DOCUMENT RESUME ED 384 294 HE 028 407 AUTHOR Gore, Al TITLE From Red Tape to Results:Creating a Government Works Better & That Costs Less. Reportof the National Performance Review. INSTITUTION Office of theVice President, PUB DATE 10 Sep 93 Washington, DC. NOTE 175p.; Twelvemajor recommendations Department of Education pertaining to the are listed onpages 137-138. For accompanyingreport specific Department of to the U.S. Education, see ED379 992. For reports, see HE 028 related AVAILABLE FROM 408-409. U.S. GovernmentPrinting Office, Documents, Mail Superintendent of Stop: SSOP, Washington,DC 20402-9328;Superintendent of Documents, P.O.Box 371954, Pittsburgh,PA 15250-7954 foreign). ($14, $17.50 PUB TYPE Reports - Evaluative/Feasibility(142) EDRS PRICE MF01/PC07 PlusPostage. DESCRIPTORS Educational Research;Efficiency; Secondary Education; Elementary Eligibility; Federal *Federal Government; Aid; Federal Legislation;' Programs; Federal Federal Regulation; Government Grants; Higher Role; Education; Information Institutional Dissemination; Administration;Institutional Evaluation;Organizational Change; Organizational Effectiveness;Professional Termination; Public Development; Program Agencies; Research Administration; StaffDevelopment IDENTIFIERS Clinton Administration; Debt Collection; of Education;Dwight D Eisenhower *Department Educ Program; Math and Science Elementary Secondary General Education Education Act; Provisions Act 1968; Performance Review; *National 1991 National SecurityEducation Act

ABSTRACT This monograph the federal presents results government and the of a 6-monthstudy of Clinton Administration's a decade-longprocess of re-inventing proposal for the federal operations. Eachof four major government's principles are organized around presented ina chapter specific stepstowards its principles are:cutting red tape, implementation. These putting customers employees to getresults, and cutting first, empowering present recommendations back to basics.Appendices organized byfederal agency, expected savings,and major a summary of systems. The 12 recommendationsaffecting governmental recommendations forthe Department (1) redesignChapter 1 of the of Educationare: (2) reduce the Elementary andSecondary Education number ofprograms the department Act; consolidate the administers; (3) Eisenhower Mathand Science Chapter 2;(4) consolidate Education Programwith National Security (5) streamlineand improve the Education Actprograms; Department's grants provide incentivesfor the Department's process; (6) simplify andstrengthen debt collectionservice; (7) for participation institutionaleligibility and in federalstudent aid certification single point of programs; (8) createa contact forprogram and grant improve employee information; (9) development opportunities eliminate the in theDepartment; (10) grantback statutoryprovision of the Provisions Act; (11)build a professional, General Education for research; and mission-drivenstructure (12) developa strategy for and information technical assistance dissemination. (Contains 251 endnotes.)(JB) TORESULTSLE-

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Report of the National Performance Review

Vice President Al Gore

September 7, 1993

Revised September 10, 1993

3 For sale by the U.S. Government Printing Office Superintendent of Documents, Mail Stop: SSOP. Washington. DC 20402-9328

Printed on recycled paper

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74N , Au-4, ,4*,r3444094Thwratoryteirl.'),:- 1ov-fit ."34trefigyet-rer THE VICE PRESIDENT WASHINGTON

September 7, 1993

The President The White House Washington. DC

Dear Mr. President.

The National Performance Review, the intensive. 6-month study of the federal government that you requested, has completed its work. This report represents the beginning of what must be. and with your leadership will be, a long-term commitment to change. The title of this report reflects our goals: moving from red tape to results to create a government that works better and costs less.

Many talented federal employees contributed to this report, bringing their experience and insight to a difficult and urgent task. We sought ideas and advice from all across America: from other federal workers, from state and local government officials, from management experts, from business leaders, and from private citizens eager for change. This report benefitted greatly from their involvement, and we intend for them to benefit from the reforms we are proposing here.

It is your vision of a government that works for people, cleared of useless bureaucracy and waste and freed from red tape and senseless rules, that continues to be the catalyst for our efforts. We present this report to you confident that it will provide an effective and innovative plan to make that vision a reality.

Sincerely,

Al Gore Vice President

a CONTENTS

PREFACE INTRODUCTION 1 Chapter 1 CUTTING RED TAPE 11 STEP I : STREAMLINING THE BUDGET PROCESS 14 STEP 2: DECENTRALIZING PERSONNEL POLICY 20 STEP 3: STREAMLINING PROCUREMENT 26 STEP 4: REORIENTING THE INSPECTORS GENERAL 31 STEP 5: ELIMINATING REGULATORY OVERKILL 32 STEP 6: EMPOWER STATE AND LOCAL GOVERNMENTS 35 CommusioN 41 Chapter 2 PUTTING CUSTOMERS FIRST 43 STEP 1: GIVING CUSTOMERS A VOICE-AND A CHOICE 44 STEP 2: MAKING SERVICE ORGANIZATIONS COMPETE 54 STEP 3: CREATING MARKET DYNAMICS 60 STEP 4: USING MARKET MECHANISMS To SOLVE PROBLEMS 62 CONCLUSION 64 Chapter 3 EMPOWERING EMPLOYEES To GET RESULTS 65 STEP 1: DECENTRALIZING DECISIONMAKING POWER 69 STEP 2: HOLDING ALL FEDERAL EMPLOYEES ACCOUNTABLE FOR RESULTS 72 STEP 3: GIVING FEDERAL WORKERS THE TOOLS THEY NEED To Do THEIR JOBS 77 STEP 4: ENHANCING THE QUALITY OF WORK LIFE 84 STEP 5: FORMING A LABOR-MANAGEMENT PARTNERSHIP 87 STEP 6: EXERT LEADERSHIP 88 CONCLUSION 91 Chapter 4 CUTTING BACK TO BASICS 93 STEP 1: ELIMINATE WHAT WE DON'T NEED 94 STEP 2: COLLECTING MORE 104 STEP 3: INVESTING IN GREATER PRODUCTIVITY 110 STEP 4: REENGINEERING PROGRAMS To CUT COSTS 112 CONCLUSION 120

CONCLUSION 121

ENDNOTES 125

APPENDIX A: NATIONAL PERFORMANCE REVIEW MAJOR RECOMMENDATIONS BY AGENCY 133

APPENDIX B: NATIONAL PERFORMANCE REVIEW SUMMARY OF SAVINGS 155

APPENDIX C: NATIONAL PERFORMANCE REVIEW MAJOR RECOMMENDATIONS AFFECTING GOVERNMENTAL SYSTEMS 159 PREFACE

We can no longer afford to pay more forand get less fromour government. The answer for ever), problem cannot always be another program or more money.It is time to radically change the way the government operatesto shift fiom top-down bureaucracy to entrepreneurial government that empowers citizens and communities to change our count-7yfrom the bottom up. We must reward the people and ideas that work and get rid of those that don't.

Bill Clinton and Al Gore Putting People First'

The National Performance government and asked me to lead the Review is about change effort. We organized a team of experienced historic changein the federal employees from all corners of the way the government governmenta marked change from past works. The Clinton efforts, which relied on outsiders. administration believes it is We turned to the people who know time for a new customer service contract government bestwho know what works, with the American people, a new guarantee what doesn't, and how things ought to be of effective, efficient, and responsive changed. We organized these people into a government. As our title makes clear, the series of teams, to examine both agencies National Performance Review is about and cross-cutting systems, such as moving from red tape to results to create a budgeting, procurement, and personnel. government that works better and costs less. The President also asked all cabinet These are our twin missions: to make members to create Reinvention Teams to government work better and cost less. The lead transformations at their departments, President has already addressed the federal and Reinvention Laboratories, to begin deficit with the largest deficit reduction experimenting with new ways of doing package in history. The National business. Thousands of federal employees Performance Review can reduce the deficit joined these two efforts. further, but it is not just about cutting But the National Performance Review spending. It is also about closing the trust did not stop there. From the beginning, I deficit: proving to the American people that wanted to hear from as many Americans as their tax dollars will be treated with respect possible. I spoke with federal employees at for the hard work that earned them. We are every major agency and at federal centers taking action to put America's house in across the countryseeking their ideas, order. their input, and their inspiration. I visited The National Performance Review began programs that work: a Miami school that on March 3, 1993, when President Clinton also serves as a community center, a announced a 6-month review of the federal Minnesota pilot program that provides I ROM RED l'APE TO R.SV.FS ( .10.A II NG .1 GOVERNMEN rA WORKS BE rTER & Cos us LESS

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benefits more efficiently by using from business, government, and the technology and debit cards, a Chicago academic communit-y. neighborhood that has put community This report is the first product of our policing to work, a U.S. Air Force base that efforts. It describes roughly 100 of our most has made quality management a way of life. important actions and recommendations, We also heard from citizens all across while hundreds more are listed in the America, in more than 30,000 letters and appendices at the end of this report. In the phone calls. We sought the views of coming months, we will publish additional hundreds of different organizations, large information providing more detail on and small. We learned from the experience those recommendations. of state and local leaders who have This report represents the beginning of restructured their organizations. And we what will bewhat must bean ongoing listened to business leaders who have used commitment to change. It includes actions innovative management practices to turn that will be taken now, by directive of the their companies around. President; actions that will be taken by the At a national conference in Tennessee, cabinet secretaries and agency heads; and we brought together experts to explore how recommendations for congressional action. best to apply the principles of reinventing The National Performance Review government to improving family services. focused primarily on how government In Philadelphia's Independence Square, should work, not on what it should do. where our government was born, we Our job was to improve performance in gathered for a day-long "Reinventing areas where policymakers had already Government Summit" with the best minds decided government should play a role.

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6,1644,...v 4. PREFACE

We examined every cabinet department changes proposed in the agencies and and 10 agencies. At two departments, departments of the government. Defense and Health and Human Services, We also expect that the reinventions we our work paralleled other large-scale reviews propose will allow us to reduce the size of already under way. Defense had launched a the civilian, non-postal workforce by 12 Bottom-Up Review to meet the President's percent over the next 5 years. This will 1994-1997 spending reduction target. In bring the federal workforce below two addition, comprehensive health and welfare million employees for the first time since reform task forces had been established to 1966. This reduction in the workforce will make large-scale changes in significant total 252,000 positions-152.000 over and parts of Health and Human Services. above the 100,000 already promised by Nevertheless, we made additional President Clinton. recommendations regarding both these Most of the personnel reductions will be departments and passed other findings on concentrated in the structures of over- to the relevant task force for review. control and micromanagement that now The National Performance Review bind the federal government: supervisors, recommendations, if enacted, would headquarters staffs, personnel specialists, produce savings of $108 billion over 5 budget analysts, procurement specialists, years. As the table below indicates, $36.4 accountants, and auditors. These central billion of these savings come from specific control structures not only stifle the

Clinton/Gore NPR Savings (FY-1995-1999 $ in Billions)

AGENCIES 36.4

STREAMLINING THE BUREAUCRACY 40.4 THROUGH REENGINEERING

PROCUREMENT 22.5 5% annual savings in total procurement spending

INFORMATION TECHNOLOGY 5.4 Savings due to consolidation and modernization of the information infrastructure

INTERGOVERNMENTAL 3.3 Offer fee-for-service option in lieu of existing administrative costs

TOTAL 108.0

(Fora fidler description see Appendix A and Appendix B.) . 120%1 12! I) 1 1.1. 10 122-.SVI.IS CRLA N \ CIOV1 ItV11 111.11 WORKSBEFTLa &COS FS 1...LSS

creativity of line managers and workers, administering grant programs to state and they consume billions per year in salary, local governments. benefits, and administrative costs. Many of the spending cuts we propose Additional personnel cuts will result as each can be done by simplifying the internal agency reengineers its basic work processes organization of our departments and to achieve higher productivity at lower agencies. Others will require legislation. We costseliminating unnecessary layers of recognize that there is broad support in management and nonessential staff. Congress for both spending curs and We will accomplish as much of this as government reforms, and we look forward possible through attrition, early retirement, to working with Congress to pass this and a time-limited program of cash package of recommendations. As President incentives to leave federal service. If an Clinton said when he announced the employee whose job is eliminated cannot National Performance Review: take early retirement and elects not to take a cash incentive to leave government service, This performance review is not about we will help that employee find another job politics. Programs passed by both offer through out-placement assistance. Democratic presidents and Republican In addition to savings from the agencies presidents, voted on by members of and savings in personnel we expect that Congress of both parties, and supported systematic reform of the procurement by the American people at the time, are process should reduce the cost of everything being undermined by an inefficient and the government buys. Our antiquated outdated bureaucracy, and by our huge procurement system costs the government debt. For too long the basic functioning in two ways: first, we pay for all the of the government has gone unexamined. bureaucracy we have created to buy things, We want to make improving the way and second, manufacturers build the price government does business a permanent of dealing with this bureaucracy into the part of how government works, regardless prices they charge us. If we reform the of which party is in power. procurement system, we should be able to save $22 billion over 5 years. We have not a moment to lose. President As everyone knows, the computer Kennedy once told a story about a French revolution allows us to do things faster general who asked his gardener to plant a and more cheaply than we ever have tree. "Oh, this tree grows slowly," the before. Savings due to consolidation and gardener said. "It won't mature for a modernization of the information hundred years." infrastructure amount to $5.4 billion over "Then there's no time to lose," the 5 years. general answered. "Plant it this afternoon." Finally, by simplifying paperwork and reducing administrative costs, we expect to Al Gore save $3.3 billion over 5 years in the cost of Vice President of the United States

i 0 iv INTRODUCTION

Our goal is to make the entire federalgovernment both less expensive and more efficient and to change the culture ofour national bureaucracy away from complacency and entitlement touard initiative andempowerment. 1.1"-i, intend to redesign, to reinvent, to reinvigorate the entire national government."

President Bill Clinton Remarks announcing the National Performance Review March 3, 1993

public confidence in the obsolete. It knows how to add, butnor to federal government hasnever subtract. been lower. The average And yet, waste is not the only problem. American believes we waste The federal government is not simply 48 cents of every tax dollar. broke; it is broken. Ineffective regulation of Five of every six want the financial industry broughtus the savings "fundamental change" in Washington. and loan debacle. Ineffective ed'ication and Only 20 percent of Americanstrust the training programs jeopardize our federal government to do the right thing competitive edge. Ineffective welfare and most of the timedown from 76 percent housing programs undermineour families 30 years ago.' and cities. We all know why. Washington's failures We spend $25 billion a yearon welfare, are large and obvious. For a decade, the $27 billion on food stamps, and $13 billion deficit has run out of control. The national on public housingyet more Americans debt now exceeds $4 trillionS16,600 for fall into poverty every year.; We spend $12 every man, woman, and child in America. billion a year wagingwar on drugsyet see But the deficit is only the tip of the few signs of victory. We fund 150 different iceberg. Below the surface, Americans employment and trainingprogramsyet believe, lies enormousunseen waste. The the average American hasno idea where to Defense Departmentowns more than $40 get job training, and the skills of our billion in unnecessary supplies.2 The workforce fall further behind those ofour Internal Revenue Service strugglesto collect competitors.1 billions in unpaid hills. Acentury after It is almost as if federalprograms were industry replaced farmingas America's designed not to work. In truth, feware principal business, the Agriculture "designed" at all; the legislativeprocess Department still operates more than 12,000 simply churns them out,one after another, Field service offices,an average of nearly 4 year after year. It's little wonder that when for every county in the nationrural, asked if "government alwaysmanages to urban, or suburban. The federal mess things up," two-thirds of Americans government seems unable to abandon the say yes.,,5

11 FROM RED CAPE TO RESULTS CREATING A GOVERNMENT THAr WORKS BE FTFR & COSI s LLSS

To borrow the words of a recent taxpayers, and create a leaner but more Brookings Institution book, we suffer not productive government. As noted in the only a budget deficit but a performance preface, they can save S108 billion over 5 deficit.° Indeed, public opinion experts years if those which will be enacted by the argue that we are suffering the deepest crisis President and his cabinet are added to those of faith in government in our lifetimes. In we propose for enactment by Congress. past crisesWatergate or the Vietnam \Var, Some of these proposals can be enacted by for exampleAmericans doubted their the President and his cabinet, others will leaders on moral or ideological grounds. require legislative action. We are going to They felt their government was deceiving fight for these changes. We .ire determined them or failing to represent their values. to create a government that works better Today's crisis is different: people simply feel and costs less. that government doesn't work.- In Washington, debate rarely focuses on the performance deficit. Our leaders spend A Cure Worse Than The Disease most of their time debating policy issues. But if the vehicle designed to carry out Government is not alone in its troubles. policy is broken, new policies won't take us As the Industrial Era has given Nvay to the anywhere. If the car won't run, it hardly Information Age, institutionsboth public matters where we point it: we won't get and privatehave come face to face with there. Today, the central issue we face is not obsolescence. The past decade has witnessed what government does, but how it works. profound restructuring: In the 1980s, major American corporations reinvented themselves: in the 1990s, governments are struggling to do the same. We needa federal government that delivers In recent Years, our national leaders more for less. We need a federal government responded to the growing crisis with traditional medicine. They blamed the that treats its taxpayers as if they were bureaucrats. They railed against "fraud, cu tomers and treats taxpayer dollars with waste, and abuse." And they slapped ever respect fir the sweat and sacrifice that earned more controls on the bureaucracy to prevent it. them. But the cure has become indistinguish- able from the disease. The problem is not Vice President Al Gore lazy or incompetent people: it is red tape May 24, 1993 and regulation so suffocating that they stifle every ounce of creativity. No one would offer a drowning man a drink of water. And We have spent too much money for yet, for more than a decade, we have added programs that don't work. It's time to make red tape to a system already strangling in it. our government work for the people, learn The fedeial crovernment is filled with to do more with less, and treat taxpayers like good people trapped in bad systems: budget customers. systems, personnel systems, procurement President Clinton created the National systems. financial management systems, Performance Review to do just that. In information systems. When we blame the this report we make hundreds of people and impose more controls, we make recommendations for actions that, if the systems worse. Over the past 15 Years, implemented, will revolutionize the way for example, Congress has created within the federal government does business. each agency an independent office of the They will reduce waste, eliminate inspector general. The idea was to root out unneeded bureaucracy, improve service to fraud, waste, and abuse. The inspectors

12 INTRODUCTION general have certainly uncovered important problems. But as we learned in conversation after conversation, they have so intimidated Our people, ofcourse, work hard fir their federal employees that many are now afraid money.... They want quality inthe cars they to deviate even slightly from standard operating procedure. buy They want quality in their local Thoth. '.'et innovation, by its nature, requires And they want quality in their federal deviation. Unfortunately, faced with so government and in federal programs. many controls, many employees have simply given up. They do everything by the whether it makes sense or not. They Senator John Glenn book Remarks introducing a hearing fill out forms that should never have been on federal planning and performance created, follow rules that should never have May 5, 1992 been imposed, and prepare reports that serve no purposeand are often never even read. In the name of controlling waste, we have created paralyzing inefficienc-y. It's time work very well. Saturn isn't run the way we found a way to get rid of waste and General Motors was. Intel isn't run the way encourage efficiency. IBM was. Many federal organizations are also monopolies, with few incentives to innovate The Root Problem: or improve. Employees have virtual lifetime Industrial-Era Bureaucracies tenure, regardless of their performance. in an Information Age Success offers few rewards; failure, few penalties. And customers are captive; they Is government inherently incompetent? can't walk away from the air traffic control Absolutely not. Are federal agencies filled system or the Internal Revenue Service and with incompetent people? No. The sign up with a competitor. Worse, most problem is much deeper: Washington is federal monopolies receive their money filled with organizations designed fo:- an without any direct input from their environment that no longer exists customers. Consequently, they try a lot bureaucracies so big and wasteful they can harder to please Congressional appropri- no longer serve the American people. ations subcommittees than the people they From the 1930s through the 1960s, are meant to serve. Taxpayers pay more we built large, top-down, centralized than they should and get poorer service. bureaucracies to do the public's business. Politics intensifies the problem. In They were patterned after the corporate Washington's highly politicized world, the structures of the ashierarchical greatest risk is not that a program will bureaucracies in which tasks were broken perform poorly, but that a scandal will into simple parts, each the responsibility of erupt. Scandals are front-page news,while a different layer of employees, each defined routine failure is ignored. Hence control by specific rules and regulations. With system after control system is piled up their rigid preoccupation with standard to minimize the risk of scandal. The operating procedure, their vertical chains of budget system, the personnel rules, the command, and their standardized services, procurement process, the inspectors these bureaucracies were steadybut slow generalall are designed to prevent the and cumbersome. And in today's world of tiniest misstep. We assume that we can't rapid change, lightning-quick information trust employees to make decisions, so we technologies, tough global competition, and spell out in precise detail how they must do demanding customers, large, top-down virtually everything, then audit them to bureaucraciespublic or privatedon't ensure that they have obeyed even rule.

13 3 FROM REo FARE To RESUI, IS CRI.A I IVc.\ (3U \ I RN \11.N r \X'oIths & cos rs Liss

Indeed, the federal government spends billions of dollars paying people who uring Y4 Presi dent Gore's town hall meeting control, check up on, or investigate L. .employees of the Department of Housing, otherssupervisors, headquarters staffs, and Urban Dt-velopment (HUD), the following budget officers, personnel officers, procurement officers, and staffs of the exchange'tOO161aCei.:- !':' General Accounting Office (GAO) and the Pirticia had an article in our newsletter inspectors general.' Not all this money is mj ago,iatsai4 the lead story was "Pd wasted, of course. But the real waste is no doubt larger, because the endless regulations rather have aldietomy than. have another idea. "And and layers of control consume every that war relecting the problem of our Ideas Program employee's time. Who pays? The taxpayer. hen, in HUD. Consider but one example, shared with Vice President Gore at a meeting of federal Many of the employees have wonderful ideas about employees in Atlanta. After federal marshals how to save money and so on, but the way it works is seize drug dealers' homes, they are allowed that it has to be approved by the supervisor and the to sell them and use the money to help supervisor} supervisor and the supervisors supervisor's finance the war on drugs. To sell the houses, they must keep them presentable, which supervisor before it ever gets to the Ideas Program... includes keeping the lawns mowed. Many of the supervisors feel threatened because they In Atlanta, the employee explained, most didn't think of this idea, and this money is wasted in organizations would hire neighborhood their office, and they didn't believe or didn't know it was teenagers to mow a lawn for $10. But procurement regulations require the U.S. happening and didn't catch it. So they are threatened Marshals Service to bid out all work and fiel that it will make them look bad i f they competitively, and neighborhood teenagers recognize the idea. don't compete for contracts. So the federal government pays $40 a lawn to professional Vice President Gore: So they strangle that idea in landscape firms. Regulations designed to the crib, don't they? save money waste it, because they take decisions out of the hands of those Participant: And then they strangle the person that responsible for doing the work. And had the idea. taxpayers lose $30 for every lawn mowed. What would happen if the marshals used their common sense and hired The slightest deviation prompts new neighborhood teenagers? Someone would regulations and even more audits. noticeperhaps the Washington office, Before long, simple procedures are too perhaps the inspector general's office, complex for employees to navigate, so we perhaps even the GAO. An investigation hire more budget analysts, more personnel might well followhindering a career or experts, and more procurement officers to damaging a reputation. make things work. By then, the process In this way, federal employees quickly involves so much red tape that the smallest learn that common sense is riskyand action takes far longer and costs far more creativity is downright dangerous. They than it should. Simple travel arrangements learn that the goal is not to produce results, require endless forms and numerous please customers, or save taxpayers' money, signatures. Straightforward purchases take but to avoid mistakes. Those who dare to months; larger ones take years. Routine innovate do so quietly. printing jobs take a dozen approvals. This is perhaps the saddest lesson learned This emphasis on process steals resources by those who worked on the National from the real job: serving the customer. Performance Review: Yes, innovators exist

4 14 INTRODUCTION within the federal government, but many risk of runaway spending or fraud. work hard to keep their innovations quiet. The National Performance Review By its nature, innovation requires a approached its task differently. Not only did departure from standard operating we look for potential savings and procedure. In the federal government, such efficiencies, we searched for success. We departures invite repercussions. looked for organizations that produced The result is a culture of fear and results, satisfied customers, and increased resignation. To survive, employees keep a productivity. We looked for organizations low profile. They decide that the safest, that constantly learned, innovated, and answer in any given situation is a firm improved. We looked for effective, "maybe." They follow the rules, pass the entrepreneurial public organizations. And buck, and keep their heads down. They we found them: in local government, in develop what one employee, speaking with state government, in other countriesand Vice President Gore at a Department of right here in our federal government. Veterans Affairs meeting, called "a At the Air Combat Command, for government attitude." example, we found units that had doubled their productivity in 5 years. Why? Because the command measured The Solution: Creating performance everywhere; squadrons and Entrepreneurial Organizations bases competed proudly for the best maintenance, flight, and safety records; and How do we solve these problems% It top management had empowered won't be easy. We know all about employees to strip away red tape and government's problems, but little about redesign work processes. A supply system solutions. The National Performance that had once required 243 entries by 22 Review began by compiling a people on 13 forms to get one spare part comprehensive list of problems. We had the into an F-15 had been radically simplified GAO's 28-volume report on federal and decentralized. Teams of employees were management problems, published last fall. saving millions of dollars by moving supply We had GAO's High-Risk Series, a 17- operations to the front line, developing their volume series of pamphlets on troubled own flight schedules, and repairing parts programs and agencies. We had the House that were once discarded.`' Government Operations Committee's At the Internal Revenue Service, we report on federal mismanagement, called found tax return centers competing for the Managing the Federal Government: A Decade best productivity records. Performance on of Decline. And we had 83 notebooks key customer service criteriasuch as the summarizing just the tables of contents of accuracy of answers provided to reports published by the inspectors general, taxpayershad improved dramatically. the Congressional Budget Office, the Utah's Ogden Service Center, to cite but agencies, and think tanks. one example, had more than 50 Unfortunately, few of these studies "productivity improvement teams" helped us design solutions. Few of the simplifying forms and reengineering work investigating bodies had studied success processes. Not only had employees saved storiesorganizations that had solved their more than $11 million, they had won the problems. And without studying success, it 1992 Presidential Award for Quality.'" is hard to devise real solutions. For years, the At the Forest Service, we found a pilot federal government has studied failure, and project in the 22-state Eastern Region that for years, failure has endured. Six of every had increased productivity by 15 percent in ten major agencies have programs on the just 2 years. The region had simplified its Office of Management and Budget's "high- budget systems, eliminated layers of middle risk" list, meaning they carry a significant management, pared central headquarters

15 5 FROM RED TAPE TO RESLtars CREATING A GOVERNMENTrnA rWORKS BET1 rR&COS FS LESS

articulated these in a one-page statement of our commitment. In organizing this report, Americans voted fira change last November. we have boiled these characteristics down to four key principles. They want better schools and health e and better roads and more jobs, but they want us 1. Cutting Red Tape to do it all with a government thatworks Effective, entrepreneurial governments better on less money and that is more cast aside red tape, shifting from systems in responsive. which people are accountable for following rules to systems in which they are President Bill Clinton accountable for achieving results. They Remarks announcing the streamline their budget, personnel, and National Performance Review procurement systemsliberating March 3, 1993 organizations to pursue their missions. They reorient their control systems to prevent problems rather than simply staff by a fifth, and empowered front-line punish those who make mistakes. They employees to make their own decisions. At strip away unnecessary layers of regulation the Mark Twain National Forest, for that stifle innovation. And they deregulate instance, the time needed to grant a grazing organizations that depend upon them for permit had shrunk from 30 days to a few funding, such as lower levels of hoursbecause employees could grant government. permits themselves rather than process them through headquarters) 2. Putting Customers First We discovered that several other governments were also reinventing Effective, entrepreneurial governments themselves, from Australia to Great Britain. insist on customer satisfaction. They listen Singapore to Sweden, the Netherlands to carefully to their customersusing surveys, New Zealand. Throughout the developed focus groups, and the like. They restructure world, the needs of information-age their basic operations to meet customers' societies were colliding with the limits of needs. And they use market dynamics such industrial-era government. Regardless of as competition and customer choice to party, regardless of ideology, these create incentives that drive their employees governments were responding. In Great to put customers first. Britain, conservatives led the way. In New By "customer," we do not mean "citizen." Zealand, the Labor Party revolutionized A citizen can participate in democratic government.In Australia and Sweden, both decisionmaking; a customer receives conservative and liberal parties embraced benefits from a specific service. All fundamental change. Americans are citizens. Most are also In the United States, we found the same customers: of the U.S. Postal Service, the phenomenon at the state and local levels. Social Security Administration, the The movement to reinvent government is as Department of Veterans Affairs, the bipartisan as it is widespread. It is driven not National Park Service, and scores of other by political ideology, but by absolute federal organizations. necessity. Governors, mayors, and legislators In a democracy, citizens and customers of both parties have reached the same both matter. But when they vote, citizens conclusion: Government is broken, and it is seldom have much chance to influence the time t) fix it. behavior of public institutions that directly Where we found success, we found many affect their lives: schools, hospitals, farm common characteristics. Early on, we service agencies, social security offices. It is a 16 6

..1111Yabl&A -.212.411EamaTaie.A.../.12th:ssba-Its -:Llr_44.aalligiv INTRODUCTION sad irony: citizens own their government, but private businesses they do not own Principles of the National work much harder to cater to their needs. Performance Review 3. Empowering Employees to Get Results ..,. wpwill invent a government that puts people Effective, entrepreneurial governments VII P14 by: transform their cultures by decentralizing CuiiiniUtineCessary spending authority. They empower those who work on the front lines to make moreof their Serving its customers own decisions and solve moreof their Empowering its employees own problems. They embracelabor- Helping communities solve their management cooperation, provide training and other tools employees need to be own problems effective, and humanize the workplace. Fostering excellence While stripping away layers and empowering front-line employees, they Here's how. We will. hold organizations accountable for producing results. Create a clear sense of mission Steer more, row less 4. Cutting Back to Basics: Producing Delegate authority and responsibility Better Government for Less ' Replace regulations with incentives Effective, entrepreneurial governments Develop budgets based on outcomes constantly find ways to make government Expose federal operations to competition work better and cost lessreengineering j-Ser.011'fOr mar ket, tiOi'aAridnistrative, how they do their work and reexamining programs and processes. Theyabandon the -solutions obsolete, eliminate duplication, and end Measure our success by customer satisfaction special interest privileges. They invest in greater productivity, through loanfunds and long-term capital investments. And they embrace advanced technologies to cut taken the lead in reinventing these systems. costs. In 1990, it passed the Chief Financial These are the bedrock principles on Officers Act, designed to overhaul financial which the reinvention of the federal management systems; in July 1993, itpassed bureaucracy must buildand the principles the Government Performance and Results around which we have organized our Act, which will introduce performance actions. They fit together much like the measurement throughout thefederal pieces of a puzzle: if one is missing. the government. With Congress's leadership, we others lose their power. To create hope to reinvent government's other basic organizations that deliver value to American systems, such as budget, personnel, taxpayers, we must embrace all four. information, and procurement. Our approach goes far beyond fixing Our approach has much in common specific problems in specific agencies. with other management philosophies, such Piecemeal efforts have been under way for as quality management andbusiness process years, but they have not delivered what reengineering. But these management Americans demand. The failure in disciplines were developed for the private Washington is embedded in the very systems sector, where conditions are quitedifferent. by which we organize the federal In business, red tape may be bad, but it bureaucracy. In recent years, Congress has is not the suffocating presence it is in RON.1 RFD I'VEtoRI.SUI FS CRi A tl\ GovtRNMEN HIA I WORKS tT1.12 &CUSP; Li.ss

government. In business, marketincentives government that broadly distributed power. already exist; no one need invent them. Their vision of democracy, which gave Powerful incentives are always at work, citizens a voice in managing the United forcing organizations to do more with less. States, was untried and untested in 1776. Indeed, businesses that fail to increase their It required a tremendous leap of faith. productivityor that tie themselves up in But it worked. red tapeshrink or die. Hence, private Later generations extended this sector management doctrines tend to experiment in democracy to those not yet overlook some central problems of enfranchised. As the 20th century dawned, government: its monopolies. itslack of a a generation of "Progressives"such as Teddy bottom line, its obsession with process Roosevelt and Woodrow Wilson invented rather than results. Consequently, our the modern bureaucratic state, designed approach goes beyond private sector to meet the needs of a new industrial methods. It is aimed at the heart and soul society. Franklin Roosevelt brought it to of government. full flower. Indeed, Roosevelt's 1937 The National Performance Review also announcement of his Committee on shares certain goals with past efforts to cut Administrative Management sounds as if costs in government. But our mission goes it were written only yesterday: beyond cost-cutting. Our goal is not simply to weed the federal garden; it is to create a The time has come to set our house in regimen that will keep the garden free of order. The administrative management weeds. It is not simply to trim pieces of of the government needs overhauling. government, but to reinvent the way The executive structure of the government does everything. It is not government is sadly out of date .... If we simply to produce a more efficient have faith in our republican form of government, but CO create a moreeffective government ... we must devote ourselves one. After all, Americans don't want a energetically and courageously to the task government that fails more efficiently.They of making that government efficient. want a government that works. To deliver what the people want, we need Through the ages, public management not jettison the traditional values that has tended to follow the prevailing underlie democratic governancevalues paradigm of private management. The such as equal opportunity, justice. diversity, 1930s were no exception. Roosevelt's and democracy. We hold these values dear. committeeand the two Hoover We seek to transform bureaucracies commissions that followedrecommended precisely because they have failed to nurture a structure patterned largelyafter those of these values. We believe that those who corporate America in the 1930s. In a sense, resist change for fear of jeopardizing our they brought to government the GM model democratic values doom us to a government of organization. that continuesthrough its failuresto By the 1980s, even GM recognized that subvert those very values. this model no longer worked. When it created Saturn, its first new division in 67 years. GM embraced a very differentmodel. Our Commitment: A Long-Term It picked its best and brightest and asked Investment in Change them to create a more entrepreneurial organization, with fewer layers, fewer rules, This is not the first time Americans have and employees empowered to do whatever felt compelled to reinvent their government. was necessary to satisfy the customer.Faced In 1776, our founding fathers rejected the with the very real threat of bankruptcy, old model of a central power issuing edicts major American corporations have for all to obey. In its place, they created a revolutionized the way they do business.

8 18 INTRODUCTION

Confronted with our twin budget and performance deficitswhich so undermine public trust in governmentPresident I would invite those whoare cynical about the Clinton intends to do the same thing. He possibility of this change to ask themselves this did not staff the Performance Review question: What would your reaction have primarily with outside consultants or corporate experts, as past presidents have. been 10 years ago if someone had said that in Instead, he chose federal employees to take the summer of 1993 American automobile the lead. They consulted with experts from state government, local government, and companies would be making the highest qua4 the private sector. But as Vice President most competitively priced cars in Gore said over and over at his meetings with the world? federal employees: "The people who work closest to the problem know the most about I know my reaction would have been, "No how to solve the problem. way I am sorry but I've bought too many Nor did the effort stop with the men clunkers. They can't do it. The momentum and women who staffed the Performance Review. President Clinton asked even, toward mediocrity is just too powerfitl." cabinet member to create a Reinvention But that change has taken place. And i f an Team to redesign his or her department. industry as large and as stodgy as the automobile and Reinvention Laboratories to begin experimenting immediately. Since April, industry can undergo that kind of people all across our government have been transformation, then the federal government can working full time to reinvent the federal as well. bureaucracy. The process is not easy, nor will it be Vice President Al Gore quick. There are changes we can make Town Hall Meeting, immediatek% but even if all of our recom- Department of Energy mendations are enacted, we will have only July 13, 1993 begun to reinvent the federal government. Our efforts are but a down paymentthe first installment of a long-term investment in With this report, then, we begin a change. Even' expert with whom we talked decade-long process of reinvention. We reminded us that change takes time. In a hope this process will involve not only the large corporation, transformation takes 6 to 8 thousands of federal employees now at work rars at best. In the federal government, on Reinvention Teams and in Reinvention which has more than 7 times as many Labs, but millions more who are not vet employees as Amends largest corporation, it engaged. We hope it will transform the will undoubtedly take longer to bring about habits, culture, and performance of all the historic changes we propose.' federal organizations. Along the WM', we will make mistakes. Some may say that the task is too large; Some reforms will succeed beyond our that we should not attempt it because we wildest dreams; others will not. As in any are bound to make mistakes; that it cannot experimental process. we will need to be done. But we have no choice. Our monitor results and correct as we go. But we government is in trouble. It has lost its sense must not confuse mistakes with failure. As of mission; it has lost its ethic of public Tom Peters and Robert Waterman wrote in service; and, most importantly, it has lost ,S'earch o/ any organization that the faith of the American people. is not making mistakes is not trying hard In times such as these, the most enough. Babe Ruth, the Sultan of Swat, dangerous course is to do nothing. We must struck out 1.330 times. have the courage to risk change.

13 Chapter 1 CUTTING RED TAPE

About 10 years ago, two foresters returned from a hard day in the field to make plans for the coming week. Searching for a detail of ageacy they found themselves overwhelmed by voluminous editions of policy manuals, reports, and binders filled with thousands of directives. One forester recalled the very first Forest Service manualsmall enough to fit into every ranger's shirt pocket, yet containing everything firesters needed to know to do their jobs.

"Why is it that when we have a problem, 'the other fo. rester asked "the solution is always to add something at report, a system, a policybut never take something away?"

The first replied: "What if.. wecould just start over?"

The federal government unapproved purpose, we dictate precisely does at least one thing how much they can spend on everything well: It generates red tape. from staff to telephones to travel. But not one inch of that And because we don't want state and red tape appears bv local governments using federal funds for accident. In fact, the purposes that Congress did not intend, we government creates it all with the best of write regulations telling them exactly how intentions. It is time now to put aside our to run most programs that receive federal reverence for those good intentions and funds. We call for their partnership in examine what they have createda dealing with our country's most urgent system that makes it hard for our civil domestic problems, yet we do not treat servants to do what we pay them for, and them as equal partners. frustrates taxpayers who rightfully expect Consider some examples from the daily their money's worth. lives of federal workers, people for whom Because we don't want politicians' red tape means being unable to do their families, friends, and supporters placed in jobs as well as they canor as well as we "no-show" jobs, we have more than deserve. 100,000 pages of personnel rules and The district managers of Oregon's regulations defining in exquisite detail how million-acre Ochoco National Forest have to hire, promote, or fire federal employees.' 53 separate budgetsone for fence Because we don't want employees or private maintenance, one for fence construction, companies profiteering from federal one for brush burningdivided into 557 contracts, we create procurement processes management codes and 1,769 accounting that r...quire endless signatures and long lines. To transfer money between accounts, months to buy almost anything. Because we they need approval from headquarters. don't want agencies using tax dollars for any They estimate the task of tracking spending

40 11 I ROM RI I)I OF FO RESUI FS CRI AFING GOVI- RNMI-A I111.1r WORKS BETTLR & COS IS LASS

in each account consumes at least 30 days computers. they are asked to write with of their time every year, days they could quill pens. spend doing their real jobs.3 It also sends a This thicket of rules and regulations has message: You are not trusted with eventhe layer upon laver of additional oversight. simplest responsibilities. Each new procedure necessitates someone's Or consider the federal employees who approval. The result is fewer people doing repair cars and trucks at naval bases. Each real work, more people getting in their way. time they need a spare part, they order it As management sage Peter Drucker once through a central purchasing officea said, "So much of what we call procedure that can keep vehicles in the shop management consists of making it difficult for a month. This keeps one-tenth of the for people to work. "`' fleet out of commission, so the Navy buys As Robert Tobias, president of the 10 percent more vehicles than it needs..' National Treasury Employees Union, told Or how about the new Energy participants at the Philadelphia Summit on Department petroleum engineer who Reinventing Government, "The regulations requested a specific kind of calculator to do and statutes that bind federal employees her job? Three months later, she received an from exercising discretion available in the adding machine. Six months after that, the private sector all come about as a response procurement office got her a calculatora to the humiliations, mistakes, tiny, hand-held model that could not embarrassments of the past." Even though, perform the complex calculations her work as Tobias noted, "those problems are 15, 20, required. Disgusted, she bought her own.' 30 years old," and "the regulations and the Federal managers read the same books statutes don't change." The need to enforce and attend the same conferences as private the regulations and statutes, in turn, creates sector managers. They know what good needless layers of bureaucracy. management looks like. They just can't put The layers begin with "staff" agencies, it into practicebecause they face such as the General Services Administration constraints few managers in the private (GSA) and the Office of Personnel sector could imagine. Management (OPM). These staff agencies Hamstrung by rules and regulations, were designed originally to provide federal managers simply do not have the specialized support for "line" agencies, power to shape their organizations enjoyed such as the Interior and Commerce Departments, that do government's real work. But as rules and regulations began to proliferate, support turned into control. Never tell people howto do things. Tell them The Office of Management and Budget (OMB) which serves the President in the what you want to achieve, and they will budget process, runs more than 50 surprise you with their ingenuity. compliance, clearance, and review processes. Some of this review is necessary to ensure General George S. Patton budget control and consistency of agency 1944 actionswith each other and with the President's program hut much of it is overkill. by private sector managers. Their job is to Line agencies then wrap themselves in make sure that every dollar is spent in the even more red tape by creating their own budget category and the Year for which it budget offices, personnel offices, and was appropriated, that ever' promotion is procurement offices. Largely in response to consistent with central guidelines, and that appropriations committees, budget offices ;cry piece of equipment is bought through divide congressional budgets into competitive bidding. In an age of personal increasingly tiny line items. A few years ago,

12 21 CUTTING RED TAPE. for example, base managers in one branch done, and self-restraint enough to keep of the military had 26 line items for from meddling with them while they do it." housing repairs alone. Personnel offices tell Our path is clear: We must shift from managers when they can and cannot systems that hold people accountable for promote, reward, or move employees. And process to systems that hold them procurement offices force managers to buy accountable for results. We discuss through a central monopulv, precluding accountability for results in chapter 3. In agencies from getting what they need. when this chapter, we focus on six steps necessary they need it. to strip away the red tape that so engulfs our What the staff agencies don't control. federal employees and frustrates the Congress does. Congressional American people. appropriations often come with hundreds First, we will streamline the budget of strings attached. The Interior process, to remove the manifold restrictions Department found that language in its that consume managers' time and literally 1992 House. Senate. and conference force them to waste money. committee reports included some 2.150 .Cecond, we will decentralize personnel directives, earmarks, instructions. ind policy, to give managers the tools they need prohibitions.' As the federal budget to manage effectivelythe authority to tightens, lawmakers request increasingly hire, promote. reward, and fire. specific report language to protect activities Third, we will streamline procurement, in their districts. Indeed, 1993 was a to reduce the enormous waste built into the record year for such requests. In one process we use to buy S200 billion a year in appropriations bill alone, senators required goods and services. the U.S. Customs Service to add new Fourth, we will reorient the inspectors employees to its Honolulu office, general, to shift their focus from punishing prohibited closing any small or rural post those who violate rules and regulations to office or U.S. Forest Service offices: and helping agencies learn to perform better. forbade the U.S. Mint and the Bureau of Fifth, we will eliminate thousands of Engraving and Printing from even studying other regulations that hamstring federal the idea of contracting out guard duties. employees, to cut the final Lilliputian ropes Even worse, Congress often gives a single on the federal giant. agency multiple missions, some of which Finally, we will deregulate state and local are contradictory. The Agency for governments, to empower them to spend International Development has more than more time meeting customer needs 40 different objectives: Congress wants it to particularly with their 600 federal grant dispose of American farm surpluses, build programsand less time jumping through democratic institutions, even strengthen the bureaucratic hoops. American land grant college system.' No As we pare down the systems of over- wonder it has trouble accomplishing its real control and micromanagement in missionpromoting international government, we must also pare down the development. structures that go with them: the oversized In Wishington, we must work together headquarters, multiple layers of supervisors to untangle the knots of red tape that and auditors, and offices specializing in the prevent government from serving the arcane rules of budgedng, personnel, American people well. We must give procurement, and finance. We cannot cabinet secretaries, program directors and entirely do without headquarters, line managers much greater authority to supervisors, auditors, or specialists, but these pursue their real purposes. structures have grown twice as large as they As Theodore Roosevelt said: "The best should be. executive is the one who has the sense to Counting all personnel, budget, pick good men [sic] to do what he wants procurement, accounting, auditing. and

22 1si FROM RED TAPE TO RESULTS CREATING A G.-VERNMENT THAT WORKS BETTER & COSTS LESS

headquarters staff, plus supervisory our early retirement program, and does not personnel in field offices, there are roughly elect to take a cash incentive to leave 700,000 federal employees whose job it is to government service, we will help that employee manage, control, check up on or audit find another job offer, either with government others.''' This is one third of all federal or in the private sector. civilian employees. Normal attrition will contribute to the Not counting the suffocating impact reduction. In addition, we will introduce these management control structures have legislation to permit all agencies to offer on line managers and workers, they cash payments to those who leave federal consume $35 billion a year in salary and service voluntarily, whether by retirement or benefits alone." If Congress enacts the resignation. The Department of Defense management reforms outlined in this report, (DOD) and intelligence community we will dramatically cut the cost of these already have this "buy-out" authority; we structures. We will reinvest some of the will ask Congress to extend it to all agencies. savings in the new management tools we We will also give agencies broad authority need, including performance measurement, to offer early retirement and to expand their quality management, and training. Overall, retraining, out-placement efforts, and other these reforms will result in the net tools as necessary to accomplish the 12% elimination of approximately 252,000 reduction. Agencies will be able to use these positions. (This will include the 100,000 tools as long as they meet their cost position reduction the President has already reduction targets. set in motion.) These options will give federal managers A reduction of 252,000 positions will the same tools commonly used to downsize reduce the civilian, non-postal work force private businesses. Even with these by almost 12 percentbringing it below investments, the downsizing we propose two million for the first time since1966.'2 will save the taxpayer billions over the next This reduction, targeted at the structures 5 years. of control and micromanagement, is None of this will be easy. Downsizing designed to improve working conditions for never is. But the result will not only be a the average federal employee. We cannot smaller workforce, it will also be a more empower employees to give us their best empowered, more inspired, and more work unless we eliminate much of the red productive workforce. tape that now prevents it. We will do As one federal employee told Vice everything in the government's power to President Gore at one of his many town ease the tr nsition for workers, whether they meetings, "If you always do what you've choose to stay with government, retire, or always done, you'll always get what you move to the private sector. always got." We can no longer afford to get Our commitment is this: If an employee what we've always got. whose job is eliminated cannot retire through STEP 1: STREAMLINING THE BUDGET PROCESS process of resource allocation: how much Most people can't get excited about money they have, what strings are attached the federal budget process, with to it, and what hurdles are placed before its green-eyeshade analysts, managers who must spend it. complicated procedures, byzantine In government, budgeting is never easy language, and reams of minutiae. Beyond After all, the budget is the most political of such elements, however, lies a basic, documents. If as the political scientist unalterable reality. For organizations of all Harold D. Lasswell once said, politics is kinds, nothing is more important than the "who gets what, when, how," the budget

14 23 CUTTING RED TAPE answers that question." By crafting a Early the next year, the President presents budget, public officials decide who pays a budget proposal to Congress for the fiscal what taxes and who receives what benefits. year beginning the following October 1. The public's largesse to children, the elderly, Lawmakers, the media, and interestgroups the poor. the middle class, and others is pore over the document, searching for shaped by the budgets that support cities, winners and losers, new spending proposals, states, and the federal government. and changes in tax laws. In the ensuing But if:budgeting is inherently messy, such months, Congress puts its own stamp on messiness is costly. Optimally, the budget the plan. Although House and Senate would he more than the product of struggles budget committees guide Congress' action, among competing interests. It also would even' committee plays a role. reflect the thoughtful planning of our public Authorizing .-ommirtees debate the leaders. No one can improve quality and cut merits of existing programs and the costs without planning to do so. President's proposals tor changes within Unfortunately, the most deliberate their subject areas. While they decide which planning is often subordinated to politics, programs should continue and recommend and is perhaps the last thing we do in funding levels, separate appropriations constructing a budget. Consider our committees draft the 13 annual spending process. Early in the year, each agency bills that actually comprise the budget. estimates what it will need to run its Congressional debates over a budget programs in the fiscal year that begins resolution, authorization bills, and almost 2 years later. This is like asking appropriations drag on, often into the kill. someone to figure out not only what they Frequently the President and Congress don't will be doing, but bow much it will cost finish by October 1, so Congress passes one 3 years biter since that's when the money or more -continuing resolutions" to keep will be spent. Bureau and program the money flowing, often at the previous managers typically examine the previous year's level. Until the end, agency officials 'ear's activitv data and project the figures 3 troop back and forth to OMB and to the years out, with no word from top political Hill to make their case. States and localities, leaders on their priorities, or even on the interest groups and advocates seek time to total amount that they want to spend. In argue their cause. Budget staffs work non- other words, planning budgets is like stop, preparing estimates and projections on playing "pin the tail on the donkey." how this or that change will affect revenues Blindfolded managers are asked to hit an or spending. All this work is focused on unknown target. making a budgetnot planning or OMB, acting for the President, then delivering programs. crafts a proposed budget through back-and forth negotiations with departments and Ironies riddle the process. agencies, still a year before the fiscal year it will govern. Decisions are struck on Uncertainty reigns: Although taey dollars Congress may never appropriate begin calculating their budget 2 years dollars that, to agencies, mean people, ahead, agency officials do not always equipment. and everything else they need know by October 1 how much they for their jobs. OMB's examiners may will have to spend and frequently don't question agency staff as they develop option even receive their money until well into papers, ONIB's director considers the the fisk.al year. option during his Director's Review meetings, ONIB "passes back" ()MB is especially prone to question recommended funding levels for the unspent funds and reduce the ensuing agencies, and final figures are worked out year's budget by that amount. Agency during a final appeals process. officials inflate their estimates, driving

24 15 I RUM REDFAILIFto REst:t.ts CRLA I INE,X COVE RNMENl r WORKS BETI'l It & Cos I'S Liss

budget numbers higher and higher. resolution, setting broad policy pritnities One bureau budget director claims that and allocating jUnds by function for each many regularly ask for 90 percent more agency.' ' than they eventually receive. Federal managers should focus primarily Despite months of debate, Congress on the content of the budget, not onthe compresses its actualdecision-making process. A new executive budgetresolution on the budget intosuch a short time will help them do that. The President frame that many of the public's highest should issue a directive in early 1994 to prioritieswhat to do about drug mandate the use of such a resolution in addiction, for example, or how to developing his fiscal yea, 1996 budget. It prepare workers for jobs inthe 21st will turn the executive budget process centuryare discussedonly briefly, if at upside down. all. To develop the resolution, officials from the White House policy councils will meet The process is devoid of the most useful with OMB and agency officials. In those information. We do not know what last sessions, the administration's policy Year's money, or that of the year before, leadership will make decisions on overall actually accomplished. Agency officials spending and revenue levels, deficit devise their funding requests based on reduction targets, and funding allocations what they got before, not whether it for major inter-agency policy initiatives. produced results. The product of these meetingsa resolution completed by Augustwill In sum, the budget process is provide agencies with funding ceilings and characterized by fictional requests and allocations for major policy missions. Then, promises, an obsession with inputs rather bureaus will generate their own budget than outcomes, and a shortage of debate estimates, now knowing their agency's about critical national needs. We must start priorities and fiscal limits. to plan strategicallylinking ourspending Our own Environmental Protection with priorities and performance. First, we Agency (EPA) tried a similar approach must create a rational budgeting system. the 1970s as part of a zero-based budgeting trial run. Although zero-based budgeting Action: The President should begin the fell short, participants said, two important budget process with an executive budget advantages emerged: a new responsiveness to internal customer needs and a commitment to final decisions. When participants voted to (lit research and Thereare two ways to reduceexpenditures. development funds because they felt There is the intelligent way..going through researchers ignored program needs, researchers began asking program managers each department and questioning each what kind of research would support their program. Then there is the stupid way: efforts. EPA also found that, after its leaders announcing how much you will cut and had agonized over funding, they remained committed to common decisions. getting each department to cut that amount. Critics may view the executive budget I favor the stupid way resolution process as a top-down tool that will stifle creative, bottom-up suggestions Michel Belanger for funding options. We think otherwise. Chairman, Quebec National Bank The resolution will render top officials May 7, 1992 responsible for budget totals and polio; decisions, but will encourage lower-level

16 25 CUTTING RED TAPE ingenuity to devise funding options within Act set 5-Year spending limits for those guidelines. By adopting this plan. we discretionary spending and pay-as-you-go will help discourage non-productive micro- requirements for mandatory programs. management by senior departmentand With these multi-year caps in place, neither agency officials. the President nor Congress has to decide the total level of discretionary spending each Action: Institute biennial budgets and Year. These caps provide even more reason appropriations.'' for biennial budgets and appropriations. In Congress. 7 out of 10 members favor a We should not have to enact a budget_ biennial process with a 2-year budget every 'ear. Twenry staresadopt budgets for resolution and multi-year authorizations. 2 years. (They retain the power to make The time is ripe. small adjustments in off years if revenues or We recommend that Congress establish expenditures deviate widely from forecasts). biennial budget resolutions and As a result, their governors and legislatures appropriations and multi-year have much more time to evaluate programs authorizations. The first biennium should and develop longer-term plans. begin October 1. 1996, to cover fiscal years Annual budgets consume an enormous 1997 and 1998. After that, bienniums amount of management timetime not would begin October 1 of each even- spent serving customers. Withbiennial numbered year. Such timing would allow budgets, rather than losing months to a President Clinton to develop the first frantic -last-year's budget-plus-X-percent" comprehensive biennial federal budget, exercise. we might spend more time built on the new executive budget examining which programs actually work. resolution. In off years, the President would The idea of biennial budgeting has been submit only amendments for exceptional around for some time. Congressman Leon areas of concern, emergencies. orother Panetta, now OMB director, introduced the unforeseen circumstances. first biennial budgeting bill in 1977, and Biennial budgeting will not make our dozens have been offered since. Although budget decisions easier, for they arc shaped none have passed, the government has some by competing interests and priorities. But it experience with budget plans that cover 2 will eliminate an enormous amount of busy years or more. In 1987, thePresident and work that keeps us from evaluating Congress drafted a budget plan for fiscal programs and meeting customerneeds. years 1988 and 1989 that setspending levels for major categories, enabling Action: OMB, departments. and Congress to enact all 13 appropriations bills agencies will minimize budget restrictions on time for the first time since 1977. such as apportionments and allotments."' In addition, Congress directed the Defense Department to submit a biennial Congress typically divides its budget for fiscal 1988 and 1989 to give appropriations into more than 1,000 Congress more time for broad policy accounts. Committee reportsspecify oversight. At the time, Congress asserted thousands of other restrictions on using that a biennial budget would "substantially money. OMB apportionseach account by improve DOD management and quarter or year, and sometimesdivides it congressional oversight," and that a two- into sub-accounts by line-item or object vear DOD budget was an important step classall to control over-spending. toward across -the -board biennial budgeting. Departmental budget offices further divi.le Administrations have continued to submit the money into allotments. biennial budgets for DOD. Thus, many managers And their money The 1990 Budget Enforcement Act and fenced into hundreds of separate accounts. In the 1993 Omnibus Budget Reconciliation some agencies, they can movefunds among

20 IRMA RED CAPE l'O RESULTS CRLA FIN(, A GOVERNMENT CIIAWORKS BErrr & COs I'S LESS

accounts. In others, Congress or the agency ability to maneuver, however limited44 limits the transfer of funds, trapping the through the baroque and bizarre world money. When that happens, managers must offederalfinance and procurement. spend money where they have it, not where they need it. On one military base, for Solutions to these problems exist. They example, managers had no line item to have been tested in local governments, in purchase snowplow equipment, but they did state governments, even in the federal have a maintenance account. When the government. Essentially, they involve snowplow broke down they leased one. using budget systems with fewer line items, more the maintenance account. Unfortunately, the authority for managers to move money 1-year lease cost S 100,000the same as the among line items, and freedom for agencies full purchase price. to keep some or all of what they savethus Such stories are a dime a dozen within minimizing the incentive for year-end the federal bureaucracy. (They may he the spending sprees. only government cost that is coming Typically, federal organizations down.) Good managers struggle to make experimenting with such budgets have things work, but, trapped by absurd found that they can achieve better constraints. they are driven to waste billions productivity, sometimes with less money. of dollars every year. During an experiment at Oregon's Stories about the legendary end-of-the- Ochoco National Forest in the 1980s, when year spending rush also abound. Managers dozens of accounts were reduced to six, who don't exhaust each line item at year's productivity jumped 25 percent the first end usually are told to return the excess. year and 35 percent more the second. A Typically, they get less the next time around. 1991 Forest Service study indicated that the The result: the well-known spending frenzy. experiment had succeeded in bringing gains The National Performance Review received in efficiency, productivity, and morale, but more examples of this source of wastein had failed to provide the Forest Service letters, in calls, and at town meetingsthan region with a mechanism for complying any other. with congressional intent. After 3 years of Most managers know how to save 5 or negotiations, Washington and Region 6, 10 percent of what they spend. But where the Ochoco Forest is located, couldn't knowing they will get less money next year, agree. The region wanted to retain the they have little reason to save. Instead, smart initial emphasis on performance goals and managers spend every penny of every line targets so forest managers could shift money item. Edwin G. Fleming, chief of the from one account to another if they met Resources Management Division of the performance goals and targets. Washington Internal Revenue Service's Cleveland argued that Congress would not regard such District, put it well in a letter to the targets as a serious measure of congressional Treasury Department's Reinvention Team: intent. The experiment ended in March 1993T' Every manager has saved money only to When the Defense Department allowed have his allocation reduced in the several military bases to experiment with subsequent year. This usually happens what was called the Unified Budget Test. only once, then the manager becomes a base commanders estimated that they could spender rather than a planner accomplish their missions with up to 10 Managing becomes watching after little percent less money. If this experience could pots of money that can't be put where it be applied to the entire government, it makes business sense because of could mean huge savings. reprogramming restrictions. So Beginning with their fiscal year 1995 managers, who are monitors of these submissions to OMB, departments and little pots of money, are rewarded fo the agencies will begin consolidating accounts

18 27 CUTTING RED TAPE to .minimize restrictions and manage more President's commitment to reduce the effectively. ..I-hey will radically cut the federal bureaucracy by 100,000 positions number of allotments used to subdivide through attrition. But as we redesign the accounts. In addition, they will consider government for greater accountability, we using the Defense Department's Unified need to use budgets. rather than FTE Budget plan, which permits shifts in funds controls. to drive our downsizing. between allotments and cost categories to FTE ceilings are usually imposed help accomplish missions. independently ofand often conflict OMB will simplify the apnortionment withbudget allocations. They are process, which hamstrings agencies by frequently arbitrary, rarely account for dividing their fimding into amounts that changing circumstances, and are normally are available, bit by bit, according to impc.,ed as across-the-board percentage cuts specified time periods, activities. or in FTEs for all of an agency's units projects. Agencies often .don't get their regardless of changing circumstances. funding on rime and. after they do, must Organizations that face new regulations or a fill out reams of paperwork to show greater workload don't get new FTE that they adhered to apportionment ceilings. Consequently, they must contract guidelines: ()MB will also expedite the out work that could be done better and "reprogramming" process, by which cheaper in-house. One manager at Vice agencies can move funds within President Gore's town meeting at the State congressionally appropriated accounts. Department in May 1993 offered an Currently, OMB and congressional example: his FTE limit had forced him to subcommittees approve all such contract out for a junior programmer for reprogrammings. OMB should the Foreign Service Institute. As it turned automatically approve reprogramming out, the programmer's hourly rate equaled unless it objects within a set period, such as the Institute Director's, so the move cost five days. money instead of saving it. The President should direct OMB and Action:OMB and agencies will stop agency heads to stop setting FTE ceilings in using full -time equivalent ceilings, fiscal year 1995. managing and budgeting instead with For this transition, the agencies' ceilings on operating costs to control accounting systems will have to separate spending.'``' true operating costs from program and other costs. Some agencies already have In another effort to control spending, such systems in place; others must develop both the executive and legislative branches financial management systems to allow often limit the number of each agency's them to calculate these costs. We address employees by using full-time equivalent this issue in a separate recommendation in (FTE) limits. When agencies prepare their chapter 3. budget estimates, they must state how This recommendation fully supports the many FTEs they need in addition to how Pres dent's commitment to maintain a many dollars. Then, each department or red! iced federal workforce. Instead of agency divides that number into a ceiling controlling the size of the federal for each bureiu, division, branch, or other yorkforce by employment ceilingswhich unit. Congi .s occasionally complicates the cause inefficiencies and distortions in situation by legislating FTE floors. managers' personnel and resource Federal managers often cite FIT allocation decisionsthis new system will controls as the single most oppressive control the federal workforce by dollars restriction on their ability to manage. available in operating funds. Under the existing system, FTE controls are the only way to make good on the

28 19 FROM RED I.1PE FO RESIT FS CR LA tit, GoVI R NM EN II'HA WORKS BF. FTER & COS FS LESS

Action:Minimize congressional permanently allow agencies to roll over 50 restrictions such as line items and percent of unobligated year-end balances in earmarks and eliminate FTE all appropriations for operations. It should allow agencies to use up to 2 percent of Congress should also minimize the rolled-over funds to finance bonuses for restrictions and earmarks that it imposes on employees involved. This approach, which agencies. With virtually all federal spending the Defense Department and Forest Service under scrutiny for future cuts, Congress is have used successfully, would reward increasingly applying earmarks to ensure employees for finding more productive that funding flows to favored programs and ways to work. Moreover, it would create hometown projects. incentives to save the taxpayers' money. Imagine the surprise of Interior Secretary Shared savings incentives work. In 1989, Bruce Babbitt, who a few months after the General Accounting Office (GAO) taking office discovered that he was under discovered that the Veterans orders from Congress to maintain 2.3 Administration had not recovered $223 positions in the Wilkes-Barre, Pennsylvania, million in health payments from third field office of his department's anthracite parties, such as insurers. Congress then reclamation program. Or that his changed the rules, allowing the VA to hire department was required to spend more staff to keep up with the paperwork $100,000 to train beagles in Hawaii to sniff and also to keep a portion of recovered out brown tree snakes. Edward Derwinslci, third-party payments for administrative former secretary of Veteran Affairs, was costs. VA recoveries soared from $24 once summoned before the Texas million to $530 million.=2 congressional delegation to explain his plan If incentives to save are to be real, to eliminate 38 jobs in that state. =° Congress and OMB will have to refrain While understandable in some cases, from automatically cutting agencies' congressional earmarks hamper agencies budgets by the amount they have saved that seek to manage programs efficiently. when their next budget is prepared. Policy Agencies should work with appropriations decisions to cut spending are one thing; subcommittees on this problem. automatic cuts to take back savings are quite another. They simply confirm Action:Allow agencies to roll over 50 managers' fears that they will be penalized percent of what they do not spend on for saving money. Agencies' chief financial internal operations during a fiscal vear.2/ officers should intervene in the budget process to ensure that this does not As part of its 13 fiscal year 1995 happen. appropriations bills, Congress should

STEP 2: DECENTRALIZING PERSONNEL POLICY ur federal personnel system has new inequities, even more rules were been evolving for more than 100 added. Over time...a maze of regulations vearsever since the 1881 and requirements was created, 0assassination of President James A. Garfield hamstringing managers... often impeding by a disappointed job seeker. And during federal managers and employees from that time, according to a 1988 Office of achieving their missions and ftom giving Personnel Management publication: the public a high quality of service.

...anecdotal mistakes prompted Year after year, laver after layer, the rules additional rules. When the rules led to have piled up. The U.S. Merit Systems

20 29

7' "t0101,0004"Iro"el . CUTTING RED TAPE

Catch-22

Our federal personnel system ought to place in the government's 100,000 pages of personnel a value on experience. That's not always rules says that an employee hired as a civil the case. Consider the story of Rosalie Tapia. servant overseas is not considered a government Ten years ago, fresh from high school, she employee once on home soil. Any smart joined the Army and was assigned to Germany employer would prefer to hire an experienced as a clerk. She served out her enlistment with an worker with an excellent service record over art excellent record, landed a job in Germany as a unknown. But our government's policy doesn't civilian secretary for the Army, and worked her make it easy. Ironically, Tapia landed a job with way up to assistant to the division chief. When a government contractor, making more the Cold War ended, Tapia wanted to return to money and probably costing taxpayers the U.S. and transfer to a government job here. morethan a job in the bureaucracy would Unfortunately, one of the dictates contained have paid.

Protection Board reports there are now 850 this personnel quagmire are enormous. In pages of federal personnel lawaugmented total. 54,000 people work in federal by 1.300 pages of OPM regulations on how personnel positions.,- We spend billions of to implement those laws and another dollars for these staff to classify each 10,000 pages of guidelines from the Federal employee within a highly complex system Personnel Manual. of some '+59 job series. 15 grades and 10 On one, topic alonehow to complete a steps within each grade. standard form for a notice of a personnel Does this elaborate system v.ork? No. actionthe Federal Personnel Manual After surveying managers, supervisors contains 900 pages of instructions. The full stack of personnel laws. regulations, directives, case law and departmental guidance that the Agriculture Department usesshown in the photo at rightweighs 1.088 pounds. Thousands of pages of personnel rules prompt t. thousands of pages of personnel forms. In 1991, for example, the Navy's Human Resources Office processed enough forms to create a "monument" 3,100 feet tallsix times the height of the Washington Monument. Costs to the taxpayer for

21 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

and personnel officers in a number of more promotions in her current job series. federal agencies, the U.S. Merit Systems The loss would be enormous, the colonel Protection Board recently concluded that told Gore, because her secretary was her federal personnel rules are too complex, too "right-hand person". One of the Labor prescriptive, and often counterproductive. Department's regional directors for Talk to a federal manager for 10 minutes: unemployment insurance complained that You likely will hear at least one personnel even though he is charged with running a horror story. The system is so complex and multimillion-dollar-a-year program, he isn't rule-bound that most managers cannot even allowed to hire a S45,000-a-year program advise an applicant how to get a federal job. specialist without getting approval from "Even when the public sector finds Washington. outstanding candidates," In 1989, Paul To create an effective federal government, Volckers National Commission on the we must reform virtually the entire Public Service explained, "the complexity of personnel system: recruitment, hiring, the hiring process often drives all but the classification, promotion, pay, and reward most dedicated away." Managers who find systems. We must make it easier for federal it nearly impossible to hire the people they managers to hire the workers they need, to need sometimes flaunt the system by hiring reward those who do good work, and to fire people as consultants at higher rates than those who do not. As the National those same people would earn as federal Academy of Public Administration employees. The average manager needs a concluded in 1993, "It is not a question of year to fire an incompetent employee, even whether the federal government should with solid proof. During layoffs, employees change how it manages its human resources. slated to be laid off can "bump" employees It must change." with less seniority, regardless of their abilities or performanceputting people in jobs Action: OPM will deregulate personnel they don't understand and never wanted. policy by phasing out the 10,000-page Vice President Gore heard many stories Federal Personnel Manual and all agency of dissatisfixtion as he listened to federal implementing directives. 4 workers at meetings in their agencies. A supervisor at the Centers for Disease We must enable all managers to pursue Control complained that it can take six to their missions, freed from the cumbersome eight months and as many as 15 revisions to red tape of current personnel rules. The a job description in order to get approval for President should issue a directive phasing a position he needs to fill. A secretary from out the Federal Personnel Manual and all the Justice Department told the Vice agency implementing directives. The President she was discouraged and directive should require that most personnel overworked in an office where some management authority be delegated to secretaries were slacking offwith no agencies' line managers at the lowest level system in place to reward the hard workers practical in each agency. It should direct and take action against the slackers. OPM to work with agencies to determine A worker from the Agency for which FPM chapters, provisions, or International Development expressed her supplements are essential, which are useful, frustration at being so narrowly "slotted" in and which are unnecessary. OPM will then a particular GS series that she wasn't allowed replace the FPM and agency directives with to apply for a job in a slightly different GS manuals tailored to user needs, automated series even though she was qualified for personnel processes, and electronic decision the job. An Air Force lieutenant colonel told support systems. the vice president that her secretary was Once some of the paperwork burden is abandoning government for the private eased, our next priority must be to give sector because she was blocked from any agency managers more control over who

22 31 CUTTING RED TAPE comes to work for them. To accomplish this, we propose to radically decentralize the government's hiring process. First,we must cut the waste and make government operations more responsive to the Action:Give all departments and ,tgencies authority to conduct their own American people. It is time to shift from top- eruiring and examining for all down bureaucracy to entrepreneurial positions, and abolish all central registers government that generates change from the ,Ind standard application forms.-' bottom up. We must reward the people and We will ask Congress to pass legislation ideas that work and get rid of those that don't. decentralizing authority over recruitment. hiring, and promotion. Under the present President Bill Clinton system. OPM controls the examination February 17, 1993 system f'or external candidates and recruits and screens candidates for positions that are common to all agencies, with agencies then hiring from among candidates presented by creating "rigid job hierarchies that cannot )PM. Under the new system. OPM could change with organizational structure." They offer to screen candidates for agencies, but drive some of the best employees out of agencies need not accept OPM's offer. their fields of expertise and into Under this decentralized system, agencies management positions, for higher pay. And will also be allowed to make their own managers seeking to create new positions decisions about when to hire candidates often fight the system for months to get directlywithout examinations or rankings them classified and under guidelines to be drafted by ()PM. There is strong evidence that agencies Agencies able to do so should also be given authority to do these things permitted to conduct their own background themselves can do better. Using investigations of potential candidates. demonstration authority under the 1978 We will make sure the system is fair and Civil Service Reform Act, several agencies easy fbr job applicants to use, however, by have experimented with simpler systems. In making information about federal job one experiment, at the Naval Weapons openings available in one place. In place of a Center in China Lake, California, and the central register, OPM will create a Naval Oceans Systems Center. in San government-wide, employment Diego. the system was simplified to a few information system that allows the public to career paths and only four-to-six 5road pay go to one place for information about all hands within each path. Known as the job opportunities in the federal "China Lake Experiment," it solved many government. of the problems faced by the two naval Next, we must change the classification facilities. It: system, introduced in 1949 to create fairness across agencies but now widely classified all jobs in just five career regarded as time - consuming, expensive. pathsprofessional, technical, cumbersome, and intensely frustratingfbr specialist, administrative and clerical; both workers and managers. After an exhaustive 1991 study of the folded all GS (General Schedule) grades system, the National Academy of Public into four, five, or six pay hands within Administration recommended a complete each career path; overhaul of the system. Classification standards, NAPA argued, are "too complex, allowed managers to pay market salaries inflexible, out-of-date, and inaccurate," to recruit people, to increase the pay of

32 23 FROM RED TAPE TO RESULTS CRLA I ING A GOVERNMENT ruA I WORKS BETTER & COS rs LESS

written tests or other examinations. In USDA's demonstration, however, the Recognizing the importance of attracting and agency grouped candidates by its own criteria, such as education, experience or retaining highly qualified professionals in ability, then picked from those candidates. government service, one of the demoralizing A candidate might qualifi, for a job, for and frustrating aspects is the fact that we are example, with a 2.7 college grade point average. Agencies could create their own retained to do a job but not allowed the recruitment incentives, do their own hiring, flexibility to carry it out, assume the and extend the probationary period for responsiblit, and reap the rewards or be some new hires. Managers were far more satisfied with this system than the accountable for out actions. existing one.

Edith Houston Action:Dramatically simplify the Town Hall Meeting, current classification system, to give U.S. Agency for International Developme May 26, 1993 agencies greater flexibility in how they classify and pay their employees.=

We will urge Congress to remove all the outstanding employees without having 1940s-era grade-level descriptions from the to reclassifr them, and to give law and adopt an approach that is more performance-based bonuses and salary modern. In addition, Congress should allow increases; agencies to move from the General Schedule system to a broad-band system. automatically moved employees with OPM should develop such standard repeated marginal performance banding patterns, and agencies should be evaluations down to the next pay band; free to adopt one without seeking OPM's and approval. When agency proposals do not fit under limited bumping to one career path, a standard pattern, OPM should approve and based it primarily on performance them as five-year demonstration projects ratings, not seniority. that would be converted to permanent "alternative systems" if successful. OPM Another demonstration at McClellan Air should establish criteria for broad-banding Force Base, in Sacramento, California, demonstration projects, and agencies' involved "gainsharing"allowing projects meeting those criteria should employees to pocket some of the savings receive automatic approval. they achieved through cooperative labor- These changes would give agencies management efforts to cut costs. It greater flexibility to hire, retain, and generated $5 million in productivity savings promote the best people they find. They in four years and saw improved employee would help agencies flatten their hierarchies performance; fewer grievances; less sick and promote high achievers without having leave and absenteeism; and improved labor- to make them supervisors. They would management relations. eliminate much valuable time now lost to A third demonstration at more than 200 battles between managers seeking to Agriculture Department sites tested a promote or reward employees and streamlined, agency -based recruiting and personnel specialists administering a hiring system that replaced OPM's register classification system with rigid limits. process. Under OPM's system, candidates Finally, they would remove OPM from its are arrayed and scored based on OPM's role as "classification police."

24 3d CUTTING RED TAPE

To accompany agencies new flexibility on classification and pay, they must also be given authority to set standards for their There hasto be a clear shared sense of mission. own workers and to reward those who do well. There have to be clearly understood goals. There have to be common values according to Action: .1:4-elidesshould be allowed to which decisions are made. There has to be design their otvn polo' mance management and reward systems, with trust placed in the employees who actually do the objective of improving- the the work, so that they will feel free to make performance individuals and decisions. organizations. 28 They cannot be treated like automatonsor The current government performance children bound up in straighackets and rules appraisal process is frequently criticized as a and regulations and told to do the meaningless exercise in which most federal same thing employees are given above-average ratings. over and over and over again. We believe that agencies will he able to develop performance appraisals that are Vice President Al Gore more meaningful to their employees. If they August 4, 1993 succeed, these new approaches will senda message that job performance is directly linked to workers' chances for promotion and higher pay. Action:Reduce by half the time Current systems to assess on-the-job required to terminate federal managers performance were designed to serve and employees fir cause and improve the multiple purposes: to enhance performance, system fir dealing with poor pelf nners.29 to authorize higher pay for high performers, to retain high performers, and to promote Agencies will reduce the time for staff development. Not surprisingly, they terminating employees for cause by half. For serve none of these purposes well. example, agencies could halve the length of Performance management programs time during which managers and employees should have a single goal: to improve the with unsatisfactory performance ratings are performance of individuals and allowed to demonstrate improved organizations. Agencies should be allowed performance. to develop programs that meet their needs To support this effort, we will ask OPM and reflect their cultures, including to draft and Congress to pass legislation to incentive programs. gainsharing programs, change the required time for notice of and awards that link pay and performance. termination from 30 to 15 days. This If agenciesin cooperation with legislation should also require the waiting employeesdesign their own systems, period for a within-grade increase to be managers and employees alike should feel extended by the amount of time an more ownership of them. employee's performance does not meet Finally, if performance measuresare to expectations. In other words, only the time be taken seriously, managers must have that an employee is doing satisfactory work authority to fire workers who do not should be credited toward the required measure up. It is possible to fire a poor waiting period for a pay raise. worker in the federal government, but it takes far too long. We believe this undermines good management and diminishes workers incentives to improve.

34 25 FROM RED TAPE TO RESUL ES CRII IN6 Govt RNMENEriiArWORKS BETTER & COS ES Liss

STEP 3: STREAMLINING PROCUREMENT

Every year, Washington spends about purchasing creates another problem. When $200 billion buying goods and line managers needs and experiences are services. That's 5800 per American. not understood by the procurement officer, With a price tag like that, taxpayers have a the government is unable to make right to expect prudent spending. decisions that reward good vendors and The federal government employs punish bad ones. As a result, vendors often 142,000 workers dedicated to procurement." "game" contractsexploiting loopholes to The Federal Acquisition Regulation (FAR) require expensive changes. For example, in controlling procurement runs 1,600 pages, a major government contract for a with 2,900 more pages of agency-specific computerized data network a few years supplements. ago, a vendor used slight underestimates of These numbers document what most system demand in the contract federal workers and many taxpayers already specifications as an excuse to charge know: Our system relies on rigid rules and exorbitant prices for system upgrades. In procedures, extensive paperwork, detailed the private sector, a manager could have design- specifications. and multiple used the incentive of future contracts to inspections and audits. It is an prevent such gaming; in the government, extraordinary example of bureaucratic there is no such leverage. red tape. The symptoms of what's wrong are Like the budget and personnel systems, apparent, too, from stories about small the procurement system was designed with purchases. the best of intentions. To prevent One story that Vice President Gore profiteering and fraud, it includes rigid has repeated in Washington over the past safeguards. To take advantage of bulk six months concerns steam traps. Steam purchasing, it is highly centralized. But the traps remove condensation from steam government wrote its procurement rules lines in heating systems. Each costs about when retailing was highly stratified, with S100. But when one breaks, it leaks as many markups by intermediaries. Today much as $50 of steam a week.Obviously_. the game has changed considerably. Retail a leaking steam trap should bereplaced giants like Wal-Mart, Office Depot and quickly. Price Club are vertically integrated, When plumbers at the Sacramento eliminating the markups of intermediaries. Army Depot found leaking traps, however, Federal managers can buy 90 percent of their manager followed standard operating what they need over the phone, from mail- procedure. He called the procurement order discounters. Bulk purchasing still has office, where an officer, who knew nothing its advantages, but it is not always necessary about steam traps, followed common to get the best price. practice. He waited.for enough orders to Our overly centralized purchasing- buy in bulk, saving the government about system takes decisions away from S 10 per trap. There was no rule requiring managers who know what they need, him to wait just a powerful tradition. So and allows strangersoften thousands the Sacramento Depot didn't get new steam of miles awayto make purchasing traps for a year. In the meantime, each of decisions. The frequent result: Procurement their leaking traps spewed $2,500 of steam. officers. who make their own decisions To save $10, the central procurement about what to buy and how soon to buy system wasted $2,500. it, purchase low-quality items that arrive As the Vice President visited government too late. agencies, he heard many more stories of This "secondhand" approach to wasteful spendingmost of them

26 35

tg",' lx:.:1.4" I' to .....rd.V.441, tr,nn. mew ye CUTTING RED TAPE

"Ash receivers, tobacco (desk type)..."

Our federal procurement system leaves guard against the purchase of defective ash little to chance. receivers, the GSA required that all ashtrays be When the General Services Administration tested. "The test shall be made by placing the wanted to buy ashtrays, it has some very specimen on its base upon a solid support (a 1 specific ideas how those ashtraysbetter 3/4 inch, 44.5mm maple plank), placing a steel known to GSA as "ash receivers, tobacco (desk center punch (point ground to a 60-degree type)," should be constructed. included angle) in contact with the center of In March 1993, the GSA outlined, in nine the inside surface of the bottom and striking full pages of specifications and drawings, the with a hammer in successive blows of precise dimensions, color, polish and markings increasing severity until breakage occurs." required for simple glass ashtrays that would Then, according to paragraph 4.5.2., "The pass U.S. government standards. specimen should break into a small number of A Type I, glass, square, 4'12 inch (114.3 irregular shaped pieces not greater in number mm) ash receiver must include several features: than 35, and it must not dice." What does "A minimum of four cigarette rests, spaced "dice" mean? The paragraph goes on to equidistant around the periphery and aimed at explain: "Any piece 1/4 inch (6.4 mm) or more the center of the receiver, molded into the top. on any three of its adjacent edges (excluding The cigarette rests shall be sloped toward the the thickness dimension) shall be included in center of the ash receiver. The rests shall be the number counted. Smaller fragments shall parallel to the outside top edge of the receiver not be counted." or in each corner, at the manufacturer's option. Regulation AA-A-710E, (superseding Regulation AA-A-710D). All surfaces shall be smooth." Government ashtrays must be sturdy too. To

produced by the very rules we have it cost them a day's worth of timeand a designed to prevent it. Take the case of day's worth of taxpayers' money. Others government travel. told of being unable to take advantage of Because GSA selects a "contract airline" cheap "special fares" because they were not for each route, federal employees have few "government fares." And one worker choices. If Northwest has the Washington- showed the National Performance Review a Tampa route, for instance, federal memo from the Resolution Trust employees get routed through Detroit. If Corporation explaining that RTC workers Northwest has the Boston-Washington would not be reimbursed for any travel route, employees have to use Northwest expenses unless they signed their travel even if USAir has more frequent flights at vouchers in blue ink! more convenient times. Workers told the Beyond travel, at every federal agency the Vice President of being routed through Vice President visited, employees told thousands of miles out of their was, even if stories about not getting supplies and

36 FROM RED F1PF ro Ri.sui.ts CREA GOVERNM NI ritAWORKS BE ITFR & COs is [ASS

equipment they needed, getting them late, Chapter 1. we must make the system or watching the government spend too competitive by allowing managers to use much for them. At the Department of any procurement office that meets their Health and Human Services, a worker told needs. the Vice President that no matter how As we take these actions, we must much his office needed a FAX machine embrace these fundamental principles: and how much time the machine would integrity, accountability, professionalism, save workersthe purchase wouldn't be openness, competitionand value. possible "without the signature of everyone in this room." An engineer from the National Institutes of Health added that in his agency, it takes more than a year to buy Action: Simplifythe procurement a computer, not a mainframe, but a process by rewritingfrderal regulations personal computer! At the Transportation shifting from rigid rules to guiding Department, a hearing-impaired employee principles.'' told the Vice President of watching with dismay as her agency spent S600 to huy her The Federal Acquisition Regulation a Telephone Device for the Deaf (TDD), (FAR), the government's principal set of when she knew she could buy one off the procurement regulations, contains too shelf for $300. many rules. Rules are changed too often Anecdotes like these were documented in and are so process-oriented that they January 1993, when the Office of Federal minimize discretion and stifle innovation, Procurement Policy and the U.S. Merit according to a Merit Systems Protection Systems Protection Board collaborated on a Board suryey.33 As one frustrated manager survey of the procurement system's noted, the FAR does not even clearly state customers: federal managers. More than the main goal of procurement policy: "Is it 1,000 responded. Their message: The to avoid waste, fraud, and abuse? Is it to system is not achieving what its customers implement a social-economic agenda? Is it want. It ignores its customers' needs, pays to procure the government's requirements at higher prices than necessary, is filled with a fair and reasonable cost?" peripheral objectives, and assumes that line This administration will rewrite the managers cannot be trusted. 1,600-page FAR, the 2,900 pages of agency A study by the Center for Strategic and supplements that accompany it, and International Studies added several other Executive Order 12352, which governs conclusions. The procurement system adds federal procurement. The new regulations costs without adding value; it impedes will: government's access to state-of-the-art commercial technology; and its complexity shift from rigid rules to guiding forces businesses to alter standard principles; procedures and raise prices when dealing with the government.-" promote decision making at the lowest There is little disagreement that federal possible level: procurement must be reconfigured. We must radically decentralize authority to line end unnecessary regulatory managers, letting them buy much of what requirements; they need. We must radically simplify' procurement regulations and processes. Easier competitiveness and commercial We must empower the systems customers practices; by ending most government service monopolies, including those of the General shift to a new emphasis on choosing Services Administration. As we detailed in "best value" products; 37 28 CUTTING RED TAPE

facilitate innovative contracting authorization levels to 550 million, S20 approaches: million and S5 million. These levels will be calculated according to each agency's size, recommend acquisition methods that the size of its information technolcov reflect information technology's short budget, and its management record. In life cycle; and some cases, GSA may grant an agency greater or unlimited delegation. develop a more effective process to GSA will also waive requirements that listen to its customers: line managers, agencies justify their decisions to buy government procurement officers. and information technoloov items costing less vendors who do business with the than S500.000, if they are mass-produced government. and offered on the open market.

Action: The GSA will significantly Action: GSA will simplify' the increase its delegated authoriry to federal procurement process by allowing agencies .tgenciesfOr the purchase of intOrmarion to buy where they want and by testing a technology, including hardware, software, fidly "electronic marketplace.- .end ser ices; The government buys everything from In 1965, when "automated data forklifts and snowplows to flak jackets and processing" meant large, mainframe test tubes through a system called the computersoften developed specifically for Multiple Award Schedule program, which one customerCongress passed the Brooks includes more than one million separate Act. It directed GSA to purchase, lease, and items. maintain such equipment for the entire Under this program. GSA negotiates and federal government. The Act also gave GSA awards contracts to multiple vendors of authority to delegate to agencies these same comparable products and services, at authorities. In 1986, Congress extended the varying prices. GSA then creates a "supply requirement to software and support schedule" for a particular good or service, services. identifying all vendors that have won -Today; with most computer equipment contracts as well as the negotiated prices. Of commercially available in highly GSA's 154 schedules, civilian agencies must competitive markets, the advantages of must buy from 117. In ordering from centralized purchasing have faded and the schedules, agencies still must complyin disadvantages have grown. The federal additionwith the Federal Acquisition government takes. on average, more than Regulation, Federal Information Resources four years to buy major information Management Regulation, and Federal technology systems; the private sector takes Property Management Regulation. 13 months. Due to rapidly changing In most cases, we should not limit technology, the government often buys managers to items on the supply schedules. computers that are state-of-the-art when the If they can find the same or a comparable purchase process begins and when pricesare product for less, they should be free to buy negotiated, but which are almost obsolete it. Mandatory schedules should apply only when computers arc delivered. The when required by law, to ensure phenomenon is what one observer calls standardization, or when agencies "getting a 286 at a 486 price." voluntarily create team pools that buy in Currently, the GSA authori/es agencies hulk for lower prices. In addition, GSA to make individual purchases up to S2.5 should revise regulations that currently limit million in equipment and services on their agencies from buying more than 5300,000 own. The GSA Administrator will raise of information technology items on supply

38 EROM RED TAPE TO RESULTS CREATINGAGOVERNMENT THAI" WORKS BETTER & COSTS LESS

schedules, raise them to 5500,000 and buys such items as. integrated circuits, provide a higher limit for individual items pillows, and oil pans, designed to costing more than 5500,000. government specificationseven when To make supply schedules more user- there are equally good commercial products friendly, GSA should conduct several pilot available. tests. One should test an -electronic We recommend that all agency heads be marketplace,- in which GSA would not instructed to review and revise internal negotiate prices. instead, suppliers would purchasing procedures and rules to allow list products and prices electronically, and their agencies to buy commercial products agencies would electronically order the whenever practical and to take advantage of lowest-priced item that met their needs. market conditions. Suppliers, at any time, would be able to add We will ask the Office of Management new products and change prices. Such a and Budget to draft a new federal pilot would test whether visible price commercial code with commercial-style competition will cut prices and give line procedures, and then ask Congress to adopt managers easier access to rapidly changing the new code and remove impediments to products. this money-saving approach to procurement. Action:Allowagencies to make purchases under S100,000 through Action:Bring federal procurement laws simplified purchase procedures.'° up to date.38

Under current law, agencies are allowed There are four federal labor laws to make purchases of less than 525.000 on implemented through the federal their own, using simple procurement procurement process. Each was passed procedures. These small purchases, on because of valid and well founded concerns average, take less than a month to complete; about the welfare of working Americans. purchases of more than 525.000 normally But as part of our effort to make the take more than three months. If Congress government's procurement process work raised the threshold to S100.000, agencies more efficiently, we must consider whether could use simplified procedures on another those laws are still necessaryand whether 45,550 procurementswith a total value of the burdens they impose on the S2.5 billion. procurement system are reasonable ones. Congress should keep current rules that The Davis-Bacon Act of 1931 requires reserve small purchases for small businesses that each repair or construction contract in and should improve access to information excess of $2,000 for work on a public on procurements of more than $25,000. To building specify that the prevailing area ensure that small business receives adequate minimum wage be paid to workers on that notice of possible procurements, the federal contract. The law was passed because government, with OMB as the lead agency, Congress feared that without it, federal should adopt an electronic notification contracts awarded through a sealed bid system. process could undermine local prevailing wages. While Congress shifted the Action:Rely more on the commercial government's focus to an open bidding marketplace..; process in 1984, we acknowledge that concerns about the impact of government The government can save enormous contracts on prevailing wages are still valid. amounts of money by buying more Recognizing that the original $2,000 commercial products instead of requiring threshold in the law was set more than 60 products to he designed to government- years ago, we recommend that Congress unique specifications. Our government modify the Davis-Bacon Act by raising the

30 CUTTING RED TAPE threshold for compliance to 5100,000, a an unreasonable burden on federal change similar to that proposed by Senator contractors, and we will urge Congress to Kennedy in March 1993. modif'y the act. We suggest eliminating .1-he Service Contract Act of 1965 has requirements for weekly reports and purposes similar to those of the Davis-Bacon requiring contractors instead to certify with Act, and applies to service contracts in excess each payment that they have complied with of 52,500. It requires contractors to pay the the law. Contractors would also be required minimum prevailing wage and specified to keep records to prove their compliance fringe benefits. To keep contractors from for three years. "locking in- their wage agreements at low The Walsh-Healey Public Contracts Act levels, the law imposes a five-year limit on requires contractors that supply materials to service contracts and requires new wage the federal government through contracts in determinations every two years. excess of S10,000 to pay all workers the We suggest that the five-year limit is federal minimum wage, to agree that no inconsistei.t with the government's interest employee is required to work more than 40 in entering into long-range contracts. We hours a week, and to avoid using convict will urge Congress to increase the limit up labor or workers under the age of 16. to 10 Years while retaining the rwo-vear Over rime, each of the requirement:: of wage adjustment requirement. the Walsh-Healey Actwith dlr. exception The Copeland Anti-Kickback Act of of the provision relating to convict labor- 1934 regulates payroll deductions on federal has been superseded by other federal and federally assisted construction. The law legislation. We therefore urge Congress to prohibits anyone from inducing employees remove the burden of certifying compliance to give up any part of their compensation with redundant laws from federal and requires contractors to submit weekly contractors. Within 30 days of the repeal of statements of compliance and detailed that law, the President should amend weekly payroll reports to the Labor Executive Order 11755 to include the Department. convict labor provisions of the Walsh- We suggest that such detailed reporting is Healey Act.

STEP 4: REORIENTING THE INSPECTORS GENERAL Responding to growing concern These reports detail how much money IG about waste, fraud, and abuse in audits have recovered or put to better use government, Congress passed the and the number of convictions resulting Inspector General Act in 1978. This act from their criminal investigations. The IGs and subsequent amendments created the 60 also send the audit reports to the heads of Inspectors General offices that today their agencies and forward investigations fin. employ 15.000 federal workers, including criminal prosecution to the U.S. Attorney postal inspectors. General. The act was broad in scope, requiring The Inspector General Act's two central IGs to promote the efficiency, economy and mandates, combined with the last two integrity of federal programs with auditing administrations' eagerness to highlight program expenditures, and investigating "waste, fraud and abuse," have shaped the possible fraud and abuse. evolution of the IG offices. The standard by The inspectors general, who are which they are evaluated is finding error or independent of the agencies in which they fraud: The more frequently they find operate. report to Congress twice a year. mistakes, the more successful they are

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judged to be. As a result, the IC staffS often Department, for example, some offices were develop adversarial relations with agency inefficient in completing background and managers--who, in trying to do things securiry clearances. The Inspector General's better, may break rules. office examined the problem. tl.c At virtually every agency he visited, the recommended setting up a central database Vice President heard federal employees to manage the clearance process and warn complain that the IGs' basic approach officials automatically when they were inhibits innovation and risk taking. Heavy- about ro miss deadlines for completing handed enforcementwith the IC investigations. Similarly, the Inspector watchfulness compelling employees to General of the Department of Health and follow every rule. document every decision, Human Services has long been engaged in and fill out even' formhas had a negative program evaluations to help agencies effect in some agencies. uncover inefficiencies. While the Inspector General's office retains the right ro conduct Action:Broaden the focus of the formal audits and criminal investigations, it Inspectors General from strict compliance also uses its role as a neutral observer to auditing to evaluating management collaborate on making programs work control systems :'' better. Congress need pass no legislation to In a government focused on results, the make this happen. Promoting the efficiency Inspectors General can play a key role not and integrity of government programs was only in controlling managers behavior by part of the IGs' original mandate. But such monitoring it, but in helping to improve it. change will require a cultural revolution Today, they audit for strict compliance with within many IC offices, and we rules and regulations. In the future, they recommend two steps to help guide such a should help managers evaluate their change. First, line managers, who are the management control systems. Today, they IGs' front-line customers, should be look for "waste, fraud, and abuse." In the surveyed periodically to see whether they future, they should also help improve believe the IGs are helping them improve systems to prevent waste, traud and abuse performance. Second, criteria should he and ensure efficient. effective service. established for judging IC performance. Many IGs have already begun to help their agencies this way. At the Justice

STEP 5: ELIMINATING REGULATORY OVERKILL Reinventing our budget, personnel 1993 study concluded that the cost to the and procurement systems will strip private sector of complying with regulations away much hut not allof the is at least 5430 billion annually-9 percent red tape that makes our governing processes of our gross domestic product! -4° so cumbersome. Thousands upon thousands We must clear the thicket of regulation of outdated, overlapping regulations remain by undertaking a thorough review of the in place. These regulations affect the people regulations already in place and redesigning inside government and those who deal with regulatory processes to end the proliferation it from the outside. Inside government, we of unnecessary and unproductive rules. We have no precise measurement of how much have worked closely with administration regulation costs or how much rime it steals officials responsible for developingnew from productive work. But there's no approach to regulatory review and disagreement that the costs are enormous. incorporated that work into the following And on the matter of external regulation, a action.

32 41

1ziaAati mow- ,at1 t,3"1"14* CUTTING RED TAPE

Action:The President should issue a efforts and their burden on government and directive requiring all fede ral agencies to the private sector, President Reagan required review internal government regulations the Office of Management and Budget the next .3 years, with a goal of specifically, the Office of Information and eliminating 50 percent of those Regulatory Affairs (OIRA) to review all )1pdations.`i regulations proposed by executive agencies. With a limited staff, many of whom are Can regulations be eliminated? The also involved with paperwork reduction answer is Yes, as evidenced by promising issues, the review process for proposed experiments in several federal agencies. regulations can be lengthy. And while a In the Management Efficiency Pilot lengthy review process may be appropriate Program (MEPP) in five of the Department for significant rules, it is a waste of time of Veterans Affairs regional benefits offices, for others. the offices were encouraged to do away with red tape.1= At several benefits offices, 895 of 1,969 regulations were dropped, saving the staff more than 3,000 hours and $640,000 e can lick gravios but sometimes the in one year. Productivity at MEPP centers paperwork is overwhelming. increased by 35 percent in one year (1988- 89), more than double the increase at other Wernher von Braun centers. A similar effort by five VA medical centers redirected $3.1 million to much- needed funding for acute care centers.. An even more sweeping example of a In early 1993, Vice President Gore fresh start in internal regulations comes convened an informal workinggroup to from the Air Force, where the Chief of Staff recommend changes in the regulatory has established a servicewide program to review process. The working group and the streamline the organization and cut out National Performance Review coordinated bureaucracy. Under the Policy Review their efforts closely. We endorse the Initiative begun in 1992, the Air Force is recommendations of the working group replacing 1,510 regulations with 165 policy and the President's executive order, which directives and 750 sets of instructions. This will implement those changes and effort will cut 55,000 pages of intermingled streamline the regulatory review process. policy and procedure to about 18,000 The order will enhance the planning pages, clearly separating policy from process and encourage agencies to consult procedure. This deregulation effort, with the public early in that process. In managed by a staff of 10, is expected to be addition, in an effort to coordinate the completed in fiscal year 1994. regulatory actions of all executive agencies, the Over the next 3 years, each federal Vice President will meet annually with agency agency will undertake a thorough and heads, and the Administrator ofOIRA will systematic review of its internal regulations. hold quarterly r eetings with representatives Agencies may choose their own strategies of executive agencies and the administration. for reaching the goal of reducing internal Improving the regulatory review process regulations by 50 percent. also means being selective in reviewing regulations. Through this order, the Action:Improve inter-agency President will instruct OIRA to review only coordination of regulations to reduce significant regulationsnot, as under the unnecessary regulation and red tape.° current process, all regulations. The new review process, which will take into account In 1981, frustrated at the inconsistencies a broad range of costs and benefits, will be and duplication among federal regulatory more useful and realistic.

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.1-o ease the adverse effects of regulation congressional history than the tendency to on citizens, businesses, andthe economy as subject even the details of administration- a whole, the executiveorder also will require to constant congressional supervision. an ongoing review of existingregulations. One place to start in liberating agencies Agencies will identify regulations that are from congressional micromanagement is the cumulative, obsolete, or inconsistent. and, issue of reporting requirements. Over the where appropriate, eliminate or modify past decades, we have thrown layer upon them. 'rho; will also identify legislative laver of reporting requirements on federal mandates that require them m impose agencies, creating an almost endless series of unnecessary or outdatedregulations. required audits. reports, and exhibits. Today the annual calendar is jammed with Action: Establish a process by which report deadlines. On August 31of each year, agencies ran more widely obtain waivers the Chief Financial Officers (CFO) Act from reguations. ' requires that agencies file a 3 -year financial plan and a CFO annual report. On With the advent of the Government September 1, budget exhibits for financial Performance and Results Act. Nvhich management activities and high risk areas are Congress passed in July 1993. we have due. On November 30, IG reports are begun to acknowledge the important expected, along with reports required by the principle of "flexibility in return for Prompt Payment Act. On January 31, accountability." reports under the Federal Civil Penalties Under the act, some agencies may apply Inflation Report Adjustment Act of 1990 for waivers from federal regulations if they come due. On March 31, financial state- meet specific performance targets.In other ments are due, and on May 1 annual single- words, they will he exempt from some audit reports must be filed. On May 31 administrative requirements if they do their another round of IG reports are due. At the jobs better. The law applies only to internal end of July and December, "high-risk" regulations and government agencies, but it reports are filed. On August 31, itall begins also urges wider waiver authority to test the again. And these are just the major reports! potential benefits. In the spirit of that In fiscal year 1993, Congress required legislation, we seek to expand the concept of executive branch agencies to prepare 5,348 greater flexibility for greateraccountability. reports. 4' Much of this work isduplicative. The President should direct each federal And because there are so many different agency to establish and publish,in atimely sources of information, no one gets an manner, an open process throughwhich integrated view of an agency's condition- - other federal agencies can obtain waivers least of all the agency manager who needs from that agency's regulationswith an accurate and up to date numbers. expedited appeals process. Meanwhile, trapped in this blizzard of Rules adopting this new waiver process paperwork. no one is looking at results. would state that all future agency regulations We propose to consolidate and simplify would be subject to the waiver process unless reporting requirements, and to redesign explicitly prohibited. We will also ask them so that the manager will have a clear Congress to specify that legislation would be picture of the agency's financial condition, subject to waivers unless explicitly prohibited. the condition of individual programs. and the extent to which the agency is meeting its Action: Reduce the burden of objectives. We will ask Congress to pass congressionally mandated reports.'' legislation granting OMB the flexibility to consolidate and simplify statutory reports Woodrow Wilson \vas right. Our and establishing a sunset provision in any country's 28th president once wrote that reporting requirements adopted by "there is no distincter tendency in Congress in the future. 43 34 CUTTING RED TAPE

STEP 6: EMPOWER STATE AND LOCAL GOVERNMENTS

hat we usually call -government" writing and reviewing grant applications, is, in fact, a tangle of different filling out forms, checking on each other, levels of government agencies and avoiding oversight. In this way, some run from Washington, some in state professionals and bureaucrats siphon money capitals, and some by cities and towns. In from the programs intended customers: the United States, in fact, some 80.000 students, the poor, urban residents, and -governments" run everything from local others. State and local governments find schools and water supply systems to the their money fragmented into hundreds of Defense Department and Overseas tiny pots, each with differentoften embassies. Few taxpayers differentiate contradictoryrules, procedures, and among levels of government, however. To program requirements. the average citizen, a tax is a taxand a Henry Cisneros, Secretary of Housing service a serviceregardless of which level and Urban Development, likens federal of government is responsible. Ii) grants to a system of pipelines spreading our reinvent government in the .public's eves, across the country. The -water," says we must address the web of federal-state- Cisneros, reaches states and localities local relations. Washington provides about 16 percent of the money that states and localities spend and shapes a much larger share of such Werewe directed from Washington when to spending through mandates. Much of sow and when to reap, weshould soon want Washington's domestic agendaS226 br;u2`. billion to be preciseconsists of programs actually run by states, cities, and counties. Thomas Jefferson But the federal government doesn't always .1826 distribute its moneyor its mandates wisely. For starters, Washington allocates federal money through an array of more than 600 through hundreds of individual pipelines. different grant programs. Many are small: This means there is little chance for the 445 of them distribute less than 550 million water to be mixed, properly calibrated to a year nationwide; some 275 distribute less local needs, or concentrated to address a than 510 million. Through grants, specific problem, geographic area, or Congress funds some 150 education and population. training programs, 100 social service In employment and training, for programs, and more than 80 health care example, Washington hinds training programs. programs, literacy programs, adult Considered individually, many education programs, tuition grant categorical grant programs make sense. But programs, and vocational education together, they often work against the very programs. Different programs are purposes for which they were established. designed for different groupswelfare When a department operates small grant recipients, food stamp recipients, programs, it produces more bureaucracy, displaced homemakers, youth in school, not more services. Thousands of public drop-outs, "dislocated workers," workers employeesat all levels of government displaced by foreign trade, and on spend millions of hours writing regulations, and on.

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At a plant in Pittsfield, Massachusetts, large layoffs. Yet even EDWAA's most General Electric recently laid off a large flexible money, the "national reserve fund," group of workers. Some workers could get has become so tangled in red tape that Trade Adjustment Assistance benefits, many states won't use it. As Congress's because their jobs were lost to foreign Office of Technology Assessment put it, competition. Others could not; their jobs "the process is simply too obstacle ridden.... fell to defense cutbacks. Because they have a many state EDWAA managers cannot union, people working in one area began handle the complexities of the grant exercising their seniority rights and application, and those that do know how bumping people in other areas. Some are too busy responding to clients' urgent workers humped from trade-affected jobs to needs to write demanding, detailed grant defense contracting jobs, then lost those a proposals." few weeks later. Under federal regulations, When Congress amended JTPA in 1993, they could no longer get Trade Adjustment targeting more funds to those with Assistance..aus, friends who had spent "multiple barriers" to employment, years working side by side found themselves homeless advocates thought the change with very different benefits. Some got the would help their clients. After all, who has standard 6 months of unemployment more harriers to employment than someone checks. Others got 2 years of without an address or phone number? But unemployment checks and extensive the new JTPA formula also emphasized retraining support. Try explaining that to training over job search assistance. So a local people who have lost the only jobs they've program in Washington, D.C. that had ever held! won a Labor Department award for placing People who run such programs struggle 70 percent of its clients in jobsmany of to knit together funds from three, four, or them service sector jobs paying more than five programs, hoping against hope that the minimum wagelost its JTPA funding. workers get enough retraining to land Why? It didn't offer training. It just helped decent new jobs. But the task is difficult; the homeless find jobs..1' each program has its own requirements, But federal programs rarely focus on funding cycles, eligibility criteria, and the results. As structured by Congress, they pay like. One employment center in Allegheny more attention to process than outcomes County, New York, has tried hard to bring in th.case, more to training than to jobs. several programs together and make them Even in auditing state and local programs, appear as seamless as possible to the federal overseers often do little more than customers. At the end of the day, to check to see whether proper forms are filed accommodate reporting requirements, the in proper folders. staff enters inf,rmation on each customer at The rules and regulations behind federal four different computer terminals: one for grant programs were designed with the best Job Training Partnership Act (JTPA) of intentionsto ensure that funds flow for programs, one for the JOBS program, one the purposes Congress intended. Instead, for the Employment Service, and one for they often ensure that programs don't work tracking purposes. as well as they couldor don't work at all. When Congress enacted JTPA. it sought Virtually every expert with whom to avoid such problems. It let local areas we spoke agreed that this system is tailor their training programs to local needs. fundamentally broken. No one argued for But federal rules and regulations have marginal or incremental change. Everyone gradually undermined the good intentions. wants dramatic changestate and local Title III, known as the Economic officials, federal managers, congressional Dislocation and Worker Adjustment staff. As in managing its own affairs, the Assistance Act (EDWAA), helps states federal government must shift the basic respond immediately to plant closings and paradigm it uses in managing state and local

36 45' CUTTING RED TAPE affairs. It must stop holding programs accountable for process and begin holding them accountable for results. -Sinnedikes- tVe needStart' slate and sad "Hey we've been doing* The task is daunting; it will take years to accomplish. We propose several significant the last 40, 50 years. It doesn't work." steps on the journey: throw out everything, clear out mi

Establish a cabinet-level Enterprise have as agoal doing the'. rightthfrig Board to oversee new initiatives in right reasons, even fit entails taking community empowerment; - t .....- t ..., Cut the number of unfunded mandates Chairman, Chicago Housing Authority, Reinventing Government Stithrifit that Washington imposes; Philadelphia, June 25,1993

Consolidate 55 categorical grants into -.,--;41-..7,,,i4.7.---.- .,, .....,....2-.4....' broader "flexible grants:"

Increase state and local flexibilitv in rather than "top -down' requirements. It will using the remaining categorical grants; focus on the administration's community empowerment agenda, beginning with the Let all agencies waive rules and 9 Empowerment Zones and 95 Enterprise regulations when they conflict with Communities that passed Congress as part results; and of the President's economic plan. In participating communities, for Deregulate the public housing program. example, federal programs could be consolidated and planning requirements The likely benefits are clear: could be simplified; waivers would be administrative savings at all levels; greater granted to assure maximum flexibility; flexibility to design solutions; more effective federal funding cycles would be concentration of limited resources; and synchronized; and surplus federal properties programs that work for their customers. could be designated for community use.

Action:The President should establish Action:The President should issue a a cabinet-level Enterprise Board to directive limiting the use of unfunded oversee new initiatives in community mandates by the administration.° empowerment.48 As the federal deficit mounted in the The federal government needs to better 1980s, Congress found it more and more organize itself to improve the way it works difficult to spend new money. Instead, it with states and localities. The President often turned to "unfunded mandates" should immediately establish a working passing laws for the states and localities to group of cabinet-level officials, with follow, but giving them little or no money leadership from the Vice President, the to implement those policies. As of Domestic Policy Council, and the National December 1992, there were at least 172 Economic Council. separate pieces of federal legislation in fince The Board will look for ways to that imposed requirements on state and empower innovative communities by local governments. Many of these, such as reducing red tape and regulation on federal clean water standards and increased public programs. This group will be committed to access for disabled citizens, are solutions that respect "bottom-up" initiatives unquestionably noble goals.

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But the question remains: Now will state create a forum in which federal, state, and and local governments pay to meet those local officials could develop solutions to goals? We recommend that Congress refrain problems involving unfunded mandates. from this practice and that the President's directive establish that the executive branch Action:Consolidate 55 categorical grant will similarly limit its use of unfunded programs with finding of 512.9 billion mandates in policies, legislative proposals into six broad "flexible grants"in job and regulations. training, education, water quality, The directive would narrow the defense conversion, environmental circumstances under which departments management, and motor carrier safety.5° and agencies could impose new unfunded burdens on other governments. It also This proposal came from the National would direct federal agencies to review their Governors Association (NGA) and existing regulations and reduce the number National Conference of State Legislatures of mandates that interfere with effective (NCSL), which describe it as "a first step service delivery. OMB's Office of toward broader, more ambitious reforms." Information and Regulatory Affairs (OIRA) It would consolidate some 20 education, should review all major regulations or employment and training programs, with a legislation proposed by the executive branch combined S5.5 billion in fiscal year 1993 for possible adverse impacts on states and spending; roughly 10 other education localities. Finally, ()IRA's director should programs ($1.6 billion); 10 small

How Much Do You Get for a 1983 Toyota?

VIhat does the price of a used car have to under Aid to Families with Dependent do with the federal government's family Children (AFDC) does not own a car worth policies? more than $1,500 inequity value.To give a More than it should. Caseworkers employed poor family food stamps, it must verify that the by state and local government to work with family doesn't own a car worth more than poor families are supposed to help those $4,500 in market value. Medicaid specifies a families become self-sufficient. Their job is to range that it allows for the value of a recipient's understand how federal programs work. But as car, depending on the recipient's Medicaid it turns out, those caseworkers also have to category. But under food stamp rules, the car is know something about used cars. Used cars? exempt if it is used for work or training or That's right. Consider this example, recounted transporting a disabled person. And under to Vice President Gore at a July 1993 AFDC, there is no exemption for the car under Progressive Foundation conference on family any circumstances. policy in Nashville, Tennessee: Recounting that story to a meeting of the Agencies administering any of the federal nation's governors, the Vice President asked this government's programs for the poor must verify simple question: "Why can't we talk about the many details about people's lives. For instance, same car in all three programs?" they must verify that a family receiving funds

38 47 CUTTING RED TAPE environmental programs (5392 million); performance without tackling the thorny six water quality programs (52.66 billion); political problem involved in consolidating and six defense conversion programs 600 grant programs, reconciling thousands (S460 million). of rules and regulations, and anticipating every possible instance when flexibility Action:Gmcress should allow states and might be necessary. It puts the burden of localities to consolidate separate (,'ant identifying obstacles and designing the hest programs front th2 bottom up.'' solution where it belongson those who must make the programs work. Recognizing the political and administrative obstacles to wholesale reform Action:(jive all cabinet secretaries and of more than 600 existing categorical grants agency heads authority to grant states and in the short term, the National Performance localities selective waivers front federal Review focused on an innovative solution regulations or mandates. to provide flexibility and to encourage result-oriented performance at the stare and local levels. Our proposal calls fOr Congress to The National Performance Reviewis not authorize -bottom-up- grant consolidation intended to be the final word on reinventing initiatives. Localities would have authority government but rather a first step. This long to mix funding from different programs, with simple notification to Washington, overdue effort will require continuing when combining grants smaller than S 10 commitment from the very top to truly change million each. For a consolidation involving the way government does business. any program funded at more than S 10 million, the federal awarding office (and U.S. Rep. John Conyers (D. Mich.) state, if applicable), would have to approve August 28, 1993 it before implementation. In return for such consolidation, the state and local governments would waive all but one of the programs administrative payments from For federal grant programs to work, the federal government. managers must have flexibility to waive When different grants regulations rules that get in the way. Some departments conflict, the consolidating agency would have this authority; others don't. Federal select which to follow. States and localities decisions onmostwaivers come very slowly, that demonstrated effective service and states often must apply to a half-dozen integration through consolidation would agencies to get the waivers they need. receive preference in future grant awards. Florida. for example, has a two-year waiver Each of the partners in the allowing it to provide hospice care to AIDS intergovernmental system must work patients under Medicaid. Its renewal takes collaboratively with othersfederal, state, 18 months. So state officials have to reapply and localto refine this recommendation. after only six months. The details will be negotiated with Waiver legislation should grant broad important state and local organizations, waiver authority, with the exception of fair such as the NGA, the NCSI the U.S. housing, non-discrimination, environ- Conference of Mayors, and the National mental, and labor standards. We will ask League of Cities, before legislation is Congress to grant such authority to cabinet drafted. officers. These waivers should be granted Bottom-up consolidation will he given a under limited circumstances, however. They high priority by the administration. It must be time-limited and designed to represents a way to improve state and local include performance measures. When each

48 39 .(()%1 1(11) . i,) RI St 1 Is ( (, k,()%1 I(\ f \I \V(11th1 BE III it & costs

experiment is concluded, the granting organizations to create innovative new agency should decide whether the new wav models to serve low-income people. of doing things should be included in HUD recognizes that local authorities standard practice. with proven records of excellence can serve their customers tar better if allowed to make Action:I; controt of puolic nousincz (heir own decisions. We and the secretary :o local Public bousuur authorities with recommend that Congress give HUD Nsto)-i('s Ofexceilein numagementellill authority to create demonstration projects .;trbstantiallv deregulate the rest. in which local housing authorities would continue to receive operating subsidies as Public housing is a classic story of good long as they met a series of performance intentions gone awry. When the program targets, but would he free from other HUI) began in the 1030s, it was hailed as an control. Individual demonstrations could enlightened response to kuropean sari', but all federal rules would be open for immigrants. squalid living conditions in waivers as long as HUD could measure cities across the country. .1-hrough an performance in providing long-term, enormous bureaucracy stretching from affordable housing to those poor enough to Washington into virtually every city in be eligible for public housing. America, the public housing program In addition. HUD should work closely brought clean, safe. inexpensive living with local housing authorities, their national quarters to people who could not afford organizations, public housing tenant them otherwise. organizations, and state and local officials to Now, however, public housing is even eliminate unnecessary rules, requirements, more troubled than our categorical grant procedures, md regulations. In particular, programs. With its tight,centralized HUD should replace its detailed control, it epitomizes the industrial-era procurement and operating manuals and program: hierarchical, rule-bound, and design and site selection requirements with bureaucratic. HUD's Washington, regional. performance measures, using annual and local offices rigidly control local public ranking of local housing authorities to housing authorities, who struggle to help encourage better service and greater the very poor. accountability. It should eliminate the Frustrated by the failure of public annual budget review, an exercise in which housing, innovative state and local HUD field staff spend thousands of hours governments began to experiment with new reviewing and approving detailed budgets models of developing, designing, financing, from local housing authorities even managing, ind owning low-income though the reviews do not influence federal housing. Successful efforts tailored the funding decisions. And it should work with housing to the characteristics of the Congress to change current rent rules. surrounding community. Local public which create strong incentives for people to housing authorities began to work with move from public housing as soon as they local governments and non-profit find jobs.

40 4

W.4I ;1 ,F; )4:it CUTTING RED TAPE Conclusion

The changes described above are massaged to death, or reversed beyond ambitious. They will take enormous recognition or usefulness by the overlayered effort and enormous will. It will he structures.... many Years before all of them take root. But But the changes we propose will produce if they succeed, the American people will their own momentum to overcome have a government capable of attacking bureaucratic resistance. As the red tape is their problems with far more energy, and far being cut, federal workers will become more less waste, than they can today imagine. and more impatient with the red tape that We must move quickly, because the remains. They will resist any reversal of the bureaucracy, by its nature. resists change. As process. And they will be strengthened in .lom Peters wrote in Thriving on OPilos, their resistance by the steps we propose in -Good intentions and brilliant proposals the next chapters. %al be dead-ended, delayed, sabotaged,

5 0 41 Chapter 2

PUTTING CUSTOMERS FIRST

11." are going to rationalize the war the federal government relates to the .-11)1Criedll people, and We ale goin,(f to make the jidend government customer friendly A lot of people dour realize that the fiyleral govermnent has customers. We have customers. The Amerimn people.

Vice President Al Gore Town Meeting, Department of Housing and Urban Development, March 26, 1993

AII of usbureaucrat or managers to the same struggle to cut costs business owner, cabinet and improve customer service that compels secretary or office private managers. We can imb/ue the federal clerkrespond to governmentfrom top to bdttomwith a incentives. We do more driving sense of accountability. of what brings us Is it really possible to reinvent rewards and recognition, less of what government in this way? Horror stories brings us criticism. But our government, about government waste are so abundant built around a complex cluster of that many doubt its ability to change. For monopolies, insulates both managers and some, the only solution is to cut or abolish workers from the power of incentives. programs wholesale. In some instances We must change the system. We must those cuts make sense and we are force our government to put the customer recommending them. But alone they do not first by injecting the dynamics of the address the problem we face or move us marketplace. decidedly toward a government that works The best way to deal with monopoly is to better and costs less. expose it to competition. Let us be clear: We propose a different approach. We this does not mean we should run must make cuts where necessary; we also government agencies exactly like private must make our government effective and businesses. After all, many of government's efficient. Some programs clearly should be functions arc public responsibilities precisely eliminated, others streamlined. We will because the private sector cannot, should offer many proposals to do both in chapter not, or would not manage them. But we 4. But reinventing government isn't just cam transplant some aspects of the business about trimming programs; its about world into the public arena. We can create fundamentally changing the way an environment that commits federal government does business. By forcing

51 43 I ROM RI D 11P4. It RESI I Fs CRI 111 \(, 1;OVI RNMIAT I-11AI WORKS BI TTER & ('USFS Liss

public agencies to compete for their and services, acquire and maintain office customersbetween offices. with other space, and print public documents. These agencies, and with the private sectorwe internal monopolies serve their customers will create a permanent pressure to streamline government workersso poorly, it's no programs, abandon the obsolete, and wonder those workers have such trouble improve what's left. serving customers outside government. This process will be neither quick nor Third, where competition isn't feasible, easy. But as it unfolds, a very different we will turn government monopolies into type of government will emerge, one that more businesslike enterprises--enterprises is accountable to its true customers in closer touch with both customers and the public. market incentives. We propose four specific steps to Fourth, we will shift some federal empower customers, break federal functions from old-style bureaucracies to monopolies, and provide incentives for market mechanisms. We will use federal federal employees to better serve their powers to structure private markets in ways customers. that solve problems and meet citizens First, we will require that all federal needssuch as for job training or sate agencies put customers first by regularly workplaceswithout ftinding more and asking them how they view government bigger public bureaucracies. services, what problems they encounter, and Together, these strategies will enable us to how they would like services improved. We create a responsive, innovative, and will ensure that all customers have a voice, entrepreneurial government. If we inject and that every voice is heard. market mechanisms into federal agencies as Second, we will make agencies compete we are cutting red tape, we will create new for their customers' business. Wherever dynamicsand a new dynamism feasible, we will dismantle government's throughout the federal government. monopolies, including those that buy goods

STEP 1: GIVING CUSTOMERS A VOICE AND A CHOICE Setting Customer Service Standards public agencies that hold monopolies. And monopolies, public or private, have little Long lines, busy signals, bad sensitivity to customer needs. information, and indifferent workers So government agencies must do what at front countersthese are all too many of America's best businesses have common occurrences when customers come done: renew their focus on customers. Some in contact with their government. Quite are already trying. The Internal Revenue simply, the quality of government service is Service (IRS) and Social Security below what its customers deserve. Administration (SSA) have taken major We propose to set a goal of providing steps to improve their telephone services to customer services equal to the best in busnuss. customers. SSA, the U.S. Postal Service Too many agencies have learned to (USPS), and the Department of Veterans overlook their customers. After all, most of Affairs are developing a combined government's customers can't really take government services kiosk, providing a their business elsewhere. Veterans who use single point of access for services offered by veterans' hospitals, companies that seek the three agencies. The Library of Congress, environmental permits, or retirees applying the Energy Department, the National for social security benefits must deal with Aeronautics and Space Administration, the

44 52 PUTTING CUSTOMERS FIRST

National Science Foundation, and other agency is fostering competition among its federal agencies have placed their materials tax return centers, based on customer on Internet, a worldwide computer service levels and effi. ciency at handling the network.' 1.' billion pieces of paper the IRS receives Good service means giving people what each year. Centers that perform better get they need. To do that, however, one must higher budgets and workloads, and first find out what they wanta step tew employees get promotion opportunities. federal agencies have taken. In the future, The IRS was among the first government federal agencies will ask their customers agencies to use 800 numbers and what they want. what problems they have. automated voice mail systems to increase and how the agencies can improve their customer access to information. -loday. the services. IRS is beginning to survey its customers. Knowing what customers want, public agencies must set clear and specific customer service standards. When Federal Customer Service Standards: IRS Express promises to deliver a package the- next day by 10:30 a.m., both customers and employees understand precisely what that As part of the National Performance Review, the means. Similarly, when the Air Force's IRS is publishing customer service standards, Tactical Air Command discarded its thick including these: set of specifications about living quarters for visiting pilots and adopted a simple standardequivalent to "a moderately If you file a paper return, your ref.und due will priced hotel, like Ramada"employees be mailed within 40 days. understood exactly what it meant.= Several federal agencies that frequently If you file an electronic return, your refund due interact with citizens have launched will be sent within 14 days when you specify aggressive customer service initiatives. We direct deposit, within 21 days when you endorse strengthening these initiatives request a check. described belowand expanding them across the federal government. Our goal is to resolve your account inquiry Internal Revenue Service. The IRS, the with one contact; repeat problems will be federal agency most citizens prefer to avoid. handled by a Problem Resolution Office in an might seem the least likely to develop a average of 21 days. customer focus. But its working hard to do just that. When you give our tax assistors sufficient and Four years ago. the General Accounting accurate information and they give you the Office (GAO) discovered that IRS staff gave wrong answers, we will cancel related penalties. a wrong answer to one of every three taxpayers who called with a question. Since With your feedback, by 1995 IRS forms and then, the agency has improved its accuracy instructions will be so clear that 90 percent of rate to 88 percent.' Andin a switch that individual tax returns will be error-free. signals a basic change in attitudeagency employees now refer to taxpayers as customers. In IRS pilot projects across the country, employees now have authority to change In addition, some centers are serving work processes on their own in order to ci tstomers in truly :astonishing ways. One improve productivity. Front-line workers anecdote makes the point. At the Ogden, also have more authority to resolve issues Utah Service Centera winner of the one-on-one with individual taxpayers. The Presidential Award for Qualitya down-

53 45 ROM RED TAPE TO RESULTS CREA TING ( ;ovI :RNMEN r tuAl WORKS BET TER & Cos I s Ss

pensions. survivors and disability insurance, and the supplemental security income (SSI) program. Tlie agency has 1,300 field offices Customer Service Standards: and receives 60 million calls a year on its Social Security Administration toll-free lines. As the nation's population ages, the agency faces an ever-increasing As part of its participation inthe National workload. Recently, an inspector general's report showed that customer satisfaction Performance Review, the Social Security had fallen 4 years in a row due to longer Administration will publish nationall)4 and post in waiting times in offices and increasing each of its offices, these performance standards: problems in reaching someone on the phone.' You will be treated with courtesy every time Fortunately, the Social Security you contact us. Administration is strengthening its customer orientation. When Hurricane We will tell you what benefits you qualify for Andrew struck South Florida. where and give you the information you need to use 367,000 people collect social security and OUT programs. SSI, agency workers took steps to ensure that senior citizens would know how to get We will refer you to other programs that may their checks despite the devastation. Local help you. offices used television, radio, and loudspeaker trucks touring the area with You will reach us the first time you try on our messages in English, Spanish. and Creole. 800 number. The agency also hired an airplane to tow a banner with SSA's toll-free 800 telephone number over the hard-hit Homestead area. More generally, the Social Security Administration recently adopted a on-his-luck man hitchhiked from out of customer-oriented strategic plan, which state to get his refund check. As it turns out includes objectives such as issuing social this center doesn't issue checks. But IRS security numbers orally within 24 hours of employees there discovered that a disbursing an application. Besides pinpointing some of center had sent a check to the hitchhiker's their objectives as standards to reach today, old address and that it had been returned. SSA is publishing all 34 of its objectives and They ordered a new check sent to Ogden seeking customer feedback on whether it set and helped the hitchhiker make ends meet the right targets for service. until the check arrived. U.S. Postal Service. The Postal Service. In the end, the IRS's efforts could affect which delivered 166 billion pieces of mail in all of us, not only as filers of tax returns but 1992, has begun improving customer as taxpayers. If IRS forms are easier to service for a good reason: It has understand and use, more taxpayers might competition. While most people still use the file on time. If the IRS develops an image as Postal Service to deliver first class mail. the a more effective, user-friendly agency, more use of private delivery services and taxpayers might decide to file in thefirst electronic mail is rising quickly. place. A mere 1-percent increase in The Postal Service has decided to meet voluntary compliance would add S7 billion its competition head-on. Using focus in government revenue each year.' groups, the agency identified service areas Social Security Administration. Even, where its customers wanted improvement. year, more than 47 million Americans come It found that people wanted shorter waiting in contact with the Social Security lines at counters, better access to postal Administration, which administers old-age information, and better responses to their

46 54 PUTTING CUSTOMERS FIRST complaints. Using these standards to measure performance. the agency set a lonz. Customer Service range goal of "100-percent satisfaction- and developed a customer satisfaction index to Standards: USPS measure progress toward it. The agency also is providing incentives As part of its participation in the National for employee performance: In cooperation Performance Review, the USPS will expand its with two postal unions, managers now use plans to display these standards in post offices: customer satisfaction data to help determine employee bonuses. Your first class mail will be delivered anywhere Action: Presidentsimuiti issue.: in the United States within 3 days. 'freellre .1111 Yerriet'S 10 We Cir Your local first class mail will be delivered usunner ,ertuce oroqTains that 'dentin. overnight. na sn1 vel. customers. life °mei. ?rill Wt. 1011011'111V Sfallth1;71 You will receive service at post office counters

11,11111.: 1 .stonier service canal lailk, ,.,St within 5 minutes.

You can get postal information 24 hours a day Me President's directive will lay out by calling a local number. principles to govern the provision of customer services. For example. organizations should: immediately identify who their survey their customers frequently to customers are; find out what kind and qualitv of services they want:: survey their customers on services and results desired, and on satisfaction with post standards and results measured existing services; against them: survey front-line employees on barriers benchmark performance against 'the to, and ideas for, matching the best in best in business"; business;

provide choices in both source of in 6 months, report results on these service and delivery means; three steps to the President: and

make information, services, and develop and publish a customer service complaint systems easily accessible; planincluding an initial set of customer service standardswithin I handle inquiries and deliver services Fear. with courtesy; l'he customer service plans will address provide pleasant surroundings for the need to train front-line employees in customers; and customer service skills. They will also identify companies that agencies will use to provide redress for poor services, judge how they compare to the "best in business." The directive will ask cabinet The order will direct all federal agencies secretaries and agency heads to use (hat deal with the public to: improvement in customer satisfaction as a

56 Ill \/p i() itrNtiis :1\I Is (1(1\ 112 \ \II NII!! 'X')ItlN 1;1 I1112 IsLiss

primary criterion in judging the their focus to customers, they act like performance of agency managers and front- Avisthey try harder. line employees.

Action: roilllitil 11510111er surveys, Crossing Agency Boundaries the Office or .11anavyment and Btukret tviildeletfate its survey approval autnorn-v Unfortunately, even agencies that try under the RIperworie 1?etlution Act to harder find very real obstacles in the way of departments that are able10comply nod) putting their customers first. Perhaps the the act. worst is Washington's organizational chart. Time and again, agencies find it impossible The public's input is crucial to improving to meet their customers needs, because customer service. But current law gives the organizational boundaries stand in the way. Office of Management and Budget (OMB) Sometimes, programs housed in the same power to decide on virtually all agency agency are only tangentially related. While requests to solicit information from the most Agrfailture Department programs public (0MB can delegate this authority). relate to food, for instance, its customers This law was designed to minimize onerous range from farmers who grow it to poor paperwork burdens the federal government children whose families use food stamps. At imposes on businesses and citizens. But it other times, programs dealing with the also minimizes the number of times same customers are located in a dozen agencies ask customers about their needs. It different agencies. Rather than make people often slows agencies down so much that jump over organizational boundaries on they abandon the idea of doing a survey their own, we must remove the boundaries altogether. at the point of customer contact. We must For many agencies, customer surveys arc make the delivery of services "seamless." the single most useful way to measure The traditional solution is to shuffle the performance. If OMB has to approve every organizational chart. But in Washington, request for a customer survey, however, such proposals set off monumental turf neither the directive described above nor the wars between agencies in the executive Government Performance and Results Act, branch, and between committees in which the President signed in August 1993, Congress. After years of struggle, one or two will work. Citizens do not like to be forced agencies are reorganized or a new to fill out forms by their government. But department is created. Meanwhile, the most Americans would be pleased to receive nation's problems keep changing, so the a voluntary survey asking how their post new structure is soon out of date. office or social security office could improve In a rapidly changing world, the best its customer service. solution is not to keep redesigning the We propose to delegate approval of organizational chart; it is to melt the rigid voluntary customer surveys to departments boundaries between organizations. The with the ability to comply with the law, and federal government should organize work ensure that they create rapid approval according to customers needs and processes so bottlenecks don't develop at anticipated outcomes, not bureaucratic turf. lower levels. It should learn from America's best-run Customer-driven programs rarely cost companies, in which employees no longer more than others; indeed, productivity work in separate, isolated divisions, but in gains in past federal experiments have more project- or product-oriented teams. than offset cost increases. At the Ogden To do so, the government must make Service Center, the IRS office's new three changes. It must give federal workers approach helped workers process 5 percent greater decision making authorirv, allowing more tax returns. \Mien organizations shift them to operate effectively in cross-cutting

48 56 PUTTING CUSTOMERS FIRST ventures. It must strip federal laws of reputation for providing its youth extensive prohibitions against such cooperation. And opportunity to attend college," the General it must order agencies to reconsider their Accounting Office noted recently. own regulations and tradition-bound -However, our country falls short in thinking. For example, the Forest Service employment preparation of many found that -0 percent of its regulatory noncollege-youth.- Unlikeour competitors. harriers to new, creative ways of doing GAO said, we have no national policy to business were self-imposed.' systematically prepare non-college educated Despite these barriers, some noteworthy youth for jobs.'' initiatives are underway. Rural Our system is badly fragmented. Each Development Councils, under the service from job referral-to retraining Agriculture Department's direction, work is designed for different people, with with several federal departments as well as different rules. regulations, and reporting states and localities to better coordinate requirements. Bewildered, often dispirited, rural aid programs. At the Federal Aviation job seekers must trudge from office to Administration (FAA), a systems manager office, trying to fit themselves into a helps coordinate the activities of the FAA. program. Vihen they find a program, they Defense Department, international aviation may find that they aren't eligible, that its all organizations, and various private interests filled up, or that the classroom is across on matters involving satellites, data links, town. and traffic flow management. American workers deserve a better deal. We should bring the same approach to Nowhere on the government reinvention other parts of government. The following front is action more urgently needed or are examples illustrate the problems we face and potential rewards greater. We envision a the solutions we must create. new workforce development system, fbcused on the needs of workers and Action: a system oicompetitive, employers. We will organize it around the one-stop, career development centers open customer whether an individual or a .o ail ..linericans."' business then provide that customer with good information about the Our nations economic future depends performance of different providers and on the quality of our workforce. Our plenty of choices. If we do this, career individual futures, too, depend on whether centers and training providers will have to we have marketable, flexible skills with compete for their customers business, based which to adapt to the changing demands of on the quality of their services. new technologies. In a country where the Specifically, wepropose one-stop career average worker changes jobs seven times in management centers across the country, a lifetime, those skills are more than open to all Americans regardless of race, desirable: they are crucial. gender, age, income, employment Our government invests heavily in experience, or skills. (One-stop centers are education and training. 'Ibgether, 14 also a key feature of the Workforce separate government departments and Investment Strategy the Labor Department agencies invest 524 billion a year, through is developing.) Our centers would offer ISO employment and training programs.' ' skills assessment, information on jobs, But we do not invest this money well access to education and training enough. For one thing, our system is everything people needed to make career organized for the convenience of those who decisions. The centers would be linked to deliver services, not those who use them. all federal, state, and local workforce For another, the system lacks competition development programs, and to many and incentives for improvement. private ones (which arc. after all. the source -File United States has a worldwide of most job-training money). Core services

57 49 ROM RID I\I'lFt) RI St'l rk, CAI \ II\ (. (;()\ IIt \MI t 1111I \VOIlks l3n ern Itt1/4. 1.l.sS

such as labor market intOrmation and job workers, but the many rules and regulations search help would be offered tree. Some that prevent them from doing their jobs. centers might otter other services, from Waiver of these antiquated rules will free up comprehensive testing to career counseling rhese workers to perform well. In order for and workshops, on a tee-tor-service basis. state employment services to compete on a These centers would help their customers level playing field particularly after the get access to funds from of the 150 negative effects of the last decade of programs for which they qualified..lo make Tending cuts and over-regulationline this possible. the federal government would workers must he given the opportunity to eliminate or waive mane rules and retool. The Labor Department should regulations that keep our workforce ensure that the. receive the necessary development- programs separate..ihe training to enable them to participate in the centers would Also he Allowed to generate process. their own revenues, in, hiding lees collected The bigg est single harrier to creating an from employers and employees would could integrated system of one-stop career centers afford to pay. Any oruanuation, public or is the fragmented nature of federal funds. private, would he .111,Aved 1,) seek a charter 'Me I SO federal programs have different to operate one or more oil,. stop career rules, different reporting requirements. even centers. 'Fhe process wol lid he performance- different fiscal years:lh synchronize these driven, with contracts renewed only if and to break down the walls between centers met customers. demands. The categorical programsthe National federal government would establish national Economic Council should convene a chartering standards for the centers, but Workforce Development Council, with states and lot al employment boards would members from the Departments of Labor. decide which orgam/Anons met the Education, and Health and Human standards. Services: the Office of Management and Today, local organizations such as state Budget: and other departments and employment servi, es get most of their agencies with employment and training federal funds almost a. a matter of programs. This council should standardize entitlement. They iccount for the money, fiscal and administrative procedures, but we do not hold them accountable for develop a standard set of terms and whether they spend it effectively. \Ve would definitions between programs. develop a make funding for these new centers more comprehensive set of results-oriented competitive, opening the process to public performance standards, and improve the and private, nonprofit and for-profit, qualitative evaluation of program entities. performance. We would judge these centers in part by how many people sought help at them Action: The President shoud issue a on the theory that centers attracting the directive that requires collaborative most ClItit0Illel's were clearly doing efforts across the government to something right. BI.It we would focus as well omporver communities and strengthen On what happened alter the customers left. fittnilies." Did they enroll in meaningfial training programs? Did they find jobs? Did they At Vice President Gore's recent keep their jobs? I )id they increase their conference on family policy in Nashville. incomes? Finally: we would give customers experts agreed that effective family policy the necessary inf(11111.1t.liiil to decide the requires new approaches at the federal. state, same thing for themselves: Which training and local levels. We should stop dividing up program would meet their needs best? families' needs into health, education, \Ve believe that the central problem in welfare, and shelter, each with its own set of the Employment is not the line agencies and programs, many of which

5 PUTTING CUSTOMERS FIRST

Loncradict one another and work at .cross- Action:'he President should issue a purposes. Instead, across alllevels of directive and propose leisiation to government, we need collaborative. reconstitute the Federal Coordinatinz community- based, customer-driven Council fOr .vience, Engineering, and approaches through NVIliCh providers can li,chnoiou as the Aational Science and integrate the full network of services. Icchnology Council, givinz it a broader For instance, we spend about 560 billion role in settinq. science and technoloky a 'ear on the well-beingof children. But we poiiev. have created at least 340 separate programs for families and children, administered by 11 Progress in science and technology is a different federal agencies and departments.'' key ingredient of national eLonotnic -Illus. a poor faintly may need to seek help success. President ( Vision of from several departmentsAgriculture tor Change for /imern.,1. icleascd in February, food stamps, Housing and Urban cites studies showing that -investments in Development for rental support, Health and researchanc. Les1 e.opmentI (R&D) tend to Human Services for health care and chasing be the strongest and most consistent down dead -heat parents. For each program. positive influence on productivity they will have to visit different offices, learn growth.-In an increasingly competitive about services, till out forms to establish world eLonomv. the American people need eligibilityand wait. the best possible return c,n tederal R&D fhe system is fragmented and illogical. investments. In Texas, where the immunization rate The Federaloordinating Council for among poor children is about 30 percent, Science, Engineering, and Technology the state Health Department sought (FCCSE) is a White I louse-managed permission to have nurses who run the team that helps set policy fortechnology Agriculture Department's Women, Infants development. With representatives from and Children supplemental food program more than a dozen agencies, itdevelops also give immunizations. The Agriculture interagency proieL is, such as Department said nounless Texas biotechnology research and the high- developed an elaborate cost allocation plan. performance comparing initiative. Consequently, mothers and children will Unfortunately, IA lacks the teeth to have to continue visiting more than one set priorities, direct policy, ind participate agency.'' fulls' in the budget process. It cant compel A few years ago, Governing magazine agencies to participate in its projects, nor described a teenage girl who was pregnant, can it tell agencies how to spend funds.Its had a juvenile record, and was on welfare. six funded projects will account for just Between the three problems.shehad more 16 percent of Washington's 5-6 billion than six caseworkerseach from a different R & D budget inI 99q. At a time of agency. As one put it: "The kid hasall these declining federal resources, experts in people providing services, and everybody's business, Kademia, and government doing their own thing and 'rasha's not recognize the need for one-stop shopping getting better. We need to have one person for science and technology policy. who says, 'Now look, let's talk about a plan A new National Science and Technology of action tor Tasha. President Clinton's Council would direct science and directive will help remove obstacles that technology policy more forcefully. and agencies face in trying to serve Fasha and would streamline the White 1 louse's oth Is like her. advisory apparatus by toinhining the functions of '(..SET, the National Space Council, and the National Critical Materials Council.

51 . , 1 1 1 0 \ 1 RED i% P I I( ) R I S tII s ( t : \ I 1:\`,11N I I1111 N.VORKSBi t.c)s ss

Action: SI1011111issue a Action:The President should issue a directive to give the hark Promotion directive to establish ecosystem Coordinatinz Commttree ,yrearer 7nanagement policies. . across the authority to control fiyierat export :,,overnment.:i n.omotion efforts.' "For too long, contradictory policies Unlike most of our economic from feuding agencies have blocked competitors, the United States has no progress, creating uncertainty, confusion, national export strategy. Our export controversy, and pain throughout the programs are fragmented among 19 region," President Clinton declared at the separate organizationsincluding the Forest Conference held in Portland, Agriculture and Commerce Departments Oregon in April 1993. Shortly thereafter, and the Small Business Administration. The the President announced his Forest U.S. and Foreign Commercial Service, in Plana proactive approach to ensuring a Commerce's International .Frade sustainable economy and a sustainable Administration, is the lead agency fir trade environment through ecosystem promotion overseas. But dozens of other management. We recommend extending entitiesmany within Commercealso the concept of ecosystem management have trade promotion roles. across the federal government. Our export programs provide little Although economic growth has strained benefit to all but our nations largest our ecological systems, our government businesses. The economic implications of lacks a coordinated approach to ecosystem such selective assistance are serious. management. A host of agencies have Exports are among our most effective job- jurisdiction over individual pieces of our creating tools. They create about 20,000 natural heritage. The Bureau of Land new jobs for every S I billion in exports. Management oversees more than 60 Thousands of small and mid-sized percent of all public lands; the Forest companies make products attractive for Service manages our national forests and overseas markets, but are discouraged by grasslands; the Fish and Wildlife Service high transaction costs and a lack of manages our National Wildlife Refuge information. According to trade experts, System; the National Park Service oversees the United States may be the "world's the national parks; the Environmental biggest export underachiever."2" Protection Agency implements laws to The President's directive will give the regulate air and water quality; the National Trade Promotion Coordinating Committee Oceanic and Atmospheric Administration (TPCC), chaired by the Commerce /(NOAA) manages marine resources; and Secretary and including representatives from various other agencies run programs that 19 departments, agencies, and executive affect the environment. Different agencies, offices, broader authority to create with jurisdictions over the same ecosystem, performance measures and set allocation do not work well together. Even within the criteria for the nation's export promotion same agency, bureaus fight one another. programs. Working with the National At the local level, a hodge podge of Economic Council, TPCC will ensure that government agencies control activities that such programs better serve the exporting affect the environment. Consider, for community. instance, the San Francisco Bay delta estuary. One of the most human-altered estuaries on the west coast of North or South America, it is governed by a complex array of agencies, plans, and laws. One mile of the delta may be affected by decisions of more than 400 agencies.--

52 U PUTTING CUSTOMERS FIRST

The White House Office on reconfigured to suit its customersstates Environmental Policy has convened an and communities. We propose a Federal interagency task force of appropriate Coordinating Council for Economic assistant secretaries to develop and Development, comprising the appropriate implement cross-agency ecosystem cabinet secretaries and agency heads, to management projects. The Office or coordinate such activities and provide a Nlanagement and Budget will review the central source of information for states and plans as part of the fiscal 1995 budget localities. The council will provide a process. In 1994, the assistant secretaries unifying framework for economic and will establish cross-agency teams to develop regional development efforts, develop a initial ecosystem management plans tbr governmentwide strategic plan and unified implementation in fiscal year 1995. Also in budget to support the framework, prevent 1994. the President should issue a directive duplication in the various programs, and that will declare sustainable ecosystem assess appropriate funding levels for the management across the federal government. agencies involved.

Action: Action:. .-idiuton. Yleral 1:01(1111l1111!" iTtiss-itflencv ?:: :tuue

The federal government has no wherent A series of legislative restrictions make it policy for regional development and particularly difficult to pursue solutions to community dislocation. Instead, it offers a problems that span agency boundaries. For fragmented and bureaucratic system of seven instance, to put together a working group programs to assist states and localities..lhe on an issue that cuts across agency lines, major programs are the Commerce one agency has to fund all costs for the Department's Economic Development group. Several agencies cannot combine Administration, the Housing and Urban their funds to finance collaborative efforts. Development Department's Community Rather than discourage cross-agency Development Block Grant Program, and the operations, the federal government should Agriculture Department's Rural Development encourage them. Congress should repeal Administration and Rural Electrification the restrictions that stand in the way of Administration. The Defense Department, cross-agency collaboration, and refrain Tennessee Valley Authorir and Appalachian from putting future restrictions in Regional Commission run smaller programs. appropriations bills. In addition. Congress Thus, states and communities must turn to should modify the Intergovernmental many different agencies and programs. rather Personnel Act to give cabinet members and than a single coordinated system. those working for them greater authority Communities find it hard to get help, and the to enter into cooperative agreements with dispersion of effort limits overall funding. other federal, state, and local agencies. Washington's economic and regional development activities should be

AVAILABLr 61 53 I ROM RH) I 1,11'0 RI 511.1'S (.1(LA 1 INC A GOVHINMEN 1111A 1 WORKS Bi r 11 R & (.051 s [ASS

STEP 2: MAKING SERVICE ORGANIZATIONS COMPETE While our federal government has handle their printing, real estate, and long opposed private support services. Originally, this approach monopolies, it has deliberately was supposed to offer economies of scale created public ones. For instance, most and protect against profiteering and federal managers must use monopolies to corruption. In an earlier timeof primitive

The Air Combat CommandFlying High With Incentives and Competition

The military: the most conservative, results have been astonishing. Young mechanics hierarchical and traditional branch of the are taking parts from B-ls, F-15s, and F-16s government and the bureaucracy least likely to some of which cost $30,000 to $40,000and behave like a cutting-edge private company, fixing them for as little as $10. The savings are right? Wrong. expected to reach $100 million this year. ACC One of Washington's most promising managers have an incentive, too: Because they reinvention stories comes from the Air Combat control their own operating budgets, these Command. With 175,000 employees at 45 savings accrue to their units. bases across the country, the ACC owns and General Loh instilled competition by using operates all of the Air Force's combat aircraft. benchmarking, which measures performance Says its commander, General John Michael Loh,against the ACC standard and shows "We manage big, but we operate small." commanders exactly how their units compare to How? The ACC adopted overall performance others. The ACC also compares its air wings to standards, called quality performance measures. similar units in the Army, Navy, and Marine Each ACC unit decides for itself how to meet Corps; units in other air forces; and even the them. General Loh then provides lots of private sector. Before competition, the average incentives and a healthy dose of competition. F-16 refueling took 45 minutes. With The most powerful incentive is the chance to competition, teams cut that time to 36 minutes, do creative work, General Loh told the National then 28. Performance Review's Reinventing Government The competition is against a standard, not a Summit in Philadelphia. For instance, the Air fellow ACC unit. "If you meet the standard, you Combat Command allows maintenance workerswin," says General Loh. "There aren't 50 percent to fix parts that otherwise would have been winners and 50 percent losers. We keep the discarded or returned to the depot for repair improvement up by just doing thatby just "under the thesis that our people aren't smart measuring. If it doesn't get measured, it doesn't enough to repair parts at the local level." The get improved."

54 62 PUTTING CUSTOMERS FIRST recordkeeping, less access to information. and industrial-era retail systemsit may Ccy have offered some advantages. It is better to abolish monopolies in allcases But not today. Economists don't agree on than not to do it in any" much, but they do concur that monopolies provide poorer service at higher prices than ,ompecitive companies. Our public monopolies have brought us higher costs. Thomas Jefferson Letter to James Madison, 1788 endless delays, and reduced flexibility. \lonopolies don't suffer the full costs of their inefficiency. \X'ith nowhere else to go, customers absorb them. A monopoles competition yields resultsbecause managers dour even know when they are competition is the one force that gives providing poor service or failing to take public agencies ;w choice but to improve. advantage of new, cost-cutting technologies. because they dour get signals from their t.ustomers. In contrast. competitive firms The Government Printing Office get instant feedback when customers go elsewhere. No wonder the bureaucracy Perhaps the oddest federal monopoly is defends the status quo. even when thequo the Government Printing Office. has lost its status. In 1846. Congress established a Joint As for economies of scale, the realities Committee on Printing (JCP) to promote have changed. The philosophy when these efficiency and protect agencies from procurement systems were set up was that it profiteering and abuse by commercial the government bought in bulk, costs printers. The JCP sets standards for all would be lower, and taxpayers wouldget agency activitiesincluding printing, the savings. But it no longer works thatway. photocopying, and color and paper quality. As we discuss more fully in chapter 1, we When the Naval Academy wants touse no longer need to buy inbulkto buy parchment paper tor graduation certificates. cheaply. The last decade has brought inure for instance. the JCP must approve the and more discount stores. which sell decision. evervthing from groceries to office supplies 1-he JCP also supervises the (,overent to electronic equipment at a discount. The Printing Office. the mandatory source of Vice President heard story after story from most government printing .t whopping S i federal workers who had found equipment billion a year. Along with printing federal and supplies at discount storeseven local publications, the GPO must approve all hardware storesat two-thirds the price the privately contracted government printing government paid. jobs. even includes printing orders less Not all federal operations should be than S 1,000of which there were 270.000 forced to compete. ofcourse. Competition in 1992. Simply for processing orders to between regulatory agencies isa terrible private companies, Glk) charges 6 to 9 idea. f\X'itness the regulation of banks. percent. which can decide to charter with thestate Such oversight doesn't work inan age of or federal government, depending on where computers and advanced they can find the most lenient regulations.I telecommunications. Desktop publishing Nor should policy agencies compete. In the has replaced the traditional cutting and development of policy, cooperation between pasting with computer graphics and different units of government is essential. automated design. In private business, in- (:ompetition creates turf wars, which get in house printing flourishes. Small printing the way of creating rational policies and companies specialize in strategic market programs. It is in sert'icedeuvery that niches.

63 55 I t ( ) N 1R II )I\ P I .I ( ) REM. II' ( 1 11 \ ( .\(;() \ I ItNNII \ IIIII WORK .BI 1.1111 & COsIS I.I.SS

The "government look"

ere's a sad story about the Government process, the material can change substantially. HPrinting Office, multiple signatures, and Orders often turn out far differently than $20,000 of wasted taxpayer money. NHTSA wanted. But under the GPO's policy, Vice President Gore heard it from an agencies must accept any printing order that the employee at the Transportation Department's GPO deems "usable." National Highway Traffic Safety "I can cite one example where more than Administration, which p..-smotes highway $20,000 has been spent and we still do not safety. Hoping to convey safety messages to have the product that we originally requested," young drivers, her office tries to make its the employee explained, "because GPO materials "slick"to compete with decided on its own that it did not have a sophisticated advertising aimed at that 'government' look. We were not attempting to audience. Sound simple? Read on. produce a government look. We were trying to After the agency decides what it wants, it produce something that the general public goes through multiple approvals at the GPO would like to use." and the Department of Transportation. In the

Action:Him:nate the Government Administration (GSA), which runs a host of Ninting Office's mottonolv.2' federal support servicesfrom acquiring and managing more than 270 million For all executive branch printing, square feet of office space to brokering Congress should end the JCP's oversight office furniture and supplies to disposing of role. Congressional control of executive the government's car and truck fleets. branch printing may have made sense in the With its monopoly, GSA can pass 1840s, when printing was in its infancy, the whatever costs it wants on to tenants and government was tinv, there was no civil customers. Often it rents the cheapest space service, and corruption flourished. But it it can find, then orders federal agencies to makes much less sense today. We want to occupy itregardless of location or quality. encourage competition benveen GPO, (Occasionally an agency with enough clout private companies, and agencies in-house refuses, and GSA ends up paying to rent publishing operations. If GPO can empty space.) This is not all GSA's fault. compete, it will win contracts. If it can't, Frequently, the agency is hemmed in by government will print for less, and taxpayers federal budget and personnel rules. GSA will benefit. admits that many of its customers are unhappy. It has already permitted some agencies to make their own real estate deals. The General Services We propose to open that door further. Administration Among government's inure cumbersome bureaucracies is the ( ;cneral Services

56 64 PUTTING CUSTOMERS FIRST

Action: 1::esilient snould eta GS.115 ,S1,11C : II le tRylle',' .VSli:CS..C. :,SA Will ATI: Dialing for Dollars: 11"/11111110JIS, How Competition Cut the 11151e." .:.11101:r,' IlS C.V.SUMICPS. Federal Phone Bill .110011'Ci7';'",Vill c,100se inflow, ninetintr Jilell1W,T111011 n the mid 1980s, a long - distance call on the ille917SeS, ..:C11111111Sf those 1)1 the olivine Ifederal system, which the General Services . Administration manages, cost 30 to 40 cents a Specifically, GSA will create one or more minute, the "special government rate." AT&T's property enterprises, with separate budgets. regular commercial customers normally paid 20 The enterprises will compete with private cents a minute. The Defense Department, citing companiesreal estate developers and rental firmsto provide and manage space GSA's rates, would not use the government-wide for federal agencies. Agencies, in turn, will system. lease general purpose space and procure, at Spurred by complaints about high costs and the the lowest cost. real property services acquisition, design, management, and loss of customers, GSA put the government's construction. Such competition should contract up for bid among long-distance phone lower costs tor federal office space. companies. It offered 60 percent of the business to All other federal agencies with real estate the winner, 40 percent to the runner up. holdings, including the Defense and Veterans Affairs Departments. will adopt Today, the government pays 8 cents a minute similarly competitive approaches: for long-distance calls. More agenciesincluding the Defense Departmentare using the system. Competition in Support Services And taxpayers are saving a bundle.

Every federal agency needs "support services--accounting, property had problems meeting the Treasury's management, payroll processing, legal reporting standards. Rather than send nasty advice, and so on. Currently, most letters, they decided to offer help. managers have little choice about where to The Treasury established a consulting get them; they must use what's available in- business. The center includes a small house. But no manager should be confined group of people who offer training, to an agency monopoly. Nor should technical assistance, and even a system for agencies provide services in-house unless the accounting programs so that agencies need services can compete with those of other not own the software. The center markets agencies and private companies. its services to government agencies, Over the past decade, a few federal aggressively and successfully, competing entrepreneurs have created support service with accounting and consulting firms for enterprises, which offer their expertise to agency business and dollars. Its clients other agencies for a fee. Consider the Center include the Small Business Administration for Applied Financial Management, in the and the Nuclear Regulatory Commission. Treasury Department's Financial Already, the center's work has reduced the NIanagement Service. A few .'ears ago, errors in reports submitted to the Treasury Treasury officials realized that many agencies and reduced agencies' accounting costs. reporting to their central accounting system Opened 2 years ago, the center plans to he

'4;7' ;Rum RID I 1.1 10 Iii SLiis ( c, ,2.0\ 112N \11N1111.11 WORKS B11-1112 & 1.1.SS

profitable by 1995; if nor, the Treasury will percent of its ocean floor charting to private close it. firms, shows that the private sector can and will do this kind of work. Competition Action: The administration should among private companies for these services encourage operations (Jr one agency to also might reduce NOAA's costs. compete jOrJl'(fl ill ower agencies.- Action: the Defense Department will We want to expand the approach implement a comprehensive program of exemplified be 'Treasury's Center for contracting non-core fitnctions Applied Financial Management throughout government. lust as in business. competition is the surest way to cut costs The Defense Department is another and improve customer service. agency in which necessity is becoming the mother of invention. Facing a swiftly falling Midget, the department literally cant afford Competing with the Private Sector to do things in its usual wayespecially when private firms can perform DOD's Forcing governments internal service non-core functions better, cheaper, and bureaus to compete to please their faster. Functions such as command, customers is one strategy. Forcing deployment, or rotation of troops cannot be governments external service organizations contracted, of course. But data processing, to do the same is another. In a time of billing, payroll, and the like certainly can. scarce public resources, we can no longer Private firmsincluding many defense afford SO many service monopolies. Many contractorscontract out such functions. federal organizations should begin to General Dynamics, for instance, has compete with private companies. Consider contracted with Computer Services the National Oceanic and Atmospheric Corporation to provide all its information Administration. technology functions, data center operations, and networking. But at the Action:r",.5i, National Oceanic and Pentagon, a bias against out-sourcing Atmospheric "Idministration ATOAA) will remains strong. Only a commitment be experiment with a program of public- senior leaders will overcome that bias. private competition to help fidfdl irs In addition to the cultural barriers at the mission? Pentagon, numerous statutory roadblocks exist. In section 312 of the fiscal year 1993 NOAA, a part of the Commerce DOD Authorization Act, for example, Department, maintains a fleet of ships to Congress stopped DOD from shifting any support its research on oceans and marine more in-house work to contractors. Another life and its nautical charting. But its fleet is law requires agencies to obtain their reaching the end of its projected life construction and design services from the expectancy. And even with the fleet, NOAA Army Corps of Engineers or Naval Facilities has consistently fallen far short of the 5,000 Engineering Command. The days at sea that it claims to need each year administration should draft legislation to to fulfill its mission. NOAA faces a basic remove both of these roadblocks. It will also questionwhether to undertake a total make contracting easier by rescinding its fleet replacement and modernization plan, orders on the performance of commercial estimated to cost more than S1.6 billion in activities and issuing a new order, to the next 15 years, or charter some privately establish a policy supporting the acquisition owned ships. of goods and services in the most The experience of the L.S. Army Corps economical manner possible. OMB will of Engineers, which contracts out 30 to ' +0 review Circular A-76, which governs

6 6 PUTTING CUSTOMERS FIRST contracting out, for potential changes that With a new accounting system that would simplify the contracting process and recognizes full costsand assigns rent, increase the flexibility of managers. utilities, staff support, retirement benefits, and all other costs to the unit that actually

Action: ._mend the job 1;7611112g incurs themwe can determine the true Partnership Act to authorize public and costs of what government produces. At that private competition Tbr the operation of point, we can compare costs across agencies, Job Corps Civilian Conservation make agencies compete on a level playing Centers.-' field, and decide whether we are getting what we pay for. 'Me Labor Department's Employment and Training Administration (ETA) Action: 13v the end of 1994. the Federal supervises 1(18 lob Corps Centers, which .1CC011111l1T StailliartiS Board provide training and work experience to :Mil issue a set ot.COSt accountinz poor youth. The ETA contracts with fOr- standards /Or adPriemi activities. I hese prolit and non-profit corporations to standards twill provide a methodtin- operate -s of the centers. The department Wentiliiing- the true unit- cost or all has long sought to contract out the ocher ,0119171Ment activities.-. 30, now run by the Agriculture and Interior Departments as C:ivilian Conservation Some government agencies have already ( :enters. But Congress under the lob moved in this direction. Others have gone Training Partnership Act, has passed even further. The Defense Department is legislation barring such action. experimenting with what it calls a Unit Because they are insulated from Cost Budget. It calculates the costs of competition, CCC managers have few delivering a unit of service, then budgets for incentives to cut costs and boost quality. For the desired service levels. the past S years, average per-trainee costs at The Defense Logistics Agency (DLA) a CCC have run about S2,000 higher than began this experiment, hoping to ease at centers run by contractors. Competition pressures to contract out its supply depots would force the Ir.terior and Agriculture to private companies. DLA examined the Departments to operate the rural centers cost of receiving and delivering shipments, more efficientlyor risk losing their then attached a dollar figure to each item operations to private competitors. received and another to each item delivered. All money was then appropriated according to the number of items shipped or received. Truth in Budgeting Line items disappeared, incentives grew The more boxes a depot shipped or If federal organizations are to compete for received, the more money that depot their customers, they must do so on a level brought in. For the first time, DLA could playing field, That means they must include calculate its true costs, compare those of their full costs in the price they charge various installations, and pinpoint customers. Businesses do this, but federal problems. This approach, which enables agencies hide many costs in overhead, which managers to set productivity targets, is now is paid by a central office. Things like rent, spreading to other military installations. utilities, staff support, and the retirement benefits of employees are often assigned to the overall agency rather than the unit that incurred them. In this way, governmental accounting typically understates the true cost of any service.

59 1 II12 Rosi R I o \ ro Ri s t i CRI. 1 11 \ ( ; ( / \ 1 1 2 \ N I"I \I \VOlt Iii (: \

STEP 3: CREATING MARKETDYNAMICS Nof all public activities should be overstated, that it suffered 5674.000 in subject to competition, as noted additional operating losses in 1989. and above. In some cases, even service that its procedures in handling such losses delivery operations are better off as and cash shortfalls violated government monopolies. In the private sector, we call accounting principles and standards. these utilities and regulate them to protect Commerce instead decided to turn the the consumer. They are run in a agency around. The effort worked. NTIS's businesslike fashion, and they respond to revenues and sales are both up. \XIY? the market. (For instance, they have Because the agency was forced to respond to stockholders and hoards, and they can its customers unhappiness. NTIS reduced borrow on the capital markets.) They the turnaround time on its orders, cut simply don't face competition. complaints about incorrect orders, and Many governments, including our dramatically slashed the percentage of federal government, do something very unanswered phone calls. Consequently. similar.1 hey create government- owned most business customers who turned away corporations to undertake specific tasks. in the 1980s have returned. NTIS's The Postal Service and Tennessee \.'illev turnaround shows what can happen when Authority are two examples. Such public organizations face the pressure of corporations are free from many restrictions customer demands.'' and much of the red tape facing public Other agencies may require a structural agencies, but most of them remain change to enhance their customer service. monopoliesor, as with the Postal Service. Because its run as a public agency, for partial monopolies. instance, the Federal Aviation At other times governments subject Administration's air traffic control (AI'C) public organizations to market dynamics, system is constantly hamstrung by budget, stimulate the creation of private enterprises. personnel, and procurement restrictions. 'Io or spin of} public enterprisestothe private ensure the safety of those who fly, the FAA sector. To get the best value for the must frequently modernize air traffic taxpayer's dollar, the federal government control technology. But this has been needs to use these options more often. virtually impossible, because the FAA's Consider the National Technical money comes in annual appropriations. Information Service (NTIS), a once-failing Now can the FAA maintain a massive, state- agency in the Commerce Department that of-the-art, nationwide computer system turned itself around in a brief year's time. when it doesn't know what its appropriation Established to disseminate federally funded for next Year or the Years beyond will he? scientific and technical infOrmation, NTIS As a result, the 10 -Year National Airspace was, until recently, not meeting its mission. Plan. begun in 1981, is now 10 vars The agency, which receives no congressional behind schedule and 32 percent over appropriations, was suffering serious budget. Federal personnel rules aggravate financial problems, selling fewer documents the problems: The FAA has trouble each Year to its mostly private sector attracting experienced controllers to high- customers. and charging higher and higher cost cities. With no recent expansion, the prices on those it did sell. system lacks the capacity to handle all air Commerce not surprisingly travel demands. Consequently. airlines lose considered abolishing the agency. A scar about S2 billion annually in costs for earlier, the department's inspector general additional personnel. equipment, and excess had concluded that N'HS's reported fuel. Passengers lose an estimated SI billion earnings of S3.7 million were vastly annually in delays.

60 68 PUTTING CUSTOMERS FIRST

.\incrica needs one seamless air traffic Action:'e deralTrne.c ,ontrol system from coast to coast. It should he run in a businesslike fashionable to borrow on the capital markets, to do long- . .i!!mo .n-111.1 term financial planning, to buy equipment wv:It . 11 it needs when it needs it, and to hire and ;7)."1/1111,1 MU: ':':1;!.1."1;r,, :ire ill reasonable fashion. the solution is a _tovernment-owned corporation. In asset management, too. government could take a fe y lessons from business. \\'e Action: .!;.//ture must begin to manage assets based on their anie systeni into ,t1i!)111.1f1M1. rates of return. A good place to start is in the (ieneral Services Administration. is an overwhelming consensus in Ile federal government owns assets the aviation C01111111111i1V that the AR: land, buildings, equipmentthat are system requires fundamental change it enormous in number and value. But it aviation's positive contribution to trade and manages them poorly. l.ike several other tourism is to be sustained,: one study agencies, C.'S:\ wears two hats: with one, it soncluded earlier this year.'' must provide office space r.0 federal The AFC\ problems can't be fixed agencies. With the other, it serves as without a major reorganization. ender its manager and trustee of huge real estate urrent structure, the system is subject to holdings for American taxpayers. It cannot federal budget. procurement, and personnel do bothat least not well. Should it rules designed to prevent mismanagement maximize returns tor taxpayers by selling a and the misuse of fields. The rules. valuable asset? Or. as the office space however, prevent the system from reacting provider, should it require an agency to quickly to events, such as buying the most occupy one of its own buildings when less up-to-date technology. In its recent report, expensive leased space is available? Change, Challenge, and Competition. the ( ;SA will create a Real Property Asset National Commission to Ensure a Strong Nlanagement Enterprise, solely responsible :ompetitive Airline industry, chaired by for managing federally owned real estate to tOrmer Virginia (;overnor Gerald Baliles. optimize the rate of return for taxpayers. recommended the creation of an while competing with the private sector and independent federal corporate entity within better serving tenants' needs. the Transportation Department. \Ve agree. We should restructure the A'l'C into Action: i.)CM117711e111 of Holism, a government-owned corporation. ana 1"rban t)evetatanent teal tam over supported by user fees and governed by a nanagement '':?(WIN't rate, :Ural board of directors that represents the properties rJJllr iliorlffilfre ;0ans to I/o' system's customers. As customer use rises, !)riVale senor ; so will revenues, providing the funds needed to answer rising customer I heDepartment of Housing and Urban demands and finance new technologies to Development (HUI)) ILLS a growing improve safety. Relieved of its operational workload of problem multi-family loans and Nile, the FAA would focus on regulating fOreclosed properties. In addition, restrictive s.ifory. with better, safer service, we all rules and outdated practices hamper its would beneilt This approach has already management of these assets. Rather than worked in (;re,,z- Britain, New Zealand. more staff, HUD needs a new approach. and other commie,. II L'1 ), which oversees the Federal Housing Administration, owns many loans and properties it acquired from the FIfA when owners defaulted on their loans.

61 1 I I ROM R I . 1 ) \PI:1 0 1 1 1 . 5 1 1 I S CRLAriNG GovritN 1 1 11 1 WORKS 131 IIt & (:I S LI SS

These "market-rate" assetswhich were department entered into limited never set aside for low-income people partnerships with real estate firms, it could have fewer restrictions on disposal than retain most profits from any sales and let a most HUD-subsidized properties. But in private business entity perform the sales in trying to sell the assets, HUD still faces a the most economically beneficial way. variety of legal and political pressures. If the

STEP 4: USING MARKET MECHANISMS To SOLVE PROBLEMS Government cannot create a worksitcs. The system doesn't work well program for every problem lacing enough. There arc only enough inspectors the nation. It cannot simply raise to visit even the most hazardousworkplace taxes and spend more money. Weneed once every several years. And OSHAhas the more than government programs tosolve personnel to follow up on only 3 percent of our problems. We need governance. its inspections. Governance means setting priorities, then using the federal governments Action: the Secretary of Labor will immense power to steer what happens in issue new regulations,* worksite safety the private sector. Governance can take and health, relying on private inspection many forms: setting regulations,providing companies or non-management financial incentives, or ensuring that employees.'' consumers have the information they need to drive the market. Government should assume a more When the Roosevelt administration appropriate and effective role: setting made home ownership a national priority, standards and imposing penalties on the government didn't build millions of workplaces that don't comply. In this way, homes or distribute money so families could OSHA could ensure that all workplaces are buy them. Instead, the Federal Housing regularly inspected, without hiring Administration helped to create a new kind thousands of new employees. It would use of mortgage loan. Rather than put down 50 the same basic technique the federal percent, buyers could put down just 20 government uses to force companies tokeep percent; rather than repay mortgages in 5 honest financial books: setting standards years, borrowers could stretch the payments and requiring periodic certification of the over 30 years. The government also helped hooks by expert financial auditors. No army to create a secondary market for mortgages, of federal auditors descends upon American helping even more Americans buy homes. businesses to audit their books; the As we reinvent the federal government, government forces them to have the.job we, too, must rely more on market done themselves. In the same way, no army incentives and less on new programs. of OSHA inspectors need descend upon corporate America. The health andsafety of American workers could be vastly Worker Safety and Health improvedwithout bankrupting the federal treasury. Thday, 2,400 inspectors from the The Labor Secretary already is authorized Occupational Safety and Health to require employers to conductcertified Administration (OSHA) and approved state self-inspections. OSHA should give programs try to ensure the safety and health employers two options with which to do so: of 93 million workers at 6.2 million They could hire third parties, such as

62 PUT'T'ING CusTomERs FIRST' private inspection companies: or they could pollution by more than the law requires. authorize non-management employeesitter Rather than dictating exactly which t raining and certification, to conduct t....chnok)gies industn should use to reduce inspections. In either case, OSHA woiiid set pollution. the government would set standards

inspection and reporting standards and and let the market handle the details. Ihe . conduct random reviews, audits, ind ,overnment could also assess fees based on the inspections to ensure quality. amount and nature of pollution emissions or \X lthin a year or two of issuing the new discharges. Fees could reflect the quality regulations, ( )SI -IA should establish a sliding toxicity; and other adverse characteristics of scale of incentives designed to encourage pollutants. workplaces to comply \X torksites with good l-he federal government has used this health, safety, and compliance records would approach befOre. In the I 970s, the be allowed to report less frequently to the Environmental Protection Agency (EPA) I,abo r I )epartment, to undergo fewer audits. distributed credits to companies that cut air and to submit less paperwork. OSHA could pollution and let them trade credits between also impose higher fines for employers whose different sources of their own pollution or sell health and safety records worsened or did not them to other companies located nearby. In improve. the I 980s. the EPA used a similar approach as it tqrced industry to remove lead from gasoline. Both efforts were successful: industry Environmental Protection met its targets, while spending billions of dollars less than otherwise would have been As governments across the globe have required. "[hen, as part of the 1990 Clean Air begun to explore better ways to protect the Act, the President and Congress agreed to give environment. they have discovered that credits to coal-burning electric power plants market mechanismsfees on pollution, tOr their allowable emissions of sulfur dioxide, pollution trading systems, and deposit-rebate to cut down on acid rain. Power plants that systems

71 63 I RONI RI I) TkPF N) REST I IS IN(. GOVI RN \ II IIA IL WORKS Br1.1 R & COs US LI SS

agencies, managers are hamstrung by subsidiaries, compete for new construction endless federal regulations that offer little and modernization funds that they would flexibility. Any savings they generate are use to create market-rate housing. The simply returned to the government. managers would manage this new housing Tenants enjoy even less flexibility. With free of most regulations, provided they met housing subsidies attached to buildings, not performance standards set by HUD. They people. the program's clients have no choice would rent to a mix of publicly subsidized about where to live. They, therefore, have and market-rate tenants. The rents of absolutely no leverageas customersover unsubsidized tenants would help to finance the managers. the subsidies of assisted tenants. With portable subsidies. publicly assisted Action:iuthorize the Deparnnort of tenants could look for housing wherever Housing and ("limn Development to they could find it. Rather than dependent create demonstration projects that free beneficiaries, t-orced to live where the managers from regulations and give government says, they would become tenants new ',talker powers, such as "paving customers," able to choose where to freedom of choice to move out of old live. Thus, public housing managers would public housin no longer have guaranteed tenants intheir buildings; they would have to compete for We want to let public housing them. authorities, through not-for-profit

Conclusion

We know from experience that American businessesand now penetrating monopolies do not serve the public sectorhas brought the issue of customers well. It is an odd fact customer service front and center. Some of American life that we attack monopolies federal agencies have already begun to harshly when they are businesses, but respond: the IRS, the Social Security embrace them warmly when they are public Administration, and others. But there is institutions. In recent years, as fiscal much, much more to be done. By creating pressures have forced governments at all competition between public organizations, levels to streamline their operations, this contracting services out to private attitude has begun to break down. organizations, listening to our customers, Governments have begun to contract and embracing market incentives wherever services competitively; school districts have appropriate, we can transform the quality of begun to give their customers a choice; services delivered to the American people. public managers have begun to ask their In our democratic form of government, customers what they want. we have long sought to give people a voice. This trendwillnot be reversed. The As we reinvent government, it is time we quality revolution sweeping through also gave them a choice.

64 7ti

Okr -1... Chapter 3 EMPOWERING EMPLOYEES TO GET RESULTS

Tike two managers and (five to each the same number oflaboirrs and let those laborers be Nita! in all respects. Let both managers rise equally early, go equally late to rest. be equally active, sober, and industrious, and vet, in the course of the year one of .them. without pushinz the hands that are under bhn inure than the other shall have perfOrmed infinitely more u'ork. George Washington

WIren Nature has work to be done, she creates 11(4011.W to (10 it.

Ralph Waldo Emerson

wo hundred years ago, Academy of Public Administration wrote George Washington not long ago, "The federal government now recognized the common manages ... some of the most importantand sense in hiring and complex enterprises in the world."' But it promoting productive does not manage them well. managersand taking Admittedly, "management" is a fuzzy authority away from unproductive ones. concept, hard to recognize or define. But One hundred wears ago, Emerson poor management has real consequences. . observed that we all share a common Money is wasted. Programs don't work. genius, ignited simply by the work at People aren't helped. 'Mat's what taxpayers hand. These American originals defined and customers see. the basic ingredients of a healthy, productive Inside government, had management work environment: managers who stifles the morale of workers. The "system" innovate and motivate, and workers who kills initiative. As Vice President Gore, are free to improvise and make decisions. responding to the concerns of Transportation Today, our federal government's executive Department employees, put it: branch includes 14 cabinet departments, 135 agencies and hundreds of hoards and One of the problems with a centralized commissions. These entities employ more bureaucracy is that people get placed in than 2.1 million civilians (not counting the these rigid attegm.ies, regulations bind Postal Service), and 1.9 million membeis of them, procedures bind them, the the military, spend S1.5 trillion a year, and, organizational chart binds them to the directly or indirectly, account for one third old ways of the past... The message over of our national economy'. Their tasks are time to...employees becomes: Dont try to both massive and difficult. As the National do something new hunt try to change

73 65 III FII it & COS I'SI.,ESS ROM III I) I \ Iti.StI IS ("RI \I! \I !Cs MI.\ I l' WOIMS

established procedures. Don't try to adapt Electric, Motorola, Harley-Davidson, and to the new circumstances your office or scores of leading corporations before they agency confronts. Because you're going to embraced a new management philosophy. get in trouble if ptt try to do things In the 1970s and 1980s, as technology differently."' began to revolutionize everything and global competitors began to take away Cutting red tape, organizing services market share, firms that had grown fat and around customers, and creating happy had to face the facts: This wasn't the competition will start to generate an 1950s anymore. environment that rewards success. Now, we These firms quickly discovered that must encourage those within government to economists can be wrong: More isn't always change their ways. We must create a culture better: better is better. One by one, they of public entrepreneurship. began to pursue a new goal quality and to reorganize their entire businesses around it. The quality imperative is simple: Do Our long-term goal isto change the very everything smarter; better; .faster, cheaper: It is not simple, however, to obey. It means culture of the federal government... A dismantling the old ways of doing business. government that puts people first, puts its The same tired command hierarchies that employees first, too. It empowers them, freeing continue to hind government are being scrapped daily by companies on the rise. In them from mind-numbing rules and their place, firms seek new ways to manage regulations. It delegates authority and and organize work that develop and use the responsibility. And it provides for them a clear full talents of every employee. They want everyone to contribute to the bottom line sense ofmissirn. that is, to produce goods and services that match customer needs at the lowest cost Vice President Al Gore and fastest delivery time. Speech to National Performance Review members The quality movement has spawned May 24, 1993 many proven methods and mantras, each with its loyal fans: management by results; total quality management; high-performance organization; business process reengineering. But changing culture is a lot harder than But the quest for qualityin performance, changing rules and regulations. An attitude product. and serviceunifies them all. of powerlessness and complacency pervades Government has recognized the quality the federal workplace. As one veteran of imperative. In 1987, the U.S. Department many government reform initiatives of Commerce instituted the Malcolm observed, "Changing government is a bit Baldrige National Quality Award. Now the like moving the town cemetery. It's much object of fierce competition, it recognizes harder to deal with the feelings it arouses private firms that achieve excellence by than with the relocation itself." pursuing quality management. In 1988, the Federal Quality Institute began awarding the Presidential Award for Quality to federal The Quality Imperative agencies that do the same. The Presidential Award criteria, modeled on Baldrige, set Of course, many thought that turning new standards for federal government General Motors around would be performance. The President should impossible. If vou talked to their employees, encourage all department and agency heads the same undoubtedly was true of General to manage with these criteria in mind.

66 74 EMPOWERING EMPLOYEES TO GET RESULTS

Changing the Culture: Power and people on the ground who do the work. Accountability This rewrites the relationship between managers and themanaged. The bright line Companies do not achieve high quality that separates the two vanishes as everyone simply 1w announcing it. for can they get is given greater authority over how to get to quality by hiring theservices of the their job done. roving bands of consultants who promise to But with greater authority comes greater turn businesses aroundovernight. They do responsibility. People must be accountable it by turning their entire management tOr the results they achieve when they systems upside downsheddingthe power exercise authority. Of course. we can only what to makedecisionsfrom the sedimentary hold people accountable if they know Livers of management and giving it to the is expected of them. The powerless know

The Federal Quality Imperative

The Presidential Quality Award sets forth potential and to pursue performance goals? Are you building and maintaining identify excellent seven principles to an environment forworkforce excellence government agencies: that increases worker involvement, education and training, employee Leadership: Are your top leaders and performance and recognition systems, and managers personally committed to employee well-being and satisfaction? creating and sustaining your organization's vision and customer focus? Does your Management of Process Quality: effort extend to the management system, Does your agency systematically and labor relations, external partnerships, and continually improve quality and the fulfillment of public responsibilities? performance? Is every work unit redesigning its process to improve quality? Information and Analysis: Do your data, Are internal and external customer- information, and analysis systems help you supplier relationships managed better? improve customer satisfaction, products, services, and processes? Quality and Operational Results: Are you measuring andcontinuously Strategic Quality Planning: Do you have improving the trends and quality of your short-term and long-term plans that products and services, your business address customer requirements; the processes and support services,and the capabilities necessary to meet key goods and services of your suppliers? Are requirements or technological you comparing yourdata against opportunities; the capacities of external competitors and world-class standards? suppliers; and changing work processes to improve performance, productivity Customer Focus and Satisfaction: Do improvement, and waste reduction? you know what your customersneed? Do you relate well to yourcustomers? Do you Human Resource Development and have a method to determine customer Management: Is your agency's entire satisfaction? workforce enabled to develop its full

75 67 I ROM RI D I.N. PE 1.0 RESULTS CREA I INC .\ GOVERNSI EN IIIIA I WORKS BETTER & COS FS LI.SS

they are expected only to obey the rules. accountable for producing results. Six steps, But with many rules swept away, what is described in this chapter, will start us down expected from the empowered? that road: The answer is results. Results measured as First, we must give decisionmaking the customer wouldby better and more power to those who do the work, pruning efficiently delivered services. If the staff in layer upon layer of managerial overgrowth. Second, we must hold every organization and individual accountable for clearly understood, feasible outcomes. Our bedrock premise is that ineffective Accountability for results will replace government is not the fault of people in it. "command and control" as the way we Our governmentis fill ofwell-intentiona manage government. Third we must give federal employees hard-working, intelligent peoplemanagers better tools for the jobthe training to and staff We intend to let our workers pursue handle their own work and to make decisions cooperatively, good information, excellence. and the skills to take advantage of modern computer and telecommunications Vice President Al Gore technologies. Reinventing Government Summit Fourth, we must make federal offices a Philadelphia, June 25, 1993 better place to work. Flexibility must extend not only to the definition of job tasks but also to those workplace rules and conditions an agency field office are given greater voice that still convey the message that workers over how their workplace and their work are aren't trusted. organized, then the customer deserves to Fifth, labor and management must forge spend less time waiting in line, to receive a a new partnership. Government must learn prompt answer and even-thing else we a lesson from business: Change will never expect from a responsive government. happen unless unions and employers work So how do we change culture? The together. answer is as broad as the system that now Sixth, we must offer top-down support holds us hostage. Part of it, outlined in for bottom-up decisionmaking. Large chapter 1,lies in liberating agencies from private corporations that have answered the the cumbersome burden of over-regulation call for quality have succeeded only with the and central control. Part of it, detailed in full backing of top management. Chief chapter 2, hinges on creating new incentives executive officersfrom the White House to accomplish more through competition to agency headsmust ensure that and customer choice. And part of it everyone understands that power will never depends on shifting the locus of control: flow through the old channels again. That's empowering employees to use their how GE did it; that's how we must do it as judgment; supporting them with the tools well. and training they need; and holding them

68 76 EMPOWERING EMPLOYEES TO GET RESULTS

STEP 1: DECENTRALIZING DECISIONMAKING POWER To people working in any large An internal memo written by a organizationpublic or private- manager at the US. Department- -headquarters- can be a dreaded of Energy (Rocky Flats' plant word. It's where cumbersome rules and recommended a new safety procedure fir regulations are created and good ideas are "the replacement of a light bulb in a buried. Headquarters never understands criticality beacon." The beacon, similar problems. never listens to employees. When to the rei,oh,ing red lamp atop a police the Office of Personnel Management can warns workers of 'nuclear accidents. (OPN1) surveyed federal employees. fewer Ilse memo said that the job Anal. I hike than half expressed any confidence in at least -4.3 people or,er 1.08 7 1 holm to supervisors two layers above them--or any replace the light. It added that the sate confidence at all in their organization, job used to take 12 workers 4.15 hours. overall structure.' Everyone knows the truth: NIanagement lhe memo called for a planner to meet too often is happily unaware of what occurs with six others at a work-control at the front desk or in the field. In fact, its meeting; talk with other workers who the people %vim work closest to problems hate done the job belbre; meet again; get who know the most about solving them. As signatures from five people at that work- one federal employee asked Vice President control meeting; get the project plans Gore. "If we can't tell what we're doing right approved by separate officials overseeing - and wrong, who better can: safety logistics, waste management and The Social Security Administration's plant scheduling; wait for a monthly Atlanta field office has shown the wisdom criticality-beacon test; direct electricians of empowering workers to faill their to replace the bulb; and then test and mission. Since 1990, disability benefit verify the claims have risen 40 percent. keeping folks in the Atlanta office busy. So workers created a reinvention team. 'Ihey quickly realized that if they asked customers to bring along medical records when filing claims, workers could reduce the time they I hadseven teams of people each restructure spent contacting doctors and requestingthe our business... After the third presentation, my records. That idea alone saved GO days on executive assistant...said to me, "Bill this stuff the average claim. Even better, it saved taxpayers S351,000 in 1993, and will save is fabulous. In fact, we never would have half a million dollars in 1994, The same thought of these things." workers also found a better, cheaper way to process disability claims in cases reviewed by But you've got to trust. People don't come administrative law judges. Instead of asking to work with the intent of screwing it up judges to send them written decisions, they every day. They come here to make itbetter. created a system for judges to send decisions electronically. Its quicker. and it eliminates Bill Goins, President paperwork. too.' Xerox Integrated Systems Operations, Now here's the other side of the coin. A Reinventing Government Summit, Oenver Post reporter recently uncovered this June 25, 1993 bureaucracy-shaking news: It takes +3 people to (unge a light bulb.

77 69 RNmEN II 11. ROM 1211) Ivi.Fo RI st1 (IREA rim; Govi 1 WORKS BE ril R COSI'', LESS

This example drives the point home: lino forth from the machine's central processor. mama rules have created too manylavers of It's like running six errands on Saturday, but supervisors and controllers who, however going home between each stop. Even at the well-intentioned, wind up "managing" speed of light, that takes time. In massively simple tasks into complex processes. They parallel computers, hundreds of smaller waste workers' rime and squander the processors solve different elements of the taxpayers money. same problem simultaneously. les the Decentralizing the power to make equivalent of a team of six people each decisions will energize government to do deciding to take on one of the Saturday everything smarter, better, faster, and errands. cheaperif only because there will be more America's best-run businesses are realizing hands and heads on the task at the same enormous cost savings and improvingthe time. Vice President Gore likens the effect quality of their products by pushing of decentralization to the advent of "massive decisions down as far as possible and parallelism"--the technology used in the eliminating unnecessary management world's fastest supercomputers. Standard layers. The federal government will adopt computers with central processors solve this decentralized approach as its new problems in sequence: One by one, each standard operating procedure. This element of information travels hack and technique can unearth hundreds of good ideas, eliminate employee frustration, and raise the morale and productivity of an entire organization. Roam on the Range If offered greater responsibility, will employees rise to the task? We are confident Ranthers, allowed to graze their cattle in they will. After all, few people take up federal work for the money. Our interviews Missouri's Mark Twain National Forest, with hundreds of federal workers support regularly muse move their herds to avoid over- what survey after survey of public service grazing any plot of land. Until recently, ranchers workers have found: People want had to apply at the local Forest Service office for challenging jobs. Yet, that's exactly what our rule-bound and over-managed system permits to move the cattle. Typically, the local too often denies them. office sent them on to the regional office for approval, which, in some cases, sent them on to the Action: Over the next five years, the national office in Washington. Approval could take executive branch will decentralize decisionmaking, and increase the average up to 60 dayslong enough, in a dry season, to span of a manager:s. contro1.8 hurt the forest, leave the cows hungry, and annoy the rancher. Currently, the federal government averages one manager or supervisor for Thanks to an employee suggestion, the local every seven employees.' Management staffer now can settle the details of moving the herd expert Tom Peters recommends that well- directly with the rancher. If the rancher comes in performing organizations should operate in by 10 a.m., the cattle can be on the move by noon. a range of 25 to 75 workers for even' one supervisor.'" One "best company" puts Ranchers are happier, cattle are fatter, the Peters principle to shame: "Never have so environment is better protectedall because local many been managed by so few," Ritz- workers now make decisions well within their Carlton Vice President Patrick Merle told Vice President Gore at the Philadelphia judgment. Summit. "There's only about 12 of us back in Atlanta for 11,500 employees. And it

70 76 EMPOWERING EMPLOYEES TO GET RESULTS really starts with passionate leadership. techniques to decentralize. ,Mane focus on Working toward a quality government passing decisions on to the work teams that means reducing, the power ofheadquarters deal directly with the customer. Some have vis-a-vis field operations. As our reinvented produced impressive results, both in government begins to liberate agencies from productivity and management delavcring. over - regulation, we nolonger will need The Internal Revenue Service's HartfOrd 280,0(X) separate supervisory staff and district office slashed the time required to 420,000 -systems control staff to support process a form on"currentlynon- them.Instead, we will encourage more of collectible- taxes from 11.6 days to 1.4 our 2.1 million federalemployees to days. l'hen it replaced time-consuming case become managers of their own work. reviews with an automated case Put simply, all federal agencies will management system and began usingthe delegate. decentralize, and empower managers time to upgrade employees. skills. employees to make decisions. This will let Delinquent tax dollars collected rose by 22 front-line and front-office workers use their percent. The office chose not totill vacant creative judgment as they otter service u) management positions, investing partof its customers and solve problems. taff- savings in new technology to boost As part of their performance agreements productivity further. Eventually, it cut with the President, cabinet secretaries and overall case processing time front 40 to 21.6 weeks.. agency (TOs will set goals forincreasing the span of control for every manager. (See At the Robins Air Force Base, the 1926th Step 3.) The federal government should Communications-Computer .Systems seek to double its managerial span of Group cut its supervisory staff in half by control in the coming years. organizing into teams.'.` An Agriculture Some employees may view such pruning Department personnel office that converted as threatening--to theirjobs or their to self-managed work teamsbeefed up chances for.promotion._It is true that the customer satisfaction and now usesonly size of the federal workforce will decrease. one manager for every 23employees. At the But our goal is to make jobs meaningful Defense Logistics Agency, self-managing and challenging. Removing a laver of teams in the Defense DistributionRegion oversight that adds no value to customers Central eliminated an entire level of does more than save money: It management. saving more than 52.5 demonstrates trust in our workers. It ofrers million a year..- In 1990. the Airways employees in dead-end or deadly dull jobs a Facilities Division of the Federal Aviation chance to use all their abilities. It makes the Administration maintained approximately federal government a better place to work 16,000 airspace facilities, with roughly which will in turn make federal workers 14,000 employees. Today its workforce is more productive. organized in self-managed teams instead of As private companies have h)und, the units with supervisors. They now maintain key to improving service while redeploying more than 26.000 facilities with only 9,0(X) staff and resources is thinking about the employees.''' organization's staffing and operating needs Other decentralization and delavering from the perspective of customer needs. plans are in the works. After a successfill \X'hat does each person's task add in value pilot program in 11 field service sites, the to the customer% The PostalService has Department of Veterans Affairs is developed a single criterion: It asks, "Do recommending an agencywide effort.' they touch the mail:- Where possible, other Over the next 5 years, the Department of agencies should develop similar simple. -lousing and Urban Development (HUD) easy-to-understand criteria. plans to convert HUD's field structure from Pioneering federal offices have used the three to two levels, eliminating the regional full variety of quality management offices. HUD will free its five assistant 14051 10 I) I \ VI 1010'441 1` 4 ZI II \ (.1 (.t)\ I12 \ \II \I 11111 \\.()R1.*, l31I H R & 1.ISS

secretaries to organize their Own attic:6°ns interesting jobs, with better career ladders in the field. It will transfer many of its and better access to managers. HUD application and loan processing functions believes its restructuring effort will improve to private firms. While letting staff customer service while saving SI57.4 attrition dictate staff reductions million in personnel and overhead costs.' HUD promises no layoffsI -IUD plansto retrain and redeploy people into more

STEP 2: HOLDING ALL FEDERAL EMPLOYEES ACCOUNTABLE FOR RESULTS

t's easy to understand why federal education programs evenas student employeesincluding the hundreds performance sinks. It enrolls jobless people who aired their deep frustrationsto the in training programs that teach by the National Periiirmance Reviewwouldcare hook. but places few graduates in well-paid about empowerment. It adds new, positive jobs. dimensions to their jobs. A recent management survey of the But why should taxpayers or social largest 103 federal agencies sketches in stark security recipients care: Iaxpavers arent relief this lack of focuson real results. Two- interested in what rules bureaucracy thirds of the agencies reported that they follows. But they do care. deeply, about had strategic plans. But only nine said they how well government serves them. They could link those plans to intended results.'' want education programs to give young In other words, many had planned, but few people basic skills and teach them howto knew where they were going. That'sa bit think, anti - poverty programs that bring the like trying to steer a ship by lookingat its unemployed into the economic mainstream wake. As a result,some of our worst for good, anti-crimeprograms that keep examples of "waste" arenot rooted in criminals off the streets, and environmental corruption or incompetence, but rather in programs that preserve clean air and water. the simple lack of knowing whatwe are In other words, they want programs that actually trying to accomplish. Asone work. despairing federal employee toldus, But management in government does "Process is our most important product." not judge most programs by whether they Recommendations by the National work or not. Instead, government typically Performance Review aim to revolutionize measures program activityhow much it our method of navigation. "Today." Vice spends on them, or how many people it has President Gore told one departmental assigned to staff them. Becausegovernment meeting, "all we measure is inputs. We focuses on these "inputs" instead of real don't measure outputsand that'sone of results, it tends to throw goodmoney after the things we're going to change had. It pours more dollars into the old throughout the federal government." Measuring outputs is easy in principle. It means measuring how mans' unemployed Whatyou do thunders so loudly, I cannot people get jobs, not howmany people look tor help at local Employment Service hear what you say to the contrary. offices. Or it means measuring howmany People received their social security checks Ralph Waldo Emerson on time, not how many checks were sent out from a local office. "Outputs" are, quite simply. measures of howgovernment . EMPOWERING EMPLOYEES TO GET RESULTS programs and policies affect their Lustomers. The importance of pursuing the correct measures cannot be underestimated. Itmay seem amazing to says but like many \s Holt. an Oregon Department or big organizations, ours is primarily dominated Transportation employee who has worked by considerations of inputhow much money with the ground - breaking Oregon Progress Boardour nations first statewide do we spend on a program, how many people experiment in comprehensive performance do you have on the staff what kind of accountabilitycautions: "Our focus has occurred through our indicatom not regulations and rules are going to govern it; through our strategic plans.'" and much less by outputdoes this work, is it changing people's lives for the better? Implementing the Government Performance and Results Act President Bill Clinton Remarks at the signing of the Government To its credit. Congress has begun to Performance And Results Act recognize this need. In July 1993, it passed August 3, 1993 the Government Performance and Results Acta pivotal first step toward me.buring whether federal programs are meeting their intended objectives. T he act requires that at goals. The Office of Nlanagenent and least 10 federal agencies launch 3-year pilot Budget may exempt very small agencies, projects, beginning in fiscal 1994, to and those agencies that cannot easily develop measures of progress. Each agency measure their outcomes will use qualitative pilot will develop annual performance plans rather than quantitative goals and that specify measurable goals. They then measurements. After all, any agency can, at must produce annual reports showing how the very least, survey their customers and they are doing on those measures. At least report the rating they are given. five pilots will also test "managerial Setting goals is not something that flexibility waivers--which exempt them agencies do once. It is a continual process in trom some administrative regulationsto which goals are raised higher and higher to help them perform even better. In exchange push agency managers and staff harder and for greater flexibility, they must set higher harder to improve. As the old business performance targets. This is exactly the adage states, -If you're standing still. you're process of measured deregulation--we falling behind.- agree to deregulate you if you agree to he That is why we strongly support the act. held accountable--that must he the basis But agencies should not wait until fiscal of an empowered and accountable 1999 to start integrating performance government. measurement into their operations. Nor At the beginning of fiscal 1998. after should they limit themselves to the learning from the pilot programs. all federal minimum mandates of the new law. The agencies must develop 5-year strategic President. through OMB, is encouraging planslinked, this time. to measurable even' federal program and agency tobegin outcomes. By the next year, even- agency strategic planning and performance will he crafting detailed annual performance measurement. whether it is ~elected as a plansthat is, plans that describe w hat they pilot or not. intend to achieve, not plans that detail how many pencils they will buy or people they will hire. And they will have to reoort their successes and failures in meeting those

73 'RomRED I roRIst.EisCut INc, I III NI. WORKS BETTER & COS I S

oversight to help craft an effective system, and encourage agencies to improve ifgovernment is to become customer oriented, measures that are clearly ineffective. 01\4B will negotiate stronger goals for agencies then managers closest to the citizens must be that set their sights too low. empowered to act quickly. Why must every Agencies will gradually build decision be signed-off on by so many people? If performance information into their own budget, guidance and review procedures, program managers were instead held into their strategic and operational plans, accountable for the results the.,, achieve, they and into revised position descriptions for their budget, management, and program could be given more authority to be innovative analysts. Nothing, however, will replace peer and responsive. pressure as agencies vie for performance awards or seek public recognition tor their Senator William V. Roth, Jr. achievements. Congressional Record, July 30, 1993 Action:Clitriti, the objectives of jederat. 1

Action: .:1/ di:xi/ties will begin Many agencies will be unable to set clear dere/op/mi.-and me,Isurabb: measurable goals until Congress simplifies objectives and reportinresults.-- their responsibilities. Programs are bound by multiple, often conflicting, legislative In early 1994in time to prepare the objectives. The complex politics of passing fiscal 1996 budgetOMB will revise the enabling legislation and then negotiating budget instructions it gives agencies to annual appropriations forces some programs incorporate performance objectives and to be all things to all people. results to the greatest extent possible. For example, a training program targeted Agencies will start measuring and reporting at unemployed steel workers soon is on their past goals and performance as part required to serve unemployed farm workers, of their 1996 budget requests. The OMB the disabled, and displaced homemakers. instructions, along with executive office Originally, the program's purpose may have policy guidance, will guide agencies as they been to refer people to jobs. But develop hill-fledged goal-setting and congressional maneuvers first force it to performance-monitoring systems for the offer them training; then to help them find first time. transportation and daycare. All these are At the outset, managers may feel important activities. But, by now, the unprepared to set reasonable performance original appropriation is hopelessly targets. Some will lack any program data inadequate, reporting requirements have worth its salt on which to base any future multiplied geometrically along with the goals or performance projections. Others, multiplicity of goals, and the program is not overwhelmed with "input indicators about simply unmanagedit's unmanageable. If program staffing and spending, will find it agencies are to set measurable goals for their difficult to figure out whetheror how programs, Congress must demand less and those measures directly relate to achieving clarih' priorities more. desired outcomes. Agencies will start In the private sector, leaders do not preparing themselves ,by reallocating enough simply drop goals on their organizations resources toward performance planning and ftom above. Hewlett-Packard, Microsoft. measurement over the long term. Xerox, and others involve their full OMB will help. Its budget analysts will workforccs in identifying a few goals that be trained to provide feedback and broad have top priority, and then demand smaller

S2 EMPOWERING EmPLOYEES TO GET RESULTS work teams to translate those overall goals these countries say that these agreements into specific team measures. This process have improved organizationalyerformance enables the people directly responsible tor more than any other aspect of their meeting the goals to help set them. h also reinventing government efforts. In the ensures that every part of an organization I.'nited States, mans' local governments do aims at the same goals, md that everyone much the same: In Sunnyvale, California, understands where they fit in. It may seem a managers can earn bonuses of up to I () time consuming process, but boats travel percent if their agencies exceed performance much taster when everyone is pulling their targets. oar in the same direction. With a new joint spirit of accountability. Action: f he executive branch plans to work with aureelhelltS With :ongress to clarity program goals and t."Yhey objectives, and to identitY programs where lack of clarity is making it difficult to get Past efforts to institute management by results. objectives have collapsed under the weight of too many objectives and too much reporting. The President should craft Holding Top Management agreements with cabinet secretaries and Accountable agency heads to focus oil the administration's strategy and policy objectives. These NX'hen General Eisenhower took agreements should not "micro-manage" the command of the Allied Expeditionary Force work of the agency heads. They should not in World War II, he was given a mission attempt to row the boat. .They should set a statement that clearly 'elineated goals for course. his vast organization of more than a million These agreements will begin with the top and a half men and women: "You will 24 agency heads. In fact, Secretaries Mike enter the continent of Europe and, in Espy' at the Agriculture Department and c-nunction with the other united nations, Henry Cisneros at the Department of undertake operations aimed at the heart Housing and Urban Development, as well of Germany and the destruction of her as Roger Johnson at the General Services armed forces.- .Administration (GSA) and Administrator_). In 1%1. President Kennedy gave NASA Brian Atwood of the Agency for an even clearer mission: Put a man on the International Development, are already moon and return him safely to earth by the working with their top managers on end of the decade. As Vice President Al agreements. ( ;ore told his audience at a meeting with Not everyone will welcome outcome Veterans Affairs Department employees: measures. People will have trouble "There has to be a clear, shared sense of developing them. Public employees mission. There have to be clearly generally don't focus on the outcomes of understood goals. There have to be their work. For one thing, they've been common values according to which conditioned to think about process: tor decisions are made. There has to be trust another, measures aren't always easy to placed in the employees who actually do develop. Consequently, they tend to measure the work. their work volume, not their results. If they In Great Britain, Australia, and New are working hard, they believe they arc doing Zealand, many department and agency all they can. Public organizations will need heads are appointed for limited terms and the several years envisioned under the given performance agreements. Their Government Performance and Results Act reappointments depend on achieving to develop useful outcome measures and measurable outcomes. Senior officials trom outcome reporting.

83 FROMRED r roEst-t.rs 011.111NC. GOVI RNMI N I11111 WORKS iIFT II R & COS I S LLSS

Measuring Outcomes

outcome-basedmanagement is new in the the board stated, "will have the best chance of public sector. Some U.S. cities have achieving an attractive future if Oregonians developed it over the past two decades; some agree clearly on where we want to go and then states are beginning to; and foreign countries join together to accomplish those goals."25 such as Great Britain, Australia, and New The legislature approved the board's Zealand are on their way. recommended 160 benchmarks, measuring Sunnyvale, California, a city of120,000in how Oregon is faring on three general goals: the heart of the Silicon Valley, began the exceptional individuals; outstanding quality of experiment 20 years ago. In each policy area, life; and a diverse, robust economy. Seventeen the city defines sets of "goals," "community measures are deemed short-term "lead" condition indicators," "objectives," and benchmarks, related to urgent problems on "performance indicators." "In a normal which the board seeks progress within 5 years. political process, most decisionmakers never They include reducing the teen pregnancy spend much time talking about the results they rates, enrolling people in vocational programs, want from the money they spend," says City expanding access to basic health care, and Manager Tom Lewcock. "With this system, for cutting worker compensation costs. the first time they understand what the money Another 13 benchmarks are listed as "key" is actually buying, and they can say yes or fundamental, enduring measures of Oregon's no."24 vitality and health. These include improving Sunnyvale measures performance to reward basic student skills, reducing the crime rate, successful managers. If a program exceeds its and raising Oregon's per capita income as a objectives for quality and productivity, its percentage of the U.S. average. manager can receive a bonus of up to 10 Barbara Roberts, today's governor, has percent. This generates pressure for ever-higher translated the broad goals and benchmarks into productivity. The result: average annual specific objectives for each agency. This year, productivity increases of four percent. From for the first time, objectives were integrated 1985 to 1990, the city's average cost of service into the budget--giving Oregon the first dropped 20 percent, in inflation-adjusted performance-based budget among the states. dollars. According to a 1990 comparison, Great Britain has instituted performance Sunnyvale used 35 to 45 percent fewer people measurement throughout its national to deliver more services than other cities of government. In addition, the government has similar size and type. begun writing 3-year performance contracts, At least a half-dozen states hope to follow in called "Framework Agreements," with about Sunnyvale's footsteps. Oregon has gone half its agencies. These agencies are run by chief farthest. In the late 1980s, Governor Neil executive officers, many from the private sector, Goldschmidt developed long term goals, with who are hired in competitive searches and then significant citizen input. He set up the Oregon negotiate agreements specifying objectives and Progress Board, comprising public and private performance measures. If they don't reach leaders, to manage the process. The board their objectives, the CEOs are told, their developed goals and benchmarks through 12 agencies' services may be competitively bid statewide meetings and written materials from after the 3 years. over 200 groups and organizations. "Oregon,"

-6 8 4 EMPOWERING EMPLOYEES TO GET RESULTS

Ultimateh% no one can generate results we have created three different award without knowing how the "bottom line" is systems, each administered by a different defined. Without a performance target. organization. 'rile Federal Quality Institute managers manage blindly, employees have (FQI) administers the Presidential Award no guidance, policvmakers don't know for Quality: the President's Council on what's working, and customers have no idea Management Improvement administers the where they may he served best. if tor Award for Management Excellence: and the example, jobless people know how well Office of Personnel Management awards graduates of local training programs fare the Presidential Quality and Management when looking for work, they can better Improvement Awards for tangible savings to choose which new careers and programs the government of more than 5250,000. offer the best prospects. Informed The administration will issue one set of consumers are the strongest enforcers of presidential awards for quality. The Baldrige accountability in government. Award Office of the National Institute for Standards and Technology will combine the Action: The wittily/is/nu-ion will issue existing awards into a new set of Baldrige one set of Baldrige Alum pis lbr quality in Awards for public serviceto go along with the Priem' govel-nment.-" its private sector award. 'lie new award will recognize agency and work unit quality For 'cars. the executive branch has taken initiatives and ideas, based on program steps to recognize and support good performance, cost savings, innovation, and performance. In typical fashion, however, customer satisfaction.

STEP 3: GIVING FEDERAL WORKERS THE TOOLS THEY NEED 'TO DO THEIR JOBS

Americans today demand a more acquire and use them. We must change responsive, more humane that. We must give workers the tools the' government that costs less. Their need to get resultsthen make sure they expectations are neither it rational nor use them. whimsical. Over the past 20 Years, the entire way we do things. make things, even contact one another, has changed around us. Businesses have no guarantees. no Employee Training captive markets. 'To compete. they must make things and deliver service better and After two decades of organizing for faster, and get their message out sooner. No quality, business knows one thing for sure: one benefits more than customers. It's no Empowered people need new skillsto wonder these same people now turn to work as teams, use new computer software, government and ask. "Why can't you do interpret financial and statistical things better too:- information, cooperate with and manage Transforming our federal government to other people, and adapt. Indeed, business do better will mean recasting what people talks about a new breed of "knowledge do as they work. They will turn from bosses worker"people who understand that. into coaches, from directors into throughout their careers, their most negotiators, from employees into thinkers important task is to continue learning and and doers. Government has access to the applying new knowledge to the challenge at same tools that have helped business make hand. Knowledgeable workers are our most this transformation: it's just been slower to important source of progress. They are,

85 77 . 4051 III 1) I PII ,) HI SII I \ 4 1 (,,,, I 11I`X'oitI.s 31 I ; ( I s I ss

quite simply, the currency of 2Ist century watchiK the role of /e al commerce. secretaries chancy. Less and less of the Business teaches us that ongoing training typical secretarial duties are being for every worker is essential tor pop' rmedlsimply because the attorneys organizations to work well. Not surprisingly, do a lot of their 0101 drafting of the federal governmentunder spends on documents... However; for a secretary to training and education. just as it does on ,tart to move into a assistant most other productivity-enhancing position... or into a paralegal role, is investments. In 1989. the National frowned upon... ;Is far as twining goes Commission on the Public Service. headed it impossible... That prevents a lot of by Paul Volcker, estimated that while people lrom...moving into new jobs that leading private firms Nnend 3 to 5 percent of are ro be of more benefit to the their budgets on training, retraining, and department... le lost a good number upgrading employee skills. the federal of:cam-dries who have moved elsewhere, government spends less than one percent.=- because they cannot go any further here.-2' And the little we do spend is not always allocated wisely. A wed-promoted 4-day Employees at the top rung, too. must training seminar packaged to appeal to keep learning. Managers and executives face federal agency managers may seem like a the same hurdl.:s in keeping up with good deal. It is not. however. always what technology as do front-line workers. the agency needs. The \ 'olcker Commission Technicians must stay up to dare with concluded: system advances and new techniques. The growing band of federal export and trade Federal training is sulk' rinzfivin an personnel must learn more than foreign identity crisis. Agencies are not sure what languagesthey need to master the they should train for (short term or long language of negotiation as well. Indeed, term), who should get the lion's share of employees in the Office of the U.S. Trade resources (entry level or senior Representative currently receive no level)...:ind whether mid-career systematic training in negotiation skills or education is of value...Career paths are the cross-cultural styles and patterns they poorly designed executive succession is are likely to encounter in their worka accidental and .unplanned, and real- situation the office is now planning to time training for pressured managers is correct.'" virtually non-existent. At both the career Perhaps most important, training is the and presidential let.el, twining is all-too- key that unlocks the power of bottom-up often ad hoc and self-initiated 2' decisionmaking. At the Reinventing Government Summit, General Electric Perhaps most striking is the paucity of Executive Vice President Frank Doyle career training for people on the lowest detailed the GE experience: "We had to rungs of the civil service ladder, or for people educate our entire workforce to give them without the leg-up of university degrees. the tools to become meaningfully involved These valuci employees may have the most in all aspects of work. Empowerment...is a tenure in an office. They may see and know disorderly and almost meaningless gesture evenThing. Frequently. they are indispensable, unless people doing the actual work are because only they know how the system given the tools and knowledge that self- worksand how to work the system. direction demands." Unfortunately, their abilities are rarely During the National Performance rewarded, despite their desire to advance. Review process, almost every one of the One staffer in the Justice Department's agentx teams identified a specific learning Civil Division alerted Vice President Gore need critical to their agency's quality to her quandary: improvement and mission. In addition,

66 EMPOWERING EMPLOYEES TO GET RESULTS several common training concerns demand information technology in their jobs. If government-wide action. business is any guide, our government reinvention efforts will only quicken the

Action: I _1he adMilliSITatiOn Will (Tani trend. Pen and paper exercises keep moving agencies the flexibility to finance nytining to the screen. Literal files now form needs.'2 database records. Video- and computer- based courses make learning possible Leading corporations view training as a anytime, anywhere. Money no longer strategic resource, an invesnnent. Federal changes h. nds; it's transmitted digitally. managers tend to view it as a cost. So in People not only talk, they "message." A government, worker training isn't even meeting of the minds can take place included in most budget estimates for new without the bodies present. systems or programs. 'Ibis is puzzling and Other chapters discuss how we will speed quite short-sighted, since new workplace the procurement process for technology and innovations, like advanced software, won't how we will deploy technology, to alter what transform employee productivity unless we do and how well we do it. Here, we those employees know how to use them. want to stress that much of the federal Although training may be the best and least workforce lacks the training and costly way to improve worker performance, background to use advanced information government executives view it as a "quick technologies. fix,unworthy of any planning effort. Compared to the private sector, the Perceptions are changing, however. federal government invests few dollars and Today's management literature is full of talk scant time in technology, training.34 Federal about the value of on-the-job-training, agencies provide insufficient incentives to computer-based instruction, expert systems, motivate their workforce to seek technology work exchange, mentors and other tools for training, scarce opportunities to obtain learning. Since 1992, OPM has been trainingeven when it's desired and steering agencies toward more necessaryand rarely, incorporate comprehensive training initiatives. technology training in the strategic We will grant agencies a substantial planning process. The longer we wait. the portion of the savings they realize from farther behind we fall. decentralizing staff and reducing operating This foot-dragging costs the taxpayer costs (see chapter 1) to invest in worker dearly. We do things the old way, not the training, performance measurement, and cheaper, more efficient way. Or we start henchmarking. doing things the new way, but we don't go Budget directives further complicate an far enough: We buy computers for our agency's ability to train workers effectively, workers, but not the training to use them particularly when its own budget office, properly, so the software and hardware OMB, or Congress cut line items for investments are wasted. We invest in new employee training. Such over-specified systems, and our people cant make them reductions deny employees the access to work. skills they need to be productIve, to advance Training should begin with top in their careers, and to adapt to new nontechnical managers, to help them focus technology. on uses, management, planning, and acquisition of state-of-the-art information Action: The federal government will technology. By May 1994, OPM and GSA upgrade information technology training will jointly develop and administer fbr employees.'' information technology training for non- technical managers and presidential Even' year, more and more federal appointees. The New York City workers must use computer-based Department of Personnel, already in the

87 79 FHA 1 WORKS BE 1 ROVaI)Im10 10 511 1,, CR1 \II\ 1,051 RNM1xr rTER & Costs Liss

technology training business, offers a useful Action:Eliminate narrow restrictions model of monthly halt-day sessions for on employee training to helpdevelop a executives covering ten topics: strategic mnitrskilled workforce:" planning, reengineering implementing systems, electronic mail, video conterencing, The Government Employees Training voice-enhanced technologies, geographic Act (GETA), which authorizes agencies to information systems. database management, manage and determine theirtraining needs, imaging, and multi-agency and defines training as a tool for "increasing inspection systems. Our effort will help economy and efficiency ingovernment." every senior manager earn a certificatethat The rules written behind this 1958 wording signifies his or her level of technology severely limit how agencies can use training competency. Parallel training and today. Training too often is ad hoc and certification efforts will target Senior seldom linked to strategic or human Executive Service members and information resource planning. Managersgenerally are resource managers. not able to get the information to Anyone who has grappled with determine the return on their training comouterstrom the basics of word investment. Even worse, existing restrictions processing to the complexity of expert dictate that any training be related to an wstemsknows that we often learn best employee's official dutiesthus ensuring how to use software by finding a technology that our Justice Department secretary does "pal: someone who knows the ins and outs not become a paralegal.These rules keep of a particular software application and is federal employees single-skilled in a multi- willing to share that knowledge. To spread skilled world. information technology training and use in By early 1994, OPM will draft legislation the entire federal workforce, the existing to amend GETA on threefronts. OPM will Federal Information Resources Management redefine the objective of federal training as Policy Council will motivated agencies the "improvement of individual and set up a program ofof collegial assistance for a organizational performance." It will relate wide range of technology applications. We the use of training to achieving an agency's will tap the cadre of techno-proficient mission and performance goals, not to a individuals spread across the federal worker's official duties. And OPM will seek government to provide occasional on-line to end the distinction between government help or personal assistance on demand to and nongovernment training, giving public their struggling colleagues. employees access to the best training services Finally, starting late in 1993, new available, no matter who provides them. contracts for technology acquisitionor Clarihing the purpose of training in those in early stages must include a GETA will reinforce the need to use provision for training. If agencies work training to improve performance and together, they can cut such training costs produce results. Removing the distinction dramatically. When .Texas contracted with between government and non-government tour statewide technology training firms to training will deregulate the in-government train state employees, it cut the price to S60 training monopoly, introducing to S110 a day per worker for a wide range competition that will improve the quality of of skills. An even larger customer, the learning opportunities for federal federal government should he able to land employees. And linking training to an an even better bargain. agency's mission will ease employees efforts to become adept ar all theskills they need as empowered workers. We urge Congress join in the quality effort by passing these important amendments early in 1994.

80 EMPOWERING EMPLOYEES TO GET RESULTS

Management Information Systems We all know the potential costs of lagging systems: 'They contributed to the Management isn't about guessing, $300 billion savings and loan bailout,'`( $47 about knowing. Those in positions of billion in nontax delinquent debt, $3.6 responsibility must have the information billion in student loan defaults, and so on. they need to make good decisions. Good Fortunately, the process of updating our managers have the right information at their management information systems has fingertips. Poor managers don't. begun. In 1990, Congress passed the Chief Good information comes from good Financial Officers (CFO) Act.'`" It information systems. Management designated an OMB deputy director as the information systems have improved in federal governments chief financial lockstep with even advance in the management officer. The Office of Federal telecommunications revolution. New Financial Management was charged with management information systems are establishing financial management policies transforming government, just as they have across the government and monitoring business, in two ways. They can make agency audits. The act also created chief government more productivethe benefit financial officers in 23 agencies. The OMB we discuss in this chapterand let us deputy chairs a CFO Council to deal with deliver services to customers in new ways, improving financial management across which we take on in chapter 4. Indeed. government. today's systems have enabled businesses to But we need to do moreand quickly. slim down data processing staffs, while giving more employees access to more Action: The executive branch will create accurate data. This shows up on the bottom a coherent financial management system, line. If federal decisionmakers are given the clariljl responsibilities, and ;wise the same type of financial and performance standards for financial officers.'" information that private managers use, it too will show up on the bottom lineand Vastly improved financial management is cut the cost of government. critical to the overall effort to reform Sheer size alone would make the federal government. First, it will save taxpayers government difficult to manage, even under money. Trillions of dollars flow through the the best of conditions. Unfortunately, federal government in any year; even a small federal employees don't work under the best improvement in managing those hinds of conditions. Indeed, when it comes to could recover billions. Second, we need financial information, mans' are flying accurate and timely financial information if blind. It's not for lack of staffing: Some managers are to have greater authority to 120,000 workersalmost 6 percent of run federal agencies, and decisionmaking non- postal service civilian employees moves to the front lines. Greater perform budget, accounting, auditing, and responsibility requires greater accountability, financial management tasks. 3' But when or the best-intentioned reforms will only ON1B surveyed agency financial reporting create new problems. Finally, better systems last year, it found that one-third financial management will present a more were more than a decade old, and only 6 accurate picture of the federal budget, percent were less than 2 years old. One- enabling the President, Congress, and third failed to meet Treasury and ()NIB agency leaders to make better policy reporting standards. TWo-fifths did not decisions. meet their own in-house reporting By the end of 1993, OMB and lfeasury standardsmeaning they did not provide will sign a fbrmal agreement to clarify the information managers wanted. And their respective policvmaking and more than hallsimply lacked the computer implementation roles, to eliminate power to process the data being entered. regulatory confusion and overlap for their

8i 81 FROM RED CAPE ro RESULTS CREATING A GOVERNMENT CHAT WORKS BETTER & COSTS LESS

governmental customers. OMB, working standards of the federal government do not with Treasury and the CFO Council, will accurately disclose the current and probable charter a governmentwide Budget and future cost of operating and investment Financial Information Steering Group to decisions, including the fixture needs for oversee the stewardship of financial cash and other resources." In other words, if planning and management data for the a publicly-traded corporation kept itsbooks federal government. By spring 1994, OMB the way the federal government does, the will work with the existing Joint Financial Securities and Exchange Commission Management Improvement Program and would close it down immediately. consult with Treasury and the agencies to It's not that we have no accounting define exactly what constitutes an integrated procedures and standards. It's that we have budget and financial system. At the same too many, and too many of them conflict. time, working with Treasury and the CFO Even worse, some budget and accounting Council, OMB will develop a long-range practices obscure the amount and type of strategic plan to link financial information resources managers might leverage to and performance goals to the work of produce savings and increase productivity. agency managers. We must agree on stricter accounting Finally, we will insist on higher standards for the federal books. We require qualifications for chief financial officers. corporations to meet strict standards of After all, many federal agencies are larger financial management before their stocks than Fortune 500 companies. Americans can be publicly traded. They mustfully deserve financial officers with qualifications disclose their financial condition, operating that match those in our best companies. By results, cash flows, long-term obligations, March 1994, working with accounting and and contingent liabilities. Independent banking groups, the CFO Council will certified public accountants audit their create a continuing education programfor accounts. But we exempt the $1.5 trillion federal financial managers. At the same federal government from comparable time, OMB guidelines will clarify the standards. precise financial functions the CFO should Currently, the fcieral Accounting oversee, trimming responsibilities like Standards Advisory Board (FASAB), personnel or facilities management that lie established in October 1990, develops and outside the CFO's main mission. recommends federal accounting standards for OMB, Treasury, and GAOwhich Action: Within 18 months the Federal together must approve them. Although we Accounting Standards Advisory Board need almost a dozen sets of standards, only will issue a comprehensive set of credible one has been approved using this processin accounting standards for the federal more than two and a half years. We need to government.'' quicken the pace. The administration will give the Federal A recent GAO audit of the Internal Accounting Standards Advisory Board an Revenue Service unearthed $500,000 of 18-month deadline to release and get overpayments to vendors in just 280 approval of all 11 sets of standards. If it fails, transactions and a video display terminal the administration will replace it with a new, that cost only $752 listed at $5.6 million on independent board with greater powers. the IRS books. Other GAO efforts found the Army and Air Force guilty of $200 billion in accounting mistakes, NASA guilty of $500 million, and widespread recordkeeping problems across government.': In 1990, Congress concluded that "current financial reporting

82 0 EMPOWERING EMPLOYEES TO GET RESULTS

Action: The Administration should issue beating the mainframe. His state an Annual AccountabilityReport to the administrator took notice, and managed to Citizens.'; squeak through a request to the Department of Labor's Veterans Employment and The ultimate consumer of information Training Service for grant funding and about the performance of federal permission to reprogram dollars in the fall organizations should be the American of 1990. Soon after, 40 Massachusetts public. As agencies develop output and caseworkers were working with laptops. In outcome measures, theyshould publish just one year, Massachusetts jumped from them. The customer service standards 47th in the nation for its veterans job required by the President's directive on placement rate to 23rd. improving customer service, outlined in Although this story screams success, it is chapter 2. will he a first step. unfortunately the exception, not the rule. A second step will be a new report card Normally, the Labor Department has to on the financial condition ofthe federal approve the purchase ofsomething as small government. For the last 20 years, our as a 530 modem in thefield. Massachusetts government has issued "prototype"financial got the funding onlybecause it was the end statements, but no one can assuretheir of the fiscal year and money had to be accuracy. Put simply, theywould never pass spent.° an audit. We believe Americansdeserve The point stands: When workers have numbers th,2v can trust. By 1997, we will current and flexible technology todo their require the Department of the Treasury to jobs, they improve performance. We need provide an audited coticolidatedannual to get more computers off theshelf and into report on federalfinancesincluding tax the hands of federal employees. expenditures. hidden subsidies, and hidden contingent liabilities such as trust funds and Action: The administration will develop government-sponsored enterprises.'' a strategic plan for usinginformation The Treasury and OMB will develop a technology throughout the federal simplified version of the government's government. i6 financial condition, to be published for public consumption in 1995. Rather than a Transforming the federal government is detailed. unreadable financial account, it will an enormous, complexundertaking that he a straightforward description of the begins with leadership, not technology. Yet, money spent and its effects onachieving goals. We will call this the Annual Accountability Report to the Citizens. In short, it's timeour governmentadjusted to Information Technology the real world tightened its belt, managed its affairs in the context of an economy that is A few years ago in Massachusetts, a disabled veterans caseworker who worked to information- based, rapidly changing and puts match veterans with available jobs took a premium onspeed and fitnction and service, some initiative. He decided toabandon his sole reliance on the state's central office not rules and regulations. mainframe computer and take his personal President Bill Clinton laptop, loaded with readily available Remarks announcing the software, on the road. Suddenly, he was able National Performance Review to check a database. make amatch, and March 3, 1993 print a resume all during his first contact with an employer. Quickly, he started 91 83 FROM RED I APE 1-0 RESULTS CREATING A GOVERNMLNI FIHAU WORKS BETTER & CoSIS LESS

in helping to break down organizational independent systems solving unique boundaries and speed service delivery, problems. Or they simply automate, instead information technology can be a powerful of improve, how we do business. tool for reinvention. To use that tool, The President should expand the work of government employees must have a clear the existing Informaticn Infrastructure Task vision of its benefits and a commitment to Force to include a Government Information its use. 'rechnology Services Working Group. This Washington's attempts to integrate working group will develop a strategic information technology into the business of vision for using government information government have produced some successes services and propose strategies to improve but many costly failures. Many federal information resource management. Also executives continue to overlook information beginning in October 1993, OMB will technology's strategic role in.reengineering convene interagency teams to share agency practices. Agency information information and solve common resource management plans aren't information technology problems. In integrated, and their managers often aren't addition, OMB will work with each agency brought into the top realm of agency to develop strategic plans and performance decisionmaking. Nlodernization programs measures that tie technology use to the tend to degenerate into loose collections of agency's mission and budget.

STEP 4: ENHANCING THE QUALITY OF WORK LIFE When it comes to the quality of used flextime and faraily leave were absent work life, as measured by 50 percent fewer days than its regular employee pay, benefits, schedule workforce. Moreover, 71 percent of those flexibility, and working conditions, the workers using benefits said that the policies federal government usually gets good were -very important- to their decision to marks. Uncle Sam is a family-friendly stay with the company, as compared to 58 employer, offering plenty of options that percent of the employees overa11.16 help employees balance their life and work The federal government must maintain responsibilities. Flextime, part-time, leave- its "model employer" status and keep the sharing, and unpaid family and medical workplace a humane and healthy place. It leave are all available. Pilot projects in must also ensure that, as we move toward telecommuting allow some workers who improving performance and begin to rely travel long distances to work at locations on every worker for valuable ideas, we closer to home. create a workplace culture in which The federal government would be smart employees are trusted to do their best. to keep abreast of workplace trends. Our increasingly diverse workforce struggles to Action:The federal government will manage child care, elder c're, family update and expand ,familyfriendly emergencies, and other personal workplace options. commitments, while working conditions become ever more important. Recent Even under current workplace policies, studies suggest that our ability to recruit federal workers still encounter some and retain the bcst employeesand problems. Many agencies do not fully motivate them to he productivedepends advocate or implement flexible work on our ability to create a satisfring work policies. For example, only 53 percent of environment. Johnson & Johnson, for our employees with dependent care needs example, reported that its employees who believe their agencies understand and

84 92 EMPOWERING EMPLOYEES TO GET RESULTS support family issues, according toOPM. 1-hirrv-eight percent indicated that their agencies do not provide the full range of One of the thingswe learned.. is that there's a dependent-care services available. As one strong correlation between employeesatisfaction example. OPNI concluded that '...certain agencies may have internal harriers that and customer satisfaction. If your employees are make supervisors reluctant to approve unhappy and worried about the various employee requests to work part-time. baseline, basic needs, you know, of the quality The President should issue a directive requiring that all agencies adopt of th :ir work life, they won't worry about compressed/flexible time, part-time, and customers. job-sharing work schedules. Agencies will also he asked to implement flexiplace and Rosetta Riley telecommuting policies, where appropriate. Director of Customer Satisfaction Starting next year, we ViI allow federal General Motors employeesto use accrued sick leave to care tor sick or elderly dependents or for adoptions.'" We will also give credit for all sick leave to employees who have been Action: /he executive branch will separated from and then rejoin federal abolish employee time sheets and time employment, no matter how long they were cards for the standard work week." out of government service. Congress has written into law some In a productive workplace, where harriers to improving the federal workplace. employees clearly understand their agency's It should lift them. By January 1994, OPM mission, how they fit into it, and what they will submit legislation to remove limitations must accomplish to fulfill it, everyone is a on dependent-care programs and give professional. The work culture must send agencies more authority to craft employee- this message in every way possible. One easy friendly programs, such as employee benefit way is to put anendonce and for allto packages. By N larch 1994, OPM and GSA meaningless employee sign-ins and sign- will propose legislation to enable flcxiplace outs on time sheets. and telecommuting arrangements. Many may consider this a trivial matter. Finally, we urge Congress to reauthorize But consider the salaried Health and the Federal Employees Leave Sharing Act Human Services (HHS) employee who which expires October .31, 1993 with a few must still sign in at a central location in her changes to improve program operations and office every morningand sign out exactly allow interagency transfers of annual leave. 81/, hours later. She must do this no matter Voluntary leave enables employees with how many more hours she really works, and family medical emergencies, who have every employee in her branch must sign the exhausted all their available annual leave, to same list, in order of appearance. receive donated annual leave from their Occasionally, when she gets caught up in a fellow federal workers. In just the last two meeting or lost in concentration at her desk, years. voluntary leave served more than she forgets to sign the book at her appointed 23,000 federal employees with more than hour. Supervisors have "guided" her to avoid 3,742,600 hours of donated annual leave. this problem. She tells her supervisor, whc The dependent-care needs of more than 96 agrees that the practice is senseless, that it percent of federal employees are met by the discourages her from working longer hours. leave-sharing program.'" "What about us overachievers?" she asks him. "You lose," he answers.

93 8S ROM RED TAPE TO RESUI. FS CREA I ING A CIOVERNSIEN F FHA I WORKS B1-11:11 & C0515 LESS

The truth is, we all lose. Yet 1-11-1S best must continue to break down stubborn continues to spend dollars training barriers that too often keep us from timekeepers.' employing, training, or promoting the best The Department of Labor, by contrast, people. listened to complaints from its employees While the President has set the stage, the about the needless paper-pushing and use current federal workforce does not reflect of administrative time that repetitive the nation's diverse working population. timekeeping required. Under the leadership Overall, the federal government has vet to of Secretary Robert Reich, and with full successfully eliminate some discriminatory backing of union presidents who represent barriers to attracting and retaining department employees, Labor has begun to underrepresented groups at every civil dump the standard time card. After service grade level, or advancing them into realizing that nearly 14.000 of its 18,000 senior positions. A glass ceiling still hangs employees work a standard 40-hour week, over the employment and career prospects department leaders decided to trust their for women, minorities and people with workers to report only exceptions, such as disabilities who work in the federal service. overtime and sick and annual leave. Since Women account for only 12 percent of the only one third of Labor's workforce reports top tier of the federal employment ladder any exception in the average week, the the Senior Executive Service. Minorities department is already saying paper and account for nine percent." Serious disparity timeand money. Standard time records persists for both groups in promotion rates are now submitted electronically, without to professional and administrative levels that bothering employees.'' serve as the gateway to further advance- The President should encourage all ment. The numbers for Americans with departments and agencies to follow the disabilities are even worse. Department of Labor's lead. The new policy Much can be done to make equal will allow for exceptionsfor example, opportunity an integral part of each agency's when labor contracts or matters of public mission and strategic plan. The President safety require them. But if we truly seek the should issue a directive in 1993 committing highest productivity from our workers, we the administration to attaining a diverse must treat them like responsible adults. In federal workforce and increasing the today's work environment, time cardsarc a representation of qualified minorities, useless annoyance. women, and people with disabilities at all career levels. The order should instruct Action: The President should issue a agency heads to build equal employment directive committing the achninistmtion opportunity and affirmative employment to greater equal opportunity and diversity elements into their agency strategic plans in the federal workforce.'.' and performance agreements. In turn, agency leaders should require managers and President Clinton launched his reams throughout their agencies to build administration by appointing cabinet and the same goals into their own performance senior officials who, in his words, "look like plansand should publicly recognize those America." In doing so, he sent a clear who succeed. message: A government that strives for the

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ermukroIr 1+or r' ° koPer-07"- "",erv"' ro--0.-"fKiwite"1-rfntseW ',40 -my j ^i'aa,y/e.`.""tooklifen.r EMPOWERING EMPLOYEES TO GET RESULTS

STEP 5: FORMING A LABOR-MANAGEMENT PARTNERSHIP The federal workforce is changing, While the number of employes has remained constant fOr a decade, the -rewant to be full partners. We want to workforce is much more diverse, with more work. We want government to work better. minorities and women. It is better educated and more mobile. And more employees We want to be there in partnership to help work in professional, scientific, and highly identify the problems. We want to be there in technical jobs than ever before. partnership to help craft the solution. We want lbday, more than 125 federal unions represent about 60 percent of the federal to be there in partnership to help implement workforce. That's 1.3 million civilian, non- together the solution that this government postal employees, or 80 percent of the workforce eligible to participate in federal needs. unions. The three largest federal employee And we're prepared to work in partnership unions are the American Federation of to make some bold leaps to turn this Government Employees (AFGE), the National Treasury Employees Union government around and make it work the (NTEU), and the National Federation of way it should work. Federal Employees (NFFE). Federal employees and their unions are as John Sturdivant, President aware of the quality revolution as are federal American Federation of Government Employees managers. Consistent with the quality push, Reinventing Government Summit, federal employees want to participate in Philadelphia June 25, 1993 decisions that affect their work. Indeed, GAO estimates that 13 percent of federal workers already are involved in formal quality management processes.' At the and to work hand-in-hand to improve IRS, for example, a Joint Quality quality. Improvement Process with the NTEL: has The current context for federal labor- spread throughout the agency saving management relations, title VII uf the 1978 money, producing better service, and Civil Service Reform Act, preset,such a improving labor-management relations. barrier. In 1991, the GAO concluded after Corporate executives from unionized an exhaustive survey of union leaders, firms declare this truth from experience: No government managers, federal employees move to reorganize for quality can succeed and neutral experts, that the federal labor- without the full and equal participation of management relations program embodied workers and their unions. Indeed, a in title VII "is not working well." GAO unionized workplace can provide a leg up characterized the existing bargaining because forums already exist for labor and processes as too adversarial, bogged down management exchange. The primary barrier by litigation over minute details, plagued by that unions and employers must surmount slow and lengthy dispute resolution, and is the adversarial relationship that binds weakened by poor management. One them to noncooperation. Based on expert interviewed by GAO summed up mistrust, traditional union-employer the prevailing view: "We have never had so relations are not well-suited to handle a many people and agencies spend so much culture change that asks workers and time, blood, sweat. and tears on so little. In managers to think first about the customer ocher words, I am saving 1 think it is an 95 87 FROM RED run:. To RESULTS CREA TING A GOVI RNMENT FDA F WORKS BETTER & COs FS LESS

awful waste of time and money on very and charge it with the task of championing little results." Indeed, the cost of handling these efforts and developing the next steps. unfair labor practice disputes using this The council will include appropriate federal system runs into tens of millions of dollars cabinet secretaries, deputy secretaries, and every year.' agency directors; the presidents of AFGE, We can only transform government if we NTEU, and NFFE: and a representative of transform the adversarial relationship that the Public Employee Department of the dominates federal union-management AFL-CIO. Federal agencies and unions will interaction into a partnership for assign existing personnel to staff the council. reinvention and change. Action: The National Partnership Action: The President should issue a Council will propose the statutory changes directive that establishes labor-numagement needed to make labor - management partnership as an executive branch goal partnership a reality.''' and establishes a National Partnership Council to help implement it.'8 GAO cited the need for a new labor- management relations framework that The President's executive order will "motivates labor and management to form articulate a new vision of labor- productive relationships to improve the management relations. It will outline the public service."60 The Federal Labor roles of managers and unions in creating a Relations Authority, The Federal Mediation high-performance, high-quality and Conciliation Service, and several government. It will call for systematic agencies have been encouraging and training in alternative dispute resolution facilitating new labor-management and other joint problem-solving approaches cooperation effOrts. However, their efforts for managers, supervisors and union are being hampered by legal restrictions that officials. And it will call for agencies to form focus on the traditional adversarial models. their own internal councils. The council will recommend legislation to By October, 1993, the President should the President to create a better framework. appoint the National Partnership Council

STEP 6: EXERTING LEADERSHIP Despite the federal government's The sweeping change in work culture solid core of capable employees, it that quality government promises won't lacks effective leadership and happen by itself. Power won't decentralize of management strategies. In 1992, GAO its own accord. It must be pushed and delivered a stark diagnosis of the pulled out of the hands of the people who situation. Our government, GAO have wielded it for so long. It will be a reported, lacks the "processes and systems struggle. fundamental to a well-run organization. We must look to the nation's top leaders Most agencies have not created a vision of and managers to break new ground. The their futures, most lack good systems to President, the Vice President, cabinet collect and use financial information or secretaries, and agency heads are pivotal to to gauge operational success and bringing about governmentwide change. It accountability, and many people do not is they who must lead the charge. Under have the skills to accomplish their President Clinton's leadership they are missions." This situation, GAO determined to make it happen. concluded in a burst of understatement, If we want to make the federal was "not good.''''' government a better place, our current

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3"6915PC'''''""zr'.:"°7:'-"4"41 -...2°'411''1.4444V"""or . or,..- EMPOWERING EMPLOYEES TO GET RESULTS leadership must make it clear by what we do to-day management cultures, for improving that, when we offer change, we mean performance to achieve agencies goals, for business. That is a promise must make reengineering administrative processes, and to the entire community of hardworking, for implementing other National committed federal workers. It is a promise Performance Review recommendations. we must keep. The COO will not add an additional position in the secretary's or director's staff. Action:!he President shoull issue a Secretaries and agency directors should directive detailing nis vision. plan. anal designate a deputy secretan, or under commitment toCleat!. YU!'quality secretary with agencvwide authority as the overninent.'- COO. The COO will report directly to the agency's top official. Graham Scott, who as Secretary of

Treasury for New Zealand helped shepherd Action:I._e1 7 'resitieur shout:! reinvention of that country's government, President's Management Council:0tcaa cautioned Vice President Gore. "Our the (nudity revolution ,ina en sun' ',! experience is that government wont change inniementatron of A/ilia/id/ -7111'7):41iit unless the chief executive is absolutely IC(; percent committed to making it change."' CEOs of corporations the world over echo A new President's Management Council Scott's call. (PMC) will be the President's chief The first directive issued along with this instrument to retool management systems report will clarify the President's vision of a throughout the executive branch. It will act quality federal government. It wig commit as the institutional lever to drive the administration to the principles of management and cultural changes reinventing government, quality throughout the bureaucracy. The PMC will management, and perpetual reengineering, ensure that quality management principles as well as the National Performance are adopted, processes are reengineered, Review's other recommendations. In performance is assessed, and other National addition, it will detail the strategic Performance Review recommendations are leadership roles of the cabinet and agencies implemented. in iniplen...fiting them.

Action:I:: federal department and agency will designate a chief operating officer:." Unlesseveryone understands what a work Transforming federal management process is, how to map it, how to analyze and systems and spreading the culture of qualitY throughout the federal government is no quantify its essential elements, no organization small task. To accomplish it, at least one will be able to reap the enormous gains in senior official with agencvwide per)brmance thatcome with an involved and management authorin from every agency will be needed to make it happen. empowered workforce. Even' cabinet-level department and federal agency will designate a chief Frank Doyle operating officer (COO). In addition to Executive Vice President, General Electric ensuring that the President's and agency Reinventing Government Summit, Philadelphia heads priorities are implemented, COOs June 25, 1993 will he responsible for applying quality principles in transforming the agencies day-

9 7 BEST COPY AVAILABLF 89 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

The President should appoint the frustrate well-intentioned attempts to Deputy Director for Management of OMB progress. So first and foremost, everyone to chair the PMC, and its progresswill be will need to learn what working and overseen by the Vice President. Thecouncil managing for quality is all about. will include the COOs from 15 major The President and agency heads must agencies and three other agencies designated send a clear message about their by the chairperson, the heads of GSA and commitment by becoming directly involved OPM, and the President's Director of in the design and delivery of quality training Cabinet Affairs (ex officio). Its agenda will in their. agencies. Therefore, the PMC, include setting priorities; identifying and working with the Federal Quality Institute, resolving cross-agency management issues; will begin quality training with the cabinet establishing interagency task forces to secretaries and agency heads. Training transform governmentwide systems such as sessions will focus on defining a shared personnel, budget, procurement, and vision, developing a strategy to embed that information technology; and soliciting vision in the each department, committing feedback from the public and government participants to lead and be responsible for employees. It will secure assistance from the change, and establishing a process for CEOs, officials and consultants who have training the next level of management. helped transform major American Even as agencies reorganize around corporations, state and local governments, quality and customers, their staff may need and non-profit organizations. In training to fulfill expanded job addition, the PMC will conduct future responsibilities. Line staff may need to learn performance reviews of the federal budget and procurement processes. government and report to the public on Managers may need help in becoming its findings. coaches rather than commanders. We will Working together, the President, Vice pursue the goal of reaching the entire President, PMC and every agency head will federal workforce with quality training. carry the quality message into the sleepiest It is worth noting that some cabinet corners of the bureaucracy. Successful and secretaries already are up on the quality innovative agencies will be cheered; slower learning curve. During the past few moving organizations will be prodded and months, more than 60 top field managers, encouraged until change occurs. contract lab directors, and assistant secretaries have joined Energy Secretary Action:The President's Management Hazel O'Leary for 6 days of total quality Council will launch quality management management training at Motorola "basic training" for all employees, University in Chicago. They've agreed on a starting with top officials and cascading mission statement, set the department's core through the entire executive branch.66 values, and put strategic planning in motion. In the process, skeptics have However pressing the need, we cannot become energized, egos have been expect leaders, managers and employees subsumed, hidden agendas unearthed and caught up in old ways to change overnight. dispensed. In the words of one participant, To nurture a quality culture within "Everyone is working as a team. We're government, we must help the entire incredibly excited about doing better. In just workforce understand the President's vision. 6 days of quality training, we have moved Unless we train everyone in the new skills from `I' to `we'." t'' they needand help them understand the Other departments are hot on Energy's new roles they are expected to playthey heels. Such agency leadership is pivotal to can, through passive or active resistance, moving quality forward. As leading quality

90 EMPOWERING EMPLOYEES TO GET RESULTS innovator Dr. Joseph Juran told Vice and everybody else is going to watch. And President Gore, As we go at it energetically as they get results and nobody's hurt in the in the federal government... we're still going process, others will be stimulated to do the to see some of the agencies step out in front same Ehing.""8 Conclusion

To change the employee culture in workers fail, rather than hold them up to government, to bring about a public ridicule when they do. Only if they democracy of leadership within our fail from time to time on their way to bureaucracies, we need more than a leap of success will we be sure they are even trying faith. We need a leap of practice. We must to succeed. Someone once asked an old move from control to collaboration, from man known for his wisdom why he was so headquarters to every quarter. We must smart. "Good judgment comes from allow the people who face decisions to experience," he said. And experience? make decisions. We must do everything we "Well, that comes from bad judgment." can to make sure that when our federal To transform the culture of our workers exercise their judgment, they are government, w: must learn to let go. When prepared with the best information, the we do, we will release the same kind of best analysis, and the best tools we have to creativity, energy, productivity, and offer. We must then trust that they will do performance in government service that their bestand measure the results. was unleashed 200 years ago, and that Indeed, we must let our managers and continues to guide us today.

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91 Chapter 4 CUTTING BACK TO BASICS

I feel like that person in the old movie who writes in lipstick on bathroom mirrors, "Stop me before I kill again." However, in my case, the legend should be, 'Stop me before I steal some more."

Letter from Bruce Bair of Schoenchen, Kansas, to Vice President Al Gore, May 24, 1993

Bruce Bair admitted to federal government: its entrenchment in old "stealing" from the federal ways, its reluctance to question procedures, governmentat a rate of and its resistance to change. Its inflexibility about $11 an hour. His job has preserved scores of obsolete programs. was checking the weather in This is not news to most of us Russell, Kansas, every hour, obsolescence is part of our stereotype of and reporting to the Federal Aviation government. Administration. The FAA used his Why is it so difficult to close unneeded information to warn planes in the area programs? Because those who benefit from about bad weather. But Russell isn't a busy them fight to keep them alive. While the flight station any more. Bair saw just two savings from killing a program may be large, landings in more than a year during his they are spread over many taxpayers. In night shift. Days were only slightly busier. contrast, the benefits of keeping the Before the advent of automated weather program are concentrated in a few hands. gathering devices, human weather watchers So special interests often prevail over the at Russell and at other small stations general interest. throughout the Midwest were vital for That's why we can't eliminate aircraft safety. Today, they could be replaced unnecessary programs simply by making with machines. "From my experience with lists. Politicians, task forces, commissions, the machine," wrote Bair, "it is very and newspaper articles have been ridiculing adequate to protect the air space over wasteful programs for as long as we have Russell." In fact, Russell has had a machine enjoyed democratic government. But most for some time, but the FAA had not yet programs survive attack. After a decade of eliminated the human staff tight budget talk, for example, federal Bair concluded his letter to Vice budget expert Allen Schick says he can President Gore with these words: "I feel identify just three major nondefense there is very little doubt among programs eliminated since 1980: general professionals that we are basically useless revenue sharing, urban development action here." A few months later, he quit. Now he grants, and the fast breeder reactor says, "I'm no longer stealing from the program.' government."' To shut down programs, therefore, we Bruce Bair's story tells us much about our must change the underlying culture of

93 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

government. As we described in the pricing makes economic sense, and by preceding chapters, we will do this by collecting what the government is owed in introducing market dynamics, sharing delinquent debt or fraudulent overpayment savings from cuts with agencies, exposing of benefits. unnecessary programs to the spotlight of Thiroh we will reengineer government annual performance measures, and giving activities, making full use of computer customers the power to reject what they do systems and telecommunications to not need. As government begins operating revolutionize how we deliver services. under these new rules, we are confident that The actions and recommendations agencies will request the consolidation and described in this Chapter are the first elimination of programs. Billions of dollars dividend on what we can earn from will be returned to taxpayers or passed on to streamlining government. They won't be customers. the lastor even the largest. The strategy We will begin this process today. of the National Performance Review differs First, we will eliminate programs we do from that of previous budget cutting efforts. not needthe obsolete, the duplicative, Our recommendations have been discussed and those that serve special, not national thoroughly with agency heads to determine interests. which cuts are warranted, feasible, and can Second, we will collect morethrough be done quickly. We are ready to act with imposing or increasing user fees where the full force of the cabinet.

STEP 1: amiNATE WHAT WE DON'T NEED After World War II, a British Other programs are not so much commission on modernizing obsolete as duplicative. When confronted government discovered that the with new problems, we instinctively create civil service was paying a full-time worker to new programs. But we seldom eliminate the light bonfires along the Dover cliffs if a old programs that have failed us in the first Spanish Armada was sighted. The last place. Still other programs were never Spanish Armada had been defeated some needed in the first place. They were created years beforein 1588, to be precise. to benefit influential industries or interest This story may be apocryphal. But not groups. The National Performance Review all such stories are. In Brooklyn, New York, has targeted several programs in each of there is a Federal Tea Room where a federal these categories for immediate elimination. employee sips imported tea to test its Although we make specific quality.3 For one hundred years, taxpayers recommendations in the pages that follow, paid for the position. It was not until press we believe the government must tackle the coverage angered enough members of problem systematically. The single best Congress that things were changed: now, tea method would be to give the President importers pay to have their tea tested greater power to eliminate pork that creeps although the taster remains a government into federal budgets. employee. These stories capture an essential truth Action: Give the President greater about governments; they rarely abandon power to cut items from spending bills4 anything. Like the FAA that employed Bruce Bair to check the weather, federal Today, the President's powers to cut agencies do many things not because they spending are limitedmore limited than make sense, but because they have always most of the nation's fifty governors. He can been done that way. They become like the either sign or veto appropriations bills; he furniture: They are simply there. can't veto individual itemsa power most

94 .. 101 CUTTING BACK TO BASICS governors have. For the President to cut wasteful spending, he needs the power of what is called, in Washington, "expedited Thisis a precious opportunity to make rescission." Under current law, the President fundamental change in government. I look can submit proposed rescissions to Congress, which then has 45 legislative days forward to working together on areas of to act. If Congress does not act, proposals mutual agreemen4 are rejected. The President should have greater authority to reject individual items. Broader rescission powers were US. Rep. William F. Clinger (R. Penn.) envisioned in HR 1578, which the House passed in late April 1993. This bill would force Congress to vote on the President's proposals to cancel funding, rather than let in ways that are compatible with our it kill those requests by ignoring them, as principle of better services to customers. under current procedures. If enacted, the The President's Management Council will new procedure would, as President Clinton submit the report to Congress within 18 wrote in a letter to House Speaker Thomas months showing which offices may be S. Foley, "provide an effective means for closed, which can be consolidated and curbing unnecessary or inappropriate which can be slimmed. We urge Congress expenditures without blocking enactment to act quickly on this package. of critical appropriations bills." We are confident that the savings will be large because several agencies are already committed to far-reaching reforms in their Eliminate the Obsolete field office systems. Their efforts will be models for those that haven't moved as Not all employees of useless programs act quickly as they prepare their plans for the with Bruce Bair's forthrightness. But that President's Management Council. doesn't mean their offices or programs are any more useful. The vast nationwide Action:The Department of Agriculture network of 30,000 federal government will close or consolidate 1,200 field offices, for example, reflects an era when offices.° America was a rural country and the word "telecommunications" was not vet in the The Department of Agriculture (USDA) dictionary. While circumstances have operates the most elaborate and extensive changed, the government hasn't. As a result, set of field officesmore than 12,000 workloads arc unevenly distributedsome across the country. Under Secretary Mike field offices are underworked, others are Espy's leadership, the department is overworked, some are located too far from planning dramatic reforms. USDA runs their customers to serve them well, and f.w 250 programs in such vital but diverse areas are connected to customers through as farm productivity, nutrition, food safety, modern communications systems. and conservation. Its focus has shifted dramatically since the 1930s, when its Action:Within 18 months, the present structure evolved: 60 percent of its President's Management Council will budget now deals with nutrition; less than review and submit to Congress a report 30 percent with agriculture. on closing and consolidatingfederal As the basis for reorganization, USDA civilian fiwilities' will concentrate its activities on six key functions: commodity programs, rural All agencies will develop strategies to cut development, nutrition, conservation, food back or consolidate their field office systems quality, and research. This focus will allow it

102 95 I ROM RFD I \Pr FO RIISI'l is (.RI Si I \ c, G,UshRNM11.NI rll:\r WORKS BI.I11.11 & Costs LESS

to consolidate from 42 to 30 agencies and Action:The Department of Enemy will from 14 to six support staffs, cutting consolidate and redirect the mission of its administrative costs by more than $200 laboratory, production, and testing million over five years. facilities to meet post-cold War national As part of this process, USDA will priorities.''' consolidate or close about 1,200 field offices within the Agricultural Stabilization and For the first time in 50 years, the United Conservation Service, the Soil Conservation States is not engaged in producing or testing Service, the Farmers Home Administration, nuclear weapons. Significant reductions in the Cooperative Extension System, and the funding for these programs are already Federal Crop Insurance Corporation. Some underway$1.25 billion in fiscal year of these offices now serve suburban 1994 alone. Yet, the Department of counties, others have few rural customers Energy's weapons laboratories and left. In 1991, the General Accounting production plants represent an irreplaceable Office reported that in Gregg County, investment in world-class research and Texas, the Agricultural Stabilization and development, intellectual, and computing Conservation Service office served only 15 capabilities, carefully cultivated over five farmers: in Douglass County, Georgia, two decades. As the department redirects its USDA programs served a total of 17 facilities, the challenge is to eliminate farmers.: unnecessary activities, while shifting Field office closings will be determined appropriate resources to meet non-defense by a six-part scoring system developed to objectives. evaluate each office. Once in place, this Under Secretary of Energy Hazel restructuring will save more than $1.6 O'Leary's leadership, DOE will review its billion over five years and eliminate the labs, weapons production facilities, and equivalent of 7,500 full time employees. testing sites in the context of its mission Customers will be better served because and will recommend the phased operations will be combined in multi- consolidation or closure of obsolete or purpose USDA field service offices. redundant facilities. The secretary will also identify facilities that other government Action:The Department of Housing agencies may find useful, encourage and Urban Development will streamline laboratory managers to bid on contracts its regional office system.' with other agencies, and increase cooperation with the private sector. The Department of Housing and Urban Development (HUD) has also developed a Action:The U.S. Army Corps of strategy to close offices without cutting Engineers will reduce the number of customer services. Roughly 10,000 of regional offices." HUD's 13,500 employees work in field offices, but their workloads vary: the New The U.S. Army Corps of Engineers, too, York regional office monitors 238,000 has a plan: it will cut its divisional offices federal public housing units, the Seattle from 11 to 6. It cannot, however, close office only 30,000 units. Management district offices because Congress prevented restructuring, described in the previous such actions by lawan example of costly chapter, will streamline HUD's field congressional micro-managing. The Corps operations.9 Under a five-year plan, HUD has carried out the nation's largest civil will eliminate all regional offices, pare down works projects. Its role is changing: it builds its 80-field office system, and cut its field fewer large projects and faces more complex staff by 1,500 people. environmental projects.

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Action: !beSmall Business Administration will reduce the number of 7;7- field offices and consolidate services.' -We'll challenge the basic assumptionso. program, asking does it work, does itrorride-. The Small Business Administration is quality service, does it encourage innovation: developing criteria for consolidating field offices based on the customer load. It has and reward hard work. If the answer is So; already demonstrated in pilot programs it there's a better way to do it or iftherei how to cut local office staff by providing routine loan servicing for several local something that the federal government is SBA offices and by adopting automated doing it should simply stop doing we'll try to procedures for processing applications for make the changes needed" the agenc-vs many different loan programs. AM Action: /beI:S. Agency for President Bill Clinton !nternational Development will reduce Announcement of initiative to streamline govemnien`e March 3, 1993 ..4 :lw number of overseas missions.:

With the dramatic changes in U.S. foreign policy, agencies with overseas Action:The Deparnnent of State will operations are rethinking their educe by 11 the number of Marine responsibilities. J. Brian Atwood, Guard detachments it employs."' administrator for the U.S. Agency for International Development (AID), believes By consolidating the storage of top secret the number of countries in which his documents in overseas missions, the agency operates missions can be cut from Department of State can reduce the need 105 to perhaps 50. Cuts will be made in the for Marine Guard detachments. The number of missions in developing countries Bureau of Diplomatic Security has so that the agency's efforts can focus on identified 11 posts where the Marine those nations that can absorb and manage Security Guard program could be assistance. eliminated simply by moving documents to other places. Action:The United States Information .1e.,encv will cut the number oflibraries Action: Pass legislationto allow the sale and rcieence centers it pays.* overseas." of the Alaska PowerAdministation.'-r

Savings are also possible in overseas The federal government once played a facilities maintained by the United States crucial role in financing, developing and Information Agency. USIA maintains operating the Alaska Power Administration libraries and otiver facilities in many (APA). No longer. APA was created to developed countries, as well as in emerging encourage economic development in Alaska countries. While facilities in the latter are by making low-cost hydro-power available often crowded, those in developed countries to industry and to residential customers. attract few customers: In Canada, for The project has succeeded and can now he example, a USIA library attracted only 568 turned over to local ownership. walk-in visitors in a year. Eliminating some The federal government retains four of these facilities or turning them over to other Power Marketing Administrations their host countries could save an estimated (PMAs), which own hydropower facilities S51.5 million through 1999.'' and sell the power they generate to public, private, and cooperative utilities at cost. These PMAs serve customers spread

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throughout many states, so the facilities controllers as the FAA Academy does. If cannot easily he sold to a local entity. APA. they could. it would save the government on the other hand, is unique: Its facilities the $20,000 it costs to train each new and customers are located in a single stare. controller at the academy. The answer is Various public agencies have already urged clearly yes. Five schools participating in the the federal government to sell the APA program are producing well-qualified facilities. APA signed purchase agreements controllers, although only two are receiving to do so before 1993. government subsidies. It is now time to The sale is supported by state and local phase out these remaining subsidies. officials, Alaska's congressional delegation. the Energy Department, the Office of Action:Close the Uniformed Services Management and Budget, and the House University of the Health Sciences." Appropriations Committee. But Congress has vet to pass the necessary authorizing The Department of Defense (DOD) legislation. We urge it to do so. The sale once faced shortages of medical personnel, would bring $52.5 million into the U.S. particularly of physicians. So, in 1972. Treasury and save millions more in yearly Congress created the Uniformed Services operating costs. University of the Health Sciences. Today, the University provides less than 10 percent Action:Ii,rminate frderal .vymt fimding of the services' physicians at a cost much Jr Federal Aviation Administration higher than other programs: University higher education programs."s physicians cost the federal government $562,000 each, while subsidies under the Success has rendered two FAA federal Health Professionals Scholarship Program subsidies obsolete. They have met the cost only $111,000 per physician. Closing objectives for which they were established the facility and relying on the scholarship and can now be terminated. For example, in program and volunteers would save DOD 1982, the Federal Aviation Administration $300 million over five years. (FAA) launched a program to improve the development and teaching of aviation Action:Suspend the acquisition of new curricula at universities and other post- federal office space.-") secondary schools. The goal was to produce graduates better prepared for jobs in the Over the next 5 years, the federal industry. government is slated to spend more than So far, the FAA has spent about $4 $800 million a year acquiring new federal million on consultants to upgrade schools' office space and courthouses. Under current programs Another $100 million was conditions, however, those acquisitions appropriatedmost at Congress' insistence, don't make sense. rather than FAA's requestto be given out The federal workforce is being reduced, in grants so that the schools could buy the Resolution Trust Corporation is better facilities and equipment. Many disposing of real estate once held by failed schools now offer high quality aviation savings and loans at 10 to 50 cents on the training programs without support from the dollar, commercial office vacancy rates are FAA. Since $45 million of the running in the 10 to 25 percent range, and appropriation remains unspent, stopping U.S. military bases are being closed. All of the program now can save this money. these factors suggest that the government Another program we no longer need is has many potential sources for office space the Collegiate Training Initiative for Air without buying any more buildings. Traffic Controllers. It was set up to The GSA administrator will place an determine whether other institutions could immediate hold on GSA's acquisition offer the same quality training for through construction, purchase, or lease

1 06 CUTTING BACK TO BASICS of net new office space. The administrator Action: Consolidate training programs 22 will begin aggressive negotiations for for unemployed people. existing and new leases to further reduce costs. And GSA will reevaluate and reduce Government's response to changing the costs of new courthouse construction. circumstance often creates duplication. As These actions should save at least $2 billion the economy has evolved, for example, we over the next 5 Years. have created at least four major programs to help laid-off workers: the Economic Dislocation and Worker Adjustment Eliminate Duplication Assistance Act (EDWAA) program, which spends $517 million annually for those who Government programs accumulate like lose their jobs through plant closings or coral reefsthe slow and unplanned major layoffs; the Trade Adjustment accretion of tens of thousands of ideas, Assistance program (TAA), which legislative actions, and administrative distributes $170 million for those who lose initiatives. But, as a participant at the Vice jobs due to increased imports; the Defense President's HUD meeting told us, "There Conversion Adjustment program, which isn't always a rational basis for the way we dispenses $150 million for those are set up in this organization. Over the unemployed because of defense cuts; and a years, branches have developed; theyhave program that allocates $50 millionfor those been taken over by divisions; and we don't unemployed due to the enforcement of new look at the organization as a whole." Now clean air standards. Even more programs are we must clear our way through these reefs. in the pipeline. The National Performance Review has But multiple programs aimed at looked at government as a whole. We have common goals don't work well. identified many areas of duplication. What Administrative overhead is doubled and follow are recommendations for the first services suffer. Because each training round of cuts and consolidations. program is intended to help people rendered jobless for different reasons, people Action:Elim.nate; the President's seeking work must wait for help until the Intelligence Oversight Board.' government determines which program they are eligible for. The process is slow. No branch of governmentincluding The General Accounting Office estimates the Executive Office of the President that less than one-tenth of TAA-eligible (EOP)is free of duplication. We will workers receive any benefits within 15 begin the streamlining process in the EOP, weeks of losing their jobs, for example.23 where two groups oversee intelligenceat The unemployed care less about why times tripping over each other and allowing they lost their jobs than about enrolling in some issues to fall through jurisdictional training programs or finding other jobs. cracks. The President, by directive, should Labor Secretary Robert Reich is proposing terminate the President's Intelligence legislative changes to consolidate programs Oversight Board and assign its functions to for workers who lose their jobs, regardless of a standing committee of the President's the cause. His bill would also allow more Foreign Intelligence Advisory Board. fimds to be used before workers lose their jobs. In Chapter 1, we recommend the consolidation of 20 education, employment, and training programs. We urge Congress to support both initiatives.

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Action:,astnithtte the leterans. triplicatemultiple administrative systems bnpiurnient and 1:.aintmf,sieretce ana at all levels of government. the Form .`..anto i;mnimf Pror.Tain into Of these 230 programs, 160 will award the Znintomenr dna rraininff money through 245 different national .1thntnisratton.- competitions this year. The cumbersome administrative systems divert money from Several training programs offer similar activities more central to the department's services through the same offices mission. These programs should be reduced sometimes even using the same in number and their procedures employeesbut requiring separate streamlined. management and reporting systems. We can The department has begun reforming cut bureaucracy and paperwork \vbile and streamlining programs, particularly improving services to the customer by those under the Elementary and Secondary merging these programs. Education Act. This will make it easier for Consider the case of the \ eterans' schools to get the money without jumping Employment and Fraining Service 1 \ FIS) through so many bureaucratic hoops. We in the Department of labor t DOI). propose to eliminate and consolidate more Another operation in DOI We programs that have servedrheir original Employment and Training Administration purpose or would he more appropriately (ETA). funds local Employment Services. funded through non-federal sources. The which, in turn, house staff dedicated to savings, as much as S515 million over 6 providing veterans with advice on training years, can be better used for other programs. But these staff are legally departmental priorities. For example: prohibited from serving non-veterans. So. if a local office is crowded with non-veterans, 'I-he department administers two these specialists cannot help outeven if programsthe National Academy they have no veterans to serve. Moving of Space. Science, and Technology VETS into the ETA will generate much program and the National Science greater efficiency in the use of staff: leading Scholars programthat give to shorter lines and better service. scholarships to post-secondary math, We also recommend moving the Food science, and engineering students. Stamp Training Program into the FAA. These two should be combined. Most training under the program is already performed under contract by ETA staff, lw State Student Incentives Grants were the Employment Service, or by local created to encourage states to education institutions. Overall. ETA can develop needs-based student aid offer poor people a much more programs. Since all states now have comprehensive range of job-search and their own programs, the federal training services than can the Food Stamp program is no longer needed. .1-raining Program. The Research Libraries program Action::!ctluce the number of funds research libraries to build their Deparment otTducatton proyramsTi?);!! collections. University endowments 2.30 toi9.- could and should support these efforts, without federal subsidy. The nations concern with education has led to an explosion of programs at all levels of government. The Education Department now hinds 230 programs, many of which overlap. Since many are grants to state and local governments, we face duplication in 10 100 CUTTING BACK TO BASICS

Action: Eliminate the Food Safety involved. The new FDA would have the and Inspection Service as a separate power to require all food processingplants agency by consolidating allfood safety to identify the danger points intheir responsibilities under the Food and Drug processes on which safety inspectionswould Administration.26 focus. Where and how inspections are carried out, not the number or frequency of Sometimes duplication among federal inspections, determines the efficiency of the programs can make us illeven kill us. system. Take the way we inspect food for The FDA would also develop rigorous. contamination. Several agencies are scientifically based systems for conducting involved, each operating under separate inspections. Today, we rely, primarily, on legislation, with different standards, and inspection by touch, sight, and smell. with staff trained in different procedures. In Modern technology allows more reliable 1992, the Food and Drug Administration methods. We should employ the full power (FDA)part of the Department of Health of modern technology to detect the and Human Servicesdevoted about 255 presence of microbes, giving Americansthe staff years to inspecting 53,000 food stores, best possible protection. Wherever possible. while the Food Safety and Inspection reporting should be automated so that Service (FSIS)part of the Department of high-risk foods and high-risk food Agriculturedevoted 9,000 staff years to processors can be found quickly . inspecting 6,100 food processing plants. Enforcement powers should be uniform tOr But this duplication doesn't mean that all types of foods, with incentives built in to we cover all sources of contamination reward businesses with strong safety records. thoroughly. Meat and poultry products must be inspected daily, whileshellfish, Action: Consolidate non-militmy which have the same risk of causing food international broadcasting.23 borne illness, are not required by law to be federally inspected. Too many items fall The U.S. government funds several tl, cough the bureaucratic cracks. Not only overseas broadcastingservicesincluding that, enforcement powers vary among the those operated by the United States different agencies. If the FDA finds Information Agency's Bureau of unsanitary plant conditions or Broadcasting, which accounts for one-third contaminated products, compliance is of the agency's $1.2 billion budget, and usually voluntary because the agency lacks services such as Radio Free Europe and FSIS's powers to close plants or seize or Radio Libercy, which have budgets totaling detain suspect or known contaminated $220 million a year. All non-military products. And if one agency refers a international broadcasting services should problem to another, follow up is at best be consolidated under the USIA. Part of slow and at worst ignored.' this was propsed in the President's budget With no fewer than 21 agencies engaged request for fiscal year 1994. in research on food safety, often duplicating each other's efforts, we aren't progressing fast Action: Create a single civilian polar enough in understanding and overcoming satellite system.29 life-threatening illness. As recent and fatal outbreaks of food-borne illness attest, Collecting temperature, moisture. and multiple agencies aren't adequately other weather and environmental protecting Americans. information from polar satellites is a vital Under our recommended streamlining, task, both for weather forecasting and for the FDA would handle all food safety global climate studies. But we have two regulations and inspection, spanning the different systems, one run by the work of the many different agencies now Department of Defense and the other by

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the National Oceanic and Atm3spheric may involve violations of financial, firearms, Administration. On top of this, the immigration and customs laws, as well as National Aeronautics and Space drug statutes. Unfortunately, too many Administration is planning a third. Over cooks spoil the broth. Agencies squabble the next tenyearsthese three systems will over turf, fail to cooperate, or delay matters cost taxpayers about $6 billion. Congress while attempting to agree . ,n common should enact legislation requiring these policies. agencies to consolidate their efforts into a The first step in consolidating law single system, saving as much as $1.3 billion enforcement efforts will be major structural over the same period. changes to integrate drug enforcement efforts of the DEA and FBI. This will create Action: Transfer the functions of the savings in administrative and support Railroad Retirement Benefits Board to functions such as laboratories, legal services, other agencies.'" training facilities, and administration. Most important, the federal government will get a The government can operate with fewer much more powerful weapon in its fight pension management systems. In 1934, against crime. Congress set up the Railroad Retirement When this has been successfully Board to protect railroad workers in the face accomplished, we will move toward of financial problems, to allow workers to combining the enforcement functions of transfer among railroads, and to encourage the Bureau of Alcohol, Tobacco and early retirement to create jobs for the Firearms (BATF) into the FBI and merge millions of younger workers. In those days, BATF's regulatory and revenue functions the huge national public pension system, into the IRS. BATF was originally created as Social Security, was not yet in place; neither a revenue collection agency but, as the war were the state-federal unemployment on drugs escalated, it was drafted into the insurance systems nor Medicare. law enforcement business. We believe that Today, it makes no sense for a separate war would be waged most successfully agency to administer benefits for a single under the auspices of a single federal agency industry. Social Security Administration can administer social security benefits for railroad workers as it administers them for Eliminate Special Interest Privileges everyone else; unemployment insurance systems can serve unemployed railroad Some programs were never needed. They workers as wd as it serves other exist only because powerful special interest unemployeu p.mple; and the Health Care foups succeeded in pushing them through Financing Administration can incorporate Congress. Claiming to pursue national railroad workers' health care benefits into objectives, Congress, at times, funds the Medicare system.;' programs that guarantee profits to specific industries by restricting imports, raising Action: liwnsfei' law enforcement prices, or paying direct and unnecessary functions of the Drug Enforcement subsidies. Administration and the Bureau of Special interest groups come in all shapes Alcohol, Thbacco, and Firearms to the and sizes and their privileges are as diverse. Federal Bureau of hwestigation.32 Producers of crops, residents of certain areas, and holders of some occupations have More than 140 federal agencies are all succeeded in persuading Congress that responsible for enforcing 4,100 federal their needs are special and their claim on criminal laws. Most federal crimes involve special treatment is deserving. violations of several laws and fall under the jurisdiction of several agencies; a drug case

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Action:Iliminate ii,derat support pound more to borrow money than it lairmentitbr wool anti 111011111.11' charged bee keepers. Taxpayers paid the difference. If it were to scrap the program, During World War II and the Korean Congress would save taxpayers S15 million conflict, the U.S. was forced to import over the next six Years. about half the wool needed for military uniforms..I.O cut dependence on foreign Action:Rescind all anobligated contract suppliers, Congress in 1954 passed the authority and appropriations liexisting National Wool Act, providing direct highway demonstration projects/' payments to American wool producers. "The more wool a producer sold. the greater the The practice of directing federal highway government subsidy. In 1960, the Pentagon funds toward spending on specific removed wool from its list of strategic demonstration projectsand away from materials. But the Wool Act remained in regular state-level allocationsis increasing. effecta tribute to adept lobbying. This is not, for several reasons. a good Between 1994 and 1999. wool subsidies trend. will cost an estimated 5923 million. About In 1991, the General Accounting Office half the payments will go to ranchers who ((;AO) examined the contributior s of raise Angora goats for mohaira product demonstration projectswhich range from that is 80 percent exported. So American paving a gravel road to building a multi- taxpayers will subsidize the price of mohair lane highway to the nation's overall sweaters overseas! In some vars, subsidies highway needs. Looking specifically at the provide more income than sales. The 1990 S1.3 billion authorized to fund 152 projects mohair checks. for example, totalled S3.87 under the 1987 Surface Transportation and for every dollar's worth of mohair sold. Uniform Relocation and Assistance Act, Today, about half the beneficiaries receive GAO found that "most of the projects...did only S44 a year each. But the top one not respond to states' and regions most percent of sheep raisers capture a quarter of critical federal aid needs." Indeed, in more the moneynearly SI00,000 each. The than half the cases, the projects weren't even national interest does not require this included in regional and state plan program. It provides an unnecessary subsidy tpicall because officials believed the for the wealthy. projects would provide only limited benefits. GAO also discovered that 10 Action:Eliminate fideral price supports projectsworth S31 million in to. r homy.'" demonstration fundswere for local roads not even entitled to receive federal highway World War II also brought us federal funding. In other words, many highway subsidies for honey production. During the demonstration projects are little more than war, honey was declared essential because federal pork. the military used bees wax to wrap Perhaps even worse, there's no guarantee ammunition, and citizens replaced rationed that all these highway demonstration sugar with honey. When honey prices projects, once started, will ever he finished. dropped after the war, the kderal GAO noted that project completion costs government began subsidizing honey will greatly exceed authorized federal and production. state contributions, and that state officials The program was intended to he are uncertain where they will find more temporaryto last until there were enough finding. Further, only 36 percent of the honeybees available for pollination. But project funds GAO reviewed had even been more than 40 years later, every bee keeper in obligated by the beginning of fiscal year the U.S. is eligible for federal loans. In 1991, even though they were authorized in 1992, the federal government paid 7 cents a 1987. Some projects with no activity since

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1987 may never use their funds. Finally, But the program didn't end in 1988 as no federal provisions allow for canceling scheduled. Quite the opposite. Congress or redirecting funds, nor can states extended it for another ten years and its redirect demonstration funds to other budget has grownfrom $30.6 million in transportation projects.-'6 1988 to $38.6 million in 1993. We urge Congress to rescind all The program is unneeded: 25 subsidized unobligated authority and appropriations communities are less than 75 miles from for highway demonstration projects. Some hub airports. It is also costly: nine locations, of the savings would go to the taxpayers. receiving $3 million in subsidies in 1992, We recommend that all highway projects be carried five or fewer passengers a dayone forced to compete for any remaining savings community, only 60 miles from a hub through the normal allocation and planning airport, received subsidies averaging $433 processes set up in more recent legislation. per passenger. Opposition to the program is rising. The Action: Cut Essential Air Service Transportation Department's Inspector sztbsidies.3- General has concluded that the program's costs outweigh its benefits. And after many Sometimes, to push through controversial years of resistance, a Congressional changes, Congress grants affected groups subcommittee agreed this year that the special privileges. This was the case when program lacks merit-based criteria. It's time airlines were deregulated in 1978. Because to prune these subsidies. We recommend people living in small towns feared the loss eliminating subsidies to locations in the 48 of air service, Congress created the Essential contiguous states within 70 miles of a hub Air Service program. The program airport; limiting subsidies to no more than guaranteed continue services for a decade $200 a passenger, and giving the with federal subsidies if necessary The Transportation Department authority to purpose was to allow these communities to establish more restrictive criteria over time. learn to live in a deregulated environment. This would save $13 million a year.

STEP 2: GOT i ECTING MORE

Given the size of the federal deficit, subsidizing their less scrupulous neighbors. government must find better, more Their actions raise the costs of federal efficient, and more effective ways programs, divert money from where it was to pay for its activities. In Chapter 2, we intended, and discredit our system of showed how government could become governance. Here are the first steps we will more businesslike. In this section, we take to end these practices. propose three ways to increase federal revenues: introducing or increasing market- based user fees, collecting what is due the Raising User Fees government in delinquent loans and in accidental or fraudulent overpayment of Congress and federal agencies have shied benefits, and refinancing debt at lower away from charging for federal services. But interest rates. government surely produces many goods Some people take advantage of and services for which consumers could, government's largesse. They default on and should, pay." User fees can serve exactly loans, or they double claim for health the same function as prices doproviding insurance benefits. Government has made it federal managers with invaluable far too easy for people to get away with information about their customers. If such actions. As a result, honest people are customers like the services they are paying

104 CUTTING BACK TO BASICS forif they find the experience of visiting a National Park System. One-third of NPS particular national park enjoyable, for primary paved roads are in poor or failing examplerevenues will increase. If the condition; a tenth of employee housing is agency can keep some of its additional obsolete or deteriorated; and 4,700 planned revenues, it will be able to pay the increased natural and cultural resource projects are on operating costs associated with its rising the waiting list for funding. Meanwhile, number of customers. It will, as a result, demands on the parks are rising sharply as learn to care about satisfYing those the number of visitorsboth American and customers.. foreigngrows each year's Pavingfor the services vou receive also is

an issue of fairness. Why should taxpayers Action: ;%:loinow all agencies70111'.1' subsidize concessionaires or visitors to qed0111rrrSCItIlgrfieSto; .11.71 National Parks, or pay the cost of VOW WC ri'0111 illeSC i11.11' determining whether a business should asea: dump sludge into the nation's waterways? Many services government provides because Even with a modest increase in fees, a they are in the national interest or because family of four will pay less to spend a week we do not expect people to pay for them. in Yellowstone National Park than they But the customers of some government would to see a first-run movie. The activities could and should pay. Many National Park Service should be allowed to agencies, including the Food and Drug keep 50 percent of revenues from fees to Administration, The Patent and Trademark pay for vital services and projects. Office, the National Technical Information The natural ..-ear is that federal facilities Service, and the Securities and Exchange .nonopolies and, unless their pricing Commission already charge their customers policies were regulated, they would become fees. In some cases, these fees cover the full price-gauging profiteers. The concern is cost of operations. Taxpayers are not called appropriate, but the policies it has led to are upon to pay for the services that others not. We would not recommend that receive. But, most agencies aren't allowed to national parks or documents repositories, keep the feesthe revenues are sent to the for example, become federal profit Treasury. Under these circumstances. centersbut they could, certainly, cover a agencies have no incentive to increase fees if larger part of their costs. They cannot market conditions merit it. charge exorbitant pricesafter all, parks are Where fees are allowed. Congress often in competition with each other, and with limits themremoving any discretion from many privately owned recreation areas. The local managers. The National Park Service, market will control the revenues they can for example, cannot charge more than $5 realistically collect. per car or S3 a visitor at many parks. At Pricing policy is an important busy Yellowstone, Grand Teton, and the management tool, and we recommend that Grand Canyon, fees are limited to S10 a Congress place it in the hands of many vehicle and S5 a visitor. Ending subsidies to more federal managers. The National concessionaires and moderately increasing Performance Review recommends fees would let the National Park Service increasing the use of user fees for many invest more in its crumbling infrastructure, activities. For example: and spend more to protect America's priceless natural heritage. The FDA must ensure that 1.5 -Iwo-thirds of all tie National Park million food products imported each Services facilities charge no admission fee at year meet the same safety and all. Yet the Park Service suffers from a multi- labeling standards as domestic billion dollar backlog in infrastructure products. It also certifies the safety of repair and rehabilitation projects for the exported foods. Thxpavers, not

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manufacturers, pay for these through the nationwide Small inspections. User fees could save Business Development Center taxpayers as much as $1.4 billion (SBDC) program. SBDC customers over 5 years.'" The agency should like the services they get, so the also have the power to collect fees for revenues from fees will enable the conducting inspections and reviews, centers to expand successful processing petitions and programs. applications, analyzing samples and issuing device reports for food, Action:Inc ease revenues by refinancing drugs, devices, and radiological debt or raising federal hydropower rates products. to cover full operating costs."

The Department of Veterans Affairs The Power Marketing Administrations runs a program to guaranteehome (PMAs), such as Alaska Power, were loans for veterans. It lets them mandated in 1944 to sell their power at low borrow at lower costs and make rates to help promote developmentin smaller down payments than would sparsely populated areas. Rates are still low be possible without assistance, today; in fact, the PMAs sell power to their because the guarantee protects public, private and cooperative utility lenders in the event of foreclosure by customers at below market rates. Thus,the reducing their potential loss. The low electricity rates enjoyed by customers in department collects fees for this some areas are subsidized by American service, yet they are set very low. A taxpayers in others. Taxpayerssubsidize modest increase in fees costing an PMA utility customers through low-interest extra $6 per month, for example, loans. The interest rates most PMAs pay the would still provide homebuvers with government are artificallv low. As the better-than-market terms. Yet it interest on the Treasury's long-term debt would generate an additional S811.4 climbed in the 1960s, 1970s, and 1980s, million over 6 vears..4' the differential between those rates and rates on PMA loans created federalsubsidies for Under the Clean Water Act, the these projects. Army Corps of Engineers issues The Energy Department will take permits for discharges of dredged or immediate steps to increase revenues from filled materials into rivers, lakes and hydropower operations. The department streams. The Corps has processed will set a new rate policy for specified PMAs 15,000 applications at a total cost of to seek recovery of full operating costs. As $86 million. Yet it has charged only an alternative, the Energy Department may token fees for its services, collecting attempt to restructure thefinancing of the only $400,000 annually. This Bonneville Power Administration's debt, amounts to a $12 million annual allowing Bonneville to issue bonds at subsidy for commercial customers, market rates and repay its low-interest according to Defense Department Treasury loans. The department will estimates. Higher fees would help attempt to achieve such a refinancingwith not only taxpayers but Corps minimal effects on the near-term rates paid customers, because additional by its customers by seeking favorable bond revenues could pay for faster interest rates and lengthening terms of processing of applications.'' repayment.

The Small Business Administration should have the power to establish user fees for the services they provide

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Collecting Debt result: a four-fold increase in collections since 1989. At the end of last year the federal The VA, now called the Department of government was owed 5241 billion by Veterans Affairs, wants to go even further by former students, small businesses, farmers, expanding its cost recovery efforts into its companies developing alternative energy loan programs and establishing cost-sharing, sourceseven foreign companies and performance incentives. Local hospitals, for governments. This makes the federal example, might be allowed to keep some of government the nation's largest lender. Of the revenues they generate to buy new this total, a shocking $47 billion-20 medical equipment. Overall, VA believes it percent of the totalwas delinquent." could pull in another $500 million through To some extent, the federal government's 1999. unpaid debts reflect the fact that some of its Opportunities like this occur throughout loan programs operate more like grant the federal government. The Education programs. They are designed to meet Department, for example, wants to use the national policy goals such as increasing the additional repayments it would collect to pay number of physicians in rural areas and for further collections of Higher Education supporting democratic governments Act debts. Budget offices tend to oppose the overseas. But in other cases agencies have idea of sharing new earnings with the agency done a poor job in collecting what they are in question, because they want 100 percent owed. After all, agencies are rarely held of the earnings to meet deficit reduction accountable for unpaid loans. All too targets. But unless the agencies have frequently, neither are delinquent incentives to generate the earnings, they borrowers. rarely produce them in the first place. If agencies were to put a higher priority The solution is twofold. First, Congress on pursuing delinquent debt and if should allow agencies to use some of the Congress were to grant them greater money they now collect from delinquent flexibility in their debt collection debts to pay for further debt collection operations, the federal government could efforts. Second, it should increase the collect more of what it is owed. The Office incentives agencies have to pursue debt of Management and Budget will work with collections, by letting them use a small each agency to develop debt collecting portion of their increased collections to strategies that employ the following invest in improving their overall operations. expanded powers. Action:Eliminate restrictions that Action:Give agencies the flexibility to prevent federal agencies from using use some of the money they collect from private collection agencies to collect delinquent debts to pay for further debt debt.' collection efforts, and to keep a portion of the increased collections." In addition to sharing in their earnings, agencies would benefit from being able to Small investments in debt collecting can use private debt collectors, as the yield high returns. In 1989, the GAO Department of Education has done. While discovered that the Veterans Administration we know how cost-effective private had not recovered $223 million in health collection agencies are, many agencies payments from third parties, such as including the Farmers Home insurers. Congress then changed the rules, Administration, Social Securitv, the IRS, allowing the VA to keep a portion of and the Customs Serviceare statutorily recovered third-party payments for prohibited from using private agencies for administrative costs. With this incentive, the job, even on a contingency-fee basis. the VA increased its recovery effort. The Congress should lift those restrictions.

114 107 '()%1 RI 1) 1 119 H) RI '(l F' (.RI XII \C,\ GO% 1 RN MINI 11111 WORKS LitI FIR & s Liss

Action:Authorizethe Deoartment of' underpayments and to impose fees on a Justice to retain Up to one percent of broader range of administrative costs. amounts collected through civil debt collections to cover costs.' Action:HID should offer incentive contracts to private companies to help When borrowers default on their federal ,/,tlerally sub sidized home owners loans, the first step is for the lending agency :.efinance their mortgages at lower rates. 19 to try to collector, if permissible, to use a private debt collection agenc-y. If these HUD has succeeded in extending the measures fail, agencies refer claims to the dream of home ownership to many people. Department of Justice. While the But the HUD section 235 program does Department handles the larger claims itself, not take advantage of lower interest rates it refers those under $500,000which because the assisted owners do not have constitute 90 percent of all claimsto local enough incentive to go through the work U.S. attorneys' offices. In overworked U.S. and bother of refinancing. attorney's offices, debt collection is often a We recommend that HUD offer low priority. incentive contracts to private companies to To encourage the Department of Justice let them share a percentage of the savings to to collect debts, Congress should allow the the government of refinancing the department to retain 1 percent of mortgages. They could work with the home everything it collects through litigating civil owners to arrange refinancing, doing the debt cases under $500,000. These retained necessary leg work and make cost effective kinds should be used for paying staff payments to home owners to induce them working on debt collection, for paying case- to refinance. Projected savings from this related costs, and for paying for training and program could exceed $210 million other investments to improve local debt over five years. Yet program beneficiaries collection programs. would continue to receive exactly the same benefits. Action:fly Royalty Management Program will increase the royalty paionents it collects ('V developing new Eliminating Fraud uter proc'rains to analyze and cross- verifY While many think government steals from people, the reverse is also true: People The federal government collects royalty steal from government. And, unlike private payments from mining companies companies, some government agencies recovering minerals from federal land. The aren't very good at finding and prosecuting Interior Department's Minerals thieves. Moreover, the bureaucracy does too Management Service (MMS), the agency little to deter dishonest people. charged with the job, collects $4.7 billion annually. But its auditing system is limited Action:Make it a felony to knowingly and focuses heavily on the companies lie on an application for benefits under paying the largest royaltiesso smaller the federal Employees' compensation Act companies don't always pay their share. The :tnd amend Federal law so individuals Department of the Interior will increase its convicted offinud are ineligible.* collectionsby as much as $28 million continued benefits.'" over five yearsby developing better accounting and auditing systems. In make The federal government manages many sure MMS can collect its dues, the Interior programs that provide benefits to people Department will ask Congress for injured or taken sick. Not all the recipients permission to assess penalties on substantial are legitimate. When agencies discover 115 108 CUTTING BACK TO BASICS

fraud, however, they are often hamstrung in caseload. The backlog of 70u,000 pending their ability to terminate benefitsso they claims is taking priority over reviewing keep paying fraudulent claims. For example, continuing cases. under the Federal Employees' The agency is working to create a single Compensation Act (FECA), the Office of disability claims processing system, but it Workers' Compensation Programs cannot needs greater budget flexibility to invest in terminate benefits even after finding that hardware and software and to redeploy staff someone made false statements about a to meet growing demands.54 disability or an illness. In one case, a former federal employee Action:Create a clearinghouse for the collected almost $200,000 in benefits under reporting and disclosure of death data." the FECA disability program while working. When a witness told the Obviously, no federal agency should government about the fraud, the employee continue paying benefits after recipients hired someone to kill him. The employee have died. But stopping payments is not was convicted of falsifying his application easy because sharing death information for FECA benefits, but the government among different levels of government is could not cut off his compensation on the restricted and not always reliable. The Social basis of his original false statements alone.'' Security Administration regularly obtains death information from states under Action: Improve processes for removing agreements with each of them (except people who are no longer disabled front Virginia). But most agreements restrict disability insurance rolls.52 SSA's disclosure of death data, so the information the SSA collects cannot always The Social Security Administration be shared with those running other serves more than 10 million people through federally- and state-administered benefits two disability programs, Disability programs. The result is millions of dollars in Insurance and Supplemental Security overpayments. For Americans living Income. But the General Accounting Office overseas, the problem is even worse. SSA has estimated that 30,000 of these recipients gives benefit checks to overseas embassies to are no longer eligible. Overpayments from deliver. The State Department claims that the trust funds to ineligible people are SSA must check that the recipients are still projected to reach $1.4 billion by 1997." alive; SSA says that it's the State The Social Security Administration faces a Department's job. dual problem: overpayment to unlawful We need not serve customers who are no claimants and lengthy delays in providing longer alive. Congress should amend the benefits to legitimate claimants. Using Social Security Act to allow SSA to share present management practices, the agency death information with other programs.' lacks the staff to review its rapidly escalating

\ 116 109 WORKSBr r ent & CusIS 1.I.SS Ro RFDI Oft rnRI'sV1. I'S ('RI A I INC, A GONTRNSO'NrI'llA I STEP 3: INVESTING IN GREATERPRODUCTIVITY ne of the greatestobstacles to and justice operate working capital funds innovation in government is the that finance specific innovations, such as absence of investment capital. The modernizing information technology and 0appropriations for most federal agencies last computer systems. And theCommerce only one vear: anything left over at the end Department has a Pioneer Fund that gives of the year disappears. So it's difficult for employees cash grants (rather than loans) of organizations to scrape together enough up to S70,000 tofinance quality and money to make evensmall investments in productivity improvements. The money training, technology, new work processes, or can beused for supplies, equipment, or program innovations. V-re have expert services. Somefunds have financed recommended that agencies he allowed to projects related to advanced technology, keep half of am savings they can generate. such as the development of public In addition, we propose a serves of information on CD- RONls. innovation hinds from which they can State and local governments use this borrow. When managers and their approach quite often. N1any cities have long employees are allowed to borrow for long- had some form of innovation fund. In term investments, they have a realincentive Florida, Governor Lawton Chiles cut to implement creative new ideas. departmental budgets by five percent across The IRS and Interior Department the board, then gave half back to agencies already have innovation funds.' Treasury that developed plans to invest in higher

The Productivity Bank: Paying When the Department of License and Big Interest in Philadelphia Inspection beefed up collection and enforcement efforts and generated $2.8 million Mayor Ed Rendell says it's nor hard to more than expected in 1992,Rendell said, the change incentives so that public employees save city let the department keep $1 million of the money. savings to hire more inspectors and, in turn, "We tell a department, 'You go out there and exceed the $2.8 million in 1993. do good work,' " Rendell told the National The city also opened a Productivity Bank, Performance Review's Reinventing Government..from which departments can borrow for Summit in his city. "You produce more investment-type projectsthat is, capital r revenue. You cut waste. Andwe'll let you keep equipmentto produce either savings or some of the savings of theincreased revenue.' enough revenues to repay the loan in five years. Traditionally, the mayor said, "every nickel To ensure that departments don't apply that they would have saved would have gone frivolously, the city subtracts loan payments right back to the general fund... They would from annual departmental budgets. have gotten a pat on the back, but nothing Successes already abound. The Public else." Now, city employees save because their Property Department repaid a $350,000 loan departments can keep some of the savings for to buy energy efficientlamps in one yearafter projects to help them perform better. saving $700,000 in energy costs.

110 11 CUTTING BACK TO BASICS productivity and effectiveness. government investments in productive fixed At the federal level, one important use for assets, like computer systems. Right now, such funds would be technology we count a $5 million investment to investments. These are often considered too purchase a Local Area Network computer expensive for agencies operating budgets. system in exactly the same way as we count even though they save money in the future. $5 million spent on staff salaries. American The Agency for International Development, businesses do it differently. Business for instance, needs a centralized information depreciates fixed assets over time: If the $5 management system to coordinate its million computer system has a useful life of central office with its international field five years, then its S5 million acquisition offices. Because its information systems lack costs will be spread mg over five years. Poor essential data and are not coordinated, they choices of capital investment and the provide inconsistent, inaccurate, and acquisition methods are currently costing incomplete reporting that managers the taxpayer millions of dollars each year. frequently do not trust. Agencies such as Listen to Eleanor Travers, the director of AID should have authority to create Pathology and Laboratory Medicine for the innovation funds for capital investment Veterans Hospital Administration. She told loans to reduce futux operating costs. the National Performance Review meeting at the Department of Veterans Affairs in Action:Allow all agencies and August 1993: departments to create innovation fimds-58 Procurement of'equipment is held up Congress should authorize a two tier because capital dollars to purchase system of innovation hinds: small loan equipment are frozen. And you asked funds within agencies; larger funds at the what dumb rules there were we could departmental level. These would be change. Allow our hospital directors and capitalized through retained savings from our top managers to use operating dollars operational appropriations. For the new when they find it's necessary to do leasing system to work well. Congress should allow rather than purchasing...Please help all new and existing innovation funds to its loosen up the capital fiend so that we invest in joint projects with other agency don't have to ,go to Congress and wait hinds, with state or local governments, or two and a half years for this line item to with industry. change. If managed according to market principles, innovation hands would produce The budget should recognize the measurable improvements in agency special nature and long-term benefits of efficiency and significant taxpayers savings. investments in fixed assets through a Strict repayment schedules, with interest. separate capital budget, operating budget, would discourage careless borrowing. and cash budget. The separate capital budget will explicitly show expenditures on Aeon:The govo.nment should ensure fixed assets, and will help to steer our scarce that there is no budget bias against long- resources toward the most economical term investments.''' means of acquisition of the most needed assets. The cash budget reflects the effect of Part of straightening out the govern- both the capital and the operating budget merit's hooks will involve adopting some on the economy. Therefore. the discipline financial distinctions that business uses. oldie cash outlay caps in the Budget Federal bookkeeping rules discourage Enforcement A .t must he maintained.

118 III FROM RED CAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & Cos FS LESS

STEP 4: REENGINEERING PROGRAMS TO CUT COSTS In the past turbulent decade, many performance review could never learn companies have been forced to enough about internal agency work recognize that they weren't organized in processes to redesign them intelligently. But the right way to do what they were doing. we can begin to redesign several broad Their organization structure reflected government-wide processes: The way we history, not current needs. Reform wasn't design programs. develop regulations, and easytoo many people had vested interests resolve disputes. in preserving their particular part of the organization. As a result, most attempts at reorganization were reduced to shifting Electronic Government things among different boxes on organizational charts. Businesses found tha.,. The history of the closing decade of this century is being written on computer. You wouldn't know it if vou worked for many federal agencies, however. While private Weare determined to movefrom an businesses have spent the past two decades industrial age government to information age either getting rich by developing new government, from a government pre-occupied computer technologies or frantically trying to keep up with them, government is still with sustaining itself to a government clearly doing things our parentsperhaps even our focused on serving the people. grandparentswould recognize. Offshoots of the unexpected and fertile Vice President Ai Gore marriage between computers and May 24, 1993 telephones have changed just about everything we dohow we work, where we work, the design of the workplace, and the skills we need to continue working. the only way to break the mold was to Organizations don't need as many people reengineerto forget how they were collecting information because computers organized, decide what they needed to do, can do much of it automatically. They don't and design the best structure to do it. An need as many people processing that obvious insight? Perhaps. But the best ideas information because clever software arc always the ones that seem obvious programs can give managers what they need after their discover: at the press of a button. We will reengineer the work of Factories don't need to stockpile large government agencies in two ways. First, we inventories because smart machines on the will expand the use of new technologies. assembly lines order components from With computers and telecommunications, equally smart machines working for we need not do things as we have in the suppliers. Yet government agencies stand past. We can design a customer-driven guard over warehouses of unused office electronic government that operates in ways furniture. Retailers ship the right size of that, 10 years ago, the most visionary clothing to customers as soon as they receive planner could not have imagined. a telephone order and a credit card number. Second, we will speed up the adoption of Yet we can't pay our taxes that way. new ways to improve federal operations. Computer companies give technical Most of this work will be done by the advice for our computers and software over federal agencies themselves. An outside the telephone 24 hours a day by fax,

1I 2 CUTTING BACK TO BASICS modem, or voice. Yet, the Social Security thousands of administrative staff years. Administration can't do the same. More than 3 billion food stamps will be Failure to adapt to the information age printed this 'ear and distributed to more threatens many aspects of government. Take than 10 million households. Each month, the State Department, a globe-spanning 210,000 authorized food retailers receive organization dependent on fast and accurate these coupons in exchange for food. These communications. Its equipment is so old- retailers carry stacks of coupons to 10,000 fashioned that the Office of Management participating financial institutions, which and Budget says "worldwide systems could then exchange them with Federal Reserve suffer from significant downtime and even Banks for currency. The Federal Reserve failure.""" According to OMB, its systems Banks count the couponsalthough they are so obsolete and incompatible that already have been counted more than a employees often have to re-enter data dozen timesand destroy them. The several times. These problems jeopardize administrative cost of this systemshared our ability to meet our foreign policy equally by federal and state governments objectives. is almost S400 million a year. Or think about the way our government We will support Agriculture's sends out checks. For 15 years, electronic commitment to the goal of issuing food fluids transfers have been widely used. They stamps electronically by 1996. Electronic cost only 6 cents per transfer, compared benefits transfer could eliminate the paper with 36 cents per check. Yet each Year, chase, improve services to customers, and Treasury's Financial Management Service reduce fraud. At the same time, it could be still disburses some 100 million more used to authorize Medicaid payments. checks than electronic funds transfers. distribute welfare payments, infant We still pay about one federal employee nutrition support, state general assistance, in six by check and reimburse about half of and housing assistance. It could eliminate travel expenses by check. Only one-half of billions of checks, coupons, and all the Social Security paymentswhich account other paperwork. record keeping and for 60 percent of all federal paymentsare eligibility forms that clutter the welfare made electronically, making SSA the world's system. largest issuer of checks. Only 48 percent of Why has business moved faster than the Veterans Affairs Department's payments government into the electronic are made electronically. Fewer than one in marketplace? In the first place, government five Supplemental Security Income is a monopoly. Public organizations don't go payments and one in ten tax refunds are out of business if they don't have the latest transferred electronically."' We have only and smartest machines or the best approach begun to think about combining electronic to managing resources. In the second, funds transfers for welfare, food stamps, employees who do want to modernize subsidies for training programs. and many management have their hands tied with red other government activities. tapedetailed budgets and cumbersome Private financial transactions have procurement proceduresthat deter become a lot easier in the past decade: hank investment. Finally, there is a natural cash machines are open 24 hours a day, inclination, familiar to private and public credit cards let us avoid carrying cash, and managers alike, to do things as they've we can buy goods over the telephone. This always been done. saves many of us a lot of time and money. It What can we do to help our federal could save the Government a lot of time bureaucracy catch up? and money, too. Consider the paper chase involved in running the welfare system. The Food Stamp Program, alone, involves billions 9f bits of paper that absorb

120 113 !ROM RED TAPE TO RESULTS CRLA GOVERNMENT run] WORKS BETTER & COS rs LESS

Action:Support the rapid development "smart' benefit cards. With a computer of a nationwide system to deliver chip in the card, participants could receive government benefits electronically.62 public assistance benefits, enroll in training programs, receive vcierans services, or pay OMB has already begun the process. The for day care. The card would contain electronic benefits transfer steering information about participants financial committee, .vhich OMB oversees, will positions and would separately track their develop an implementation plan for benefit accountsthus minimizing fraud. electronic benefits transfer by March 1994. Electronic government will be fairer, more The system is workable with today's secure, more responsive to the customer, technology. For cash programs such as and more effic,ent than our present paper federal retirement, social securim based systems. unemployment insurance. or AFDC. Barriers still stand in the way. Agencies benefits would be electronically deposited will have to work together to develop a directly into recipient bank accounts comprehensive nationwide strategy for electronically. If people didn't have hank implementation: it will do no good for each accounts, these could be created once the agency to develop its own process. We will individual enrolled in a program. For -non- need to strengthen the partnership between cash- programs such as food stamps, state and federal governments in developing participants would have accounts through and operating the system. We will have to which they could make purchases at eliminate some regulations that would approved food storesanalogous to credit prevent this radical change in how cards with credit limits. Stores would debit government operates. And the National accounts as eligible items were purchased. Institute of Standards and Technology will The entire system could operate on or be have to issue final standards and protocols compatible with the existing commercial for electronic signatures to facilitate infrastructure through which private funds electronic funds transfers and the electronic are transferred electronically. approval of budget and financial Agencies have begun experiments with documents. electronic benefits transfers. Welfare checks, food stamps, and state-collected child Action:Federal agencies will expand support, for example. are distributed their use of electronic government." electronically in Maryland. There are test sites in Iowa. Minnesota. New Mexico. Opportunities abound for cutting Ohio, Pennsylvania, Texas. and Wyoming. operating costs by using We know that a joint federal-state effort to telecommunications technologies. The transfer welfare benefits electronically National Performance Review has identified worksand works well. The system is several projects that would improve strongly supported by recipients. the state government's productivity and reduce the welfare agencies, food retailers, banks, and burden of reporting on individuals and participating commercial networks. We also businesses. know that direct federal deliven. of funds by The IRS is introducing an efficient electronics is cost-effective. We cant Yet computer system, automating tax returns, project with certainty what the savings and creating a wholly new work might he. but preliminary estimates suggest environment for its 115,000 full-time S1 billion over five years once electronic personnel. The agency currently operates a benefits transkr of food stamps is fully computer system put together in the implemented. 1960snot the tool our principal revenue In the future, the concept of electronic collector should be using. 'lb make the new government can go beyond transferring system work, the agency will need to figure money and other benefits by issuing plastic. out how to train its staff to operate in a

1 1 4 121

:11tr.1.4...."P"sr e 1;1"x54 : "42,110100"7"1111kON'. de7"1645ii" CUTTING BACK TO BASICS reengineered agency. We will support the We will continue investing in the Social agency's investments in new hardware and Security Administration's massive project to training, as discussed in Chapter 3. create a single nationwide disabiliry The IRS will also manage the creation of processing system.' This will require an integrated electronic system for financial considerable investments in new tiling, reporting, and tax payment by 1996. telecommunications and computer systems The system will serve federal, state, and as well as in staff retraining. It will also local taxpayers. It will allow the electronic mean that the SSA will have to work filing of tax returns by individuals and cooperatively with state-run disability companies, the electronic reporting of determination offices, set performance wages and withholding information, and standards, and take over those that don't other data required by all levels of meet standards. Many of the system's worst government. In addition, the inter-agency processing bottlenecks are in the state offices Wage Reporting Simplification Project that approve individual claims. (WRSP) will be in place quicklyallowing businesses to file information once to serve many different purposes. The savings from fully implementing this program over the Money for Numbers life of the system have been projected at S1.7 billion for government agencies and 513.5 billion for private employers. The National Technical Information Service Individuals will be able to file federal and runs a large and complex information collection state income taxes simultaneously through and marketing operation. It is the nation's largest an Electronic Data Interchange, with their privacy protected and fraud prevented clearinghouse for scientific and technical through digital signature standards. information. Yet it covers the costs of its operations Electronic filing alone will save the IRS and without receiving a penny in federal state agencies from having to mail out the appropriations. Its customers pay and their equivalent of 75 boxcars of forms. Working together, the Labor numbers are growing every year. Department and IRS will develop an NTIS's archives contain about 2 million automated system all employers can use to documents (from research reports to patents), more file electronically the pension plan forms employers required by the Employee than 2,000 data files on tape, diskette, or CD- Retirement Income Security Act." At ROM, and 3,000 software programs. This resource present. it costs the Internal Revenue is growing at the rate of about 70,000 items each Service more than $10 million a year to year. NTIS's press releases, on-line services, and enter all these forms into its data base. The Labor Department will develop CD-ROMs serve 70,000 customers, three-quarters computer programs to determine quickly of whom are from busiaess and industry. the appropriate wages on federal service In 1991, NTIS collected $30.7 million in contracts!°' Currently, all federal agencies contracting for servicesfrom cleaning revenues 77 percent from its clearinghouse services to building managementmust activities, the rest from other government agencies apply to the department for a determination that reimburse NTIS for patent licensing services, of appropriate wages. The process is and from billing other agencies for producing and supposed to ensure that federal contracts don't undermine local prevailing wages. The distributing documents. I' 'TIS is required by law to process takes an average of 57 days and, be self-sufficient. with a growing number of service contracts, more and more arc subject to delays.

122 1 1 5 Air

I ROM RID I APE E0 RESULTS 04F.ATINc A COVERNMI NT THATWORKS BETTER & COSTS LASS

Some of these investments will require Index. Good data will be vital in solving the Congressional appropriations. But some can problems associated with global climate be financed through innovation funds, changes. The U.S. must be a leader in described above, and some will become developing these information resources. possible to pay for as soon as rigid budget regulations are relaxed. Action:In partnership with state and local governments and private companies, Action:Federal agencies will develop we will create a National Spatial Data and market data bases to business.6- lufrastructure.68

Federal agencies must treat the data they Dozens of agencies collect spatial data compile and process as potentially valuable for example, geophysical, environmental, resources. Congress alerted the bureaucracy land use, and transportation data. They to the value of information in 1991 by spend S I to 3 billion a year on these efforts. passing the American Technology The administration will develop a National Preeminence Act. The act required federal Spatial Data Infrastructure, (NSDI) to agencies to transfer to the National integrate all of these data sources into a Technical Information Service copies of single digital resource accessible to anyone federally funded research. At NTIS, the with a personal computer. This resource will information is organized and made available help land developers and conservationists, to research scientists in academia and in transportation planners and those industry. NTIS has developed an aggressive concerned with mineral resources, and marketing strategy and pricing policy that farmers and city water departments. have greatly increased its revenues. Because of the value of the data, it will be The Census Bureau has pioneered the possible to attract private sector funding for use of computer technology such as CD- its collection, processing, and distribution. ROM technology to make federal data The Federal Geographic Data Committee, available. By 1992, the Bureau sold census which operates under the auspices of OMB, data to 380,000 customers on tape or disc plans to raise enough non-federal funding directly, and served another I.1 million to pay for at least 50 percent of the project's customers indirectly. cost. It will set the standards for data Unfortunately some federal agencies lag collection and processing by all agencies to behind private data retailers in the services ensure that NSDI can be developed as they offer their customers. People buying economically as possible. Census data must order it through paper order forms or by telephone during business Action:The Internal Revenue Service hoursonly 9 hours a day, 5 days a week. If will develop a system that lets people pay private software companies offer 24-hour a taxes by credit card.69 day technical support, so should the Census Bureau. The Customs Service lets people pay Other agencies will begin to exploit the duties on imported goods by credit card. potential of the information they collect. Americans should have the same convenient The Commerce Department, for example, way to pay taxes. It will save time and cut will develop a manufacturing technology the IRS's collection costs.-1) There is one data hank that brings together information hitch: Those who pay by credit card could residing in the National Institute of avoid paying back taxes simply by filing for Standards and Technology, the Defense personal bankruptcy. This escape Department, federal research laboratories, mechanism can't be employed today and other organizations. Commerce will because back taxes are, under bankruptcy also use its climate data as the basis for law, a "non-dischargeable" debtthat is, developing a National Environmental Data they are a debt that remains even after

1I 6 12j CUTTING BACK TO BASICS someone becomes insolvent. Therefore, the to target training programs on dislocated use of credit cards for tax payments should workers, we didn't anticipate the be delayed until Congress has amended the bureaucratic hassles involved in establishing bankruptcy statute to prevent taxes paid by eligibility. credit card from becoming a dischargeable But the fact that we did not anticipate debt. Our goal is to increase customer consequences does not mean that we could convenience, not to open up another not have done so. Many different programs loophole through which people can dodge have been triedby federal agencies, by paying delinquent taxes. state and local agencies, and by governments overseas. We have built up what lawyers would call "case law": lots of Reengineering to Use precedents about what works and Cost-Cutting Tools what doesn't. The trouble is that, unlike case law, these precedents aren't easy to find. Our reinvented government will be able Congressional staff or agency employees to cut further costs by using new ways to designing new programs have no systematic earn' out traditional duties. To begin with, way to find out what has been tried before we will have to get a lot smarter about how and how well it has worked. The result% we design government programs. The Endless reinvention of third rate or failed President's Management Council will play a programs. lead role in helping government learn from In 1981, for example, the chairman of its past failures and successes to design the House Banking Committee asked the better programs. In addition, new Congressional Budget Office if it knew of approaches to regulationsuch as any studies evaluating government loans as negotiated rule makingcan reduce an effective policy tool. CBO did not. Yet conflict and produce better results. Finally, the federal government had lent hundreds alternative techniques for resolving disputes of billions of dollarsand it continues to can avoid many of the costs of traditional do so today. The price we pay for this litigation. ignorance is a mountain of delinquent debt and a raft of discredited government Action: The President's Management initiatives. Too many policies and programs Council will help agencies design and are built on equally feeble foundations. redesign better programs. ° In 1988, Congress recognized this dilemma and provided for the As taxpayers and customers we have establishment of a National Commission on been, time and time again, victims of the Executive Organization, patterned after the thoughtless expansion of government. First Hoover Commission. Its charter would When new programs were introduced or have included a requirement to "establish old ones retargeted, little thought was given criteria for use by the President and to what economists blandly label "second Congress in evaluating proposals for order effects"the unintended and government corporations and government- unwanted consequences of actions. These sponsored enterprises and subsequently unintended consequences are the collateral overseeing their performance." The new damage responsible for so much of the commission could have been activated by waste documented in this report. When we presidential directive. It was not. placed limits on crop deficiency payments, To begin our attack on ignorance, the we didn't realize how easy it would be to President should direct the President's establish eligible shell-corporations. When Management Council to make program we added new procurement standards, we design a formal discipline throughout the didn't anticipate the difficulties caused by federal government. The PMC will centralized decision making. When we tried commission the preparation and 124 117 FROM RED TAPE. TO RESULTS CREA HNC; GOVERNMEN r THA r WORKS BETTER & COS FS LESS

publication of a program design handbook children, states have had to introduce their and establish pilot efforts within agencies to own regulations without the benefit of strengthen their ability to design programs. federal guidance. Some of these state These pilot programs will help senior regulations have later been overturned after management design new programs, evaluate federal regulations were eventually issued, current programs, and create models for leaving states financially liable. many different types of programs (research New rules and regulations can also contracts, loan programs, tax preferences, generate costly litigationa bonanza for and insurance programs to name just a few.) lawyers. Agencies writing the rules to Since many programs originate in implement environmental laws. according Congress, the Legislative branch should also to one expert, often find "too frequently work to improve staff capacity. We urge the that their proceedings become a Offices of the Legislative Counsel, the battleground for interest groups and other Congressional Research Service, and the affected partiesin effect little more than General Accounting Office to fill this role. the first round of the expected litigation." As both the legislative and executive There are better ways to make rules. A branches elevate the discipline of program small group of federal agencies has pioneered design, we will get better programs and less a process called negotiated rulemaking. In contentious relations between the two 1990, Congress recognized and encouraged branches of government. the process with passage of the Negotiated But we need more than good programs. Rulemaking Act. We believe negotiated We need better rules and more efficient rulemakingcolloquially referred to as "reg rulemaking. Federal agencies administer neg"is a process every rulemaking agency tens of thousands of laws, rules, and should use more frequenth.-3 regulationsand the number is growing quickly. For better or worse, government's Action:Agencies will make greater use of rulemaking, even more than its negotiated rule making. appropriations, shapes our lives. Costs, for the most part, are offset by The "reg neg" process brings together benefits. Our system of laws and rules is the representatives of the agencies and affected foundation for our economic success. It groups before draft regulations are issued defines and protects personal and property and before all sides have formally declared rights and provides the framework for the war. The group meets with a mediator or orderly conduct of social and business "facilitator." The negotiators reach affairs. consensus on the regulation by evaluating But some aspects of rulemaking don't their own priorities and making trade-offs. work well. As rules extend into increasingly The negotiating process allows informal complex areas of our environment, give and take that can never happen in workplace safety, health, and social rights, court or in a public hearing. If agreement is their consequencesboth deliberate and reached, the agency can publish the unintendedalso grow. As this happens, proposed rule, accompanied by a discussion we introduce more and more safeguards of the issues raised during negotiations. into the rulemaking process. The result is Even if both sides are too far apart to reach not always what we want. Hearings, consensus, agency staff learn a lot during reviews, revisions, more reviews, more the process that helps them improve the hearings, and even more reviews are regulations. When the parries do reach cumbersome. costly, and time consuming. consensus, regulations are issued faster and For example. because the Department of costly litigation is avoided. Health and Human Services has been slow When EPA applied reg neg techniques to to issue regulations on such vital areas as the the issue of emission standards for wood allocation of funds for the elderly and for burning stoves, it was able to put standards 125 118 CUTTING BACK TO BASICS into effect two rears faster, and with much Alternative Dispute Resolution (ADR). better factual input, than it could have Alternative Dispute Resolution (ADR) without negotiations. Manufacturers of includes mediation (a neutral third party stoves. in turn, were able to begin retooling helps the disputants negotiate), early neutral to meet standards without another two evaluation (a neutral, often expert. person years of uncertainty. evaluates the merits of both sides), factfinding (a neutral expert resolves Action:Agencies will expand their use of disputes that arise over matters of fact, not alternative dispute resolution interpretation), settlement judges (a techniques. ' mediator settles disputes coming before tribunals), mini-trials (a structured Federal agencies also need better and settlement process), and arbitration (an cheaper ways to resolve disputes. Enforcing arbitrator issues a decision on the dispute). thousands of difficult and sometimes Overcrowded courts are already controversial ruleshowever carefully they encouraging private litigants to use ADR. are designedleads to disagreements. State Private contracts often specify the use of and local governments, businesses, and ADR to resolve disagreements among citizens challenge Washington's right to signatories. In 1990, Congress passed the regulate certain issues, or they challenge the Administrative Dispute Resolution Act, the enforcement of specific regulations. authorizing every federal agency to develop Solving these disputes can be expensive. its own ADR policy. Some have, but some It involves high-priced lawyers, it clogs the have dragged their feet. courts, and it delays action. Each year, Those that have used ADR have saved 24,000 litigation matters reach the 530 full- time and money and avoided generating ill time attorneys and 220 support staffers will. The Labor Department started a pilot employed by the Labor Department alone. program last year for OSHA and Wage and It often takes years to resolve these disputes, Hour cases and found it much quicker and postponing the implementation of cheaper. The Federal Deposit Insurance important programs and preventing a lot of Corporation saved more than $400,000 people from doing what they are paid to do. ,.vith a single, small pilot program. The In some cases, litigation is important: It Farmers Home Administration has used interprets the law, sets important ADR on foreclosure casesnot only saving precedents, and serves as a deterrent to money but actually avoiding foreclosure on future wrongdoing. But in many cases, no several families. This type of innovation one really winsand the taxpayer loses. It is should spread faster and further across the often cheaper to resolve conflicts through federal government. new techniques known collectively as

126 119 I ROM RID tPE TO RINI:1.1'S CR1 A II NG X GoVIRNMNT I IIAr WoRks &COSTS LESS Conclusion

/f we follow these steps, we will move was difficult for the king to spend a million much closer to a government that costs pounds and get his money's worth. less and works better for all of us. It will Fawning courtiers, belligerent Lords and be leaner, more effective, fairer, and more hundreds of other claimants each up-to-date. It will be a government worth demanded their share. The same is true what we pay for it. today. The money spigot in Washington is We do not deny that many groups will much easier to turn on than to turn off oppose the actions we propose to take. We and too little of the funds that gush from it all want to see cuts made, but we want irrigate where water is scarce. That is why them elsewhere. Eliminating or cutting we have not simply offered a list of cuts in programs hurts. But it hurts less, at least in this report. Instead, we have offered a new the long run, than the practice of processa process of incentives that will government as usual. Writing about imbue government with a new Britain's monarchy in the eighteenth accountability to customers and a new century, Samuel Pepvs once observed that it respect for the public's money.

12 120 :

CONCLUSION

Though I do not believe that a plant spring up where no seed has been, I have great faith ina seed. Convince me that you havea seed there, and I am prepared to expect wonders.

Henry David Thoreau

UAke many past efforts to change the government, the National Thisperformance review will not produce Performance Review will another report just to gather dust insome not end with the publication of a report. warehouse. We have enough of them already. We have identified what we must doto make government work better andcost less: President Bill Clinton We must serve our customers, cut redtape, Remarks announcing the National Performance Review, empower employees to get results, and cut March 3, 1993 hack to basics. Now, we will take action. The task is immense. The federal government has 2.1 million civilian and the Reinvention Teams and Labsnow employees. 800,000 postal workers, 1.8 in place in every departmentsucceed in million military personnel, and a S1.5 planting a seed. That seed will sprout only if trillion budgetmore than the entiregross we create a process of ongoing change that domestic product of Germany, the world's branches outward from the workwe have third largest economy. already done. The National Performance Review has How we proceed will be as importantas identified the problems and defined what we have done to date. Wemust avoid solutions. The President will issue the pull of implementation models thatare directives, cabinet secretaries will change familiar and comfortable but poorly suited administrative practices, and Office of to today's world. We must avoid creating Management and Budget will issue new bureaucracies to reform the old. We guidance. We will work with Congress for must actively involve government leaders at legislation where its needed. Senseless all levels. We must seek the guidance of regulations will be repealed; mechanismsto those who have successfully transformed enhance customer service will be created; large organizations in both the private and change will begin. public sectors. But we do not pretend to have solved The nature of our strategies willno every problem. We will transform the doubt cause discomfort. They will be federal government only ifour actions unfamiliar. They will not look like business

128 121 ROM RI 0 RLst.t.rs (:REA FING A GOVERN \11-.N r1"11. I WORKS BIIITI.14 & COs rS 1.1 SS

as usual.They will cnge the current two-way communication with federal culture. And they will demand federal employees and their risk-taking. organizations; If we are to bring about true change, however, some discomtort is inevitable. Our hi-partisan partnership with Congress; strategies are not untested; they have been used successfully by both public and private processes to listen to and use organizations throughout the country. feedback from customers and to succeed where others have failed, the citizens; and President and Vice President have committed to specific initiatives that will government-wide mechanisms to create a culture capable of sustaining monitor, coordinate, and facilitate fUndamental change. This shift in culture plans for reinvention. will not occur overnight. lb bring it.111011I, we will continue: The administration has already taken a number of steps to bring about the changes a cascading process of education. we are recommending. participation, and ownership at the First, we have launched Reinvention highest levels of the executive Teams and Reinvention Labs in even' branch; department to continue seeking ways to improve the government and put these ideas in practice. Second, we have begun to workand will continue to expand relationships- to do is to create a large What we're trying with leaders and representatives of federal number of changes, simultaneously in the employees from throughout the federal government. Because if you just change government. Indeed, the National Performance Review is the first one thing without changing someof the other government-wide change initiative to be things that need to be changed, we won't get run and stalled by federal employees. Our anywhere. actions will make employees jobs better, and their participation will make our We can bring the quality revolution, for actions better. example, into the federal workforce as well as it Third the President and Vice President could possibly be done, and i f we didn't fix have begun to work with the cabinet to develop performance agreements that will some of the other problems, itwouldn't amount institutionalize a commitment to and to much. We could fix the personnel system, but establish accountability for change. if we didn't fix the budgetary system and the Fourth, we have developed a mechanism to spread our basic principles throughout procurement system, then we would still be the government. The President will meet mired in a lot of the difficulties that we with the cabinet to develop strategies reflecting these principles and ideas, encounter today. We are trying to do a lot of committing all involved to take things at the same time. responsibility for changing the way we do business. Cabinet members will then go Vice President AI Gore through the same process with their senior Town Hall Meeting, managers, who will go through it with their Department of Veterans Affairs August 4. 1993 senior managers, and so on. Firth, the President is establishing a management council to monitor change

1 2 122 CONCLUSION and provide guidance and resources to those working to bring it about. The President's Management Council will be charged with responsibility for changing the culture and management of the federal government. Sixth, the Federal Quality Institute will help agencies with access to information, education, research, and consultation on quality management. Like our other values will, over time, changenot in initiatives, this models a basic tenet of the response to a mandate, but because people behavior we recommendencouraging are working together to change their managers to define their own missions and government. If we have done our job well, tasks, but providing the support they need the next generation of changes will be built to do a good job. on the foundation we have laid with this Seventh, we will launch future reviews of report. We are merely initial planners; the the federal government, targeted at specific President, the Vice President, the cabinet, problems. The National Performance federal managers and employees will be the Review was a learning experience; we architects and builders. learned what we could do in six months, Despite all the horror stories and years of and what we still need to do. We focused scorn heaped on federal employees, our heavily on the basic systems that drive government is staffed by people committed federal agencies: the budget, personnel, to their jobs, qualified to do them better, procurement, financial management, and hungry for the opportunity to try. The accountability, and management systems. environment and culture of government In subsequent reviews, we will narrow our have discouraged many of these people; the focus. For example, we plan a review of the system has undermined itself. But we can antiquated federal field office structure, and willchange that environment and which dates from the 1930s and contains culture. some 30,000 field offices. (See Chapter 4.) Over time, it will become increasingly Other targets might include the obvious that people are not the problem. As abandonment of obsolete programs; the old ways of thinking and actingare replaced elimination of unproductive subsidies; the by a culture that promotes reinvention and redesign of failed programs; the redefinition quality, a new face of government will of relationships between the federal appearthe face of employees newly government and state and local empowered and newly motivated, and of governments; and the reinvigoration of customers newly satisfied. relationships between the executive and legislative branches. Finally, the National Performance What Reinventing Government Review will continue to rely on its greatest Means for You asset: the federal employees who made it happen. They have all worked hard for We have talked enough of what we will change, and many will continue to work on do and how we will change. The more reinvention in their own agencies. They important question is how life will change constitute a network that will reach out to for you, the American people. other employees, sharing their enthusiasm, If we succeedif the administrationcan energy, and ideas. implement our recommended actions and During this process, a vision of change Congress can pass our legislative package will emerge beyond that which is contained you will begin to see a different in this report. Leadership and management government. Your mail will be delivered

I 130 MIST COPY AVAILABLE, FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

more rapidly. When you call a Social children and grandchildrenwill slow its Security office, you'll get through. When rampage. Our federal agencies will begin to you call the Internal Revenue Service,you'll figure out, bit by bit by bit, how to cut get accurate answersand if you don't, you spending, eliminate the obsolete, and will no longer be penalized. provide better service for less money If you lose your job, a local career center You will begin to feel, when you walk will help you find a new one. If you want into a post office or social security office or retraining, or you want to go back to employment service or veterans' hospital, school, you'll find counselors who can help like a valued customer. We will begin to you sort out your options, pick thebest spend more money on things you want and program, and pay for it. If you run a needhealth care, training, education, environmental protectionand less on 4.41 bureaucracy One day you will be able to conclude that you are getting a dollar of value for every dollar of taxes you pay. This is our vision of a government that works better and costs less. We know it will not come to be overnight, but we believe it is a vision we can bring to life. We believe this because we have already seen this vision come to lifein local governments, in state agencies, even in a few federal agencies. We believe it is the right vision for government as we approach the 21st century. It will take more than a dedicated President and Vice President to make this vision a reality, however. It will take more than dedicated employees. It will take dedicated citizens, willing to work long and small business, you will have fewer forms to hard to improve their government. fill out. It will take citizens willing to push their If you live in public housing, your social security offices and unemployment apartment complex might get cleaner and offices to treat them like customersand to safer. Perhaps you'll even be able to move demand that their voices be heard when your family to a safer, quieter, more stable they don't get satisfaction. It will take neighborhood. citizens willing to demand information Our workplaces will get safer because about the performance of their federal they are inspected more often. Our water organizations. And it will take citizens will get cleaner. Your local government will willing to act on the basis of that work better because it is no longer information. hamstrung by silly federal regulations. As our President has said so often, the And perhaps the federal debtthat $4 future is oursif we have the courage to trillion albatross around the necks of our create it.

BEST COPY AVAILABLE

124 131 ENDNOTES

PREFACE Council, July 1993),p. 111-12. Pollster Stanley 1. Bill Clinton and Al Gore, PuttingPeople First, Greenberg asked people if they agreedthat (New York, Times Books, 1992)pp. 23-24. "government alwaysmanages to mess things up." Seventy-two percent of Perotvoters agreed, 64 percent of Clinton voters agreed, and 66percent of Bush voters agreed. INTRODUCTION 6. Dilulio, John J., Jr., GeraldGarvey, and Donald I. Data taken from the following sources: "The F. ICettl, Improving GovernmentPerformance: : An average American...," Senator William Roth, vol. Owner's Manual (Washington,D.C.: Brookings 138 no. 51, Cong. Rec. (April7, 1992), p. SI; "Five Institution, 1993),p. 79. out of every six Americans...," CBS NewsPoll, unpublished, May 27-30, 1992, 7. Yankelovich, Daniel, AmericanValues and Public released June 1, Polity (Washington, D.C.: 1992; "Only 20 percent...,"an ABC News- Democratic Leadership Council, 1992),p. 7. Washington Post poll, taken April23-26, 1993, 8. National Performance asked: "How much of the time doyou trust the Review Accompanying government in Washington to do what is right:Just Report, Transforming OrganizationalStructures about always, most of the time,or only some of the (Washington, D.C.: U.S.Government Printing Office (GPO], September time?" Four percent said "just aboutalways," 16 1993). percent said "most of the time," 74percent said 9. Finegan, Jay, "Four-StarManagement," Inc. "only some of the time," and 6 percent volunteered (January 1987), pp. 42-51; Osborne,David, and "none of the time;" 1963 figure, University of Ted Gaebler, ReinventingGovernment: How the Michigan poll, cited in "FromCamelot to Clinton: Entrepreneurial Spirit is Transformingthe Public A Statistical Portrait of the United States," Sector (Reading, MA: Addison-WesleyPublishing Washington Post (August 23,1993), p. A15. Company, Inc., 1992),pp. 255-259; and Creech, General W. L, "Leadership 2. U.S. General Accounting Office(GAO), High- and Management Risk Series: Defense InventoryManagement The Present and the Future,"address presented at GAO/HR-93-12 (December 1992). the Armed Services Leadershipand Management 3. U.S. Office of Management and Symposium (October 11-14, 1983)(available from Budget (OMB), the Office of the Assistant Budget of the U.S. GovernmentFY 93 (Washington, Secretary of Defense for Installations, Pentagon, Washington, D.C., 1992) and Budget of theU.S. Government FY D.C.). 10. National Performance 94 (Washington, D.C., 1993); andinterview with Review Accompanying Report, Improving Customer Department of Housing and UrbanDevelopment Service (Washington, Budget Officer Herbert Purcell,August 26, 1993. D.C.: U.S. GPO, September1993). 4. U.S. Congress, Senate,Committee on 11. U.S. Department of Agriculture,Forest Service, Appropriations, Subcommitteeon Education, Labor Regional Office, Profile ofa Reinvented Government and Health and Human Services,testimony of Organization (Milwaukee, WI,May 24, 1993); "The Clarence C. Crawford, U.S. GAO,"Multiple U.S. Forest Service: DecentralizingAuthority," Employment Programs: NationalEmployment Government Executive (March1953), pp. 23-4; and Training Strategy Needed," June18, 1993. interviews with Forest Serviceofficials. 12. The President's Fiscal 5. Democratic Leadership Council,The Road to 1994 budget (page 40) Realignment: The Democrats and thePerot Voters estimates 2.1 million Federalnon-postal workers and (Washington, D.C.: Democratic Leadership 1.8 million military for 1994.Manpower, Inc. employs 560,000. GeneralMotors employs 362,000.

132 BETTER & COSTS LESS CREATING A GOVERNMENTTHAI WORKS FROM RED TAPE TORESULTS 22. Mission-Driven,Results-Oriented Budgeting. CHAPTER 1- CUTTINGRED TAPE 23. U.S. Congress, House,Democratic Caucus, Agriculture, Starting Over Waste, The Challenge of 1.U.S. Department of Task Force on Government (Washington, D.C., undated), p. 1. Sound Management(Washington, D.C., June 1992), 2. Estimate by Officeof Management and Budget. 24. Office of PersonnelManagement, Central Personnel Data File, unpublishedanalysis, March 3. National PerformanceReview Accompanying 1993. Calculations byRobert Knisely, National Report, Mission-Driven,Results-Oriented Budgeting (Washington, D.C.: U.S. GPO,September 1993). Performance Review. Gore from Bob Peterson, 25. National PerformanceReview Accompanying 4. Letter to Vice President Resource Management Jackson, NJ (undated). Report, Reinventing Human (Washington, D.C.: U.S. GPO,September 1993). 5. Department of Energy townmeeting of the National Performance Review,July 13, 1993. 26. Ibid. for of Public Administration, 6. Peter, Dr. Lawrence J.,Peter's Quotations: Ideas 27. National Academy Quill/William Morrow, Modernizing Federal Classification:An Opportunity Our Time (New York: D.C.: July 1991). 1977), p. 124. for Excellence (Washington, Resource Management. 7. Osborne, David, andTed Gaebler, Reinventing 28. Reinventing Human Government: How theEntrepreneurial Spirit is 29. Ibid. (Reading, Mk. Transforming the Public Sector 30. Ibid. Addison-Wesley Publishing Company,Inc., 1992), 31. National PerformanceReview Accompanying p. 118. Report, Reinventing FederalProcurement 8. Mission-Driven,Results-Oriented Budgeting. (Washington, D.C.: U.S. GPO,September 1993). Review Accompanying 9. 3. National Performance 32. Ibid. Development Report, Agency for Internatione! Protection Board, Work Force (Washington, D.C.: U.S. GPO,September 1993). 33.U.S. Merit Systems Quality and Federal Procurement:An Assessment 10. This estimate is derivedfrom federal (Washington, D.C.: U.S. GPO,July 1992), p. 21. employment statistics as of September30, 1991, 34. National PerformanceReview Accompanying provided in Office of PersonnelManagement Report, Reinventing FederalProcurement, "PR0008: publication MW 56-22. Reform Information TechnologyProcurements" central staff x $50,000 in 11. $35 billion = 700,000 (Washington, D.C.: U.S. GPO,September 1993). salary and benefits per person year. 35. Ibid. 12. The Budget of the UnitedStates Government (Washington, D.C.: U.S. GovernmentPrinting 36. Ibid. Office): for 1966 total full-time permanent 37. Ibid. 1,876,419 employment in the executive branch was 38. Ibid. (excludingPost Office); for 1967 thenumbaer 39. Ibid. increased to 2,043,797. Review Accompanying 13. Haas, Lawrence J., Running onEmpty: Bush, 40. National Performance Control Congress, and the Politics ofaBankrupt Government Report, Streamlining Management September 1993). (Homewood, IL: Business One Irwin1990), p. (Washington, D.C.: U.S. GPO, Review Accompanying 14. Mission-Driven Results-OrientedBudgeting. 41. National Performance Report, Improving RegulatorySystems (Washington, 15. Ibid. D.C.: U.S. GPO, September1993). 16. Ibid. 42. Streamlining ManagementControls. 17. Unpublished case studyby Pamela Varley, John 43. Department of VeteransAffairs, Management F. Kennedy School ofGovernment, Harvard Efficiency Pilot ProgratInnovative Test is Meeting University, Cambridge, MA, July1993. All Expectations (Washington,D.C.: U.S. GPO, Results-Oriented Budgeting. 18. Mission-Driven, March 1990). 19. Ibid. 44. Improving Regulatory Systems. 20. Broder, David S. andStephen Barr, "Hill's Control Separation of 45. Streamlining Management Micromanagement of Cabinet Blurs Control and National Powers," Washington Post (July 25,1993), p. Al. 46. Streamlining Management Performance Review AccompanyingReport, Results-Oriented Budgeting, 21. Mission-Driven, Improving Financial Management(Washington, Ceilings and "BGT04: Eliminate Employment D.C.: U.S. GPO, September1993). Floors by Managing WithinBudget."

126 133 47. Streamlining Management Control and Improving 12. U.S. General Accounting Office, testimony of Financial Management. Franklin Frazier, Tax Administration: U.S. and 48. Interview with Stephen Cleghorn, Director, Jobs Foreign Strategies for Preparing Noncollege Youth for for Homeless People, Washington, D.C., August Employment, GAO/T-HRD-90-31 (June 14, 1990). 1993. 13. National Performance Accompanying Reports, 49. National Performance Review Accompanying Health and Human Svices; and Strengthening the Report, Strengthening the Partnership in Partnership in Intergovernmental Service Delivery Intergovernmental Service Delivery (Washington, (Washington, D.C.: U.S. GPO, September 1993). D.C.: U.S. GPO, September 1993). 14. National Commission on Children, Beyond 50. Ibid. Rhetoric, A New American Agenda for Children and 51. Ibid. Families (Washington D.C., 1991), p. 314. 15. Health and Human Services. 52. Ibid. 53. Ibid. 16. Sylvester, Kathleen, "New Strategies to Save Children in Trouble," Governing (May 1990), pp. 54. National Performance Review Accompanying 32-37. Report, Housing and Urban Development, (Washington, D.C.: U.S. GPO, September 1993) 17. National Performance Review Accompanying Report, Office of Science and Technology Policy and 55. Peters, Tom, Thriving on Chaos: Handbook for a the National Science Foundation (Washington, D.C.: Management Revolution, (New York: Harper & Row, U.S. GPO, September 1993). 1989). 18. Executive Office of the President, Office of Management and Budget, A Vision of Change for America (Washington D.C.: U.S. GPO, February 1993), p. 52. CHAPTERS 2-PUTTING 19. National Performance Review Accompanying CUSTOMERS FIRST Report, Department of Commerce (Washington, I. National Performance Review Accompanying D.C.: U.S. GPO, September 1993). Report, Reengineering Through Information 20. Nothdurft, William, It's Time the U.S. Got Technology (Washington, D.C.: Government Serious About Exporting (St. Paul, MN: The Printing Office [GPO], September 1993). Northwest Area Foundation), pp. 28-31. 2. National Performance Review Accompanying 21. National Performance Review Accompanying Report, Improving Customer Service (Washington, Report, Reinventing Environmental Management D.C.: U.S. GPO, September 1993). (Washington, D.C.: U.S. GPO, September 1993). 3. General Accounting Office (GAO), Tax and 22. Ibid. Administration 1989 Test Call Survey, GAO/GGD- 23. Department of Commerce. 90-36 (January 4, 1990) and Tax and Administration 24. Transforming Organizational Structures. IRS Budget Request of FY94, GAO/T-GGD-93-23 (April 28, 1993). 25. National Performance Review Accompanying Report, Reinventing Support Services (Washington, 4. Improving Customer Service. D.C.: U.S. GPO, September 1993). 5. Department of Health and Human Services, 26. Ibid. Report of the Inspector General, on the Social Security Administration's services, 1993. 27. National Performance Review Accompanying Report, Improving Financial Management 6. Improving Customer Service. (Washington, D.C.: U.S. GPO, September 1993). 7. Ibid. 28. Department of Commerce. 8. National Performance Review Accompanying 29. National Performance Review Accompanying Report, Streamlining Management Control Report, Department of Defense (Washington, D.C.: (Washington, D.C.: U.S. GPO, September 1993). U.S. GPO, September 1993). 9. National Performance Review Accompanying 30. Department of Labor. Report, Department of Transportation (Washington, D.C.: U.S. GPO, September 1993). 31. Improving Financial Management. 10. National Performance Review Accompanying 32. Cummins, Keren Ware, National Technical Report, Department of Labor (Washington, D.C.: Information Service, Reinventing Government's Role: U.S. GPO, September 1993). The Turnaround of the National Thchnical Information Service (Washington, D.C.: U.S. GPO, 11. Ibid January 27, 1993). 134 kj. FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

33. Department of Transportation. 10. Peters, Tom, Thriving on Chaos: Handbook for a 34. Competitiveness Policy Council, A Management Revolution (New Yolic: Harper & Row, Competitiveness Strategy for America (March 1993), 1989). p. 274. The Competitiveness Policy Council is an 11. National Performance Review, Reinventing independent advisory committee established by Government Summit Proceedings (Washington, Congress in 1988. D.C.: U.S. GPO, June 25, 1993), p. 87. 35. Reinventing Support Services. 12. OPM, Central Personnel Data File, unpublished 36. National Performance Review Accompanying analysis, March 1993. Calculations by Robert Report, Housing and Urban Development Knisely, National Performance Review. (Washington, D.C.: U.S. GPO, September 1993). 13. Transforming Organizational Structures. 37. Department of Labor. 14. Ibid. 38. National Performance Review Accompanying 15. Ibid. Report, Environmental Protection Agency 16. National Performance Review, Town Hall (Washington, D.C.: U.S. GPO, September 1993). Meeting Department of Transportation, 39. Osborne, David, and Ted Gaebler, Reinventing unpublished transcript (Washington, D.C., May 11, Government: How the Entrepreneurial Spirit is 1993). Transforming the Public Sector (Reading, MA: 17. National Performance Review Accompanying Addison-Wesley Publishing Company, Inc., 1992), Report, Department of Veterans Affairs (Washington, pp. 304-5. D.C.: U.S. GPO, September 1993). 40. Housing and Urban Development 18. National Performance Review Accompanying Report, Housing and Urban Development (Washington, D.C.: U.S. GPO, September 1993). 19. GAO, Program Performance Measures. CHAPTER 3.- EMPOWERING EMPLOYEES 20. 1992 Commission on the Future of the South, TO GET RESULTS Heading Home: New Directions Toward Southern 1. Budget of the U.S. Government FY 1994 Progress (Research Triangle Park, NC: Southern (Washington, D.C., 1993), p. 40. Growth Policies Board, September 1993). 2. National Academy of Public Administration 21. National Performance Review Accompanying (NAPA), Revitalizing Federal Management: Managers Report, Mission Driven, Results-Oriented Budgeting and Their Overburdened Systems (Washington, D.C.: (Washington, D.C.: U.S. GPO, September 1993). NAPA 1983). 22. Ibid. 3. "Department of Transportation Town Hall 23. National Performance Review Accompanying Meeting with Vice President Al Gore," unpublished Report, Creating Quality Leadership and Management transcript, May 11, 1993, pp. 11-12. (Washington, D.C.: U.S. GPO, September 1993). 4. Office of Personnel Management (OPM), Office 24. Osborne, David, and Ted Gaebler, Reinventing of Systems Innovation and Simplification, Survey of Government: How the Entrepreneurial Spirit is Federal Employees, publication OS-92-06. Transforming the Public Sector (Reading, MA: (Washington, D.C.: OPM, May 1992). Addison-Wesley Publishing Company, Inc., 1992), 5. Telephone interview with the Social Security p. 144. Administration, Atlanta office, on April 1, 1993. 25. Ibid., p. 145. 6. Obmascik, Mark, "Light-Bulb Change a 43- 26. Creating Quality Leadership and Management. Person Task," Denver Post (November 1, 1992), p. Al. 27. National Commission on the Public Service (Volcker Commission), Leadership for America: 7. U.S. General Accounting Office (GAO), Program Rebuilding the Public Service (Washington D.C., Performance Measures: Federal Collection and Use of 1989). Performance Data, GAO/GGD-92-65 (Washington D.C.: U.S. Government Printing Office (GPO), 28. Ibid. May 1992). 29. National Performance Review, Department of 8. National Performance Review Accompanying Justice Town Hall Meeting, unpublished transcript, Report, Transforming Organizational Structures Washington, D.C., July 14, 1993. (Washington, D.C.. U.S. GPO, September 1993). 30. National Performance Review, Executive Office of 9. Office of Personnel Management (OPM), Central the President (Washington, D.C.: U.S. GPO, Personnel Data File, unpublishd analysis, March September 1993). 1993.

128 133 ENDNOTES

31. National Performance Review, Reinventing 51. Improving Financial Management. Government Summit. 52. Interview with Lani Horowitz, Administration 32. National Performance Review Accompanying for Child,.en and Families, Department of Health Report, Reinventing Human Resource Management and Human Services, August 20, 1993. (Washington, D.C.: U.S. GPO, September 1993). 53. Interview with Tom Komarek, Assistant 33. National Performance Review Accompanying Secretary for Administration and Management, Report, Reengineering Through Information Department of Labor, August 20, 1993. Technology (Washington, D.C.: U.S. GPO, 54. Reinventing Human Resource Management. September 1993). 55. U.S. Merit Systems Protection Board, A 34. Kendrick, James E., "IT Management Focus Question of Equity: Women and the Glass Ceiling in Must Extend Beyond Tip of the Iceberg," Federal Federal Government (Washington D.C., October Computer Week (September 21, 1992), p. 17. 1992), p. 37. 35. Reinventing Human Resource Management. 56. GAO, Quality Management in Government, 36. OPM, 1969-1991 Trends of the Federal Civilian GAO/GGD-93-9-BR (Washington D.C.: GAO, Workforce in Accounting and Budget Occupations, October, 1992). Special Report. Figures represent 1991 employment 57. GAO, Federal Labor Relations:A Program in Need in occupation series 501, 503, 505, 510-11, 525, of Reform, GGD-91-101(Washington, D.C.: GAO, 30, 540, 544-45, 560-61, 593, 599, and half the July 1991), p. 2. total number in 343. 58. Reinventing Human Resource Management. 37. National Performance Review Accompanying Report, Improving Financial Management 59. Ibid. (Washington, D.C.: Government Printing Office, 60. GAO, Federal Labor Re/ tions, p. 76. September 1993). 6L GAO, Government Management !was, 38. To date, Congress has appropriated $130 billion GAO/TR-93-3 (Washington, D.C.: GAO, to cover the savings and loan bailout. General December 1992). Accounting Office estimates project the cost will 62. Creating Quality Leadership and Management. reach $500 billion over the next few decades, including interest costs. 63. Reinventing Government Summit. 39. Improving Financial Management. 64. Creating Quality Leadership and Management. 40. Ibid. 65. Ibid. 41. Ibid. 66. Ibid and Reinventing Human Resource Management. 67. Interview with Robert DeGrasse, Special 42. Barr, Stephen, "See IRS's Books. Color Them Red," Washington Post (August 18, 1993), Assistant to Hazel O'Leary, Secretary of Energy, p. A19. August 22, 1993. 43. Improving Financial Management. 68. Reinventing Government Summit. 44. Not all federal agencies will have audited financial statements completed by 1997, but the 1997 consolidated financial statements will footnote any discrepancies. See Improving Financial Management. CHAPTER 4CUTTING BACK TO BASICS 1. Letter and personal communications with Bruce 45. Telephone interview with Rick Weidman, Bair, Schoenchen, KS, May 24, 1993. Administrator, New York State Veterans Program (New York Department of Labor), August 20, 1993. 2. La Franiere, Sharon, "Hair That Defies Cutting; Subsidy Program Seems a Lock in Budget," 46. Reengineering Through Information Technology. Washington Post, April 6, 1993, p. Al. 47. Galen, Michele, Ann Therese Palmer, Alice 3. Gladwell, Malcolm, "Epicurean Niche Barely Cuneo, and Mark Maremont, "Work & Family," Survives a Boiling Dispute," Washington Post, August Business Week, (June 28, 1993), p. 82. 20, 1993, p. A21. 48. Reinventing Human Resource Management. 4. National Performance Review Accompanying 49. OPM, A Study of the Work and Family Needs of Report, Mission-Driven, Results-Oriented Budgeting the Federal Workforce (Washington, D.C., April (Washington, D.C.: U.S. Government Printing 1992), pp. 5, 6, 20, 26. Office [GPO], September 1993). 50. OPM, Report to Congress on the Federal Employees 5. National Performance Review Accompanying Leave Sharing Act of 1988 (Washington, D.C., April Report, Transforming Organizational Structures 30, 1993), p. 30; and A Study of the Work and (Washington, D.C.: U.S. GPO, September 1993). Family Needs, p. 96.

136 129 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

6. National Performance Review Accompanying 26. National Performance Review Accompanying Report, Department ofAgriculture (Washington, Report, Health and Human Services (Washington, D.C.: U.S. GPO, September 1993). D.C.: U.S. GPO, September 1993). 7. U.S. General Accounting Office (GAO), U.S. 27. Ibid. Department ofAgriculture: Farm Agencies' Field 28. Department ofState. Structure Needs Major Overhau4 RCED-91-09 29. National Performance Review Accompanying (Washington, D.C.: January 1991), p. 10. Report, Department of Commerce (Washington, 8. National Performance Review Accompanying D.C.: U.S. GPO, September 1993). Report, Housing and Urban Development 30. Health and Human Services. (Washington, D.C.: U.S. GPO, September 1993). 31. Ibid. 9. Ibid. 32. National Performance Review Accompanying 10. National Performance Review Accompanying Report, Department ofJustice (Washington, D.C.: Report, Department of Energy (Washington, D.C.: U.S. GPO, September 1993). September 1993). 33. Department ofAgriculture. 11. National Performance Review Accompanying 34. U.S. Department of Agriculture, Office of the Report, Department of Defense (Washington, D.C.: Inspector General, International Affairs, Commodity U.S. GPO, September 1993). Programs, and Science and Education Division, 12. National Performance Review Accompanying Report on Agricultural Stabilization and Conservation Report, Small Business Administration (Washington, Service (Washington D.C.: Department of D.C.: U.S. GPO, September 1993). Agriculture, May 1993), p. 11. 13. National Performance Review Accompanying 35. Department of Transportation. Report, U.S. Agency for International Development, (Washington, D.C.: U.S. GPO, September 1993). 36. U.S. General Accounting Office, Highway Demonstration Projects: Improved Selection and 14. National Performance Review Accompanying Funding Controls Are Needed (Washington, DC: Report, Department of State (Washington, D.C.: GAO, 1991), pp. 1-6. U.S. GPO, September 1993). 37. Department of Transportation. 15. Ibid. 38. National Performance Review Accompanying 16. Ibid. Report, Department of the Interior (Washington, 17. National Performance Review Accompanying D.C.: U.S. GPO, September 1993). Report, Department of Energy (Washington, D.C.: 39. Ibid. U.S. GPO, September 1993). 40. Health and Human Services. 18. National Performance Review Accompanying Report, Department of Transportation (Washington, 41. National Performance Review Accompanying D.C.: U.S. GPO, September 1993). Report, Department of Veterans Affairs (Washington, D.C.: U.S. GPO, September 1993). 19. Department of Defense. 42. Department of Defense. 20. National Performance Review, Accompanying _Report, Reinventing Federal Procurement (Washington, 43. Department of Energy. D.C.: U.S. GPO. September 1993). 44. Office of Management and Budget (OMB), Fact 21. National Performance Review Accompanying Sheet on Reform of Federal Power Marketing Report, Intelligence Community (Washington, D.C.: Administration Debt Repayment Practices U.S. GPO, September 1993). (Washington D.C., 1990), p. 3. 22. National Performance Review Accompanying 45. OMB, Status Report on Credit Management and Report, Department of Labor (Washington, D.C.: Debt Collection, Report to Congress (Washington U.S. GPO, September 1993). D.C., 1993), p 1. 23. GAO, Dislocated Workers: Comparison of 46. National Performance Review Accompanying Assistance Programs, Briefing Report to Report, Improving Financial Management Congressional Requesters, GAO/FIRD-92-153BR (Washington, D.C.: U.S. GPO, September 1993). (Washington D.C., September 1992), p. 2. 47. Department ofJustice. 24. Department ofAgriculture and Department of 48. Department of the Interior. Labor. 49. Housing and Urban Development. 25. National Performance Review Accompanying 50. Department of Labor. Report, Department of Education (Washington, 51. Ibid. D.C.: U.S. GPO, September 1993).

130 137

, , ENDNOTES

52. Health and Human Services. 64. Department of Labor. 53. GAO, SSA's Processing of Continuing Disability 65. Ibid. Reviews, testimony of Jane L. Ross before the House 66. Health and Human Services. Select Committee on Aging, GAO/T-HRD-93-3 67. Department of the Interior. (March 9, 1993), p. 3. 68 Department of the Treasury. 54. Health and Human Services. 69. Ibid. 55. Ibid. 70. National Performance Review Accompanying 56. GAO, Federal Benefit Payments: Agencies Need Death Information from Social Security to Avoid Report, Rethinking Program Design (Washington, Erroneous Payments, GAO/HRD-9-3 (Washington D.C.: Government Printing Office, September D.C., February 1991). 1993). 57. National Performance Review Accompanying 71. Moe, Ronald C., "Reorganizing the Executive Reports: Department of the Treasury and the Branch," in The Twentieth Century: Landmark Commissions, 92-293 GOV (Washington, D.C.: Resolution Trust Corporatim, Department of the Interior; Improving Financial Management; and, Library of Congress, Congressional Research Service, Department of Defense (Washington, D.C.: U.S. March 19, 1992), p. 50. GPO, September 1993). 72. Pritzker, David M., "Working Together for 58. Improving Financial Management. Better Regulations," vol. 5, no. 2, Natural Resources and the Environment (Fall 1990). 59. Ibid. 73. Department of Labor and Health and Human 60. Department of State. Services, and National Performance Review 61. Department of the Treasury. Accompanying Report, Improving Regulatory Systems 62. National Performance Review Accompanying (Washington, D.C.: U.S. GPO, September 1993). Report, Reengineering Through Information 74. Department of Labor and Improving Regulatory Technology (Washington, D.C.: U.S. GPO, Systems. September 1993). 75. Improving Regulatory Systems. 63. Ibid.

138 131 APPENDIX A

NATIONAL PERFORMANCE REVIEW MAJOR RECOMMENDATIONS BY AGENCY

139 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal Impact, 1994-99* (Millions of Dollars) Change in Change In Recommendation Spending Revenues AGENCY FOR INTERNATIONAL DEVELOPMENT AIDO1 Redefine and Focus AID's Mission and Priorities the cbe With the end of the Cold War, AID must rethink how it will operate. NPR recommends steps to plan for this new mission and proposes new authorizing legislation to define its post-Cold War mission and priorities. AIDO2Reduce Funding, Spending and Reporting Micromanagement cbe the Eliminate AID's outdated or unduly burdensome reporting requirements and reduce legislative earmarks to provide greater operating flexibility. AIDO3 Overhaul the AID Personnel System na na Recommendations include changes in AID's personnel system to integrate its multiple systems and review benefits. AIDO4 Manage AID Employees and Consultants as a Unified Work Force the cbe Lift some current personnel restrictions and give managers authority to manage staff resources more efficiently and effectively. AIDO5 Establish an AID Innovation Capital Fund na na Create a capital investment fund to improve information and financial management systems and customer service. AIDO6 Reengineer Management of AID Projects and Programs cbe cbe AID should use pilot programs and new approaches to emphasize flexibility, innovation, customer service and program results. ATI)07 Consolidate or Close AID Overseas Missions cbe the AID should regionalize missions and staff services overseas and dose nonessential missions. It should establish "graduation" criteria for countries receiving U.S. assistance.

DEPARTMENT OF AGRICULTURE USDA01End the Wool and Mohair Subsidy -$923.0 $0.0 The subsidy is no longer needed since wool is no longer a strategic commodity. USDA02Eliminate Federal Support for Honey -15.0 0.0 Eliminate the honey subsidy because the program does not serve the intended purpose of ensuring the availability of honeybees for crop pollination. USDA03Reorganize the Department of Agriculture to Better Accomplish Its Mission, -1,673.6 0.0 Streamline Its Field Structure and Improve Service to Its Customers USDA should streamline its field operations to eliminate unnecessary offices, reduce costs and better serve Farmers. USDA04Implement a Consolidated Farm Management Plan cbe cbe The farm management plan proposed by Secretary Espy provides an opportunity to simplify regulations for farm management and is a good way to consolidate competing requirements into a single plan for each farm. USDA05Administer the Employment and Training Requirements for -1,041.1** 0.0 Food Stamp Recipients More Effectively and Efficiently Redirect funds from an ineffective training program for food stamp recipients and allow them to participate in programs with proven results. USDA06 Encourage Better Food Package Management Practices and Facilitate Multi-State -500.0 0.0 Contracts for Infant Food and Formula Cost Containment in the WIC Program The recommendation encourages increased competition among infant formula vendors and manufacturers of other items in the UDSDA's Special Supplemental Food Program for Women, Infants and Children (WIC). Savings accrue to program.

Fiscal estimates were made for 1994 only where action could impact spending in that year. Most estimates cover 1995-99. Estimates shown are for cumulative budget authority changes. Negative numbers indicate reduced spending. The NPR recommends that these savings be redirected to alternative uses. Savings totals exclude these amounts. Savings will be invested in the program to serve additional customers. cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

134 140 Fiscal impact, 1994-99 (Millions of Dollars) Change in Change In Recommendation Spending Receipts USDA07Deliver Food Stamp Benefits Via Electronic Benefits Transfer to Improve Service the the to Customers While Remaining Cost Effective Use electronic technology to distribute food stamp benefits, thereby improving service and reducing the need for current paper stamps.

DEPARTMENT OF COMMERCE DOC:01 Reinvent Federal Economic and Regional Development Efforts na na Improve coordination of federal economic development efforts with the goals of eliminating duplication and better directing federal resources to improve business conditions. D00O2Provide Better Coordination to Refocus and Leverage Federal Export Promotion na na This recommendation is designed to improve federal services to U.S. businesses competing in the world export markets. D00O3Reform the Federal Export Control System for Commercial Goods na na To help ensure leading U.S. industries are competitive in the global marketplace, changes should be made in the export control system. D0004Strengthen the Tourism Policy Council na na Revitalize the Tourism Policy Council and give it greater authority to coordinate federal tourism promotion efforts. DOCO5 Create Public / Private Competition for the NOAA Fleet cbe the A pilot program is recommended to open the National Oceanic and Atmospheric Administration fleet to public and private competition to bolster the aging fleet. DOC% Improve Maxine Fisheries Management 0.0 375.0 To help protect fishing resources and provide new income to the government, NOAA should collaborate with Congress and fishing industry representatives to establish appropriate user fees to help offset management costs for national fishery zones. D0007Provide EDA Public Works Loan Guarantees for Infrastructure Assistance na na This recommendation would provide the Economic Development Administration with authority to use part of its funding as a reserve for loan guarantees for various public economic development projects. D0008Establish a Manufacturing Technology Data Bank na na To help U.S. manufacturing firms increase their technical capabilities, Commerce should create a new database to provide technical information andconta, D0009 Expand the Electronic Availability of Census Data na na To increase access to and use of census data, the Census Bureau should create a computerized census information center. DOCIOAmend the Omnibus Trade and Competitiveness Act to Increase the Data na na Quality of the National Trade Data Bank This recommendation outlines improvements needed in the quality and quantity of data in this business-oriented data bank. DOC11 Eliminate Legislative Barriers to the Exchange of Business Data Among na na Federal Statistical Agencies Eliminate legislative barriers to the exchange of business data among federal agencies (the Census Bureau, Bureau of Labor Statistics, and Bureau of Economic Analysis) to reduce the reporting burden on American business. DOC12 Establish a Single Civilian Operational Environmental Polar Satellite Program -300.0 0.0 To reduce duplication and save taxpayers a billion dollars over the next decade, various current and proposed polar satellite programs should be consolidated under NOAA.

DOC13 Use Sampling to Minimize Cost of the Decennial Census the cbe Use sampling rather than more costly methods of counting nonrespondentsto next deciennial census. (Savings will occur but are beyond the time frame of this analysis.)

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

141 : I, FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTSLESS

Fiscal Impact, 1994-99 (Milliont of Dollars) Recommendation Change in . Change In Spending Receipts DOC14Build a Business and Economic Information Node for the Information Highway cbe cbe To assist in the distribution ofgovernment information to private citizens, Commerce should build a business and economicinformation node to the "information highway." DOC15 Increase Access to Capital for MinorityBusinesses na na Commerce and SBA should provide the President withrecommendations to improve SBA and Minority Business DevelopmentAdministration programs.

DEPARTMENT OF DEFENSE The Bottom-Up Review This is a general summary of the Bottom-UpReview of DOD's force structure and requirements and its part in the NationalPerformance Review effort. A total of $79 billion in savings through 1997are already incorporated into the President's 1994 budget. These savingsare not included in the NPR analysis. Acquisition Reform The DOD acquisitionsystem is large and extraordinarily complex. It needs to enable DOD to take advantage of the technological advancesand efficient procurement practices of the commercial marketplace. DODO1 Rewrite Policy Directivesto Include Better Guidance and Fewer Procedures cbe cbe DOD should clarify policy directives and proceduresto reduce administrative burden and unnecessary regulatory controls. DODO2 Establish a Unified Budget for theDepartment of Defense cbc cbc Give commanders greater flexibilityto set priorities, solve funding problems, and resolve unplanned requirementsat the lowest appropriate operating level. DODO3 Purchase Best Value Common Suppliesand Services cbe cbc Allow managers and commandersto purchase the best value common supplies and services from public, private,or nonprofit sources. DODO4 Outsource Non-core Departmentof Defense Functions cbc cbe By contracting out non-core functions (fromtowing services to certain information technology functions), DOD will be better ableto focus on its core responsibilities. DODOS Create Incentives for the Departmentof Defense to Generate Revenues This recommendation -500.0 60.0 proposes giving ers and commanders the ability to generate income at the installation leveln172owing the Corpsof Engineers to recover its costs for processing certain commerical applicationsand by establishing goals for solid waste reduction and recycling. DOD06 Establish and Promotea Productivity-Enhancing Capital Investment Fund DOD should be authorized -110.3 0.0 to expand its capital investment fund andmanage its operations in a more business-likemanner. DODO7 Create a Healthy and Safe Environment for Department of DefenseActivities na na To create a safe environment, DODmust take action in the areas of clean-up of hazardous wastes, use of environmentaltechnology, and pollution prevention. DODO8 Establish a Defense Quality Workplace This is an internal department cbc cbe recommendation to encourage theuse of quality management concepts at all levels of DOD. DODO9 Maximize the Efficiency of DODHealth Care Operations Use emerging technology -350.0 0.0 to upgrade care at DOD health care facilities andreduce costs to train health care professionals.

DOD 10 Give Department of Defense InstallationCommanders More Authority and Responsibility Over Installation Management cbe cbc By giving DOD installation commandersmore authority over installation management, DOD will be better able tomanage its resources, provide services to its employees and move toward more entrepreneurialmanagement.

cbc = cannot be estimated (due to data limitations or uncertainties aboutimplementation time lines). race= not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budgetauthority.

136 142 APPENDIXA

Fiscal impact, 1994-99 (Millions of Dollars) Recommendation Change in Change In Spending Receipts DOD11Reduce National Guard and ReserveCosts -900.0 This recommendation makestwo changes in the current costs for reservists: 0.0 (I) to limit compensation of federal employees on reserve duty to thegreater of civilian or reserve compensationor to allow the reservist to take annual leave; and (2) to limit the basic allowance forquarters only to reservists who actually bring their dependents on short-term dutyassignments when quarters to dependents. are not provided DOD12 Streamline and Reorganize the US. Army Corps of Engineers -68.0 NPR recommends implementinga 1992 reorganization proposal that would 0.0 reduce the number of division office:, from 11 to six and would allowthe Corps to work with OMB and other agenciesto make maximum use of Corps' engineering and technical capabilities.

DEPARTMENT OF EDUCATION ED01 Redesign Chapter 1 of Elementary and Secondary Education Act 43,000.0* Recommendations focus education fundson the neediest students and simplify $0.0 requirements on schools receiving federal education aid. Existing fundsare redirected. ED02 Reduce the Number of Programsthe Department of Education Eliminate or consolidate Administers -515.0* 0.0 more than 40 existing educationgrant programs and free up funds foruse in other educational programs. ED03 Consolidate the Eisenhower Math and Science Education Program withChapter 2 na NPR proposes combining thisteacher training program, which is na with short-term training, with largely consumed other ED programs tocreate a new program with a more coherent national focus on teacher trainingand professional development. ED04 Consolidate National Security Education Act Programs na The NSEA trust fund, administeredby the Department of Defense, na consolidated with the Center for should be International Education in EDto strengthen foreign language study and eliminateduplication of effort. EDO5 Streamline and Improve theDepartment of Education's Grants Statutory restrictions Process cbe cbe on the department's rulemakingprocess should be removed, flexibility added to certain procedures, and unnecessary requirementseliminated to shorten the grant awardprocess. / ED06 Provide Incentives for theDepartment of Education's Debt This recommendation would allow Collection Service na na ED to use a portion ofrevenues collected from defaulted student loansto pay for collections costs, thereby providing an incentive for increased collections. ED07 Simplify and Strengthen InstitutionalEligibility and Certification for Participation in Federal Student AM -175.0 0.0 NPR recommends developingways of measuring default indicators, creating of high-risk institutions, and profiles removing elgibility of institutionsto participate in federal financial aidprograms once the schools have become ineligible federal student loan funds. to receive ED08 Create a Single Point of Contactfor Program and Grant Information 1.8 ED should createan electronic system that can be used by students, 0.0 researchers and administrators parents, to learn about departmentprograms, funding opportunities, best practices and otherinformation. ED09 Improve Employee DevelopmentOpportunities in Department of ED should create Education na na a full spectrum of activities whichcan contribute to career development, including conducting a departmentwide assessment of training and development needs.

* The NPR recommends that thesesavings be redirected to alternative uses. Savings totals exclude theseamounts. cbe = cannot be estimated (dueto data limitations or uncertainties about implementation time lines). na= not applicablerecommendation improvesefficiency or redirects resources but does not directly reduce budgetauthority.

aaa FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTSLESS

Fiscal Impact, 1994-99 (Millions of Dollars) Recommendation Change in Change In ED 10 Spending Receipts Eliminate the Grantbac.kStatutory Provision of the General Education ProvisionsAct 0.0* 0.0 NPR recommends repealingthis provision which permits to a grantee a percentage of funds the department toreturn recovered from thegrantee as a result of an audit. ED11 Build a Professional, Mission-Driven Structure forResearch NPR recommends establishing na na a research advisory board, consolidatingand targeting research and developmentefforts, and establishing into education reform assistance. an office to translate research findings ED12 Develop a Strategy for TechnicalAssistance and Information ED should developa strategy for its $290 million technical Dissemination na na assistance efforts designed to promote the NationalGoals 2000 themes.

DEPARTMENT OF ENERGY DOE01 Improve EnvironmentalContract Management NPR proposes improvementsin DOE environmental cbe cbe achieve efficiency. clean-up contractsto DOE02 Incorporate LandUse Planning in Cleanup NPR recommends that DOE cbe incorporate land use planninginto the nuclear cbe facilities dean-upprocess. DOE03 Make Field FacilityContracts Outcome-Oriented This recommendation would -570.0 modify the current DOEcontract process at 0.0 field facilities to make thecontracts more outcome-oriented and contractor performance. to improve efficiency DOE04 Increase Electrical Power Revenues and StudyRates NPR proposes increasing federal 0.0 income by allowing the PowerMarketing 3,601.0 Administrations to recovera larger portion of their operating rate increases or by changing the financing costs through of Bonneville Power DOE05 Strengthen the Administration. Federal Energy ManagementProgram NPR recommendsa number of improvements na na to this program, designedto better management of federalenergy use. DOE06 Redirect Energy Laboratories to Post-Cold WarPriorities This recommendation providesguidance for use of the DOE -2,150.0 0.0 focusing on defining energy labs, new missions, consolidatingor eliminating unneeded facilities, and making theirservices of greater benefit in the post-Cold Warera. DOE07 Save Costs ThroughPrivate Power Cogeneration This would allow the privatesector to cogenerate power -112.0 0.0 of saving at DOE labs as a means money. DOD has similar authorityat this time. DOE08 Support the Sale ofthe Alaska Power The federal Administration government should divest its interests -20.5 -52.5 in the Alaska PowerAdministration.

ENVIRONMENTAL PROTECTIONAGENCY EPA01Improve Environmental Protection Through Increasedflexibility for Local Government na na EPA should amend theregulations it determines governments pursuant to the Regulatory are most troublesome for local Flexibility Act of 1980. The provide alternative, flexible goal is to approaches to meetingenvironmental mandates. EPA02Streamline EPA's PermitProgram Streamlining efforts includeestablishing a permit clearinghouse -22.5 0.0 point of contact and piloting to serve as a single a cross-program permit trackingsystem.

This recommendationsaves an estimated $18.5 million in expenditures but makesno change in budget authority. cbe = cannot be estimated(due to data limitations or uncertainties about implementation na= not applicablerecommendation time lines). improves efficiency or redirects resources but doesnot directly reduce budget authority.

138 1 4 46 APPENDIX A

Fiscal Impact, 1994-99 (Millions of Dollars) Recommendation Change In Change In Spending Receipts EPA03 Shift EPA': Emphasis Toward PollutionPrevention and Away from Pollution EPA needs to emphasize pollution Control cbe the prevention by implementingan effective pollution prevention strategy that includes amending regulations andmotivating the private sector to invest in cleaner, lesspolluting technologies and practices. EPA04 Promote the Use of Economic andMarket-Based Approaches to Reduce Water Pollution cbe the EPA should work with Congressto propose language amending the Clean Water Act to explicitly encourage market-basedapproaches to reduce water pollution. EPA should also identifywastewater discharge fees that could be included in the Act reauthorization. Clean Water EPA05 Increase Private Sector Partnershipsto Accelerate Development of Innovative Technologies na na NPR recommends that EPA developan action plan with specific milestones for improving the regulatory andstatutory climate for innovative technologies. EPA06Stop the Export of Banned Pesticides na na EPA should work with Congressto develop legislation to stop the exportation of banned pesticides from the U.S. byJune 1994. IEPA07 Establish Measurable Goals, PerformanceStandards and Strategic Planning within EPA na na EPA should draft measurable environmentalgoals for the range of environmental problems the U.S. faces. The agency should also draft internal goalsto provide direction for assessing and redirectingexisting EPA strategies. EPA08 Reform EPA's Contract ManagementProcess cbe the NPR recommends reforms in EPA'scontract management process by implementing performance standards and by maximizing competition in the contractingprocess. EPA09Establish a Blueprint for Environmental Justice Through EPA's Operations t12. EPA should develop a blueprint ofactions that will incorporate environmental na justice consideration into allaspects of EPA operations. EPAIO Promote Quality Science for QualityDecisions na na Improvements include establishing guidelinesfor professional development of scientific and technical staff and EPA's expanding the use of peer-review andquality assurance procedures. EPA11 Reorganize EPA's Office of Enforcement -10.5 EPA should initiate a reorganization ofits headquarter's enforcement 0.0 by October 1, 1993. organization

EXECUTIVE OFFICE OF THEPRESIDENT NOTE: White House Office and Officeof the Vice President The White House Office and the Officeof the Vice Presidentare regularly "reinvented" with each change of administration. This analysis focuseson the other portions of the Executive Officeof the President. EOP01 Delegate Routine Paperwork Reviewto the Agencies and Redeploy OMB' Resources More Effectively cbe cbe These recommendations outlineimprovements to streamline the government's paperwork review process and reduceunnecessary burdens on agencies. EOP02 Modify the OMB CircularSystem na OMB should reinvigorate theprocess for the review, updating, and consolidation na of management circulars. It should also develop uniformprocesses for developing circulars and for obtaining inputduring their development. EOP03 Strengthen the Office ofU.S. Trade Representative's and Local Governments Coordination with State 0.5 0.0 The Trade Representative's Office should examine the trade policyneeds of state and local governments and workwith them on relevant issues. cbe = cannot be estimated (dueto data limitations or uncertainties about implementation time lines). na= not applicablerecommendation improves efficiency or redirectsresources but does not directly reduce budget authority.

1451 '! 134 FROM RED TAPE TO RESULTS CREATING A GOVERNMENTTHAT WORKS BETTER & COSTS LESS

Fiscal Impact,1994-99 (Millions of Dollars) Recommendation Change In Change In Spending Receipts EOPO4 Improve Federal AdvisoryCommittee Management -1.4 Discontinuing the "antipass the hat" language annually inserted into 0.0 appropriations acts would allowappropriate pooling of executive certain multi-agency projects. resources for EOP05 Reinvent OMB's ManagementMission NPR recommends a series of 0.1 actions by OMB to redirectresources to provide 0.0 better management informationfor Presidential decision making. EOP06 Improve OMB's Relationshipwith Other Agencies This recommendation outlines na methods by which OMBcan work more effectively na with agencies and withstates. EOP07Strengthen the Office of the U.S. Trade Representative's TradePolicy Coordination Process na na These recommendations outlineways to improve the interagency trade policy coordination process. EOP08 Strengthen the Officeof the US. Trade Representative's The Office of the USTR should Negotiation Process cbe cbe implement various techniques forupgrading the negotiating skills of its employeesand the analysis of the negotiation EOP09 process itself. Establish a Customer ServiceBureau in the EOP Using available resources, EOP na management should establish a small, na customer service bureau within the EOP. one-stop EOPIO Conduct Qualitative Self-Reviews of CriticalAdministrative Processes The Assistant to the President the cbe for Management andAdministration should establish a formal program of ongoing, internal qualityreviews of administrative the EOP to savemoney and improve service. processes in EOP11 Improve the Presidential TransitionProcess Past difficulties with the Presidential the the transition should be corrected byamendment of the Presidential TransitionAct and related actions. EOP12 Improve AdministrativeProcesses na This recommendation outlinesa series of steps to improve internal na processes within the EOP, including mail administrative management. processing, paperwork flow, andsupply

FEDERAL EMERGENCYMANAGEMENT AGENCY FEMA01Shift Emphasis to Preparing for and Respondingto the Consequences of All Disasters na na FEMA's early focus was on preparedness for nuclearwar. The currear world situation and recent natural disastershighlight the need for FEMA resources to respond to all hazards. to continue to shift its FEMA02 Develop a More Anticipatory and Customer-DrivenResponse to Catastrophic Disasters na na These recommendations shouldmake FEMA respond faster to catastrophic disasters. and more effectively FEMA03 Create Results-Oriented Incentives to Reduce the Costsof a Disaster The Midwest floods, Hurricanes cbe cbc Hugo and Andrew and theLorna Prieta Earthquake all illustrate theenormous costs of disaster to society. These move toward reducing that cost. recommendations will FEMA04 Develop A Skilled Management Team Among PoliticalAppointees and Career Staff na na Leadership has been the weak link in FEMA's missionas the federal government's emergency management coordinator. Theserecommendations strive FEMA leadership to successfully to improve implement its new, all-hazardsmission. cbc = cannot be estimated (dueto data limitations or uncertainties na= not applicablerecommendation about implementation timelines). improves efficiency or redirects resources but does not directly reducebudget authority. APPENDIXA

Fiscal Impact, 1994-99 (Millions of Dollars) Change In Change in Recommendation Spending Receipts DEPARTMENT OF HEALTH AND HUMAN SERVICES NOTE: Treatment of Health Care and Welfare Reform Issues by the NPR Two primary concerns of the Department of Health and Human Servicesare the delivery of health and welfare services to individuals. Since the Administration has special, ongoing efforts dealing with these areas, theyare not covered by the National Performance Review. HHSOI Promote Effective, Integrated Service Delivery for Customers by Increasing cbe the Collaborative Efforts These recommendations outline a number of steps neededto better integrate and deliver social services to communities and families. HHS02 Reengineer the HHS Process for Issuing Regulations the cbe HHS should improve the timeliness and quality of regulations issued and should involve stakeholders in the development of regulations. HHS03 Develop a National, Uniform Inspection Systemto Ensure a Safe Food Supply cbe the Responsibility for food safety should be consolidated intoa single agency, and policies and inspection systems should be implemented onan objective, scientific basis. HHSO4 Reconfigure Support for Health Professions Education na na Existing programs should be consolidated and/or eliminated. HHSOS Restructure the Management of Railroad Industry Benefit Programs the cbe Railroad Retirement Board functions should be integrated into existingprograms administered by federal, state, and private sector service providers. HFIS06 Improve Social Security Administration Disability Claims Processingto -4,0l0.0* 0.0 Better Serve People with Disabilities and Safeguard Trust Fund Assets SSA should apply resources and management tools neededto reduce backlogs and to avoid paying benefits to individuals who are no longer disabled. HHS07 Protect Social Security, Disability and Medicare Trust Fund Assets byRemoving na na Barriers to Funding Productive Oversight Activities HHS should aggressively pursue options to assure that adequate investmentsare made to avoid unnecessary payments from trust funds. HHS08 Coordinate Collection and Dissemination of Social SecurityAdministration cbe cbe Death Information to Protect Federal Program Assets SSA's clearinghouse for death information and "best practices"can be used by dozens of federal and state agencies to reduce federalprogram outlays. HHS09 Take More Aggressive Actions to Collect Outstanding Debts Owedto the Social -335.0* 0.0 Security Trust Fund SSA should be given the authority to use a fullrange of debt collection tools available under the Debt Collection Act of 1982 to collect debts owed by individualswho are no longer on benefit rolls. HHS10 Institute and Collect User Fees on FDA's Inspection and ApprovalProcesses -1,439.8 0.0 Food, drug and medical device manufacturers,processors and suppliers should be required to pay for FDA services.

HHS1I Redesign SSA Service Delivery and Make Better Use of Technologyto Provide Rd na Improved Access and Services to Customers SSA's organizational structure needs to be updatedto reflect changing customer needs and to take full advantage of emerging technologies.

HHS12 Strengthen Departmentwide Management na na The department should conduct a review of its organizationalstructure and management systems to determine an appropriate balance between centralized and decentralized functions.

HHS13 Review the Field and Regional Office Structure of the HHSand Develop a Plan cbe cbe for Shifting Resources to Match Workload Demands The review should emphasize customer service, results and increasedaccountability.

'These savings, included in the Grand Total, will be realized in theSocial Security Trust Funds and will not affect discretionary spending levels. cbe = cannot be estimated (due to data limitationsor uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirectsresources but does not directly reduce budget authority. FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

FiscalIMPar,t, 1994-99 (Millions of Dollars) Change In Change in Recommendation Spending Receipts HHS14 Amend the Health Care Financing Administration's Contracting Authority -985.0 0.0 to Allow for Competitive Contracting HCFA should be authorized to fully and openly compete Medicare claims processing contracts to reduce costs and eliminate inefficiencies and conflicts of interest.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

HUDO1 Reinvent Public Housing cbe cbe HUD should create pilot programs to devolve greater authority over housing funds to sound local agencies. It should create demonstrations of mixed-income public housing with portable subsidies. HUD should also streamline public housing rules and take other steps to improve public housing management. HUDO2 Improve Multi-Family Asset Management and Disposition na na HUD should use public-private partnerships to manage and sell HUD-held loans and real estate for non-subsidized housing projects. Congress should reduce restrictions on HUD sale of multi-family properties, including use of portable subsidies for tenants when the Secretary determines that to be best for tenant needs. HUDO3 Improve Single-Family Asset Management and Disposition na na HUD should use a combination of early assistance to borrowers having financial difficulties, contract loan servicing, contract mortgage assistance programs and public-private partnerships to streamline and improve management of HUD- assigned single-family mortgages. HUDO4 Create an Assisted- Housing(Rent Subsidy Demonstration Project na na HUD should be authorized to experiment in negotiated restructuring of privately owned assisted-housing projects to improve management, promote mixed-income housing and save taxpayer funds. HUDO5 Establish a New Housing Production Program na na HUD should stimulate housing production through FHA risk-sharing arrangements with housing finance agencies, stimulate a secondary market for multi-family properties, improve ari-ps to FHA insurance for first-time home buyers, provide special FHA programs to revitalize neighborhoods and improve FHAmanagement. HUDO6 Streamline HUD Field Operations -167.0 0.0 HUD should streamline its Washington, regional and field office structure and consolidate and reduce its size over time. HUDO7 Refinance Section 235 Mortgages -210.0 HUD should use incentive contracts to speed savings from refinancing expensive old mortgages subsidized by HUD. HUDO8 Reduce Section 8 Contract Rent Payments -225.0 0.0 HUD should modify its process to reduce unjustified increases in annualpayments to Section 8 projects. HUDO9 Consolidate Section 8 Certificates and Vouchers cbe cbe This recommendation would consolidate two overlapping projectsto eliminate duplication.

HUDIO Reduce Operating Subsidies for Vacancies cbe cbe . This recommendation would encourage public housing agenciesto make better use of their assets by reducing subsidies paid for unjustifiably vacant units.

INTELLIGENCE COMMUNITY INTEL01 Enhance Intelligence Community Integration The end of the Cold War and the constrained fiscal environment in the U.S.create an imperative for the 13 components of the Intelligence Community to act more effectively and more efficiently as a team.

'The Intelligence Community budget is classified. Savings from these recommendationscannot be shown in this report. cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

142 148. rS 1"

APPENDIX A

Fiscal Impact, 1994-99 (Millions of Dollars) fiecommendation Change in Change In Spending Receipts INTEL02 Enhance CommunityResponsiveness to Customers A 40-year emphasison the Soviet Union allowed the to develop a repertoire which Intelligence Community was not dependent on a dose relationshipwith its customers. That is no longer thecase today, and NPR makes for improvements in thisarea. recommendations INTEL03 Reassess InformationCollection to Meet New The analytical issues the Analytical Challenges Intelligence Community facesare far more diverse and complex today, requiringnew focus and new techniques needs of policymakers. to meet the intelligence

INTEL04 Integrate IntelligenceCommunity Information The Intelligence Community Management Systems lacks the connectivity andinteroperability in its information systemsto do its job efficiently and effectively. INTEL.05 Develop IntegratedPersonnel and Training This recommendation Systems focuses on organizationaldevelopment and training within the IntelligenceCommunity. issues maim Merge the President's IntelligenceOversight Board with the Intelligence Advisory Board President's Foreign The roles of thesetwo oversight bodies are sufficiently and some efficiencies similar that small savings can be achieved by combiningthem. ENTEL07 Improve Supportto Ground Troops During Numerous studies of intelligence Combat Operations support during the Gulf War focusedon agency or service-specific support issues.This issue outlines proposes an integrated approach a reinvention lab effort which to studying support to ground combat operations. forces during

DEPARTMENT OF THEINTERIOR DOI01 Establish a Hard RockMine Reclamation Fund To address health and to Restore the Environment safety threats and environmental cbe cbe metal and chemical leaching damage caused by toxic from abandoned mines,the federal establish a hard-rockmine reclamation fund. government should D0102 Redefine Federal Oversightof Coal Mine Regulation To overcomeor -28.0 arional problems that inhibitan effective state-federal 0.0 relationship, federal oversightof coal mine regulations D0103 should be redefined. Establish a National SpatialData Infrastructure By supportinga cross-agency coordinating effort, 36.0 the federalgovernment can develop 0.0 a coherent vision for the nationalspatial &a infrastructure (NSDI). (Spatial,or geographic, data refersto information that can be placed greatly improved information on a map.) This will allow analysis in a widerange of areas, induding the analysis of environmentalinformation and the monitoring land arts. of endangered animalsand sensitive DOI04 Promote EntrepreneurialManagement of the National The Park Service should Park Service** t1 be allowed to raise additional 332.0 993.0 sources and to use a portion of the revenues from appropriate money for investment in park This proposal wouldincrease selected park infrastructure. park concessionaires. entry fees and would increase feeson D0105 Obtain a Fair Returnfor Federal Resources The federalgovernment should institute reforms 132.4 to guarantee a fairreturn for 549.7 federal resources suchas livestock grazing and hard-rock mining. Some of the programs regulating the commercialsale and use of natural lands operateat a loss to the taxpayers and fail resources on federal stewardship practices. The to provide incentives for good administration should alsodevelop a new fee schedule for communicationssites on DOI and Department of Agriculture lands. The Intelligence Community budget is classified. Savingsfrom these recommendations **NPR recommends cannot be shown in thisreport. redirecting half of increasedpark income to investment cbe = cannot be estimated(due to data limitations in park infrastructure. na = not applicablerecommendation or uncertaintilx about implementationtime lines). improves efficiencyor redirects resources but does not directly reduce budgetauthority.

'143 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal Impact, 1994-99 (Millions-of Dollars) Change In Change in Recommendation Spending Receipts D0106Rationalize Federal Land Ownership na na DOI needs to reinvent the way it manages and acquires federal lands. Due to historical patterns of settlement and development of this country, adjoining federal lands often fall under the jurisdiction of several federal agencies. To the degree possible, this should be corrected based on the principle of ecosystem management. D0107Improve the Land Acquisition Policies of the DOI na na The Secretaries of Interior and Agriculture and the Director of OMB should modify the process for determining land acquisition priorities and procedures. The new system should reflect major objectives of federal land acquisition, including outdoor recreation resources, resource protection, and resource and cultural heritage protection. 130108Improve Mineral Management Service Royalty Collections 0.0 28.0 Better management of DOI's royalty collection program would increase revenues and improve efficiency. D0109Establish a System of Personnel Exchanies in DOI na na A change in management philosophy is needed to address bureaucratic barriers at DOI. This recommendation outlines various approaches to this problem. DOI10Consolidate Administrative and Programmatic Functions in DOI -17.5 0.0 To manage its bureaus effectively, DOI needs to reduce duplicative services. By consolidating administrative and programmatic functions, DOI can improve customer service, promote efficiency, and reduce costs. 130111Streamline Management Support Systems in DOI cbe cbe To create a quality management culture, the department should streamline its management support systems, including telecommunications, procurement, financial management, and paperwork control. 130112Create a New Mission for the Bureau of Reclamation -184.1 0.0 The Bureau of Reclamation needs to redefine its mission toward new environmental priorities and darify its role in water management.. TI a original mission to develop water resources and provide for economic development of the Westis almost complete. 130113Improve the Federal Helium Program -12.0 35.0 The federal government needs to reexamine its role in the federal helium program. The program can be run more efficiently, reducing outlays by federal helium customers and increasing revenue. To obtain maximum benefit from helium operations, the government should cancel tip: helium debt, reduce costs, increase efficiencies in helium operations, and increase sales of crude helium as market conditions permit. DOI14Enhance Environmental Management by Remediating Hazardous Material Sites 18.7 0.0 The time is right to integrate skills across bureau boundaries in the remediation of DOI's hazardous materials sites. The high cost of remediation requires DOI to make maximum use of existing resources.

DEPARTMENT OF JUSTICE DOJO'Improve the Coordination and Structure of Federal Law Enforcement Agencies* -$187.0 $0.0 NPR recommends the designation of the Attorney General as the Director of Law Enforcement to coordinate federal law enforcement efforts. It also recommends changes in the alignment of federal law enforcement responsibilities. DOJ02Improve Border Management* cbc cbc Federal border management should be significantly improved. NPR recommends a series of actions to be taken by Customs and INS to make these improvements. DOJ03Redirect and Better Coordinate Resources Dedicated to Interdiction of Drugs* na na This recori mendation outlines changes that can be made to better coordinate federal programs directed at the air interdiction of drugs.

'issue corresponds to an identical issue in the Department of Treasury report; fiscal impact is for Justice only. cbc = cannot be estimated (due to data li.nitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

144 150 APPENDIXA

Fiscal Impact, 1994-99 (Millions of Dollars) Recommendation Change in Change In Spending Receipts DOJ04Improve Department of Justice Debt Collection Efforts cbe This recommendation would makeimprovements in the Justice debt collection the effort, including giving thedepartment the ability to retain debts collected and allowing a small percentage of Justice to credit its working capitalfund with a percentage of debt collections to be used forthe creation of a centralized debt tracking and informationsystem. DOJOS Improve the Bureau of Prisons Education, Job Training,and Financial Responsibilities Programs 0.0 13.8 NPR makes a series of recommendations for improving prison education,training, and inmate financial responsibilitypolicies. EX3J06Improve the Management of Federal Assets Targeted for Disposition* the Improvements are needed in the methodsby which the federal cbe of various assets. government disposes DOJ07Reduce the Duplication of Drug Intelligence Systems andImprove Computer Security* cbe cbe NPR recommends several changesto eliminate duplication in the federal intelligence system. drug DOJ08 Reinvent the Immigration andNaturalization Service's Organization and Management -48.0 NPR recommends a number ofchanges in INS organization and 0.0 to provide an improved management processes management structure and a strategic vision forthe agency. DOJ09Make the Department of Justice Operate More Effectivelyas the US. Government Law Firm na na Justice should undertake severalimprovements in the way it functions to improve service manages its litigation to its customers and bettermanage its case toad. DOJ10 Improve White Collar Fraud CivilEnforcement Civil fraud recovery should be 14.0 111.0 established as a priority and thedepartment should take steps to improve its whitecollar fraud enforcement. D0J11Reduce the Duplication of Law Enforcement TrainingFacilities Overlap and duplication in theprovision of federal law enforcement cbe cbe should be examined. Multi-agency training facilities training needs should beaccommodated through existing facilities in lieu of theconstruction of new facilities by D0J12 individual agencies. Streamline Background Investigationsfor Federal Employees -60.0 The current method of completingbackground examinations 0.0 is time-consuming and inefficient. on federal employees This recommendation outlinesimprovements to streamline the process withoutsacrificing thoroughness. DOJ13 Adjust Civil Monetary Penaltiesto the Inflation Index 0.0 Civil monetary penalties havenot been adjusted to keep up with inflation. 193.0 this recommendation, Under a 'catch-up" adjustment would be madeand the need for additional inflation adjustmentswould be automatically reassessed D0J14 every four years. Improve F feral CourthouseSecurity This recommendation is intended 24.0 0.0 to address concerns of the U.S. MarshalsService concerning security at federalcourthouses. 130J15 Improve the Professionalism ofthe US. Marshals Service U.S. Marshals should be selected -36.0 based on merit by the Directorof the U.S. 0.0 Marshal Service and reducesome positions. D0J16 Develop Lower Cost Solutionsto Federal Prison Space Problems This recommendation describes else cbe approaches to solving existingprison space problems. DEPARTMENT OF LABOR DOLO1 Enhance Reemployment Programs for OccupationallyDisabled Federal Employees -$125.7 $0.0 These recommendations would help occupationally disabledfederal employeesreturn to productive careers by expandingDOL's return-to-work by reducing long-term program. This saves money benefit costs to thegovernment. cbe = cannot be estimated (dueto data limitations or uncertainties na = not applicable--recommendation about implementation timelines). improves efficiency or redirects resources but doesnot directly reduce budget authority. 151 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal Impact, 1994-99 (Millions of Dollars) Change in Change In Recommendation Spending Receipts DOLO2Develop a Single Comprehensive Worker Adjustment Strategy na na Improve services to the unemployedand those at risk of dislocationand make better use of resources available for assistance by developing a new worker adjustment strategy. DOLO3 Expand Negotiated Rulemaking and Improve Up-front Teamwork on Regulations the cbe DOL should provide administrative ruidance more quickly and cheaply through negotiated rulemaking and a streamlined team approach to the rules development process. DOLO4 Expand the Use of Alternative Dispute Resolution by the Department of Labor cbe cbe The increased use of alternative dispute resolution could reduce litigation and produce significant long-term savings. DOLO5Automate the Processing of ERISA Annual Financial Reports (Forms 5500) to Cut -49.7 0.0 Costs and Delays in Obtaining Employee Benefit Plan Data Automating the filing and processing of annual financial repOrts required of pension and benefit plan administrators (ERISA Forms 5500) would reduce costs anu. delays. DOLO6Amend the ERISA Requirement for Summary Plan Descriptions -0.6 0.0 The filing of summary plan descriptions by employee benefit plan administrators with DOL is intended to make the plans more readily available for participants and beneficiaries. Since requests for copies are received on only about one percent, the cost to maintain the system and the administrative burden on employers far outweighs the public benefit. DOLO7Redirect the Mine Safety and Health Administration's Role in Mine Equipment na na Regulation Shifting the Mine Safety and Health Administration's regulatory role from one of in-house testing to one of on-site quality assurance would provide increased economic benefits to the mining industry and would allow DOL to redirect resources. DOLO8Create One-Stop Centers for Career Management cbe cbe Establishing one-stop centers for career management would create a customer-driven work force system, empowering Americans to make informed career choices and providing the means to achieve those goals. DOLO9Create a Boundary-Spanning Work Force Development Council na na Because the greatest barriers to creating an integrated work force development system arc the categorical nature of federal funds and structural fragmentation of various federal programs, this issue proposes to coordinate work force development efforts by convening a multi-agency Work Force Development Council and implementing "bonom-up grant consolidation" for states and localities. DOL1O Refocus the Responsibility for Ensuring Workplace Safety and Health cbe cbe This recommendation proposes to shift responsibility for workplace safety and health to employers by issuing regulations requiring self-inspections and implementing a sliding scale of incentives and penalties to ensure safety standards are met. DOLI 1Open the Civilian Conservation Centers to Private and Public Competition ' cbe cbc A long-term reduction in costs is possible through expanded competition for contracts to operate Job Corps Civilian Conservation Centers. DOL12 Partially Fund Mine Safety and Health Enforcement Through Service Fees -44.4 0.0 Charge for services to put the mining industry on a comparable footing with other industries which bear the cost of their regulation. This proposes to partially fund enforcement of mine safety regulations through service fees. DOL13 Integrate Enforcement Activities within the Department of Labor cbc cbe Introduce greater coordination and flexibility in the DOL enforcement agencies to project a consistent message to customers and integrate approaches to common issues. DOL14 Apply Information Technology to Expedite Wage Determinations for Federal 0.1 0.0 Contracts Developing an electronic data interchange/data mapping system which is integrated into the Service Contract Act process should eliminate delays both in the delivery of wage determinations and in procurement when caused by determination delays.

cbc = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

146 t,, i 152 Fiscal impact, 1994-99 (Millions of Dollars) Change in Change in Recommendation Spending Receipts DOL15 Provide Research and Development Authority for the DOL's Mine Safety and na na Health Program Granting the Mine Safety and Health Administration authority to procure services and goods directly would improve the mine safety program by expediting the acquisition process for new and improved technology.

DOL16 Increase Assistance to States in Collecting Delinquent Unemployment Insurance na na Trust Fund Contributions This recommendation outlines ways of improving state collections of delinquent unemployment insurance contributions. DOL17 Revise and Update the Consumer Price Index 56.0 0.0 The consumer price index has important consequences for both public and private decisions. This important measure should be updated to reflectrecent inflation trends. DOL18 Improve the Delivery of Legal Services by the Office of the Solicitor in the na na Department of Labor The delivery of legal services by the Office of the Solicitorcan be improved by using cooperative agreements, coordinated budgeting and better use of resources. DOL19 Transfer the Veterans' Employment and Training Service to the Employment -66.0 0.0 and Training Administration The DOL can improve service delivery to veterans and savemoney by consolidating administration of this function. DOL20Reduce Federal Employees' Compensation Act Fraud -22.6 0.0 Congress needs to amend several sections of the United States Codeto enable DOL to eliminate benefits to persons who have been convicted of defrauding the program. DOL21 Change the Focus of the Unemployment Insurance Benefits Quality ControlProgramna na to Improve Performance Re-examining the present mix of systems to shift the focus of thisprogram from error measurement to a constructive use of the results would allow DOL to improve benefit payment quality and more e et-Lively achieve the program's goals.

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION NASA01Improve NASA Contracting Practices cbe cbe This recommendation outlines several steps NASA can taketo improve its contracting procedures, including greater use of performance standards, contracting out for data instead of hardware whenever appropriate, and using cooperative research agreements to more quickly exploit high performance computing techniques.

NASA02Increase NASA Technology Transfer Efforts and Eliminate Barriersto Technology na na Development NASA should expand its technology transfer efforts andpromote the development of new technologies.

NASA03 Increase NASACoordination of Programs with the U.S. Civil Aviation Industry na na NASA should develop a closer relationship with the U.S. civil aviation industryto ensure industry input is received early and throughout the technology development process.

NASA04Strengthen and Restructure NASA Management -1,982.0 0.0 NASA program management should be aggressively overhauled. This recommendation outlines a number of steps theagency should take, both in overall management and in the management of the space station program. NASA05Clarify the Objectives of the Mission to Planet Earth Program na na This recommendation suKests a number of steps neededto improve the management and performance of the Mission to Planet Earth program. cbe = cannot be estimated (due to data limitationsor uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirectsresources but does not directly reduce budget authority.

153 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal Impact, 1994-99 (Millions-of Dollars) Change in Change In Recommendation Spending Receipts NATIONAL SCIENCE FOUNDATION/OFFICE OF SCIENCE AND TECHNOLOGY POLICY NSF01 Strengthen Coordinztion of Science Policy na na NPR recommends modifying the current structure of the Federal Coordinating Council for Science, Engineering, and Technology (FCCSET) to strengthen its role in science policy. NSF02Use a Federal Demonstration Project to Increase Research Productivity na na NPR recommends using a demonstration project structured between several universities and five federal agencies as a model for a program to reduce administrative overhead on research grants. NSF03Continue Automation of NSF Research Support Functions na na NSF should push forward with efforts to implement advanced information technology in the proposal submission, review, award, and information dissemination areas.

SMALL BUSINESS ADMINISTRATION SBA01 Allow Judicial Review of the Regulatory Flexibility Act ripe cbe Allow access to the courts when federal agencies develop rules that fail to properly examine alternatives that will lessen the burden on small businesses. SBA02 Improve Assistance to Minority Small Businesses na na This proposal recommends a complete review of all federal minority business assistance programs and the establishment of a Small Disadvantaged Business Set- Aside program for civilian agencies to provide increased opportunities for minority small business. SBA03 Reinvent the US. Small Business Administration's Credit Programs na na Identify ways to improve SBA's credit programs to make SBA more responsive to those industries with the potential for creating a higher number of jobs, those involved in international trade, and those providing critical technologies. It will also enable the agency to operate more efficiently. SBA04 Examine Federal Guidelines for Small Business Lending Requirements na na The federal government should examine the guidelines bank regulators set for small business lending by financial institutions to ensure that capital is available without undue barriers while maintaining the integrity of the financial institutions. SBA05 Manage the Microloan Program to Increase Loans for Small Business na na Allowing SBA to guarantee loans made by banks to nonprofit intermediaries, who could, in turn, make small loans to low-income individuals, women, minorities and other small businesses unable to obtain credit through traditional lending sources would increase private sector participation and lessen administrative burdens linked to direct government lending. SBA%Establish User Fees for Small Business Development Center Services 0.0 102.0 Authorize Small Business Development Centers to charge a nominal fee for their services to reduce federal outlays and require the direct beneficiaries of the assistance to pay a share of the cost. SBA07 Distribute SBA Staff Based on Workload and Administrative Efficiency na na Reallocating staff based on administrative efficiency and objective workload measures to allow the SBA to better serve its customers by shifting resources from its central and regional offices into its district offices. SBA08 Improve Federal Data on Small Businesses na na The quality of information made available to shape federal legislative and regulatory actions affecting small and large businesses will be increased if federal household and employer surveys include a "size of firm" question.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

148 I 1 5 4 APPENDIXA

Fiscal Impact, 1994-99 (Millions of Dollars) Change in Change In Recommendation Spending Receipts DEPARTMENT OF STATFJU.S. INFORMATION AGENCY DOS01 Expand the Authority of Chiefs of Mission Overseas cbe cbe This recommendation proposes a pilot program to expand the management authority of Chiefs of Mission overseas in the allocation of fiscal and staffing resources. DOS02Integrate the Foreign Affairs Resource Management Process na na NPR recommends specific reforms of the interagency foreign policy resource management process to improve coordination. The recommendation also covers specific improvements within the Department of State. DOS03 Improve State Department Efforts to Promote U.S. Business Overseas cbe cbe International trade is an important responsibility of U.S. missions overseas in the post-Cold War world. This recommendation outlines several improvements that can be made in State Department efforts in this area. DOSO4Provide Leadership in the Department's Information Management cbe the The Department of State should make significant changes in the way it manages information technology policy. Several improvements are recommended. DOS05 Reduce Mission Operating Costs -57.8 0.0 Several recommendations are made for reducing U.S. costs to operate missions overseas, including eliminating certain facilities, reducing security costs and considering altogether new forms of overseas representation. DOS06 Consolidate U.S. Nonmilitary International Broadcasting na na This recommendation supports the Administration's decision to consolidate U.S. international broadcasting under USIA and outlines ways of extending the benefits of this change. DOS07Relocate the Mexico City Regional Administrative Management Center -0.1 0.0 NPR recommends moving this administrative support office to the U.S. to save money and recommends examining the need for similar offices now in Paris and Bangkok. DOS08 Improve the Collection of Receivables -9.8 0.0 The State Department should do a better job collecting debts, such as medical expenses and others, owed to the department. DOS09 Change UN Administrative and Assessment Procedures -36.2 0.0 This recommendation outlines several changes in the U.S.'s fiscal relationship with the United Nations, including recommending an oversight office for the organization and tax law changes to reduce costs to the federal government.

DEPARTMENT OF TRANSPORTATION DOTOI Measure Transportation Safety na na NPR recommends the development of common, government-wide measures of transportation safety. DOTO2 Streamline the Enforcement Process cbe cbe NPR recommends pilot program.1 the U.S. Coast Guard, the Federal Aviation Administration, and the Federal Highway Administration, designed to offer greater flexibility in enforcement methods. DOTO3 Use a Consensus-Building Approach to Expedite Transportation and Environmental na na Decisionmaldng DOT should conduct two demonstration projects to apply a problem-solving approach to transportation planning, development and decisionmaking as a means of reducing costs and improving the efficiency of agency decisionmaking. DOTO4 Establish a Corporation to Provide Air Traffic Control Services 0.0 0.0 NPR recommends development of a detailed action plan and statutory language for changes in air traffic control management to make it more business-like.

cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

155 149 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal impact, 1994-99 (Millions-of Dollars) Change In ChangeIn Recommendation Spending Receipts DOTO5 Permit States to Use Federal Aid as a Capital Reserve na na This recommendation would allow federal transportation grant recipients to use grant funds capital reserve to back debt financing to construct eligible transportation projects.

DOT06 Encourage Innovations in Automotive Safety na na NPR recommends allowing the National Highway Traffic Safety Administration to grant more exemptions from highway safety standards to develop new safety systems. DOTO7 Examine User Fees for International Over-Flights 0.0 9.0 DOT should conduct a cost allocation study to determine whether foreign air carriers passing over U.S. air space are paying their fair share and whether direct user fees should be imposed. DOTO8 Increase FAA Fees for Inspection of Foreign Repair Facilities 0.0 8.0 To ensure full cost recovery, increase the fees charged for certification and surveillance of foreign aircraft repair stations. DOTO9Contract for Level I Air Traffic Control Towers -3.1 0.0 NPR recommends converting 99 Level I (low-use) air control towers to contract operation and reviewing the remaining Level I towers for possible decommissioning. DOTIO Establish an Aeronautical Telecommunications Network to Developa Public-Private na na Consortium FAA should pursue the creation of a public-private consortium undera cooperative agreement with industry to develop an Aeronautical Telecommunications Network DOT11 Improve Intermodal Transportation Policy Coordination and Management na na DOT should institute a strategic planning process to promulgate national, integrated transportation policies. DOT12Develop an Integrated National Transportation Research and Development Plan na na DOT should examine the nation's transportation-related research and development portfolio and develop an integrated national transportation plan that considers specific transportation research needs as well as intermodal transportation plans. DOT13 Create and Evaluate Telecommuting Programs na na DOT should implement a telecommuting plan within the agency and should evaluate transportation-related behavior and other topics requiring research in this area. DOT14 Improve DOT Information Technology Management -224.5 0.0 The department should develop an information management strategy which will enable the sharing of data among its component agencies and reducecosts. DOT15 Provide Reemployment Rights for Merchant Mariners na na Guarantee reemployment rights to U.S. seafarers at their private sector jobs if called to serve during a war or national emergency. DOT16 Establish an Independent Commission to Review U.S. Maritime Industry na na NPR recommends a detailed examination of the future of the maritime industry in the U.S. and the benefits derived by the taxpayers from maritime industry subsidies and related issues. DOT17 Eliminate Funding for Highway Demonstration Projects -7,853.0 0.0 Rescind funding for existing highway demonstration projects. These demonstration projects should compete at the state level for the limited highwayresources available and not be singled out for special treatment at the federal level. DOT18 Reduce Spending for the U.S. Merchant Marine Academy -45.6 0.0 As an economy measure, federal funding for the U.S. Merchant Marine Academy should be cut by half. The Academy should be given the abilityto charge tuition to cover a portion of its operations. DOT19 Rescind Unobligated Earmarks for the FTA New Starts and Bus Program -131.5 Rescind unobligated balances for fiscal year 1992 and prior earmarked funding under this FTA program that remain unobligated after threeyears.

cbc = cannot be estimated (due to data limitations or uncertainties about implementation timelines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority. 150 156 APPENDIX A

Fiscal Impact, 199499 (Millions of Dollars) Change in Change In Recommendation Spending Receipts DOT20 Reduce the Annual Essential Air Service Subsidies -65.0 0.0 This recommendation would set new, more restrictive criteria for small airports to qualify for essential air service subsidies. DOT21 Terminate Grant Funding for Federal Aviation Administration Higher Education -45.4 0.0 Programs To reduce costs, eliminate federal grant funding of two FAA post-secondary education programs. DOT22 Assign Office of Motor Carriers (OMC) Field Staff to Improve Program Effectiveness the the and Reduce Costs OMC should develop a resource allocation model so that regional managers will be able to optimize geographic assignment of staff, schedule carrier reviews in an efficient manner, and eliminate unnecessary travel requirements.

DOT23 Automate Administrative Requirements for Federal Aid Highway Projects na na NPR recommends improvements in the flow of information on Federal Aid Highway projects that will reduce paperwork and reduce staff time in completing certain forms and other current requirements.

DEPARTMENT OF TREASURY/RESOLUTION TRUST CORPORATION TRE01 Improve the Coordination and Structure of Federal Law Enforcement Ag.mcies* $-92.9 $0.0 NPR recommends the designation of the Attorney General as the Director of Law Enforcement to coordinate federal law enforcement efforts. It also recommends changes in the alignment of federal law enforcement responsibilities.

TRE02 Improve Border Management" cbe cbe Federal border management should be significantly improved. NPR recommendsa series of actions to be taken by Customs and INS to make these improvements. TRE03 Redirect and Better Coordinate Resources Dedicated to the Interdiction of Drugs` -186.6 0.0 This recommendation outlines changes that can be made to better coordinate federal programs directed at the air interdiction of drugs. TRE04Foster Federal-State Cooperative Initiatives by the IRS the the Cooperative relationships between the IRS and state tax administrations, including joint filing of data, should improve taxpayer service as well as collection activity while reducing costs.

TREO5Simplify Employer Wage Reporting cbe cbe The administrative burden caused by our current employer wage-reporting requirements could be reduced while maintaining or improving the effectiveness of government operations by developing and implementing a simplified wage reporting system.

TRE06 Establish Federal Firearms License User Fees to Cover Costs 0.0 132.5 The current fee for a retail dealer's firearms license (authorized in 1968) doesnot cover the cost of license processing and is low enough to encourage applications from individuals wishing to occasionally purchase firearms at reducedcost. Increased fees would recover the cost of operating the firearms program. TRE07 Improve the Management of Federal Assets Targeted for Dispositions cbe the Improvements are needed in the methods by which the federal government disposes of various assets.

TRE08Reduce the Duplication of Drug Intelligence Systems and Improve Computer na na Security' NPR recommends several changes to eliminate duplication in the federal drug intelligence system.

TRE09Modernize the IRS cbe cbe The IRS Tax System Modernization (TSM) initiative, currently in its initialstages, would ease taxpayer burdens due to manual return processing and inaccessible information, and enable IRS to provide a level of service comparable to private sector financial institutions.

`Issue corresponds to an identical issue in the Department of Justice report; fiscal impact is for Treasury only, cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority. t 157 151 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS

Fiscal Impact, 1994-99 (Milliond of Dollars) Change in Change In Recommendation Spending Receipts TRE10Modernize the U.S. Customs Service 0.0 450.0 NPR recommends a number of changes in Customs' organization and management processes to provide an improved management structure and strategic vision. TREllEnsure the Efficient Merger of Resolution Trust Corporation into the FDIC na na The merger of the RTC and the FDIC should ensure the transfer of RTC expertise not currently held by the FDIC in order to provide the most efficient administration of these asset-disposition functions. TRE12Reduce the Duplication of LAW Enforcement Training Facilities* cbe cbe Overlap and duplication in the provision of federal law enforcement training facilities should be examined. Multi-agency training needs should be accommodated through existing facilities in lieu of the construction of new facilities by individual agencies. TRE13Streamline Background Investigations for Federal Employees* cbe cbe The current method of completing background examinations of federal employees is time-consuming and inefficient. This recommendation outlines improvements to streamline the process without sacrificing thoroughness. TRE14Adjust Civil Monetary Penalties to the Inflation Index* 0.0 126.0 Civil monetary penalties have not been adjusted to keep up with inflation. Under this recommendation, a "catch-up" adjustment would be made and the need for additional inflation adjustments would be automatically reassessed by the government every four years. TRE15Increase IRS Collections Through Better Compliance Efforts cbe cbe NPR supports the current efforts of the IRS under Compliance 2000 to improve voluntary compliance and other efforts to collect taxes already owed to the federal government. TRE16Improve Agency Compliance with Employment Tax Reporting Requirements cbe cbe Many federal agencies do not fully comply with federal tax reporting requirements. Responsibilities for compliance should be more fully communicated and enforced. TRE17Authorize Federal Tax Payment by Credit Card cbe cbe Legislation should be enacted to allow certain taxpayers to make tax payments with a credit card. TRE18Modernize the Financial Management Systems -41.1 0.0 NPR recommends several changes to improve financial management with Treasury, including consolidation of some operations, the improved use of technology, and other actions. TRE19Repeal Section 5010 of the Internal Revenue Code to Eliminate Tax Credits 0.0 500.0 for Wine and Flavors The wine and flavors tax credit should be repealed. TRE20 Amend or Repeal Section 5121 of the Internal Revenue Code Requiring Special 0.0 45.0 Occupational Taxes on Retail Alcohol Dealers This recommendation would increase federal income from alcohol dealers.

DEPARTMENT OF VETERANSAFFAIRS DVA01Develop the Master Veteran Record and Modernize the Department's Information na na Infrastructure Creation of a master veteran record for all VA programs and the improvements in the department's information technology will improve services to veterans and their families. DVA02 Modernize Benefits Claims Processing na na Modernization of the VA benefits claims processing system will improve the quality of service and save taxpayer dollars over time.

'Issue corresponds to an identical issue in the Department of Justice report; fiscal impact is for Treasury only. cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

152 158 APPENDIX A

Fiscal Impact, 1994-99 (Millions of Dollars) Change in Change In Recommendation Spending Receipts DVA03Eliminate Legislative Budget Constraints to Promote Management Effectiveness cbe cbe VA is covered by a number of special legislative requirements, including employment "floors" for certain programs. Reducing or eliminating some of these controls can reduce costs and improve service without sacrificing accountability. DVA04 Streamline Benefits Claims Processing 1.8 0.0 VA should examine the usefulness of a New York Regional Office approachto benefits claims processing that promises to streamline the process. It should also examine regional staffing. DVA05 Consolidate Department of Defense and Department of Veterans Affairs cbe cbe Compensation and Retired Pay Programs DOD and VA should create a task force to jointly examine their disability compensation adjudication and disbursement processes. DVA06 Enhance VA Cost Recovery Capabilities 0.0 486.5 Revise VA policy to use a portion of cost recovery funds to defray debt collection costs and expand recoveries to save money. DVA07 Establish a Working Capital Fund na na This recommendation would allow creation of a working capital fund using existing resources in the department to be used for certain selected needs. DVA08 Decentralize Decisionmaldng Authority to Promote Management Effectiveness na na NPR recommends that VA headquarters and field management work togetherto improve agency decisionmaking, including the delegation of some decisionmalcing to field activity directors.

DVA09 Establish a Comprehensive Resource Allocation Program na na VA should design and develop a comprehensive, departmentwide, performance and needs-based resource allocation program to replace current approaches. DVAIO Serve Veterans and Their Families as Customers na na This recommendation outlines several approaches for VA to improve its focuson veterans and their families as customers. DVA11Phase-Out and Close Supply Depots -168.0 0.0 VA should convert its existing centralized depot storage and distributionprogram to a commercial just-in-time delivery system and close unneeded supply depots. DVA12 Improve Business Practices through Electronic Commerce -124.1 0.0 VA should expand its use of electronic media to reduce paperwork andsave money. It should seek to make greater use of electronic funds transfer of compensation and pension benefits. DVA13 Eliminate "Sunset" Dates in the Omnibus Budget Reconciliation Act of1990 -704.8 490.0 To achieve cost savings, extend certain cost savingsmeasures that are due to expire in 1998.

DVA14Raise the Fees for Veterans Affairs' Guaranteed Home Loans -811.4 0.0 As a cost savings measure, loan fees on veterans loans should be raised above the levels set in the Omnibus Budget Reconciliation Act of 1994. DVA15 Restructure the Veterans Affairs' Health Care System 0.0 0.0 VA should reexamine its role and delivery structure after the issuance of thereport of the President's National Health Care Reform Task Force and takeactions to restructure the VA health care system. DVA16 Recover Administrative Costs of Veterans' Insurance Program fromPremiums 0.0 0.0 and Dividends VA should be permitted to recover certain insuranceprogram costs from insurance trust fund surpluses. Grand Total $28,100 $8,300 cbe = cannot be estimated (due to data limitationsor uncertainties about implementation time lines). na = not applicablerecommendation improves efficiency or redirects resources but does not directly reduce budget authority.

A 159 153 APPENDIX B

NATIONAL PERFORMANCE REVIEW SUMMARYOF SAVINGS Introduction The NPR savings for recommendationsyield $108.0 with the 5year period, billion in reductions in $36.4 billion FY1995-1999. excluded from procurement result fromthe specific this personnelare individualagencies that changes in savings "reinventing The were detailed estimate. procurement" remaining$71 billion in Appendix result from A. 3. governmentwidechanges Reeingeering This appendix explainedhere. Through provides the Technology Information governmentwide estimates ofthe These underlying changes, andthe estimatesassume: thoseestimates. assumptions a. A $25 billion are shown in Savings by baseline in Table B-1. major issuearea (IT) spending, information basedon obligationstechnology I. throughOMB circular reported Streamlining agencies for A-11 by The acquisition, executivebranch Reengineering.Bureaucracy7.1trough systems. operation, and These b. 30% use of IT estimatesassume: savings in IT a. Agency through systems may be reengineering information achieved of civilian will allowa 12% infrastructure b. personnelover 5 years. reduction consolidationand Administrative estimate is standardization this savings and central extrapolatedfrom the supervisors control staffsand Information "Defense will be the Infrastructure downsizing. primaryareas for (December Initiative" c. Attrition, 1992, Resource enhanced Defense ITspending Summary).Since relocation, severance, half of total constitutes outplacement reassignment, IT spending roughlyone- the primary and savings it is assumed toolsto accomplishretraining willbe can be obtained that equal d. Agencies the reduction. civilian from the will useother tools agencies. IT budgetsof accomplishthe 12% as necessaryto c. Savingsfrom e. The 12% reduction. from electronicbenefits reduction consolidationand transfer and includes and federal modernization Administration'spreviously increases the information of the personnel established4% costs result from infrastructure;offsetting f. Indirectreduction goalfor fiscal consolidation costs associated 1995. modernization and office with of the law space and personnel,such as mobile enforcement expenses, travel networks anda program and safety not includedin the and supplies, citizens with to provide dollar are betteraccess to estimates. information. government 2. d. Savings ReinventingFederal for electronic These Procurement may be benefitstransfer estimatesassume: extrapolated nationally a. The General states of New from pilot Service Mexico and programs in the that total Administration's e. Savings Minnesota. annual estimate recommendedfor the billion (GSA procurementcosts equal TransportationIT Departmentof b. Savings Federal $200 consolidation can be generatedProcurementReport). modernization and in by a are subtracted procurement variety of counting. to avoiddouble- systems, including reforms acquisition simplified thresholds,labor law 4. procurement reforms, IT reforms,shifting from Intragovernmental specificationsto commercial government Simplifyingand reducingAdministrativeCosts. of purchase items, reporting the federal cards, and expanded requirements c. Savings electronic use federal, will government's up to 12%of commerce. state, and local generate savingsat the may be achieved procurement that levels. The spending over 75% ofthe estimateassumes by Defense throughthese reforms accept a state and local Systems (study fee-for-serviceoption in governments will NPR used Management reimbursement place of d. To 5% asa mid-range College). The procedures existingcost avoid estimate. return for from double-counting, greater FY1995-1999in savings cost reimbursementadministrativeflexibility. associated Eliminating 3% peryear at theproceduresslows federal level. cost growthby

156 161 REST COPY AVAILABLE. 162 157 APPENDIX C

NATIONAL PERFORMANCE REVIEW MAJOR RECOMMENDATIONS AFFECTING GOVERNMENTAL SYSTEMS FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS Recommendations CREATING QUALITY LEADERSHIP AND MANAGEMENT QUALOI PROVIDE IMPROVED LEADERSHIP AND MANAGEMENT OF THE EXECUTIVE BRANCH The President should define a vision for the management of the government in the 21st century. To act on this vision, he should direct department and agency heads to designate chief operating officers and he should establish a President's Management Council, comprised of the chief operating officers, to oversee the implementation of NPR's recommendations. QUAL02 IMPROVE GOVERNMENT PERFORMANCE THROUGH STRATEGIC AND QUALITY MANAGEMENT Encourage all department and agency heads to lead and manage in accordance with the criteria in the Presidential Award for Quality. To begin this culture change, all executive branch employeesstarting with the President and Cabinetshould attend aprepri2re educational sessions on strategic and quality management. QUAL03 STRENGTHEN THE CORPS OF SENIOR LEADERS Develop guidance to be used to determine the qualifications needed for selected senior political appointee positions, and provide adequate orientations for individuals upon their appointment. QUAL04 IMPROVE LEGISLATIVE-EXECUTIVE BRANCH RELATIONSHIP Improve communications between the executive branch, members of Congress, and congressional staff on key issues during and after program and policy development and implementation. Develop an agreed-upon approach for dealing with management failures, crises, and chronic program difficulties. STREAMLINING MANAGEMENT CONTROL SMC01 IMPLEMENT A SYSTEMS DESIGN APPROACH TO MANAGEMENT CONTROL Redesign the existing collection of management control mechanisms for the executive branch, using a systems design approach, in order to create a well managed and cost-effective system. SMCO2 STREAMLINE THE INTERNAL CONTROLS PROGRAM TO MAKE IT AN EFFICIENT AND EFFECTIVE MANAGEMENT TOOL Rescind the current set of Internal Control Guidelines and replace them with a broader handbook on management controls. SMC03 CHANGE-THE FOCUS OF THE INSPECTORS GENERAL Change the focus of Inspectors General from compliance auditing to evaluating management control systems. In addition, recast the IGs method of operation to be more collaborative and less adversarial. SMC04 INCREASE THE EFFECTIVENESS OF OFFICES OF GENERAL COUNSEL Define clearly the clients of agency General Counsel offices as agency line managers. Train staff attorneys to understand the cultural changes they will need to undertake to operate in an environment where program results are important. Develop performance measures and "feedback loops" to ensure close cooperation with line managers. SMC05 IMPROVE THE EFFECTIVENESS OF THE GENERAL ACCOUNTING OFFICE THROUGH INCREASED CUSTOMER FEEDBACK Improve GAO's documentation of best practices and the use of feedback loops on its performance. SMC06 REDUCE THE BURDEN OF CONGRESSIONALLY MANDATED REPORTS Eliminate at least 50 percent of all congressionally mandated reports. Review new reporting requirements for management impact, and include a sunset provision. SMC07 REDUCE INTERNAL REGULATIONS BY MORE THAN 50 PERCENT Direct department secretaries and agency heads to reduce by at least 50 percent the number of internal regulations. and the number of pages of regulations, within 3 years. SMC08 EXPAND THE USE OF WAIVERS TO ENCOURAGE INNOVATION Establish a process for obtaining waivers from federal regulations and identifying those regulations for which this process should apply. TRANSFORMING ORGANIZATIONAL STRUCTURES ORGO1 REDUCE THE COSTS AND NUMBERS OF POSITIONS ASSOCIATED WITH MANAGEMENT CONTROL STRUCTURES BY HALF Cut management control positions over the next 5 years. Reinvest some of the savings in benchmarking, training, and investments in new technology. In addition to separation incentives (see HRM14), provide outplacement services to affected staff. ORGO2 USE MULTI-YEAR PEFORMANCE AGREEMENTS BETWEEN THE PRESIDENT AND AGENCY HEADS TO GUIDE DOWNSIZING STRATEGIES Performance agreements with agency heads (sec BGT01) should be used to identify progress toward agreed upon downsizing goalsnot central management agency controls such as across-the-board cuts or ceilings on employment. In exchange, agencies will be supported with increased management flexibili ties. ORGO3 ESTABLISH A LIST OF SPECIFIC FIELD OFFICES TO BE CLOSED Within 18 months, the President's Management Council should submit a list to Congress of civilian field offices that should be closed.

160 164 APPENDIX C Recommendations

ORGO4 THE PRESIDENT SHOULD REQUEST AUTHORITY TO REORGANIZEAGENCIES Congress should restore to the President the amitotic., to restructure the executive branch. ORGO5 SPONSOR THREE OR MORE CROSS-DEPARTMENTAL INITIATIVES ADDRESSING COMMON ISSUES OR CUSTOMERS The President's Management Council should identify andsponsor three or more cross-departmental initiatives in areas such as illegal immigration, debt collection, and the problems of the homeless. ORGO6 IDENTIFY AND CHANGE LEGISLATIVE BARRIERS TO CROSS-ORGANIZATIONALCOOPERATION As cross-organizational collaborations become an integralpart of government operations, barriers to ready collaboration and funding should be removed. IMPROVING CUSTOMER SERVICES ICS01 CREATE CUSTOMER-DRIVEN PROGRAMS IN ALL DEPARTMENTS ANDAGENCIES THAT PROVIDE SERVICES DIRECTLY TO THE PUBLIC Establish an overall policy for quality of federal services deliveredto the public and initiate customer service programs in all agencies that provide services directly to the public. ICS02 CUSTOMER SERVICE PERFORMANCE STANDARDSINTERNAL REVENUESERVICE As part of its participation in the NPR, the Internal Revenue Service is publishingcustomer service performance standards. To speed the delivery of taxpayer refunds, the Secretary of the Treasury should delegatedisbursing authority to IRS in 1993 and future tax seasons. ICS03 CUSTOMER SERVICE PERFORMANCE STANDARDS SOCIAL SECURITYADMINISTRATION As part of its participation in the NPR, the Social Security Administrationis publishing customer service performance standards. SSA will also obtain customer opinionson all the goals and objectives of their strategic plan, using that input to revise the goals and objectives as needed, set priorities, and establish interim objectives. ICSO4 CUSTOMER SERVICE PERFORMANCE STANDARDSPOSTAL SERVICE As part of its participation in the NPR, the U.S. Postal Service will expandits plans to display customer service standards in Post Office retail lobbies. ICS05 STREAMLINE WAYS TO COLLECT CUSTOMER SATISFACTION ANDOTHER INFORMATION FROM THE PUBLIC For voluntary information collection requests directedat customers, OMB will delegate authority to approve such requests if departments certifiy that they will fully comply with Paperwork Reduction Actrequirements. OMB will also clarify rules on the use of focus groups and streamline renewals of previously approvedsurvey requests. MISSION-DRIVEN, RESULTS-ORIENTED BUDGETING BGTOI DEVELOP PERFORMANCE AGREEMENTS WITH SENIORPOLITICAL LEADERSHIP THAT REFLECT ORGANIZATIONAL AND POLICY GOALS The President should develop performanceagreements with agency heads, starting with the top two dozen. Agency heads should also use performance agreements within theiragency to forge an effective team committed to achieving organizational goals and objectives. BGTO2 EFFECTIVELY IMPLEMENT THE GOVERNMENT PERFORMANCEAND RESULTS ACT OF 1993 Accelerate planning and measurement effortsto improve performance in every federal program and agency. Designate as pilots under the act several multi- agency efforts that have related programs and functions. Develop common measures and data collection efforts for cross-cutting issues. Clarify the goals and objectivesof federal programs. Incorporate performance objectives and results as key elements in budget andmanagement reviews. BGTO3 EMPOWER MANAGERS TO PERFORM Restructure appropriations accounts to reduce overitemization andto align them with programs. Ensure that direct operating costs can be identified. Reduce overly detailed restrictions and earmarks in appropriationsand report language. Simplify the apportionment process. Reduce the excessive administrative subdivision of funds in financial operating plans. BGT04 ELIMINATE EMPLOYMENT CEILINGS AND FLOORS BYMANAGING WITHIN BUDGET Budget and manage on the basis of operatingcosts rather than full-time equivalents or employment ceilings. Request Congress to remove FTE floors. BGT05 PROVIDE LINE MANAGERS WITH GREATER FLEXIBILITYTO ACHIEVE RESULTS Identify those appropriations that should be convertedto multi- or no-year status. Permit agencies to roll over 50 percent of their unobligated year-end balances in annualoperating costs to the next year. Expedite reprogramming of funds within agencies.

tl 165 161 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKSBETTER & COSTS LESS Recommendations BGTO6 STREAMLINE BUDGET DEVELOPMENT Begin the President's budget formulation process with a mission-driven Executive Budget Resolutionprocess that will replace hierarchial budget development,delegate more decision making approach to crosscutting issues. In the to agency heads, and promote a collaborative process, eliminate multiple requirements for detailed budgetjustification materials. Negotiate a reduction in the detailed budgetjustification provided to Congress. BGTO7 INSTITUTE BIENNIAL BUDGETS ANDAPPROPRIATIONS Submit a legislative proposal to move from an annual to a biennial budget submissionby the President Establish biennial budget resolution and biennial appropriation processes. Evaluateprogram effectiveness and refine performancemeasures in the off-year. BGTO8 SEEK ENACTMENT OF EXPEDITEDRESCISSION PROCEDURES Pursue negotiations with the leadership of the House and Senate to gainenactment of expedited rescission authority. IMPROVING FINANCIAL MANAGEMENT FM01 ACCELERATE THE ISSUANCE OFFEDERAL ACCOUNTING STANDARDS Issue a comprehensive set of federal financial accounting standards within 18 months. If allstandards are not issued under the present advisory board structure, create an independent federalfinancial accounting standards board. FM02 CLARIFY AND STRENGTHEN THE OMB AND TREASURY FINANCIAL MANAGEMENT ROLES OF Develop a Memorandum of Undirstandingto darify the roles of OMB and Treasury in financial governmentwide budget and financial information management. Create a steering group to develop and provide guidancein implementing an integrated budget and financial informationstrategic plan. Shift review of Financial Deputy Director for Management. Management Service budget to the OMB FM03 FULLY INTEGRATE BUDGET, FINANCIALAND PROGRAM INFORMATION Ensure that agency financialsystems are in compliance with a revised OMB Circular Systems," by September 1996. Provide A-127 , "Financial Management interagency funding for the joint development offinancial systems. FM04 INCREASE THE USE OF TECHNOLOGYTO STREAMLINE FINANCIAL Use electronic funds transfer SERVICES to pay and reimburse expenses for all federal employees,to handle all interagency payments, to make payments to state and localgovernments, and to pay for purchases from the private individuals should be done electronically. sector. Similarly, all payments to FM05 USE THE CHIEF FINANCIAL OFFICERS(CFO) ACT TO IMPROVE FINANCIAL Identify the set of financial SERVICES management functions which should reportto agency CFOs, and ensure that all financial management personnel are fully-qualified when hired. Ensurethat information being collected, is useful, objective, timely, and disseminated, and reportedon accurate for the benefit of programmanagers. FM06 "FRANCHISE" INTERNAL SERVICES The President's Management Councilshould encourage agencies computer support, or procurement, competitively from to purchase common administrative services, suchas payroll, prices. other federal agencies thatmay be more responsive or offer better FM07 CREATE INNOVATION FUNDS Allow agencies to create innovation capitalfunds from retained savings provide a return on investment. to invest in innovations that can improve service and FM08 REDUCE FINANCIAL REGULATIONSAND REQUIREMENTS Eliminate timesheets and timecards and use technology to enter payroll data onlyon an exception basis. Allow use of commercial checking accounts instead ofthird-party accounts. Create audit findings. a threshold below which it is not cost effectiveto resolve FM09 SIMPLIFY THE FINANCIAL REPORTINGPROCESS Grant OMB the flexibility to consolidate and simplify over a dozen relatedstatutory reports to Congress and the President. Require agency heads to providetwo reports annually, a planning report and financial management reporting an accountability report. Ensure that any future requirements can be addressed in either theplanning or accountability FM10 reports. PROV DE AN ANNUAL FINANCIALREPORT TO THE PUBLIC Provide a simplified version of a consolidated report on the finances of the federalgovernment for distribution to the taxpayers by June 1995. Developa method of identifying and budgeting for the expected Government. costs of contingent liabilities of the Federal FM I I STRENGTHEN DEBT COLLECTIONPROGRAMS Propose legislation to allow debt collectionactivities to be funded by the agencies to keep a certain percentage of revenues generated from collections and to allow the any increased collection amounts. Propose legislationto lift restrictions on the use of private collection, and expandagency litigation authority for debt collection through Attorneys. the designation of special assistant U.S.

162 .166 APPENDIX C Recommendations FM12 MANAGE FIXED ASSET INVESTMENTS FOR THELONG TERM Establish a long-term fixedasset planning and analysis process, and incorporate it into the federal budget is no bias in the budget against long-term investments. process. Ensure there FM13 CHARGE AGENCIES FOR THE FULL COST OFEMPLOYEE BENEFITS Require all agencies to pay the full accruing cost of Civil Service Retirement and Pensions. OMB and the Office ofPersonnel Management should also research the possibility of chargingagencies for civilian retiree health benefits. REINVENTING HUMAN RESOURCEMANAGEMENT HRMOI CREATE A FLEXIBLE AND RESPONSIVE HIRINGSYSTEM Authorize agencies to establish their own recruitment and examining programs. Abolish centralizedregisters and standard application forms. Allow federal departments and agenciesto determine that recruitment shortages exist and directly hire candidates without ranking. Reduce thetypes of competitive service appointments to 3. Abolish the requirement. time-in-grade HRM02 REFORM THE GENERAL SCHEDULECLASSIFICATION AND BASIC PAY SYSTEM Remove all grade-level classification criteria from thelaw. Provide agencies with flexibility built upon the General Schedule framework. to establish broadbanding systems HRM03 AUTHORIZE AGENCIES TO DEVELOP PROGRAMSFOR IMPROVEMENT OF INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE Authorize agencies to design theirown performance management programs which define and agency's unique needs. measure success based on each HRM04 AUTHORIZE AGENCIES TO DEVELOP INCENTIVEAWARD AND BONUS SYSTEMS TO IMPROVE INDIVIDUAL AND ORGANIZATIONALPERFORMANCE Authorize agencies so develop their own incentive award and bonus systems. Encourage agenciesto establish productivity gainsharing programs to support their reinventionand change efforts. HRM05 STRENGTHEN SYSTEMS TO SUPPORTMANAGEMENT IN DEALING WITH POOR Develop a culture of performance which provides PERFORMERS supervisors with the skills, knowledge, andsupport they need to deal with poor performers, and holds supervisors accountable for effectively managing their human resources. Reduce by half thetime needed to terminate federal employees forcause. HRMO6 CLEARLY DEFINE THE OBJECTIVE OF TRAINING AS THE IMPROVEMENT OFINDIVIDUAL AND ORGANIZATIONAL PERFORMANCE; MAKETRAINING MORE MARKET-DRIVEN Reduce restrictions on trainingto allow managers to focus on organizational mission training marketplace. ancto take advantage of the available HRM07 ENHANCE PROGRAMS TO PROVIDEFAMILY-FRIENDLY WORKPLACES Implement family-friendly workplace practices(flex-time, flexip)ace, job sharing, telecommuting) accountability for customer service. Provide while ensuring telecommunications and administrativesupport fleet-wry for employees participating in flexiplace and telecommuting workarrangements. Expand the authority to establish and fund dependent programs. Mow employees to use sick leave to care care for dependents. Allow employees who leave and thenre-enter federal service to be given credit for prior sick leavebalances. HRM08 IMPROVE PROCESSES AND PROCEDURESESTABLISHED TO PROVIDE WORKPLACE DUE EMPLOYEES PROCESS FOR Eliminate jurisdictional overlaps. All agencies shouldestablish alternative dispute resolution methods and informal disposition of employment disputes. options for the HRM09 IMPROVE ACCOUNTABILITY FOR EQUALOPPORTUNITY GOALS AND ACCOMPLISHMENTS Charge all federal agency heads with the responsibility for ensuring equal opportunity andincreasing representation of qualified women, minorities, andpersons with disabilities into all levels and job categories, including management positions. middle and senior HRM 10 IMPROVE INTERAGENCY COLLABORATIONAND CROSS TRAINING FOR HUMAN PROFESSIONALS RESOURCE Establish an Interagency Equal EmploymentOpportunity and Affirmative Employment Steering of the Equal Employment Opportunity Group under the joint chair Commission and the Office of Personnel Management.Require appropriate cross training for human resourcemanagement professionals. HRM11 STRENGTHEN THE SENIOR EXECUTIVE SERVICE SO THAT IT BECOMES A KEYELEMENT IN THE GOVERNMENTWIDE CULTURE CHANGEEFFORT Create and reinforce a corporate perspective within the Senior Executive Service thatsupports gOvemmentwide culture change. Promote a corporate successionplanning model to use to select and develop senior within and between agencies for staff. Enhance voluntary mobility top senior executive positions ingovernment.

.167 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS .Recommendations

HRM12 ELIMINATE EXCESSIVE RED TAPE AND AUTOMATE FUNCTIONS AND INFORMATION Phase out the entire 10,000 page Federal Personnel Manual (FPM) and all agency implementing directives by December 1994. Replace the PPM and agency directives with automated personnel processes, electronic decision support systems and "manuals" tailored to user needs. HRM13 FORM LABOR-MANAGEMENT PARTNERSHIPS FOR SUCCESS Identify labor-management partnerships as a goal of the executive branch and establish the National Partnership Council. HRM 14 PROVIDE INCENTIVES TO ENCOURAGE VOLUNTARY SEPARATIONS Provide departments and agencies with the authority to offer separation pay. Decentralize the authority to approve early retirement. Authorize departments and agencies to fund job search activities and retraining of employees scheduled to he displaced. Limit annual leave accumulation by senior executives to 240 hours. REINVENTING FEDERAL PROCUREMENT PR0001 REFRAME ACQUISITION POLICY Convert the 1,600 page:, of the Federal Acquisition Regulation from a set of rigid rules to a set of guiding principles. PR00O2 BUILD AN INNOVATIVE PROCUREMENT WORKFORCE Establish an interagency program to improve the governmentwide procurement workforce. Provide civilian agencies with authority for improving the acquisition wol-kforc.e similar to that of the Defense Department's. PR00O3 ENCOURAGE MORE PROCUREMENT INNOVATION Provide new legislative authority to test innovative procurement methods. Establish a mechanism to disseminate information governmentwide on innovative procurement ideas. PR0004 ESTABLISH NEW SIMPLIFIED ACQUISITION THRESHOLD AND PROCEDURES Enact legislation to simplify small purchases by raising the threshold for the use of simplified acquisition procedures from $25,000 to $100,000 and raise the various thresholds for the application of over a dozen other statutory requirements that similarly complicate the process. To ensure small business participation, establish a single electronic bulletin board capability to provide access to information on contracting opportunities. PR0005 REFORM LABOR LAWS AND TRANSFORM THE LABOR DEPARTMENT INTO AN EFFICIENT PARTNER FOR MEETING PUBLIC POLICY GOALS Enact legislation to simplify acquisition labor laws such as the Davis-Bacon Act, the Copeland Act, and the Service Contract Act. Improve access to wage schedules through an on-line electronic system. PR0006 AMEND PROTEST RULES Change the standard of review at the General Services Board of Contracts Appeals to conform to that used in the relevant courts. Allow penalties for frivolous protests. Allow contract negotiation to continue up to the point of contract award, even though a protest has been filed with the General Services Board of Contract Appeals. PR0007 ENHANCE PROGRAMS FOR SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS Repeal statutory limitations on subcontracting and substitute regulatory limitations to provide greater flexibility. Authorize civilian agencies to establish small disadvantaged business set-asides. PR0008 REFORM INFORMATION TECHNOLOGY PROCUREMINTS Increase the delegation of authority to agencies to purchase information technology. For purchases less than $500,000 for products, and $2.5 million for services over the life of a contract, eliminate indcpth requirementgfor analyses of alternatives. Pilot-test alternative ways of buying commercially available information technology items. PR0009 LOWER COSTS AND REDUCE BUREAUCRACY IN SMALL PURCHASES THROUGH THE USE OF PURCHASE CARDS Provide managers with the ability to authorize employees to purchase small dollar value items directly using a government purchase card. Require internal government supply sources to accept this card. PROCI 0 ENSURE CUSTOMER FOCUS IN PROCUREMENT Revise Procurement Management Reviews to incorporate NPR principles such as "focusing on results" for the line managers. PROC11 IMPROVE PROCUREMENT ETHICS LAWS Create consistency across the government in the application of procurement ethics laws. PROC12 ALLOW FOR EXPANDED CHOICE AND COOPERATION IN THE USE OF SUPPLY SCHEDULES Allow state and local governments, grantees, and certain nonprofit agencies to use federal supply sources. Similarly, allow federal agencies to enter into cooperative agreements to share state and local government supply sources. PROCI3 FOSTER RELIANCE ON THE COMMERCIAL MARKETPLACE Change laws to make it easier to buy commercial items. For example, revise the definition of commercial item. Revise governmentwide and agency regulations and procedures which preclude the use of commercial specifications. PROCI4 EXPAND ELECTRONIC COMMERCE FOR FEDERAL ACQUISITION Establish a governmentwide program to use electronic commerce for federal procurements.

164 168 APPENDIX C Recommendations

PROC15 ENCOURAGE BEST VALUE PROCUREMENT To recognize other factors besides price, define "best value" and provide regulatory guidance to implement a program for buying on a "best value" basis. Issue guide on the use of "best practices" source selection procedures. PROC16 PROMOTE EXCFT I F.NCE IN VENDOR PERFORMANCE Establish an interagency Excellence in Vendor Performance Forum that would develop policies and techniques to measure contractor performance for use in contract decisions. Establish an award for contractor and government acquisition excellence. PROC17 AUTHORIZE A TWO-PHASE COMPETITIVE SOURCE SELECTION PROCESS Authorize the use of a two-phase selection process for certain types of contracts so that an offeror does not incur a substantial expense in preparing a contract proposal. PROCIE AUTHORIZE MULTIYEAR CONTRACTS Authorize multiyear contracts and allow contracts for severable services to cross fiscal years. PROC19 CONFORM CERTAIN STATUTORY REQUIREMENTS FOR CIVIUAN AGENCIES TO THOSE OF DEFENSE AGENCIES Repeal requirements for commercial pricing certificates and authorize contract awards without discussions, where appropriate. Maintain the $500,000 threshold for cost and pricing data requirements for the Defense Department and establish the same threshold for civilian agencies. PROC20 STREAMLINE BUYING FOR THE ENVIRONMENT Develop "best practice" guides on buying for the environment. Encourage multiple award schedule contractors to identify environmentally preferable products. Provide energy efficiency information in government catalogs and automated systems.

REINVENTING SUPPORT SERVICES SUPOI AUTHORIZE THE EXECUTIVE BRANCH TO ESTABLISH A PRINTING POLICY THAT WILL ELIMINATE THE CURRENT PRINTING MONOPOLY Give the executive branch authority to make its own printing policy that will eliminate the mandatory printing source. Develop a new executive branch printing policy for the 21st century. SUP02 ASSURE PUBLIC ACCESS TO FEDERAL INFORMATION Give the executive branch agencies responsibility for distributing printed federal information to depository libraries. Require agencies to inventory the federal information they hold, and make it arresible to the public. SUP03 IMPROVE DISTRIBUTION SYSTEMS TO REDUCE COSTLY INVENTORIES Permit customer choice in sources of supply. Compare depot distribution costs with commercial distribution systems. Take away the Federal Prison Industries' status as a mandatory source of federal supplies and require it to compete commercially for federal agencies' business. Increase the use of electronic commerce for ordering from depot systems. SUP04 STREAMLINE AND IMPROVE CONTRACTING STRATEGIES FOR THE MULTIPLE AWARD SCHEDULE PROGRAM Eliminate the use of mandatory supply schedules. Make the supply schedule system easier to use by reducing the administrative burden for acquisitions under $10,000. In addition, eliminate the announcement requirements andIse the maximum order limitations for the purchase of information technology items listed in supply schedules. SUP05 EXPAND AGENCY AUTHORITY AND ELIMINATE CONGRESSIONAL CONTROL OVER FEDERAL VEHICLE FLEET MANAGEMENT Update vehicle replacement standards. Increase emergency repair limits to $150. Eliminate the monopoly on disposing of agency-owned vehicles. SUP06 GIVE AGENCIES AUTHORITY AND INCENTIVE FOR PERSONAL PROPERTY MANAGEMENT AND DISPOSAL Provide incentives to agencies to dispose of excess personal property. Automate the process and eliminate the monopoly on personal property disposal. SUP07 SIMPLIFY TRAVEL AND INCREASE COMPETITION Increase choices for federal travelers and automate the travel process. Pilot-test a tender system for airfares. SUP08 GIVE CUSTOMERS CHOICES AND CREATE REAL PROPERTY ENTERPRISES THAT PROMOTE SOUND REAL PROPERTY ASSET MANAGEMENT Give agencies greater authority to choose their sources of real property services. Create competitive enterprises within the government to provide real property services on a fee basis, and encourage federal managers to seek the best available source. Create an ownership enterprise for the sound management of federal real property assets. Establish a government-wide policy for real property asset management. Manage the Federal Buildings Fund in a manner comparable to the commercial sector. SUP09 SIMPLIFY PROCEDURES FOR ACQUIRING SMALL BLOCKS OF SPACE TO HOUSE FEDERAL AGENCIES Simplify the procedures lor acquiring small amounts of leased space under 10,000 square feet.

169 165 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS Recommendations

SUPIO ESTABLISH NEW CONTRACTING PROCEDURES FOR THE CONTINUED OCCUPANCY OF LEASED OFFICE SPACE Simplify the procedures for renewing leases. SUP11 REDUCE POSTAGE COSTS THROUGH IMPROVED MAIL MANAGEMENT Encourage postage savings through the implementation of mailmanagement initiatives. Allow line managers to manage their own postal budgets.

REENGINEER THROUGH THE USE OF INFORMATION TECHNOLOGY ITO I PROVIDE CLEAR, STRONG LEADERSHIP TO INTEGRATE INFORMATIONTECHNOLOGY INTO THE BUSINESS OF GOVERNMENT Create a Government Information Technology Services workinggroup to develop a strategic vision for the use of government information technology and to implement NPR's information technology recommendations. IT02 IMPLEMENT NATIONWIDE, INTEGRATED ELECTRONIC BENEFIT,TRANSFER Design an integrated implementation plan for the use of electronic benefit transfer forprograms such as Food Stamps and for direct payments to individuals without bank accounts. IT03 DEVELOP INTEGRATED ELECTRONIC ACCESS TO GOVERNMENT INFORMATION AND SERVICE Use information technology initiatives to improve customer service by creatinga one-stop "800" calling service, integrated one-stop service "kiosks," and a governmentwide electronic bulletin board system. IT04 ESTABLISH A NATIONAL LAW ENFORCEMENT/PUBLIC SAFETY NETWORK Establish a national law enforcement/public safety data network foruse by federal, state, and local law enforcement officials. IT05 PROVIDE INTERGOVERNMENTAL TAX FILING, REPORTING, AND PAYMENTSPROCESSING Integrate government financial filings, reporting, andpayments processing, and determine ways to eliminate the need for filing routine tax returns. IT06 ESTABLISH AN INTERNATIONAL TRADE DATA SYSTEM Develop and implement a U.S. Government International Trade Data Systemin the Treasury Department. IT07 CREATE A NATIONAL ENVIRONMENTAL DATA INDEX Organize the implementation of a national environmental data index in the CommerceDepartment. IT08 PLAN, DEMONSTRATE., AND PROVIDE GOVERNMENTWIDE ELECTRONICMAIL Improve electronic mail and messaging among federal agencies. IT09 ESTABLISH AN INFORMATION INFRASTRUCTURE Develop a Government Information Infrastructureto use government information resources effectively and support electronic government applications. Consolidate and modernize government data processingcenters. IT 10 DEVELOP SYSTEMS AND MECHANISMS TO ENSURE PRIVACY ANDSECURITY Establish a Privacy Protection Board. Establish uniform privacy protectionpractices and generally acceptable implementation methods for these practices. Developa digital signature standard for sensitive, unclassified data by January 1994. IT11 IMPROVE METHODS OF INFORMATION TECHNOLOGY ACQUISITION (see PROC 08, PR0009, PROC14, SUP04, and FMO6) ITI2 PROVIDE INCENTIVES FOR INNOVATION Retain a portion of agency information technology savingsto reinvest in information technology. Promote performance-based contracting for information technology. Establish a govemmentwideventure capital fund for innovative information technology projects IT13 PROVIDE TRAINING AND TECHNICAL ASSISTANCE IN INFORMATIONTECHNOLOGY TO FEDERAL EMPLOYEES Establish a program to train non-technical senior executives and politicalappointees in information technology. Require managers of information resources to meet certification standards. Promote collegial assistance in using information technology. Include training costs as part of all information technology purchases. RETHINKING PROGRAM DESIGN DES01 ACTIVATE PROGRAM DESIGN AS A FORMAL DISCIPLINE The President's Management Council should commission the developmentof a handbook to help federal managers understand the strengths and weaknesses of various forms ofprogram design. DES02 ESTABLISH PILOT PROGRAM DESIGN CAPABILITIES IN ONE ORTWO AGENCIES Test the usefulness of the program design handbook and the value ofprogram design as a useful discipline.

166 VO APPENDIX C Recommendations DES03 ENCOURAGE THE STRENGTHENING OF PROGRAM DESIGN The President's Management IN THE LEGISLATIVEBRANCH Council should work withcongressional support agencies strengthen their program designcapacities. to help them DESO4 COMMISSION PROGRAM DESIGNCOURSES Develop training courses for managers and policymakerson various program design approaches. STRENGTHENING THE PARTNERSHIPIN INTERGOVERNMENTAL FSLOI SERVICE DELIVERY IMPROVE THE DELIVERYOF FEDERAL DOMESTIC Create flexibility and GRANT PROGRAMS encourage innovation by designinga bottom-up solution to the problem of accompanying red tape. Also,support the pending proposal for Federal-State grant proliferation and its National Governors Association Flexibility Grants that has beendeveloped by the and the National Conferenceof State Legislatures. Establish to oversee NEW initiatives in communityimprovement. a Cabinet-level Enterprise Board FSLO2 REDUCE RED TAPE THROUGH Issue an Executive Order REGULATORY AND MANDATERELIEF addressing the problems of unfundedfederal mandates and regulatory Secretaries and agency headsto obtain selective relief from regulations relief and authorize Cabinet FSLO3 or mandates in programs theyoversee. SIMPLIFY REIMBURSEMENTPROCEDURES FOR ADMINISTRATIVE FEDERAL GRANT DISBURSEMENT COSTS OF Modify OMB Circular A-87,''Cost Principles for State and lieu of costly reimbursement Local Governments,"to provide a fixed fee-for-service option procedures covering actual in FSLO4 administrative costs ofgrant disbursement. ELIMINATE NEEDLESSPAPERWORK BY SIMPLIFYING CERTIFICATION PROCESS THE COMPLIANCE Simplify OMB's requirementsto prepare multiple grant compliance submit a single certification certifications by allowing to a single point of contact in the federal state and local governmentsto FSLO5 government. SIMPLIFY ADMINISTRATIONBY MODIFYING THE ON SMALL PURCHASES COMMON GRANT RULES Modify OMB Circular A-102,"Grants and Cooperative threshold for small purchases by Agreements to State and LocalGovernments", to increase the dollar local governments from$25,000 to $100,000 (see also FSLO6 STRENGTHEN THE PR0004). Reinvent thz. Advisory CommissionINTERGOVERNMENTAL PARTNERSHIP on Intergovernmental Affairs (ACIR) improvement in federal,state and local partnership and and charge it with the responsibilityfor continuous opportunities to imr. intergovernmental service delivery.Direct the AICR to identify rove intergovernmental service deliveryand develop a set of benchmarks. REINVENTING ENVIRONMENTALMANAGEMENT ENVOI IMPROVE FEDERALDECISIONMAKING THROUGH Develop demonstration ENVIRONMENTAL COST projects to test the applicabilityof environmental ACCOUNTING guidelines to implementenvironmental cost accounting cost accounting. Based on project results,develop encourage the use of environmental throughout the FederalGovernment. Issue an Executive cost accounting by federal agencies. Order to ENVO2 DEVELOP CROSS-AGENCYECOSYSTEM PLANNING Issue an Executive Order AND MANAGEMENT to encourage sustainable economicdevelopment and agency ecosystem managementprocess. Begin phased-in implementation ensure sustainable ecosystems througha cross- demonstration projects. Conduct of the policy with selected management and budget reviews of the ecosystem management year 1995 budget process. ecosystem management projectsas a part of the fiscal ENVO3 INCREASE ENERGY ANDWATER EFFICIENCY Issue an Executive Orderto address energy efficiency and to allow the Defense Department water conservation issues at federal to retain savings from water efficiency facilities. Propose legislation facilities to retain rebatesreceived from utility companies. projects. Develop appropriatemechanisms to allow ENVO4 INCREASE ENVIRONMENTALLYAND ECONOMICALLY Issue an Executive Orderto require the use of environmentally BENEFICIAL LANDSCAPING native species and reduceduse of water and chemicals, beneficial landscaping techniques,including increaseduse of at federal facilities and federally-fundedprojects, where appropriate. IMPROVING REGULATORYSYSTEMS REGOI CREATE AN INTERAGENCY Create an interagency RegulatoryREGULATORY COORDINATINGGROUP Coordinating Groupto share information and coordinate REGO2 ENCOURAGE MORE INNOVATIVE approaches to regulatory issues. Use innovative regulatory APPROACHES TO REGULATION approaches and developa Deskbook on Regulatory Design. REGO3 ENCOURAGE CONSENSUS-BASEDRULEMAKING Encourage agencies touse negotiated rulemaking more frequently in developingnew rules.

171 FROM RED TAPE TO RESULTS CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS Recommendations

REGO4 ENHANCE PUBLIC AWARENESS AND PARTICIPATION Use information technology and other techniques to increase opportunities for early, frequent and interactive public participation during the rulemaking process and to increase program evaluation efforts. REGO5 STREAMLINE AGENCY RULEMAKING PROCEDURES Streamline internal agency rulemaking procedures, use "direct final" rulemaking for noncontroversial rules and expedite treatment of rulemaking petitions. REGO6 ENCOURAGE ALTERNATIVE DISPUTE RESOLUTION WHEN ENFORCING REGULATIONS Increase the use of alternative means of dispute resolution. REGO7 RANK RISKS AND ENGAGE IN "ANTICIPATORY" REGULATORY PLANNING Rank the seriousness of environmental, health or safety risks and develop anticipatory approaches to regulatory problems. REGO8 IMPROVE REGULATORY SCIENCE Create science advisory boards for those regulatory agencies that depend heavily on scientific information and judgments. REGO9 IMPROVE AGENCY AND CONGRESSIONAL RELATIONSHIPS Encourage agencies to establish technical drafting services for congressional committees and subcommittees. REG I0 PROVIDE BEI I ER TRAINING AND INCENTIVES FOR REGULATORS Establish a basic training program for Presidential rppointees assigned to regulatory agencies and expand existing training programs to cover career staff not currently being trained. GENERAL SERVICES ADMINISTRATION GSAO I SEPARATE POLICYMAKING FROM SERVICE DELIVERY AND MAKE THE GENERAL SERVICES ADMINISTRATION (GSA) A FULLY COMPETITIVE, REVENUE-BASED ORGANIZATION Fund GSA service delivery from customer revenues, transfer activities not related to GSA's central mission to other agencies, and allow agencies to choose whether to purchase GSA services. OFFICE OF PERSONNEL MANAGEMENT OPM01 STRENGTHEN THE OFFICE OF PERSONNEL MANAGEMENT'S (OPM) LEADERSHIP ROLE IN TRANSFORMING FEDERAL HUMAN RESOURCE MANAGEMENT SYSTEMS Clearly define OPM's policy, service and leadership role in addressing human resource problems and delegate operational work to the agencies. OPM02 REDEFINE AND RESTRUCTURE OPM'S FUNCTIONAL RESPONSIBILITIES TO FOSTER A CUSTOMER ORIENTATION Restructure and rightsize OPM to enhance and reflect its commitment CO addressing its customers' needs. OPM03 CHANGE THE CULTURE OF OPM TO EMPOWER ITS STAFF AND INCREASE ITS CUSTOMER ORIENTATION Use interagency groups to involve OPM's external stakeholders in changing federal human resource systems. Improve OPM's policy-making process through experimental use of negotiated rulemaking ("reg-neg") and broaden the customer focus of OPM and agency personnel specialists.

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