[Budget of the United States Government]
[III. Creating a Better Government]
[1. Improving Government Performance]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 9]]
 
                   III. CREATING A BETTER GOVERNMENT

[[Page 11]]

                  1.  IMPROVING GOVERNMENT PERFORMANCE

  The Federal Government's performance needs to improve. The past 
Administration, Congress, and the General Accounting Office concluded 
that we still have much work to do to improve the management and 
performance of the Federal Government.
  True Government reform must be based on a reexamination of the role of 
the Federal Government. The President has called for an ``active, but 
limited'' Government: one that empowers States, cities, and citizens to 
make decisions; ensures results through accountability; and promotes 
innovation through competition. Thus, the Administration will reform and 
modernize Government on the basis of three objectives to make 
Government:
  Citizen-centered, not bureaucracy centered;
  Results-oriented, not process-oriented; and
  Market-based, actively promoting not stifling, innovation and 
          competition.
  This task will not be easy and it will take time. The agenda for 
management reform outlined in the discussion below and in the following 
chapters of the President's Budget is just the first step in the 
process. As a next step, in the next few months the Administration will 
announce a more comprehensive Government reform and management agenda 
that will expand on the initiatives discussed below, and address other 
key reforms.
  Section III, ``Creating a Better Government,'' of this budget is a 
Government-wide Performance Plan with an integrated view of the goals 
and descriptions of program activity as contemplated by the Government 
Performance and Results Act of 1993 (GPRA). Rather than examining 
performance only in individual organizational units (such as departments 
and agencies), the functional presentation in the chapters that follow 
groups together similar programs. The Government-wide Performance Plan 
contains a significant number of key performance goals that serve as a 
window into the agencies' 2002 Performance Plans, which will be sent to 
Congress following the transmittal of the budget.
  Good beginnings are not the measure of success, in Government or any 
other pursuit. What matters in the end is performance. Not just making 
promises, but making good on promises. This will be the standard for 
this Administration--from the farthest field office to the highest 
office in the land--as we begin the process of getting results from 
Government.

Making Government Citizen-Centered

  Use the Internet to Create a Citizen-Centric Government: The explosive 
growth of the Internet has transformed communications between customers 
and businesses. It is also transforming communications between citizens 
and Government. The President believes that providing access to 
information and services is only the first step in electronic Government 
(e-gov). Citizen-centered Government will use the Internet to bring 
about transformational change: agencies will conduct transactions with 
the public along secure web-enabled systems that use portals to link 
common applications and protect privacy. This will give citizens the 
ability to go online and interact with their Government and with their 
State and local Governments that provide similar information and 
services around citizen preferences and not agency boundaries.
  Create an E-Government Fund: The budget proposes $20 million in 2002 
as the first installment of a fund that will grow to a total of $100 
million over three years to support interagency e-gov initiatives. OMB 
would control the allocation of the fund to support information 
technology (IT) projects in the e-gov arena.

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  Projects that operate across agency boundaries will build off the 
foundation of essential building blocks, including: www.firstgov.gov, 
the online information portal that provides 24 hours a day/seven days a 
week access to all Government online information, searchable by topic 
rather than by agency; and the development of a Public Key 
Infrastructure to implement digital signatures that are accepted across 
agencies for secure online communications.
  The fund will also further the Administration's ability to implement 
the Government Paperwork Elimination Act of 1998, which calls upon 
agencies to provide the public with optional use and acceptance of 
electronic information, services and signatures, when practicable, by 
October 2003. In recent years, funding for interagency e-gov initiatives 
has been obtained, as authorized by law, by passing the hat among 
agencies to support activities of interagency councils. The e-gov fund 
will accelerate the improvements this Administration will make to 
provide for interagency e-gov innovation.

Making Government Results-Oriented

  Link Budget and Management Decisions to Performance: The Government's 
budget decision-making process allows elected officials--the President 
and members of Congress--to set broad priorities for Government programs 
and their managers through resource allocation. Choices are framed by 
the assessments of these officials about the country's needs for 
education, defense, energy, health, and a host of other national needs, 
within a framework of the resources available.
  Making spending choices and allocating the appropriate resource level 
is an important step, but it is also important for spending to produce 
meaningful results. Performance information is necessary to determine 
the value and success of Government programs in achieving their goals. 
Passage of GPRA elevated the importance of good information on program 
performance, and at the same time signaled dissatisfaction with the 
performance information that has been available in the past.
  The initial years of GPRA implementation have focused on developing a 
performance management framework, accompanied by a growing increase in 
the use of this performance information to support budget decisions. 
However, a systematic integration of budgeting with program performance 
has yet to occur, and GPRA has not been fully harnessed to improve 
management and managerial accountability. Bringing about a better 
linkage between performance and budget information will be a priority of 
this Administration. As a first step, department and agency heads have 
been directed to ensure that their 2002 Performance Plans, which will be 
submitted to Congress in April, also include performance goals for 
Presidential initiatives and for Government-wide and agency-specific 
reform proposals.
  Over the coming year, the Administration will take a number of steps 
to strengthen the linkage between budget decision making and program 
performance.
  Formally integrate performance with budget decisions: Agencies 
          will be asked to submit performance-based budgets this 
          September for a selected set of programs. For the selected 
          programs, agencies will be advised of specific performance 
          targets that are compatible with funding levels, and program 
          managers will be held directly accountable for managing to the 
          targets. In future years, policy officials at all levels in 
          the Executive Branch will be expected to set output targets to 
          match funding levels for selected programs.
  Develop legislation to enable program managers to be charged 
          for support services, capital assets, and employer benefits: 
          If program managers are going to be held more accountable for 
          the achievement of output targets, they should be given 
          accurate information on the cost of their programs and 
          flexibility in choosing service providers. At present, program 
          managers do not always have information on, or control of, the 
          full costs of support services, retirement, and other non-
          direct costs associated with their programs, which can distort 
          budget choices. Legislation will be developed this year to 
          address this problem by changing the way support services, 
          capital assets, and employee benefits are budgeted.

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  Publish detailed performance data: The 2003 Budget will 
          include more performance information and the 2004 Budget will 
          integrate detailed performance and budget data to establish a 
          stronger, more extensive and public link between the agency 
          budget requests and performance measurement in the President's 
          Budget.

  Ensure Financial Accountability: The President believes that 
Government must ensure a basic level of financial accountability that is 
expected of any company in the private sector. He is holding agency 
heads accountable for obtaining and maintaining unqualified or ``clean'' 
opinions on their agencies' annual financial statement audits. More than 
60 percent of agencies currently receive ``clean'' opinions; heads of 
the agencies without clean opinions are expected to attack vigorously 
the long-standing difficulties and record-keeping deficiencies that 
prevent clean opinions.
  Reduce Erroneous Payments to Beneficiaries and Other Recipients of 
Government Funds: Financial accountability also requires assurance that 
Federal funds are being used for their intended purpose and not being 
distributed due to error. The General Accounting Office identified $19.1 
billion in erroneous payments made last year, and noted that the amount 
could be considerably larger. The President will direct agency heads to 
develop more rigorous controls to ensure that Federal funds reach their 
intended recipients at the correct time and in the proper amount. 
Further, he will promote the use of recovery audits and other steps to 
ensure that overpayments are avoided or returned to the Government.
  Use Capital Planning to Improve Performance: Agencies invest more than 
$40 billion in IT to support some 26,000 information systems. Technology 
now affects virtually every aspect of the way the Government operates, 
and IT investments are extremely important to the success of e-gov 
transforming the delivery of information and services. Agencies will use 
capital planning and investment control to promote security and privacy 
in the use of technology and guide the results of this investment, and 
ultimately for ensuring results from other capital assets as well. The 
Government can thus achieve outcomes from IT investments that match 
agency strategic priorities and provide real benefits for the American 
people.
  Eliminate Duplicative and Ineffective Programs: The Federal Government 
spends billions of dollars on programs that are obsolete, ineffective, 
or better performed by the private sector. The Administration will seek 
to redeploy resources from old priorities to make room for new 
Administration priorities by reducing or eliminating funding for 
programs that have completed their mission or that are redundant, 
ineffective, or obsolete.
  Expand the Use of Performance-Based Contracts: Because of expanding 
missions and declining staff, agencies are increasingly relying on 
outside contractors. The Federal Government spends roughly $110 billion 
a year in service contracts. The increase in the amount and type of 
contracting creates the opportunity and the necessity to move toward 
performance-based contracting--where the focus is on the results to be 
achieved, rather than the manner in which the work is performed or the 
``effort'' involved. Agencies will convert Federal service contracts to 
performance-based contracts wherever possible, saving an estimated $8.3 
billion over five years.
  Incorporate Successful Private Sector Reforms Throughout the Federal 
Work Force: The current civil service system does not do all it should 
to reward achievement or encourage excellence. It also limits the 
ability of agency heads to compete successfully for high-skilled senior 
talent. In an effort to get closer to the customer, American businesses 
have increasingly replaced old, hierarchical organizations with flatter, 
more entrepreneurial ones. To shrink the distance between citizens and 
decision makers who shape Government programs, the Administration will 
incorporate successful private sector reforms throughout the Federal 
work force: flatten the Federal hierarchy; reduce the number of layers 
in the upper echelon of Government; and use work force planning to help 
agencies redistribute higher-level positions to front-line, service 
delivery positions that interact with citizens. The Administration will 
also seek legislation to provide program managers new and expanded work 
force restructuring tools. These actions, combined with improved

[[Page 14]]

accountability through better linkage of program performance with budget 
decision making and other reforms, will make the Federal Government more 
nimble and responsive. The Government can also be made more effective. 
These same work force planning tools can help ensure that agencies have 
people with the right skills in the right places in the right numbers to 
deliver programs people care about.

Making Government Market-Based

  Make e-Procurement the Government-wide Standard: Businesses are 
experiencing significant cost savings by shifting their procurement to 
the Internet. Savings are derived from reduced transaction-processing 
costs, more efficient inventory management, and greater competition from 
vendors lowering prices. In an effort to lower costs and utilize market-
based solutions wherever possible, agencies will move to paperless 
contracting processes in which information from one step of the process 
is automatically fed to the next step in the process, eliminating the 
need to re-enter data. Procurement data will be linked to financial 
systems, making the payment process both faster and more accurate; 
disposal of excess Government property will become more effective. 
Agencies will also expand use of ``share-in-savings'' approaches, in 
which market incentives reward contractors who can retain a portion of 
any savings that result from innovation.
  Open Government Activities to Competition: Opening Government 
functions to competition to the fullest extent possible is the best way 
to ensure market-based pricing and encourage innovation, while saving 
the taxpayers an estimated $14 billion over five years. Since 1998, 
agencies have been required to inventory their activities that are 
commercial in nature--that is activities that are not ``so intimately 
related to the public interest as to require performance by Federal 
Government employees.'' In the past, agencies have found that when 
competitive bidding is employed, they experience average savings of 30 
percent when a private contractor wins, and 20 percent when the public 
sector wins. Consequently, for these activities, agencies will use an 
open, competitive process (considering both public and private bidders) 
to choose the providers. The competitive process will be studied so that 
it can be streamlined.

            

[[Page 15]]



                                    Table 1-1.  Federal Resources by Function
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                         Estimate
          Category               2000    -----------------------------------------------------------------------
                                Actual       2001        2002        2003        2004        2005        2006
----------------------------------------------------------------------------------------------------------------
NATIONAL DEFENSE:
  Spending:
    Discretionary Budget          300.8       311.3       325.1       333.9       343.2       352.7       362.5
     Authority..............
    Mandatory Outlays:
      Existing law..........       -0.5        -0.4        -0.1        -0.2        -0.5        -0.6        -0.6
      Proposed legislation..  ..........  ..........        0.1         0.2         0.2         0.1         0.1
  Credit Activity:
    Direct loan               ..........          *         0.1         0.1         0.2   ..........  ..........
     disbursements..........
    Guaranteed loans........          *           *         0.1         0.5         0.5   ..........  ..........
  Tax Expenditures:
    Existing law............        2.1         2.2         2.2         2.2         2.2         2.3         2.3
                             -----------------------------------------------------------------------------------
INTERNATIONAL AFFAIRS:
  Spending:
    Discretionary Budget           23.5        22.7        23.9        24.4        24.9        25.5        26.0
     Authority..............
    Mandatory Outlays:
      Existing law..........       -4.1        -6.7        -3.5        -3.4        -3.4        -3.4        -3.4
  Credit Activity:
    Direct loan                     1.6         2.3         2.0         0.5         0.2         0.2         0.1
     disbursements..........
    Guaranteed loans........       11.4        11.1        11.5        10.8        10.7        11.6        11.2
  Tax Expenditures:
    Existing law............       16.6        18.1        18.3        18.9        20.0        21.3        22.6
                             -----------------------------------------------------------------------------------
GENERAL SCIENCE, SPACE, AND
 TECHNOLOGY:
  Spending:
    Discretionary Budget           19.2        20.9        21.2        21.9        22.4        22.9        23.5
     Authority..............
    Mandatory Outlays:
      Existing law..........          *         0.1         0.1         0.2         0.2         0.1         0.1
  Tax Expenditures:
    Existing law............        3.3         7.7         8.4         7.2         6.6         4.7         3.3
                             -----------------------------------------------------------------------------------
ENERGY:
  Spending:
    Discretionary Budget            2.7         3.1         2.8         2.9         3.1         3.2         3.3
     Authority..............
    Mandatory Outlays:
      Existing law..........       -4.0        -3.7        -3.3        -3.2        -3.7        -3.6        -3.6
  Credit Activity:
    Direct loan                     1.4         1.9         2.2         2.5         2.7         2.8         2.9
     disbursements..........
    Guaranteed loans........        0.2         0.1         0.1         0.1         0.1         0.1         0.1
  Tax Expenditures:
    Existing law............        2.0         2.1         2.1         1.9         1.6         1.8         1.9
                             -----------------------------------------------------------------------------------
NATURAL RESOURCES AND
 ENVIRONMENT:
  Spending:
    Discretionary Budget           24.6        28.7        26.4        27.0        27.6        27.6        27.4
     Authority..............
    Mandatory Outlays:
      Existing law..........          *        -0.2        -0.1         0.1         0.2         0.1         0.1
      Proposed legislation..  ..........  ..........         -*        -0.1          -*           *         0.1
  Credit Activity:
    Direct loan                       *           *           *           *           *           *           *
     disbursements..........
    Guaranteed loans........  ..........  ..........          *         0.1           *   ..........  ..........
  Tax Expenditures:
    Existing law............        1.5         1.6         1.6         1.7         1.8         1.9         2.0
                             -----------------------------------------------------------------------------------
AGRICULTURE:
  Spending:
    Discretionary Budget            4.7         5.1         4.8         5.2         5.2         5.3         5.4
     Authority..............
    Mandatory Outlays:
      Existing law..........       32.0        20.4        13.2         9.8         8.8         8.8         9.1
  Credit Activity:
    Direct loan                    11.0        10.3        10.4         8.9         8.8         8.6         8.9
     disbursements..........
    Guaranteed loans........        5.4         6.5         6.8         6.9         6.9         6.9         6.9

[[Page 16]]


  Tax Expenditures:
    Existing law............        1.0         1.1         1.1         1.2         1.2         1.3         1.3
                             -----------------------------------------------------------------------------------
COMMERCE AND HOUSING CREDIT:
  Spending:
    Discretionary Budget            5.1         0.7        -0.3        -0.1        -0.4        -0.5        -0.5
     Authority..............
    Mandatory Outlays:
      Existing law..........       -1.3        -2.5         6.7         4.7         4.0         4.2         2.9
      Proposed legislation..  ..........  ..........       -0.1        -0.1        -0.1        -0.1        -0.1
  Credit Activity:
    Direct loan                     1.3         1.7         1.6         1.6         1.6         1.6         1.6
     disbursements..........
    Guaranteed loans........      218.7       231.3       250.8       263.2       272.8       282.4       290.0
  Tax Expenditures:
    Existing law............      242.5       254.7       266.7       277.8       289.5       301.2       314.8
                             -----------------------------------------------------------------------------------
TRANSPORTATION:
  Spending:
    Discretionary Budget           15.2        18.9        16.8        17.8        18.2        18.6        19.0
     Authority..............
    Mandatory Outlays:
      Existing law..........        2.1         2.2         1.8         2.0         2.0         1.9         1.9
  Credit Activity:
    Direct loan                     0.3         0.4         0.7         1.1         1.5         2.0         2.2
     disbursements..........
    Guaranteed loans........        0.9         0.6         0.4         0.2         0.2         0.2         0.2
  Tax Expenditures:
    Existing law............        2.1         2.2         2.4         2.5         2.7         2.8         3.0
                             -----------------------------------------------------------------------------------
COMMUNITY AND REGIONAL
 DEVELOPMENT:
  Spending:
    Discretionary Budget           12.2        11.0        10.4        10.7        10.9        11.1        11.3
     Authority..............
    Mandatory Outlays:
      Existing law..........       -0.8        -0.6        -0.3        -0.7        -0.7        -0.8        -0.9
      Proposed legislation..  ..........  ..........         -*        -0.1        -0.1        -0.2        -0.4
  Credit Activity:
    Direct loan                     1.9         2.2         1.9         1.8         2.0         2.0         2.0
     disbursements..........
    Guaranteed loans........        1.4         2.8         2.4         2.0         1.8         1.8         1.9
  Tax Expenditures:
    Existing law............        1.2         1.4         1.9         2.4         2.4         2.6         3.1
                             -----------------------------------------------------------------------------------
EDUCATION, TRAINING,
 EMPLOYMENT, AND SOCIAL
 SERVICES:
  Spending:
    Discretionary Budget           44.4        61.1        65.4        67.1        69.0        70.7        72.3
     Authority..............
    Mandatory Outlays:
      Existing law..........       10.3         9.1        14.3        14.5        14.8        15.3        16.2
      Proposed legislation..  ..........  ..........        0.1         0.3         0.4         0.4         0.4
  Credit Activity:
    Direct loan                    16.4        19.1        16.6        17.5        18.4        19.4        20.4
     disbursements..........
    Guaranteed loans........       26.6        29.5        30.7        32.4        34.2        36.2        38.2
  Tax Expenditures:
    Existing law............       36.0        37.8        38.8        40.4        43.2        45.0        47.5
                             -----------------------------------------------------------------------------------
HEALTH:
  Spending:
    Discretionary Budget           33.8        38.9        41.0        45.7        46.9        48.1        49.4
     Authority..............
    Mandatory Outlays:
      Existing law..........      124.5       138.7       152.4       168.9       183.6       199.7       216.6
      Proposed legislation..  ..........        2.5        10.7        13.7        14.6         4.3         0.1
  Credit Activity:
    Guaranteed loans........          *           *           *           *           *           *           *

[[Page 17]]


  Tax Expenditures:
    Existing law............       91.1        99.8       108.6       117.8       127.5       136.8       147.1
                             -----------------------------------------------------------------------------------
MEDICARE:
  Spending:
    Discretionary Budget            3.0         3.4         3.5         3.5         3.6         3.7         3.8
     Authority..............
    Mandatory Outlays:
      Existing law..........      194.1       216.0       226.4       238.6       252.2       270.8       279.4
      Proposed legislation..  ..........  ..........  ..........  ..........  ..........        8.3        12.8
                             -----------------------------------------------------------------------------------
INCOME SECURITY:
  Spending:
    Discretionary Budget           31.6        39.5        42.8        45.1        46.7        48.3        49.6
     Authority..............
    Mandatory Outlays:
      Existing law..........      206.5       217.2       228.5       237.0       246.3       258.2       265.5
      Proposed legislation..  ..........  ..........        0.3         0.9         1.0         1.2         1.3
  Credit Activity:
    Direct loan                       *           *           *   ..........  ..........  ..........  ..........
     disbursements..........
    Guaranteed loans........          *           *         0.1         0.1         0.1         0.1         0.1
  Tax Expenditures:
    Existing law............      147.6       153.4       159.1       165.7       172.3       179.1       187.7
                             -----------------------------------------------------------------------------------
SOCIAL SECURITY:
  Spending:
    Discretionary Budget            3.2         3.4         3.5         3.6         3.7         3.8         3.8
     Authority..............
    Mandatory Outlays:
      Existing law..........      406.0       430.0       451.6       473.5       498.0       524.3       553.0
  Tax Expenditures:
    Existing law............       24.8        26.0        27.3        28.4        29.7        31.3        33.0
                             -----------------------------------------------------------------------------------
VETERANS BENEFITS AND
 SERVICES:
  Spending:
    Discretionary Budget           20.9        22.5        23.5        24.0        24.5        25.1        25.7
     Authority..............
    Mandatory Outlays:
      Existing law..........       26.3        23.0        28.1        29.7        31.3        35.4        34.1
      Proposed legislation..  ..........  ..........          *          -*        -0.1        -0.1        -0.1
  Credit Activity:
    Direct loan                     1.5         1.7         1.7         1.9         2.0         2.0         2.0
     disbursements..........
    Guaranteed loans........       20.2        29.5        29.0        29.6        30.2        30.8        31.5
  Tax Expenditures:
    Existing law............        3.3         3.5         3.7         3.9         4.0         4.3         4.5
                             -----------------------------------------------------------------------------------
ADMINISTRATION OF JUSTICE:
  Spending:
    Discretionary Budget           27.1        30.0        29.8        31.9        32.3        32.8        33.5
     Authority..............
    Mandatory Outlays:
      Existing law..........        1.0         0.7         1.5         1.1         2.5         2.5         2.5
                             -----------------------------------------------------------------------------------
GENERAL GOVERNMENT:
  Spending:
    Discretionary Budget           12.4        14.0        14.8        15.0        15.4        15.7        16.0
     Authority..............
    Mandatory Outlays:
      Existing law..........        1.0         2.3         1.8         1.8         2.0         1.8         1.8
      Proposed legislation..  ..........  ..........          *   ..........        1.2           *           *
  Credit Activity:
    Direct loan                       *           *           *   ..........  ..........  ..........  ..........
     disbursements..........
  Tax Expenditures:
    Existing law............       67.7        71.3        74.8        78.3        82.1        86.0        88.7
                             -----------------------------------------------------------------------------------
NET INTEREST:
    Mandatory Outlays:
      Existing law..........      223.2       206.4       188.1       175.2       161.5       144.6       127.1
      Proposed legislation..  ..........  ..........          *           *           *         0.1         0.1

[[Page 18]]


  Tax Expenditures:
    Existing law............        0.5         0.5         0.5         0.5         0.6         0.6         0.6
                             -----------------------------------------------------------------------------------
ALLOWANCES:
  Spending:
    Discretionary Budget      ..........  ..........        5.3         5.4         5.6         5.7         5.8
     Authority..............
                             -----------------------------------------------------------------------------------
UNDISTRIBUTED OFFSETTING
 RECEIPTS:
    Mandatory Outlays:
      Existing law..........      -42.6       -47.7       -51.8       -60.7       -62.4       -56.2       -57.8
      Proposed legislation..  ..........  ..........        2.4         0.3        -8.2        -2.7        -4.6
                             -----------------------------------------------------------------------------------
FEDERAL GOVERNMENT TOTAL:
  Spending:
    Discretionary Budget          584.4       634.9       660.6       685.1       702.7       720.1       737.9
     Authority..............
    Mandatory Outlays:
      Existing law..........    1,174.0     1,204.4     1,255.4     1,289.2     1,336.6     1,403.0     1,444.0
      Proposed legislation..  ..........        2.5        13.4        15.2         8.9        11.2         9.6
  Credit Activity:
    Direct loan                    35.5        39.6        37.3        35.9        37.5        38.6        40.2
     disbursements..........
    Guaranteed loans........      284.9       311.6       332.0       346.0       357.6       370.1       380.0
----------------------------------------------------------------------------------------------------------------
* $50 million or less.

Notes: Tax expenditure proposals are presented in Table S-10.

The Administration proposes to reverse the misleading budget practice of using advance appropriations simply to
  avoid spending limitations and is requesting sufficient appropriations in 2002 to cover normal funding,
  instead of requesting advance appropriations for 2003. This increases budget authority by $22.7 billion in
  2002 only.