Summary

GAO's audits and evaluations identify federal programs and operations that are high risk, in some cases, due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement. Increasingly, we also are identifying high-risk areas to focus on major economy, efficiency, or effectiveness challenges. Since 1990, GAO has periodically reported on government operations that it has designated as high risk. In this 2003 update for the new 108th Congress, GAO presents the status of high-risk areas included in our last report made in January 2001 and identifies new high-risk areas warranting attention by the Congress and the administration. Lasting solutions to high-risk problems offer the potential to save billions of dollars, dramatically improve service to the American public, strengthen public confidence and trust in the performance and accountability of our national government, and ensure the ability of government to deliver on its promises.

In 2001, GAO identified 23 high-risk areas. Since then, demonstrable progress has been made in virtually all of them. Federal departments and agencies, and the Congress as well, have shown a growing commitment to addressing management challenges and have taken new steps to correct the root causes of the problems. In two areas, the Supplemental Security Income program and the asset forfeiture programs managed by the Departments of Justice and the Treasury, GAO has determined that sufficient progress has been made to remove the high-risk designation. GAO has increasingly used the high-risk designation to draw attention to the challenges faced by government programs and operations in need of broadbased transformation. For example, in 2001, GAO designated as high risk strategic human capital management across government and the U.S. Postal Service's transformation and fiscal outlook. Since then, the President has made human capital a top initiative of his Management Agenda, while the Congress enacted key governmentwide human capital reforms as it created the Department of Homeland Security (DHS). In addition, a promising Postal Service transformation plan has been produced and the President formed a commission to focus on Postal Service transformation. With these positive results in mind, for 2003, GAO has designated three additional areas as high risk based on challenges involving broad-based transformation and/or the need for legislative solutions. The first new high-risk area is implementing and transforming DHS, which is high risk because of the sheer size of the undertaking, the fact that DHS's proposed components already face a wide array of existing challenges, and the prospect of serious consequences for the nation should DHS fail to adequately address its management challenges and program risks. A related homeland security challenge will be to protect information systems supporting the federal government as well as the nation's critical infrastructures; information security has been a high-risk area since 1997 and has been expanded this year to include both of these concerns. The second new high-risk area involves federal disability programs, primarily those at the Social Security Administration and the Department of Veterans Affairs. Already growing, disability programs are poised to surge as baby-boomers age, yet the programs remain mired in outdated economic, workforce, and medical concepts and are not well positioned to provide meaningful and timely support to disabled Americans. The third new high-risk area involves federal real property, based on long-standing problems such as excess and underutilized property and deteriorating facilities, as well as increased security challenges from the threat of terrorism. As appropriate, GAO also continues to identify more traditional high-risk areas. For example, this year's fourth new high-risk area involves the Medicaid program, in part because of growing concerns about inadequate fiscal oversight to prevent inappropriate program spending.