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Having said that, we shouldn't lose what I consider to be a really critical point, and the Academy has said it in its study, that the GAO is essential to the democratic process working. We have got to oversee the operations of agencies. The GAO has saved literally billions of dollars in taxpayers' money. Senator Glenn estimated that GAO identified during the 1980's over $100 billion in savings, and during the 1990's already over $100 billion in savings.

Now, that is over $200 billion in about 15 years, and that is a return to the taxpayers of something over $40 for each $1 invested. Now, if we can streamline this operation and save $46 for every $1 invested instead of $44 for every dollar invested, I am for it. If we can change the GAO function and save $49 for every $1 that we spend instead of $44, I am for it.

But let's not forget the immense savings that are accomplished every week by the GAO and slash their budget in a way which will make it impossible for us to get the $44 return for each $1 invested.

That is really what I want to talk to this group of witnesses about. But before I do that, I want to just make one other point. Senator Cohen has listed a number of examples of savings that he has been deeply involved with as part of an oversight function which he performs, I think as well as anybody in the Congress. Just to give you one example where I have been deeply involved, and that has to do with Defense Department inventory. Based on GAO reports, we learned that the Pentagon was spending billions of dollars each year to buy things that the military did not need. We need GAO. They are our allies in fighting waste. They came up with reports which were essential in our effort to reduce that wasteful spending by the Pentagon. They produced photographs— "they" being the GAO-of warehouses bulging at the seams with boxes of obsolete supplies that would never be used. They showed us how we could insist on efficiencies and reduce costs with private sector practices such as direct ordering and just-in-time delivery.

As a result of the GAO reports, we reduced the DOD budget or inventory purchases in fiscal year 1991 by over $500 million. In fiscal year 1992, we used those reports to reduce those purchases by the DOD by over $1 billion. We literally rescinded $1 billion in their budget in 1992. We cut their budget in 1993 for that same purpose by over $3 billion.

Those 3 years' savings in just that one area of DOD purchasing is almost $5 billion. Now, these are based on GAO reports, folks. We have to understand the critical nature of their work at the same time we try to improve it. We cannot lose sight of what they help us do and what we should do more of, not less of.

We can rail against the bureaucracy-and they frequently deserve it but if you want to rein it in and make it efficient, you have got to have an ally. They are the technicians who make it possible for us to perform a great deal of our oversight function, and that function is, in my opinion, not performed enough. I know there may be some people in the room who disagree with that.

Does that mean that they are above review themselves? Of course not. GAO should be reviewed, and I am glad we are reviewing them.

Now, to this panel, I have just a few questions. I am interested in knowing how we can reduce the costs of the GAO jobs. That lefthand pie chart over there shows, I guess, an average or a typical cost of a GAO work product of $396,000. It may be a certain type of work product. I am not sure. But I want to look at just that lefthand pie chart.

The Academy has made certain recommendations to us about improving the job design up front. On page 31 of your report, you have recommended that to improve the quality of its work, the GAO should, first and foremost, develop thorough terms of reference for each job. And you have spent quite a bit of time on that. This is before the job is approved and before the work begins. And you go through quite a lengthy list of things they should do in their job preparation and job design.

Now, that could have the effect of increasing those up-front costs; is that correct?

Mr. CAMPBELL. Quite right. We would assume that by that kind of careful preparation, it could reduce the amount of resources used in doing the study itself.

Senator LEVIN. Right. But

Mr. CAMPBELL. I don't have a precise calculation.

Senator LEVIN. All right. That looks like a lot of money to design a job, and I know that

Mr. CAMPBELL. Those numbers are new to us.

Senator LEVIN. All right. Have you looked at how much money they spend in designing a job, typically? Have you looked at that? Mr. CAMPBELL. No. We did not look at it that way. We looked at average costs of jobs in total, but not breaking it down by design and then the carrying out of the project and then the review.

We do spend a good deal of time talking about changing the review process.

Senator LEVIN. They are looking at streamlining that job design process themselves, but in order to get to my point, your recommendations, which I think make a lot of sense, actually could increase those up-front costs.

Mr. CAMPBELL. Could increase the up-front costs?

Senator LEVIN. And have you identified specific up-front costs which could be eliminated from their current system or changed or streamlined or modified? Have you identified savings in those job design costs?

Mr. CAMPBELL. No is the answer. Let me, if I could, just expand on that.

I think the judgment of our panel is that the need is more in the area of the review side of their activities than it is in the design side.

Senator LEVIN. All right. Because I believe that a major part of the Majority staff suggestion that we can reduce the average costs of the job from $396,000 to $194,000 comes from an estimate-I am not sure based on what-that the job design could be dramatically reduced in cost. So you are indicating that is not where you see the savings. Indeed, you may increase it by your recommendations, but as I understand the Majority staff statement, you could cut that $396,000 to $194,000. The majority of their reduction comes from reducing that job design from $138,000 to about $20,000.

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Those are the only questions that I have of this panel, Mr. Chairman. Thank you.

Mr. CAMPBELL. One comment, if I might, sir, in relation to your opening comments, Senator Levin, in terms of GAO's responsiveness. GAO has been very responsive to our study. We have spent time with them since completion of the study working with them on how they might usefully respond to it, and they have been most cooperative in their efforts to be responsive to what we have recommended.

Senator LEVIN. Thank you. I just want to say one other thing, because Senator Grassley made reference to this Majority staff recommendation. I asked to try to get a breakdown of it because it is a very significant recommendation. But I think we have to now analyze that recommendation, and I don't know whether you folks feel that you have gone way beyond the call of duty already. You probably have. But I think it is important that that recommendation be reviewed because there would be significant savings. If you can cut the $138,000 down to $20,000, let me tell you, that is a pretty significant recommendation.

I don't know. It is up to the Chairman, obviously, but in any event, I will be asking the Majority staff to meet with us and to share with us the factual data that leads them to conclude that we can reduce that job design so significantly. Again, it is a huge reduction in a major cost, and I don't know what the basis for it is. I am sure the Majority staff would be happy to share with us what the basis for their conclusion is.

The reason I raise this is because Senator Grassley had placed such emphasis on that conclusion of the Majority staff that the $396,000 could be cut to $194,000.

Thank you, Mr. Chairman.

Chairman ROTH. Thank you.

Senator Nunn.

Senator NUNN. Mr. Chairman, I just have one question, and I want to just take a couple of minutes and give a couple of observations.

The question is: Did you all look at the requests initiated from individuals as opposed to from committees? Did you look at the question of whether we ought to continue the practice of having both individual as well as Committee and Subcommittee requests? Mr. CAMPBELL. Annmarie, do you want to comment on the individual requests as a part of the total and then the question of whether there can be some cutback there?

Ms. WALSH. We sampled both kinds of requests, and we basically found some important requests from individual members as well as some trivial requests from individual members. We found some trivial requests from committees as well as important requests from committees. So we did not come out with a simple conclusion that Member requests were trivial. Some of them were very important. Some of them were bipartisan. Take the example of the agricultural commodity studies. Individual member requests from a Republican and a Democrat over the years supported that stream of research.

Senator NUNN. Does GAO give priority to Committee and Subcommittee requests over individual requests? Did you get into that?

Ms. WALSH. I think you should ask them that. We saw them trying to respond to everything that came in insofar as they could. They certainly did give priority to committee chairman and ranking member requests. But they were trying to respond to all of it.

Senator NUNN. So you didn't make any policy recommendations along that line, committee versus individual?

Ms. WALSH. No, we did not, because we didn't find work to be clearly weak on one side or the other.

OPENING STATEMENT OF SENATOR NUNN

Senator NUNN. Mr. Chairman, I want to thank the panel for an excellent job. I think it has been a very big help to us, and I think it helps put the whole matter in perspective. I appreciate very much your work. It has been very valuable. I would like to submit a statement for the record in addition to my comments.

Mr. Chairman, just a very brief statement at this time. I know that some people have called for very drastic cuts in the budget and staffing of GAO, I am told on the order of 25 percent, some say 50 percent. I don't think there is any doubt that any organization can improve. I don't think there is any doubt that any organization can stand some outside scrutiny, and without it, sometimes it does not have the incentive to take on its own reform. And I don't have any doubt GAO can improve and, under Chuck Bowsher, will make changes and is making changes.

I do believe, though, that we need to put it in perspective because the complaints on one side, even if taken totally to be legitimate and I don't. But if they were all taken to be legitimate, on the other side all the things that have been done beneficial to the taxpayers by the GAO far outweigh the complaints, even if every complaint were legitimate. And I do not believe they have been, and I think the panel here has indicated they did not find any partisanship in terms of the GAO approach.

Just from the Subcommittee I chaired on this Committee, the Permanent Subcommittee on Investigations, we have had hearings and the result of GAO work that just in the last few years we believe has saved the Federal Government, in a way we can document, over $300 million. Just one Subcommittee. For example, $250 million of it is in reduced prison construction costs from recommendations on double bunking and revised square footage standards by the Federal Bureau of Prisons. Another $62 million we can document in recommended changes in wage garnishment for defaulted student loans. So that is just one Subcommittee on Capitol Hill, and that would be, what, two-thirds of the total budget in 1 year for GAO.

In addition to that, where we do not try to quantify the dollars but the dollars could be many, many times what I just identified, we have had GAO's substantial help in highlighting the shortcoming of State insurance regulation of Blue Cross and Blue Shield plans that exposed literally thousands of subscribers to loss of health care benefits through insurer default. And the work, Mr. Chairman, you and I and others on this Subcommittee have done on that-and Senators Glenn and Levin are part of it-has basically, I think, had the effect of having a reform of Blue Cross/Blue

Shield throughout the Nation. It hasn't solved all the problems, but we couldn't have done that without GAO.

Another area is the highlighted shortcomings in State insurance regulation that permitted fraudulent insurers to operate with impunity, a very big area that involves literally billions and billions of dollars.

Another area, just for instance, is highlighting the loopholes in current Federal and State money-laundering statutes-Mr. Chairman, you have taken a real lead on that-that really permit billions of dollars of drug and criminal proceeds to escape taxation, forfeiture, and seizure.

So just in the work of that Permanent Subcommittee on Investigations alone I think GAO has earned their keep many times over. Now, that does not mean that they should not make improvements. I think that there is room for improvement. I think sometimes I have chaired and am now Ranking Member on the Armed Services Committee. They have done enormous work for us there. Overall, it has been very beneficial.

There are times when GAO takes on, for instance, a detailed examination of a weapons system, and frankly, I think they get in over their heads sometimes because it is very difficult. You don't have expertise in that area to analyze all that is going on in weapons system procurement. They can look at the accounting part of it, but it is very hard for them to always get the evaluation part of it properly. Sometimes I think they don't listen quite enough to the experts in that regard, but even when I don't agree with the report, I find the questions raised by them to be useful in getting the managers over there in the Department of Defense to come up with the answers to those matters.

All in all, I am a strong supporter of GAO, and I hope whatever we do here in reforming GAO will be constructive and will not leave us crippled in terms of basically dealing with waste, fraud, and abuse in the government. And we know there is plenty of it going around.

We all also know that the way people run campaigns out there get out there as if there is a line item in the budget called "Waste, Fraud, and Abuse" and we can simply put an amendment on the floor saying, "Thou shalt not waste any more money or abuse any more money," and it doesn't work that way. You have got to get out there and dig it out. And you have got to have good people digging it out, and they have got to be professional people, and they have got to be able to do the job.

So I hope we will put this in its proper balance as we move forward. I look forward to hearing from Chuck Bowsher and other witnesses.

PREPARED STATEMENT OF SENATOR NUNN

Today, our Committee reviews the work of the National Academy of Public Administration (NAPA) that studied the operations and management of the General Accounting Office. Their study was initiated by our former chairman, Senator Glenn, and our current chairman, Senator Roth, in response to concerns expressed by some about the operations and objectivity of the GAO. Some are calling for drastic cuts in the budget and staffing of the GAO on the order of 25 percent in 1 year alone.

While I have an open mind to any recommendations to improve the GAO and it's operation and look forward to today's testimony, I do not believe cuts in the order

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