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Mr. Chairman and Members of the Subcommittee:

As the Comptroller General of the United States, it is a pleasure to appear before you today to present the General Accounting Office's (GAO's) budget request for fiscal year 2002. I am proud to say that we served the Congress and the American people well in fiscal year 2000. Our work resulted in substantial financial savings and significant improvements to government that will benefit all Americans. I am confident that fiscal year 2001 will be just as productive.

At the outset, I want to thank the Committee for its support in helping enact GAO's human capital legislation. This legislation will go a long way toward helping us address many of our human capital requirements and ensuring that GAO remains prepared to meet the Congress' needs in the future. We have issued implementing regulations for the early retirement and scientific and technical staff provisions and plan to issue authorizing regulations later this year to guide any potential future buy-outs and reductions-in-force.

GAO's fiscal year 2002 budget request is critical to our continuing efforts to reorganize and reshape the agency, reengineer our business processes, and train and equip our staff with up-todate technology to help meet Congress' current and future needs. Congressional mandates and requests continue to represent over 90 percent of our work, and our workload and productivity remain at near-record levels. Our budget request represents our needs--not wants--to sustain this level of effort and support to the Congress.

Since becoming the Comptroller General at the beginning of fiscal year 1999, GAO's appropriations have been insufficient to fund mandatory and inflation expenses associated with employee compensation and benefits, and make needed investments in critical areas, such as technology, training, and performance recognition. We have managed our resource shortages by reducing our staffing levels and underfunding critical investments. We cannot, and should not, continue this trend.

The funds we are requesting are essential to helping us remain prepared to meet the complex, controversial, and multidimensional issues and challenges confronting the Congress now and in the future. Our request includes only those funds we need to stabilize at our targeted 3,275 fulltime equivalent staffing level and to incrementally increase investments needed in training, technology, performance recognition, and other key support items to a level consistent with best practices of other comparable government and private sector entities.

Before I begin detailing our fiscal year 2002 budget needs, I would like to highlight some of GAO's accomplishments and achievements in fiscal year 2000 and the major challenges confronting us.


GAO had a tremendous year in fiscal year 2000. As a result of actions taken on our work by the Congress and federal departments and agencies, taxpayers benefited from over $23 billion in financial savings-a $61 return on every $1 invested in GAO. Our work also resulted in significant improvements in government operations and services that will benefit all Americans.

Among other things, by acting on our recommendations, the government improved public health and safety, strengthened national security, better protected consumers, and improved its financial management and information systems. We also contributed critical information to public debates on Social Security and Medicare reform and called attention to looming problems, such as the security of government computer systems and the knowledge and skills needed in the federal workforce in coming years. Other indicators of our performance, such as the number of testimonies our senior executives provided and recommendations implemented, exceeded that of most recent years. I also am pleased to report that we made significant progress toward addressing many of the organizational, human capital, and information technology challenges that I outlined for you at last year's hearing. We had a very busy and productive year.

Taxpayers Benefit from $23 Billion in Financial Savings

In fiscal year 2000, GAO helped achieve about $23.2 billion in direct financial benefits for the American taxpayer. These benefits are a result of the Congress or federal departments and agencies implementing our recommendations to make government services more efficient, improve the budgeting and spending of tax dollars, and strengthen the management of federal resources. The estimated financial benefits include budget reductions, costs avoided, resources reallocated, and revenue enhancements. These results exceeded our target of $22 billion and were greater than that of the previous three fiscal years, as illustrated in the following graphic.

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Some examples of GAO's work that contributed to these financial savings include the following.

Helping to Prevent Fraud and Abuse in Medicare: GAO had long advocated increased funding specifically for activities to prevent fraud and abuse in the Medicare program. In 1996, the Congress passed the Health Insurance Portability and Accountability Act,

which provided the additional funding. As a result of these activities, the Medicare program's net savings were about $3 billion in fiscal year 2000.

Cutting Costs of the F-22 Aircraft Program: In a series of reports beginning in the mid1990s, GAO questioned various aspects of the Air Force's F-22 aircraft acquisition program. We reported that the acquisition strategy was risky and that the program was experiencing cost growth, manufacturing problems with test aircraft, and testing delays. Our analysis helped the Congress reduce the final fiscal year 2000 appropriation request for the F-22 by about $552 million and to identify conditions that should be met before the Department of Defense could begin full production.

• Supporting Oversight of the Internal Revenue Service (IRS): GAO continued to support
congressional oversight of IRS' operations, including IRS' implementation of the 1998
IRS Restructuring and Reform Act, its budget requests, and administration of various tax
functions. For example, our testimony on IRS' broad-based modernization efforts
provided an integrated assessment of the challenges IRS continues to face in its tax
enforcement and customer service operations and its modernization of performance
management, information systems, and business practices. At the same time, our work
generated savings and potential reductions in taxpayer burden. Our work on the
improved use of information returns in IRS' tax enforcement operations yielded $83
million in savings this year. IRS also agreed to begin tracking information that has the
potential of clarifying its notices to taxpayers and easing their task in complying with
those notices.

Recapturing Excess HUD Funding: GAO identified funding from several sources in the Department of Housing and Urban Development's budget, including unexpended balances no longer needed, that could be recaptured in fiscal years 1998 and 1999. The Congress rescinded $1.65 billion from the Section 8 housing program's fiscal year 1998 budget authority and rejected $1.3 billion of HUD's fiscal year 1999 request for housing assistance for a total reduction of $2.95 billion. Subsequently, GAO and HUD worked together to revise HUD's analysis to show that, by using recaptured funds, HUD had sufficient funding to meet its needs.

Almost 800 Actions Taken To Improve Government Operations or Services

GAO's recommendations and audit findings also resulted in or contributed to many improvements in the effectiveness and efficiency of government operations and services during fiscal year 2000. While immeasurable in dollar terms, they contributed to improving public safety and consumer protection, establishing more effective and efficient government operations, and safeguarding the nation's physical and information infrastructure. We recorded 788 actions taken in response to our recommendations to improve how the federal government operates, a number far exceeding that of the preceding 3 years as illustrated in the following graphic.

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Examples of GAO's work that resulted in these accomplishments follow.

Improving Nursing Home Quality of Care: The Health Care Financing Administration
(HCFA) and several states-including California, Maryland, and Michigan-improved
their oversight and enforcement of nursing homes' quality of care standards in response
to GAO's recommendations highlighting weaknesses in existing processes.
Improvements included increased funding for nursing home surveyors, more prompt
investigation of complaints alleging serious harm to residents, more immediate
enforcement actions for homes with repeated serious problems, a reorganization of
HCFA's regional staff to improve consistency in oversight, and increased funding for
administrative law judges to reduce the backlog of appealed enforcement actions.

Managing Wildfire Prevention: "Federal Experts Saw Massive Wildfires Coming" read an August 7, 2000, news headline. The article was referring to GAO's April 1999 report on wildfires. Since then, GAO has used the increased risk of uncontrollable and often catastrophic wildfires as an example of the need for "strategic budgeting" to address issues that are not aligned with the current budget and organizational structures of the four major federal land management agencies. Responding to the wildfires that burned over 6.5 million acres of public and private land in 2000, the Congress appropriated an additional $240 million in fiscal year 2001 to reduce hazardous fuels in high-risk locations where wildlands and urban areas meet. GAO testified on the need for the four land management agencies to act quickly to develop a framework to spend funds effectively and to account accurately for what they accomplish with the funds.

Improving Human Capital Practices: Our work on human capital issues helped focus the attention of the executive and legislative branches on the importance of these issues,

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Last year, I outlined for you a number of major management and operational challenges facing GAO. These challenges included human capital, information technology, organizational, job processes, and communication issues within the agency. I am pleased to report that we made significant progress toward addressing many of these issues.

We continued to enhance our effectiveness and efficiency through a variety of means during fiscal year 2000, including issuing a strategic plan, establishing congressional protocols, realigning the agency, implementing key human capital initiatives, and increasing the use of information technology. These efforts to enhance and strengthen GAO and its services to the Congress and the American people include the following.

In the Spring of 2000, we issued our first strategic plan for the 21st century based on input from the Congress and supplemented by GAO's own expertise and other outreach efforts. The plan focuses on how we intend to support the Congress in helping to shape a more efficient and effective government. It describes our role and mission in the federal government; the core values that guide our work; the trends, conditions, and external factors underlying our plan; and our goals, objectives, and strategies for serving the Congress. Our intent is to update the strategic plan every 2 years for each Congress.

We established a set of congressional protocols to govern our interactions with and ensure our accountability to the Congress. These protocols, which underwent a 9month pilot test, set out clear, transparent, consistently applied policies and practices

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