The Government Accountability Office (GAO) began in 1921 as the General Accounting Office. That year, the Budget and Accounting Act transferred auditing responsibilities, accounting, and claims functions from the Treasury Department to the new GAO. The agency was created because federal financial management was in disarray after World War I. Wartime spending had driven up the national debt, creating a need for more information and better control over expenditures. The act made the GAO independent of the executive branch and gave it a broad mandate to investigate how federal dollars are spent. The act also required the President to prepare an annual budget for the federal government. Later legislation clarified or expanded GAO’s role, but the Budget and Accounting Act continues to serve as the basis for its operations.

Until the end of World War II, the GAO primarily checked the legality and adequacy of government expenditures. The agency issued decisions on payment questions and helped process financial claims for and against the government. GAO employees reviewed individual financial transactions by checking expenditure vouchers. They also audited and reconciled disbursing officers’ accounts. The work was done centrally, which meant that government agencies had to send their fiscal records to the GAO. Legions of audit clerks worked in the great hall of the Pension Building—GAO’s home from 1926 to 1951—reviewing stacks of paperwork documenting government expenditures.

During President Franklin Roosevelt’s New Deal in the 1930s, federal money poured into recovery and relief efforts to fight the Great Depression. More government programs meant more paperwork for the GAO to examine. The agency, which started out with approximately 1,700 employees, soon found its ranks filled to 5,000. With the U.S. entry into World War II, military spending triggered a paperwork explosion that overwhelmed GAO’s ability to keep up with central voucher auditing. Even with a staff that grew to more than 14,000 by 1945, the agency still faced a backlog of 35 million unaudited vouchers.

After the war, GAO decided it could best serve Congress and the nation by doing broader, more comprehensive audits that examined the economy and efficiency of government operations. It soon cut the size of its workforce and changed its approach to doing its job. The agency began to shift away from the central auditing it had done for 25 years. GAO transferred some of its responsibilities, such as voucher checking, to the executive branch. Instead of scrutinizing every government fiscal transaction, GAO began to review financial controls and management in federal agencies.

Starting in the late 1940s, the GAO also worked with the Department of the Treasury and the Bureau of the Budget (now the Office of Management and Budget) to help executive branch agencies improve their accounting systems and controls over spending. With the move to comprehensive auditing, the agency further reduced the number of audit clerks and began to hire accountants. By 1951, when the GAO moved into its new headquarters across the street from the Pension Building, its staff numbered just under 7,000—less than half the number that had been on the payroll at the end of the war.

The 1950s saw a rise in government spending because of the Cold War and the build-up of American military forces in Europe and Asia. GAO’s work increasingly focused on defense spending and contract reviews. Although the agency first began doing field work in the 1930s, it formally established a network of regional offices in 1952. It also opened branches in Europe and the Far East. Various national crises affected the agency’s work in the 1960s and 1970s. During the Vietnam War, for example, the GAO opened an office in Saigon to monitor military expenditures and foreign aid. And in 1972, some GAO reviews touched on Watergate.

Congress also found that it needed more information on how well government programs were meeting their objectives. Congress asked the GAO to evaluate President Lyndon Johnson’s Great Society program in 1967. The agency also examined energy policy, consumer protection, the environment, and the economy. In 1974, Congress broadened the GAO’s evaluation role and gave it greater responsibility in the budget process. The agency’s staff, mostly accountants, began to change to fit the changing work. In the 1970s, it started to recruit scientists, actuaries, and experts in fields such as health care, public policy, and computers. In 1986, GAO assembled a team of professional investigators, many with law enforcement backgrounds, to look into allegations of possible criminal and civil misconduct.

During the last 20 years, the GAO has sought to improve accountability by alerting policymakers and the public to emerging problems throughout government. In the 1980s, for example, the agency reported on problems brewing in the savings and loan industry and repeatedly warned about the government’s failure to control deficit spending. It also worked with executive branch agencies to strengthen financial management. The GAO urged federal agencies to modernize outmoded financial systems, prepare yearly financial statements, and submit them for audit. As the 1990s drew to a close, the agency did important work on a range of issues, including computer security, conditions at nursing homes, and the choices posed by continuing budget surpluses.

The GAO generated a 2008 report that found that federal prosecutors exaggerated claimed terrorist convictions, a 2011 report (pdf) revealing that the U.S. government improperly spent $125 billion in FY 2010, and a 2011 study showing that nearly $200 million was spent by the U.S. military to remove and replace homosexuals serving in its ranks. It also took the EPA to task for abandoning child safety efforts during the eight years of the George W. Bush administration, and found that the $200 million spent in 2009 by the Transportation Security Administration on behavior detection (ability to identify terrorists based on observed behavior) was a waste of money.

In February 2009, a GAO study (pdf) disclosed that 36% of all arms sent to the Afghanistan government by the U.S.—87,000 weapons—are missing due to lapses in the U.S. inventory process. One September 2011 GAO report showed that in 2009, the federal government’s inspector generals discovered $43.3 billion in expenditures that could be done away with. Another report (pdf) that month revealed that the U.S. government has lost track of 17 tons of nuclear material that it has shipped to 27 different nations, enough to build hundreds of nuclear warheads.

As part of the GAO Human Capital Reform Act of 2004, the GAO’s legal name changed to the Government Accountability Office to better reflects the agency’s work. In addition to the name change, the law decoupled GAO from the federal employee pay system; established a compensation system that placed greater emphasis on job performance while protecting the purchasing power of employees who are performing acceptably; gave GAO permanent authority to offer voluntary early retirement opportunities and voluntary separation payments (buy-outs); provided greater flexibility for reimbursing employees for relocation benefits; allowed certain employees and officers with less than three years of federal service to earn increased amounts of annual leave; and authorized an exchange program with private sector organizations.

On September 19, 2007, a majority of GAO analysts voted to establish the first union in the agency’s history, choosing to affiliate with the International Federation of Professional and Technical Engineers (IFPTE), a member union of the AFL-CIO. Known as the IFPTE Local 1921, the GAO analysts’ union approved its first negotiated pay contract with management in February 2008.

GAO: Working for Good Government Since 1921

How GAO Built Its Dream House

The Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the “Congressional watchdog,” the GAO investigates how the federal government spends taxpayer dollars by conducting audits and other types of investigations.

Headquartered in Washington D.C., the GAO has offices in 11 major cities across the country. Its staff includes economists, social scientists, accountants, public policy analysts, attorneys, and computer experts as well as specialists in fields ranging from foreign policy to health care. GAO’s workforce is organized largely by subject area, with most employees being in one of the following 14 teams:

• Acquisition and Sourcing Management
• Applied Research and Methods
• Defense Capabilities and Management
• Education, Workforce, and Income Security
• Financial Management and Assurance
• Financial Markets and Community Investment
• Forensic Audits and Investigative Services
• Health Care
• Homeland Security and Justice
• Information Technology
• International Affairs and Trade
• Natural Resources and Environment
• Physical Infrastructure
• Strategic Issues

The GAO produces a wide variety of documents available to the public including reports and testimonies, legal decisions, a Top 10 List, Month In Review, Comptroller General Presentations, the High-Risk Series, 21st Century Challenges: Reexamining the Base of the Federal Government and Federal Debt and the  Fiscal Outlook.

The head of the GAO, the Comptroller General of the United States, is appointed to a 15-year term by the President from a slate of candidates proposed by a congressional commission. The commission consists of the Speaker of the House, President Pro Tempore of the Senate, majority and minority leaders of the House of Representatives and the Senate, chairman and ranking member of the Senate Committee on Homeland Security and Governmental Affairs, and chairman and ranking member of the House Committee on Oversight and Government Reform. The commission must recommend at least three individuals to the President, and the President may request that the commission recommend additional individuals.

The Office of General Counsel (GC) provides a wide variety of legal services. GAO attorneys assist Congress, federal agencies, and GAO analysts in interpreting the laws that govern the expenditure of public funds and the myriad of government programs and activities.

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As a legislative branch agency, the Government Accountability Office (GAO) is not required to submit its contracting information for viewing on USAspending.gov, which is reserved for executive branches agencies. But the GAO does make available some data regarding companies and organizations its pays for goods and services.

According to GAO’s FY 2007 Contract and Small Business Subcontract Awards (pdf) information, approximately 150 companies were paid by the agency, including IBM, a division of Lockheed, and MCI.

Through GAO’s FY 2007 Small Business Procurement Information, aggregate data is made available. This report states that 341 contracts were awarded to small businesses during this time period, at a total cost of $53.4 million. Other findings include:

• 22% of all contract awards were given to small businesses
• 5% were given to women-owned businesses
• 4% were given to small disadvantaged businesses
• 1% were given to veteran-owned businesses

Congress Cuts the Budget of Agency that Saves Billions of Dollars

Despite its history of saving more money than its consumes, the Government Accountability Office (GAO) in 2011-2012 faced a substantial reduction in its budget, thanks to lawmakers “embarrassed” by the agency. In autumn 2011, the Senate proposed cutting the GAO’s budget by $50 million. This reduction would have amounted to a 9% chop in the watchdog’s funding.

Eventually, Congress backed off somewhat and cut the GAO’s budget by $35 million, which was going to force the agency to function with fewer than 3,000 full-time employees—something it hadn’t done since the Great Depression.

Senator Tom Coburn (R-Oklahoma), a strong supporter of the GAO, said some lawmakers were happy to weaken the agency because its reports have often “embarrassed” them. Coburn opposed cutting the budget, noting “for every dollar they [the GAO] spend, we save 90 bucks,” which the senator added was a “pretty good return.”

Shrinking GAO Budget Concerns Employees, Oversight Advocates (by Jack Moore, Federal News Radio)

Congress Set to Cut GAO Budget 5% – Neutering Watchdog? (by Joyce Cordi, Reimagine America)

Agencies Anticipate Budget Cuts in FY2013, Request Less from Congress (by Debbie Siegelbaum, The Hill)

Army Claimed GAO Report Mischaracterized Combat System Costs and Technology

U.S. Army leaders took exception in 2009 to a GAO report that was critical of the service’s Future Combat Systems (FCS), then in its sixth year. The GAO report said the FCS program—the Army’s principal modernization plan, which included creating new brigades outfitted with new manned and unmanned vehicles connected by a new battlefield network—was over budget and that its technology lacked development and testing.

Lt. Gen. Ross Thompson, military deputy to the Assistant Secretary of the Army for Acquisition, Logistics and Technology, objected to the GAO’s conclusion that the FCS had experienced $21 billion in cost increases. “One of the things we have to get addressed with GAO is the basis in which they calculated that,” Thompson said. “I can’t explain their $21 billion.”

Thompson insisted overages were only 6.5% of the total program cost of about $159 billion (or $10.3 billion). By 2009, the Army had spent approximately $19 billion of the funds. He also said of the 44 key technologies in the FCS, 35 were moving toward “demonstrated readiness,” according to the testing methodology employed by the Army.

That bit of progress, wasn’t enough to save the program—Robert Gates, then-Secretary of Defense, ordered it canceled later in 2009, telling Defense News in 2011 that “the fundamental design [of the overall plan] . . . was flawed.”

Cost estimates at the time of cancellation approached $200 billion. FCS program contractors — including Boeing and SAIC — weren’t happy, and are charging termination fees that will cost taxpayers nearly half a billion dollars.

GAO Report Mischaracterizes Army Efforts on FCS (by C. Todd Lopez, U.S. Army)

System Development and Demonstration (GlobalSecurity.org)

Army to Pay $500M for Future Combat Systems Termination (by Amber Corrin, Federal Computer Week)

GAO Unsuccessfully Sues Bush Administration Over Energy Notes

One of the first actions George W. Bush took as president was to create a 14-member National Energy Policy Development Group to be headed by Vice President Dick Cheney and to include eight cabinet members. The executive branch would ultimately fight a four-year court battle to keep secret the names of people who met with this task force and what was discussed at meetings of the group. On May 17, 2001, Cheney’s task force issued a report calling for expanded drilling on public lands, industry-backed tax breaks and weaker regulatory barriers to the building of new nuclear power plants. The GAO requested documents relating to the work of the energy task force as part of their inquiry into how the Enron Corporation, the leading contributor to George W. Bush’s presidential campaign, influenced the formation of government policy. Cheney refused to comply. 

David M. Walker, the head of the GAO, accused the executive branch of making Cheney the head of the National Energy Policy Development Group for the very reason that he could claim executive privilege and thus avoid congressional oversight. In February 2002, the GAO filed suit against Cheney for refusing to turn over his records. It was the first time in its 80-year history that the GAO had sued a member of the executive branch.  They were not alone. The conservative public-interest group Judicial Watch had already requested the documents through the Freedom of Information Act, while the more liberal Natural Resources Defense Council had filed suit over related documents held by the Department of Energy. As court rulings see-sawed between Cheney’s side and that of the document seekers, the Bush administration became nervous and acknowledged that Enron executives had met six times with members of the task force, and that one of those meetings was a one-on-one session between Vice President Cheney and Enron Chairman Kenneth Lay on April 17. When a federal judge forced the Energy Department to reveal some documents, they showed that Energy Secretary Spencer Abraham had refused a request to meet with a coalition of 30 environmental groups because of his “busy schedule.” However, in the days that followed, he did find the time to meet with the executives of a half-dozen oil and gas companies, a half-dozen nuclear power corporations, and a half-dozen utility companies.

Eventually, John D. Bates, a Bush-appointed federal district judge, dismissed the GAO’s suit on the basis that only a house of Congress or a congressional committee could file such a claim. Prior to becoming a federal judge, Bates served as a Whitewater prosecutor in the mid-1990s, arguing in a federal appeals court that White House lawyers’ notes of conversations with Hillary Clinton must be turned over to a federal grand jury.

The suit brought by Judicial Watch, which was later joined by the Sierra Club, was accepted by the Supreme Court, but not without controversy. It seems that between the time the Supreme Court agreed to hear the case and the time it actually came before the court, Vice President Cheney went duck hunting with one of the Supreme Court justices, Antonin Scalia. Scalia refused to recuse himself from the case, claiming that he “never hunted in the same blind with the vice-president.” Scalia voted with the majority to send the case back to an appeals court, which, in May 2005, ruled unanimously that Cheney’s involvement with the task force was part of his role as vice-president and so he could keep secret the details of his meetings.

In the wake of Walker v. Cheney, Congressman Henry Waxman introduced legislation in 2008 to bolster the legal stature of the GAO (see Suggested Reforms).

Suit Against Cheney Task Force Dismissed (by Pete Yost, Associated Press)

GAO Statement on Lawsuit (pdf)

Fact Sheet on GAO Suit (pdf)

GAO Comptroller Doesn’t Mince Words

While leading the GAO, and after, David Walker has never been afraid to tell it like it is. In 2007, Walker wrote a piece for The Futurist, in which he accused the United States of being too short-sighted in its fiscal behavior. “Too many individuals tend to focus on their next paycheck. Too many company executives focus on their next quarterly earnings report. Too many politicians focus on the next election cycle rather than the next generation,” wrote Walker.

That same year, Walker barnstormed the country like a presidential candidate, but instead of asking Americans to vote for him, he warned them about the single biggest issue facing the United States: the national debt. Walker visited college campuses, spoke to lawmakers in Washington, and toured 19 states over a year and a half.

He said he hoped the candidates for the White House seriously heeded his warnings.

“If [the candidates] don't make [the debt] one of their top three priorities, in my opinion, they don’t deserve to be president and we can’t afford for them to be president,” he told CNN. “The fact is that we could eliminate the Iraq war tomorrow. We could eliminate every dime of pork-barrel spending. And we wouldn’t come close to solving our problem,” he said.

Walker said it was necessary to balance the budget within the next five years, make a down payment on the $50 trillion imbalance and begin reforming government programs.

“It’s going to take us probably 20 years to do all the things that need to be done,” he said. “But we need to get started now because the clock is ticking and time is working against us.”

After leaving the GAO, Walker continued to issue dire warnings about the current housing and mortgage crises. While the Bush administration proposed shoring up mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit, and Congress contemplated another economic stimulus, the question arose: Who will bail out the government?

“People seem to think the government has money,” said Walker. “The government doesn't have any money.”

“The factors that contributed to our mortgage-based subprime crisis exist with regard to our federal government’s finances,” said Walker, former head of the Peter G. Peterson Foundation and now founder and CEO of the Comeback America Initiative, a group devoted to promoting fiscal responsibility in the U.S. “The difference is that the magnitude of the federal government’s financial situation is at least 25 times greater.”

Concern grows over a fiscal crisis for U.S. (by Carolyn Lochhead, San Francisco Chronicle)

One man's campaign against federal debt (by Kyle Almond, CNN)

Foresight for Government (by David M. Walker, The Futurist)

Waxman Seeks More Powers for GAO

House Oversight Committee Chairman Henry Waxman (D-California) and 18 other committee chairs introduced legislation in 2008 to strengthen the Government Accountability Office (GAO) and restore its authority to pursue litigation if documents are improperly withheld from the agency. The bill passed in the House by voice vote in July of that year, but did not become law.

“At a time when our budget deficits are soaring to record levels, we cannot afford to waste billions on poorly managed contracts and bloated federal programs,” said Waxman. “We need a strong GAO to root out waste and corruption.”

One key provision of the legislation repudiated a district court decision in Walker v. Cheney and reaffirmed GAO’s authority to go to court when agencies or the White House refuse to provide access to records.

Other provisions of this bill would have given the GAO authority to interview federal employees and administer oaths; affirmed GAO’s right to obtain records from three agencies (Centers for Medicare and Medicaid Services, the Food and Drug Administration, and the Federal Trade Commission) that have sometimes thwarted GAO oversight by denying access to documents; and created a reporting mechanism so that Congress will be informed when federal agencies do not cooperate with GAO.

The Government Accountability Office Act of 2008 also would have:

• Established an Office of the Inspector General in GAO who would report semiannually to the Comptroller General.

• Required the Comptroller General’s annual report to Congress to assess the overall degree of federal agency cooperation with GAO audits.

• Required any executive agency (or component) that prepares an audited financial statement to reimburse GAO the cost of any GAO audit of such statement.

• Amended the Ethics in Government Act of 1978 to revise the coverage of certain GAO officers and employees under its financial disclosure requirements.

• Revised the highest basic pay rate for GAO personnel from GS-15 to Executive Level III.

• Increased from 15 to 20 the number of experts and consultants whose services the Comptroller General may procure for renewable three-year terms at rates up to level IV of the Executive Schedule.

• Made funds appropriated to GAO for salaries and expenses also available for recruitment-related meals and entertainment.

• Revised provisions governing GAO voluntary separation incentive payments.

• Required specified minimum percentage pay increases and lump sum back payments for certain GAO officers and employees.

Government Accountability Office Act of 2008

House Passes Government Accountability Office Improvement Act (The Gavel)

H.R. 6388: Government Accountability Office Improvement Act of 2008, bill status (Govtrack.us)

David M. Walker, 1998–2008

Charles A. Bowsher, 1981–1996

Elmer B. Staats, 1966–1981

Joseph Campbell, 1955–1965

Lindsay C. Warren, 1940–1954

Fred Herbert Brown, 1939–1940

John Raymond McCarl, 1921–1936