NPR's Savings: Claimed Agency Savings Cannot All Be Attributed to NPR
(Letter Report, 07/23/1999, GAO/GGD-99-120).
The National Performance Review (NPR) has claimed about $137 billion in
savings from its efforts to reinvent the federal government. However,
this amount includes savings from agency-specific recommendations that
could not be fully attributed to NPR's efforts. In general, the savings
estimates GAO reviewed could not be replicated, and there was no way to
substantiate the savings claimed. GAO also found that some savings were
overstated because the Office of Management and Budget counted savings
twice and two of the estimates were reported incorrectly, resulting in
claims that were understated.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-99-120
TITLE: NPR's Savings: Claimed Agency Savings Cannot All Be
Attributed to NPR
DATE: 07/23/1999
SUBJECT: Cost control
Future budget projections
Statistical methods
Deficit reduction
Financial analysis
Budget outlays
Budget administration
Reengineering (management)
Budget cuts
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United States General Accounting Office GAO Report
to the Chairman, Committee on Government Reform House of
Representatives July 1999 NPR's SAVINGS Claimed Agency
Savings Cannot All Be Attributed to NPR GAO/GGD-99-120 United
States General Accounting Office
General Government Division Washington, D.C. 20548 B-282850 July
23, 1999 The Honorable Dan Burton Chairman, Committee on
Government Reform House of Representatives Dear Mr. Chairman: As
you requested, this report discusses savings claims from the
National Performance Review, which has been renamed the National
Partnership for Reinventing Government (for both of which we use
the acronym NPR) and the methodologies that the Office of
Management and Budget (OMB) used in estimating these claims. NPR
claimed that about $137 billion in savings has resulted from its
efforts to reinvent the federal government, including about $34.3
billion in savings that is not expected to be realized until
fiscal years 1999 and 2000. Of the $137 billion in estimated
savings, about $44.3 billion was claimed from recommendations that
were targeted toward individual agencies. About $67.5 billion was
claimed from recommendations designed to be implemented
governmentwide, and another $24.9 billion was claimed from items
not originated by NPR but, according to NPR, were consistent with
the principles of reinventing government. Our objective was to
describe and assess how OMB estimated savings from selected NPR
recommendations targeted toward individual agencies. We reviewed
recommendations representing over two-thirds of the $44.3 billion
in savings that NPR claimed had been achieved from its
recommendations to individual federal agencies. Specifically, we
examined the savings estimates for two recommendations each from
three agencies: the U.S. Department of Agriculture (USDA), the
Department of Energy (DOE), and the National Aeronautics and Space
Administration (NASA). (Appendixes I through VI contain detailed
information on the six recommendations.) The claims we reviewed
at these three agencies constituted about 22 percent of the total
estimated savings from NPR. As agreed with your office, we did not
determine the amount of savings NPR should have claimed but rather
focused on describing how OMB estimated savings from agency-
specific recommendations, specifically these six recommendations.
NPR claimed savings from agency-specific recommendations that
could Results in Brief not be fully attributed
to its efforts. OMB generally did not distinguish Page 1
GAO/GGD-99-120 NPR's Savings B-282850 NPR's contributions from
other initiatives or factors that influenced budget reductions at
the agencies we reviewed. Therefore, the relationship between the
recommended action and the savings claimed from the
recommendations we reviewed was not clear. For example, OMB
attributed all $8.5 billion of expected reductions to NASA's
budget for fiscal years 1996 through 2000 directly to NPR's
recommendation to reinvent NASA but did not account for other
factors that influenced NASA's budget during this period. Such
factors included ongoing NASA management reform initiatives
undertaken separately from the NPR and budgetary spending caps. To
estimate the savings from the agency-specific recommendations, OMB
said it used the same types of procedures and analytic techniques
that have long been used in developing the President's budget.
These procedures and techniques are intended to support point-in-
time budget estimates that are based on policies and economic
forecasts in effect at a given time. As our previous reviews of
budget estimates have shown, it is difficult to reconstruct the
specific assumptions used and track savings for estimates produced
several years ago.1 Moreover, we have reported that it is often
impossible to isolate the impacts of particular proposals or
recommendations on actual savings achieved due to the multiple
factors involved. OMB relied on these point-in-time estimates
rather than attempting to measure actual savings. OMB last updated
its estimates in 1997, so any changes that have occurred since
then are not reflected in NPR's claimed savings. We identified two
instances where OMB counted at least part of the estimated savings
twice. OMB counted the same $770 million in estimated savings for
two different NPR initiatives-once for agency-specific changes
(from reorganizing USDA) and again as part of a NPR governmentwide
initiative to reduce the size of the federal workforce. OMB also
counted some savings twice-potentially up to $1.4 billion in
estimated savings-for two NPR recommendations we reviewed, one
made in 1993 to strengthen and restructure NASA management and
another made in 1995 to reinvent NASA. Therefore, the total
estimated savings from the USDA and NASA recommendations were
overstated. For one recommendation where OMB and the Congressional
Budget Office (CBO) both estimated savings, we found that
offsetting program costs may not have been fully included in OMB's
estimates. In estimating savings that 1 NPR Savings Estimates
(GAO/GGD/AIMD-96-149R, July 24, 1996) and Budget Process: Issues
Concerning the 1990 Reconciliation Act (GAO/AIMD-95-3, Oct. 7,
1994). Page 2
GAO/GGD-99-120 NPR's Savings B-282850 resulted from personnel
reductions at USDA (part of the NPR recommendation to reorganize
USDA), OMB and CBO considered different offsetting costs and
arrived at different estimates, with CBO's estimate being $324
million less than OMB's $770 million estimate. According to CBO,
it assumed that severance benefits and relocation costs would
reduce the potential savings, while OMB assumed that the agency
could absorb those costs. Consistent with OMB's normal budget
practices, OMB examiners generally did not retain documentation
when estimating NPR savings. The program examiners were unable to
document estimates for four of the six recommendations we
reviewed, constituting $21.8 billion in savings claims. Instead,
the OMB examiners attempted to reconstruct how they thought the
savings had been estimated through approximating rather than
replicating savings estimates. OMB had documentation for two of
the recommendations we reviewed. However, we found that the
savings were reported incorrectly, understating NPR's estimated
savings for those two recommendations by about $1.9 billion. The
administration launched NPR in March 1993, when President Clinton
Background announced a 6-month review of the federal government
to be led by Vice President Gore. The first NPR report was
released in September 1993 and made recommendations intended to
make the government "work better and cost less."2 The first NPR
phase, called NPR I, included recommendations to reinvent
individual agencies' programs and organizations. It also included
governmentwide recommendations for (1) reducing the size of the
federal bureaucracy, (2) reducing procurement costs through
streamlining, (3) reengineering processes through the better use
of information technology, and (4) reducing administrative costs.
The estimates for NPR I savings covered fiscal years 1994 through
1999. Vice President Gore launched the second NPR phase (called
NPR II) in December 1994 and reported on this phase's savings
estimates in September 1995.3 According to NPR, this second phase
expanded the agenda for governmental reform. NPR II efforts
focused on identifying additional programs that could be
reinvented, terminated, or privatized, as well as on reinventing
the federal regulatory process. The estimates for NPR II savings
covered fiscal years 1996 through 2000. 2 From Red Tape to
Results: Creating a Government That Works Better and Costs Less,
report of the National Performance Review, Vice President Al Gore,
September 7, 1993. 3Common Sense Government: Works Better and
Costs Less, third report of the National Performance Review, Vice
President Al Gore, September 7, 1995. Page 3
GAO/GGD-99-120 NPR's Savings B-282850 As shown in table I, NPR
claimed estimated savings of $82.2 billion from NPR I
recommendations. NPR similarly reported that $29.6 billion had
been "locked into place" from program changes in individual
agencies under NPR II. Table 1: Estimated Savings Claimed
Source of estimated savings Amount of
estimated savings claimed from NPR Recommendations
(in billions) a NPR I Reducing the size of the bureaucracy
$54.8 Reducing procurement costs and
12.7 reengineering information technology Program and
organizational changes in individual agencies
14.7 Subtotal of estimated savings from NPR I
82.2 NPR II Program changes in individual agencies
29.6 Total estimated savings claimed from
$111.8 NPR I and II recommendations aOMB estimated savings for NPR
I in 1993 and for NPR II in 1995. It updated its savings database
in 1996 and again in 1997. Sources: NPR's web page (www.npr.gov),
as of October 15, 1997, and OMB data. In addition to the $111.8
billion NPR claimed from the NPR I and II recommendations, NPR
claimed $24.9 billion in estimated savings based on reinvention
principles. These additional claimed savings included, for
example, $23.1 billion from the Federal Communications
Commission's auctions of wireless licenses. This $24.9 billion
brings the total amount of reinvention savings claimed by NPR to
about $137 billion. This $137 billion savings figure is the one
NPR most commonly cites as the savings it has achieved. NPR relied
on OMB to estimate the savings it claimed from its NPR I and II
recommendations. OMB's program examiners were responsible for
developing the estimates in their role as focal points for all
matters pertaining to their specific assignment area. One of the
examiners' major duties is to oversee the formulation and
execution of the budget process. They are also expected to perform
legislative, economic, policy, program, organizational, and
management analyses. OMB made the initial estimates for the 1993
and 1995 NPR reports and updated its database on the savings
claimed in the summers of 1996 and 1997. These updates, according
to an OMB official, were primarily to ensure that all the
estimates for recommendations that NPR considered implemented were
included in the total amount of savings claimed. Page 4
GAO/GGD-99-120 NPR's Savings B-282850 To describe and assess how
OMB estimated the savings from NPR, we Scope and focused on
three agencies (USDA, DOE, and NASA), where relatively large
Methodology savings were claimed and that provided a variety
of types of actions taken. At each agency, we selected two
recommendations with claims of at least $700 million in savings
each. The six recommendations we reviewed accounted for $10.45
billion of the $14.7 billion claimed from changes in individual
agencies under NPR I and $19.17 billion of the $29.6 billion
claimed from NPR II savings. Overall, the claimed savings from the
recommendations we reviewed accounted for over two-thirds of the
$44.3 billion in savings claimed from NPR's recommendations to
individual agencies and 22 percent of the total amount of NPR's
savings claims. Following is a listing of the six recommendations
we reviewed and the estimated savings, in millions of dollars,
that NPR claimed for each of those recommendations. (See apps. I
through VI for detailed information on each of the
recommendations.) * reorganize USDA to better accomplish its
mission, streamline its field structure, and improve service to
its customers ($770 million); * end USDA's wool and mohair
subsidy ($702 million); * redirect DOE laboratories to post-Cold
War priorities ($6,996 million); * realign DOE, including
terminating the Clean Coal Technology Program; privatizing the
naval petroleum reserves in Elk Hills, CA; selling uranium no
longer needed for national defense purposes; reducing costs in
DOE's applied research programs; improving program effectiveness
and efficiencies in environmental management of nuclear waste
cleanups; and strategically aligning headquarters and field
operations ($10,649 million); * strengthen and restructure NASA
management, both overall management and management of the space
station program ($1,982 million); and * reinvent NASA, including
eliminating duplication and overlap between NASA centers,
transferring functions to universities or the private sector,
reducing civil service involvement with and expecting more
accountability from NASA contractors, emphasizing objective
contracting, using private sector capabilities, changing NASA
regulations, and returning NASA to its status as a research and
development center ($8,519 million). Since these recommendations
are not representative of all NPR recommendations, our findings
cannot be generalized to apply to other savings claimed by NPR. As
agreed with your office, we did not independently estimate the
actual amount of savings achieved from these six recommendations.
Page 5 GAO/GGD-99-120
NPR's Savings B-282850 We interviewed NPR and OMB officials about
how they estimated and claimed savings and also requested relevant
documentation. We also examined a database OMB maintained showing
the amount of savings achieved from the recommendations. The NPR I
data covered fiscal years 1994 through 1999, and the NPR II data
covered fiscal years 1996 through 2000. Both sets of data were
most recently updated in the summer of 1997. We reviewed NPR data,
including a description of the status of the recommendations and
reports containing background information, on the three agencies
and the relevant recommendations where available. We also
interviewed officials from these agencies about the savings OMB
estimated for the recommendations we reviewed. We conducted our
review in Washington, D.C., from April 1998 through February 1999
in accordance with generally accepted government auditing
standards. We requested comments on a draft of this report from
OMB, the Departments of Agriculture and Energy, and NASA. These
comments are discussed at the end of this letter. OMB generally
did not distinguish between NPR's and other contributions The
Relationship for the agency-specific recommendations
we reviewed. NPR attempted to Between NPR build
on prior management reforms and operated in an atmosphere where
other factors, such as agencies' ongoing reforms as well as the
political Recommendations and environment, also influenced actions
taken to address NPR's Agency Savings Claims recommendations. The
relationship between the recommendations we Was Not Clear
reviewed and the savings claimed was not clear because OMB
attributed a broad range of changes to NPR. Savings estimated from
the recommendation to reinvent NASA illustrate how OMB attributed
a broad range of changes to NPR and did not distinguish NPR's
contribution from other factors. To estimate savings for that
recommendation, OMB consolidated seven somewhat related
recommendations into one savings estimate of $8.519 billion. OMB
estimated savings by totaling expected reductions to NASA's entire
budget for fiscal years 1996 through 2000. According to a NASA
official, NASA's funding during this period was limited as the
result of several initiatives, including direction from the NASA
administrator that began before NPR was initiated and
congressionally imposed spending caps. Nevertheless, OMB
attributed all of the $8.519 billion in savings from estimated
reductions in the entire NASA budget to NPR. OMB followed similar
procedures in estimating savings from the other NPR recommendation
concerning NASA that we reviewed-the recommendation to strengthen
and restructure NASA management. The Page 6
GAO/GGD-99-120 NPR's Savings B-282850 examiner estimated savings
of $1.982 billion on the basis of expected reductions in funding
levels for one of NASA's three budget accounts for fiscal years
1994 through 1999. The estimated savings were based on
expectations for lower levels of budget authority due to the
combined effects of several factors, such as budgetary spending
caps and ongoing NASA management reform efforts. In the case of
the NPR recommendation for DOE to shift its laboratory facilities'
priorities in response to conditions that accompanied the end of
the Cold War, NPR recognized that changes were already under way.
For example, as part of this recommendation, NPR called for DOE to
"continue" the reduction of funding for nuclear weapons
production, research, testing programs, and infrastructure.
Considering the comprehensive nuclear test ban treaty agreements
and other factors, it was apparent that the DOE laboratories'
priorities would have changed regardless of whether NPR had made
the recommendation. However, as figure 1 shows, when OMB estimated
savings from this recommendation, it credited all savings from
estimated reductions in the weapons activity budget account
($6.996 billion) to NPR. Page 7
GAO/GGD-99-120 NPR's Savings B-282850 Figure 1: Savings OMB
Estimated From NPR's Recommendation to Redirect DOE Laboratories'
Priorities Note: OMB used budget data based on actual numbers
through fiscal year 1997 and budget estimates for fiscal years
1998 and 1999. Source: GAO analysis of OMB data. Similarly,
efforts related to NPR's recommendation to reorganize USDA were
under way prior to or simultaneously with the NPR recommendation.
These efforts included USDA reorganization plans and the
introduction of legislation to streamline USDA. For example, the
Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994 (P.L. 103-354, Oct. 13, 1994), required
USDA to reduce the number of federal staff years by at least 7,500
by the end of fiscal year 1999. Therefore, USDA's reorganization
could be viewed as part of a continuous management improvement
effort. OMB attributed the entire $770 million in estimated
savings it reported from USDA's staffing reductions to NPR. In
contrast, the relationship between the recommended action and the
estimated savings was relatively straightforward for the NPR
recommendation to end USDA's wool and mohair subsidy program. In
that Page 8
GAO/GGD-99-120 NPR's Savings B-282850 case, program costs,
primarily subsidy amounts that were reduced by phasing out the
program and subsequently eliminated by ending the program, were
counted as savings. According to OMB, the procedures and
techniques it used to estimate NPR OMB Used Standard
savings were those that it commonly follows in developing the
President's Budget Estimating budget. Therefore the
NPR savings estimates were to provide a "snapshot" showing the
amount of savings OMB expected would result from the Techniques to
Estimate recommendations. For example, in 1993, OMB projected
savings from the Savings NPR recommendation
to strengthen and restructure NASA management covering fiscal
years 1994 through 1999. OMB characterized these estimated savings
as achieved in 1996, and NPR has continued to report these
estimated savings (based on the 1993 estimate) as achieved. More
generally, OMB's savings estimates for agency-specific
recommendations included about $34.3 billion in savings that were
not expected to be realized until fiscal years 1999 and 2000. OMB
last updated its estimates in 1997, so any changes that have
occurred since then are not reflected in NPR's claimed savings.
OMB's budget estimating procedures and techniques use policies and
economic forecasts in effect at a given time. The estimates OMB
prepared for NPR initiatives involved projecting changes from a
given baseline and identifying the difference as savings. OMB said
that it generally used a fiscal year 1994 current services
baseline for the NPR I agency-specific recommendations and a
fiscal year 1996 Omnibus Budget Reconciliation Act baseline for
the NPR II recommendations. OMB said, however, that in both cases,
program examiners could use other savings baselines where the
examiners believed it made better sense for a particular program
or NPR recommendation. The OMB examiners also had latitude in
determining the most appropriate analytical approach to use, based
on their knowledge of the agency and the specific characteristics
of the individual NPR recommendation. Our prior reviews of budget
estimates have shown that it is difficult to reconstruct the
specific assumptions used or to track savings for estimates
produced several years ago. As we reported in 1996, once an
estimate is prepared and time passes, it becomes difficult to
retrace the original steps and reconstruct events in order to
replicate the original estimate.4 Moreover, it is often difficult
to isolate the impacts of particular proposals on actual savings
achieved due to the multiple factors involved. In our 1994 report
on issues concerning the 1990 Reconciliation Act, we found that it
is 4 GAO/GGD/AIMD-96-149R, July 24, 1996. Page 9
GAO/GGD-99-120 NPR's Savings B-282850 generally not possible to
identify or track precise savings by isolating the budgetary
effects of individual provisions from the effects of other factors
such as intervening actions or subsequent legislation.5 In two
instances, OMB counted some of the estimated savings NPR Some
Estimated NPR claimed twice. In the first instance,
OMB counted the same estimated Savings Were Claimed savings on two
different NPR I initiatives-once for agency-specific changes (from
reorganizing USDA) and again as part of a NPR Twice
governmentwide initiative to reduce the bureaucracy. In the second
instance, OMB appears to have counted the same savings twice when
separately estimating savings from the two NASA recommendations we
reviewed. Therefore, the total estimated savings NPR claimed in
both of these instances were overstated. OMB estimated that $770
million in cost savings resulted from NPR's recommendation to
reorganize USDA on the basis of workforce reductions. OMB also
counted these workforce reductions when estimating the total of
$54.8 billion in savings NPR claimed from its governmentwide
initiative to reduce the size of the bureaucracy. While
acknowledging that this occurred, OMB officials stated that the
level of double counting appeared to be quite small in relation to
total NPR savings-less than 1 percent of the total savings claimed
from NPR recommendations. They said that the double counting was
small because the recommendation to reorganize USDA was the only
agency-specific recommendation with a significant staffing effect.
However, OMB officials told us that they had not established a
mechanism to prevent double counting from savings claimed for the
agency-specific recommendations and from the governmentwide
initiative. Officials from the other two agencies we reviewed-DOE
and NASA-said that their staff also had been reduced and counted
as part of the savings claimed for the agency-specific
recommendations to streamline DOE and strengthen NASA management.
Therefore, in the absence of OMB processes to guard against
including savings from personnel reductions in both agency-
specific and governmentwide savings claims, additional double
counting of workforce reductions could have occurred. In the
second instance, a portion of the estimated savings appears to
have been counted twice for two NASA recommendations we reviewed,
one from NPR I (to strengthen and restructure NASA management) and
the other from NPR II (to reinvent NASA). Some of the actions NPR
5 GAO/AIMD-95-3, Oct. 7, 1994. Page 10
GAO/GGD-99-120 NPR's Savings B-282850 recommended, such as
restructuring NASA centers, were components of both the NPR I and
NPR II recommendations. The OMB examiner acknowledged that some of
the savings could have been counted twice and that there was no
mechanism to distinguish the sweeping changes that were occurring
at NASA. She said that the NPR II recommendation built on the NPR
I recommendation. NASA officials also said that they were not able
to assign savings precisely to one recommendation or the other
because the recommendations were similar and there was no clear
demarcation where one ended and the other began. OMB estimated
savings from the NPR I recommendation for fiscal years 1994
through 1999 and from the NPR II recommendation for fiscal years
1996 through 2000. Estimated savings from both recommendations
were included when OMB aggregated total NPR-estimated savings. As
figure 2 shows, a portion of the savings claimed from these two
recommendations overlapped during fiscal years 1996 through 1999.
For those years, claimed savings totaled about $7 billion (about
$1.6 billion from the NPR I recommendation and about $5.4 billion
from the NPR II recommendation). OMB appears to have counted some
portion of that amount twice- potentially up to $1.4 billion. The
NPR savings claims in these two instances were overstated. Page 11
GAO/GGD-99-120 NPR's Savings B-282850 Figure 2: Potential Overlap
in Estimated Savings From NASA Recommendations a. No savings were
claimed in 1994 for the NPR I recommendation. Source: GAO analysis
of OMB estimates. OMB and CBO both estimated savings for the
recommendation to Offsetting Costs May
streamline USDA, and these estimates differed. While OMB estimated
the Not Have Been Fully savings to be $770
million, CBO's estimate was $446 million-a difference of $324
million. We did not evaluate the differences between these
Included estimates. However,
according to a November 15, 1993, letter from the CBO director to
the then House Minority Leader, CBO's estimate differed from OMB's
". . . with respect to the costs associated with severance
benefits and relocation. While the administration assumes that
agency baseline budgets are large enough to absorb these costs,
CBO assumes that the costs would reduce the potential savings. The
administration also estimates larger savings in employee overhead
costs." According to CBO, due to the differences in the
consideration of offsetting costs, OMB's estimate for the 5-year
budget period (fiscal years 1994 through 1998) exceeded CBO's
estimate by $324 million. OMB provided documentation showing that,
in fiscal year 1996 and again in fiscal year 1997, OMB factored
"up-front" costs of $40 million into the Page 12
GAO/GGD-99-120 NPR's Savings B-282850 estimates it reported. The
responsible OMB branch chief stated that although he did not
recall what the up-front costs for this recommendation
specifically encompassed, these costs typically consist of buyouts
(i.e., financial incentives of up to $25,000 for employees who
voluntarily leave the federal government), lease breakage costs,
and moving expenses. According to OMB, consistent with its normal
budget practices, OMB OMB Lacked examiners generally
did not retain documentation for NPR savings Documentation and
estimates. The budget examiners were unable to document estimates
for four of the six recommendations we reviewed, constituting
$21.8 billion in Reported Estimates savings claims. Instead,
the OMB examiners attempted to reconstruct how Incorrectly
they thought the savings had been estimated through approximating
rather than replicating savings estimates. OMB did, however,
provide documentation on the estimated savings for two of the six
recommendations we reviewed. These recommendations were to
reorganize USDA (with estimated savings of $770 million) and to
redirect the DOE laboratories' priorities (with estimated savings
of $6.996 billion). Even when documentation for the NPR savings
estimates was available, OMB could not always provide complete
information about how the estimates were calculated. For example,
the responsible OMB branch chief could not specifically remember
what comprised the up-front costs shown on documentation for the
recommendation to reorganize USDA. The NPR savings claims for both
cases where OMB provided documentation were reported incorrectly.
These errors led NPR to understate the estimated savings from
those recommendations. One of the errors involved a math mistake
that affected the amount of savings claimed. When updating the
estimate, a subtraction error led to $10 million in estimated
savings being omitted from the total claimed for the
recommendation to redirect the DOE laboratories' priorities. The
other error occurred because savings of $1.859 billion that the
examiner estimated would occur from the recommendation to
reorganize USDA for fiscal years 1997 through 1999 were not
reported. NPR claimed savings from agency-specific recommendations
that could Conclusions not be fully attributed to its
efforts. In general, the savings estimates we reviewed could not
be replicated, and there was no way to substantiate the savings
claimed. We also found that some savings were overstated because
OMB counted savings twice, and two of the estimates were reported
incorrectly, resulting in claims that were understated. Page 13
GAO/GGD-99-120 NPR's Savings B-282850 We requested comments on a
draft of this report from the Director of Agency Comments and OMB,
the Secretaries of Agriculture and Energy, and the NASA Our
Evaluation Administrator, or their designees. On
June 14, 1999, we met with OMB staff who provided clarifying and
technical comments on the draft report. We incorporated their
suggestions in this report where appropriate. We obtained written
comments on the draft report from the Director of USDA's Office of
Budget and Program Analysis. He said that a loan program for
mohair producers established in fiscal year 1999 provides
substantially different incentives than the original wool and
mohair program. His letter stated that the costs associated with
the 1999 program did not negate the savings derived from
eliminating the earlier program. As a result, we eliminated our
discussion concerning this loan program from the report. We also
obtained written comments on the draft report from DOE's
Controller. She said that OMB's use of the weapons activity budget
account to estimate savings from the recommendation to redirect
the energy laboratories to post-Cold War priorities is more
reasonable than is implied by the report. She explained that while
the title of the NPR recommendation suggests that only
laboratories would be affected by the recommendation, related NPR
information indicates that the recommendation affected facilities
beyond just the laboratories. We added language to the report
recognizing that the recommendation, although focused on the
laboratories, did include actions to reduce the production and
testing of nuclear weapons. Secondly, she said that DOE had
progressed beyond the status NPR reported for the initiatives
included in the recommendation to realign DOE, and we included the
updated information in appendix IV. On June 2, 1999, a NASA
official reported that NASA had no comments on our draft report.
As agreed, unless you announce the contents of this report
earlier, we plan no further distribution until 30 days from the
date of this letter. At that time, we will send copies of this
report to Representative Henry A. Waxman, Ranking Minority Member
of the House Government Reform Committee and to Senator Fred
Thompson, Chairman, and Senator Joseph I. Lieberman, Ranking
Minority Member, of the Senate Governmental Affairs Committee. We
will also send copies to the Honorable Jacob J. Lew, Director of
OMB; Mr. Morley Winograd, Director of NPR; the Honorable Daniel R.
Glickman, Secretary of Agriculture; the Honorable Bill Richardson,
Secretary of Energy; and the Honorable Daniel S. Goldin, Page 14
GAO/GGD-99-120 NPR's Savings B-282850 Administrator of NASA. We
will also make copies available to others on request. Major
contributors to this report appear in appendix VII. Please contact
me or Susan Ragland, Assistant Director, on (202) 512-8676 if you
have questions about this report. Sincerely yours, J. Christopher
Mihm Associate Director Federal Management and Workforce Issues
Page 15 GAO/GGD-99-120
NPR's Savings Contents 1 Letter 18 Appendix I NPR
Recommendation 18
Reorganize USDA Key Actions Reported
18 Methodology Used to Estimate Savings
18 19 Appendix II NPR Recommendation
19 End the Wool and Key Actions Reported
19 Methodology Used to Estimate Savings
19 Mohair Subsidy 20 Appendix III NPR Recommendation
20 Redirect DOE's Key Actions Reported
20 Methodology Used to Estimate Savings
20 Laboratories to Post- Cold War Priorities 21 Appendix IV
NPR Recommendation
21 Summary of Savings Key Actions Reported
21 Methodology Used to Estimate Savings
21 From Realigning DOE 22 Appendix V NPR
Recommendation 22
Strengthen and Key Actions Reported
22 Methodology Used to Estimate Savings
22 Restructure NASA Management 23 Appendix VI NPR
Recommendation 23
Reinvent NASA Key Actions Reported
23 Methodology Used to Estimate Savings
23 Page 16 GAO/GGD-99-120 NPR's
Savings Contents Appendix VII
24 GAO Contacts and Staff Acknowledgments Table 1: Estimated
Savings Claimed from NPR
4 Tables Recommendations Table I.1: Claimed Savings
18 Table II.1: Claimed Savings
19 Table III.1: Claimed Savings
20 Table IV.1: Claimed Savings
21 Table V.1: Claimed Savings
22 Table VI.1: Claimed Savings
23 Figure 1: Savings OMB Estimated From NPR's
8 Figures Recommendation to Redirect DOE
Laboratories' Priorities Figure 2: Potential Overlap in Estimated
Savings From 12 NASA Recommendations
Abbreviations CBO Congressional Budget Office DOE
Department of Energy FTE full-time equivalent NASA
National Aeronautics and Space Administration NPR
National Performance Review OMB Office of Management
and Budget PMC Program Management Council R&D
research and development USDA United States Department
of Agriculture Page 17
GAO/GGD-99-120 NPR's Savings Appendix I Reorganize USDA In
September 1993, NPR recommended that USDA be reorganized to better
NPR Recommendation accomplish its mission, streamline its field
structure, and improve service to its customers. NPR had
recommended that USDA reorganize its structure, submit legislation
to enact the reorganization, and review its field office structure
to eliminate and restructure those elements no longer
appropriate.1 NPR reported that USDA has made progress towards
reorganizing at its Key Actions Reported
headquarters and field office structure. USDA submitted
reorganization legislation, and Congress enacted the Federal Crop
Insurance Reform and Department of Agriculture Reorganization Act
of 1994 (P.L. 103-354) on October 13, 1994. The reorganization at
the headquarters level has reduced the number of agencies from 43
to 29 and has established 7 "mission areas" to carry out program
responsibilities.2 USDA also implemented a field office
streamlining plan that consolidates the county-based agencies to
provide services to customers from all agencies at one location.
This effort is to result in streamlining the number of field
office locations from over 3,700 to 2,550. As of May 1998, the
total number of field office locations had been reduced to about
2,700. Table I.1: Claimed Savings Dollars in millions
1994 1995 1996
1997 1998 1999
Total O M B e s t i m a t e1 3 0 3 5 5 2 8 5000 7 7 0 Source: OMB,
revised estimates as of summer 1996. OMB officials stated that
savings for this recommendation were derived Methodology Used to
solely from the number of full-time equivalent (FTE) reductions
USDA Estimate Savings made.3 OMB took the
difference between the fiscal year 1994 current services baseline
and actual and updated reductions and then multiplied that amount
by an average salary that was comprised of both headquarters and
field office salary data. From that amount, OMB subtracted
offsetting costs. OMB officials provided documentation on how
these savings were estimated. 1 USDA's structure consists of
headquarters, regional, state, and county-based offices. 2 USDA is
composed of various component agencies, including the Forest
Service, the Farm Service Agency, and the Natural Resources
Conservation Service. Mission areas are groupings of agencies at
USDA that perform a common function. For example, the Natural
Resources and Environment Mission Area is comprised of the Forest
Service and the Natural Resources Conservation Service. 3 FTEs are
used to measure civilian employment, and 1 FTE is equal to 1
workyear of 2,080 hours. Page 18
GAO/GGD-99-120 NPR's Savings Appendix II End the Wool and Mohair
Subsidy In September 1993, NPR recommended that USDA end this
subsidy NPR Recommendation program, which was implemented in 1954
to increase domestic production of wool by providing direct
payments to farmers. At that time, Congress declared wool a
strategic commodity to reduce dependence on foreign fibers, which
was caused by imports needed during World War II and the Korean
conflict. NPR said that this subsidy was outdated, since wool was
no longer a strategic commodity. NPR reported that this subsidy
had been eliminated as a result of Key Actions Reported
legislation amending the National Wool Act of 1954 (P.L. 103-130,
November 1, 1993). The act mandated the reduction of subsidies
during fiscal years 1994 and 1995 and the elimination of subsidies
for fiscal year 1996. Payments were reduced by 25 percent in
fiscal year 1994, 50 percent in fiscal year 1995, and eliminated
entirely beginning in fiscal year 1996. Table II.1: Claimed
Savings Dollars in millions 1994 1995
1996 1997 1998 1999
Total OMB estimate 0 47 103
183 181 188 702 Source:
OMB, revised estimates as of summer 1996. In response to our
questions, although they were unable to provide Methodology Used
to documentation on how savings were estimated,
OMB generally could Estimate Savings
reconstruct how savings would have been estimated. This involved
subtracting the payments that farmers were receiving as a result
of the subsidy reductions mandated in P.L.103-130 from the amount
of subsidies that were projected to have been paid, had the
legislation not been enacted, for fiscal years 1994 through 1999.
OMB said that the source of the projected subsidy information was
1993 data from the Commodity Credit Corporation, which analyzes
budget projections and assumptions. Page 19
GAO/GGD-99-120 NPR's Savings Appendix III Redirect DOE's
Laboratories to Post-Cold War Priorities In 1993, NPR recommended
that DOE shift laboratory facilities' priorities NPR
Recommendation to accommodate conditions that accompanied the end
of the Cold War- such as the dramatic decrease in the arms race
and cutbacks in defense- related energy and nuclear research
funding. NPR recommended, among other things, that DOE continue to
reduce funding for nuclear weapons production, research, testing
programs, and infrastructure that are needed to meet current
defense requirements; develop a vision for the DOE laboratory
complex; and encourage laboratory managers to work with the
private sector on high-priority research and development (R&D)
needs. NPR reported that DOE is restructuring and refocusing its
laboratories by Key Actions Reported developing
new strategic plans and implementing a science-based stockpile
stewardship program. The stockpile stewardship program is designed
to support the testing of nuclear weapons in a safe manner as
directed by the comprehensive nuclear test ban treaty, which
banned the production of nuclear weapons after the Cold War. DOE
has also established the Laboratory Operations Board and the R&D
Council. These organizations study the use of government/private
partnerships to increase productivity of DOE R&D programs. Table
III.1: Claimed Savings Dollars in millions 1994 1995
1996 1997 1998 1999
Total OMB estimate 991 1,519 1,409
1,077 1,000 1,000 6,996 Source:
OMB, revised estimates as of summer 1997. OMB calculated savings
for redirecting energy laboratories to post-Cold Methodology Used
to War priorities by taking the difference in
the weapons activities budget Estimate Savings
account between the fiscal year 1994 current services baseline and
the actual appropriations for that fiscal year and counting the
savings through fiscal year 1999. The DOE laboratories' budget is
subsumed within the weapons activities account of the President's
budget. This account includes R&D to support the safety and
reliability of the nuclear weapons stockpile as well as personnel
and contractual services for certain defense programs' missions.
OMB considered DOE laboratories as well as the entire weapons
complex, of which the laboratories are a component, when
estimating savings for this recommendation. OMB officials provided
documentation on how these savings were estimated. Page 20
GAO/GGD-99-120 NPR's Savings Appendix IV Summary of Savings From
Realigning DOE In 1995, NPR had six recommendations concerning
realignment of DOE. NPR Recommendation NPR consolidated reporting
on these recommendations for purposes of developing savings
estimates. These recommendations were to (1) terminate the Clean
Coal Technology Program; (2) privatize the naval petroleum
reserves in Elk Hills, CA; (3) sell uranium no longer needed for
national defense purposes; (4) reduce costs in DOE's applied
research programs; (5) improve program effectiveness and
efficiencies in environmental management of nuclear waste
cleanups; and (6) strategically align headquarters and field
operations. NPR reported that DOE has implemented actions
consistent with these Key Actions Reported
recommendations. For instance, NPR reported that DOE is planning
to terminate the Clean Coal Technology Program by September 2000.
DOE has reorganized the department by implementing the Strategic
Alignment Initiative, which is intended to reduce staffing,
support service contracting, and travel costs; streamline the
National Environmental Policy Act; increase asset sales; and
improve information resources management. DOE has also established
performance measures to improve effectiveness of nuclear waste
cleanups, developed a plan for selling uranium reserves, and is
developing ways to reduce administrative costs in DOE's research
programs. More recently, DOE noted that the Elk Hills Naval
Petroleum Reserves were sold in February 1998 for $3.1 billion.
Similarly, in fiscal year 1998, $0.4 billion was realized due to
DOE's uranium being a part of the sale of the United States
Enrichment Corporation. Table IV.1: Claimed Savings Dollars in
millions 1996 1997 1998 1999
2000 Total OMB estimate
1,673 2,244 2,244 2,244
2,244 10,649 Source: OMB, revised
estimates as of summer 1996. OMB could not reconstruct
calculations for the savings estimated for this Methodology Used
to recommendation. Estimate Savings Page 21
GAO/GGD-99-120 NPR's Savings Appendix V Strengthen and Restructure
NASA Management In September 1993, NPR recommended that NASA take
a number of NPR Recommendation restructuring steps, both in
overall management and in the management of the space station
program. It recommended that NASA, among other things,
aggressively complete its overhaul of space station program
management, implement the management principles developed for the
redesigned space station program, and formally institute its
Program Management Council (PMC), an organization charged with
improving NASA's internal management processes. NPR reported that
NASA has taken and is continuing to take steps to Key Actions
Reported improve the management of the agency and
the space station. According to NPR, NASA's overhaul of space
station program management was accomplished through enactment of
the fiscal year 1995 Appropriations Act (P.L. 103-327, September
28, 1994). Also, the PMC was established in June 1993 and is fully
operational. Table V.1: Claimed Savings Dollars in millions
1994 1995 1996 1997
1998 1999 Total OMB estimate
0 396 396 396 397
397 1,982 Source: OMB, original estimated savings from
September 1993. In response to our questions, OMB attempted to
reconstruct how savings Methodology Used to were
estimated, but could not provide documentation to support its
Estimate Savings calculation. OMB officials said
the methodology they would have used to estimate savings for this
recommendation was to take the difference between the fiscal year
1994 current services baseline and the actual appropriations for
that fiscal year and count the savings through fiscal year 1999.
Page 22
GAO/GGD-99-120 NPR's Savings Appendix VI Reinvent NASA In 1995,
NPR recommended that NASA be reinvented. This NPR Recommendation
recommendation built on the earlier NPR recommendation to
strengthen and restructure NASA management. OMB consolidated seven
recommendations that related to reinventing NASA for developing
savings estimates. These recommendations included (1) eliminating
duplication and overlap between NASA centers; (2) transferring
functions to universities or the private sector; (3) reducing
civil service involvement with and expecting more accountability
from NASA contractors; (4) emphasizing objective contracting; (5)
using private sector capabilities; (6) changing NASA regulations;
and (7) returning NASA to its status as a research and development
agency. NPR reported that NASA has completed actions consistent
with this Key Actions Reported consolidated
recommendation. For instance, NPR reported that NASA has
restructured its centers to eliminate overlap and duplication of
functions and has implemented techniques, such as forming
partnerships and outsourcing functions. NPR also reported that
NASA was creating alliances with academic and industrial centers
and consolidating all space shuttle operations management under a
single, private sector prime contractor. In addition, NPR reported
that NASA has implemented a performance-based contracting
initiative. Table VI.1: Claimed Savings Dollars in millions
1996 1997 1998 1999
2000 Total OMB estimate 226
1,024 1,715 2,418
3,136 8,519 Source: OMB, original estimated savings
from September 1995. In response to our questions, OMB attempted
to reconstruct how savings Methodology Used to
were estimated, but could not provide documentation to support its
Estimate Savings calculation. An OMB
official said she took the difference between the fiscal year 1996
current services baseline and the actual appropriations for that
fiscal year and counted savings through fiscal year 2000. Page 23
GAO/GGD-99-120 NPR's Savings Appendix VII GAO Contacts and Staff
Acknowledgments J. Christopher Mihm, (202) 512-8676 GAO Contacts
Susan Ragland, (202) 512-8486 In addition to those named above,
Carole Buncher, Lauren Alpert, and Acknowledgments Jenny Kao
made key contributions to this report. Page 24
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