[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

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  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                                                         
                                                                                                                

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   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.
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   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 

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

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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.
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                                                  Table IV-2.  PROPOSED PERFORMANCE-BASED ORGANIZATIONS                                                 
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                         Department or Agency                                                               Function                                    
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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                                                     
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   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.                              
                                                                                                                
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Note: This report is required by the Information Technology Management Reform Act of 1996, 40 USC 1412(c)).