	Fiscal Year 2004 Performance and Results

In fiscal year 2004, much of our work examined the effectiveness of the  federal government’s day-to-day operations, such as administering benefits  to the elderly and other needy populations, providing grants and loans to  college students, and collecting taxes from businesses and individuals. We also informed  policymakers about long-term challenges facing the nation, such as the  federal government’s financial condition and fiscal outlook, new security  threats in the post-cold war world, the aging of America and its impact on  our health care and retirement systems, changing economic conditions,  and the increasing demands on our infrastructure—from highways to  water systems. See appendix I for our Strategic Plan Framework for serving the Congress  and the nation. Outcomes of Our Work

In fiscal year 2004, our work generated $44 billion in financial benefits,  primarily from recommendations we made to agencies and the Congress  (see fig. 1). Financial benefits could also result  from increases in federal revenues—due to changes in laws, user fees, or  sales—that our work helped to produce. Many of the benefits that result from our work cannot be measured in  dollar terms. During fiscal year 2004, we recorded a total of 1,197 other  benefits (see fig. 4). Putting these recommendations into practice is  generating tangible benefits for the American people. Testimonies That Serve the Congress

During fiscal year 2004, experts from our staff testified at 217  congressional hearings (see fig. 9) covering a wide range of complex  issues. Streamlining and Management Improvement Efforts

Shortly after I was appointed in November 1998, I determined that GAO  should undertake a major transformation effort to better enable it to “lead  by example” and better support the Congress in the 21st century. This has  resulted in a 14 percent reduction in our support staff since 1998. Currently, as shown in figure 12, over 50 percent of our staff resources in  the support area are contractors, allowing us to devote more of our staff  resources to our mission work. We recently surveyed managers of agency  mission support operations and identified additional activities that  potentially could be filled through alternative sourcing strategies. In fiscal  years 2005 and 2006, we will assess the feasibility of alternative sourcing  for these activities using an acquisition sourcing maturity model and cost- benefit analyses. In fiscal year 2002, an independent study of GAO’s IT  processes and related costs revealed that, “GAO is delivering superb IT  application support and development services to the business units at 29  percent less than the cost it would take the Government peer group to  deliver.” In confirmation of these findings, in fiscal year 2003, GAO was  one of only three federal agencies to receive the CIO Magazine 100 Award  for excellence in effectively managing IT resources to obtain the most  value for every IT dollar. GAO’s Fiscal Year 2006 Request to Support the Congress

We are requesting budget authority of $493.5 million for fiscal year 2006. This budget request will allow us to continue to maximize productivity,  operate more effectively and efficiently, and maintain the progress we  have made in technology and other areas. However, it does not allow us  sufficient funding to support a staffing level of 3,269—the staffing level  that we requested in previous years. However, with about 80  percent of our budget composed of human capital costs, we needed to  constrain hiring to keep our fiscal year 2006 budget request modest. There are increasingly greater demands on GAO’s resources. While we have reduced our planned staffing  level for fiscal years 2005 and 2006, we believe that the staffing level we  requested in previous years is a more optimal staffing level for GAO and  would allow us to successfully meet the future needs of the Congress and  provide the return on investment that the Congress and the American  people expect. Given current and projected deficits and the demands  associated with managing a growing national debt, as well as challenges  facing the Congress to restructure federal programs, reevaluate the role of  government, and ensure accountability of federal agencies, a strong GAO  will result in substantially greater benefits to the Congress and the  American people. Table 2 summarizes the changes we are requesting in our fiscal year 2006  budget. As a knowledge-based,  world-class, professional services organization in an environment of  increasingly complex work and accelerating change, we maintain a strong  commitment to staff training and development. We promote a workforce  that continually improves its skills and knowledge. Mission Support programs provide the critical infrastructure we need to  conduct our work. We also will continue to modernize or develop systems focusing on how  analysts do their work. We continue to look for cost-reducing efficiencies in our  utility usage. Due to recent budget constraints,  we have curtailed some efforts related to archiving paper records. In the  years ahead, GAO’s support will prove even more critical because of the  pressures created by our nation’s large and growing long-term fiscal  imbalance. I would be pleased to answer any questions  the Members of the Committee may have.
Why GAO Did This Study

We are grateful to the Congress for providing us with the support and resources that have helped us in our quest to be a world-class professional services organization. We are proud of the work we accomplish as we continue to provide our congressional clients with professional, objective, fact-based, non-partisan, non-ideological, fair, balanced, and reliable information in a timely manner regarding how well government programs and policies are working and, when needed, recommendations to make government work better. We believe that investing in GAO produces a sound return and results in substantial benefits to the Congress and the American people. In the years ahead, our support to the Congress will likely prove even more critical because of the pressures created by our nation's current and projected budget deficit and long-term fiscal imbalance. These fiscal pressures will require the Congress to make tough choices regarding what the government should do, how it will do its work, who will help carry out its work in the future, and how government will be financed in the future. We summarized the larger challenges facing the federal government in our recently issued 21st Century Challenges report. In this report, we emphasize the critical need to bring the federal government's programs and policies into line with 21st century realities. Continuing on our current unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. We, therefore, must fundamentally reexamine major spending and tax policies and priorities in an effort to recapture our fiscal flexibility and ensure that our programs and priorities respond to emerging security, social, economic, and environmental changes and challenges in the years ahead. We believe that GAO can be of invaluable assistance in helping the Congress address these challenges. This testimony focuses on our (1) performance and results with the funding you provided us in fiscal year 2004, (2) streamlining and management improvement efforts under way, and (3) budget request for fiscal year 2006 to support the Congress and serve the American people.

What GAO Found

In summary the funding we received in fiscal year 2004 allowed us to audit and evaluate a number of major topics of concern to the nation and, in some cases, the world. We also continued to raise concerns about the nation's long-term fiscal imbalance, summarized key health care statistics and published a proposed framework for related reforms, and provided staff support for the 9/11 Commission. In fiscal year 2004, we exceeded or equaled our all-time record for six of our seven key performance indicators while continuing to improve our client and employee feedback results. We are especially pleased to report that we documented $44 billion in financial benefits--a return of $95 for every dollar spent, or $13.7 million per employee. In fiscal year 2004, we also recorded 1,197 other benefits that could not be measured in dollar terms including benefits that helped to change laws, to improve services to the public and to promote sound agency and governmentwide management. Also, experts from our staff testified at 217 congressional hearings covering a wide range of important public policy issues during fiscal year 2004. Shortly after David Walker was appointed Comptroller General, he determined that our agency would undertake a transformation effort. Our transformation effort has enabled us to eliminate a management layer, streamline our organization, reduce our overall footprint, and centralize many of our support functions. Currently, over 50 percent of our support staff are contractors, allowing us to devote more of our staff resources to our mission work. We recently surveyed managers of agency support operations and identified additional activities that potentially could be filled through alternative sourcing strategies. In fiscal years 2005 and 2006, we will further assess the feasibility of using alternative sourcing for these activities. I would be pleased to brief you at a later date on our preliminary analyses. In developing our fiscal year 2006 budget, we have taken into consideration the overall federal budget constraints and the committee's desire to lead by example. Accordingly, we are requesting $493.5 million which represents a modest increase of 4 percent over fiscal year 2005. This increase is primarily for mandatory pay costs and price level changes. This budget request will allow us to continue to maximize productivity, operate more effectively and efficiently, and maintain the progress we have made in technology and other areas, but it does not allow us sufficient funding to support a staffing level of 3,269--the staffing level that we requested in previous years. Even as we are tempering our budget request, it needs to be acknowledged that there are increasing demands on GAO's resources. While we have reduced our planned staffing level for fiscal years 2005 and 2006 in order to keep our request modest, we believe that the staffing level we requested in previous years is a more optimal staffing level for GAO and would allow us to better meet the needs of the Congress and provide the return on investment that both the Congress and the American people expect.