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Testimony:



Before the Subcommittee on the Legislative Branch, Committee on 

Appropriations, U.S. Senate:



United States General Accounting Office:



GAO:



For Release on Delivery Expected at 1:30 p.m. EST:



Thursday, March 27, 2003:



Fiscal Year 2004 Budget Request:



U.S. General Accounting Office:



Statement of David M. Walker 

Comptroller General of the United States:



GAO-03-580T:



Mr. Chairman and Members of the Subcommittee:



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

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

Office (GAO). GAO is a key source of objective information and analyses 

and, as such, plays a crucial role in supporting congressional 

decision-making and helping improve government for the benefit of the 

American people. My testimony today will focus on GAO’s (1) fiscal year 

2002 performance and results, (2) efforts to maximize our 

effectiveness, responsiveness and value, and (3) our budget request for 

fiscal year 2004 to support the Congress and serve the American public. 

In summary,



* In fiscal year 2002, GAO’s work informed the national debate on a 

broad spectrum of issues including helping the Congress answer 

questions about the associated costs and program trade-offs of the 

national preparedness strategy, including providing perspectives on how 

best to organize and manage the new Transportation Security 

Administration and Department of Homeland Security. GAO’s efforts 

helped the Congress and government leaders achieve $37.7 billion in 

financial benefits--an $88 return on every dollar invested in GAO. The 

return on the public’s investment in GAO extends beyond dollar savings 

to improvements in how the government serves its citizens. This 

includes a range of accomplishments that serve to improve safety, 

enhance security, protect privacy, and increase the effectiveness of a 

range of federal programs and activities.



* The results of our work in fiscal year 2002 were possible, in part, 

because of changes we have made to transform GAO in order to meet our 

goal of being a model federal agency and a world-class professional 

services organization. We had already realigned GAO’s structure and 

resources to better serve the Congress in its legislative, oversight, 

appropriations, and investigative roles. Over the past year, we 

cultivated and fostered congressional and agency relations, better 

refined our strategic and annual planning and reporting processes, and 

enhanced our information technology infrastructure. We also continued 

to provide priority attention to our management challenges of human 

capital, information security, and physical security. We have made 

progress in addressing each of these challenges, but we still have work 

to do and plan to ask for legislation to help address some of these 

issues.



* GAO is requesting budget authority of $473 million for fiscal year 

2004. Our request represents a modest 4.1 percent increase in direct 

appropriations, primarily for mandatory pay and uncontrollable costs. 

This budget will allow us to maintain current operations for serving 

the Congress as outlined in our strategic plan and to continue 

initiatives to enhance our human capital, support business processes, 

and ensure the safety and security of GAO staff, facilities, and 

information systems. Approximately $4.8 million, or about 1 percent, of 

our request relates to several safety and security items that are 

included in our fiscal year 2003 supplemental request. If this 

supplemental request is granted, our fiscal year 2004 request could be 

reduced accordingly.



Fiscal Year 2002 Performance and Results:



Fiscal year 2002 was a year of challenges, not just for GAO but also 

for the Congress and the nation. The nation’s vulnerabilities were 

exposed in a series of events--America’s vulnerability to sophisticated 

terrorist networks, bioterrorism waged through mechanisms as mundane as 

the daily mail, and corporate misconduct capable of wiping out jobs, 

pensions, and investments virtually overnight. As the Congress’s 

priorities changed to meet these crises, GAO’s challenge was to respond 

quickly and effectively to our congressional clients’ changing needs.



With work already underway across a spectrum of critical policy and 

performance issues, we had a head start toward meeting the Congress’ 

needs in a year of unexpected and often tumultuous events. For example, 

in fiscal year 2002 GAO’s work informed the debate over national 

preparedness strategy, helping the Congress determine how best to 

organize and manage major new departments, assess key vulnerabilities 

to homeland defense, and respond to the events of September 11 in areas 

such as terrorism insurance and airline security. GAO’s input also was 

a major factor in shaping the Sarbanes-Oxley Act, which created the 

Public Company Accounting Oversight Board, as well as new rules to 

strengthen corporate governance and ensure auditor independence. 

Further, GAO’s work helped the Congress develop and enact election 

reform legislation in the form of the Help America Vote Act of 2002 to 

help restore voter confidence.



In fiscal year 2002, GAO also served the Congress and the American 

people by helping to:



* Contribute to a national preparedness strategy at the federal, state, 

and local levels that will make Americans safer from terrorism:



* Protect investors through better oversight of the securities industry 

and the accounting profession:



* Ensure a safer national food supply:



* Expose the inadequacy of nursing home care:



* Make income tax collection fair, effective, and less painful to 

taxpayers:



* Strengthen public schools’ accountability for educating children:



* Keep sensitive American technologies out of the wrong hands:



* Protect American armed forces confronting chemical or biological 

weapons:



* Identify the risks to employees in private pension programs:



* Identify factors causing the shortage of children’s vaccines:



* Assist the postal system in addressing anthrax and various management 

challenges:



* Identify security risks at ports, airports, and transit systems:



* Save billions by bringing sound business practices to the Department 

of Defense:



* Foster human capital strategic management to create a capable, 

effective, well-managed federal workforce:



* Ensure that the armed forces are trained and equipped to meet the 

nation’s defense commitments:



* Enhance the safety of Americans and foreign nationals at U.S. 

installations wordwide:



* Assess ways of improving border security through biometric 

technologies and other means:



* Reduce the international debt problems faced by poor countries:



* Reform the way federal agencies manage their finances:



* Protect government computer systems from security threats:



* Enhance the transition of e-government--the new “electronic 

connection” between government and the public:



During fiscal year 2002, GAO’s analyses and recommendations contributed 

to a wide range of legislation considered by the Congress, as shown in 

the following table.



Table 1: Selected Public Laws to Which GAO Contributed During Fiscal 

Year 2002:



* Prescription Drug User Fee Amendments of 2002, P.L. 107-188.



* Best Pharmaceuticals for Children Act, P.L. 107-1092.



* No Child Left Behind Act of 2001, P.L. 107-110.



* Food Stamp Reauthorization Act of 2002, P.L. 107-171.



* Help America Vote Act of 2002, P.L. 107-252.



* Homeland Security Act of 2002, P.L. 107-296.



* Public Health Security and Bioterrorism Preparedness and Response Act 

of 2002, P.L. 107-188.



* Aviation and Transportation Security Act, P.L. 107-71.



* Department of Defense Appropriation Act, 2003, P.L. 107-248.



* Department of Defense and Emergency Supplemental Appropriations for 

Recovery From and Response to Terrorist Attacks on the United States 

Act, 2002, P.L. 107-117.



* Bob Stump National Defense Authorization Act for Fiscal Year 2003 

P.L. 107-314.



* Foreign Relations Authorization Act, Fiscal Year 2003, P.L. 107-228.



* Small Business Paperwork Relief Act of 2002, P.L. 107-198.



* Federal Information Security Management Act of 2002, P.L. 107-347.



* Sarbanes-Oxley Act of 2002, P.L. 107-204.



* National Defense Authorization Act for Fiscal Year 2002, P.L. 107-

107.



* Legislative Branch Appropriations, Fiscal Year 2002, P.L. 107-68.



* Improper Payments Information Act of 2002, P.L. 107-300.



* Trade Act of 2002, P.L. 107-210.



* Terrorism Risk Insurance Act of 2002, P.L. 107-297.



* E-Government Act of 2002, P.L. 107-347.



Source: GAO.



[End of table]



By year’s end, we had testified 216 times before the Congress, 

sometimes on as little as 24 hours’ notice, on a range of issues. We 

had responded to hundreds of urgent requests for information. We had 

developed 1,950 recommendations for improving the government’s 

operations, including, for example, those we made to the Secretary of 

State calling for the development of a governmentwide plan to help 

other countries combat nuclear smuggling and those we made to the 

Chairman of the Federal Energy Regulatory Commission calling for his 

agency to develop an action plan for overseeing competitive energy 

markets. We also had continued to track the recommendations we had made 

in past years, checking to see that they had been implemented and, if 

not, whether we needed to do follow-up work on problem areas. We found, 

in fact, that 79 percent of the recommendations we had made in fiscal 

year 1998 had been implemented, a significant step when the work we 

have done for the Congress becomes a catalyst for creating tangible 

benefits for the American people.



Table 2 highlights, by GAO’s three external strategic goals, examples 

of issues on which we testified before Congress during fiscal year 

2002.



Table 2: Issues on Which GAO Testified During Fiscal Year 2002:



Goal 1: Well-Being and Financial Security of the American People: 

Aviation security; Bioterrorism; Blood supplies; Child welfare; 

Childhood vaccines; Coast Guard’s security missions; Customs’ cargo 

inspections; Disability programs; EPA cabinet status; FBI 

reorganization; Federal property management reform; Food safety; 

Highway trust fund; Housing; HUD management reform; Identity theft; 

Immigration enforcement; Indian tribal recognition; Intercity 

passenger rail; Long-term care; Medicare payments; Nuclear waste 

storage; Nursing homes; Postal Service challenges; Public health 

aspects of homeland security; Retiree health insurance; SBA’s human 

capital challenges; Social Security reform; Transit safety and 

security; VA health care; Welfare reform; Wildfire threats; Workforce 

development; 



Goal 2: Changing Security Threats and Challenge of 

Globalization: A-76 competitive sourcing; Anthrax vaccine; Ballistic 

missile defense; Chemical and biological preparedness; Combating 

terrorism; Compact with Micronesia; Conflict diamonds; Debt relief for 

poor countries; Encroachment on training ranges; Export controls; Food 

aid; Foreign language needs; Gulf War illnesses; Information security 

aspects of homeland; security; International trade; Nuclear smuggling; 

Organizational aspects of homeland security; SEC’s human capital 

challenges; Strategic seaport protection; Terrorism insurance; U.S. 

overseas presence; Weapons of mass destruction; 



Goal 3: Transforming the Federal Government’s Role: 

Contract management; Contracting for services; Corporate governance and 

accountability; Debt collection; DOD financial management; Electronic 

Government Act of 2002; Electronic-government security; Enterprise 

architecture; Federal budget issues; Federal building security; Federal 

financial management reform; Federal rulemaking requirements; Freedom 

to Manage Act; Human capital strategy; Illegal tax schemes and scams 

Intergovernmental aspects of homeland; security; IRS modernization; 

Medicaid financial management; NASA’s management challenges; 

President’s Management Agenda; Purchase card controls; Securing 

America’s borders; U.S. government’s financial statements.



Source: GAO.



[End of table]



Congress and the executive agencies took a wide range of actions in 

fiscal year 2002 to improve government operations, reduce costs, or 

better target budget authority based on GAO analyses and 

recommendations, as highlighted in the following sections.



Federal action on GAO’s findings or recommendations produced financial 

benefits for the American people: a total of $37.7 billion was achieved 

by making government services more efficient, improving the budgeting 

and spending of tax dollars, and strengthening the management of 

federal resources (see fig. 1). For example, increased funding for 

improved safeguards against fraud and abuse helped the Medicare program 

to better control improper payments of $8.1 billion over 2 years, and 

better policies and controls reduced losses from farm loan programs by 

about $4.8 billion across 5 years.



Figure 1: Financial Benefits Resulting from GAO’s Work:



[See PDF for image]



[End of figure]



In fiscal year 2002, we also recorded 906 instances in which our work 

led to improvements in government operations or programs (see fig. 2). 

For example, by acting on GAO’s findings or recommendations, the 

federal government has taken important steps toward enhancing aviation 

safety, improving pediatric drug labeling based on research, better 

targeting of funds to high-poverty school districts, greater 

accountability in the federal acquisition process, and more effective 

delivery of disaster recovery assistance to other nations, among other 

achievements.



Figure 2: GAO’s Work Improving Government Operations and Services:



[See PDF for image]



[End of figure]



As shown in table 3, we met all of our annual performance targets 

except our timeliness target. While we provided 96 percent of our 

products to their congressional requesters by the date promised, we 

missed this measure’s target of 98 percent on-time delivery. The year’s 

turbulent events played a part in our missing the target, causing us to 

delay work in progress when higher-priority requests came in from the 

Congress. We know we will continue to face factors beyond our control 

as we strive to improve our performance in this area. We believe the 

agency protocols we are piloting will help clarify aspects of our 

interactions with the agencies we evaluate and audit and, thus, 

expedite our work in ways that could improve the timeliness of our 

final products. We also believe that our continuing investments in 

human capital and information technology will improve our timeliness 

while allowing us to maintain our high level of productivity and 

performance overall.



Table 3: Annual Performance Measures and Targets:



Performance measure: Financial benefits (dollars in billions); Fiscal 

year: 1998: Actual: $19.7; Fiscal year: 1999: Actual: $20.1; Fiscal 

year: 2000: Actual: $23.2; Fiscal year: 2001: Actual: $26.4; Fiscal 

year: : 2002 Target: $30.0; Fiscal year: 2002: Actual: $37.7[A]; Fiscal 

year: 4-year avg.: Actual: $26.9; Fiscal year: 2003: Target: $32.5[B]; 

Fiscal year: 2004: Target: $35.0.



Performance measure: Other benefits; Fiscal year: 1998: Actual: 537; 

Fiscal year: 1999: Actual: 607; Fiscal year: 2000: Actual: 788; Fiscal 

year: 2001: Actual: 799; Fiscal year: : 2002 Target: 770; Fiscal year: 

2002: Actual: 906; Fiscal year: 4-year avg.: Actual: 775; Fiscal year: 

2003: Target: 800[B]; Fiscal year: 2004: Target: 820.



Performance measure: Past recommendations implemented; Fiscal year: 

1998: Actual: 69%; Fiscal year: 1999: Actual: 70%; Fiscal year: 2000: 

Actual: 78%; Fiscal year: 2001: Actual: 79%; Fiscal year: : 2002 

Target: 75%; Fiscal year: 2002: Actual: 79%; Fiscal year: 4-year avg.: 

Actual: N/A; Fiscal year: 2003: Target: 77%; Fiscal year: 2004: Target: 

77%.



Performance measure: New recommendations made; Fiscal year: 1998: 

Actual: 987; Fiscal year: 1999: Actual: 940; Fiscal year: 2000: Actual: 

1,224; Fiscal year: 2001: Actual: 1,563; Fiscal year: : 2002 Target: 

1,200; Fiscal year: 2002: Actual: 1,950; Fiscal year: 4-year avg.: 

Actual: 1,419; Fiscal year: 2003: Target: 1,250[B]; Fiscal year: 2004: 

Target: 1,250.



Performance measure: New products with recommendations; Fiscal year: 

1998: Actual: 33%; Fiscal year: 1999: Actual: 33%; Fiscal year: 2000: 

Actual: 39%; Fiscal year: 2001: Actual: 44%; Fiscal year: : 2002 

Target: 45%; Fiscal year: 2002: Actual: 53%; Fiscal year: 4-year avg.: 

Actual: 42%; Fiscal year: 2003: Target: 50%; Fiscal year: 2004: Target: 

50%.



Performance measure: Testimonies; Fiscal year: 1998: Actual: 256; 

Fiscal year: 1999: Actual: 229; Fiscal year: 2000: Actual: 263; Fiscal 

year: 2001: Actual: 151; Fiscal year: : 2002 Target: 200; Fiscal year: 

2002: Actual: 216; Fiscal year: 4-year avg.: Actual: 215; Fiscal year: 

2003: Target: 180[B]; Fiscal year: 2004: Target: 200.



Performance measure: Timeliness; Fiscal year: 1998: Actual: 93%; Fiscal 

year: 1999: Actual: 96%; Fiscal year: 2000: Actual: 96%; Fiscal year: 

2001: Actual: 95%; Fiscal year: : 2002 Target: 98%; Fiscal year: 2002: 

Actual: 96%; Fiscal year: 4-year avg.: Actual: 96%; Fiscal year: 2003: 

Target: 98%; Fiscal year: 2004: Target: 98%.



Legend:



N/A = not applicable:



Source: GAO.



[A] Changes GAO made to its methodology for tabulating financial 

benefits caused about 11 percent of the increase in fiscal year 2002.



[B] Four targets published in GAO’s performance plan for fiscal year 

2003 were subsequently revised based on more current information. Two 

were raised; two were lowered. The original targets were financial 

benefits, $35 billion; other benefits, 785; recommendations made, 

1,200; and testimonies, 210.



[End of table]



Maximizing GAO’s Effectiveness, Responsiveness and Value:



The results of our work were possible, in part, because of changes we 

have made to maximize the value of GAO. We had already realigned GAO’s 

structure and resources to better serve the Congress in its 

legislative, oversight, appropriations, and investigative roles. Over 

the past year, we cultivated and fostered congressional and agency 

relations, better refined our strategic and annual planning and 

reporting processes, and enhanced our information technology 

infrastructure. We also continued to provide priority attention to our 

management challenges of human capital, information security, and 

physical security. Changes we made in each of these areas helped enable 

us to operate in a constantly changing environment.



Congressional and Agency Relations:



Over the course of the year, we cultivated and fostered congressional 

and agency relations in several ways. On October 23, 2001, in response 

to the anthrax incident on Capitol Hill, we opened our doors to 435 

members of the House of Representatives and their staffs. Later in the 

year, we continued with our traditional hill outreach meetings and 

completed a 7-month pilot test of a system for obtaining clients’ views 

on the quality of our testimonies and reports. We also developed agency 

protocols to provide clearly defined, consistently applied, well-

documented, and transparent policies for conducting our work with 

federal agencies. We have implemented our new reporting product line 

entitled Highlights--a one-page summary that provides the key findings 

and recommendations from a GAO engagement. We continued our policy of 

outreach to our congressional clients, the public, and the press to 

enhance the accessibility of GAO products. Our external web site now 

logs about 100,000 visitors each day and more than 1 million GAO 

products are downloaded every month by our congressional clients, the 

public, and the press.



In light of certain records access challenges during the past few years 

and with concerns about national and homeland security unusually high 

at home and abroad, it may become more difficult for us to obtain 

information from the Executive Branch and report on certain issues. If 

this were to occur, it would hamper our ability to complete 

congressional requests in a timely manner. We are updating GAO’s 

engagement acceptance policies and practices to address this issue and 

may recommend legislative changes that will help to assure that we have 

reasonable and appropriate information that we need to conduct our work 

for the Congress and the country.



Strategic and Annual Planning:



GAO’s strategic planning process serves as a model for the federal 

government. Our plan aligns GAO’s resources to meet the needs of the 

Congress, address emerging challenges and achieve positive results. 

Following the spirit of the Government Performance and Results Act, we 

established a process that provides for updates with each new Congress, 

ongoing analysis of emerging conditions and trends, extensive 

consultations with congressional clients and outside experts, and 

assessments of our internal capacities and needs.



At the beginning of fiscal year 2002, we updated our strategic plan for 

serving the Congress based on substantial congressional input--

extending the plan’s perspective out to fiscal year 2007 and factoring 

in developments that had occurred since we first issued it in fiscal 

year 2000. The updated plan carries forward the four strategic goals we 

had already established as the organizing principles for a body of work 

that is as wide-ranging as the interests and concerns of the Congress 

itself. 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. Following is our strategic plan framework. 

Appendix I of this statement delineates in a bit more detail our 

strategic objectives and our qualitative performance goals for fiscal 

years 2002 and 2003.



We issued our 2001 Performance and Accountability Report that combines 

information on our past year’s accomplishments and progress in meeting 

our strategic goals with our plans for achieving our fiscal year 2003 

performance goals. The report earned a Certificate of Excellence in 

Accountability Reporting from the Association of Government 

Accountants. We issued our fiscal year 2002 Performance and 

Accountability Report in January 2003.



Our financial statements, which are integral to our performance and 

accountability, received an unqualified opinion for the sixteenth 

consecutive year. Furthermore, our external auditors did not identify 

any material control weaknesses or compliance issues relating to GAO’s 

operations.



Information Technology:



During the past year, we acquired new hardware and software and 

developed user-friendly systems that enhanced our productivity and 

responsiveness to the Congress and helped meet our initial information 

technology goals. For example, we replaced aging desktop workstations 

with notebook computers that provide greater computing power, speed, 

and mobility. In addition, we upgraded key desktop applications, the 

Windows desktop operating system, and telecommunications systems to 

ensure that GAO staff have modern technology tools to assist them in 

carrying out their work. We also developed new, integrated, user-

friendly Web-based systems that eliminate duplicate data entry while 

ensuring the reusability of existing data. As the Clinger-Cohen Act 

requires, GAO has an enterprise architecture program in place to guide 

its information technology planning and decision making. In designing 

and developing systems, as well as in acquiring technology tools and 

services, we have applied enterprise architecture principles and 

concepts to ensure sound information technology investments and the 

interoperability of systems.



Human Capital:



Given GAO’s role as a key provider of information and analyses to the 

Congress, maintaining the right mix of technical knowledge and 

expertise as well as general analytical skills is vital to achieving 

our mission. We spend about 80 percent of our resources on our people, 

but without excellent human capital management, we could still run the 

risk of being unable to deliver what the Congress and the nation expect 

from us. At the beginning of my term in early fiscal year 1999, we 

completed a self-assessment that profiled our human capital workforce 

and identified a number of serious challenges facing our workforce, 

including significant issues involving succession planning and 

imbalances in the structure, shape, and skills of our workforce. As 

presented below, through a number of strategically planned human 

capital initiatives over the past few years, we have made significant 

progress in addressing these issues. For example, as illustrated in 

figure 3, by the end of fiscal year 2002, we had almost a 60 percent 

increase in the percentage of staff at the entry-level (Band I) as 

compared with fiscal year 1998. Also, the proportion of our workforce 

at the mid-level (Band II) decreased by about 8 percent.



Figure 3: GAO’s Human Capital Profile:



[See PDF for image]



[End of figure]



[A] Attorneys and criminal investigators:



[B] Mission support includes both mission and mission support offices 

as discussed in GAO’s budget submission:



Our fiscal year 2002 human capital initiatives included the following:



* In fiscal year 2002, we hired nearly 430 permanent staff and 140 

interns. We also developed and implemented a strategy to place more 

emphasis on diversity in campus recruiting.



* In fiscal years 2002 and 2003, to help meet our workforce planning 

objectives, we offered voluntary early retirement under authority 

established in our October 2000 human capital legislation. Early 

retirement was granted to 52 employees in fiscal year 2002 and 24 

employees in fiscal year 2003.



* To retain staff with critical skills and staff with less than 3 years 

of GAO experience, we implemented legislation authorizing federal 

agencies to offer student loan repayments in exchange for certain 

federal service commitments.



* In fiscal year 2002, GAO implemented a new, modern, effective, and 

credible performance appraisal system for analysts and specialists, 

adapted the system for attorneys, and began modifying the system for 

administrative professional and support staff.



* We began developing a new core training curriculum for managers and 

staff to provide additional training on the key competencies required 

to perform GAO’s work.



* We also took steps to achieve a fully democratically-elected Employee 

Advisory Council to work with GAO’s Executive Committee in addressing 

issues of mutual interest and concern.



The above represent just a few of many accomplishments in the human 

capital area. GAO is the clear leader in the federal government in 

designating and implementing 21st century human capital policies and 

practices. We also are taking steps to work with the Congress, the 

Office of Management and Budget, and the Office of Personnel 

Management, and others to “help others help themselves” in the human 

capital area.



Information Security:



Ensuring information systems security and disaster recovery systems 

that allow for continuity of operations is a critical requirement for 

GAO, particularly in light of the events of September 11 and the 

anthrax incidents. The risk is that our information could be 

compromised and that we would be unable to respond to the needs of the 

Congress in an emergency. In light of this risk and in keeping with our 

goal of being a model federal agency, we are implementing an 

information security program consistent with the requirements in the 

Government Information Security Reform provisions (commonly referred to 

as “GISRA”) enacted in the Floyd D. Spence National Defense 

Authorization Act for fiscal year 2001. We have made progress through 

our efforts to, among other things, implement a risk-based, agencywide 

security program; provide security training and awareness; and develop 

and implement an enterprise disaster recovery solution.



Physical Security:



In the aftermath of the September 11 terrorist attacks and subsequent 

anthrax incidents, our ability to provide a safe and secure workplace 

emerged as a challenge for our agency. Protecting our people and our 

assets is critical to our ability to meet our mission. We devoted 

additional resources to this area and implemented measures such as 

reinforcing vehicle and pedestrian entry points, installing an 

additional x-ray machine, adding more security guards, and reinforcing 

windows.



GAO’s Fiscal Year 2004 Budget Request:



GAO is requesting budget authority of $473 million for fiscal year 2004 

to maintain current operations for serving the Congress as outlined in 

our strategic plan and to continue initiatives to enhance our human 

capital, support business processes, and ensure the safety and security 

of GAO staff, facilities, and information systems. This funding level 

will allow us to fund up to 3,269 full-time equivalent personnel. Our 

request includes $466.6 million in direct appropriations and authority 

to use estimated revenues of $6 million from reimbursable audit work 

and rental income. Our requested increase of $18.4 million in direct 

appropriations represents a modest 4.1 percent increase, primarily for 

mandatory pay and uncontrollable costs. Our budget request also 

includes savings from nonrecurring fiscal year 2003 investments in 

fiscal year 2004 that we propose to use to fund further one-time 

investments in critical areas, such as security and human capital.



We have submitted a request for $4.8 million in supplemental fiscal 

year 2003 funds to allow us to accelerate implementation of important 

security enhancements. Our fiscal year 2004 budget includes $4.8 

million for safety and security needs that are also included in the 

supplemental. If the requested fiscal year 2003 supplemental funds are 

provided, our fiscal year 2004 budget could be reduced by $4.8 million. 

Table 4 presents our fiscal year 2003 and requested fiscal year 2004 

resources by funding source.



Table 4: Fiscal Years 2003 and 2004 Resources by Funding Source:



[See PDF for image]



[End of table]



During fiscal year 2004, we plan to sustain our investments in 

maximizing the productivity of our workforce by continuing to address 

the key management challenges of human capital, and both information 

and physical security. We will continue to take steps to “lead by 

example” within the federal government in connection with these and 

other critical management areas.



Over the next several years, we need to continue to address skill gaps, 

maximize staff productivity and effectiveness, and reengineer our human 

capital processes to make them more user-friendly. We plan to address 

skill gaps by further refining our recruitment and hiring strategies to 

target gaps identified through our workforce planning efforts, while 

taking into account the significant percentage of our workforce 

eligible for retirement. We will continue to take steps to reengineer 

our human capital systems and practices to increase their efficiency 

and to take full advantage of technology. We will also ensure that our 

staff have the needed skills and training to function in this 

reengineered environment. In addition, we are developing competency-

based performance appraisal and broad-banding pay systems for our 

mission support employees.



To ensure our ability to attract, retain, and reward high-quality 

staff, we plan to devote additional resources to our employee training 

and development program. We will target resources to continue 

initiatives to address skill gaps, maximize staff productivity, and 

increase staff effectiveness by updating our training curriculum to 

address organizational and technical needs and training new staff. 

Also, to enhance our recruitment and retention of staff, we will 

continue to offer a student loan repayment program and transit subsidy 

benefit established in fiscal year 2002. In addition, we will continue 

to focus our hiring efforts in fiscal year 2004 on recruiting talented 

entry-level staff.



To build on the human capital flexibilities provided by the Congress in 

2000, we plan to recommend legislation that would, among other things, 

facilitate GAO’s continuing efforts to recruit and retain top talent, 

develop a more performance-based compensation system, realign our 

workforce, and facilitate our succession planning and knowledge 

transfer efforts. In addition, to help attract new recruits, address 

certain “expectation gaps” within and outside of the government, and 

better describe the modern audit and evaluation entity GAO has become, 

we will work with the Congress to explore the possibility of changing 

the agency’s name while retaining our well-known acronym and global 

brand name of “GAO.”:



On the information security front, we need to complete certain key 

actions to be better able to detect intruders in our systems, identify 

our users, and recover in the event of a disaster. Among our current 

efforts and plans for these areas are completing the installation of 

software that helps us detect intruders on all our internal servers, 

completing the implementation of a secure user authentication process, 

and refining the disaster recover plan we developed last year. We will 

need the Congress’ help to address these remaining challenges.



We also are continuing to make the investments necessary to enhance the 

safety and security of our people, facilities, and other assets for the 

mutual benefit of GAO and the Congress. With our fiscal year 2003 

supplemental funding, if provided, or if not, with fiscal year 2004 

funds, we plan to complete installation of our building access control 

and intrusion detection system and supporting infrastructure, and 

obtain an offsite facility for use by essential personnel in emergency 

situations. With the help of the Congress, we plan to implement these 

projects over the next several years.



Concluding Remarks:



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

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

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

benefits and improvements in federal programs and operations that have 

resulted from our work, but also in strengthening and increasing the 

productivity of GAO, and making a real difference for our country and 

its citizens. Our budget request for fiscal year 2004 is modest, but 

necessary to sustain our current operations, continue key human capital 

and information technology initiatives, and ensure the safety and 

security of our most valuable asset--our people. We seek your continued 

support so that we will be able to effectively and efficiently conduct 

our work on behalf of the Congress and the American people.



As the Comptroller General of the United States, I am very proud of 

how, in a time of uncertainty, GAO staff responded with a positive 

attitude and did whatever their country required and demonstrated an 

unwavering resolve to continue their work. Knowing this organization as 

I do, I was not surprised. We at GAO look forward to continuing to help 

the Congress and the nation meet the current and emerging challenges of 

the 21st century:



[End of section]



Appendix I: GAO’s Qualitative Performance Goals for Fiscal Years 2002 

and 2003:



This appendix lists GAO’s strategic goals and the strategic objectives 

for each goal. They are part of our updated draft strategic plan (for 

fiscal years 2002 through 2007).



Organized below each strategic objective are its qualitative 

performance goals. The performance goals lay out the work we plan to do 

in fiscal years 2002 and 2003 to help achieve our strategic goals and 

objectives. We will evaluate our performance at the end of fiscal year 

2003.



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:



To achieve this goal, we will provide information and recommendations 

on the following:



the Health Care Needs of an Aging and Diverse Population:



* evaluate Medicare reform, financing, and operations;



* assess trends and issues in private health insurance coverage;



* assess actions and options for improving the Department of Veterans 

Affairs’ and the Department of Defense’s (DOD) health care services;



* evaluate the effectiveness of federal programs to promote and protect 

the public health;



* evaluate the effectiveness of federal programs to improve the 

nation’s preparedness for the public health and medical consequences of 

bioterrorism;



* evaluate federal and state program strategies for financing and 

overseeing chronic and long-term health care; and:



* assess states’ experiences in providing health insurance coverage for 

low-income populations.



the Education and Protection of the Nation’s Children:



* analyze the effectiveness and efficiency of early childhood education 

and care programs in serving their target populations;



* assess options for federal programs to effectively address the 

educational and nutritional needs of elementary and secondary students 

and their schools;



* determine the effectiveness and efficiency of child support 

enforcement and child welfare programs in serving their target 

populations; and:



* identify opportunities to better manage postsecondary, vocational, 

and adult education programs and deliver more effective services.



the Promotion of Work Opportunities and the Protection of Workers:



* assess the effectiveness of federal efforts to help adults enter the 

workforce and to assist low-income workers;



* analyze the impact of programs designed to maintain a skilled 

workforce and ensure employers have the workers they need;



* assess the success of various enforcement strategies to protect 

workers while minimizing employers’ burden in the changing environment 

of work; and:



* identify ways to improve federal support for people with 

disabilities.



a Secure Retirement for Older Americans:



* assess the implications of various Social Security reform proposals;



* identify opportunities to foster greater pension coverage, increase 

personal saving, and ensure adequate and secure retirement income; and:



* identify opportunities to improve the ability of federal agencies to 

administer and protect workers’ retirement benefits.



an Effective System of Justice:



* identify ways to improve federal agencies’ ability to prevent and 

respond to major crimes, including terrorism;



* assess the effectiveness of federal programs to control illegal drug 

use;



* identify ways to administer the nation’s immigration laws to better 

secure the nation’s borders and promote appropriate treatment of legal 

residents; and:



* assess the administrative efficiency and effectiveness of the federal 

court and prison systems.



the Promotion of Viable Communities:



* assess federal economic development assistance and its impact on 

communities;



* assess how the federal government can balance the promotion of home 

ownership with financial risk;



* assess the effectiveness of federal initiatives to assist small and 

minority-owned businesses;



* assess federal efforts to enhance national preparedness and capacity 

to respond to and recover from natural and man-made disasters; and:



* assess how well federally supported housing programs meet their 

objectives and affect the well-being of recipient households and 

communities.



Responsible Stewardship of Natural Resources and the Environment:



* assess the nation’s ability to ensure reliable and environmentally 

sound energy for current and future generations;



* assess federal strategies for managing land and water resources in a 

sustainable fashion for multiple uses;



* assess federal programs’ ability to ensure a plentiful and safe food 

supply, provide economic security for farmers, and minimize 

agricultural environmental damage;



* assess federal pollution prevention and control strategies; and:



* assess efforts to reduce the threats posed by hazardous and nuclear 

wastes.



a Secure and Effective National Physical Infrastructure:



* assess strategies for identifying, evaluating, prioritizing, 

financing, and implementing integrated solutions to the nation’s 

infrastructure needs;



* assess the impact of transportation and telecommunications policies 

and practices on competition and consumers;



* assess efforts to improve safety and security in all transportation 

modes;



* assess the U.S. Postal Service’s transformation efforts to ensure its 

viability and accomplish its mission; and:



* assess federal efforts to plan for, acquire, manage, maintain, 

secure, and dispose of the government’s real property assets.



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:



To achieve this goal, we will provide information and recommendations 

on the following:



Respond to Diffuse Threats to National and Global Security:



* analyze the effectiveness of the federal government’s approach to 

providing for homeland security;



* assess U.S. efforts to protect computer and telecommunications 

systems supporting critical infrastructures in business and government; 

and:



* assess the effectiveness of U.S. and international efforts to prevent 

the proliferation of nuclear, biological, chemical, and conventional 

weapons and sensitive technologies.



Ensure Military Capabilities and Readiness:



* assess the ability of DOD to maintain adequate readiness levels while 

addressing the force structure changes needed in the 21st century;



* assess overall human capital management practices to ensure a high-

quality total force;



* identify ways to improve the economy, efficiency, and effectiveness 

of DOD’s support infrastructure and business systems and processes;



* assess the National Nuclear Security Administration’s efforts to 

maintain a safe and reliable nuclear weapons stockpile;



* analyze and support DOD’s efforts to improve budget analyses and 

performance management;



* assess whether DOD and the services have developed integrated 

procedures and systems to operate effectively together on the 

battlefield; and:



* assess the ability of weapon system acquisition programs and 

processes to achieve desired outcomes.



Advance and Protect U.S. International Interests:



* analyze the plans, strategies, costs, and results of the U.S. role in 

conflict interventions;



* analyze the effectiveness and management of foreign aid programs and 

the tools used to carry them out;



* analyze the costs and implications of changing U.S. strategic 

interests;



* evaluate the efficiency and accountability of multilateral 

organizations and the extent to which they are serving U.S. interests; 

and:



* assess the strategies and management practices for U.S. foreign 

affairs functions and activities.



Respond to the Impact of Global Market Forces on U.S. Economic and 

Security Interests:



* analyze how trade agreements and programs serve U.S. interests;



* improve understanding of the effects of defense industry 

globalization;



* assess how the United States can influence improvements in the world 

financial system;



* assess the ability of the financial services industry and its 

regulators to maintain a stable and efficient global financial system;



* evaluate how prepared financial regulators are to respond to change 

and innovation; and:



* assess the effectiveness of regulatory programs and policies in 

ensuring access to financial services and deterring fraud and abuse in 

financial markets.



Strategic Goal 3:



Help Transform the Government’s Role and How It Does Business to Meet 

21st Century Challenges:



To achieve this goal, we will provide information and recommendations 

on the following:



Analyze the Implications of the Increased Role of Public and Private 

Parties in Achieving Federal Objectives:



* analyze the modern service-delivery system environment and the 

complexity and interaction of service-delivery mechanisms;



* assess how involvement of state and local governments and 

nongovernmental organizations affect federal program implementation 

and achievement of national goals; and:



* assess the effectiveness of regulatory administration and reforms in 

achieving government objectives.



Assess the Government’s Human Capital and Other Capacity for Serving 

the Public:



* identify and facilitate the implementation of human capital practices 

that will improve federal economy, efficiency, and effectiveness;



* identify ways to improve the financial management infrastructure 

capacity to provide useful information to manage for results and costs 

day to day;



* assess the government’s capacity to manage information technology to 

improve performance;



* assess efforts to manage the collection, use, and dissemination of 

government information in an era of rapidly changing technology;



* assess the effectiveness of the Federal Statistical System in 

providing relevant, reliable, and timely information that meets federal 

program needs; and:



* identify more businesslike approaches that can be used by federal 

agencies in acquiring goods and services.



Support Congressional Oversight of the Federal Government’s Progress 

toward Being More Results-Oriented, Accountable, and Relevant to 

Society’s Needs:



* analyze and support efforts to instill results-oriented management 

across the government;



* highlight the federal programs and operations at highest risk and the 

major performance and management challenges confronting agencies;



* identify ways to strengthen accountability for the federal 

government’s assets and operations;



* promote accountability in the federal acquisition process;



* assess the management and results of the federal investment in 

science and technology and the effectiveness of efforts to protect 

intellectual property; and:



* identify ways to improve the quality of evaluative information.



* develop new resources and approaches that can be used in measuring 

performance and progress on the nations 21ST century challenges:



Analyze the Government’s Fiscal Position and Approaches for Financing 

the Government:



* analyze the long-term fiscal position of the federal government;



* analyze the structure and information for budgetary choices and 

explore alternatives for improvement;



* contribute to congressional deliberations on tax policy;



* support congressional oversight of the Internal Revenue Service’s 

modernization and reform efforts; and:



* assess the reliability of financial information on the government’s 

fiscal position and financing sources.



Strategic Goal 4:



Maximize the Value of GAO by Being a Model Federal Agency and a World-

Class Professional Services Organization:



To achieve this goal, we will do the following:



Sharpen GAO’s Focus on Clients’ and Customers’ Requirements:



* continuously update client requirements;



* develop and implement stakeholder protocols and refine client 

protocols; and:



* identify and refine customer requirements and measures.



Enhance Leadership and Promote Management Excellence:



* foster an attitude of stewardship to ensure a commitment to GAO’s 

mission and core values;



* implement an integrated approach to strategic management;



* continue to provide leadership in strategic human capital management 

planning and execution;



* maintain integrity in financial management;



* use enabling technology to improve GAO’s crosscutting business 

processes; and:



* provide a safe and secure workplace.



Leverage GAO’s Institutional Knowledge and Experience:



* improve GAO’s use of Web-based knowledge tools;



* develop a framework to manage the collection, use, distribution, and 

retention of organizational knowledge; and:



* strengthen relationships with other national and international 

accountability and professional organizations.



Continuously Improve GAO’s Business and Management Processes:



* improve internal business and administrative processes;



* improve GAO’s product and service lines; and:



* improve GAO’s job management processes.



Become the Professional Services Employer of Choice:



* maintain an environment that is fair, unbiased, family-friendly, and 

promotes and values opportunity and inclusiveness;



* improve compensation and performance management systems;



* develop and implement a training and professional development 

strategy targeted toward competencies; and:



* provide GAO’s people with tools, technology, and a working 

environment that is world-class.