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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the House Committee on Oversight and Government Reform: 

For Release on Delivery: 
Expected at 9:30 a.m. EST:
Thursday, March 3, 2011: 

Opportunities to Reduce Potential Duplication in Government Programs, 
Save Tax Dollars, and Enhance Revenue: 

Statement of Gene L. Dodaro:
Comptroller General of the United States: 

GAO-11-441T: 

Mr. Chairman, Ranking Member Cummings, and Members of the Committee: 

Thank you for the opportunity to discuss our first annual report to 
Congress responding to a new statutory requirement that GAO identify 
federal programs, agencies, offices, and initiatives--either within 
departments or governmentwide--that have duplicative goals or 
activities.[Footnote 1] This work will inform government policymakers 
as they address the rapidly building fiscal pressures facing our 
national government. Our annual simulations of the federal 
government's fiscal outlook show continually increasing levels of debt 
that are unsustainable over time, absent changes in the federal 
government's current fiscal policies.[Footnote 2] Since the end of the 
recent recession, the gross domestic product has grown slowly and 
unemployment has remained at a high level. While the economy is still 
recovering and in need of careful attention, widespread agreement 
exists on the need to look not only at the near term but also at steps 
that begin to change the long-term fiscal path as soon as possible 
without slowing the recovery. With the passage of time, the window to 
address the fiscal challenge narrows and the magnitude of the required 
changes grows. 

My testimony today is based on our March 1, 2011, report and addresses 
two key issues: (1) federal programs or functional areas where 
unnecessary duplication, overlap, or fragmentation exists, the actions 
needed to address such conditions, and the potential financial and 
other benefits of doing so; and (2) other opportunities for potential 
cost savings or enhanced revenues.[Footnote 3] The issues raised in 
the report were drawn from our prior and ongoing work. We conducted 
our work from February 2010 through February 2011 in accordance with 
generally accepted government auditing standards or with GAO's quality 
assurance framework, as appropriate. For issues being reported on for 
the first time, we sought comments from the agencies involved and 
incorporated those comments as appropriate. 

We identified 81 areas for consideration--34 areas of potential 
duplication, overlap, or fragmentation as well as 47 additional cost- 
saving and revenue-enhancing areas. The 81 areas span a range of 
federal government missions such as agriculture, defense, economic 
development, energy, general government, health, homeland security, 
international affairs, and social services. Within and across these 
missions, our report touches on hundreds of federal programs, 
affecting virtually all major federal departments and agencies. By 
reducing or eliminating unnecessary duplication, overlap, or 
fragmentation and by addressing the other cost-saving and revenue-
enhancing opportunities contained in the report, the federal 
government could yield tens of billions of tax dollars annually and 
help agencies provide more efficient and effective services. However, 
these actions will require some difficult decisions, and sustained 
attention by the administration and the Congress. 

In some cases, there is sufficient information to estimate potential 
savings or other benefits if actions are taken to address individual 
issues. In other cases, estimates of cost savings or other benefits 
would depend upon what congressional and executive branch decisions 
were made, including how certain of our recommendations are 
implemented. Nevertheless, considering the amount of program dollars 
involved in the issues we have identified, even limited adjustments 
could result in significant savings. Additionally, information on 
program performance, the level of funding in agency budgets devoted to 
overlapping or fragmented programs, and the implementation costs that 
might be associated with program consolidations or terminations, are 
factors that could impact actions to be taken as well as potential 
savings. 

Overlap and Fragmentation Can Indicate Unnecessary Duplication: 

We identified 34 areas where agencies, offices, or initiatives may 
have similar or overlapping objectives or may provide similar services 
to the same populations; or where government missions are fragmented 
across multiple agencies or programs (see table 1). Overlap and 
fragmentation among government programs or activities can be 
harbingers of unnecessary duplication. The areas identified below are 
not intended to represent the full universe of duplication, overlap, 
or fragmentation within the federal government. Our future work will 
examine other areas of government for potential duplication, overlap, 
and fragmentation. 

Table 1: Duplication, Overlap, or Fragmentation Areas Identified: 

Mission: Agriculture; 
Areas identified: 1. Fragmented food safety system has caused 
inconsistent oversight, ineffective coordination, and inefficient use 
of resources; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: The Department of Agriculture's (USDA) Food 
Safety and Inspection Service and the Food and Drug Administration are 
the primary food safety agencies, but 15 agencies are involved in some 
way. 

Mission: Defense; 
Areas identified: 2. Realigning DOD's military medical command 
structures and consolidating common functions could increase 
efficiency and result in projected savings ranging from $281 million 
to $460 million annually; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Department of Defense (DOD), including the 
Office of the Assistant Secretary for Health Affairs, the Army, the 
Navy, and the Air Force. 

Mission: Defense; 
Areas identified: 3. Opportunities exist for consolidation and 
increased efficiencies to maximize response to warfighter urgent needs; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: At least 31 entities within DOD. 

Mission: Defense; 
Areas identified: 4. Opportunities exist to avoid unnecessary 
redundancies and improve the coordination of counter-improvised 
explosive device efforts; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: The services and other components within DOD. 

Mission: Defense; 
Areas identified: 5. Opportunities exist to avoid unnecessary 
redundancies and maximize the efficient use of intelligence, 
surveillance, and reconnaissance capabilities; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Multiple intelligence organizations within 
DOD. 

Mission: Defense; 
Areas identified: 6. A departmentwide acquisition strategy could 
reduce DOD's risk of costly duplication in purchasing Tactical Wheeled 
Vehicles; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DOD, including Army and Marine Corps. 

Mission: Defense; 
Areas identified: 7. Improved joint oversight of DOD's prepositioning 
programs for equipment and supplies may reduce unnecessary duplication; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DOD including Air Force, Army, and Marine 
Corps. 

Mission: Defense; 
Areas identified: 8. DOD business systems modernization: opportunities 
exist for optimizing business operations and systems; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: About 2,300 investments across DOD. 

Mission: Economic development; 
Areas identified: 9. The efficiency and effectiveness of fragmented 
economic development programs are unclear; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: USDA, Department of Commerce (Commerce), 
Housing and Urban Development (HUD), and the Small Business 
Administration (SBA); 80 programs involved. 

Mission: Economic development; 
Areas identified: 10. The federal approach to surface transportation 
is fragmented, lacks clear goals, and is not accountable for results; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Five agencies within the Department of 
Transportation (DOT); over 100 programs involved. 

Mission: Economic development; 
Areas identified: 11. Fragmented federal efforts to meet water needs 
in the U.S.-Mexico border region have resulted in an administrative 
burden, redundant activities, and an overall inefficient use of 
resources; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: USDA, Commerce's Economic Development 
Administration, Environmental Protection Agency (EPA), Department of 
Health and Human Services' (HHS) Indian Health Service, Department of 
the Interior's (Interior) Bureau of Reclamation, HUD, and the U.S. 
Army Corps of Engineers. 

Mission: Energy; 
Areas identified: 12. Resolving conflicting requirements could more 
effectively achieve federal fleet energy goals; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: A number of agencies, including the 
Department of Energy (Energy) and the General Services Administration 
(GSA) play a role overseeing the governmentwide requirements. 

Mission: Energy; 
Areas identified: 13. Addressing duplicative federal efforts directed 
at increasing domestic ethanol production could reduce revenue losses 
by up to $5.7 billion annually; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: EPA and the Department of the Treasury. 

Mission: General government; 
Areas identified: 14. Enterprise architectures: key mechanisms for 
identifying potential overlap and duplication; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Governmentwide. 

Mission: General government; 
Areas identified: 15. Consolidating federal data centers provides 
opportunity to improve government efficiency and achieve significant 
cost savings; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Twenty-four federal agencies. 

Mission: General government; 
Areas identified: 16. Collecting improved data on interagency 
contracting to minimize duplication could help the government leverage 
its vast buying power; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Governmentwide. 

Mission: General government; 
Areas identified: 17. Periodic reviews could help identify ineffective 
tax expenditures and redundancies in related tax and spending 
programs, potentially reducing revenue losses by billions of dollars; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Governmentwide. 

Mission: Health; 
Areas identified: 18. Opportunities exist for DOD and VA to jointly 
modernize their electronic health record systems; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DOD and the Department of Veterans Affairs 
(VA); 
Page: 79. 

Mission: Health; 
Areas identified: 19. VA and DOD need to control drug costs and 
increase joint contracting whenever it is cost-effective; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DOD and VA. 

Mission: Health; 
Areas identified: 20. HHS needs an overall strategy to better 
integrate nationwide public health information systems; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Multiple agencies, led by HHS. 

Mission: Homeland security/Law enforcement; 
Areas identified: 21. Strategic oversight mechanisms could help 
integrate fragmented interagency efforts to defend against biological 
threats; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: USDA, DOD, Department of Homeland Security 
(DHS), HHS, Interior, and others; more than two dozen presidentially 
appointed individuals with responsibility for biodefense. 

Mission: Homeland security/Law enforcement; 
Areas identified: 22. DHS oversight could help eliminate potential 
duplicating efforts of interagency forums in securing the northern 
border; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DHS and other federal law enforcement 
partners. 

Mission: Homeland security/Law enforcement; 
Areas identified: 23. The Department of Justice plans actions to 
reduce overlap in explosives investigations, but monitoring is needed 
to ensure successful implementation; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Department of Justice's Federal Bureau of 
Investigation and Bureau of Alcohol, Tobacco, Firearms and Explosives. 

Mission: Homeland security/Law enforcement; 
Areas identified: 24. TSA's security assessments on commercial 
trucking companies overlap with those of another agency, but efforts 
are under way to address the overlap; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: DHS's Transportation Security Administration 
(TSA) and DOT. 

Mission: Homeland security/Law enforcement; 
Areas identified: 25. DHS could streamline mechanisms for sharing 
security-related information with public transit agencies to help 
address overlapping information; Federal agencies and programs where 
duplication, overlap, or fragmentation may occur: Three information-
sharing mechanisms funded by DHS and TSA. 

Mission: Homeland security/Law enforcement; 
Areas identified: 26. FEMA needs to improve its oversight of grants 
and establish a framework for assessing capabilities to identify gaps 
and prioritize investments; Federal agencies and programs where 
duplication, overlap, or fragmentation may occur: DHS's Federal 
Emergency Management Agency (FEMA); 17 programs involved. 

Mission: International affairs; 
Areas identified: 27. Lack of information sharing could create the 
potential for duplication of efforts between U.S. agencies involved 
in development efforts in Afghanistan; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Principally DOD and the U.S. Agency for 
International Development. 

Mission: International affairs; 
Areas identified: 28. Despite restructuring, overlapping roles and 
functions still exist at State's Arms Control and Nonproliferation 
Bureaus; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Two bureaus within the Department of State 
(State). 

Mission: Social services; 
Areas identified: 29. Actions needed to reduce administrative overlap 
among domestic food assistance programs; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: USDA, DHS, and HHS; 18 programs involved. 

Mission: Social services; 
Areas identified: 30. Better coordination of federal homelessness 
programs may minimize fragmentation and overlap; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Seven federal agencies, including Department 
of Education (Education), HHS, and HUD; over 20 programs involved. 

Mission: Social services; 
Areas identified: 31. Further steps needed to improve cost-
effectiveness and enhance services for transportation-disadvantaged 
persons; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: USDA, DOT, Education, Interior, HHS, HUD, 
Department of Labor (Labor), and VA; 80 programs involved. 

Mission: Training, employment, and education; 
Areas identified: 32. Multiple employment and training programs: 
providing information on colocating services and consolidating 
administrative structures could promote efficiencies; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Education, HHS, and Labor, among others; 44 
programs involved. 

Mission: Training, employment, and education; 
Areas identified: 33. Teacher quality: proliferation of programs 
complicates federal efforts to invest dollars effectively; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: Ten agencies including DOD, Education, 
Energy, National Aeronautics and Space Administration, and the 
National Science Foundation; 82 programs involved. 

Mission: Training, employment, and education; 
Areas identified: 34. Fragmentation of financial literacy efforts 
makes coordination essential; 
Federal agencies and programs where duplication, overlap, or 
fragmentation may occur: More than 20 different agencies; about 56 
programs involved. 

Source: GAO-11-318SP. 

[End of table] 

As table 1 shows, many of the issues we identified are focused on 
activities that are contained within single departments or agencies. 
In those cases, agency officials can generally achieve cost savings or 
other benefits by implementing existing GAO recommendations or by 
undertaking new actions suggested in our March 1 report. However, a 
number of issues we have identified span multiple organizations and 
therefore may require higher-level attention by the executive branch 
or enhanced congressional oversight or legislative action. For example: 

* Teacher quality programs: In fiscal year 2009, the federal 
government spent over $4 billion specifically to improve the quality 
of our nation's 3 million teachers through numerous programs across 
the government. We identified 82 distinct programs designed to help 
improve teacher quality, either as a primary purpose or as an 
allowable activity, administered across 10 federal agencies. The 
proliferation of programs has resulted in fragmentation that can 
frustrate agency efforts to administer programs in a comprehensive 
manner, limit the ability to determine which programs are most cost 
effective, and ultimately increase program costs. 

In 2009, we recommended that the Secretary of Education work with 
other agencies as appropriate to develop a coordinated approach for 
routinely and systematically sharing information that can assist 
federal programs, states, and local providers in achieving efficient 
service delivery. The Department of Education has established working 
groups to help develop more effective collaboration across Education 
offices, and has reached out to other agencies to develop a framework 
for sharing information on some teacher quality activities, but it has 
noted that coordination efforts do not always prove useful and cannot 
fully eliminate barriers to program alignment, such as programs with 
differing definitions for similar populations of grantees, which 
create an impediment to coordination. 

Congress could help eliminate some barriers through legislation, 
particularly through the pending reauthorization of the Elementary and 
Secondary Education Act of 1965 and other key education bills. 
Specifically, to minimize any wasteful fragmentation and overlap among 
teacher quality programs, Congress may choose either to eliminate 
programs that are too small to evaluate cost effectively or to combine 
programs serving similar target groups into a larger program. 
Education has already proposed combining 38 programs into 11 programs 
in its reauthorization proposal, which could allow the agency to 
dedicate a higher portion of its administrative resources to 
monitoring programs for results and providing technical assistance. 

* Military health system: The responsibilities and authorities for the 
Department of Defense's (DOD) military health system are distributed 
among several organizations within DOD with no central command 
authority or single entity accountable for minimizing costs and 
achieving efficiencies. Under the military health system's current 
command structure, the Office of the Assistant Secretary of Defense 
for Health Affairs, the Army, the Navy, and the Air Force each has its 
own headquarters and associated support functions. Annual military 
health system costs have more than doubled from $19 billion in fiscal 
year 2001 to $49 billion in 2010 and are expected to increase to over 
$62 billion by 2015. 

DOD has made varying levels of progress in implementing limited 
actions to consolidate certain common administrative, management, and 
clinical functions. However, to reduce duplication in its command 
structure and eliminate redundant processes that add to growing 
defense health care costs, DOD could take action to further assess 
alternatives for restructuring the governance structure of the 
military health system. A May 2006 report by the Center for Naval 
Analyses showed that if DOD and the services had chosen to implement 
one of the three larger-scale alternative concepts studied by DOD, the 
department could have achieved significant savings. Our adjustment of 
those projected savings into 2010 dollars indicates those savings 
could range from $281 million to $460 million annually depending on 
the alternative chosen and numbers of military, civilian, and 
contractor positions eliminated. DOD officials said that they 
generally agreed with the facts and findings in our analysis. 

* Federal data centers: According to the Office of Management and 
Budget (OMB), the number of federal data centers grew from 432 in 1998 
to more than 2,000 in 2010. These data centers often house similar 
types of equipment and provide similar processing and storage 
capabilities, raising concerns about the provision of redundant 
capabilities, the underutilization of resources, and the significant 
consumption of energy. While the total annual federal spending 
associated with data centers has not yet been determined, the Federal 
Chief Information Officer has found that operating data centers is a 
significant cost to the federal government, including hardware, 
software, real estate, and cooling costs. For example, according to 
the Environmental Protection Agency, the electricity cost to operate 
federal servers and data centers across the government is about $450 
million annually. 

In February 2010, OMB launched the Federal Data Center Consolidation 
Initiative to guide federal agencies in developing and implementing 
data center consolidation plans. As part of this initiative, OMB 
directed federal agencies to prepare an inventory of their data center 
assets and a plan for consolidating these assets by August 30, 2010, 
and to begin implementing them in fiscal year 2011. Moving forward, it 
will be important for individual agencies to move quickly to correct 
any missing items in their data center consolidation plans, establish 
sound baselines so that progress and efficiencies can be measured, 
begin their consolidation efforts, track their progress, and report to 
OMB on their progress over time. Sustained monitoring by Congress 
could help ensure progress is realized. 

* DOD and VA electronic heath record systems: Although DOD and the 
Department of Veterans Affairs (VA) have many common health care 
business needs, the departments have separate efforts to modernize 
their electronic health record systems. Specifically, DOD has 
obligated approximately $2 billion over the 13-year life of its Armed 
Forces Health Longitudinal Technology Application and requested $302 
million in fiscal 2011 year funds for a new system. For its part, VA 
reported spending almost $600 million from 2001 to 2007 on eight 
projects as part of its Veterans Health Information Systems and 
Technology Architecture modernization. In April 2008, VA estimated an 
$11 billion total cost to complete the modernization by 2018. 

Efforts by the departments to jointly identify and develop common 
information technology solutions to address their mutual health care 
needs could result in system development and operation cost savings 
while supporting higher-quality health care for service members and 
veterans. We identified several actions that DOD and VA could take to 
overcome barriers they face in modernizing their electronic health 
record systems, including revising the departments' joint strategic 
plans and defining and implementing a process for identifying and 
selecting joint information technology investments. Officials from 
both DOD and VA agreed with these recommendations. 

* Domestic ethanol production: Congress supported domestic ethanol 
production through a $5.4 billion tax credit program in 2010 and 
through a renewable fuel standard that applies to transportation fuels 
used in the United States. The ethanol tax credit and the renewable 
fuel standard can be duplicative in stimulating domestic production 
and use of ethanol, and can result in substantial loss of revenue to 
the Treasury. The ethanol tax credit was recently extended at 45 cents 
per gallon through December 31, 2011. The tax credit will cost $5.7 
billion in forgone revenues in 2011. Because the fuel standard allows 
increasing annual amounts of conventional biofuels through 2015, which 
ensures a market for a conventional corn starch ethanol industry that 
is already mature, Congress may wish to consider whether revisions to 
the ethanol tax credit are needed, such as reducing, modifying, or 
phasing out the tax credit. 

* Interagency and agencywide contracts: Agencies have created numerous 
interagency and agencywide contracts using existing statutes, the 
Federal Acquisition Regulation, and agency-specific policies. With the 
proliferation of these contracts, however, there is a risk of 
unintended duplication and inefficiency. Interagency and agencywide 
contracting was responsible for at least $54 billion of the 
approximately $540 billion that was obligated governmentwide for goods 
and services in fiscal year 2009. However, the federal government does 
not have a clear, comprehensive view of whether these contracts are 
being utilized in an efficient and effective manner. In addition, 
agencies may be unaware of existing contract options that could meet 
their needs and may be awarding new contracts when use of an existing 
contract would suffice. 

Government contracting officials and representatives of vendors have 
expressed concerns about potential duplication among the interagency 
and agencywide contracts across government. Some vendors stated they 
offer similar products and services on multiple contracts and that the 
effort required to be on multiple contracts results in extra costs to 
the vendor, which they pass to the government through increased 
prices. Some vendors stated that the additional cost of being on 
multiple contracts ranged from $10,000 to $1,000,000 per contract due 
to increased bid and proposal and administrative costs. 

Requiring business case analyses for new multiagency and agencywide 
contracts and ensuring agencies have access to up-to-date and accurate 
data on the available contracts will promote the efficient use of 
interagency and agencywide contracting and, by reducing the costs 
associated with duplicate contracts, help the government better 
leverage its purchasing power when buying commercial goods and 
services. OMB reported in August 2010 that it planned to issue 
overarching guidance that would address the need for agencies to 
prepare business cases describing the need for a new multiagency or 
agencywide contract, the value added by its creation, and the agency's 
suitability to serve as an executive agent. Additionally, improvements 
are still needed regarding the accuracy of the federal contracts 
database in order to determine whether the contracts are being used in 
an efficient and effective manner. Continued congressional oversight 
of this issue is warranted. 

* Domestic food assistance: The federal government spent more than 
$62.5 billion on 18 domestic food and nutrition assistance programs in 
fiscal year 2008. Programs' spending ranged from $4 million for the 
smallest program to more than $37 billion for the largest. The 
Department of Agriculture's (USDA) Food and Nutrition Service oversees 
most of these programs--including the five largest. These programs 
help ensure that millions of low-income individuals have consistent, 
dependable access to enough food for an active, healthy life. However, 
we have found that some of these programs provide comparable benefits 
to similar or overlapping populations which can lead to inefficient 
use of federal funds, duplication of effort, and confusion among those 
seeking services. For example, individuals eligible for groceries 
through the Commodity Supplemental Food Program are also generally 
eligible for groceries through the Emergency Food Assistance Program 
and for targeted benefits that are redeemed in authorized stores 
through the largest program, the Supplemental Nutrition Assistance 
Program (formerly the Food Stamp Program). In addition, most of the 18 
programs have specific and often complex legal requirements and 
administrative procedures that often require applicants who seek 
assistance from multiple programs to submit separate applications for 
each program and provide similar information which can create 
unnecessary work for both providers and applicants and may result in 
the use of more administrative resources than needed. Additionally, 
little is known about the effectiveness of 11 of the 18 programs 
because they have not been well studied. 

In April 2010, we recommended that USDA identify and develop methods 
for addressing potential inefficiencies and reducing unnecessary 
overlap among its smaller food assistance programs while ensuring that 
those who are eligible receive the assistance they need. To date, USDA 
has not taken action on this recommendation. One of the possible 
methods for reducing program inefficiencies would entail USDA 
broadening its efforts to simplify, streamline, or better align 
eligibility procedures and criteria across programs to the extent that 
it is permitted by law. Such efforts could result in sizable 
administrative cost savings since they are a large part of program 
costs. In addition, options such as consolidating or eliminating 
overlapping programs have the potential to reduce administrative costs 
but may not reduce spending on benefits unless fewer individuals are 
served as a result. 

* Employment and training programs: In fiscal year 2009, 47 federal 
employment and training programs spent about $18 billion to provide 
services, such as job search and job counseling, to program 
participants. Most of these programs are administered by the 
Departments of Labor, Education, and Health and Human Services (HHS). 
We found that 44 of the 47 programs overlap with at least one other 
program in that they provide at least one similar service to a similar 
population. Our review of three programs among the largest--Temporary 
Assistance for Needy Families (TANF), Employment Service, and 
Workforce Investment Act (WIA) Adult programs--found that they provide 
some of the same services to the same population through separate 
administrative structures. Although the extent to which individuals 
receive the same services from these programs is unknown due to 
limited data, these programs maintain parallel administrative 
structures to provide some of the same services such as job search 
assistance to low-income individuals. 

At the state level, the TANF program (which also provides a wide range 
of other services) is typically administered by the state human 
services or welfare agency, while the Employment Service and WIA Adult 
programs are typically administered by the state workforce agency and 
provided through one-stop centers. Agency officials acknowledged that 
greater efficiencies could be achieved in delivering services through 
these programs but said factors such as the number of clients that any 
one-stop center can serve and one-stop centers' proximity to clients, 
particularly in rural areas, could warrant having multiple entities 
provide the same services. Colocating services and consolidating 
administrative structures may increase efficiencies and reduce costs, 
but implementation can be challenging. 

Some states have colocated TANF employment and training services in 
one-stop centers where Employment Service and WIA Adult services are 
provided. Three states--Florida, Texas, and Utah--have gone a step 
further by consolidating the agencies that administer these programs, 
and state officials said this reduced costs and improved services, but 
they could not provide a dollar figure for cost savings. States and 
localities may face challenges to colocating services, such as limited 
office space. In addition, consolidating administrative structures may 
be time consuming and any cost savings may not be immediately realized. 

To facilitate further progress by states and localities in increasing 
administrative efficiencies in employment and training programs, we 
recommended in 2011 that the Secretaries of Labor and HHS work 
together to develop and disseminate information that could inform such 
efforts. As part of this effort, Labor and HHS should examine the 
incentives for states and localities to undertake such initiatives, 
and, as warranted, identify options for increasing such incentives. 
Labor and HHS agreed they should develop and disseminate this 
information. HHS noted that it lacks legal authority to mandate 
increased TANF-WIA coordination or create incentives for such efforts. 
Sustained oversight by Congress could help ensure progress is realized. 

Opportunities Exist for Other Cost Savings or Revenue Enhancements: 

Given today's fiscal environment, our work summarizes 47 additional 
areas--beyond those directly related to duplication, overlap, or 
fragmentation--describing other opportunities for agencies or Congress 
to consider taking action that could either reduce the cost of 
government operations or enhance revenue collections for the Treasury. 
These cost-saving and revenue-enhancing opportunities also span a wide 
range of federal government agencies and mission areas (see table 2). 

Table 2: Federal Agencies and Programs Where Cost-Saving or Revenue- 
Enhancement Opportunities May Exist: 

Mission: Agriculture; 
Areas identified: 35. Reducing some farm program payments could result 
in savings from $800 million over 10 years to up to $5 billion 
annually; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of Agriculture. 

Mission: Defense; 
Areas identified: 36. DOD should assess costs and benefits of overseas 
military presence options before committing to costly personnel 
realignments and construction plans, thereby possibly saving billions 
of dollars; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of Defense (DOD). 

Mission: Defense; 
Areas identified: 37. Total compensation approach is needed to manage 
significant growth in military personnel costs; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DOD. 

Mission: Defense; 
Areas identified: 38. Employing best management practices could help 
DOD save money on its weapon systems acquisition programs; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DOD. 

Mission: Defense; 
Areas identified: 39. More efficient management could limit future 
costs of DOD's spare parts inventory; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DOD, including the military services and Defense 
Logistics Agency. 

Mission: Defense; 
Areas identified: 40. More comprehensive and complete cost data can 
help DOD improve the cost-effectiveness of sustaining weapon systems; 
Federal agencies and programs where cost-saving or revenue- 
enhancement options may exist: DOD. 

Mission: Defense; 
Areas identified: 41. Improved corrosion prevention and control 
practices could help DOD avoid billions in unnecessary costs over time; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DOD's Office of Corrosion Policy and Oversight. 

Mission: Economic development; 
Areas identified: 42. Revising the essential air service program could 
improve efficiency and save over $20 million annually; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of Transportation. 

Mission: Economic development; 
Areas identified: 43. Improved design and management of the universal 
service fund as it expands to support broadband could help avoid cost 
increases for consumers; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Federal Communications Commission; 
four programs involved. 

Mission: Economic development; 
Areas identified: 44. The Corps of Engineers should provide Congress 
with project-level information on unobligated balances; 
Federal agencies and programs where cost-saving or revenue- 
enhancement options may exist: U.S. Army Corps of Engineers. 

Mission: Energy; 
Areas identified: 45. Improved management of federal oil and gas 
resources could result in approximately $1.75 billion over 10 years; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of the Interior's Bureau of Land 
Management, Bureau of Ocean Energy Management, Regulation and 
Enforcement, and Office of Natural Resources Revenue. 

Mission: General government; 
Areas identified: 46. Efforts to address governmentwide improper 
payments could result in significant cost savings; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: About 20 federal agencies; over 70 programs 
involved. 

Mission: General government; 
Areas identified: 47. Promoting competition for the over $500 billion 
in federal contracts can potentially save billions of dollars over 
time; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Governmentwide. 

Mission: General government; 
Areas identified: 48. Applying strategic sourcing best practices 
throughout the federal procurement system could save billions of 
dollars annually; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Governmentwide. 

Mission: General government; 
Areas identified: 49. Adherence to new guidance on award fee contracts 
could improve agencies' use of award fees and produce savings; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Several agencies, including DOD and the National 
Aeronautics and Space Administration. 

Mission: General government; 
Areas identified: 50. Agencies could realize cost savings of at least 
$3 billion by continued disposal of unneeded federal real property; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Governmentwide, including DOD, General Services 
Administration (GSA), and Department of Veterans Affairs. 

Mission: General government; 
Areas identified: 51. Improved cost analyses used for making federal 
facility ownership and leasing decisions could save tens of millions 
of dollars; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Primarily GSA, the central leasing agent for most 
agencies. 

Mission: General government; 
Areas identified: 52. The Office of Management and Budget's IT 
Dashboard reportedly has already resulted in $3 billion in savings and 
can further help identify opportunities to invest more efficiently in 
information technology; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Governmentwide. 

Mission: General government; 
Areas identified: 53. Increasing electronic filing of individual 
income tax returns could reduce IRS's processing costs and increase 
revenues by hundreds of millions of dollars; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of the Treasury's (Treasury) Internal 
Revenue Service (IRS). 

Mission: General government; 
Areas identified: 54. Using return on investment information to better 
target IRS enforcement could reduce the tax gap; 
for example, a 1 percent reduction would increase tax revenues by $3 
billion; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 55. Better management of tax debt collection may 
resolve cases faster with lower IRS costs and increase debt collected; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 56. Broadening IRS's authority to correct simple tax 
return errors could facilitate correct tax payments and help IRS avoid 
costly, burdensome audits; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 57. Enhancing mortgage interest information 
reporting could improve tax compliance; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 58. More information on the types and uses of 
canceled debt could help IRS limit revenue losses on forgiven mortgage 
debt; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 59. Better information and outreach could help 
increase revenues by tens or hundreds of millions of dollars annually 
by addressing overstated real estate tax deductions; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 60. Revisions to content and use of Form 1098-T 
could help IRS enforce higher education requirements and increase 
revenues; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 61. Many options could improve the tax compliance of 
sole proprietors and begin to reduce their $68 billion portion of the 
tax gap; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 62. IRS could find additional businesses not filing 
tax returns by using third-party data, which show such businesses have 
billions of dollars in sales; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 63. Congress and IRS can help S corporations and 
their shareholders be more tax compliant, potentially increasing tax 
revenues by hundreds of millions of dollars each year; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 64. IRS needs an agencywide approach for addressing 
tax evasion among the at least 1 million networks of businesses and 
related entities; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 65. Opportunities exist to improve the targeting of 
the $6 billion research tax credit and reduce forgone revenue; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Treasury and IRS. 

Mission: General government; 
Areas identified: 66. Converting the new markets tax credit to a grant 
program may increase program efficiency and significantly reduce the 
$3.8 billion 5-year revenue cost of the program; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Treasury. 

Mission: General government; 
Areas identified: 67. Limiting the tax-exempt status of certain 
governmental bonds could yield revenue; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Treasury. 

Mission: General government; 
Areas identified: 68. Adjusting civil tax penalties for inflation 
potentially could increase revenues by tens of millions of dollars per 
year, not counting any revenues that may result from maintaining the 
penalties' deterrent effect; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 69 IRS may be able to systematically identify 
nonresident aliens reporting unallowed tax deductions or credits; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: IRS. 

Mission: General government; 
Areas identified: 70. Tracking undisbursed balances in expired grant 
accounts could facilitate the reallocation of scarce resources or the 
return of funding to the Treasury; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Governmentwide. 

Mission: Health; 
Areas identified: 71. Preventing billions in Medicaid improper 
payments requires sustained attention and action by CMS; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of Health and Human Services' Centers 
for Medicare & Medicaid Services (CMS). 

Mission: Health; 
Areas identified: 72. Federal oversight over Medicaid supplemental 
payments needs improvement, which could lead to substantial cost 
savings; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: CMS. 

Mission: Health; 
Areas identified: 73. Better targeting of Medicare's claims review 
could reduce improper payments; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: CMS. 

Mission: Health; 
Areas identified: 74. Potential savings in Medicare's payments for 
health care; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: CMS. 

Mission: Homeland security/Law enforcement; 
Areas identified: 75. DHS's management of acquisitions could be 
strengthened to reduce cost overruns and schedule and performance 
shortfalls; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Department of Homeland Security (DHS). 

Mission: Homeland security/Law enforcement; 
Areas identified: 76. Improvements in managing research and 
development could help reduce inefficiencies and costs for homeland 
security; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DHS. 

Mission: Homeland security/Law enforcement; 
Areas identified: 77. Validation of TSA's behavior-based screening 
program is needed to justify funding or expansion; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Transportation Security Administration (TSA). 

Mission: Homeland security/Law enforcement; 
Areas identified: 78. More efficient baggage screening systems could 
result in about $470 million in reduced TSA personnel costs over the 
next 5 years; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: TSA. 

Mission: Homeland security/Law enforcement; 
Areas identified: 79. Clarifying availability of certain customs fee 
collections could produce a one-time savings of $640 million; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: DHS's Customs and Border Protection (CBP). 

Mission: Income security; 
Areas identified: 80. Social Security needs data on pensions from 
noncovered earnings to better enforce offsets and ensure benefit 
fairness, resulting in estimated $2.4-$2.9 billion savings over 10 
years; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: Social Security Administration. 

Mission: International affairs; 
Areas identified: 81. Congress could pursue several options to improve 
collection of antidumping and countervailing duties; 
Federal agencies and programs where cost-saving or revenue-enhancement 
options may exist: CBP. 

Source: GAO-11-318SP. 

[End of table] 

Examples of opportunities for agencies or Congress to consider taking 
action that could either reduce the cost of government operations or 
enhance revenue collections include: 

* DOD spare parts: We have identified weaknesses in DOD's inventory 
management practices, including problems in accurately forecasting 
demand for spare parts. Most recently, we reviewed the Defense 
Logistics Agency inventory levels and reported in 2010 that the 
Agency, over a period of 3 fiscal years, averaged $1 billion of 
inventory annually that has been identified as excess. Since our work 
has consistently shown that the greatest opportunities to minimize 
investment in unneeded inventory are at the initial stages of the 
inventory management process when acquisition decisions are being 
made, DOD could limit future costs by focusing its efforts on better 
managing on-order inventory, with a view toward reducing on-order 
inventory levels that are not needed for current needs or projected 
demand. 

Recently, Congress required DOD to submit a comprehensive plan for 
improving the inventory management systems of the military departments 
and the Defense Logistics Agency, with the objective of reducing the 
acquisition and storage of inventory that is excess to requirements. 
In November 2010, DOD submitted its plan to Congress and stated in its 
plan that it has already reduced unneeded inventory and that further 
reductions are possible. For example, DOD reported that $10.3 billion 
(11 percent) of its secondary inventory has been designated as excess 
and categorized for potential reuse or disposal. While DOD's plan is 
an important step in improving inventory management practices, 
successful implementation will be challenging and will require 
sustained oversight by DOD as well as collaboration among the services 
and the Defense Logistics Agency. Continued congressional attention is 
warranted. 

* Corrosion: DOD estimates that corrosion costs the department over 
$23 billion each year. Corrosion--which can take such varied forms as 
rusting; pitting; calcium or other mineral buildup; degradation from 
exposure to ultraviolet light; and mold, mildew, and other organic 
decay--if left unchecked, can degrade the readiness and safety of 
equipment and facilities and can result in substantial, sometimes 
avoidable costs. The Defense Science Board Task Force estimated in a 
2004 report that 30 percent of corrosion costs could be avoided 
through proper investment in prevention and mitigation of corrosion 
during design, manufacture, and sustainment. According to DOD, 
increased corrosion prevention and control efforts are needed to 
adequately address the wide-ranging and expensive effects of corrosion 
on equipment and infrastructure. However, DOD did not fund about one-
third of acceptable corrosion projects for fiscal years 2005 through 
2010. 

If the projects accepted by DOD's Office of Corrosion Policy and 
Oversight from fiscal years 2005 through 2010 had been fully funded, 
DOD potentially could have avoided $3.6 billion in corrosion-related 
costs--assuming those projects achieved the same level of cost- 
effectiveness as was estimated for all accepted projects in those 
years. If the Corrosion Office wishes to convince DOD and 
congressional decision makers that more fully funding its corrosion 
prevention programs could provide such a significant return on 
investment, the Corrosion Office needs to complete the validation of 
return on investment estimates in order to demonstrate the costs and 
benefits of its corrosion prevention and control projects. 

* Noncompetitive contracts: Federal agencies generally are required to 
award contracts competitively, but a substantial amount of federal 
money is being obligated on noncompetitive contracts annually. Federal 
agencies obligated approximately $170 billion on noncompetitive 
contracts in fiscal year 2009 alone. While there has been some 
fluctuation over the years, the percentage of obligations under 
noncompetitive contracts recently has been in the range of 31 percent 
to over 35 percent. Although some agency decisions to forego 
competition may be justified, we found that when federal agencies 
decide to open their contracts to competition, they frequently realize 
savings. For example, the Department of State (State) awarded a 
noncompetitive contract for installation and maintenance of technical 
security equipment at U.S. embassies in 2003. In response to our 
recommendation, State subsequently competed this requirement, and in 
2007 it awarded contracts to four small businesses for a total savings 
of over $218 million. In another case, we found in 2006 that the Army 
had awarded noncompetitive contracts for security guards, but later 
spent 25 percent less for the same services when the contracts were 
competed. 

In July 2009, OMB called for agencies to reduce obligations under new 
contract actions that are awarded using high-risk contracting 
authorities by 10 percent in fiscal year 2010. These high-risk 
contracts include those that are awarded noncompetitively and those 
that are structured as competitive but for which only one offer is 
received. While sufficient data are not yet available to determine 
whether OMB's goal was met, we are currently reviewing the agencies' 
savings plans to identify steps taken toward that goal, and will 
continue to monitor the progress agencies make toward achieving this 
and any subsequent goals set by OMB. 

* Undisbursed grant balances: Past audits of federal agencies by GAO 
and Inspectors General, as well as agencies' annual performance 
reports, have suggested grant management challenges, including failure 
to conduct grant closeouts and undisbursed balances, are a long- 
standing problem. In August 2008, we reported that during calendar 
year 2006, about $1 billion in undisbursed funding remained in expired 
grant accounts in HHS's Payment Management System--the largest 
civilian grant payment system, which multiple agencies use. In August 
2008, we recommended that OMB instruct all executive departments and 
independent agencies to track undisbursed balances in expired grant 
accounts and report on the resolution of this funding in their annual 
performance plan and Performance and Accountability Reports. As of 
January 13, 2011, OMB had not issued governmentwide guidance regarding 
undisbursed balances in expired grant accounts. 

* Social Security offsets: Social Security covers about 96 percent of 
all U.S. workers; the vast majority of the remaining 4 percent are 
public employees who work for federal, state, and local government. 
Although these workers do not pay Social Security taxes on their 
noncovered government earnings, they may still be eligible for Social 
Security benefits through their spouses' or their own earnings from 
other jobs that Social Security does cover. Two Social Security 
provisions--the Government Pension Offset, which generally applies to 
spouse and survivor benefits, and the Windfall Elimination Provision, 
which applies to retired worker benefits--attempt to take noncovered 
employment into account when calculating the Social Security benefits. 
However, these provisions have been difficult to administer because 
the Social Security Administration (SSA) does not have the pension 
data it needs to perform these calculations accurately. 

In April 1998, we recommended that SSA work with the Internal Revenue 
Service (IRS) to revise the reporting of pension information on IRS 
Form 1099R, so that SSA would be able to identify people receiving a 
pension from noncovered employment, especially in state and local 
governments. However, IRS did not believe it could make the 
recommended change without new legislative authority. 

Extending mandatory Social Security coverage for all state and local 
workers has been proposed among other options for addressing Social 
Security's long-term financial deficit. While this would eventually 
make the Government Pension Offset and Windfall Elimination Provision 
offsets obsolete, they would still be needed for many years to come 
for existing employees and beneficiaries, and we continue to believe 
that it is important to apply these laws consistently and equitably. 
Hence, we have suggested that Congress consider giving IRS the 
authority to collect the information that SSA needs on government 
pension income to administer the Government Pension Offset and 
Windfall Elimination Provision requirements accurately and fairly. The 
President's 2011 budget proposal contains a provision that would 
address the need for more complete and accurate information on 
noncovered state and local pensions, and it estimates savings of $2.9 
billion over 10 years. The Congressional Budget Office's 2009 Budget 
Options, Volume 2, has a similar provision and estimates savings of 
$2.4 billion over 10 years. 

* Customs fee collections: The U.S. Customs and Border Protection 
(CBP) collects user fees to recover certain costs incurred for 
processing, among other things, air and sea passengers, and various 
private and commercial land, sea, air, and rail carriers and 
shipments. These fees are deposited into the Customs User Fee Account. 
We discovered that CBP has a $639.4 million unobligated balance in its 
Customs User Fee Account as a result of excess collections from a 
temporary fee increase and elimination of North American Free Trade 
Agreement country exemptions from January 1, 1994, to September 30, 
1997. 

Clarifying the availability of unobligated balances in CBP's Customs 
User Fee Account could enable Congress to revise the agency's future 
appropriations, thereby producing a one-time savings of up to $640 
million. We first identified these unobligated balances in 2008. CBP 
officials stated at that time that although they formerly believed 
they needed additional authorization to spend these balances, it later 
appeared that the funds may be used as authorized by law. However, 
when we discussed these unobligated balances again in 2009 and 2010, 
CBP officials said they requested assistance from OMB to clarify the 
availability of these funds but OMB has not responded to their request. 

We believe this is an issue that Congress may wish to address since 
these unobligated balances have remained in CBP's Customs User Fee 
account for more than 10 years. Congress could clarify the purposes 
for which the $640 million in unobligated balances is available and 
take action as appropriate. 

* Addressing the gap between taxes owed and paid: The net tax gap, 
which is the difference between the amount of taxes owed and the 
amount paid voluntarily and timely less late payments and IRS 
collection results, was last estimated by IRS to be $290 billion for 
tax year 2001. Experts believe it may be larger. Our work has 
identified a number of areas where IRS or Congress could take action 
to better collect owed revenue, including: 

- Business nonfilers: Historically, the IRS has identified several 
million businesses each year that may have failed to file tax returns--
more than it can thoroughly investigate. IRS has had difficulty 
determining if these businesses are still active and thus required to 
file a tax return. As a result, IRS has pursued many inactive 
businesses, which has not been a productive use of its resources. 
Recently, IRS has begun to use some third-party data such as 
information required about certain payments as indicators of business 
activity. 

* However IRS has not used private sector data that it could obtain to 
verify taxpayer statements about whether a business is active and a 
tax return should have been filed. A number of private companies 
maintain business activity data, such as data on a business's gross 
sales and number of employees. Our analysis of Dun and Bradstreet data 
showed they could be used to identify business activity that IRS was 
not aware of. For two states, we analyzed 2007 data on the businesses 
that IRS initially identified as potential nonfilers but later 
determined were not liable to file returns. Of these, we found 7,688 
businesses where IRS data indicated little or no business activity, 
but Dun and Bradstreet data showed business activity as measured by 
sales totaling $4.1 billion. In addition to other improvements in its 
business nonfiler program, we recommended that IRS study the 
feasibility and cost-effectiveness of using non-IRS, private data to 
verify taxpayer statements. IRS agreed with the recommendation. 

- Electronic filing: The percentage of tax returns filed 
electronically has increased from 52 percent in 2005 to 71 percent in 
2010. However, in 2010, IRS still processed 40 million tax returns 
filed on paper. Electronic filing benefits taxpayers by reducing 
processing errors and expediting their refunds. Increasing electronic 
filing would also reduce IRS's return processing costs and increase 
revenue by facilitating enforcement. As noted in a December 2010 GAO 
report[Footnote 4], IRS estimated savings of $3.10 per return for 
returns filed electronically versus paper in fiscal year 2009. 

Our prior work has shown that IRS has three opportunities to increase 
electronic filing of individual income tax returns: (1) requiring tax 
software identification numbers would help inform research into how 
the pricing and attributes of different software products affect 
taxpayers' willingness to use software and file electronically, 
allowing IRS to better promote electronic filing; (2) working with 
taxpayers and their representatives to reduce the number of rejected 
electronic returns could reduce the number of frustrated taxpayers who 
opt to print and mail in their rejected electronic returns, leaving 
IRS to identify and correct any errors and process the paper returns, 
thereby losing the benefits of electronic filing; and (3) requiring 
software vendors to encode relevant information in a bar code that 
would be embedded on all paper returns printed from tax software and 
mailed would enable IRS to obtain electronic information, such as a 
taxpayer's Social Security number and address, from the return. While 
not as beneficial as electronic filing, bar coding would still provide 
efficiencies over data transcription and enable more information to be 
available electronically. 

Having more or all tax return information available electronically 
could help IRS target audits on noncompliant taxpayers, avoid 
burdening compliant taxpayers with unnecessary audits, make more 
productive use of IRS's audit resources, and--according to IRS 
officials--increase annual tax revenue by $175 million. 

- Adjusting civil tax penalties: The Internal Revenue Code has over 
150 civil penalties that potentially deter taxpayer noncompliance. A 
number of civil tax penalties have fixed dollar amounts--either a 
specific dollar amount, or a minimum or maximum amount--that are not 
indexed for inflation. Over time, the lack of indexing can decrease 
the real value of IRS assessments and collections significantly. We 
found in August 2007 that adjusting civil tax penalty fixed-dollar 
amounts for inflation from 2000 to 2005 would have increased IRS 
collections by an estimated $38 million to $61 million per year based 
on a limited number of penalties we reviewed. 

We reported that Congress may want to consider requiring IRS to 
periodically adjust for inflation, and round appropriately, the fixed- 
dollar amounts of the civil penalties to account for the decrease in 
real value over time and so that penalties for the same infraction are 
consistent over time. Although Congress has increased the amount of 
some fixed penalties since our report, only two penalties are to be 
adjusted for inflation on a periodic basis. Consequently, we continue 
to believe Congress should consider requiring IRS to periodically 
adjust all fixed penalties for inflation. 

* Unneeded real property: Many federal agencies hold real property 
they do not need, including property that is excess or underutilized. 
Excess and underutilized properties present significant potential 
risks to federal agencies because they are costly to maintain. For 
example, in fiscal year 2009, agencies reported underutilized 
buildings accounted for over $1.6 billion in annual operating costs. 
In a June 2010 Presidential Memorandum to federal agencies, the 
administration established a new target of saving $3 billion through 
disposals and other methods by the end of fiscal year 2012; the 
President reiterated this goal in his 2012 budget. However, federal 
agencies continue to face obstacles to disposing of unneeded property, 
such as requirements to offer the property to other federal agencies, 
then to state and local governments and certain non profits at no 
cost. If these entities cannot use the property, agencies may also 
need to comply with costly historic preservation or environmental 
cleanup requirements before disposing of the property. Finally, 
community stakeholders may oppose agencies' plans for property 
disposal. OMB could assist agencies in meeting their property disposal 
target by implementing our April 2007 recommendation of developing an 
action plan to address key problems associated with disposing of 
unneeded real property, including reducing the effect of competing 
stakeholder interests on real property decisions. 

In conclusion Mr. Chairman, Ranking Member Cummings, and Members of 
the Committee, given the challenges noted above, careful, thoughtful 
actions will be needed to address many of the issues discussed in our 
March 1 report, particularly those involving potential duplication, 
overlap, and fragmentation among federal programs and activities. 
These are difficult issues to address because they may require 
agencies and Congress to re-examine within and across various mission 
areas the fundamental structure, operation, funding, and performance 
of a number of long-standing federal programs or activities with 
entrenched constituencies. Some of these areas are also included in 
our 2011 High-Risk Series update on which we testified before your 
committee in February 2011.[Footnote 5] Further, in January 2011, the 
President signed the GPRA Modernization Act of 2010,[Footnote 6] 
updating the almost two-decades-old Government Performance and Results 
Act (GPRA).[Footnote 7] Implementing provisions of the new act--such 
as its emphasis on establishing outcome-oriented goals covering a 
limited number of crosscutting policy areas--could play an important 
role in clarifying desired outcomes, addressing program performance 
spanning multiple organizations, and facilitating future actions to 
reduce unnecessary duplication, overlap, and fragmentation. Continued 
oversight by OMB and Congress will be critical to ensuring that 
unnecessary duplication, overlap, and fragmentation are addressed. 

As the nation rises to meet the current fiscal challenges, GAO will 
continue to assist Congress and federal agencies in identifying 
actions needed to reduce duplication, overlap, and fragmentation; 
achieve cost savings; and enhance revenues. In our future annual 
reports, we will look at additional federal programs and activities to 
identify further instances of duplication, overlap, and fragmentation 
as well as other opportunities to reduce the cost of government 
operations and increase revenues to the government. We plan to expand 
our work to more comprehensively examine areas where a mix of federal 
approaches is used, such as tax expenditures and direct spending. 
Likewise, we will continue to monitor developments in the areas we 
have already identified. Issues of duplication, overlap, and 
fragmentation will also be addressed in our routine audit work during 
the year as appropriate and summarized in our annual reports. 

Thank you, Mr. Chairman, Ranking Member Cummings, and Members of the 
Committee. This concludes my prepared statement. I would be pleased to 
answer any questions you may have. 

For further information on this testimony or our March 1 report, 
please contact Patricia Dalton, Chief Operating Officer, who may be 
reached at (202) 512-5600, or DaltonP@gao.gov; and Janet St. Laurent, 
Managing Director, Defense Capabilities and Management, who may be 
reached at (202) 512-4300, or StLaurentJ@gao.gov. Specific questions 
about individual issues may be directed to the area contact listed at 
the end of each area summary in the report. Contact points for our 
Congressional Relations and Public Affairs offices may be found on the 
last page of this statement. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-139, § 21, 124 Stat. 29 (2010), 31 U.S.C. § 712 
Note. 

[2] GAO, The Federal Government's Long-Term Fiscal Outlook: Fall 2010 
Update, [hyperlink, http://www.gao.gov/products/GAO-11-201SP] 
(Washington, D.C.: Nov. 15, 2010). Additional information on the 
federal fiscal outlook, federal debt, and the outlook for the state 
and local government sector is available at [hyperlink, 
http://www.gao.gov/special.pubs/longterm/]. 

[3] GAO, Opportunities to Reduce Potential Duplication in Government 
Programs, Save Tax Dollars, and Enhance Revenue, [hyperlink, 
http://www.gao.gov/products/GAO-11-318SP] (Washington, D.C.: Mar. 1, 
2011). An interactive, Web-based version of the report is available at 
[hyperlink, http://www.gao.gov/ereport/gao-11-318SP].  

[4] GAO, 2010 Tax Filing Season: IRS's Performance Improved in Some 
Key Areas, but Efficiency Gains Are Possible in Others, [hyperlink, 
http://www.gao.gov/products/GAO-11-111] (Washington, D.C.: Dec. 16, 
2010). 

[5] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: Feb. 16, 
2011); and GAO's 2011 High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-394T] (Washington, D.C.: Feb.17, 
2011). 

[6] Pub. L. No. 111-352, 124 Stat. 3866 (2011). 

[7] Pub. L. No. 103-62, 107 Stat. 285 (1993). 

[End of section] 

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Automated answering system: (800) 424-5454 or (202) 512-7470: 

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Chuck Young, Managing Director, youngc1@gao.gov: 
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U.S. Government Accountability Office: 
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Washington, D.C. 20548: