[Senate Hearing 113-25]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 113-25
 
               THE COSTS AND IMPACTS OF CRISIS BUDGETING

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


                                HEARING

                               before the

                              COMMITTEE ON

               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

                             MARCH 13, 2013

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

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        Committee on Homeland Security and Governmental Affairs




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20402-0001



        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                   Richard J. Kessler, Staff Director
               John P. Kilvington, Deputy Staff Director
               John G. Collins, Professional Staff Member
                    Holly A. Idelson, Senior Counsel
                     Susan B. Corbin, DHS Detailee
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
     Catharine A. Bailey, Minority Director of Governmental Affairs
                     Trina D. Shiffman, Chief Clerk
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Coburn...............................................     4
    Senator Begich...............................................    18
Prepared statements:
    Senator Carper...............................................    39
    Senator Coburn...............................................    41

                               WITNESSES
                       Wednesday, March 13, 2013

Philip G. Joyce, Ph.D., Professor of Management, Finance, and 
  Leadership, School of Public Policy, University of Maryland....     6
Scott D. Pattison, Executive Director, National Association of 
  State Budget Officers..........................................     8
Colleen M. Kelley, National President, National Treasury 
  Employees Union................................................    10
Stan Z. Soloway, President and Chief Executive Officer, 
  Professional Services Council..................................    12

                     Alphabetical List of Witnesses

Joyce, Philip G., Ph.D.:
    Testimony....................................................     6
    Prepared statement...........................................    43
Kelley, Colleen M.:
    Testimony....................................................    10
    Prepared statement...........................................    65
Pattison, Scott D.:
    Testimony....................................................     8
    Prepared statement...........................................    56
Soloway, Stan Z.:
    Testimony....................................................    12
    Prepared statement...........................................    70

                                APPENDIX

Government Accountability Office, statement for the Record.......    78
Response to post-hearing questions for the Record:
    Mr. Joyce....................................................    91
    Mr. Pattison.................................................    96
    Ms. Kelley...................................................   101
    Mr. Soloway..................................................   104


               THE COSTS AND IMPACTS OF CRISIS BUDGETING

                              ----------                              


                       WEDNESDAY, MARCH 13, 2012

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:33 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Committee, presiding.
    Present: Senators Carper, Begich, and Coburn.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. Good afternoon, everyone. Senator Coburn 
and I are happy to see you all, and we welcome you here before 
us today.
    I have just come from a meeting where we were talking about 
potential Government shutdowns, continuing resolutions (CRs), 
sequestration, and on and on and on. So I think this topic is 
certainly timely, and hopefully that tale of horribles will 
soon come to an end and we can start running our Government 
maybe a little bit more like we try to run our own families and 
budgets in our businesses--at least most of us do. But we are 
happy to welcome all of you here today.
    Over the past several years, as we know, our Federal 
Government has had to operate through a number of debt ceiling 
crises, numerous and sometimes lengthy continuing resolutions--
people keep asking me, ``What is a CR? ''--and the threat of 
Government shutdowns, the prospect of going over some fiscal 
cliff, and now across-the-board budget cuts to most Federal 
programs through sequestration. President Obama addressed this 
flawed approach to governing in a prominent passage in his most 
recent State of the Union address that some of you may recall 
when he said, ``the greatest Nation on Earth cannot keep 
conducting its business by drifting from one manufactured 
crisis to the next.'' I think the American people know this. It 
is not the way, that they run their family budgets; it is 
usually not the way they run their businesses. This kind of 
crisis budgeting, as we all know, represents a bicameral and 
bipartisan failure of leadership.
    We are going to hear from our witnesses today thatour 
failure in this area has made our Government not only less 
effective but also more costly to taxpayers. It has also 
degraded Federal employee morale and the confidence of our 
citizens in us. It has created harmful ripple effects for State 
and local governments. I heard from some of them today. It has 
hindered efforts to help our Nation's economy as it recovers 
from one of the worst economic recessions in our history.
    I hear every day, including today, that our businesses need 
predictability, they need certainty in the Tax Code, on the 
spending side. They want to know that we can govern, that we 
can be fiscally responsible.
    Some of our budget battles stem from fundamental 
disagreements over the role of Government and how much money we 
ought to spend on it. However, today's hearing is not so much 
about how much we spend, but how we spend it. And it is about 
the price tag attached to our inability to come to timely 
agreements on spending, no matter what the eventual amounts 
are--I will call it an ``uncertainty tax,'' if you will.
    I have stated any number of times at hearings and elsewhere 
in recent months that, given the serious deficit and debt 
problems that our country faces, we need to shine a light into 
every nook and cranny of the Federal Government and ask 
ourselves at least this one question: How do we get a better 
result for less money in almost everything we do?
    Dr. Coburn and I along with our colleagues tried to do that 
on the Federal Financial Management Subcommittee that we have 
taken turns leading. I have made it one of my top goals as 
Chairman of this Committee, and it is a goal I believe I share 
with him.
    Today's hearing takes things a step further, focusing not 
just on a particular program and its inefficiencies, but rather 
on a way of doing business in Washington that makes it 
impossible for the Federal Government as a whole to give 
taxpayers the results they demand in an effective and 
affordable manner. By failing to provide timely, predictable 
budgets, we are generating waste throughout our Government and 
exporting some of that waste to our State and local partners 
and everyone who relies on us.
    Dr. Phil Joyce from the University of Maryland, who is with 
us today, has written a report detailing the costs of this 
budget uncertainty. Based on his past research of Government 
practices as well as extensive interviews with current and 
former Government officials, Dr. Joyce found that--in fact--
this uncertainty does not just deny us opportunities to get 
better results and save money, but actually gives those we 
serve and partner with worse results for more money. Among the 
findings that are disturbing:
    For example, the Government Accountability Office (GAO) 
found that because of a series of funding delays, the Bureau of 
Prisons was unable to lock in contracting prices for a new 
facility in West Virginia. This resulted in about $5.4 million 
in additional costs.
    In another instance, because of a 2011 funding delay, the 
Navy canceled seven ship repair contracts. Deferring this 
maintenance is expected in the long haul to increase costs and 
decrease operational effectiveness down the road.
    In 2006, the Veterans Health Administration (VHA) awarded 
60 percent of its maintenance budget in the last month of the 
fiscal year. Compressing that much spending in that small 
amount of time creates an environment in which error, fraud, 
and just plain bad spending decisions are inevitable.
    And those examples do not include the countless hours of 
time wasted as managers and employees attempt to prepare for 
multiple possible outcomes, perhaps several times within a 
single fiscal year depending on what Congress might have in 
mind. Colleen Kelley, President of the National Treasury 
Employees Union (NTEU), will discuss today some of these kinds 
of unseen costs.
    Our other witnesses, Scott Pattison of the National 
Association of State Budget Officers and Stan Soloway of the 
Professional Services Council, will detail some of the ripple 
effects that States and private businesses face as a result of 
the budget uncertainties we create. As a recovering Governor, I 
know that State budgeting is a zero sum game. It is incredibly 
difficult to plan and budget effectively if you do not know 
what is, or is not, coming your way from Washington. And as 
someone who has focused recently, as most of my colleagues 
have, on how we can get our economy moving at a faster clip, it 
is clear from this work that the uncertainty our Federal budget 
situation is creating is not helping businesses create jobs. In 
fact, it may be hurting them.
    As I have said before, and I suspect you will hear me say 
again--I believe the best route we can take is to pass a 
comprehensive, bipartisan plan that gives Government and 
business certainty and shows the American people that we can 
lead--not unlike the plan that the man to my right here worked 
on, the Bowles-Simpson Deficit Commission, for many months. 
Then after we do that, we need to translate those plans into 
timely appropriations bills that will let agencies and their 
partners spend their time trying to get much better results for 
the taxpayer dollar, not hastily putting together contingency 
plans. I hope today's hearing strongly reinforces the 
President's statement, puts a couple of exclamation points 
after it, and just helps bring this irresponsible behavior to 
an end.
    Before I turn it over to Senator Coburn, I will just 
mention that I just came from meeting with a group of Close Up 
students from a high school in central Delaware, just south of 
Dover, and they were asking, ``What is this sequestration all 
about? And why is it harmful from time to time?''
    Well, obviously, we need to reduce spending, but I will 
just give you an example, and this is a hypothetical. This high 
school--I just met these kids--is about 10 miles from the Dover 
Air Force Base. The Dover Air Force Base is a big airlift base. 
We have C-5s; we have one of the biggest airplanes in the 
world, cargo aircraft; we have C-17s, the newer, smaller 
version of the C-5. We can buy new C-17s for, I do not know, 
about $250 million a copy. We can overhaul, modernize I think 
two C-5s for about that same amount of money. So for the price 
of one new C-17, we can buy two C-5s. Why would we want to do 
that? Well, modernized, they will fly for another 30, 40 years. 
They can carry twice as much as a C-17, fly twice as far. They 
can take off out of Dover Air Force Base, a C-5, with new 
engines and all, they can fly out of Dover Air Force Base 
nonstop all the way to Afghanistan, right over the top. And 
save a lot of money in doing that.
    When we enter into a contract with, say, Lockheed or some 
other defense contractor, we actually make a contract to 
promise them we are going to try to modernize six planes, for 
example, a year and we get a decent price. Maybe not a low 
price, but a pretty good price. What happens when we can only 
do one or we can only do two? We end up paying a whole lot more 
money for the aircraft that eventually we will have modernized. 
It is just a dumb way to do business. And that is just one 
example out of money that come to mind for me today.
    We can do better than this, and our goal is, when we finish 
up by the end of this fiscal year, we will have put in place a 
long-term comprehensive deficit reduction plan, a balanced plan 
that gets us on the right track to bringing down our debt as a 
percentage of the gross domestic product (GDP), does it in a 
responsible way, and really follows the model that Senator 
Coburn, whom I am pleased to serve with, has helped to shine a 
light on.
    Thank you, Tom.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, let me thank you for being here, and 
I would like to submit my statement for the record and give you 
a quote from Will Rogers. Just so you know, this is not a new 
problem in Congress. In the 1930s, he said, ``I do not make 
jokes. I just watch the Government and report the facts.'' And 
so, the fact is we have not had a budget in 4 years. The reason 
we have not had a budget does not have anything to do with the 
needs of the Government or in the best interests of the 
country. It has to do with the needs of politicians.
    So even with the attempts of the 1974 Budget Act and all 
the things we have done, the process still gets manipulated for 
political gain, and our real problem is we are focused on the 
short term and not the long-term best interests of the country. 
My partner on this Committee has demonstrated an attitude that 
is other than that, and that is why we are such good friends, 
and we are focused on the long term.
    I want to welcome you here. My criticisms are of both 
parties because both have done it. In 16 of the last 20 years, 
Congress has failed to pass and send the President all the 
appropriation bills on time. That kills the agencies. A 
continuing resolution kills the agencies. It does not allow for 
innovation. It does not allow for changes. It does not allow 
for judgment. And we have been doing that for 4 years, which 
has markedly hurt their ability to do what they are asked to 
do.
    So I am thankful that you are here on a day when a new 
budget is being marked up. This is a good hearing, but I think 
we all know what the consequences are. It is inefficiency, it 
is increased costs, and it lays at the feet of the Members of 
Congress for not doing their job.
    It also lays at the feet of the President. He is 2 months 
late in putting forth his budget--that is the first time that 
has happened in a long time in this town--to see what his 
priorities are as we put out what the Congress' priorities are.
    So we do not have the benefit of what their ideas are, the 
very people at the Office of Management and Budget (OMB) who 
actually get to see at a much closer level than we do what 
works and what does not. And so we are at a disadvantage 
because the President has failed to comply.
    Nevertheless, there is enough blame to go around in 
Washington for every party and every branch, and what we ought 
to be about is the leadership that solves that, which means 
knowing what you are voting on, thinking about what is in the 
best long-term interest of the country, and not what is the 
best short-term interest of any party or politician. I thank 
you.
    Chairman Carper. Thank you.
    We have been joined by Senator Begich from Alaska. Welcome, 
Mark. Good to see you.
    Before I introduce Dr. Joyce, I will just mention one other 
thing, if I could. We are going to have some tough choices to 
make today and this week with respect to the kind of continuing 
resolution or mini omnibus appropriations bill we are going to 
pass. Some really hard choices are going to have to be made 
when the House and the Senate create a conference committee and 
try to hammer out the differences between our two different 
bills.
    We are going to have some tough choices on the budget 
resolution that will be before us next week in the Senate and 
finally in a conference with the House. We are going to have 
some really tough choices that will enable us to avert or get 
into another debt crisis later this summer.
    And one of the things I want from this hearing is just the 
ammunition to enable us to remind our colleagues when we are 
trying to make those tough decisions, struggling with making 
those tough decisions, that there are real consequences for our 
failure to make those tough decisions, and there are 
consequences that can be measured in some cases in dollars and 
cents, in other cases not. But we welcome you here today and 
appreciate your testimony and your presence and the work you 
do.
    Our first witness is Dr. Phil Joyce, Professor of 
Management, Finance, and Leadership at the University of 
Maryland's School of Public Policy. Dr. Joyce recently authored 
a widely cited report for the IBM Center for the Business of 
Government examining the costs and impacts of Federal budget 
uncertainty. And before his academic career, Dr. Joyce worked 
in both the Illinois State Budget Office and with the United 
States Congressional Budget Office (CBO), where he received the 
Director's Award for Distinguished Service. That is quite an 
accomplishment.
    Our next witness is Mr. Scott Pattison, Executive Director 
of the National Association of State Budget Officers (NASBO), 
which represents budget officers from all of 50 States. Prior 
to his service in the association, Mr. Pattison served as 
Virginia's State Budget Director, and before that head of the 
Regulatory and Economic Analysis Section of the Virginia 
Department of Planning and Budget. Is that in Richmond?
    Mr. Pattison. Yes.
    Chairman Carper. That is where young Ben Carper lives 
today, our youngest son.
    Our next witness is Ms. Colleen Kelley--Colleen, very nice 
to see you--the National President of the National Treasury 
Employees Union, which is the largest independent Federal 
sector union in the country. A Pittsburgh native and a 
certified public accountant (CPA), Ms. Kelley has served in her 
current position since 1999 and has been here more than a few 
times. We welcome you back.
    The final witness is Stan Soloway, the President and Chief 
Executive Officer of the Professional Services Council, which 
represents over 360 member companies. And prior to his current 
position, Mr. Soloway served as Deputy Under Secretary of 
Defense for Acquisition Reform and director of former Secretary 
of Defense Bill Cohen's Defense Reform Initiative. That is 
good.
    I thank all of you for joining us today, and your entire 
testimony will be made part of the record. We welcome you and 
look forward to your comments and to a good conversation after 
that. Dr. Joyce.

     TESTIMONY OF PHILIP G. JOYCE,\1\ PH.D., PROFESSOR OF 
 MANAGEMENT, FINANCE, AND LEADERSHIP, SCHOOL OF PUBLIC POLICY, 
                     UNIVERSITY OF MARYLAND

    Mr. Joyce. Thank you, Chairman Carper, Senator Coburn, and 
Senator Begich. It is good to be here.
----------------------------------------------------------------------
    \1\ The prepared statement of Mr. Joyce appears in the Appendix on 
page 43.
----------------------------------------------------------------------
    Thank you for asking me to testify today on this important 
topic. I want to congratulate the Committee for deciding to 
highlight the subject of the insidious effects of budget 
uncertainty. You have done a good job of outlining the long-
term nature of this problem, the fact that we have recently 
limped along from one crisis to another.
    It would be a bit reassuring to think that this recent 
experience was exceptional and we could now return to normal. 
But normal is not too good either. We have not passed a budget 
resolution actually in 7 of the last 15 years, and we have not 
passed all appropriation bills on time in 16 years, and only 4 
times in the 37 years since the Congressional Budget and 
Impoundment Control Act became law.
    So this is not a problem that has come to us recently, and 
it is also, as you suggest, not a partisan problem. It is a 
bipartisan problem.
    Any organization--whether it is the Federal Government, a 
State or local government, or a business--needs to plan for the 
funds that it is going to have available in order to 
effectively budget and manage. And my message to you is that 
late appropriations not only create negative consequences for 
Federal agencies, but also for people who get money from the 
Federal Government. And my colleagues on the panel are, I am 
sure, going to be talking about the effects on recipients and 
know more about it than I do, so I want to focus on some of the 
main negative consequences for Federal management and for the 
costs of providing services.
    First, budget uncertainty disrupts service delivery and 
lowers employee morale and productivity. Agencies engage in 
hiring freezes. The problem with hiring freezes is it leads you 
to not having staff in the places where you need them because 
you do not have turnover that happens equally across the 
agency. And people leave Government because of this lowered 
morale, and the people who leave are precisely the ones who 
have options, who are precisely the ones who you do not want to 
leave.
    Second, CRs tend to freeze priorities in place. Agencies 
have difficulty responding to new threats and problems, and 
they are required to keep funding outdated or ineffective 
programs.
    Third, CRs require governments to engage in hurried or 
short-term contracting. Agencies have to squeeze 12 months of 
contracting work into perhaps less than half a year. They also 
enter into multiple contracts, month to month, or even week to 
week in some cases, because of the length of CRs. This leads to 
more work and higher costs. Contractors dealing with the 
Federal Government may even charge a higher rate, a risk 
premium, if you will, in order to be compensated for this 
uncertainty.
    Fourth, agencies, OMB, and congressional staff waste a 
great deal of time preparing for potential Government shutdowns 
and CRs and then figuring out how to comply with them after the 
fact.
    Finally, agencies defer investments in people or in 
physical assets, which compromises their effectiveness and 
leads to higher future costs.
    Ultimately, I think it may be the apparent invisibility of 
these negative effects that creates the greatest impediment to 
fixing the problem. Frankly, we hear a lot in this town about 
waste in Government, which undoubtedly exists, but at least 
part of the waste in Government is caused by these very 
practices. That is, many of the same people who decry waste in 
Government are ones who are contributing to it.
    No State or local government would be able to get away with 
this. You know this, Senator Carper, from having been a 
Governor. If you had chronic funding delays at the State level, 
it would result in lowered bond ratings and increased borrowing 
costs and political fallout.
    Given all of this, of course, the best thing that could be 
done would be to just enact appropriations on time. And, of 
course, that would be the best possible outcome. I find that to 
not be a completely helpful suggestion, so I am going to move 
on to some things that, if we are stuck with late 
appropriations, might tend to at least lower the costs of them.
    First, I think the Congress should give agencies more 
flexibility in spending. For example, you could increase the 
percentage of money that is available on a multi-year or no-
year basis and also avoid the temptation to micromanage the 
budget execution process. My point on this latter is that 
sometimes we have appropriations that are 4 months or 6 months 
late, but agencies are still required to get approval of 
spending plans before they can begin spending. Frankly, that is 
a luxury we cannot afford if we are going to have late 
appropriations.
    Second, I would make it harder to pass continuing 
resolutions than regular appropriations bills. If we could not 
pass CRs, the options would be either a full-year appropriation 
or a Government shutdown. That would raise the apparent cost, 
and I think perhaps more urgency in enacting appropriations 
would increase the odds of their being enacted on time.
    Third, I think CRs should be limited to only one or two per 
year that do not extend past the end of the calendar year. 
Frankly, if we are going to have CRs, they are not all created 
equal. It matters how many there are, and it matters how long 
agencies have to operate under them. Problems created by 
multiple CRs--and there have been as many as 21 in a single 
year--or CRs lasting 6 months or more are well documented.
    It seems particularly important to focus on these 
improvements now because the problem is becoming worse and the 
threat of sequestration compounds it. Even without 
sequestration, we are going to need to reduce Federal spending, 
and that is going to result in less than a zero sum game for 
Federal agencies. Having sufficient time to plan for these 
budget reductions I think is more important than ever.
    So my bottom line is that funding delays have costs, and 
there are both financial costs and costs felt through 
compromised Government effectiveness. Either way, these are 
completely self-inflicted wounds, and the Congress and the 
President should do what is necessary to mitigate them.
    I thank you, and I look forward to any questions you might 
have.
    Chairman Carper. Thank you, Dr. Joyce. Mr. Pattison.

TESTIMONY OF SCOTT D. PATTISON,\1\ EXECUTIVE DIRECTOR, NATIONAL 
              ASSOCIATION OF STATE BUDGET OFFICERS

    Mr. Pattison. Thank you, Mr. Chairman.
----------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pattison appears in the Appendix 
on page 56.
----------------------------------------------------------------------
    Chairman Carper, Ranking Member Coburn, and, of course, all 
of the Members of the Committee, I want to thank you for 
inviting me here today on behalf of the National Association of 
State Budget Officers, and I want to tell you that the State 
finance and budget commissioners across the country are very 
appreciative of your doing this hearing because they feel that 
any increase in certainty and less crisis budgeting would be a 
huge benefit.
    What we have found and what I must report to you today is 
that the uncertainty at the Federal level presents numerous 
challenges to sound financial management and long-term 
strategic planning at both the State and local government 
levels, as you know.
    One thing that I really want to point out is the Federal 
Government provides one-third of all of the resources that 
States spend, and, therefore, by having this persistent 
uncertainty through the CRs and fiscal crises like the fiscal 
cliff, it has led to a short-term focus. And so what really is 
a shame is State and local governments do not have the 
opportunity to achieve the results that we all want them to 
under the programs, either in part or fully funded by the 
Federal Government.
    Our current board chair, the South Dakota Chief Financial 
Officer (CFO) Jason Dilges, has a good quote. He told our group 
recently, ``The uncertainty causes many more problems than do 
specificity and certainty, even when that certainty is not good 
news.''
    Now, before I discuss the impacts of the----
    Chairman Carper. Would you say that again? Give us that 
quote from South Dakota again.
    Mr. Pattison. Oh, sure. He said, ``The uncertainty causes 
many more problems than do specificity and certainty, even when 
that certainty is not good news.''
    Chairman Carper. Thank you.
    Mr. Pattison. Now, before I discuss the impacts of the 
crisis budgeting--and I will just list some of these--let me 
mention that with the economy improving, you still have a 
situation where the State money is very tight. We had an 
average of 6 percent year-over-year growth in State budgets for 
many years before the recession. Now it is down to about 2 to 3 
percent.
    What is important about that, whether one thinks it is good 
or bad that the levels have declined, is that it means that 
money is very tight at the State and local government levels. 
This uncertainty and crisis budgeting that we are talking about 
today has important impacts on States and localities and their 
ability to plan budgets, as we know, but also to effectively 
deliver Government services. And, of course, as we have talked 
about, it costs money.
    There are also other impacts such as impacts on cash-flow 
and, as has been talked about and I know will be talked about 
further, definitely on contracts. I want to highlight some of 
the impacts that we have found when we deal with the budget 
officers across the country.
    Uncertainty about Federal funding prevents strategic 
planning and disrupts program management. And I have heard the 
word ``disruption'' from the CFOs across the country many 
times. It forces many State programs to focus on the next few 
weeks and not the next few months. So rather than focus on 
long-term results, they are just focusing on the short term.
    I will give you some examples that I have just heard in the 
last few days. For example, we are hearing from States like 
California that they have difficulties in planning for the next 
school year. School districts have to determine exactly how 
many teachers they want.
    I have also heard several Midwestern States talk about how 
they need a huge lead time to determine how to plan for certain 
pests so that crops are not devastated. This is something that 
is harder to plan for with only a few weeks or months.
    State CFOs also report that Federal funding volatility can 
lead to program instability, increased staff turnover, and 
decreased productivity. Ramping up and down of the staffing is 
a huge problem, and an Arizona finance official told me he 
calls it ``roller-coaster costs.'' And I think that is a great 
name for it. He says, ``It is just up and down. We ramp up and 
down. It costs us money, and it does not allow us to focus on 
the long-term results that we want to focus on.'' And as far as 
contracts, uncertain funding levels prevent State and local 
governments from signing long-term agreements that, of course, 
can save money.
    Lack of funding certainty from Congress can lead to forgone 
investments and, of course, costlier ones. I will give you an 
example. Delays in road construction because of short-term 
funding can actually be a huge problem, particularly for 
Northern States, with shorter seasons to build roads, et 
cetera.
    Just in March of last year, when we had another temporary 
extension of the surface transportation programs, for example, 
North Carolina delayed projects that affected 41,000 employees. 
Michigan cited that 3,500 jobs were at risk as a result of 
those transportation funding delays.
    Now, if the uncertainty continues, what we are concerned 
about at the State and local governmental levels is that we are 
going to look at problems that are a problem now but will get 
worse. One of them is we really feel the continued uncertainty 
will have an impact on our bond ratings even more than they do 
now. And this, of course, will affect the ability of States and 
localities to borrow money for roads, bridges, buildings, 
transit.
    Also, when State budget officials lack confidence in the 
Federal Government's ability to provide good certainty as to 
spending, they may not engage in partnering with the Federal 
Government in the future. And, of course, I mentioned there are 
huge cash-flow problems that we believe will get worse and 
delay payments in the future.
    To conclude, more certainty about Federal funding levels 
and greater flexibility can enhance States' ability to make 
informed decisions, address tough fiscal challenges, improve 
program performance, and plan for the long term. Any actions 
that provide increased certainty of Federal appropriations 
amounts to us will be exceptionally positive and will decrease 
some of the harms I have talked about today. This will lead to 
saving money and focusing on programs results.
    So, in our view, we would like to see us all work together 
to make budget preparation, financial management, and strategic 
planning more efficient, more certain, and less costly.
    Thank you very much.
    Chairman Carper. Thank you very much, Mr. Pattison. Ms. 
Kelley, please proceed.

TESTIMONY OF COLLEEN M. KELLEY,\1\ NATIONAL PRESIDENT, NATIONAL 
                    TREASURY EMPLOYEES UNION

    Ms. Kelley. Thank you very much. Chairman Carper, Ranking 
Member Coburn, thank you very much for the opportunity to 
participate in today's hearing. I think it is particularly 
important for the Committee to hear about the implications of 
crisis budgeting on those who are most directly affected by it 
in the Federal Government, and that, of course, is the Federal 
workforce.
------------------------------------------------------------------
 \1\ The prepared statement of Ms. Kelley appears in the Appendix on 
page 65.
-------------------------------------------------------------------
   During fiscal year 2011, Federal employees faced the 
possibility of Government shutdowns and unpaid furloughs due to 
appropriations lapses no less than eight times, including three 
times in December 2010 and once in April 2011, when detailed 
plans were disseminated listing who was excepted and non-
excepted from the furlough and how they were to shut down their 
work stations. In many of these cases, employees had only hours 
of notice as to whether they should go to work the next day or 
not.
    Fiscal year 2012 saw five continuing resolutions before an 
Omnibus Appropriations bill was enacted on December 23, 2011. 
While there has been a CR in place since September 2012, 
employees are yet again bracing for the possibility of a 
Government shutdown when it expires on March 27.
    In addition to Government shutdowns due to lapses in 
appropriations, Federal employees have also recently faced the 
prospect of loss of pay or job loss due to hitting the debt 
ceiling. This threat was only resolved at the last minute in 
August 2011 with the enactment of the Budget Control Act. And 
Federal employees know that they will face a similar debt 
ceiling threat again this summer.
    The current and most debilitating budgeting crisis 
impacting the Federal workforce is sequestration. On March 1, 
the sequestration order was issued requiring most Federal 
agencies to implement across-the-board cuts of 5 percent of 
their annual budget or 9 percent of their remaining fiscal year 
2013 budget. Federal employees have since been notified of 
unpaid furloughs they will have to serve of up to 22 days that 
could reduce their pay by 20 percent for the rest of the year.
    Professor Joyce's report, ``The Costs of Budget 
Uncertainty,'' noted that:
    Employees may respond to furlough notices by spending 
otherwise productive time seeking other employment. . . . An 
actual shutdown, or even a credible threat of one, can push 
people out the door. It can also be one factor that discourages 
people from wanting to work for the Federal Government.
    We are seeing that employees are leaving, and we are 
beginning to see a different twist on Professor Joyce's 
observation. There has recently been a very large increase in 
the number of workers leaving the Federal workforce, primarily 
to retire. In February 2013, 20,374 Federal employees retired. 
That is more than three times the number who retired in 
February 2012. And so far in 2013, over 42,000 employees have 
retired; that is 40 percent of what retired in the entire year 
of 2012. A large increase in retirements is especially alarming 
since approximately 53 percent of the Federal workforce will be 
eligible to retire by next year, and a significant loss of 
these experienced employees could leave agencies, already 
stretched very thin, in dire circumstances.
    With the implementation of sequestration, Customs and 
Border Protection (CBP) employees, who are represented by NTEU, 
have received notice that they will need to serve up to 14 days 
of unpaid furlough beginning in April. That will be a 10-
percent pay cut in every 2-week paycheck for the rest of the 
fiscal year. The cuts to Customs and Border Protection will 
also increase already long wait times at airports and at land 
border crossings to as much as 4 or 5 hours. Wait times at the 
border cost the U.S. economy in jobs, output, wages, and tax 
revenue.
    NTEU-represented employees at the Environmental Protection 
Agency (EPA) have been told to expect to take 13 unpaid 
furlough days by the end of the fiscal year. That will result 
in an estimated 1,000 fewer inspections by EPA.
    The Internal Revenue Service (IRS) employees represented by 
NTEU have been told they will face 5 to 7 furlough days under 
sequestration. The IRS has announced that it will delay 
implementing these unpaid furloughs until after the tax filing 
season ends on April 15. Due to funding cuts and planning for 
sequestration, the IRS has nearly 5,000 fewer employees today 
than it did just 2 years ago. Despite delaying furloughs, wait 
times for taxpayers trying to get help on the telephone and at 
walk-in centers have increased dramatically.
    Due to the late enactment of the American Taxpayer Relief 
Act in January, which included a retroactive Alternative 
Minimum Tax patch as well as other tax extender provisions, the 
IRS was forced to delay the start of the current filing season 
until January 30 for most taxpayers. According to the National 
Taxpayer Advocate, the extensive work the IRS must perform to 
accommodate late-year changes has an opportunity cost. It 
requires the IRS to pull employees from other priority work, 
reducing service to taxpayers and potentially reducing revenue 
from voluntary compliance as well as collection efforts.
    Professor Joyce's report cites a number of actions that 
agencies rely on in times of budget uncertainty that reduce 
efficiency, and these include hiring freezes, furloughs, 
training, and travel delays. All of these inefficient practices 
are being utilized by agencies right now due to the uncertainty 
of the congressional budgeting process.
    The Federal employees I represent have been under a pay 
freeze for more than 2 years. They are facing significant pay 
cuts due to sequestration. As they see the waste that comes 
from the lack of timely congressional action, it is not 
surprising that they think that the wrong people are getting 
their pay cut.
    Thank you again for this opportunity to testify today, and 
I am very happy to answer any questions you have.
    Chairman Carper. Ms. Kelley, thank you for sharing that 
valuable perspective with us today. Mr. Soloway, please 
proceed. Thank you.

TESTIMONY OF STAN Z. SOLOWAY,\1\ PRESIDENT AND CHIEF EXECUTIVE 
             OFFICER, PROFESSIONAL SERVICES COUNCIL

    Mr. Soloway. Mr. Chairman, Senator Coburn, thank you again 
for the opportunity to testify here today. I am pleased to join 
my colleagues and join the voices providing you with ammunition 
for the discussions ahead.
---------------------------------------------------------------------
    \1\ The prepared statement of Mr. Soloway appears in the Appendix 
on page 70.
---------------------------------------------------------------------
    Let me be clear from the outset that, as an organization 
representing more than 360 companies doing business with the 
Government, we take no position on the specific solutions to 
the current fiscal debate. We recognize and respect that 
funding decisions are within the purview of Congress and the 
Administration. We have a very strong point of view with regard 
to the question you have posed in today's hearing.
    When our member company Chief Executive Officers (CEOs), 
gathered just over a month ago to identify our top policy 
priorities for 2013, achieving budget stability emerged by far 
as their No. 1 objective. The consensus among our leaders can 
be summarized in four simple words: ``Rip off the Band-Aid.''
    We recognize that no stakeholders will be unscathed, but we 
also believe that it is in the best interest of the Nation and 
the Government to finally come to grips with the fiscal 
challenges we face.
    Indeed, on virtually every level, restoring a reasonable 
degree of predictability and stability to Federal budgeting--
the return to regular order, if you will--is essential to the 
right functioning of Federal agencies, successful program 
execution, and the ability of our industry to bring to the 
table the best and most innovative and effective solutions.
    Let me briefly set forth the four key areas in which 
today's lack of stability and certainty in budgeting are 
impacting our industry.
    First, and most obviously, the lack of stability and 
predictability significantly increases the risks faced by 
companies serving the Government. This is a most basic economic 
fact. And with increased risk comes unnecessarily increased 
conservatism with regard to investments in people, 
capabilities, and technology.
    When I speak of risk, I do not mean simply the risks 
associated with whether one wins a contract or not. I am 
speaking more broadly of the risks associated with whether the 
contract on which one is bidding will be significantly delayed 
or even ever awarded.
    There is broad agreement that procurement lead times today 
are stretching longer than anyone has seen in recent history, 
in some cases as much as 3 or more years from the submittal of 
bids to award decisions.
    I am also speaking of whether margins, which in the 
Government market have always been somewhat lower than the 
commercial environment, will be pressured lower and lower as 
agencies seek any and every tool at their disposal to save 
money, even when doing so is contrary to smart practice. We are 
not talking here about margins begin driven down from the 
unreasonably high to the reasonable. We are talking about 
margins being driven from the reasonable to the unreasonable.
    In fact, an authoritative annual report recently released 
by Grant Thornton documents this trend very clearly. One year 
ago, 35 percent of the more than 100 Government contractors 
surveyed reported margins below 5 percent. This year that 
number has jumped to 60 percent, despite the fact that a 
substantial percentage of those firms provide very high end, 
often complex solutions to the Government. Needless to say, the 
absence of reasonable margins directly impacts a company's 
ability to invest in future capability, in people, or in 
excellence generally.
    I am also speaking of a range of impacts playing out in 
acquisition strategy and practice. For example, across our more 
than 360 member companies of all sizes, there is a consensus 
that the Government is defaulting to procuring virtually 
everything from the simple to the most complex on a ``lowest-
price technically acceptable'' (LPTA) basis. There are many 
reasons for this, but clearly uncertainty is one of them. Under 
the rules, when what is known as an ``LPTA contract'' is 
awarded, the Government must award to the lowest bidder meeting 
the minimum technical requirements. For a wide range of 
commodities, that makes eminent sense. But for the many far 
more complex professional and technology requirements the 
Government has, it is both counterintuitive and 
counterproductive. Unfortunately, it is also dominating today's 
marketplace.
    We are facing a potential race to the bottom where 
companies have to do whatever they can to survive. But the 
depth of that race is ultimately controlled by the Government 
customer and the behaviors and attributes it rewards and 
incentivizes--rewards and incentives that are impossible in the 
face of uncertainty.
    We can also see these impacts very clearly with regard to 
the workforce. On the public sector side, our partners have 
been living with a long-term pay freeze, often increased 
workloads, and the difficult challenges of managing in an 
unstable environment. This is not to mention the potential for 
furloughs as a result of the sequester.
    All of this comes at a time when the Government workforce 
faces daunting demographic and skills gap challenges and when 
the Government itself is struggling to be competitive for 
critical skills, particularly in the technology sphere.
    In the private sector, the impacts have also been acute. 
Over the last couple of years, thousands of jobs have been 
eliminated across the industry as a direct result of the budget 
uncertainty and related program instability. Many of the 
individuals who have exited those jobs have also exited the 
Government sector altogether and are unlikely to return. Still 
thousands more positions have not been filled by companies who 
simply cannot justify the investments required, given the 
uncertainty in their marketplace.
    There is also increasing pressure on the Government market 
to arbitrarily cap contractor employee salaries, even when such 
caps bear little relationship to what the broader human capital 
marketplace has deemed certain skills to be worth. Most of the 
attention is being focused on how contractor salaries compare 
to Government salaries rather than on the far more pertinent 
question of whether those salaries enable contractors to 
compete for the best talent with the rest of the commercial 
world.
    Finally, and perhaps most importantly, is the impact on 
mission. Here the message is also quite simple. The combination 
of uncertainty and potential funding reductions force agencies 
to forgo or delay new initiatives to improve performance or 
delay planned technology refresh and scheduled maintenance and 
upkeep, all of which causes long-term costs inevitably to rise 
and mission effectiveness to suffer. They require agencies to 
fund their initiatives incrementally, which is often, by 
definition, inefficient and costly.
    Budgetary pressures lead to reduced investments in people 
and technology in both industry and Government and are further 
exacerbated by the trends I discussed earlier: Awards on the 
basis of lowest rather than best price, unprecedented pressures 
on margins, and the reduced ability of both companies and the 
Government to hire needed skills, all of which poses great 
threat to the effective and optimal execution of the 
Government's mission.
    Mr. Chairman, I have much more detail in my written 
statement, but would be happy to answer any questions that you 
may have, and thank you again for the opportunity.
    Chairman Carper. Good. Thank you, Mr. Soloway. Leading off 
the questions is Dr. Coburn.
    Senator Coburn. Mr. Soloway, I am somewhat perplexed. Most 
of the businesses that are in your group, one of their mantras 
is to do more with less every year. Most of them believe in 
markets, that markets allocate scarce resources.
    In listening to your testimony, I get the other impression. 
If, in fact, we get too cheap on our prices, you will quit 
supplying it. If you cannot supply it, if the business is not 
good for your business, you are not going to be there. And, 
therefore, as people drop out, the market price goes up. So 
markets will take care of a lot of the things that you outlined 
in your testimony.
    Do you disagree with that?
    Mr. Soloway. I do not disagree with it in terms of markets 
in general, but in the Government market there are a lot of 
unique aspects which lead me to question the presumption a 
little bit. I think clearly our member companies believe in 
markets and market forces. I think that what we have in the 
Government market are often unnatural market forces that do not 
bear any relationship to what you would see in a commercial 
environment, where the Government actually can manage things 
like profit, can manage salary caps and so forth, in ways in 
which you cannot do in the commercial space.
    I think the difference here is that in the Government 
market a large percentage of companies do a significant amount 
of work with the Government. The Government is their customer. 
So it is not easy just to exit the Government and go into the 
commercial marketplace.
    Senator Coburn. But, again, in a market-based system, it is 
the classic Walmart syndrome. If you become too big of a 
supplier to Walmart, you will not exist.
    Again, I want to get back to the markets. To me, your 
testimony does not ring true because if you want to be in this 
business, and there is no real market, the market is what the 
Government is going to say, it will have a negative effect. And 
so either you will go out of business and somebody else will 
come in to do that, and ultimately if enough go out of 
business, the market will--the price will rise because the 
Government will want to buy it.
    Mr. Soloway. Let me try to address that. I apologize if I 
am not being clear, because I do not disagree with you in 
general terms, but let me paint a slightly different picture.
    If you go back a little bit to the 1990s when we went 
through--this Committee was very key in passing some very major 
reforms to acquisition policy. The whole goal was to expand the 
Government's access to a much wider range of capabilities.
    What we have seen in recent years, absent the pressure of 
the budgets, is a bit of a regression from some of those 
efforts, and so that creates a problem.
    The Government market is different than the commercial 
market in a number of ways; companies in the Government market 
recognize that their margins are going to be lower than they 
might get if they were commercial companies. But in return, it 
is a relatively stable, predictable customer; it provides a 
reasonable degree of clarity to the space. But when that 
clarity and that predictability disappear, the tradeoff no 
longer becomes as viable.
    Senator Coburn. Oh, I agree.
    Mr. Soloway. The problem is it is not as easy to take a 
company that is doing engineering support for military systems 
and say, ``I am going to do engineering in a commercial 
world.'' That shift is not that easy. We have lots of companies 
in the Government space that are highly commercial and 
Government is a small customer. They are, in fact, going to be 
decreasing some of their investments in the Government space. I 
have many member companies that are beginning to look at other 
markets because of the uncertainty and unpredictability of the 
Government space.
    So, yes, you could argue that the markets will take care of 
themselves and these issues of margins. But for the people in 
the market today who are investing in supporting the mission of 
the U.S. Government, that answer is not actually a very helpful 
one because they are faced with the challenge of either finding 
an entirely new market or very significantly declining margins 
and, therefore, declining competitiveness and ability to drive 
value in the market that they have grown up in. So it is not an 
even switch.
    Senator Coburn. Again, but it is a choice to be in that 
market.
    Mr. Soloway. Absolutely, and they choose to be in the 
market to serve the Government.
    Senator Coburn. That is right. And what is in front of us 
as a country--with the unsustainability of where we are, that 
is not going to get better.
    Now, the timing of it, what we are talking about today, 
disrupting that and making people make poor economic decisions 
because of Congress' irresponsibility. I agree with you. We do 
not want that to come on the suppliers that are coming to the 
country. But what is a significant point is once you become 
reliant on the Government, it is very difficult for you. But if 
you were balanced in terms of where you sold and what you sold, 
it is less.
    So I understand the problems. To me, it is obvious. Your 
testimonies are obvious to me. Right? And they are to the rest 
of the people in the country. They know this is expensive, what 
we are doing. They know it interrupts planning. They know it is 
a poor way to run the Government. Everybody agrees with that. 
The question is: Will the grownups, like Tom and I, get 
together and solve the bigger problem so you do not have those 
problems?
    Mr. Soloway. Senator, could I just clarify one point? 
Because I want to be clear, if I was not in my testimony. There 
is nothing, no position we would take or statement we would 
make to suggest that we think we ought to be protected from the 
austerity we face. We recognize that piece.
    I think from a Government perspective, putting on my former 
Government official's hat, what I want as a marketplace 
supporting my missions is an innovative, agile, technologically 
current marketplace. The more the Government as a customer 
creates an unnatural marketplace, minimizes the abilities to 
drive value and reasonable margins, the less agile, less 
innovative, and weaker the market that is serving me becomes. 
So it is in the Government's interest to have that kind of 
marketplace.
    For a company other than large commercial companies, it is 
actually exceedingly difficult to be in both markets at once, 
because it is very expensive to do business in the Federal 
Government market. Accounting systems are entirely different. 
There are a lot of tremendous differences. But I just want to 
be clear. We are not expecting any protection. That is my point 
about ``ripping the Band-Aid off.'' We will plan to whatever 
scenario is out there. As Mr. Pattison said in the quote from 
one of the State budget directors, it was absolutely----
    Senator Coburn. I agree with you. I was not trying to give 
you----
    Mr. Soloway. No, I understand that. I just want to be 
clear.
    Senator Coburn. I actually have done Government contracts 
before when I was in the manufacturing business, and I decided 
I did not want to have anything to do with it, and I quit. In 
other words, I chose to not go as a Government supplier rather 
than to go as a Government supplier. Mr. Pattison, I have one 
other question for you, and then I am going to submit, if I 
may, Mr. Chairman, all my questions to the record.
    Looking at your testimony, outlining it, for example, 
education--Ms. Kelley talked about education, and you talked 
about education. Less than 10 percent of a State's budget is 
Federal education dollars. It seem to me the smarter the State 
is, given our dysfunction over the past 18 years, is to become 
less and less reliant on the Federal Government, because as you 
outline, the States know how to do this. They do it themselves. 
Senator Carper did it himself when he was Governor of Delaware. 
But when you have a question--and it is really a problem for my 
home State because a vastly greater percentage of our budget 
comes from the Federal Government than is in our local budget. 
And so there are ramifications. And there is this big movement 
in Oklahoma for us to start becoming independent of the Federal 
Government in terms of our needs. And so you are seeing this 
move, to not take advantage of things that are promised because 
the very high likelihood is, given our budget difficulties, 
there is going to be less in the future, not more, in terms of 
real dollars. I am talking absolute dollars.
    Do you have any thoughts on that?
    Mr. Pattison. Well, I think one thing is, depending on how 
the future goes, I have heard a lot of comments from State CFOs 
that they will probably--especially if new programs are 
proposed or money is moved--I would not be surprised if they do 
look at those more carefully than always automatically taking 
the Federal money.
    I will say, though, politically it is really hard in a lot 
of States not to accept the Federal funds.
    Senator Coburn. Yes.
    Mr. Pattison. In addition to that, they often feel----
    Senator Coburn. It is called an ``elixir.''
    Mr. Pattison. Yes, and they often feel they have to make up 
for it or there is an enormous amount of pressure, particularly 
if there are programs, for example, for special education and 
disabled children. So there are a lot of pressures on that----
    Senator Coburn. They are mandates.
    Mr. Pattison. Yes.
    Senator Coburn. That we have never met our obligation on 
yet.
    Mr. Pattison. And that is one thing I do have to tell you 
that States are extremely worried about right now, is they 
expect that cuts will come. We are willing to take the Band-Aid 
off, as Mr. Soloway has said, but we are worried about the 
requirements not changing and less money to do the same----
    Senator Coburn. Yes, I agree. And that is a legitimate 
criticism.
    I want to thank all of you for your testimony. I am sorry I 
cannot stay for the rest of the interchange between my two 
colleagues and you. But I will submit my questions for the 
record, and I would appreciate it if you would get back to me 
with answers. Thank you.
    Thanks, Tom.
    Chairman Carper. Dr. Coburn, I just want to thank you for 
adjusting your schedule to be here for this portion of our 
hearing. Thank you.
    Dr. Coburn mentioned that I spent some time as a Governor. 
Another guy who was a chief executive officer not of a State 
but of a big city is right here, and he served for a number of 
years as the Mayor of Anchorage, Alaska. I will not say that it 
has more people than Delaware, but it has a lot of people. And 
he brings that expertise with him, and a lot of others, and I 
am happy to recognize him for questions. Thank you. Thanks for 
being here, Mark.

              OPENING STATEMENT OF SENATOR BEGICH

    Senator Begich. Thank you very much, Mr. Chairman. We would 
describe it in Alaska, not that we would be ripping off a Band-
Aid, but we would be tearing off the duct tape. And we use duct 
tape quite a bit, and actually I describe that in somewhat of a 
serious way, that whatever we do on this budget will be 
painful. And I think people are not yet adjusting to it, and 
clearly the political environment has not adjusted. I had to do 
this when I was Mayor, and the former Governor, now Chairman of 
the Committee here, had to do it. We make tough calls. You have 
to deal with it.
    Mr. Soloway, I think what you were trying to describe, I am 
going to give you a couple examples. In the road construction 
business, you can take the low bid and potentially pay for that 
between two elements: Cost overruns, adjustments they would 
require during the project, or a product that later down the 
road--down the road literally--that you have to repair because 
it was poorly done.
    We switched to an effort called ``best value,'' which was 
we will pay a little bit more, but we will get a better 
product. But it is more competitive, because then everyone 
starts playing and you increase the pool. Because if you are 
just low-balling it, no one wants to do that, and they hope, 
they pray, and play off of change orders.
    Is that one of the examples that you are trying to 
describe, that that is another way to do the business, if you 
had a long-term plan, in service delivery and product delivery, 
that best value is another way to manage things to get the best 
value and also create a larger competitive pool, which gets 
more competition but gets better value for what you are paying?
    Mr. Soloway. I think it is precisely the point I was trying 
to make, and you have given an excellent example. I think the 
bottom line is there are certainly a lot of commodities we buy, 
from pencils to laptops these days, to other things that maybe 
even a few years ago had not been a commodity.
    Senator Begich. Right.
    Mr. Soloway. Low price makes eminent sense. But when you 
are dealing with anything complex, you get what you pay for, 
and we are finding more and more that the Government, partially 
because of these pressures and this uncertainty, is more about 
driving price down at the expense of long-term quality than it 
is about re-evaluating what we are doing. We are not critically 
relooking at the requirements saying, ``What can we do better? 
How do we do more with less? Or how do we do less with less? ''
    Senator Begich. Also, I think on the service end--again, I 
am asking this so I make sure I am thinking the same thing 
here. When we bid out services, we looked for first quality of 
the delivery of the service, for example, engineering services 
for the city to construct, versus price. Because if you are 
looking for quality, then you get a better product. Then when 
you put those bid packages out, you do not have people coming 
back for multiple change orders.
    But the issue in the service industry is--I will use 
engineering as an example. It takes an expertise to have a 
civil engineer, mechanical engineer, or any of those types of 
engineers that work on Government projects versus a private 
sector project. There is a difference. There are a lot of 
similarities. But there are sometimes different requirements of 
the paperwork that goes over here, the mill that we create, but 
to keep that kind of staff available, you cannot just go out to 
the marketplace tomorrow, put an ad in, and get a whole bunch 
of engineers, because one thing we do not have a lot of in this 
country because we do not do good STEM education--we are 
trying--is to have actually a lot of qualified, ready-to-go 
engineers.
    Is that a fair statement? One of the challenges with a 
service company is making sure you have a cadre that you can 
tap into, not just have them reassess what they are going to do 
from a company standpoint, they are not just going to keep them 
on line waiting for the Government.
    Mr. Soloway. They cannot afford to keep them on line.
    Senator Begich. Right.
    Mr. Soloway. I think your example is exactly right. The 
point is that we have a shortage of high-tech skills, of 
engineering skills in the country. Our member companies are 
competing primarily with the purely commercial marketplace for 
that talent. The Government is competing as well for that 
talent and struggling to get it because of the way the 
Government pay and other personnel policies are structured. So 
I think, yes, the dichotomy you reference is very accurate.
    Senator Begich. Let me ask Dr. Joyce, if I can, I think the 
way we do the business here--I mean, I come from the small 
business world. I would be bankrupt the way we do the business 
around here. As Mayor, I would have been kicked out of office 
without--because in local government, just kind of like State 
government, you cannot--in my case now--be thousands of miles 
away from your constituents. They will find you as a Mayor, and 
as a Governor I am sure they would, especially in Delaware. 
They would find you.
    Chairman Carper. In Delaware, our State is about 6 miles 
wide. In one part it is actually 35 miles wide. But there are 
not many places to hide, so you are right.
    Senator Begich. Yes, that's right.
    So I think your general testimony here from all of you--and 
I am going to focus, if I could, Dr. Joyce, and others that 
want to give some thoughts here. The system of how we do CRs, 
these half-baked kind of appropriation bills, budget 
resolutions that the President never even has to sign at the 
end of the day, which makes no sense to me, because there is no 
responsibility then. The system is convoluted and broken. Is 
that a fair statement based on the testimony? I heard 
systematically maybe at different levels, but is not that how 
we do these? There is no penalty. In other words, we keep doing 
CRs. So what? The penalty is taxpayers lose a ton of money. And 
we are a service company. That is what the Federal Government 
is. We deliver services. And if we cannot deliver them with 
some certainty, then it has a ripple effect, and the system is 
broken.
    So I guess I am interested in--we did a 2-year budgeting in 
the city. When I first got here, the Department of Veterans 
Affairs (VA) budget we worked on, we got them a 2-year budget, 
which makes a lot of sense. I know it would be problematic here 
because all the politicians want to have every pound of hide 
they can get out of every department for every inch and every 
month. But does it not make sense for us actually as a Federal 
Government to make a 2-year budget as well as finally do what 
State budgets do, local budgets do, and the private sector, 
operating budget, capital budget? Does that not make more 
sense?
    Mr. Joyce. Well, two responses to that.
    On biennial budgeting, which has been proposed for a long 
time--I mean, when I worked at the Congressional Budget Office 
in the early 1990s, there were active proposals for biennial 
budgeting. There was even one that came from President Clinton. 
On biennial budgeting, I think the first thing to say is that 
we do not actually do annual budgeting very well.
    Senator Begich. We do not monthly budget.
    Mr. Joyce. I mean, the benefits of biennial budgeting were 
typically sort of stated as a counter to annual budgeting. But 
I would say we do not even do annual budgeting very well.
    Senator Begich. Well, that gives us a good basis to start 
from.
    Mr. Joyce. Right. And I think the thing that one would have 
to keep in mind on biennial budgeting is that in the first 
place it would create more certainty, but it would only create 
more certainty if it worked as advertised. The way it is 
advertised is that you would budget in, say, the odd-numbered 
year and then you would do oversight in the even-numbered year.
    Senator Begich. Right.
    Mr. Joyce. You would have to make sure that people did not 
come in and do wholesale changes to the budget in the second 
year, because at that point you just have a biennial process on 
paper.
    Senator Begich. Good point. Yes.
    Mr. Joyce. And I think on capital budgeting, I think that 
the concern that I have heard expressed is only that it would 
be sort of difficult to enforce what was called capital and 
what was called operating in the Federal Government context.
    Senator Begich. I would totally disagree with any Federal 
agency that says that. State governments do it, local 
governments do it. We can tell the difference. People can tell 
the difference between capital--so I have heard that same 
thing, and every time an agency brings that up, I say, ``Are 
you kidding me?'' The private sector does it. I mean, in my 
household, I know what a capital budget--I mean, a roof is a 
capital budget.
    Mr. Joyce. Right.
    Senator Begich. Putting a string of lights at Christmastime 
is not.
    Mr. Joyce. Right.
    Senator Begich. And I think as long as the parameters are 
there, right, the base, then they could actually do a capital 
budget because when you think of our budget and the debt that 
we accumulated, part of that is for capital. We are building 
all these roads and ports. This is capital investment. It is 
like when we buy a home. But people view it as, oh, we are just 
borrowing money to operate the Government. Yes, but we are also 
investing, and that capital investment is no different than the 
private sector would do borrowing from the markets, as well as 
an individual would do when they want to buy a house.
    Now, some are lucky and fortunate enough to pay cash for a 
house, but a majority of Americans do not. They borrow. But to 
pay the utility bills, they use operating dollars. It seems so 
simple to me.
    Mr. Joyce. Well, and I agree with you absolutely that there 
needs to be more attention paid not to just spending as 
spending, but asking the question, What is it we are buying for 
that spending? A dollar of spending for consumption is not the 
same thing as a dollar of spending for investment. And that is 
where having some distinction between at least what is 
investment spending and what is consumption spending is a 
useful thing to do.
    Senator Begich. Can I ask one last question, Mr. Chairman? 
This is maybe a set-up question to any of you that want to 
answer this, because I will editorialize in the question.
    I do not think Congress does enough oversight in this area. 
We are always just running and moving from place to place. And 
I appreciate the Chairman's focus here not only today but on 
multiple levels. I have seen multiple hearings being set up, 
and it is about oversight. I do not think Congress does a 
really good job. We do oversight on the crisis, but we never do 
oversight on the operations. We are good with a crisis. I mean, 
if something happened tomorrow, we would be all here sitting 
around, yelling screaming, and then the next week, new day, new 
story.
    Do any of you want to comment? And you can criticize us. I 
am OK with that. I have alligator skin. Once you have survived 
being Mayor, once you have survived being Governor, huh, this 
is an easy job compared to that. Give me your thoughts. I just 
do not think we do enough of this kind of review and say, this 
program should not exist anymore because it is inefficient. 
Give me your thoughts on that. And I will stop there, Mr. 
Chairman. I apologize.
    Mr. Joyce. Well, I have a couple things I could say, but I 
do not want to monopolize. But I think you are exactly right. I 
think the reason for that is because there is no incentive to 
do oversight, it is not sexy. The kind of oversight----
    Senator Begich. We think it is. Right?
    Mr. Joyce. Well, I know. This is a great Committee for 
that. But many other committees do not view it as sexy.
    Senator Begich. Right.
    Mr. Joyce. And they view oversight as defined as sort of 
rooting out the big-headline kind of problem. And the real work 
of oversight is hard work. It is getting sort of into the 
weeds.
    Now, I think that some of the things that have happened in 
the past several years--for example, the Government Performance 
and Results Act (GPRA) and then the Government Performance and 
Results Modernization Act--are trying to get at that kind of 
issue, trying to sort of emphasize how well it is the programs 
are working. But, still, I do not think there is nearly enough 
attention paid in forums such as this on questions of what 
programs are working and what programs are not working.
    Senator Begich. Does anyone else want to comment?
    Mr. Soloway. I would like to just second what Dr. Joyce 
said about the definition of ``oversight'' and the hard work 
involved. As he said, a lot of oversight is about rooting out 
bad actors, which is important. It is certainly one of the 
responsibilities of the Committee. But a lot of it is also 
delving into understanding not only what programs work and do 
not work but why they work and why they do not work and, 
therefore, what changes are needed in personnel policies, 
organizational structures, or whatever it might be, to learn 
those lessons and apply them later on. And too often it is a 
quick hit and move on. With discussions like this where you 
really get into the impacts of the budget process on management 
of the agencies, you begin to see where a lot of those problems 
are and things that need to be done to address it, as opposed 
to just pointing to bad actors and moving on from that.
    Mr. Pattison. I will just add, Senator, that there are a 
lot of States and localities, including Delaware and Alaska, 
where we have seen some really exceptional examples, and, 
frankly, strong incentives, where they provide really good 
oversight. And it is certainly not perfect, but I think there 
are some examples that I would love to see Federal agencies and 
departments and, of course, you in the Congress look at as 
models for looking at when programs are effective and what 
changes should take place to really put the money toward 
results and effectiveness and not just appropriate on a short-
term basis for a program.
    Senator Begich. Will you share those with the Committee at 
whatever time?
    Mr. Pattison. Certainly.
    Senator Begich. Great.
    Mr. Pattison. I would be happy to.\1\
    Senator Begich. Mr. Chairman, thank you for letting me go 
on a little longer there. I appreciate it.
---------------------------------------------------------------------------
    \1\ The information provided by Mr. Pattison appears in the 
Appendix on page 99.
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    Chairman Carper. You can go on longer almost any time, 
including this time. Thank you really for the valuable 
perspectives you bring here, and a lot of common sense.
    I am Presbyterian, but I have a news break here. In terms 
of uncertainty, there is less uncertainty in the Vatican, and 
apparently our Catholic brothers and sisters are going to have 
a new Pope. He is from Argentina, and his name is--he is not 
Irish. When I say this name, you will say, ``This guy is not 
Irish.'' His name is Jorge Bergoglio, and he is going to go by 
``Pope Francis.'' I do not know if that is in honor of St. 
Francis of Assisi, who has a great prayer. I will not say his 
prayer today, but it is one that we could probably take to 
heart here in our work in the U.S. Senate. So I just wanted to 
wish him well, and now we will go back to our questions.
    Senator Begich. They made a decision in a timely manner.
    Chairman Carper. Yes, they did. Something we can learn. 
[Laughter.]
    There you go. No sequestration there, no fiscal cliffs. 
They just did it.
    I have a number of questions that my staff has been good 
enough to help prepare, and I am going to go to those in a 
minute. But I want to followup on a little bit of what Dr. 
Coburn and Senator Begich were saying.
    I am not one who likes just to focus on symptoms of 
problems. I like to go to the underlying cause. One of my 
favorite things I like to do, as my staff knows, is ask people 
who have been married a long time, ``What is the secret for 
being married 50, 60, or 70 years? '' And I get funny answers, 
hilarious answers. I almost use them in a comedy monologue 
sometimes at home. I am not going to go there today.
    But I get some great serious responses, too. One of my 
favorites from over the years is the two C's. The first time I 
heard that, I said, ``What do you mean, the two C's?'' And the 
answer was, ``Communicate and compromise.'' And I really think 
part of--if you go back not really to just symptoms but the 
underlying causes, we do not do a real good job here of 
communicating. And some of us are better than others at trying 
to find the middle and reaching a compromise.
    I am happy that the President has been reaching out to 
Republicans and Democrats on Capitol Hill. I think he is doing 
that again today. He took some of our colleagues out to dinner 
last week. I talked to several of them. They thought that was 
good. They had a good conversation, and I hope we hear and see 
a good deal more of that, and that is going to be helpful.
    At the end of the day, we have to figure out how to 
compromise on some of these issues. And one of the things I 
have asked my staff to do is to literally go through your 
testimony and pull from that just some of the most telling, 
undeniable truths that you are saying today so that when we 
find we are struggling to get to a compromise on a continuing 
resolution, when we are struggling to get to a budget 
resolution, I will be able to say to my colleagues, ``All 
right. I know this is not easy, this is hard, but just keep in 
mind these four or five points. And that is why it is important 
for us to not give up.''
    In terms of solutions, let us talk a minute about 
solutions, and then I will go to a list of more prepared 
questions. But Senator Begich has raised an idea that we both 
heard Senator Enzi of Wyoming bring forth for a number of 
years, the idea of a capital budget, maybe a biennial budget. 
And we have had some discussions of that. I just want us to 
drill down on that a little bit more. He is one of the most 
thoughtful people we have here, and I think he is either a CPA 
or accountant by training, and a Mayor of Gillette, Wyoming, in 
his past. So he comes at it from a number of different 
directions. But just help us drill down. I will give you an 
example.
    We have a whole lot of surplus property, like tens of 
thousands of pieces of Federal property, that we do not use or 
we underuse. We pay utilities for them, have security for them. 
We spend a lot of money, maybe a couple billion bucks a year. 
But we do not really need these pieces of property. Some of 
them are buildings, some of them are not. Some of them are in 
great shape, some are not.
    But one of the reasons we spent a whole lot of money for 
space for the Federal Government is because we are on a cash 
basis of accounting. And you say to an agency, you can go out 
and lease a place for a year or two, and that is going to be--
that is fine. Or you can go out and buy a place for forever. 
But if you go out and buy a place--and let us say it costs, I 
don't know, $1 million--or you can lease a place for $100,000 a 
year. Within about 10, 11, 12 years you have more than paid for 
the place by what you are paying for it. But the way we run our 
accounting system here, a cash basis of accounting, we 
discourage agencies from making a smarter decision. That is 
just one example where we waste money in terms of space 
allocation and acquisition of buildings.
    But go ahead, just help us drill down on some solutions. 
One of them could be what Senator Begich has mentioned here. 
What are some others? In other words, if we could wave a magic 
wand and get everybody around here to communicate and 
compromise, that would certainly help. I think the President 
could play a big role in that, and I am encouraged with the 
role he is playing. But just help us with some common sense 
solutions here. Go ahead, please, anybody.
    Mr. Soloway. Senator, one of the points that we raised in 
our testimony--and I think it is related to the question you 
are posing--is in the face of uncertainty, what can we do to be 
smarter about how we manage? And one thing, which seems simple 
but is unfortunately not terribly prevalent in the Government 
environment today, to build on your communication theme, is to 
really--and this Committee play a significant role here--lead 
and even direct agencies to get with their stakeholders. There 
are companies, non-governmental organizations (NGOs), 
universities, others who work with Federal employees every day 
of the week together to figure out how to drive sustainable 
savings as opposed to cuts. It is one thing to cut the cost of 
something. But if you are not really looking at it 
strategically, the cut may be temporary, it may drive costs up 
later on, or it may be unwise. But if we could create an 
environment in which all of the stakeholders are actually 
collaborating, to look at program X, everything we are 
requiring in it, and I as a company give up some revenue 
because, that does not really add value to what you are doing, 
and the Government says, well, I do not really need to do this, 
you actually have a much better chance of getting at some 
sustainable savings and actually some paradigm shifts in how we 
do business. Right now it is so siloed, so distant, and 
exacerbated by uncertainty, but in the near future, something 
like that to help build a different environment I think would 
be very helpful to agencies.
    Chairman Carper. Thank you. Others, please?
    Mr. Joyce. The other thing--and I mentioned this briefly in 
my testimony, but Senator Begich's question really, sort of 
suggested this to me again--is that when you are talking about 
making more certainty available on a longer-term basis, you are 
talking about something like biennial budgeting. Biennial 
budgeting in its kind of classic sense is saying you are only 
making budget decisions every other year as opposed to every 
year. But there is also the issue of how long you allow 
agencies to have funding available; that is, if we made more 
funding available on a multi-year as opposed to an annual 
basis, or even on a no-year basis, that would mean that there 
would be less serious consequences for agencies when they came 
up to the sort of end of the fiscal year because not as much of 
their money would be at risk.
    And when I was doing this IBM report, when I went out to 
talk to people in agencies, the agencies that had more money 
that was available to them to obligate over a longer period of 
time were agencies that had a much less difficult time dealing 
with this problem, and they had much more flexibility when the 
time came when a CR was about to run out, because a lower 
percentage of their funding was at risk at that point.
    Chairman Carper. Thank you. My father used to say, to 
followup on what you said--I remember all these adages that my 
mom and my dad raised us with. You probably can, too, from your 
own childhood. But my dad used to say, ``Work expands to fill 
the amount of time we allocate to a job.'' And I would like to 
think that if we had a biennial budget, 1 year to legislate, 1 
year to do oversight, I would like to think we would get it 
done--the first year we would do what we are supposed to get 
done in terms of budgets and appropriations. That may not work 
that way. We may think, well, we actually have 2 years here, 
and we will just, like, let it bleed into the second year.
    All right. Please?
    Mr. Pattison. Well, one thing that we find with the 
uncertainty--and I am not sure exactly the best solution, but I 
think it is helpful to point it out. From a State and local 
government perspective, in addition to the uncertainty or the 
very short-term CRs and that type of thing, there are the 
communication issues. And it is totally understandable. I am 
not being critical of the Federal Government or Federal 
agencies, but they are afraid to say or communicate anything 
until something is actually passed. And so it compounds the 
problem we have at the State and local level because not only 
is there uncertainty because we do not know amounts, we have to 
wait for a CR or the fiscal cliff to be dealt with.
    In addition to that, once that occurs, then we begin 
getting communications of how to technically implement and make 
the actually changes, or we get the exact amounts and that type 
of thing.
    So I think a lot of problems we have, especially in that 
regard, and allow us to do more long-term planning, which could 
be beneficial in many ways and decreases costs, would be to end 
the compounding of the uncertainty by somehow improving the 
communication over time, too.
    Chairman Carper. Ms. Kelley.
    Ms. Kelley. Chairman Carper, I have been trying to think of 
suggestions for you since I learned about the hearing last 
week, and I do not like telling you that I have a blank piece 
of paper right now. But I am still thinking, so I will send 
them as I think of them.
    But for me, it is trying to figure out how to not put 
Federal employees in the middle of the uncertainty. States, 
governments, and the American public are who are getting caught 
in the middle of all this right now. I just think it is so 
disheartening for the workforce and it will be for the country, 
once it hits. Because sequestration is different than a 
shutdown, of course, the severe impact and the immediate impact 
of it has not been seen yet. But it will be, and then I think 
the American public is going to be saying, ``What the heck is 
going on down there?''
    When I thought about the multi-year budgeting, I do not 
really have a position on it one way or the other because, as 
we have all noted, we have not been able to get it right for an 
annual budget yet. So I worry a little bit about trying to set 
the goal for a 2-year until we can do it for the 1-year. But we 
will keep working on it at NTEU, and I will send any ideas that 
we have.
    Chairman Carper. OK. That would be great. Thanks.
    All right. A couple other questions I would like to ask 
while you are still here with us. One of the those is that the 
types of budget issues that we are discussing today can be 
difficult for a lot of folks to understand. And for those 
people at home and those that are here with us today, could you 
just give us a couple--maybe a real sort of basic definition of 
what a continuing resolution is and how it works?
    Mr. Joyce. Well, a continuing resolution, a classic 
continuing resolution, is just a short-term appropriation that 
permits spending to continue until a full-year appropriation is 
enacted. And so in a sense, it is just allowing you to continue 
doing what you are already doing. And one of the problems with 
that, of course, is that it freezes past priorities in place, 
and also it does not permit for increases, inflationary 
increases, for example, that you know are going to occur; or in 
the case of agencies where they are going to experience, let us 
say, an increase in the demand for their services, it does not 
enable them to sort of adjust for that. But in a classic sense, 
it is just a short-term appropriation that just allows you to 
limp along at the prior year's spending level.
    Chairman Carper. That was nice. I would call it Continuing 
Resolution 101. Every now and then you hear a great truth, and 
I ask one of you to repeat something you said today, that was 
especially good. But when I hear from witnesses a great truth--
today, several of them, actually. But one of the great truths 
we had from a witness about a year or two ago, Dr. Alan 
Blinder, former Vice Chairman of the Federal Reserve, now back 
to teaching economics at Princeton, when I asked him about 
deficit reduction, he had been saying that the 800-pound 
gorilla in the room on deficit reduction is health care. If we 
do not get our arms around health care costs, we are doomed. 
And I just asked him as a followup question what we ought to do 
about that. And he said, ``I am not a health economist. I am 
not a health expert. Here is my advice to you. Find out what 
works, do more of that.'' That is all he said. ``Find out what 
works, do more of that.'' I said, ``You mean find out what does 
not work and do less of that?'' He said, ``Yes.''
    But the problem with a CR, if we continue these CRs for 
long enough, we are continuing to do stuff that does not work, 
even though we know it does not work. And maybe when we have a 
better idea we cannot fund that better idea. That is not very 
smart.
    A question, if I could, for Ms. Kelley and Dr. Joyce. I 
think there was a story in the Washington Post a month or two 
ago, in late January, but it talked about the time that 
agencies spent planning for various budget scenarios. And the 
story I think quotes one manager, I think at the Department of 
Homeland Security, who said these words:
    ``First we are told not to develop plans for sequestration. 
Then we spent 7 days a week coming up with them, and the cuts 
got postponed. Now we are doing it all over again with new 
targets. It is taking away from what we need to be getting 
done.''
    That is a pretty good quote, is it not?
    That I think kind of says it all. It sums it up pretty 
well. And I would just ask you to talk a little bit, both of 
you, about how much time gets eaten up by preparation for CRs, 
fiscal cliffs, sequestrations, and so on, and the toll it takes 
on the real missions, the real work that we are supposed to be 
doing. Please, Ms. Kelley, Dr. Joyce.
    Ms. Kelley. I think we will probably never know the real 
number of hours or months that go into all this, but without 
exception, I believe every agency has been doing these what-if 
scenarios since last summer when they saw January 1, coming as 
the first sequestration deadline, and then when it got moved 
forward, and then for each CR. It would be pretty irresponsible 
of them not to do that. I mean, they really have to. But to do 
all that work and then have to do it all over again is a huge 
waste of time. And it is a distraction, of course, for the 
agencies from what their real mission is and what they are 
supposed to be doing.
    For the front-line employees, it is a huge distraction. 
They keep hearing the noise about a Government shutdown, now 
about furloughs. And that is a huge distraction and, again, 
that time will just never, ever be measured. But it takes away 
from the energy and the focus and the creativity, of what it is 
they come to work every day to do on behalf of our country.
    Chairman Carper. Dr. Joyce.
    Mr. Joyce. I was told recently that I had been overusing 
the word ``stupid,'' so----
    Chairman Carper. I am sorry. Say that again. Did you call 
me ``stupid''?
    Mr. Joyce. No, I did not. [Laughter.]
    I was told recently I had been overusing the word 
``stupid'' in describing what we are doing in the budget 
process, so I will just use words like ``counterproductive'' 
and ``dysfunctional.'' But I think, the issue that you are 
putting your finger on is one of the best examples of where the 
budget process is counterproductive, because we are either 
spending a lot of time planning for something that does not 
happen, in which case it is a complete waste of time, or we are 
spending a lot of time planning for something that does happen, 
in which case it happened and it was a bad thing, given a 
Government shutdown.
    In either case, it is not a good thing, and we just put 
agencies through this in the spring of 2011 when they had to 
develop furlough plans and plans for dealing with a Government 
shutdown. And now, 2 years later, they are doing it again.
    I suppose the good news is that, given that we had late 
budgets in many prior years as well, OMB did not make them do 
that every year. But as Ms. Kelley suggests, any rational 
agency, even if they were not told by OMB to do this, should 
have been thinking, once they saw all the uncertainty out 
there, ``What are we going to do?'' And there was a point at 
which OMB was saying--and it was in a sense quite reasonable--
``Do not plan for this because we do not know what is going to 
happen,'' because they knew as soon as they pulled the switch, 
it was going to lead to all this wasted time. But I do not 
think that means that agencies were not doing it, because I 
think there are a lot of agencies out there that were quite 
concerned about what would happen when the time came when they 
did not have any funding.
    Then OMB pulled the switch, and at that point everybody 
kind of went into high gear, as you suggested from your quote, 
trying to develop these plans. And there is nothing about 
developing these plans that contributes to the mission success 
of any of these agencies. And it is all, as I suggested, a 
completely self-inflicted wound.
    Chairman Carper. A followup, if I could, for Ms. Kelley and 
Dr. Joyce, and then I will probably ask others to just chime in 
if you want to. But kind of focusing on morale, in your 
testimony, Ms. Kelley, you note the noticeable decrease in 
Federal employee morale and job satisfaction over the past 
several years. I would like to quote the results of an 
international study reported on National Public Radio (NPR) a 
year or so ago. When they asked people what they liked about 
their job, thousands of people around the world, some people 
liked getting paid; some people liked the benefits, vacation, 
health care, whatever, pensions; some people liked the folks 
they work with; some people liked the environment in which they 
work. But do you know what most people said? What they liked 
most about the job was they liked the idea that they were 
working on something important and they were making progress.
    Think about that. They liked the notion that they were 
working on something important and they were making progress, 
and I think part of the impact on morale for Federal employees, 
I think everybody--I do not care whether you are in 
agriculture, transportation, health care, housing, defense, or 
whatever. The work that those folks are doing, they are 
servants. I am a servant, they are servants. The work they are 
doing is important, and I think we are impeding their progress 
and impeding their ability to make progress for our country in 
their particular line of work.
    But go ahead. I am going to ask Ms. Kelley, if you would, 
from your perspective, how has the morale decreases affected 
employee productivity? And I do not know if there is any way to 
put a cost on it, but I would like to ask if you think there 
might be. And we will ask our other witnesses for any comments 
they have. Thank you.
    Ms. Kelley. I think there is definitely a decrease in 
morale, and it has been documented over the last couple of 
years. I think that is for a number of reasons, including 
Federal employees being under a pay freeze for the last 2 years 
and seeing nonstop efforts to continue that pay freeze well 
into the future by some.
    They also see that they do not have the resources in their 
agencies to do the important work that they are trying to do 
every day. Most agencies have seen the numbers of employees 
that they have decrease, and so the workloads increase, and 
their ability to do the quality work they are trying to do, 
they are not able to do that.
    As to the costs of the productivity, I believe that Federal 
employees, most of them rise above that. I think kind of in 
spite of the bad morale, they continue to do the work they do, 
and they do it as best they can with the resources that they 
have. Most Federal employees come to work for the Federal 
Government because they want to serve the public, and they 
believe in the mission of their agency. They believe in it. No 
matter how bad morale is, they believe in the mission of the 
agency. And what they are looking for is the support daily from 
the leadership in the agency as well as from Congress and 
everyone who needs to support----
    Chairman Carper. And even the President.
    Ms. Kelley. And even the President, yes. That is what they 
are looking for.
    So I actually believe that productivity in the Federal 
Government has not gone down in spite of the morale, and I 
think that is to the credit of the employees.
    Chairman Carper. All right. Does anybody else want to 
respond to that? Again, because we are trying to figure out 
how--about has there been a morale decrease among Federal 
employees and is there any way to put a cost on that. Anybody?
    Mr. Joyce. Well, I would just say I do not think you can 
place any kind of precise cost on it, but I think that the 
people that I talk to certainly suggest that, there are a lot 
of people spending a lot of time talking about this 
uncertainty. And I am not suggesting that as a criticism of 
Federal employees. I would think that in any workplace where 
you were facing the kind of uncertainty, the prospects of 
furloughs, and everything else that Federal employees are 
facing, it would be reasonable for a certain percentage of each 
day to be spent sort of talking about what is going to happen. 
And I think that is a decrease in productivity, and certainly 
it is the case that it does not have a positive effect on 
morale. And as I suggested in my testimony, the people that 
tend to leave Federal service for these reasons are the people 
who have options to do other things, and some of those people 
are the very people that you would least want to see leave.
    Chairman Carper. Good point.
    Anything else before I go to my next question, Mr. 
Pattison?
    Mr. Pattison. I just want to add really quickly from a 
State and local perspective that it is more along the lines of 
where resources are being devoted, and what we see at the State 
and local level, particularly when there is the uncertainty 
from the Federal level--and obviously the programs that are all 
or in part funded from Federal funds--is really time being 
spent more on short-term activities or dealing with how they 
are going to deal with the sequester and so forth that really 
prevents you from devoting the time where you want, which is 
effective programs, getting the results, and he goals you want.
    Chairman Carper. OK. Good point. All right.
    This will be a question for our entire panel. Looking at 
examples of waste that result related to uncertainty, one of 
the goals for this Committee--and I think it is certainly one 
shared by Dr. Coburn--is, as I said earlier, getting better 
results for less money or at least better results for the same 
amount of money for everything we are doing, from A to Z, in 
this Government.
    From what I have heard today, it seems like we are often 
doing the opposite, and we are setting up agencies to deliver 
worse services, and sometimes at a higher cost for taxpayers 
because we are making it almost impossible in some instances 
for them to plan. And this is coming at the same time that we 
are talking about cutting services in programs that a lot of 
Americans actually do rely on.
    So let me just ask each of you from your own perspective, 
from you own experience, what has been the clearest, maybe the 
most startling example that you can think of, of this kind of 
waste and inefficiency that we are talking about today? Think 
about that. If you want to give that one some thought and come 
back to me on the record, that would certainly be fine. But if 
you have anything that you want to offer right now, you can.
    But I find when we are struggling to get to a compromise on 
a continuing resolution/mini omnibus appropriations bill for 
the rest of the year, when we are struggling to get to yes on a 
continuing resolution with the House, when we are struggling to 
figure out how to avoid another debt ceiling crisis, I just 
want to have a whole, if you will, quiver full of arrows, each 
of which provides a startling example that will just make my 
colleagues think, ``No, that is crazy. We cannot continue to do 
that. We have to find a way to get to yes.'' So that is what I 
am looking for here. And I will be happy to take those for the 
record, but put some thought into it, and give me a bunch of 
good examples, really good examples, please.
    I have sort of a followup question. I think this would be 
for all of our witnesses, maybe especially for Mr. Pattison and 
Dr. Joyce. Not many people like uncertainty. Some do, though, 
but not many people like uncertainty, and that certainly 
includes planners.
    But listening to the testimony, I get a sense that not all 
uncertainty is created equal, and that the budget uncertainty 
of the past few years is actually worse than usual. Somebody 
mentioned how many years we have gone with only four or five 
times when we have passed all the appropriations bills. I 
remember when Jim Wright became Speaker of the House, 
succeeding Tip O'Neill a number of years ago, I was a House 
Member, and one of the things he said when we elected him 
Speaker of the House was that we are going to pass every single 
appropriations bill this Congress and put it on the President's 
desk. And you know what? We did.
    So I have felt from that time ever since, if a leader says 
that this is what we are going to get done and there is no 
stopping us, we are not going to give up, says that early, not 
at the last minute, every day drives that home, you can get 
that done. And it does not have to be the Speaker. It can 
actually be the President or a Majority Leader or not.
    But, anyway, going back to the question, it sounds as 
though in past agendas and past agencies and their State and 
local partners did not know exactly when they were going to get 
their funds, but they usually knew about how much they would 
eventually get. Now it is almost anybody's guess what eventual 
funding will be as well as when is it going to show up. And I 
just want to know, am I hearing that right? If you want to 
discuss this shift, please do, and how it makes the uncertainty 
harder to work with. So it is not just a question of when we 
are going to get it but how much will we get and when are we 
going to get it. Please.
    Mr. Pattison. Well, what I see from a State and local 
perspective that I think illustrates the problem is the reason 
it is getting worse is because our money is tighter. Obviously, 
the recession was a big cause. But we certainly forecast and 
foresee that our growth rates of revenue and budgets at the 
State level are probably going to average about half what they 
did for the period after World War II to the beginning of the 
Great Recession.
    As a result, when money is that tight, the uncertainty 
makes it much worse. When you have a little more money, you 
have a cushion, as you know having been Governor, Mr. Chairman, 
and they really have no cushion, and they do not expect to for 
years. And there is really no ability to move money, so those 
cash-flow issues, the lost money from not being able to save 
money on certain contracts, the roller coaster, up-and-down 
staffing, and all these other issues, causes an enormous amount 
of problems and, frankly, costly problems that could be covered 
over a bit when you had a bit of a cushion. And since the 
cushion no longer exists, the uncertainty is really going to 
make problems even worse for State and local government.
    Chairman Carper. OK.
    Mr. Joyce. I would say, three things to sort of document 
the fact that it has gotten worse. The first is to just 
reinforce the last point that you made--which is that the issue 
now is one of both timing and amount--it used to be that 
agencies were pretty sure how much money they were going to end 
up with. They just were not exactly sure when they were going 
to get it. So they could limp along under a continuing 
resolution, but they knew what the full-year appropriation 
looked like.
    Now, especially with sequestration, they do not know what 
the full-year appropriation looks like, and I would think that 
trickles down to State and local governments and contractors as 
well.
    The second is that it used to be that some appropriation 
bills became law prior to the beginning of the fiscal year, and 
others might be bundled up in a continuing resolution. Recently 
we have a situation where no appropriation bills become law 
before the beginning of the fiscal year, and, therefore, it is 
the entire appropriations process that is late.
    And the third is that we tend to be operating under CRs for 
a longer period of time, that is, further into the fiscal year. 
I had lots of people in agencies tell me that they have sort of 
adjusted to CRs as long as they did not last past the beginning 
of the calendar year. But once it started getting into February 
or March, it started to create much bigger problems. And now we 
have a lot more CRs that go into February, March, or April.
    Chairman Carper. OK. Mr. Soloway.
    Mr. Soloway. Mr. Chairman, if I could just add to that--and 
I agree with both comments--I think there is another piece to 
this puzzle which is more than just the question of timing or 
amount of money. And I think it has to do with the times we are 
in. Unlike 15, 20, 25 years ago, technology is moving at what 
they call ``clock speed'' now. Needs are changing dramatically 
very quickly, but we do not have a system that can respond very 
quickly to those changing needs. In fact, we have a system that 
tends to get bottlenecked and not move forward. We have a 
confluence of a whole bunch of pressures from the demography of 
the Federal workforce, mission requirements of Federal 
agencies, all of these things coming together at a time when 
the system supporting it seems to not be--well, I will not say 
``seems''--in fact, is not moving efficiently forward. So that 
you have a bunch of factors coming together.
    I think from a private sector perspective, there are two 
things that when I think about this or we talk about it, it 
should not surprise anybody--I know it does not surprise you or 
the other Members of the Committee--there is a lack of 
confidence, whether it is on the Federal workforce part or on 
the part of industry relative to the Government. It is 
analogous to the economy, writ large. People ask, ``Why is it a 
jobless recovery? '' or ``why has the jobless rate not come 
down faster? '' And the answer, the economists say, is because 
industry is not yet confident that this is a recovery that is 
going to hold.
    Well, play that back down at the Government level. We are 
doing it to ourselves in the sense of not being able to provide 
any level of certainty or predictability to drive confidence, 
whether it is of the workforce or of the outside players who 
support the Government.
    The final thing I will say is we recognize in our industry 
and I think everybody recognizes that the debate that is taking 
place is a fairly seminal one. There are some very fundamental 
differences of opinion in Congress and the Administration over 
how and where the money ought to be spent. And I think as 
outsiders we sit back and say, ``We understand that, but at 
some point you have to make a decision.'' And it is that lack 
of decision, that inability to come to that closure, that is 
causing everybody to step back and say this is a broken system.
    Chairman Carper. OK. A couple more and we are done.
    I am going to come back to you, if I could, Mr. Soloway, 
and this deals really with the impact on contractors. In your 
testimony, you highlight the effects that this crisis budgeting 
has on the economy at large. You, in fact, touched on this 
again. For my entire career, I think I have been focused like a 
laser on how do we create a nurturing environment for job 
creation and job preservation. As a recovering Governor, I care 
a whole lot about job creation and job preservation. I think 
the best thing you can do for anybody is to make sure they have 
a job.
    Guys and gals like me, Governors, Mayor, Presidents, 
Senators, we do not create jobs. What we do is help create a 
nurturing environment for jobs: a well-equipped workforce, the 
kind of broad infrastructure that we need, access to capital, 
common sense regulations, reasonable tax levels--all those 
things that are part of that nurturing environment.
    A few would argue that the Federal Government plays an 
integral role in our national economy in decisions that we make 
or do not make and are felt far outside of Washington.
    I would just like to hear a little bit about what your 
member companies are telling you regarding holding back on 
hiring or investment because of the budget uncertainty, and 
specifically the role that these continuing resolutions and 
potential fiscal cliffs and shutdowns play in their 
decisionmaking, if you would just a little bit.
    Mr. Soloway. Sure, and I think there is some of that in my 
written testimony. There has been a palpable effect on hiring. 
There have been both layoffs, some of them very public in the 
larger public companies, many of them not public as there are 
smaller companies involved, and tens of thousands of positions 
cut over the last couple of years.
    I have talked to 15 or 20 of our companies just in the week 
or so since we got the call about this hearing to find out what 
they were doing, and I think I may have mentioned in the 
written statement that small businesses are telling us they 
have 6, 8, or 10 positions that they are simply not filling. 
These are positions that would be considered ``overhead,'' and 
that are not revenue generating. They consider them critical to 
being able to build their infrastructure, to build the company 
and so forth, but they are simply not able to justify the 
investment. They are not confident enough in what is going on 
that they can cover those costs. So it is a combination of jobs 
being lost and hiring not taking place.
    And then the third piece, it is always a challenge--I think 
Senator Begich mentioned this when he was here. It is always a 
challenge in the services industry, which is what we represent, 
to keep a bench of people who are not revenue generating. There 
is only a certain amount of time that you can keep somebody on 
board who is not actually generating revenue. What our 
companies are telling us is that period of time, which has 
always been limited, is more limited than ever, because the 
pressures to drive costs down to the bone, some of which are 
perfectly appropriate, they are competitive, others of which 
might be unhealthy, are affecting their ability to keep people 
on board. And as we have these long procurement lead times--we 
had one case I mentioned, the U.S. Agency for International 
Development (USAID), notified some contractors just a few 
months ago that bids that they submitted in June 2010 would not 
be decided on until at least June 2013. That is 3 years from 
the time they submitted the bid. They are supposed to have key 
personnel by name and resume, not just by capability. They are 
supposed to be able to turn on a dime as soon as the award is 
made and say, ``I am ready to go to work.'' It becomes an 
impossibility because you cannot hold onto those people. They 
go to other positions. You need to redeploy them.
    So there is a whole range of employment impacts that are 
driven by these delays that are negatively impacting the space.
    Chairman Carper. Good. Thank you for that.
    A question for Mr. Pattison, and then I have one for the 
whole panel, and I think we are just about done. Again, as a 
recovering Governor, I know there is little wiggle room when it 
comes to putting together and implementing a State budget. 
States cannot engage, for the most part, in deficit spending, 
although some figure out how to do it. It is a zero sum game.
    With that in mind, what are you hearing from States 
regarding specific programs that are at greatest risk of their 
missions being compromised under budget uncertainty? And how 
are the States addressing those risks? You spoke to this 
already to some extent, but just come back to it, if you would.
    Mr. Pattison. Well, there are quite a few examples, 
although one thing I want to preface this with is one thing 
that we are finding is that it is kind of how the shell game is 
working. And what I mean by that is some of those things that 
could involve the worst harm, they are able to move monies and 
try to prevent that. But what you are not seeing necessarily is 
maybe the State park has closed hours or money that goes to 
libraries, to the localities, that is not going there because 
they are moving money to cover, say, the Ryan White Program 
funds that the Federal Government uncertainty is causing 
problems with, or the Individuals with Disabilities Education 
Act (IDEA) or whatever the case may be.
    What the uncertainty is really causing is the disruption 
and the problems, especially since they do feel the obligation 
in certain programs that really affect individuals, as the ones 
I have mentioned, like the Ryan White Program. And so they feel 
that they would have to funnel those funds to those things. 
But, again, you are short-changing something. And those other 
things are really what is the painful result of uncertainty. 
And, of course, I mentioned K-12 and some of the other things.
    Chairman Carper. Yes, you did. I keep talking about core 
values. You have core values, too, but you do not get to talk 
about it as much as I do. But I know you have core values, and 
for me they are just sort of like a compass. If I get off 
course, they help me get back on course. But I am sure that 
your core values do the same thing for you. But one of them is: 
If it is not perfect, make it better. Everything I do I know I 
can do better. I think that is true for all of us. It is true 
for all Federal, State, and local programs as well. Everything 
we do we can do better.
    No one is going to argue that this lurching from one crisis 
to the next is anything close to perfect. We know it is not. 
But I imagine that there are some agencies, some employees, and 
some companies that are finding ways to make it better even in 
the midst of this difficult environment.
    Some of you discussed it, at least in your written 
testimony, but I would like to hear more, if I could, from each 
of you about some of the best practices and strategies you have 
seen to mitigate the effects of budget uncertainty. If some of 
you have some ideas on that--I know you do--if you could just 
maybe cite an example or two of some of the best practices and 
strategies that you have seen to mitigate these uncertainties, 
please. Anybody. Mr. Soloway.
    Mr. Soloway. Sure. I will go back to what I said earlier, 
and it is in my written testimony, because I think it is one 
thing that is simple in concept but needs some real leadership, 
direction, and guidance, and that is collaboration. Any program 
the Government executes has numerous stakeholders involved in 
the execution of that program. What we need to be doing is 
building bridges of collaboration to enable these folks to work 
together to identify what I referred to earlier as 
``sustainable savings and performance improvements.''
    Too often what happens is that salami slice cuts to the 
budget come down and they are directed cuts, so we try to do 
the same amount with less money; but we do not change 
requirements, and do not really look at the efficacy of the 
program as a whole, how it is structured. So I think if we 
proactively had agencies, contractors, universities, and 
whoever else is involved in the given operation, working much 
more closely together and collaboratively than they are 
encouraged to do by and large today, you could drive some real 
sustainable savings and help mitigate some of the effects on 
the near term. This would require agencies to really be 
proactively and be pushed and encouraged to communicate and 
collaborate with other stakeholders and for them to be 
supported and praised for it as opposed to occasionally being 
criticized for appearing to be too cozy or what have you.
    It sounds simplistic. It may sound a little Pollyanna. It 
happens to be a basic tenet and a core value of some of the 
most successful businesses, particularly in the professional 
services world. They see the degree to which you collaborate 
with your customer as a mark of success and excellence. It is 
not a mark of misbehavior.
    Chairman Carper. Good. Thank you. Ms. Kelley.
    Ms. Kelley. One of the things that NTEU is doing every day 
and has since this latest crisis came at Federal employees has 
been one of your C's, Chairman Carper, which is communicate.
    One of the things that I have found is that agencies have 
not done a good job of communicating with employees as to what 
is going on, what is happening, what the risks are, or what the 
real risks are versus the rumors. The rumor mill runs wild 
everywhere in any organization. And NTEU has worked very hard 
to provide information to employees as best that we could and 
to make sure that we put some of the rumors to rest, because 
the rumors were only increasing the anxiety that employees were 
feeling.
    So that communication is important, even with this 
uncertainty, as we try to figure out what the appropriations 
and the budgets will be, which will take compromise and will 
take a balanced approach, of course, which NTEU supports. But 
the communication, like I said, has really just been terrible 
coming from the Government, from the agencies to the employees, 
and has left them really out there making uncertainty a lot 
more frightening than it has to be.
    And so we have worked hard and I think have set up a pretty 
good best practice of that communication, but I would urge 
agencies from the top all the way down through all the 
departments to do a better job of that and to be allowed to do 
a better job of that, because in many cases I think their hands 
were tied.
    Chairman Carper. Thank you. Well said. Mr. Pattison.
    Mr. Pattison. One thing that would really make a positive 
difference toward dealing with certainty and allow State 
officials and State finance officials to create more certainty 
would actually be to the extent we can get Federal agencies and 
departments to get away from checklists of requirements and 
really allow more flexibility for the implementation of 
programs that focuses on results, whether it is decreasing 
infant mortality or whatever it might be, that would really 
make a big difference. If we are going to continue to have 
uncertainty, it would help us deal with it very well.
    Chairman Carper. That reminds me of something I heard. It 
was another one of those conversations I will always remember. 
It was, I do not know, 7, 8, 9 years ago. We had a bunch of 
utility CEOs in to meet with me to talk about clean air policy, 
and one of the utility CEOs from a Southern utility was kind of 
a curmudgeonly old guy. He said to me, ``Senator, here is what 
you need to do''--this is us, the Senate, with respect to clean 
air. ``Tell us what the rules are going to be. Give us some 
flexibility, a reasonable amount of time, and get out of the 
way.'' I will always remember that. I thought it was pretty 
good advice. Dr. Joyce.
    Mr. Joyce. The only thing I would add--and in this longer 
report I did for IBM, there is more detail on this. But in 
every agency where I talked to employees that were involved in 
sort of managing the budget--and this is going to sound like it 
is a negative, but it is sort of a positive in the way they 
responded to the uncertainty--is that they pretty much just 
assumed that they were not going to get an appropriation until 
after the beginning of the calendar year, and they adjusted 
their budget execution process accordingly.
    So, for example, they did not plan to send people to 
training in the first quarter of the year because they were 
afraid they would have to schedule it and then cancel it. They 
moved the renewal date for contracts when they could so that 
they did not renew during the first quarter of the year so they 
did not run into this situation where they were trying to renew 
a contract but they did not have the funding in order to do it.
    Now, that is something they have done to respond positively 
to a negative. But I do think it represents, a perfectly 
rational response and probably a good stewardship of resources 
on their part of their dealing with that uncertainty. And as I 
suggested earlier, the problem really comes because even having 
adjusted to that uncertainty, the appropriations are being 
received later and later, and there is a certain point at which 
you just cannot solve that problem by delaying anymore, because 
it is too late into the fiscal year.
    Chairman Carper. OK. Good.
    I have one last question. I am going to tell you what it is 
and let you think about it for a minute. And while you are 
thinking, I will make just a short closing statement.
    But I am going to ask you just to take a minute to think 
about that you are not sitting in front of that table there, 
but you are up here, and sitting in front of you were 100 
Senators, and, if this room were big enough, maybe 435 
Representatives. And given this upheaval and this turmoil, this 
churn that we have been living through mostly for the last 
couple years--even before that, but it just continues to 
worsen. But if you had opportunities to say to all of my 
colleagues in the House and the Senate maybe one or two things 
that we ought to do, what would be your advice your individual 
or collective advice? Think about that, if you would.
    And while you are thinking about that, I want to say this: 
One of the things that annoys me in my job--and it used to 
annoy me when I was in State government to some extent, but not 
as much--in fact, I will go even further back. I spent some 
time as a naval flight officer in the Vietnam War, and one of 
the things that annoyed me then, too, was every now and then I 
would hear somebody do a job, not do it very well, and say, 
``That is good enough for Government work.'' I do not know if 
you have ever heard that before. Few things make me less happy 
than to hear that I think that the work that we do is not 
sacred work, but it is the people's work. And we are at the 
service of the taxpayers, and we need to do our best. That is 
one of the things that I find that annoys me and always has. I 
never countenanced that kind of stuff.
    The other thing that annoys me very much is when I hear my 
colleagues in hearings or in speeches or in press interviews 
talk about nameless, faceless bureaucrats making decisions 
because we are not making them. And there are some times they 
say, well, why should we let a nameless, faceless bureaucrat 
make this particular decision, how dare them? And I think that 
demeans the work and the stature of the people who serve us in 
all kinds of ways--defense of our country, defense of our 
homeland, trying to make sure that our economy works, our 
transportation systems work, our food systems work. That just 
demeans the work that they do.
    So I would just say here today to those nameless, faceless 
bureaucrats across the country that are struggling and trying 
to deal with this turmoil that we have visited on them, 
particularly for the people that are rolling with the punches, 
still getting up every morning, going to work, doing the best 
work that they can do, try not to let it get you down. I just 
want to say thank you.
    And with that, having said that and gotten that off my 
chest, let me just come to each of you for the advice. Again, 
you are sitting up here. The Senate and House are arrayed 
before you. One or two takeaways that you would have for all of 
us, please. We will start with Mr. Soloway.
    Mr. Soloway. I was actually hoping you would start at the 
other end of the table.
    Chairman Carper. I could do that. [Laughter.]
    Mr. Soloway. I do not know that I could come up with any 
cogent, great advice. I think there is one message that I would 
take away from this, that everybody at this table representing 
different communities shares the passion you have for good 
management and good stewardship of the public dollar, high-
quality service across the board. And what you heard today was 
essentially unanimity in perspective on what is happening to 
our ability to achieve those goals, and that should really 
matter to the people charged with legislating, overseeing, 
authorizing the work, and appropriating the work of Government.
    I do not mean this in a flippant way, but Colleen Kelley 
and I have known each other for well over a decade. We have 
testified together before, but rarely have we testified in an 
environment where we are sitting here joined at the hip. Often 
we are at odds over certain issues. But I think that it means 
something when we have the private sector, we have the public 
sector, we have the States, we have academia all coming 
together and saying this is a serious problem, and if you care 
about the management of Government, the stewardship of the 
public dollar, it is time to fix it.
    Chairman Carper. Thank you. I thought you two were sitting 
kind of close together here. [Laughter.]
    All right. Ms. Kelley, you can go next.
    Ms. Kelley. I would say that one of the responsibilities of 
your job is to pass appropriations bills so that the Government 
can function effectively. I would ask you to do that in a 
timely way, in a responsible way, so that the agencies and the 
dedicated Federal employees who are trying to provide these 
services to our country, that our country needs and wants, can 
do their jobs effectively. So I would ask you to do that, to do 
it the right way, to do it in a balanced way, and then to get 
out of the way so Federal employees can deliver the high 
quality of service that our country needs from them.
    Chairman Carper. Thank you.
    Mr. Pattison. I have more or less a corollary to that, and 
that is, figure out incentives that are strong enough, and 
obviously constitutional, that will cause the appropriations 
bills, the budget, and so forth to be passed on time and for 
the entire year process. Obviously, the sequester was not 
sufficient to create that incentive, but I think incentives can 
be developed.
    It certainly occurs at the State level. States almost never 
pass a budget late, and they pass 1- or 2-year budgets at a 
time. And if they can do it--and, of course, many local 
governments do too. I really believe the right incentives can 
be put in place for the Feds to do it also.
    Chairman Carper. OK. Thank you. Dr. Joyce.
    Mr. Joyce. I would say that there is no question that there 
is a big fiscal problem facing the country, and that solving 
that problem is going to invariably involve inflicting pain on 
a whole bunch of people.
    What matters is not just the decisions you make about who 
is going to contribute in what way, but the certainty that any 
organization responding to that has after the fact. And so I 
think the most important thing to do is to make a decision, 
make it as quickly as possible, set out a path for multiple 
years so that people can plan for what is coming, and then 
allow them to implement those changes and not limp along from 
one crisis to another.
    Chairman Carper. All right. Well, I again want to finish up 
where we started off, by thanking you for joining us today with 
your diverse, valuable perspectives. And one of the things I 
look for in a hearing like this is for actually repetition. I 
look not for different game plans or road maps, but I try to 
look for people coming together, and I look for consensus. And 
I think we heard a fair amount of that here today.
    The information that you have given me is good. In a day 
and age when we are thinking a lot about gun control, this is 
good ammo. And we are thinking a lot about the number of rounds 
in a magazine, but I do not know if you gave me 30 rounds or 
20, but you have given us quite a few.
    A lot of the folks that serve on this Committee 
appropriately also serve on the Budget Committee, and the 
Budget Committee is in high gear today, and probably tomorrow 
as well, in order to get us ready for the budget resolution. So 
a lot of those folks who otherwise would be here are otherwise 
occupied in the Budget Committee. But on behalf of all of them 
and all of us, Dr. Coburn and myself and Senator Begich, thanks 
so much for joining us today.
    I told you that I was going to ask you for the record to 
give me one, two, or three just really strong, dramatic, 
undeniable examples of why this churning, stop-and-go, CR, debt 
ceiling, sequestration--why this is just senseless and we have 
to get away from it so that when we are in darkest hour in the 
next couple of days or weeks or months trying to get to a point 
where we are actually going to not just communicate but 
compromise and get to where we need to be, I will be able to 
pull out one of those clips and use it.
    The hearing record will remain open for 15 days for the 
submission of additional statements and questions for the 
record. And with that, again our thanks, and this hearing is 
adjourned.
    [Whereupon, at 4:27 p.m., the Committee was adjourned.]


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