Mr. Chairman and Members of the Committee:

We are pleased to be here to discuss solutions to serious management problems that needlessly cost billions of dollars in taxpayers funds and result in huge missed opportunities to improve service to the American public and ensure adequate accountability for federal operations.

This Committee continues to be a vitally important driving force in efforts to effectively implement much needed management reforms. Important recent legislative initiatives initiated in this Committee and enacted by the Congress provide the framework for the actions needed to bring about lasting solutions to serious and long-standing federal government management problems. Determined follow-through by agency managers and sustained attention by the Congress, however, are essential ingredients to translating these critical reforms into the reality of reformed day-to-day management practices across the spectrum of the federal government’s operations.

GAO’s mission is helping the Congress in its efforts to improve management of our national government. One approach has entailed identifying critical management problems before they become uncontrollable crises. Since 1990, we have produced a list for the Congress of areas that were identified, based on GAO work, as highly vulnerable to waste, fraud, abuse, and mismanagement. To help solve high-risk problems, we have made hundreds of recommendations to get at the heart of these problems, which have at their core a fundamental lack of accountability.

This list helps focus attention of the administration and the Congress on critical management problems. The high-risk designation has prompted agencies to take action in many areas, and progress in addressing management problems has ensued. The need to address fundamental management problems also was a factor in prompting the Congress to enact important reforms such as (1) the 1995 Paperwork Reduction Act and the 1996 Clinger-Cohen Act to better manage investments in information technology, (2) the Government Management Reform Act of 1994, which expanded the 1990 Chief Financial Officers (CFO) Act’s requirement for financial statements and controls that can pass the test of an independent audit, and (3) the 1993 Government Performance and Results Act (GPRA) to better measure performance and focus on results. This legislation forms an integrated framework that will help agencies identify and monitor high-risk areas and operate programs more efficiently and will assist the Congress in overseeing agencies’ efforts to achieve these results.

At the beginning of each new Congress, we update our high-risk list. Areas are removed from the list as improvements develop and progress is made, and new areas are added to highlight burgeoning problems. Our latest update of high-risk areas was issued last month. The 25 areas that are the current focus of our high-risk initiative are listed in attachment I and the reports included in our 1997 set of high-risk reports are listed in attachment II.

In brief, we reported that agencies are taking high-risk problems seriously, trying to correct them, and making progress in many areas. The Congress also has acted to address several problems affecting these high-risk areas through oversight hearings and specific legislative initiatives. Full and effective implementation of legislative mandates, our suggestions, and corrective measures by agencies, however, has not yet been achieved because the high-risk areas involve long-standing problems that are difficult to correct.

Through the set of reforms embodied in the CFO Act, GPRA, and the information technology initiatives, the Congress has laid the groundwork for the federal government to use proven best management practices that have been successfully applied in the private sector and state and local governments. These reforms will not produce lasting improvements, however, without successful implementation by agencies and relentless congressional involvement. The next few years are critical; agencies are in the formative years of implementing the expanded, governmentwide mandates of the CFO Act and GPRA and in the first full year of carrying out the new information technology mandates. Congressional attention, such as that shown by this hearing, is pivotal to achieving meaningful improvements.

The following sections outline actions needed to solve high-risk management problems. Fixing these problems can result in the government (1) saving billions of dollars, (2) making better investments in information technology, (3) managing the cost of government more effectively, and (4) improving performance and service to the public.