    [Budget of the U.S. Government]
    [IV. Improving Performance in a Balanced Budget World]
    [From the U.S. Government Publishing Office, www.gpo.gov]

              IV.  IMPROVING PERFORMANCE IN A BALANCED BUDGET WORLD

      ----------------------------------------------------------------------

      We still have work to do, for while the era of big Government is over, the era of big challenges is not.
    Achieving educational excellence, finishing welfare reform and our campaign for safe streets, helping families
    to succeed at home and at work, balancing the budget, keeping America strong and prosperous, reforming campaign
    finance and modernizing Government operations so that, together, we can meet the challenges and seize the
    opportunities of this remarkable time.

                                          President Clinton
                                          December 11, 1996

      ----------------------------------------------------------------------
       The President's challenge is an awesome one--literally, how to do
    more with less, and how to do it better.
       But it is the challenge that we face, shaped by the fiscal and
    political realities of our times. The President has worked hard to
    reduce the deficit, and he wants to work with Congress to finish the job
    and balance the budget by 2002--a goal that is widely shared in Congress
    and across the Nation. Consequently, departments and agencies no longer
    can count on more funding each year. For the foreseeable future, their
    resources will be constrained, perhaps severely so.
       And yet, the Federal Government has a legitimate role to play in
    fulfilling the President's goals. Over the last four years, the
    President has used Federal resources and the power of his office to
    begin achieving educational excellence, expanding opportunity, cleaning
    up the environment, investing in promising research, ending welfare as
    we know it, protecting health care and pensions, making the tax system
    fairer, and keeping America strong. The public wants further progress on
    these and other issues and, with limited resources, the Federal
    Government must be able to respond effectively.
       Led by Vice President Gore's National Performance Review, the
    Administration promised to create a Government that ``works better and
    costs less.'' And we have made a good start. We are saving money,
    cutting the work force, eliminating needless regulations and improving
    the ones we need, streamlining bureaucracies, cutting red tape, and
    finding numerous ways to better serve Government's ``customers''--the
    American people.

    Costs Less

       The Administration has:
       Saved over $100 billion, largely through a series of
              management reforms.
       Cut the Federal work force by over 250,000 employees,\1\
              creating the smallest work force in 30 years and, as a share
              of total civilian employment, the smallest since 1931.
              Thirteen of the 14 Cabinet Departments have cut their
              permanent work forces between 1993 and 1996; the Justice
              Department is growing because of the Administration's expanded
              war on crime and drugs.
    ---------------------------------------------------------------------------
      \1\ As of September 1996.
    ---------------------------------------------------------------------------
       Eliminated over 200 programs and projects--major programs
              like the Bureau of Mines, and smaller special-interest or
              narrowly-focused activities like wool and mohair subsidies and
              the Tea-Tasters Board.
       Closed nearly 2,000 obsolete field offices.
       Negotiated better deals for Government purchases. The
              Government now pays $3.62 for a three-pound commercial
              overnight delivery, compared to the $27 retail rate, and as
              little as two-cents-a-minute

    [[Page 36]]

              for long-distance calls, compared
              to the 16-cents-a-minute retail rate.

    Works Better

       Departments and agencies are:
       Eliminating 16,000 pages of regulations and dramatically
              simplifying 31,000.\2\
    ---------------------------------------------------------------------------
      \2\ As of December 31, 1996, agencies had eliminated, or proposed for
    elimination, 87 percent of the 16,000; they had improved, or proposed
    for improvement, 78 percent of the 31,000.
    ---------------------------------------------------------------------------
       Improving customer service. Spurred by the President's
              challenge to be the ``best in the business,'' over 200
              agencies have committed to meet over 3,000 customer service
              standards. The Social Security Administration was rated first
              in a 1995 independent survey of selected public and private 1-
              800 services. Agencies including the Postal Service, Veterans
              Affairs Department (VA), and the Bureau of Engraving and
              Printing have surveyed over a million customers in the past
              year to learn how they can improve services.
       Using emerging technologies, particularly the Internet and
              its World Wide Web, to make Government information readily
              accessible and easier to find. The White House expanded its
              home page (www.whitehouse.gov) to provide access to commonly
              requested services. For example, citizens can get passport
              applications, their earnings records from the Social Security
              Administration, or student loan applications. The Commerce
              Department's ``FedWorld'' system connects users to hundreds of
              agency resources and information--from Federal job
              opportunities, to automobile emission system repair
              instructions, to information on starting a small business.
              Users downloaded over 250,000 tax forms and instruction
              booklets from the IRS' home page during the 1996 tax season.
       Creating ``one-stop shops,'' such as the new U.S. General
              Stores, which give the public walk-in access to services
              across a wide range of agencies while cutting agency overhead
              costs. Similarly, the National Performance Review and the
              General Services Administration are working with phone
              companies across the country to convert Federal listings by
              agency to listings according to services, such as Food Stamps
              or AIDS information. Over 18 million Americans will get such
              listings this year.
       Launching pilot projects to shift regulatory enforcement
              approaches from adversarial relationships to partnerships. In
              the Maine 200 partnership program, in which both companies and
              workers look for hazards, workman's compensation claims have
              dropped 40 percent.
       Cutting ``red tape'' and paperwork. The President and
              Congress strengthened the Paperwork Reduction Act,
              establishing goals for agencies to cut by 25 percent, by 1998,
              the hours that the public spends filling out Government forms
              and paperwork.

    A Toolkit of Strategies and Techniques

       The Administration is proud of its accomplishments, but our work is
    not done. As we move forward, the challenge will only get harder.
    Spurred by the Vice President, the Administration has identified many
    ways for agencies to improve their performance and cut costs. Some of
    these tools focus on eliminating obsolete processes; others focus on
    improving the ones we have. Because agencies and programs operate in
    such different ways, not all of these tools, techniques, and strategies
    apply to each agency and department. But every agency and program can
    benefit from a number of them.
       Based on what we have learned over the past four years, we plan to
    employ the following seven tools, as shown in Table IV-1.
      ----------------------------------------------------------------------

                                                 Table IV-1.  STRATEGIES TO IMPROVE PERFORMANCE AND REDUCE COSTS

    --------------------------------------------------------------------------------------------------------------------------------------------------------
    1...........................  Restructure Agencies
    2...........................  Improve Effectiveness of the Federal Workplace
    3...........................  Reform Federal Purchasing Practices
    4...........................  Expand Competition to Improve Services and Reduce Costs
    5...........................  Follow the Best Private Sector Practices in Using Information Technology
    6...........................  Improve Credit Program Performance
    7...........................  Improve Business Management Practices
    --------------------------------------------------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------

    1. Restructure Agencies

       A smaller Government is not an end in itself. We want to change the
    way it operates. In place of highly-centralized, inflexible
    organizations that focused on inputs, the Administration is creating
    more flexible, decentralized management structures within agencies to
    focus on results. Agencies are streamlining their work forces,
    collapsing redundant layers, increasing spans of control, and creating
    leaner headquarters. Many are closing small, inefficient field offices
    while strengthening

    [[Page 37]]

    the services they provide to customers through increased electronic communications and systems. And some agencies are fundamentally changing the way they work with State and local governments and with the private sector by creating partnerships to focus on joint goals and the progress toward meeting them.
       Create more efficient, performance-based organizations
              (PBOs): PBOs, which the President has labeled a priority for
              his second term, are discrete units of a department that
              commit to clear management objectives, measurable goals,
              customer service standards, and specific targets for improved
              performance (see Table IV-2). Once designated, they would have
              greater personnel and procurement flexibilities and a
              competitively-hired CEO, who would sign an annual performance
              agreement with the Secretary and have a share of his or her
              pay depend on the organization's performance. The British, who
              have extensive experience with this concept, have found that
              such agencies have improved performance and cut administrative
              costs.
      ----------------------------------------------------------------------

                                                      Table IV-2.  PROPOSED PERFORMANCE-BASED ORGANIZATIONS
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                             Department or Agency                                                               Function
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Commerce..............................................................  Technical information dissemination (National Technical Information Service)
    Commerce..............................................................  Intellectual property rights (Patent and Trademark Office)
    Commerce..............................................................  Seafood inspection
    Defense...............................................................  Defense Commissary Agency
    Housing and Urban Development.........................................  Mortgage insurance services (GNMA)
    Housing and Urban Development.........................................  Mortgage insurance services (FHA)
    Transportation........................................................  St. Lawrence Seaway Development Corporation
    Treasury..............................................................  United States Mint
    Office of Personnel Management........................................  Retirement benefit services
    --------------------------------------------------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------
       Consolidate intergovernmental funding streams into
              Performance Partnerships: Performance Partnership grants with
              larger, more flexible funding pools can replace small
              categorical grants, improving financial incentives, rewarding
              results, eliminating overlapping authorities, and cutting
              Federal overhead, micro-management, and paperwork. States or
              Tribes can now combine up to 15 separate Environmental
              Protection Agency funding streams across water, air, hazardous
              waste, and similar programs to improve environmental outcomes.
              Agriculture Department (USDA) State Directors can combine
              funding for 18 programs into three funding streams

    [[Page 38]]

              for rural housing, utilities and business or cooperative services.
       Accelerate implementation of existing streamlining plans: The
              President and Congress are ahead of schedule on plans to cut
              272,900 Federal positions, or 12 percent of the work force, by
              the end of this decade (see Chart IV-1). As Chart IV-2 shows,
              agencies are working hard to implement their streamlining
              plans--designed to cut overhead, eliminate vertical layers and
              redundant structures, particularly in headquarters operations,
              and increase spans of control.

       Eliminate excess field offices: Several agencies, including
              the Departments of Agriculture, Transportation, and the
              Treasury, and the Small Business Administration, have
              developed proposals to streamline their field office
              structures, while improving operations and customer service.
              Over 890,000 Federal employees work in almost 30,000 separate
              field offices that vary greatly in size. Although the average
              field office houses 30 employees, over 11,000 offices house
              five or fewer.

    2. Improve Effectiveness of the Federal Workplace

       What was true in 1993 remains true today. The main agents for change
    are Federal employees themselves. With a quarter of a million fewer of
    them than in 1993, we are asking those who remain to do more with less.
    They are working harder and smarter each and every day, and our efforts
    to reinvent Government would be nowhere near as successful were it not
    for their enthusiastic leadership and support. We must, however,
    continue to downsize and restructure, if only because of the limited
    resources that a balanced budget will offer. As with the previous
    personnel cuts, the Administration plans to closely manage and target
    further downsizing. Agencies need to avoid workplace

    [[Page 39]]

    disruptions and employee disputes and, when they occur, resolve them quickly and fairly. Employees and managers need to plan and work together for common goals. In addition, the President proposes a 2.8 percent pay raise for both
    civilian employees and the military. \3\
    ---------------------------------------------------------------------------
      \3\ Once again, the Administration will consult employee organizations
    and others before recommending how to allocate the civilian pay raise
    between locality pay and a national schedule adjustment.
    ---------------------------------------------------------------------------
       Increase the number and effectiveness of labor-management
              partnerships: The Administration plans to add to the more than
              850 labor-management partnerships already in place to improve
              relations between agencies and the unions representing their
              employees. With these partnerships, the two sides work
              together toward a common goal--providing the highest-quality
              service at the lowest cost. The two sides cooperate to solve
              problems, implement changes, and jointly resolve worksite
              issues. Good partnerships breed good organizations, with an
              energized work force focused on doing its job better and more
              efficiently.
       Use buyouts to adjust the size and skill mix of the work
              force: A well-planned, well-executed buyout program can
              minimize the need for involuntary layoffs by increasing
              attrition in targeted occupations, organizations, or
              locations. In response to changed conditions, missions, and
              resources, private and public organizations have used buyouts
              to make needed adjustments in the composition of the work
              force. Generally, they are less costly than formal reductions-
              in-force and are always less disruptive to workers--to those
              who elect to leave and those who remain.
       Replace formal grievance procedures with Alternative Dispute
              Resolution (ADR): The early, voluntary use of ADR can quickly
              resolve workplace disputes, eliminating the costs, delays, and
              adverse effects on workplace morale of formal administrative
              procedures or litigation. ADR encompasses various techniques
              to resolve disputes and

    [[Page 40]]

              reach negotiated settlements and,
              at the Federal level, ADR has resolved a wide range of workplace
              disputes, including employee grievances and allegations of
              discrimination. For example, a Postal Service alternative
              mediation pilot program in Florida resolved 77 percent of
              cases using ADR, and generally reached settlements within two
              weeks of the offer of mediation services. ADR's expanded use
              can produce quicker, better settlements and significant
              savings.

    3. Reform Federal Purchasing Practices

       Prior to this Administration, efforts to make Government work better
    and cost less were often hindered by the Government's unique acquisition
    system. It was heavily rule-driven, leaving little leeway for Federal
    managers and employees to exercise good business judgment and common
    sense and providing too much incentive for wasteful and costly
    litigation. With leadership from the National Performance Review, the
    Administration issued an early call for fundamental reform and--with
    strong bipartisan support that helped produce the 1994 Federal
    Acquisition and Streamlining Act--is transforming the system into one
    that operates much more like private sector acquisition. The
    Administration seeks a Government acquisition system that performs like
    those of our most successful companies and, to achieve it, is pursuing
    important reforms.
       Use performance-based service contracting (PBSC): The
              Government spends over $100 billion a year for contracted
              services. PBSC is a valuable tool that can not just save
              money, but also better enable agencies to achieve their
              missions. PBSC emphasizes what the Government wants from a
              contractor in measurable, mission-related, results-oriented
              terms, rather than prescribing how to do the work. PBSC also
              cuts costs by moving the Government away from cost
              reimbursement contracts, which are open-ended, to fixed price
              contracts. An ongoing Government-wide pilot project already
              has generated savings of 15 to 20 percent, and the agencies
              involved have expressed more satisfaction with contractor
              performance.
       Use past performance in selecting contractors: Agencies have
              realized, as have successful companies, that they need not
              settle for mediocrity when they can get better overall value
              from stronger performers. By paying more attention to a
              contractor's past performance, agencies are beginning to do
              business only with firms that provide quality performance in
              exchange for taxpayers dollars. For example, a Navy
              installation in Seattle reports that its use of past
              performance has improved on-time delivery from 20 to over 70
              percent and significantly reduced defects in the past 18
              months.
       Apply successful commercial buying strategies: Recent legal
              and regulatory reforms are letting agencies more easily and
              effectively use commercial purchasing practices. Many
              agencies, for instance, are leveraging the Government's buying
              power as a large customer of commercial products, often by
              consolidating their orders. VA entered into a single national
              contract for one of its pharmaceuticals, cutting its costs
              from about $2.5 million a year to just $550,000. By
              consolidating its requirements for lab testing services in the
              Southeast region, the Army cut its bill in half. The Defense
              Logistics Agency is using another approach--a ``prime vendor''
              strategy in which customers order and receive products
              directly from distributors--reducing the value of its
              pharmaceutical inventories by nearly $85 million.
       Streamline the buying process: The Administration is revising
              the rules for source selection, letting contracting officials
              more easily get the best deals while still allowing all
              interested firms to participate. These changes will save the
              Government the cost of fruitless negotiations with offerors
              who are not leading contenders, and allow firms to focus
              resources on situations in which they likely will be the most
              competitive.

    [[Page 41]]

    4. Expand Competition to Improve Services and Reduce Costs

       Competition spurs efficiency. Agencies that provide administrative
    and other commercial or industrial products or services to ``captive
    customers''--be they other agencies, or individuals or businesses--lack
    the stimulus of competition to sharpen their performance and control
    their costs. The Administration's effort to expand competition
    encourages agencies to compete with one another, and with the private
    sector, to provide common administrative support services. More
    competition will bring new technologies, capital, management techniques,
    and opportunity to Federal employees and their customers.
       Accelerate and expand the use of competition: Agencies are
              using competition to purchase support services from their own
              employees, from ``franchise funds'' in other agencies, and
              from the private sector. Competition allows agencies to focus
              on their core mission requirements while giving them access to
              the best service providers, both public and private, and it
              encourages employees to organize themselves to cut costs and
              meet performance standards. The Social Security
              Administration, for example, recently chose to purchase
              payroll services from the Interior Department at lower annual
              operating costs. Through competition, the Defense Department
              (DOD) is cutting costs without cutting service. Indeed,
              experience here and abroad has shown that a greater use of
              competition can cut costs by as much as 30 percent.
       Spin off or privatize functions: Agencies are spinning off or
              otherwise converting to the private sector a range of assets
              and activities that the Government no longer needs to own or
              perform, including the Alaska Power Administration, the
              Interior Department's helium processing, the Naval Petroleum
              Reserve known as Elk Hills, and, eventually, the U.S.
              Enrichment Corporation. Similarly, VA relied on ``just in
              time'' deliveries in buying medical supplies, eliminating its
              internal warehousing system and saving about $100 million a
              year. In a new, innovative approach, the Office of Personnel
              Management converted its background investigation staff to an
              Employee Stock Ownership corporation, saving money, protecting
              jobs, and letting those former Government employees expand
              services into State, local, and private markets.

    5. Follow the Best Private Sector Practices in Using Information
    Technology

       Well-managed information technology should improve the Government's
    productivity while cutting its costs. Table IV-3 at the end of this
    chapter lists some of the most important investments in information
    technology for which the President is proposing funding. To ensure the
    maximum return on investment, agencies can now copy the successful
    practices of private firms, due to their new authority under the 1996
    Clinger-Cohen Act. These practices--reengineering, buying and managing
    smart, integrating information--ensure that the technology provides
    workable solutions to real problems at a reasonable cost.
       Re-engineer before automating: Agencies can redesign how they
              do business to ensure that automation cuts costs, improves
              effectiveness, and uses commercial, off-the-shelf technology
              as much as possible. The Census Bureau, for example, moved its
              information to the World Wide Web to let researchers draw from
              the vast stores of Census data. The Weather Service
              restructured the duties of its forecasters, using advanced
              workstations to increase their productivity, and the accuracy
              and timeliness of weather forecasts. The warning time for
              tornados has risen significantly, giving communities more time
              to take appropriate precautions, such as moving children off
              playgrounds.
       Acquire systems in phases: By acquiring information
              technology systems in pieces, rather than all at once,
              agencies can reap immediate benefits while increasing the
              chance of having an integrated, working system at the end. A
              General Accounting Office (GAO) study found that buying
              systems in phases was one of the most important strategies
              followed by companies that have most successfully acquired new
              information technology systems.

    [[Page 42]]

       Buy off-the-shelf: Agencies can reduce their risks of
              problems by avoiding custom-designed components. The broad
              range of information technology equipment, software, and
              services now commercially available provides new opportunities
              to use commercial, off-the-shelf technology, rather than
              designing and building more-costly custom systems from the
              ground up. Through contracts with the General Services
              Administration (GSA), agencies can get standard commercial
              software packages for financial systems.
       Consolidate and out source: The Government can close over
              half of its larger computer centers and eliminate duplicative
              communications links. The National Aeronautics and Space
              Administration cut its data center processing costs by 30
              percent in its first year of consolidation, and expects to
              save another 35 to 40 percent next year. GSA will close 11
              data centers, outsourcing all of its data center requirements
              to the private sector.
       Monitor progress with performance-based management systems:
              Agencies are establishing performance-based monitoring
              systems, enabling managers to track whether major system
              acquisitions are meeting expectations for costs, schedules,
              and capabilities. The Federal Aviation Administration's Air
              Traffic Modernization System is using performance measures
              that are linked to design and procurement decisions.
       Integrate information: By integrating their information,
              agencies can stop duplicating each others' efforts while
              making their critical information more accurate. Many agencies
              collect information that other agencies use. Over 40 agencies,
              for example, collect and use trade data for analysis and for
              processing imports and exports. Those agencies are integrating
              information about shippers, bills of lading, types of cargo,
              exports, imports, and duties into a cohesive, coordinated
              system. The new system will eliminate duplicative import
              forms, speed cargo clearance, and improve our trade
              statistics. Similarly, eight agencies administering programs
              that deliver cash benefits to individuals are working together
              to better coordinate program information across major Federal
              benefit programs, in order to prevent overpayments and avoid
              the costs of trying to recoup them after the fact.

    6. Improve Credit Program Performance

       To fulfill its stewardship responsibilities to taxpayers, the
    Government must manage its cash and loan assets as wisely as possible.
    Specifically, it must design and administer its loan programs prudently,
    and provide incentives to ensure that it can collect its ``receivables''
    (that is, the amounts owed) in a timely fashion. At the end of 1995,
    contingent liabilities (that is, outstanding guaranteed loans) totaled
    $737 billion, and non-tax receivables totaled $245 billion, of which $50
    billion was delinquent. The 1996 Debt Collection Improvement Act gives
    agencies a range of new tools to improve credit program performance.
       Lower costs with improved loan servicing: The Debt Collection
              Improvement Act lets agencies withhold Federal payments to
              those who are delinquent on loans from the Federal Government,
              refer delinquent accounts to a private collection agency or a
              private attorney, or sell the ``account receivable'' to the
              private sector. Agencies also can keep up to five percent of
              any increase in their collections in 1997, compared to their
              average annual collections in 1993-96, but they must use the
              funds they keep to improve their credit management and debt
              collection.
       Obtain higher recoveries on delinquencies with enhanced
              payment offset: Also under the Act, the Treasury Department
              has begun to implement its new authority to intercept any
              Federal payment to a delinquent individual or entity to offset
              the delinquent amount. Through agency referrals of such debt
              to the Treasury Department, the Government expects to recover
              over $300 million in the next three years, which it will
              credit to agency accounts.
       Consolidate Government-wide debt collection: The Act enables
              Treasury to designate agencies as Federal Debt Collection
              Centers to compete for delinquent account referrals and, in
              turn, be paid from recov-

    [[Page 43]]

              eries. By October 1997, Treasury will
              designate up to five agencies to provide comprehensive account
              maintenance and special collection services. For agencies with
              decentralized account servicing operations or few loans, the
              centers will offer a low-cost alternative to in-house
              servicing.
       Coordinate and expedite asset sales: The Act encourages
              agencies to sell loan assets when the Federal Government will
              benefit financially. In 1996, the Department of Housing and
              Urban Development received over $300 million more by selling
              collateralized loans than it would have--had it continued to
              hold these delinquent loans in its portfolio. VA sells over $1
              billion in collateralized loan assets each year. The Small
              Business Administration will undertake loan sales in 1998.

    7. Improve Business Management Practices

       The Administration is trying to transform a Federal Government with
    vestiges of early 20th Century thinking into one suited for the next
    century, and seeking to provide financial accountability for Government
    spending. An efficient, effective Government needs sound financial
    management, reliable information, and, where appropriate, fees from
    those who benefit from Government's business-like activities. The
    Administration is taking a coordinated approach to electronic process
    initiatives in order to re-engineer financial services; aggressively
    implement electronic purchasing, payment, and funds transfer; and
    improve the quality and timeliness of financial reporting.
       Collect fees from the beneficiaries of Government's business-
              like activities: The Federal Government provides services to
              businesses and others in the private sector. The budget would
              impose or raise fees on these recipients because, where
              possible, those who benefit from the Government's business-
              like activities should finance the services--not the general
              taxpayer. Specifically, the budget proposes Federal Aviation
              Administration fees to fund the air traffic control system;
              Food and Drug Administration fees to finance the testing and
              approval of new drugs; and Food Safety and Inspection Service
              fees to fund the costs of meat and poultry inspection in
              production plants.
       Re-engineer travel policies and procedures: The Federal
              Government spends over $7 billion a year for travel (almost $5
              billion in the Defense Department). GAO found that DOD spends
              an additional 30 percent of its direct travel costs to manage
              its travel system, while the private sector spends about six
              percent. DOD has begun implementing the recommendations of a
              two-year study to streamline its travel management procedures.
              GSA also has begun implementing the recommendations of a
              similar study of civilian agency travel management policies
              and practices. Both efforts likely will dramatically cut
              travel administrative costs throughout the Government.
       Use electronic means to improve purchasing and capture
              financial data for easier accounting: Purchase cards and
              electronic data interchange let buyers buy items cheaply and
              conveniently, while they capture the needed financial data
              from the buyers. USDA estimates that a paper purchase costs
              $77 to process, while the same purchase by card costs $33;
              USDA hopes to cut the card cost to $17 per transaction. At the
              same time, information technology makes it easier for buyers
              to learn about items for sale. The ``GSA Advantage'' World
              Wide Web site lets Government employees browse through
              thousands of product listings and order with the Government's
              ``IMPAC'' credit card, and agencies can order high-end
              computer equipment and software through the Web page of NASA's
              ``Scientific and Engineering Workstation Procurement''
              contract. The Administration wants to adopt ``smart card''
              technology so that, ultimately, every employee will be able to
              use one card for a wide range of purposes, including travel,
              small purchases, and building access.
       Phase-in electronic funds transfer: The Debt Collection
              Improvement Act supports agencies' efforts to modernize their
              payment processes by requiring the Federal Government, by
              1999, to make payments

    [[Page 44]]

              to individuals and businesses by
              electronic funds transfer, thereby eliminating the costs and
              inconvenience of lost and stolen paper checks.
       Accelerate implementation of Electronic Benefits Transfer
              (EBT): EBT replaces multiple Federal and State paper-based
              benefit delivery systems with a single card system, cutting
              overhead costs by streamlining processes and replacing
              multiple government delivery systems with the private banking
              infrastructure. EBT also brings dignity, security, and access
              to benefit recipients. Over half of the States will issue EBT
              cards in 1997. The Administration's EBT Task Force has
              estimated that Nation-wide implementation of EBT will save
              $195 million a year by 1999.
       Assure integrity of data (with audited financial statements):
              Government managers need management and reporting systems that
              produce reliable information. The basic set of Federal
              accounting standards is now complete, and agencies are
              improving the accuracy and reliability of their financial
              information. Sixty percent of entities that prepared audited
              financial statements for 1995 received unqualified opinions.
              Agencies are also making those statements more timely by
              completing and releasing them earlier.

    Public Confidence in Government

       The tools discussed above are designed to do more than let agencies
    function better for their own sake. Ultimately, they are designed to
    help agencies provide better, more effective services to the American
    people.
       Already, agencies are assessing what their programs actually
    accomplish and what we must do to improve their performance. The
    Government Performance and Results Act (GPRA)--the landmark legislation
    that enjoyed broad bipartisan support in Congress before the President
    signed it in 1993--makes agencies more accountable for, and focused on,
    what their programs achieve. The law provides the Administration,
    working with Congress, an unprecedented opportunity to give the American
    people a comprehensive picture of what they are getting for their taxes.
       GPRA requires all agencies to send strategic plans to Congress by
    September 30, 1997 and make them available to the public. Each agency
    will define its mission, and set out its long-term goals for fulfilling
    it. Complementing the strategic plans, agencies also will create annual
    performance plans, establishing performance targets for the year ahead.
    Agencies will send the first of these performance plans, for 1999, to
    Congress and make them available publicly in February 1998. Finally, at
    year-end, GPRA requires agencies to compare actual performance against
    target levels in the performance plan, and to feature the comparisons in
    annual reports on performance to the President and Congress. Agencies
    will complete the first of those reports, for 1999, by March 2000.
       For the challenges ahead, agencies now have many of the tools they
    need from not only GPRA but, as illustrated above, from the Federal
    Acquisition and Streamlining Act, the Debt Collection Improvement Act,
    the Clinger-Cohen Act, and the Paperwork Reduction Act. Others, however,
    will require legislation. Working together, the Administration and
    Congress can build on the groundwork they have laid. Working together,
    we can help agencies improve the Federal Government's performance in a
    balanced budget world.

    [[Page 45]]

                 Table IV-3.  PROGRAM PERFORMANCE BENEFITS FROM MAJOR INFORMATION TECHNOLOGY INVESTMENTS
                                       (Budget authority, in millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                          1996     1997      1998
              Program/Project            Actual  Estimate  Proposed            Program Performance Benefits
    ----------------------------------------------------------------------------------------------------------------
    Agriculture: Field Service Center       132       91       101   Allows ``one-stop service'' for farmers and
     Initiative.                                                      producers.

    Commerce: Advanced Weather               58      100       117   Improves the timeliness and accuracy of
     Interactive Processing System.                                   forecasts. Lowers the costs of generating
                                                                      forecasts through reduced staffing
                                                                      requirements.

    Commerce: Census 2000..............       6       20        67   Reduces errors, the number of temporary
                                                                      employees needed, and publication costs.

    Defense: Defense Messaging System..     121      167       203   Provides timely, reliable, standardized, and
                                                                      secure communications worldwide and in the
                                                                      field.

    Education: Direct Student Loan           85      135       172   Provides efficient and accurate servicing and
     Servicing System.                                                record keeping for direct student loans.

    Education: National Student Loan         23       28        32   Identifies institutions with high default rates
     Data System.                                                     for corrective action or elimination from
                                                                      student loan programs. Prevents students with
                                                                      previously defaulted student loans from
                                                                      receiving additional aid.

    Education: PELL Grant Systems......       6       11        11   Distributes grant funds to institutions and
                                                                      supports sound financial management.

    Education: Guaranteed Student Loan       24       23        20   Makes payments and maintains records for
     Data System.                                                     transactions between the Education Department,
                                                                      guaranty agencies, and banks, as well as
                                                                      improving debt collection of student loans.

    Education: Student Aid Application       50       50        52   Assists institutions and students by providing
     System.                                                          a standardized way to determine financial aid
                                                                      eligibility.

    Energy: Telecommunications               --        2         4   Lowers operating and maintenance costs and
     Integrator Services contract.                                    improves sharing of information by promoting
                                                                      interoperability of telecommunications
                                                                      systems.

    Health and Human Services: Medicare      20       75        89   Simplifies and streamlines claims processing,
     Transaction System.                                              eligibility, and managed care information
                                                                      systems while improving service to Medicare
                                                                      customers.

    Health and Human Services: National      --       --        30   Will help locate non-custodial parents who flee
     Directory of New Hires.                                          their home state to avoid making child support
                                                                      payments.

    Housing and Urban Development:           40       43        66   Provides better internal controls and oversight
     Information Technology Investments.                              of Federal grants, verification of the
                                                                      eligibility of recipients, timely and accurate
                                                                      payment of funds, and oversight and servicing
                                                                      of FHA mortgages.

    Interior: Automated Land Management      51       42        33   Improves the quality of, and access to, land,
     Records System.                                                  resources, and title information for public
                                                                      land managers and the public.

    Interior: American Indian Trust          --       13        17   Ensures that trust income is collected,
     System.                                                          invested, and distributed accurately.

    Justice: Integrated Automated            84       84        84   Allows the FBI to process routine
     Fingerprinting Identification                                    identification requests in 24 hours and urgent
     System.                                                          requests in two hours.

    Justice: National Criminal               62       39        --   Provides the criminal justice community Nation-
     Information Center 2000.                                         wide with immediate access to documented
                                                                      information on criminals and criminal
                                                                      activity.

    Labor: ERISA Filing Acceptance           --        6         3   Increases the speed, accuracy, and integrity of
     System.                                                          information that three agencies use to
                                                                      safeguard private pensions.

    State: Diplomatic and Consular          100      144       191   Improve delivery and management of information
     Systems Modernization.                                           required by diplomatic and consular officers
                                                                      overseas to support the Nation's foreign
                                                                      policy goals and ensure U.S. border security.
                                                                      (Includes user fees and budget authority.)

    [[Page 46]]

    Transportation: FAA Air Traffic       1,368    1,233     1,306   Maintains and improves capability to promote
     Control System Modernization.                                    the safe, orderly, and expeditious flow of air
                                                                      traffic

    Treasury: Information Technology         --       --       500   Provides advanced funding for reengineering and
     Investments.                                                     redesign of tax administration systems and
                                                                      operations.

    Treasury: Treasury Communications        46      115       118   Provides secure data transmission and
     System.                                                          information services worldwide for Treasury
                                                                      bureaus. (Funded through Treasury's working
                                                                      capital fund, not annual appropriations.)

    Treasury: Automated Commercial           15       15        15   Supports business process redesign, systems
     Environment.                                                     architecture, development, and implementation
                                                                      for systems to replace Customs' Automated
                                                                      Commercial System.

    Veterans Administration: Benefits         6        6         7   Ensures that benefits are delivered timely and
     Payment System transition.                                       establishes a modern information technology
                                                                      infrastructure.

    Veterans Administration: VA             430      450       456   Allows clinicians at VA hospitals and clinics
     Clinical Workstation Information                                 easy access to complete medical records.
     System.

    Environmental Protection Agency:          7        7         8   Helps to improve the environment by maintaining
     Toxic Release Inventory System.                                  data related to the release of certain toxic
                                                                      chemical uses. The data is available to EPA
                                                                      staff, State and local governments,
                                                                      educational institutions, industry,
                                                                      environmental and public interest groups, and
                                                                      the general public.

    National Aeronautics and Space          247      255       245   Archives, manages, and distributes earth
     Administration: Earth Observing                                  science data from NASA missions and provides
     System Data Information System.                                  spacecraft control and science data processing
                                                                      for the earth-observing mission systems.

    Social Security Administration          167      235       200   Funds national implementation of a new
     (SSA): Automation Investment Fund.                               computing network of intelligent workstations
                                                                      for SSA and the State Disability Determination
                                                                      Services and related technological
                                                                      enhancements, including electronic sharing of
                                                                      information.

    General Services Administration:         10       21        31   Beginning in 1998, will offer the Federal
     Post-FTS 2000.                                                   Government low-cost, state-of-the-art,
                                                                      integrated voice, data, video, and long-
                                                                      distance telecommunications. (Cost numbers are
                                                                      not budget authority, but agency contributions
                                                                      to the Information Technology Fund for
                                                                      expenses associated with the FTS 2000
                                                                      Program.)

    Nuclear Regulatory Commission:            1        2         2   Implements workprocess improvement review and
     Agency Document Access and                                       increases staff efficiency through improved
     Management System.                                               information access and elimination of
                                                                      redundant data entry. Reduces maintenance
                                                                      costs by replacing aging legacy hardware and
                                                                      minimizing custom software.

    Office of Personnel Management:          --       --        --   Improves product accuracy, customer service,
     Retirement System Modernization.                                 and staff efficiency by reengineering current
                                                                      paper-laden Federal employee retirement
                                                                      processes.

    Interagency: Simplified Tax and          --       --        --   Reduces employers' tax and wage reporting
     Wage Reporting System.                                           burden.

    Interagency: International Trade         --       --         6   Reduces burden on exports and imports, speeds
     Data System.                                                     up shipments, and improves the quality of
                                                                      trade statistics.

    Data Center Consolidation..........      --       --       -56   Saves money by requiring all Federal agencies
                                                                      to consolidate or co-locate their data
                                                                      processing centers to fewer larger, more
                                                                      efficient, and cost effective locations,
                                                                      either within the Government or with a private
                                                                      sector provider.

    ----------------------------------------------------------------------------------------------------------------
    Note: This report is required by the Information Technology Management Reform Act of 1996, 40 USC 1412(c)).