[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
REDUCING WASTE IN GOVERNMENT: ADDRESSING GAO'S 2014 REPORT ON
DUPLICATIVE FEDERAL PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 8, 2014
__________
Serial No. 113-103
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia PETER WELCH, Vermont
THOMAS MASSIE, Kentucky TONY CARDENAS, California
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan Vacancy
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on April 8, 2014.................................... 1
WITNESSES
Gene L. Dodaro
Oral Statement............................................... 4
Written Statement............................................ 7
APPENDIX
GAO Response to Question for the Record from Representative Rob
Woodall........................................................ 52
REDUCING WASTE IN GOVERNMENT: ADDRESSING GAO'S 2014 REPORT ON
DUPLICATIVE FEDERAL PROGRAMS
----------
Wednesday, April 8, 2014,
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 1:30 p.m., in Room
2154, Rayburn House Office Building, Hon. Darrell E. Issa
[chairman of the committee] presiding.
Present: Representatives Issa, Mica, Turner, Chaffetz,
Walberg, Lankford, Amash, Gosar, DesJarlais, Collins,
Bentivolio, DeSantis, Cummings, Maloney, Connolly, Lujan
Grisham, and Kelly.
Staff Present: Ali Ahmad, Majority Staff Member; Molly
Boyl, Majority Deputy General Counsel and Parliamentarian;
Lawrence J. Brady, Majority Staff Director; David Brewer,
Majority Senior Counsel; Caitlin Carroll, Majority Press
Secretary; Sharon Casey, Majority Senior Assistant Clerk; Drew
Colliatie, Majority Professional Staff Member; Adam P. Fromm,
Majority Director of Member Services and Committee Operations;
Tyler Grimm, Majority Senior Professional Staff Member; Mark D.
Marin, Majority Deputy Staff Director for Oversight; Katy
Rother, Majority Counsel; Laura L. Rush, Majority Deputy Chief
Clerk; Jenna VanSant, Majority Professional Staff Member; Peter
Warren, Majority Legislative Policy Director; Krista Boyd,
Minority Deputy Director of Legislation/Counsel; Aryele
Bradford, Minority Press Secretary; Beverly Britton Fraser,
Minority Counsel; and Juan McCullum, Minority Clerk.
Chairman Issa. The committee will come to order.
Today's hearing is on Reducing Waste in Government:
Addressing GAO's 2014 Report on Duplicative Federal Programs.
Without objection, the chair is authorized to declare a
recess of the committee at any time.
The Committee on Oversight and Government Reform exists to
secure two fundamental principles: first, Americans have a
right to know that the money Washington takes from them is well
spent and, second, Americans deserve an efficient, effective
Government that works for them. Our duty on the Oversight and
Government Reform Committee is to protect these rights.
Our solemn responsibility is to hold Government accountable
to taxpayers, because taxpayers have a right to know what they
get from their Government and that money is well spent. It is
our job to work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy.
Today, the Government Accountability Office released its
fourth annual report on fragmentation, overlap, and
duplications in Federal Government programs. The report
identifies opportunities to consolidate Federal programs in
order to both save taxpayers money and provide better services.
Since the first report in 2011, the GAO has identified 188
problem areas over 400 actions that the Executive Branch
agencies and Congress could take to address these problems.
Comptroller General Gene Dodaro has joined us here today in
order to discuss the report and answer the Committee's
questions. But there are some questions he won't be able to
answer.
For instance, how does the duplication and waste in Federal
Government cost and how much taxpayer money can we save if we
follow the GAO's recommendations? Through GAO estimates of cost
savings, we find a range of tens of billions of dollars per
year or more that we cannot provide a specific answer. Nor
should we look for a specific answer. The American people
expect, if there is tens of billions of dollars to be saved,
that we begin saving them and score the savings after we have
it.
GAO found agencies often unable to tell them how much
taxpayer money is actually being spent on a given federal
program. This is part of a bigger problem. The American people
deserve to know how much their money is being spent on any
particular Federal program and how much of that money is being
wasted.
Fortunately, we have a big solution: the Digital
Accountability and Transparency Act, or DATA Act. The DATA Act
will bring rigorous reporting standards to Federal spending
information; Federal agencies will be required to report on how
they spend taxpayer dollars down to the program level.
Improving transparency and accountability for Federal
spending is not a partisan issue. I introduced the bipartisan
DATA Act in both the 112th and 113th Congress along with my
colleague, Ranking Member Cummings as its chief cosponsor. In
both congresses the DATA Act was passed by the full House on a
near unanimous basis.
This week a bipartisan, bicameral compromised version of
the DATA Act will be advanced in the United States Senate. My
lead advocate there is Senator Warner, who in fact has worked
together with our staff on both sides, the ranking member and
my staff, to work out what we would call a hybrid, best of DATA
Act.
While there were some differences, they were resolved and,
working together over three years, we believe we have the best
of all answers for data of what can be done at this time, and I
look forward to asking Mr. Dodaro more about his view on the
current version of the DATA Act and what it would yield.
In the testimony today I am quite sure that what we will
find is there is low-hanging fruit; much of it is the same low-
hanging fruit that we saw a year ago and a year before that. So
as we hold this hearing today, I ask everyone to realize can we
any longer enjoy inaction at a time when the budget could be
completely, budget goals could be completely reached by this
sort of savings? And I say that every time because the budget
compromise of last year was $23 billion over 10 years.
Eliminating duplicative programs could save more than $23
billion over 10 years without costing any service or any
reductions to anyone working or retired.
With that, I recognize the ranking member for his opening
statement.
Mr. Cummings. Thank you very much, Mr. Chairman. I thank
you for holding this hearing today and I thank you, Mr. Dodaro,
for being here to testify about GAO's new report.
This report will focus on GAO's fourth annual report on
duplicative programs and opportunities for Federal cost
savings. This hearing goes right to the heart of this
committee's jurisdiction. The rules of the House identify
Government management and accounting measures as central
pillars of the Oversight Committee's jurisdiction.
The committee's jurisdiction also includes the overall
economy, efficiency and management of Government operations and
activities, including Federal procurement. In its 2012 report,
GAO identifies procurement of information technology as an area
of potential savings for taxpayers. GAO highlights the Obama
Administration's PortfolioStat initiative, which was unveiled
by the Office of Management and Budget in 2012.
PortfolioStat is designed to maximize IT investments by
eliminating duplicative low value and wasteful IT spending. GAO
estimates that PortfolioStat could save the Federal Government
at least $5.8 billion through fiscal year 2015.
Think about that. This one program could have the potential
to save the Government nearly $6 billion.
We have heard so much rhetoric recently about challenges
and information technology investments related to the
Affordable Care Act. We should be hearing more about the money
the Federal Government can save through initiatives such as
PortfolioStat.
The House recently passed a bill sponsored by Chairman Issa
and Subcommittee Ranking Member Connolly to improve information
technology spending. That legislation, FITARA, demonstrates
that there is a bipartisan support for making IT spending more
effective and efficient.
GAO's work shows us that there are potential additional
opportunities to improve IT spending through bipartisan
oversight. GAO, for example, found that OMB's initial cost
savings estimates for PortfolioStat failed to include
information from the Department of Defense and the Department
of Justice because those agencies did not report information to
OMB in the proper template. As a result, OMB's estimated
savings from PortfolioStat were half as much as GAO's estimate,
a difference of over $3 billion. The committee should ask DOD
and DOJ why they failed to provide this information to OMB
using OMB's template.
We should also ask OMB why it released estimates without
information from those two agencies and without clearly
disclosing that the data from those agencies was missing. I ask
the chairman to join me in following up with those agencies to
ensure that we have the best information possible about how to
cut Government spending.
I want to take a moment to highlight an issue that was
addressed following the committee's hearing last year on GAO's
2013 report.
In its 2013 report, the GAO criticized the Department of
Defense's fragmented approach to combat uniforms.
Representative Tammy Duckworth introduced an amendment to
address that issue and her amendment was enacted as a part of
the National Defense Authorization Act of 2014. Representative
Duckworth's amendment required the Secretary of Defense to
eliminate service-specific combat uniforms. The GAO estimates
that all of the actions taken by the Executive Branch and
Congress in response to GAO's first three reports have yielded
more than $10 billion in cost savings. GAO estimates that
billions more in savings will be realized over the next 10
years.
I want to applaud Representative Duckworth for her work
following last year's hearing. I hope we can all use the
testimony here today to inspire us to take further action.
With that, I yield back.
Chairman Issa. I thank the gentleman.
It is now my pleasure to introduce the Honorable Gene
Dodaro, the Comptroller General of the United States, who today
is joined by quite an entourage of experts from the General
Accountability Office. And I understand that many of them will
be providing detailed information, so I would ask both
Comptroller General Dodaro and those who may provide
information to stand and take the oath. Please raise all of
your right hands.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witnesses respond in the affirmative.]
Chairman Issa. Please be seated.
Let the record reflect that all witnesses answered in the
affirmative.
Mr. Dodaro, since you are the only one that will be
formally doing an opening statement, you may take such time as
you may need, but your entire opening statement will be placed
in the record. You are recognized.
WITNESS STATEMENT
STATEMENT OF GENE L. DODARO
Mr. Dodaro. Thank you very much, Mr. Chairman. Good
afternoon to you, Ranking Member Cummings, Congressman Mica,
Congressman DesJarlais. I appreciate the opportunity to be here
today to discuss GAO's 2014 report.
In this report, we identify 26 new areas, in addition to
the 162 areas we identified before. Eleven of the areas deal
with overlap fragmentation and potential duplication in the
Federal Government. Half of those 11 areas deal with the
Department of Defense. One example I would provide today has to
do with systems to control their satellite operations. What we
found is that they are using more dedicated systems rather than
shared systems over a period of time, in the last several years
in particular during the last decade, which means that there
are fragmented systems and potentially duplicative.
So they have one system for one satellite, as opposed to
having one ground base system that would save hardware,
software, and personnel costs that could service many
satellites. We think implementation of our recommendations in
this area could save millions, if not hundreds of millions of
dollars.
We also found duplication and overlap in special payments
that are made for unemployment insurance and disability
insurance. Those programs are meant to operate separately, but
there is a potential loophole where we found that people can
receive both benefits at the same time. In effect, the Federal
Government is replacing lost income from these individuals
twice, not just once, as intended. CBO has said that enactment
of a legislation to close this loophole could save $1.2 billion
over a 10-year period of time.
We also found 15 other areas where there are opportunities
for cost savings. One example I would cite is the alternative
Technology Vehicle Manufacturing Loan Program. We found that
there is $4.2 billion in already appropriated credit subsidy
costs that are available, but the Department of Energy has not
demonstrated a need for that money and we recommended that,
unless they do, Congress could rescind all or a portion of the
$4.2 billion. There is really not a lot of active applications
for loans under that program currently.
We also found that there are opportunities to collect
amounts of delinquent taxes, for example, in not issuing
passports to people who have delinquent taxes that are owed to
the Federal Government. Right now, you can collect child
support payment that way, but you can't prevent somebody from
getting a passport. CBO estimates that if a provision is passed
to allow the State Department to withhold passports from people
who owe delinquent taxes, the Federal Government could receive
about $500 million in a five-year period of time.
Also, there is the ability to potentially offset payments
of delinquent taxes to Medicaid providers. Right now that is
able to be done for Medicare, but not for Medicaid. Additional
revenues could accrue to the Federal Government as a result of
that.
Now, in addition to identifying new areas, we tracked the
162 areas that we recommended previously, and they had over 380
specific actions that needed to be taken. If I draw your
attention to the chart that we have here, the dark blue on the
bottom shows the increase in the amount of areas that have been
addressed over time. So roughly, of the over 380 actions that
have been recommended by us, about a third have been
implemented. The partially implemented are another 44 percent,
and about 19 percent haven't been addressed at all either by
the Executive Branch or the Congress.
Now, the areas that have been addressed, as you mentioned,
Mr. Chairman, we can score the savings that occur after the
fact. The areas that have been addressed, over $10 billion has
already been saved to the Federal Government because of actions
by the Congress and by the Executive Branch, and those actions
will also result in the future of about another $60 billion in
savings over a period of time. And some of these areas, Mr.
Chairman, as you mentioned, were used to help offset the
sequester last year so that we were able to take targeted
reductions without disrupting services to the public
unnecessarily.
So there has been action on many of the recommendations.
Billions of dollars is being saved, will be saved, but there is
a lot yet still on the table to be dealt with that could lead
to a lot more savings and more efficient and effective
operations for the American taxpayer. So we are dedicated to
continuing to follow up on these areas, Mr. Chairman, and we
thank you very much for the opportunity to be here today.
[Prepared statement of Mr. Dodaro follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Issa. Thank you. First of all, I want to thank you
for this initiative. This really is making a difference. I
would note, if you would put that slide back up, that the
partially addressed, I note that some of that is moved out of
committee; some of that is the Executive Branch has partially
done something; some of it is that it moved out of one House,
but not the other.
When I look at the cross-tabs, I am very disappointed in
the work we have done in the Congress; we have a strong
tendency to have half done it in the Congress. And that sort of
brings up a real point here, which is in order to assert these
things, do you believe that we should begin moving packages of
reforms out of the Congress, bundling, if you will, some of
these duplications so as to make them bigger? Because many of
the partially addressed are very minute and they are just not
being picked up in one House or the other.
Mr. Dodaro. I think that is a very viable option, Mr.
Chairman. I would note there have been separate bills
introduced along the lines of what you are talking about, for
example, to close this loophole between disability and the
unemployment benefits being able to be received at the same
time. There are other parts of the recommendations that we made
where there has been bills introduced and even the President
has supported them in his budget submission.
So there is broad agreement. I think packaging them
together as you suggest is a really good idea, and that is what
in effect happened with the two-year budget deal. A number of
these things were packaged. Some of them were recommendations
from this report, for example, to increase the airport fees.
That helped offset the need to have the sequester and avoid the
broad-based, across-the-board cuts. So I am very supportive of
what you suggest and whatever we can do to work with the
Congress we would be happy to do so.
Chairman Issa. Well, perhaps the most important thing you
can do is, once we work together to put together some packages,
one, be willing to meet with each of the committees of
jurisdiction, because as we package them they tend to go
through more committees before they go to the floor; and,
secondly, quite frankly, I need you to aggressively work with
the CBO, because often what we believe is a savings is very
hard to score, and the other day there was a vote on dynamic
scoring, which, of course, does give the opportunity to assume
more of this will actually occur rather than, as the CBO often
does with these, we pass it, but unless it closes it on day
one, it assumes that these legacy duplications will continue to
occur. So that is sort of an inside baseball, but since we are
all in the Leg Branch, hopefully we can do that.
What would you say is the greatest growth area in
duplication in this year? You obviously have ones that are
recurring, ones that are legacy. But what concerns you the most
as far as duplication growth in Government?
Mr. Dodaro. I think the areas, now that we have covered
quite a bit of programs, is in the Defense area still. There is
a lot of duplication. The services have their own health
systems. We point out another one this year that we identified
in the Army material command of duplicative information systems
that are costing millions of dollars to maintain. I mentioned
the satellite control operations. We had one about the
potential to streamline ground control operations for
satellites and electronic warfare. And the list goes on with
the Defense Department and I think it is particularly important
in that area. So I would say that is the area that we continue
to identify the most opportunities, and it is reflected in our
report this year.
Chairman Issa. I want to thank you. Of course, we don't
have specific jurisdiction over what the Armed Services
Committee has, but it is interesting that when you do something
like the Joint Strike Fighter, what it means is that multiple
branches get together and agree to have a common different
aircraft.
The ranking member mentioned Congresswoman Duckworth's
proposal on uniformity of uniforms. Do you want to give us an
update on how you view that? Because it certainly has not
occurred. And if you are familiar with it, also comment on the
large amount of civilian contractors who also get uniforms
provided, but we essentially pay for a myriad of different
uniforms there.
Mr. Dodaro. Yes. We are pleased with the actions that have
been taken by the Department of Defense and by the Congress, as
Congressman Cummings mentioned in the National Defense
Authorization Act, to require it. DOD, their requirements would
not only eliminate the duplication, but, as I mentioned last
year, provide equivalent level of protection to our armed
forces, which is more important than the money, even, in many
respects.
Chairman Issa. You mean distinctive and invisible is an
oxymoron? Distinctive, but invisible, as they often try to say
the digital pattern somehow can all be seen easily, but not in
fact be seen by the enemy?
Mr. Dodaro. In any sport, everybody on the same team ought
to have the same uniform, and in this case this will ensure
that that happens, and it will ensure that it happens very
efficiently, as well, with the changes in the Defense
Authorization bill.
Now, one thing that we have learned over the years as it
relates to the Department is to make sure they effectively
implement these new provisions. And they have said that they
will, so we will be following up. I also would note that the
Army canceled its effort to develop its own uniform, which is
about, I believe, about $4 billion that would be potentially
saved, depending upon what their future actions would be.
Chairman Issa. Thank you.
As I recognize the ranking member, I think back to when I
was a young lieutenant and I wondered if the most valuable
asset we would have in a combat was our forward air controller.
And if he had a specific uniform that was easy for the snipers
to pick out, whether I was safer as a result, but our mission
was less safe. So I join with you in realizing that uniform in
a combat situation should be as indistinguishable by the enemy
as possible.
I recognize the ranking member.
Mr. Cummings. Mr. Dodaro, the report released today
identified the management of Federal information technology
investments as an area of potential cost savings. GAO estimates
that the Federal Government could save $5.8 billion by fully
implementing the Administration's PortfolioStat. PortfolioStat
was initiated by the Office of Management in 2012 to help
agencies make better decisions about their IT investments. Can
you explain how PortfolioStat helps agencies reduce wasteful
spending?
Mr. Dodaro. Yes. It provides a lot more information about
the entire range of IT investments that are in the system, as
opposed to the dashboard effort which focuses on individual
major high-risk systems. Joel Willemssen is in charge of our IT
practice; he can elaborate, Mr. Cummings.
Mr. Willemssen. Thank you, Ranking Member Cummings. It
really is an initiative to look at commodity IT within the
agencies. Commodity IT not necessarily being those mission-
critical systems, but systems like enterprise IT systems,
whether it be email or IT security; IT infrastructure,
mainframes, desktop systems; and then business systems,
financial management, human resources; and looking at them
across the department, identifying where those kinds of systems
are siloed, and then putting together plans to consolidate them
and gain efficiencies, and with those efficiencies billions in
savings.
Mr. Cummings. Well, GAO reports that OMB's original cost
savings estimates for PortfolioStat were significantly lower
than they should have been because data from the Department of
Defense and Department of Justice was not included in OMB's
estimate. Specifically, OMB estimated a potential cost savings
of $2.53 billion, while GAO estimates that the program could
save nearly $6 billion through fiscal year 2015.
GAO reports that the reason DOD and DOJ were left out of
OMB's estimate was because those agencies did not report their
plans in the template that OMB was using to compile its overall
estimate. Do you know why DOD and DOJ failed to properly report
their data?
Mr. Willemssen. OMB went with, at the time, what it had
without fully checking the reliability of the data.
Accordingly, we have recommendations outstanding to both OMB
and to the agencies to examine the reports before publicly
disclosing them and disclose with that public release any data
limitations that are present so that, for example, in the
situation you mentioned, where DOD and DOJ were excluded, let's
identify those exclusions so that we know what the total
potential savings would be.
Mr. Cummings. So did OMB provide a reason for why it didn't
require DOD and DOJ to report their estimated cost savings
before OMB publicly disclosed the overall?
Mr. Willemssen. We identified the deficiency for them, so
we did not really ask the question; we wanted to move forward
and say let's make sure this doesn't happen again pursuant to
the recommendation. You have to check the report and disclose
any limitations in the data.
Mr. Cummings. The GAO reported in November 2013 that OMB
officials had not yet decided what information from the
PortfolioStat process would be made public. GAO's report
stated, ``Until OMB publicly reports data, agencies submit on
their commodity IT consolidation efforts, including planned and
actual cost savings, it will be more difficult for
stakeholders, including Congress and the public, to monitor
agencies' process and hold them accountable for reducing
duplication and achieving cost savings.'' GAO recommended that
OMB improve the transparency and accountability of
PortfolioStat. Specifically, the GAO recommended that OMB
publicly disclose planned and actual data consolidation efforts
and cost savings for each agency.
What is the status of OMB's implementation of GAO's
recommendation for greater transparency in the PortfolioStat
process?
Mr. Willemssen. They have not yet implemented that
recommendation. We continue to push OMB on it. We point to the
dashboard as an excellent example of the value of transparency
of identifying investments that are at risk and actions being
taken to either terminate those investments or turn them
around. Similar action could be taken with PortfolioStat in
identifying the savings. Most importantly, one of our concerns
is following through on the savings opportunities. It is one
thing to estimate the savings; it is quite another to actually
realize them. One of our concerns is making sure the pressure
is sustained on that implementation. It is one reason we are
very supportive of your FITARA Act, because irrespective of
what efforts on the implementation side may wane in the
Executive Branch, you would have legislation on your side to
ensure that those efforts would still go forward.
Mr. Cummings. Thank you.
Chairman Issa. I thank the gentleman.
We now recognize the gentleman from Florida, Mr. Mica.
Mr. Mica. Thank you.
Mr. Dodaro, welcome back. A couple of questions. One of the
things I found in the report that we have is I guess we started
this about four years ago, these reports, and there have been
over 300 recommendations. I think you just added 26 or
something like that, new ones. But only about 20 percent of
them have been implemented. There is about 50 percent something
has been done. That seems like a small number implemented,
don't you agree?
Mr. Dodaro. I definitely agree more should have been done
by this point in time. I am hopeful that it will----
Mr. Mica. It is hard to get them moving. Refresh me, if you
can, on the process. Now, you are reporting to us. You also
report to each agency the findings.
Mr. Dodaro. Yes.
Mr. Mica. And then what is the follow-up?
Mr. Dodaro. Every year we follow up on actions that the
Executive Branch has taken on our recommendations, and with the
Congress where we have recommended statutory changes.
You know, Mr. Chairman and ranking member, it might be a
good idea if we looked at--we know how much can be saved, and
there is very little of this implemented. It might be
interesting to put an act in that gave them more power that the
amount would be subtracted some way from their budget or
something, that we take some automatic action.
Right now, as you go plead with them, do you present this
to the authorizers and the Appropriations Committee?
Mr. Dodaro. Yes.
Mr. Mica. You do? Okay. And they may or may not institute
it through legislative means. But it doesn't seem like you have
a hammer to get it done, and I think we need to put some of
those savings, or there be some penalty on the agency; some
motivation, light a fire under their fanny. It is a highly
technical term, but something to get them to move on this.
I was stunned to see we are up to $84 billion in IT in your
report.
Mr. Dodaro. Yes.
Mr. Mica. I thought the last figure I saw was $64 billion.
The last estimate I had, if we consolidate, every time I get a
report they find more data centers. I think they started out
with 2,000; we are 6,000, or I don't know what the latest
number. But they estimated at one of the hearings that about
half of the amount, that was $64 billion, now I don't know if
it is the same for the $84 billion, is wasted or could be
saved. Is that still an actual assumption? Are we in the same
neighborhood?
Mr. Willemssen. I probably would state that----
Mr. Mica. That is a year, right? Annual?
Mr. Willemssen. It is about $80 billion a year reported,
but, as we testified last year, that is an understated figure.
Mr. Mica. It is huge. Also the same thing; everybody wants
their own to get them to consolidate. It is just a bear to try
to get them to do that.
I just was thinking, too, now, me and Obama aren't on the
best terms, but he has said he doesn't have to consider
Congress; he has his mighty pen and he does executive orders. I
just got a release; he just did two today. Has he done any of
these by executive order?
Mr. Dodaro. I don't know if it is by executive order. Some
of the actions have been taken by the Executive Branch.
Mr. Mica. Well, it might be something. But do you give a
copy to the White House, too?
Mr. Dodaro. Oh, sure. Sure. And we make these all available
to OMB. Actually, OMB put a guidance out that all the agencies
are supposed to tell OMB what they are doing to address GAO's
recommendations in these reports.
Mr. Mica. Okay, a couple things. You know my report, The
Federal Government Must Stop Sitting on its Assets, we produced
some years ago, and in that I list a lot of real property or
vacant property that sits vital. Over the past two years I have
asked the Office of Budget and Management for access to the
Federal real property database so we can analyze and evaluate
how efficiently GSA is using facilities. So far I have received
no cooperation.
Has GAO been granted access to the database?
Mr. Dodaro. We have looked at the database. We found----
Mr. Mica. Yes, but we found data in, and if it is garbage
in, it is garbage out.
Mr. Dodaro. Right.
Mr. Mica. We found that the information they give--they
didn't have an inventory of the buildings or properties. Then
when we looked at some of the properties, some of the
properties were derelict, defunct, or even taken off the rolls.
You find the same things?
Mr. Dodaro. Yes, we found a lot of inaccuracies with the
database.
Mr. Mica. Billions of dollars in that area. We just had the
post office in here. God forbid they should be doing expedited
disposal of their billions of dollars worth of property.
Well, you do have information, then, from the database. We
don't have that; I have asked for it. And you found the same
thing, that the information we have from that is not accurate.
I see a lady. What is her name, raising her hand? I might want
to call on her.
Identify yourself for the mob here, please.
Ms. Siggerud. Kate Siggerud.
Mr. Mica. Can you testify to that fact? Give me your name
again; I didn't catch it.
Ms. Siggerud. Kate Siggerud.
Mr. Mica. Okay. We may want to follow up with you.
Ms. Siggerud. There we go. That helps, doesn't it? Kate
Siggerud. That is much better.
Yes. In fact, we did a report focused specifically on the
quality of the data in that database in 2012, I believe it was;
made a number of recommendations, and we would be happy to
provide some information for the record on what has been
implemented.
Mr. Mica. I will have a staffer follow up with you.
Appreciate that.
Chairman Issa. I thank the gentleman.
We now go to the gentlelady from New York.
Mrs. Maloney. Welcome. Nice to see you. How much do we
spend in Federal contracts? I think two years ago it was $435
billion. What is the number for this year in Federal contracts?
Mr. Dodaro. Paul Francis is in charge of all our
acquisition work across Government. You are in the ballpark.
Paul?
Mr. Francis. Yes. It has come down. It was over $500
billion. I think in the last year it is just under 500.
Mrs. Maloney. Last year. So now it is a little over $500
billion?
Mr. Francis. Little under.
Mrs. Maloney. Under $500 billion.
Mr. Francis. Yes.
Mrs. Maloney. Okay. And that is purchasing things. What
about the contracts we have with the military and Defense and
everything, the people who help us in Afghanistan, independent
contractors, are they part of that $500 billion?
Mr. Francis. Yes. Department of Defense has about two-
thirds of that, so think about $300 billion in rough figures
for Department of Defense and the rest for the civilian
agencies.
Mrs. Maloney. Well, I just came from a bill signing at the
White House. Today is Equal Pay Day, and there will be a vote
on equal pay bill in the Senate tomorrow, and the President
signed two, really, contract bills, one that makes it against
the law for Federal contractors to retaliate against employees
if they tell another employee what their pay is. Did you know
that that was the law now, that if you told someone your pay,
you would be fired? You didn't know that? But that is the law
now. So that would change that.
The other would call upon the contractors, the $500 billion
contractors to put together an assessment of what people are
paid in like jobs to see if there is pay discrimination.
Are you supportive of those two initiatives?
Mr. Dodaro. We haven't really looked at them, but----
Mrs. Maloney. It is an Executive Order, so it is already in
effect.
If you were a czar here and you could come out with the top
three things that you would do to make Government more
efficient based on the report that you just did, what would
they be? And what would the savings be for the number one,
number two, number three?
Mr. Dodaro. Well, first of all, I think one thing that
needs to be done, the chairman alluded to it before, is passage
of the DATA Act. I think the DATA Act is one of the biggest
single things that could be done in order to provide more
transparency on the costs of these program activities. So that
being said----
Mrs. Maloney. Exactly what would the DATA Act do?
Mr. Dodaro. It would standardize the data so you would be
able to compare data across agencies, which you can't do right
now. It would also provide more consistent information and at a
lower program spending level that we found to be a big obstacle
in us identifying additional savings opportunities.
Mrs. Maloney. There are a number of things that I mentioned
earlier that could save billions of dollars. One is to try to
collect unpaid Federal taxes. These are taxes that are already
due to the Federal Government, and to potentially not issue
passports to people who have delinquent taxes; not pay Medicaid
providers who aren't paying their taxes. There are
recommendations that we have had in order----
Mrs. Maloney. We pass bills all the time saying that you
cannot give a Federal contract to anyone who hasn't paid their
taxes. I think it was the chairman's bill; it was one of the
bills coming out of this committee. So right now the law is you
can't give a contract to someone who doesn't pay their taxes.
In other words, they get the contract, then they don't pay
their taxes?
Mr. Dodaro. Well, what happens is right now Medicaid is
considered to be a State payment, not a Federal payment, so
Congress has to pass a law to say that that particular area
gets dealt with. That happens for Medicare providers, but not
for Medicaid providers, even though the Federal Government is
underwriting most of the Medicaid costs to the programs. Of
course, the other areas is passports.
We have also recommended equalizing taxes on different
forms of tobacco. That is about almost a billion dollars a year
that could be gained in that area. We have mentioned two or $3
billion that CBO has already estimated on Social Security
offsets. These are areas where the State and local government
employees don't necessarily pay into the Social Security system
unless the IRS reports the Social Security Administration these
earnings that aren't to be covered aren't considered, so the
CBO estimates it could be two to $3 billion a year in providing
additional savings in those areas.
So we have a lot--and none of those areas involve any cuts
in services to anybody; they are all dealing with gaining
revenues. We have a whole collection of recommendations on fees
and immigration, agricultural quarantine, and other things that
should be more appropriately covering----
Mrs. Maloney. On immigration, people pay the fees when they
come in, so how do you have a collection----
Mr. Dodaro. Well, the fees aren't enough to cover the costs
the way they are supposed to, so we say they ought to better
match the fees. Right now appropriated funds are being used,
when fees should be raised in order to do that.
Mrs. Maloney. What is the worst agency in terms of
management?
Mr. Dodaro. Well, in our reports we have recommended
changes in virtually every major Federal agency across the
Federal Government, so everybody has issues that need to be
dealt with. I mentioned earlier that the Department of Defense
has a number of areas in fragmentation overlap and duplication.
Mrs. Maloney. Well, thank you. My time is up.
Chairman Issa. I thank the gentlelady and I thank the
ranking member for pointing out executive order signing is not,
in fact, a law signing.
With that, we go to the gentleman from Tennessee, Mr.
DesJarlais.
Mr. DesJarlais. Thank you, Mr. Chairman.
Welcome back, Mr. Dodaro. I know the answer to the
question, but for the record please tell us how much taxpayer
money we could save if we were able to implement every one of
GAO's recommendations today.
Mr. Dodaro. Tens of billions of dollars.
Mr. DesJarlais. And you mentioned earlier the importance of
the DATA Act. How, over time, would that improve the reporting
standards and improve the quality and accuracy of claims?
Mr. Dodaro. Well, right now you don't really have data
standards at all, and that Act would place responsibility with
the Treasury Department so they could consolidate and develop
data standards that would require them to work with
stakeholders both within and outside of the Government; would
also establish a pilot that would require recipient reporting
models to be developed so the Government could get more
accurate reporting as it did in the Recovery Act. So it would
be a major step forward.
Mr. DesJarlais. While it is vital that we advance the DATA
Act in order to strengthen spending information, implementation
is certain to face some of the same challenges as the GPRA
Modernization Act and other good Government reforms. What can
we do to avoid the same pitfalls?
Mr. Dodaro. I think effective oversight by the Congress is
absolutely essential. I think there ought to be more oversight
and it ought to be focused more on how these acts could be
implemented properly and consistently and diligently across the
Government. We find continual problems in this regard. One area
in the GPRA area that we pointed out is there is not enough
effective consultation with the Congress and, as a result,
there is not enough agreement on how to measure programs and
activities.
All the tools are in place now in many areas, and if you
get the DATA Act in place and a couple other things, you will
have all the information. It is just a matter of basically
rolling up your sleeves and working hard to implement these
things properly.
Mr. DesJarlais. Can you discuss the status of any ongoing
work GAO has with OMB or other Federal agencies to develop a
comprehensive, well-defined, uniform list of all Federal
programs?
Mr. Dodaro. Yes. This is another area where the GPRA
Modernization Act of 2010 required OMB to publish an inventory
of all Federal programs. We have ongoing work looking at the
inventory. It is really not helpful in identifying and
comparing programs across Government. OMB gave the agencies a
lot of flexibility in how to define the inventory, so some
defined them on budgetary accounts, others on outcomes or
different types of bases, so it is really not comparable right
now; it only includes the 24 major departments and agencies, it
doesn't include the rest of the Federal Government. So both of
those areas need to be addressed. So we really do not yet have
a complete comparable inventory of Federal programs across the
Federal Government.
Mr. DesJarlais. What is a reasonable time frame to expect
getting a complete list?
Mr. Dodaro. It should be able to be done soon, within a
year.
Mr. DesJarlais. How do we achieve that?
Mr. Dodaro. I think you have to put pressure on OMB and the
agencies to develop that information. I mean, basically they
are getting the money to run these programs; they ought to be
able to provide a comprehensive inventory.
Mr. DesJarlais. GAO's work shows that building ownership is
often more cost-effective in Federal Government than leasing.
However, GSA continues to rely heavily on costly operating
leases to meet the long-term needs. At the same time, GSA's
current capital planning lacks transparency and makes it
difficult to estimate long-term needs, prioritize projects, and
evaluate alternatives to leasing, thereby inhibiting informed
decision-making.
In your report, GAO identifies millions of dollars worth of
potential savings if GSA were to improve its capital planning.
Can you elaborate on the recommendations GAO makes to that
effect?
Mr. Dodaro. Yes. First, the GSA has to provide lease
prospectuses to the Congress on high-value leases. Now, while
the high-value leases last year was, I think, $2.79 million a
year on these leases, they aren't including a lot of
information about alternatives. We looked at 218 operating
leases. In 191 cases they didn't have information about
alternatives that could be made in order to save money for the
Federal Government either by buying the property, as opposed to
leasing it. So a lot of the information isn't available and
transparent to the Congress to be able to do this.
These high-value leases, while they are only 3 percent of
the individual leases, account for one-third of all the lease
costs to the Federal Government, so we recommended that they
start including alternative analysis in these prospectuses to
provide to the Congress so that you can begin quantifying how
much would be saved by purchasing the property rather than
leasing property. We found where the Federal Government is
leasing some property for 40 years and also putting in
substantial amounts of money into providing security upgrades,
which we will never be able to recoup during the period of
time.
For the operating leases prospectuses that had information
in them about alternatives, there were, I believe, hundreds of
millions of dollars that could have been saved had the
alternatives been used other than leasing.
Mr. DesJarlais. Okay, I see we are out of time. Thank you.
Chairman Issa. I thank the gentleman.
We now go to the gentlelady from New Mexico, Ms. Grisham.
Ms. Lujan Grisham. Thank you, Mr. Chairman, and thank you
for having this hearing.
And thank you, Mr. Dodaro. I really appreciate it. I think
there is lots of work to do to make not only better and
productive decisions that are sustainable to make sure these
programs are effective and not redundant and not wasteful, but
also making sure that they are really focusing on efficacy and
either making decisions about keeping that program, if it is a
priority, and fixing it and being clear about that and
accountable, or eliminating that program and moving to
something else that might meet that priority. And I want to
talk about one of those programs.
New Mexico has one of the highest foreclosure rates still
in the Country. In 2010, during the height of the crisis, one
out of every 46 homes was going through a foreclosure process
in Albuquerque. There are thousands of homeowners in New Mexico
who tried to receive help from the Federal Housing
Administration's Home Affordable Modification Program, or HAMP,
and actually, before coming to Congress, I helped folks in a
prior life to navigate it, and I found it to be the most
confusing, difficult, ineffective effort of any program I have
ever been associated with and was quite disappointed, and still
am.
You find in your report that the Federal Housing
Administration has failed to collect adequately and analyze any
performance data of its foreclosure mitigation programs,
including HAMP. Am I correct in that?
Mr. Dodaro. Yes.
Ms. Lujan Grisham. So the Federal Housing Administration
has not conducted any analyses on the effectiveness of their
foreclosure mitigation programs, the same programs that are,
frankly, the only lifeline that my constituents went through to
find help and stay in their homes. And I might add that very
few of them, and, unfortunately, because we don't have the
data, it is anecdotal, it doesn't appear that it has helped
many New Mexicans. Do you have any information that would
provide me a little better sense about whether HAMP was helpful
or not?
Mr. Dodaro. Yes. I am going to ask Orice Williams Brown,
who is in charge of our work in that area, to respond. I would
note, though, we also found problems at VA and Agriculture, as
well.
Ms. Williams Brown. Let me start with the report that you
are referring to actually spent much of its focus on FHA. In
terms of Treasury and the HAMP program, they actually did a
little better job in terms of collecting information. That
said, we have chronicled for the last five years all of the
problems associated with the HAMP program, and there are a
number of them that we identified with how the program was
rolled out overall and the extent to which it has actually
helped homeowners.
In terms of FHA and its efforts to deal with foreclosures,
we found that FHA needs to do a better job collecting
information, because if you look at the data and you look at
cases of re-defaults, it is important for agencies to look at
efforts that they have taken to address foreclosures and to
drill into the data to find out which approaches work and which
approaches have been less effective, rather than just
continuing to take action; and we actually found, with FHA,
that if they focus on reducing the payment by a significant
amount, we found that about 30 to 49 percent tended to be the
sweet spot in terms of having a lower re-default rate.
Ms. Lujan Grisham. And I appreciate that, but you raise a
very important point. Five years of collecting data, and that
is five years where people are not, arguably, getting the
assistance that they need by that program. And I can tell you
that in my State it is a significant issue, and I get as many
complaints about HAMP and the other mitigation programs as I do
about dealing with the lending institutions and the loan
servicers and the attorneys. They are not distinguished.
What I really want is an effective program that meets the
needs of the constituents, but do you also believe that getting
this data and having an effective program would save the
Federal Government money if we were administering that program
more effectively?
Ms. Williams Brown. We found with FHA that, yes, that would
be the case.
Ms. Lujan Grisham. And you have actually answered my last
question, which is the lack of this program evaluation and
performance data, that it is a common problem among programs
and agencies that the GAO analyzes.
Mr. Dodaro. Definitely. Definitely. I mean, this is one
area where I think effective congressional oversight would be
enormously helpful.
Ms. Lujan Grisham. And I am about out of time, but, Mr.
Chairman and for the folks testifying today, it would also, I
think, mitigate tons of consumer fraud in the interim that is
now certainly pervasive in my State, because folks have no idea
what is a credible program, who is doing what, how you get
through. The response times are slow. It is an arduous process
at best, and it is probably good that I am out of time to give
you other examples and adjectives about how I feel.
Thank you, Mr. Chairman.
Chairman Issa. You know, you sound like a Republican
complaining about Government bureaucracy. You better be
careful.
Ms. Lujan Grisham. I think a little bipartisan work, Mr.
Chairman, on these issues would be a very good thing.
Chairman Issa. I certainly agree.
We now go to the gentleman from Michigan, Mr. Bentivolio.
Mr. Bentivolio. Thank you very much, Mr. Chairman.
Good to see you again, Mr. Comptroller.
Mr. Dodaro. Good to see you.
Mr. Bentivolio. More than 83,000 persons remain missing
from past conflicts in World War II, Korea, Vietnam, the Cold
War, and Persian Gulf.
Can we show the first slide, please?
[Slide.]
Mr. Bentivolio. As you can see, the missing persons are
spread over every continent and under any command.
Please show slide two. Thank you.
[Slide.
Mr. Bentivolio. Understandably, this is a complex mission
involving many offices. As you can see from this slide, the
missing persons accounting community consists of 11 offices in
8 organizations that report through different lines of
authority. Is the accounting community too fragmented? How do
the soldiers and civil servants working in those offices feel
about the lack of a single chain of command?
Mr. Dodaro. I think that everyone wanted greater clarity
that we had talked with, and we pointed this area out.
Fortunately, Secretary of Defense Hagel just recently, within
the last week or so, announced that a new organization to have
a more unified command over these issues which would simplify
things. So we are hopeful and will be watching how this is
implemented to see if it will correct this problem. We found it
was very disjointed; it wasn't operating very effectively; it
really wasn't accomplishing as much as it should have in order
to locate the remains of these prisoners of wars and missing
persons of action. So I don't think it was providing effective
service to them, and hopefully this new organization will make
a change.
Mr. Bentivolio. Can we have slide 3, please?
[Slide.]
Mr. Bentivolio. As you can see, on average only 72 persons
are identified each year; no more than 100 missing persons have
been identified in a single year. In 2009, the deputy secretary
of defense directed the accounting community to build the
capability to identify 200 persons a year.
How is the fragmentation within the accounting community
hindering progress towards this goal?
Mr. Dodaro. I would like to ask Cathy Berrick, who is head
of our Defense Capabilities and Management team, to answer.
Ms. Berrick. Thank you for the question. This is actually
an open issue. Although, as Gene mentioned, the Department of
Defense recently announced the reorganization to streamline the
eight organizations within DOD that manage this function, DOD
still has to put forth a strategy to meet a new congressional
goal to identify 200 missing persons a year by the year 2015.
As you mentioned, right now they are identifying about 72 to 74
missing persons a year, so they have quite a bit of work to do.
As a result of the fragmentation in these organizations
within DOD and not having a clear line of authority, we had two
different offices develop two separate plans on how they were
going to achieve that goal and there was a lot of conflicting
information in those. So we hope that with this reorganization
these entities can now work together to come up with a plan to
achieve that goal of identifying 200 persons per year.
Mr. Bentivolio. You answered my next question. I appreciate
that.
Can we put up slide 4? Slide 4, please.
[Slide.]
Mr. Bentivolio. As you can see, it is clear that the
accounting community is not lacking for Federal funding. From
2008 to 2012, the accounting community obligations increased
from $76 million to $132 million. DOD has also indicated that
additional funds will be reprogrammed towards this goal.
With the growth in funding, it is not clear to me that
additional dollars will improve performance in this important
mission. What concrete steps is DOD taking to improve the
culture within the accounting community so that disputes
between offices don't derail community-wide planning efforts?
Ms. Berrick. In terms of the funding needed to meet this
mission, it is really imperative that DOD complete a plan on
how they are going to achieve the new goal to identify 200
missing persons per year. Right now they are identifying about
half of that, so they need to figure out whether they need
additional resources or other mechanisms to support meeting
that goal. So in terms of budget I think the next most
important step is for DOD to complete their plan so that can
inform decisions about what their budget needs are.
Mr. Bentivolio. Okay, when you examine each department and
how they duplicate efforts, reading the briefing, I was
wondering out of the 83,000, I got the impression there were
offices working on the same area or same individual that was
missing. Do you know how they differentiate out of the 83,000
missing? Do they assign like case files and can anybody access
those case files within those eight agencies or eight teams?
Chairman Issa. The gentleman's time has expired, but you
can answer.
Ms. Berrick. That is part of the problem. The roles and
responsibilities for those eight individual offices isn't clear
so, as a result, we identified overlap in four areas. One is in
artifact and analysis, another is in research and analysis,
another area is investigations, and the fourth is in family
outreach. For example, there are two labs within those eight
organizations, and just to give you an example of the overlap,
we identified that one lab had already closed cases, not aware
that the second lab actually had those in the queue to work. So
it has resulted in problems like that.
Chairman Issa. I thank the gentleman.
Mr. Connolly. Mr. Chairman? Mr. Chairman, can I make an
inquiry, just an inquiry?
Chairman Issa. Very quickly.
Mr. Connolly. We have votes on the floor right now.
Chairman Issa. Yes, we do. We are coming back.
Mr. Connolly. So you are going to break.
Chairman Issa. We are going to break.
Mr. Connolly. Okay. Thank you.
Chairman Issa. The gentlelady from Illinois.
Ms. Kelly. Thank you, Mr. Chair, and thank you for your
flexibility this morning. I appreciate it.
The report GAO released today focuses on two specific
property-related issues leading to Government waste. One of
those is the Federal Government's use of property leases. GSA
was appropriated $5.2 billion to provide 193 million square
feet of rental space to Federal agencies and privately owned
buildings, is that correct?
Mr. Dodaro. Yes.
Ms. Kelly. What specific best practices does GAO recommend
GSA uses to evaluate whether to lease space or to buy it, since
there were comments about we could be wasting taxpayers' money?
Mr. Dodaro. Yes. We recommended that they, first, in
developing lease prospectus, particularly for high-cost leases,
do an alternative analysis to say would it be cheaper to buy or
cheaper to lease; to get more specific information from the
agencies about how long they are going to need the property to
be leased over a period of time; and to develop that analysis.
I would ask Kate Siggerud if she would add anything to
that.
Ms. Siggerud. There was one additional recommendation that
we made in that report, and that was for these high-value
leases that have existed for a long period of time, to develop
a ranking or criteria system to move some of those high-cost
leases into ownership situations, and then present that clearly
to the Congress so that choices could be made.
Ms. Kelly. Would an example of that be the Environmental
Protection Agency in Seattle?
Ms. Siggerud. We did have that as an example in the report,
yes.
Ms. Kelly. GAO's report also focuses on cost savings
related to real estate owned, or REO, properties owned by the
Federal Government after foreclosure. A number of agencies own
these properties, including the Departments of VA, Agriculture,
and enterprises Fannie Mae and Freddie Mac. GAO, however,
singled out the Federal Housing Administration as taking the
most time to dispose of foreclosed properties, about 340 days.
Mr. Dodaro, that would be nearly $1 billion per year in
savings from one agency alone, is that correct?
Mr. Dodaro. Yes. There would be quite a bit of savings in
that area if they could reduce that size. Ms. Brown will
explain how that would happen.
Ms. Williams Brown. Part of the process that made FHA a
little different has to do when they actually take ownership of
the property. And in the case of the enterprises and VA, rather
than waiting to go through the process of redemption and
actually having a free and clear title, they wait until that
process is complete before FHA actually takes ownership, and
that is part of the reason that they have a longer process. But
they also take longer to actually sell the properties.
Ms. Kelly. GAO notes that FHA's oversight over the
contractors is usually maintain and dispose of properties have
weaknesses. How does GAO recommended that FHA improves its
oversight of these contractors?
Ms. Williams Brown. We outlined a series of recommendations
for FHA to improve their oversight. One of the things that we
found they were deficient in had to do with actually tracking
the performance of the contractors for the various properties.
That is one area that we recommended that FHA focus on, and
also improve the guidance that they give to their regional
offices to ensure that the contractors are being consistently
overseen across the regions.
Ms. Kelly. Thank you very much.
I yield back.
Mr. Lankford. [Presiding.] Thank you.
Mr. Dodaro, thank you for being here. I am going to get a
chance to run through some of these quick questions. We are
about to break for a recess in just a moment. I want to bounce
a couple questions off before we do in this process.
You have some serious concerns on the Medicaid
demonstration projects. We are talking about tens of billions
of dollars. Can we talk through a little bit about this? The
demonstration projects have a requirement to be budget-neutral
to be a demonstration project. Are the demonstration projects
budget-neutral?
Mr. Dodaro. We looked at 10 demonstration projects and
found problems with four that we believe they were not budget-
neutral.
Mr. Lankford. State-specific for them? Are you talking
about four specific States or four----
Mr. Dodaro. Four specific States.
Mr. Lankford. Okay.
Mr. Dodaro. In total, we found about $32 billion that was
being paid to the demonstration projects that we believe was in
excess of the budget neutrality provision. They were using
outdated information in some cases, and in some cases they were
accounting for costs prospectively that the State had never
retrospectively spent money on.
Mr. Lankford. Okay, so the State and the Federal Government
have a partnership in this as far as the funding of that. The
$32 billion for the four States, is that all the Federal
portion or is that State and Federal portion combined?
Mr. Dodaro. That is State and Federal portion combined. I
think it was about $21 billion was the Federal portion. I will
correct that, if I am wrong, for the record.
Mr. Lankford. So is that in a single year or is that over
multiple years?
Mr. Dodaro. I believe it is over five years.
Mr. Lankford. All right, so $21 billion over five years
that has been spent that does not meet the basic criteria under
law for being budget-neutral.
Mr. Dodaro. Well, the budget neutrality is not by law, it
is by HHS policy. And one of our recommendations is for the
Congress to require it be done by law and instruct the
secretary to change their procedures to make sure that it is
implemented that way.
Mr. Lankford. Okay. The same issue with the Medicare
Advantage demonstration program that we have talked about in
the past. Two and a half years ago $8.3 billion was moved into
a Medicare Advantage demonstration program. A part of that is
obviously budget neutrality and also a report to come back to
show what they are demonstrating. Have you seen a report of
what they were trying to demonstrate with that Medicare
Advantage program?
Mr. Dodaro. Well, we had concerns about whether or not the
demonstration, the way it was structured, could conceivably
ever demonstrate what it was intended to demonstrate, and
basically those years have run out now. We have recommended
every year that Congress rescind some of the money there that
would be put in place, but they haven't. The demonstration is
over now. I don't know if we have looked at the final report or
not.
Mr. Lankford. Did they submit a final report of what they
were trying to demonstrate with that $8.3 billion transfer of
funds?
Mr. Dodaro. I don't know, Congressman. I will get an answer
for you and give it for the record. But our point was the way
it was structured, with data that occurred beforehand--first of
all, as I recall, they were giving money to mediocre performing
plans, and not just high performing plans, and encouraging
people to improve their performance. So by the structure and
how it was set up, we believe it would not have been able to
demonstrate that it was having an effect because so many people
were already receiving the payment.
But I will follow up and get you a detailed answer.
Mr. Lankford. It was not designed to demonstrate anything;
it was designed to carry over Medicare Advantage passed the
election, so there wouldn't be serious cuts to Medicare
Advantage until after the election was over. But that is a
different issue on it.
One last thing, then we are going to recess. VA and DOD
have purchased prescription drugs together in the past to
provide greater efficiency. Have you seen any kind of trending?
They have discussed it often again, about trying to get back
together. That seems to be around $500 million they could save
a year, just to be able to combine their purchasing power.
While there has been discussion, is there any movement that you
have seen towards that?
Mr. Dodaro. I will get you a specific answer, but last time
I recall we looked at it they weren't taking full advantage of
the potential purchasing power of both entities, but I will get
you a specific update.
Mr. Lankford. Okay. Thank you very much for being here.
We are going to recess for a moment because of votes, and
then the committee will come back in order as soon as the votes
have completed.
Mr. Dodaro. Thank you very much, Mr. Chairman.
Mr. Lankford. We are going to recess.
[Recess.]
Chairman Issa. The committee will come to order.
Mr. Dodaro, we will shortly have other individuals coming
back, but I thought I would take a moment. I guess you would be
considered nonpartisan since it is just you and me. The
Healthcare.gov Web site, in combination with the other parts of
the Affordable Care Act, some 30-some separate Web sites that
were done by 30-some separate States at a cost, let me rephrase
that, a grant of no less than $100 million, and sometimes over
$300 million apiece. Have you looked into, if you will, the
cost and duplication involved in that?
Mr. Dodaro. We have been asked by a number of parties and
the Congress to look at Healthcare.gov, a lot of aspects of it,
and also the State Web sites, as you mentioned, Mr. Chairman.
So we will be looking at those issues both in terms of how they
were designed and what kind of investment policies, testing
that they did. And while we haven't been asked to specifically
look at the potential for overlap and duplication, you raise a
good point. So I will make sure that we look at that aspect of
it as we cover this issue. I thank you for raising that.
Chairman Issa. And I appreciate it. You have a big job in
looking at all aspects of that and I wanted to make sure that
we did not look at the Affordable Care Act and Healthcare.gov
and the other sites as an event that we can do anything about.
The money is spent; the history is written.
But legislatively this committee would have the authority
to prohibit grants if they were redundant. So as you are
looking at, if you will, this propensity to give everyone a
little bit of buy-in money, which there were plenty of costs
that could have been provided in grants, but in this case the
building of IT, when clearly, once you got to the second State
and the third State and the fourth State, any level of
duplication was pure waste.
And in the case of, for example, Maryland, versus Kentucky,
versus other States, we also have this odd situation in which
you have failures and successes in some cases just because they
didn't know what the other entity was doing.
So as you look at it, look at it in a mind to a proposed
legislative fix that would prohibit any future Government in
any area, not just health care or something as this example,
from issuing grants that would duplicate in State after State
without a justification. Sometimes there are justifications,
but without a specific justification. Because I believe that
this was well intended, but if anyone had sat down and said you
are going to spend over $5 billion to produce essentially
duplicate copies of Web sites that all do the same thing, they
would have said, my goodness, we can spend three or $4 billion
of those dollars somewhere else and do better.
So I would appreciate that.
I will now, as I said, go to Dr. Gosar for five minutes.
Mr. Gosar. Thank you, Chairman, and thank you very, very
much, Mr. Dodaro.
A couple things, statements. Compared to Fannie and Freddie
Mac, FHA saw about 4 to 6 percent lower returns on disposition
of foreclosed properties and took 60 percent longer to dispose
of those properties, average of 340 days versus 200 days. And
there are a number of things that Fannie and Freddie do that
FHA does not do.
So can you put up slide number 1 for me?
[Slide]
Mr. Gosar. FHA real estate owned properties performed
behind Fannie and Freddie. GAO analysis shows that FHA REO
properties are 4 to 6 percent behind there. When it takes FHA
about 60 percent longer to sell an REO property, how does this
affect FHA's performance to get rid of that property in
disposition?
Mr. Dodaro. I will ask Ms. Brown to respond.
Ms. Williams Brown. It impacts the return on the property,
so it is the amount of how much they actually spend and then
actually how much they get back. So it affects their overall
return on the property.
Mr. Gosar. Yes, but if we were to follow Fannie and Freddie
in that same disposition, we could have seen as much as $400
million in costs incurred, but saved as much $600 million.
Ms. Williams Brown. Yes.
Mr. Gosar. Seems like a very good balance line, wouldn't it
be?
Ms. Williams Brown. Excuse me?
Mr. Gosar. It would be a very good balance line?
Ms. Williams Brown. Yes.
Mr. Gosar. Yes. How does FHA's disposition process differ
from the disposition process of the enterprises or the private
industry?
Ms. Williams Brown. We found that it differs in a couple of
areas. One, it differs on the front end when FHA actually takes
possession of the property and starts the sale process, the
management and the sale. It also differs in terms of how they
go about getting their initial sale price on the property. FHA
tends to go with a single price; the enterprises and VA tend to
get a number of prices to come up with a sale price.
They also differ in terms of how they reduce the sales
price if a property has been on the market for a while. FHA
takes an approach that they have a price and they will reduce
the sale price of the property the same, regardless of where
that property exists in the Country. The enterprises and VA
will take a different approach, they will actually consider
market factors in terms of reducing the price of a sales
property.
Mr. Gosar. And don't the other entities also look at
maintaining and changing that out?
Ms. Williams Brown. Yes.
Mr. Gosar. And that is a big deal, isn't it?
Ms. Williams Brown. Yes.
Mr. Gosar. And what prohibits the FHA from doing that? What
is one of the prohibitive factors in maintenance and improving
the lot?
Ms. Williams Brown. Well, we aren't aware of anything that
prohibits them from doing that; it is something that we
recommended that they take a look at in terms of the difference
in their properties and the others. FHA indicated in their
comments back to us that they weren't sure that that would
actually increase their ability if they did a certain minimal
maintenance.
Mr. Gosar. Well, I am going to stop you there because we
have limited time. The GAO's 2013 report, HUD reported the
compliance with Davis-Bacon, made it difficult to engage in
projects to make necessary repairs to increase sale returns.
Fannie and Freddie do not need to comply with Davis-Bacon. So
there is another aspect, is there not?
Ms. Williams Brown. Well, there are costs associated with
it, but when we did our analysis we actually controlled for
geographic differences in terms of so if you are dealing with a
different geography and the labor associated with maintaining a
property in one community versus another. Those were controlled
for in terms of how the enterprises fared versus FHA.
Mr. Gosar. Well, then why don't other entities cite that
barrier? I mean, it sounds if we are recreating the wheel, we
ought to look at the wheel prior to that, wouldn't we?
Ms. Williams Brown. Yes.
Mr. Gosar. I mean, Davis-Bacon is riddled with fraud,
right?
Ms. Williams Brown. Well, in that 2013 report we didn't
drill in on Davis-Bacon.
Mr. Gosar. Well, maybe we should, because in that GAO
report it actually showed that the calculations for Davis-Bacon
were 100 percent fraudulent. A hundred percent.
Ms. Williams Brown. In the 2013 report?
Mr. Gosar. 2012, I am sorry.
Ms. Williams Brown. GAO's 2012 report?
Mr. Gosar. Absolutely.
Ms. Williams Brown. Okay.
Mr. Gosar. I mean, just in your calculation from the
Department of Wages and Labor and moving it to the Bureau of
Statistics, GAO hardly likes Davis-Bacon, do they?
Ms. Williams Brown. This body of work didn't focus on
Davis-Bacon; it could be another body within GAO.
Mr. Gosar. I mean, when you start looking at some of the
implications, particularly on buildings and maintenance of
buildings, and increasing aperture, this is a barrier, and it
cites it that this is a barrier; and we ought to be looking at
this because CBO says that if we just change the calculations,
we could save between $10 and $25 billion a year just by
calculating Davis-Bacon properly. And part of the problem with
utilizing Davis-Bacon is there is no transparency, no one knows
how it is calculated. So that would make it very easy for us to
see an increase in sales and looking at the taxpayers' dollars
a little bit better.
Mr. Dodaro. We will take a look at that issue.
Mr. Gosar. Okay.
I am running out of time, so I will yield back to the
chair.
Mr. Collins. [Presiding.] The gentleman yields back.
The chair now recognizes himself for questions.
It is always good to have you, Mr. Dodaro. This is the part
for me, as a freshman, and the meetings that we have. One, I
love the reports that you have and the reports that are put
out. We talked about this last year. I am in the military. That
part on military uniforms is, again, unfathomable in most
comprehensive reports, especially when you look at it from a
position of other things that we need. And I think when you
spend those dollars in certain ways it just presents an issue
for many of us as we look at this and say why do we have these
duplication of products; why do we have these services; why are
these things not being done.
So in that line I have some things I want to talk to you
about and some issues that I think maybe from the chairman's
earlier comments today and many other's earlier comments, how
do we get to fix this. For my district, we are about fixing
issues; we are about fixing problems. I did not come to
Washington to be a spotlight and simply shine a light and say
here is a problem, there is another problem. I think the way we
rebuild with the American people is we say here is a problem,
here is how we fix it; here is a problem, here is how we fix
it.
In looking at that, I do have a couple questions for you.
As I understand it, the GAO started issuing these reports
in 2011. I want to know how many of these recommendations have
been fully addressed.
Mr. Dodaro. Of the over 389 specific actions that we have
made, 123 have been fully addressed, so it is about a third.
Mr. Collins. Would that be fully addressed?
Mr. Dodaro. Yes.
Mr. Collins. Completely. So from what we are gathering, it
is about 19 percent.
Mr. Dodaro. Well, it depends on--there is 162 areas.
Mr. Collins. Right.
Mr. Dodaro. If you take the areas, that is about 19
percent, 20 of the areas. But if you go down to the specific
actions it is a little bit more.
Mr. Collins. Well, again, that is completed actions. I know
there are a lot that have partial actions, other things like
that, but I am looking at completed, because when you look at
this, to explain this back home, when you go home and you see
these or they take the GAO reports, because I have a lot of
folks in the 9th District of Georgia that look at these
reports, they see them put out, and they say, well, why can't
you do this? And we say, well, that is just a little bit. Well,
it means a lot. This hundred million here, hundred million
there, that is actually real money in the State of Georgia,
especially in the 9th District. So they don't understand how we
can't do this or come together.
I recall the words of Senator Coburn. He came before this
committee just a few months ago and he said that he never
dreamed that the GAO would have published these reports and
Congress wouldn't embrace all the recommendations. He said that
he thought that these reports would embarrass Congress into
action. It is not the GAO's fault; it is Congress's inability
to address these types of issues.
And that is the reason that I am going to, in just a few
days, introduce the Commission on Accountability and Review of
Federal Agencies, the CARFA, Act. This is not new; we have made
some changes to it, but we are bringing it back up. This will
establish a results-orientated bipartisan commission made up of
seven official members appointed by the President and Congress,
one each appointed by the Majority and Minority leaderships of
both Houses and three appointed by the President, as well as
four non-voting ex officio members, members of Congress, two
from each House.
The Commission's charge will be to recommend: one,
realignment where a function can be performed by two or more
agencies or programs and can be consolidated; two realignment
or elimination of any agency or program that has wasted Federal
funds; and, three, elimination of any agency or program that
has completed its purpose, become irrelevant, or failed to meet
its objectives. Any savings that result from the consolidation
or cancellation of programs will be applied to offset the cost
of the Commission for deficit reduction.
The findings and suggestions of this Commission will have
privileged status before the House and the Senate, and this is
important, and will be considered in their entirety without
amendment, which, by forcing Congress to vote up or down on a
Commission's recommendation, the congressional log-rolling that
normally protects spending and waste can be circumvented and
backroom deals become much less effective.
Farm Bill negotiations over the USDA's duplicative catfish
inspection program point to this perfectly. In 2012, Senators
McCain and Kerry offered an amendment to the Farm Bill, which
was approved by voice vote. The GAO, your organization,
included this program in its list of duplicative programs in
its 2013 report. I remember you and I having this discussion
last year. I couldn't understand. Like I said, you inspect
catfish at my place, you catch them, you inspect them, you put
them in the bucket. Okay? There is bigger issues here. I know,
but we have a protection issue going on.
In the most recent Farm Bill, there was considerable effort
by a vast majority of members in Congress to repeal this
program. Unfortunately, due to the effects of several
influential members, the program was included in the bill and
another defeat for Government efficiency. CARFA is designed
specifically to address issues like this one.
So not only urging members who are watching now or
listening to become a cosponsor on this, I would like to talk
with you just a moment about actually looking at these
recommendations and how we can work together. Comment on Mr.
Coburn's discussion when he said that he thought it would
embarrass us into action. And just on more of a personal level,
has it surprised you, the lack of inaction on these items?
Mr. Dodaro. At one level, I have been concerned that there
hasn't been enough movement of legislation that has been
introduced. I mean, in many of these areas legislation has been
introduced and has, in some cases, advanced, but it hasn't been
passed, even in cases where the President also agrees and has
submitted it in the budget proposal. So where there is broad
agreement and legislation has been introduced between certain
parties and the Congress and the President, yes, I have been
surprised that there hasn't been quicker action when those
circumstances present themselves.
On areas where we have pointed out multiple programs across
multiple agencies that touch upon many different parts of the
Executive Branch and various committee jurisdictions, no, I
haven't been that surprised that there hasn't been fast action
on those areas.
So it is kind of mixed depending upon the areas. There are
a lot of areas I would consider to be very straightforward and
broad agreement; there, I am perplexed as to why there hasn't
been more action. But in some of the more entrenched areas
where there are constituencies and longstanding Federal
programs and interest groups and others, I am, quite frankly,
not surprised that more hasn't happened.
Mr. Collins. Well, I think that is a concern for all of us
and maybe one of the reasons why we are addressing it, is
because Congress hasn't acted, and we come with another
reasons. You hear enough speeches about cut this, cut that.
That never happens. It sounds more like my excuse for my
children not cleaning their rooms at this point.
With that, I will yield to the gentleman from Arizona for
five minutes.
Mr. Gosar. I want to continue where I left off.
In 2002, GAO recommended that HUD establish unified
property custody as a priority for FHA. Now, more than a decade
later, FHA still does not have consistent custody over the
foreclosed properties. Today's report indicates there is still
bifurcated ownership. What benefits may FHA see if it
establishes a unified property custody?
Mr. Dodaro. We think it will lead to quicker action in
disposing of the properties.
Mr. Gosar. I think I would agree with you. Why hasn't FHA
actually taken and implemented this recommendation?
Mr. Dodaro. You know, Congressman, in preparing for this
hearing, I asked myself a lot of the same questions. I have
asked my staff to elevate this issue within the Federal Housing
Administration and I do plan to follow up, myself, personally
with the secretary of HUD about why they haven't taken more
action on these areas. I am, quite frankly, surprised along the
lines of the previous question.
Mr. Gosar. Are there any other things that GAO would tell
FHA that they would help in the implementation?
Ms. Williams Brown. We have highlighted a number of
alternative approaches, the one you mentioned being one, and
FHA, for the first time, has started to begin to look at some
alternatives to dealing with REO, and we actually think the one
you mention would be transformative for the program if it were
to actually look at the whole unified custody approach.
Mr. Gosar. Gotcha. I am going to now refocus. Being a
dentist, I am going to go back to defense health care
contracting.
The report issued today identifies contracting for the
Defense health care professionals as an area of fragmentation
in the Federal Government. The central issue is a lack of
consolidated agency-wide strategy to contract for health care
professionals. Can you explain the efforts the Army, Navy, and
other components within DOD and what they have made to remedy
the problem of this widespread fragmentation?
Mr. Dodaro. Yes. I will ask Paul Francis, who is the head
of our Acquisition Services, to elaborate, but part of the
problem, Congressman, is that there is not any effort to
coordinate across the services. And even we find some efforts
within the individual services to coordinate among themselves,
within the Army, Air Force, and Navy, and neither of those
efforts were very effective; and there wasn't any effort across
the services to do so.
Paul?
Mr. Francis. Yes, sir. What we found was in contracting for
medical health care professionals at DOD's facilities, I think
there was $1.1 billion in contracting. We found about only 8
percent of that where two services got together and
consolidated the requirements. Even when a single service was
doing the contracting, they would award multiple contracts for
the same type of people in the same facility.
And I think the issue is with the Federal Government and
contracting is if you run your competition and you have a
pretty good contract, you seem happy. But that is just not good
enough. So these contracts are competed; they are good
instruments and so forth, but the Government needs to do more,
to do like private industry. So you need to be looking for your
best deals. So while the Army, for example, might have 10
really good contracts for 10 different things, maybe it should
have one contract for 10 things.
Mr. Gosar. Is there a way, from your viewpoint, that we
could get the military to actually get this taken care of and
done and actually implement contracting unified across the
board?
Mr. Francis. Yes. Now, there are a couple things. There is
a new Defense health agency that says it is going to take that
up, but we are still waiting. And there has been a subcontract
group that is supposed to deal with it as well. But I think
Congress could create incentives. One would be do something
with the money. If you think savings are available, maybe you
could lower the budget by that amount and create an incentive
for them to consolidate those contracts.
Mr. Gosar. Part of the problem, even though we have power
of the purse, is actually trying to get a budget passed. I
mean, I am a dentist impersonating a politician, and to see
what goes on in this place is just absolutely ludicrous. So
maybe a commission, maybe a mixture of retired military as well
as some business folks. Could a commission like that actually
have some benefit?
Mr. Francis. It could, although I would say I don't think
there is any question about the problem. People agree it is not
that efficient; it has been studied. And I think people know
what to do about it. It is the point you made, the actual
taking of action; that is what is not happening.
Mr. Dodaro. Congressman, we have recommended in the past
that there be a chief management official over at the
Department. In this case, and like many of the cases, the
people we talk with in the Department agree with us; they just
can't be organized enough to focus on the implementation of the
program. So congressional oversight and control of the funds
within the Department is really the only way to do it. In many
of these areas there have been commissions in the past and
studies, and my feeling is that other commissions will have
marginal effect; that you really need to focus on and hold the
people in the Department accountable for focusing in on it if
you really want some action done.
Mr. Gosar. Well, that gets back to my aspects of that we
have a lawless society in Washington, D.C., because we can't
even get compliance with a subpoena by the attorney general of
the United States. So that is also problematic, but that is
another subject for another day. Actually, Thursday. But I
thank you very, very much.
I yield back the balance of my time.
Mr. Collins. I thank the gentleman.
The gentleman brings up a great point, though. In just
listening to you, I love what these words are: we are still
waiting. You made it just a second ago. How many times have we
come into this room, and that is one of the things we are still
waiting? Or I don't remember, or we are getting to it, or we
are still waiting; oh, the report hasn't come out yet.
And, yet, when you come inside basically the Beltway, the
only area in the world right now, especially in the U.S. over
the last few years, that is actually building, growing, and
producing something which is not widgets, but they are jobs to
do the things that we are talking about here in areas in which
hurt business. They don't do things efficiently, they change up
things.
That is why I believe the Commission we are proposing--and,
again, I am not, by any illusion, I was in Georgia. In the
appropriations committee, appropriators, this is an area where
we should be doing some of this; we are not doing it now. Not
an indictment on anyone, I think it is just the politics of it.
So we are actually putting together an up or down vote, a BRAC
style vote. You put this up, there are going to be some things
that you may not like, but you find the common agreement stuff.
You are not going to get a report from a bipartisan commission
that is going to have these things that most people don't agree
with.
We are looking at this and it also is six years and takes
each appropriations bill two each year. So you are going
through the whole appropriations bill process in six years. And
then at the end it has a provision in which GAO will do a
report to look at what actually happened in this process.
So as we look at this, I think the other issue is getting
control of the budget in and of itself. You said areas like
this where we find this, why should these still be rewarded,
and I think those are the things we are going to look at, my
office is looking at, is to say if we see it in the report,
then we need to make an amendment in the appropriations
process; undoubtedly, you don't need this anymore.
That is the one thing I think that we can continue on; it
is one thing this committee needs to be a part of, because the
American people, if there is one thing true, they are simply
tired of saying we are still waiting. They can't wait on their
jobs; they can't wait on their businesses; and Washington needs
to do the same.
So, with that, I see no one else. I would like to thank the
witness for taking time from his busy schedule to appear before
us today. When you come, you bring light. I hope now that we
can take that light and actually put these into work.
With that, the committee stands adjourned.
[Whereupon, at 3:45 p.m., the committee was adjourned.]
APPENDIX
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Material Submitted for the Hearing Record
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