[Congressional Record (Bound Edition), Volume 146 (2000), Part 12]
[House]
[Pages 17502-17505]
[From the U.S. Government Publishing Office, www.gpo.gov]



          PROPOSED LEGISLATION TO CREATE OFFICE OF MANAGEMENT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from California (Mr. Horn) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. HORN. Mr. Speaker, next week I will be introducing legislation to 
create an Office of Management within the Executive Office of the 
President. This proposal complements and extends the efforts of recent 
Congresses to focus on one of the greatest challenges facing the 
Federal Government: finding an effective way to manage the complex 
collection of Government cabinet departments, independent agencies, and 
laws and regulations that exist to serve the public and provide for our 
national security.
  Some might argue that this proposal is unnecessary or unimportant. 
Those arguments are profoundly misguided. The challenge of effectively 
managing our government is, in fact, one of the most vital issues 
before us.
  If we hope to solve the long-term problems that threaten Social 
Security and Medicare, if we hope to strengthen our social safety net 
for children and other vulnerable members of our society, if we want to 
reduce the tax burden on American families, then we must start with a 
well-managed Federal Government.
  As most Members of Congress know, each year we receive reports that 
billions of taxpayers dollars are lost to waste, fraud, or misuse.
  A January 26, 1999, report by the General Accounting Office stated: 
``We have identified several Government programs that are not managed 
effectively or that experience chronic waste and inefficiency.''
  In fact, the General Accounting Office report identified 29 large 
programs and agencies that were at high risk of waste, fraud, abuse, 
and mismanagement.
  Among the most significant problems, the report cited the inability 
of the Department of Defense to produce financial statements that could 
be audited.
  Despite the General Accounting Office's recognition of this serious 
financial management program, which dates back to 1995, little has 
changed.
  In May of this year, the Subcommittee on Government Management, 
Information and Technology, which I chair, again examined the Defense 
Department's financial management. We found that the Department still 
cannot produce auditable and accurate financial statements.
  In fact, the Department's inspector general reported that in 1999 the 
Defense Department had to make bookkeeping adjustments that totaled 
$7.6 trillion. Think of it, $7.6 trillion. Not millions, not billions, 
trillions. That is about what the national debt was. But they had to 
use that $7.6 billion to reconcile its books with the United States 
Treasury and other sources of financial records.
  The General Accounting Office's examination of those adjustments 
found that at least $2.3 trillion of the adjustments were not supported 
by documentation, reliable information, or audit trails.
  The Defense Department is not the only agency with such problems. It 
is just the biggest.
  The subcommittee's examination of the 1999 financial audit of the 
Health Care Financing Administration found that the agency had paid out 
an estimated $13.5 billion in improper payments for its Medicare fee-
for-service program, something that is very important to the 
constituents of every Member of this House. That is roughly 8 percent 
of the fee-for-service program's $170 billion budget.
  As the General Accounting Office testified at a subcommittee hearing 
earlier this year, the Health Care Financing Administration accounting 
procedures are so inadequate that no one can estimate how much of this 
money was lost to fraud.
  These are just two examples of the enormous cost of the Government's 
poor management, outmoded business practices, and insufficient 
financial controls.
  At a subcommittee hearing on the government-wide consolidated 
financial statement that was held this year, the Comptroller General of 
the United States, David M. Walker, testified that serious financial 
management weaknesses also exist at the Internal Revenue Service, the 
Forest Service, and the Federal Aviation Administration.
  These weaknesses, he said, place billions of dollars of the 
taxpayers' money at high risk of being lost to waste, fraud, and 
misuse.
  There is only one way to find these abuses, and that is to ferret out 
each wasted dollar agency by agency, program by program, and line by 
line. To accomplish this goal, we must make management a clear and 
unequivocal priority across the entire executive branch of the Federal 
Government.
  General Accounting Office investigators came to the same conclusion 
in a

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January 2000 report: ``Fixing the underlying weaknesses in high-risk 
program management areas can significantly reduce Government costs and 
improve services.''
  Congress must create a core of management experts who will not only 
have the ability and skill to address wasteful administration and 
program failures but who also have the power and mandate to force 
action and produce results.

                              {time}  1215

  The Office of Management and Budget in the Executive Office of the 
President was created in the 1970s for the very purposes I have just 
outlined. I supported its creation and the belief that the power of the 
budget process would strengthen support for stronger management 
practices.
  I was wrong.
  For years, management experts, whom I respect within and outside the 
government, have said to me that the ``M'' in OMB is not management. It 
is a mirage.
  The unpleasant reality is that tying management to the power of the 
budget process was an excellent theory but one that never worked. The 
pressures and dynamics of the annual budget process have simply 
overwhelmed nearly every initiative aimed at improving management. In 
effect, the fledgling management trees could not survive among the 
tangled and gnarled limbs of the budgetary forest.
  Since serving as chairman of the Subcommittee on Government 
Management, Information and Technology for the last 6 years, it has 
become very clear to me that the executive branch could no longer 
continue on the present course of muddling along, then papering over 
the fundamental management deficiencies with more tax dollars. This 
course has left us vulnerable to monetary waste and threatens to 
disrupt vital government programs that serve millions of Americans.
  This very real problem seized my attention in April of 1996 when I 
learned that the Federal Government's computers were not prepared to 
deal with the year 2000 date change, or the so-called Y2K or millennium 
bug. In one case after another, we had evidence that the government was 
simply not up to meeting it. Overall, however, the government and the 
private sector did meet it after this committee asked the President to 
put somebody in charge in the executive branch. When the president did 
make an appointment, it was not to OMB. It was as Assistant to the 
President. He had the President's ear, and that is what is important if 
you are going to get something done in the executive branch of the 
Federal Government.
  After our Subcommittee on Government Management, Information and 
Technology began examining the year 2000 problem in 1996, we surveyed 
cabinet officers about their knowledge of the problem. The survey 
revealed that two cabinet officers had never heard of the Y2K or year 
2000 problem, even though the Social Security Administration was doing 
it on their own with no guidance from any administration, be it 
Republican or Democratic, and a lot of the cabinet had done exactly 
nothing. So it was clear that the executive branch was not providing 
leadership. It was providing procrastination. When the executive branch 
finally awakened, it put the portfolio to handle Y2K on a desk occupied 
by an already overworked individual 16 hours a day, 7 days a week. In 
brief, the Office of Management and Budget provided no leadership.
  One Federal agency was the exception to this serious lack of 
management foresight. The Social Security Administration recognized the 
year 2000 problem in 1989. That agency was steadfast in its commitment 
to solve this technological challenge, and it was one of the first 
agencies to announce in 1999 that its computer systems were Y2K 
compliant. It should be noted, however, that the agency had been 
working on the problem for a decade. So should the rest of the 
executive branch have been working on the problem.
  The Federal Highway Administration had been alerted to the computer 
problem as early as 1987. That was even earlier than Social Security. 
The problem was, however, that nobody would listen to those who warned 
them about Y2K in the Department of Transportation. The Federal Highway 
Administration did not care. So the issue was never brought to the 
attention of the Secretary of Transportation. If it had been, one would 
hope that the Secretary would have been especially concerned about one 
of the Department's most critical agencies, the Federal Aviation 
Administration. Worse yet, the issue was never submitted to the 
President.
  That would never have happened under President Eisenhower.
  He had a cabinet who brought the issues up the system. He made a 
decision, initialed it 30 days later, said ``six months from now I want 
to see you before the cabinet again.'' But in 1987 that was not the 
kind of government we had at that time.
  In July of 1997, the gentlewoman from New York (Mrs. Maloney), my 
ranking minority member on the subcommittee, and I wrote the President 
stating that there was an urgent need for him to designate a senior 
administration official to oversee the Federal Y2K effort and to 
encourage private sector initiatives to fix the problem.
  The President did not act until February 1998 and then instead of 
relying on a budget-dominated OMB, the President brought out of 
retirement and appointed John Koskinen as an Assistant to the 
President. As I noted earlier, the President gave the authority to Mr. 
Koskinen to pull together the relevant officials who were responsible 
for computing systems in the various Federal agencies.
  Mr. Koskinen had served the President as deputy director of OMB for 
management from 1993 to 1997. He retired in 1997. Yet, despite Mr. 
Koskinen's able leadership at some management matters at OMB, very few 
steps had been taken to address the year 2000 problem during the years 
when he was in charge of management.
  Because of this stunning and inexcusable management failure, 
executive branch agencies were forced into a belated and unnecessary 
state of emergency action that added billions of dollars to the total 
cost of fixing government computers.
  The year 2000 crisis provides powerful evidence of the need for an 
Office of Management with a Director reporting to the President. Our 
government must have one office that is focused solely on finding, 
deciphering, and solving this kind of problem before it occurs, not 
afterwards. We need one group of management-oriented professionals who 
are available to monitor and to help find solutions to management 
problems before they become costly burdens to the taxpayers.
  President Franklin Roosevelt had professionals who were capable of 
sorting out common problems, whether it was the Tennessee Valley 
Authority, or the beginning of the Marshall Plan.
  President Truman used the management experts to develop the Marshall 
Plan, which would rebuild the war-torn countries in Europe.
  President Eisenhower, as I noted, had also a similar group of about 
15 to 20 management personnel in the then Bureau of the Budget. Those 
professionals did not change when Presidents changed. They served the 
Presidency. After the Eisenhower administration, the then Bureau of the 
Budget became more and more politicized.
  Unfortunately, Y2K is only a small piece of the larger management 
problem as the Federal Government attempts to update its information 
technology. We have asked the Comptroller General of the United States 
to have the General Accounting Office survey the adequacy of hardware 
and software in the executive branch.
  In recent years, five major Federal agencies have launched computer 
modernization efforts that sunk from very lofty goals to abject 
failures. These efforts, by the Internal Revenue Service, the Federal 
Aviation Administration, the Department of Defense, the National 
Weather Service, and the Medicare program can best be summed up as an 
ongoing series of repetitive disasters that at the highest possible 
cost failed to produce useful computer systems needed to serve the 
public.

[[Page 17504]]

  The Internal Revenue Service finally realized that its project had 
failed when it hit the $4 billion mark. The Federal Aviation 
Administration, which as a freshman member I was taken out to look at 
that project, along with the gentleman from Florida (Mr. Mica), and 
when we walked into the room and knew something was wrong. What was 
wrong? The place was not being managed.
  The FAA had a similar disaster and that was it, and it cost over $3 
billion when somebody finally pulled the plug. Both were costly 
examples of abysmal management.
  The American taxpayer deserves a lot more from the executive branch 
than it has received. Three years ago, the General Accounting Office 
reported that, quote, ``these efforts are having serious trouble 
meeting cost, schedule and/or performance goals. Such problems are all 
too common in Federal automation projects,'' unquote.
  In short, good management could have saved the taxpayers billions of 
dollars and given the government and its citizens modern, efficient, 
productive, and effective technology.
  What is needed is not just to strengthen the President's staff in the 
area of information technology, but to have an integrated approach to 
management improvement.
  The desperate need for improvement in financial management systems, 
to which I have already referred, can be pursued only in concert with 
information technology. Moreover, many of the failures in upgrading 
these computer systems can be traced to inadequacies in the procurement 
process.
  At present, these three specialized areas of management which are in 
three separate statutory offices within the Office of Management and 
Budget essentially involve procurement and the review of regulations, 
all of which is very important, and it can be tools to move an agency 
into being much more effective than without that kind of leadership. We 
must remove all of the people that are in OMB from the shackles of the 
budget process and insist that they work together to eliminate the 
further loss of billions of dollars in wasteful and unsuccessful 
systems development. Those offices should be part of the Office of 
Management.
  Many other management challenges lie ahead. We need an organized and 
comprehensive government-wide plan to protect government computers from 
invasion, such as the Melissa and ``I love you'' viruses. Over the next 
few years, the Federal workforce will suffer massive attrition. We need 
an executive branch agency-wide strategy to train new workers and to 
retain veteran employees.
  An Office of Management would produce enormous dividends in these 
areas simply by the early identification of problems such as these and 
pointing the way toward the most effective solutions. Presidents need 
help. An Office of Management would provide that help.
  Mr. Speaker, there are other vital areas that need the same kind of 
scrutiny and guidance that I believe would flow from an Office of 
Management. Beginning with the Debt Collection Improvement Act, which 
became law in 1996, Congress has attempted to provide Federal 
departments and agencies with the tools they need to collect the 
billions in dollars in debts that are owed to the government. Whose 
money is it? It is the taxpayers' money. Yet so far, their collection 
efforts have been sluggish and ineffective.
  Good financial management practices and systems should be in place 
throughout the Federal Government. However, recent subcommittee 
hearings have again shown that too many agencies have neither financial 
managements and up-to-date systems. Property management, procurement 
and personnel policies continue, on and on.
  Most White House staffers are interested in policy development, not 
managing policy implementation, and that is true of most 
administrations. They come out of the very best colleges and 
universities of America and they want to make policy. Most of these 
policies fail because nobody has an understanding of management and the 
implementation of policies, and the cooperative needs between the 
various executive branch agencies if you are going to be truly 
effective.
  Policy involves hope, excitement, and media coverage. Management, on 
the other hand, appears dull and dreary, whether it is program 
management or financial management. Yet good policies that are not 
translated through management into action have no value and those 
policies will never go anywhere.
  Removing the management problems from the current Office of 
Management and Budget would provide the President with a rational 
division of labor that would place a new and necessary emphasis on 
managing what is currently unmanageable. Those now engaged in budget 
analysis fulfill different roles than those who work in financial and 
program management. Both management and budget staffs would participate 
in annual budget reviews of executive branch departments and agencies. 
We do not need to create a new bureaucracy, or require a major 
reorganization of the Executive Office of the President.
  We do, however, need to create a separate Office of Management whose 
director has clear and direct access to the President, similar to the 
relationship of the director of an Office of the Budget. If we are to 
create government-wide accountability, the President needs an Office of 
Management. It is essential, it is long overdue reform that taxpayers 
deserve and that good government demands.
  An Office of Management could work with departments and agencies in 
measuring the value of program effectiveness. There is very little 
evaluation of program effectiveness.
  In a bipartisan basis, in the first few years I was a member of 
Congress, the performance and results law of 1994 has worked and is 
starting to work more effectively. In the beginning, it was setting 
goals. Those achievements have seldom been reached. The agencies need 
to look at how efficient and how effective they are? And if they are 
not effective or efficient, then change it or get rid of it.
  The cities and counties of America have had great improvements in the 
delivery of these programs over the last few years.

                              {time}  1230

  If Oregon can do it, why cannot the Executive Branch of the Federal 
Government?
  If New Zealand can do it, why cannot the Executive Branch of the 
Federal Government?
  If Australia can do it, why cannot the Executive Branch of the 
Federal Government?
  In August 1910, former President Theodore Roosevelt spoke to this 
very issue: ``No matter how honest and decent we are in our private 
lives, if we do not have the right kind of law and the right kind of 
administration of the law, we cannot go forward as a Nation.''
  Mr. Speaker, I think it is time to move forward and to create an 
Office of Management.
  Mr. Speaker, for the Record I include the text of a draft bill to 
establish an Office of Management as follows:

                                H.R. --

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. ESTABLISHMENT OF OFFICE OF MANAGEMENT.

       (a) Establishment.--There is hereby established in the 
     Executive Office of the President the Office of Management, 
     the purpose of which shall be to improve Federal management 
     and organization and to promote efficiency and effectiveness 
     in the operation of the Federal Government.
       (b) Director; Deputy Director.--(1) There shall be at the 
     head of the Office of Management a Director, who shall be 
     appointed by the President by and with the advice and consent 
     of the Senate. The Director shall be compensated at the 
     annual rate of basic pay for Executive level I as provided in 
     section 5312 of title 5, United States Code.
       (2) There shall be a Deputy Director of the Office of 
     Management, who shall be appointed by the President by and 
     with the advice and consent of the Senate. The Deputy 
     Director shall be compensated at the annual rate of basic pay 
     for Executive level II as provided in section 5313 of title 
     5, United States Code.

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       (c) Transfer of Authority and Functions.--(1) The following 
     offices in the Office of Management and Budget are abolished; 
     and the functions and authorities of the heads of such 
     offices are hereby transferred to the Director of the Office 
     of Management:
       (1) The Office of Federal Procurement Policy.
       (2) The Office of Information and Regulatory Affairs.
       (3) The Office of Federal Financial Management.
       (4) The Office of the Deputy Director for Management.
       (5) The Office of the Chief Financial Officer.

     SEC. 2. REDESIGNATION OF OFFICE OF MANAGEMENT AND BUDGET.

       The Office of Management and Budget is hereby redesignated 
     as the Office of the Budget. Any authorities of, and 
     functions performed by, the Director and other officers and 
     appointees of the Office of Management and Budget before the 
     date of the enactment of this Act and not transferred under 
     section 1 shall remain the authorities and functions of the 
     Director as the head of the Office of the Budget and such 
     other officers and appointees as appropriate.

     SEC. 3. CONFORMING AMENDMENTS TO OTHER LAWS.

       Not later than 90 days after the date of the enactment of 
     this Act, the President shall submit to Congress 
     recommendations for conforming amendments necessary to carry 
     out the purposes of this Act.

                          ____________________