Federal Downsizing: Agency Officials' Views on Maintaining Performance
During Downsizing at Selected Agencies (Letter Report, 03/24/98,
GAO/GGD-98-46).
Pursuant to a congressional request, GAO reviewed the Department of
Housing and Urban Development (HUD), the Department of the Interior, the
General Services Administration (GSA), the National Aeronautics and
Space Administration (NASA), and the Office of Personnel Management
(OPM) to obtain information on the effects downsizing has had on their
performance and what actions were taken to maintain performance,
focusing on: (1) which components within the five agencies were
downsized and to what extent; (2) what actions were taken to maintain
performance for one selected downsized component at each parent agency,
the results of those actions on the component's performance, and the
effect of the downsizing on customer service; and (3) the lessons that
the five components learned about maintaining performance during a
period of downsizing.
GAO noted that: (1) most components within the five parent agencies were
downsized to some extent, although how much varied considerably; (2) the
percentage of agency components' full-time equivalent reductions from
fiscal year (FY) 1993 through 1996 ranged from 3 percent to 100 percent
at HUD, 2 percent to 87.5 percent at Interior, 10 percent to 37 percent
at GSA, 3 percent to 42 percent at NASA, and 2 percent to 100 percent at
OPM; (3) according to officials of the parent agencies and the five
selected components, several actions helped the components maintain
performance levels during the period of downsizing; (4) they explained
that it was difficult to isolate actions taken independently of
downsizing from those taken because of downsizing; (5) however, the
actions the officials told GAO about generally fell into three
categories: (a) refocusing of missions; (b) reengineering of work
processes; and (c) building and maintaining employee skills; (6) the
officials stated that the five components were generally able to
maintain performance and fulfill the requirements of their missions
despite the relatively large downsizing that occurred from FY 1993 to FY
1996; (7) although the officials stated that they could not connect
specific actions taken with specific outcomes, they stated that without
the three actions mentioned, the performance levels of the components
would not have been maintained; (8) officials at some components stated
that additional downsizing could hamper future performance; (9) it
should be noted that GAO's results primarily reflect the viewpoints of
officials from the agencies and components and are a snapshot at the
time of its review; (10) performance measurement data, particularly
baseline data with which current data could be compared, that would
support agency officials' views or enable policymakers to track program
performance and make informed decisions were limited; (11) the data that
were available tended to substantiate the views of component officials
that they were meeting goals they had set for themselves; (12) according
to component officials and employees or their representatives at the
five components, customers remained satisfied with the components'
performance during the period of downsizing; and (13) among the lessons
learned, officials stated that the most important was the need for early
planning and open communication with employees.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-98-46
TITLE: Federal Downsizing: Agency Officials' Views on Maintaining
Performance During Downsizing at Selected Agencies
DATE: 03/24/98
SUBJECT: Federal downsizing
Customer service
Reengineering (management)
Cost control
Agency missions
Federal agency reorganization
Privatization
Human resources training
Reductions in force
Strategic planning
IDENTIFIER: National Performance Review
HUD 2020 Management Reform Plan
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Cover
================================================================ COVER
Report to the Chairman, Subcommittee on Civil Service, Committee on
Government Reform and Oversight, House of Representatives
March 1998
FEDERAL DOWNSIZING - AGENCY
OFFICIALS' VIEWS ON MAINTAINING
PERFORMANCE DURING DOWNSIZING AT
SELECTED AGENCIES
GAO/GGD-98-46
Maintaining Performance Amid Downsizing
(410088)
Abbreviations
=============================================================== ABBREV
BOR - Bureau of Reclamation
DOI - Department of the Interior
FTE - full time equivalent
GSA - General Services Administration
HUD - Department of Housing and Urban Development
IG - Inspector General
KSC - Kennedy Space Center
NASA - National Aeronautics and Space Administration
OMB - Office of Management and Budget
OPM - Office of Personnel Management
PBS - Public Buildings Service
USIS - US Investigations Service, Inc.
Letter
=============================================================== LETTER
B-276566
March 24, 1998
The Honorable John Mica
Chairman, Subcommittee on Civil Service
Committee on Government Reform and Oversight
House of Representatives
Dear Mr. Chairman:
A bipartisan consensus has emerged that the federal government must
find ways to meet the public's demand for services with a reduced but
more effective workforce. In response to this consensus, the number
of civilian employees governmentwide decreased by about 12 percent
between fiscal years 1993 and 1996. On an agency-by-agency basis,
some agencies had reductions larger than 12 percent, including the
Department of Housing and Urban Development (HUD), the Department of
the Interior (DOI), the General Services Administration (GSA), the
National Aeronautics and Space Administration (NASA), and the Office
of Personnel Management (OPM).
In light of the demand for a smaller but more effective workforce,
you asked us to review these five agencies to obtain information on
the effects downsizing has had on their performance and what actions
were taken to maintain performance. In response to your request, our
objectives were to (1) determine which components within the five
agencies were downsized and to what extent; (2) determine what
actions were taken to maintain performance for one selected downsized
component at each parent agency, the results of those actions on the
component's performance, and the effect of the downsizing on customer
service; and (3) identify lessons the five components learned about
maintaining performance during a period of downsizing. The selected
components were HUD's Office of Housing, DOI's Bureau of Reclamation
(BOR), GSA's Public Buildings Service (PBS), NASA's Kennedy Space
Center (KSC), and OPM's Investigations Service. Each of these
components had experienced a sizeable downsizing of its workforce.
In the case of the Investigations Service, unlike the other four
components, most of its activities and employees were privatized
(made part of a private company - see app. V).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
Most components within the five parent agencies were downsized to
some extent, although how much varied considerably. The percentage
of agency components' full-time equivalent (FTE) reductions from
fiscal year 1993 through 1996 ranged from 3 percent to 100 percent at
HUD, 2 percent to 87.5 percent at DOI, 10 percent to 37 percent at
GSA, 3 percent to 42 percent at NASA, and 2 percent to 100 percent at
OPM.\1
According to officials of the parent agencies and the five selected
components, several actions helped the components maintain
performance levels during the period of downsizing. They explained
that it was difficult to isolate actions taken independently of
downsizing from those taken because of downsizing. However, the
actions the officials told us about generally fell into three
categories: (1) refocusing of missions, (2) reengineering of work
processes,\2 and (3) building and maintaining employee skills.
The officials said the five components were generally able to
maintain performance and fulfill the requirements of their missions
despite the relatively large downsizing that occurred from fiscal
year 1993 to fiscal year 1996. The Investigations Service downsized
by 61 percent,\3 PBS by 21 percent, BOR by 20 percent, Office of
Housing by 16 percent, and KSC also by 16 percent. Although the
officials told us they could not connect specific actions taken with
specific outcomes, they said that without the three actions mentioned
earlier, the performance levels of the components would not have been
maintained. Officials at some components also said that additional
downsizing could hamper future performance. It should be noted that
our results primarily reflect the viewpoints of officials from the
agencies and components and are a snapshot at the time of our review.
Performance measurement data, particularly baseline data with which
current data could be compared, that would support agency officials'
views or enable policymakers to track program performance and make
informed decisions were limited. The data that were available tended
to substantiate the views of component officials that they were
meeting goals they had set for themselves.
According to component officials and employees or their
representatives at the five components, customers remained satisfied
with the components' performance during the period of downsizing.
This view was generally supported by the limited customer survey data
we reviewed. For example, surveys during the period covered by our
review of building tenants under PBS and customers of KSC over time
both showed stable rates of relatively high customer satisfaction.
More limited survey data from a power program under BOR showed high
satisfaction, and responses from a small group of lenders and
realtors using HUD's Office of Housing services showed moderate
satisfaction. On the other hand, our inquiries of a small number of
Investigations Service, BOR, and Office of Housing customers showed
mixed customer satisfaction. Investigations Service customers
indicated continued satisfaction, while BOR and Housing customers
revealed some dissatisfaction. BOR customers, however, stated that
their dissatisfaction was not due to the downsizing.
Among the lessons that component officials said they learned, the
most important was the need for early planning and open communication
with employees. In emphasizing the need for early planning, one
component official said that targeting buyouts (i.e., cash incentives
for employees to resign) could have prevented mismatches at his
component between buyout results and organizational needs. Another
official said that his component should have communicated better with
employees to minimize the inherent distrust and fear generated by
downsizing.
--------------------
\1 According to Office of Management and Budget (OMB) guidance, an
FTE or work year generally includes 260 compensable days or 2,080
hours. These hours include straight-time hours only and exclude
overtime and holiday hours.
\2 Commonly defined as a systematic, disciplined improvement approach
that critically examines, rethinks, and redesigns mission-delivery
processes to achieve dramatic improvements in performance in areas
important to customers and stakeholders.
\3 Although the Investigations Service downsized by 61 percent
according to its full FY 1996 FTE usage, the OPM GAO Liaison noted
that if the Investigations Service downsizing was measured using the
FTE complement at the close of FY 1996, a reduction of 96 percent
occurred from the FY 1993 level. The privatization of Investigations
occurred in the last quarter of FY 1996, which dramatically lowered
the end-of-year staffing level.
BACKGROUND
------------------------------------------------------------ Letter :2
Beginning in 1993, both Congress and the administration agreed that
federal employment levels should be cut as a means of reducing
federal costs and controlling deficits. Through a series of
executive orders and legislation, goals were established for reducing
federal staffing levels. Two driving forces in the reductions were
the Federal Workforce Restructuring Act of 1994 and the National
Performance Review. The act, passed in March 1994, mandated
governmentwide reductions of 272,900 FTE positions through fiscal
year 1999. The National Performance Review, the administration's
major management reform initiative, recommended that any reductions
be accomplished through agency efforts to streamline operations,
reduce management control and headquarters positions, and improve
government operations through reinvention and quality management
techniques.
In addition to reducing their workforces and streamlining their
operations, agencies are required to measure their performance. The
Government Performance and Results Act of 1993 requires agencies to
(1) develop strategic plans covering a period of at least 5 years and
submit the first of these plans to Congress and OMB by the end of
fiscal year 1997, (2) develop and submit annual performance plans to
OMB and Congress beginning for fiscal year 1999 containing the
agencies' annual performance goals and the measures they will use to
gauge progress toward achieving the goals, and (3) submit annual
reports on program performance for the previous fiscal year to
Congress and the President beginning with fiscal year 2000. In
addition, the Results Act established requirements for pilot projects
so that participating agencies could gain experience in using key
provisions of the Results Act and provide lessons for other agencies
as well. Over 70 federal organizations, including GSA, HUD, and OPM,
participated in the pilot projects for performance planning and
reporting.
Between fiscal years 1993 and 1996, when the federal civilian
workforce was cut by about 12 percent, the workforces of certain
agencies were reduced by larger percentages. These included cuts of
14 percent at HUD, 13 percent at DOI, 22 percent at GSA, 13 percent
at NASA, and 42 percent at OPM.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3
To determine which components within HUD, DOI, GSA, NASA, and OPM
were downsized and to what extent, we examined agency FTE data for
fiscal years 1993 through 1996. These data were organized by
component.
To address our remaining objectives, we selected one component from
each agency, primarily on the basis of the percentage it downsized;
however, we also considered such factors as public interest, the
effects of downsizing on safety, and privatization of agency
functions as selection criteria. We selected HUD's Office of Housing
and GSA's PBS because, on a percentage basis, they accounted for the
largest portion of their parent agencies' staffing reductions. We
selected DOI's BOR because it was one of the most heavily downsized
of DOI's components, and within BOR, we focused on the Denver
Reclamation Service Center because of its central role in BOR
operations. Within NASA, the Human Space Flight Program experienced
the greatest percentage of downsizing, and from the program's
centers, we focused on KSC because of its high profile as the space
shuttle launch and recovery site and because of public concerns that
had been expressed about shuttle safety. We selected OPM's
Investigations Service because many of its functions had been
privatized.
To determine what actions were taken to maintain performance in the
selected components as a result of downsizing, the results of these
actions on performance, the effects of downsizing on customer
satisfaction, and lessons learned, we interviewed officials from the
parent agencies, components, unions, and employee associations. We
also interviewed a small number of randomly selected BOR and KSC
employees who were not represented by unions to obtain their views on
agency performance during downsizing. We reviewed streamlining,
performance, and customer service plans; where available, we examined
performance and customer satisfaction measurement data.
We did not evaluate the performance or customer satisfaction measures
used by the components or verify their performance measurement or
customer satisfaction scores. Because of limited customer
satisfaction data at the Office of Housing, BOR, and the
Investigations Service, we interviewed a small number of randomly
selected customers to determine their satisfaction with performance
during downsizing. The lessons learned by components reflect the
judgment of component officials. We did not independently assess how
well these lessons were followed during components' actual downsizing
experiences. The results of our work are limited to the components
reviewed and cannot be projected to the entire agency or
governmentwide.
Our work was performed at the headquarters of the parent agencies and
components in Washington, D.C.; at the KSC in Florida; and at BOR's
Reclamation Service Center in Denver, CO. We also interviewed BOR
employees, KSC employees, HUD customers, BOR customers, and OPM
customers in various locations throughout the United States. We
performed our work between October 1996 and November 1997 in
accordance with generally accepted government auditing standards.
We asked HUD, DOI, GSA, NASA, and OPM to provide comments on a draft
of this report. The comments provided are discussed at the end of
this letter.
EXTENT OF DOWNSIZING VARIED
AMONG COMPONENTS AND IN ITS
EFFECT ON TOTAL AGENCY
REDUCTIONS
------------------------------------------------------------ Letter :4
Nearly all organizational components in each agency were affected,
some more than others. The downsizing of components at the five
parent agencies we reviewed ranged from around 2 percent to 100
percent. In addition, the effect of each component's downsizing on
the parent agency's total reductions varied. For example, HUD's
Office of Housing's FTE reductions between fiscal years 1993 and 1996
were 52 percent of HUD's total reductions, while BOR's FTE reductions
were 15 percent of DOI's total reductions for the period. The extent
of agency downsizing by selected organizational component is shown in
table 1.
Table 1
Downsizing Between Fiscal Years 1993 and
1996 at Five Selected Agencies, by
Organizational Components and Percentage
of Total Agency FTE Reductions
FTE
reductions Percentage
between FYs of total
1993 and agency
Components 1996 reductions
Agency ------------------------------ ------------ ------------
HUD Office of Housing 977 51.9 %
Office of Administration 187 9.9
Community Planning and 172 9.0
Development
Public and Indian Housing 171 9.0
Field Directorate & 157 8.3
Operational Support
Other 230 12.1
DOI Bureau of Indian Affairs 2,394 23.5
Bureau of Mines 2,016 19.8
Bureau of Reclamation 1,518 14.9
Geological Survey 1,445 14.2
Bureau of Land Management 1,162 11.4
Other 1,641 16.1
GSA Public Buildings Service 2,114 46.6
Federal Supply Service 1,026 22.6
Federal Telecommunications 903 19.9
Service
Other 492 10.8
NASA Human Space Flight 1,909 48.2
Center Management and 807 20.4
Operations
Science, Aeronautics, 347 8.6
Technology
Mission Support 348 8.8
Other 553 14.0
OPM Investigations Service 898 36.1
Human Resources Development 520 20.9
Administrative Services 518 20.8
Employment Services 469 18.8
Personnel Systems and 380 15.3
Oversight
Other\a +296 +11.9
----------------------------------------------------------------------
\a Includes three components that lost FTEs, and three components
that gained FTEs, resulting in a combined FTE increase.
Source: GAO calculations based on agency-provided data.
COMPONENTS TOOK THREE
CATEGORIES OF ACTIONS TO
MAINTAIN PERFORMANCE
------------------------------------------------------------ Letter :5
Although officials told us it was difficult to isolate actions that
agencies and their components took to maintain performance
independently of downsizing from those taken because of downsizing,
the actions they said were taken to maintain performance amid
downsizing fell into three categories: refocusing their missions,
reengineering their work processes, and taking steps to build and
maintain employee skills. Detailed information on each component is
provided in appendixes I through V.
MOST COMPONENTS REFOCUSED
THEIR MISSIONS
---------------------------------------------------------- Letter :5.1
The National Performance Review, budget reductions, and workforce
reductions generally have led federal agencies to rethink how they
operate and work to reinvent themselves to become more efficient
organizations. According to component officials, most of the five
components, under the guidance of their parent agencies, refocused
their missions primarily to increase their efficiency. For example,
BOR changed its emphasis from water project construction to water
resources management because of the increased demand on limited water
resources and cutbacks in federal spending. NASA's Human Space
Flight program shifted its focus and scarce resources from
operations--which it believed could be conducted more efficiently by
private vendors--to its primary mission, research and development.
OPM created US Investigations Services (USIS), Inc., to do the
background investigations work OPM's Investigations Service
previously provided to other agencies.
COMPONENTS REENGINEERED
THEIR WORK PROCESSES
---------------------------------------------------------- Letter :5.2
In addition to refocusing missions, components reengineered their
work processes to improve effectiveness and/or efficiency. Changes
to work processes included consolidating functions into fewer
locations, aligning operations more closely with private sector
business practices, modernizing data processing systems, placing
increased decisionmaking authority in field offices, and increasing
reliance on contractors. HUD's Office of Housing, for example,
consolidated single family housing activities from 17 field offices
into 1 homeownership center, which officials said helped reduce
processing times. The Office plans further consolidations by the
year 2000. KSC changed from its traditional contractor oversight
role to one of "insight." Under oversight, KSC directly oversaw
contractors on a continual basis, but under insight, KSC will
directly oversee contractor processes on a periodic basis. Another
component, OPM's Investigations Service, privatized its
investigations operations through the establishment of a private
corporation owned by former Investigations Services employees under
an Employee Stock Ownership Plan. An Investigations Service official
said that USIS completed about 20 percent more investigations in
fiscal year 1997 than the Investigations Service did in fiscal year
1996.
COMPONENTS TOOK STEPS TO
BUILD AND MAINTAIN EMPLOYEE
SKILLS
---------------------------------------------------------- Letter :5.3
Along with reengineering their work processes, components generally
took steps to help ensure that they had the skilled workforces needed
to maintain their performance in a downsized environment. These
steps included retraining employees for additional responsibilities
and consolidating expertise in fewer locations. For example,
according to a PBS official, PBS lacked a workforce suited to its
mission; however, it was training its staff to develop a workforce
with the necessary skills. BOR officials said that although their
workforce had retained the appropriate skills and experience,
employees were being retrained and rotated among functions to develop
future supervisors and managers.
Nevertheless, some officials were concerned about the sufficiency of
current or future workforces for some components. In March 1997, the
HUD Inspector General (IG) reported that the Office of Housing did
not have the staffing levels and skill mixes it needed. The IG also
reported staffing shortages in some areas, barriers to effective
staff redeployment, and mismatches between skills and needs. The
report stated that staff reductions would be compounded as
anticipated budget restrictions led to further reductions by the end
of fiscal year 2000. The report also said staffing needs continued
to be most critical in the multifamily insured portfolio monitoring
area and, to a lesser degree, in the multifamily note servicing area.
The IG said this prevented the component from placing adequate
resources on multifamily loss mitigation functions and properly
managing troubled multifamily assets. In October 1997, HUD began
implementing its 2020 Management Reform Plan, which included a
specific initiative to refocus HUD's mission and retrain its
workforce to perform a wider variety of interdisciplinary tasks.
Office of Housing officials reported to us that one expected effect
of the HUD 2020 Management Reforms will be that Housing will be able
to focus a highly trained staff with adequate automated systems on
the multifamily portfolio. Also, because of concern about the safety
of the space shuttle as KSC downsized and a new contract for shuttle
operations was implemented, NASA's Aerospace Safety Advisory Panel
reviewed issues associated with program safety and management. It
found that, overall, efforts to streamline the space shuttle program
had not created unacceptable risks, but it was concerned with the
long-term loss of critical skills and experience. The panel said
these personnel issues were challenging and had the potential to
adversely affect risk in the future.
OFFICIALS AND EMPLOYEES OF THE
FIVE COMPONENTS GENERALLY
BELIEVED PERFORMANCE WAS
MAINTAINED AND CUSTOMERS
REMAINED SATISFIED
------------------------------------------------------------ Letter :6
Component officials, employee representatives, and employees we spoke
with believed that efforts to maintain performance had generally been
successful. However, some expressed concern about whether
performance could be maintained with additional downsizing. They
also largely believed that their customers remained satisfied, a view
generally supported by the limited customer survey data available;
however, customers we spoke with did not always agree with that
assessment.
ACCORDING TO COMPONENT
OFFICIALS AND EMPLOYEES,
ACTIONS TAKEN TO MAINTAIN
PERFORMANCE WERE GENERALLY
SUCCESSFUL
---------------------------------------------------------- Letter :6.1
Officials, employee representatives, and employees we spoke with at
all five components said that they generally believed performance had
been maintained; however, some officials expressed concern about
whether performance could be maintained with additional downsizing.
Office of Housing officials, for example, believed downsizing had not
greatly affected the Office's performance. Further, they reported to
us that they anticipate the component's performance would not only be
maintained but would improve after the additional downsizing called
for by HUD's management reform plan is completed in the year 2000.
Office of Housing union representatives had mixed opinions, with one
agreeing with the Housing officials that there were few performance
problems to date and another believing that performance had been
negatively affected. KSC officials said they believed KSC was still
able to perform its mission. However, they also said they were
concerned about retaining the human resources needed to react to
problems, meet unplanned requirements, and sustain work as the
workforce continued to decline. Most KSC employees we spoke with
supported their management's view. They said mission performance had
been unaffected by downsizing but that it could be affected by future
downsizing.
We found limited performance measurement baseline or trend data to
validate the belief of component officials and employees that
performance had been maintained. However, the data that were
available showed that the components generally met performance goals
they set for themselves. For example, at the time of our review, PBS
had been developing performance measures under a Government
Performance and Results Act pilot project, and while there were
little trend data, the data that existed showed that PBS met or
exceeded more than half of the goals it set for itself during
downsizing. At KSC, available performance measurement data indicated
that KSC had maintained performance during downsizing. The data
showed that KSC had maintained its shuttle launch schedule at lower
cost and that the number of in-flight problems caused by ground
processing had declined. BOR officials were unable to provide any
BOR-wide performance measurement data to use in corroborating
officials' views that performance had been maintained. The Results
Act requires that agencies collect performance measurement data for
managing their programs, and component officials told us they are
currently developing these data.
CUSTOMER SATISFACTION DURING
CHANGE HAS BEEN MIXED
---------------------------------------------------------- Letter :6.2
Officials, employee representatives, and employees we spoke with at
all five components largely believed that their customers remained
satisfied even as the organizations took action to maintain their
performance during downsizing. This view was generally supported by
the limited customer survey data available. However, customers of
the Office of Housing and BOR that we spoke with did not always
agree.
PBS and KSC officials cited customer survey results that supported
their positive views of customer satisfaction during downsizing. PBS
reported surveys of its buildings' tenants showed satisfaction
increasing from 74 percent to 77 percent between fiscal years 1993
and 1996. KSC reported that its payload customers' satisfaction
remained at about 4.2 on a scale of 1 to 5 with 5 being excellent
service, despite downsizing, during fiscal years 1993 through 1996.
Because BOR, the Office of Housing, and the Investigations Service
had little customer satisfaction data to support their opinions, we
interviewed a small number of their customers. We interviewed seven
randomly selected BOR customers consisting of six water districts
located in rural areas in the western United States and one state
agency. One customer was satisfied with BOR's performance, five were
not satisfied, and one reported declining satisfaction. The most
common reason cited for dissatisfaction was the view that BOR more
often favored the water demands of politically powerful groups at the
expense of rural farmers. However, none of the customers we talked
to blamed their dissatisfaction on downsizing. Of the five Office of
Housing customers we interviewed, three either were not satisfied or
had mixed feelings with Housing's performance. All three said
downsizing caused major losses of staff with adequate technical
expertise. The two Investigations Service customers we spoke with
said there had been no change in their satisfaction level since the
Service had privatized.
LESSONS LEARNED BY OFFICIALS
INCLUDE MAINTAINING OPEN
COMMUNICATION AND INVOLVING
EMPLOYEES IN ADVANCE PLANNING
------------------------------------------------------------ Letter :7
Although officials from the components identified a number of lessons
that they said helped them maintain performance during downsizing,
most cited two overarching lessons. They believed that open lines of
communication between management and employees were a must and that
management must solicit employee input into the planning process.
NASA officials told us that unions, employee associations, and
employees should be involved with developing the agency downsizing
implementation strategy. In addition, officials said that (1) people
must be treated with compassion and must know they are valued by the
agency; (2) there must be no favoritism even though management may be
reluctant to let some people leave; (3) buyouts need to be planned to
prevent a sudden loss of expertise; and (4) critical skills should be
backed up by more than one person so that, if people leave, the
agency still has employees with the required skills.
AGENCY COMMENTS
------------------------------------------------------------ Letter :8
We requested comments on a draft of this report from the heads of
each of the five agencies or their designees from which we had
obtained information. We received written comments from NASA in a
letter dated January 22, 1998, from the Acting Deputy Administrator.
The Acting Deputy Administrator had no comments on any of the
substantive content of the draft report. However, he did suggest one
technical change, which we have made in the report. See appendix VI
for a reprint of NASA's letter. We requested comments from the
Administrator, GSA, but despite several follow-up inquiries, no
comments were received.
On January 28 and 29, 1998, we spoke with the GAO Liaisons at OPM,
DOI, and HUD, respectively. The OPM GAO Liaison said that OPM had no
substantive comments on the draft report. He suggested several
technical comments to improve the accuracy or context in the draft
report; we made these changes in this report where appropriate. The
DOI GAO Liaison had no comments on the draft report. The HUD GAO
Liaison told us that except for one statement attributed to Office of
Housing officials that the Department cannot support, the agency had
no comments on the draft report. Consequently, we deleted the
sentence from this report.
---------------------------------------------------------- Letter :8.1
As arranged with your office, unless you announce the contents of
this report earlier, we plan no further distribution until 30 days
after its issue date. At that time, we will send copies to the
Ranking Minority Member of the Subcommittee on Civil Service, House
Committee on Government Reform and Oversight, and to the Chairman and
Ranking Minority Member of the Senate Committee on Governmental
Affairs. We will also send copies to the Secretaries of HUD and DOI,
the Administrators of GSA and NASA, and the Director of OPM. We will
make copies available to others on request.
The major contributors to this report are listed in appendix VII. If
you have any questions about the report, please call me on (202)
512-8676.
Sincerely yours,
Michael Brostek
Associate Director, Federal Management
and Workforce Issues
OFFICE OF HOUSING, DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
=========================================================== Appendix I
EXTENT OF DOWNSIZING VARIED BY
COMPONENT
--------------------------------------------------------- Appendix I:1
The Department of Housing and Urban Development (HUD) reduced its
workforce by 1,894 FTEs between fiscal years 1993 and 1996. As shown
in Table I.1, the Office of Housing accounted for the largest
percentage of HUD's downsizing.
Table I.1
FTE Reductions at HUD Components Between
Fiscal Years 1993 and 1996
FTE reduction Percent of FY Percent of
between FYs 1993 FTEs total HUD FTE
Component 1993 and 1996 reduced reduction
------------------------- ------------- ------------- -------------
Office of Housing 977 15.9% 51.6%
Office of Administration 187 15.9 9.9
Community Planning 172 16.9 9.1
and Development
Public and Indian 171 11.2 9.0
Housing
Field Directorate & 157 31.8 8.3
Operational Support
Other components 230 7.8 12.1
======================================================================
Total 1,894 14.2% 100%
----------------------------------------------------------------------
Source: GAO calculations based on agency-provided data.
HUD AND OFFICE OF HOUSING TOOK
THREE ACTIONS TO MAINTAIN
PERFORMANCE DURING DOWNSIZING
--------------------------------------------------------- Appendix I:2
Actions taken that helped HUD's Office of Housing maintain
performance during downsizing can be categorized into three general
areas: (1) HUD refocused its mission, (2) Office of Housing
reengineered its work processes, and (3) Office of Housing took steps
to build and maintain employee skills.
HUD, according to its streamlining plan, had operated for years
without a clear mission, resulting in an inability to mobilize its
resources to meet the needs of America's communities. In a 1996
statement highlighting the agency's reinvention efforts, the
Secretary of HUD stated that HUD's mission is to help people create
communities of opportunities and that the programs and resources of
HUD help Americans create cohesive, economically healthy communities.
HUD's Office of Housing has responsibility for (1) underwriting
single family, multifamily, property improvement, and manufactured
home loans and (2) administering special purpose programs designed
specifically for the elderly, the handicapped, and the chronically
mentally ill. In addition, the Office of Housing administers
assisted-housing programs for low-income families, administers grants
to fund resident ownership of multifamily housing properties
development, and protects consumers against fraudulent practices of
land developers and promoters. In support of its mission, HUD
officials said that Office of Housing took or planned a number of
actions to help maintain performance during this period of
downsizing. Routine, location neutral activities were consolidated
into fewer offices. In August 1994, the Office of Housing
consolidated single family housing activities from 17 field offices
into the Denver Homeownership Center and reported reduced processing
times as a result. By 2000, Housing plans to consolidate remaining
single family loan processing, quality assurance, marketing and
outreach, and asset management activities from its 81 field offices
into 4 homeownership centers (including Denver), which officials said
should enable them to reduce single family personnel by 50 percent.
The multifamily housing program consolidated voucher processing in
Kansas City in August 1995, property disposition in Atlanta and Fort
Worth in October 1996, and risk-sharing lender activities in
Greensboro, NC, in January 1997 to reduce processing time, improve
customer service, and use staff resources more efficiently.
Multifamily housing officials planned to continue consolidating its
51 hub locations until activities are located in 18 hub locations and
33 additional smaller sites by fiscal year 1998. According to these
officials, this will create economies of scale and maximize use of
limited resources while still maintaining a local presence. They
explained these consolidations were not done specifically because of
downsizing, but they were part of an ongoing HUD reinvention effort,
which permitted HUD to adjust to a fluctuating workload and maintain
performance during downsizing. In addition to the consolidations,
the Office of Housing began implementing paperless processing of
mortgage record changes, default reporting, and other record changes.
Office of Housing officials told us their employees generally had the
appropriate skills and experience to maintain performance during this
downsizing period. However, in certain instances, the Office of
Housing used contractors to supplement shrinking staff and provide
technical expertise, such as physical inspections and property
disposition rehabilitation reviews. The various consolidations
reduced the need to have expertise in all functions in all offices.
To augment employee skills, the multifamily housing program
implemented work sharing using a "matrix" scheme of 5 teams
consisting of 18 to 20 offices each. Under this scheme, offices
within a matrix shared work so that, if an office needed help with a
function, it could get it from another office in the team. Union
officials we spoke with also believed that Office of Housing
employees had the skills and experience needed to maintain
performance in most but not all locations; however, they warned that
the skills would not be available as downsizing continued.
Although Office of Housing and union officials believed Housing had
the skills and experience necessary to maintain performance, a March
1997 IG's audit was less optimistic. It found staffing shortages in
some areas, barriers to effective staff redeployment, and mismatches
between skills and needs. The IG report stated that staff reductions
would be compounded as anticipated budget restrictions led to further
reductions by the end of fiscal year 2000. The report said staffing
needs continued to be most critical in the multifamily insured
portfolio monitoring area and, to a lesser degree, in the multifamily
note servicing area. Office of Housing officials reported to us that
the realignment of functions and responsibilities as outlined in
HUD's 2020 Management Reform Plan, initiated in October 1997, will
enable Housing to focus a highly trained staff with adequate
automated systems on the multifamily portfolio.
ACTIONS TAKEN DURING DOWNSIZING
WERE GENERALLY SUCCESSFUL IN
MAINTAINING PERFORMANCE,
ACCORDING TO OFFICIALS
--------------------------------------------------------- Appendix I:3
The Office of Housing reported that the creation of new methods to
deal with its workload, such as the single family homeownership
centers and work sharing, had allowed it to maintain, and in some
cases, improve performance. Union officials differed on whether
downsizing had affected performance. Two union officials thought
performance had been negatively affected, while one union official
said it had not been because employees took pride in their work and
were willing to do what was necessary to get it done. Office of
Housing performance measurement goals changed from year to year so
there were few trend data, but the available data showed that Housing
generally met or exceeded the goals it set for itself during this
downsizing period. Trend data for one goal, to close sales on 95
percent of each year's single family inventory, were available. They
showed closed sales were 95 percent of inventory in fiscal year 1994,
109 percent in fiscal year 1995, and 194 percent in fiscal year 1996.
Housing officials told us that HUD was developing performance
measures in compliance with the Government Performance and Results
Act.
HUD's 2020 Management Reform Plan seeks to (1) consolidate most of
its recordkeeping and many program activities in selected cities
around the country and (2) focus the agency on assessing the quality
of the government housing stock, and curtailing waste, fraud, and
abuse. As part of this plan, HUD would continue its downsizing
efforts. In a November 25, 1997, audit-related memorandum providing
for an interim review of HUD's reform plan, HUD's IG criticized the
plan for setting a downsizing target without first analyzing HUD's
workload and mission. The IG reported that HUD's staff reductions
are resulting in a serious loss of technical expertise leading to
concerns about the relative capacity of HUD's remaining staff to
carry out their mission and responsibilities once reforms are in
place. HUD officials had not yet responded to the audit-related
memorandum at the time we concluded our work.
CUSTOMER SATISFACTION DURING
DOWNSIZING WAS MIXED
--------------------------------------------------------- Appendix I:4
Office of Housing officials, citing feedback from lending
institutions and a decreased number of complaints, believed customers
were satisfied with their performance. A union official believed
that customer satisfaction on the part of the private real estate
industry had increased because private companies were asked to do
more for themselves, which they applaud, but satisfaction on the part
of the public had decreased because downsizing had reduced the
opportunities for the public to interact with the Office of Housing.
Another union official believed that customers had generally remained
satisfied in spite of downsizing because the extra time employees
were devoting to their jobs enabled the Office of Housing to continue
providing levels of service after downsizing that were comparable to
those provided before downsizing.
The Office of Housing provided results of two customer satisfaction
surveys done during downsizing. A Denver Single Family Processing
Center customer survey in 1995 with an 8 percent response rate
indicated that the respondents were satisfied. A 1996 survey found
moderate satisfaction among lenders and low satisfaction among
realtors for the Section 203(k) Rehabilitation Mortgage Insurance
Program, and it found high satisfaction among lenders and moderate
satisfaction among realtors for the Section 203(b) Mortgage Insurance
Program. However, in the absence of any similar surveys prior to
downsizing, we could not tell if satisfaction among these customers
had increased or decreased during downsizing. Further, the low
response rates for the surveys undermine their value as accurate
measures of customer satisfaction.
In the absence of agency data measuring changes in customer
satisfaction during downsizing, we interviewed a small number of
Office of Housing customers. The Office of Housing provided customer
lists containing 80 customers composed primarily of nonprofit
organizations representing industry groups and homeowners. From the
80 customers, we randomly selected 10. We asked them if their
satisfaction with the Office of Housing's performance had changed
since 1992 and if their satisfaction had been affected by downsizing.
Three of the organizations denied being customers, one could not be
contacted, and one did not respond to our questions. Of the
remaining five, two were satisfied with the Office of Housing's
performance, but three were either dissatisfied or had mixed
feelings. The dissatisfaction all three expressed was due to major
losses, at headquarters or field offices, of staff with adequate
technical expertise, and all three blamed downsizing. The
organizations said these losses made it difficult for the
organizations and their constituents to obtain information they
needed. One organization described the situation at the Office of
Housing as a "brain drain."
LESSONS LEARNED INCLUDE
MAINTAINING OPEN COMMUNICATION
AND INVOLVING EMPLOYEES IN
ADVANCE PLANNING
--------------------------------------------------------- Appendix I:5
Office of Housing officials identified a number of lessons learned
they believed helped maintain performance during downsizing. They
said agencies should involve employees who will be affected by
downsizing in the planning and development of new organizational
procedures. They said managers need to "be straight" with employees
about what is happening because it makes acceptance easier; tell
employees the situation as soon as possible so they can make
decisions about their futures; not change direction after the
inevitable is accepted because that causes downtime while employees
become reoriented; and make every effort to convey to the employees
how important they are to the agency's success and to ensure that the
employees feel they are part of a team. Officials also said it is
important to develop a cooperative relationship with employee unions.
BUREAU OF RECLAMATION, DEPARTMENT
OF THE INTERIOR
========================================================== Appendix II
EXTENT OF DOWNSIZING VARIED BY
COMPONENT
-------------------------------------------------------- Appendix II:1
The Department of the Interior (DOI) reduced its workforce by almost
10,200 FTEs between fiscal years 1993 and 1996. Table II.1 shows
components with the largest downsizing percentages.
Table II.1
FTE Reductions at DOI Components Between
Fiscal Years 1993 and 1996
FTE reduction Percent of FY Percent of
between FYs 1993 FTEs total DOI FTE
Component 1993 and 1996 reduced reduction
------------------------- ------------- ------------- -------------
Indian Affairs 2,394 18.3% 23.5%
Mines\a 2,016 87.5 19.8
Reclamation 1,518 20.1 14.9
Geological Survey 1,445 12.6 14.2
Land Management 1,162 10.5 11.4
Other programs 1,641 5.2 16.1
======================================================================
Total 10,176 13.2% 100%
----------------------------------------------------------------------
\a The Bureau of Mines closed in February 1995. Some FTEs remained
to shut down facilities.
Source: GAO calculations based on agency-provided data.
BOR TOOK THREE ACTIONS TO
MAINTAIN PERFORMANCE DURING
DOWNSIZING
-------------------------------------------------------- Appendix II:2
Actions taken that helped Bureau of Reclamation (BOR) maintain
performance amid downsizing can be categorized into three general
areas: BOR (1) refocused its mission, (2) reengineered its work
processes, and (3) took steps to build and maintain employee skills.
According to the Secretary of the Interior, his agency's mission is
to protect and provide access to the nation's natural and cultural
heritage and to honor its trust responsibilities to tribes. DOI's
internal operating manual states that BOR's mission is to manage,
develop, and protect water and related resources in an
environmentally and economically sound manner in the interest of the
American public. In fulfilling its mission, BOR designs and
constructs water resources projects; develops and enhances
recreational uses at BOR projects; conducts research and encourages
technology transfer to improve resource management development and
protection; assists other federal and state agencies in protecting
and restoring surface water and ground water resources from hazardous
waste contamination; and provides engineering and technical support
to federal and state agencies, Native American tribes, and other
nations.
Over the past decade, BOR shifted its mission emphasis from water
project construction to water resources management, including water
conservation, environmental restoration, and solutions to the water
problems of Native Americans and urban water suppliers. According to
BOR officials, this reemphasis occurred at the same time as
downsizing, but not because of downsizing.
In October 1994, BOR reengineered its Denver facilities into the
Reclamation Service Center to provide administrative, research,
scientific, and technical services to BOR, other DOI organizational
components, water districts, and others. These services are provided
through four major units, specifically, the Administrative Service
Center, the Human Resources Office, the Management Services Office,
and the Technical Service Center. As part of the restructuring, the
Technical Service Center became self-supporting--dependent on client
payments for its financing. In addition to establishing the
Reclamation Service Center, BOR's 35 project offices were
consolidated into 26 area offices.
BOR officials believed that BOR employees had the appropriate skills
and experience to maintain performance amid downsizing, although they
also believed additional younger people needed to be hired. To
develop a cadre of people to be future supervisors and managers, the
officials said BOR was rotating people among functions and retraining
them. A union official also believed that BOR had the appropriate
skills and experience to maintain acceptable performance with the
workforce currently on board. Employees we spoke with generally
agreed that BOR had the necessary skills, but they were concerned
about the future. One employee said that skills were thinly spread,
and although the work would get done, its quality might suffer.
Another employee said there were skill gaps, and unless BOR was
careful, it would not have the skills needed. Some employees also
expressed concern that employees were leaving who would have been
BOR's future leaders and that few young people were being hired.
ACTIONS TAKEN DURING DOWNSIZING
WERE GENERALLY SUCCESSFUL IN
MAINTAINING PERFORMANCE,
ACCORDING TO OFFICIALS
-------------------------------------------------------- Appendix II:3
BOR headquarters officials believed no performance problems had
emerged because of downsizing; however, Reclamation Service Center
officials were less positive. While Service Center officials
generally agreed performance had not suffered greatly, they also
noted that some problems had emerged, particularly in the Service
Center's ability to provide computer support to other BOR units.
Service Center officials believed that people were working harder and
were tired because of fewer people to carry the same or even an
increased workload, and performance may ultimately suffer because
stress leads to mistakes. Service Center officials said there had
already been incidents such as threats of violence and bizarre
behavior brought on by stress. A union official concurred that some
performance problems had emerged, particularly the ability to provide
all the computer support needed. Employees we spoke with, for the
most part, agreed with headquarters officials that downsizing had not
yet led to performance problems, although some said downsizing had
caused a loss of expertise.
We found no BOR-wide performance measurement data to use in
corroborating officials' views that performance had been maintained.
The Power Programs' Power Management Laboratory had identified a
number of fiscal year 1994 measures, such as FTEs per operating unit
and per megawatt, but there were no data for other fiscal years. A
Power Program official said data for other fiscal years were being
gathered but would not be available for several months, and
consequently there were no data showing performance trends during
downsizing. The 1994 data showed that BOR was performing within an
acceptable range of the power industry's standards. At the
Reclamation Service Center, an official suggested one performance
measure would be whether its Technical Service Center unit broke even
each year. The official pointed out that, although the Technical
Service Center suffered a deficit of about $180,000 in its first year
of operation as a self-supporting activity in fiscal year 1995, it
earned a surplus of about $270,000 in its second year even after
recovering the previous year's deficit. BOR officials said the
agency was developing performance measures in compliance with the
Government Performance and Results Act.
CUSTOMER SATISFACTION WAS
MIXED, BUT DISSATISFACTION WAS
NOT LINKED TO DOWNSIZING
-------------------------------------------------------- Appendix II:4
BOR officials told us that, based on informal feedback, their
customers remained satisfied with their work. One measure of
satisfaction cited was that Technical Service Center customers
continued to seek and pay for services. Furthermore, an official
said, downsizing had benefited customer satisfaction because it
forced BOR employees to become more customer-oriented. Employees we
spoke with were not unanimous, but most employees felt that customers
remained satisfied. One employee echoed management's statement that
downsizing had benefited customer satisfaction because BOR employees
had become more customer-oriented and added that having fewer people
on projects resulted in more direct communication with customers
about routine matters. On the other hand, one employee said BOR had
been unable to adequately service two federal agencies and a water
district, and another employee said it was hard to provide staff for
all of the unit's projects.
A BOR official said there were no agencywide customer satisfaction
data; however, BOR was developing an agencywide customer satisfaction
survey that it hoped to administer at 3-year intervals. BOR's Power
Program surveyed 942 customers in 1995 and found that 84 percent of
the respondents thought BOR was doing a good to excellent job. There
were no predownsizing data for comparison, but the Power Program
intended to continue seeking customer feedback in the future.
In the absence of BOR-wide customer satisfaction data, we interviewed
a small number of customers. BOR provided customer lists containing
627 customers. Customers included other federal agencies,
international customers, and state agencies, but most of them were
water districts located in rural areas in the western United States.
From the 627 customers, we randomly selected 10 to survey of which 9
were rural water districts and 1 was a state agency. We asked them
if their satisfaction with BOR's performance had changed since 1992
and if their satisfaction had been affected by downsizing. Two
organizations denied being BOR customers, and one did not respond.
Of the remaining seven, one was satisfied with BOR's performance,
five were not satisfied, and one reported declining satisfaction.
Reasons cited for dissatisfaction included longer turnaround time for
decisions, diminished technical support, increased reporting
requirements, and higher water fees. However, the most common reason
cited for dissatisfaction was customers' belief that BOR is prone to
favor the water demands of politically powerful groups, such as large
population centers and environmental groups, at the expense of rural
farmers. Four of the dissatisfied customers did not think that
downsizing caused their dissatisfaction, and two were not sure.
LESSONS LEARNED INCLUDE
MAINTAINING OPEN COMMUNICATION
AND INVOLVING EMPLOYEES IN
ADVANCE PLANNING
-------------------------------------------------------- Appendix II:5
BOR officials identified a number of lessons learned they believed
helped maintain performance amid downsizing. First, officials said
that agencies should include employees in planning and implementing
the downsizing. The officials believed it was impossible to
communicate with employees too much, and said to be open and honest
with them. If there must be a reduction-in-force, officials said it
should be conducted without favoritism even though there are some
employees managers may not want to lose. By adhering to this
principle, they said only two appeals resulted from BOR's
reduction-in-force, both of which they said were quickly resolved.
Officials also stressed the need to plan for buyouts. Although BOR's
first buyout round was open to everyone, by phasing the time when
employees left, officials said BOR prevented a sudden loss of
expertise. In addition, the officials cited the need to provide
training for employees in coping with downsizing, and to also provide
them time to talk out troubling issues with their peers. One
official said, in addition to rewarding employees, agencies should
also hold them accountable for their actions. The official said BOR
cannot afford to tolerate poor performers since it has downsized and
relies on customer reimbursement for funding.
PUBLIC BUILDINGS SERVICE, GENERAL
SERVICES ADMINISTRATION
========================================================= Appendix III
EXTENT OF DOWNSIZING VARIED BY
ORGANIZATIONAL COMPONENT
------------------------------------------------------- Appendix III:1
The General Services Administration (GSA) reduced its workforce by
4,535 FTEs between fiscal years 1993 and 1996. As shown in table
III.1, the Public Buildings Service (PBS) accounted for the largest
percentage of GSA's downsizing.
Table III.1
FTE Reductions at GSA Organizational
Components Between Fiscal Years 1993 and
1996
FTE
reduction Percent of
between FYs Percent of total GSA
1993 and FY 1993 FTEs FTE
Component 1996 reduced reduction
---------------------------- ------------ ------------ ------------
Public Buildings Service 2,114 21.0% 46.6%
Federal Supply Service 1,026 21.8 22.6
Federal Telecommunications 903 36.9 19.9
Service
Other components 492 16.3 10.9
======================================================================
Total 4,535 22.4% 100%
----------------------------------------------------------------------
Source: GAO calculations based on agency-provided data.
GSA AND PBS TOOK ACTIONS TO
MAINTAIN PERFORMANCE DURING
DOWNSIZING
------------------------------------------------------- Appendix III:2
Actions taken that helped PBS maintain performance during downsizing
can be categorized into two general areas: (1) reengineering work
processes and (2) PBS taking steps to build and maintain employee
skills.
According to its fiscal year 1998 budget overview, GSA's mission is
to improve the effectiveness of the federal government by ensuring
quality work environments for its employees. To that end, GSA began
moving from being a mandatory source of services to being a provider
of choice, which must compete with other providers in terms of cost,
quality, and timeliness. GSA reported it is increasingly competing
effectively for customer purchases of real property services. In
support of GSA's mission, PBS is responsible for the design,
construction, management, operation, alteration, and remodeling of
space, owned and leased, in which accommodations for government
activities are provided, and where authorized, for the acquisition,
use, custody, and accountability of GSA real property and related
personal property. In addition, PBS has responsibility for providing
leadership in the development and maintenance of needed property
management information systems for the government.
In January 1995, PBS reengineered its work processes to align itself
more closely with private sector business practices, allow regional
offices to operate more independently, and fill gaps left by
downsizing. PBS decentralized property development operations to
field offices to allow for increased contact with customers. In July
1996, GSA implemented the "Can't Beat GSA Leasing" program to reduce
delivery times and enhance cost-effectiveness by cutting procedures
and offering greater competition and choices to federal agencies. In
November 1996, it initiated the "Can't Beat GSA Space Alterations"
program for the procurement of construction services that aim to be
better, cheaper, and faster for customers. According to an official,
PBS also solicited several national real estate services to identify
private sector service providers with which PBS could contract to
deliver leasing services to federal agencies. The official said
these contracts will allow PBS' smaller staff to continue to satisfy
customers by outsourcing routine transactional details. Further, the
official said PBS planned, in fiscal year 1998, to begin
transitioning its automated data processing system from multiple
applications operating on an antiquated mainframe computer to the use
of integrated commercial applications to provide on-line transaction
processing, permit data sharing, and support an easy to use query
facility.
A PBS official said PBS lacked the necessary skills mix suited to
today's mission; however, it was developing the necessary mix, for
example, by retraining staff in asset management and empty building
space disposal. The official further said that PBS was losing
experienced employees, forcing those remaining to assume higher-level
responsibilities, but this situation also allowed PBS to train people
to replace lost managers by providing opportunities for employees to
act in management roles.\4 The official added that PBS would have
sufficient staff with the appropriate skills and experience to
maintain performance only if its improved automated data processing
system is successfully implemented.
PBS employee representatives differed in their views about whether
PBS had the necessary employee skill mix. Officials of one union
believed that PBS did not have the appropriate skill mix and
experience to maintain performance, while an official of another
union believed the skill mix and experience were sufficient to
maintain acceptable performance. An employee association official
also believed that PBS currently had a sufficient skill and
experience mix and added that GSA had greatly increased employee
training.
--------------------
\4 During interviews with PBS officials for a separate GAO review,
PBS officials noted that the inexperience of some staff has affected
performance. For example, officials said a lack of experience was a
contributing factor to significantly overestimating rental revenues
for fiscal years 1996, 1997, and 1998 for the Federal Buildings Fund.
ACTIONS TAKEN DURING DOWNSIZING
WERE GENERALLY SUCCESSFUL IN
MAINTAINING PERFORMANCE,
ACCORDING TO OFFICIALS
------------------------------------------------------- Appendix III:3
A PBS official said it was not possible to describe the effects of
downsizing alone on PBS performance because it occurred concurrently
with changes GSA had already planned to make before downsizing was
mandated. However, the official said streamlining its operations
enabled PBS to maintain its performance, and implementation of the
new data processing system planned for fiscal year 1998 will further
enhance its ability to maintain performance. In addition, the
official said downsizing forced PBS to implement changes faster, and
in that respect, downsizing had been healthy. Employee
representatives we spoke with disagreed about the effect of
downsizing on PBS performance. Officials of one union believed it
had been affected because constant change did not allow people to
settle in and learn their jobs and because, in his opinion,
contractor employees cannot perform the work as well as federal
employees. An official of another union believed performance had not
been greatly affected because of good planning and preparation by the
agency. An employee association official said performance was
initially affected because employees were placed in jobs for which
they were not qualified, and experienced employees were replaced by
temporary workers.
The PBS official said GSA did not have good baseline performance
measurement data because it had historically done little performance
measurement; however, it is now focusing its attention on developing
performance measures to meet Results Act requirements. PBS had
developed performance measures under a Results Act pilot project, but
they had been evolving from year to year, and there were little data
showing trends. The data did show, however, that PBS met or exceeded
more than half of the pilot project goals it set for itself during
fiscal years 1994, 1995, and 1996.
CUSTOMERS REMAINED SATISFIED
DURING DOWNSIZING
------------------------------------------------------- Appendix III:4
PBS surveyed its buildings' tenants between fiscal years 1993 and
1996, and the results showed an upward trend in satisfaction ranging
from 74 percent in fiscal year 1993 to 77 percent in fiscal year
1996. However, because different buildings' tenants were surveyed in
different years, the results did not measure changes in satisfaction
of the same tenants.
Union officials we spoke with disagreed on the extent of customer
satisfaction. One union believed that the customer survey data
misrepresented customer satisfaction because of a low response rate;
however, another union believed that customer satisfaction was
improving.
LESSONS LEARNED INCLUDE THE
NEED TO TARGET BUYOUTS
------------------------------------------------------- Appendix III:5
A PBS official said GSA made a mistake in its first round of buyouts
by not targeting them. In some areas and occupations, too many
employees left, while in others, too few left, causing a mismatch
between buyout results and organization needs. GSA had to use the
staff who remained as best it could to repair the damage. The
official said it was also a mistake for GSA to offer deferred buyouts
over an 18-month period. Although deferred buyouts gave GSA more
time to adjust to a downsized workforce, according to the official,
the motivation of employees who knew they would be leaving was never
the same.
KENNEDY SPACE CENTER, NATIONAL
AERONAUTICS AND SPACE
ADMINISTRATION
========================================================== Appendix IV
EXTENT OF DOWNSIZING VARIED BY
COMPONENT
-------------------------------------------------------- Appendix IV:1
NASA reduced its workforce by nearly 4,000 FTEs between fiscal years
1993 and 1996. Table IV.1 shows the components with the largest
percentage in downsizing.
Table IV.1
FTE Reductions at NASA Components
Between Fiscal Years 1993 and 1996
FTE reduction Percent of FY Percent of
between FYs 1993 FTEs total NASA
Component 1993 and 1996 reduced FTE reduction
------------------------- ------------- ------------- -------------
Human Space Flight 1,909 24.3% 48.2%
Center Mgmt. and 807 16.7 20.4
Operations
Science, Aeronautics, 347 3.4 8.6
Technology
Mission Support 348 42.0 8.8
Other components 553 45.9 14.0
======================================================================
Total 3,964 15.9% 100%
----------------------------------------------------------------------
Source: GAO calculations based on agency-provided data.
FTE REDUCTIONS AT NASA SPACE
FLIGHT CENTERS
------------------------------------------------------ Appendix IV:1.1
As table IV.1 shows, NASA's Human Space Flight Program experienced
the largest percentage FTE reduction between fiscal years 1993 and
1996. Table IV.2 shows downsizing at Johnson, Kennedy, Marshall, and
Stennis space centers, which are part of the Human Space Flight
Program.
Table IV.2
FTE Reductions at NASA Space Flight
Centers Between Fiscal Years 1993 and
1996
FTE reduction
between FYs 1993 Percent of FY 1993
Center and 1996 FTEs reduced
------------------------------ ------------------ ------------------
Marshall Space Flight Center 668 17.6%
Kennedy Space Center (KSC) 409 15.6
Johnson Space Center 316 8.4
Stennis Space Center 11 4.9
----------------------------------------------------------------------
Source: GAO calculations based on agency-provided data.
NASA AND KSC TOOK THREE ACTIONS
TO MAINTAIN PERFORMANCE DURING
DOWNSIZING
-------------------------------------------------------- Appendix IV:2
Actions taken that helped KSC maintain performance can be categorized
into three general areas: (1) refocusing its mission (NASA), (2)
reengineering its work processes (KSC), and (3) taking steps to build
and maintain employee skills (KSC).
According to the Administrator of NASA, NASA's mission encompasses
the following: (1) explore, use, and enable the development of space
for human enterprise; (2) advance scientific knowledge and
understanding of the Earth, the solar system, and the universe; (3)
use the environment of space for research; and (4) research, develop,
verify, and transfer advanced aeronautics, space, and related
technologies. NASA has shifted the focus of its mission from
operations to research and development. It has cut back on
operations, bought commercial services from the private sector, and
focused its efforts on technology development. In carrying out its
part of NASA's refocused mission, KSC designs, constructs, operates,
and maintains space vehicle facilities and ground support equipment
for launch and recovery operations. It maintains responsibility for
prelaunch and launch operations, payload processing for the space
shuttle and expendable launch vehicle programs, landing operations
for the space shuttle orbiter, and recovery and refurbishment of the
reusable solid rocket booster.
As NASA refocused on being a high-tech research and development
agency, it turned over more of its operations to contractors and in
September 1996, it awarded a space flight operations contract to
United Space Alliance. This contract consolidated a number of
existing contracts under one prime contractor and gave the prime
contractor overall responsibility for space shuttle operations,
including orbiter vehicles, solid rocket boosters, external fuel
tank, flight crew equipment, ground support systems, and integration
of payloads. The space shuttle program remained NASA managed;
however, according to KSC officials KSC changed from its traditional
oversight role to "insight." Under oversight, KSC maintained
continual surveillance over the contractor, telling it not only what
to do but how to do it. Under insight, KSC will directly oversee
contractor processes only periodically. KSC officials said they will
maintain technical visibility through audit, surveillance, assessment
of trends, software verification, the flight readiness review
process, and independent assessment of problems.
KSC officials believed KSC had the workforce needed to carry out its
shuttle operations; however, they were concerned about the future.
Because KSC programs had lost "centuries" of operating and
engineering knowledge, the officials worried about having the
appropriate skills mix and experience to maintain performance as
downsizing continued. Employees we spoke with generally agreed that
KSC's skill mix and experience remained adequate, but some employees
believed that if downsizing continued, skills and experience would
become inadequate.
To help ensure that KSC would continue to have needed skills, its
fiscal year 1997 buyout plan was designed to limit skill loss by
limiting the number of buyouts in shuttle processing, safety and
mission assurance, and payload processing. Further, some senior
executive service positions, for example, shuttle processing and
safety and mission assurance program directors, were excluded from
buyout eligibility. In addition, KSC officials said they were
planning for the succession of managers and other senior people that
did leave. KSC instituted individual development plans for future
managers and, as part of its senior executive service candidate
program, offered programs in management development, project
management, and skills training. To prepare for work on the
international space station, KSC was cross-utilizing people currently
working on the space laboratory program, which was winding down.
ACTIONS TAKEN DURING DOWNSIZING
WERE GENERALLY SUCCESSFUL IN
MAINTAINING PERFORMANCE,
ACCORDING TO OFFICIALS
-------------------------------------------------------- Appendix IV:3
KSC officials said that KSC was still able to perform its mission.
However, they were concerned about retaining the human resources
needed to react to problems, to meet unplanned and new requirements,
and to sustain the work as the workforce continued to decrease. Most
of the employees we spoke with believed downsizing had not yet
affected KSC's performance or shuttle safety. One employee, however,
believed downsizing had begun affecting performance and said the
quality of safety inspections would decline if personnel were not
restored and the workload was not reduced. The employee believed
safety of the shuttle program had been affected and cited a wrench
left inside a solid rocket booster and water spilled on a maneuver
pod as causes for concern. Other employees said, although the work
gets done, they were concerned about the effect of further downsizing
or overload of remaining employees on performance. Performance
measurement data showed KSC maintained its shuttle launch schedule at
lower cost during downsizing. In addition, as flight costs
decreased, quality increased as measured by the decrease in the
number of in-flight problems caused by ground processing.
CUSTOMERS REMAINED SATISFIED
DURING DOWNSIZING
-------------------------------------------------------- Appendix IV:4
According to KSC surveys, customers remained satisfied with KSC's
performance during downsizing. Payload customers rated KSC's service
on a five-point scale ranging from 1 for poor service to 5 for
excellent service. Ratings during downsizing were 4.2 in 1993, 4.3
in 1994, 4.2 in 1995, and 4.2 in 1996. KSC found the apparent
leveling off of satisfaction disturbing but attributed it to several
factors: (1) during the survey's early years, KSC concentrated on
improving those issues that drew the most frequent customer comments,
but subsequently it concentrated on smaller, but important,
improvements; (2) inconsistent methods for counting survey results
may have skewed the results; and (3) as KSC's performance improved,
customers came to expect even more from it and became more critical
in their survey responses. KSC viewed this critical customer
feedback as positive because its customers recognized its commitment
to improving customer service and became increasingly forthcoming
with suggestions for improvements. Employees we spoke with also
believed that customers so far remained satisfied with KSC's
performance.
DOWNSIZING REPORTEDLY HAS NOT
AFFECTED SHUTTLE SAFETY
-------------------------------------------------------- Appendix IV:5
As KSC downsized and transitioned to the space flight operations
contract negotiated with United Space Alliance, concern grew about
the safety of the space shuttle. This led to a review by NASA's
Aerospace Safety Advisory Panel of issues associated with the safe
operation and management of the space shuttle program. The panel's
conclusion concurred with NASA officials' beliefs that shuttle safety
had not been adversely affected.
The panel found that NASA's efforts to streamline the space shuttle
program had not created unacceptable risks. However, the panel also
said there was a clear need for NASA to take steps to ensure the
availability of a skilled and experienced civil service workforce in
sufficient numbers to meet ongoing safety needs. The panel said
these personnel issues were challenging and had the potential to
adversely affect risk in the future. The panel said the space flight
operations contract appeared to be a comprehensive and workable
document espousing safety as paramount throughout. It also said
there were minimal adverse safety implications, especially in the
short term, largely because the people currently in place were
dedicated to making the new scheme work. However, the panel was
concerned with the loss of critical skills and experience among NASA
personnel over the long term. It said that NASA should not be misled
by the apparent initial success of all the transition efforts and
that a major test of the new approach would likely be faced after
there was significant turnover among incumbents at all levels.
LESSONS LEARNED INCLUDE
MAINTAINING OPEN COMMUNICATION
AND INVOLVING EMPLOYEES IN
ADVANCE PLANNING
-------------------------------------------------------- Appendix IV:6
KSC officials identified a number of lessons learned that helped
maintain performance during downsizing. The officials said agencies
should recognize that they are going to have to downsize, be
proactive, and not wait for downsizing to happen before acting. They
said unions, employee associations, and employees should be involved
in developing the agency downsizing implementation strategy. The
officials said communication with employees should be open and
honest. Communication, the officials said, builds credibility, while
silence makes workers think something is going on behind the scenes,
and openness helps retain key people by reducing their concerns about
their jobs. The officials suggested that agencies should do positive
things for employees--for example, hold job fairs, which promote the
message that the agency is trying to help them, and offer training
courses to help people cope with change. The officials said employee
anxiety should be recognized and addressed. They believed that
employees should be treated with compassion and should know that they
are valued by the agency. Employees should be told the agency does
not want them to leave, but if they do leave, respect them for taking
actions they feel are in their own best interests. The officials
said agencies should back up critical skills so that, if people
leave, the agency still has employees with those skills.
INVESTIGATIONS SERVICE, OFFICE OF
PERSONNEL MANAGEMENT
=========================================================== Appendix V
EXTENT OF DOWNSIZING VARIED BY
COMPONENT
--------------------------------------------------------- Appendix V:1
The Office of Personnel Management (OPM) reduced its workforce by
2,489 FTEs between fiscal years 1993 and 1996. Components
experiencing the largest downsizing percentages are shown in table
V.1. Although the Investigations Service downsized by 61 percent
according to its full fiscal year 1996 usage, the OPM GAO Liaison
noted that if the Investigations Service downsizing was measured
using the FTE complement at the close of fiscal year 1996, a
reduction of 96 percent occurred from the fiscal year 1993 level.
The privatization of Investigations occurred in the last quarter of
fiscal year 1996, which dramatically lowered the end-of-year staffing
level.
Table V.1
FTE Reductions at OPM Components Between
Fiscal Years 1993 and 1996
FTE reduction Percent of FY Percent of
between FYs 1993 FTEs total OPM FTE
Component 1993 and 1996 reduced reduction
------------------------- ------------- ------------- -------------
Investigations Service 898 60.6% 36.1%
Human Resources 520 100 20.9
Development
Administrative Services 518 76.3 20.8
Employment Services 469 40.7 18.8
Personnel Systems and 380 100 15.3
Oversight
Other components\a + 296 + 17.8 + 11.9
======================================================================
Total 2,489 42.3% 100%
----------------------------------------------------------------------
\a Includes three components that lost FTEs, and three components
that gained FTEs, resulting in a combined FTE increase.
Source: GAO calculations based on agency-provided data.
INVESTIGATIONS SERVICE TOOK
ACTIONS TO MAINTAIN PERFORMANCE
DURING DOWNSIZING
--------------------------------------------------------- Appendix V:2
Actions taken that helped OPM's Investigations Service maintain
performance during downsizing can be categorized into two general
areas. The Investigations Service (1) refocused its mission, and (2)
reengineered its work processes.
Among other things, OPM's mission includes supporting agencies in
merit-based examining and hiring. OPM oversees the merit principles
and hiring and retention procedures used by agencies to select
applicants for competitive positions in the federal service at
general schedule grades and for federal wage system positions.
Personnel background investigations are used in support of the
selection and appointment process. The Office of Investigations
formerly performed these background investigations of federal
employees, contractors, and applicants to provide a basis for
determining an individual's suitability for federal employment and
whether an individual should be granted clearance for access to
national security information.
Investigation Service officials said they began downsizing the
Investigations Service in 1993 by offering buyouts to employees. In
May 1994 the Investigations Service laid off approximately 440 (of
about 1,440) employees. As a result of continuing downsizing and
reinvention of government initiatives, the investigations function
was privatized in 1996 through the establishment of a private
corporation known as the US Investigations Service, Inc. (USIS).
USIS' workforce, with the exception of people with specialized
skills, primarily marketing, finance, and human resources, was drawn
from OPM's Investigations Service staff. At the time the
Investigations Service was privatized, approximately 90 percent of
those who worked in the office and received reduction-in-force
notices accepted USIS job offers at the same salary, and with
comparable benefits. The other 10 percent either stayed as part of
OPM's Investigations Service, transferred to another agency, or
retired. With a total staff of about 40 individuals, OPM's
Investigations Service currently limits its functions to policy,
agency oversight, contract management, processing of Freedom of
Information and Privacy Act requests, adjudicating cases, and the
making of suitability determinations.
The Investigations Service reengineered its work processes, which
enabled it to maintain performance during downsizing. No longer
designed to do background investigations, the Investigations Service
oversees the government's contract with USIS. Officials told us that
the creation of USIS, an employee-owned firm (owned by former federal
civil servants) and the subsequent award of a 3-year contract to USIS
to conduct federal background investigations, resulted in a seamless
transition for OPM's former federal customers.
ACTIONS TAKEN DURING DOWNSIZING
WERE GENERALLY SUCCESSFUL IN
MAINTAINING PERFORMANCE,
ACCORDING TO OFFICIALS
--------------------------------------------------------- Appendix V:3
An Investigations Service official said performance was maintained or
improved even as investigations were privatized. The official said
that USIS completed about 20 percent more investigations in fiscal
year 1997 than the Investigations Service did in fiscal year 1996,
and also maintained the Service's timeliness record. In addition,
the official said there had been no decrease in the quality of cases
processed by USIS. A May 1997 USIS employee survey showed that 85
percent of the respondents recognized the importance of quality, and
80 percent believed that USIS puts the customer's needs first.
CUSTOMERS REMAINED SATISFIED
DURING DOWNSIZING
--------------------------------------------------------- Appendix V:4
Investigations Service officials believed that USIS' customers were
satisfied with its investigations; however, we found no customer
satisfaction survey data to support this position. Two customers we
spoke with said there had been no change in their respective
satisfaction levels since prior to privatization. An OPM employee
association official said there was no indication that customers were
dissatisfied.
LESSONS LEARNED INCLUDE
MAINTAINING OPEN COMMUNICATION
AND TAKING CUSTOMER
SATISFACTION INTO ACCOUNT
--------------------------------------------------------- Appendix V:5
An OPM union representative said that the union wanted to be more
proactive and discuss the downsizing and possible impacts with OPM
management early on, but that initial communications between
management, employees, and union representatives were not very good.
An Investigations Service official identified open communication as a
lesson learned during the Investigation Service's downsizing and
ensuing privatization. The official said there was no such thing as
too much communication, and there should be open lines of
communication whereby information can be passed in all directions.
The official added that agencies and components should realize they
will not be able to do everything and should concentrate on their
most critical areas and functions. They should listen to their
customers and ensure that their satisfaction is taken into account
before making major decisions.
(See figure in printed edition.)Appendix VI
COMMENTS FROM THE NATIONAL
AERONAUTICS AND SPACE
ADMINISTRATION
=========================================================== Appendix V
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
Steven J. Wozny, Assistant Director, Federal Management
and Workforce Issues
Clifton G. Douglas, Jr., Assignment Manager
DENVER FIELD OFFICE
Robert P. Pickering, Evaluator-in-Charge
Robert W. Stewart, Evaluator
*** End of document. ***