..

you were not prescribing the methodology in the supplement and supplant section we were discussing. you were merely saying that state and local school districts to choose their own methodology as long as they got the result

that was desired. is that right? >> they can use their own methodology effort to ensure that fulfill the principal supplement, not supplant. >> and in defining what we mean by coming to proposed rule, not listening to what you said as you describe what the goal was, would it be accurate to say that the local education agency, the school district, has said he wished combined state and local per pupil expenditure, including personnel expenditures in each school, each title i school, is not less than the average combined state and local per pupil expenditures in the non-title i schools, is that about right? >> it's that allocation of funds to state and local funds to title i schools has to be at least equal to the average non-title i school. now, approach might include looking at staffing and program

provision, but another approach might be a weighted student funding formula approach. >> but in any event it would have to include teachers and personnel, right? >> it would include them. total impact of the allocation of state and local dollars. >> did you realize that's precisely the definition in senator bennet's amendment on comparability when he sought to amend section 1120, which didn't succeed in which he acknowledged this morning didn't succeed? so the effect of your proposed rule is to change the comparability while which congress did not change. >> again, we are not addressing comparability here. >> you would have the same effect as if you were to change the comparability law which has not been changed since 1970. >> that would depend on the circumstances in a given district but the key in the district is about title i dollars would be genuinely

supplemental and not used to -- >> but you're saying that in order to do that you've got to have the spending in the title i schools, including teacher salaries, has got to be not less than the average combined state and local per expenditures in the non-title i schools. that's comparability. that's what we didn't change. >> again, here, because the focus is on supplement not supplant, the question is whether not the total local and state effort is at least equal to the non-title i school. and a school could address a gap in effort to a variety of mechanisms. they could have advanced coursework, a preschool program, a number of strategies. it's no think of the services need to be the same. it's saying the allocation of dollars of title i dollars has to be supplemental. >> but you were saying the total state and local effort for the

non-title i schools has to be the same as for the title i schools, right? >> at least equal to the average non-title i school. which again could result in variety within a district. >> which began is comparability. i mean, that's what comparability is. i saw to change by introducing amendment allowing dollars, federal dollars to follow children from low-income families to the school but it didn't or that was rejected. senator bennet had his amendment. the changes in the supplement not supplant law are to some extent, maybe a large extent, due to recommendations directly for the center of america progress, the federal education law group, american integer -- american enterprise institute. they said quote it's important that the proposed change, the one that was made, we made in

supplant and supplement and supplant, would not look at whether the amount of state and local money at title i school receives is equitable. given the significance of the problems caused by the supplement not supplant test. this issue should be addressed on its own separate from other title i fiscal issues. concerns over equity can be addressed through title i's comparability requirement. what would you say to that? >> here, i think part of what they are referencing is the number of problems that we saw with the supplement not supplant approach under no child left behind, that indeed it was a burdensome process that did not achieve the desired goal of ensuring title i dollars are supplemental. we are not make you change the comparability. we are making a change to supplement not supplant to reflect the change in law. supplement not supplant is different and we are asked by a variety of stakeholders to

provide clarity on implementation of supplement not supplant and that's what we propose to negotiate to rulemakers. >> what you proposed most of the effects of equal spending by state and local dollars in title i schools as well as non-title i schools before you get the title i money, isn't that correct? >> it does not report equal spending. it requires that the state and local funds in title i schools are at least what is being spent in state and local funds in the average non-title i schools. any given district you would see still a variety within -- >> you say you've got has bee a leak as much as the average of here. i mean, that's a legal comparability, isn't it? >> no. the decisions use the average non-title i school means there would be a variety of spending levels in the non-title i schools. >> sesection 16 of five -- what

would you say to that? >> this wouldn't equalize spending. what he would say is that in the title i school you've got to be spending at least as much in state and local resources as spent an average non-title i school. it would be a range of levels with the non-title i schools so you would not be required district to spend the same in all schools that you would be ensuring importantly that the title i dollars are, in fact, supplemental and not being used to backfill. >> there are plenty of ways to figure that out without equalizing spending. this sounds to me exactly like the kind of thing the department got into with academic standards with common core. you basically said state didn't have to adopt common core but then you come up with the requirement that, in fact, required to the mall to do it. it produced an enormous backlash which was a big part of the passage of this law. so i would urge you to look

carefully at the supplement not supplant negotiated rulemaking proposal, which is an early stage. because in my view, it violates the unambiguous prohibitions that were into law the president signed in december. related to prescribing state and local funding methodologies, mandating equalizing spending. you were not supposed to do that. in different with state of local programs of instruction. prohibited from doing that. or controlling the allocation of state and local resources. it ignores congress is intent which was to not change the requirements on comparability. it regulates outside the scope of the supplement not supplant requirement or it would impose unprecedented burdens on state and local school districts, requiring an overall of almost all the state and local finance systems, giving districts few options other than forcing the transfer of teachers to new schools.

perhaps in direct conflict with collective bargaining contracts with the teachers organizations. and it would require states to move back to the burdensome practice that we had before. and as i mentioned earlier, according to the great city schools council it would cost 3.9 billion just for the school districts to address state disparities. i have only one other question. flexibility for eighth grade students taking advanced math. one thing we heard about more than anything else in this reauthorization was over testing and more flexibility in testing. we thought we provided that. but here's a rule that says that you may take, well, the new law permits a state to a eighth grade students to take the end of your test for passing the

advanced math test in place of the eighth grade test. in other words, if you're an eighth grader at you can take algebra two, you can take that instead of the basic eighth grade test. that just makes common sense and the fact the department of labor's allowed that. now you are proposing to add a new requirement, one that you barely just made up, which has a stake in be granted this flexibility only if it demonstrates that offers all students in the state the opportunity to be prepared for and take advanced mathematics coursework in middle school. where did that come from? that's not in the law. >> this is being discussed by the negotiators. i think the key question here is to the extent that opportunities are to be equitably provided to access advanced culture -- coursework. we know for example, that the our high schools around the country serving large numbers of low-income students of color that don't even offer algebra

two or chemistry. we know there are middle school serving high numbers of low-income students of color that don't even offer access to the algebra course. so if you were going have an assessment system that provides comparable information about equitable access to opportunity in schools, you need to ensure that students have that opportunity. for a school do not offer students access to that advanced course means that you are then using the assessment system too, in a sense, -- >> dr. king, if you'll excuse me, if you were a united states senator on the floor of the senate that would be very good and persuasive argument but you are not. we could've written it into the law but we didn't. we basically said that a state may allow an eighth grade student who is taking an advanced math course to take it and not have to take the test in the basic course at the same

time. you have come along and said well, that's an interesting idea. we think would be also good to make all states and 100,000 public schools to change the way they offer advanced math courses to include a lot more students. that may be a noble aspiration but it's not in the law. and for an agency that only funds 4% of the title i funding is 4% of what the state of local governments spend, those decisions ought to be left to the elected officials, not to people in your department. >> you can't get the comparable, valid, reliable information about student performance if the assessment is only available to some students and not others. and so the goal here is to ensure that the assessment system provides -- >> but you are in charge of the accountability system. along requires the results of those tests be a part of the state's accountability system.

what we are trying to get rid of is you here telling states what to do with the results of test. it must have made common sense to say that if you're an eighth grade student taking an advanced math course, that you can take it and you don't also to take the basic eighth grade test. it. the department allowed states to do that in the waiver. why are you making this up now? >> the design of the accountability system, there is state flexibility by the state or to generate comparable information about the performance of students within any given grade. if you've got an assessment that's available only to some students -- >> are you going to decide that? >> states would decide how that would work. >> but why not let them decide if? >> we are. >> but no, you said in your proposed rule, and i will not belabor any further, i hope you go back and take a look at this. you basically put in a new

requirement that you could only take this flexibility congress gave if you do what the department now wants to legislate, described that you offer all students in the state the opportunity to be prepared for an advanced mathematics coursework in middle school. it's kind of hard to know what that would mean anyway. you are asked by one of the senators, do you have anything else to tell us about, you said proposed regulations to omb last week on accountable assistance, state plans, innovation, a cessna pilot. when are you going to make details of those proposals public? what you intended timeline for final regulations, and what can you tell us about other areas of the law that you intend to issue guidance on or provide technical assistance? >> so the accountability regulations are now with omb for review. we expect later this spring early summer those regulations will be posted for comment.

we will later develop regulations based on the input that we received from stakeholders on state plans and on the innovative assessment pilot. we expect those regulations to be out for public comment in the fall. the goal is to have all the regulations in place by the end of the year so that states are in a position to develop plans in spring and summer of next year, submit those plans in spring and summer of next year so that they're ready for full implementation in september 2017. we have committed to develop guidance on services for homeless students, fosters -- foster distance and english learners. we are continued to gather feedback and input from stakeholders and potentially develop additional guidance documents based on what states, deserts, educators, parents, civil rights organizations are

telling us they need in order to ensure clarity and have examples of best practices. >> thank you, dr. king. i hope you will reflect on this hearing today. we have many different opinions on this committee, and we were able to come to a law and each of us can speak for ourselves. but for me, i think it's very clear that we did not intend that you come up with some clever way to use one provision, the supplement and supplant her vision, to change another provision, the comparability provision that we deliberately did not change because we couldn't a great how to change it. we left the law exactly as it is. i hope you will take another look at that. i mean, your responsibility to faithfully execute the law and abide by the letter of the law, and i don't think the beginning of those rule proposals suggest that for some of the employees are doing. we will look forward to

following the implementation of the law carefully during the rest of the year. if there are no other -- get my concluding comments here. the hearing record will remain open for 10 business days. members may submit additional information and questions to our witnesses for the record within the time it would like. thank you for being here, dr. king. the committee will stand adjourned. >> thank you. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> the senate armed service committee meets today to consider to military commander nominations. they will question the nominees to the u.s. military's european command in northern command. you can watch that hearing live at 9:30 a.m. eastern on c-span3 and c-span.org.

>> this sunday night on q&a, historian ron chernow talks about the hit broadway musical hamilton. >> he said to me i was reading your book on vacation, mexico, and that i was reading it, hip hop song start rising off the page. he started telling me, hamilton's life is a classic hip-hop narrative and a sticky what on earth is this guy talking about? i think he was thinking he had the fact that hip-hop ignoramus on the centric my first question was, can hip-hop be the vehicle for telling this kind of very large and complex story? he said, i'm going to educate you about hip-hop their candidate on the spot. he started pointing out with hip-hop you can pack more information into the lyrics than

any other form because of their very dense and rapid. he started talking about the fact that hip-hop not only has rhymed in things, it has internal rhymes, and these are educating me in all these different areas that are very important to the success of the show. >> sunday night at eight eastern and pacific on c-span's q&a. >> at a house oversight committee hearing the comptroller general of the government accountability office presented the annual report on federal government waste and duplication. this year's report identified 12 areas of overlap. officials from the irs, defense department and medicare testified about the efforts to government the gao's recommendations. congressman jason chaffetz chairs the oversight committee. this is two hours and 40 minut minutes.

>> [inaudible conversations] >> committee on oversight and government reform will come to order. without objection pictures

authorized to declare a recess at any time. appreciate the group we have assembled a day. it's always a keen interest the duplication report. government is so big, so wide and so expensive. we are talking about trillions of dollars in expenditures and we are always seeking ways to make the government dollars more effective, more efficient. this morning the government accountability office has released its sixth annual report on opportunities to reduce fragmentation of overlap and duplication in the federal government to achieve financial and other benefits. over the course of the six years the gao has highlighted 250 carries the federal government and recommended more than 600 corrective actions. we cannot thank enough the men and women who serve in the gao, the good work that they do. doing hard work, looking under the hood and really coming up with important recommendations that we as members of congress desperately need in order to do

our jobs properly. 41% of the recommend corrective actions have been fully addressed and closed which gao reports say will save about $125 billion by the 2025 the this report reveals persistent efforts to address inefficiencies and resolve wasteful spending can provide significant benefits to the public. yet with only 41% of actions addressed, more needs to be done. taking action at just three agencies, the department of defense, health and human services, and the internal revenue service, if we did just those three we would save literally billions upon billions of dollars. combined these agencies count for more than half of all federal spending in fiscal year 2015. more than half of all correction actions are directed at these three agencies. yet all three agencies have more than 60% of the recommended actions still open. for example, the gao estimates the irs can save hundreds of

millions of dollars in increased revenue by enhancing its online services. 2013 jl recommends the irs develop a methodology for allocation of enforcement resources. the irs develop methodology but to date has chosen not to implement it. in action cost taxpayers time and money. the irs needs to explain the refusal to take his corrective action. in a new every highlighted an issues report they irs is using a paper-based system to receive an track tips on noncompliance in nine different offices. gao estimates the coordination and information sharing can help the irs identify and collect billions in tax revenue. it shouldn't take a gao report to point out the cord knitting investigation prevent duplicative for amateurs taxpayer resources are used efficiently and effectively. in 2015 gao recommended the centers for medicare and medicaid services should ensure

states report accurate and complete data on state sources of funds. seems fairly reasonable. gao estimates cms could save taxpayers hundreds of millions but cms has not taken this action. and in 2013 the gao recommended the department of defense implement a plan to guide joint basing meaning multiple military services using a single base to achieve efficiency. that dod has yet to complete this action even though it could save as much as $2.3 billion over a 20 year period. why do we need to come back year after year to discuss the same actions? that's in part what we will be discussing today. the federal government has an obligation not to waste taxpayer dollars. we are pulling money out of somebody's pocket and then trying to give it to someone else and use that so got to be very, very cognizant of this wasteful taxpayer spending. all federal workers should consider it part of the job

description to prevent waste and should embrace the role as fiduciaries for the american public. disagreements over policy can lead to disagreements over appropriate spending at the imperative to prevent waste is something you can all agree in both sides of the aisle. when we know it's about waste and inefficiency, we have to act. the gao annual report provides a roadmap to tackling the known wastes and inefficiencies out of there. so we have a lot of questions, a host of questions here. but we do look forward to an want to maximize time for member input. without i would like to recognize the ranking member for his opening statement. >> thank you very much, mr. chairman. once again for holding what has become a tradition for our committee and for making sure the gao's report gets the attention it warrants. this type of oversight is one of the core functions of our committee.

today, we will focus on gao's sixth annual report and duplicative the programs and opportunities for cost savings in the federal government. this report allows the executive branch and congress to work together to identify critical areas where we can reduce waste, and make the programs more efficient and effective. this report is interesting because it focuses on both the executive branch and congress. since 2011 gao's reports have consistently shown that congress has been doing far worse than the executive branch in implementing gao's recommendations. today's report is no different. it shows that congress could be doing much more to foster an efficient, effective and accountable government. according to gao, the executive branch is fully or partially completed 81% of gao's

recommendations. 81%. that is an impressive success rate, particularly in light of the budget cuts agencies have endured in recent years. congress, on the other hand, has implemented only about 46% of gao's recommendations. even with that 46%, it's kind of generous because gao gives congress credit for taking partial action by just moving a bill through committee, even if that's not gotten past even the house or the senate. during last year's hearing, you think the gao four, ethical, providing congress and executive branch with a roadmap to achieve needed savings, into court. according to gao the administration has done a much better job of following that

roadmap than we here in congress. specifically, gao made 459 recommendations for the executive branch, and 372 have now been fully or partially completed. in contrast gao has made 85 recommendations to congress but only 37 of those have been fully or partially completed. gao's new report highlights areas where congress could legislate right now to eliminate waste and duplication. for example, gao recommended to congress passed legislation to protect private citizens who report tax fraud to the irs from retaliation by their employers. it is vital we protect these whistleblowers and award them for their service. that is why in february senator baldwin and i introduced the

warn act. our bill would have been since the people of low the whistle on financial crime including misrepresentations of this, vital and public violence. the bill has been endorsed by many organizations including bogle, americans for financial reform, afl-cio and documentation workers of america. i hope congress can consider this bill this year. gao also recommended that congress lower the threshold required employers to electronically file w-2s to help the irs detect fraudulent refund claims. gao 26 report also recognizes improvements by federal agencies which includes a number of recommendations for federal agencies going forward. for example, gao highlighted a number of success stories at the centers for medicare and

medicaid services, including eliminating duplicative contracts, improving processes for identifying improper payments. through improvements to medicaid integrity program, cms helped recover nearly $657 million of improper medicaid payments in fiscal year 2015, according to gao. on the flipside gao found the department of defense still has 79 major weapons systems programs, total acquisition cost of over $14 trillion. and dod spends $100 billion each year on these systems, but it has failed to strategically manage those investments, resulted in inefficiency and waste. taxpayers and our troops deserve better than that.

i want to thank all of our witnesses today, to mr. dodaro, you and your talented staff provide critical service to congress and the american people. as well as the work you do every day to help ensure our tax dollars are spent wisely. i hope that you will share with all of your employees how grateful we are for their pursuit of excellence, and for them helping to provide us with the roadmaps to make a difference. with that, mr. chairman, i yield back. >> thank you. uphold the record open for five legislative days. we when i recognized our panel of witnesses. we have quite a few people to swear in that we are first place to welcome the honorable gene dodaro was the comptroller general of the united states and the united states government accountability office. we are pleased to have you come before our committee.

again, you are one of the more important people that we have come here, given your insight and your commitment to these issues. and again i can't thank your staff in for the great work that they do behind the scenes. a number of those key staff people are here. we wanted to maximize the opportunity for members to dive deeper into some of these issues, and pursue the committee rules we will swear these people and as well. these experts that are here include ms. kathleen barrack, managing director for defense capabilities. mr. paul francis, managing director acquisition and sourcing management team. mr. chris men, managing director, strategic issues team. ms. nikki clark, managing director of 13. ms. oris williams and brown, managing director financial markets and committee investment the. mr. phillip herr, managing director physical infrastructure team.

ms. barbara bovbjerg, managing director education workforce that income security team. mr. sato -- i hope i pronounced it properly, forensics audits and investigative services team. and mr. dave hollander, director information technology team. my apologies if i did meet all the names proper. we also have mr. john dalrymple, deputy commissioner for services and enforcement at the internal revenue service at the united states department treasure. mr. david tillotson, deputy director and chief management officer at the united states department of defense. and dr. patrick conway, and doctor come you've got a title ii. acting principal deputy administrator and deputy chief administrator for innovation to called it, chief medical officer at the centers for medicare and medicaid services at the united states department of health and human services. so i thank you again for all of

your good work and for you being here. are some of the committee rules all witnesses are to be sworn before they testify. those on the panel as well as those a company mr. dodaro, if you at all please rise and raise your right hand. [witnesses were sworn in] >> thank you. you may be seated. let the record reflect all witnesses answered in the affirmative. we would ask the four panelists that are here at the table to please limit your oral testimony to five minutes so members have ample time to answer questions. mr. dodaro, it's your discretion if you want to yield time to a particular individual as we get into the questions. we have a seat there if need be. so mr. dodaro, you are not recognized for five minutes. >> thank you very much, mr. chairman.

good morning to you, ranking member cummings, numbers of the committee. we are very pleased to be here today to discuss gao's six annual report on overlap and duplication and fragmentation of the federal government, and also other opportunities to achieve cost savings and revenue enhancements. in this report we introduced 92 new actions that the congress and executive branch can take in 37 different areas. to give you some examples come in the overlap duplication fragmentation area me highlight 12 areas. for example, we found that the defense department is procuring commercial services for satellites, and then the billion dollars they spent, about 30% of that was spent outside the central procurement agency by the different services and other agencies throughout the department. and as a result in the central agency, the costs were about 15% less than purchasing it outside

the central offices. so we think there is better money to be saved there. tens of billions of dollars. we also found nine ferral programs at irs for whistleblowers and others to report improper activities that would give irs some tips to follow up for tax enforcement purposes and potentially produce billions of dollars in additional revenue over the government. these systems are manually operated. they were fragmented. they were not coordinated and there a lot of opportunities to streamline and provide better indication to the people are fighting tips. also we found that was potential for duplicative health care spending between people who are on medicaid or who are in the state exchanges. there's some amount of transfer time that could be made if people's income levels of change or become eligible for medicaid for the services, but we find that the activities outside the normal transition period, and we

recommended that in order to minimize any duplicate federal spending, a better coordination we need to be taken place and better oversight by cms over the medicaid programs at the state level in with the exchanges. in areas of cost savings, revenue enhancements, without a number of recommendations be sure that our new. we have opportunities to save a lot of money in overpayments for disability programs by the social security administration. there are billions to be saved in revamping some of the payment policies that guide medicare spending. there is greater need for oversight, you could save hundreds of millions of dollars, if not billions by greater oversight of cms over medicaid spending and the states activity. this also millions that could be saved either federal agencies have a better access to access personal property at dod and ammunition that's discarded but

could be used by other federal agencies. so we don't have to buy it twice in the process. and there's some fees that could be raised that having been raised in over 20 years to provide more resources in particular to do with deferred maintenance in our national parks. to date, as mr. chairman mentioned, mr. cummings in opening statements, congress and the administration have acted on many of our recommendations. of the 544 we have made previously, 41% of them implemented. 34% partially, 20% not yet implement it at all. that are tens of billions of dollars in additional savings to be had in the offing here, if those recommendations were for acted upon. to date as you mentioned, mr. chairman, your opening statement

about $125 billion that have been saved or will be saved over the coming years. we are pleased congress has taken action. a lot of large dollar savings have come from congressional action. and also in a number of areas where the agencies have taken action that's because of congressional urging as well. but there's a lot more that could be done. i'm very pleased to be a today to talk about those opportunities and in addition to the new areas that we've added to the list. thank you for holding this annual hearing. it makes a big difference in getting support. and i will pass on to our staff your thanks and appreciation for their hard work. mr. chairman, congressman cummings, thank you for your comments and be happy to answer questions at the appropriate point. >> thank you. mr. dalrymple, you are recognized for five minutes. >> chairman chaffetz, ranking member cummings and members of the committee, i'm here to

discuss the findings of the government accountability office, gao, related to its six and review of duplicative programs. we appreciate gao studies of the irs and its programs. their findings and insights and recommendations are invaluable to us as to help usher we're successful in accomplishing our mission of collecting over $3 trillion annually. with independent auditors and evaluators we simply could not be as effective. since fiscal year 2013, the irs has taken action to address more than 82% of all of gao recommendations made including those highlighted in this report. between fiscal year 2011-2015, the irs received more than 2100 recommendations from gao and our inspector general auditors. with gao recommendations accounting for roughly 30% of those. kevin is the sheer number and

scope of recommendations the irs receives on a wide variety of area, the reality of resource and budget limitations precludes us from taking every action recommended as quickly as we might prefer. the irs has to look at total universe of recommendations across the enterprise through a larger lens and make strategic decisions about actions most important to address those audit findings. to that end we very much appreciate the initiative gao started this year with a review and prioritize the universe of open recommendations. this helps us better understand what they think are the most critical. overwhelmingly gao and irs are on the same page. our top priorities are generally the same as theirs. this increases our confidence that we are acting on the most important recommendations first. thank you irs programs highlighted in this years gao of

duplicative program study, referrals and identity theft, are illustrative of the value we get from gao recommendations and the actions we take your iran's referral programs which involve individuals and businesses reporting alleged noncompliance with tax laws, gao study reports are the areas needing improvement, and we got right to work. we now have a team in place past with engineering parts of the referral process to be more streamlined and effective. in fiscal year 2012-2015, about 93% of information referrals did not lead to audits what about 7% did. this is a much higher overall audit rate which is hovering around .7% for the general population. what's more, the audit is on those referrals yielded over $209 million in additional tax assessment recommended.

but these figures reveal is our screening process is effective at identifying the productive referrals for audit. it's making an important contribution. with the improvements we plan to make as a result of the gao recommendations, our referral process is working streamlined and we will be more efficient and effective. while unique relative to other referrals, the gao report on irs whistleblower program offers a snapshot in time for the program under constant scrutiny for its processes that are continually refine. even before gao began its most recent evaluation of the irs whistleblower program, we have begun addressing the major issues that were identified. they gao findings confirm we're taking the right actions and streamlined the process for claims making dramatic reductions take inventory of cases at particular faces of the process, and instilling new leadership with a strong background in bringing about operational efficiency. another i was programs highlighted in this years gao

duplicative program report is our identity theft program which gao has almost continually reviewed in recent years and prompted important programs improvements. as we confront the growing problem of stolen identity refund fraud, the irs is using a multipronged approach to protect taxpayers and their information. the irs has made this area of high priority and is making steady progress. the additional $290 million in fiscal year '16 funds afford to irs by the congress had allowed us to allocate more resources to combating this insidious crime. about 2000 individuals have been convicted on federal charges related to refund fraud involving identity theft over the past few years. using our improved filters we stop 1.4 million returns last year and kept criminals from collecting about $8.7 billion in fraudulent refunds.

gao has been helpful in identifying areas where improvement to this program can be made. we've acted on those recommended improvements and continue to look for ways to strengthen our defenses against this crime, and stop the victimization of taxpayers in the entire tax system. be happy to take questions at the proper time. thank you. >> thank you so much for your testimony. mr. tillotson, you are recognized for five minutes. >> thank you, mr. chairman. first of all good morning cheer, speakers can you pull the mic that a little bit closer to you? >> is that better? thank you to the chair and ranking member tom is, members of the committee. taken for the opportunity to discuss the debarment process on addressing the findings related to duplication from fragmentation and overlap in the department. i also want to add my thanks to those of the chair and the ranking member to the honorable mr. gene dodaro and the gao for the work that they do. candidly while one is not always happy to the we can be doing

things better, the truth is we all know full well we can do things that. in fact, as the acting deputy chief management office for the department of defense that's my job description is to find those things. so to be perfect and honest having assisted in identifying opportunities bothers me not but also we look forward to continued work with the government accountability office. as the assistant deputy chief office manager i provide direction and device improvements to business processes and practices in the department with emphasis on finding efficiencies and overhead and mission support. so clearly our intent of my office and mr. dodaro align very well. last year the deputy secretary asked the office to put together a series of initiatives that would help free up needed funds commuting merging needs within the toppling of the department the initiatives were leaving include headquarters reduction, service contract requirements

reviews, information technology optimization, and business optimization to include exchanges in, series. we have been working on select business processes include the hiring process, covers hiring process, covers the pros and could maybe accommodating dod issues. when completed these will result in $7.7 billion forecasted savings over fy '17-21 under for the reduction of 25% of headquarters cos caused several topics are heirs their identified in either priest reports or the current 2016 report. the department appreciates the gao's work in this area. they gao identified 101 recommendations directed so as to the department in its first four and reports from 2011-2014. we have address or partially dressed 87% of these recommendations. they identified an additional 19 recommendations in 2015 for the department and we are partially or fully or partially addressed 47%. i acknowledge that means we have more to do.

we will continue to make progress. one specific area in which we have made significant progress is in the area dod contract management for brought acquisitions to in his high risks use of a report published in february 2015 the gao recognized progress made regarding the management and oversight of contracting techniques noted the department leadership has taken steps to plan and monitor progress over the last soviet. as a result the gao made a decision to remove contracting techniques and approaches from the scope of the dod contract management high-risk areas. another example the departments progress and get aligned with the recommendation made in the 2016 report is involves the management of fleet of space the and 2014 the department using a baseline of 5.4 million square feet of deity occupied space the national capital region set out to reduce about space. our initial plan calls for reduction of 1.2 million square feet prior to 2020 to date we've eliminated 267,000 square feet

of leased space by making better use of government space and we intend to get an additional 886,000 square feet reduction families of space used by 2020 which was a $43 million a year. in addition to those 14 efforts we will look more broadly across the entirety of dod property and broadly across the country. i anticipate more progress in that area. mr. chairman, ranking member, the department looks for to continue to work both with this committee and with the gao to continue implement recommended action. we did our duty to be a steward of the taxpayers dollars series with a look forward to work on the opportunities that can fight in the 2016 report. thank you. >> dr. conway, you are recognized for five minutes. >> chairman chaffetz, ranking member cummings and members of the committee, thank you to discuss cms operations. we share this committee's

commitment to serving beneficiaries and protecting taxpayer dollars. both stewards of medicare and medicaid marketplace, the children's health insurance program, seen as a serving almost 140 million americans and we want these programs to be as effective and as efficient as possible. we review -- we do the gao as important partner and appreciate take sisley their work and the recommendations. and are working to address and implement them. we are making important progress in all our efforts to reduce duplication, improve efficiency and protect taxpayer dollars all by providing our beneficiaries high quality care. last year we implemented 38 recommendations and submitted 100 additional recommendations to gao for their review. one of our driving forces is changing the way health care is delivered. movinmoving towards paying provr space on quality rather than the quality of care they give patients. i know how important this work is. known as the 30% of medicare

payments are tight alternative payment models and millions of patients are benefiting or better cordon and improve quality of care. i worked to reduce hospital pashtun represent over 87,000 lives saved and an estimate $20 billion in cost savings. we've seen 555,000 fewer hospital readmissions meaning beneficiaries do not have experience an extra hospital stay and medicare did not face expenses for extra care. consistent with recommendations come cms has taken steps to improve transparency in supplemental payment and medicaid and run section 1115 research and demonstration programs used for states to pursue innovation. we are collecting data which includes provider specific information and content to throh the payment methodology to determine compliance. section 1115 demonstration are available publicly include specific terms and conditions that must be fall as a result of the demonstration. we've identified and made

publicly available the criteria we're using. more states are using mediscare to serve medicaid beneficiaries. recognizing these changes, we propose improvements to medicaid managed care applying it with medicare advantage and private coverage plans, promoting the quality of care, strengthening program and fiscal integrity, incorporating best practices, and enhancing the beneficiaries extremes. a commitment to program integrity underpins all our work. cms is moving away from a so-called pay and chase program model towards one focus on prevention. we are utilizing sophisticated, and analogy technology to identify invested leads to the protect the medicare program from inappropriate billing practices. in first three years, we identified and prevented $820 million in inappropriate payments, and in 2014 the sbs

had a 10 to one return on investment. we have deactivated billing privileges for more than 540,000 providers and suppliers that do not meet medicare requirements and revoke an additional 34,000 plus providers since 2011. perhaps most importantly increased screening efforts have allowed cms to deny over 7000 applications in the last 12 much preventing these providers and suppliers from ever submitted a claim. we are increasing our site visits. cms is dedicated to promoting better care, protecting patient safety, reducing health care costs and providing access to the right care at the right time when and where they needed. this includes continually

strengthening and improving medicare and medicaid programs to provide vital services. we look forward to working with both the gao and this committee towards our mutual goals of providing value, quality to the beneficiaries we serve and taxpayers. thank you. >> thank you, dr. conway. thank each of you for your testimony. i'm going to recognize the gentleman from tennessee for a series of questions but before i do that i think it's important as a look at this particular issue and duplicative services in deficiencies, to recognize one of the greatest assets the federal government has come and that's its federal employees. in doing that it's very easy to start looking at the inefficiencies and the problems, and undermine really our federal work force. i want to go on record to say thank you to the 99.5% of the federal workforce that does an outstanding job each and every day, and sometimes we focus on

the .5% and paint a broad brush. i don't want this hearing to do that as we were look at meaningful ways to make sure that we have cost savings. without i would recognize the gentleman from tennessee, my good friend mr. duncan, for five minutes. >> thank you. thank you, mr. chairman. thank you and chairman chaffetz for calling this hearing, nanuet i think is one of the most important hearings that we hold each year. mr. botero, i think -- mr. botero, i think the work you've done is extra important than before us. i have several different questions i would have turned it into all of them but we have background information from -- the department defense now has weapons acquisition programs that total 1.3 trillion, extending over 100 billion annually on weapons system acquisition. i know you've put out several

recommendations over the years and especially in 2011, report as saying it was very inefficient their weapons acquisition program andover duplications and so forth. you think defense has done enough in regard to your recommendations that you made on thathat in the past or could ite additional savings in that area? >> i think they can definitely do more. we've appreciated what they have done to they've adopted some of the best practices, recommendations that we suggested. they have begun looking at things but i'm concerned some of the reforms have been implemented very consistent over time but i will ask mr. francis user expert in this area to give you a more thorough answer. there's more that could be done. >> good morning, mr. duncan. yes, i think one of the things we have talked about is portfolio management which is basically an approach for the department to look at its

weapons assistant portfolio as a whole. because one of the looming problems for defense is when you get beyond the next five year plan bears much more demand for money, for weapons systems that money is available. so the department has to take a more holistic look across weapons systems to see what's the best mix of investments are for them. right now the department has multiple processes that are fragmented, requirements and acquisitions and the services all do their own things. we pretty much of a process that optimizes for individual weapons systems we need to look more across the board. >> thank you very much. the week before last i was on a trip with three senators and anoer member of the house, and we met with admiral harris who is the head of the pacific command. we were talking about the problems the defense department is facing in acquiring some of the more expensive weapons and

things that they need. we talked about how the costs have been shooting way up, have been in the pay and benefits and so forth. many top leaders have talked about the problem, how with cutting into being able to buy the equipment that they want. admiral harris said he thought that we needed to have another brac. mr. tillotson, any opinion on that? also, mr. dodaro, have you all look into that? >> it is the department's position that another round of brac would be appropriate. mr. dodaro's findings about the use of leased space and underutilization of government space relates to making better use of the space that we have. we agree we should do that. having said that, there's a large amount of space that is more industrial and involves a lot of bases that are at this point largely underutilized, and

we do believe there is excess capacity that could be reduced so we would endorse another round of brac. >> there's definitely excess property. and our work though focus on reviewing past brac rounds, have shown that the department needs to make additional improvements in its methodology for estimating brac savings and i should bring those savings to realization. .. will be the savings that should be achieved through any process in this.

we have many outstanding recommendations that the department has not yet implemented this regard. >> another area before my time runs out, you mentioned potentially saving billions on social security disability payments. will you tell us about what needs to be done in that area? >> yes. right now, people can receive full disability benefits and full unemployment benefits at the same time. if there is somebody on disability, they can get permission to try to work because obviously we want them to bet back to work. but if they take a job, and eventually laid off from that position they can collect both benefits. we don't think this is prudent use of federal government's money, to get both full disability benefits at unemployment benefits at the same time. cbo could save $1.3 billion over a few year period this change is made. >> thank you very much, mr. chairman. >> i thank the gentleman.

the chair recognizes the gentleman from pennsylvania, mr. cartwright, for five minutes. >> thank you, chairman meadows and thank chairman chaffetz for calling this important hearing. mr. tillotson, one of the issues the gao included in this year's duplication report, dod's storage of occupational and environmental surveillance data. am i correct in that. >> yes, that's correct. >> can you explain what the term means, occupational and environmental surveillance data? >> surely. as the department conducts its industrial activities there is a requirement commence root with both law and osha standard we collect information on any conditions that may eventually cause us to have to go back and look at impacts on the workforce and work environment. >> this has impact on active duty servicemen and women, also veterans, am i correct in that? >> that's correct.

>> dod use this is information to attract biological, chemical and physical health has orders to our servicemen and servicewomen, right? >> that is correct. >> what benefit does dod get from collecting that type of information? >> so two benefits come out of it. first of all we collect it if we link environmental issues with impacts on active duty or servicemembers or even civilian workers, then it allows to us take corrective action to insure the condition does not continue. it allows us to position ourselves to provide appropriate compensation should the condition actually emerge and i think the department is moving aggressively in the totality of its medical community to look at a better with way to manage its medical information across active duty and civilian force. this is activity area gotten great attention in the department. >> thank you for that. you toughed on it. the department of veterans

affairs makes use environmental and health information to establish disability benefits for veterans, am i correct in that? >> that is correct. >> it is critical this information be accurate and useable to help protect our active duty servicemembers and our veterans, right? >> yes, sir. >> mr. dodaro, thank you for being here as well and all your good work. according to f -- gao it is not clear the quality of the data is reliable and report issued in 2015 gao said, and i quote, some of the military services have developed their own guidance resulting in inconsistent approaches and levels of effort which has reduced dod's ability to be confident that the data are sufficiently reliable. have i read that correctly? >> that's correct. >> does it concern you dod does not know if the data it is collecting is accurate? >> yes, it does.

>> mr. tillotson, gao recommended in that 2015 report that the dod establish clear policies and procedures for performing quality assurance reviews of the data collected. dod responded to gao it would need additional resources to clarify its policies. is dod taking any actions to improve the quality of the date it is collecting? >> yes. we are in fact doing that. new policies are in fact in draft. they're due to be issued this year. we did make the resources available to do this because we like you, felt that this was important undertaking to put in place. we have tied that into our broader issues of increasing standardization of medical practices across the department. the establishment of the defense health agency. the establishment of the defense health program appropriation have all been value-added activities. this body, this congress has acted on those in prior years.

>> thank you for that but separate from the question of quality is how the information is processed and whether that's being done efficiently. according to the fao report, oehs data is stored in two different database systems. mr. dodaro, did gao identify problems with the use of two separate systems? >> want to ask miss clowers who is head of our health care team to respond. >> yes, sir, we did. there are two different systems which is referred to measles and doors and we found duplication of entry of the data but importantly you couldn't get a comprehensive set of differences -- >> two separate systems. mr. tillotson, why is dod using two separate systems? >> this is part of the correction actions we have underway in the broader medical community. prior to the establishment of the defense health program,

prior to more integration across the department medical practices were run largely in the military departments. >> i want to run in here. more than 10 years since gao first high heighted issue of dod's managementa. occupational health data. mr. tillotson why is it taking so long to fix problems? >> i can't give you a satisfactory answer for that. i can testimony you we're working on it and looking to resolve the issue. >> look, we owe it to our servicemembers, active duty and men and women and veterans to collect the information accurately, to fix these problems and i urge you to give it your every attention. >> thank you, congressman. we will. >> i yield back. >> i thank the gentleman. the chair recognizes jent from florida, mr. mica, for five minutes. >> thank you, mr. chairman. thank you for holding this hearing again. some of the weast and inefficiency at the federal government is identified annually by gao and appreciate what you've done, mr. dodaro of

bringing this to our attention. couple of areas. first some of dod's waste -- you probably have one of the biggest hawks in congress. i vote for everything. i voted for the omnibus because we cut, cut, dod. but i sit in these hearings and i'm senior person now on the national security subcommittee on the panel. been on it since the beginning of time. and i see more and more waste. i see another report, mr. dodaro , that dod impacted inventory of properties and assets is almost non-existent. is that correct? >> we've been very concerned about the lack of good information with -- >> they don't have a good inventory even much their properties and their assets and this report highlights it again. that's a concern.

we have billions of dollars worth of assets both domestically and internationally. we can't even account for it. so, again, i think this is troubling. do -- now the other thing too, work with some. folks in, we work with some of the folks in the dod committee, authorization committee. we did substantial acquisition reform and you talk about procurement and acquisition. that is part of the problem, isn't it, sir? is procedures? they're cumbersome, they're outdated, they're brat brac -- bureaucratic. that is problem. >> that is problem if you don't know what you have. >> acquiring new assets, it is just as bad. and one the things that concerns me as we bass these reforms, i

know it takes a while to implement. i met with some. folks. i have one of the biggest acquisitions activities in the assimulation and army down in my district. i sit with the folks. we passed passed this stuff las. first, there is no secretary of army in place or there hasn't been. there is no chief of staff. then there is no one over the programs. you've got these vacancies which is part of the problem. i asked, have you implemented the acquisition reforms? no. sort of no, no, no i get. or are they in place? no, no. decisions are somewhere in the chain of command. maybe mr. tillotson, you can tell us what is happening there. >> certainly. let me address all three of your issues. on the inventory i agree with mr. dodaro, the inventory is not as it should be. it is part of the broader audit status of the department. mr. dodaro and i and dod are

working on progress which will include inventory. >> inventory we can't even audit. >> you have to have full existence to do that. >> troubling. >> we agree. on the issue of acquisition reform, mr. kendall has moved out quickly with the new guidance. to put some of those new procedures in place. i would respond a little bit to mr. dodaro's earlier roarkses about strategic portfolio management. we agree. over last three years the deputy secretary of defense led a strategic portfolio review on annual basis. not only are reviews done within the military departments across their business space but then it comes to a departmental level where the vice chairman of the joint chiefs, dep sy secretary of defense all heads of agencies do strategic review of all investments and investment plans. to your point and to

mr. dodaro's point we have been deal. >> we have disposal and management. how many people in the property own property? almost everybody, right? would you have the federal government manage that property if hell no. you would be nuts. and we do that and the biggest property owner is probably biggest one is dod you can't get anyone to make a decision to dispose of property. we have 177,000-acres at nasa sitting there. 16,000-acres with the airports. i'll trying to get 400-acres surplus property to transfer to do a commercial cargo center next to our port in canaveral. not even in my district. 5000 jobs it would create. i've been working on it for four years. the other thing too, you got to get some permanency to some of these military people. i'm on my third commander. they change them every two years. we need to get these guys -- three years at least.

four, stability to the process. dealing with incompetent people in the past. then i get someone competent, i got a second competent. but they're gone. how can you manage anything with turnover that we have. just a little frustration, mr. chairman. but, it drives me, drives me batty. just one thing for the members. did you see what the private sector did this past week in landing that booster rocket on the barge in -- you got to look at that, see what the private sector can do when we unleash the private sector. god forbid we should give them a lease on doing things with private property and moving projects ahead. thank you. yield back the balance of my time. >> i thank the gentleman from florida. i know that excess properties has been something that has been a priority for the gentleman from florida for a long time. >> mr. chairman, incidentally the bill we're passing i don't

know if we're passing, does not apply to dod. >> right. >> one that everyone has been working on. that is something we need to look at. >> chair recognizes the gentlewoman from illinois, miss kelly, for five minutes. >> thank you, mr. chair. welcome to the witnesses. dr. conway, last year the united states spent over a trillion dollars on medicare and health-related expenditures. i think we can all agree there are opportunities to increase efficiency and reduce medicare and medicate spending. i'm the chair of congressional black caucus health brain trust this is something i'm very interested in, i meet with a lot of people that are concerned with the future of medicaid and medicare. i want to start by clarifying what is covered by the term, improper payments? improper payments covers both overpayments and underpayments, is that correct? >> that is correct. improper payments is both overpayments and underpayment. >> improper payments can include payments made to fraudulent claims and can include

legitimate claims that include mistakes, is that right? >> yes. a proportion is fraudulent claims but the majority of improper payments are actually due to documentation or other errors in the submission of the claim that was for on further reading often legitimate medical service. >> one area gao identified for potential duplication is in health care coverage for people who are hovering around the poverty line and moving between medicaid and federally subsidized coverage provided through the affordable care act exchanges. in the report gao released today it said that hhs concured with gao's recommendation and highlighted actions the department has already taken to insure the accuracy of medicaid eligibility determinations made through the exchanges. what steps has cms taken to insure that the recipients of medicaid or federal subsidies are not receiving duplicative coverage? >> yes.

so we appreciate the gao's work here. let me describe briefly some of the steps we've taken. one the account transfer process, we have accounts transferring between marketplace in medicaid and working closely with our states and private health plants on a daily basis. we now review account transfers on weekly basis. in terms of duplicative coverage, or either by medicaid and marketplace in most common reason for this to give you a tangible example, somebody may have marketplace for example, coverage, lose tear job and equal for medicaid. we do what is called data matching with the states. we've been working with closely with the states as they have a critical role here. we are doing periodic data matching now. so we continue to work through the set of issues both testing systems with states and private health plans. both at the federal and state level and through data matching and using data, reducing any

people that may have coverage in both in marketplace and medicate at the same time. >> okay. another area was how cms wirefies the he eligibility of medicare suppliers. without stronger controls and verifications cms may be making payments to providers without legitimate address, whose licenses have expired or revoked or some cases actually died. one recommendation was to upgrade the software. >> yes. thank you for that question. we are doing that. we are, we agree with the recommend is today. we're updating software. we're doing 4:00 major actions in this area. one, software updates for address verification and other verification modalities. two, increased site visits so we are visiting sites at an increased frequency. three, more continuously

monitoring data and checking with postal data and other sources in terms of the enrollment process. so we are upgrading our systems and using data to address these program integrity issues. >> do you have enough people in the right people in place to carry this out? >> new for the question. you know, managing resource in the federal government, i managed both in the private sector and federal government is incredibly challenging. we have, you know, in total approximately 6,000 cms employees trying to manage a program of huge scope and complexity. i think whether it's program integrity or quality arenas or other policies or marketplace medicaid, we have a staff, i appreciate the comments earlier, that i think is mission driven, wants to deliver on that mission. when you look at our employee

viewpoint surveys that comes across clearly. the other thing that comes across is a feeling they don't always have the resources and the training and the ability to improve the system as much as they would want. >> just quickly, mr. dodaro, any comment about what you just heard or anything i want to add? >> no. i'm very pleased that the cms has taken action on number of our recommendations if these areas. there are still some outstanding recommendations, particularly as it relates to medicaid. i'm very concerned that we have not had a good oversight over the managed care portion of medicaid at the state level. cms is in the process of instituting a process that will provide more audits of what is going on in the med -- managed care portion of medicaid at that level. i'm still concerned though that we have a disagreement with them

about the definition of budget neutrality for demonstration projects. the ones that we looked at we don't believe have been budget neutral and it is costing the federal government of 10 of billions of dollars in additional money. they have made their criteria more transparent as dr. conway says but we don't agree with the implementation of the criteria that we've seen in those areas. there's also many things that we recommended that congress could do to stream line spending in medicare and medicaid program as well. so, we're pleased. we've had on going dialogue with cm panned plan to continue to press of full implementation of our outstanding recommendations. >> thank you, mr. chairman. >> the chair recognizes mr. walberg for five minutes. >> thank you, mr. chairman. thanks for the panel being here. mr. dodaro thanks for heavy lifting and sharp penciling and

pinpointing that you continue to do. one man's opinion, overly large federal government but nonetheless. one area that i'm interested in is the unobligated balances that are out there. some staggering in nature, at least to my been. is there any value to allowing agencies to hold excess appropriations to the next fiscal year? i guess i would add quickly to that, at what point does it become a problem? >> i think, agencies need -- and it depends on the program and activity. so it's variable. they need to have a little bit of a potential buffer depending on the nature of the programs but ones we looked at they had set criteria what they thought they needed. they were well above their own

criteria. that is why we called it excess. so the amount of unobligated balances that we had pointed out in those areas are ones that in our view should be deobligated or rescinded by congress. >> how did, and specifically, let me get to a specific one here in the state department. one area i've been in fact dealing with back in the district, the counselor and border security programs was 440 million over its target for unobligated balances in fiscal year 2014. how did that account end up almost half a billion dollars over target? >> well, sir, as mr. dodaro mentioned is that very often these types of programs, the consular service you mentioned over at state department, environment or department of energy was another will have spending obligations or needs that will cross fiscal years.

our point to this is they have had targets they put in place, the amount of money they need to have each year to handle that type of flexibility or to understand their spending will cross years. when this is way out of whack as it was with consular services and parts of department of energy, they need to roll that back or have greater transparency understanding what money they actually need, how they will spend it and be publicly reporting where they are on that. >> i guess my concern would be, if that be the case, and they set a 25%, why not fix the problem by next year saying we'll set it at 40%? that doesn't seem to get in touch with reality of trying to live within one's means, and truthfully set those targets? >> well, setting it at, you know, they could flex, move it each year and we're going from

25% to 40% or even down beyond that. what goals, these are goals they have set for themselves. these are based on historically what they think they need to carry over from year to year and they have to justify it. that the while, yes, but not at level we think there should that be level of transparency. and that's the whole point on this. >> one of the things we do every year, congressman, we scrub a lot of these accounts and provide the information to the appropriation committees. and in some cases the appropriations committees will not approve additional money if there are large carryover balances. so we keep an eye on these activities quite a bit. and agencies have to justify. we try to flag these for the appropriators, so that they can focus on whether or not to take action. have any customs and border patrol officials been held accountable for, as i see here, 2012, 2013, 2014, right around

40% where they have ended up over target. have any accountability thus far? >> not -- typically there isn't accountability at an individual level on this or even an institutional level. what we're talking about is improving management processes that get a better transparency and better management over time so you don't -- there will be fluctuations sir, exactly what you're saying, that is to be expected but what we do want to see, if you set your own targets you ought to be able to pretty consistently hit those targets, if not have good explanations to congress and others why a particular year was anomaly. >> another problem, and thank you for that answer. another problem that state, for instance in their area of fraud prevention they claim they had the level balance developed because fraud activities and fees could only be spent on

fraudulent activities. they didn't have enough fraud to spend it on? do they have that significant problem not being able to use funds in other portions of their budget or their processes? >> what we found, sir, is that when we look at all agencies across government and states are no different than this, there are very often internal control weaknesses in place and opportunities for agencies to tighten up their anti-fraud activities. certainly we think within the parameters of the 25%, that is something that state or any other agency ought to be able to improve internal controls with that amount of resources. >> i see my time has expired. i yield back. >> i thank the gentleman from michigan. the chair recognizes the gentleman from arizona, mr. goes sar, for five minutes. >> thank you, mr. chairman. in your own written testimony you say irs is making steady progress on vast majority of recommendations recommended did i gao.

in 2013 inspector tax and wage administration that the irs assess value of information referral process. why has the irs not acted on this recommendation yet? push the button please. >> thank you. we have begun acting on the gao recommend. we literally have a team of folks from across our various organizations looking at the referral program. we intend within the 60 days from the date of the report to actually put together a timeline. we are, our intentions at this point in time are to limit the number of organizations that have referrals. in other words we intend to bring the referral process down to, you know, one centralized activity. and our intention is to, at some point in time, in the very near future, have an online

opportunity for taxpayers to make referrals. so we're looking at all of the recommendations that have been made by gao and the treasury inspector general for tax administration. and i believe we're going to be quite responsive to, to the issues that have been raised. >> you know there is old adage trust is series of promises kept. irs is behind the eight ball on that one. can you explain why the irs failed to better coordinate and share information between programs? >> well a lot of these programs grew up over time. so, for example, we -- >> i know but what is happening that you should have a constant evaluation and, you know, predication as an ongoing exercise and we haven't seen that. >> well, in this particular instance we had a series of referral programs that grew up in each individual operating division over a period of time. now should we have looked at that and addressed it earlier, i think we should have.

the fact is that my view on this is the auditors were very helpful in terms of focusing our attention on this. and now that we focused attention on it, we're taking action. >> so we can expect some results here shortly? >> absolutely. >> mr. dodaro, as you may know, fraud within and throughout the va is rampant. with regards to unemployment benefits why doesn't the va use irs data to verify applicant self-reported earnings? >> i'm not sure. i don't know, i will have to give you an answer for the record for that. >> i appreciate that. i'm going to a second one. what does the va need to do to make sure the process for determining unemployment eligibility is applied uniformly >> yeah, no, i'm sorry, on this one on the va one, i'm going to have to get back to you. >> this is critical. i love you guys but the va is

mess, an absolute disgusting mess. and we need some actions in regards to this. and, you know, it behooves us to have the ideas, facts so congress can dress those. >> we will get you facts. i will get an answer today but you know, you know, we agree in terms of the criticality of va i added them to our high-risk list last year in terms of health care that need to be, needs to be addressed. >> we also like to have some models that they could follow so we're not reinventing the wheel for them. so, i think they need some parenting outright. i will bring up another one is prevailing wage. i believe in a fair wage for a fair job that is fair to the taxpayers but we've seen a huge rise in the number of businesses going out of business because of the department of labor in regards to the calculation of prevailing wage. this is a huge issue across the

country. do you see an equitable aspect of just recalculating this in a very transparent fashion? >> yeah. we've, we haven't looked at that issue in a while. so i would have to, i would have to go back and take a look. we did, a long time ago but it has been number of years since we had resources to be able to look at it again. >> we would love you to. i think from standpoint, as long as transparent schedule which is major complaint, particularly for smaller business along the lines, with my district, and my state, we had a lot of subcontractors, small contractors put out of business in regards working with the department of defense. this would be something that i think, i think both sides could go alongwith. making sure there is transparent schedule a fair wage for a fair job for the taxpayer. >> we will take a look at that i understand your concern. >> i appreciate it. thank you for what you do. i yield back. >> i thank the gentleman.

the chair recognizes the gentleman from north carolina, mr. walker, for five minutes. >> thank you, mr. chairman. thank you, gentlemen, others for being here today. i have got a couple questions. would like to start with mr. dodaro. why is the referral process being conducted by through the mill? isn't this archaic out of date process. can you speak to that a minute? >> yes, it is archaic, particularly given volume of complaints. the one information referral office had 87,000 referrals one year and so they're manually reading them. then when they refer it to another part of irs, they manually look at it again as well. so i'm very pleased, as mr. dalrymple indicated they're going to online electronic process but this is outdated. >> mr. dalrymple, you did talk about the plans to move it

online. can you give us a little more specificity what it lookings like in a timeline? >> we're just in the planning stages right now so i can't really give you anymore specificity about exactly what it is going to look like. we have to, you know, engineer that process. et cetera. but, it is pretty clear to us our processes working for the taxpayers or for us at this point in time. so we'll make major changes to that program. >> no. i hear that, sounds like you've got some great intentions there but in your forecasting is there any kind of timeline? you said you are talking about some plans. can you be a little bit more specific. >> we'll be responding to the gao report in may. at that point in time we'll have a timeline together that will actually lay out what we're going to do in a time line for getting it done. >> i look forward to seeing that in may. mr. dodaro, how might greater coordination between the referral programs increase savings for the irs and american

taxpayer? can you talk about that for a minute? >> sure, sure. first of all, i think it will increase the timeliness. a lot of the information that it gets they need to react quickly in order to be able to move and investigate, evaluate the referral, whether it is legitimate or not. apply resources properly. secondly it will enable them to get back to whoever made the lead if they identified themselves in a way won't encourage people to send additional information in as well. as mr. dalrymple said, percentage of returns irs has been auditing on their own is going down. so they're auditing less returns. that makes ability to get leads and referrals all that more important and put it at greater premium. this will enable them to move more quickly. it will enable them to ferret out which ones they should spend time on and dedicate time on.

i believe this has high potential. >> sounds like very encouraging to hear. i know gao identified a lack of leadership within many levels of the irs referral programs. what are we doing to improve this failure of leadership over programs that have the potential to reduce the tax gap? can you speak to that. >> sure i will ask mr. mihm. >> thank you, sir, for the question. as mr. dalrymple noted in his conversation on an earlier question the problem with the referral programs is that they grew up over time on a singular basis. so one division within business unit, within irs would have referral program versus another one would have a referral program and so they were viewed as referral programs rather than an integrated set of initiatives that are underway. very similar to what local governments do what they have a 311 number. you don't have to know the problem is when you call. there is no wrong door. that what we need with referral program. someone with issue referred understand have to navigate the

various processes and programs that are existing within irs and i know from mr. dalrymple and his colleagues that is something that they're committed to. >> get one more question. a little lengthy, stay with me here. when whistle blowers contact irs they are taking considerable risk. we would agree on that part. despite this irs take years to process claims with poor communications back to the whistle-blowers. why are we not taking steps to evaluate effectiveness of whistle-blower programs, to evaluate communication with thee people that come forward? >> we looked at whistle-blower program. they need to make timely action. whether or not that will be sesful around meet the needs of people providing information. the other thing we point out in our evaluation there are monetary awards for whistle-blowers.

so far the irs only issued 31 specific monetary awards. they have to look whether or not they're providing enough incentives for people both in communication and into awards. >> thank you, mr. dodaro. mr. chairman i yield back. >> thank the gentleman. the chair recognizes the gentleman from oklahoma, mr. russell, for five minutes. >> thank you, mr. chairman and thank you for all of our witnesses here today. we do appreciate what you do. i'm a big fan of our government accounters and also our inspectors general that others that help us father out weast -- ferret out waste to have responsible government. mr. dodaro, commerce department itn loan guarranty program was essentially performing the same function as four other federal loan guarranty programs. the program was set up as you, i'm sure are aware as a result of the 2010 reauthorization of

the america competes act. congress specifically directed commerce to avoid duplication. given the preexisting programs, was it inevitable that itm would overlap with existing loan programs or was there more that commerce could have the done to avoid the now duplicative existing programs? >> we think there's more that could be done. we made a recommendation to commerce to work with sba and national institutes of standards and technologies. i think what congress was trying to do here was to deal with a niche. there may be some gaps in the capital markets for innovation for this particular purpose. and it's going to be very difficult though, i think to find what that niche is going to be. and to avoid duplication with the other programs. i think that congress is also quite frankly frustrated with the sba's lack of timeliness in meeting these needs. and so, we have recommended that commerce work with them, to identify what these capital

needs are. i'm pleased that they haven't made any loan guaranties yet until they can find out and make sure they're not duplicating. we're going to stay on this we have a regular requirement to review it. >> the report also shows that itm's program is copying the forms and application process used by the small business administration for its own loan program. how does this contribute to duplication in the insurance -- issuance of loans? >> it is growing to duplicate it. unless they follow our recommendation to find the right niche to focus on, inevitably it will result in duplication, in my opinion. >> gao also recommended in the report that the commerce department create targeted marketing materials in coordination with the national institute for standards and technology so the program offers guaranties to manufacturers who currently do not have access to federal loan guaranties.

if nist has the best overall idea which borrowers would benefit most from the program, would you recommend or the gao that the loan guarranty program simply be consolidated under nist or would one of the other agencies with a preexisting program, and if not why not? >> i think that's a possibility that has to be identified once commerce does their homework and that there's a proper plan. i think, at that point, somebody ought to reassess. now i also would note, my understanding is, commerce has talked to other federal departments and agencies about carrying out the program. so far there have been no takers. in that regard. i think i'll be very interested to see what commerce does with our recommendation. once it has a mark connect materials and once it has identified potential gaps in the capital markets, whether or not it could be done by another existing program or whether we

really need another program. >> thank you. >> i think the jury's out on that. >> i appreciate that. mr. chairman, being a true conservative, i will yield back the balance of my time. >> i thank the gentleman from oklahoma. the chair recognizes the gentleman from alabama, mr. palmer, for five minutes. >> thank you, mr. chairman. i'm, mr. dodaro, i really appreciate the work you guys do. i hate to say it but i enjoy reading your reports. [laughter] that probably speaks volumes about my personality but, i do want to go back to this issue of unobligated balances. i know you may or may not be in position to make judgment whether or not this is sound fiscal policy i don't think we could make the case that it is absolutely necessary to hold almost $900 billion in

unobligated balances, would you agree with that? >> yes. >> my point here then we're in a debate over our budget in which we're being asked to increase spending by $30 billion. if we were to reduce unobligated balances by approximately 3 1/2%, that would more than cover the increase in spending. does it not make sense to do that? particularly in the context if we're holding money in unobligated balances and having to borrow money to fund other agencies, isn't there an interest cost incurred in addition to the additional spending? >> well it is definitely not, it is not an efficient way to operate. i would say though that i don't believe it would be probably prudent to do an across the board kind of reduction there. i think you have to look at targeted areas and agencies. that is why we focused on specific areas.

we do that every year for the congress. because in some cases it may make sense to have that and other cases not. but in no case should being in excess of what the needs are. >> right. i just use that as a generalization. not in specific. i think you would have to look at each agency individually, but the point is, it is not sound fiscal management? >> that is correct. at that's why we focus on it. >> mr. dalrymple, i want to direct some questions to you about the tax gap and the inspector general for the tax administration, the treasury inspector general, issued a report and in his report he said this there needs to be more timely and more accurate estimates of the tax gap. currently the irs reports this about every five years. has the irs acted on the inspector general's

recommendations? >> we intend to have in the new tax gap out, report out later this month as a matter of fact. so we're acting on it as we speak. >> can you tell me how much the irs collected? what was the revenue in total collected for 2015 fiscal year? it is over $3 trillion, wasn't it? >> it was over $3 trillion, yes. >> based on a report from the urban institute and brookings institution over the past years the tax gap ranged 16 to 20%. say it is 16%. if $3 trillion came into the irs last year, that means 16 percent, that is 84% of what should have been collected. i won't get into the math i will give you an idea. that means somewhere in the range of 500 to $550 billion went uncollected.

what is the irs doing to collect the taxes that are owed it? >> well, we have a number of initiatives. i mean the tax gap itself, one of the things that needs to be completely understood about the tax gap is, that it is made up of a lot of different monies owed and if we were going to go after every, sort of last cent of the tax goop, it would be incredibly intrusive process. >> let me suggest this. 84% of it is underreporting. 10% is under payment. 6% is just flat non-filing. the part i'm trying to make here, this may not be the proper forum to do it, even when you do collect some of the, of the taxes you still have a net gap

somewhere between 380 and $400 billion. i'm on the budget committee. this is one of these things that makes me want to pull my hair out. at my age i don't need to be doing that. we do everything in 10-year window. if it is 380 billion a year, that is 3.8 trillion in our 10-year window, okay? we've got improper payments that, another one of your reports i read mr. dodaro, 124.7 billion in 2014. if that is the average, that is $1.25 trillion over the 10-year window. we're liking at a $19 trillion debt? and we just identified $5 trillion, okay? seems to me that it begs for a flat tax or consumption tax, some way of collecting every dime that's owed the government. so, i just want to see if the irs can be more diligent in making sure that we collect revenue that's owed us, because

we've got some serious fiscal issues facing the country. thank you for your indulgence, mr. chairman. i yield back. >> i thank the gentleman. chair recognizes gentleman from texas, mr. hurt, five minutes. thank you, mr. chairman saving best for second to last. mr. dodaro, always a pleasure. i want to shift gears, talking about internet availability on tribal lands t-noted a lack of coordination between fcc and usda to increase internet access on tribal lands. what risk of duplication or inefficiency are presented by this lack of coordination? >> mr. hurd, led that work to respond. >> thanks for the question. one of the challenges we saw there was that they were not doing occurred nated training. one of the challenges for tribal groups, getting to that training. also just having administrative

staff to take advantage of some of those programs. >> have agencies made any progress on increasing their coordination? >> we did the record last year. follow up on them last year. we concured with the recommendations. hopefully they are taking steps forward. >> is this lack of coordination creating a risk that fcc and usda is going to offer conflicting advice to folks seeking increased access on their lands. >> i think it is possible. >> as you continue with this, keep us informed on that. >> we will, thank you. >> mr. dodaro for you and your team, commercial satellite communications prokurtment, something i'm interested in. and mr. tillotson, we'll get to you on some questions on this. mr. dodaro, first for you or whoever on your team, how has dod commercial satellite procurement strategy changed over the past decade?

>> they have become more reliant on purchasing commercial satellite services. >> has, was dod procurement policy willfully ignored in your opinion. >> it definitely wasn't followed. i will leave it at that. >> and has dod or was dod procurement policy effectively communicated to the various components? >> i will ask mr. francis to respond to that who led the work. >> mr. hurd, my understanding it was effectively communicated. there is a couple of things that get in the way. the two agencies that enforce the procurement policy for satcom is the defense intelligence security agency, disa, and u.s. strategic command. while they have authority, they don't necessarily have enforcement powers. so there are some weaknesses there. and then the funding for satellite communications actually is done through the

supplemental budget. so the incentives are not as strong to be up front about that. then when the agencies or components go around the normal procurement regulations it is for reasons ever exigency so it becomes harder to enforce. >> mr. tillotson, why has dod ignored several recommendations over past decade for more strategic commercial satellite procurement strategy? >> sorry. forgot to hit my button. so i would not agree we have ignored the policy. in fact let me start with all could have facts and figures. since 2011 we actually reduced expenditures on commercial satellite usage by 571 million. right now dias, the defense information services agency manages 90% of the commercial satellite communications. i think at time criticism was rendered or findings were rendered there were certainly issues how coherent that policy should have been implemented. since that time the department

has put more energy and effort into this. gao correctly identifies there are two agencies involved. one is the defense information services agency, disa, who does largely commercial backbone kind of work. there is the strategic command and associated military departments space agency that do military satellite communication, the department established defense space council -- >> have all those entities, have all those entities been educated what dod procurement policy is? >> yes. >> why have some components independently incurred satellite communications as opposing defense policy. >> we allowed contracts to continue, cheaper to continue the contract than to reissue the contract. i will point out we actually reduced satellite communications use by $571 million since 2011.

>> in my remaining 15 seconds, mr. dodaro, and information it investments what is the best next action there? >> i think that this is a classic case for good congressional oversight to find out exactly what their current plan is. this to me was, a classic case of mismanagement of this effort over a number of years. there are 422 different systems over there. there was lack of attention by management. they have supposedly now focused more on it and coming up with a validating the business case again in the model but i think congressional oversight would be very appropriate and prudent at this point to make sure they right the ship here. >> well, mr. dodaro, i do know someone sits on oversight and government reform and homeland security committee. so i will make sure he follows up on it. >> i thank the gentleman for his

personal interest on that particular topic. the chair recognizes from california, mr. desaulnier, for five minutes. >> thank you, mr. chairman. thank you mr. dodaro, thank you for your good work. it is always interesting and thrilling to be here in this committee and see a government agency doing so well, not that a lot of government agencies don't do so well. i want to ask you a couple questions just about our, sort of segues from the last comment about oversight. comparison between the executive branch implementing your recommendations an how you measure that versus us in congress. i'm told this is partisan issue. just happens between the administration and congress irrespective who holds control over those levels of power. so for instance, the gao has made 459 recommendations of the executive branch and 372 have now been fully or portionly completed by your analysis.

in contrast the gao has made 85 recommendations for congress but only 37 have been fully or partially completed. that is 46% as opposed to 81%. over time have you or your predecessors given friendly suggestions how we could be more successful? or is it just part of our role as deliberative process that makes it difficult? >> i give friendly suggestions all the time, as often as i can. >> hopefully they're received. >> and they are, and they are but it's, you know, i pointed out in my opening statements, all thousand the numbers, the percentages are different, where the big dollar savings have come from is through the congress's actions. i also pointed out that congress has encouraged and indeed directed, for example, defense authorization bill certain actions by dod to implement our recommendations. so congress has a little bit of a hand in the executive branch implementation as well.

but i have a long list of specific legislative recommendations for the congress to act on that would save billions of dollars for, i can give examples now, if you would like. for example, in medicare, the number of hospitals have moved to do what they call vertical integration which is to have physician practices operate as affiliates of the hospital. so people can get certain services there, the same as they could in the doctors office. but right now, the hospital, if they go to one of these hospital affiliated outpatient services, the ghost reimburses them much more than if you go to a physician office. we think it ought to be equalized. there are billions of dollars that could be saved there. there are certain cancer hospitals that were originally deemed special rate payment hospitals in 1980s when there weren't that many hospitals for providing services.

that if their payment rates are equalized now, the other hospitals for similar treatments, you could save $500 million right there. on the medicare advantage, there is an annual adjustment factor that is supposed to be made to compare it to fee-for-service. we don't think cms is using the most up-to-date information to make that adjustment, and we think that they could last time, we looked at it, we thought it could be several billion dollars, at least two to three billion dollars could be saved, perhaps on annual basis going forward. we are recommending that congress take action to lower the requirement for electronic filing. from 250, down to about 5 for employers. this will help irs have better ability to match and prevent identity theft refund fraud which last year by irs estimates the government lost $3 billion,

could be more in that area. so we have got also recommendations to the congress where they could eliminate payments that are made by the disability program where people can also collect unemployment insurance at the same time. so they're getting double benefits. we don't think that is prudent, to be able to do that. there is also legislation -- >> let me stop you there. i get the sense you could go on long before, long beyond my five minutes. >> target-rich environment. >> on all these things we could agree, all the members. there are no savings to be had, right? so is there a way, the way i read your report, sort of like when i was in local government, civil grand jury how many of these recommendations have you actually implemented. so since that is our measurement, i just wonder, and this is just an open-ended question, perhaps you could respond to it, at your leisure

to me or to the chair, is there a better measurement to get us to do what we need to do in friendly manner? because, for instance, you give us partial credit for passing a bill even though it doesn't become effectuated and signed into law. just strikes me these measurements when you look at executive branch is pretty clear. they have have or have not. with us you get big advantages you say. is there another way we can measure that more clearly so we in the general public can understand it? thank you, mr. chairman. >> i will take a look at. >> i thank the gentleman. the chair recognizes the gentleman from iowa, mr. blum, for five minutes. >> thank you, chairman meadows. would i also like to thank the panel for being here today. appreciate it very much. mr. dodaro, good to see you again. and i like commend you on the work that you do and work gao does. it is very impressive. i'm a career businessman from the private sector and i for one

can appreciate what your department does many times unsung, many times reports probably not read, but i share mr. palmer's zest for reading your reports and i think it's extremely important to the taxpayers in this country the job that you do. so thank you very much. >> thank you for those comment. >> i'd like to, as opposed to digging into the details today, if you and i could go to the 60,000-foot level i would appreciate that. i would like to ask you a couple questions, i'm very interested. i think my constituents are interested in your answers and the taxpayers are as well. first question, has the federal government, in your estimation, in your opinion, grown so large, so big, that it can not effectively, that is the key word, be managed any longer? because as businessman i see this time and time again, i'm coming to the conclusion it is so large it can't be managed. what is your opinion of that?

>> there are definitely challenges in this regard. some of the federal entities are very large entities. the department of defense for example, irs is a large agency. hhs is huge. all three agencies represented today. but in my view, that there are good management practices that could be taken and to effectively manage these departments and agencies but there are not consistently applied management practices that should be made that are made. and as a result we don't have as good of a effective management as you should to be able to do this. . .

top 3000 political appointees and put all new people in their in these agencies. there are vacancies that occur over time. nobody in the private sector with take them all once it was about. but that's part of our democracy, part of what happens. congress has a role for continuity purposes, for confirming new people to lead these agencies do think there has to be more attention by the executive branch on management capabilities and experiences of people who are put into these positions to manage them, that they have the right qualifications, the right experience, and that there needs to be proper oversight and stewardship by the conference to ensure that they effectively carry out their responsibilities. the president needs to pay attention to management issues as well as policy matters when

they come into place. and so this whole notion of management often gets a second class status compared to policy orientations, and that's a the fundamental problem that plagues a lot of agencies. >> we are going to spend nearly $4 trillion of our citizens money next 12 months. what percentage do you think is ineffectively spent or is wasted due to things like duplication of services, due to waste, fraud, and abuse? because of strong american now estimates it's as high as 30%. what is your estimation? you are here every day. you're in the belly of the beast so to speak. >> right, right. it's hard to give you a good figure but here's the way i look at it, we have the latest estimate of improper payments was $137 billion for 2015. since improper payments have been required to be ported by

the congress, it's over $1 trillion in improper payments. you have a lot of money going out the door that perhaps should be going out the door. most of that is overpayments, not underpayments. you have the tax gap we talked about earlier, $385 billion, tax gap last estimate how i'm anxious to see what the new figure will be when it's released. that's a lot of money that should become in the door that's not coming in the door. and the duplication, tens of billions of dollars in additional money that could be saved. >> my last question to you is what we needed to as a congress, as a government to help make gao, which i think is outstanding by the way, more effective? >> we need your support to double that our recommendations. i do that, not going. most people would tak say give e more money but i would to implement our recommendations and work with us more. congress is a great partner with us. we don't have any enforcement

authority at the gao. we can't compel people to implement our recommendations but congress can't comment that's our enforcement approach. >> my time is up in what again i would like to commend you on the great job your organization does. i yield back the time i don't have. >> i thank the gentleman. the chair recognizes the children from 11th district of virginia, my good friend. >> thank you, mr. chairman. just pick it up on your last point, gene, i do want you to miss the opportunity. yes, of course we have to open your recommendations but every dollar we invest in gao has what return on it? >> $134 back for every dollar invested. >> your point, i know it's not always a great idea, the countryside of the aisle, but this one has a return on it. so investing in gao is a very smart investment. >> and i joined the gentleman in supporting his notion of their

that we need to invest more in gao. >> i thank the chair. do you hear that, gene? run with a. for god's sake it's a special moment here. at any rate, and by the way, this committee in the past has done i think some very thoughtful hearings on both the issue of improper payments, the largest single chunk of which identified, identifiable charges medicare fraud. and the second is money left on the table that i of us could, did not collect but is owed. those two categories, if we actually to bring it down theoretically 20, would be an enormous dent on the debt over 10 years. ithey would be in the trillions of dollars, and it's something we ought to take a look at as a congress because that is

low-hanging fruit. i know it involves making diarist more efficient and more effective, but it also has a return on it. and right now we need. and thank you, mr. dodaro come for your thoughtful work again. i want to talk, mr. dalrymple, about identity theft. because identity theft, conversion of refunds a special irs has now become almost epidemic, has it not? >> that's true. >> if i would ask about identity theft, at irs say eight or 10 years ago, it would have been a small part of your concern, portfolio concerned, we did not? >> it would have been primarily 10 years ago, unrelated to refund abroad. >> right. and today, best estimate, how

many americans are affected by refund fraud? >> i don't have estimates on how many people at this point, but i can tell you that -- >> number of returns and. >> 1.4 million returns in 15 i'm a quitter to about $8.7 billion in refunds. >> ten years ago it would've been negligible. >> yes. >> here's the other problem, isn't not, it's virtually cost free crime. the chances of us identifying you for illegally diverting somebody's refund and prosecuting you and convicting you and even punishing you, operating know, i do not -- are pretty nil, are they not? >> we prosecuted -- >> i didn't ask that question. >> we ask you a lot of folks. 2000 but pales in comparison. >> that's improved but is still a drop in the bucket. and again i think congress has

to provide resources to beef up that effort and help restore american conference. i mean, here i am in a transaction with a federal agency, trusting of course that the transaction will be protected. as a matter of fact, it's not going to be, or for a lot of americans. mr. dodaro, to what extent is this a problem, eithe irs experiencing, a function of antiquated i.t.? >> i.t. is definitely a solution to this issue. >> is also part of the problem? >> well, there are benefits and risks associated with any information technology initiative. and the idea is to maximize your benefit, minimize your risk. here advocate congress very good credit for acting on our recommendations are for example, we found there was, one of the problems they had was irs did

not have a w-2 information from employers until april. so that trucks were filing early and irs didn't have the w-2 to match. congress fixed that in the last year, and the irs will be getting the w-2 information at the end of january. so disappointed in a better position to identify this area. we think also congress ought to lower the threshold for electronic filing of employers from 250, the five to 10, give more data. the issue though is can irs change its processes and systems to now take advantage of this electronic information that's available? and also irs needs to do a better job of authenticating people before they're using their systems. so the our ways and techniques to do this. so if managed properly, i.t. can be a big help, even though it's causing the problem to occur.

>> i hope at some point we have a chance to talk more in depth about this. mr. chairman, we have talked about it collaboratively, but so much of the i.t. at irs is legacy systems, antiquated systems, multiple systems, incompatible with each other and often not suitable for encryption, no wonder we have a growing problem. thank you very much. >> i would note to the irs, that's code word for you to come up with a plan to try to address it. because we are willing to work in a bipartisan way to help you address that problem. >> we appreciate this. >> the chair recognizes the gentleman from georgia, mr. carter. >> thank you, mr. chairman. and thank all of you for being here today. we appreciate your presence. mr. dodaro, i want to start with you. i want to speak specific on a project that is listed in your list of fragmentation and duplication, and that is the u.s. embassy in kabul.

it's my understanding that the state department did not have either a strategic facilities plan nor di do they follow their own cost containment and risk mitigation project, poli-sci should say. is that true? >> i'm going to ask mr. herr who led the project. >> your name? >> phillip herr. that's correct. >> that's cricketer told me he didn't have it strategic that the plan, didn't call their own cost containment and on risk mitigation policy? >> right. that's what were the poor -- that's what we reported last you do this committee. >> what does this say about the state department. what does this say about their construction planning in general? am i to take from this that it's not very good at all? >> i think in this case the conditions on the ground in kabul are really challenging. we think this kind of a plan, two to five year period could be updated periodically would help

orient folks that come and go. many people are serving one year tours there. to your point about kabul it does not look -- we have a large embassy construction program underway now. >> so am i to understand that all these developers and how dangerous a place it became while it was under construction, they didn't plan for that when you're planning? they did know that in advance? >> obviously they would've known something about the idea of an overarching plan was not a place but we think would've been very helpful. >> would you say that the state department go to follow their own cost mitigation policies is a good stewardship of our taxpayers money whenever we're talking about a project of the magnitude of to $.17 billion? >> no, i would not. >> mr. dodaro or mr. herr, in your may 2015 report in kabul, the one you referenced earlier,

he stated the state department failures to focus cost containment risk mitigation procedures likely contributed to the fact that the cost of the projects increased 27% and that the project will finish three years later than it was planned, is that correct? >> yes. >> would i be correct in saying that when we're talking about a project of this magnitude and the state department is not only not following their own policies, what are we to expect for smaller projects? we're talking about a to $.17 billion project. that's big even by our standards. i can only take from that we talk about smaller projects they're not doing that either and they are wasting money. let me get to the point. i believe that the point you want and here's what's bothering me, okay? i have a federal law enforcement training center in my district, full disclosure. here is the state department

needs to build a new training facility him or says they need to build a new training facility for embassy personnel. and understand that, and listen to all of us understand what happened in benghazi. we don't want to ever happen again. we want to be as big as we can be. comparing where they will build it now, take a minute 260 some odd million dollars. fort pickett came in at 900 some, 965 whatever million dollars. then he went back and you even compared, gao did, as did the state department. in six different factors the site came out ahead in four of the six, only one favored fort pickett. yet they went back and they said let's review it one more time. then he came back and said it's not going to be 965 million to do it at fort pickett actually going to be 465 million.

i mean, come on. i was born at night but it wasn't last night. i mean seriously. so what did they do? if they decide we will build in fort pickett. it's one thing for us to come and talk about where we wasted money in the past but my problem is i can't let this go. it is with me. i've only been here for 15 months and i just can't let it go. because i see us wasting money. why what can i do? tell me. this is keeping me up at night. i want to sleep. tony what i can do. >> with regard, i mean, congress has the power of the purse and thethe need to use it when they don't believe that the agencies are taking appropriate action. you have the authority to be able. nobody can spend money without congress' authority, and ago spend it on what to tell them to spend it on.

>> i hope you can understand my frustration. this is very, very frustrating, and i guarantee you i will bet you every penny i've got in my pocket that when it's finished at fort pickett that it would be closer to 965 million than it would be the 465 million. you know that, i know that and they know that. you see what i'm frustrated? do you see why the american people are frustrated? >> i look at this across government every day so i share -- >> share with me how can i get used to it? i've got to get some sleep. >> the gentleman's time has expired. >> tried to i need to know how i can get to sleep at night. >> i've never gotten used to it, okay? you just have to work we can to make improvements and make it better. >> thank you, mr. chairman. i apologize. >> i think the gentlemen of the chair recognizes the ranking member of the full committee for five minutes. >> thank you very much. mr. dodaro, the defense department has 79 major weapons

systems or grams with a total estimated acquisition cost of over $1.4 trillion. in august the 2015 gao released a report on dod's process for buying weapons systems. the report said quote, dod and the military plan to acquire more weapons than they could afford given and tested levels of funding. are usually with that report? >> yes, i'm familiar with it, and that the author here with me. >> okay. gao also found that dod makes decisions to invest in weapons on a piecemeal basis with each individual service making its own decisions about spending. according to gao, and if that dod managed its investments as a departmentwide portfolio rather than using this piecemeal approach, it would ensure that

these investments are, and i quote, strategy driven, affordable and balanced near and long-term needs, and, of course. but dod is not doing that, are they? >> not to the extent we think they should. >> according to the congressional budget office, dod's projected cost for weapons and other major prevent will increase by 21% by 2019, to a whopping $541 billion. that's an enormous investment of taxpayer dollars. do you believe dod could save money if they used a portfolio approach rather than the piecemeal approach it is currently using? >> yes. i will ask mr. francis to explain what. >> yes, mr. cummings, we think they can save money. what you can do with portfolio management is look at what is the right mix of weapons for a given level of funding.

if you don't do that to the extent that's possible, you into optimizing for individual systems and then you will pay as much as you can to get those systems in. now, the department has taken some efforts, and i'm sure mr. tillotson will have some comments on that, but dod does look out portfolios, but each organization looks at them differently, defines it differently, if they can't integrate the budgeting and acquisition requirements processes. so you are right on the numbers. cbo estimates in the out years for procurement. if you look at the navy, then it is going to need about 30-32% more money to bring the programs in that it already has under way. and we have joint strike fighter is going to start hitting peak years a 15 billion you. so there's real questions about how i'm going to manage all of that.

what you don't want to do is do that system by system because you will give everything a haircut. >> mr. tillotson, i'm surprised to see that dod does not agree with most of gao's recommendation. for example, according to the gao and i quote, dod does not plan to designate the deputy secretary of defense when appropriate delegate responsibility for overseeing portfolio management we recommended, end of quote. why is dod not plan to implement gao's recommendations? >> so department actually agrees with the gao on the intent to move in the direction of the strategic portfolio management and to do a better job of it. so, in fact, we are not in disagreement with the direction gao is suggesting. in fact, i would also state that over the last three years deputy

secretary osecretary of defensee vicvice chairman have conducted strategic portfolio reviews across elements of weapon systems with different outcome in mind that the gao is suggesting a. how do i make a more rational investment decision? i think the key has been the department recognizes that the military departments tend to bring forward individual piece parts, and as a result we need to integrate this at a departmentwide love. that's been taking place not consistently for the last, we've executed at the last two years. there's a third round in progress something that deputy secretary work brought on board when he came into the job. we are moving in the direction the gao suggests. >> gao also said adequate, dod does not plan to require annual enterprise level portfolio reviews that integrate key portfolio review à la months from the requirements, acquisition and budget processes as we recommended. why not?

>> i think the disagreement is more over the specifics of how to do it that it is over the intent. we think that the requirements process needs to be struck at a portfolio level. the actual management of programs is a management of programs issue. we don't want to make that the centerpiece of the decision. addenda decision of what resources we applied against the programs is the place where the portfolio losses comes back into being. we are actually in agreement with the intent of the gao. the differences are in the application. >> i see that my time is up. thank you. >> the chair recognizes the gentleman from ohio for five minutes. >> thank you, mr. chairman. mr. dalrymple, how long have you been at the irs? >> sorry. i've been at the irs for a total of about 33 and a half years. i had a stint there, retired, then i come back.

>> what are your responsibilities exactly? >> my responsibility and put all that enforcement activities at the irs, examination, collection, criminal investigation, all of the customer services activities including telephone services, submission processing speed do you do with it tax exempt division? >> that's part of -- >> to give any overlap with lois lerner? >> actually i think overlap with ms. lerner for about three months. >> you report directly to the commissioner? >> i do. >> my understanding of mr. dodaro's report, there's $385 billion tax gap, is that accurate? >> we are going to put out a new tax gap report that -- >> you disagree? >> at the end of the other figures going to be, it will be adjusted based on the new information we have, but it's not going to change dramatical dramatically. >> so he is close? >> yes.

>> nds 112 recommendations, right? for trish to government cannot do with the fact we are not collecting $385 billion. $385 billion. >> i'm not certain how many recommendations are exactly on point with the tax gap but -- >> overall recommendations that the recommended treasury and irs implement. >> actually i believe there's -- >> how many are there, mr. dodaro? >> i believe the 112 figure is correct. >> is it true, mr. dalrymple comity of all implemented about 50? 73 main, you haven't dealt with, haven't implemented? >> we have on implemented or partially addressed actions without question. >> how many have bee they put in place? >> they're still about 63% need to be implemented. >> it implemented less than half to do with hi this huge tax gap. changing subject somewhat.

you in charge of enforcement to denote anything about the stingray technology? >> i know about, i know the technology exists. i know that we have employed it in certain circumstances. >> how many times has the irs used this technology? i think a cell phone tower grabs the bible in a particular area cell phone data and gives the irs, the same irs that target people him access to people in that geographic location. the irs knows where they are at and their cell number and cell information. how many times has the irs used that technology? >> i would have to come back with the exact number. i think it's about 37 times. >> in those 37 to denote if the irs got a warrant to use that technology? >> in every instance we would've had some sort of course -- >> that's not what i asked.

did you get a probable cause warrant? >> i would have to come back to you on that. >> does the irs have a nondisclosure with the fbi? not disclosing that it's actually, so when you employed and you supposedly grabbed somebody's, does not pay their taxes but whatever you're going to get, e.g. disclose to them that using stingray technology? >> disclose it to the fbi? >> no. do you have an agreement with the fbi assist you will not disclose to the individual that you are using the technology to ice and get information from or maybe get the individual, not disclose to them or their counsel? >> again i would have to add to that for the record. i'm not certain. >> we would appreciate that as well. do you know if the irs has received the jones memo outlining how you would do with stingray, how the agencies will do with stingray technology as we move forward? >> i'm not familiar with the jones memorandum. i would have to get back to

your. >> so those four things, how many times did you use it, could you get a probable cause warrant, do you have a nondisclosure with the fbi, and have you received the jones memo? >> we will get back to you on all four of those. >> appreciate it. thank you, mr. chairman. >> i thank the gentleman. i want to add one thing to that in terms of stingray technology, sinjar answering the gentleman back. i would like to ask if you've ever opportunity information, i.e., if you didn't get a board if you are following them their personal household, and like you to respond to that as well. the chair recognizes the gentleman from new mexico, ms. luan grisham. >> thank you very much, mr. chairman. and i'm going to kind of go off topic, and i apologize, kind of,