CALLS for greater government efficiency are nothing new in Washington. But with President Obama and Congress now debating budgets for both the rest of this year and the next, with the economy yet to fully recover from the recent recession and with our government’s finances still on an unsustainable long-term path, the need to wring every dollar out of the federal budget and ensure that taxpayers are getting their money’s worth has never been greater.
How, though, do you find these savings?
Today, the Government Accountability Office is issuing its updated roadmap to confronting waste, fraud, abuse and mismanagement.
Since we started this list of programs at high risk of such problems two decades ago, our office has come to update it with each new Congress, and history shows that sustained, focused oversight from lawmakers and administration officials can save billions of dollars and improve services.
But while over one-third of the programs we listed previously have come off the list over the years, dozens of others have moved onto it. The latest high-risk list presents 30 areas ripe for Congress and President Obama to take action.
One new area on the list is the Interior Department’s management of oil and gas leases and royalties, which are among the largest sources of non-tax revenue to the federal government. One reason this area is at risk is that the department does not have reasonable assurance that all revenues are being collected.
Indeed, in 2008, the G.A.O. reported that the Interior Department had not conducted a comprehensive evaluation of the federal oil and gas revenue system in more than 25 years, despite significant changes in the oil and gas industry.
We have also pointed out that royalty collection relied too heavily on company-reported oil and gas production figures. In fiscal years 2006 and 2007 we found that much of the data reported by oil and gas companies appeared erroneous, resulting in millions in uncollected fees.
And the proportion of revenues that the government collected for oil and gas produced in the Gulf of Mexico, according to a major study, was lower than for 93 of 104 other owners of such resources.
In recent years, the G.A.O. has made more than 50 recommendations to the interior secretary to improve the department’s revenue collection and hiring, training and retaining staff policies and modify its practices for managing oil and gas resources.
The Interior Department has been acting on some of these recommendations — but there were many more that still need to be put into effect. As the G.A.O. and other institutions continue to examine these issues, additional problems and recommendations will likely be identified as well.
We are also dropping two issues from the high-risk list: the Department of Defense’s personnel security clearance program, which processes hundreds of thousands of security clearances annually for service members and civilians, and the 2010 Census. Both dealt sufficiently with identified vulnerabilities to warrant their removal.
Three factors contributed to this success: high-level support from agencies, clear measures with which to gauge progress and strong Congressional oversight. Credit goes to the Senate Homeland Security and Governmental Affairs Committee and the House Oversight and Government Reform Committee for holding the agencies involved accountable.
Several other items remaining on the high-risk list illustrate the magnitude of the potential savings that are possible. For example, the Medicare and Medicaid programs need to add better detection and controls to curtail billions of dollars in improper payments.
In fiscal year 2010 alone, Medicare had estimated improper payments of almost $48 billion; this estimate did not include improper payments in its prescription drug benefit program, for which the agency has not yet determined a total amount.
And because Medicare remains on a path that is fiscally unsustainable over the long term, there is heightened pressure to improve its payment methods, as well as its management and oversight of program operations and patient care.
As for Medicaid, it has taken steps to improve transparency and reduce improper payments in recent years, but more can be done. Improper payments to providers that submit inappropriate claims can result in substantial financial losses to states and the federal government. The Department of Health and Human Services has estimated a national improper payment rate for Medicaid of 9.4 percent (with the federal share estimated at $22.5 billion) for fiscal year 2010.
Certain services may be more susceptible than others to improper payments. For example, in 2009 the G.A.O. found that Medicaid beneficiaries and providers were involved in potentially wasteful or abusive purchases of controlled substances in five selected states.
Specifically, we found that Medicaid paid over $2 million in controlled substance prescriptions during fiscal years 2006 and 2007 that were written or filled by 65 medical practitioners and pharmacies barred, excluded or both from federal health care programs, including Medicaid.
As a result, the G.A.O. recommended that the Centers for Medicare and Medicaid Services issue guidelines to states for processes that better prevent payment of improper claims for controlled substances in Medicaid. The agency generally agreed with our recommendations — yet such guidance had not been issued by the end of last year.
Billions more could flow to the Treasury through better enforcement of the tax laws and closing the gap between taxes owed and paid. Typically, about 84 percent of owed taxes are paid voluntarily and on time; in its most recent estimate, for 2001, the I.R.S. said the resulting net gap was $290 billion. Congress and the I.R.S. have taken innovative actions aimed at further improving tax compliance.
The I.R.S. last year began putting in place regulations covering paid tax return preparers, an important step given the critical role they play in helping taxpayers meet their tax obligations. Congress also passed laws that require financial institutions to report information on foreign bank accounts, the cost basis of securities and merchants’ credit card receipts.
Greater attention also needs to be paid to how the Pentagon acquires weapon systems. Each year, investments totaling hundreds of billions of dollars too often produce military equipment that is over budget, behind schedule or unable to meet the needs of our troops.
The Government Accountability Office has previously reported that the growth in projected costs on the Defense Department’s fiscal year 2008 portfolio of 96 defense acquisition programs was more than $303 billion (adjusted for inflation). In addition, the average delay in delivering initial capability was 22 months.
For 42 programs the G.A.O. assessed in depth in 2010, there was continued improvement in the amount of knowledge the department had on the technology, design and manufacturing of these weapons programs at key points in the acquisition process. Most programs, however, were still proceeding with less knowledge than best practices suggest, putting them at higher risk for cost growth and schedule delays.
Congress and top officials responsible for programs on the high-risk list have been willing to address these issues. For example, in 2009, Congress required that the Defense Department’s weapons acquisition programs now reflect the basic elements of a knowledge-based acquisition approach and that programs with excessive cost growth be terminated.
In addition, Secretary of Defense Robert Gates has proposed canceling major defense acquisition programs that have been plagued with cost and schedule problems.
OUR list also includes programs that are at risk not for financial reasons but because they need better management or broad transformation. Take information security, which the G.A.O. first identified as a government-wide problem in 1997.
Our office in 2003 expanded this high-risk area to include critical elements — like power distribution, water supply, telecommunications and emergency services — that rely extensively on computerized information systems and electronic data to carry out their operations.
The security of these systems and data is essential to protecting national and economic security, and public health and safety; and at the Department of Defense, the Department of Homeland Security and numerous other federal agencies, progress is being made. But cyber threats are growing and evolving, reported security incidents are rising and significant security deficiencies pervade federal systems that jeopardize the confidentiality, integrity and availability of the federal government’s security and the information they process.
In addition, the administration and executive branch agencies have not yet fully carried out key actions that are intended to improve the current United States approach to cybersecurity: developing a comprehensive national strategy for addressing global cybersecurity and governance; creating a national and federal research and development agenda for improving cybersecurity; carrying out the near- and mid-term actions recommended by the 2009 cybersecurity policy review directed by the president and updating the national strategy for securing the information and communications infrastructure.
Top agency officials and the Office of Management and Budget have been working with the Government Accountability Office to make greater progress on the high-risk list, and continued Congressional oversight has been essential to this progress. By focusing on oversight and acting to reform these programs on the high-risk list, Congress and the White House send an important message: the public must receive the best possible return on every tax dollar spent. Closing our nation’s fiscal gap will require broader budgetary changes and shared contributions. Greater efficiency and effectiveness in government can help ease that burden on the American people while preserving vital programs of importance to us all.
Gene L. Dodaro is the comptroller general of the United States and the head of the Government Accountability Office.
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