DOCUMENT RESUME

ED 384 294HE 028 407

AUTHOR Gore, AlTITLE From Red Tape to Results: Creating a Government ThatWorks Better & Costs Less. Report of the National

Performance Review.INSTITUTION Office of the Vice President, Washington, DC.PUB DATE 10 Sep 93NOTE 175p.; Twelve major recommendations

pertaining to theDepartment of Educationare listed on pages 137-138.For accompanying report specific to the U.S.Department of Education, see ED 379 992. For relatedreports, see HE 028 408-409.AVAILABLE FROM U.S. Government Printing Office,

Superintendent ofDocuments, Mail Stop: SSOP, Washington, DC20402-9328; Superintendent of Documents, P.O. Box371954, Pittsburgh, PA 15250-7954 ($14, $17.50foreign).PUB TYPE Reports -

Evaluative/Feasibility (142)

EDRS PRICE MF01/PC07 Plus Postage.DESCRIPTORS Educational Research; Efficiency; ElementarySecondary Education;

Eligibility; Federal Aid;*Federal Government;Federal Legislation;' FederalPrograms; Federal

Regulation; Government Role;Grants; HigherEducation; Information

Dissemination;Institutional Administration; InstitutionalEvaluation; Organizational Change;OrganizationalEffectiveness; Professional Development; ProgramTermination; Public Agencies; Research

Administration; Staff DevelopmentIDENTIFIERS Clinton Administration; Debt Collection; *Departmentof Education; Dwight D EisenhowerMath and ScienceEduc Program;

Elementary Secondary Education Act;General EducationProvisions Act 1968; *NationalPerformance Review; National Security Education Act1991

ABSTRACT

This monograph presents results of a 6-month study ofthe federal government and theClinton Administration's proposal fora decade-long process of re-inventing

the federal government'soperations. Each of four majorprinciples are presented in a chapterorganized around specific steps towards its

implementation. Theseprinciples are: cutting red tape,putting customers first, empoweringemployees to get results, and cutting back to basics. Appendicespresent recommendations

organized by federal agency, a summary ofexpected savings, and major recommendations affecting governmentalsystems. The 12recommendations for the Department of Education are:(1) redesign Chapter 1 of the Elementary and Secondary Education Act;(2) reduce the number of programs the department

administers; (3)consolidate the Eisenhower Math and Science Education Program withChapter 2; (4) consolidate National Security Education Act programs;(5) streamline and improve theDepartment's grants process; (6)provide incentives for the Department's

debt collection service; (7)simplify and strengthen institutional eligibility and certificationfor participation in federal student aid programs; (8) create asingle point of contact for program and grantinformation; (9)improve employee

development opportunities in the Department; (10)eliminate the grantback statutory provision of the General EducationProvisions Act; (11) build a professional,mission-driven structurefor research; and (12) develop a strategy for technical assistanceand information

dissemination. (Contains 251 endnotes.) (JB)

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CREATING AGOVERNMENT

THATWORKS BETTER&COSTS LESS

Report ofthe National

Performance Review

Vice President Al Gore

September 7, 1993

Revised September 10, 1993

3

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The PresidentThe White HouseWashington. DC

Dear Mr. President.

THE VICE PRESIDENTWASHINGTON

September 7, 1993

The National Performance Review, the intensive. 6-month study of thefederal government that you requested, has completed its work. This reportrepresents the beginning of what must be. and with your leadershipwill be, a long-term commitment to change. The title of this report reflectsour goals: moving from red tape to results to create a government that worksbetter and costs less.

Many talented federal employees contributed to this report, bringingtheir experience and insight to a difficult and urgent task. We sought ideasand advice from all across America: from other federal workers, from stateand local government officials, from management experts, from businessleaders, and from private citizens eager for change. This report benefittedgreatly from their involvement, and we intend for them to benefit from thereforms we are proposing here.

It is your vision of a government that works for people, cleared ofuseless bureaucracy and waste and freed from red tape and senseless rules,that continues to be the catalyst for our efforts. We present this report to youconfident that it will provide an effective and innovative plan to make thatvision a reality.

Sincerely,

Al GoreVice President

a

CONTENTSPREFACEINTRODUCTION

Chapter 1 CUTTING RED TAPE 11

1

STEP I : STREAMLINING THE BUDGET PROCESS 14

STEP 2: DECENTRALIZING PERSONNEL POLICY 20

STEP 3: STREAMLINING PROCUREMENT 26STEP 4: REORIENTING THE INSPECTORS GENERAL 31

STEP 5: ELIMINATING REGULATORY OVERKILL 32STEP 6: EMPOWER STATE AND LOCAL GOVERNMENTS 35

CommusioN 41

Chapter 2 PUTTING CUSTOMERS FIRST 43

STEP 1: GIVING CUSTOMERS A VOICE-AND A CHOICE 44STEP 2: MAKING SERVICE ORGANIZATIONS COMPETE 54

STEP 3: CREATING MARKET DYNAMICS 60STEP 4: USING MARKET MECHANISMS To SOLVE PROBLEMS 62CONCLUSION 64

Chapter 3 EMPOWERING EMPLOYEES To GET RESULTS 65STEP 1: DECENTRALIZING DECISIONMAKING POWER 69STEP 2: HOLDING ALL FEDERAL EMPLOYEES ACCOUNTABLE FOR RESULTS 72STEP 3: GIVING FEDERAL WORKERS THE TOOLS THEY NEED To Do THEIR JOBS 77STEP 4: ENHANCING THE QUALITY OF WORK LIFE 84STEP 5: FORMING A LABOR-MANAGEMENT PARTNERSHIP 87STEP 6: EXERT LEADERSHIP 88

CONCLUSION 91

Chapter 4 CUTTING BACK TO BASICS 93

STEP 1: ELIMINATE WHAT WE DON'T NEED 94STEP 2: COLLECTING MORE 104

STEP 3: INVESTING IN GREATER PRODUCTIVITY 110STEP 4: REENGINEERING PROGRAMS To CUT COSTS 112

CONCLUSION 120

CONCLUSION 121

ENDNOTES 125

APPENDIX A: NATIONAL PERFORMANCE REVIEWMAJOR RECOMMENDATIONS BY AGENCY 133

APPENDIX B: NATIONAL PERFORMANCE REVIEW SUMMARY OF SAVINGS 155

APPENDIX C: NATIONAL PERFORMANCE REVIEWMAJOR RECOMMENDATIONS AFFECTING GOVERNMENTAL SYSTEMS 159

PREFACE

We can no longer afford to pay more forand get less fromour government. The answer forever), problem cannot always be another program or more money. It is time to radically

change the way the government operatesto shift fiom top-down bureaucracy to entrepreneurialgovernment that empowers citizens and communities to change our count-7y from the bottom up.

We must reward the people and ideas that work and get rid of those that don't.

The National PerformanceReview is about changehistoric changein theway the governmentworks. The Clintonadministration believes it is

time for a new customer service contractwith the American people, a new guaranteeof effective, efficient, and responsivegovernment. As our title makes clear, theNational Performance Review is aboutmoving from red tape to results to create agovernment that works better and costs less.

These are our twin missions: to makegovernment work better and cost less. ThePresident has already addressed the federaldeficit with the largest deficit reductionpackage in history. The NationalPerformance Review can reduce the deficitfurther, but it is not just about cuttingspending. It is also about closing the trustdeficit: proving to the American people thattheir tax dollars will be treated with respectfor the hard work that earned them. We aretaking action to put America's house inorder.

The National Performance Review beganon March 3, 1993, when President Clintonannounced a 6-month review of the federal

Bill Clinton and Al GorePutting People First'

government and asked me to lead theeffort. We organized a team of experiencedfederal employees from all corners of thegovernmenta marked change from pastefforts, which relied on outsiders.

We turned to the people who knowgovernment bestwho know what works,what doesn't, and how things ought to bechanged. We organized these people into aseries of teams, to examine both agenciesand cross-cutting systems, such asbudgeting, procurement, and personnel.The President also asked all cabinetmembers to create Reinvention Teams tolead transformations at their departments,and Reinvention Laboratories, to beginexperimenting with new ways of doingbusiness. Thousands of federal employeesjoined these two efforts.

But the National Performance Reviewdid not stop there. From the beginning, Iwanted to hear from as many Americans aspossible. I spoke with federal employees atevery major agency and at federal centersacross the countryseeking their ideas,their input, and their inspiration. I visitedprograms that work: a Miami school thatalso serves as a community center, aMinnesota pilot program that provides

I ROM RED l'APE TO R.SV.FS ( .10.A I I NG .1 GOVERNMEN rA WORKS BE rTER & Cos us LESS

r_rie'

4

benefits more efficiently by usingtechnology and debit cards, a Chicagoneighborhood that has put communitypolicing to work, a U.S. Air Force base thathas made quality management a way of life.

We also heard from citizens all acrossAmerica, in more than 30,000 letters andphone calls. We sought the views ofhundreds of different organizations, largeand small. We learned from the experienceof state and local leaders who haverestructured their organizations. And welistened to business leaders who have usedinnovative management practices to turntheir companies around.

At a national conference in Tennessee,we brought together experts to explore howbest to apply the principles of reinventinggovernment to improving family services.In Philadelphia's Independence Square,where our government was born, wegathered for a day-long "ReinventingGovernment Summit" with the best minds

ii

6,1644,...v 4.

IN

from business, government, and theacademic communit-y.

This report is the first product of ourefforts. It describes roughly 100 of our mostimportant actions and recommendations,while hundreds more are listed in theappendices at the end of this report. In thecoming months, we will publish additionalinformation providing more detail onthose recommendations.

This report represents the beginning ofwhat will bewhat must bean ongoingcommitment to change. It includes actionsthat will be taken now, by directive of thePresident; actions that will be taken by thecabinet secretaries and agency heads; andrecommendations for congressional action.

The National Performance Reviewfocused primarily on how governmentshould work, not on what it should do.Our job was to improve performance inareas where policymakers had alreadydecided government should play a role.

IQ

BEST COPY AVAILABLI.

PREFACE

We examined every cabinet departmentand 10 agencies. At two departments,Defense and Health and Human Services,our work paralleled other large-scale reviewsalready under way. Defense had launched aBottom-Up Review to meet the President's1994-1997 spending reduction target. Inaddition, comprehensive health and welfarereform task forces had been established tomake large-scale changes in significantparts of Health and Human Services.Nevertheless, we made additionalrecommendations regarding both thesedepartments and passed other findings onto the relevant task force for review.

The National Performance Reviewrecommendations, if enacted, wouldproduce savings of $108 billion over 5years. As the table below indicates, $36.4billion of these savings come from specific

changes proposed in the agencies anddepartments of the government.

We also expect that the reinventions wepropose will allow us to reduce the size ofthe civilian, non-postal workforce by 12percent over the next 5 years. This willbring the federal workforce below twomillion employees for the first time since1966. This reduction in the workforce willtotal 252,000 positions-152.000 over andabove the 100,000 already promised byPresident Clinton.

Most of the personnel reductions will beconcentrated in the structures of over-control and micromanagement that nowbind the federal government: supervisors,headquarters staffs, personnel specialists,budget analysts, procurement specialists,accountants, and auditors. These centralcontrol structures not only stifle the

Clinton/Gore NPR Savings(FY-1995-1999 $ in Billions)

AGENCIES 36.4

STREAMLINING THE BUREAUCRACY

THROUGH REENGINEERING

PROCUREMENT5% annual savings in totalprocurement spending

INFORMATION TECHNOLOGYSavings due to consolidation andmodernization of the informationinfrastructure

INTERGOVERNMENTALOffer fee-for-service option in lieuof existing administrative costs

40.4

22.5

5.4

3.3

TOTAL 108.0

(Fora fidler description see Appendix A and Appendix B.)

. 120%1 12! I) 1 1.1. 10 122-.SVI.IS CRLA N \ CIOV1 ItV11 111.11 WORKS BEFTLa & COS FS 1...LSS

creativity of line managers and workers,they consume billions per year in salary,benefits, and administrative costs.Additional personnel cuts will result as eachagency reengineers its basic work processesto achieve higher productivity at lowercostseliminating unnecessary layers ofmanagement and nonessential staff.

We will accomplish as much of this aspossible through attrition, early retirement,and a time-limited program of cashincentives to leave federal service. If anemployee whose job is eliminated cannottake early retirement and elects not to take acash incentive to leave government service,we will help that employee find another joboffer through out-placement assistance.

In addition to savings from the agenciesand savings in personnel we expect thatsystematic reform of the procurementprocess should reduce the cost of everythingthe government buys. Our antiquatedprocurement system costs the governmentin two ways: first, we pay for all thebureaucracy we have created to buy things,and second, manufacturers build the priceof dealing with this bureaucracy into theprices they charge us. If we reform theprocurement system, we should be able tosave $22 billion over 5 years.

As everyone knows, the computerrevolution allows us to do things fasterand more cheaply than we ever havebefore. Savings due to consolidation andmodernization of the informationinfrastructure amount to $5.4 billion over5 years.

Finally, by simplifying paperwork andreducing administrative costs, we expect tosave $3.3 billion over 5 years in the cost of

iv

administering grant programs to state andlocal governments.

Many of the spending cuts we proposecan be done by simplifying the internalorganization of our departments andagencies. Others will require legislation. Werecognize that there is broad support inCongress for both spending curs andgovernment reforms, and we look forwardto working with Congress to pass thispackage of recommendations. As PresidentClinton said when he announced theNational Performance Review:

This performance review is not aboutpolitics. Programs passed by bothDemocratic presidents and Republicanpresidents, voted on by members ofCongress of both parties, and supportedby the American people at the time, arebeing undermined by an inefficient andoutdated bureaucracy, and by our hugedebt. For too long the basic functioningof the government has gone unexamined.We want to make improving the waygovernment does business a permanentpart of how government works, regardlessof which party is in power.

We have not a moment to lose. PresidentKennedy once told a story about a Frenchgeneral who asked his gardener to plant atree. "Oh, this tree grows slowly," thegardener said. "It won't mature for ahundred years."

"Then there's no time to lose," thegeneral answered. "Plant it this afternoon."

i 0

Al GoreVice President of the United States

INTRODUCTION

Our goal is to make the entire federal government both less expensive and more efficientand to change the culture of our national bureaucracy away from complacencyand entitlement touard initiative and empowerment. 1.1"-i, intend to redesign,

to reinvent, to reinvigorate the entire national government."

President Bill ClintonRemarks announcing the National Performance Review

March 3, 1993

public confidence in thefederal government has neverbeen lower. The averageAmerican believes we waste48 cents of every tax dollar.Five of every six want

"fundamental change" in Washington.Only 20 percent of Americans trust thefederal government to do the right thingmost of the timedown from 76 percent30 years ago.'

We all know why. Washington's failuresare large and obvious. For a decade, thedeficit has run out of control. The nationaldebt now exceeds $4 trillionS16,600 forevery man, woman, and child in America.

But the deficit is only the tip of theiceberg. Below the surface, Americansbelieve, lies enormous unseen waste. TheDefense Department owns more than $40billion in unnecessary supplies.2 TheInternal Revenue Service struggles to collectbillions in unpaid hills. A century afterindustry replaced farming as America'sprincipal business, the AgricultureDepartment still operates more than 12,000Field service offices, an average of nearly 4for every county in the nationrural,urban, or suburban. The federalgovernment seems unable to abandon the

obsolete. It knows how to add, but nor tosubtract.

And yet, waste is not the only problem.The federal government is not simplybroke; it is broken. Ineffective regulation ofthe financial industry brought us the savingsand loan debacle. Ineffective ed'ication andtraining programs jeopardize ourcompetitive edge. Ineffective welfare andhousing programs undermine our familiesand cities.

We spend $25 billion a year on welfare,$27 billion on food stamps, and $13 billionon public housingyet more Americansfall into poverty every year.; We spend $12billion a year waging war on drugsyet seefew signs of victory. We fund 150 differentemployment and training programsyetthe average American has no idea where toget job training, and the skills of ourworkforce fall further behind those ofourcompetitors.1

It is almost as if federal programs weredesigned not to work. In truth, few are"designed" at all; the legislative processsimply churns them out, one after another,year after year. It's little wonder that whenasked if "government always manages tomess things up," two-thirds of Americans

,,5say yes.

11

FROM RED CAPE TO RESULTS CREATING A GOVERNMENT THAr WORKS BE FTFR & COSI s LLSS

To borrow the words of a recentBrookings Institution book, we suffer notonly a budget deficit but a performancedeficit.° Indeed, public opinion expertsargue that we are suffering the deepest crisisof faith in government in our lifetimes. Inpast crisesWatergate or the Vietnam \Var,for exampleAmericans doubted theirleaders on moral or ideological grounds.They felt their government was deceivingthem or failing to represent their values.Today's crisis is different: people simply feelthat government doesn't work.-

In Washington, debate rarely focuses onthe performance deficit. Our leaders spendmost of their time debating policy issues.But if the vehicle designed to carry outpolicy is broken, new policies won't take usanywhere. If the car won't run, it hardlymatters where we point it: we won't getthere. Today, the central issue we face is notwhat government does, but how it works.

We need a federal government that delivers

more for less. We need a federal government

that treats its taxpayers as if they were

cu tomers and treats taxpayer dollars with

respect fir the sweat and sacrifice that earned

them.

Vice President Al GoreMay 24, 1993

We have spent too much money forprograms that don't work. It's time to makeour government work for the people, learnto do more with less, and treat taxpayers likecustomers.

President Clinton created the NationalPerformance Review to do just that. Inthis report we make hundreds ofrecommendations for actions that, ifimplemented, will revolutionize the waythe federal government does business.They will reduce waste, eliminateunneeded bureaucracy, improve service to

taxpayers, and create a leaner but moreproductive government. As noted in thepreface, they can save S108 billion over 5years if those which will be enacted by thePresident and his cabinet are added to thosewe propose for enactment by Congress.Some of these proposals can be enacted bythe President and his cabinet, others willrequire legislative action. We are going tofight for these changes. We .ire determinedto create a government that works betterand costs less.

A Cure Worse Than The Disease

Government is not alone in its troubles.As the Industrial Era has given Nvay to theInformation Age, institutionsboth publicand privatehave come face to face withobsolescence. The past decade has witnessedprofound restructuring: In the 1980s, majorAmerican corporations reinventedthemselves: in the 1990s, governments arestruggling to do the same.

In recent Years, our national leadersresponded to the growing crisis withtraditional medicine. They blamed thebureaucrats. They railed against "fraud,waste, and abuse." And they slapped evermore controls on the bureaucracy toprevent it.

But the cure has become indistinguish-able from the disease. The problem is notlazy or incompetent people: it is red tapeand regulation so suffocating that they stifleevery ounce of creativity. No one wouldoffer a drowning man a drink of water. Andyet, for more than a decade, we have addedred tape to a system already strangling in it.

The fedeial crovernment is filled withgood people trapped in bad systems: budgetsystems, personnel systems, procurementsystems. financial management systems,information systems. When we blame thepeople and impose more controls, we makethe systems worse. Over the past 15 Years,for example, Congress has created withineach agency an independent office of theinspector general. The idea was to root outfraud, waste, and abuse. The inspectors

12

general have certainly uncovered importantproblems. But as we learned in conversationafter conversation, they have so intimidatedfederal employees that many are now afraidto deviate even slightly from standardoperating procedure.

'.'et innovation, by its nature, requiresdeviation. Unfortunately, faced with somany controls, many employees havesimply given up. They do everything by thebook whether it makes sense or not. Theyfill out forms that should never have beencreated, follow rules that should never havebeen imposed, and prepare reports thatserve no purposeand are often never evenread. In the name of controlling waste, wehave created paralyzing inefficienc-y. It's timewe found a way to get rid of waste andencourage efficiency.

The Root Problem:Industrial-Era Bureaucraciesin an Information Age

Is government inherently incompetent?Absolutely not. Are federal agencies filledwith incompetent people? No. Theproblem is much deeper: Washington isfilled with organizations designed fo:- anenvironment that no longer existsbureaucracies so big and wasteful they canno longer serve the American people.

From the 1930s through the 1960s,we built large, top-down, centralizedbureaucracies to do the public's business.They were patterned after the corporatestructures of the as hierarchicalbureaucracies in which tasks were brokeninto simple parts, each the responsibility ofa different layer of employees, each definedby specific rules and regulations. Withtheir rigid preoccupation with standardoperating procedure, their vertical chains ofcommand, and their standardized services,these bureaucracies were steadybut slowand cumbersome. And in today's world ofrapid change, lightning-quick informationtechnologies, tough global competition, anddemanding customers, large, top-downbureaucraciespublic or privatedon't

INTRODUCTION

Our people, ofcourse, work hard fir their

money.... They want quality in the cars they

buy They want quality in their local Thoth.And they want quality in their federalgovernment and in federal programs.

Senator John GlennRemarks introducing a hearing

on federal planning and performanceMay 5, 1992

work very well. Saturn isn't run the wayGeneral Motors was. Intel isn't run the wayIBM was.

Many federal organizations are alsomonopolies, with few incentives to innovateor improve. Employees have virtual lifetimetenure, regardless of their performance.Success offers few rewards; failure, fewpenalties. And customers are captive; theycan't walk away from the air traffic controlsystem or the Internal Revenue Service andsign up with a competitor. Worse, mostfederal monopolies receive their moneywithout any direct input from theircustomers. Consequently, they try a lotharder to please Congressional appropri-ations subcommittees than the people theyare meant to serve. Taxpayers pay morethan they should and get poorer service.

Politics intensifies the problem. InWashington's highly politicized world, thegreatest risk is not that a program willperform poorly, but that a scandal willerupt. Scandals are front-page news, whileroutine failure is ignored. Hence controlsystem after control system is piled upto minimize the risk of scandal. Thebudget system, the personnel rules, theprocurement process, the inspectorsgeneralall are designed to prevent thetiniest misstep. We assume that we can'ttrust employees to make decisions, so wespell out in precise detail how they must dovirtually everything, then audit them toensure that they have obeyed even rule.

13 3

4

FROM REo FARE To RESUI, IS CRI.A I IVc. \ (3U \ I RN \11.N r \X'oIths & cos rs Liss

uring Y4 Presi dent Gore's town hall meeting

L. .employees of the Department of Housing,

and Urban Dt-velopment (HUD), the following

exchange'tOO161aCei.:- !':'

Pirticia had an article in our newsletter

mj ago, iatsai4 the lead story was "Pd

rather have aldietomy than. have another idea. "And

that war relecting the problem of our Ideas Program

hen, in HUD.

Many of the employees have wonderful ideas about

how to save money and so on, but the way it works is

that it has to be approved by the supervisor and the

supervisor} supervisor and the supervisors supervisor's

supervisor before it ever gets to the Ideas Program ...

Many of the supervisors feel threatened because they

didn't think of this idea, and this money is wasted in

their office, and they didn't believe or didn't know it was

happening and didn't catch it. So they are threatened

and fiel that it will make them look bad i f they

recognize the idea.

Vice President Gore: So they strangle that idea in

the crib, don't they?

Participant: And then they strangle the person that

had the idea.

The slightest deviation prompts newregulations and even more audits.

Before long, simple procedures are toocomplex for employees to navigate, so wehire more budget analysts, more personnelexperts, and more procurement officers tomake things work. By then, the processinvolves so much red tape that the smallestaction takes far longer and costs far morethan it should. Simple travel arrangementsrequire endless forms and numeroussignatures. Straightforward purchases takemonths; larger ones take years. Routineprinting jobs take a dozen approvals.

This emphasis on process steals resourcesfrom the real job: serving the customer.

14

Indeed, the federal government spendsbillions of dollars paying people whocontrol, check up on, or investigateotherssupervisors, headquarters staffs,budget officers, personnel officers,procurement officers, and staffs of theGeneral Accounting Office (GAO) and theinspectors general.' Not all this money iswasted, of course. But the real waste is nodoubt larger, because the endless regulationsand layers of control consume everyemployee's time. Who pays? The taxpayer.

Consider but one example, shared withVice President Gore at a meeting of federalemployees in Atlanta. After federal marshalsseize drug dealers' homes, they are allowedto sell them and use the money to helpfinance the war on drugs. To sell the houses,they must keep them presentable, whichincludes keeping the lawns mowed.

In Atlanta, the employee explained, mostorganizations would hire neighborhoodteenagers to mow a lawn for $10. Butprocurement regulations require the U.S.Marshals Service to bid out all workcompetitively, and neighborhood teenagersdon't compete for contracts. So the federalgovernment pays $40 a lawn to professionallandscape firms. Regulations designed tosave money waste it, because they takedecisions out of the hands of thoseresponsible for doing the work. Andtaxpayers lose $30 for every lawn mowed.

What would happen if the marshalsused their common sense and hiredneighborhood teenagers? Someone wouldnoticeperhaps the Washington office,perhaps the inspector general's office,perhaps even the GAO. An investigationmight well followhindering a career ordamaging a reputation.

In this way, federal employees quicklylearn that common sense is riskyandcreativity is downright dangerous. Theylearn that the goal is not to produce results,please customers, or save taxpayers' money,but to avoid mistakes. Those who dare toinnovate do so quietly.

This is perhaps the saddest lesson learnedby those who worked on the NationalPerformance Review: Yes, innovators exist

within the federal government, but manywork hard to keep their innovations quiet.By its nature, innovation requires adeparture from standard operatingprocedure. In the federal government, suchdepartures invite repercussions.

The result is a culture of fear andresignation. To survive, employees keep alow profile. They decide that the safest,answer in any given situation is a firm"maybe." They follow the rules, pass thebuck, and keep their heads down. Theydevelop what one employee, speaking withVice President Gore at a Department ofVeterans Affairs meeting, called "agovernment attitude."

The Solution: CreatingEntrepreneurial Organizations

How do we solve these problems% Itwon't be easy. We know all aboutgovernment's problems, but little aboutsolutions. The National PerformanceReview began by compiling acomprehensive list of problems. We had theGAO's 28-volume report on federalmanagement problems, published last fall.We had GAO's High-Risk Series, a 17-volume series of pamphlets on troubledprograms and agencies. We had the HouseGovernment Operations Committee'sreport on federal mismanagement, calledManaging the Federal Government: A Decadeof Decline. And we had 83 notebookssummarizing just the tables of contents ofreports published by the inspectors general,the Congressional Budget Office, theagencies, and think tanks.

Unfortunately, few of these studieshelped us design solutions. Few of theinvestigating bodies had studied successstoriesorganizations that had solved theirproblems. And without studying success, itis hard to devise real solutions. For years, thefederal government has studied failure, andfor years, failure has endured. Six of everyten major agencies have programs on theOffice of Management and Budget's "high-risk" list, meaning they carry a significant

INTRODUCTION

risk of runaway spending or fraud.The National Performance Review

approached its task differently. Not only didwe look for potential savings andefficiencies, we searched for success. Welooked for organizations that producedresults, satisfied customers, and increasedproductivity. We looked for organizationsthat constantly learned, innovated, andimproved. We looked for effective,entrepreneurial public organizations. Andwe found them: in local government, instate government, in other countriesandright here in our federal government.

At the Air Combat Command, forexample, we found units that had doubledtheir productivity in 5 years. Why?Because the command measuredperformance everywhere; squadrons andbases competed proudly for the bestmaintenance, flight, and safety records; andtop management had empoweredemployees to strip away red tape andredesign work processes. A supply systemthat had once required 243 entries by 22people on 13 forms to get one spare partinto an F-15 had been radically simplifiedand decentralized. Teams of employees weresaving millions of dollars by moving supplyoperations to the front line, developing theirown flight schedules, and repairing partsthat were once discarded.`'

At the Internal Revenue Service, wefound tax return centers competing for thebest productivity records. Performance onkey customer service criteriasuch as theaccuracy of answers provided totaxpayershad improved dramatically.Utah's Ogden Service Center, to cite butone example, had more than 50"productivity improvement teams"simplifying forms and reengineering workprocesses. Not only had employees savedmore than $11 million, they had won the1992 Presidential Award for Quality.'"

At the Forest Service, we found a pilotproject in the 22-state Eastern Region thathad increased productivity by 15 percent injust 2 years. The region had simplified itsbudget systems, eliminated layers of middlemanagement, pared central headquarters

15 5

FROM RED TAPE TO RESL tars CREATING A GOVERNMENT rnA r WORKS BET1 rR & COS FS LESS

6

Americans voted fir a change last November.

They want better schools and health e andbetter roads and more jobs, but they want us

to do it all with a government thatworks

better on less money and that is more

responsive.

..1111Yabl&A

President Bill ClintonRemarks announcing the

National Performance ReviewMarch 3, 1993

staff by a fifth, and empowered front-lineemployees to make their own decisions. Atthe Mark Twain National Forest, forinstance, the time needed to grant a grazingpermit had shrunk from 30 days to a fewhoursbecause employees could grantpermits themselves rather than process themthrough headquarters)

We discovered that several othergovernments were also reinventingthemselves, from Australia to Great Britain.Singapore to Sweden, the Netherlands toNew Zealand. Throughout the developedworld, the needs of information-agesocieties were colliding with the limits ofindustrial-era government. Regardless ofparty, regardless of ideology, thesegovernments were responding. In GreatBritain, conservatives led the way. In NewZealand, the Labor Party revolutionized

government. In Australia and Sweden, bothconservative and liberal parties embracedfundamental change.

In the United States, we found the samephenomenon at the state and local levels.The movement to reinvent government is asbipartisan as it is widespread. It is driven notby political ideology, but by absolutenecessity. Governors, mayors, and legislatorsof both parties have reached the sameconclusion: Government is broken, and it istime t) fix it.

Where we found success, we found manycommon characteristics. Early on, we

-.212.411EamaTaie.A.../.12th:ssba-Its -:Llr_44.aalligiv

articulated these in a one-page statement ofour commitment. In organizing this report,we have boiled these characteristics down tofour key principles.

1. Cutting Red Tape

Effective, entrepreneurial governmentscast aside red tape, shifting from systems inwhich people are accountable for followingrules to systems in which they areaccountable for achieving results. Theystreamline their budget, personnel, andprocurement systemsliberatingorganizations to pursue their missions.They reorient their control systems toprevent problems rather than simplypunish those who make mistakes. Theystrip away unnecessary layers of regulationthat stifle innovation. And they deregulateorganizations that depend upon them forfunding, such as lower levels ofgovernment.

2. Putting Customers First

Effective, entrepreneurial governmentsinsist on customer satisfaction. They listencarefully to their customersusing surveys,focus groups, and the like. They restructuretheir basic operations to meet customers'needs. And they use market dynamics suchas competition and customer choice tocreate incentives that drive their employeesto put customers first.

By "customer," we do not mean "citizen."A citizen can participate in democraticdecisionmaking; a customer receivesbenefits from a specific service. AllAmericans are citizens. Most are alsocustomers: of the U.S. Postal Service, theSocial Security Administration, theDepartment of Veterans Affairs, theNational Park Service, and scores of otherfederal organizations.

In a democracy, citizens and customersboth matter. But when they vote, citizensseldom have much chance to influence thebehavior of public institutions that directlyaffect their lives: schools, hospitals, farmservice agencies, social security offices. It is a

16

sad irony: citizens own their government,but private businesses they do not ownwork much harder to cater to their needs.

3. Empowering Employees to Get Results

Effective, entrepreneurial governmentstransform their cultures by decentralizingauthority. They empower those who workon the front lines to make more of theirown decisions and solve more of theirown problems. They embrace labor-management cooperation, provide trainingand other tools employees need to beeffective, and humanize the workplace.While stripping away layers andempowering front-line employees, theyhold organizations accountable forproducing results.

4. Cutting Back to Basics: ProducingBetter Government for Less

Effective, entrepreneurial governmentsconstantly find ways to make governmentwork better and cost lessreengineeringhow they do their work and reexaminingprograms and processes. They abandon theobsolete, eliminate duplication, and endspecial interest privileges. They invest ingreater productivity, through loan fundsand long-term capital investments. Andthey embrace advanced technologies to cutcosts.

These are the bedrock principles onwhich the reinvention of the federalbureaucracy must buildand the principlesaround which we have organized ouractions. They fit together much like thepieces of a puzzle: if one is missing. theothers lose their power. To createorganizations that deliver value to Americantaxpayers, we must embrace all four.

Our approach goes far beyond fixingspecific problems in specific agencies.Piecemeal efforts have been under way foryears, but they have not delivered whatAmericans demand. The failure inWashington is embedded in the very systemsby which we organize the federalbureaucracy. In recent years, Congress has

INTRODUCTION

Principles of the NationalPerformance Review

..,.wpwill invent a government that puts people

VII P14 by:CuiiiniUtineCessary spending

Serving its customers

Empowering its employees

Helping communities solve their

own problems

Fostering excellence

Here's how. We will.

Create a clear sense of mission

Steer more, row less

Delegate authority and responsibility

' Replace regulations with incentivesDevelop budgets based on outcomes

Expose federal operations to competition

j-Ser.011'fOr mar ket, tiOi'aAridnistrative,

-solutions

Measure our success by customer satisfaction

taken the lead in reinventing these systems.In 1990, it passed the Chief FinancialOfficers Act, designed to overhaul financialmanagement systems; in July 1993, it passedthe Government Performance and ResultsAct, which will introduce performancemeasurement throughout the federalgovernment. With Congress's leadership, wehope to reinvent government's other basicsystems, such as budget, personnel,information, and procurement.

Our approach has much in commonwith other management philosophies, suchas quality management and business processreengineering. But these managementdisciplines were developed for the privatesector, where conditions are quite different.In business, red tape may be bad, but itis not the suffocating presence it is in

RON.1 RFD I'VE to RI.SUI FS CRi A tl \ Govt RNMEN HIA I WORKS tT1.12 & CUSP; Li.ss

government. In business, market incentivesalready exist; no one need invent them.Powerful incentives are always at work,forcing organizations to do more with less.Indeed, businesses that fail to increase theirproductivityor that tie themselves up inred tapeshrink or die. Hence, privatesector management doctrines tend tooverlook some central problems ofgovernment: its monopolies. its lack of abottom line, its obsession with processrather than results. Consequently, ourapproach goes beyond private sectormethods. It is aimed at the heart and soulof government.

The National Performance Review alsoshares certain goals with past efforts to cutcosts in government. But our mission goesbeyond cost-cutting. Our goal is not simplyto weed the federal garden; it is to create aregimen that will keep the garden free ofweeds. It is not simply to trim pieces ofgovernment, but to reinvent the waygovernment does everything. It is notsimply to produce a more efficientgovernment, but CO create a more effective

one. After all, Americans don't want agovernment that fails more efficiently. Theywant a government that works.

To deliver what the people want, we neednot jettison the traditional values thatunderlie democratic governancevaluessuch as equal opportunity, justice. diversity,and democracy. We hold these values dear.We seek to transform bureaucraciesprecisely because they have failed to nurturethese values. We believe that those whoresist change for fear of jeopardizing ourdemocratic values doom us to a governmentthat continuesthrough its failurestosubvert those very values.

Our Commitment: A Long-TermInvestment in Change

This is not the first time Americans havefelt compelled to reinvent their government.In 1776, our founding fathers rejected theold model of a central power issuing edictsfor all to obey. In its place, they created a

8

government that broadly distributed power.Their vision of democracy, which gavecitizens a voice in managing the UnitedStates, was untried and untested in 1776.It required a tremendous leap of faith.But it worked.

Later generations extended thisexperiment in democracy to those not yetenfranchised. As the 20th century dawned,a generation of "Progressives" such as TeddyRoosevelt and Woodrow Wilson inventedthe modern bureaucratic state, designedto meet the needs of a new industrialsociety. Franklin Roosevelt brought it tofull flower. Indeed, Roosevelt's 1937announcement of his Committee onAdministrative Management sounds as ifit were written only yesterday:

The time has come to set our house inorder. The administrative managementof the government needs overhauling.The executive structure of the

government is sadly out of date .... If wehave faith in our republican form ofgovernment ... we must devote ourselvesenergetically and courageously to the taskof making that government efficient.

Through the ages, public managementhas tended to follow the prevailingparadigm of private management. The1930s were no exception. Roosevelt'scommitteeand the two Hoovercommissions that followedrecommendeda structure patterned largely after those ofcorporate America in the 1930s. In a sense,they brought to government the GM modelof organization.

By the 1980s, even GM recognized thatthis model no longer worked. When itcreated Saturn, its first new division in 67years. GM embraced a very different model.It picked its best and brightest and askedthem to create a more entrepreneurialorganization, with fewer layers, fewer rules,and employees empowered to do whateverwas necessary to satisfy the customer. Facedwith the very real threat of bankruptcy,major American corporations haverevolutionized the way they do business.

18

Confronted with our twin budget andperformance deficitswhich so underminepublic trust in governmentPresidentClinton intends to do the same thing. Hedid not staff the Performance Reviewprimarily with outside consultants orcorporate experts, as past presidents have.Instead, he chose federal employees to takethe lead. They consulted with experts fromstate government, local government, andthe private sector. But as Vice PresidentGore said over and over at his meetings withfederal employees: "The people who workclosest to the problem know the most abouthow to solve the problem.

Nor did the effort stop with the menand women who staffed the PerformanceReview. President Clinton asked even,cabinet member to create a ReinventionTeam to redesign his or her department.and Reinvention Laboratories to beginexperimenting immediately. Since April,people all across our government have beenworking full time to reinvent the federalbureaucracy.

The process is not easy, nor will it bequick. There are changes we can makeimmediatek% but even if all of our recom-mendations are enacted, we will have onlybegun to reinvent the federal government.Our efforts are but a down paymentthefirst installment of a long-term investment inchange. Even' expert with whom we talkedreminded us that change takes time. In alarge corporation, transformation takes 6 to 8rars at best. In the federal government,which has more than 7 times as manyemployees as Amends largest corporation, itwill undoubtedly take longer to bring aboutthe historic changes we propose.'

Along the WM', we will make mistakes.Some reforms will succeed beyond ourwildest dreams; others will not. As in anyexperimental process. we will need tomonitor results and correct as we go. But wemust not confuse mistakes with failure. AsTom Peters and Robert Waterman wrote in

,S'earch o/ any organization thatis not making mistakes is not trying hardenough. Babe Ruth, the Sultan of Swat,struck out 1.330 times.

INTRODUCTION

I would invite those who are cynical about the

possibility of this change to ask themselves this

question: What would your reaction have

been 10 years ago if someone had said that in

the summer of 1993 American automobilecompanies would be making the highest qua4most competitively priced cars in

the world?

I know my reaction would have been, "No

way I am sorry but I've bought too manyclunkers. They can't do it. The momentum

toward mediocrity is just too powerfitl."

But that change has taken place. And i f an

industry as large and as stodgy as the automobile

industry can undergo that kind oftransformation, then the federal government canas well.

Vice President Al GoreTown Hall Meeting,

Department of EnergyJuly 13, 1993

With this report, then, we begin adecade-long process of reinvention. Wehope this process will involve not only thethousands of federal employees now at workon Reinvention Teams and in ReinventionLabs, but millions more who are not vetengaged. We hope it will transform thehabits, culture, and performance of allfederal organizations.

Some may say that the task is too large;that we should not attempt it because weare bound to make mistakes; that it cannotbe done. But we have no choice. Ourgovernment is in trouble. It has lost its senseof mission; it has lost its ethic of publicservice; and, most importantly, it has lostthe faith of the American people.

In times such as these, the mostdangerous course is to do nothing. We musthave the courage to risk change.

13

Chapter 1

CUTTING RED TAPE

About 10 years ago, two foresters returned from a hard day in thefield to make plans for the coming week. Searching for a detail of ageacythey found themselves overwhelmed by voluminous editions of policy manuals,

reports, and binders filled with thousands of directives. One forester recalled the very firstForest Service manualsmall enough to fit into every ranger's shirt pocket, yet

containing everything firesters needed to know to do their jobs.

"Why is it that when we have a problem, 'the other fo. rester asked "the solution is always to addsomething at report, a system, a policybut never take something away?"

The first replied: "What if . . we could just start over?"

The federal governmentdoes at least one thingwell: It generates red tape.But not one inch of thatred tape appears bvaccident. In fact, the

government creates it all with the best ofintentions. It is time now to put aside ourreverence for those good intentions andexamine what they have createdasystem that makes it hard for our civilservants to do what we pay them for, andfrustrates taxpayers who rightfully expecttheir money's worth.

Because we don't want politicians'families, friends, and supporters placed in"no-show" jobs, we have more than100,000 pages of personnel rules andregulations defining in exquisite detail howto hire, promote, or fire federal employees.'Because we don't want employees or privatecompanies profiteering from federalcontracts, we create procurement processesthat r...quire endless signatures and longmonths to buy almost anything. Because wedon't want agencies using tax dollars for any

unapproved purpose, we dictate preciselyhow much they can spend on everythingfrom staff to telephones to travel.

And because we don't want state andlocal governments using federal funds forpurposes that Congress did not intend, wewrite regulations telling them exactly howto run most programs that receive federalfunds. We call for their partnership indealing with our country's most urgentdomestic problems, yet we do not treatthem as equal partners.

Consider some examples from the dailylives of federal workers, people for whomred tape means being unable to do theirjobs as well as they canor as well as wedeserve.

The district managers of Oregon'smillion-acre Ochoco National Forest have53 separate budgetsone for fencemaintenance, one for fence construction,one for brush burningdivided into 557management codes and 1,769 accountinglines. To transfer money between accounts,they need approval from headquarters.They estimate the task of tracking spending

40 11

12

I ROM RI I) I OF FO RESUI FS CRI AFING GOVI- RNMI-A I 111.1r WORKS BETTLR & COS IS LASS

in each account consumes at least 30 daysof their time every year, days they couldspend doing their real jobs.3 It also sends amessage: You are not trusted with even thesimplest responsibilities.

Or consider the federal employees whorepair cars and trucks at naval bases. Eachtime they need a spare part, they order itthrough a central purchasing officeaprocedure that can keep vehicles in the shopfor a month. This keeps one-tenth of thefleet out of commission, so the Navy buys10 percent more vehicles than it needs..'

Or how about the new EnergyDepartment petroleum engineer whorequested a specific kind of calculator to doher job? Three months later, she received anadding machine. Six months after that, theprocurement office got her a calculatoratiny, hand-held model that could notperform the complex calculations her workrequired. Disgusted, she bought her own.'

Federal managers read the same booksand attend the same conferences as privatesector managers. They know what goodmanagement looks like. They just can't putit into practicebecause they faceconstraints few managers in the privatesector could imagine.

Hamstrung by rules and regulations,federal managers simply do not have thepower to shape their organizations enjoyed

Never tell people how to do things. Tell them

what you want to achieve, and they will

surprise you with their ingenuity.

General George S. Patton1944

by private sector managers. Their job is tomake sure that every dollar is spent in thebudget category and the Year for which itwas appropriated, that ever' promotion isconsistent with central guidelines, and that

;cry piece of equipment is bought throughcompetitive bidding. In an age of personal

21

computers. they are asked to write withquill pens.

This thicket of rules and regulations haslayer upon laver of additional oversight.Each new procedure necessitates someone'sapproval. The result is fewer people doingreal work, more people getting in their way.As management sage Peter Drucker oncesaid, "So much of what we callmanagement consists of making it difficultfor people to work. "`'

As Robert Tobias, president of theNational Treasury Employees Union, toldparticipants at the Philadelphia Summit onReinventing Government, "The regulationsand statutes that bind federal employeesfrom exercising discretion available in theprivate sector all come about as a responseto the humiliations, mistakes,embarrassments of the past." Even though,as Tobias noted, "those problems are 15, 20,30 years old," and "the regulations and thestatutes don't change." The need to enforcethe regulations and statutes, in turn, createsneedless layers of bureaucracy.

The layers begin with "staff" agencies,such as the General Services Administration(GSA) and the Office of PersonnelManagement (OPM). These staff agencieswere designed originally to providespecialized support for "line" agencies,such as the Interior and CommerceDepartments, that do government's realwork. But as rules and regulations began toproliferate, support turned into control.The Office of Management and Budget(OMB) which serves the President in thebudget process, runs more than 50compliance, clearance, and review processes.Some of this review is necessary to ensurebudget control and consistency of agencyactionswith each other and with thePresident's program hut much of it isoverkill.

Line agencies then wrap themselves ineven more red tape by creating their ownbudget offices, personnel offices, andprocurement offices. Largely in response toappropriations committees, budget officesdivide congressional budgets intoincreasingly tiny line items. A few years ago,

for example, base managers in one branchof the military had 26 line items forhousing repairs alone. Personnel offices tellmanagers when they can and cannotpromote, reward, or move employees. Andprocurement offices force managers to buythrough a central monopulv, precludingagencies from getting what they need. whenthey need it.

What the staff agencies don't control.Congress does. Congressionalappropriations often come with hundredsof strings attached. The InteriorDepartment found that language in its1992 House. Senate. and conferencecommittee reports included some 2.150directives, earmarks, instructions. indprohibitions.' As the federal budgettightens, lawmakers request increasinglyspecific report language to protect activitiesin their districts. Indeed, 1993 was arecord year for such requests. In oneappropriations bill alone, senators requiredthe U.S. Customs Service to add newemployees to its Honolulu office,prohibited closing any small or rural postoffice or U.S. Forest Service offices: andforbade the U.S. Mint and the Bureau ofEngraving and Printing from even studyingthe idea of contracting out guard duties.

Even worse, Congress often gives a singleagency multiple missions, some of whichare contradictory. The Agency forInternational Development has more than40 different objectives: Congress wants it todispose of American farm surpluses, builddemocratic institutions, even strengthen theAmerican land grant college system.' Nowonder it has trouble accomplishing its realmissionpromoting internationaldevelopment.

In Wishington, we must work togetherto untangle the knots of red tape thatprevent government from serving theAmerican people well. We must givecabinet secretaries, program directors andline managers much greater authority topursue their real purposes.

As Theodore Roosevelt said: "The bestexecutive is the one who has the sense topick good men [sic] to do what he wants

CUTTING RED TAPE.

done, and self-restraint enough to keepfrom meddling with them while they do it."

Our path is clear: We must shift fromsystems that hold people accountable forprocess to systems that hold themaccountable for results. We discussaccountability for results in chapter 3. Inthis chapter, we focus on six steps necessaryto strip away the red tape that so engulfs ourfederal employees and frustrates theAmerican people.

First, we will streamline the budgetprocess, to remove the manifold restrictionsthat consume managers' time and literallyforce them to waste money.

.Cecond, we will decentralize personnelpolicy, to give managers the tools they needto manage effectivelythe authority tohire, promote. reward, and fire.

Third, we will streamline procurement,to reduce the enormous waste built into theprocess we use to buy S200 billion a year ingoods and services.

Fourth, we will reorient the inspectorsgeneral, to shift their focus from punishingthose who violate rules and regulations tohelping agencies learn to perform better.

Fifth, we will eliminate thousands ofother regulations that hamstring federalemployees, to cut the final Lilliputian ropeson the federal giant.

Finally, we will deregulate state and localgovernments, to empower them to spendmore time meeting customer needsparticularly with their 600 federal grantprogramsand less time jumping throughbureaucratic hoops.

As we pare down the systems of over-control and micromanagement ingovernment, we must also pare down thestructures that go with them: the oversizedheadquarters, multiple layers of supervisorsand auditors, and offices specializing in thearcane rules of budgedng, personnel,procurement, and finance. We cannotentirely do without headquarters,supervisors, auditors, or specialists, but thesestructures have grown twice as large as theyshould be.

Counting all personnel, budget,procurement, accounting, auditing. and

22 1 si

14

FROM RED TAPE TO RESULTS CREATING A G.-VERNMENT THAT WORKS BETTER & COSTS LESS

headquarters staff, plus supervisorypersonnel in field offices, there are roughly700,000 federal employees whose job it is tomanage, control, check up on or auditothers.''' This is one third of all federalcivilian employees.

Not counting the suffocating impactthese management control structures haveon line managers and workers, theyconsume $35 billion a year in salary andbenefits alone." If Congress enacts themanagement reforms outlined in this report,we will dramatically cut the cost of thesestructures. We will reinvest some of thesavings in the new management tools weneed, including performance measurement,quality management, and training. Overall,these reforms will result in the netelimination of approximately 252,000positions. (This will include the 100,000position reduction the President has alreadyset in motion.)

A reduction of 252,000 positions willreduce the civilian, non-postal work forceby almost 12 percentbringing it belowtwo million for the first time since 1966.'2

This reduction, targeted at the structuresof control and micromanagement, isdesigned to improve working conditions forthe average federal employee. We cannotempower employees to give us their bestwork unless we eliminate much of the redtape that now prevents it. We will doeverything in the government's power toease the tr nsition for workers, whether theychoose to stay with government, retire, ormove to the private sector.

Our commitment is this: If an employeewhose job is eliminated cannot retire through

our early retirement program, and does notelect to take a cash incentive to leavegovernment service, we will help that employeefind another job offer, either with governmentor in the private sector.

Normal attrition will contribute to thereduction. In addition, we will introducelegislation to permit all agencies to offercash payments to those who leave federalservice voluntarily, whether by retirement orresignation. The Department of Defense(DOD) and intelligence communityalready have this "buy-out" authority; wewill ask Congress to extend it to all agencies.We will also give agencies broad authorityto offer early retirement and to expand theirretraining, out-placement efforts, and othertools as necessary to accomplish the 12%reduction. Agencies will be able to use thesetools as long as they meet their costreduction targets.

These options will give federal managersthe same tools commonly used to downsizeprivate businesses. Even with theseinvestments, the downsizing we proposewill save the taxpayer billions over the next5 years.

None of this will be easy. Downsizingnever is. But the result will not only be asmaller workforce, it will also be a moreempowered, more inspired, and moreproductive workforce.

As one federal employee told VicePresident Gore at one of his many townmeetings, "If you always do what you'vealways done, you'll always get what youalways got." We can no longer afford to getwhat we've always got.

STEP 1: STREAMLINING THE BUDGET PROCESS

Most people can't get excited aboutthe federal budget process, withits green-eyeshade analysts,

complicated procedures, byzantinelanguage, and reams of minutiae. Beyondsuch elements, however, lies a basic,unalterable reality. For organizations of allkinds, nothing is more important than the

23

process of resource allocation: how muchmoney they have, what strings are attachedto it, and what hurdles are placed beforemanagers who must spend it.

In government, budgeting is never easyAfter all, the budget is the most political ofdocuments. If as the political scientistHarold D. Lasswell once said, politics is"who gets what, when, how," the budget

answers that question." By crafting abudget, public officials decide who payswhat taxes and who receives what benefits.The public's largesse to children, the elderly,the poor. the middle class, and others isshaped by the budgets that support cities,states, and the federal government.

But if:budgeting is inherently messy, suchmessiness is costly. Optimally, the budgetwould he more than the product of strugglesamong competing interests. It also wouldreflect the thoughtful planning of our publicleaders. No one can improve quality and cutcosts without planning to do so.

Unfortunately, the most deliberateplanning is often subordinated to politics,and is perhaps the last thing we do inconstructing a budget. Consider ourprocess. Early in the year, each agencyestimates what it will need to run itsprograms in the fiscal year that beginsalmost 2 years later. This is like askingsomeone to figure out not only what theywill be doing, but bow much it will cost3 years biter since that's when the moneywill be spent. Bureau and programmanagers typically examine the previous'ear's activitv data and project the figures 3years out, with no word from top politicalleaders on their priorities, or even on thetotal amount that they want to spend. Inother words, planning budgets is likeplaying "pin the tail on the donkey."Blindfolded managers are asked to hit anunknown target.

OMB, acting for the President, thencrafts a proposed budget through back-andforth negotiations with departments andagencies, still a year before the fiscal yearit will govern. Decisions are struck ondollars Congress may never appropriatedollars that, to agencies, mean people,equipment. and everything else they needfor their jobs. OMB's examiners mayquestion agency staff as they develop optionpapers, ONIB's director considers theoption during his Director's Reviewmeetings, ONIB "passes back"recommended funding levels for theagencies, and final figures are worked outduring a final appeals process.

CUTTING RED TAPE

Early the next year, the President presentsa budget proposal to Congress for the fiscalyear beginning the following October 1.Lawmakers, the media, and interest groupspore over the document, searching forwinners and losers, new spending proposals,and changes in tax laws. In the ensuingmonths, Congress puts its own stamp onthe plan. Although House and Senatebudget committees guide Congress' action,even' committee plays a role.

Authorizing .-ommirtees debate themerits of existing programs and thePresident's proposals tor changes withintheir subject areas. While they decide whichprograms should continue and recommendfunding levels, separate appropriationscommittees draft the 13 annual spendingbills that actually comprise the budget.

Congressional debates over a budgetresolution, authorization bills, andappropriations drag on, often into the kill.Frequently the President and Congress don'tfinish by October 1, so Congress passes oneor more -continuing resolutions" to keepthe money flowing, often at the previousyear's level. Until the end, agency officialstroop back and forth to OMB and to theHill to make their case. States and localities,interest groups and advocates seek time toargue their cause. Budget staffs work non-stop, preparing estimates and projections onhow this or that change will affect revenuesor spending. All this work is focused onmaking a budgetnot planning ordelivering programs.

Ironies riddle the process.

Uncertainty reigns: Although taeybegin calculating their budget 2 yearsahead, agency officials do not alwaysknow by October 1 how much theywill have to spend and frequently don'teven receive their money until well intothe fisk.al year.

()MB is especially prone to questionunspent funds and reduce the ensuingyear's budget by that amount. Agencyofficials inflate their estimates, driving

24 15

16

I RUM RED FAILIF to REst:t.ts CRLA I INE, X COVE RNMENl r WORKS BETI'l It & Cos I'S Liss

budget numbers higher and higher.One bureau budget director claims thatmany regularly ask for 90 percent morethan they eventually receive.

Despite months of debate, Congresscompresses its actual decision-makingon the budget into such a short timeframe that many of the public's highestprioritieswhat to do about drugaddiction, for example, or how toprepare workers for jobs in the 21st

centuryare discussed only briefly, if atall.

The process is devoid of the most usefulinformation. We do not know what lastYear's money, or that of the year before,actually accomplished. Agency officialsdevise their funding requests based onwhat they got before, not whether itproduced results.

In sum, the budget process ischaracterized by fictional requests andpromises, an obsession with inputs ratherthan outcomes, and a shortage of debateabout critical national needs. We must startto plan strategicallylinking our spendingwith priorities and performance. First, wemust create a rational budgeting system.

Action: The President should begin thebudget process with an executive budget

There are two ways to reduce expenditures.

There is the intelligent way..going through

each department and questioning eachprogram. Then there is the stupid way:

announcing how much you will cut andgetting each department to cut that amount.

I favor the stupid way

Michel BelangerChairman, Quebec National Bank

May 7, 1992

resolution, setting broad policy pritnitiesand allocating jUnds by function for eachagency.' '

Federal managers should focus primarilyon the content of the budget, not on theprocess. A new executive budget resolutionwill help them do that. The Presidentshould issue a directive in early 1994 tomandate the use of such a resolution indeveloping his fiscal yea, 1996 budget. Itwill turn the executive budget processupside down.

To develop the resolution, officials fromthe White House policy councils will meetwith OMB and agency officials. In thosesessions, the administration's policyleadership will make decisions on overallspending and revenue levels, deficitreduction targets, and funding allocationsfor major inter-agency policy initiatives.The product of these meetingsaresolution completed by Augustwillprovide agencies with funding ceilings andallocations for major policy missions. Then,bureaus will generate their own budgetestimates, now knowing their agency'spriorities and fiscal limits.

Our own Environmental ProtectionAgency (EPA) tried a similar approachthe 1970s as part of a zero-based budgetingtrial run. Although zero-based budgetingfell short, participants said, two importantadvantages emerged: a new responsivenessto internal customer needs and acommitment to final decisions. Whenparticipants voted to (lit research anddevelopment funds because they feltresearchers ignored program needs,researchers began asking program managerswhat kind of research would support theirefforts. EPA also found that, after its leadershad agonized over funding, they remainedcommitted to common decisions.

Critics may view the executive budgetresolution process as a top-down tool thatwill stifle creative, bottom-up suggestionsfor funding options. We think otherwise.The resolution will render top officialsresponsible for budget totals and polio;decisions, but will encourage lower-level

25

ingenuity to devise funding options withinthose guidelines. By adopting this plan. wewill help discourage non-productive micro-management by senior department andagency officials.

Action: Institute biennial budgets andappropriations.''

We should not have to enact a budget_every 'ear. Twenry stares adopt budgets for2 years. (They retain the power to makesmall adjustments in off years if revenues orexpenditures deviate widely from forecasts).As a result, their governors and legislatureshave much more time to evaluate programsand develop longer-term plans.

Annual budgets consume an enormousamount of management timetime notspent serving customers. With biennialbudgets, rather than losing months to afrantic -last-year's budget-plus-X-percent"exercise. we might spend more timeexamining which programs actually work.

The idea of biennial budgeting has beenaround for some time. Congressman LeonPanetta, now OMB director, introduced thefirst biennial budgeting bill in 1977, anddozens have been offered since. Althoughnone have passed, the government has someexperience with budget plans that cover 2years or more. In 1987, the President andCongress drafted a budget plan for fiscalyears 1988 and 1989 that set spendinglevels for major categories, enablingCongress to enact all 13 appropriations billson time for the first time since 1977.

In addition, Congress directed theDefense Department to submit a biennialbudget for fiscal 1988 and 1989 to giveCongress more time for broad policyoversight. At the time, Congress assertedthat a biennial budget would "substantiallyimprove DOD management andcongressional oversight," and that a two-vear DOD budget was an important steptoward across -the -board biennial budgeting.Administrations have continued to submitbiennial budgets for DOD.

The 1990 Budget Enforcement Act andthe 1993 Omnibus Budget Reconciliation

CUTTING RED TAPE

Act set 5-Year spending limits fordiscretionary spending and pay-as-you-gorequirements for mandatory programs.With these multi-year caps in place, neitherthe President nor Congress has to decide thetotal level of discretionary spending eachYear. These caps provide even more reasonfor biennial budgets and appropriations. InCongress. 7 out of 10 members favor abiennial process with a 2-year budgetresolution and multi-year authorizations.The time is ripe.

We recommend that Congress establishbiennial budget resolutions andappropriations and multi-yearauthorizations. The first biennium shouldbegin October 1. 1996, to cover fiscal years1997 and 1998. After that, bienniumswould begin October 1 of each even-numbered year. Such timing would allowPresident Clinton to develop the firstcomprehensive biennial federal budget,built on the new executive budgetresolution. In off years, the President wouldsubmit only amendments for exceptionalareas of concern, emergencies. or otherunforeseen circumstances.

Biennial budgeting will not make ourbudget decisions easier, for they arc shapedby competing interests and priorities. But itwill eliminate an enormous amount of busywork that keeps us from evaluatingprograms and meeting customer needs.

Action: OMB, departments. andagencies will minimize budget restrictionssuch as apportionments and allotments."'

Congress typically divides itsappropriations into more than 1,000accounts. Committee reports specifythousands of other restrictions on usingmoney. OMB apportions each account byquarter or year, and sometimes divides itinto sub-accounts by line-item or objectclassall to control over-spending.Departmental budget offices further divi.lethe money into allotments.

Thus, many managers And their moneyfenced into hundreds of separate accounts. Insome agencies, they can move funds among

20

IRMA RED CAPE l'O RESULTS CRLA FIN(, A GOVERNMENT CIIA WORKS BErrr & COs I'S LESS

accounts. In others, Congress or the agencylimits the transfer of funds, trapping themoney. When that happens, managers mustspend money where they have it, not wherethey need it. On one military base, forexample, managers had no line item topurchase snowplow equipment, but they didhave a maintenance account. When thesnowplow broke down they leased one. usingthe maintenance account. Unfortunately, the1-year lease cost S 100,000the same as thefull purchase price.

Such stories are a dime a dozen withinthe federal bureaucracy. (They may he theonly government cost that is comingdown.) Good managers struggle to makethings work, but, trapped by absurdconstraints. they are driven to waste billionsof dollars every year.

Stories about the legendary end-of-the-year spending rush also abound. Managerswho don't exhaust each line item at year'send usually are told to return the excess.Typically, they get less the next time around.The result: the well-known spending frenzy.The National Performance Review receivedmore examples of this source of wasteinletters, in calls, and at town meetingsthanany other.

Most managers know how to save 5 or10 percent of what they spend. Butknowing they will get less money next year,they have little reason to save. Instead, smartmanagers spend every penny of every lineitem. Edwin G. Fleming, chief of theResources Management Division of theInternal Revenue Service's ClevelandDistrict, put it well in a letter to theTreasury Department's Reinvention Team:

Every manager has saved money only tohave his allocation reduced in thesubsequent year. This usually happensonly once, then the manager becomes aspender rather than a plannerManaging becomes watching after littlepots of money that can't be put where itmakes business sense because ofreprogramming restrictions. Somanagers, who are monitors of theselittle pots of money, are rewarded fo the

18 27

ability to maneuver, however limited44through the baroque and bizarre worldoffederalfinance and procurement.

Solutions to these problems exist. Theyhave been tested in local governments, instate governments, even in the federalgovernment. Essentially, they involvebudget systems with fewer line items, moreauthority for managers to move moneyamong line items, and freedom for agenciesto keep some or all of what they savethusminimizing the incentive for year-endspending sprees.

Typically, federal organizationsexperimenting with such budgets havefound that they can achieve betterproductivity, sometimes with less money.

During an experiment at Oregon'sOchoco National Forest in the 1980s, whendozens of accounts were reduced to six,productivity jumped 25 percent the firstyear and 35 percent more the second. A1991 Forest Service study indicated that theexperiment had succeeded in bringing gainsin efficiency, productivity, and morale, buthad failed to provide the Forest Serviceregion with a mechanism for complyingwith congressional intent. After 3 years ofnegotiations, Washington and Region 6,where the Ochoco Forest is located, couldn'tagree. The region wanted to retain theinitial emphasis on performance goals andtargets so forest managers could shift moneyfrom one account to another if they metperformance goals and targets. Washingtonargued that Congress would not regard suchtargets as a serious measure of congressionalintent. The experiment ended in March1993T'

When the Defense Department allowedseveral military bases to experiment withwhat was called the Unified Budget Test.base commanders estimated that they couldaccomplish their missions with up to 10percent less money. If this experience couldbe applied to the entire government, itcould mean huge savings.

Beginning with their fiscal year 1995submissions to OMB, departments andagencies will begin consolidating accounts

to .minimize restrictions and manage moreeffectively. ..I-hey will radically cut thenumber of allotments used to subdivideaccounts. In addition, they will considerusing the Defense Department's UnifiedBudget plan, which permits shifts in fundsbetween allotments and cost categories tohelp accomplish missions.

OMB will simplify the apnortionmentprocess, which hamstrings agencies bydividing their fimding into amounts thatare available, bit by bit, according tospecified time periods, activities. orprojects. Agencies often .don't get theirfunding on rime and. after they do, mustfill out reams of paperwork to showthat they adhered to apportionmentguidelines: ()MB will also expedite the"reprogramming" process, by whichagencies can move funds withincongressionally appropriated accounts.Currently, OMB and congressionalsubcommittees approve all suchreprogrammings. OMB shouldautomatically approve reprogrammingunless it objects within a set period, such asfive days.

Action: OMB and agencies will stopusing full -time equivalent ceilings,managing and budgeting instead withceilings on operating costs to controlspending.'``'

In another effort to control spending,both the executive and legislative branchesoften limit the number of each agency'semployees by using full-time equivalent(FTE) limits. When agencies prepare theirbudget estimates, they must state howmany FTEs they need in addition to howmany dollars. Then, each department oragency divides that number into a ceilingfor each bureiu, division, branch, or otherunit. Congi .s occasionally complicates thesituation by legislating FTE floors.

Federal managers often cite FITcontrols as the single most oppressiverestriction on their ability to manage.Under the existing system, FTE controlsare the only way to make good on the

CUTTING RED TAPE

President's commitment to reduce thefederal bureaucracy by 100,000 positionsthrough attrition. But as we redesign thegovernment for greater accountability, weneed to use budgets. rather than FTEcontrols. to drive our downsizing.

FTE ceilings are usually imposedindependently ofand often conflictwithbudget allocations. They arefrequently arbitrary, rarely account forchanging circumstances, and are normallyimpc.,ed as across-the-board percentage cutsin FTEs for all of an agency's unitsregardless of changing circumstances.Organizations that face new regulations or agreater workload don't get new FTEceilings. Consequently, they must contractout work that could be done better andcheaper in-house. One manager at VicePresident Gore's town meeting at the StateDepartment in May 1993 offered anexample: his FTE limit had forced him tocontract out for a junior programmer forthe Foreign Service Institute. As it turnedout, the programmer's hourly rate equaledthe Institute Director's, so the move costmoney instead of saving it.

The President should direct OMB andagency heads to stop setting FTE ceilings infiscal year 1995.

For this transition, the agencies'accounting systems will have to separatetrue operating costs from program andother costs. Some agencies already havesuch systems in place; others must developfinancial management systems to allowthem to calculate these costs. We addressthis issue in a separate recommendation inchapter 3.

This recommendation fully supports thePres dent's commitment to maintain ared! iced federal workforce. Instead ofcontrolling the size of the federalyorkforce by employment ceilingswhichcause inefficiencies and distortions inmanagers' personnel and resourceallocation decisionsthis new system willcontrol the federal workforce by dollarsavailable in operating funds.

28 19

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FROM RED I.1PE FO RESIT FS CR LA tit, GoVI R NM EN I I'

Action: Minimize congressionalrestrictions such as line items andearmarks and eliminate FTE

Congress should also minimize therestrictions and earmarks that it imposes onagencies. With virtually all federal spendingunder scrutiny for future cuts, Congress isincreasingly applying earmarks to ensurethat funding flows to favored programs andhometown projects.

Imagine the surprise of Interior SecretaryBruce Babbitt, who a few months aftertaking office discovered that he was underorders from Congress to maintain 2.3positions in the Wilkes-Barre, Pennsylvania,field office of his department's anthracitereclamation program. Or that hisdepartment was required to spend$100,000 to train beagles in Hawaii to sniffout brown tree snakes. Edward Derwinslci,former secretary of Veteran Affairs, wasonce summoned before the Texascongressional delegation to explain his planto eliminate 38 jobs in that state. =°

While understandable in some cases,congressional earmarks hamper agenciesthat seek to manage programs efficiently.Agencies should work with appropriationssubcommittees on this problem.

Action: Allow agencies to roll over 50percent of what they do not spend oninternal operations during a fiscal vear.2/

As part of its 13 fiscal year 1995appropriations bills, Congress should

HA WORKS BF. FTER & COS FS LESS

permanently allow agencies to roll over 50percent of unobligated year-end balances inall appropriations for operations. It shouldallow agencies to use up to 2 percent ofrolled-over funds to finance bonuses foremployees involved. This approach, whichthe Defense Department and Forest Servicehave used successfully, would rewardemployees for finding more productiveways to work. Moreover, it would createincentives to save the taxpayers' money.

Shared savings incentives work. In 1989,the General Accounting Office (GAO)discovered that the VeteransAdministration had not recovered $223million in health payments from thirdparties, such as insurers. Congress thenchanged the rules, allowing the VA to hiremore staff to keep up with the paperworkand also to keep a portion of recoveredthird-party payments for administrativecosts. VA recoveries soared from $24million to $530 million.=2

If incentives to save are to be real,Congress and OMB will have to refrainfrom automatically cutting agencies'budgets by the amount they have savedwhen their next budget is prepared. Policydecisions to cut spending are one thing;automatic cuts to take back savings arequite another. They simply confirmmanagers' fears that they will be penalizedfor saving money. Agencies' chief financialofficers should intervene in the budgetprocess to ensure that this does nothappen.

STEP 2: DECENTRALIZING PERSONNEL POLICY

0 ur federal personnel system hasbeen evolving for more than 100vearsever since the 1881

assassination of President James A. Garfieldby a disappointed job seeker. And duringthat time, according to a 1988 Office ofPersonnel Management publication:

...anecdotal mistakes promptedadditional rules. When the rules led to

7'

new inequities, even more rules wereadded. Over time...a maze of regulationsand requirements was created,hamstringing managers... often impedingfederal managers and employees fromachieving their missions and ftom givingthe public a high quality of service.

Year after year, laver after layer, the ruleshave piled up. The U.S. Merit Systems

29

"t0101,0004"Iro"el .

Catch-22

Our federal personnel system ought to place

a value on experience. That's not always

the case. Consider the story of Rosalie Tapia.

Ten years ago, fresh from high school, she

joined the Army and was assigned to Germany

as a clerk. She served out her enlistment with an

excellent record, landed a job in Germany as a

civilian secretary for the Army, and worked her

way up to assistant to the division chief. When

the Cold War ended, Tapia wanted to return to

the U.S. and transfer to a government job here.

Unfortunately, one of the dictates contained

Protection Board reports there are now 850pages of federal personnel lawaugmentedby 1.300 pages of OPM regulations on howto implement those laws and another10,000 pages of guidelines from the FederalPersonnel Manual.

On one, topic alonehow to complete astandard form for a notice of a personnelactionthe Federal Personnel Manualcontains 900 pages ofinstructions. The full stackof personnel laws.regulations, directives, caselaw and departmentalguidance that the AgricultureDepartment usesshown inthe photo at rightweighs1.088 pounds.

Thousands of pages ofpersonnel rules promptthousands of pages ofpersonnel forms. In 1991, forexample, the Navy's HumanResources Office processedenough forms to create a"monument" 3,100 feettallsix times the height ofthe Washington Monument.

Costs to the taxpayer for

t.

CUTTING RED TAPE

in the government's 100,000 pages of personnel

rules says that an employee hired as a civil

servant overseas is not considered a government

employee once on home soil. Any smart

employer would prefer to hire an experienced

worker with an excellent service record over art

unknown. But our government's policy doesn't

make it easy. Ironically, Tapia landed a job with

a government contractor, making more

money and probably costing taxpayersmorethan a job in the bureaucracy would

have paid.

this personnel quagmire are enormous. Intotal. 54,000 people work in federalpersonnel positions.,- We spend billions ofdollars for these staff to classify eachemployee within a highly complex systemof some '+59 job series. 15 grades and 10steps within each grade.

Does this elaborate system v.ork? No.After surveying managers, supervisors

21

22

FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

and personnel officers in a number offederal agencies, the U.S. Merit SystemsProtection Board recently concluded thatfederal personnel rules are too complex, tooprescriptive, and often counterproductive.

Talk to a federal manager for 10 minutes:You likely will hear at least one personnelhorror story. The system is so complex andrule-bound that most managers cannot evenadvise an applicant how to get a federal job."Even when the public sector findsoutstanding candidates," In 1989, PaulVolckers National Commission on thePublic Service explained, "the complexity ofthe hiring process often drives all but themost dedicated away." Managers who findit nearly impossible to hire the people theyneed sometimes flaunt the system by hiringpeople as consultants at higher rates thanthose same people would earn as federalemployees. The average manager needs ayear to fire an incompetent employee, evenwith solid proof. During layoffs, employeesslated to be laid off can "bump" employeeswith less seniority, regardless of their abilitiesor performanceputting people in jobsthey don't understand and never wanted.

Vice President Gore heard many storiesof dissatisfixtion as he listened to federalworkers at meetings in their agencies. Asupervisor at the Centers for DiseaseControl complained that it can take six toeight months and as many as 15 revisions toa job description in order to get approval fora position he needs to fill. A secretary fromthe Justice Department told the VicePresident she was discouraged andoverworked in an office where somesecretaries were slacking offwith nosystem in place to reward the hard workersand take action against the slackers.

A worker from the Agency forInternational Development expressed herfrustration at being so narrowly "slotted" ina particular GS series that she wasn't allowedto apply for a job in a slightly different GSseries even though she was qualified forthe job. An Air Force lieutenant colonel toldthe vice president that her secretary wasabandoning government for the privatesector because she was blocked from any

more promotions in her current job series.The loss would be enormous, the coloneltold Gore, because her secretary was her"right-hand person". One of the LaborDepartment's regional directors forunemployment insurance complained thateven though he is charged with running amultimillion-dollar-a-year program, he isn'tallowed to hire a S45,000-a-year programspecialist without getting approval fromWashington.

To create an effective federal government,we must reform virtually the entirepersonnel system: recruitment, hiring,classification, promotion, pay, and rewardsystems. We must make it easier for federalmanagers to hire the workers they need, toreward those who do good work, and to firethose who do not. As the NationalAcademy of Public Administrationconcluded in 1993, "It is not a question ofwhether the federal government shouldchange how it manages its human resources.It must change."

31

Action: OPM will deregulate personnelpolicy by phasing out the 10,000-pageFederal Personnel Manual and all agencyimplementing directives. 4

We must enable all managers to pursuetheir missions, freed from the cumbersomered tape of current personnel rules. ThePresident should issue a directive phasingout the Federal Personnel Manual and allagency implementing directives. Thedirective should require that most personnelmanagement authority be delegated toagencies' line managers at the lowest levelpractical in each agency. It should directOPM to work with agencies to determinewhich FPM chapters, provisions, orsupplements are essential, which are useful,and which are unnecessary. OPM will thenreplace the FPM and agency directives withmanuals tailored to user needs, automatedpersonnel processes, and electronic decisionsupport systems.

Once some of the paperwork burden iseased, our next priority must be to giveagency managers more control over who

comes to work for them. To accomplishthis, we propose to radically decentralize thegovernment's hiring process.

Action: Give all departments and,tgencies authority to conduct their owneruiring and examining for all

positions, and abolish all central registers,Ind standard application forms.-'

We will ask Congress to pass legislationdecentralizing authority over recruitment.hiring, and promotion. Under the presentsystem. OPM controls the examinationsystem f'or external candidates and recruitsand screens candidates for positions that arecommon to all agencies, with agencies thenhiring from among candidates presented by)PM. Under the new system. OPM could

offer to screen candidates for agencies, butagencies need not accept OPM's offer.

Under this decentralized system, agencieswill also be allowed to make their owndecisions about when to hire candidatesdirectlywithout examinations or rankingsunder guidelines to be drafted by ()PM.Agencies able to do so should also bepermitted to conduct their own backgroundinvestigations of potential candidates.

We will make sure the system is fair andeasy fbr job applicants to use, however, bymaking information about federal jobopenings available in one place. In place of acentral register, OPM will create agovernment-wide, employmentinformation system that allows the public togo to one place for information about alljob opportunities in the federalgovernment.

Next, we must change the classificationsystem, introduced in 1949 to createfairness across agencies but now widelyregarded as time - consuming, expensive.cumbersome, and intensely frustratingfbrboth workers and managers.

After an exhaustive 1991 study of thesystem, the National Academy of PublicAdministration recommended a completeoverhaul of the system. Classificationstandards, NAPA argued, are "too complex,inflexible, out-of-date, and inaccurate,"

CUTTING RED TAPE

First, we must cut the waste and makegovernment operations more responsive to the

American people. It is time to shift from top-

down bureaucracy to entrepreneurialgovernment that generates change from the

bottom up. We must reward the people and

ideas that work and get rid of those that don't.

President Bill ClintonFebruary 17, 1993

creating "rigid job hierarchies that cannotchange with organizational structure." Theydrive some of the best employees out oftheir fields of expertise and intomanagement positions, for higher pay. Andmanagers seeking to create new positionsoften fight the system for months to getthem classified and

There is strong evidence that agenciesgiven authority to do these thingsthemselves can do better. Usingdemonstration authority under the 1978Civil Service Reform Act, several agencieshave experimented with simpler systems. Inone experiment, at the Naval WeaponsCenter in China Lake, California, and theNaval Oceans Systems Center. in SanDiego. the system was simplified to a fewcareer paths and only four-to-six 5road payhands within each path. Known as the"China Lake Experiment," it solved manyof the problems faced by the two navalfacilities. It:

classified all jobs in just five careerpathsprofessional, technical,specialist, administrative and clerical;

folded all GS (General Schedule) gradesinto four, five, or six pay hands withineach career path;

allowed managers to pay market salariesto recruit people, to increase the pay of

32 23

FROM RED TAPE TO RESULTS CRLA I ING A GOVERNMENT ruA I WORKS BETTER & COS rs LESS

Recognizing the importance of attracting and

retaining highly qualified professionals in

government service, one of the demoralizing

and frustrating aspects is the fact that we are

retained to do a job but not allowed theflexibility to carry it out, assume the

responsiblit, and reap the rewards or be

accountable for out actions.

Edith HoustonTown Hall Meeting,

U.S. Agency for International DevelopmeMay 26, 1993

outstanding employees without havingto reclassifr them, and to giveperformance-based bonuses and salaryincreases;

automatically moved employees withrepeated marginal performanceevaluations down to the next pay band;and

limited bumping to one career path,and based it primarily on performanceratings, not seniority.

Another demonstration at McClellan AirForce Base, in Sacramento, California,involved "gainsharing"allowingemployees to pocket some of the savingsthey achieved through cooperative labor-management efforts to cut costs. Itgenerated $5 million in productivity savingsin four years and saw improved employeeperformance; fewer grievances; less sickleave and absenteeism; and improved labor-management relations.

A third demonstration at more than 200Agriculture Department sites tested astreamlined, agency -based recruiting andhiring system that replaced OPM's registerprocess. Under OPM's system, candidatesare arrayed and scored based on OPM's

24

written tests or other examinations. InUSDA's demonstration, however, theagency grouped candidates by its owncriteria, such as education, experience orability, then picked from those candidates.A candidate might qualifi, for a job, forexample, with a 2.7 college grade pointaverage. Agencies could create their ownrecruitment incentives, do their own hiring,and extend the probationary period forsome new hires. Managers were farmore satisfied with this system than theexisting one.

Action: Dramatically simplify thecurrent classification system, to giveagencies greater flexibility in how theyclassify and pay their employees.=

We will urge Congress to remove all the1940s-era grade-level descriptions from thelaw and adopt an approach that is moremodern. In addition, Congress should allowagencies to move from the GeneralSchedule system to a broad-band system.OPM should develop such standardbanding patterns, and agencies should befree to adopt one without seeking OPM'sapproval.

When agency proposals do not fit undera standard pattern, OPM should approvethem as five-year demonstration projectsthat would be converted to permanent"alternative systems" if successful. OPMshould establish criteria for broad-bandingdemonstration projects, and agencies'projects meeting those criteria shouldreceive automatic approval.

These changes would give agenciesgreater flexibility to hire, retain, andpromote the best people they find. Theywould help agencies flatten their hierarchiesand promote high achievers without havingto make them supervisors. They wouldeliminate much valuable time now lost tobattles between managers seeking topromote or reward employees andpersonnel specialists administering aclassification system with rigid limits.Finally, they would remove OPM from itsrole as "classification police."

3d

To accompany agencies new flexibilityon classification and pay, they must also begiven authority to set standards for theirown workers and to reward those who dowell.

Action: .1:4-elides should be allowed todesign their otvn polo' mancemanagement and reward systems, withthe objective of improving- theperformance individuals andorganizations. 28

The current government performanceappraisal process is frequently criticized as ameaningless exercise in which most federalemployees are given above-average ratings.We believe that agencies will he able todevelop performance appraisals that aremore meaningful to their employees. If theysucceed, these new approaches will send amessage that job performance is directlylinked to workers' chances for promotionand higher pay.

Current systems to assess on-the-jobperformance were designed to servemultiple purposes: to enhance performance,to authorize higher pay for high performers,to retain high performers, and to promotestaff development. Not surprisingly, theyserve none of these purposes well.

Performance management programsshould have a single goal: to improve theperformance of individuals andorganizations. Agencies should be allowedto develop programs that meet their needsand reflect their cultures, includingincentive programs. gainsharing programs,and awards that link pay and performance.If agenciesin cooperation withemployeesdesign their own systems,managers and employees alike should feelmore ownership of them.

Finally, if performance measures are tobe taken seriously, managers must haveauthority to fire workers who do notmeasure up. It is possible to fire a poorworker in the federal government, but ittakes far too long. We believe thisundermines good management anddiminishes workers incentives to improve.

CUTTING RED TAPE

There has to be a clear shared sense of mission.

There have to be clearly understood goals.

There have to be common values according to

which decisions are made. There has to be

trust placed in the employees who actually do

the work, so that they will feel free to make

decisions.

They cannot be treated like automatons orchildren bound up in straighackets and rulesand regulations and told to do the same thingover and over and over again.

Vice President Al GoreAugust 4, 1993

Action: Reduce by half the timerequired to terminate federal managersand employees fir cause and improve thesystem fir dealing with poor pelf nners.29

Agencies will reduce the time forterminating employees for cause by half. Forexample, agencies could halve the length oftime during which managers and employeeswith unsatisfactory performance ratings areallowed to demonstrate improvedperformance.

To support this effort, we will ask OPMto draft and Congress to pass legislation tochange the required time for notice oftermination from 30 to 15 days. Thislegislation should also require the waitingperiod for a within-grade increase to beextended by the amount of time anemployee's performance does not meetexpectations. In other words, only the timethat an employee is doing satisfactory workshould be credited toward the requiredwaiting period for a pay raise.

34 25

FROM RED TAPE TO RESUL ES CRI I IN6 Govt RNMENE riiAr WORKS BETTER & COS ES Liss

26

tg",' lx:.:1.4" I'

STEP 3: STREAMLINING PROCUREMENTEvery year, Washington spends about$200 billion buying goods andservices. That's 5800 per American.

With a price tag like that, taxpayers have aright to expect prudent spending.

The federal government employs142,000 workers dedicated to procurement."The Federal Acquisition Regulation (FAR)controlling procurement runs 1,600 pages,with 2,900 more pages of agency-specificsupplements.

These numbers document what mostfederal workers and many taxpayers alreadyknow: Our system relies on rigid rules andprocedures, extensive paperwork, detaileddesign specifications. and multiple-inspections and audits. It is anextraordinary example of bureaucraticred tape.

Like the budget and personnel systems,the procurement system was designed withthe best of intentions. To preventprofiteering and fraud, it includes rigidsafeguards. To take advantage of bulkpurchasing, it is highly centralized. But thegovernment wrote its procurement ruleswhen retailing was highly stratified, withmany markups by intermediaries. Todaythe game has changed considerably. Retailgiants like Wal-Mart, Office Depot andPrice Club are vertically integrated,eliminating the markups of intermediaries.Federal managers can buy 90 percent ofwhat they need over the phone, from mail-order discounters. Bulk purchasing still hasits advantages, but it is not always necessaryto get the best price.

Our overly centralized purchasing-system takes decisions away frommanagers who know what they need,and allows strangersoften thousandsof miles awayto make purchasingdecisions. The frequent result: Procurementofficers. who make their own decisionsabout what to buy and how soon to buyit, purchase low-quality items that arrivetoo late.

This "secondhand" approach to

35

purchasing creates another problem. Whenline managers needs and experiences arenot understood by the procurement officer,the government is unable to makedecisions that reward good vendors andpunish bad ones. As a result, vendors often"game" contractsexploiting loopholes torequire expensive changes. For example, ina major government contract for acomputerized data network a few yearsago, a vendor used slight underestimates ofsystem demand in the contractspecifications as an excuse to chargeexorbitant prices for system upgrades. Inthe private sector, a manager could haveused the incentive of future contracts toprevent such gaming; in the government,there is no such leverage.

The symptoms of what's wrong areapparent, too, from stories about smallpurchases.

One story that Vice President Gorehas repeated in Washington over the pastsix months concerns steam traps. Steamtraps remove condensation from steamlines in heating systems. Each costs aboutS100. But when one breaks, it leaks asmuch as $50 of steam a week. Obviously_.

a leaking steam trap should be replaced

quickly.When plumbers at the Sacramento

Army Depot found leaking traps, however,their manager followed standard operatingprocedure. He called the procurementoffice, where an officer, who knew nothingabout steam traps, followed commonpractice. He waited.for enough orders tobuy in bulk, saving the government aboutS 10 per trap. There was no rule requiringhim to wait just a powerful tradition. Sothe Sacramento Depot didn't get new steamtraps for a year. In the meantime, each oftheir leaking traps spewed $2,500 of steam.To save $10, the central procurementsystem wasted $2,500.

As the Vice President visited governmentagencies, he heard many more stories ofwasteful spendingmost of them

to .....rd.V.441, tr, nn. mew ye

"Ash receivers, tobacco (desk type)..."

Our federal procurement system leaves

little to chance.

When the General Services Administration

wanted to buy ashtrays, it has some very

specific ideas how those ashtraysbetterknown to GSA as "ash receivers, tobacco (desk

type)," should be constructed.

In March 1993, the GSA outlined, in nine

full pages of specifications and drawings, the

precise dimensions, color, polish and markings

required for simple glass ashtrays that would

pass U.S. government standards.

A Type I, glass, square, 4'12 inch (114.3

mm) ash receiver must include several features:

"A minimum of four cigarette rests, spaced

equidistant around the periphery and aimed at

the center of the receiver, molded into the top.

The cigarette rests shall be sloped toward the

center of the ash receiver. The rests shall be

parallel to the outside top edge of the receiver

or in each corner, at the manufacturer's option.

All surfaces shall be smooth."

Government ashtrays must be sturdy too. To

produced by the very rules we havedesigned to prevent it. Take the case ofgovernment travel.

Because GSA selects a "contract airline"for each route, federal employees have fewchoices. If Northwest has the Washington-Tampa route, for instance, federalemployees get routed through Detroit. IfNorthwest has the Boston-Washingtonroute, employees have to use Northwesteven if USAir has more frequent flights atmore convenient times. Workers told theVice President of being routed throughthousands of miles out of their was, even if

CUTTING RED TAPE

guard against the purchase of defective ash

receivers, the GSA required that all ashtrays be

tested. "The test shall be made by placing the

specimen on its base upon a solid support (a 1

3/4 inch, 44.5mm maple plank), placing a steel

center punch (point ground to a 60-degree

included angle) in contact with the center of

the inside surface of the bottom and striking

with a hammer in successive blows of

increasing severity until breakage occurs."

Then, according to paragraph 4.5.2., "The

specimen should break into a small number of

irregular shaped pieces not greater in number

than 35, and it must not dice." What does

"dice" mean? The paragraph goes on to

explain: "Any piece 1/4 inch (6.4 mm) or more

on any three of its adjacent edges (excluding

the thickness dimension) shall be included in

the number counted. Smaller fragments shall

not be counted."

Regulation AA-A-710E, (superseding Regulation AA-A-710D).

it cost them a day's worth of timeand aday's worth of taxpayers' money. Otherstold of being unable to take advantage ofcheap "special fares" because they were not"government fares." And one workershowed the National Performance Review amemo from the Resolution TrustCorporation explaining that RTC workerswould not be reimbursed for any travelexpenses unless they signed their travelvouchers in blue ink!

Beyond travel, at every federal agency theVice President visited, employees toldstories about not getting supplies and

36

FROM RED F1PF ro Ri.sui.ts CREA GOVERNM NI ritA WORKS BE ITFR & COs is [ASS

equipment they needed, getting them late,or watching the government spend toomuch for them. At the Department ofHealth and Human Services, a worker toldthe Vice President that no matter howmuch his office needed a FAX machineand how much time the machine wouldsave workersthe purchase wouldn't bepossible "without the signature of everyonein this room." An engineer from theNational Institutes of Health added that inhis agency, it takes more than a year to buya computer, not a mainframe, but apersonal computer! At the TransportationDepartment, a hearing-impaired employeetold the Vice President of watching withdismay as her agency spent S600 to huy hera Telephone Device for the Deaf (TDD),when she knew she could buy one off theshelf for $300.

Anecdotes like these were documented inJanuary 1993, when the Office of FederalProcurement Policy and the U.S. MeritSystems Protection Board collaborated on asurvey of the procurement system'scustomers: federal managers. More than1,000 responded. Their message: Thesystem is not achieving what its customerswant. It ignores its customers' needs, payshigher prices than necessary, is filled withperipheral objectives, and assumes that linemanagers cannot be trusted.

A study by the Center for Strategic andInternational Studies added several otherconclusions. The procurement system addscosts without adding value; it impedesgovernment's access to state-of-the-artcommercial technology; and its complexityforces businesses to alter standardprocedures and raise prices when dealingwith the government.-"

There is little disagreement that federalprocurement must be reconfigured. Wemust radically decentralize authority to linemanagers, letting them buy much of whatthey need. We must radically simplify'procurement regulations and processes.We must empower the systems customersby ending most government servicemonopolies, including those of the GeneralServices Administration. As we detailed in

28

Chapter 1. we must make the systemcompetitive by allowing managers to useany procurement office that meets theirneeds.

As we take these actions, we mustembrace these fundamental principles:integrity, accountability, professionalism,openness, competitionand value.

Action: Simplify the procurementprocess by rewritingfrderal regulationsshifting from rigid rules to guidingprinciples.''

The Federal Acquisition Regulation(FAR), the government's principal set ofprocurement regulations, contains toomany rules. Rules are changed too oftenand are so process-oriented that theyminimize discretion and stifle innovation,according to a Merit Systems ProtectionBoard suryey.33 As one frustrated managernoted, the FAR does not even clearly statethe main goal of procurement policy: "Is itto avoid waste, fraud, and abuse? Is it toimplement a social-economic agenda? Is itto procure the government's requirements ata fair and reasonable cost?"

This administration will rewrite the1,600-page FAR, the 2,900 pages of agencysupplements that accompany it, andExecutive Order 12352, which governsfederal procurement. The new regulationswill:

shift from rigid rules to guidingprinciples;

promote decision making at the lowestpossible level:

end unnecessary regulatoryrequirements;

Easier competitiveness and commercialpractices;

shift to a new emphasis on choosing"best value" products;

37

facilitate innovative contractingapproaches:

recommend acquisition methods thatreflect information technology's shortlife cycle; and

develop a more effective process tolisten to its customers: line managers,government procurement officers. andvendors who do business with thegovernment.

Action: The GSA will significantlyincrease its delegated authoriry to federal.tgenciesfOr the purchase of intOrmariontechnology, including hardware, software,.end ser ices;

In 1965, when "automated dataprocessing" meant large, mainframecomputersoften developed specifically forone customerCongress passed the BrooksAct. It directed GSA to purchase, lease, andmaintain such equipment for the entirefederal government. The Act also gave GSAauthority to delegate to agencies these sameauthorities. In 1986, Congress extended therequirement to software and supportservices.

-Today; with most computer equipmentcommercially available in highlycompetitive markets, the advantages ofcentralized purchasing have faded and thedisadvantages have grown. The federalgovernment takes. on average, more thanfour years to buy major informationtechnology systems; the private sector takes13 months. Due to rapidly changingtechnology, the government often buyscomputers that are state-of-the-art when thepurchase process begins and when prices arenegotiated, but which are almost obsoletewhen computers arc delivered. Thephenomenon is what one observer calls"getting a 286 at a 486 price."

Currently, the GSA authori/es agenciesto make individual purchases up to S2.5million in equipment and services on theirown. The GSA Administrator will raise

CUTTING RED TAPE

authorization levels to 550 million, S20million and S5 million. These levels will becalculated according to each agency's size,the size of its information technolcovbudget, and its management record. Insome cases, GSA may grant an agencygreater or unlimited delegation.

GSA will also waive requirements thatagencies justify their decisions to buyinformation technoloov items costing lessthan S500.000, if they are mass-producedand offered on the open market.

Action: GSA will simplify' theprocurement process by allowing agenciesto buy where they want and by testing afidly "electronic marketplace.-

The government buys everything fromforklifts and snowplows to flak jackets andtest tubes through a system called theMultiple Award Schedule program, whichincludes more than one million separateitems.

Under this program. GSA negotiates andawards contracts to multiple vendors ofcomparable products and services, atvarying prices. GSA then creates a "supplyschedule" for a particular good or service,identifying all vendors that have woncontracts as well as the negotiated prices. OfGSA's 154 schedules, civilian agencies mustmust buy from 117. In ordering fromschedules, agencies still must complyinadditionwith the Federal AcquisitionRegulation, Federal Information ResourcesManagement Regulation, and FederalProperty Management Regulation.

In most cases, we should not limitmanagers to items on the supply schedules.If they can find the same or a comparableproduct for less, they should be free to buyit. Mandatory schedules should apply onlywhen required by law, to ensurestandardization, or when agenciesvoluntarily create team pools that buy inhulk for lower prices. In addition, GSAshould revise regulations that currently limitagencies from buying more than 5300,000of information technology items on supply

38

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schedules, raise them to 5500,000 andprovide a higher limit for individual itemscosting more than 5500,000.

To make supply schedules more user-friendly, GSA should conduct several pilottests. One should test an -electronicmarketplace,- in which GSA would notnegotiate prices. instead, suppliers wouldlist products and prices electronically, andagencies would electronically order thelowest-priced item that met their needs.Suppliers, at any time, would be able to addnew products and change prices. Such apilot would test whether visible pricecompetition will cut prices and give linemanagers easier access to rapidly changingproducts.

Action:Allow agencies to makepurchases under S100,000 throughsimplified purchase procedures.'°

Under current law, agencies are allowedto make purchases of less than 525.000 ontheir own, using simple procurementprocedures. These small purchases, onaverage, take less than a month to complete;purchases of more than 525.000 normallytake more than three months. If Congressraised the threshold to S100.000, agenciescould use simplified procedures on another45,550 procurementswith a total value ofS2.5 billion.

Congress should keep current rules thatreserve small purchases for small businessesand should improve access to informationon procurements of more than $25,000. Toensure that small business receives adequatenotice of possible procurements, the federalgovernment, with OMB as the lead agency,should adopt an electronic notificationsystem.

Action: Rely more on the commercialmarketplace..;

The government can save enormousamounts of money by buying morecommercial products instead of requiringproducts to he designed to government-unique specifications. Our government

30

buys such items as. integrated circuits,pillows, and oil pans, designed togovernment specificationseven whenthere are equally good commercial productsavailable.

We recommend that all agency heads beinstructed to review and revise internalpurchasing procedures and rules to allowtheir agencies to buy commercial productswhenever practical and to take advantage ofmarket conditions.

We will ask the Office of Managementand Budget to draft a new federalcommercial code with commercial-styleprocedures, and then ask Congress to adoptthe new code and remove impediments tothis money-saving approach toprocurement.

Action: Bring federal procurement lawsup to date.38

There are four federal labor lawsimplemented through the federalprocurement process. Each was passedbecause of valid and well founded concernsabout the welfare of working Americans.But as part of our effort to make thegovernment's procurement process workmore efficiently, we must consider whetherthose laws are still necessaryand whetherthe burdens they impose on theprocurement system are reasonable ones.

The Davis-Bacon Act of 1931 requiresthat each repair or construction contract inexcess of $2,000 for work on a publicbuilding specify that the prevailing areaminimum wage be paid to workers on thatcontract. The law was passed becauseCongress feared that without it, federalcontracts awarded through a sealed bidprocess could undermine local prevailingwages. While Congress shifted thegovernment's focus to an open biddingprocess in 1984, we acknowledge thatconcerns about the impact of governmentcontracts on prevailing wages are still valid.

Recognizing that the original $2,000threshold in the law was set more than 60years ago, we recommend that Congressmodify the Davis-Bacon Act by raising the

threshold for compliance to 5100,000, achange similar to that proposed by SenatorKennedy in March 1993.

.1-he Service Contract Act of 1965 haspurposes similar to those of the Davis-BaconAct, and applies to service contracts in excessof 52,500. It requires contractors to pay theminimum prevailing wage and specifiedfringe benefits. To keep contractors from"locking in- their wage agreements at lowlevels, the law imposes a five-year limit onservice contracts and requires new wagedeterminations every two years.

We suggest that the five-year limit isinconsistei.t with the government's interestin entering into long-range contracts. Wewill urge Congress to increase the limit upto 10 Years while retaining the rwo-vearwage adjustment requirement.

The Copeland Anti-Kickback Act of1934 regulates payroll deductions on federaland federally assisted construction. The lawprohibits anyone from inducing employeesto give up any part of their compensationand requires contractors to submit weeklystatements of compliance and detailedweekly payroll reports to the LaborDepartment.

We suggest that such detailed reporting is

CUTTING RED TAPE

an unreasonable burden on federalcontractors, and we will urge Congress tomodif'y the act. We suggest eliminatingrequirements for weekly reports andrequiring contractors instead to certify witheach payment that they have complied withthe law. Contractors would also be requiredto keep records to prove their compliancefor three years.

The Walsh-Healey Public Contracts Actrequires contractors that supply materials tothe federal government through contracts inexcess of S10,000 to pay all workers thefederal minimum wage, to agree that noemployee is required to work more than 40hours a week, and to avoid using convictlabor or workers under the age of 16.

Over rime, each of the requirement:: ofthe Walsh-Healey Actwith dlr. exceptionof the provision relating to convict labor-has been superseded by other federallegislation. We therefore urge Congress toremove the burden of certifying compliancewith redundant laws from federalcontractors. Within 30 days of the repeal ofthat law, the President should amendExecutive Order 11755 to include theconvict labor provisions of the Walsh-Healey Act.

STEP 4: REORIENTING THE INSPECTORSGENERAL

Responding to growing concernabout waste, fraud, and abuse ingovernment, Congress passed the

Inspector General Act in 1978. This actand subsequent amendments created the 60Inspectors General offices that todayemploy 15.000 federal workers, includingpostal inspectors.

The act was broad in scope, requiringIGs to promote the efficiency, economy andintegrity of federal programs with auditingprogram expenditures, and investigatingpossible fraud and abuse.

The inspectors general, who areindependent of the agencies in which theyoperate. report to Congress twice a year.

These reports detail how much money IGaudits have recovered or put to better useand the number of convictions resultingfrom their criminal investigations. The IGsalso send the audit reports to the heads oftheir agencies and forward investigations fin.criminal prosecution to the U.S. AttorneyGeneral.

The Inspector General Act's two centralmandates, combined with the last twoadministrations' eagerness to highlight"waste, fraud and abuse," have shaped theevolution of the IG offices. The standard bywhich they are evaluated is finding error orfraud: The more frequently they findmistakes, the more successful they are

BEST COPY AVAILABLE31

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I ROM Ri 1) kl)F to REst.t rs Citt. iNc, GOVURNME-N r 1 II I WORKS 111 T HA: & Cos i s Liss

judged to be. As a result, the IC staffS oftendevelop adversarial relations with agencymanagers--who, in trying to do thingsbetter, may break rules.

At virtually every agency he visited, theVice President heard federal employeescomplain that the IGs' basic approachinhibits innovation and risk taking. Heavy-handed enforcementwith the ICwatchfulness compelling employees tofollow every rule. document every decision,and fill out even' formhas had a negativeeffect in some agencies.

Action: Broaden the focus of theInspectors General from strict complianceauditing to evaluating managementcontrol systems :''

In a government focused on results, theInspectors General can play a key role notonly in controlling managers behavior bymonitoring it, but in helping to improve it.Today, they audit for strict compliance withrules and regulations. In the future, theyshould help managers evaluate theirmanagement control systems. Today, theylook for "waste, fraud, and abuse." In thefuture, they should also help improvesystems to prevent waste, traud and abuseand ensure efficient. effective service.

Many IGs have already begun to helptheir agencies this way. At the Justice

Department, for example, some offices wereinefficient in completing background andsecuriry clearances. The Inspector General'soffice examined the problem. tl.crecommended setting up a central databaseto manage the clearance process and warnofficials automatically when they wereabout ro miss deadlines for completinginvestigations. Similarly, the InspectorGeneral of the Department of Health andHuman Services has long been engaged inprogram evaluations to help agenciesuncover inefficiencies. While the InspectorGeneral's office retains the right ro conductformal audits and criminal investigations, italso uses its role as a neutral observer tocollaborate on making programs workbetter.

Congress need pass no legislation tomake this happen. Promoting the efficiencyand integrity of government programs waspart of the IGs' original mandate. But suchchange will require a cultural revolutionwithin many IC offices, and werecommend two steps to help guide such achange. First, line managers, who are theIGs' front-line customers, should besurveyed periodically to see whether theybelieve the IGs are helping them improveperformance. Second, criteria should heestablished for judging IC performance.

STEP 5: ELIMINATING REGULATORY OVERKILLReinventing our budget, personneland procurement systems will stripaway much hut not allof the

red tape that makes our governing processesso cumbersome. Thousands upon thousandsof outdated, overlapping regulations remainin place. These regulations affect the peopleinside government and those who deal withit from the outside. Inside government, wehave no precise measurement of how muchregulation costs or how much rime it stealsfrom productive work. But there's nodisagreement that the costs are enormous.And on the matter of external regulation, a

41

1993 study concluded that the cost to theprivate sector of complying with regulationsis at least 5430 billion annually-9 percentof our gross domestic product! -4°

We must clear the thicket of regulationby undertaking a thorough review of theregulations already in place and redesigningregulatory processes to end the proliferationof unnecessary and unproductive rules. Wehave worked closely with administrationofficials responsible for developing newapproach to regulatory review andincorporated that work into the followingaction.

1ziaAati mow- ,at1 t,3"1"14*

Action: The President should issue adirective requiring all fede ral agencies toreview internal government regulations

the next .3 years, with a goal ofeliminating 50 percent of those)1pdations.`i

Can regulations be eliminated? Theanswer is Yes, as evidenced by promisingexperiments in several federal agencies.

In the Management Efficiency PilotProgram (MEPP) in five of the Departmentof Veterans Affairs regional benefits offices,the offices were encouraged to do away withred tape.1= At several benefits offices, 895 of1,969 regulations were dropped, saving thestaff more than 3,000 hours and $640,000in one year. Productivity at MEPP centersincreased by 35 percent in one year (1988-89), more than double the increase at othercenters. A similar effort by five VA medicalcenters redirected $3.1 million to much-needed funding for acute care centers..

An even more sweeping example of afresh start in internal regulations comesfrom the Air Force, where the Chief of Staffhas established a servicewide program tostreamline the organization and cut outbureaucracy. Under the Policy ReviewInitiative begun in 1992, the Air Force isreplacing 1,510 regulations with 165 policydirectives and 750 sets of instructions. Thiseffort will cut 55,000 pages of intermingledpolicy and procedure to about 18,000pages, clearly separating policy fromprocedure. This deregulation effort,managed by a staff of 10, is expected to becompleted in fiscal year 1994.

Over the next 3 years, each federalagency will undertake a thorough andsystematic review of its internal regulations.Agencies may choose their own strategiesfor reaching the goal of reducing internalregulations by 50 percent.

Action: Improve inter-agencycoordination of regulations to reduceunnecessary regulation and red tape.°

In 1981, frustrated at the inconsistenciesand duplication among federal regulatory

CUTTING RED TAPE

efforts and their burden on government andthe private sector, President Reagan requiredthe Office of Management and Budgetspecifically, the Office of Information andRegulatory Affairs (OIRA) to review allregulations proposed by executive agencies.

With a limited staff, many of whom arealso involved with paperwork reductionissues, the review process for proposedregulations can be lengthy. And while alengthy review process may be appropriatefor significant rules, it is a waste of timefor others.

e can lick gravios but sometimes the

paperwork is overwhelming.

Wernher von Braun

In early 1993, Vice President Goreconvened an informal working group torecommend changes in the regulatoryreview process. The working group and theNational Performance Review coordinatedtheir efforts closely. We endorse therecommendations of the working groupand the President's executive order, whichwill implement those changes andstreamline the regulatory review process.

The order will enhance the planningprocess and encourage agencies to consultwith the public early in that process. Inaddition, in an effort to coordinate theregulatory actions of all executive agencies, theVice President will meet annually with agencyheads, and the Administrator ofOIRA willhold quarterly r eetings with representativesof executive agencies and the administration.

Improving the regulatory review processalso means being selective in reviewingregulations. Through this order, thePresident will instruct OIRA to review onlysignificant regulationsnot, as under thecurrent process, all regulations. The newreview process, which will take into accounta broad range of costs and benefits, will bemore useful and realistic.

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.1-o ease the adverse effects of regulationon citizens, businesses, and the economy asa whole, the executive order also will requirean ongoing review of existing regulations.Agencies will identify regulations that arecumulative, obsolete, or inconsistent. and,where appropriate, eliminate or modifythem. 'rho; will also identify legislativemandates that require them m imposeunnecessary or outdated regulations.

Action: Establish a process by whichagencies ran more widely obtain waiversfrom reguations. '

With the advent of the GovernmentPerformance and Results Act. NvhichCongress passed in July 1993. we havebegun to acknowledge the importantprinciple of "flexibility in return foraccountability."

Under the act, some agencies may applyfor waivers from federal regulations if theymeet specific performance targets. In otherwords, they will he exempt from someadministrative requirements if they do theirjobs better. The law applies only to internalregulations and government agencies, but italso urges wider waiver authority to test thepotential benefits. In the spirit of thatlegislation, we seek to expand the concept ofgreater flexibility for greater accountability.

The President should direct each federalagency to establish and publish,in a timelymanner, an open process through whichother federal agencies can obtain waiversfrom that agency's regulationswith anexpedited appeals process.

Rules adopting this new waiver processwould state that all future agency regulationswould be subject to the waiver process unlessexplicitly prohibited. We will also askCongress to specify that legislation would besubject to waivers unless explicitly prohibited.

Action: Reduce the burden ofcongressionally mandated reports.''

Woodrow Wilson \vas right. Ourcountry's 28th president once wrote that"there is no distincter tendency in

34

congressional history than the tendency tosubject even the details of administration-to constant congressional supervision.

One place to start in liberating agenciesfrom congressional micromanagement is theissue of reporting requirements. Over thepast decades, we have thrown layer uponlaver of reporting requirements on federalagencies, creating an almost endless series ofrequired audits. reports, and exhibits.

Today the annual calendar is jammed withreport deadlines. On August 31 of each year,the Chief Financial Officers (CFO) Actrequires that agencies file a 3 -year financialplan and a CFO annual report. OnSeptember 1, budget exhibits for financialmanagement activities and high risk areas aredue. On November 30, IG reports areexpected, along with reports required by thePrompt Payment Act. On January 31,reports under the Federal Civil PenaltiesInflation Report Adjustment Act of 1990come due. On March 31, financial state-ments are due, and on May 1 annual single-audit reports must be filed. On May 31another round of IG reports are due. At theend of July and December, "high-risk"reports are filed. On August 31, it all beginsagain. And these are just the major reports!

In fiscal year 1993, Congress requiredexecutive branch agencies to prepare 5,348reports. 4' Much of this work is duplicative.And because there are so many differentsources of information, no one gets anintegrated view of an agency's condition- -least of all the agency manager who needsaccurate and up to date numbers.Meanwhile, trapped in this blizzard ofpaperwork. no one is looking at results.

We propose to consolidate and simplifyreporting requirements, and to redesignthem so that the manager will have a clearpicture of the agency's financial condition,the condition of individual programs. andthe extent to which the agency is meeting itsobjectives. We will ask Congress to passlegislation granting OMB the flexibility toconsolidate and simplify statutory reportsand establishing a sunset provision in anyreporting requirements adopted byCongress in the future.

43

STEP 6: EMPOWER STATE ANDLOCAL GOVERNMENTS

hat we usually call -government"is, in fact, a tangle of differentlevels of government agencies

some run from Washington, some in statecapitals, and some by cities and towns. Inthe United States, in fact, some 80.000-governments" run everything from localschools and water supply systems to theDefense Department and Overseasembassies. Few taxpayers differentiateamong levels of government, however. Tothe average citizen, a tax is a taxand aservice a serviceregardless of which levelof government is responsible. Ii)reinvent government in the .public's eves,we must address the web of federal-state-local relations.

Washington provides about 16 percent ofthe money that states and localities spendand shapes a much larger share of suchspending through mandates. Much ofWashington's domestic agendaS226billion to be preciseconsists of programsactually run by states, cities, and counties.But the federal government doesn't alwaysdistribute its moneyor its mandateswisely.

For starters, Washington allocates federalmoney through an array of more than 600different grant programs. Many are small:445 of them distribute less than 550 milliona year nationwide; some 275 distribute lessthan 510 million. Through grants,Congress funds some 150 education andtraining programs, 100 social serviceprograms, and more than 80 health careprograms.

Considered individually, manycategorical grant programs make sense. Buttogether, they often work against the verypurposes for which they were established.When a department operates small grantprograms, it produces more bureaucracy,not more services. Thousands of publicemployeesat all levels of governmentspend millions of hours writing regulations,

CUTTING RED TAPE

writing and reviewing grant applications,filling out forms, checking on each other,and avoiding oversight. In this way,professionals and bureaucrats siphon moneyfrom the programs intended customers:students, the poor, urban residents, andothers. State and local governments findtheir money fragmented into hundreds oftiny pots, each with differentoftencontradictoryrules, procedures, andprogram requirements.

Henry Cisneros, Secretary of Housingand Urban Development, likens federalgrants to a system of pipelines spreading ouracross the country. The -water," saysCisneros, reaches states and localities

Were we directed from Washington when to

sow and when to reap, we should soon want

br;u2`.

Thomas Jefferson.1826

through hundreds of individual pipelines.This means there is little chance for thewater to be mixed, properly calibrated tolocal needs, or concentrated to address aspecific problem, geographic area, orpopulation.

In employment and training, forexample, Washington hinds trainingprograms, literacy programs, adulteducation programs, tuition grantprograms, and vocational educationprograms. Different programs aredesigned for different groupswelfarerecipients, food stamp recipients,displaced homemakers, youth in school,drop-outs, "dislocated workers," workersdisplaced by foreign trade, and onand on.

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[Rom 101) %pi. 10 Ri:si.L.rs citi.A rtNG A cm" RNME.S; inAt WORKS Bt. r & COS FS LESS

At a plant in Pittsfield, Massachusetts,General Electric recently laid off a largegroup of workers. Some workers could getTrade Adjustment Assistance benefits,because their jobs were lost to foreigncompetition. Others could not; their jobsfell to defense cutbacks. Because they have aunion, people working in one area beganexercising their seniority rights andbumping people in other areas. Someworkers humped from trade-affected jobs todefense contracting jobs, then lost those afew weeks later. Under federal regulations,they could no longer get Trade AdjustmentAssistance..aus, friends who had spentyears working side by side found themselveswith very different benefits. Some got thestandard 6 months of unemploymentchecks. Others got 2 years ofunemployment checks and extensiveretraining support. Try explaining that topeople who have lost the only jobs they'veever held!

People who run such programs struggleto knit together funds from three, four, orfive programs, hoping against hope thatworkers get enough retraining to landdecent new jobs. But the task is difficult;each program has its own requirements,funding cycles, eligibility criteria, and thelike. One employment center in AlleghenyCounty, New York, has tried hard to bringseveral programs together and make themappear as seamless as possible to thecustomers. At the end of the day, toaccommodate reporting requirements, thestaff enters inf,rmation on each customer atfour different computer terminals: one forJob Training Partnership Act (JTPA)programs, one for the JOBS program, onefor the Employment Service, and one fortracking purposes.

When Congress enacted JTPA. it soughtto avoid such problems. It let local areastailor their training programs to local needs.But federal rules and regulations havegradually undermined the good intentions.Title III, known as the EconomicDislocation and Worker AdjustmentAssistance Act (EDWAA), helps statesrespond immediately to plant closings and

45'

large layoffs. Yet even EDWAA's mostflexible money, the "national reserve fund,"has become so tangled in red tape thatmany states won't use it. As Congress'sOffice of Technology Assessment put it,"the process is simply too obstacle ridden. ...

many state EDWAA managers cannothandle the complexities of the grantapplication, and those that do know howare too busy responding to clients' urgentneeds to write demanding, detailed grantproposals."

When Congress amended JTPA in 1993,targeting more funds to those with"multiple barriers" to employment,homeless advocates thought the changewould help their clients. After all, who hasmore harriers to employment than someonewithout an address or phone number? Butthe new JTPA formula also emphasizedtraining over job search assistance. So a localprogram in Washington, D.C. that hadwon a Labor Department award for placing70 percent of its clients in jobsmany ofthem service sector jobs paying more thanthe minimum wagelost its JTPA funding.Why? It didn't offer training. It just helpedthe homeless find jobs..1'

But federal programs rarely focus onresults. As structured by Congress, they paymore attention to process than outcomesin th. case, more to training than to jobs.Even in auditing state and local programs,federal overseers often do little more thancheck to see whether proper forms are filedin proper folders.

The rules and regulations behind federalgrant programs were designed with the bestof intentionsto ensure that funds flow forthe purposes Congress intended. Instead,they often ensure that programs don't workas well as they couldor don't work at all.

Virtually every expert with whomwe spoke agreed that this system isfundamentally broken. No one argued formarginal or incremental change. Everyonewants dramatic changestate and localofficials, federal managers, congressionalstaff. As in managing its own affairs, thefederal government must shift the basicparadigm it uses in managing state and local

affairs. It must stop holding programsaccountable for process and begin holdingthem accountable for results.

The task is daunting; it will take years toaccomplish. We propose several significantsteps on the journey:

Establish a cabinet-level EnterpriseBoard to oversee new initiatives incommunity empowerment;

Cut the number of unfunded mandatesthat Washington imposes;

Consolidate 55 categorical grants intobroader "flexible grants:"

Increase state and local flexibilitv inusing the remaining categorical grants;

Let all agencies waive rules andregulations when they conflict withresults; and

Deregulate the public housing program.

The likely benefits are clear:administrative savings at all levels; greaterflexibility to design solutions; more effectiveconcentration of limited resources; andprograms that work for their customers.

Action: The President should establisha cabinet-level Enterprise Board tooversee new initiatives in communityempowerment.48

The federal government needs to betterorganize itself to improve the way it workswith states and localities. The Presidentshould immediately establish a workinggroup of cabinet-level officials, withleadership from the Vice President, theDomestic Policy Council, and the NationalEconomic Council.

The Board will look for ways toempower innovative communities byreducing red tape and regulation on federalprograms. This group will be committed tosolutions that respect "bottom-up" initiatives

CUTTING RED TAPE

-Sinnedikes- tVe need Start'

slate and sad "Hey we've been doing*the last 40, 50 years. It doesn't work."throw out everything, clear out mi

have as agoal doing the'. right thfrig

right reasons, even fit entails taking

t - t.....- ...,

Chairman, Chicago Housing Authority,Reinventing Government Stithrifit

Philadelphia, June 25,1993

-.,--;41-..7,,,i4.7.---.- .,,

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rather than "top -down' requirements. It willfocus on the administration's communityempowerment agenda, beginning with the9 Empowerment Zones and 95 EnterpriseCommunities that passed Congress as partof the President's economic plan.

In participating communities, forexample, federal programs could beconsolidated and planning requirementscould be simplified; waivers would begranted to assure maximum flexibility;federal funding cycles would besynchronized; and surplus federal propertiescould be designated for community use.

Action: The President should issue adirective limiting the use of unfundedmandates by the administration.°

As the federal deficit mounted in the1980s, Congress found it more and moredifficult to spend new money. Instead, itoften turned to "unfunded mandates"passing laws for the states and localities tofollow, but giving them little or no moneyto implement those policies. As ofDecember 1992, there were at least 172separate pieces of federal legislation in fincethat imposed requirements on state andlocal governments. Many of these, such asclean water standards and increased publicaccess for disabled citizens, areunquestionably noble goals.

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But the question remains: Now will stateand local governments pay to meet thosegoals? We recommend that Congress refrainfrom this practice and that the President'sdirective establish that the executive branchwill similarly limit its use of unfundedmandates in policies, legislative proposalsand regulations.

The directive would narrow thecircumstances under which departmentsand agencies could impose new unfundedburdens on other governments. It alsowould direct federal agencies to review theirexisting regulations and reduce the numberof mandates that interfere with effectiveservice delivery. OMB's Office ofInformation and Regulatory Affairs (OIRA)should review all major regulations orlegislation proposed by the executive branchfor possible adverse impacts on states andlocalities. Finally, ()IRA's director should

create a forum in which federal, state, andlocal officials could develop solutions toproblems involving unfunded mandates.

Action: Consolidate 55 categorical grantprograms with finding of 512.9 billioninto six broad "flexible grants"in jobtraining, education, water quality,defense conversion, environmentalmanagement, and motor carrier safety.5°

This proposal came from the NationalGovernors Association (NGA) andNational Conference of State Legislatures(NCSL), which describe it as "a first steptoward broader, more ambitious reforms."It would consolidate some 20 education,employment and training programs, with acombined S5.5 billion in fiscal year 1993spending; roughly 10 other educationprograms ($1.6 billion); 10 small

How Much Do You Get for a 1983 Toyota?

VIhat does the price of a used car have to

do with the federal government's family

policies?

More than it should. Caseworkers employed

by state and local government to work with

poor families are supposed to help those

families become self-sufficient. Their job is to

understand how federal programs work. But as

it turns out, those caseworkers also have to

know something about used cars. Used cars?

That's right. Consider this example, recounted

to Vice President Gore at a July 1993

Progressive Foundation conference on family

policy in Nashville, Tennessee:

Agencies administering any of the federal

government's programs for the poor must verify

many details about people's lives. For instance,

they must verify that a family receiving funds

38

under Aid to Families with Dependent

Children (AFDC) does not own a car worth

more than $1,500 in equity value. To give a

poor family food stamps, it must verify that the

family doesn't own a car worth more than

$4,500 in market value. Medicaid specifies a

range that it allows for the value of a recipient's

car, depending on the recipient's Medicaid

category. But under food stamp rules, the car is

exempt if it is used for work or training or

transporting a disabled person. And under

AFDC, there is no exemption for the car under

any circumstances.

Recounting that story to a meeting of the

nation's governors, the Vice President asked this

simple question: "Why can't we talk about the

same car in all three programs?"

47

environmental programs (5392 million);six water quality programs (52.66 billion);

and six defense conversion programs(S460 million).

Action: Gmcress should allow states andlocalities to consolidate separate (,'antprograms front th2 bottom up.''

Recognizing the political andadministrative obstacles to wholesale reformof more than 600 existing categorical grantsin the short term, the National PerformanceReview focused on an innovative solutionto provide flexibility and to encourageresult-oriented performance at the stare andlocal levels.

Our proposal calls fOr Congress toauthorize -bottom-up- grant consolidationinitiatives. Localities would have authorityto mix funding from different programs,with simple notification to Washington,when combining grants smaller than S 10million each. For a consolidation involvingany program funded at more than S 10million, the federal awarding office (andstate, if applicable), would have to approveit before implementation. In return for suchconsolidation, the state and localgovernments would waive all but one of theprograms administrative payments fromthe federal government.

When different grants regulationsconflict, the consolidating agency wouldselect which to follow. States and localitiesthat demonstrated effective serviceintegration through consolidation wouldreceive preference in future grant awards.

Each of the partners in theintergovernmental system must workcollaboratively with othersfederal, state,and localto refine this recommendation.The details will be negotiated withimportant state and local organizations,such as the NGA, the NCSI the U.S.Conference of Mayors, and the NationalLeague of Cities, before legislation isdrafted.

Bottom-up consolidation will he given ahigh priority by the administration. Itrepresents a way to improve state and local

CUTTING RED TAPE

performance without tackling the thornypolitical problem involved in consolidating600 grant programs, reconciling thousandsof rules and regulations, and anticipatingevery possible instance when flexibilitymight be necessary. It puts the burden ofidentifying obstacles and designing the hestsolution where it belongson those whomust make the programs work.

Action: (jive all cabinet secretaries andagency heads authority to grant states andlocalities selective waivers front federalregulations or mandates.

The National Performance Review is not

intended to be the final word on reinventinggovernment but rather a first step. This long

overdue effort will require continuingcommitment from the very top to truly change

the way government does business.

U.S. Rep. John Conyers (D. Mich.)August 28, 1993

For federal grant programs to work,managers must have flexibility to waiverules that get in the way. Some departmentshave this authority; others don't. Federaldecisions on most waivers come very slowly,and states often must apply to a half-dozenagencies to get the waivers they need.Florida. for example, has a two-year waiverallowing it to provide hospice care to AIDSpatients under Medicaid. Its renewal takes18 months. So state officials have to reapplyafter only six months.

Waiver legislation should grant broadwaiver authority, with the exception of fairhousing, non-discrimination, environ-mental, and labor standards. We will askCongress to grant such authority to cabinetofficers. These waivers should be grantedunder limited circumstances, however. Theymust be time-limited and designed toinclude performance measures. When each

48 39

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.(()%1 1(11) . i,) RI St 1 Is ( (, k,()%1 I(\ f \I \V(11th1 BE I II it & costs

experiment is concluded, the grantingagency should decide whether the new wavof doing things should be included instandard practice.

Action: I; controt of puolic nousincz:o local Public bousuur authorities withNsto)-i('s Ofexceilein numagementellill.;trbstantiallv deregulate the rest.

Public housing is a classic story of goodintentions gone awry. When the programbegan in the 1030s, it was hailed as anenlightened response to kuropeanimmigrants. squalid living conditions incities across the country. .1-hrough anenormous bureaucracy stretching fromWashington into virtually every city inAmerica, the public housing programbrought clean, safe. inexpensive livingquarters to people who could not affordthem otherwise.

Now, however, public housing is evenmore troubled than our categorical grantprograms. With its tight, centralizedcontrol, it epitomizes the industrial-eraprogram: hierarchical, rule-bound, andbureaucratic. HUD's Washington, regional.and local offices rigidly control local publichousing authorities, who struggle to helpthe very poor.

Frustrated by the failure of publichousing, innovative state and localgovernments began to experiment with newmodels of developing, designing, financing,managing, ind owning low-incomehousing. Successful efforts tailored thehousing to the characteristics of thesurrounding community. Local publichousing authorities began to work withlocal governments and non-profit

4

organizations to create innovative newmodels to serve low-income people.

HUD recognizes that local authoritieswith proven records of excellence can servetheir customers tar better if allowed to make(heir own decisions. We and the secretaryrecommend that Congress give HUDauthority to create demonstration projectsin which local housing authorities wouldcontinue to receive operating subsidies aslong as they met a series of performancetargets, but would he free from other HUI)control. Individual demonstrations couldsari', but all federal rules would be open forwaivers as long as HUD could measureperformance in providing long-term,affordable housing to those poor enough tobe eligible for public housing.

In addition. HUD should work closelywith local housing authorities, their nationalorganizations, public housing tenantorganizations, and state and local officials toeliminate unnecessary rules, requirements,procedures, md regulations. In particular,HUD should replace its detailedprocurement and operating manuals anddesign and site selection requirements withperformance measures, using annualranking of local housing authorities toencourage better service and greateraccountability. It should eliminate theannual budget review, an exercise in whichHUD field staff spend thousands of hoursreviewing and approving detailed budgetsfrom local housing authorities eventhough the reviews do not influence federalfunding decisions. And it should work withCongress to change current rent rules.which create strong incentives for people tomove from public housing as soon as theyfind jobs.

W.4I ;1 ,F; )4:it

ConclusionThe changes described above areambitious. They will take enormouseffort and enormous will. It will he

many Years before all of them take root. Butif they succeed, the American people willhave a government capable of attackingtheir problems with far more energy, and farless waste, than they can today imagine.

We must move quickly, because thebureaucracy, by its nature. resists change. As.lom Peters wrote in Thriving on OPilos,-Good intentions and brilliant proposals%al be dead-ended, delayed, sabotaged,

CUTTING RED TAPE

massaged to death, or reversed beyondrecognition or usefulness by the overlayeredstructures....

But the changes we propose will producetheir own momentum to overcomebureaucratic resistance. As the red tape isbeing cut, federal workers will become moreand more impatient with the red tape thatremains. They will resist any reversal of theprocess. And they will be strengthened intheir resistance by the steps we propose inthe next chapters.

5 041

Chapter 2

PUTTING CUSTOMERS FIRST

11." are going to rationalize the war the federal government relates to the.-11)1Criedll people, and We ale goin,(f to make the jidend government customer friendly

A lot of people dour realize that the fiyleral govermnent has customers.We have customers. The Amerimn people.

AII of usbureaucrat orbusiness owner, cabinetsecretary or officeclerkrespond toincentives. We do moreof what brings us

rewards and recognition, less of whatbrings us criticism. But our government,built around a complex cluster ofmonopolies, insulates both managers andworkers from the power of incentives.

We must change the system. We mustforce our government to put the customerfirst by injecting the dynamics of themarketplace.

The best way to deal with monopoly is toexpose it to competition. Let us be clear:this does not mean we should rungovernment agencies exactly like privatebusinesses. After all, many of government'sfunctions arc public responsibilities preciselybecause the private sector cannot, shouldnot, or would not manage them. But wecam transplant some aspects of the businessworld into the public arena. We can createan environment that commits federal

Vice President Al GoreTown Meeting,

Department of Housingand Urban Development,

March 26, 1993

managers to the same struggle to cut costsand improve customer service that compelsprivate managers. We can imb/ue the federalgovernmentfrom top to bdttomwith adriving sense of accountability.

Is it really possible to reinventgovernment in this way? Horror storiesabout government waste are so abundantthat many doubt its ability to change. Forsome, the only solution is to cut or abolishprograms wholesale. In some instancesthose cuts make sense and we arerecommending them. But alone they do notaddress the problem we face or move usdecidedly toward a government that worksbetter and costs less.

We propose a different approach. Wemust make cuts where necessary; we alsomust make our government effective andefficient. Some programs clearly should beeliminated, others streamlined. We willoffer many proposals to do both in chapter4. But reinventing government isn't justabout trimming programs; its aboutfundamentally changing the waygovernment does business. By forcing

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I ROM RI D 11P4. It RESI I Fs CRI 111 \(, 1;OVI RNMIAT I-11AI WORKS BI TTER & ('USFS Liss

public agencies to compete for theircustomersbetween offices. with otheragencies, and with the private sectorwewill create a permanent pressure to streamlineprograms, abandon the obsolete, andimprove what's left.

This process will be neither quick noreasy. But as it unfolds, a very differenttype of government will emerge, one thatis accountable to its true customersthe public.

We propose four specific steps toempower customers, break federalmonopolies, and provide incentives forfederal employees to better serve theircustomers.

First, we will require that all federalagencies put customers first by regularlyasking them how they view governmentservices, what problems they encounter, andhow they would like services improved. Wewill ensure that all customers have a voice,and that every voice is heard.

Second, we will make agencies competefor their customers' business. Whereverfeasible, we will dismantle government'smonopolies, including those that buy goods

and services, acquire and maintain officespace, and print public documents. Theseinternal monopolies serve their customersgovernment workersso poorly, it's nowonder those workers have such troubleserving customers outside government.

Third, where competition isn't feasible,we will turn government monopolies intomore businesslike enterprises--enterprisesin closer touch with both customers andmarket incentives.

Fourth, we will shift some federalfunctions from old-style bureaucracies tomarket mechanisms. We will use federalpowers to structure private markets in waysthat solve problems and meet citizensneedssuch as for job training or sateworkplaceswithout ftinding more andbigger public bureaucracies.

Together, these strategies will enable us tocreate a responsive, innovative, andentrepreneurial government. If we injectmarket mechanisms into federal agencies aswe are cutting red tape, we will create newdynamicsand a new dynamismthroughout the federal government.

STEP 1: GIVING CUSTOMERS A VOICEAND A CHOICE

Setting Customer Service Standards

Long lines, busy signals, badinformation, and indifferent workersat front countersthese are all too

common occurrences when customers comein contact with their government. Quitesimply, the quality of government service isbelow what its customers deserve.

We propose to set a goal of providingcustomer services equal to the best in busnuss.

Too many agencies have learned tooverlook their customers. After all, most ofgovernment's customers can't really taketheir business elsewhere. Veterans who useveterans' hospitals, companies that seekenvironmental permits, or retirees applyingfor social security benefits must deal with

52

public agencies that hold monopolies. Andmonopolies, public or private, have littlesensitivity to customer needs.

So government agencies must do whatmany of America's best businesses havedone: renew their focus on customers. Someare already trying. The Internal RevenueService (IRS) and Social SecurityAdministration (SSA) have taken majorsteps to improve their telephone services tocustomers. SSA, the U.S. Postal Service(USPS), and the Department of VeteransAffairs are developing a combinedgovernment services kiosk, providing asingle point of access for services offered bythe three agencies. The Library of Congress,the Energy Department, the NationalAeronautics and Space Administration, the

National Science Foundation, and otherfederal agencies have placed their materialson Internet, a worldwide computernetwork.'

Good service means giving people whatthey need. To do that, however, one mustfirst find out what they wanta step tewfederal agencies have taken. In the future,federal agencies will ask their customerswhat they want. what problems they have.and how the agencies can improve theirservices.

Knowing what customers want, publicagencies must set clear and specificcustomer service standards. When FederalExpress promises to deliver a package the-next day by 10:30 a.m., both customers andemployees understand precisely what thatmeans. Similarly, when the Air Force'sTactical Air Command discarded its thickset of specifications about living quarters forvisiting pilots and adopted a simplestandardequivalent to "a moderatelypriced hotel, like Ramada"employeesunderstood exactly what it meant.=

Several federal agencies that frequentlyinteract with citizens have launchedaggressive customer service initiatives. Weendorse strengthening these initiativesdescribed belowand expanding themacross the federal government.

Internal Revenue Service. The IRS, thefederal agency most citizens prefer to avoid.might seem the least likely to develop acustomer focus. But its working hard to dojust that.

Four years ago. the General AccountingOffice (GAO) discovered that IRS staff gavea wrong answer to one of every threetaxpayers who called with a question. Sincethen, the agency has improved its accuracyrate to 88 percent.' Andin a switch thatsignals a basic change in attitude agencyemployees now refer to taxpayers ascustomers.

In IRS pilot projects across the country,employees now have authority to changework processes on their own in order toimprove productivity. Front-line workersalso have more authority to resolve issuesone-on-one with individual taxpayers. The

PUTTING CUSTOMERS FIRST

agency is fostering competition among itstax return centers, based on customerservice levels and effi. ciency at handling the1.' billion pieces of paper the IRS receiveseach year. Centers that perform better gethigher budgets and workloads, andemployees get promotion opportunities.The IRS was among the first governmentagencies to use 800 numbers andautomated voice mail systems to increasecustomer access to information. -loday. theIRS is beginning to survey its customers.

Customer Service Standards: IRS

As part of the National Performance Review, the

IRS is publishing customer service standards,

including these:

If you file a paper return, your ref.und due willbe mailed within 40 days.

If you file an electronic return, your refund duewill be sent within 14 days when you specifydirect deposit, within 21 days when yourequest a check.

Our goal is to resolve your account inquirywith one contact; repeat problems will behandled by a Problem Resolution Office in anaverage of 21 days.

When you give our tax assistors sufficient andaccurate information and they give you thewrong answers, we will cancel related penalties.

With your feedback, by 1995 IRS forms andinstructions will be so clear that 90 percent ofindividual tax returns will be error-free.

In addition, some centers are servingci tstomers in truly :astonishing ways. Oneanecdote makes the point. At the Ogden,Utah Service Centera winner of thePresidential Award for Qualitya down-

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ROM RED TAPE TO RESULTS CREA TING ( ;ovI :RNMEN r tuAl WORKS BET TER & Cos I s Ss

Customer Service Standards:Social Security Administration

As part of its participation in the National

Performance Review, the Social Security

Administration will publish nationall)4 and post in

each of its offices, these performance standards:

You will be treated with courtesy every timeyou contact us.

We will tell you what benefits you qualify forand give you the information you need to useOUT programs.

We will refer you to other programs that mayhelp you.

You will reach us the first time you try on our800 number.

on-his-luck man hitchhiked from out ofstate to get his refund check. As it turns outthis center doesn't issue checks. But IRSemployees there discovered that a disbursingcenter had sent a check to the hitchhiker'sold address and that it had been returned.They ordered a new check sent to Ogdenand helped the hitchhiker make ends meetuntil the check arrived.

In the end, the IRS's efforts could affectall of us, not only as filers of tax returns butas taxpayers. If IRS forms are easier tounderstand and use, more taxpayers mightfile on time. If the IRS develops an image asa more effective, user-friendly agency, moretaxpayers might decide to file in the firstplace. A mere 1-percent increase involuntary compliance would add S7 billionin government revenue each year.'

Social Security Administration. Even,year, more than 47 million Americans comein contact with the Social SecurityAdministration, which administers old-age

46

pensions. survivors and disability insurance,and the supplemental security income (SSI)program. Tlie agency has 1,300 field officesand receives 60 million calls a year on itstoll-free lines. As the nation's populationages, the agency faces an ever-increasingworkload. Recently, an inspector general'sreport showed that customer satisfactionhad fallen 4 years in a row due to longerwaiting times in offices and increasingproblems in reaching someone on thephone.'

Fortunately, the Social SecurityAdministration is strengthening itscustomer orientation. When HurricaneAndrew struck South Florida. where367,000 people collect social security andSSI, agency workers took steps to ensurethat senior citizens would know how to gettheir checks despite the devastation. Localoffices used television, radio, andloudspeaker trucks touring the area withmessages in English, Spanish. and Creole.The agency also hired an airplane to tow abanner with SSA's toll-free 800 telephonenumber over the hard-hit Homestead area.

More generally, the Social SecurityAdministration recently adopted acustomer-oriented strategic plan, whichincludes objectives such as issuing socialsecurity numbers orally within 24 hours ofan application. Besides pinpointing some oftheir objectives as standards to reach today,SSA is publishing all 34 of its objectives andseeking customer feedback on whether it setthe right targets for service.

U.S. Postal Service. The Postal Service.which delivered 166 billion pieces of mail in1992, has begun improving customerservice for a good reason: It hascompetition. While most people still use thePostal Service to deliver first class mail. theuse of private delivery services andelectronic mail is rising quickly.

The Postal Service has decided to meetits competition head-on. Using focusgroups, the agency identified service areaswhere its customers wanted improvement.It found that people wanted shorter waitinglines at counters, better access to postalinformation, and better responses to their

54

complaints. Using these standards tomeasure performance. the agency set a lonz.range goal of "100-percent satisfaction- anddeveloped a customer satisfaction index tomeasure progress toward it.

The agency also is providing incentivesfor employee performance: In cooperationwith two postal unions, managers now usecustomer satisfaction data to help determineemployee bonuses.

Action: President simuiti issue .:

'freellre.1111 Yerriet'S 10 We Cir

usunner ,ertuce oroqTains that 'dentin.na sn1 vel. customers. life °mei. ?rill

Wt. 1011011'111V Sfallth1;71

11,11111.: 1 .stonier service canal la ilk, ,.,St

Me President's directive will lay outprinciples to govern the provision ofcustomer services. For example.organizations should:

survey their customers frequently tofind out what kind and qualitv ofservices they want::

post standards and results measuredagainst them:

benchmark performance against 'thebest in business";

provide choices in both source ofservice and delivery means;

make information, services, andcomplaint systems easily accessible;

handle inquiries and deliver serviceswith courtesy;

provide pleasant surroundings forcustomers; and

provide redress for poor services,

The order will direct all federal agencies(hat deal with the public to:

PUTTING CUSTOMERS FIRST

Customer ServiceStandards: USPS

As part of its participation in the National

Performance Review, the USPS will expand its

plans to display these standards in post offices:

Your first class mail will be delivered anywherein the United States within 3 days.

Your local first class mail will be deliveredovernight.

You will receive service at post office counterswithin 5 minutes.

You can get postal information 24 hours a dayby calling a local number.

immediately identify who theircustomers are;

survey their customers on services andresults desired, and on satisfaction withexisting services;

survey front-line employees on barriersto, and ideas for, matching the best inbusiness;

in 6 months, report results on thesethree steps to the President: and

develop and publish a customer serviceplanincluding an initial set ofcustomer service standardswithin IFear.

l'he customer service plans will addressthe need to train front-line employees incustomer service skills. They will alsoidentify companies that agencies will use tojudge how they compare to the "best inbusiness." The directive will ask cabinetsecretaries and agency heads to useimprovement in customer satisfaction as a

56

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(1(1\ 112 \ \II NI I!! 'X')ItlN 1;1 I1112 I s LissIll p\/ i() itrNti is :1 \ I Is

primary criterion in judging theperformance of agency managers and front-line employees.

Action: roilllitil 11510111er surveys,the Office or .11anavyment and Btukrettviil deletfate its survey approval autnorn-vunder the RIperworie 1?etlution Act todepartments that are able 10 comply nod)the act.

The public's input is crucial to improvingcustomer service. But current law gives theOffice of Management and Budget (OMB)power to decide on virtually all agencyrequests to solicit information from thepublic (0MB can delegate this authority).This law was designed to minimize onerouspaperwork burdens the federal governmentimposes on businesses and citizens. But italso minimizes the number of timesagencies ask customers about their needs. Itoften slows agencies down so much thatthey abandon the idea of doing a surveyaltogether.

For many agencies, customer surveys arcthe single most useful way to measureperformance. If OMB has to approve everyrequest for a customer survey, however,neither the directive described above nor theGovernment Performance and Results Act,which the President signed in August 1993,will work. Citizens do not like to be forcedto fill out forms by their government. Butmost Americans would be pleased to receivea voluntary survey asking how their postoffice or social security office could improveits customer service.

We propose to delegate approval ofvoluntary customer surveys to departmentswith the ability to comply with the law, andensure that they create rapid approvalprocesses so bottlenecks don't develop atlower levels.

Customer-driven programs rarely costmore than others; indeed, productivitygains in past federal experiments have morethan offset cost increases. At the OgdenService Center, the IRS office's newapproach helped workers process 5 percentmore tax returns. \Mien organizations shift

56

their focus to customers, they act likeAvisthey try harder.

Crossing Agency Boundaries

Unfortunately, even agencies that tryharder find very real obstacles in the way ofputting their customers first. Perhaps theworst is Washington's organizational chart.Time and again, agencies find it impossibleto meet their customers needs, becauseorganizational boundaries stand in the way.

Sometimes, programs housed in the sameagency are only tangentially related. Whilemost Agrfailture Department programsrelate to food, for instance, its customersrange from farmers who grow it to poorchildren whose families use food stamps. Atother times, programs dealing with thesame customers are located in a dozendifferent agencies. Rather than make peoplejump over organizational boundaries ontheir own, we must remove the boundariesat the point of customer contact. We mustmake the delivery of services "seamless."

The traditional solution is to shuffle theorganizational chart. But in Washington,such proposals set off monumental turfwars between agencies in the executivebranch, and between committees inCongress. After years of struggle, one or twoagencies are reorganized or a newdepartment is created. Meanwhile, thenation's problems keep changing, so thenew structure is soon out of date.

In a rapidly changing world, the bestsolution is not to keep redesigning theorganizational chart; it is to melt the rigidboundaries between organizations. Thefederal government should organize workaccording to customers needs andanticipated outcomes, not bureaucratic turf.It should learn from America's best-runcompanies, in which employees no longerwork in separate, isolated divisions, but inproject- or product-oriented teams.

To do so, the government must makethree changes. It must give federal workersgreater decision making authorirv, allowingthem to operate effectively in cross-cutting

ventures. It must strip federal laws ofprohibitions against such cooperation. Andit must order agencies to reconsider theirown regulations and tradition-boundthinking. For example, the Forest Servicefound that -0 percent of its regulatoryharriers to new, creative ways of doingbusiness were self-imposed.'

Despite these barriers, some noteworthyinitiatives are underway. RuralDevelopment Councils, under theAgriculture Department's direction, workwith several federal departments as well asstates and localities to better coordinaterural aid programs. At the Federal AviationAdministration (FAA), a systems managerhelps coordinate the activities of the FAA.Defense Department, international aviationorganizations, and various private interestson matters involving satellites, data links,and traffic flow management.

We should bring the same approach toother parts of government. The followingexamples illustrate the problems we face andthe solutions we must create.

Action: a system oicompetitive,one-stop, career development centers open.o ail ..linericans."'

Our nations economic future dependson the quality of our workforce. Ourindividual futures, too, depend on whetherwe have marketable, flexible skills withwhich to adapt to the changing demands ofnew technologies. In a country where theaverage worker changes jobs seven times ina lifetime, those skills are more thandesirable: they are crucial.

Our government invests heavily ineducation and training. 'Ibgether, 14separate government departments andagencies invest 524 billion a year, throughISO employment and training programs.' 'But we do not invest this money wellenough. For one thing, our system isorganized for the convenience of those whodeliver services, not those who use them.For another, the system lacks competitionand incentives for improvement.

-File United States has a worldwide

PUTTING CUSTOMERS FIRST

reputation for providing its youth extensiveopportunity to attend college," the GeneralAccounting Office noted recently.-However, our country falls short inemployment preparation of manynoncollege-youth.- Unlike our competitors.GAO said, we have no national policy tosystematically prepare non-college educatedyouth for jobs.''

Our system is badly fragmented. Eachservice from job referral-to retrainingis designed for different people, withdifferent rules. regulations, and reportingrequirements. Bewildered, often dispirited,job seekers must trudge from office tooffice, trying to fit themselves into aprogram. Vihen they find a program, theymay find that they aren't eligible, that its allfilled up, or that the classroom is acrosstown.

American workers deserve a better deal.Nowhere on the government reinventionfront is action more urgently needed or arepotential rewards greater. We envision anew workforce development system,fbcused on the needs of workers andemployers. We will organize it around thecustomer whether an individual or abusiness then provide that customerwith good information about theperformance of different providers andplenty of choices. If we do this, careercenters and training providers will have tocompete for their customers business, basedon the quality of their services.

Specifically, we propose one-stop careermanagement centers across the country,open to all Americans regardless of race,gender, age, income, employmentexperience, or skills. (One-stop centers arealso a key feature of the WorkforceInvestment Strategy the Labor Departmentis developing.) Our centers would offerskills assessment, information on jobs,access to education and trainingeverything people needed to make careerdecisions. The centers would be linked toall federal, state, and local workforcedevelopment programs, and to manyprivate ones (which arc. after all. the sourceof most job-training money). Core services

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such as labor market intOrmation and jobsearch help would be offered tree. Somecenters might otter other services, fromcomprehensive testing to career counselingand workshops, on a tee-tor-service basis.

These centers would help their customersget access to funds from of the 150programs for which they qualified..lo makethis possible. the federal government wouldeliminate or waive mane rules andregulations that keep our workforcedevelopment- programs separate..ihecenters would Also he Allowed to generatetheir own revenues, in, hiding lees collectedfrom employers and employees would couldafford to pay. Any oruanuation, public orprivate, would he .111,Aved 1,) seek a charterto operate one or more oil,. stop careercenters. 'Fhe process wol lid he performance-driven, with contracts renewed only ifcenters met customers. demands. Thefederal government would establish nationalchartering standards for the centers, butstates and lot al employment boards woulddecide which orgam/Anons met thestandards.

Today, local organizations such as stateemployment servi, es get most of theirfederal funds almost a. a matter ofentitlement. They iccount for the money,but we do not hold them accountable forwhether they spend it effectively. \Ve wouldmake funding for these new centers morecompetitive, opening the process to publicand private, nonprofit and for-profit,entities.

We would judge these centers in part byhow many people sought help at themon the theory that centers attracting themost ClItit0Illel's were clearly doingsomething right. BI.It we would focus as wellOn what happened alter the customers left.Did they enroll in meaningfial trainingprograms? Did they find jobs? Did theykeep their jobs? I )id they increase theirincomes? Finally: we would give customersthe necessary inf(11111.1t.liiil to decide thesame thing for themselves: Which trainingprogram would meet their needs best?

\Ve believe that the central problem inthe Employment is not the line

5

workers, but the many rules and regulationsthat prevent them from doing their jobs.Waiver of these antiquated rules will free uprhese workers to perform well. In order forstate employment services to compete on alevel playing field particularly after thenegative effects of the last decade ofTending cuts and over-regulationlineworkers must he given the opportunity toretool. The Labor Department shouldensure that the. receive the necessarytraining to enable them to participate in theprocess.

The bigg est single harrier to creating anintegrated system of one-stop career centersis the fragmented nature of federal funds.'Me I SO federal programs have differentrules, different reporting requirements. evendifferent fiscal years:lh synchronize theseand to break down the walls betweencategorical programsthe NationalEconomic Council should convene aWorkforce Development Council, withmembers from the Departments of Labor.Education, and Health and HumanServices: the Office of Management andBudget: and other departments andagencies with employment and trainingprograms. This council should standardizefiscal and administrative procedures,develop a standard set of terms anddefinitions between programs. develop acomprehensive set of results-orientedperformance standards, and improve thequalitative evaluation of programperformance.

Action: The President shoud issue adirective that requires collaborativeefforts across the government toomporver communities and strengthenfittnilies."

At Vice President Gore's recentconference on family policy in Nashville.experts agreed that effective family policyrequires new approaches at the federal. state,and local levels. We should stop dividing upfamilies' needs into health, education,welfare, and shelter, each with its own set ofagencies and programs, many of which

Loncradict one another and work at .cross-purposes. Instead, across all levels ofgovernment, we need collaborative.community- based, customer-drivenapproaches through NVIliCh providers canintegrate the full network of services.

For instance, we spend about 560 billiona 'ear on the well-being of children. But wehave created at least 340 separate programsfor families and children, administered by 11different federal agencies and departments.''-Illus. a poor faintly may need to seek helpfrom several departmentsAgriculture torfood stamps, Housing and UrbanDevelopment for rental support, Health andHuman Services for health care and chasingdown dead -heat parents. For each program.they will have to visit different offices, learnabout services, till out forms to establisheligibilityand wait.

fhe system is fragmented and illogical.In Texas, where the immunization rateamong poor children is about 30 percent,the state Health Department soughtpermission to have nurses who run theAgriculture Department's Women, Infantsand Children supplemental food programalso give immunizations. The AgricultureDepartment said nounless Texasdeveloped an elaborate cost allocation plan.Consequently, mothers and children willhave to continue visiting more than oneagency.''

A few years ago, Governing magazinedescribed a teenage girl who was pregnant,had a juvenile record, and was on welfare.Between the three problems. she had morethan six caseworkerseach from a differentagency. As one put it: "The kid has all thesepeople providing services, and everybody'sdoing their own thing and 'rasha's notgetting better. We need to have one personwho says, 'Now look, let's talk about a planof action tor Tasha. President Clinton'sdirective will help remove obstacles thatagencies face in trying to serve Fasha andoth Is like her.

PUTTING CUSTOMERS FIRST

Action: 'he President should issue adirective and propose leisiation toreconstitute the Federal CoordinatinzCouncil fOr .vience, Engineering, andli,chnoiou as the Aational Science andIcchnology Council, givinz it a broaderrole in settinq. science and technolokypoiiev.

Progress in science and technology is akey ingredient of national eLonotnicsuccess. President ( Vision ofChange for /imern.,1. icleascd in February,cites studies showing that -investments in

anc. Les e.opmentresearch 1 I (R&D) tend tobe the strongest and most consistentpositive influence on productivitygrowth.- In an increasingly competitiveworld eLonomv. the American people needthe best possible return c,n tederal R&Dinvestments.

The Federal oordinating Council forScience, Engineering, and Technology(FCCSE) is a White I louse-managedteam that helps set policy for technologydevelopment. With representatives frommore than a dozen agencies, it developsinteragency proieL is, such asbiotechnology research and the high-performance comparing initiative.Unfortunately, IA lacks the teeth toset priorities, direct policy, ind participatefulls' in the budget process. It cant compelagencies to participate in its projects, norcan it tell agencies how to spend funds. Itssix funded projects will account for just16 percent of Washington's 5-6 billionR & D budget in I 99q. At a time ofdeclining federal resources, experts inbusiness, Kademia, and governmentrecognize the need for one-stop shoppingfor science and technology policy.

A new National Science and TechnologyCouncil would direct science andtechnology policy more forcefully. andwould streamline the White 1 louse'sadvisory apparatus by toinhining thefunctions of '(..SET, the National SpaceCouncil, and the National CriticalMaterials Council.

51

52

1 1 1 0 \ 1 RED i % P I I ( ) R I S t I I s ( t . : \ , I 1:\`,11N I I

Action: SI1011111 issue adirective to give the hark PromotionCoordinatinz Commttree ,yrearerauthority to control fiyierat exportn.omotion efforts.'

Unlike most of our economiccompetitors, the United States has nonational export strategy. Our exportprograms are fragmented among 19separate organizationsincluding theAgriculture and Commerce Departmentsand the Small Business Administration. TheU.S. and Foreign Commercial Service, inCommerce's International .FradeAdministration, is the lead agency fir tradepromotion overseas. But dozens of otherentitiesmany within Commercealsohave trade promotion roles.

Our export programs provide littlebenefit to all but our nations largestbusinesses. The economic implications ofsuch selective assistance are serious.Exports are among our most effective job-creating tools. They create about 20,000new jobs for every S I billion in exports.Thousands of small and mid-sizedcompanies make products attractive foroverseas markets, but are discouraged byhigh transaction costs and a lack ofinformation. According to trade experts,the United States may be the "world'sbiggest export underachiever."2"

The President's directive will give theTrade Promotion Coordinating Committee(TPCC), chaired by the CommerceSecretary and including representatives from19 departments, agencies, and executiveoffices, broader authority to createperformance measures and set allocationcriteria for the nation's export promotionprograms. Working with the NationalEconomic Council, TPCC will ensure thatsuch programs better serve the exportingcommunity.

U

1111 N.VORKS Bi t.c)s ss

Action: The President should issue adirective to establish ecosystem

. .7nanagement policies across the:,,overnment.:i

"For too long, contradictory policiesfrom feuding agencies have blockedprogress, creating uncertainty, confusion,controversy, and pain throughout theregion," President Clinton declared at theForest Conference held in Portland,Oregon in April 1993. Shortly thereafter,the President announced his ForestPlana proactive approach to ensuring asustainable economy and a sustainableenvironment through ecosystemmanagement. We recommend extendingthe concept of ecosystem managementacross the federal government.

Although economic growth has strainedour ecological systems, our governmentlacks a coordinated approach to ecosystemmanagement. A host of agencies havejurisdiction over individual pieces of ournatural heritage. The Bureau of LandManagement oversees more than 60percent of all public lands; the ForestService manages our national forests andgrasslands; the Fish and Wildlife Servicemanages our National Wildlife RefugeSystem; the National Park Service overseesthe national parks; the EnvironmentalProtection Agency implements laws toregulate air and water quality; the NationalOceanic and Atmospheric Administration

/(NOAA) manages marine resources; andvarious other agencies run programs thataffect the environment. Different agencies,with jurisdictions over the same ecosystem,do not work well together. Even within thesame agency, bureaus fight one another.

At the local level, a hodge podge ofgovernment agencies control activities thataffect the environment. Consider, forinstance, the San Francisco Bay delta estuary.One of the most human-altered estuaries onthe west coast of North or South America, itis governed by a complex array of agencies,plans, and laws. One mile of the delta maybe affected by decisions of more than 400agencies.--

The White House Office onEnvironmental Policy has convened aninteragency task force of appropriateassistant secretaries to develop andimplement cross-agency ecosystemmanagement projects. The Office orNlanagement and Budget will review theplans as part of the fiscal 1995 budgetprocess. In 1994, the assistant secretarieswill establish cross-agency teams to developinitial ecosystem management plans tbrimplementation in fiscal year 1995. Also in1994. the President should issue a directivethat will declare sustainable ecosystemmanagement across the federal government.

Action:Yleral 1 :01(1111l1111!"

The federal government has no wherentpolicy for regional development andcommunity dislocation. Instead, it offers afragmented and bureaucratic system of sevenprograms to assist states and localities..lhemajor programs are the CommerceDepartment's Economic DevelopmentAdministration, the Housing and UrbanDevelopment Department's CommunityDevelopment Block Grant Program, and theAgriculture Department's Rural DevelopmentAdministration and Rural ElectrificationAdministration. The Defense Department,Tennessee Valley Authorir and AppalachianRegional Commission run smaller programs.Thus, states and communities must turn tomany different agencies and programs. ratherthan a single coordinated system.Communities find it hard to get help, and thedispersion of effort limits overall funding.

Washington's economic and regionaldevelopment activities should be

PUTTING CUSTOMERS FIRST

reconfigured to suit its customersstatesand communities. We propose a FederalCoordinating Council for EconomicDevelopment, comprising the appropriatecabinet secretaries and agency heads, tocoordinate such activities and provide acentral source of information for states andlocalities. The council will provide aunifying framework for economic andregional development efforts, develop agovernmentwide strategic plan and unifiedbudget to support the framework, preventduplication in the various programs, andassess appropriate funding levels for theagencies involved.

Action: . .-idiuton.iTtiss-itflencv ?::

:tuue

A series of legislative restrictions make itparticularly difficult to pursue solutions toproblems that span agency boundaries. Forinstance, to put together a working groupon an issue that cuts across agency lines,one agency has to fund all costs for thegroup. Several agencies cannot combinetheir funds to finance collaborative efforts.Rather than discourage cross-agencyoperations, the federal government shouldencourage them. Congress should repealthe restrictions that stand in the way ofcross-agency collaboration, and refrainfrom putting future restrictions inappropriations bills. In addition. Congressshould modify the IntergovernmentalPersonnel Act to give cabinet members andthose working for them greater authorityto enter into cooperative agreements withother federal, state, and local agencies.

61AVAILABLr

53

I ROM RH) I 1,1 1'0 RI 511.1'S (.1(LA 1 INC A GOVHINMEN 1 111A 1 WORKS Bi r 1 1 R & (.051 s [ASS

STEP 2: MAKING SERVICE ORGANIZATIONSCOMPETE

While our federal government haslong opposed privatemonopolies, it has deliberately

created public ones. For instance, mostfederal managers must use monopolies to

handle their printing, real estate, andsupport services. Originally, this approachwas supposed to offer economies of scaleand protect against profiteering andcorruption. In an earlier timeof primitive

The Air Combat CommandFlying HighWith Incentives and Competition

The military: the most conservative,

hierarchical and traditional branch of the

government and the bureaucracy least likely to

behave like a cutting-edge private company,

right? Wrong.

One of Washington's most promising

reinvention stories comes from the Air Combat

Command. With 175,000 employees at 45

bases across the country, the ACC owns and

operates all of the Air Force's combat aircraft.

Says its commander, General John Michael Loh,

"We manage big, but we operate small."

How? The ACC adopted overall performance

standards, called quality performance measures.

Each ACC unit decides for itself how to meet

them. General Loh then provides lots of

incentives and a healthy dose of competition.

The most powerful incentive is the chance to

do creative work, General Loh told the National

Performance Review's Reinventing Government

Summit in Philadelphia. For instance, the Air

Combat Command allows maintenance workers

to fix parts that otherwise would have been

discarded or returned to the depot for repair

"under the thesis that our people aren't smart

enough to repair parts at the local level." The

results have been astonishing. Young mechanics

are taking parts from B-ls, F-15s, and F-16ssome of which cost $30,000 to $40,000andfixing them for as little as $10. The savings are

expected to reach $100 million this year. ACC

managers have an incentive, too: Because they

control their own operating budgets, these

savings accrue to their units.

General Loh instilled competition by using

benchmarking, which measures performance

against the ACC standard and shows

commanders exactly how their units compare to

others. The ACC also compares its air wings to

similar units in the Army, Navy, and Marine

Corps; units in other air forces; and even the

private sector. Before competition, the average

F-16 refueling took 45 minutes. With

competition, teams cut that time to 36 minutes,

then 28.

The competition is against a standard, not a

fellow ACC unit. "If you meet the standard, you

win," says General Loh. "There aren't 50 percent

winners and 50 percent losers. We keep the

improvement up by just doing thatby justmeasuring. If it doesn't get measured, it doesn't

get improved."

54 62

recordkeeping, less access to information.and industrial-era retail systemsit mayhave offered some advantages.

But not today. Economists don't agree onmuch, but they do concur that monopoliesprovide poorer service at higher prices than,ompecitive companies. Our publicmonopolies have brought us higher costs.endless delays, and reduced flexibility.

\lonopolies don't suffer the full costs oftheir inefficiency. \X'ith nowhere else to go,customers absorb them. A monopolesmanagers dour even know when they areproviding poor service or failing to takeadvantage of new, cost-cutting technologies.because they dour get signals from theirt.ustomers. In contrast. competitive firmsget instant feedback when customers goelsewhere. No wonder the bureaucracydefends the status quo. even when the quohas lost its status.

As for economies of scale, the realitieshave changed. The philosophy when theseprocurement systems were set up was that itthe government bought in bulk, costswould be lower, and taxpayers would getthe savings. But it no longer works that way.

As we discuss more fully in chapter 1, weno longer need to buy in bulk to buycheaply. The last decade has brought inureand more discount stores. which sellevervthing from groceries to office suppliesto electronic equipment at a discount. TheVice President heard story after story fromfederal workers who had found equipmentand supplies at discount storeseven localhardware storesat two-thirds the price thegovernment paid.

Not all federal operations should beforced to compete. of course. Competitionbetween regulatory agencies is a terribleidea. f\X'itness the regulation of banks.which can decide to charter with the stateor federal government, depending on wherethey can find the most lenient regulations. I

Nor should policy agencies compete. In thedevelopment of policy, cooperation betweendifferent units of government is essential.(:ompetition creates turf wars, which get inthe way of creating rational policies andprograms. It is in sert'icedeuvery that

PUTTING CUSTOMERS FIRST

CcyIt is better to abolish monopolies in all cases

than not to do it in any"

Thomas JeffersonLetter to James Madison, 1788

competition yields resultsbecausecompetition is the one force that givespublic agencies ;w choice but to improve.

The Government Printing Office

Perhaps the oddest federal monopoly isthe Government Printing Office.

In 1846. Congress established a JointCommittee on Printing (JCP) to promoteefficiency and protect agencies fromprofiteering and abuse by commercialprinters. The JCP sets standards for allagency activitiesincluding printing,photocopying, and color and paper quality.When the Naval Academy wants to useparchment paper tor graduation certificates.for instance. the JCP must approve thedecision.

1-he JCP also supervises the (,over entPrinting Office. the mandatory source ofmost government printing .t whopping S ibillion a year. Along with printing federalpublications, the GPO must approve allprivately contracted government printingjobs. even includes printing orders lessthan S 1,000of which there were 270.000in 1992. Simply for processing orders toprivate companies, Glk) charges 6 to 9percent.

Such oversight doesn't work in an age ofcomputers and advancedtelecommunications. Desktop publishinghas replaced the traditional cutting andpasting with computer graphics andautomated design. In private business, in-house printing flourishes. Small printingcompanies specialize in strategic marketniches.

6355

56

I t ( ) N 1 R I I ) I \ P I . I ( ) REM. I I' ( 1 1 1 \ ( . \ (;() \ I ItNNII \ I III I WORK . BI 1.1111 & COsIS I.I.SS

The "government look"

H ere's a sad story about the Government

Printing Office, multiple signatures, and

$20,000 of wasted taxpayer money.

Vice President Gore heard it from an

employee at the Transportation Department's

National Highway Traffic Safety

Administration, which p..-smotes highway

safety. Hoping to convey safety messages to

young drivers, her office tries to make its

materials "slick"to compete withsophisticated advertising aimed at that

audience. Sound simple? Read on.

After the agency decides what it wants, it

goes through multiple approvals at the GPO

and the Department of Transportation. In the

process, the material can change substantially.

Orders often turn out far differently than

NHTSA wanted. But under the GPO's policy,

agencies must accept any printing order that the

GPO deems "usable."

"I can cite one example where more than

$20,000 has been spent and we still do nothave the product that we originally requested,"

the employee explained, "because GPO

decided on its own that it did not have a

'government' look. We were not attempting to

produce a government look. We were trying to

produce something that the general public

would like to use."

Action: Him:nate the GovernmentNinting Office's mottonolv.2'

For all executive branch printing,Congress should end the JCP's oversightrole. Congressional control of executivebranch printing may have made sense in the1840s, when printing was in its infancy, thegovernment was tinv, there was no civilservice, and corruption flourished. But itmakes much less sense today. We want toencourage competition benveen GPO,private companies, and agencies in-housepublishing operations. If GPO cancompete, it will win contracts. If it can't,government will print for less, and taxpayerswill benefit.

The General ServicesAdministration

Among government's inure cumbersomebureaucracies is the ( ;cneral Services

64

Administration (GSA), which runs a host offederal support servicesfrom acquiringand managing more than 270 millionsquare feet of office space to brokeringoffice furniture and supplies to disposing ofthe government's car and truck fleets.

With its monopoly, GSA can passwhatever costs it wants on to tenants andcustomers. Often it rents the cheapest spaceit can find, then orders federal agencies tooccupy itregardless of location or quality.(Occasionally an agency with enough cloutrefuses, and GSA ends up paying to rentempty space.) This is not all GSA's fault.Frequently, the agency is hemmed in byfederal budget and personnel rules. GSAadmits that many of its customers areunhappy. It has already permitted someagencies to make their own real estate deals.We propose to open that door further.

Action: 1::esilient snould eta GS.115,S1,11C : II le tRylle','

.VSli:CS..C. :,SA Will ATI:

11"/11111110JIS,

11151e." .:.11101:r,' IlS C.V.SUMICPS.

.110011'Ci7';'",Vill c,100se inflow,ninetintr Jilell1W,T111011

ille917SeS, ..:C11111111Sf those 1)1 the olivine.

Specifically, GSA will create one or moreproperty enterprises, with separate budgets.The enterprises will compete with privatecompaniesreal estate developers andrental firmsto provide and manage spacefor federal agencies. Agencies, in turn, willlease general purpose space and procure, atthe lowest cost. real property servicesacquisition, design, management, andconstruction. Such competition shouldlower costs tor federal office space.

All other federal agencies with real estateholdings, including the Defense andVeterans Affairs Departments. will adoptsimilarly competitive approaches:

Competition in Support Services

Every federal agency needs "supportservices--accounting, propertymanagement, payroll processing, legaladvice, and so on. Currently, mostmanagers have little choice about where toget them; they must use what's available in-house. But no manager should be confinedto an agency monopoly. Nor shouldagencies provide services in-house unless theservices can compete with those of otheragencies and private companies.

Over the past decade, a few federalentrepreneurs have created support serviceenterprises, which offer their expertise toother agencies for a fee. Consider the Centerfor Applied Financial Management, in theTreasury Department's FinancialNIanagement Service. A few .'ears ago,Treasury officials realized that many agenciesreporting to their central accounting system

PUTTING CUSTOMERS FIRST

Dialing for Dollars:How Competition Cut theFederal Phone Bill

n the mid 1980s, a long - distance call on the

I federal system, which the General Services

Administration manages, cost 30 to 40 cents a

minute, the "special government rate." AT&T'sregular commercial customers normally paid 20

cents a minute. The Defense Department, citingGSA's rates, would not use the government-wide

system.

Spurred by complaints about high costs and the

loss of customers, GSA put the government's

contract up for bid among long-distance phonecompanies. It offered 60 percent of the business to

the winner, 40 percent to the runner up.Today, the government pays 8 cents a minute

for long-distance calls. More agenciesincludingthe Defense Departmentare using the system.And taxpayers are saving a bundle.

had problems meeting the Treasury'sreporting standards. Rather than send nastyletters, they decided to offer help.

The Treasury established a consultingbusiness. The center includes a smallgroup of people who offer training,technical assistance, and even a system foraccounting programs so that agencies neednot own the software. The center marketsits services to government agencies,aggressively and successfully, competingwith accounting and consulting firms foragency business and dollars. Its clientsinclude the Small Business Administrationand the Nuclear Regulatory Commission.Already, the center's work has reduced theerrors in reports submitted to the Treasuryand reduced agencies' accounting costs.Opened 2 years ago, the center plans to he

'4;7'

;Rum RID I 1.1 10 Iii SL i is ( c, , 2.0\ 112N \11N1 111.11 WORKS B11-1112 & 1.1.SS

profitable by 1995; if nor, the Treasury willclose it.

Action: The administration shouldencourage operations (Jr one agency tocompete jOr Jl'(fl ill ower agencies.-

We want to expand the approachexemplified be 'Treasury's Center forApplied Financial Management throughoutgovernment. lust as in business.competition is the surest way to cut costsand improve customer service.

Competing with the Private Sector

Forcing governments internal servicebureaus to compete to please theircustomers is one strategy. Forcinggovernments external service organizationsto do the same is another. In a time ofscarce public resources, we can no longerafford SO many service monopolies. Manyfederal organizations should begin tocompete with private companies. Considerthe National Oceanic and AtmosphericAdministration.

Action: r",.5i, National Oceanic andAtmospheric "Idministration ATOAA) willexperiment with a program of public-private competition to help fidfdl irsmission?

NOAA, a part of the CommerceDepartment, maintains a fleet of ships tosupport its research on oceans and marinelife and its nautical charting. But its fleet isreaching the end of its projected lifeexpectancy. And even with the fleet, NOAAhas consistently fallen far short of the 5,000days at sea that it claims to need each yearto fulfill its mission. NOAA faces a basicquestionwhether to undertake a totalfleet replacement and modernization plan,estimated to cost more than S1.6 billion inthe next 15 years, or charter some privatelyowned ships.

The experience of the L.S. Army Corpsof Engineers, which contracts out 30 to ' +0

6 6

percent of its ocean floor charting to privatefirms, shows that the private sector can andwill do this kind of work. Competitionamong private companies for these servicesalso might reduce NOAA's costs.

Action: the Defense Department willimplement a comprehensive program ofcontracting non-core fitnctions

The Defense Department is anotheragency in which necessity is becoming themother of invention. Facing a swiftly fallingMidget, the department literally cant affordto do things in its usual way especiallywhen private firms can perform DOD'snon-core functions better, cheaper, andfaster. Functions such as command,deployment, or rotation of troops cannot becontracted, of course. But data processing,billing, payroll, and the like certainly can.

Private firmsincluding many defensecontractorscontract out such functions.General Dynamics, for instance, hascontracted with Computer ServicesCorporation to provide all its informationtechnology functions, data centeroperations, and networking. But at thePentagon, a bias against out-sourcingremains strong. Only a commitment besenior leaders will overcome that bias.

In addition to the cultural barriers at thePentagon, numerous statutory roadblocksexist. In section 312 of the fiscal year 1993DOD Authorization Act, for example,Congress stopped DOD from shifting anymore in-house work to contractors. Anotherlaw requires agencies to obtain theirconstruction and design services from theArmy Corps of Engineers or Naval FacilitiesEngineering Command. Theadministration should draft legislation toremove both of these roadblocks. It will alsomake contracting easier by rescinding itsorders on the performance of commercialactivities and issuing a new order, toestablish a policy supporting the acquisitionof goods and services in the mosteconomical manner possible. OMB willreview Circular A-76, which governs

contracting out, for potential changes thatwould simplify the contracting process andincrease the flexibility of managers.

Action: . _mend the job 1;7611112gPartnership Act to authorize public andprivate competition Tbr the operation ofJob Corps Civilian ConservationCenters.-'

'Me Labor Department's Employmentand Training Administration (ETA)supervises 1(18 lob Corps Centers, whichprovide training and work experience topoor youth. The ETA contracts with fOr-prolit and non-profit corporations tooperate -s of the centers. The departmenthas long sought to contract out the ocher30, now run by the Agriculture and InteriorDepartments as C:ivilian Conservation( :enters. But Congress under the lobTraining Partnership Act, has passedlegislation barring such action.

Because they are insulated fromcompetition, CCC managers have fewincentives to cut costs and boost quality. Forthe past S years, average per-trainee costs ata CCC have run about S2,000 higher thanat centers run by contractors. Competitionwould force the Ir.terior and AgricultureDepartments to operate the rural centersmore efficientlyor risk losing theiroperations to private competitors.

Truth in Budgeting

If federal organizations are to compete fortheir customers, they must do so on a levelplaying field, That means they must includetheir full costs in the price they chargecustomers. Businesses do this, but federalagencies hide many costs in overhead, whichis paid by a central office. Things like rent,utilities, staff support, and the retirementbenefits of employees are often assigned tothe overall agency rather than the unit thatincurred them. In this way, governmentalaccounting typically understates the truecost of any service.

PUTTING CUSTOMERS FIRST

With a new accounting system thatrecognizes full costsand assigns rent,utilities, staff support, retirement benefits,and all other costs to the unit that actuallyincurs themwe can determine the truecosts of what government produces. At thatpoint, we can compare costs across agencies,make agencies compete on a level playingfield, and decide whether we are gettingwhat we pay for.

Action: 13v the end of 1994. the Federal.1CC011111l1T StailliartiS Board:Mil issue a set ot.COSt accountinzstandards /Or adPriemi activities. I hesestandards twill provide a methodtin-Wentiliiing- the true unit- cost or all,0119171Ment activities.-.

Some government agencies have alreadymoved in this direction. Others have goneeven further. The Defense Department isexperimenting with what it calls a UnitCost Budget. It calculates the costs ofdelivering a unit of service, then budgets forthe desired service levels.

The Defense Logistics Agency (DLA)began this experiment, hoping to easepressures to contract out its supply depotsto private companies. DLA examined thecost of receiving and delivering shipments,then attached a dollar figure to each itemreceived and another to each item delivered.All money was then appropriated accordingto the number of items shipped or received.Line items disappeared, incentives grewThe more boxes a depot shipped orreceived, the more money that depotbrought in. For the first time, DLA couldcalculate its true costs, compare those ofvarious installations, and pinpointproblems. This approach, which enablesmanagers to set productivity targets, is nowspreading to other military installations.

59

Rosi R I o \ ro Ri s t i CRI . 1 1 1 \ ( ; ( / \ 1 1 2 \ N I "I \ I \VOlt Iii 1 I I 12 (: \

STEP 3: CREATING MARKET DYNAMICS

Nof all public activities should besubject to competition, as notedabove. In some cases, even service

delivery operations are better off asmonopolies. In the private sector, we callthese utilities and regulate them to protectthe consumer. They are run in abusinesslike fashion, and they respond tothe market. (For instance, they havestockholders and hoards, and they canborrow on the capital markets.) Theysimply don't face competition.

Many governments, including ourfederal government, do something verysimilar. 1 hey create government- ownedcorporations to undertake specific tasks.The Postal Service and Tennessee \.'illevAuthority are two examples. Suchcorporations are free from many restrictionsand much of the red tape facing publicagencies, but most of them remainmonopoliesor, as with the Postal Service.partial monopolies.

At other times governments subjectpublic organizations to market dynamics,stimulate the creation of private enterprises.or spin of} public enterprises to the privatesector. To get the best value for thetaxpayer's dollar, the federal governmentneeds to use these options more often.

Consider the National TechnicalInformation Service (NTIS), a once-failingagency in the Commerce Department thatturned itself around in a brief year's time.Established to disseminate federally fundedscientific and technical infOrmation, NTISwas, until recently, not meeting its mission.The agency, which receives no congressionalappropriations, was suffering seriousfinancial problems, selling fewer documentseach Year to its mostly private sectorcustomers. and charging higher and higherprices on those it did sell.

Commerce not surprisinglyconsidered abolishing the agency. A scarearlier, the department's inspector generalhad concluded that N'HS's reportedearnings of S3.7 million were vastly

60 68

overstated, that it suffered 5674.000 inadditional operating losses in 1989. andthat its procedures in handling such lossesand cash shortfalls violated governmentaccounting principles and standards.

Commerce instead decided to turn theagency around. The effort worked. NTIS'srevenues and sales are both up. \XIY?Because the agency was forced to respond toits customers unhappiness. NTIS reducedthe turnaround time on its orders, cutcomplaints about incorrect orders, anddramatically slashed the percentage ofunanswered phone calls. Consequently.most business customers who turned awayin the 1980s have returned. NTIS'sturnaround shows what can happen whenpublic organizations face the pressure ofcustomer demands.''

Other agencies may require a structuralchange to enhance their customer service.Because its run as a public agency, forinstance, the Federal AviationAdministration's air traffic control (AI'C)system is constantly hamstrung by budget,personnel, and procurement restrictions. 'Ioensure the safety of those who fly, the FAAmust frequently modernize air trafficcontrol technology. But this has beenvirtually impossible, because the FAA'smoney comes in annual appropriations.Now can the FAA maintain a massive, state-of-the-art, nationwide computer systemwhen it doesn't know what its appropriationfor next Year or the Years beyond will he?

As a result, the 10 -Year National AirspacePlan. begun in 1981, is now 10 varsbehind schedule and 32 percent overbudget. Federal personnel rules aggravatethe problems: The FAA has troubleattracting experienced controllers to high-cost cities. With no recent expansion, thesystem lacks the capacity to handle all airtravel demands. Consequently. airlines loseabout S2 billion annually in costs foradditional personnel. equipment, and excessfuel. Passengers lose an estimated SI billionannually in delays.

.\incrica needs one seamless air traffic,ontrol system from coast to coast. It shouldhe run in a businesslike fashionable toborrow on the capital markets, to do long-term financial planning, to buy equipmentit needs when it needs it, and to hire and:ire ill reasonable fashion. the solution is a_tovernment-owned corporation.

Action: .!;.//tureanie systeni into ,t1i!)111.1f1M1.

is an overwhelming consensus inthe aviation C01111111111i1V that the AR:system requires fundamental change itaviation's positive contribution to trade andtourism is to be sustained,: one studysoncluded earlier this year.''

The AFC\ problems can't be fixedwithout a major reorganization. ender itsurrent structure, the system is subject to

federal budget. procurement, and personnelrules designed to prevent mismanagementand the misuse of fields. The rules.however, prevent the system from reactingquickly to events, such as buying the mostup-to-date technology. In its recent report,Change, Challenge, and Competition. theNational Commission to Ensure a Strong:ompetitive Airline industry, chaired by

tOrmer Virginia (;overnor Gerald Baliles.recommended the creation of anindependent federal corporate entity withinthe Transportation Department. \Ve agree.

We should restructure the A'l'C intoa government-owned corporation.supported by user fees and governed by aboard of directors that represents thesystem's customers. As customer use rises,so will revenues, providing the fundsneeded to answer rising customerdemands and finance new technologies toimprove safety. Relieved of its operationalNile, the FAA would focus on regulatings.ifory. with better, safer service, we allwould beneilt This approach has alreadyworked in (;re,,z- Britain, New Zealand.and other commie,.

PUTTING CUSTOMERS FIRST

Action: 'e deral Trne.c

. .i !!mo .n-111.1

wv:It . 11

;7)."1/1111,1 MU: ':':1;!.1."1;r,,

In asset management, too. governmentcould take a fe y lessons from business. \\'emust begin to manage assets based on theirrates of return. A good place to start is inthe (ieneral Services Administration.

Ile federal government owns assetsland, buildings, equipmentthat areenormous in number and value. But itmanages them poorly. l.ike several otheragencies, C.'S:\ wears two hats: with one, itmust provide office space r.0 federalagencies. With the other, it serves asmanager and trustee of huge real estateholdings for American taxpayers. It cannotdo bothat least not well. Should itmaximize returns tor taxpayers by selling avaluable asset? Or. as the office spaceprovider, should it require an agency tooccupy one of its own buildings when lessexpensive leased space is available?

( ;SA will create a Real Property AssetNlanagement Enterprise, solely responsiblefor managing federally owned real estate tooptimize the rate of return for taxpayers.while competing with the private sector andbetter serving tenants' needs.

Action: i.)CM117711e111 of Holism,ana 1"rban t)evetatanent teal tam overnanagement '':?(WIN't rate , :Ural

properties rJJllr iliorlffilfre ;0ans to I/o'!)riVale senor ;

I he Department of Housing and UrbanDevelopment (HUI)) ILLS a growingworkload of problem multi-family loans andfOreclosed properties. In addition, restrictiverules and outdated practices hamper itsmanagement of these assets. Rather thanmore staff, HUD needs a new approach.

I I L'1 ), which oversees the FederalHousing Administration, owns many loansand properties it acquired from the FI fAwhen owners defaulted on their loans.

61

I ROM R I . 1 ) \PI: 1 0 1 1 1 . 5 1 1 I S CRLAriNG GovritN 1 1 1 1 1 WORKS 131 1 I I It & (:I S LI SS

These "market-rate" assetswhich werenever set aside for low-income peoplehave fewer restrictions on disposal thanmost HUD-subsidized properties. But intrying to sell the assets, HUD still faces avariety of legal and political pressures. If the

department entered into limitedpartnerships with real estate firms, it couldretain most profits from any sales and let aprivate business entity perform the sales inthe most economically beneficial way.

STEP 4: USING MARKET MECHANISMSTo SOLVE PROBLEMS

Government cannot create aprogram for every problem lacingthe nation. It cannot simply raise

taxes and spend more money. We needmore than government programs to solve

our problems. We need governance.Governance means setting priorities,

then using the federal governmentsimmense power to steer what happens inthe private sector. Governance can takemany forms: setting regulations, providingfinancial incentives, or ensuring thatconsumers have the information they needto drive the market.

When the Roosevelt administrationmade home ownership a national priority,the government didn't build millions ofhomes or distribute money so families couldbuy them. Instead, the Federal HousingAdministration helped to create a new kindof mortgage loan. Rather than put down 50percent, buyers could put down just 20percent; rather than repay mortgages in 5years, borrowers could stretch the paymentsover 30 years. The government also helpedto create a secondary market for mortgages,helping even more Americans buy homes.

As we reinvent the federal government,we, too, must rely more on marketincentives and less on new programs.

Worker Safety and Health

Thday, 2,400 inspectors from theOccupational Safety and HealthAdministration (OSHA) and approved stateprograms try to ensure the safety and healthof 93 million workers at 6.2 million

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worksitcs. The system doesn't work wellenough. There arc only enough inspectorsto visit even the most hazardous workplaceonce every several years. And OSHA has thepersonnel to follow up on only 3 percent ofits inspections.

Action: the Secretary of Labor willissue new regulations,* worksite safetyand health, relying on private inspectioncompanies or non-managementemployees.''

Government should assume a moreappropriate and effective role: settingstandards and imposing penalties onworkplaces that don't comply. In this way,OSHA could ensure that all workplaces areregularly inspected, without hiringthousands of new employees. It would usethe same basic technique the federalgovernment uses to force companies to keephonest financial books: setting standardsand requiring periodic certification of thehooks by expert financial auditors. No armyof federal auditors descends upon Americanbusinesses to audit their books; thegovernment forces them to have the. jobdone themselves. In the same way, no armyof OSHA inspectors need descend uponcorporate America. The health and safety ofAmerican workers could be vastlyimprovedwithout bankrupting thefederal treasury.

The Labor Secretary already is authorizedto require employers to conduct certifiedself-inspections. OSHA should giveemployers two options with which to do so:They could hire third parties, such as

private inspection companies: or they couldauthorize non-management employeesittert raining and certification, to conductinspections. In either case, OSHA woiiid setinspection and reporting standards andconduct random reviews, audits, indinspections to ensure quality.

\X lthin a year or two of issuing the newregulations, ( )SI -IA should establish a slidingscale of incentives designed to encourageworkplaces to comply \X torksites with goodhealth, safety, and compliance records wouldbe allowed to report less frequently to theI ,abo r I )epartment, to undergo fewer audits.and to submit less paperwork. OSHA couldalso impose higher fines for employers whosehealth and safety records worsened or did notimprove.

Environmental Protection

As governments across the globe havebegun to explore better ways to protect theenvironment. they have discovered thatmarket mechanismsfees on pollution,pollution trading systems, and deposit-rebatesystems<an he effective alternatives toregulation. But while the idea of -making thepolluter pay- is widely accepted in thiscountry, our governments have not widelyapplied it. Many federal, state, and localregulations re1v on an earlier approach toenvironmental control: stipulating treatment,not outcomes. Their wholesale shift to a newapproach will take time.

Action: ..;courage marlect-inisea.,pprollenes to reduce pollution.

\ lam' federal agencies, lawmakers, andenvironmental groups endorse using market-based incentives to meet environmental goals.We propose that both EPA and Congress useadministrative and legislative measuresfqrexample, the Clean Water Actto promotemarket mechanisms to stop pollution.

One route is allowing polluters to 'tradepollution rights. This would rewardcompanies that not only meet legalrequirements hut go the extra mile to reduce

PUT'T'ING CusTomERs FIRST'

pollution by more than the law requires.Rather than dictating exactly which

t....chnok)gies industn should use to reducepollution. the government would set standardsand let the market handle the details. Ihe .

,overnment could also assess fees based on theamount and nature of pollution emissions ordischarges. Fees could reflect the qualitytoxicity; and other adverse characteristics ofpollutants.

l-he federal government has used thisapproach befOre. In the I 970s, theEnvironmental Protection Agency (EPA)distributed credits to companies that cut airpollution and let them trade credits betweendifferent sources of their own pollution or sellthem to other companies located nearby. Inthe I 980s. the EPA used a similar approach asit tqrced industry to remove lead fromgasoline. Both efforts were successful: industrymet its targets, while spending billions ofdollars less than otherwise would have beenrequired. "[hen, as part of the 1990 Clean AirAct, the President and Congress agreed to givecredits to coal-burning electric power plantstOr their allowable emissions of sulfur dioxide,to cut down on acid rain. Power plants thatcut their emissions helm a certain level can,.:f11 unused credits to other plants. Expertsestimate that this will cut the cost of reducingsulfur dioxide emissions by several billiondollars a year.

Public Housing

For two decades, public housing was asuccess. But by the I 970s, it had come tosymbolize everything wrong with the-liberal- approach to social problems.Inflexible federal standards, an overlycentralized administrative structure, andlocal political pressures combined toproduce cookie-cutter high-rise projects inour worst urban areas. Over time, manyprojects degenerated into hopelessconcentrations of welfare families beset byviolence and crime.

We spend SI3 billion a year on publichousing, but we create few incentives forbetter management. In local housing

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I RONI RI I) TkPF N) REST I IS IN(. GOVI RN \ I I IIA IL WORKS Br 1.1 R & COs US LI SS

agencies, managers are hamstrung byendless federal regulations that offer littleflexibility. Any savings they generate aresimply returned to the government.

Tenants enjoy even less flexibility. Withhousing subsidies attached to buildings, notpeople. the program's clients have no choiceabout where to live. They, therefore, haveabsolutely no leverageas customersoverthe managers.

Action: iuthorize the Deparnnort ofHousing and ("limn Development tocreate demonstration projects that freemanagers from regulations and givetenants new ',talker powers, such as

freedom of choice to move out of oldpublic housin

We want to let public housingauthorities, through not-for-profit

Conclusion

We know from experience thatmonopolies do not servecustomers well. It is an odd fact

of American life that we attack monopoliesharshly when they are businesses, butembrace them warmly when they are publicinstitutions. In recent years, as fiscalpressures have forced governments at alllevels to streamline their operations, thisattitude has begun to break down.Governments have begun to contractservices competitively; school districts havebegun to give their customers a choice;public managers have begun to ask theircustomers what they want.

This trend will not be reversed. Thequality revolution sweeping through

64

7ti

subsidiaries, compete for new constructionand modernization funds that they woulduse to create market-rate housing. Themanagers would manage this new housingfree of most regulations, provided they metperformance standards set by HUD. Theywould rent to a mix of publicly subsidizedand market-rate tenants. The rents ofunsubsidized tenants would help to financethe subsidies of assisted tenants.

With portable subsidies. publicly assistedtenants could look for housing whereverthey could find it. Rather than dependentbeneficiaries, t-orced to live where thegovernment says, they would become"paving customers," able to choose where tolive. Thus, public housing managers wouldno longer have guaranteed tenants in theirbuildings; they would have to compete forthem.

American businessesand now penetratingthe public sectorhas brought the issue ofcustomer service front and center. Somefederal agencies have already begun torespond: the IRS, the Social SecurityAdministration, and others. But there ismuch, much more to be done. By creatingcompetition between public organizations,contracting services out to privateorganizations, listening to our customers,and embracing market incentives whereverappropriate, we can transform the quality ofservices delivered to the American people.

In our democratic form of government,we have long sought to give people a voice.As we reinvent government, it is time wealso gave them a choice.

Okr -1...

Chapter 3

EMPOWERING EMPLOYEES TOGET RESULTS

Tike two managers and (five to each the same number oflaboirrs and let those laborers be Nita!in all respects. Let both managers rise equally early, go equally late to rest. be equally active, sober,and industrious, and vet, in the course of the year one of .them. without pushinz the hands that

are under bhn inure than the other shall have per fOrmed infinitely more u'ork.

George Washington

WIren Nature has work to be done, she creates 11(4011.W to (10 it.

Ralph Waldo Emerson

wo hundred years ago,George Washingtonrecognized the commonsense in hiring andpromoting productivemanagersand taking

authority away from unproductive ones.One hundred wears ago, Emersonobserved that we all share a commongenius, ignited simply by the work athand. These American originals definedthe basic ingredients of a healthy, productivework environment: managers whoinnovate and motivate, and workers whoare free to improvise and make decisions.

Today, our federal government's executivebranch includes 14 cabinet departments,135 agencies and hundreds of hoards andcommissions. These entities employ morethan 2.1 million civilians (not counting thePostal Service), and 1.9 million membeis ofthe military, spend S1.5 trillion a year, and,directly or indirectly, account for one thirdof our national economy'. Their tasks areboth massive and difficult. As the National

Academy of Public Administration wrotenot long ago, "The federal government nowmanages ... some of the most important andcomplex enterprises in the world."' But itdoes not manage them well.

Admittedly, "management" is a fuzzyconcept, hard to recognize or define. Butpoor management has real consequences. .

Money is wasted. Programs don't work.People aren't helped. 'Mat's what taxpayersand customers see.

Inside government, had managementstifles the morale of workers. The "system"kills initiative. As Vice President Gore,responding to the concerns of TransportationDepartment employees, put it:

One of the problems with a centralizedbureaucracy is that people get placed inthese rigid attegm.ies, regulations bindthem, procedures bind them, theorganizational chart binds them to theold ways of the past... The message overtime to...employees becomes: Dont try todo something new hunt try to change

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established procedures. Don't try to adaptto the new circumstances your office oragency confronts. Because you're going toget in trouble if ptt try to do thingsdifferently."'

Cutting red tape, organizing servicesaround customers, and creatingcompetition will start to generate anenvironment that rewards success. Now, wemust encourage those within government tochange their ways. We must create a cultureof public entrepreneurship.

Our long-term goal is to change the very

culture of the federal government... A

government that puts people first, puts its

employees first, too. It empowers them, freeing

them from mind-numbing rules andregulations. It delegates authority andresponsibility. And it provides for them a clear

sense ofmissirn.

Vice President Al GoreSpeech to National Performance Review members

May 24, 1993

But changing culture is a lot harder thanchanging rules and regulations. An attitudeof powerlessness and complacency pervadesthe federal workplace. As one veteran ofmany government reform initiativesobserved, "Changing government is a bitlike moving the town cemetery. It's muchharder to deal with the feelings it arousesthan with the relocation itself."

The Quality Imperative

Of course, many thought that turningGeneral Motors around would beimpossible. If vou talked to their employees,the same undoubtedly was true of General

74

Electric, Motorola, Harley-Davidson, andscores of leading corporations before theyembraced a new management philosophy.In the 1970s and 1980s, as technologybegan to revolutionize everything andglobal competitors began to take awaymarket share, firms that had grown fat andhappy had to face the facts: This wasn't the1950s anymore.

These firms quickly discovered thateconomists can be wrong: More isn't alwaysbetter: better is better. One by one, theybegan to pursue a new goal qualityand to reorganize their entire businessesaround it.

The quality imperative is simple: Doeverything smarter; better; .faster, cheaper: It isnot simple, however, to obey. It meansdismantling the old ways of doing business.The same tired command hierarchies thatcontinue to hind government are beingscrapped daily by companies on the rise. Intheir place, firms seek new ways to manageand organize work that develop and use thefull talents of every employee. They wanteveryone to contribute to the bottom linethat is, to produce goods and services thatmatch customer needs at the lowest costand fastest delivery time.

The quality movement has spawnedmany proven methods and mantras, eachwith its loyal fans: management by results;total quality management; high-performanceorganization; business process reengineering.But the quest for qualityin performance,product. and serviceunifies them all.

Government has recognized the qualityimperative. In 1987, the U.S. Departmentof Commerce instituted the MalcolmBaldrige National Quality Award. Now theobject of fierce competition, it recognizesprivate firms that achieve excellence bypursuing quality management. In 1988, theFederal Quality Institute began awardingthe Presidential Award for Quality to federalagencies that do the same. The PresidentialAward criteria, modeled on Baldrige, setnew standards for federal governmentperformance. The President shouldencourage all department and agency headsto manage with these criteria in mind.

Changing the Culture: Power andAccountability

Companies do not achieve high qualitysimply 1w announcing it. for can they getto quality by hiring the services of theroving bands of consultants who promise toturn businesses around overnight. They doit by turning their entire managementsystems upside downshedding the powerto make decisions from the sedimentaryLivers of management and giving it to the

EMPOWERING EMPLOYEES TO GET RESULTS

people on the ground who do the work.This rewrites the relationship betweenmanagers and the managed. The bright linethat separates the two vanishes as everyoneis given greater authority over how to gettheir job done.

But with greater authority comes greaterresponsibility. People must be accountabletOr the results they achieve when theyexercise authority. Of course. we can onlyhold people accountable if they know whatis expected of them. The powerless know

The Federal Quality Imperative

The Presidential Quality Award sets forth

seven principles to identify excellent

government agencies:

Leadership: Are your top leaders andmanagers personally committed tocreating and sustaining your organization'svision and customer focus? Does youreffort extend to the management system,labor relations, external partnerships, andthe fulfillment of public responsibilities?

Information and Analysis: Do your data,information, and analysis systems help youimprove customer satisfaction, products,services, and processes?

Strategic Quality Planning: Do you haveshort-term and long-term plans thataddress customer requirements; thecapabilities necessary to meet keyrequirements or technologicalopportunities; the capacities of externalsuppliers; and changing work processes toimprove performance, productivityimprovement, and waste reduction?

Human Resource Development andManagement: Is your agency's entireworkforce enabled to develop its full

potential and to pursue performancegoals? Are you building and maintainingan environment for workforce excellencethat increases worker involvement,education and training, employeeperformance and recognition systems, andemployee well-being and satisfaction?

Management of Process Quality:Does your agency systematically andcontinually improve quality andperformance? Is every work unitredesigning its process to improve quality?Are internal and external customer-supplier relationships managed better?

Quality and Operational Results: Areyou measuring and continuouslyimproving the trends and quality of yourproducts and services, your businessprocesses and support services, and thegoods and services of your suppliers? Areyou comparing your data againstcompetitors and world-class standards?

Customer Focus and Satisfaction: Doyou know what your customers need? Doyou relate well to your customers? Do youhave a method to determine customersatisfaction?

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they are expected only to obey the rules.But with many rules swept away, what isexpected from the empowered?

The answer is results. Results measured asthe customer wouldby better and moreefficiently delivered services. If the staff in

Our bedrock premise is that ineffectivegovernment is not the fault of people in it.

Our governmentis fill ofwell-intentionahard-working, intelligent people managers

and staff We intend to let our workers pursue

excellence.

Vice President Al GoreReinventing Government Summit

Philadelphia, June 25, 1993

an agency field office are given greater voiceover how their workplace and their work areorganized, then the customer deserves tospend less time waiting in line, to receive aprompt answer and even-thing else weexpect from a responsive government.

So how do we change culture? Theanswer is as broad as the system that nowholds us hostage. Part of it, outlined inchapter 1 , lies in liberating agencies fromthe cumbersome burden of over-regulationand central control. Part of it, detailed inchapter 2, hinges on creating new incentivesto accomplish more through competitionand customer choice. And part of itdepends on shifting the locus of control:empowering employees to use theirjudgment; supporting them with the toolsand training they need; and holding them

76

accountable for producing results. Six steps,described in this chapter, will start us downthat road:

First, we must give decisionmakingpower to those who do the work, pruninglayer upon layer of managerial overgrowth.

Second, we must hold every organizationand individual accountable for clearlyunderstood, feasible outcomes.Accountability for results will replace"command and control" as the way wemanage government.

Third we must give federal employeesbetter tools for the jobthe training tohandle their own work and to makedecisions cooperatively, good information,and the skills to take advantage of moderncomputer and telecommunicationstechnologies.

Fourth, we must make federal offices abetter place to work. Flexibility must extendnot only to the definition of job tasks butalso to those workplace rules and conditionsthat still convey the message that workersaren't trusted.

Fifth, labor and management must forgea new partnership. Government must learna lesson from business: Change will neverhappen unless unions and employers worktogether.

Sixth, we must offer top-down supportfor bottom-up decisionmaking. Largeprivate corporations that have answered thecall for quality have succeeded only with thefull backing of top management. Chiefexecutive officersfrom the White Houseto agency headsmust ensure thateveryone understands that power will neverflow through the old channels again. That'show GE did it; that's how we must do it aswell.

EMPOWERING EMPLOYEES TO GET RESULTS

STEP 1: DECENTRALIZING DECISIONMAKINGPOWER

To people working in any largeorganizationpublic or private--headquarters- can be a dreaded

word. It's where cumbersome rules andregulations are created and good ideas areburied. Headquarters never understandsproblems. never listens to employees. Whenthe Office of Personnel Management(OPN1) surveyed federal employees. fewerthan half expressed any confidence insupervisors two layers above them--or anyconfidence at all in their organization,overall structure.'

Everyone knows the truth: NIanagementtoo often is happily unaware of what occursat the front desk or in the field. In fact, itsthe people %vim work closest to problemswho know the most about solving them. Asone federal employee asked Vice PresidentGore. "If we can't tell what we're doing rightand wrong, who better can:

-

The Social Security Administration'sAtlanta field office has shown the wisdomof empowering workers to faill theirmission. Since 1990, disability benefitclaims have risen 40 percent. keeping folksin the Atlanta office busy. So workerscreated a reinvention team. 'Ihey quicklyrealized that if they asked customers tobring along medical records when filingclaims, workers could reduce the time theyspent contacting doctors and requesting therecords. That idea alone saved GO days onthe average claim. Even better, it savedtaxpayers S351,000 in 1993, and will savehalf a million dollars in 1994, The sameworkers also found a better, cheaper way toprocess disability claims in cases reviewed byadministrative law judges. Instead of askingjudges to send them written decisions, theycreated a system for judges to send decisionselectronically. Its quicker. and it eliminatespaperwork. too.'

Now here's the other side of the coin. AOenver Post reporter recently uncovered thisbureaucracy-shaking news: It takes +3people to (unge a light bulb.

An internal memo written by amanager at the US. Department-of Energy (Rocky Flats' plantrecommended a new safety procedure fir"the replacement of a light bulb in acriticality beacon." The beacon, similarto the rei,oh,ing red lamp atop a policecan warns workers of 'nuclear accidents.Ilse memo said that the job Anal. I hikeat least -4.3 people or,er 1.08 7 1 holm toreplace the light. It added that the satejob used to take 12 workers 4.15 hours.

lhe memo called for a planner to meetwith six others at a work-controlmeeting; talk with other workers whohate done the job belbre; meet again; getsignatures from five people at that work-control meeting; get the project plansapproved by separate officials overseeingsafety logistics, waste management andplant scheduling; wait for a monthlycriticality-beacon test; direct electriciansto replace the bulb; and then test andverify the

I hadseven teams of people each restructure

our business... After the third presentation, my

executive assistant...said to me, "Bill this stuff

is fabulous. In fact, we never would have

thought of these things."

But you've got to trust. People don't come

to work with the intent of screwing it up

every day. They come here to make it better.

77

Bill Goins, PresidentXerox Integrated Systems Operations,

Reinventing Government Summit,June 25, 1993

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This example drives the point home: linomama rules have created too many lavers ofsupervisors and controllers who, howeverwell-intentioned, wind up "managing"simple tasks into complex processes. Theywaste workers' rime and squander thetaxpayers money.

Decentralizing the power to makedecisions will energize government to doeverything smarter, better, faster, andcheaperif only because there will be morehands and heads on the task at the sametime. Vice President Gore likens the effectof decentralization to the advent of "massiveparallelism"--the technology used in theworld's fastest supercomputers. Standardcomputers with central processors solveproblems in sequence: One by one, eachelement of information travels hack and

Roam on the Range

Ranthers, allowed to graze their cattle in

Missouri's Mark Twain National Forest,

regularly muse move their herds to avoid over-

grazing any plot of land. Until recently, ranchers

had to apply at the local Forest Service office for

permits to move the cattle. Typically, the local

office sent them on to the regional office for

approval, which, in some cases, sent them on to the

national office in Washington. Approval could take

up to 60 dayslong enough, in a dry season, to

hurt the forest, leave the cows hungry, and annoy

the rancher.

Thanks to an employee suggestion, the local

staffer now can settle the details of moving the herd

directly with the rancher. If the rancher comes in

by 10 a.m., the cattle can be on the move by noon.

Ranchers are happier, cattle are fatter, the

environment is better protectedall because localworkers now make decisions well within their

judgment.

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forth from the machine's central processor.It's like running six errands on Saturday, butgoing home between each stop. Even at thespeed of light, that takes time. In massivelyparallel computers, hundreds of smallerprocessors solve different elements of thesame problem simultaneously. les theequivalent of a team of six people eachdeciding to take on one of the Saturdayerrands.

America's best-run businesses are realizingenormous cost savings and improving thequality of their products by pushingdecisions down as far as possible andeliminating unnecessary managementlayers. The federal government will adoptthis decentralized approach as its newstandard operating procedure. Thistechnique can unearth hundreds of goodideas, eliminate employee frustration, andraise the morale and productivity of anentire organization.

If offered greater responsibility, willemployees rise to the task? We are confidentthey will. After all, few people take upfederal work for the money. Our interviewswith hundreds of federal workers supportwhat survey after survey of public serviceworkers have found: People wantchallenging jobs. Yet, that's exactly whatour rule-bound and over-managed systemtoo often denies them.

Action: Over the next five years, theexecutive branch will decentralizedecisionmaking, and increase the averagespan of a manager:s. contro1.8

Currently, the federal governmentaverages one manager or supervisor forevery seven employees.' Managementexpert Tom Peters recommends that well-performing organizations should operate ina range of 25 to 75 workers for even' onesupervisor.'" One "best company" putsPeters principle to shame: "Never have somany been managed by so few," Ritz-Carlton Vice President Patrick Merle toldVice President Gore at the PhiladelphiaSummit. "There's only about 12 of us backin Atlanta for 11,500 employees. And it

really starts with passionate leadership.Working toward a quality government

means reducing, the power of headquartersvis-a-vis field operations. As our reinventedgovernment begins to liberate agencies fromover - regulation, we no longer will need280,0(X) separate supervisory staff and420,000 -systems control staff to supportthem. Instead, we will encourage more ofour 2.1 million federal employees tobecome managers of their own work.

Put simply, all federal agencies willdelegate. decentralize, and empoweremployees to make decisions. This will letfront-line and front-office workers use theircreative judgment as they otter service u)customers and solve problems.

As part of their performance agreementswith the President, cabinet secretaries andagency (TOs will set goals for increasingthe span of control for every manager. (SeeStep 3.) The federal government shouldseek to double its managerial span ofcontrol in the coming years.

Some employees may view such pruningas threatening--to their jobs or theirchances for.promotion._It is true that thesize of the federal workforce will decrease.But our goal is to make jobs meaningfuland challenging. Removing a laver ofoversight that adds no value to customersdoes more than save money: Itdemonstrates trust in our workers. It ofrersemployees in dead-end or deadly dull jobs achance to use all their abilities. It makes thefederal government a better place to workwhich will in turn make federal workersmore productive.

As private companies have h)und, thekey to improving service while redeployingstaff and resources is thinking about theorganization's staffing and operating needsfrom the perspective of customer needs.\X'hat does each person's task add in valueto the customer% The Postal Service hasdeveloped a single criterion: It asks, "Dothey touch the mail:- Where possible, otheragencies should develop similar simple.easy-to-understand criteria.

Pioneering federal offices have used thefull variety of quality management

EMPOWERING EMPLOYEES TO GET RESULTS

techniques to decentralize. ,Mane focus onpassing decisions on to the work teams thatdeal directly with the customer. Some haveproduced impressive results, both inproductivity and management delavcring.

The Internal Revenue Service's HartfOrddistrict office slashed the time required toprocess a form on "currently non-collectible- taxes from 11.6 days to 1.4days. l'hen it replaced time-consuming casereviews with an automated casemanagement system and began using themanagers time to upgrade employees. skills.Delinquent tax dollars collected rose by 22percent. The office chose not to till vacantmanagement positions, investing part of itstaff- savings in new technology to boost

productivity further. Eventually, it cutoverall case processing time front 40 to 21.6weeks..

At the Robins Air Force Base, the 1926thCommunications-Computer .SystemsGroup cut its supervisory staff in half byorganizing into teams.'.` An AgricultureDepartment personnel office that convertedto self-managed work teams beefed upcustomer satisfaction and now uses onlyone manager for every 23 employees. At theDefense Logistics Agency, self-managingteams in the Defense Distribution RegionCentral eliminated an entire level ofmanagement. saving more than 52.5million a year..- In 1990. the AirwaysFacilities Division of the Federal AviationAdministration maintained approximately16,000 airspace facilities, with roughly14,000 employees. Today its workforce isorganized in self-managed teams instead ofunits with supervisors. They now maintainmore than 26.000 facilities with only 9,0(X)employees.'''

Other decentralization and delaveringplans are in the works. After a successfillpilot program in 11 field service sites, theDepartment of Veterans Affairs isrecommending an agencywide effort.'Over the next 5 years, the Department of-lousing and Urban Development (HUD)

plans to convert HUD's field structure fromthree to two levels, eliminating the regionaloffices. HUD will free its five assistant

14051 10 I) I \ VI 1010'441 1` 4 ZI II \ (. 1 (.t)\ I 12 \ \II \I 11111 \\.()R1.*, l31 I H R & 1.ISS

secretaries to organize their Own attic:6°nsin the field. It will transfer many of itsapplication and loan processing functionsto private firms. While letting staffattrition dictate staff reductionsHUD promises no layoffsI -IUD plans toretrain and redeploy people into more

interesting jobs, with better career laddersand better access to managers. HUDbelieves its restructuring effort will improvecustomer service while saving SI57.4million in personnel and overhead costs.'

STEP 2: HOLDING ALL FEDERAL EMPLOYEESACCOUNTABLE FOR RESULTS

t's easy to understand why federalemployeesincluding the hundredswho aired their deep frustrations to the

National Periiirmance Reviewwould careabout empowerment. It adds new, positivedimensions to their jobs.

But why should taxpayers or socialsecurity recipients care: Iaxpavers arentinterested in what rules bureaucracyfollows. But they do care. deeply, abouthow well government serves them. Theywant education programs to give youngpeople basic skills and teach them how tothink, anti - poverty programs that bring theunemployed into the economic mainstreamfor good, anti-crime programs that keepcriminals off the streets, and environmentalprograms that preserve clean air and water.In other words, they want programs thatwork.

But management in government doesnot judge most programs by whether theywork or not. Instead, government typicallymeasures program activityhow much itspends on them, or how many people it hasassigned to staff them. Because governmentfocuses on these "inputs" instead of realresults, it tends to throw good money afterhad. It pours more dollars into the old

Whatyou do thunders so loudly, I cannothear what you say to the contrary.

Ralph Waldo Emerson

education programs even as studentperformance sinks. It enrolls jobless peoplein training programs that teach by thehook. but places few graduates in well-paidjobs.

A recent management survey of thelargest 103 federal agencies sketches in starkrelief this lack of focus on real results. Two-thirds of the agencies reported that theyhad strategic plans. But only nine said theycould link those plans to intended results.''In other words, many had planned, but fewknew where they were going. That's a bitlike trying to steer a ship by looking at itswake. As a result, some of our worstexamples of "waste" are not rooted incorruption or incompetence, but rather inthe simple lack of knowing what we areactually trying to accomplish. As onedespairing federal employee told us,"Process is our most important product."

Recommendations by the NationalPerformance Review aim to revolutionizeour method of navigation. "Today." VicePresident Gore told one departmentalmeeting, "all we measure is inputs. Wedon't measure outputsand that's one ofthe things we're going to changethroughout the federal government."

Measuring outputs is easy in principle. Itmeans measuring how mans' unemployedpeople get jobs, not how many people looktor help at local Employment Serviceoffices. Or it means measuring how manyPeople received their social security checkson time, not how many checks were sentout from a local office. "Outputs" are, quitesimply. measures of how government

programs and policies affect theirLustomers. The importance of pursuing thecorrect measures cannot be underestimated.\s Holt. an Oregon Department orTransportation employee who has workedwith the ground - breaking Oregon ProgressBoardour nations first statewideexperiment in comprehensive performanceaccountabilitycautions: "Our focus hasoccurred through our indicatom notthrough our strategic plans.'"

Implementing the GovernmentPerformance and Results Act

To its credit. Congress has begun torecognize this need. In July 1993, it passedthe Government Performance and ResultsActa pivotal first step toward me.buringwhether federal programs are meeting theirintended objectives. T he act requires that atleast 10 federal agencies launch 3-year pilotprojects, beginning in fiscal 1994, todevelop measures of progress. Each agencypilot will develop annual performance plansthat specify measurable goals. They thenmust produce annual reports showing howthey are doing on those measures. At leastfive pilots will also test "managerialflexibility waivers--which exempt themtrom some administrative regulationstohelp them perform even better. In exchangefor greater flexibility, they must set higherperformance targets. This is exactly theprocess of measured deregulation--weagree to deregulate you if you agree to heheld accountable--that must he the basisof an empowered and accountablegovernment.

At the beginning of fiscal 1998. afterlearning from the pilot programs. all federalagencies must develop 5-year strategicplanslinked, this time. to measurableoutcomes. By the next year, even- agencywill he crafting detailed annual performanceplansthat is, plans that describe w hat theyintend to achieve, not plans that detail howmany pencils they will buy or people theywill hire. And they will have to reoort theirsuccesses and failures in meeting those

. EMPOWERING EMPLOYEES TO GET RESULTS

It may seem amazing to says but like many

big organizations, ours is primarily dominated

by considerations of inputhow much moneydo we spend on a program, how many people

do you have on the staff what kind ofregulations and rules are going to govern it;

and much less by output does this work, is it

changing people's lives for the better?

President Bill ClintonRemarks at the signing of the Government

Performance And Results ActAugust 3, 1993

goals. The Office of Nlanagenent andBudget may exempt very small agencies,and those agencies that cannot easilymeasure their outcomes will use qualitativerather than quantitative goals andmeasurements. After all, any agency can, atthe very least, survey their customers andreport the rating they are given.

Setting goals is not something thatagencies do once. It is a continual process inwhich goals are raised higher and higher topush agency managers and staff harder andharder to improve. As the old businessadage states, -If you're standing still. you'refalling behind.-

That is why we strongly support the act.But agencies should not wait until fiscal1999 to start integrating performancemeasurement into their operations. Norshould they limit themselves to theminimum mandates of the new law. ThePresident. through OMB, is encouragingeven' federal program and agency to beginstrategic planning and performancemeasurement. whether it is ~elected as apilot or not.

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'Rom RED I ro RI st.Eis Cut INc, I III NI. WORKS BETTER & COS I S

ifgovernment is to become customer oriented,

then managers closest to the citizens must be

empowered to act quickly. Why must every

decision be signed-off on by so many people? If

program managers were instead held

accountable for the results the.,, achieve, they

could be given more authority to be innovative

and responsive.

Senator William V. Roth, Jr.Congressional Record, July 30, 1993

Action: . :1/ di:xi/ties will begindere/op/mi.-and me,Isurabb:objectives and reportin results.--

In early 1994in time to prepare thefiscal 1996 budgetOMB will revise thebudget instructions it gives agencies toincorporate performance objectives andresults to the greatest extent possible.Agencies will start measuring and reportingon their past goals and performance as partof their 1996 budget requests. The OMBinstructions, along with executive officepolicy guidance, will guide agencies as theydevelop hill-fledged goal-setting andperformance-monitoring systems for thefirst time.

At the outset, managers may feelunprepared to set reasonable performancetargets. Some will lack any program dataworth its salt on which to base any futuregoals or performance projections. Others,overwhelmed with "input indicators aboutprogram staffing and spending, will find itdifficult to figure out whetheror howthose measures directly relate to achievingdesired outcomes. Agencies will startpreparing themselves ,by reallocating enoughresources toward performance planning andmeasurement over the long term.

OMB will help. Its budget analysts willbe trained to provide feedback and broad

S2

oversight to help craft an effective system,and encourage agencies to improvemeasures that are clearly ineffective. 01\4Bwill negotiate stronger goals for agenciesthat set their sights too low.

Agencies will gradually buildperformance information into their ownbudget, guidance and review procedures,into their strategic and operational plans,and into revised position descriptions fortheir budget, management, and programanalysts. Nothing, however, will replace peerpressure as agencies vie for performanceawards or seek public recognition tor theirachievements.

Action: Clitriti, the objectives of jederat.1

Many agencies will be unable to set clearmeasurable goals until Congress simplifiestheir responsibilities. Programs are boundby multiple, often conflicting, legislativeobjectives. The complex politics of passingenabling legislation and then negotiatingannual appropriations forces some programsto be all things to all people.

For example, a training program targetedat unemployed steel workers soon isrequired to serve unemployed farm workers,the disabled, and displaced homemakers.Originally, the program's purpose may havebeen to refer people to jobs. Butcongressional maneuvers first force it tooffer them training; then to help them findtransportation and daycare. All these areimportant activities. But, by now, theoriginal appropriation is hopelesslyinadequate, reporting requirements havemultiplied geometrically along with themultiplicity of goals, and the program is notsimply unmanagedit's unmanageable. Ifagencies are to set measurable goals for theirprograms, Congress must demand less andclarih' priorities more.

In the private sector, leaders do notsimply drop goals on their organizationsftom above. Hewlett-Packard, Microsoft.Xerox, and others involve their fullworkforccs in identifying a few goals thathave top priority, and then demand smaller

work teams to translate those overall goalsinto specific team measures. This processenables the people directly responsible tormeeting the goals to help set them. h alsoensures that every part of an organizationaims at the same goals, md that everyoneunderstands where they fit in. It may seem atime consuming process, but boats travelmuch taster when everyone is pulling theiroar in the same direction.

With a new joint spirit of accountability.f he executive branch plans to work with:ongress to clarity program goals and

objectives, and to identitY programs wherelack of clarity is making it difficult to getresults.

Holding Top ManagementAccountable

NX'hen General Eisenhower tookcommand of the Allied Expeditionary Forcein World War II, he was given a missionstatement that clearly 'elineated goals forhis vast organization of more than a millionand a half men and women: "You willenter the continent of Europe and, inc -nunction with the other united nations,undertake operations aimed at the heartof Germany and the destruction of herarmed forces.-

In 1%1. President Kennedy gave NASAan even clearer mission: Put a man on themoon and return him safely to earth by theend of the decade. As Vice President Al( ;ore told his audience at a meeting withVeterans Affairs Department employees:"There has to be a clear, shared sense ofmission. There have to be clearlyunderstood goals. There have to becommon values according to whichdecisions are made. There has to be trustplaced in the employees who actually dothe work.

In Great Britain, Australia, and NewZealand, many department and agencyheads are appointed for limited terms andgiven performance agreements. Theirreappointments depend on achievingmeasurable outcomes. Senior officials trom

EMPOWERING EmPLOYEES TO GET RESULTS

these countries say that these agreementshave improved organizationalyerformancemore than any other aspect of theirreinventing government efforts. In theI. 'nited States, mans' local governments domuch the same: In Sunnyvale, California,managers can earn bonuses of up to I ()percent if their agencies exceed performancetargets.

Action:aureelhelltS With

t."Yhey

Past efforts to institute management byobjectives have collapsed under the weightof too many objectives and too muchreporting. The President should craftagreements with cabinet secretaries andagency heads to focus oil the administration'sstrategy and policy objectives. Theseagreements should not "micro-manage" thework of the agency heads. They should notattempt to row the boat. .They should set acourse.

These agreements will begin with the top24 agency heads. In fact, Secretaries MikeagencyEspy' at the Agriculture Department andHenry Cisneros at the Department ofHousing and Urban Development, as wellas Roger Johnson at the General Services.Administration (GSA) and Administrator_).Brian Atwood of the Agency forInternational Development, are alreadyworking with their top managers onagreements.

Not everyone will welcome outcomemeasures. People will have troubledeveloping them. Public employeesgenerally don't focus on the outcomes oftheir work. For one thing, they've beenconditioned to think about process: toranother, measures aren't always easy todevelop. Consequently, they tend to measuretheir work volume, not their results. If theyare working hard, they believe they arc doingall they can. Public organizations will needthe several years envisioned under theGovernment Performance and Results Actto develop useful outcome measures andoutcome reporting.

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Measuring Outcomes

outcome-based management is new in thepublic sector. Some U.S. cities have

developed it over the past two decades; somestates are beginning to; and foreign countriessuch as Great Britain, Australia, and NewZealand are on their way.

Sunnyvale, California, a city of 120,000 inthe heart of the Silicon Valley, began theexperiment 20 years ago. In each policy area,the city defines sets of "goals," "communitycondition indicators," "objectives," and"performance indicators." "In a normalpolitical process, most decisionmakers neverspend much time talking about the results theywant from the money they spend," says CityManager Tom Lewcock. "With this system, forthe first time they understand what the moneyis actually buying, and they can say yes orno."24

Sunnyvale measures performance to rewardsuccessful managers. If a program exceeds itsobjectives for quality and productivity, itsmanager can receive a bonus of up to 10percent. This generates pressure for ever-higherproductivity. The result: average annualproductivity increases of four percent. From1985 to 1990, the city's average cost of servicedropped 20 percent, in inflation-adjusteddollars. According to a 1990 comparison,Sunnyvale used 35 to 45 percent fewer peopleto deliver more services than other cities ofsimilar size and type.

At least a half-dozen states hope to follow inSunnyvale's footsteps. Oregon has gonefarthest. In the late 1980s, Governor NeilGoldschmidt developed long term goals, withsignificant citizen input. He set up the OregonProgress Board, comprising public and privateleaders, to manage the process. The boarddeveloped goals and benchmarks through 12statewide meetings and written materials fromover 200 groups and organizations. "Oregon,"

-6

the board stated, "will have the best chance ofachieving an attractive future if Oregoniansagree clearly on where we want to go and thenjoin together to accomplish those goals."25

The legislature approved the board'srecommended 160 benchmarks, measuringhow Oregon is faring on three general goals:exceptional individuals; outstanding quality oflife; and a diverse, robust economy. Seventeenmeasures are deemed short-term "lead"benchmarks, related to urgent problems onwhich the board seeks progress within 5 years.They include reducing the teen pregnancyrates, enrolling people in vocational programs,expanding access to basic health care, andcutting worker compensation costs.

Another 13 benchmarks are listed as "key"fundamental, enduring measures of Oregon'svitality and health. These include improvingbasic student skills, reducing the crime rate,and raising Oregon's per capita income as apercentage of the U.S. average.

Barbara Roberts, today's governor, hastranslated the broad goals and benchmarks intospecific objectives for each agency. This year,for the first time, objectives were integratedinto the budget--giving Oregon the firstperformance-based budget among the states.

Great Britain has instituted performancemeasurement throughout its nationalgovernment. In addition, the government hasbegun writing 3-year performance contracts,called "Framework Agreements," with abouthalf its agencies. These agencies are run by chiefexecutive officers, many from the private sector,who are hired in competitive searches and thennegotiate agreements specifying objectives andperformance measures. If they don't reachtheir objectives, the CEOs are told, theiragencies' services may be competitively bidafter the 3 years.

8 4

Ultimateh% no one can generate resultswithout knowing how the "bottom line" isdefined. Without a performance target.managers manage blindly, employees haveno guidance, policvmakers don't knowwhat's working, and customers have no ideawhere they may he served best. if torexample, jobless people know how wellgraduates of local training programs farewhen looking for work, they can betterchoose which new careers and programsoffer the best prospects. Informedconsumers are the strongest enforcers ofaccountability in government.

Action: The wittily/is/nu-ion will issueone set of Baldrige Alum pis lbr quality inthe Priem' govel-nment.-"

For 'cars. the executive branch has takensteps to recognize and support goodperformance. In typical fashion, however,

EMPOWERING EMPLOYEES TO GET RESULTS

we have created three different awardsystems, each administered by a differentorganization. 'rile Federal Quality Institute(FQI) administers the Presidential Awardfor Quality: the President's Council onManagement Improvement administers theAward for Management Excellence: and theOffice of Personnel Management awardsthe Presidential Quality and ManagementImprovement Awards for tangible savings tothe government of more than 5250,000.

The administration will issue one set ofpresidential awards for quality. The BaldrigeAward Office of the National Institute forStandards and Technology will combine theexisting awards into a new set of BaldrigeAwards for public serviceto go along withits private sector award. 'lie new award willrecognize agency and work unit qualityinitiatives and ideas, based on programperformance, cost savings, innovation, andcustomer satisfaction.

STEP 3: GIVING FEDERAL WORKERS THE TOOLS THEYNEED 'TO DO THEIR JOBS

Americans today demand a moreresponsive, more humanegovernment that costs less. Their

expectations are neither it rational norwhimsical. Over the past 20 Years, the entireway we do things. make things, evencontact one another, has changed aroundus. Businesses have no guarantees. nocaptive markets. 'To compete. they mustmake things and deliver service better andfaster, and get their message out sooner. Noone benefits more than customers. It's nowonder these same people now turn togovernment and ask. "Why can't you dothings better too:-

Transforming our federal government todo better will mean recasting what peopledo as they work. They will turn from bossesinto coaches, from directors intonegotiators, from employees into thinkersand doers. Government has access to thesame tools that have helped business makethis transformation: it's just been slower to

acquire and use them. We must changethat. We must give workers the tools the'need to get resultsthen make sure theyuse them.

Employee Training

After two decades of organizing forquality, business knows one thing for sure:Empowered people need new skillstowork as teams, use new computer software,interpret financial and statisticalinformation, cooperate with and manageother people, and adapt. Indeed, businesstalks about a new breed of "knowledgeworker"people who understand that.throughout their careers, their mostimportant task is to continue learning andapplying new knowledge to the challenge athand. Knowledgeable workers are our mostimportant source of progress. They are,

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. 4051 III 1) I PI I ,) HI SI I I \ 4 1 (,,,, I 11I

quite simply, the currency of 2Ist centurycommerce.

Business teaches us that ongoing trainingfor every worker is essential tororganizations to work well. Not surprisingly,the federal government under spends ontraining and education. just as it does onmost other productivity-enhancinginvestments. In 1989. the NationalCommission on the Public Service. headedby Paul Volcker, estimated that whileleading private firms Nnend 3 to 5 percent oftheir budgets on training, retraining, andupgrading employee skills. the federalgovernment spends less than one percent.=-

And the little we do spend is not alwaysallocated wisely. A wed-promoted 4-daytraining seminar packaged to appeal tofederal agency managers may seem like agood deal. It is not. however. always whatthe agency needs. The \ 'olcker Commissionconcluded:

Federal training is sulk' rinzfivin anidentity crisis. Agencies are not sure whatthey should train for (short term or longterm), who should get the lion's share ofresources (entry level or seniorlevel)...:ind whether mid-careereducation is of value...Career paths arepoorly designed executive succession isaccidental and .unplanned, and real-time training for pressured managers isvirtually non-existent. At both the careerand presidential let.el, twining is all-too-often ad hoc and self-initiated 2'

Perhaps most striking is the paucity ofcareer training for people on the lowestrungs of the civil service ladder, or for peoplewithout the leg-up of university degrees.These valuci employees may have the mosttenure in an office. They may see and knowevenThing. Frequently. they are indispensable,because only they know how the systemworksand how to work the system.Unfortunately, their abilities are rarelyrewarded, despite their desire to advance.

One staffer in the Justice Department'sCivil Division alerted Vice President Goreto her quandary:

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`X'oitI.s 31 I ; ( I s I ss

watchiK the role of /e alsecretaries chancy. Less and less of thetypical secretarial duties are beingpop' rmedlsimply because the attorneysdo a lot of their 0101 drafting ofdocuments... However; for a secretary to,tart to move into a assistantposition... or into a paralegal role, isfrowned upon... ;Is far as twining goesit impossible... That prevents a lot ofpeople lrom...moving into new jobs thatare ro be of more benefit to thedepartment... le lost a good numberof:cam-dries who have moved elsewhere,because they cannot go any further here.-2'

Employees at the top rung, too. mustkeep learning. Managers and executives facethe same hurdl.:s in keeping up withtechnology as do front-line workers.Technicians must stay up to dare withsystem advances and new techniques. Thegrowing band of federal export and tradepersonnel must learn more than foreignlanguagesthey need to master thelanguage of negotiation as well. Indeed,employees in the Office of the U.S. TradeRepresentative currently receive nosystematic training in negotiation skills orthe cross-cultural styles and patterns theyare likely to encounter in their workasituation the office is now planning tocorrect.'"

Perhaps most important, training is thekey that unlocks the power of bottom-updecisionmaking. At the ReinventingGovernment Summit, General ElectricExecutive Vice President Frank Doyledetailed the GE experience: "We had toeducate our entire workforce to give themthe tools to become meaningfully involvedin all aspects of work. Empowerment...is adisorderly and almost meaningless gestureunless people doing the actual work aregiven the tools and knowledge that self-direction demands."

During the National PerformanceReview process, almost every one of theagentx teams identified a specific learningneed critical to their agency's qualityimprovement and mission. In addition,

several common training concerns demandgovernment-wide action.

Action: I 1_ he adMilliSITatiOn Will (Taniagencies the flexibility to finance nytiningneeds.'2

Leading corporations view training as astrategic resource, an invesnnent. Federalmanagers tend to view it as a cost. So ingovernment, worker training isn't evenincluded in most budget estimates for newsystems or programs. 'Ibis is puzzling andquite short-sighted, since new workplaceinnovations, like advanced software, won'ttransform employee productivity unlessthose employees know how to use them.Although training may be the best and leastcostly way to improve worker performance,government executives view it as a "quickfix, unworthy of any planning effort.

Perceptions are changing, however.Today's management literature is full of talkabout the value of on-the-job-training,computer-based instruction, expert systems,work exchange, mentors and other tools forlearning. Since 1992, OPM has beensteering agencies toward morecomprehensive training initiatives.

We will grant agencies a substantialportion of the savings they realize fromdecentralizing staff and reducing operatingcosts (see chapter 1) to invest in workertraining, performance measurement, andhenchmarking.

Budget directives further complicate anagency's ability to train workers effectively,particularly when its own budget office,OMB, or Congress cut line items foremployee training. Such over-specifiedreductions deny employees the access toskills they need to be productIve, to advancein their careers, and to adapt to newtechnology.

Action: The federal government willupgrade information technology trainingfbr employees.''

Even' year, more and more federalworkers must use computer-based

EMPOWERING EMPLOYEES TO GET RESULTS

information technology in their jobs. Ifbusiness is any guide, our governmentreinvention efforts will only quicken thetrend. Pen and paper exercises keep movingto the screen. Literal files now formdatabase records. Video- and computer-based courses make learning possibleanytime, anywhere. Money no longerchanges h. nds; it's transmitted digitally.People not only talk, they "message." Ameeting of the minds can take placewithout the bodies present.

Other chapters discuss how we will speedthe procurement process for technology andhow we will deploy technology, to alter whatwe do and how well we do it. Here, wewant to stress that much of the federalworkforce lacks the training andbackground to use advanced informationtechnologies.

Compared to the private sector, thefederal government invests few dollars andscant time in technology, training.34 Federalagencies provide insufficient incentives tomotivate their workforce to seek technologytraining, scarce opportunities to obtaintrainingeven when it's desired andnecessaryand rarely, incorporatetechnology training in the strategicplanning process. The longer we wait. thefarther behind we fall.

This foot-dragging costs the taxpayerdearly. We do things the old way, not thecheaper, more efficient way. Or we startdoing things the new way, but we don't gofar enough: We buy computers for ourworkers, but not the training to use themproperly, so the software and hardwareinvestments are wasted. We invest in newsystems, and our people cant make themwork.

Training should begin with topnontechnical managers, to help them focuson uses, management, planning, andacquisition of state-of-the-art informationtechnology. By May 1994, OPM and GSAwill jointly develop and administerinformation technology training for non-technical managers and presidentialappointees. The New York CityDepartment of Personnel, already in the

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technology training business, offers a usefulmodel of monthly halt-day sessions forexecutives covering ten topics: strategicplanning, reengineering implementingsystems, electronic mail, video conterencing,voice-enhanced technologies, geographicinformation systems. database management,imaging, and multi-agency andinspection systems. Our effort will helpevery senior manager earn a certificate thatsignifies his or her level of technologycompetency. Parallel training andcertification efforts will target SeniorExecutive Service members and informationresource managers.

Anyone who has grappled withcomouterstrom the basics of wordprocessing to the complexity of expertwstemsknows that we often learn besthow to use software by finding a technology"pal : someone who knows the ins and outsof a particular software application and iswilling to share that knowledge. To spreadinformation technology training and use inthe entire federal workforce, the existingFederal Information Resources ManagementPolicy Council will

ofmotivated agencies

set up a program of collegial assistance for awide range of technology applications. Wewill tap the cadre of techno-proficientindividuals spread across the federalgovernment to provide occasional on-linehelp or personal assistance on demand totheir struggling colleagues.

Finally, starting late in 1993, newcontracts for technology acquisitionorthose in early stages must include aprovision for training. If agencies worktogether, they can cut such training costsdramatically. When .Texas contracted withtour statewide technology training firms totrain state employees, it cut the price to S60to S110 a day per worker for a wide rangeof skills. An even larger customer, thefederal government should he able to landan even better bargain.

Action: Eliminate narrow restrictionson employee training to help develop amnitrskilled workforce:"

The Government Employees TrainingAct (GETA), which authorizes agencies tomanage and determine their training needs,defines training as a tool for "increasingeconomy and efficiency in government."The rules written behind this 1958 wordingseverely limit how agencies can use trainingtoday. Training too often is ad hoc andseldom linked to strategic or humanresource planning. Managers generally arenot able to get the information todetermine the return on their traininginvestment. Even worse, existing restrictionsdictate that any training be related to anemployee's official dutiesthus ensuringthat our Justice Department secretary doesnot become a paralegal. These rules keepfederal employees single-skilled in a multi-skilled world.

By early 1994, OPM will draft legislationto amend GETA on three fronts. OPM willredefine the objective of federal training asthe "improvement of individual andorganizational performance." It will relatethe use of training to achieving an agency'smission and performance goals, not to aworker's official duties. And OPM will seekto end the distinction between governmentand nongovernment training, giving publicemployees access to the best training servicesavailable, no matter who provides them.

Clarihing the purpose of training inGETA will reinforce the need to usetraining to improve performance andproduce results. Removing the distinctionbetween government and non-governmenttraining will deregulate the in-governmenttraining monopoly, introducingcompetition that will improve the quality oflearning opportunities for federalemployees. And linking training to anagency's mission will ease employees effortsto become adept ar all the skills they need asempowered workers. We urge Congressjoin in the quality effort by passing theseimportant amendments early in 1994.

Management Information Systems

Management isn't about guessing,ofabout knowing. Those in positions of

responsibility must have the informationthey need to make good decisions. Goodmanagers have the right information at theirfingertips. Poor managers don't.

Good information comes from goodinformation systems. Managementinformation systems have improved inlockstep with even advance in thetelecommunications revolution. Newmanagement information systems aretransforming government, just as they havebusiness, in two ways. They can makegovernment more productivethe benefitwe discuss in this chapterand let usdeliver services to customers in new ways,which we take on in chapter 4. Indeed.today's systems have enabled businesses toslim down data processing staffs, whilegiving more employees access to moreaccurate data. This shows up on the bottomline. If federal decisionmakers are given thesame type of financial and performanceinformation that private managers use, ittoo will show up on the bottom lineandcut the cost of government.

Sheer size alone would make the federalgovernment difficult to manage, even underthe best of conditions. Unfortunately,federal employees don't work under the bestof conditions. Indeed, when it comes tofinancial information, mans' are flyingblind. It's not for lack of staffing: Some120,000 workersalmost 6 percent ofnon- postal service civilian employeesperform budget, accounting, auditing, andfinancial management tasks. 3' But whenON1B surveyed agency financial reportingsystems last year, it found that one-thirdwere more than a decade old, and only 6percent were less than 2 years old. One-third failed to meet Treasury and ()NIBreporting standards. TWo-fifths did notmeet their own in-house reportingstandardsmeaning they did not providethe information managers wanted. Andmore than hallsimply lacked the computerpower to process the data being entered.

EMPOWERING EMPLOYEES TO GET RESULTS

We all know the potential costs oflagging systems: 'They contributed to the$300 billion savings and loan bailout,'`( $47billion in nontax delinquent debt, $3.6billion in student loan defaults, and so on.

Fortunately, the process of updating ourmanagement information systems hasbegun. In 1990, Congress passed the ChiefFinancial Officers (CFO) Act.'`" Itdesignated an OMB deputy director as thefederal governments chief financialmanagement officer. The Office of FederalFinancial Management was charged withestablishing financial management policiesacross the government and monitoringagency audits. The act also created chieffinancial officers in 23 agencies. The OMBdeputy chairs a CFO Council to deal withimproving financial management acrossgovernment.

But we need to do moreand quickly.

Action: The executive branch will createa coherent financial management system,clariljl responsibilities, and ;wise thestandards for financial officers.'"

Vastly improved financial management iscritical to the overall effort to reformgovernment. First, it will save taxpayersmoney. Trillions of dollars flow through thefederal government in any year; even a smallimprovement in managing those hindscould recover billions. Second, we needaccurate and timely financial information ifmanagers are to have greater authority torun federal agencies, and decisionmakingmoves to the front lines. Greaterresponsibility requires greater accountability,or the best-intentioned reforms will onlycreate new problems. Finally, betterfinancial management will present a moreaccurate picture of the federal budget,enabling the President, Congress, andagency leaders to make better policydecisions.

By the end of 1993, OMB and lfeasurywill sign a fbrmal agreement to clarifytheir respective policvmaking andimplementation roles, to eliminateregulatory confusion and overlap for their

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FROM RED CAPE ro RESULTS CREATING A GOVERNMENT CHAT WORKS BETTER & COSTS LESS

governmental customers. OMB, workingwith Treasury and the CFO Council, willcharter a governmentwide Budget andFinancial Information Steering Group tooversee the stewardship of financialplanning and management data for thefederal government. By spring 1994, OMBwill work with the existing Joint FinancialManagement Improvement Program andconsult with Treasury and the agencies todefine exactly what constitutes an integratedbudget and financial system. At the sametime, working with Treasury and the CFOCouncil, OMB will develop a long-rangestrategic plan to link financial informationand performance goals to the work ofagency managers.

Finally, we will insist on higherqualifications for chief financial officers.After all, many federal agencies are largerthan Fortune 500 companies. Americansdeserve financial officers with qualificationsthat match those in our best companies. ByMarch 1994, working with accounting andbanking groups, the CFO Council willcreate a continuing education program forfederal financial managers. At the sametime, OMB guidelines will clarify theprecise financial functions the CFO shouldoversee, trimming responsibilities likepersonnel or facilities management that lieoutside the CFO's main mission.

Action: Within 18 months the FederalAccounting Standards Advisory Boardwill issue a comprehensive set of credibleaccounting standards for the federalgovernment.''

A recent GAO audit of the InternalRevenue Service unearthed $500,000 ofoverpayments to vendors in just 280transactions and a video display terminalthat cost only $752 listed at $5.6 million onthe IRS books. Other GAO efforts foundthe Army and Air Force guilty of $200billion in accounting mistakes, NASA guiltyof $500 million, and widespreadrecordkeeping problems acrossgovernment.': In 1990, Congressconcluded that "current financial reporting

0

standards of the federal government do notaccurately disclose the current and probablefuture cost of operating and investmentdecisions, including the fixture needs forcash and other resources." In other words, ifa publicly-traded corporation kept its booksthe way the federal government does, theSecurities and Exchange Commissionwould close it down immediately.

It's not that we have no accountingprocedures and standards. It's that we havetoo many, and too many of them conflict.Even worse, some budget and accountingpractices obscure the amount and type ofresources managers might leverage toproduce savings and increase productivity.

We must agree on stricter accountingstandards for the federal books. We requirecorporations to meet strict standards offinancial management before their stockscan be publicly traded. They must fullydisclose their financial condition, operatingresults, cash flows, long-term obligations,and contingent liabilities. Independentcertified public accountants audit theiraccounts. But we exempt the $1.5 trillionfederal government from comparablestandards.

Currently, the fcieral AccountingStandards Advisory Board (FASAB),established in October 1990, develops andrecommends federal accounting standardsfor OMB, Treasury, and GAOwhichtogether must approve them. Although weneed almost a dozen sets of standards, onlyone has been approved using this process inmore than two and a half years. We need toquicken the pace.

The administration will give the FederalAccounting Standards Advisory Board an18-month deadline to release and getapproval of all 11 sets of standards. If it fails,the administration will replace it with a new,independent board with greater powers.

Action: The Administration should issuean Annual Accountability Report to theCitizens.';

The ultimate consumer of informationabout the performance of federalorganizations should be the Americanpublic. As agencies develop output andoutcome measures, they should publishthem. The customer service standardsrequired by the President's directive onimproving customer service, outlined inchapter 2. will he a first step.

A second step will be a new report cardon the financial condition of the federalgovernment. For the last 20 years, ourgovernment has issued "prototype" financialstatements, but no one can assure theiraccuracy. Put simply, they would never passan audit. We believe Americans deservenumbers th,2v can trust. By 1997, we willrequire the Department of the Treasury toprovide an audited coticolidated annualreport on federal financesincluding taxexpenditures. hidden subsidies, and hiddencontingent liabilities such as trust funds andgovernment-sponsored enterprises.''

The Treasury and OMB will develop asimplified version of the government'sfinancial condition, to be published forpublic consumption in 1995. Rather than adetailed. unreadable financial account, it willhe a straightforward description of themoney spent and its effects on achievinggoals. We will call this the AnnualAccountability Report to the Citizens.

Information Technology

A few years ago in Massachusetts, adisabled veterans caseworker who worked tomatch veterans with available jobs tooksome initiative. He decided to abandon hissole reliance on the state's central officemainframe computer and take his personallaptop, loaded with readily availablesoftware, on the road. Suddenly, he was ableto check a database. make a match, andprint a resume all during his first contactwith an employer. Quickly, he started

EMPOWERING EMPLOYEES TO GET RESULTS

beating the mainframe. His stateadministrator took notice, and managed tosqueak through a request to the Departmentof Labor's Veterans Employment andTraining Service for grant funding andpermission to reprogram dollars in the fallof 1990. Soon after, 40 Massachusettscaseworkers were working with laptops. Injust one year, Massachusetts jumped from47th in the nation for its veterans jobplacement rate to 23rd.

Although this story screams success, it isunfortunately the exception, not the rule.Normally, the Labor Department has toapprove the purchase of something as smallas a 530 modem in the field. Massachusettsgot the funding only because it was the endof the fiscal year and money had to bespent.°

The point stands: When workers havecurrent and flexible technology to do theirjobs, they improve performance. We needto get more computers off the shelf and intothe hands of federal employees.

Action: The administration will developa strategic plan for using informationtechnology throughout the federalgovernment. i6

Transforming the federal government isan enormous, complex undertaking thatbegins with leadership, not technology. Yet,

In short, it's time our government adjusted to

the real world tightened its belt, managed itsaffairs in the context of an economy that is

information- based, rapidly changing and puts

a premium on speed and fitnction and service,

not rules and regulations.

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President Bill ClintonRemarks announcing the

National Performance ReviewMarch 3, 1993

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in helping to break down organizationalboundaries and speed service delivery,information technology can be a powerfultool for reinvention. To use that tool,government employees must have a clearvision of its benefits and a commitment toits use.

Washington's attempts to integrateinformation technology into the business ofgovernment have produced some successesbut many costly failures. Many federalexecutives continue to overlook informationtechnology's strategic role in.reengineeringagency practices. Agency informationresource management plans aren'tintegrated, and their managers often aren'tbrought into the top realm of agencydecisionmaking. Nlodernization programstend to degenerate into loose collections of

independent systems solving uniqueproblems. Or they simply automate, insteadof improve, how we do business.

The President should expand the work ofthe existing Informaticn Infrastructure TaskForce to include a Government Information'rechnology Services Working Group. Thisworking group will develop a strategicvision for using government informationservices and propose strategies to improveinformation resource management. Alsobeginning in October 1993, OMB willconvene interagency teams to shareinformation and solve commoninformation technology problems. Inaddition, OMB will work with each agencyto develop strategic plans and performancemeasures that tie technology use to theagency's mission and budget.

STEP 4: ENHANCING THE QUALITYOF WORK LIFE

When it comes to the quality ofwork life, as measured byemployee pay, benefits, schedule

flexibility, and working conditions, thefederal government usually gets goodmarks. Uncle Sam is a family-friendlyemployer, offering plenty of options thathelp employees balance their life and workresponsibilities. Flextime, part-time, leave-sharing, and unpaid family and medicalleave are all available. Pilot projects intelecommuting allow some workers whotravel long distances to work at locationscloser to home.

The federal government would be smartto keep abreast of workplace trends. Ourincreasingly diverse workforce struggles tomanage child care, elder c're, familyemergencies, and other personalcommitments, while working conditionsbecome ever more important. Recentstudies suggest that our ability to recruitand retain the bcst employeesandmotivate them to he productivedependson our ability to create a satisfring workenvironment. Johnson & Johnson, forexample, reported that its employees who

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used flextime and faraily leave were absent50 percent fewer days than its regularworkforce. Moreover, 71 percent of thoseworkers using benefits said that the policieswere -very important- to their decision tostay with the company, as compared to 58percent of the employees overa11.16

The federal government must maintainits "model employer" status and keep theworkplace a humane and healthy place. Itmust also ensure that, as we move towardimproving performance and begin to relyon every worker for valuable ideas, wecreate a workplace culture in whichemployees are trusted to do their best.

Action: The federal government willupdate and expand ,familyfriendlyworkplace options.

Even under current workplace policies,federal workers still encounter someproblems. Many agencies do not fullyadvocate or implement flexible workpolicies. For example, only 53 percent ofour employees with dependent care needsbelieve their agencies understand and

support family issues, according to OPM.1-hirrv-eight percent indicated that theiragencies do not provide the full range ofdependent-care services available. As oneexample. OPNI concluded that '...certainagencies may have internal harriers thatmake supervisors reluctant to approveemployee requests to work part-time.

The President should issue a directiverequiring that all agencies adoptcompressed/flexible time, part-time, andjob-sharing work schedules. Agencies willalso he asked to implement flexiplace andtelecommuting policies, where appropriate.Starting next year, we ViI allow federalemployees to use accrued sick leave to caretor sick or elderly dependents or foradoptions.'" We will also give credit for allsick leave to employees who have beenseparated from and then rejoin federalemployment, no matter how long they wereout of government service.

Congress has written into law someharriers to improving the federal workplace.It should lift them. By January 1994, OPMwill submit legislation to remove limitationson dependent-care programs and giveagencies more authority to craft employee-friendly programs, such as employee benefitpackages. By N larch 1994, OPM and GSAwill propose legislation to enable flcxiplaceand telecommuting arrangements.

Finally, we urge Congress to reauthorizethe Federal Employees Leave Sharing Actwhich expires October .31, 1993 with a fewchanges to improve program operations andallow interagency transfers of annual leave.Voluntary leave enables employees withfamily medical emergencies, who haveexhausted all their available annual leave, toreceive donated annual leave from theirfellow federal workers. In just the last twoyears. voluntary leave served more than23,000 federal employees with more than3,742,600 hours of donated annual leave.The dependent-care needs of more than 96percent of federal employees are met by theleave-sharing program.'"

EMPOWERING EMPLOYEES TO GET RESULTS

One of the things we learned.. is that there's a

strong correlation between employee satisfaction

and customer satisfaction. If your employees are

unhappy and worried about the variousbaseline, basic needs, you know, of the quality

of th :ir work life, they won't worry about

customers.

Rosetta RileyDirector of Customer Satisfaction

General Motors

Action: /he executive branch willabolish employee time sheets and timecards for the standard work week."

In a productive workplace, whereemployees clearly understand their agency'smission, how they fit into it, and what theymust accomplish to fulfill it, everyone is aprofessional. The work culture must sendthis message in every way possible. One easyway is to put an endonce and for alltomeaningless employee sign-ins and sign-outs on time sheets.

Many may consider this a trivial matter.But consider the salaried Health andHuman Services (HHS) employee whomust still sign in at a central location in heroffice every morningand sign out exactly81/, hours later. She must do this no matterhow many more hours she really works, andevery employee in her branch must sign thesame list, in order of appearance.

Occasionally, when she gets caught up in ameeting or lost in concentration at her desk,she forgets to sign the book at her appointedhour. Supervisors have "guided" her to avoidthis problem. She tells her supervisor, whcagrees that the practice is senseless, that itdiscourages her from working longer hours."What about us overachievers?" she asks him."You lose," he answers.

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The truth is, we all lose. Yet 1-11-1Scontinues to spend dollars trainingtimekeepers.'

The Department of Labor, by contrast,listened to complaints from its employeesabout the needless paper-pushing and useof administrative time that repetitivetimekeeping required. Under the leadershipof Secretary Robert Reich, and with fullbacking of union presidents who representdepartment employees, Labor has begun todump the standard time card. Afterrealizing that nearly 14.000 of its 18,000employees work a standard 40-hour week,department leaders decided to trust theirworkers to report only exceptions, such asovertime and sick and annual leave. Sinceonly one third of Labor's workforce reportsany exception in the average week, thedepartment is already saying paper andtimeand money. Standard time recordsare now submitted electronically, withoutbothering employees.''

The President should encourage alldepartments and agencies to follow theDepartment of Labor's lead. The new policywill allow for exceptionsfor example,when labor contracts or matters of publicsafety require them. But if we truly seek thehighest productivity from our workers, wemust treat them like responsible adults. Intoday's work environment, time cards arc auseless annoyance.

Action: The President should issue adirective committing the achninistmtionto greater equal opportunity and diversityin the federal workforce.'.'

President Clinton launched hisadministration by appointing cabinet andsenior officials who, in his words, "look likeAmerica." In doing so, he sent a clearmessage: A government that strives for the

best must continue to break down stubbornbarriers that too often keep us fromemploying, training, or promoting the bestpeople.

While the President has set the stage, thecurrent federal workforce does not reflectthe nation's diverse working population.Overall, the federal government has vet tosuccessfully eliminate some discriminatorybarriers to attracting and retainingunderrepresented groups at every civilservice grade level, or advancing them intosenior positions. A glass ceiling still hangsover the employment and career prospectsfor women, minorities and people withdisabilities who work in the federal service.Women account for only 12 percent of thetop tier of the federal employment ladderthe Senior Executive Service. Minoritiesaccount for nine percent." Serious disparitypersists for both groups in promotion ratesto professional and administrative levels thatserve as the gateway to further advance-ment. The numbers for Americans withdisabilities are even worse.

Much can be done to make equalopportunity an integral part of each agency'smission and strategic plan. The Presidentshould issue a directive in 1993 committingthe administration to attaining a diversefederal workforce and increasing therepresentation of qualified minorities,women, and people with disabilities at allcareer levels. The order should instructagency heads to build equal employmentopportunity and affirmative employmentelements into their agency strategic plansand performance agreements. In turn,agency leaders should require managers andreams throughout their agencies to buildthe same goals into their own performanceplansand should publicly recognize thosewho succeed.

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ermukroIr 1+or r' ° koPer-07"- "",erv"' ro--0.-"fKiwite"1-rfntseW ',40 -my j ^i'aa,y/e.`.""tooklifen.r

EMPOWERING EMPLOYEES TO GET RESULTS

STEP 5: FORMING A LABOR-MANAGEMENTPARTNERSHIP

The federal workforce is changing,While the number of employes hasremained constant fOr a decade, the

workforce is much more diverse, with moreminorities and women. It is better educatedand more mobile. And more employeeswork in professional, scientific, and highlytechnical jobs than ever before.

lbday, more than 125 federal unionsrepresent about 60 percent of the federalworkforce. That's 1.3 million civilian, non-postal employees, or 80 percent of theworkforce eligible to participate in federalunions. The three largest federal employeeunions are the American Federation ofGovernment Employees (AFGE), theNational Treasury Employees Union(NTEU), and the National Federation ofFederal Employees (NFFE).

Federal employees and their unions are asaware of the quality revolution as are federalmanagers. Consistent with the quality push,federal employees want to participate indecisions that affect their work. Indeed,GAO estimates that 13 percent of federalworkers already are involved in formalquality management processes.' At theIRS, for example, a Joint QualityImprovement Process with the NTEL: hasspread throughout the agency savingmoney, producing better service, andimproving labor-management relations.

Corporate executives from unionizedfirms declare this truth from experience: Nomove to reorganize for quality can succeedwithout the full and equal participation ofworkers and their unions. Indeed, aunionized workplace can provide a leg upbecause forums already exist for labor andmanagement exchange. The primary barrierthat unions and employers must surmountis the adversarial relationship that bindsthem to noncooperation. Based onmistrust, traditional union-employerrelations are not well-suited to handle aculture change that asks workers andmanagers to think first about the customer

-re want to be full partners. We want to

work. We want government to work better.

We want to be there in partnership to helpidentify the problems. We want to be there in

partnership to help craft the solution. We want

to be there in partnership to help implementtogether the solution that this government

needs.

And we're prepared to work in partnership

to make some bold leaps to turn thisgovernment around and make it work the

way it should work.

John Sturdivant, PresidentAmerican Federation of Government Employees

Reinventing Government Summit,Philadelphia June 25, 1993

and to work hand-in-hand to improvequality.

The current context for federal labor-management relations, title VII uf the 1978Civil Service Reform Act, preset, such abarrier. In 1991, the GAO concluded afteran exhaustive survey of union leaders,government managers, federal employeesand neutral experts, that the federal labor-management relations program embodiedin title VII "is not working well." GAOcharacterized the existing bargainingprocesses as too adversarial, bogged downby litigation over minute details, plagued byslow and lengthy dispute resolution, andweakened by poor management. Oneexpert interviewed by GAO summed upthe prevailing view: "We have never had somany people and agencies spend so muchtime, blood, sweat. and tears on so little. Inocher words, I am saving 1 think it is an

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FROM RED run:. To RESULTS CREA TING A GOVI RNMENT FDA F WORKS BETTER & COs FS LESS

awful waste of time and money on verylittle results." Indeed, the cost of handlingunfair labor practice disputes using thissystem runs into tens of millions of dollarsevery year.'

We can only transform government if wetransform the adversarial relationship thatdominates federal union-managementinteraction into a partnership forreinvention and change.

Action: The President should issue adirective that establishes labor-numagementpartnership as an executive branch goaland establishes a National PartnershipCouncil to help implement it.'8

The President's executive order willarticulate a new vision of labor-management relations. It will outline theroles of managers and unions in creating ahigh-performance, high-qualitygovernment. It will call for systematictraining in alternative dispute resolutionand other joint problem-solving approachesfor managers, supervisors and unionofficials. And it will call for agencies to formtheir own internal councils.

By October, 1993, the President shouldappoint the National Partnership Council

and charge it with the task of championingthese efforts and developing the next steps.The council will include appropriate federalcabinet secretaries, deputy secretaries, andagency directors; the presidents of AFGE,NTEU, and NFFE: and a representative ofthe Public Employee Department of theAFL-CIO. Federal agencies and unions willassign existing personnel to staff the council.

Action: The National PartnershipCouncil will propose the statutory changesneeded to make labor - managementpartnership a reality.'''

GAO cited the need for a new labor-management relations framework that"motivates labor and management to formproductive relationships to improve thepublic service."60 The Federal LaborRelations Authority, The Federal Mediationand Conciliation Service, and severalagencies have been encouraging andfacilitating new labor-managementcooperation effOrts. However, their effortsare being hampered by legal restrictions thatfocus on the traditional adversarial models.The council will recommend legislation tothe President to create a better framework.

STEP 6: EXERTING LEADERSHIPDespite the federal government'ssolid core of capable employees, itlacks effective leadership and

management strategies. In 1992, GAOdelivered a stark diagnosis of thesituation. Our government, GAOreported, lacks the "processes and systemsfundamental to a well-run organization.Most agencies have not created a vision oftheir futures, most lack good systems tocollect and use financial information orto gauge operational success andaccountability, and many people do nothave the skills to accomplish theirmissions." This situation, GAOconcluded in a burst of understatement,was "not good.'''''

88

The sweeping change in work culturethat quality government promises won'thappen by itself. Power won't decentralize ofits own accord. It must be pushed andpulled out of the hands of the people whohave wielded it for so long. It will be astruggle.

We must look to the nation's top leadersand managers to break new ground. ThePresident, the Vice President, cabinetsecretaries, and agency heads are pivotal tobringing about governmentwide change. Itis they who must lead the charge. UnderPresident Clinton's leadership they aredetermined to make it happen.

If we want to make the federalgovernment a better place, our current

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3"6915PC'''''""zr'.:"°7:'-"4"41 -...2°'411''1.4444V"""or . or,..-

leadership must make it clear by what we dothat, when we offer change, we meanbusiness. That is a promise

ofmust make

to the entire community of hardworking,committed federal workers. It is a promisewe must keep.

Action: !he President shoull issue adirective detailing nis vision. plan. analcommitment to Cleat!. YU!' qualityoverninent.'-

Graham Scott, who as Secretary ofTreasury for New Zealand helped shepherdreinvention of that country's government,cautioned Vice President Gore. "Ourexperience is that government wont changeunless the chief executive is absolutely IC(;percent committed to making it change."'CEOs of corporations the world over echoScott's call.

The first directive issued along with thisreport will clarify the President's vision of aquality federal government. It wig committhe administration to the principles ofreinventing government, qualitymanagement, and perpetual reengineering,as well as the National PerformanceReview's other recommendations. Inaddition, it will detail the strategicleadership roles of the cabinet and agenciesin iniplen...fiting them.

Action: I:: federal department andagency will designate a chief operatingofficer:."

Transforming federal managementsystems and spreading the culture of qualitYthroughout the federal government is nosmall task. To accomplish it, at least onesenior official with agencvwidemanagement authorin from every agencywill be needed to make it happen.

Even' cabinet-level department andfederal agency will designate a chiefoperating officer (COO). In addition toensuring that the President's and agencyheads priorities are implemented, COOswill he responsible for applying qualityprinciples in transforming the agencies day-

EMPOWERING EMPLOYEES TO GET RESULTS

to-day management cultures, for improvingperformance to achieve agencies goals, forreengineering administrative processes, andfor implementing other NationalPerformance Review recommendations.

The COO will not add an additionalposition in the secretary's or director's staff.Secretaries and agency directors shoulddesignate a deputy secretan, or undersecretary with agencvwide authority as theCOO. The COO will report directly to theagency's top official.

Action: 1 7I._e 'resitieur shout:!President's Management Council :0 tcaathe (nudity revolution ,ina en sun' ',!inniementatron of A/ilia/id/ -7111'7):41iit

A new President's Management Council(PMC) will be the President's chiefinstrument to retool management systemsthroughout the executive branch. It will actas the institutional lever to drivemanagement and cultural changesthroughout the bureaucracy. The PMC willensure that quality management principlesare adopted, processes are reengineered,performance is assessed, and other NationalPerformance Review recommendations areimplemented.

Unless everyone understands what a work

process is, how to map it, how to analyze and

quantify its essential elements, no organization

will be able to reap the enormous gains in

per)brmance that come with an involved andempowered workforce.

Frank DoyleExecutive Vice President, General Electric

Reinventing Government Summit, PhiladelphiaJune 25, 1993

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

The President should appoint theDeputy Director for Management of OMBto chair the PMC, and its progress will beoverseen by the Vice President. The councilwill include the COOs from 15 majoragencies and three other agencies designatedby the chairperson, the heads of GSA andOPM, and the President's Director ofCabinet Affairs (ex officio). Its agenda willinclude setting priorities; identifying andresolving cross-agency management issues;establishing interagency task forces totransform governmentwide systems such aspersonnel, budget, procurement, andinformation technology; and solicitingfeedback from the public and governmentemployees. It will secure assistance from theCEOs, officials and consultants who havehelped transform major Americancorporations, state and local governments,and non-profit organizations. Inaddition, the PMC will conduct futureperformance reviews of the federalgovernment and report to the public onits findings.

Working together, the President, VicePresident, PMC and every agency head willcarry the quality message into the sleepiestcorners of the bureaucracy. Successful andinnovative agencies will be cheered; slowermoving organizations will be prodded andencouraged until change occurs.

Action: The President's ManagementCouncil will launch quality management"basic training" for all employees,starting with top officials and cascadingthrough the entire executive branch.66

However pressing the need, we cannotexpect leaders, managers and employeescaught up in old ways to change overnight.To nurture a quality culture withingovernment, we must help the entireworkforce understand the President's vision.Unless we train everyone in the new skillsthey needand help them understand thenew roles they are expected to playtheycan, through passive or active resistance,

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frustrate well-intentioned attempts toprogress. So first and foremost, everyonewill need to learn what working andmanaging for quality is all about.

The President and agency heads mustsend a clear message about theircommitment by becoming directly involvedin the design and delivery of quality trainingin their. agencies. Therefore, the PMC,working with the Federal Quality Institute,will begin quality training with the cabinetsecretaries and agency heads. Trainingsessions will focus on defining a sharedvision, developing a strategy to embed thatvision in the each department, committingparticipants to lead and be responsible forchange, and establishing a process fortraining the next level of management.

Even as agencies reorganize aroundquality and customers, their staff may needtraining to fulfill expanded jobresponsibilities. Line staff may need to learnbudget and procurement processes.Managers may need help in becomingcoaches rather than commanders. We willpursue the goal of reaching the entirefederal workforce with quality training.

It is worth noting that some cabinetsecretaries already are up on the qualitylearning curve. During the past fewmonths, more than 60 top field managers,contract lab directors, and assistantsecretaries have joined Energy SecretaryHazel O'Leary for 6 days of total qualitymanagement training at MotorolaUniversity in Chicago. They've agreed on amission statement, set the department's corevalues, and put strategic planning inmotion. In the process, skeptics havebecome energized, egos have beensubsumed, hidden agendas unearthed anddispensed. In the words of one participant,"Everyone is working as a team. We'reincredibly excited about doing better. In just6 days of quality training, we have movedfrom `I' to `we'." t''

Other departments are hot on Energy'sheels. Such agency leadership is pivotal tomoving quality forward. As leading quality

innovator Dr. Joseph Juran told VicePresident Gore, As we go at it energeticallyin the federal government... we're still goingto see some of the agencies step out in front

ConclusionTo change the employee culture ingovernment, to bring about ademocracy of leadership within our

bureaucracies, we need more than a leap offaith. We need a leap of practice. We mustmove from control to collaboration, fromheadquarters to every quarter. We mustallow the people who face decisions tomake decisions. We must do everything wecan to make sure that when our federalworkers exercise their judgment, they areprepared with the best information, thebest analysis, and the best tools we have tooffer. We must then trust that they will dotheir bestand measure the results.

Indeed, we must let our managers and

EMPOWERING EMPLOYEES TO GET RESULTS

and everybody else is going to watch. Andas they get results and nobody's hurt in theprocess, others will be stimulated to do thesame Ehing.""8

workers fail, rather than hold them up topublic ridicule when they do. Only if theyfail from time to time on their way tosuccess will we be sure they are even tryingto succeed. Someone once asked an oldman known for his wisdom why he was sosmart. "Good judgment comes fromexperience," he said. And experience?"Well, that comes from bad judgment."

To transform the culture of ourgovernment, w: must learn to let go. Whenwe do, we will release the same kind ofcreativity, energy, productivity, andperformance in government service thatwas unleashed 200 years ago, and thatcontinues to guide us today.

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Chapter 4

CUTTING BACK TO BASICS

I feel like that person in the old movie who writes in lipstick on bathroom mirrors, "Stop me before Ikill again." However, in my case, the legend should be, 'Stop me before I steal some more."

Letter from Bruce Bair of Schoenchen, Kansas,to Vice President Al Gore, May 24, 1993

Bruce Bair admitted to"stealing" from the federalgovernmentat a rate ofabout $11 an hour. His jobwas checking the weather inRussell, Kansas, every hour,

and reporting to the Federal AviationAdministration. The FAA used hisinformation to warn planes in the areaabout bad weather. But Russell isn't a busyflight station any more. Bair saw just twolandings in more than a year during hisnight shift. Days were only slightly busier.Before the advent of automated weathergathering devices, human weather watchersat Russell and at other small stationsthroughout the Midwest were vital foraircraft safety. Today, they could be replacedwith machines. "From my experience withthe machine," wrote Bair, "it is veryadequate to protect the air space overRussell." In fact, Russell has had a machinefor some time, but the FAA had not yeteliminated the human staff

Bair concluded his letter to VicePresident Gore with these words: "I feelthere is very little doubt amongprofessionals that we are basically uselesshere." A few months later, he quit. Now hesays, "I'm no longer stealing from thegovernment."'

Bruce Bair's story tells us much about our

federal government: its entrenchment in oldways, its reluctance to question procedures,and its resistance to change. Its inflexibilityhas preserved scores of obsolete programs.This is not news to most of usobsolescence is part of our stereotype ofgovernment.

Why is it so difficult to close unneededprograms? Because those who benefit fromthem fight to keep them alive. While thesavings from killing a program may be large,they are spread over many taxpayers. Incontrast, the benefits of keeping theprogram are concentrated in a few hands.So special interests often prevail over thegeneral interest.

That's why we can't eliminateunnecessary programs simply by makinglists. Politicians, task forces, commissions,and newspaper articles have been ridiculingwasteful programs for as long as we haveenjoyed democratic government. But mostprograms survive attack. After a decade oftight budget talk, for example, federalbudget expert Allen Schick says he canidentify just three major nondefenseprograms eliminated since 1980: generalrevenue sharing, urban development actiongrants, and the fast breeder reactorprogram.'

To shut down programs, therefore, wemust change the underlying culture of

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

government. As we described in thepreceding chapters, we will do this byintroducing market dynamics, sharingsavings from cuts with agencies, exposingunnecessary programs to the spotlight ofannual performance measures, and givingcustomers the power to reject what they donot need. As government begins operatingunder these new rules, we are confident thatagencies will request the consolidation andelimination of programs. Billions of dollarswill be returned to taxpayers or passed on tocustomers.

We will begin this process today.First, we will eliminate programs we do

not needthe obsolete, the duplicative,and those that serve special, not nationalinterests.

Second, we will collect morethroughimposing or increasing user fees where

pricing makes economic sense, and bycollecting what the government is owed indelinquent debt or fraudulent overpaymentof benefits.

Thiroh we will reengineer governmentactivities, making full use of computersystems and telecommunications torevolutionize how we deliver services.

The actions and recommendationsdescribed in this Chapter are the firstdividend on what we can earn fromstreamlining government. They won't bethe lastor even the largest. The strategyof the National Performance Review differsfrom that of previous budget cutting efforts.Our recommendations have been discussedthoroughly with agency heads to determinewhich cuts are warranted, feasible, and canbe done quickly. We are ready to act withthe full force of the cabinet.

STEP 1: amiNATE WHAT WE DON'T NEEDAfter World War II, a Britishcommission on modernizinggovernment discovered that the

civil service was paying a full-time worker tolight bonfires along the Dover cliffs if aSpanish Armada was sighted. The lastSpanish Armada had been defeated someyears beforein 1588, to be precise.

This story may be apocryphal. But notall such stories are. In Brooklyn, New York,there is a Federal Tea Room where a federalemployee sips imported tea to test itsquality.3 For one hundred years, taxpayerspaid for the position. It was not until presscoverage angered enough members ofCongress that things were changed: now, teaimporters pay to have their tea testedalthough the taster remains a governmentemployee.

These stories capture an essential truthabout governments; they rarely abandonanything. Like the FAA that employedBruce Bair to check the weather, federalagencies do many things not because theymake sense, but because they have alwaysbeen done that way. They become like thefurniture: They are simply there.

..

Other programs are not so muchobsolete as duplicative. When confrontedwith new problems, we instinctively createnew programs. But we seldom eliminate theold programs that have failed us in the firstplace. Still other programs were neverneeded in the first place. They were createdto benefit influential industries or interestgroups. The National Performance Reviewhas targeted several programs in each ofthese categories for immediate elimination.

Although we make specificrecommendations in the pages that follow,we believe the government must tackle theproblem systematically. The single bestmethod would be to give the Presidentgreater power to eliminate pork that creepsinto federal budgets.

Action: Give the President greaterpower to cut items from spending bills4

Today, the President's powers to cutspending are limitedmore limited thanmost of the nation's fifty governors. He caneither sign or veto appropriations bills; hecan't veto individual itemsa power most

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governors have. For the President to cutwasteful spending, he needs the power ofwhat is called, in Washington, "expeditedrescission." Under current law, the Presidentcan submit proposed rescissions toCongress, which then has 45 legislative daysto act. If Congress does not act, proposalsare rejected. The President should havegreater authority to reject individual items.

Broader rescission powers wereenvisioned in HR 1578, which the Housepassed in late April 1993. This bill wouldforce Congress to vote on the President'sproposals to cancel funding, rather than letit kill those requests by ignoring them, asunder current procedures. If enacted, thenew procedure would, as President Clintonwrote in a letter to House Speaker ThomasS. Foley, "provide an effective means forcurbing unnecessary or inappropriateexpenditures without blocking enactmentof critical appropriations bills."

Eliminate the Obsolete

Not all employees of useless programs actwith Bruce Bair's forthrightness. But thatdoesn't mean their offices or programs areany more useful. The vast nationwidenetwork of 30,000 federal governmentoffices, for example, reflects an era whenAmerica was a rural country and the word"telecommunications" was not vet in thedictionary. While circumstances havechanged, the government hasn't. As a result,workloads arc unevenly distributedsomefield offices are underworked, others areoverworked, some are located too far fromtheir customers to serve them well, and f.ware connected to customers throughmodern communications systems.

Action: Within 18 months, thePresident's Management Council willreview and submit to Congress a reporton closing and consolidatingfederalcivilian fiwilities'

All agencies will develop strategies to cutback or consolidate their field office systems

CUTTING BACK TO BASICS

This is a precious opportunity to make

fundamental change in government. I lookforward to working together on areas of

mutual agreemen4

US. Rep. William F. Clinger (R. Penn.)

in ways that are compatible with ourprinciple of better services to customers.The President's Management Council willsubmit the report to Congress within 18months showing which offices may beclosed, which can be consolidated andwhich can be slimmed. We urge Congressto act quickly on this package.

We are confident that the savings will belarge because several agencies are alreadycommitted to far-reaching reforms in theirfield office systems. Their efforts will bemodels for those that haven't moved asquickly as they prepare their plans for thePresident's Management Council.

Action: The Department of Agriculturewill close or consolidate 1,200 fieldoffices.°

The Department of Agriculture (USDA)operates the most elaborate and extensiveset of field officesmore than 12,000across the country. Under Secretary MikeEspy's leadership, the department isplanning dramatic reforms. USDA runs250 programs in such vital but diverse areasas farm productivity, nutrition, food safety,and conservation. Its focus has shifteddramatically since the 1930s, when itspresent structure evolved: 60 percent of itsbudget now deals with nutrition; less than30 percent with agriculture.

As the basis for reorganization, USDAwill concentrate its activities on six keyfunctions: commodity programs, ruraldevelopment, nutrition, conservation, foodquality, and research. This focus will allow it

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to consolidate from 42 to 30 agencies andfrom 14 to six support staffs, cuttingadministrative costs by more than $200million over five years.

As part of this process, USDA willconsolidate or close about 1,200 field officeswithin the Agricultural Stabilization andConservation Service, the Soil ConservationService, the Farmers Home Administration,the Cooperative Extension System, and theFederal Crop Insurance Corporation. Someof these offices now serve suburbancounties, others have few rural customersleft. In 1991, the General AccountingOffice reported that in Gregg County,Texas, the Agricultural Stabilization andConservation Service office served only 15farmers: in Douglass County, Georgia, twoUSDA programs served a total of 17farmers.:

Field office closings will be determinedby a six-part scoring system developed toevaluate each office. Once in place, thisrestructuring will save more than $1.6billion over five years and eliminate theequivalent of 7,500 full time employees.Customers will be better served becauseoperations will be combined in multi-purpose USDA field service offices.

Action: The Department of Housingand Urban Development will streamlineits regional office system.'

The Department of Housing and UrbanDevelopment (HUD) has also developed astrategy to close offices without cuttingcustomer services. Roughly 10,000 ofHUD's 13,500 employees work in fieldoffices, but their workloads vary: the NewYork regional office monitors 238,000federal public housing units, the Seattleoffice only 30,000 units. Managementrestructuring, described in the previouschapter, will streamline HUD's fieldoperations.9 Under a five-year plan, HUDwill eliminate all regional offices, pare downits 80-field office system, and cut its fieldstaff by 1,500 people.

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Action: The Department of Enemy willconsolidate and redirect the mission of itslaboratory, production, and testingfacilities to meet post-cold War nationalpriorities.'''

For the first time in 50 years, the UnitedStates is not engaged in producing or testingnuclear weapons. Significant reductions infunding for these programs are alreadyunderway$1.25 billion in fiscal year1994 alone. Yet, the Department ofEnergy's weapons laboratories andproduction plants represent an irreplaceableinvestment in world-class research anddevelopment, intellectual, and computingcapabilities, carefully cultivated over fivedecades. As the department redirects itsfacilities, the challenge is to eliminateunnecessary activities, while shiftingappropriate resources to meet non-defenseobjectives.

Under Secretary of Energy HazelO'Leary's leadership, DOE will review itslabs, weapons production facilities, andtesting sites in the context of its missionand will recommend the phasedconsolidation or closure of obsolete orredundant facilities. The secretary will alsoidentify facilities that other governmentagencies may find useful, encouragelaboratory managers to bid on contractswith other agencies, and increasecooperation with the private sector.

Action: The U.S. Army Corps ofEngineers will reduce the number ofregional offices."

The U.S. Army Corps of Engineers, too,has a plan: it will cut its divisional officesfrom 11 to 6. It cannot, however, closedistrict offices because Congress preventedsuch actions by lawan example of costlycongressional micro-managing. The Corpshas carried out the nation's largest civilworks projects. Its role is changing: it buildsfewer large projects and faces more complexenvironmental projects.

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Action: !be Small BusinessAdministration will reduce the number offield offices and consolidate services.'

The Small Business Administration isdeveloping criteria for consolidating fieldoffices based on the customer load. It hasalready demonstrated in pilot programshow to cut local office staff by providingroutine loan servicing for several localSBA offices and by adopting automatedprocedures for processing applications forthe agenc-vs many different loan programs.

Action: /be I:S. Agency for!nternational Development will reduce:lw number of overseas missions.:

With the dramatic changes in U.S.foreign policy, agencies with overseasoperations are rethinking theirresponsibilities. J. Brian Atwood,administrator for the U.S. Agency forInternational Development (AID), believesthe number of countries in which hisagency operates missions can be cut from105 to perhaps 50. Cuts will be made in thenumber of missions in developing countriesso that the agency's efforts can focus onthose nations that can absorb and manageassistance.

Action: The United States Information.1e.,encv will cut the number oflibrariesand rcieence centers it pays.* overseas."

Savings are also possible in overseasfacilities maintained by the United StatesInformation Agency. USIA maintainslibraries and otiver facilities in manydeveloped countries, as well as in emergingcountries. While facilities in the latter areoften crowded, those in developed countriesattract few customers: In Canada, forexample, a USIA library attracted only 568walk-in visitors in a year. Eliminating someof these facilities or turning them over totheir host countries could save an estimatedS51.5 million through 1999.''

CUTTING BACK TO BASICS

-We'll challenge the basic assumptions o.

program, asking does it work, does it rorride-.

quality service, does it encourage innovation:

and reward hard work. If the answer is So;

it there's a better way to do it or ifthereisomething that the federal government isdoing it should simply stop doing we'll try to

make the changes needed" MAPresident Bill Clinton

Announcement of initiative to streamline govemnien`eMarch 3, 1993 ..4

7;7-

Action: The Deparnnent of State willeduce by 11 the number of Marine

Guard detachments it employs."'

By consolidating the storage of top secretdocuments in overseas missions, theDepartment of State can reduce the needfor Marine Guard detachments. TheBureau of Diplomatic Security hasidentified 11 posts where the MarineSecurity Guard program could beeliminated simply by moving documents toother places.

Action: Pass legislation to allow the saleof the Alaska Power rAdministation.'-

The federal government once played acrucial role in financing, developing andoperating the Alaska Power Administration(APA). No longer. APA was created toencourage economic development in Alaskaby making low-cost hydro-power availableto industry and to residential customers.The project has succeeded and can now heturned over to local ownership.

The federal government retains fourother Power Marketing Administrations(PMAs), which own hydropower facilitiesand sell the power they generate to public,private, and cooperative utilities at cost.These PMAs serve customers spread

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throughout many states, so the facilitiescannot easily he sold to a local entity. APA.on the other hand, is unique: Its facilitiesand customers are located in a single stare.Various public agencies have already urgedthe federal government to sell the APAfacilities. APA signed purchase agreementsto do so before 1993.

The sale is supported by state and localofficials, Alaska's congressional delegation.the Energy Department, the Office ofManagement and Budget, and the HouseAppropriations Committee. But Congresshas vet to pass the necessary authorizinglegislation. We urge it to do so. The salewould bring $52.5 million into the U.S.Treasury and save millions more in yearlyoperating costs.

Action: Ii,rminate frderal .vymt fimdingJr Federal Aviation Administrationhigher education programs."s

Success has rendered two FAA federalsubsidies obsolete. They have met theobjectives for which they were establishedand can now be terminated. For example, in1982, the Federal Aviation Administration(FAA) launched a program to improve thedevelopment and teaching of aviationcurricula at universities and other post-secondary schools. The goal was to producegraduates better prepared for jobs in theindustry.

So far, the FAA has spent about $4million on consultants to upgrade schools'programs Another $100 million wasappropriatedmost at Congress' insistence,rather than FAA's requestto be given outin grants so that the schools could buybetter facilities and equipment. Manyschools now offer high quality aviationtraining programs without support from theFAA. Since $45 million of theappropriation remains unspent, stoppingthe program now can save this money.

Another program we no longer need isthe Collegiate Training Initiative for AirTraffic Controllers. It was set up todetermine whether other institutions couldoffer the same quality training for

controllers as the FAA Academy does. Ifthey could. it would save the governmentthe $20,000 it costs to train each newcontroller at the academy. The answer isclearly yes. Five schools participating in theprogram are producing well-qualifiedcontrollers, although only two are receivinggovernment subsidies. It is now time tophase out these remaining subsidies.

Action: Close the Uniformed ServicesUniversity of the Health Sciences."

The Department of Defense (DOD)once faced shortages of medical personnel,particularly of physicians. So, in 1972.Congress created the Uniformed ServicesUniversity of the Health Sciences. Today,the University provides less than 10 percentof the services' physicians at a cost muchhigher than other programs: Universityphysicians cost the federal government$562,000 each, while subsidies under theHealth Professionals Scholarship Programcost only $111,000 per physician. Closingthe facility and relying on the scholarshipprogram and volunteers would save DOD$300 million over five years.

Action: Suspend the acquisition of newfederal office space.-")

Over the next 5 years, the federalgovernment is slated to spend more than$800 million a year acquiring new federaloffice space and courthouses. Under currentconditions, however, those acquisitionsdon't make sense.

The federal workforce is being reduced,the Resolution Trust Corporation isdisposing of real estate once held by failedsavings and loans at 10 to 50 cents on thedollar, commercial office vacancy rates arerunning in the 10 to 25 percent range, andU.S. military bases are being closed. All ofthese factors suggest that the governmenthas many potential sources for office spacewithout buying any more buildings.

The GSA administrator will place animmediate hold on GSA's acquisitionthrough construction, purchase, or lease

1 06

of net new office space. The administratorwill begin aggressive negotiations forexisting and new leases to further reducecosts. And GSA will reevaluate and reducethe costs of new courthouse construction.These actions should save at least $2 billionover the next 5 Years.

Eliminate Duplication

Government programs accumulate likecoral reefsthe slow and unplannedaccretion of tens of thousands of ideas,legislative actions, and administrativeinitiatives. But, as a participant at the VicePresident's HUD meeting told us, "Thereisn't always a rational basis for the way weare set up in this organization. Over theyears, branches have developed; they havebeen taken over by divisions; and we don'tlook at the organization as a whole." Nowwe must clear our way through these reefs.

The National Performance Review haslooked at government as a whole. We haveidentified many areas of duplication. Whatfollow are recommendations for the firstround of cuts and consolidations.

Action: ;Elim.nate the President'sIntelligence Oversight Board.'

No branch of governmentincludingthe Executive Office of the President(EOP)is free of duplication. We willbegin the streamlining process in the EOP,where two groups oversee intelligenceattimes tripping over each other and allowingsome issues to fall through jurisdictionalcracks. The President, by directive, shouldterminate the President's IntelligenceOversight Board and assign its functions toa standing committee of the President'sForeign Intelligence Advisory Board.

CUTTING BACK TO BASICS

Action: Consolidate training programsfor unemployed people.22

Government's response to changingcircumstance often creates duplication. Asthe economy has evolved, for example, wehave created at least four major programs tohelp laid-off workers: the EconomicDislocation and Worker AdjustmentAssistance Act (EDWAA) program, whichspends $517 million annually for those wholose their jobs through plant closings ormajor layoffs; the Trade AdjustmentAssistance program (TAA), whichdistributes $170 million for those who losejobs due to increased imports; the DefenseConversion Adjustment program, whichdispenses $150 million for thoseunemployed because of defense cuts; and aprogram that allocates $50 million for thoseunemployed due to the enforcement of newclean air standards. Even more programs arein the pipeline.

But multiple programs aimed atcommon goals don't work well.Administrative overhead is doubled andservices suffer. Because each trainingprogram is intended to help peoplerendered jobless for different reasons, peopleseeking work must wait for help until thegovernment determines which programthey are eligible for. The process is slow.The General Accounting Office estimatesthat less than one-tenth of TAA-eligibleworkers receive any benefits within 15weeks of losing their jobs, for example.23

The unemployed care less about whythey lost their jobs than about enrolling intraining programs or finding other jobs.Labor Secretary Robert Reich is proposinglegislative changes to consolidate programsfor workers who lose their jobs, regardless ofthe cause. His bill would also allow morefimds to be used before workers losetheir jobs. In Chapter 1, we recommendthe consolidation of 20 education,employment, and training programs. Weurge Congress to support both initiatives.

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Action: ,astnithtte the leterans.bnpiurnient and 1:.aintmf,sieretce anathe Form .`..anto i;mnimf Pror.Tain intothe Znintomenr dna rraininff.1thntnisratton.-

Several training programs offer similarservices through the same officessometimes even using the sameemployeesbut requiring separatemanagement and reporting systems. We cancut bureaucracy and paperwork \vbileimproving services to the customer bymerging these programs.

Consider the case of the \ eterans'Employment and Fraining Service 1 \ FIS)in the Department of labor t DOI).Another operation in DOI WeEmployment and Training Administration(ETA). funds local Employment Services.which, in turn, house staff dedicated toproviding veterans with advice on trainingprograms. But these staff are legallyprohibited from serving non-veterans. So. ifa local office is crowded with non-veterans,these specialists cannot help outeven ifthey have no veterans to serve. MovingVETS into the ETA will generate muchgreater efficiency in the use of staff: leadingto shorter lines and better service.

We also recommend moving the FoodStamp Training Program into the FAA.Most training under the program is alreadyperformed under contract by ETA staff, lwthe Employment Service, or by localeducation institutions. Overall. ETA canoffer poor people a much morecomprehensive range of job-search andtraining services than can the Food Stamp.1-raining Program.

Action: :!ctluce the number ofDeparment otTducatton proyrams Ti?);!!

2.30 to i9.-

The nations concern with education hasled to an explosion of programs at all levelsof government. The Education Departmentnow hinds 230 programs, many of whichoverlap. Since many are grants to state andlocal governments, we face duplication in

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triplicatemultiple administrative systemsat all levels of government.

Of these 230 programs, 160 will awardmoney through 245 different nationalcompetitions this year. The cumbersomeadministrative systems divert money fromactivities more central to the department'smission. These programs should be reducedin number and their proceduresstreamlined.

The department has begun reformingand streamlining programs, particularlythose under the Elementary and SecondaryEducation Act. This will make it easier forschools to get the money without jumpingthrough so many bureaucratic hoops. Wepropose to eliminate and consolidate moreprograms that have servedrheir originalpurpose or would he more appropriatelyfunded through non-federal sources. Thesavings, as much as S515 million over 6years, can be better used for otherdepartmental priorities. For example:

'I-he department administers twoprogramsthe National Academyof Space. Science, and Technologyprogram and the National ScienceScholars programthat givescholarships to post-secondary math,science, and engineering students.These two should be combined.

State Student Incentives Grants werecreated to encourage states todevelop needs-based student aidprograms. Since all states now havetheir own programs, the federalprogram is no longer needed.

The Research Libraries programfunds research libraries to build theircollections. University endowmentscould and should support theseefforts, without federal subsidy.

Action: Eliminate the Food Safetyand Inspection Service as a separateagency by consolidating allfood safetyresponsibilities under the Food and DrugAdministration.26

Sometimes duplication among federalprograms can make us illeven kill us.Take the way we inspect food forcontamination. Several agencies areinvolved, each operating under separatelegislation, with different standards, andwith staff trained in different procedures. In1992, the Food and Drug Administration(FDA)part of the Department of Healthand Human Servicesdevoted about 255staff years to inspecting 53,000 food stores,while the Food Safety and InspectionService (FSIS)part of the Department ofAgriculturedevoted 9,000 staff years toinspecting 6,100 food processing plants.

But this duplication doesn't mean thatwe cover all sources of contaminationthoroughly. Meat and poultry productsmust be inspected daily, while shellfish,which have the same risk of causing foodborne illness, are not required by law to befederally inspected. Too many items falltl, cough the bureaucratic cracks. Not onlythat, enforcement powers vary among thedifferent agencies. If the FDA findsunsanitary plant conditions orcontaminated products, compliance isusually voluntary because the agency lacksFSIS's powers to close plants or seize ordetain suspect or known contaminatedproducts. And if one agency refers aproblem to another, follow up is at bestslow and at worst ignored.'

With no fewer than 21 agencies engagedin research on food safety, often duplicatingeach other's efforts, we aren't progressing fastenough in understanding and overcominglife-threatening illness. As recent and fataloutbreaks of food-borne illness attest,multiple agencies aren't adequatelyprotecting Americans.

Under our recommended streamlining,the FDA would handle all food safetyregulations and inspection, spanning thework of the many different agencies now

CUTTING BACK TO BASICS

involved. The new FDA would have thepower to require all food processing plantsto identify the danger points in theirprocesses on which safety inspections wouldfocus. Where and how inspections arecarried out, not the number or frequency ofinspections, determines the efficiency of thesystem.

The FDA would also develop rigorous.scientifically based systems for conductinginspections. Today, we rely, primarily, oninspection by touch, sight, and smell.Modern technology allows more reliablemethods. We should employ the full powerof modern technology to detect thepresence of microbes, giving Americans thebest possible protection. Wherever possible.reporting should be automated so thathigh-risk foods and high-risk foodprocessors can be found quickly .Enforcement powers should be uniform tOrall types of foods, with incentives built in toreward businesses with strong safety records.

Action: Consolidate non-militmyinternational broadcasting.23

The U.S. government funds severaloverseas broadcasting servicesincludingthose operated by the United StatesInformation Agency's Bureau ofBroadcasting, which accounts for one-thirdof the agency's $1.2 billion budget, andservices such as Radio Free Europe andRadio Libercy, which have budgets totaling$220 million a year. All non-militaryinternational broadcasting services shouldbe consolidated under the USIA. Part ofthis was propsed in the President's budgetrequest for fiscal year 1994.

Action: Create a single civilian polarsatellite system.29

Collecting temperature, moisture. andother weather and environmentalinformation from polar satellites is a vitaltask, both for weather forecasting and forglobal climate studies. But we have twodifferent systems, one run by theDepartment of Defense and the other by

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the National Oceanic and Atm3sphericAdministration. On top of this, theNational Aeronautics and SpaceAdministration is planning a third. Overthe next ten years these three systems willcost taxpayers about $6 billion. Congressshould enact legislation requiring theseagencies to consolidate their efforts into asingle system, saving as much as $1.3 billionover the same period.

Action: Transfer the functions of theRailroad Retirement Benefits Board toother agencies.'"

The government can operate with fewerpension management systems. In 1934,Congress set up the Railroad RetirementBoard to protect railroad workers in the faceof financial problems, to allow workers totransfer among railroads, and to encourageearly retirement to create jobs for themillions of younger workers. In those days,the huge national public pension system,Social Security, was not yet in place; neitherwere the state-federal unemploymentinsurance systems nor Medicare.

Today, it makes no sense for a separateagency to administer benefits for a singleindustry. Social Security Administrationcan administer social security benefits forrailroad workers as it administers them foreveryone else; unemployment insurancesystems can serve unemployed railroadworkers as wd as it serves otherunemployeu p.mple; and the Health CareFinancing Administration can incorporaterailroad workers' health care benefits intothe Medicare system.;'

Action: liwnsfei' law enforcementfunctions of the Drug EnforcementAdministration and the Bureau ofAlcohol, Thbacco, and Firearms to theFederal Bureau of hwestigation.32

More than 140 federal agencies areresponsible for enforcing 4,100 federalcriminal laws. Most federal crimes involveviolations of several laws and fall under thejurisdiction of several agencies; a drug case

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may involve violations of financial, firearms,immigration and customs laws, as well asdrug statutes. Unfortunately, too manycooks spoil the broth. Agencies squabbleover turf, fail to cooperate, or delay matterswhile attempting to agree . ,n commonpolicies.

The first step in consolidating lawenforcement efforts will be major structuralchanges to integrate drug enforcementefforts of the DEA and FBI. This will createsavings in administrative and supportfunctions such as laboratories, legal services,training facilities, and administration. Mostimportant, the federal government will get amuch more powerful weapon in its fightagainst crime.

When this has been successfullyaccomplished, we will move towardcombining the enforcement functions ofthe Bureau of Alcohol, Tobacco andFirearms (BATF) into the FBI and mergeBATF's regulatory and revenue functionsinto the IRS. BATF was originally created asa revenue collection agency but, as the waron drugs escalated, it was drafted into thelaw enforcement business. We believe thatwar would be waged most successfullyunder the auspices of a single federal agency

Eliminate Special Interest Privileges

Some programs were never needed. Theyexist only because powerful special interestfoups succeeded in pushing them through

Congress. Claiming to pursue nationalobjectives, Congress, at times, fundsprograms that guarantee profits to specificindustries by restricting imports, raisingprices, or paying direct and unnecessarysubsidies.

Special interest groups come in all shapesand sizes and their privileges are as diverse.Producers of crops, residents of certainareas, and holders of some occupations haveall succeeded in persuading Congress thattheir needs are special and their claim onspecial treatment is deserving.

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Action: Iliminate ii,derat supportlairmentitbr wool anti 111011111.11'

During World War II and the Koreanconflict, the U.S. was forced to importabout half the wool needed for militaryuniforms..I.O cut dependence on foreignsuppliers, Congress in 1954 passed theNational Wool Act, providing directpayments to American wool producers. "Themore wool a producer sold. the greater thegovernment subsidy. In 1960, the Pentagonremoved wool from its list of strategicmaterials. But the Wool Act remained ineffecta tribute to adept lobbying.

Between 1994 and 1999. wool subsidieswill cost an estimated 5923 million. Abouthalf the payments will go to ranchers whoraise Angora goats for mohaira productthat is 80 percent exported. So Americantaxpayers will subsidize the price of mohairsweaters overseas! In some vars, subsidiesprovide more income than sales. The 1990mohair checks. for example, totalled S3.87for every dollar's worth of mohair sold.

Today, about half the beneficiaries receiveonly S44 a year each. But the top onepercent of sheep raisers capture a quarter ofthe moneynearly SI00,000 each. Thenational interest does not require thisprogram. It provides an unnecessary subsidyfor the wealthy.

Action: Eliminate fideral price supportsto. r homy.'"

World War II also brought us federalsubsidies for honey production. During thewar, honey was declared essential becausethe military used bees wax to wrapammunition, and citizens replaced rationedsugar with honey. When honey pricesdropped after the war, the kderalgovernment began subsidizing honeyproduction.

The program was intended to hetemporaryto last until there were enoughhoneybees available for pollination. Butmore than 40 years later, every bee keeper inthe U.S. is eligible for federal loans. In1992, the federal government paid 7 cents a

CUTTING BACK TO BASICS

pound more to borrow money than itcharged bee keepers. Taxpayers paid thedifference. If it were to scrap the program,Congress would save taxpayers S15 millionover the next six Years.

Action: Rescind all anobligated contractauthority and appropriations liexistinghighway demonstration projects/'

The practice of directing federal highwayfunds toward spending on specificdemonstration projectsand away fromregular state-level allocationsis increasing.This is not, for several reasons. a goodtrend.

In 1991, the General Accounting Office((;AO) examined the contributior s ofdemonstration projectswhich range frompaving a gravel road to building a multi-lane highway to the nation's overallhighway needs. Looking specifically at theS1.3 billion authorized to fund 152 projectsunder the 1987 Surface Transportation andUniform Relocation and Assistance Act,GAO found that "most of the projects...didnot respond to states' and regions mostcritical federal aid needs." Indeed, in morethan half the cases, the projects weren't evenincluded in regional and state plantpicall because officials believed theprojects would provide only limitedbenefits. GAO also discovered that 10projectsworth S31 million indemonstration fundswere for local roadsnot even entitled to receive federal highwayfunding. In other words, many highwaydemonstration projects are little more thanfederal pork.

Perhaps even worse, there's no guaranteethat all these highway demonstrationprojects, once started, will ever he finished.GAO noted that project completion costswill greatly exceed authorized federal andstate contributions, and that state officialsare uncertain where they will find morefinding. Further, only 36 percent of theproject funds GAO reviewed had even beenobligated by the beginning of fiscal year1991, even though they were authorized in1987. Some projects with no activity since

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1987 may never use their funds. Finally,no federal provisions allow for cancelingor redirecting funds, nor can statesredirect demonstration funds to othertransportation projects.-'6

We urge Congress to rescind allunobligated authority and appropriationsfor highway demonstration projects. Someof the savings would go to the taxpayers.We recommend that all highway projects beforced to compete for any remaining savingsthrough the normal allocation and planningprocesses set up in more recent legislation.

Action: Cut Essential Air Servicesztbsidies.3-

Sometimes, to push through controversialchanges, Congress grants affected groupsspecial privileges. This was the case whenairlines were deregulated in 1978. Becausepeople living in small towns feared the lossof air service, Congress created the EssentialAir Service program. The programguaranteed continue services for a decadewith federal subsidies if necessary Thepurpose was to allow these communities tolearn to live in a deregulated environment.

But the program didn't end in 1988 asscheduled. Quite the opposite. Congressextended it for another ten years and itsbudget has grownfrom $30.6 million in1988 to $38.6 million in 1993.

The program is unneeded: 25 subsidizedcommunities are less than 75 miles fromhub airports. It is also costly: nine locations,receiving $3 million in subsidies in 1992,carried five or fewer passengers a dayonecommunity, only 60 miles from a hubairport, received subsidies averaging $433per passenger.

Opposition to the program is rising. TheTransportation Department's InspectorGeneral has concluded that the program'scosts outweigh its benefits. And after manyyears of resistance, a Congressionalsubcommittee agreed this year that theprogram lacks merit-based criteria. It's timeto prune these subsidies. We recommendeliminating subsidies to locations in the 48contiguous states within 70 miles of a hubairport; limiting subsidies to no more than$200 a passenger, and giving theTransportation Department authority toestablish more restrictive criteria over time.This would save $13 million a year.

STEP 2: GOT i ECTING MOREGiven the size of the federal deficit,government must find better, moreefficient, and more effective ways

to pay for its activities. In Chapter 2, weshowed how government could becomemore businesslike. In this section, wepropose three ways to increase federalrevenues: introducing or increasing market-based user fees, collecting what is due thegovernment in delinquent loans and inaccidental or fraudulent overpayment ofbenefits, and refinancing debt at lowerinterest rates.

Some people take advantage ofgovernment's largesse. They default onloans, or they double claim for healthinsurance benefits. Government has made itfar too easy for people to get away withsuch actions. As a result, honest people are

104

subsidizing their less scrupulous neighbors.Their actions raise the costs of federalprograms, divert money from where it wasintended, and discredit our system ofgovernance. Here are the first steps we willtake to end these practices.

Raising User Fees

Congress and federal agencies have shiedaway from charging for federal services. Butgovernment surely produces many goodsand services for which consumers could,and should, pay." User fees can serve exactlythe same function as prices doprovidingfederal managers with invaluableinformation about their customers. Ifcustomers like the services they are paying

forif they find the experience of visiting aparticular national park enjoyable, forexamplerevenues will increase. If theagency can keep some of its additionalrevenues, it will be able to pay the increasedoperating costs associated with its risingnumber of customers. It will, as a result,learn to care about satisfYing thosecustomers..

Paving for the services vou receive also isan issue of fairness. Why should taxpayerssubsidize concessionaires or visitors toNational Parks, or pay the cost ofdetermining whether a business shoulddump sludge into the nation's waterways?Many services government provides becausethey are in the national interest or becausewe do not expect people to pay for them.But the customers of some governmentactivities could and should pay. Manyagencies, including the Food and DrugAdministration, The Patent and TrademarkOffice, the National Technical InformationService, and the Securities and ExchangeCommission already charge their customersfees. In some cases, these fees cover the fullcost of operations. Taxpayers are not calledupon to pay for the services that othersreceive. But, most agencies aren't allowed tokeep the feesthe revenues are sent to theTreasury. Under these circumstances.agencies have no incentive to increase fees ifmarket conditions merit it.

Where fees are allowed. Congress oftenlimits themremoving any discretion fromlocal managers. The National Park Service,for example, cannot charge more than $5per car or S3 a visitor at many parks. Atbusy Yellowstone, Grand Teton, and theGrand Canyon, fees are limited to S10 avehicle and S5 a visitor. Ending subsidies toconcessionaires and moderately increasingfees would let the National Park Serviceinvest more in its crumbling infrastructure,and spend more to protect America'spriceless natural heritage.

-Iwo-thirds of all tie National ParkServices facilities charge no admission fee atall. Yet the Park Service suffers from a multi-billion dollar backlog in infrastructurerepair and rehabilitation projects for the

CUTTING BACK TO BASICS

National Park System. One-third of NPSprimary paved roads are in poor or failingcondition; a tenth of employee housing isobsolete or deteriorated; and 4,700 plannednatural and cultural resource projects are onthe waiting list for funding. Meanwhile,demands on the parks are rising sharply asthe number of visitorsboth American andforeigngrows each year's

Action: ;%loin: ow all agencies 70111'.1'

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asea:

Even with a modest increase in fees, afamily of four will pay less to spend a weekin Yellowstone National Park than theywould to see a first-run movie. TheNational Park Service should be allowed tokeep 50 percent of revenues from fees topay for vital services and projects.

The natural ..-ear is that federal facilities.nonopolies and, unless their pricing

policies were regulated, they would becomeprice-gauging profiteers. The concern isappropriate, but the policies it has led to arenot. We would not recommend thatnational parks or documents repositories,for example, become federal profitcentersbut they could, certainly, cover alarger part of their costs. They cannotcharge exorbitant pricesafter all, parks arein competition with each other, and withmany privately owned recreation areas. Themarket will control the revenues they canrealistically collect.

Pricing policy is an importantmanagement tool, and we recommend thatCongress place it in the hands of manymore federal managers. The NationalPerformance Review recommendsincreasing the use of user fees for manyactivities. For example:

The FDA must ensure that 1.5million food products imported eachyear meet the same safety andlabeling standards as domesticproducts. It also certifies the safety ofexported foods. Thxpavers, not

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manufacturers, pay for theseinspections. User fees could savetaxpayers as much as $1.4 billionover 5 years.'" The agency shouldalso have the power to collect fees forconducting inspections and reviews,processing petitions andapplications, analyzing samples andissuing device reports for food,drugs, devices, and radiologicalproducts.

The Department of Veterans Affairsruns a program to guarantee homeloans for veterans. It lets themborrow at lower costs and makesmaller down payments than wouldbe possible without assistance,because the guarantee protectslenders in the event of foreclosure byreducing their potential loss. Thedepartment collects fees for thisservice, yet they are set very low. Amodest increase in fees costing anextra $6 per month, for example,would still provide homebuvers withbetter-than-market terms. Yet itwould generate an additional S811.4million over 6 vears..4'

Under the Clean Water Act, theArmy Corps of Engineers issuespermits for discharges of dredged orfilled materials into rivers, lakes andstreams. The Corps has processed15,000 applications at a total cost of$86 million. Yet it has charged onlytoken fees for its services, collectingonly $400,000 annually. Thisamounts to a $12 million annualsubsidy for commercial customers,according to Defense Departmentestimates. Higher fees would helpnot only taxpayers but Corpscustomers, because additionalrevenues could pay for fasterprocessing of applications.''

The Small Business Administrationshould have the power to establishuser fees for the services they provide

106

through the nationwide SmallBusiness Development Center(SBDC) program. SBDC customerslike the services they get, so therevenues from fees will enable thecenters to expand successfulprograms.

Action: Inc ease revenues by refinancingdebt or raising federal hydropower ratesto cover full operating costs."

The Power Marketing Administrations(PMAs), such as Alaska Power, weremandated in 1944 to sell their power at lowrates to help promote development insparsely populated areas. Rates are still lowtoday; in fact, the PMAs sell power to theirpublic, private and cooperative utilitycustomers at below market rates. Thus, thelow electricity rates enjoyed by customers insome areas are subsidized by Americantaxpayers in others. Taxpayers subsidizePMA utility customers through low-interestloans. The interest rates most PMAs pay thegovernment are artificallv low. As theinterest on the Treasury's long-term debtclimbed in the 1960s, 1970s, and 1980s,the differential between those rates and rateson PMA loans created federal subsidies forthese projects.

The Energy Department will takeimmediate steps to increase revenues fromhydropower operations. The departmentwill set a new rate policy for specified PMAsto seek recovery of full operating costs. Asan alternative, the Energy Department mayattempt to restructure the financing of theBonneville Power Administration's debt,allowing Bonneville to issue bonds atmarket rates and repay its low-interestTreasury loans. The department willattempt to achieve such a refinancing withminimal effects on the near-term rates paidby its customers by seeking favorable bondinterest rates and lengthening terms ofrepayment.

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Collecting Debt

At the end of last year the federalgovernment was owed 5241 billion byformer students, small businesses, farmers,companies developing alternative energysourceseven foreign companies andgovernments. This makes the federalgovernment the nation's largest lender. Ofthis total, a shocking $47 billion-20percent of the totalwas delinquent."

To some extent, the federal government'sunpaid debts reflect the fact that some of itsloan programs operate more like grantprograms. They are designed to meetnational policy goals such as increasing thenumber of physicians in rural areas andsupporting democratic governmentsoverseas. But in other cases agencies havedone a poor job in collecting what they areowed. After all, agencies are rarely heldaccountable for unpaid loans. All toofrequently, neither are delinquentborrowers.

If agencies were to put a higher priorityon pursuing delinquent debt and ifCongress were to grant them greaterflexibility in their debt collectionoperations, the federal government couldcollect more of what it is owed. The Officeof Management and Budget will work witheach agency to develop debt collectingstrategies that employ the followingexpanded powers.

Action: Give agencies the flexibility touse some of the money they collect fromdelinquent debts to pay for further debtcollection efforts, and to keep a portion ofthe increased collections."

Small investments in debt collecting canyield high returns. In 1989, the GAOdiscovered that the Veterans Administrationhad not recovered $223 million in healthpayments from third parties, such asinsurers. Congress then changed the rules,allowing the VA to keep a portion ofrecovered third-party payments foradministrative costs. With this incentive,the VA increased its recovery effort. The

CUTTING BACK TO BASICS

result: a four-fold increase in collectionssince 1989.

The VA, now called the Department ofVeterans Affairs, wants to go even further byexpanding its cost recovery efforts into itsloan programs and establishing cost-sharing,performance incentives. Local hospitals, forexample, might be allowed to keep some ofthe revenues they generate to buy newmedical equipment. Overall, VA believes itcould pull in another $500 million through1999.

Opportunities like this occur throughoutthe federal government. The EducationDepartment, for example, wants to use theadditional repayments it would collect to payfor further collections of Higher EducationAct debts. Budget offices tend to oppose theidea of sharing new earnings with the agencyin question, because they want 100 percentof the earnings to meet deficit reductiontargets. But unless the agencies haveincentives to generate the earnings, theyrarely produce them in the first place.

The solution is twofold. First, Congressshould allow agencies to use some of themoney they now collect from delinquentdebts to pay for further debt collectionefforts. Second, it should increase theincentives agencies have to pursue debtcollections, by letting them use a smallportion of their increased collections toinvest in improving their overall operations.

Action: Eliminate restrictions thatprevent federal agencies from usingprivate collection agencies to collectdebt.'

In addition to sharing in their earnings,agencies would benefit from being able touse private debt collectors, as theDepartment of Education has done. Whilewe know how cost-effective privatecollection agencies are, many agenciesincluding the Farmers HomeAdministration, Social Securitv, the IRS,and the Customs Serviceare statutorilyprohibited from using private agencies forthe job, even on a contingency-fee basis.Congress should lift those restrictions.

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'()%1 RI 1) 1 119 H) RI '(l F' (.RI XII \C, \ GO% 1 RN MINI 11111 WORKS Lit I FIR & s Liss

Action:Authorize the Deoartment of'Justice to retain Up to one percent ofamounts collected through civil debtcollections to cover costs.'

When borrowers default on their federalloans, the first step is for the lending agencyto try to collector, if permissible, to use aprivate debt collection agenc-y. If thesemeasures fail, agencies refer claims to theDepartment of Justice. While theDepartment handles the larger claims itself,it refers those under $500,000whichconstitute 90 percent of all claimsto localU.S. attorneys' offices. In overworked U.S.attorney's offices, debt collection is often alow priority.

To encourage the Department of Justiceto collect debts, Congress should allow thedepartment to retain 1 percent ofeverything it collects through litigating civildebt cases under $500,000. These retainedkinds should be used for paying staffworking on debt collection, for paying case-related costs, and for paying for training andother investments to improve local debtcollection programs.

Action: fly Royalty ManagementProgram will increase the royaltypaionents it collects ('V developing new

uter proc'rains to analyze and cross-verifY

The federal government collects royaltypayments from mining companiesrecovering minerals from federal land. TheInterior Department's MineralsManagement Service (MMS), the agencycharged with the job, collects $4.7 billionannually. But its auditing system is limitedand focuses heavily on the companiespaying the largest royaltiesso smallercompanies don't always pay their share. TheDepartment of the Interior will increase itscollectionsby as much as $28 millionover five yearsby developing betteraccounting and auditing systems. In makesure MMS can collect its dues, the InteriorDepartment will ask Congress forpermission to assess penalties on substantial

108

underpayments and to impose fees on abroader range of administrative costs.

Action: HID should offer incentivecontracts to private companies to help,/,tlerally sub sidized home owners:.efinance their mortgages at lower rates. 19

HUD has succeeded in extending thedream of home ownership to many people.But the HUD section 235 program doesnot take advantage of lower interest ratesbecause the assisted owners do not haveenough incentive to go through the workand bother of refinancing.

We recommend that HUD offerincentive contracts to private companies tolet them share a percentage of the savings tothe government of refinancing themortgages. They could work with the homeowners to arrange refinancing, doing thenecessary leg work and make cost effectivepayments to home owners to induce themto refinance. Projected savings from thisprogram could exceed $210 millionover five years. Yet program beneficiarieswould continue to receive exactly thesame benefits.

Eliminating Fraud

While many think government stealsfrom people, the reverse is also true: Peoplesteal from government. And, unlike privatecompanies, some government agenciesaren't very good at finding and prosecutingthieves. Moreover, the bureaucracy does toolittle to deter dishonest people.

Action: Make it a felony to knowinglylie on an application for benefits underthe federal Employees' compensation Act:tnd amend Federal law so individualsconvicted offinud are ineligible.*continued benefits.'"

The federal government manages manyprograms that provide benefits to peopleinjured or taken sick. Not all the recipientsare legitimate. When agencies discover

115

fraud, however, they are often hamstrung intheir ability to terminate benefitsso theykeep paying fraudulent claims. For example,under the Federal Employees'Compensation Act (FECA), the Office ofWorkers' Compensation Programs cannotterminate benefits even after finding thatsomeone made false statements about adisability or an illness.

In one case, a former federal employeecollected almost $200,000 in benefits underthe FECA disability program whileworking. When a witness told thegovernment about the fraud, the employeehired someone to kill him. The employeewas convicted of falsifying his applicationfor FECA benefits, but the governmentcould not cut off his compensation on thebasis of his original false statements alone.''

Action: Improve processes for removingpeople who are no longer disabled frontdisability insurance rolls.52

The Social Security Administrationserves more than 10 million people throughtwo disability programs, DisabilityInsurance and Supplemental SecurityIncome. But the General Accounting Officehas estimated that 30,000 of these recipientsare no longer eligible. Overpayments fromthe trust funds to ineligible people areprojected to reach $1.4 billion by 1997."The Social Security Administration faces adual problem: overpayment to unlawfulclaimants and lengthy delays in providingbenefits to legitimate claimants. Usingpresent management practices, the agencylacks the staff to review its rapidly escalating

\

CUTTING BACK TO BASICS

caseload. The backlog of 70u,000 pendingclaims is taking priority over reviewingcontinuing cases.

The agency is working to create a singledisability claims processing system, but itneeds greater budget flexibility to invest inhardware and software and to redeploy staffto meet growing demands.54

Action:Create a clearinghouse for thereporting and disclosure of death data."

Obviously, no federal agency shouldcontinue paying benefits after recipientshave died. But stopping payments is noteasy because sharing death informationamong different levels of government isrestricted and not always reliable. The SocialSecurity Administration regularly obtainsdeath information from states underagreements with each of them (exceptVirginia). But most agreements restrictSSA's disclosure of death data, so theinformation the SSA collects cannot alwaysbe shared with those running otherfederally- and state-administered benefitsprograms. The result is millions of dollars inoverpayments. For Americans livingoverseas, the problem is even worse. SSAgives benefit checks to overseas embassies todeliver. The State Department claims thatSSA must check that the recipients are stillalive; SSA says that it's the StateDepartment's job.

We need not serve customers who are nolonger alive. Congress should amend theSocial Security Act to allow SSA to sharedeath information with other programs.'

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Ro RFD I Oft rn RI'sV1. I'S ('RI A I INC, A GONTRNSO'N r I'llA I WORKS Br r ent & Cus IS 1.I.SS

STEP 3: INVESTING IN GREATER PRODUCTIVITY

0 ne of the greatest obstacles toinnovation in government is theabsence of investment capital. The

appropriations for most federal agencies lastonly one vear: anything left over at the endof the year disappears. So it's difficult fororganizations to scrape together enoughmoney to make even small investments intraining, technology, new work processes, orprogram innovations. V-re haverecommended that agencies he allowed tokeep half of am savings they can generate.In addition, we propose a serves ofinnovation hinds from which they canborrow. When managers and theiremployees are allowed to borrow for long-term investments, they have a real incentiveto implement creative new ideas.

The IRS and Interior Departmentalready have innovation funds.' Treasury

The Productivity Bank: PayingBig Interest in Philadelphia

Mayor Ed Rendell says it's nor hard to

change incentives so that public employees save

money.

"We tell a department, 'You go out there and

do good work,' " Rendell told the National

Performance Review's Reinventing Government..

Summit in his city. "You produce more

revenue. You cut waste. And we'll let you keep

some of the savings of the increased revenue.'

Traditionally, the mayor said, "every nickel

that they would have saved would have gone

right back to the general fund... They would

have gotten a pat on the back, but nothing

else." Now, city employees save because their

departments can keep some of the savings for

projects to help them perform better.

110

and justice operate working capital fundsthat finance specific innovations, such asmodernizing information technology andcomputer systems. And the CommerceDepartment has a Pioneer Fund that givesemployees cash grants (rather than loans) ofup to S70,000 to finance quality andproductivity improvements. The moneycan be used for supplies, equipment, orexpert services. Some funds have financedprojects related to advanced technology,such as the development of publicinformation on CD- RONls.

State and local governments use thisapproach quite often. N1any cities have longhad some form of innovation fund. InFlorida, Governor Lawton Chiles cutdepartmental budgets by five percent acrossthe board, then gave half back to agenciesthat developed plans to invest in higher

When the Department of License and

Inspection beefed up collection and

enforcement efforts and generated $2.8 million

more than expected in 1992, Rendell said, the

city let the department keep $1 million of the

savings to hire more inspectors and, in turn,

exceed the $2.8 million in 1993.

The city also opened a Productivity Bank,

from which departments can borrow for

investment-type projects that is, capital

equipmentto produce either savings orenough revenues to repay the loan in five years.

To ensure that departments don't apply

frivolously, the city subtracts loan payments

from annual departmental budgets.Successes already abound. The Public

Property Department repaid a $350,000 loan

to buy energy efficient lamps in one yearaftersaving $700,000 in energy costs.

r

11

productivity and effectiveness.At the federal level, one important use for

such funds would be technologyinvestments. These are often considered tooexpensive for agencies operating budgets.even though they save money in the future.The Agency for International Development,for instance, needs a centralized informationmanagement system to coordinate itscentral office with its international fieldoffices. Because its information systems lackessential data and are not coordinated, theyprovide inconsistent, inaccurate, andincomplete reporting that managersfrequently do not trust. Agencies such asAID should have authority to createinnovation funds for capital investmentloans to reduce futux operating costs.

Action: Allow all agencies anddepartments to create innovation fimds-58

Congress should authorize a two tiersystem of innovation hinds: small loanfunds within agencies; larger funds at thedepartmental level. These would becapitalized through retained savings fromoperational appropriations. For the newsystem to work well. Congress should allowall new and existing innovation funds toinvest in joint projects with other agencyhinds, with state or local governments, orwith industry.

If managed according to marketprinciples, innovation hands would producemeasurable improvements in agencyefficiency and significant taxpayers savings.Strict repayment schedules, with interest.would discourage careless borrowing.

Aeon: The govo.nment should ensurethat there is no budget bias against long-term investments.'''

Part of straightening out the govern-merit's hooks will involve adopting somefinancial distinctions that business uses.Federal bookkeeping rules discourage

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government investments in productive fixedassets, like computer systems. Right now,we count a $5 million investment topurchase a Local Area Network computersystem in exactly the same way as we count$5 million spent on staff salaries. Americanbusinesses do it differently. Businessdepreciates fixed assets over time: If the $5million computer system has a useful life offive years, then its S5 million acquisitioncosts will be spread mg over five years. Poorchoices of capital investment and theacquisition methods are currently costingthe taxpayer millions of dollars each year.

Listen to Eleanor Travers, the director ofPathology and Laboratory Medicine for theVeterans Hospital Administration. She toldthe National Performance Review meetingat the Department of Veterans Affairs inAugust 1993:

Procurement of'equipment is held upbecause capital dollars to purchaseequipment are frozen. And you askedwhat dumb rules there were we couldchange. Allow our hospital directors andour top managers to use operating dollarswhen they find it's necessary to do leasingrather than purchasing . . . Please helpits loosen up the capital fiend so that wedon't have to ,go to Congress and waittwo and a half years for this line item tochange.

The budget should recognize thespecial nature and long-term benefits ofinvestments in fixed assets through aseparate capital budget, operating budget,and cash budget. The separate capitalbudget will explicitly show expenditures onfixed assets, and will help to steer our scarceresources toward the most economicalmeans of acquisition of the most neededassets. The cash budget reflects the effect ofboth the capital and the operating budgeton the economy. Therefore. the disciplineoldie cash outlay caps in the BudgetEnforcement A .t must he maintained.

118 III

FROM RED CAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & Cos FS LESS

STEP 4: REENGINEERING PROGRAMS

TO CUT COSTSIn the past turbulent decade, manycompanies have been forced torecognize that they weren't organized in

the right way to do what they were doing.Their organization structure reflectedhistory, not current needs. Reform wasn'teasytoo many people had vested interestsin preserving their particular part of theorganization. As a result, most attempts atreorganization were reduced to shiftingthings among different boxes onorganizational charts. Businesses found tha.,.

We are determined to movefrom anindustrial age government to information age

government, from a government pre-occupied

with sustaining itself to a government clearly

focused on serving the people.

Vice President Ai GoreMay 24, 1993

the only way to break the mold was toreengineerto forget how they wereorganized, decide what they needed to do,and design the best structure to do it. Anobvious insight? Perhaps. But the best ideasarc always the ones that seem obviousafter their discover:

We will reengineer the work ofgovernment agencies in two ways. First, wewill expand the use of new technologies.With computers and telecommunications,we need not do things as we have in thepast. We can design a customer-drivenelectronic government that operates in waysthat, 10 years ago, the most visionaryplanner could not have imagined.

Second, we will speed up the adoption ofnew ways to improve federal operations.Most of this work will be done by thefederal agencies themselves. An outside

1 I 2

performance review could never learnenough about internal agency workprocesses to redesign them intelligently. Butwe can begin to redesign several broadgovernment-wide processes: The way wedesign programs. develop regulations, andresolve disputes.

Electronic Government

The history of the closing decade of thiscentury is being written on computer. Youwouldn't know it if vou worked for manyfederal agencies, however. While privatebusinesses have spent the past two decadeseither getting rich by developing newcomputer technologies or frantically tryingto keep up with them, government is stilldoing things our parentsperhaps even ourgrandparentswould recognize.

Offshoots of the unexpected and fertilemarriage between computers andtelephones have changed just abouteverything we dohow we work, where wework, the design of the workplace, and theskills we need to continue working.

Organizations don't need as many peoplecollecting information because computerscan do much of it automatically. They don'tneed as many people processing thatinformation because clever softwareprograms can give managers what they needat the press of a button.

Factories don't need to stockpile largeinventories because smart machines on theassembly lines order components fromequally smart machines working forsuppliers. Yet government agencies standguard over warehouses of unused officefurniture. Retailers ship the right size ofclothing to customers as soon as they receivea telephone order and a credit card number.Yet we can't pay our taxes that way.

Computer companies give technicaladvice for our computers and software overthe telephone 24 hours a day by fax,

modem, or voice. Yet, the Social SecurityAdministration can't do the same.

Failure to adapt to the information agethreatens many aspects of government. Takethe State Department, a globe-spanningorganization dependent on fast and accuratecommunications. Its equipment is so old-fashioned that the Office of Managementand Budget says "worldwide systems couldsuffer from significant downtime and evenfailure.""" According to OMB, its systemsare so obsolete and incompatible thatemployees often have to re-enter dataseveral times. These problems jeopardizeour ability to meet our foreign policyobjectives.

Or think about the way our governmentsends out checks. For 15 years, electronicfluids transfers have been widely used. Theycost only 6 cents per transfer, comparedwith 36 cents per check. Yet each Year,Treasury's Financial Management Servicestill disburses some 100 million morechecks than electronic funds transfers.

We still pay about one federal employeein six by check and reimburse about half oftravel expenses by check. Only one-half ofSocial Security paymentswhich accountfor 60 percent of all federal paymentsaremade electronically, making SSA the world'slargest issuer of checks. Only 48 percent ofthe Veterans Affairs Department's paymentsare made electronically. Fewer than one infive Supplemental Security Incomepayments and one in ten tax refunds aretransferred electronically."' We have onlybegun to think about combining electronicfunds transfers for welfare, food stamps,subsidies for training programs. and manyother government activities.

Private financial transactions havebecome a lot easier in the past decade: hankcash machines are open 24 hours a day,credit cards let us avoid carrying cash, andwe can buy goods over the telephone. Thissaves many of us a lot of time and money. Itcould save the Government a lot of timeand money, too. Consider the paper chaseinvolved in running the welfare system. TheFood Stamp Program, alone, involvesbillions 9f bits of paper that absorb

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thousands of administrative staff years.More than 3 billion food stamps will beprinted this 'ear and distributed to morethan 10 million households. Each month,210,000 authorized food retailers receivethese coupons in exchange for food. Theseretailers carry stacks of coupons to 10,000participating financial institutions, whichthen exchange them with Federal ReserveBanks for currency. The Federal ReserveBanks count the couponsalthough theyalready have been counted more than adozen timesand destroy them. Theadministrative cost of this systemsharedequally by federal and state governmentsis almost S400 million a year.

We will support Agriculture'scommitment to the goal of issuing foodstamps electronically by 1996. Electronicbenefits transfer could eliminate the paperchase, improve services to customers, andreduce fraud. At the same time, it could beused to authorize Medicaid payments.distribute welfare payments, infantnutrition support, state general assistance,and housing assistance. It could eliminatebillions of checks, coupons, and all theother paperwork. record keeping andeligibility forms that clutter the welfaresystem.

Why has business moved faster thangovernment into the electronicmarketplace? In the first place, governmentis a monopoly. Public organizations don't goout of business if they don't have the latestand smartest machines or the best approachto managing resources. In the second,employees who do want to modernizemanagement have their hands tied with redtapedetailed budgets and cumbersomeprocurement proceduresthat deterinvestment. Finally, there is a naturalinclination, familiar to private and publicmanagers alike, to do things as they'vealways been done.

What can we do to help our federalbureaucracy catch up?

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!ROM RED TAPE TO RESULTS CRLA GOVERNMENT run] WORKS BETTER & COS rs LESS

Action:Support the rapid developmentof a nationwide system to delivergovernment benefits electronically.62

OMB has already begun the process. Theelectronic benefits transfer steeringcommittee, .vhich OMB oversees, willdevelop an implementation plan forelectronic benefits transfer by March 1994.

The system is workable with today'stechnology. For cash programs such asfederal retirement, social securimunemployment insurance. or AFDC.benefits would be electronically depositeddirectly into recipient bank accountselectronically. If people didn't have hankaccounts, these could be created once theindividual enrolled in a program. For -non-cash- programs such as food stamps,participants would have accounts throughwhich they could make purchases atapproved food storesanalogous to creditcards with credit limits. Stores would debitaccounts as eligible items were purchased.The entire system could operate on or becompatible with the existing commercialinfrastructure through which private fundsare transferred electronically.

Agencies have begun experiments withelectronic benefits transfers. Welfare checks,food stamps, and state-collected childsupport, for example. are distributedelectronically in Maryland. There are testsites in Iowa. Minnesota. New Mexico.Ohio, Pennsylvania, Texas. and Wyoming.We know that a joint federal-state effort totransfer welfare benefits electronicallyworksand works well. The system isstrongly supported by recipients. the statewelfare agencies, food retailers, banks, andparticipating commercial networks. We alsoknow that direct federal deliven. of funds byelectronics is cost-effective. We cant Yetproject with certainty what the savingsmight he. but preliminary estimates suggestS1 billion over five years once electronicbenefits transkr of food stamps is fullyimplemented.

In the future, the concept of electronicgovernment can go beyond transferringmoney and other benefits by issuing plastic.

1 1 4

:11tr.1.4...."P"sr e 1;1"x54

"smart' benefit cards. With a computerchip in the card, participants could receivepublic assistance benefits, enroll in trainingprograms, receive vcierans services, or payfor day care. The card would containinformation about participants financialpositions and would separately track theirbenefit accountsthus minimizing fraud.Electronic government will be fairer, moresecure, more responsive to the customer,and more effic,ent than our present paperbased systems.

Barriers still stand in the way. Agencieswill have to work together to develop acomprehensive nationwide strategy forimplementation: it will do no good for eachagency to develop its own process. We willneed to strengthen the partnership betweenstate and federal governments in developingand operating the system. We will have toeliminate some regulations that wouldprevent this radical change in howgovernment operates. And the NationalInstitute of Standards and Technology willhave to issue final standards and protocolsfor electronic signatures to facilitateelectronic funds transfers and the electronicapproval of budget and financialdocuments.

Action:Federal agencies will expandtheir use of electronic government."

Opportunities abound for cuttingoperating costs by usingtelecommunications technologies. TheNational Performance Review has identifiedseveral projects that would improvegovernment's productivity and reduce theburden of reporting on individuals andbusinesses.

The IRS is introducing an efficientcomputer system, automating tax returns,and creating a wholly new workenvironment for its 115,000 full-timepersonnel. The agency currently operates acomputer system put together in the1960snot the tool our principal revenuecollector should be using. 'lb make the newsystem work, the agency will need to figureout how to train its staff to operate in a

121

: "42,110100"7"1111kON'. de7"1645ii"

reengineered agency. We will support theagency's investments in new hardware andtraining, as discussed in Chapter 3.

The IRS will also manage the creation ofan integrated electronic system for financialtiling, reporting, and tax payment by 1996.The system will serve federal, state, andlocal taxpayers. It will allow the electronicfiling of tax returns by individuals andcompanies, the electronic reporting ofwages and withholding information, andother data required by all levels ofgovernment. In addition, the inter-agencyWage Reporting Simplification Project(WRSP) will be in place quicklyallowingbusinesses to file information once to servemany different purposes. The savings fromfully implementing this program over thelife of the system have been projected atS1.7 billion for government agencies and513.5 billion for private employers.Individuals will be able to file federal andstate income taxes simultaneously throughan Electronic Data Interchange, with theirprivacy protected and fraud preventedthrough digital signature standards.Electronic filing alone will save the IRS andstate agencies from having to mail out theequivalent of 75 boxcars of forms.

Working together, the LaborDepartment and IRS will develop anautomated system all employers can use tofile electronically the pension plan formsemployers required by the EmployeeRetirement Income Security Act." Atpresent. it costs the Internal RevenueService more than $10 million a year toenter all these forms into its data base.

The Labor Department will developcomputer programs to determine quicklythe appropriate wages on federal servicecontracts!°' Currently, all federal agenciescontracting for servicesfrom cleaningservices to building managementmustapply to the department for a determinationof appropriate wages. The process issupposed to ensure that federal contractsdon't undermine local prevailing wages. Theprocess takes an average of 57 days and,with a growing number of service contracts,more and more arc subject to delays.

CUTTING BACK TO BASICS

We will continue investing in the SocialSecurity Administration's massive project tocreate a single nationwide disabiliryprocessing system.' This will requireconsiderable investments in newtelecommunications and computer systemsas well as in staff retraining. It will alsomean that the SSA will have to workcooperatively with state-run disabilitydetermination offices, set performancestandards, and take over those that don'tmeet standards. Many of the system's worstprocessing bottlenecks are in the state officesthat approve individual claims.

Money for Numbers

The National Technical Information Service

runs a large and complex information collection

and marketing operation. It is the nation's largest

clearinghouse for scientific and technical

information. Yet it covers the costs of its operations

without receiving a penny in federal

appropriations. Its customers pay and their

numbers are growing every year.

NTIS's archives contain about 2 million

documents (from research reports to patents), more

than 2,000 data files on tape, diskette, or CD-

ROM, and 3,000 software programs. This resource

is growing at the rate of about 70,000 items each

year. NTIS's press releases, on-line services, and

CD-ROMs serve 70,000 customers, three-quarters

of whom are from busiaess and industry.

In 1991, NTIS collected $30.7 million in

revenues 77 percent from its clearinghouse

activities, the rest from other government agencies

that reimburse NTIS for patent licensing services,

and from billing other agencies for producing and

distributing documents. I' 'TIS is required by law to

be self-sufficient.

1221 1 5

I ROM RI D I APE E0 RESULTS 04F.ATINc A COVERNMI NT THAT WORKS BETTER & COSTS LASS

Some of these investments will requireCongressional appropriations. But some canbe financed through innovation funds,described above, and some will becomepossible to pay for as soon as rigid budgetregulations are relaxed.

Action: Federal agencies will developand market data bases to business.6-

Federal agencies must treat the data theycompile and process as potentially valuableresources. Congress alerted the bureaucracyto the value of information in 1991 bypassing the American TechnologyPreeminence Act. The act required federalagencies to transfer to the NationalTechnical Information Service copies offederally funded research. At NTIS, theinformation is organized and made availableto research scientists in academia and inindustry. NTIS has developed an aggressivemarketing strategy and pricing policy thathave greatly increased its revenues.

The Census Bureau has pioneered theuse of computer technology such as CD-ROM technology to make federal dataavailable. By 1992, the Bureau sold censusdata to 380,000 customers on tape or discdirectly, and served another I.1 millioncustomers indirectly.

Unfortunately some federal agencies lagbehind private data retailers in the servicesthey offer their customers. People buyingCensus data must order it through paperorder forms or by telephone during businesshoursonly 9 hours a day, 5 days a week. Ifprivate software companies offer 24-hour aday technical support, so should the CensusBureau.

Other agencies will begin to exploit thepotential of the information they collect.The Commerce Department, for example,will develop a manufacturing technologydata hank that brings together informationresiding in the National Institute ofStandards and Technology, the DefenseDepartment, federal research laboratories,and other organizations. Commerce willalso use its climate data as the basis fordeveloping a National Environmental Data

Index. Good data will be vital in solving theproblems associated with global climatechanges. The U.S. must be a leader indeveloping these information resources.

Action: In partnership with state andlocal governments and private companies,we will create a National Spatial Datalufrastructure.68

Dozens of agencies collect spatial datafor example, geophysical, environmental,land use, and transportation data. Theyspend S I to 3 billion a year on these efforts.The administration will develop a NationalSpatial Data Infrastructure, (NSDI) tointegrate all of these data sources into asingle digital resource accessible to anyonewith a personal computer. This resource willhelp land developers and conservationists,transportation planners and thoseconcerned with mineral resources, andfarmers and city water departments.

Because of the value of the data, it will bepossible to attract private sector funding forits collection, processing, and distribution.The Federal Geographic Data Committee,which operates under the auspices of OMB,plans to raise enough non-federal fundingto pay for at least 50 percent of the project'scost. It will set the standards for datacollection and processing by all agencies toensure that NSDI can be developed aseconomically as possible.

Action: The Internal Revenue Servicewill develop a system that lets people paytaxes by credit card.69

The Customs Service lets people payduties on imported goods by credit card.Americans should have the same convenientway to pay taxes. It will save time and cutthe IRS's collection costs.-1) There is onehitch: Those who pay by credit card couldavoid paying back taxes simply by filing forpersonal bankruptcy. This escapemechanism can't be employed todaybecause back taxes are, under bankruptcylaw, a "non-dischargeable" debtthat is,they are a debt that remains even after

1 I 6 12j

Air

someone becomes insolvent. Therefore, theuse of credit cards for tax payments shouldbe delayed until Congress has amended thebankruptcy statute to prevent taxes paid bycredit card from becoming a dischargeabledebt. Our goal is to increase customerconvenience, not to open up anotherloophole through which people can dodgepaying delinquent taxes.

Reengineering to UseCost-Cutting Tools

Our reinvented government will be ableto cut further costs by using new ways toearn' out traditional duties. To begin with,we will have to get a lot smarter about howwe design government programs. ThePresident's Management Council will play alead role in helping government learn fromits past failures and successes to designbetter programs. In addition, newapproaches to regulationsuch asnegotiated rule makingcan reduceconflict and produce better results. Finally,alternative techniques for resolving disputescan avoid many of the costs of traditionallitigation.

Action: The President's ManagementCouncil will help agencies design andredesign better programs. °

As taxpayers and customers we havebeen, time and time again, victims of thethoughtless expansion of government.When new programs were introduced orold ones retargeted, little thought was givento what economists blandly label "secondorder effects"the unintended andunwanted consequences of actions. Theseunintended consequences are the collateraldamage responsible for so much of thewaste documented in this report. When weplaced limits on crop deficiency payments,we didn't realize how easy it would be toestablish eligible shell-corporations. Whenwe added new procurement standards, wedidn't anticipate the difficulties caused bycentralized decision making. When we tried

CUTTING BACK TO BASICS

to target training programs on dislocatedworkers, we didn't anticipate thebureaucratic hassles involved in establishingeligibility.

But the fact that we did not anticipateconsequences does not mean that we couldnot have done so. Many different programshave been triedby federal agencies, bystate and local agencies, and bygovernments overseas. We have built upwhat lawyers would call "case law": lots of

precedents about what works andwhat doesn't. The trouble is that, unlikecase law, these precedents aren't easy to find.Congressional staff or agency employeesdesigning new programs have no systematicway to find out what has been tried beforeand how well it has worked. The result%Endless reinvention of third rate or failedprograms.

In 1981, for example, the chairman ofthe House Banking Committee asked theCongressional Budget Office if it knew ofany studies evaluating government loans asan effective policy tool. CBO did not. Yetthe federal government had lent hundredsof billions of dollarsand it continues todo so today. The price we pay for thisignorance is a mountain of delinquent debtand a raft of discredited governmentinitiatives. Too many policies and programsare built on equally feeble foundations.

In 1988, Congress recognized thisdilemma and provided for theestablishment of a National Commission onExecutive Organization, patterned after theFirst Hoover Commission. Its charter wouldhave included a requirement to "establishcriteria for use by the President andCongress in evaluating proposals forgovernment corporations and government-sponsored enterprises and subsequentlyoverseeing their performance." The newcommission could have been activated bypresidential directive. It was not.

To begin our attack on ignorance, thePresident should direct the President'sManagement Council to make programdesign a formal discipline throughout thefederal government. The PMC willcommission the preparation and

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FROM RED TAPE. TO RESULTS CREA HNC; GOVERNMEN r THA r WORKS BETTER & COS FS LESS

publication of a program design handbookand establish pilot efforts within agencies tostrengthen their ability to design programs.These pilot programs will help seniormanagement design new programs, evaluatecurrent programs, and create models formany different types of programs (researchcontracts, loan programs, tax preferences,and insurance programs to name just a few.)

Since many programs originate inCongress, the Legislative branch should alsowork to improve staff capacity. We urge theOffices of the Legislative Counsel, theCongressional Research Service, and theGeneral Accounting Office to fill this role.As both the legislative and executivebranches elevate the discipline of programdesign, we will get better programs and lesscontentious relations between the twobranches of government.

But we need more than good programs.We need better rules and more efficientrulemaking. Federal agencies administertens of thousands of laws, rules, andregulationsand the number is growingquickly. For better or worse, government'srulemaking, even more than itsappropriations, shapes our lives.

Costs, for the most part, are offset bybenefits. Our system of laws and rules is thefoundation for our economic success. Itdefines and protects personal and propertyrights and provides the framework for theorderly conduct of social and businessaffairs.

But some aspects of rulemaking don'twork well. As rules extend into increasinglycomplex areas of our environment,workplace safety, health, and social rights,their consequencesboth deliberate andunintendedalso grow. As this happens,we introduce more and more safeguardsinto the rulemaking process. The result isnot always what we want. Hearings,reviews, revisions, more reviews, morehearings, and even more reviews arecumbersome. costly, and time consuming.For example. because the Department ofHealth and Human Services has been slowto issue regulations on such vital areas as theallocation of funds for the elderly and for

children, states have had to introduce theirown regulations without the benefit offederal guidance. Some of these stateregulations have later been overturned afterfederal regulations were eventually issued,leaving states financially liable.

New rules and regulations can alsogenerate costly litigationa bonanza forlawyers. Agencies writing the rules toimplement environmental laws. accordingto one expert, often find "too frequentlythat their proceedings become abattleground for interest groups and otheraffected partiesin effect little more thanthe first round of the expected litigation."

There are better ways to make rules. Asmall group of federal agencies has pioneereda process called negotiated rulemaking. In1990, Congress recognized and encouragedthe process with passage of the NegotiatedRulemaking Act. We believe negotiatedrulemakingcolloquially referred to as "regneg"is a process every rulemaking agencyshould use more frequenth.-3

Action: Agencies will make greater use ofnegotiated rule making.

The "reg neg" process brings togetherrepresentatives of the agencies and affectedgroups before draft regulations are issuedand before all sides have formally declaredwar. The group meets with a mediator or"facilitator." The negotiators reachconsensus on the regulation by evaluatingtheir own priorities and making trade-offs.The negotiating process allows informalgive and take that can never happen incourt or in a public hearing. If agreement isreached, the agency can publish theproposed rule, accompanied by a discussionof the issues raised during negotiations.Even if both sides are too far apart to reachconsensus, agency staff learn a lot duringthe process that helps them improve theregulations. When the parries do reachconsensus, regulations are issued faster andcostly litigation is avoided.

When EPA applied reg neg techniques tothe issue of emission standards for woodburning stoves, it was able to put standards

125

into effect two rears faster, and with muchbetter factual input, than it could havewithout negotiations. Manufacturers ofstoves. in turn, were able to begin retoolingto meet standards without another twoyears of uncertainty.

Action: Agencies will expand their use ofalternative dispute resolutiontechniques. '

Federal agencies also need better andcheaper ways to resolve disputes. Enforcingthousands of difficult and sometimescontroversial ruleshowever carefully theyare designedleads to disagreements. Stateand local governments, businesses, andcitizens challenge Washington's right toregulate certain issues, or they challenge thethe enforcement of specific regulations.

Solving these disputes can be expensive.It involves high-priced lawyers, it clogs thecourts, and it delays action. Each year,24,000 litigation matters reach the 530 full-time attorneys and 220 support staffersemployed by the Labor Department alone.It often takes years to resolve these disputes,postponing the implementation ofimportant programs and preventing a lot ofpeople from doing what they are paid to do.

In some cases, litigation is important: Itinterprets the law, sets importantprecedents, and serves as a deterrent tofuture wrongdoing. But in many cases, noone really winsand the taxpayer loses. It isoften cheaper to resolve conflicts throughnew techniques known collectively as

CUTTING BACK TO BASICS

Alternative Dispute Resolution (ADR).Alternative Dispute Resolution (ADR)

includes mediation (a neutral third partyhelps the disputants negotiate), early neutralevaluation (a neutral, often expert. personevaluates the merits of both sides),factfinding (a neutral expert resolvesdisputes that arise over matters of fact, notinterpretation), settlement judges (amediator settles disputes coming beforetribunals), mini-trials (a structuredsettlement process), and arbitration (anarbitrator issues a decision on the dispute).

Overcrowded courts are alreadyencouraging private litigants to use ADR.Private contracts often specify the use ofADR to resolve disagreements amongsignatories. In 1990, Congress passed theAdministrative Dispute Resolution Act,authorizing every federal agency to developits own ADR policy. Some have, but somehave dragged their feet.

Those that have used ADR have savedtime and money and avoided generating illwill. The Labor Department started a pilotprogram last year for OSHA and Wage andHour cases and found it much quicker andcheaper. The Federal Deposit InsuranceCorporation saved more than $400,000,.vith a single, small pilot program. TheFarmers Home Administration has usedADR on foreclosure casesnot only savingmoney but actually avoiding foreclosure onseveral families. This type of innovationshould spread faster and further across thefederal government.

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I ROM RID t PE TO RINI:1.1'S CR1 A I I NG X GoVIRNMNT I IIA r WoRks & COSTS LESS

Conclusion/f we follow these steps, we will movemuch closer to a government that costsless and works better for all of us. It will

be leaner, more effective, fairer, and moreup-to-date. It will be a government worthwhat we pay for it.

We do not deny that many groups willoppose the actions we propose to take. Weall want to see cuts made, but we wantthem elsewhere. Eliminating or cuttingprograms hurts. But it hurts less, at least inthe long run, than the practice ofgovernment as usual. Writing aboutBritain's monarchy in the eighteenthcentury, Samuel Pepvs once observed that it

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was difficult for the king to spend a millionpounds and get his money's worth.Fawning courtiers, belligerent Lords andhundreds of other claimants eachdemanded their share. The same is truetoday. The money spigot in Washington ismuch easier to turn on than to turn offand too little of the funds that gush from itirrigate where water is scarce. That is whywe have not simply offered a list of cuts inthis report. Instead, we have offered a newprocessa process of incentives that willimbue government with a newaccountability to customers and a newrespect for the public's money.

:

CONCLUSIONThough I do not believe that a plant spring up where no seed has been, I have great faith in a

seed. Convince me that you have a seed there, and I am prepared to expect wonders.

UAke many past efforts tochange the government,the NationalPerformance Review willnot end with thepublication of a report.

We have identified what we must do tomake government work better and cost less:We must serve our customers, cut red tape,empower employees to get results, and cuthack to basics. Now, we will take action.

The task is immense. The federalgovernment has 2.1 million civilianemployees. 800,000 postal workers, 1.8million military personnel, and a S1.5trillion budgetmore than the entire grossdomestic product of Germany, the world'sthird largest economy.

The National Performance Review hasidentified the problems and definedsolutions. The President will issuedirectives, cabinet secretaries will changeadministrative practices, and Office ofManagement and Budget will issueguidance. We will work with Congress forlegislation where its needed. Senselessregulations will be repealed; mechanisms toenhance customer service will be created;change will begin.

But we do not pretend to have solvedevery problem. We will transform thefederal government only if our actions

Henry David Thoreau

Thisperformance review will not produceanother report just to gather dust in somewarehouse. We have enough of them already.

President Bill ClintonRemarks announcing the National Performance Review,

March 3, 1993

and the Reinvention Teams and Labs nowin place in every departmentsucceed inplanting a seed. That seed will sprout only ifwe create a process of ongoing change thatbranches outward from the work we havealready done.

How we proceed will be as important aswhat we have done to date. We must avoidthe pull of implementation models that arefamiliar and comfortable but poorly suitedto today's world. We must avoid creatingnew bureaucracies to reform the old. Wemust actively involve government leaders atall levels. We must seek the guidance ofthose who have successfully transformedlarge organizations in both the private andpublic sectors.

The nature of our strategies will nodoubt cause discomfort. They will beunfamiliar. They will not look like business

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as usual. They will cnge the currentfederal culture. And they will demandrisk-taking.

If we are to bring about true change,however, some discomtort is inevitable. Ourstrategies are not untested; they have beenused successfully by both public and privateorganizations throughout the country.

to succeed where others have failed, thePresident and Vice President havecommitted to specific initiatives that willcreate a culture capable of sustainingfUndamental change. This shift in culturewill not occur overnight. lb bring it .111011I,

we will continue:

a cascading process of education.participation, and ownership at thehighest levels of the executivebranch;

What we're trying to do is to create a large

number of changes, simultaneously in thefederal government. Because if you just change

one thing without changing some of the other

things that need to be changed, we won't get

anywhere.

We can bring the quality revolution, for

example, into the federal workforce as well as it

could possibly be done, and i f we didn't fix

some of the other problems, it wouldn't amount

to much. We could fix the personnel system, but

if we didn't fix the budgetary system and the

procurement system, then we would still be

mired in a lot of the difficulties that we

encounter today. We are trying to do a lot of

things at the same time.

Vice President AI GoreTown Hall Meeting,

Department of Veterans AffairsAugust 4. 1993

122

two-way communication withfederal employees and theirorganizations;

hi-partisan partnership with Congress;

processes to listen to and usefeedback from customers andcitizens; and

government-wide mechanisms tomonitor, coordinate, and facilitateplans for reinvention.

The administration has already taken anumber of steps to bring about the changeswe are recommending.

First, we have launched ReinventionTeams and Reinvention Labs in even'department to continue seeking ways toimprove the government and put theseideas in practice.

Second, we have begun to workandwill continue to expand relationships-with leaders and representatives of federalemployees from throughout thegovernment. Indeed, the NationalPerformance Review is the firstgovernment-wide change initiative to berun and stalled by federal employees. Ouractions will make employees jobs better,and their participation will make ouractions better.

Third the President and Vice Presidenthave begun to work with the cabinet todevelop performance agreements that willinstitutionalize a commitment to andestablish accountability for change.

Fourth, we have developed a mechanismto spread our basic principles throughoutthe government. The President will meetwith the cabinet to develop strategiesreflecting these principles and ideas,committing all involved to takeresponsibility for changing the way we dobusiness. Cabinet members will then gothrough the same process with their seniormanagers, who will go through it with theirsenior managers, and so on.

Firth, the President is establishing amanagement council to monitor change

1 2

and provide guidance and resources tothose working to bring it about. ThePresident's Management Council will becharged with responsibility for changing theculture and management of the federalgovernment.

Sixth, the Federal Quality Institute willhelp agencies with access to information,education, research, and consultation onquality management. Like our otherinitiatives, this models a basic tenet of thebehavior we recommendencouragingmanagers to define their own missions andtasks, but providing the support they needto do a good job.

Seventh, we will launch future reviews ofthe federal government, targeted at specificproblems. The National PerformanceReview was a learning experience; welearned what we could do in six months,and what we still need to do. We focusedheavily on the basic systems that drivefederal agencies: the budget, personnel,procurement, financial management,accountability, and management systems.In subsequent reviews, we will narrow ourfocus. For example, we plan a review of theantiquated federal field office structure,which dates from the 1930s and containssome 30,000 field offices. (See Chapter 4.)Other targets might include theabandonment of obsolete programs; theelimination of unproductive subsidies; theredesign of failed programs; the redefinitionof relationships between the federalgovernment and state and localgovernments; and the reinvigoration ofrelationships between the executive andlegislative branches.

Finally, the National PerformanceReview will continue to rely on its greatestasset: the federal employees who made ithappen. They have all worked hard forchange, and many will continue to work onreinvention in their own agencies. Theyconstitute a network that will reach out toother employees, sharing their enthusiasm,energy, and ideas.

During this process, a vision of changewill emerge beyond that which is containedin this report. Leadership and management

I

CONCLUSION

values will, over time, changenot inresponse to a mandate, but because peopleare working together to change theirgovernment. If we have done our job well,the next generation of changes will be builton the foundation we have laid with thisreport. We are merely initial planners; thePresident, the Vice President, the cabinet,federal managers and employees will be thearchitects and builders.

Despite all the horror stories and years ofscorn heaped on federal employees, ourgovernment is staffed by people committedto their jobs, qualified to do them better,and hungry for the opportunity to try. Theenvironment and culture of governmenthave discouraged many of these people; thesystem has undermined itself. But we canand willchange that environment andculture.

Over time, it will become increasinglyobvious that people are not the problem. Asold ways of thinking and acting are replacedby a culture that promotes reinvention andquality, a new face of government willappearthe face of employees newlyempowered and newly motivated, and ofcustomers newly satisfied.

What Reinventing GovernmentMeans for You

We have talked enough of what we willdo and how we will change. The moreimportant question is how life will changefor you, the American people.

If we succeedif the administration canimplement our recommended actions andCongress can pass our legislative packageyou will begin to see a differentgovernment. Your mail will be delivered

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

more rapidly. When you call a SocialSecurity office, you'll get through. Whenyou call the Internal Revenue Service, you'llget accurate answersand if you don't, youwill no longer be penalized.

If you lose your job, a local career centerwill help you find a new one. If you wantretraining, or you want to go back toschool, you'll find counselors who can helpyou sort out your options, pick the bestprogram, and pay for it. If you run a

4.41

small business, you will have fewer forms tofill out.

If you live in public housing, yourapartment complex might get cleaner andsafer. Perhaps you'll even be able to moveyour family to a safer, quieter, more stableneighborhood.

Our workplaces will get safer becausethey are inspected more often. Our waterwill get cleaner. Your local government willwork better because it is no longerhamstrung by silly federal regulations.

And perhaps the federal debtthat $4trillion albatross around the necks of our

124

children and grandchildrenwill slow itsrampage. Our federal agencies will begin tofigure out, bit by bit by bit, how to cutspending, eliminate the obsolete, andprovide better service for less money

You will begin to feel, when you walkinto a post office or social security office oremployment service or veterans' hospital,like a valued customer. We will begin tospend more money on things you want andneedhealth care, training, education,environmental protectionand less onbureaucracy One day you will be able toconclude that you are getting a dollar ofvalue for every dollar of taxes you pay.

This is our vision of a government thatworks better and costs less. We know it willnot come to be overnight, but we believe itis a vision we can bring to life. We believethis because we have already seen this visioncome to lifein local governments, in stateagencies, even in a few federal agencies. Webelieve it is the right vision for governmentas we approach the 21st century.

It will take more than a dedicatedPresident and Vice President to make thisvision a reality, however. It will take morethan dedicated employees. It will takededicated citizens, willing to work long andhard to improve their government.

It will take citizens willing to push theirsocial security offices and unemploymentoffices to treat them like customersand todemand that their voices be heard whenthey don't get satisfaction. It will takecitizens willing to demand informationabout the performance of their federalorganizations. And it will take citizenswilling to act on the basis of thatinformation.

As our President has said so often, thefuture is oursif we have the courage tocreate it.

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ENDNOTES

PREFACE

1. Bill Clinton and Al Gore, PuttingPeople First,(New York, Times Books, 1992) pp. 23-24.

INTRODUCTION

I. Data taken from the following sources: "Theaverage American...," Senator William Roth, vol.138 no. 51, Cong. Rec. (April 7, 1992), p. SI; "Fiveout of every six Americans...," CBS News Poll,unpublished, May 27-30, 1992, released June 1,1992; "Only 20 percent...," an ABC News-Washington Post poll, taken April 23-26, 1993,asked: "How much of the time do you trust thegovernment in Washington to do what is right: Justabout always, most of the time, or only some of thetime?" Four percent said "just about always," 16percent said "most of the time," 74 percent said"only some of the time," and 6 percent volunteered"none of the time;" 1963 figure, University ofMichigan poll, cited in "From Camelot to Clinton:A Statistical Portrait of the United States,"Washington Post (August 23, 1993), p. A15.2. U.S. General Accounting Office(GAO), High-Risk Series: Defense InventoryManagementGAO/HR-93-12 (December 1992).

3. U.S. Office of Management and Budget (OMB),Budget of the U.S. Government FY 93 (Washington,D.C., 1992) and Budget of the U.S. Government FY94 (Washington, D.C., 1993); and interview withDepartment of Housing and Urban DevelopmentBudget Officer Herbert Purcell, August 26, 1993.4. U.S. Congress, Senate, Committee onAppropriations, Subcommittee on Education, Laborand Health and Human Services, testimony ofClarence C. Crawford, U.S. GAO, "MultipleEmployment Programs: National EmploymentTraining Strategy Needed," June 18, 1993.5. Democratic Leadership Council, The Road toRealignment: The Democrats and the Perot Voters(Washington, D.C.: Democratic Leadership

Council, July 1993), p. 111-12. Pollster StanleyGreenberg asked people if they agreed that"government always manages to mess things up."Seventy-two percent of Perot voters agreed, 64percent of Clinton voters agreed, and 66 percent ofBush voters agreed.

6. Dilulio, John J., Jr., Gerald Garvey, and DonaldF. ICettl, Improving Government Performance: : AnOwner's Manual (Washington, D.C.: BrookingsInstitution, 1993), p. 79.

7. Yankelovich, Daniel, American Values and PublicPolity (Washington, D.C.: Democratic LeadershipCouncil, 1992), p. 7.8. National Performance Review AccompanyingReport, Transforming Organizational Structures(Washington, D.C.: U.S. Government PrintingOffice (GPO], September 1993).9. Finegan, Jay, "Four-Star Management," Inc.(January 1987), pp. 42-51; Osborne, David, andTed Gaebler, Reinventing Government: How theEntrepreneurial Spirit is Transformingthe PublicSector (Reading, MA: Addison-WesleyPublishingCompany, Inc., 1992), pp. 255-259; and Creech,General W. L, "Leadership and ManagementThe Present and the Future," address presented atthe Armed Services Leadership and ManagementSymposium (October 11-14, 1983) (available fromthe Office of the Assistant Secretary of Defense forInstallations, Pentagon, Washington, D.C.).10. National Performance Review AccompanyingReport, Improving Customer Service (Washington,D.C.: U.S. GPO, September 1993).

11. U.S. Department of Agriculture, Forest Service,Regional Office, Profile ofa Reinvented GovernmentOrganization (Milwaukee, WI, May 24, 1993); "TheU.S. Forest Service: Decentralizing Authority,"Government Executive (March 1953), pp. 23-4; andinterviews with Forest Service officials.12. The President's Fiscal 1994 budget (page 40)estimates 2.1 million Federal non-postal workers and1.8 million military for 1994. Manpower, Inc.employs 560,000. General Motors employs 362,000.

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAI WORKS BETTER & COSTS LESS

CHAPTER 1- CUTTING RED TAPE

1. U.S. Department ofAgriculture, Starting Over

(Washington, D.C., undated), p. 1.

2. Estimate by Office of Management and Budget.

3. National Performance Review Accompanying

Report, Mission-Driven, Results-Oriented Budgeting

(Washington, D.C.: U.S. GPO, September 1993).

4. Letter to Vice President Gore from Bob Peterson,

Jackson, NJ (undated).

5. Department of Energy town meeting of the

National Performance Review, July 13, 1993.

6. Peter, Dr. Lawrence J., Peter's Quotations: Ideasfor

Our Time (New York: Quill/William Morrow,

1977), p. 124.

7. Osborne, David, and Ted Gaebler, Reinventing

Government: How theEntrepreneurial Spirit is

Transforming the Public Sector (Reading, Mk.

Addison-Wesley Publishing Company,Inc., 1992),

p. 118.

8. Mission-Driven, Results-Oriented Budgeting.

9. 3. National Performance Review Accompanying

Report, Agency for Internatione!Development

(Washington, D.C.: U.S. GPO, September 1993).

10. This estimate is derived from federalemployment statistics as of September 30, 1991,

provided in Office of Personnel Management

publication MW 56-22.

11. $35 billion = 700,000 central staff x $50,000 in

salary and benefits per person year.

12. The Budget of the United States Government

(Washington, D.C.: U.S. Government Printing

Office): for 1966 total full-time permanentemployment in the executive branch was 1,876,419

(excludingPost Office); for 1967 the numbaer

increased to 2,043,797.

13. Haas, Lawrence J., Running on Empty: Bush,

Congress, and the Politics ofa Bankrupt Government

(Homewood, IL: Business One Irwin 1990), p.

14. Mission-Driven Results-Oriented Budgeting.

15. Ibid.

16. Ibid.

17. Unpublished case study by Pamela Varley, John

F. Kennedy School of Government, HarvardUniversity, Cambridge, MA, July 1993.

18. Mission-Driven, Results-Oriented Budgeting.

19. Ibid.

20. Broder, David S. and Stephen Barr, "Hill's

Micromanagement of Cabinet Blurs Separation of

Powers," Washington Post (July 25, 1993), p. Al.

21. Mission-Driven, Results-Oriented Budgeting,

"BGT04: Eliminate Employment Ceilings and

Floors by Managing Within Budget."

22. Mission-Driven, Results-Oriented Budgeting.

23. U.S. Congress, House, Democratic Caucus,

Task Force on Government Waste, The Challenge of

Sound Management (Washington, D.C., June 1992),

24. Office of Personnel Management, Central

Personnel Data File, unpublished analysis, March

1993. Calculations by Robert Knisely, National

Performance Review.

25. National Performance Review Accompanying

Report, Reinventing Human Resource Management

(Washington, D.C.: U.S. GPO, September 1993).

26. Ibid.

27. National Academy of Public Administration,Modernizing Federal Classification: An Opportunity

for Excellence (Washington, D.C.: July 1991).

28. Reinventing Human Resource Management.

29. Ibid.

30. Ibid.

31. National Performance Review Accompanying

Report, Reinventing Federal Procurement(Washington, D.C.: U.S. GPO, September 1993).

32. Ibid.

33.U.S. Merit Systems Protection Board, Work Force

Quality and Federal Procurement:An Assessment

(Washington, D.C.: U.S. GPO, July 1992), p. 21.

34. National Performance Review Accompanying

Report, Reinventing Federal Procurement, "PR0008:

Reform Information Technology Procurements"

(Washington, D.C.: U.S. GPO, September 1993).

35. Ibid.

36. Ibid.

37. Ibid.

38. Ibid.

39. Ibid.

40. National Performance Review Accompanying

Report, Streamlining Management Control

(Washington, D.C.: U.S. GPO, September 1993).

41. National Performance Review Accompanying

Report, Improving Regulatory Systems (Washington,

D.C.: U.S. GPO, September 1993).

42. Streamlining Management Controls.

43. Department of Veterans Affairs, Management

Efficiency Pilot Prograt Innovative Test is Meeting

All Expectations (Washington, D.C.: U.S. GPO,

March 1990).

44. Improving Regulatory Systems.

45. Streamlining Management Control

46. Streamlining Management Control and National

Performance Review Accompanying Report,

Improving Financial Management (Washington,

D.C.: U.S. GPO, September 1993).

133

47. Streamlining Management Control and ImprovingFinancial Management.

48. Interview with Stephen Cleghorn, Director, Jobsfor Homeless People, Washington, D.C., August1993.

49. National Performance Review AccompanyingReport, Strengthening the Partnership inIntergovernmental Service Delivery (Washington,D.C.: U.S. GPO, September 1993).

50. Ibid.

51. Ibid.

52. Ibid.

53. Ibid.

54. National Performance Review AccompanyingReport, Housing and Urban Development,(Washington, D.C.: U.S. GPO, September 1993)

55. Peters, Tom, Thriving on Chaos: Handbook for aManagement Revolution, (New York: Harper & Row,1989).

CHAPTERS 2-PUTTINGCUSTOMERS FIRST

I. National Performance Review AccompanyingReport, Reengineering Through InformationTechnology (Washington, D.C.: GovernmentPrinting Office [GPO], September 1993).

2. National Performance Review AccompanyingReport, Improving Customer Service (Washington,D.C.: U.S. GPO, September 1993).

3. General Accounting Office (GAO), Tax andAdministration 1989 Test Call Survey, GAO/GGD-90-36 (January 4, 1990) and Tax and AdministrationIRS Budget Request of FY94, GAO/T-GGD-93-23(April 28, 1993).

4. Improving Customer Service.

5. Department of Health and Human Services,Report of the Inspector General, on the Social SecurityAdministration's services, 1993.

6. Improving Customer Service.

7. Ibid.

8. National Performance Review AccompanyingReport, Streamlining Management Control(Washington, D.C.: U.S. GPO, September 1993).

9. National Performance Review AccompanyingReport, Department of Transportation (Washington,D.C.: U.S. GPO, September 1993).

10. National Performance Review AccompanyingReport, Department of Labor (Washington, D.C.:U.S. GPO, September 1993).

11. Ibid

12. U.S. General Accounting Office, testimony ofFranklin Frazier, Tax Administration: U.S. andForeign Strategies for Preparing Noncollege Youth forEmployment, GAO/T-HRD-90-31 (June 14, 1990).

13. National Performance Accompanying Reports,Health and Human S vices; and Strengthening thePartnership in Intergovernmental Service Delivery(Washington, D.C.: U.S. GPO, September 1993).

14. National Commission on Children, BeyondRhetoric, A New American Agenda for Children andFamilies (Washington D.C., 1991), p. 314.

15. Health and Human Services.

16. Sylvester, Kathleen, "New Strategies to SaveChildren in Trouble," Governing (May 1990), pp.32-37.

17. National Performance Review AccompanyingReport, Office of Science and Technology Policy andthe National Science Foundation (Washington, D.C.:U.S. GPO, September 1993).

18. Executive Office of the President, Office ofManagement and Budget, A Vision of Change forAmerica (Washington D.C.: U.S. GPO, February1993), p. 52.

19. National Performance Review AccompanyingReport, Department of Commerce (Washington,D.C.: U.S. GPO, September 1993).

20. Nothdurft, William, It's Time the U.S. GotSerious About Exporting (St. Paul, MN: TheNorthwest Area Foundation), pp. 28-31.

21. National Performance Review AccompanyingReport, Reinventing Environmental Management(Washington, D.C.: U.S. GPO, September 1993).

22. Ibid.

23. Department of Commerce.

24. Transforming Organizational Structures.

25. National Performance Review AccompanyingReport, Reinventing Support Services (Washington,D.C.: U.S. GPO, September 1993).

26. Ibid.

27. National Performance Review AccompanyingReport, Improving Financial Management(Washington, D.C.: U.S. GPO, September 1993).

28. Department of Commerce.

29. National Performance Review AccompanyingReport, Department of Defense (Washington, D.C.:U.S. GPO, September 1993).

30. Department of Labor.

31. Improving Financial Management.

32. Cummins, Keren Ware, National TechnicalInformation Service, Reinventing Government's Role:The Turnaround of the National ThchnicalInformation Service (Washington, D.C.: U.S. GPO,January 27, 1993).

kj.134

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

33. Department of Transportation.

34. Competitiveness Policy Council, ACompetitiveness Strategy for America (March 1993),p. 274. The Competitiveness Policy Council is anindependent advisory committee established byCongress in 1988.

35. Reinventing Support Services.

36. National Performance Review AccompanyingReport, Housing and Urban Development(Washington, D.C.: U.S. GPO, September 1993).

37. Department of Labor.

38. National Performance Review AccompanyingReport, Environmental Protection Agency(Washington, D.C.: U.S. GPO, September 1993).

39. Osborne, David, and Ted Gaebler, ReinventingGovernment: How the Entrepreneurial Spirit isTransforming the Public Sector (Reading, MA:Addison-Wesley Publishing Company, Inc., 1992),pp. 304-5.

40. Housing and Urban Development

CHAPTER 3.- EMPOWERING EMPLOYEES

TO GET RESULTS

1. Budget of the U.S. Government FY 1994(Washington, D.C., 1993), p. 40.

2. National Academy of Public Administration(NAPA), Revitalizing Federal Management: Managersand Their Overburdened Systems (Washington, D.C.:NAPA 1983).

3. "Department of Transportation Town HallMeeting with Vice President Al Gore," unpublishedtranscript, May 11, 1993, pp. 11-12.

4. Office of Personnel Management (OPM), Officeof Systems Innovation and Simplification, Survey ofFederal Employees, publication OS-92-06.(Washington, D.C.: OPM, May 1992).

5. Telephone interview with the Social SecurityAdministration, Atlanta office, on April 1, 1993.

6. Obmascik, Mark, "Light-Bulb Change a 43-Person Task," Denver Post (November 1, 1992),p. Al.

7. U.S. General Accounting Office (GAO), ProgramPerformance Measures: Federal Collection and Use ofPerformance Data, GAO/GGD-92-65 (WashingtonD.C.: U.S. Government Printing Office (GPO),May 1992).

8. National Performance Review AccompanyingReport, Transforming Organizational Structures(Washington, D.C.. U.S. GPO, September 1993).

9. Office of Personnel Management (OPM), CentralPersonnel Data File, unpublishd analysis, March1993.

10. Peters, Tom, Thriving on Chaos: Handbook for aManagement Revolution (New Yolic: Harper & Row,1989).

11. National Performance Review, ReinventingGovernment Summit Proceedings (Washington,D.C.: U.S. GPO, June 25, 1993), p. 87.

12. OPM, Central Personnel Data File, unpublishedanalysis, March 1993. Calculations by RobertKnisely, National Performance Review.

13. Transforming Organizational Structures.

14. Ibid.

15. Ibid.

16. National Performance Review, Town HallMeeting Department of Transportation,unpublished transcript (Washington, D.C., May 11,1993).

17. National Performance Review AccompanyingReport, Department of Veterans Affairs (Washington,D.C.: U.S. GPO, September 1993).

18. National Performance Review AccompanyingReport, Housing and Urban Development(Washington, D.C.: U.S. GPO, September 1993).

19. GAO, Program Performance Measures.

20. 1992 Commission on the Future of the South,Heading Home: New Directions Toward SouthernProgress (Research Triangle Park, NC: SouthernGrowth Policies Board, September 1993).

21. National Performance Review AccompanyingReport, Mission Driven, Results-Oriented Budgeting(Washington, D.C.: U.S. GPO, September 1993).

22. Ibid.

23. National Performance Review AccompanyingReport, Creating Quality Leadership and Management(Washington, D.C.: U.S. GPO, September 1993).

24. Osborne, David, and Ted Gaebler, ReinventingGovernment: How the Entrepreneurial Spirit isTransforming the Public Sector (Reading, MA:Addison-Wesley Publishing Company, Inc., 1992),p. 144.

25. Ibid., p. 145.

26. Creating Quality Leadership and Management.

27. National Commission on the Public Service(Volcker Commission), Leadership for America:Rebuilding the Public Service (Washington D.C.,1989).

28. Ibid.

29. National Performance Review, Department ofJustice Town Hall Meeting, unpublished transcript,Washington, D.C., July 14, 1993.

30. National Performance Review, Executive Office ofthe President (Washington, D.C.: U.S. GPO,September 1993).

133

31. National Performance Review, ReinventingGovernment Summit.

32. National Performance Review AccompanyingReport, Reinventing Human Resource Management(Washington, D.C.: U.S. GPO, September 1993).

33. National Performance Review AccompanyingReport, Reengineering Through InformationTechnology (Washington, D.C.: U.S. GPO,September 1993).

34. Kendrick, James E., "IT Management FocusMust Extend Beyond Tip of the Iceberg," FederalComputer Week (September 21, 1992), p. 17.

35. Reinventing Human Resource Management.

36. OPM, 1969-1991 Trends of the Federal CivilianWorkforce in Accounting and Budget Occupations,Special Report. Figures represent 1991 employmentin occupation series 501, 503, 505, 510-11, 525,30, 540, 544-45, 560-61, 593, 599, and half the

total number in 343.

37. National Performance Review AccompanyingReport, Improving Financial Management(Washington, D.C.: Government Printing Office,September 1993).

38. To date, Congress has appropriated $130 billionto cover the savings and loan bailout. GeneralAccounting Office estimates project the cost willreach $500 billion over the next few decades,including interest costs.

39. Improving Financial Management.

40. Ibid.

41. Ibid.

42. Barr, Stephen, "See IRS's Books. Color ThemRed," Washington Post (August 18, 1993), p. A19.43. Improving Financial Management.

44. Not all federal agencies will have auditedfinancial statements completed by 1997, but the1997 consolidated financial statements will footnoteany discrepancies. See Improving FinancialManagement.

45. Telephone interview with Rick Weidman,Administrator, New York State Veterans Program(New York Department of Labor), August 20, 1993.

46. Reengineering Through Information Technology.

47. Galen, Michele, Ann Therese Palmer, AliceCuneo, and Mark Maremont, "Work & Family,"Business Week, (June 28, 1993), p. 82.

48. Reinventing Human Resource Management.

49. OPM, A Study of the Work and Family Needs ofthe Federal Workforce (Washington, D.C., April1992), pp. 5, 6, 20, 26.

50. OPM, Report to Congress on the Federal EmployeesLeave Sharing Act of 1988 (Washington, D.C., April30, 1993), p. 30; and A Study of the Work andFamily Needs, p. 96.

51. Improving Financial Management.

52. Interview with Lani Horowitz, Administrationfor Child,.en and Families, Department of Healthand Human Services, August 20, 1993.

53. Interview with Tom Komarek, AssistantSecretary for Administration and Management,Department of Labor, August 20, 1993.

54. Reinventing Human Resource Management.

55. U.S. Merit Systems Protection Board, AQuestion of Equity: Women and the Glass Ceiling inFederal Government (Washington D.C., October1992), p. 37.

56. GAO, Quality Management in Government,GAO/GGD-93-9-BR (Washington D.C.: GAO,October, 1992).

57. GAO, Federal Labor Relations:A Program in Needof Reform, GGD-91-101(Washington, D.C.: GAO,July 1991), p. 2.

58. Reinventing Human Resource Management.

59. Ibid.

60. GAO, Federal Labor Re/ tions, p. 76.

6L GAO, Government Management !was,GAO/TR-93-3 (Washington, D.C.: GAO,December 1992).

62. Creating Quality Leadership and Management.

63. Reinventing Government Summit.

64. Creating Quality Leadership and Management.

65. Ibid.

66. Ibid and Reinventing Human Resource Management.

67. Interview with Robert DeGrasse, SpecialAssistant to Hazel O'Leary, Secretary of Energy,August 22, 1993.

68. Reinventing Government Summit.

CHAPTER 4CUTTING BACK TO BASICS1. Letter and personal communications with BruceBair, Schoenchen, KS, May 24, 1993.

2. La Franiere, Sharon, "Hair That Defies Cutting;Subsidy Program Seems a Lock in Budget,"Washington Post, April 6, 1993, p. Al.

3. Gladwell, Malcolm, "Epicurean Niche BarelySurvives a Boiling Dispute," Washington Post, August20, 1993, p. A21.

4. National Performance Review AccompanyingReport, Mission-Driven, Results-Oriented Budgeting(Washington, D.C.: U.S. Government PrintingOffice [GPO], September 1993).

5. National Performance Review AccompanyingReport, Transforming Organizational Structures(Washington, D.C.: U.S. GPO, September 1993).

136

ENDNOTES

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

130

6. National Performance Review AccompanyingReport, Department ofAgriculture (Washington,D.C.: U.S. GPO, September 1993).

7. U.S. General Accounting Office (GAO), U.S.Department ofAgriculture: Farm Agencies' FieldStructure Needs Major Overhau4 RCED-91-09(Washington, D.C.: January 1991), p. 10.

8. National Performance Review AccompanyingReport, Housing and Urban Development(Washington, D.C.: U.S. GPO, September 1993).

9. Ibid.

10. National Performance Review AccompanyingReport, Department of Energy (Washington, D.C.:September 1993).

11. National Performance Review AccompanyingReport, Department of Defense (Washington, D.C.:U.S. GPO, September 1993).

12. National Performance Review AccompanyingReport, Small Business Administration (Washington,D.C.: U.S. GPO, September 1993).

13. National Performance Review AccompanyingReport, U.S. Agency for International Development,(Washington, D.C.: U.S. GPO, September 1993).

14. National Performance Review AccompanyingReport, Department of State (Washington, D.C.:U.S. GPO, September 1993).

15. Ibid.

16. Ibid.

17. National Performance Review AccompanyingReport, Department of Energy (Washington, D.C.:U.S. GPO, September 1993).

18. National Performance Review AccompanyingReport, Department of Transportation (Washington,D.C.: U.S. GPO, September 1993).

19. Department of Defense.

20. National Performance Review, Accompanying_Report, Reinventing Federal Procurement (Washington,D.C.: U.S. GPO. September 1993).

21. National Performance Review AccompanyingReport, Intelligence Community (Washington, D.C.:U.S. GPO, September 1993).

22. National Performance Review AccompanyingReport, Department of Labor (Washington, D.C.:U.S. GPO, September 1993).

23. GAO, Dislocated Workers: Comparison ofAssistance Programs, Briefing Report toCongressional Requesters, GAO/FIRD-92-153BR(Washington D.C., September 1992), p. 2.

24. Department ofAgriculture and Department ofLabor.

25. National Performance Review AccompanyingReport, Department of Education (Washington,D.C.: U.S. GPO, September 1993).

137

26. National Performance Review AccompanyingReport, Health and Human Services (Washington,D.C.: U.S. GPO, September 1993).

27. Ibid.

28. Department ofState.

29. National Performance Review AccompanyingReport, Department of Commerce (Washington,D.C.: U.S. GPO, September 1993).

30. Health and Human Services.

31. Ibid.

32. National Performance Review AccompanyingReport, Department ofJustice (Washington, D.C.:U.S. GPO, September 1993).

33. Department ofAgriculture.

34. U.S. Department of Agriculture, Office of theInspector General, International Affairs, CommodityPrograms, and Science and Education Division,Report on Agricultural Stabilization and ConservationService (Washington D.C.: Department ofAgriculture, May 1993), p. 11.

35. Department of Transportation.

36. U.S. General Accounting Office, HighwayDemonstration Projects: Improved Selection andFunding Controls Are Needed (Washington, DC:GAO, 1991), pp. 1-6.

37. Department of Transportation.

38. National Performance Review AccompanyingReport, Department of the Interior (Washington,D.C.: U.S. GPO, September 1993).

39. Ibid.

40. Health and Human Services.

41. National Performance Review AccompanyingReport, Department of Veterans Affairs (Washington,D.C.: U.S. GPO, September 1993).

42. Department of Defense.

43. Department of Energy.

44. Office of Management and Budget (OMB), FactSheet on Reform of Federal Power MarketingAdministration Debt Repayment Practices(Washington D.C., 1990), p. 3.

45. OMB, Status Report on Credit Management andDebt Collection, Report to Congress (WashingtonD.C., 1993), p 1.46. National Performance Review AccompanyingReport, Improving Financial Management(Washington, D.C.: U.S. GPO, September 1993).

47. Department ofJustice.

48. Department of the Interior.

49. Housing and Urban Development.

50. Department of Labor.

51. Ibid.

, ,

52. Health and Human Services.

53. GAO, SSA's Processing of Continuing DisabilityReviews, testimony of Jane L. Ross before the HouseSelect Committee on Aging, GAO/T-HRD-93-3(March 9, 1993), p. 3.

54. Health and Human Services.

55. Ibid.

56. GAO, Federal Benefit Payments: Agencies NeedDeath Information from Social Security to AvoidErroneous Payments, GAO/HRD-9-3 (WashingtonD.C., February 1991).

57. National Performance Review AccompanyingReports: Department of the Treasury and theResolution Trust Corporatim, Department of theInterior; Improving Financial Management; and,Department of Defense (Washington, D.C.: U.S.GPO, September 1993).

58. Improving Financial Management.

59. Ibid.

60. Department of State.

61. Department of the Treasury.

62. National Performance Review AccompanyingReport, Reengineering Through InformationTechnology (Washington, D.C.: U.S. GPO,September 1993).

63. Ibid.

64. Department of Labor.

65. Ibid.

66. Health and Human Services.

67. Department of the Interior.

68 Department of the Treasury.

69. Ibid.

70. National Performance Review AccompanyingReport, Rethinking Program Design (Washington,D.C.: Government Printing Office, September1993).

71. Moe, Ronald C., "Reorganizing the ExecutiveBranch," in The Twentieth Century: LandmarkCommissions, 92-293 GOV (Washington, D.C.:Library of Congress, Congressional Research Service,March 19, 1992), p. 50.

72. Pritzker, David M., "Working Together forBetter Regulations," vol. 5, no. 2, Natural Resourcesand the Environment (Fall 1990).

73. Department of Labor and Health and HumanServices, and National Performance ReviewAccompanying Report, Improving Regulatory Systems(Washington, D.C.: U.S. GPO, September 1993).

74. Department of Labor and Improving RegulatorySystems.

75. Improving Regulatory Systems.

138

ENDNOTES

131

APPENDIX A

NATIONAL PERFORMANCE REVIEWMAJOR RECOMMENDATIONSBY AGENCY

139

134

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Recommendation

Fiscal Impact, 1994-99*(Millions of Dollars)

Change in Change InSpending Revenues

AGENCY FOR INTERNATIONAL DEVELOPMENT

AIDO1 Redefine and Focus AID's Mission and Priorities the cbeWith the end of the Cold War, AID must rethink how it will operate.NPR recommends steps to plan for this new mission and proposes newauthorizing legislation to define its post-Cold War mission and priorities.

AIDO2 Reduce Funding, Spending and Reporting Micromanagement cbe theEliminate AID's outdated or unduly burdensome reporting requirements andreduce legislative earmarks to provide greater operating flexibility.

AIDO3 Overhaul the AID Personnel System na naRecommendations include changes in AID's personnel system to integrateits multiple systems and review benefits.

AIDO4 Manage AID Employees and Consultants as a Unified Work Force the cbeLift some current personnel restrictions and give managers authority to managestaff resources more efficiently and effectively.

AIDO5 Establish an AID Innovation Capital Fund na naCreate a capital investment fund to improve information and financialmanagement systems and customer service.

AIDO6 Reengineer Management of AID Projects and Programs cbe cbeAID should use pilot programs and new approaches to emphasize flexibility,innovation, customer service and program results.

ATI)07 Consolidate or Close AID Overseas Missions cbe theAID should regionalize missions and staff services overseas and dosenonessential missions. It should establish "graduation" criteria forcountries receiving U.S. assistance.

DEPARTMENT OF AGRICULTURE

USDA01 End the Wool and Mohair Subsidy -$923.0 $0.0The subsidy is no longer needed since wool is no longer a strategic commodity.

USDA02 Eliminate Federal Support for Honey -15.0 0.0Eliminate the honey subsidy because the program does not serve theintended purpose of ensuring the availability of honeybees for crop pollination.

USDA03 Reorganize the Department of Agriculture to Better Accomplish Its Mission, -1,673.6 0.0Streamline Its Field Structure and Improve Service to Its CustomersUSDA should streamline its field operations to eliminate unnecessary offices,reduce costs and better serve Farmers.

USDA04 Implement a Consolidated Farm Management Plan cbe cbeThe farm management plan proposed by Secretary Espy provides anopportunity to simplify regulations for farm management and is a good way toconsolidate competing requirements into a single plan for each farm.

USDA05 Administer the Employment and Training Requirements for -1,041.1** 0.0Food Stamp Recipients More Effectively and EfficientlyRedirect funds from an ineffective training program for food stamp recipientsand allow them to participate in programs with proven results.

USDA06 Encourage Better Food Package Management Practices and Facilitate Multi-State -500.0 0.0Contracts for Infant Food and Formula Cost Containment in the WIC ProgramThe recommendation encourages increased competition among infant formulavendors and manufacturers of other items in the UDSDA's Special Supplemental FoodProgram for Women, Infants and Children (WIC). Savings accrue to program.

Fiscal estimates were made for 1994 only where action could impact spending in that year. Most estimates cover 1995-99.Estimates shown are for cumulative budget authority changes. Negative numbers indicate reduced spending.

The NPR recommends that these savings be redirected to alternative uses. Savings totals exclude these amounts.

Savings will be invested in the program to serve additional customers.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

140

Recommendation

Fiscal impact, 1994-99(Millions of Dollars)

Change in Change InSpending Receipts

USDA07 Deliver Food Stamp Benefits Via Electronic Benefits Transfer to Improve Service the theto Customers While Remaining Cost EffectiveUse electronic technology to distribute food stamp benefits, therebyimproving service and reducing the need for current paper stamps.

DEPARTMENT OF COMMERCE

DOC:01 Reinvent Federal Economic and Regional Development Efforts na naImprove coordination of federal economic development efforts with the goalsof eliminating duplication and better directing federal resources to improvebusiness conditions.

D00O2 Provide Better Coordination to Refocus and Leverage Federal Export Promotion na naThis recommendation is designed to improve federal services to U.S. businessescompeting in the world export markets.

D00O3 Reform the Federal Export Control System for Commercial Goods na naTo help ensure leading U.S. industries are competitive in the global marketplace,changes should be made in the export control system.

D0004 Strengthen the Tourism Policy Council na naRevitalize the Tourism Policy Council and give it greater authority to coordinatefederal tourism promotion efforts.

DOCO5 Create Public / Private Competition for the NOAA Fleet cbe theA pilot program is recommended to open the National Oceanic and AtmosphericAdministration fleet to public and private competition to bolster the aging fleet.

DOC% Improve Maxine Fisheries Management 0.0 375.0To help protect fishing resources and provide new income to the government, NOAAshould collaborate with Congress and fishing industry representatives to establishappropriate user fees to help offset management costs for national fishery zones.

D0007 Provide EDA Public Works Loan Guarantees for Infrastructure Assistance na naThis recommendation would provide the Economic DevelopmentAdministration with authority to use part of its funding as a reserve for loanguarantees for various public economic development projects.

D0008 Establish a Manufacturing Technology Data Bank na naTo help U.S. manufacturing firms increase their technical capabilities, Commerceshould create a new database to provide technical information andconta,

D0009 Expand the Electronic Availability of Census Data na naTo increase access to and use of census data, the Census Bureau shouldcreate a computerized census information center.

DOCIO Amend the Omnibus Trade and Competitiveness Act to Increase the Data na naQuality of the National Trade Data BankThis recommendation outlines improvements needed in the quality and quantityof data in this business-oriented data bank.

DOC11 Eliminate Legislative Barriers to the Exchange of Business Data Among na naFederal Statistical AgenciesEliminate legislative barriers to the exchange of business data among federalagencies (the Census Bureau, Bureau of Labor Statistics, and Bureau ofEconomic Analysis) to reduce the reporting burden on American business.

DOC12 Establish a Single Civilian Operational Environmental Polar Satellite Program -300.0 0.0To reduce duplication and save taxpayers a billion dollars over the next decade,various current and proposed polar satellite programs should be consolidatedunder NOAA.

DOC13 Use Sampling to Minimize Cost of the Decennial Census the cbeUse sampling rather than more costly methods of counting nonrespondents tonext deciennial census. (Savings will occur but are beyond the time frame of this analysis.)

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

: I,141

136

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Recommendation

Fiscal Impact, 1994-99(Milliont of Dollars)

Change in . Change InSpending Receipts

DOC14 Build a Business and Economic Information Node for the Information Highway cbe cbeTo assist in the distribution of government information to private citizens,Commerce should build a business and economic information node to the"information highway."

DOC15 Increase Access to Capital for MinorityBusinesses na naCommerce and SBA should provide the President with recommendations toimprove SBA and Minority Business Development Administration programs.

DEPARTMENT OF DEFENSE

The Bottom-Up ReviewThis is a general summary of the Bottom-Up Review of DOD's force structureand requirements and its part in the National Performance Review effort.A total of $79 billion in savings through 1997 are already incorporated into thePresident's 1994 budget. These savingsare not included in the NPR analysis.Acquisition ReformThe DOD acquisition system is large and extraordinarily complex. It needsto enable DOD to take advantage of the technological advances and efficientprocurement practices of the commercial marketplace.

DODO1 Rewrite Policy Directives to Include Better Guidance and Fewer ProceduresDOD should clarify policy directives and procedures to reduce administrativeburden and unnecessary regulatory controls.

DODO2 Establish a Unified Budget for theDepartment of DefenseGive commanders greater flexibility to set priorities, solve funding problems,and resolve unplanned requirements at the lowest appropriate operating level.

DODO3 Purchase Best Value Common Suppliesand ServicesAllow managers and commanders to purchase the best value common suppliesand services from public, private, or nonprofit sources.

DODO4 Outsource Non-core Department of Defense FunctionsBy contracting out non-core functions (from towing services to certain informationtechnology functions), DOD will be better able to focus on its core responsibilities.

DODOS Create Incentives for the Department of Defense to Generate RevenuesThis recommendation proposes giving ers and commanders the ability togenerate income at the installation leveln172owing the Corps of Engineers torecover its costs for processing certain commerical applicationsand by establishinggoals for solid waste reduction and recycling.

DOD06 Establish and Promote a Productivity-Enhancing Capital Investment FundDOD should be authorized to expand its capital investment fund and manage itsoperations in a more business-like manner.

DODO7 Create a Healthy and Safe Environment for Department of Defense ActivitiesTo create a safe environment, DOD must take action in the areas of clean-up ofhazardous wastes, use of environmental technology, and pollution prevention.

DODO8 Establish a Defense Quality WorkplaceThis is an internal department recommendation to encourage the use of qualitymanagement concepts at all levels of DOD.

DODO9 Maximize the Efficiency of DOD Health Care OperationsUse emerging technology to upgrade care at DOD health care facilities and reducecosts to train health care professionals.

DOD 10 Give Department of Defense Installation Commanders More Authority andResponsibility Over Installation ManagementBy giving DOD installation commanders more authority over installationmanagement, DOD will be better able to manage its resources, provide servicesto its employees and move toward more entrepreneurial management.

cbe

cbc

cbe

cbc

-500.0

-110.3

na

cbc

-350.0

cbe

cbc = cannot be estimated (due to data limitations or uncertainties about implementation time lines).race= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

142

cbe

cbc

cbc

cbe

60.0

0.0

na

cbe

0.0

cbc

Recommendation

APPENDIX A

Fiscal impact, 1994-99(Millions of Dollars)

Change in Change InSpending ReceiptsDOD11 Reduce National Guard and ReserveCosts -900.0 0.0This recommendation makes two changes in the current costs for reservists:

(I) to limit compensation of federal employees on reserve duty to the greater ofcivilian or reserve compensation or to allow the reservist to take annual leave; and(2) to limit the basic allowance forquarters only to reservists who actually bringtheir dependents on short-term duty assignments when quarters are not providedto dependents.

DOD12 Streamline and Reorganize the US. Army Corps of Engineers -68.0 0.0NPR recommends implementing a 1992 reorganization proposal that wouldreduce the number of division office:, from 11 to six and would allow the Corpsto work with OMB and other agencies to make maximum use of Corps'engineering and technical capabilities.

DEPARTMENT OF EDUCATIONED01 Redesign Chapter 1 of Elementary and Secondary Education Act 43,000.0* $0.0Recommendations focus education funds on the neediest students and simplify

requirements on schools receiving federal education aid. Existing funds are redirected.ED02 Reduce the Number of Programs the Department of Education Administers -515.0* 0.0Eliminate or consolidate more than 40 existing education grant programs andfree up funds for use in other educational programs.ED03 Consolidate the Eisenhower Math andScience Education Program with Chapter 2 na naNPR proposes combining this teacher training program, which is largely consumedwith short-term training, with other ED programs to create a new program with a

more coherent national focus on teacher training and professional development.ED04 Consolidate National Security Education Act Programs na naThe NSEA trust fund, administered by the Department of Defense, should beconsolidated with the Center for International Education in ED to strengthenforeign language study and eliminateduplication of effort.EDO5 Streamline and Improve the Department of Education's Grants Process cbe cbeStatutory restrictions on the department's rulemaking process should be removed,

flexibility added to certain procedures, and unnecessary requirements eliminated /to shorten the grant award process.ED06 Provide Incentives for the Department of Education's Debt Collection Service na naThis recommendation would allow ED to use a portion ofrevenues collected

from defaulted student loans to pay for collections costs, thereby providingan incentive for increased collections.

ED07 Simplify and Strengthen Institutional Eligibility and Certification for -175.0 0.0Participation in Federal Student AMNPR recommends developing ways of measuring default indicators, creating profilesof high-risk institutions, and removing elgibility of institutions to participate infederal financial aid programs once the schools have become ineligible to receivefederal student loan funds.

ED08 Create a Single Point of Contact for Program and Grant Information 1.8 0.0ED should create an electronic system that can be used by students, parents,researchers and administrators to learn about department programs, fundingopportunities, best practices and other information.

ED09 Improve Employee Development Opportunities in Department ofEducation na naED should create a full spectrum of activities which can contribute to careerdevelopment, including conducting a departmentwide assessment of training anddevelopment needs.

* The NPR recommends that these savings be redirected to alternative uses. Savings totals exclude these amounts.cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

aaa

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Recommendation

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change InSpending ReceiptsED 10 Eliminate the Grantbac.k Statutory Provision of the

0.0* 0.0General Education Provisions ActNPR recommends repealing this provision which permits the department to returnto a grantee a percentage of funds recovered from the grantee as a result of an audit.ED11 Build a Professional, Mission-Driven Structure for Research na naNPR recommends establishing a research advisory board, consolidating andtargeting research and development efforts, and establishing an office to translate research findingsinto education reform assistance.

ED12 Develop a Strategy for Technical Assistance and Information Dissemination na naED should develop a strategy for its $290 million technicalassistance effortsdesigned to promote the National Goals 2000 themes.

DEPARTMENT OF ENERGY

DOE01 Improve Environmental Contract Managementcbe cbeNPR proposes improvements in DOE environmental clean-up contracts toachieve efficiency.

DOE02 Incorporate Land Use Planning in Cleanupcbe cbeNPR recommends that DOE incorporate land use planning into the nuclearfacilities dean-up process.

DOE03 Make Field Facility Contracts Outcome-Oriented-570.0 0.0This recommendation would modify the current DOE contract process atfield facilities to make the contracts more outcome-oriented to improve efficiencyand contractor performance.

DOE04 Increase Electrical Power Revenues and StudyRates0.0NPR proposes increasing federal income by allowing the Power MarketingAdministrations to recover a larger portion of their operating costs throughrate increases or by changing the financing

of Bonneville Power Administration.DOE05 Strengthen the Federal Energy Management Programna naNPR recommends a number of improvements to this program, designed tobetter management of federal energy use.

DOE06 Redirect Energy Laboratories to Post-Cold War Priorities -2,150.0 0.0This recommendation provides guidance for use of the DOE energy labs,focusing on defining new missions, consolidating or eliminating unneededfacilities, and making their services of greater benefit in the post-Cold War era.DOE07 Save Costs Through Private Power Cogeneration-112.0 0.0This would allow the private sector to cogenerate power at DOE labs as a meansof saving money. DOD has similar authority at this time.

DOE08 Support the Sale ofthe Alaska Power AdministrationThe federal government should divest its interests in the Alaska Power Administration.

3,601.0

ENVIRONMENTAL PROTECTION AGENCY

-20.5 -52.5

EPA01 Improve Environmental Protection Through Increased flexibility for Local na naGovernmentEPA should amend the regulations it determines are most troublesome for localgovernments pursuant to the Regulatory Flexibility Act of 1980. The goal is toprovide alternative, flexible approaches to meeting environmental mandates.EPA02 Streamline EPA's Permit Program

-22.5 0.0Streamlining efforts include establishing a permit clearinghouse to serve as a singlepoint of contact and piloting a cross-program permit tracking system.

This recommendation saves an estimated $18.5 million in expenditures but makes no change in budget authority.cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na= not applicablerecommendationimproves efficiency or redirects resources but does not directly reduce budget authority.

1 4 46

Recommendation

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change In Change InSpending ReceiptsEPA03 Shift EPA': Emphasis Toward Pollution Prevention and Away from Pollution Control cbeEPA needs to emphasize pollution prevention by implementing an effective

pollution prevention strategy that includes amending regulations and motivatingthe private sector to invest in cleaner, less polluting technologies and practices.

EPA04 Promote the Use of Economic and Market-Based Approaches to Reduce Water cbePollutionEPA should work with Congress to propose language amending the Clean WaterAct to explicitly encourage market-based approaches to reduce water pollution.EPA should also identifywastewater discharge fees that could be included in the Clean WaterAct reauthorization.

EPA05 Increase Private Sector Partnerships to Accelerate Development of Innovative naTechnologiesNPR recommends that EPA develop an action plan with specific milestones forimproving the regulatory andstatutory climate for innovative technologies.

EPA06 Stop the Export of Banned PesticidesnaEPA should work with Congress to develop legislation to stop the exportation of

banned pesticides from the U.S. by June 1994.IEPA07 Establish Measurable Goals, Performance Standards and Strategic Planning nawithin EPA

EPA should draft measurable environmental goals for the range of environmentalproblems the U.S. faces. The agency should also draft internal goals to providedirection for assessing and redirecting existing EPA strategies.

EPA08 Reform EPA's Contract Management Process cbeNPR recommends reforms in EPA's contract management process by implementingperformance standards and by maximizing competition in the contractingprocess.

EPA09 Establish a Blueprint for Environmental Justice Through EPA's Operationst12.EPA should develop a blueprint ofactions that will incorporate environmental

justice consideration into all aspects of EPA operations.EPAIO Promote Quality Science for Quality Decisions naImprovements include establishing guidelines for professional development ofEPA'sscientific and technical staff and expanding the use of peer-review andqualityassurance procedures.

EPA11 Reorganize EPA's Office of EnforcementEPA should initiate a reorganization of its headquarter's enforcement organizationby October 1, 1993.

EXECUTIVE OFFICE OF THE PRESIDENTNOTE: White House Office and Office of the Vice President

The White House Office and the Office of the Vice President are regularly"reinvented" with each change ofadministration. This analysis focuses on theother portions of the Executive Office of the President.

EOP01 Delegate Routine Paperwork Review to the Agencies and Redeploy OMB' cbe cbeResources More EffectivelyThese recommendations outline improvements to streamline the government'spaperwork review process and reduce unnecessary burdens on agencies.

EOP02 Modify the OMB Circular Systemna naOMB should reinvigorate the process for the review, updating, and consolidation

of management circulars. It should also develop uniform processes for developingcirculars and for obtaining input during their development.EOP03 Strengthen the Office of U.S. Trade Representative's Coordination with State 0.5 0.0and Local Governments

The Trade Representative's Office should examine the trade policy needs of stateand local governments and work with them on relevant issues.

-10.5

the

the

na

na

na

the

na

na

0.0

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

1451 '! 134

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Recommendation

Fiscal Impact,1994-99(Millions of Dollars)

Change In Change InSpending ReceiptsEOPO4 Improve Federal AdvisoryCommittee Management

-1.4 0.0Discontinuing the "anti pass the hat" language annually inserted intoappropriations acts would allow appropriate pooling of executive resources forcertain multi-agency projects.

EOP05 Reinvent OMB's Management Mission0.1 0.0NPR recommends a series ofactions by OMB to redirect resources to providebetter management information for Presidential decision making.

EOP06 Improve OMB's Relationship with Other Agenciesna naThis recommendation outlines methods by which OMB can work more effectivelywith agencies and with states.

EOP07 Strengthen the Office of the U.S. Trade Representative's TradePolicy na naCoordination ProcessThese recommendations outline ways to improve the interagency trade policycoordination process.

EOP08 Strengthen the Office of the US. Trade Representative's Negotiation Process cbe cbeThe Office of the USTR should implement various techniques for upgrading thenegotiating skills of its employees and the analysis of the negotiation process itself.EOP09 Establish a Customer Service Bureau in the EOPna naUsing available resources, EOP management should establish a small, one-stopcustomer service bureau within the EOP.

EOPIO Conduct Qualitative Self-Reviews of Critical Administrative Processes the cbeThe Assistant to the President for Management and Administration should establisha formal program of ongoing, internal quality reviews of administrative processes inthe EOP to save money and improve service.EOP11 Improve the Presidential Transition Process

the thePast difficulties with the Presidential transition should be corrected by amendmentof the Presidential Transition Act and related actions.EOP12 Improve Administrative Processes

na naThis recommendation outlines a series of steps to improve internal administrativeprocesses within the EOP, including mailprocessing, paperwork flow, and supplymanagement.

FEDERAL EMERGENCY MANAGEMENT AGENCYFEMA01 Shift Emphasis to Preparing for and Responding to the Consequences of na naAll Disasters

FEMA's early focus was on preparedness for nuclear war. The currear world situationand recent natural disasters highlight the need for FEMA to continue to shift itsresources to respond to all hazards.

na naFEMA02 Develop a More Anticipatory and Customer-Driven Response to CatastrophicDisasters

These recommendations should make FEMA respond faster and more effectivelyto catastrophic disasters.

FEMA03 Create Results-Oriented Incentives to Reduce the Costs of a Disaster cbe cbcThe Midwest floods, Hurricanes Hugo and Andrew and the Lorna Prieta Earthquakeall illustrate the enormous costs of disaster to society. These recommendations willmove toward reducing that cost.

FEMA04 Develop A Skilled Management Team Among Political Appointees and Career na naStaffLeadership has been the weak link in FEMA's mission as the federal government'semergency management coordinator. These recommendations strive to improveFEMA leadership to successfully implement its new, all-hazards mission.

cbc = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na= not applicablerecommendationimproves efficiency or redirects resources but does not directly reduce budget authority.

Recommendation

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change In Change inSpending Receipts

DEPARTMENT OF HEALTH AND HUMAN SERVICES

NOTE: Treatment of Health Care and Welfare Reform Issues by the NPRTwo primary concerns of the Department of Health and Human Services are thedelivery of health and welfare services to individuals. Since the Administration hasspecial, ongoing efforts dealing with these areas, they are not covered by theNational Performance Review.

HHSOI Promote Effective, Integrated Service Delivery for Customers by Increasing cbe theCollaborative EffortsThese recommendations outline a number of steps needed to better integrate anddeliver social services to communities and families.

HHS02 Reengineer the HHS Process for Issuing Regulations the cbeHHS should improve the timeliness and quality of regulations issued and shouldinvolve stakeholders in the development of regulations.

HHS03 Develop a National, Uniform Inspection System to Ensure a Safe Food Supply cbe theResponsibility for food safety should be consolidated into a single agency, and policiesand inspection systems should be implemented on an objective, scientific basis.

HHSO4 Reconfigure Support for Health Professions Education na naExisting programs should be consolidated and/or eliminated.

HHSOS Restructure the Management of Railroad Industry Benefit Programs the cbeRailroad Retirement Board functions should be integrated into existing programsadministered by federal, state, and private sector service providers.

HFIS06 Improve Social Security Administration Disability Claims Processing to -4,0l0.0* 0.0Better Serve People with Disabilities and Safeguard Trust Fund AssetsSSA should apply resources and management tools needed to reduce backlogs andto avoid paying benefits to individuals who are no longer disabled.

HHS07 Protect Social Security, Disability and Medicare Trust Fund Assets by Removing na naBarriers to Funding Productive Oversight ActivitiesHHS should aggressively pursue options to assure that adequate investments aremade to avoid unnecessary payments from trust funds.

HHS08 Coordinate Collection and Dissemination of Social Security Administration cbe cbeDeath Information to Protect Federal Program AssetsSSA's clearinghouse for death information and "best practices"can be used by dozensof federal and state agencies to reduce federal program outlays.

HHS09 Take More Aggressive Actions to Collect Outstanding Debts Owed to the Social -335.0* 0.0Security Trust FundSSA should be given the authority to use a full range of debt collection tools availableunder the Debt Collection Act of 1982 to collect debts owed by individuals who areno longer on benefit rolls.

HHS10 Institute and Collect User Fees on FDA's Inspection and Approval Processes -1,439.8 0.0Food, drug and medical device manufacturers, processors and suppliers should berequired to pay for FDA services.

HHS1I Redesign SSA Service Delivery and Make Better Use of Technology to Provide Rd naImproved Access and Services to CustomersSSA's organizational structure needs to be updated to reflect changing customerneeds and to take full advantage of emerging technologies.

HHS12 Strengthen Departmentwide Management na naThe department should conduct a review of its organizational structure andmanagement systems to determine an appropriate balance between centralized anddecentralized functions.

HHS13 Review the Field and Regional Office Structure of the HHS and Develop a Plan cbe cbefor Shifting Resources to Match Workload DemandsThe review should emphasize customer service, results and increased accountability.

'These savings, included in the Grand Total, will be realized in the Social Security Trust Funds and will not affectdiscretionary spending levels.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

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Recommendation

Fiscal IMPar,t, 1994-99(Millions of Dollars)

Change In Change inSpending Receipts

HHS14 Amend the Health Care Financing Administration's Contracting Authority -985.0 0.0to Allow for Competitive ContractingHCFA should be authorized to fully and openly compete Medicare claims processingcontracts to reduce costs and eliminate inefficiencies and conflicts of interest.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

HUDO1 Reinvent Public Housing cbe cbeHUD should create pilot programs to devolve greater authority over housing fundsto sound local agencies. It should create demonstrations of mixed-income publichousing with portable subsidies. HUD should also streamline public housing rulesand take other steps to improve public housing management.

HUDO2 Improve Multi-Family Asset Management and Disposition na naHUD should use public-private partnerships to manage and sell HUD-held loansand real estate for non-subsidized housing projects. Congress should reduce restrictionson HUD sale of multi-family properties, including use of portable subsidies fortenants when the Secretary determines that to be best for tenant needs.

HUDO3 Improve Single-Family Asset Management and Disposition na naHUD should use a combination of early assistance to borrowers having financialdifficulties, contract loan servicing, contract mortgage assistance programs andpublic-private partnerships to streamline and improve management of HUD-assigned single-family mortgages.

HUDO4 Create an Assisted- Housing(Rent Subsidy Demonstration Project na naHUD should be authorized to experiment in negotiated restructuring of privatelyowned assisted-housing projects to improve management, promote mixed-incomehousing and save taxpayer funds.

HUDO5 Establish a New Housing Production Program na naHUD should stimulate housing production through FHA risk-sharing arrangementswith housing finance agencies, stimulate a secondary market for multi-familyproperties, improve ari-ps to FHA insurance for first-time home buyers, providespecial FHA programs to revitalize neighborhoods and improve FHA management.

HUDO6 Streamline HUD Field Operations -167.0 0.0HUD should streamline its Washington, regional and field office structure andconsolidate and reduce its size over time.

HUDO7 Refinance Section 235 Mortgages -210.0HUD should use incentive contracts to speed savings from refinancing expensiveold mortgages subsidized by HUD.

HUDO8 Reduce Section 8 Contract Rent Payments -225.0 0.0HUD should modify its process to reduce unjustified increases in annual paymentsto Section 8 projects.

HUDO9 Consolidate Section 8 Certificates and Vouchers cbe cbeThis recommendation would consolidate two overlapping projects to eliminateduplication.

HUDIO Reduce Operating Subsidies for Vacancies cbe cbe .This recommendation would encourage public housing agencies to make betteruse of their assets by reducing subsidies paid for unjustifiably vacant units.

INTELLIGENCE COMMUNITY

INTEL01 Enhance Intelligence Community IntegrationThe end of the Cold War and the constrained fiscal environment in the U.S. createan imperative for the 13 components of the Intelligence Community to act moreeffectively and more efficiently as a team.

'The Intelligence Community budget is classified. Savings from these recommendations cannot be shown in this report.cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

148.

t1

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change Infiecommendation

Spending ReceiptsINTEL02 Enhance Community Responsiveness to CustomersA 40-year emphasis on the Soviet Union allowed the Intelligence Communityto develop a repertoire which

was not dependent on a dose relationship with itscustomers. That is no longer the case today, and NPR makes recommendationsfor improvements in this area.INTEL03 Reassess Information Collection to Meet New Analytical ChallengesThe analytical issues the Intelligence Community faces are far more diverse andcomplex today, requiring new focus and new techniques to meet the intelligenceneeds of policymakers.

INTEL04 Integrate Intelligence Community Information Management SystemsThe Intelligence Community lacks the connectivity and interoperability in itsinformation systems to do its job efficiently and effectively.INTEL.05 Develop Integrated Personnel and Training SystemsThis recommendation focuses on organizational development and training issueswithin the Intelligence Community.maim Merge the President's Intelligence Oversight Board with the President's ForeignIntelligence Advisory Board

The roles of these two oversight bodies are sufficiently similar that small savingsand some efficiencies can be achieved by combining them.ENTEL07 Improve Support to Ground Troops During Combat OperationsNumerous studies of intelligence

support during the Gulf War focused on agencyor service-specific support issues. This issue outlinesa reinvention lab effort whichproposes an integrated approach to studying support to ground forces duringcombat operations.

DEPARTMENT OF THE INTERIORDOI01 Establish a Hard RockMine Reclamation Fund to Restore the Environment cbe cbe

To address health and safety threats and environmental damage caused by toxicmetal and chemical leaching from abandoned mines, the federal government shouldestablish a hard-rock mine reclamation fund.D0102 Redefine Federal Oversightof Coal Mine Regulation

To overcome o r arional problems that inhibit an effective state-federalrelationship, federal oversight of coal mine regulations should be redefined.D0103 Establish a National Spatial Data InfrastructureBy supporting a cross-agency coordinating effort, the federal government can developa coherent vision for the national spatial &a infrastructure (NSDI). (Spatial,orgeographic, data refers to information that can be placed on a map.) This will allowgreatly improved information analysis in a wide range of areas, induding the analysisof environmental information and the monitoring of endangered animalsand sensitiveland arts.

DOI04 Promote Entrepreneurial Management of the National Park Service**The Park Service should be allowed to raise additional revenues from appropriatesources and to use a portion of themoney for investment in park infrastructure.This proposal would increase selected park entry fees and would increase fees onpark concessionaires.

D0105 Obtain a Fair Return for Federal ResourcesThe federal government should institute reforms to guarantee a fair return forfederal resources such as livestock grazing and hard-rock mining. Some of theprograms regulating the commercial sale and use of natural resources on federallands operate at a loss to the taxpayers and fail

to provide incentives for goodstewardship practices. The administration should also develop a new fee schedulefor communications sites on DOI and Department of Agriculture lands.

-28.0 0.0

36.0 0.0

332.0 993.0

132.4 549.7

The Intelligence Community budget is classified. Savings from these recommendationscannot be shown in this report.**NPR recommends redirecting half of increased park income to investment in park infrastructure.cbe = cannot be estimated (due to data limitations or uncertaintilx about implementation time lines).na = not applicablerecommendation

improves efficiency or redirects resources but does not directly reduce budget authority.

rS1"

'143

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Recommendation

Fiscal Impact, 1994-99(Millions-of Dollars)

Change In Change inSpending Receipts

D0106 Rationalize Federal Land Ownership na naDOI needs to reinvent the way it manages and acquires federal lands. Due tohistorical patterns of settlement and development of this country, adjoining federallands often fall under the jurisdiction of several federal agencies. To the degreepossible, this should be corrected based on the principle of ecosystem management.

D0107 Improve the Land Acquisition Policies of the DOI na naThe Secretaries of Interior and Agriculture and the Director of OMB should modifythe process for determining land acquisition priorities and procedures. The newsystem should reflect major objectives of federal land acquisition, including outdoorrecreation resources, resource protection, and resource and cultural heritage protection.

130108 Improve Mineral Management Service Royalty Collections 0.0 28.0Better management of DOI's royalty collection program would increase revenuesand improve efficiency.

D0109 Establish a System of Personnel Exchanies in DOI na naA change in management philosophy is needed to address bureaucratic barriers atDOI. This recommendation outlines various approaches to this problem.

DOI10 Consolidate Administrative and Programmatic Functions in DOI -17.5 0.0To manage its bureaus effectively, DOI needs to reduce duplicative services. Byconsolidating administrative and programmatic functions, DOI can improvecustomer service, promote efficiency, and reduce costs.

130111 Streamline Management Support Systems in DOI cbe cbeTo create a quality management culture, the department should streamline itsmanagement support systems, including telecommunications, procurement,financial management, and paperwork control.

130112 Create a New Mission for the Bureau of Reclamation -184.1 0.0The Bureau of Reclamation needs to redefine its mission toward new environmentalpriorities and darify its role in water management.. TI a original mission to developwater resources and provide for economic development of the Westis almost complete.

130113 Improve the Federal Helium Program -12.0 35.0The federal government needs to reexamine its role in the federal helium program.The program can be run more efficiently, reducing outlays by federal heliumcustomers and increasing revenue. To obtain maximum benefit from heliumoperations, the government should cancel tip: helium debt, reduce costs, increaseefficiencies in helium operations, and increase sales of crude helium as marketconditions permit.

DOI14 Enhance Environmental Management by Remediating Hazardous Material Sites 18.7 0.0The time is right to integrate skills across bureau boundaries in the remediation ofDOI's hazardous materials sites. The high cost of remediation requires DOI to makemaximum use of existing resources.

DEPARTMENT OF JUSTICE

DOJO' Improve the Coordination and Structure of Federal Law Enforcement Agencies* -$187.0 $0.0NPR recommends the designation of the Attorney General as the Director of LawEnforcement to coordinate federal law enforcement efforts. It also recommendschanges in the alignment of federal law enforcement responsibilities.

DOJ02 Improve Border Management* cbc cbcFederal border management should be significantly improved. NPR recommendsa series of actions to be taken by Customs and INS to make these improvements.

DOJ03 Redirect and Better Coordinate Resources Dedicated to Interdiction of Drugs* na naThis recori mendation outlines changes that can be made to better coordinate federalprograms directed at the air interdiction of drugs.

'issue corresponds to an identical issue in the Department of Treasury report; fiscal impact is for Justice only.

cbc = cannot be estimated (due to data li.nitations or uncertainties about implementation time lines).na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

150

Recommendation

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change InSpending ReceiptsDOJ04 Improve Department of Justice Debt Collection Efforts cbe theThis recommendation would make improvements in the Justice debt collection

effort, including giving the department the ability to retain a small percentage ofdebts collected and allowing Justice to credit its working capital fund with apercentage of debt collections to be used for the creation of a centralized debttracking and information system.

DOJOS Improve the Bureau of Prisons Education, Job Training, and Financial 0.0 13.8Responsibilities ProgramsNPR makes a series of recommendations for improving prison education, training,and inmate financial responsibility policies.

EX3J06 Improve the Management of Federal Assets Targeted for Disposition* the cbeImprovements are needed in the methodsby which the federal government disposesof various assets.

DOJ07 Reduce the Duplication of Drug Intelligence Systems and Improve Computer cbe cbeSecurity*NPR recommends several changes to eliminate duplication in the federal drugintelligence system.

DOJ08 Reinvent the Immigration and Naturalization Service's Organizationand Management-48.0 0.0NPR recommends a number of changes in INS organization and management processesto provide an improved management structure and a strategic vision for the agency.DOJ09 Make the Department ofJustice Operate More Effectively as the US. Government na naLaw Firm

Justice should undertake several improvements in the way it manages its litigationfunctions to improve service to its customers and better manage its case toad.DOJ10 Improve White Collar Fraud Civil Enforcement

14.0 111.0Civil fraud recovery should be established as a priority and the department shouldtake steps to improve its white collar fraud enforcement.D0J11 Reduce the Duplication ofLaw Enforcement Training Facilities cbe cbeOverlap and duplication in the provision of federal law enforcement training facilitiesshould be examined. Multi-agency training needs should be accommodated throughexisting facilities in lieu of theconstruction of new facilities by individual agencies.D0J12 Streamline Background Investigations for Federal Employees

-60.0 0.0The current method of completing background examinations on federal employeesis time-consuming and inefficient. This recommendation outlines improvements tostreamline the process without sacrificing thoroughness.DOJ13 Adjust Civil Monetary Penalties to the Inflation Index

0.0 193.0Civil monetary penalties have not been adjusted to keep up with inflation. Underthis recommendation, a 'catch-up" adjustment would be madeand the need foradditional inflation adjustments would be automatically reassessed every four years.D0J14 Improve F feral CourthouseSecurity24.0 0.0This recommendation is intended to address concerns of the U.S. Marshals Serviceconcerning security at federal courthouses.

130J15 Improve the Professionalism of the US. Marshals Service-36.0 0.0U.S. Marshals should be selected based on merit by the Director of the U.S.Marshal Service and reduce some positions.

D0J16 Develop Lower Cost Solutions to Federal Prison Space Problemselse cbeThis recommendation describesapproaches to solving existing prison space problems.

DEPARTMENT OF LABOR

DOLO1 Enhance Reemployment Programs for Occupationally Disabled Federal -$125.7 $0.0EmployeesThese recommendations would help occupationally disabled federal employees returnto productive careers by expanding DOL's return-to-work program. This saves moneyby reducing long-term benefit costs to the government.

cbe = cannot be estimated (due to data limitations or uncertaintiesabout implementation time lines).na = not applicable--recommendation

improves efficiency or redirects resources but does not directly reduce budget authority.

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FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Recommendation

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change InSpending Receipts

DOLO2 Develop a Single Comprehensive Worker Adjustment Strategy na naImprove services to the unemployedand those at risk of dislocationand makebetter use of resources available for assistance by developing a new worker adjustmentstrategy.

DOLO3 Expand Negotiated Rulemaking and Improve Up-front Teamwork on Regulations the cbeDOL should provide administrative ruidance more quickly and cheaply throughnegotiated rulemaking and a streamlined team approach to the rules developmentprocess.

DOLO4 Expand the Use of Alternative Dispute Resolution by the Department of Labor cbe cbeThe increased use of alternative dispute resolution could reduce litigation and producesignificant long-term savings.

DOLO5 Automate the Processing of ERISA Annual Financial Reports (Forms 5500) to Cut -49.7 0.0Costs and Delays in Obtaining Employee Benefit Plan DataAutomating the filing and processing of annual financial repOrts required of pensionand benefit plan administrators (ERISA Forms 5500) would reduce costs anu. delays.

DOLO6 Amend the ERISA Requirement for Summary Plan Descriptions -0.6 0.0The filing of summary plan descriptions by employee benefit plan administratorswith DOL is intended to make the plans more readily available for participants andbeneficiaries. Since requests for copies are received on only about one percent, thecost to maintain the system and the administrative burden on employers far outweighsthe public benefit.

DOLO7 Redirect the Mine Safety and Health Administration's Role in Mine Equipment na naRegulationShifting the Mine Safety and Health Administration's regulatory role from one ofin-house testing to one of on-site quality assurance would provide increased economicbenefits to the mining industry and would allow DOL to redirect resources.

DOLO8 Create One-Stop Centers for Career Management cbe cbeEstablishing one-stop centers for career management would create a customer-drivenwork force system, empowering Americans to make informed career choices andproviding the means to achieve those goals.

DOLO9 Create a Boundary-Spanning Work Force Development Council na naBecause the greatest barriers to creating an integrated work force development systemarc the categorical nature of federal funds and structural fragmentation of variousfederal programs, this issue proposes to coordinate work force development effortsby convening a multi-agency Work Force Development Council and implementing"bonom-up grant consolidation" for states and localities.

DOL1O Refocus the Responsibility for Ensuring Workplace Safety and Health cbe cbeThis recommendation proposes to shift responsibility for workplace safety and healthto employers by issuing regulations requiring self-inspections and implementing asliding scale of incentives and penalties to ensure safety standards are met.

DOLI 1 Open the Civilian Conservation Centers to Private and Public Competition ' cbe cbcA long-term reduction in costs is possible through expanded competition forcontracts to operate Job Corps Civilian Conservation Centers.

DOL12 Partially Fund Mine Safety and Health Enforcement Through Service Fees -44.4 0.0Charge for services to put the mining industry on a comparable footing with otherindustries which bear the cost of their regulation. This proposes to partially fundenforcement of mine safety regulations through service fees.

DOL13 Integrate Enforcement Activities within the Department of Labor cbc cbeIntroduce greater coordination and flexibility in the DOL enforcement agencies toproject a consistent message to customers and integrate approaches to common issues.

DOL14 Apply Information Technology to Expedite Wage Determinations for Federal 0.1 0.0ContractsDeveloping an electronic data interchange/data mapping system which is integratedinto the Service Contract Act process should eliminate delays both in the delivery ofwage determinations and in procurement when caused by determination delays.

cbc = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

t,, i 152

Recommendation

Fiscal impact, 1994-99(Millions of Dollars)

Change in Change inSpending Receipts

DOL15 Provide Research and Development Authority for the DOL's Mine Safety and na naHealth ProgramGranting the Mine Safety and Health Administration authority to procure servicesand goods directly would improve the mine safety program by expediting theacquisition process for new and improved technology.

DOL16 Increase Assistance to States in Collecting Delinquent Unemployment Insurance na naTrust Fund ContributionsThis recommendation outlines ways of improving state collections of delinquentunemployment insurance contributions.

DOL17 Revise and Update the Consumer Price Index 56.0 0.0The consumer price index has important consequences for both public and privatedecisions. This important measure should be updated to reflect recent inflationtrends.

DOL18 Improve the Delivery of Legal Services by the Office of the Solicitor in the na naDepartment of LaborThe delivery of legal services by the Office of the Solicitor can be improved by usingcooperative agreements, coordinated budgeting and better use of resources.

DOL19 Transfer the Veterans' Employment and Training Service to the Employment -66.0 0.0and Training AdministrationThe DOL can improve service delivery to veterans and save money by consolidatingadministration of this function.

DOL20 Reduce Federal Employees' Compensation Act Fraud -22.6 0.0Congress needs to amend several sections of the United States Code to enable DOLto eliminate benefits to persons who have been convicted of defrauding theprogram.

DOL21 Change the Focus of the Unemployment Insurance Benefits Quality ControlProgram na nato Improve PerformanceRe-examining the present mix of systems to shift the focus of this program fromerror measurement to a constructive use of the results would allow DOL to improvebenefit payment quality and more e et-Lively achieve the program's goals.

NATIONAL AERONAUTICS AND SPACE ADMINISTRATIONNASA01 Improve NASA Contracting Practices cbe cbe

This recommendation outlines several steps NASA can take to improve itscontracting procedures, including greater use of performance standards, contractingout for data instead of hardware whenever appropriate, and using cooperativeresearch agreements to more quickly exploit high performance computingtechniques.

NASA02 Increase NASA Technology Transfer Efforts and Eliminate Barriers to Technology na naDevelopmentNASA should expand its technology transfer efforts and promote the developmentof new technologies.

NASA03 Increase NASA Coordination of Programs with the U.S. Civil Aviation Industry na naNASA should develop a closer relationship with the U.S. civil aviation industry toensure industry input is received early and throughout the technology developmentprocess.

NASA04 Strengthen and Restructure NASA Management -1,982.0 0.0NASA program management should be aggressively overhauled. Thisrecommendation outlines a number of steps the agency should take, both in overallmanagement and in the management of the space station program.

NASA05 Clarify the Objectives of the Mission to Planet Earth Program na naThis recommendation suKests a number of steps needed to improve themanagement and performance of the Mission to Planet Earth program.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

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Recommendation

Fiscal Impact, 1994-99(Millions-of Dollars)

Change in Change InSpending Receipts

NATIONAL SCIENCE FOUNDATION/OFFICE OF SCIENCE AND TECHNOLOGY POLICY

NSF01 Strengthen Coordinztion of Science Policy na naNPR recommends modifying the current structure of the Federal CoordinatingCouncil for Science, Engineering, and Technology (FCCSET) to strengthen its rolein science policy.

NSF02 Use a Federal Demonstration Project to Increase Research Productivity na naNPR recommends using a demonstration project structured between severaluniversities and five federal agencies as a model for a program to reduceadministrative overhead on research grants.

NSF03 Continue Automation of NSF Research Support Functions na naNSF should push forward with efforts to implement advanced informationtechnology in the proposal submission, review, award, and informationdissemination areas.

SMALL BUSINESS ADMINISTRATION

SBA01 Allow Judicial Review of the Regulatory Flexibility Act ripe cbeAllow access to the courts when federal agencies develop rules that fail to properlyexamine alternatives that will lessen the burden on small businesses.

SBA02 Improve Assistance to Minority Small Businesses na naThis proposal recommends a complete review of all federal minority businessassistance programs and the establishment of a Small Disadvantaged Business Set-Aside program for civilian agencies to provide increased opportunities for minoritysmall business.

SBA03 Reinvent the US. Small Business Administration's Credit Programs na naIdentify ways to improve SBA's credit programs to make SBA more responsive tothose industries with the potential for creating a higher number of jobs, thoseinvolved in international trade, and those providing critical technologies. It will alsoenable the agency to operate more efficiently.

SBA04 Examine Federal Guidelines for Small Business Lending Requirements na naThe federal government should examine the guidelines bank regulators set for smallbusiness lending by financial institutions to ensure that capital is available withoutundue barriers while maintaining the integrity of the financial institutions.

SBA05 Manage the Microloan Program to Increase Loans for Small Business na naAllowing SBA to guarantee loans made by banks to nonprofit intermediaries, whocould, in turn, make small loans to low-income individuals, women, minorities andother small businesses unable to obtain credit through traditional lending sourceswould increase private sector participation and lessen administrative burdens linkedto direct government lending.

SBA% Establish User Fees for Small Business Development Center Services 0.0 102.0Authorize Small Business Development Centers to charge a nominal fee for theirservices to reduce federal outlays and require the direct beneficiaries of the assistanceto pay a share of the cost.

SBA07 Distribute SBA Staff Based on Workload and Administrative Efficiency na naReallocating staff based on administrative efficiency and objective workloadmeasures to allow the SBA to better serve its customers by shifting resources fromits central and regional offices into its district offices.

SBA08 Improve Federal Data on Small Businesses na naThe quality of information made available to shape federal legislative and regulatoryactions affecting small and large businesses will be increased if federal householdand employer surveys include a "size of firm" question.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

I 1 5 4

Recommendation

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change InSpending Receipts

DEPARTMENT OF STATFJU.S. INFORMATION AGENCY

DOS01 Expand the Authority of Chiefs of Mission Overseas cbe cbeThis recommendation proposes a pilot program to expand the managementauthority of Chiefs of Mission overseas in the allocation of fiscal and staffingresources.

DOS02 Integrate the Foreign Affairs Resource Management ProcessNPR recommends specific reforms of the interagency foreign policy resourcemanagement process to improve coordination. The recommendation also coversspecific improvements within the Department of State.

DOS03 Improve State Department Efforts to Promote U.S. Business OverseasInternational trade is an important responsibility of U.S. missions overseas in thepost-Cold War world. This recommendation outlines several improvements thatcan be made in State Department efforts in this area.

DOSO4 Provide Leadership in the Department's Information ManagementThe Department of State should make significant changes in the way it managesinformation technology policy. Several improvements are recommended.

DOS05 Reduce Mission Operating CostsSeveral recommendations are made for reducing U.S. costs to operate missionsoverseas, including eliminating certain facilities, reducing security costs andconsidering altogether new forms of overseas representation.

DOS06 Consolidate U.S. Nonmilitary International BroadcastingThis recommendation supports the Administration's decision to consolidate U.S.international broadcasting under USIA and outlines ways of extending the benefitsof this change.

DOS07 Relocate the Mexico City Regional Administrative Management CenterNPR recommends moving this administrative support office to the U.S. to savemoney and recommends examining the need for similar offices now in Paris andBangkok.

DOS08 Improve the Collection of ReceivablesThe State Department should do a better job collecting debts, such as medicalexpenses and others, owed to the department.

DOS09 Change UN Administrative and Assessment ProceduresThis recommendation outlines several changes in the U.S.'s fiscal relationship withthe United Nations, including recommending an oversight office for theorganization and tax law changes to reduce costs to the federal government.

na

cbe

cbe

-57.8

na

-0.1

-9.8

-36.2

na

cbe

the

0.0

na

0.0

0.0

0.0

DEPARTMENT OF TRANSPORTATION

DOTOI Measure Transportation Safety na naNPR recommends the development of common, government-wide measures oftransportation safety.

DOTO2 Streamline the Enforcement Process cbe cbeNPR recommends pilot program .1 the U.S. Coast Guard, the Federal AviationAdministration, and the Federal Highway Administration, designed to offer greaterflexibility in enforcement methods.

DOTO3 Use a Consensus-Building Approach to Expedite Transportation and Environmental na naDecisionmaldngDOT should conduct two demonstration projects to apply a problem-solvingapproach to transportation planning, development and decisionmaking as a meansof reducing costs and improving the efficiency of agency decisionmaking.

DOTO4 Establish a Corporation to Provide Air Traffic Control Services 0.0NPR recommends development of a detailed action plan and statutory language forchanges in air traffic control management to make it more business-like.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

155

0.0

149

150

FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Recommendation

Fiscal impact, 1994-99(Millions-of Dollars)

Change In Change InSpending Receipts

DOTO5 Permit States to Use Federal Aid as a Capital Reserve na naThis recommendation would allow federal transportation grant recipients to usegrant funds capital reserve to back debt financing to construct eligibletransportation projects.

DOT06 Encourage Innovations in Automotive Safety na naNPR recommends allowing the National Highway Traffic Safety Administration togrant more exemptions from highway safety standards to develop new safetysystems.

DOTO7 Examine User Fees for International Over-Flights 0.0 9.0DOT should conduct a cost allocation study to determine whether foreign aircarriers passing over U.S. air space are paying their fair share and whether directuser fees should be imposed.

DOTO8 Increase FAA Fees for Inspection of Foreign Repair Facilities 0.0 8.0To ensure full cost recovery, increase the fees charged for certification andsurveillance of foreign aircraft repair stations.

DOTO9 Contract for Level I Air Traffic Control Towers -3.1 0.0NPR recommends converting 99 Level I (low-use) air control towers to contractoperation and reviewing the remaining Level I towers for possibledecommissioning.

DOTIO Establish an Aeronautical Telecommunications Network to Develop a Public-Private na naConsortiumFAA should pursue the creation of a public-private consortium under a cooperativeagreement with industry to develop an Aeronautical Telecommunications Network

DOT11 Improve Intermodal Transportation Policy Coordination and Management na naDOT should institute a strategic planning process to promulgate national,integrated transportation policies.

DOT12 Develop an Integrated National Transportation Research and Development Plan na naDOT should examine the nation's transportation-related research and developmentportfolio and develop an integrated national transportation plan that considersspecific transportation research needs as well as intermodal transportation plans.

DOT13 Create and Evaluate Telecommuting Programs na naDOT should implement a telecommuting plan within the agency and shouldevaluate transportation-related behavior and other topics requiring research in thisarea.

DOT14 Improve DOT Information Technology Management -224.5 0.0The department should develop an information management strategy which willenable the sharing of data among its component agencies and reduce costs.

DOT15 Provide Reemployment Rights for Merchant Mariners na naGuarantee reemployment rights to U.S. seafarers at their private sector jobs if calledto serve during a war or national emergency.

DOT16 Establish an Independent Commission to Review U.S. Maritime Industry na naNPR recommends a detailed examination of the future of the maritime industry inthe U.S. and the benefits derived by the taxpayers from maritime industry subsidiesand related issues.

DOT17 Eliminate Funding for Highway Demonstration Projects -7,853.0 0.0Rescind funding for existing highway demonstration projects. These demonstrationprojects should compete at the state level for the limited highway resources availableand not be singled out for special treatment at the federal level.

DOT18 Reduce Spending for the U.S. Merchant Marine Academy -45.6 0.0As an economy measure, federal funding for the U.S. Merchant Marine Academyshould be cut by half. The Academy should be given the ability to charge tuition tocover a portion of its operations.

DOT19 Rescind Unobligated Earmarks for the FTA New Starts and Bus Program -131.5Rescind unobligated balances for fiscal year 1992 and prior earmarked fundingunder this FTA program that remain unobligated after three years.

cbc = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

156

Recommendation

APPENDIX A

Fiscal Impact, 199499(Millions of Dollars)

Change in Change InSpending Receipts

DOT20 Reduce the Annual Essential Air Service Subsidies -65.0 0.0This recommendation would set new, more restrictive criteria for small airports toqualify for essential air service subsidies.

DOT21 Terminate Grant Funding for Federal Aviation Administration Higher Education -45.4 0.0ProgramsTo reduce costs, eliminate federal grant funding of two FAA post-secondaryeducation programs.

DOT22 Assign Office of Motor Carriers (OMC) Field Staff to Improve Program Effectiveness the theand Reduce CostsOMC should develop a resource allocation model so that regional managers will beable to optimize geographic assignment of staff, schedule carrier reviews in anefficient manner, and eliminate unnecessary travel requirements.

DOT23 Automate Administrative Requirements for Federal Aid Highway Projects na naNPR recommends improvements in the flow of information on Federal AidHighway projects that will reduce paperwork and reduce staff time in completingcertain forms and other current requirements.

DEPARTMENT OF TREASURY/RESOLUTION TRUST CORPORATIONTRE01 Improve the Coordination and Structure of Federal Law Enforcement Ag.mcies* $-92.9 $0.0

NPR recommends the designation of the Attorney General as the Director of LawEnforcement to coordinate federal law enforcement efforts. It also recommendschanges in the alignment of federal law enforcement responsibilities.

TRE02 Improve Border Management" cbe cbeFederal border management should be significantly improved. NPR recommends aseries of actions to be taken by Customs and INS to make these improvements.

TRE03 Redirect and Better Coordinate Resources Dedicated to the Interdiction of Drugs` -186.6 0.0This recommendation outlines changes that can be made to better coordinatefederal programs directed at the air interdiction of drugs.

TRE04 Foster Federal-State Cooperative Initiatives by the IRS the theCooperative relationships between the IRS and state tax administrations, includingjoint filing of data, should improve taxpayer service as well as collection activitywhile reducing costs.

TREO5 Simplify Employer Wage Reporting cbe cbeThe administrative burden caused by our current employer wage-reportingrequirements could be reduced while maintaining or improving the effectiveness ofgovernment operations by developing and implementing a simplified wagereporting system.

TRE06 Establish Federal Firearms License User Fees to Cover Costs 0.0 132.5The current fee for a retail dealer's firearms license (authorized in 1968) does notcover the cost of license processing and is low enough to encourage applicationsfrom individuals wishing to occasionally purchase firearms at reducedcost.Increased fees would recover the cost of operating the firearms program.

TRE07 Improve the Management of Federal Assets Targeted for Dispositions cbe theImprovements are needed in the methods by which the federal government disposesof various assets.

TRE08 Reduce the Duplication of Drug Intelligence Systems and Improve Computer na naSecurity'NPR recommends several changes to eliminate duplication in the federal drugintelligence system.

TRE09 Modernize the IRS cbe cbeThe IRS Tax System Modernization (TSM) initiative, currently in its initial stages,would ease taxpayer burdens due to manual return processing and inaccessibleinformation, and enable IRS to provide a level of service comparable to privatesector financial institutions.

`Issue corresponds to an identical issue in the Department of Justice report; fiscal impact is for Treasury only,

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

t 157 151

152

FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Recommendation

Fiscal Impact, 1994-99(Milliond of Dollars)

Change in Change InSpending Receipts

TRE10 Modernize the U.S. Customs Service 0.0 450.0NPR recommends a number of changes in Customs' organization and managementprocesses to provide an improved management structure and strategic vision.

TREll Ensure the Efficient Merger of Resolution Trust Corporation into the FDIC na naThe merger of the RTC and the FDIC should ensure the transfer of RTC expertisenot currently held by the FDIC in order to provide the most efficientadministration of these asset-disposition functions.

TRE12 Reduce the Duplication of LAW Enforcement Training Facilities* cbe cbeOverlap and duplication in the provision of federal law enforcement trainingfacilities should be examined. Multi-agency training needs should beaccommodated through existing facilities in lieu of the construction of new facilitiesby individual agencies.

TRE13 Streamline Background Investigations for Federal Employees* cbe cbeThe current method of completing background examinations of federal employeesis time-consuming and inefficient. This recommendation outlines improvements tostreamline the process without sacrificing thoroughness.

TRE14 Adjust Civil Monetary Penalties to the Inflation Index* 0.0 126.0Civil monetary penalties have not been adjusted to keep up with inflation. Underthis recommendation, a "catch-up" adjustment would be made and the need foradditional inflation adjustments would be automatically reassessed by thegovernment every four years.

TRE15 Increase IRS Collections Through Better Compliance Efforts cbe cbeNPR supports the current efforts of the IRS under Compliance 2000 to improvevoluntary compliance and other efforts to collect taxes already owed to the federalgovernment.

TRE16 Improve Agency Compliance with Employment Tax Reporting Requirements cbe cbeMany federal agencies do not fully comply with federal tax reporting requirements.Responsibilities for compliance should be more fully communicated and enforced.

TRE17 Authorize Federal Tax Payment by Credit Card cbe cbeLegislation should be enacted to allow certain taxpayers to make tax payments witha credit card.

TRE18 Modernize the Financial Management Systems -41.1 0.0NPR recommends several changes to improve financial management with Treasury,including consolidation of some operations, the improved use of technology, andother actions.

TRE19 Repeal Section 5010 of the Internal Revenue Code to Eliminate Tax Credits 0.0 500.0for Wine and FlavorsThe wine and flavors tax credit should be repealed.

TRE20 Amend or Repeal Section 5121 of the Internal Revenue Code Requiring Special 0.0 45.0Occupational Taxes on Retail Alcohol DealersThis recommendation would increase federal income from alcohol dealers.

DEPARTMENT OF VETERANS AFFAIRS

DVA01 Develop the Master Veteran Record and Modernize the Department's Information na naInfrastructureCreation of a master veteran record for all VA programs and the improvements inthe department's information technology will improve services to veterans and theirfamilies.

DVA02 Modernize Benefits Claims Processing na naModernization of the VA benefits claims processing system will improve the qualityof service and save taxpayer dollars over time.

'Issue corresponds to an identical issue in the Department of Justice report; fiscal impact is for Treasury only.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

158

Recommendation

APPENDIX A

Fiscal Impact, 1994-99(Millions of Dollars)

Change in Change InSpending Receipts

DVA03 Eliminate Legislative Budget Constraints to Promote Management EffectivenessVA is covered by a number of special legislative requirements, includingemployment "floors" for certain programs. Reducing or eliminating some of thesecontrols can reduce costs and improve service without sacrificing accountability.

DVA04 Streamline Benefits Claims ProcessingVA should examine the usefulness of a New York Regional Office approach tobenefits claims processing that promises to streamline the process. It should alsoexamine regional staffing.

DVA05 Consolidate Department of Defense and Department of Veterans AffairsCompensation and Retired Pay ProgramsDOD and VA should create a task force to jointly examine their disabilitycompensation adjudication and disbursement processes.

DVA06 Enhance VA Cost Recovery CapabilitiesRevise VA policy to use a portion of cost recovery funds to defray debt collectioncosts and expand recoveries to save money.

DVA07 Establish a Working Capital FundThis recommendation would allow creation of a working capital fund using existingresources in the department to be used for certain selected needs.

DVA08 Decentralize Decisionmaldng Authority to Promote Management EffectivenessNPR recommends that VA headquarters and field management work together toimprove agency decisionmaking, including the delegation of some decisionmalcingto field activity directors.

DVA09 Establish a Comprehensive Resource Allocation ProgramVA should design and develop a comprehensive, departmentwide, performance andneeds-based resource allocation program to replace current approaches.

DVAIO Serve Veterans and Their Families as CustomersThis recommendation outlines several approaches for VA to improve its focus onveterans and their families as customers.

DVA11 Phase-Out and Close Supply DepotsVA should convert its existing centralized depot storage and distribution program toa commercial just-in-time delivery system and close unneeded supply depots.

DVA12 Improve Business Practices through Electronic CommerceVA should expand its use of electronic media to reduce paperwork and save money.It should seek to make greater use of electronic funds transfer of compensation andpension benefits.

DVA13 Eliminate "Sunset" Dates in the Omnibus Budget Reconciliation Act of 1990To achieve cost savings, extend certain cost savings measures that are due to expirein 1998.

DVA14 Raise the Fees for Veterans Affairs' Guaranteed Home LoansAs a cost savings measure, loan fees on veterans loans should be raised above thelevels set in the Omnibus Budget Reconciliation Act of 1994.

DVA15 Restructure the Veterans Affairs' Health Care SystemVA should reexamine its role and delivery structure after the issuance of the reportof the President's National Health Care Reform Task Force and take actions torestructure the VA health care system.

DVA16 Recover Administrative Costs of Veterans' Insurance Program from Premiumsand DividendsVA should be permitted to recover certain insurance program costs from insurancetrust fund surpluses.

cbe cbe

1.8 0.0

cbe cbe

0.0 486.5

na na

na na

na na

na na

-168.0 0.0

-124.1 0.0

-704.8 490.0

-811.4 0.0

0.0 0.0

0.0 0.0

Grand Total $28,100 $8,300

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).

na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

A

159 153

APPENDIX B

NATIONAL PERFORMANCE REVIEWSUMMARY OF SAVINGS

156

IntroductionThe NPR

recommendations yield $108.0 billion insavings for the 5 year period,

FY1995-1999.$36.4 billion result from the specificchanges inindividual agencies thatwere detailed in AppendixA.

The remaining $71 billion result fromgovernmentwide changes explainedhere.This appendixprovides theestimates ofthegovernmentwidechanges, and the assumptionsunderlyingthose estimates. Savings by major issue area

are shown in Table B-1.

I.StreamliningThe

Bureaucracy7.1troughReengineering.These estimatesassume:a. Agency

reengineeringwill allowa 12%reduction

of civilianpersonnel over 5 years.b.

Administrativeand centralcontrol staffsandsupervisorswill be theprimary areas fordownsizing.

c. Attrition,enhanced severance,

reassignment,relocation,outplacementand retraining will bethe primary tools to accomplish

the reduction.d. Agencies will useother toolsas necessary toaccomplish the 12%reduction.e. The 12%

reduction includes andincreases theAdministration's previouslyestablished4%personnel reduction goal for fiscal 1995.f. Indirect

costs associated with personnel, such asoffice space and

expenses, traveland supplies, arenot included in thedollarestimates.

2. ReinventingFederalProcurementThese estimates assume:a. The General

ServiceAdministration's estimatethat totalannual

procurementcosts equal $200billion (GSA FederalProcurement Report).

b. Savingscan be generatedby avariety ofreforms

inprocurement

systems, includingsimplifiedacquisition thresholds, labor law reforms, ITprocurement reforms, shifting fromgovernmentspecifications to commercial items, expanded use

of purchasecards, and

electroniccommerce.c. Savings up to 12% of

procurement spendingmay be achievedthrough these reforms (study

by DefenseSystems

ManagementCollege). TheNPR used 5% as a mid-rangeestimate.d. Toavoid

double-counting, savings associated

with reductions inprocurementpersonnel areexcluded from this"reinventing

procurement"savings estimate.

3.Reeingeering Through InformationTechnologyThese estimates assume:a. A $25 billion

baseline ininformation technology(IT) spending, basedon obligations

reportedthrough OMB circularA-11 byexecutive branchagencies foracquisition,operation, and use of ITsystems.

b. 30% savings in ITsystems may be achievedthrough

informationinfrastructureconsolidation and

standardization this savingsestimate isextrapolated from the "DefenseInformation

Infrastructure Initiative"(December 1992, ResourceSummary). SinceDefense ITspending constitutes roughly one-half of total

IT spending it is assumedthat equalsavings can be obtained

from the IT budgetsofcivilian agencies.c. Savings fromelectronic benefits transfer andfrom

consolidation andmodernization of thefederal information

infrastructure; offsettingcosts result fromconsolidationandmodernization of the law

enforcementand safetymobile networks anda program to providecitizens with betteraccess togovernmentinformation.

d. Savingsfor electronic

benefits transfer nationallymay be

extrapolated from pilotprograms in thestates of New

Mexico andMinnesota.e. Savings

recommended for theDepartment ofTransportation IT

consolidation andmodernization are subtracted to avoid double-counting.

161

4.Intragovernmental

Administrative Costs.Simplifying and reducing the federalgovernment's

reportingrequirements will

generate savings at thefederal, state, and local

levels. The estimate assumesthat over 75% ofthe state and local

governments willaccept a

fee-for-service option in place ofexisting costreimbursement procedures fromFY1995-1999 in

return for greateradministrative flexibility. Eliminating

cost reimbursementproceduresslows cost growth by

3% per year at thefederal level.

REST COPY AVAILABLE. 162157

APPENDIX C

NATIONAL PERFORMANCE REVIEWMAJOR RECOMMENDATIONSAFFECTINGGOVERNMENTAL SYSTEMS

160

FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

RecommendationsCREATING QUALITY LEADERSHIP AND MANAGEMENT

QUALOI PROVIDE IMPROVED LEADERSHIP AND MANAGEMENT OF THE EXECUTIVE BRANCHThe President should define a vision for the management of the government in the 21st century. To act on this vision, heshould direct department and agency heads to designate chief operating officers and he should establish a President'sManagement Council, comprised of the chief operating officers, to oversee the implementation of NPR's recommendations.

QUAL02 IMPROVE GOVERNMENT PERFORMANCE THROUGH STRATEGIC AND QUALITY MANAGEMENTEncourage all department and agency heads to lead and manage in accordance with the criteria in the Presidential Award forQuality. To begin this culture change, all executive branch employeesstarting with the President and Cabinetshouldattend aprepri2re educational sessions on strategic and quality management.

QUAL03 STRENGTHEN THE CORPS OF SENIOR LEADERSDevelop guidance to be used to determine the qualifications needed for selected senior political appointee positions, andprovide adequate orientations for individuals upon their appointment.

QUAL04 IMPROVE LEGISLATIVE-EXECUTIVE BRANCH RELATIONSHIPImprove communications between the executive branch, members of Congress, and congressional staff on key issues duringand after program and policy development and implementation. Develop an agreed-upon approach for dealing withmanagement failures, crises, and chronic program difficulties.

STREAMLINING MANAGEMENT CONTROL

SMC01 IMPLEMENT A SYSTEMS DESIGN APPROACH TO MANAGEMENT CONTROLRedesign the existing collection of management control mechanisms for the executive branch, using a systems designapproach, in order to create a well managed and cost-effective system.

SMCO2 STREAMLINE THE INTERNAL CONTROLS PROGRAM TO MAKE IT AN EFFICIENT AND EFFECTIVEMANAGEMENT TOOLRescind the current set of Internal Control Guidelines and replace them with a broader handbook on management controls.

SMC03 CHANGE-THE FOCUS OF THE INSPECTORS GENERALChange the focus of Inspectors General from compliance auditing to evaluating management control systems.In addition, recast the IGs method of operation to be more collaborative and less adversarial.

SMC04 INCREASE THE EFFECTIVENESS OF OFFICES OF GENERAL COUNSELDefine clearly the clients of agency General Counsel offices as agency line managers. Train staff attorneys to understand thecultural changes they will need to undertake to operate in an environment where program results are important. Developperformance measures and "feedback loops" to ensure close cooperation with line managers.

SMC05 IMPROVE THE EFFECTIVENESS OF THE GENERAL ACCOUNTING OFFICE THROUGH INCREASEDCUSTOMER FEEDBACKImprove GAO's documentation of best practices and the use of feedback loops on its performance.

SMC06 REDUCE THE BURDEN OF CONGRESSIONALLY MANDATED REPORTSEliminate at least 50 percent of all congressionally mandated reports. Review new reporting requirements for managementimpact, and include a sunset provision.

SMC07 REDUCE INTERNAL REGULATIONS BY MORE THAN 50 PERCENTDirect department secretaries and agency heads to reduce by at least 50 percent the number of internal regulations. and thenumber of pages of regulations, within 3 years.

SMC08 EXPAND THE USE OF WAIVERS TO ENCOURAGE INNOVATIONEstablish a process for obtaining waivers from federal regulations and identifying those regulations for which this processshould apply.

TRANSFORMING ORGANIZATIONAL STRUCTURES

ORGO1 REDUCE THE COSTS AND NUMBERS OF POSITIONS ASSOCIATED WITH MANAGEMENT CONTROLSTRUCTURES BY HALFCut management control positions over the next 5 years. Reinvest some of the savings in benchmarking, training, andinvestments in new technology. In addition to separation incentives (see HRM14), provide outplacement services to affectedstaff.

ORGO2 USE MULTI-YEAR PEFORMANCE AGREEMENTS BETWEEN THE PRESIDENT AND AGENCY HEADS TOGUIDE DOWNSIZING STRATEGIESPerformance agreements with agency heads (sec BGT01) should be used to identify progress toward agreed upon downsizinggoalsnot central management agency controls such as across-the-board cuts or ceilings on employment. In exchange,agencies will be supported with increased management flexibili ties.

ORGO3 ESTABLISH A LIST OF SPECIFIC FIELD OFFICES TO BE CLOSEDWithin 18 months, the President's Management Council should submit a list to Congress of civilian fieldoffices that should be closed.

164

APPENDIX C

RecommendationsORGO4 THE PRESIDENT SHOULD REQUEST AUTHORITY TO REORGANIZEAGENCIES

Congress should restore to the President the amitotic., to restructure the executive branch.ORGO5 SPONSOR THREE OR MORE CROSS-DEPARTMENTAL INITIATIVES ADDRESSING

COMMON ISSUES OR CUSTOMERSThe President's Management Council should identify and sponsor three or more cross-departmental initiativesin areas such as illegal immigration, debt collection, and the problems of the homeless.

ORGO6 IDENTIFY AND CHANGE LEGISLATIVE BARRIERS TO CROSS-ORGANIZATIONALCOOPERATIONAs cross-organizational collaborations become an integral part of government operations, barriers to ready collaboration andfunding should be removed.

IMPROVING CUSTOMER SERVICESICS01 CREATE CUSTOMER-DRIVEN PROGRAMS IN ALL DEPARTMENTS AND AGENCIES THAT PROVIDE

SERVICES DIRECTLY TO THE PUBLICEstablish an overall policy for quality of federal services delivered to the public and initiate customer service programs in allagencies that provide services directly to the public.

ICS02 CUSTOMER SERVICE PERFORMANCE STANDARDSINTERNAL REVENUESERVICEAs part of its participation in the NPR, the Internal Revenue Service is publishing customer service performance standards. Tospeed the delivery of taxpayer refunds, the Secretary of the Treasury should delegate disbursing authority to IRS in 1993 andfuture tax seasons.

ICS03 CUSTOMER SERVICE PERFORMANCE STANDARDS SOCIAL SECURITYADMINISTRATIONAs part of its participation in the NPR, the Social Security Administration is publishing customer service performancestandards. SSA will also obtain customer opinions on all the goals and objectives of their strategic plan, using that input torevise the goals and objectives as needed, set priorities, and establish interim objectives.

ICSO4 CUSTOMER SERVICE PERFORMANCE STANDARDSPOSTAL SERVICEAs part of its participation in the NPR, the U.S. Postal Service will expand its plans to display customer service standards inPost Office retail lobbies.

ICS05 STREAMLINE WAYS TO COLLECT CUSTOMER SATISFACTION AND OTHER INFORMATIONFROM THE PUBLICFor voluntary information collection requests directed at customers, OMB will delegate authority to approve such requests ifdepartments certifiy that they will fully comply with Paperwork Reduction Act requirements. OMB will also clarify rules onthe use of focus groups and streamline renewals of previously approvedsurvey requests.

MISSION-DRIVEN, RESULTS-ORIENTED BUDGETINGBGTOI DEVELOP PERFORMANCE AGREEMENTS WITH SENIOR POLITICAL LEADERSHIP THAT REFLECT

ORGANIZATIONAL AND POLICY GOALSThe President should develop performance agreements with agency heads, starting with the top two dozen. Agency headsshould also use performance agreements within theiragency to forge an effective team committed to achieving organizationalgoals and objectives.

BGTO2 EFFECTIVELY IMPLEMENT THE GOVERNMENT PERFORMANCEAND RESULTS ACT OF 1993Accelerate planning and measurement efforts to improve performance in every federal program and agency. Designate as pilotsunder the act several multi- agency efforts that have related programs and functions. Develop common measures and datacollection efforts for cross-cutting issues. Clarify the goals and objectives of federal programs. Incorporate performanceobjectives and results as key elements in budget and management reviews.

BGTO3 EMPOWER MANAGERS TO PERFORMRestructure appropriations accounts to reduce overitemization and to align them with programs. Ensure that direct operatingcosts can be identified. Reduce overly detailed restrictions and earmarks in appropriations and report language. Simplify theapportionment process. Reduce the excessive administrative subdivision of funds in financial operating plans .

BGT04 ELIMINATE EMPLOYMENT CEILINGS AND FLOORS BYMANAGING WITHIN BUDGETBudget and manage on the basis of operating costs rather than full-time equivalents or employment ceilings. Request Congressto remove FTE floors.

BGT05 PROVIDE LINE MANAGERS WITH GREATER FLEXIBILITY TO ACHIEVE RESULTSIdentify those appropriations that should be converted to multi- or no-year status. Permit agencies to roll over50 percent of their unobligated year-end balances in annual operating costs to the next year. Expedite reprogramming of fundswithin agencies.

tl 165161

162

FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

RecommendationsBGTO6 STREAMLINE BUDGET DEVELOPMENT

Begin the President's budget formulation process with a mission-driven Executive Budget Resolution processthat will replace hierarchial budget development, delegate more decision making to agency heads, and promote a collaborativeapproach to crosscutting issues. In the process, eliminate multiple requirements for detailed budget justification materials.Negotiate a reduction in the detailed budget justification provided to Congress.BGTO7 INSTITUTE BIENNIAL BUDGETS AND APPROPRIATIONS

Submit a legislative proposal to move from an annual to a biennial budget submission by the PresidentEstablish biennial budget resolution and biennial appropriation processes. Evaluate program effectivenessand refine performance measures in the off-year.

BGTO8 SEEK ENACTMENT OF EXPEDITED RESCISSION PROCEDURESPursue negotiations with the leadership ofthe House and Senate to gain enactment of expedited rescission authority.

IMPROVING FINANCIAL MANAGEMENTFM01 ACCELERATE THE ISSUANCE OF FEDERAL ACCOUNTING STANDARDS

Issue a comprehensive set of federal financial accounting standards within 18 months. If all standards are not issued under thepresent advisory board structure, create an independent federal financial accounting standards board.FM02 CLARIFY AND STRENGTHEN THE FINANCIAL MANAGEMENT ROLES OFOMB AND TREASURY

Develop a Memorandum of Undirstanding to darify the roles of OMB and Treasury in financial management. Create agovernmentwide budget and financial information steering group to develop and provide guidance in implementing anintegrated budget and financial information strategic plan. Shift review of Financial Management Service budget to the OMBDeputy Director for Management.FM03 FULLY INTEGRATE BUDGET, FINANCIALAND PROGRAM INFORMATION

Ensure that agency financial systems are in compliance with a revised OMB Circular A-127 , "Financial ManagementSystems," by September 1996. Provide interagency funding for the joint development of financial systems.FM04 INCREASE THE USE OF TECHNOLOGY TO STREAMLINE FINANCIAL SERVICESUse electronic funds transfer to pay and reimburse expenses for all federal employees, to handle all interagency payments, tomake payments to state and local governments, and to pay for purchases from the private sector. Similarly, all payments toindividuals should be done electronically.FM05 USE THE CHIEF FINANCIAL OFFICERS (CFO) ACT TO IMPROVE FINANCIAL SERVICESIdentify the set of financial management functions which should report to agency CFOs, and ensure that all financial

management personnel are fully-qualified when hired. Ensure that information being collected, disseminated, and reported onis useful, objective, timely, and accurate for the benefit of program managers.FM06 "FRANCHISE" INTERNAL SERVICES

The President's Management Council should encourage agencies to purchase common administrative services, such as payroll,computer support, or procurement, competitively from other federal agencies that may be more responsive or offer betterprices.

FM07 CREATE INNOVATION FUNDSAllow agencies to create innovation capital funds from retained savings to invest in innovations that can improve service andprovide a return on investment.

FM08 REDUCE FINANCIAL REGULATIONS AND REQUIREMENTSEliminate timesheets and timecards and use technology to enter payroll data only on an exception basis. Allow use ofcommercial checking accounts instead of third-party accounts. Create a threshold below which it is not cost effective to resolveaudit findings.

FM09 SIMPLIFY THE FINANCIAL REPORTING PROCESSGrant OMB the flexibility to consolidate and simplify over a dozen related statutory reports to Congress and the President.Require agency heads to provide two reports annually, a planning report and an accountability report. Ensure that any futurefinancial management reporting requirements can be addressed in either the planning or accountability reports.FM10 PROV DE AN ANNUAL FINANCIAL REPORT TO THE PUBLICProvide a simplified version ofa consolidated report on the finances of the federal government for distribution to the taxpayersby June 1995. Develop a method of identifying and budgeting for the expected costs of contingent liabilities of the FederalGovernment.

FM I I STRENGTHEN DEBT COLLECTION PROGRAMSPropose legislation to allow debt collection activities to be funded by the revenues generated from collections and to allow theagencies to keep a certain percentage ofany increased collection amounts. Propose legislation to lift restrictions on the use ofprivate collection, and expand agency litigation authority for debt collection through the designation of special assistant U.S.Attorneys.

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RecommendationsFM12 MANAGE FIXED ASSET INVESTMENTS FOR THE LONG TERM

Establish a long-term fixed asset planning and analysis process, and incorporate it into the federal budget process. Ensure thereis no bias in the budget against long-term investments.

FM13 CHARGE AGENCIES FOR THE FULL COST OF EMPLOYEE BENEFITSRequire all agencies to pay the full accruing cost of Civil Service Retirement and Pensions. OMB and the Office of PersonnelManagement should also research the possibility of charging agencies for civilian retiree health benefits.

REINVENTING HUMAN RESOURCE MANAGEMENTHRMOI CREATE A FLEXIBLE AND RESPONSIVE HIRING SYSTEM

Authorize agencies to establish their own recruitment and examining programs. Abolish centralized registers and standardapplication forms. Allow federal departments and agencies to determine that recruitment shortages exist and directly hirecandidates without ranking. Reduce the types of competitive service appointments to 3. Abolish the time-in-graderequirement.

HRM02 REFORM THE GENERAL SCHEDULE CLASSIFICATION AND BASIC PAY SYSTEMRemove all grade-level classification criteria from the law. Provide agencies with flexibility to establish broadbanding systemsbuilt upon the General Schedule framework.

HRM03 AUTHORIZE AGENCIES TO DEVELOP PROGRAMS FOR IMPROVEMENT OF INDIVIDUAL ANDORGANIZATIONAL PERFORMANCEAuthorize agencies to design their own performance management programs which define and measure success based on eachagency's unique needs.

HRM04 AUTHORIZE AGENCIES TO DEVELOP INCENTIVE AWARD AND BONUS SYSTEMS TO IMPROVEINDIVIDUAL AND ORGANIZATIONAL PERFORMANCEAuthorize agencies so develop their own incentive award and bonus systems. Encourage agencies to establish productivitygainsharing programs to support their reinvention and change efforts.

HRM05 STRENGTHEN SYSTEMS TO SUPPORT MANAGEMENT IN DEALING WITH POOR PERFORMERSDevelop a culture of performance which providessupervisors with the skills, knowledge, and support they need to deal withpoor performers, and holds supervisors accountable for effectively managing their human resources. Reduce by half the timeneeded to terminate federal employees for cause.HRMO6 CLEARLY DEFINE THE OBJECTIVE OF TRAINING AS THE IMPROVEMENT OF INDIVIDUAL AND

ORGANIZATIONAL PERFORMANCE; MAKE TRAINING MORE MARKET-DRIVENReduce restrictions on training to allow managers to focus on organizational mission ancto take advantage of the availabletraining marketplace.

HRM07 ENHANCE PROGRAMS TO PROVIDE FAMILY-FRIENDLY WORKPLACESImplement family-friendly workplace practices (flex-time, flexip)ace, job sharing, telecommuting) while ensuringaccountability for customer service. Provide telecommunications and administrative support fleet-wry for employeesparticipating in flexiplace and telecommuting work arrangements. Expand the authority to establish and fund dependent careprograms. Mow employees to use sick leave tocare for dependents. Allow employees who leave and then re-enter federalservice to be given credit for prior sick leave balances.

HRM08 IMPROVE PROCESSES AND PROCEDURES ESTABLISHED TO PROVIDE WORKPLACE DUEPROCESS FOREMPLOYEESEliminate jurisdictional overlaps. All agencies shouldestablish alternative dispute resolution methods and options for theinformal disposition of employment disputes.

HRM09 IMPROVE ACCOUNTABILITY FOR EQUAL OPPORTUNITY GOALS AND ACCOMPLISHMENTSCharge all federal agency heads with the responsibility for ensuring equal opportunity and increasing representation ofqualified women, minorities, and persons with disabilities into all levels and job categories, including middle and seniormanagement positions.

HRM 10 IMPROVE INTERAGENCY COLLABORATION AND CROSS TRAINING FOR HUMAN RESOURCEPROFESSIONALSEstablish an Interagency Equal Employment Opportunity and Affirmative Employment Steering Group under the joint chairof the Equal Employment Opportunity Commission and the Office of Personnel Management. Require appropriate crosstraining for human resource management professionals.

HRM11 STRENGTHEN THE SENIOR EXECUTIVE SERVICE SO THAT IT BECOMES A KEY ELEMENT IN THEGOVERNMENTWIDE CULTURE CHANGE EFFORTCreate and reinforce a corporate perspective within the Senior Executive Service that supports gOvemmentwide culturechange. Promote a corporate succession planning model to use to select and develop senior staff. Enhance voluntary mobilitywithin and between agencies for top senior executive positions in government.

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.RecommendationsHRM12 ELIMINATE EXCESSIVE RED TAPE AND AUTOMATE FUNCTIONS AND INFORMATION

Phase out the entire 10,000 page Federal Personnel Manual (FPM) and all agency implementing directives by December1994. Replace the PPM and agency directives with automated personnel processes, electronic decision support systems and"manuals" tailored to user needs.

HRM13 FORM LABOR-MANAGEMENT PARTNERSHIPS FOR SUCCESSIdentify labor-management partnerships as a goal of the executive branch and establish the National Partnership Council.

HRM 14 PROVIDE INCENTIVES TO ENCOURAGE VOLUNTARY SEPARATIONSProvide departments and agencies with the authority to offer separation pay. Decentralize the authority to approve earlyretirement. Authorize departments and agencies to fund job search activities and retraining of employees scheduled to hedisplaced. Limit annual leave accumulation by senior executives to 240 hours.

REINVENTING FEDERAL PROCUREMENT

PR0001 REFRAME ACQUISITION POLICYConvert the 1,600 page:, of the Federal Acquisition Regulation from a set of rigid rules to a set of guiding principles.

PR00O2 BUILD AN INNOVATIVE PROCUREMENT WORKFORCEEstablish an interagency program to improve the governmentwide procurement workforce. Provide civilian agencies withauthority for improving the acquisition wol-kforc.e similar to that of the Defense Department's.

PR00O3 ENCOURAGE MORE PROCUREMENT INNOVATIONProvide new legislative authority to test innovative procurement methods. Establish a mechanism to disseminate informationgovernmentwide on innovative procurement ideas.

PR0004 ESTABLISH NEW SIMPLIFIED ACQUISITION THRESHOLD AND PROCEDURESEnact legislation to simplify small purchases by raising the threshold for the use of simplified acquisition procedures from$25,000 to $100,000 and raise the various thresholds for the application of over a dozen other statutory requirements thatsimilarly complicate the process. To ensure small business participation, establish a single electronic bulletin board capabilityto provide access to information on contracting opportunities.

PR0005 REFORM LABOR LAWS AND TRANSFORM THE LABOR DEPARTMENT INTO AN EFFICIENT PARTNERFOR MEETING PUBLIC POLICY GOALSEnact legislation to simplify acquisition labor laws such as the Davis-Bacon Act, the Copeland Act, and the Service ContractAct. Improve access to wage schedules through an on-line electronic system.

PR0006 AMEND PROTEST RULESChange the standard of review at the General Services Board of Contracts Appeals to conform to that used in the relevantcourts. Allow penalties for frivolous protests. Allow contract negotiation to continue up to the point of contract award, eventhough a protest has been filed with the General Services Board of Contract Appeals.

PR0007 ENHANCE PROGRAMS FOR SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNSRepeal statutory limitations on subcontracting and substitute regulatory limitations to provide greater flexibility. Authorizecivilian agencies to establish small disadvantaged business set-asides.

PR0008 REFORM INFORMATION TECHNOLOGY PROCUREMINTSIncrease the delegation of authority to agencies to purchase information technology. For purchases less than $500,000 forproducts, and $2.5 million for services over the life of a contract, eliminate indcpth requirementgfor analyses of alternatives.Pilot-test alternative ways of buying commercially available information technology items.

PR0009 LOWER COSTS AND REDUCE BUREAUCRACY IN SMALL PURCHASES THROUGH THE USE OFPURCHASE CARDSProvide managers with the ability to authorize employees to purchase small dollar value items directly using a governmentpurchase card. Require internal government supply sources to accept this card.

PROCI 0 ENSURE CUSTOMER FOCUS IN PROCUREMENTRevise Procurement Management Reviews to incorporate NPR principles such as "focusing on results"for the line managers.

PROC11 IMPROVE PROCUREMENT ETHICS LAWSCreate consistency across the government in the application of procurement ethics laws.

PROC12 ALLOW FOR EXPANDED CHOICE AND COOPERATION IN THE USE OF SUPPLY SCHEDULESAllow state and local governments, grantees, and certain nonprofit agencies to use federal supply sources. Similarly, allowfederal agencies to enter into cooperative agreements to share state and local government supply sources.

PROCI3 FOSTER RELIANCE ON THE COMMERCIAL MARKETPLACEChange laws to make it easier to buy commercial items. For example, revise the definition of commercial item. Revisegovernmentwide and agency regulations and procedures which preclude the use of commercial specifications.

PROCI4 EXPAND ELECTRONIC COMMERCE FOR FEDERAL ACQUISITIONEstablish a governmentwide program to use electronic commerce for federal procurements.

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RecommendationsPROC15 ENCOURAGE BEST VALUE PROCUREMENT

To recognize other factors besides price, define "best value" and provide regulatory guidance to implement a program forbuying on a "best value" basis. Issue guide on the use of "best practices" source selection procedures.

PROC16 PROMOTE EXCFT I F.NCE IN VENDOR PERFORMANCEEstablish an interagency Excellence in Vendor Performance Forum that would develop policies and techniques to measurecontractor performance for use in contract decisions. Establish an award for contractor and government acquisition excellence.

PROC17 AUTHORIZE A TWO-PHASE COMPETITIVE SOURCE SELECTION PROCESSAuthorize the use of a two-phase selection process for certain types of contracts so that an offeror does not incur a substantialexpense in preparing a contract proposal.

PROCIE AUTHORIZE MULTIYEAR CONTRACTSAuthorize multiyear contracts and allow contracts for severable services to cross fiscal years.

PROC19 CONFORM CERTAIN STATUTORY REQUIREMENTS FOR CIVIUAN AGENCIES TO THOSE OFDEFENSE AGENCIESRepeal requirements for commercial pricing certificates and authorize contract awards without discussions, where appropriate.Maintain the $500,000 threshold for cost and pricing data requirements for the Defense Department and establish the samethreshold for civilian agencies.

PROC20 STREAMLINE BUYING FOR THE ENVIRONMENTDevelop "best practice" guides on buying for the environment. Encourage multiple award schedule contractors to identifyenvironmentally preferable products. Provide energy efficiency information in government catalogs and automated systems.

REINVENTING SUPPORT SERVICES

SUPOI AUTHORIZE THE EXECUTIVE BRANCH TO ESTABLISH A PRINTING POLICY THAT WILL ELIMINATETHE CURRENT PRINTING MONOPOLYGive the executive branch authority to make its own printing policy that will eliminate the mandatory printing source.Develop a new executive branch printing policy for the 21st century.

SUP02 ASSURE PUBLIC ACCESS TO FEDERAL INFORMATIONGive the executive branch agencies responsibility for distributing printed federal information to depository libraries. Requireagencies to inventory the federal information they hold, and make it arresible to the public.

SUP03 IMPROVE DISTRIBUTION SYSTEMS TO REDUCE COSTLY INVENTORIESPermit customer choice in sources of supply. Compare depot distribution costs with commercial distribution systems. Takeaway the Federal Prison Industries' status as a mandatory source of federal supplies and require it to compete commercially forfederal agencies' business. Increase the use of electronic commerce for ordering from depot systems.

SUP04 STREAMLINE AND IMPROVE CONTRACTING STRATEGIES FOR THE MULTIPLE AWARDSCHEDULE PROGRAMEliminate the use of mandatory supply schedules. Make the supply schedule system easier to use by reducing theadministrative burden for acquisitions under $10,000. In addition, eliminate the announcement requirements and Ise themaximum order limitations for the purchase of information technology items listed in supply schedules.

SUP05 EXPAND AGENCY AUTHORITY AND ELIMINATE CONGRESSIONAL CONTROL OVER FEDERAL VEHICLEFLEET MANAGEMENTUpdate vehicle replacement standards. Increase emergency repair limits to $150. Eliminate the monopoly on disposing ofagency-owned vehicles.

SUP06 GIVE AGENCIES AUTHORITY AND INCENTIVE FOR PERSONAL PROPERTY MANAGEMENT ANDDISPOSALProvide incentives to agencies to dispose of excess personal property. Automate the process and eliminate the monopoly onpersonal property disposal.

SUP07 SIMPLIFY TRAVEL AND INCREASE COMPETITIONIncrease choices for federal travelers and automate the travel process. Pilot-test a tender system for airfares.

SUP08 GIVE CUSTOMERS CHOICES AND CREATE REAL PROPERTY ENTERPRISES THAT PROMOTE SOUNDREAL PROPERTY ASSET MANAGEMENTGive agencies greater authority to choose their sources of real property services. Create competitive enterprises within thegovernment to provide real property services on a fee basis, and encourage federal managers to seek the best available source.Create an ownership enterprise for the sound management of federal real property assets. Establish a government-wide policyfor real property asset management. Manage the Federal Buildings Fund in a manner comparable to the commercial sector.

SUP09 SIMPLIFY PROCEDURES FOR ACQUIRING SMALL BLOCKS OF SPACE TO HOUSEFEDERAL AGENCIESSimplify the procedures lor acquiring small amounts of leased space under 10,000 square feet.

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RecommendationsSUPIO ESTABLISH NEW CONTRACTING PROCEDURES FOR THE CONTINUED OCCUPANCY

OF LEASED OFFICE SPACESimplify the procedures for renewing leases.

SUP11 REDUCE POSTAGE COSTS THROUGH IMPROVED MAIL MANAGEMENTEncourage postage savings through the implementation of mail management initiatives.Allow line managers to manage their own postal budgets.

REENGINEER THROUGH THE USE OF INFORMATION TECHNOLOGYITO I PROVIDE CLEAR, STRONG LEADERSHIP TO INTEGRATE INFORMATION TECHNOLOGY INTO THE

BUSINESS OF GOVERNMENTCreate a Government Information Technology Services working group to develop a strategic vision for the use of governmentinformation technology and to implement NPR's information technology recommendations.

IT02 IMPLEMENT NATIONWIDE, INTEGRATED ELECTRONIC BENEFIT,TRANSFERDesign an integrated implementation plan for the use of electronic benefit transfer for programs such as Food Stamps and fordirect payments to individuals without bank accounts.

IT03 DEVELOP INTEGRATED ELECTRONIC ACCESS TO GOVERNMENTINFORMATION AND SERVICEUse information technology initiatives to improve customer service by creatinga one-stop "800" calling service, integratedone-stop service "kiosks," and a governmentwide electronic bulletin board system.

IT04 ESTABLISH A NATIONAL LAW ENFORCEMENT/PUBLIC SAFETY NETWORKEstablish a national law enforcement/public safety data network foruse by federal, state, and local law enforcement officials.

IT05 PROVIDE INTERGOVERNMENTAL TAX FILING, REPORTING, AND PAYMENTS PROCESSINGIntegrate government financial filings, reporting, and payments processing, and determine ways to eliminate the need forfiling routine tax returns.

IT06 ESTABLISH AN INTERNATIONAL TRADE DATA SYSTEMDevelop and implement a U.S. Government International Trade Data System in the Treasury Department.

IT07 CREATE A NATIONAL ENVIRONMENTAL DATA INDEXOrganize the implementation of a national environmental data index in the Commerce Department.

IT08 PLAN, DEMONSTRATE., AND PROVIDE GOVERNMENTWIDE ELECTRONIC MAILImprove electronic mail and messaging among federal agencies.

IT09 ESTABLISH AN INFORMATION INFRASTRUCTUREDevelop a Government Information Infrastructure to use government information resources effectively and support electronicgovernment applications. Consolidate and modernize government data processingcenters.

IT 10 DEVELOP SYSTEMS AND MECHANISMS TO ENSURE PRIVACY AND SECURITYEstablish a Privacy Protection Board. Establish uniform privacy protection practices and generallyacceptable implementation methods for these practices. Develop a digital signature standard for sensitive, unclassified data byJanuary 1994.

IT11 IMPROVE METHODS OF INFORMATION TECHNOLOGY ACQUISITION(see PROC 08, PR0009, PROC14, SUP04, and FMO6)

ITI2 PROVIDE INCENTIVES FOR INNOVATIONRetain a portion of agency information technology savings to reinvest in information technology. Promote performance-basedcontracting for information technology. Establish a govemmentwide venture capital fund for innovative informationtechnology projects

IT13 PROVIDE TRAINING AND TECHNICAL ASSISTANCE IN INFORMATION TECHNOLOGY TO FEDERALEMPLOYEESEstablish a program to train non-technical senior executives and political appointees in information technology. Requiremanagers of information resources to meet certification standards. Promote collegial assistance in using informationtechnology. Include training costs as part of all information technology purchases.

RETHINKING PROGRAM DESIGN

DES01 ACTIVATE PROGRAM DESIGN AS A FORMAL DISCIPLINEThe President's Management Council should commission the development of a handbook to help federal managersunderstand the strengths and weaknesses of various forms ofprogram design.

DES02 ESTABLISH PILOT PROGRAM DESIGN CAPABILITIES IN ONE OR TWO AGENCIESTest the usefulness of the program design handbook and the value ofprogram design as a useful discipline.

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APPENDIX C

RecommendationsDES03 ENCOURAGE THE STRENGTHENING OF PROGRAM DESIGN IN THE LEGISLATIVE BRANCHThe President's Management Council should work with congressional support agencies to help themstrengthen their program design capacities.DESO4 COMMISSION PROGRAM DESIGN COURSES

Develop training courses for managers and policymakers on various program design approaches.STRENGTHENING THE PARTNERSHIP IN INTERGOVERNMENTAL SERVICE DELIVERYFSLOI IMPROVE THE DELIVERY OF FEDERAL DOMESTIC GRANT PROGRAMSCreate flexibility and encourage innovation by designing a bottom-up solution to the problem ofgrant proliferation and itsaccompanying red tape. Also, support the pending proposal for Federal-State

Flexibility Grants that has been developed by theNational Governors Association and the National Conference of State Legislatures. Establish a Cabinet-level Enterprise Boardto oversee NEW initiatives in community improvement.FSLO2 REDUCE RED TAPE THROUGH REGULATORY AND MANDATE RELIEFIssue an Executive Orderaddressing the problems of unfunded federal mandates and regulatory relief and authorize CabinetSecretaries and agency heads to obtain selective relief from regulations or mandates in programs they oversee.FSLO3 SIMPLIFY REIMBURSEMENT PROCEDURES FOR ADMINISTRATIVE COSTS OFFEDERAL GRANT DISBURSEMENT

Modify OMB Circular A-87, ''Cost Principles for State and Local Governments," to provide a fixed fee-for-service option inlieu of costly reimbursement procedures covering actual administrative costs ofgrant disbursement.FSLO4 ELIMINATE NEEDLESS PAPERWORK BY SIMPLIFYING THE COMPLIANCECERTIFICATION PROCESSSimplify OMB's requirements to prepare multiple grant compliance certifications by allowing state and local governments tosubmit a single certification to a single point of contact in the federal government.FSLO5 SIMPLIFY ADMINISTRATION BY MODIFYING THECOMMON GRANT RULESON SMALL PURCHASESModify OMB Circular A-102, "Grants and Cooperative Agreements to State and Local Governments", to increase the dollarthreshold for small purchases by local governments from $25,000 to $100,000 (see also PR0004).FSLO6 STRENGTHEN THE

INTERGOVERNMENTAL PARTNERSHIPReinvent thz. Advisory Commissionon Intergovernmental Affairs (ACIR) and charge it with the responsibility for continuousimprovement in federal, state and local partnership and

intergovernmental service delivery. Direct the AICR to identifyopportunities to imr.rove intergovernmental service delivery and develop a set of benchmarks.REINVENTING ENVIRONMENTAL MANAGEMENTENVOI IMPROVE FEDERAL DECISIONMAKING THROUGH ENVIRONMENTAL COST ACCOUNTINGDevelop demonstration projects to test the applicability of environmental cost accounting. Based on project results, developguidelines to implement environmental cost accounting throughout the Federal Government. Issue an Executive Order toencourage the use of environmental

cost accounting by federal agencies.ENVO2 DEVELOP CROSS-AGENCY ECOSYSTEM PLANNING AND MANAGEMENTIssue an Executive Order to encourage sustainable economic development and ensure sustainable ecosystems through a cross-agency ecosystem management process. Begin phased-in implementation of the policy with selected ecosystem managementdemonstration projects. Conduct

management and budget reviews of the ecosystem management projects as a part of the fiscalyear 1995 budget process.ENVO3 INCREASE ENERGY AND WATER EFFICIENCY

Issue an Executive Order to address energy efficiency andwater conservation issues at federal facilities. Propose legislationto allow the Defense Department

to retain savings from water efficiency projects. Develop appropriate mechanisms to allowfacilities to retain rebates received from utility companies.ENVO4 INCREASE ENVIRONMENTALLY AND ECONOMICALLY BENEFICIAL LANDSCAPINGIssue an Executive Order to require the use of environmentally

beneficial landscaping techniques, including increased use ofnative species and reduced use of water and chemicals, at federal facilities and federally-funded projects, where appropriate.IMPROVING REGULATORY SYSTEMSREGOI CREATE AN INTERAGENCY

REGULATORY COORDINATING GROUPCreate an interagency Regulatory Coordinating Group to share information and coordinate approaches to regulatory issues.REGO2 ENCOURAGE MORE INNOVATIVE APPROACHES TO REGULATIONUse innovative regulatory approaches and develop a Deskbook on Regulatory Design.REGO3 ENCOURAGE CONSENSUS-BASED RULEMAKINGEncourage agencies to use negotiated rulemaking more frequently in developing new rules.

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RecommendationsREGO4 ENHANCE PUBLIC AWARENESS AND PARTICIPATION

Use information technology and other techniques to increase opportunities for early, frequent and interactive publicparticipation during the rulemaking process and to increase program evaluation efforts.

REGO5 STREAMLINE AGENCY RULEMAKING PROCEDURESStreamline internal agency rulemaking procedures, use "direct final" rulemaking for noncontroversialrules and expedite treatment of rulemaking petitions.

REGO6 ENCOURAGE ALTERNATIVE DISPUTE RESOLUTION WHEN ENFORCING REGULATIONSIncrease the use of alternative means of dispute resolution.

REGO7 RANK RISKS AND ENGAGE IN "ANTICIPATORY" REGULATORY PLANNINGRank the seriousness of environmental, health or safety risks and develop anticipatory approachesto regulatory problems.

REGO8 IMPROVE REGULATORY SCIENCECreate science advisory boards for those regulatory agencies that depend heavily on scientific information and judgments.

REGO9 IMPROVE AGENCY AND CONGRESSIONAL RELATIONSHIPSEncourage agencies to establish technical drafting services for congressional committees and subcommittees.

REG I0 PROVIDE BEI I ER TRAINING AND INCENTIVES FOR REGULATORSEstablish a basic training program for Presidential rppointees assigned to regulatory agencies and expandexisting training programs to cover career staff not currently being trained.

GENERAL SERVICES ADMINISTRATION

GSAO I SEPARATE POLICYMAKING FROM SERVICE DELIVERY AND MAKE THE GENERAL SERVICESADMINISTRATION (GSA) A FULLY COMPETITIVE, REVENUE-BASED ORGANIZATIONFund GSA service delivery from customer revenues, transfer activities not related to GSA's central mission to other agencies,and allow agencies to choose whether to purchase GSA services.

OFFICE OF PERSONNEL MANAGEMENT

OPM01 STRENGTHEN THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) LEADERSHIP ROLE INTRANSFORMING FEDERAL HUMAN RESOURCE MANAGEMENT SYSTEMSClearly define OPM's policy, service and leadership role in addressing human resource problems anddelegate operational work to the agencies.

OPM02 REDEFINE AND RESTRUCTURE OPM'S FUNCTIONAL RESPONSIBILITIES TO FOSTERA CUSTOMER ORIENTATIONRestructure and rightsize OPM to enhance and reflect its commitment CO addressing its customers' needs.

OPM03 CHANGE THE CULTURE OF OPM TO EMPOWER ITS STAFF AND INCREASEITS CUSTOMER ORIENTATIONUse interagency groups to involve OPM's external stakeholders in changing federal human resource systems. Improve OPM'spolicy-making process through experimental use of negotiated rulemaking ("reg-neg") and broaden the customer focus ofOPM and agency personnel specialists.

172*11.S. GOVERNMENT PRINTING OFFICE: 1991 357434190157

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