Organizational Transformation: Implementing Chief Operating	 
Officer/Chief Management Officer Positions in Federal Agencies	 
(13-DEC-07, GAO-08-322T).					 
                                                                 
As agencies across the federal government embark on large-scale  
organizational change needed to address 21st century challenges, 
there is a compelling need for leadership to provide the	 
continuing, focused attention essential to completing these	 
multiyear business-related transformations. At the same time,	 
many agencies are suffering from a range of long-standing	 
management problems that are undermining their ability to	 
accomplish their missions and achieve results. One proposed	 
approach to address these challenges is to have COO/ CMO	 
positions in federal agencies. This statement is mostly drawn	 
from GAO's report released today (GAO-08-34) that discusses	 
criteria that can be used to determine the type of COO/CMO that  
ought to be established in federal agencies and strategies for	 
implementing these positions. To do this, GAO reviewed four	 
organizations with COO/CMO-type positions and convened a forum.  
GAO also discusses previous GAO work on DOD and DHS. GAO's report
recommends that the Office of Management and Budget (OMB),	 
working with the President's Management Council use the 	 
identified criteria when assessing the type of COO/CMO positions 
appropriate for federal agencies and the strategies for 	 
implementing these positions. Also, GAO suggests that Congress	 
consider these criteria and strategies as it develops and reviews
legislative proposals for these positions.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-322T					        
    ACCNO:   A78869						        
  TITLE:     Organizational Transformation: Implementing Chief	      
Operating Officer/Chief Management Officer Positions in Federal  
Agencies							 
     DATE:   12/13/2007 
  SUBJECT:   Accountability					 
	     Continuity of operations				 
	     Employees						 
	     Evaluation criteria				 
	     Executive agencies 				 
	     Federal agencies					 
	     Federal agency reorganization			 
	     Financial management				 
	     Human capital					 
	     Internal controls					 
	     Organizational change				 
	     Program evaluation 				 
	     Reorganization					 
	     Reporting requirements				 
	     Strategic planning 				 
	     Business planning					 
	     Business transformation				 
	     Program implementation				 
	     GAO High Risk Series				 

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GAO-08-322T

   

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material separately. 

Testimony: 

Before the Subcommittee on Oversight of Government Management, the 
Federal Workforce, and the District of Columbia, Committee on Homeland 
Security and Governmental Affairs, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EST: 

December 13, 2007: 

Organizational Transformation: 

Implementing Chief Operating Officer/Chief Management Officer 
Positions in Federal Agencies: 

Statement of David M. Walker Comptroller General of the United States: 

GAO-08-322T: 

GAO Highlights: 

Highlights of GAO-08-322T, a testimony to the Subcommittee on Oversight 
of Government Management, the Federal Workforce, and the District of 
Columbia, Committee on Homeland Security and Governmental Affairs, U.S. 
Senate. 

Why GAO Did This Study: 

As agencies across the federal government embark on large-scale 
organizational change needed to address 21st century challenges, there 
is a compelling need for leadership to provide the continuing, focused 
attention essential to completing these multiyear business-related 
transformations. At the same time, many agencies are suffering from a 
range of long-standing management problems that are undermining their 
ability to accomplish their missions and achieve results. One proposed 
approach to address these challenges is to have COO/CMO positions in 
federal agencies. 

This statement is mostly drawn from GAOï¿½s report released today (GAO-08-
34) that discusses criteria that can be used to determine the type of 
COO/CMO that ought to be established in federal agencies and strategies 
for implementing these positions. To do this, GAO reviewed four 
organizations with COO/CMO-type positions and convened a forum. GAO 
also discusses previous GAO work on DOD and DHS. 

What GAO Found: 

GAO has long advocated that the Department of Defense (DOD) and the 
Department of Homeland Security (DHS) could benefit from a full-time 
and senior-level chief operating officer (COO)/chief management officer 
(CMO) position, with a term appointment of at least 5 to 7 years, and a 
performance agreement. In fact, every federal agency can benefit from a 
senior leader acting as a COO/CMO. While the type of COO/CMO may vary 
depending on the characteristics of the organization, a number of 
criteria can be used to determine the appropriate type of COO/CMO 
position in a federal agency. These criteria include the history of 
organizational performance, degree of organizational change needed, 
nature and complexity of mission, organizational size and structure, 
and current leadership talent and focus. For example, the existing 
deputy position could carry out the integration and business 
transformation roleï¿½this type of COO/CMO might be appropriate in a 
relatively stable or small organization. Or, a second deputy position 
could be created to bring strong focus to the integration and business 
transformation of the agency. This might be the most appropriate type 
of COO/CMO for a large and complex organization undergoing a 
significant transformation to reform long-standing management problems. 

GAO identified six key strategies that agencies can follow in 
implementing COO/CMO positions in federal agencies. However, the 
implementation of any one approach should be determined within the 
context of the agencyï¿½s specific facts and circumstances. 

Key Strategies for Implementing COO/CMO Positions: 

Define the specific roles and responsibilities of the COO/CMO position: 
Once clearly defined, these specific roles and responsibilities should 
be communicated throughout the organization. 

Ensure that the COO/CMO has a high level of authority and clearly 
delineated reporting relationships: 
The organizational level and span of control of the COO/CMO position is 
crucial in affecting the incumbentï¿½s authority and status within the 
organization. 

Foster good executive-level working relationships for maximum 
effectiveness: 
Effective working relationships can help greatly to ensure that the 
people, processes, and technology are well-aligned in support of the 
agencyï¿½s mission. 

Establish integration and transformation structures and processes in 
addition to the COO/CMO position: 
These structures and processes could include business transformation 
offices, senior executive committees, functional councils, and 
crosscutting teams that are actively involved in strategic planning, 
budgeting, performance monitoring, information sharing, and decision 
making. 

Promote individual accountability and performance through specific job 
qualifications and effective performance management: 
A specific set of job qualification standards could aid in ensuring 
that the incumbent has the necessary knowledge and experience. A 
clearly defined, realistic performance agreement would also assist in 
clarifying expectations and reinforcing accountability. 

Provide for continuity of leadership in the COO/CMO position: 
The administration and Congress could also consider options of other 
possible mechanisms to help agencies in maintaining leadership 
continuity for the COO/CMO position, such as term and career 
appointments. 

Source: GAO analysis. 

[End of table] 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-322T]. For more information, contact 
Bernice Steinhardt at (202) 512-6806 or [email protected]. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss one proposed approach to 
address systemic federal governance and management challenges: the use 
of chief operating officer (COO)/chief management officer (CMO) 
positions in federal agencies, particularly in the Department of 
Defense (DOD) and Department of Homeland Security (DHS). As agencies 
across the federal government embark on large-scale organizational 
change needed to address 21st century challenges, there is a compelling 
need for leadership to provide the continuing, focused attention 
essential to completing these multiyear business-related 
transformations. At the same time, many agencies are suffering from a 
range of long-standing management problems that are undermining their 
ability to efficiently, economically, and effectively accomplish their 
missions and achieve results. New leadership models are needed to help 
elevate, integrate, and institutionalize these business transformation 
and management reform efforts. 

As you know, I share your views on the need for a COO/CMO position for 
DOD and DHS. However, these are not the only agencies that could 
benefit from such a senior leadership position. While the type of COO/
CMO may vary depending on the characteristics of the organization--
whether, for example, it is a large organization undergoing significant 
transformation or a small or stable agency--every federal agency can 
benefit from a senior leader serving as a COO/CMO. Each agency, of 
course, faces its own unique circumstances and challenges in attempting 
to improve and transform its business operations. For that reason, at 
your request, in the report that is being released today we looked at 
the experiences of several organizations with COOs/CMOs and used this 
and other information to outline the criteria that can be used to 
determine the most appropriate type of COO/CMO for a particular agency 
as well as the strategies that agencies can follow in implementing 
these positions.[Footnote 1] These strategies include making sure that 
the COO/CMO has a sufficiently high level of authority and continuity 
in the position. We believe that these criteria and strategies can be 
helpful to the Congress, as it considers legislation for COO/CMO 
positions, and to the Office of Management and Budget (OMB) and the 
President's Management Council as they consider the leadership 
positions necessary to carry out business transformation and management 
reforms. 

My statement today is primarily drawn from our report released today on 
implementing COO/CMO positions in federal agencies and previously 
issued GAO work on DOD and DHS, all of which were developed in 
accordance with generally accepted government auditing 
standards.[Footnote 2] To develop these criteria and strategies, we (1) 
gathered information on the experiences and views of officials at four 
organizations with COO/CMO-type positions and (2) convened a forum to 
gather insights from individuals with experience and expertise in 
business transformation, federal and private sector management, and 
change management. The four organizations included in our review are 
three federal agencies and one nonprofit organization: the Department 
of the Treasury (Treasury), the Internal Revenue Service (IRS), the 
Department of Justice (Justice), and the Massachusetts Institute of 
Technology (MIT).[Footnote 3] To select the organizations to include in 
our study, we collected and reviewed literature on general management 
integration approaches and organizational structures of public and 
private sector organizations, reviewed our prior work, and consulted 
with various nonprofit organizations with experience in the federal 
government. We sought to identify organizations that had senior-level 
officials with responsibility for integrating key management functions, 
and who generally did not have direct responsibility for the mission 
programs and policies of their organizations. For the four 
organizations included in our review, the COOs/CMOs either reported to 
the organization head or reported to an individual who reports to the 
organization head. Attachment I depicts the reporting relationships of 
the four COO/CMO positions. We also hosted a forum on April 24, 2007, 
to bring together former and current government executives and 
officials from private business and nonprofit organizations to discuss 
when and how a COO/CMO might effectively provide the continuing, 
focused attention essential for integrating key management functions 
and undertaking multiyear organizational business-related 
transformations. 

Background: 

The concept of the COO/CMO position largely came out of the creation of 
performance-based organizations (PBO) in the federal government in the 
late 1990s and early in this decade. During that time, the 
administration and Congress renewed their focus on the need to 
restructure federal agencies and hold them accountable for achieving 
program results. To this end, three PBOs were established,[Footnote 4] 
which were modeled after the United Kingdom's executive 
agencies.[Footnote 5] A PBO is a discrete departmental unit that is 
intended to transform the delivery of public services by having the 
organization commit to achieving specific measurable goals with targets 
for improvement in exchange for being allowed to operate without the 
constraints of certain rules and regulations to achieve these targets. 
The clearly defined performance goals are to be coupled with direct 
ties between the achievement of the goals and the pay and tenure of the 
head of the PBO, often referred to as the COO. The COO is appointed for 
a set term of typically 3 to 5 years, subject to an annual performance 
agreement, and is eligible for bonuses for improved organizational 
performance. 

With the backdrop of these PBOs and an ongoing focus on transforming 
organizational cultures in the federal government, we convened a 
roundtable of government leaders and management experts on September 9, 
2002, to discuss the COO concept and how it might apply within selected 
federal departments and agencies.[Footnote 6] The intent of the 
roundtable was to generate ideas and to engage in an open dialogue on 
the possible application of the COO concept to selected federal 
departments and agencies. It was generally agreed at this roundtable 
discussion that the implementation of any approach should be determined 
within the context of the specific facts and circumstances that relate 
to each individual agency. Nonetheless, there was general agreement on 
the importance of the following actions for organizational 
transformation and management reform: 

* Elevate attention on management issues and transformational change. 
Top leadership attention is essential to overcome organizations' 
natural resistance to change, marshal the resources needed to implement 
change, and build and maintain the organizationwide commitment to new 
ways of doing business. 

* Integrate various key management and transformation efforts. There 
needs to be a single point within agencies with the perspective and 
responsibility--as well as authority--to ensure the successful 
implementation of functional management and, if appropriate, 
transformational change efforts. 

* Institutionalize accountability for addressing management issues and 
leading transformational change. The management weaknesses in some 
agencies are deeply entrenched and long-standing, and it can take at 
least 5 to 7 years of sustained attention and continuity to fully 
implement transformations and change management initiatives. 

In the time since the 2002 roundtable, legislative proposals have been 
introduced and are still pending in this Congress to establish CMO 
positions at DOD and DHS to help address transformation efforts at the 
two departments, both of which are responsible for various areas 
identified on our biennial update of high-risk programs.[Footnote 7] 
These legislative proposals differ somewhat in content but would 
essentially create a senior-level position to serve as a principal 
advisor to the secretary on matters related to the management of the 
department, including management integration and business 
transformation.[Footnote 8] Some of these legislative proposals also 
include specific provisions that spell out qualifications for the 
position, require a performance contract, and provide for a term 
appointment of 5 or 7 years. At the present time, no federal department 
has a COO/CMO-type position with all these characteristics. In August 
2007, the proposal for the Undersecretary for Management position at 
DHS to become the CMO at an Executive Level II,[Footnote 9] but without 
a term appointment, was enacted into law.[Footnote 10] DOD issued a 
directive on September 18, 2007, that assigned CMO responsibilities to 
the current Deputy Secretary of Defense in addition to his other 
responsibilities. However, as I will discuss later in this statement, 
we do not believe that these actions go far enough. 

The heads of federal departments and selected agencies designate a COO, 
who is usually the deputy or another official with agencywide 
authority, to sit on the President's Management Council. However, 
deputy secretaries and the other senior officials designated as COOs do 
not have all of the characteristics of a COO/CMO that I just described, 
including a term appointment and performance agreement. The council was 
created by President Clinton in 1993 in order to advise and assist the 
President and Vice President in ensuring that management reforms are 
implemented throughout the executive branch.[Footnote 11] The Deputy 
Director for Management of OMB chairs the council, and the council is 
responsible for: 

* improving overall executive branch management, including 
implementation of the President's Management Agenda (PMA);[Footnote 12] 

* coordinating management-related efforts to improve government 
throughout the executive branch and, as necessary, resolving specific 
interagency management issues; 

* ensuring the adoption of new management practices in agencies 
throughout the executive branch; and: 

* identifying examples of, and providing mechanisms for, interagency 
exchange of information about best management practices. 

Specific Criteria Can Help in Assessing the Type of COO/CMO Position 
Needed in a Federal Agency: 

Because each agency has its own set of characteristics, challenges, and 
opportunities, the type of COO/CMO to be established in a federal 
agency should be determined within the context of the specific facts 
and circumstances surrounding that agency. Nevertheless, a number of 
criteria can be used to determine the type of COO/CMO position for an 
agency. These criteria are the agency's: 

* history of organizational performance, such as the existence of long-
standing management weaknesses and the failure rates of major projects 
or initiatives; 

* degree of organizational change needed, such as the status of ongoing 
major transformational efforts and the challenge of reorganizing and 
integrating disparate organizational units or cultures; 

* nature and complexity of mission, such as the range, risk, and scope 
of the agency's mission; 

* organizational size and structure, such as the number of employees, 
geographic dispersion of field offices, number of management layers, 
types of reporting relationships, and degree of centralization of 
decision making; and: 

* current leadership talent and focus, such as the extent of knowledge 
and the level of focus of the agency's managers on management functions 
and change initiatives, and the number of political appointees in key 
positions. 

These five criteria are important for determining the appropriate type 
of COO/CMO position, which in turn can inform many other elements of 
the position, including roles and responsibilities, job qualifications, 
reporting relationships, and decision-making structures and processes. 
Based on these criteria, there could be several types of COO/CMO 
positions, including the following: 

* The existing deputy position could carry out the integration and 
business transformation role. This type of COO/CMO might be appropriate 
in a relatively stable or small organization. 

* A senior-level executive who reports to the deputy, such as a 
principal undersecretary for management, could be designated to 
integrate key management functions and lead business transformation 
efforts in the agency. This type of COO/CMO might be appropriate for a 
larger organization. 

* A second deputy position could be created to bring strong focus to 
the integration and business transformation of the agency, while the 
other deputy position would be responsible for leading the operational 
policy and mission-related functions of the agency. For a large and 
complex organization undergoing a significant transformation to reform 
long-standing management problems, this might be the most appropriate 
type of COO/CMO. 

To address long-standing management and business transformation 
problems, we have long advocated that DOD and DHS could benefit from a 
senior-level COO/CMO position, with a term appointment of at least 5 to 
7 years, and a performance agreement. We continue to identify DOD's 
approach to business transformation and implementing and transforming 
DHS on GAO's biennial high-risk list of programs. DOD dominates our 
list of agencies with high-risk programs designated as vulnerable to 
waste, fraud, and abuse of funds, bearing responsibility, in whole or 
in part, for 15 of 27 high-risk areas.[Footnote 13] 

While DOD has recently designated the current DOD Deputy Secretary as 
the CMO in addition to his other responsibilities, we believe this 
action does not go far enough to change the status quo and ensure 
sustainable success of the overall business transformation effort 
within the department. We recognize the commitment and elevated 
attention that the current Deputy Secretary of Defense and other senior 
leaders have clearly shown in addressing deficiencies in the 
department's business operations. For example, the Deputy Secretary has 
overseen the creation of various business-related entities, such as the 
Defense Business Systems Management Committee and the Business 
Transformation Agency, and has been closely involved in monthly 
meetings of both the Defense Business Systems Management Committee and 
the Deputy's Advisory Working Group, a group that provides 
departmentwide strategic direction on various issues. In our view, 
subsuming the duties within the responsibilities of the individual 
currently serving as the Deputy Secretary largely represents a 
continuation of the status quo and will not provide full-time attention 
or continuity as administrations change. While the Deputy Secretary may 
be at the right level, the substantial demands of the position make it 
exceedingly difficult for the incumbent to maintain the focus, 
oversight, and momentum needed to resolve business operational 
weaknesses, including the many high-risk areas within DOD. Furthermore, 
the assignment of CMO duties to an individual with a limited term in 
the position does not ensure continuity of effort or sustained success 
within and across administrations. We continue to believe a CMO 
position should be codified in statute as a separate position, at the 
right level, and with the appropriate term in office. In fact, 
consensus exists among GAO's work and other studies (e.g. the Defense 
Business Board and the Institute for Defense Analysis),that DOD needs a 
full-time senior management official with a term appointment to provide 
focused and sustained leadership over business transformation efforts. 

Additionally, DHS is experiencing particularly significant challenges 
in integrating its disparate organizational cultures, and multiple 
management processes and systems, which make it an appropriate 
candidate for a COO/CMO as a second deputy position or alternatively as 
a principal undersecretary for management position. Designating the 
Undersecretary for Management at DHS as the CMO at an Executive Level 
II is a step in the right direction, but this change does not go far 
enough. A COO/CMO for DHS with a limited term that does not transition 
across administrations will not help to ensure the continuity of focus 
and attention needed to protect the security of our nation. DHS faces 
significant management and organizational transformation challenges as 
it works to protect the nation from terrorism and simultaneously 
establish itself. DHS must integrate approximately 180,000 employees 
from 22 originating agencies, consolidate multiple management systems 
and processes, and transform into a more effective organization with 
robust planning, management, and operations. However, DHS continues to 
lack not only a comprehensive management integration strategy with 
overall goals and a timeline, but also a dedicated team with the 
authority and responsibility to help develop and implement this 
strategy. A COO/CMO at the appropriate organizational level at DHS, 
with a term appointment, would provide the elevated senior leadership 
and concerted and long-term attention required to marshal this effort. 

Strategies for Implementing COO/CMO Positions at Federal Agencies: 

Once the type of COO/CMO is determined, the following six key 
strategies can be useful in implementing COO/CMO positions in federal 
agencies, including making sure that the COO/CMO has a sufficiently 
high level of authority and continuity in the position: 

Define the specific roles and responsibilities of the COO/CMO position. 
For carrying out the role of management integration, it should be clear 
which of the agency's key management functions are under the direct 
purview of the COO/CMO. Depending on the agency, the COO/CMO might have 
responsibility for human capital, financial management, information 
resources management, and acquisition management as well as other 
management functions in the agency, such as strategic planning, program 
evaluation, facilities and installations, or safety and security, as 
was the case with the four organizations we reviewed. As the COO/CMO is 
a leader of business transformation in the organization, it should 
likewise be clear which major change efforts are the direct 
responsibility of the COO/CMO. Once clearly defined, these specific 
roles and responsibilities should be communicated throughout the 
organization. 

Ensure that the COO/CMO has a high level of authority and clearly 
delineated reporting relationships. The COO/CMO concept is consistent 
with the governance principle that there needs to be a single point 
within agencies with the perspective and responsibility to ensure the 
successful implementation of functional management and business 
transformation. The organizational level and span of control of the 
COO/CMO position is crucial in affecting the incumbent's authority and 
status within the organization. At both IRS and MIT, the COO/CMO 
reports to the head of the organization (i.e., second-level reporting 
position), and at Justice and Treasury, the COO/CMO reports through the 
deputy secretary (i.e., third-level reporting position). Although our 
interviews and the forum discussion uncovered differing views about the 
appropriate level and reporting relationships for a COO/CMO position, 
it was broadly recognized that any COO/CMO should have the high level 
of authority needed to ensure the successful implementation of 
functional management and business transformation efforts in the 
agency. 

Foster good executive-level working relationships for maximum 
effectiveness. Effective working relationships of the COO/CMO with the 
agency head and his or her peers can help greatly to ensure that the 
people, processes, and technology are well-aligned in support of the 
agency's mission. For example, officials at IRS stressed the importance 
of the working relationship between the agency's two deputy 
commissioners--one serving as the COO/CMO--in carrying out their 
respective roles and responsibilities in leading the mission and 
mission support offices of the agency. 

Establish integration and transformation structures and processes in 
addition to the COO/CMO position. While the position of COO/CMO can be 
a critical means for transforming and integrating business and 
management functions, other structures and processes need to be in 
place to support the COO/CMO in business transformation and management 
integration efforts across the organization. These structures and 
processes can include business transformation offices, senior executive 
committees, functional councils, and crosscutting teams that are 
actively involved in strategic planning, budgeting, performance 
monitoring, information sharing, and decision making. To bring focus 
and direction and help enforce decisions in the agency, the COO/CMO 
should be a key player in actively leading or supporting these 
integration structures and processes. 

Promote individual accountability and performance through specific job 
qualifications and effective performance management. A specific set of 
job qualification standards could aid in ensuring that the incumbent 
has the necessary knowledge and experience. Our interviews at the four 
organizations revealed that essential qualifications for a COO/CMO 
position include having broad management experience and a proven track 
record of making decisions in complex settings as well as having direct 
experience in, or solid knowledge of, the respective department or 
agency, but there were varying views as to whether qualifications 
should be statutory. To further clarify expectations and reinforce 
accountability, a clearly defined performance agreement with measurable 
organizational and individual goals would be warranted as well. Such 
agreements should contain clear expectations as well as appropriate 
incentives and rewards for outstanding performance and consequences for 
those who do not perform. 

Provide for continuity of leadership in the COO/CMO position. The 
administration and Congress could also consider options of other 
possible mechanisms to help agencies in maintaining leadership 
continuity for the COO/CMO position, such as term and career 
appointments, because organizational results and transformational 
efforts can take years to achieve. I share your concern about 
leadership continuity particularly for those DOD and DHS programs that 
we consider to be high risk as the administration heads for a 
presidential transition in early 2009. Foremost, an agency needs to 
have an executive succession and transition planning strategy that 
ensures a sustained commitment and continuity of leadership as 
individual leaders arrive or depart or serve in acting capacities. The 
administration and Congress could also consider other possible 
mechanisms to help agencies in maintaining leadership continuity for 
the position. For example, the benefits of a 5-to 7-year term 
appointment for the position, such as instilling a long-term focus, 
need to be weighed along with the potential challenges of a term 
appointment, such as a lack of rapport between members of a new senior 
leadership team with any change in administration. Term appointments 
for key leadership positions already exist at a number of agencies. 
(Attachment II provides a list of term appointments at a variety of 
U.S. agencies.) Moreover, as emphasized in our interviews and in the 
forum discussion, the appointment of career civil servants to the COO/
CMO position could be considered when assessing the position's roles, 
responsibilities, and reporting relationships. High turnover among 
politically appointed leaders in federal agencies can make it difficult 
to follow through with organizational transformation because of the 
length of time often needed to provide meaningful and sustainable 
results. 

Conclusions: 

As Congress considers COO/CMO positions for federal agencies, the 
criteria and strategies we identified should help to highlight key 
issues that need to be considered, both in design of the positions and 
in implementation. While Congress is currently focused on two of the 
most challenging agencies--DOD and DHS--the problems they face are, to 
varying degrees, shared by the rest of the federal government. Each 
agency, therefore, should consider the type of COO/CMO that would be 
appropriate for its organization, either by designating an existing 
position as the COO/CMO or creating a new position, and adopt the 
strategies we outline to implement such a position. Because it is 
composed of the senior management officials in each department and 
agency, we recommend in the report being released today that the 
President's Management Council, working closely with OMB, play a role 
in leading such an assessment and helping to ensure that due 
consideration is given to how each agency can improve its leadership 
structure for management. Moreover, given the council's charter to 
oversee government management reforms, it can help institutionalize a 
leadership position that will be essential to overseeing current and 
future reform efforts. 

Recent legislative proposals have called for certain features of the 
COO/CMO position that we have endorsed, including a direct reporting 
relationship to the departmental secretary, responsibility for 
integrating key management functions and overseeing overall business 
transformation efforts, the requirement for a performance agreement, 
and the designation of a term appointment. We are suggesting that 
Congress consider the criteria and strategies that I have discussed 
today as it continues to develop and review legislative proposals for 
the appropriate type of COO/CMO positions for all major federal 
agencies, recognizing that the implementation of any approach should be 
determined within the context of the specific facts and circumstances 
that relate to each agency. 

Mr. Chairman and members of the subcommittee, this concludes my 
prepared statement. I would be pleased to respond to any questions that 
you or other members of the subcommittee may have at this time. 

Contacts and Acknowledgements: 

For further information on this testimony, please contact Bernice 
Steinhardt, Director, Strategic Issues, at (202) 512-6806 or 
[email protected]. Contact points for our Office of Congressional 
Relations and Public Affairs may be found on the last page of this 
testimony. Individuals making key contributions to this testimony 
include Sarah Veale, Assistant Director; K. Scott Derrick; and 
Katherine Wulff. 

[End of section] 

Attachment I: Reporting Relationships for the COO/CMO Positions in Four 
Case-Study Organizations: 

[See PDF for image] 

This figure is a series of flow charts of reporting relationships, with 
the following data depicted: 

Second-level reporting positions: 
Internal Revenue Service:
Commissioner: receives reports from Deputy Commissioner for Services 
and Enforcement; 
Commissioner: receives reports from Deputy Commissioner for Operations 
Support. 

Second-level reporting positions: 
Massachusetts Institute of Technology: 
President: receives reports from Provost; 
President: receives reports from Chancellor; 
President: receives reports from Executive Vice-President. 

Third-level reporting positions: 
Department of the Treasury: 
Secretary: receives reports from Deputy Secretary; 
Deputy Secretary: receives reports from: 
* Under Secretary (three positions); 
* Heads of mission bureaus; 
* Assistant Secretary for Management. 

Third-level reporting positions: 
Department of Justice: 
Attorney General: receives reports from Deputy Attorney General; 
Deputy Attorney: General receives reports from: 
* Solicitor General; 
* Associate Attorney General; 
* Heads of mission bureaus; 
* Assistant Attorney General for Administration. 

Source: GAO presentation of IRS, MIT, Treasury, and Justice 
information. 

[End of figure] 

[End of section] 

Attachment II: Term Appointments at Selected U.S. Agencies: 

Agency: Air Traffic Organization,[A] Federal Aviation Administration 
(FAA); 
Position title and length of term: Chief Operating Officer; 5 years; 
Method of appointment and provision for reappointment: Appointed 
by the FAA Administrator, with the approval of the Air Traffic Services 
Committee. There is no statutory provision on reappointment of the 
officeholder; 
Conditions for removal and provisions for filling unexpired terms: The 
COO is to serve at the pleasure of the Administrator, and the 
Administrator is to make every effort to ensure stability and 
continuity in the leadership of the air traffic control system; 
Appointments to fill a vacancy occurring before the expiration 
of term shall be only for the remainder of that term. 

Agency: Architect of the Capitol; 
Position title and length of term: Architect of the Capitol; 10 years; 
Method of appointment and provision for reappointment: Appointed by the 
President, following recommendations from a special congressional 
commission, and confirmed by the Senate. May be appointed to more than 
one 10-year term; 
Conditions for removal and provisions for filling unexpired terms: 
There are no statutory conditions on the authority of the President to 
remove the officeholder. No statutory provision. 

Agency: Federal Bureau of Investigation; 
Position title and length of term: Director; 10 years; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. The officeholder 
may not be reappointed; 
Conditions for removal and provisions for filling unexpired terms: 
There are no statutory conditions on the authority of the President to 
remove the officeholder. No statutory provision. 

Agency: Federal Reserve Board; 
Position title and length of term: Chairman; 4 years[B]; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. There is no 
statutory limitation on a Chairman serving more than one 4-year 
term.[C]; 
Conditions for removal and provisions for filling unexpired terms: 
President may remove members for cause. An individual appointed to fill 
a vacancy among the seven members of the board shall hold office only 
for the unexpired term of his or her predecessor. 

Agency: Federal Student Aid, Department of Education; 
Position title and length of term: Chief Operating Officer; 3 to 5 
years; 
Method of appointment and provision for reappointment: Appointed by the 
Secretary of Education. May be reappointed by the Secretary to 
subsequent terms of 3 to 5 years as long as the incumbent's performance 
is satisfactory per required annual performance agreement; 
Conditions for removal and provisions for filling unexpired terms: The 
COO may be removed by the President or by the Secretary for misconduct 
or failure to meet performance goals set forth in the performance 
agreement. The President or the Secretary must communicate the reasons 
for any such removal to the appropriate committees of Congress. No 
statutory provision. 

Agency: Government Accountability Office; 
Position title and length of term: Comptroller General; 15 years; 
Method of appointment and provision for reappointment: Appointed by the 
President, following recommendations from a special congressional 
commission, and confirmed by the Senate. The officeholder is limited to 
a single 15-year term; 
Conditions for removal and provisions for filling unexpired terms: The 
Comptroller General may be removed by impeachment or by adoption of a 
joint resolution of Congress. Removal by joint resolution can occur 
only after notice and an opportunity for a hearing and only for certain 
specified reasons: permanent disability, inefficiency, neglect of duty, 
malfeasance, felony, or conduct involving moral turpitude. No 
statutory provision. 

Agency: Internal Revenue Service; 
Position title and length of term: Commissioner; 5 years; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. May be appointed 
to more than one 5-year term; 
Conditions for removal and provisions for filling unexpired terms: 
There are no statutory conditions on the authority of the President to 
remove the officeholder. Appointments to fill a vacancy occurring 
before the expiration of term shall be only for the remainder of that 
term. 

Agency: Office of Personnel Management; 
Position title and length of term: Director; 4 years[D]; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. There is no 
statutory provision on reappointment of the officeholder; 
Conditions for removal and provisions for filling unexpired terms: 
There are no statutory conditions on the authority of the President to 
remove the officeholder. No statutory provision. 

Agency: Office of the Comptroller of the Currency; 
Position title and length of term: Comptroller of the Currency; 5 
years; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. There is no 
statutory provision on reappointment of the officeholder; 
Conditions for removal and provisions for filling unexpired terms: May 
be removed by the President for reasons to be communicated by him or 
her to the Senate. No statutory provision. 

Agency: Office of Thrift Supervision; 
Position title and length of term: Director; 5 years[E]; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. There is no 
statutory provision on reappointment of the officeholder; 
Conditions for removal and provisions for filling unexpired terms: 
There are no statutory conditions on the authority of the President to 
remove the officeholder. Appointments to fill a vacancy occurring 
before the expiration of a term shall be appointed only for the 
remainder of that term. 

Agency: Social Security Administration; 
Position title and length of term: Commissioner; 6 years[F]; 
Method of appointment and provision for reappointment: Appointed by the 
President with the advice and consent of the Senate. There is no 
statutory provision on reappointment of the officeholder; 
Conditions for removal and provisions for filling unexpired terms: The 
officeholder may be removed only pursuant to a finding by the President 
of neglect of duty or malfeasance in office. Appointments to fill a 
vacancy occurring before the expiration of a term shall be appointed 
only for the remainder of that term. 

Agency: U.S. Patent and Trademark Office; 
Position title and length of term: Commissioner for Patents; 5 years; 
Method of appointment and provision for reappointment: Appointed by the 
Secretary of Commerce. May be reappointed to subsequent terms by the 
Secretary as long as the incumbent's performance is satisfactory per 
required annual performance agreement; 
Conditions for removal and provisions for filling unexpired terms: The 
Secretary may remove the Commissioner for misconduct or unsatisfactory 
performance under the required performance agreement. The Secretary 
must provide notification of any such removal to both Houses of 
Congress. No statutory provision. 

Agency: U.S. Patent and Trademark Office; 
Position title and length of term: Commissioner for Trademarks; 5 
years; 
Method of appointment and provision for reappointment: Appointed by the 
Secretary of Commerce. May be reappointed to subsequent terms by the 
Secretary as long as the incumbent's performance is satisfactory per 
required annual performance agreement; 
Conditions for removal and provisions for filling unexpired terms: The 
Secretary may remove the Commissioner for misconduct or unsatisfactory 
performance under the required performance agreement. The Secretary 
must provide notification of any such removal to both Houses of 
Congress. No statutory provision. 

Source: GAO. 

[A] Executive Order No. 13180 (Dec. 7, 2000) established the Air 
Traffic Organization within FAA and gave responsibility to head the Air 
Traffic Organization to the Chief Operating Officer for the Air Traffic 
Control System of FAA, a position created pursuant to Pub. L. No. 106-
181 (Apr. 5, 2000). 

[B] Members of the Federal Reserve Board, including the Chairman, serve 
terms of 14 years from the expiration of the terms of their 
predecessors. The Chairman's term is 4 years. 

[C] A Chairman may not be reappointed after serving a full 14-year term 
as a member. 

[D] The 4-year term does not have to coincide with the President's term 
in office. 

[E] An individual may continue to serve after the expiration of his or 
her term until a successor is appointed. 

[F] An individual may continue to serve after the expiration of his or 
her term until a successor enters office. 

[End of table] 

[End of section] 

Footnotes: 

[1] See GAO, Organizational Transformation: Implementing Chief 
Operating Officer/Chief Management Officer Positions in Federal 
Agencies, GAO-08-34 (Washington, D.C.: Nov. 1, 2007). 

[2] See GAO, Defense Business Transformation: Achieving Success 
Requires a Chief Management Officer to Provide Focus and Sustained 
Leadership, GAO-07-1072 (Washington, D.C.: Sept. 5, 2007), Department 
of Homeland Security: A Comprehensive and Sustained Approach Needed to 
Achieve Management Integration, GAO-05-139 (Washington, D.C.: Mar. 16, 
2005) and Chief Operating Officer Concept and its Potential Use as a 
Strategy to Improve Management at the Department of Homeland Security, 
GAO-04-876R (Washington, D.C.: June 28, 2004). 

[3] IRS is a bureau of Treasury. In this statement, we will often refer 
to the three federal organizations as agencies. 

[4] The three PBOs are Federal Student Aid in the Department of 
Education, the U.S. Patent and Trademark Office in the Department of 
Commerce, and the Air Traffic Organization in the Federal Aviation 
Administration. 

[5] For additional information, see GAO, Performance-Based 
Organizations: Lessons from the British Next Steps Initiative, GAO/
T-GGD-97-151 (Washington, D.C.: July 8, 1997). 

[6] GAO, Highlights of a GAO Roundtable: The Chief Operating Officer 
Concept: A Potential Strategy to Address Federal Governance Challenges, 
GAO-03-192SP (Washington, D.C.: Oct. 4, 2002). 

[7] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: 
January 2007). 

[8] For example, see S. 179 and H.R. 1585 (DOD) and S. 547 (DHS). 

[9] In this statement, "Level II" and "Level III" are used to refer to 
the level of compensation under the federal government's Executive 
Schedule, which does not necessarily correspond to the reporting level 
in the agency. We use "second level" and "third level" in reference to 
reporting relationships. 

[10] See Section 2405 of Pub. L. No. 110-53, 121 Stat. 266, 548-550 
(August 3, 2007). 

[11] The President's Management Council was reconstituted by President 
Bush in 2001. The council has focused its efforts on the management 
agendas of each administration. 

[12] The PMA was launched in August 2001 as a strategy for improving 
the management and performance of the federal government and includes 
five governmentwide initiatives: strategic management of human capital, 
competitive sourcing, improved financial performance, expanded 
electronic government, and budget and performance integration. OMB 
developed criteria to measure success and a PMA scorecard to track 
agency progress for each of the five initiatives. 

[13] GAO-07-310. 

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