[Senate Hearing 108-]
[From the U.S. Government Printing Office]



                        THURSDAY, MARCH 4, 2004

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:58 a.m., in room SD-116, Dirksen 
Senate Office Building, Hon. Ben Nighthorse Campbell (chairman) 
    Present: Senators Campbell, Stevens, and Durbin.

                       GENERAL ACCOUNTING OFFICE


          opening statement of senator ben nighthorse campbell

    Senator Campbell. The subcommittee will come to order. 
Senator Durbin is running a little late and will be here in 
just a few minutes.
    Today's hearing is the first of four hearings we plan to 
have to review the fiscal year 2005 legislative branch budget 
request which totals roughly $4 billion.
    Overall, legislative branch agencies have requested a 12 
percent increase over the current fiscal year level. Clearly 
this total level of spending will be very difficult, if not 
impossible, to accommodate in view of the overall budget 
constraints we face. We will be asking all agencies to have 
another look at their budgets to ensure that there have been no 
items requested which are not truly needed next year, and we 
will also be exploring the impact of cutting budgets back to 
current levels, if that is necessary, which it appears to be at 
this point.
    This morning we will take testimony from three agencies: 
the General Accounting Office, the Government Printing Office, 
and the Congressional Budget Office.
    We will hear first from Mr. David Walker, Comptroller 
General. Mr. Walker will be accompanied by Deputy Chief Gene 
Dodaro. Welcome, Gene. And Mr. Stan Czerwinski, GAO's budget 
officer. GAO's budget request of $486 million is a steady-state 
budget, with the exception of the request for a permanent new 
technology assessment capability.
    The GAO will be followed by the Government Printing Office: 
Mr. Bruce James, the Public Printer; accompanied by Mr. William 
Turri, the Deputy Printer; and Steve Shedd, the Chief Financial 
Officer. The GPO has many initiatives underway at this time to 
restructure their agency, including the possible relocation of 
their facility from its present North Capitol Street location. 
The budget request of $151 million includes $25 million for 
transformation efforts, but we do not have a delineation of 
what those transformation efforts involve. It might be very 
difficult to provide the funds without a detailed spending 
    And finally, we will hear from Mr. Douglas Holtz-Eakin, the 
Director of the Congressional Budget Office, accompanied by Dr. 
Elizabeth Robinson, CBO's new Deputy Director. CBO's budget 
request of $35 million is a 5.5 percent increase over the 
current fiscal year and would support the current staffing 
level of 235 FTE.
    So we welcome everyone this morning. Mr. Walker, if you 
would like to proceed. If you would like to abbreviate your 
comments, we will put your complete testimony in the record.


    Mr. Walker. Thank you, Mr. Chairman. It is a pleasure to be 
here again. On my far right is Stan Czerwinski, who is our 
Controller. To my immediate right is Sallyanne Harper, who is 
our Chief Administrative Officer and Chief Financial Officer, 
and on my immediate left is Gene Dodaro, who is our Chief 
Operating Officer.
    Mr. Chairman, we believe that our fiscal year 2005 budget 
request is both reasonable and responsible. We have asked for a 
4.9 percent increase, primarily to cover automatic pay 
increases and related costs, as well as price level increases. 
This requested level will allow us to maintain our base 
authorized FTEs, maintain operational support at fiscal year 
2004 levels, and continue to meet the needs of the Congress at 
present service levels.
    Our requested budget reflects an offset of almost $5 
million from nonrecurring fiscal year 2004 estimates, and it 
represents a baseline review approach.
    In times of tight budgets and fiscal pressures, I believe 
it is especially important for GAO to lead by example in 
connection with our budget request. We have done so as noted by 
the fact that we are requesting the smallest percentage 
increase of any legislative branch agency. In addition, we have 
helped this subcommittee in your initial efforts to assure that 
other legislative branch agencies ultimately employ a baseline 
review approach in their budget submissions.
    In the years ahead, our support to the Congress will likely 
prove even more critical because of pressures created on our 
Nation caused by large and growing fiscal imbalances. I believe 
that GAO's help will prove to be invaluable as the Congress 
seeks to review, reprioritize, and re-engineer existing 
mandatory and discretionary spending programs and tax policies.
    Maintaining a strong and adequately resourced GAO will also 
help ensure that we can continue to provide an excellent return 
on investment to the Congress and the country. Last year we 
returned $78 for every dollar invested in GAO, number one in 
the world. Nobody is even close.
    Mr. Chairman and members of the subcommittee, I 
respectfully request that you consider the modest nature of our 
request and the unparalleled return on investment the Congress 
and the country receives from your investment in GAO's work. I 
would also respectfully request you consider the fact that many 
independent sources have noted that we at GAO are leading in 
the transformation of how the Government does business, and in 
order to continue to do that, we will need your help and 
reasonable resource levels.

                           PREPARED STATEMENT

    Thank you, Mr. Chairman, Senator Durbin. I would be happy 
to answer any questions you might have.
    [The statement follows:]

                 Prepared Statement of David M. Walker

    Mr. Chairman and Members of the Subcommittee: I am pleased to 
appear before the subcommittee today, having recently completed my 
fifth year as the Comptroller General of the United States and head of 
the U.S. General Accounting Office. 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. In the years ahead, our support to 
the Congress will likely prove even more critical because of the 
pressures created by our nation's large and growing long-term fiscal 
imbalance, which is driven primarily by known demographic and rising 
health care trends. These pressures will require the Congress to make 
tough choices regarding what the government does, how it does business, 
and who will do the government's business in the future. GAO's work 
covers virtually every area in which the federal government is or may 
become involved, anywhere in the world. Perhaps just as importantly, 
our work sometimes leads us to sound the alarm over problems looming 
just beyond the horizon--such as our nation's enormous long-term fiscal 
challenges--and help policymakers address these challenges in a timely 
and informed manner.
    My testimony today will focus on GAO's progress during my first 
five years as Comptroller General. I will highlight our (1) fiscal year 
2003 performance and results; (2) efforts to maximize our 
effectiveness, responsiveness, and value; and (3) budget request for 
fiscal year 2005 to support the Congress and serve the American people. 
Following is a summary:
  --The funding we received in fiscal year 2003 allowed us to conduct 
        work that addressed many of the difficult issues confronting 
        the nation, including diverse and diffuse security threats, 
        selected government transformation challenges, and the nation's 
        long-term fiscal imbalance. Perhaps the foremost challenge 
        facing government decision makers this year was ensuring the 
        security of the American people. By providing professional, 
        objective, and nonpartisan information and analyses, we helped 
        inform the Congress and the executive branch agencies on key 
        security issues, such as the nature and scope of threats 
        confronting the nation's nuclear weapons facilities, its 
        information systems, and all areas of its transportation 
        infrastructure, as well as the challenges involved in creating 
        the Department of Homeland Security. Our work was also driven 
        by changing demographic trends, which led us to focus on such 
        areas as the quality of care in the nation's nursing homes and 
        the risks to the government's single-employer pension insurance 
        program. Our work in these and other areas covered programs 
        that involve billions of dollars and touch millions of lives. 
        Importantly, in fiscal year 2003, GAO generated a $78 return 
        for each $1 appropriated to our agency.
  --With the Congress's support, we have demonstrated that becoming 
        world class does not require a substantial increase in the 
        number of staff authorized, but rather maximizing the efficient 
        and effective use of the resources available to us. We have 
        worked with you to obtain targeted funding for areas critical 
        to GAO such as information technology, security, and human 
        capital management. We are grateful to the Congress for 
        supporting our efforts through pending legislation that, if 
        passed, would give us additional human capital flexibilities. 
        During tight budget times, these flexibilities would allow us, 
        among other things, more options to deal with mandatory pay and 
        related costs.
  --In keeping with my belief that the federal government needs to 
        exercise a greater degree of fiscal discipline, we have kept 
        our request to $486 million, an increase of only 4.9 percent 
        over fiscal year 2004. I also applaud the Congress's request 
        that all legislative branch agencies examine how they could 
        work toward a more transparent budget presentation. In keeping 
        with the Congress's intent, we are continuing our efforts to 
        revamp our budget presentation to make the linkages between 
        funding and program areas more clear. I hope that in the future 
        the Congress will be able to use such performance information 
        to make tough choices on funding, thereby enabling it to avoid 
        across-the-board reductions that penalize agencies that 
        exercise fiscal discipline and generate high returns on 
        investment and real results.


    GAO is a key source of professional and objective information and 
analysis and, as such, plays a crucial role in supporting congressional 
decision making. For example, in fiscal year 2003, as in other years, 
the challenges that most urgently engaged the attention of the Congress 
helped define our priorities. Our work on issues such as the nation's 
ongoing battle against terrorism, Social Security and Medicare reform, 
the implementation of major education legislation, human capital 
transformations at selected federal agencies, and the security of key 
government information systems all helped congressional members and 
their staffs to develop new federal policies and programs and oversee 
ongoing ones. Moreover, the Congress and the executive agencies took a 
wide range of actions in fiscal year 2003 to improve government 
operations, reduce costs, or better target budget authority based on 
GAO's analyses and recommendations. In fiscal year 2003, GAO served the 
Congress and the American people by helping to identify steps to reduce 
improper payments and credit card fraud in government programs; 
restructure government and improve its processes and systems to 
maximize homeland security; prepare the financial markets to continue 
operations if terrorism recurs; update and strengthen government 
auditing standards; improve the administration of Medicare as it 
undergoes reform; encourage and help guide federal agency 
transformations; contribute to congressional oversight of the federal 
income tax system; identify human capital reforms needed at the 
Department of Defense, the Department of Homeland Security, and other 
federal agencies; raise the visibility of long-term financial 
commitments and imbalances in the federal budget; reduce security risks 
to information systems supporting the nation's critical 
infrastructures; oversee programs to protect the health and safety of 
today's workers; ensure the accountability of federal agencies through 
audits and performance evaluations; and serve as a model for other 
federal agencies by modernizing our approaches to managing and 
compensating our people.
    To ensure that we are well positioned to meet the Congress's future 
needs, we update our 6-year strategic plan every 2 years, consulting 
extensively during the update with our clients in the Congress and with 
other experts (see app. I for our strategic plan framework).
    The following table summarizes selected performance measures and 
targets for fiscal years 1999 through 2005. Highlights of our fiscal 
year 2003 accomplishments and their impact on the American public are 
shown in the following sections.

                                              [Dollars in billions]
                                                                       Fiscal year--
           Performance measure              1999     2000     2001     2002     2003     2003     2004     2005
                                           Actual   Actual   Actual   Actual   Target   Actual   Target   Target
Financial benefits......................    $20.1    $23.2    $26.4  \1\ $37    $32.5    $35.4    $35.0    $36.0
Other benefits..........................      607      788      799      906      800    1,043  \2\ 900      900
Past recommendations implemented               70       78       79       79       77       82   \2\ 79       79
New recommendations made................      940    1,224    1,563    1,950    1,250    2,175  \2\ 1,5    1,500
Testimonies.............................      229      263      151      216      180      189  \2\ 190      180
Timeliness (percent)....................       96       96       95       96       98       97       98       98
\1\ Changes GAO made to its methodology for tabulating financial benefits in part caused our results to increase
  beginning with the fiscal year 2002 results.
\2\ On the basis of past performance and expected future work, we revised these targets after we issued our
  fiscal year 2004 performance plan. The original targets were 820 for other benefits, 77 percent for past
  recommendations implemented, 1,250 for new recommendations made, and 200 for testimonies.

Source: GAO.

Benefits Reported
    Many of the benefits produced by our work can be quantified as 
dollar savings for the federal government (financial benefits), while 
others cannot (other benefits). Both types of benefits resulted from 
our efforts to provide information to the Congress that helped (1) 
improve services to the public, (2) provide information that resulted 
in statutory or regulatory changes, and (3) improve core business 
processes and advance governmentwide management reforms.
    In fiscal year 2003, our work generated $35.4 billion in financial 
benefits--a $78 return on every dollar appropriated to GAO. The funds 
made available in response to our work may be used to reduce government 
expenditures or reallocated by the Congress to other priority areas. 
Nine accomplishments accounted for nearly $27.4 billion, or 77 percent, 
of our total financial benefits for fiscal year 2003. Six of these 
accomplishments totaled $25.1 billion. Table 2 lists selected major 
financial benefits in fiscal year 2003 and describes the work 
contributing to financial benefits over $500 million.

                        [In millions of dollars]
                        Description                             Amount
Financial benefits exceeding $1 billion:
    Updated the Consumer Price Index (CPI): Recommended            9,200
     that the Bureau of Labor Statistics periodically
     update the expenditure weights of its market basket of
     goods and services used to calculate the CPI to make
     it more timely and representative of consumer
     expenditures. The Bureau agreed to do this every 2
     years, and the CPI for January 2002 reflected the new
     weights. The adjustments have resulted in, among other
     things, lower federal expenditures on programs like
     Social Security that use the CPI to calculate benefits
    Eliminated Medicaid's upper payment limit loophole:            5,900
     Identified a weakness in Medicaid's upper payment
     limit methodology that allowed states to make
     excessive payments to local, government-owned nursing
     facilities and then have the facilities return the
     payments to the states, creating the illusion that
     they made large Medicaid payments in order to generate
     federal matching payments. Closing the loophole
     prevented the federal government from making
     significant federal matching payments to states above
     those intended by Medicaid............................
    Made funds available for lighter-weight weapons                3,900
     systems: Identified the Crusader artillery system as a
     duplicative weapons system that was inconsistent with
     the Department of the Army's plans to transform itself
     into a lightweight combat force. The Department of
     Defense (DOD) terminated the Crusader program,
     resulting in costs avoided............................
    Reduced the cost of federal housing programs: Improved         3,400
     management of the Department of Housing and Urban
     Development's unexpended balances resulting in the
     recapture of unobligated funds........................
    Reduced the cost of DOD's services acquisition process:        1,700
     Examined the acquisition practices of leading
     commercial companies and recommended a more strategic
     approach for acquiring services at DOD, which was
    Avoided costs associated with an increase in the               1,000
     skilled nursing facilities rate: Determined that the
     Congress's increase in the nursing component of
     Medicare's daily rate for skilled nursing facilities
     had little effect on increasing the ratios of nursing
     staff to patients in these facilities. The nursing
     component increase expired on October 1, 2002, and
     despite arguments from the nursing facility industry,
     the nursing component increase has not been reinstated
Selected financial benefits between $500 million and $1
    Recovered Supplemental Security Income (SSI)                     990
     overpayments: Identified weaknesses in the Social
     Security Administration's (SSA) efforts to recover SSI
     overpayments that led to the development of SSA's
     automated reconciliation process......................
    Reduced DOD's implementation risks and purchase costs            780
     for the Navy-Marine Corps intranet: Highlighted the
     need for various management controls related to the
     acquisition and implementation of the Navy-Marine
     Corps intranet. As a result, DOD modified the Navy-
     Marine Corps intranet contract and reduced contract
     amounts in fiscal year 2002 and fiscal year 2003,
     reduced program risks, and increased the likelihood
     that the program will be acquired and implemented
    Ensured Defense Emergency Response funds are better              517
     targeted: Identified millions of dollars in
     unobligated DOD Emergency Response funding, a portion
     of which the Congress rescinded or directed DOD to
     reallocate for other fund purposes....................
Source: GAO.

    Many of the benefits that flow to the American people from our work 
cannot be measured in dollar terms. During fiscal year 2003, we 
recorded a total of 1,043 other benefits--up from 607 in fiscal year 
1999. As shown in appendix II, we documented instances where 
information we provided to the Congress resulted in statutory or 
regulatory changes, where federal agencies improved services to the 
public and where agencies improved core business processes or 
governmentwide reforms were advanced.
    These actions spanned the full spectrum of national issues, from 
securing information technology systems to improving the performance of 
state child welfare agencies. We helped improve services to the public 
  --Strengthening the U.S. visa process as an antiterrorism tool.--Our 
        analysis of the U.S. visa-issuing process showed that the 
        Department of State's visa operations were more focused on 
        preventing illegal immigrants from obtaining nonimmigrant visas 
        than on detecting potential terrorists. We recommended that 
        State reassess its policies, consular staffing procedures, and 
        training program. State has taken steps to adjust its policies 
        and regulations concerning the screening of visa applicants and 
        its staffing and training for consular officers.
  --Enhancing quality of care in nursing homes.--In a series of reports 
        and testimonies since 1998, we found that, too often, residents 
        of nursing homes were being harmed and that programs to oversee 
        nursing home quality of care at the Centers for Medicare and 
        Medicaid Services were not fully effective in identifying and 
        reducing such problems. In 2003, we found a decline in the 
        proportion of nursing homes that harmed residents but made 
        additional recommendations to further improve care.
  --Making key contributions to homeland security.--Drawing on an 
        extensive body of completed and ongoing work, we identified 
        specific vulnerabilities and areas for improvement to protect 
        aviation and surface transportation, chemical facilities, sea 
        and land ports, financial markets, and radioactive sealed 
        sources. In response to our recommendations, the Congress and 
        cognizant agencies have undertaken specific steps to improve 
        infrastructure security and improve the assessment of 
  --Improving compliance with seafood safety regulations.--We reported 
        that when Food and Drug Administration (FDA) inspectors 
        identified serious violations at seafood processing firms, it 
        took FDA 73 days on average, well above its 15-day target. 
        Based on our recommendations, FDA now issues warning letters in 
        about 20 days.
    We helped to change laws in the following ways:
  --We highlighted the National Smallpox Vaccination program 
        volunteers' concerns about losing income if they sustained 
        injuries from an inoculation. As a result, the Smallpox 
        Emergency Personnel Protection Act of 2003 (Public Law No. 108-
        20) provides benefits and other compensation to covered 
        individuals injured in this way.
  --We performed analyses that culminated in the enactment of the 
        Postal Civil Service Retirement System Funding Reform Act of 
        2003 (Public Law No. 108-18), which reduced USPS's pension 
        costs by an average of $3 billion per year over the next 5 
        years. The Congress directed that the first 3 years of savings 
        be used to reduce USPS's debt and hold postage rates steady 
        until fiscal 2006.
    We also helped to promote sound agency and governmentwide 
management by
  --Encouraging and helping guide agency transformations.--We 
        highlighted federal entities whose missions and ways of doing 
        business require modernized approaches, including the Postal 
        Service and the Coast Guard. Among congressional actions taken 
        to deal with modernization issues, the House Committee on 
        Government Reform established a special panel on postal reform 
        and oversight to work with the President's Commission on the 
        Postal Service on recommendations for comprehensive postal 
        reform. Our recommendations to the Coast Guard led to better 
        reporting by the Coast Guard and laid the foundation for key 
        revisions the agency intended to make to its strategic plan.
  --Helping to advance major information technology modernizations.--
        Our work has helped to strengthen the management of the complex 
        multibillion-dollar information technology modernization 
        program at the Internal Revenue Service (IRS) to improve 
        operations, promote better service, and reduce costs. For 
        example, IRS implemented several of our recommendations to 
        improve software acquisition, enterprise architecture 
        definition and implementation, and risk management and to 
        better balance the pace and scope of the program with IRS's 
        capacity to effectively manage it.
  --Supporting controls over DOD's credit cards.--In a series of 
        reports and testimonies beginning in 2001, we highlighted 
        pervasive weaknesses in DOD's overall credit card control 
        environment, including the proliferation of credit cards and 
        the lack of specific controls over its multibillion-dollar 
        purchase and travel card programs. DOD has taken many actions 
        to reduce its vulnerabilities in this area.
Benefits to State and Local Governments
    While our primary focus is on improving government operations at 
the federal level, sometimes our work has an impact at the state and 
local levels. To the extent feasible, in conducting our audits and 
evaluations, we cooperate with state and local officials. At times, our 
work results will have local applications, and local officials will 
take advantage of our efforts. We are conducting a pilot to determine 
the feasibility of measuring the impact of our work on state and local 
governments. The following are examples we have collected during our 
pilot where our work is relevant for state and local government 
  --Identity theft.--Effective October 30, 1998, the Congress enacted 
        the ``Identity Theft and Assumption Deterrence Act of 1998'' 
        prohibiting the unlawful use of personal identifying 
        information, such as names, Social Security numbers, and credit 
        card numbers. GAO report GGD-98-100BR is mentioned prominently 
        in the act's legislative history. Subsequently, a majority of 
        states have enacted identity theft laws. Sponsors of some of 
        these state enactments--Alaska, Florida, Illinois, Michigan, 
        Pennsylvania, and Texas--mentioned the federal law and/or our 
        report. For example, in 1999, Texas enacted SB 46, which is 
        modeled after the federal law. Justice officials said that 
        enactment of state identity theft laws has multijurisdictional 
        benefits to all levels of law enforcement--federal, state, and 
  --Pipeline safety.--Our report GAO-RCED-00-128, Pipeline Safety: The 
        Office of Pipeline Safety Is Changing How It Oversees the 
        Pipeline Industry, found that the Department of 
        Transportation's Office of Pipeline Safety was reducing its 
        reliance on states to help oversee the safety of interstate 
        pipelines. The report stated that allowing states to 
        participate in this oversight could improve pipeline safety. As 
        a result, the Office of Pipeline Safety modified its Interstate 
        Pipeline Oversight Program for 2001-2002 to allow greater 
        opportunities for state participation.
  --Temporary Assistance for Needy Families Grant Program.--We reported 
        on key national and state labor market statistics and changes 
        in the levels of cash assistance and employment activities in 
        five selected states. We also highlighted the fact that the 
        five states had faced severe fiscal challenges and had used 
        reserve funds to augment their spending above the amount of 
        their annual Temporary Assistance for Needy Families block 
        grant from the federal government.
GAO's High-Risk Program
    Issued to coincide with the start of each new Congress, our high-
risk update lists government programs and functions in need of special 
attention or transformation to ensure that the federal government 
functions in the most economical, efficient, and effective manner 
possible. This is especially important in light of the nation's large 
and growing long-term fiscal imbalance. Our latest report, released in 
January 2003, spotlights more than 20 troubled areas across 
government.\1\ Many of these areas involve essential government 
services, such as Medicare, housing programs, and postal service 
operations that directly affect the lives and well-being of the 
American people.
    \1\ U.S. General Accounting Office, High Risk Series: An Update, 
GAO-03-119 (Washington, D.C.: January 2003).
    Our high-risk program, which we began in 1990, includes five high-
risk areas added in 2003: implementing and transforming the new 
Department of Homeland Security; modernizing federal disability 
programs; federal real property, Medicaid program; and Pension Benefit 
Guaranty Corporation's (PBGC) single-employer pension insurance 
    \2\ We added this issue in July 2003 after we published the January 
2003 update.
    In fiscal year 2003, we also removed the high-risk designation from 
two programs: the Social Security Administration's Supplemental 
Security Income program, and Asset Forfeiture programs administered by 
the U.S. Departments of Justice and the Treasury.
    In fiscal 2003, we issued 208 reports and delivered 112 testimonies 
related to high-risk areas, and our related work resulted in financial 
benefits totaling almost $21 billion. Our sustained focus on high-risk 
problems also has helped the Congress enact a series of governmentwide 
reforms to strengthen financial management, improve information 
technology, and create a more results-oriented and accountable federal 
government. The President's Management Agenda for reforming the federal 
government mirrors many of the management challenges and program risks 
that we have reported on in our performance and accountability series 
and high-risk updates, including a governmentwide initiative to focus 
on strategic management of human capital.
    Following GAO's designation of federal real property as a high-risk 
issue, the Office of Management and Budget (OMB) has indicated its 
plans to add federal real property as a new program initiative under 
the President's Management Agenda. OMB recently issued an executive 
order on federal real property that addresses many of GAO's concerns, 
including the need to better emphasize the importance of government 
property to effective management. We have an ongoing dialog with OMB 
regarding the high-risk areas, and OMB is working with agency officials 
to address many of our high-risk areas. Some of these high-risk areas 
may require additional authorizing legislation as one element of 
addressing the problems.
    Our fiscal year 2003 high-risk list is shown in table 3.

                   TABLE 3.--GAO'S 2003 HIGH-RISK LIST
                     High-risk area                         designated
Addressing challenges in broad-based transformations:
    Strategic human capital management \1\..............            2001
    U.S. Postal Service transformation efforts and long-            2001
     term outlook \1\...................................
    Protecting information systems supporting the                   1997
     federal government and the nation's critical
    Implementing and transforming the new Department of             2003
     Homeland Security..................................
    Modernizing federal disability programs \1\.........            2003
    Federal real property \1\...........................            2003
Ensuring major technology investments improve services:
    Federal Aviation Administration (FAA) air traffic               1995
     control modernization..............................
    IRS business systems modernization..................            1995
    DOD systems modernization...........................            1995
Providing basic financial accountability:
    DOD financial management............................            1995
    Forest Service financial management.................            1999
    FAA financial management............................            1999
    IRS financial management............................            1995
Reducing inordinate program management risks:
    Medicare program \1\................................            1990
    Medicaid program \1\................................            2003
    Earned income credit noncompliance..................            1995
    Collection of unpaid taxes..........................            1990
    DOD support infrastructure management...............            1997
    DOD inventory management............................            1990
    HUD single-family mortgage insurance and rental                 1994
     assistance programs................................
    Student financial aid programs......................            1990
    Pension Benefit Guaranty Corporation's (PBGC) single-           2003
     employer pension insurance program.................
Managing large procurement operations more efficiently:
    DOD weapon systems acquisition......................            1990
    DOD contract management.............................            1992
    Department of Energy contract management............            1990
    NASA contract management............................            1990
\1\ Additional authorizing legislation is likely to be required as one
  element of addressing this high-risk area.

Source: GAO.

    During fiscal year 2003 GAO executives testified at 189 
congressional hearings--sometimes with very short notice--covering a 
wide range of complex issues. Testimony is one of our most important 
forms of communication with the Congress; the number of hearings at 
which we testify reflects, in part, the importance and value of our 
expertise and experience in various program areas and our assistance 
with congressional decision making. The following figure highlights, by 
GAO's three external strategic goals for serving the Congress, examples 
of issues on which we testified during fiscal year 2003.

    While the vast majority of our products--97 percent--were completed 
on time for our congressional clients and customers in fiscal year 
2003, we slightly missed our target of providing 98 percent of them on 
the promised day. We track the percentage of our products that are 
delivered on the day we agreed to with our clients because it is 
critical that our work be done on time for it to be used by 
policymakers. Though our 97 percent timeliness rate was a percentage 
point improvement over our fiscal year 2002 result, it was still a 
percentage point below our goal. As a result, we are taking steps to 
improve our performance in the future by encouraging matrix management 
practices among the teams supporting various strategic goals and 
identifying early those teams that need additional resources to ensure 
the timely delivery of their products to our clients.


    The results of our work were possible, in part, because of the 
changes we have made to maximize the value of GAO. With the Congress's 
support, we have demonstrated that becoming world class does not 
require substantial staffing increases, but rather maximizing the 
efficient and effective use of the resources available to us. Since I 
came to GAO, we have developed a strategic plan, realigned our 
organizational structure and resources, and increased our outreach and 
service to our congressional clients. We have developed and revised a 
set of congressional protocols, developed agency and international 
protocols, and better refined our strategic and annual planning and 
reporting processes. We have worked with you to make changes in areas 
where we were facing longer-term challenges when I came to GAO, such as 
in the critical human capital, information technology, and physical 
security areas. We are grateful to the Congress for supporting our 
efforts through pending legislation that, if passed, would give us 
additional human capital flexibilities that will allow us, among other 
things, to move to an even more performance-based compensation system 
and help to better position GAO for the future. As part of our ongoing 
effort to ensure the quality of our work, this year a team of 
international auditors will perform a peer review of GAO's performance 
audit work issued in calendar year 2004.

Making GAO's Work Accessible to the American People
    We continued our policy of proactive outreach to our congressional 
clients, the press, and the public to enhance the visibility of our 
products. On a daily basis we compile and publish a list of our current 
reports. This feature has more than 18,000 subscribers, up 3,000 from 
last year. We also produced an update of our video on GAO, ``Impact 
2003.'' Our external Web site continues to grow in popularity, having 
increased the number of hits in fiscal year 2003 to an average of 3.4 
million per month, 1 million more per month than in fiscal year 2002. 
In addition, visitors to the site are downloading an average of 1.1 
million files per month. As a result, demand for printed copies of our 
reports has dramatically declined, allowing us to phase out our 
internal printing capability.

Promoting Sound Financial Management and Improving Strategic Management
    For the 17th consecutive year, GAO's financial statements have 
received an unqualified opinion from our independent auditors. We 
prepared our financial statements for fiscal year 2003 and the audit 
was completed a month earlier than last year and a year ahead of the 
accelerated schedule mandated by OMB. For a second year in a row, the 
Association of Government Accountants awarded us a certificate of 
excellence; this year the award was for the fiscal year 2002 annual 
performance and accountability report.

Aligning GAO's Workforce and Mission Needs
    Given our role as a key provider of information and analyses to the 
Congress, maintaining the right mix of technical knowledge and 
expertise as well as general analytical skills is vital to achieving 
our mission. Because we spend about 80 percent of our resources on our 
people, we need excellent human capital management to meet the 
expectations of the Congress and the nation. Accordingly, in the past 
few years, we have expanded our college recruiting and hiring program 
and focused our overall hiring efforts on selected skill needs 
identified during our workforce planning effort and to meet succession 
planning needs. For example, we identified and reached prospective 
graduates with the required skill sets and focused our intern program 
on attracting those students with the skill sets needed for our analyst 
positions. Our efforts in this area were recognized by Washingtonian 
magazine, which listed GAO as one of the ``Great Places to Work'' in 
its November 2003 issue. Continuing our efforts to promote the 
retention of staff with critical skills, we offered qualifying 
employees in their early years at GAO student loan repayments in 
exchange for their signed agreements to continue working at GAO for 3 
    We also have begun to better link compensation, performance, and 
results. In fiscal year 2002 and 2003, we implemented a new performance 
appraisal system for our analyst, attorney, and specialist staff that 
links performance to established competencies and results. We evaluated 
this system in fiscal year 2003 and identified and implemented several 
improvements, including conducting mandatory training for staff and 
managers on how to better understand and apply the performance 
standards, and determining appropriate compensation. We will implement 
a new competency based appraisal system, pay banding and a pay for 
performance system for our administrative professional and support 
services staff this fiscal year.
    To train our staff to meet the new competencies, we developed an 
outline for a new competency-based and role- and task-driven learning 
and development curriculum that identified needed core and elective 
courses and other learning resources. We also completed several key 
steps to improve the structure of our learning organization, including 
hiring a Chief Learning Officer and establishing a GAO Learning Board 
to guide our learning policy, to set specific learning priorities, and 
to oversee the implementation of a new training and development 
    We also drafted our first formal and comprehensive strategic plan 
for human capital to communicate both internally and externally our 
strategy for enhancing our standing as a model professional services 
organization, including how we plan to attract, retain, motivate, and 
reward a high-performing and top-quality workforce. We expect to 
publish the final plan this fiscal year. Our Employee Advisory Council 
is now a fully democratically elected body that advises GAO's senior 
executives on matters of interest to our staff. We also established a 
Human Capital Partnership Board to gather opinions of a cross section 
of our employees about upcoming initiatives and ongoing programs. The 
15-member board will assist our Human Capital Office in hearing and 
understanding the perspectives of its customers--our staff.
    In addition, we will continue efforts to be ready to implement the 
new human capital authorities included in legislation currently pending 
before the Senate. This legislation, if passed, would give us more 
flexibility to deal with mandatory pay and related costs during tight 
budgetary times.

Managing Our Information Technology Resources
    Our resourceful management of information technology was recognized 
when we were named one of the ``CIO (Chief Information Officer) 100'' 
by CIO Magazine, recognizing excellence in managing our information 
technology (IT) resources through ``creativity combined with a 
commitment to wring the most value from every IT dollar.'' We were one 
of three federal agencies named, selected from over 400 applicants, 
largely representing private sector firms. In particular, we were cited 
for excellence in asset management, staffing and sourcing, and building 
partnerships, and for implementing a ``best practice''--staffing new 
projects through internal ``help wanted'' ads.
    We have expanded and enhanced the IT Enterprise Architecture 
program we began in fiscal year 2002. We formally established an 
Enterprise Architecture oversight group and steering committee to 
prioritize our IT business needs, provide strategic direction, and 
ensure linkage between our IT Enterprise Architecture and our capital 
investment process. We implemented a number of user friendly Web-based 
systems to improve our ability to obtain feedback from our 
congressional clients, facilitate access to our information for the 
external customer, and enhance productivity for the internal customer. 
Among the new and enhanced Web-based systems were an application to 
track and access General Counsel work by goal, team, and attorney; a 
Web site on emerging trends and issues to provide information for our 
teams and offices as they consult with the Congress; and an automated 
tracking application for our staff to monitor the status of products to 
be published.
    In addition, we developed and released a system to automate an 
existing data collection and analysis process, greatly expanding our 
annual capacity to review DOD weapons systems programs. As a result, we 
were able to increase staff productivity and efficiency and enhance the 
information and services provided to the Congress. In the past, we were 
able to complete a review annually of eight DOD weapons systems 
programs. In fiscal year 2003 we reviewed 30 programs and reported on 
26. Within the next year, that number will grow to 80 per year.

Increasing Information Security
    We recognize the ongoing, ever present threat to our shared IT 
systems and information assets and continue to promote awareness of 
this threat, maintain vigilance, and develop practices that protect 
information assets, systems, and services. As part of our continuing 
emergency preparedness plan, we upgraded the level of 
telecommunications services between our disaster recovery site and 
headquarters, expanded our remote connectivity capability, and improved 
our response time and transmission speed. To further protect our data 
and resources, we drafted an update to our information systems security 
policy, issued network user policy statements, hardened our internal 
network security, expanded our intrusion detection capability, and 
addressed concerns raised during the most recent network vulnerability 
    We plan to continue initiatives to ensure a secure environment, 
detect intruders in our systems, and recover in the event of a 
disaster. We are also continuing to make the investments necessary to 
enhance the safety and security of our staff, facilities, and other 
assets for the mutual benefit of GAO and the Congress. In addition, we 
plan to continue initiatives designed to further increase employees' 
productivity, facilitate knowledge sharing, and maximize the use of 
technology through tools available at the desktop and by reengineering 
the systems that support our business processes.

Providing a Safe and Secure Workplace
    On the basis of recommendations resulting from our physical 
security evaluation and threat assessment, we continue to implement 
initiatives to improve the security and safety of our building and 
personnel. In terms of the physical plant improvements, we upgraded the 
headquarters fire alarm system and installed a parallel emergency 
notification system. We completed a study of personal protective 
equipment, and based on the resulting decision paper, we have 
distributed escape hoods to GAO staff. We have also made a concerted 
effort to secure the perimeter and access to our building. Several 
security enhancements will be installed in fiscal year 2004, such as 
vehicle restraints at the garage ramps; ballistic-rated security guard 
booths; vehicle surveillance equipment at the garage entrances; and 
state-of-the-art electronic security comprising intrusion detection, 
access control, and closed-circuit surveillance systems.

Preparing for Peer Review
    A team of international auditors, led by the Office of the Auditor 
General of Canada, will conduct a peer review for calendar year 2004 of 
our performance audit work. This entails reviewing our policies and 
internal controls to assess the compliance of GAO's work with 
government audit standards. The review team will provide GAO with 
management suggestions to improve our quality control systems and 
procedures. Peer reviews will be conducted every 3 years.


    GAO is requesting budget authority of $486 million for fiscal year 
2005. The requested funding level will allow us to maintain our base 
authorized level of 3,269 full-time equivalent (FTE) staff to serve the 
Congress, maintain operational support at fiscal year 2004 levels, and 
continue efforts to enhance our business processes and systems. This 
fiscal year 2005 budget request represents a modest increase of 4.9 
percent over our fiscal year 2004 projected operating level, primarily 
to fund mandatory pay and related costs and estimated inflationary 
increases. The requested increase reflects an offset of almost $5 
million from nonrecurring fiscal year 2004 initiatives, including 
closure of our internal print plant, and $1 million in anticipated 
reimbursements from a planned audit of the Securities and Exchange 
Commission's (SEC) financial statements. Our requested fiscal year 2005 
budget authority includes about $480 million in direct appropriations 
and authority to use $6 million in estimated revenue from reimbursable 
audit work and rental income.
    To achieve our strategic goals and objectives for serving the 
Congress, we must ensure that we have the appropriate human capital, 
fiscal, and other resources to carry out our responsibilities. Our 
fiscal year 2005 request would enable us to sustain needed investments 
to maximize the productivity of our workforce and to continue 
addressing key management challenges: human capital, and information 
and physical security. We will continue to take steps to ``lead by 
example'' within the federal government in these and other critical 
management areas.
    If the Congress wishes for GAO to conduct technology assessments, 
we are also requesting $545,000 to obtain four additional FTEs and 
contract assistance and expertise to establish a baseline technology 
assessment capability. This funding level would allow us to conduct one 
assessment annually and avoid an adverse impact on other high priority 
congressional work.
    A summary of the requested changes between our fiscal year 2004 and 
2005 budget is reflected in table 4:

                        Budget category                               FTEs            Amount        percentage
Fiscal year 2004 resources: \1\
    Appropriation..............................................  ..............        $457,606   ..............
    Estimated revenue (offsetting collections).................  ..............          $5,971   ..............
      Total fiscal year 2004 resources.........................           3,269        $463,577   ..............
Fiscal year 2005 requested changes:
    Mandatory pay and related costs............................  ..............         $21,821              4.7
    Costs to maintain current operating levels.................  ..............          $4,007              5.5
    Nonrecurring fiscal year 2004 costs........................  ..............         ($4,499)  ..............
    New financial audit responsibility for SEC.................  ..............         ($1,000)  ..............
    Continuing improvements/new initiatives....................  ..............          $2,203   ..............
      Subtotal increased funding required to support GAO         ..............         $22,532              4.9
Fiscal year 2005 budget authority required to support GAO opera-          3,269        $486,109   ..............
Less: Estimated revenue (offsetting collections)...............           3,269         ($6,119)  ..............
      Fiscal year 2005 appropriation...........................  ..............        $479,990   ..............
Establish a baseline technology assessment capability..........               4            $545   ..............
      Total fiscal year 2005 appropriation.....................           3,273        $480,535   ..............
\1\ Includes rescission of 0.59 percent ($2,751).

Source: GAO.

                           CONCLUDING REMARKS

    We are grateful to the Congress for providing support and resources 
that have helped us in our quest to be a world class professional 
services organization. The funding we received in fiscal year 2004 is 
allowing us to conduct work that addressed many difficult issues 
confronting the nation. By providing professional, objective, and 
nonpartisan information and analyses, we help inform the Congress and 
executive branch agencies on key issues, and covered programs that 
continue to involve billions of dollars and touch millions of lives.
    I am proud of the outstanding contributions made by GAO employees 
as they work to serve the Congress and the American people. In keeping 
with my strong belief that the federal government needs to exercise 
fiscal discipline, our budget request for fiscal year 2005 is modest, 
but would maintain our ability to provide first class, effective, and 
efficient support to the Congress and the nation to meet 21st century 
challenges in these critical times.
    This concludes my statement. I would be pleased to answer any 
questions the Members of the Subcommittee may have.
    Appendix I: Serving the Congress--GAO's Strategic Plan Framework

   Appendix II: GAO Accomplishments That Helped Change Laws, Improve 
                 Services, or Promote Sound Management

GAO Efforts That Helped to Change Laws and/or Regulations
    Consolidated Appropriations Resolution, 2003, Public Law 108-7.--
The law includes GAO's recommended language that the administration's 
competitive sourcing targets be based on considered research and sound 
    Smallpox Emergency Personnel Protection Act of 2003, Public Law 
108-20.--GAO's report on the National Smallpox Vaccination program 
highlighted volunteers' concerns about losing income if they sustained 
injuries from an inoculation. This statute provides benefits and other 
compensation to covered individuals injured in this way.
    Postal Civil Service Retirement System Funding Reform Act of 2003, 
Public Law 108-18.--Analyses performed by GAO and OPM culminated in the 
enactment of this law that reduces USPS's pension costs by an average 
of $3 billion per year over the next 5 years. The Congress directed 
that the first 3 years of savings be used to reduce USPS's debt and 
hold postage rates steady until fiscal 2006.
    Accountability of Tax Dollars Act of 2002, Public Law 107-289.--A 
GAO survey of selected non-CFO Act agencies demonstrated the 
significance of audited financial statements in that community. GAO 
provided legislative language that requires 70 additional executive 
branch agencies to prepare and submit audited annual financial 
    Emergency Wartime Supplemental Appropriations Act, 2003, Public Law 
108-11.--GAO assisted congressional staff with drafting a provision 
that made available up to $64 million to the Corporation for National 
and Community Service to liquidate previously incurred obligations, 
provided that the Corporation reports overobligations in accordance 
with the requirements of the Antideficiency Act.
    Intelligence Authorization Act for Fiscal Year 2003, Public Law 
107-306.--GAO recommended that the Director of Central Intelligence 
report annually on foreign entities that may be using U.S. capital 
markets to finance the proliferation of weapons, including weapons of 
mass destruction, and this statute instituted a requirement to produce 
the report.

GAO Efforts That Helped to Improve Services to the Public
    Strengthening the U.S. Visa Process as an Antiterrorism Tool.--Our 
analysis of the U.S. visa-issuing process showed that the Department of 
State's visa operations were more focused on preventing illegal 
immigrants from obtaining nonimmigrant visas than on detecting 
potential terrorists. We recommended that State reassess its policies, 
consular staffing procedures, and training program. State has taken 
steps to adjust its policies and regulations concerning the screening 
of visa applicants and its staffing and training for consular officers.
    Enhancing Quality of Care in Nursing Homes.--In a series of reports 
and testimonies since 1998, we found that, too often, residents of 
nursing homes were being harmed and that programs to oversee nursing 
home quality of care at the Centers for Medicare and Medicaid Services 
were not fully effective in identifying and reducing such problems. In 
2003, we found a decline in the proportion of nursing homes that harmed 
residents but made additional recommendations to further improve care.
    Making Key Contributions to Homeland Security.--Drawing upon an 
extensive body of completed and ongoing work, we identified specific 
vulnerabilities and areas for improvement to protect aviation and 
surface transportation, chemical facilities, sea and land ports, 
financial markets, and radioactive sealed sources. In response to our 
recommendations, the Congress and cognizant agencies have undertaken 
specific steps to improve infrastructure security and improve the 
assessment of vulnerabilities.
    Improving Compliance with Seafood Safety Regulations.--We reported 
that when Food and Drug Administration (FDA) inspectors identified 
serious violations at seafood processing firms, it took FDA 73 days on 
average, well above its 15-day target. Based on our recommendations, 
FDA now issues warning letters in about 20 days.
    Strengthening Labor's Management of the Special Minimum Wage 
Program.--Our review of this program resulted in more accurate 
measurement of program participation and noncompliance by employees and 
prevented inappropriate payment of wages below the minimum wage to 
workers with disabilities.
    Reducing National Security Risks Related to Sales of Excess DOD 
Property.--We reported that DOD did not have systems and procedures in 
place to maintain visibility and control over 1.2 million chemical and 
biological protective suits and certain equipment that could be used to 
produce crude forms of anthrax. Unused suits (some of which were 
defective) and equipment were declared excess and sold over the 
Internet. DOD has taken steps to notify state and local responders who 
may have purchased defective suits. Also, DOD has taken action to 
restrict chemical-biological suits to DOD use only--an action that 
should eliminate the national security risk associated with sales of 
these sensitive military items. Lastly, DOD has suspended sales of the 
equipment in question pending the results of a risk assessment.
    Protecting the Retirement Security of Workers.--We alerted the 
Congress to potential dangers threatening the pensions of millions of 
American workers and retirees. The pension insurance program's ability 
to protect workers' benefits is increasingly being threatened by long-
term, structural weaknesses in the private-defined, pension benefit 
system. A comprehensive approach is needed to mitigate or eliminate the 
    Improving Mutual Fund Disclosures.--To improve investor awareness 
of mutual fund fees and to increase price competition among funds, we 
identified alternatives for regulators to increase the usefulness of 
fee information disclosed to investors. Early in fiscal year 2003, the 
Securities and Exchange Commission issued proposed rules to enhance 
mutual fund fee disclosures using one of our recommended alternatives.

GAO Efforts That Helped to Promote Sound Agency and Governmentwide 
    Encouraging and Helping Guide Agency Transformations.--We 
highlighted federal entities whose missions and ways of doing business 
require modernized approaches, including the Postal Service, and the 
Coast Guard. Among congressional actions taken to deal with 
modernization issues, the House Committee on Government Reform 
established a special panel on postal reform and oversight to work with 
the President's Commission on the Postal Service on recommendations for 
comprehensive postal reform. We also reported this year on the Coast 
Guard's ability to effectively carry out critical elements of its 
mission, including its homeland security responsibilities. We 
recommended that the Coast Guard develop a blueprint for targeting its 
resources to its various mission responsibilities and a better 
reporting mechanism for informing the Congress on its effectiveness. 
Our recommendations led to better reporting by the Coast Guard and laid 
the foundation for key revisions the agency intended to make to its 
strategic plan.
    Helping DOD Recognize and Address Business Modernization 
Challenges.--Several times we have reported and testified on the 
challenges DOD faces in trying to successfully modernize about 2,300 
business systems, and we made a series of recommendations aimed at 
establishing the modernization management capabilities needed to be 
successful in transforming the department. DOD has implemented some key 
architecture management capabilities, such as assigning a chief 
architect and creating a program office, as well as issuing the first 
version of its business enterprise architecture in May 2003. In 
addition, DOD has revised its system acquisition guidance. By 
implementing our recommendations, DOD is increasing the likelihood that 
its systems investments will support effective and efficient business 
operations and provide for timely and reliable information for decision 
    Helping to Advance Major Information Technology Modernizations.--
Our work has helped to strengthen the management of the complex, 
multibillion-dollar information technology modernization program at the 
Internal Revenue Service (IRS) to improve operations, promote better 
service, and reduce costs. For example, IRS implemented several of our 
recommendations to improve software acquisition, enterprise 
architecture definition and implementation, and risk management and to 
better balance the pace and scope of the program with its capacity to 
effectively manage it.
    Improving Internal Controls and Accountability over Agency 
Purchases.--Our work examining purchasing and property management 
practices at FAA identified several weaknesses in the specific controls 
and overall control environment that allowed millions of dollars of 
improper and wasteful purchases to occur. Such weaknesses also 
contributed to many instances of property items not being recorded in 
FAA's property management system, which allowed hundreds of lost or 
missing property items to go undetected. Acting on our findings, FAA 
established key positions to improve management oversight of certain 
purchasing and monitoring functions, revised its guidance to strengthen 
areas of weakness and to limit the allowability of certain 
expenditures, and recorded assets into its property management system 
that we identified as unrecorded.
    Strengthening Government Auditing Standards.--Our publication of 
the Government Auditing Standards in June 2003 provides a framework for 
audits of federal programs and monies. This comes at a time of urgent 
need for integrity in the auditing profession and for transparency and 
accountability in the management of scarce resources in the government 
sector. The new revision of the standards strengthens audit 
requirements for identifying fraud, illegal acts, and noncompliance, 
and gives clear guidance to auditors as they contribute to a government 
that is efficient, effective, and accountable to the people.
    Supporting Controls over DOD's Credit Cards.--In a series of 
reports and testimonies beginning in 2001, we highlighted pervasive 
weaknesses in DOD's overall credit card control environment, including 
the proliferation of credit cards and the lack of specific controls 
over its multibillion dollar purchase and travel card programs. We 
identified numerous cases of fraud, waste, and abuse and made 174 
recommendations to improve DOD's credit card operations. DOD has taken 
many actions to reduce its vulnerabilities in this area.

    Senator Campbell. Do any of your colleagues have any 
comments or they are just resources?
    Mr. Walker. They are here to answer questions.
    Senator Campbell. Senator Durbin, do you have an opening 
    Senator Durbin. Yes, I do. Thank you, Mr. Chairman.
    [The statement follows:]

            Prepared Statement of Senator Richard J. Durbin

    Mr. Chairman, thank you for scheduling today's hearing, the 
first of four budget oversight hearings to be held by the 
Legislative Branch Subcommittee this year. I'm glad we're all 
here and ready to begin working on this year's budget. Based on 
the events of last week, this is obviously going to be a very 
challenging year. I'm very happy to see that we are moving 
ahead with the hearing over on this side of the Capitol.
    Mr. Chairman, I am happy to be working with you on this 
important bill again this year. I think we did a good job 
working together last year and finishing the bill in a timely 
manner. With any luck, we can do so again this year.
    This is an important Subcommittee. There are 12 other 
Appropriations Subcommittees that fund all of the Executive 
Branch Agencies and Departments. The Legislative Branch has 
this one Subcommittee in which we need to fund all of the tools 
and resources required of a co-equal branch of government.
    Today we are going to hear from three important Legislative 
Branch agencies, the General Accounting Office, the Government 
Printing Office, and the Congressional Budget Office. I join 
Chairman Campbell in welcoming David Walker, the Comptroller 
General of the United States, Bruce James, the U.S. Public 
Printer, and Douglas Holtz-Eakin, the Director of the 
Congressional Budget Office to today's hearing.
    Gentlemen, I know I don't have to tell you that this is 
going to be a very challenging year for this Committee. The 
budget constraints under which we are expected to work seem 
unrealistic to say the least.
    However, it is important to the Members of this 
Subcommittee that you have the resources you need to do your 
jobs effectively and efficiently.
    To the extent that any of your budget requests have holes 
in them which could negatively impact your performance during 
fiscal year 2005, I hope you will share those concerns with us.
    First, Mr. Walker, I want you to know how much I appreciate 
everything you do for us here in the Senate. I particularly 
appreciate the guidance I have received from you and your staff 
on matters relating to the Capitol Visitor Center. I know this 
has been a tremendous task, but I think it is extremely 
important for Members to have access to your external oversight 
of this project as we make decisions about how to move forward 
on the CVC. I hope you will spend several minutes today 
discussing the GAO Human Capital Reform Act, which was approved 
in the House last week and will now be voted on in the Senate. 
This legislation will certainly give you broader flexibility in 
constructing your workforce. I look forward to hearing how this 
works for you and if you think it is worth pursuing in other 
federal agencies.
    Mr. James, you are doing a tremendous job as Public 
Printer. I am looking forward to hearing your testimony about 
your plans to relocate the Government Printing Office. You 
certainly have a vision for the future of the GPO and I hope 
you will walk us through it. I would also like to hear a little 
about your voluntary separation incentive program. The 10 
percent staff reduction and savings of $21.7 million was very 
impressive, and I understand that you are about to undergo 
another voluntary separation incentive program in April.
    Mr. Holtz-Eakin, I see you have a relatively flat budget, 
consisting mainly of increases in salaries and benefits. The 
Congressional Budget Office does great work in providing 
important information to the Congress. Over the years I have 
had concerns about your experiment with the dynamic 
scorekeeping initiative and I would appreciate it if you would 
provide the subcommittee with an update on where this 
experiment stands.
    Mr. Chairman, I will conclude here and request that my 
entire statement, as well as a series of questions, be made a 
part of the record.


    Senator Campbell. We will go to a couple of questions.
    In looking at your testimony, Mr. Walker, the GAO listed 
strategic human capital management as among its top high risk 
issues for the Federal Government. Can you tell me what that 
involves in laymen's terms?
    Mr. Walker. What it involves is making sure that we have 
the right number of people with the right skills and knowledge 
in the right agencies doing the right things. It also means 
modernizing Federal management practices for how we treat 
people. It also means civil service reforms in order to provide 
management with reasonable flexibility to make decisions while 
incorporating adequate safeguards to prevent abuse of employees 
and also making sure that we have certain principles that are 
timeless in nature that apply across Government so we do not 
have the balkanization of the civil service, among other 
things, Mr. Chairman.


    Senator Campbell. That sounds commendable.
    Under your current pay-for-performance system, how do you 
determine how many people will be given pay raises, and who 
makes that decision? Are the increases all tied to performance?
    Mr. Walker. Well, first, we have several categories of 
employees at GAO.
    Senator Campbell. How many employees are there at GAO?
    Mr. Walker. About 3,260. With regard to our categories, we 
have our auditors, analysts, and investigators. That is one 
category. That comprises over 70 percent of our employees. We 
have attorneys, which is another category, and then we have our 
administrative, professional and support staff. The auditors, 
investigators, and analysts have been involved in pay-for-
performance since the late 1980's. The attorneys have also been 
involved in pay-for-performance since the late 1980's. The 
administrative, professional and support staff are moving to a 
pay-for-performance (PFP) system. Right now they are under the 
current GS system, which provides for periodic and optional 
quality step increases. We have designed a new competency-based 
performance appraisal system for them as well as a pay-for-
performance system. So, for next fiscal year, almost all of our 
employees will be under a pay-for-performance system. Those not 
in PFP are our wage grade individuals.
    We have a modern, effective, and credible competency-based 
performance appraisal system, which provides for a meaningful 
distinction in performance among all individuals, and is tied 
to our strategic plan. It is focused on the results that we 
want to deliver for the Congress and the country.

                           RATING PERFORMANCE

    Senator Campbell. Does the immediate supervisor do the 
rating of the performance?
    Mr. Walker. Yes, Mr. Chairman. There is a designated 
performance manager. That designated performance manager will 
come up with a proposed rating, but then there are a number of 
review processes that take place in order to provide reasonable 
assurance that there is consistency, equity and 
nondiscrimination in how we go about completing the process. 
There is reporting all the way up to the Executive Committee, 
which involves myself, my two colleagues on my immediate right 
and left, as well as our general counsel. There is also 
transparency with regard to results. We post the results, 
maintaining privacy, but the overall results, so that all of 
our employees can see what the results are.
    We are clearly leading the Government in this regard, Mr. 
Chairman. There is no doubt about it.


    Now, the last thing I would mention is we do have 
legislation that has already passed the House. It has passed 
the Senate once. It is coming back to the Senate because the 
House version was slightly different. That bill would give us 
the ability to improve our pay-for-performance system. It has 
broad-based bipartisan and bicameral support. We are hoping 
that the Senate will pass it via unanimous consent in the near 

                         TRAINING GAO EMPLOYEES

    Senator Campbell. Tell the committee a little bit about the 
training for fiscal year 2005, which is about a 4 percent 
increase over 2004. What does that training include? What kind 
of training is it and do you have a strategic plan for the 
training? And how much of that is directly related to 
maintaining technical skills? Just give us a little information 
about it.
    Mr. Walker. Well, as you know, Mr. Chairman, we are a 
professional services and knowledge-based organization. We are 
only as good as our people, and therefore, we have to do 
everything that we can to attract, retain, and train our 
    During this past year, we hired Carol Willett, who is our 
Chief Learning Officer and who formerly was a top training 
official at the CIA. She has been working with the Executive 
Committee and all of our employees and others to modernize our 
training and learning curriculum.
    Four percent is, I think, a modest increase, but it is only 
the hard dollars. In other words, that is only the dollars that 
we actually spend on consultants or outside activities. We 
obviously invest a lot more in the way of time in helping to 
execute our training program.
    We are basically training on professional standards. We are 
training on technical matters, including subject matter 
expertise. We are training on leadership skills. We are 
training on changed management experience. So it is a very 
comprehensive curriculum. Our objective is to be world-class in 
this regard, and I think we are headed there.
    Mr. Dodaro. Senator, one additional comment on the training 
at GAO. One-third of our employees right now have been with GAO 
less than 5 years because of changing demographics and bringing 
in new people. So training this next generation of people is 
very important to build our institutional knowledge for the 
Congress. It is very important to keep that up.

                        EFFECT OF FUNDING FREEZE

    Senator Campbell. We understand about fast turnovers. We 
have them here too.
    Well, let me ask you, as I am going to ask all three 
panels. You heard me say we are going to have some limited 
funds and we might not be able to increase the amount that you 
need. What happens if we cannot? How is this going to impact 
your budget if we have to have a freeze in spending at the 
current level?
    Mr. Walker. Well, Mr. Chairman, to a great extent it 
depends upon what other actions Congress takes. For example, if 
you look at our proposed increase, which is the smallest of any 
legislative branch entity, 4.9 percent, most of that is 
mandatory increases. For example, we were told to include in 
our request a 3.5 percent increase in compensation for all of 
our employees. So if Congress ends up mandating that we have to 
give an automatic pay increase to all of our employees and 
since 81 percent of our costs represent payroll costs, then it 
is going to be extremely difficult for us to deal with a flat-
line budget.
    There are things that we have started to look at as to what 
we might be able to defer or cancel, but the fact of the matter 
is that when 81 percent of our costs represent people costs, we 
do not have a whole lot of flexibility. We have to start 
talking about how many people we can have.
    Senator Campbell. So if we have a freeze in the budget, you 
are going to have to reduce your manpower.
    Mr. Walker. We may have to reduce our manpower. We would 
obviously only do that as a last resort, but I think it could 
be possible. If Congress mandates pay increases and does not 
fund those pay increases, it is going to make it that much 
    But I will also reinforce that our human capital 
legislation that is pending before the Senate at the present 
point in time is of critical importance not only to keep us in 
the lead in human capital reform, but to give us additional 
flexibility to deal with the difficult budget situation next 
year. It is critically important.

                          GAO TRAVEL PATTERNS

    Senator Campbell. Okay, thank you. That was my last 
question, but I would like you to provide for the record 
something about your travel which, as I understand, seems to be 
relatively high for the number of people that are employed. If 
you would send it over to us. I would like to know the number 
of people who traveled, the average cost of the trip, the 
average duration of the trip, and the number of people that 
went on each trip, and how much travel was spent on training, 
the number of trips that were made overseas and why they went 
overseas, and a number of other things.
    Mr. Walker. I will be happy to provide it, Mr. Chairman. I 
would note for the record on a preliminary basis it is my 
understanding that our per capita travel costs are actually 
down compared with where they were 10 years ago, but I will be 
happy to provide all that information and any explanations.
    [The information follows:]

    Question. It seems as though GAO's travel budget is very 
high considering the number of people employed by the agency. 
Your request for fiscal 2005 looks like it would average over 
$3,500 per person. Why is travel so high?
    Answer. Our congressional mandates and requests require us 
to follow the federal dollar no matter where it goes--across 
our expansive country or across the globe. As a world-class 
professional services organization, we rely on travel to (1) 
meet our professional standards, including generally accepted 
governmental auditing standards; (2) conduct our work in 
supporting the Congress; and (3) provide staff technical 
training needed to comply with minimum annual continuing 
professional education requirements. We collect original 
information, directly observe program activities first hand, 
and have high standards in the conduct of our work that require 
adequate standards of evidence. Travel provides the means to 
conduct first-hand research that contributes to effective 
oversight of federal programs. We conduct our work in an 
unbiased manner that usually means we take responsibility for 
gathering the relevant data, rather than relying on material 
provided by others. Our credibility is enhanced by what we 
learn on travel. The ability to ``be on the ground'' increases 
the value and credibility of our work. Also, we are often able 
to obtain various types of evidence, e.g., access to internal 
agency databases that would not be available at a distance. 
First-hand observation and data gathering also helps us make 
decisions about data reliability when we observe or talk to 
those persons who are responsible for entering the data. Also, 
travel provides developmental opportunities for inexperienced 
analysts that can only be gained from on-site work.
    GAO is committed to gaining as much as possible from 
travel. We weigh many factors before approving engagement 
travel. We strive to be as knowledgeable as possible on the 
issues before conducting fieldwork. We assess the overall cost 
of each trip, including staff time, as well as travel dollars. 
We also judiciously prioritize the use of funds and assess 
possible alternatives to travel. We actively focus on reducing 
costs by limiting the number of travelers; minimizing time 
spent on per diem; using alternative, more cost-effective 
airports and indirect flights to reduce transportation costs; 
and consolidating purposes to avoid multiple trips.
    GAO drastically reduced travel spending in the mid-1990s 
due to budget constraints. Travel spending, as a percentage of 
our total budget, has remained relatively flat since then at 
less than 3 percent. In fiscal year 1995, our travel per capita 
cost averaged $3,632 in 2004 dollars--slightly higher than our 
estimated fiscal year 2004 travel per capita cost of $3,482.
    Recently, we convened a task force of senior managers to 
further review our travel practices and identify ways to 
improve our effectiveness and efficiency. The task force will 
be making recommendations to the Comptroller General and the 
Executive Committee later this year.
    Question. For the record, can you give the committee a 
detailed analysis showing the following? The number of people 
who traveled in fiscal year 2003.
    Answer. In fiscal year 2003, 2,324 staff traveled--over 70 
percent of our staff on board at the end of the fiscal year. 
Staff that conduct fieldwork and gather data conduct the 
majority of our travel. Typically, they are recurring 
    Question. What was the average duration of each trip?
    Answer. The average duration per trip in fiscal year 2003 
was 4 days.
    Question. What was the average number of people that went 
on each trip?
    Answer. In fiscal year 2002, the average number of staff 
per trip was 2. Generally, most engagement related trips 
require a minimum of 2 staff to ensure data integrity and the 
reliability of interview write-ups. Other travel may only 
involve 1 GAO employee.
    Question. What was the average cost per trip?
    Answer. The average cost per trip was $1,014 in fiscal year 
    Question. How much travel was spent to attend conferences 
not directly associated with a specific job? How much travel 
was spent for training?
    Answer. In fiscal year 2003, we spent 7 percent of our 
travel funds to support training and development activities, 
including conferences and speeches, many of which were related 
to specific jobs. Presently, we do not segregate the cost for 
each of these activities, but plan to do so in the future. 
These trips allow staff to attend training and professional 
conferences to gain and share information, as well as to 
represent GAO in their professional capacity.
    Question. What was the number of trips that were made 
overseas and why?
    Answer. In fiscal year 2003, 380 trips were made outside 
the contiguous United States to areas such as Afghanistan and 
Iraq. Our International Affairs and Trade team conducted travel 
to assess peacekeeping transitions, review the U.S. public 
diplomacy, monitor sensitive exports, review refugee 
protections, assess embassy conditions, review ocean container 
security, and assess the global health fund. Travel by other 
teams and offices included issues related to joint strike 
fighter allies, foreign military sales shipments, foreign 
schools, port security, force protection, contractors on the 
battlefield, plutonium production reactors and radioactive 
sources, international aviation consumer benefits, postal work-
sharing, border security, and collaboration with the other 
Supreme Audit Institutions.
    Question. What has been the average increase over the past 
five years in per diem and transportation costs?
    Answer. Per diem costs represent about sixty-two percent of 
our total travel costs. Between fiscal years 2001 and 2003, in 
the 20 major cities that we travel to most often, per diem 
costs increased an average of 4 percent, while domestic 
airfares increased an average of almost 7 percent from 
Washington, D.C., and international airfares increased an 
average of 10 percent. Between fiscal years 2001 and 2003, per 
diem costs increased 18 percent in Atlanta, 16 percent in 
Chicago, 23 percent in Denver, 25 percent in Seattle, and 21 
percent in Washington, D.C. Since fiscal year 1999, 
transportation costs have increased almost 40 percent.

                         TECHNOLOGY ASSESSMENT

    Senator Campbell. Thank you.
    Would you mind if I yield to the chairman?
    Senator Durbin. No, of course, not.
    Senator Campbell. Before we turn to our ranking member, I 
would like to yield to the chairman of the full committee. 
Senator Stevens, do you have any comments or questions?
    Senator Stevens. Well, first to express my regret for your 
decision yesterday, Mr. Chairman.
    Senator Campbell. My granddaughter, 4 years old, is very 
happy with it.
    Senator Stevens. I was just going to say you would like to 
get to know your grandchildren before they enter college, which 
is what my experience has been.
    Mr. Walker, I note that you are going to have four 
additional staff devoted to establishing a technology 
assessment capability. Now, I am one of the few survivors of 
the Office of Technology Assessment Board. It was one of the 
most controversial boards that we ever had, and it brought in 
the private sector, it brought in Government, it brought in 
academia, and the oversight of Members of the House and the 
    Being what you are, an office that serves the Congress, 
both the House and the Senate, and knowing the propensity for 
these issues to involve horrendous political controversies, why 
are you doing this?
    Mr. Walker. Well, Senator, first, it was not our idea. The 
fact of the matter is there are a number of parties in Congress 
and individuals on both ends of the Hill and both sides of the 
aisle who are interested in some limited technology assessment 
capability. They specifically asked us to include a proposal 
for consideration by the Congress as to whether or not if there 
was some limited technology assessment capability, what we 
thought would make sense.
    Our view, Senator, is this is a decision for the Congress 
to make. I think there was a general view that it does not 
necessarily make sense to create a new entity, and to the 
extent that there was an existing entity within the legislative 
branch that could meet this need, that GAO was the logical 
entity to do it.
    The additional FTE's and the $545,000 would be for 
additional skills that we think we would need in order to be 
able to properly address this.
    But it is really up to the Congress as to whether or not 
you want to expand our mission for us to do this.
    Senator Stevens. We have two shared staffs, the GAO and the 
Congressional Research Service. We had a meeting yesterday of 
the Joint Committee of the Library, which I am honored to be 
chairman of, and we discovered yesterday that CRS has hired 
four technology assessment scientists.
    Now, I would respectfully suggest that you should take this 
issue to the Government Affairs Committee and let both Houses 
review this. Obviously, with the loss of the Technology 
Assessment Board concept, we do need in Congress some 
substantial advice on technology assessment. Actually the old 
Board came out of the SST controversy, and we decided we did 
not have the capability. We reviewed that and created a Board 
that assisted us for some time.
    I personally favor restoring the Board and having some 
Members of Congress in constant oversight of what is going on 
on a bipartisan basis and a bicameral basis. But I do not think 
that either entity of the Congress should proceed to fill this 
gap without some direction from the Congress itself. Enough 
said on that.
    On your pay-for-performance concept, did you generate that 
or was that pursuant to an act of Congress?

                     SOURCE OF PAY-FOR-PERFORMANCE

    Mr. Walker. No. This is at our generation, Senator. We have 
been a leader in the Federal Government for years in pay-for-
performance, and we are looking to provide additional 
flexibility for pay-for-performance. We have also been a leader 
in the Federal Government in the so-called broad-banding 
concept which is moving away from the 15 General Schedule (GS) 
levels and to have flatter and more flexible classification 
systems and pay systems. So we have been in this business for a 
while, Senator.
    Senator Stevens. Again, I remember when I was chairman of 
the Government Affairs Committee, we had China Lake and San 
Diego experiments on the whole concept of unit management 
rather than directed management by law. But we had some 
parameters from the Congress in setting it up. You do not have 
any parameters. Right?
    Mr. Walker. Well, Senator, we actually do. And the other 
thing is----
    Senator Stevens. Where do you have it from?
    Mr. Walker. Well, we had legislation in 1980 that gave us 
the authority to go to broad-banding and additional pay-for-
performance. We had legislation in the year 2000, and now we 
have legislation pending before the Senate, the GAO Human 
Capital Reform Act of 2003. It has actually already passed the 
Senate once, but the House passed a bill that was slightly 
different, and so now we have for consideration by the Senate 
that legislation, which is of critical importance to, number 
one, help us to continue to make progress on pay-for-
performance, and second, to give us additional flexibility if 
we have a tight budget year next year.
    Senator Stevens. All right. My memory is that the past 
performances ended up with the chiefs being able to divide the 
money for performances and the Indians sitting there at the 
desks and not having annual increases. I would be very 
interested to see how you are going to balance the rights of 
those who are permanent employees from the temporary super 
stars you have got.
    Mr. Walker. Senator, I would be happy to provide you some 
information. We have, I think, successfully addressed that 
issue. There is no such thing, as you know, as a perfect 
performance appraisal system, but I clearly believe, Senator, 
that we are in the lead in the Federal Government in this 
regard. I would be happy to provide you some additional data 
and statistics with regard to this.

                            FEDERAL DEFICIT

    Senator Stevens. My staff tells me that you have expressed 
some rather strong views on the deficit. Is that right?
    Mr. Walker. Well, Senator, let me tell you what I have 
done. As you know, I am the audit partner on the consolidated 
financial statements of the U.S. Government. My comments really 
are twofold. One, that if you look at how we keep score, both 
as it relates to financial reporting, the financial statements 
of the U.S. Government, which were just released, I might add, 
last Friday for fiscal year 2003, that it does not provide a 
full and complete picture of our true financial condition. For 
example, it does not adequately consider the difference between 
promised Social Security benefits and promised Medicare 
benefits and the resources that are there, the payroll taxes, 
et cetera. So we actually have huge unfunded commitments that 
are not given enough transparency.
    I have also noted concern about the fact that given known 
demographic trends, the retirement of the baby boom generation 
and rising health care costs, that we are likely to face a 
structural deficit in future years that is going to require the 
Congress to take a look at entitlement programs, discretionary 
spending, and tax policy in the way that you deem appropriate 
to try to address that gap.
    Senator Stevens. Have you addressed the lack of a capital 
budget for the United States?
    Mr. Walker. I have touched on that somewhat, Senator. One 
of the problems we have is the way that we keep score is 
problematic, and one of the challenges that we have, as you 
know, Senator, is we treat capital transactions the same way 
that we do operating expenses.
    There are different ways that one could approach that. You 
would not necessarily have to have a capital budget, but as you 
yourself have noted, in the case of trying to make major 
capital purchases, we need to figure out how we can go about 
doing that in a way to recognize that we need to modernize our 
platforms, we need to modernize our infrastructure, and those 
are investments that end up inuring benefits over a number of 
years rather than just in the year that you appropriate the 
    Senator Stevens. I do not want to prolong this, but I 
showed to a group of Senators yesterday a chart that I had of 
the infrastructure investment by China per year and the 
increase in infrastructure investment of the United States per 
year, and it has declined. We are supposed to be involved in a 
world economy, competing globally. If we continue to take the 
position that the Federal Government should not spend for the 
infrastructure that is necessary for growth, then by definition 
we will not have any growth. And I think we face a challenge 
internationally in terms of our place in the global marketplace 
that cannot be handled unless we address the subject of a 
capital budget and, if necessary, the concept of bonding some 
of that expansion. So I would welcome your review of that.
    Again, I am still on the Government Affairs Committee. I 
hope to raise this before the Government Affairs Committee so 
that we might consider it after the election. It is not 
something we address in an election year. But clearly, we 
cannot deal with this situation, and I mentioned it this 
morning in another committee. When we have energy development 
in Alaska, we have to take our roads allowances for our 
highways and build the roads to that energy development. In any 
other place in the world, the government provides 
infrastructure. As a matter of fact, if you want to build a 
building in China, you go to one entity and get one permit and 
you outline the necessity for your infrastructure and it is 
there within literally weeks. You could not build a building in 
this town in less than 4 years. So I do think we either get on 
to the capital budget concept and infrastructure renewal--the 
bridges we have and interstate highways were built in 
Eisenhower's day, and many of them are decaying and are really 
seriously in need of replacement or modernization.
    So I would welcome your comments on these things. I do not 
think we should become deficit blind, and if we do not wake up, 
we are going to be a third class power, not only militarily but 
    Mr. Walker. Senator, I would love to meet with you sometime 
on this, and we have done work on this in the past, as you 
know. So I would welcome the opportunity.
    Senator Stevens. I would welcome the opportunity to work 
with you on the technology assessment activity, but I would 
urge you to go to Government Affairs and get some outline so 
later we do not have a political squabble over who you have 
hired and what they have done.
    Mr. Walker. We will do it.
    Senator Stevens. Mr. Dodaro?
    Mr. Dodaro. Senator, that is a good idea and we will pursue 
that, but I just want to note for the record that we were 
required to do a pilot in the technology assessment area 2 
years ago. We did one, and we were required to have an 
evaluation of it by outside parties.
    Senator Stevens. Who required it?
    Mr. Dodaro. It was required by the Congress in our 
appropriation bill. We did it on biometrics.
    Senator Stevens. I do remember that.
    Mr. Dodaro. Yes, and we were deemed to have done it 
successfully, but it required some additional changes. And we 
were kind of viewed as an interim gap for the Congress, with 
CRS providing quick turnaround using secondary research, and 
the National Academy of Sciences doing long-term studies. GAO 
was looked at as a potential option to meet an intermediary 
    Senator Stevens. If we are not careful, though, we are 
going to have different arms of the Congress giving us 
different advice on the same technology.
    Mr. Dodaro. Yes, exactly, Senator. We do not dispute your 
concerns about this. I think it is important to work it 
    Senator Stevens. Thank you very much, Mr. Chairman. Thank 
you, Senator Durbin.
    Senator Campbell. We will now turn to Senator Durbin.

                          RETURN ON INVESTMENT

    Senator Durbin. I just wanted to make one observation. I 
want to thank Mr. Walker and all those in the GAO. I note that 
you have, in your testimony, acknowledged that the GAO has had 
a $78 return on every dollar appropriated. Have you considered 
taking over the thrift savings plan?
    Mr. Walker. It is not in our line of business.
    Senator Durbin. If we had a G fund and it was a GAO fund, 
that return?
    Mr. Walker. Some have suggested we ought to do an IPO, but 
I do not think that is appropriate.
    Senator Durbin. Two questions I would like to ask you. One 
is related to technology. It is my impression that the 
technology of the United States Senate is two steps behind the 
world and three steps behind the House. I happen to live with 
House Members and I hear what they are doing. It just amazes me 
that there is such a dichotomy and divergence here between the 
technology that is being used on the other side of the Hill and 
what we are using in the Senate. We seem to be late to the 
party time and again. I will not dwell on that other than to 
say I am going to send you a note and ask you to please look 
into this because I think that there are things that, for some 
reason, we are very slow to come to in changes here.
    Let me ask you one specific question. I feel very strongly 
about the human capital issue and the fact that to attract the 
best and brightest of the new young men and women who are 
available requires some attentiveness to the issue of student 
loans. I have found that time and again that some of the very 
best people cannot afford to make the Government service choice 
because of their student loan indebtedness.
    Now, I created this idea a few years ago. I have to tell 
you candidly that I do not think it got off to a strong start 
in the Senate because, frankly, no one wanted to take on the 
responsibility of deciding how to establish standards. Have you 
used this program in GAO and can you tell me whether or not you 
think it has value to you in terms of human capital?

                        STUDENT LOAN REPAYMENTS

    Mr. Walker. Senator, I believe we were the first agency in 
the Federal Government to adopt the student loan repayment 
program. We are the second largest user of student loan 
repayments in the entire Federal Government as far as the 
number of student loan repayments and the amount of dollars 
involved. Number one is the State Department. Needless to say, 
we are a lot smaller than the State Department.
    To give you just some statistics off the top, last year we 
gave about $1.2 million--pardon me--last year, fiscal year 
2003, $945,000 in student loan repayments, that averaged about 
$4,000 each.
    We have criteria that we set up where we look at the nature 
of the position, what the skills and knowledge are for the 
position. As you know, there are statutory limits as to how 
much you can do in a given year and how much you can do over a 
period of time.
    One of the things that we have done is, in addition to 
trying to attract and retain critical skills, we have really 
structured our student loan repayment program to try to help us 
maximize the chance that we can keep top new talent for at 
least 3 years. And the reason I say that is that our statistics 
show over time that if we can keep people for 3 years, then 
many times we can keep them for many years because they 
understand what public service is all about. They understand 
the difference they can make at GAO. They understand that we 
are a very unique place where you will be challenged your 
entire career and you can work in different areas and yet still 
work for the same entity. And it has been extremely successful. 
It is a very popular program. It is very successful, and we are 
using it strategically to help us attract, retain, and motivate 
top talent.


    Senator Durbin. The second thing I will be asking the GAO 
is to take a look at the student loan redemption or forgiveness 
programs across the board, which I have some pride of 
authorship. But I also want to be candid. I do not think they 
are being applied fairly and evenly in all agencies. I think we 
ought to try to establish some common standards and what you 
have just described sounds like a good start. So that will be 
my second request of you.
    Mr. Walker. Thanks, Senator. One thing I would mention that 
would be helpful and it would involve an amendment to the 
Internal Revenue Code, which obviously raises a jurisdictional 
issue, but as you know, right now the student loan repayment is 
on a taxable basis. We could really leverage these dollars 
quite a bit if these were nontaxable because actually what we 
have right now is a situation where if somebody gets a student 
loan repayment, they have to include it in their income. If 
they end up leaving within a period of time, they have to pay 
back the full gross amount, in other words, including the 
taxes. It is a way that you could end up potentially further 
leveraging the dollars without appropriating additional money, 
but it would involve an amendment to the tax code.


    Senator Durbin. Thanks very much. Thanks, Mr. Chairman.
    Senator Campbell. Thank you and we thank this panel for 
    [The following questions were not asked at the hearing, but 
were submitted to the Office for response subsequent to the 

         Questions Submitted by Senator Ben Nighthorse Campbell

    Question. You are requesting about $4 million for training in 
fiscal year 2005. Does this include both the cost of training provided 
by GAO's internal staff or is it only training provided by contractors?
    Answer. The requested amount includes (1) contractor costs to 
develop and/or provide training, (2) tuition costs to enable GAO-
sponsored groups or individuals to participate in job-related courses 
offered by private and public vendors, and (3) costs for training 
manuals and online tutorials. It does not include the time cost of 
training provided to or received by GAO staff.
    Question. What kind of training is provided by contractors and what 
is done by GAO's internal staff?
    Answer. Training that addresses development of core analytic 
skills, GAO policies, standards, and culture, and quality assurance 
procedures and practices are developed in-house using GAO subject 
matter experts and adjunct faculty. Professional development topics 
that are more general in nature, such as coaching, teambuilding, or 
project management, are outsourced. We seek to provide a blend of face-
to-face classroom interaction, online learning and web-based 
performance support tools. Learning programs delivered in each of these 
ways have been developed in-house, developed jointly with outside 
contractors or consultants, and purchased from outside vendors.
    Question. How many people has GAO dedicated to its internal 
training function, and what is the cost of this effort?
    Answer. GAO has about 15 staff, at an estimated cost of $1.9 
million, assigned to its internal training function. These staff are 
responsible for overseeing contractor training development and 
delivery; developing training materials; coordinating training delivery 
to GAO staff; providing subject matter expertise, conducting training 
courses, and assessing course development and content; and working with 
GAO managers and staff to identify options for maintaining and 
enhancing course offerings.
    Question. How much of that is directly related to maintaining or 
enhancing technical skills? How much is directly related to supervisory 
and management training?
    Answer. GAO's total investment in training approximates that spent 
by comparable professional services organizations. Our request provides 
funding for development and delivery of courses in our newly revised 
curriculum not only to maintain individual professional competence, but 
also to enhance it, thus promoting a work force that continually 
improves its skills and knowledge. To this end, we require analyst and 
specialist employees complete 80 hours of continuing professional 
education credits every 2 years. The proposed new mandatory curriculum 
for analyst staff includes 256 hours to maintain or enhance technical 
skills through orientation to GAO processes and customers, core 
analytic skills training, and professional development at an estimated 
cost of about $2 million. This training is critically important because 
about 38 percent of our analyst staff have 5 years or less with GAO. 
Also, about 172 hours of training in the new mandatory curriculum will 
focus on leadership development for senior and management-level analyst 
staff at an estimated cost of $687,000. Teams and offices provide 
training on substantive professional development and subject matter 
expertise at an estimated cost of $1.6 million.
    We plan to develop a mandatory curriculum for our administrative, 
professional, and support staff which will include components for 
technical skills, as well as supervisory and management training.
    Question. Do you have a strategic plan for training in GAO? If so, 
could you supply it for the record?
    Answer. Human capital elements, such as training, have always been 
broadly reflected in our agency strategic plan. However, we felt the 
need to have a separate human capital plan due to the importance of 
human capital management as the cornerstone of GAO's management 
framework and the high interest in such a plan. During fiscal year 
2003, we made substantial progress towards finalizing our first formal 
and separate strategic plan planning document for human capital that 
communicates our strategy for becoming a model, professional 
organization, including how we plan to attract, retain, train, 
motivate, and reward a high-performing and top quality workforce. 
Management has reviewed the draft human capital strategic plan and we 
are following it in practice. We are waiting for enactment of our 
pending human capital legislation. Thereafter, we will finalize the 
plan and provide copies to the committee.

                       GOVERNMENT PRINTING OFFICE



    Senator Campbell. We will now hear from the Government 
Printing Office, Bruce James, the Public Printer; Marc Nichols, 
Inspector General; William Turri, the Deputy Printer; and Steve 
Shedd, the Chief Financial Officer.
    Mr. James, why do you not go ahead and proceed. If you 
would like to abbreviate your comments, your complete testimony 
will be in the record.
    Mr. James. Thank you, Mr. Chairman. I am pleased to be with 
you here today to offer testimony in support of the Government 
Printing Office's appropriations request and to answer any 
questions you may have. At the table with me is Bill Turri, the 
Deputy Public Printer of the United States and the Chief 
Operating Officer, and to my immediate right is Steve Shedd, 
our Chief Financial Officer, and to my far right is Marc 
Nichols, our Inspector General.
    Last year at this hearing, I discussed the importance of 
developing a strategic plan for the GPO that is aligned with 
the changing information requirements of the agencies of 
Government, the national library community, and the general 
public. I also testified about the importance of stabilizing 
GPO's finances by stopping the long string of financial losses.
    We have made great strides toward the development of a 
strategic plan that can be accepted by Congress, employees of 
GPO, the printing and information industries, and the library 
community. We are wrapping up the first phase, the fact 
finding, and are only waiting for the final reports from GAO's 
study of the future information dissemination needs of the 
Government. We expect to complete a final plan before the 
beginning of next fiscal year.
    Meantime, as you know, we have proceeded to make changes to 
our organization that will be required regardless of the final 
plan. We have taken the steps necessary to stabilize the 
financial condition of the GPO by reorganizing and streamlining 
our business units, reducing employment, and shutting 
unnecessary operations. We conducted a successful early 
retirement program last year and have another underway. By the 
summer, we will have reduced overall agency employees by 20 
percent from the time that I arrived at the GPO a little over 1 
year ago. We have changed our capital investment program to 
require faster paybacks for taxpayers. If there are no 
unanticipated setbacks as the year progresses, we should end 
this fiscal year at or near the breakeven point rather than the 
$33 million loss I inherited, all while measurably improving 
our service levels to agencies, libraries and the public.
    Next year we will begin to roll out a series of new 
printing and digital information products now being developed 
by our New Products and Revenues Group which is supported by 
our Office of Innovation and New Technology, both of which 
report directly to me.
    While I cannot bring before you a finished strategic plan 
today, I can tell you that every sign is pointing to the 
necessity of maintaining a centralized public source for 
Federal Government documents that takes into account the fact 
that more than 50 percent of our documents are born digital and 
will never be printed by the Government except on demand, as 
needed. This calls for a different type of dissemination 
system, one that can deal with multiple electronic versions of 
the same document, authenticate electronic documents as 
official and reliable, and preserve the digital record of the 
American Government in perpetuity.
    Congress is fortunate to have in place an organization for 
providing such services to the American people staffed by more 
than 2,000 printing and information professionals who together 
have more than 55,000 years of experience in collecting, 
processing, and the distribution of United States Government 
documents. The men and women of the GPO are here to serve you 
and guide our brothers and sisters throughout the Government 
into the complex world of 21st century digital information.

                           PREPARED STATEMENT

    We appreciate the trust and confidence that Congress has 
placed in us and this subcommittee in particular for your 
support of our initiatives. To continue to serve your needs and 
those of the courts and the executive branch agencies, we are 
asking for a $25 million technology investment. We will use 
this to modernize our document handling systems, which will 
reduce future costs and lead to lower appropriations for 
congressional printing and binding and other Government 
    With that, we would be pleased to entertain your questions.
    [The statement follows:]

                  Prepared Statement of Bruce R. James

    Mr. Chairman and Members of the Subcommittee: It is an honor to be 
here today to present the appropriations request of the U.S. Government 
Printing Office (GPO) for fiscal year 2005.
    2003 Results.--I'm pleased to report that 2003 was an 
extraordinarily eventful and productive year for the GPO. With funding 
from the Legislative Branch Appropriations Act for 2004 and the 
approval of the Joint Committee on Printing, we conducted a highly 
successful voluntary separation incentive program that allowed us to 
reduce our workforce level by more than 300 positions, or 10 percent, 
yielding annual savings of $21.7 million. Together with our efforts to 
shutter GPO's failing retail bookstores, which will generate savings of 
$1.5 million in the first year, and the other steps we have taken to 
better manage our operations, our finances are being restored to a 
positive basis.
    We have undertaken additional measures in recent weeks that will 
yield further financial benefits. With the approval of the Joint 
Committee on Printing, we are implementing another voluntary separation 
incentive program that is targeted at reducing an additional 250 
positions, yielding an annual savings of $16.5 million for fiscal year 
2005. This program will be financed through our revolving fund during 
the April-July period of this year. The Joint Committee has also 
approved our plan to end the financial losses at our Denver regional 
printing plant by closing it. Barring any unforeseen developments, 
these and related actions we are taking to improve efficiency and 
economy will allow us to complete fiscal year 2004 at or near the 
break-even point, halting a decade-long pattern of year-end losses and 
setting the GPO on the road to sustained financial health.
    Transforming the GPO.--Apart from restoring our finances, during 
2003 we began the transformation of the GPO into a 21st century digital 
information processing facility. We carried out a broad reorganization 
to redirect the GPO's management, expanded our workforce development 
resources, began modernizing the GPO's product lines with new offerings 
such as Public Key Infrastructure technology, and initiated planning 
for the restructuring of our Federal Depository Library Program. We 
also improved emergency preparedness for our employees and for 
continuity-of-government operations. Across the board--from our 
customers in Congress, Federal agencies, and among the public, from the 
printing industry, the library and information communities, and from 
our employee representatives--we're getting strong support for the 
direction we're heading.
    Transforming the GPO for the long term will require much more than 
the changes we've already achieved. As you know, in the coming weeks 
the General Accounting Office will be concluding its congressionally-
mandated study of Federal printing and information policy. The study 
will establish a baseline of current operations on which we can 
confidently build a strategic plan for the GPO's future involving 
consultations with all of our stakeholders. The plan will include 
recommendations for reforming the 19th century statutes comprising 
Title 44 of the U.S. Code, the laws that authorize our programs and 
    Dealing with the GPO's building needs is a major transformational 
issue that we are also addressing. As reports in The Washington Post, 
The Washington Times, Roll Call, and The Hill have detailed recently, 
we've begun a process that we expect to culminate by 2007 in the 
relocation of the GPO from our aging, oversized quarters on North 
Capitol Street to modern, efficient facilities--preferably in the 
District of Columbia--that are sized and equipped to meet our needs in 
the 21st century. Rather than burden the taxpayers with this project, 
we want to investigate opportunities to finance it through the 
redevelopment of our current structures. In addition to benefiting the 
GPO and our customers, this approach will also generate significant 
benefits for the District. We have obtained the approval of the Joint 
Committee on Printing to proceed with the initial stages of this 
project and we will continue to consult closely with Congress as we 
proceed. As part of these efforts, we are seeking specific statutory 
approval to utilize up to $500,000 in our revolving fund to finance the 
services of experts to help us in this process.
    Beyond our planning and building efforts, the transformation of the 
GPO will require investments in new technology for collecting, 
processing, and distributing Government information. This will 
establish the GPO's leadership in using the best leading-edge digital 
technology in support of Congress, Federal agencies, and the public. 
The GPO has a vastly expanded role to play in content management, 
authentication of documents, meeting the challenges associated with 
versioning of electronic data, on-demand printing, the transfer of 
information from one generation of technology to the next, and the 
preservation of digital information in perpetuity. The 19th century is 
not coming back. These are the baseline services that the GPO must be 
prepared to provide if we are to carry out our mission effectively in 
the 21st century. In addition to our request for funding for 
continuation of services, our appropriations request for fiscal year 
2005 reflects this investment requirement, which is essential to the 
GPO's future and the future information activities of the customers we 
by law support.
    Fiscal Year 2005 Request.--Our appropriations request is designed 
to provide for the: Continuation of our congressional printing and 
binding operations at required levels; continuation of our document 
dissemination services at required levels; investment in GPO's future 
as a 21st century digital information processing facility; separate 
funding for the GPO's Office of the Inspector General; and 
modernization of business practices through appropriate legislative 
    Continuation of Services.--For the Congressional Printing and 
Binding Appropriation, which covers printing and related services for 
Congress, we are requesting $88.8 million. This is a reduction of $1.8 
million, or 2 percent, from the level approved by Congress for fiscal 
year 2004.
    For the Salaries and Expenses Appropriation of the Superintendent 
of Documents, we are requesting $33 million. This is a reduction of 
$1.2 million, or about 3.6 percent, from the fiscal year 2004 approved 
level. This appropriation provides for the cataloging and indexing of 
Government publications, and the distribution of Government 
publications to Federal Depository and International Exchange libraries 
and other recipients authorized by law.
    The reductions in these two appropriations have been made possible 
by reduced printing workloads, our continued application of cost-saving 
digital information technologies, and increased efficiency in 
operations, including savings from the buyout conducted in 2003.
    Investment in the GPO's Future.--The most strategic of our fiscal 
year 2005 requests is a proposal for $25 million to be appropriated to 
our revolving fund, to remain available until expended, which will be 
used in carrying out a multi-year plan to transform the information 
technology used at the GPO in meeting Federal agency customer 
requirements for printed and digital documents as well as the public's 
increasing demand for authenticated, official Government information to 
be available from the Internet.
    Our vision is to move the GPO forward from a predominantly ink-on-
paper distributor of printing requirements to a life-cycle manager of 
digital Government information, electronically collecting, organizing, 
processing, and protecting the flow of public documents from their 
origination in Congress and Federal agencies through their 
dissemination, in perpetuity, to depository libraries and the public. 
To make this transformation effective, our technology plan has 
identified a series of initiatives that will sustain and improve the 
GPO's current information technology (IT) baseline; consolidate data 
center capabilities; modernize the GPO's IT infrastructure; reengineer 
the GPO's business processes to synchronize with IT capabilities; 
provide effective enterprise resource management; and ensure continuing 
IT security. This vision embraces the GPO's historic role of serving as 
the gateway to the Government's public documents while utilizing 
technologies that meet the demands of the 21st century. It will 
necessarily be modified by our strategic plan, the development of which 
will depend on the conclusions reached by the GAO's study.
    The funding we are requesting today will be used to generate 
efficiency and reduce costs tomorrow. Already, Congress is seeing the 
results of investment in the GPO, as last year's appropriation to fund 
our buyout is already generating savings that are showing up in our 
reduced requests for the Congressional Printing and Binding and 
Salaries and Expenses Appropriations for fiscal year 2005. As with all 
of our initiatives undertaken since my taking office as Public Printer, 
this transformation will be conducted under the oversight and guidance 
of the Joint Committee on Printing, the Appropriations Committees, and 
our legislative oversight committees in the House of Representatives 
and the Senate, and in consultations with our customers throughout 
Congress, Federal agencies, and the library and information 
    Office of the Inspector General.--Rather than continue to finance 
the GPO's IG through our revolving fund, we are requesting that this 
function be funded annually by direct appropriations, as IG operations 
are throughout much of the Government. For fiscal year 2005, we are 
requesting $4.2 million and 25 full-time equivalent (FTE's) positions 
for this purpose.
    Financing the IG through the revolving fund requires that the fees 
for various services be increased to reimburse this cost. A direct 
appropriation will alleviate that cost burden on Congress and agency 
customers and make our services more competitively priced. It will also 
provide greater independence for the IG and his staff to monitor the 
GPO's operations.
    Legislative Changes.--In addition to our funding request, we are 
requesting several authorities to support our transformational efforts 
and further our mission:
  --Extension of our early retirement and separation incentive 
        authority, which expires at the end of fiscal year 2004. 
        Utilized in 2003 and again this year, this authority has been 
        extremely useful in achieving orderly reductions in staffing 
        that are providing significant savings to GPO operations.
  --Authorization to use up to $500,000 to contract for expert services 
        to assist us in our effort to relocate the GPO and to finance 
        this project through redevelopment of our existing structures.
  --Authority to accept contributions of property, equipment, and 
        services to support and enhance the work of the GPO. We have 
        improved the language we submitted last year by adding 
        additional reporting requirements to ensure full 
  --Elimination of the current, long-outdated limit of 25 percent on 
        discounts for our sales publications. This would enable us to 
        match current sales discount practices in the private sector 
        and improve our documents sales practices.
  --Elimination of the current 5-year retention period for Government 
        documents in selective depository libraries. This requirement, 
        which would be replaced with regulations issued by the 
        Superintendent of Documents in consultation with the library 
        community, is imposing excessive costs for documents management 
        on libraries and undermining the efficiency of program 
  --Authorization to use up to $10,000 in our Revolving Fund to support 
        the activities of the Benjamin Franklin Tercentenary 
        Commission, established by Public Law 107-202. The Commission 
        is working on ways for the Federal Government to appropriately 
        observe the tercentenary of Benjamin Franklin's birth in 2006. 
        The GPO's support for this important work could involve 
        printing, mailing, travel, or associated expenses. We are 
        deeply committed to cooperating with the Commission and its 
        private sector counterpart, the Benjamin Franklin Tercentenary 
  --An increase in our representation allowance to $15,000 to support 
        activities promoting the GPO.
    Mr. Chairman and Members of the Subcommittee, thank you for all the 
support you have shown for our efforts to bring transformation to the 
GPO, reduce the costs of its operations, and improve the provision of 
our services to Congress, Federal agencies, and the public. This past 
year has been one of unparalleled accomplishment at the GPO, and with 
your support we can continue that record of achievement. I look forward 
to working with you and the Appropriations Committees in your review 
and consideration of our request. This concludes my prepared statement, 
and I would be pleased to answer any questions you may have.

                        BUSINESS-LIKE OPERATIONS

    Senator Campbell. You stated that you would like to run the 
GPO like a business, which around here sometimes is a buzzword. 
That is what almost candidate for office says about the Federal 
Government. You run it like a business and with most 
businesses, if they are not making a profit, you have got to 
shut it down because it is the profit margin that keeps it 
    What are you going to do to make it more businesslike? 
Explain what that buzzword means.
    Mr. James. Well, Senator, I think we have taken a number of 
steps. I think we are seeing results from those steps. We have 
streamlined the organization to eliminate multiple levels of 
reporting. We have begun to build metrics to be able to predict 
and measure what it is that we are supposed to be doing. We are 
streamlining the ways that we go about dealing with Government 
agencies. I think we have taken a number of steps. I think 
those steps are paying off.
    Senator Campbell. You closed the bookstores, the outlets.
    Mr. James. We did.
    Senator Campbell. Has that saved a considerable amount?
    Mr. James. It will save millions over the years, Senator, 
about $1.5 million per year.
    Senator Campbell. And if people want a document that they 
normally would get in that bookstore, how do they get it now?
    Mr. James. Well, they get it online. They can certainly 
come online and look at our bookstore online, or they can call 
our 800 number and receive help from a real, live human being 
who will find that document and Federal Express it to them.

                           INVESTMENT REQUEST

    Senator Campbell. Good.
    Your budget includes $25 million for transformation 
efforts, and you mentioned that your final strategic plan will 
not be done until next fiscal year. Is that correct?
    Mr. James. Well, we certainly hope, Mr. Chairman, that we 
will complete that plan this summer. We are on track to 
complete it and to begin to make the investments we need 
beginning in the next fiscal year. I am a little reluctant. I 
know your staff has pushed us hard to give solid specifics.
    Senator Campbell. Yes. There is some concern about 
appropriating the money before the plan is complete.
    Mr. James. I think by the time that you would move forward 
with this, I think we will be able to give you more facts. I am 
just a little concerned about putting the cart in front of the 
horse in talking about how we are going to spend the money 
before we get the agreement on the plan not only from Congress 
but from the various stakeholders that we have.
    Senator Campbell. Do you still think you might get the 
strategic plan done by the summer, though?
    Mr. James. We will have it done.
    Senator Campbell. Your budget includes 16 new staff for the 
depository library program. Are those needed at this time?
    Mr. James. You bet. The depository library program is 
changing and it is changing because of the nature of the way 
the Government is creating information. For many years we sent 
to depositories hard copies, first in paper, then in 
microfiche, and we began to send CD-ROM's 15 years ago. It is 
now not only a combination of those products but last month, 66 
percent of all the documents we sent to our depository 
libraries were only digital. And they need a considerable 
amount of help in learning how to use digital tools to mine 
that data for their clients.
    Senator Campbell. Let me ask you the same thing I asked the 
former panel, and that is, if we have a flat budget and cannot 
increase the amount of money that you are asking for, what is 
going to get cut or hurt?
    Mr. James. Well, I think we will not come back to you in 
tears. We will manage the business. It may cause us to change 
the timing on some of the investments we are making in the 
future, but we will continue forward.


    Senator Campbell. I have a couple other questions too and I 
will submit those in writing, if you would get to those.
    Mr. James. Thank you.
    Senator Campbell. Thank you for appearing. I appreciate it.
    Mr. James. Thank you, Mr. Chairman.
    [The following questions were not asked at the hearing, but 
were submitted to the Office for response subsequent to the 

         Questions Submitted by Senator Ben Nighthorse Campbell

    Question. What would be the benefits of continuing to invest in the 
GPO, as we did last year with an appropriation of $10 million to your 
revolving fund?
    Answer. We are asking Congress to invest in the GPO only where we 
can show that savings will result. Using the $10 million appropriation 
to our revolving fund for fiscal year 2004, we conducted a retirement 
incentive program that resulted in annual savings of $21.7 million. Our 
request for $25 million for the revolving fund for fiscal year 2005 
will be used to carry out a multi-year plan to transform the 
information technology used at the GPO in meeting Federal agency 
customer requirements for printed and digital documents as well as the 
public's increasing demand for authenticated, official Government 
information to be available over the Internet. This plan, to be carried 
out in concert with the pending results of the General Accounting 
Office's study of the GPO, as requested by this Committee, will 
generate new efficiencies and significantly reduce the future costs of 
our operations to Congress, Federal agencies, and the public.
    Question. Can you tell the subcommittee about your plans for 
relocating the GPO? Have you determined GPO's specific new space 
    Answer. The GPO's current facilities are outdated, inefficient, and 
too large to support our changing operations, particularly as we 
transform those operations to meet the demands of the 21st century. Our 
central office complex here in Washington, DC, is composed of 4 aging 
multi-story buildings totaling 1.5 million square feet of space, 
completed between 1903 and 1940. The buildings have numerous 
inefficiencies that have been well-documented. At one time housing over 
8,000 employees, they now are too big for our current workforce of less 
than 2,500. Multiple stories make it difficult and costly to handle 
materials. Deteriorating utilities and elevators require constant 
upgrading. Floor loading limitations in the older buildings have long 
restricted their use.
    The nature and age of the buildings is imposing growing costs just 
to maintain the structures in serviceable condition. These costs must 
be recovered through the rates charged to the GPO's customers. 
Currently, 12 percent of our costs, about $35 million annually, are for 
building-related expenses (including utilities, maintenance and repair, 
security). The GPO will need to spend between $275 million and $530 
million over the next 5-10 years to maintain, repair, and secure our 
current facilities. If there is no change in our situation, these costs 
will have to be recovered from Congress, Federal agencies, and the 
public through our printing rates and sales prices.
    Our objective is to secure a modern, inline production facility 
that is appropriately sized and equipped to meet the GPO's current and 
future needs, which are still in the process of being determined 
through our planning process. Optimally, this facility would be located 
conveniently in the District of Columbia to enable us to serve 
Congress, Federal agencies, and the public efficiently. We envision 
entering into an agreement with a private sector concern to redevelop 
our current buildings and use the revenue generated from the 
redevelopment to acquire, construct, and equip a new GPO facility. The 
redevelopment agreement would also be configured to provide a revenue 
stream that would be used to underwrite GPO's operations into the 
future. This financing approach should obviate the need for 
congressional appropriations to accomplish the relocation project, 
remove the burden of building-related expenses on GPO's rate and price 
structures, and ensure the continuation of the GPO's information 
production and dissemination services well into the 21st century.
    Question. How many people took the buyout with the funding we 
provided you last year? What is the annual savings from this reduction? 
Did this reduction affect your request for appropriations for 2005? How 
is your current buyout effort proceeding?
    Answer. A total of 319 employees took the buyout we conducted last 
year, resulting in annual savings of $21.7 million. These savings--more 
accurately characterized as a reduction to our costs--have been a 
primary factor in eliminating the loss pattern that the GPO sustained 
over the past several years. We are currently conducting another buyout 
with the target of reducing our current employment level by 250 by July 
1, 2004. This buyout, which has been approved by the Joint Committee on 
Printing, will be financed through the GPO's revolving fund. It will 
generate annual savings of $16.5 million beginning in fiscal year 2005. 
It is proceeding well and we expect to meet the targeted goal of 
reducing employment by 250 positions.
    Question. You've requested authority to accept contributions of 
property, equipment, and services to support and enhance the work of 
the GPO. How do you see this authority working? How would GPO avoid a 
conflict of interest in accepting gifts?
    Answer. Last year we requested authority to accept contributions of 
property and services on behalf of the GPO and to make donations of 
surplus property and equipment to specified Federal, state, local, and 
charitable entities. The authority to accept contributions of voluntary 
services, such as those provided by interns, and to make donations was 
approved in the fiscal year 2004 Legislative Branch Appropriations Act. 
For fiscal year 2005 we are renewing our request to accept 
contributions of equipment and property, which was approved by this 
Committee last year.
    Currently, GPO is not authorized by law to accept contributions of 
equipment and property. This authority would allow us to accept the 
placement of prototype equipment for beta-testing and systems trials 
without requiring a Government investment, providing us with the 
flexibility we need to evaluate new and emerging technologies onsite in 
this period of rapid technological change. It would also permit us to 
work with the private and non-profit sector on the development of 
programs designed to increase the public visibility of GPO's 
operations, such as the creation of a printing museum similar to the 
U.S. Postal Service Museum located nearby.
    The authority we are requesting is similar to donation acceptance 
authorities possessed by many Federal agencies, such as the Library of 
Congress, the U.S. Court of Veterans Appeals, the Department of Housing 
and Urban Development, the Consumer Product Safety Commission, the 
Department of Commerce, the Administrative Office of United States 
Courts, and the Department of Labor. Acceptance of contributions of 
equipment and property would be solely on behalf of the GPO and subject 
to the usual limitations covering donations to the Government. To 
assure accountability, our request this year includes additional 
language that would require reporting on all contributions to the 
Appropriations Committees and the Joint Committee on Printing.
    Question. What are the benefits from providing a direct 
appropriation for your Inspector General?
    Answer. The GPO's Office of the Inspector General, established 
under the provisions of 44 U.S.C. 3901 et. seq., is currently funded 
through the GPO's revolving fund. The costs of this office are 
distributed as overhead to the various revenue-generating operations of 
in-plant printing, printing procurement, and documents distribution. 
The rates for the GPO's products and services must be adjusted to 
recover our overhead costs, including those of the IG. Along with other 
actions we are taking to reduce costs and improve efficiency, we are 
asking Congress to provide direct appropriated funding to cover this 
mandatory expense to help reduce cost pressures on our rates and 
    Equally as important, we believe it is necessary to have direct 
funding to the GPO's IG to ensure a level of independence for this 
operation that is appropriate to its mission. The IG is responsible for 
conducting audits and investigations relating to the GPO, yet is 
dependent on the Public Printer to provide approval for the necessary 
staffing, funding, equipment, and training necessary to carry out this 
mission. By law the Public Printer has ``no authority to prevent or 
prohibit the Inspector General from initiating, carrying out, or 
completing any audit or investigation.'' However, providing the IG with 
the capability to execute its mission independent of the GPO's 
management would put this office on a par with how most Federal IG 
operations are funded today.
    Question. What efforts have you undertaken to identify and make use 
of new and emerging information technologies?
    Answer. The GPO has implemented a variety of strategies over the 
past year to identify, evaluate, and incorporate new and emerging 
information technologies into our operations. An Office of Innovation 
and New Technology (INT) was established to identify new technologies 
and practices that will help us move forward. Reporting directly to the 
Public Printer, INT also helps create associations with other public 
and private sector entities to carry out the GPO's mission. During 
2003, we announced a partnership with the National Archives and Records 
Administration in support of permanent online public access.
    Along with INT, we have expanded our participation in technology 
and trade forums and shows to gain greater exposure to new 
developments. Through management reorganization and associated 
strategic and contingency planning functions, we are also carrying out 
broader outreach to the technology community. We have begun modernizing 
the GPO's product lines with new planned offerings such as Public Key 
Infrastructure technology. We are participating in the ongoing General 
Accounting Office long-range study of Federal printing and information 
policy, and expect to be able to use the study's results to help guide 
technology evaluation and acquisitions programs at the GPO. We have 
also revised our capital acquisitions policy to establish a more 
rigorous standard for return-on-investment to ensure we gain the 
maximum value from taxpayers' technology dollar.
    Question. Tell us what you see as the future of the depository 
library program. Why are additional staff needed in fiscal year 2004? 
What will be the impact if we are unable to provide these additional 
    Answer. The ongoing transition to a more electronic Federal 
Depository Library Program (FDLP) will continue into fiscal year 2005 
and beyond. Approximately 63 percent of the new titles entering the 
FDLP in fiscal year 2003 were electronic and this percentage will 
continue to grow. Currently, there are more than 262,000 titles in the 
FDLP electronic collection and it is expected to increase substantially 
over time.
    New challenges associated with discovering, acquiring, cataloging, 
and preserving digital documents for the FDLP electronic collection, 
working through these changes with our depository library partners, and 
carrying out our cataloging and indexing responsibilities will require 
an increase of sixteen FTEs for the Salaries and Expenses (S&E) 
Appropriation in fiscal year 2005. The increase will support the 
following activities:
  --Fourteen of the additional FTEs would be dedicated to preservation 
        activities associated with maintaining and providing permanent 
        public access to materials in the FDLP legacy and electronic 
        collections and a proactive program that emphasizes 
        consultation and education and promotes best practices for our 
        depository partners during this transition.
  --Two FTEs would be added to our cataloging and indexing efforts to 
        ensure that the full range of in-scope electronic information 
        being published by our Government is brought under 
        bibliographic control and made publicly available.
    While every effort to reallocate resources from traditional 
pursuits has and will provide some of the required personnel, not 
increasing the FTE level would mean that we would not be completely 
able to carry out our program responsibilities in fiscal year 2005.
    Question. You completed a management reorganization last year. How 
has that helped your transformation efforts at the GPO? Do you 
anticipate additional realignments?
    Answer. Last year we implemented an organizational model that is 
relatively new to the Federal Government but widely used in industry, 
wherein the chief executive officer (Public Printer) focuses on 
organizational policy and long-range planning and the second in command 
(Deputy Public Printer) serves as chief operating officer focusing on 
the day-to-day operations of the business. This has streamlined 
decision-making and is designed to keep the overall GPO organization 
focused on movement forward while ensuring that the day-to-day tasks of 
the agency are fulfilled. The reorganization of the top-level 
management structure has been followed by organizational restructurings 
at lower levels. There will be further organizational change in the 
future as the result of the development and implementation of the GPO's 
strategic plan.
    Question. Last year you reached an agreement with OMB on executive 
printing. Can you tell us how that agreement is working? Where do you 
expect this to go in fiscal year 2004 and fiscal year 2005?
    Answer. The OMB/GPO Compact on printing (June 6, 2003) successfully 
resolved the longstanding controversy over executive printing by 
proposing a new system that will enable Federal agencies to choose 
their own printers, using technology and support services provided by 
the GPO. Our hope is that the volume of printing paid through the GPO 
will increase at lower costs while providing all documents for 
cataloging and entry into the GPO's Federal Depository Library Program 
and related dissemination programs. As called for by the Compact, 
during fiscal year 2004 we are operating a demonstration project at an 
agency selected by OMB, the Department of Labor. We plan to deploy the 
system established by the Compact government-wide in early fiscal year 
    Question. How important is employee workforce development to your 
transformation efforts at the GPO? What changes have you implemented in 
your workforce development program?
    Answer. Workforce development is critical to GPO's transformation 
process. It is the means by which GPO will move our current workforce 
into our future mission. Last year we doubled our workforce development 
program and increased our training budget to help us shape the staffing 
capabilities we will need for the future. We also revised our training 
policy to support mission-related training, not just job-related 
training. To guide our workforce development for GPO's future mission, 
we will conduct a systematic needs assessment across GPO and a 
corresponding skills assessment of the current workforce.
    GPO has made a number of changes in order to ensure the success of 
the workforce development. A new Director of Workforce Development 
position was established and a new Director has been selected. The 
Director works under the leadership of the Chief Human Capital Officer. 
A Workforce Development Advisory Committee, involving the key leaders 
in each major area of GPO, has been working on the critical aspects of 
the needs assessment. A working committee involving management and key 
labor representatives has also been involved in formulating a process 
for ensuring that the needs assessment and the skill assessment is 
reflective of the differences that exist in GPO across organizations 
and occupations. These efforts have been widely promoted throughout 
    Question. What is the status of emergency planning at the GPO?
    Answer. Over the past year, the GPO has completely revised its 
Emergency Action Plan. New procedures for emergency evacuations and 
``shelter in place'' were developed and published in an Interim Plan. 
Both plans were exercised and based on the results, adjustments to the 
procedures were made, and the final version of the Plan will be 
published this month. We also completed a number of physical security 
improvements such as raising the height of outside air intakes to 
preclude easy introduction of toxic substances into our heating and 
ventilation system. We also upgraded the ventilation control and fire 
alarm systems in our passport production building. We further reduced 
the number and operating hours of building access points and 
implemented more rigorous metal detection and package x-ray policies. 
This month we are installing an upgraded access system based on smart 
card technology which will allow us to incorporate digitally signed 
certificates and biometric identification data into our building and 
computer access control systems. Finally, we are in the final phase of 
acquiring an emergency mass notification system, which will enable us 
to individually notify and instruct all of our employees in a matter a 
few minutes during an emergency. Collectively, these actions represent 
a significant upgrade of our ability to protect and secure GPO 
employees and property.
    In the area of continuity of business operations, we this week 
signed the Memorandum of Understanding with the Congress which will 
enable the GPO to backup our critical computer databases and 
applications at the Legislative Alternate Computing Facility (ACF). In 
preparation for this, we have been consolidating databases and systems 
at our main North Capitol Street facility into a state-of-the-art data 
center, which we currently back up on a daily basis. As we implement 
our new capability at the ACF, we will be able to back up systems 
continuously and thus will be able to provide virtually uninterrupted 
support to Congress and our other Government customers in all but the 
most catastrophic disasters. Last summer, we initiated a comprehensive 
program to complete enterprise-wide risk assessments and security 
upgrades for all of our business applications and databases. This 
effort will be complete by the end of fiscal year 2004 and will further 
secure the integrity and security of our operations.



    Senator Campbell. Now we will hear from our third panel 
from CBO, Douglas Holtz-Eakin, the Director, accompanied by 
Elizabeth Robinson, the Deputy Director. Mr. Holtz-Eakin, if 
you would like to proceed, your complete testimony will be in 
the record. I see you have got abbreviated notes right there in 
front of you.
    Mr. Holtz-Eakin. I have very little to say.
    Senator Campbell. They look like the kind of notes I use 
    Mr. Holtz-Eakin. I thank you for the chance for us to be 
here this morning to talk about CBO's budget request for 2005. 
I want to take the opportunity to introduce Beth Robinson, who 
has done a sterling job in under a year as the Deputy Director 
of CBO. And I want to thank the committee for its support with 
    Senator Campbell. May I interrupt you? What was your 
background before you got to the position, Ms. Robinson?
    Ms. Robinson. It was an eclectic one. I have training as a 
geophysicist actually.
    Senator Campbell. A geophysicist.
    Ms. Robinson. Yes, and I spent some time on the Hill at the 
Office of Technology Assessment.
    Senator Campbell. Does the geophysicist background help you 
with CBO?
    Ms. Robinson. Well, sometimes I wonder, but basically a lot 
of skills that you learn to handle large data sets, to get the 
computers to give you the answer you want, we use a lot at CBO.
    Senator Campbell. I have got an eclectic background too, 
and I am not sure it helps me being a Senator.
    Mr. Holtz-Eakin. She is being very modest. One of the 
reasons I was attracted to her is, in fact, that she has a 
background in science; and the range of issues that rolls 
through the CBO is quite broad. She brings skills that we did 
not previously have.
    Senator Campbell. Welcome aboard. Please proceed.

                       OVERVIEW OF CBO'S REQUEST

    Mr. Holtz-Eakin. Briefly, this year we have a request that 
would be an increase of $1.6 million for pay and benefits for 
the existing FTEs at CBO and an additional roughly $200,000 
that would cover a variety of needs--including our alternative 
computing facility communications, which are part of the 
disaster recovery system at CBO, and some higher costs for the 
Federal Accounting Standards Advisory Board, and other things 
are detailed in the written request.
    The total would be a budget of $35.5 million, an increase 
of $1.8 million, or 5.5 percent. We view this as essentially a 
current-services request, which will allow us to maintain our 
level of productivity, which we hope is well documented in our 
submission, in supporting the Congress in its need for 
budgetary and economic advice.
    We have made great progress, I think, in being responsive, 
cutting the time required to produce reports and being timely 
in their delivery for the deliberations of Congress. I would be 
happy to expand on that if necessary.
    As you mentioned in your opening remarks, we recognize that 
Congress may desire an even more limited request, and we 
respect Congress' desire to limit the growth of spending in the 
Federal budget and will work with this committee as necessary 
to meet any target that you might provide.
    I will point out that we have modest opportunities in the 
non-pay part of CBO's budget, which is only 12 percent of the 
budget. Many of those would be one-time reductions, which we 
will entertain as possible. But to the extent that there was an 
ongoing need for budgetary stringency, it would be concentrated 
in our personnel, which constitute 88 percent of the CBO 
budget. Moving to a freeze, for example, given the current pay 
and benefits requirements, would create the need to reduce by 
about 12 full-time equivalents at CBO.
    Senator Campbell. Twelve employees, twelve FTEs?
    Mr. Holtz-Eakin. With more flexibility on the scale of the 
pay increase, that, of course, could be different, and we could 
ameliorate that to some extent through the non-pay part of the 

                           PREPARED STATEMENT

    But certainly we would work with you. We look forward to 
additional guidance on the kind of request that is appropriate 
and would be happy to answer your questions.
    [The statement follows:]

               Prepared Statement of Douglas Holtz-Eakin

    Mr. Chairman and Members of the Subcommittee, I am pleased to 
present the fiscal year 2005 budget request for the Congressional 
Budget Office (CBO). The mission of CBO is to provide the Congress with 
timely objective, nonpartisan analyses of the economy and the budget 
and to furnish the information and cost estimates required for the 
Congressional budget process.
    The Congressional Budget Office's proposed budget for fiscal year 
2005 is effectively a ``current-services'' request, in which the 
increases from 2004 are primarily for pay, benefits, and general 
inflation. The request totals $35,455,000, a $1.8 million, or 5.5 
percent, increase over the appropriation for fiscal year 2004 (after 
the rescission of 0.59 percent).
    The total increase requested is dominated by $1.6 million for 
expected increases in staff salaries and benefits. Funding for salaries 
and benefits constitutes 88 percent of CBO's budget, and those costs 
will grow by 5.5 percent in 2005. Additional factors include a new 
$75,000 charge for telecommunications services associated with the 
Alternate Computing Facility, a component of the legislative branch's 
disaster recovery system, and a $32,000, or 8.1 percent, increase in 
CBO's portion of the cost of operating the Federal Accounting Standards 
Advisory Board (FASAB). The remainder of CBO's budget request increases 
by 3.2 percent over that in 2004, a rate of growth affected by the fact 
that this portion of the budget will absorb almost half of the 0.59 
percent rescission in 2004.
    With the requested funds for 2005, CBO plans to continue to support 
the Congress in exercising its responsibilities for the budget of the 
United States government. CBO participates in the Congressional budget 
process by providing analyses required by law or requested by the House 
and Senate Budget Committees; the Committees on Appropriations, Ways 
and Means, and Finance; other committees; and individual Members. In 
particular, CBO:
  --Reports on the outlook for the budget and the economy to help the 
        Congress prepare for the legislative year;
  --Analyzes the likely effects of the President's budgetary proposals 
        on outlays and revenues;
  --Estimates the costs of legislative proposals, including formal cost 
        estimates for all bills reported by committees of the House and 
        Senate and for unfunded mandates on states and localities and 
        the private sector;
  --Constructs statistical, behavioral, and computational models to 
        project short- and long-term costs and revenues of government 
        programs; and
  --Conducts policy studies of governmental activities having major 
        economic and budgetary impacts.
    In fiscal year 2005, CBO's request will allow the agency to build 
on current efforts:
  --Increase the number and reduce the preparation time of reports and 
        in-depth analyses for the Congress, extending progress begun in 
        2003. The request will support a workload estimated at 2,120 
        legislative and mandate cost estimates, 82 major analytical 
        reports (11 percent more than in 2003, which itself represented 
        a 76 percent increase over 2002), 74 other publications, and a 
        heavy schedule of Congressional testimony.
  --Consolidate gains from additional staff resources provided by the 
        Congress for 2004 to augment the agency's ability to estimate 
        revenues and conduct dynamic analyses of the budget. Overall, 
        the request will support 235 full-time-equivalent positions, 
        the same number as in 2004. It includes an across-the-board pay 
        adjustment of 3.5 percent for staff earning a salary of 
        $100,000 or less, which is consistent with the pay adjustment 
        requested by other legislative branch agencies, along with a 
        projected increase in benefits of 7.0 percent.
  --Fund a combination of promotions and merit increases for all staff, 
        including those whose salary exceeds $100,000 and who do not 
        receive automatic annual across-the-board increases.
  --Provide $429,000 for CBO's share of FASAB's budget.
  --Provide $75,000 (previously paid by the House of Representatives) 
        for telecommunications services for the Alternate Computing 
  --Complete the replacement of CBO's Budget Analysis Data System, the 
        agency's primary budget-tracking system, with a lower-cost, 
        more-capable in-house system. After accomplishing that 
        replacement midyear in 2005, CBO plans to continue to develop 
        and exploit the capabilities of the new system--to improve the 
        speed and breadth of the agency's analyses--during the 
        remainder of the year and into the next, but at a much lower 
        annual development cost.
    Before I close, I would like to thank the Committee for its support 
of CBO's 2004 budget request, in particular, the two new positions that 
it approved to strengthen the agency's ability to forecast the economy 
and project revenues. And I would also cite the Committee's ongoing 
support of the student loan repayment benefit, which is an increasingly 
valuable tool in CBO's recruiting.
    I look forward to answering any questions that you might have about 
this request.

                      STAFFING IN DIFFICULT AREAS

    Senator Campbell. Thanks.
    In fiscal year 2004, the committee agreed to provide two 
additional staff for CBO. Are those staffers both on board?
    Mr. Holtz-Eakin. Those were identified to address needs for 
enhanced precision in our baseline receipts forecasts, and also 
to meet the desire for Congress to have some more dynamic 
analysis of macro-economic effects and also some budgetary 
proposals. We have not only enhanced the FTEs and are hiring 
for those, but we have also done some internal reallocations to 
make sure that there are people available in some of the tough 
cross-cutting areas, in particular finance. A lot of the 
difficulties in forecasting baseline revenues in the past 
several years have involved large run-ups in the stock market 
and then declines and associated bonuses and options. Finance 
people are difficult to hire, hard to retain. If Senator Durbin 
were here, I would point out that that has been one of our 
targets for student loan repayment. It has been successful.
    Senator Campbell. They make more in New York.
    Mr. Holtz-Eakin. We have had some success on that front, 
and we have got more firepower in those areas.

                            PROGRAM CHANGES

    Senator Campbell. You have $227,000 in what is described as 
program changes. What are those program changes and what is the 
money for, necessary at this time?
    Ms. Robinson. The largest component of that is twofold. One 
is a new $75,000 charge for disaster recovery for the physical 
data connections between CBO and alternate computing facility.
    The second one is an investment in our defense-modeling 
capability, of the defense budget itself. We had been 
contracting in the past for some data sets and other things, 
and we find, actually, that these contractors are retiring. It 
is a very specific $75,000 expense to bring that capability in-
    Senator Campbell. Thank you.

                         INCREASED PRODUCTIVITY

    Your budget also discusses your effort to increase staff 
productivity. What are you doing to accomplish that goal?
    Mr. Holtz-Eakin. Well, there are two major problems. The 
first is management: setting clear objectives for deadlines for 
studies, keeping track of progress for those deadlines, and 
making sure in our merit review system that productivity is a 
component of the merit review. So internal management issues 
are one aspect, but there are also some changes in the nature 
of the process, the most notable being moving toward a more 
modern platform for publication, moving from word processors to 
a real desktop publishing system.

                         RETENTION OF EMPLOYEES

    Senator Campbell. How does the CBO compare with other 
Federal agencies on the retention of employees?
    Mr. Holtz-Eakin. I do not have the precise statistics, but 
I think we have been very successful.
    Senator Campbell. Could you provide that for the committee?
    Mr. Holtz-Eakin. Yes.
    [The information follows:]

    Employee retention is defined by the amount of turnover and 
agency experiences. The chart below describes the Congressional 
Budget Office's (CBO's) turnover among management and 
professional staff over the last two fiscal years. (Clerical 
staff are not included because CBO's workforce is less than 10 
percent clerical, and the agency experiences very little 
turnover among clerical staff.)
    Comparing the Congressional Budget Office's turnover with 
other agencies' is challenging because agencies maintain their 
data in disparate ways. The chart shows the information that we 
have been able to gather.

                                                  Fiscal Year 2002                     Fiscal Year 2003
                                          Staff on                 Turnover    Staff on                 Turnover
                                           Board     Separations  (percent)     Board     Separations  (percent)
Congressional Budget Office...........          190          18        9.47          193          28       14.51
General Accounting Office.............          n/a         n/a        8.80          n/a         n/a        7.70
Congressional Research Service........          554          31        5.60          609          22        3.61
Library of Congress \1\...............        2,622         146        5.57        2,725         123        4.51
Executive Branch Agencies \2\.........    1,232,496      71,866        5.83    1,244,493      86,285        6.93
\1\ Includes Congressional Research Service as part of the Library of Congress.
\2\ Does not include the Federal Bureau of Investigation, the Postal Service, or intelligence agencies (such as
  the Central Intelligence Agency and the National Security Agency). Source: www.fedscope.opm.gov.

Data are for permanent employees in management and professional positions.
n/a = not available; GAO does not track staff by the category of management and professional and therefore could
  not provide this breakdown.

                          SUBCOMMITTEE RECESS

    Senator Campbell. Well, I have no further questions. 
Senator Durbin might and/or Senator Stevens, and if they do, 
they will submit those in writing to you. If you could get 
those back to us. Okay?
    Mr. Holtz-Eakin. Thank you very much.
    Senator Campbell. I thank you and with that, the 
subcommittee is recessed.
    [Whereupon, at 11:43 a.m., Thursday, March 4, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]