The John R. Quetsch Memorial Lecture Series.

David M. Walker, Comptroller General of the United States 

The American Society of Military Comptrollers began an exciting new tradition at the 2001 Professional Development Institute (PDI)--the Quetsch Lecture Series. Named in honor of John R. Quetsch, former Principal Deputy Assistant Secretary of Defense (Comptroller) and former Chief Financial Officer of the Pentagon Federal Credit Union, this lecture series is intended to be an academic high point of future PDIs. It will be a forum for discussions of future issues in national and foreign policy and of future trends in government financial management.

To initiate this new lecture series, PDI attendees were privileged to hear the Honorable David M. Walker, Comptroller General of the United States.

Before sharing his thoughts on the major challenges facing the United States and other industrialized nations in the 21st century, Mr. Walker shared some background on the General Accounting Office (GAO), the agency he leads. The GAO is part of the legislative branch of government. Its primary clients are the Members of Congress; the American people are the beneficiaries of its work.

Despite its name, the GAO does not keep the books of the federal government. Rather, the GAO'S mission is to maximize the performance and ensure the accountability of the federal government for the American people. The GAO is results-oriented and exists, in part, to ensure that taxpayers get a reasonable return on their investment.

Challenges Facing the United States in the 21st Century

Mr. Walker discussed six major challenges facing the United States in this new millennium:

* Globalization of markets, products, information, and enterprises has left no islands in a wired, interconnected, and interdependent world.

* Changing security threats since the end of the Cold War are causing the United States to rethink its national security strategy. Our nation faces more diffuse and diverse security threats ranging from weapons of mass destruction to illegal drugs, infectious diseases, and cyberterrorist attacks. Threats emanate from rogue nations and transnational groups and may pose a more imminent threat than in the past to America's borders and cities.

* Rapidly evolving technologies are changing both warfighting requirements and day-to-day activities. The new technologies provide opportunities to increase productivity and decrease costs, but they also pose an increased threat to national security and personal privacy and may lessen the emphasis on the human element.

* Changing demographics are creating current and future challenges. The United States' aging population, combined with longer life spans and lower birth rates, translates into a decreasing worker-to-retiree ratio. The nation is experiencing slower workforce growth and a growing skills gap within the workforce.

* Growing quality of life concerns are creating tension within the available resources of the federal government. Citizens have increasing expectations concerning what services they receive from the federal government and how those services will be received. For example, education needs compete against environmental expectations and aging infrastructure needs.

* Rising health care costs will put increasing pressures on government, employers, and individuals in the coming years. We have a huge imbalance between the level of health care services people want (which is unlimited), what they need (which should be clearly identified and met), and what we-as a nation-can afford.

Meeting the Challenges

Mr. Walker stated that these trends have significant implications for the services that the government provides--and how it provides them--over the next century. Two key questions must be answered in order to address those challenges: What are the core functions the federal government must perform in the 21st century? and How should the government do business?

The federal government is a monopoly with all the classic characteristics: internally focused, hierarchically structured, and slow to respond to customer needs and a changing environment. However, to address the challenges ahead, we will need to change the culture within that monopoly. We need to move to an externally focused, cooperative, flatter, and more responsive bureaucracy. And we need to move rapidly while the window is still open to such change.

Mr. Walker noted that the Comptroller General is uniquely positioned to focus not just on today but on the long view and to take on tough issues because of the statutory 15-year term of office. In fact, the GAO has been taking the long view for some time. For example, the agency has crafted long-range (50-year) budget forecasts based upon Congressional Budget Office estimates.

For the short term, those estimates project budget surpluses; then things "get tight." With no programmatic changes made now, rising health care costs will take the country back to deficits in just a few years' time.

Mr. Walker warned that budget surpluses and flexibility are not the only items at risk. Human capital is the factor most at risk. The civilian workforce is currently viewed as a cost to be cut. To maintain our competitive advantage in the world, human capital should be viewed as a valued asset.

The United States is transitioning from an industrial-based society into a knowledge-based society that competes based upon information. People are the key factor in attaining and maintaining the competitive advantage in public, private, and the not-for-profit sectors in a knowledge-based society because people are the source of knowledge.

Right now, we have a skill imbalance in the workforce as a result of the workforce drawdown, and each agency needs to "get on with fixing it" so that the federal government is ready to meet the challenges ahead.

What About the Department of Defense?

In 1962, over two-thirds of the federal budget was composed of discretionary spending, and half of the federal budget was dedicated to national defense. By fiscal year 2000, only about one-third of the budget was discretionary spending, and about 16 percent of the federal budget was dedicated to national defense. The reductions in defense spending over this period were used, in part, to fund nondiscretionary programs such as Social Security, health care, and interest on the deferral debt.

Social Security and health care costs are continuing to rise. Defense competes with the judicial system, education programs, infrastructure needs, and other programs mandated by the Constitution or promoted by politically potent competitors. Fiscal tensions will only increase over future years, as will demands for accountability and results.

Mr. Walker reminded the audience that the Department of Defense (DoD) performs its primary mission extremely well. If he had to give DoD a grade, it would receive an "A" for its ability to defend the nation, but a "D" for the economy, efficiency, and accountability of its business practices. Thus, there is a strong mandate for change.

The Department has some particular challenges other agencies do not face. For example, the GAO has identified 24 high-risk areas in the federal government; the DoD "owns" eight of those areas. Mr. Walker reminded the audience, "This is not a good market share." The Department must change the way it does business.

However, a silver lining accompanies this "high market share." With the advent of the high-risk list, long-standing problems were illuminated. With illumination comes attention and with attention comes action. The changes will require a top-down, enterprise-wide approach and cooperation across the Department, its Components, and its personnel. Also, the changes cannot be incremental; that has been tried and it didn't work.

Even then, some problems may not be fixed, such as the disbursement "system." The Department may need to stop funding legacy systems and start anew.

Mr. Walker noted that the problem is the systems, not the people. The Department's strength lies in its people. No matter what changes are made, we can never privatize the duty and loyalty to the collective good displayed by DoD personnel-both military and civilian. Therefore, the solutions need to focus on systems and controls so that managers are able to get accurate and timely information upon which to act.

Mr. Walker believes we have a window of opportunity of about 10 to 15 years to "get it right" and answer the questions about the proper role of the government in the 21st century and how the government should do business. During this period, elected officials and policymakers must relook at the range of government programs and policies in light of past and expected changes and future challenges.

The demographic tidal wave is coming. Mr. Walker encouraged us all to become an active part of the solution.

Donna L Brown works as Chief, Resource Management Branch, Office of the DoD Chancellor of Education. Prior to this assignment, she taught Defense Financial Management to senior graduate students at the Naval War College in Newport, Rhode Island She has hod previous financial management assignments with the Army headquarters staff in the Pentagon and worked for GAO and the House Appropriations Committee Surveys and Investigations staff. She has master's degrees from Virginia Tech and the Naval War College.

David M. Walker be came the seventh Comptroller General of the United States and began his 15-year term when he took his oath of office on November 9, 1998. Immediately prior to his appointment as Comptroller General, Mr. Walker was a partner and Global Managing Director of Arthur Andersen LLP's human capital services practice and a member of the board of Arthur Andersen Financial Advisors. He also served as a Public Trustee for Social Security and Medicare (1990-1995) while he was a partner with Arthur Andersen. Prior to joining Arthur Andersen, Mr. Walker was Assistant Secretary of Labor for Pension and Welfare Benefit Programs and Acting Executive Director for the Pension Benefit Guarantee Corporation. He has had extensive private-sector experience.

Mr. Walker is a CPA and holds a B.S. in accounting from Jacksonville University and a Senior Management-in Government Certificate in Public Policy from the John F. Kennedy School of Government at Harvard University. He is Married to the former Mary Etheredge and they have two adult children, Carol and Andy Mr. Walker also is the proud grandfather of a brand-new granddaughter

John R. Quetsch was born in Oak Park, Illinois, and attended Notre Dame University. He served for 18 months in the Korean War. During his federal career, which spanned the years 1976 to 1987, he received three civil service awards and twice was designated as Distinguished Executive of the Senior Executive Service. He rose to the position of Principal Deputy Assistant Secretary of Defense (Comptroller) and served as a volunteer on the Board of the Pentagon Federal Credit Union (PFCU) for several years. Quetsch served as National President of ASMC from 1986 to 1988.

Following retirement from federal service, he rose to the position of Chief Financial Officer for the PFCU. He was always physically active and died on June 2, 1997, while playing volleyball. He is survived by his wife, Mary F., and six adult children.