[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




HUMAN CAPITAL PLANNING: EXPLORING THE NATIONAL COMMISSION ON THE PUBLIC 
   SERVICE'S RECOMMENDATIONS FOR REORGANIZING THE FEDERAL GOVERNMENT

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON CIVIL SERVICE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 17, 2003

                               __________

                           Serial No. 108-109

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                            WASHINGTON : 2003
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

         Subcommittee on Civil Service and Agency Organization

                   JO ANN DAVIS, Virginia, Chairwoman
TIM MURPHY, Pennsylvania             DANNY K. DAVIS, Illinois
JOHN L. MICA, Florida                MAJOR R. OWENS, New York
MARK E. SOUDER, Indiana              CHRIS VAN HOLLEN, Maryland
ADAH H. PUTNAM, Florida              ELEANOR HOLMES NORTON, District of 
NATHAN DEAL, Georgia                     Columbia
MARSHA BLACKBURN, Tennessee          JIM COOPER, Tennessee

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     Ron Martinson, Staff Director
       B. Chad Bungard, Deputy Staff Director and Senior Counsel
                          Chris Barkley, Clerk
            Tania Shand, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 17, 2003...............................     1
Statement of:
    Johnson, Clay, III, Deputy Director for Management, Office of 
      Management and Budget......................................    41
    Volcker, Paul A., chairman, National Commission on the Public 
      Service....................................................    47
    Walker, David M., Comptroller General, U.S. General 
      Accounting Office..........................................     9
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................     8
    Davis, Hon. Jo Ann, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     4
    Johnson, Clay, III, Deputy Director for Management, Office of 
      Management and Budget, prepared statement of...............    43
    Volcker, Paul A., chairman, National Commission on the Public 
      Service, prepared statement of.............................    49
    Walker, David M., Comptroller General, U.S. General 
      Accounting Office, prepared statement of...................    12

 
HUMAN CAPITAL PLANNING: EXPLORING THE NATIONAL COMMISSION ON THE PUBLIC 
   SERVICE'S RECOMMENDATIONS FOR REORGANIZING THE FEDERAL GOVERNMENT

                              ----------                              


                     WEDNESDAY, SEPTEMBER 17, 2003

                  House of Representatives,
          Subcommittee on Civil Service and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:13 p.m., in 
room 2154, Rayburn House Office Building, Hon. Jo Ann Davis 
(chairman of the subcommittee) presiding.
    Present: Representatives Davis of Virginia, Tim Murphy, 
Davis of Illinois, Van Hollen, and Delegate Norton.
    Staff present: Ron Martinson, staff director; B. Chad 
Bungard, deputy staff director and senior counsel; Vaughn 
Murphy, legislative counsel; Chris Barkley, legislative 
assistant clerk; John Landers, OPM detailee; Michelle Ash, 
minority counsel; Tania Shand, minority professional staff 
member; and Teresa Coufal, minority assistant clerk.
    Mrs. Davis of Virginia. A quorum being present, the 
Subcommittee on Civil Service and Agency Organization will come 
to order. We are going to go ahead and start the hearing even 
though our witnesses are not here yet. They are on their way. 
However, we are expected to have a series of votes starting 
here within the next 15 minutes, so for the sake of time, we 
are going to go ahead and begin with opening statements.
    I want to thank you for being here for such an important 
hearing. Many of our hearings this year have touched on items 
presented in the Volcker Commission report. This one is going 
to look at an interesting point the Commission made that is 
easily overlooked, the connection between government 
reorganization and employee performance, and enhancing mission 
coherence and clarifying the roles of Federal agencies 
throughout the executive branch.
    One of the reasons that I came to Congress was to eliminate 
unnecessary spending, redundant programs, and other problems 
that waste the taxpayers' money. I believe there is a great 
deal of money to be saved by improving the performance of our 
government. I am not anti-government. I do, after all, chair 
the Civil Service Subcommittee, and I believe that my record 
demonstrates my strong support for Federal employees, for 
military personnel, and for retirees. But that does not mean 
that I am unable to see any flaws in our government.
    Something is wrong with the way the Federal Government is 
organized when the Department of Agriculture is charged with 
inspecting pepperoni pizzas and the Food and Drug 
Administration is charged with inspecting cheese pizzas. There 
are at least 12 different agencies responsible for 
administering more than 35 food safety laws. Such nonsensical, 
fragmented responsibility leads to gaps, inconsistencies, 
ineffective Government oversight, and an unacceptable level of 
protection of the public. When I read the Volcker report and 
see many such examples of potentially overlapping and redundant 
programs, it makes me seriously question whether our limited 
resources are being used most effectively.
    Such organizational chaos is the reason that I recently 
introduced H.R. 2743, the Government Accountability and 
Streamlining Act, which will help prevent the creation of 
redundant or duplicative Federal programs by requiring the 
General Accounting Office to review all legislation before a 
final vote in the House or Senate to determine if new 
government programs would be created by the legislation.
    Today, we are going to hear from three outstanding 
witnesses--and I am sorry they are not here to hear me say 
that: Paul Volcker, chairman, National Commission on the Public 
Service; Clay Johnson, Deputy Director of the Office of 
Management and Budget; and Comptroller General David Walker. 
Mr. Walker has just concluded an appearance at the National 
Press Club in which he outlined many of the pressures that are 
bearing down on the Federal Government's limited resources. I 
see Mr. Walker's speech as a call to arms, a warning that 
unless we dramatically change the way that we do business, the 
Federal Government is going to be in dire straits very soon.
    When we talk about reducing or eliminating redundancies, we 
must also look at reorganization. The heart of the Volcker 
report is its suggestion to realign the executive branch into a 
limited number of mission-based departments. Very obviously, 
this could result in elimination of redundant or overlapping 
functions; but just as importantly, it would serve to 
reinvigorate the Civil Service.
    Federal human capital planning, getting the best employees 
to come to work for the Federal Government, keeping them in 
public service, and getting the most production out of them 
begins not with any small changes to personnel practices, but 
with a complete reorganization of the Government into a limited 
number of mission-based departments. According to the Volcker 
Commission report, reorganization is the first and most 
critical step in improving the performance of Federal civil 
servants.
    The structure of the Federal Government is often the result 
of department-level decisionmaking without governmentwide 
coordination. Consequently, Federal civil servants have 
difficulty in fully comprehending an agency's mission and 
coordinating with other agencies. Reorganizing along mission-
oriented goals will allow the Government to get the most 
productivity out of Federal civil servants and provide 
employees with a greater sense of purpose.
    Allow me to read a few excerpts from the Volcker Commission 
report, ``the simple reality is that Federal public servants 
are constrained by their organizational environment. Changes in 
Federal personnel systems will have limited impact if they are 
not accompanied by significant change in the operating 
structure of the executive branch.''
    ``The reorganization we recommend here will require 
significant improvements in the quality of top executives, in 
the management or operating units, and in the ability of 
agencies to meet their unique staffing needs. There is 
extensive evidence now of duplication, overlap, and gaps in 
many critical functions. This pattern consistently undermines 
effective government performance.''
    To facilitate reorganization, the Volcker Commission 
suggested reestablishing the President's fast-track authority 
to recommend structural reorganization of Federal agencies and 
departments. Reorganization authority would give the President, 
as it has for others dating back to 1932, the power to propose 
organizational changes to Federal agencies and require Congress 
to disapprove or approve the action without lengthy delays. 
Between 1953 and 1980, when Presidential reorganization 
authority was in effect, 65 reorganization plans were submitted 
to Congress; only 8 were rejected.
    We are now in a far different place since 1980. There has 
been exponential growth in technology, globalization, and the 
Federal Government. The need to reestablish Presidential 
reorganization authority is more important now than ever.
    As a nation, we simply cannot afford to continue the status 
quo. The Volcker Commission made an important finding, ``the 
current organization of the Federal Government is not good 
enough. It is not good enough for the American people, not good 
enough to meet the extraordinary challenges of the century just 
beginning, and not good enough for the hundreds of thousands of 
talented Federal workers who hate the constraints that keep 
them from serving their country with the full measure of their 
talents and energy. We must do better, much better, and soon.''
    It is very clear that reorganizing the Government, 
revitalizing and improving the performance of the Civil 
Service, and reducing duplicative and overlapping programs are 
three pieces of the same large puzzle.
    Mr. Walker earlier today made a strong case as to why the 
time for reorganization and improved operations is now. I look 
forward to hearing the views of our distinguished guests when 
they arrive today on this very important matter. I want to 
thank you all for being here.
    And now I would like to recognize the ranking minority 
member of the subcommittee, Mr. Danny Davis, for his opening 
statement. And, Danny, we are proceeding on even though our 
witnesses are not here yet. They are on their way. But we are 
expected for votes here very shortly.
    [The prepared statement of Hon. Jo Ann Davis follows:]

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    Mr. Davis of Illinois. All right. Well, thank you very 
much, Madam Chairwoman. And let me first of all thank you for 
convening this hearing on the reorganization of the executive 
branch.
    This hearing will be very helpful as we continue to examine 
how to make the Federal Government more effective and 
efficient. In April, the full committee held a hearing on 
reorganizing the government. At that hearing, the Comptroller 
General, David Walker, stressed that above all else ``all 
segments of the public that must regularly deal with our 
government--individuals, private sector organizations, States, 
and local governments--must be confident that the changes that 
are put in place have been thoroughly considered, and that the 
decisions made today will make sense tomorrow.''
    Many experts, like those who will testify before us today, 
support granting the President's reorganization authority. But 
what is emerging from these hearings on reforming government is 
that the ``devil is indeed in the details.''
    I believe that everyone would agree that overlapping and 
duplicative government programs are problematic. But how much 
authority should the President be given to reorganize the 
Federal Government and what role should Congress have in 
framing the reorganization?
    There are numerous models for granting the President's 
reorganization authority. In 1932, when Congress first granted 
the President's reorganization authority, the President was 
permitted to issue an Executive order which went into effect 
unless Congress acted within 60 days.
    In 1984, the last time Congress passed reorganization 
authority, a joint resolution had to be issued in the House and 
the Senate. If either body failed to vote on the reorganization 
plan, it was considered disapproved.
    We can learn a lot from the creation of the Department of 
Homeland Security and the role Congress played in framing that 
agency. Hopefully, the witnesses before us today will have an 
opportunity to provide us with specifics on how and why 
reorganization language should be drafted, and I hope that they 
will do so.
    Again, Madam Chairwoman, I thank you for convening this 
hearing, and I look forward to the testimony of our witnesses.
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    [The prepared statement of Hon. Danny K. Davis follows:]

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    Mrs. Davis of Virginia. Our witnesses have now arrived. I 
will tell you, gentlemen, we started with our opening 
statements because they have just rung for us to go for a 
series of votes. So we will be out of here for probably 40 to 
45 minutes, and I do apologize for that.
    I would like to see if Mr. Cooper, if you have an opening 
statement you would like to make?
    Mr. Cooper. I have no opening statement, Madam Chair.
    Mrs. Davis of Virginia. Then I am afraid I am going to have 
to recess us here for about however long it takes. We have 
three votes, possibly one with a 10-minute debate. So we may be 
gone 40, 45 minutes or so. I do apologize.
    The hurricane is also headed right through my district and 
over my house, so I am trying to get out of here as fast as I 
can to go make sure my horses and my husband and my family are 
all safe and sound. So if this goes too long--if it doesn't go 
too long, I will love you guys; if it goes too long, I will 
turn it over to someone else.
    But thank you. We will be back shortly.
    [Recess.]
    Mrs. Davis of Virginia. I want to thank you all for being 
patient and waiting. It seems to happen every time we have a 
hearing.
    I ask unanimous consent that all Members have 5 legislative 
days to submit written statements and questions for the hearing 
record and that any answers to written questions provided by 
the witnesses also be included in the record. Without 
objection, so ordered.
    I ask unanimous consent that all exhibits, documents and 
other materials referred to by Members and the witnesses may be 
included in the hearing record and that all Members be 
permitted to revise and extend their remarks. Without 
objection, it is so ordered.
    It is the practice of this committee to administer the oath 
to all witnesses. So if you all would please stand, I will 
administer the oath.
    [Witnesses sworn.]
    Mrs. Davis of Virginia. Let the record reflect that the 
witnesses have answered in the affirmative and please be 
seated. Our first witness on this distinguished panel is David 
Walker, the U.S. Comptroller General from the General 
Accounting Office. Mr. Walker just arrived from delivering a 
speech at the National Press Club dealing with the same issues 
we are considering here today.
    The subcommittee is also very fortunate to have two other 
very distinguished guests, Clay Johnson of the Office of 
Management and Budget as well as Paul Volcker, chairman of the 
National Commission on the Public Service. We are very glad to 
have such expert witnesses here today to discuss these issues.
    Mr. Walker, you are recognized first for 5 minutes and feel 
free to summarize your statement. Your complete statement will 
be submitted for the record.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL, U.S. GENERAL 
                       ACCOUNTING OFFICE

    Mr. Walker. Thank you, Madam Chair. I will summarize it 
since you have got the whole statement. I am pleased to have 
the opportunity to be here. As you alluded to, I just came from 
the National Press Club talking about an array of challenges 
that the Federal Government faces at the early stage of the 
21st century. I think because of those challenges we have both 
an opportunity and an obligation for the government to 
fundamentally review and reassess what it's doing, how it's 
organized, how it does business and in some cases who does its 
business in the 21st century. I believe part of that has to 
include the subject of this hearing, which is how it's 
organized and how it goes about doing business, including 
important human capital strategies.
    On the organization front, I think as we reexamine 
government's missions, functions and activities, there's an 
opportunity to reduce, to consolidate, to integrate a number of 
existing government functions, activities and even departments 
and agencies in order to improve the flexibility, 
accountability, economy, efficiency and effectiveness of the 
Federal Government. My general view is that the fewer number of 
entities that you have, the better. The less overhead you are 
going to have and the more flexibility you're going to have, 
etc.
    If I can, I included in my statement a number of examples 
of where we have a number of redundancies in the Federal 
Government right now anywhere from meat and poultry inspection 
to a number of grant programs dealing with first responders to 
job training programs, etc. I won't go into that. I think that 
my written statement speaks for itself. I think it's important 
that as we move forward we recognize that what we're trying to 
do is to create high performing organizations in government 
that are focused more on results, positive outcomes for the 
citizens and that hopefully are working together in partnership 
to achieve those desired outcomes. Clearly part of this is 
going to involve a transformation, a cultural transformation of 
how agencies do business. The center of that will be how they 
treat their people, what type of people they have, how they end 
up measuring their performance, how they reward their 
performance, etc. I have included a number of examples in my 
testimony.
    What we are trying to do at GAO is to lead by example in 
both the organizational alignment area as well as in strategic 
planning, human capital and other areas. We, for example, 
developed a strategic plan in consultation with the Congress. 
Based on that plan we reorganized our agency. We reduced the 
layer of management. We reduced the number of organizational 
entities from 35 to 13. We reduced the number of our field 
offices from 16 to 11. We redeployed resources both 
horizontally and focused externally, and enhanced our 
partnerships within government and outside of government both 
domestically and internationally with positive outcomes. Much 
greater results with the same level of FTEs. And I think it can 
be done in other areas of government as well.
    I would also point out in my statement that there are 
several things that I believe that should be considered as a 
way to move the ball forward. I think your proposal for a 
Government Accountability and Streamlining Act of 2003 has 
conceptual merit. I think we need to look at some modifications 
to target that. I have some suggestions in my testimony. We 
need to relook at reinstituting budget controls given our 
fiscal challenge. We need to consider additional executive 
reorganization authority, special commissions, as Chairman 
Volcker will be talking about, based on the great work that he 
has done. In addition, enhanced congressional oversight is 
going to be key. Considering selective application of a chief 
operating officer or chief management official in selected 
departments and agencies as well as governmentwide human 
capital reforms will be important.
    In the final analysis Congress has to be able to integrate 
whatever it has done here in its oversight, authorization and 
appropriation activities. If there are not consequences for 
agencies who are not performing, who are not demonstrating 
results for the resources they are given, if there aren't 
consequences, then behavior is not going to change. People who 
are doing the right thing need to be rewarded. People who are 
not doing the right thing need to be held accountable. With 
that Madam Chairwoman and Mr. Van Hollen, thank you for the 
opportunity to be here. I look forward to hearing from my 
colleagues and would be happy to answer any questions you may 
have thereafter.
    [The prepared statement of Mr. Walker follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Walker. Mr. Johnson, 
I will recognize you for 5 minutes. You are welcome to 
summarize your statement, and your full statement will be put 
in the record.

STATEMENT OF CLAY JOHNSON III, DEPUTY DIRECTOR FOR MANAGEMENT, 
                OFFICE OF MANAGEMENT AND BUDGET

    Mr. Johnson. Thank you very much. I agree with Comptroller 
General Walker and I am sure I will agree with Chairman 
Volcker's position that we must and can significantly improve 
the performance of government for the American people. However, 
mine is a cautionary note here today. I suggest to members of 
this committee that no matter how the Federal Government is 
organized, its performance will not be enhanced, it will not be 
enhanced unless our valuable human resources and employees are 
managed strategically. It won't be enhanced unless we make 
investments wisely and professionally in technologies to help 
us accomplish our goals. It won't be enhanced unless we focus 
on cost and efficiency and have timely and financial 
information available to us to do that, and it won't be 
enhanced unless we're asking ourselves whether individual 
government programs are working and if they aren't working what 
we need to do about them to get them to work.
    These are areas where there is opportunity today for 
historic improvements in the management and performance of the 
Federal Government. Agencies and departments with a little help 
from OMB are aggressively pursuing these opportunities as we 
speak. This is happening today. We must continue to support and 
reward these efforts and never think that reorganization per se 
is the big cure for unsatisfactory performance. Reorganization 
per se will not accomplish what we want to accomplish.
    With my verbal comments today I want to briefly touch on 
the human capital opportunities. I want to be brief so more 
time can be devoted to Chairman Volcker because I know we are 
interested in hearing his remarks.
    Our employees are the greatest resource we have to improve 
the performance of the Federal Government. Each year we spend 
more than $100 billion on our almost 2 million civilian 
employees. Agencies are beginning to manage this annual 
investment and their employees more strategically, focusing 
more on results and evaluating employee performance based on 
the achievement of measurable goals. Inventories of the skills 
we need to perform our mission are being prepared. Skills gaps 
are being addressed and succession plans are being put in 
place, which is particularly important given the large 
percentage of Federal employees who are eligible for retirement 
in the next few years.
    Hopefully, if Congress adopts the administration's proposed 
human capital performance fund and we move away from a complete 
reliance on automatic across-the-board pay raises, Federal 
employees can receive pay based on their performance and not 
just their longevity. As an example of what agencies are doing 
today, not a year from now but what they are doing today, to 
more strategically place the human capital, HHS has developed 
and implemented SES performance based employment contracts that 
link to program outputs and outcomes. EPA has implemented an 
SES mobility program which fosters the development of cross-
agency skills and succession planning. Interior has completed a 
comprehensive work force plan for all its bureaus to guide a 
department-wide recruiting strategy as well as performance-
based contracts for members of the Senior Executive Service. 
The Department of Transportation has implemented a department-
wide leadership succession planning strategy and piloted a 
mentoring program for emerging leaders. And GSA has implemented 
an agency-wide leadership institute to ensure that current and 
future leaders are effective.
    That is all happening today. It's not all that needs to be 
done, but it is very significant because none of that was 
happening 2, 3 years ago. Agencies and departments are working 
on these significant management opportunities and others like 
them that are realistically possible today. It is important and 
necessary that we make these changes no matter how the Federal 
Government is organized. Any reorganization without these 
changes will have minimum impact on government performance.
    Currently, the administration is not studying any possible 
reorganization of the executive branch as such a move would not 
be practical without the benefits of the Reorganization Act, 
which allowed such a proposal to be considered by Congress in 
an expedited fashion. If and when the Reorganization Act is 
reauthorized, the administration looks forward to working with 
Congress, this committee in particular, and GAO to explore the 
opportunities to reorganize agencies and departments to better 
serve the American people. Thank you.
    [The prepared statement of Mr. Johnson follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Johnson. Mr. 
Volcker, I want to thank you for agreeing to come back before 
this subcommittee. I really enjoyed hearing your testimony in 
front of our full committee, and I recognize you for 5 minutes.

STATEMENT OF PAUL A. VOLCKER, CHAIRMAN, NATIONAL COMMISSION ON 
                       THE PUBLIC SERVICE

    Mr. Volcker. Thank you for inviting me back. I appreciate 
it and I will try to be brief. I have the feeling I don't need 
any statement. I just have to read your introductory comments 
here. We are certainly singing out of the same hymn book and 
you emphasized very clearly some of the organizational problems 
we have.
    Interestingly enough, listening to Mr. Johnson, he says 
organization can't accomplish everything, which I certainly 
agree with. We arrived at some emphasis at organizational 
change because we felt it's very difficult in getting personnel 
and other changes of the kind we're talking about without some 
pretty basic reorganization and an emphasis on the importance 
of bringing related activities together, avoiding too many 
conflicts in activities, strong political direction of related 
departments, but when it gets to the ministerial agencies, 
providing the kind of flexibility and personnel and other 
practices and review that Mr. Johnson and the Comptroller 
General have emphasized. So we kind of are approaching this in 
different directions, but I don't want to lose sight of the 
importance of the reorganizational changes.
    Having said that, the question is how to get there. 
Reorganization is always very controversial and difficult. It's 
not a thing that grabs the attention of the Congress or the 
administration very often. It's not a glamorous political 
subject. And we have concluded that you're not going to get any 
action unless you provide some general reorganization 
authority. It's a lot easier to say than to do, but I think we 
are at an exceptional period now where there is more 
recognition of the need for reform, not just an organization 
but elsewhere, particularly in personnel practices in 
government, and I've seen it for a long time. So the 
opportunity is there.
    And you personified the interest in Congress, which I 
presume is not unanimous, but it's been very difficult to get 
people in Congress interested in this. And I'm encouraged by 
the interest in this committee and I think there is some 
interest in the Senate, too. So I think we have an opportunity 
to make some progress, and we strongly recommend something 
that's not unique but a reorganization authority. That is about 
the only way the progress has been made consistently in the 
past beginning back with President Truman and moving ahead with 
the reorganization proposed by the Hoover commission.
    Reorganizational authority or authority subject to 
congressional approval has been used in other controversial 
areas, as you well know, and that is our proposal, that you go 
ahead and provide some reorganization authority subject to the 
approval of the Congress, a positive approval of the Congress, 
by both Houses of the Congress.
    We are not talking about a blank check. I think the check 
in this legislation is to provide a framework that will permit 
the President to make proposals within a framework that the 
Congress has already set out as reasonable, because otherwise 
you are going to have too much controversy on every particular 
proposal. So the check as I see it, the good political 
challenge is to provide the reorganization authority with 
enough of a framework for the President to work within in 
presenting a particular proposal.
    What do I mean by a framework? I certainly think there 
ought to be a requirement for consultation within the effective 
departments with the Congress. We suggest in the report that 
might be useful to have an outside group or groups of experts 
involved so that kind of weight can be attached to the 
proposals. I think you need some guidelines to make sure that 
merit principles are preserved, traditional insulation at the 
administrative side from political interference. You need some 
indication of employee protections, many of which have become 
quite traditional in the Civil Service. If you're going to have 
pay for performance and wide pay bands and all the rest, which 
we strongly support, you need some standards for how 
performance is judged in a neutral and nonpartisan way. I think 
you'll need some provision for oversight by OPM and by the 
Office of Management and Budget so that we can have some 
assurance that flexibility is used and not abused. But I think 
all those things are possible. And the commission that I headed 
and its staff is in the process still of sponsoring some 
conferences and some work along the lines of spelling out what 
might be practical and feasible in terms of developing some of 
these guidelines.
    So I think that's all I would want to urge today that 
concentration be placed upon the importance of enabling 
legislation and the kind of framework that should be 
established in that enabling legislation.
    [The prepared statement of Mr. Volcker follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Volcker, and I would 
like to say thank you for taking the time and being so patient 
waiting while we voted. I appreciate the expertise that comes 
from each one of you. I am going to begin with the question and 
answer session. And I would like to thank Mr. Van Hollen and 
Mr. Murphy and Ms. Holmes Norton for coming to the hearing 
today, and we are going to start out here with a few questions. 
I will take my 5 minutes and then go to Mr. Van Hollen.
    Mr. Walker, in 1949 the Hoover commission sent Congress 277 
specific recommendations for structural changes to the Federal 
Government. It's estimated that about 100 of the 
recommendations were adopted, which was considered to be quite 
impressive. In the 2 years following the commission's report 
Truman submitted 35 reorganizational plans to Congress, of 
which 26 were approved. Do you believe it will be a worthwhile 
exercise for Congress to assemble a high level bipartisan 
commission similar to that of the Hoover commission for 
reorganization of the government?
    Mr. Walker. There were two Hoover Commissions. One was more 
successful than the other. I think we can learn some valuable 
lessons from the Hoover commission that was more successful. 
And part of that was the players that were involved, you had a 
combination of people from the executive branch, the 
legislative branch as well as certain other experts. 
Furthermore, if you look at the scope of what they were asked 
to do, it was a much clearer defined scope, if you will, and, 
you know, dealing more with management and operational issues, 
if you will, rather than policy and programmatic choices. And 
so I do think that considering some type of a commission that 
is properly comprised with the appropriate scope is one that 
could help to move this forward.
    Mrs. Davis of Virginia. Would you gentlemen like to comment 
on that question?
    Mr. Volcker. I must confess, I had not thought of that 
approach at this point. I think the kind of consultation and 
expertise that was involved in the Hoover commission would be 
useful. I don't know whether it's useful to do that kind of 
across the board or do it in a particular area that a President 
or the Congress may decide is a priority area as a kind of 
complement to the kind of legislation I'm talking about, which 
would simply have enabling authority for reorganization. And 
the substance of that reorganization is obviously a big and 
complicated subject. Is that the point at which you want--if 
the President chose an independent commission. I don't know 
whether it would require legislation. You could go back 
obviously and have a full scale Hoover type commission. That's 
not what I have been thinking about and my guess is that we 
slow down the process at this point rather than enhance it.
    Mr. Johnson. My personal preference is that the 
Reorganization Act be passed and then the executive branch be 
challenged to come forward with proposals.
    Mr. Walker. If I can, Madam Chair, I think it is important 
to have enabling legislation, no question about that. And 
that's fundamental. I think any commission that you would have 
could be a supplement to, not a substitute for, but you need 
that enabling legislation.
    Mrs. Davis of Virginia. Mr. Volcker, you made a comment 
that Congress hasn't politically been real interested in the 
reorganization and I would imagine one of the reasons is that, 
A, it's not glamorous and, B, it's probably very controversial 
and something that quite frankly scares the socks off the 
Federal workers, and that's not what this hearing is intended 
to do and it's not what we want to do. We want to make it a 
better place for our Federal workers. I think that is one of 
the reasons you don't see much activity within the Congress on 
our reorganizing or doing anything to change our Civil Service 
workers.
    Mr. Walker. We have reorganized GAO to where we eliminated 
a layer of management, which was an unneeded layer. We didn't 
lay off anybody. Nobody lost their jobs.
    Mrs. Davis of Virginia. Was there job loss?
    Mr. Walker. In that particular case, no. We did close 5 of 
16 field offices and there were some job losses, but every 
person but one who wanted our assistance to find a job found a 
job. And so they either retired or they--or we helped them find 
a job. So there are ways to do this in ways that get the job 
done, but in a considered, compassionate, you know, effective 
manner.
    Mrs. Davis of Virginia. Mr. Walker, your concerns about 
government spending should strike a real chord with all the 
taxpayers and future taxpayers, and I have heard your comments 
and I saw your speech that you made today. And our children and 
grandchildren must not be burdened by our inability to control 
spending.
    Could you give us any ideas about the best path we should 
take to achieve governmental reorganization to eliminate 
functional redundancies? I assume you read my opening statement 
about the cheese pizzas and the pepperoni pizzas.
    Mr. Walker. It's hard to believe that one department has 
responsibility for cheese pizza and the other department 
pepperoni pizza, and the only difference is the pepperonis I 
guess. We were trying to debate earlier who had the pineapple 
pizzas but we couldn't decide that. That is a small part of our 
challenge, let's face it. But it is illustrative of what could 
end up happening through an accumulation of agencies, programs, 
functions, policies and activities on a piecemeal basis over 
decades. And one of the things that has to happen that I 
pointed out in my speech at the Press Club today is that we 
need to have a very disciplined process where we start looking 
at what exists in government today, both mandatory 
discretionary spending as well as the tax side. We have to look 
at it and ask ourselves does it make sense in the 21st century. 
You know, what kind of resources and authorities are being 
allocated? What kind of results are being achieved? It's a very 
important approach.
    I lay out several ideas with regard to redundancies that 
need to be considered in my testimony. But this is a 
fundamental process. It's an important process. It's going to 
take years but we need to get started.
    Mrs. Davis of Virginia. Anyone else have a comment? My 5 
minutes are up, and I want to go to Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Madam Chairman, and I want to 
thank all three of you gentlemen for your testimony. And Mr. 
Walker, I haven't had a chance to look at it all but I have a 
copy of the speech you gave before the National Press Club and 
I heard a little bit about it on NPR radio this morning. So 
thank you for your observations there with respect to future 
budget situations as well as the management issues.
    And Mr. Volcker, thank you very much for your sticking to 
it on this issue over many years and your service. You're 
right, it is not one of those issues that grabs the attention 
of a lot of people but it is very important to the success of 
our country that we be able to continue--that we attract good 
people to government in the future. So all three of you, thank 
you very much for being here. Obviously one of the concerns 
Congress has is giving up a blank check over any 
administration, Republican or Democrat. So if we were to 
provide the kind of authority, as I understand it, you are 
supporting a provision where the administration would come 
forward with the reorganization proposal and there would be 
vote up or down. Let me take you back though to the whole 
question of the Homeland Security Department, because there the 
administration came forward with the proposal and I think maybe 
I'm wrong but my sense was that the administration as well as 
Members of Congress thought the final product would be 
strengthened and improved in many ways as a result of going 
through the process. After all there had been number of bills 
that Members of Congress introduced that actually initiated the 
process. And if we had just an up or down vote, you wouldn't 
have--without the opportunity for amendment, you wouldn't 
really have that ability to do it or the administration would 
be in such a position they could say well, OK, we agree to that 
and will have to come back with another draft. And I guess why 
should Congress give up that flexibility? My understanding--I 
could be wrong--with respect to reorganization of government 
that we have not--and I could be wrong--we haven't seen any 
major proposals coming forward in recent years other than 
Homeland Security, that we have--and anything that has come up 
we as a Congress have acted on. So I would be interested in 
your response.
    Mr. Volcker. I guess my brief answer would be history is 
against you. When you do it one by one and with full range of 
debate about every aspect of the reorganization proposal, 
nothing gets done. In fact it probably won't be proposed. Now 
Homeland Security was a rare instance, obviously following 
September 11, obviously revealed a lot of lack of cooperation, 
lack of information, of course related agencies at that time, a 
sense of emergency, and finally got done with a lot of effort 
in a very difficult situation, but a pressing situation. 
Whether you can expect that to be successful right across the 
board I think is doubtful. With the kind of question that you 
have, I would anticipate by saying you can't write a complete 
blank check you want to give some instruction in effect in this 
legislation about basic principles or guidelines that have to 
be respected in terms of any Presidential proposal and you 
could require certain consultation, too, including certain 
consultation with this committee. But it gives you some kind of 
framework within which the proposal is made and if you still 
don't like it you vote it down and obviously you would have to 
come back. But you don't have to fight every principle over 
again. You settle what's really a core continuing requirement 
in the enabling legislation in general terms.
    Mr. Van Hollen. Do you believe that the prior 
reorganization acts offer any guidance in that area or is there 
some kind of model?
    Mr. Volcker. I think some of those weren't quite so 
sweeping. They were more individual proposals, but I think the 
conclusion consistently has been to get consistent action here, 
you need some kind of enabling legislation. And I am just 
urging what's been done in the past to get some action here.
    Mr. Van Hollen. Is there a model that you've seen that sort 
of spells out the limitations?
    Mr. Volcker. There are models in other areas. Base 
closings.
    Mr. Van Hollen. In terms of this procedure, I understand. 
But I'm talking about with respect to the kind of limitations 
that you thought would be appropriate to write into this kind 
of authorization.
    Mr. Volcker. I'm not going to be very precise now because I 
am unable to sitting here. It is an area that we've been 
working a bit with the committee staff on--the full committee 
staff. And it's an area in which we are engaging and plan to 
engage in consultations with some experts in this area and we 
would be delighted to work with the committee if and when--I 
hope you will--develop some legislation.
    Mr. Van Hollen. Thank you.
    Mr. Johnson. My comment about the Homeland Security to be 
careful, it's not just the Homeland Security organization. It's 
the largest reorganization in 50 years. What was proposed by 
the President, I think it was 27 pages long, would have led to 
a very, very effective Department of Homeland Security. What 
was agreed to by the Congress and the President will also lead 
to a very effective--it's what was agreed to was better--we 
could debate that all day long--it will be made to work and our 
country will be much more secure and safer as a result of that. 
But I don't think it's proper to say that thank goodness there 
was not an up or down vote on the original proposal because 
that proposal was flawed.
    Mr. Walker. If I can quickly, first, there were unusual 
external events that resulted in the creation of the Department 
of Homeland Security, which hopefully are not going to occur 
frequently. And so I think--we can't count on those types of 
events. We don't want those types of events to try to force the 
type of reorganization that needs to occur in other areas of 
government that may not involve safety and security but are 
important opportunities for economy, efficiency, effectiveness, 
etc.
    Second, you're right, no blank checks. Nobody should give a 
blank check. I have had the opportunity to testify before the 
House Rules Committee as well as the full Government Reform 
Committee on this issue and will be happy to provide that to 
your office because I think there are some principles and 
guidelines that could be employed to try to allow more 
flexibility in circumstances where it's really only management 
operational issues versus policy and programmatic issues and, 
you know, different safeguards to make sure the Congress is not 
giving up too much of its Constitutional responsibilities.
    Mr. Van Hollen. Thank you, Madam Chairman.
    Mrs. Davis of Virginia. Mr. Murphy.
    Mr. Murphy. Thank you, Madam Chair. First of all, I 
compliment you on putting together this hearing. And these 
issues are incredibly important when we read some of these 
reports about the number of agencies and programs involved. 
It's absurd and we can certainly save the taxpayers a lot of 
money and do a better job. In the interest of time and also the 
delays our panels had and recognizing the impending weather 
here, I would like to submit some questions for the record and 
ask them to respond that way.
    Mrs. Davis of Virginia. Without objection. Ms. Holmes 
Norton.
    Ms. Norton. Thank you very much, Madam Chairwoman. I'd 
simply like to get some clarification as to what exactly is 
desired here. First, I want to make it clear that far from 
having any objection to reorganizations of government when I 
served as Chair of the Equal Employment Opportunity Commission 
during the Carter administration, I asked the President and he 
indeed put forward a major civil rights reorganization of the 
Federal Government precisely because the duplication and 
overlapping of agencies was so costly and so inefficient. So 
I--if I have any bias, it's toward consolidation and toward 
reorganization. I believe the government agencies grow like 
topsy. When anybody has an idea, they create some department or 
subdepartment.
    But after having served on the Homeland Security Committee, 
I sat on this committee as we dealt with DOD, I want to know 
what it is about. I mean after that experience where the 
Congress was so responsive, I'm absolutely puzzled that the 
administration would come forward and ask to have the authority 
to reorganize the government with no amendments from the 
Congress as if, you know, there were some kind of perfection 
anywhere in the universe.
    So I just want to know why you don't feel that perhaps with 
some kind of abbreviated process, I can even understand that, 
you wouldn't be better off talking to Members of the House and 
Senate, many of whom have far longer experience than I have, 
know the government better than any of you with the possible 
exception of Mr. Volcker. Why in the world don't you think--I 
thought I heard Mr. Johnson say a better piece of legislation 
than Homeland Security because of the way people cooperated, 
what is to be gained? What is it that you are after given the 
responsiveness of Congress to you on two occasions, giant 
reorganizations, Homeland Security and DOD? What is it that you 
are after that requires such haste that you don't even want the 
kind of give and take legislative process that we have had for 
200 years in this Congress? What is it that requires--because 
the word ``requires'' is the word I think should be used. 
Congress should give up such authority only if it's required. 
Why is it required? What is the urgent necessity requiring it?
    Mr. Johnson. I am not suggesting a specific reorganization. 
What I'm suggesting is that some form of expedited 
consideration by Congress be passed. I don't know how that 
ought to be structured. That would be debated as such an act 
was being created. But what exists now would almost ensure that 
whatever started off as a race horse would end up as a camel 
medical. And there has to be instead of that some kind of 
expedited way to consider government reorganization. Whether it 
allows up, down votes I don't know any of that. But a faster, 
more direct way of consideration by Congress has to be 
developed is what I'm suggesting.
    Mr. Walker. Ms. Holmes Norton, I believe what the issue is 
that there are a number of Presidents of both political parties 
who, for a number of years, had certain reorganization 
authority. That authority has expired. And so the question is 
whether and to what extent Congress might seek to give this and 
future administrations some basic reorganization authority. 
Clearly no blank checks. And as I mentioned, I testified before 
House Rules as well as full committee about some ideas as to 
how you separate the wheat from the chaff. I share a lot of 
your concerns about DOD's transformation bills, especially in 
the human capital area. I don't think that's necessarily what 
they are talking about expedited treatment for. We're really 
talking about organizational units rather than fundamental 
changes in the Civil Service system.
    Ms. Norton. You know, whole units involving employee rights 
could be abolished with a blank check.
    Mr. Walker. And blank checks would clearly be 
inappropriate. And that's one of the things we have tried to do 
at GAO is to talk about some principles and some safeguards in 
order to make sure that Congress doesn't give up too much 
authority and to make sure that situation doesn't occur because 
that wouldn't be anybody's benefit for that to occur.
    Ms. Norton. I don't oppose an expedited way to reorganize 
the government. My own experience tells me you want to get it 
done, you don't want to get it done fast and wrong but you want 
to get it done fast. Mr. Johnson's testimony was that President 
and Congress need to work together and we work on things far 
more serious, far more urgent if, I may so and is. Why would 
the reorganization--how would you ensure that the President 
works with the Congress given what you have proposed here this 
afternoon?
    Mr. Johnson. I'm sorry----
    Ms. Norton. If in fact the President could put forward an 
up or down motion, an up or down bill and you would have to 
vote against the whole thing, and we know what the purpose of 
that is, we're not fools, how would you assure that we worked 
with the President since he knows just like we have an omnibus 
bill that nobody is going to go after the omnibus bill because 
there are too many things in there to get the whole body to 
vote against them? How would you assure that we work together 
to keep that from happening, an omnibus type bill from 
occurring in this context?
    Mr. Johnson. Well, maybe--briefly and you are much more 
informed.
    Mr. Volcker. You are on the seat here and I'm not.
    Mr. Johnson. In my mind, it would be to do it with Congress 
and not to Congress, because if we're doing it to Congress 
nothing would get approved. Once an idea is developed you would 
seek input from Congress, who know their States and districts, 
and you would work with agencies who know their programs and so 
forth and you would work with constituent groups that know what 
needs to be done and what the opportunities were. And then you 
develop your ideas and there's compromise and debate and 
discussion, but eventually somebody has to put together 
something and come forward. And you would come forward with 
full explanation and full selling points why on balance this is 
the best thing to do.
    Ms. Norton. And if you don't like it vote against the whole 
thing. That is really an ``in your face'' approach.
    Mr. Johnson. As an expedited fashion as opposed to 
piecemeal as current legislation would call for. I don't know 
whether it has to be up or down. That's the way the old bill 
was and Congress and the President and the executive branch 
have to figure out what expedited fashion means. But we would 
do this so we would be doing it with Congress because the way 
our government is set up you don't do anything to Congress.
    Ms. Norton. Unless you have an up or down vote when you 
get----
    Mr. Johnson. I don't hear anybody saying it was a 
disastrous approach.
    Mr. Volcker. I agree with what Mr. Johnson is saying. You 
want to work with the Congress and with others to get something 
this broadly acceptable. But I think history suggests that at 
the end of the day you have to get together and got to get a 
vote. And because there are so many controversial areas 
involved, it's very hard to get Congress to act unless they are 
faced with an up or down vote. And it's likely to be a down 
vote unless there's the type of concentration to talk about. 
And you are going to have a certain framework that Congress has 
put in there to make sure what Congress thinks are important 
are appropriately recognized in the proposal. And employee 
protections is one of those areas where you know you fight it 
now in Homeland Security. You fight it over again in the 
Defense Department reorganization. And you'll fight it in every 
reorganization and get a different answer maybe in each one. 
You want some kind of a template here that will facilitate 
consideration of something that experience shows is very 
difficult to get action on even when there's recognition that 
something ought to be done, as you have expressed that.
    Ms. Norton. I want to assure you that we have up and down 
votes on very complicated bills here every week, bills of 
enormous complication. So the whole notion that you are 
proposing something that is more complicated than what we do on 
a regular basis is an amazing notion to me. And I invite you to 
look at the bills that have been passed during this session of 
Congress alone. Mr. Volcker, again your notion about beginning 
with some guidelines and the rest, that gives you a start, but 
the last thing we should do is to approach the reorganization 
of the government of the United States with a blueprint. The 
kind of principles we start out with would be so general that I 
don't think they would be of much help. That's why what we 
usually start out with is some kind of bill. Then people get to 
look at it--and frankly we pass these things--you know some of 
us vote against it. You can't hold it up. You got a majority, 
at least the present majority has a majority. So some vote 
against us. Some of us vote for it. So it passes out the 
committee. Yes, there is some division, but it passes. It goes 
to the floor and it passes. Nobody can hold it up. So it seems 
to me, yes, you begin with principles. Your next task as far as 
I'm concerned is to come forward with a specific expedited 
process and ask the Congress to vote on that process. I would 
be perfectly prepared to vote on an expedited process, not on 
something called a concept of an expedited process. And I am in 
your corner. I am one of the few Members of Congress who has 
run an agency. And I would be prepared to advocate the 
shorthand way of reorganizing the government. I saw just a tiny 
part of government, what it took to reorganize. And by the way 
we did it in a very short period of time.
    So I think it can be done, but I don't think you will get 
very far talking to Members of Congress who have to deal with 
complicated tax legislation, complicated welfare legislation, 
that this is so complicated that we need an up and down vote 
with all of the stuff kind of buried like sausage in between 
and you folks couldn't get it done if you had to deal with the 
sausage. We get our hands dirty with this sausage every day. We 
pass bills out of here every day and I think we could do this 
as well.
    Mr. Walker. If I could mention real quickly. Clay Johnson's 
two predecessors ago, Sean O'Keefe, who was Deputy Director of 
OMB for Management, and I had an opportunity to testify before 
the House Rules Committee--and I will make sure that GAO 
provides you a copy of that testimony and some of the follow-up 
of that because it's very much along the lines of what you're 
talking about. What happened is the administration came forth 
with the Freedom to Manage Act and it didn't have enough 
specificity, controls and safeguards in place. And what we said 
was what needs to happen is we need to put forth something that 
does have more specificity, more controls and safeguards in 
place, which is what I hear you saying. And I think it's a 
reasonable request that there's got to be something in writing 
that people can debate and discuss.
    Mrs. Davis of Virginia. Thank you, Ms. Holmes Norton. 
Without seeing any specifics in concept I agree with you that 
it should be not concept but specifics when it comes forward. I 
am going to ask one more question and I will certainly leave it 
open to you, Mr. Murphy and Ms. Holmes Norton, if you have 
another question. And this is to you, Mr. Walker. When 
considering reorganization it's of utmost importance in my mind 
to do it right the first time, which means we have to have all 
of our information in front of us.
    Could GAO provide to the subcommittee the identity of all 
Federal programs under each Federal agency determine the role 
and function of each program and determine if an existing 
program performs a function that is performed or carried out by 
an existing program or programs even though it is cutting 
across Federal agency boundaries?
    Mr. Walker. Madam Chair, I would like to work with you to 
see if we could narrow the scope and clarify that because that 
would be a huge undertaking that would take a tremendous amount 
of resources over a considerable period of time. But if we 
could end up talking about narrowing it to certain activities 
and start there and do it on an installment basis, that might 
make more sense.
    Mrs. Davis of Virginia. That may be the way we do 
reorganization as well because we can't vote on reorganization 
if we don't know what we are voting on.
    Mr. Murphy. Ms. Holmes Norton.
    I want to thank all three of you gentlemen. We may have 
some more questions that we would like to submit to you in 
writing. If you, Mr. Johnson, Mr. Walker and Mr. Volcker would 
be willing to respond to us so that we can make it available to 
the committee members, I would certainly appreciate it. And Mr. 
Volcker, I appreciate you coming all the way down here and I 
appreciate your time for coming down here and thank you for all 
your valuable work that you have done with your commission on a 
bipartisan basis.
    Mr. Volcker. I appreciate even more the opportunity to come 
down and try to help keep this process going.
    Mrs. Davis of Virginia. Thank you so much, and with that, 
the committee stands adjourned.
    [Whereupon, at 4:10 p.m., the subcommittee was adjourned.]

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