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Mr. Sabo.

DEPARTMENT OF HOMELAND SECURITY

Mr. SABO. Thank you, Mr. Chairman. And, Mr. Walker, let me thank you and your agency for lots of good work.

The hat I wear where I spend most of my time is Ranking Democrat on the Homeland Security Subcommittee, and your agency has been very helpful with requests we made.

Frankly, I have to tell you that sometimes I lose track of whether we have asked you for help or the inspector general, both at least— I am not sure what the new inspector general is going to be like, but the previous one in your agency has been very helpful.

And we built reports by GAO about some of our requirements on homeland security, and it has been very helpful to have some re

view.

I must say that I think there are two very fundamental problems in operation of government that exist and have existed for a significant period of time, and all of those problems are magnified several times over in a new agency quickly put together. One is just agency after agency has had a terrible time figuring out how to procure new IT systems. It seems to me we put that responsibility on people who are operational people, and they are very good operational people, but we expect them to handle complicated acquisition programs, and they don't make that transition. That is my off-the-topof-my-head analysis. But it is just systemic through the whole system.

And you know, OMB has done very little on the management side that really helps agencies.

We found in Homeland Security, they don't even have a bookkeeping system in place so they can keep track of their money.

And the other is that-I think we overcontract at the Federal level.

The article in the paper this morning on DHS, there was no real news there. It was all old news, but compiled. We hire consultants to figure out what we should do, and then many times the same folks turn out to be the folks who we hired to do what they told us to do. And we have absolutely no capacity over-from the earliest days of the TSA, we had no control over managing the contracts we contracted out, and they just explode in cost. Frankly, Mr. Chairman, I think we see the same thing in the Defense Department.

And I don't know what goes on in other agencies. But, you know, in my judgment, DHS is a disaster in the way it has been operating, but DHS sort of magnifies what goes on throughout the Federal Government. I don't know how we get a handle on it. It just seems to me there is nothing jazzy about it, and it is not going to make any big political headlines for anybody doing anything about it. And every administration ignores it.

The nuts and bolts of how we run government is a disaster, and we are going to lose more and more of our senior people, and anybody in the Federal Government that knows anything about anything is going to be gone.

GAO'S HIGH RISK LIST

Mr. WALKER. Absolutely. Several things. First, as you undoubtedly know, GAO every 2 years publishes something called a high risk list. It includes programs, policies, functions, and activities at higher risk of fraud, waste, abuse, and mismanagement, or in need of fundamental transformation.

I might note that several of the projects that you mentioned are on that high risk list. Contract management is one as well as the merger and transformation of the new Department of Homeland Security, which, as you know, is the largest reorganization since the creation of the Department of Defense in 1947.

The fact of the matter is that all too frequently in the Federal Government, the government made the decision to outsource something or to contract out something, but it may not have enough qualified people internally to manage cost, quality and perform

ance.

Mr. SABO. What strikes me, at times we contract out to have them tell us what we should even contract out.

Mr. WALKER. Well, that is not acceptable. The fact of the matter is you can contract out performance, and there are many circumstances where it makes sense for the government and for the taxpayers to do that; however, if you do that without a strategy, if you do that without having enough people who are qualified and independent and are looking out for the public interest to manage cost, quality and performance, then everybody is going to get in trouble. The government is going to get in trouble, the taxpayers are going to get in trouble, and the contractors are going to get in trouble. That happens all too frequently.

I might note as well, this document. Gentlemen, I would strongly suggest that at some point in time you take time to look at this, because we have a fundamental problem in government. We are on an unsustainable course, and part of the challenge is a vast majority of the Federal Government is based upon conditions that existed in the United States and in the world in the 1950s and the 1960s and has not been subject to a fundamental review and reexamination since then.

There are a number of questions in this document that I think illustrate that pretty vividly, one of which is the following idea. Some people think when you contract it out, you don't have any more responsibilities. That is just wrong.

Chairman LEWIS. Yes, they are available to the Members.

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U.S. GOVERNMENT ACCOUNTABILITY OFFICE SERVING THE CONGRESS AND THE NATION

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GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people.

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As I reflect on GAO's work during the past fiscal year, I am pleased with and proud of our results in serving the Congress and the American people, which we convey in this summary of our fiscal year 2004 performance and accountability report that appears in full on our Web site at www.gao.gov. Our business involves helping to improve performance and ensure accountability in connection with a broad range of federal programs, policies, and activities. Simply put, we try to help improve the way the federal government works for the benefit of all of our nation's citizens. To determine our success, we set performance targets and follow financial management practices that help ensure that we are making the best use of the federal funds invested in us.

In short, fiscal year 2004 was an exceptional year for GAO. For example, we received a clean opinion from independent auditors on our financial statements and met or exceeded all but one of our key performance measures. In addition, we exceeded or equaled our all-time record for six of our seven key performance indicators while continuing to improve our client and employee feedback survey results. I am especially happy to report that we documented $44 billion in financial benefits-a return of $95 for every dollar spent, or $13.7 million per employee. We also recorded over 1.000 nonfinancial benefits that helped to shape important legislation and increase the efficiency of various federal programs, thus improving the lives of millions of Americans. In addition, the rate at which our recommendations had been implemented by the Congress or federal agencies rose to 83 percent, and we made over 2,700 new recommendations in fiscal year 2004. We

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