The Business of Government Hour


About the show

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. The executives discuss their careers and the management challenges facing their organizations. Past government executives include Administrators, Chief Financial Officers, Chief Information Officers, Chief Operating Officers, Commissioners, Controllers, Directors, and Undersecretaries.

The interviews

Join the IBM Center for a weekly conversation about management with a government executive who is changing the way government does business.

Gene L. Dodaro interview

Monday, November 29th, 1999 - 20:00
Gene L. Dodaro
Radio show date: 
Wed, 05/24/2000
Intro text: 
Strategic Thinking; Missions and Programs; managing for performance and results...

Strategic Thinking; Missions and Programs; managing for performance and results

Magazine profile: 
Complete transcript: 

Arlington, Virginia

Wednesday, May 24, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, conversation with government leaders. I'm Paul Lawrence, a partner of PricewaterhouseCoopers and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. The Endowment was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the Web at

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our special guest tonight is Gene Dodaro, Chief Operating Officer of the U.S. General Accounting Office. Welcome, Gene.

Mr. Dodaro: Welcome, Paul. Thank you very much. I'm pleased to be here.

Mr. Lawrence: And joining me in our conversation is Pat McNamee. Pat's also a PwC partner. Welcome, Pat.

Mr. McNamee: Thank you, Paul.

Mr. Lawrence: Well, Gene, let's begin this first segment by talking about GAO. How would you describe the various activities that take place at GAO?

Mr. Dodaro: Well, GAO exists to support the Congress in carrying out its constitutional responsibilities and to help improve the performance and accountability of the federal government for the benefit of the American people and there are various facets of that broad mission of the GAO, and I'll mention four categories briefly.

First, we help evaluate federal programs and activities in order to determine how well they're working and whether or not they should be modified or improved, and this really runs the gamut of the federal government's activities. For example, in health care we would look at the safety of the nursing homes in terms of whether the federal government's providing adequate oversight to ensure that the elderly are being properly taken care of.

In the national security area, we'll look at counterterrorism measures that are being put in place by law enforcement agencies. We'd look at the recruiting and retention policies and strategies to ensure ready military. We'd look at the weapon systems modernization of the Department of Defense.

We also would look at the management of federal lands in the natural resources area. Many people don't realize that the federal government still owns 30 percent of the landmass in the United States and several billion dollars of the outer continental shelf.

And we look at whether or not federal assistance to foreign countries is being spent as intended. We look at the execution of trade agreements of which the United States is now party to over three hundred and growing. And the list goes on and on to include the safety of the air traffic control system and our national highway structure.

The second major category is basically auditing the nation's finances to make sure that the taxpayers' funds are being appropriately accounted for and that the public's money is being spent efficiently and effectively in accordance with federal law. And in this category we do various financial audits of government entities, including the financial statements of the entire federal government. We help set accounting, auditing, management control standards for the conduct of public officials. We also produce a high-risk series which includes areas that are particularly susceptible to fraud, waste, and mismanagement in the federal government. For example, in the Medicare area, we've had an ongoing struggle to combat fraud and abuse in that particular fast-growing health care area. In fact, health care expenditures in the federal government are growing twice the rate of any other federal expenditure.

We would also conduct specific investigations of alleged illegal activities or improper conduct on the part of federal officials and issue various legal decisions and opinions concerning compliance with appropriation law, for example, in the direction of the Congress.

The third major category would be identifying for the Congress emerging issues that they need to focus on. And some recent examples here are, in the 1990s, we surfaced early on the need to address the year 2000 computing challenge and also the vulnerabilities of the federal government to computer security intrusions. And we've seen recent events prove us right in highlighting that for the Congress in protecting our critical infrastructures, both in the public sector and in the private sector. We've also focused on the long-term financial condition of the federal government and the need to deal with the changes that will ensue as a result of changing demographics to the Social Security and the Medicare trust funds with the advent of the Baby Boom generation in a couple of decades.

And lastly, in the fourth category I would mention, is where we're helping the Congress respond to particular events that have occurred. Two recent examples would be the fire situation in Los Alamos. We've been asked to take a look at that issue, which is typical of when we have particular disasters, and the Congress wants to know why did it occur, how can we prevent these situations from occurring again. We've also been asked to testify recently on the "I Love You" virus and what the federal government can do and what kind of responsiveness did the federal government enact to protect its assets during that event.

So the bottom line is that GAO is a very diverse, professional services organization. The scope of our responsibilities is as vast as the federal government being one of the world's largest enterprises. And our basic governing principle is to do work to support the Congress, to help them make informed decisions on behalf of the American people, and to advance constructive recommendations for improving government.

Mr. McNamee: You mentioned supporting the Congress, and I'm not sure how many people actually realize that GAO is part of the legislative branch of the government. Can you describe a little more about GAO's relationship with the Congress?

Mr. Dodaro: Yes, Pat. The GAO is part of the legislative branch of the Congress and that is to ensure its independence from the Executive Branch to help the Congress carry out the checks and balances envisioned in the Constitution and in our system of government. That independence is further assured by the fact that the Comptroller General -- in this case, the current Comptroller General David M. Walker -- has a fifteen-year, nonrenewable term, like his six predecessors before him.

Basically, the vast majority of our work is in direct response to requests from chairmen and ranking minority members of various committees and individual members who are also on particular committees of jurisdiction, and that runs into the oversight of federal government programs, as I mentioned earlier.

We work with the Congress in helping them make appropriation decisions. For example, it's typical for the Congress to ask for our advice before making major investments in information technology systems, given the past problems with many federal expenditures that haven't actually produced the improvements that were intended through multibillion-dollar purchases. And basically, we provide a lot of assistance to the Congress, working very closely with them.

We've recently issued and are testing a set of congressional protocols now which explain our commitments to the Congress in clear, transparent terms that are consistently applied, and that Congress can hold us accountable for delivering. And we deal with, you know, basically 535 members of the Congress, as well as the delegates from the various federal territories. And we want to have a commitment to each and every one of those clients -- Congress is our primary client -- and also produce work that can help them effectively represent the American people who elect them to come and act on their behalf.

Mr. Lawrence: Well, tell us about your career and the various positions you've held at GAO?

Mr. Dodaro: I've been with the General Accounting Office since 1973. I came to GAO directly from college. I graduated with an accounting degree. And then my early years at the GAO had a wide variety of experiences in different areas, for example, looking at the problems of illegal immigration and smuggling of aliens into the country; licensing of radioactive materials for medical, educational, research, and industrial purposes; I was involved in a major study evaluating the implications of changing Puerto Rico's political status to a state or revised commonwealth status or even independence; I also was involved in a major nationwide study looking at the impact of countercyclical revenue-sharing that occurred in the mid-1970s, following the high inflation and recessionary period during that period of time. And the idea of that program was to provide assistance to state and local governments to help compensate them for losses of revenue during recessionary periods, and also, basically, increases in certain expenditures that would increase as a result of unemployment during that period of time.

In the early 1980s, I was involved in a major GAO project for two years looking at the initiatives -- at that point labeled "new federalism" -- to take over a hundred federal programs and consolidate them into block grant programs and give more discretion to the state and local government.

Mr. Lawrence: Let me ask you to hold the rest of your answer. It's time for a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's guest is Gene Dodaro, Chief Operating Officer of the U.S. General Accounting Office. And joining me in our conversation is Pat McNamee, also a PwC partner.

Well, Gene, let me continue with your career, because before we went to a break you were in the middle of describing the positions you've held and your various experiences.

Mr. Dodaro: Basically, in the early 1980s, this major block grant study was an experiment in new federalism really on behalf of the federal government. And there was a lot of interest on behalf of the Congress as to the recipients of federal assistance under these 100 categorical programs that were folded into eight block grant programs in the health care arena, social services, community services, low-income energy assistance, et cetera.

We had received multiple requests, so we created an interdisciplinary team in GAO and looked nationally at many states across the nation and local governments on how they were carrying out their new responsibilities, and found them to be handling their responsibilities very responsibly. And we had made some recommendations from some increased reporting requirements, but that was a major turning point in the federal relations with state and local government.

Following that, I was involved in another pioneering effort at GAO to begin looking at the entire management operations of individual departments and agencies. At this point in time, in the 1980s, we began seeing recurring problems in our audits of individual departments and agencies, and felt we weren't getting to the root causes of the problems. So we launched this new type of work, where we would work with the top leadership team of individual departments and agencies, look at their planning structures, their strategic focus on the agencies, look at performance management, their personnel approaches to carrying out the work, and found a lot of serious deficiencies at the departments and agencies.

For example, I led studies at the Internal Revenue Service. We did actual management studies of the Office of Management and Budget and the executive office of the President, the Office of Personnel Management, Labor Department, Social Security Administration, et cetera. And really, the common findings of these management reviews helped lead to the creation of the Government Performance and Results Act because we found an absence of strategic planning, performance measures in the individual agencies, and it added to the discussion and the genesis of that legislation later on.

Following that experience, which lasted several years, I was asked to go to the Accounting and Financial Management Division in GAO and there, at that point in time, the Chief Financial Officer's Act was being passed in 1990, and that led to increased responsibilities for the GAO. So I helped, at that time, change GAO's work force around to accept these new responsibilities.

And then I became the assistant comptroller general in charge of our accounting and information management work at GAO. And in that capacity, I led the first ever audit of the federal government's consolidated financial statements, which began in fiscal year 1997 and 1998, and they continue today.

This was a major achievement. The federal government was the last major segment of our economy to really impose on itself the management discipline of a financial audit. And so this was a big effort to mobilize and work with inspector generals across the government to help them carry out their responsibilities and GAO's to do these audits. We worked very closely with chief financial officers across the government, as well. And in that capacity also, I was responsible for GAO's work within the year 2000 computing challenge and also looking at major IT investments and working with the Congress and the Administration to help shape the Clinger-Cohen Act, which put in place chief information officers across the government, as well.

I've been in my current position now as chief operating officer for GAO for the last year, and I've led efforts to put in place a strategic planning process for GAO. We've just issued a strategic plan and our first annual performance plan and accountability reports, so we're trying to lead by example in that we evaluate how other agencies are implementing the Government Performance and Results Act. So we're going forward and producing and complying with the Act even though we're not covered by the Act.

Mr. McNamee: I know one of your areas of responsibility in GAO, Gene, is meeting visitors from foreign countries and working with your counterparts in other governments. Can you tell us a little bit about GAO's international role and the recent international conference you attended?

Mr. Dodaro: Few people know about the longstanding involvement of GAO in the international arena, and this dates back to Comptroller General Elmer Staats, who started a training program whereby developing countries in particular would send representatives to GAO for a four- or five-month study course to learn the basics of auditing. And in fact, in the 20 years since that program's been in existence, we've graduated about 300 people and more than a dozen have gone on to actually become the auditor general in their particular country.

There's also an organized effort of close to 180 countries around the world where we work with counterpart agencies who are, in effect, the GAO of their particular country, to share experiences, to develop common standards. And basically, there's a commitment on the part of this international organization to help developing countries, and it's particularly useful now in working with Eastern European countries who are beginning to establish democratic forms of government.

So we provide a lot of technical assistance, support, and help. And with the globalization of economies, enterprises, and government processes now across the country, we foresee that this good investment we've made in working with our counterparts across the globe will become even more important as we have to work to look at issues that transcend boundaries and government borders, particularly in the financial markets and institutions area. Health care is now becoming a global issue, as well. And so this has been a good investment and GAO is very well known and looked to as a source of leadership in the international auditing arena.

Mr. Lawrence: One of your recent activities has been the reorganization of GAO. Could you tell us about that reorganization and how GAO is now organized?

Mr. Dodaro: Yes. This is a major change for us. We've made many changes and improvements over the years, but this is a fundamental realignment of GAO. It's being done to provide us more alignment with our strategic plan that we've worked very closely with the Congress in shaping.

GAO also has had a significant downsizing during the late 1990s, going from an organization of roughly 5,500 people to an organization now of almost 3,300 people. So we've looked at our field structure, we've streamlined the field offices and are in the process of closing some now.

At headquarters, we've also moved to flatten the organization. We've eliminated divisions, which were the major operating units of GAO structure, and have reduced the number of areas from 31 issue areas of the government to 11, in effect, flattening the organization considerably.

Mr. Lawrence: Okay, great. It's time for a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Gene Dodaro, Chief Operating Officer of the U.S. General Accounting Office. And joining me is Pat McNamee, also a partner at PwC. Pat?

Mr. McNamee: Thanks, Paul. Gene, can you describe for us a little bit your role as Chief Operating Officer of the GAO?

Mr. Dodaro: My responsibilities as Chief Operating Officer is to work closely with David Walker, the Comptroller General, to carry out the leadership of the GAO. One of my primary tasks right now, in addition to completing our strategic plan, will be to implement our realignment, which will be fully effective by the beginning of the next fiscal year.

There are a number of transition issues that need to be dealt with. We're moving to a major effort to push accountability down in the organization and build quality into the products, to continue to make improvements in our ability to serve the Congress, and to have a more flexible, nimble organization moving into the next century.

I spend a lot of my time reviewing the requests from the Congress to help set priorities on staffing, looking to make sure that we are being responsive to our clients' needs, and monitoring the more sensitive and difficult and complex assignments throughout the course of their development, implementation, and reporting to the Congress. Also working a lot on building institutional capacity within GAO. That's particularly challenging now given our downsizing environment, our efforts to replenish our pipeline in the human capital area. And I work very closely with GAO's Chief Mission Support Officer SallyAnn Harper and our General Counsel Bob Murphy, who, along with Dave Walker and myself, make up GAO's executive team.

Mr. McNamee: We know that human capital is a major issue of the Comptroller General David Walker. Can you tell us about the changes GAO has made or is considering making in terms of is own human resource management?

Mr. Dodaro: Human capital has been one of the preeminent issues that Dave Walker's focused on in the year and a half that he's been comptroller general. And it's particularly apropos given his experience in the private sector and the fact that he has been a human capital expert.

We started with doing an exhaustive human capital profile of the GAO. I mentioned our downsizing efforts before by 40 percent over a period of time. Basically, we had a hiring freeze in place for about five years. As a result, we have more people at the mid-level and the upper levels at the GAO than we do at the entry level.

So a big effort is underway to reinstitute and reinvigorate our recruiting efforts to get people into the organization. And it's particularly important because, like a lot of other federal entities, we're facing the potential loss of a lot of our senior managers over the next five years. In fact, one-third of GAO's entire work force is eligible to retire by 2004, 55 percent of our senior executives. So it's very important -- particularly because the Congress looks to us as continuity and institutional memory of government -- that we'd be able to replenish our work force and have a steady succession planning effort so that we can be responsive to the Congress in a timely fashion.

We're looking at our performance appraisal systems. We've established an employee advisory council broadly representative of GAO to work with us. We've instituted very detailed surveys of our employees to learn their interests and concerns, and we are opening up two-way communications throughout the organization to solicit ideas. We've instituted an employee suggestion program.

And so we have a wide range of activities going on. We're also going to be conducting a skill inventory across the organization to be able to look at our strategic plan and what kind of skills that we're going to need in the next five to six years, evaluate what we have in-house already, and that will help dictate what type of training activities we need to provide, as well as what areas we need to target to recruit.

We know we're going to have to have more people with information technology experiences, but we're also moving and adapting to changes in the federal government, which now, after 30 years, is spending more on health care than on defense. And so, there have been some profound changes in the nature and composition of federal spending, and there will be more as the federal government responds to changes in society and the world at large, and we need to be ready to be able to help the Congress in a most effective manner.

Mr. McNamee: Gene, one of the interesting parts of your job at GAO is getting to work on a lot of the major issues that face the government today. One thing I'd like to start off talking about was responding to the Y2K threat for the government. Can you tell us a little bit about GAO's activities in the Y2K area and through what the lessons learned were from the government's successful response to the Y2K challenge?

Mr. Dodaro: I think the Y2K experience has several profound lessons. Number one, it demonstrates that when the federal government applies its talent, resources, and has effective leadership, it can get a problem solved. And the successful transition into the year 2000 and the very few disruptions that were held was very much a testimonial to the dedicated efforts of federal employees throughout the federal government. GAO played a unique role in this in that we were one of the earlier people raising this, along with several members of the Congress, as a problem, alerting the federal government to the need to address this issue directly.

We actually created a set of four guides: One on how to do the conversion planning, one on business continuity and contingency planning, one on how to do testing, and one on day one planning for this activity. And those guides were adopted by the Executive Branch and the President's Council on Y2K Conversion as the official policy for the federal government. So this is a case where an audit organization helps preventing problems, being a constructive force in addressing these issues directly.

We worked very closely with the Congress. And this is also a case where the Congress was actively involved in helping craft solutions, providing effective oversight. Both the House and the Senate were very actively involved in this endeavor and we worked very closely with the President's Council on Y2K Conversion and John Koskinen is the chair of that council. People who have been in the auditing business for a while know that usually you do not have a hundred percent adoption of your recommendations. In this case, for the three or four years we were engaged in this, we issued well over a hundred and fifty reports and dozens and dozens of recommendations. All were adopted and effectively implemented quickly by the agencies.

We also worked, in this case, internationally with our counterparts and with our counterparts at the state and local level. We had conferences with state auditors. I was also asked to be part of, as an observer, the U.S. delegation to the United Nations when John Koskinen helped orchestrate a meeting up there and effectively mobilized the world.

And so, it provides a good lesson in not only how the federal government can operate and carry out its activities, but there were successful engagement at the state and local level, the international level, and, in particular, with the private sector. I think this provides effective lessons learned going into computer security and critical infrastructure protection, where the federal government needs to have an effective partnership with the private sector, which owns most of the computer assets in the country.

Mr. McNamee: What's your impression of the impact of the Chief Financial Officers Act?

Mr. Dodaro: The Chief Financial Officers Act has had a very important cultural effect on the federal government. Basically, it's moving the federal government to instituting effective fiscal discipline. It's a major change and it's very difficult, if you can imagine a large corporation that operated for 50 or 60 years and spending billions of dollars and not having financial reporting, statement reporting and auditing in place, and the federal government also has a very decentralized accounting structure. And the CFO Act is helping the federal government impose the discipline to get on top of that and to provide the type of accountability over federal funds that the public really expects and demands. And I think if the Act is effectively implemented it will go a long way to restoring public trust in the federal government.

Steady progress is being made. In 1996, we had about 6 of 24 major departments and agencies get clean opinions. That number has almost doubled now in the last fiscal year, so individual agencies are beginning to come on board. The challenge now is to go beyond just clean opinions and improve the underlying financial management systems so that agencies have timely data on a day-to-day basis that's reliable, and to effectively manage and oversee the federal government's operations.

So a good start, tremendously needed discipline imposed in the federal government, but a long way to go to effectively change and transform the reforms contemplated under the Act into a day-to-day management reality at the federal agency level.

Mr. McNamee: GAO's also been involved heavily in the oversight of the Government Performance and Results Act, or GPRA. Can you give us your impression on the impact the GPRA's had so far?

Mr. Dodaro: I think the GPRA, again, is introducing another very important paradigm shift in the federal government to focus more on results, away from process and inputs to outcomes. I think it's important to note, even though the Act was passed in 1993, just this past spring, we've completed, across the federal government, the first full cycle of the Act, having strategic plans developed in 1997 for fiscal year 1999. And now the first reports against those performance plans are being produced.

So we're still somewhat in the early stages of government-wide implementation. Progress is being made. More agencies are taking it seriously. More committees on the Hill are legislating with this in mind, but there's a number of additional things that need to be done, again, to make this a day-to-day management reality and integrate with the budget process.

Mr. Lawrence: Okay, with that we've got to take a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Gene Dodaro, Chief Operating Officer of the U.S. General Accounting Office. And joining me is Pat McNamee. Pat's also a partner at PwC.

Well, Gene, let's spend this last segment looking ahead to the future. And I know the Comptroller General and you recently testified before Congress on managing in the new millennium, shaping a more efficient and effective government for the 21st century. Can you tell us about that testimony?

Mr. Dodaro: This was a very important opportunity provided by the Senate Committee on Governmental Affairs to take a look ahead at the federal government and also it was a venue for us to talk about our strategic plan and support to Congress in carrying out its responsibilities.

The basic message of that testimony was that dynamics have changed markedly as we transition into the new environment and provide a lot of opportunities. For example, the Cold War has ended. We're also transitioning into the new millennium with a much different fiscal position. Thanks to hard decisions by the Congress and the Administration and a burgeoning economy we're now in an era of budget surpluses rather than deficits. So we've slain the deficit dragon temporarily, although there are looming fiscal pressures as with the advent of the Baby Boom generation and changing demographics.

But for the time being, we've got a window of opportunity here, and it's an opportunity to look at the dynamics that are changing the shape of the federal government and the environment which it operates in. Globalization, changing demographics, changing security threats, quality of life considerations, are all changing the federal government's expectations for government and requiring it to be more responsive, results- oriented, bottom-line driven, and also more effectively managed and implemented.

And also, there's a huge opportunity now with the budget surpluses to look ahead in a more long-term fiscal posture to look at what the federal government does and how it conducts business. And there's really an opportunity and an obligation to look forward now, and to really scrutinize the federal government's basic programs. A lot of programs were started many years ago for well-intended purposes. Times have changed, the environment has changed, and now's a good time to sort of take a look at that.

And this testimony puts forth a couple of points along the management lines. Number one, it talks about the need to implement effectively the management reforms that were put in place in the 1990s -- the Chief Financial Officers Act, the Government Performance and Results Act, the Clinger-Cohen Act -- and basically says this was a very good set of management reforms that were put in place, but we really have to implement them effectively to reap the benefits of those reforms.

And we also point out the missing element in management reforms, which is human capital in the federal government, and that the people side of government has not been attended to effectively and really needs attention and reform to make all these other management reforms work effectively and to help the federal government be responsive to the American people and to be more flexible as we enter into this new millennium and face new challenges facing the federal government.

In that testimony, we also talked about the opportunities for the Congress to look at different ways it can enhance oversight and work in a partnership manner with the GAO and with the Executive Branch in bringing about the type of federal government that we need to operate effectively in the 21st century.

Mr. McNamee: Gene, as we talked about a little earlier, you've been very involved in technology issues for the government. What do you see is the impact of technology on the government in the years ahead?

Mr. Dodaro: I think technology holds tremendous promise for improving the responsiveness of the government; restoring confidence in government with citizens; and the ability to interact directly with the citizens, both in terms of answering their questions, helping them find information they need about their government; and also providing information to the public to increase public confidence and safety.

There are a number of real issues, though, that are really important. Number one, the gap between the private sector investment and reaping the benefits of technology in the federal government is growing. About 40 percent of all capital investment by the year 2003 in the private sector will be for information technology investments. And really, as the Chairman of the Federal Reserve Board Alan Greenspan points out, a large part of the economic growth and development in the United States has been fueled now by productivity increases because of investments in information technology over a number of years. So that needs to be a contributing factor in improving government.

Now the key to government improving its performance is really effectively implementing the Clinger-Cohen Act of 1996. That Act put in place a chief information officer structure across government, required modern investment management practices, required federal agencies to develop architectures so they could have interoperability and effective security systems put in place, and it really put in place a modern set of best practices that were being employed by the private sector. And this was based on research done by GAO and, working with the Congress and the Executive Branch, is to put that into effect.

I also think these reforms have been tempered a little bit in terms of being implemented by the focus necessarily on Y2K preparations, but the benefit of Y2K was that it also got managers' attention about the important role of information technology and the dependency on it for improving their operations. So technology holds the key to really reforming dramatically the federal government.

Reforms are in place, but they need to be effectively implemented and this will be a major challenge for the federal government going forward to improve its operations and also deal with important computer security concerns about protecting the information that the federal government receives from private citizens in an appropriate manner.

Mr. Lawrence: What other major changes do you envision in the government of the future?

Mr. Dodaro: The government of the future is going to have to be much more responsive and flexible to be able to change to the dynamics that are unfolding. Take globalization. We now, in the United States, are a party to over 300 trade agreements, with the potential increases in world trade. World exports have doubled almost as a percent of gross domestic product over the past 10 years. Foreign investment in the United States has increased, which helps our economic development, but it also makes us vulnerable to changes in other economies. And so, the federal government is becoming much more intertwined as the global interdependence increases and it's transcending a number of different areas in the federal government. That is a challenge to the structures and institutions of government because it requires working across agency boundaries, across departments, and the federal government needs to create new structures and processes in order to implement that effectively.

Also, the changing demographics are going to profoundly change this country. By the year 2020, about 20 percent of the United States population will be 65 or older, up from about the current 13 or 14 percent. We could have as many people in this country 65 or older as we have 20 or younger. That will change the service requirements for the federal government in not only entitlement reform areas in Social Security and Medicare, but also transportation requirements and other attendant housing concerns.

Also, the labor force in the United States is becoming more diverse and not growing at an exceedingly fast pace, calling into question whether or not we'll have the necessary skills in the labor force to move as information technology and other demands call for a more highly skilled work force, and that has attendant issues associated with it in regard to immigration and other issues.

So a lot of dynamics are at play right now, and the rapid pace of changes in technology combined with these other factors of globalization, changing demographics, really call for a federal government to be more responsive, more focused on results and outcomes, and one that can operate across departments and agencies and not just within the traditional government structures of individual departments and agencies -- a major challenge. I believe the federal government's up to it and I think, with a lot of partnership between the Congress and the Executive Branch, that the federal government can be prepared to meet all these challenges very effectively.

Mr. Lawrence: Well, I'm afraid we're out of time, so we'll end there. I want to thank you very much, Gene, for spending time with us tonight. Pat and I have enjoyed the conversation very much.

Mr. Dodaro: I've enjoyed it, as well. Thank you very much, Paul, Pat.

Mr. Lawrence: This has been The Business of Government Hour, conversation with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and the co-chair of the PricewaterhouseCoopers endowment for the business of government. To learn more about the endowment's programs and research, visit us on the Web at See you next week.

Gene L. Dodaro interview
Gene L. Dodaro

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