U.S. Department of Agriculture: Administrative Streamlining Is Expected
to Continue Through 2002 (Letter Report, 12/11/98, GAO/RCED-99-34).

Pursuant to a congressional request, GAO provided information on the
Department of Agriculture's (USDA) progress in streamlining its
administrative operations, focusing on USDA's efforts to: (1) reduce the
number of administrative staff departmentwide; (2) consolidate and
streamline administrative support structures for seven field-based
agencies, particularly at the state office level; and (3) measure the
savings and efficiencies realized as a result of its departmentwide
reorganization and streamlining efforts.

GAO noted that: (1) from fiscal year (FY) 1993 through FY 1998, USDA
reduced its departmentwide administrative staff for four administrative
functions--human resources, budgeting, accounting and auditing, and
acquisition--from about 10,300 to an estimated 8,800, or by 15 percent;
(2) USDA estimates that the number of administrative staff will decrease
by an additional 250 by the end of FY 1999; (3) at that time, about
8,550 administrative staff will support approximately 98,500 program
staff; (4) USDA has no estimates for further departmentwide reductions
in administrative staffing beyond 1999; (5) as of November 1998, USDA
had not begun to implement its plan to consolidate and streamline
administrative functions at the state office level; (6) these new state
offices will receive policy guidance from a newly created headquarters
Support Service Bureau and report to a board of directors composed of
the state leaders of the Farm Service Agency, Natural Resources
Conservation Service, and Rural Development; (7) the plan, which is
expected to be fully implemented by 2002, requires the completion of a
number of time-consuming and potentially costly actions, including
relocating offices, developing common policies and procedures, and
instituting common computing systems; (8) furthermore, although it
appears that administrative consolidation may provide long-term savings
and efficiencies, USDA may incur additional costs to implement this
consolidation in the short term; (9) USDA has no plans to develop
performance measures to determine the economies and efficiencies
realized as a result of its departmentwide streamlining actions; (10)
USDA officials believe that a single measure--personnel
reductions--serves as a sufficient indicator of the Department's overall
performance; and (11) however, without additional performance measures,
such as those that measure the quality of service delivery, USDA will
not know the extent to which it has accomplished the 1994 act's overall
objective of achieving greater efficiency, effectiveness, and economy in
the organization and management of its programs and activities.

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

 REPORTNUM:  RCED-99-34
     TITLE:  U.S. Department of Agriculture: Administrative Streamlining 
             Is Expected to Continue Through 2002
      DATE:  12/11/98
   SUBJECT:  Federal agency reorganization
             Federal downsizing
             Centralization
             Human resources utilization
             Reductions in force
             Personnel management
             Performance measures
IDENTIFIER:  USDA Administrative Convergence Plan
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on the Budget, House of
Representatives

December 1998

U.S.  DEPARTMENT OF AGRICULTURE -
ADMINISTRATIVE STREAMLINING IS
EXPECTED TO CONTINUE THROUGH 2002

GAO/RCED-99-34

USDA's Administrative Streamlining

(150748)


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

  FAS - Foreign Agricultural Service
  FSA - Farm Service Agency
  GAO - General Accounting Office
  NPR - National Performance Review
  NRCS - Natural Resources Conservation Service
  RD - Rural Development
  USDA - U.S.  Department of Agriculture

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


B-281418

December 11, 1998

The Honorable John R.  Kasich
Chairman, Committee on the Budget
House of Representatives

Dear Mr.  Chairman: 

The Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994\1 (Reorganization Act of 1994) provided
the Secretary of Agriculture with the authority to streamline and
reorganize the U.S.  Department of Agriculture (USDA) to achieve
greater efficiency, effectiveness, and economy in its organization
and management of programs and activities.  In earlier reports, we
stated that USDA has made progress in achieving several specific
goals set forth in the act.\2

This progress included reducing the number of employees by nearly
20,000, consolidating headquarters offices, and combining field
offices.  However, we reported that a number of issues concerning
administrative streamlining warranted continued attention, such as
USDA's progress in consolidating operations at the state level and in
developing performance measures to determine the extent of the
efficiencies and economies achieved. 

As a result of the issues raised in our previous work, you asked us
to provide you with additional information concerning USDA's progress
in streamlining its administrative operations.  Specifically, you
asked us to report on USDA's progress in (1) reducing the number of
administrative staff departmentwide; (2) consolidating and
streamlining administrative support structures for seven field-based
agencies, particularly at the state office level;\3 and (3) measuring
the savings and efficiencies realized as a result of its
departmentwide reorganization and streamlining efforts. 


--------------------
\1 P.L.  103-354 (Oct.  13, 1994). 

\2 U.S.  Department of Agriculture:  Update on Reorganization and
Streamlining Efforts (GAO/RCED-97-186R, June 24, 1997) and U.S. 
Department of Agriculture:  Status of USDA's Reorganization
(GAO/RCED-98-109R, Mar.  19, 1998). 

\3 Three of these agencies--the Farm Service Agency, Risk Management
Agency, and Foreign Agricultural Service--are in the Farm and Foreign
Agricultural Services mission area.  Three others--the Rural Housing
Service, Rural Business-Cooperative Service, and Rural Utilities
Service--are in the Rural Development mission area.  The seventh
agency--the Natural Resources Conservation Service--is one of two
agencies in the Natural Resources and Environment mission area.  The
second agency in the mission area, the Forest Service, which has its
own administrative support structure, is not participating in the
consolidation and streamlining with the other field-based agencies. 
While the Farm Service Agency provides administrative support for the
Risk Management Agency and Foreign Agricultural Service, these two
agencies do not operate from state offices. 


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

From fiscal year 1993\4 through fiscal year 1998, USDA reduced its
departmentwide administrative staff for four administrative
functions--human resources, budgeting, accounting and auditing, and
acquisition--from about 10,300 to an estimated 8,800, or by 15
percent.  USDA estimates that the number of administrative staff will
decrease by an additional 250 by the end of fiscal year 1999.  At
that time, about 8,550 administrative staff will support
approximately 98,500 program staff.  USDA has no estimates for
further departmentwide reductions in administrative staffing beyond
1999. 

As of November 1998, USDA had not yet begun to implement its plan to
consolidate and streamline administrative functions at the state
office level.  In October 1998, USDA had developed a plan, subject to
the Secretary's approval, that will consolidate the administrative
functions for the agencies into a single administrative office for
each state.  These new state offices will receive policy guidance
from a newly created headquarters Support Service Bureau and report
to a board of directors composed of the state leaders of the Farm
Service Agency, Natural Resources Conservation Service, and Rural
Development.  The plan, which is expected to be fully implemented by
2002, requires the completion of a number of time-consuming and
potentially costly actions, including relocating offices, developing
common policies and procedures, and instituting common computing
systems.  Furthermore, although it appears that administrative
consolidation may provide long-term savings and efficiencies, USDA
may incur additional costs to implement this consolidation in the
short term. 

USDA has no plans to develop performance measures to determine the
economies and efficiencies realized as a result of its departmentwide
streamlining actions.  USDA officials believe that a single
measure--personnel reductions--serves as a sufficient indicator of
the Department's overall performance.  However, without additional
performance measures, such as those that measure the quality of
service delivery, USDA will not know the extent to which it has
accomplished the 1994 act's overall objective of achieving greater
efficiency, effectiveness, and economy in the organization and
management of its programs and activities. 


--------------------
\4 1993 is the baseline date established by the National Performance
Review and the Federal Workforce Restructuring Act of 1994 for
determining workforce reductions (P.L.  103-226, Mar.  30, 1994). 


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

In response to the Government Performance and Results Act of 1993 and
the Vice-President's National Performance Review (NPR), the Secretary
of Agriculture initiated a departmental reorganization to refocus and
simplify the Department's headquarters structure, improve
accountability and service to customers, reform the Department's
field structure, and reduce costs.  Several components of the
Secretary's reorganization required enabling legislation, which the
Congress provided in the Reorganization Act of 1994. 

In addition to granting USDA broad authority for streamlining and
reorganization, the Reorganization Act of 1994 directed USDA to (1)
reduce the number of full-time-equivalent staff by at least 7,500 by
the end of fiscal year 1999, (2) reduce the number of staff so that
the percentage of the reduction in headquarters is at least twice
that in the field offices, (3) consolidate headquarters offices, and
(4) combine field offices and have them share resources. 

By the end of fiscal year 1997, USDA had achieved most of the act's
goals.  It had reduced its overall staff-years by nearly 20,000, from
about 129,500 in 1993 to about 110,000 by the end of 1997; 22 percent
of the reductions occurred in headquarters, and about 13 percent
occurred in field offices.  In addition, the number of USDA agencies
fell from 43 to 29, most of which are under seven mission areas.\5
(App.  I shows USDA's staff by mission area and agencies and
headquarters staff offices.) Of the seven mission areas, five include
more than one agency.  In four of these five mission areas,\6 USDA
has designated one agency as the lead administrative agency for the
mission area.  (USDA's current administrative structure is shown in
app.  II.) Finally, USDA reduced the number of its county office
locations by about 30 percent, from about 3,760 in 1994 to about
2,700 in 1997. 

The Farm Service Agency (FSA), Natural Resources Conservation Service
(NRCS), and Rural Development (RD)--through the Rural Housing
Service--operate three separate administrative structures to provide
administrative support for seven field-based agencies\7

in 50 states, two territories, and several Foreign Agricultural
Service (FAS) overseas offices.  These seven agencies employed about
37,900 staff, or about 35 percent of USDA's total staff, in 1997 and
are located in headquarters, about 150 state offices, 5,800
county-based service centers, over 500 other support offices, and
several consolidated operations centers, such as FSA's Management
Office in Kansas City, Missouri; RD's Centralized Servicing Center in
St.  Louis, Missouri; and NRCS' National Science and Technology
Consortium in Fort Worth, Texas. 


--------------------
\5 These mission areas are (1) Farm and Foreign Agricultural
Services; (2) Rural Development; (3) Food, Nutrition, and Consumer
Services; (4) Natural Resources and Environment; (5) Food Safety; (6)
Research, Education, and Economics; and (7) Marketing and Regulatory
Programs. 

\6 The four mission areas are (1) Farm and Foreign Agricultural
Services; (2) Marketing and Regulatory Programs; (3) Research,
Education, and Economics; and (4) Rural Development. 

\7 FSA, Risk Management Agency, Foreign Agricultural Service, NRCS,
Rural Housing Service, Rural Business-Cooperative Service, and Rural
Utilities Service. 


   USDA HAS REDUCED ADMINISTRATIVE
   POSITIONS OVERALL
------------------------------------------------------------ Letter :3

From fiscal year 1993 through fiscal year 1998, USDA reduced its
departmentwide administrative staff by 15 percent, from about 10,300
to an estimated 8,800, in four areas identified by the NPR--human
resources, budgeting, accounting and auditing, and acquisition. 
Administrative staff provide internal services for USDA's program
delivery staff, such as payroll processing, financial management and
reporting, and the purchasing of supplies and equipment.  USDA plans
to have about 8,550 administrative staff supporting a departmentwide
program staff of approximately 98,500 by the end of fiscal year 1999. 

Figure 1 shows the changes in the number of administrative staff for
each of the four administrative functions for fiscal years 1993 and
1998.  (Administrative staffing is shown in app.  III.)

   Figure 1:  Changes in
   Departmentwide Administrative
   Staff, Fiscal Years 1993 and
   1998

   (See figure in printed
   edition.)

Legend

RBS = Rural Business-Cooperative Service
RHS = Rural Housing Service
RMA = Risk Management Agency
RUS = Rural Utilities Service

Source:  USDA's Office of Budget and Program Analysis. 


   CHANGES TO ADMINISTRATIVE
   OPERATIONS FOR FIELD-BASED
   AGENCIES WILL NOT BE FULLY
   IMPLEMENTED UNTIL 2002
------------------------------------------------------------ Letter :4

As of November 1998, USDA had not consolidated administrative
functions for its field-based agencies at the state office level. 
However, in October 1998, a USDA team submitted a plan (known as the
Administrative Convergence Plan) to the Secretary of Agriculture that
will, upon approval, implement this consolidation by 2002.  USDA
officials explained that the plan, when fully implemented, is
expected to reduce costs and improve customer service and operating
efficiencies.  In addition, they said the plan will require up to 4
years to implement because the Department will need to complete a
number of time-consuming and complex actions--relocating offices,
developing common policies and procedures, and instituting common
computing systems.  Even though these actions are expected to provide
savings and efficiencies in the long term, the Department has not
identified the costs it will incur in the short term to achieve these
savings.  Furthermore, USDA officials commented that these tasks are
not likely to be accomplished in a timely and effective manner unless
a strong leader is appointed to oversee them. 


      USDA HAS NOT YET BEGUN TO
      IMPLEMENT ITS ADMINISTRATIVE
      CONVERGENCE PLAN AT THE
      STATE LEVEL
---------------------------------------------------------- Letter :4.1

USDA expects to begin consolidating administrative functions at the
state level for its field-based agencies approximately 6 to 9 months
following the Secretary's approval of the proposed October 1998
convergence plan.  Under the plan, a new office headquartered in
Washington, D.C.--the Support Services Bureau--will provide the
administrative support now provided separately by FSA, NRCS, and RD
for seven field-based agencies.  (See fig.  2.)

   Figure 2:  Administrative
   Support Structure Before and
   After Creation of the Support
   Services Bureau

   (See figure in printed
   edition.)

Source:  USDA's Administrative Convergence Plan. 

In addition to its office in Washington, D.C., the bureau will have a
single administrative support unit in each state and in each of its
four consolidated operations centers to carry out combined
administrative functions.  The new state offices will receive policy
guidance from the headquarters Support Services Bureau and will
report to a board of directors composed of the state leaders of FSA,
NRCS, and RD. 

While the NPR specifies only four administrative functions
(personnel, budgeting, accountants and auditors, and acquisition),
USDA's Administrative Convergence Plan includes additional functions
and categorizes them differently.  The plan's functions include
financial management (excluding budgeting), human resources, civil
rights, information technology, and management services (such as
procurement and printing).  By consolidating these functions into a
single administrative support unit in each state or consolidated
operations center, USDA expects to reduce the administrative staff
for the seven field-based agencies by 45 percent from fiscal year
1993 through fiscal year 2002.  However, by 1997, two-thirds of these
reductions had already occurred.  (See table 1.)



                          Table 1. Administrative Staff for the
                         Seven Field-Based Agencies, Fiscal Years
                                    1993 Through 2002

                                    Number of full-time-equivalent staff
                   ----------------------------------------------------------------------
                                                           Fiscal       Staff
Administrative         Fiscal      Fiscal     Percent        year      change     Percent
function            year 1993   year 1997      change      2002\a   from 1993      change
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Financial               1,133         783     (30.9%)         756       (377)     (33.3%)
 management
Human resources           853         524     (38.6%)         473       (380)     (44.6%)
Management              1,019         624     (38.8%)         405       (614)     (60.3%)
 services
Civil rights               74          80        8.1%         164          90      121.6%
Information             1,955       1,512     (22.7%)       1,159       (796)     (40.7%)
 technology
Other                     590         381     (35.4%)         116       (474)     (80.3%)
 administrative
 operations\b
=========================================================================================
Total                   5,624       3,904     (30.6%)       3,073     (2,551)     (45.4%)
-----------------------------------------------------------------------------------------
\a Proposed number of staff when convergence plan is fully
implemented. 

\b Includes administrative officers, program assistants, and
secretaries. 

Source:  USDA's Administrative Convergence Plan. 

According to USDA officials, they did not implement streamlining at
the state office level earlier for two reasons.  First, they were
focused on implementing the Secretary's initiative to create
consolidated county-based service centers.  And second, they were
unable to reach agreement among the affected agencies on how to
achieve consolidation. 


      A NUMBER OF CHALLENGES NEED
      TO BE ADDRESSED BEFORE
      IMPLEMENTATION CAN BE
      COMPLETED
---------------------------------------------------------- Letter :4.2

USDA officials stated they must deal with several challenges to fully
achieve the cost savings, benefits, and efficiencies expected to be
realized as a result of implementing the administrative consolidation
plan.  These challenges include relocating offices, developing common
policies and procedures, and adopting a common computing environment. 
In addition, USDA officials said that strong leadership will be
needed to implement the plan and additional investments for
collocating offices and modernizing business processes and
information technology will be required. 


         RELOCATING OFFICES
-------------------------------------------------------- Letter :4.2.1

Currently, in 28 states,\8 the state offices for each of the
different field-based agencies are not located in the same facility
(collocated), and in 19 of these states, the offices are not even
located in the same city.  USDA is planning to begin consolidating
administrative functions before many of these state offices have
collocated.  In those instances, the agencies will continue to
maintain staff in up to three separate offices.  Consequently, in
these states, the benefits of sharing resources--reducing staff and
equipment and expanding staff expertise--will not be fully realized
until the agencies' state offices are collocated.  For example, in
Kansas, the FSA, NRCS, and RD state offices are located from 50 to
100 miles apart in three separate cities.  As a result, even though
these agencies' administrative staff will be one organization on
paper, they will continue to function in up to three separate
locations until the offices are collocated, requiring USDA to retain
more administrative staff and continue to pay for separate equipment
and facilities. 

In addition, at least some of the 24 collocated state offices will
need to be reorganized before they can operate efficiently under the
Administrative Convergence Plan.  For example, several collocated
state offices have separate office suites for each agency's staff. 
Agency officials acknowledged that to combine administrative staff
into functional work units under administrative convergence, it will
be necessary to move staff within existing office space, reconfigure
existing office space, or move agency operations to new facilities. 

In other cases, collocated offices are already designed to operate
effectively under the planned administrative convergence.  For
example, the new state office for FSA, NRCS, and RD in Boise,
Idaho--opened in February 1998--is expected to facilitate
administrative convergence once the plan is implemented.  When the
three agencies planned the new office, they required that all
employees in a functional area--such as human resources or
information technology--share a common work space.  In addition, the
agencies share common mail rooms, printing equipment, and other
office facilities.  According to state officials, their location in a
shared facility has already increased the efficiency of their
operations by allowing them to have fewer staff, less space, and less
equipment. 

USDA estimates that it will cost as much as $29 million to collocate
offices in 24 of the 28 states where they are not currently
collocated,\9 including moving personnel and acquiring new space, and
an undetermined amount to reconfigure existing space for collocated
offices.  Figure 3 shows the states with collocated offices, and
those with noncollocated offices.  (App.  IV provides more detailed
information on the noncollocated locations). 

   Figure 3:  Location of
   Collocated and Noncollocated
   State Offices

   (See figure in printed
   edition.)

Source:  USDA documents. 


--------------------
\8 When we use the term "states," we are including the Commonwealth
of Puerto Rico and the Territory of Guam. 

\9 USDA has state cost analyses from 24 of the 28 noncollocated
states.  Alaska, Hawaii, Michigan, and Puerto Rico have not yet
submitted this information. 


         DEVELOPING COMMON
         POLICIES AND PROCEDURES
-------------------------------------------------------- Letter :4.2.2

While FSA, NRCS, and RD are subject to the same administrative
regulations, each has developed a different approach to implementing
them.  As a result, there are slight to significant differences in
the policies, procedures, and business processes that each agency
follows. 

For example, NRCS and RD state offices have authority over personnel
actions for employees up to the level of General Schedule-13 and are
delegated authority to obligate funds for most categories of
procurement.  In contrast, FSA state offices have far less authority
over personnel actions and procurement. 

For budgeting, NRCS provides each state with a single budget
allocation for its program and administrative expenses.  However, RD
allocates specific budget line items to its state offices for their
individual programs, salaries, and administrative expenses.  FSA
headquarters allocates the total number of staff that each state may
have each fiscal year and retains control over certain state-level
administrative expenses, such as office leasing and information
technology. 

State office officials note that their agencies also need to develop
common business processes to standardize their personnel and
recordkeeping systems.  Currently, the National Finance Center
provides payroll processing for USDA employees.  However, NRCS uses a
different process than FSA and RD for entering personnel and payroll
transactions transmitted to the center. 


         DEVELOPING A COMMON
         COMPUTING ENVIRONMENT
-------------------------------------------------------- Letter :4.2.3

To modernize and integrate the separate information systems currently
used by the agencies undergoing administrative convergence, USDA
plans to acquire a single, integrated information system--referred to
as the common computing environment.  The common computing
environment, as part of USDA's effort to modernize its business
processes and information technology, will consist of new computer
hardware and software applications.  This new integrated system may
require as many as 38,000 new personal computers and 24,000 printers,
which will be expected to operate in more than 3,000 locations
nationwide.  As we reported in August 1998,\10 USDA estimates that
the costs of implementing a common computing environment may exceed
$2.6 billion over its expected 15-year life cycle.\11

The effort to acquire and install this system will be significant,
complex, time-consuming, and costly.  Achieving a common computing
environment requires these agencies to accomplish many activities,
such as reengineering and creating a common set of business
processes, designing common software, and determining the
requirements for hardware.  In addition, FSA, NRCS, and RD have 150
existing software applications, many of which must be modified.  It
is not clear when USDA will complete these tasks.  Some planning
documents show that the tasks may be completed by fiscal year 2002,
while others show a completion date as late as fiscal year 2008. 
Until existing business applications are modified, USDA plans to
maintain and operate both the old and new information systems. 

In our August 1998 report, we found several fundamental planning and
management weaknesses in the Department's effort to modernize
business processes and technology for the agencies undergoing
administrative convergence.  In light of these weaknesses, we
suggested that the Congress consider limiting funding for information
technology for these agencies' field offices to no more than the
level needed to meet Year 2000 compliance requirements until
appropriate action was taken to resolve these weaknesses.  USDA
started acquiring new hardware and software for its common computing
environment at the end of fiscal year 1998, when it purchased over
16,000 personal computers.  While this purchase was principally made
to replace computers that are not Year 2000 compliant, USDA also
expects this procurement to enable its field-based agencies to use
common software applications that will support administrative
convergence in such areas as human resources, procurement, and
travel. 


--------------------
\10 USDA Service Centers:  Multibillion-Dollar Effort to Modernize
Processes and Technology Faces Significant Risks (GAO/AIMD-98-168,
Aug.  31, 1998). 

\11 Life-cycle costs represent those costs associated with planning,
acquiring, developing, operating, and maintaining the system from
1996 through 2011.  These costs include, for example, the costs for
equipment and software, personnel, contractor support, and supplies. 


      NEED FOR STRONG LEADERSHIP
---------------------------------------------------------- Letter :4.3

USDA officials emphasized the need for the Secretary to move quickly
to fill key leadership positions for the Support Services Bureau and
charge the appointed officials with the responsibility to implement
the Administrative Convergence Plan once it has been approved.\12
According to the leader of the implementation planning team,
assigning leadership responsibilities and providing the appropriate
authority to carry out those responsibilities are critical to the
plan's success, given the host of decisions to be made and actions to
be taken in implementing the convergence plan.  These decisions
include determining how the new organization will be funded in the
long term, how authority will be delegated within the organization,
and how staff will be classified. 

Currently, three separate administrative structures provide support
to seven agencies in 50 states, two territories, and several FAS
overseas offices.  As mentioned earlier, these agencies have
developed different approaches to delivering administrative services
to their customers.  The administrators for these three structures
are focused on the delivery of several programs in addition to
administrative support.  USDA officials said, and we agree, that
unless the Secretary moves quickly to appoint the leaders to
translate the plan into a workable operation, it is unlikely that
substantial progress will be made. 


--------------------
\12 Key leadership positions, according to the leader of the
implementation planning team, include the Executive Director, Deputy
Director/Chief Information Officer, and the top functional leaders
for human resources, financial management, management services, and
civil rights. 


      ADDITIONAL INVESTMENTS WILL
      BE REQUIRED BEFORE LONG-TERM
      ADMINISTRATIVE SAVINGS ARE
      REALIZED
---------------------------------------------------------- Letter :4.4

While USDA has estimated the savings it will achieve through staff
reductions resulting from the administrative convergence, it has not
estimated the costs associated with the convergence.  USDA officials
believe that administrative convergence will allow the Department to
reduce the number of administrative staff by 45 percent from 1993
through 2002.  However, they acknowledge that budgetary savings from
staff reductions will be decreased in the next several years by the
costs of collocating state offices, modernizing business processes,
and acquiring and implementing a common computing environment.  If
the administrative convergence is fully implemented in 2002, the
savings in administrative staff is projected to total about $144
million annually.\13 However, these savings will be reduced by the
approximately $29 million associated with merging offices in 24 of
the 28 states that do not yet have collocated offices and by several
million dollars annually for modernizing business processes and
implementing a common computing environment.  The Administrative
Convergence Plan does not provide an estimate of these costs. 


--------------------
\13 Approximately $96 million of the projected $144 million in annual
savings had been realized through fiscal year 1997.  Therefore, the
future costs associated with administrative convergence must be
offset against the remaining $48 million in projected annual savings. 


   SAVINGS AND EFFICIENCIES
   MEASURES LACKING
------------------------------------------------------------ Letter :5

USDA has not instituted, and has made no plans to develop,
performance measures to determine the economies and efficiencies
realized as a result of its departmentwide administrative
streamlining.  According to USDA officials, staff reductions should
serve as a sufficient indicator of the Department's savings and
efficiencies because employees' salary and benefit costs typically
represent a majority--about 85 percent--of salary and administrative
expenses.  However, although it has developed savings estimates
associated with staff-year reductions, these estimates do not include
any offsetting expenses as a result of employee buyouts and
reductions in force.  While staff-year reductions are certainly one
indicator of savings, absent other measures, USDA does not know the
extent to which it has improved service delivery, efficiency, and
quality--key objectives of the 1994 act and desired outcomes of the
agencies' ongoing restructuring efforts.  Additional outcome-oriented
performance measures could help USDA determine when it is achieving
the overall objectives of the Reorganization Act of 1994.  For
example, using the ratio of the number of employees served per
personnel specialist as a broad measure of efficiency,\14 we found
that although USDA had reduced its personnel staff departmentwide by
17 percent from September 1993 to September 1997, the ratio decreased
from 55 to 54 employees served by one personnel specialist,
indicating that the personnel reductions had not increased
efficiency.  Other measures of effectiveness could include (1)
financial measures, such as cost per employee hired; (2) customer
satisfaction measures, such as those associated with responsiveness
and quality; and (3) process effectiveness measures, such as the time
it takes to complete specific administrative functions. 


--------------------
\14 Management Reform:  Agencies' Initial Efforts to Restructure
Personnel Operations (GAO/GGD-98-93, July 13, 1998). 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

USDA has made a number of organizational changes since 1994 to reduce
its staff and streamline its operations.  However, USDA does not plan
to determine the extent to which its streamlining efforts have
achieved the objectives of the Reorganization Act of 1994, other than
determining the savings associated with staff reductions.  The 1994
act also had as its objectives more efficient operations to better
carry out the Department's missions.  Without an assessment of the
overall effects of its departmentwide streamlining efforts, USDA
cannot know the extent to which its efforts have been successful in
achieving all of the objectives mandated by the 1994 act. 

USDA's current reorganization task--the convergence of administrative
functions at the state level for the field-based agencies--is complex
and, even under the best of circumstances, will be difficult to
implement effectively and efficiently.  However, we believe that
there are weaknesses in USDA's current plans for administrative
convergence that could hinder its successful implementation.  First,
while the convergence is likely to save money in the long run, USDA
has not calculated the costs associated with implementing the plan. 
As a result, USDA managers lack key cost information that could be
used to evaluate the effectiveness of various actions that the
Department has taken or will take in connection with administrative
convergence.  Second, USDA has not yet assigned leadership
responsibilities for implementing the convergence plan.  In our view,
this is critical to establishing the accountability needed to help
ensure the plan's successful implementation. 


   RECOMMENDATIONS TO SECRETARY OF
   AGRICULTURE
------------------------------------------------------------ Letter :7

To measure the economies and efficiencies gained by the
departmentwide administrative streamlining, we recommend that the
Secretary of Agriculture require the leaders for the seven mission
areas, in consultation with the Assistant Secretary for
Administration, the Chief Information Officer, and the Chief
Financial Officer, to develop and implement performance measures for
the Department's administrative operations that assess service
delivery, efficiency, and quality. 

We further recommend that the Secretary direct the Undersecretaries
for the Farm and Foreign Agricultural Services, Natural Resources and
Environment, and Rural Development to develop cost estimates for the
complete implementation of administrative convergence. 

Finally, to facilitate the effective implementation of the
Administrative Convergence Plan, we recommend that the Secretary,
after approving the implementation plan, move quickly to fill key
leadership positions for the Support Services Bureau and charge the
appointed officials with the responsibilities to carry out the plan. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We provided USDA with a draft of this report for its review and
comment.  We met with the Deputy Assistant Secretary for
Administration; Acting Director for Human Resources Management; and
officials from the Office of Departmental Administration, the Office
of Budget and Program Analysis, the Office of the Chief Financial
Officer, the Office of Inspector General, the National Food and
Agriculture Council, the Farm Service Agency, Rural Development, and
the Natural Resources Conservation Service. 

USDA generally agreed with the report and our recommendations and
noted that USDA's field-based agencies have made progress in
developing certain common policies and administrative systems for
areas such as employee recognition, evaluation of human resources
management, merit promotion, telecommuting, and work scheduling.  In
addition, USDA noted that most of the savings associated with
administrative consolidation will be achieved by merging the three
agencies'--FSA's, NRCS', and RD's--administrative functions, not from
collocating offices.  Finally, USDA agreed with our recommendation to
develop and implement performance measures to evaluate the efficiency
and effectiveness of the Department's administrative operations. 
However, USDA noted that it would be difficult to develop historical
baseline data for fiscal year 1993--the baseline date established by
the National Performance Review and the Federal Workforce
Restructuring Act of 1994--and therefore suggested that more recent
baseline data be used to measure changes in administrative
operations.  While we recognize it would be difficult to develop
baseline data for certain indicators that date back to fiscal year
1993, we continue to believe that USDA, to the extent practicable,
should develop measures using baseline data for this time period to
demonstrate the progress it has made in streamlining the Department
since the passage of the Reorganization Act. 

USDA provided a number of technical changes and clarifications to the
report, which we have incorporated as appropriate. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To obtain information on USDA's progress in reducing administrative
staff departmentwide, we interviewed administrative officials in
Departmental Administration, the Office of Budget and Program
Analysis, and each mission area and reviewed relevant documents.  To
understand USDA's plans for consolidating administrative functions,
we interviewed the implementation team leader and reviewed relevant
documents. 

To determine USDA's progress in consolidating state office
administrative functions for FSA, NRCS, and RD, we interviewed
headquarters officials in each agency and state office officials in
five states where these agency offices are collocated and five states
where the agency offices are not collocated.  We also obtained
relevant data and documentation.  We also met with the appropriate
officials in USDA agencies in Kansas City and St Louis to obtain data
on the status of (1) FSA's, NRCS', and RD's efforts to collocate
their state offices into single facilities; (2) the reduction of
administrative staff that has occurred since 1993; (3) USDA's plans
to implement administrative convergence, including the benefits the
Department hopes to achieve and the problems associated with this
action; and (4) USDA's attempts to quantify the savings associated
with streamlining efforts, including administrative convergence. 

To determine USDA's progress in measuring the savings and
efficiencies realized as a result of its departmentwide
reorganization and streamlining, we interviewed Department and agency
officials involved in reorganization and streamlining and reviewed
documents pertaining to their performance measures. 

We conducted our review from May through November 1998 in accordance
with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :9.1

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter.  At that time, we will send copies of
this report to appropriate congressional committees, Members of
Congress, the Secretary of Agriculture, and other interested parties. 
We will also make copies available to others on request. 

If you have any questions, please call me at (202) 512-5138.  Major
contributors to this report are listed in appendix V. 

Sincerely yours,

Robert E.  Robertson
Associate Director, Food and
 Agriculture Issues


USDA'S STAFF BY MISSION AREA,
AGENCY AND OFFICE FOR FISCAL YEARS
1993 THROUGH 1999
=========================================================== Appendix I

                                                   Number of full-time-equivalent staff
                                                 ----------------------------------------
                                                 1993  1994  1995              1998  1999
Mission area or office  Agency                     \a    \a    \a  1996  1997    \b    \b
----------------------  -----------------------  ----  ----  ----  ----  ----  ----  ----
Farm and Foreign        Farm Service Agency      7,62  7,11  6,60  6,28  5,87  5,90  5,64
 Agricultural Services   (FSA) (federal)            8     2     2     3     0     9     6
                        Farm Service Agency      14,9  14,1  13,4  12,7  11,3  10,8  9,98
                         (nonfederal)              53    76    32    38    99    35     0
                        Foreign Agricultural      923   906   907   885   881   881   819
                         Service
                        Risk Management Agency    664   651   563   536   526   550   550
=========================================================================================
Total                   2                        4,16  2,84  1,50  0,44  8,67  8,17  6,99
                                                  8 2   5 2   4 2   2 1   6 1   5 1     5
Rural Development (RD)  Rural Housing Service    8,22  7,87  7,23  6,91  6,22  6,18  6,10
                                                    2     0     4     1     7     8     9
                        Rural Business-           428   419   391   331   320   328   304
                         Cooperative Service
                        Rural Utilities Service   890   891   850   765   745   764   715
                        Alternative                 7     6     7     7     6    11    11
                         Agricultural Research
                         and Commercialization
                         Corporation\
=========================================================================================
Total                                            9,54  9,18  8,48  8,01  7,29  7,29  7,13
                                                    7     6     2     4     8     1     9
Natural Resources and   Natural Resources        13,7  13,3  12,1  11,8  11,8  11,9  11,4
 Environment             Conservation Service      84    11    57    33    88    45    12
                         (NRCS)
                        Forest Service           43,0  40,5  38,3  37,2  36,3  36,3  35,5
                                                   25    93    49    24    30    11    26
=========================================================================================
Total                                            56,8  53,9  50,5  49,0  48,2  48,2  46,9
                                                   09    04    06    57    18    56    38
Food, Nutrition, and    Food and Nutrition       2,00  1,93  1,86  1,80  1,71  1,72  1,78
 Consumer Services       Service                    9     3     8     7     1     5     2
Food Safety             Food Safety and          9,95  10,1  10,0  9,76  9,69  9,70  9,70
                         Inspection Service         0    11    90     0     7     2     2
Marketing and           Agricultural Marketing   4,02  3,95  3,84  3,64  3,52  3,52  3,52
 Regulatory Programs     Service                    7     6     3     5     4     4     4
                        Animal and Plant Health  6,55  6,63  6,30  6,19  6,29  6,28  6,13
                         Inspection Service         2     1     3     5     5     7     3
                        Grain Inspection,         936   867   812   808   788   824   824
                         Packers and Stockyards
                         Administration
=========================================================================================
Total                                            11,5  11,4  10,9  10,6  10,6  10,6  10,4
                                                   15    54    58    48    07    35    81
Research, Education,    Agricultural Research    8,42  7,95  7,62  7,61  7,52  7,55  7,56
 and Economics           Service                    6     3     1     7     1     6     2
                        Cooperative State         408   424   386   380   394   405   405
                         Research, Education
                         and Extension Service
                        Economic Research         788   717   625   591   570   554   551
                         Service
                        National Agricultural    1,48  1,34  1,21  1,13  1,12  1,29  1,10
                         Statistics Service         7     5     4     8     8     0     7
=========================================================================================
Total                                            11,1  10,4  9,84  9,72  9,61  9,80  9,62
                                                   09    39     6     6     3     5     5
Departmental                                      727   710   628   625   618   648   701
 Administration\c\
Staff offices           Office of the Secretary    83    72    64    66    61    82    82
                        Office of Chief          1,22  1,28  1,24  1,23  1,23  1,27  1,13
                         Financial Officer          1     8     3     1     8     7     1
                        Office of Chief           297   281   279   262   246   268   271
                         Information Officer
                        Office of                 150   135   127   123   119   119   120
                         Communications
                        Office of Budget and       76    72    71    72    73    70    69
                         Program Analysis
                        Office of the Chief        45    36    37    37    40    50    57
                         Economist
                        Office of the General     420   402   368   353   351   374   378
                         Counsel
                        Office of Inspector       850   825   777   754   742   750   925
                         General
                        National Appeals          152   151   132   132   133   133   133
                         Division
                        Thrift Savings Plan       367   397   408   430   445   490   502
=========================================================================================
Total                                            3,66  3,65  3,50  3,46  3,44  3,61  3,66
                                                    1     9     6     0     8     3     8
Total USDA staff                                 129,  124,  117,  113,  109,  109,  107,
                                                  495   241   388   539   886   850   031
-----------------------------------------------------------------------------------------
\a Numbers adjusted to reflect mission area reorganization that
occurred from 1993 to 1995. 

\b Estimates. 

\c Offices included under the Assistant Secretary for Administration
are the Office of Administrative Support, Board of Contract Appeals,
Office of the Judicial Officer, Office of Administrative Law Judges,
Office of Civil Rights, Office of Procurement and Property
Management, Office of Operations, Office of Human Resources
Management, Office of Small and Disadvantaged Business Utilization,
and Office of Outreach. 

Source:  USDA's Office of Budget and Program Analysis. 


USDA'S CURRENT DEPARTMENTWIDE
ADMINISTRATIVE SUPPORT STRUCTURE
========================================================== Appendix II

                                                    Responsible
                                                    administrative
Mission area                    Agency or offices   support unit
------------------------------  ------------------  ------------------
Farm and Foreign Agricultural   Farm Service        Farm Service
Services                        Agency              Agency\a
                                Foreign
                                Agricultural
                                Service
                                Risk Management
                                Agency

Rural Development               Rural Housing       Rural
                                Service             Development\a,b
                                Rural Business-
                                Cooperative
                                Service
                                Rural Utilities
                                Service
                                Alternative
                                Agricultural
                                Research and
                                Commercialization
                                Corporation

Natural Resources and           Natural Resources   Natural Resources
Environment                     Conservation        Conservation
                                Service             Service\a

                                Forest Service      Forest Service

Food, Nutrition, and Consumer   Food and Nutrition  Food and Nutrition
Services                        Service             Service


Food Safety                     Food Safety and     Food Safety and
                                Inspection Service  Inspection Service

Marketing and Regulatory        Agricultural        Animal and Plant
Programs                        Marketing Service   Health Inspection
                                Animal and Plant    Service
                                Health Inspection
                                Service
                                Grain Inspection,
                                Packers and
                                Stockyards
                                Administration

Research, Education, and        Agricultural        Agricultural
Economics                       Research Service    Research Service
                                Cooperative State
                                Research,
                                Education, and
                                Extension Service
                                Economics Research
                                Service
                                National
                                Agricultural
                                Statistics Service

                                Other staff         Departmental
                                offices and         Administration
                                activities\c
----------------------------------------------------------------------
\a Administrative support for these agencies will be provided by the
Support Services Bureau when the Administrative Convergence Plan is
implemented. 

\b Administrative support staff are located at the Rural Housing
Service, but report to the Rural Development mission area. 

\c Offices and activities include the Office of Congressional
Relations, Office of Administrative Support, Board of Contract
Appeals, Office of the Judicial Officer, Office of Administrative Law
Judges, Office of Civil Rights, Office of Procurement and Property
Management, Office of Operations, Office of Human Resources
Management, Office of Small and Disadvantaged Business Utilization,
Office of Outreach, Office of the Secretary, Office of Chief
Financial Officer, Office of Chief Information Officer, Office of
Communications, Office of Budget and Program Analysis, Office of the
Chief Economist, Office of the General Counsel, National Appeals
Division, and Thrift Savings Plan.  The Office of Inspector General
provides its own administrative support. 

Source:  USDA documents. 


USDA'S DEPARTMENTWIDE
ADMINISTRATIVE STAFF, FISCAL YEARS
1993 THROUGH 1999
========================================================= Appendix III

                                Number of full-time-equivalent staff
                              ----------------------------------------
                                                            1998  1999
Administrative function       1993  1994  1995  1996  1997    \a    \a
----------------------------  ----  ----  ----  ----  ----  ----  ----
Accountants and Auditors      2,98  2,83  2,67  2,56  2,50  2,67  2,58
                                 3     3     6     5     7     5     3
Acquisition                   2,56  2,47  2,28  2,21  1,99  2,10  2,05
                                 9     4     8     1     6     8     0
Budgeting                     2,01  1,95  1,74  1,65  1,56  1,70  1,67
                                 2     3     8     7     2     2     0
Personnel                     2,74  2,59  2,35  2,24  2,20  2,29  2,22
                                 4     3     3     8     2     9     7
======================================================================
Total                         10,3  9,85  9,06  8,68  8,26  8,78  8,53
                                08     3     5     1     7     4     0
----------------------------------------------------------------------
\a Estimates. 

Source:  USDA data, based on National Performance Review categories
of administrative functions. 


LOCATION OF NONCOLLOCATED STATE
OFFICES
========================================================== Appendix IV

                State offices less than 50 miles apart
----------------------------------------------------------------------
State                           Agency              Address
------------------------------  ------------------  ------------------
Alaska                          NRCS                949 East 36th
                                                    Avenue
                                                    Anchorage

                                FSA                 800 West
                                RD                  Evergreen
                                                    Palmer

Arizona                         NRCS                3003 North Central
                                RD                  Avenue
                                                    Phoenix

                                FSA                 77 East Thomas
                                                    Road
                                                    Phoenix

Connecticut\a                   NRCS                16 Professional
                                                    Park Road
                                                    Storrs

                                FSA                 88 Day Hill Road
                                                    Windsor

Delaware                        FSA                 1201-03 College
                                NRCS                Park Drive
                                                    Dover

                                RD                  5201 South DuPont
                                                    Highway
                                                    Camden

Iowa                            NRCS                Federal Building
                                RD                  210 Walnut Street
                                                    Des Moines

                                FSA                 10500 Buena Vista
                                                    Court
                                                    Des Moines

Maine                           NRCS                5 Godfrey Drive
                                                    Orono

                                FSA                 444 Stillwater
                                RD                  Avenue
                                                    Bangor

Maryland\b                      NRCS                339 Busch's
                                                    Frontage Road
                                                    Annapolis

                                FSA                 8335 Guilford
                                                    Road
                                                    Columbia

Michigan                        NRCS                1045 South
                                                    Harrison Road
                                                    East Lansing

                                FSA                 3001 Coolidge Road
                                RD                  East Lansing

Mississippi                     NRCS                Federal Building
                                RD                  100 West Capitol
                                                    Street
                                                    Jackson

                                FSA                 6310 I-55 North
                                                    Jackson

Montana                         FSA                 Federal Building
                                NRCS                10 East Babcock
                                                    Bozeman

                                RD                  900 Technology
                                                    Boulevard
                                                    Bozeman

Nebraska                        NRCS                Federal Building
                                RD                  100 Centennial
                                                    Mall
                                                    Lincoln

                                FSA                 7131 A Street
                                                    Lincoln

Nevada\c                        NRCS                5301 Longley Lane
                                                    Reno

                                FSA                 1755 East Plumb
                                                    Lane
                                                    Reno

                                RD                  1390 South Curry
                                                    Street
                                                    Carson City

New Hampshire\d                 NRCS                Federal Building
                                                    2 Madbury Street
                                                    Durham

                                FSA                 22 Bridge Street
                                                    Concord

New Jersey                      NRCS                1370 Hamilton
                                                    Street
                                                    Somerset

                                FSA                 Mastoris
                                                    Professional Plaza
                                                    Route 130
                                                    Bordentown

                                RD                  Tarnsfield Plaza
                                                    790 Woodlane Road
                                                    Mt. Holly

Oregon                          NRCS                101 Southwest Main
                                RD                  Street Portland

                                FSA                 7620 Southwest
                                                    Mowhawk Tualatin

Puerto Rico                     NRCS                IBM Building
                                                    654 Munoz Rivera
                                                    Avenue
                                                    Hato Rey

                                FSA                 1607 Ponce de Leon
                                                    Avenue
                                                    Santurce

                                RD                  New San Juan
                                                    Office Building
                                                    159 Carlos E.
                                                    Chardon Street
                                                    Hato Rey

South Carolina                  NRCS                Strom Thurmond
                                RD                  Federal Building
                                                    1835 Assembly
                                                    Street
                                                    Columbia

                                FSA                 1927 Thurmond
                                                    Mall
                                                    Columbia

Tennessee                       FSA                 US Court House
                                NRCS                801 Broadway
                                                    Nashville

                                RD                  3322 West End
                                                    Avenue
                                                    Nashville

Vermont                         NRCS                69 Union Street
                                                    Winooski

                                FSA                 346 Shelburne
                                                    Street
                                                    Burlington

                                RD                  City Center
                                                    89 Main Sreet
                                                    Montpelier

Wyoming                         NRCS                Federal Building
                                RD                  100 East B Street
                                                    Casper

                                FSA                 951 Werner Count
                                                    Casper


State office locations greater than 50 miles apart
----------------------------------------------------------------------
Alabama                         NRCS                3381 Skyway Drive
                                                    Auburn

                                FSA                 4121 Carmichael
                                RD                  Road Montgomery

Hawaii                          FSA                 Federal Building
                                NRCS                300 Ala Moana
                                                    Boulevard
                                                    Honolulu

                                RD                  Federal Building
                                                    154 Waianuenue
                                                    Avenue
                                                    Hilo

Illinois                        FSA                 3500 Wabash
                                                    Avenue
                                                    Springfield

                                NRCS                1902 Fox Drive
                                                    Champaign

                                RD                  1817 South Neil
                                                    Street
                                                    Champaign

Kansas                          NRCS                760 South
                                                    Broadway
                                                    Salina

                                FSA                 3600 Anderson
                                                    Avenue
                                                    Manhattan

                                RD                  1200 Southwest
                                                    Executive Drive
                                                    Topeka

North Dakota                    NRCS                220 East Rosser
                                RD                  Avenue
                                                    Bismark

                                FSA                 1025 28th Street
                                                    Fargo

Texas                           NRCS                101 South Main
                                RD                  Street
                                                    Temple

                                FSA                 2405 Texas Avenue
                                                    South
                                                    College Station

Washington                      FSA                 Rock Point Tower
                                NRCS                II
                                                    West 316 Boone
                                                    Avenue Spokane

                                RD                  1825 Black Lake
                                                    Boulevard Olympia

Wisconsin                       FSA                 6515 Watts Road
                                NRCS                Madison

                                RD                  4949 Kirschling
                                                    Court
                                                    Stevens Point
----------------------------------------------------------------------
\a RD field offices served by Massachusetts state office. 

\b RD field offices served by Delaware state office. 

\c FSA field offices served by Idaho state office. 

\d RD field offices served by Vermont state office. 

Source:  USDA documents. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION

Ronald E.  Maxon Jr, Assistant Director
John C.  Smith, Evaluator-in-Charge
Robert G.  Hammons
Carol Herrnstadt Shulman


*** End of document. ***