Taxpayers Beware: GAO Releases New High Risk List

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February 15, 2013

Every two years, the Government Accountability Office (GAO) releases its so-called high-risk list.  This is the list of areas of federal spending that are vulnerable to waste, fraud and abuse.   And, this year, just 48 hours after the President’s State of the Union address, GAO released their update for 2013.  Titled, “High-Risk Series: An Update,” which details 30 high-risk areas of the federal government.  Two areas were removed and two new areas were added to the high-risk list.  The two areas that were removed included “Management of Interagency Contracting,” and “Internal Revenue Service Business Systems Modernization.”   The two new areas added to this list were “limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks” and “Mitigating Gaps in Weather Satellite Data.”  With 28 “repeat offenders,” the list clearly shows that there is quite a bit of work to do.  With all the talk of deficits, debt, and the sequester, there couldn’t be a better time to discuss options on making the government more efficient and save taxpayer dollars.

Let’s start out with the good news.  As mentioned, two areas were taken off the list.

Management of Interagency Contracting

GAO noted that “Improvements include (1) continued progress made by agencies in addressing identified deficiencies, (2) establishment of additional management controls, (3) creation of a policy framework for establishing new interagency contracts, and (4) steps taken to address the need for better data on these contracts.”

Internal Revenue Service Business Systems Modernization

GAO noted that, “The Internal Revenue Service (IRS) made progress in addressing significant weaknesses in information technology and financial management capabilities. IRS delivered the initial phase of its cornerstone tax processing project and began the daily processing and posting of individual taxpayer accounts in January 2012. This enhanced tax administration and improved service by enabling faster refunds for more taxpayers, allowing more timely account updates, and faster issuance of taxpayer notices. In addition, IRS has put in place close to 80 percent of the practices needed for an effective investment management process, including all of the processes needed for effective project oversight.”  This improvement probably won’t change people’s perspective on the IRS but credit should be given to the agency.

Now, the bad news, there were two areas that were added.

Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks

GAO stated that their concerns with limiting the federal government’s fiscal exposure by better managing climate change risks included, “Climate change creates significant financial risks for the federal government, which owns extensive infrastructure, such as defense installations; insures property through the National Flood Insurance Program; and provides emergency aid in response to natural disasters. The federal government is not well positioned to address the fiscal exposure presented by climate change, and needs a government wide strategic approach with strong leadership to manage related risks.

Mitigating Gaps in Weather Satellite Data

GAO’s concern with Mitigating Gaps in Weather Satellite Data was that, “Potential gaps in environmental satellite data beginning as early as 2014 and lasting as long as 53 months have led to concerns that future weather forecasts and warnings—including warnings of extreme events such as hurricanes, storm surges, and floods— will be less accurate and timely. A number of decisions are needed to ensure contingency and continuity plans can be implemented effectively.”

It would take up way too much space to go into detail on every area, but here are three that jumped out at TPA.

Department of Defense

There is quite a bit of panic about the sequester (automatic spending cuts) and how some claim that the cuts will hollow out the Department of Defense.  There is quite a bit of waste at the Pentagon and TPA’s reaction to the State of the Union outlined some smart defense cuts and why we shouldn’t panic about the sequester.  GAO added some more context to the inefficiency at the Pentagon, “In 2012, GAO reported that the total acquisition cost of DOD’s fiscal year 2011 portfolio of 96 major defense acquisition programs grew by more than $74.4 billion, or 5 percent, in the past year. About $31.1 billion of that amount can be attributed to factors such as inefficiencies in production, $29.6 billion to quantity changes, and $13.7 billion to research and development cost growth.”  This was only one of seven areas in DoD that GAO warned about.

Medicare

The federal government has been vulnerable to improper payments (read previous TPA blog posting here), but there may not be one program that is as vulnerable as Medicare.  According to GAO, “In 2012, the Medicare program covered more than 49 million elderly and disabled beneficiaries at an estimated cost of $555 billion, and reported improper payments estimated to be more than $44 billion.”  That is $44 billion that could be saved without affecting one person.

NASA

NASA has long been a difficult area to cut because of the fascination space exploration by both Democrats and Republicans.  Well, GAO wasn’t seduced by NASA’s star gazing appeal, “For example, GAO reported that cost and schedule growth on one of NASA’s most expensive and complex science projects, the James Webb Space Telescope (JWST), has had a significant impact on NASA’s overall performance. JWST was rebaselined in 2011 with a $3.7 billion increase in lifecycle costs and a 52 month launch delay. Such a significant increase impacted NASA’s ability to fund other important missions going forward.”

It is time for the White House and Congress to take GAO’s high-risk list seriously.  Ensuring that federal programs work effectively and efficiently should be the top priority for all elected and non-elected officials.

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