Management Reform: Status of Agency Reinvention Lab Efforts (Chapter
Report, 03/20/96, GAO/GGD-96-69).
GAO reviewed the National Performance Review's (NPR) initiative to
establish reinvention labs in federal departments and agencies, focusing
on: (1) the labs' developmental status; (2) factors that hindered or
assisted their development; (3) whether the labs were collecting
performance data; and (4) whether the labs have achieved any results.
GAO found that: (1) more than 2 dozen federal agencies and other
entities have developed a total of 185 reinvention labs; (2) the labs
deal with a variety of issues, from personnel management to improving
operations using technology; (3) almost all of the labs consider
customer service as their primary goal, and consider other government
organizations to be customers; (4) while labs considered management
support to be important to lab development, the use of regulatory
waivers and communication about the lab's progress were rarely needed or
used; (5) other federal reform efforts, such as downsizing and the
implementation of the Government Performance and Results Act had both
positive and negative effects on the labs' development; (6) labs
experienced difficulties in sustaining efforts that crossed agency
boundaries or challenged agencies' existing cultures; (7) over
two-thirds of the labs had collected some type of performance data,
ranging from information on unit outputs to informal comments from staff
and customers, but some of the lab administrators refused to collect
performance data because they believed it was unnecessary or not
worthwhile; (8) the performance data are inconclusive, since there are
no previous data for comparison and the nature of the data is
subjective; (9) the labs have yielded results by improving customer
service, increasing unit productivity and employee morale, and reducing
costs at some federal sites; and (10) the value of the labs will be
realized only when lab efforts proven to be effective spread beyond the
lab sites.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-96-69
TITLE: Management Reform: Status of Agency Reinvention Lab Efforts
DATE: 03/20/96
SUBJECT: Federal downsizing
Agency missions
Federal agency reorganization
Customer service
Total quality management
Reengineering (management)
Surveys
Clearinghouses (information)
Information analysis operations
IDENTIFIER: National Performance Review
TQM
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Cover
================================================================ COVER
Report to the Senate Committee on Governmental Affairs and the House
Committee on Government Reform and Oversight
March 1996
MANAGEMENT REFORM - STATUS OF
AGENCY REINVENTION LAB EFFORTS
GAO/GGD-96-69
Reinvention Labs
(246072)
Abbreviations
=============================================================== ABBREV
APHIS - Animal and Plant Health Inspection Service
CAMS - Commerce Administrative Management System
CHA - Chicago Housing Authority
CIA - Central Intelligence Agency
CMD - Contract Management Division
DAS/DI - Deputy Assistant Secretary of Defense for Installations
DLA - Defense Logistics Agency
DOD - Department of Defense
DOE - Department of Energy
DOI - Department of the Interior
EC - Electronic Commerce
EDI - Electronic Data Interchange
FAR - Federal Acquisition Regulations
FSS - Federal Supply Service
GPRA - Government Performance and Results Act
GPO - Government Printing Office
GSA - General Services Administration
HUD - Department of Housing and Urban Development
IRS - Internal Revenue Service
IS - Information Services
ITS - Information Technology Service
KPI - Key Performance Indicators
MASC - Mountain Administrative Support Center
NIST - National Institute of Standards and Technology
NOAA - National Oceanic and Atmospheric Administration
NTIA - National Telecommunications and Information Administration
NPR - National Performance Review
NYRO - New York Regional Office
OMB - Office of Management and Budget
OPM - Office of Personnel Management
PBS - Public Buildings Service
PHA - Public Housing Authority
PHMAP - Public Housing Management Assessment Program
PPQ - Plant Protection and Quarantine
QI - Quality Improvement
SDWT - Self Directed Work Teams
SPC - Statistical Process Control
STAR - System to Target Assistance Resources
USBM - United States Bureau of Mines
USDA - United States Department of Agriculture
USGS - United States Geological Survey
VA - Department of Veterans Affairs
VACO - Veterans Affairs Central Office
VAMC - Veterans Affairs Medical Center
VHA - Veterans Health Administration
Letter
=============================================================== LETTER
B-260087
March 20, 1996
The Honorable Ted Stevens, Chairman
The Honorable John Glenn, Ranking
Minority Member
Committee on Governmental Affairs
United States Senate
The Honorable William F. Clinger, Jr., Chairman
The Honorable Cardiss Collins, Ranking
Minority Member
Committee on Government Reform and Oversight
House of Representatives
One part of the President's National Performance Review (NPR)
initiative has been the establishment of reinvention labs in a number
of departments and agencies. This report on the reinvention lab
effort was prepared as part of our ongoing body of work examining
NPR-related issues.
We are sending copies of the report to the Vice President and the
Director of the Office of Management and Budget. Copies will also be
made available to others upon request.
If you have any questions about this report or would like to discuss
it further, please contact me on (202) 512-8676. Major contributors
are listed in appendix XV.
L. Nye Stevens
Director, Federal Management and
Workforce Issues
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
The National Performance Review (NPR) is a major management reform
initiative begun by the President in 1993 and placed under the
direction of the Vice President. A key part of that initiative has
been the establishment of agency "reinvention labs," which are
designed to test ways that agencies could improve their performance
and customer service by reengineering work processes and eliminating
unnecessary regulations. Although a great deal has been written
about other NPR-related activities, no one has systematically studied
the operation of these labs. Therefore, as part of its ongoing body
of work examining NPR issues, GAO reviewed (1) the focus and
developmental status of the labs, (2) factors that hindered or
assisted their development, (3) whether the labs were collecting
performance data, and (4) whether the labs had achieved any results.
To accomplish these objectives, GAO visited 12 labs and conducted a
telephone and fax survey of all 185 of the labs.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
An interagency task force comprising staff temporarily assigned from
many federal agencies was established to implement NPR. Although it
has collected and disseminated information about the labs and
encouraged their progress, the NPR task force has deliberately taken
a "hands-off" approach to overseeing the labs. This approach has
allowed agencies to decide whether they will have any labs and has
not required the labs to make any progress reports. The Office of
Management and Budget (OMB), which is responsible for providing
management leadership across the executive branch, has been less
actively involved in the labs' development or oversight than the task
force.
Other management reform proposals have been initiated in recent
years, including significant downsizing of the federal workforce, the
Government Performance and Results Act's (GPRA) requirements that
agencies establish strategic goals and plans to measure results, and
agency restructuring proposals made as part of a second NPR phase
initiated in December 1994. Several congressional proposals have
also been made to eliminate entire agencies or to consolidate the
functions of several agencies.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
Officials representing agency reinvention labs throughout the country
indicated that the labs addressed a variety of topics. Although
nearly all of the survey respondents reported that customer service
was a primary goal of their labs, they frequently said that the labs'
customers were other governmental organizations, not the general
public as the Vice President originally suggested. At the time of
GAO's survey, about half of the labs had been fully implemented at
the lab site while the rest were still in the planning stage. Over
75 percent of the respondents who expressed an opinion said that the
labs had the support of both top political and career managers.
However, 60 percent of lab officials said they had not needed the
regulatory waivers that NPR officials and others believed would be
needed to develop the labs. Those labs that had requested waivers
often found them difficult to obtain, particularly from central
management agencies. Also, most of the lab officials said they had
not had a substantial amount of communication with either other labs
or with the NPR task force. However, respondents who said their labs
did engage in those types of communication indicated that they were
helpful. Lab officials indicated that contemporaneous reform
efforts, such as workforce downsizing, had both positive and negative
effects on the labs.
About two-thirds of the respondents indicated that they collected
data on their labs' performance, and more than 80 percent said these
data indicated that the labs had improved service, productivity, and
employee morale. Officials from most of the labs that had not
collected performance data said they intended to do so when their
labs were more developed. However, some lab or agency officials said
they did not believe such data were important. Other labs were
collecting informal comments or, more frequently, had no baseline
data against which post-lab data could be compared. Some agency
officials reportedly had not used the data the labs had collected.
GAO believes that the labs' results suggest a number of promising
approaches to improving existing agency work processes. However, GAO
also points out that the real value of the labs will be realized only
when the operational improvements they initiated, tested, and
validated achieve wider adoption.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
LABS VARIED IN DEVELOPMENT
AND SUBJECT AREAS
-------------------------------------------------------- Chapter 0:4.1
At the time of GAO's survey, more than 2 dozen agencies and other
federal entities had developed a total of 185 reinvention labs in
various parts of the country. Many of the labs were in progress,
about 50 percent had not been fully implemented at the lab site, and
less than 20 percent had been implemented beyond the lab site. Many
of the lab efforts reportedly began before the President initiated
the NPR effort, often as an outgrowth of the agencies' quality
improvement efforts. However, several lab officials said that the
designation of those initiatives as reinvention labs had
reinvigorated them and given them more latitude and visibility.
The labs covered a variety of issues, with topics ranging from such
traditional issues as personnel management and procurement systems
(each addressed by 45 percent of the labs) to such crosscutting
themes as how agencies could use technology to improve their
operations (38 labs). Nearly three-fourths of the respondents said
their labs addressed more than one subject area, and more than one-
third of the labs had multiple lines of effort.
The Vice President said that the labs were to be initiated where the
government served the public in a highly visible way, and virtually
all of the lab officials GAO surveyed indicated that customer service
was a primary goal of their efforts. However, the labs' customers
varied by lab and did not always directly involve the public. Most
of the lab officials viewed at least one of their labs' customers as
other governmental organizations, and for some of the labs, a
government organization was their only customer. (See ch. 2.)
A VARIETY OF FACTORS
AFFECTED THE LABS'
DEVELOPMENT
-------------------------------------------------------- Chapter 0:4.2
NPR officials and others expected management support, the use of
regulatory waivers, communication about the labs' progress, and other
factors to help the development of the labs. GAO survey results
often confirmed those expectations. Lab officials said that top
political and career managers generally supported the labs and that
the support was important to the development of many labs. Many of
the labs requested and received waivers from both agency-specific and
governmentwide regulations involving a range of issues. However, the
survey respondents frequently said that it was difficult to obtain
regulatory waivers, particularly from central management agencies,
such as the Office of Personnel Management, the General Services
Administration, and OMB.
Lab officials also reported that some of the factors they originally
believed important for the development of the labs were, in fact, not
always needed or used. For example, most of the lab officials said
they had not sought any regulatory waivers at the time of GAO's
survey. Even among labs that were fully implemented at the lab site,
officials from nearly half said they had never sought a waiver. Some
lab officials indicated that the regulatory restrictions they
believed were present either never existed or had been removed by
blanket agency action or by passage of reform legislation. Only 11
percent of the lab officials reported extensive communications with
other labs, and 18 percent reported extensive communications with the
NPR task force. Those labs that did communicate with other labs or
the NPR task force found the discussions helpful to the development
of their labs.
Contemporaneous reform efforts reportedly had both positive and
negative effects on the labs. For example, the respondents said that
the downsizing of the federal workforce both stimulated the types of
reforms the Vice President contemplated and made it more difficult to
implement them. The respondents indicated that the effects of GPRA
and the agency restructuring in NPR's second phase were less clear
but that they were much more likely to view GPRA as having a positive
effect than a negative effect. They said GPRA complemented their
reform efforts and emphasized the importance of performance measures.
Lab officials also indicated that it was difficult to generate and
sustain lab efforts that crossed agency boundaries or that
significantly challenged agencies' existing culture. Some officials
said that certain statutory provisions stood in the way of their
reinvention efforts. (See ch. 3.)
LABS' MEASUREMENT OF
PERFORMANCE VARIED
-------------------------------------------------------- Chapter 0:4.3
Over two-thirds of the respondents said their labs had collected or
were collecting some type of performance data at the time of GAO's
survey, usually data on their units' outputs and/or informal comments
from staff or customers. However, many of the respondents said that
it was too early in the reinvention process to collect performance
data, and analysis of the survey responses indicated that the labs
that were fully implemented at the lab site were more likely to have
collected performance data compared to those labs in earlier stages
of development. Over 80 percent of the respondents who said their
labs had not collected performance data said they planned to do so in
the future.
On the other hand, some of the respondents said that neither they nor
other agency officials believed that the collection of performance
data was necessary or worthwhile. Other lab officials said that they
had difficulty developing measures of performance or that data had
been collected but not used by decisionmakers.
Some of the data being collected were informal comments from
customers or staff--data that may not be convincing to skeptics of
the reinvention process. A number of respondents collecting post-lab
data said they did not collect similar types of data before the start
of their labs. Without such pre-lab data there will be no baseline
against which post-lab data can be compared to determine the efforts'
effects, thereby making it difficult for decisionmakers to reach any
conclusions about the labs. (See ch. 4.)
LAB EFFORTS HAVE YIELDED
RESULTS
-------------------------------------------------------- Chapter 0:4.4
The respondents often said that the data the reinvention labs were
collecting indicated that the labs' changes were yielding results--
improved service to their customers, heightened productivity in their
units, and/or increased employee morale. The 12 labs GAO visited
provided a number of examples of improved operations. (See apps. II
through XIII.) For example:
Officials from the Department of Energy's Hanford site reinvention
lab in Washington State said that the lab had saved $29 million
over a 4-year period by changing the nature of the
installation's security operations.
Surveys of physicians, patients, and family members at the
Department of Veterans Affairs' Zablocki Medical Center in
Milwaukee indicated that customer service had been improved when
social workers were teamed with primary physicians to coordinate
veterans' outpatient and inpatient care.
Officials from the Defense Logistics Agency said their lab had
reduced the agency's pharmaceutical inventories by $48.6 million
and achieved similar inventory reductions and cost savings at
Department of Defense medical facilities.
However, the true value of the reinvention labs will be realized only
when lab efforts proven to be effective spread beyond the lab sites.
The absence of both pre- and post-lab data may make it difficult for
lab officials to convince skeptics that the labs' changes should be
expanded to the rest of the agency or to other federal entities.
Also, dissemination of lab results is made difficult by the lack of
substantial communication among labs and between labs and the NPR
task force. Finally, the diffusion of lab information is hampered by
the incomplete nature of the data the NPR task force maintains and,
in the long run, by the temporary nature of the task force itself.
There is no certainty that the task force will be in existence when
some of the labs reach maturity. Therefore, some type of information
"clearinghouse," placed in a relatively stable environment, is needed
to allow other organizations to become aware of the labs and to learn
about the labs' experiences. The clearinghouse could, among other
things, provide information and guidance to labs on the development
of appropriate performance measures, including baseline data against
which the lab's performance could be judged. OMB or some other
entity could perform this function.
RECOMMENDATION
---------------------------------------------------------- Chapter 0:5
GAO recommends that the Director of OMB ensure that a clearinghouse
of information about the labs be established. Working with the NPR
task force, the Director should identify which agency or other
federal entity can effectively serve as that clearinghouse. The
clearinghouse should contain information that identifies the location
of each lab, the issues being addressed, points of contact for
further information about the lab, and any performance information
demonstrating the lab's results.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6
GAO provided a draft of this report to the Vice President and the OMB
Director and met with the Senior Policy Advisor to the Vice President
for NPR issues, the Deputy Director of the NPR task force, and OMB's
Deputy Director for Management to obtain their comments. All of the
officials indicated that information in the report was generally
accurate, interesting, and helpful. Certain technical changes the
officials suggested were incorporated into the report as appropriate.
In the draft report provided to the officials, GAO recommended that
OMB itself serve as the clearinghouse for information about the labs.
While agreeing that a clearinghouse was needed, none of the officials
were convinced that OMB was necessarily the best location for it.
The OMB Deputy Director for Management suggested that the
recommendation be changed to allow for options other than OMB itself
as the clearinghouse. GAO agreed to change the recommendation to
state that the OMB Director should ensure that a clearinghouse is
established and, working with the NPR task force, should identify the
appropriate site for the clearinghouse. (See ch. 5.)
INTRODUCTION
============================================================ Chapter 1
The National Performance Review (NPR) was begun by the President in
March 1993 and is a major management reform initiative by the
administration under the direction of the Vice President. In
September 1993, the Vice President published 384 NPR recommendations
designed to make the government work better and cost less.\1 We have
commented on these recommendations and discussed their implementation
in two previous reports.\2
A key part of the NPR initiative has been the creation of agency
"reinvention labs." In April 1993, the Vice President sent a letter
to the heads of major federal departments and agencies asking them to
"designate two or three programs or units to be laboratories for
reinventing government" and to notify him about the lab designations
by May 1, 1993, according to an NPR official. In the letter, the
Vice President said the objectives of the lab effort were
"to pick a few places where we can immediately unshackle our
workers so they can re-engineer their work processes to fully
accomplish their missions--places where we can fully delegate
authority and responsibility, replace regulations with
incentives, and measure our success by customer satisfaction."
In response to the Vice President's request, dozens of federal
agencies have established reinvention labs throughout the government.
--------------------
\1 See From Red Tape to Results: Creating a Government That Works
Better and Costs Less, report of the National Performance Review,
Vice President Al Gore, Sept. 7, 1993.
\2 See Management Reform: GAO's Comments on the National Performance
Review's Recommendations (GAO/OCG-94-1, Dec. 3, 1993); and
Management Reform: Implementation of the National Performance
Review's Recommendations (GAO/OCG-95-1, Dec. 5, 1994).
ORIGINS OF THE REINVENTION LAB
CONCEPT
---------------------------------------------------------- Chapter 1:1
Although similar in some respects to pilot projects that have been
used on numerous occasions in federal agencies to test new
procedures,\3 the reinvention lab concept originated at the
Department of Defense (DOD) during the mid-1980s. DOD's model
installation program was initiated by the then Deputy Assistant
Secretary of Defense for Installations (DAS/DI). The program focused
on reducing the amount of regulation governing administrative
functions at certain military installations. Through this program,
DOD identified hundreds of pages of regulations governing military
installations that it believed did not make sense or wasted time and
money. The DAS/DI waived as many DOD regulations as possible and
allowed the base commanders to operate the installations in their own
way. According to an NPR official, the program was enthusiastically
supported by the installations, which began to improve not only
administrative operations but also mission-related functions. The
model installations program became so successful that DOD opened the
program to all military installations in March 1986.
In early 1993, the DAS/DI was appointed the Director of the overall
NPR effort. According to an NPR official, the Director suggested to
the Vice President that "reinvention labs" similar to the model
installations be established within all federal agencies as part of
the administration's governmentwide effort to improve government
operations and save money.
--------------------
\3 See Federal Research: Lessons Learned From the Pilot Technology
Access Program (GAO/RCED-95-212, Sept. 18, 1995); Food Assistance:
Early Results of USDA's No-Fee School Meal Pilot Program
(GAO/T-RCED-94-184, Apr. 14, 1994); and NASA Procurement: Planning
for Pilot Test of New Procurement Procedures Is Adequate
(GAO/NSIAD-94-67, Nov. 4, 1993).
NPR TASK FORCE SUPPORTS LAB
EFFORT
---------------------------------------------------------- Chapter 1:2
The NPR effort is headed by the Vice President, but the day-to-day
operation of the effort is the responsibility of an NPR task force
that comprises staff from various federal departments and agencies.
The staff are assigned to the task force for a temporary period of
time, usually 3 to 6 months. The total number of staff assigned to
the task force has varied over time but has usually been between 40
and 60. About 10 of these staff have worked on the NPR task force
since it was established in 1993, but even they technically remain
employees of their home agencies.
The NPR task force has attempted to advertise and promote the
reinvention lab effort in a variety of ways. For example, the task
force has sponsored or cosponsored several reinvention lab
conferences (with another scheduled for March 25-27, 1996) and has
periodically published information about the labs.\4 It has also
developed a lab database using information voluntarily submitted by
the labs identifying their agencies, location, contact persons, and
other general information about the reinvention efforts.
However, consistent with its overall philosophy, the NPR task force
has avoided control mechanisms and has consciously taken a
"hands-off" approach to the development and oversight of the labs.
NPR officials said it is up to each agency to decide whether it will
have any labs and, if so, how they should be structured and operated.
The NPR task force has not required agencies to notify it when labs
are created or to report to NPR on their progress. In fact, the task
force recommended that labs not be required to file progress reports
with their agencies' management. Overall, agencies have been allowed
to operate reinvention labs as they believe appropriate, without
top-down control or interference from the task force. The task force
views its role as encouraging federal agencies to establish
reinvention labs and highlighting those labs that are "success
stories" and that focus on customer service.
The Office of Management and Budget (OMB) has played less of a role
in the reinvention lab effort than the NPR task force. OMB has not
been involved in the labs' designation or their oversight and does
not collect or disseminate information about the labs. However, OMB
officials said that OMB program examiners are generally aware of the
existence of labs in the agencies for which the examiners have
responsibility.
OMB is responsible for providing management leadership across the
executive branch and therefore can be important to the implementation
of NPR management improvement ideas. In fact, OMB has already begun
to play that role in some areas. For example, during the fiscal year
1996 budget cycle, OMB stressed agency downsizing plans and the use
of performance information--key elements of the overall NPR
effort--during its reviews of agencies' budget submissions. OMB
itself was "reinvented" as part of the NPR effort when its budget
analysis, management review, and policy development roles were
integrated into a new structure designed to improve the
decisionmaking process and the oversight of executive branch
operations.\5
--------------------
\4 NPR has published this information as a hard copy newsletter and
electronically on the Internet.
\5 See Office of Management and Budget: Changes Resulting From the
OMB 2000 Reorganization (GAO/GGD/AIMD-96-50, Dec. 29, 1995).
NO SPECIFIC DEFINITION OF A
REINVENTION LAB
---------------------------------------------------------- Chapter 1:3
After the Vice President's April 1993 letter, each federal agency was
made responsible for designating organizational units, programs, or
new or ongoing initiatives as reinvention labs. Although their
comments in the intervening period provide some indication of what
kinds of reinvention projects they envisioned, neither the Vice
President nor the NPR task force has established specific criteria
defining a lab.
The Vice President said that the lab sites should ideally be places
where the federal government directly serves the public in a highly
visible way. He also said that "[t]his effort is about more than
just making marginal improvements in the efficiency of our current
government--it is about fundamental cultural change in the federal
government." A similar tone was struck in the September 1993 NPR
report, which said that
"[w]e hope this process will involve not only the thousands of
federal employees now at work on Reinvention Teams and in
Reinvention Labs, but millions more who are not yet engaged. We
hope it will transform the habits, culture, and performance of
all federal organizations."
In October 1993, representatives from reinvention labs at a number of
agencies attended a conference in Hunt Valley, MD, at which they
discussed their ideas and experiences. One of the key topics of
discussion at the conference was, "What is a reinvention lab?" The
conference proceedings stated that a lab "is a place that cuts
through 'red tape,' exceeds customer expectations, and unleashes
innovations for improvement from its employees." The proceedings
listed five areas of consensus about the characteristics of a
reinvention lab: (1) vision (continually improving value to
customers); (2) leadership (unleashing the creativity and wisdom in
everyone); (3) empowerment (providing employee teams with resources,
mission, and accountability); (4) incentives (offering timely
"carrots" for innovation and risk-taking); and (5) accountability
(ensuring the customer is always right). The Vice President said
that reinvention labs were doing the same things as the rest of the
agencies, "only they're doing them faster."
Several of the Vice President's and NPR officials' comments about the
reinvention labs centered on the labs' ability to avoid complying
with regulations that could encumber their efforts. As noted
previously, the Vice President told agencies in his April 1993 letter
that regulations should be replaced with "incentives" in the labs.
NPR officials also told the reinvention labs that they should be
provided freedom from regulations. A number of the comments at the
Hunt Valley conference focused on eliminating red tape and
unnecessary regulations.
Another recurring theme in the Vice President's comments and NPR
publications has been the need to communicate about lab results. At
the Hunt Valley conference, the Vice President said that reinvention
labs "will need to share what they learn and forge alliances for
change." A 1993 NPR report also voiced support for spreading
reinvention ideas.
SEVERAL CONTEMPORANEOUS REFORM
EFFORTS
---------------------------------------------------------- Chapter 1:4
Reinvention labs are but one of a number of efforts initiated in
recent years by the administration or Congress to reform the
operation of the federal government. Because these other reform
efforts were being implemented at the same time that the reinvention
labs were being initiated, they may have affected the labs'
development.
For example, the Government Performance and Results Act (GPRA),
enacted in August 1993, was designed to improve the effectiveness and
efficiency of federal programs by establishing a system to set goals
for program performance and to measure results.\6 GPRA requires
federal agencies to (1) establish 5-year strategic plans by September
30, 1997; (2) prepare annual plans setting performance goals
beginning with fiscal year 1999; and (3) report annually on actual
performance toward achieving those goals, beginning in March 2000.
As a result of GPRA's requirements, greater emphasis is to be placed
on the results or outcomes of federal programs. OMB is responsible
for leading the GPRA implementation effort and has designated more
than 70 programs and agencies as pilots.
As noted previously, the reinvention lab effort was initiated in 1993
at about the same time that the original NPR recommendations were
being developed. As part of that effort, the 1993 NPR report said
that the civilian, nonpostal workforce could be reduced by 252,000
positions during a 5-year period. The report said these cuts would
be made possible by changes in agencies' work processes and would
bring the federal workforce to its lowest level since the mid-1960s.
In 1994, Congress enacted the Federal Workforce Restructuring Act,
which mandated an even greater 5-year workforce reduction of 272,900.
The September 1995 NPR status report estimated that more than 160,000
jobs had already been eliminated from the federal government.\7
In December 1994, the administration launched a second phase of the
NPR effort, referred to as NPR II. One aspect of NPR II was an
agency-restructuring initiative in which the Vice President asked the
heads of each agency to reexamine all of their agencies' functions
and determine what functions could be eliminated, privatized,
devolved to state or local governments, or implemented in a different
way. The agencies developed a total of 186 agency-restructuring
recommendations, which were aggregated and published in the September
1995 NPR status report. For example, the Department of Housing and
Urban Development (HUD) proposed consolidating 60 grant programs into
3, giving greater flexibility to governors and mayors.
There have also been several recent congressional proposals to reform
the federal government. For example, in May 1995, the Senate
Committee on Governmental Affairs held hearings on proposals for the
elimination of the Departments of Commerce, Housing and Urban
Development, Energy, and Education. In February 1995, the House
Committee on Economic and Educational Opportunities proposed merging
the Departments of Education and Labor and the Equal Employment
Opportunity Commission into a single department.\8 There has also
been a proposal to combine elements of the Departments of Commerce
and Energy with the Environmental Protection Agency and other
independent agencies to create a Department of Science.
--------------------
\6 See Managing for Results: Status of the Government Performance
and Results Act (GAO/T-GGD-95-193).
\7 Common Sense Government: Works Better and Costs Less, Third
Report of the National Performance Review, Vice President Al Gore,
September 7, 1995.
\8 See Federal Reorganization: Congressional Proposal to Merge
Education, Labor, and EEOC (GAO/HEHS-95-140, June 7, 1995) for a
discussion of this proposal.
NO COMPREHENSIVE REVIEW OF LAB
EFFORTS HAS BEEN PUBLISHED
---------------------------------------------------------- Chapter 1:5
Although reinventing government and the NPR effort have been
frequently discussed in the professional literature, relatively
little has been written about reinvention labs. In the Brookings
Institution's Inside the Reinvention Machine: Appraising
Governmental Reform, one author briefly mentioned several agencies'
labs and said they were but one component in the agencies'
reinvention efforts.\9 She also said the labs frequently were
"bottom-up" reform processes, sending a message to the staff that
we're all in this together. Another author in this volume said that
the labs "represent exciting innovations in the federal government"
and that they were generating "an impressive amount of fresh ideas
and information about how government workers can do their jobs
better."\10 However, he also noted that there had been no systematic
survey of what the labs had accomplished.
An article exclusively about reinvention labs described the lab
effort as being a struggle between advocates for change and those
individuals with power within the agencies.\11 The author describes
labs at several agencies (e.g., the Departments of Agriculture and
Education and the General Services Administration), noting that in
some cases entire agencies have become labs (e.g., the Agency for
International Development and the Federal Emergency Management
Agency). Other articles have briefly discussed the activities of a
few reinvention labs,\12 but no research efforts have systematically
collected information about all of the labs.
--------------------
\9 Beryl A. Radin, "Varieties of Reinvention: Six NPR 'Success
Stories,'" Inside the Reinvention Machine: Appraising Governmental
Reform (Washington, D.C.: The Brookings Institution, 1995), pp.
107-130.
\10 Donald F. Kettl, "Building Lasting Reform: Enduring Questions,
Missing Answers," Inside the Reinvention Machine, (Washington, D.C.:
The Brookings Institution, 1995), pp. 9-83.
\11 James Thompson, "Eureka?," Government Executive, June 1995, p.
30.
\12 See Peter F. Drucker, "Really Reinventing Government," The
Atlantic Monthly, February 1995, pp. 49-61 and James Thompson, "Joe
Versus the Bureaucracy," Government Executive, October 1995, pp.
49-55.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:6
We initiated this review of the reinvention labs as part of our
ongoing body of work examining NPR issues. The objectives of this
review were to determine (1) the focus and developmental status of
the labs, (2) the factors that hindered or assisted the development
of the labs, (3) whether the labs were collecting performance data,
and (4) whether the labs had achieved any results.
We addressed all of these objectives by conducting a telephone and
fax survey of all of the reinvention labs. However, to design and
conduct the survey, we had to obtain preliminary information from the
NPR task force, agencies, and some of the labs themselves.
We obtained information from the NPR task force's database about the
labs' locations, their developmental status, subject areas covered,
and a contact person at each of the lab sites. As of February 1995,
NPR's database indicated that there were 172 labs. However, NPR's
database did not include some labs and double-counted others. After
contacting officials responsible for the labs in each of the agencies
that the task force reported had ongoing efforts, we later concluded
there were 185 labs active as of early 1995.
The NPR task force told us that the regional labs were further along
in the implementation process than the labs in the Washington, D.C.,
area. Therefore, we conducted a structured interview of the regional
labs by telephone in the summer of 1994 to obtain information on
their status, the type of procedure or process being reinvented, and
any results the labs had produced. Using the information obtained
from these contacts, we selected 12 labs to visit on the basis of two
criteria: (1) labs that represented a variety of procedures or
processes being reinvented (e.g., procurement, personnel, financial
management, or general operations); and (2) labs that had generally
progressed to at least the planning stage. We visited each of these
12 labs and obtained detailed information concerning each of our
objectives. We developed case studies on each of the 12 labs and
subsequently sent them to both the lab officials from whom we
gathered the data and the agencies' headquarters for their review and
comment. Their comments were incorporated into the final version of
the case studies. (For a list of these labs, see app. I. See apps.
II through XIII for the full case studies.)
We then conducted two surveys of all 185 of the labs--first a
telephone then a fax survey--and received responses from 181 of the
labs (98 percent). The telephone survey was primarily designed to
obtain a general description and overview of the labs' operations.
We sent the second survey to the respondents by fax after the
completion of the telephone survey. If a lab focused on more than
one area for reinvention (i.e., the lab was engaged in multiple lines
of effort), we asked the respondent to focus his or her answers to
the fax survey on the lab's primary line of effort. (See app. I for
a list of the labs by agency and subject category.)
The fax survey consisted primarily of structured multiple-choice
items that focused on each of our objectives. (See app. XIV for
copies of the telephone and fax surveys.) Questions focused on such
issues as the lab's developmental status and the nature and extent of
performance data being collected. We also asked questions about a
number of factors that could affect the labs' development--e.g.,
waivers from certain regulations, communication with other labs and
the NPR task force, and agency management support. On the basis of
comments made by lab officials during our site visits, we selected
these factors for specific follow-up in the survey phase of our work.
They may not cover all possible factors affecting lab development.
We did not independently verify the information we received from any
of the information sources--the NPR task force, the site visits, the
telephone survey, or the fax survey. For example, if a survey
respondent said that his or her lab had collected performance data or
had communicated with other labs, we did not assess those data or
check with the other labs. However, we did collect some relevant
documents or data regarding these issues during our site visits to
the 12 labs.
We conducted our work between June 1994 and August 1995 in accordance
with generally accepted government auditing standards. The telephone
and fax surveys were administered between April and July 1995, so the
survey data are as of those dates. Although we attempted to survey
all of the reinvention labs in the federal government, we cannot be
sure that the 185 labs we contacted included all agencies' labs.
Others may have been active at the time of our survey, but we were
not aware of them either because of the lack of a specific definition
for reinvention labs, the NPR task force did not keep an accurate
record on the number of operating labs, or we were denied access to
agency officials. In one instance, we were unable to verify the
existence of a lab appearing on NPR's list as being at the Central
Intelligence Agency (CIA) because a CIA official said that it was
their standard policy to deny GAO access to CIA reinvention
activities. Also, other labs may have been developed since the
survey was conducted.
We submitted a draft of each case study to the relevant lab and
agency headquarters officials for their review and have incorporated
their comments into the final version of each appendix. On December
27, 1995, we submitted a draft of this report to the Vice President
(as head of the NPR effort) and to the Director of OMB for their
review and comment. Their comments are described at the end of
chapter 5.
OVERVIEW OF THE REINVENTION LABS
============================================================ Chapter 2
In the reinvention labs, agencies were supposed to experiment with
new ways of doing business, and the NPR task force purposely gave
agencies wide latitude in how the labs could be structured and what
topics they could address. Agencies were also free to build on
existing management reform efforts or to start their reinvention labs
from scratch. Aside from the general parameters of customer service
and employee empowerment, few restrictions were placed on the labs'
initiation or development.
Federal agencies responded to the Vice President's call for the
creation of reinvention labs in earnest. Labs were designated in
dozens of agencies and in virtually every region of the country. Our
survey indicated that the labs varied widely in terms of their
origin, their stage of development at the time of the survey, the
number of reinvention efforts addressed by each lab, and the subject
areas covered by the labs. Also, although many of the labs shared a
common customer service focus, they differed in who they defined as
their customers. Finally, the survey indicated that a number of the
labs' efforts actually began before the NPR effort was initiated.
LABS WERE DESIGNATED IN VARIOUS
AGENCIES AND REGIONS
---------------------------------------------------------- Chapter 2:1
As table 2.1 shows, the 185 reinvention labs that had been designated
at the time of our survey were spread across 26 federal departments,
agencies, and other federal entities. DOD had the most labs (54),
followed by the Department of the Interior (DOI) (28). The number of
labs in each agency was not always related to its size. Some large
agencies had relatively few labs (e.g., the Department of Veterans
Affairs); while some comparatively small agencies had initiated a
number of labs, e.g., the General Services Administration (GSA).
Some agencies that serve the public directly and that had been the
subject of both the 1993 and 1995 NPR recommendations had not started
any labs at the time of the survey (e.g., the Small Business
Administration).
Table 2.1
Number of Reinvention Labs Varied by
Agency
Number of
Agencies labs
-------------------------------------------------------- ------------
Department of Defense\a 54
Department of the Interior\a 28
General Services Administration\a 14
Department of Agriculture\a 12
Department of Justice 10
Department of Health and Human Services 8
Department of the Treasury\a 8
Department of Energy\a 6
Department of Commerce\a 5
Department of Housing and Urban Development\a 5
National Aeronautics and Space Administration 5
Department of Veterans Affairs\a 5
Office of Personnel Management 3
Department of State 3
Department of Transportation 3
Department of Education 2
Environmental Protection Agency 2
Department of Labor 2
Agency for International Development 1
Federal Emergency Management Agency 1
Nuclear Regulatory Commission 1
National Science Foundation 1
Securities and Exchange Commission 1
Tennessee Valley Authority 1
Other entities
Federal Executive Boards\b 3
REGNET\c 1
======================================================================
Total 185
----------------------------------------------------------------------
\a Agencies with reinvention labs that were included as case studies
for this report.
\b Federal Executive Boards were established by presidential
directive in 1961 to improve internal federal management practices
and to provide a central focus for federal participation in civic
affairs in major metropolitan centers of federal activity.
\c REGNET is a multiagency effort supporting the mission of the
Regulatory Coordinating Group and helping agencies implement the NPR
regulatory reform recommendations.
Source: GAO analysis.
Figure 2.1 and table 2.2 show the number of reinvention labs at the
time of our survey within each standard federal region.\1 As the
figure illustrates, labs had been established in virtually every
federal region, but the mid-Atlantic region (region 3) had over
two-thirds of the labs. Most of these labs were located in the
Washington, D.C., area, but some affected operations in other areas.
Relatively few labs were located in the northeast (regions 1 and 2)
or the northwest (region 10). Some of the labs were operated in
multiple locations within a single region. For example, one HUD lab
effort had several sites that included HUD's offices at Chicago,
Milwaukee, and Cleveland. (See app. VIII for a discussion of this
lab.) Other labs had multiple sites located in different standard
federal regions. For example, GSA's Federal Supply Service lab was
headquartered in New York City (region 2), but some aspects of the
lab were being implemented in Boston (region 1). (See app. VI for a
discussion of this lab.)
Figure 2.1: Reinvention Labs
by Standard Federal Region
(See figure in printed
edition.)
Note: Some labs have been implemented beyond their pilot sites and
have multiple locations. Labs have been placed in these regions
according to their primary sites.
Source: GAO analysis.
Table 2.2
Number of Reinvention Labs by Standard
Federal Region
Number of
Standard federal regions labs
-------------------------------------------------------- ------------
Region 1 1
Region 2 1
Region 3 122
Region 4 14
Region 5 11
Region 6 3
Region 7 4
Region 8 13
Region 9 12
Region 10 3
Overseas 1\a
======================================================================
Total 185
----------------------------------------------------------------------
\a One DOD reinvention lab is located in Frankfurt, Germany.
Source: GAO analysis.
--------------------
\1 OMB Circular A-105 establishes 10 standard federal regions to
provide more uniformity in the location of federal field offices,
create opportunities for securing management improvements and
economies, and promote greater interagency and intergovernmental
coordination.
ORIGINS AND STATUS OF LABS
---------------------------------------------------------- Chapter 2:2
We asked the survey respondents why their labs were initiated,
allowing them to designate more than one closed-ended response
category and/or add additional reasons. They indicated that the
reinvention efforts were generally focused and uncoerced. As shown
in figure 2.2, nearly two-thirds of the respondents said that they
were trying to address a specific problem, and over half indicated
that they volunteered to become a lab.\2 Only 13 percent of the
respondents reported that they were told to pursue their labs by
agency officials. Forty percent said their labs were an outgrowth of
quality improvement efforts in their agencies.
Figure 2.2: Most Labs Were
Reported as Being Voluntary,
Trying to Address Problems
(See figure in printed
edition.)
Source: GAO analysis.
We also asked the respondents when their labs' efforts actually
began, regardless of when the labs were officially designated as
labs. The lab start dates varied widely, ranging from as early as
1984 to as recently as March 1995--1 month before the start of our
survey. About one-third of the respondents indicated that their
labs' efforts began before the announcement of the NPR effort in
March 1993. The early beginning of so many lab efforts is not
surprising given that 40 percent of the respondents said that their
labs originated in their agencies' quality improvement
efforts--efforts that started in some federal agencies in the early
1990s.\3
For example, lab officials at the sites we visited told us the
following:
GSA's reinvention labs in two regional offices originated with the
offices' quality assurance programs that began in 1988 and 1989.
(See app. VI and app. VII.)
The Internal Revenue Service's (IRS) reinvention lab in Helena, MT,
began as a joint quality improvement process launched in 1988 by
IRS and the National Treasury Employees Union. (See app. XI.)
The United States Department of Agriculture's (USDA) lab on baggage
inspection operations in Miami started in 1989 as an effort to
improve productivity as staff resources declined and the
workload increased. (See app. II.)
DOI's efforts to improve information dissemination at the U.S.
Geological Survey began in 1986 when it attempted to establish a
more efficient and responsive order entry, inventory control,
and distribution system. (See app. X.)
Officials from 14 of the labs we surveyed said that they sought lab
designations for existing management improvement efforts because the
officials thought such designations would give them more latitude to
make changes and provide greater visibility for their efforts. For
example, one of the survey respondents said that reinvention lab
designation provided the lab team with the momentum needed to
overcome common barriers to change. During one of the site visits,
an official from HUD's lab on reinventing the field operations of the
Office of Public and Indian Housing said that before its lab
designation "we could not get in the door at headquarters." However,
he said that after the lab's designation "the waters parted" and that
headquarters officials became interested in the new oversight
approach. (See app. VIII for a discussion of this lab.) Other
respondents said that being designated as a reinvention lab provided
the mechanism by which they could seek waivers from cumbersome rules
and regulations that had been an impediment to previous management
reform efforts.
--------------------
\2 The fax survey usually provided respondents with closed-ended
category responses. Therefore, when we report that a survey
respondent "said" a response, it usually indicates the selection of
one of these categories. See the questionnaire in appendix XIV for
the exact wording of this and other questions in the telephone and
fax surveys.
\3 See Quality Management: Survey of Federal Organizations
(GAO/GGD-93-9BR, Oct. 1, 1992) for a discussion of agencies' quality
improvement efforts.
LAB OFFICIALS REPORTED
SIGNIFICANT CHANGES FOCUSED ON
CUSTOMER SERVICE
---------------------------------------------------------- Chapter 2:3
The 1993 NPR report called for a new customer service contract with
the American people--a new guarantee of effective, efficient, and
responsive government. The report also stated that federal agencies
were to provide customer service equal to the best in business. In
his April 1993 letter calling for the creation of reinvention labs,
the Vice President said the labs were to measure their success by
customer satisfaction. Consistent with this goal, 99 percent of our
survey respondents said that customer service improvement was a
primary goal of their labs to at least "some extent"; 93 percent of
the respondents said this was true to a "great" or "very great"
extent. (See ch. 4 for information on the labs' collection of
performance data.)
The survey respondents frequently indicated that the changes that
were occurring in their reinvention labs represented a substantially
different mode of operation, not simply a minor change in procedures.
Over 65 percent of the respondents said that their reinvention labs
involved changing the way staff in their agencies did their work to a
"great" or "very great" extent. Over 20 percent said that changes in
work processes occurred to a "moderate" or "some" extent.
Lab officials reported the following examples:
The Defense Logistics Agency's (DLA) lab on inventory management
made significant changes in its work processes and staff roles.
DLA officials said they shifted from acting as a wholesaler who
buys, stores, and sells inventory to acting as a broker who
obtains the most efficient and effective military support for
its customers through any appropriate mechanism--including the
use of private-sector vendors to store and distribute
inventories. (See app. IV.)
The U.S. Geological Survey's information dissemination lab
improved internal communications and job processes by combining
the organizational unit that took map purchasing orders with the
unit that filled the orders and by cross-training staff. (See
app. X.)
GSA's mid-Atlantic regionwide lab improved customer service in the
region's Public Buildings Service office by shifting staff from
working as teams of specialists responsible for moving projects
through their segments of a work process to working as
multidisciplinary teams made up of specialists responsible for
processing one project. (See app. VII.)
About two-thirds of the respondents who said that their labs were
involved in changing the way staff did their work indicated that the
changes improved customer service to a "great" or "very great"
extent. However, only 20 percent of the respondents indicated that
these changes required substantial alterations in their agencies'
personnel systems.
The labs' definition of their customers varied depending on the lab.
Given the opportunity to choose more than one response category, the
respondents described their labs' customers as the general public;
their agencies' constituencies; another government organization
(e.g., federal, state, or local); and/or other offices within their
own agencies. Almost two-thirds of the respondents said their labs'
customers were both internal and external to the government. For
example, officials in HUD's lab on reinventing the field operations
of the Office of Public and Indian Housing said that their lab's
customers included the residents of the public housing units and the
local governments' public housing authorities who operated the
housing units. (See app. VIII.)
Overall, the two most frequently selected response categories for
customers were "another government organization" and "other offices
within the lab's agency"; 18 percent of the respondents said that
these were their labs' only customers. For example, the Department
of Commerce's reinvention lab in Boulder, CO, defined its customers
as the scientists and engineers working within the department's
scientific laboratories. (See app. III.)
REPORTED STAGE OF DEVELOPMENT,
SCOPE, AND SUBJECT AREAS
COVERED BY LABS VARIED
---------------------------------------------------------- Chapter 2:4
We asked the survey respondents to characterize their labs' stage of
development in one of five categories: (1) planning stage (no
implementation begun), (2) implementation begun but not completed at
the lab site, (3) implemented at the lab site only, (4) implemented
at the lab site and planning or implementation begun at other sites,
(5) implemented at the lab site and at other sites, or (6) other. As
figure 2.3 shows, the respondents were equally divided between those
who said that their labs had been at least implemented at the lab
site (responses 3 through 5) and those that had not gotten to that
stage of development (responses 1 and 2). The most common single
response (35 percent) was "implementation begun but not completed."
Figure 2.3 : Lab Officials
Indicated Stage of Lab
Development Varied
(See figure in printed
edition.)
Source: GAO analysis.
We also asked the respondents whether their labs were focused on a
single effort or multiple lines of effort.\4 Nearly two-thirds (63
percent) of the respondents said that their reinvention labs had only
one line of effort. As figure 2.4 shows, DOD labs reported they were
much more likely to have multiple lines of effort (58 percent) than
were civilian labs (29 percent).
Figure 2.4: DOD Labs Reported
Being More Likely to Have
Multiple Lines of Effort
(See figure in printed
edition.)
Source: GAO analysis.
A line of effort is not the same as a subject category. For example,
a lab with only one line of effort can address a variety of subjects,
including personnel management, procurement, information technology,
and financial management. Nearly three-fourths of the survey
respondents
indicated that their labs were focused on more than one subject area.
The most commonly cited subject area was operations (72 percent),
followed by information technology (60 percent), personnel (45
percent), procurement (45 percent), and financial management (39
percent). Examples of these subject areas include the following:
In an operations lab, USDA officials examined ways to improve the
operation of their airport baggage inspection program by
permitting more self-direction by employees and allowing them to
identify ways to improve procedures. (See app. II.)
An information technology lab explored the use of electronic media,
such as the Internet, E-mail servers, fax on demand, and the
Worldwide Web to disseminate information on the latest medical
research from sources around the world.
A procurement lab established teams of customers, contractors, and
contract administration officials to identify areas for process
improvements. The lab was also trying to develop a "risk
management" approach to contract administration in which the
lab's level of contractor oversight would be linked to an
assessment of the contractor's performance.
--------------------
\4 A "line of effort" is a discrete area of emphasis in the lab that
is unrelated to the lab's other areas of emphasis.
CROSSCUTTING THEMES REPORTED IN
LABS
---------------------------------------------------------- Chapter 2:5
In addition to the traditional subject area categories previously
mentioned, analysis of survey respondents' comments in the survey and
during our site visits indicated three crosscutting areas of
interest: (1) marketing services and expertise; (2) using electronic
commerce (EC) and electronic data interchange (EDI) to improve
operations, such as procurement and benefit transfers;\5 and (3)
developing partnerships with other levels of government, the private
sector, and customers. (See app. I for a complete list of these
reinvention labs.)
--------------------
\5 EC and EDI involve the comprehensive, end-to-end electronic
exchange of information between an agency and other organizations as
the agency conducts its business.
MARKETING SERVICES AND
EXPERTISE
-------------------------------------------------------- Chapter 2:5.1
The 1993 NPR report advocated creating competition between in-house
agency support services and what it termed "support service
enterprises"--federal agencies that offer their expertise to other
agencies for a fee. Officials from 20 reinvention labs said that
their labs were planning or implementing these kinds of reforms,
using marketing techniques to expand their customer base. Examples
of marketing services include the following:
Two of the labs were department training centers that were
attempting to become self-sufficient by charging fees for their
services. In addition to marketing their training courses,
officials from both centers said they were contracting with
other agencies to provide consulting services.
One respondent said that his lab was experimenting with franchising
its contracting services to civilian agencies. Lab officials
developed a standard rate to be charged for their services and
had signed agreements with other agencies to provide those
services.
One respondent said that his lab had successfully marketed its
organic waste disposal services to other federal, state, and
local agencies. He also said that the lab generated additional
income by recycling these wastes for resale as compost.
One DOD official said that existing statutes had prevented his lab
from marketing its duplicating services to non-DOD agencies. He said
Congress requires federal agencies to contract printing and
duplicating to the private sector via the Government Printing Office
(GPO), which applies a surcharge. However, he said that one of our
recent reports noted that some of the agency's in-house duplicating
services were about 57 percent cheaper than GPO's prices.\6
--------------------
\6 See Government Printing: Comparison of DOD and GPO Prices for
Printing and Duplicating Work (GAO/NSIAD-95-65, Feb. 17, 1995).
USING ELECTRONIC COMMERCE
AND ELECTRONIC DATA
INTERCHANGE
-------------------------------------------------------- Chapter 2:5.2
The 1993 NPR report recommended that federal agencies adopt EC and
EDI techniques that the private sector had been using for some time
because, NPR said, they can save money. Respondents for 38 labs said
that their labs were in the process of implementing EC and EDI
systems to enable them to easily transfer information on financial
and procurement transactions and on client services and benefits.
For example, DLA officials said the agency was using EC and EDI to
develop a paperless, automated system for critical documents in the
contracting process, including delivery orders, requests for
quotations, bid responses, and awards. They said that this system
would ultimately provide a standard link among DLA, its customers,
and suppliers in the private sector. (See app. IV.)
ESTABLISHING PARTNERSHIPS
-------------------------------------------------------- Chapter 2:5.3
At the time of our survey, 54 labs reported attempting to develop
partnerships with other levels of government, labor organizations,
contractors, and/or their customers. Several of these partnership
efforts focused solely on intra- or intergovernmental relations. For
example, one official said his lab was working with other federal
agencies and state and local government agencies to design an
ecosystem management strategy. Another lab was focused on developing
an automated prisoner processing system for use by five federal law
enforcement entities.
Officials for 16 other labs also said that their labs were developing
partnerships with contractors, academia, or the private sector. For
example, at the Department of Energy's (DOE) Hanford reinvention lab,
the department entered into an agreement allowing a private company
to disassemble and use excess equipment, saving the government $2.6
million in disposal costs. In another lab, agency officials and
contractors formed teams to rework contracting processes and shift
oversight from an adversarial position to a team approach so that
both the agency and its contractors could lower oversight costs.
Nine respondents said that their labs were establishing partnerships
with employee unions. For example, officials at the Commerce
Department's Boulder reinvention lab said that their efforts had
built a strong union-management relationship by changing the rigid
work environment so that skilled workers would be able to work
together as teams and supervisors could perform more as coaches than
managers.
FACTORS AFFECTING LABS'
DEVELOPMENT
============================================================ Chapter 3
Reinvention labs were intended to be agents of change in the federal
government. As such, they have faced many of the same challenges as
other change agents--eliminating rules that stand in the way of
progress, ensuring top management support, communicating with others
attempting similar changes, and coping with cultural resistance.
However, some of the challenges the reinvention labs faced were
difficult, such as attempting to initiate new ideas or new work
processes while their organizations were shrinking and while other
management reform efforts were being implemented.
We asked the survey respondents to provide information on a variety
of factors that could have hindered or helped the development of the
labs, and some of the results were contrary to our initial
expectations. For example, many of the lab officials said they had
not sought waivers from regulations, even in labs that were fully
implemented at the lab site. Few reported substantial communication
with other labs or with the NPR task force. However, over 80 percent
enjoyed top management support. Analysis of the survey responses
also indicated other factors that the respondents said affected the
development of their labs.
NPR ENCOURAGED LABS TO SEEK
WAIVERS
---------------------------------------------------------- Chapter 3:1
One of the NPR effort's recurring themes is that regulations and red
tape stifle the creativity and ability of federal workers to solve
problems and improve service to the public. At the Hunt Valley
reinvention lab conference in October 1993, NPR officials encouraged
the labs to request waivers from requirements imposed on them "which
are barriers to reinvention." The Vice President said that he was
looking to the reinvention labs to identify "barriers that stand in
the way of getting the job done in the right way" and to "drive out
rules and regulations that just don't make sense anymore." A
September 1993 NPR report noted that carefully crafted waiver
requests and prompt review of these requests can be "experiments for
government's reinvention."\1
Regulations can come from a variety of sources. Some regulations are
promulgated by central management agencies--e.g., OMB, GSA, or the
Office of Personnel Management (OPM)--and apply to all or virtually
all federal agencies. Other regulations are issued by line agencies
and apply only to the issuing agency. In the reinvention lab effort,
the entity that establishes a regulation is to receive and rule on
any waiver requests.
--------------------
\1 National Performance Review Accompanying Report, Streamlining
Management Control (Washington, DC: U.S. GPO, Sept. 1993).
MAJORITY OF LABS DID NOT
REQUEST WAIVERS
-------------------------------------------------------- Chapter 3:1.1
Although they were encouraged to seek regulatory waivers, 60 percent
of the survey respondents who answered the question said that their
labs had not sought such waivers. Of these respondents, about half
said that they considered seeking a waiver, but they did not do so;
half said they had not even considered seeking a waiver. When asked
why their labs did not seek waivers, the respondents most commonly
indicated that waivers were not needed to accomplish their labs'
goals (54 percent) or that it was too early in the reinvention
process to seek waivers (30 percent). (Respondents were allowed to
select more than one response category to this question.)
The relationship between the labs' stage of development and their
propensity to seek waivers was supported by other data in the survey.
As figure 3.1 shows, labs that were at least fully implemented at the
lab site were almost twice as likely to have requested a waiver than
labs that had not reached that stage of development. However, nearly
half of the fully implemented labs had not sought any regulatory
waivers at the time of the survey.
Figure 3.1: Respondents
Reporting Waiver Requests Were
Most Likely in Fully
Implemented Labs
(See figure in printed
edition.)
Source: GAO analysis.
Over two-thirds of the respondents for the fully implemented labs
that had not sought a waiver said that a specific waiver was not
needed to accomplish their labs' goals, and they cited a variety of
reasons. For example:
In some labs, the agencies reported that constraints on pre-lab
operations were nonregulatory and that removal of the
constraints did not require a waiver. For example, officials
from one reinvention lab planned to request a general waiver
from using GSA's supply schedule to enable the site's supply
room to seek the best value for each product it provides.
According to an official, this request was dropped because lab
officials discovered that procurement rules allowed agencies to
ignore the supply schedule if a local source can provide the
product at a lower price.
In other labs, a blanket waiver of internal regulations, or a
delegation of authority, provided by agency headquarters
eliminated the need for individual waiver requests. In blanket
waivers, agency headquarters typically granted labs the
authority to make their own decisions on which agency-specific
rules to eliminate without asking for prior permission. For
example, GSA gave the Mid-Atlantic Regional Administrator a
blanket waiver from nonstatutory internal rules and regulations
that might hinder the development of the region's lab. (See
app. VII.)
In another lab, officials told us that passage of the Federal
Acquisition Streamlining Act removed the legislative barriers to
the lab's reform efforts. Therefore, lab officials said they
did not need to go forward with their proposals to waive
contracting rules and regulations.
WAIVER REQUESTS MOST
COMMONLY DIRECTED AT
AGENCY-SPECIFIC RULES
-------------------------------------------------------- Chapter 3:1.2
The survey respondents indicated that their labs had requested nearly
1,000 waivers from regulatory requirements. Some respondents said
their labs had requested only one waiver, but other labs reported
requesting dozens of waivers. The respondents also indicated that
their labs' waiver requests involved regulations in a range of
subject areas. One-third of all the waivers requested involved
agency work process rules or regulations, with the remaining
two-thirds about equally divided between personnel rules, procurement
rules, and other rules. Examples of agency work process regulations
include the following:
Officials from GSA's office products lab requested a waiver from an
agency work process regulation requiring the use of a certain
quality assurance technique so that they could replace it with
another, reportedly better, technique. (See app. VI.)
The reinvention teams at the U.S. Bureau of Mines'\2 reinvention
lab proposed 21 changes to departmental procedures, such as
altering the review process for computer equipment acquisition,
removing restrictions on the use of local attorneys to process
patent paperwork, and eliminating one level of supervision
within the lab's research center. (See app. IX.)
Contracting officials from the Department of Veterans Affairs' (VA)
reinvention lab in Milwaukee requested nine waivers from both
departmental regulations and governmentwide Federal Acquisition
Regulations (FAR). Eight of these waivers were pending at the
time of our review, including an authorization to remove annual
contracts from the current fiscal year cycle and to permit the
lab to participate with private-sector purchasing groups in best
value purchasing. (See app. XII.)
As shown in figure 3.2, over half of the waivers the labs sought were
reported to be from agency-specific rules issued by the respondent's
own agency, and nearly one-third of the requested waivers were from
governmentwide rules issued by central management agencies. The
respondents said the remaining 16 percent of the waiver requests
focused on rules from other sources (e.g., executive memorandum), or
the respondents were unsure of the source of the regulation from
which the waiver was requested.
Figure 3.2: Most Waiver
Requests Focused on
Agency-Specific Regulations
(See figure in printed
edition.)
Source: GAO analysis.
--------------------
\2 Congress has passsed legislation providing for the elimination of
the U.S. Bureau of Mines, with the exception of some programs being
transferred to other federal agencies.
LAB OFFICIALS REPORTED
DIFFICULTIES GETTING SOME
WAIVERS
-------------------------------------------------------- Chapter 3:1.3
The survey respondents frequently said that it was difficult to
obtain waivers from both governmentwide and agency-specific
regulations, but they indicated that waivers of governmentwide rules
issued by central management agencies, such as GSA, OMB, or OPM, were
the most difficult to obtain. More than three-fourths of the
respondents who offered an opinion said it was difficult to obtain a
waiver from governmentwide rules, with nearly twice as many choosing
the "very difficult" response category compared with the "somewhat
difficult" category. Only 7 percent of the respondents said it was
"easy" to obtain waivers from governmentwide rules. In contrast, 50
percent of the respondents who sought a waiver from rules issued by
their own agencies said such waivers were "difficult" to obtain. Of
these respondents, most said obtaining agency-specific waivers was
only "somewhat difficult," and 31 percent said it was "easy."
The difficulty survey respondents reported in receiving waivers from
governmentwide regulations was also indicated by waiver approval
rates. As shown in figure 3.3, lab officials said that over 60
percent of their labs' requests for waivers from agency-specific
rules had been approved at the time of our survey, compared with only
about 30 percent of the requests for waivers from governmentwide
regulations.
Figure 3.3: Respondents
Reporting Waivers From
Agency-Specific Rules Were More
Likely To Be Approved
(See figure in printed
edition.)
Source: GAO analysis.
Lab officials also reported other types of problems when they
requested regulatory waivers. For example, officials from the
Pittsburgh Research Center lab in the U.S. Bureau of Mines said the
lab team spent a substantial amount of time concentrating on waiver
requests that were beyond the scope anticipated by NPR officials.\3
The lab team said they were not clearly warned by DOI management that
"overturning statutes was off-limits" when requesting waivers. (See
app. IX.)
Officials from three different reinvention labs said that they found
it difficult to use the delegation of authority to waive regulations
that had been given to them by their agencies' headquarters. For
example, officials from these labs said that they had to obtain
approval from legal counsels to use that authority and that getting
this approval proved to be just as time-consuming as it would have
been to get a specific waiver from headquarters.
Officials from the Commerce Department's Boulder reinvention lab said
that they tried to use their waiver authority to develop alternative
procedures to abolish three staff positions. In keeping with one of
the lab's areas of emphasis to build management and labor
partnerships, field managers worked with the local union president to
develop an alternative procedure that was less disruptive than the
traditional one. However, one lab official said that even though the
lab had been given authority to deviate from procedures, headquarters
officials required extensive documentation and heavily reviewed the
proposal. The lab official said as many as 19 headquarters officials
were involved in reviewing and approving every aspect of these
procedural changes. (See app. III.)
--------------------
\3 At the October 1993 Hunt Valley Conference, reinvention labs were
encouraged to request waivers to requirements imposed upon them that
were barriers to reinvention.
RESPONDENTS REPORT TOP
MANAGEMENT SUPPORT
---------------------------------------------------------- Chapter 3:2
Top management support is crucial to the successful management of
changes within organizations, particularly changes of the magnitude
envisioned by the Vice President. Top management can provide needed
resources and remove barriers that may stand in the way of
organizational changes. On the other hand, managers can also
negatively affect changes by withholding needed resources and
erecting barriers that effectively prevent changes from occurring.
Eighty-three percent of the survey respondents who expressed an
opinion said top management in their agencies (i.e., Office of the
Secretary/Agency Head) were supportive of their reinvention labs, and
77 percent said that upper level career managers were also
supportive. In some cases, lab officials said that top management
was the leading force behind the reinvention labs. For example,
staff developing DOI's U.S. Geological Survey lab said their lab
proposal was approved by headquarters because of the active support
of the department's leadership. (See app. X.) DLA officials said
that their top management pushed for a total overhaul of the agency
before the start of the NPR effort and that the reinvention labs
provided a vehicle for enhancing the visibility of these reforms.
(See app. IV.) An official from IRS' reinvention lab said that IRS
management expressed its support for that lab by approving a
memorandum of understanding between the lab and its regional office.
Included in the memorandum was a commitment from the regional
commissioner to provide oversight and program support to the lab, to
reduce the reporting requirements on front-line managers, and to
offer assistance in implementing the reinvention ideas. (See app.
XI.)
However, in a few cases labs reported that they were adversely
affected by a lack of top management support or attention. For
example, one lab official said his lab initially had a high-level
supporter in headquarters who could get waivers and delegations of
decisionmaking authority approved. However, he said that when the
lab lost this supporter, other headquarters officials began to
actively resist the lab's efforts, and some even engaged in what he
termed "pay-back." Another survey respondent said managers in his
agency were inattentive to the agency's lab. The respondent also
reported that management was unconcerned about the lab's progress;
did not provide needed resources (e.g., relieving the reinvention
team of their usual duties); and did not direct field offices to
participate in the lab.
Survey respondents also related examples of resistance to their
reinvention efforts from nonmanagerial staff in headquarters. One
respondent said that the lab was set up in such a manner that staff
members at headquarters, whom he said were threatened by the lab's
goals, could obstruct its progress. Another respondent said that
staff at her facility had been "frustrated with the NPR experience"
and questioned the point of the labs. She said that the lab staff
had submitted a proposal to their headquarters that would have
allowed them to buy fuel oil from a local supplier at a cheaper price
than from their in-house supplier. The headquarters staff sought
feedback on the idea from their in-house supplier, who naturally
objected to the proposal. On the basis of this response, the
headquarters staff denied the request.
SUBSTANTIAL COMMUNICATION ABOUT
REINVENTION LABS WAS RARE
---------------------------------------------------------- Chapter 3:3
The Vice President said that reinvention labs "will need to share
what they learn and forge alliances for change." A September 1993 NPR
report stated that:
"We will transform the federal government only if our
actions--and the Reinvention Teams and Labs now in place in
every department--succeed in planting a seed. That seed will
sprout only if we create a process of ongoing change that
branches outward from the work we have already done."
If the reinvention labs are to "plant seeds" for organizational
change, communication of information about what they have tried and
how it has worked is essential. Therefore, we asked lab officials
about communication with other reinvention labs and with the NPR task
force.
The respondents who offered an opinion indicated that substantial
communication among labs or between the labs and the NPR task force
was relatively rare. Only 11 percent of the respondents said that
their labs had communicated with other labs to a "great" or "very
great" extent, and only 18 percent reported that level of
communication between their labs and the NPR task force.
Twenty-three percent of the respondents said they had communicated to
a "moderate" extent with other labs and with the NPR task force; the
stage of lab development had little effect on their responses.
Officials in fully implemented labs were no more likely to have
communicated with their colleagues in other labs or with NPR staff
than officials in labs that had not gotten to that stage of
development.
Nevertheless, over 70 percent of the respondents who said they had at
least some communication with other labs said it was helpful to the
development of their labs. About 68 percent of the respondents
reporting that level of communication with NPR staff said it was
helpful. For example, one respondent said that DOD held a
reinvention lab conference in March 1995 that allowed the agency's
labs to share experiences and exchange ideas. According to lab
officials from DOE's Hanford site reinvention lab, NPR staff assisted
them in seeking a waiver enabling DOE to privatize some laboratory
services. (See app. V.)
There were clear differences in the responses in this area between
DOD lab officials and respondents for the other labs. Where over
two-thirds of the DOD respondents said that they had at least some
communication with other labs, only half of the non-DOD labs
indicated this level of lab-to-lab communication. Similarly, DOD lab
officials were much more likely to report that this communication had
aided in the development of their labs (83 percent) than respondents
from other agencies (59 percent). Interestingly, DOD and non-DOD
labs did not differ in the degree to which they communicated with the
NPR task force (62 percent for both responses) or the extent to which
they believed that the communication had assisted in their labs'
development (62 percent for DOD labs versus 60 percent for non-DOD
labs).
DOWNSIZING HAD BOTH POSITIVE
AND NEGATIVE EFFECTS ON THE
LABS
---------------------------------------------------------- Chapter 3:4
As noted in chapter 1, many of the reinvention labs were initiated or
were being implemented at a time when federal agencies were being
reduced in size. The September 1995 NPR report estimated that at
least 160,000 positions had been eliminated from the federal
workforce since early 1993. Because they were operating in this
environment, we asked the survey respondents whether agency
downsizing had a positive, negative, or other effect on their
reinvention labs. (The respondents were allowed to check multiple
categories.)
About 44 percent of the respondents reported that downsizing had a
positive effect on their labs, but about 53 percent reported that
downsizing had a negative effect. The respondents mentioned such
negative effects of downsizing as slower implementation of lab
efforts; loss of corporate memory; and morale problems (e.g., fear,
stress, and uncertainty) that resulted in less interest in and
support of management reforms and less risk-taking. In addition,
some respondents said that downsizing had jeopardized their labs'
ability to achieve desired outcomes and raised concerns that
decreasing manpower, coupled with the same or increasing work
requirements, would reduce the amount of time respondents had
available to focus on lab activities.
The respondents who said downsizing had a positive effect on their
labs commonly indicated that it was a catalyst for real change in
their agencies. Several of the respondents noted that downsizing
forced management and staff to rethink agency operations, support
reforms, adopt NPR efforts and labs, and work more collaboratively.
A few of these respondents also noted that downsizing led to greater
innovation and creativity. Five other respondents said that their
labs benefited from the downsizing of other agencies. For example,
one lab reported that reductions in other agencies' contract
administration staff increased interest in the contract
administration services that the lab was marketing.
Thirty-three percent of the respondents reported both positive and
negative effects from agency downsizing. For example, one respondent
said that although downsizing had forced staff to consider radical
changes that would have otherwise been rejected, it had also reduced
the amount of staff, time, and resources available for concentrating
on making these improvements.
NPR II AND GPRA EFFECTS ON MOST
LABS UNCLEAR
---------------------------------------------------------- Chapter 3:5
We also asked the survey respondents what effect, if any, the
implementation of GPRA and the agency restructuring initiative in the
second phase of the NPR effort (NPR II) had on their reinvention
labs. Compared to their views on downsizing, the respondents were
less clear about the effects of GPRA implementation and NPR II's
restructuring on their labs. They were more likely to say that they
did not know the effects of GPRA or NPR II on their labs, perhaps
because these reforms had not been fully implemented at the time of
our survey.
However, the survey respondents were much more likely to indicate
that GPRA had a positive effect on the development of their labs (33
percent) than a negative effect (6 percent). For example, they said
that GPRA
complemented and reinforced their labs' ongoing reinvention
efforts;
promoted the development of performance measures and results-based
management systems that were a part of their labs' goals;
forced their organization to focus on performance, redefining
mission, corporate goals, and objectives;
compelled management to think about how to integrate various
management reform legislation, such as the Federal Managers'
Financial Integrity Act of 1982 and the Chief Financial Officers
Act of 1990,\4 with the reinvention labs; and
provided a driving force for interest in, and design of, a new
operations evaluation process for the lab.
At least one of the labs was also participating in a GPRA pilot
program. As a pilot site, VA's New York Regional Office's claims
processing lab developed a new system of measures, including one that
VA officials said enabled teams to determine how productive they were
by comparing the dollar value of the claims they processed to the
relative salary of the team. (See app. XIII.)
Officials from six labs said that developing performance measures and
complying with GPRA requirements were integral parts of their
reinvention efforts. Labs' performance-based reform initiatives
included (1) developing GPRA performance measures and defining a
matrix program of performance-based management techniques, (2)
building GPRA requirements into the lab's strategic planning effort,
and (3) integrating planning and performance measurement requirements
into a standard agencywide system. However, two survey respondents
said that the implementation of GPRA had little effect on their labs
because they were already developing and using performance measures.
Less than 6 percent of the respondents said that GPRA had a negative
effect on their reinvention labs. These respondents typically said
that GPRA was perceived as "busy work" or as having increased the
staff's workload.
In contrast to the respondents' comments on GPRA, the proportion of
positive and negative responses about NPR II restructuring was
relatively close--31 and 24 percent, respectively. One respondent
said that agency restructuring had resulted in greater cooperation
between his lab and OPM on personnel issues. Another respondent said
that restructuring provided the framework to take the lab initiative
to the next level of improvement. Yet another respondent said that
officials at his lab viewed NPR II restructuring as basically a
budget exercise.
--------------------
\4 The Federal Managers' Financial Integrity Act was designed to
strengthen internal controls by requiring annual evaluation and
reports as to their adequacy. The Chief Financial Officers Act was
intended, among other things, to improve agencies' systems of
accounting, financial management, and internal controls to ensure the
issuance of reliable financial information.
OTHER ISSUES AFFECT LABS'
DEVELOPMENT
---------------------------------------------------------- Chapter 3:6
In their comments, the survey respondents also mentioned three other
barriers to the development of their reinvention labs--lack of
interagency coordination, existing legislation, and organizational
culture. Several respondents provided examples of the difficulties
they experienced in undertaking management reforms that crossed
agency boundaries, even when those agencies are within the same
department. Other respondents said that existing statutory
requirements, which would require an act of Congress to change, had
hindered their labs' performance. Still other survey respondents
said that implementation of the reforms in the lab required changing
the organizational culture within their agencies--that is, the
underlying assumptions, beliefs, values, practices, and expectations
of employees and managers.
INTERAGENCY COORDINATION
-------------------------------------------------------- Chapter 3:6.1
Many governmental functions are performed by more than one agency or
level of government. In some cases, the federal government is
addressing very broad issues, such as environmental degradation or
the need for job training, that fall within the missions of several
agencies.\5 Therefore, similar programs have been established in
different federal agencies. Other federal programs require the
cooperation of state and local governments. Federal agencies also
have similar administrative responsibilities (e.g., personnel,
procurement, and contracting) that require the provision of resources
in each agency to fulfill those functions. In all of these areas,
opportunities exist for greater cooperation and sharing of resources.
As noted in chapter 2, at the time of our survey, 54 labs were
attempting to develop partnerships with other levels of government,
labor organizations, contractors, and/or customers. Other labs were
attempting to consolidate activities among different federal
organizations. The survey respondents provided several examples of
the difficulties involved in enacting management reforms across
agency boundaries. For example, one respondent said that statutes
requiring the use of different contracting procedures in different
agencies were a significant barrier to his lab's goal of
consolidating multiagency programs. The respondent said that one
agency had to use competition when awarding contracts, while other
agencies were required to set aside a percentage of contract awards
for minority contractors. Officials at the Commerce Department's
Boulder reinvention lab said that they established a multiagency team
to address the issue of funding for administrative services.
However, they said the team was ultimately disbanded because it could
not reach consensus on proposed funding alternatives. According to
one lab official, the team lacked sufficient authority needed to push
a proposal forward. (See app. III.) Other difficulties that the lab
officials described in such multiagency efforts included (1)
nonparticipation in or withdrawal from the lab by some relevant
agencies, (2) resistance from top management at one or more of the
agencies, and (3) failure by some agencies to send staff to
NPR-related training courses.
--------------------
\5 See Budget Function Classification: Agency Spending and Personnel
Levels for Fiscal Years 1994 and 1995 (GAO/AIMD-95-115FS, Apr. 11,
1995) for a discussion of the distribution of governmental functions
by agency.
STATUTORY AND REGULATORY
CONSTRAINTS REPORTED BY LABS
-------------------------------------------------------- Chapter 3:6.2
Some of the survey respondents said certain statutory requirements
had a negative effect on their labs. For example, some respondents
mentioned federal contracting laws as a constraint on reinvention
labs. In one case, a lab official said it was difficult to determine
the extent of the lab's authority to reform contracting procedures
because of the myriad of different contracting statutes. Another
respondent noted that the FAR was designed to prevent close
relationships from developing between federal contracting units and
contractors. The respondent said this FAR-required "arms length"
relationship prevented sharing costs and resources with contractors
and was not conducive to cost savings and cycle time reductions.
Lab officials at VA's Clement J. Zablocki Medical Center in
Milwaukee provided an interesting example of how such constraints
affected the lab's performance. The officials said VA classifies
eyeglasses as a prosthetic device, and statutorily based regulations
state that prosthetics can be provided only to veterans with
nonservice-related medical conditions who have been admitted to the
hospital. Therefore, patients having outpatient cataract surgery
must be admitted to the hospital for a 2-day stay in order to receive
corrective eyeglasses. Medical center officials said this is an
unnecessary and costly requirement, and they have sought a waiver
from the regulation.\6
--------------------
\6 The waiver request was submitted to VA's central office, which
recommended that OMB draft legislation to change this eligibility
requirement. However, medical center staff said the recommendation
had not yet been acted upon. Relatedly, the September 1995 NPR
report recommends reforming veterans' health care eligibility and
treatment. It stated that "existing laws limit the ability of VA to
provide the most appropriate care in the most appropriate setting.
For example, VA doctors are presently forced to hospitalize veterans
who only need such care as blood pressure treatment or crutches."
CHANGING THE FEDERAL CULTURE
-------------------------------------------------------- Chapter 3:6.3
According to the President, one of the goals of the reinvention
effort is changing the culture of the national bureaucracy "away from
complacency and entitlement toward initiative and empowerment." A
1993 NPR report stated that traditional cultural values in the
federal government resist change, preserve mistrust and control, and
operate within a rigid and hierarchical structure. The report also
said that this segmented system creates artificial organizational
boundaries that separate staff within and among agencies that work on
related problems.
Several lab officials indicated that this traditional culture had
hindered the process of change in their organizations. In an attempt
to change their units' culture, several organizations combined
organizational restructuring with changes in individual performance
measurement systems as a way to reinforce new employee behaviors.
This type of organizational restructuring typically involved moving
from hierarchical, specialized departments that were responsible for
the performance of a single component of a work process (commonly
known as stovepipes) to multidisciplinary work teams responsible for
the performance of an entire process. To ensure that incentive
systems were aligned with restructured operations, labs were
evaluating the use of self-directed work teams by
creating business contracts with built-in product delivery and
customer satisfaction targets, with both the customer and the
team evaluating the team's overall performance and each member's
contribution;
having the team leader conduct evaluations rather than the
management of the functional units; and
creating an award system that ties group awards to the team's
contribution to the achievement of the agency's goals.
By creating work teams within their organizations, these labs have
tried to address the Vice President's goal to change the culture of
the federal government.
MEASURING THE LABS' PERFORMANCE
============================================================ Chapter 4
The collection and analysis of performance data are key elements in
changing the way the federal government operates, particularly when
those changes are initiated as pilot projects.\1 At the most basic
level, performance data are needed to determine whether the changes
being implemented are producing the expected results. If the data
indicate that the changes are successful and merit wider
implementation, performance data can be used to make a compelling
argument for changing what may be long-standing policies and
practices.
Because reinvention labs are intended to explore new ways of
accomplishing agencies' existing missions, often on a small scale
before broader implementation begins, data about the labs'
performance can be crucial to the labs' long-range success. Without
such data, decisionmakers will not know whether the changes are an
improvement over existing practices. Also, without performance data,
lab officials will find it difficult to obtain support for full-scale
implementation within their agency or for diffusion beyond their
agency to other federal entities.
The survey respondents frequently said their labs were collecting
various types of performance data. Those labs not collecting data
were commonly described as not being sufficiently developed to do so.
Where data were collected, the respondents indicated that it showed
the labs were improving productivity and customer service. However,
the respondents also frequently said that their labs did not have
pre-lab data against which post-lab data could be compared. Some
respondents also indicated other problems with their labs' data
collection efforts.
--------------------
\1 See Managing for Results: Critical Actions for Measuring
Performance (GAO/T-GGD/AIMD-95-187, June 20, 1995); Managing for
Results: Steps for Strengthening Federal Management
(GAO/T-GGD/AIMD-95-158, May 9, 1995); Government Reform:
Goal-Setting and Performance (GAO/AIMD/GGD-95-130R, Mar. 27, 1995);
and Program Performance Measures: Federal Agency Collection and Use
of Performance Data (GAO/GGD-92-65, May 4, 1992).
MOST LABS WERE REPORTEDLY
COLLECTING PERFORMANCE DATA
---------------------------------------------------------- Chapter 4:1
As figure 4.1 shows, over two-thirds of the respondents said that
their labs had collected or were collecting some type of performance
data. Even those respondents who said data were not being collected
generally recognized its importance. Over 80 percent said their labs
planned to gather such data in the future.
Figure 4.1: Most Labs Reported
Collecting Performance Data
(See figure in printed
edition.)
Source: GAO analysis.
We asked the survey respondents who said their labs were collecting
performance data to identify the kinds of data being collected from
the following categories: (1) informal, ad hoc comments from staff
or customers; (2) customer opinion survey data; (3) staff opinion
survey data; (4) output data reflecting the unit's level of activity
or effort (e.g., the number of claims processed); (5) outcome data
indicating the unit's results, effects, or program impacts (e.g.,
changes in infant mortality rates); and/or (6) some other kind of
data. (Survey respondents were allowed to identify more than one
type of data for their labs.) The respondents most commonly said
their labs were collecting data on the units' outputs (77 percent)
and/or were collecting informal comments from staff or customers (69
percent). Other frequent responses were customer opinion survey data
(57 percent), outcome data (52 percent), and staff opinion survey
data (40 percent). Many of the labs (88 percent) reported collecting
more than one type of data.
Of those respondents who said their labs were not collecting
performance data, over three-fourths said that it was too early in
the reinvention process to do so. Analysis of the labs' stage of
development and whether or not they collected data supports the lab
officials' opinion that it was too early in the reinvention process
to be collecting performance data. As shown in figure 4.2, nearly 90
percent of the labs that were at least fully implemented at the lab
site said they had collected or were collecting performance data. In
contrast, only about half of the labs in the planning or beginning
implementation stages of development had collected or were collecting
such data.
Figure 4.2: Fully Implemented
Labs Were More Likely to
Collect Performance Data
(See figure in printed
edition.)
Source: GAO analysis.
A more detailed breakdown of the responses from fully implemented
labs further demonstrates this relationship between stage of
development and data collection. As figure 4.3 shows, although more
than three-fourths of the labs implemented at only the lab site were
collecting performance data, over 90 percent of the labs implemented
at the lab site and beyond were collecting such data. Therefore, the
more developed the lab, the more likely that it would have collected
performance data.
Figure 4.3: Labs Implemented
Beyond the Lab Site Were More
Likely to Collect Performance
Data
(See figure in printed
edition.)
Source: GAO analysis.
SOME RESPONDENTS INDICATED DATA
NOT NEEDED OR USED
---------------------------------------------------------- Chapter 4:2
Although most of the survey respondents indicated their labs were
collecting performance data, 14 percent of the respondents who said
their labs were not collecting such data said they did not do so
because gathering performance data was not seen as essential to their
labs' efforts. For example, lab officials from GSA's Mid-Atlantic
Regional Office and the Commerce Department's Boulder reinvention lab
said that efforts to measure "obvious improvements" were unnecessary.
One official from the Boulder lab said that data collection efforts
should be concentrated on those changes in which outcomes are more
dubious. Other officials from this lab said that they had planned to
use the agency's Inspector General to monitor the lab's progress, but
the Inspector General told them that many of the lab's changes were
based on common sense and, therefore, did not require measurement to
prove their worthiness. (See app. III.) Another 12 percent of the
respondents said that they had not collected performance data because
they had experienced difficulty in identifying and/or developing
appropriate performance measures.
To be valuable, performance data must not only be collected but also
be used by decisionmakers to assess the changes being made in
agencies' operations. However, not all of the data the labs
collected appear to have been used. For example, officials from
USDA's lab reinventing the baggage inspection operations in Miami
said that they had collected data that could have been used to judge
the lab's performance, but the data were never used by anyone in the
agency or the lab for that purpose. (See app. II.)
RESPONDENTS REPORTED IMPROVED
PRODUCTIVITY AND CUSTOMER
SERVICE THROUGH LABS
---------------------------------------------------------- Chapter 4:3
Eighty-two percent of the respondents who said their labs had
collected or were collecting performance data said that the data had
allowed them to reach conclusions regarding the performance of their
labs. Of these respondents who offered an opinion, 98 percent
reported improved customer service, nearly 92 percent noted improved
productivity in their units, and 84 percent said their labs had
improved staff morale. Examples of customer service improvements
follow:
VA's New York Regional Office claims processing lab said that the
average amount of time veterans had to wait before being seen
for an interview had been reduced from about 20 minutes before
the lab to less than 3 minutes after the lab was established.
Lab officials also said that VA employees had greater control
and more authority and found their jobs much more satisfying.
(See app. XIII.)
VA's reinvention lab at the Zablocki Medical Center in Milwaukee
said two surveys--one of physicians and the other of patients
and their family members--indicated that customer satisfaction
had improved as a result of the lab's effort to coordinate
veterans' outpatient and inpatient care by teaming social
workers with primary care physicians. (See app. XII.)
DOE's reinvention lab at the Hanford site in Washington State said
that the lab had reduced the safeguard and security budget by
$29 million over a 4-year period by changing the installation's
security operations from a large paramilitary organization that
supported a national defense mission to an industrial-style
organization that supports environmental cleanup. (See app.
V.)
HUD's reinvention lab in Chicago, Milwaukee, and Cleveland said
that by developing partnerships with public housing authorities
the lab had improved the satisfaction of the public housing
residents. Lab officials also said that an overall measure of
the public housing authorities' management performance in such
areas as rent collected, condition of the housing units, and
operating reserve had improved since the lab was initiated.
(See app. VIII.)
DLA's lab said the lab reduced the agency's overall pharmaceutical
inventories by $48.6 million and achieved similar inventory
reductions and cost savings at DOD medical facilities. (See
app. IV.)
RESPONDENTS SAID LABS OFTEN DID
NOT HAVE PRE-LAB PERFORMANCE
DATA
---------------------------------------------------------- Chapter 4:4
Respondents frequently said that performance data allowed them to
conclude that their labs had improved units' productivity, customer
satisfaction, and staff morale. However, conclusively documenting
these improvements may be very difficult. As figure 4.4 indicates,
many of the respondents who said their labs were collecting
performance data did not collect similar types of data before the
start of the lab to serve as a baseline for documenting the labs'
effects.
Figure 4.4: Many Labs Reported
That They Did Not Collect
Pre-Lab Performance Data
(See figure in printed
edition.)
Source: GAO analysis.
The most common forms of pre-lab performance data (baseline data)
that respondents indicated existed concerned a unit's outputs (53
percent of the respondents) and informal comments (57 percent). Labs
reported that they were least likely to have such data on customer
(24 percent) and staff (17 percent) opinions.
CONCLUSIONS AND RECOMMENDATION
============================================================ Chapter 5
At the time of our survey, 26 agencies and other federal entities had
designated a total of 185 reinvention labs in various parts of the
country. The survey respondents indicated that the labs generally
were established to do what the Vice President suggested in his April
1993 letter to federal departments and agencies--improve customer
service; address specific problems; and, ultimately, improve the
operation of federal agencies. Because many of the labs had not been
implemented at the time of our review, it is too early to tell
whether they will accomplish these goals. Even for the labs that the
respondents said had been fully implemented, it may take years before
it can be determined whether the changes will have a long-lasting
effect on federal agencies beyond the lab site. Also, because there
is not a specific definition of a reinvention lab or guidance from
either the NPR task force or OMB as to how labs should operate, few
clear criteria exist against which to judge the labs' performance.
Nevertheless, some preliminary observations about the labs are
possible based on comments the Vice President and others have made
about the labs and the information developed during this review.
For example, the Vice President said that the labs should ideally be
initiated where the government serves the public in a highly visible
way. Although virtually all of the survey respondents indicated that
improving customer service was a primary goal of their labs, they did
not always define their labs' customers as the public. In fact, lab
officials most commonly viewed their labs' customers as other
governmental organizations, and, for some of the labs, a government
organization was their only customer. Although the linkage of these
labs to the public may not have been as direct as the Vice President
envisioned, the public or the agency's constituency appeared to be at
least indirectly served in virtually all of the labs.
Although the survey respondents indicated that the labs' changes
represented a substantially different mode of operation, the scope of
the reforms being developed in the labs was relatively narrow
compared to the sweeping changes contemplated by GPRA, the NPR II
agency-restructuring recommendations, and the congressional proposals
to consolidate agencies' functions or eliminate agencies entirely.
However, the labs' comparatively narrow scope is a natural
consequence of the Vice President's charge that they "reengineer work
processes." Agencies and employees were not asked to suggest
macro-level changes, such as whether entire agencies or programs
should be abolished or whether multiple agencies should be merged
into a single structure. Ultimately, though, the diffusion and
widespread adoption of the labs' reengineering proposals could lead
to the "fundamental culture change" that the Vice President
envisioned in 1993.
At the beginning of the lab effort, a number of observers indicated
that a key factor in the success of the effort would be the labs'
ability to obtain waivers from federal regulations. Although the
respondents said many labs sought and received regulatory waivers, a
large number of the efforts were able to be implemented without such
waivers. Some lab officials said they believed waivers would be
needed, but they later discovered that they already had the authority
needed to change their work processes. Although some impediments to
the labs were clearly real, the experiences of those officials
suggest that at least some barriers to organizational change may be
more a function of perception than reality.
Most of the survey respondents said they were collecting performance
data to measure the effect of their labs' reinvented work processes.
However, some of the respondents' comments raised questions about
their commitment to measuring performance or the quality of the data
being collected. Some lab officials said that either they or other
agency officials did not believe that the collection of performance
data was necessary or worthwhile. Other lab officials said that they
had difficulty developing measures of performance or that data had
been collected but had not been used by decisionmakers. One of the
most common types of data reportedly being collected by the labs was
informal comments from customers or staff--anecdotal data that are
not measurable and, therefore, may not be convincing to skeptics of
the reinvention process.
Of particular concern to us are the labs that were reportedly
collecting data about their reinvention efforts but had not collected
similar types of data before the start of their labs. Without such
pre-lab data, lab officials have no baseline for documenting a lab's
effects and therefore will find it difficult, if not impossible, to
reach persuasive conclusions about the lab's effects. The absence of
both pre- and post-lab data will also make it difficult to support
expanding a lab's changes to the rest of its agency or to other
organizations. Development of pre-lab performance measures is
particularly important for the substantial number of labs reportedly
still in the planning stage.
Nevertheless, the reinvention lab effort has produced hundreds of
ideas to reengineer work processes and improve agencies'
performance--ideas drawn from employees with hands-on experience in
operating government programs. Many of the labs are addressing
issues that are at the cutting edge of government management, such as
how agencies can use technology to improve their operations; how they
can be more self-sufficient in an era of tight budgetary resources;
and how agencies can work in partnership with other agencies, other
levels of government, or the private sector to solve problems. This
progress notwithstanding, even more innovations are possible in these
and other areas as agencies review and rethink their existing work
processes.
MOVING BEYOND THE LABS
---------------------------------------------------------- Chapter 5:1
The labs we surveyed were at varying stages of development. About
half had not been fully implemented at the lab sites and were still
in the planning or developmental stages. The rest of the labs had
been fully implemented at the lab sites, and some had proven that the
innovations being tested can save money, improve service, and/or
increase organizational productivity. However, relatively few of the
labs' proposals had been implemented beyond the original lab site.
The types of assistance the labs need depend on their stage of
development. Labs that are in the planning or developmental stages
need the support, encouragement, and, at times, the protection that a
"change agent" in a position of influence can provide.
Governmentwide, the Vice President and the NPR task force have
attempted to perform that role. There have also been change agents
within particular agencies that have encouraged and supported the
labs' development.
Labs that have been fully implemented, particularly those that have
demonstrated ways to save money and/or improve federal operations,
need a different type of assistance if the ideas they represent are
to spread beyond the lab sites. Nonlab organizations both within the
labs' agencies and in other agencies need to become aware of the
labs, recognize the applicability and value of the ideas the labs
represent to their own organizations, and learn from the labs'
experiences. As the Vice President said, for the labs to achieve
their full potential they "will need to share what they learn and
forge alliances for change." The real value of the labs will be
realized only when the operational improvements they initiated,
tested, and validated achieve wider adoption. Also, by learning from
the labs' experiences, other organizations can avoid the pitfalls
that some of the labs experienced. Sharing this information will
keep other organizations from having to "reinvent the wheel" as they
reinvent their work processes. If the changes the labs represent end
at the lab sites, a valuable resource will have been wasted.
Therefore, communication about the labs is crucial to the long-term
success of this part of the overall reinvention effort.
However, the survey respondents indicated that relatively few labs
have had substantial communication either with other labs or with the
NPR task force. Also, although it has encouraged the labs'
development and made certain information available about them, the
NPR task force has not actively solicited information from the labs,
has encouraged agencies to focus on reinventing rather than
reporting, and has not systematically contacted the labs to provide
them with information or direction. As a result, the NPR task force
was not able to provide us with an accurate listing of all of the
labs. The task force's "hands-off" approach to the reinvention lab
effort was a conscious decision by NPR officials not to micromanage
the labs and impose a top-down "command and control" structure. This
approach, while appropriate to encourage and empower employees and
agencies to find the solutions they believe most appropriate to
reengineer their work processes, may not be the best strategy for
moving the labs' results beyond their experimental environments.
Furthermore, there is no certainty that the NPR task force will still
be in existence when some of the labs reach maturity.
Therefore, we believe that some type of information "clearinghouse,"
placed in a relatively stable environment, is needed to allow other
organizations to become aware of the labs and to learn about the
labs' experiences. The clearinghouse could, among other things,
provide information and guidance to labs on the development of
appropriate performance measures, including baseline data against
which the labs' performance could be judged. A number of federal
organizations could conceivably perform this clearinghouse role. For
example, OMB's responsibility for providing management leadership
across the executive branch makes it a candidate to serve as the
clearinghouse. Other possible candidates include OPM, GSA, the
President's Management Council, or an executive agency interested in
tracking innovations.
RECOMMENDATION
---------------------------------------------------------- Chapter 5:2
We recommend that the Director of OMB ensure that a clearinghouse of
information about the labs be established. Working with the NPR task
force, the Director should identify which agency or other federal
entity can effectively serve as that clearinghouse. The
clearinghouse should contain information that identifies the location
of each lab, the issues being addressed, points of contact for
further information about the lab, and any performance information
demonstrating the lab's results.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 5:3
We provided a draft of this report to the Vice President and the OMB
Director for their review and comment. On January 17, 1996, we met
with the Senior Policy Advisor to the Vice President for NPR issues
and the Deputy Director of the NPR task force. On January 22, 1996,
we met with OMB's Deputy Director for Management. All of the
officials indicated that the report was generally accurate,
interesting, and helpful. The OMB and NPR Deputy Directors said the
report was the most comprehensive analysis of the reinvention labs to
date. Certain technical changes the officials suggested were
incorporated into the report as appropriate.
In the draft, we recommended that OMB serve as the clearinghouse for
information about the labs. All of the officials expressed concerns
about this recommendation. The Senior Policy Advisor and the NPR
Deputy Director were somewhat concerned that the recommendation might
be read as implying that OMB, rather than NPR, should have had
responsibility for initiating and promoting reinvention labs. They
pointed out that OMB's historical role, its budget responsibilities,
and its statutory management responsibilities compete with its role
as a "change agent" fostering innovation. We explained that our
recommendation was intended to emphasize OMB's responsibility to
facilitate the dissemination of work process innovations beyond the
lab sites, not make them change agents responsible for initiating the
labs. The Senior Policy Advisor and the Deputy Director agreed that
this innovation dissemination function is important and agreed that
OMB was one place where this responsibility could be placed.
The OMB Deputy Director for Management suggested that the
recommendation be changed to allow for options other than OMB itself
as the clearinghouse. He said that although OMB has a leadership
role to play in this regard, OMB may not be the best candidate to
collect and provide information about the labs. Other possible
candidates, he said, include the President's Management Council,
other central management agencies, and the Chief Financial Officers
Council. We agreed to change the recommendation to state that the
OMB Director should ensure that a clearinghouse is established and,
working with the NPR task force, should identify the appropriate site
for the clearinghouse.
LIST OF REINVENTION LABS
RESPONDING TO SURVEY BY AGENCY AND
SUBJECT CATEGORIES
=========================================================== Appendix I
Informati
on Financial
Personnel Procureme technolog managemen Operation Marketi EC/ Partnership
Agency Lab name /HRM nt y t s Other ng EDI s
----------------- --------------------------------------- --------- --------- --------- --------- --------- ----- ------- ----- -----------
Agency for Agency for International Development--
International Agencywide Lab
Development
Agriculture Automated Records Management System
Coordinate Public and Private 4-H
Programmatic Functions
Dispute Resolution Board
Emphasizing Prevention In Pre-Harvest
Food Safety
Empowering Employees Through Self-
Directed Work Teams
Enhancing Service Delivery Through
Decentralization
Expanding Options For User Fees
Focusing On Results In Resources
Management
Meeting Customer Needs For Small
Purchasing and Leasing
Organizational Change: Toward Improving
Information and Education Technology
Simplifying Rulemaking in APHIS
Streamlining the Travel Accounting
Process
Commerce Administrative Management for the
Boulder Laboratories
Computer-Assisted Survey Information
Collection--Census Bureau
Electronic Marketplace/Information
Partnerships/Automated Document
Storage and Retrieval System--
National Technical Information Service
Flexiplace Reinvention Lab--Patent and
Trademark Office
Reinventing the Bureau of Export
Administration
Defense 45th Space Wing Lab--Air Force
Acquisition Reform--Navy
Air Force DLA Express Service--U.S.
Transportation Command
Army Battle Labs
Army Chemical and Biological Command
Lab
Army Concept Analysis Agency
Army Missile Command Reinvention Lab
Army Personnel Information Systems
Command
Best Value Supply and Services--Marine
Corps Air Station, El Toro, CA
Best Value Supply and Services--Marine
Corps Air Ground Combat Center,
Twenty-nine Palms, CA
Defense (cont.) Best Value Supply and Services--Marine
Corps Air Station, Cherry Point, NC
Best Value Supply and Services--Marine
Corps Base, Camp Lejeune, NC
Best Value Supply and Services--Marine
Corps Logistics Base, Albany, GA
Buy Response Vice Inventory--Defense
Logistics Agency
Central Penn Regional Public Works
Center--Army
Civilian Human Resource Management Lab-
-Army
Closed-Loop Wood Recycling--Defense
Logistics Agency
Customer Value Contracting--Defense
Logistics Agency
Defense Printing Service--Department of
Defense
Defense Reutilization and Marketing
Service--Defense Logistics Agency
Naval Postgraduate School: Delivery of
Graduate Education and Related
Research and Consulting Services--
Navy
Defense Transportation Reinvention Lab-
-U.S. Transportation Command
Enterprise Integration--Defense
Information Systems Agency
Federal Automated System for Travel--
Air Force
Federal Contract Administrative
Services--Defense Logistics Agency
Facilitating Our Customers' Ultimate
Satisfaction--Defense Logistics Agency
Full Business Cycle Electronic Data
Interchange--Defense Logistics Agency
Health Care Systems Support--Army
Infusing Best Business Practices Into
The Federal Government--Army
Initiative To Improve On-Time Delivery
of Government Contract Line Items--
Defense Logistics Agency
Installations and Logistics Lab--
National Security Agency
Medical Technology Lab--Air Force
Naval Safety and Survivability--Navy
Naval Shore Activities--Navy
NSA Travel Reinvention Lab--National
Security Agency
Performance Labor Accounting System--
Defense Logistics Agency
Premium Service Lab--Defense Logistics
Agency
Defense (cont.) Process Oriented Contract
Administration Services--Defense
Logistics Agency
Recycled Packaging--Defense Logistics
Agency
Reduce Policy and Procedures to "One
Book"--Defense Logistics Agency
Reducing Oversight Costs--Defense
Logistics Agency
Reinvent the Essential Mission of
Supporting DOD Activities in the
National Capital Region--Department of
Defense
Science and Technology Labs--
Department of Defense
Software Engineering Productivity
Improvement--National Security Agency
Streamlining Procurement of Commercial
Items--Defense Mapping Agency
Support to the Combat Operator--
National Security Agency
Tailored Logistics Support Detachment-
-Defense Logistics Agency
Total Activity Reinvention Lab--Marine
Corps Logistics Base, Barstow, CA
Total Activity Reinvention Lab--Marine
Corps Base, Camp Pendleton, CA
Total Agency Reinvention Lab--Defense
Mapping Agency
Variable Pricing--Defense Logistics
Agency
Wood Products--Defense Logistics Agency
Education Debt Collection Service--Office of
Postsecondary Education
Development of Performance Indicators
Energy Implementing a Business Model for Power
Marketing Operation--Bonneville Power
Administration
Declassification of Information
(Openness Initiative)
Energy Efficiency and Renewable Energy:
Reinventing the Federal-State-Local
Partnership for Energy
Policy, Planning, and Program
Evaluation: National Clean Industry
Initiative
Real-Time Access to Oil and Gas
Information
Reinventing Government at Hanford
Environmental Reengineering Management Integrity at
Protection EPA
Agency
The Learning, Information, and
Performance Support System
Federal The Atlanta Federal Executive Board
Executive
Board
Federal The Alamo Federal Executive Board
Executive
Board (cont.)
The Greater Los Angeles Federal
Executive Board
Federal Federal Emergency Management Agency--
Emergency Agencywide Lab
Management
Agency
General Services Commercial Products Acquisition Lab
Administration
Direct Ordering of Technical Support
Services for Risk Analysis and
Security Audits
Electronic Time and Attendance
Reporting Lab
Federal Supply Service, GSA, Northeast
and Caribbean Region
Governmentwide E-Mail Lab
Governmentwide Real Property Standards
Lab
Interagency Fleet Consolidation Lab
Lease Lab
Local Telecommunications Services Lab
Regionwide Lab: Mid-Atlantic Region
Regionwide Lab: Rocky Mountain Region
Revised Public Buildings Service
Contract Review Procedures
Telecommuting Lab
Health and Human Alaska Native Medical Center
Services
Georgia Common Access Project
International Cancer Information Center
Internet Lab
National Library of Medicine Systems
Reinvention Lab
Negotiated Rulemaking (Reg-Neg)
Phoenix Indian Medical Center
Reinventing the National Institutes of
Health's Research Grants
Housing and Affirmative Fair Housing Marketing
Urban
Development
Community Partnerships Against Crime
District of Columbia Homeless
Initiative
Reinventing Public and Indian Housing's
Field Operations
Single Family Property Disposition
Interior Affirmative Employment Program Lab
Interior (cont.) Cadastral Survey--Bureau of Land
Management
California Desert Ecosystem Management
and Planning--Bureau of Land
Management
Common Reference Data--Minerals
Management Service
Consolidation of Administrative
Services
Denver Service Center--Bureau of Land
Management
Discrimination Complaints Processing
End User Support--Office of Information
Resources Management
Ethics Reengineering Lab: Financial
Disclosure Requirements
Ethics Reengineering Lab: Standards of
Conduct and Training
Ethics Reengineering Lab: Management
Decision Making and the Enforcement of
Ethics
Federal Financially Assisted Programs
Fort Collins: Natural Resources
Research Center--National Biological
Service
Four Corners Indian Trust Service Lab
Freedom of Information Act Process
Reinvention Lab
Housing Improvement Program Reinvention
Management Lab--Bureau of Indian
Affairs
Information Dissemination System--U.S.
Geological Survey
Information Management--Office of
Information Resources Management
Inter-Department Indian Program--
Bureau of Indian Affairs
National Training Center NPR Lab--
Bureau of Land Management
Partnership San Antonio--National Park
Service
Pittsburgh Research Center--Bureau of
Mines
Power Management Laboratory--Bureau of
Reclamation
Redesign and Reorient the Operations
Evaluation Process--National Park
Service
Reengineering the Evaluation Program--
Bureau of Land Management
Review of Planning, Design and
Construction Documents--National Park
Service
Royalty Management Program--Minerals
Management Service
Use of Internet and Other External
Networks
Justice "Operation Payback" Debt Collection
Lab--U.S. Marshals Service
Airfleet Management
Comprehensive Anti-Crime and Social
Service Delivery Strategies
Computer Security Technology
Detainee Medical Services
Freedom of Information and Privacy Acts
Laboratory
Customer Service Initiative--
Immigration and Naturalization Service
Joint Automated Booking System (JABS)
Partners Against Violence Network
Special Access Inspections Lane
Labor Cincinnati 2000
One Stop Career Centers
National Enhancing the Accessibility of Earth
Aeronautics Science Data
and Space
Administration
Functional Management Reinvention Lab
Improving Instrument Integration For
Mission To Planet Earth
Procurement Reinvention Lab
Shuttle/Payload Processing
Nuclear Procurement Reinvention Lab
Regulatory
Commission
National Science National Science Foundation--
Foundation Agencywide Lab
Office of Project ABLE (Able Beneficiaries Link
Personnel To Employers)
Management
Self Directed Work Team
Telephone Application Processing
Securities and Reinventing Personnel Management
Exchange
Commission
State Consular Reinvention Lab
Diplomatic Security
Office of Coordinator for Business
Affairs
Tennessee Valley Tennessee Valley Authority--Agencywide
Authority Lab
Transportation Air Traffic Control System Command
Center--Federal Aviation
Administration
Transportation Electronic Signature Project--Federal
(cont.) Highway Administration
Merchant Mariner Licensing and
Documentation System--U.S. Coast Guard
Treasury Air Passenger Processing--U.S. Customs
Service
Application Processing--Office of
Thrift Supervision
Check Claims Reinvention Lab--
Financial Management Service
Eliminating Imprest Funds Through
Electronic Commerce
Public Tours--Bureau of Engraving and
Printing
Reengineering Work Processes--Internal
Revenue Service
Reinventing Prompt Payment Initiative-
-Financial
Management Service
Streamline Initiative For
Noncompetitive Procurement--Bureau of
Engraving and Printing
Veterans Affairs Claims Processing--Lab New York
Regional Office
Customer-Focused Health Care--Sioux
Falls VA Medical and Regional Office
Center
Customer-Focused Health Care--
Milwaukee VAMC
Customer-Focused Health Care--
Baltimore VAMC
Customer-Focused Health Care--West Palm
Beach VAMC
-----------------------------------------------------------------------------------------------------------------------------------------------------
\a These categories were reported by a contact person from each of
the reinvention labs during GAO's telephone survey.
\b These themes were identified from a GAO analysis of comments
volunteered by respondents in addition to the mandatory survey
responses.
Source: Responses to fax survey from 181 reinvention labs.
U.S. DEPARTMENT OF AGRICULTURE:
BAGGAGE INSPECTION OPERATIONS AT
THE MIAMI INTERNATIONAL AIRPORT
========================================================== Appendix II
OVERVIEW OF THE REINVENTION LAB
SITE
-------------------------------------------------------- Appendix II:1
The U.S. Department of Agriculture's (USDA) baggage inspection
operation at Miami International Airport is responsible for
inspecting the baggage of arriving international passengers for
undeclared and/or illegal agricultural products. The goal of the
operation is to ensure that exotic plant pests and animal diseases do
not enter the United States and cause economic distress to America's
agriculture.
Baggage inspection operations at the airport are carried out 24 hours
a day, 7 days a week, reflecting the nearly constant arrival of
international flights. International passengers must first go
through Immigration and Naturalization Service processing and Customs
Service inspections. Then, those passengers who either have declared
that they are bringing in agricultural products or who are suspected
of bringing them in have their baggage inspected by personnel from
the Plant Protection and Quarantine (PPQ) program of USDA's Animal
and Plant Health Inspection Service (APHIS). If travelers are found
to have brought prohibited agricultural products into the country,
they can be assessed civil penalties ranging from $50 to $250,
according to Miami PPQ officials.
The PPQ baggage inspection program creates stressful working
conditions because inspectors must perform an important enforcement
activity while serving international travelers in a positive way.
Also, the volume of international travelers at the airport has
increased dramatically in recent years. According to PPQ management,
international passenger volume at the airport was about 17,000 per
day in 1991 and increased to about 30,000 passengers per day in 1995.
During the same period, budget constraints prevented any significant
increase in PPQ baggage inspection staffing levels.
INITIATION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix II:2
The origins of the lab can be traced to 1989, when PPQ began efforts
to improve productivity. Recognizing that work was increasing but
that staff resources were not, PPQ management undertook an employee
utilization study in an attempt to address the problem. The study
indicated that the quality of worklife was a key factor in improving
staff productivity, so PPQ decided to attempt to improve job
satisfaction and morale. A union representative suggested the team
concept be explored, which ultimately led to the development of
self-directed work teams (SDWT).\1 The goal of SDWTs was to permit
more self-direction by employees and to allow them to identify ways
of improving procedures, efficiency, and effectiveness. In April
1991, two SDWTs became operational as a pilot project in the baggage
inspection program at Miami International Airport.
In August 1993, the pilot project was designated as a reinvention
lab. According to Miami PPQ management officials, that designation
brought the project recognition, attention, and a needed boost.
However, the officials also said that the lab designation revealed
certain barriers they were facing. They said that if the pilot
project had not been designated a lab, it would have been left as a
small, struggling, internal effort.
--------------------
\1 The self-directed work team is formed along process lines and
empowered to make process improvements with only limited managerial
oversight as well as to make many of the day-to-day decisions
formerly made by supervisors.
DESCRIPTION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix II:3
The overall objective of the lab was to improve morale, provide the
opportunity for self-development, and enhance the quality of worklife
by giving employees greater decisionmaking power and actively
involving them in decisions that influenced their working
environments. The lab also was intended to achieve improvements in
program productivity as the employees examined ways to improve the
operations of the baggage inspection program.
Before SDWTs, the baggage inspection function operated in a
traditional organizational arrangement with a rigid hierarchical
structure of supervisors, officers, and technicians. A supervisor
directed all aspects of employee activities, even specifying when
employees could take bathroom breaks. Furthermore, PPQ management
said the work area was considered poor by both managers and employees
and was known as the "purple dungeon" because of the windowless,
closed working space.
Since the advent of SDWTs in April 1991, officers and technicians as
a group determined their shift schedules and break arrangements and
worked out annual leave conflicts. In some cases, SDWTs arranged for
compressed schedules that allowed for 10- instead of 8-hour workdays.
Employees also were permitted to rearrange their workspace to make it
more efficient. Supervisors became facilitators to coach and mentor
the SDWT effort. Both employees and management said that the SDWT
effort improved morale and the working environment.
The SDWT effort also reportedly led to changes in the order of
inspection operations that USDA shares with the Customs Service.
Before the pilot, USDA's PPQ profilers/screeners would mark
passengers' declarations and, if USDA needed to inspect their
luggage, would direct passengers to USDA after they went through
Customs' checkpoint. As a result of the SDWT effort, USDA and
Customs rethought the operation, changed some of the order of
inspection, and rearranged the inspection area. According to Miami
PPQ management, these changes resulted in a more efficient operation
that moves passengers through the airport more quickly and provides
PPQ better control in determining which passengers to select to have
their baggage inspected.
APHIS headquarters formed a work group to help implement the team
approaches at other APHIS locations. As a result of lessons learned
at the SDWT lab, similar, team-based work efforts were started at the
other PPQ operations in Miami and at more than 20 other APHIS
locations across the country. The work group is also seeking to
address system barriers that currently prevent the use of certain
team approach techniques, such as the team-based performance
assessments.
USE OF WAIVERS
-------------------------------------------------------- Appendix II:4
All of the lab's efforts were done within existing regulations
because PPQ officials said they believed it would have been too
difficult to obtain a waiver from governmentwide and agency-specific
regulations. However, lab officials said that informal arrangements
were sometimes developed to work around certain regulations. For
example, regulations require that all leave be approved by a
supervisor. In the lab, the SDWT collectively arranged its members'
schedules and agreed when annual leave could be taken. To ensure
consistency with regulations, a supervisor signed employee leave
slips. Although the action was not considered a regulatory waiver,
the local union agreed to ease some contract rules that conflicted
with the SDWT approach because the union supported that approach.
Lab officials said some elements of traditional SDWTs could not be
accomplished under federal regulations and therefore were not
included in the lab. These elements included allowing SDWT members
to conduct team-based appraisals and to make hiring or firing
decisions. A member of the APHIS work group said that it was
identifying ways to overcome these barriers and that it may seek
regulatory waivers in the future that would allow it to include these
elements in the lab. Because of the limitations on what the SDWT was
able to do, Miami PPQ management no longer uses the term
"self-directed work teams" and refers to the lab's efforts as "moving
toward a team-based organization."
PERFORMANCE MEASURES
-------------------------------------------------------- Appendix II:5
Miami PPQ officials said that a June 1991 survey conducted shortly
after the start of the pilot project showed that employee job
satisfaction and morale had increased from levels reported before the
project. However, there has been no other attempt to measure
employee job satisfaction or morale to indicate the effect of the
project or, after 1993, the lab.
One possible measure of the lab's effectiveness--pest interception
data--was collected before the pilot and after the start of the lab.
However, lab officials said these data were not analyzed to identify
the possible impact of the SDWTs. PPQ Miami management officials
said that they may conduct such an analysis in the future to
demonstrate the need for more staff to deal with the increase in
international passenger volume.
OTHER ISSUES
-------------------------------------------------------- Appendix II:6
LESSONS LEARNED
------------------------------------------------------ Appendix II:6.1
Although top management in APHIS supported the lab from the
beginning, Miami PPQ officials said that the organizational support
services necessary for the SDWT effort proved to be insufficient.
Specifically, they said that these services lacked ongoing guidance
and failed to provide adequate, timely, and sufficient training,
especially in preparing the team members for their responsibilities
associated with the new team roles. The officials attributed this
lack of support to an underestimation of the extent of support that
would be required by all involved, including top management in APHIS
and PPQ. They also said that certain PPQ management actions
communicated messages that were contradictory to the teamwork
efforts, causing setbacks and distrust. PPQ employees said that
local Miami PPQ managers were very supportive throughout the whole
effort. Within the SDWTs, morale reportedly improved as team members
were able to work together as a team and make decisions on their
work.
Miami PPQ management said that as a result of being one of the first
efforts to use SDWTs in the federal government they learned over time
from their successes and failures. They said that the APHIS work
group could help team members resolve problems at the lab site and
prevent problems elsewhere as similar team efforts are implemented.
COMMUNICATION WITH OTHER
LABS
------------------------------------------------------ Appendix II:6.2
APHIS held a reinvention lab conference in November 1994. Miami PPQ
managers said that the sharing of lab experiences was very helpful
and provided them with useful ideas for their lab.
DEPARTMENT OF COMMERCE:
ADMINISTRATIVE SERVICES FOR THE
BOULDER SCIENTIFIC RESEARCH
LABORATORIES
========================================================= Appendix III
OVERVIEW OF THE REINVENTION LAB
SITE
------------------------------------------------------- Appendix III:1
The Department of Commerce's scientific research laboratories in
Boulder, CO are under the administration of three Commerce agencies:
the National Institute of Standards and Technology (NIST), the
National Oceanic and Atmospheric Administration (NOAA), and the
National Telecommunications and Information Administration (NTIA).
These laboratories conduct various types of research in support of
industry, other government agencies, and academia. This research
includes developing technology to improve product quality, describing
and predicting changes in the earth's environment, promoting
standards to help the development of U.S. products and services,
modernizing manufacturing processes, ensuring product reliability,
and helping rapid commercialization of products based on scientific
breakthroughs. The Mountain Administrative Support Center (MASC),
which is organizationally located within NOAA, provides
administrative support to the scientific research laboratories
operated by NIST, NTIA, and NOAA.
INITIATION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix III:2
In response to the National Performance Review's (NPR) request,
Commerce selected five components, including the Boulder
Laboratories, to test reinvention ideas. The Boulder site was
officially designated a reinvention lab in June 1993.
A Reinvention Committee was organized by the Boulder site senior
management to develop a conceptual plan for the reinvention lab and
to review all reinvention recommendations. The recommendations were
developed by four reinvention teams in the following functional
areas: (1) personnel, (2) equipment and services, (3) information
management and flow, and (4) facilities and logistics. The
Reinvention Committee also established an Automation Strategies Group
and a Funding Strategies Group to assist the reinvention teams.
In addition, the Reinvention Committee had the responsibility of
presenting the recommendations to a Reinvention Board of Directors
comprising the directors of the Commerce agencies at the Boulder
site. The Board was responsible for approving all of the
recommendations, with general concurrence on major changes from
Commerce's Performance Review Steering Committee, which oversees all
five of the department's reinvention labs.
DESCRIPTION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix III:3
The overall purpose of the reinvention lab was to improve the
delivery of administrative services to NIST, NOAA, and NTIA
scientists and engineers working at the Boulder site. In July 1993,
the Reinvention Committee issued the lab's conceptual plan, which
proposed 112 actions designed to create an administrative system that
would empower agency employees to work better for their customers.
Of these 112 actions, 34 were short-term "quick-fixes," although some
required waivers from regulations. The remaining 78 recommendations
required more planning and long-term work, most of which the lab has
discussed extensively but has not yet acted upon. All the
recommendations were placed into four major categories:
decentralization of decisionmaking, service responsiveness, funding
of services, and site-specific services. Most of the reinvention
teams focused on the short-term quick fixes. The following is a
discussion of the most significant efforts by some of the lab's teams
and groups.
DECENTRALIZATION OF
DECISIONMAKING
----------------------------------------------------- Appendix III:3.1
A primary focus of the lab was decentralizing administrative
decisionmaking to the lowest practical level. In response to this
goal, the lab's Personnel Team made nine "quick-fix" recommendations
that delegated the authority to make personnel decisions from the
personnel office to line managers.
Six of the team's nine recommendations were approved by the lab's
Board: (1) authorize managers to permit the use of alternate and/or
compressed work schedules, (2) allow managers to account for the work
hours of their employees on alternative work schedules, (3) enable
employees to use leave in 15-minute intervals, (4) authorize managers
to approve flexiplace arrangements, (5) permit managers to develop
their own incentive award systems, and (6) use E-mail to automate the
employee clearance process. The Board did not approve other
recommendations covering alternative discipline procedures, ethics
training, and requirements for and storage of financial disclosure
statements because those recommendations were beyond the scope of the
lab and were sent to departmental management for resolution.
SERVICE RESPONSIVENESS
----------------------------------------------------- Appendix III:3.2
Another critical element of the reinvention lab was to improve
service responsiveness through enhanced automation and
communications. An Automation Strategies Group, consisting of
computer experts from all three Commerce agencies at the Boulder
site, was created to develop a sitewide computer network, which would
include local databases, automated systems, interfaces with Boulder
agencies and Commerce systems, and electronic communication links.
The Automation Strategies Group's primary accomplishment was
developing a "white pages" directory service accessible through the
Internet that provided names, phone numbers, mail codes, locations,
and security clearances for all employees at the Boulder site.
Lab officials said that the implementation of some of the other
automation recommendations was discontinued or delayed because of
questions among site staff regarding how MASC wanted to proceed with
automation. In addition, lab officials needed to consider the impact
of the departmentwide Commerce Administrative Management System
(CAMS) on the lab's automation proposals. Currently being
implemented, CAMS is an automated management system that integrates
various administrative functions, including financial management,
travel, requisitioning, and training. Lab officials said that they
intend to develop their own interconnectable systems that will also
connect with CAMS when it is implemented at the Boulder site.
However, they noted that fulfilling this strategy will be difficult
given the limited funds available for automation.
FUNDING OF CENTRAL AND
ON-SITE SERVICES
----------------------------------------------------- Appendix III:3.3
Another lab objective was to provide the agencies at the Boulder site
with greater control over funding decisions for the administrative
services provided by MASC. NTIA and NIST are billed at specific
levels for the administrative services provided; however, funding for
NOAA's Boulder administrative support comes directly from NOAA
headquarters. As a result, lab officials said that because the
billing methods among the three Commerce agencies are different, the
funding decisions for administrative services could be viewed as
inequitable and not necessarily based on the needs of the scientific
research projects. Furthermore, lab officials said that because MASC
was organizationally within NOAA, NTIA and NIST had little control
over the level of administrative services they received.
The Reinvention Committee established a Funding Strategies Group to
address this issue. However, the group ultimately disbanded because
the agencies represented in the group could not reach a consensus on
the group's alternative funding proposals. According to one lab
official, the group, comprising representatives from all of the
Boulder site agencies, lacked sufficient authority to push a proposal
forward.
In spite of this experience, lab officials said that the reinvention
effort had succeeded in developing budding partnerships among the
agencies at the Boulder site. An example of these partnerships
included a proposed administrative council with representatives from
all three agencies.
USE OF WAIVERS
------------------------------------------------------- Appendix III:4
According to the lab's status report, the lab planned to request
seven waivers from departmental and governmentwide regulations. As
of October 1995, four waivers had been approved. Three departmental
waivers were approved that allowed the use of alternative work
schedules, authorized managers to create their own promotion and
staffing processes, and permitted managers to recruit federal workers
to fill job vacancies.
The department approved a fourth waiver in the form of a blanket
delegation of authority allowing the agency directors at the Boulder
site to have full authority to suspend or deviate from the policies
of Commerce's Central Office, its bureaus, or other nonstatutory
policies and procedures when it was determined to be in the best
interest of the government.
In addition, Commerce officials received Office of Personnel
Management (OPM) approval for the expansion of a personnel
demonstration project that was originally implemented in NIST in
January 1988. Lab officials stated that they sought to include the
other Boulder agencies in the project because their position
classification system was superior to the traditional system.
A departmental waiver to change the processing of personnel actions
also was pending because of Commerce's plans to consolidate all of
its personnel processing into one or two offices.
Finally, officials planned to request a general waiver from using the
General Service Administration's (GSA) supply schedule to enable the
site's supply room to seek the best value for each product it sells.
According to an official, this request was dropped because
reinvention lab team members did not realize that procurement rules
allowed agencies to ignore the supply schedule if a local source
could provide the product at a lower price.
PERFORMANCE MEASURES
------------------------------------------------------- Appendix III:5
The lab's conceptual plan states that the basis for monitoring and
evaluating the results of reinvention will be the measurement methods
designed by reinvention teams and reported in their reform proposals.
Each proposal was also required to include a checkpoint for
determining if the reform had generated any improvements. Lab
officials said that they planned to use Commerce's Office of the
Inspector General to assist in evaluating the lab's progress as well
as to investigate potential savings and cost avoidance.
One official said that although an effort will be made by the
Reinvention Committee to review each proposal and measure its
progress, not all proposals will have specific measures. In his
view, developing specific measures for some reinvention changes is
too difficult or the changes cannot be quantified. He said, in some
cases, a methodological approach does not exist to measure a
particular type of change or the cost of measuring the change
outweighs the potential benefits of measurement. Improvements may be
so obvious that performance measures are not needed. According to
the official, more effort should be concentrated on those changes in
which the outcomes are more dubious. He offered an alternative
approach to performance measurements for those improvements lacking
clear performance measures--conducting opinion surveys of
participants and other people intimately involved with the work
process.
Another lab official stated that the Reinvention Committee would not
be evaluating the lab's activities. This official said that
Commerce's Inspector General had told lab officials not to waste
their time evaluating their lab activities. After being briefed on
the lab's activities, the Inspector General said that many of the
changes made by the lab were "common sense changes" not requiring
measurements to prove their worthiness.
OTHER ISSUES
------------------------------------------------------- Appendix III:6
UNION-MANAGEMENT RELATIONS
----------------------------------------------------- Appendix III:6.1
Lab officials said that attitudes have changed between the site's
management and the local union since the two groups worked together
on the lab. According to officials, the Reinvention Committee's
decision to include the union in the early development of the lab was
a key factor in alleviating communication problems and increasing
cooperation. Lab officials stated that union and management had
begun to change the rigid work environment so that skilled workers
would be able to work together as teams and on more than one project
at a time. Supervisors also had begun to perform more as coaches
rather than just managers.
HEADQUARTERS SUPPORT
----------------------------------------------------- Appendix III:6.2
Commerce's Inspector General stated that the Boulder site had not
been involved in "real reinvention" and encouraged lab officials to
be more ambitious. He stated that much of the reinvention activity
had been stovepiped into the different Commerce agencies at the
Boulder site and, instead, these agencies should have been working
together as one installation.
Lab officials said that they completed the first phase of their
reinvention lab, having started the implementation of more than half
of the "quick-fix" recommendations. Officials said that they
believed the blanket delegation of authority from departmental
headquarters would help the lab move into a second phase with fewer
but more flexible reinvention teams.
One example of the use of the blanket delegation was NIST officials'
attempt at reinventing the reduction-in-force procedures. In an
effort to abolish three positions, Boulder site managers and the
local union president worked in partnership to develop an alternative
reduction-in-force procedure that was less disruptive than the
traditional one.
One lab official said that the amount of resistance encountered in
making changes to these procedures was staggering. According to lab
documentation, up to 19 headquarters officials were involved in
reviewing and approving every aspect of these procedural changes. A
union official said that the union was frustrated that agency
management was reluctant to endorse the lab's efforts to reinvent the
reduction-in-force procedures. Although the highest department
officials and the Inspector General had encouraged lab officials to
be ambitious and innovative, resistance remained strong within the
middle layers of the department not to change the established
procedures. Despite this frustration and resistance, a union
official said that the effort built a strong union-management
relationship at the Boulder site that eventually was able to develop
and implement an alternative to the traditional reduction-in-force
procedures.
DEPARTMENT OF DEFENSE: DEFENSE
LOGISTICS AGENCY'S INVENTORY
MANAGEMENT
========================================================== Appendix IV
OVERVIEW OF THE REINVENTION LAB
SITE
-------------------------------------------------------- Appendix IV:1
The Defense Logistics Agency's (DLA) Supply Management Business Area
is headquartered at Fort Belvoir, VA, and its six field offices,
which are located in Ohio, Pennsylvania, and Virginia, are
responsible for the purchase and inventory management of consumable
items for the military services, some civilian agencies, and
emergency relief organizations. DLA defines consumable items as
those items that are not repairable or are consumed during normal
use. They include spare parts, weapon systems items, fuel, medical
supplies, food, and clothing.
INITIATION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix IV:2
Designated by the Department of Defense (DOD) as a reinvention lab in
August 1994, the Supply Management Business Area's Buy Response Vice
Inventory lab was originally a component of the total quality
management\1 and business process reengineering effort put together
by DLA's Director in 1992. The Director's overall goal was to revamp
the entire agency by, among other things, changing its business
philosophy. Lab officials said they requested designation as a
reinvention lab because it provided a mechanism to seek any needed
waiver requests and to increase the visibility of the Director's
reform efforts.
Before the current Director's tenure, DLA had traditionally
maintained inventories of consumable items--sometimes for years--to
ensure that they were available to customers when needed. To
receive, store, and issue these items, DLA maintained over 1,400
warehouses at 27 distribution depots throughout the country. We
recently reported that as a result of this philosophy and mode of
operation, DLA inventory often turned over slowly, thereby producing
large amounts of old, obsolete, and excess items. DLA officials said
that many people in and outside of DLA no longer found this massive
logistics infrastructure appropriate because of the post-cold war
military downsizing and because of growing concern over the federal
government's budget deficit.
--------------------
\1 Total quality management, which includes quality improvement, is a
leadership philosophy that makes quality the primary goal of an
organization. Under such management, an organization strives to
satisfy customers by involving staff and customers in an effort to
continually improve products and services, the processes used to
produce them, and the interpersonal relationships that are at the
heart of those processes.
DESCRIPTION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix IV:3
The Buy Response Vice Inventory lab is an umbrella effort that
encompasses a number of management reforms in the Supply Management
Business Area, including its six field offices. The overall purpose
of this lab is to minimize operating and inventory costs while
supporting military service readiness requirements. Inventory
managers are encouraged to adopt best commercial practices, such as
shifting the logistics management functions to contractors when they
can provide timely support at lower costs. According to lab
officials, the use of commercial practices represented a major shift
in DLA's business philosophy and required a commensurate cultural
change within the organization. They also said training, the use of
interdisciplinary teams, and new performance measurement and reward
systems were needed to support this cultural change. The two primary
elements of the lab are the use of (1) new contracting strategies
that take advantage of commercial practices; and (2) new electronic
commerce (EC) and electronic data interchange (EDI) systems that
provide direct electronic communication between DLA and its vendors,
contractors, and customers. Although implementation has begun, lab
officials said that completion of all the lab's reform efforts will
take a number of years.
NEW CONTRACTING STRATEGIES
------------------------------------------------------ Appendix IV:3.1
In its attempt to modernize military logistics practices, lab
officials said that the Buy Response Vice Inventory lab focused on
the following methods of support and contracting strategies:
Direct vendor delivery is a method of support in which the vendor
ships items purchased by DLA directly to the customer. This
procedure avoids the costs associated with receiving, storing,
and issuing items from a government warehouse. According to lab
officials, many long-term contractual agreements for direct
vendor delivery are in place for commodities managed by DLA,
such as diesel engine parts, electrical items, helicopter parts,
and auto parts.
Prime vendor expands upon direct vendor delivery by having the
customer both order and receive commercial items directly from
the vendor. A prime vendor is a distributor that has been
awarded a contract to buy, store, and distribute items to
customers, thereby reducing the need for DLA and the armed
services to maintain inventory and distribution systems. Under
prime vendor delivery, DLA uses its national buying power to
negotiate pricing agreements directly with the manufacturer or
supplier. Regional agreements are then negotiated with prime
vendors who purchase, warehouse, and deliver the items directly
to the customer. DLA uses data from both customers and the
prime vendor to process financial transactions and monitor prime
vendor performance.
Corporate contracting is a type of long-term contract in which DLA
leverages its buying power by consolidating the procurement
needs of multiple customers under a single contract. In
addition to maximizing buying power, combining all requirements
on a single contract reduces the cost associated with
negotiating and administrating multiple contracts. DLA's first
attempts at implementing the corporate contracting concept
included contracts with Bell Helicopter and Cummins Engine.
Long-term contracting involves a change from short-term contracts
that define specific quantities at set delivery schedules to the
use of long-term agreements that emphasize indefinite quantities
with multiple deliveries and multiple option years. A goal of
long-term contracting is the development of stable partnerships
between DLA and manufacturers and suppliers, ultimately reducing
costs to both parties. DLA's long-term contracts often
incorporate EC and EDI procedures, direct vendor delivery
support methodology, and multiple items on a single contract.
DLA expects that 50 percent of its sales will use direct vendor
delivery and prime vendors by fiscal year 1997 and that 80 percent of
the dollars obligated will be under long-term contracts by fiscal
year 1997.
However, lab officials said these strategies have already resulted in
dramatic improvements in response time and price, and DLA has avoided
the costs associated with receiving, warehousing, and shipping items.
For example, they said before the initiation of the Buy Response Vice
Inventory procedures, DLA and the armed services had to stock
batteries for combat vehicles because locally procured commercial
batteries did not always comply with military specifications. Under
the Buy Response Vice Inventory lab strategy, a contractor will place
military specification batteries on consignment at designated user
locations throughout the United States. There is no charge to the
government until the battery is actually used. The contractor then
replenishes the stock and is responsible for disposing of used
batteries in compliance with environmental laws. The Army Audit
Agency estimated that the use of this strategy may save DOD $17
million annually.
Lab officials also cited the use of the prime vendor strategy at
approximately 150 military medical facilities as an example of
improved contracting practices. As a result of this strategy, DLA
has reportedly reduced its overall pharmaceutical inventories by
$48.6 million and has achieved similar inventory reductions and cost
savings at medical facilities. The Walter Reed Army Medical Center
is aggressively applying this strategy and has reported an inventory
reduction of $3.8 million and an estimated savings of over $6 million
annually in related inventory management expenses. One of our
reports said the medical prime vendor program should be more
consistently and aggressively applied at all military medical
facilities.\2
--------------------
\2 See Inventory Management: DOD Can Build on Progress in Using Best
Practices to Achieve Substantial Savings (GAO/NSIAD-95-142, Aug. 4,
1995).
ELECTRONIC COMMERCE AND
ELECTRONIC DATA INTERCHANGE
------------------------------------------------------ Appendix IV:3.2
According to the lab's fiscal year 1996 performance plan, EC and EDI
refer to a paperless, automated system for delivery orders, requests
for quotations, bid responses, and awards, and EC and EDI are to
provide a standard link with the private sector. Lab officials
stated that the use of EC and EDI is another aspect of their attempt
to use commercial practices and is the enabling technology for the
operation of most of the lab's other initiatives. They said
conversion to EC and EDI is being done incrementally. DLA officials
reported that they achieved their goal that 65 percent of orders with
suppliers would be electronically transmitted in fiscal year 1995.
TRAINING
------------------------------------------------------ Appendix IV:3.3
According to lab officials, training was needed to overcome
resistance that DLA and other DOD employees had to DLA's new business
philosophy of adopting commercial practices. They said DLA employees
and their customers were wedded to the traditional inventory approach
as the best way to ensure military readiness. Use of commercial
practices was also reportedly counter to a long-held military
assumption that the private sector could not meet the military's
needs.
Lab officials said staff from the lab spent over a year designing a
Buy Response training course with the assistance of commanders and
other senior staff. The goal of the course was to enable employees
to apply Buy Response commercial business practices and to create new
customer support arrangements in their daily operations. By August
1995, we were told, the majority of Supply Management's managers and
procurement staff had received the training.
INTERDISCIPLINARY TEAMS
------------------------------------------------------ Appendix IV:3.4
Under the traditional mode of operations, field offices were
organized by function in units, such as contracting, technical, and
inventory management. Employees reported to and were rewarded by
management of their respective functional units. This organizational
approach, coupled with personnel and reward systems that reportedly
did not encourage communication between functions and did not
reinforce behaviors that benefited DLA as a whole, created functional
barriers within the field offices. These functional barriers often
inhibited staff from placing the customer's needs over their unit's
bureaucratic needs.
The Buy Response Vice Inventory lab used the concept of
interdisciplinary teams to eliminate these functional barriers, with
the teams designed to provide "cradle-to-grave" customer support for
assigned consumable items. To ensure successful implementation of
the team concept, commanders of each of the six offices designed
employee incentive systems that linked awards to achievement of
agency objectives and overall team performance. Another mechanism
used to reinforce the team concept was having the team leader, rather
than functional units, conduct individual performance appraisals.
USE OF WAIVERS
-------------------------------------------------------- Appendix IV:4
Lab officials said a key advantage of being a reinvention lab was a
blanket contracting waiver provided by DOD to contracting activities
participating in a designated reinvention lab. The labs were given
authority to deviate from federal and DOD acquisition regulations,
with some exceptions. One exception was that labs could not deviate
from regulations that had a significant effect beyond internal DOD
operating procedures, and they could not deviate from statutory
requirements. Consequently, the only specific waiver the Buy
Response Vice Inventory lab requested was from GSA's regulations
concerning federal excess property management. Lab officials said
the waiver was approved 5 months after it was requested.
In further explaining the relatively small number of waiver requests,
lab officials pointed out that many of the barriers to effective
management are internal cultural barriers and that changing them does
not require a change in regulations. For example, they said that
part of the bureaucratic culture is not questioning the rationale for
regulations or the assumptions that these regulations are based on
legislative or statutory authority.
PERFORMANCE MEASURES
-------------------------------------------------------- Appendix IV:5
DLA as a whole is a pilot program under the Government Performance
and Results Act (GPRA). According to its fiscal year 1996 GPRA
performance plan, DLA has made significant progress in developing a
performance measurement system. Lab officials said they are using
this system, as implemented by the Supply Management Business Area,
to evaluate the reinvention lab. They said this system uses fiscal
year 1995 (the first year new performance measures were used) as the
base year for performance measurement because old measures did not
reflect current operations and it would have been too costly to
retroactively apply new measures to historical data.
The officials said the new performance measurement system has shifted
DLA's evaluative focus from internally focused input and output
measures (e.g., percentage of requisitions filled) to externally
focused outcome measures (e.g., customer price change). According to
the fiscal year 1996 performance plan, the Supply Management's
performance measures covered such areas as responsiveness,
timeliness, operating efficiency, financial performance, and quality.
One lab official said that the Supply Management's primary outcome
measure is "logistics response time." Total "logistics response time"
measures the time that elapses between the date a requisition is
established by a customer and the date that the customer actually
receives the material. The timeliness of DLA's performance may be
determined by analyzing segments of the total "logistics pipeline."
Other outcome-based measures include (1) product conformance
verification, a quality measure based on the number of items that
pass a random testing for critical and major defects divided by the
total number tested; (2) the customer satisfaction index, a measure
based on survey data and the results of focus groups; and (3) the
customer price change, a financial performance measure based on the
change in customer price expressed as a percentage of the difference
in the price charged for an item from one year to the next.
OTHER ISSUES
-------------------------------------------------------- Appendix IV:6
COMMUNICATION
------------------------------------------------------ Appendix IV:6.1
Lab officials said they did not communicate directly with the
national NPR task force and that this lack of communication was
neither a help nor a hindrance to the lab. They stated the lab was
represented by the DLA NPR team that maintained communication with
the NPR office. Lab officials noted that the Buy Response Vice
Inventory lab's reform effort was initiated before NPR existed and
resulted from the leadership of DLA's Director and his goal to
transform the agency by focusing on quality improvement and business
process reengineering principles.
DEPARTMENT OF ENERGY: SITE
SECURITY AND ECONOMIC
DIVERSIFICATION AT HANFORD
=========================================================== Appendix V
OVERVIEW OF THE REINVENTION LAB
SITE
--------------------------------------------------------- Appendix V:1
The Hanford site is a major Department of Energy (DOE) facility in
southeastern Washington State, occupying 560 square miles and
employing over 14,000 people. From 1942 until the end of the cold
war, Hanford's mission was the production of nuclear defense
material. Currently, Hanford is the world's largest environmental
cleanup project, having the largest amount of radioactive and toxic
chemicals ever concentrated in one area. Hanford also includes a
high-technology center established through the operation of the
Pacific Northwest Laboratory, a DOE national laboratory.
The environmental cleanup of Hanford is projected to last 30 years,
after which DOE intends to shut down the site. To accomplish its
mission to shut down the site, Hanford's management is focusing on
site cleanup, the development and deployment of science and
technology to industry, and the diversification of the region's
economy to rely less on Hanford's presence.
INITIATION OF THE REINVENTION
LAB
--------------------------------------------------------- Appendix V:2
Because of the site's new mission, Hanford's units, such as the
economic transition, security, and personnel offices, needed to
reexamine and reinvent their own roles in the organization. By the
time DOE designated the Hanford site as a reinvention lab in the
summer of 1993, the site's major reinvention efforts were already
under way. According to lab officials, the designation provided
positive reinforcement for the work already started at the Hanford
site and for new reinvention efforts.
DESCRIPTION OF THE REINVENTION
LAB
--------------------------------------------------------- Appendix V:3
The Hanford reinvention lab consists of several different reinvention
efforts, each at a different stage of development and each relating
to different parts of the site. Descriptions of the four most
significant efforts of the Hanford reinvention lab--security
transition, economic transition, human resource reinvention, and
commercial facilities standards--follow.
SECURITY TRANSITION
------------------------------------------------------- Appendix V:3.1
During the 1970s and 1980s, Hanford's security measures included a
highly mobile and heavily armed security force trained to respond
quickly to terrorists or other security threats. Using armored
personnel carriers and helicopters, this paramilitary force
complemented other measures designed to provide Hanford with a high
level of security.
In 1990, Hanford officials began to change from this high level of
security by reducing the number of staff required to have security
clearances. In addition, Hanford officials established a series of
security review teams to review the site's security needs. During
this time, Hanford also began to consolidate nuclear materials into
fewer facilities at the site.
In 1992, a security planning team reviewed the costs of security at
Hanford. They found that Hanford was spending about $15 million to
protect the public from theft or sabotage of nuclear materials, $12
million on site management, and $11 million on protecting government
property. The team determined that these costs were high because of
Hanford's practice of protecting the whole site rather than focusing
on the protection of specific assets or facilities.
To provide a benchmark for the security transition, the team visited
the Boeing and Microsoft companies to review their security measures.
In consultation with Boeing, Hanford officials were able to develop
more customer-oriented security procedures that guided facility
managers to take more ownership for security of all but certain
critical assets that would still receive a high level of security.
Hanford management determined that they needed to transition to an
industrial-style security that was supplemented to protect the
remaining nuclear materials and classified information. In addition
to the consolidation of nuclear material into fewer protected
facilities, the security transition included eliminating selected
security posts, consolidating its alarm monitoring system,
reorganizing its dispatch centers, decreasing the number of staff
required to have security clearances, and reducing the amount of
classified information.
ECONOMIC TRANSITION
------------------------------------------------------- Appendix V:3.2
As the major employer in the region, Hanford's eventual shutdown will
have dramatic effects on the region's economy. As of October 1995,
Hanford's estimated 14,000 employees constituted about 25 percent of
the local workforce and represented about 50 percent of the local
economy's payroll. The average wage in the surrounding area (not
including Hanford) was $22,000 per year, compared to an average
Hanford wage of $45,000 per year.
DOE's Office of Economic Transition is working closely with regional
and local community organizations to diversify the local economy and
depend less on federal appropriations at Hanford. Although it is
projected to take more than 30 years to complete the site cleanup,
community officials estimated they would need to create more than 1.5
jobs each day during this period to replace all of the jobs expected
to be lost by the closure of the site.
Lab officials are using several strategies to diversify the local
economy. According to lab officials, an example of a successful
strategy has been the privatization of some excess equipment and
resources at Hanford. Metalworking equipment was converted to the
City of Richland, and the building at Hanford where the equipment is
located was leased to a private company that was contracted to use
the equipment. This conversion of equipment was accomplished through
the first-time use of section 120 of the Atomic Energy Community Act.
Lab officials said that the conversion of the equipment created a new
private metalworking business that will create 25 new jobs for the
local economy in the near future and potentially 200 additional jobs
within 3 to 5 years if the private venture is a success. In
addition, the private venture has produced approximately $2.4 million
in lease revenues to the federal government and avoided the cost of
removing the equipment from the building.
Lab officials also reported transferring other excess equipment to
another private company. In January 1995, DOE entered into an
agreement that allowed a private company to disassemble and use
equipment for the development of a specialized electrical generator.
The agreement has enabled DOE to avoid paying for disassembling and
disposing of the equipment at an estimated cost of $2.6 million. In
addition, the federal government has obtained royalty and stock
option rights potentially worth $4 million if the generator becomes
fully developed and a commercial success.
Also privatized was Hanford's laundry service, which had been used to
clean and decontaminate 3.5 million pounds of laundry per year.
According to lab officials, the laundry service had been
government-owned and -operated for the past 40 years and would need
to be replaced to remain operational. Rather than spend funds to
rebuild the facility, lab officials contracted with a private company
to build and operate a new laundry facility in Richland, WA. Lab
officials said that they expect this facility to receive business
from Hanford and other government and commercial entities and has
created 56 new jobs. Lab officials also said that by contracting
with a private company, the government avoided $22 million in capital
costs and saved $3 million per year in operation costs.
HUMAN RESOURCES REINVENTION
------------------------------------------------------- Appendix V:3.3
To stay in step with the changing mission at Hanford, officials
reorganized the personnel office into three teams: (1) employee
development, (2) employee recognition, and (3) contract and
industrial relations.
According to a lab official, one of the personnel office's major
efforts was the institution of what they termed a "360-degree
feedback loop" that provides staff with input on their job
performance from both their supervisors and their coworkers. Started
as an OPM demonstration project in July 1993, this feedback program
also served as an evaluation process for employees. Lab officials
said that by receiving input from multiple sources, the program
created more realistic evaluations of staff performance and curbed
"rating inflation." After the feedback program was instituted, the
percentage of staff receiving outstanding ratings dropped from 40
percent to 5 percent, according to lab officials.
COMMERCIAL FACILITIES
STANDARDS
------------------------------------------------------- Appendix V:3.4
DOE is responsible for the construction and renovation for many of
the facilities located at Hanford. Beginning in 1992, a team
consisting of staff from DOE's Project Management Division and the
facilities and project management offices of several DOE contractors
began to examine how to improve on these activities. Known as the
Commercial Facilities Implementation Team, the team examined these
activities during a "stand down," in which all activity performed by
these offices was halted to allow employees to examine how they
performed their particular jobs. The stand-down review revealed that
project management often blindly followed DOE requirements and
previously used standards.
The team wanted to create a more flexible and responsive approach to
project management and, therefore, designed an approach that would
emphasize state and local building and safety codes rather than DOE
requirements. The team was given permission to manage construction
and renovation projects worth up to $2 million, while GSA retained
responsibility for larger projects. According to team members, this
new flexible approach will reduce costs in almost all phases of the
project, from development to completion.
USE OF WAIVERS
--------------------------------------------------------- Appendix V:4
The security transition did not require any regulatory waivers,
although Hanford officials originally assumed that they would be
needed. The officials conducted an extensive review of DOE orders on
security to identify the minimum security measures required for a
particular asset or facility in light of Hanford's new mission.
Because the orders provided options to meet the security
requirements, Hanford officials said that they realized that waivers
were not needed to modify the facility's security measures.
A similar strategy was used by the Commercial Facilities
Implementation Team, which did not seek waivers from regulations but
used DOE orders as guidance during the design and construction of its
facilities projects. The team used a strategy that followed state
and local building and safety codes and attempted to be more
responsive to the needs of its customer.
For the lab's privatization of analytical laboratory services, lab
officials needed a waiver from the 5-year contract limitation
provided under the Service Contract Act.\1 A waiver of this provision
would allow a private company additional time to recover its capital
investment in performing these services. With some assistance from
the NPR task force, lab officials worked with the Department of Labor
and received a waiver from that provision of the act. The waiver
allowed lab officials to select a private vendor using a contract
with an 8-year term of performance provision.
--------------------
\1 The Service Contract Act of 1965 provides that service contracts
entered into by the U.S. government in excess of $2,500 may be for
any length of time not to exceed 5 years. However, the statute
provides that the Department of Labor can allow reasonable variations
and exemptions from this and other provisions of the act.
PERFORMANCE MEASURES
--------------------------------------------------------- Appendix V:5
The security transition team measured its results by measuring cost
savings associated with moving to the new security arrangement.
According to lab officials, the security transition cost $14 million
to implement but reduced the security office's annual budget over a
4-year period by more than $29 million--a savings of roughly 2
dollars for every dollar spent.
Lab officials reported that the first pilot project of the Commercial
Facilities Implementation Team was canceled and the current project
has not yet completed construction. The team plans to measure the
quality of the facility by whether the final product will meet or
exceed construction specifications and a subjective review of the
finished facility in comparison to other commercial and DOE
constructed facilities.
OTHER ISSUES
--------------------------------------------------------- Appendix V:6
Lab officials said that developing ideas for the security transition
and the economic transition efforts was possible only through a
change in the culture at Hanford. To develop ideas for these
efforts, they said staff needed to think "outside the box" and beyond
the regulations that seemed to define their environment.
Lab officials also said that making the changes visible early in the
reinvention process was very helpful to the long-range success of the
projects. For example, the security office discontinued badge checks
on individuals leaving the facility as a visible signal that changes
in security procedures could and would occur.
For the economic transition, lab officials said that they realized
the need to take more risks and change their organization from within
if they were to accomplish their objective of diversifying the local
economy. In addition, the officials said they learned to question
whether the government needed to be performing all of the activities
at the Hanford site.
GENERAL SERVICES ADMINISTRATION:
QUALITY ASSURANCE OF OFFICE
PRODUCTS
========================================================== Appendix VI
OVERVIEW OF THE REINVENTION LAB
SITE
-------------------------------------------------------- Appendix VI:1
The Northeast and Caribbean Region of GSA's Federal Supply Service
(FSS) is headquartered in New York City. The region's Office
Supplies and Paper Products Commodity Center is responsible for
providing federal agencies with common-use office supplies and
services worldwide. The center does so by managing and ensuring the
quality of those products and providing them via various methods,
including the stockage and issuance of selected items.
The quality assurance function is the responsibility of the Contract
Management Division (CMD), which is located in the region's Boston
office. GSA has five CMDs located throughout the country in New
York, Chicago, Atlanta, Dallas-Ft. Worth, and San Francisco. When
GSA issues a solicitation, any company in the country can bid on it.
However, once the contract is awarded, it is managed by CMD staff in
the area in which the company's manufacturing plant is located. CMD
staff audit prospective manufacturing plants to determine whether
they will be able to meet contract obligations. Once contracts to
manufacture products are in effect, CMD staff monitor the
manufacturing processes and audit processes to ensure product
quality.
INITIATION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix VI:2
In March 1993, GSA headquarters management asked all GSA offices to
identify areas for reinvention. The Northeast and Caribbean Region
applied for and received designation as a reinvention lab in June
1993, but many process improvement initiatives were already well
under way. According to lab officials, designation as a reinvention
lab renewed the staff's belief that they were going in the right
direction by trying to streamline procurement and improve product
quality.
DESCRIPTION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix VI:3
The overall objective of the lab was to increase the reliability of
the services provided by the region's Office Supplies and Paper
Products Commodity Center. To meet this objective the following two
lines of effort were developed: (1) improve the quality of GSA's
products by teaching suppliers proactive quality assurance techniques
and (2) amend the "scope of contract" clause in GSA's contracts with
its suppliers to enable the center to have quality products available
when customer agencies need them.
QUALITY ASSURANCE TECHNIQUES
------------------------------------------------------ Appendix VI:3.1
The lab's focus on quality assurance techniques actually began in
1988, when staff in the Boston CMD began reexamining the way it
assessed the quality of GSA suppliers' manufacturing processes. The
staff believed that the poor quality of some products manufactured by
GSA suppliers was causing GSA to lose customers. For example, the
U.S. Postal Service, one of the region's largest customers, took its
contract for plastic bags to a private company because of the
poor-quality bags provided by GSA through previous contracts. CMD
staff believed that statistical process control (SPC) techniques were
better able to ensure product quality than the method prescribed in
FSS' Quality Assurance Handbook.\1 SPC techniques identified critical
processes that occurred during the manufacturing of products and
helped prevent the production of "nonconforming products" by
predicting unacceptable variations in those critical processes before
defective products were manufactured. Whereas the handbook's
techniques emphasized defect detection, SPC techniques focused on
defect prevention.
On the basis of earlier management improvement efforts, CMD staff
developed a 5-year plan for adopting and teaching suppliers SPC
techniques. Part of the plan included automating the process by
which the staff ensured the quality of products manufactured by GSA
suppliers. SPC software was added to laptop computers used by CMD
staff at suppliers' manufacturing plants. The staff also developed
computerized forms for use with the SPC software to assist in
assessing the manufacturing processes. The computerized forms
enabled CMD staff to quickly share the results of their inspections
with suppliers.
CMD staff began teaching GSA suppliers to use SPC techniques to
monitor the quality of their products during the manufacturing
process. Using information generated by the SPC software, suppliers
could adjust their manufacturing processes and practice the SPC
techniques taught by the GSA quality assurance specialists. For
example, after learning about SPC, the National Industries for the
Blind, one of GSA's main paper suppliers, reportedly delayed
production until it built the SPC system into its manufacturing
processes. According to lab officials, the National Industries for
the Blind cut the amount of waste in its paper manufacturing process
by almost 10 percent between September 1993 and December 1993. CMD
staff wrote an eight-page conceptual guideline incorporating SPC
techniques into the Quality Assurance Handbook. On the basis of this
prototype, GSA headquarters amended the handbook for use nationwide.
As of August 1995, SPC techniques had been fully implemented at the
Boston CMD and the other four CMDs were at least planning
implementation.
--------------------
\1 The handbook provides guidance for quality assurance specialists
to follow when auditing suppliers' facilities and processes.
CHANGES TO SCOPE OF CONTRACT
CLAUSE
------------------------------------------------------ Appendix VI:3.2
According to lab officials, to provide products for its customer
agencies, GSA enters into contracts with its suppliers to manufacture
those products. Lab officials further stated that a "scope of
contract" clause in the contracts obligates GSA to purchase products
covered by the contract. If the contractor is unable to supply the
agreed-upon products, GSA is precluded from using alternative
suppliers until either specific purchase orders are terminated or the
entire contract is terminated. According to lab officials, the
process for a formal "termination for default" action is
time-consuming and frequently causes product back orders to increase.
Additionally, the default notice is coupled with an invitation to the
terminated party to appeal the notice. Therefore, poor performers
have the potential to delay contract termination and manipulate the
process, according to lab officials.
The reinvention lab's second line of effort changed the scope of
contract clause to allow GSA to purchase from alternative suppliers
when a determination is made that back orders exist or are likely to
occur as a result of late deliveries. According to lab officials,
the revised clause states that these purchases could be made without
taking a formal default action and without having to charge the
initial suppliers for the excess costs that might occur when
purchases are made from alternative sources. As of August 1995, the
lab manager said that the new scope of contract clause had been
written into about 100 contracts, and its authority had been
exercised successfully in a number of instances.
USE OF WAIVERS
-------------------------------------------------------- Appendix VI:4
When GSA headquarters asked its offices to identify areas for
reinvention, it required units requesting lab designation to identify
specific regulations that needed to be waived. Units were told to
focus on requesting waivers from GSA's internal nonstatutory
regulations that could be approved within the agency. In its June
1993 proposal, the lab requested a waiver of the Quality Assurance
Handbook and the scope of contract clause in the FSS requirements
contracts for depot stock replenishment. It was given authority to
modify portions of the Quality Assurance Handbook, to use SPC
techniques when inspecting product samples for deviation, and to
change the scope of contract clause to allow for purchases from
alternative suppliers when necessary.
PERFORMANCE MEASURES
-------------------------------------------------------- Appendix VI:5
CMD staff have measured the success of their SPC efforts by
determining the number of suppliers who have modified their
manufacturing processes to include the new techniques. After the lab
designation was received in June 1993, CMD staff surveyed GSA's 400
suppliers and found that 15 percent were using SPC techniques. By
August 1995, lab officials reported that all of GSA's suppliers had
been introduced to SPC techniques, 20 percent of them had modified
their inspection processes to adopt SPC techniques, and 17 contracts
had been modified to include a clause about using SPC techniques.
Lab officials said they plan to track back orders and conduct
customer satisfaction surveys to determine the effectiveness of the
new scope of contract clause. Lab officials said they believed the
increase in requests for products from both civilian and military
agencies, some of which are downsizing, is the result of improved
product quality.
OTHER ISSUES
-------------------------------------------------------- Appendix VI:6
Lab officials stated that the efforts undertaken in this reinvention
lab helped improve GSA's competitiveness, especially in the area of
quality assurance. They noted that these efforts were occurring
while GSA adhered to laws and regulations that required or encouraged
procurement of (1) environmentally friendly products; and (2)
supplies from small businesses, minority-owned businesses, and
workshops of the National Industries for the Blind and the National
Industries for the Severely Handicapped.
Reportedly, early publicity about the success of the lab was hindered
because its results contradicted prevailing notions that purchasing
from private office supply stores was cheaper and easier than
purchasing from GSA. In August 1995, the lab was acknowledged as a
model of federal excellence by the Federal Quality Institute with the
receipt of a Quality Improvement Prototype Award from Vice President
Gore for having achieved high standards of customer service and
quality.
GENERAL SERVICES ADMINISTRATION:
MID-ATLANTIC REGION'S WORK
PROCESSES
========================================================= Appendix VII
OVERVIEW OF THE REINVENTION LAB
SITE
------------------------------------------------------- Appendix VII:1
GSA's Mid-Atlantic Regional Office in Philadelphia is responsible for
managing federally owned and leased property located in southern New
Jersey, Pennsylvania, Delaware, Maryland, West Virginia, and
Virginia. In addition to its Office of Management Services and Human
Resources (formerly the Office of Administration), the region
operates the following three services:
The Federal Supply Service (FSS) manages the procurement and
distribution of supplies and administers programs for
transportation and travel management, for vehicle fleet
management, and for the utilization and disposal of personal
property.
The Information Technology Service (ITS) manages the automatic data
processing resources and telecommunications program.
The Public Buildings Service (PBS) manages the construction and
operation of federally owned and leased buildings.
Before the start of the reinvention lab, each of the services
reportedly executed its duties without much interaction with other
services. For example, FSS and PBS did not necessarily coordinate
the services they provided to ensure that supplies were available to
a customer agency at the time it moved into GSA-leased office space.
INITIATION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix VII:2
According to lab officials, the Mid-Atlantic Region had been using
continuous improvement and quality improvement concepts as a part of
its operating practices since 1989. In the spring of 1993, when
GSA's Administrator requested proposals for reinvention labs,
officials in the Mid-Atlantic Region proposed that the entire region
become a reinvention lab. GSA headquarters designated the region as
a lab in July 1993, which lab officials said encouraged employees to
think about and suggest ways to improve their work processes.
DESCRIPTION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix VII:3
According to the lab's vision statement developed by regional staff,
the overall goal of the lab was to provide the best possible services
to customer agencies in the region by empowering regional staff to
improve their work processes. The lab was structured to accomplish
this goal by eliciting suggestions directly from employees and by
developing service-specific initiatives. Lab officials said that the
lab created a culture in which all employees were empowered to
identify and remove nonstatutory obstacles that inhibited optimal
performance.
In addition to a regionwide effort to get employee ideas on how to
improve work processes, each of the region's three services developed
its own initiatives. As of August 1995, these initiatives were at
various phases of development. Even within a particular service,
some efforts were still in the conceptual phase while others had been
fully implemented. Some of the efforts that were initiated
regionwide and in each of the services are described below.
REGIONWIDE EFFORT TO OBTAIN
EMPLOYEE-GENERATED IDEAS
----------------------------------------------------- Appendix VII:3.1
Lab officials stated that the Office of Management Services and Human
Resources managed the region's effort to get staff ideas on how to
remove barriers to improving work processes. As originally designed,
ideas were to be submitted simultaneously to first-line supervisors
and the Office of the Regional Administrator, with the supervisor
principally responsible for approving and implementing the ideas.
According to the lab coordinator, the policy was later changed to
allow employees to submit ideas directly to a reinvention lab team
made up of staff from all of the services and the Office of
Management Services and Human Resources. The team used a software
program to track the ideas, and all staff could access this program
to submit an idea or review the status of ideas already submitted.
The reinvention lab team said that when an idea was submitted, a team
member researched the feasibility of the idea and reported the result
of the research to the team, which then recommended either the idea's
approval or disapproval. All ideas, along with the team's
recommendation, were forwarded to a Reinvention Board of Directors,
which comprised the Regional Administrator and the Assistant Regional
Administrator for each service. The final decision to disapprove a
recommendation could be made only by the Regional Administrator.
As of August 1, 1995, 485 ideas had been submitted to the lab. Of
those, 249 had been approved; 109 were not approved; 36 required
additional research; 74 were classified in the "other" category,
which included ideas that addressed organization rather than process
changes; and 17 were under consideration in headquarters. Those
ideas submitted to headquarters were ones that the reinvention lab
team said it believed required waivers from statutory requirements.
Reportedly, over half of all the ideas were submitted during the
first 3 months of the reinvention effort, but ideas were still being
submitted at the time of our review. Some of the ideas that were
implemented regionwide included: (1) automate and extend the
operating hours of the region's imprest fund, (2) decrease signature
authority for lease reviews from seven levels to three levels, and
(3) eliminate the need for the Regional Administrator to formally
approve official travel outside of the region.
PUBLIC BUILDINGS SERVICE
----------------------------------------------------- Appendix VII:3.2
According to lab officials, PBS staff discussed new ways of doing
business and agreed to focus on improving customer service. PBS
staff were originally organized in teams by function. For example,
one team comprised all contract specialists, and another team
comprised all engineers. PBS officials said that when a problem
arose, this structure gave teams the opportunity to blame each other
rather than help each other resolve the problem. To address this,
interdisciplinary teams were formed with staff from the different
functions and organized around specific projects to provide more
integrated services to customer agencies. Employees were reportedly
resistant to this reorganization because they were used to the
collegiality that existed in their functional teams. Lab officials
said that they were trying, with the reorganization, to create
networks to allow specialists to continue to interact with each other
even though they were no longer collocated. A team was also formed
to perform administrative services (e.g., personnel matters) for the
interdisciplinary teams. Lab officials told us that customer
agencies were very supportive of the new organization.
OFFICE OF MANAGEMENT
SERVICES AND HUMAN RESOURCES
----------------------------------------------------- Appendix VII:3.3
Lab officials said that one lab effort in the Office of Management
Services and Human Resources involved automating the personnel
system. They said that under the old system, staff entered data on
several different forms, a process that provided many opportunities
for errors. In addition, personnel documents had to be handled by
staff at many different work stations, making it hard to locate
specific documents.
Shortly after the lab was started, staff in the region's personnel
office learned about an automated personnel system used by the
Department of the Navy that allowed personnel forms to be processed
electronically and could generate about 20 standardized reports. The
region then purchased the system from the Navy and modified it for
its use. By automating the region's personnel system, lab officials
said personnel information about all staff could be directly accessed
by the personnel director or other authorized staff. In September
1994, GSA headquarters granted authority for the Mid-Atlantic Region
to share this system with other GSA regions.
FEDERAL SUPPLY SERVICE
----------------------------------------------------- Appendix VII:3.4
In the area of fleet management, lab officials said that FSS had
implemented a streamlined process for obtaining vehicle damage repair
estimates. Lab officials said that before the lab, GSA regulations
required customer agencies to obtain at least three repair estimates
before contacting GSA for authorization of any accident repair.
Often an FSS automotive equipment inspector had to go to the vehicle
to assess the damage before approving the repairs. Under the lab
authority, when the customer agency notifies FSS of vehicle damage,
FSS is to dispatch an inspector to take the vehicle for an estimate.
Only one estimate is required under the lab authority, but the
inspector is to compare each repair item listed to the current "crash
estimating guide" to determine if the estimate is within established
acceptable guidelines. The fleet manager is to give the final
approval for the estimated repairs. The region's fleet of about
14,000 vehicles reportedly had about 1,200 accidents each year. FSS
staff calculated that reducing the number of repair estimates from 3
to 1 would result in a savings of 4,800 staff hours and $96,000 each
year. GSA headquarters officials have noted that the reported
workload savings are a combination of GSA and customer agencies'
staff hours.
Lab officials also said that FSS had improved its relationships with
both its external and internal customers by working in partnership
with them. Externally, FSS formed a quality partnership group with
customers and vendors at its furniture commodity center in Crystal
City, VA. The group consisted of 15 members: 5 customer agencies, 5
contractors, and 5 GSA employees. Internally, FSS worked in
partnership with PBS on projects to provide office supplies and
office space to customer agencies.
INFORMATION TECHNOLOGY
SERVICE
----------------------------------------------------- Appendix VII:3.5
According to lab officials, ITS staff streamlined the region's
procurement process. For example, ITS staff awarded a 5-year
business systems and programming contract without using some of the
traditional evaluation factors, such as performing a cost analysis
and benchmarking. Staff calculated that using the streamlined
process reduced the time needed to award this contract by 3 months,
with estimated savings to the taxpayers of $225,000. ITS staff also
said there had been no protests of any contract awarded since the
streamlined process had been in place.
In another reinvention effort, ITS has discontinued printing and
distributing the Regional Telephone Book. Previously, it cost
$75,000 for employees to update, print, and distribute the directory.
By automating the directory via an electronic method (Lotus Notes),
employees can have immediate access and updates can be done more
frequently. ITS is looking to further this process by expanding the
electronic media to eventually include the Internet, CD-Rom, and
electronic bulletin boards.
Lab officials said that to meet anticipated staff reductions, ITS
staff planned changes in the way the service was operated and
organized and that they believed these changes would result in a more
flexible workforce. For example, they said the planned changes
should (1) flatten the service's hierarchy by organizing around work
processes, not occupations, such as computer specialists; (2)
eliminate activities that do not add value or contribute to key
objectives; and (3) eliminate specific position descriptions and
replace them with generic ones. In conjunction with the new position
descriptions, ITS staff said that they would rewrite performance
expectations.
USE OF WAIVERS
------------------------------------------------------- Appendix VII:4
According to lab officials, the region received a delegation of
authority from GSA headquarters to implement regionwide reinvention
activities. The delegation gave the Regional Administrator the
authority to waive internal GSA rules and regulations not bound by
statute. However, lab officials said that reinvention ideas that the
reinvention lab team believed required a change in legislation were
sent to headquarters for consideration. The disposition of an
idea--whether it was approved or disapproved--was entered into the
database.
PERFORMANCE MEASURES
------------------------------------------------------- Appendix VII:5
GSA headquarters required each of its reinvention labs to report on
how the outcomes of reinvention activities would be measured. Lab
officials in the region said that they believed efforts to measure
what they described as "obvious improvements" were unnecessary. For
example, they said that flexitime was "readily recognized" as a
positive change and that developing measures to document this was
unnecessary. In addition, they said developing measures to show
improvements in work processes was sometimes difficult because a
reinvented work process often differed significantly from the
traditional work process.
Therefore, the region established measurement task forces in each
service and in the Office of Management Services and Human Resources
to develop measures to determine whether approved ideas resulted in
improved performance. For example, the Office of Management Services
and Human Resources' measurement task force measured the value of
expanded operating hours of the imprest fund by comparing the amount
of money transacted under the new expanded hours of operation to the
amount that had been transacted under the old hours. Also, the FSS
task force measured the effectiveness of the change in motor vehicle
repair estimate requirements in terms of staff hours and dollars
saved. Lab officials said that they planned to use GSA's annual
quality survey to gauge employees' sense of empowerment because it
asked questions about staff morale.
GSA headquarters officials have noted that the region's FSS option
for addressing process improvements for obtaining vehicle damage
repairs does represent an enhancement over the previous accident
management system in place in the region. However, they further
noted that the numbers reported were preliminary, and any potential
for expanding this accident management approach beyond the region
would require an assessment of final numbers and an analysis of
whether the approach would be practical for other locations outside
of the region.
OTHER ISSUES
------------------------------------------------------- Appendix VII:6
COMMUNICATIONS
----------------------------------------------------- Appendix VII:6.1
Lab officials said that they were using computer software to share
information on reinvention ideas within the region. They also said
that they submitted a quarterly report to GSA headquarters on the
status of lab activities within the region. Lab officials said they
made presentations on the regionwide reinvention effort to GSA top
management and to all interested employees at GSA headquarters in
August 1994. In addition, GSA's Office of Public Affairs published
many of the region's reinvention ideas in its Message from the
Administrator pamphlet, which is distributed to GSA offices
nationwide.
SCOPE OF THE LAB
----------------------------------------------------- Appendix VII:6.2
Lab officials said that although they asked employees to look at work
processes that affected them, the officials still encouraged
employees to "think big." Lab officials said that employees seemed to
identify barriers that required reinvention of incremental policy
matters, such as expanding flexitime, as opposed to broader process
changes, such as working in partnership with customer agencies.
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT: OVERSIGHT OF PUBLIC
HOUSING AUTHORITIES
======================================================== Appendix VIII
OVERVIEW OF THE REINVENTION LAB
SITE
------------------------------------------------------ Appendix VIII:1
The Department of Housing and Urban Development's (HUD) Office of
Public and Indian Housing administers public and Indian housing
programs, including rental and homeownership programs, and provides
technical and financial assistance in planning, developing, and
managing low-income housing projects. To administer these low-income
housing projects, HUD enters into contracts with local public housing
authorities (PHA) that build, own, and operate the public housing.
HUD field offices located across the country are responsible for
overseeing PHAs by conducting compliance reviews of PHAs and the
housing units. HUD field offices also provide technical assistance
to PHA management. HUD's Chicago, Milwaukee, and Cleveland field
offices were located in HUD's formerly designated Region V, which
consisted of Illinois, Ohio, Michigan, Indiana, Wisconsin, and
Minnesota.\1
--------------------
\1 In April 1994, HUD implemented a new reorganization plan, which
restructured the field offices along single-family and multifamily
lines of business and made the field office staff directly
accountable to the program office assistant secretaries. The
reorganization also eliminated many traditional review and management
oversight functions of the regional offices, in effect, abolishing
HUD's regional organizational structure.
INITIATION OF THE REINVENTION
LAB
------------------------------------------------------ Appendix VIII:2
In 1991, the Assistant Secretary for Public and Indian Housing hired
the firm of Price Waterhouse to recommend improvements to HUD's
oversight of PHAs. According to a Price Waterhouse report, HUD
management recognized that the narrowly focused, compliance-oriented
reviews being used were not addressing some PHAs' deep-rooted,
interrelated problems, such as the constant need to repair the
housing units while having very limited resources. Price Waterhouse
interviewed HUD and PHA staff and, in April 1992, recommended changes
to the mission, objectives, and organizational structure of HUD's
regional and field offices involved with public housing programs. On
the basis of these recommendations, a pilot project was implemented
that outlined a new approach to overseeing PHAs. HUD staff were
trained to manage the proposed changes, and Price Waterhouse was
retained as a consultant to monitor the pilot. In the summer of
1992, HUD's Region V volunteered and was selected by HUD management
to be the pilot site. In the spring of 1993, HUD management
designated the pilot as a reinvention lab. HUD's Chicago, Milwaukee,
and Cleveland field offices were some of the first locations to
implement the proposed changes of the pilot project and reinvention
lab.
DESCRIPTION OF THE REINVENTION
LAB
------------------------------------------------------ Appendix VIII:3
The lab had six objectives in restructuring Region V's oversight of
PHAs. Four of these objectives were (1) targeted monitoring of PHAs,
(2) problem solving by HUD staff, (3) reorganizing HUD staff into
functional groups, and (4) streamlining work processes.\2
Descriptions of these objectives follow.
--------------------
\2 The other two objectives were (1) strengthening analytical
capabilities and (2) leveraging non-HUD resources. They are not
discussed here because of space limitations and because HUD staff did
not emphasize them in our discussions.
TARGETED MONITORING OF PHAS
AND PROBLEM SOLVING BY HUD
STAFF
---------------------------------------------------- Appendix VIII:3.1
Before the lab, HUD field office staff were required to conduct a
standardized set of reviews of all PHAs on a prescribed schedule.
These reviews used the Public Housing Management Assessment Program
(or PHMAP), which is an analytical tool developed in 1991 separate
from the reinvention lab. According to HUD officials, PHMAP is used
by HUD field office staff to ensure content consistency of the PHA
assessments. PHMAP measures PHAs' management performance using 12
indicators, such as rents uncollected, condition of units, and PHA's
operating reserve. However, a lab official said increased
responsibilities, such as increasing low-income families'
homeownership rates and combating drugs and drug-related crime,
coupled with decreased staffing and travel funds, made it impossible
for HUD staff to even come close to the required number of reviews.
In fact, he said HUD staff avoided reviews of the larger or troubled
PHAs because they would take too much time and effort. Even in those
PHAs that were reviewed, he said HUD staff could only "find the
obvious and conclude that the PHA should fix it."
As part of the reinvention lab, Region V staff developed a
computerized "System to Target Assistance Resources" (STAR) based on
the PHMAP scores and other data.\3 STAR would give each PHA a score
based on its potential risk to HUD. A troubled PHA, or one with a
substantial investment of HUD dollars, would be considered a
potential high risk and therefore would require the attention of HUD
field office staff.
According to lab officials, STAR changed the attitude of the HUD and
PHA staffs. Rather than simply pointing out problems in a compliance
mindset, STAR helped HUD staff develop a partnership with PHAs to
help solve the problems identified by STAR. Lab officials said that
STAR enabled HUD staff to move from a mode of policing to a mode of
assisting PHAs. For example, staff are now more likely to ask why
the units are vacant and dilapidated, identify the cause, and help
PHAs find the solutions.\4
--------------------
\3 In addition to the PHMAP indicators, STAR scores were based on the
federal funds available to each PHA, the number of units assisted at
each PHA, crime and unemployment statistics for the PHA locality, and
Section 8 Program characteristics.
\4 On May 30, 1995, HUD took over the Chicago Housing Authority (CHA)
because of the poor physical condition of CHA's housing stock and
troubled management. According to lab officials, the STAR program
consistently indicated that the housing authority was always the
Illinois office's highest risk. Using the STAR scores, the HUD
Chicago Field Office was able to focus its resources to assist CHA
but did not conclude that a takeover was necessary. Lab officials
stated that additional detailed analysis and a change in the local
political environment led to the intervention by HUD headquarters'
office.
REORGANIZING HUD STAFF
---------------------------------------------------- Appendix VIII:3.2
According to a lab official, the proliferation of new HUD programs in
the late 1980s and early 1990s overwhelmed HUD housing management
specialists, who were actually generalists not adequately trained for
the job's new demands. To address the inadequate training and
guidance, staff at Region V field offices were reorganized into five
functional groups. Each group focused on a specific aspect of PHA
operations: (1) organization, management, and personnel; (2)
marketing and leasing; (3) community relations and involvement; (4)
facilities management; and (5) finance and budget. This arrangement
was implemented to allow HUD staff to specialize and focus their
attention on particular functions instead of having to be, in the
words of a lab official, a "jack of all trades and master of none."
Lab officials said that cross-functional teams were established to
conduct on-site reviews or provide technical assistance for PHAs.
STREAMLINING WORK PROCESSES
---------------------------------------------------- Appendix VIII:3.3
Another lab objective was the elimination of unnecessary procedures
and paperwork. According to lab officials, dozens of HUD
requirements and processes have reportedly been reexamined and
changed since the designation of the lab. For example, before the
lab, PHAs were required to prepare quarterly requisitions for monthly
Section 8 payments from HUD.\5 Lab officials said that review of the
estimated 3,000 budget submissions and 10,000 requisitions per year
by the HUD Chicago Field Office was time-consuming and unnecessary.\6
Furthermore, since the PHAs' budgets were prepared annually, the
quarterly requisitions and monthly payments were not significantly
different. Therefore, HUD staff proposed that payments to PHAs be
based on one requisition at the beginning of the year instead of on
annual budget submissions and quarterly requisitions. Lab officials
estimated that changing the process would save $300,000 per year in
processing costs at the HUD Chicago Field Office.
--------------------
\5 Section 8 of the U.S. Housing Act of 1937 authorizes rental
assistance programs that provide subsidies to lower income households
to assist them in obtaining decent, safe, and sanitary housing.
\6 Before April 1994, PHA's requisitions were first reviewed by HUD
field office staff. If approved, the requisition was then forwarded
to the Accounting Division in the regional office, which was
responsible for authorizing and disbursing the funds to PHAs. In
April 1994, HUD's structural reorganization placed the responsibility
of the HUD Field Accounting Budget and Requisition processing
function with the Public and Indian Housing field office staff.
USE OF WAIVERS
------------------------------------------------------ Appendix VIII:4
A lab official said the lab was given the authority to waive any
nonstatutory HUD rules or procedures. However, he stated that the
lab did not need waivers to proceed with most of its activities. Lab
officials did receive a waiver from departmental procedures to change
the Section 8 budget and requisition process.
PERFORMANCE MEASURES
------------------------------------------------------ Appendix VIII:5
In May 1993, Price Waterhouse assessed the lab by visiting the field
offices involved in the lab, reviewing documentation, interviewing a
limited number of PHAs' officials, and surveying all HUD staff
members below the supervisor level. A Price Waterhouse report
concluded that the new approach represented "a significant
improvement over prior operations." This conclusion was based on the
fact that (1) most HUD and PHA staff endorsed the lab as sensible and
effective and (2) HUD staff at all the participating sites had taken
steps toward understanding the new approach's concepts and had begun
to implement them. Price Waterhouse also concluded that the lab
should be extended to other offices.\7
A lab official located at HUD headquarters stated that increases in
the PHMAP scores for some PHAs in Region V indicated improved
satisfaction on behalf of the public housing residents whom HUD
considers its ultimate customers. Another lab official said that HUD
had not surveyed public housing residents to determine whether the
lab's changes had improved housing conditions, but the official
acknowledged that HUD should do such a survey.
--------------------
\7 Price Waterhouse's report did not include any assessment of
changes in the program's outcome, such as a reduction in the number
of troubled PHAs.
OTHER ISSUES
------------------------------------------------------ Appendix VIII:6
SCOPE OF THE LAB
---------------------------------------------------- Appendix VIII:6.1
A lab official acknowledged that the scope of the HUD reinvention lab
was relatively limited.\8 The official said that innovative
ideas--such as distributing HUD funds directly to low-income
families--has traditionally never been solicited from HUD employees
because HUD rewards its employees for complying with the system, not
challenging it.
Lab officials said several innovative suggestions about public
housing had surfaced during the reinvention process, but they had not
been acted upon. They said that one of the suggestions discussed
before the creation of the lab was to divide PHAs into several groups
according to the number of tenants served. PHAs within each
particular-sized group would then compete for assistance from HUD on
the basis of their administrative costs and the improvement in the
quality of life for their clients.
--------------------
\8 Since the development of the reinvention lab, HUD Secretary
Cisneros has proposed a major overhaul of HUD, including the
deregulation of the nation's 3,400 PHAs and eventually forcing them
to compete with the private sector for tenants holding rent subsidy
vouchers. In addition, HUD's current budget request proposes
"consolidating 60 major categorical programs into three flexible
performance based funds." This consolidation is intended "to shift
substantial control of resources from HUD to state and local
governments." Under this plan, state and local governments would be
given the flexibility to design housing programs to meet their local
needs.
HEADQUARTERS'
SUPPORT/COMMUNICATION
---------------------------------------------------- Appendix VIII:6.2
A lab official said that the designation of the pilot as a
reinvention lab produced a dramatic difference in recognition and
cooperation from officials at HUD headquarters. Before the pilot was
designated as a lab, the lab official said "we could not get in the
door at headquarters." After the lab's designation, the official said
"the waters parted" and HUD headquarters became more interested in
the implementation of the new approach.
However, lab officials at HUD's Cleveland Field Office told us that
they had received inconsistent messages regarding HUD headquarters'
support for the lab. They said that HUD headquarters paid little
attention to the lab's implementation and had dedicated only two
people to work as liaisons with the field offices. They also said
the lab's progress had been hindered by a lack of communication
between the lab and HUD headquarters and among the different HUD
field offices.
A lab official from the headquarters office of Public and Indian
Housing said that his office should have played a greater role in
implementing the new approach through training sessions and other
methods to elicit more buy-in from field office staff. Furthermore,
the official said that knowledgeable headquarters staff should have
been assigned to act as functional area contacts for field office
staff with specific questions. In addition, the official said that
more site-to-site communication would have been helpful, but it was
hampered by access problems to HUD's E-mail system.
DEPARTMENT OF THE INTERIOR:
OPERATIONS AT THE U.S. BUREAU OF
MINES' PITTSBURGH RESEARCH CENTER
========================================================== Appendix IX
OVERVIEW OF THE REINVENTION LAB
SITE
-------------------------------------------------------- Appendix IX:1
The Pittsburgh Research Center, established in 1910, is the largest
of nine research centers administered by the Department of the
Interior's (DOI) U.S. Bureau of Mines (USBM).\1 The research
center's mission is to promote the safety and health of miners,
improve mine productivity, enhance the recovery of mineral resources,
and minimize the environmental impact of mining. Special facilities
at the center include
the Experimental Mine, which permits research on the prevention of
mine fires and explosions;
the Safety Research Coal Mine, where tests of new equipment and
technology are conducted before transferring them to industry;
the Mining Equipment Test Facility, which houses a variety of
specialized testing laboratories;
the Wire Rope Research Laboratory, where research is conducted to
improve safety in hoisting personnel and materials; and
the Lake Lynn Laboratory, where large-scale explosion tests and
mine fire research are conducted.
As of August 1995, approximately 350 federal employees and more than
100 contract employees worked at the research center. Their
technical skills spanned several disciplines, including engineering,
geology, chemistry, industrial hygiene, and computer science.
--------------------
\1 This case study was completed before Congress passed legislation
providing for the elimination of USBM. Some of the bureau's programs
are expected to be transferred to the U.S. Geological Survey (USGS)
and DOE.
INITIATION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix IX:2
In 1991, the Pittsburgh Research Center established a quality
improvement(QI)\2 program under the direction of a steering
committee, which was composed equally of the center's management and
staff (members of the American Federation of Government Employees
Union). Four quality improvement teams were formed by the steering
committee: teamwork, communication, morale, and employee orientation
and training (also referred to as "planning for success"). In June
1993, DOI invited the research center to participate in the NPR
effort as one of DOI's reinvention labs. The research center's
management chartered the QI steering committee to form a reinvention
team that would reengineer the research center as if it were starting
anew.
--------------------
\2 See footnote 1 in appendix IV.
DESCRIPTION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix IX:3
With the overall goal of improving its operations, the research
center's reinvention teams developed three principal recommendations:
(1) improving the process for selecting research projects, (2)
creating SDWTs\3 to conduct research, and (3) revising the personnel
evaluation system. As of August 1995, the lab was planning the
implementation of the research selection process and the SDWTs.
DOI's management was addressing the third recommendation, the
revision of the performance appraisal system.
Another effort developed by the reinvention teams was a series of
procedural changes designed to improve the operations of the research
center. These changes included ideas such as establishing a
centerwide awards process and receiving a waiver from DOI's
restrictions on using local solicitors to review patent work. A few
of the most significant procedural changes had been approved, while
other changes were still pending.
--------------------
\3 See footnote 1 in appendix II.
REENGINEERING THE RESEARCH
SELECTION PROCESS
------------------------------------------------------ Appendix IX:3.1
In response to a recommendation from one of the lab's reinvention
teams, a committee was created to design a new process for selecting
research projects. The lab's documentation stated that the previous
selection system often solicited a wide variety of research ideas
that did not correspond to USBM's goals or the customer's needs. It
also stated that the system had too many steps and did not provide
enough feedback between the researchers and the selecting officials.
Once implemented, the new research selection process is to revise how
research priorities are developed, how research projects are
selected, and how resources are assigned. According to documentation
on the new process, research priorities are to be determined by the
research center's program office with input from its customers, which
could include mine unions, other government agencies, private
industry, and/or the public. The lab's documentation stated that
these research priorities are to be refined into problem statements
by a technical evaluation team that consists of researchers and a
customer representative. This team is to solicit research proposals
from the center's researchers and scientists to address the research
problem statements. Proposals are then to be evaluated and ranked by
the team that submits final recommendations on the selected proposals
and research funding levels to the research center's management. The
team also is to be responsible for providing written feedback for the
proposals so that the originators of ideas will be assured that their
ideas were communicated and understood.
CREATING SELF-DIRECTED WORK
TEAMS
------------------------------------------------------ Appendix IX:3.2
Another of the lab's reinvention teams concluded that the research
center's hierarchical supervisory structure discouraged
cross-functional research and trapped researchers into narrow career
tracks. Therefore, it recommended the use of SDWTs to conduct
research under a matrix management approach. Under this approach,
multidisciplinary teams are to manage research projects until their
completion, and then the teams are to disband. A team leader is to
coach and facilitate the team's development and be the single point
of contact between the team and its customers and managers.
SDWTs are also to be used to flatten the research center's
hierarchical structure by eliminating middle management positions.
The lab's documentation stated that accountability for work will be
established through the use of "contracts" between the research
center's top management and the SDWTs. For example, a contract may
require that project spending stay within 1 percent of the proposed
budget and that products are submitted within proposed time frames.
Lab officials noted that although the teams are to be self-directed,
they are not to be self-managed. The officials said that the
research center's management is to retain responsibility for
conducting performance appraisals for individual team members.
REVISING THE PERSONNEL
EVALUATION SYSTEM
------------------------------------------------------ Appendix IX:3.3
The lab's third reinvention team recommended that the Pittsburgh
Research Center revise the way employees are evaluated. According to
lab officials, revising the evaluation system will help (1) eliminate
the negative impressions of the appraisal process held by both
management and employees and (2) management and employees use the
process as a career development and mentoring tool for the future.
Reforms anticipated in the design of a new performance evaluation
system include the following:
develop specific measures of research performance that currently do
not exist;
combine two evaluation instruments--DOI's Individual Performance
Plan and the Individual Development Plan--into one document to
provide employee feedback on training and developmental needs;
conduct performance evaluations at different points during the year
(e.g., on the employee's service anniversary date) to reduce the
administrative burden on management of completing all of the
evaluations at the same time; and
adopt a simplified format for annual performance reviews, such as
pass/fail or feedback on elements not summarized by grade.
The recommendation to revise the personnel evaluation system has been
placed on hold because of DOI's effort to revise the structure of its
individual performance plan used for evaluating personnel. Despite
this delay, research center officials said they anticipate
implementing a two-tier (pass/fail) performance evaluation system for
fiscal year 1996.\4
--------------------
\4 According to an OPM official, OPM was not considering any waivers
from regulations affecting agencies' appraisal programs because, at
the time, OPM was preparing to issue new regulations. A final
version of these regulations was issued (effective date September 22,
1995) that allowed agencies to create appraisal programs that use as
few as two appraisal levels, with one level being "Fully Successful"
or its equivalent and another level being "Unacceptable." (60 Fed.
Reg. 43,943 (1995) to be codified at 5 C.F.R. Part 430).
CHANGING RESEARCH CENTER AND
DEPARTMENTAL PROCEDURES
------------------------------------------------------ Appendix IX:3.4
In addition to the three principal recommendations of the lab, the
reinvention teams proposed 21 changes to some research center and DOI
procedures. Lab officials said that some of the more significant
changes proposed included the following: alter the review process
for computer equipment acquisition, remove departmental restrictions
on the use of local attorneys to process patent paperwork, and revise
the procedure for processing memorandums of agreement with
contractors. A lab official said that a proposal to eliminate one
level of supervision within the research center was pending because
of DOI's current reorganization. Another proposal to create a
centerwide personnel awards system was stalled because of a lack of
support from the local union.
USE OF WAIVERS
-------------------------------------------------------- Appendix IX:4
Team members said that at the beginning of the lab the team was
instructed by DOI management to consider all reinvention
possibilities, with no restrictions on the types of waivers it could
request. They said they were not clearly warned by DOI management
that "overturning statutes was off-limits" when making waiver
requests. Consequently, the team spent a substantial amount of time
concentrating on waiver requests that were beyond the scope
anticipated by NPR officials.
Of the eight waiver requests that the research center submitted to
other federal agencies for review, none were approved. While it did
not waive provisions of the Paperwork Reduction Act, OMB did develop
a simplified process for agencies to use in seeking approval to
conduct customer satisfaction surveys. Two waiver requests involving
Federal Acquisition Regulations were denied by the Small Business
Administration because the regulations were mandated by statute. A
waiver from a procurement regulation was denied by GSA officials
because the waiver would be a breach of contract. A second waiver
request to GSA on regulations for excess property management was also
denied because some modifications to the regulations were pending,
which might have provided some flexibility. Department of Labor
officials also denied the lab's waiver request from a provision of
the Service Contract Act. Lastly, OMB denied a waiver from
full-time-equivalent ceiling restrictions to provide more personnel
for the reinvention lab.
The eighth waiver request to allow servicing personnel offices to
handle the recruitment process was unnecessary because, according to
OPM officials, the authority already existed.
PERFORMANCE MEASURES
-------------------------------------------------------- Appendix IX:5
The written proposals for the recommendation on the research
selection process and the SDWTs outlined measurement and evaluation
strategies. Specific performance measures and other details were not
included in the proposal because research center officials were
waiting for approval to implement the recommendations. However, the
officials said they recognized that the success of the lab hinged on
its ability to measure the impact of the recommended changes. The
lab's plan indicated that an evaluation team would be established and
charged with defining a comprehensive performance measurement plan
for those changes.
In developing the recommendations, the reinvention teams benchmarked
the center's research activities against private research
organizations, such as the Mayo Clinic, the Massachusetts Institute
of Technology, and the Dupont Corporation. The teams attempted to
identify the critical characteristics of these successful
organizations and how those characteristics could be integrated into
the environment at the Pittsburgh Research Center.
OTHER ISSUES
-------------------------------------------------------- Appendix IX:6
PITTSBURGH RESEARCH CENTER
AND NPR RELATIONS
------------------------------------------------------ Appendix IX:6.1
Officials from the research center said that miscommunication existed
between the reinvention teams and NPR staff. Those officials said
that they were under the impression that the lab's reinvention
recommendations were needed by a particular time to be included in a
September 1993 NPR report. This short time frame hampered the
research center's efforts to do follow-up work on its reinvention
activities. For example, the reinvention teams had planned to hold
town meetings with the research center's employees, but they were
unable to do so because they ran out of time. A research center
official stated that he expected the lab's recommendations and report
to be included in the September 1993 NPR report, but they were not.
CULTURE CHANGE
------------------------------------------------------ Appendix IX:6.2
Lab officials said they recognized the importance of organizational
culture change to the success of their proposals. They said that
changing the organizational culture of the research center would be a
factor in implementing the recommendations to revise the research
selection process and establish SDWTs. The lab's documentation noted
that the new process would be a major change from the research
center's long-standing mode of empire building and competition
between research groups for funding. Officials from the reinvention
teams anticipated that loyalties would need to shift from individual
research groups to the research center as a whole. Furthermore, team
members stated that a matrix management approach (resulting from the
use of SDWTs) might result in conflicting management direction,
changes in physical location, and changes to the work environment
that had been considered stable by employees. However, team members
stated that the advantages of the proposals outweighed these
disadvantages.
DEPARTMENT OF THE INTERIOR: U.S.
GEOLOGICAL SURVEY'S PRODUCT
DISTRIBUTION
=========================================================== Appendix X
OVERVIEW OF THE REINVENTION LAB
SITE
--------------------------------------------------------- Appendix X:1
DOI's USGS publishes and disseminates the results of its scientific
investigations in thousands of products, such as general interest
publications, maps, books, and pamphlets. USGS is also authorized to
sell and distribute these and similar products of other federal
agencies. While these scientific products are prepared primarily for
federal and state governments, they are also available to the public.
USGS has one central warehouse and distribution facility, the Rocky
Mountain Mapping Center, in Denver.
As of August 1995, the Mapping Center employed about 100 people in
the information and product delivery activity, a part of the
Information Services Branch (IS). The IS branch currently handles
about 340,000 inquiries per year by phone, fax, mail order, and
walk-in customers. The branch also includes 14 contractors whose
primary function is to enter product orders into the financial
computer system. At the time of our review, most of the orders were
received by mail, but customers could order products in person at the
facility. For these customers, staff at the facility's Sales and
Research Counter enter orders into the system; the orders are
generated for product retrieval, and the customer receives the
materials. Within the current fiscal year, USGS plans to transition
some customer orders to a more efficient, electronic version, which
will greatly reduce the delivery time for all customers.
The financial computer system, which is used by the IS Branch,
processes orders and decreases inventory as the orders are entered.
Before the implementation of the financial computer system in July
1995, order placement and product retrieval was much slower,
requiring customers to wait considerably longer to get the needed
products. Many more manual steps were also required, which meant
that employees' time was not being used effectively.
INITIATION OF THE REINVENTION
LAB
--------------------------------------------------------- Appendix X:2
Since 1986, USGS has attempted to establish an efficient and
responsive order entry, inventory control, and distribution system.
Options developed have included, among other things, contracting out
the distribution function to a private company. In USGS' 1993
proposal to DOI asking to become a reinvention lab, the Director of
USGS said that the fundamental objective of the lab would be to
develop options for modernizing the distribution function and to move
all basic product distribution functions into the private sector.
In June 1993, DOI officially designated the USGS information
dissemination and product distribution functions at the Denver
Mapping Center as a reinvention lab. A lab team was formed that
reviewed previous studies, interviewed private-sector organizations
known for their distribution capabilities, and interviewed USGS
employees for their suggestions on how to improve the distribution
function. In addition, the lab team attended a 2-week training
session sponsored by DOI in which trainers charged attendees to
consider their agencies' true missions. According to the lab team,
this training forced it to look closely at its work processes to find
new solutions. In October 1993, the lab team's recommendations for
improving the function were approved, and the team began to develop
its implementation plan.
DESCRIPTION OF THE REINVENTION
LAB
--------------------------------------------------------- Appendix X:3
According to the lab team, contracting out USGS' product distribution
function was considered initially. However, the lab team ultimately
concluded that wholesale contracting out would result in, among other
things, a loss of corporate knowledge about earth science information
and products. Reportedly, the lab team had discovered in its
interviews with private-sector organizations that only repetitive,
basic tasks were contracted out and that often the best staff dealt
directly with customers. The lab team said that it found that USGS
employees had the core knowledge and expertise needed to do their
jobs, but that the distribution process had become bogged down. The
lab team also said it believed that contracting out the product
distribution function would result in a loss of government control
over wholesale and retail prices that ensured reasonable public
access to information.
The lab team's implementation plan separated the information and
product distribution functions into three distinct parts: (1)
information dissemination (how customers obtain information about
products); (2) product distribution (how customers receive products);
and (3) the input system (how the product is printed, shipped, and
received). According to a lab official, the lab team was initially
tasked to focus on product distribution. However, it became apparent
to the lab team that this process could not occur in a vacuum.
Therefore, one of the lab team's recommendations was to establish
teams to reengineer the information dissemination and input systems
so that those activities could be coordinated in a systematic fashion
to meet customers' needs. According to the lab team leader, certain
parts of the distribution function, such as taking telephone orders,
are being evaluated for possible contracting out.
DOI has instructed all of its lab teams to "reengineer the system to
meet customers' needs." The distribution center had not
systematically collected data on customer satisfaction, but from
anecdotal information the center's staff knew there had been
complaints about the lack of timeliness in product receipt, receipt
of incorrect products, and the lack of space to spread out products
in the front counter area. Therefore, implementation teams were
established to work on these issues.
REDESIGNED COUNTER
------------------------------------------------------- Appendix X:3.1
In one of the first improvements to be implemented, the front counter
was redesigned to create a more library-like atmosphere in which
customers could look through catalogues and spread out maps. A
separate space was also set aside for map dealers.
Employee-generated ideas, such as creating a slide show for customers
to watch while waiting for their orders to be filled, are also being
implemented, according to a headquarters official.
ELIMINATION OF
ORGANIZATIONAL "STOVEPIPES"
------------------------------------------------------- Appendix X:3.2
Before the lab was established, the front counter staff who took the
orders and the map-pulling staff who filled the orders in the
warehouse reported to different branches of USGS and only rarely
communicated with each other. As part of the lab, the two groups
were combined into one group--the IS branch--and the staff was
cross-trained, allowing the map-pullers and map-orderers to do each
others' jobs. By August 1995, waiting time for map orders had been
reduced from 45 minutes before the reorganization to 15 minutes or
less. The lab team said it believed that cross-training allowed
staff to be more productive and provided for some career advancement
because of increased knowledge and skills. The lab team also said
that combining the staff improved internal communication. A new
generic position description was written for employees performing
cross-functional tasks.
Reportedly, the IS branch has a much more horizontal structure based
on three primary program areas--Information Access, Product Delivery,
and Inventory Management. The supervisor-to-employee ratio is about
1 to 25, with the IS branch teams, team leaders, and team sponsors
involved in meeting customers' needs. Only three employees are
involved in direct supervision, according to USGS officials.
BAR CODING
------------------------------------------------------- Appendix X:3.3
Before the lab was established, communication among the distribution,
production, and printing branches was hindered because each branch
used different product codes. The production branch also used
different numbers for creating a product and for ordering a reprint
of that same product. The lab team said that it believed that
standardized bar coding of all products would help correct this
problem. Bar coding labels each product with a unique set of printed
and variously patterned markings that can be read electronically. At
the John Deere Company, the lab team learned that bar coding reduced
the error rate involved in sending products to customers from 1 in
200 to 1 in 1,000. Furthermore, the lab team said it believed that
bar coding would allow better product management at all stages of
inventory control, which involves tracking the product from the time
it is (1) printed and shipped, (2) received at the loading dock in
Denver, (3) placed on the shelf, and (4) delivered to the customer.
Lab team members told us that the bar coding also assisted in the
ordering process, the reprinting process, and identifying the
location of the product in the warehouse.
REVAMPED TELEPHONE SYSTEM
------------------------------------------------------- Appendix X:3.4
Currently, USGS' telephone number, 1-800-USA-MAPS, can be used only
for inquiries about USGS products, not to order products. Customers
calling this number are sent an index or are given the 1-800-Help-Map
number for Information Services in Denver. USGS is working on
expanding the services available on the 1-800 numbers to include the
capability of ordering products over the telephone using a credit
card. According to the plan, a contract may be put in place to
handle customers ordering over the 1-800 number. The lab team leader
said that to ensure correct and timely responses to inquiries, USGS
staff would be involved in additional training on products and
information resources.
USE OF WAIVERS
--------------------------------------------------------- Appendix X:4
Eventually, the lab team said it may need waivers from governmentwide
regulations in order to institute new procedures, such as using local
printing companies to print products. The lab team said that when
fully implemented, the distribution system is intended to be
self-sustaining, with generated revenues being returned to the
system. Under 43 U.S.C. 42, the Director of the Geological Survey,
on approval by the Secretary of the Interior, has the authority to
set prices for maps.
PERFORMANCE MEASURES
--------------------------------------------------------- Appendix X:5
According to the lab team, USGS previously had some data about the
costs and revenue generated by the information dissemination and
product distribution functions. However, the lab team said USGS
lacked other types of data. For example, before the lab, orders were
recorded manually as they came in and went out, but the type of
products ordered (e.g., maps versus books) was not tracked.
Therefore, USGS staff could not systematically determine which
products were sold and which sat on the shelf.
Now, the lab team said the system is collecting data on product type,
sales history, inventory, and revenues, which helps to make decisions
about the product delivery processes. This information will be used
to reduce certain stock and to determine reprint numbers. Before the
lab was established, a set number of reprints were made for all
products needing additional stock regardless of demand, causing some
products to be overstocked. Now, stock reductions can be based on
maintaining a 5-year supply of a product, which is expected to reduce
current space needs by half.
In the past, the lab team said USGS did not systematically collect
data about customer service, relying instead on anecdotal information
for feedback. Now, as a result of an employee suggestion, reply
cards are enclosed with each product order. Since January 1995, the
Mapping Center has received about 20,000 customer reply cards
indicating, among other things, how customers became aware of USGS
products, whether they liked the products, and whether delivery of
the products was timely.
OTHER ISSUES
--------------------------------------------------------- Appendix X:6
The lab team said that it received active support from the USGS
Director, Associate Director, and the Chief of the Mapping Division.
(The Mapping Center Chief participated in the team's planning and the
brainstorming sessions.) The lab team said that their support
assisted the lab team in getting headquarters to sign off on the plan
for the reinvention lab and the lab team's recommendations for
implementation.
U.S. DEPARTMENT OF THE TREASURY:
WORK PROCESSES AT THE INTERNAL
REVENUE SERVICE'S HELENA DISTRICT
OFFICE
========================================================== Appendix XI
OVERVIEW OF THE REINVENTION LAB
SITE
-------------------------------------------------------- Appendix XI:1
As of August 1995, the Internal Revenue Service's (IRS) Helena, MT,
district office employed about 160 people in its central office and 5
satellite offices throughout the state. The district office served
approximately 800,000 taxpayers and had three basic functions:
collecting taxes, auditing tax returns, and providing information and
assistance to taxpayers.
Before the reinvention lab, the process by which the district office
performed these functions involved staff from different divisions. A
tax return was to be examined by either a tax auditor or revenue
agent within the Examination Division. If the examination resulted
in the assessment of additional taxes against the taxpayer, the
return was then handed over to a collections officer within the
Collection Division. If the collection process resulted in the
Collection Division's establishing a payment schedule with the
taxpayer, the return then became the responsibility of a revenue
officer within the Collection Division. This separation of duties
between different personnel in two of the office's divisions
reportedly confused taxpayers trying to respond to IRS' requirements
or to inquire about their returns.
INITIATION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix XI:2
The Helena reinvention lab's origins can be traced to 1988, when
officials from IRS and the National Treasury Employees Union launched
a joint quality improvement process designed to improve the office's
organizational structure and work processes. The office's management
surveyed staff to learn about their concerns and to build trust among
the staff about the management team. Soon thereafter, the district
office's management and staff received quality improvement training
and formed teams to work on a variety of processes.
In October 1992, district officials established three additional
teams, known as organizational renewal teams, to focus on three areas
of concern: (1) organizational structure, (2) performance measures,
and (3) performance evaluation. By the time the office was
designated a reinvention lab in August 1993, district office
management had already begun evaluating the recommendations proposed
by the organizational renewal teams. For example, the team focusing
on the office's organizational structure found that the taxpayer
service, collection, and examination processes were "stovepiped" into
separate processes that did not relate to or support each other. For
example, managers of the Examination Division said that they often
concentrated their examinations on a particular business or industry,
such as restaurants, without considering the collectability of the
taxes involved or the effect of their division's examinations on the
workload of the Collection Division.
DESCRIPTION OF THE REINVENTION
LAB
-------------------------------------------------------- Appendix XI:3
To provide guidance for the three organizational renewal teams,
district officials requested that the teams' recommendations address
one or more of the following criteria: (1) improve voluntary
compliance, (2) reduce taxpayer burden, (3) improve the quality of
employees' work, (4) improve customer satisfaction, (5) improve
cost-effectiveness, and (6) increase managerial span of control.
District officials approved and launched several initiatives as a
result of the teams' recommendations. A discussion of a sample of
these initiatives follows.
ELIMINATING STOVEPIPES
------------------------------------------------------ Appendix XI:3.1
To address the problem of organizational stovepipes that had led to
functional barriers across divisions, the district office combined
the Collection, Taxpayer Service, and Examination Divisions into a
single Operations Division. To achieve this new organizational
structure, some positions were combined and others were eliminated.
The office created multifunctional work teams with beginning-to-end
responsibility for providing "counter service" to taxpayers as well
as examining tax returns and collecting taxes. The teams were
organized by the type of customer located within certain geographic
areas. Subgroups of these teams focused on certain types of
customers, such as lumber companies or the tourist industry.
CUSTOMER SERVICE
------------------------------------------------------ Appendix XI:3.2
To improve customer service, the district office created a one-stop
counter service staffed by a customer service technician. This new
position was created by combining the job functions of the taxpayer
service representative and the field collection representative into
one position authorized to handle a variety of collection and
examination problems and to answer most customer questions. In
addition, tax auditors were placed in each satellite office to
provide more convenient access to auditors to taxpayers who were
being audited. Auditors were empowered to schedule their own
appointments and to contact taxpayers before beginning an audit to
clarify any outstanding issues. During the tax filing season, the
auditors also helped the customer service technicians answer
taxpayers' questions at the counter.
The office also formed a public outreach team to increase taxpayers'
voluntary compliance and to reduce their tax burden. This team,
known as the Public Education Cadre, comprised district managers and
technical staff and was created to educate the public through
seminars targeted to specific audiences. However, because IRS
headquarters found that the team was performing fewer of its primary
duties, the team was discontinued. Furthermore, the team was not
measuring the effects of its outreach program and, therefore, was
unable to document the results of its work.
AWARDS AND PERSONNEL
EVALUATION SYSTEM CHANGES
------------------------------------------------------ Appendix XI:3.3
The office created a performance awards system based on a
recommendation from an organizational renewal team. Under this
system, group awards were given on the basis of the team's ability to
achieve IRS' mission goals, rather than solely on the basis of
individual performance. To reinforce this team concept, teamwork was
added as a critical element on the evaluation of all district office
employees. District officials also attempted to change their current
personnel appraisal program to a two-tiered or pass/fail program. In
doing so, the officials said they expected to reduce the managers'
burden of evaluating personnel and to promote teamwork among
employees.
PERFORMANCE INDICATORS
------------------------------------------------------ Appendix XI:3.4
IRS uses key performance indicators (KPI) to measure the progress of
the agency's work, including the percentage of returns filed
electronically, the dollars collected per hour of staff time, and the
cycle time for completing an examination. However, the district
office and IRS' Midwest Regional Office recently analyzed 200 KPIs
and concluded that only 2 were directly tied to IRS' mission
objectives. Therefore, IRS headquarters began to change the KPI
system to better align it with the agency's strategic plan. The
lab's team focusing on performance measures tried to develop a new
set of measures that would be more closely tied to IRS' mission
objectives, but that effort was not successful. A lab official said
that one barrier was that a reporting system did not exist to collect
data related to mission objectives. Another barrier was reportedly
the difficulty of measuring voluntary compliance.
USE OF WAIVERS
-------------------------------------------------------- Appendix XI:4
A district official said IRS headquarters had made the process of
obtaining waivers from governmentwide and agency-specific regulations
relatively easy. The official said that some of the waivers could be
granted directly by IRS or the U.S. Department of the Treasury, but
other waiver requests had been directed to central management
agencies. For example, Treasury submitted a waiver request for a
two-tiered appraisal program to OPM for consideration.\1 In the
meantime, the district office was permitted, under existing
regulations, to use a three-tiered evaluation system, which rates
personnel achievements as either outstanding, successful, or failed.
The district office also said it planned to take advantage of a
generic waiver from OMB that allowed agencies to survey their
customers more often than federal regulations allowed. The proposed
survey would enable the office to gather data on taxpayer burden and
customer service.
--------------------
\1 See footnote 4 in appendix IX.
PERFORMANCE MEASURES
-------------------------------------------------------- Appendix XI:5
District management and staff said that they recognized the need to
use measures other than KPIs developed by IRS headquarters. District
officials developed 11 types of KPIs to measure the results of the
lab's work teams and the district office's progress in meeting IRS'
mission goals. According to an official, the 11 districtwide KPIs
included such measures as revenue agents' dollars collected per hour,
timeliness of the Operations Division's congressional responses, and
the percentage of cases meeting quality standards. The officials
said the 11 KPIs were also selected to help district officials
monitor the office's progress on IRS headquarters' KPIs.
To measure their progress, district officials required each work team
to use at least two measures selected from either the IRS-wide KPIs,
the office's KPIs, or measures developed by the work teams.
Furthermore, district officials required one of the measures to be a
performance- or results-based measure, such as the number of tax
returns received and audited, and the other measure to be a process
measure, such as the amount of resources (e.g., staff years) used to
complete the work.
The performance-based measures were sometimes exclusive to a team's
efforts and sometimes used by more than one team. For the process
measures, the teams were allowed to develop new measures or to use an
existing IRS or district KPI measure. At least some of the teams
developed their own measures because they recognized that none of the
KPIs measured the team's performance. For example, a team
responsible for processing applications for lien certificates
developed its own measures because neither IRS' nor the district
office's KPIs were tracking the activities of the lien certificate
program. By measuring the amount of dollars collected through the
program (performance-based measure), the team discovered that the
program collected about $1 million per staff year. The team also
measured the number of days spent to process an application and
discovered it took up to 30 days. After meeting with some of its
customers to seek improvements to the application process, the team
revised the process and reduced the processing time to 5 days.
OTHER ISSUES
-------------------------------------------------------- Appendix XI:6
District officials said that IRS management was initially resistant
to some of the changes proposed by the district office. However,
frequent meetings between IRS headquarters and district officials
helped IRS management understand the need for changes, such as those
in the personnel evaluation system.
District officials had differing opinions as to whether IRS
management and regional officials had been supportive of the district
office's reinvention activities. One district official said top IRS
management had been supportive and that the IRS Midwest Regional
Office had given the district some support through a memorandum of
understanding. The district and regional offices' memorandum of
understanding outlined the district office's effort to reorganize its
structure through reengineering and quality improvement activities
that supported IRS' mission objectives. It also contained a
commitment from the Midwest Regional Commissioner to (1) provide
oversight and program support to the district office, (2) reduce the
reporting requirements on frontline managers, and (3) offer
assistance in implementing the reinvention ideas.
However, other district officials said that there had been a lack of
support for the lab's activities from the regional office. One
district official said regional office management was not available
during the reinvention process because the region was involved in its
own reorganization. Without the regional office's involvement, the
official said, IRS headquarters did not become involved in the lab
either. A second district official said that neither IRS
headquarters nor the regional office provided the resources necessary
to support the lab's activities. A third district official said that
IRS headquarters did not like the changes developed by the lab and
did not reinforce the ideas developed through the earlier quality
improvement process. The official said that the quality improvement
process teams were an effort to make accountants more people-oriented
and to increase staff participation in management decisionmaking.
This was a new approach to which IRS personnel were unaccustomed.
Despite these problems, the second district official said that the
lab had been a success because employees saw an opportunity to change
and improve their work processes. The district office also
reportedly had some success at implementing these changes because it
was relatively unnoticed by IRS headquarters until the district
office was designated a reinvention lab. However, the district
office's staff was then reportedly pressured into producing results
quickly.
According to another district official, the relatively small size of
the Helena District Office was a hindrance in gaining IRS
headquarters' attention or cooperation in establishing the lab. The
district office also reportedly lacked the expertise to reorganize
the office, and an official said that he felt as though the office
staff were reinventing their work processes in a vacuum. The
official also said that the district office could have benefited from
having experts in personnel management issues and union-management
relations law when it planned different strategies of restructuring.
DEPARTMENT OF VETERANS AFFAIRS:
HEALTH CARE AT THE ZABLOCKI
MEDICAL CENTER
========================================================= Appendix XII
OVERVIEW OF THE REINVENTION LAB
SITE
------------------------------------------------------- Appendix XII:1
The Clement J. Zablocki Veterans Affairs Medical Center (VAMC) in
Milwaukee is one of the largest of the 172 medical centers operated
by the Department of Veterans Affairs' (VA) Veterans Health
Administration (VHA). In June 1995, the Zablocki VAMC employed 2,200
full-time equivalent staff and had an annual budget of $158 million.
Its facilities and services included a hospital, a nursing home, a
domiciliary, and an extensive outpatient program. VA's Central
Region Contract Service Center, located on the Zablocki VAMC's
campus, provides contracting services to eight VAMCs in Wisconsin,
Illinois, and Michigan and participates in the reinvention lab
activities.
INITIATION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix XII:2
The Zablocki VAMC was designated as a reinvention lab in May 1993.
According to lab officials, the lab originated from management's
desire to make the Zablocki VAMC the hospital of choice, not only for
veterans entitled to free medical care, but also for veterans who
have a choice of medical care facilities.
The reinvention activities began with a request to all employees that
they submit ideas and requests for waivers from governmentwide and
agency-specific regulations for the purpose of improving the center's
health care delivery and administrative processes. The Zablocki
VAMC's staff submitted over 200 reinvention ideas for consideration.
From the initial ideas, 29 requests for waivers were generated. The
approval of three of these waivers permitted the budget and full-time
equivalent flexibility that significantly affected the implementation
of several of the reinvention lab's activities. Several of the
remaining ideas were the basis of four Zablocki VAMC-wide continuous
quality improvement teams, while many other ideas were simply
implemented by management, if appropriate.
DESCRIPTION OF THE REINVENTION
LAB
------------------------------------------------------- Appendix XII:3
The overall goal of the lab was to increase customer service and
reduce costs while improving the quality and timeliness of the
delivery of health care. The lab's activities were categorized by
lab officials into the following five general areas: (1) improve
customer service, (2) reduce costs, (3) improve quality, (4) improve
timeliness and efficiency, and (5) improve contracting. Reinvention
teams were created and assigned to implement many of the lab's
efforts. Examples from each of these areas follow.
IMPROVING CUSTOMER SERVICE
----------------------------------------------------- Appendix XII:3.1
According to lab officials, the Zablocki VAMC improved the continuity
of health care to its customers by assigning a social worker to
patients receiving primary care. Before the lab, outpatients were
assigned a primary physician who served as the point of contact
regarding the patient's status for the patient, family members, and
other VAMC staff. By assigning a social worker to work with the
primary physician, lab officials stated that the patient's social
needs and medical care could be better coordinated and continually
evaluated, and physicians could focus on the patient's medical
issues. According to lab officials, the social worker coordinates
the patient's outpatient and/or inpatient care; provides
post-hospitalization placement; and, if necessary, arranges social
work services to the patient.
REDUCING COSTS
----------------------------------------------------- Appendix XII:3.2
The Zablocki VAMC created a patient transfer team to reduce back
injuries to the nursing staff and therefore reduce worker
compensation costs. The two-person team assisted the nursing staff
by moving patients to and from beds, wheelchairs, and gurneys. Under
the direction of the VAMC's physical therapy service, the team was
trained extensively in safe lifting techniques. The team also is
available to help with scheduled transfers and to respond to paged
requests for assistance from the nursing staff.
IMPROVING QUALITY
----------------------------------------------------- Appendix XII:3.3
The Zablocki VAMC hired an infectious disease pharmacist to lower the
cost and improve the quality of antibiotic treatment. Unless
antibiotics are carefully prescribed and monitored, drug interactions
and toxicities could result in serious side effects for patients,
thereby lengthening a patient's hospital stay. Lab officials said
that the appropriate use of these drugs could reduce patients' length
of stay and medical costs.
IMPROVING TIMELINESS AND
EFFICIENCY
----------------------------------------------------- Appendix XII:3.4
A telephone triage system was created to increase the timeliness and
accessibility of medical care. According to lab officials, the
telephone triage system was needed because patients with nonemergency
conditions or health care questions were frequently making
unscheduled visits to the admission center and emergency room.
Frequently, these patients' needs could be met via a telephone
contact with the appropriate provider or a scheduled clinic
appointment. In the telephone triage system, nurses could assist
patients over the telephone with their clinical concerns between
visits to the Zablocki VAMC. In May 1995, this system was expanded
to include the outpatient prescription renewal process. A pharmacist
and a pharmacy technician were added to the registered nurse and
clerical staff team.
IMPROVING CONTRACTING
----------------------------------------------------- Appendix XII:3.5
Lab officials said that the Central Region Contract Service Center
reduced costs by promoting "best value contracting" rather than "low
bidder" contracting. Contract service center officials stated that
their customers were not only the eight VAMCs in their geographic
area, but also vendors with VA contracts. To improve their customer
service effort, contract service center officials designated their
contracting officers as customer service champions and assigned a
champion to each of the eight VAMCs served by their office. These
officials said they have reduced the number of contract award
protests by better training contracting officers and educating
vendors on VA contracting regulations and procedures.
USE OF WAIVERS
------------------------------------------------------- Appendix XII:4
According to lab officials, the number of waivers from governmentwide
and agency-specific regulations sought by management has increased
since the lab began. By July 1995, the Zablocki VAMC had forwarded a
total of 62 waiver requests to VA's Central Office (VACO), 16 of
which had been approved and 4 disapproved. Over half of the waiver
requests were still pending, and the remainder had been withdrawn
because lab officials discovered the waivers were not required or
were no longer needed due to changes after the requests were sent
forward. Included in the 62 waiver requests were 9 requests
submitted by contract service center officials.
APPROVED WAIVERS
----------------------------------------------------- Appendix XII:4.1
Lab officials said three waivers approved in November 1993 provided
the budget and staffing flexibility they needed to begin the
reinvention process. The waivers allowed the Zablocki VAMC to submit
a new budget for fiscal years 1994 and 1995 that moved funds between
different budgetary accounts (e.g., travel or training) provided that
its total appropriations were not exceeded. A lab official said that
the waivers also allowed the Zablocki VAMC funds to be spent
throughout the year instead of only in designated quarters, which
better enabled the VAMC to meet required patient-care needs and
reduce expenses. Through this budget flexibility, the lab was able
to gain 15 additional full-time equivalents through fiscal year 1995
on a nonrecurring funding basis to support the lab's activities. For
example, the Zablocki VAMC was able to hire the infectious disease
pharmacist using the funds his activities generated in savings in
antibiotic and other inpatient costs. The lab also was able to
transfer $105,000 from an operational account to other accounts,
which were used for training to support the recruitment and retention
of administrative and clinical staff. These funds also enabled staff
to receive training on reengineering the activities of the Zablocki
VAMC.
Lab officials also received a waiver from a VA regulation that
permitted the lab to reward physicians for specific
performance-related activities, such as providing primary care to
patients. Through these changes, Zablocki VAMC staff said they were
able to reward a physician for activities directly related to
improved patient care rather than for the physician's tenure or
specialty. The funds were to be used strictly as a bonus and were
not to become part of the physician's base pay.
DISAPPROVED WAIVERS
----------------------------------------------------- Appendix XII:4.2
According to a lab official, VACO disapproved four waiver requests.
Lab officials sought the first waiver to give them the authority to
allocate physician residents between disciplines and to appoint
residents on the basis of facility need. These placements are
presently overseen by the Under Secretary for Health of the Veterans
Health Administration, who needs to retain this authority because of
VHA's responsibility to allocate residents consistent with the needs
of VA nationwide. Lab officials sought a second waiver to change the
locale for the evaluation of community nursing homes to the local
VAMC. Because VHA would remain accountable to Congress (via a
required report) for the evaluation of these facilities, VHA
officials denied the request. VHA officials also disapproved a third
waiver request to exempt the Zablocki VAMC from providing a
semiannual neurological surgical report to VHA. Although the
Zablocki VAMC does not use the report, VHA officials stated that they
use the report to monitor neurosurgery programs and, therefore,
disapproved the waiver. Finally, lab officials sought a fourth
waiver to extend locality pay systems to additional professionals,
such as pharmacists. VHA officials did not approve this waiver, but
they issued new rules to provide VAMCs with more flexibility within
the existing special salary rate policy.
PENDING WAIVERS
----------------------------------------------------- Appendix XII:4.3
Some of the waiver requests were pending because the regulation
involved was based in statute. For example, VA classifies eyeglasses
as a prosthetic device, and regulations state that prosthetics can be
provided only to veterans (with nonservice- related medical
conditions) who have been admitted to the hospital. Therefore, the
Zablocki VAMC sought a waiver from veteran eligibility requirements
that require patients having outpatient cataract surgery to be
admitted to the hospital for a 2-day stay in order to receive
corrective eyeglasses. Lab officials said this is an unnecessary and
costly requirement because the medical community's standard for
cataract surgery is to perform it on an outpatient basis. The waiver
request was submitted to VACO, which recommended that OMB draft
legislation to change this eligibility requirement. However,
Zablocki VAMC staff said the recommendation had not yet been acted
upon.\1
--------------------
\1 The NPR's third report entitled Common Sense Government: Works
Better and Costs Less recommends reforming veterans health care
eligibility and treatment. It states that "existing laws limit the
ability of the VA to provide the most appropriate care in the most
appropriate setting. For example, VA doctors are presently forced to
hospitalize veterans who only need such care as blood pressure
treatment or crutches."
WAIVERS NOT NEEDED OR
WITHDRAWN
----------------------------------------------------- Appendix XII:4.4
Zablocki VAMC staff found that six of the waivers they requested were
not needed because of interpretations of the regulations by VACO or
because of changes in legislation. For example, the Federal
Employees Family Leave Act allowed the Zablocki VAMC certain leave
flexibilities that had been the subject of a waiver request. Three
of the six waiver requests were withdrawn because they were no longer
required. For example, the Zablocki VAMC requested a waiver to use
the building services equipment fund and the minor improvement fund
to provide a new state-of-the-art pneumatic tube system to transport
medical test samples and their results quickly through VAMC.
However, because Zablocki VAMC officials found that the system could
be modified and updated in phases, the waiver was no longer needed.
CONTRACT SERVICE CENTER
WAIVERS
----------------------------------------------------- Appendix XII:4.5
The Central Region Contract Service Center had submitted 9 of the 62
waiver requests made by the Zablocki VAMC. The subjects of the
waivers included both departmental regulations and governmentwide
Federal Acquisition Regulations. One waiver from a VA regulation was
approved that allowed the contract service center to negotiate
special rates when contracting with community nursing centers.
Previously, these special rates could be negotiated only by the VA
Regional Director's office. As of July 1995, eight of the nine
waiver requests were still pending. Two of the pending waivers
include requests for authorizations to remove annual contracts from
the currently devised fiscal year cycle and to permit the contract
service center to participate with private sector purchasing groups
for best value purchasing.
PERFORMANCE MEASURES
------------------------------------------------------- Appendix XII:5
Zablocki VAMC officials said that they were committed to defining,
measuring, and documenting pre- and post-lab outcome measures. Each
reinvention team was required to develop such measures to evaluate
the success and viability of its reinvention effort. For example,
the patient transfer team measured the number of nursing staff
injuries and lost workdays due to those injuries for the 9 months
before and after the establishment of the patient transfer team. It
found that the number of injuries declined from 8 to 4, and the
number of lost workdays dropped from 97 to 9. Zablocki VAMC
officials estimated that the establishment of the team had saved the
center over $73,000 in worker compensation costs and over $84,000 in
replacement compensation costs. Furthermore, a survey of the nursing
staff indicated that they were overwhelmingly supportive of the
transfer team.
OTHER ISSUES
------------------------------------------------------- Appendix XII:6
Lab officials said that the Zablocki VAMC's assigned staff ceilings
were reduced by 77 full-time equivalents in fiscal year 1995 but that
its overall workload would continue to increase. They said this
staffing reduction would reduce the flexibility the lab was intended
to create. Furthermore, they said, downsizing does not provide a
good environment for reinvention because it affects the staff's
morale and ability to improve customer service.
DEPARTMENT OF VETERANS AFFAIRS:
CLAIMS PROCESSING AT THE NEW YORK
REGIONAL OFFICE
======================================================== Appendix XIII
OVERVIEW OF THE REINVENTION LAB
SITE
------------------------------------------------------ Appendix XIII:1
As of June 1995, VA's New York Regional Office (NYRO) had about 340
staff positions. One of NYRO's responsibilities is to process claims
submitted by veterans (or their families) in the region for
compensation, pension, and death benefits.\1 Before the reinvention
lab, claims were processed using an assembly-line approach in which
each claim went through 20 to 30 specific steps involving 12 or more
different clerks, adjudicators, and ratings specialists. A veteran
inquiring about his or her claim talked with a Veterans Benefits
Counselor, who often had little contact with the veteran's claims
folder as it moved through the processing system. The veteran's
claims folder was often difficult to locate, and only limited
information was available to the counselor from VA's computerized
tracking system. As a result, lab officials said some veterans
believed that no one knew what was happening to their claims and that
the VA staff's role was to move claims folders from one processing
step to another.
--------------------
\1 NYRO's other business lines are VA's home loan program and
vocational rehabilitation program. The region includes the eastern
half of New York State, New York City, and Long Island.
INITIATION OF THE REINVENTION
LAB
------------------------------------------------------ Appendix XIII:2
NYRO's effort to improve the claims processing function began in
April 1991 with its total quality management initiatives.\2 Lab
officials reported that the quality improvement training helped lay a
foundation; however, they recognized that incremental empowerment
would not achieve the necessary results from a customer's
perspective. In April 1992, regional staff said they believed a
fundamental change had to be made to the organizational structure and
work processes. Staff researched topics such as work process
reengineering and SDWTs\3 and benchmarked their efforts against
companies that were using SDWTs. NYRO used two consulting firms
during this year of planning. One firm focused on the office's
organizational structure, workflow, job structure, and performance
measures. The other firm provided a structured training program that
included courses on teamwork and the social aspects of cultural
change.
In May 1993, NYRO opened a prototype unit with 50 staff from the
adjudication and veterans services divisions of its claims processing
office--about one-fourth of the entire claims processing staff. The
claims processing function was officially designated as a reinvention
lab in September 1993.
--------------------
\2 See footnote 1 in appendix IV.
\3 See footnote 1 in appendix II.
DESCRIPTION OF THE REINVENTION
LAB
------------------------------------------------------ Appendix XIII:3
The overall goal of the lab was to improve claims processing by
empowering SDWTs to handle a veteran's claim from start to finish,
with the team interacting directly with the veteran to improve
communications. This approach was also expected to reduce the time
it took to process a claim by reducing the number of staff and work
steps involved.
When the prototype unit was established, employees were formed into
SDWTs and physically moved into the same work area. Claims folders
assigned to this unit were also moved into the team's work area for
processing. In this environment, the team could review a claim and
request any additional information needed for its adjudication. The
team also entered data and did the final processing of the claim in
its work area. When inquiries were made about the claim, staff in
the prototype unit were reportedly more knowledgeable about the
issues involved and had easier access to the claims folder.
PERSONNEL SYSTEM REFORMS
---------------------------------------------------- Appendix XIII:3.1
New positions in the SDWTs were created by administratively
reclassifying existing positions. Under the new job classifications,
a case technician performed duties formerly assigned to four clerks.
The case manager adjudicated claims and interacted with claimants in
person and by telephone, thereby performing duties previously
assigned to employees in four other positions. Each team also had a
coach who performed some of the duties previously assigned to
supervisors, such as giving individual employee performance
evaluations. Reviews of the team's overall performance and other
quality control processes eventually are to become the responsibility
of the team. According to lab officials, decisions about workload
control and work assignment were also devolving to the teams.
As of August 1995, NYRO's personnel compensation system was being
redesigned to be compatible with the SDWT model. The old
compensation system was based on positions held and time in grade.
Annual rewards were based on individual activity, such as the number
of claims processed. Lab officials said that they anticipate that
the new system will consist of skill-based pay and variable pay that
support the team environment. Variable pay is pay that would be
based on how well the organization as a whole met its goals.
According to lab officials, NYRO developed an interim compensation
system to recognize employees' skill development while a new system
was being designed. Additionally, VACO and OPM have assisted NYRO in
developing an OPM demonstration project for the new system. In July
1995, NYRO officials were at OPM headquarters for a 3-day session to
work on the proposal for the demonstration project.
STATUS OF THE LAB
---------------------------------------------------- Appendix XIII:3.2
By August 1994, the entire claims processing function was operating
in 16 SDWTs. Although all staff had been placed in the new job
classifications, not all had acquired the skills needed for their new
positions. Lab officials said they recognized that skill acquisition
would take time. They also said that the team approach had helped
allay the fears of those employees not comfortable with some of the
different tasks they were to perform.
USE OF WAIVERS
------------------------------------------------------ Appendix XIII:4
To establish SDWTs, NYRO received a delegation of authority from VACO
that allowed it to waive certain VA administrative and procedural
requirements applying to claims processing. However, after
designation as a reinvention lab NYRO initially submitted about 140
waivers from governmentwide and agency-specific regulations.
Subsequently, knowledgeable staff were brought in to help decide what
waivers were really needed. As of June 1995, the lab had requested
31 waivers of both governmentwide and agency-specific regulations,
and lab officials said that the process of requesting and receiving
waivers was still ongoing. Some of the requested waivers related to
how veterans' claims are paid. For example, the lab requested a
waiver of certain requirements needed to verify the death of a
veteran.
PERFORMANCE MEASURES
------------------------------------------------------ Appendix XIII:5
Lab officials said that the key to the success of their new claims
processing system was determining what kinds of performance measures
to use. Under the old measurement system, VA's performance standards
centered on productivity, timeliness, and the accuracy of claims
processing. (Accuracy refers to the correctness of the decision made
on a claim.) However, the lab staff said that they believed that from
a veteran's perspective those standards alone would not lead to
improvements in the quality of claims processing. Therefore, the lab
staff developed additional measures based on customer satisfaction,
employee development, and costs. In fiscal year 1992, a contractor
was hired by VACO to do a national survey of veterans and establish a
baseline for customer service expectations. Additionally, a
gain/loss statement was developed that lab officials said enabled the
teams to determine how productive they were by comparing the dollar
value of the claims they processed to the relative salary of the
team.
Lab officials said they believed that it will take several years for
the new organization to demonstrate improvement in all five measures
(customer satisfaction, employee development, speed, accuracy, and
cost). However, they do plan to compare fiscal year 1993 data to
fiscal year 1995 data, the year in which the entire claims processing
office would have been working as SDWTs.\4
--------------------
\4 We believe the fiscal year 1993 data are flawed because they do
not distinguish between data for the self-directed work teams and
data for claims processed the traditional way. The flaw will not
allow comparison of the traditional approach to the SDWT model.
MEASURING CLAIMS ACTIVITY IN
THE PROTOTYPE UNIT
---------------------------------------------------- Appendix XIII:5.1
Lab officials reported that early results were encouraging. Mature
teams (those established in May 1993) had backlogs that were 25
percent smaller, processed claims 15 percent faster, and at a 7
percent lower cost than teams that processed claims in the
traditional way, despite having to spend a significant amount of time
learning new skills. Lab officials also said that excellent progress
had been made in (1) reducing the waiting time to see a counselor in
a personal interview from 20 minutes to less than 3 minutes; and (2)
increasing phone responsiveness, as measured by veterans getting
through on the first attempt, from 16 percent to 96 percent. The
most important result of the team approach, according to lab
officials, had been that teams provided a level of individualized
service to veterans that was not possible under the old system and
employees had greater control, had more authority, and found their
jobs much more satisfying.
Lab officials also said inquiries to VACO on behalf of veterans had
been reduced for claims handled by the prototype unit because it was
able to respond to veterans' inquiries directly and completely.
According to lab officials, the prototype unit reduced its pending
caseload from about 5,900 on May 17, 1993, to less than 3,450 at the
end of September 1994--a reduction of more than 40 percent. Lab
officials said that the number of cases waiting to be rated declined
by less than 10 percent during this period because only a few trained
rating specialists were available to rate these claims for
disability.\5
--------------------
\5 Rating a claim is the process of determining the degree of a
veteran's disability and whether the disability is service-connected
and therefore eligible for compensation.
OTHER ISSUES
------------------------------------------------------ Appendix XIII:6
CULTURE CHANGE
---------------------------------------------------- Appendix XIII:6.1
Lab officials said that the lab's central principles are a direct
link to customer service, teamwork, and the broadening of the duties
of staff members. They said that thinking in these terms represented
a culture change for everyone and that old habits were hard to
overcome. Lab officials said they have tried to help this culture
change by continually meeting with staff.
Before teams were established, lab officials said adjudication and
veterans services staff often did not know what was going on with
other aspects of a claim or in other parts of the office. Under the
integrated case management approach, they said all staff members knew
about all facets of the claims on which they worked. However, some
aspects of teamwork were still being addressed, according to lab
officials. For example, staff received classroom training in group
dynamics and held meetings once a week with the coaches leading the
discussion. Lab officials said teamwork had reduced the intragroup
competition that existed before the lab because now the entire team
was working toward the completion of a claim.
UNION-MANAGEMENT PARTNERSHIP
---------------------------------------------------- Appendix XIII:6.2
According to lab officials, although union officials were involved in
all aspects of the changes, there were some difficult times from 1993
to 1994 when the then new president filed over 350 unfair labor
charges with the Federal Labor Relations Authority concerning the
organizational changes taking place in the lab. Responding to these
charges took up a considerable amount of management time. Lab
officials stated that they were able to resolve these differences and
the union dropped all charges. Development of a partnership
agreement, which puts a framework in place for continued good
union-management relations, is being finalized by a joint union and
management committee.
EFFECT OF THE LAB ON OTHER
UNITS
---------------------------------------------------- Appendix XIII:6.3
In November 1994, the Deputy Under Secretary for Benefits sent a memo
to all the regional offices stating they should strive to blend
veterans services and adjudication. He listed several models as
examples of good work processes, among them the one used by NYRO.
NYRO's Loan Guaranty Division is beginning its reengineering process
using some of the lessons learned from reinventing the claims
processing function.
(See figure in printed edition.)Appendix XIV
GAO'S SURVEYS OF THE REINVENTION
LABS
======================================================== Appendix XIII
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
include a category for labs that were surveyed but did not respond to
a question-"Did not answer." Also, results in the report may differ
from those in the appendix because, in some cases, they are based
only on those labs that provided an answer to a question.
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
equal the total number of waivers sought in question 5c. The reason
for the difference is that we did not include the waivers for two
labs in question 5b because those labs reported only totals without
indicating a breakout by subject area.
(See figure in printed edition.)
question 5c includes one waiver that was reported be be withdrawn.
The total number of waivers sought under category "b" for question 5c
includes three waivers that were reported to be withdrawn.
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix XV
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
-------------------------------------------------------- Appendix XV:1
Curtis Copeland, Assistant Director, (202) 512-8101
Tom Beall, Technical Advisor
Steven G. Lozano, Evaluator-in-Charge
Theresa Roberson, Senior Evaluator
Theodore Saks, Senior Evaluator
Donna Byers, Senior Evaluator
Kiki Theodoropoulos, Evaluator (Communications Analyst)
*** End of document. ***