Paperwork Reduction Act: Burden Reduction May Require a New	 
Approach (14-JUN-05, GAO-05-778T).				 
                                                                 
Americans spend billions of hours each year providing information
to federal agencies by filling out information collections	 
(forms, surveys, or questionnaires). A major aim of the Paperwork
Reduction Act (PRA) is to minimize the burden that these	 
collections impose on the public, while maximizing their public  
benefit. Under the act, the Office of Management and Budget (OMB)
is to approve all such collections and to report annually on the 
agencies' estimates of the associated burden. In addition, agency
Chief Information Officers (CIO) are to review information	 
collections before they are submitted to OMB for approval and	 
certify that the collections meet certain standards set forth in 
the act. For its testimony, GAO was asked to comment on OMB's	 
burden report for 2004 and to discuss its recent study of PRA	 
implementation (GAO-05-424), concentrating on CIO review and	 
certification processes and describing alternative processes that
two agencies have used to minimize burden. For its study, GAO	 
reviewed a governmentwide sample of collections, reviewed	 
processes and collections at four agencies that account for a	 
large proportion of burden, and performed case studies of 12	 
approved collections.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-778T					        
    ACCNO:   A26677						        
  TITLE:     Paperwork Reduction Act: Burden Reduction May Require a  
New Approach							 
     DATE:   06/14/2005 
  SUBJECT:   Chief information officers 			 
	     Data collection					 
	     Federal law					 
	     Federal regulations				 
	     Government collections				 
	     Government information dissemination		 
	     Information resources management			 
	     Reporting requirements				 
	     Standards						 
	     Surveys						 
	     Federal forms					 
	     Government paperwork				 

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GAO-05-778T

United States Government Accountability Office

GAO Testimony

Before the Subcommittee on Regulatory Affairs, Committee on Government
Reform, House of Representatives

For Release on Delivery Expected at 2 p.m. EDT Tuesday, June 14, 2005

PAPERWORK REDUCTION ACT

                  Burden Reduction May Require a New Approach

Statement of Linda D. Koontz Director, Information Management

GAO-05-778T

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[IMG]

June 14, 2005

PAPERWORK REDUCTION ACT

Reducing Burden May Require a New Approach

What GAO Found

The total paperwork burden imposed by federal information collections
shrank slightly in fiscal year 2004, according to estimates provided in
OMB's annual PRA report to Congress. The estimated total burden was 7.971
billion hours-a decrease of 1.6 percent (128 million burden hours) from
the previous year's total of about 8.099 billion hours. Different types of
changes contributed to the overall change in these estimates, according to
OMB. For example, adjustments to the estimates (from such factors as
changes in estimation methods and estimated number of respondents)
accounted for a decrease of about 156 million hours (1.9 percent), and
agency burden reduction efforts led to a decrease of about 97 million
hours (1.2 percent). These decreases were partially offset by increases in
other categories, primarily an increase of 119 million hours (1.5 percent)
arising from new statutes. However, because of limitations in the accuracy
of burden estimates, the significance of small changes in these estimates
is unclear. Nonetheless, as the best indicators of paperwork burden
available, these estimates can be useful as long as the limitations are
clearly understood.

Among the PRA provisions aimed at helping to achieve the goals of
minimizing burden while maximizing utility is the requirement for CIO
review and certification of information collections. GAO's review of 12
case studies showed that CIOs provided these certifications despite often
missing or inadequate support from the program offices sponsoring the
collections. Further, although the law requires CIOs to provide support
for certifications, agency files contained little evidence that CIO
reviewers had made efforts to improve the support offered by program
offices. Numerous factors have contributed to these problems, including a
lack of management support and weaknesses in OMB guidance. Because these
reviews were not rigorous, OMB, the agency, and the public had reduced
assurance that the standards in the act-such as minimizing burden-were
consistently met.

In contrast, the Internal Revenue Service (IRS) and the Environmental
Protection Agency (EPA) have set up processes outside the CIO review
process that are specifically focused on reducing burden. These agencies,
whose missions involve numerous information collections, have devoted
significant resources to targeted burden reduction efforts that involve
extensive outreach to stakeholders. According to the two agencies, these
efforts led to significant reductions in burden on the public. In
contrast, for the 12 case studies, the CIO review process did not reduce
burden.

In its report, GAO recommended that OMB and the agencies take steps to
improve review processes and compliance with the act. GAO also suggested
that the Congress may wish to consider mandating pilot projects to target
some collections for rigorous analysis along the lines of the IRS and EPA
approaches. OMB and the agencies agreed with most of the recommendations,
but disagreed with aspects of GAO's characterization of agencies'
compliance with the act's requirements.

                 United States Government Accountability Office

Madam Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of the
Paperwork Reduction Act (PRA).1 As you know, the primary goals of the act
are to minimize the government paperwork burden on the public while
maximizing the public benefit and utility of the information collections
that the government undertakes. To achieve these goals, the PRA includes a
range of provisions that establish standards and procedures for effective
implementation and oversight. Among these provisions is the requirement
for the Office of Management and Budget (OMB) to report annually to the
Congress on the estimated burden imposed on the public by government
information collections (forms, surveys, and questionnaires). Another
requirement is that agencies not establish information collections without
having them approved by OMB, and that before submitting them for approval,
agencies' Chief Information Officers (CIO) certify that the collection
meets 10 specified standards (for example, that it avoids unnecessary
duplication and minimizes burden).

As you requested, I will begin by commenting briefly today on the
estimates of government paperwork burden provided in the annual PRA report
(known as the Information Collection Budget) that OMB recently released,
which presents federal agencies' estimates of federal paperwork burden as
of the end of fiscal year 2004. I will then discuss results from a report
that we prepared on PRA processes and compliance, which is being released
today.2 I will concentrate on our findings regarding agencies' processes
to certify that information collections meet PRA standards and on
alternative processes that two agencies have used to minimize burden.

1 The Paperwork Reduction Act was originally enacted into law in 1980
(Pub. L. 96-511, Dec. 11, 1980). It was reauthorized with minor amendments
in 1986 (Pub. L. 99-591, Oct. 30, 1986) and was reauthorized a second time
with more significant amendments in 1995 (Pub.

L. 104-13, May 22, 1995).

2 GAO, Paperwork Reduction Act: New Approach May Be Need to Reduce
Government Burden on Public, GAO-05-424 (Washington, D.C.: May 20, 2005).

In preparing this testimony, we reviewed our testimonies on previous
annual PRA reports as well as examining the most recent one. For our
discussion of the certification process, we drew on our report, for which
we performed detailed reviews of paperwork clearance processes and
collections at four agencies: the Department of Veterans Affairs (VA), the
Department of Housing and Urban Development (HUD), the Department of
Labor, and the Internal Revenue Service (IRS). Together, these four
agencies represent a broad range of paperwork burdens, and in 2003, they
accounted for about 83 percent of the 8.1 billion hours of estimated
paperwork burden for all federal agencies. Of this total, IRS alone
accounted for about 80 percent.3 We also selected 12 approved collections
as case studies (three at each of the four agencies) to determine how
effective agency processes were. In addition, we analyzed a random sample
(343) of all OMB-approved collections governmentwide as of May 2004 (8,211
collections at 68 agencies) to determine compliance with the act's
requirements regarding agency certification of the 10 standards and
consultation with the public. We designed the random sample so that we
could determine compliance levels at the four agencies and governmentwide.
Finally, although the Environmental Protection Agency (EPA) was not one of
the agencies whose processes we reviewed, we analyzed documents and
interviewed officials concerning the agency's efforts to reduce the burden
of its information collections. Further details on our scope and
methodology are provided in our report.

The work on which this testimony is based was conducted from May 2004 to
May 2005, in accordance with generally accepted government auditing
standards.

3Although IRS accounted for about 80 percent of burden, it did not account
for 80 percent of collections: it accounted for 808 out of the total 8,211
collections governmentwide as of May 2004.

  Results in Brief

The total paperwork burden imposed by federal information collections
shrank slightly in fiscal year 2004, according to estimates provided in
OMB's May 2005 annual PRA report to Congress. The estimated total burden
was 7.971 billion hours, which is a decrease of 1.6 percent (128 million
burden hours) from the previous year's total of about 8.099 billion hours.
Different types of changes contributed to the overall change in the total
burden estimates, according to OMB. For example, adjustments to the
estimates (from such factors as changes in estimation methods and the
population of respondents4) accounted for a decrease of about 156 million
hours (1.9 percent), and agency burden reduction efforts led to a decrease
of about 97 million hours (1.2 percent). These decreases were partially
offset by increases in other categories, primarily an increase of 119
million hours (1.5 percent) arising from new statutes. However, because of
limitations in the ability to develop accurate burden estimates, the
degree to which agency burden-hour estimates reflect real burden is
unclear, and so the significance of small changes in these estimates is
also uncertain. Nonetheless, these estimates are the best indicators of
paperwork burden available, and they can be useful as long as the
limitations are clearly understood.

Among the PRA provisions intended to help achieve the goals of minimizing
burden while maximizing utility is the requirement for CIO review and
certification of information collections. Governmentwide, agency CIOs
generally reviewed information collections before they were submitted to
OMB and certified that the required standards in the act were met.
However, our review of 12 case studies showed that CIOs provided these
certifications despite often missing or inadequate support from the
program offices sponsoring the collections. Further, although the law
requires CIOs to provide support for certifications, agency files

4 That is, an agency may change its method for estimating the burden
associated with a collection of information, or new information or
circumstances may lead to a changed estimate of the number of respondents
(the people or entities that can or must respond to an information
collection).

contained little evidence that CIO reviewers had made efforts to improve
the support offered by program offices. Numerous factors have contributed
to these problems, including a lack of management support and weaknesses
in OMB guidance. Because these reviews were not rigorous, OMB, the agency,
and the public have reduced assurance that the standards in the act-such
as avoiding duplication and minimizing burden-were consistently met.

In contrast, IRS and EPA have used additional evaluative processes that
focus specifically on reducing burden. These processes are targeted,
resource-intensive efforts that involved extensive outreach to
stakeholders. According to these agencies, their processes led to
significant reductions in burden on the public while maximizing the
utility of the information collections.

In our report, we recommended that OMB and the agencies take steps to
improve review processes and compliance with the act. We also suggested
that the Congress may wish to consider mandating pilot projects to target
some collections for rigorous analysis along the lines of the IRS and EPA
approaches. OMB and the agencies agreed with most of the recommendations,
but disagreed with aspects of GAO's characterization of agencies'
compliance with the act's requirements.5

Background

Collecting information is one way that federal agencies carry out their
missions. For example, IRS needs to collect information from taxpayers and
their employers to know the correct amount of taxes owed. The U.S. Census
Bureau collects information used to apportion congressional representation
and for many other

5 For example, OMB, the Treasury, Labor, and HUD disagreed with our
position that the PRA requires agencies both to publish a Federal Register
notice and to otherwise consult with public. Our position, however, is
that the PRA's language is unambiguous: agencies shall "provide 60-day
notice in the Federal Register, and otherwise consult with members of the
public and affected agencies concerning each proposed collection..." Pub.
L. 104-13, 109 Stat. 173, 44 U.S.C. 3506(c)(2).

purposes. When new circumstances or needs arise, agencies may need to
collect new information. We recognize, therefore, that a large portion of
federal paperwork is necessary and often serves a useful purpose.

Nonetheless, besides ensuring that information collections have public
benefit and utility, federal agencies are required by the PRA to minimize
the paperwork burden that they impose. Among the act's provisions aimed at
this purpose are detailed requirements, included in the 1995 amendments to
the PRA, spelling out how agencies are to review information collections
before submitting them to OMB for approval. According to these amendments,
an agency official independent of those responsible for the information
collections (that is, the program offices) is to evaluate whether
information collections should be approved. This official is the agency's
CIO,6 who is to review each collection of information to certify that the
collection meets 10 standards (see table 1) and to provide support for
these certifications.

6The 1995 amendments used the 1980 act's reference to the agency "senior
official" responsible for implementation of the act. A year later,
Congress gave that official the title of agency Chief Information Officer
(the Information Technology Management Reform Act, Pub. L. 104-106, Feb.
10, 1996, which was subsequently renamed the Clinger-Cohen Act, Pub. L.
104-208, Sept. 30, 1996).

 Table 1: Standards for Information Collections Set by the Paperwork Reduction
                                      Act

Standards

The collection is necessary for the proper performance of agency functions. The
                   collection avoids unnecessary duplication.

The collection reduces burden on the public, including small entities, to
the extent practicable and appropriate.

The collection uses plain, coherent, and unambiguous language that is
understandable to respondents.

The collection will be consistent and compatible with respondents' current
reporting and recordkeeping practices to the maximum extent practicable.

The collection indicates the retention period for any recordkeeping
requirements for respondents.

The collection informs respondents of the information they need to
exercise scrutiny of agency collections information (the reasons the
information is collected; the way it is used; an estimate of the burden;
whether responses are voluntary, required to obtain a benefit, or
mandatory; and a statement that no person is required to respond unless a
valid OMB control number is displayed).

The collection was developed by an office that has planned and allocated
resources for the efficient and effective management and use of the
information to be collected.

The collection uses effective and efficient statistical survey methodology
(if applicable).

The collection uses information technology to the maximum extent
practicable to reduce burden and improve data quality, agency efficiency
and responsiveness to the public.

Source: Paperwork Reduction Act, Pub. L. 104-13, 109 Stat. 173-4, sec.
3506(c)(3).

In addition, the original PRA of 1980 (section 3514(a)) requires OMB to
keep Congress "fully and currently informed" of the major activities under
the act and to submit a report to Congress at least annually on those
activities. Under the 1995 amendments, this report must include, among
other things, a list of any increases in burden. To satisfy this
requirement, OMB prepares the annual PRA report, which reports on agency
actions during the previous fiscal year, including changes in agencies'
burden-hour estimates.

In addition, the 1995 PRA amendments required OMB to set specific goals
for reducing burden from the level it had reached in 1995: at least a 10
percent reduction in the governmentwide burden-hour estimate for each of
fiscal years 1996 and 1997, a 5 percent governmentwide burden reduction
goal in each of the next 4 fiscal years, and annual agency goals that
reduce burden to the "maximum practicable opportunity." At the end of
fiscal year 1995, federal agencies estimated that their information
collections imposed about 7 billion burden hours on the public. Thus, for
these reduction goals

to be met, the burden-hour estimate would have had to decrease by about 35
percent, to about 4.6 billion hours, by September 30, 2001. In fact, on
that date, the federal paperwork estimate had increased by about 9
percent, to 7.6 billion burden hours.

For the most recent PRA report, the OMB Director sent a bulletin in
September 2004 to the heads of executive departments and agencies
requesting information to be used in preparing its report on actions
during fiscal year 2004. In May 2005, OMB published this report, which
shows changes in agencies' burden-hour estimates during fiscal year 2004.

  Reported Paperwork Burden Decreased Slightly in 2004

According to OMB's most recent PRA report to Congress, the estimated total
burden hours imposed by government information collections in fiscal year
2004 was 7.971 billion hours; this is a decrease of 128 million burden
hours (1.6 percent) from the previous year's total of about 8.099 billion
hours. It is also about a billion hours larger than in 1995 and 3.4
billion larger than the PRA target for the end of fiscal year 2001 (4.6
billion burden hours).

The reduction for fiscal year 2004 was a result of several types of
changes, which OMB assigns to various categories. OMB classifies all
changes-either increases or decreases-in agencies' burdenhour estimates as
either "program changes" or "adjustments."

0M	Program changes are the result of deliberate federal government action
(e.g., the addition or deletion of questions on a form) and can occur as a
result of new statutory requirements, agency-initiated actions, or the
expiration or reinstatement of OMB-approved collections.7

7 When an agency allows OMB approval of a collection to lapse but
continues to collect the information, this is a violation of the PRA.
However, the expired collection is accounted for as a decrease in burden.
When the approval is reinstated, the reinstatement is accounted for as an
increase in burden in OMB's accounting system. The lapse and reinstatement
thus generally cancel each other out, unless the reinstatement involves
changed burden estimates based on new analysis.

0M	Adjustments do not result from federal burden-reduction activities but
rather are caused by factors such as changes in the population responding
to a requirement or agency reestimates of the burden associated with a
collection of information. For example, if the economy declines and more
people complete applications for food stamps, the resulting increase in
the Department of Agriculture's paperwork estimate is considered an
adjustment because it is not the result of deliberate federal action.

Table 2 shows the changes in reported burden totals since the fiscal year
2003 PRA report.

Table 2: Changes in Governmentwide Reported Burden Totals by Category

Change from fiscal year 2003 PRA report In millions total (hours and
percentage)

                               Category of change

  Baseline: Fiscal year 2003 total 8,098.79 Fiscal year 2004 program changes:

                    Changes due to agency action   -96.84             (-1.2%) 
                     Changes due to new statutes   119.00              (1.5%) 
           Changes due to lapses in OMB approval     6.39              (0.1%) 
                           Total program changes            28.54      (0.4%) 
                    Fiscal year 2004 adjustments           -156.15    (-1.9%) 
                          Fiscal year 2004 total           7971.18    (-1.6%) 

Source: OMB annual PRA reports.

As table 2 shows, the change in the "adjustments" category was the largest
factor in the decrease for fiscal year 2004. These results are similar to
those for fiscal year 2003, in which adjustments of 181.7 million hours
led to an overall decrease of 116.3 million hours (1.4 percent) in total
burden estimated. The slight decreases that occurred in fiscal years 2004
and 2003 followed several years of increases, as shown in table 3. As
table 3 also shows, if adjustments are disregarded, the federal government
paperwork burden would have increased by about 28.5 million burden hours
in fiscal year 2004 ("total program changes" in table 2).

Table 3: Increases in Burden Hours Due to Program Changes Between Fiscal
Years 1998 and 2004

In millions

                          Total governmentwide   Net increase in burden hours 
            Fiscal year   burden-hour estimate         due to program changes 
                   2004                7,971.2                           28.5 
                   2003                8,105.4                           72.1 
                   2002                8,223.2                          294.1 
                   2001                7,651.4                          158.7 
                   2000                7,361.0                          188.0 
                   1999                7,183.9                          189.0 
                   1998                6,951.1                           41.1 

Source: OMB.

The largest percentage of governmentwide burden can be attributed to the
IRS. In fiscal year 2004, IRS accounted for about 78 percent of
governmentwide burden: about 6210 million hours. No other agency's
estimate approaches this level: As of September 30, 2004, only five
agencies had burden-hour estimates of 100 million hours or more (the
Departments of Health and Human Services, Labor, and Transportation; EPA;
and the Securities and Exchange Commission). Thus, as we have previously
reported, changes in paperwork burden experienced by the federal
government have been largely attributable to changes associated with IRS.8

However, in interpreting these figures, it is important to keep in mind
their limitations. First, as estimates, they are not precise; changes from
year to year, particularly small ones, may not be meaningful. Second,
burden-hour estimates are not a simple matter. The "burden hour" has been
the principal unit of paperwork burden for more than 50 years and has been
accepted by agencies and the public because it is a clear,
easy-to-understand concept. However, it is challenging to estimate the
amount of time it will take for a respondent to collect and provide the
information or how many

8 GAO, Paperwork Reduction Act: Agencies' Paperwork Burden Estimates Due
to Federal Actions Continue to Increase, GAO-04-676T (Washington, D.C.:
Apr. 20, 2004).

individuals an information collection will affect.9 Therefore, the degree
to which agency burden-hour estimates reflect real burden is unclear. (IRS
is sufficiently concerned about the methodology it uses to develop burden
estimates that it is in the process of developing and testing alternative
means of measuring paperwork burden.) Because of these limitations, the
degree to which agency burden-hour estimates reflect real burden is
unclear, and so the significance of small changes in these estimates is
also uncertain. Nonetheless, these estimates are the best indicators of
paperwork burden available, and they can be useful as long as the
limitations are clearly understood.

  Agency Review Processes Were Not Rigorous

Among the PRA provisions intended to help achieve the goals of minimizing
burden while maximizing utility are the requirements for CIO review and
certification of information collections. The 1995 amendments required
agencies to establish centralized processes for reviewing proposed
information collections within the CIO's office. Among other things, the
CIO's office is to certify, for each collection, that the 10 standards in
the act have been met, and the CIO is to provide a record supporting these
certifications.

The four agencies in our review all had written directives that
implemented the review requirements in the act, including the requirement
for CIOs to certify that the 10 standards in the act were met. The
estimated certification rate ranged from 100 percent at IRS and HUD to 92
percent at VA. Governmentwide, agencies certified that the act's 10
standards had been met on an estimated 98 percent of the 8,211
collections.

However, in the 12 case studies that we reviewed, this CIO certification
occurred despite a lack of rigorous support that all standards were met.
Specifically, the support for certification was

9 See GAO, EPA Paperwork: Burden Estimate Increasing Despite Reduction
Claims, GAO/GGD-00-59 (Washington, D.C.: Mar. 16, 2000), for how one
agency estimates paperwork burden.

missing or partial on 65 percent (66 of 101) of the certifications.10
Table 4 shows the result of our analysis of the case studies.

 Table 4: Support Provided by Agencies for Paperwork Reduction Act Standards in
                        12 Case Studies Support provided

                        Standards                       Totala Yes Partial No 
        The collection is necessary for the proper          12   6       6 
             performance of agency functions.                              
      The collection avoids unnecessary duplication.        11   2       2 
       The collection reduces burden on the public,                        
including small entities, to the extent practicable                     
                           and                                             
                       appropriate.                         12   5       7 
The collection uses plain, coherent, and unambiguous                    
            language that is understandable to                             
                       respondents.                         12   1       0 11 
     The collection will be consistent and compatible                      
         with respondents' current reporting and                           
      recordkeeping practices to the maximum extent         12   3       0 
                       practicable.                                        
    The collection indicates the retention period for        6   3       3 
     any recordkeeping requirements for respondents.b                      

The collection informs respondents of the information they need to
exercise scrutiny of agency
collections (i.e., the reasons the information is collected; the way it is
used; an estimate of the
burden; whether responses are voluntary, required to obtain a benefit, or
mandatory; and a
statement that no person is required to respond unless a valid OMB control
number is displayed).b 12 4 8

    The collection was developed by an office that has planned             
                  and allocated resources for the                          
efficient and effective management and use of the information  11 2   0 
                         to be collected.                                  
      The collection uses effective and efficient statistical      1 1   0 
                survey methodology (if applicable).                        
     The collection uses information technology to the maximum             
                extent practicable to reduce burden                        
         and improve data quality, agency efficiency, and         12 8   4 
                   responsiveness to the public.                           
                              Totals                             101 35 30 36 

Sources: Paperwork Reduction Act, GAO.

aThe total number of certifications is not always 12 because not all
certifications applied to all collections.

bFor these two standards, the presence on the forms of the information
indicated was categorized as support, the absence of some elements was
categorized as partial support, and the absence of all elements was
categorized as no support.

For example, under the act, CIOs are required to certify that each
information collection is not unnecessarily duplicative. According to OMB
instructions, agencies are to (1) describe efforts to identify duplication
and (2) show specifically why any similar information already available
cannot be used or modified for the purpose described.

10The total number of certifications does not total 120 (12 cases times 10
standards) because some standards did not apply to some cases.

In 2 of 11 cases, agencies provided the description requested; for
example:

Program reviews were conducted to identify potential areas of duplication;
however, none were found to exist. There is no known Department or Agency
which maintains the necessary information, nor is it available from other
sources within our Department.

In an additional 2 cases, partial support was provided. An example is the
following, provided by Labor:

[The Employer Assistance Referral Network (EARN)] is a new, nationwide
service that does not duplicate any single existing service that attempts
to match employers with providers who refer job candidates with
disabilities. While similar job-referral services exist at the state
level, and some nation-wide disability organizations offer similar
services to people with certain disabilities, we are not aware of any
existing survey that would duplicate the scope or content of the proposed
data collection. Furthermore, because this information collection involves
only providers and employers interested in participating in the EARN
service, and because this is a new service, a duplicate data set does not
exist.

While this example shows that the agency attempted to identify duplicative
sources, it does not discuss why information from state and other
disability organizations could not be aggregated and used, at least in
part, to satisfy the needs of this collection.

In 7 cases, moreover, support for these certifications was missing. An
example is the following statement, used on all three IRS collections:

We have attempted to eliminate duplication within the agency wherever
possible.

This assertion provides no information on what efforts were made to
identify duplication or perspective on why similar information, if any,
could not be used. Further, the files contained no evidence that the CIO
reviewers challenged the adequacy of this support or provided support of
their own to justify their certification.

A second example is provided by the standard requiring each information
collection to reduce burden on the public, including

small entities, 11 to the extent practicable and appropriate. OMB guidance
emphasizes that agencies are to demonstrate that they have taken every
reasonable step to ensure that the collection of information is the least
burdensome necessary for the proper performance of agency functions. In
addition, OMB instructions and guidance direct agencies to provide
specific information and justifications: (1) estimates of the hour and
cost burden of the collections and (2) justifications for any collection
that requires respondents to report more often than quarterly, respond in
fewer than 30 days, or provide more than an original and two copies of
documentation.

With regard to small entities, OMB guidance states that the standard
emphasizes such entities because these often have limited resources to
comply with information collections.12 The act cites various techniques
for reducing burden on these small entities,13 and the guidance includes
techniques that might be used to simplify requirements for small entities,
such as asking fewer questions, taking smaller samples than for larger
entities, and requiring small entities to provide information less
frequently.

Our review of the case examples found that for the first part of the
certification, which focuses on reducing burden on the public, the files
generally contained the specific information and justifications called for
in the guidance. However, none of the case examples

11OMB's instructions to agencies state that a small entity may be (1) a
small business, which is deemed to be one that is independently owned and
operated and that is not dominant in its field of operation; (2) a small
organization, which is any not-for-profit enterprise that is independently
owned and operated and is not dominant in its field; or (3) a small
government jurisdiction, which is a government of a city, county, town,
township, school district, or special district with a population of less
than 50,000.

12"Particularly for small businesses, paperwork burdens can force the
redirection of resources away from business activities that might
otherwise lead to new and better products and services, and to more and
better jobs. Accordingly, the Federal Government owes the public an
ongoing commitment to scrutinize its information requirements to ensure
the imposition of only those necessary for the proper performance of an
agency's functions." H. Report 104-37 (Feb. 15, 1995) p. 23.

13These include (a) establishing different compliance or reporting
requirements or timetables for respondents with fewer available resources;
(b) clarifying, consolidating, or simplifying compliance and reporting
requirements; and (c) exempting certain respondents from coverage of all
or part of the collection.

contained support that addressed how the agency ensured that the
collection was the least burdensome necessary. According to agency CIO
officials, the primary cause for this absence of support is that OMB
instructions and guidance do not direct agencies to provide this
information explicitly as part of the approval package.

For the part of the certification that focuses on small businesses, our
governmentwide sample included examples of various agency activities that
are consistent with this standard. For instance, Labor officials exempted
6 million small businesses from filing an annual report; telephoned small
businesses and other small entities to assist them in completing a
questionnaire; reduced the number of small businesses surveyed; and
scheduled fewer compliance evaluations on small contractors.

For four of our case studies, however, complete information that would
support certification of this part of the standard was not available.
Seven of the 12 case studies involved collections that were reported to
impact businesses or other for-profit entities, but for 4 of the 7, the
files did not explain either

0M why small businesses were not affected or

0M	even though such businesses were affected, that burden could or could
not be reduced.

Referring to methods used to minimize burden on small business, the files
included statements such as "not applicable." These statements do not
inform the reviewer whether there was an effort made to reduce burden on
small entities or not. When we asked agencies about these four cases, they
indicated that the collections did, in fact, affect small business.

OMB's instructions to agencies on this part of the certification require
agencies to describe any methods used to reduce burden only if the
collection of information has a "significant economic impact on a
substantial number of small entities." This does not appropriately reflect
the act's requirements concerning small business: the act requires that
the CIO certify that the information collection reduces burden on small
entities in general, to the extent practical and appropriate, and provides
no thresholds for the level

of economic impact or the number of small entities affected. OMB officials
acknowledged that their instruction is an "artifact" from a previous form
and more properly focuses on rulemaking rather than the information
collection process.

The lack of support for these certifications appears to be influenced by a
variety of factors. In some cases, as described above, OMB guidance and
instructions are not comprehensive or entirely accurate. In the case of
the duplication standard specifically, IRS officials said that the agency
does not need to further justify that its collections are not duplicative
because (1) tax data are not collected by other agencies so there is no
need for the agency to contact them about proposed collections and (2) IRS
has an effective internal process for coordinating proposed forms among
the agency's various organizations that may have similar information.
Nonetheless, the law and instructions require support for these
assertions, which was not provided.

In addition, agency reviewers told us that management assigns a relatively
low priority and few resources to reviewing information collections.
Further, program offices have little knowledge of and appreciation for the
requirements of the PRA. As a result of these conditions and a lack of
detailed program knowledge, reviewers often have insufficient leverage
with program offices to encourage them to improve their justifications.

When support for the PRA certifications is missing or inadequate, OMB, the
agency, and the public have reduced assurance that the standards in the
act, such as those on avoiding duplication and minimizing burden, have
been consistently met.

  Two Agencies Have Developed Processes to Reduce Burden Associated with
  Information Collections

IRS and EPA have supplemented the standard PRA review process with
additional processes aimed at reducing burden while maximizing utility.
These agencies' missions require them both to

deal extensively with information collections, and their management has
made reduction of burden a priority.14

In January 2002, the IRS Commissioner established an Office of Taxpayer
Burden Reduction, which includes both permanently assigned staff and staff
temporarily detailed from program offices that are responsible for
particular information collections. This office chooses a few forms each
year that are judged to have the greatest potential for burden reduction
(these forms have already been reviewed and approved through the CIO
process). The office evaluates and prioritizes burden reduction
initiatives by

0M determining the number of taxpayers impacted;

0M quantifying the total time and out-of-pocket savings for taxpayers;

0M	evaluating any adverse impact on IRS's voluntary compliance efforts;

0M	assessing the feasibility of the initiative, given IRS resource
limitations; and

0M tying the initiative into IRS objectives.

Once the forms are chosen, the office performs highly detailed, indepth
analyses, including extensive outreach to the public affected, the users
of the information within and outside the agency, and other stakeholders.
This analysis includes an examination of the need for each data element
requested. In addition, the office thoroughly reviews form design.15

The office's Director16 heads a Taxpayer Burden Reduction Council, which
serves as a forum for achieving taxpayer burden reduction

14"IRS is committed to reducing taxpayer burden and established the Office
of Taxpayer Burden Reduction (OTBR) in January 2002 to lead its efforts."
Congressional testimony by the IRS Commissioner, April 20, 2004, before
the Subcommittee on Energy Policy, Natural Resources, and Regulatory
Affairs, House Committee on Government Reform.

15In congressional testimony, the IRS Commissioner stated that OMB had
referred another agency to IRS's Office of Taxpayer Burden Reduction as an
example of a "best practice" in burden reduction in government.

16 The Director reports to the IRS Commissioner for the Small Business and
Self-Employed Division.

throughout IRS. IRS reports that as many as 100 staff across IRS and other
agencies can be involved in burden reduction initiatives, including other
federal agencies, state agencies, tax practitioner groups, taxpayer
advocacy panels, and groups representing the small business community.

The council directs its efforts in five major areas:

0M simplifying forms and publications;

0M streamlining internal policies, processes, and procedures;

0M	promoting consideration of burden reductions in rulings, regulations,
and laws;

0M	assisting in the development of burden reduction measurement
methodology; and

0M	partnering with internal and external stakeholders to identify areas of
potential burden reduction.

IRS reports that this targeted, resource-intensive process has achieved
significant reductions in burden: over 200 million burden hours since
2002. For example, it reports that about 95 million hours of taxpayer
burden were reduced through increases in the incomereporting threshold on
various IRS schedules.17 Another burden reduction initiative includes a
review of the forms that 15 million taxpayers use to request an extension
to the date for filing their tax returns.18

Similarly, EPA officials stated that they have established processes for
reviewing information collections that supplement the standard PRA review
process. These processes are highly detailed and

17In addition, the office reports that IRS staff positions could be freed
up through its efforts to raise the reporting threshold on various tax
forms and schedules. Fewer IRS positions are needed when there are fewer
tax forms and schedules to be reviewed.

18 We did not verify the accuracy of IRS's reported burden-hour savings.
We have previously reported that the estimation model that IRS uses for
compliance burden ignores important components of burden and has limited
capabilities for analyzing the determinants of burden. See GAO, Tax
Administration: IRS Is Working to Improve Its Estimates of Compliance
Burden, GAO/GGD-00-11 (Washington, D.C.: May 22, 2000). Moreover, IRS has
an effort under way to revise the methodology used to compute burden. That
new methodology, when completed, may result in different estimates of
reduced burden hours.

evaluative, with a focus on burden reduction, avoiding duplication, and
ensuring compliance with PRA. According to EPA officials, the impetus for
establishing these processes was the high visibility of the agency's
information collections and the recognition, among other things, that the
success of EPA's enforcement mission depended on information collections
being properly justified and approved: in the words of one official,
information collections are the "life blood" of the agency.

According to these officials, the CIO staff are not generally closely
involved in burden reduction initiatives, because they do not have
sufficient technical program expertise and cannot devote the extensive
time required.19 Instead, these officials said that the CIO staff's focus
is on fostering high awareness within the agency of the requirements
associated with information collections, educating and training the
program office staff on the need to minimize burden and the impact on
respondents, providing an agencywide perspective on information
collections to help avoid duplication, managing the clearance process for
agency information collections, and acting as liaison between program
offices and OMB during the clearance process. To help program offices
consider PRA requirements such as burden reduction and avoiding
duplication as they are developing new information collections or working
on reauthorizing existing collections, the CIO staff also developed a
handbook20 to help program staff understand what they need to do to comply
with PRA and gain OMB approval.

In addition, program offices at EPA have taken on burden reduction
initiatives that are highly detailed and lengthy (sometimes lasting years)
and that involve extensive consultation with stakeholders (including
entities that supply the information, citizens groups, information users
and technical experts in the agency and elsewhere, and state and local
governments). For example, EPA

19These officials added that in exceptional circumstances the CIO office
has had staff available to perform such projects, but generally in
collaboration with program offices.

20EPA Office of Environmental Information, Collection Strategies Division,
ICR Handbook: EPA's Guide to Writing Information Collection Requests Under
the Paperwork Reduction Act of 1995, draft (revised March 2005).

reports that it amended its regulations to reduce the paperwork burden
imposed under the Resource Conservation and Recovery Act. One burden
reduction method EPA used was to establish higher thresholds for small
businesses to report information required under the act. EPA estimates
that the initiative will reduce burden by 350,000 hours and save $22
million annually. Another EPA program office reports that it is proposing
a significant reduction in burden for its Toxic Release Inventory
program.21

Overall, EPA and IRS reported that they produced significant reductions in
burden by making a commitment to this goal and dedicating resources to it.
In contrast, for the 12 information collections we examined, the CIO
review process resulted in no reduction in burden. Further, the Department
of Labor reported that its PRA reviews of 175 proposed collections over
nearly 2 years did not reduce burden.22 Similarly, both IRS and EPA
addressed information collections that had undergone CIO review and
received OMB approval and nonetheless found significant opportunities to
reduce burden.

In summary, government agencies often need to collect information to
perform their missions. The PRA puts in place mechanisms to focus agency
attention on the need to minimize the burden that these information
collections impose-while maximizing the public benefit and utility of
government information collections-but these mechanisms have not succeeded
in achieving the ambitious reduction goals set forth in the 1995
amendments. Achieving real reductions in the paperwork burden is an
elusive goal, as years of PRA reports attest.

Among the mechanisms to fulfill the PRA's goals is the CIO review required
by the act. However, as this process is currently implemented, it has
limited effect on the quality of support provided

21We did not verify the accuracy of EPA's burden reduction estimates.

22These reviews did result in a 1.3 percent reduction in calculated burden
by correcting mathematical errors in program offices' submissions.

for information collections. CIO reviews appear to be lacking the rigor
that the Congress envisioned. Many factors have contributed to these
conditions, including lack of management support, weaknesses in OMB
guidance, and the CIO staff's lack of specific program expertise. As a
result, OMB, federal agencies, and the public have reduced assurance that
government information collections are necessary and that they
appropriately balance the resulting burden with the benefits of using the
information collected.

The targeted approaches to burden reduction used by IRS and EPA suggest
promising alternatives to the current process outlined in the PRA.
However, the agencies' experience also suggests that to make such an
approach successful requires top-level executive commitment, extensive
involvement of program office staff with appropriate expertise, and
aggressive outreach to stakeholders. Indications are that such an approach
would also be more resourceintensive than the current process. Moreover,
such an approach may not be warranted at all agencies that do not have the
level of paperwork issues that face IRS and similar agencies.
Consequently, it is critical that any efforts to expand the use of the IRS
and EPA models consider these factors.

In our report, we suggested options that the Congress may want to consider
in its deliberations on reauthorizing the act, including mandating pilot
projects to test and review alternative approaches to achieving PRA goals.
We also made recommendations to the Director of OMB, including that the
office alter its current guidance to clarify and emphasize issues raised
in our review, and to the heads of the four agencies to improve agency
compliance with the act's provisions.

Madam Chairman, this completes my prepared statement. I would be pleased
to answer any questions.

  Contacts and Acknowledgments

For future information regarding this testimony, please contact Linda
Koontz, Director, Information Management, at (202) 512-6420, or
[email protected]. Other individuals who made key contributions to this
testimony were Barbara Collier, Alan Stapleton, Warren Smith, and
Elizabeth Zhao.

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