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Before the Subcommittee on Legislative Committee on Appropriations:

House of Representatives:

United States General Accounting Office:


For Release on Delivery Expected at 5:30 p.m. EDT:

Wednesday, April 9, 2003:

Fiscal Year 2004 Budget Request:

U.S. General Accounting Office:

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


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 

* 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 

* Strengthen public schools' accountability for educating children:

* Keep sensitive American technologies out of the wrong hands:

* Protect American armed forces confronting chemical or biological 

* 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 

* 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-

* 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 

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 

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 

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: 

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: 

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%.


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 

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]

[A] Attorneys and criminal investigators:

[B] Mission support includes both mission and mission support offices 
as discussed in GAO's budget submission:

[End of figure]

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 

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:

(Dollars in thousands).

Total budget authority; Less: offsetting collections[B]; Direct 
appropriation; FY 2003 Revised: $451,202[A]; (3,000); $448,202; FY 2004 
Request: $472,627; (6,006); $466,621; [Empty]; Change - FY 2003 to 
2004: Amount: $21,425; (3,006); $18,419; Change - FY 2003 to 2004: 
Percent: 4.1.

Source: GAO.

[A] Excludes request for supplemental funds of $4.8 million.

[B] Offsetting collections include reimbursable audit work and rental 

[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 

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 

* 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 

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 

* 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 

* 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 

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 

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 

* 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; 

* 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 

* evaluate the efficiency and accountability of multilateral 
organizations and the extent to which they are serving U.S. interests; 

* 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 

* 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.