GENERAL ACCOUNTING OFFICE OVERSIGHT AND THE NATIONAL ACADEMY OF PUBLIC ADMINISTRATION STUDY

THURSDAY, MARCH 30, 1995

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 10 a.m., in room SD342, Dirksen Senate Office Building, Hon. William V. Roth, Jr., Chairman of the Committee, presiding.

Present: Senators Roth, Cohen, Grassley, Glenn, Nunn, Levin, Pryor, and Lieberman.

OPENING STATEMENT OF CHAIRMAN ROTH

Chairman ROTH. The Committee will please be in order. This morning we will be considering "The Roles, Mission and Operation of the U.S. General Accounting Office." That is not only the purpose of the hearing, but the title of a report that was prepared for the Committee last year by the National Academy of Public Administration. Because the report was not available until the end of the session, there was no opportunity to receive testimony from NAPA or GAO on the findings or recommendations of the report. In the interim, GAO has made some progress on some of the recommendations, and we will look forward to hearing about the progress made on that front later this morning from the Comptroller General.

As stated in the Executive Summary of the report, "GAO has been a valuable part of the Federal Government for more than 70 years, providing auditing, research and evaluation to government generally and to Congress in particular, which could not be easily and readily replaced.'

By the very nature of this Committee's jurisdiction and responsibilities for general oversight of all functions of government, the Governmental Affairs Committee depends heavily on the work of GAO. We call on GAO to perform a variety of audits and evaluations in every facet of government. In that sense, it can be said that the success of this Committee is directly tied to the success of GAO. I want to congratulate Comptroller General Bowsher and the thousands of GAO employees, dedicated men and women, who have been instrumental in performing this critical role. While there may be criticism on particular issues, reports, or actions, I think it needs to be made clear that GAO is a vital link in providing in(1)

formation, support, and guidance that is necessary for Congress to meet both its oversight and legislative responsibilities.

The GAO has evolved over the decades and responded with internal changes to meet the needs and demands required at different times in our history. I believe we are now at a crossroad which requires a serious review of GAO's role and mission as we prepare the Federal Government to meet the needs of the 21st Century.

GAO's statutory authorization gives a broad mandate to make recommendations on the economy and efficiency of public expenditures, to prescribe systems and procedures for appropriation and accounting, and to undertake investigations and reports ordered by any congressional committee. We need to consider the broad mandate in the context of where it has taken the agency to date. The NAPA report suggests that the GAO mission and use by Congress has been broadened and expanded in recent years, placing new demands on the agency's core purpose, skills, and resources. NAPA further suggests, and I tend to agree, that it is incumbent on the Congress to more clearly define the mission as we see it.

I also believe that it is fundamental to GAO's credibility that they live by the standards that they prescribe to others. GAO should be asking the same questions of itself that it poses to others. How can GAO be made more efficient? How can they emulate the private sector to do more with less? Why are only 21 percent of GAO reports on time, with 29 percent of the reports over 6 months late? How does GAO compare to its management layers and ratio of supervisors to employees? Is GAO operating efficiently when 30 percent of its budget goes to general administrative and overhead costs. How does GAO justify spending more than a quarter of its staff time on tasks other than core work products, as indicated on the Workforce Utilization Chart A?1

How can GAO justify reductions to its core workforce of GS-7 through GS-12 by 34 percent while inflating the senior management ranks by 11 percent, as, again, represented on Chart B?2

Why should the Committee accept the notion that GAO will be able to use personnel cuts to achieve a dollar savings when over the past 2 years a total staff cut of 12 percent has resulted in only 1 percent savings to the taxpayer?

These are all issues that must be examined closely by this Committee and by the GAO.

In performing its mission and paramount to the effectiveness of the GAO is the absolute requirement that GAO have the trust and confidence of all Members of Congress, regardless of party affiliation or individual policy positions. NAPA has raised concerns that GAO has become increasingly involved in policy analysis and policy development. It is recommended that GAO revise its vision and mission statements to reflect more focused and realistic objectives. The panel further recommends a shift in GAO perspectives and methods, from promoting process-oriented controls to examine the root causes of problems in order to help improve the effectiveness of program outcomes. I believe this goes to the heart of the Com

1Chart A appears in the Appendix on page 84. 2Chart B appears in the Appendix on page 85.

mittee's initiatives to put in place performance measures and results-oriented planning.

I also support the panel recommendation that congressional requesters have a responsibility not to put GAO's role and reputation as impartial objective auditor and evaluator in jeopardy by requesting work that inevitably places GAO in the middle of controversial issues.

I believe there is a valid question to be raised about the role of the Congress. We need to do a little self-examination ourselves and determine to what extent we are a part of the problem and how that can be changed.

Another point raised by the panel is in the area of work processes, pointing out that they tend to proceed in uniform hierarchical patterns with inadequate definition at the outset of the objectives, methods, and types of work and cumbersome review process at the end. By taking a look at Chart C,1 you will get an idea of the draft review process from beginning to end.

The recommendations that GAO congressional oversight committees need to do more regular, continuing oversight of GAO is an important one. We need to closely monitor the actions of the Committee in responding to the observations and recommendations that are brought forth today. We need to look at the utilization of resources, the quality of work products, the value of those work products to the core mission of the agency, the organizational structure, the management layers, the makeup of the workforce, and the work processes.

Because of GAO's unique role as an auditor and investigator, it is important that the organization have credibility with those entities being reviewed. In this sense, it is incumbent upon GAO to operate in the most effective, efficient manner possible. There may be a natural assumption that GAO conducts its own internal reviews to assure that it is living by the recommendations it makes to others.

As we in the Congress raise the tough questions to Executive Branch agencies, we need to raise the same tough questions of our Legislative Branch organization. We are all aware that the current environment is calling for tight budgetary constraints and some sacrifices from all government organizations. Faced with the need to find dollar savings, as the largest congressional entity, GAO is an obvious target.

There has been a call for a 25-percent reduction from the current funding level, and the Comptroller General has expressed his serious concerns about the impact of such a dramatic cut.

While the Appropriation Committee will make the final determination on funding levels, as the GAO oversight committee we have the responsibility for conducting an in-depth review of GAO's operation to determine if, in fact, all the services and the cost of those services is justified.

This exercise should be viewed as a constructive, not destructive one. Criticisms of the work process are not criticisms of the individuals performing the work or the Comptroller General. And as a

1Chart C appears in the Appendix on page 86.

part of our review, we should take into consideration the future role of GAO.

I see the organization as a critical element in our efforts to reinvent government. The driving force for the needed management changes will depend heavily on the guidance from the GAO and the Governmental Affairs Committee. In light of this, I am pleased that the current strategic plan for GAO lists as one of its top five areas for concentration promoting a smaller, more efficient and cost-effective government.

In looking to the strategic plan for GAO in the work priorities, I have to say I am quite concerned about a provision inserted in the Senate regulatory moratorium bill adopted yesterday. That provision assigns responsibility to GAO for reviewing every significant regulation promulgated by an agency, informing Congress whether the agency performed its job. This task is currently carried out by OMB's Office of Information and Regulatory Affairs and in some cases duplicates the missions of independent peer review provisions and legislation ordered reported by this Committee last week.

Senators McCain and Levin added an important provision to the paperwork legislation currently in conference that would reduce unnecessary reports to Congress, and in my opinion, the reporting called for in the provision would be a prime candidate for classification as duplicative and not necessary, something to be eliminated. It is troublesome to create a new mission for the agency at the very time we are trying to preserve the core mission on a smaller budget.

Let me reiterate that, as Chairman of this Committee, my ultimate goal is to define the vital role that GAO will be called to perform as we prepare for this future, and I look forward to maintaining a close, cooperative working relationship with the Comptroller General and his management team. But that does not mean there aren't some tough questions to be raised, and I challenge the GAO to find answers to those questions and make the adjustments necessary to give it the credibility, to hold itself out as a standard by which any government organization should measure itself. Senator Glenn.

OPENING STATEMENT OF SENATOR GLENN

Senator GLENN. Thank you, Mr. Chairman.

I do think it is good we are having a look at GAO. This whole process started back in the spring of 1993. This isn't something that just happened in the last few months. We had talked to GAO about when was the last time anybody had come in and really looked at GAO, to assess and, in effect, audit the auditors. It hadn't been done for a while. While Comptroller General Bowsher had had some internal groups looking at its processes, we felt it was good to have an outside group come in and really look at the way things were going.

There was an original proposal for $2 million for this project. We talked to the National Academy of Public Administration, and they agreed to do it for considerably less than that, for which we thank them. This is their business, looking at government, and we appreciate the work that they have done.

I think they have done a good job. Comptroller Bowsher has looked at the results of NAPA's study and already is making some of the changes and improvements that have been suggested. They are already underway.

I was glad to hear the Chairman say that he supports GAO's work, that it is vital and that this is an effort to make GAO better, not to slash their budget 50 percent, as some on his side of the aisle have suggested. We even had comments in the paper a short time ago about doing away with GAO. I think that would be a tragedy.

So I wanted to make an opening statement this morning. I think it is appropriate that we go back a little bit and understand what we have been getting for our money so far. I think GAO has basically a very good track record.

The GAO has already downsized over the last 2 years, about 12 or 13 percent, I think. I believe that was the figure that we had a little while ago. They said their objective is to downsize by 25 percent, but they would like to do it over a 2-year period, into 1997, so they can do it in an orderly fashion.

I might note that GAO is operating now with about the same size operation as it had back in 1963 when the budget for the United States was $100 billion. We now have a budget of $1.5 trillion, 15 times as large and far more complex. To think that we can just whack 25 percent off GAO's budget in 1 year, which has been proposed, as I understand it, by the Republican Conference, is something that I don't think we can do.

So let's look back for just a moment. This will be a little longer than my normal opening statements that I try to keep to a couple of minutes. I think it is important that we set the stage here for what we are talking about.

I am sure we can make some internal improvements in the way GAO operates and in the review process that their work has to go through. But let's look at what GAO has produced in savings. In the long term, GAO has already saved more in the 1990's than during all of the 1980's, and it is a very substantial amount. In the 1980's, GAO could look at their record and say that they had saved about $106 billion through that decade, and they can document this. This isn't just something that is ethereal. It is something they can document.

So far in the 1990's, GAO can point to savings of $119 billion and can document those savings. So if we put it on a cost-benefit basis, for every dollar appropriated in 1994, GAO returned $45. I think that is a pretty good investment. And for every staff year spent by GAO in the 1990's, GAO returned $4.8 million.

Moreover, it is up to the Congress and the Executive Branch to implement the recommendations that GAO makes. GAO can't do it. So part of the fault for not having achieved even greater savings, it seems to me, is ours. We need only look in the mirror to identify who may be at fault on that one. If you take GAO's figures of what has been saved over the last 15 years or so here, the total for the 1980's and the 1990's so far comes to some $225 billion, and these savings can be documented.

I think when we are talking about GAO's internal workings over here, whether we can save a little bit on a rug there or a different