as the issues of taxpayer assistance, returns processing and tax system modernization, and other aspects of
Administration of Justice
GAO, in fiscal year 1992, issued a series of reports that examined and analyzed the Federal Bureau of
Prison's (BOP) operations and facilities expansion program.
GAO found that BOP could realize significant
cost savings if prison designs were altered and double-bunking were increased. Expanded use of existing
hart way houses would also save money. Operating improvements could also be achieved by better
succession planning and improved recruitment efforts. During fiscal year 1992, GAO achieved almost $24
million in cost savings as a result of changes in BOP policies due to GAO recommendations.
GAO has also undertaken the important work of reviewing the government's efforts to combat financial
institution fraud. In fiscal year 1 992, GAO found that the government's response has been less than effective
in many regards. Debt collection of civil and criminal fines, judgments, and restitutions has been lagging-
generally at 5 percent or less. Turning to the efforts of the responsible agencies, namely, the Department of
Justice, Resolution Trust Corporation (RTC), and Federal Deposit Insurance Corporation (FDIC), GAO found
the government's performance to be mixed, somewhat uncoordinated, and needing improvement. In the
latter part of fiscal year 1992, GAO testified on three separate occasions about these problems to the
Congress. As a result, debt collection has improved, policy changes were enacted at RTC, and greater
public attention has been focused on these problems.
During fiscal year 1 992, GAO has also assessed the efforts of the government to effectively pursue the war
on drugs. Most of the work has been completed on a comprehensive drug capping report that GAO will
issue early next year. This report summarizes a variety of studies conducted throughout GAO to assess
government programs aimed at drug control and demand reduction. Important issues in the drug war
include (1) how to judge effectiveness, (2) how to maximize the impact of funds expended, and (3) selection
of the proper strategies in pursuing the drug war.
In a report and subsequent testimony for a House subcommittee, GAO identified serious management
problems with the Department of the Treasury's processing of civil penalty cases for violations of the Bank
Secrecy Act. Because of lengthy delays, the statute of limitations had expired on several cases before
penalties could be assessed. In fiscal year 1 992, GAO also concluded a major review of state efforts against
money laundering, which found that federal support of these efforts is lacking because financial intelligence
data are not accessible to state law enforcement agencies.
Significant improvements in the operations of the Bureau of Alcohol, Tobacco and Firearms (BATF) have
been achieved this past fiscal year as a result of GAO studies and audits. Gun tracing activities and related
processes have been upgraded and improvements noted. Another important effort involved an analysis of a
potential nation-wide gang member data base. As a result of GAO work, significant changes will be made in
any modeling of this system.
This past fiscal year, GAO has also undertaken a series of reports to examine the U.S. bankruptcy system
and how the U.S. Trustee Program works. Recommendations addressing organization changes and
operations improvement have been made to the Congress. With more than 1 million bankruptcies a year,
the efficient and effective handling and disposition of such cases has become vital.
Sentencing guidelines, prerelease planning for inmates in prisons and boot camps and sentencing
disparities were all subjects addressed in GAO reports this year. The common theme running through all
this work is the need to better deal with the nation's crime problem.
GAO's work wfth the Immigration and Naturalization Service (INS) in fiscal year 1992 resulted in significant
cost savings. Almost $2.5 million was saved based on GAO's recommendation to the INS to adopt a
statistical method for its employer compliance inspections and resulted in substantially reducing the number
of inspections that the INS must perform annually.
Future GAO work will continue to focus on how effective the war on drugs is, how to improve BOP
operations, how to enhance the government's white-collar crime effort, and how to handle the increasing
problems of illegal immigration. In addition, GAO will conduct a major study focusing on priority setting and
resource allocation by the Department of Justice, Federal Bureau of Investigation, and Drug Enforcement
Federal Management Issues
Dunng fiscal year 1992, GAO's work in this area focused primarily on improving agency organization and
management and achieving financial savings by better managing federal assets. About one-third of the
issue area's resources were dedicated to assessments of the overall management of federal agencies.
These reviews have created a basis for more targeted congressional oversight and led to corrective agency
actions. For example, a report on the management of the U.S. Customs Service led to two House hearings
on the management of its trade enforcement activities. The Customs Service has committed to significant
long-term changes in management to overcome basic roadblocks facing the successful accomplishment of
its mission. GAO also reported on the progress being made at the Government Printing Office (GPO), where
it had previously done a management review. In response to GAO's recommendation that production
operations costs could be reduced by decreasing overtime on the weekends, GPO's net reductions in
overtime will result in cost-savings of $5.4 million. In addition, GAO assisted the Library of Congress in the
design and execution of a procurement for a paper deacidif ication plant which resulted in cost savings of
$11.1 million, due to the elimination of unqualified bidders and deferral of the contract award.
In fiscal year 1 993, GAO will continue or complete its ongoing management reviews and follow up on agency
progress in addressing recommendations made in several other completed reviews.
About two-thirds of the issue area's resources were devoted to reviewing high-risk activities surrounding the
management of nearly $200 billion in federal assets, both seized and forfeited assets, as well as the assets of
failed savings and loans acquired by the RTC. GAO s work at the U.S. Marshals Service and Customs
Service focused on their management of millions of seized and forfeited assets resulting from the war on
drugs. GAO's recommendations led to an agreement by the two agencies to test the consolidation of these
functions, which will reduce duplication of effort and save millions of dollars. GAO's work at RTC focused on
the agency's progress in managing and disposing of its huge and growing inventory of hundreds of billions
of dollars in assets. As a result of GAO's review of the RTC's policies and procedures for maintaining
insurance on assets held by failed thrifts, the RTC established a new policy which will save $21 million in
insurance premium payments. GAO's work has disclosed major problems in RTC's contracting systems,
information systems, and programs for disposing of real estate assets. By comparison, RTC's activities in
resolving failed thrifts and selling financial assets have fared well.
A broad range of work will continue to track the RTC's progress in fiscal year 1993. In addition, GAO will
examine the overall management of the Department of Commerce.
Work Force Quality
GAO's recent work has demonstrated that the state of the public service is not what it should be and that, as
a result, government programs and services have suffered. Significant improvements in federal human
resource management have been made as a result of GAO's work. This work dealing with the public service
has contributed to, among other things, improved programs for federal employees displaced due to
downsizing, legislation affecting the proper use of experts and consultants, enhanced Office of Management
and Budget (OMB) guidance to agencies on contracting for inherently governmental functions, expanded
Office of Personnel Management (OPM) efforts to achieve administrative cost savings in the Federal
Employees Health Benefits Program ($62 million) and as a result of the strengthening of federal policies
governing the use of administrative leave ($35.7 million), improved Tennessee Valley Authority labor-
management relations, stronger ethics regulations, and more effective implementation of veterans'
Future GAO work will involve continued evaluation of what the government should do to attract, motivate,
and retain people committed to providing high-quality public service. At the request of key congressional
oversight committees, major reviews are under way focusing on hiring and promotion practices of
government agencies, specifically assessing the government's hiring process and its progress in achieving a
discrimination-free environment, the equity of federal pay classification systems, and the adequacy of
financial disclosure systems. Other GAO work will involve evaluations of future critical work force issues,
such as the aging work force, work force diversity, and work-family issues.
Government Business Operations and Information
As a result of GAO recommendations, the Department of Labor upgraded mailing operations which will save
$14.9 million. In addition, GAO recommendations to the General Services Administration (GSA) to modify
the terms of their overnight package delivery contract resulted in reducing mail costs by almost $1 .6 million.
During the next few years, GAO's work in government business operations will focus on adapting the
businesslike functions of government to an increasingly competitive environment. The mission and varied
roles of the Department of Commerce need scrutiny as the relationship between business and government
changes. The productivity, pricing, service, and employment policies of the U.S. Postal Service will continue
to generate congressional oversight and interest. The GSA will face renewed challenges to business as
usual in interacting with the private sector to provide office space, supplies, and equipment to government
In the area of government information and statistics, GAO will continue to build on its recommendations for
census reform to examine other problems with the statistical system, and help the Congress determine how
the collection, protection, and dissemination of government information can be improved in an era of swift
During fiscal year 1992, GAO's work contributed significantly to legislative and executive actions that will
result in future financial benefits and improvements to program operations. For example, GAO proposed
several major internal control improvements and program changes that were acted on in fiscal year 1 992
and will result in savings of more than $751 million. These improvements included actions to (1) remove
deceased persons from federal and state income security program rolls and collect overpayments, (2)
encourage the passage of legislation to allow VA to use tax data to verify beneficiaries' incomes ($31
million), (3) strengthen the Computer Matching and Privacy Protection Act of 1988 ($105 million), (4) reduce
VA pensions to veterans who receive Medicaid supported nursing home care ($1 50 million), (5) offset tax
refunds to collect Social Security overpayments ($186 million), and (6) improve federal collection of
insurance premiums to protect private pensions.
In addition, GAO reports and testimony addressed numerous policy issues affecting retirees, veterans, the
poor, and the disabled:
• GAO helped the Congress focus on major legislative changes to pension laws under the Employee
Retirement Income Security Act (ERISA) that will improve the financial condition at Pension Benefit
Guaranty Corporation (PBGC). GAO analyzed approaches that will help strengthen funding of
underfunded pension plans. Underfunded plans pose a $40- billion risk to PBGC.
• GAO described how lowering the age of Medicaid eligibility would reduce the retiree health liabilities
of U.S. corporations.
• GAO highlighted public service issues that the federal government, and Social Security
Administration (SSA) in particular, will face in the next decade.
• GAO disclosed the dearth of protections farmworkers have in the area of health and worker
In the future, as in the past, GAO will focus a significant portion of its resources on the long-term health of the
Social Security Trust Fund. It will analyze proposals on alternative trust fund investments and work to
develop a procedure for proper accounting of trust fund balances.
GAO will also continue to study (1) the nation's major welfare reform initiatives to address their effects on
long-term recipients and on the self-sufficiency of families; (2) the implementation of landmark child care
legislation to develop a framework for evaluating trade-offs among cost, quality, and access; (3) alternative
models for delivering long-term care services to the elderly and the disabled; (4) policies and program
designs of VA and SSA disability programs to identify needed reform; and (5) retirement policy issues,
including protection of retiree income and health benefits, the impact of changes in pension coverage, and
alternative ways to invest pension funds to meet social goals while protecting beneficiaries' interests.
GAO will also continue to focus on enforcement of pension laws under the ERISA to identify fraud, waste,
and mismanagement in the management of $1 .6 trillion in private pension plan assets. GAO also plans to
continue assessing internal control problems involving benefit rolls. In addition, GAO will investigate reasons
for the unprecedented growth in the Social Security disability programs.
Medicare and Medicaid
In fiscal year 1992, the Congress took actions based on GAO recommendations that will require the Health
Care Financing Administration (HCFA) to identify and recover mistaken payments owed the Medicares'
program, reduce payments for durable medical equipment, and to extend the secondary payer provisions
for Medicare disability patients. These actions will result in nearly $984.2 million in expected Medicare
program savings. Additionally, GAO recommended that HCFA correct serious internal control weaknesses
that involve the review of electronic claims for anesthesia services.
GAO also issued a number of reports dealing with Medicare payment rates for new and expensive
technology and is performing additional reviews concerning the Department of Health and Human Service
(DHHS) controls over Medicare payments. In addition, GAO reported and testified on actions needed to
ensure that beneficiaries receive high-quality care from providers, such as health maintenance
organizations, hospitals, and ambulatory care facilities. Finally, GAO completed a series of studies
addressing waste, abuse, and fraud in the Medicare program.
GAO will continue its work to assess whether several fee schedules and payment formulas in the Medicare
program have set payments at appropriate levels. GAO will also continue work to assess alternative means
to finance long-term care. A third series of assignments will address the regulation and pricing of
pharmaceuticals in the United States and several foreign countries.
HCFA is also responsible for the federal administration of the Medicaid program-the federal/state program
serving the health care needs of the poor. Because Medicaid has been experiencing tremendous growth in
recent years, GAO's work has focused on how the program can be more effectively run. A significant
ongoing effort in this area focuses on the Medicaid program's vulnerability to fraud and abuse. One
assignment that addresses these concerns involves the diversion and resale of prescription drugs under the
guise of legitimate medicine. GAO has found that certain states have developed promising approaches to
help control these losses. Among these is the development and implementation of managed care systems.
Federal Health Care Delivery
GAO's recommendations and analyses continued to help the Congress improve the cost effectiveness of
DOD's and VA's health care systems and the quality of care provided their beneficiaries. In fiscal year 1 992,
GAO provided reports, briefings, and testimony on a wide variety of health issues, such as the efficient
operation of VA pharmacies, including controls over addictive drugs; DOD's implementation of a system of
managed health care; quality of care issues at VA psychiatric hospitals; the accuracy and completeness of
VA medical records; the importance of elevating the role of chief of nursing services at VA hospitals; HCFA
evaluations of accrediting organizations tor home health care agencies, such as the Community Health
Accreditation Program; and DOD's Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS) mental health benefits program.
Much of GAO's work is generated as a result of congressional requests and is closely aligned to the
committees' legislative agendas. As a result, GAO plays a substantive role in legislative developments and
agency actions. For example, GAO's testimony on obstacles to implementing DOD's coordinated care
program included suggestions that DOD postpone its plans to "lock our nonenrollees from military health
care facilities, that DOD use positive incentives such as reduced cost-sharing and discounts to nonenrollees
who use the program's providers, and that DOD use a system of beneficiary premiums in place of higher
cost sharing by enrollees. House and Senate committees included these suggestions in reports supporting
legislative authorizations, citing GAO's testimony as instrumental in developing the legislation. DOD also
used GAO's suggestions in implementing the coordinated care programs for CHAMPUS.
Future work will continue to focus on the effectiveness with which VA and DOD carry out their responsibilities
to provide high-quality health care to federal beneficiaries. Due to pressures placed on the nation's health
care system by a variety of cost containment measures, GAO will continue its focus on quality assurance
issues that affect private health care programs. GAO will review potential ways to reform and refine the entire
federal health care delivery system.
National and Public Health
The federal government is the guardian of the public health. Among its functions in this role are funding
research; support for educating and training health professionals; surveillance of contagious diseases;
overseeing food and drugs; providing block grants to states for mental health services, drug and alcohol
programs, and maternal and child health services; and providing health care services to underserved areas
and population groups. The Public Health Service (PHS), through its numerous administrations and
agencies, carries out most of these tasks.
During 1 992, our work had a major impact on the debate on health insurance policy and reform. We
provided information, analysis, and reform options that have a direct bearing on solving the combined
problems of lack of access (35 million Americans lack any health insurance) and rapidly escalating costs.
We completed two reports on efforts by the various states to implement health care reforms and potential
federal barriers to those reforms. One of these reports, showing the very modest effects of state efforts to
assist the small business health insurance market, was the centerpiece of two hearings and has become a
key document in the consideration of federal insurance reform legislation. Additionally, testimony prepared
for the Senate Finance Committee on federal barriers to state reform efforts was used as a key source
document for committee members and staff.
Our work on the nation's drug abuse problem had a significant impact on a major piece of legislation, the
Alcohol, Drug Abuse and Mental Health Administration (ADAMHA) Reorganization Act. Within the past year,
GAO recommended better accountability under the block grant program, which is the primary vehicle for
federal funding to states for substance abuse treatment. Our report on information and accountability
problems in state use of block grant funds led to the Reorganization Act's requirement that states provide
detailed needs assessments.
Other important provisions of the ADAMHA Reorganization Act incorporate recommendations made in
previous GAO reports on drug-exposed infants and substance-abusing pregnant women to provide for
augmented and improved services for such women. The act also responds to recommendations made in
GAO's report on methadone maintenance.
Education and Employment
During fiscal year 1992, GAO's work contributed significantly to legislation and improvements in agency
operations and resulted in financial savings. For example, GAO's recommendations related to the Job
Training Partnership Act program were incorporated into legislation enacted in 1 992 that refocuses the
program on the hard-to-serve population; eliminates abuses of on-the-job training; emphasizes the need to
continue services to older workers; improves program oversight, monitoring, evaluation, and data collection;
and improves federal monitoring of racial and gender disparities in services. Prompted in part by GAO
reports and testimony, the Congress raised the maximum penalties for violations of workplace safety and
health regulations and child labor laws, which will result in $341 million in increased government revenue in
fiscal years 1992 and 1993. Also, GAO's report on legislative and administrative options for improving
workers' safety and health led to the first comprehensive reexamination of the Occupational Safety and
Health Administration's authorizing legislation in the agency's 20-year history. In response to GAO's
recommendations, the National Labor Relations Board (NLRB) made substantial progress in expediting its
review of cases.
GAO also contributed significantly to congressional oversight of elementary and secondary education. For
example, as a result of GAO's work, the Congress required the Department of the Interior's Bureau of Indian
Affairs (BIA) to develop a plan to overcome deficiencies GAO reported in services to Indian preschool
students with disabilities. After reviewing the plan, Congress reassigned responsibilities to the states and
tribes and provided the tribes with the funding BIA had been receiving to provide these services. GAO also
reported on rural districts' use of Drug-Free School Program money to help the Congress determine
appropriate funding levels.
In addition, on the basis of GAO's work, the Department of Education is changing the administration of the
Vocational Rehabilitation Program to better meet the intent of the Congress to serve those with severe
In the higher education area, GAO continued to help the Congress deal with shortcomings in the guaranteed
student loans programs, especially during the recently completed reauthorization of the Higher Education
Act. GAO's work, through changes made to the act by the Higher Education Amendments of 1992, should
help improve management controls over student financial aid programs and reduce the programs' cost to
the government. For example, (1) future borrowing under supplemental and parental loan programs will be-
as are other guaranteed student loans-subject to origination fees that are expected to significantly increase
future federal revenue, (2) tightening federal gatekeeping activities for schools participating in federal
student assistance programs should help ensure that students obtain the education they expect, and (3)
subjecting defaulted Perkins loans to the same federal rules as guaranteed loans will make some schools
reduce their default rates to receive future federal funding. Also as a result of GAO's work, financial savings
were achieved with the Department of Education's collection of student loan origination fees that two lenders
had previously failed to pay ($257,682). In addition, the Department in response to GAO recommendations,
instituted new accounting procedures to more accurately account for Perkins Student Loans acquired from
schools that cease operations.
During the next 2 years, GAO will continue to address the nation's human resources and workplace quality