THURSDAY, FEBRUARY 29, 1996.

U.S. GENERAL ACCOUNTING OFFICE

WITNESSES

CHARLES A. BOWSHER, COMPTROLLER GENERAL OF THE UNITED STATES

JAMES F. HINCHMAN, SPECIAL ASSISTANT TO THE COMPTROLLER GENERAL

JOAN M. DODARO, ASSISTANT COMPTROLLER GENERAL FOR OPERATIONS RICHARD L. BROWN, CONTROLLER

Mr. PACKARD. Let's call the hearing back to order.

The next item on the agenda is the General Accounting Office. We are very pleased to have Mr. Charles Bowsher with us, who is the-what is your title, Charles?

Mr. BOWSHER. Comptroller General.

Mr. PACKARD. Yes the Comptroller General.

This budget request is for $377.8 million. The funding includes $6.1 million that will be derived from offsetting collections. You have several members of your staff with you today. We appreciate that, Mr. Bowsher; and if you would like to introduce them, we would be pleased to-well, before we do that, let me make a couple of-three comments.

Mr. BOWSHER. Sure.

Mr. PACKARD. The testimonies of the witnesses have been distributed to the members, and I think most of us have read them. So you may not wish to read yours verbatim.

Mr. BOWSHER. No, I will summarize.

Mr. PACKARD. You may wish to summarize. Then we will open it up to question and answer.

In reading your budget and we had a discussion yesterday on the telephone-let me review briefly where we were last year and some of the dynamics of the General Accounting Office budget last year. Then we will certainly that will be a part of the discussion, because there was a desire, particularly on the part of the Senate, to ask for a 25-percent cut all in the one year, last year, as you recall.

We came together, I think partly because of my influence, and determined that it would be probably more acceptable and more appropriate if the reduction of the 25-percent reduction in your budget would be over a 2-year period, and I think that is ultimately where it settled, and the agreement-and I used your agency rather profusely last year as the model

Mr. THORNTON. As an example.

Mr. PACKARD [continuing]. Of what I felt we needed to do in terms of bringing government agencies and congressional agencies under control, spending under control and also fulfilling our commitment to a balanced budget in 7 years. I really praised you high

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ly and was somewhat surprised to find your budget this year is restoring some of those cuts and that your budget submittal really does not meet the second year of commitment that we have from you.

Now, we talked yesterday and, of course, you indicated that your agency and you would be willing, of course, and certainly have not reneged on that commitment. Of course, what we will be hearing today will be a change from that commitment, and that is distressing to me at least, and we will have, I am sure, a lot of questions and discussion on that point.

Our intention, of course, coming into this hearing was that we would this was a done deal. It was not something that was going to be changed. So we will probably have a lot of questions on that before we are done, and you will have some explaining to do, I suspect.

With that, I am going to have you go ahead and introduce your staff, and most of them I think we know. Certainly I know them, and we are grateful to have each of you with us.

Then you may proceed as you wish, Mr. Bowsher.

DOWNSIZING GAO

Mr. BOWSHER. Thank you, Mr. Chairman, Mr. Thornton.

With me is Jim Hinchman, my Acting Deputy; Joan Dodaro, who is the Assistant Comptroller General for Operations; and Dick Brown, who is our Controller and has been in charge of putting our budget together for many years.

Let me just point out that we are very much still following the plan to reduce our budget by the full 25 percent. In other words, we have been making good progress on coming down in size. As we said on page 59 of our annual report, we are doing the downsizing in three phases. This is also, of course, the plan that we sent over here to the Congress last August when we put it together.

In phase one, we offered separation incentives to staff who voluntarily would leave our agency by last September 30. A total of 418 employees retired or resigned under that authority at that time.

By the way, I do want to say how much I appreciate this committee and, of course, the counterpart committee in the Senate allowing us to offer that early-out and that buy-out last year, because that facilitated reducing the budget by the full 25 percent.

In the second phase, we closed three offices-Cincinnati, Detroit, and New York-in November 1995, and that eliminated over 200 positions.

The final phase, phase three, will start in the next few weeks; and that is the phase where we will reduce our administrative, technical, and support operations mostly here at headquarters in Washington so that we will be on the glide path to meet the 2-year commitment that the committee asked us to meet.

I might point out that we have reduced the number of our offices from 40 to 16. In other words, I don't think there is any other government agency that has done a better job of reducing the number of offices and locations in the last few years, and one of the reasons we have been able to do that, of course, is your support on technology. In other words, we are using videoconferencing and com

puter networking and things like that, and we just don't need as many locations as we once had.

We have come down from 5,300 staff to 3,700. We will be down to about 3,500 at the end of this year, the beginning of the next fiscal year; and that will be the lowest staffing of our agency since World War II. It is over a 30-percent reduction in staffing.

GAO PRODUCTIVITY

You said that you have been using us as a model. I think we still are the model. I don't think any other agency has done a better job. I think a question arises when an agency comes down in size, especially as dramatically as we have. That is, what kind of productivity has the agency maintained? What kind of quality has it maintained?

I am very pleased to report, as you saw in our annual report here, that we have maintained our productivity in fiscal year 1995. We issued over a thousand reports. We testified around 250 times, and those are numbers that are similar to those for our previous years of high productivity. Again, it is the quality of our people and it is the new technology and the facilities to support that technology that allows us to maintain quality and productivity.

Mr. PACKARD. If I can break in just a minute?

Mr. BOWSHER. Yes.

Mr. PACKARD. In other words, the figures that you gave us as to the level of your work, the written reports, et cetera

Mr. BOWSHER. Yes.

Mr. PACKARD. That gave us numbers, but I didn't get-have a chance to compare that with your previous workload. Apparently you are saying it is about equivalent?

Mr. BOWSHER. If you look in our annual report, you will see that those charts, Mr. Chairman, show figures for the previous years and you will see that our products in 1995 numbered slightly more than they did in 1993 and 1994. You will also see that the figures for the products per hundred staff years spent is even better, and that is because we are operating with fewer people. Then you can also see the number of testimonies delivered.

Now, we did have higher productivity in 1992, when we still had 5,300 staff. But I think,-and this is interesting-that if you look at figures going back 10 years, you will see that we have really doubled the productivity since 1985. So, you know, we have made a lot of changes at GAO. We have gone to merit pay and merit promotion, and we have reduced layering of our organization.

So all these changes are paying off here as we try to become a much more efficient and effective organization, which I think is what the American taxpayers really want in government overall. In other words, they want a smaller government, but they also want one that is efficient and effective. They just don't want a dysfunctional government out of all of this downsizing, and GAO is not dysfunctional.

One of the other things I am very proud of is that although we haven't been recruiting now since 1992, the deans of some of the big universities that have schools of public policy stop by and tell us that they have got more graduates who want to join us whenever we start recruiting again.

There is one problem I believe you and the Chairman in the Senate said to me that if problems developed in this downsizing, I should let you know. I did mention the problem at the time. The problem is that when an organization comes down in staffing by 25 or 30 percent, it gets out of balance. In other words, it never loses exactly the right number of accountants or the right number of economists or the right number of engineers or statisticians. And I found that to be true when I was in the private sector, too, working with my clients.

So what we are saying here is that, if you can-and that is just if you can afford to authorize us an additional 100 staff for this year, we could rebalance GAO in a more effective way than if we proceeded to implement the full 25-percent cut.

GOVERNMENTWIDE AUDIT

One of our big responsibilities, of course, is the audit of the government's consolidated financial report in fiscal 1997, and that is the biggest audit that mankind has ever attempted in the Western World. So we want to do the job well, and we are short staffed to do this work.

We are being raided by other government agencies and the private sector for our accountants and our computer systems people, and so we are short of staff in this area. So I just raise this problem. If the committee and if the Congress can help us, then, it seems to me, that you will eliminate what I consider to really be the only risk of this major downsizing and that is the imbalance in our talent.

NEED FOR ADDITIONAL STAFFING

We would still be down over 30 percent as far as staffing. In other words, we are not in any way asking to go up in a major way. Late the other night, I came down with somebody on the elevator who said he was the last remaining person in our statistician pool. Now, we have got other people who, of course, are good at statistics, but we did have a little nucleus that we ran everything through. When we go to check now what the liability on the Social Security Trust Fund is and things like that, we need a particular kind of talent.

We are just trying to rebalance, you might say, 100 positions, which, I think, would eliminate the one problem. Imbalance is a very common thing when an organization downsizes.

Mr. PACKARD. Ed pointed that out.

MEASURABLE BENEFITS

Mr. BOWSHER. The other thing I would like to say is that if you look on that next page, Mr. Chairman, you will see also the dollars saved because of GAO work. Not that we make the final decisions on changes in agencies' budgets. Only the Congress or the executive branch can make the decisions. But you can see the dollars saved from the work GAO has done has been going up fairly dramatically, and I think that the American taxpayers get a terrific bargain from GAO.