DOT's Restructuring: Limited Progress in Streamlining Field Office
Structure (Letter Report, 04/30/98, GAO/RCED-98-138).

Pursuant to a congressional request, GAO reviewed the results of two of
the Department of Transportation's (DOT) streamlining efforts--the field
office Colocation Task Force and the Federal Highway Administration's
(FHwA) Organization Structure Task Force.

GAO noted that: (1) DOT's colocation effort will not result in the
substantial restructuring of its field offices; (2) the 21-month
colocation effort narrowly focused on developing an inventory of DOT's
office space in the field and identifying opportunities for DOT's field
offices to share space; (3) few colocations have occurred as a result of
the colocation effort, and additional colocations will take years to
accomplish; (4) morever, colocating offices will likely result in
limited short-term dollar savings, if any; (5) FHwA's proposal to
restructure its nine regional offices into four resource centers does
not identify any long-term budgetary savings, and estimates are that in
the short-term, the proposal might cost the agency more than $10 million
to implement; (6) in addition, the proposal leaves many unanswered
questions about the differences between the roles and responsibilities
of current regional offices and the roles and responsibilities of the
four new resource centers; (7) for example, the agency's report notes
that most of the regional offices' responsibilities can be delegated to
the agency's 52 division offices; (8) however, the agency envisions that
the new resource centers will provide training, technical assistance,
and supervision similar to that which the current regional offices
provide; and (9) in addition, the agency will not complete the details
on its restructuring efforts until June 1998 and projects that these
efforts will take 3 to 5 years to complete.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-98-138
     TITLE:  DOT's Restructuring: Limited Progress in Streamlining Field 
             Office Structure
      DATE:  04/30/98
   SUBJECT:  Federal agency reorganization
             Cost control
             Federal downsizing
             Reductions in force
             Projections
             Cost analysis

             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Transportation and Related
Agencies, Committee on Appropriations, House of Representatives

April 1998

DOT'S RESTRUCTURING - LIMITED
PROGRESS IN STREAMLINING FIELD
OFFICE STRUCTURE

GAO/RCED-98-138

DOT's Field Office Structure

(348049)


Abbreviations
=============================================================== ABBREV

  DOT - Department of Transportation
  FTA - the Federal Transit Admnistration
  FRA - Federal Railroad Administration
  FHWA - Federal Highway Administration
  NHTSA - National

Letter
=============================================================== LETTER


B-279432

April 30, 1998

The Honorable Frank R.  Wolf
Chairman, Subcommittee on Transportation
 and Related Agencies
Committee on Appropriations
House of Representatives

Dear Mr.  Chairman: 

For several years, we have testified before your Subcommittee that
the Department of Transportation (DOT) could realize significant cost
savings by restructuring its field organization.  DOT has begun
examining its field office structure and has identified options for
streamlining the more than 1,700 field offices that it supports
throughout the United States.  At your request, we examined the
results of two departmental streamlining efforts--the field office
Colocation Task Force and the Federal Highway Administration's (FHWA)
Organization Structure Task Force.  The Colocation Task Force issued
an interim report in November 1996 and identified several potential
field offices that could be colocated over the next few years.\1
FHWA's February 1998 report on its regional offices' restructuring
called for replacing the agency's nine regional offices with four
resource centers.\2 Our report to you provides our observations on
the assumptions, limitations, findings, and potential costs savings
associated with these two streamlining initiatives. 


--------------------
\1 Department of Transportation Co-location Task Force Interim Report
(Nov.  19, 1996). 

\2 Report to Congress on an Evaluation of the Federal Highway
Administration's Organization Structure (Feb.  24, 1998). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The Department's colocation effort will not result in the substantial
restructuring of its field offices.  The 21-month colocation effort
narrowly focused on developing an inventory of the Department's
office space in the field and identifying opportunities for the
Department's field offices to share space.  Few colocations have
occurred as a result of the colocation effort, and additional
colocations will take years to accomplish.  Moreover, colocating
offices will likely result in limited short-term dollar savings, if
any. 

The Federal Highway Administration's proposal to restructure its nine
regional offices into four resource centers does not identify any
long-term budgetary savings, and estimates are that in the
short-term, the proposal might cost the agency more than $10 million
to implement.  In addition, the proposal leaves many unanswered
questions about the differences between the roles and
responsibilities of current regional offices and the roles and
responsibilities of the four new resource centers.  For example, the
agency's report notes that most of the regional offices'
responsibilities can be delegated to the agency's 52 division
offices.  However, the agency envisions that the new resource centers
will provide training, technical assistance, and supervision similar
to that which the current regional offices provide.  In addition, the
agency will not complete the details on its restructuring efforts
until June 1998 and projects that these efforts will take 3 to 5
years to complete. 


   BACKGROUND
------------------------------------------------------------ Letter :2

In 1966, DOT was established to consolidate many widespread federal
transportation functions and programs.  According to a National
Academy of Public Administration study,\3 no reorganization in the
history of the federal executive branch involved structural and
management issues as complex as those involved in establishing DOT. 
The programs that would be brought together into one department
affected over 95,000 employees and military personnel located in many
bureaus and offices.  The design of the new department had to fit
numerous discrete organizations and programs into a rational
structure.  However, to ensure that services were not interrupted,
the new heads of individual modal (e.g., highway, rail, and aviation)
operating administrations carried out the bulk of the new
department's responsibilities.  Similarly, the existing field
structures that DOT inherited were retained.  For many years,
successive Secretaries have attempted to significantly reorganize the
Department with little success.  Largely unchanged in structure and
purpose since its creation, DOT has also been the object of many
reform proposals. 

In 1995, DOT proposed to consolidate its 10 operating administrations
into 3:  a new Intermodal Transportation Administration, which would
integrate all surface transportation programs and the civilian
operations of the Maritime Administration; a restructured Federal
Aviation Administration; and the U.S.  Coast Guard.  In 1995, DOT's
Associate Deputy Secretary and Director for Intermodalism noted that
DOT's current structure was costly to operate and hindered the
Department's ability to develop creative partnerships, strategic
transportation investments, and innovative financing mechanisms. 
While the 1995 reorganization initiative did not provide a detailed
field-restructuring plan, it furnished a general framework for
decisions affecting field offices.  To support its missions, DOT
proposed that goals for restructuring field offices should move away
from a hierarchical field structure and create better partnerships
with state and local organizations.  DOT cited, as a goal, the need
to minimize management layers between headquarters and field offices
and drastically reduce the number of managers and supervisors. 
Although the Congress did not pass DOT's 1995 legislative proposal
for restructuring the Department, it remained concerned about the
need to streamline the Department's field structure. 

In June 1996, DOT set up a Colocation Task Force to review the
Department's inventory of field offices and identify opportunities
for colocating field offices.  The Task Force is chaired by the
Special Assistant to the Deputy Secretary, and members consist of
representatives from DOT's Office of the Secretary and Transportation
Administrative Services and representatives from each of the
operating administrations with field offices.  The Colocation Task
Force issued an interim report in November 1996 and is expected to
issue a final report in the spring of 1998.  In May 1997, FHWA set up
a task force consisting of FHWA field employees and headquarters
staff to review the agency's regional office structure.  FHWA issued
a draft report on its initial efforts in September 1997 and a final
report in February 1998. 

Currently, DOT has about 100,000 civilian and military employees and
1,700 field locations with almost 50,000 staff.  FHWA has about 3,500
staff--1,090 in headquarters and 2,418 in 9 regional offices and 52
division offices nationwide. 


--------------------
\3 The Organization and Management of the Department of
Transportation, National Academy of Public Administration (Mar. 
1991). 


   DOT HAS MADE LIMITED PROGRESS
   IN RESTRUCTURING ITS FIELD
   OFFICES
------------------------------------------------------------ Letter :3

The structure of DOT's field offices will not change substantially as
a result of DOT's colocation efforts.  Over the past 21 months, the
Colocation Task Force, charged with reviewing DOT's field structure,
has progressively narrowed its scope by confining its focus to how
532 of the 1,700 field offices could share space and administrative
services over a 5-year period.  As a result, DOT anticipates that
nine field offices would be colocated through 1999 and that limited
short-term savings will result.  According to DOT officials,
colocation will take years to accomplish because of a lack of funds,
the amount of lead time required to colocate large offices, and
incompatible information and telecommunication systems. 


      TASK FORCE EXCLUDED MANY
      FIELD OFFICES
---------------------------------------------------------- Letter :3.1

DOT's Colocation Task Force was charged with reviewing the structure
of DOT's field offices and identifying opportunities for colocating
field offices.  A Task Force representative from the Office of the
Secretary stated that the Task Force was not charged with looking at
the integration and consolidation of programs or organizational
structure issues.  The Colocation Task Force concentrated almost
solely on office space issues related to colocation, that is,
physically moving field offices to one shared location to reduce
space and administrative expenses, such as reception, printing,
mailing, and copying.  Its accomplishments are limited in part
because 1,217 offices--nearly 70 percent of all field offices--were
excluded from the colocation study.  Although DOT has more than 1,700
offices in the field, the Colocation Task Force's review was limited
to the 532 (30 percent) of DOT's field offices that provide customer
service or technical assistance.  (See table 1.) The remaining 1,217
offices that provide training, research, and special services, such
as air traffic towers and radar facilities, were excluded from the
study because they did not provide program, financial, or technical
assistance.\4 In commenting on a draft of this report, DOT stated
that the operational nature of these offices provided a compelling
reason for their exclusion from any potential opportunities for
colocation by the Task Force. 

Using lease expiration dates for existing offices or the dates of the
completion of new office space, the Colocation Task Force reviewed
the space inventory of the 532 field offices and further narrowed its
scope by identifying 160 field offices within 50 geographic locations
as potential candidates for colocation over a 5-year period. 



                                Table 1
                
                  DOT's Field Offices as of the End of
                            Fiscal Year 1996

                                                            Percentage
Field offices                                   Number        of total
--------------------------------------  --------------  --------------
Total                                            1,749             100
Excluded from the study                        (1,217)              70
Included in the study                              532              30
Potential colocations                              208              39
Already colocated                                 (48)               9
Colocation opportunities (as of Nov.               160              30
 1996)
----------------------------------------------------------------------
As table 1 indicates, 324 (61 percent) of DOT's 532 field offices
included in the study were not considered candidates for colocation,
and only 48 were actually colocated at the end of fiscal year 1996. 
The interim report projected colocations and other inventory actions
for only a 2-year period--fiscal years 1997-98.  The report indicated
that, in the next phase of the study, the Colocation Task Force would
be reviewing colocation opportunities beyond 1998, examining the work
of other groups reviewing programmatic issues, and proposing
colocation strategies. 

The Chairperson of the Task Force and other members stated that the
Colocation Task Force is not authorized to make colocation decisions
or to implement colocations.  According to DOT officials, for smaller
offices, DOT's Transportation Administrative Services would probably
oversee colocation actions in conjunction with lease expiration
dates.  For larger offices, the Assistant Secretary for
Administration or Associate Deputy Secretary, Office of
Intermodalism, would oversee these colocations.  However, DOT has not
yet developed formal procedures for colocating field offices. 


--------------------
\4 The interim report recommended that the Department or the
operating administration, where appropriate, conduct reviews of the
facilities excluded from the colocation report to ensure their
efficient use and colocation where possible. 


      LIMITED SHORT-TERM DOLLAR
      SAVINGS ARE PROJECTED
---------------------------------------------------------- Letter :3.2

The Colocation Task Force's effort will likely result in limited
short-term dollar savings, while costs could increase in some cases. 
According to DOT officials, unless the Congress provides funds to pay
for colocating field offices, the Department will have to absorb any
additional costs.  Few colocations are anticipated in the near term,
and the overall reductions in field space projected by the Colocation
Task Force for fiscal years 1997-98 are limited.  Also, some
administrations opened new offices during this period.  Moreover,
colocations will not be accomplished quickly, and collocation efforts
will likely be hampered by funding and technology limitations. 

The interim colocation report did not estimate the budgetary savings,
if any, resulting from the colocation opportunities it identified;
the Colocation Task Force has not tracked or estimated colocation
costs.  However, Task Force representatives from the Office of the
Secretary and Transportation Administrative Services said that
relocating offices will cause the Department to incur costs and that,
in some cases, rental costs could increase.  For example, offices
relocating from a suburban area to a downtown metropolitan area would
likely incur increased rental costs.  Task Force members from the
Office of the Secretary and FHWA said that colocation efforts will
likely result in long-term savings and other benefits, such as a more
unified DOT representation in the field, shared expertise, and
improved customer service as a result of "one-stop shopping."

In addition, while the Colocation Task Force identified 160
colocation opportunities, it projected that only two additional
offices would be colocated during fiscal year 1997 and that seven
additional offices would be colocated by the end of fiscal 1998.  In
fiscal year 1997, one colocation occurred in Baltimore between the
National Highway Traffic Safety Administration and FHWA, and another
occurred between FHWA and the Federal Railroad Administration (FRA)
in Columbus, Ohio.  The seven colocations originally projected to
take place in Kansas City, Missouri, in fiscal year 1998 are now
projected to occur in fiscal 1999.  In addition, the Colocation Task
Force identified colocation actions that could be accommodated within
existing office space.  For example, five FRA offices were projected
to close during fiscal years 1997-98, and staff were to be relocated
to existing space held by FHWA. 

The interim report measured only the benefits of colocation and
consolidation activities in terms of the amount of square footage
changes in the inventory of field space during fiscal years 1997-98. 
Our analysis of these data indicates that the estimated savings in
square footage are minimal.  During this period, colocation, in
conjunction with all other space inventory actions\5 such as closing
unneeded offices and opening new offices, will reduce the amount of
field office space needed by DOT during fiscal years 1997-98 by about
19,400 square feet.  This is the equivalent to 0.04 percent of DOT's
total field space, as of September 1996. 

While the field office space may slightly decline during fiscal years
1997-98, three of DOT's modal agencies--FHWA, the Federal Transit
Administration (FTA), and the Research and Special Projects
Administration--added five field offices.  For example, in fiscal
years 1996 and 1997, DOT established three new joint FHWA/FTA
metropolitan offices to serve urban customers in Philadelphia,
Chicago, and Los Angeles; it will establish a New York metropolitan
office in 1998.  These four new offices will increase DOT's field
space by over 7,000 square feet.  According to DOT officials, these
actions were taken because of the Department's focus on service
delivery and customer satisfaction.  Consequently, any benefits from
colocation opportunities may be offset by the addition of
metropolitan offices. 

According to DOT officials, colocations are complicated by a number
of factors, making it unlikely that substantial progress will be made
in the short term.  The interim report indicated that implementing
the colocation opportunities identified by the Colocation Task Force
will take years to accomplish.  Furthermore, Colocation Task Force
officials stated that colocation efforts are hampered by the lack of
funds needed for expenses related to the moves, the amount of lead
time required to colocate a number of large offices, and incompatible
information and telecommunication systems at some offices.  While
Colocation Task Force officials stated that little can be
accomplished in the short term because the Department needs
additional funds for colocation efforts, DOT has not requested
additional funds for fiscal year 1999 for these efforts. 


--------------------
\5 Projected space inventory actions include colocations,
relocations, expansions, reductions, closing, and openings. 


   FHWA'S PROPOSED REGIONAL OFFICE
   RESTRUCTURING LEAVES MANY
   UNANSWERED QUESTIONS
------------------------------------------------------------ Letter :4

In its February 1998 report to you, FHWA proposed to replace its nine
regional field offices with four new resource centers located at
sites to be determined by June 1998.  Although the proposal is
another step in FHWA's restructuring efforts, it leaves many
unanswered questions about the differences between the current roles
and responsibilities of regional offices and those of the four new
resource centers.  For example, FHWA's interim restructuring report
notes that most regional offices' responsibilities can be delegated
to FHWA's 52 field division offices.  However, FHWA envisions that
the new resource centers will provide training and technical
assistance similar to that which the current regional offices
provide.  During its review, FHWA did not evaluate other
alternatives, such as completely eliminating its regional offices
because, in part, it determined that the agency needed some
intermediate organizational level between its 52 division offices and
headquarters.  In addition, FHWA will not complete the details of its
restructuring efforts until June 1998 and projects that these efforts
will take 3 to 5 years to complete. 


      NEED FOR NEW RESOURCE
      CENTERS IS UNCLEAR
---------------------------------------------------------- Letter :4.1

FHWA's interim report recommends transferring some functions
currently performed by regional offices to headquarters or specific
division offices and relocating most regional staff to either new
resource centers, division offices, or headquarters.  However, it is
unclear from the report how the new resource centers will differ in
their roles and responsibilities from those of the current regional
offices.  For example, according to the FHWA Task Force's report and
FHWA officials, the new resource centers will provide a strong
customer focus, quality customer service, technical and program
assistance, training in and the deployment of technology, intermodal
and interagency coordination, leadership in strategic initiatives,
legal services, and the supervision of division offices.  However,
regional office staff currently provide technical and program
assistance, training, the deployment of technology, legal services,
and the supervision of division office staff.  Furthermore, FHWA's
report also notes that most of the regional offices' program
responsibilities can be delegated to division offices. 


      ADDITIONAL OPTIONS WERE NOT
      FULLY EVALUATED
---------------------------------------------------------- Letter :4.2

FHWA did not fully evaluate a wide variety of options before
proposing new resource centers.  In May 1997, FHWA officials
established the Task Force to evaluate and report on the roles and
functions of FHWA's field organization.  FHWA's Task Force staff
identified and confirmed a series of roles and functions best
provided by future FHWA field offices other than division offices. 
In February 1998, FHWA recommended that it retain its 52 division
offices and replace its 9 regional offices with 4 resource centers. 
Although other options--ranging from totally eliminating any
intermediate office structure to having some minimum level of office
structure at each existing regional office location--were identified
by FHWA's Task Force, these options were not fully considered. 
FHWA's Task Force officials stated that these options were not
responsive to improving the agency's programs and customer services. 
Furthermore, FHWA's Task Force began its work with the presumption
that intermediate offices were needed to provide a link between
FHWA's headquarters and division offices.  This decision contrasts
with congressional concerns over streamlining FHWA's regional offices
by eliminating or significantly reducing the agency's regional office
structure.  For example, in its report on DOT's fiscal year 1998
appropriation, the House Committee on Appropriations questioned the
value of FHWA's regional offices and directed FHWA to provide a
detailed implementation plan with special emphasis on eliminating or
significantly reducing FHWA's regional office structure.  In
addition, the House proposal to reauthorize the Intermodal Surface
Transportation Efficiency Act of 1991 would direct the Secretary of
Transportation to eliminate any programmatic responsibility for
FHWA's regional offices and would require that the Secretary provide
a detailed implementation plan to the House Committee on
Transportation and Infrastructure and the Senate Committee on
Environment and Public Works no later than September 30, 1998, with
additional periodic reports.  The Secretary would be required to
begin implementation of the plan by December 31, 1998. 


      COST SAVINGS ARE UNKNOWN
---------------------------------------------------------- Letter :4.3

FHWA's report does not estimate any long-term savings resulting from
the restructuring of FHWA's regional offices.  Furthermore, FHWA
officials estimate that in the short term, it will cost the agency
money to relocate regional office staff displaced when offices close. 
As a result, FHWA estimates that relocation costs could be $10
million (about $2 million for each of the five regional offices
closed).  In addition, these costs do not include additional expenses
for office space alterations to accommodate the employees at their
new locations or establishing the four new joint FHWA/FTA
metropolitan centers in Philadelphia, Chicago, Los Angeles, and New
York.  FHWA officials did not consider reductions in force but
instead concluded that all affected employees who would be willing to
relocate would be moved at FHWA's expense. 

As of January 1998, FHWA had 449 staff in its nine regional offices. 
Accordingly, FHWA does not project enough long-term savings to offset
the initial relocation costs.  However, according to FHWA officials,
while short-term costs will increase because of extensive staff
relocations, some long-term efficiencies may be possible in the
future, such as improved program and technical assistance to division
offices, improved program services to customers, and reduced
administrative expenses.  In commenting on a draft of this report,
DOT identified other benefits, such as improved program services to
partners and the redeployment of personnel resources to division
offices to work on high-priority programs. 

Other questions, such as where FHWA will locate the new resource
centers, how many regional office staff will be affected, and how
FHWA will coordinate the changes with other DOT administrations,
remain unanswered.  FHWA officials recognize that many issues remain
and plan to address them by June 1998.  However, FHWA's report notes
that it could take 3 to 5 years to completely establish the four
resource centers once a final decision is made. 

FHWA's Task Force did not evaluate other implementation issues, such
as budget implications, the impacts on staff, and the location of
resource centers, which could alter the conclusions and
recommendations of the conceptual phase of the study.  In commenting
on a draft of this report, DOT stated that it has identified the
basic elements of the agency's intended field structure and does not
plan to examine any further options in regard to its field structure. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :5

DOT provided us with comments on a draft of this report.  These
comments and our responses appear in appendix I.  DOT stated that,
overall, our report accurately portrays many of the Department's
efforts to colocate field offices and reorganize FHWA's regional
offices.  However, DOT stated that the report could better recognize
that the driving force behind both efforts was improving program
delivery and customer service and streamlining the Department's field
organization.  Furthermore, DOT stated that the objectives of the
colocation and FHWA's regional streamlining efforts were not
exclusively limited to short-term budget savings but included
improved customer service.  However, DOT noted that economies could
be achieved from both restructuring efforts.  Finally, DOT believes
that further space reductions need to be tempered by understanding
that the Department has already reduced its staffing levels and has
reached an overall level that it considers appropriate for providing
high-quality customer service. 

We added information in the report to describe the other benefits,
such as improved program delivery and customer service, that DOT
cites as important aspects of its restructuring efforts.  We also
recognized that the streamlining efforts could achieve budget savings
but, in the absence of specific data from DOT, we were not able to
specify what exact savings DOT will achieve over time. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :6

We reviewed the Colocation Task Force's Interim Report to the
Secretary's Management Council, dated November 1996, and supporting
documents and updated information.  We also interviewed the
Colocation Task Force's members and other DOT staff.  We reviewed
FHWA's September 1997 interim report and February 1998 final report,
obtained supporting documents, updated information, and interviewed
FHWA officials involved in preparing the report.  We did not conduct
reliability tests on the data contained within the reports.  However,
agency officials told us that they verified the data in the reports
with individual operating administrations and that they considered
the data to be the best available at the time.  We conducted our
review from October 1997 through March 1998 according to generally
accepted government auditing standards. 


---------------------------------------------------------- Letter :6.1

As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this report until 7 days
after the date of this report.  At that time, we will make copies
available to interested congressional committees, the Secretary of
Transportation, and the Administrator, FHWA.  We will make copies
available to others on request.  If you have any questions, please
contact me at (202) 512-2834.  Major contributors to this report were
Joseph Christoff, Teresa Dee, Lena Natola, John Rose, and Phyllis
Scheinberg. 

Sincerely yours,

John H.  Anderson, Jr.
Director, Transportation Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
TRANSPORTATION
============================================================== Letter 



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Department of
Transportation's (DOT) letter dated April 15, 1998. 

GAO'S COMMENTS

1.  In its comments, DOT stated that the primary objectives of the
Colocation Task Force were limited to improving service delivery and
achieving administrative efficiencies.  Therefore, DOT stated that we
cannot conclude that DOT's field structure will not change
substantially as a result of DOT's colocation efforts.  First, we
have not misrepresented the objectives of the Colocation Task Force. 
Our report stated that the Task Force was not charged with looking at
program integration, consolidation, or organizational structure
issues and concentrated almost solely on office space issues. 
Second, in the Colocation Task Force's November 1996 interim report,
the Department envisioned several potential accomplishments for its
field restructuring efforts, including a reduction in field office
locations, streamlined inventories, and enhanced customer service. 

2.  DOT stated that our report implies that the Colocation Task Force
was remiss in focusing colocation efforts on only 532 of 1,700 field
offices.  DOT noted that many of the excluded field offices are
important air traffic control or Coast Guard facilities that cannot
be colocated with other facilities, thereby making their exclusion
from the Colocation Task Force's study reasonable.  We have added
information to the report to more accurately explain the reasons why
DOT excluded several facilities from its review.  However, our report
describes how the Colocation Task Force progressively narrowed the
scope of its decision-making.  The 532 offices that the Colocation
Task Force reviewed were reduced to a review of only 160 field
locations.  The 160 locations were further narrowed to only 9 offices
that might be colocated by the end of fiscal year 1999.  With such
limited opportunities, it is difficult to envision DOT's achieving
its cost saving or customer improvement goals. 

3.  DOT believes that it has made "realistically paced" progress
through its Colocation Task Force and the creation of prototypical
metropolitan offices.  After almost 2 years of study, DOT's
colocation efforts to date have resulted in savings of only 19,400
square feet of field office space, which equals 0.04 percent of DOT's
total field space.  This is limited progress, at best. 

4.  DOT disagreed with our statement that FHWA did not fully consider
a "no-regional office" alternative because the agency's decision to
create four resource centers and delegate regional offices' program
responsibilities to division offices "embodies the essential elements
of the no-regional office alternative." We disagree that the plan put
forward by FHWA embodies a no-regional office alternative.  According
to FHWA documents, FHWA decided to retain an intermediate field level
and therefore did not fully evaluate several scenarios, including a
no-regional office alternative.  This presumption precluded FHWA from
fully considering the no-regional office alternative.  More
importantly, the results of FHWA's decision--that four proposed
resource centers will be located in four of FHWA's current regional
offices and employ current regional office staff--reinforce this
view.  A no-regional office alternative would have eliminated any
intermediate level between FHWA's division offices and headquarters. 

DOT also disagreed with our draft report's observation that the
differences in roles between the current regional offices and
proposed resource centers are unclear.  We amended the report to more
accurately reflect our concern that the need for the proposed
resource centers is unclear.  FHWA proposes to delegate most of the
regional offices' program authority to the division offices, and FHWA
will retain only training and technical assistance for the proposed
resource centers. 

5.  FHWA disagreed with our observation that the agency will not
achieve long-term budget savings as a result of its regional office
restructuring.  FHWA believes that while there may be initial
implementation costs resulting from personnel and space changes, some
long-term cost savings can be achieved from potentially lower rental
and communications costs.  During the course of our review, we asked
DOT and FHWA officials for detailed cost estimates related to their
colocation and regional office restructuring.  The officials
indicated that long-term savings can be realized but did not provide
any dollar estimates.  However, we did add information to the report
that represents FHWA's expectation of other benefits such as improved
program services to partners and redeployment of personnel resources
to division offices to work on high-priority programs. 

6.  DOT commented that FHWA has identified the basic elements of its
intended field structure and does not plan to examine any further
options.  Therefore, we have revised the report to reflect this
comment. 


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