The  five criteria for determining if the high-risk designation can be removed  are (1) a demonstrated strong commitment to, and top leadership support  for, addressing problems; (2) the capacity to address problems; (3) a  corrective action plan; (4) a program to monitor corrective measures; and  (5) demonstrated progress in implementing corrective measures. As detailed in our 2013 high risk update report, we are removing the  management of interagency contracting from the High Risk List based on  the following:
Continued progress in addressing previously identified deficiencies. Strengthened management controls. OMB and the General  Services Administration have taken a number of steps to address the  need for better data on interagency contract vehicles. We also will continue to monitor developments in  this area. We are removing IRS’s Business Systems Modernization program from  the High Risk List because of:
Progress in addressing weaknesses. In January 2012, the agency  delivered the initial phase of its cornerstone tax processing project  and began the daily processing and posting of individual taxpayer  accounts. This enhanced tax administration and improved service by  enabling faster refunds for more taxpayers, allowing more timely  account updates, and faster issuance of taxpayer notices. In July 2011, we  reported that IRS had put in place close to 80 percent of the practices  needed for an effective investment management process, including all  of the processes needed for effective project oversight. Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks

Climate change poses risks to many environmental and economic  systems—including agriculture, infrastructure, ecosystems, and human  health—and presents a significant financial risk to the federal  government. These  impacts pose significant financial risks for the federal government, which  owns extensive infrastructure, insures property through federal flood and  crop insurance programs, provides technical assistance to state and local  governments, and provides emergency aid in response to natural  disasters. However, the federal government is not well positioned to  address this fiscal exposure, partly because of the complex, cross-cutting  nature of the issue. The federal government owns  and operates hundreds of thousands of buildings and facilities, such  as defense installations, that could be affected by a changing climate. According to  National Oceanic and Atmospheric Administration program officials, a  satellite data gap would result in less accurate and timely weather  forecasts and warnings of extreme events—such as hurricanes, storm  surges and floods. We have concluded that the potential gap in  weather satellite data is a high-risk area and added it to the High Risk  List this year as well. Potential gaps in satellite data need to be effectively addressed. High Risk Areas Narrowing Due to Progress

Since our 2011 update, sufficient progress has been made to narrow the  scope of the following three areas. Management of Federal Oil and Gas Resources

In 2011, we added the Department of the Interior’s (Interior) management  of oil and gas on leased federal lands and waters to GAO’s High Risk List  for three reasons; (1) Interior did not have reasonable assurance that it  was collecting its share of revenue from oil and gas produced on federal  lands; (2) Interior was unable to hire, train, and retain sufficient staff to  provide oversight and management of oil and gas operations on federal  lands and waters; and (3) Interior was reorganizing its oversight of  offshore oil and gas activities in the immediate aftermath of the  Deepwater Horizon incident. Progress on Remaining High-Risk Areas

There has been notable progress on the vast majority of the issues that  remain on the High Risk List. Addressing high-risk problems can save billions of dollars each  year. Specifically, FDA needs to:  strengthen its Drug Shortage Program by assessing program  resources, systematically tracking data on shortages, considering the  availability of medically necessary drugs as a strategic priority, and  developing relevant results-oriented performance metrics to gauge the  agency’s response to shortages;  improve oversight of medical device recalls by routinely assessing  information on device recalls, clarifying procedures for conducting  recalls, developing criteria for evaluating the effectiveness of recalls,  and documenting the agency’s basis for terminating individual recalls;  implement the Safe Medical Devices Act of 1990;  conduct more inspections of foreign establishments manufacturing  medical products for the U.S. market and utilize new authority to take  a risk-based approach in selecting foreign drug establishments to  ensure that they are inspected at a frequency comparable to domestic  establishments with similar characteristics; emphasize the importance of timely medical product reviews,  particularly for medical devices; and  track applications to market medical products for children. In support  of Congress and to further progress to address high risk issues, GAO  continues to review efforts and make recommendations to address high  risk areas problems.
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 2012 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. Since 1990, more than one-third of the areas previously designated as high risk have been removed from the list because sufficient progress was made to address the problems identified.
This biennial update describes the status of high-risk areas listed in 2011 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

In February 2011, GAO detailed 30 high-risk areas. Sufficient progress has been made to remove the high-risk designation from two areas.
Management of Interagency Contracting. Improvements include (1) continued progress made by agencies in addressing identified deficiencies, (2) establishment of additional management controls, (3) creation of a policy framework for establishing new interagency contracts, and (4) steps taken to address the need for better data on these contracts.
Internal Revenue Service Business Systems Modernization. We are removing this area because progress has been made in addressing significant weaknesses in information technology and financial management capabilities. IRS delivered the initial phase of its cornerstone tax processing project and began the daily processing and posting of individual taxpayer accounts in January 2012. This enhanced tax administration and improved service by enabling faster refunds for more taxpayers, allowing more timely account updates, and faster issuance of taxpayer notices. IRS has put in place close to 80 percent of the practices needed for an effective investment management process, including all of the processes needed for effective project oversight.
While these two areas have been removed from the High Risk List, GAO will continue to monitor them.
This year, GAO has added two areas.
Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks. Climate change creates significant financial risks for the federal government, which owns extensive infrastructure, such as defense installations; insures property through the National Flood Insurance Program; and provides emergency aid in response to natural disasters. The federal government is not well positioned to address the fiscal exposure presented by climate change, and needs a government wide strategic approach with strong leadership to manage related risks.
Mitigating Gaps in Weather Satellite Data. Potential gaps in environmental satellite data beginning as early as 2014 and lasting as long as 53 months have led to concerns that future weather forecasts and warnings--including warnings of extreme events such as hurricanes, storm surges, and floods--will be less accurate and timely. A number of decisions are needed to ensure contingency and continuity plans can be implemented effectively.
In the past 2 years notable progress has been made in the vast majority of areas that remain on GAO's High Risk List. This progress is due to the combined efforts of the Congress through oversight and legislation, the Office of Management and Budget through its leadership and coordination, and the agencies through their efforts to take corrective actions to address longstanding problems and implement related GAO recommendations.

What GAO Recommends

This report contains GAOs 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 GAOs 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.