Mr. BOWSHER. Well, I don't claim that we have 25 percent in administration. Chairman ROTH. Or even one-sixth. Mr. BOWSHER. What I am saying, though, is that you have in the home office here the people that have to do the testimonies; they have to do the planning of the work. In other words, this is the home office of GAO where the Federal Government is located. Our SES is smaller as a percent than OMB, CBO, CRS, Arthur Andersen & Company, the Canadian Auditor General's Office, and everybody whom we have benchmarked on an informal basis. And what I plan to do, Mr. Chairman, is to do a formal benchmarking to show you that we do not have too many people at the SES level. In fact, when Dr. Demming came to visit us on that Saturday back in 1990, we had a partner from McKenzie & Company, who joined us that day and he was astounded at the ratio of jobs that my SESers had to oversee versus what they would do at McKenzie & Company. So I think that we have got to show you-I understand your concern because people have given you ratios to the private sector, which I believe include companies other than our type of business. Chairman ROTH. Just let me say this. I find any agency when you make this kind of a comment, they are very defensive about it. I think what we are talking about today is trying to take a hard look as to how we can reduce costs through reduction of personnel where it is not necessary. Mr. BOWSHER. I agree with that. Chairman ROTH. So it just seems to me that there is a pretty significant ratio here when you have 765, roughly, in administration. But we are not here to argue figures at the moment. We are here to see where do we go from here and what can be done to reduce costs. Just one final area. My time is up on this round, Senator, but I have one other area I would like to unless you want to make some further comment. I sort of cut you off. Mr. BOWSHER. NO. Chairman ROTH. On the financial benefits, and certainly it is true that billions of dollars have been saved. I am not arguing that, and I commend you and the organization for that. And it is also true that the 5-year trend for financial benefits is up 22 percent, from $15.2 billion in 1990 to $19.5 billion in 1994. Is that correct? Mr. BOWSHER. I have to look at my list. Yes, I guess that is correct. Chairman ROTH. Now, when we speak of financial benefits, in 1994 what are we speaking of? Are those recommendations made that year, or are those the recommendations that are implemented that year irrespective of when they were recommended? Mr. BOWSHER. The latter. In other words, another point that your staff indicated was that we only had 20-some percent of our recommendations Chairman ROTH. We can comment later, but the point you are making, as I understand this, is that in 1994 when we had $19.5 billion of financial benefits in having your recommendations implemented, those are recommendations that were made that year irre 89-838 98-3 spective of when they were recommended by you, either that year or the year before or 5 years. Mr. BOWSHER. That is correct. And most of them don't get implemented the year we make the recommendation because of just Chairman ROTH. It takes some time. Mr. BOWSHER. It takes some time, yes. Chairman ROTH. But then if you look at 1991 and 1992, financial benefits went up from-you had roughly $18 billion in 1990. That went up to over maybe $30, or $33 billion in 1991, $34 billion or higher in 1992. Then it drops back, back to under $20 billion, say $18 billion, then it goes back up to $19.5 billion. Given these large fluctuations, are financial benefits a good measure for gauging GAO's effectiveness? Mr. BOWSHER. I think it is one of the measures. In other words, in any organization you have to have several performance indicators on results or accomplishments. And I think that the financial benefits that accrue out of the work of any audit organization is one that you should monitor. My predecessor had started this system. I tightened it up a little bit when I got here. We have a very thorough review of these accomplishment reports by our internal audit, our policy office, in addition to the line management. And I think it is an indication of whether we are working on the important work. In other words, if your audit organization is not working on important issues that lead to financial benefits, then I think you have a problem. I expect, with the Republicans having taken leadership and all the efforts here to reduce the budget, I am expecting that our 1995, 1996, and 1997 financial benefits should go up, because there is a major effort to reduce the size of the Federal budget, and they are looking at some of our reports, like the Davis-Bacon Act report that is 10 years old. We did a superb report on the Davis-Bacon Act in the early 1980's, and those are the kinds of issues that I think are a good test over the years as to how well an audit office has performed. Chairman ROTH. Well, I guess where I come out is that, as you say, it is one indication. Mr. BOWSHER. Just one. Chairman ROTH. But any 1 year could be biased by one major event with major savings. Mr. BOWSHER. Yes, absolutely. Chairman ROTH. It could look like a good year and nothing else done. Mr. BOWSHER. Very good point, Mr. Chairman. You should not look at just 1 year. You have to look at whether you want a 5-year period, a 10-year period, or a 3-year period. Chairman ROTH. Over this 4-year period, you have, as I pointed out, quite a change. Mr. BOWSHER. Yes. Chairman ROTH. So it is an indication. Now, my friend and Member of the Committee, Senator McCain, of course, has recommended that we have an independent Inspector General for GAO. I suppose one of the tasks they could do is review, because the fact is you make the recommendations and you do decide how much savings you think that will result in. Isn't that correct? Mr. BOWSHER. No. We really take the Chairman ROTH. Where do you get those figures? Mr. BOWSHER. Generally from the Executive Branch or the department where it is happening. Chairman ROTH. Do you review them? Mr. BOWSHER. We generally take whatever they publicly issue, and then what we generally do is we scale them back because we have certain limitations. For example, we don't take a full savings, if the savings are going to cover too many years. We are very conservative in how we score financial benefits, but we try very hard to use other people—namely, the departments that run the program's numbers-in pricing them. We don't price them ourselves. Chairman ROTH. What if there is a difference between you and the agency? Mr. BOWSHER. Well, then, our audit people look at it, and a final decision is made. Chairman ROTH. But the final decision is your agency? Mr. BOWSHER. It is within the agency. That is correct. Now, I could have it reviewed by our CPA audit firm at the end of the year, or I could have it reviewed by some outside group. Chairman ROTH. I am not suggesting that. I am just trying to get a feel for it. But one of the criticisms I have heard is that it is internally derived. Let me ask you this: In 1990, 77 percent of all recommendations, at least to my understanding, were implemented? Mr. BOWSHER. In 1990? Chairman ROTH. Yes. Mr. BOWSHER. Well, again, you have to look at a 4-year period because the recommendations generally don't get implemented the first year, and what we have consistently had is a 70-percent recommendation implementation track record over a 4-year period. Chairman ROTH. What was that? Mr. BOWSHER. When you look at it over a 4-year period, a rolling 4-year period. In other words, if you look at the recommendations that were made in 1990 for the next 4 years, you will generally see a pattern of about a 70-percent implementation rate, and lots of times it is in the third and the fourth year of when a recommendation gets implemented rather than the first year. Chairman ROTH. I guess the question I have is that of the key recommendations made, the number that are being implemented going down, is there any reason for that? Mr. BOWSHER. That is only because that tells you what happened in that first year. Chairman ROTH. But those figures, I thought you said, show the total number that are implemented, irrespective of what year. Isn't that correct? Mr. BOWSHER. That is the dollar savings. Chairman ROTH. Yes, right. Mr. BOWSHER. The dollar savings are computed in whatever year they get implemented, and I think the way we show these recommendations, it would be better if we showed a rolling 4-year average because that is the way I really do monitor it. Chairman ROTH. Senator Glenn. Senator GLENN. Yes, thank you, and I will be brief. I know it is late. Some people have been in here ever since we started this morning, I believe, and so we will get out of here very shortly. I just want to sort of summarize here a little bit. Your track record shows you saving over the past 15 years about $225 billion. Staff was just showing me the kind of report that reflects this. This is not off the top of somebody's head. You do an actual analysis of this. It is called an accomplishment report and so on. Mr. BOWSHER. That is correct. Senator GLENN. It has to be checked off. It goes back to the agency, and everybody has to agree on what was saved before you put it on the list. Mr. BOWSHER. That is correct. Senator GLENN. This is not some fictitious figure. This report is just one example. Mr. BOWSHER. What you have in your hand is a set of documents that we would have on every financial accomplishment. Senator GLENN. This isn't a series of reports. This is substantiation for that one claim right here. Mr. BOWSHER. That is correct. Senator GLENN. So those are pretty solid figures. Now, this averages out over the past 15 years, then, through 1980's and up to now in the 1990's, averages $15 billion per year. Mr. BOWSHER. That is correct. Senator GLENN. In savings. Now, your cost of doing business, what is your current budget, $430-some million? Mr. BOWSHER. I think $443 million, coming down. Senator GLENN. OK, $443 million, going down. All right. Now, that is a good-sized chunk of money. Mr. BOWSHER. Yes, it is. Senator GLENN. And I think the NAPA advice, you are taking that. I think it is excellent. And you are working those things out, and you want to get better efficiency. And I am glad we had the NAPA report done. The question we are facing, though, is whether you can take a 25-percent reduction in your budget this year as opposed to accomplishing your drawdown and still do the same work by 1997, the end of 1997. It just seems to me I would like to take the opposite tack, and I don't want to extend the hearing along, so just be brief if you can. What if you had a 25-percent increase instead of a cut? How many extra billion could we save? It probably wouldn't be proportional exactly to that $15 billion a year. But what are we going to get back if we gave you a 25-percent increase of $130 million? Mr. BOWSHER. I just don't know what the answer would be, Senator Glenn. Senator GLENN. But it would be good? Mr. BOWSHER. It would be good. But I can't Senator GLENN. I figure we would get back more than our bait, wouldn't we? Mr. BOWSHER. Yes, you would. Senator GLENN. We are expending $430 million a year and we are getting back about $15 billion a year, on an average-and that is up and down, I know. You can't count on that being constant. I just think that I agree you can be improved; I think you have gone a long ways toward improving GAO since you have been there. We have worked very closely with you on some of these things. But my view is that GAO is one of the success stories in government. You have taken the lead in total quality management. You are setting an example over there by how you are handling your own people and performance, which is what the GPRA, that the Chairman put in for all of government, is supposed to be doing. You are a model of how that can be done, or may be a pilot case of how that can be done. I know everything isn't perfect at GAO, but I think to cut a fourth of your resources, cut a fourth off your budget, when we know that would wreck your plans over there and cut back on what studies you could do for us that contribute to this $15 billion a year, I think would be the height of folly. I just wanted to finish with that remark. We have lots of other questions. I presume we will have questions for the record, Mr. Chairman, and we will submit some for the record, also. [The addition question from Senator Glenn follows:] ADDITIONAL QUESTION FOR THE RECORD FROM SENATOR GLENN Question. I am quite curious as to what your reaction has been to how your report has been received-and perceived-to date. On the other hand, it does raise some serious matters which GAO must, and should, address. On the other hand, I feel that some may have tried to put their own "spin" on it, using it for maximum advantage to make their case that GAO should be abolished or drastically cut. What is your reaction to this? Have there been some accounts which have distorted the panel's findings and recommendations? Please explain. Answer. The report of the National Academy of Public Administration (NAPA) panel does not suggest or recommend abolishing or drastically cutting GAO. On the contrary, the panel reasserted that GAO is an important and valuable part of government, "providing auditing, research, and evaluation to government in general and to Congress in particular, which could not be easily or readily replaced." The report also does not suggest or recommend that GAO's mission or capacity should be legislatively altered or reduced. In particular, the panel did not suggest that GAO exclude policy relevant research or program evaluation from its work. The panel recognized that it is not possible to draw a clear line between policy analysis, evaluation of government performance, and audit. The panel's key conclusion was that GAO work should be both policy relevant and rigorously fact-based; while GAO should continue to make recommendations based on its research and analysis, it should avoid policy advocacy. The panel concluded that GAO's effectiveness depends on bipartisan and public trust to maintain its special status as objective and impartial central audit agency. To protect and strengthen this status, the report suggests two major approaches: 1. Restraint on the part of GAO and congressional requesters of its work, to avoid reports that do not have a firm factual base within GAO's competence; and 2. Continuing congressional oversight based upon sharing of information on GAO strategic plans, lists of jobs started, terms of reference for individual studies, periodic external peer review of work completed, and improved GAO performance indicators, as well as agency comments routinely and consistently obtained on individual GAO reports. The report calls for increasing GAO capacities in the areas of financial management systems and program cost analysis. The panel also recommends some changes in review processes and other internal operations, which could lead to improved efficiencies and more importantly to improved quality of GAO work. |