For our 2011 high-risk update, we determined that two areas warranted  removal from the High-Risk List: the Department of Defense (DOD)  Personnel Security Clearance Program and the 2010 Census. New High-Risk Area: Management of Federal Oil and Gas Resources

We have designated the Department of the Interior’s management of  federal oil and gas on leased federal lands and waters as high risk because  Interior (1) does not have reasonable assurance that it is collecting its  share of revenue from oil and gas produced on federal lands; (2) continues  to experience problems in hiring, training, and retaining sufficient staff to  provide oversight and management of oil and gas operations on federal  lands and waters; and (3) is currently engaged in a broad reorganization of  both its offshore oil and gas management and revenue collection  functions. With regard to this organizational effort, there are many open  questions about whether Interior has the capacity to undertake such a  reorganization while continuing to provide reasonable assurance that  billions of dollars of revenue owed the public are being properly assessed  and collected and that oil and gas exploration and production on federal  lands and waters is well-managed. GAO made  recommendations to address these issues. Remaining High-Risk Areas

While there has been some progress on nearly all of the issues that remain  on the High-Risk List, the nation cannot afford to allow problems to  persist. Addressing high-risk problems can save billions of dollars each  year. Several areas on GAO’s list illustrate both the challenges of  addressing difficult and tenacious high-risk problems and the  opportunities for savings that can accrue if progress is made to address  high-risk problems. Further, CMS could take other  actions to help better address the issue of improper payments in the  Medicare and Medicaid programs. The level of importance CMS, HHS, and the  administration place on the efforts to implement the requirements  established by recent laws and guidance and implementation of our  recommendations will be key factors in reducing improper payments in  the Medicare and Medicaid programs and ensuring that federal funds are  used efficiently and for their intended purposes. In fiscal year 2009, agencies  reported underutilized buildings accounted for $1.66 billion in annual  operating costs. Senior Defense officials have  stated that further reductions may be needed to ensure that its  infrastructure is appropriately sized to carry out its missions in a cost- effective manner. Over the next 5 years, the  Department of Defense (DOD) expects to invest almost $343 billion (in  fiscal year 2011 dollars) on the development and procurement of major  defense acquisition programs. With the prospect of slowly growing or flat defense budgets for the  foreseeable future, DOD must get better value for its weapon system  spending and find ways to deliver needed capability to the warfighter for  less than it has spent in the past. Sustaining Progress on High-Risk Programs

Overall, the government continues to take high-risk problems seriously  and is making long-needed progress toward correcting them. Continued perseverance in addressing high-risk areas will  ultimately yield significant benefits. Lasting solutions to high-risk  problems offer the potential to save billions of dollars, dramatically  improve service to the American public, and strengthen public confidence  and trust in the performance and accountability of our national  government. The GAO’s high-risk update and High Risk and Other Major Government  Challenges Web site, www.gao.gov/highrisk/, can help inform the oversight  agenda for the 112th Congress and guide efforts of the administration and  agencies to improve government performance and reduce waste and risks. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

The federal government is the world's largest and most complex entity, with about $3.5 trillion in outlays in fiscal year 2010 funding a broad array of programs and operations. GAO maintains a program to focus attention on government operations that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement or the need for transformation to address economy, efficiency, or effectiveness challenges. This testimony summarizes GAO's 2011 High-Risk Update, which describes the status of high-risk areas listed in 2009 and identifies any new high-risk area needing attention by Congress and the executive branch. Solutions to high-risk problems offer the potential to save billions of dollars, improve service to the public, and strengthen the performance and accountability of the U.S. government.

What GAO Found

This year, GAO removed the high-risk designation from two areas--the DOD Personnel Security Clearance Program and the 2010 Census--and designated one new high-risk area--Interior's Management of Federal Oil and Gas Resources. These changes bring GAO's 2011 High-Risk List to a total of 30 areas. While many positive developments have occurred, additional progress is both possible and needed in all 30 high-risk areas to save billions of dollars and further improve the performance of federal programs and operations. Congressional oversight and sustained attention by top administration officials are essential to ensuring further progress. The high-risk effort is a top priority for GAO. Working with Congress, agency leaders, and the Office of Management and Budget, GAO will continue to provide insights and recommendations on needed actions to solve high-risk areas. Regarding the new high-risk area, Interior does not have reasonable assurance that it is collecting its share of billions of dollars of revenue from oil and gas produced on federal lands, and it continues to experience problems in hiring, training, and retaining sufficient staff to provide oversight and management of oil and gas operations on federal lands and waters. Further, Interior recently began restructuring its oil and gas program, which is inherently challenging, and there are many open questions about whether Interior has the capacity to undertake this reorganization while carrying out its range of responsibilities, especially in a constrained resource environment. While there has been some progress on nearly all of the issues that remain on the High-Risk List, the nation cannot afford to allow problems to persist. This statement discusses opportunities for savings that can accrue if progress is made to address high-risk problems. For example: (1) Billions of dollars are estimated in Medicare and Medicaid improper payments. The effective implementation of recent laws, including the Improper Payments Elimination and Recovery Act of 2010, and administration guidance will be key factors in determining the overall effectiveness of reducing improper payments in the Medicare and Medicaid programs. (2) Federal agencies' real property holdings include thousands of excess and/or underutilized buildings and cost over $1.6 billion annually to operate. If this issue is not addressed, the costs to maintain these properties will continue to rise. (3) Over the next 5 years, the Department of Defense (DOD) expects to invest over $300 billion (in fiscal year 2011 dollars) on the development and procurement of major defense acquisition programs. DOD must get better value for its weapon system spending and find ways to deliver needed capability to the warfighter for less than it has spent in the past. The High-Risk update contains GAO's views on progress made and what remains to be done to bring about lasting solutions for each high-risk area. Perseverance by the executive branch in implementing GAO's recommended solutions and continued oversight and action by Congress are essential to achieving progress. GAO is dedicated to continue working with Congress and the executive branch to help ensure additional progress is made.