Management Reform: Continuing Attention Is Needed to Improve Government
Performance (Testimony, 05/04/2000, GAO/T-GGD-00-128).
Pursuant to a congressional request, GAO discussed the management reform
efforts conducted by the National Partnership for Reinventing
Government, formerly known as the National Performance Review (NPR).
GAO noted that: (1) NPR has been one of the longest sustained and most
well-known executive branch reform initiatives in the nation's history;
(2) however, NPR's efforts were not undertaken in isolation from other
management reforms; (3) indeed, reflecting the widespread interest in
reforming government to improve effectiveness and service quality while
limiting costs, Congress, the administration, and federal agencies have
all undertaken ambitious and largely consistent reforms in the last
decade; (4) NPR attempted to build upon prior management reforms and
operated in an atmosphere where other factors, such as agencies' ongoing
efforts as well as the political environment, also influenced actions
taken to address NPR's recommendations; (5) at the same time, Congress
has put in place a statutory framework intended to improve federal
program effectiveness and public accountability by instilling a
performance-based approach into the management of federal agencies; (6)
Congress has also taken legislative action consistent with selected NPR
recommendations and initiated other improvements targeted to individual
agencies; (7) in recent years, GAO has examined aspects of NPR's reform
efforts and found that NPR claimed savings from agency-specific
recommendations that could not be fully attributed to its efforts; (8)
GAO also found in its examinations of selected management reform efforts
that have been emphasized by NPR, that: (a) agencies' downsizing has
short- and long-term implications that require continuing attention; (b)
better communication could help disseminate methods used by NPR
reinvention laboratories to improve performance; (c) despite recent
reforms, the federal government still does not have a world-class
purchasing system; and (d) regulatory reforms have yielded mixed
results; (9) the results of GAO's reviews underscore the work that still
lies ahead in reforming federal management; (10) the next Congress and
administration will face a series of long-standing management problems
that will continue to demand attention if the efficiency and
effectiveness of the federal government is to be fundamentally improved;
and (11) a few of the more important management problems that will
confront the next Congress and administration include: (a) adopting an
effective results orientation; (b) coordinating crosscutting programs;
(c) addressing high-risk federal functions and programs; (d) developing
and implementing modern human capital practices; (e) strengthening
financial management; and (f) enhancing computer security.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-GGD-00-128
TITLE: Management Reform: Continuing Attention Is Needed to
Improve Government Performance
DATE: 05/04/2000
SUBJECT: Public administration
Internal controls
Congressional/executive relations
Cost control
Accountability
Reengineering (management)
Performance measures
IDENTIFIER: National Performance Review
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T/GGD-00-128
MANAGEMENT REFORM: Continuing Attention Is Needed to Improve Government Performance (GAO/T-GGD-00-128)
MANAGEMENT REFORM Continuing Attention Is Needed to Improve Government Performance
Statement of J. Christopher Mihm, Associate Director Federal Management and Workforce Issues General Government Division
United States General Accounting Office
GAO Testimony Before the Subcommittee on Oversight of Government
Management, Restructuring, and the District of Columbia, Committee on Governmental Affairs U. S. Senate
For Release on Delivery Expected at 10: 00 a. m. EDT on Thursday May 4, 2000
GAO/T-GGD-00-128
Summary Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 1 GAO/ T- GGD- 00- 128
The NPR has been one of the longest sustained and most well- known executive branch reform initiatives in the nation's history. However, the NPR's efforts were not undertaken in isolation from other management reforms. Indeed, reflecting the widespread interest in reforming government to improve effectiveness and service quality while limiting costs, Congress, the administration, and federal agencies have all undertaken ambitious and largely consistent reforms in the last decade. NPR attempted to build upon prior management reforms and operated in an atmosphere where other factors, such as agencies' ongoing efforts as well as the political environment, also influenced actions taken to address NPR's recommendations. At the same time, Congress has put in place a statutory framework intended to improve federal program effectiveness and public accountability by instilling a performance- based approach into the management of federal agencies. Congress has also taken legislative action consistent with selected NPR recommendations and initiated other improvements targeted to individual agencies.
In recent years, GAO has examined aspects of NPR's reform efforts and found that NPR claimed savings from agency- specific recommendations that could not be fully attributed to its efforts. GAO also found in its examinations of selected management reform efforts that have been emphasized by NPR, that agencies' downsizing has short- and long- term implications that require continuing attention; that better communication could help disseminate methods used by NPR reinvention laboratories to improve performance; that, despite recent reforms, the federal government still does not have a world- class purchasing system; and that regulatory reforms have yielded mixed results. The results of GAO's reviews underscore the work that still lies ahead in reforming federal management.
The next Congress and administration will face a series of long- standing management problems that will continue to demand attention if the efficiency and effectiveness of the federal government is to be fundamentally improved. A few of the more important management problems that will confront the next Congress and administration include
adopting an effective results orientation,
coordinating crosscutting programs,
addressing high- risk federal functions and programs,
developing and implementing modern human capital practices,
strengthening financial management, and
enhancing computer security.
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 2 GAO/ T- GGD- 00- 128
Mr. Chairman and Members of the Subcommittee: I am pleased to be here this morning to discuss the management reform efforts conducted by the National Partnership for Reinventing Government, formerly known as the National Performance Review (NPR), and the continuing management improvement agenda facing federal decisionmakers. As you know, since the administration launched NPR in March 1993, under the leadership of the Vice President, the initiative has attempted to make the government work better and cost less, and to get results Americans care about. The NPR has been one of the longestsustained and most well- known executive branch management reform initiatives in the nation's history.
However, the NPR's efforts were not undertaken in isolation from other management reforms. Indeed, reflecting the widespread interest in reforming government to improve effectiveness and service quality while limiting costs, Congress, the administration, and federal agencies have all undertaken ambitious and largely consistent reforms in the last decade. For example, Congress has put in place a statutory framework intended to improve federal program effectiveness and public accountability by instilling a performance- based approach into the management of federal agencies. This framework provides the basis for developing fully integrated information about agencies' missions and strategic priorities, results- oriented goals that flow from those priorities, performance data to show progress in achieving those goals, the relationship of information technology investments to the achievement of performance goals, and audited financial information about the costs of achieving results.
In 1993, 1994, and 1996, we issued assessments of NPR's recommendations and the status of their implementation, 1 and we are currently reviewing selected NPR recommendations at your request, Mr. Chairman, and that of Senator Brownback. However, we have not comprehensively examined NPR. Therefore, as agreed, my statement today summarizes our work on selected aspects of the NPR where we have done recent work from a governmentwide perspective. I also will draw on our large body of work on management issues to highlight some of the more important management problems confronting the next Congress and administration. Our work on selected NPR initiatives, as well as our other related work on federal management issues, suggests an overriding theme successful
1 Management Reform: GAO's Comments on the National Performance Review's Recommendations (GAO/ OCG- 94- 1, Dec. 3, 1993), Management Reform: Implementation of the National Performance Review's Recommendations (GAO/ OCG- 95- 1, Dec. 5, 1994), and Management Reform: Completion Status of Agency Actions Under the National Performance Review (GAO/ GGD- 96- 94, June 12, 1996).
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 3 GAO/ T- GGD- 00- 128
reinvention is not an end- state but rather an ongoing process that seeks continuous improvements in performance, efficiency, and effectiveness.
NPR has had at least three phases, and has encompassed a wide range of different initiatives during the 7 years it has existed. NPR, given its organizational placement (as a taskforce within the staff offices of the Vice President), had no independent authority to force action. Rather, its efforts have been accomplished through others (agencies, the Office of Management and Budget (OMB), the Executive Office of the President, and Congress). NPR therefore has carried out its role by raising various issues, identifying possible solutions, leveraging partnerships, facilitating change, and stimulating action.
NPR's efforts have ranged from focusing on specific agency reforms to major crosscutting efforts, such as those to downsize the federal government and to streamline acquisition and regulatory processes. NPR has used various methods to advance its agenda, including
issuing reports with recommendations;
working with agencies to establish reinvention laboratories to test ways to improve performance and customer service;
encouraging agencies to set customer service standards and surveying the public's level of satisfaction with federal services; and
proposing new ways of operating, such as through Performance Based Organizations.
By their very nature, successful management reform efforts often entail (1) concerted efforts on the part of agencies, (2) leadership and follow through on the part of central management agencies and the administration, and (3) support and oversight from Congress. The presence of all three of these elements has been critical to the effective implementation of management reforms over the last decade.
As we reported in July 1999, NPR attempted to build upon prior management reforms and operated in an atmosphere where other factors, such as agencies' ongoing efforts as well as the political environment, also influenced actions taken to address NPR's recommendations. 2 At the same time, Congress has sought to reform the fiscal, program, and management performance of the federal government through a statutory framework, which includes the Chief Financial Officers Act of 1990 and related
2 NPR's Savings: Claimed Agency Savings Cannot All Be Attributed to NPR (GAO/ GGD- 99- 120, July 23, 1999). NPR's Reinvention
Efforts Have Evolved Over Time
NPR's Initiatives Were Not Undertaken in Isolation from Other Management Reform Efforts
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 4 GAO/ T- GGD- 00- 128
financial management legislation; information technology reform legislation, such as the Clinger- Cohen Act of 1996 and the Paperwork Reduction Act of 1995; and the Government Performance and Results Act (GPRA). Congress has also taken legislative action consistent with selected NPR recommendations and initiated other improvements targeted to individual agencies. Given the interaction of these elements, any attempt to isolate the specific contributions that any one entity made to successful management reforms or to apportion credit among entities is generally not possible and likely to have little, if any, value.
One of the first steps NPR took was to release a report in September 1993 that made 384 recommendations intended to make the government work better and cost less. 3 This report made recommendations to reinvent individual agencies' programs and organizations, and also included governmentwide recommendations for, among other things, reducing the size of the federal workforce. In making its recommendations, NPR sought to build its initiatives on existing efforts, practices, and recommendations. Thus, in many cases, NPR's recommendations were consistent with recommendations that we and agency Inspectors General (IGs) had made in the past. Not surprisingly, because NPR's recommendations reflected issues that we and others had stressed for years, we reported that we generally agreed with most of them. 4
Our ongoing review of selected NPR recommendations for this Subcommittee and Senator Brownback provides several examples illustrating the interrelationship between NPR's recommendations and other reform efforts. For example, IRS's current modernization effort is consistent with NPR's recommendation, made in 1993, which included actions to
Support a new business vision,
Realign the missions of IRS' organizations, and
Improve taxpayer- focused output measures. Several years after NPR's recommendation, Congress remained concerned about the need to modernize IRS and enacted the IRS Restructuring and Reform Act of 1998. 5 Building on the direction set forth in the
3 From Red Tape to Results: Creating a Government That Works Better and Costs Less, National Performance Review, September 7, 1993. 4 GAO/ OCG- 94- 1, Dec. 3, 1993.
5 P. L. 105- 206, July 22, 1998.
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 5 GAO/ T- GGD- 00- 128
Restructuring Act and recommendations from NPR and others, Commissioner Rossotti established a new mission statement and supporting strategic goals for the IRS. Recognizing the complex and interdependent nature of its long- standing problems, IRS also initiated a massive modernization effort that encompasses major changes to its organizational structure, business practices, performance management system, and information systems. While, in many ways, IRS remains as challenged an agency today as it was 2 years ago when the Restructuring Act was passed, we have said that this modernization effort has the potential to provide improvements in the agency's two key mission areas taxpayer service and enforcement. 6 IRS modernization, however, is a longterm effort that is likely to take more than a decade to fully implement.
An additional example of the interrelationship between NPR's recommendations and other reform efforts, involves two recommendations NPR made to the Department of Energy (DOE) reflecting the political environment that followed the end of the cold war. One of NPR's recommendations called for DOE to redirect energy laboratories to post- cold war priorities by continuing the reduction already under way of funding for nuclear weapons production, research, testing programs, and infrastructure. NPR also recommended that DOE sell uranium no longer needed for national defense purposes. DOE said that NPR's recommendation was consistent with uranium disposition programs that DOE already had in place.
In recent years, we have examined aspects of NPR's cost savings estimates, downsizing initiative, reinvention laboratories, and acquisition and regulatory reform efforts. The results of our reviews, which are summarized below, underscore the work that still lies ahead in reforming federal management.
We reported in July 1999 that NPR claimed savings from agency- specific recommendations that could not be fully attributed to its efforts. NPR claimed that about $137 billion in savings has resulted from its efforts to reinvent the federal government, with about $44.3 billion of these savings claimed from recommendations that were targeted toward individual agencies. We reviewed six recommendations representing over two- thirds of this $44. 3 billion, and found that the relationship between the NPR recommendations and the savings claims was not clear. These savings
6 See IRS Modernization: Long- term Effort Under Way, but Significant Challenges Remain (GAO/ TGGD/ AIMD- 00- 154, May 3, 2000) and IRS Restructuring Act: Implementation Under Way but Agency Modernization Important to Success (GAO/ T- GGD/ AIMD- 00- 53, Feb. 2, 2000). Information From Our
Reviews of Selected NPR Initiatives
Claimed Agency Savings Cannot All Be Attributed to NPR
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 6 GAO/ T- GGD- 00- 128
estimates also could not be replicated, and there was no way to substantiate the savings claimed.
NPR relied on the OMB to estimate the savings it claimed from its recommendations, and OMB generally did not distinguish NPR's contributions from other initiatives or factors that influenced budget reductions at the three agencies we reviewed the Department of Agriculture (USDA), DOE, and the National Aeronautics and Space Administration (NASA).
To estimate the savings from the agency- specific recommendations, OMB said it used the same types of procedures and analytic techniques that have long been used in developing the President's budget. These procedures and techniques are intended to support point- in- time budget estimates that are based on policies and economic forecasts in effect at a given time. As our previous reviews of budget estimates have shown, it is difficult to reconstruct the specific assumptions used and track savings for estimates produced several years ago. 7
At NASA, for example, OMB attributed all $8.5 billion of expected reductions to NASA's budget for fiscal years 1996 through 2000 directly to NPR's recommendation to reinvent NASA. OMB did not account for other factors, such as ongoing NASA reform initiatives and budgetary spending caps, that also influenced NASA's budget during this period. Similarly, when OMB estimated savings from the recommendation to redirect DOE's energy laboratories to post- cold war priorities, it credited all savings from estimated reductions in the weapons activity budget account ($ 6. 996 billion) to NPR. Considering the nuclear test ban treaty and other factors, it was apparent that the DOE laboratories' priorities would have changed regardless of whether NPR had made the recommendation.
Reflecting policy decisions to reduce the size of the federal government during the 1990s, both NPR and Congress proposed personnel reductions. NPR attempted to achieve the downsizing, without diminishing the quality of service to the public, by streamlining organizational structures to eliminate overseers while maintaining frontline staff, and by making better use of technology to more efficiently deliver services. The NPR called on agencies to restructure their workforces by directing their downsizing toward specific management control positions, including budget, procurement, and personnel positions, as well as managers and
7 NPR Savings Estimates (GAO/ GGD/ AIMD- 96- 149R, July 24, 1996) and Budget Process: Issues Concerning the 1990 Reconciliation Act (GAO/ AIMD- 95- 3, Oct. 7, l994). Agencies' Downsizing Has
Short- and Long- term Implications
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 7 GAO/ T- GGD- 00- 128
supervisors. Congress passed the Federal Workforce Restructuring Act of 1994, which mandated governmentwide reductions of 272,000 full time equivalent (FTE) positions through fiscal year 1999.
As a result of the legislation, executive branch efforts, and other budget and program pressures, the federal government is now smaller as measured by the number of federal employees. As the Comptroller General noted in his March 2000 testimony before this Subcommittee, from fiscal year 1990 to fiscal year 1999, the number of nonpostal civilian federal employees fell from about 2.3 million to about 1.9 million. 8
Nevertheless, the manner in which the downsizing was implemented has short- and long- term implications that require continuing attention. The management control positions NPR sought to decrease were barely reduced as a proportion of the workforce as a whole, and at some agencies they increased. 9
In addition, our reviews have found that a lack of adequate strategic and workforce planning during the initial rounds of downsizing by some agencies may have affected their ability to achieve organizational missions. 10 Some agencies reported that downsizing in general led to such negative effects as a loss of institutional memory and an increase in work backlogs. For example, efforts to downsize while introducing new technology were not consistently well planned. In our review of agencies' initial efforts to restructure personnel operations, upgrading systems technology was a primary element of the restructuring plans because the departments planned to reduce the number of personnel specialists they employed and improve services and operating efficiency by automating paper- based processes. 11 However, the automation efforts were not completed as planned before reductions in personnel staffing occurred. As a result, the agencies were struggling to achieve their efficiency and service improvement objectives.
Although we found that agencies' planning for downsizing improved as their downsizing efforts continued, it is by no means clear that the current
8 Human Capital: Managing Human Capital in the 21 st Century (GAO/ T- GGD- 00- 77, Mar. 9, 2000). 9 Federal Downsizing: The Status of Agencies' Workforce Reduction Efforts (GAO/ T- GGD- 96- 124, May 23, 1996). 10 Federal Workforce: Payroll and Human Capital Changes During Downsizing (GAO/ GGD- 99- 57, Aug. 13, 1999). 11 Management Reform: Agencies Initial Efforts to Restructure Personnel Operations (GAO/ GGD- 98- 93, July 13, 1998).
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 8 GAO/ T- GGD- 00- 128
workforce is adequately balanced to properly execute agencies' missions today. For example, most major agencies' fiscal year 2000 annual performance plans that were prepared under GPRA do not sufficiently address how the agencies will use their human capital to achieve results. 12 This suggests that one of the critical components of high- performing organizations, the systematic integration of human capital planning and program planning is not being adequately addressed across the federal government.
Another of NPR's initiatives was to establish reinvention labs, which were designated to test ways that agencies could improve their performance and customer service by reengineering work processes and eliminating unnecessary regulations.
Some of the lab efforts began before NPR's initiative, and the labs covered a wide variety of subject areas, ranging from acquisition systems to ways to use technology to improve operations. 13 Our 1996 review found that the labs' results suggested a number of promising approaches to improving existing agency work processes. For example, the Veterans Affairs New York Regional Office sought to improve customer service and communication in its claims processing function by creating self directed work teams responsible for handling a veteran's claim from start to finish. Similarly, the U. S. Geological Survey's information dissemination lab sought to improve internal communications and job processes by combining the organizational unit that took map purchasing orders with the unit that filled the orders and by cross- training staff.
These and other reinvention labs represent real achievements. The real value of the labs' efforts can only be realized when effective practices spread beyond the lab sites to the rest of the government. Unfortunately, we found a lack of substantial communication among labs and between the labs and other federal entities to disseminate lab results. Therefore, we recommended establishing a clearinghouse to facilitate the sharing of information and provide performance information that demonstrates results. The National Academy for Public Administration initially filled such a role in response to our recommendation by establishing a clearinghouse on the Internet. However, it did not appear that this Website has been updated since October 1998.
12 Managing for Results: Opportunities for Continued Improvements in Agencies' Performance Plans (GAO/ GGD/ AIMD- 99- 215, July 20, 1999). 13 Management Reform: Status of Agency Reinvention Lab Efforts (GAO/ GGD- 96- 69, Mar. 20, 1996). Better Communication
Could Help Disseminate Reinvention Laboratories' Methods That Improved Performance
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 9 GAO/ T- GGD- 00- 128
Congress and the administration have taken a number of important steps to improve federal acquisition, but despite recent reforms, the government still does not have a world- class purchasing system. Reform efforts, including the Federal Acquisition Streamlining Act of 1994 and the ClingerCohen Act of 1996, have focused principally on simplifying the process for buying commercial products and services and on attempting to improve decisionmaking in acquiring information technology.
Despite these reforms, however, the products and services the government buys all too often cost more than expected, are delivered late, or fail to perform as anticipated. No commercial business would remain viable for very long with results like these. Problems are particularly evident in the two areas where most of the dollars are spent on weapons systems and information technology. Significant improvements in these areas, as well as in the skills of the acquisition workforce, are needed in order to produce better outcomes. We have made a number of recommendations over the years to improve acquisition outcomes, including that federal agencies use best commercial practices. 14
As we testified before the Subcommittee on Government Management, Information, and Technology, House Committee on Government Reform, it is difficult to assess the impact of acquisition reforms because many of them are still being implemented. 15 In addition, it is difficult to measure any increase in the government's purchases of commercial items since the Federal Acquisition Streamlining Act of 1994, because reliable baseline data are not available.
Nevertheless, we are seeing some changes. Agencies have streamlined their acquisition processes, particularly by using governmentwide acquisition and schedule contracts to get what they need more quickly. However, much more needs to be done to achieve real and sustained improvements. It will take time to improve agency acquisition operations because the problems we have identified are difficult ones and are deeprooted in very large programs and organizations. To insure that progress continues, sustained management attention and congressional oversight particularly involving weapons systems, information technology, and human capital issues will be necessary.
14 For example, see Best Practices: DOD Training Can Do More to Help Weapon System Programs Implement Best Practices (GAO/ NSIAD- 99- 206, Aug. 16, 1999), and Defense Acquisition: Best Commercial Practices Can Improve Program Outcomes (GAO/ T- NSIAD- 99- 116, Mar. 17, 1999).
15 Federal Acquisition: Trends, Reforms, and Challenges (GAO/ T- OCG- 00- 7, Mar. 16, 2000). Continued Improvements in
Acquisition Management Are Needed
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 10 GAO/ T- GGD- 00- 128
One of NPR's major initiatives was to improve the federal government's regulatory system by, among other things, streamlining agency rulemaking and cutting regulations. In June 1995, President Clinton said that, as part of his administration's regulatory reform initiative, federal agencies would eliminate 16,000 pages of regulations from the 140,000- page Code of Federal Regulations (CFR), and that another 31, 000 pages would be revised. When we examined this issue in 1996, agencies reported that they had eliminated 11,569 pages of the CFR and revised another 13,216 pages.
However, in our October 1997 report on this initiative, we noted that officials in each of the four agencies we reviewed (the Departments of Housing and Urban Development and Transportation, the Occupational Safety and Health Administration within the Department of Labor, and the Environmental Protection Agency) said that the page elimination totals that they reported did not take into account the pages that their agencies had added to the CFR while the eliminations were taking place. 16 In some cases, agencies added more pages than they removed during the page elimination initiative. The agencies pointed out that pages are often added to the CFR because of statutory requirements or to clarify requirements placed on regulated entities, and that pages are sometimes not eliminated at the request of those entities.
The Paperwork Reduction Act of 1995 (PRA) coincided with NPR's regulatory reform initiative on burden reduction and was similar to that initiative in its emphasis. We recently testified on the implementation of the PRA before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, House Committee on Government Reform. 17 Although the PRA envisioned a 30- percent reduction in federal paperwork between fiscal years 1995 and 1999, preliminary data indicate that the paperwork has increased during this period. Federal paperwork increased by about 233 million burden hours during fiscal year 1999 alone the largest increase in any 1- year period since the PRA was enacted. Nearly 90 percent of the governmentwide increase during fiscal year 1999 was attributable to increases at IRS, which IRS said were primarily a result of new and existing statutory requirements.
16 Regulatory Reform: Agencies' Efforts to Eliminate and Revise Rules Yield Mixed Results (GAO/ GGD98- 3, Oct. 2, 1997). 17 Paperwork Reduction Act: Burden Increases at IRS and Other Agencies (GAO/ T- GGD- 00- 114, Apr. 12, 2000). Regulatory Reforms Have
Yielded Mixed Results
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 11 GAO/ T- GGD- 00- 128
The next Congress and administration will face a series of long- standing management problems that will continue to demand attention if the efficiency and effectiveness of the federal government is to be fundamentally improved. In recent testimonies, including one for the Senate Governmental Affairs Committee, the Comptroller General has suggested a framework for thinking about these weaknesses and how they can be addressed. 18 Today, I will highlight just a few of the more important management problems facing the federal government to give a sense of the range of continuing problems that will confront the next Congress and administration.
We have seen that integrating a focus on results into agency operations does not come quickly or easily. In the 2- 1/ 2 years since the requirements of GPRA were implemented across the executive branch, Congress and executive branch decisionmakers have been provided with a wealth of new and valuable information on the plans, goals, strategies, and results of federal agencies. However, continuing progress is needed to use that information in managing programs and making program, resource, and policy decisions.
Our work has identified widespread mission fragmentation and program overlap in the federal government. The broad scope of this fragmentation and overlap ranging from social programs to defense efforts indicates the inherent complexity of national problems that the federal government traditionally has addressed in a piecemeal approach. Table 1 highlights the areas of fragmentation and overlap that we have identified in our work through 1999.
18 Budget Issues: Effective Oversight and Budget Discipline Are Essential Even in a Time of Surplus (GAO/ T- AIMD- 00- 73, Feb. 1, 2000), and Congressional Oversight: Opportunities to Address Risks, Reduce Costs, and Improve Performance (GAO/ T- AIMD- 00- 96, Feb. 17, 2000). The Impetus for
Improving Government Has Not Diminished
Adopting an Effective Results Orientation
Coordinating Crosscutting Programs
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 12 GAO/ T- GGD- 00- 128
Mission areas Programs
Agriculture Food safety Commerce and housing credit Financial institution regulation Community and regional development Community development
Economic development
Emergency preparedness
Housing Rural development Education, training, employment, and social services Early childhood programs
Employment training
Student aid General science, space, and technology High performance computing
National laboratories
Research and development facilities
Small business innovation research General government Federal statistical agencies Health Long- term care
Substance abuse
Nuclear health and safety
Telemedicine Teen pregnancy prevention Income security Child care
Welfare and related programs
Youth programs
Homelessness programs
Programs for people with disabilities Defense Guided weapon systems
Telecommunications Military health care
Satellite control systems
Nonmedical chemical and biological research and development International affairs Educational programs
Policy formulation and implementation Law enforcement Border inspections
Drug control
Investigative authority
Drug trafficking
Combating terrorism Natural resources and environment Federal land management
International environmental programs
Hazardous waste cleanup
Water quality Note: This table has been updated to reflect work we completed since our report Managing for Results: Using the Results Act to Address Mission Fragmentation and Program Overlap (GAO/ AIMD97- 146, Aug. 29, 1997) was issued.
Source: GAO analysis.
Table 1: Areas of Potential Fragmentation and Overlap
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 13 GAO/ T- GGD- 00- 128
Coordinating crosscutting programs is a persistent challenge for executive branch agencies and Congress. For example:
The current system to ensure food safety suffers from inconsistent oversight, poor coordination, and inefficient allocation of resources. As many as 12 different federal agencies administer over 35 laws overseeing food safety. This fragmented federal approach costs over $1 billion each year and hinders the government's efforts to effectively protect consumers from unsafe food. 19
Better coordination is needed to improve the effectiveness of efforts to safeguard the nation from terrorist attacks. Over 40 agencies, bureaus, and offices implement numerous programs designed to prevent and deter terrorism, respond to terrorist threats and incidents, and manage the consequences of terrorist acts. 20
The 1994 Catalogue of Federal Domestic Assistance describes 342 economic development programs. 21 In addition, the limited information available on the impact of economic development assistance provided by three programs the Appalachian Regional Commission, the Department of Commerce's Economic Development Administration, and the Tennessee Valley Authority did not establish a strong causal linkage between a positive effect and agency assistance.
There are over 90 early childhood programs in 11 federal agencies and 20 offices. The system of multiple early childhood programs with firm eligibility cutoffs could lead to disruptions in services from even slight changes in a child's family status. While multiple programs target disadvantaged preschool- aged children, most such children do not participate in any preschool program. 22
19 Food Safety: Opportunities to Redirect Federal Resources and Funds Can Enhance Effectiveness (GAO/ RCED- 98- 224, Aug. 6, 1998), and Food Safety and Quality: Uniform, Risk- Based Inspection System Needed to Ensure Safe Food Supply (GAO/ RCED- 92- 152, June 26, 1992).
20 Combating Terrorism: Issues to Be Resolved to Improve Counterterrorism Operations (GAO/ NSIAD99- 135, May 13, 1999), and Major Management Challenges and Program Risks: A Governmentwide Perspective (GAO/ OCG- 99- 1, Jan. 1999).
21 Economic Development: Limited Information Exists on the Impact of Assistance Provided by Three Agencies (GAO/ RCED- 96- 103, Apr. 3, 1996), and Economic Development Programs (GAO/ RCED- 95251R, July 28, 1995).
22 See Early Childhood Programs: Characteristics Affect the Availability of School Readiness Information (GAO/ HEHS- 00- 38, Feb. 28, 2000), and Early Childhood Programs: Multiple Programs and Overlapping Target Groups (GAO/ HEHS- 95- 4FS, Oct. 31, 1994).
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
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As these and other examples suggest, unfocused and uncoordinated crosscutting programs can waste scarce funds, confuse and frustrate taxpayers, and limit overall program effectiveness.
Over the years, our work has shown that federal functions and programs, ranging from Medicare to weapons acquisition, have been hampered by daunting financial and program management problems. Since 1990, as part of our high- risk initiative, we have reported on specific federal activities and functions that are particularly vulnerable to waste, fraud, abuse, and mismanagement.
Our 1999 high- risk update listed 26 areas at high- risk spanning a range of government operations, such as benefit programs that lose billions of dollars annually in improper payments, IRS' difficulty in controlling tax filing fraud, inefficient and weak lending programs, and the challenges the Department of Defense (DOD) faces in reducing infrastructure costs.
It will take time to fully resolve most high- risk areas because they are deep- rooted, difficult problems in very large programs and organizations. Congress has heightened its attention to resolving these weaknesses by reviewing agencies' progress and taking legislative action. However, more could be done by Congress and the executive branch to achieve real and sustained improvements. For example, in many cases, agencies have agreed with our recommendations but have not yet fully implemented them.
The annual planning process under GPRA provides an excellent vehicle for helping to address high- risk functions and programs and to ensure that clear accountability for progress is established. In our assessment of the fiscal year 1999 performance plans, we noted that precise and measurable goals for resolving mission- critical management problems are important to ensuring that the agencies have the institutional capacity to achieve their more results- oriented programmatic goals. 23 Similarly, our assessment of the fiscal year 2000 annual performance plans concluded that plans with goals and strategies that address mission- critical management challenges and program risks show that agencies are striving to build the capacity to be high- performing organizations and to reduce the risk of waste, fraud, abuse, and mismanagement. 24
23 Managing for Results: An Agenda to Improve the Usefulness of Agencies' Annual Performance Plans (GAO/ GGD/ AIMD- 98- 228, Sept. 8, 1998). 24 GAO/ GGD/ AIMD- 99- 215. Addressing High- Risk
Federal Functions and Programs
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 15 GAO/ T- GGD- 00- 128
Modern strategic human capital management recognizes that employees are a critical asset for success, and that an organization's human capital policies and practices must be designed, implemented, and assessed by the standard of how well they support the organization's missions and goals. The government's human capital management has emerged as the missing link in the statutory management framework that Congress established to provide for a more businesslike and results- oriented federal government. It is federal employees who will make the principles of performance management work for government, and federal employees thus should be viewed not as costs to be cut, but as assets to be valued. Only when the right employees are on board and provided with the training, technology, structure, incentives, and accountability to work effectively is organizational success possible.
At present, serious concerns are emerging about the aging of the federal workforce, the rise in retirement eligibilities, and the actions needed to ensure effective succession planning. The size and shape of the workforce, its skills needs and imbalances, and agencies' approaches to management performance and incentives, all need greater attention than they have been given. For example, our work at DOD, where downsizing has resulted in a civilian workforce reduction of about 43 percent from 1989 levels, suggests that imbalances are developing in the age distribution of DOD civilian staff. The average age of this staff has been increasing, while the proportion of younger staff, who are the pipeline of future agency talent and leadership, has been dropping. 25 Further, to cope with downsizing, as well as to become more efficient, DOD has numerous initiatives under way to change the way it does business. Changes in business practices and mission strategies in both DOD and other federal agencies can affect the kinds of competencies that will be needed to carry out organizational missions in the future. Ensuring that such competencies are identified, and that the appropriate staff are on- board, will require that federal agencies take a strategic approach to viewing and managing their human capital. 26
The U. S. government, as a whole, has not yet been able to accurately report a significant portion of its assets, liabilities, and costs because of significant financial systems weaknesses; problems with fundamental recordkeeping and financial reporting; incomplete documentation; and
25 Human Capital: Strategic Approach Should Guide DOD's Civilian Workforce Management (GAO/ TGGD/ NSIAD- 00- 120, Mar. 9, 2000). 26 See, for example, SSA Customer Service: Broad Service Delivery Plan Needed to Address Future Challenges (GAO/ T- HEHS/ AIMD- 00- 75, Feb. 10, 2000), Space Shuttle: Human Capital Challenges Require Management Attention (GAO/ T- NSIAD- 00- 133, Mar. 22, 2000), and Human Capital: Observations on EPA's Efforts to Implement a Workforce Planning Strategy (GAO/ T- RCED- 00- 129). Developing and
Implementing Modern Human Capital Practices
Strengthening Financial Management
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 16 GAO/ T- GGD- 00- 128
weak internal control, including computer controls. These deficiencies also affect the government's ability to accurately measure the full cost and financial performance of certain programs and to effectively manage related operations. 27
The executive branch recognizes that, because of the extent and severity of the financial management deficiencies, addressing them will require concerted improvement efforts across government. The President has designated financial management improvement as a priority management objective, and efforts are under way across government to address the pervasive, generally long- standing financial management problems.
While obtaining unqualified clean audit opinions on federal financial statements is an important objective, it is not an end in and of itself. The key is to take steps to continuously improve internal control and underlying financial and management information systems as a means to assure accountability, increase economy, improve efficiency, and enhance the effectiveness of government. These systems must generate timely, accurate, and useful information on an ongoing basis, not just as of the end of the fiscal year. Unfortunately, for fiscal year 1999, the financial management systems of 19 of the 22 agencies that have reported thus far were again found not to be in substantial compliance with the requirements of the Federal Financial Management Improvement Act of 1996. The act requires agency financial management systems to comply with system requirements and standards to provide uniform, reliable, and more useful financial information.
Increasingly, the federal government is using technology to deliver products and services to the public. But the success of these efforts is critically dependent on computer security. Computer security is an area that OMB and GAO agree is of critical concern. Our nation's computerbased infrastructures are at increasing risk of severe disruption, as illustrated by the recent attacks on popular Internet Websites. Massive computer networks provide pathways among systems that, if not properly secured, can be used to gain unauthorized access to data and operations from remote locations. As a result, government officials are increasingly concerned about attacks from individuals and groups with malicious intentions, such as terrorists and nations engaging in information warfare. 28
27 Financial Audit: 1999 Financial Report of the United States Government (GAO/ AIMD- 00- 131, Mar. 31, 2000). 28 Critical Infrastructure Protection: Comprehensive Strategy Can Draw on Year 2000 Experiences (GAO/ AIMD- 00- 1, Oct. 1, 1999). Enhancing Computer
Security
Statement Management Reform: Continuing Attention Is Needed to Improve Government Performance
Page 17 GAO/ T- GGD- 00- 128
In February 1997 and again in January 1999, in reports to Congress, we designated information security as a governmentwide high- risk area, 29 and OMB has listed it as a priority management objective.
The long- standing management issues confronting the next Congress and administration will likely stimulate new efforts to reform the federal government. In previous appearances before this Subcommittee, I have identified a number of factors that appear to be critical to making progress on these and other management issues. These factors are (1) a demonstrated leadership commitment and accountability for change; (2) the integration of management improvement initiatives into programmatic decisionmaking; (3) thoughtful and rigorous planning to guide decisions, particularly to address human capital and information technology issues; (4) employee involvement to elicit ideas and build commitment and accountability; (5) organizational alignment to streamline commitment and accountability; and (6) strong and continuing congressional involvement. These factors, derived from the lessons of past reforms, offer the opportunity for increased success for future reforms.
Mr. Chairman, this concludes my prepared statement. I would be pleased to respond to any questions that you or other Members of the Subcommittee may have.
Contacts and Acknowledgement
For further information concerning this testimony, please contact J. Christopher Mihm at (202) 512- 8676. Individuals making key contributions to this testimony included Susan Ragland, William Reinsberg, and Katherine Cunningham.
29 High- Risk Series: An Update (GAO/ HR- 99- 1, January 1999), and High- Risk Program: Information on Selected High- Risk Areas (GAO/ HR- 97- 30, May 16, 1997). Summary Observations
Page 18 GAO/ T- GGD- 00- 128
Page 19 GAO/ T- GGD- 00- 128
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(410571)
MANAGEMENT REFORM: Continuing Attention Is Needed to Improve
Government Performance (GAO/T-GGD-00-128) MANAGEMENT REFORM
Continuing Attention Is Needed to Improve Government Performance
Statement of J. Christopher Mihm, Associate Director Federal
Management and Workforce Issues General Government Division United
States General Accounting Office GAO Testimony Before the
Subcommittee on Oversight of Government Management, Restructuring,
and the District of Columbia, Committee on Governmental Affairs U.
S. Senate For Release on Delivery Expected at 10: 00 a. m. EDT on
Thursday May 4, 2000 GAO/T-GGD-00-128 Summary Management
Reform: Continuing Attention Is Needed to Improve Government
Performance Page 1 GAO/T-GGD-00-128 The NPR has been one of the
longest sustained and most well- known executive branch reform
initiatives in the nation's history. However, the NPR's efforts
were not undertaken in isolation from other management reforms.
Indeed, reflecting the widespread interest in reforming government
to improve effectiveness and service quality while limiting costs,
Congress, the administration, and federal agencies have all
undertaken ambitious and largely consistent reforms in the last
decade. NPR attempted to build upon prior management reforms and
operated in an atmosphere where other factors, such as agencies'
ongoing efforts as well as the political environment, also
influenced actions taken to address NPR's recommendations. At the
same time, Congress has put in place a statutory framework
intended to improve federal program effectiveness and public
accountability by instilling a performance- based approach into
the management of federal agencies. Congress has also taken
legislative action consistent with selected NPR recommendations
and initiated other improvements targeted to individual agencies.
In recent years, GAO has examined aspects of NPR's reform efforts
and found that NPR claimed savings from agency- specific
recommendations that could not be fully attributed to its efforts.
GAO also found in its examinations of selected management reform
efforts that have been emphasized by NPR, that agencies'
downsizing has short- and long- term implications that require
continuing attention; that better communication could help
disseminate methods used by NPR reinvention laboratories to
improve performance; that, despite recent reforms, the federal
government still does not have a world- class purchasing system;
and that regulatory reforms have yielded mixed results. The
results of GAO's reviews underscore the work that still lies ahead
in reforming federal management. The next Congress and
administration will face a series of long- standing management
problems that will continue to demand attention if the efficiency
and effectiveness of the federal government is to be fundamentally
improved. A few of the more important management problems that
will confront the next Congress and administration include
adopting an effective results orientation, coordinating
crosscutting programs, addressing high- risk federal functions
and programs, developing and implementing modern human capital
practices, strengthening financial management, and enhancing
computer security. Statement Management Reform: Continuing
Attention Is Needed to Improve Government Performance Page 2
GAO/T-GGD-00-128 Mr. Chairman and Members of the Subcommittee: I
am pleased to be here this morning to discuss the management
reform efforts conducted by the National Partnership for
Reinventing Government, formerly known as the National Performance
Review (NPR), and the continuing management improvement agenda
facing federal decisionmakers. As you know, since the
administration launched NPR in March 1993, under the leadership of
the Vice President, the initiative has attempted to make the
government work better and cost less, and to get results Americans
care about. The NPR has been one of the longestsustained and most
well- known executive branch management reform initiatives in the
nation's history. However, the NPR's efforts were not undertaken
in isolation from other management reforms. Indeed, reflecting the
widespread interest in reforming government to improve
effectiveness and service quality while limiting costs, Congress,
the administration, and federal agencies have all undertaken
ambitious and largely consistent reforms in the last decade. For
example, Congress has put in place a statutory framework intended
to improve federal program effectiveness and public accountability
by instilling a performance- based approach into the management of
federal agencies. This framework provides the basis for developing
fully integrated information about agencies' missions and
strategic priorities, results- oriented goals that flow from those
priorities, performance data to show progress in achieving those
goals, the relationship of information technology investments to
the achievement of performance goals, and audited financial
information about the costs of achieving results. In 1993, 1994,
and 1996, we issued assessments of NPR's recommendations and the
status of their implementation, 1 and we are currently reviewing
selected NPR recommendations at your request, Mr. Chairman, and
that of Senator Brownback. However, we have not comprehensively
examined NPR. Therefore, as agreed, my statement today summarizes
our work on selected aspects of the NPR where we have done recent
work from a governmentwide perspective. I also will draw on our
large body of work on management issues to highlight some of the
more important management problems confronting the next Congress
and administration. Our work on selected NPR initiatives, as well
as our other related work on federal management issues, suggests
an overriding theme successful 1 Management Reform: GAO's Comments
on the National Performance Review's Recommendations (GAO/OCG-94-
1, Dec. 3, 1993), Management Reform: Implementation of the
National Performance Review's Recommendations (GAO/OCG-95-1, Dec.
5, 1994), and Management Reform: Completion Status of Agency
Actions Under the National Performance Review (GAO/GGD-96-94, June
12, 1996). Statement Management Reform: Continuing Attention Is
Needed to Improve Government Performance Page 3 GAO/T-GGD-00-128
reinvention is not an end- state but rather an ongoing process
that seeks continuous improvements in performance, efficiency, and
effectiveness. NPR has had at least three phases, and has
encompassed a wide range of different initiatives during the 7
years it has existed. NPR, given its organizational placement (as
a taskforce within the staff offices of the Vice President), had
no independent authority to force action. Rather, its efforts have
been accomplished through others (agencies, the Office of
Management and Budget (OMB), the Executive Office of the
President, and Congress). NPR therefore has carried out its role
by raising various issues, identifying possible solutions,
leveraging partnerships, facilitating change, and stimulating
action. NPR's efforts have ranged from focusing on specific agency
reforms to major crosscutting efforts, such as those to downsize
the federal government and to streamline acquisition and
regulatory processes. NPR has used various methods to advance its
agenda, including issuing reports with recommendations; working
with agencies to establish reinvention laboratories to test ways
to improve performance and customer service; encouraging agencies
to set customer service standards and surveying the public's level
of satisfaction with federal services; and proposing new ways of
operating, such as through Performance Based Organizations. By
their very nature, successful management reform efforts often
entail (1) concerted efforts on the part of agencies, (2)
leadership and follow through on the part of central management
agencies and the administration, and (3) support and oversight
from Congress. The presence of all three of these elements has
been critical to the effective implementation of management
reforms over the last decade. As we reported in July 1999, NPR
attempted to build upon prior management reforms and operated in
an atmosphere where other factors, such as agencies' ongoing
efforts as well as the political environment, also influenced
actions taken to address NPR's recommendations. 2 At the same
time, Congress has sought to reform the fiscal, program, and
management performance of the federal government through a
statutory framework, which includes the Chief Financial Officers
Act of 1990 and related 2 NPR's Savings: Claimed Agency Savings
Cannot All Be Attributed to NPR (GAO/GGD-99-120, July 23, 1999).
NPR's Reinvention Efforts Have Evolved Over Time NPR's Initiatives
Were Not Undertaken in Isolation from Other Management Reform
Efforts Statement Management Reform: Continuing Attention Is
Needed to Improve Government Performance Page 4 GAO/T-GGD-00-128
financial management legislation; information technology reform
legislation, such as the Clinger- Cohen Act of 1996 and the
Paperwork Reduction Act of 1995; and the Government Performance
and Results Act (GPRA). Congress has also taken legislative action
consistent with selected NPR recommendations and initiated other
improvements targeted to individual agencies. Given the
interaction of these elements, any attempt to isolate the specific
contributions that any one entity made to successful management
reforms or to apportion credit among entities is generally not
possible and likely to have little, if any, value. One of the
first steps NPR took was to release a report in September 1993
that made 384 recommendations intended to make the government work
better and cost less. 3 This report made recommendations to
reinvent individual agencies' programs and organizations, and also
included governmentwide recommendations for, among other things,
reducing the size of the federal workforce. In making its
recommendations, NPR sought to build its initiatives on existing
efforts, practices, and recommendations. Thus, in many cases,
NPR's recommendations were consistent with recommendations that we
and agency Inspectors General (IGs) had made in the past. Not
surprisingly, because NPR's recommendations reflected issues that
we and others had stressed for years, we reported that we
generally agreed with most of them. 4 Our ongoing review of
selected NPR recommendations for this Subcommittee and Senator
Brownback provides several examples illustrating the
interrelationship between NPR's recommendations and other reform
efforts. For example, IRS's current modernization effort is
consistent with NPR's recommendation, made in 1993, which included
actions to Support a new business vision, Realign the missions
of IRS' organizations, and Improve taxpayer- focused output
measures. Several years after NPR's recommendation, Congress
remained concerned about the need to modernize IRS and enacted the
IRS Restructuring and Reform Act of 1998. 5 Building on the
direction set forth in the 3 From Red Tape to Results: Creating a
Government That Works Better and Costs Less, National Performance
Review, September 7, 1993. 4 GAO/OCG-94-1, Dec. 3, 1993. 5 P. L.
105- 206, July 22, 1998. Statement Management Reform: Continuing
Attention Is Needed to Improve Government Performance Page 5
GAO/T-GGD-00-128 Restructuring Act and recommendations from NPR
and others, Commissioner Rossotti established a new mission
statement and supporting strategic goals for the IRS. Recognizing
the complex and interdependent nature of its long- standing
problems, IRS also initiated a massive modernization effort that
encompasses major changes to its organizational structure,
business practices, performance management system, and information
systems. While, in many ways, IRS remains as challenged an agency
today as it was 2 years ago when the Restructuring Act was passed,
we have said that this modernization effort has the potential to
provide improvements in the agency's two key mission areas
taxpayer service and enforcement. 6 IRS modernization, however, is
a longterm effort that is likely to take more than a decade to
fully implement. An additional example of the interrelationship
between NPR's recommendations and other reform efforts, involves
two recommendations NPR made to the Department of Energy (DOE)
reflecting the political environment that followed the end of the
cold war. One of NPR's recommendations called for DOE to redirect
energy laboratories to post- cold war priorities by continuing the
reduction already under way of funding for nuclear weapons
production, research, testing programs, and infrastructure. NPR
also recommended that DOE sell uranium no longer needed for
national defense purposes. DOE said that NPR's recommendation was
consistent with uranium disposition programs that DOE already had
in place. In recent years, we have examined aspects of NPR's cost
savings estimates, downsizing initiative, reinvention
laboratories, and acquisition and regulatory reform efforts. The
results of our reviews, which are summarized below, underscore the
work that still lies ahead in reforming federal management. We
reported in July 1999 that NPR claimed savings from agency-
specific recommendations that could not be fully attributed to its
efforts. NPR claimed that about $137 billion in savings has
resulted from its efforts to reinvent the federal government, with
about $44.3 billion of these savings claimed from recommendations
that were targeted toward individual agencies. We reviewed six
recommendations representing over two- thirds of this $44. 3
billion, and found that the relationship between the NPR
recommendations and the savings claims was not clear. These
savings 6 See IRS Modernization: Long- term Effort Under Way, but
Significant Challenges Remain (GAO/ TGGD/ AIMD- 00- 154, May 3,
2000) and IRS Restructuring Act: Implementation Under Way but
Agency Modernization Important to Success (GAO/ T- GGD/ AIMD- 00-
53, Feb. 2, 2000). Information From Our Reviews of Selected NPR
Initiatives Claimed Agency Savings Cannot All Be Attributed to NPR
Statement Management Reform: Continuing Attention Is Needed to
Improve Government Performance Page 6 GAO/T-GGD-00-128 estimates
also could not be replicated, and there was no way to substantiate
the savings claimed. NPR relied on the OMB to estimate the savings
it claimed from its recommendations, and OMB generally did not
distinguish NPR's contributions from other initiatives or factors
that influenced budget reductions at the three agencies we
reviewed the Department of Agriculture (USDA), DOE, and the
National Aeronautics and Space Administration (NASA). To estimate
the savings from the agency- specific recommendations, OMB said it
used the same types of procedures and analytic techniques that
have long been used in developing the President's budget. These
procedures and techniques are intended to support point- in- time
budget estimates that are based on policies and economic forecasts
in effect at a given time. As our previous reviews of budget
estimates have shown, it is difficult to reconstruct the specific
assumptions used and track savings for estimates produced several
years ago. 7 At NASA, for example, OMB attributed all $8.5 billion
of expected reductions to NASA's budget for fiscal years 1996
through 2000 directly to NPR's recommendation to reinvent NASA.
OMB did not account for other factors, such as ongoing NASA reform
initiatives and budgetary spending caps, that also influenced
NASA's budget during this period. Similarly, when OMB estimated
savings from the recommendation to redirect DOE's energy
laboratories to post- cold war priorities, it credited all savings
from estimated reductions in the weapons activity budget account
($ 6. 996 billion) to NPR. Considering the nuclear test ban treaty
and other factors, it was apparent that the DOE laboratories'
priorities would have changed regardless of whether NPR had made
the recommendation. Reflecting policy decisions to reduce the size
of the federal government during the 1990s, both NPR and Congress
proposed personnel reductions. NPR attempted to achieve the
downsizing, without diminishing the quality of service to the
public, by streamlining organizational structures to eliminate
overseers while maintaining frontline staff, and by making better
use of technology to more efficiently deliver services. The NPR
called on agencies to restructure their workforces by directing
their downsizing toward specific management control positions,
including budget, procurement, and personnel positions, as well as
managers and 7 NPR Savings Estimates (GAO/ GGD/ AIMD- 96- 149R,
July 24, 1996) and Budget Process: Issues Concerning the 1990
Reconciliation Act (GAO/AIMD-95-3, Oct. 7, l994). Agencies'
Downsizing Has Short- and Long- term Implications Statement
Management Reform: Continuing Attention Is Needed to Improve
Government Performance Page 7 GAO/T-GGD-00-128 supervisors.
Congress passed the Federal Workforce Restructuring Act of 1994,
which mandated governmentwide reductions of 272,000 full time
equivalent (FTE) positions through fiscal year 1999. As a result
of the legislation, executive branch efforts, and other budget and
program pressures, the federal government is now smaller as
measured by the number of federal employees. As the Comptroller
General noted in his March 2000 testimony before this
Subcommittee, from fiscal year 1990 to fiscal year 1999, the
number of nonpostal civilian federal employees fell from about 2.3
million to about 1.9 million. 8 Nevertheless, the manner in which
the downsizing was implemented has short- and long- term
implications that require continuing attention. The management
control positions NPR sought to decrease were barely reduced as a
proportion of the workforce as a whole, and at some agencies they
increased. 9 In addition, our reviews have found that a lack of
adequate strategic and workforce planning during the initial
rounds of downsizing by some agencies may have affected their
ability to achieve organizational missions. 10 Some agencies
reported that downsizing in general led to such negative effects
as a loss of institutional memory and an increase in work
backlogs. For example, efforts to downsize while introducing new
technology were not consistently well planned. In our review of
agencies' initial efforts to restructure personnel operations,
upgrading systems technology was a primary element of the
restructuring plans because the departments planned to reduce the
number of personnel specialists they employed and improve services
and operating efficiency by automating paper- based processes. 11
However, the automation efforts were not completed as planned
before reductions in personnel staffing occurred. As a result, the
agencies were struggling to achieve their efficiency and service
improvement objectives. Although we found that agencies' planning
for downsizing improved as their downsizing efforts continued, it
is by no means clear that the current 8 Human Capital: Managing
Human Capital in the 21 st Century (GAO/T-GGD-00-77, Mar. 9,
2000). 9 Federal Downsizing: The Status of Agencies' Workforce
Reduction Efforts (GAO/T-GGD-96-124, May 23, 1996). 10 Federal
Workforce: Payroll and Human Capital Changes During Downsizing
(GAO/GGD-99-57, Aug. 13, 1999). 11 Management Reform: Agencies
Initial Efforts to Restructure Personnel Operations (GAO/GGD-98-
93, July 13, 1998). Statement Management Reform: Continuing
Attention Is Needed to Improve Government Performance Page 8
GAO/T-GGD-00-128 workforce is adequately balanced to properly
execute agencies' missions today. For example, most major
agencies' fiscal year 2000 annual performance plans that were
prepared under GPRA do not sufficiently address how the agencies
will use their human capital to achieve results. 12 This suggests
that one of the critical components of high- performing
organizations, the systematic integration of human capital
planning and program planning is not being adequately addressed
across the federal government. Another of NPR's initiatives was to
establish reinvention labs, which were designated to test ways
that agencies could improve their performance and customer service
by reengineering work processes and eliminating unnecessary
regulations. Some of the lab efforts began before NPR's
initiative, and the labs covered a wide variety of subject areas,
ranging from acquisition systems to ways to use technology to
improve operations. 13 Our 1996 review found that the labs'
results suggested a number of promising approaches to improving
existing agency work processes. For example, the Veterans Affairs
New York Regional Office sought to improve customer service and
communication in its claims processing function by creating self
directed work teams responsible for handling a veteran's claim
from start to finish. Similarly, the U. S. Geological Survey's
information dissemination lab sought to improve internal
communications and job processes by combining the organizational
unit that took map purchasing orders with the unit that filled the
orders and by cross- training staff. These and other reinvention
labs represent real achievements. The real value of the labs'
efforts can only be realized when effective practices spread
beyond the lab sites to the rest of the government. Unfortunately,
we found a lack of substantial communication among labs and
between the labs and other federal entities to disseminate lab
results. Therefore, we recommended establishing a clearinghouse to
facilitate the sharing of information and provide performance
information that demonstrates results. The National Academy for
Public Administration initially filled such a role in response to
our recommendation by establishing a clearinghouse on the
Internet. However, it did not appear that this Website has been
updated since October 1998. 12 Managing for Results: Opportunities
for Continued Improvements in Agencies' Performance Plans (GAO/
GGD/ AIMD- 99- 215, July 20, 1999). 13 Management Reform: Status
of Agency Reinvention Lab Efforts (GAO/GGD-96-69, Mar. 20, 1996).
Better Communication Could Help Disseminate Reinvention
Laboratories' Methods That Improved Performance Statement
Management Reform: Continuing Attention Is Needed to Improve
Government Performance Page 9 GAO/T-GGD-00-128 Congress and the
administration have taken a number of important steps to improve
federal acquisition, but despite recent reforms, the government
still does not have a world- class purchasing system. Reform
efforts, including the Federal Acquisition Streamlining Act of
1994 and the ClingerCohen Act of 1996, have focused principally on
simplifying the process for buying commercial products and
services and on attempting to improve decisionmaking in acquiring
information technology. Despite these reforms, however, the
products and services the government buys all too often cost more
than expected, are delivered late, or fail to perform as
anticipated. No commercial business would remain viable for very
long with results like these. Problems are particularly evident in
the two areas where most of the dollars are spent on weapons
systems and information technology. Significant improvements in
these areas, as well as in the skills of the acquisition
workforce, are needed in order to produce better outcomes. We have
made a number of recommendations over the years to improve
acquisition outcomes, including that federal agencies use best
commercial practices. 14 As we testified before the Subcommittee
on Government Management, Information, and Technology, House
Committee on Government Reform, it is difficult to assess the
impact of acquisition reforms because many of them are still being
implemented. 15 In addition, it is difficult to measure any
increase in the government's purchases of commercial items since
the Federal Acquisition Streamlining Act of 1994, because reliable
baseline data are not available. Nevertheless, we are seeing some
changes. Agencies have streamlined their acquisition processes,
particularly by using governmentwide acquisition and schedule
contracts to get what they need more quickly. However, much more
needs to be done to achieve real and sustained improvements. It
will take time to improve agency acquisition operations because
the problems we have identified are difficult ones and are
deeprooted in very large programs and organizations. To insure
that progress continues, sustained management attention and
congressional oversight particularly involving weapons systems,
information technology, and human capital issues will be
necessary. 14 For example, see Best Practices: DOD Training Can Do
More to Help Weapon System Programs Implement Best Practices
(GAO/NSIAD-99-206, Aug. 16, 1999), and Defense Acquisition: Best
Commercial Practices Can Improve Program Outcomes (GAO/T-NSIAD-99-
116, Mar. 17, 1999). 15 Federal Acquisition: Trends, Reforms, and
Challenges (GAO/T-OCG-00-7, Mar. 16, 2000). Continued Improvements
in Acquisition Management Are Needed Statement Management Reform:
Continuing Attention Is Needed to Improve Government Performance
Page 10 GAO/T-GGD-00-128 One of NPR's major initiatives was to
improve the federal government's regulatory system by, among other
things, streamlining agency rulemaking and cutting regulations. In
June 1995, President Clinton said that, as part of his
administration's regulatory reform initiative, federal agencies
would eliminate 16,000 pages of regulations from the 140,000- page
Code of Federal Regulations (CFR), and that another 31, 000 pages
would be revised. When we examined this issue in 1996, agencies
reported that they had eliminated 11,569 pages of the CFR and
revised another 13,216 pages. However, in our October 1997 report
on this initiative, we noted that officials in each of the four
agencies we reviewed (the Departments of Housing and Urban
Development and Transportation, the Occupational Safety and Health
Administration within the Department of Labor, and the
Environmental Protection Agency) said that the page elimination
totals that they reported did not take into account the pages that
their agencies had added to the CFR while the eliminations were
taking place. 16 In some cases, agencies added more pages than
they removed during the page elimination initiative. The agencies
pointed out that pages are often added to the CFR because of
statutory requirements or to clarify requirements placed on
regulated entities, and that pages are sometimes not eliminated at
the request of those entities. The Paperwork Reduction Act of 1995
(PRA) coincided with NPR's regulatory reform initiative on burden
reduction and was similar to that initiative in its emphasis. We
recently testified on the implementation of the PRA before the
Subcommittee on National Economic Growth, Natural Resources, and
Regulatory Affairs, House Committee on Government Reform. 17
Although the PRA envisioned a 30- percent reduction in federal
paperwork between fiscal years 1995 and 1999, preliminary data
indicate that the paperwork has increased during this period.
Federal paperwork increased by about 233 million burden hours
during fiscal year 1999 alone the largest increase in any 1- year
period since the PRA was enacted. Nearly 90 percent of the
governmentwide increase during fiscal year 1999 was attributable
to increases at IRS, which IRS said were primarily a result of new
and existing statutory requirements. 16 Regulatory Reform:
Agencies' Efforts to Eliminate and Revise Rules Yield Mixed
Results (GAO/ GGD98- 3, Oct. 2, 1997). 17 Paperwork Reduction Act:
Burden Increases at IRS and Other Agencies (GAO/T-GGD-00-114, Apr.
12, 2000). Regulatory Reforms Have Yielded Mixed Results Statement
Management Reform: Continuing Attention Is Needed to Improve
Government Performance Page 11 GAO/T-GGD-00-128 The next Congress
and administration will face a series of long- standing management
problems that will continue to demand attention if the efficiency
and effectiveness of the federal government is to be fundamentally
improved. In recent testimonies, including one for the Senate
Governmental Affairs Committee, the Comptroller General has
suggested a framework for thinking about these weaknesses and how
they can be addressed. 18 Today, I will highlight just a few of
the more important management problems facing the federal
government to give a sense of the range of continuing problems
that will confront the next Congress and administration. We have
seen that integrating a focus on results into agency operations
does not come quickly or easily. In the 2- 1/ 2 years since the
requirements of GPRA were implemented across the executive branch,
Congress and executive branch decisionmakers have been provided
with a wealth of new and valuable information on the plans, goals,
strategies, and results of federal agencies. However, continuing
progress is needed to use that information in managing programs
and making program, resource, and policy decisions. Our work has
identified widespread mission fragmentation and program overlap in
the federal government. The broad scope of this fragmentation and
overlap ranging from social programs to defense efforts indicates
the inherent complexity of national problems that the federal
government traditionally has addressed in a piecemeal approach.
Table 1 highlights the areas of fragmentation and overlap that we
have identified in our work through 1999. 18 Budget Issues:
Effective Oversight and Budget Discipline Are Essential Even in a
Time of Surplus (GAO/T-AIMD-00-73, Feb. 1, 2000), and
Congressional Oversight: Opportunities to Address Risks, Reduce
Costs, and Improve Performance (GAO/T-AIMD-00-96, Feb. 17, 2000).
The Impetus for Improving Government Has Not Diminished Adopting
an Effective Results Orientation Coordinating Crosscutting
Programs Statement Management Reform: Continuing Attention Is
Needed to Improve Government Performance Page 12 GAO/T-GGD-00-128
Mission areas Programs Agriculture Food safety Commerce and
housing credit Financial institution regulation Community and
regional development Community development Economic development
Emergency preparedness Housing Rural development Education,
training, employment, and social services Early childhood programs
Employment training Student aid General science, space, and
technology High performance computing National laboratories
Research and development facilities Small business innovation
research General government Federal statistical agencies Health
Long- term care Substance abuse Nuclear health and safety
Telemedicine Teen pregnancy prevention Income security Child care
Welfare and related programs Youth programs Homelessness programs
Programs for people with disabilities Defense Guided weapon
systems Telecommunications Military health care Satellite control
systems Nonmedical chemical and biological research and
development International affairs Educational programs Policy
formulation and implementation Law enforcement Border inspections
Drug control Investigative authority Drug trafficking Combating
terrorism Natural resources and environment Federal land
management International environmental programs Hazardous waste
cleanup Water quality Note: This table has been updated to reflect
work we completed since our report Managing for Results: Using the
Results Act to Address Mission Fragmentation and Program Overlap
(GAO/ AIMD97- 146, Aug. 29, 1997) was issued. Source: GAO
analysis. Table 1: Areas of Potential Fragmentation and Overlap
Statement Management Reform: Continuing Attention Is Needed to
Improve Government Performance Page 13 GAO/T-GGD-00-128
Coordinating crosscutting programs is a persistent challenge for
executive branch agencies and Congress. For example: The current
system to ensure food safety suffers from inconsistent oversight,
poor coordination, and inefficient allocation of resources. As
many as 12 different federal agencies administer over 35 laws
overseeing food safety. This fragmented federal approach costs
over $1 billion each year and hinders the government's efforts to
effectively protect consumers from unsafe food. 19 Better
coordination is needed to improve the effectiveness of efforts to
safeguard the nation from terrorist attacks. Over 40 agencies,
bureaus, and offices implement numerous programs designed to
prevent and deter terrorism, respond to terrorist threats and
incidents, and manage the consequences of terrorist acts. 20 The
1994 Catalogue of Federal Domestic Assistance describes 342
economic development programs. 21 In addition, the limited
information available on the impact of economic development
assistance provided by three programs the Appalachian Regional
Commission, the Department of Commerce's Economic Development
Administration, and the Tennessee Valley Authority did not
establish a strong causal linkage between a positive effect and
agency assistance. There are over 90 early childhood programs in
11 federal agencies and 20 offices. The system of multiple early
childhood programs with firm eligibility cutoffs could lead to
disruptions in services from even slight changes in a child's
family status. While multiple programs target disadvantaged
preschool- aged children, most such children do not participate in
any preschool program. 22 19 Food Safety: Opportunities to
Redirect Federal Resources and Funds Can Enhance Effectiveness
(GAO/RCED-98-224, Aug. 6, 1998), and Food Safety and Quality:
Uniform, Risk- Based Inspection System Needed to Ensure Safe Food
Supply (GAO/RCED-92-152, June 26, 1992). 20 Combating Terrorism:
Issues to Be Resolved to Improve Counterterrorism Operations (GAO/
NSIAD99- 135, May 13, 1999), and Major Management Challenges and
Program Risks: A Governmentwide Perspective (GAO/OCG-99-1, Jan.
1999). 21 Economic Development: Limited Information Exists on the
Impact of Assistance Provided by Three Agencies (GAO/RCED-96-103,
Apr. 3, 1996), and Economic Development Programs (GAO/ RCED-
95251R, July 28, 1995). 22 See Early Childhood Programs:
Characteristics Affect the Availability of School Readiness
Information (GAO/HEHS-00-38, Feb. 28, 2000), and Early Childhood
Programs: Multiple Programs and Overlapping Target Groups
(GAO/HEHS-95-4FS, Oct. 31, 1994). Statement Management Reform:
Continuing Attention Is Needed to Improve Government Performance
Page 14 GAO/T-GGD-00-128 As these and other examples suggest,
unfocused and uncoordinated crosscutting programs can waste scarce
funds, confuse and frustrate taxpayers, and limit overall program
effectiveness. Over the years, our work has shown that federal
functions and programs, ranging from Medicare to weapons
acquisition, have been hampered by daunting financial and program
management problems. Since 1990, as part of our high- risk
initiative, we have reported on specific federal activities and
functions that are particularly vulnerable to waste, fraud, abuse,
and mismanagement. Our 1999 high- risk update listed 26 areas at
high- risk spanning a range of government operations, such as
benefit programs that lose billions of dollars annually in
improper payments, IRS' difficulty in controlling tax filing
fraud, inefficient and weak lending programs, and the challenges
the Department of Defense (DOD) faces in reducing infrastructure
costs. It will take time to fully resolve most high- risk areas
because they are deep- rooted, difficult problems in very large
programs and organizations. Congress has heightened its attention
to resolving these weaknesses by reviewing agencies' progress and
taking legislative action. However, more could be done by Congress
and the executive branch to achieve real and sustained
improvements. For example, in many cases, agencies have agreed
with our recommendations but have not yet fully implemented them.
The annual planning process under GPRA provides an excellent
vehicle for helping to address high- risk functions and programs
and to ensure that clear accountability for progress is
established. In our assessment of the fiscal year 1999 performance
plans, we noted that precise and measurable goals for resolving
mission- critical management problems are important to ensuring
that the agencies have the institutional capacity to achieve their
more results- oriented programmatic goals. 23 Similarly, our
assessment of the fiscal year 2000 annual performance plans
concluded that plans with goals and strategies that address
mission- critical management challenges and program risks show
that agencies are striving to build the capacity to be high-
performing organizations and to reduce the risk of waste, fraud,
abuse, and mismanagement. 24 23 Managing for Results: An Agenda to
Improve the Usefulness of Agencies' Annual Performance Plans (GAO/
GGD/ AIMD- 98- 228, Sept. 8, 1998). 24 GAO/ GGD/ AIMD- 99- 215.
Addressing High- Risk Federal Functions and Programs Statement
Management Reform: Continuing Attention Is Needed to Improve
Government Performance Page 15 GAO/T-GGD-00-128 Modern strategic
human capital management recognizes that employees are a critical
asset for success, and that an organization's human capital
policies and practices must be designed, implemented, and assessed
by the standard of how well they support the organization's
missions and goals. The government's human capital management has
emerged as the missing link in the statutory management framework
that Congress established to provide for a more businesslike and
results- oriented federal government. It is federal employees who
will make the principles of performance management work for
government, and federal employees thus should be viewed not as
costs to be cut, but as assets to be valued. Only when the right
employees are on board and provided with the training, technology,
structure, incentives, and accountability to work effectively is
organizational success possible. At present, serious concerns are
emerging about the aging of the federal workforce, the rise in
retirement eligibilities, and the actions needed to ensure
effective succession planning. The size and shape of the
workforce, its skills needs and imbalances, and agencies'
approaches to management performance and incentives, all need
greater attention than they have been given. For example, our work
at DOD, where downsizing has resulted in a civilian workforce
reduction of about 43 percent from 1989 levels, suggests that
imbalances are developing in the age distribution of DOD civilian
staff. The average age of this staff has been increasing, while
the proportion of younger staff, who are the pipeline of future
agency talent and leadership, has been dropping. 25 Further, to
cope with downsizing, as well as to become more efficient, DOD has
numerous initiatives under way to change the way it does business.
Changes in business practices and mission strategies in both DOD
and other federal agencies can affect the kinds of competencies
that will be needed to carry out organizational missions in the
future. Ensuring that such competencies are identified, and that
the appropriate staff are on- board, will require that federal
agencies take a strategic approach to viewing and managing their
human capital. 26 The U. S. government, as a whole, has not yet
been able to accurately report a significant portion of its
assets, liabilities, and costs because of significant financial
systems weaknesses; problems with fundamental recordkeeping and
financial reporting; incomplete documentation; and 25 Human
Capital: Strategic Approach Should Guide DOD's Civilian Workforce
Management (GAO/ TGGD/ NSIAD- 00- 120, Mar. 9, 2000). 26 See, for
example, SSA Customer Service: Broad Service Delivery Plan Needed
to Address Future Challenges (GAO/ T- HEHS/ AIMD- 00- 75, Feb. 10,
2000), Space Shuttle: Human Capital Challenges Require Management
Attention (GAO/T-NSIAD-00-133, Mar. 22, 2000), and Human Capital:
Observations on EPA's Efforts to Implement a Workforce Planning
Strategy (GAO/T-RCED-00-129). Developing and Implementing Modern
Human Capital Practices Strengthening Financial Management
Statement Management Reform: Continuing Attention Is Needed to
Improve Government Performance Page 16 GAO/T-GGD-00-128 weak
internal control, including computer controls. These deficiencies
also affect the government's ability to accurately measure the
full cost and financial performance of certain programs and to
effectively manage related operations. 27 The executive branch
recognizes that, because of the extent and severity of the
financial management deficiencies, addressing them will require
concerted improvement efforts across government. The President has
designated financial management improvement as a priority
management objective, and efforts are under way across government
to address the pervasive, generally long- standing financial
management problems. While obtaining unqualified clean audit
opinions on federal financial statements is an important
objective, it is not an end in and of itself. The key is to take
steps to continuously improve internal control and underlying
financial and management information systems as a means to assure
accountability, increase economy, improve efficiency, and enhance
the effectiveness of government. These systems must generate
timely, accurate, and useful information on an ongoing basis, not
just as of the end of the fiscal year. Unfortunately, for fiscal
year 1999, the financial management systems of 19 of the 22
agencies that have reported thus far were again found not to be in
substantial compliance with the requirements of the Federal
Financial Management Improvement Act of 1996. The act requires
agency financial management systems to comply with system
requirements and standards to provide uniform, reliable, and more
useful financial information. Increasingly, the federal government
is using technology to deliver products and services to the
public. But the success of these efforts is critically dependent
on computer security. Computer security is an area that OMB and
GAO agree is of critical concern. Our nation's computerbased
infrastructures are at increasing risk of severe disruption, as
illustrated by the recent attacks on popular Internet Websites.
Massive computer networks provide pathways among systems that, if
not properly secured, can be used to gain unauthorized access to
data and operations from remote locations. As a result, government
officials are increasingly concerned about attacks from
individuals and groups with malicious intentions, such as
terrorists and nations engaging in information warfare. 28 27
Financial Audit: 1999 Financial Report of the United States
Government (GAO/AIMD-00-131, Mar. 31, 2000). 28 Critical
Infrastructure Protection: Comprehensive Strategy Can Draw on Year
2000 Experiences (GAO/AIMD-00-1, Oct. 1, 1999). Enhancing Computer
Security Statement Management Reform: Continuing Attention Is
Needed to Improve Government Performance Page 17 GAO/T-GGD-00-128
In February 1997 and again in January 1999, in reports to
Congress, we designated information security as a governmentwide
high- risk area, 29 and OMB has listed it as a priority management
objective. The long- standing management issues confronting the
next Congress and administration will likely stimulate new efforts
to reform the federal government. In previous appearances before
this Subcommittee, I have identified a number of factors that
appear to be critical to making progress on these and other
management issues. These factors are (1) a demonstrated leadership
commitment and accountability for change; (2) the integration of
management improvement initiatives into programmatic
decisionmaking; (3) thoughtful and rigorous planning to guide
decisions, particularly to address human capital and information
technology issues; (4) employee involvement to elicit ideas and
build commitment and accountability; (5) organizational alignment
to streamline commitment and accountability; and (6) strong and
continuing congressional involvement. These factors, derived from
the lessons of past reforms, offer the opportunity for increased
success for future reforms. Mr. Chairman, this concludes my
prepared statement. I would be pleased to respond to any questions
that you or other Members of the Subcommittee may have. Contacts
and Acknowledgement For further information concerning this
testimony, please contact J. Christopher Mihm at (202) 512- 8676.
Individuals making key contributions to this testimony included
Susan Ragland, William Reinsberg, and Katherine Cunningham. 29
High- Risk Series: An Update (GAO/HR-99-1, January 1999), and
High- Risk Program: Information on Selected High- Risk Areas
(GAO/HR-97-30, May 16, 1997). Summary Observations Page 18 GAO/T-
GGD-00-128 Page 19 GAO/T-GGD-00-128 Viewing GAO Reports on the
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