I can remember being at a hearing of the Senate Banking Committee where they wanted me to reorganize the RTC, and I said I shouldn't do that. Right there they wanted a reorganization plan. Chairman ROTH. I understand the point you are making. I agree with what you are saying. A large part of the problem is the Congress, and they do want to draw on your personal views as well as the expertise within the agency. But the fact is one of the problems, I think we are going to have to wrestle with is, Do we want to change how missions are undertaken by you. I have some reservations along the lines of NAPA because I am fearful what will happen if we begin to-do John and I want to approve every one? I don't think that makes sense. Mr. BOWSHER. Right. Chairman ROTH. But one of the reasons the Comptroller General is given a 15-year term of office, with other benefits, is so he is sheltered. Mr. BOWSHER. Right. Chairman ROTH. And that is important. In large measure, it does depend upon the Comptroller General saying, "I am sorry, but as Comptroller General that is not my responsibility." Senator Grassley. Mr. BOWSHER. And, by the way, Mr. Chairman, I do that quite a bit. I do say no. Chairman ROTH. I commend you for that. Mr. BOWSHER. Contrary to what maybe some witnesses have indicated, I have often had to say "no" to various Members of the Congress. Chairman ROTH. Just don't say "no" to me. [Laughter.] Senator Grassley. Senator GRASSLEY. My discussion with you probably won't be this colorful, because I want to focus on the green-eyeshade part of your work. Mr. BOWSHER. All right. Senator GRASSLEY. That being accounting, and that is your major responsibility, I assume. As you know all too well, the Department of Defense accounting system is flat busted. Your audit reports tell me that. The Inspector General of DOD, his reports tell me that. Every shred of evidence that you can see tells us that. So I think the time has come to clean up the mess. Today, I want to discuss with you your responsibilities under the law to help us do what must be done. The breakdown of the financial control at the Pentagon I think is intolerable. I think it is even dangerous when you consider their major responsibility of defending our Nation. I think this means that huge chunks of the defense budget are vulnerable to fraud and theft and abuse, and you know that there are billions of dollars that are unaccounted for. And it means that we can't fulfill our constitutional responsibilities to the people of this country for defense or even for accounting for the taxpayers' money. The taxpayers have a right to an accurate and complete account of how their money is spent. Today, Mr. Bowsher, we can't meet that responsibility. That is a disgrace. That is unacceptable. The DOD accounting system has to be fixed. Now, I don't buy the notion that this problem is so big, so complex, that we can't hope to fix it in our lifetime. Maybe that is naive, but I don't buy it, and I want to start with the premise we can do something about it. I think that when we hear that excuse, it is a bureaucrat's excuse for doing nothing. We have to find a way to fix it, and I think that you have a responsibility under the law to help us do that. We now have a legislative vehicle for getting the repair job done, and that comes from Senator Roth, the Chairman of this Committee. He has introduced a bill, the DOD Acquisition Management Reform Act of 1995. I am a cosponsor of that. The bill includes a section on financial management. I am exploring with the Chairman an amendment to the financial management section that would give you, the Comptroller General, specific guidance. The proposed language would direct you to develop a comprehensive plan for fixing the DOD accounting system. You would be asked to develop a plan in close cooperation with the DOD comptroller and the financial managers in the military departments, and we would impose a deadline for getting the job done. I believe that this direction would be fully consistent with your responsibilities under the law. If I read that law correctly, you have far-reaching powers and responsibilities over all government accounting systems. You are responsible under the law for maintaining the integrity of the government's books. I am referring here to your responsibilities as spelled out in Chapter 35 of Title 31, and I would read Section 3511. It says, in part, "The Comptroller General shall prescribe the accounting principles, standards, and requirements that the head of each executive agency shall observe." The law states that you prescribe accounting standards and requirements. To me, that means you lay down the rules that the agency must follow. Continuing to quote, "The Comptroller General, the Secretary, and the President shall conduct a continuous program for improving accounting and financial reporting to the government." So the law states that you should improve accounting systems. If this needs improvement-without a doubt, they do need improvement. Now, Section 3512(E) says, in part, "The Comptroller General shall: (1) cooperate with the head of each executive agency in developing an accounting system for an agency; and (2) improve the system when the Comptroller General considers it to be adequate and in conformity with the principles, standards, and requirements under Section 2511 of this title." So the law states that you cooperate with all agencies in developing satisfactory accounting systems. You review those systems, and when you think that they meet your standards as prescribed in law, then you have the authority to approve them or, implied, not approve of them since you are the top accountant charged with keeping the government's books in order. If the accounting system is broken, then I see that you have the authority by law to fix it. So my questions: One, is my interpretation correct that you already have authority in law to develop a comprehensive plan for fixing DOD accounting systems? Two, if you developed a detailed plan to overhaul the DOD accounting system and did it in close cooperation with DOD officials, would DOD be required to put that plan into operation? Three, and this may be a little more difficult for you to say yes or no right now, but would you be willing to help the Committee develop a comprehensive plan for fixing the DOD's accounting system? Those are my three questions. Mr. BOWSHER. Those are your three questions, Senator. Mr. BOWSHER. Could I ask the Chairman if I can say "no" to Senator Grassley? Chairman ROTH. Better ask him. [Laughter.] Senator GRASSLEY. Well, at least can you answer one Mr. BOWSHER. Yes, I will answer both of your questions. Your interpretation is right, but let me just expand, if I could, on the law. That is, in 1950, the Budget and Accounting Act of 1950 really moved the main responsibility for keeping the accounting records back from the General Accounting Office to the Executive Branch. And at that point in time, we became the reviewer and the approver, you might say, of those systems. We are doing that, of course, all the time as we do these financial audits, and we tell the Congress and the agencies where the problems are. And your description of how bad it is at the Department of Defense, Senator, is exactly right, and it has been that way for the nearly 30 years that I have been here in town, starting as an Assistant Secretary of the Navy. I was appalled at how bad the bookkeeping, accounting, and accountability were at the Pentagon when I got here in 1967, and I am still appalled at how bad it is. So I would love to work with the Committee to try to improve it, but I can't be the detail designer of that system. The Defense Department will have to do that. I don't have enough people to do it, and the law puts that responsibility in the Executive Branch and not with the GAO. Senator GRASSLEY. I think, though, you are talking about existing law. I think our amendment would give you some additional authority in this area, specifically for the Department Mr. BOWSHER. Well, you might have to give me some additional people. But why don't I work with you? Why don't I get together with you and your staff to see what is doable? Because what you are trying to do is exactly right, and I would love to help you to every bit of my ability. Senator GRASSLEY. Well, then let's go back to my second Mr. BOWSHER. But I don't want to indicate that the Defense Department doesn't have to do its job. Senator GRASSLEY. Well, and we obviously feel that we can't leave them out or shouldn't leave them out. But now you are saying that except for drawing up a detailed plan, my interpretation of your existing power is accurate. And if you did develop such a plan, would DOD under law-let's say under existing law, if you helped develop it, would they have to put that in place? Mr. HINCHMAN. Senator, could I try to respond to that question? Senator GRASSLEY. Yes. Mr. HINCHMAN. There is no doubt that the statute currently provides for that, and I think that we have attempted to carry out that authority. I think if you ask the Justice Department, it would tell you that the statute has some of the same defects that the GrammRudman-Hollings legislation had and that you cannot give that kind of executive authority to the Comptroller General. You don't have to agree with that to recognize that in practice, achieving the transformation at DOD which we all want is going to take cooperation between us and DOD. And I think that is what the Comptroller General was trying to say. We are going to have to work with DOD to do this. Senator GRASSLEY. Because if you directed them, that would be an executive function. Mr. HINCHMAN. I am not sure that I agree with that argument, but I believe that there are those within the Executive Branch who would make that argument. Senator GRASSLEY. I think that takes care of my questions, and I will be back with you. Mr. BOWSHER. We would like to meet with you. Senator GRASSLEY. On the other hand, I don't want this to detract from my opening statement when I said that we have to set an example as the watchdog. Mr. BOWSHER. Right. Senator GRASSLEY. To some extent you have to watchdog yourself. Mr. BOWSHER. Right. And if I could just say this, Senator, I would like to come and go over some of the figures that you were given by the Committee staff, because I am not sure that you have the full picture. And when I was going through my statement, you weren't here. Senator GRASSLEY. No. Mr. BOWSHER. I think we have been a much more proactive organization improving our operations at GAO in the last 14 years and also under my predecessor, and I would like to give you that story sometime at your office and to work with you on this Department of Defense issue. Senator GRASSLEY. OK. Well, maybe when we get together on the Department of Defense issue, you can come just a little bit earlier, and we can get it all done in one trip. Mr. BOWSHER. I would like to do that. Thank you, Senator. Chairman ROTH. Mr. Bowsher, in your earlier testimony, if I understood what you were saying, in re-engineering you expect to save rework time but not necessarily money. Is that correct? Mr. BOWSHER. No. Rework time is what we have set as our performance goal, but if we achieve that performance goal, then I think we will be able to come down to the 4,000 level at GAO, and that level could save about $50 million a year. Chairman ROTH. Now, do you look upon re-engineering as a means of restructuring your processes? Mr. BOWSHER. Yes. Chairman ROTH. Because it seems to me that that is one concern we have, that too much of our technology is not being used to streamline or restructure, but is merely being used to automate business as usual. Mr. BOWSHER. Oh, not at GAO. We are streamlining our processes as we bring the technology in, and we want to do more of that because that is exactly the Chairman ROTH. So shouldn't there be more savings than merely reduction of personnel? Mr. BOWSHER. Well, our costs basically are 80 percent personnel, and then we have travel costs, on which we have made a big cut already because of the video conferencing and the computers, and I am sure we will get more out of that. Chairman ROTH. But your video conferencing should be reflected in improving the lateness of the reports, shouldn't it? Mr. BOWSHER. Yes, it should. Chairman ROTH. Why isn't that happening? Mr. BOWSHER. Because the other factors, like bringing down the staff and the disruption-when I lost 400 people last year, that means that they walk away from 400 jobs that are being worked on. So that helped bring down the statistics last year of our timeli ness. When we had a stable workforce of 5,000, most of our productivity and timeliness indicators were going up. When you go through a period of downsizing, you have to be willing to take some diminution, you might say, in your efficiency but then you hope that you would work to where you have a more efficient and less costly Chairman ROTH. As I understand it, evaluators are roughly 3,000-3,014. You have something like 764 SES and GS-15 supervisory grade employees-that means roughly one out of every six GAO employees is in management and administration. Mr. BOWSHER. No, that doesn't mean that. Chairman ROTH. What does it mean? Mr. BOWSHER. Well, the lawyers, which make up one of the biggest groups you mentioned are not in administration. Chairman ROTH. All right. You still have administration, 764. What do they do? Mr. BOWSHER. Well, I would have to look to see. I would have to break out the 764. Needless to say, we have to have a certain amount of administration like a mail room to mail out our reports. We have a very small print shop, but we have to also have the administration team that gets the reports to the GPO so that it can get them printed. We have a certain number of secretaries, but we actually are down very much in the number of secretaries and administrative people than we had because of the use of word processors and PCs. Most of our people do their own secretarial work, you might say. We also have the personnel administration, which is an area that, as we come down, we will have to look at. We also have our training institute, which is 5 percent of our Chairman ROTH. Let me just make this observation, because it does seem that 764 in administration of all types is relatively high, at least relatively high with the private sector. And one of the things that Mr. BOWSHER. Well, let me just say- Chairman ROTH. Just a minute. Now, there was a total cut in GAO staff of over 12 percent from 1990 to 1994, but the number of SES plus GS-15 went up 11 percent, and really all the cuts in |