By fixing DOD "M" accounts, when we got done with all of the negotiations we saved $471 million. This resulted from GAO studies; and

We also cancelled the problem-plagued IRS taxpayer service integrated 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 million;

Asset forfeiture improvements, $1.2 million;

Termination of unauthorized vehicles at Lawrence Livermore National 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 reports GAO produces may not have an obvious money value associated with them. Some of them involve other things.

How about GAO's look at the stability of the U.S. chemical weapons 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 subject.

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 watch 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 Senator 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 poisoning 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

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 something 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 accounting systems in government. We have 160 different accounting systems in the Department of Defense alone-43 different accounting systems in the Army by itself.

These are areas that GAO has looked into and has pointed out the problems. GAO is trying to straighten these things out, and doing a great job over in the Department of Defense because we followed that one in particular, in trying to improve financial management in DOD. The Government Performance and Results Act, which was our Chairman's piece of legislation, mandates GAO to be intricately involved in that process, particularly in auditing of agency financial statements.

On the floor just a couple of days ago, Senator Domenici also called upon GAO to examine whether proper procedures were followed by agencies in proposing significant new regulations. Regulatory reform is something that will be on the floor in just a few weeks. We have already passed it out of this Committee. These are things that concern me when we say we are going to cut GAO back by 25 percent.

I think NAPA has done a good job in setting out some guidance for internal improvements and how we might handle things in making GAO a paragon of efficiency. And there can be improvements at GAO, and the Comptroller is taking action to do some of the things NAPA recommended. I don't know whether we have to prod him into going farther than he would like to go or not. I certainly don't know that we need to at this time. I think he has been doing a pretty good job in seeking improvement.

So I want to thank NAPA. This Committee had the GAO oversight hearing scheduled last fall, at the request of the then-minority. Most of the Members on that side, however, then requested that the hearing that we had scheduled to release the report be put off until this year. I honored that request, and that is why the hearing was put off from the time the report first became available last fall.

I look forward to working with the Minority Members on the Committee on improving GAO's functions and how they do their job over there. I think we can make an excellent case for, instead of cutting GAO 25 percent, increasing GAO 25 percent and get back even more of the money that I was talking about here just a few moments ago. I am not proposing that this morning. I know that might fall on deaf ears. We do appreciate very much the work that NAPA has done in this area, and I thank them for their work.

I would like to submit a full statement for the record in addition to this statement, which has gone on for a little while, I know.

[The prepared statement of Senator Glenn follows:]

PREPARED STATEMENT OF SENATOR GLENN

I want to thank Chairman Roth for holding this hearing today, and welcome our witnesses.

I have a lot to say and will try and make it succinct.

First, let me stress that this hearing, I think, is not about abolishing GAO. The Chairman, unlike some others in his party, has indicated that he believes GAO has an important mission and is an invaluable tool for both Congress and the Executive Branch. I am glad to hear that reemphasized today.

I intend to support efforts aimed at reducing costs. If there are gains we can achieve by eliminating duplication, streamlining the process, and lowering administrative and other overhead expenses, we should take full advantage.

I will, however, vociferously oppose such actions if they go too far and will impede GAO's ability to carry out its basic responsibilities. We are told that the Republican Conference has agreed upon a 25 percent reduction in GAO's budget for fiscal year 1996. But I am not a party to that “agreement”, nor have I been privy to any of those discussions.

Yes, I will admit to being just a little biased.

We have spent a great deal of time hammering out-with leadership by the Chairman-a new regulatory reform process which emphasizes cost-benefit analysis. While the purpose of this hearing is to see where-and whether-GAO can cut its costs, we also must determine how that might affect what benefits GAO produces. That is also part of the equation.

For example, I'd like to recite a few GAO investigations done at my request which have ultimately resulted in savings to the government, but more importantly, the taxpayer:

• Reduction of the fiscal year 1991 Budget for the Chemical Stockpile Disposal Program. $108.4 million.

• Closeout of New Production Reactor. $3.5 billion.

• FTS 2000 Recompetition Bids. $145 million. DOD "M" Accounts. $471 million total.

Cancellation of the problem-plagued IRS Taxpayer Service Integrated System Automation Project. $41 million.

These are just the "big-ticket" items. It doesn't include millions of dollars saved through other investigations done at my request. Things like: Reducing the Backlog in RTC Suspense Accounts ($4.8 million); Improvements in USDA's IRM Activities ($4.4 million); Asset Forfeiture Improvements ($1.2 million); Termination of costly and unauthorized vehicles by Lawrence Livermore National Laboratory ($546,000); Lower Software and Copier Prices (nearly $6 million), and; Recovery of Army Payroll Overpayments by DFAS ($1.7 million so).

At a time when Čongressional staffs have been cut and IG offices are about to downsize themselves, we must be very careful about further eroding our investigative and auditing capacity.

Moreover, GAO's value is not always apparent in dollar figures. This Committee has taken major strides towards finally putting the government's books in order, through the enactment of the Chief Financial Officers (CFO) Act, and determining the effectiveness of government programs, with the Government Performance and Results Act (GPRA). We have asked-in some cases, mandated-GAO to be intricately involved in this process, particularly in the auditing of agency financial statements.

In fact, I note just the other day-on the floor of the U.S. Senate an amendment was offered by Senator Domenici which calls upon GAO to examine whether proper procedures were followed by agencies in proposing significant new regulations. And just yesterday, our distinguished Chairman introduced a new DOD procurement bill which, among other things, requires GAO to review DOD's contract payment procedures and develop standards accordingly.

I'm not sure whether it's possible to measure in dollars the results of GAO contributions in exposing the dangers at our deteriorating nuclear weapons plants, identifying weaknesses in the regulation and management of derivatives, or disclosing serious problems in FDA's oversight of medical device manufacturers. Much of the work done by GAO may simply just result in making government work better, whether it's protecting American lives or their hard-earned money.

Sure, GAO is not always perfect. They, like any large organization, make mistakes.

If I had my way, they would cut down on the time it takes to produce their reports, particularly in the review process which seems to add an inordinate delay. We do not always have the luxury of time around here and the last thing you want is a nice blue cover report after-the-fact.

The other area they need to work on is simply being straightforward: Don't mince words; tell it like it is. Lay out the facts and let the chips fall where they may, whether I happen to agree with their findings or not. Tell me who is responsible or accountable, not that "general management practices are deficient".

One final area I want to address is the NAPA report, undertaken in close consultation with Senator Roth and paid for largely by Committee funds.

It is a comprehensive report on the role and mission of GAO. It makes several good recommendations governing what GAO does, how they should do it, and where Congress fits in.

It is worth noting, however, that NAPA found no evidence of partisan political, or other bias in GAO's work. Further, they recommended against making any changes in GAO's statutory charter at this time, though I know some Members in Congress would like to do just that.

Obviously, auditing and evaluation go hand-in-hand. In my judgment, to have one without the other would not be very useful.

GAO is, therefore, going to sometimes enter the arena of policy, a very hostile arena at that. Dare I say that sometimes it almost becomes the sacrificial lamb. We tend to shoot the messenger around here, rather than the message.

An example contained in the NAPA report bears this out. It mentions that one evaluator, during the review process, had to defend his work some 27 times before GAO published it. According to NAPA:

"In this example, the study had become controversial even though it was grounded solidly in fact, because the underlying program is strongly supported by some congressional members and sharply criticized by others."

Now, whether the subject was grazing fees, government hydroelectric rates, peanuts or tobacco subsidies, the SuperConducting SuperCollider (SSC), or the B-2 Bomber, is not important. But it is indicative of the fact that sometimes feathers may get ruffled, particularly when they're plucked from one's home State or district. In closing, I just want to point out that last October, when I was Chairman, we had scheduled a Committee hearing to coincide with the release of the NAPA report. That was postponed at the urging of every Member on the other side, with the objection that a subject of this magnitude, to do it justice, should not be considered in the waning days of Congress.

I did want to note this for the record, not to cast blame or aspersion in any way. But I do think if we had had that hearing-on GAO's role and mission-it would have put today's hearing in the proper context. Before we adjudge how much of a hit-and over what time-GAO can take it, I think it would have been wise to examine exactly what GAO does, and means, to Congress, the Executive Branch, and the American people.

Thank you.

Senator GLENN. I also would like to enter into the record a statement by Senator Dorgan, who could not be here today, and he wanted me to read his whole statement in the record. I will summarize it briefly here. He is out there, because of some Base Closing Commission work, at two air bases in North Dakota and wouldn't be able to be here today. He has been involved with GAO the past 15 years and found them to be extraordinarily helpful. They have been involved in complicated tax, economic, and financial issues at his request. Their work is professional, thorough, absolutely independent and invaluable for Congress. I ask unanimous consent that his entire statement be included in the record. [The prepared statement of Senator Dorgan follows:]

PREPARED STATEMENT OF SENATOR DORGAN

Mr. Chairman, because the Base Closing Commission is visiting two air bases in my State today, I'm necessarily required to be in North Dakota. Regretfully, I will miss this important hearing on the subject of the effectiveness of the General Accounting Office (GAO).

I have been involved in many study requests of the GAO over the past 15 years, and I want to relate my experiences with the GAO.

I've found the GAO to be extraordinarily helpful and effective in examining and evaluating some very difficult subjects and providing answers that can be used for legislative guidance on a wide range of matters.

They've been involved in complicated tax, economic and financial issue studies at my request, and I have always felt their work was professional, thorough and absolutely independent.

I think it is invaluable for Congress, whether led by Republicans or Democrats, to have a fiercely independent, nonpartisan organization like the GAO to do the research and investigations necessary to provide a base of information with which to guide good legislative policy.

I commend the GAO for its excellent work, and I hope the Congress will see the merit of continuing this fine organization.

Senator GLENN. NAPA, Mr. Campbell, we thank you very much for your efforts.

Senator COHEN [presiding]. Senator Glenn, thank you for that very dispassionate expression of support for GAO. [Laughter.] Senator Grassley.

OPENING STATEMENT OF SENATOR GRASSLEY

Senator GRASSLEY. Well, I think you have heard two excellent statements by our leaders about GAŎ, one asking for introspection and a detailed effort to make sure that the taxpayers' money is well spent, and you have heard another leader say that GAO does a very good job. I don't know how we can disagree with those state

ments.

Today, I am going to associate myself more closely to the opening statement of our Chairman. I go back as a launching-off point for my point of view today to what the Senate's first action was this year: A bill that will never get much public attention, but when we applied the laws that we have exempted ourselves from to the Congress for the first time, I think it was a very symbolic act. It said. that we are going to lead by example, not by rhetoric. More important, it was meant to restore credibility with the people. Our credibility had eroded.

With the passage of that one act, the Congress has gone a long ways towards restoring our credibility as an institution. I raise this point for the Members of this Committee because I think there is a parallel with the subject of this hearing.

I read the report by the Committee's professional staff that reviewed the GAO's management. I have to say that it really raised my eyebrows. The staff review confirmed many of the key findings and recommendations of the NAPA report. Among the staff's finding is that GAO's average cost per job is $396,000. By improving GÃO's use of modern analytical methods and computers, the average cost per job could be reduced to $194,000. That alone would save $147 million, or 33 percent of the GAO's budget. In addition, overhead costs could be reduced significantly from the current 30 percent of the GAO budget.1

So, Members of this Committee, I think it is very imperative that the Congress and the public have utmost confidence that their No. 1 watchdog is watchdogging not just other Federal agencies, but itself as well. So, to me, that also is a matter of credibility. How can Congress' auditing arm, which is charged with finding waste and

1 Staff report appears in the Appendix on page 89.