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GAO oversight and the National Academy of Public Administration study : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, first session, March 30, 1995 online

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S. Hrg. 104-879

GAO OVERSIGHT AND THE NATIONAL ACADEMY
OF PUBUC ADMINISTRATION STUDY



Y 4. G 74/9; S. HRG. 104-879

GAD Oversight and the National Acad..



HEARING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION



MARCH 30, 1995



Printed for the use of the Committee on Governmental Affairs







U.S. GOVERNMENT PRINTING OFFICE
89-838 cc WASHINGTON : 1998

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-055967-7



S. Hrg. 104-879

GAO OVERSIGHT AND THE NATIONAL ACADEMY
OF PUBUC ADMINISTRATION STUDY



Y 4. G 74/9; S. HRG. 104-879

GAD Oversight and the National ftcad. .



HEARING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION



MARCH 30, 1995



Printed for the use of the Committee on Governmental Affairs







U.S. GOVERNMENT PRINTING OFFICE
89-838 cc WASHINGTON : 1998



For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-055967-7



COMMITTEE ON GOVERNMENTAL AFFAIRS

WILLIAM V. ROTH, Jr., Delaware, Chairman
TED STEVENS, Alaska JOHN GLENN, Ohio

WILLIAM S. COHEN, Maine SAM NUNN, Georgia

FRED THOMPSON, Tennessee CARL LEVIN, Michigan

THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas

CHARLES E. GRASSLEY, Iowa JOSEPH I. LIEBERMAN, Connecticut

JOHN McCAIN, Arizona DANIEL K. AKAKA, Hawaii

BOB SMITH, New Hampshire BYRON L. DORGAN, North Dakota

Franklin G. Polk, Staff Director and Chief Counsel
Suseinne Marshall, Deputy Staff Director
Leonard Weiss, Minority Staff Director
Michal Sue Prosser, Chief Clerk



(II)



CONTENTS



Opening statements: Page

Senator Roth 1

Senator Glenn 4

Senator Grassley 11

Senator Pryor 12

Senator Cohen 13

Senator Lieberman 14

Senator Levin 30

Senator Nunn 34

Prepared statement:

Senator Dorgan 10

WITNESSES

Thursday, March 30, 1995

R. Scott Fosler, President, and Alan K. "Scotty" Campbell, Panel Chair,
National Academy of Public Administration, accompanied by Annmarie
Walsh, Project Director 15

Hon. Charles A. Bowsher, Comptroller General, U.S. General Accounting
Office, accompanied by James F. Hinchman, Special Assistant to the Comp-
troller General 37

Alphabetical List of Witnesses

Bowsher, Charles A.:

Testimony 37

Prepared statement 78

Campbell, Alan K. "Scotty":

Testimony 15

Prepared statement 69

Fosler, R. Scott:

Testimony 15

Prepared statement 69

APPENDIX

GAO Charts A, B, C, D and E 84

Staff Briefing Packet of Charts for the General Accounting Office 89

Study entitled "The Roles, Mission and Operation of the U.S. General Ac-
counting Office," October 1994, report prepared for the Committee on Gov-
ernmental Affairs by the National Academy of Public Administration 95

Comptroller General's 1994 Annual Report 186

Memorandum containing the issue area plans 266



(III)



GENERAL ACCOUNTING OFFICE OVERSIGHT
AND THE NATIONAL ACADEMY OF PUBLIC
ADMINISTRATION STUDY



THURSDAY, MARCH 30, 1995

U.S. Senate,
Committee on Governmental Affairs,

Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., in room SD-
342, Dirksen Senate Office Building, Hon. William V. Roth, Jr.,
Chairman of the Committee, presiding.

Present: Senators Roth, Cohen, Grassley, Glenn, Nunn, Levin,
Pryor, and Lieberman.

OPENING STATEMENT OF CHAIRMAN ROTH

Chairman ROTH. The Committee will please be in order.

This morning we will be considering "The Roles, Mission and Op-
eration of the U.S. General Accounting Office." That is not only the
purpose of the hearing, but the title of a report that was prepared
for the Committee last year by the National Academy of Public Ad-
ministration. Because the report was not available until the end of
the session, there was no opportunity to receive testimony from
NAPA or GAO on the findings or recommendations of the report.
In the interim, GAO has made some progress on some of the rec-
ommendations, and we will look forward to hearing about the
progress made on that front later this morning from the Comptrol-
ler General.

As stated in the Executive Summary of the report, "GAO has
been a valuable part of the Federal Government for more than 70
years, providing auditing, research and evaluation to government
generally and to Congress in particular, which could not be easily
and readily replaced."

By the very nature of this Committee's jurisdiction and respon-
sibilities for general oversight of all functions of government, the
Governmental Affairs Committee depends heavily on the work of
GAO. We call on GAO to perform a variety of audits and evalua-
tions in every facet of government. In that sense, it can be said
that the success of this Committee is directly tied to the success
of GAO. I want to congratulate Comptroller General Bowsher and
the thousands of GAO employees, dedicated men and women, who
have been instrumental in performing this critical role. While there
may be criticism on particular issues, reports, or actions, I think
it needs to be made clear that GAO is a vital link in providing in-

(1)



formation, support, and guidance that is necessary for Congress to
meet both its oversight and legislative responsibilities.

The GAO has evolved over the decades and responded with inter-
nal changes to meet the needs and demands required at different
times in our history. I believe we are now at a crossroad which re-
quires a serious review of GAO's role and mission as we prepare
the Federal Government to meet the needs of the 21st Century.

GAO's statutory authorization gives a broad mandate to make
recommendations on the economy and efficiency of public expendi-
tures, to prescribe systems and procedures for appropriation and
accounting, and to undertake investigations and reports ordered by
any congressional committee. We need to consider the broad man-
date in the context of where it has taken the agency to date. The
NAPA report suggests that the GAO mission and use by Congress
has been broadened and expanded in recent years, placing new de-
mands on the agency's core purpose, skills, and resources. NAPA
further suggests, and I tend to agree, that it is incumbent on the
Congress to more clearly define the mission as we see it.

I also believe that it is fundamental to GAO's credibility that
they live by the standards that they prescribe to others. GAO
should be asking the same questions of itself that it poses to oth-
ers. How can GAO be made more efficient? How can they emulate
the private sector to do more with less? Why are only 21 percent
of GAO reports on time, with 29 percent of the reports over 6
months late? How does GAO compare to its management layers
and ratio of supervisors to employees? Is GAO operating efficiently
when 30 percent of its budget goes to general administrative and
overhead costs. How does GAO justify spending more than a quar-
ter of its staff time on tasks other than core work products, as indi-
cated on the Workforce Utilization Chart A? ^

How can GAO justify reductions to its core workforce of GS-7
through GS-12 by 34 percent while inflating the senior manage-
ment ranks by 11 percent, as, again, represented on Chart B?^

Why should the Committee accept the notion that GAO will be
able to use personnel cuts to achieve a dollar savings when over
the past 2 years a total staff cut of 12 percent has resulted in only
1 percent savings to the taxpayer?

These are all issues that must be examined closely by this Com-
mittee and by the GAO.

In performing its mission and paramount to the effectiveness of
the GAO is the absolute requirement that GAO have the trust and
confidence of all Members of Congress, regardless of party affili-
ation or individual policy positions. NAPA has raised concerns that
GAO has become increasingly involved in policy analysis and policy
development. It is recommended that GAO revise its vision and
mission statements to reflect more focused and realistic objectives.

The panel further recommends a shift in GAO perspectives and
methods, from promoting process-oriented controls to examine the
root causes of problems in order to help improve the effectiveness
of program outcomes. I believe this goes to the heart of the Com-



* Chart A app>ears in the Appendix on page 84.
^Chart B appears in the Appendix on page 85.



mittee's initiatives to put in place performance measures and re-
sults-oriented planning.

I also support the panel recommendation that congressional re-
questers have a responsibility not to put GAO's role and reputation
as impartial objective auditor and evaluator in jeopardy by request-
ing work that inevitably places GAO in the middle of controversial
issues.

I believe there is a valid question to be raised about the role of
the Congress. We need to do a little self-examination ourselves and
determine to what extent we are a part of the problem and how
that can be changed.

Another point raised by the panel is in the area of work proc-
esses, pointing out that they tend to proceed in uniform hier-
archical patterns with inadequate definition at the outset of the ob-
jectives, methods, and types of work and cumbersome review proc-
ess at the end. By taking a look at Chart C,^ you will get an idea
of the draft review process fi*om beginning to end.

The recommendations that GAO congressional oversight commit-
tees need to do more regular, continuing oversight of GAO is an
important one. We need to closely monitor the actions of the Com-
mittee in responding to the observations and recommendations that
are brought forth today. We need to look at the utilization of re-
sources, the quality of work products, the value of those work prod-
ucts to the core mission of the agency, the organizational structure,
the management layers, the makeup of the workforce, and the
work processes.

Because of GAO's unique role as an auditor and investigator, it
is important that the organization have credibility with those enti-
ties being reviewed. In this sense, it is incumbent upon GAO to
operate in the most effective, efficient manner possible. There may
be a natural assumption that GAO conducts its own internal re-
views to assure that it is living by the recommendations it makes
to others.

As we in the Congress raise the tough questions to Executive
Branch agencies, we need to raise the same tough questions of our
Legislative Branch organization. We are all aware that the current
environment is calling for tight budgetary constraints and some
sacrifices fi'om all government organizations. Faced with the need
to find dollar savings, as the largest congressional entity, GAO is
an obvious target.

There has been a call for a 25-percent reduction fi-om the current
funding level, and the Comptroller General has expressed his seri-
ous concerns about the impact of such a dramatic cut.

While the Appropriation Committee will make the final deter-
mination on funding levels, as the GAO oversight committee we
have the responsibility for conducting an in-depth review of GAO's
operation to determine if, in fact, all the services and the cost of
those services is justified.

This exercise should be viewed as a constructive, not destructive
one. Criticisms of the work process are not criticisms of the individ-
uals performing the work or the Comptroller General. And as a



*Chart C appears in the Appendix on page 86.



part of our review, we should take into consideration the future
roleofGAO.

I see the organization as a critical element in our efforts to re-
invent government. The driving force for the needed management
changes will depend heavily on the guidance from the GAO and the
Governmental Affairs Committee. In light of this, I am pleased
that the current strategic plan for GAO lists as one of its top five
areas for concentration promoting a smaller, more efficient and
cost-efiective government.

In looking to the strategic plan for GAO in the work priorities,
I have to say I am quite concerned about a provision inserted in
the Senate regulatory moratorium bill adopted yesterday. That pro-
vision assigns responsibility to GAO for reviewing every significant
regulation promulgated by an agency, informing Congress whether
the agency performed its job. This task is currently carried out by
OMB's Office of Information and Regulatory Affairs and in some
cases duplicates the missions of independent peer review provisions
and legislation ordered reported by this Committee last week.

Senators McCain and Levin added an important provision to the
paperwork legislation currently in conference that would reduce
unnecessary reports to Congress, and in my opinion, the reporting
called for in the provision would be a prime candidate for classifica-
tion as duplicative and not necessary, something to be eliminated.

It is troublesome to create a new mission for the agency at the
very time we are tr3dng to preserve the core mission on a smaller
budget.

Let me reiterate that, as Chairman of this Committee, my ulti-
mate goal is to define the vital role that GAO will be called to per-
form as we prepare for this future, and I look forward to maintain-
ing a close, cooperative working relationship with the Comptroller
General and his management team. But that does not mean there
aren't some tough questions to be raised, and I challenge the GAO
to find answers to those questions and make the adjustments nec-
essary to give it the credibility, to hold itself out as a standard by
which any government organization should measure itself.

Senator Glenn.

OPENING STATEMENT OF SENATOR GLENN

Senator Glenn. Thank you, Mr. Chairman.

I do think it is good we are having a look at GAO. This whole
process started back in the spring of 1993. This isn't something
that just happened in the last few months. We had talked to GAO
about when was the last time anybody had come in and really
looked at GAO, to assess and, in effect, audit the auditors. It hadn't
been done for a while. While Comptroller General Bowsher had had
some internal groups looking at its processes, we felt it was good
to have an outside group come in and really look at the way things
were going.

There was an original proposal for $2 million for this project. We
talked to the National Academy of Public Administration, and they
agreed to do it for considerably less than that, for which we thank
them. This is their business, looking at government, and we appre-
ciate the work that they have done.



I think they have done a good job. Comptroller Bowsher has
looked at the results of NAPA's study and already is making some
of the changes and improvements that have been suggested. They
are already underway.

I was glad to hear the Chairman say that he supports GAO's
work, that it is vital and that this is an effort to make GAO better,
not to slash their budget 50 percent, as some on his side of the
aisle have suggested. We even had comments in the paper a short
time ago about doing away with GAO. I think that would be a trag-
edy.

So I wanted to make an opening statement this morning. I think
it is appropriate that we go back a little bit and understand what
we have been getting for our money so far. I think GAO has basi-
cally a very good track record.

The GAO has already downsized over the last 2 years, about 12
or 13 percent, I think. I believe that was the figure that we had
a little while ago. They said their objective is to downsize by 25
percent, but they would like to do it over a 2-year period, into 1997,
so they can do it in an orderly fashion.

I might note that GAO is operating now with about the same size
operation as it had back in 1963 when the budget for the United
States was $100 billion. We now have a budget of $1.5 trillion, 15
times as large and far more complex. To think that we can just
whack 25 percent off GAO's budget in 1 year, which has been pro-
posed, as I understand it, by the Republican Conference, is some-
thing that I don't think we can do.

So let's look back for just a moment. This will be a little longer
than my normal opening statements that I try to keep to a couple
of minutes. I think it is important that we set the stage here for
what we are talking about.

I am sure we can make some internal improvements in the way
GAO operates and in the review process that their work has to go
through. But let's look at what GAO has produced in savings. In
the long term, GAO has already saved more in the 1990's than dur-
ing all of the 1980's, and it is a very substantial amount. In the
1980's, GAO could look at their record and say that they had saved
about $106 billion through that decade, and they can document
this. This isn't just something that is ethereal. It is something they
can document.

So far in the 1990's, GAO can point to savings of $119 billion and
can document those savings. So if we put it on a cost-benefit basis,
for every dollar appropriated in 1994, GAO returned $45. I think
that is a pretty good investment. And for every staff year spent by
GAO in the 1990's, GAO returned $4.8 million.

Moreover, it is up to the Congress and the Executive Branch to
implement the recommendations that GAO makes. GAO can't do it.
So part of the fault for not having achieved even greater savings,
it seems to me, is ours. We need only look in the mirror to identify
who may be at fault on that one. If you take GAO's figures of what
has been saved over the last 15 years or so here, the total for the
1980's and the 1990's so far comes to some $225 billion, and these
savings can be documented.

I think when we are talking about GAO's internal workings over
here, whether we can save a little bit on a rug there or a different



size room someplace else, while cutting out one spot in the review
process that will save a few hundred thousand dollars, perhaps, we
also have to look at the bigger picture.

We want to cut out mismanagement, waste, and abuse. Cer-
tainly, we want to do that. And GAO has already downsized, as I
said, by some 12 to 13 percent. But we also want to do it in a way
that means something and doesn't interfere with the operation of
GAO.

Now, let's look at some specific savings, some major savings in
1994 alone, just in 1994. I will run through these rather rapidly.
These are all as a result of GAO studies that came back, on which
we took action:

Changed corporate tax benefits for investment in Puerto Rico, re-
sulting in new revenues of $1.3 billion;

Required DOE to submit a budget request with an analysis of its
uncosted obligations, a savings of $950 million;

Redressed a problem with Medicare overpayments for clinical di-
agnostic services. With the resulting cost reductions, we now have
a savings over 2 years of $840 million;

Implemented a GAO recommendation to Congress provided for
mandatory IRS offset to collect non-tax delinquent debts, resulting
in savings of over $820 million;

The Air Force, as a result of a GAO report concerning excess on-
order stocks, will save almost $600 million;

Veterans' Affairs resolved a problem in estimating housing sub-
sidies, leading to over $450 million subsequently recovered in ex-
cess housing payments; and

We also abolished the fabled wool and mohair subsidies.

Now, this subject came up a number of times, but I think I can
say that the GAO report that came out was the final nail in the
coffin. We will realize about $200 million in savings on that one.

Now, let me comment personally. As the former Committee
Chairman, I can point to these requests to GAO and what resulted
from them when they came back. And let me say there has been
some suggestion in the past that whoever was in control, the Ma-
jority, had the inside track with GAO. I would note that so far this
year in 1995, more than 80 percent of the requests for GAO studies
have come fi'om the Republican side. So it is normal that the Ma-
jority, in their positions of leadership, whether on the Committee
or wherever, are the ones who make the majority of requests. And
I was pursuing my job as Chairman and trying to get efficiency in
government in making requests, and I made quite a number of
them, and some of them have resulted in these savings. These are
just major savings that came fi*om major reports that I requested:

We had a reduction in the 1991 budget for chemical stockpile dis-
posal program of $108.4 million;

A closeout of the new production nuclear reactor, based on a
GAO report, saved a total overall, we can estimate, of about $3.5
billion;

The FTS 2000, the Federal Telecommunications System 2000, re-
competition bids cut back government expenditures by $145 mil-
lion;



By fixing DOD "M" accounts, when we got done with all of the
negotiations we saved $471 million. This resulted fi"om GAO stud-
ies; and

We also cancelled the problem-plagued IRS taxpayer service inte-
grated system automation project, for savings of $41 million.

Now, those are some fairly big-ticket items. Along with them
come a lot of smaller ones:

Reducing the backlog in the RTC suspense accounts, $4.8 million;

Improvements in Department of Agriculture's IRM activities,
$4.4 miUion;

Asset forfeiture improvements, $1.2 million;

Termination of unauthorized vehicles at Lawrence Livermore Na-
tional Laboratory, $546,000;

Lower software and copier prices, $6 million; and

Recovery of Army payroll overpayments by DFAS, $1.7 million.

Now, when you look at these reports that we have used as a
basis for taking legislative action, literally saving money, big-time
money — we are talking billions of dollars here — they came from an
organization that is operating basically at the same size it was
back in 1963 and is still doing this kind of work for us. Mind you,
I want to improve all of GAO's internal procedures. I don't want
anyone to think that I am overboard on GAO. But some of the re-
ports GAO produces may not have an obvious money value associ-
ated with them. Some of them involve other things.

How about GAO's look at the stability of the U.S. chemical weap-
ons stockpile, so we don't wind up in trouble there? These types of
reports don't necessarily involve cost savings, but they are certainly
protecting health and safety of the public.

Patient survival on mastectomies versus breast conservation was
another study that GAO did that is a new sort of guide on the sub-
ject.

Risks of financial derivatives — GAO was one of the first to point
out dangers with derivatives — where Orange County got into deep
and serious trouble, and where we have to v/atch out.

States using illusory approaches to shift costs to the Federal
Government on Medicaid was another study.

Future-year DOD programs. This report was requested by Sen-
ator Roth, our Chairman. The subtitle is: Optimistic estimates lead
to billions in over-programming.

How to make Soviet-designed reactors more safe?

"C-17 Settlement: Not a Good Deal" was the title of another
GAO report. We are using that to look into the C-17 matter.

Exposure of children in public housing to lead-based paint poi-
soning risks is another subject.

We could go on and on with many more examples, which I won't
do this morning. We would take up all of our time with just our
recitation of past reports. But I think it is very, very important.

At a time when congressional staffs have been cut and IG offices
are downsizing somewhat, I think we have to be very careful about
further limiting our investigative and auditing capacity that we
have here in the Congress.

These benefits are not always reflected in dollar figures, as I just
indicated. This Committee has put on the books the Chief Financial
Officers Act, which was termed in one of our hearings as "the best



8

step forward in 40 years in financial management." GAO performs
a vital function under the Act, doing the auditing, and they don't
have nearly enough people to do that. We had to make three basic
pilot projects just to get started because GAO didn't have enough
people to go government-wide on it as soon as we would like to
have seen. So there will be a rotating check each year of different
organizations in government, and that is to follow — that is some-
thing that will go on day after day, year after year, as part of the
CFO Act — in addition to what we did with the IGs in those same
areas.

This is not a small matter. We have some 200 different account-
ing systems in government. We have 160 different accounting sys-
tems in the Department of Defense alone — 43 different accounting



Online LibraryUnited States. Congress. Senate. Committee on GoveGAO oversight and the National Academy of Public Administration study : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, first session, March 30, 1995 → online text (page 1 of 28)