[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



THE GOVERNMENT PERFORMANCE AND RESULTS ACT: SENSIBLE GOVERNMENT FOR THE 
                              NEXT CENTURY

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM
                             AND OVERSIGHT
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 12, 1997

                               __________

                            Serial No. 105-2

                               __________

Printed for the use of the Committee on Government Reform and Oversight

39-381              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1997

____________________________________________________________________________
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              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois          TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland       ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
STEVEN H. SCHIFF, New Mexico         EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida         GARY A. CONDIT, California
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEPHEN HORN, California             THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, Washington, 
THOMAS M. DAVIS, Virginia                DC
DAVID M. McINTOSH, Indiana           CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana              TIM HOLDEN, Pennsylvania
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
JOHN SHADEGG, Arizona                DENNIS KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio           ROD R. BLAGOJEVICH, Illinois
MARSHALL ``MARK'' SANFORD, South     DANNY K. DAVIS, Illinois
    Carolina                         JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire        JIM TURNER, Texas
PETE SESSIONS, Texas                 THOMAS H. ALLEN, Maine
MIKE PAPPAS, New Jersey                          ------
VINCE SNOWBARGER, Kansas             BERNARD SANDERS, Vermont 
BOB BARR, Georgia                        (Independent)
------ ------
                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                       Judith McCoy, Chief Clerk
                 Phil Schiliro, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 12, 1997................................     1
Statement of:
    Armey, Hon. Richard, House Majority Leader...................    33
    Hinchman, James, acting Comptroller General of the United 
      States, accompanied by Chris Mihm, Assistant Director, 
      Federal Management Issue Area, General Accounting Office...    11
    Koskinen, John, Deputy Director for Management, Office of 
      Management and Budget......................................    51
Letters, statements, etc., submitted for the record by:
    Armey, Hon. Richard, House Majority Leader, prepared 
      statement of...............................................    37
    Burton, Hon. Dan, a Representative in Congress from the State 
      of Indiana, prepared statement of..........................     3
    Hinchman, James, acting Comptroller General of the United 
      States, prepared statement of..............................    13
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     9
    Koskinen, John, Deputy Director for Management, Office of 
      Management and Budget:
        Information concerning congressional consultations.......    75
        Prepared statement of....................................    54
    Morella, Hon. Constance, a Representative in Congress from 
      the State of Maryland, prepared statement of...............    68
    Sessions, Hon. Pete, a Representative in Congress from the 
      State of Texas, prepared statement of......................    48

 
THE GOVERNMENT PERFORMANCE AND RESULTS ACT: SENSIBLE GOVERNMENT FOR THE 
                              NEXT CENTURY

                              ----------                              


                      WEDNESDAY, FEBRUARY 12, 1997

                          House of Representatives,
              Committee on Government Reform and Oversight,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. Dan Burton 
(chairman of the committee) presiding.
    Present: Representatives Burton, Shays, Horn, Mica, Davis 
(VA), Shadegg, Sanford, Sununu, Sessions, Pappas, Snowbarger, 
Barr, Condit, Sanders, Maloney, Barrett, Norton, and Holden.
    Staff present: Kevin Binger, staff director; Dan Moll, 
deputy staff director; John Rowley, general counsel; Jonathan 
Yates, counsel; Kristine Simmons and Jane Cobb, professional 
staff members; Judy McCoy, chief clerk; Teresa Austin, 
assistant clerk/calendar clerk; Mark Stephenson, minority 
professional staff; and Jean Gosa, minority administrative 
staff.
    Mr. Burton. We have the most important members of the 
committee here, so far, so we'll go ahead and start. Good 
morning, and welcome to the first Government Reform and 
Oversight full committee hearing of the 105th Congress. I am 
pleased that the first order of business on our full committee 
oversight agenda is the Government Performance and Results Act, 
or GPRA.
    We will, henceforth, be calling this the Results Act for 
simplicity purposes. I want everybody to understand what we're 
talking about when you talk about GPRA. People probably think 
it's some kind of a disease, and we don't want that to happen, 
so we'll call it the Results Act. For some of us this is 
familiar territory and for others it's brand new. But for all 
of us on both sides of the aisle and at both ends of 
Pennsylvania Avenue, the Results Act is the key to reforming 
government now and into the next century.
    The Government Performance and Results Act requires 
agencies to set performance goals and eventually tie their 
budgets to their performance. This is a sound business practice 
that we should have been employing for a long time. This act 
has the force of law to make agencies do what they should be 
doing anyway, knowing what their mission is and fulfilling that 
mission in the most efficient, cost-effective manner possible.
    The subtitle of this hearing is Sensible Government for the 
Next Century. And that is exactly what the Results Act is 
about--a government that makes sense and is based on 
performance and results. I hope this hearing will send a signal 
to the administration and to American taxpayers that this 
committee is very serious about using the act to make sure 
citizens are getting what they expect and pay for from Federal 
programs.
    Throughout the 104th Congress, Chairman Steve Horn of the 
Government Management Subcommittee worked diligently to oversee 
the results process. Mr. Horn's efforts have taken the 
important first step of educating Members of Congress and the 
American people about this act. It is essential that members of 
this committee and the other committees in Congress begin to 
understand what the Results Act is and what role they must play 
if it is to be implemented successfully.
    Agencies are required under the law to consult with 
Congress on their strategic goals and plans, which must 
formally be submitted to Congress in September. Every committee 
in the House and Senate needs to take an active and immediate 
role in the consultative process. The key to the Results Act is 
that it requires a cooperative effort among agencies, Congress 
and, most importantly, the people that are affected by these 
Federal programs.
    To highlight the importance with which the House leadership 
regards this Results Act, we will be pleased, before too long, 
to welcome the House Majority Leader, Richard Armey, to speak. 
Mr. Armey will be here, probably, in about 10 or 15 minutes, so 
I will save his introduction for that time. We're happy to have 
him and we regret that his minority counterpart, Richard 
Gephardt, was unable to join us due to a scheduling conflict.
    Following the majority leader, we will welcome the Acting 
Comptroller General of the General Accounting Office, Mr. James 
Hinchman, who will explain the requirements of the Results Act 
and how we in Congress can use it as a vital oversight tool. 
Finally, John Koskinen the Deputy Director of the Office of 
Management and Budget, will testify regarding the priority the 
administration has placed on the Results Act implementation and 
the general readiness of agencies to comply with the act.
    Since Mr. Armey is not yet here, I would like to now 
recognize Mr. Waxman, who isn't here, he's detained at another 
meeting--the ranking member of the subcommittee. Mrs. Maloney, 
I think, has his statement and one of her own. So we'll now 
recognize Mrs. Maloney for her own statement.
    [The prepared statement of Hon. Dan Burton follows:]

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    Mrs. Maloney. Thank you very much, Mr. Chairman, and thank 
you for holding this hearing on the Government Performance and 
Results Act. The Results Act is landmark legislation which has 
enjoyed wide bipartisan support since its passage in 1993.
    The act is approaching a critical period of implementation, 
and I am hopeful that bipartisanship will continue. The Results 
Act is that latest in a series of laws, such as the Chief 
Financial Officers Act and the Inspector General Act, meant to 
improve performance and reduce waste, fraud and abuse in the 
Federal Government.
    It is intended to improve the efficiency and the 
effectiveness of the Federal Government and to begin a cultural 
change in the Federal workforce by forcing the agencies to 
focus on results. Mr. Chairman, I am pleased you are holding 
this hearing at a time when government is getting fewer and 
fewer resources yet being expected to do at least as much as it 
always has. Improving the efficiency and effectiveness of the 
Federal Government is more important than ever.
    I would just like to add that I am pleased that you are 
starting the committee work on this important piece of 
legislation. It happens to be the very first piece of 
legislation that I managed on the floor of the House of 
Representatives in 1993. And it was also a cornerstone in Vice 
President Gore's Reinventing Government, which has worked so 
far to make government more effective and cost effective and 
productive, even as we have moved, really, to the smallest 
workforce in many years, since President Kennedy was in office.
    It will force our agencies to plan better, to come forward 
with their priorities, and it will allow us to analyze their 
results. And I--it's a sensible, important bill. I look forward 
to working with you on oversight of it. The importance that you 
place on it is underscored by the fact that the Majority 
Leader, Mr. Armey, will be here. And I look forward to his 
testimony. In appreciation of time restraints, I'll put my 
formal remarks in the record. Thank you.
    Mr. Burton. Without objection, your remarks will be entered 
into the record.
    And I'd just like to say to Mrs. Maloney that, as you can 
see, we are reaching out to the minority right off the bat 
because this is one of your pet projects. Now, I'd like to 
recognize the chairman of the Government Management, 
Information, and Technology Subcommittee, a good friend and a 
very fine legislator, Mr. Horn, who held a number of hearings 
on the Results Act in the 104th Congress. And I'm sure he'll 
continue to be a leader in this Congress as well. Mr. Horn.
    Mr. Horn. Thank you very much, Mr. Chairman, for holding 
this hearing and your generous comments. I welcome this hearing 
as a beginning step in what I think can be a sea change in the 
way our government works. The Government Performance and 
Results Act may be landmark legislation, in that it can 
simplify and de-mystify our processes of government.
    It does this by forcing Federal agencies to explain what 
they intend to do with the tax dollars we give them and by 
measuring whether the agencies then live up to their word. The 
goal of this law can be summed up in one word: accountability. 
That is, this law creates the ability for government to 
actually account for the money it raises in taxes and then 
spends on a vast array of programs.
    That goal may seem elementary to many Americans. Families 
and businesses go through the exercise on a routine basis. But 
for the Federal Government this is a startling and even 
wrenching exercise. Under this law, every Federal agency must 
ask itself some basic common sense questions: What are we 
doing? Should we be doing it? Can we do it better? Can we do it 
cheaper?
    Under this law, every Federal agency must establish clear, 
realistic and understandable goals, and they must establish 
effective ways to measure performance. Instead of focusing 
solely on the bare minimum requirements of complying with the 
law, they will be expected to produce real results, and they 
will have to produce real balance sheets that can be verified 
by outside auditors and understood by ordinary taxpayers.
    The Government Performance and Results Act has the 
potential to produce enormous change, particularly as it is 
connected with other landmark laws such as the Chief Financial 
Officers Act. These laws, for the first time, put a premium on 
good management. They are the beginning steps in reversing the 
Federal Government's long legacy of inattention, indifference, 
and, at times, incompetence in managing the Nation's affairs.
    But Mr. Chairman, I also want to note that there's another 
important fundamental change underway, and it's demonstrated by 
this hearing. That change is the commitment we're making here 
in Congress to give real life and energy to these laws through 
vigorous oversight of Federal agencies. The fact that the 
Majority Leader, Mr. Armey, is here today is an illustration of 
that commitment.
    Tomorrow, the Subcommittee on Government Management, 
Information, and Technology, which I chair and Mrs. Maloney 
serves as the ranking Democrat, will continue this process with 
our opening hearing on the 25 high risk Federal agencies 
identified by the General Accounting Office. The subcommittee 
will hold extensive hearings on these programs and agencies 
over the next 2 years.
    In short, Mr. Chairman, there's a lot of work to do. I'm 
grateful for your support of this effort, and I thank you.
    [The prepared statement of Hon. Stephen Horn follows:]

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    Mr. Burton. I thank Mr. Horn. I'd just like to say to all 
the Members who are here, including the new Members, that we 
will introduce all of you and tell of your backgrounds this 
afternoon, at our organizational meeting, but because of time 
constraints this morning and because of other meetings that are 
being held, we'll hold your very important introductions until 
later.
    Our next witness, pending the arrival of the majority 
leader, is the distinguished Acting Comptroller General of the 
General Accounting Office, James Hinchman. GAO has done some 
outstanding work tracking the implementation of the Results Act 
to date. We look forward to Mr. Hinchman's testimony this 
morning on the requirements of the act and how it can serve as 
an essential oversight tool for Congress.
    Mr. Hinchman has with him an associate. And Mr. Hinchman, 
if you'd like to introduce him at this time, I'd appreciate it.
    Mr. Hinchman. Thank you, Mr. Chairman. It's a pleasure to 
be here this morning.
    Mr. Burton. Before you start your statement, would you mind 
standing and being sworn in?
    Mr. Hinchman. Of course.
    Mr. Burton. This is a common practice we have here. Would 
you raise your right hand?
    [Witnesses sworn.]
    Mr. Burton. OK. You may proceed, Mr. Hinchman.

STATEMENT OF JAMES HINCHMAN, ACTING COMPTROLLER GENERAL OF THE 
 UNITED STATES, ACCOMPANIED BY CHRIS MIHM, ASSISTANT DIRECTOR, 
    FEDERAL MANAGEMENT ISSUE AREA, GENERAL ACCOUNTING OFFICE

    Mr. Hinchman. As I said, thank you, Mr. Chairman. It is a 
pleasure to be here this morning. With me is Chris Mihm, 
Assistant Director in GAO's Federal Management Issue Area. And 
we and GAO, as a whole, are honored to be a part of this 
important hearing on the Government Performance and Results Act 
and its implementation.
    I have a prepared statement. With your permission, I would 
like to summarize it briefly, and, if that's acceptable to you, 
request that that statement be put in the record.
    Mr. Burton. Without objection.
    Mr. Hinchman. GAO has, over the past year or so, Mr. 
Chairman, done a great deal of work examining management issues 
throughout the Federal Government, much of it for this 
committee. This work includes our executive guide on 
implementing the Government Performance and Results Act. It 
also includes the work we now have underway, to report to you 
by June 1 on the status of GPRA implementation.
    Three important conclusions come out of this work. And I 
want to summarize them for you briefly. First, we need better 
management in the Federal Government. Our work has consistently 
shown that Federal agencies have significant management 
problems that undermine their ability to function efficiently 
and effectively. Missions are unclear. Planning is inadequate. 
There is too little goal-setting and performance measurement. 
And too little of what there is is not results-oriented. 
Financial management systems do not work. Information 
technology is badly managed, as well.
    The public will not accept, and we cannot afford, these 
poor management practices, particularly in these days of budget 
constraint. Part of the solution to the Federal Government's 
fiscal problems must be more efficient and effective management 
of its programs and activities, and I think there is growing 
and broad consensus both in the government and among the 
students of its institutions that this is so.
    Second, Congress has put in place a sound statutory 
framework for addressing these management problems. Much of 
that work has been done under the leadership of this committee. 
This framework includes the Chief Financial Officers Act, the 
Paperwork Reduction Act of 1995, the Clinger-Cohen Act; and its 
cornerstone, its centerpiece, is the Government Performance and 
Results Act.
    At the request of this committee, we studied management 
reform in State governments, in foreign governments, in other 
public sector institutions, for lessons that can assist in the 
successful implementation of the Results Act. The results of 
this work are in our executive guide, and they confirm the 
soundness that the course that the Congress has established.
    Effective management in all of these institutions defines 
clear missions and outcomes, measures performance in achieving 
outcomes to gauge progress, and uses performance information to 
make changes that will improve results. Our work shows that 
this is the process that has worked for those successful public 
sector institutions that have reformed their management, and it 
is precisely the process that the Results Act mandates.
    Third, and finally, Congress has an important role to play 
in the implementation of the Results Act. For every agency, one 
of the first steps in the implementation of the Results Act is 
consultation with Congress about its mission and strategic 
plan.
    These consultations provide the opportunity for Congress to 
work with the executive branch to ensure that missions are 
focused, that goals are results oriented, and that they have 
been clearly established. In our work we have found that 
planning efforts that produced focused missions and results 
oriented goals virtually always drive improved efficiency and 
effectiveness.
    We have also urged in the past that congressional 
committees of jurisdiction hold regular oversight hearings of 
major departments and agencies. Our work for this committee 
underscores the importance of sustained leadership in assuring 
successful implementation of results oriented management in the 
public sector.
    These hearings can be used to reinforce Congress's 
commitment to improve management in the Federal sector and 
ensure that agencies continue to pursue the reforms mandated by 
the Results Act. As I said a moment ago, Mr. Chairman, these 
are the three correlessants of the large body of work that we 
have done for this committee. They support the direction in 
which Congress has set the government in the Results Act. And 
the test now before us is to assure that it is effectively 
implemented. With that, let me conclude, Mr. Chairman, and take 
any questions that you or other members of the committee may 
have.
    [The prepared statement of Mr. Hinchman follows:]

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    Mr. Burton. Well, thank you, Mr. Hinchman, for that very 
concise summary of your views. Let me just ask a couple of 
questions. Then I'll yield to my colleague, Mr. Horn, and then 
to Mrs. Maloney.
    Can you give us an example of how the Results Act can be 
helpful in addressing the problem of overlapping Federal 
programs--for instance, job training?
    Mr. Hinchman. Yes. I think that there are many examples--
one to which I would return is food safety. The General 
Accounting Office did a review and we established that there 
are 35 laws affecting food safety in this country, administered 
by 12 agencies, and that there is a lack of coordination among 
those agencies and overlapping jurisdiction in those laws.
    The Results Act provides a framework in which agencies can 
focus on the results of their efforts, and by focusing on 
results, to identify these areas of overlap and inconsistency, 
because they have to focus on the impact that these laws have 
on the safety of the food supply. The strategic planning 
process provides a framework in which they can begin to 
coordinate their efforts and bring greater rationality to the 
administration of those food laws.
    And I think we are seeing the consequences of that in the 
proposals which are now before the Congress to bring greater 
rationality to the administration of those food safety laws.
    Mr. Burton. Let me ask you, Mr. Hinchman, if I can impose 
upon you and Mr. Mihm. The majority leader has arrived, and he 
is under severe time constraints.
    Mr. Hinchman. Of course.
    Mr. Burton. And so if I could get back to questioning you?
    Mr. Hinchman. It would be a privilege to yield to him.
    Mr. Burton. OK. Thank you. We'd like to now welcome the 
good-looking, dynamic leader of the Republican party, Mr. 
Armey. I don't know if that's a tan or whether I embarrassed 
you, Mr. Leader.
    Mr. Armey. Right.
    Mr. Burton. But he's a person who's been interested in this 
area for a long time. He's been very concerned about reforming 
government to make it more effective, more business-like, and 
obviously, he's somebody that we all admire in the Republican 
party, and I think a lot of our Democrats, as well. So Mr. 
Armey, we would love to hear from you this morning.

     STATEMENT OF HON. RICHARD ARMEY, HOUSE MAJORITY LEADER

    Mr. Armey. Well, thank you, Mr. Chairman. I appreciate your 
accommodating me in my new role as chief disrupter of committee 
hearings. And I want to thank our colleagues in the GAO for 
their graciousness with allowing me to pop in as I do. It is, 
of course, an exciting thing for me to see these hearings on 
what I call the Results Act.
    And Mr. Chairman, I would ask that my longer statement be 
made a part of the record. Mr. Chairman, I would ask unanimous 
consent that my----
    Mr. Burton. Without objection. Thank you, sir.
    Mr. Armey. All right. That was a wise move, if you don't 
mind my saying. [Laughter.]
    Mr. Chairman, the Results Act is a law sponsored by 
Republicans and Democrats alike and was signed into law by 
President Clinton in August 1993. It is the right tool to give 
us a more honest glimpse of how our Federal Government works. 
This law will focus on all existing Federal programs, and, for 
the first time mandated by statute, measure government 
performance and report on results.
    It is not an ideological law. It represents an opportunity 
for both Democrats and Republicans, the Congress and the 
executive branch, to work together to improve the way 
Washington works. Whether you want a smaller, more limited 
government, or whether you want a larger, more activist 
government, we can all agree--nobody wants government to waste 
money through inefficiencies, ineffectiveness, fraud, or bad 
management.
    I expect the 105th Congress to be viewed as the 
implementation Congress. With 1997 a critical implementation 
year for this new law, our success or failure with the Results 
Act could play a large part in defining this Congress. The 
Results Act gives us a common sense tool to analyze and solve 
problems between the Congress and the executive branch--a way 
to help us report to our shareholders and taxpayers on their 
inventory and the effectiveness of their expenditures in 
government.
    In 1996, the Federal Government spent $1.56 trillion. 
Eighty-five million families paid taxes in 1996. Washington is, 
therefore, spending $18,355 per tax family in our Federal 
Government. It is time to take stock of this spending. And I 
might add, Mr. Chairman, I just finished my own taxes last 
night, and I'm $10,000 over that number and I wonder if I can 
get a refund. [Laughter.]
    But it is good, at this time when we're all aware of how 
much we are giving to the government in taxes, that we put 
focus on this. And by that way, I relate this to my own life. 
If I pay good money to add insulation to my home, I'm going to 
be sure to check the electric bill to see if I've saved any 
money.
    The Results Act brings this common sense to the government. 
It is the ultimate common sense tool to help us ask whether our 
taxpayer-funded programs are working. We all want safer 
streets, cleaner air, and better schools for our children. 
Often, however, we disagree on how to get there. In any given 
legislative cycle, we, in the Congress, pass laws after 
negotiation and debate. We think problems are solved when we 
pass a law.
    In reality, the solution has only begun. We only win when, 
in fact, our streets are clean, safer, our air is, in fact, 
cleaner, our children are, in fact, well-educated. We must 
become more active participants in the implementation of the 
programs we enact. As the Congress and the Clinton 
administration prepare to make difficult decisions to balance 
the budget for our children and our Nation's future, we need 
credible, objective information about programs and whether or 
not they are really working.
    My testimony summarizes several areas where Federal 
jurisdiction overlaps and is calling out for better 
congressional oversight, such as education, Federal food 
safety, drug treatment, rural water treatment and job training. 
Let's focus on our own lives for a moment.
    If we found that services we were paying were not resulting 
in what we wanted, we'd take action. You and I don't rely on 
blind faith and continue paying in such instances. Take, for 
example, a child's medical care. When you take your child to 
the doctor, you take extra care that the doctor is qualified 
and capable. You monitor each stage of your child's treatment.
    This is how we must approach Federal programs, scrutinizing 
their implementation at every stage and making sure we get the 
desired results. If an education program was created to ensure 
that every third grader can read, improving literacy rate 
should be one measure of the program's effectiveness. The 
Results Act can be such a common sense approach to help 
Congress and the executive branch review our existing Federal 
Government with a focus on achieving the best results for the 
money we are contributing.
    The Results Act was passed out of frustration by the 103d 
Congress and signed into law by a Democrat President. This 
frustration was born out of our not knowing the government's 
ability to really affect critical issues in our world today: 
saving lives, preventing crime, and getting vital help to the 
American people.
    Indeed, during this consideration of the Results Act, the 
Senate Governmental Affairs Committee pointed to a recent poll 
which showed that the Americans believe that 48 cents our of 
every tax dollar is wasted. The committee noted that this could 
explain the apparent inconsistency between the public's desire 
for a wide range of government services on the one hand, and 
its disdain for the government and higher taxes on the other.
    The committee viewed the Results Act as a way to make clear 
what taxpayers are getting for their money. The Results Act 
should foster an atmosphere in Federal service where employees 
better understand what they do and the results their agency are 
trying to achieve. This law was enacted to ensure that every 
employee's work would be value added to public service.
    I commend you, Mr. Chairman, for holding this hearing 
today, and for continuing the momentum that your predecessor, 
Bill Clinger, started on this important law. I commend our 
colleague, and your subcommittee chairman, Steve Horn, for 
continuing to devote his attention to something that will yield 
long term results and better government for taxpayers.
    I commend the GAO and others, who have encouraged the 
Congress to seriously--to take seriously the enactment of this 
law, as well as the OMB for working seriously with Congress to 
enact this law. And I should point out, it was a topic of 
conversation between myself and Frank Raines when he made a 
courtesy call to me in January. I also commend the Vice 
President for the reforms he's pursuing that are similarly 
motivated.
    So what is to be done? We need the vital information on 
actual performance that the Results Act can provide. For the 
success of this new tool, each congressional committee and each 
elected Representative must devote more attention to each and 
every agency's major plans and objectives. For the Results Act 
to succeed, we all must show a new willingness to re-examine 
pet projects with an ear toward objective, credible information 
about the results of these programs.
    Good intentions are not enough; we must pay close attention 
to the warning signs of operational disaster or excessive 
confusion in a department or agency charged by us to perform 
specific tasks. Specifically, Congress can use the Results Act 
in a variety of formal and informal settings, both immediately 
and in the long-term. Starting now, and moving through August, 
committees should be working with their executive branch 
departments to clarify what we want from programs, how that 
will be accomplished and how we expect to measure progress.
    Agencies are required by the law to consult with Congress 
as they prepare their 5-year strategic plans due in late 
September. Once results-oriented and measurable program goals 
are adopted, it is equally important that committees followup, 
through oversight hearings, GAO reviews and other means, to 
assess whether these goals are being met. Such program by 
program assessment should provide a road map to determine how 
limited Federal tax dollars can be applied most effectively in 
the future.
    In conclusion, the Results Act provides this Congress, the 
public and the President a management tool that has been widely 
used in making private business more effective. The American 
people and our children's children deserve a government that is 
accountable for results, a government that is a wise steward of 
their hard-earned money, and a government that directs 
resources to key priority areas, while ensuring the maximum 
impact for each and every Federal dollar spent. With your help, 
we might just give our children such a better government. And 
incidentally, we may just belie Armey's axiom that nobody 
spends somebody else's money as wisely as they spend their own.
    And with those comments, Mr. Chairman, I want to thank you 
for the opportunity to be here. And I guess I'm at your 
disposal, like the plumber.
    [The prepared statement of Hon. Richard Armey follows:]

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    [GRAPHIC] [TIFF OMITTED] T9381.030
    
    Mr. Burton. Well, thank you. We're always pleased to hear 
your remarks, and, in particular, Armey's axioms, because we 
don't hear them anyplace else. [Laughter.]
    But they're always very wise and well thought out. Did I 
understand you to say that in the Senate Oversight Committee 
hearing, someone estimated that 48 cents out of every tax 
dollar is wasted?
    Mr. Armey. I think there was a poll that showed the 
American people believe that 48 percent out of every tax dollar 
is wasted, cited in the committee by one of the Senators.
    Mr. Burton. So the American people feel very strongly that 
we're wasting a ton of money up here?
    Mr. Armey. Well----
    Mr. Burton. Let me just ask you, I think our committee has 
become aware of the Results Act and the need to push very hard 
for more business-like management in government. But a number 
of other committees have oversight responsibilities. And I was 
wondering how the leadership on our side and, hopefully, the 
other side plans to stimulate them, raise their antennae, if 
you will, so that they will be a participant in trying to make 
sure that we literally force some of these agencies to accept 
business-like practices?
    Mr. Armey. Well, I appreciate your inquiry. Obviously, as 
you know, the government is a very, very big organization, and 
we can most effectively, I believe, do this oversight if we 
divide that labor among the competing committees by definition 
of their jurisdiction.
    GAO, once again, has been extremely helpful here. They are 
preparing, on a staff by staff basis--the committee staffs--for 
the process and procedures they should undertake. And I can 
just tell you that it is a high priority of this leadership.
    We will, in fact, do everything we can to encourage every 
committee. I would think that each committee--it seems almost a 
process of natural selection, that committees end up with 
people that have an acute interest in the jurisdictional areas 
of the committee, so that the committees, themselves, would 
find their own interest. We work hard to report a bill out of 
committee, and we take a great deal of satisfaction when we see 
that signed into law.
    And we do that because we have serious intentions for what 
good can be done in the lives of the American people. For us in 
our separate committees to have the opportunity to go back and 
revisit the implementation of that law, to see that our 
intentions were, in fact, met, I should think would be a 
welcome opportunity for every committee, and I'm going to 
encourage them to utilize that opportunity to the fullest 
capacity.
    Mr. Burton. I thank you, Mr. Leader. I think that 
statements from leadership that they utilize their committees 
to stimulate the various agencies will be helpful. We'll do our 
part, and if we can get the others to help it would be great. 
Mr. Horn.
    Mr. Horn. Thank you, Mr. Chairman and Mr. Leader. I want to 
commend you, not only for your historic Base Closure Act, which 
was a good way to get results out of an executive branch that 
had never closed anything, but also thank you for that fact 
that you included the Debt Collection Act, which I authored and 
Mrs. Maloney was co-author, into the omnibus appropriations 
bill. Very frankly, that would not have become law without you 
making a decision and getting it on a train that was leaving 
the station.
    And following up on what the chairman opened up on, we know 
Congress is a fragmented institution. We know there are very 
jealous jurisdictional lines that many have. Now, as one Member 
of Congress, to get this effort moving, I would be delighted to 
see on one of the walls in your offices, a matrix in which 
you've got authorizing committees, appropriation subcommittees, 
area to be changed. And that the majority leader's office 
coordinate that effort. And very frankly, if you don't, it 
won't happen. It will get lost on the cutting room floors of 
several committees you and I can think of.
    So I know you hate to take on any power. You want to 
devolve everything out of Washington, but may I suggest you 
save a wall and coordinate this operation.
    Mr. Armey. Well, let me, first of all, on the--we are 
developing a matrix, and I have--I'm not sure I want to hang it 
on my wall, but I would certainly make it available. But you 
are absolutely right. I would see this not as an exercise of 
power by the majority leader, but as an exercise of service. 
And I would be more than happy to undertake that.
    I wonder, Mr. Chairman, if I could just take a moment. Mr. 
Horn raised the question of base closing, and I just saw 
something last week, that this gives me an opportunity to cite 
one of my colleagues. Base closing was about bang for your 
buck, the effective use of dollars. I set up efficiency 
criteria, defense preparedness criteria by which judgments 
would be made. And I should mention that, as I reflected back 
on that, the chairman of the relevant subcommittee of armed 
services was one Mr. Dellums.
    Mr. Dellums had, at that time, many bases in his district 
that he could have--he could have put many obstacles in the way 
of that legislation, but he saw it for what it was--an honest 
effort to have a fair appraisal of the true effectiveness of 
deployment of resources in the Nation's defense--and he was one 
of the first people to hold hearings. He didn't vote for it, 
and I understand that. But I always felt that this was a 
commendable effort made very early that is perfectly consistent 
with what we are doing here.
    I saw a report the other day--and I have not talked to Ron 
Dellums about this--but it turns out, pursuant to base closing, 
every base in his district has been closed. And I think we 
ought to pay a little regard to our call. He must have known 
that risk, but he said, ``this is a necessary thing to do in 
the questions of efficiencies and effectiveness in government. 
It's a fair and honorable process.'' And he did not stand in 
the way of it.
    But if we would all be willing to be that objective and 
that committed to an objective that is more important and more 
dear than ourselves and our own destinies in our own districts, 
I think we could get a great deal of effectiveness. So if I may 
tip my hat to Mr. Dellums in this. As a matter of fact, I 
think, Mr. Burton, you were on that subcommittee, at the time, 
if I'm not mistaken.
    Mr. Burton. I believe I was.
    Mr. Horn. If I might comment on that. It was also the 
ranking Republican had a base closed in Charleston. It was 
rather ironic. Both of the key people on that committee had 
major facilities closed.
    I might add, as a humble freshman in that exercise, after 
you had passed the law, we now have every base in Long Beach, 
CA closed. We were once headquarters of the Pacific fleet. They 
moved to Hawaii, and you saw what happened to them. But we are 
now free to look with a very objective eye to the Pentagon.
    Mr. Armey. I appreciate that. And Mr. Horn, if you don't 
mind, I get nervous about my standing with my colleagues if 
these discussions of base closings go on for too long. So--
[laughter.]
    Mr. Burton. Are you finished, Mr. Horn? Mrs. Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman. Mr. Majority Leader, 
the Results Act says, ``When developing a strategic plan, the 
agency shall consult with the Congress.''
    And Mr. Armey, can you tell us what consulting with 
Congress means to the Republican leadership and what do you see 
as the role of the minority in the process? And also, the 
Results Act, if it is going to work, do you think it's a fair 
statement that we need a true consensus of the agencies' plans 
and Congress's intent from both sides of the aisle?
    Mr. Armey. Yes. I think these are very important questions. 
I think underlying your point is a very important point I'd 
like to speak to right now. It is absolutely imperative, if 
this is to work, for all Members of Congress, majority and 
minority, to be involved. I am discussing with Mr. Gephardt a 
liaison role from his staff to this process as I have 
established for my staff.
    We would expect that consult be taken as a rigorous 
discussion between the agency and the committee, and the 
committee as a whole, regarding what are the goals defined in 
the agency's report and the extent to which they comply with 
and agree with the intent of Congress at the time the law was 
passed, or any amendments made thereto.
    In the end, each of these programs is created by an act of 
Congress. Both the majority and the minority participate in 
that process. We all have a stake in what is actually done in 
the implementation, and we ought to work together. I would 
encourage you to work with Mr. Burton and encourage you to come 
discuss this with me. I do believe we must be inclusive in this 
process, in particular, and I am devoted to that effort.
    Mrs. Maloney. Thank you. Do you think that the 
implementation of the Results Act in Congress may strengthen 
the case of those who advocate a 2-year budget cycle, focusing 
on appropriations 1 year and oversight the next?
    Mr. Armey. No. I really hadn't thought about that. I may, 
now that you've prompted me, I'll go give some thought to that. 
I don't know what discussions might have been made regarding 
that point at the time it was enacted. And it's possible that 
could happen. I don't know.
    But I do think that the focus should be--I think we should 
be very focused on this in terms of the bang for the buck 
measurement that we get, the consistency of defining the 
activities of an agency with respect to a law relative to the 
intent of Congress when the law was passed.
    And my own view would be that if the case is going to be 
made for 2-year budgeting, it will have to be made on a far 
broader basis than that.
    Mrs. Maloney. I would like to join the comments of my 
colleague, Mr. Horn, in complimenting you on your leadership on 
the Base Closing Commission Act. This was a problem that 
Congress confronted for years. We could never agree. You came 
up with a unique and original approach, and we solved the 
problem.
    I truly believe that if you never do another thing in your 
life, you will have made a tremendous contribution to public 
policy enactment in this country. And to really pay you a very 
large compliment, I was so impressed with that bill and the 
accomplishments of it, that I copied it. I took your bill, and 
I copied your bill on another very important issue before this 
Congress that we confront, which is campaign finance reform.
    And we have a tremendous division between the Republican 
party and the Democratic party on how to control the role of 
money and spending of money in campaigns. And we can't seem to 
agree. I've only been here--this is my third term, and Mr. Horn 
and I have probably both been on around 15 different task 
forces on campaign finance reform.
    So I copied your bill. And I would like to know whether you 
would consider having an approach of your bill on campaign 
finance this year if the Republican--because even though we're 
bipartisan--but if we cannot agree on a campaign finance 
proposal, would you support your bill creating a commission, if 
a Republican campaign finance plan fails, a Democratic campaign 
finance plan fails, would you then support a commission to move 
this process forward?
    For years we could not close bases in this country. We all 
agreed. Bases had to be closed. And you came up with an idea to 
take what everybody agreed on and move it. We face the same 
problem now. Whether it's the President or Mr. Gingrich or Mr. 
Gephardt, everyone says they are for campaign finance. We 
cannot agree. Would you support moving the Armey commission 
idea forward for campaign finance, so we could get it off of 
the discussion table and onto the floor for a serious vote, to 
try to move forward in this critical area of our country?
    Mr. Armey. Well, let me just respond by first pointing out 
that the base closing commission is one of the great ironies in 
my life, because I ordinarily do not believe in Congress 
referring its work to commissions. And I like to console myself 
by reminding people that the Base Closing Commission was 
created to keep Congress from continuing to meddle in other 
people's business.
    Now, insofar as Congress has its own responsibilities, I 
think they should do this without a commission. I believe that 
we can, if we will work together, through a congenial 
legislative process, I think we can, in this Congress, between 
ourselves and the Senate, on both sides of the aisle, and the 
White House, come up with campaign finance reform.
    And I would prefer to see us do our own work. Now, what 
I've also learned is don't rule anything out. But the first 
thing I want to do is--before I go to a commission--is I want 
to have clearly irrefutable evidence that it is, indeed, in 
fact, impossible for us to do our job ourselves.
    Mrs. Maloney. May I add that the true genius of your last 
bill on base closing was that it was not just a commission that 
came back with a report, your bill forced a vote. Your bill was 
not just a commission. It forced a conclusion or a step toward 
a conclusion of a particular problem.
    And if we cannot reach a conclusion, I would like to join 
you in moving forward with a commission approach, so, at least, 
we can get a product that can pass on the floor and move the 
project further in an area where everyone agrees something 
needs to be done.
    Mr. Armey. Well, let's--if you don't mind--let's stay in 
touch on that while I--and I hope you will understand--I feel 
my obligation is to, first, encourage the Congress, in every 
way, to take care of this important job on its own.
    Mrs. Maloney. May I underscore that I would go to a 
commission only after the Republicans can't pass it, the 
Democrats can't. Let's go forward with a commission.
    Mr. Burton. Yes. The gentlelady's time has expired. I 
understand that Mr. Shays of Connecticut has decided to pass, 
so we'll go to Mr. Mica of Florida.
    Mr. Shays. I have other questions I could ask you, but--
[laughter.]
    Mr. Burton. Mr. Mica.
    Mr. Mica. Mr. Chairman, just one quick question, Mr. Armey, 
I heard your testimony and read this written testimony, and--
you know--you cite part of the problem: education. We have 760 
Federal education programs and 39 different agencies, food 
safety programs administered by 12 different agencies, rural 
water--8 agencies--job training--15 different agencies--I tried 
to consolidate our international trade efforts, which are 
disorganized and disjointed among 19 Federal agencies.
    My legislation was referred to 11 committees of 
jurisdiction. It's almost impossible to change the bureaucracy. 
You've got two problems. One, which I just outlined, all the 
committees and their vast jurisdiction. Second, the 
bureaucracies have now become effective lobbying forces for the 
status quo and view the members as only passing stars in the 
constellation, something to be ignored.
    What about a bureaucracy closure commission, where we take 
your same example, which has been cited now in reference to do 
something with campaign reform, but for dealing with the 
problem we have with closing down some of the bureaucracy and 
the duplication?
    Mr. Armey. Well, again, let me remind you that this is 
within the authority and the responsibility of the Congress. I 
believe that what we may learn from the effective 
implementation of the Results Act will help us to gather the 
information by which we can make the justifiable case for 
consolidation of efforts, where we see so many duplications. 
But you know, again--I mean--this ridiculous position of 
having, apparently, one as sort of a place in the sun for a 
commission.
    And turning around and saying I'm not all that big on 
commissions. I think we should do that job. That is our job. 
And I think we are capable of doing that job.
    Mr. Mica. Without a bureaucracy closure commission?
    Mr. Armey. Without it.
    Mr. Mica. Thank you, Mr. Chairman.
    Mr. Burton. Mr. Sanders.
    Mr. Sanders. Mr. Armey, I'm very impressed by the 
discussion today. Mrs. Maloney wants to emulate your efforts 
for campaign finance reform. Mr. Mica wants to emulate your 
efforts for bureaucracy reform. Do you want to write a new 
Constitution for the United States while you're here? 
[Laughter.]
    I mean, it seems to me, everyone is very impressed.
    But I would just say I think that regardless of one's 
political persuasion and disagreement about the role of 
government in civil life, I don't think any sensible person 
feels good about government waste, and we can all acknowledge 
that there is bureaucracy, inefficiency, and waste, and we want 
to, all of us, make the government more efficient.
    But maybe picking up on Mr. Mica's question, next year when 
Congress is presented with a governmentwide performance plan 
for fiscal year 1999, how do you anticipate that plan will be 
used in Congress?
    In other words, where do we go with it? Will it, for 
example, be referred automatically to all committees with 
jurisdiction over agency and program authorizations? How do you 
feel that the plan will be used?
    Mr. Armey. Well, first of all, let me just say this--and I 
mentioned this in my testimony--this is not an ideological 
discussion. And I think that one of the reasons base closing 
got enacted was it was clearly understood to be non-
ideological.
    So we're talking about efficiency. The first thing we must 
do is to undertake a period of discovery. And it's almost as if 
we're taking an inventory of the government, what is there, 
gaining information. Now, as we gather that information, I 
would think we would distill from that, in our separate 
committees of jurisdiction, amendments to the law, a revision 
of the law, very likely some program consolidations or 
closures.
    One of the things I might say, I was laughing this morning. 
I had some experience with this when I was with the university. 
Mr. Horn, you may have encountered this, too. I remember as a 
department chairman receiving this elaborate set of 
instructions from the dean about how I was to define my goals 
and come up with empirical bases for measuring achievement of 
those goals and so forth.
    It's not easy, and it's not going to be something that is 
going to be heartily welcomed by everybody that's all of a 
sudden steamed at this new effort. So we'll have to encourage 
people to do a thorough job, and that's where the consultation 
comes in.
    We will have to be encouraging to them, because they are 
going to feel a bit overwhelmed. In many cases, people will 
feel overwhelmed by it. So we'll have to sort of lend a guiding 
hand.
    Mr. Sanders. But what I'm hearing you say is that you see 
this going through the normal legislative process?
    Mr. Armey. Yes. I have to say, Mr. Sanders, I am a big fan 
of regular order.
    Mr. Sanders. Mm-hmm.
    Mr. Armey. I'm an economist by trade, and I will tell you 
pursuant, of course, to Adam Smith, that all economic progress 
comes from division of labor, and division of labor works best 
when people mind their own business. So that for everything 
that we see, there would be a legitimate jurisdiction and a 
committee of jurisdiction.
    And we should then have that profession and that expertise 
and that interest that has resulted in people joining these 
committees, brought to bear on these discoveries so that they 
could be measured up and evaluated in a very sober and 
business-like fashion.
    Mr. Sanders. OK. Thank you very much.
    Mr. Burton. We'll now recognize your colleague from Texas, 
Mr. Sessions.
    Mr. Sessions. Thank you, Mr. Chairman. Mr. Armey, it's 
great to see you here. As a freshman of this committee, I must 
confess through the last few years, I didn't know that I would 
be sitting on this side of the bar and you on that side. It's 
good to see you.
    Yesterday, we had a press conference where there were fewer 
people there than here today, and so I'd like to take this 
opportunity to let you know about my thoughts on this 
Government Performance and Results Act. Because I think that 
throughout the media and, perhaps, in bureaucracy, there is a 
sense of fear of this act.
    And I had an opportunity, yesterday, to really say that I 
thought it was essential that bureaucrats and the management of 
the Federal Government look at this as really a cleansing 
opportunity, an opportunity to have dialog from not just at the 
upper end of management, but down to the lower ends, to where 
they could talk about not only the things that are measurable 
and within their control, but also an opportunity to look 
strategically at how they are going to guide their departments 
in the era of lowering and lessening budgets.
    What I'd like to hear from you is whether this serious 
discussion that's going to begin and whether it's near term, 
whether we're going to send the correct signal--which I think 
is correct--of this is an opportunity to begin a serious dialog 
with the managers of government, with the expectation that they 
will present these strategic views and that we will be able to 
work hand in hand.
    I think that's what it is, but I'm interested in hearing 
what you have to say about that, sir.
    [The prepared statement of Hon. Pete Sessions follows:]
    [GRAPHIC] [TIFF OMITTED] T9381.031
    
    Mr. Armey. Well, let me just say, first of all, I 
understand that fear. I related earlier as a department 
chairman receiving these complex papers from my dean. And I 
tell you, my first reaction is, what is the dean up to? Deans 
are not very trustworthy people. [Laughter.]
    Every chairman knows that. So there is a tendency to be 
defensive. And now we have the GAO working, I think, very 
actively here. The OMB is enthusiastic. I mentioned my 
discussions with Frank Raines. But we ought to--I always 
believe that we ought to take a service model, not a power 
model. And we ought to make it clear to folks that we're not 
here to hold a hammer over your head, but to work in 
partnership with you toward that end of fulfilling what we most 
often find to be our mutual shared objectives.
    I always kind of laugh. You know, one of our favorite 
whipping boys in American political discourse is the 
bureaucrat. And I can say ``bureaucrat'' with as much disdain 
in my voice as any, but when you get right down to it, these 
are decent, hard-working men and women that are trying to 
accomplish something. And often, they are drawn to this agency 
because of their concern for this area of what von Mieses 
called human action, just as we were drawn to this committee 
because we had that concern.
    And if we undertake our relationship with these folks as 
one that is encouraging and not threatening and so forth, we 
can put at ease a lot of those concerns. Now, I must say, after 
20 years of being a professor, I never got to the point where I 
accepted that deans were people that were operating in my own 
best interest.
    So it's a tough job. I'm sure deans were frustrated, too, 
with my doubt and skepticism along the way. But I think we need 
to understand that we do not come off hammering. Now, when we 
find people who are reluctant to move forward and, therefore--
perhaps, even, we will encounter some that are recalcitrant 
about it, I think we have to be assertive.
    But I think there's a far, far difference in the 
effectiveness of your demeanor when you understand to be 
assertive with somebody, as opposed to being angry at someone. 
And most people, I think, do understand that most agencies, I 
believe, of the Federal Government owe their existence to an 
act of Congress, and I'm sure they understand that they can get 
caught up in consolidation, and recalcitrance might encourage 
that.
    So I think we just need to go forward on a business-like 
basis with a good deal of respect and appreciation for each 
other, and I think we can do a good job.
    Mr. Sessions. Thank you. Well, it makes me feel good to 
know that as our leader, you're expecting the best from someone 
we have no control over but someone that we do have oversight 
functions with and that we can work hand in hand.
    Mr. Chairman, just really the bottom line to our press 
conference yesterday was that I was setting the expectation and 
the hopeful expectation that what these strategic plans will 
result in is something that is measurable, something that is 
realistic, and something that represents the true nature of the 
business or the work that these agencies are involved in.
    And I believe if they will come hand in hand and work with 
us--but it's up to them to make sure that their plan, their 
strategic plan and their direction is given to us, then we'll 
be able to work very comfortably together.
    I thank the majority leader for taking his time today, and 
I agree with everything you said, sir. Thank you.
    Mr. Burton. Thank you, Mr. Sessions. I guess Ms. Norton 
doesn't have any questions? Is that correct? Mr. Barr.
    Mr. Barr. Thank you, Mr. Chairman. Mr. Armey, the timetable 
for implementation of GPRA and GPRA, itself, I think, is really 
an important beginning, but it's really fairly modest in terms 
of the long-term goal that we have before us. As Mr. Mica 
pointed, just the proliferation of agencies that are 
overlapping in their jurisdiction and so forth.
    Is it your view--it is mine, but I'd be interested on the 
record, Mr. Armey, if it's your view that the time table set 
out for implementation of GPRA ought to be adhered to really is 
the minimum requirement that we ought to have, and that this 
Congress ought to resist efforts, which are starting already in 
the executive branch, to soften it and postpone some of the 
requirements?
    Mr. Armey. Well, yes, it is. First of all, the time table 
is set out in the law. And--I hate to harken always back to my 
years as a professor----
    Mr. Barr. I think you take great delight in doing it, as a 
matter of fact. [Laughter.]
    Mr. Armey. I don't remember a semester when I didn't have a 
host of students who found 100 reasons why they couldn't get 
their term paper in on time. And you just have to learn that's 
the deadline. I was particularly impressed with the one young 
man that had three dead grandmothers in the same semester. 
[Laughter.]
    That didn't upset me so much as their dying again the next 
semester. [Laughter.]
    Mr. Barr. That's a very dysfunctional family, apparently.
    Mr. Armey. But again, I think a firm insistence that, you 
know, deadlines are there and they must be met. And again, we 
will have a process of discovery. You know, one of my great 
anticipations about the implementation of this law is, what 
will we discover. What will we find out? What can we learn?
    That will, undoubtedly, generate the basis by which we can 
get together on both sides of the committee room and write laws 
to improve and make more effective the public--could I say--
apparatus, for accomplishing the goals of the Congress and the 
President.
    Mr. Barr. I appreciate that and I appreciate your stating 
on the record how important that you think it is to adhere to 
the time table and the requirements that are currently in 
there, and that we ought to resist efforts to soften them or 
postpone them.
    Thank you, Mr. Armey.
    Mr. Armey. Thank you.
    Mr. Burton. Mr. Majority Leader, we want to thank you for 
taking time out of your very busy schedule to be with us. Your 
remarks were very cogent. We appreciate it, and thank you for 
being with us.
    Mr. Armey. Well, let me thank you. And again, if I can 
thank the gentlemen behind me from GAO and OMB for their 
graciousness in letting me go. Gentlemen, I hope I didn't say 
anything that was too amusing. [Laughter.]
    I did the best I could.
    Mr. Burton. Well, those Armey axioms are pretty 
interesting. Thanks a lot. Could we have Mr. Hinchman and Mr. 
Mihm up here, and, also, could we have your opening statement, 
Mr. Koskinen, now? The reason for that, if it's possible--it 
would help expedite the hearing and make sure that everybody on 
the panel gets a chance to question both of you, 
simultaneously, if necessary, so we can speed things along.
    So right now, we'll recognize you, Mr. Koskinen, for your 
opening remarks, and then we'll go to questions. Oh, pardon me. 
Before we do that.
    [Witness sworn.]
    Mr. Burton. Please have a seat.

  STATEMENT OF JOHN KOSKINEN, DEPUTY DIRECTOR FOR MANAGEMENT, 
                OFFICE OF MANAGEMENT AND BUDGET

    Mr. Koskinen. Thank you, Mr. Chairman. I seem to spend most 
of my time testifying on panels with GAO and, in fact, these 
gentlemen.
    So this works out just fine. I'm pleased to appear before 
this committee to discuss the importance of the Government 
Performance and Results Act and to give you an assessment of 
our progress in meeting its requirements. I will be brief to 
allow time for questions and ask that my written statement be 
included in the record.
    Mr. Burton. Without objection.
    Mr. Koskinen. Thank you. GPRA became law 3\1/2\ years ago 
and it will soon take effect governmentwide. This was 
bipartisan legislation that the administration strongly 
supported. This committee played an important role in passing 
this act, and we look forward to continue working with you and 
others in the Congress as we carry out this law in the months 
ahead.
    On behalf of the administration, Mr. Chairman, let me thank 
you for holding this hearing, which signifies the importance we 
all attach to this very significant legislation. Let me also 
express our appreciation for the excellent work GAO has done in 
this area over the past several years. We have found it to be 
of great assistance, and have enjoyed our working relationship 
with them.
    At its simplest, GPRA can be reduced to a single question: 
What are we getting for the money we are spending? The answer 
to this question is important to all of us in government and to 
the American public as well. Regaining public confidence 
requires that the government not only work better, but that it 
be seen as working better.
    Let me summarize briefly those aspects of GPRA 
implementation that are our most immediate focus. The basic 
foundation for what agencies do under GPRA is their strategic 
plans. Agencies are required to send their strategic plans to 
Congress and OMB by this September 30th. When developing its 
strategic plan, an agency is to consult with Congress and 
consider the views of stake holders, customers, and other 
interested parties.
    Since last year, OMB has been encouraging agencies to begin 
their congressional consultations. OMB issued guidance over 18 
months ago on the preparation and submission of strategic 
plans. In the summer of 1996, as a followup, OMB conducted a 
comprehensive review of the agencies' strategic planning 
efforts and the status of their plans. The reviews' objectives 
was to gauge how the agencies were doing and identify any 
concerns with the plans themselves or the process being 
followed.
    Generally, the agency plans reflected a serious effort and 
allowed us to conclude that agencies should be able to produce 
useful and informative strategic plans by this fall. Their 
review also revealed several challenges, including the need to 
ensure clear linkage between the general goals and objectives 
of these strategic plans and the annual performance goals to be 
included in the annual performance plans. We also expect to see 
increasing inter-agency discussions on performance goals and 
measures for cross-cutting programs, and increased involvement 
by the senior leadership of the departments in the completion 
of the strategic plans.
    The first of the agency annual performance plans, as 
opposed to strategic plans, for fiscal year 1999 will be sent 
to OMB this September with the agency's budget request. These 
annual plans will contain the specific performance goals that 
the agency intends to achieve in the fiscal year. A subsequent 
iteration of the annual performance plan is sent to Congress 
concurrently with the release of the President's budget next 
year at this time. The agencies and OMB gained valuable 
experience in preparing annual performance plans through the 
pilot project phase of GPRA.
    GPRA also requires that a governmentwide performance plan 
be annually prepared and be made part of the President's 
budget, as noted. The first plan will be sent in February 1998, 
and will cover fiscal year 1999. We would welcome your views on 
those futures that this committee believes would make this 
governmentwide plan informative and useful to Congress.
    As I noted, we expect agencies to provide useful and 
informative strategic and annual performance plans within the 
timeline specified by the act. However, as Mr. Armey noted, 
preparing a good GPRA plan is not an easy task. No one should 
expect the first plans to be perfect. We should view these 
plans as the beginning of a process of improvement and 
refinement that will evolve over several years. Even as these 
performance plans and measures become more refined, we should 
always bear in mind that using performance measures in the 
budgeting process will never be an exact science or even a 
science at all.
    Comparing results across program lines will always require 
political judgments about relative priorities of, for example, 
programs for highways and education. And we should not lose 
sight of the fact that performance information will often be 
used to adjust the way the programs are managed, rather than to 
change the resources provided. Accurate, timely performance 
information is important in all these situations, and that is 
why the administration is committed to the successful 
implementation of GPRA.
    As I've said on other occasions, if we are successful over 
time, GPRA should disappear. If GPRA works as envisioned, 
government managers will absorb it into day-to-day agency 
administration and program management. That's why I suggest 
that the true measure of the success of GPRA will be the extent 
to which the concepts of management and good business practices 
set out in this law become the accepted way that the government 
works, without reference to any particular statutory framework 
or requirements.
    This concludes my brief oral statement, Mr. Chairman. I'd 
be pleased to take any questions you may have and join in this 
panel. Thank you.
    [The prepared statement of Mr. Koskinen follows:]

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    Mr. Horn [presiding]. Thank you very much for your 
testimony. Mr. Hinchman, did you have some other remarks you 
want to make in general on this? And then we'll throw it open 
to questions.
    Mr. Hinchman. Thank you for that offer, Mr. Chairman. I 
think that the three central conclusions from our work that I 
described are the important message that we have. I think that 
they are consistent with what Mr. Armey said and with what my 
friend Mr. Koskinen said, as well. So I have nothing more to 
add to that.
    Mr. Horn. OK. Mr. Shays. Do you have a question? Ms. 
Norton. Do you have a question, at all? Mr. Sununu. Do you have 
a question? You do? OK. Well, let me pursue some of the things, 
here, just in general.
    One of the problems you face when you're developing any 
strategic plan are the units of measurement, as well as not 
just relation to the budget, but how do you know we're being 
successful? How would you generalize, both from the Comptroller 
General standpoint and the Office of Management and Budget 
standpoint, where we are on achieving certain reasonable units 
of measurement?
    You're familiar, I think, both of you, with the Oregon 
experience, when they went out and talked to the citizens, said 
what programs do you like, how will you know if we got there 
and achieve those goals, and so forth? What's the--give me a 
good generalization here as to where you think we are in the 
Federal Government on this.
    Mr. Hinchman. We have been monitoring both the pilot 
projects which OMB is conducting and the implementation in the 
24 major agencies that comprise 95 percent of the budget. I 
think I would make one point. Progress is further in those 
agencies which are engaged in direct delivery of services. For 
example, the Social Security Administration, which can measure 
the effectiveness of its 800 telephone service and the 
timeliness of its check mailing.
    Progress is slower in those agencies which work through 
third parties, like State and local government, in which the 
precise goal of the Federal involvement is less clear, at least 
less specifically defined, and in which--I think we have to 
say--the agency officials are more concerned about committing 
themselves to outcome goals over which they have less control.
    On the other hand, I have to say that I think we will get--
as Mr. Koskinen said--we will get both strategic and annual 
performance plans from those 24 agencies for fiscal year 1999. 
And while some will be better than others, basically the 
framework for outcome measurement is going to be there.
    Mr. Koskinen. I would agree with that perspective. I would 
add that our experience over the last three as we've worked 
with the agencies, is that focusing on missions and goals is 
complicated, difficult and challenging. But your question goes 
right to the heart of it. Trying to figure out what are our 
appropriate performance measures is really the intellectually 
challenging and stimulating task.
    This is true partially because of the wide range of 
activities in which the government engages. And besides the 
point Mr. Hinchman, we say that when we get to areas like basic 
research, and when we get to areas of operations like policy 
operations, even OMB, for example, trying to figure out how to 
measure successful performance gets to be a very complicated 
process. This is why, as I said in my testimony, I think what 
we have to expect is that these first plans won't be the last 
plans. And they should not be the last plans.
    We will find with some performance measures that--we'll 
find over time that they don't appear to be appropriate. They 
measure the wrong outcomes. We'll find with other performance 
measures that the data is either very difficult to obtain or 
too expensive to obtain. And we will find with other 
performance measures that we get a better understanding of the 
utility of those measures over time.
    I think your reference to the Oregon benchmark project is 
very appropriate. There they had the same experience. Their 
measures have gotten better over--with the passage of time. And 
I would hope that we would understand that the provision of the 
strategic plans in the fall of 1997 and the provision of the 
first performance plans in the winter of 1998 will be the start 
of a dialog and not the end of it, and that we do need a 
partnership, not only in a bipartisan nature in the Congress, 
but a partnership between the Congress and the agencies as we 
continue to review what are the appropriate, most effective 
performance measures.
    Mr. Horn. Let me ask one more generality on this, then I'm 
going to get down to specific agencies. What have you found 
were the ``performance measures'' that really haven't worked 
out? Can we generalize from what you've seen in changes when 
you've looked at the way some agencies have used ceratin 
measurements and just decided, hey, this isn't going to work? 
Any of those cases you could describe for the committee?
    Mr. Hinchman. The only point that I would make as 
generality is the importance of result oriented performance 
standards, that there is a temptation to look at outputs or 
ever process measures and to shy away from commitment to 
measuring actual impact which programs have on the lives of 
Americans. And that that's a temptation which has to be 
resisted. I think that we will get better at that over time.
    That is certainly the experience of GAO. We have been 
trying to measure our performance. We currently have a mix of 
both outcome and output measures. We hope to evolve toward 
completely--complete use of outcome measures, but it's going to 
take us some years to do that, I think.
    Mr. Koskinen. Our review of the pilot showed that the 
biggest problem at the front end as we're dealing with this is, 
in fact, the data collection. There may be an agreement that 
the measure looks appropriate, but the question is can you 
accurately collect timely data. As I said, going back to 
something to even something like research, a lot of impacts and 
outcomes are longitudinal, so you may be spending the money now 
and you won't see the results of that expenditure over a longer 
period of time.
    As we've told the agencies, that doesn't mean you shouldn't 
start measuring now, because if it takes 3 to 5 years to see 
the results, 3 to 5 years from now, if we haven't started, we 
won't know what the results were. But that's one of the 
issues--is in terms of programs with a longitudinal impact. 
Another is a point Mr. Hinchman made earlier, and that is how 
to obtain data when, in fact, the services are being provided 
by third parties, and we're making grants and there are 
actually intermediaries who are engaged in the activity. And 
what are appropriate measures--and--that they can effectively 
collect.
    Mr. Horn. In business, one of the measures would be, 
obviously, client satisfaction, the attitude that the customer 
can do no wrong. And businesses prosper that way. Now, with 
government, to what extent have we tried actual surveys of 
client satisfaction, the taxpayer, in brief, or anybody we 
serve.
    Mr. Koskinen. As they say in the trade, I'm glad you asked 
that question. A major initiative of the Vice President's 
National Performance Review has been directed in that area, 
which is focusing on developing customer service standards and 
then surveying customers to find out how those standards are 
being met, as well as collecting data. So there are not 
literally hundreds of standards that have been designed and 
developed across the government. And many of them depend upon 
government surveys.
    Now, one of the interesting ironies is that when you want 
to collect survey data, you have to be very careful about 
Privacy Act and Paperwork Reduction Act requirements that we do 
not want from the Federal Government, to burden the public with 
a wide range of data calls and data requests. So that--we are 
right now in the process of trying to develop the right 
balance.
    But I think you're exactly right. A lot of what we do 
interfaces directly with the government. Obviously, Social 
Security Administration, IRS, Veterans Administration, in the 
Customs Service, in INS. And across the board, part of the 
effectiveness of that agency has to be the perception and the 
satisfaction of the customers of those agencies.
    Mr. Horn. Has OMB rejected some of the proposed client 
satisfaction criteria?
    Mr. Koskinen. At this point, we have not. But as I say, at 
this point, the statute provides that we're really focused now 
on trying to get the strategic plans done and begin to focus on 
the development of the measures. The mechanics of how we 
collect that data will then be in the performance plan 
discussions. And we are concerned about that in holding 
discussions about it.
    Mr. Horn. So you're saying it's premature right now to 
consider this? When is it not?
    Mr. Koskinen. No. Actually, there are surveys that have 
been done. And in fact, if you look at annual reports being put 
out by agencies, you will see what those results are. The 
Social Security Administration has one of the most effective 
performance measurement devices.
    Mr. Horn. Mm-hmm.
    Mr. Koskinen. It puts out an accountability report that 
measures all of its range of activities in terms of standards 
and goals.
    Mr. Horn. Now, is that an in-house or is that contracted?
    Mr. Koskinen. My understanding is that--well, I do not know 
the answer to that question.
    Mr. Horn. Yes. I think we ought to look at should we 
contract this out to objective survey people or do we trust a 
particular agency and is it simply throwing things in the box 
as you leave the field office as to whether you were satisfied 
with the people at the counter, sort of like a hotel does. 
[Laughter.]
    And I'm just curious to what degree we're looking at the 
credibility of the data and how we go about it.
    Mr. Hinchman. Let me share one success story from SSA that 
does rely on external data.
    Mr. Horn. Sure.
    Mr. Hinchman. I had mentioned earlier that SSA runs a very 
large 800 number information system. They get over 60 million 
phone calls a year. And when they became more customer focused, 
they decided they needed to improve that service. They made a 
large investment in that, and then had the quality of that 
service tested by an outside firm, which measures, essentially, 
the quality of 800 service.
    Mr. Horn. Right.
    Mr. Hinchman. And there was a study done by that firm, 
involved eight respected private sector companies and SSA, and 
SSA won.
    Mr. Horn. Now, was that merely looking at how rapidly that 
phone was answered?
    Mr. Hinchman. No.
    Mr. Horn. Or was that talking about the end result?
    Mr. Hinchman. It was about calling people who had used the 
number and asking them about the quality of the service they 
received, how quickly the phone was answered, how polite the 
people who spoke to them were, how knowledgeable they were, how 
quickly their problems were resolved.
    Mr. Horn. Yes. Good.
    Mr. Koskinen. And in fact, and across the range of those 
quality indicators, the 800 number at Social Security did not 
answer the fastest.
    Mr. Horn. Mm-hmm.
    Mr. Hinchman. But nonetheless, the overall satisfaction and 
quality of the information made it the most effective 800 
number in that comparison.
    Mr. Horn. Yes. I think that's probably true. I've checked 
myself every once in a while on Social Security. But an agency 
we have real problems with, as you know in management--and I 
must say the President has a choice now when he nominates 
people. This agency, he needs not a good tax accountant, not a 
wonderful tax lawyer. What he needs is a manager. And that's 
the IRS. This is obviously a basket case agency.
    And we've had numerous congressional hearings on this. 
They're going through hearings in Ways and Means. Hopefully, 
they will be included in the debt collection act that we passed 
here last year. And they have not yet agreed to that. But I'm 
told by the chairman, Ms. Johnson of Connecticut, that she will 
generally follow what was done here. And that's long overdue.
    Now, what worries me is when the thousands of citizens I 
have heard from on this subject all over America, is that this 
is an agency they are frustrated by, in the sense they can't 
get through to somebody to solve the problem. And there needs 
to be some sort of telephone tree that ends up, maybe, with an 
agent somewhere that can answer a question. And you know, the 
airlines have worked on this, lots of different groups have 
worked on it.
    It isn't impossible. Social Security has already done some 
of it, and we need to take a real good look at that. Because if 
we were ranking agencies in customer satisfaction, that would 
be one right at the bottom. And I just wonder what you are 
doing about it.
    Mr. Koskinen. Well, I think we might disagree with whether 
it's a basket case or not. It fairly effectively collects a 
trillion-and-a-half dollars a year in finances. But in terms of 
being----
    Mr. Horn. But it very ineffectively has $100 million 
written off. That bothered me. That's what got me started on 
the Debt Collection Act.
    Mr. Koskinen. As you know, we worked with you very closely 
on that act and appreciate your support of it. What has 
happened is that the issues of management of the IRS are 
receiving the highest level of attention. The Secretary of the 
Treasury has set up a modernization management board, chaired 
by the deputy secretary, Mr. Summers, that is working on a 
regular basis really as a board of directors with the 
management of the IRS focused directly on those questions, on 
its information technology systems.
    As you know, we basically--that board made a decision to 
stop a program for document processing which was going to cost 
a $1,200,000,000 billion, and it wasn't clear that it was going 
to, in fact, work. And over $1 billion was not spent as a 
result of that decision. There is a focus on the 800 numbers, 
there's a focus on electronic filing, making it easier for 
people to file their returns.
    And one of the great successes they've had is, in fact, 
increasing the speed with which they provide refunds. But 
you're right. One of the questions taxpayers legitimately have 
is they'd like to be able to get advice promptly and 
effectively. And we are focused on that.
    And I think you're also correct that we need to focus on 
the management internally in the IRS. We've been very 
successful and very fortunate to recruit a new chief 
information officer from the State of New York, Art Gross, who, 
I think, is doing a phenomenal job. And we have high 
expectations, but also high demands of the need for improvement 
in that agency.
    Mr. Horn. Before I yield to the gentlewoman from Maryland, 
let me make sure the record shows I said $100 billion, not 
million. I think I mushed that a little.
    But now, I yield to the gentlewoman from Maryland, Mrs. 
Morella.
    Mrs. Morella. Thank you, Mr. Chairman. We know that you 
always operate in the magnitude of billions. [Laughter.]
    Gentlemen, particularly Mr. Hinchman and Mr. Koskinen, I 
wanted to ask you about the Government Performance and Results 
Act--usually requires agencies to consult with Congress in 
preparing their strategic plans. From my experience, agencies 
always check in with OMB first before they move forward beyond 
that.
    And so this happens with testimony before Congress. We find 
out. And certainly, with the current budget process. So my 
question to you is, whether agencies must clear through OMB 
every single document, idea, goal, or mission that is required 
by the Government Performance and Results Act?
    Mr. Koskinen. No. That's not required.
    Mrs. Morella. It's not?
    Mr. Koskinen. Some people would like to think of us as all-
powerful and all-encompassing, but the agencies actually have a 
lot of dialog with the Congress that does not clear through us. 
We clear testimony, but not, generally, materials provided. We 
have, as a I noted in my testimony over a 1\1/2\ years ago, 
sent out guidance to the agencies which we reaffirmed last 
fall, encouraging them--reminding them of the statutory 
requirement that they consult with Congress as their plans are 
developed, and encouraging them to begin--engage in that 
consultation.
    So quite the contrary in terms of resisting that, we think 
that the statute not only requires it, but that it's an 
important part of the development of the strategic plan. The 
statute, I think, wisely contemplates that the agency should 
consult with Congress. The agency should consult with their 
stake holders, whether that be State and local governments or 
the public, in the development of their final plans.
    And we are encouraging them to do that. We have spent, as a 
I noted in my prepared testimony, a significant amount of time 
over the last 3 years working with them, reviewing their 
processes, trying to provide them my help, assistance and 
guidance, drawing to their attention a lot of the good work 
that GAO has done in terms of the development of strategic 
plans.
    So on occasion, we hear that someone has said, well, gee, 
OMB won't let us do that. And I'd be delighted if anybody would 
refer any difficulties they're having getting consultation with 
their agencies. You can call me directly, because our--we're at 
the other end of that spectrum. We're encouraging that 
consultation.
    We think the time now is right, that it needs to be done 
this spring and this summer, so that when those plans come in, 
as the statute notes, to the extent that the agencies have 
consulted and they have not reflected in the plans, views of 
anyone they consulted, their cover letters are supposed to 
highlight that for both us and for you, so that they--when they 
publish these plans, which will be submitted not only to the 
Congress, but available to the public, it will be clear where 
the agency's plan is going, with the administration's support, 
and what views are not--have been made that have not been 
reflected, significant views, obviously, in that plan.
    So I think it's an important process, and we support it 
significantly.
    Mrs. Morella. And they don't need to OK it with you? That's 
not mandatory?
    Mr. Koskinen. No. At this point, they don't have a plan to 
OK.
    Mrs. Morella. When they do.
    Mr. Koskinen. What they need to be discussing with you is 
what are their proposed goals and objectives. We have--there is 
one case, actually, in the press, if they start to produce 
long-term projections about the impacts of what's going to 
happen to their performance before they've actually reviewed 
that in the budget process, then we actually do not allow that 
to happen, only because the reason for the OMB review of budget 
numbers and numbers, themselves, is to make sure that when you 
get those numbers, they come with the imprimatur and support of 
the administration.
    That--but that's a level of detail that we're not involved 
in at this point. At this point, the agency should be 
discussing with you what their views are and your views are of 
their goals, their missions, their objectives, and, as Mr. Horn 
stated, what are their performance measures going to look like 
in terms of categories, not the details or what the numbers are 
actually going to be.
    Mrs. Morella. They don't need the clearance. Great. How 
about, Mr. Hinchman, would you like to get back on this?
    Mr. Hinchman. We are doing a review for Mr. Kasich of the 
consultation process required by the act. As you, I think, 
know, relatively few consultations have taken place so far, 
perhaps half a dozen or so, I think, most of them initiated by 
Congress and its staff, not by the agencies. As Mr. Koskinen 
has indicated, that pace will pick up rapidly over the coming 
months. We'll begin to get a better idea of how it's going to 
go as we get into a larger volume of activity.
    I would add one other note. I think that we have to 
recognize that the Office of Management and Budget has a 
legitimate concern for ensuring that the President's policies 
are reflected in all the communications that occur between 
execute agencies and the Congress, and that that concern is not 
going to go away.
    What I think is important is to also recognize that GPRA is 
basically about improving the management of the government. And 
a lot of what the government does is about the management of 
trillions of dollars of assets and billions of dollars in 
expenditures every year, and that we all have a shared 
interests beyond the policy issues over which we disagree about 
making that management process more effective.
    And I would hope that these consultations can provide for 
frequent open dialog about how we can improve that management 
process and what the goals and outcomes of that management 
undertaking ought to be.
    Mrs. Morella. Could I ask one more question, and it's 
simply that when agencies form their strategic plan and their 
mission, how do we ensure that the appropriate group is working 
on the process? I mean, by that I mean, is there any kind of a 
mechanism that would include a cross-section of employees, 
managers, budget experts, policy experts, you know, stake 
holders and others that might be appropriate?
    Mr. Koskinen. In our guidance to the agencies and in our 
reviews with the agencies, we have stressed the importance of 
that point. One of my concerns is that if we're not careful in 
the implementation of this act, we'll create what I call a GPRA 
bureaucracy, and that is, in an agency we'll have a group of 
people off on the side, in a planning office or someplace, who 
fill in the blanks and provide whatever documents the statute 
seems to require, without drawing upon the expertise and the 
perspectives of everyone in the organization.
    Mr. Hinchman is exactly right, that this statute is not 
meant as an abstract exercise in producing neat binders with 
blue covers. The purpose of this statute is to improve the 
effectiveness of government operations. And one of our pitches 
to the agencies has been, what they should focus on is what 
data and information do they need to effectively manage their 
programs, and to the extent that they can work with us to 
define that data, we will guarantee them that that will be 
acceptable performance data for the management of those 
programs and reporting.
    Because, again, as I say, it will be counterproductive if 
we have strategic plans to collect artificial information that 
no one is actually using in the day-to-day operations of the 
agencies, because one of the key utilizations of this 
information is not just to make resource allocations, the most 
immediate impact of the information is to adjust or change or 
modulate the way the program is organized or managed.
    If we never allocated a budget dollar differently because 
of GPRA performance, it would not mean that the exercise was 
for nought. If we do it well, all of that performance 
information will be reflected in changes in the way we actually 
manage or operate those programs. So it's critical that we 
focus on this. And that can only be done effectively, as you 
note in your question, if the people focusing on this include 
the senior leadership in the agencies as well as the people on 
the front lines.
    Our responses to the agencies last summer, after our 
reviews went to the cabinet secretaries, and noted wherever we 
thought it was important, that those senior political 
appointees of the agency have to be intimately involved in this 
process, just as much as the front line workers.
    Mrs. Morella. So the directions are that they--the 
assumption is that they will do so?
    Mr. Koskinen. Yes.
    Mrs. Morella. And not make----
    Mr. Koskinen. And we've--we've asked that question of them 
and encouraged them to broaden the base of their planning 
effort.
    Mrs. Morella. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Constance Morella follows:]

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    Mr. Hinchman. If I could just add one note to that, Mr. 
Chairman. In our work with successful public sector reform 
efforts, one of the best practices we've identified--and it's 
reflected in our executive guide--is involving stake holders. 
And there are both internal and external stake holders. And 
they all need to be part of the planning process.
    Mr. Horn. Before yielding to Mr. Sessions, let me round out 
what Mrs. Morella has correctly begun. I think your answer is a 
very good one in terms of what the data--what those data ought 
to be down the line. And I guess my query is, does OMB plan to 
have the agencies, when they come in for future budgets, show 
this performance data as part of the budget review process in 
OMB, and is it understood that secretaries will sign off on 
this? I agree with everything you've said, because I've been 
through this, 35 years ago and 25 years ago.
    The University of Toronto was the first to have university-
wide planning. I was at the second, in terms of California 
State University at Long Beach. And we started from the bottom 
up, just exactly as you're talking about. You've got to really 
get people involved.
    I was amused by my colleague, Mr. Armey's, department 
chair. That's what most people do. Say, you have them file a 
report at the end of the night. The people who are there 
rendering the service are never involved. It's just somebody 
writing it out, and it's pieces of paper moving around. And 
your comments lead me to believe you're very alert to that 
situation and you want involvement. And you want something that 
works.
    And that's what we're talking about.
    Mr. Koskinen. Right.
    Mr. Horn. Now, are you going to include it in the budget 
process?
    Mr. Koskinen. As they say in the trade, you bet. Our hope 
is, ultimately, that we would evolve an accountability report, 
as we call it. And we've had pilot program experimentation with 
that, in which we would pull all of the results of agency 
activities and reviews together in one document. And our hope 
would be that an agency, ultimately, in the budget process, 
would come to OMB and, ultimately, to the Congress, saying, 
these are the results of our activities thus far and our 
accountability report, and these are our resource requests. And 
if we get these resources, these are what our performance plan 
show we will be able to receive with those.
    And a year later, they would come in with an accountability 
report, saying, these are the resources you gave us, these are 
the results we got, these are the resources we'd like in the 
next cycle.
    Mr. Horn. Mm-hmm.
    Mr. Koskinen. It will take us some time to get from here to 
there. But we started in the fall of 1994 with the 1996 budget 
process, asking for as much performance information as the 
agencies had in their justifications to us. This last fall, in 
the 1998 budget process, we told agencies it would be a very 
effective time to start a pilot program for seeing how much 
performance information they had. We ran a spring review in 
1995, saying for your major key programs, what measures would 
you use to judge their effectiveness?
    So we've engaged, over the last 2 years, 2\1/2\ years, in 
an on-going dialog, trying to bring to bear the focus of the 
agencies, not only on the results, but, in fact, as you say, 
that these should be involved in the explanations as to what 
they're going to be accomplishing with the additional resources 
they're asking.
    Mr. Horn. Now, does the gentleman from Texas have any 
questions he'd like to ask?
    Mr. Sessions. Yes. I would. Thank you.
    Mr. Horn. Yes.
    Mr. Sessions. I would direct to either three of you, is 
there any indication that you have when you hear back from 
these agencies that there's some reluctance or some unknowing 
of about what these strategic directions might be, that you 
could direct them to their IGs, Inspector Generals, and/or to 
this report that this committee came out with last year, as a 
good indication about realistic approaches that need to be made 
within their agencies, at least as a starting point?
    Or do you find that they do understand this as strategic 
direction and that they've got a good handle on it? So it's 
just a general question and comment about feedback from these 
agencies.
    Mr. Koskinen. You've been doing well, Jim.
    Mr. Hinchman. Chris, do we have any feedback from the 
agencies on that issue? Do you know of any? I'm not aware of 
any.
    Mr. Mihm. Mr. Sessions, we haven't heard specifically of 
agencies referencing the committee report or thinking of going 
to their Inspectors General for decisions or questions about 
strategic direction. To the broader issue that you're raising, 
though, about a lack of strategic direction, that's one of the 
major challenges to the implementation of GPRA. It's one of the 
opportunities that GPRA affords, is that we've found an awful 
lot of agencies where the basic approach of Federal program 
management has been an adaptive approach over time, where we've 
had new responsibilities overlaid on existing missions, such 
that now some agencies have really lost their way.
    And in Mr. Hinchman's prepared statement, he talks about a 
couple of those. And so, there is a real need as agencies go 
through the strategic planning process, to start first with 
what is our purpose, what business are we in? And for some 
agencies, that's going to be quite a struggle.
    Mr. Koskinen. We have not had any feedback that would 
indicate a difficulty. We have increasingly encouraged 
agencies, though--and will again in a review and an assessment 
we're doing this spring--to take a look at their major, what we 
call, management challenges. And those challenges come in a lot 
of different formats and have been drawn to their attention in 
a lot of different ways. And encourage them to take a look at 
what are their performance measures going to be for solving or 
dealing with those management challenges.
    And to the extent that they are significant, they should 
be, we think, reflected in their overall strategic planning 
effort. But as Mr. Mihm noted, the strategic planning effort 
deals with, ultimately, the basic goals and missions and drive 
of the agencies. And a lot of the particular IG reports or 
other issues are significant, but not clearly sufficient to 
cover the wide level of activities going on.
    I would note, also, in response to your earlier discussion 
with the majority leader, that I very much appreciate your 
concern that agencies not come forth with fear and trepidation 
and concern that nothing good is going to come out of this for 
them. As Woody Hayes once said when he was coach at Ohio State, 
why did he like forward passes, ``two out of three things that 
happen to you are bad.''
    Part of my concern has been that the agencies may, over 
time, feel that nothing, everything will be bad with measures, 
that it will only be used as a way of justifying fewer 
resources. I think to the extent that we can in a bipartisan 
way and in a cooperative way--a partnership between the 
administration and the Congress--get everybody to understand 
our goal here really is to be effective.
    We may argue, as noted earlier, about whether the 
government ought to be doing one thing or another, but we all 
ought to agree, once the government is in an activity, it ought 
to be doing it in the most productive way possible. And as I 
noted in my prepared testimony, we need to have people 
understand that if an agency is not performing well, the answer 
may not be fewer resources, the answer may be more resources.
    On the other hand, an agency that's continually moving 
along may turn out to be a lower priority over time, and we may 
decide that the performance isn't good enough and we won't get 
increased performance, there just is no way to turn it around 
with resources or management changes.
    But those dialogs need to be held, and I think, as I say, 
your focus on the positive aspects of it are important, because 
I think agencies need to understand that this is an important 
dialog and, at least, on occasion some good things will happen 
as a result of a dialog, as well as some hard questions being 
asked.
    Mr. Sessions. Good. Thank you. Let me just say this, that 
the work that you do is in the best interest of the taxpayer, 
should continue. And I think, Mr. Chairman, this committee 
should do all we can do to reinforce not only the work you're 
going to do, but to present a positive spin to all managers of 
the government, that they must comply, but it's up to them what 
they present.
    And then we will get into an oversight, if necessary, of 
the discussion of the priorities. Thank you, Mr. Chairman.
    Mr. Horn. Thank you. The gentlewoman from Maryland.
    Mrs. Morella. Thanks. Just as a followup, Mr. Koskinen, I 
was looking at an article here in the Washington Post, which 
quotes Franklin Raines and states that--OK. ``He encouraged 
agencies to consult with congressional committees but requested 
that all substantive documents related to strategic plans 
should be provided to OMB beforehand.''
    Is that accurate?
    Mr. Koskinen. Well, they've all, actually, been provided to 
OMB. I mean, as Mr. Hinchman stated, these plans have been 
under review with us for the last 2 years as they've evolved. 
And what we've told the agencies is they need to consult with 
the Congress, they need to provide the most updated 
information. And to the extent that they are providing to you, 
we'd like to know what that information is. But at this point, 
as I say, they've already submitted the bulk of their material 
to us. So we have it under review. So it's not an obstacle.
    It's not as if the agencies have been off on their own and 
we've never seen it. We've seen the information and our 
encouragement to the agencies now is they need to discuss their 
basic goals and measures and where they're going with you.
    Mrs. Morella. So they've already--what you're saying is 
that since they've already presented some of this material to 
you, they can move forward?
    Mr. Koskinen. Yes. Right.
    Mrs. Morella. But they need to present it to you. I mean, 
it is a requirement.
    Mr. Koskinen. Yes. It's not an obstacle because they've 
already done it. But it is part of the normal process, that 
they would continue to deal with us.
    Mrs. Morella. It is part of the process that they report 
it.
    Mr. Koskinen. I would renew my offer. If there is ever an 
area where someone feels that an agency is not being 
forthcoming--and worthy explanation for that, I would be 
delighted to make sure that we resolve whatever issue there is 
promptly.
    Mrs. Morella. Mm-hmm. Mm-hmm.
    Mr. Koskinen. I'm not aware of any at this point.
    Mrs. Morella. OK. I see that same statement is quoted here 
in the memorandum for the heads of executive departments and 
agencies, ``All substantive documents related to strategic plan 
should be provided to OMB beforehand. And OMB comments ensuring 
consistency with national program and budget policies should be 
incorporated before the documents are given to Congress.'' 
That's correct, though? Right?
    Mr. Koskinen. That's correct.
    Mrs. Morella. Thanks.
    Mr. Koskinen. And in fact, I'd be happy to put into the 
record that letter which pursues--is pursuant to the guidance 
we gave a year earlier encouraging congressional consultation. 
As noted, our goal is primarily to make sure that when you get 
engaged in a dialog with the agencies, you're engaging with a 
dialog with the administration--with the administration's 
support, that there's--and that's our role in OMB, is not to 
think up new things, it's basically to make sure that when 
agencies make presentations to you on major matters like this, 
that you're not going to find out later on that that 
presentation is disowned because it doesn't reflect the 
understanding of the President's priorities or our view of 
where we're going to be going with it.
    But as I say, at this juncture, all of the agencies are 
sharing that material with us. We're giving them feedback. We 
expect to have another assessment starting in the next couple 
weeks with them of where they are. Our problem is less--our 
concern is less what they're doing with those plans. Our real 
concern is making sure that they have the consultation with you 
and that they complete acceptable and useful plans for 
submission to all of us by next September.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T9381.041
    
    [GRAPHIC] [TIFF OMITTED] T9381.042
    
    Mrs. Morella. OK. Thank you. Thank you.
    Mr. Horn. As I understand, where we are on this question 
and answer, the consultation can be oral up here.
    Mr. Koskinen. Right.
    Mr. Horn. And they can talk to us and we can talk to them. 
But when the chips are down, what they put in writing is 
cleared through OMB.
    Mr. Koskinen. That's correct. If they are going to give you 
a plan, we should have seen it beforehand.
    Mr. Horn. Right. Yes.
    Mr. Koskinen. But--but there's nothing that we----
    Mr. Horn. So I don't think any of us are deluded that OMB 
won't be involved. And I think if Members are concerned about 
what the agency suggests that was knocked out, we can ask them.
    Mr. Koskinen. You can ask them.
    Mr. Horn. And they have to tell us, just as we do, what did 
you ask them in money.
    Mr. Koskinen. Exactly.
    Mr. Horn. And then what did they do to you?
    Mr. Koskinen. And at that point, you'll have exactly the 
right information you need, which is what the agency suggested 
and, for whatever reason, we didn't want to put in, and then we 
can have a dialog about that. Our concern is that if we don't 
have that process, you'll get agency discussions and you'll 
move forward with them only to discover after the fact that 
that's been--turned out to be a problem and the administration 
is not supporting that position.
    But the chairman has it exactly right, that the agencies 
are encouraged to have those discussions with you, 
freewheeling. They should be talking with you. And we encourage 
them to engage you in a dialog in your perspectives of what 
those goals and missions and objectives ought to be, 
recognizing that the final plans will be agency plans as part 
of the administration. But as I say, if you have ideas that are 
not reflected, the cover letter for those plans should reflect 
that for you.
    So they should say, we had congressional consultations and 
the Congress said we ought to have a mission statement that 
looked like that. We have a mission statement that varies 
somewhat, and now you can take a look at the differences. So 
the important point is to get all of that out so people 
understand exactly where everyone is.
    Mr. Horn. Let me go back, as the gentlewoman--let me go 
back to a couple of areas. Mr. Hinchman, you mentioned the 
report on ``consultation'' that you are preparing for Budget 
Chairman Kasich. If you would be good enough to send Mr. Burton 
and Mr. Waxman, myself and Mrs. Maloney copies of that, we'd be 
most grateful.
    Mr. Hinchman. Of course, Mr. Chairman.
    Mr. Horn. We'd like to keep up on what's going on here, and 
there's no use asking you twice. Just copy us. Now, let me ask 
you, Mr. Hinchman, on the basis of what the General Accounting 
Office has learned, do you plan to propose any changes to the 
legislation when you report on June 1, 1997? Do you have a 
number of changes that will be coming to----
    Mr. Hinchman. I think that we do not expect to report new 
changes. I think our view is that the framework in the statute, 
as I said in my testimony, is sound and that we need to try to 
make it work. And that it's not time yet to begin thinking 
about changes in that structure.
    Mr. Horn. OK. Now, one of the concerns that we have is on 
the various pilots. Some of them relate to those agencies that 
are also on your high risk list, which we will begin discussing 
tomorrow. For example, the HUD Office of Chief Financial 
Officer. Apparently, the department cannot get an opinion on 
its audited financial statements and has serious and pervasive 
weaknesses in its internal controls that cause it to be on your 
1997 high risk theories. And the EPA Superfund program. There's 
another one.
    Mr. Hinchman. Mm-hmm.
    Mr. Horn. What is your feeling on this in terms of being a 
pilot when we have so many problems? Is that good, bad? Does 
that just force them to focus more attention on it and solve 
the problem? And why haven't they?
    Mr. Hinchman. I think, in general, we would say that 
participating in the pilot program has been good for agencies, 
that those agencies that have been in the pilot program are a 
few steps ahead of others in achieving effective implementation 
of the requirements of the act. And I think we will see that 
when we see the 1999 plans. That is to say that those, in 
general, those pilot agencies, will do the better jobs of 
meeting the requirements of the act that time around.
    With respect to specific cases like HUD, I don't think that 
we can expect that participation in the pilot program is going 
to solve HUD's problems. HUD has made progress, however, and 
I'm hopeful, I like to think that its involvement in the pilot 
project has helped focus its thinking on the kind of steps 
which will lead to progress. Our high risk report will say that 
things are better at HUD than they were 2 years ago.
    But you are right. Things are not OK, and there is more 
work to be done there.
    Mr. Horn. Let me move to the Forest Service. It's also 
listed as a pilot for performance plan phase. I'm told its cost 
accounting is abysmal.
    Mr. Hinchman. Mm-hmm.
    Mr. Horn. It doesn't track the cost with associated 
revenues on a consistent, logical basis as good cost accounting 
practices dictate.
    Mr. Hinchman. Mm-hmm.
    Mr. Horn. It would seem that the pilot implementation would 
require better cost accounting. Have you seen any improvement 
in the Forest Service management lately?
    Mr. Hinchman. We currently have work underway concerning 
Forest Service management. I am not in a position, today, to 
say exactly what the outcome of that will be. There is no 
question, though, that the Forest Service does have financial 
management problems. It is not unique in that regard. I think 
that one of the reasons I talk about the Results Act as being 
part of a framework of statutes is because I think that solving 
our information technology and financial management problems is 
a critical part of solving our general management problems.
    And we're going to have to rely on those statutes working 
together to make the government a well run institution.
    Mr. Horn. Do you want to comment on any of these?
    Mr. Koskinen. I would just echo Mr. Hinchman's comment that 
I think wherever we've had agencies participating in pilots, 
it's been a benefit to them as well as to the statute. I think 
it has helped focus them, not only on improvements, but 
actually on how to measure those improvements, and that's one 
of our biggest challenges, is to not just keep coming back 
every year saying, well, things are a little better.
    We need to have actual measures. And I think the 
application of the statute and through the pilot program is a 
significant step in the right direction.
    Mr. Horn. As you know from the private sector, there have 
been experiments with looking at a particular corporate culture 
of a firm, a plant, especially when you've merged maybe three 
or four unique companies under one conglomerate. Has anybody 
looked at that from the point of the Federal Government, where 
you think in these pilots, now, that you have a good cross-
section of the government? Do you feel that you have or are 
there other ones, perhaps, you should convince to be pilots?
    Mr. Koskinen. Well, the great genius of the act was to 
allow us to have the pilot program phase and have the agencies 
as well as us learn. Now what we're doing is turning the whole 
government into a pilot. In September of this year, everyone is 
supposed to show up with a strategic plan, has to show up with 
a strategic plan, and in February, next year, they will all 
show up with a performance plan.
    So that at this point, we're out of the pilot phase and 
we're into the actual full implementation phase.
    Mr. Horn. Mr. Hinchman, back to you. In terms of your 
testimony, you stated that the Department of Defense is unable 
to properly manage its cost resources, and that the critical 
cost data are absent for almost all of the department's non-
cash assets such inventory, equipment, aircraft, missiles.
    Mr. Hinchman. Mm-hmm.
    Mr. Horn. I'm just curious how they're doing with 
implementing the pilot project.
    Mr. Hinchman. I think that financial management at the 
Department of Defense remains a very big challenge, and I don't 
think that we will see that problem fixed in the near term. And 
obviously, part of a good financial management system includes 
cost accounting systems. And I think we all share the goal of 
reaching a point at which financial management, including cost 
accounting within the government, meets private sector 
standards. DOD is not there today.
    Mr. Horn. We found in our hearing last year of what did you 
do with the $25 billion, and they said we didn't steal, or 
nobody stole, but we just can't find it all. Forty-nine 
accounting systems exist in the Department of Defense. Anything 
happening to consolidate that? And if you were suddenly made 
the Chief Financial Officer of Defense, what would you do?
    Mr. Hinchman. I would begin----
    Mr. Horn. Besides go to Australia. [Laughter.]
    Mr. Koskinen. That's right.
    Mr. Horn. What would you do?
    Mr. Hinchman. I would begin a strategic planning process to 
determine what the goals of that system need to, and begin 
developing plans to move toward those goals year by year. I 
think it's going to be a long-term process.
    Mr. Koskinen. There is--I would note--that there is a 
strategic plan in this particular area, to over a reasonably 
definable period of time, migrate those systems to five basic 
financial accounting systems. It's not easy. It's been a 
project underway for some time, but they have begun to make 
significant progress. But I think Mr. Hinchman is right. This 
is one of the major challenges in the government, is to, in 
fact, work with the Department, which is very focused on this, 
in bringing its financial system up to date.
    Mr. Horn. Well, we know they won't be able to give us a 
balance sheet, I think. Both IRS and Defense, for 4 years now, 
everybody said they can't possibly meet the law on that. Do you 
feel that is still true?
    Mr. Hinchman. I believe that we will have financial 
statements from the Department of Defense when it's required 
under the CFO act. I do not know, at this point, what the 
opinion in the statements will be.
    Mr. Koskinen. Right.
    Mr. Horn. Any reaction on that?
    Mr. Koskinen. I think that's correct. We are--we have 
actually worked jointly--the Treasury Department, GAO and OMB--
in developing and preparing for the governmentwide financial 
statement required under the CFO Acts and Government Management 
and Reform Act, and, clearly, we all are working together with 
the areas you've discussed and some others, to make sure that 
we comply with the statute.
    So I think, at this point, we've arrayed all the resources 
in the government together in a very cooperative and very 
focused effort to see if we can improve these problems.
    Mr. Horn. Before I yield to Mr. Sessions, let me ask you 
one question while we're on this topic. IRS has had major 
problems implementing the new technology down there.
    Mr. Koskinen. Yes.
    Mr. Horn. We went through this with FAA 3 years ago.
    Mr. Koskinen. Uh-huh.
    Mr. Horn. Absolute basket case. And we have this throughout 
the government, now. What have we learned from these 
experiences, either from the OMB side or the Comptroller 
General side.
    Mr. Koskinen. Well, I won't give you my full half hour 
speech that I gave yesterday morning.
    Mr. Horn. Give me your executive summary.
    Mr. Koskinen. The executive summary is that thanks to the 
assistance of this committee and the Governmental Affairs 
Committee, we passed the Information Technology Management 
Reform Act, now known and referred to as the Clinger-Cohen 
Act----
    Mr. Horn. Right.
    Mr. Koskinen. Which fundamentally changes the way the 
government plans for, acquires and manages information 
technology. Again, it was--we had the benefit of a lot of 
insight and experience and reviews by GAO, in which we drew on 
the promising practices or best practices of 10 of the best 
private sector companies who use information technology. We 
know have Chief Information Officers in every agency. They are 
focused on dealing with what we think were the fundamental 
weaknesses in the prior system.
    Mr. Horn. But what were those weaknesses?
    Mr. Koskinen. Fundamental weaknesses are, first of all, 
partially driven by the nature of the procurement system. We 
tended to design large complicated systems all on one 
procurement so that we would be buying systems and planning 
them over 8 to 10 to 12-year time horizons. The best private 
sector companies buy systems with deliverables no farther out 
in time than 12 to 18 months.
    A corollary to that means that if you are designing a large 
system, you need to, in fact, then buy it in modular or phases, 
with testing of each phase to make sure you're moving in the 
direction in which you want to go. Another major lessen of the 
private sector is that these are not technology questions--the 
problems--they are actually management questions.
    And the best companies, before anyone automates anything, 
ask the question of A, do we need to do this work at all?; B, 
if it needs to be done, is there someone else who can do it 
better? And probably most functionally and important in dealing 
with not only the government's problems, but the private 
sector's problems, if we need to do the work and no one else 
can do it better, have we restructured and re-engineered the 
way the work is done to be able to maximize the impact of 
information technology.
    A corollary to that is, have we re-engineered the work so 
that we can take advantage of off the shelf software and 
existing systems, rather than customizing a new system to meet 
what is often an idiosyncratic way of doing the work.
    Mr. Horn. Yes. Since we knew all that 25 years ago, does 
this mean the role of Assistant Secretary for management has 
failed in these departments?
    Mr. Koskinen. Well, I would tell you that A, people didn't 
know this 25 years ago. So I would challenge on that.
    Mr. Horn. But we did. On the systems that--look, the 
dumbest thing you can do is bring in a computer, which they 
will sell to you with all the wonderful things they can do with 
it, and not clean up your systems to start with, and ask, are 
you doing it, just as you said, and get rid of it. And then you 
automate that. The other dumb thing you do--and the FAA did 
that regular--is you don't get closure on everybody's great 
idea. And there's nobody managing it. It's everybody doing add-
ons. McNamara got into that trouble in the early 1960's with 
building a plane that had to do everything, which didn't work.
    Mr. Koskinen. I would respectfully note that the government 
has no monopoly on these problems, that, in fact, there are 
vast numbers of failed systems right now in the private sector. 
A study last year showed that over half of the private sector 
systems being designed last year and implemented either didn't 
work or came in over budget and did not come in on time.
    So that these lessons which are straightforward and 
understandable are not technological lessons, have not 
necessarily been out there in everybody's mind for 25 years, 
and the government has not led the failure parade. There are, 
as I say, far more dollars that have been spent on failed 
systems in the private sector in the last few years than in the 
government.
    That doesn't mean that we don't need to learn the lessons. 
And that's where GAO's reviews were very helpful. They went out 
and didn't look at the private sector generally because if they 
had done that, they would have seen a lot of failed systems as 
well as successes. What they said was what are the best 
companies and what are their practices, and what can we learn 
from those. And I think the government, if we implement the 
Clinger-Cohen Act effectively, can become a state-of-the-art 
acquirer, manager and user of information technology. But we'll 
continue to need the support of this committee, as well as that 
of the agencies, if we're going to do that.
    Mr. Horn. Now, when you say effectively implement that act, 
you're talking about the CIO, I assume.
    Mr. Koskinen. I'm talking, actually, about the CIO being a 
catalyst for the agency coming to grips with these problems.
    Mr. Horn. Right. Now, are there situations where we have 
the CIO also holding other responsibilities, as we have in 
Treasury with the Assistant Secretary for management also being 
the Chief Financial Officer, something I think is just crazy, 
and yet we haven't done anything about it?
    Mr. Koskinen. There are those. If you'd like, we could hold 
a hearing on this. There's a long discussion going on about 
that.
    Mr. Horn. No. When you've got a problem and we give you the 
authorization to do something about it, it seems to me there's 
got to be focus. And why these problems continue is many of 
these people aren't really devoting full time to either the CIO 
or the CFO. It's like having the Inspector General be chewed 
away by some other agency responsibility.
    Now, since that's an adverse relationship in many cases is 
why we don't do that, I gather. But I must say it bothers me 
when we have that kind of overlap.
    Mr. Koskinen. Yes. Our premise and assumption has been that 
we should not have that overlap. There are three or four cases 
where we--on what we call an evaluation mode--have allowed the 
agencies to combine the CIO and the CFO. That's primarily where 
the CFO both has significant IT background and experience and 
where a significant part of the information technology problems 
in the agency come within the CFO's jurisdiction, so that 
bifurcation did not necessarily look like the most logical way 
to proceed.
    But in those cases we have told the agencies, we, with GAO, 
will be evaluating, at the end of their first year, the 
effectiveness of that operation. And virtually all of the other 
agencies where we're working, we have a CIO who is free 
standing. That, by itself, will not self execute. There are 
other issues that need to be addressed that we are working with 
the agencies on.
    And to make sure that the CIO is a catalyst for reform, a 
leader of effective implementation. But much like GPRA, 
effective implementation of information technology requires 
that the senior program managers and the senior managers of the 
agency participate in the basic decisions, that it not be left 
to what I call the tekies or the people who are knowledgeable 
about systems. They need to be involved, but the basic 
questions and the basic failings often times are not 
technological issues, they are actually program management 
issues.
    Mr. Horn. No. I agree with that. Mr. Hinchman, Mr. Mihm, do 
you have any reaction to that?
    Mr. Hinchman. No. I think that Mr. Koskinen is exactly 
right about that. And I think the most important point he 
makes, and one that we ought to all take some comfort in is 
that the Clinger-Cohen Act, in fact, reflects the lessons that 
we have learned both from experience within the government and 
in our study of the experiences of others who have run 
successful information technology programs. That act embodies 
what we know.
    Mr. Horn. You've done a fine job on that best practices 
series you have, and I think all of us have profited from it. 
Mr. Sessions. Gentleman, Mr. Sessions.
    Mr. Sessions. Thank you, Mr. Chairman. Mr. Koskinen, I 
appreciate you taking our questions and comments as the way 
they're intended, and I hope that they can continue to be 
positive, but I must confess you'll probably be able to go home 
today to your Director and say that you turned in an honest 
day's work for an honest day's pay, and that he would not want 
to switch places with you.
    I'd like to, if I could, to say a couple things. The 
chairman was going into to some of the questions that I have 
about the IRS. Obviously, many people have known. It's been 
widely publicized. Some $4 billion that was spent by the IRS to 
begin the development of a new computer program. I heard you 
say, probably many of the problems are with program management 
within getting these data systems up and working.
    My background includes that of being at Bell labs for 
several years where I was deeply involved in the intricate 
management of programming and those systems. Start with me, if 
you can, on some sort of a dialog on where the IRS is in this 
general process. Were they in the pilot program? Were they 
considered for that? What sort of help is OMB giving them to 
get them to direct themselves? Do they have any inward 
recollection that the perception is that they are not as 
effective and efficient?
    I'm not going to ask you to reach the final conclusion that 
really begs itself with, do we have a system that we can put on 
a sheet of paper to draw a flow chart to with our tax code? But 
let's keep this within the confines: Where's the IRS? How 
realistic are they? What is your working relationship with 
them? And where can we expect any near term advantages or 
something that would be considered positive out of this agency?
    Mr. Koskinen. I'm happy to respond. And I think that your 
point is well taken that this is an important dialog. With 
regard to the pay issue, I think if we hold three hearings for 
the price of one here, then I'm going to ask for a bonus as it 
goes.
    But let's deal with the IRS. It's an important question. 
First, I think the leadership at the IRS as well as the 
Treasury Department, as I said earlier, recognizes that there 
are serious issues to be addressed within the IRS. I think 
there is no sense of denial. Whatever may have happened in the 
past, there is a real attempt to come to grips with these 
issues. They are working very carefully with GAO--people on 
their systems.
    But more significantly, under the leadership of people in 
the Treasury, as well as in the IRS, triggered and headed by 
the Chief Information Officer, they are looking at their 
strategic plan. They are basically saying, what are our goals 
over the next 3 to 4 years, what system developments match 
those goals, and which system developments are a lower priority 
and, therefore, should not have our attention.
    Because one of the things they have discovered is that they 
have a number of systems that will achieve various goals, but 
it's clear there's no capacity there--and because of the huge 
undertaking--to do them all at once. And what they need is 
exactly what you're saying: Say, where are we going; what are 
our major problems; what are the major expectations that people 
have that we need the most improvements. Let's focus on those. 
Let's make sure that we have a coherent plan for getting from 
here to there. And in particular, let us take a hard look at 
one of the fundamental pesky questions, and that is, of the 
work that needs to be done, how much of it has to be done here, 
how much of it can be done somewhere else, how much of it is 
out there already in systems or in processes that we could take 
advantage of.
    And I think that's a big breakthrough for the Internal 
Revenue Service that, historically, has prided itself, 
appropriately, on doing all of the work internally, developing 
all of its systems internally. But as life gets more 
complicated and as the alternatives get to be more complex, 
that process hasn't stood them in good stead recently. And I 
think they recognize that.
    So I'm confident that they are addressing the problem, that 
they understand the magnitude of it and that they are coming up 
with constructive solutions. I mentioned that management--
modernization management board that the Secretary of the 
Treasury has set up. We have agreed--from OMB--to support that 
process. Steve Kelman, the Administrator of the Office of 
Federal Procurement Policy at OMB, and I serve as adjunct 
members of that committee.
    We are not in a position where we could exercise direct 
authority. We attend the meetings, though, and have 
participated with them, and have a better dialog now than we've 
ever had with the IRS and the Treasury about the problematic 
implications of what they're doing and the budgetary 
implications of what they're doing. As we've said, we're 
prepared to give them one stop shopping. That is, they bring 
these issues up in the modernization management board. If we 
have OMB perspectives, we will bring them to bear there and 
we'll engage in that dialog so they don't have to go through 
the process twice.
    But the bottom line, much like defense, is--and, as you 
know far better than most, with your background--these are very 
complicated, difficult problems. Were talking about literally 
hundreds of millions of transactions and relationships, and 
it's a phenomenal amount of data. And they have major obstacles 
to overcome. So I would be the last one to tell you that in the 
next year it will all be done.
    But I am very confident that in the next year, you will be 
able to see measurable progress, that we will develop plans 
there, where we will have benchmarks that basically have broken 
it down into modules and components that can be monitored, and, 
also, that lead more directly and clearly to the achievement of 
mission goals and strategic efforts.
    Mr. Sessions. So what you're saying is you believe that 
their work will result in a document--a blue print--that will 
be a guiding principle for them, measurable, realistic, and 
it's something that represents the true nature of the business?
    Mr. Koskinen. Yes. Over time I think that's exactly right.
    Mr. Sessions. Good. Mr. Chairman, thank you for the 
questions. Best of luck. I hope that spirit in which you know 
that we're involved in this process is one that will translate 
throughout the government. And I say this over and over again 
because I think that every piece of government, all the 
agencies, need to recognize that mission statement orientation 
will get them back to the point of what their core business is. 
And if the taxpayer needs it supported, then that will be done. 
Mr. Chairman, thank you for the question.
    Mr. Horn. Well, we thank you for your good questions. Also, 
there's only a few more to go and you can all get a decent 
meal. [Laughter.]
    You'll have put in your day's work before noon, you can 
tell the Director.
    I want to start with Mr. Hinchman on this. Beginning in 
fiscal year 1999, the performance plans required by the Results 
Act may include proposals to OMB to waive certain 
administrative requirements, including staffing levels, 
limitations on compensation or remuneration, and prohibitions 
or restrictions on funding transfers among budget 
classifications in return for specific individual or 
organization accountability to achieve a performance goal.
    The expected improvements in performance that would result 
are to be quantified as part of the request for the waiver. 
Now, the pilot projects for this stage, called pilot projects 
for managerial accountability and flexibility, were never 
implemented because the OMB did not improve any pilots. Did the 
GAO review these pilots? Why, in your opinion, did OMB not 
improve any pilots? And what impact does that have, in your 
opinion, on the potential success of the Results Act? Mr. 
Hinchman, it's all yours. We'll get to your colleague in a 
minute.
    Mr. Koskinen. In 30 words or less.
    Mr. Hinchman. Yes.
    Mr. Horn. That's right.
    Mr. Hinchman. I think that we do not yet know what the 
impact of the waiver provisions in the Results Act are going to 
be. I think we didn't find any what OMB felt were some 
appropriate opportunities to apply the waiver authority. There 
were some situations, I think, where agencies originally sought 
waivers and then later concluded that, in fact, authority to do 
what they wanted to do existed anyway, or legislation changed 
the underlying constraints against which they were working, and 
that, as a result, we just haven't had a good test of the 
waiver authority.
    I don't think that we're in a position to say that OMB has 
been unwilling to use that authority is circumstances where it 
seems to us to be obviously appropriate. I don't think that our 
work suggested OMB is opposed to the waiver authority. As I 
said, I think it's just that we haven't yet had an environment 
in which we can get a good test of it. And we're going to have 
to wait and see what happens.
    Mr. Koskinen. Yes. Let me just make clear, we are strong 
supporters of the concept of administrative and other 
flexibilities, regulatory flexibilities for people if they can 
tie it to our performance measures. To some extent, part of the 
problem in the act is the success of this committee and the 
Congress in generally relieving agencies of a lot of 
administrative requirements, a number of them in the 
procurement area.
    The major procurement reforms that this Congress and this 
committee have supported eliminated a lot of potential requests 
for waivers. The Office of Personnel Management threw out a lot 
of old time regulations and requirements on personnel that, 
again, would have been very good subjects for--in contemplation 
for waivers.
    So when we reached out to the agencies for proposals, we 
discovered that part of the reason, beyond that, that we didn't 
get very good candidates was, first of all, they wanted waivers 
from statutory requirements, which the statute does not allow. 
It really talks about administrative waivers. So a lot of their 
waivers were from statutory requirements. Or they wanted 
waivers from limitations on agencies outside the executive 
branch that we did not have the ability and the authority under 
the act to grant beyond that.
    Also, when we then dwindle down to the precious few, we did 
not have what we thought were very--we didn't have a large 
number, and the small number that we did have didn't have a 
very clear nexus between the relative limited waiver they 
wanted and any improvement in performance. And so, our judgment 
was that at this point in time, we would not gain anything by 
pursuing the relatively small number of applicants for very 
minor waivers.
    Mr. Horn. Who reviewed the pilots on managerial 
accountability and flexibility, and how much time did they 
spend with the agencies before deciding the pilot proposals 
were unacceptable?
    Mr. Koskinen. Those come through OMB. Ultimately, they--the 
whole process reports to me. The development of the proposals 
and the request for them were generated by inter-agency groups. 
So we had a range of people that we taxed for this. The actual 
development of this particular number was handled under, at 
that time, my supervision by one of our senior career people, 
who has, in fact, been the guru of GPRA. And he spent a 
significant amount of time trying to generate acceptable 
proposals, working with other agencies and OMB to make sure 
that we hadn't overlooked any possibilities that would----
    Mr. Horn. So these proposals were circulated around the 
program areas of OMB?
    Mr. Koskinen. OMB.
    Mr. Horn. And coordinated.
    Mr. Koskinen. We went to the agencies in the program areas, 
saying what are their--here's a whole set of possibilities, 
which of these are you willing to waive, in terms of the 
agencies, and in terms of program managers, to try to, again, 
see what was there out there that agencies might find 
attractive.
    And we sent to the agencies, then, that list, saying here 
are a whole set--it wasn't very large by the time we got done--
but here are a range of waivers that you could apply for and 
participate in the pilot program for. And as I say, by the time 
we got done with it, we got a number of responses back, but a 
number of them, most of them were really out of bounds for the 
purposes of the statute.
    Mr. Horn. Was this a written reaction or did you sit around 
a table and go over it with them line by line and say, maybe we 
can make a deal on this?
    Mr. Koskinen. Yes. Most of it was by document. So we don't 
have--we don't have enough people to go to all of the agencies 
and have those conversations. But when we had applications, 
then we would talk with the agency about that. But----
    Mr. Horn. So they submitted it. OMB pursued it, asked their 
program pro what they thought, maybe some other agencies, maybe 
OPM, whatever?
    Mr. Koskinen. Right. And then our final judgment----
    Mr. Horn. Then you gave it back in paper, but nobody really 
sat down and had a dialog on those?
    Mr. Koskinen. About the ones we made? Yes. When we got down 
with it all and looked at the final applications we had from 
the agencies, our judgment was that it was not worth pursuing 
those at this time.
    Mr. Horn. Now, did the agencies make any reaction to that 
judgment in terms of suggesting improvements or suggesting 
changes on their part or was that just the killer?
    Mr. Koskinen. I'm not aware of any further conversations 
with the agencies.
    Mr. Horn. OK. Are you going to encourage any 
experimentation with managerial flexibility and accountability 
before fiscal year 1999? Or is this it?
    Mr. Koskinen. As you know, one of our major initiatives, 
only partially growing out of this experience, but out of a 
number of other experiences, is to propose a significant number 
of performance-based organizations, as we call them, in which 
we have pulled together statutory waivers in procurement and 
personnel areas. And we, in effect, think that those will serve 
very clearly as pilot programs, as it were, for what improved 
performance can you get if you eliminate some of the statutory 
limitations in procurement and personnel.
    And in fact, the proposals that we're developing and the 
template require that any of the performance-based 
organizations, to obtain those flexibilities, have to enter 
into a very clear performance agreement between the head of the 
organization and this cabinet secretary, measured on an annual 
basis. And the new chief operating officer for the performance-
based organization is there under a term contract and can be 
dismissed if performance is not adequate.
    So that, as I say, we did not design with the Vice 
President and the National Performance Review the concept of 
performance-based organizations in response to our differences 
here, but we think that we will get more fulsome experimental 
results out of these performance-based organizations than 
looking at an individual, independent waiver and saying, what 
performance improvement do we get from that.
    Mr. Horn. Let me ask you now. In terms of encouraging 
agencies to propose pilots in this managerial accountability, 
flexibility area, what do you plan to include in your report 
required under Section 9704C of the act? It's apparently due in 
May of this year.
    Mr. Koskinen. In May of this year we will give you the 
background and experience. GAO has a draft report out, as well, 
on their own, and we will share that with you in May as 
required.
    Mr. Horn. Yes. We'd like to ask formally that OMB provide 
the staff on both sides of the aisle here and committee with 
copies of all the proposals submitted to OMB for managerial 
flexibility and accountability in the pilot phase including any 
notes or reasons the proposals were not accepted. We just need 
to get a feel for this particular aspect of the process.
    So if you and majority and minority staff could work out 
what we need in that area, we'd appreciate the chance to review 
that on both sides. Because I think there's an interest in 
getting focus on managerial flexibility.
    Mr. Koskinen. I would commend to you, again--not to over 
sell the point----
    Mr. Horn. OK.
    Mr. Koskinen. Your review and support of the performance-
based organization concept, which, as I say, is really focused 
on managerial flexibility in a much broader way than we've been 
able to deal with under the statute, or will be able to deal 
with under the statute.
    Mr. Horn. Let me ask you one last question and then Mrs. 
Maloney can have the final word on the subject. In terms of 
consultation, which we've talked about, with the authorizing 
committees and the agencies, do you have any feelings in terms 
of OMB consultation with this committee or others?
    Will that process be orchestrated to assure that the 
agencies do talk to their congressional counterparts and not 
just make it a staff thing, but sit down with Members in, say, 
agriculture, if you're in agriculture--this kind of thing--or 
you sit down with Government Reform and Oversight and 
Governmental Affairs officials.
    Mr. Koskinen. We are doing our own strategic planning 
exercise, which has been instructive, I think, for all the 
staff at OMB. In fact, later this month, as I noted in my 
prepared testimony, we're having an agency-wide stand down day 
to, in fact, develop the next iteration of our plan. And we 
will be here consulting with you as the other agencies are.
    We are encouraging the agencies. We obviously can lead them 
to water. We cannot necessarily make them drink. But I think, 
we need also response from the hill. I think it's very 
important, as you noted--this committee did in a conversation 
with the majority leader--that the other committees, 
themselves, be forthcoming in expressing their interest and 
concern in this area, that the, in some cases, as we start to 
evolve, it will be just as important for the congressional 
committees to be interested and responsive as it is for the 
agencies to be willing to consult.
    We can manage our end of the process by continuing to 
require that. We need some support from the hill across the 
spectrum of committee activities and authorizers and 
appropriators, for them to both become knowledgeable about the 
act and then participate in that dialog.
    Mr. Horn. Very good. Mr. Hinchman, do you have any comment 
on these last few minutes of discussion?
    Mr. Hinchman. No, sir.
    Mr. Horn. The distinguished gentlewoman from New York.
    Mrs. Maloney. Following up on your last comment on your own 
strategic plan, you're required to consult with this committee 
on that plan, and when may we expect to receive your 
consultation and how do you propose to conduct it?
    Mr. Koskinen. We will be up here before summer, well in 
advance of our attempt to then finalize our plan. As I say, at 
this point, we have an outline. We've had a strategic planning 
process that started last summer. The budget process puts us in 
the limbo from the first of October until about now, which is 
why we're renewing it. I would expect that we would be here--
our plans are to have consultation with you and other stake 
holders certainly before the end of May. And we would hope to 
do it as early as April.
    Mrs. Maloney. OK. The Department of Defense is the largest 
Federal agency and has components which are themselves larger 
than some agencies. To date, DOD has not provided guidance to 
the various services on how to link goals and performance 
measures, and GAO has found that many subordinate units are 
unsure of how to implement the results law and are waiting for 
guidance. And I'd just like you to comment on it. Do you know 
when DOD plans to issue this guidance and if it doesn't, how 
DOD plans to assure that the services and other units support 
the overall DOD plans and goals?
    Mr. Koskinen. I don't know the answer to that now. As I 
noted, we are about to begin yet another assessment, agency by 
agency, of where they are in their strategic planning process. 
We had a detailed set of conversations with the Defense 
Department last summer, and we will pursue that further this 
spring. And one of the questions we will be pursuing is what is 
their internal process, who is involved in it, and when will 
they begin to have products.
    Mrs. Maloney. Thank you very much.
    Mr. Koskinen. Thank you.
    Mr. Horn. Well, if there are no further questions, then we 
thank all three of you for coming up and sharing your thoughts 
with us on this very important subject. A lot of these seem to 
be very simple laws, in a way, long overdue, but, without 
question, they will make a difference in the executive 
establishment and hopefully in the congressional establishment.
    Because it's going to take two working together to solve a 
lot of these problems. And that's why the consultation is so 
important between executive branch legislative committees. And 
that's why Mr. Armey's role, in particular, in having the war 
room to make sure a few things get done around here in the 
limited amount of time that we have as elected Members.
    And we thank you for your thoughts on that. We welcome any 
ideas you have. But we're not talking about amending laws, 
we're talking about implementing the law.
    Mr. Koskinen. Right.
    Mr. Horn. So without any further questions, this hearing is 
adjourned.
    [Whereupon, at 12:20 p.m., the committee was adjourned.]

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