Testimony issued by the General Accounting Office with an abstract that begins "This testimony focuses on the Alternative Minimum Tax (AMT), its interaction with the regular tax system, and its projected growth in coverage. GAO found that (1) AMT was designed to ensure that high-income individuals do not avoid significant income tax liabilities--for tax year 1997, about 14,000 taxpayers would not have paid any income taxes absent AMT, (2) AMT operates as a separate tax system that parallels the regular individual income tax system but with different rules for determining taxable income, different tax rates for computing tax liability, and different rules for allowing the use of tax credits, (3) AMT affected about one percent of taxpayers in 2000 and accounted for about $5.8 billion in additional tax revenue; by 2010, it is expected to increase the tax liabilities of about one out of six taxpayers and account for about $189 billion in tax revenues over the period, (4) the projected increase in AMT coverage is, for the most part, attributable to inflation and to the scheduled expiration of legislation temporarily excluding some tax credits from AMT rules, and (5) AMT's impacts include increased taxpayer compliance burden; increased Internal Revenue …

Testimony issued by the General Accounting Office with an abstract that begins "The results of the Defense Department (DOD) financial audit for fiscal year 2000 highlight long-standing financial management weaknesses that continue to plague the military. These weaknesses not only hamper the department's ability to produce timely and accurate financial management information but also unnecessarily increase the cost of carrying out its missions. Although DOD has made incremental improvement, it has a long way to go to overcome its long-standing, serious financial management weaknesses as part of a comprehensive, integrated reform of the department's business support operations. Such an overhaul must include not only DOD's financial management and other management challenges but also its high-risk areas of information technology and human capital management. Personnel throughout the department must share the common goal of reforming the department's business support structure. Without reengineering, DOD will have little chance of radically improving its cumbersome and bureaucratic processes."

Testimony issued by the General Accounting Office with an abstract that begins "Federal agencies rely extensively on computer systems and electronic data to support their missions. The security of these systems is essential to avoiding disruptions in critical operations and to prevent data tampering, fraud, and inappropriate disclosure of sensitive information. GAO analyzed information security audits and evaluations at 24 major federal departments and agencies since July 2000. This testimony summarizes (1) the pervasive weaknesses that led GAO to begin reporting information security as a government-wide high-risk issue in 1997, (2) the serious risks that these weaknesses pose at selected agencies and common weaknesses that agencies need to address to improve their information security programs, and (3) the importance of establishing strong agency-wide security management programs and developing a comprehensive government-wide strategy for improvement."

Testimony issued by the General Accounting Office with an abstract that begins "The Army's decision to issue black berets to all of its forces in just eight months placed enormous demands on the military's procurement system. To meet this challenge, the Department of Defense (DOD) increased the domestic supplier's production, awarded contracts to known foreign sources, and procured berets from additional sources. This testimony discusses DOD's contracting strategy, including (1) the contracting procedures DOD used to buy the berets and (2) the circumstances surrounding waivers to the Berry Amendment, a statutory requirement to buy clothing from domestic suppliers. The Defense Logistics Agency (DLA) took several steps to expedite award of the contracts. However, DLA failed to (1) provide for full and open competition as required by the Competition in Contracting Act of 1984 or (2) obtain a review of these contract actions from the Small and Disadvantaged Business Utilization Office for possible small business participation. GAO also found that authority to waive the Berry Amendment was delegated to DLA's Director and Senior Procurement Executive by the Principal Deputy Under Secretary of Defense (Acquisition, Technology, and Logistics), but later canceled to ensure that any request for a waiver to the Berry …

Testimony issued by the General Accounting Office with an abstract that begins "A safe and secure civil aviation system is a critical component of the nation's overall security, physical infrastructure, and economic foundation. Billions of dollars and a myriad of programs and policies have been devoted to achieving such a system. Although it is not fully known at this time what actually occurred or what all the weaknesses in the nation's aviation security apparatus are that contributed to the horrendous terrorist acts of Semptember 11, 2001, it is clear that serious weaknesses exist in the nation's aviation security system and that their impact can be far more devastating than previously imagined. There are security concerns with (1) airport access controls, (2) passenger and carry-on baggage screening, and (3) alternatives to current screening practices, including practices in selected other countries. Controls for limiting access to secure areas, including aircraft, have not always worked as intended. In May of 2000, special agents used counterfeit law enforcement badges and credentials to gain access to secure areas at two airports, bypassing security checkpoints and walking unescorted to aircraft departure gates. In June 2000, testing of screeners showed that significant, long-standing weaknesses--measured by the screeners' …

Testimony issued by the General Accounting Office with an abstract that begins "Dietary supplements marketed as anti-aging therapies may pose a potential for physical harm to senior citizens. Evidence from the medical literature shows that a variety of frequently used dietary supplements can have serious health consequences for seniors. Particularly risky are products that may be used by seniors who have underlying diseases or health conditions that make the use of the product medically inadvisable or supplements that interact with medications that are being taken concurrently. Studies have also found that these products sometimes contain harmful contaminants or much more of an active ingredient than is indicated on the label. Although GAO was unable to find any recent, reliable estimates of the overall economic harm to seniors from these products, it did uncover several examples that illustrate the risk of economic harm. The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) have identified several products that make advertising or labeling claims with insufficient substantiation, some costing consumers hundreds or thousands of dollars apiece. The potential for harm to senior citizens from health products making questionable claims has been a concern for public health and law enforcement officials. …

Testimony issued by the General Accounting Office with an abstract that begins "This testimony discusses the results of GAO's investigation of health care billing consultants whose seminars and workshops advise health care providers on how to boost revenue and avoid audits. Consultants at two workshops that GAO attended provided in-depth discussions of regulations on billing for health care services and compliance with health care laws and regulations. Some of this advice was inconsistent with federal law and guidance provided by the Department of Health and Human Services' Office of Inspector General. Such advice could result in violations of both civil and criminal statutes. Some consultants urged health care providers to not report or refund overpayments from insurance carriers after they were discovered. The consultants also encouraged the performance of unnecessary tests and procedures to generate documentation that would support bills for evaluation and management services at a higher level of complexity than actually confronted during patients' office visits. This testimony summarizes a June report (GAO-01-818)."

Testimony issued by the General Accounting Office with an abstract that begins "This testimony discusses (1) the status of the 2001 tax filing season, (2) the status of the Internal Revenue Service's (IRS) business systems modernization effort, and (3) the security of IRS' electronic filing system. GAO found that although the 2001 filing season appears to be running smoothly, some matters require further attention. For example, IRS has had problems with the personal identification number assigned to electronic filers. Although data indicate that taxpayers are having an easier time reaching IRS to ask questions, concerns persist about the productivity of its telephone assistors. With respect to business systems modernization, GAO has long held that IRS needs to establish fundamental modernization management controls before it begins to build and implement modernized systems. IRS has made some progress in this area, but it is still not where it needs to be. GAO is concerned that IRS is allowing its system acquisition projects to get ahead of its capabilities for managing them. Lastly, GAO's review of IRS' electronic filing systems last year showed that IRS had ineffective controls to ensure the security of those systems and electronically-transmitted taxpayer data. IRS moved promptly to …

Testimony issued by the General Accounting Office with an abstract that begins "This testimony discusses (1) how well the Internal Revenue Service (IRS) is providing service to taxpayers and ensuring compliance with tax laws, and (2) IRS' progress in its long-term effort to modernize. GAO found that IRS posted mixed results in 2001 in collecting revenues, providing taxpayer service, and enforcing tax laws. On the plus side, IRS processed millions of tax returns and issued refunds without significant problems, taxpayers had an easier time getting through to telephone assistors, and IRS said that it made progress in correcting weaknesses that threatened the security of electronically filed tax information. On the down side, the quality of service provided to taxpayers who visited taxpayer assistance centers, trends in audit rates and enforcement programs, and productivity all experienced troubling declines. With respect to modernization, IRS is making incremental progress in overhauling its organization, performance management system, business processes, and information technology. IRS is also making important progress in implementing its new organizational structure, developing a blueprint for modernizing its business processes and information systems, and more fully defining its strategic direction. However, IRS progress has fallen short of expectations. For example, IRS is …

Testimony issued by the General Accounting Office with an abstract that begins "The Heavily Indebted Poor Countries (HIPC) Initiative and the International Monetary Fund's concessional (below-market terms) lending facility--the Poverty Reduction and Growth Facility--are two multilateral programs intended to help spur economic growth and reduce poverty in low-income countries, most notably countries in sub-Saharan Africa. The HIPC Initiative represents a step forward in the international community's efforts to relieve poor countries of their heavy debt burdens. It does so by seeking to include all creditors and by providing significant debt relief to recipient countries. Unless strong, sustained economic growth is achieved, however the initiative will not likely provide recipient countries with a lasting exit from their debt problems. Furthermore, as long as the initiative links debt relief to poverty reduction strategies, the tension between quick debt relief and comprehensive country-owned strategies is likely to persist. These issues should not be seen, however, as a reason to abandon efforts to provide debt relief to eligible countries. Heavily indebted poor countries continue to carry unsustainable debt burdens that are unlikely to be lessened without debt relief, but participants and observers need to be more realistic about what the initiative may ultimately achieve. …

Testimony issued by the General Accounting Office with an abstract that begins "GAO and the Department of Education's Office of Inspector General have issued many reports in recent years on the Department's financial management problems, including internal control weaknesses that put the Department at risk for waste, fraud, abuse, and mismanagement. In an April 2001 assessment of the internal control over Education's payment processes and the associated risks for improper payments, GAO identified four broad categories of internal control weaknesses: poor segregation of duties, lack of supervisory review, inadequate audit trails, and inadequate computer systems' applications controls. This testimony discusses how these weaknesses make Education vulnerable to improper payments in grant and loan payments, third party drafts, and government purchase card purchases. GAO found that Education's student aid application processing system for grants and loans lacks an automated edit check that would identify potentially improper payments from students who were much older than expected, a single social security number associated with two or more dates of birth, grants to recipients in excess of statutory limits, and searches for invalid social security numbers. GAO also found problems with Education's third party draft system. Specifically, Education (1) circumvented a system's application control …

Testimony issued by the General Accounting Office with an abstract that begins "Discussions about how to reform and modernize the Medicare Program have, in part, focused on whether the structure that was adopted in 1965 is optimal today. Questions have been raised about whether the program could benefit from changes to the way that Medicare's claims processing contractors are chosen and the jobs they do. Medicare could benefit from full and open competition and its relative flexibility to promote better performance and accountability. If the current limits on Medicare contracting authority are removed, the Centers for Medicare and Medicaid Services could (1) select contractors on a competitive basis from a broader array of entities capable of performing needed program activities, (2) issue contracts for discrete program functions to improve contractor performance through specialization, (3) pay contractors based on how well they perform rather than simply reimbursing them for their costs, and (4) terminate poor performers more efficiently."

Testimony issued by the General Accounting Office with an abstract that begins "In the event of a domestic terrorist attack or other major disasters, the Department of Veterans Affairs (VA) is to provide backup medical resources to the military health system and local communities. VA now assists other federal agencies that have lead responsibility for responding to disasters, including terrorism. Its areas of responsibility include disaster simulation exercises and maintaining medical stockpiles. VA's efforts in these areas have enhanced national emergency preparedness by improving medical response procedures and by strengthening the security of federal pharmaceutical stockpiles to ensure rapid response to local authorities. VA also has resources that could play a role in future federal homeland security efforts. Its assets include the bricks, mortar, and human capital components of its health care system; graduate medical education programs; and expertise involving emergency backup and support activities. In managing large-scale medical emergencies arising from terrorist attacks, VA's emergency response capabilities have strengths and weaknesses. Determining how VA can best contribute to homeland security is especially timely given the extraordinary level of federal activity underway to manage large-scale disasters."

Testimony issued by the General Accounting Office with an abstract that begins "Federal agencies spend billions of tax dollars each year to buy services--from clerical support to information technology assistance to the management of national laboratories. The federal government spent more than $87 billion in services--a 24 percent increase in real terms from fiscal year 1990. Some service procurements are not being done efficiently, putting taxpayer dollars at risk. In particular, agencies are not clearly defining their requirements, fully considering alternative solutions, performing vigorous price analyses, and adequately overseeing contractor performance. This testimony (1) describes service contracting trends and the changing acquisition environment, (2) discusses the challenges confronting the government in acquiring services, and (3) highlights some efforts underway to address these challenges. GAO found that purchases of services now account for about 43 percent of federal contracting expenses--the largest single spending category. The growth of services has been driven largely by the government's increased purchases of information technology services and professional, administrative, and management support services. Poor contract management has undermined the government's ability to obtain good value for the money and continues to be a major problem for the two biggest service purchasers-the Departments of Defense and Energy. …

Testimony issued by the General Accounting Office with an abstract that begins "The Office of the Secretary of Defense and the service headquarters provide overall policy guidance and negotiate agreements on the treatment of the military's historic properties. However, most decisions on historic properties are made at the installation level. The installations are responsible for identifying and evaluating properties to determine if they are eligible to be listed on the National Register of Historic Places as well as maintaining all properties that are listed on or have been determined eligible for listing on the National Register. The military lacks complete and reliable data on the number of its historic properties. None of the services have a centralized database that comprehensively identifies all of their respective historic properties. Data is not available on the costs to to maintain or repair historic properties. Cost data GAO examined at several installations showed that, overall, the day-to-day maintenance historic properties was similar to maintenance on non-historic properties."

Testimony issued by the General Accounting Office with an abstract that begins "This testimony discusses the long-term viability of the Social Security program. Social Security's Trust Funds will not be exhausted until 2038, but the trustees now project that the program's cash demands on the rest of the federal government will begin much sooner. Aiming for sustainable solvency would increase the chance that future policymakers would not have to face these difficult questions on a recurring basis. GAO has developed the following criteria for evaluating Social Security reform proposals: financing sustainable solvency, balancing adequacy and equity, and implementing and administering reforms. These criteria seek to balance financial and economic considerations with benefit adequacy and equity issues and the administrative challenges associated with various proposals. GAO's recent report on Social Security and income adequacy (GAO-02-62) makes three key points. First, no single measure of adequacy provides a complete picture; each measure reflects a different outlook on what adequacy means. Second, given the projected long-term financial shortfall of the program, it is important to compare proposals to both benefits at currently promised levels and benefits funded at current tax levels. Third, various approaches to benefit reductions would have differing effects on adequacy."

Testimony issued by the General Accounting Office with an abstract that begins "To ensure that people claiming disability insurance program benefits can obtain legal representation at a fair price, the Social Security Administration (SSA) is required to regulate the fees that attorneys charge people to represent their disability claims before the agency. Balancing the needs of the claimants with those of their attorneys, the law limits the amount of fees that attorneys can charge claimants, but also guarantees that those fees will be paid from the claimants' past-due benefits. Inefficiencies in the current process increase both the time it takes to pay the attorney fees and the cost of administration. One segment of attorney fee processing--the fee approval process--was substantially simplified in 1991. Systems support could streamline the second segment of the processing--the fee payment--thus lowering the annual administrative costs and cutting processing time. Automation of this final segment of the fee process could help improve customer service for both claimants and their attorneys."

Testimony issued by the General Accounting Office with an abstract that begins "Accurate cost information is crucial for proper program management. Such information is especially important for the Bureau of Land Management's (BLM) Mining Law Administration Program (MLAP) because this program partially funded through mining fees that Congress has earmarked only for mining law administration operations. Some labor costs and several contracts and services were improperly charged to MLAP, causing other subactivities to benefit from funds intended for MLAP operations. Therefore, fewer funds have been available for actual MLAP operations. Although BLM has tried to make correcting adjustments for some of these improper charges, it has not established specific guidance or procedures to prevent improper charging of MLAP funds from recurring. Until additional procedures for MLAP are developed and effectively implemented, Congress and program managers can only place limited reliance on the accuracy of MLAP cost information."

Testimony issued by the General Accounting Office with an abstract that begins "Through the Mutual Mortgage Insurance Fund, the Federal Housing Administration operates a single-family insurance program that helps millions of Americans buy homes. Last year, the Fund's economic value appeared to have reached its highest level in the last 20 years--prompting proposals to spend some of the Fund's current resources or reduce net cash flows into the Fund. This testimony discusses (1) the financial health of the Fund under different economic scenarios and (2) the impact of proposals to reduce the size of the Fund. Under several scenarios it tested, GAO found that the Fund would be able to withstand moderately severe economic downturns. However, in three other scenarios GAO tested, the Fund would not be able to maintain its actuarial soundness. Because of the professional judgment and uncertainty involved in these analyses, GAO urges caution in using these estimates to conclude that the Fund would withstand any particular economic scenario under all circumstances. Congress and the Secretary of Housing and Urban Development have taken and could take several steps to influence the economic value of the Fund. However, those actions will affect the federal budget, and, if not …

Testimony issued by the General Accounting Office with an abstract that begins "GAO discusses the progress the National Nuclear Security Administration (NNSA) has made in implementing title 32 of the National Defense Authorization Act for Fiscal Year 2000. Title 32 established NNSA as a semiautonomous agency within the Department of Energy (DOE) with responsibility for the nation's nuclear weapons, nonproliferation, and naval reactors programs. GAO found that the agency is making progress in implementing changes to its organization; planning, programming, and budgeting functions; and use of personnel authority. However, it will be several months before real, tangible evidence of these changes will be seen. And it may be several years before these changes are fully implemented and can be definitively assessed. Important work remains to be done in (1) establishing an organization that clearly defines the roles and responsibilities of headquarters and field staff, moves program management officials as close to the action as possible, and establishes clear lines of authority between NNSA and its contractors; (2) implementing an integrated planning, programming, and budgeting system that can deliver information to decision makers and Congress in time for the 2003 budget deliberations; and (3) overcoming obstacles to using NNSA's Expected Service …

Testimony issued by the General Accounting Office with an abstract that begins "Since the attacks against the World Trade Center and the Pentagon, the terrorist threat has risen to the top of the national agenda. Preparing for all possible contingencies is impractical, so a risk management approach should be used. This would include a threat assessment to determine which chemical or biological agents are of greatest concern. The federal government has various programs to prepare for and respond to chemical and biological terrorism, including response teams, support laboratories, training and equipment programs, and research efforts. Evaluations of chemical and biological preparedness have identified several problems and their solutions. Congress faces competing demands for spending as it seeks to invest resources to better prepare our nation for chemical and biological terrorism. Given the uncertainty of the chemical and biological threat, Congress may want to initially invest resources in efforts with broad applicability rather than in those that are applicable to a specific type of chemical or biological attack."

Testimony issued by the General Accounting Office with an abstract that begins "This testimony discusses the National Aeronautics and Space Administration's (NASA) X-33 and X-34 reusable launch vehicle programs. The two programs experienced difficulties achieving their goals primarily because NASA did not develop realistic cost estimates, timely acquisition and risk management plans, and adequate and realistic performance goals. In particular, neither program fully (1) assessed the costs associated with developing new, unproven technologies, (2) provided for the financial reserves needed to deal with technical risks and accommodate normal development delays, (3) developed plans to quantify and mitigate the risks to NASA, or (4) established performance targets showing a clear path leading to an operational reusable launch vehicle. As a result, both programs were terminated. Currently, NASA is in the process of taking steps in the Second Generation Reusable Launch Vehicle Program to help avoid problems like those encountered in the X-33 and X-34 programs."

Testimony issued by the General Accounting Office with an abstract that begins "In recent years, the Washington Metropolitan Area Transit Authority's (WMATA) public transit system has experienced safety and reliability problems, including equipment breakdowns, delays in scheduled service, unprecedented crowding on trains, and accidents and tunnel fires. WMATA is examining ways to ease crowding on the systems rail cars and determining whether and how to expand Metrorail maintenance and repair shop capacity as WMATA acquires nearly 200 new rail cars. WMATA has also undertaken a comprehensive program for infrastructure renewal, and it is now studying improvements or modifications to accommodate the goal of doubling ridership by the year 2025. WMATA's safety program has evolved since the mid-1990s, when a series of accidents and incidents led to several independent reviews citing the need for program improvements. WMATA monitors safety and crime statistics and has several ongoing targeted efforts to reduce safety incidents and deter crime on its transit systems. WMATA has adopted several of the best capital investment practices used by leading public and private sector organizations, but it could benefit by establishing a more formal, disciplined framework for its capital decision-making process. WMATA has used a wide variety of innovative …

Testimony issued by the General Accounting Office with an abstract that begins "The U.S. Postal Service (USPS) faces major challenges that collectively call for a structural transformation if it is to remain viable in the 21st century. This testimony discusses USPS' current financial outlook, actions that USPS has taken or planned to take, and the transformation issues that will need to be addressed. GAO concludes that structural transformation is essential if USPS is to overcome its financial, operational, and human capital challenges. It is at a growing risk of being unable to continue providing universal postal service at reasonable rates while remaining self-supporting through postal revenues. Although USPS has announced steps to address its mounting problems, it lacks a comprehensive plan to address its various financial, operational, or human capital challenges. USPS needs to develop a transformation plan in conjunction with Congress and other stakeholders that would address the key transformation issues facing USPS."