serving a 15-year term that began in November 1998. 
Three other executives join Comptroller General Walker to form GAO's 
Executive Committee, which is the top policymaking body within GAO. 
These executives are Chief Operating Officer Gene L. Dodaro, Chief 
Administrative Officer/Chief Financial Officer Sallyanne Harper, and 
General Counsel Anthony H. Gamboa. 

To achieve our strategic goals, our staff is organized as shown in 
figure 3. For the most part, our 13 research, audit, and evaluation 
teams perform the work that supports strategic goals 1, 2, and 3--our 
three external strategic goals--with several of the teams working in 
support of more than one strategic goal. 

Senior executives in charge of the teams manage a mix of engagements to 
ensure that the Congress's need for information on quickly emerging 
issues is met as we also continue longer term work efforts that flow 
from our strategic plan. To effectively serve the Congress with a 
finite set of resources, senior managers consult with our congressional 
clients and determine the timing and priority of engagements for which 
they are responsible. In fiscal year 2005, we formed a new unit-- 
Forensic Audits and Special Investigations--within our Financial 
Management and Assurance team. This unit was designed to provide the 
Congress with high-quality forensic audits;[Footnote 2] investigations 
of fraud, waste, and abuse; and evaluations of security vulnerabilities 
and other appropriate investigative services as part of its own 
assignments or in support of other teams. This unit follows up on 
engagements and referrals from our other teams when its special 
services are required to help determine whether legislative or 
administrative actions are necessary. The unit is composed of 
investigators and staff from our former Office of Special 
Investigations; auditors from the Financial Management and Assurance 
team who have experience with forensic audits; and staff in General 
Counsel who worked with FraudNet--our online system designed to 
facilitate the reporting of allegations of fraud, waste, abuse, or 
mismanagement of federal funds. 

As described below, General Counsel supports the work of all of our 
teams. In addition, the Applied Research and Methods team assists the 
other teams on matters requiring expertise in areas such as economics, 
research design, and statistical analysis. And staff in many offices 
such as Strategic Planning and External Liaison, Congressional 
Relations, Opportunity and Inclusiveness (OOI), Quality and Continuous 
Improvement (QCI), Public Affairs, and the Chief Administrative Office 
(CAO) support the efforts of the teams. This collaborative process, 
which we refer to as matrixing, increases our effectiveness, 
flexibility, and efficiency in using our expertise and resources to 
meet congressional needs on complex issues. 

General Counsel is structured organizationally along subject matter 
lines to facilitate the delivery of legal services. This structure 
allows General Counsel to (1) provide legal support to GAO and its 
audit teams concerning all matters related to their work and (2) 
produce legal decisions and opinions for the Comptroller General. 
Specifically, the Goal 1, Goal 2, and Goal 3 groups in General Counsel 
are organized to provide each of the audit teams with a corresponding 
team of attorneys dedicated to supporting each team's needs for legal 
services. In addition, these groups prepare advisory opinions to 
committees and members of the Congress on agency adherence to laws 
applicable to their programs and activities. General Counsel's Legal 
Services group provides in-house support to GAO's management on a wide 
array of human capital matters and initiatives and on information 
management and acquisition matters and defends the agency in 
administrative and judicial forums. Finally, attorneys in the 
Procurement Law and the Budget and Appropriations Law groups prepare 
administrative decisions and opinions adjudicating protests to the 
award of government contracts or opining on the availability and use of 
appropriated funds. 

For strategic goal 4--our fourth and only internal strategic goal-- 
staff in CAO take the lead. They are assisted on specific key efforts 
by the Applied Research and Methods team and by staff offices such as 
Strategic Planning and External Liaison, Congressional Relations, OOI, 
QCI, and Public Affairs. In addition, attorneys in General Counsel, 
primarily in the Legal Services group, provide legal support for goal 4 
efforts. 

Figure 3: Organizational Structure: 

[See PDF for image] - graphic text: 

An organization chart showing GAO’s basic structure. The agency’s top 
level of organization was the Executive Committee, which includes the 
Comptroller General, the Chief Operating Officer, the Chief 
Administrative Officer/Chief Financial Officer, and the General 
Counsel. Nineteen units report directly to the Comptroller General and 
the Chief Operating Officer. The units included the following staff 
offices: Public Affairs, Strategic Planning and External Liaison, 
Congressional Relations, Opportunity and Inclusiveness, and Inspector 
General, which report to the Comptroller General; and Quality and 
Continuous Improvement, which reports to the Chief Operating Officer. 

Other units that report to the Chief Operating Officer include teams 
and field operations that conduct audits, evaluations, and research. 
These teams perform work primarily supporting one of our three external 
strategic goals but several teams perform work in support of multiple 
strategic goals. Generally the teams fall under the following goals: 

Goal 1: 

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. 

* Education, Workforce, and Income Security; 
* Financial Markets and Community Investment; 
* Health Care; 
* Homeland Security and Justice; 
* Natural Resources and Environment; 
* Physical Infrastructure; 

Goal 2: 

Provide timely, quality service to the Congress and the federal 
government to respond to the changing security threats and the 
challenges of global interdependence. 

* Acquisition and Sourcing Management; 
* Defense Capabilities and Management; 
* International Affairs and Trade; 

Goal 3: 

Help transform the federal government’s role and how it does business 
to meet 21st century challenges. 

* Applied Research and Methods; 

* Financial Management and Assurance; 
- Forensic Audits and Special Investigations; 

* Information Technology; 

* Strategic Issues; 
- Federal Budget and Intergovernmental Relations; 

Goal 4: 

Five units that report to the Chief Administrative Officer support our 
fourth goal; which is to maximize the value of GAO by being a model 
federal agency and a world-class professional services organization. 
These are: 

* Controller; 

* Human Capital Office: 
- Chief Human Capital Officer; 

* Information Systems and Technology Services: 
- Chief Information Officer; 

* Knowledge Services: 
- Chief Knowledge Services Officer; 

* Professional Development Program. 

Note: General Counsel's structure largely mirrors the agency's goal 
structure, and attorneys who are assigned to goals work with the teams 
on specific engagements. Thus, the dotted lines in this figure indicate 
General Counsel's support of or advisory relationship with the goals 
and teams rather than a direct reporting relationship. 

Source: GAO. 

[End of figure] 

Throughout GAO, we maintain a workforce of highly trained professionals 
with degrees in many academic disciplines, including accounting, law, 
engineering, public and business administration, economics, and the 
social and physical sciences. About three-quarters of our approximately 
3,200 employees are based at our headquarters in Washington, D.C; the 
rest are deployed in 11 field offices across the country. Staff in 
these field offices are aligned with our research, audit, and 
evaluation teams and perform work in tandem with our headquarters staff 
in support of our external strategic goals. 

GAO Field Locations: 

* Atlanta; 
* Boston; 
* Chicago; 
* Dallas; 
* Dayton; 
* Denver; 
* Huntsville; 
* Los Angeles; 
* Norfolk; 
* San Francisco; 
* Seattle. 

How We Measure Our Performance: 

We measure our performance using annual quantitative measures and 
multiyear qualitative performance goals. Together, these indicators 
help us to determine how well we are meeting the needs of the Congress 
and maximizing our value as a world-class organization. 

Annual Performance Measures: 

For several years, we assessed our performance annually using 
quantitative performance measures that are related to our work results 
and the usefulness of those results to our primary client--the 
Congress. Recently, we expanded our focus to include a more balanced 
set of performance measures that focus on three key areas--results, 
clients, and people.[Footnote 3] Fiscal year 2005 is the first year 
that we report how well we performed against the targets we set for our 
people measures. These categories of measures are briefly described 
below. 

* Results. Focusing on results and the effectiveness of the processes 
needed to achieve them is fundamental to accomplishing our mission. To 
assess our results, we measure financial benefits, other (nonfinancial) 
benefits, recommendations implemented, and percentage of new products 
with recommendations. 

* Clients. Our strategy in this area draws upon a variety of data 
sources (e.g., our client feedback survey and in-person discussions 
with congressional staff) to obtain information on the services we are 
providing to our congressional clients. To judge how well we are 
serving our clients, we measure the number of times we are asked to 
present expert testimony at congressional hearings as well as our 
timeliness in delivering products to the Congress. 

* People. As our most important asset, our people define our character 
and capacity to perform. A variety of data sources, including an 
internal survey, provide information to help us measure how well we are 
attracting and retaining high-quality staff and how well we are 
developing, supporting, using, and leading staff. 

Beginning with fiscal year 2006, we will add internal operations 
measures to the list of measures on which we report. Our mission and 
people are supported by our internal administrative services, including 
information management, building management, knowledge services, human 
capital, and financial management services. Through an internal 
customer satisfaction survey, we gather information on how well our 
internal operations help employees get their jobs done or improve 
employees' quality of work life. Examples of surveyed services include 
providing secure Internet access and voice communication systems, 
performance management, and benefits information and assistance. (For 
more information about these measures, see the section entitled 
Focusing on Our Internal Operations). 

To establish targets for these measures, we examine what we have been 
able to achieve in the past (e.g., by looking at our 4-year rolling 
averages for our client measures and most of our results measures, see 
part I) and the external factors that influence our work (see the 
section entitled Mitigating External Factors That Could Affect Our 
Performance). The teams and offices that are directly engaged in the 
work discuss their views of what must be accomplished in the upcoming 
fiscal year with our top executives, who then establish targets for the 
performance measures. Once approved by the Comptroller General, the 
targets become final and are presented in our annual performance 
plan.[Footnote 4] We may adjust these targets after they are initially 
published when our expected future work or level of funding provided 
warrant doing so. If we make changes, we include the changed targets in 
later documents, such as this performance and accountability report, 
and annotate the changes. In part II, we include detailed information 
on data sources that we use to assess each of these measures, as well 
as the steps we take to verify and validate the data (see the section 
entitled Verifying and Validating Performance Data). 

Measuring the Results of Our Work: 

We use four of our annual measures--financial benefits, other benefits, 
the percentage of past recommendations implemented, and the percentage 
of new products with recommendations--to assess our efforts to provide 
the kind of information and recommendations that will lead to benefits 
for the American people. Financial benefits and other benefits provide 
quantitative and qualitative information, respectively, on the outcomes 
or results that have been achieved from our work. They often represent 
outcomes that occurred over a period of several years. The remaining 
measures are intermediate outcomes in that they often lead to achieving 
outcomes that are ultimately captured in our financial or other 
benefits. 

For financial benefits and other benefits we first set targets for the 
agency as a whole and then we set targets for each of the external 
goals--that is, goals 1, 2, and 3--so that the sum of the targets for 
the goals equals the agencywide targets. For past recommendations 
implemented and percentage of products with recommendations, we set 
targets and report performance for the agency as a whole because we 
want our performance on these measures to be consistent across goals. 
We track our performance by strategic goal in order to understand why 
we meet or do not meet the agencywide target. We also use this 
information to provide feedback to our teams on the extent to which 
they are contributing to the overall target and to help them identify 
areas in which they need to improve. 

Multiyear Performance Goals: 

We use two elements in our strategic planning hierarchy--performance 
goals and key efforts--as qualitative indicators of our performance. We 
ask senior managers to determine whether the performance goals 
established in our strategic plan have been met over a multiyear 
period. To do this, these managers examine the amount of work conducted 
and recommendations made for each key effort supporting each 
performance goal. Senior managers also consider any other assistance 
provided to the client or customer that is related to these efforts. 
These managers then judge whether the work completed collectively for 
all key efforts actually achieved the performance goal, and we include 
the results of those assessments in our performance and accountability 
reports. 

For all four strategic goals, the multiyear, qualitative performance 
goals included in our current strategic plan describe specific areas of 
work that we had planned to complete by the end of fiscal year 2005. We 
assess our progress toward these multiyear, qualitative performance 
goals in part II of this report. However, during fiscal year 2004, we 
decided to revise our strategic plan every 3 years, rather than on a 2- 
year cycle, which means that we will not set new multiyear performance 
goals until 2007. To accommodate this change, for fiscal year 2006, we 
plan to continue to use the current performance goals as a basis for 
aligning our work with our strategic goals, and will describe the work 
we did in support of these multiyear performance goals at the end of 
fiscal year 2006. In preparing our fiscal year 2006 budget submission, 
we made minor revisions that apply to fiscal year 2006 for some of 
these performance goals, mainly in the homeland security and justice 
areas. These revisions were discussed in our fiscal year 2006 
performance plan. In our next strategic plan update, which will cover 
fiscal years 2007 through 2012, we will establish revised performance 
goals and key efforts that cover fiscal years 2007 through 2009. 

Measuring Client Service: 

We use two performance measures--the number of testimonies and the 
timeliness of our products--as indicators of how well we are meeting 
our clients' needs. 

We consider requests to present testimony as an indicator that our 
clients believe our work can add value to the congressional decision- 
making process. We set a target at the agencywide level for the number 
of testimonies and then assign a portion of the testimonies as a target 
for each of the external goals--that is, goals 1, 2, and 3--based on 
their expected contribution to the agencywide total. As in measuring 
the results of our work, we track our progress on this measure at the 
goal level in order to understand why we met or did not meet the 
agencywide target. 

We also believe that our ability to provide products by the agreed-upon 
date means that we have met the clients' needs for providing 
information in time for it to be of value to them. We set agencywide 
targets for timeliness because we want our performance on these 
measures to be consistent across goals. However, we track our progress 
on this measure at the team level so that we can provide feedback to 
our teams on the extent to which they are contributing to the overall 
target and to help them identify areas in which they need to improve. 

Measuring the Management of Our People: 

Our most important asset is our people, and they determine our capacity 
to perform. Therefore, we hold our managers accountable for attracting 
and retaining our human resources and determine how well we are 
performing in these areas through our new hire rate, acceptance rate, 
and retention rate. We also hold our managers accountable for investing 
in and leading our human resources. To assess our success in these 
areas, we track our performance using the following measures: staff 
development, staff utilization, leadership, and organizational 
development. We set targets for all of these measures at the agencywide 
level. 

On the pages that follow, we assess our performance for fiscal year 
2005 against our previously established performance targets. We also 
present our financial statements, the independent auditor's report, and 
a statement from GAO's Inspector General. 

[End of About GAO] 

[End of Introduction] 

Part I: Management's Discussion and Analysis: 

"Government is a trust, and the officers of the government are 
trustees; and both the trust and the trustees are created for the 
benefit of the people." 

- Henry Clay: 

Providing Information That Improves Federal Programs Now and in the 
Future: 

In fiscal year 2005, the Congress focused its attention on a broad 
array of challenging issues affecting the safety, health, and well- 
being of Americans here and abroad, and we were able to provide the 
objective, fact-based information these decision makers needed to 
stimulate debate, change laws, and improve federal programs for the 
betterment of the nation. For example, as the war in Iraq continued, we 
examined how DOD supplied vehicles, body armor, and other materiel to 
the troops in the field; contributed to the debate on military 
compensation; and highlighted the need to improve health, vocational 
rehabilitation, and employment services for seriously injured soldiers 
transitioning from the battlefield to civilian life. We also kept pace 
with the Congress's information needs about ways to better protect 
America from terrorism by issuing products and delivering testimonies 
that addressed issues such as security gaps in the nation's passport 
operations that threaten public safety and federal efforts needed to 
improve the security of checked baggage at airports and cargo 
containers coming through U.S. ports. We explored the financial crisis 
that weakened the airline industry and the impact of this situation on 
the traveling public and airline employees' pensions. 

In addition, we helped to focus the attention of the Congress and the 
public on issues affecting the fiscal security and economic stability 
of the nation in the long term. In the second quarter of fiscal year 
2005, we issued two products that will assist the Congress as it 
addresses future challenges. Our report entitled 21st Century 
Challenges: Reexamining the Base of the Federal Government provides a 
series of illustrative questions related to 12 areas of federal 
activity as well as our perspective on various strategies and 
approaches that should be considered as a possible means to address the 
issues and questions raised in the report. Drawing on our institutional 
knowledge and extensive program evaluation and performance assessment 
work for the Congress, we presented over 200 specific 21st century 
questions illustrating the types of hard choices our nation needs to 
face as it reexamines what the federal government does and how it does 
it. We also issued our High-Risk Series: An Update, which identifies 
federal areas and programs at risk of fraud, waste, abuse, and 
mismanagement and those in need of broad-based transformations. The 
issues affecting many areas and programs discussed in these two 
products may take years to address, and these products will serve as a 
useful guide for the Congress's future programmatic deliberations and 
oversight activities. (see pp. 42 and 43 for more information about our 
21st century challenges and high-risk reports, respectively.) We 
performed all this work and more in accordance with our strategic plan, 
guided by our core values, and consistent with our professional 
standards. 

As we assisted the Congress in fiscal year 2005, we monitored our 
performance using 14 annual performance measures that capture the 
results of our work; the assistance we provided to our client--the 
Congress; and our ability to attract, retain, develop, and lead a 
highly professional workforce (see table 1). These measures indicate 
that we had an impressive year--we met or exceeded our performance 
targets for 10 of our 14 measures. Two of our results measures-- 
financial benefits and other benefits--illustrate the outcomes of our 
work and our value to the nation because they track federal dollars 
saved or better used and programmatic improvements implemented as a 
result of our work. Two additional results measures track 
recommendations implemented and new products with recommendations that 
help us to achieve financial and other benefits. Our client measures-- 
testimonies and timeliness--indicate how well we, as an information 
provider, serve the Congress, and our people measures reflect how well 
we manage our staff to achieve the results that we do. 

Table 1: Agencywide Summary of Annual Measures and Targets: 

Results: 

Performance measure: Financial benefits; 
2001 Actual: $26.4 billion; 
2002 actual: $37.7 billion; 
2003 actual: $35.4 billion; 
2004 actual: $44.0 billion; 
2005 target: $37.5 billion; 
2005 actual: $39.6 billion; 
Met/not met: Met; 
2006 target: $39.0 billion. 

Performance measure: Other benefits; 
2001 Actual: 799; 
2002 actual: 906; 
2003 actual: 1,043; 
2004 actual: 1,197; 
2005 target: 1,000; 
2005 actual: 1,409; 
Met/not met: Met; 
2006 target: 1,050. 

Performance measure: Past recommendations implemented; 
2001 Actual: 79%; 
2002 actual: 79%; 
2003 actual: 82%; 
2004 actual: 83%; 
2005 target: 80%; 
2005 actual: 85%; 
Met/not met: Met; 
2006 target: 80%. 

Performance measure: New products with recommendations; 
2001 Actual: 44%; 
2002 actual: 53%; 
2003 actual: 55%; 
2004 actual: 63%; 
2005 target: 55%; 
2005 actual: 63%; 
Met/not met: Met; 
2006 target: 60%. 

Client: 

Performance measure: Testimonies; 
2001 actual: 151; 
2002 actual: 216; 
2003 actual: 189; 
2004 actual: 217; 
2005 target: 185; 
2005 actual: 179; 
Met/not met: Not met; 
2006 target: 210 

Performance measure: Timeliness; 
2001 actual: 95%; 
2002 actual: 96%; 
2003 actual: 97%; 
2004 actual: 97%; 
2005 target: 98%; 
2005 actual: 97%; 
Met/not met: Not met; 
2006 target: 98%. 

People: 

Performance measure: New hire rate; 
2001 Actual: N/A; 
2002 actual: 96%; 
2003 actual: 98%; 
2004 actual: 98%; 
2005 target: 97%; 
2005 actual: 94%; 
Met/not met: Not met; 
2006 target: 97%. 

Performance measure: Acceptance rate; 
2001 Actual: N/A; 
2002 actual: 81%; 
2003 actual: 72%; 
2004 actual: 72%; 
2005 target: 75%; 
2005 actual: 71%; 
Met/not met: Not met; 
2006 target: 75%. 

Performance measure: Retention rate with retirements; 
2001 Actual: 91%; 
2002 actual: 91%; 
2003 actual: 92%; 
2004 actual: 90%; 
2005 target: 90%; 
2005 actual: 90%; 
Met/not met: Met; 
2006 target: 90%. 

Performance measure: Retention rate without retirements; 
2001 Actual: 
95%; 
2002 actual: 97%; 
2003 actual: 96%; 
2004 actual: 95%; 
2005 target: 94%; 
2005 actual: 94%; 
Met/not met: Met; 
2006 target: 94%. 

Performance measure: Staff development; 
2001 Actual: N/A; 
2002 actual: 71%; 
2003 actual: 67%; 
2004 actual: 70%; 
2005 target: 72%; 
2005 actual: 72%; 
Met/not met: Met; 
2006 target: 74%. 

Performance measure: Staff utilization; 
2001 Actual: N/A; 
2002 actual: 67%; 
2003 actual: 71%; 
2004 actual: 72%; 
2005 target: 74%; 
2005 actual: 75%; 
Met/not met: Met; 
2006 target: 75%. 

Performance measure: Leadership; 
2001 actual: N/A; 
2002 actual: 75%; 
2003 actual: 78%; 
2004 actual: 79%; 
2005 target: 80%; 
2005 actual: 80%; 
Met/not met: Met; 
2006 target: 80%. 

Performance measure: Organizational climate; 
2001 Actual: N/A; 
2002 actual: 67%; 
2003 actual: 71%; 
2004 actual: 74%; 
2005 target: 75%; 
2005 actual: 76%; 
Met/not met: Met; 
2006 target: 75%. 

Source: GAO. 

Notes: N/A indicates the information is not available or the target is 
not applicable. Our fiscal year 2006 target for the percentage of 
products with recommendations differs from the target we reported for 
this measure in our fiscal year 2006 performance plan posted on our Web 
page in June 2005. On the basis of our performance in fiscal year 2005, 
we increased this target by 5 percentage points. 

[End of table] 

In fiscal year 2005, we accomplished real results for the nation, 
surpassing our financial benefits target for the year and exceeding our 
annual target and all-time record for other (nonfinancial) benefits. 
Our financial benefits of $39.6 billion represents an $83 return on 
every dollar invested in us, and the more than 1,400 other benefits 
resulting from our work helped to improve the efficiency and 
effectiveness of government programs that serve the public. In 
addition, we exceeded our targets for past recommendations implemented 
and new products with recommendations by 5 percentage points and 8 
percentage points, respectively. 

We did not achieve the targets we set for testimonies and timeliness. 
Several testimonies we had scheduled were postponed or canceled so that 
the Congress could turn its attention to the Supreme Court nominations, 
and during the last months of the fiscal year, to Hurricane Katrina and 
its aftermath. However, we believe we served the Congress very well 
during fiscal year 2005. Based on feedback through an electronic survey 
completed by a sample of our congressional clients who requested our 
testimonies and significant products, 96 percent of the responses 
concerning their overall satisfaction with our products were favorable. 
These respondents were pleased with various aspects of our written 
products and testimony statements, such as the professional manner in 
which we conducted our work and responded orally to questions at 
congressional hearings, respectively. We discuss the client feedback 
survey in detail in the section called Focusing on Our Clients. 

Concerning our eight people measures, which we began to hold managers 
accountable for in fiscal year 2005, we are happy to report that we met 
or exceeded our annual targets for all but two of them--new hire rate 
and acceptance rate. Our performance in this area indicates that we did 
a very good job developing, productively using, and managing our staff, 
but need to improve our recruiting and hiring processes a little more, 
which we have taken steps to do. We discuss these actions in appendix 1 
of this report. 

To help us examine trends over time, we also look at 4-year averages 
for all of our results and client measures except the percentage of 
past recommendations implemented because it is a composite that is 
drawn from a number of years rather than an annual percentage. 
Calculating 4-year rolling averages for the other measures minimizes 
the effect of an atypical result in any given year. We consider this 
calculation, along with other factors, when we set our performance 
targets. Table 2 shows that from fiscal year 2001 through fiscal year 
2005 financial and other benefits increased steadily along with the 
percentage of new products with recommendations. The average number of 
testimonies, on the other hand, declined from fiscal years 2003 through 
fiscal year 2004, but has increased in fiscal year 2005. Our ability to 
provide timely products leveled off after fiscal year 2002 and fiscal 
year 2004 at 96 percent, but increased slightly by 1 percentage point 
in fiscal year 2005. 

Table 2: Four-Year Rolling Averages for Selected GAO Measures: 

Results: 

Performance measure: Financial benefits; 
2001: $22.4 billion; 
2002: $26.9 billion; 
2003: $30.7 billion; 
2004: $35.9 billion; 
2005: $39.2 billion. 

Performance measure: Other benefits; 
2001: 683; 
2002: 775; 
2003: 884; 
2004: 986; 
2005: 1,139. 

Performance measure: New products with recommendations; 
2001: 37%; 
2002: 42%; 
2003: 48%; 
2004: 54%; 
2005: 58%. 

Client: 

Performance measure: Testimonies; 
2001: 225; 
2002: 215; 
2003: 205; 
2004: 193; 
2005: 200. 

Performance measure: Timeliness; 
2001: 95%; 
2002: 96%; 
2003: 96%; 
2004: 96%; 
2005: 97%. 

Source: GAO. 

[End of table] 

Regarding our qualitative multiyear performance goals, at the close of 
fiscal year 2005 (the end of our multiyear performance cycle) we met 96 
of our 99 performance goals. In part II of this report, we present 
detailed information about the multiyear performance goals developed to 
measure our progress toward achieving each of our four strategic goals. 

Focusing on Results: 

Focusing on outcomes and the efficiency of the processes needed to 
achieve them is fundamental to accomplishing our mission. The following 
five annual measures indicate that we have fulfilled our mission and 
delivered results that benefit the nation. 

Financial and Other Benefits: 

We describe many of the benefits produced by our work as either 
financial or other (nonfinancial) benefits. Both types of benefits 
result from our efforts to provide information to the Congress that 
helped to (1) change laws and regulations, (2) improve services to the 
public, and (3) promote sound agency and governmentwide management. In 
many cases, the benefits we claimed in fiscal year 2005 are based on 
work we did in past years because it often takes the Congress and 
agencies time to implement our recommendations or to act on our 
findings. 

To claim either type of benefit, our staff must document the connection 
between the benefits reported and the work that we performed. 

Financial Benefits: 

Our findings and recommendations produce measurable financial benefits 
for the federal government when the Congress or agencies act on them 
and the funds are made available to reduce government expenditures or 
are reallocated to other areas. The monetary effect realized can be the 
result of changes in: 

* business operations and activities; 

* the structure of federal programs; or: 

* entitlements, taxes, or user fees. 

For example, financial benefits could result if the Congress were to 
reduce the annual cost of operating a federal program or lessen the 
cost of a multiyear program or entitlement. Financial benefits could 
also result from increases in federal revenues--due to changes in laws, 
user fees, or asset sales--that our work helped to produce. 

In fiscal year 2005, our work generated $39.6 billion in financial 
benefits (see fig. 4). Of this amount, $19 billion (or approximately 48 
percent) resulted from changes in laws or regulations (see fig. 5). 

Figure 4: Financial Benefits GAO Recorded in Fiscal Year 2005: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

2001 Actual: $26.4 billion; 
2002 Actual: $37.7 billion; 
2003 Actual: $35.4 billion; 
2004 Actual: $44.0 billion; 
2005 Target: $37.5 billion; 
2005 Actual: $39.6 billion. 

Source: GAO. 

[End of figure] 

Figure 5: Types of Financial Benefits Recorded in Fiscal Year 2005 from 
Our Work: 

[See PDF for image] - graphic text: 

Pie chart with three slices, representing a total of $39.6 billion in 
financial benefits. 

Information GAO provided to the Congress resulted in statutory or 
regulatory changes: $19.0 billion (48.0%); 

Agencies acted on GAO information to improve services to the public: 
$12.8 billion (32.4%); 

Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO's work: $7.7 billion (19.5%). 

Source: GAO. 

Note: Percentages and amounts do not add due to rounding. 

[End of figure] 

Financial benefits included in our performance measures are net 
benefits--that is, estimates of financial benefits that have been 
reduced by the costs associated with taking the action that we 
recommended. We convert all estimates involving past and future years 
to their net present value and use actual dollars to represent 
estimates involving only the current year. Financial benefit amounts 
vary depending on the nature of the benefit, and we can claim financial 
benefits over multiple years based on a single agency or congressional 
action. To ensure conservative estimates of net financial benefits, 
reductions in operating cost are typically limited to 2 years of 
accrued reductions. Multiyear reductions in long-term projects, changes 
in tax laws, program terminations, or sales of government assets are 
limited to 5 years. Estimates come from non-GAO sources and are reduced 
by any identifiable offsetting costs. These non-GAO sources are 
typically the agency that acted on our work, a congressional committee, 
or the Congressional Budget Office. 

To document financial benefits, our staff complete reports documenting 
accomplishments that are linked to specific products or actions. All 
accomplishment reports for financial benefits are documented and 
reviewed by (1) another GAO staff member not involved in the work and 
(2) a senior executive in charge of the work. Also, a separate unit, 
QCI, reviews all financial benefits and approves benefits of $100 
million or more, which amounted to 94 percent of the total dollar value 
of benefits recorded in fiscal year 2005. Additionally, our IG performs 
an independent review of all accomplishment reports claiming benefits 
of $500 million or more, which represented about 78 percent in fiscal 
year 2005. 

Figure 6 lists several of our major financial benefits reported in 
fiscal year 2005 and briefly describes some of our work contributing to 
financial benefits. 

Figure 6: GAO's Selected Major Financial Benefits Reported in Fiscal 
Year 2005: 

Description: Reduced funding for a missile defense system. In an April 
2003 report, we stated that to successfully develop an effective and 
suitable missile defense system, the Missile Defense Agency must be 
willing to adopt knowledge-based acquisition practices that have made 
other developers successful. Our report acknowledged that the agency's 
development strategy for the Kinetic Energy Interceptor program 
included knowledge-based practices, but concluded that the agency had 
not implemented two important practices: (1) using well-developed 
technologies during system integration and (2) fully testing a system 
before fielding it. In response, the Missile Defense Agency is scaling 
back development of the Kinetic Energy Interceptor program until 
technologies are mature. Over a 5-year period--from fiscal year 2005 
through fiscal year 2009--program funding will be reduced by about $5.2 
billion, which has a net present value of about $4.7 billion. (Goal 2); 
Amount: $4.7 billion. 

Description: Avoided higher costs associated with a nuclear waste 
disposal process. In a June 2003 report, we recommended that DOE pursue 
legislative clarification from the Congress because of a legal 
challenge that threatened DOE's ability to proceed with its less costly 
strategy for treating and disposing of radioactive tank wastes with 
lower concentrations of radioactivity. DOE estimated that pursuing a 
more expensive treatment and disposal strategy suitable for wastes with 
higher concentrations of radioactivity would increase waste treatment 
disposal costs by $55 billion to $60 billion at its Savannah River 
Site. The Fiscal Year 2005 National Defense Authorization Act contained 
a provision that clarified DOE's authority to follow its planned 
treatment and disposal strategy thus avoiding a more costly process. We 
calculated that the net present value of the cost avoidance for fiscal 
years 2005 through 2009 was about $4.5 billion. (Goal 1); 
Amount: $4.5 
billion. 

Description: Improved the Army's force structure. In a report examining 
the Army's force structure, we recommended that the Army establish 
mission criteria to provide a firmer basis for its Strategic Reserve, 
Domestic Support, and Homeland Defense force requirements. Such 
criteria would help to ensure that the Army had the right number and 
types of soldiers available for these purposes. Rather than request 
additional end strength, the Army reconfigured its existing force's 
structure. In April 2003, DOD reported that the Army had included force 
structure changes in its fiscal year 2004 budget, which supported 
increased units for military police; military intelligence; special 
forces; and chemical, civil affairs, and psychological operations. 
Based on this action, the Army has been able to rebalance its force 
structure to create needed units with minimal increases in authorized 
end strength. The amount shown represents the net present value of the 
force structure changes over a 5-year period (fiscal years 2004 through 
2008). (Goal 2); 
Amount: $3.4 billion. 

Description: Reduced the cost of federally subsidized housing projects. 
We determined that the Department of Housing and Urban Development 
(HUD) had not developed the systems it needed to track the status of 
unexpended balances in its project-based Section 8 housing program and 
therefore could not use this information to help manage the program and 
formulate budget requests for it. As a result of our work, the Congress 
required HUD to better enforce the legislative provisions requiring the 
recapture of capital funds not being utilized by public housing 
authorities. In fiscal year 2005, we documented--using HUD data--that a 
financial benefit of about $2.7 billion in current dollars resulted 
from HUD's recapture of about $2.5 billion of fiscal year 2003 dollars. 
(Goal 1); 
Amount: $2.7 billion. 

Description: Avoided costs associated with higher payment rates at 
skilled nursing homes. In 2002, we assessed the impact of a 16.6 
percent increase in Medicare's daily rate for skilled nursing 
facilities on nurse staffing ratios. Our analysis showed that nurse 
staffing ratios changed little from April 1, 2001, through September 
30, 2002--the period during which the rate increase was in effect. In 
fiscal year 2003, the cost to the federal government of reinstating the 
payment rate increase was approximately $1 billion per year. Since we 
issued our report, the Congress has considered reinstating the rate 
increase, but it has chosen not to, largely on the basis of our 
analysis. The net present value of the annual cost avoidance for fiscal 
years 2004 and 2005 is $2 billion. (Goal 1); 
Amount: $2.0 billion. 

Description: Increased tax revenues. We reported that the Internal 
Revenue Service (IRS) did not have systems or procedures in place to 
allow it to identify and actively pursue unpaid tax cases that may have 
some collection potential. Based on our work, IRS has taken action to 
better assess the potential for collecting unpaid tax assessment cases 
and has used that information to better target its collection efforts. 
Specifically, in 2004 IRS began implementing a sophisticated modeling 
technology to identify productive and less productive cases to ensure 
that its resources are devoted to cases with a higher likelihood of 
collection and to help prevent premature suspension of collection 
efforts. IRS's analysis of the yield on collection cases after 
employing this modeling in fiscal year 2004 shows that this yield 
increased by about $1.8 billion (in current year dollars), or 8.4 
percent from the previous year (fiscal year 2003), without significant 
staffing level increases. (Goal 3); 
Amount: $1.8 billion. 

Description: Ensuring continued investment in the General Services 
Administration's (GSA) online purchasing system. As of 2003, GSA had 
spent $84 million to develop, implement, and maintain Advantage, a 
system for ordering products and services online. However, 5 years 
after the system was launched, only 35 percent of all government-
contracted vendors participated in the program, and agencies were 
largely using the system to compare pricing. To ensure GSA's level of 
investment matched customer needs, we recommended that the agency 
develop a business case for a system such as Advantage, and in January 
2005, GSA selected a new business strategy that would significantly 
enhance the system's capabilities to serve as a broker between buyers 
and suppliers and provide agencies with an automated tool for 
formulating acquisition requirements and developing requests for 
quotes. GSA projects over $1.5 billion in financial benefits to result 
from electronic transactions, spend analysis (analysis of expenditures 
that shows how money is spent on goods and services), a searchable 
procurement data repository, and competitive pricing. This financial 
benefit has a net present value of just over $1.3 billion. (Goal 3); 
Amount: $1.3 billion. 

Description: Reduced Navy and Air Force appropriations. DOD policy 
requires the Defense Working Capital Fund to maintain cash levels to 
cover 7 to 10 days of operational cash and 6 months of capital asset 
disbursements. Our analysis showed that the January 2004 reported 
actual cash balance for the Air Force Working Capital Fund exceeded the 
10-day cash requirement by about $1.5 billion, and the Navy's Working 
Capital Fund reported actual cash balance exceeded the budgeted cash 
balance by $659 million and $408 million at the end of fiscal years 
2002 and 2003, respectively. The Congress reduced the Navy and Air 
Force fiscal year 2005 Operation and Maintenance appropriations by just 
under $1.3 billion due to excessive cash amounts. (Goal 3); 
Amount: 
$1.3 billion. 

Description: Eliminated the National Aeronautics and Space 
Administration's (NASA) Prometheus 1 project. We issued a report 
questioning whether NASA had established the initial justification for 
its investment in the Prometheus 1 project and how the agency planned 
to ensure that critical nuclear power and propulsion system 
technologies were sufficiently developed to support deep space probes 
like the Jupiter Icy Moons Orbiter. We also reported that the approved 
Prometheus 1 funding profile was inadequate to support the planned 
mission--a launch to Jupiter's Icy Moons in 2015. NASA has subsequently 
deferred the Jupiter Icy Moons Orbiter mission indefinitely, reducing 
the agency's funding needs by about $1.22 billion through fiscal year 
2009; the net present value of this reduction is over $1.1 billion. 
(Goal 3); 
Amount: $1.1 billion. 

Description: Reduced the budget request for a new foreign assistance 
program. In March and June 2004, we provided the Congress with 
information to help it assess the President's $2.5 billion fiscal year 
2005 budget request for the Millennium Challenge Account--a new foreign 
assistance program intended to provide economic assistance to countries 
that demonstrate a commitment to ruling justly, investing in people, 
and encouraging economic freedom. Our work provided the Congress with a 
framework for identifying relationships and tradeoffs between funding 
levels, compact length, and number of compacts (i.e., agreements). Our 
analysis indicated that by reducing assistance target levels, the 
length of compacts or both with participating countries, the program 
could operate at a lower funding level. We also estimated the effect of 
funding compacts partly from future appropriations. Our work 
facilitated the Congress's decision to reduce the appropriation for the 
Millennium Challenge Account in fiscal year 2005 to $1.5 billion. (Goal 
2); 
Amount: $1.0 billion. 

Source: GAO. 

[End of table] 

Other Benefits: 

Many of the benefits that result from our work cannot be measured in 
dollar terms. During fiscal year 2005, we recorded a total of 1,409 
other benefits (see fig. 7). 

Figure 7: Other Benefits GAO Recorded in Fiscal Year 2005: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

2001 Actual: 799; 
2002 Actual: 906; 
2003 Actual: 1,043; 
2004 Actual: 1,197; 
2005 Target: 1,000; 
2005 Actual: 1,409. 

Source: GAO. 

[End of figure] 

We documented 75 instances where the information we provided to the 
Congress resulted in statutory or regulatory changes, 595 instances 
where federal agencies used our information to improve services to the 
public, and 739 instances where agencies improved core business 
processes or governmentwide reforms as a result of our work. (See fig. 
8.) These actions spanned the full spectrum of issues, from identifying 
that some soldiers had not been reimbursed for military-related travel 
costs they personally incurred to highlighting weaknesses in SSA's 
policies for verifying birth certificates when issuing replacement 
Social Security cards. In figure 9 we provide examples of some of the 
other benefits we claimed as accomplishments in fiscal year 2005. The 
laws that we cite in the first section of this figure were passed in 
fiscal year 2005. 

Figure 8: Types of Other Benefits Recorded in Fiscal Year 2005 from Our 
Work: 

[See PDF for image] - graphic text: 

Pie chart with three slices, representing a total of 1,409 other 
benefits. 

Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO's work: 739 (52.4%); 

Agencies acted on GAO information to improve services to the public: 
595 (42.2%); 

Information GAO provided to the Congress resulted in statutory or 
regulatory changes: 75 (5.3%). 

Source: GAO. 

Note: Percentages do not add due to rounding. 

[End of figure] 

Figure 9: GAO's Selected Other (Nonfinancial) Benefits Reported in 
Fiscal Year 2005: 

Other benefits that helped to change laws: 

Intelligence Reform and Terrorism Prevention Act of 2004 (Pub. L. No. 
108-458): 

Our work is reflected in this law in different ways. In our May 2004 
testimony on the use of biometrics for aviation security, we reported 
on the need to identify how biometrics will be used to improve aviation 
security prior to making a decision to design, develop, and implement 
biometrics. Using information from our statement, the House introduced 
a bill on July 22, 2004, directing the Transportation Security 
Administration (TSA) to establish system requirements and performance 
standards for using biometrics, and to establish processes (1) to 
prevent individuals from using assumed identities to enroll in a 
biometric system and (2) to resolve errors. These provisions were later 
included in an overall aviation security bill and were eventually 
included in the Intelligence Reform and Terrorism Prevention Act of 
2004, enacted in December 2004. (Goal 2). We conducted a body of work 
assessing the physical screening of airport passengers and their 
checked baggage. We found that the installation of systems that are in 
line with airport baggage conveyor systems may result in financial 
benefits according to TSA estimates for nine airports. We also found 
that the effectiveness of the advance passenger screening under the 
process known as Secure Flight was not certain. TSA agreed to take 
corrective actions in these areas, and the Congress required TSA in the 
Intelligence Reform and Terrorism Protection Act to prepare a plan and 
guidelines for installing in-line baggage screening systems, and 
enacted measures to promote Secure Flight's development and 
implementation. (Goal 1). 

Real ID Act of 2005 (Pub. L. No. 109-13): 

We reported on the verification of identity documents for drivers' 
licenses, noting that visual inspection of key documents lent itself to 
possible identity fraud. To demonstrate this, our investigators were 
able to obtain licenses in two states using counterfeit documents and 
the Social Security numbers of deceased persons. The Congress 
established federal identification standards for state drivers' 
licenses and other such documents and mandated third- party 
verification of identity documents presented to apply for a driver's 
license. (Goal 1). 

Ronald W. Reagan National Defense Authorization Act for Fiscal Year 
2005 (Pub. L. No. 108-375): 

We assisted the Congress in crafting major improvements to a program 
intended to compensate individuals who worked in DOE facilities and 
developed illnesses related to radiation and hazardous materials 
exposure. In a 2004 report, we identified features of the originally 
enacted program that would likely lead to inconsistent benefit outcomes 
for claimants, in part because the program depended on the varying 
state workers compensation systems to provide some benefits. We also 
presented several options for improving the consistency of benefit 
outcomes and a framework for assessing these options. When the Congress 
enacted the Ronald W. Reagan National Defense Authorization Act for 
Fiscal Year 2005, it revamped this energy employees benefit program. 
Among other changes, this law federalized the payment of worker 
compensation benefits for eligible energy contractor employees and 
provided a schedule of uniform benefit payments. (Goal 1). 

Federal Lands Recreation Enhancement Act (Pub. L. No. 108-447): 

Our work over the past several years has helped the Congress to 
establish and assess the impacts of the recreational fee demonstration 
program. Under this trial program, the Congress authorized the National 
Park Service, the Fish and Wildlife Service, the Bureau of Land 
Management, and the Forest Service to charge fees to visitors to, among 
other things, reduce the maintenance backlog at federal parks and 
historic places and protect these lands from visitor impacts. Since the 
program's inception in 1996, we have identified issues that needed to 
be addressed to improve the program's effectiveness that included 
providing (1) a more permanent source of funds to enhance stability, 
since the current program had to be reauthorized every 2 years; (2) the 
participating agencies with greater flexibility in how and where they 
apply fee revenues; and (3) improvements in interagency coordination in 
the collection and use of revenue fees to better serve visitors by 
making the payment of fees more convenient and equitable and reducing 
visitor confusion about similar or multiple fees being charged at 
nearby or adjacent federal recreational sites. As a result of this body 
of work, the Congress addressed these issues by passing the Federal 
Lands Recreation Enhancement Act in December 2004. This act permits 
federal land management agencies to continue charging fees at 
campgrounds, rental cabins, high-impact recreation areas, and day-use 
sites that have certain facilities. The act also provides for a 
nationally consistent interagency program, more on-the-ground 
improvements at recreation sites across the nation, enhanced visitor 
services, a new national pass for use across interagency federal 
recreation sites and services, and public involvement in the program. 
(Goal 1). 

Consolidated Appropriations Act, 2005 (Pub. L. No. 108-447): 

Our work is reflected in this law in different ways. At the time of our 
August 2003 report, the original 1999 expiration date for the franchise 
fund pilots operating at the Departments of Commerce, Veterans Affairs, 
Health and Human Services, the Interior, and the Treasury and at the 
Environmental Protection Agency had been extended three times. These 
franchise funds, authorized by the Government Management Reform Act of 
1994, are part of a group of 34 intragovernmental revolving funds that 
were created to provide common administrative support services required 
by many federal agencies. For example, the Commerce Franchise Fund's 
business line provides IT infrastructure support services to the 
agency. We concluded that increasing the period of authorization would 
help ease concerns of current and potential clients about franchise 
fund stability and might allow franchise funds to add new business 
lines, and we suggested that the authorizations be extended for longer 
periods. The Congress provided permanent authority to the Treasury 
franchise fund in the Consolidated Appropriations Act, 2005, passed on 
December 8, 2004. (Goal 3); In 2003, we reported that most agencies 
could not retain the proceeds from the sale of unneeded property and 
this acted as a disincentive to disposing of unneeded property. We 
stated in our high- risk report on federal real property that it may 
make sense to permit agencies to retain proceeds for reinvestment in 
real property where a need exists. Subsequently, in the Consolidated 
Appropriations Act, 2005, the Congress authorized the Administrator of 
GSA to retain the net proceeds from the conveyance of real and related 
personal property. These proceeds are to be deposited into the Federal 
Buildings Fund and are to be used as authorized for GSA's real property 
capital needs. (Goal 1). In December 2003, we reported that 184 out of 
213 Alaska Native villages are affected, to some extent, by flooding 
and erosion. However, these villages often have difficulty qualifying 
for federal assistance to combat their flooding and erosion problems. 
In our report, we recommended that the Denali Commission adopt a policy 
to guide investment decisions and project designs in villages affected 
by flooding and erosion. In this legislation, the Congress provided the 
Secretary of the Army authority to carry out "structural and non- 
structural projects for storm damage prevention and reduction, coastal 
erosion, and ice and glacial damage in Alaska, including relocation of 
affected communities and construction of replacement facilities." (Goal 
1). To improve the federal government's ability to collect billions of 
dollars of outstanding criminal debt, we recommended in a 2001 report, 
that the Department of Justice work with other agencies involved in 
criminal debt collection, including the Administrative Office of the 
U.S. Courts, the Department of the Treasury (Treasury), and the Office 
of Management and Budget (OMB), to develop a strategic plan that would 
improve interagency processes and coordination with regard to criminal 
debt collection activities. The conference report that accompanied the 
Consolidated Appropriations Act, 2005, directed the Attorney General to 
assemble an interagency task force for the purpose of better managing, 
accounting for, reporting, and collecting criminal debt. (Goal 3). 

Other benefits that helped to improve services to the public: 

Encouraged improvements in the process for ensuring states' compliance 
with education laws for the disabled: 

Our report found that the Department of Education's (Education) system 
for resolving noncompliance with the Individuals with Disabilities in 
Education Act is protracted. We found that resolution of noncompliance 
cases often takes several years, in part because Education took a year 
on average from the time it identified noncompliance to issue a report 
citing the noncompliance. We therefore recommended that Education 
improve its system of resolving noncompliance by shortening the amount 
of time it takes to issue a report of noncompliance and by tracking 
changes in response times under the new monitoring process. In response 
to our recommendation, Education has instituted an improved process for 
managing and tracking the various phases of the monitoring process, 
which includes the creation of a database to facilitate this tracking. 
This new tracking system will enable Education to better monitor the 
status of existing noncompliance, and thus enable the department to 
take appropriate action when states fail to come into compliance in a 
timely manner. (Goal 1). 

Identified a weakness in Medicare's telephone assistance service: 

In 2004, we found that the 24-hour 1-800-MEDICARE help line, operated 
by the Centers for Medicare & Medicaid Services (CMS), did not answer 
10 percent of the calls we placed to test its accuracy, often because 
it automatically transferred some calls to claims administration 
contractors that were not open for business at the time of the call. 
This call transfer process prohibited callers from accessing 
information during nonbusiness hours, even though 1-800-MEDICARE 
operates 24-hours a day. As a result, we recommended that CMS revise 
the routing procedures of 1-800-MEDICARE to ensure that calls are not 
transferred or referred to claims administration contractors' help 
lines during nonbusiness hours. In response, CMS finished converting 
its call routing procedures. As a result, calls placed after normal 
business hours will be routed to the main 1-800-MEDICARE help line for 
assistance. (Goal 1). 

Highlighted the need for increased security at a federal disease 
research facility: 

USDA scientists at the Plum Island Animal Disease Center research 
contagious animal diseases that have been found in other countries. The 
mission of the facility, now administered by DHS, is to develop 
strategies for protecting the nation's animal industries and exports 
from these foreign animal diseases. In our September 2003 report, 
Combating Bioterrorism: Actions Needed to Improve Security at Plum 
Island Animal Disease Center, we made several recommendations to 
improve security at the facility and reduce vulnerability to terrorist 
attacks. Among other things, we recommended that the Secretary of 
Homeland Security, in consultation with the Secretary of Agriculture, 
enhance incident response capability by increasing the size of the 
guard force. DHS has informed us that this has been completed. 
According to the Director of Plum Island, DHS has more than doubled the 
number of guards assigned on each shift on Plum Island. (Goal 1). 

Other benefits that helped to promote sound agency and governmentwide 
management: 

Recommended a process to increase the efficiency of DOD procurements: 

DOD spending on service contracts approaches $100 billion annually, but 
DOD's management of services procurement is inefficient and ineffective 
and the dollars are not always well spent. Many private companies have 
changed management practices based on analyzing spending patterns and 
coordinating procurement efforts in order to achieve major savings. We 
recommended that DOD adopt the effective spend analysis processes used 
by these leading companies and use technology to automate spend 
analysis to make it repeatable. In response, DOD is developing new 
technology to do that. According to DOD and contractor project 
managers, one phase of the project was completed in December 2004. In 
March 2005, DOD approved a business case analysis to seek follow-on 
funding for developing a DOD-wide spend analysis system. (Goal 2). 

Improved the Air Force's oversight of purchase card transactions: 

As part of our audit of Air Force purchase card controls, we identified 
transactions that Air Force officials acknowledged to be fraudulent as 
well as potentially fraudulent transactions that the Air Force had not 
identified. To improve Air Force oversight of purchase card activity 
and facilitate the identification of systemic weaknesses and 
deficiencies in existing internal control and the development of 
additional control activities, we recommended that the Air Force 
establish an agencywide database of known purchase card fraud cases. In 
lieu of establishing a separate agencywide database, during fiscal year 
2003, the Air Force Office of Special Investigations initiated 
quarterly reporting on its purchase card investigations to the DOD IG 
for macro-level analysis of systemic weaknesses in the program. Our 
ongoing collaboration with the DOD IG on DOD's purchase card program 
confirmed that the Air Force's Office of Special Investigations is 
working effectively with DOD's IG on data- mining techniques for 
detection of potentially improper and fraudulent purchase card 
transactions. As a result of our work, the Air Force has taken action 
to reduce the financial risk associated with undetected fraud and abuse 
in its purchase card program. (Goal 3). 

Encouraged the Census Bureau to produce training materials in other 
languages: 

For the 2000 Census, the United States Census Bureau (Bureau) printed 
material used to train census workers only in English, except in Puerto 
Rico where training materials were available in Spanish. However, to 
better prepare census workers--some of whom speak Spanish as their 
first language--to locate migrant farm workers and other hard-to-count 
groups, we recommended that the Bureau consider providing training 
materials in languages other than English to targeted areas. In 
response to our recommendation, the Bureau is researching foreign- 
language data collection methods as part of its preparations for the 
2006 Census test and, more generally, plans to identify areas and 
operations that will require in-language training materials for areas 
with very large, new migrant populations where it will not be possible 
to hire bilinguals. Moreover, the Bureau's June 2005 request for 
proposals for a Field Data Collection Automation System includes a 
requirement for the contractor to provide training applications and 
materials in English and Spanish for the handheld computers enumerators 
are to use to count nonrespondents. (Goal 3). 

Source: GAO. 

[End of table] 

In addition to the financial and other benefits claimed in fiscal year 
2005 from our work, we also achieved the following results. 

Past Recommendations Implemented: 

One way we measure our effect on improving the government's 
accountability, operations, and services is by tracking the percentage 
of recommendations that we made 4 years ago that have since been 
implemented. At the end of fiscal year 2005, 85 percent of the 
recommendations we made in fiscal year 2001 had been implemented (see 
fig. 10), primarily by executive branch agencies. Putting these 
recommendations into practice will generate tangible benefits for the 
nation in the years ahead. 

Figure 10: Percentage of Past Recommendations Implemented: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

Four-year implementation rate: 

2001 Actual: 79%; 
2002 Actual: 79%; 
2003 Actual: 82%; 
2004 Actual: 83%; 
2005 Target: 80%; 
2005 Actual: 85%. 

Source: GAO. 

[End of figure] 

The 85 percent implementation rate for fiscal year 2005 exceeded our 
target for the year by 5 percentage points as well as our actual 
performance for the last 4 years. As figure 11 indicates, agencies need 
time to act on recommendations. Therefore, we assess recommendations 
implemented after 4 years, the point at which experience has shown that 
if a recommendation has not been implemented, it is not likely to be. 

Figure 11: Cumulative Implementation Rate for Recommendations Made in 
Fiscal Year 2001: 

[See PDF for image] - graphic text: 

Bar graph with four items. 

After 1 year: 20%; 
After 2 years: 31%; 
After 3 years: 48%; 
After 4 years: 85%. 

Source: GAO. 

[End of figure] 

New Products Containing Recommendations: 

This year, about 63 percent of the 637 written products we issued 
(excluding testimonies) contained recommendations. (See fig. 12.) We 
track the percentage of new products with recommendations because we 
want to encourage staff to develop recommendations that when 
implemented by the Congress and agencies, produce financial and other 
benefits for the nation. However, by setting our target at 55 percent, 
we recognize that our products do not always include recommendations 
and that the Congress and agencies often find such informational 
reports just as useful as those that contain recommendations. Our 
informational reports have the same analytical rigor and meet the same 
quality standards as those with recommendations and, similarly, can 
help to bring about significant financial and other benefits. Hence, 
this measure allows us ample leeway to respond to requests that result 
in reports without recommendations. 

Figure 12: Percentage of New Products with Recommendations: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

2001 Actual: 44%; 
2002 Actual: 53%; 
2003 Actual: 55%; 
2004 Actual: 63%; 
2005 Target: 55%; 
2005 Actual: 63%. 

Source: GAO. 

[End of figure] 

Multiyear Performance Goals: 

In addition to our annual measures, we track our progress on 99 
multiyear performance goals. At the end of fiscal year 2005, we met all 
but 3 of our performance goals. Our performance goals measure the 
extent to which we did the work we had planned to do to support the 
Congress during fiscal years 2004 and 2005. Our senior managers 
developed these performance goals at the beginning of the assessment 
cycle (fiscal year 2004) based on their knowledge of specific subject 
areas and in consultation with our clients and customers. However, 
because congressional or GAO priorities can change over the period 
covered by these performance goals, we may not be able to meet some of 
them because resources had to be shifted away from planned work to 
address new or more urgent priorities. In such circumstances, we do not 
necessarily view an unmet performance goal as a problem. Rather, we 
believe it shows that we are responsive in carrying out our mission of 
serving the Congress and the nation and devoting our resources to 
efforts of critical importance. We consider these performance goals 
qualitative rather than quantitative because our senior managers 
determine whether enough work (i.e., key efforts) has been performed to 
achieve a performance goal. In Part II of this report, we list by 
strategic goal the multiyear qualitative performance goals supporting 
each strategic objective and indicate whether the performance goal was 
met. 

Focusing on Our Clients: 

To fulfill the Congress's information needs, we strive to deliver the 
results of our work orally as well as in writing at a time agreed upon 
with our clients. Our performance this year indicates that we assisted 
our clients--the Congress--well, though we missed our target on both 
the number of hearings we participated in and our ability to deliver 
products on time. 

Testimonies: 

Our clients often invite us to testify on our current and past work 
when it addresses issues that congressional committees are examining 
through the hearing process. During fiscal year 2005, experts from our 
staff testified at 179 congressional hearings covering a wide range of 
complex issues (see fig. 13). For example, our senior executives 
testified on improving the security of nuclear material, federal 
oversight of mutual funds, and the management and control of DOD's 
excess property. (See the list of selected testimony issues below for a 
summary of issues we testified on by strategic goal in fiscal year 
2005.) Over 70 of our testimonies were related to high-risk areas and 
programs, which are discussed in the section called GAO's High-Risk 
Program. 

However, in spite of our willingness to testify for our clients, we did 
not meet our fiscal year 2005 target of 185 testimonies, primarily 
because congressional committees either canceled or postponed several 
hearings at which our senior executives were scheduled to testify to 
focus instead on the Supreme Court nominations and Hurricane Katrina. 

Figure 13: Testimonies: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

Hearings at which GAO testified: 

2001 Actual: 151; 
2002 Actual: 216; 
2003 Actual: 189; 
2004 Actual: 217; 
2005 Target: 185; 
2005 Actual: 179. 

Source: GAO. 

[End of figure] 

Selected Testimony Issues: Fiscal Year 2005: 

Goal 1: 

Address Challenges to the Well-Being and Financial Security of the 
American People: 

* Head Start grants management; 
* Preparing for an influenza pandemic; 
* Overseeing the U.S. food supply; 
* Retirement options for seniors; 
* Long-term health care costs and government budgets; 
* Energy demand in the 21st century; 
* Postal service reform legislation; 
* Veterans' disability claims; 
* Social Security reform; 
* Wildland fire management; 
* Medicaid financing issues; 
* Meeting the future demand for energy in the United States; 
* National air traffic system; 
* Amtrak's Acela train; 
* Protecting nuclear material handled at science and environmental 
sites; 
* Providing services to seriously injured veterans; 
* Rural housing service; 
* Federal real property; 
* Endangered Species Act; 
* Federal oversight of the E-rate program. 

Goal 2: 

Respond to Changing Security Threats and the Challenges of 
Globalization: 

* Army's modular forces; 
* U.S. passport fraud; 
* Cargo security strategies; 
* Acquisition challenges facing the Navy's DD(X) destroyer program; 
* Tactical aircraft modernization; 
* DOD security clearances; 
* Oil for Food program; 
* Unmanned aerial vehicles; 
* Condition of Coast Guard aircraft and ships used in deep waters; 
* Managing violations of restricted air space; 
* Federal oversight of mutual funds to ensure investor security; 
* Port security; 
* Protecting U.S. officials overseas from terrorist attacks; 
* DOD's business transformation; 
* Transportation security issues; 
* Implementing laws that protect the security of information; 
* DOD's national security personnel system; 
* Acquisition challenges facing the Army's future combat systems 

Goal 3: 

Help Transform the Federal Government's Role and How It Does Business: 

* Long-term fiscal issues affecting the federal government; 
* Gaps in military pay and benefits; 
* 21st century challenges for the federal government; 
* Air Force procurement protests; 
* Human capital transformation at DHS; 
* Preparing for emergencies at federal agencies; 
* Space shuttle workforce issues; 
* Reducing the tax gap; 
* U.S. government financial statements; 
* Management and control of DOD's excess property; 
* Pricing federal multiple award contracts; 
* Performance budgeting; 
* High-risk federal programs; 
* Army National Guard travel reimbursement issues; 
* Space acquisitions and investment planning; 
* Improper Payments Information Act; 
* Agencies' continuity of operations plans; 
* DHS's Student and Exchange Visitor Information System. 

Source: GAO. 

[End of figure] 

Timeliness: 

We track the percentage of our products that are delivered on or before 
the day we agreed to with our clients because it is critical that our 
work be done on time for it to be used by policymakers. As shown in 
figure 14, in fiscal year 2005 we missed our target of providing 98 
percent of them by the promised date. 

Figure 14: Timeliness: 

[See PDF for image] - graphic text: 

Bar graph with six items. 

Percentage of products on time. 

2001 Actual: 95%; 
2002 Actual: 96%; 
2003 Actual: 97%; 
2004 Actual: 97%; 
2005 Target: 98%; 
2005 Actual: 97%. 

Source: GAO. 

[End of figure] 

As part of its periodic review of our performance measures, the IG 
independently examined our process for calculating product timeliness 
and found evidence that some staff may be inconsistently applying the 
policy for changing a committed issue date, which ultimately affects 
the reliability of this measure. The IG also noted that the internal 
reporting approach may not adequately represent the most complete 
assessment of the requesters' satisfaction with our ability to deliver 
products when our clients need them. The IG recommended that GAO 
management strengthen the guidance for determining timeliness and 
consider developing an alternative, more independent measure to gauge 
performance in this area. 

Therefore, beginning in fiscal year 2006, we will use the results of 
our client feedback survey as a barometer for how well we are getting 
our products to the Congress when it needs them. We will use this 
survey as the primary data source for our external timeliness measure 
because the responses come directly from our clients and are free from 
significant input by our staff. However, we will continue to use as a 
supplemental check to the survey our current process for determining 
timeliness and have already taken steps to clarify the guidance related 
to our process for changing committed issue dates. Both indicators will 
help to ensure that teams supporting strategic goals 1 through 3 
continue to complete engagements on the date mutually agreed to with 
our clients. 

Since March 2002, we have been pilot testing an e-mail survey that we 
send to a portion of our clients for direct, independent feedback from 
them on their satisfaction with the quality and timeliness of our work 
and their interactions with our staff. We tally responses from the 
survey we send to key staff working for the requesters of our testimony 
statements and our more significant written products (e.g., engagements 
assigned a risk level of "high" by our senior management[Footnote 5] 
and those requiring an investment of 500 staff days or more). Each 
survey asks the client whether the product was delivered on time. 
Because our products often have multiple requesters, we survey more 
than one congressional staff person per product. In fiscal year 2005, 
we sought feedback on 42 percent of the products we issued that year 
and had a 30 percent response rate from the congressional staff 
surveyed. Overall, 93 percent of those responding to the survey either 
strongly or generally agreed that our products were delivered on time. 

Focusing on Our People: 

We could not have performed as well as we did in fiscal year 2005 
without the support and commitment of our highly professional, 
multidisciplinary staff. Our ability to hire, develop, retain, and lead 
staff is critical to fulfilling our mission of serving the Congress and 
the American people. 

Since 2002, we have refined our processes for measuring how well we 
manage our human capital and have benchmarked our performance in this 
area. Fiscal year 2005 was the first year we held our managers 
accountable for our eight people measures, and we met six of them-- 
slightly missing our targets for new hire rate and acceptance rate by 
only a few percentage points. These measures are directly linked to our 
goal 4 strategic objective of becoming a professional services employer 
of choice. For more information about our people measures, see 
Verifying and Validating Performance Data in part II of this report. 

New Hire Rate and Acceptance Rate: 

Our new hire rate is the ratio of the number of people hired to the 
number we planned to hire. Annually, we develop a workforce plan that 
takes into account projected workload changes, as well as other 
changes, such as retirements, other attrition, promotions, and skill 
gaps. The workforce plan for the upcoming year specifies the number of 
planned hires and, for each new hire, specifies the skill type and the 
level. The plan is conveyed to each of our units to guide hiring 
throughout the year. Progress toward achieving the workforce plan is 
monitored monthly by the Chief Operating Officer and the Chief 
Administrative Officer. Adjustments to the workforce plan are made 
throughout the year, if necessary, to reflect changing needs and 
conditions. In fiscal year 2005, our adjusted plan was to hire 281 
staff. However, we were only able to bring on board 263 staff by year- 
end. Our acceptance rate measure is a proxy for GAO's attractiveness as 
an employer and an indicator of our competitiveness in bringing in new 
talent. It is the ratio of the number of applicants accepting offers to 
the number of offers made. Table 3 shows that we missed the targets we 
set for new hire rate and acceptance rate by 3 percentage points and 4 
percentage points, respectively. Our calculations for each of these 
measures do not include offers extended to applicants for fiscal year 
2005 vacancies that were accepted but for which applicants will not 
report for duty until the first quarter of fiscal year 2006. In 
addition, we were unable to fill by year-end critical positions for 
accountants/auditors due to market competition. 

To more effectively anticipate and acquire the human resources we need 
now and in the future, we took steps to improve our recruitment 
strategy by expanding the focus of our student employment program. 
Rather than targeting our recruitment efforts solely at graduate 
students who are available to work with us during the summer, we 
expanded the program to include undergraduate students, and we will 
offer both groups employment opportunities in the fall and spring as 
well as during the summer. Our fiscal year 2006 recruitment strategy, 
developed in fiscal year 2005, includes (1) using targeted recruiting 
for special skill sets and hard-to-fill positions with an emphasis on 
diversity and (2) implementing year-round internships, cooperative 
education agreements with five local universities, and governmentwide 
flexibility for noncompetitive appointments into our Professional 
Development Program. We also launched a pilot program that offers 
employment to a limited number of undergraduate cooperative education 
program participants in September 2005. 

Table 3: Actual Performance and Targets Related to Our New Hire and 
Acceptance Rate Measures: 

Performance measure: New hire rate; 
2001 Actual: N/A; 
2002 Actual: 96%; 
2003 Actual: 98%; 
2004 Actual: 98%; 
2005 Target: 97%; 
2005 Actual: 94%. 

Performance measure: Acceptance rate; 
2001 Actual: N/A; 
2002 Actual: 81%; 
2003 Actual: 72%; 
2004 Actual: 72%; 
2005 Target: 75%; 
2005 Actual: 71%. 

Source: GAO. 

Note: N/A indicates the data are not available. 

[End of table] 

Retention Rate: 

We continuously strive to make GAO a place where people want to work. 
Once we have made an investment in hiring and training people, we would 
like them to stay with us. This measure is one indicator of whether we 
are attaining this objective. We calculate this measure by taking 100 
percent of the on-board strength minus the attrition rate, where 
attrition rate is defined as the number of separations divided by the 
average on-board strength. We calculate this measure with and without 
retirements. Table 4 shows that we met each of our retention rate 
targets in fiscal year 2005. With the exception of fiscal year 2002 and 
2003, our actual retention rate excluding and including retirements, 
respectively, has been relatively flat over the last 5 years. 

Table 4: Actual Performance and Targets Related to Our Retention Rate 
Measures: 

Performance measure: Retention rate with retirements; 
2001 Actual: 91%; 
2002 Actual: 91%; 
2003 Actual: 92%; 
2004 Actual: 90%; 
2005 Target: 90%; 
2005 Actual: 90%. 

Performance measure: Retention rate without retirements; 
2001 Actual: 95%; 
2002 Actual: 97%; 
2003 Actual: 96%; 
2004 Actual: 95%; 
2005 Target: 94%; 
2005 Actual: 94%. 

Source: GAO. 

[End of table] 

Staff Development, Staff Utilization, Leadership, and Organizational 
Climate: 

One way that we measure how well we are supporting our staff and 
providing an environment for professional growth and improvement is 
through our annual employee feedback survey. This Web-based survey, 
which is conducted by an outside contractor to ensure the 
confidentiality of every respondent, is administered to all of our 
employees once a year. Through the survey, we encourage our staff to 
indicate what they think about GAO's overall operations, work 
environment, and organizational culture and how they rate our managers-
-from the immediate supervisor to the Executive Committee--on key 
aspects of their leadership styles. The survey consists of over 100 
questions. 

In fiscal year 2005, 80 percent of our employees completed the survey, 
and we met or slightly exceeded our targets for all four measures (see 
table 5). We first conducted this survey in fiscal year 2002 and since 
then favorable responses to questions related to these measures have 
increased each year. Our scores this year averaged 8.5 percent higher 
than the latest Office of Personnel Management governmentwide survey 
and 5.25 percent higher than the latest private industry survey. In 
fiscal year 2005, we also added questions to assess employees' 
satisfaction with us. The results of the responses to these questions 
were used by the Partnership for Public Service (Partnership) to 
determine our standing in the annual Best Places to Work in the Federal 
Government rankings. In September 2005, we received an award from the 
Partnership for our fourth place ranking. 

Table 5: Actual Performance and Targets Related to Our Measures of 
Employee Satisfaction with Staff Development, Staff Utilization, 
Leadership, and Organizational Climate: 

Performance measure: Staff development; 
2001 Actual: N/A; 
2002 Actual: 71%; 
2003 Actual: 67%; 
2004 Actual: 70%; 
2005 Target: 72%; 
2005 Actual: 72%. 

Performance measure: Staff utilization; 
2001 Actual: N/A; 
2002 Actual: 67%; 
2003 Actual: 71%; 
2004 Actual: 72%; 
2005 Target: 74%; 
2005 Actual: 75%. 

Performance measure: Leadership; 
2001 Actual: N/A; 
2002 Actual: 75%; 
2003 Actual: 78%; 
2004 Actual: 79%; 
2005 Target: 80%; 
2005 Actual: 80%. 

Performance measure: Organizational climate; 
2001 Actual: N/A; 
2002 Actual: 67%; 
2003 Actual: 71%; 
2004 Actual: 74%; 
2005 Target: 75%; 
2005 Actual: 76%. 

Source: GAO. 

Note: N/A indicates the data are not available. 

[End of table] 

Focusing on Our Internal Operations: 

Our mission and people are supported by our internal administrative 
services, including information management, building management, 
knowledge services, human capital, financial management, and other 
services. Beginning in fiscal year 2006, we will begin using two new 
performance measures to assess our performance related to how well our 
internal administrative services help employees get their jobs done or 
improve employees' quality of work life. These measures are directly 
related to our goal 4 strategic objectives of continuously enhancing 
GAO's business and management processes and becoming a professional 
services employer of choice. We will use information from our annual 
customer satisfaction survey to set targets and assess our performance 
for both of these measures, which are shown in table 6 along with 
baseline data that we recorded for them in fiscal year 2003 and fiscal 
year 2004. The first measure encompasses 21 services that help 
employees get their jobs done, such as Internet access, desktop 
computer equipment, and voice and video communication systems. The 
second measure encompasses another 10 services that affect quality of 
work life, such as assistance related to pay and benefits, building 
security, and workplace safety and health. Using survey responses, we 
calculate a composite score for each service category that reflects 
employee ratings for (1) satisfaction with the service and (2) 
importance of the service. 

Table 6: Actual Performance and Targets Related to Our Internal 
Operations Measures: 

Performance measures: Internal Operations: Help get job done; 
2000 Actual: N/A; 
2001 Actual: N/A; 
2002 Actual: N/A; 
2003 Actual: 3.98; 
2004 Actual: 4.01; 
2005 Actual: N/A; 
2006 Target: 4.0. 

Performance measures: Internal Operations: Quality of work life; 
2000 Actual: N/A; 
2001 Actual: N/A; 
2002 Actual: N/A; 
2003 Actual: 3.86; 
2004 Actual: 3.96; 
2005 Actual: N/A; 
2006 Target: 4.0. 

Source: GAO. 

Notes: We will report actual data for fiscal year 2005 once the data 
from our November 2005 internal operations survey have been analyzed. 
N/A indicates that the data are not available yet or not applicable 
because we did not collect the data during this period. 

[End of table] 

21st Century Challenges: 

We have long had a statutory responsibility for monitoring the 
condition of the nation's finances. Recently, in our role as the 
auditor of the U.S. government's consolidated financial statements, we 
included an emphasis paragraph in our audit report for the fiscal year 
ended September 30, 2004, expressing our concern that the fiscal 
policies in place today will--absent unprecedented changes in tax 
policies, spending policies, or both--result in large, escalating, and 
persistent deficits that are economically unsustainable over the long 
term. This conclusion is based on the results of our long-term budget 
model, which the agency has used since 1992. 

Over the long term, the nation's growing fiscal imbalance stems 
primarily from the aging of the population, rising health care costs, 
and lower federal revenues as a percentage of the economy. These trends 
are compounded by the presence of near-term deficits arising from new 
discretionary and mandatory spending as well as lower revenues as a 
share of the economy. Absent significant changes on the spending side, 
the revenue side, or both of the budget, these long-term deficits will 
encumber a growing share of federal resources and test the capacity of 
current and future generations to afford both today's and tomorrow's 
commitments. Continuing on this unsustainable path will gradually 
erode, if not suddenly damage, our economy, our standard of living, and 
ultimately our national security. 

Addressing the nation's long-term fiscal imbalances constitutes a major 
transformational challenge that may take a generation to resolve. Given 
the size of our projected deficit, we will not be able to grow our way 
out of this problem--tough choices will be required. In addition, 
traditional incremental approaches to budgeting will need to give way 
to more fundamental and periodic reexaminations of the base of 
government, ultimately covering discretionary and mandatory programs as 
well as the revenue side of the budget. The nature and magnitude of the 
fiscal, security, economic, and other adjustments that need to be 
considered are not amenable to "quick fixes"; rather they will likely 
require an iterative, thoughtful process of disciplined changes and 
reforms over many years. 

We produced the 21st century challenges report to help the Congress 
review and reconsider the base of federal spending and tax 
programs.[Footnote 6] It is intended as one input among many that the 
Congress will receive as it decides what its agenda will be for 
oversight and program review. We have framed the issues presented as 
illustrative questions for policymakers to consider as a supplement to 
their own efforts. The questions are drawn from our issued work, our 
strategic plan prepared in consultation with the Congress, input from 
several inspectors general, and the institutional knowledge of our 
staff. They cover discretionary spending; mandatory spending, including 
entitlements; as well as tax policies and programs. While answers to 
these questions may draw on our work and that of others, only elected 
officials can and should decide which questions to address as well as 
how and when to address them. 

Having identified the major fiscal challenge facing the nation, and 
given our role in supporting the Congress, we believe that we also have 
an obligation to provide policymakers with support in identifying 
issues and options that could help to address these fiscal pressures. 
In our 21st century challenges report, we built on our past and pending 
work--90 percent of which was requested by the Congress or required by 
law--to provide policymakers with a comprehensive compendium of those 
areas throughout government that could be ripe for reexamination and 
review. The report is consistent with our other products, such as our 
high-risk reports (discussed below), in that it pulls together our 
insights and previous work for the Congress to help with its budget and 
programmatic deliberations and oversight activities. 

In developing the 21st century questions, we reflected on the inventory 
of future forces working to reshape American society, our place in the 
world, and the various roles and responsibilities of the federal 
government that were presented in our Strategic Plan for Serving the 
Congress and the Nation (2004-2009). The specific questions raised for 
each area were informed by a set of generic evaluation criteria that 
are useful in evaluating any government program, policy, function, or 
activity. The criteria are framed as questions and are designed to 
address the legislative basis for the program, its purpose and 
continued relevance, its effectiveness in achieving goals and outcomes, 
its efficiency and targeting, its affordability, its sustainability, 
and its management. We used these criteria to generate specific 21st 
century questions about those programs and priorities already 
identified. The 21st century questions illustrate the kinds of issues 
that a reexamination and review initiative needs to address. 

Copies of this report are available upon request. In addition, this 
document is available at no charge on our Web site at [Hyperlink, 
http://www.gao.gov]. 

GAO's High-Risk Program: 

Since 1990, our high-risk program has highlighted long-standing 
challenges facing the federal government. Increasingly, the program has 
focused on those major programs and operations that are in urgent need 
of broad transformation, and congressional as well as executive branch 
action, to ensure that our national government functions in the most 
economical, efficient, and effective manner possible. Our latest 
report, released in January 2005, highlights 25 troubled areas across 
government.[Footnote 7] Many of these areas involve critical public 
service providers, such as the U.S. Postal Service and IRS, and 
services provided to Medicare and Medicaid recipients through CMS. 
Table 7 lists each high-risk area, the year it was placed on the high- 
risk list, and the strategic goal under which our work related to each 
high-risk area is generally performed. 

Table 7: GAO's 2005 High-Risk List: 

Addressing challenges in broad-based transformations: 

2005 high-risk area: Strategic Human Capital Management[A]; 
Year designated high risk: 2001; 
GAO's strategic goal: 3. 

2005 high-risk area: U.S. Postal Service Transformation Efforts and 
Long-Term Outlook[A]; 
Year designa