Originally broadcast on April 23, 2012

Arlington, VA

Host: Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by the IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the center by visiting us on the web at BusinessofGovernment.org. And now, The Business of Government Hour.

Michael Keegan: Welcome to The Business of Government Hour.  I’m Michael Keegan, your host and Managing Editor of The Business of Government Magazine.  Faced with seemingly intractable issues the ever-growing deficit, economic uncertainty, unemployment and aging infrastructure, today’s government leaders face unique challenges that present many difficult choices that go to the core of effective public management.  At this critically historical juncture citizen expectation remains constant to have a government that is more responsive, coordinated, transparent and accountable.

To that end the U.S. Government Accountability Office works with Congress to better manage resources for a more sustainable future, while mitigating risks that can compromise the nation’s security, health, and solvency.

How is GAO working to put the country back on a sustainable fiscal path?  What is GAO doing to assist Congress in support of its oversight of decision making responsibilities?  And how is GAO overseeing federal programs and operations to ensure accountability to the American people?  We will explore these questions and so much more with our very special guest, Gene Dodaro, Comptroller General of the United States and Head of the U.S. Government Accountability Office.  Welcome, Gene.

Gene Dodaro: Thank you. Michael.  It’s a pleasure to be here.

Michael Keegan: Before we delve into specific initiatives perhaps you could give us an overview of the history and continual evolution of the U.S. Government Accountability Office marking its ninetieth year?

Gene Dodaro: Yes. GAO was founded in 1921 as part of a package of budgetary and accounting reforms that were put in place following the large debt that accumulated after World War I.

In the beginning, GAO’s role was to examine vouchers on government payments and purchases.  Then following World War II as the government grew and expanded those functions were transferred to the Executive Branch, and GAO began more comprehensive financial auditing.  And then as government continued to evolve on the war on poverty and the Great Society programs in the ‘60s, GAO began doing program evaluations, which are what we are famous for today, looking at how programs operate, and whether they’re operating as intended, and whether they can be made more efficient and effective.

And our evolution has continued.  Now we provide a full range of management of evaluations of functions necessary to carry out the government’s large departments and agencies.  And we also do quite a bit looking at new technologies that the government is putting in place.  And so we have a very multi-disciplinary workforce right now and our evolution continues, based upon the needs of the government and the needs of our primary clients, the Congress.

Michael Keegan: Great, wonderful.  So it’s such a critical mission, I’d like to understand the operational footprint of GAO, what’s the size of its budget?  How was it organized, and what’s its geographical footprint?

Gene Dodaro: GAO is organized along subject area lines, covering the full range of the Federal Government’s responsibilities.  We have a team focused on national defense issues, for example, healthcare, transportation, natural resources and the environment, et cetera.  We also have teams focused on technical disciplines, financial management, auditing and accounting, and information technology.  We have a Division focused with the Center for Economics, Science and Engineering.  And so we have a full range of issues set-up both for subject areas and technical disciplines.

Our work is carried out in multi-disciplinary teams.  It’s very important to ensure the quality and the sophistication of our work.  Our budget is over $500 million a year.  We have about 3,000 people in the organization, and we carry out a number of functions and types of audits.  We produce hundreds of reports and testimonies every year.

Michael Keegan: So what about your role as the Comptroller General and leader of GAO?  Could you tell us a little bit about your duties and responsibilities?

Gene Dodaro: Yes, the Comptroller General, and I provide a strategic direction and leadership for the GAO.  As its Chief Executive it’s my job to make sure we carry out our mission effectively, which is to support the Congress in carrying out its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people.  And we do that through the production of hundreds of reports and testimonies each year to the Congress, that are made also available to the public.  And it’s very important that we have good quality assurance systems around those reports, so my job is to ensure that that happens and that we have the skilled workforce necessary to carry out these responsibilities.  And so I also provide testimony to the Congress before various Congressional committees, particularly on GAO’s more important broad-based work that we issue during the year.

The Comptroller General also sets government auditing standards and internal control standards for the federal government, and also I have very important representational responsibilities both for domestic accountability purposes, such as Chairman of the National Intergovernmental Audit Forum and also internationally as the U.S. representative to the organization internationally of National Audit Offices, which is comprised of approximately 189 countries around the world.

Michael Keegan: So with that important duty and mission and responsibility what would you say are your three top challenges?  And how have you sought to address those challenges?

Gene Dodaro: Yeah, it’s very important for us always to work on the areas of highest priority for the Congress and key national important issues. Our workload is a very important challenge, you know, we’re asked to do anywhere from 900 to 1,000 requests per year from the Congress, so we obviously have to set priorities appropriately.  That’s the number one challenge.

I do that by meeting with chair and ranking members of all the standing committees of the Congress to understand their priorities and work on issues. It’s very important that while I provide leadership, our teams continually to work through and to continually set priorities in working with the Congress to make sure that we meet their needs.

Second, like a lot of federal agencies right now, there are budgetary challenges that we’re all going to be facing across federal government.  GAO is no exception to that.  We’re working through those issues very carefully to make sure that we maintain the quality of our work to the Congress, work on items of highest priority, and also to make sure that we’re minimizing any adverse effects on the very dedicated and talented GAO workforce.

Thirdly, Michael, I would say a big challenge is succession planning, like lot of organizations the Baby Boom generation is beginning its retirement.  We’ve been working very hard on this over the last decade, and we’ll continue to be able to do that because we need to have the right skilled workforce and we need to have the people in the right job.  That’s about 75% of success, and so I spend a lot of time dealing with that challenge.

Michael Keegan: Speaking of having the right person in the right job, I’d like to know a little bit more about yourself.  Could you tell us about your career path and how you got to where you are now?

Gene Dodaro: Yes, I came to the GAO in 1973 as an entry level auditor, right out of college.  And I was intrigued with the mission of the organization. I worked in various capacities throughout the early stages of my career, taking on issues like many in the immigration area, licensing radioactive materials for commercial uses, looking at the anti-recession assistance program formed in the 1974-’75 recession, and Reagan’s new federalism initiatives of block grants in the early ‘80s.

I became a Senior Executive in 1985, and was given the responsibility of doing a portfolio of management reviews, which were sort of top to bottom reviews of various departments and agencies.  And then I took on responsibilities later to head-up all of our accounting and information technology work at the GAO.  I led the first ever audit of the federal government’s consolidated financial statements for the fiscal year 1997, I led our Y2K efforts to help the government successfully deal with that challenge, and dealt with a number of other technology issues, including computer security.

Following Dave Walker’s appointment as Comptroller General in 1998, I became the Chief Operating Officer for GAO, which is the number two position, and really held that position throughout Dave’s nine-and-a-half year tenure at GAO.  And then when Dave resigned in March 2008 I became the Acting Comptroller General and led in that capacity until I was confirmed by the Senate last December.

Michael Keegan: Actually, could you tell us a little bit more about the actual tenure of the Comptroller General?  It’s a little bit longer than most places, correct?

Gene Dodaro: It’s one of the longest tenures in government, Michael.  It’s very important to maintain our independence.  The Comptroller General has a 15-year term, non-renewable, of course.  And the selection process is quite unique, as well, in part because of the long tenure.  The selection process begins when there is a vacancy. There’s a creation of a 10-member Congressional commission that’s bicameral, bipartisan, there’s leadership in both the House and Senate, as well as our two oversight committees in the Senate and House.  And those 10 members carry out a search, and they do interviews, and they go through a process.  And then the commission recommends three or more names to the President.  The President selects from the list, can ask for more names, and then the person nominated by the President from that list has to receive Senate confirmation.  So it’s a very unique involved process, but befitting the term and the importance of the position.

Michael Keegan: You have a tremendous amount of experience. Yyou discussed your role at GAO as it evolved – I’d like to understand what you believe or you’ve seen as the most effective characteristics of a real leader?  Could you give us a sense of what are those characteristics?

Gene Dodaro: Yeah, well, you have to be able to motivate your organization.  I mean the motivation at the GAO is facilitated because we do such interesting work for the Congress, but it’s very important for our organization to be viewed as independent, nonpartisan, professional, objective, fact based, and providing a full range of professional services to the Congress that are respected by both parties, by both chambers of Congress. 

So by being able to have important credibility to be able to lead the organization with integrity and to make sure our work is professional, but also constructive.  It’s very important that we not only identify problems but bring solutions to those problems to help policymakers, and leaders in the Executive Branch, as well as Congress to take the necessary actions to improve government for the benefit of the public.

Michael Keegan: How does the GAO working to put the country back on a sustainable fiscal path?  We will ask Gene Dodaro, Controller General of the United States, when our conversation continues on The Business of Government Hour.

(Intermission)

Welcome back to The Business of Government Hour.  I’m Michael Keegan, your host, and our guest today is Gene Dodaro, Comptroller General of the United States.

Gene, as you mentioned in the last segment, GAO is a Legislative Branch Agency and exempt from many of the laws that apply to the Executive Branch Agencies.  However, you do have a strategic plan that outlines division of the organization and the direction you want to take it in.  Would you outline the plan for us, highlighting the overarching goals and strategies you are using to support your moves?

Gene Dodaro: Yeah, sure, Mike.  An important point I want to make upfront is that while we are exempt from many of these management reforms and legislative requirements, we voluntarily comply with them, whether it’s a government performance and results act, a financial management legislation, or an information technology legislation, you know, we believe we need to hold ourselves accountable for the same way that we’ve advised Congress on how the agencies ought to be held accountable.

So as part of that we do develop a strategic plan, and our strategic plan is for serving the Congress and the nation.  So it’s very important, it starts with consultation with the Congress and ends with consultation with the Congress and then commenting on our draft strategic plan.  It sets out our vision for a five-year period of time on what type of issues we’re going to pursue to support the Congress in carrying out its responsibilities to help provide leadership for the country.

We’ve set broad goals, and the goals are rooted in some of the constitutional responsibilities of the Congress.  For example, we want to provide timely and quality service to the Congress and the federal government to address current and emerging challenges to the wellbeing and the financial security of the American people, and this includes everything from healthcare to education, to transportation, et cetera, across the full breadth of the full government’s responsibilities to help achieve this broad goal.

Also, the second goal is to address the challenges to changing security threats and the challenges of global interdependence, and this includes areas of national defense, homeland security, international affairs, for example.

The third broad goal is to help the government transform itself to improve its programs and activities to meet 21^st Century challenges.  Here we provide a lot of help in terms of implementation of the government performance and results act, many other management reforms across government, the application of new technologies to improve government services and operations, and to develop government’s management capacities to be commensurate with the challenges that the federal government faces right now and going forward.

Our last and final goal is to improve ourselves on a continuous basis and to make sure that we are an organization that has the capacity to deliver on its mission but to continuously improve ourselves in doing so.

Michael Keegan: That’s wonderful.  When I was doing the research for our interview, I came across the eight trends you identify, that by the context around a strategic plan, and I found them very helpful for the IBM Center for the Business of Government, which produces the show.  As you may know, we put out research announcements and we collect third-party research and we support third-party research.  These eight trends really helped us clarify the direction we’re going in, and I found it very interesting.  Could you identify these eight trends for our audience?

Gene Dodaro: Yes, the trends are very, very important, as you point out.  I’m glad that you found them helpful.  And we spend a lot of time making sure that we understand the trends because we believe they will shape the types of challenges the federal government will face and the decisions that policymakers might have. 

For example, first are national security threats, they’ve become more diffuse and evolving – these are areas ranging from regional instability to extremism, terrorism, proliferation of nuclear weapons, cyber terrorism.  These are all things that are very important, and there are also emerging challenges and threats that can be caused by changing economic conditions, even climate change, energy interdependence issues.  So it’s very important for the work that we do.  So that’s sort of trend number one are these broad trends and changing security threats.

So the second are the fiscal sustainability challenges, and the federal government faces enormous challenges in this regard to make sure that we can put the federal government on a more sustainable, long-term fiscal path.  This is dominating a lot of the discussion now in the Congress.  We also look at the state and local sector as well and they face many of the same challenges.

Third are economic recovery and growth.  Obviously, we’re dealing still with the aftermath of the last recession.  Unemployment is high.  Housing market is still weak.  We monitor the banking sector and other sectors of the economy, as well, and look at the federal government’s activities to provide training assistance and others.

Global interdependence is the fourth trend, and this is very important, not only for flows of capital, which receives a lot of attention, but also other areas of trade and products that are really changing how the federal government needs to protect the public and food safety, for example, and medical devices and drugs.

The next trend, science and technology, obviously a lot of changes – nanotechnology, cloud computing, a lot of areas that are potential solutions to help both from an economic growth standpoint in our country but also the effective productivity of the government in the private sector, but they have a lot of issues that need to be dealt with.  For example, cloud computing can be very helpful in driving down cost, but there are also security issues that need to be dealt with the federal government.

Another trend is networks and virtualization.  Obviously, how we learn, communicate and deal with one another is changing dramatically across the world, and it’s from mobile devices, wireless technologies, and et cetera.  And this involves looking and shaping how the federal government is adapting to those changes both from a regulatory standpoint and a broadband technologies allocation, spectrum, for example, but so also how the federal government is using these devices to improve its own performance in dealing with the public. 

Shifting roles of government, this focuses a lot on the use of contractors.  There’s been a lot of discussion and debate about this, even using contractors to carry out our conflicts abroad, and how the federal government should be using the contractors, and what their role should be is very important.

And also the last trend is demographics and social changes.  Obviously, with the advent of the Baby Boom generation there’s far fewer workers now per retiree than there was when we started out these systems before, and so that’s changing not only the financial status of our entitlement programs but also bringing about other important changes in how we provide housing, transportation, immigration issues, to make sure we have a workforce that can sustain economic growth in the future.  And so those demographic and sidal changes are very important to understand because they have important policy ramifications for the government.

Michael Keegan: Yeah, I really do believe GAO did a service and I believe folks should take the time to look at these trends to understand what they entail because they’re in the strategic plan, they do a wonderful job of doing that.

So what I’d like to do is focus in on a few of these trends, and you mentioned trend number two, fiscal sustainability.  Central among the significant challenges we face is the whole national government finding, if you will, a path towards long-term sustainability.  Would you elaborate on the challenges affecting the federal budget both near and long term?

Gene Dodaro: Yes, this is a very important issue.  For years GAO has done long-range simulations of the federal government’s fiscal path in order to illustrate what the long-term affects may be of policy decisions, but also changes, such as demographics and others.  And even before this last recession we warned that the federal government was increasingly coming along an unsustainable fiscal path, that deficits and debt were accumulating over time.  And, obviously, with the last recession, the recession itself, affected both the government’s finances and the government’s policy response to the recession as well as added to the government’s debt burden.  While necessary to deal with the short-term issues, it created other long-term issues that need to be dealt with.

Now the long-term fiscal position of the federal government is really being driven by changing demographics, as I mentioned the aging of our society and more people going on the Social Security roles and also the Medicare, Medicaid roles.  The first of the Baby Boomers became eligible for Social Security in 2008.  This year 2011 was the first year for eligibility for the Medicare program, so this demographic wave will hit these entitlement programs over the next few years, and rising healthcare costs.  Those are the two primary drivers.

Now the Budget Control Act of 2011, earlier this year, has improved the federal government’s situation.  It calls for $2.1 trillion of cuts between 2013 and 2021, and this will help improve the situation in the short term, but even with these changes in the longer term there’s still a serious issue that needs to be dealt with.

Michael Keegan: Yeah, I was wondering as a follow-up, about implication.  Are the implications of the failure of the so-called Super Committee to identify a path forward?  And how, if at all, does it impact your efforts at GAO?

Gene Dodaro: Well, the Budget Control Act provided a backup should the Super Committee not reach consensus and move the legislative package to the Congress, that’s a $1.2 trillion sequestration or changes in the caps over the next 10 years.  So that part will go forward, but obviously there are many implementation issues associated with that, and Congress always has the flexibility to deal with these matters in ways that they believe should be the fiscal policies going forward. 

So we will continue to do our long-range simulations and continue to do the work that GAO does to help support the Congress in making difficult resource tradeoff decisions, try to identify ways to save money, to enhance revenues, and to help them evaluate policy options for dealing with this long-term fiscal issue.

Michael Keegan: Gene, you mentioned global interdependence as a trend that GAO identified.  Would you describe the changing dynamic of global interdependence?  What are the implications of this trend, and how does your work act as a catalyst for greater congressional and public awareness, as well as contribute to addressing some of the problems?

Gene Dodaro: Yeah, this is a very important trend that has a lot of ramifications for the federal government.  A prime example is in the financial institutions and financial markets sector.  We saw where the federal government needed to change its federal regulatory regime in order to deal with these problems, and the failure to do so led to some of the issues that caused the turmoil in the financial markets. 

But going forward, there are new capital requirements in BASO3 that are international standards that we have to implement that.  There has to be stronger coordination on financial regulatory situations.  But the implications go even further than global financial markets and flows of capital. 

They go to how we deal with ensuring food safety for our public.  Most of the seafood and fruits and vegetables now come from foreign sources.  In the medical device area it’s been estimated by the FDA that 80% of the ingredients for prescription drugs come from foreign manufacturers.  And our systems that were set-up to provide assurance and oversight over these areas were set-up initially for domestic production, and now that we have international production and flows we have to be able to do this.

And what we’ve done is we’ve put oversight of food safety and oversight of medical devices on our high risk list that we give to the Congress to show and feature these areas as important areas where there needs to be changes made in the federal regulatory scheme and implementation for dealing with these issues.

We also have put changing the modernizing of the financial regulatory system on our risk list, as well.  So we’ve used the high risk list as a prime vehicle, and then our normal work as appropriate. 

There’s also and the last area I’d mention in terms of this global interdependence, obviously had implications for homeland security, as well.  And we’ve done a lot of work on visa issues and dealing with these things, and there’s a need to really continue to improve our process in these areas.

Michael Keegan: That’s interesting because I want to focus on, say, the food safety example that you gave, and then the work you’re doing at GAO to facilitate a more holistic way of governing, if you will.  And where I’m going with that is the fragmentation that’s associated with the food safety system in the country.  But what are you doing at GAO to sort of address overlap, duplication and fragmentation of government programs, given the fact that the budgets are tightening?

Gene Dodaro: We have a statutory requirement to produce an annual report on overlap and duplication in the federal government that was implemented about a year-and-a-half ago.  We issued the first report on that last March, and we pointed out 34 different areas across the federal government where there was fragmentation, overlap or duplication.  And we identified fragmentation and overlap as harbingers of potential duplications to try to get ahead of the curve on some of these issues. 

For example, we identified that within the military services, each one had their own military command, and that there had been options explored by the Pentagon to try to streamline this process that could have led to savings of anywhere from $200 million to $400 million a year.  And so it’s important to reassess this and take another look at it. 

We’ve found overlap and duplication in dozens of programs that focused on teacher quality, economic development, and surface transportation. There were close to 100 different programs.  So there are opportunities to try to consolidate these programs, but it requires careful decisions to be made by the Congress to make sure there aren’t unintended consequences.

And the report also identified 47 other areas where there are opportunities for cost savings or revenue enhancements to deal, for example, with our yawning tax gap where there’s about a difference of about $200 billion between what’s owed and collected. 

So we have this requirement, we’re working right now on our second report, which will be issued early next year following the President’s submission of the budget for 2013.

Michael Keegan: And one of the things I find about the reports you folks publish and the work your interdisciplinary teams do is they’re chockfull of practicable, actionable recommendations that really do inform both the public and the policymakers, so I find them very helpful.  And what I want to get at is you’re doing a lot of work and yet budgets are tight.  And my question is how do you plan and manage the demand increases that you’re seeing, given the environment we’re in now, without additional resources?

Gene Dodaro: It’s very important to be able to set priorities in doing our work, and that’s why this congressional outreach effort that I’ve been pursuing and will continue to pursue is so critical, Michael.  I mean it’s very important to deal with committee leaders, chairpersons and ranking members of the committees and to understand their priorities and to make sure that we’re focused on those efforts going forward.  And so that’s the main thing.

Now we’re also, you know, making sure that we are operating our own work as efficiently and as effectively as possible, so we’ve undertaken a number of internal efforts to try to look at our business processes to look for streamlining and efficiency opportunities.  But really my approach to identifying this is to really make sure we’re working on the most important issues facing the country and where the Congress needs help to be able to carry out their responsibilities.

Michael Keegan: How is GAO overseeing federal programs and operations to ensure accountability to the American people?  We will ask Gene Dodaro, Comptroller General of the United States, when our conversation continues on The Business of Government Hour.

(Intermission)

Welcome back to The Business of Government Hour.  I’m Michael Keegan, your host, and our guest today is Gene Dodaro, Comptroller General of the United States.

Gene, the GPRA Modernization Act of 2010 offers promise because it encourages a more coordinated, cross-cutting approach to achieving common goals.  Would you elaborate on those goals?  And how does it enhance the requirements for agencies to consult with Congress?

Gene Dodaro: Yes, the Modernization Act of 2010 brings about really important changes in the government performance and results act scheme.  The original act that was passed in 1993 required strategic planning in the setting of goals and measures by individual departments and agencies.  But more and more they really need to have partnerships and multiple agencies involved in dealing with issues and bringing about changes in this interconnected world. 

And so the setting of goals by ONB on cross-cutting issues is very important to dealing with some of these issues and holding government accountable for achieving and resolving some of these problems and improving the performance of the government, whether you’re talking about pandemic, food safety, homeland security issues, and other issues that multiple agencies need to be involved.

It also has a requirement, though, for agencies to identify who they need to coordinate with in their programs and activities, which will bring about another feature that can help identify overlap and duplication but, importantly, the need for greater coordination among departments and agencies.  We find this consistently across the work that we do, there’s a lack of a well-structured mechanism in many areas to bring about coordination across the government.

Now, importantly, there’s also requirements for quarterly reviews of performance and a requirement that the performance measures be posted on a public website so that it will increase transparency of the government’s ability to achieve its performance goals that it set for itself.  Agencies also have to attest to the reliability of the information that they’re posting, and this will bring about important reforms, as well.

So I think that collectively the Act brings about and offers the opportunity for very important reforms to be put in place to improve the performance of the federal government, but implementation will be the key. 

Now part of the original Act required consultation with the Congress, but that hasn’t happened as much as people believe and it needs to happen over time.  So there’s a requirement now that the executive agencies consult with Congress and to reflect in their plans what feedback they received from the Congress and how they dealt with that, so there’s more accountability for ensuring the consultation and the use of it in developing their plans.

I also, in testifying on this legislation, have encouraged the Congress to be proactive as well as reach out to the agencies and provide their views on how they should be measuring their performance.  So hopefully this legislation will provide an important catalyst for improving government’s performance.

Michael Keegan: Now does GAO have a role in evaluating the implementation of the Act?

Gene Dodaro: Yes, we have set requirements to evaluate the planning requirements, is consultation being made, for example, how are they setting the goals and measures, and looking at also then implementation of the issue down the road, and whether or not it’s actually improving the performance of the government and how these measures are being used to bring about important changes. We have set requirements over the next decade really to produce regular reports.

Michael Keegan: Now in the last segment you mentioned the high risk list that you folks do, and GAO has been putting together and highlighting longstanding managerial and operational challenges facing federal government and the federal agencies.  Would you tell us a little bit more about this program and what is specific key high risk areas of late and, more importantly, how do agencies learn to work with GAO to get off the list and to excel in these areas?

Gene Dodaro: Yes, we’ve been creating the high risk list since 1990, and it was to identify problems before they reach crisis proportions.  Initially we started out identifying areas subject to waste, fraud, and abuse, and mismanagement in the federal government.  And the program has evolved now to also include areas in need of broad-based transformation.

There are currently 30 areas on the list.  They include in the classic areas of potential fraud and abuse, for example, the Medicare program and the Medicaid program where there are large amounts of improper payments that the federal government has to deal with, as well as the states dealing with the Medicaid program.

In the transformation area, there’s the need to modernize the financial regulatory system, and transformation and implementation of the Department of Homeland Security is on the list as well.  There are sets of issues that are on the list that are dealing with agencies or issues that are in sort of precarious financial situations, the financial condition of the United States Postal Service, for example, the National Flood Insurance Program, the Pension Benefit Guarantee Corporation are all on the high risk list because of their challenges in the financial area.

Now we work very carefully with each of the agencies that are on the list, to identify what progress is being made.  In order to come off the list eventually there needs to be leadership commitment, there needs to be a good plan that’s resourced properly.  And then, importantly, there needs to be demonstration of progress in actually fixing the items.

We are also engaged in regular meetings between the agencies on the high risk list, ONB, and GAO.  And we meet on a regular basis, and very high level officials from the agency in ONB are involved, Deputy Director for Management, Jeff Zions (ph), and the Deputy or head of the Agency is involved in discussions.  And I personally participate in those meetings in order to make sure that we’re bringing all the resources to bear and identifying what needs to be done to ensure progress in these areas. 

So it’s a very important initiative, and I believe that I discuss some of these issues with the Congress, as well, and our teams do make sure that in those areas where there’s legislative need for reform to fix the high risk area that the Congress has benefit of our insights, as well.

Michael Keegan: Well, Gene, I’d like to turn our attention to one particular function that the government does and does a lot of.  I believe the fiscal year 2010 the federal government spent about $535 billion acquiring goods and services.  The GAO has raised concerns about the contracting practices of federal agencies.  I would like you to give an overview, if you would, of the weaknesses that seem to be affecting government contract management, and perhaps you could describe the four changes that GAO has identified that could actually yield cost savings in this area?

Gene Dodaro: Yes, contracting problems have been problematic across the federal government.  In fact, many areas on our high risk list are contracting areas, contracting issues, the DoD, the Department of Energy, NASA, and interagency contracting issues.  Typically what we find are problems in well defining the requirements as a root cause of many of these issues, and there needs to be more attention to contract oversight once contracts are let, as well.  We’ve reported on this issue many times over the years.

Now important progress is being made in a number of these areas, but there are things in particular that could be done.  For example, there needs to be greater competition in the contracts.  Over the last several years about 30% to 32% of all government contracts are let without competition, and that’s not even counting the contracts where there’s only one bid in place.  There also needs to be important use of award fees and incentives that are in place with in some cases. In the past we’ve found they have paid contractors irrespective of their performance, and so there needs to be wise use.  There’s an important role for incentive fees, but they have to be used for positive performance, not mediocre or subpar performance. 

There’s a need for the federal government, thirdly, to recognize the strategic sourcing uses and use its purchasing power collectively in order to drive down prices and get better deals on its contracts.  The Administration is pursuing some initiatives in this area, as well. 

And so those are some of the ways that the federal government can really improve its opportunities to improve contract management.  And given the vast amount of money that’s used and the important role of contracts in helping the government, this is a real important opportunity for improving performance.

Michael Keegan: So improving performance in contract management yields some cost savings in the four items that you mentioned, I’d like to turn to something that you mentioned earlier regarding the Medicaid program, and that is improper payments.  Can you first tell us what is an improper payment?  And then the other thing I wanted to talk about is what recommendations or solutions has GAO explored or offered that could yield in mitigating this risk and actually realizing some savings?

Gene Dodaro: Right.  An improper payment is any payment that should not have been made.  It could have been for an ineligible recipient, not for approved service, it might have been for an item that was never received, it could be an overpayment or an underpayment.  And so it’s an area where there is a lot of activity. 

The volume of the federal government’s payments in many of these areas, whether it’s Medicare or Medicaid or in other large programs is very high.  So the likelihood of errors can occur.  The total rate that’s been identified is a little under 5% of payments in this area, and so there are billions of dollars that occur in this area.

What we’ve done is, first, have recommendations that help quantify improper payments.  Before the requirements for implementing financial audits in the federal government, there was not a systematic quantification of improper payments.  So we helped, along with the inspector generals and others of implementing the financial audit requirements in the 1990s, in preparing financial statements and having them audited and we began surfacing this issue to make sure that the improper payments were being quantified.  So that was step number one.

Then we worked with the Congress and got legislation passed in 2002 to require the quantification across government and the reporting of these issues.  And then we advised the Congress, and they strengthened the laws and requirements for reporting on this area, made sure the reporting occurred at the proper levels, and that agencies had actions plans going forward.  The Administration has been active in this area, as well, helping set goals that need to be pursued to drive down the payments.  It’s not enough to just measure them; it’s then using that information in order to deal with them in both recoveries of payments that have been made but, importantly, to prevent them from occurring in the first place.

And the application of new technologies is really critical to that, so we’ve made some other suggestions in that regard and have looked at agencies areas.  So this is an area, it’s a lot of money, you know, $100 billion or more, and it is an area where both the Congress and the Administration have been focused on it.  And so I expect to see improvements and better results going forward.

Michael Keegan: You mentioned audited financial statements, and I want to talk about the 21 of the 26 CFO Act agencies have received an unqualified opinion, yet there are major impediments still remaining for the federal government as a whole, being able to receive a clean opinion.  Would you tell us more about these impediments and what you can do to achieve this clean opinion?

Gene Dodaro: Yes, now this is a very important area.  I’ve been working on this for many years.  It’s very good that there’s progress at individual departments and agencies, 21 out of 24, as you mentioned, now have unqualified audit opinions.  When we first started this, implementing it across government in 1996 only six of 24 were able to get a clean opinion.  So there’s been great progress, but there are very important large agencies that are yet unable to get clean opinions – the Department of Defense, and the Department of Homeland Security are two examples of that area.

Now there’s been progress in both of those areas, but really the three main impediments to getting an opinion on the government wide consolidated statements are focused on making improvements in the Department of Defense.  They own so much property and their budget and their expenditures, and operations are so large that they’re a very material item to the consolidated financial statements of the federal government.

The second impediment is eliminating inter-governmental transactions among departments and agencies and reconciling their fund balance with the Treasury. This has been an issue that’s been very meddlesome and difficult to deal with.

And, thirdly, is the process of preparing the financial statements and Treasury’s compilation process to make sure that it is consistent with the underlying financial statements at departments and agencies. This hasn’t yet been able to be done without material changes to the financial statements or adjustments in the numbers. 

And so those are the main three areas.  In all three I’m pleased that there’s activity underway to make necessary improvements.  The Congress has levied some tough requirements on DoD to improve its financial statements and to be auditable by 2017.  The Secretary of Defense has said they want to be auditable in their statement of budgetary resources by 2014, and they have a plan underway to be able to do this that is focused on improving their budgetary numbers in existence and completeness of their records on military equipment. 

Both of these things are critical to their operations.  And Treasury has a number of activities underway with ONB to deal with inter-governmental eliminations and preparing the financial statements, so I’m hopeful that we’ll see continued progress on these items, particularly before my tenure ends.

Michael Keegan: Well, you had mentioned in our last segment the term tax gap, billions of flow to the Treasury by closing the difference between taxes owed and taxes paid.  Would you explain what is tax gap?  And would you outline some of the strategies GAO has offered to eliminate it or mitigate it?

Gene Dodaro: Yes, tax gap is basically the difference between the taxes that people voluntarily comply with and what’s owed.  And the latest estimate that was made, and it’s somewhat dated now, is there was a net tax gap of $290 billion.  And one of the things that we’ve suggested, for example, is the IRS periodically update that estimate, and they’re in the process of doing that now, so we should have a new estimate soon.

We’ve looked at a number of areas that are really important to us.  First, there’s a number of things that could be done.  The first is to simplify the tax code.  I mean it’s very difficult for people to figure out, and they spend a lot of time and energy on it, so that’s something the Congress needs to do, working with the Administration.  Secondly is to get additional information from third parties that the IRS could use to corroborate the information it’s getting from taxpayers, there could be more information requested from financial institutions and others that the IRS could use.  There could be more compliance checks before refunds are given going forward. 

So we’ve had a number of recommendations in this area, and there’s important progress, for example, there’s been legislation, the IRS is implementing new programs to require continuing education and requirements for paid tax preparers.  Now this is very important because a lot of people use paid tax preparers to make sure that they’re giving proper advice and that the government is benefitting from that, as well.  And so this is an area we have continual work underway on and we hope to offer additional suggestions in the future.

Michael Keegan: Okay, in an era of fiscal constraint, it’s critical that agency leaders act with strategic intent and keep their workforce motivated to meet mission.  Reflecting on your leadership at GAO would you tell us how you have kept your employees and staff focused and motivated in the face of dramatic, sometimes painful changes?

Gene Dodaro: Yes, I mean, first and foremost, we need to continue to be doing the most important work necessary for the country.  People in GAO come to GAO and stay because of the interesting nature of the work that we do and the ability to make a difference on key national issues, so that is very important and it goes back to my earlier discussions about prioritizing our work and working with the Congress to make sure that we’re working on the most important issues.

Beyond that, however, that’s not enough.  And today’s environment you need to keep your employees engaged.  For example, in dealing with our budget situation we have worked with our union very closely, and our employee advisory groups to get ideas from them on how we can deal with our budgetary challenges.  Every employee in GAO had the opportunity to post their suggestions.  We received well over 500 suggestions from individual employees of what we could do to streamline our operations and save operations.

So, also, we communicate very effectively with our employees, what our situation is, how we’re planning to handle it.  For example, I visited every one of our 11 field offices this summer to make sure that they understood the situation and that they had the opportunity to ask me questions.  And so we have regular communications.

We do our decisions on a fact based basis, and I had an address for all GAO employees in October outlining how we were going to handle our budgetary challenges this past year, and provided a lot of details to them.

So keeping them engaged keeps them motivated and it benefits the organization.  We have an organization filled with people who give advice to the rest of the federal government on how to improve their operations, and we can benefit from that at GAO, as well.

Michael Keegan: What does the future hold for the U.S. Accountability Office?  We will ask Gene Dodaro, Comptroller General of the United States, when our conversation continues on The Business of Government Hour.

(Intermission)

Welcome back to The Business of Government Hour.  I’m Michael Keegan, your host, and our guest today is Gene Dodaro, Comptroller General of the United States.

Gene, I have the pleasure to talk to most of my guests about the use of collaboration and partnerships among agencies, branches of the government and the private sector to achieve mission results.  How are you folks at GAO leveraging partnerships and improving management operations?

Gene Dodaro: We’re using partnerships in a number of areas.  This is very important to make sure we have the brightest perspectives as possible and are leveraging our resources through the use of those partnerships.  For example, we work very closely with the Inspectors General throughout the government on the regular annual audits of financial statements in department and agencies.  They do many of these audits or arrange for them to be done by CPA firms, but we’ve worked out a joint methodology that’s used so that we can use the results of that work in order to help us in determining our audit opinion on the consolidated financial statements of the federal government. 

We have a similar methodology with the IGs we’ve worked out in looking at security issues across federal government.  Our partnerships with the IGs are very important, and we do that consistently.  We also have partnerships with the state and local audit community.  We work with them very closely in a number of areas.  We’re contemplating doing some increased work in infrastructure issues, for example, that many of them feel are important at their level.

We work, as I mentioned earlier, with ONB in looking at the high risk areas, and that’s a very important partnership and both GAO and ONB are working on these issues together with the agencies, you can create a lot more synergies to bring about positive changes in the government.

I also work in partnerships with my counterparts around the world, heads of national auditor offices in other countries.  For example, I’m leading a task force on the global financial crisis, and we have 25 countries involved, including China, countries in Europe, and other areas to look at past crises, what has led to the current situation, what needs to be done going forward, what role can the National Audit Office play in ensuring the prevention of any future crisis that might occur later. 

We’ve also been working with the international community.  I was heading up the international organization, audit offices, coordination with donor communities.  And we’ve established a partnership.  There are about 16 donors around the world that have signed this agreement with us.  The purpose is to strengthen the capacity of national audit offices in developing countries, areas where a lot of foreign aid goes in there, but there’s not always the strongest accountability mechanisms to ensuring that the aid goes to poverty reduction and to improve the economic and social conditions in these countries. 

So we have the World Bank, the International Monetary Fund, European Union, United States AID have signed on to this agreement, along with a lot of the regional banks around the world, including the Islamic Development Bank, the African Development Bank, et cetera.  So those are just some sampling of the partnerships.  We also use a lot of advisory groups to help us in GAO identify issues that are important.

Michael Keegan: I’d like to talk about major policy decisions about fiscal policy.  The shape and the role of federal government will and should be made by elected officials, as you pointed out.  But you also have an interesting insight, if you will, on the role that public managers can play in helping elected officials manage through these challenges.  Would you elaborate?

Gene Dodaro: Yes, federal managers really can step-up during these periods of times and really help officials in a number of ways.  First, is pay attention to the people; pay attention to the workforce.  When there are difficult challenges a workforce can feel devalued and dispirited and you need to engage the people in the process to help them to manage the changes, and not let the changes manage them going forward and so trying to work with the workforce.

Secondly, is to step-up efforts to fix these high risk or longstanding problems in the agencies that drain resources unnecessarily away from productive means.  There are a lot of problems in the management and infrastructure of government and there are opportunities to provide strengthened roles to be more efficient, a better use of technology, and to deal with these improving the capacity of the governments to meet these challenges and eliminate wasteful activities and unnecessary departures from what would be productive use of resources. 

So public managers can do a lot in this process, and they can also offer up suggestions and alternative ways of dealing with these issues that can minimize any adverse or unintended consequences because of their deep knowledge of the programs and activities.

Michael Keegan: Well, Gene, what advice would you give someone who is thinking about a career in public service?

Gene Dodaro: Public service is a tremendous way to give back to your country.  It’s the reason that I was drawn to the federal government many years ago.  That’s why I’ve stayed in the federal government.  It’s a very rewarding career, and people should think about pursuing a career in public service at any point in their career, you know, whether they start out as an entry level person or they come in as a mid-career manager or senior manager in government, it’s very important to be able to do that and to have the perspective to help your country. 

We’re only going to be as good as our public service in going forward to help government carry out whatever missions are given it by our legislatures and by our policymakers.  But we need to do the best we can to make sure we have the strongest country possible and that we remain economically strong and can deliver to all of our democratic institutions in a way that well serves the American public, not only now but well into the future.

Michael Keegan: Wonderful.  Gene, I want to thank you for joining me.  It’s been a wonderful conversation but, more importantly, I want to thank you for your 30 plus years of service to the country.

Gene Dodaro: Thank you very much, Michael.  I’ve enjoyed being here today.  I enjoy public service, and look forward to continuing to do my part and to make sure that GAO does its part to help serve the Congress and the country.  Thank you very much.

Michael Keegan: Thanks, again.  This has been The Business of Government Hour featuring a conversation with Gene Dodaro, Comptroller General of the United States and head of the U.S. Government Accountability Office.

Be sure to join us next week for another informative, insightful, and in-depth conversation on improving government effectiveness. For The Business of Government Hour, I’m Michael Keegan, and thanks for joining us.

Host: This has been The Business of Government Hour. Be sure to visit us on the web at BusinessofGovernment.org. There you can learn more about our programs and get a transcript of today’s conversation. Until next week it’s BusinessofGovernment.org.

Originally Broadcast August 16, 2008

Washington, D.C.

Announcer: Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness.

You can find out more about this center by visiting us on the web at businessofgovernment.org.

And now The Business of Government Hour.

Mr. Kamensky: Good morning. This is John Kamensky, senior fellow of The IBM Center for The Business of Government, sitting in for Albert Morales this morning.

Our nation faces a range of key public policy trends, challenges, and opportunities which are likely to shape our society, the place of the United States in the world, and the role of the federal government in the decades to come. At a time of large and growing long-term fiscal imbalance, shifting demographics, concerns over economic sustainability and national security, the nation requires a government that's results-oriented and accountable.

The U.S. Government Accountability Office, or GAO, works to improve the performance and to ensure the accountability of the federal government for the benefit of the American people.

With us this morning to discuss GAO's efforts in this area is our very special guest, J. Christopher Mihm, managing director of the Strategic Issues Group at the U.S. Government Accountability Office.

Good morning, Chris.

Mr. Mihm: Good morning, John.

Mr. Kamensky: Chris, before we get started, could you set some context by providing a sense of the history and mission of GAO? When was it created? What is its mission today? And who does GAO report to?

Mr. Mihm: The GAO is an independent, non-partisan agency, and we work for Congress. We're often called the "congressional watchdog," and our responsibilities are to investigate how the federal government spends taxpayers' dollars, and help the Congress execute its constitutional responsibilities.

We've been around since 1921. And for most of our history, we were known as the General Accounting Office. Several years ago, through a statutory initiative, we had our name changed to the Government Accountability Office, still kept the same brand, the GAO acronym, because it better reflected what we do today. And it's a wide range of policy analysis, program evaluations, audits, and investigations on behalf of the Congress.

We're about 3,100 people spread in 11 different offices around the United States. We do work on a bipartisan basis for chairmen and ranking members or by mandate and legislation. All of our reports, or the overwhelming majority of our reports, are available on our website at www.gao.gov, and are available to the public free.

Mr. Kamensky: Could you tell us a little bit more about how GAO's organized about the size of the budget? You just mentioned that you had 3,100 employees, and that you've got 11 field offices. Are any of those field offices overseas or are they all here in the U.S.?

Mr. Mihm: They're all here in the United States. And as I mentioned, we have about 3,100 employees. Our budget is about $490 million each year. We focus an awful lot on the outcomes that we return to the American people and the taxpayers. We measure very carefully what the financial performance of the agency is. And last year, for example, we returned $46 billion in financial accomplishments to the taxpayer. That's a $94 return for every dollar invested in GAO.

Mr. Kamensky: Now, how is GAO organized? You've got several, what, operating groups?

Mr. Mihm: We have 13 different mission teams. Most of those mission teams are focused on major programmatic or organizational aspects of the Executive Branch, and so we have teams that focus on financial markets, focus on the defense and national security and homeland security areas, focus on the environment.

Strategic Issues is a bit of the team that I have the honor of leading. It's a bit of a different team in that we have cross-cutting responsibilities looking across the federal complex at a series of public management and governance issues that are broader, longer term, more strategic in nature.

Mr. Kamensky: Tell us a little bit more about your role as managing director. Like what are your specific responsibilities or duties, or some of the stuff that goes on under your area in terms of the themes or the issues, and how they support the overall GAO mission.

Mr. Mihm: We have a number of key programmatic areas or governance issues that we look at. We look at the nation's long-term fiscal crisis and budgeting, both from the budget process from the congressional angle as well as budget execution within agencies. And so we have responsibility for GAO's broad cross-cutting budget work.

We have responsibility for GAO's cross-cutting work on strategic human capital management, which is one of the high-risk areas for the federal government. We have lead responsibility for work that's being done now on the Decennial Census, work that's on tax policy, tax administration. We look at federal regulatory policy. We look at intergovernmental and, increasingly, intersectoral relations. Much of that work these days is focused on the federal efforts in rebuilding post-Katrina. And then we focus on broad performance management, strategic planning, organizational alignment issues within the federal government. Much of this work is done in partnership with our colleagues and other teams around GAO to make sure that we the agency are presenting an integrated and sophisticated approach to the public management issues that we face.

Mr. Kamensky: And what do you see as the top three challenges that you face in your position? How are you addressing these kinds of challenges?

Mr. Mihm: I think the top three challenges, and I think they're fairly consistent with what my colleagues across the office face, are first, a growing supply-and-demand imbalance -- you know, the available resources in order to do that. You know, the GAO budget has remained largely static, or at least, unlike many other agencies, has not kept full pace with inflation in recent years. Yet at the same time, the congressional demand for GAO audits and investigations has skyrocketed, which is a good thing. It shows that we're being responsive to the client and they're seeing value in what they're getting from the GAO. But making sure that we have a good understanding of congressional priorities, making sure that we're doing the work for the Congress that matters, and how we balance all that off is one of the big challenges that we face.

Second, directly related to that, is making sure that we are attracting, retaining, developing the high-quality talent that we need to be successful, not just today in terms of executing the engagements that we have, but also tomorrow, and tomorrow meaning 5, 10, 15, and 20 years out; making sure that we have in place, in other words, both a recruitment and retention strategy and development strategy that makes sure that people are engaged and having their career aspirations met by working at GAO in strategic issues.

The third challenge that we face is making sure that we are doing the right work on the important issues that confront the Congress. And that means making sure that the engagements that we do -- which is -- you know, what ends up eventually in a blue book, it's the term "engagements" -- make sure that the engagements are really delivering demonstrable results to the American people. That ROI number that I referred to earlier, making sure that we're getting financial results from that, making sure that we're getting non-financial accomplishments for that, making sure that our work is focused on demonstrable outcomes.

Mr. Kamensky: Could you describe for our listeners your career path? How did you begin your career and wind up where you are today?

Mr. Mihm: It's through a very odd route. I was -- both in undergraduate and in graduate school, I was a political philosophy major. I was -- in graduate school I was on a Ph.D. track to eventually get a doctorate, and then I was looking forward to teaching. And then I had the wonderful opportunity -- I was at the University of Virginia for graduate school -- I had the wonderful opportunity of taking a couple of courses from Don Kettle, who is now with the Fels Institute at the University of Pennsylvania. And it's one of those kind of life-changing set of courses that I was exceedingly fortunate, as I said. And that caused me, and with a variety of other reasons, to really change my focus and think about -- more about GAO.

We were very fortunate at that point at UVA that Fritz Mozier was in residence at UVA. And he was the preeminent scholar on GAO at that point. And so we had pretty much a direct transmission belt into GAO if you did well at UVA, and I was very fortunate to do that.

So I've been at GAO about 25 years now and it's just a fantastic place to work. What I have found is obviously, first and foremost, it's the quality of the colleagues that you have at GAO and the people that you get to work with. I mean, every single day, every single meeting that I go in to, I'm just re-impressed about the intellect, experience, sophistication of my colleagues at GAO. Likewise, it's the ability to work on a variety of wide-ranging issues that really matter.

And then the third thing that I find so appealing about GAO is how much we do try and track the results of our work. We work so hard to make sure we understand the results that taxpayers get from their investment in GAO.

Mr. Kamensky: That's really cool. Now, how has your previous experience prepared you for your current leadership role? And how has it shaped your management approach or leadership style?.

Mr. Mihm: I think the single most important thing that has prepared me is I've been very, very fortunate at just about every point in my career to have a good set of mentors and supervisors and leaders for myself that I could try and model in very imperfect and inadequate ways. But nonetheless, see what they were doing and then do my best to take from that and give back and use that as my approach to management.

One of the key things that I learned from managers all throughout that I've had the honor to work for is the important of collaboration, the importance of bringing people in to decisions, both to get the best guidance and perspective that -- from people when I have to make a decision, but also to get buy-in from those that would be affected by that decision. And I've always found that to be the key to any good decision I've ever made, is making sure that I've reached out and brought in the right set of people. And fortunately, there have only been a few cases, but in those few cases that I know of that I thought, geez, I didn't handle that right, if there's been a comment element, it's been I didn't involve the people I could have and should have involved in that decision.

Mr. Kamensky: Well, that's great advice.

How does GAO improve government performance and accountability? We'll ask Chris Mihm, managing director of Strategic Issues at the U.S. Government Accountability Office, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Kamensky: Welcome back to The Business of Government Hour. I'm your host, John Kamensky, and this morning's conversation is with Chris Mihm, managing director of Strategic Issues at the U.S. Government Accountability Office.

Chris, could you tell us a little bit more about GAO's 2007/2012 strategic plan and the performance framework that turns its mission into method? Specifically, what are the seven key themes that provide the context for the plan? And what role did you and your office play in developing this plan?

Mr. Kamensky: In terms of the mission into method -- I like that as a question, by the way -- is that we like to say that our strategic plan begins and ends with the Congress. And so at the beginning of our strategic planning process is that we have a very disciplined way of going up and sitting down in a bipartisan, bicameral way with congressional clients and making sure that we have a good understanding of what their needs, what their priorities, what the big issues that they expect to confront in the coming years.

We then have the responsibility of going back and crafting that in the context of other external forces that we think that are shaping the nation and shaping governance. And that gets into the key themes that you were asking about, things like changing security threats, sustainability concerns across a variety of areas, concerns about economic growth and competitiveness, global interdependency, forces of societal change, quality of life concerns, and then concerns relating to science and technology.

And from those key themes, the priorities that we get from our conversations with the Congress, we've devised four broad strategic goals for us -- that the first is to provide timely quality service to the Congress and the federal government across current emerging issues dealing with the well-being of the American people, basically domestic policy-related issues.

The second strategic goal is to provide service that responds to changing security threats and challenges of global interdependence, basically an international focus.

The third is, and the strategic goal where I do most of my work, is to help transform the federal government and how it does business to meet 21st century challenges.

And then the fourth is an internal goal for us, and that's to maximize the value of GAO by being a model federal agency and world-class professional services organization.

We want to be a model for a wide range or the entire range of public management issues. But whether it be human capital, strategic planning, acquisition, that's both good in its own right to assure the Congress that they're getting return on investment in GAO, that we're efficient, but it's also we feel it's appropriate that if we're going to be telling other agencies what to do through making recommendations, that we're doing it -- we're holding ourselves to at least that high a standard in our own internal management.

From this strategic framework, we identify a set of performance goals and then what we call key efforts, what most would be strategies in kind of the Government Performance and Results Act, GPRA, context. And we then go back to the Congress and make sure that -- and then validate with them, make sure that we've heard them accurately, that we have a good understanding of what sort of engagements that they're going to be looking for in the coming years. And then from that, we publish the strategic plan up on our website and obviously available to the American people.

We also make sure that we publish each year a performance and accountability report that provides both the Congress and the American people with a report card on how we're doing. What are they getting from GAO in terms of its performance? And so we believe in transparency and accountability for ourselves as well as for others.

Mr. Kamensky: That's great. One of the things that I've noticed is that GAO over the past few years has been reporting that the federal government faces large and growing structural deficits, mainly due to rising health care costs and demographic trends of the aging population, and that this is placing the federal government on what GAO calls an imprudent and unsustainable long-term fiscal path. Could elaborate a little bit on some of these factors and the long-term fiscal challenges and what's being done or can be done to address them? And what's GAO doing specifically to increase public understanding of this issue?

Mr. Mihm: The question of the long-term fiscal challenges that we face is really one of the most pressing issues that the Congress faces as it makes decisions. It's one of the most pressing issues that we face in our capacity as citizens when we think about elected leadership. Since the early 1990s, we have been running simulations that have been looking at a variety of long-term projections. The bottom line of this is that you can play with various assumptions about tax cuts or not tax cuts or alternative minimum tax or not alternative minimum tax or how we deal with that. The bottom line of it, though, is that despite what you do with those assumptions, because of rising health care costs and demographics, that is the retirement of the baby boom generation and, in particular, the intertwining of those two issues, as you mentioned, we're on an unsustainable fiscal path.

And there's a number of very difficult decisions that decision-makers -- that we as taxpayers need to make in the coming years. The sooner we get started on this, the better, but decisions associated with what do we want government to do, what size do we want government to be, and who do we want to do government's business, and how do we want government to be financed.

We issued back in January of this year under Comptroller General Walker a report that he authored out called "A Call to Stewardship." And what that offered was a series of process reforms, not the hard policy reforms that need to take place, but a series of process reforms that Congress and the Executive Branch could do to start teeing up, to start offering up the information and start facilitating the types of hard decisions that need to be made. And that's something that's, again, available on our website. And as I mentioned, it's called "A Call to Stewardship."

Mr. Kamensky: For example, what might be one of those process reforms?

Mr. Mihm: Well, we think there's a number of things. One, for example, would be that we need a set of key national indicators. We're one of the few developed countries that doesn't have a set of key outcome indicators so that we can understand the nation's position and progress across a wide range of social, demographic, and other key policy areas. We believe that those would help then decision-makers know how we're doing now in an absolute sense, how we're trending, and how we're doing relative to other countries to help inform policy decisions, inform strategic planning, inform budget and appropriations decisions.

Another key one is that we've long suggested to Congress that they consider the formations of various commissions to help deal with some of these intractable issues. There's a variety of proposals that have been kicking around on the Hill and that the Comptroller General Walker when he was around talked an awful lot about. How you structure those is obviously a call for the Congress, but it would -- something that would provide the Congress a vehicle for beginning to grapple with some of these hard decisions. That's just two of them.

Mr. Kamensky: And those sound like things that the new Congress and the next president may wind up having on their plate.

Mr. Mihm: We would hope so, yes.

Mr. Kamensky: Another thing is that a lot of federal agencies across the government have attempted embarking on large-scale organizational changes, for example, the defense business transformation effort. And at the same time, agencies have these longstanding management problems that GAO has identified, and they've been on your high-risk list for more than two decades in some cases that are undermining their ability to get their missions done and achieve results. GAO's proposed creating a chief operating officer or chief management officer in federal agencies. How would agencies go about setting up a position like this? And sort of what's the status of this kind of a proposal?

Mr. Mihm: The chief operating and chief management officer concept is kind of new to the United States, but it's certainly not new to the rest of the world. In fact, most of the market-driven democracies, a notion of a chief operating officer for executive agencies is the predominant form of service delivery in many of those countries, and so it's a tried and tested approach that's been used overseas. Vice President Gore, as part of the National Performance Review and the notion of performance-based organizations, imported a version of that here.

The basic idea here is that there are a series of management issues, exactly what you were mentioning, that are longer term, more intractable, more transformational in nature; that it is unrealistic to expect political appointees who come to Washington with often a 12- to 24-month tenure, with a policy orientation rather than a management orientation, it's unrealistic to expect them to be able to devote the time, the energy, the scarce political capital in order to address these issues.

And so what we've looked for is what are elements? What can be done to elevate attention to these transformational issues, to integrate the various functional management stovepipes of the chief financial officer, the chief human capital officer, the chief acquisition officer, all the various -- the CXOs, the chief suite -- what can elevate? What can integrate? And then what can institutionalize? What can help us make sure that we maintain momentum on changes and put in place action plans that can transcend the tenure of any individual political appointee?

One of the notions that we've come up with is this notion of a chief operating officer, which would be a very senior position within an agency, probably on a term appointment, probably with a good performance contract. If she or he met the objectives and the management objectives in their performance contract, there should be sizeable rewards for that. And if they don't meet those objectives, they should be expected to achieve excellence elsewhere. And so the idea here is to create mechanisms that we can elevate, integrate, and institutionalize attention to important management and transformational challenges.

Mr. Kamensky: Have any agencies done anything like this?

Mr. Mihm: Well, there's certainly an awful lot of work that's being done in kind of consideration in the context of Department of Homeland Security. Over at the Department of Defense, obviously, there's been a lot of talk and even some statutory language that's been considered on that. So we are seeing progress on this and I think that's very healthy.

It's not as though that every agency is going to need a COO the way I was describing it a moment ago. A lot will turn on what are the particular management challenges that an agency may face? What is the culture of that agency? Some may need that person at the very top level. In other cases, it could be an assistant secretary for administration, for example, or an undersecretary for management that fulfills that critical role. What's most important is that we have some mechanism in place in agencies to really identify plans for long-term transformation and to sustain those plans across the political leadership.

Mr. Kamensky: One of the areas that you've been following over the course of your career has been the Census Bureau. And that also is in your purview in your current role now. The Decennial Census, which is held every 10 years and the next one will be 2010, is basically the foundation for measuring the nation's population, and would contribute to, for example, the key national indicators that you mentioned. It's a constitutionally mandated activity. It's used to apportion congressional seats, redraw congressional districts, and also to allocate hundreds of billions of dollars in federal aid between states.

Could you tell us about what your efforts have been in identifying opportunities to have a more cost-effective Decennial Census? And maybe you can tell us a few of the key GAO recommendations that'll help improve the 2010 Census.

Mr. Mihm: I've been very fortunate to be able to work on Census issues beginning with the -- in the mid-1980s, and so I had an opportunity to work on the 1990s Census, the 2000 Census, and now back being able to do some work on the 2010 Census. The Census is just a fascinating undertaking. I mean, it has incredible importance, as you pointed out just a moment ago. And so it's the -- what I've always found, it's this wonderful intersection -- almost a perfect storm of very, very difficult public management issues: you know, something that's done once a decade with hundreds of thousands of temporary employees; of politics because of its -- of the importance of apportionment and issues associated with the undercount; and the third leg of that kind of perfect storm is of science, and that is the sense of how the responsibility that we place on the -- we as the American people place on the Census to accurately capture and report on the changing nature of American society, changing nature of families, changing nature of how people characterize or set themselves in terms of ethnicity, and the rest. Intellectually, it's just a fascinating enterprise.

Having said that, it's also exceedingly difficult for the managers over at the Census Bureau that actually have to run this thing. And I would not envy them for a moment the great challenges that they face.

In March of this year, we put the 2010 Decennial Census on our high-risk list. And as you know, those 28 programs that, in our view, are most vulnerable to waste, fraud, abuse, or, in the case of the Census and other areas, that if they are not successfully executed could significantly undermine the cost of the federal government, the performance of federal programs, and the confidence that the American people have in government.

The big issue that the Census Bureau faces this time is they had been relying very, very heavily on the use of handheld computers for absolutely critical parts of Census-taking. Those have broken down and we think wisely the Census Bureau is now moving away from key parts of that. That leaves open, though, that they are now having to go back to a paper-based what they call non-response follow-up. That's the -- when the Census-takers come to the house of the tens of millions of houses of tens of millions of people that didn't respond through the mail. That's something they've done before, but they haven't tested in this Census cycle. And so the integration of that is going to be an enormous challenge. It also will add a billion dollars or more to the cost of the Census this time around, which is another reason we put it on the high-risk list.

So it's a very, very difficult, very sensitive operation that they're under, but also an exceedingly challenging one. We're fortunate that this Census cycle, that we have really aggressive and thoughtful congressional oversight on that. And that's always been one of the keys that we've been urging, that to make sure that we have congressional oversight during the Census cycle when it matters, that is when there's still time for the Census Bureau to make adjustments. And again, we're very fortunate on a bicameral basis with obviously the House, because of apportionment issues kind of taking the lead, has had real good oversight and very thoughtful oversight on this.

Mr. Kamensky: Another area that's in your purview is the tax system. The Internal Revenue Service developed the concept called the "tax gap" as a way to measure the extent to which taxpayers actually comply with their federal tax obligations. The tax gap measures the extent to which taxpayers don't file their tax returns and pay the correct amount on time. Would you tell us a little bit about what GAO's efforts are in conjunction with its sister agency, the Congressional Budget Officer, to pinpoint specific solutions to reducing the federal tax gap?

Mr. Mihm: The gross tax gap is $350 billion. About $55 billion of that, $60 billion, will eventually be collected. And so the net, you're looking at about a $300 billion tax gap, 290 to $300 billion tax gap.

The important thing there is that this is money that the Congress and the Executive Branch have already determined ought to be collected. So we're not talking about tax increases in anything. So going after this money or making sure the proper amount of taxes are paid is a real fairness issue for everyone else who does pay their fair amount of taxes, because it places an additional burden on them because some people are not paying, and to the tune of 300 to $350 billion.

Mr. Kamensky: But that's also about the size of the annual deficit.

Mr. Mihm: You could get an awful lot to -- our point is that when you're dealing with money that big, you don't have to get the whole $300 billion. In fact, you couldn't get the whole $300 billion. We wouldn't want to live in a society that would have that level of scrutiny into people's private lives. But with money that big, if you get 10 percent, you're talking $30 billion.

One of the things that we did in September a year ago, is we sat down with the Congressional Budget Office, as you mentioned, as well as the Joint Committee on Taxation, and had a forum on the Hill. Invited participants from the tax practitioner community, tax experts, the IRS obviously, to talk about strategies for addressing the tax gap. You know, how can we go after this? And understanding we're not going to get the whole thing, but what is it realistic to get and how can we go after this? We ended up issuing a report on that. And, again, like everything else, to keep plugging the website, that's available on gao.gov.

But the basic issue here is that we need a multi-prong strategy in order to address the tax gap. Part of it is we need additional enforcement resources. You know, IRS needs to do, in a sense, more enforcement and better targeted enforcement.

Second, we need to improve the customer service. Even though the amount of -- the effect that customer service has or improved customer service has on reducing the tax gap hasn't been well documented, there is at least an intuitive sense, and to the extent that data are available suggests that better customer service is actually going to help. That's basically going after or assisting the people who want to pay the right amount of taxes, but make an honest mistake, you know?

The third thing is that we probably need some changes in legislation to have additional information reporting. And one of the things that we've been focusing on here is information reporting associated with capital gains. And as we all know, when we fill out taxes out -- or at least I'll speak personally -- when you fill out taxes each year, figuring out the basis of stock sales and how all that factors in the tax is always an enormous challenge. So those are the three key strategies that we think need to be put in place.

Mr. Kamensky: A third area that is in your purview in Strategic Issues is assessing the implementation of the federal government's pay-for-performance systems. Could you tell us a little more about what pay-for-performance is, and what are some of the positive effects of implementing it as well as some of the drawbacks? And what are some of the best practices that you've seen in your review of the implementation in some agencies?

Mr. Mihm: The single most important thing that we found when we look at pay-for-performance efforts is that you just can't overlay a pay-for-performance scheme on an agency's existing performance management system and expect to have success in this. It's that in very many cases, agencies don't have in place a sound performance management system, and by that I mean one that is linked to organizational results, creates a line of sight for individuals between what they're doing and outcomes. They don't have in place a performance management system that's been validated, that has credibility with staff and supervisors and managers, and then if you try and overlay a pay scheme on that, it fails and people say, ah, it shows that pay-for-performance doesn't fail. And so the first thing that people need to -- the agencies need to do is to make sure that they have a good performance management system in place.

The second thing then they need to do is make sure that they don't implement pay-for-performance as just a one-off management improvement. Rather, it needs to be part of a package, a larger package of reforms an agency puts in place, designed to improve the performance and change the culture of the organization to be more results-oriented.

The third thing that agencies need to make sure that they do is that they need to make sure that they fund the program adequately. I testified on the Hill not too long ago, and which I was mentioning that if you want to kill pay-for-performance, the way to do it is to try and do it on the cheap. And, in fact, it takes quite a bit of investment, in a sense, up-front investment in new performance management systems and technology. But it also takes investment in training, in making sure -- and that's continuing training, not just in the rudiments or the tools and techniques of how to do performance appraisals under the new system, but on basic management, on how do you have conversations with adults about expectations and how do you have conversations on feedback and how do you link daily operations to external results. All of this is part of the larger package of things that need to take place if you're going to be successful in a pay-for-performance scheme.

I think one of the most important things that pay-for-performance does in an organization, if successfully implemented as part of this larger array of reforms, is, first, it gives you an opportunity to reward your top performers, to recognize them. It's a powerful retention device. And I think what's also very important is that, especially with the younger generation that's now coming into the public service, they have an expectation that their pay will be linked to their performance and to their contributions. And so a pay-for-performance system sends the right set of signals to people that you're trying to recruit and retain, and that is that the signal is that we value and reward high performance.

We have it in GAO, and obviously we've been very successful with it. We haven't been perfect by any means, and our way isn't the only way to go. But we've been very successful with it, and I wouldn't trade our approach for -- certainly for the GS system.

Mr. Kamensky: How best to manage through transitions?

We will ask Chris Mihm, who's the managing director of Strategic Issues at the U.S. Government Accountability Office, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Kamensky: Welcome back to The Business of Government Hour. I'm your host, John Kamensky, and this morning's conversation is with Chris Mihm, managing director of Strategic Issues at the U.S. Government Accountability Office.

Chris, GAO's at a crossroads of sorts these days. David Walker, who served as the Comptroller General of the United States and head of the GAO for almost a decade, just left a little earlier this year. And how there's a need to select a new Comptroller General. Chris, could you give us an overview of the selection process for Comptroller General? And what are the critical elements of a selection process and who's involved in this process?

Mr. Mihm: The process for selecting the Comptroller General was established by the GAO Act of 1980. And then under the Act, the Comptroller General is appointed by the President with advice and consent of the Senate. When a vacancy occurs for the CG, Congress establishes a commission to recommend individuals to the President. In this case, the commission consists of the Speaker of the House, the President Pro Tem of the Senate, the majority and minority leaders of the House and of the Senate, and then the chairman and raking members of our two authorizing committees, which would be the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Oversight and Government Reform.

And what they do is they get together and they must recommend at least three individuals to the President. The President may request that the commission recommend additional individuals. However, the President then selects an individual from those recommended by this congressional commission to be Comptroller General. The President's nomination must then be confirmed by the Senate. And so it kind of begins with the Congress, goes to the President for selection, and then goes back to the Senate for confirmation. And as you mentioned, it's a 15-year, non-renewable term.

You mentioned we're at a crossroads. I mean, we were obviously extremely fortunate that Dave Walker was the Comptroller General for the 9-1/2 years. He's since left, obviously, to head the Pete Peterson Foundation. We're also, though, extremely fortunate that we have as an acting comptroller General Gene Dodaro, who is a lifelong GAO person. He's been a leader of the organization for many, many years. He was the chief operating officer under Dave Walker. We have a strategic plan in place. We have a set of annual performance goals in place. And for us, it's full speed ahead on our initiatives.

Mr. Kamensky: Given that this is an election year, could you tell us what GAO's role and responsibilities are during a government that's in transition? Specifically, what role does GAO play in facilitating a smooth transition between administrations, and what kind of plans do you have in place this time around to assist during the transition?

Mr. Mihm: This, as you know, is just a very important political transition. I mean, they're all important obviously, but this is going to be the first presidential transition that we've had obviously in a post-9/11 environment since the creation of the Department of Homeland Security. It's the first presidential transition in over 40 years where the nation has been at war. So there's a whole series of extra sensitivities in making sure that we have successful hand-offs of power. We need to keep in mind that the terrorist attacks in Madrid, the Glasgow bombings were all done during times of presidential transitions. The terrorists understand that those are typically times of vulnerabilities for democracies.

Our particular role in this has been established in the Presidential Transition Act, and that is to be available and to provide briefings to transition teams. We also, though, understand that we have a broader responsibility to help the Congress prepare for the new Congress and to help the Congress prepare for its oversight and decision-making that it will need in conjunction with the new administration.

Specifically what that means is that we're now going through and pulling together through our wide body of work -- we issue over 1,000 reports a year in GAO. And on transition need fear, we're not going to be delivering 1,000 reports to them. But we're going through the wide body of work that we've issued and identifying what are those key programmatic and management issues on an agency-by-agency basis that we need to be able to get to the transition team in the new administration when they come on? What are the key open recommendations that we have that need additional action? You know, what are the key vulnerabilities based on our work that they may face when they take office on day one?

And we're making sure that we package that in a way that's digestible and usable to a transition team, which, as everyone that's been through those tells us, is just going to be inundated with information. Must of this information will be provided in a web-based environment to them. We'll also have a series of one-pagers or shorter things, and obviously offer the briefings to them. And then make sure that we're also, as part of that supporting the Congress, as I mentioned, since we are a congressional agency, making sure we're supporting the Congress in its oversight, in its authorization, appropriations decisions as it moves forward with the new administration.

Mr. Kamensky: Within government, we're seeing an increase in the multi-sector workforce, which is public and private sector and nonprofits. And it's marked by a mix of contract as well as government employees. What kinds of changes, like in the size or the competencies, the hiring process, should be made to more effectively manage a multi-sector workforce?

Mr. Mihm: Well, the first thing that needs to take place is that we need to make sure that we understand that the delivery of public programs, in many cases, the federal contribution, the number of feds, the FTEs, full-time equivalents as it were, may actually be a small or even the smallest part of the what's involved in the service delivery on that. And so one of the things we need to make sure of is that we maintain a sense of transparency over all the various partnerships and contractors that are involved in the delivery of public services.

The second thing in terms of the size and competencies in the hiring process is that for federal employees, it puts an increasing premium on skills and collaboration, in communication, in negotiation, in working across various sectors. The old hierarchical models of being able to tell someone below you that you want something done and then having faith that that will be done are really breaking down. You know, the skill to success now -- what leadership is now is being able to get work done through others who don't work for you. So skills and collaboration are needed.

The 30-year model is of coming in right out of graduate school or right out of college and then retiring 30, 35 years later. That's not the predominant way that young people today -- or not just young people, many people think about public service. We need to make sure our organizations are agile enough in order to respond to the market demands

Mr. Kamensky: Well, following on that and looking internally inside GAO, would you tell us about GAO's recruitment and retention efforts? You've got programs, like the Student Intern Program and the Executive Exchange Program. How do they factor into your recruitment and retention strategies? And what other kinds of initiatives are you pursuing in this area?

Mr. Mihm: We focus on 50 or more major graduate programs in the U.S. for our analysts, which is our predominant professional category. First, we assign individual senior executives responsibility for establishing relationships with people on those universities. It is made very clear to us that this is not just something they'd like us to do or other duties as assigned. This is a core part of our responsibility and a core accountability for us is to established these types of relationships. So we invest recruiting efforts within line managers as a key part of their responsibility.

The second, and directly related to that, is that it's not just -- the responsibility's not to develop recruiting relationships, but college relations relationships. And so the -- when I go to a university, very few of those visits, very few of -- little of the time that I spend up there is on actual hard recruiting. Most often it's about talking about GAO. And so it's kind of branding the organization that way. To what extent are agencies offering themselves up and saying, hey, we can offer you a speaker or we've done some stuff that -- you know, issued some reports that may be of interest to you? That's how you brand the organization and get the competitive advantage.

In terms of the specifics that you were asking about on the intern program, a successful GAO internship is really the predominant way of getting a full-time offer into GAO. We view it as just a great opportunity for us to get to know and see people that we think could be good possibly for full-time employment. We just find it to be just an absolutely wonderful device to be bringing people in.

The Executive Exchange Program is actually used less, and it was designed to be used less. What this was designed to do was to bring in or offer an opportunity for top talent from the outside, where we have a critical skills gap on a particular set -- a particular project or initiative, to have them come in, spend some time in educating and working with us so that we can get value from them, while at the same time hopefully giving them a deeper appreciation of kind of life inside government. I mean, it's been used, as I said, by design to a much limited extent, but to the extent we have had the opportunity to use it, it's been very successful.

Mr. Kamensky: Well, with your background and expertise, could you outline some of the critical best practices involved in leadership development and cultivating future leaders within federal government or public sector more broadly?

Mr. Mihm: The single most important thing in leadership development is making sure -- and the onus on this ought to fall on the individual -- is making sure that they identify good mentoring relationships and people that they can look to and consult with and that can give them the good advice and tell them when they're doing well, but also be willing to say, hey, you're a little bit off track here or I think your judgment was -- you know, you didn't handle this exactly right, to make sure that you have those people throughout their career. And it doesn't have to be a very formal type of mentoring device. And yet I have found just incredible value from those types of relationships. I think that's the most important type of leadership development that we can have.

The other type of -- you know, the kind of more formal things that we found very important is certainly putting people in positions where they'll have an opportunity to stretch, to really go in new directions, to test or try and develop skills that they may not have had before. So that's something that we do explicitly certainly at all levels, but at -- you know, of leadership development, but explicitly as part of the SES Candidate Development Program.

Mr. Kamensky: What does the future hold for GAO?

We will ask Chris Mihm, managing director of Strategic Issues at the U.S. Government Accountability Office, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Kamensky: Welcome back to our final segment of The Business of Government Hour. I'm your host, John Kamensky, and this morning's conversation is with Chris Mihm, managing director of Strategic Issues at GAO.

Chris, we talk with a lot of our guests about internal and external collaboration. What kinds of partnerships are you developing now to improve operations or outcomes at GAO and across the federal government? And how do these partnerships kind of change over time?

Mr. Mihm: Boy, I'm glad you asked about that. What's been fascinating to me is to see the shift in the unit of analysis in much of the public management literature over the last 10 to 15 years, probably even 15 to 20 years, away from a focus on government and much more to a focus on governance. Which is the recognition that meaningful public outcomes -- virtually any outcome, you know -- isn't accomplished or done or caused by any one organization and certainly not one federal agency working alone. But rather it's done through patterns of relationships of several federal agencies, very often state and local governments; very often, as we were discussing earlier, contractors; very often the not-for-profit sector and NGOs. It's how these all work together. Networks is another part of the -- is what it's often called. How these all work together and how you improve the working of those together much of the literature is suggesting is really the key to improving government performance in the 21st century. That certainly is the -- you know, that is the governance conundrum, as it were.

The key to success then on these types of issues is collaboration, both in -- and we look at that both in an external sense of how can the federal government better collaborate, but that's also something that we take very much to heart when we think internally. And in the narrowest sense, it's something that we work on very much in strategic issues, making sure that we're -- my team at GAO, making sure that we're reaching out to our clients -- or our colleagues rather across the office that are on other mission area teams; making sure that we have the benefit of their most sophisticated thinking; making sure that they have the benefit of some of the things that we're looking at and we're finding as well.

Externally, we also establish partnerships, primarily with the good government agencies or good government organizations -- the Partnership for Public Service, the National Academy of Public Administration, Association for Government Accountants, obviously The IBM Center for The Business of Government, and other arms of some of the major firms -- to make sure, first, that we have, as appropriate, an understanding of what each of us are working on. And then second, identify to the extent that there are opportunities for collaboration, for reinforcement of messages.

Now, all of this has to be done while maintaining the appropriate degree of institutional independence and the different perspectives that each of these organizations have, and just sharing what are we working on? What are you hearing are some of the emerging issues? What do you think is coming down the pike? It provides a great opportunity.

Concrete example of that is when the President in the early days of this administration, when they were -- OMB was putting together the President's Management Agenda for the human capital standards, OPM invited us over and said we had just done a guide on basically a maturity model on strategic human capital management. And OPM called us over and invited us in, along with OMB, and said let's see if there are opportunities to work together and see if they could be informed in on this. And that was a great partnership that we thought paid dividends in terms of the agencies that they've just got one consolidated set of advice or guidance from the administration, advice from us that they could act on, on strategic human capital issues.

Mr. Kamensky: Oh, and what's really interesting about that is that after several years of putting those standards into practice, just a few months ago, those were put into formal OPM regulations. So they are now standard guidance for agencies across the government.

Chris, in the theme of external partnerships and stuff, last year you became the 18th chairman of the board for the National Academy of Public Administration, which you mentioned a little earlier. Could you tell us a little bit more about the mission and the purpose of the National Academy? And what are your responsibilities as chairman?

Mr. Mihm: I'd be very, very happy to. In fact, I have often said that the single moment in which I have been most honored in my professional career was being elected as a fellow at the National Academy of Public Administration in -- back in 2001.

NAPA is a congressionally chartered organization of the -- it's a fellowship-oriented or a fellowship organization of the nation's top experts in public management at the federal, state, local level, and increasingly the not-for-profit level, and in the academic worlds. The basic bottom line of NAPA is it's leaders advising leaders. Our congressional charter requires that we be available to advise the Congress and Executive Branch agencies on a full range of public management issues and to offer them perspectives based on experience, guidance, and independent research that we may do.

As chairman of the board, and I've been chairman a little bit over a year now, my responsibilities are fundamentally on behalf of the board to create an environment in which we are deeply engaged in the daily activities of the academy, and that the academy is drawing on the best talents and guidance and perspectives of the board. We're very fortunate that we have a president and CEO, Jenna Dorn, to lead us into a series of new and just fascinating issue for us. And she has underway a major initiative looking at interagency collaboration and Web 2.0 technologies that I think is just going to pay great dividends for the academy or, more importantly, pay great dividends for agencies.

And so, again, my major role is to make sure that we have in place the procedures and processes to -- that we are drawing on the best talents of the fellows and that the fellows are deeply engaged in the work of the academy.

Mr. Kamensky: Separate vein, there's currently a variety of pay systems in the federal government, all the way from the 1949 era General Schedule system to the more recent pay band systems that are intended to be more market- and performance-based with broader job classifications than in the old General Schedule system. How do you think the next administration should handle issues regarding pay, classification, performance management reforms?

Mr. Mihm: You can get much of the performance improvement that you will get from a pay-for-performance system just by having in place a good performance management system. And by that, the good is meaning one that has credibility with staff and managers. The most important thing that we think that can happen is for Congress to provide legislation that would provide or allow authorities of what we call the "show-me test," which is that agencies would be authorized to go to pay-for-performance, but only after they have demonstrated, meeting a set of clear criteria, spelling out in the legislation, of what needs to be in place before they could go to pay-for-performance.

We are moving to a pay-for-performance and more market-sensitive pay. And we believe you we should and, inevitably, we will have to, but if we're going to do that, that agencies have in place the infrastructure that they will be successful in that.

Mr. Kamensky: Okay. Well, that's very interesting.

I'd like to transition now to the future. Recently, The IBM Center for The Business of Government released its report called "Ten Challenges Facing Public Managers." And those 10 challenges provide a snapshot of what we see as 10 big challenges that face public managers in the decade ahead. Would you give us a sense of the key issues that you think will be affecting the federal government over the next few years? And on a broader basis, what are some of the major opportunities or challenges that GAO will wind up encountering? And how do you think that GAO will evolve in responding to this over the next few years?

Mr. Mihm: Well, geez, that's a huge question. Let me begin by saying, and I'm obviously aware that I'm on your radio program here, but I just thought the report on challenges facing -- "Ten Challenges Facing Public Managers" was just excellent, you know? And I thought it was excellent substantively. And I think equally important that it was excellent in that the 10 challenges were distilled into a short, readable, digestible format, and didn't require 1,000 pages afterwards. So congratulations to your colleagues that worked on that.

Having said that, many of the issues that I think that you touched upon are things that are consistent with -- in the IBM report are consistent with things that we've been identifying in some of our work and that I think will be enduring challenges. They're things we've been talking about over the last hour or so.

Certainly the long-term fiscal. That's important both in its -- obviously both in its own right, but it's also important in the sense that it bathes everything else. The color of that is -- you know, bathes all other issues in which we think about what government we want and what size we want government to be.

I think the governance notion that we were talking about earlier will also be huge. When you look at the public management successes and public management failings in recent years, they've all been at the center of those either success or failure from a governance perspective. And the failures are obviously those that are more well known in terms of 9/11, the failure to connect the dots, as the 9/11 Commission referred to it. The response to Hurricane Katrina, which is -- you know, I mentioned earlier, Don Kettle is someone that I've learned from at every point in my career, referred to as perhaps the country's greatest public administration failure. That, in essence, was an inability for organizations at the federal, state, local level, not-for-profit, for-profit sectors to work well across organizational boundaries and the recovery began to get better when those government issues began to -- governance issues began to get better. The nation's preparations for -- in the event of pandemic influenza -- all completely dependent upon organizations working together.

So the long-term fiscal, the governance issues that we view as kind of the two biggest buckets that are out there.

Mr. Kamensky: Chris, given your dedicated service to GAO over the years and your time in public service, what advice would you give to someone thinking about a career in public service?

Mr. Mihm: Well, I firmly believe, and I've said this very often, that this is the most exciting time in at least a generation to be involved in the public service. And it turns on the two things that I mentioned just a moment ago: the long-term fiscal challenges and the governance issues. And the challenges that federal managers face, the decisions that federal decision-makers face in the Executive Branch and in Congress are really unprecedented in the scope that they confront. The need for good information, the need for good managers, the need for good people to help us navigate our way through these enormous challenges that we as a country face in the next 5, 10, 15 years is just enormous. And so it's an exciting time and a very challenging time to be involved in public management. So that's the first point that I would make to people.

The second point that I would make is that the importance of service is that it's increasingly through efforts like the administration's with their PART process and the President's Management Agenda, through all the heroic efforts that agencies have been making under the Government Performance and Results Act, we are getting these lines of sight in agencies where individual programs are better able to show demonstrable results from their work. That's something that people can come into government from and have complete confidence that what they're working on is improving the lives and livelihood of their fellow citizens. And that's a very, very big deal for people.

And so it's both kind of the intellectual excitement and the -- just the opportunity of being part of something big, as well as the opportunity to return something to our fellow citizens, I think are two very important reasons to be involved in the public service.

Mr. Kamensky: Well, Chris, that's really great advice. We've reached the end of our time and that'll have to be our last question, but I want to thank you for fitting us into your business schedule. But more importantly, I'd like to thank you for your dedicated service to our country and public service.

Mr. Mihm: Well, thank you, John. It's been just a great pleasure to be with you here this morning. And again, for anyone that's interested in GAO and wants any of the reports that your tax dollars go to, www.gao.gov. That's everything right there.

Mr. Kamensky: This has been The Business of Government Hour, featuring a conversation with Chris Mihm, who's the managing director of Strategic Issues at the U.S. Government Accountability Office.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who may not be able to hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm John Kamensky. Thank you for listening.

Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m. And visit us on the web at businessofgovernment.org. There you can learn more about our programs, and get a transcript of today's conversation. Until next week, it's businessofgovernment.org.