tv Politics and Public Policy Today CSPAN April 15, 2016 3:00pm-5:01pm EDT
peacekooemg keeping than war fighting and that's why he thought the eu defends arrangements were so attractive. i pointed out to him you can only be a peacekeep fer there's peace to keep. that sometimes requires you to fight or die and certainly to spend for it. this is the other point when it comes to funding. of the 9$900 billion budget of nato this year, the united states is contributing $665 billion. that's 7 % of the budget from the u.s. alone. the european union countries within nato contribute 24% despite the fact that's 500 million people out of 900. if you take the uk's contribution out of that, it's only 17% that the eu countries, members of nato actually contribute. to go back to mr. getham's excellent question earlier, which is why do so many european members of nato want britain to stay in the eu? they want to keep britain's budget in because it adds to the
eu's pretensions without adding anything to the strength of the alliance. >> if the british veto was removed by brexit, would it present an opportunity for the european union to get its defense act together in the same ways it's going to have to get its physical act together if it's going to save it's currency? >> on an extraordinarily optistic day, i might believe that and hope that a british exit might get the old men of bru brussels to change the direction of travel and opt the road map something more appropriate for today. and also that the european union might realize if they to want have any sort of offense, they have to put their hands in their pocket. but i'm afraid the experience in recent times suggest far too many of our continental european partners are taking a free ride on the american taxpayers, which
i'm afraid has a finite life span. >> one final question. please rank these in order of priority. scottish independence or british membership of the european union. >> european union second. >> thank you very much. i was interested in that. did we get that on the record? is there anything -- i want to thank our witnesses. is there anything you would want to say to pick up on the remarks made. >> in addition to what i said, it wouldn't just be russia that would welcome brexit, donald trump would welcome it as well. that's not an argument for brexit. >> on a number of occasions they mentioned the importance of a closed union. in one session of the house of commons i asked the prime minister if he could name one single issue where the united
kingdom was the sole basis of the decision. he said he would write to me. he did write to me but he couldn't name one. >> membership of the european union -- the donald trump is quite interesting because many things mr. trump has been saying is that he was going to have a 40% tariff against countries. in that appalling scenario of him having the ability to do that, i suspect i would rather be negotiating since he is the master of negotiation, as he constantly tells everybody. a marketplace of 600 million people facing him, then negotiating a bilateral agreement for somebody who's talking about 40% tariff buyers. >> i was really -- the question, the question about if the united kingdom left the european union, would that provide a risk that other countries who were
similar, for example, outside the eurozone, would they follow suit? i think the answer to the question has to be yes, initially. but without fundamental reform, without a change in direction, without consideration of the next generation of young europeans. but if britain would leave they might follow suit. i don't want the european union to fail. i don't want it to be within its judicial remit but i don't want it to fail. even if we're not a member, we'll still be affected by its failure. what i would hope is a british exit would be an historic wake-up call to those who are in charge of the european union before it's too late. >> thank you all very much, indeed. it's been an excellent session. and order -- >> 800,000 strong polish community voted down your poll of the year.
coming up live this evening on c-span, donald trump holds a campaign rally in hartford, connecticut. that state holds their primary on april 26th. watch mr. trump's rally live beginning at 7:00 p.m. eastern on our companion network, c-span. our live coverage of the presidential race continues tuesy night for the new york state primary. join us at 9:00 eastern for election results, candidate speeches and viewer reactions. taking you on the road to the white house on c-span, c-span radio and c-span.org. book tv has 48 hours of nonfiction books and authors every weekend. here's some programs to watch for this coming weekend. on saturday at 10:00 a.m. eastern, book tv is live from
maryland state capital for the 18th annual annapolis book festival. then john mueller and jon stewart talk about their book "chasing ghost goss" in which they examine the cost and efficacy of counterterrorism efforts. afterwards with ellen malcolm, she discusses her book "when women win: emily's list" which looks at the rise of women elected to public office. miss malcolm is interviewed by congresswoman maxine waters of california. >> we wanted to raise early money. we thought if we gave women credibility by raising early money, then they could go on and raise the additional money they needed to win. so, we were like little political venture capitalists. we were going to go out there. in today's terms we were the kickstarter for today's women. emily stands for early morning is like yeast. you make the dough rise. and we've been doing that every sense. >> go to booktv.org for the
complete weekend schedule. gao comptroller general gene dodaro testified on the oversight committee on his government's report of ways to -- they showed 12 areas of duplication or fragmentation in federal programs and activities and provided 59 new opportunities for cost savings. officials from the irs, defense department and centers for medicare and medicaid services testified on efforts to implement the gao recommendations. representative jason chaffetz chairs the committee.
the oversight government reform committee will come to order. the chair is authorized to declare a recess at any time. appreciate the group assembled today. this is always of keen interest, the duplication report. the government is so big, so wide, so expansive. we're talking about trillions of dollars in expenditures. we're always seeking ways to
make the government's dollar more efficient. this morning the government accountability office released its sixth annual report on opportunities to reduce fragmentation, overlap and duplication in the federal government to achieve financial and other benefits. and over the course of the six years, the gao has highlighted 250 areas of the federal government and recommended more than 600 corrective actions. we cannot thank enough the men and women who serve on the gao, the good work they do. doing hard work, looking under the hood. really coming up with important recommendations that we as members of congress desperately need in order to do other jobs properly. 41 of the corrective actions have been addressed and closed, which the gao estimates will save $15 million. this rooe report reveals can provide significant benefits to the public.
yet with only 41% of actions addressed, more obviously needs to be done. in taking action at just three agencies, the department of defense, the department of health and human services and the internal revenue service, if we did just those three, we would save literally billions upon billions of dollars. combine these agencies account for more than half of all federal spending in fiscal year 2015. more than half of all corrective actions in gao's reports are directed at these three agencies. yet all three agencies have more than 60% of the recommended actions still open. for example, the gao estimates the irs could save hundreds of millions of dollars in increased revenue by enhancing its online services. in 2013 the gao recommended the irs develop methodology for allocation of endorsement resources. the irs developed a methodology but has chosen not to implement it it costing taxpayers time and
money. the irs needs to explain refusal to take this corrective action. in a new area highlighted in this year's report, the irs is using a paper-based system to retrieve tips on noncompliance in public referral programs in nine different offices. gao estimates the coordination and information sharing could help the irs identify and collect billions in tax revenue. it shouldn't take a gao report to point out coordinating investigations prevent duplicative work and ensure taxpayer resources are used efficiently and effectively. in 2015 gao remitted the centers for medicare and medicaid services should ensure states report accurate and complete data on state sources of funds. seems fairly reasonable. the gao estimates that cms could save the taxpayers hundreds of millions of dollars but cms has not taken this action. and in 2013, the gao recommended the department of defense implement a plan to guide joint
basing, meaning multiple military services using a single base to achieve efficiencies. the dod has yet to complete this action even though it could save $23.3 billion over a 20-year period. why do we need to come back year off year to discuss the same actions? that's going to be in part what we discuss today. obviously, the federal government has an obligation not to waste taxpayer's dollars. we're pulling money out of somebody's pockets and give it to somebody else and use that. weaver got to be very, very cognizant of this wasteful taxpayer spending. all federal workers should consider it part of their job description to prevent waste and should embrace the role as few disharies for the american public. disagreements over policy can lead to disagreements over appropriate spending. the imperative to prevent waste is something we can all agree on on both sides of the aisle. when we know it's about waste and inefficiency, we have to act. this gao annual report provides
a road map to tackling the known waste and inefficiency is out there. we have a host of questions here. but we do look forward to and i want to maximize the time for member input. with that, lild toi would like recognize the ranking member mr. cummings for his opening statement. >> thank you, mr. chairman, for once again holding what has become a tradition for our committee and making sure gao's report gets the type of attention it warrants. this oversight is one of the core functions of our committee. today we will focus on gao's sixth annual report on du duplicative programs. they allow the executive branch and congress to work together to identity critical areas where we can reduce waste and make
federal programs more efficient. this report is interesting because it focuses on both the executive branch and congress. since 2011 gao's reports have consistently shown that congress has been doing far worse than the executive branch in implementing gao's recommendation. today's report is no different. it shows that congress could be doing much more to foster a more efficient, effective and accountable government. 81% of gao's recommendations. 81%. that's an impressive success rate in light of the budget cuts agencies have endured in recent years. congress, on the other hand, has implemented only about 46% of
the gao's recommendations. even with that 46% it's generous because gao gives congress credit for taking partial action by just moving a bill through committee even if it has not been passed in the house or the senate. chairman, during last year's hearing you thanked the gao for, and i quote, providing congress and the executive branch with a road map to achieve needed savings, end of quote. according to gao the administration has done a much better job of following the road map than we here in congress. specifically gao made 459 recommendations for the executive branch. and 372 have now been fully or partially completed. in contrast, gao has made 85 recommendations.
to congress. but only 37 of those have been fully or partially completed. the gao's new report highlights areas where congress could legislate right now to eliminate waste and duplication. for example, gao recommended congress pass legislation to protect private citizens who report tax fraud to the irs from retaliation by their employers. it is vital that we protect these whistle-blowers and reward them for their service. that is why in february senator baldwin and i introduced the warren act. our bill would increase incentives for people who blow the whistle on financial crimes, including misrepresentations of tax liabilities and public filings. the bill has been endorsed by many organizations, including
americans for financial reform, the afl-cio and the communication workers of america. and i hope congress can consider this bill this year. gao also recommended that congress lower the threshold requiring employers to electronically file w-2s to help the irs detect fraudulent refund claims. the gao's 2016 report also recognizes improvementses by federal agencies and has a number of recommendations for federal agencies going forward. for example, gao highlighted a number of success stories at the centers for medicare and medicaid services, including eliminated duplicationtive process, and process for identifying improper payments. cms helped recover nearly $657
million of improper medicaid payments in fiscal year 2015, according to the gao. on the flipside, gao found that the department of -- the feds still has 79 major weapon systems programs for total acquisition cost of over $14 trillion. dod spends $100 billion each year on these systems, but has failed to strategically manage those investments, resulting in inefficiency and waste. taxpayers and our troops deserve better than that. i want to thank all our witnesses today, to mr. dodaro, you and your talented staff provide a critical service to congress and the american people with this annual report, as well as with the work you do every day to help ensure our tax
dollars are spent wisely. and i hope that you will share with all of your employees how grateful we are for their pursuit of excellence and for them helping to provide us with road maps to make a difference. with that, mr. chairman, i yield back. >> thank the gentleman. we'll hold the record open for five legislative days for any members who would like to submit a written statement. we recognize our panel of witnesses. we have quite a few people to swear in, but we're first pleased to welcome gene dodaro, comptroller for the united states at the united states government accountability office. sir, we're pleased to have you come before our committee again. you're one of the mo more on important people we come here, your insight and commitment to these issues. again, i can't thank your staff enough for the great work they do behind the scenes. a number of those key staff people are here. we wanted to maximize the
opportunity for members to dive deeper into some of these issues and pursuit to committee rules we'll swear these people in. kathle kathleen barrett, mr. paul francis, managing director, acquisition and sourcing management team. mr. chris mihm, stajic issues team, miss nicky clowers, miss williams brown, community investment team. mr. phillip herr, physical director, physical infrastructure team. ms. barbara boberg, managing director, education workforce and income security team. mr. seto, forensic audits and audit team and mr. pouner.
my apologies if i didn't get all of those names proper. we also have mr. john dalrymple, deputy commissioner at the irs at united states department of treasury. mr. david tillotson, chief management officer at united states department of defense. and dr. patrick conway. doctor, you've got -- you've got a title here. acting principle director -- acting principal deputy administrator, deputy chief administrator for innovation equality and chief medical officer at centers for medicare and medicaid services at the united states department of health and human services. so, i thank you, again, for all of your good work and being here. pursuant to committee rules, all witnesses are to be sworn before they testify. those on the panel as well as those that accompanied mr mr. dodaro, if you would all rise and raise your right hand.
do you slemly swear or affirm the testimony you're about to give will be the truth, the whole truth and nothing but the truth? please be seated. please let the record show that all answered in the affirmative. we will ask those at the table to please limit your oral testimony to five minutes so we have ample time to answer questions. mr. dodaro, it's your discretion if you want to yield time to the particular individuals and questions. we have a seat there, if need be. mr. dodaro, you're now recognized for five minutes. >> good morning, mr. chairman. thank you, ranking member cummings, members of the committee. we're very excited to be here to discussion gao's sixth annual report and also other opportunities to achieve cost savings and revenue enhancements. in this report we introduce 92
new actions that the congress and the executive branch can take in 37 different areas. to give you examples, in the overlap duplication fragmentation areas, we highlight 12 areas. we found the defense department is procuring commercial services for satellites, and in the billion dollars they spent, about 30% of that was spent outside their central procurement agency by the different services and other agencies throughout the department. and as a result, in the central agency, the costs were about 15% less than purchasing it outside that central offices. so, we think there's better money to be saved there. tens of billions of dollars. we also found nine referral programs at irs for whistle-blowers and others to report improper activities that would give irs tips to follow up
for tax enforcement opportunities, and potentially additional revenue owed the government. these systems were manually operated. they were fragmented, weren't coordinated and there's a lot of opportunities to streamline and provide better communication to the people providing tips. also, we found there was some potential for dupetive health care system for people on medicaid or in the state exchanges. there's some amount of transfer time that could be made if people's income levels change or they become eligible for medicaid or the services, but we found activities outside that normal transition period, and we found better coordination would need to take place and better oversight by cms over the medicaid programs at the state level and with the exchanges. in areas of cost savings, revenue enhancements, we've got a number of recommendations this
year that are new. we have opportunities to save a lot of money in overpayments for disability programs by the social security administration. there are billions to be saved and revamping some of the payment policies that guide medicare spending. there's greater need for oversight to save. can you save hundreds of millions of dollars if not billions by greater oversight of cms over medicaid spendings and the state's activities. there's also millions that could be saved by the federal agencies having better access to excess personal property at dod and ammunition that's discarded but could be used by other federal agencies so we don't have to buy it twice in that process. and there's some fees that could be raised that haven't been raised in over 20 years to help provide more resources, in
particular, to deal with deferred maintenance in our national parks. to date, as mr. chairman mentioned, mr. cummings in their opening statements, congress and the administration have acted on many of our recommendations. the 544 we have made previously, 41% have been implemented. 34% partially. 20% not yet implemented at all. there are tens of billions of dollars in additional savings to be had in the offing here if those recommendations are fully acted upon. to date, as you mentioned, mr. chairman, your opening statements about $125 billion that have been saved or will be saved over the coming years. we're pleased that the congress has taken action. a lot of large dollar savings have come from congressional action. also in a number of areas where the agencies have taken action it's because of congressional
urging as well. but, there's a lot more that could be done. i'm very pleased to be here today to talk about those opportunities in addition to the new areas we've added to the list. thank you for holding this annual hearing. it makes a big difference in getting support. and i will pass on to our staff your thanks and appreciate for their hard work, mr. chairman, congressman cummings. thank you for your comments and be happy to answer questions at the appropriate point. >> thank you. mr. dalrymple, you're now recognized for five minutes. >> they've. chairman chef fets, ranking member cummings and members of the committee. i'm here to discuss findings of the government accountability office, gao, related to its sixth annual review of dumtive programs. we appreciate gao studies of the irs and its programs. their findings, insights and recommendations are invaluable to us as they help assure we are
successful in accomplishing our mission of collecting over $3 trillion annually. without independent auditors and evaluators, we could not be as effective. since fiscal year 2013, the government has -- including those highlighted in this report. between fiscal year 2011 and 2015, the irs received more than 2100 recommendations from gao and our inspector general auditors. gao recommendations accounting for roughly 30% of those. given the sheer number of recommendations the irs receives on a wide variety of areas, the reality of resource and budget limitations precludes us from taking every action recommended as quickly as we might prefer. the irs has to look at total universe of recommendations across the enterprise through a
larger lens and make strategic decisions about actions most important to address those audit findings. to-to-that end, we very much appreciate the initiative gao started this year where they review and prioritize the universe of open recommendations. this helps us better understand what they think are the most critical. overwhelmingly, gao and irs are on the same page. our top priorities are generally the same as theirs. this increases our confidence that we are accounting on the most important recommendations first. the first two irs programs, referrals and identity theft, are illustrative of the value we get from gao recommendations and the actions we take. irs referral programs which involve individuals and business
businesses alleged noncompliance with tax laws, gao study reported several areas needing improvements and we got right to work. we now have a team in place tasked with re-engineering parts of the referral process to be more streamlined and effective. in fiscal year 2012 through 2015, about 93% of information referrals did not lead to audits but about 7% did. this is a much higher overall audit rate hovering around 10% for the general population. what's more, the audits based on those referrals netted over $209 million in additional tax assessments recommended. what these figures reveal is our screening process is effectively identifying the productive referrals for audit. it's making an important contribution to tax administration. as a result of the gao recommendations, our referral processes are being stream lined and we'll be more efficient and
effective. while unique, relative to other referrals, the gao report on irs whistle-blower program offers a snapshot in time for a program under constant skrutd any for its processes that are continually refined. even before gao began its most recent evaluation on the irs whistle-blower program, we began addressing the major issues that were identified. the gao findings confirmed we were taking the right action in streamliningle process for claims, making dramatic reduction to the inventory of cases at particular phases of the process and instilling new leadership with a strong background in bringing about operational efficiencies. another irs program highlighted in this year's gao program is our identity theft program, which gao has continually reviewed in recent years and prompted important program improvements. as we confront the growing problem of stolen refund
fraud -- the irs has made this area a high priority and has been making steady progress. the additional $290 million in fiscal '16 funds awarded the irs by congress allowed us to allocate more resources to combating this insidious crime. about 2,000 individuals have been convicted on federal charges related to refund fraud involving identity theft over the past few years. using our improved filters, we stopped 1.4 million returns last year and kept criminals from collecting about $8.7 billion in fraudulent refunds. gchltd ao has been helpful in identifying areas where improvement to this program can be made. we've acted on those recommended improvements and looked for ways to strengthen our defense against this crime and stop the victimization of taxpayers and the entire tax system. be happy to take questions at the proper time. thank you.
>> thank you so much for your testimony, mr. tillotson, you're recognized for five minutes. >> thank you, mr. chairman. first of all, good morning to the chair, ranking member -- >> can you pull the mike a little bit closer to you? >> certainly. is that better? >> very good. >> thank you to the chair and the ranking member cummings, members of the committee, thank you for the opportunity to discuss the department's progress on addressing the general accountability's office findings related to duplication, fragmentation and overlap in the department. i also want to add my thanks to those of the chair and the ranking member to the honorable mr. gene dodaro and the gao for the work they do. candidly, while one is not always happy we can be doing things better, the truth is we all full well known we can be doing things better. my job description is to find those things. to be perfectly honest, having assistance in identifying opportunities bothers me not at all, so we look forward to our continued work with the
government accountability office. as assistant deputy office manager i provide advice to business opportunities and practices in the office with particular emphasis on finding efficiencies and overhead. so, clearly, our intent of my office and mr. dodaro align very well. last year the deputy secretary asked the dcom office to put together a series of efficiency initiatives that would help free up needed funds to meeting emerging needs within the top line of the department. initiatives we're leading include headquarters reduction, service contract requirement reviews, information technology on optimization and business optimization to include changes in commissary. we've been working on select business processes to include the hiring process, conference approvals and the process for promulgating dod initiatives. when completed they're result in $7.7 billion in forecasted
savings from fy17 to '21 and further reduction of 25% of headquarters costs. several of these topics are areas that were identified in previous gao report or in the current 2016 report. the department appreciates the gao's work in this area. the gao identified a total of 101 recommendations directed solely to the department in its first annual reports from 2011 to 2014. we've fully addressed or partially addressed 87 of these recommendations. we've partially -- fully or partially addressed 47% of those. i fully acknowledge that means we have more to do. we will continue to make progress. one significant area we made significant progress is in the area of dod contract management for acquisitions. in its report published 2015, the gao recognized progress made
noting the departmental leadership has taken significant steps to plan and monitor progress over the last several years. as a result, the gao made a decision to remove contracting techniques and approaches from the scope of the dod contract management high-risk areas. another example of the department's progress, and it aligns with the recommendation made in the 2016 report, involves the management of leased space. in 2014 the department using a baseline of 5.4 million square feet of dod occupied space in national capital region set out to reduce that space. our initial plan calls for reduction of 1.2 million square feet prior to 2020. to date we've eliminated 267,000 square feet of leased space use in the national capitol region by using better use of government space. we plan to get an additional 860,000 square feet by 202 which will save $43 million a year. in addition to those 14 efforts, we'll look more broadly across the entirety of dod property and
broadly across the country. so i happy more progress in that area. mr. chairman, ranking member, the department looks forward to be continuing to work both with this committee and with the gao to continue to implement recommended actions. we take our duty to be a steward of the taxpayers' dollars very seriously and we look forward to continuing to work on the opportunities identified in the 2016 report. thank you. >> thank you for your testimony. dr. conway, you're recognized for five minutes. >> thank you. chairman chaffetz, ranking member cummings, thank you for the opportunity to discuss medicaid operation of the medicare and medicaid programs. we share this committee's -- stewards of medicare and medicaid marketplace and the children's health insurance program, cms is serving almost 140 million americans and we want these programs to be as effective and efficient as possible. we review the gao- we view the gao as an important partner in
these efforts and appreciate and take seriously gao's work and their recommendations and are working to address and implement them. we are making important progress in our efforts to reduce duplication, improve efficiency and protect taxpayer dollars all while providing our beneficiaries with high-quality care. we implemented 38 gao recommendations and implemented 100 further recommendations to gao. one of our driving forces at cms is the way health care is delivered in this country, based on quantility rather than quant. now an estimated 30% of medicare payments are tied to alternative payment models and millions of american patients are benefits from better coordinated, improved quality of care. our work to reduce hospital acquired conditions such as ulcers, infections, avoidable traumas represents over 87,000 lives saved and an estimated $20 billion in cost savings. we've seen an estimated 565,000
fewer hospital readmissions meaning beneficiaries didn't have to experience an extra hospital stay and medicare did not face extra expenses. cms has taken several steps over the past year to improve transparency and supplemental payments around medicaid and around the research and demonstration programs used for states to pursue innovations. we are collecting annual upper payment limit data which provider specific information and continued methodology with statutory requirements. all section 1115 demonstrations are available publicly and includes specific terms and conditions that must be followed as a result of the demonstration. we've also identified and made publicly available the criteria we're using. as health care delivery system moves towards more impe greated care, more states are using managed care to serve medicare beneficiaries. recognizing these changes we proposed improvements, aligning it with medicare plan,
supporting state delivery reform, promoting quality of care, strengthening program and fiscal integrity, incorporating best practices and enhancing beneficiary experience. a commitment to program integrity underpins all our work. cms is way from a so-called pay and chase model to one focused on prevention. today we're utilizing an lettic technology, the fraud prevention system, to identify leads, to further protect the medicare program for inappropriate billing practices. in the first three years of implementation, they identified 820 $million in inappropriate payments and in calendar year 2014 alone the fbs had a 10 to 1 return on investment. at the direction of congress, cms aa-s using risk based screening of providers and suppliers to screen providers upon enrollment and identify those at heightened risk for committing fraud. this has saved $2.4 million in avoided costs.
we have deactivated billing privileges for more than 540,000 providers and suppliers that don't immediate medicare requirements and revoked an additional 40,000 plus providers and suppliers since 2011. perhaps most importantly, increased screening efforts have allowed cms to deny over 7,000 applications in the last 12 months preventing these providers from ever submitting a claim. we're also increasing our site investments to medicare enrolled suppliers and providers. cms is dedicated to protecting care, reducing health care costs and providing people access to the right care at the right time when and where they need it. this includes continually strengthening and improving medicare and medicaid programs that provide vital services to millions of americans. we look forward to working with both the gao and this committee toward our mutual goals of providing value and quality to all the beneficiaries we serve and taxpayers. thank you. >> thank you, dr. conway. thank each of you for your
testimony. i'm going to recognize the gentleman from tennessee for a series of questions. but before i do that, i think it's important as we look at this particular issue and duplicative services and recognize one of the best assets the federal government has and that's its employees. it's easy to start looking at on inefficiencies and problems and undermine really our federal workforce, so i wanted to go on record to say, a thank you to the 99.5% of the federal workforce that does an outstanding job each and every day. and sometimes we focus on that 0.5% and paint a very broad brush. i don't want this hearing to do that as we really look at meaningful ways to make sure that we have a cost safings. with that i would recognize the gentleman from tennessee, my good friend, mr. duncan, for five minutes. >> well, thank you very much, mr. chairman.
thank you and chairman chaffetz for calling this hearing, an annual hearing that i think is one of the most important hearings we hold each year. mr. dodaro, i think the work your agency does is extremely important and valuable for us. i have several different questions. i don't have time to get into all of them, but we have background information from the staff that says the department of defense now has weapons acquisition programs that total $1.3 trillion, spending over $100 billion annually on weapon system acquisition. i know you've put out several recommendations over the years and especially in 2011, the report saying it was very inefficient to their weapons acquisition program and there were duplications and so forth. do you think that the department of defense has done enough in regard to your recommendations that you've made on that in the
past or could there be additional savings in that area? >> i think they can definitely do more. we've appreciated what they've done. they've adopted some of the best practices recommendations we've suggested. they've begun looking at things. but i'm concerned that some of the reforms haven't been implemented very consistently over time. i ask mr. francis, who's our expert in this area, to give you a more thorough answer. but there's more that could be done. >> all right. >> good morning, mr. duncan. yes, one of the thins we've talked about is portfolio management, which is basically an approach for the department to look at its weapon system portfolio as a whole. because one of the looming problems for defense is when you get beyond the next five-year plan, there's much more demand for money for weapons systems than there's money available. and so the department has to
take a more wholistic look across weapon systems to see what the best mix of investments are for them. right now the department has multiple processes that are fragmented for budgeting requirements and acquisitions. and the services all do their own things so we pretty much has a process that optimizes for individual weapons systems but but we need to look for across the board. >> thank you very much. week before last i was on a trip with three senators and another member of the house. and we met with admiral harris, who is the head of the pacific command. and we were -- we were talking about the problems the defense department is facing in acquiring some of the more expensive weapons and things that they need. and we talked about how the costs have been shooting way up, have been in the pay and benefits and so forth. and many top leaders have talked about that problem, how it's cutting into being able to buy the equipment they want.
and admiral harris said that he thought they needed to -- we needed to have another brac. mr. tillotson do, you have any opinion on that? also, mr. dodoaro, if you looked into that. >> surely. it is the department's position that another round of brac would be appropriate. leased space and underutilized space makes using better use of the space we have. we agree with that. having said that, there's a large amount of space that is more industrial and involves a lot of bases at this point that are largely underutilized. we believe there's excess capacity that could be review sod we would endorse another round of brac. >> there's definitely excess property. our work, though, focused on reviewing past brac rounds, have shown that the department needs to make additional improvements
in its methodology for estimating brac, you know, savings and actually bringing those savings to realization. the initial estimates are far in excess of what d.o.d. eventually achieves through the brac rounds due to continual changes and requirements and everything. so, our opinion, if congress decides to grant them their request for another round of recommendation -- another round of brac, they really need to implement our recommendations so that congress has assurance that there really at the end of the day will be the savings that should be achieved through any process. we have many outstanding recommendations that the department has not yet implemented in this regard. >> before my time runs out, you mentioned potentially saving billions on social security disability payments. will you tell us about the -- what needs to be done in that area? >> yes. right now people can receive full disability benefits and
unemployment benefits at the same time. now, there's some ability -- if somebody's on disability, they can give permission to try to work, because, obviously, we want them to get back to work. but if they take a job and then they're eventually laid off from that position, they can collect both benefits. we don't think that this is a prudent use of the federal government's money, to give both full disability benefits and unemployment benefits at the same time. cbo's estimated, i believe, they could save $1.3 billion over a few year period if this change is made. >> all right. thank you very much. mr. chairman. >> i thank the gentleman. the chair recognizes the gentleman from pennsylvania, mr. cartwright for five minutes. >> i thank chairman meadows and chairman chaffetz for calling this important hearing. mr. tillotson, one of the issues gao included in this year's
duplication report is dod's storage of occupational and environmental surveillance data. am i correct in that? >> yes, that's correct. >> can you explain what the term means, occupational and environmental surveillance data? >> certainly. as the department conducts its industrial activityings, there's a requirement commensurate with osha standard that we collect information on any conditions that may eventually cause us to have to go back and look at impacts on the workforce or impacts on the work environment. >> so, this has an impact on active duty servicemen and women and also veterans, am i correct in that? >> that's correct. >> so dod uses this information to track biological, chemical and physical health hazards to our servicemen and servicewomen, right? >> that is correct. >> all right. what benefit does dod get from collecting that type of information? >> so, two benefits come out of it. first of all, we collect it if
we link environmental issues with impacts on active duty or service members or even civilian workers, then it allows us to take corrective action to ensure that the this is an active area that got great attention with significant investment. >> thank you for that. i think you just touched on it. department of veterans affairs makes use of this type of environmental and health information to establish disability benefits for veterans. am i correct in that? >> mr. dodaro, thank you for
being here as well, and all your good work. according to gao, it's not clear that the quality of the data that's being collected is reliable and a report issued in may 2015 gao said -- and i quote, some of the military services have developed their own guidance, resulting in inconsistent approaches and levels of effort, which has reduced dod's ability to be confident that the data are sufficiently reliable. have i read that correctly? >> that's correct. >> does it concern you that dod doesn't know if the data it's collecting is accurate? >> yes, it does. >> gao recommended that in that 2015 report that dod establish clear policies and procedures for performing quality assurance reviews of the data collected. dod responded it needed additional resources to clarify
policies. is dod taking action to improve the quality of the data it is collecting? >> yes. we are, in fact, doing that. new policies are, in fact, in draft due to be issued this year. we did make the resources available to do this. we, like you, felt this was an important undertaking to put in place. we have tied that into our broader issues of increasing standardization of medical practices across the department. the establishment of the defense health agency, the establishment of the defense health program appropriation have all been value-added activities. this body, this congress has acted on those in prior years. >> thank you for that. separate from the question of quality is how the information is processed and whether that's being done efficiently. according to the gao report, oehs data is stored in two different database systems. mr. dodaro, did gao identify problems with the use of two
separate systems? >> i'm going to ask ms. clowers, head of the health care team, to respond. >> yes, sir, we did. as you mentioned there were two different systems referred to as measles and doors, in which data is stored. we found the potential for duplication of entry of data and importantly that you couldn't get a comprehensive sense of the issues being raised by the data. >> so two separate systems. mr. tillison, why is dod using two separate systems? >> this is part of the corrective actions we have under way in the broader medical community. prior to establishment of the defense health program, prior to more integration across the department, medical practices were run largely in the military department. >> i want to jump in here. it's been more than ten years since gao highlighted the issue of problems with dod's management of occupational health data. mr. tillotson, why is it taking
so long to fix the problems? >> i can't give you a satisfactory answer. we are looking to resolve the issue. >> look, we owe it to our service members, active duty men and women and veterans, to collect this information accurately, fix these problems. and i urge you to give it your full attention. >> thank you, congressman, we will. >> i yield back. >> i thank the gentleman. the chair recognizes the gentleman from florida for five minutes. >> thank you for holding this hearing. some of the waste and in efficiency of the federal government is identified annually by gao. appreciate what you have done, mr. dodaro, of bringing this to our attention. couple of areas. first, to sum up dod's -- you probably have one of the biggest hawks in congress. i vote for everything. i voted for the omnibus.
we cut, cut, cut dod. i sit in the hearings and in the national security subcommittee on the panel. been on it since the beginning of time. i see more and more waste. i see another report, mr. dodaro, that dod -- in fact, its inventory of properties and assets is almost nonexistent. is that correct? >> we have been very concerned about the lack of good information -- >> yeah. they don't have a good inventory even with the properties and assets. this report highlights it again. that's a concern. we have billions of dollars worth of assets both domestically and internationally. we can't even account for it. so, again this is troubling. now, the other thing, too, is work with some of the folks
in -- we worked with some of the folks in the dod committee, authorization committee. we did substantial acquisition reform, and you talk about procurement and acquisition. that's part of the problem, isn't it, sir? the procedures, they're cumbersome, outdated, bureaucratic, red tape. sometimes you don't get the best buy for the taxpayers. is that right? >> it's also a problem if you don't know what you have, what condition it's in, what -- >> those are the assets but acquiring new assets is just as bad. one thing that concerns me as we pass reforms, it takes a while to implement and i met with some of the folks, i have one of the biggest acquisition activities in assimilation and army down in my district.
i sit with the folks, we pass this stuff last year. well first there's no secretary of army in place, or there hasn't been. then there's no chief of staff. and then there's no one over the programs, you've got these vacancies, which is part of the problem. and i ask, have you implemented the acquisition reforms? no. it's sort of no, no, no. or are they in place? no no no. or the decisions are somewhere in the chain of command. maybe mr. tillotson. can you tell me what's happening there? >> certainly. on the inventory i agree with mr. dodaro, the inventory is not as it should be, it's part of the broader audit status of the department and in fact we're meeting with the omb folks to talk about the progress, which will include inventory.
it's an area we're aware of. >> an inventory we can't even audit. >> right, you have to have full existence. >> that's troubling. >> we agree. on the issue of acquisition reform, mr. kendall has moved out quickly with the new guidance. to put some of those new procedures in place. i would respond a little bit to mr. dodaro's earlier remarks about strategic portfolio management. we agree, in fact over the last three years, the deputy secretary of dense has led a strategic portfolio review. on an annual basis. so not only are the reviews done within the military departments across their military space, but then it comes to a department level where the vice chairman of the joint chiefs, the deputy seskt of defense and all the agencies do a strategic review of all the investments and investment plans, to your point
and mr. dodaro's point we can rationalize investments going forward. >> we have a bill that deals with property disposal and management. how many people in the audience own property? raise your hand. almost everybody, right? would you have the federal government manage that? hell no. you'd be nuts. we do that. and the biggest property owner is, probably the biggest one is d.o.d. you can't get anyone to make a decision to dispose of property. we have 177,000 acres at nasa sitting there, an extra 16,000 acres with the air force, i'm trying to get 400 acres surplus property to transfer to do a commercial cargo center next to our port in canaveral, not even in my district 5, 000 jobs it
would create and i've been working on it for four years. the other thing you've got to do is get some permanency to some of these military people. i'm on my third commander, they change them every two years. we need to get these guys, three years at least, maybe four, some stability to the process. dealing with incompetent people in the past. then i get someone competent, i get a second competent. but they're gone. how can you manage anything with the turnover that we have? just the little frustration, mr. chairman. it drives me batty. >> did you see what the private secretary dr last week in landing that booster rocket on the barge in, you got to look at that and see what the private sector can do. when we unleash the private sector. god forbid we should give them a lease on doing things with private property and moving projects ahead. thank you, i yield back the balance of my time. >> i thank you the gentleman
from florida, i know excess properties has been something that's been a priority for the gentleman from florida for a long time. >> the bill that we're passing, i don't know if i said it, does not apply to dod. the one that everyone has been working on. and that's something we need to look at. >> the chair recognizes the gentle woman from illinois, ms. kelly, for five minutes. >> thank you, mr. chair. dr. conway, last year the united states spent over $1 trillion on health care and health-related expenditures, i think we can all agree there's ways to increase efficiency. i'm chair of the medicare brain trust. this is something i'm very interested in and meet with people that are concerned about the future of medicaid and medicare. i want to start by clarifying what is covered by the term "improper payments"? improper payments covers both overpayments and underpayments, is that correct? >> that is correct. so improper payments is both overpayments and underpayments. >> and improper payments can include payments made to fraudulent claims and it can include legitimate claims that include mistakes, is that right? >> yes, it can. a proportion is fraudulent claims, but the majority of improper payments are actually due to documentation or other
errors in the submission of the claim that was for on further review, often legitimate medical service. >> one area gao identified for potential duplication is in health care coverage for people who are hovering around the poverty line and moving between medicaid and the federally subsidized coverage provided through the affordable care act exchange. in the report gao released today, it said that hhs concurred with gao's recommendations and highlighted the actions the department has already taken to insure the accuracy of medicaid eligibility determinations made through the exchanges. what steps has cms taken to ensure the recipients of medicaid or federal subsidies are not receiving duplicative coverage? >> we appreciate the gao's work here. let me describe briefly some of the steps we've taken. one, the account transfer process, we have accounts transferring between marketplace and medicaid, working closely with our states and private health plans on a daily basis. we now review account transfers on a weekly basis.
in terms of duplicative coverage, either by medicaid and marketplace, the most common reason for this, somebody may have marketplace coverage. lose their job and qualify for medicaid. we do what's called data matching with the states. we've been working closely with the states, as they have a critical role here. we are doing periodic data matching now. so we continue to work through the set of issues both testing systems with states and private health plans. both at the federal and state level. and through data matching, and using data reducing any people that may have coverage in both in marketplace and medicaid at the same time. >> okay. another area was how cms verifies the eligibility of medicare providers and
suppliers. they found without better stronger controls and better verification, cms may be making payments to providers without a legitimate address, whose licenses have expired or been revoked, or in some cases have actually died. one recommendation made was to upgrade the software. >> yes. thank you for that question. we are doing that. we agree with the recommendation, we're updating the software. we're doing four major actions in this area. one, the software updates for address verification. and other verification modalities. two, increased site visits, so that we are visiting sites at an increased frequency. three, more continuous monitoring of data and checking with postal data and other sources in terms of the enrollment process. so we are upgrading our systems, and using data to address these program integrity issues. >> do you have enough people in
the right people in place to carry this out? >> thank you for the question. you know, managing resources in the federal government i've managed both in the private sector and the federal government. is incredibly challenging. we have you know, in total approximately 6,000 cms employees. trying to manage a program of huge scope and complexity. i think whether it's program integrity or quality arenas or other policies or marketplace medicaid, we have a staff and i appreciate the comments earlier. that i think is mission-driven. wants to deliver on that mission. when you look at the employee viewpoint survey, that comes across clearly. another thing that comes across, they don't feel they always have the resources, training and ability to improve the system as much as they would want. >> and just quickly, mr. dodaro, any comments about what you've just heard or anything you want
to add? >> no. i'm very pleased that cms has taken action on a number of our recommendations in these areas. there are still some outstanding recommendations, particularly as it relates to medicaid. i'm very concerned that we've not had a good oversight over the managed care portion of medicaid at the state level. cms is in the process of instituting a process that will provide more audits of what's going on in the medicaid -- managed care portion of medicaid at that level. i'm still concerned that we have a disagreement with them about the definition of budget neutrality for demonstration projects. the ones that we've looked at, we don't believe have been budget neutral. and that's costing tens of billions of dollars in additional money. they've made their criteria more transparent, as dr. conway says. but we don't agree with the implementation of the criteria.
that we've seen in those areas. there's also many things that we've recommended that congress could do to streamline spending in medicare and medicaid program as well. so we're pleased, we've had ongoing dialogue with cms. we plan to continue that and to press for full implementation of our outstanding recommendations. >> thank you, and i yield back. >> i thank the gentlewoman. the chair recognizes the gentleman from michigan, mr. wahlberg, for five minutes. >> thank you, mr. chairman and thanks to the panel for being here and mr. dodaro, thanks for the heavy lifting and sharp pencilling and pinpointing that you continue to do. one man's opinion, an over-large federal government, but nonetheless. one area i'm interested in is the unobligated balances that are out there, some staggering
in nature, at least to my opinion. is there any value to allowing agencies to hold excess appropriations to the next physic fiscal year? and i guess i would add quickly. at what point does it become a problem? >> i think agencies need -- and it depends on the program and activity. so it's variable. they need to have a little bit of a potential buffer, depending on the nature of the programs. but the ones we looked at, they had set criteria for what they thought they needed. in addition to appropriations. they were well above their own criteria. that's why we called that excess. you know, so the amount of unobligated balances that we had pointed out in those areas are ones that in our view, should be dele obligated or rescinded by the congress.
>> how did -- and specifically, let me get to a specific one here in the state department, one area i've been in fact dealing with back in the district. the counselor and border security programs. it was $440 million over its target for unobligated balances in fiscal year 2014. how did that account end up $440 million over target? >> very often these types of programs, the consular service over at the state department, environment or department of energy was another, will have spending obligations or needs that will cross fiscal years. our point to this is they've had targets they've put in place, the amount of money they need to have each year to handle that type of flexibility or to understand that their spending will cross years. when this is way out of whack, as it was with consular services, as it was with parts of the department of energy,
they need to be able to roll that back. or at least they need to have greater transparency and understanding as to what money they actually need, how they're going to spend it and then give, be publicly reporting on where they are on that. >> i guess my concern would be, if that be the case -- and they set a 25%, why not fix the problem by next year to saying we're going to set it at 40%? that doesn't seem to get in touch with reality of trying to live within one's means and truthfully, set those targets. >> well, setting it at -- you know, they could move it each year and say we're going from 25% to 40% or even down beyond that. what the goals -- again, these are goals that they have set for themselves. these are based on historically what they think they need to carry over from year to year. >> and they have to justify it?
>> yes, but not at the level we think there should be that level of transparency. that's the whole point on this. >> one of the things we do every year, congressman, we scrub a lot of these accounts and provide the information to the appropriation committees. and in some cases, the appropriations committees will not approve additional money, if there are large carryover balances. so we keep an eye on these activities quite a bit. and the agencies have to and the agencies have to justify it. but we try to flag these for the appropriators, so they can focus on whether or not to take action. >> have any customs and border patrol officials been held accountable for as i see here, 2012, 2013, 2014, right around 40% has been where they've ended up over target. any accountability thus far? >> not -- typically there isn't accountability at an individual level on this, or even an institutional level. what we're talking about is improving management processes
that get a better transparency and better management over time so that you don't -- there will be fluctuations, sir, is exactly what you're saying, that's to be expected. what we do want to see is that if you set your own targets, you ought to be able to pretty consistently hit those targets. and if not, have good explanations to the congress and others as to why a particular year was an anomaly. >> another problem -- and thank you for that answer. another problem the state, for instance, in their area of fraud prevention, they claim that they have the level of balance developed because fraud prevention activities, fees, could only be spent on anti-fraud activities. they didn't have enough fraud to spend it on? do they have that significant problem and not being able to use the funds in other portions of their budget or processes? >> what we found, sir, when we
look at all agencies and across government and state is no different than this, is that there are very, very often internal control weaknesses that are in place and opportunities for agencies to tighten up their anti-fraud activities. we think within the parameters of the 25% that that's something that state or any other agency ought to be able to improve internal controls with that amount of resources. >> i see my time is expired. i yield back. >> thank the gentleman from michigan. the chair recognizes the gentleman from arizona for five minutes. >> thank you, mr. chairman. mr. dalrimple, in your written testimony, you state that the irs is making steady progress on a vast mantle of options recommended by the gao, in 2013 the treasury inspector general for tax administration recommended that the wage assessment division. why has the irs not acted on this recommendation yet?
push your button, please. >> we have begun acting on the gao recommendation. we have a team of folks from across our various organizations looking at the referral program. we intend within the 60 days from date of the report to actually put together a timeline. our intentions at this point in time are to limit the number of organizations that have referrals. in other words, we intend to bring the referral process down to, you know, one centralized activity. and our intention is to at some point in time in the very near future have an online opportunity for taxpayers to make referrals. so we're, we're looking at all of the recommendations that have been made, both by the gao and the treasury inspector general
for tax administration. and i believe we're going to be quite responsive to, to the issues that have been raised. >> well you know there's an old adage, trust is a series of promises kept. the irs is behind the eight ball on that one. can you explain why the irs has failed to better coordinate and share information between programs? >> well, a lot of these programs grew up over time. so for example -- >> i know. when it's happening is that you should have a constant evaluation and predicate as an ongoing exercise. >> programs grew up over a period of time. now should we have looked at that and addressed it earlier? i think we should have. the fact is that my view of this is that the auditors were very
helpful in terms of focusing our attention on this. and now that we focused attention on it, we're taking action. >> and so we can expect some results here shortly? >> absolutely. >> okay. mr. dodaro, as you may know, fraud within and throughout the va is rampant. with regards to unemployment benefits, why doesn't the va use irs data to verify applicant's self-reported earnings? >> i'm not sure. i don't know if we -- i'll have to give you an answer for the record for that. >> i appreciate that. i'm going to go to a second one. what does the va need to do to make sure that the process for determining unemployment eligibility is applied uniformly? >> i'm sorry, on this one, on the va one, i'm going to have to get back to you. >> this is critical. i love you guys, but the va is a mess. and absolute disgusting mess. and we need some actions in
regards to this. and you know it behooves us to have those ideas, the facts so that congress can address those. >> we will get you the facts. i'll get you an answer today. but, you know, we agree in terms of the criticality of the va. i added them to our high risk list last year in terms of health care that need to be, needs to be addressed. >> we would also like to have some models that they could follow. so we're not reinventing the wheel for them. so i think they need some parenting outright. i'm going to bring up another one. is the prevailing wage. i believe in a fair wage for a fair job that's fair to the taxpayers. but we've seen a huge rise in the number of businesses going out of business. because of the department of labor in regards to the calculation of prevailing wage. this is a huge issue across the country. do you see an equitable aspect? just recalculating this in a very transparent fashion? >> yeah. we haven't looked at that issue in a while. so, i'd have to go
back and take a look. we did a long time ago. but it's been a number of years since we've had the resources to be able to look at it again. >> we would love you to. because i think from the standpoint, as long as it's a transparent schedule, which has been the major complaint for particularly smaller business, along the lines with -- in my district, in my state, we've had a lot of subcontractors, small contractors put out of business in regards to working with the department of defense. and this would be something that i think that, i think both sides could go along with, making sure that it's a transparent schedule, a fair wage for a fair job, fair to the taxpayer. >> we will take a look at that. i understand your concern. >> i appreciate it. thank you for what you do. >> sure. >> i yield back. >> i thank the gentleman. the chair recognizes the gentleman from north carolina, mr. walker, for five minutes. >> thank you, mr. chair and others for being here today.
i've got a couple of questions, i'd like to start with mr. dodaro. why is the referral process being conducted by hand, and through the mail? isn't this in an archaic, out of date process? can you speak to that for a minute? >> yes, it is archaic. and particularly given the volume of complaints, i think the one information referral office had 87,000 referrals one year. and so they're annually reading them. but then when they refer it to another part of irs, they manually look at it again as well.
so i'm very pleased, as mr. dalrymple indicated, they're going through an online electronic process. but this is outdated. >> so mr. dalrymple, will you talk about the plans to move it online? can you give us a little more specificity what it looks like in a timeline? >> we're just in the planning stages right now. so i really can't give you any more specificity about exactly what it's going to look like. we have to engineer the process. et cetera. but it's pretty clear to us that our process isn't working for either the taxpayers or for us at this point in time. so we're going to make some major changes to that program. >> and i hear that it sounds like you have so the great intentions there. but in your forecasting, is settle any kind of timeline. i know you said you're talking about some plans. can you be a little more specific? >> we'll be responding to the gao report in may. and at that point in time we'll have a timeline together that will lay out what we're going to do and the timeline for getting it done. >> i look forward to seeing that. mr. dodaro, how might greater coordination between the referral programs increase savings for the irs and the american taxpayer? can you talk about that for a minute? >> sure.
i mean well, first of all, i think it will increase the timeliness. a lot of the information that it gets you know, they need to react quickly in order to be able to move and investigate, evaluate the referral, whether it's legitimate or not. and eye ply resources properly. secondly, it will enable them to get back to whoever made the lead, if they identify themselves, in a way that will encourage people to send additional information in there as well. as mr. dalrymple mentioned, the percentage of returns that irs has been auditing on their own has been going down. so they're auditing less returns. that makes the ability to get leads and referrals all that more important and put it at a greater premium. it will enable them to move more quickly, enable them to ferret out which ones they should spend time on and dedicate time on. so i believe this has high potential. >> it sounds like it's very encouraging to hear. i know the gao has identified the lack of leadership within many levels of the irs referral programs.
what are we doing to address the failure of leadership over programs that have the potential to reduce the tax gap. can you speak to that? >> sure. >> well, thank you, sir, for the question. as mr. dalrymple noted in his conversation with you on an earlier question, the problem with the referral programs is they grew up over time on a singular basis. and so one division within our business unit within irs would have a referral program. versus another one would have a referral program. and so they were viewed as referral programs, rather than an integrated set of initiatives that are under way. very similar to what local governments do when they have a 311 number so you don't have to know what your problem is when you call, there's no wrong door. that's what needs to happen with the referral program. we shouldn't make somebody who has an issue to be referred, understand and have to navigate the various processes and programs existing within the irs. i know from mr. dalrymple and his colleagues that that is something they're committed to. >> one more question, it's a little lengthy. when whistleblowers contact the
irs, they're potentially taking considerable risk. i think we would agree with that part. despite this, the irs takes years to process claims with poor communications that goes back to these whistleblowers. why are we not taking steps to evaluate the effectiveness of the whistleblower pilot programs and other steps to improve communication with these people that come forward? >> we've looked at the whistleblower program. made a number of recommendations, they need to more timely get back. irs has the pilot program under way. they need to evaluate whether or not that's going to be successful and meet the needs of the people who providing the information. but communication here is really important. the other thing that we point out in our evaluation is there are monetary awards for whistle blowers. and so far the irs has only issued about 31 specific monetary awards. so they have to look at whether or not they're providing enough incentives for people, both in communication and to awards.
>> thank you, mr. dodaro. mr. chairman, i yield back. >> i thank the gentleman, the chair recognizes the gentleman from oklahoma, mr. russell, for five minutes. >> thank you, mr. chairman. thank you, for all of our witnesses that are here today, we do appreciate what you do. i'm a big fan of our government counters and also our inspectors general and others that help us ferret out waste and have responsible government. mr. dodaro, the gao found that the commerce department's new technologies innovate i have been, or loan program was essentially performing the same function as four other federal loan guarantee programs. the program was set up, as you i'm sure are aware, as a result of the 2010 reauthorization of the america compete act. and congress specifically directed commerce to avoid duplication. given the preexisting programs, was it inevitable that itm would overlap with the existing loan programs or was there more that commerce could have done to avoid the now duplicate existing programs?
>> we think there's more that could be done. we've made a recommendation to commerce to work with sba and national institutes of standards and technologies. i think what congress was trying to do here was to deal with a niche that maybe some gaps in the capital markets for innovation, for this particular purpose. and it's going to be very difficult, i think to find what that niche is going to be. and to avoid duplication with the other programs. i think that congress was also quite frankly, frustrated with the sba's lack of timeliness in meeting these needs. and so we've recommended that commerce work with them, to identify what these capital needs are. i'm pleased that they haven't made any loan guarantees yet until they can find out and make sure they're not duplicating. so we're going to stay on this. we have a regular requirement to
review it. >> the report also shows that itm's program is copying the forms and applicatn process used by the small business administration for its own loan program. how does this contribute to duplication in the issuance of loans? >> it's going to duplicate it. unless they follow our recommendation and find the right niche that the focus on, inevitably it will result in duplication, in my opinion. >> the gao also recommended in the report that the commerce department create targeted marketing materials in coordination with the national institute for standards and technology. so that the program offers guarantees to manufacturers who do not currently have access to federal loan guarantees. if this is the best overall idea of which borrowers would benefit most from the program, would you recommend, or the gao, that the loan guarantee programs be consolidated under nist? or would one other agency with a preexisting program? or if not, why not? >> i think that's a possibility
that has to be identified once commerce does their homework. and that there's a proper plan. i think at that point somebody ought to reassess. now i also would note, my understanding is commerce has talked to other federal departments and agencies about carrying out the program and so far there have been no takers in that regard. so i think that you know, i'll be very interested to see what commerce does with our recommendation. and once it has the marketing materials and once it's identified potential capital gaps in the capital markets, whether or not it could be done by another existing program or
whether we really need another program. >> thank you. i think the jury is out on that. >> i appreciate that. and mr. chairman, being a true conservative, i will yield back the balance of my time. >> the chair recognizes the gentleman from alabama, mr. palmer, for five minutes. >> thank you, mr. chairman. mr. dodaro, i really appreciate the work you guys do. i hate to say it, but i enjoy reading your reports. that probably speaks volumes about my personality. but i do want to go back to this issue of unobligated balances. 1 i know you may or may not be able to make a judgment on whether or not this is sound fiscal policy. i don't think we could make the case that it is absolutely necessary to hold $900 billion in unobligated balances. would you agree with that? >> yes. my point is that we're in a debate over our budget, which we're being asked to increase spending by $30 billion. if we were to reduce the unobligated balances by approximately 3.5%, that would
more than cover the increase in spending. does it not make sense to do that, and particularly in the context if we're holding money in unobligated balances, and then having to borrow money to fund other agencies, isn't there an interest cost incurred in addition to, to the additional spending? >> well it's definitely not -- it's not an efficient way to operate. i would say, though, that i don't believe it would be probably prudent to do an across-the-board kind of reduction there. i think you have to look at targeted areas and agencies. and that's why we focused on specific areas. we do that every year for the congress. because in some cases, it may make sense to have that and in other cases not. but in no case should it be an excess of what the needs are. >> right. and i just use that as a generalization. not in specific.
i think you would have to look at each agency individually. but the point is, it's not sound fiscal management. >> that is correct. that's why we focus on it. >> mr. dalrymple, i want to direct some questions to you about the tax gap. and the inspector general for the tax administration, the treasury inspector general, issued a report and in his report he said that there needs to be more timely and more accurate estimates of the tax gap. currently, the irs reports this about every five years. has the irs acted on the inspector general's recommendations? >> we intend to have the new tax gap out -- report out later this month, as a matter of fact. we're acting on it as we speak. >> can you tell me how much the irs collected, what was the revenue total collected for the last fiscal year?
it was over $3 trillion, wasn't it? >> over $3 trillion, yes. >> based on a report from the urban institute and the brookings institute, over the past 30 years, the tax gap has ranged from 16 to 20%. let's just say 16%. if $3 trillion came in to the irs last year, that means 16% -- that's 84% of what should have been collected. i won't get into the math, but i'll just give you an idea. that means that somewhere in the range of $500 to $550 billion went uncollected. what is the irs doing to collect the taxes that are owed it? >> well, we have a number of initiatives. i mean the tax gap itself, one of the things that needs to be completely understood about the tax gap is that it's made up of
a lot of different monies owed. and if we were going to go after every sort of last cent of the tax gap, it would be an incredibly intrusive process. having said that -- >> let me suggest this. 84% of it is underreporting, 10% is underpayment. 6% is just flat nonfiling. the point i'm trying to make here -- this may not be the proper form to do it. but, you know, even when you do collect some of the of the taxes, you still have a net gap somewhere between 380 and $400 billion. i'm on the budget committee. this is one of these things that makes me want to pull my hair out. and at my age i don't need to be doing that. we do everything in a ten-year window. if it's $380 billion a year,
that's $3.8 trillion in our 10-year window, okay? and then we've got improper payments that another one of your reports i read, mr. dodaro, if that's the average, that's 1.25 trillion over that 10-year window and we're looking at a $19 trillion debt? and we just identified $5 trillion, okay? it seems to me that it begs for a flat tax or a consumption tax, some way of collecting every dime that's owed the government. so i just want to see if the irs can be more diligent in making sure that we collect the revenue that's owed us. because we've got some serious fiscal issues facing the country. thank you for your indulgence, mr. chair, i yield back. >> i thank the gentleman. the chair recognizes the gentleman from texas for five minutes. >> thank you, mr. chairman for saving the best to second last.
mr. dodaro, it's always a pleasure to see you, sir. i want to shift gears talking about internet availability on tribal lands. the gao report on tribal internet access, notes the lack of coordination between the fcc and usda in their efforts to increase internet access on tribal lands. what risks of duplication or efficiency are presented by this lack of coordination? >> mr. hurd led that work to respond. >> thanks for the question. one of the challenges we saw there is they were not doing coordinated training and one of the challenges for the tribal group is getting to the training and having the administrative staff to take advantage of some of those programs.
>> have the agencies made any progress on increasing their coordination? >> we did the report last year. we'll be following up with them this year. it's, they concurred with the recommendations so hopefully they're taking some steps forward. >> is this lack of coordination creating a risk that fcc and usda is going to offer conflicting advice to folks seeking to increase access on their lands? >> i think it's possible, yes. >> i'm curious, as you continue with this, so please keep us informed on that. >> we will, thank you. >> mr. dodaro, to you and your team, commercial satellite communications procurement, something i'm interested in. and mr. tillotson, we're get to you on some questions on this. mr. dodaro first for you or whoever on your team, how has d.o.d. commercial satellite procurement strategy changed over the past decade? >> they've, they've become more reliant on purchasing commercial satellite services.
>> has, was d.o.d. procurement policy willfully ignored, in your opinion? >> well it definitely wasn't followed. i'll leave it at that. >> and has d.o.d. or was d.o.d. procurement policy effectively communicated to the various components? >> i'll ask mr. francis to respond to that. who led the work. >> mr. hurd, my understanding is it was effectively communicated. there's a couple of things that get in the way. the two agencies that enforce the procurement policy for sat com is the defense intelligence security agency, disa and the u.s. strategic command. while they have authority, they don't necessarily have enforcement powers, so there's some weaknesses there. and then the funding for satellite communications actually is done through the supplemental budget. so the incentives aren't as strong to be upfront about that. and then when agencies or components go around the normal procurement regulations, it's for reasons of exigency, it
becomes harder to enforce. >> mr. tillotson, why has the d.o.d. ignored recommendations for more strategic commercial satellite procurement strategy? >> sorry, i forget to hit my button. i would not agree that we've ignored the policy. since 2011 we've reduced expenditures on commercial satellite usage by $571 million. right now, disa, the defense information services agency manages about 90% of commercial satellite communications. think at the time the criticism was render or the findings were rendered, there were certainly
issues in how coherent that policy should have been implemented. since that time, the department has put more energy and effort into this. gao correctly identifies that there are two agencies involved. one is the defense information services agency, disa, who does largely kind of the commercial back bone kind of work and the strategic command and the associated military departments, spaes agencies that do the military satellite communication, the department has established a space council. >> have all of those entities been educated on what d.o.d. procurement policy is? >> yes. >> why have some components independently procured satellite communications as opposed to
following the department policy? >> so with the establishment of the defense space council in some cases we've deliberately allowed some of those contracts to continue, because it's cheaper to continue the contract than simply to reissue the contract. again i'll go back and point out we've actually reduced commercial satellite communications use by $571 million. since 2011. >> in my remaining 15 seconds, mr. dodaro, dhs and their human resources i.t. investments, what's the best next action there? >> i think that this is a classic case for good congressional oversight. to find out exactly what their current plan is. this to me was a classic case of mismanagement. of this effort over a number
ever years, there are 422 different systems over there. there was lack of attention by management. they've supposedly now focused more on it. and coming up with a validating the business case again in the model. but i think congressional oversight would be very appropriate and prudent at this point it make sure they right the ship here. >> mr. dodaro, i do know someone that sits on the government form and homeland security committee. so i'll make sure he follows up on it. >> the i thank the gentleman for his personal interest on that particular topic. and the chair recognizes the gentleman from california.
mr. desanet. >> thank you for your good work, mr. dodaro. it's always interesting and thrilling to be here in this committee and see a government agency doing so well. not that a lout of government agencies don't do well. >> i want to ask you a couple of questions about our sort of segues from the last comment about oversight. but the comparison between the executive branch implementing your recommendations and how you measure that, versus us in congress. i'm told this is a partisan issue, it just happens between the administration and congress, irrespective of who holds control orvis those levels of power. for instance, the gao has made 459 recommendations of the executive branch and 372 have now been fully or partially completed by your analysis.
in contrast, the gao has made 85 recommendations for congress, but only 37 have been fully or partially completed. that's 46% as opposed to 81%. so over time, have you or your predecessors given friendly suggestions as to how we could be more successful? or is it part of our role as a deliberative process that makes it difficult? >> i give friendly suggestions all the time. as often as i can. >> well hopefully they're received in that way. >> and they are. and they are. but it's i pointed out my opening statements, although the numbers, the percentages are different, where the big dollar savings have come from, is through the congress's actions. i also pointed out that congress has encouraged and indeed directed for example the defense
authorization bill, certain actions by d.o.d. to implement our recommendations. so congress has a little bit of a hand in the executive branch implementation as well. but i've got a long list of specific legislative recommendations for the congress to act on. that would save billions of dollars. for, i can give examples now. if you'd like. for example, in medicare, the number of hospitals have moved to do what they call vertical integration. which is to have physician practices operate as affiliates of the hospital. so people get certain services there, the same as they could in a doctor's office. but right now the hospital, if they go to one of these hospital-affiliated, we think it ought to be equalized. this will help irs have better ability to match and prevents identity theft refund fraud. which last year by irs estimates, the government lost about $3 billion. it could be more. in that area. so we've got also recommendations to the congress where they could eliminate
payments that are made by the disability program. and where people can also collect unemployment insurance at the same time. so they're getting double benefits. and we don't think that that's prudent. to be able to do that. there's also legislation -- >> let me stop you there. i get the sense you could go on and on, long beyond my five minutes. >> it's a target-rich environment. >> so all of those things i think we would agree on all the members. >> there are no savings to be had. >> is the way i read your report, it's sort of like when i was in local government, a civil grand jury, how many of these recommendations have you actually implemented. so that's our measurement, i just wonder and this is, just an open-ended question perhaps you can respond to it. at your leisure to me or to the chair. is there a better measurement to
get us to do what we need to do, in a friendly manner? because for instance, you give us partial credit for passing a bill, even though it doesn't become effectuated and signed into law. so just trikes me that these measurements, when you look at the executive branch, is pretty clear, either they have or have not, or partially. with us you get big advantages you say is there another way that we can measure that more clearly, so we and the general public can understand it. thank you, mr. chairman. >> i'll take a look at that. >> i thank the gentleman. the chair recognizes the gentleman from iowa, mr. blum, for five minutes. >> thank you, chair meadows. i would like to also thank the panel for being here today. we appreciate it very much. mr. dodaro, nice to see you again. and i would like to commend you on the work that you do and the work that the gao does. it's very impressive. i'm a career businessman from the private sector. and i for one can appreciate
what your department does. many times unsung, many times reports probably not read. but i share mr. palmer's zest for reading your reports and i think it's extremely important to the taxpayers in this country, the job that you do. so thank you very much. >> thank you for those comments. >> i'd like to as opposed to digging into the details today, if you and i could just go to the 60,000-foot level, i would appreciate that. i think my constituents are interested in your answers and the taxpayers are, as well. first question, has the federal government in your estimation, your opinion, grown so large, so big, that it cannot effectively, that's the key word, be managed any longer? because as a businessman, i see this time and time again. and i'm coming to the conclusion it's so large it can't be managed. what's your opinion of that. >> there are definitely
challenges in this regard. some of the federal entities are very large entities, the department of defense, for example, irs is a large agency, hhs is huge, all three agencies represented today. but in my view there are good management practices that could be taken, and to effectively manage these departments and agencies. but there are not consistently applied management practices that should be made that are made. and as a result, you don't have as good of effective management as you should to be able to do this. >> great point, great point. what needs to change? what needs to happen so that we apply management practices to this huge bureaucracy that we have here. what needs to change in your estimation? that's a very good point you raise. >> it's a fair question. i think part of the issue is there needs to be stronger congressional oversight over the process. you know when you think about it, the executive branch agencies, we're about ready to have this happen again. every change in administration,
you take out your top 3,000 political appointees and put all new people in there. in these agencies there are vacancies that occur over time. nobody in the private sector would take your top tier management all at once and move them out. >> correct. >> but that's part of our democracy and part of what happens. but congress has a role for continuity purposes, for confirming new people to lead these agencies, i think there has to be more attention by the executive branch on management capabilities and experiences of people who are put into these positions. to manage them.
that they have the right qualifications. they have the right experience. and that there needs to be proper oversight and stewardship by the congress to insure that they effectively carry out their responsibilities. and the president needs to pay attention to management issues as well as policy mallers when they come in to place. so the whole notion of management often gets a second-class status compared to policy orientations. and that's a fundamental problem that plagues a lot of agencies. >> we're going to spend nearly $4 trillion of our citizens' money next 12 months. what percentage do you think is ineffectively spent or is wasted due to things like duplication of services, due to waste, fraud, abuse? because strong america now estimates it's as high as 30%. in the federal government. what's your estimation? because you're here every day. you see it every day. you're in the belly of the
beast, so to speak. >> it's hard to give you a good figure. but here's the way i look at it, all right. the way i look at it is we have the latest estimates of improper payments, was $137 billion for p doesn't it? >> fast. and my last question is what do we need to do as a congress, as a government. to help make gao, which i think is outstanding, by the way, more effective? what can we do? >> well, we need your support to implement our recommendations. number one. most people in my position would say give me more money. i'd say implement our recommendation recommendations. work with us more. congress is a great partner with us. we don't have endorsement authority at the gao. we can't compel people to implement our recommendation bus congress can and that's our enforcement approach. >> my time is up and i commend you on the great job your organization does and i yield back the time i don't have. >> the chair recognizes the
gentleman from the 11th district of virginia mr. connolly. >> thank you, mr. chairman. just picking up on your last point, my colleague from iowa, gene, i don't want you to miss the opportunity. yes, of course, we ought to implement your recommendations but every dollar we invest in gao has what return on it? >> 134 back for every dollar. >> so to your point, i know it's not always a great idea on the conservative side of the aisle but this has a return on it so investing in gao is a very smart investment. >> i join the gentleman in supporting his notion we need to invest more in gao. >> i thank the chair. hear that, gene? run with it. [ laughter ] for god's sake, it's a special moment here. and by the way, this committee in the past has done some very
thoughtful hearings on both the issue of improper payments as the largest single chunk of which is medicare fraud. and the second is money left on the table that irs could not collect, did not collect, but is owed. those two categories which we could bring down and theoretically to zero would be an enormous dent on the debt over ten years. i mean, it would be in the trillions of dollars. it's something we ought to take a look at as a congress because that's low-hanging fruit. i know it involves making the irs more efficient and more effective but it also has a return on it and right now we need it. thank you mr. dodaro, for your
thoughtful work. i want to talk, mr. dalrymple, act identity theft. because identity theft, diversion of recons at irs has now become almost epidemic, has it not? >> that's true. >> that's true. and if i were to ask about identity theft at irs, say, eight or ten years ago it would have been a small part of your concern, would it not? and if you could speak into the microphone so we could hear you. >> it would have been primarily ten years ago unrelated to refund fraud. >> right. and today best estimate how many americans are affected by refund fraud? >> i don't have estimates on how many people at this point but i can tell you that -- >> well, number of returns then. >> 1.4 million returns in '15 equated to about $8.7 billion in refunds. >> and ten years ago it would have been negligible.
>> negligible. >> and here's the other problem, is it not? it's virtually a cost-free crime. the chances of us identifying you for illegally diversing somebody's refund and prosecute ing you and punishing you are teeny, are they not? >> we have prosecuted -- >> i can't is ask that question. >> we've prosecuted a lot of people. >> a lot? >> 2,000 folks. but it pales in comparison. >> that's an improvement but still a drop in the bucket and, again, i think congress has to provide resources to beef up that effort and to help restore american confidence. i mean, here i am in a transaction with a federal agency, trusting, of course, that that transaction will be protected and as a matter of fact it's not going to be or for a lot of americans.
mr. dodaro, to what extent is this problem irs is experiencing a function of antiquated it? >> it is definitely a solution to this issue. >> is it also part of the problem? >> well, there are benefits and risks associated with any information technology initiative and the idea is to maximize your benefit, minimize your risk. here i would give congress very good credit for acting on our recommendation. for example, we found there was -- one of the problems they had was irs did not have the w-2 information from employers until april so crooks were firing early and irs didn't have the w-2 to match. now irs will get the w-2 information at the end of january. so let's put them in a better
position to identify this area. we think congress ought to lower the threshold for electronic filing of employers from 250 to five to ten, it will give them more data. the issue, though, can irs change its processes and systems to now take advantage of this electronic information that's available? and also irs needs to do a better job of authenticating people before they're using their systems so there are ways and techniques to do this. so if managed properly it can be a big help here even though it's causing the problem to occur. >> well i hope at some point we have a chance to talk more in-depth about this and mr. chairman we have talked about it collaboratively. but so much of the it at irs is legacy systems antiquated systems, multiple systems incompatible with each other and often not suitable for encryption, no wonder we have a
growing problem. thank you very much. >> i would note to the irs that's code word for you need to come up with a plan to try to address it because we're willing to work in a bipartisan way to help you address that problem. >> >> we appreciate that. >> the chair recognizes the gentleman from georgia, mr. carter, for five minutes. >> we appreciate your presence here, this is very important. mr. dodaro, i wanted to speak specifically on a project that is listed in your list of fragmentation and duplication and that is the u.s. embassy in kabul. it's my understanding the state department didn't -- did not have either strategic facilities plan nor did they follow their own cost containment and risk mitigation policies. is that true? is that the way you understand it? >> i want to ask mr. hur who led the project to respond.
>> your name? >> phil hur. that's correct, sir. >> that is correct. so you're telling me they didn't have a strategic facilities plan. they didn't follow their own cost containment and risk mitigation policies. >> right. that's what we reported last year to this committee. >> so when -- what does this say about the state department? what does it say about their construction planning in general? am i to take from this that it's not very good at all? >> well, i think in this case the traditions on the ground in kabul are challenging. we think this plan, two to five year period that would be updated periodically would help orient folks that come and go. many people are serving one-year tours there. now your point about kabul it does not look good there. we also have a large embassy construction program under way now. >> so am i to understand that all these developments and how
dangerous of a place it became while it was under construction they didn't plan for that? they didn't know that in advance? >> obviously they would have known something but the idea of an overarching plan was not in place which we think would have been very helpful. >> would you say that the state department's failure to follow cost containment and follow their own cost mitigation policies is a good stewardship of taxpayers' money whenever we're talking about a project of the magnitude of $2.17 billion? >> no, i would not. >> mr. heard, in your may, 2015, report on the construction of the u.s. embassy in kabul, that's the one you referenced earlier. you stated the state department's failures to follow its cost containment risk mitigation procedures likely contributed to the fact that the cost for the projects increased 27% and that the project will finish three years later than it was planned. is that correct? >> yes.
so would by correct in saying that when we're talking about a project of this magnitude and the state department is not following their own policies on this, what are we to expect for smaller projects? i mean, we're talking about a $2.17 billion project, that's big even by our standards. >> i agree. >> so i can only take from that that when we talk about smaller projects, they're not doing that either and they're wasting money. let me get to the point. i've belabored the point too long. here's what's bothering me. i have the federal law enforcement training center in my district, in glencoe, georgia. full disclosure. here is the state department needs to build a new training facility or says they need to build a new training facility for embassy personnel and i understand that and, listen, all of us understand what happened in benghazi, we don't want it to happen again, we want to be as prepared as we can be. initially in the po