[Budget of the United States Government]
[IV. Improving Performance Through Better Management]
[From the U.S. Government Publishing Office, www.gpo.gov]


 
           IV. IMPROVING PERFORMANCE THROUGH BETTER MANAGEMENT

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          IV.  IMPROVING PERFORMANCE THROUGH BETTER MANAGEMENT

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  We made a decision that was profoundly important, that the way Government works matters, that we could not
maintain the confidence of the American people and we could not have ideas that delivered unless the Government
was functioning in a sensible, modern, and prudent way.
 
                                      President Clinton
                                      December 1998
 

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  On September 30, 1998, President Clinton announced that the Federal 
budget had reached balance and produced a surplus for the first time in 
a generation. Without this Administration's early and firm commitment to 
streamlining and reinventing Government, it would not have been possible 
to eliminate the deficit. ``After all,'' Vice President Gore has said, 
``it is our progress in reinventing and downsizing Government, while 
improving it, that has enabled us to balance the budget, cut taxes for 
families, and invest properly in key priorities for the future.''
   Reinventing Government--the goals of improving the quality of 
services that Americans rightfully expect, while reducing the size of 
the Government that delivers them--seems an almost contradictory notion. 
How to do more with less? The answer is that the Government must meet 
the needs of the American people by improving its management and the 
performance of programs--much as U.S. business has done in the face of 
competitive pressure over the last quarter century. From the start, Vice 
President Gore, working with the departments, agencies, inter-agency 
working groups, and worker representatives, and drawing on the expertise 
of the private sector, has led an unprecedented effort to make the 
Federal Government more efficient and effective while also reducing its 
size.
  From 1993-1998, the Administration has cut the Federal civilian work 
force by 365,000 full-time equivalent employees (FTEs). Based on the 
number of Federal employees on the payroll, the work force is the 
smallest it has been since the Kennedy Administration. Working with 
Federal employees, the Administration has eliminated wasteful spending 
and cut numerous outdated Government programs. These efforts have saved 
the American people more than $136 billion. Today, we have a smaller, 
more efficient Government that provides the services the American people 
have come to count on: protecting the environment; improving our 
schools; and providing retirement benefits to seniors, to name only a 
few. To recognize the Federal employees who help the Government operate 
more efficiently and better serve the American people, the President 
proposes a 4.4 percent pay raise, the largest increase since 1981, for 
civilian employees and military members.
  The Clinton-Gore Administration relies on several key strategies to 
achieve its reinvention goals. Key among them are the National 
Partnership for Reinventing Government (NPR), Priority Management 
Objectives (PMOs), and inter-agency management groups.
   Founded at the start of the Administration, the NPR (then the 
National Performance Review) has empowered Federal employees and 
managers and they have responded by improving services and cutting 
costs. It counts among its many successes the Food and Drug 
Administration's (FDA's) streamlined drug approval process, the Defense 
Department's (DOD's) reduction of many military specification buying 
standards, and the Federal Aviation Administration's (FAA's) improved 
safety procedures. NPR will concentrate on fostering customer-oriented, 
results-driven organizations that focus on performance.

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   PMOs focus the Administration's efforts to meet some of the 
Government's biggest management challenges. They are specific management 
initiatives covering a wide range of concerns, ranging from meeting the 
year 2000 computer challenge to implementing the restructuring of the 
Internal Revenue Service (IRS). The Administration also engages inter-
agency groups (discussed later in this Section) to marshal resources 
across the Government to address concerns important to Americans.
   Six years out, there is measurable success, more to be done, and a 
determination to realize the President's vision of a Government that 
functions in a ``modern, sensible, and prudent way.''
   Internet addresses in this Section refer the reader to websites where 
work is described in greater detail.

NPR: Changing the Government

  NPR has consistently pursued initiatives to build a Government that 
works better, costs less, and gets the results that matter to the 
American people. NPR efforts have led to operational improvements in 
agencies that affect everyday American life, such as better customer 
service at the Social Security Administration (SSA), and improvement in 
delivery of services, including the provision of water, food, and 
shelter to disaster victims by the Federal Emergency Management Agency.
  In the coming year, NPR will focus on the following four major 
initiatives designed to improve Government services to all Americans:
  (1) Working to deliver results Americans care about: In 1998, the NPR 
launched an effort with 32 agencies to increase their focus on customers 
and achieve results that matter to Americans. These High Impact Agencies 
(HIAs) interact directly with the public. The HIAs have defined specific 
commitments to improve service delivery and agency operations. Table IV-
1 includes examples of the specific commitments made by many of the 
HIAs. This focus on customers will build on the agencies' strategic and 
annual performance plans discussed in Section VI. Additional information 
on the HIAs' efforts is available on the NPR website, www.npr.gov.
  (2) Developing customer and employee satisfaction measures that will 
supplement agency program results: A key initiative in improving 
Government performance, the Government Performance and Results Act 
(GPRA), was enacted by Congress in 1993. This Act increases the 
accountability of Government agencies by requiring them to define 
measurable performance goals and report on their achievements.
  In 1999 and 2000, the Administration intends to reinforce GPRA efforts 
by increasing the use of customer satisfaction goals in annual plans of 
selected agencies. For agency programs dealing directly with the public, 
customer satisfaction is a key measure. The Administration will also 
conduct the second annual employee satisfaction survey for Federal 
workers and use the data to monitor progress in bringing the benefits of 
reinvention to all Federal workers. Employee satisfaction also affects 
agency performance--satisfied employees mean better Government services, 
products, and benefits to the public.
  (3) Improving American life in ways that no one Government program 
could accomplish alone: The Administration will pilot test strategies to 
provide seamless service delivery in areas of greatest concern to 
Americans, effectively creating a system of one-stop shopping for 
important Government services. People interested in help finding jobs or 
in improving public health in their community should be able to obtain 
that help swiftly and easily. The Administration is committed to using 
partnership approaches among Federal, State, and local programs to 
achieve the outcomes most Americans expect from their government.

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                                               Table IV-1.  STRATEGIES TO ACHIEVE HIGH IMPACT AGENCY GOALS
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Between now and January 1, 2001, agencies with great impact on Americans will:
 
I.                   Partner to get results that Americans care about that no agency can achieve alone. For example:
 
                      In partnership with the airline industry, three Federal agencies (the Animal and Plant Health Inspection Service (APHIS),
                      Customs, and the Immigration and Naturalization Service (INS)) will obtain advance information on 80 percent of international air
                      passengers to expedite the overall flow of passengers with no loss in enforcement.
 
                      The Food and Drug Administration will work closely with industry, health care providers, and the consumer to ensure that
                      75 percent of all consumers receiving new drug prescriptions will be given useful and readable information about their product.
 
                      The Food Safety and Inspection Service will collaborate closely with other public health agencies that are members of the
                      President's Food Safety Council to reduce food-borne illnesses by 25 percent, between 1997 and 2000. As a first step, they will
                      work together in 1999 to develop a common approach and coordinate budgetary resources.
 
 
II.                  Create electronic access and processing in government. For example:
 
                      The number of States issuing food stamps by electronic benefit transfer will increase from 22 in 1997 to 42 in 2000.
 
                      An electronic trademark application will be placed on the Patent and Trademark Office's website. Trademark customers will
                      be able to file applications and related papers electronically.
 
                      By October 2000, the Department of Education will enable three million students and families to submit their Federal
                      student aid applications electronically. This doubles the current annual number.
 
 
III.                 Manage with a set of measures that balance customer satisfaction, employee satisfaction, and business results. For example:
 
                      The Veterans Health Administration (VHA) shows continuing improvement in patient satisfaction with the care they receive.
                      In 1995, 60 percent of patients rated their care as very good or excellent. That number rose to 75 percent in 1998. The goal for
                      1999 is 79 percent. The 2000 goal is 83 percent and the 2003 goal is 95 percent.
 
                      By 2001, the VHA will expand its adherence to clinical guidelines to cover 95 percent of common diseases among veterans
                      compared to 76 percent in 1997.
 
                      The Federal Emergency Management Agency will increase individual customer satisfaction with the assistance application
                      process from 84 percent in 1995 to at least 90 percent in 2000.
 
 
 Note: Information on specific HIAs is available on agency websites.

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  One example of such partnerships is the establishment this year by 
Executive Order of a Food Safety Council, committed to reducing the 
incidence of food-borne illnesses. To improve the well-being of 
children, the Federal Government will also enter into 10 partnerships 
with State and local governments to devise new ways, under current law, 
to increase flexibility in the use of Federal program dollars and to 
redirect administrative savings for services and results. Successful 
partnerships will demonstrate measurable improvements in the lives of 
children. This performance partnership initiative has four components: 
1) establishment of a results-driven accountability system, working with 
the Federal Interagency Forum on Child and Family Statistics, that will 
focus on key indicators of child well-being, such as immunization 
coverage, infant and child mortality, high school graduation rates, teen 
birthrates, youth crime rates, and child health insurance coverage; 2) 
identification of ways to consolidate planning and reporting for 
programs with related goals and greater flexibility in administering 
grant funds; 3) development of recommendations for new ways, within 
current law, through which administrative savings from discretionary 
grant programs might be pooled to establish a local Child Well-Being 
Investment Fund for innovations and priority programs; and 4) sharing of 
lessons learned through a ``how-to'' manual detailing strategies to 
reduce administrative costs and allow local flexibility.
  (4) Allowing Americans to do business with the Government 
electronically: In 1997, the Administration announced the Access America 
initiatives to enable Americans to do business with the Government 
electronically. Recently, Vice President Gore launched Access America 
for Students, which pilots the integrated, computerized delivery of 
Government services to postsecondary students. This program will include 
services such as student loan applications and renewals, online address 
changes, veterans' educational benefits, campus admissions and services, 
and electronic income tax filing. Access America for Students will

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be carefully constructed to ensure the privacy and security of all 
users. Other Access America programs are planned for users of other 
Government services (e.g., senior citizens). Additional information on 
Access America is available at www.gits.gov.

Streamlining the Government

  Two fundamental changes in the Federal work force have combined to 
create a leaner, more efficient Government. First, the Administration 
has cut the overall size of the Government by 16 percent. Second, the 
Administration has given Federal employees the authority to propose and 
carry out significant improvements in agency programs. These changes 
have led to the elimination of many internal rules, establishment of 
customer service standards, creation of agency reinvention labs, and 
improved labor-management relations.
  The Administration's accomplishments in downsizing Government are 
unprecedented since the demobilization after World War II. As Chart IV-1 
shows, this is the smallest Federal work force in 36 years. The savings 
have been used to help pay for a variety of initiatives authorized by 
the 1994 crime bill, including the successful effort to put 100,000 new 
local police officers on the streets.
  Almost all of the 14 Cabinet Departments and large independent 
agencies are cutting their work forces. For example, the General 
Services Administration (GSA) is reducing FTEs by 31 percent by 
streamlining its lines of business. The Justice Department's growth 
reflects the Administration's expanded war on crime and drugs. The 
decennial census is temporarily increasing the size of the Commerce 
Department's payroll (see Chart IV-2).
  Reducing the size of Government is just one measure of success. 
Acquiring and retaining the right mix of people with the best 
combination of skills is a challenge to all employers, and the 
Government is no exception. Streamlining organizations is never easy, 
but a partnership with Federal employee unions has made change possible. 
As agencies

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continue reinventing themselves to be more effective and responsive to 
America's needs, they will require management tools to restructure their 
work forces and achieve greater efficiencies. The Administration will 
support agencies if they need--as in the case of DOD, the Department of 
Energy (DOE), and the IRS--separate authority to restructure their work 
force with voluntary separation incentives. The Administration will also 
seek renewal of the authority to offer voluntary separation incentives 
to support downsizing efforts in those areas where cost/benefit analysis 
indicates that it would be beneficial.

Creating Powerful Incentives to Manage for Results

  A new tool--the Performance-Based Organization (PBO)--was developed to 
help the Government operate more efficiently. Proposed by the 
Administration, and enacted by the Congress, the first PBO was mandated 
to improve the efficiency and delivery of student financial assistance.
  PBOs encourage a group of Government executives in an organization to 
bear responsibility for its level of performance. These executives 
commit to meet tough annual performance goals, and if successful, they 
can receive substantial bonuses. To help them meet these goals, 
executives can exercise greater flexibility in hiring, compensation, and 
procurement. During the 106th Congress, the Administration will develop 
legislation to establish additional PBOs, including the FAA Air Traffic 
Services, the Seafood Inspection Service, the Patent and Trademark 
Office, the Rural Telephone Bank, the Defense Commissary Agency, the 
National Technical Information Service, the St. Lawrence Seaway 
Development Corporation, Federal Lands Highway, and the U.S. Mint.

Tackling Government's Biggest Management Challenges

  To create a clear set of priorities for management efforts, the 
Administration has selected 24 key issues, listed in Table IV-2, to be 
PMOs. These were chosen as areas in need of real change, and will 
receive ongoing attention from the Administration.
  There are six new initiatives while 18 continue from last year's 
budget. PMOs are coordinated by OMB with assistance from the NPR and 
inter-agency working groups. This assures that objectives receive senior 
management attention. Periodic reporting and review of these objectives 
provide an opportunity for corrective action as necessary throughout the 
year.
Strengthening Government-Wide Management

  1. Manage the year 2000 (Y2K) computer problem: There is no more 
immediate management challenge facing governments and industries world-
wide than the impending shift of dates from the year 1999 to the year 
2000. A year ago, 27 percent of the Federal Government's mission-
critical systems were Y2K compliant. At the end of 1998, more than 
double that number--61 percent--met that standard. The Administration 
has set March 31, 1999, as the deadline for all mission-critical systems 
to be Y2K ready.
  Under the direction of the President's Council on Year 2000 
Conversion, agencies are reaching out to private sector organizations, 
State and local governments, and international institutions. External 
Y2K activities have been organized to focus on key sectors, including 
energy, telecommunications, and financial institutions. In December 
1998, the U.S. Government helped organize a United Nations conference of 
Y2K coordinators from over 100 countries.
  The Administration also recognizes a critical need for industry to 
share its Y2K experiences and solutions with each other and with the 
public. Accordingly, the Administration proposed and the Congress 
enacted the Year 2000 Information Disclosure Act, which encourages 
companies to share information about possible Y2K solutions.
  In 1999, agencies will focus primarily on testing their systems and 
their interactions with other systems, and will develop contingency and 
continuity of operations plans. In 2000, agencies will focus on assuring 
that Federal programs continue to deliver uninterrupted service to the 
public.

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                                   Table IV-2.  PRIORITY MANAGEMENT OBJECTIVES
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STRENGTHENING GOVERNMENT-WIDE MANAGEMENT
 
 1.  Manage the year 2000 (Y2K) computer problem
 2.  Use results to improve program management
 3.  Improve financial management information
 4.  Protect critical information infrastructure
 5.  Strengthen statistical programs
 6.  Implement acquisition reforms
 7.  Implement electronic Government initiatives
 
IMPROVING STEWARDSHIP OF ASSETS
 
 8.  Better manage financial portfolios
 9.  Better manage real property
 
IMPROVING PROGRAM OPERATIONS AND INTEGRITY
 
10.  Verify that the right person is getting the right benefit
11.  Use competition to improve operations
 
IMPROVING PROGRAM MANAGEMENT
 
12.  Modernize student aid delivery
13.  Improve DOE contract management
14.  Strengthen the HCFA's management capacity
15.  Implement HUD reform
16.  Resolve disputes over Indian trust funds
17.  Implement FAA management reform
18.  Implement IRS reforms
19.  Streamline SSA's disability claims system
20.  Revolutionize DOD business affairs
21.  Improve management of the decennial census
22.  Manage risks in building the International Space Station
23.  Improve security at diplomatic facilities around the world
24.  Reengineer the naturalization process and reduce the citizenship application backlog

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  2. Use results to improve program management: GPRA makes Government 
agencies more accountable by focusing managers and policy makers on 
agency performance. GPRA can fundamentally change how the Government 
carries out its programs and makes funding decisions. The Act requires 
Federal agencies to periodically develop long-range strategic plans and 
annually prepare performance plans and performance reports. The annual 
plans set specific performance targets for an agency's programs and 
activities. The combination of GPRA plans and reports introduces an 
unprecedented degree of managerial and institutional accountability for 
accomplishing program goals. Key to achieving success is making the 
plans useful to the Congress, the President, and agency management.
  In 2000, agencies will submit to the Congress and the President the 
first of their annual reports on program performance. These reports, 
covering 1999, will compare actual performance to the performance target 
levels in the annual plans for that year, and provide an explanation for 
any goal not met. With these reports, the first cycle of GPRA 
implementation will be complete.
  During 2000, agencies will also be revising and updating strategic 
plans for submission

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to the Congress and OMB by September 2000. All GPRA plans and reports 
are publicly available, and can often be found on individual agency 
websites.
  Budgeting for Results is an effort to display and budget for all the 
resources used by Federal programs in a way that allows the costs to be 
systematically compared with the benefits provided. Although all costs 
are reflected somewhere in the budget, these costs are not all 
associated with the individual programs that use the resources. Some 
costs may be paid by other components within the Government. Thus, some 
of the basic information necessary for effective decision making is not 
readily available. In the coming year, efforts will continue toward 
making Budgeting for Results a reality.
  3. Improve financial management information: In March 1998, for the 
first time in the history of the United States, the Government issued 
audited financial statements presenting the results of its operations. 
While the audit disclosed financial system weaknesses and problems in 
fundamental record-keeping in a number of areas, the Government's 
efforts to provide a full accounting is unprecedented. Bringing problems 
to light will force improvements. Improvement has already begun as 
illustrated by Table IV-3, which presents the anticipated results of 
audits of the financial statements of the 24 largest Federal agencies in 
1998. These show that the Administration has already made substantial 
progress in improving financial management. Recognizing more must be 
done, the President directed agencies to resolve systems and record-
keeping problems during 1999--with the goal being an unqualified report 
on the Government's 1999 financial statements, which will be issued in 
March 2000.
  4. Protect critical information infrastructure: Last year, 
Presidential Decision Directive 63, Protecting America's Critical 
Infrastructures, launched a program to counter risks to the increasingly 
interconnected national infrastructures, such as telecommunications, 
banking and finance, energy, transportation, and essential Government 
services. These infrastructures are particularly vulnerable to 
disruptions--whether deliberate or accidental--to the computer systems 
that support them. The goal for 2000 is increased security for 
Government systems. The Federal Government should be a model of 
infrastructure protection, linking security measures to business risks 
and agency mission.
  The goal for 2003 is a reliable and secure private information system 
infrastructure. The Administration will work with private industry, 
which owns the vast majority of the Nation's infrastructure, to meet 
common protection goals. Care will be taken to preserve privacy, and 
regulation will be used only if there is a material failure of the 
market to protect the health, safety, or well being of the American 
people.
  5. Strengthen statistical programs: The Government spends more than $3 
billion each year to produce statistical measures of our economy and 
society that help decision makers in the public and private sectors. 
These data are used for everything from spotting important trends in 
public health to projecting the impact of future demographic shifts on 
the Social Security system. In 1998, to improve access to, and the 
quality of, Government statistical data, the Administration: 1) 
sponsored a bill to permit limited sharing of
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                          Table IV-3.  CFO Agency Financial Statement Performance Goals
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                                                                                                    Estimate
                                 Financial Statements                                    1997  -----------------
                                                                                        Actual  1998  1999  2000
----------------------------------------------------------------------------------------------------------------
Audits Completed......................................................................  23      24
                                                                                                      24
                                                                                                            24
 
Agencies with Unqualified Opinion.....................................................  11      14
                                                                                                      20
                                                                                                            23
 
Agencies with Unqualified and Timely Opinion..........................................  8       12
                                                                                                      20
                                                                                                            23
 
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confidential data among selected agencies solely for statistical use 
with appropriate safeguards; 2) doubled (to 28) the number of Federal 
agencies whose data series are indexed on www.fedstats.gov; and 3) 
published innovative inter-agency thematic reports based on federally-
collected statistics, including America's Children: Key National 
Indicators of Well-Being, and Changing America: Indicators of Social 
and Economic Well-Being by Race and Hispanic Origin. In 1999, the 
Administration will continue to seek passage of legislation for 
statistical data sharing, and continue work on the American Community 
Survey to provide comparable demographic, economic, and housing data 
for small geographic areas. In 2000, the Administration will begin 
implementing the newly revised 1998 Standard Occupational 
Classification.
  6. Implement acquisition reforms: The Federal Government is the 
Nation's largest buyer of goods and services, purchasing almost $200 
billion annually. In the past six years, the Congress and the 
Administration have initiated numerous acquisition reforms to maximize 
the taxpayer's buying power. Contractors are increasingly being held 
responsible for results and measured on their performance when competing 
for future work. Agencies are buying commercial products and services 
rather than costly Government-unique solutions. The buying process 
continues to be streamlined, paperwork reduced, and results measured. In 
1999, the Government will have 60 percent of Government purchases below 
$2,500 made by credit card--bypassing more paper intensive and time 
consuming procurement processes. By 2000, this rate will increase to 80 
percent (see Chart IV-3). By 2000, over $23 billion in services 
contracts will be converted to Performance-Based Service Contracting 
(PBSC). Pilot programs demonstrated price reductions averaging 15 
percent in nominal dollars, and agency satisfaction with contractor 
performance rose by 18 percent. Also by 2000, all major agencies will 
have systems which record contractors performance. This information will 
be a key

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determinant to better manage contracts and successfully select 
contractors.
  7. Implement electronic Government initiatives: As discussed in the 
Vice President's 1997 Access America Report, today's most important 
infrastructure improvement needed to promote electronic access to 
Government services is the ability to authenticate users over open 
networks like the Internet. The Government Paperwork Elimination Act of 
1998 promotes Federal agency use of electronic signatures to verify 
identities and integrity of information and establishes the legal 
validity of electronic documents. In 1999, the Administration will work 
with the private sector to develop guidelines for implementing the Act. 
In 2000, the Administration will issue those guidelines, incorporating 
lessons from the Access America projects. Additional mission performance 
improvements from specific information systems investments are discussed 
in Chapter 22 of Analytical Perspectives.
Improving Stewardship of Assets

  8. Better manage financial portfolios: The Federal Government 
currently underwrites more than $1 trillion in loans, primarily to 
students, homebuyers, and small businesses. The Government must better 
serve these customers and protect its interest in obtaining efficient 
and timely repayment. Using electronic commerce and the Internet, the 
Government will test streamlined processes for student loan applications 
and electronic drawdown to those who qualify. Privacy will be protected 
though the use of electronic signatures. The Government will also begin 
sharing information electronically to better manage its single-family 
home loans, and if successful, will apply the same model to other 
lending programs. By 2000, the Debt Collection Improvement Act, which 
requires agencies to refer debt over 180 days delinquent to the Treasury 
Department for collection, will be fully implemented with the help of a 
Government-wide offset program, private collection agencies, and asset 
sales.
  9. Better manage real property: The Government owns billions of 
dollars worth of real property, including office buildings, hospitals, 
laboratories, and military bases. The Administration will pursue a 
number of initiatives, and where necessary, will submit legislation to:
   continue DOD's successful housing privatization program that 
          augments each Federal dollar with two or more private sector 
          dollars to construct and manage housing, thereby enabling the 
          department to improve the quality of military family housing 
          three times faster than would otherwise be possible;
   allow the Department of Veteran Affairs (VA) to sell unneeded 
          property and keep the proceeds to improve direct care and 
          services to veterans, with a share of the proceeds being used 
          to provide assistance grants to local homeless populations; 
          and
   amend the Federal Property and Administrative Services Act of 
          1949 to improve real property management, including allowing 
          agencies to exchange or sell unneeded property and retain a 
          share of the sales proceeds for other property investments.
Improving Program Operations and Integrity

  10. Verify that the right person is getting the right benefit: It is 
important to ensure that beneficiaries get the benefits to which they 
are entitled and that errors in providing benefits are minimized. 
Agencies can shorten application review times and strengthen program 
integrity by sharing information among Government programs. For 
instance, in 2000, HUD will begin verifying tenant-reported income 
against other Federal income data. This will help ensure that housing 
assistance goes to those entitled to these benefits. Also in 2000, the 
Department of Education will propose legislation to permit the use of 
income information in the National Directory of New Hires to verify 
income reported on student loan applications and to identify income 
received by student loan defaulters. This could lead to an estimated 
savings of over $450 million.
  In 1999, the Administration will support improved Federal and State 
program information sharing to minimize erroneous payments

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at benefit determination; to eliminate unnecessary burdens on applicants 
by coordinating information collection and verification; to protect 
individual privacy; and to enable customers to use secure and convenient 
electronic application processes.
  11. Use competition to improve operations: Competition has become a 
cornerstone of the business strategy for DOD. DOD will compete over 
200,000 positions (in accordance with OMB Circular A-76 procedures), 
including more than 100,000 positions between 2000 and 2005. Savings 
will result from: 1) reengineering work that stays in-house; and 2) 
contracting out, which has shown savings of 30 to 40 percent. Other 
agencies are identifying potential commercial activities, which will 
provide a basis for implementing the Federal Activities Inventory Reform 
Act of 1998 (FAIR). Inventories are due to OMB by June 30, 1999, under 
the Act.
Improving Program Implementation

  12. Modernize student aid delivery: Each year, nearly nine million 
students receive a total of $50 billion in aid through six major Federal 
student financial assistance programs. These programs are separately 
authorized--with unique features--and have evolved information and other 
management systems that are not always consistent with one another. To 
improve and streamline the management of these programs, the Higher 
Education Amendments of 1998 authorized the Government's first ever 
Performance Based Organization (PBO). During 1999, this PBO will work 
with a broadly representative group of lenders, students, and program 
intermediaries to develop a five-year performance plan to modernize 
student aid delivery. The goals will include:
   improving service to students and other participants in the 
          student aid process;
   reducing costs of administering the programs;
   integrating and improving program information and delivery 
          systems; and
   developing open, common, and integrated delivery and 
          information systems.
  13. Improve DOE contract management: More than 90 percent of DOE's 
budget is spent through contractors who are responsible for the 
operation, management, and safety of DOE facilities. Making more 
effective use of Performance Based Service Contracts (PBSC) and 
competition would improve DOE's mission attainment and could potentially 
save up to $1 billion. In 1999, DOE will focus on PBSC conversions for 
two management and operating contracts and 10 service contracts to 
increase work accomplished and lower costs. Also, DOE will compete four 
of the eight major expiring contracts.
  14. Strengthen Health Care Financing Administration's (HCFA's) 
management capacity:  HCFA is responsible for the stewardship of many of 
the most important social programs run by the Federal Government, 
including Medicare, Medicaid, and the Children's Health Insurance 
Program (CHIP). HCFA faces the formidable challenge of modernizing its 
administrative infrastructure, meeting pressing statutory deadlines for 
program change from the Balanced Budget Act (BBA) and the Health 
Insurance Portability and Accountability Act (HIPAA), and perhaps most 
important, the need to be highly responsive to its customers.
  HCFA has begun the process of management change through its recent 
reorganization. However, further reform is needed. HCFA, HHS, and OMB 
have together begun the development of a reform initiative that will 
increase HCFA's flexibility to operate as a customer centered prudent 
purchaser of health care while also increasing accountability. This 
initiative has five components: 1) management flexibilities (e.g., 
evaluation of personnel needs and flexibilities); 2) increased 
accountability to constituencies (e.g., regular reports to the Congress 
and the Administration, creation of an outside advisory board); 3) 
program flexibilities (e.g., new authorities and greater use of existing 
authorities to pay for services at market rates, enter into selective 
contracts, and engage in competitive bidding); 4) structural reforms 
(e.g., re-engineering the relationship between HCFA's central and 
regional offices and between HCFA and HHS; contracting out functions); 
and 5) contractor reform (e.g., promoting competition in Medicare claims 
processings, introducing contract terms

[[Page 56]]

that allow more flexibility for the Federal Government).
  HCFA's core functions--modernizing Medicare, detecting fraud and 
abuse, providing beneficiary and provider education, implementing 
legislative changes, processing claims, providing increased beneficiary 
choices, and managing Federal and State Medicaid and CHIP programs--are 
vital and continue to expand. To meet these expanding programmatic 
challenges, as well as the challenges of continuous management reform, 
it is critical to move toward a stable source of funding for HCFA. As 
HCFA and HHS move down the road toward achieving fundamental reform and 
begin to accomplish some of the basic objectives noted above (e.g., 
contractor reform), the Administration will review legislative proposals 
to increase the stability of HCFA's funding.
  15. Implement HUD reform: HUD's comprehensive reforms are geared 
toward producing improvements in agency operations--so that all tenants 
can live in safe and well-managed housing. These reforms include: 
clarifying the mission of each employee; cleaning up the data in 
existing management and financial systems; integrating these disparate 
management and financial systems where possible; and enhancing 
accountability in HUD programs. For instance, by 2000, HUD will initiate 
an independent, on-going assessment of all public housing and Section 8 
projects. Projects that fail to meet reasonable private sector 
benchmarks for safety and financial integrity will be referred to a 
newly established HUD Enforcement Center for intensive oversight and 
technical assistance. If a project's safety and financial status do not 
improve, new management will be installed, or Federal assistance to the 
project will end. By 2000, HUD will also begin periodic customer and 
employee satisfaction surveys. The results of these surveys will be used 
to monitor progress in implementing meaningful HUD reform.
  16. Resolve disputes over Indian trust funds: The Department of the 
Interior (DOI) is responsible for managing nearly $3 billion in trusts 
the Federal Government holds for the Indian Tribes and individual Native 
Americans. In 1998, DOI verified over half of all individual trust 
accounts, and conversion of these accounts to a commercial accounting 
system will be completed by the end of 1999. The Administration will 
also re-introduce legislation to settle disputed tribal trust balances 
that resulted from decades of mismanagement, and consolidate highly 
fractionated ownership of Indian lands. In 2000, DOI will:
   develop and negotiate settlement offers with Tribes whose 
          accounts lack full documentation, and develop formula-driven 
          settlement payments for Tribes that accept these offers;
   double the number of pilot projects to consolidate ownership 
          of fractionated lands; and
   complete verification of the remaining one-third of all trust 
          asset account data and finalize the conversion to the new 
          commercial trust asset management system.
  17. Implement FAA management reform: The safety of the flying public 
depends on the FAA--its air traffic controllers, technology, and 
preparation for future challenges. FAA has begun an 18-month pilot 
project to link pay increases for some staff to the achievement of their 
performance targets. In 1999, FAA will evaluate the overall impact of 
the first three years of its personnel reform. FAA will also continue to 
develop its cost accounting system to allow more business-like 
operations and management improvements. By early 2000, FAA will complete 
replacement of en route air traffic controller workstations and begin 
purchasing modernized airport terminal radar. FAA will continue to 
develop promising free flight technologies to improve air traffic 
control efficiency and effectiveness.
  18. Implement IRS reforms: The IRS is modernizing its organization and 
its information technology to better serve over 200 million taxpayers 
and enhance its productivity by encouraging quality work. Major portions 
of the IRS' modernization plans were mandated by the Internal Revenue 
Service Restructuring and Reform Act of 1998. The new focus is captured 
by the IRS' revised mission statement: Provide America's taxpayers top 
quality service by helping them

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understand and meet their tax responsibilities and by applying the tax 
law with integrity and fairness to all. The basic outline of the new 
structure was completed in August 1998. The IRS Commissioner expects to 
announce the final design and implementation plans on April 15, 1999. 
The new organization and system improvements will be implemented over 
the following two and a half years. At the same time, IRS is modernizing 
its information technology to better support its new organization. In 
December 1998, IRS awarded a prime contract for information technology 
modernization. This is a long-term partnership between IRS and private 
industry to deliver the modernized financial and information systems 
needed to support IRS' new customer oriented organization.
  19. Streamline SSA's disability claims system: SSA has undertaken a 
multi-year redesign project to improve service delivery for the millions 
of individuals filing for, or appealing decisions on, disability claims. 
SSA is providing all its adjudicators with uniform training, 
instructions which clarify complex policy areas, and an improved quality 
assurance process. Initial results indicate that these changes are 
helping SSA make more accurate disability determinations earlier in the 
claims process. SSA is also pilot testing modifications designed to 
streamline the disability applications process and increase claimant 
interaction with SSA at both the initial claim and hearing levels. 
Implementation of pilot modifications that prove successful will begin 
in 1999 and 2000.
  20. Revolutionize DOD business affairs: DOD is changing the way it 
does business. Just as industry was forced to change to be competitive, 
so too must DOD upgrade its business operations to effectively support 
future national security strategy. DOD will adopt better business 
processes, pursue commercial alternatives, consolidate redundant 
functions, and streamline organizations to reduce overhead and apply 
resultant savings to fund modernization and quality of life programs. 
For example:
   DOD has devolved day-to-day program management functions from 
          the Office of the Secretary of Defense to the military 
          departments and defense agencies so that it could concentrate 
          on policy and oversight responsibilities.
  DOD competitive sourcing initiatives will produce savings of 
          over $6 billion from 1998 to 2003, with annual recurring 
          savings thereafter of more than $2 billion.
   DOD will also improve the work environment, and benefit the 
          lives of Department personnel, by establishing a career 
          transition office for military personnel, establishing a 
          Chancellor for Education and Professional Development, 
          reengineering travel procedures, and streamlining the shipment 
          of household goods.
  21. Improve management of the decennial census: The goal of the 
decennial census is to conduct the most accurate census in U.S. history. 
The Census Bureau's plan will implement strategies to conduct a thorough 
and complete census. Specifically, management improvements include: 
user-friendly forms; a telephone questionnaire assistance program; 
language assistance; and using state-of-the art statistical sampling 
techniques. In 1999, preparations include developing the master address 
list, printing the questionnaires, and opening local census offices. In 
2000, the census becomes operational. Activities will include hiring 
300,000 temporary field staff, staffing the local census offices, and 
conducting non-response follow up and integrated coverage measurement.
  22. Manage risks in building the International Space Station: The 
United States has the lead role in the international effort to build the 
International Space Station. The cost of U.S. participation has 
escalated because of technical difficulties, new work requirements, 
performance shortfalls, and Russian delays and shortfalls. In 1999, the 
program will continue to address cost and schedule performance problems 
in its key contracts, strengthen contract management and cost controls, 
and further reduce risks from potential Russian shortfalls. In 2000, the 
program begins a transition from development activities to orbital 
operations and research, seeking to take advantage of commercial 
practices, products, and services. The first two components of the space 
station were launched successfully in November and December of 1998. 
Additional 1999 launches

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will prepare the orbital platform for the first permanent crew in 
January of 2000. Assembly will continue through 2004.
  23. Improve security at diplomatic facilities around the world: The 
State Department received $1.4 billion in 1999 emergency funds to 
implement a broad program of security enhancements in response to 
terrorist bombings in Kenya and Tanzania and related threats directed at 
U.S. diplomatic and consular facilities overseas. Achieving global 
upgrades and maintaining that readiness at the Department's overseas 
posts poses a significant management challenge. Follow-on efforts will 
include significant investments in overseas facilities to ensure 
continued protection of U.S. Government employees working overseas. 
Long-range capital planning, including a review of future security 
requirements by a panel of experts and careful use of resources, will 
ensure that these investments meet cost, schedule, and performance goals 
of the program.
  24. Reengineer the naturalization process and reduce the citizenship 
application backlog: The Immigration and Naturalization Service (INS) is 
redesigning its naturalization process to ensure service and benefits 
are provided with complete integrity and in a timely manner. At the same 
time, INS is addressing a backlog of 1.8 million pending applications 
for citizenship.
  INS is committed to completing the naturalization process 
reengineering in 2000 and reducing the citizenship backlog--which 
currently requires applicants to wait upwards of 20 months to 
naturalize--to a 12-month wait-time in 1999 and a six to nine month 
wait-time by the end of 2000.

Using Inter-agency Groups to Improve Performance

  To achieve the Administration's goal of making fundamental change in 
the operation of Government, inter-agency groups have been extensively 
used to lead crosscutting efforts. These groups draw together 
operational, financial, procurement, integrity, labor relations, and 
systems technology experts from across the Government. They establish 
Government-wide goals in their areas of expertise, and they marshal the 
resources within individual agencies to meet those goals. Several of 
these groups were established for the first time by this Administration, 
including the President's Management Council and the National 
Partnership Council. Other interagency groups are described in Table IV-
4.
  The President's Management Council (PMC): The PMC consists of the 
Chief Operating Officers of all Federal departments and the largest 
agencies. The PMC provides leadership for the most important Government-
wide reforms. Council priorities include: streamlining agencies without 
unnecessarily disrupting the work force; identifying criteria and 
recommending methods for agency restructuring; identifying performance 
measures to support electronic commerce and performance-based service 
contracting; facilitating development of customer service standards; 
supporting labor-management partnerships; and leading GPRA 
implementation.
  The National Partnership Council (NPC): President Clinton established 
the NPC in October 1993 to enlist the Federal labor unions as allies in 
reinvention and to shift Federal labor relations from adversarial 
litigation to cooperative problem solving. Members of the NPC include: 
representatives of Federal employee unions and Federal managers and 
supervisors; the Federal Mediation and Conciliation Service; the Federal 
Labor Relations Authority; the Office of Personnel Management; OMB; DOD; 
and the Department of Labor. In 2000, NPC will continue developing 
methods to evaluate partnerships and their effect on agency productivity 
and service. The results of this research will guide individual agencies 
in evaluating and promoting their efforts. More information on the NPC 
can be found on its website: www.opm.gov/npc.

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                                      Table IV-4. MAJOR INTER-AGENCY GROUPS
----------------------------------------------------------------------------------------------------------------
               Council Name/Membership                                   Council Priorities/Recent Activities
----------------------------------------------------------------------------------------------------------------
Chief Financial Officers (CFO) Council: The CFOs and                   1998 activities included
 Deputy CFOs of the 24 largest Federal agencies and                    interagency projects on GPRA
 senior officials from OMB and Treasury.                               implementation, electronic commerce,
  http://www.financenet.gov                                            grants management, and human resources
                                                                       development.
 
 
Chief Information Officers (CIO) Council: The CIOs                     The Council develops
 and Deputy CIOs for 28 major Federal agencies, two                    recommendations for information
 CIOs from small Federal agencies, and                                 technology management policy; identifies
 representatives from OMB and two information                          opportunities to share information
 technology boards.                                                    resources; and supports the Federal
  http://cio.gov                                                       Government's development of an
                                                                       information technology workforce.
 
 
President's Council on Integrity and Efficiency                        Priorities include mounting
 (PCIE): The 27 Presidentially-appointed Inspectors                    collaborative efforts to address
 General (IGs), the Vice Chair of the agency-                          integrity, economy, and effectiveness
 appointed IG council, and other key integrity                         issues that transcend individual
 officials.                                                            agencies. Recent efforts included a
  http://www.ignet.gov                                                 review of the controls of the Federal
                                                                       Electronics Benefits Transfer System and
                                                                       agency progress in debt collection.
                                                                       Current efforts include a project on non-
                                                                       tax delinquent debt.
 
 
Electronic Processes Initiatives Committee (EPIC):                     The PMC established EPIC to
 Senior policy officials from DOD, GSA, Treasury, and                  further the use of electronic commerce
 OMB.                                                                  technologies and processes within the
  http://policyworks.gov/org/main/ Government.
    me/epic/
 
 

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Federal Credit Policy Working Group: Representatives                   Provides advice and assistance to
 from the major credit and debt collection agencies                    OMB, Treasury, and Justice in formulating
 and OMB.                                                              and implementing Government-wide credit
  http://www.financenet.gov/ policy.
    financenet/fed/fcpwg
 
 
Procurement Executives Council: Senior procurement                     An inter-agency forum for
 executives from major Federal agencies.                               improving the Federal acquisition system.
 
 
Inter-agency Alternative Dispute Resolution Working                    President Clinton established the
 Group (ADR): The Attorney General, representatives                    ADR in May 1998 to assist Government
 of the heads of all Cabinet Departments, and others                   agencies in making greater use of
 with significant interest in Federal dispute                          consensual methods for resolving
 resolution.                                                           disputes, including mediation, neutral
  http://www.financenet.gov/ evaluation, arbitration, and other
    financenet/fed/iadrwg                                              processes.
 
 
Joint Financial Management Improvement Program                         During 1998, JFMIP issued draft
 (JFMIP): A joint effort of GAO, OMB, Treasury, and                    revised system requirements for Federal
 OPM, with a rotating representative from another                      financial, human resource, and payroll
 agency.                                                               systems; completed plans to redesign the
  http://www.financenet.gov/ testing and qualification process for
    financenet/fed/jfmip/                                              commercial off-the-shelf accounting
                                                                       system software for Federal agencies; and
                                                                       issued guidance on core competencies in
                                                                       financial management.
 
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