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The Secret to Staying Off the High-Risk List

Nobody wants to be on GAO’s naughty list. Here’s how to work your way off--and better yet, to avoid getting listed in the first place.

Some say getting placed on the Government Accountability Office’s high-risk list is like the 1977 Eagles’ hit, “Hotel California,” where “you can check out any time you like, but you can never leave.” But in fact, over a third of agency programs once placed on the list have been removed. What’s the secret?

Lessons summarized in a new IBM Center for the Business of Government report by Donald Kettl, one of the nation’s most insightful observers of government operations, suggest you can get off the list. Kettl took a look back over the past 25 years of GAO reports on programs it had placed on the high-risk list to see if he could detect any patterns. He explored how programs got on the list in the first place, what they did over the years to get off, and, based on these lessons, he offers advice on how to avoid getting listed in the first place.

“Understanding what can go wrong, how it can matter, what steps can make things right, and how to minimize risk ... can provide invaluable insights for improving government,” Kettl writes. Such insights will be especially timely for agencies since later this month, the Office of Management and Budget is expected to release long-awaited guidance that updates its risk management policies. Looking at the upcoming OMB guidance and Kettl’s advice may be worthwhile efforts in advance of the presidential transition, when agencies will be asked to give their incoming leaders an assessment of what lays before them.

Background

For more than a quarter century, GAO has been highlighting and tracking a handful of programs that it judges as being at high risk for waste, fraud, abuse and mismanagement. Launched in 1990, the list grew from 14 programs to 32 by 2015, when it was last updated. Programs on the list range from Medicare insurance benefits to food safety oversight to managing the risks of climate change.

Six programs on the 2015 list were on the original list in 1990. These perennial challenges -- such as defense supply chain management, NASA acquisition management, and uncollected taxes by the IRS -- are huge and inherently problematic.

Root Causes for Landing on the List

Based on his research and interviews, Kettl identifies a set of common root causes for why certain programs were placed on the high-risk list. The top issues are:

  • Agencies’ inability to effectively work across organizational stovepipes.
  • The inability to track performance and use information to make timely decisions.
  • Inadequate and aging legacy information systems.

For example, 15 agencies share responsibility for coordinating national policy and administering 30 different laws to prevent food-borne illnesses. In the case of national flood insurance, local governments have a large role in determining what can be built in flood plains, and state governments have important roles as well, so the issue is not entirely within the control of the federal government.

On the the issue of information systems, Kettl notes, for example, that GAO found that with regard to the Veterans Affairs Department 2014 hospital patient scheduling scandal, “outdated systems, coupled with the inability of many information systems to talk with each other, vastly complicated” a patient scheduling process that was 30 years old.

Kettl finds that “high-risk problems cannot be solved by a focused effort on a small number of issues.” Rather, he writes, they require “an integrated strategy aimed at a constellation of interrelated issues.”

“Some root causes are especially important,” he notes, focusing on “the clustering of financial management, contract management and information systems.” These were common in 12 of the 32 programs currently on GAO’s high-risk list.

“The typical high-risk area is risky,” he writes, “because it is the product of complex, interrelated problems, many of which are serious and all of which have to be tackled to produce improvement.”

Root Solutions for Getting Off the List

In addition to examining why programs were placed on the high-risk list, Kettl looks at the 23 programs that were removed from the list and concludes “success is possible.” He says these programs represent 40 percent of the total number of programs placed on the list over the past 25 years. He also notes that GAO has determined progress is being made on 87 percent of the programs remaining on the list.

Kettl says agencies that got their programs off the high risk list used a mix of solutions -- and these differed from the root causes that landed them on the list in the first place. The top three actions taken were:

  • Improvements to legacy information systems. Aging IT systems, and ineffective efforts to modernize them, have been a stumbling block for many agencies. Leaders who undertake fundamental management changes to bring together the technology, contracting and program management skills needed to effectively orchestrate modernization efforts are more likely to see their programs removed from the high-risk list. For example, the IRS’s Business Systems Modernization Program was removed from the list in 2013 in part because a new information system was installed successfully.
  • Strengthened financial management systems. At their core, most high-risk programs are on the list because of their financial implications for taxpayers. Kettl says managers need to “know where the money is going and how to redirect it.” Better financial management of the Defense Department’s supply chain resulted in dollars being more closely tied to forecasts of needed spare parts, producing big cost savings. In the case of the Interior Department’s oil and gas leasing programs, better financial management led to significant improvements in the collection of revenues from leases.
  • Strengthened contract management. The federal government relies heavily on contractors but often falls down in contract drafting and oversight. While the Medicare program has been on the high-risk list since its inception in 1990, GAO has recognized that its managers have put in place stronger competitive bidding procedures for durable medical equipment (such as wheelchairs) and have strengthened auditing and contract review processes.

“The high-risk list is not a sentence to eternal criticism,” Kettl writes. Rather, “when it is viewed through the lens of root solutions that got some of these programs off the list, it is a catalog of what it takes to solve those challenges.” As such, the solutions can be seen as a guide to actions that good managers can take to stay off the list in the first place.

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