Title  : NPR 93-a Report of the National Performance Review
Type   : News
NSF Org: OD / LPA
Date   : September 13, 1993
File   : npr93a




From Red Tape to Results


Creating a Government
that
Works Better
& Costs Less



Report of
the National Performance Review


Vice President Al Gore


September 7, 1993


















Contents

Preface                                                     i

Introduction                                                1

Chapter 1 Cutting Red Tape                                  11

Step 1: 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
Conclusion                                                  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: Hold 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 Worklife                   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

                                        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


THE--VICE--PRESIDENT
WASHINGTON









Preface

**********************************
We can no longer afford to pay more for--and get less from--our
government. The answer for every problem cannot always be another
program or more money. It is time to radically change the way the
government operates--to shift from top-down bureaucracy to
entrepreneurial government that empowers citizens and communities
to change our country from 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 First1
***********************************

     The National Performance Review is about change--historic
change--in the way the government works. The Clinton
administration believes it is time for a new customer service
contract with the American people, a new guarantee of effective,
efficient, and responsive government. As our title makes clear,
the National Performance Review is about moving from red tape to
results to create a government that works better and costs less.
     These are our twin missions: to make government work better
and cost less. The President has already addressed the federal
deficit with the largest deficit reduction package in history.
The National Performance Review can reduce the deficit further,
but it is not just about cutting spending. It is also about
closing the trust deficit: proving to the American people that
their tax dollars will be treated with respect for the hard work
that earned them. We are taking action to put America's house in
order.
     The National Performance Review began on March 3, 1993, when
President Clinton announced a 6-month review of the federal
government and asked me to lead the  effort. We organized a team
of experienced federal employees from all corners of the
government--a marked change from past efforts, which relied on
outsiders.
     We turned to the people who know government best--who know
what works, what doesn't, and how things ought to be changed. We
organized these people into a series of teams, to examine both
agencies and cross-cutting systems, such as budgeting,
procurement, and personnel. The President also asked all cabinet
members to create Reinvention Teams to lead transformations at
their departments, and Reinvention Laboratories, to begin
experimenting with new ways of doing business. Thousands of
federal employees joined these two efforts.

     But the National Performance Review did not stop there. From
the beginning, I wanted to hear from as many Americans as
possible. I spoke with federal employees at every major agency
and at federal centers across the country--seeking their ideas,
their input, and their inspiration. I visited programs that work:
a Miami school that also serves as a community center, a
Minnesota pilot program that provides benefits more efficiently
by using technology and debit cards, a Chicago neighborhood that
has put community policing to work, a U.S. Air Force base that
has made quality management a way of life.

     We also heard from citizens all across America, in more than
30,000 letters and phone calls. We sought the views of hundreds
of different organizations, large and small. We learned from the
experience of state and local leaders who have restructured their
organizations. And we listened to business leaders who have used
innovative management practices to turn their companies around.
     At a national conference in Tennessee, we brought together
experts to explore how best to apply the principles of
reinventing government to improving family services. In
Philadelphia's Independence Square, where our government was
born, we gathered for a day-long "Reinventing Government Summit''
with the best minds from business, government, and the academic
community.

     This report is the first product of our efforts. It
describes roughly 100 of our most important actions and
recommendations, while hundreds more are listed in the appendices
at the end of this report. In the coming months, we will publish
additional information providing more detail on those
recommendations.
     This report represents the beginning of what will be--what
must be--an ongoing commitment to change. It includes actions
that will be taken now, by directive of the President; actions
that will be taken by the cabinet secretaries and agency heads;
and recommendations for congressional action.

     The National Performance Review focused primarily on how
government should work, not on what it should do.  Our job was to
improve performance in areas where policymakers had already
decided government should play a role. We examined every cabinet
department and 10 agencies. At two departments, Defense and
Health and Human Services, our work paralleled other large-scale
reviews already under way. Defense had launched a Bottom-Up
Review to meet the President's 1994-1997 spending reduction
target. In addition, comprehensive health and welfare reform task
forces had been established to make large-scale changes in
significant  parts of Health and Human Services. Nevertheless, we
made additional recommendations in both these departments and
passed other findings on to the relevant task force for review.

     The National Performance Review recommendations, if enacted,
would produce savings of $108 billion over 5 years. As the table
below indicates, $36.4 billion of these savings come from
specific changes proposed in the agencies and departments of the
government.

     We also expect that the reinventions we propose will allow
us to reduce the size of the civilian, non-postal workforce by 12
percent over the next 5 years. This will bring the federal
workforce below two million employees for the first time since
1967. This reduction in the workforce will total 252,000
positions--152,000 over and above the 100,000 already promised by
President Clinton.

     Most of the personnel reductions will be concentrated in the
structures of over-control and micromanagement that now bind the
federal government: supervisors, headquarters staffs, personnel
specialists, budget analysts, procurement specialists,
accountants, and auditors. These central control structures not
only stifle the creativity of line managers and workers, they
consume billions per year in salary, benefits, and administrative
costs. Additional personnel cuts will result as each agency
reengineers its basic work processes to achieve higher
productivity at lower costs--eliminating unnecessary layers of
management and nonessential staff.

     We will accomplish as much of this as possible through
attrition, early retirement, and a time-limited program of cash
incentives to leave federal service. If an employee whose job is
eliminated cannot take early retirement and elects not to take a
cash incentive to leave government service, we  will help that
employee find another job offer through out-placement assistance.

     In addition to savings from the agencies and savings in
personnel we expect that systematic reform of the procurement
process should reduce the cost of everything the government buys.

Our antiquated procurement system costs the government in two
ways: first, we pay for all the bureaucracy we have created to
buy things, and second, manufacturers build the price of dealing
with this bureaucracy into the prices they charge us. If we
reform the procurement system, we should be able to save $22
billion over 5 years.

     As everyone knows, the computer revolution allows us to do
things faster  and more cheaply than we ever have  before.
Savings due to consolidation and modernization of the information
infrastructure amount to $5.4 billion over  5 years. Finally, by
simplifying paperwork and reducing administrative costs, we
expect to save $3.3 billion over 5 years in the cost of
administering grant programs to state and local governments.

     Many of the spending cuts we propose can be done by
simplifying the internal organization of our departments and
agencies. Others will require legislation. We recognize that
there is broad support in Congress for both spending cuts and
government reforms, and we look forward to working with Congress
to pass this package of recommendations. As President Clinton
said when he announced the National Performance Review:

     This performance review is not about politics. Programs
passed by both Democratic presidents and Republican presidents,
voted on by members of Congress of both parties, and supported by
the American people at the time, are being undermined by an
inefficient and outdated bureaucracy, and by our huge debt. For
too long the basic functioning of the government has gone
unexamined. We want to make improving the way government does
business a permanent part of how government works, regardless of
which party is in power.

     We have not a moment to lose. President Kennedy once told a
story about a French general who asked his gardener to plant a
tree. "Oh, this tree grows slowly," the gardener said. "It won't
mature for a hundred years."

     "Then there's no time to lose," the general answered. "Plant
it this afternoon."


Al Gore
Vice President of the United States



************************************************************** *
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
(For a fuller description see Appendix A and Appendix B.)

*****************************************************************






Introduction

******************************
Our goal is to make the entire federal government both less
expensive and more efficient,  and to change the culture of our
national bureaucracy away from complacency  and entitlement
toward initiative and empowerment. We 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 federal government has never been
lower. The average American believes we waste 48 cents of every
tax dollar. Five of every six want "fundamental change" in
Washington. Only 20 percent of Americans trust the federal
government to do the right thing most of the time--down from 76
percent 30 years ago.1

     We all know why. Washington's failures are large and
obvious. For a decade, the deficit has run out of control. The
national debt now exceeds $4 trillion--$16,600 for every man,
woman, and child in America.

     But the deficit is only the tip of the iceberg. Below the
surface, Americans believe, lies enormous unseen waste. The
Defense Department owns more than $40 billion in unnecessary
supplies.2 The Internal Revenue Service struggles to collect
billions in unpaid bills. A century after industry replaced
farming as America's principal business, the Agriculture
Department still operates more than 12,000 field service offices,
an average of nearly 4 for every county in the nation--rural,
urban, or suburban. The federal government seems unable to
abandon the obsolete. It knows how to add, but not to subtract.
     And yet, waste is not the only problem. The federal
government is not simply broke; it is broken. Ineffective
regulation of the financial industry brought us the savings and
loan debacle. Ineffective education and training programs
jeopardize our competitive edge. Ineffective welfare and housing
programs undermine our families and cities.

     We spend $25 billion a year on welfare, $27 billion on food
stamps, and $13 billion on public housing--yet more Americans
fall into poverty every year.3 We spend $12 billion a year waging
war on drugs--yet see few signs of victory. We fund 150 different
employment and training programs--yet the average American has no
idea where to get job training, and the skills of our workforce
fall further behind those of our competitors.4

     It is almost as if federal programs were designed not to
work. In truth, few are "designed" at all; the legislative
process simply churns them out, one after another, year after
year. It's little wonder that when asked if "government always
manages to mess things up," two-thirds of Americans say "yes."5
     To borrow the words of a recent Brookings Institution book,
we suffer not only a budget deficit but a performance deficit.6
Indeed, public opinion experts argue that we are suffering the
deepest crisis of faith in government in our lifetimes. In past
crises- -Watergate or the Vietnam War, for example--Americans
doubted their leaders on moral or ideological grounds. They felt
their government was deceiving them or failing to represent their
values. Today's crisis is different: people simply feel that
government doesn't work.7

     In Washington, debate rarely focuses on the performance
deficit. Our leaders spend most of their time debating policy
issues. But if the vehicle designed to carry out policy is
broken, new policies won't take us anywhere. If the car won't
run, it hardly matters where we point it; we won't get there.
Today, the central issue we face is not what government does, but
how it works.

******************************
We need a federal government that delivers more for less. We need
a federal government that treats its taxpayers as if they were
customers and treats taxpayer dollars with respect for the sweat
and sacrifice that earned them.

Vice President Al Gore
May 24, 1993
******************************

     We have spent too much money for programs that don't work.
It's time to make our government work for the people, learn to do
more with less, and treat taxpayers like customers.

     President Clinton created the National Performance Review to
do just that. In  this report we make hundreds of recommendations
for actions that, if implemented, will revolutionize the way the
federal government does business.  They will reduce waste,
eliminate unneeded bureaucracy, improve service to taxpayers, and
create a leaner but more productive government. As noted in the
preface, they can save $108 billion over 5 years if those which
will be enacted by the President and his cabinet are added to
those we propose for enactment by Congress. Some of these
proposals can be enacted by the President and his cabinet, others
will require legislative action. We are going to fight for these
changes. We are determined to create a government that works
better and costs less.


A Cure Worse Than The Disease

     Government is not alone in its troubles. As the Industrial
Era has given way to the Information Age, institutions--both
public and private--have come face to face with obsolescence. The
past decade has witnessed profound restructuring: In the 1980s,
major American corporations reinvented themselves; in the 1990s,
governments are struggling to do the same.

     In recent years, our national leaders responded to the
growing crisis with traditional medicine. They blamed the
bureaucrats. They railed against "fraud, waste, and abuse." And
they slapped ever more controls on the bureaucracy to prevent it.
But the cure has become indistinguish-able from the disease. The
problem is not lazy or incompetent people; it is red tape and
regulation so suffocating that they stifle every ounce of
creativity. No one would offer a drowning man a drink of water.
And yet, for more than a decade, we have added red tape to a
system already strangling in it.

     The federal government is filled with good people trapped in
bad systems: budget systems, personnel systems, procurement
systems, financial management systems, information systems. When
we blame the people and impose more controls, we make the systems
worse. Over the past 15 years, for example, Congress has created
within each agency an independent office of the inspector
general. The idea was to root out fraud, waste, and abuse. The
inspectors general have certainly uncovered important problems.
But as we learned in conversation after conversation, they have
so intimidated federal employees that many are now afraid to
deviate even slightly from standard operating procedure.

     Yet innovation, by its nature, requires deviation.
Unfortunately, faced with so many controls, many employees have
simply given up. They do everything by the book- -whether it
makes sense or not. They fill out forms that should never have
been created, follow rules that should never have been imposed,
and prepare reports that serve no purpose--and are often never
even read. In the name of controlling waste, we have created
paralyzing inefficiency. It's time we found a way to get rid of
waste and encourage efficiency.


The Root Problem:  Industrial-Era Bureaucracies  in an
Information Age

     Is government inherently incompetent? Absolutely not. Are
federal agencies filled with incompetent people? No. The problem
is much deeper: Washington is filled with organizations designed
for an environment that no longer exists--bureaucracies so big
and wasteful they can no longer serve the American people.
     From the 1930s through the 1960s,  we built large, top-down,
centralized bureaucracies to do the public's business. They were
patterned after the corporate structures of the age: hierarchical
bureaucracies in which tasks were broken into simple parts, each
the responsibility of a different layer of employees, each
defined by specific rules and regulations. With  their rigid
preoccupation with standard operating procedure, their vertical
chains of command, and their standardized services, these
bureaucracies were steady--but slow and cumbersome. And in
today's world of rapid change, lightning-quick information
technologies, tough global competition, and demanding customers,
large, top-down bureaucracies--public or private--don't work very
well. Saturn isn't run the way General Motors was. Intel isn't
run the way IBM was.

**************************
Our people, of course, work hard for their money.... They want
quality in the cars they buy. They want quality in their local
schools. And they want quality in their federal government and in
federal programs.

Senator John Glenn
Remarks introducing a hearing
on federal planning and performance
May 5, 1992
**************************


     Many federal organizations are also monopolies, with few
incentives to innovate or improve. Employees have virtual
lifetime tenure, regardless of their performance. Success offers
few rewards; failure, few penalties. And customers are captive;
they can't walk away from the air traffic control system or the
Internal Revenue Service and sign up with a competitor. Worse,
most federal monopolies receive their money without any direct
input from their customers. Consequently, they try a lot harder
to please Congressional appropriations subcommittees than the
people they are meant to serve. Taxpayers pay more than they
should and get poorer service.

     Politics intensifies the problem. In Washington's highly
politicized world, the greatest risk is not that a program will
perform poorly, but that a scandal will erupt. Scandals are
front-page news, while routine failure is ignored. Hence control
system after control system is piled up  to minimize the risk of
scandal. The  budget system, the personnel rules, the procurement
process, the inspectors general--all are designed to prevent the
tiniest misstep. We assume that we can't trust employees to make
decisions, so we spell out in precise detail how they must do
virtually everything, then audit them to ensure that they have
obeyed every rule. The slightest deviation prompts new
regulations and even more audits.

     Before long, simple procedures are too complex for employees
to navigate, so we hire more budget analysts, more personnel
experts, and more procurement officers to make things work. By
then, the process involves so much red tape that the smallest
action takes far longer and costs far more than it should. Simple
travel arrangements require endless forms and numerous
signatures. Straightforward purchases take months; larger ones
take years. Routine printing jobs can take dozens of approvals.
     This emphasis on process steals resources from the real job:
serving the customer. Indeed, the federal government spends
billions paying people who control, check up on, or investigate
others--supervisors, headquarters staffs, budget officers,
personnel officers, procurement officers, and staffs of the
General Accounting Office (GAO) and the inspectors general.8 Not
all this money is wasted, of course. But the real waste is no
doubt larger, because the endless regulations and layers of
control consume every employee's time. Who pays? The taxpayer.
*******************************
During Vice President Gore's town hall meeting with employees of
the Department of Housing and Urban Development (HUD), the
following exchange took place:

Participant: We had an article in our newsletter several months
ago that said -- the lead story was "I'd rather have a lobotomy
than have another idea." And that was reflecting the problem of
our Ideas Program here in HUD.

Many of the employees have wonderful ideas about how to save
money and so on, but the way it works is that it has to be
approved by the supervisor and the supervisor's supervisor and
the supervisor's supervisor's supervisor before it ever gets to
the Ideas Program ...

Many of the supervisors feel threatened because they didn't think
of this idea, and this money is wasted in their office, and they
didn't believe or didn't know it was happening and didn't catch
it.  So they are threatened and feel that it will make them look
bad if they recognize the idea.

Vice President Gore: So they strangle that idea in the crib,
don't they? Participant: And then they strangle the person that
had the idea.

Participant: And then they strangle the person that had the idea.
***************************************

     Consider but one example, shared with Vice President Gore at
a meeting of federal employees in Atlanta. After federal marshals
seize drug dealers' homes, they are allowed to sell them and use
the money to help finance the war on drugs. To sell the houses,
they must keep them presentable, which includes keeping the lawns
mowed. In Atlanta, the employee explained, most organizations
would hire neighborhood teenagers to mow a lawn for $10. But
procurement regulations require the U.S. Marshals Service to bid
out all work competitively, and neighborhood teenagers don't
compete for contracts. So the federal government pays $40 a lawn
to professional landscape firms. Regulations designed to save
money waste it, because they take decisions out of the hands of
those responsible for doing the work. And taxpayers lose $30 for
every lawn mowed.

     What would happen if the marshals  used their common sense
and hired neighborhood teenagers? Someone would notice--perhaps
the Washington office, perhaps the inspector general's office,
perhaps even the GAO. An investigation might well
follow--hindering a career or damaging a reputation.

     In this way, federal employees quickly learn that common
sense is risky--and creativity is downright dangerous. They learn
that the goal is not to produce results, please customers, or
save taxpayers' money, but to avoid mistakes. Those who dare to
innovate do so quietly.

     This is perhaps the saddest lesson learned by those who
worked on the National Performance Review: Yes, innovators exist
within the federal government, but many work hard to keep their
innovations quiet. By its nature, innovation requires a departure
from standard operating procedure. In the federal government,
such departures invite repercussions.

     The result is a culture of fear and resignation. To survive,
employees keep a low profile. They decide that the safest answer
in any given situation is a firm "maybe." They follow the rules,
pass the buck, and keep their heads down. They develop what one
employee, speaking with Vice President Gore at a Department of
Veterans Affairs meeting, called "a government attitude."


The Solution: Creating Entrepreneurial Organizations

     How do we solve these problems? It won't be easy. We know
all about government's problems, but little about solutions. The
National Performance Review began by compiling a comprehensive
list of problems. We had the GAO's 28-volume report on federal
management problems, published last fall. We had GAO's High-Risk
Series, a 1








Chapter-1-Cutting-Red-Tape Introduction


*********************************
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 agency policy,  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 manual- -small enough to fit into
every ranger's shirt pocket, yet  containing everything foresters
needed to know to do their jobs.

"Why is it that when we have a problem," the other forester
asked, "the solution is always to add something--a report, a
system, a policy--but never take something away?"

The first replied: "What if . . . we could just start over?" 1
**********************************

     The federal government does at least one thing well: It
generates red tape. But not one inch of that red tape appears by
accident. In fact, the government creates it all with the best of
intentions. It is time now to put aside our reverence for those
good intentions and examine what they have created--a system that
makes it hard for our civil servants to do what we pay them for,
and frustrates taxpayers who rightfully expect their money's
worth.

     Because we don't want politicians' families, friends, and
supporters placed in "no-show" jobs, we have more than 100,000
pages of personnel rules and regulations defining in exquisite
detail how to hire, promote, or fire federal employees.2 Because
we don't want employees or private companies profiteering from
federal contracts, we create procurement processes that require
endless signatures and long months to buy almost anything.
Because we don't want agencies using tax dollars for any
unapproved purpose, we dictate precisely how much they can spend
on everything from staff to telephones to travel.

     And because we don't want state and local governments using
federal funds for purposes that Congress did not intend, we write
regulations telling them exactly how to run most programs that
receive federal funds. We call for their partnership in dealing
with our country's most urgent domestic problems, yet we do not
treat them as equal partners.

     Consider some examples from the daily lives of federal
workers, people for whom red tape means being unable to do their
jobs as well as they can--or as well as we deserve. The district
managers of Oregon's million-acre Ochoco National Forest have 53
separate budgets--one for fence maintenance, one for fence
construction, one for brush burning- -divided into 557 management
codes and 1,769 accounting lines. To transfer money between
accounts, they need approval from headquarters. They estimate the
task of tracking spending in each account consumes at least 30
days of their time every year, days they could spend doing their
real jobs.3 It also sends a message: You are not trusted with
even the simplest responsibilities.

     Or consider the federal employees who repair cars and trucks
at naval bases. Each time they need a spare part, they order it
through a central purchasing office--a procedure that can keep
vehicles in the shop for a month. This keeps one-tenth of the
fleet out of commission, so the Navy buys 10 percent more
vehicles than it needs.4 Or how about the new Energy Department
petroleum engineer who requested a specific kind of calculator to
do her job? Three months later, she received an adding machine.
Six months after that, the procurement office got her a
calculator--a tiny, hand-held model that could not perform the
complex calculations her work required. Disgusted, she bought her
own.5

     Federal managers read the same books and attend the same
conferences as private sector managers. They know what good
management looks like. They just can't put it into
practice--because they face constraints few managers in the
private sector could imagine.

     Hamstrung by rules and regulations, federal managers simply
do not have the power to shape their organizations enjoyed by
private sector managers. Their job is to make sure that every
dollar is spent in the budget category and the year for which it
was appropriated, that every promotion is consistent with central
guidelines, and that every piece of equipment is bought through
competitive bidding. In an age of personal computers, they are
asked to write with quill pens.


***********************

Never tell people how to do things. Tell them what you want to
achieve, and they will surprise you with their ingenuity.

General George S. Patton
1944
***********************

     This thicket of rules and regulations has layer upon layer
of additional oversight. Each new procedure necessitates
someone's approval. The result is fewer people doing real work,
more people getting in their way. As management sage Peter
Drucker once said, "So much of what we call management consists
of making it difficult for people to work."6

     As Robert Tobias, president of the National Treasury
Employees Union, told participants at the Philadelphia Summit on
Reinventing Government, "The regulations and statutes that bind
federal employees from exercising discretion available in the
private sector all come about as a response to the humiliations,
mistakes, embarrassments of the past." Even though, as Tobias
noted, "those problems are 15, 20, 30 years old," and "the
regulations and the statutes don't change." The need to enforce
the regulations and statutes, in turn, creates needless layers of
bureaucracy.

     The layers begin with "staff" agencies, such as the General
Services Administration (GSA) and the Office of Personnel
Management (OPM). These staff agencies were designed originally
to provide specialized support for "line" agencies,  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. The Office of Management and Budget (OMB)
which serves the President in the budget process, runs more than
50 compliance, clearance, and review processes. Some of this
review is necessary to ensure budget control and consistency of
agency actions--with each other and with the President's
program--but much of it is overkill.

     Line agencies then wrap themselves in even more red tape by
creating their own budget offices, personnel offices, and
procurement offices. Largely in response to appropriations
committees, budget offices divide congressional budgets into
increasingly tiny line items. A few years ago, for example, base
managers in one branch of the military had 26 line items for
housing repairs alone.7 Personnel offices tell managers when they
can and cannot promote, reward, or move employees. And
procurement offices force managers to buy through a central
monopoly, precluding agencies from getting what they need, when
they need it.

     What the staff agencies don't control, Congress does.
Congressional appropriations often come with hundreds of strings
attached. The Interior Department found that language in its 1992
House, Senate, and conference committee reports included some
2,150 directives, earmarks, instructions, and prohibitions.8 As
the federal budget tightens, lawmakers request increasingly
specific report language to protect activities in their
districts. Indeed, 1993 was a record year for such requests. In
one appropriations bill alone, senators required the U.S. Customs
Service to add new employees to its Honolulu office, prohibited
closing any small or rural post office or U.S. Forest Service
offices; and forbade the U.S. Mint and the Bureau of Engraving
and Printing from even studying the idea of contracting out guard
duties.

     Even worse, Congress often gives a single agency multiple
missions, some of which are contradictory. The Agency for
International Development has more than 40 different objectives,
disposing of American farm surpluses, building democratic
institutions, and even strengthening the American land grant
college system.9 No wonder it has trouble accomplishing its real
mission--promoting international development.

     In Washington, we must work together to untangle the knots
of red tape that prevent government from serving the American
people well. We must give cabinet secretaries, program directors
and line managers much greater authority to pursue their real
purposes.

     As Theodore Roosevelt said: "The best executive is the one
who has the sense to pick good men to do what he wants done, and
self-restraint enough to keep from meddling with them while they
do it."

     Our path is clear: We must shift from systems that hold
people accountable for process to systems that hold them
accountable for results. We discuss accountability for results in
chapter 3. In this chapter, we focus on six steps necessary to
strip away the red tape that so engulfs our federal employees and
frustrates the American people.

     First, we will streamline the budget process, to remove the
manifold restrictions that consume managers' time and literally
force them to waste money.

     Second, we will decentralize personnel policy, to give
managers the tools they need to manage effectively--the authority
to hire, promote, reward, and fire.

     Third, we will streamline procurement, to reduce the
enormous waste built into the process we use to buy $200 billion
a year in goods and services.

     Fourth, we will reorient the inspectors general, to shift
their focus from punishing those who violate rules and
regulations to helping agencies learn to perform better.

     Fifth, we will eliminate thousands of other regulations that
hamstring federal employees, to cut the final Lilliputian ropes
on the federal giant.

     Finally, we will deregulate state and local governments, to
empower them to spend more time meeting customer
needs--particularly with their 600 federal grant programs--and
less time jumping through bureaucratic hoops.

     As we pare down the systems of over-control and
micromanagement in government, we must also pare down the
structures that go with them: the oversized headquarters,
multiple layers of supervisors and auditors, and offices
specializing in the arcane rules of budgeting, personnel,
procurement, and finance. We cannot entirely do without
headquarters, supervisors, auditors, or specialists, but these
structures have grown twice as large as they should be.

     Counting all personnel, budget, procurement, accounting,
auditing, and headquarters staff, plus supervisory personnel in
field offices, there are roughly 700,000 federal employees whose
job it is to manage, control, check up on or audit others.10 This
is one third of all federal civilian employees.

     Not counting the suffocating impact these management control
structures have on line managers and workers, they consume $35
billion a year in salary and benefits alone.11 If Congress enacts
the management reforms outlined in this report, we will
dramatically cut the cost of these structures. We will reinvest
some of the savings in the new management tools we need,
including performance measurement, quality management, and
training. Overall, these reforms will result in the net
elimination of approximately 252,000 positions. (This will
include the 100,000 position reduction the President has already
set in motion.)

     A reduction of 252,000 positions will reduce the civilian,
non-postal work force by almost 12 percent--bringing it below two
million for the first time since the 1966.12

     This reduction, targeted at the structures of control and
micromanagement, is designed to improve working conditions for
the average federal employee. We cannot empower employees to give
us their best work unless we eliminate much of the red tape that
now prevents it. We will do everything in the government's power
to ease the transition for workers, whether they choose to stay
with government, retire, or move to the private sector.

     Our commitment is this: If an employee whose job is
eliminated cannot retire through our early retirement program,
and does not elect to take a cash incentive to leave government
service, we will help that employee find another job offer,
either with government or in the private sector.

     Normal attrition will contribute to the reduction. In
addition, we will introduce legislation to permit all agencies to
offer cash payments to those who leave federal service
voluntarily, whether by retirement or resignation. The Department
of Defense (DOD) and intelligence community already have this
"buy-out" authority; we will ask Congress to extend it to all
agencies. We will also give agencies broad authority to offer
early retirement and to expand their retraining, out-placement
efforts, and other tools as necessary to accomplish the 12%
reduction. Agencies will be able to use these tools as long as
they meet their cost reduction targets.

     These options will give federal managers the same tools
commonly used to downsize private businesses. Even with these
investments, the downsizing we propose will save the taxpayer
billions over the next 5 years.

     None of this will be easy. Downsizing never is. But the
result will not only be a smaller workforce, it will also be a
more empowered, more inspired, and more productive workforce.
     As one federal employee told Vice President Gore at one of
his many town meetings, "If you always do what you've always
done, you'll always get what you always got." We can no longer
afford to get what we've always got.




Chapter-1-Cutting-Red-Tape Step-1:-Streamlining-The-Budget-Process

     Most people can't get excited about the federal budget
process, with its green-eyeshade analysts, complicated
procedures, byzantine language, and reams of minutiae. Beyond
such elements, however, lies a basic, unalterable reality. For
organizations of all kinds, nothing is more important than the
process of resource allocation: what goal is sought, how much
money they have, what strings are attached to it, and what
hurdles are placedble reality. For organizations of all kinds,
nothing is more important than the process of resource
allocation: what goal is sought, how much money they have, what
strings are attached to it, and what hurdles are placed before
managers who must spend it.

     In government, budgeting is never easy.  After all, the
budget is the most political of documents.  If, as the political
scientist Harold D. Lasswell once said, politics is "who gets
what, when, how," the budget answers that question.13 By crafting
a budget, public officials decide who pays what taxes and who
receives what benefits. The public's largesse to children, the
elderly, the poor, the middle class, and others is shaped by the
budgets that support cities, states, and the federal government.
     But if budgeting is inherently messy, such messiness is
costly. Optimally, the budget would be more than the product of
struggles among competing interests. It also would reflect the
thoughtful planning of our public leaders. No one can improve
quality and cut costs without planning to do so.

     Unfortunately, the most deliberate planning is often
subordinated to politics, and is perhaps the last thing we do in
constructing a budget. Consider our process. Early in the year,
each agency estimates what it will need to run its programs in
the fiscal year that begins almost 2 years later. This is like
asking someone to figure out not only what they will be doing,
but how much it will cost 3 years later--since that's when the
money will be spent. Bureau and program managers typically
examine the previous year's activity data and project the figures
3 years out, with no word from top political leaders on their
priorities, or even on the total amount that they want to spend.
In other words, planning budgets is like playing "pin the tail on
the donkey." Blindfolded managers are asked to hit an unknown
target.

     OMB, acting for the President, then crafts a proposed budget
through back-and forth negotiations with departments and
agencies, still a year before the fiscal year  it will govern.
Decisions are struck on dollars--dollars that, to agencies, mean
people, equipment, and everything else they need for their jobs.
OMB's examiners may question agency staff as they develop options
papers, OMB's director considers the options during his
Director's Review meetings, OMB "passes back" recommended funding
levels for the agencies, and final figures are worked out during
a final appeals process.

     Early the next year, the President presents a budget
proposal to Congress for the fiscal year beginning the following
October 1. Lawmakers, the media, and interest groups pore over
the document, searching for winners and losers, new spending
proposals, and changes in tax laws. In the ensuing months,
Congress puts its own stamp on the plan. Although House and
Senate budget committees, guide Congress' action, every committee
plays a role.

     Authorizing committees debate the merits of existing
programs and the President's proposals for changes within their
subject areas. While they decide which programs should continue
and recommend funding levels, separate appropriations committees
draft the 13 annual spending bills that actually comprise the
budget.

     Congressional debates over a budget resolution,
authorization bills, and appropriations drag on, often into the
fall. Frequently the President and Congress don't finish by
October 1, so Congress passes one or more "continuing
resolutions" to keep the money flowing, often at the previous
year's level. Until the end, agency officials troop back and
forth to OMB and to the Hill to make their case. States and
localities, organizations and advocates seek time to argue their
cause. Budget staffs work non-stop, preparing estimates and
projections on how this or that change will affect revenues or
spending. All this work is focused on making a budget--not
planning or delivering programs.

     Ironies riddle the process.

      Uncertainty reigns: Although they begin calculating their
budget 2 years ahead, agency officials do not always know by
October 1 how much they will have to spend and frequently don't
even receive their money until well into the fiscal year.
      OMB is especially prone to question unspent funds--and
reduce the ensuing year's budget by that amount. Agency officials
inflate their estimates, driving budget numbers higher and
higher. One bureau budget director claims that many regularly ask
for 90 percent more than they eventually receive.

      Despite months of debate, Congress compresses its actual
decision-making on the budget into such a short time frame that
many of the public's highest priorities--what to do about drug
addiction, for example, or how to prepare workers for jobs in the
21st century--are discussed only briefly, if at all.

      The process is devoid of the most useful information. We
do not know what last year's money, or that of the year before,
actually accomplished. Agency officials devise their funding
requests based on what they got before, not whether it produced
results.

****************************
There are two ways to reduce expenditures. There is the
intelligent way...going through each department and questioning
each program. Then there is the stupid way: announcing how much
you will cut and getting each department to cut that amount.  I
favor the stupid way.

Michel Belanger  Chairman, Quebec National Bank  May 7, 1992
****************************

     In sum, the budget process is characterized by fictional
requests and promises, an obsession with inputs rather than
outcomes, and a shortage of debate about critical national needs.
We must start to plan strategically--linking our spending with
priorities and performance. First, we must create a rational
budgeting system.


Action: The President should begin the budget process with an
executive budget resolution, setting broad policy priorities and
allocating funds by function for each agency.14

     Federal managers should focus primarily on the content of
the budget, not on the process. A new executive budget resolution
will help them do that. The President should issue a directive in
early 1994 to mandate the use of such a resolution in developing
his fiscal year 1996 budget. It will turn the executive budget
process upside down.

     To develop the resolution, officials from the White House
policy councils will meet with OMB and agency officials. In those
sessions, the administration's policy leadership will make
decisions on overall spending and revenue levels, deficit
reduction targets, and funding allocations for major inter-agency
policy initiatives. The product of these meetings--a resolution
completed by August--will provide agencies with funding ceilings
and allocations for major policy missions. Then, bureaus will
generate their own budget estimates, now knowing their agency's
priorities and fiscal limits.

     Our own Environmental Protection Agency (EPA) tried a
similar approach in the 1970s as part of a zero-based budgeting
trial run. Although zero-based budgeting fell short, participants
said, two important advantages emerged: a new responsiveness to
internal customer needs and a commitment to final decisions. When
participants voted to cut research and development funds because
they felt researchers ignored program needs, researchers began
asking programs managers what kind of research would support
their efforts. EPA also found that, after its leaders had
agonized over funding, they remained committed to common
decisions.

     Critics may view the executive budget resolution process as
a top-down tool that will stifle creative, bottom-up suggestions
for funding options. We think otherwise. The resolution will
render top officials responsible for budget totals and policy
decisions, but will encourage lower-level ingenuity to devise
funding options within those guidelines. By adopting this plan,
we will help discourage non-productive micro-management by senior
department and agency officials.


Action: Institute biennial budgets and appropriations.15

     We should not have to enact a budget every year. Twenty
states adopt budgets for 2 years. (They retain the power to make
small adjustments in off years if revenues or expenditures
deviate widely from forecasts). As a result, their governors and
legislatures have much more time to evaluate programs and develop
longer-term plans.

     Annual budgets consume an enormous amount of management
time--time not spent serving customers. With biennial budgets,
rather than losing months to a frantic "last-year's
budget-plus-X-percent" exercise, we might spend more time
examining which programs actually work.

     The idea of biennial budgeting has been around for some
time. Congressman Leon Panetta, now OMB director, introduced the
first biennial budgeting bill in 1977, and dozens have been
offered since. Although none have passed, the government has some
experience with budget plans that cover 2 years or more. In 1987,
the President and Congress drafted a budget plan for fiscal years
1988 and 1989 that set spending levels for major categories,
enabling Congress to enact all 13 appropriations bills on time
for the first time since 1977.

     In addition, Congress directed the Defense Department to
submit a biennial budget for fiscal 1988 and 1989 to give
Congress more time for broad policy oversight. At the time,
Congress asserted that a biennial budget would "substantially
improve DOD management and congressional oversight," and that a
two-year DOD budget was an important step toward across-the-board
biennial budgeting.  Administrations have continued to submit
biennial budgets for DOD.

     The 1990 Budget Enforcement Act and the 1993 Omnibus Budget
Reconciliation Act set 5-year spending limits for discretionary
spending and pay-as-you-go requirements for mandatory programs.
With these multi-year caps in place, neither the President nor
Congress has to decide the total level of discretionary spending
each year. These caps provide even more reason for biennial
budgets and appropriations. In Congress, 7 out of 10 members
favor a biennial process with a 2-year budget resolution and
multi-year authorizations. The time is ripe.

     We recommend that Congress establish biennial budget
resolutions and appropriations and multi-year authorizations. The
first biennium should begin October 1, 1996, to cover fiscal
years 1997 and 1998. After that, bienniums would begin October 1
of each even-numbered year. Such timing would allow President
Clinton to develop the first comprehensive biennial federal
budget, built on the new executive budget resolution. In off
years, the President would submit only amendments for exceptional
areas of concern, emergencies, or other unforeseen circumstances.

     Biennial budgeting will not make our budget decisions
easier, for they are shaped by competing interests and
priorities. But it will eliminate an enormous amount of busy work
that keeps us from evaluating programs and meeting customer
needs.


Action: OMB, departments, and agencies will minimize budget
restrictions such as apportionments and allotments.16

     Congress typically divides its appropriations into more than
1,000 accounts. Committee reports specify thousands of other
restrictions on using money. OMB apportions each account by
quarter or year, and sometimes divides it into sub-accounts by
line-item or object class--all to control over-spending.
Departmental budget offices further divide the money into
allotments.

     Thus, many managers find their money fenced into hundreds of
separate accounts. In some agencies, they can move funds among
accounts. In others, Congress or the agency limits the transfer
of funds, trapping the money. When that happens, managers must
spend money where they have it, not where they need it. On one
military base, for example, managers had no line item to purchase
snowplow equipment, but they did have a maintenance account. When
the snowplow broke down they leased one, using the maintenance
account. Unfortunately, the 1-year lease cost $100,000--the same
as the full purchase price.

     Such stories are a dime a dozen within the federal
bureaucracy. (They may be the only government cost that is coming
down.) Good managers struggle to make things work, but, trapped
by absurd constraints, they are driven to waste billions of
dollars every year.

     Stories about the legendary end-of-the-year spending rush
also abound. Managers who don't exhaust each line item at year's
end usually are told to return the excess. Typically, they get
less the next time around. The result: the well-known spending
frenzy. The National Performance Review received more examples of
this source of waste--in letters, in calls, and at town
meetings--than any other.

     Most managers know how to save 5 or 10 percent of what they
spend. But knowing they will get less money next year, they have
little reason to save. Instead, smart managers spend every penny
of every line item. Edwin G. Fleming, chief of the Resources
Management Division of the Internal Revenue Service's Cleveland
District, put it well in a letter to the Treasury Department's
Reinvention Team:

     Every manager has saved money, only to have his allocation
  reduced in the subsequent year. This usually happens only
once, then the manager becomes a spender rather than a
planner. Managing becomes watching after little pots of
money that can't be put where it makes business sense
because of reprogramming restrictions. So managers, who are
monitors of these little pots of money, are rewarded for the
ability to maneuver, however limitedly, through the baroque
and bizarre world of federal finance and procurement.
     Solutions to these problems exist. They have been tested in
local governments, in state governments, even in the federal
government. Essentially, they involve budget systems with fewer
line items, more authority for managers to move money among line
items, and freedom for agencies to keep some or all of what they
save--thus minimizing the incentive for year-end spending sprees.

     Typically, federal organizations experimenting with such
budgets have found that they can achieve better productivity,
sometimes with less money.

     During an experiment at Oregon's Ochoco National Forest in
the 1980s, when dozens of accounts were reduced to six,
productivity jumped 25 percent the first year and 35 percent more
the second. A 1991 Forest Service study indicated that the
experiment had succeeded in bringing gains in efficiency,
productivity, and morale, but had failed to provide the Forest
Service region with a mechanism for complying with congressional
intent. After 3 years of negotiations, Washington and Region 6,
where the Ochoco Forest is located, couldn't agree. The region
wanted to retain the initial emphasis on performance goals and
targets so forest managers could shift money from one account to
another if they met performance goals and targets. Washington
argued that Congress would not regard such targets as a serious
measure of congressional intent. The experiment ended in March
1993.17
     When the Defense Department allowed several military bases
to experiment with what was called the Unified Budget Test, base
commanders estimated that they could accomplish their missions
with up to 10 percent less money. If this experience could be
applied to the entire government, it could mean huge savings.
     Beginning with their fiscal year 1995 submissions to OMB,
departments and agencies will begin consolidating accounts to
minimize restrictions and manage more effectively. They will
radically cut the number of allotments used to subdivide
accounts. In addition, they will consider using the Defense
Department's Unified Budget plan, which permits shifts in funds
between allotments and cost categories to help accomplish
missions.

     OMB will simplify the apportionment process, which
hamstrings agencies by dividing their funding into amounts that
are available, bit by bit, according to specified time periods,
activities, or projects. Agencies often don't get their funding
on time and, after they do, must fill out reams of paperwork to
show that they adhered to apportionment guidelines. OMB will also
expedite the "reprogramming" process, by which agencies can move
funds within congressionally appropriated accounts. Currently,
OMB and congressional subcommittees approve all such
reprogrammings. OMB should automatically approve reprogramming
unless it objects within a set period, such as five days.

     While understandable in some cases, such earmarks hamper
agencies that seek to manage programs efficiently. Agencies
should work with appropriations subcommittees on this problem.


Action: OMB and agencies will stop using full-time equivalent
ceilings, managing and budgeting instead with ceilings on
operating costs to control spending.18

     In another effort to control spending, both the executive
and legislative branches often limit the number of each agency's
employees by using full-time equivalent (FTE) limits. When
agencies prepare their budget estimates, they must state how many
FTEs they need in addition to how many dollars. Then, each
department or agency divides that number into a ceiling for each
bureau, division, branch, or other unit. Congress occasionally
complicates the situation by legislating FTE floors.

     Federal managers often cite FTE controls as the single most
oppressive restriction on their ability to manage. Under the
existing system, FTE controls are the only way to make good on
the President's commitment to reduce the federal bureaucracy by
100,000 positions through attrition. But as we redesign the
government for greater accountability, we need to use budgets,
rather than FTE controls, to drive our downsizing. FTE ceilings
are usually imposed independently of--and often conflict
with--budget allocations. They are frequently arbitrary, rarely
account for changing circumstances, and are normally imposed as
across-the-board percentage cuts in FTEs for all of an agency's
units- -regardless of changing circumstances. Organizations that
face new regulations or a greater workload don't get new FTE
ceilings. Consequently, they must contract out work that could be
done better and cheaper in-house. One manager at Vice President
Gore's meeting with foreign affairs community employees at the
State Department in May 1993 offered an example: his FTE limit
had forced him to contract out for a junior programmer for the
Foreign Service Institute. As it turned out, the programmer's
hourly rate equaled the Institute Director's, so the move cost
money instead of saving it.

     The President should direct OMB and agency heads to stop
setting FTE ceilings in fiscal year 1995.

     For this transition, the agencies' accounting systems will
have to separate true operating costs from program and other
costs. Some agencies already have such systems in place; others
must develop financial management systems to allow them to
calculate these costs. We address this issue in a separate
recommendation in chapter 3.

     This recommendation fully supports the President's
commitment to maintain a reduced federal workforce. Instead of
controlling the size of the federal workforce by employment
ceilings--which cause inefficiencies and distortions in managers'
personnel and resource allocation decisions--this new system will
control the federal workforce by dollars available in operating
funds.



Action: Minimize congressional restrictions such as line items,
earmarks, and eliminate FTE floors.19

     Congress should also minimize the restrictions and earmarks
that it imposes on agencies. With virtually all federal spending
under scrutiny for future cuts, Congress is increasingly applying
earmarks to ensure that funding flows to favored programs and
hometown projects.

     Imagine the surprise of Interior Secretary Bruce Babbitt,
who a few months after taking office discovered that he was under
orders from Congress to maintain 23 positions in the
Wilkes-Barre, Pennsylvania, field office of his department's
anthracite reclamation program. Or that his department was
required to spend $100,000 to train beagles in Hawaii to sniff
out brown tree snakes. Edward Derwinski, former secretary of
Veteran Affairs, was once summoned before the Texas congressional
delegation to explain his plan to eliminate 38 jobs in that
state.20


Action: Allow agencies to roll over 50 percent of what they do
not spend on internal operations during a fiscal year.21

     As part of its 13 fiscal year 1995 appropriations bills,
Congress should permanently allow agencies to roll over 50
percent of unobligated year-end balances in all appropriations
for operations. It should allow agencies to use up to 2 percent
of rolled-over funds to finance bonuses for employees involved.
This approach, which the Defense Department and Forest Service
have used successfully, would reward employees for finding more
productive ways to work. Moreover, it would create incentives to
save the taxpayers' money.

     Shared savings incentives work. In 1989, the General
Accounting Office (GAO) discovered that the Veterans
Administration had not recovered $223 million in health payments
from third parties, such as insurers. Congress then changed the
rules, allowing the VA to hire more staff to keep up with the
paperwork and also to keep a portion of recovered third-party
payments for administrative costs. VA recoveries soared from $24
million to $530 million.22

     If incentives to save are to be real, Congress and OMB will
have to refrain from automatically cutting agencies' budgets by
the amount they have saved when they next budget is prepared.
Policy decisions to cut spending are one thing; automatic cuts to
take back savings are quite another. They simply confirm
managers' fears that they will be penalized for saving money.
Agencies' chief financial officers should intervene in the budget
process to ensure that this does not happen.

Chapter-1-Cutting-Red-Tape Step-2:-Decentralizing-Personnel-Policy

     Our federal personnel system has been evolving for more than
100 years--ever since the 1881 assassination of President James
A. Garfield by a disappointed job seeker. And during that time,
according to a 1988 Office of Personnel Management publication:
     ...anecdotal mistakes prompted additional rules. When the
 rules led to new inequities, even more rules were added.
Over time...a maze of regulations and requirements was
created, hamstringing managers...often impeding federal
managers and employees from achieving their missions and
from giving the public a high quality of service.

     Year after year, layer after layer, the rules have piled up.
The U.S. Merit Systems Protection Board reports there are now 850
pages of federal personnel law--augmented by 1,300 pages of OPM
regulations on how to implement those laws and another 10,000
pages of guidelines from the Federal Personnel Manual.


****************************
Catch-22
Our federal personnel system ought to place a value on
experience. That's not always the case. Consider the story of
Rosalie Tapia. Ten years ago, fresh from high school, she joined
the Army and was assigned to Germany as a clerk. She served out
her enlistment with an excellent record, landed a job in Germany
as a civilian secretary for the Army, and worked her way up to
assistant to the division chief. When the Cold War ended, Tapia
wanted to return to the U.S. and transfer to a government job
here. Unfortunately, one of the dictates contained in the
government's 10,000 pages of personnel rules says that an
employee hired as a civil servant overseas is not considered a
government employee once on home soil. Any smart employer would
prefer to hire an experienced worker with an excellent service
record over an unknown. But our government's policy doesn't make
it easy. Ironically, Tapia landed a job with a government
contractor, making more money-- and probably costing taxpayers
more-- than a job in the bureaucracy would have paid.
***************************

     On one topic alone--how to complete a standard form for a
notice of a personnel action- -the Federal Personnel Manual
contains 900 pages of instructions. The full stack of personnel
laws, regulations, directives, case law and departmental guidance
that the Agriculture Department uses weighs 1,088 pounds.

     Thousands of pages of personnel rules prompt 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 tall--six times the height of the Washington monument.
Costs to the taxpayer for this personnel quagmire are enormous.
In total, 54,000 personnel work in federal personnel positions.23
We spend billions of dollars for these staff to classify each
employee within a highly complex system of some 459 job series,
15 grades and 10 steps within each grade.

     Does this elaborate system work? No.

     After surveying managers, supervisors and personnel officers
in a number of federal agencies, the U.S. Merit Systems
Protection Board recently concluded that federal personnel rules
are too complex, too prescriptive, and often counterproductive.

     Talk to a federal manager for 10 minutes: You likely will
hear at least one personnel horror story. The system is so
complex and rule-bound that most managers cannot even advise an
applicant how to get a federal job. "Even when the public sector
finds outstanding candidates," In 1989, Paul Volcker's National
Commission on the Public Service explained, "the complexity of
the hiring process often drives all but the most dedicated away."
Managers who find it nearly impossible to hire the people they
need sometimes flaunt the system by hiring people as consultants
at higher rates than those same people would earn as federal
employees. The average manager needs a year to fire an
incompetent employee, even with solid proof. During layoffs,
employees slated to be laid off can "bump" employees with less
seniority, regardless of their abilities or performance--putting
people in jobs they don't understand and never wanted.

     Vice President Gore heard many stories of dissatisfaction as
he listened to federal workers at meetings in their agencies. A
supervisor at the Centers for Disease Control complained that it
can take six to eight months and as many as 15 revisions to a job
description in order to get approval for a position he needs to
fill. A secretary from the Justice Department told the Vice
President she was discouraged and overworked in an office where
some secretaries were slacking off--with no system in place to
reward the hard workers and take action against the slackers.

     A worker from the Agency for International Development
expressed her frustration at being so narrowly "slotted" in a
particular GS series that she wasn't allowed to apply for a job
in a slightly different GS series --even though she was qualified
for the job. An Air Force lieutenant colonel told the vice
president that her secretary was abandoning government for the
private sector because she was blocked from any more promotions
in her current job series. The loss would be enormous, the
colonel told Gore, because her secretary was her "right-hand
person". One of the Labor Department's regional directors for
unemployment insurance complained that even though he is charged
with running a multimillion a year program, he isn't allowed to
hire a $45,000-a-year program specialist without getting approval
from Washington.

     To create an effective federal government, we must reform
virtually the entire personnel system: recruitment, hiring,
classification, promotion, pay, and reward systems. We must make
it easier for federal managers to hire the workers they need, to
reward those who do good work, and to fire those who do not. As
the National Academy of Public Administration concluded in 1993,
"It is not a question of whether the federal government should
change how it manages its human resources. It must change."


Action: OPM will deregulate personnel policy by phasing out the
10,000-page Federal Personnel Manual and all agency implementing
directives.24

     We must enable all managers to pursue their missions, freed
from the cumbersome red tape of current personnel rules. The
President should issue a directive phasing out the Federal
Personnel Manual and all agency implementing directives. The
order will require that most personnel management authority be
delegated to agencies' line managers at the lowest level
practical in each agency. It will direct OPM to work with
agencies to determine which FPM chapters, provisions, or
supplements are essential, which are useful, and which are
unnecessary. OPM will then replace the FPM and agency directives
with manuals tailored to user needs, automated personnel
processes, and electronic decision support systems.

     Once some of the paperwork burden is eased, our next
priority must be to give agency managers more control over who
comes to work for them. To accomplish this, we propose to
radically decentralize the government's hiring process.


Action: Give all departments and agencies authority to conduct
their own recruiting and examining for all positions, and abolish
all central registers and standard application forms.25

     We will ask Congress to pass legislation decentralizing
authority over recruitment, hiring, and promotion. Under the
present system, OPM controls the examination system for external
candidates and recruits and screens candidates for positions that
are common to all agencies, with agencies then hiring from among
candidates presented by OPM. Under the new system, OPM could
offer to screen candidates for agencies, but agencies need not
accept OPM's offer.

     Under this decentralized system, agencies will also be
allowed to make their own decisions about when to hire candidates
directly--without examinations or rankings - -under guidelines to
be drafted by OPM. Agencies able to do so should also be
permitted to conduct their own background investigations of
potential candidates. We will make sure the system is fair and
easy for job applicants to use, however, by making information
about federal job openings available in one place. In place of a
central register, OPM will create a government-wide, employment
information system that allows the public to go to one place for
information about all job opportunities in the federal
government.

**************************
First, we must cut the waste and make government operations more
responsive to the American people. It is time to shift from
top-down bureaucracy to entrepreneurial government that generates
change from the bottom up. We must reward the people and ideas
that work and get rid of those that don't.

President Bill Clinton
February 17, 1993
**************************

     Next, we must change the classification system, introduced
in 1949 to create fairness across agencies but now widely
regarded as time-consuming, expensive, cumbersome, and intensely
frustrating--for both workers and managers.

     After an exhaustive 1991 study of the system, the National
Academy of Public Administration recommended a complete overhaul
of the system. Classification standards, NAPA argued, are "too
complex, inflexible, out-of-date, and inaccurate," creating
"rigid job hierarchies that cannot change with organizational
structure." They drive some of the best employees out of their
fields of expertise and into management positions, for higher
pay. And managers seeking to create new positions often fight the
system for months to get them classified and filled.26

     There is strong evidence that agencies given authority to do
these things themselves can do better. Using demonstration
authority under the 1978 Civil Service Reform Act, several
agencies have experimented with simpler systems. In one
experiment, at the Naval Weapons Center in China Lake,
California, and the Naval Oceans Systems Center, in San Diego,
the system was simplified to a few career paths and only
four-to-six broad pay bands within each path. Known as the "China
Lake Experiment," it solved many of the problems faced by the two
naval facilities. It:

      classified all jobs in just five career
paths--professional, technical, specialist, administrative and
clerical;

      folded all GS (General Schedule) grades into four, five,
or six pay bands within each career path;

      allowed managers to pay market salaries to recruit people,
to increase the pay of outstanding employees without having to
reclassify them, and to give performance-based bonuses and salary
increases;

      automatically moved employees with repeated marginal
performance evaluations down to the next pay band; and

      limited bumping to one career path, and based it primarily
on performance ratings, not seniority.

     Another demonstration at McClellan Air Force Base, in
Sacramento, California, involved "gainsharing"--allowing
employees to pocket some of the savings they achieved through
cooperative labor-management efforts to cut costs. It generated
$5 million in productivity savings in four years and saw improved
employee performance; fewer grievances; less sick leave and
absenteeism; and improved labor-management relations.

     A third demonstration at more than 200 Agriculture
Department sites tested a streamlined, agency-based recruiting
and hiring system that replaced OPM's register process. Under
OPM's system, candidates are arrayed and scored based on OPM's
written tests or other examinations. In USDA's demonstration,
however, the agency grouped candidates by its own criteria, such
as education, experience or ability, then picked from those
candidates. A candidate might qualify for a job, for example,
with a 2.7 college grade point average. Agencies could create
their own recruitment incentives, do their own hiring, and extend
the probationary period for some new hires. Managers were far
more satisfied with this system than the existing one.


Action: Dramatically simplify the current classification system,
to give agencies greater flexibility in how they classify and pay
their employees.27

     We will urge Congress to remove all the 1940s-era
grade-level descriptions from the law and adopt an approach that
is more modern. In addition, Congress should allow agencies to
move from the General Schedule system to a broad-band system. OPM
should develop such standard banding patterns, and agencies
should be free to adopt one without seeking OPM's approval.

     When agency proposals do not fit under a standard pattern,
OPM should approve them as five-year demonstration projects that
would be converted to permanent "alternative systems" if
successful. OPM should establish criteria for broad-banding
demonstration projects, and agencies' projects meeting those
criteria should receive automatic approval.

     These changes would give agencies greater flexibility to
hire, retain, and promote the best people they find. They would
help agencies flatten their hierarchies and promote high
achievers without having to make them supervisors. They would
eliminate much valuable time now lost to battles between managers
seeking to promote or reward employees and personnel specialists
administering a classification system with rigid limits. Finally,
they would remove OPM from its role as "classification police."
To accompany agencies' new flexibility on classification and pay,
they must also be given authority to set standards for their own
workers and to reward those who do well.


Action: Agencies should be allowed to design their own
performance management and reward systems, with the objective of
improving the performance of individuals and organizations. 28

     The current government performance appraisal process is
frequently criticized as a meaningless exercise in which most
federal employees are given above-average ratings. We believe
that agencies will be able to develop performance appraisals that
are more meaningful to their employees. If they succeed, these
new approaches will send a message that job performance is
directly linked to workers' chances for promotion and higher pay.

     Current systems to assess on-the-job performance were
designed to serve multiple purposes: to enhance performance, to
authorize higher pay for high performers, to retain high
performers, and to promote staff development. Not surprisingly,
they serve none of these purposes well.

     Performance management programs should have a single goal:
to improve the performance of individuals and organizations.
Agencies should be allowed to develop programs that meet their
needs and reflect their cultures, including incentive programs,
gainsharing programs, and awards that link pay and performance.
If agencies--in cooperation with employees--design their own
systems, managers and employees alike should feel more ownership
of them.

     Finally, if performance measures are to  be taken seriously,
managers must have authority to fire workers who do not measure
up. It is possible to fire a poor worker in the federal
government, but it takes far too long. We believe this undermines
good management and diminishes workers' incentives to improve.


Action: Reduce by half the time required to terminate federal
managers and employees for cause and improve the system for
dealing with poor performers.29

     Agencies will reduce the time for terminating employees for
cause by half. For example, agencies could halve the length of
time during which managers and employees with unsatisfactory
performance ratings are allowed to demonstrate improved
performance.

     To support this effort, we will ask OPM to draft and
Congress to pass legislation to change the required time for
notice of termination from 30 to 15 days. This legislation should
also require the waiting period for a within-grade increase to be
extended by the amount of time an employee's performance does not
meet expectations. In other words, only the time that an employee
is doing satisfactory work should be credited toward the required
waiting period for a pay raise.



























Chapter-1-Cutting-Red-Tape Step-3:-Streamlining-Procurement

     Every year, Washington spends about $200 billion buying
goods and services. That's $800 per American. With a price tag
like that, taxpayers have a right t Our system relies on rigid
rules and procedures, extensive paperwork, detailed design
specifications, and multiple inspections and audits. It is an
extraordinary example of bureaucratic red tape.ore pages of
agency-specific supplements.

     These numbers document what most federal workers and many
taxpayers already know: Our system relies on rigid rules and
procedures, extensive paperwork, detailed design specifications,
and multiple inspections and audits. It is an extraordinary
example of bureaucratic red tape.

     Like the budget and personnel systems, the procurement
system was designed with the best of intentions. To prevent
profiteering and fraud, it includes rigid safeguards. To take
advantage of bulk purchasing, it is highly centralized. But the
government wrote its procurement rules when retailing was highly
stratified, with many markups by intermediaries. Today the game
has changed considerably. Retail giants like Wal-Mart, Office
Depot and Price Club are vertically integrated, eliminating the
markups of intermediaries. Federal managers can buy 90 percent of
what they need over the phone, from mail-order discounters. Bulk
purchasing still has its advantages, but it is not always
necessary to get the best price.

     Our overly centralized purchasing system takes decisions
away from managers who know what they need, and allows
strangers--often thousands of miles away--to make purchasing
decisions. The frequent result: Procurement officers, who make
their own decisions about what to buy and how soon to buy it,
purchase low-quality items, or even the wrong ones, that arrive
too late.

     This "secondhand" approach to purchasing creates another
problem. When line managers' needs and experiences are not
understood by the procurement officer, the government is unable
to make decisions that reward good vendors and punish bad ones.
As a result, vendors often "game" contracts--exploiting loopholes
to require expensive changes. For example, in a major government
contract for a computerized data network a few years ago, a
vendor used slight underestimates of system demand in the
contract specifications as an excuse to charge exorbitant prices
for system upgrades. In the private sector, a manager could have
used the incentive of future contracts to prevent such gaming; in
the government, there is no such leverage.

     The symptoms of what's wrong are apparent, too, from stories
about small purchases.

     One story that Vice President Gore has repeated in
Washington over the past six months concerns steam traps. Steam
traps remove condensation from steam lines in heating systems.
Each costs about $100. But when one breaks, it leaks as much as
$50 of steam a week. Obviously, a leaking steam trap should be
replaced quickly.

     When plumbers at the Sacramento Army Depot found leaking
traps, however, their manager followed standard operating
procedure. He called the procurement office, where an officer,
who knew nothing about steam traps, followed common practice. He
waited for enough orders to buy in bulk, saving the government
about $10 per trap. There was no rule requiring him to wait--
just a powerful tradition. So the Sacramento Depot didn't get new
steam traps for a year. In the meantime, each of their leaking
traps spewed $2,500 of steam. To save $10, the central
procurement system wasted $2,500.
     As the Vice President visited government agencies, he heard
many more stories of wasteful spending--most of them produced by
the very rules we have designed to prevent it. Take the case of
government travel.

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

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

Our federal procurement system leaves little to chance.
When the General Services Administration wanted to buy ashtrays,
it has some very specific ideas how those ashtrays--better known
to GSA as "ash receivers, tobacco (desk type)," should be
constructed.
     In March 1993, the GSA outlined, in nine full pages of
specifications and drawings, the precise dimensions, color,
polish and markings required for simple glass ashtrays that would
pass U.S. government standards.
     A Type I, glass, square, 41/2 inch (114.3 mm) ash receiver
must include several features: "A minimum of four cigarette
rests, spaced equidistant around the periphery and aimed at the
center of the receiver, molded into the top. The cigarette rests
shall be sloped toward the center of the ash receiver. The rests
shall be parallel to the outside top edge of the receiver or in
each corner, at the manufacturer's option. All surfaces shall be
smooth."
     Government ashtrays must be sturdy too. To guard against the
purchase of defective ash receivers, the GSA required that all
ashtrays be tested. "The test shall be made by placing the
specimen on its base upon a solid support (a 1 3/4 inch, 44.5mm
maple plank), placing a steel center punch (point ground to a
60-degree included angle) in contact with the center of the
inside surface of the bottom and striking with a hammer in
successive blows of increasing severity until breakage occurs."
  Then, according to paragraph 4.5.2., "The specimen should break
into a small number of irregular shaped pieces not greater in
number than 35, and it must not dice." What does "dice" mean? The
paragraph goes on to explain: "Any piece 1/4 inch (6.4 mm) or
more on any three of its adjacent edges (excluding the thickness
dimension) shall be included in the number counted. Smaller
fragments shall not be counted."

Regulation AA-A-710E, (superseding Regulation AA-A-710D).
******************************

     Beyond travel, at every federal agency the Vice President
visited, employees told stories about not getting supplies and
equipment they needed, getting them late, or watching the
government spend too much for them. At the Department of Health
and Human Services, a worker told the Vice President that no
matter how much his office needed a FAX machine--and how much
time the machine would save workers--the purchase wouldn't be
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 a computer, not a
mainframe, but a personal computer! At the Transportation
Department, a hearing-impaired employee told the Vice President
of watching with dismay as her agency spent $600 to buy her a
Telephone Device for the Deaf (TDD), when she knew she could buy
one off the shelf for $300.

     Anecdotes like these were documented in January 1993, when
the Office of Federal Procurement Policy and the U.S. Merit
Systems Protection Board collaborated on a survey of the
procurement system's customers: federal managers. More than 1,000
responded. Their message: The system is not achieving what its
customers want. It ignores its customers' needs, pays higher
prices than necessary, is filled with peripheral objectives, and
assumes that line managers cannot be trusted. A study by the
Center for Strategic and International Studies added several
other conclusions. The procurement system adds costs without
adding value; it impedes government's access to state-of-the-art
commercial technology; and its complexity forces businesses to
alter standard procedures and raise prices when dealing with the
government.31

     There is little disagreement that federal procurement must
be reconfigured. We must radically decentralize authority to line
managers, letting them buy much of what they need. We must
radically simplify procurement regulations and processes.  We
must empower the system's customers by ending most government
service monopolies, including those of the General Services
Administration. As we detailed in Chapter 1, we must make the
system competitive by allowing managers to use any procurement
office that meets their needs.

     As we take these actions, we must embrace these fundamental
principles: integrity, accountability, professionalism, openness,
competition--and value.


Action: Simplify the procurement process by rewriting federal
regulations--shifting from rigid rules to guiding principles.32

     The Federal Acquisition Regulation (FAR), the government's
principal set of procurement regulations, contains too many
rules. Rules are changed too often and are so process-oriented
that they minimize discretion and stifle innovation, according to
a Merit Systems Protection Board survey.33 As one frustrated
manager noted, the FAR does not even clearly state the main goal
of procurement policy: "Is it to avoid waste, fraud, and abuse?
Is it to implement a social-economic agenda? Is it to procure the
government's requirements at a fair and reasonable cost?"

     This administration will rewrite the 1,600-page FAR, the
2,900 pages of agency supplements that accompany it, and
Executive Order 12352, which governs federal procurement. The new
regulations will:

      shift from rigid rules to guiding principles;

      promote decision making at the lowest possible level;
      end unnecessary regulatory requirements;

      foster competitiveness and commercial practices;

      shift to a new emphasis on choosing "best value" products;

      facilitate innovative contracting approaches; and

      recommend acquisition methods that reflect information
technology's short life cycle.

      develop a more effective process to listen to its
customers: line managers, government procurement officers and
vendors who do business with the government.


Action: The GSA will significantly increase its delegated
authority to federal agencies for the purchase of information
technology, including hardware, software, and services.34
     In 1965, when "automated data processing" meant large,
mainframe computers --often developed specifically for one
customer--Congress passed the Brooks Act. It directed GSA to
purchase, lease, and maintain such equipment for the entire
federal government. The Act also gave GSA authority to delegate
to agencies these same authorities. In 1986, Congress extended
the requirement to software and support services.

     Today, with most computer equipment commercially available
in highly competitive markets, the advantages of centralized
purchasing have faded and the disadvantages grown. The federal
government takes, on average, more than four years to buy major
information technology systems; the private sector takes 13
months. Due to rapidly changing technology, the government often
buys computers that are state-of-the-art when the purchase
process begins and when prices are negotiated, but which are
almost obsolete when computers are delivered. The phenomenon is
what one observer calls "getting a 286 at a 486 price."

     Currently, the GSA authorizes agencies to make individual
purchases up to $2.5 million in equipment and services on their
own. The GSA Administrator will raise authorization levels to $50
million, $20 million and $5 million. These levels will be
calculated according to each agency's size, the size of its
information technology budget, and its management record. In some
cases, GSA may grant an agency greater or unlimited delegation.
     GSA will also waive requirements that agencies justify their
decisions to buy information technology items under $500,000 that
are mass-produced and offered on the open market.



Action: GSA will simplify the procurement process by allowing
agencies to buy where they want, and testing a fully "electronic
marketplace." 35

     The government buys everything from forklifts and snowplows
to flak jackets and test tubes through a system called the
Multiple Award Schedule program, which includes more than one
million separate items.

     Under this program, GSA negotiates and awards contracts to
multiple vendors of comparable products and services, at varying
prices. GSA then creates a "supply schedule" for a particular
good or service, identifying all vendors that have won contracts
as well as the negotiated prices. Of GSA's 154 schedules,
civilian agencies must must buy from 117. In ordering from
schedules, agencies still must comply--in addition- -with the
Federal Acquisition Regulation, Federal Information Resources
Management Regulation, and Federal Property Management
Regulation.

     In most cases, we should not limit managers to items on the
supply schedules. If they can find the same or a comparable
product for less, they should be free to buy it. Mandatory
schedules should apply only when required by law, to ensure
standardization, or when agencies voluntarily create team pools
that buy in bulk for lower prices. In addition, GSA should revise
regulations that currently limit agencies from buying more than
$300,000 of information technology items on supply schedules,
raise them to $500,000 and provide a higher limit for individual
items costing more than $500,000.

     To make supply schedules more user-friendly, GSA should
conduct several pilot tests. One should test an "electronic
marketplace," in which GSA would not negotiate prices. Instead,
suppliers would list products and prices electronically, and
agencies would electronically order the lowest-priced item that
met their needs. Suppliers, at any time, would be able to add new
products and change prices. Such a pilot would test whether
visible price competition will cut prices and give line managers
easier access to rapidly changing products.



Action: Allow agencies to make purchases under $100,000 through
simplified purchase procedures.36

     Under current law, agencies are allowed to make purchases of
less than $25,000 on their own, using simple procurement
procedures. These small purchases, on average, take less than a
month to complete; purchases of more than $25,000 normally take
more than three months. If Congress raised the threshold to
$100,000, agencies could use simplified procedures on another
45,550 procurements--with a total value of $2.5 billion.

     Congress should keep current rules that reserve small
purchases for small businesses and should improve access to
information on procurements of more than $25,000. To ensure that
small business receives adequate notice of possible procurements,
the federal government, with OMB as the lead agency, should adopt
an electronic notification system.



Action: Rely more on the commercial marketplace.37

     The government can save enormous amounts of money by buying
more commercial products instead of requiring products to be
designed to government-unique specifications. Our government buys
such items as integrated circuits, pillows, and oil pans,
designed to government specifications--even when there are
equally good commercial products available.

     We recommend that all agency heads be instructed to review
and revise internal purchasing procedures and rules to allow
their agencies to buy commercial products whenever practical and
to take advantage of market conditions. We will ask the Office of
Management and Budget to draft a new federal commercial code with
commercial-style procedures, and then ask Congress to adopt the
new code and remove impediments to this money-saving approach to
procurement.


Action: Bring federal procurement laws up to date.38

     There are four federal labor laws implemented through the
federal procurement process. Each was passed because of valid and
well founded concerns about the welfare of working Americans. But
as part of our effort to make the government's procurement
process work more efficiently, we must consider whether those
laws are still necessary- -and whether the burdens they impose on
the procurement system are reasonable ones.

     The Davis-Bacon Act of 1931 requires that each repair or
construction contract in excess of $2,000 for work on a public
building specify that the prevailing area minimum wage be paid to
workers on that contract. The law was passed because Congress
feared that without it, federal contracts awarded through a
sealed bid process could undermine local prevailing wages. While
Congress shifted the government's focus to an open bidding
process in 1984, we acknowledge that concerns about the impact of
government contracts on prevailing wages are still valid.

     Recognizing that the original $2,000 threshold in the law
was set more than 60 years ago, we recommend that Congress modify
the Davis-Bacon Act by raising the threshold for compliance to
$100,000, a change similar to that proposed by Senator Kennedy in
March 1993.

     The Service Contract Act of 1965 has purposes similar to
those of the Davis-Bacon Act, and applies to service contracts in
excess of $2,500. It requires contractors to pay the minimum
prevailing wage and specified fringe benefits. To keep
contractors from "locking in" their wage agreements at low
levels, the law imposes a five-year limit on service contracts
and requires new wage determinations every two years.

     We suggest that the five-year limit is inconsistent with the
government's interest in entering into long-range contracts. We
will urge Congress to increase the limit up to 10 years while
retaining the two-year wage adjustment requirement.

     The Copeland Anti-Kickback Act of 1934 regulates payroll
deductions on federal and federally assisted construction. The
law prohibits anyone from inducing employees to give up any part
of their compensation and requires contractors to submit weekly
statements of compliance and detailed weekly payroll reports to
the Labor Department.

     We suggest that such detailed reporting is an unreasonable
burden on federal contractors, and we will urge Congress to
modify the act. We suggest eliminating requirements for weekly
reports and requiring contractors instead to certify with each
payment that they have complied with the law. Contractors would
also be required to keep records to prove their compliance for
three years.

     The Walsh-Healey Public Contracts Act requires contractors
that supply materials to the federal government through contracts
in excess of $10,000 to pay all workers the federal minimum wage,
to agree that no employee is required to work more than 40 hours
a week, and to avoid using convict labor or workers under the age
of 16.

     Over time, each of the requirements of the Walsh-Healey
Act--with the exception of the provision relating to convict
labor--has been superseded by other federal legislation. We
therefore urge Congress to remove the burden of certifying
compliance with redundant laws from federal contractors. Within
30 days of the repeal of that law, the President should amend
Executive Order 11755 to include the convict labor provisions of
the Walsh-Healey Act.


Chapter-1-Cutting-Red-Tape Step-4:---Reorienting-The-Inspectors--General

     Responding to growing concern about waste, fraud, and abuse
in government, Congress passed the Inspector General Act in 1978.
This act and subsequent amendments created the 60 Inspectors
General offices that today employ 15,000 federal workers,
including postal inspectors.

     The act was broad in scope, requiring IGs to promote the
efficiency, economy and integrity of federal programs with
auditing program expenditures, and investigating possible fraud
and abuse.

     The inspectors general, who are independent of the agencies
in which they operate, report to Congress twice a year. These
reports detail how much money IG audits have recovered or put to
better use and the number of convictions resulting from their
criminal investigations. The IGs also send the audit reports to
the heads of their agencies and forward investigations for
criminal prosecution to the U.S. attorney general. The Inspector
General Act's two central mandates, combined with the last two
administrations' eagerness to highlight "waste, fraud and abuse,"
have shaped the evolution of the IG offices. The standard by
which they are evaluated is finding error or fraud: The more
frequently they find mistakes, the more successful they are
judged to be. As a result, the IG staffs often develop
adversarial relations with agency managers--who, in trying to do
things better, may break rules.

     At virtually every agency he visited, the Vice President
heard federal employees complain that the IGs' basic approach
inhibits innovation and risk taking. Heavy-handed
enforcement--with the IG watchfulness compelling employees to
follow every rule, document every decision, and fill out every
form--has had a negative effect in some agencies.



Action: Broaden the focus of the Inspectors General from strict
compliance auditing to evaluating management control systems.39

    In a government focused on results, the Inspectors General
can play a key role not only in controlling managers' behavior by
monitoring it, but in helping to improve it. Today, they audit
for strict compliance with rules and regulations. In the future,
they should help managers evaluate their management control
systems. Today, they look for "waste, fraud, and abuse." In the
future, they should also help improve systems to prevent waste,
fraud and abuse, and ensure efficient, effective service.

     Many IGs have already begun to help their agencies this way.
At the Justice Department, for example some offices were
inefficient in completing background and security clearances. The
Inspector General's office examined the problem, then recommended
setting up a central database to manage the clearance process and
warn officials automatically when they are about to miss
deadlines for completing investigations. Similarly, the Inspector
General of the Department of Health and Human Services has long
been engaged in program evaluations to help agencies uncover
inefficiencies. While the Inspector General's office retains the
right to conduct formal audits and criminal investigations, it
also uses its role as a neutral observer to collaborate on making
programs work better.

     Congress need pass no legislation to make this happen.
Promoting the efficiency and integrity of government programs was
part of the IGs' original mandate. But such change will require a
cultural revolution within many IG offices, and we recommend two
steps to help guide such a change. First-line managers, who are
the IG front-line customers, should be surveyed periodically to
see whether they believe the IGs are helping them improve
performance. Second, criteria should be established for judging
IG performance.








Chapter-1-Cutting-Red-Tape Step-5:-Eliminating-Regulatory-Overkill

     Reinventing our budget, personnel and procurement systems
will strip away much--but not all--of the red tape that makes our
governing processes so cumbersome. Thousands upon thousands of
outdated, overlapping regulations remain in place. These
regulations affect the people inside government and those who
deal with it from the outside. Inside government, we have no
precise measurement of how much regulation costs or how much time
it steals from productive work. But there's no disagreement that
the costs are enormous. And on the matter of external regulation,
a 1993 study concluded that the cost to the private sector of
complying with regulations is at least $430 billion annually-- 9
percent of our gross domestic product! 40

*********************************
We can lick gravity, but sometimes the paperwork is overwhelming.

Wernher von Braun
*********************************

     We must clear the thicket of regulation by undertaking a
thorough review of the regulations already in place and
redesigning regulatory processes to end the proliferation of
unnecessary and unproductive rules. We have worked closely with
administration officials responsible for developing a new
approach to regulatory review, and incorporated that work into
the following action.



Action: The President should issue a directive requiring all
federal agencies to review internal government regulations over
the next 3 years, with a goal of eliminating 50 percent of those
regulations.41

     Can regulations be eliminated? The answer is yes, as
evidenced by promising experiments in several federal agencies.
In the Management Efficiency Pilot Program (MEPP) in five of the
Department of Veterans' Affairs regional benefits offices, the
offices were encouraged to do away with red tape.42 At several
benefits offices, 895 of 1,969 regulations were dropped, saving
the staff more than 3,000 hours and $640,000 in one year. And
productivity at MEPP centers increased by 35 percent in one year
(1988-89), more than double the increase at other centers. A
similar effort by five VA medical centers redirected $13.1
million to much-needed funding for acute care centers.

     An even more sweeping example of a fresh start in internal
regulations comes from the Air Force, where the chief of staff
has established a servicewide program to streamline the
organization and cut out bureaucracy. Under the Policy Review
Initiative begun in 1992, the Air Force is replacing 1,510
regulations with 165 policy directives and 750 sets of
instructions. This effort will cut 55,000 pages of intermingled
policy and procedure to about 18,000 pages clearly separating
policy from procedure. This deregulation effort, managed by a
staff of 10, is expected to be completed in fiscal year 1994.

     Over the next 3 years, each federal agency will undertake a
thorough and systematic review of its internal regulations.
Agencies may choose their own strategies for reaching the goal of
reducing internal regulations by 50 percent.



Action: Improve inter-agency coordination of regulations to
reduce unnecessary regulation and red tape.43

     In 1981, frustrated at the inconsistencies and duplication
among federal regulatory efforts and their burden on government
and the private sector, President Reagan required the Office of
Management and Budget specifically, the Office of Information and
Regulatory Affairs (OIRA) to review all regulations proposed by
executive agencies.

     With a limited staff, many of whom are also involved with
paperwork reduction issues, the review process for proposed
regulations can be lengthy.  And while a lengthy review process
may be appropriate for significant rules, it is a waste of time
for others. In early 1993, Vice President Gore convened an
informal working group to recommend changes in the regulatory
review process. The working group and the National Performance
Review coordinated their efforts closely.  We endorse the
recommendations of the working group and the President's
executive order, which will implement those changes and
streamline the regulatory review process.

     The order will enhance the planning process and encourage
agencies to consult with the public early in that process.  In
addition, in an effort to coordinate the regulatory actions of
all executive agencies, the Vice President will meet annually
with agency heads, and the Administrator of OIRA will hold
quarterly meetings with representatives of executive agencies and
the administration.

     Improving the regulatory review process also means being
selective in reviewing regulations. Through this order, the
President will instruct OIRA to review only significant
regulations--not, as under the current process, all regulations.
The new review process, which will take into account a broad
range of costs and benefits, will be more useful and realistic.
     To ease the adverse effects of regulation on citizens,
businesses, and the economy as a whole, the executive order also
will require an ongoing review of existing regulations. Agencies
will identify regulations that are cumulative, obsolete, or
inconsistent, and, where appropriate, eliminate or modify them.
They will also identify legislative mandates that require them to
impose unnecessary or outdated regulations.


Action: Establish a process by which agencies can more widely
obtain waivers from regulations.44

     With the advent of the Government Performance and Results
Act, which Congress passed in July 1993, we have begun to
acknowledge the important principle of "flexibility in return for
accountability."

     Under the act, some agencies may apply for waivers from
federal regulations if they meet specific performance targets. In
other words, they will be exempt from some administrative
requirements if they do their jobs better. The law applies only
to internal regulations and government agencies, but it also
urges wider waivers authority to test the potential benefits. In
the spirit of that legislation, we seek to expand the concept of
greater flexibility for greater accountability.

     The President should direct each federal agency to establish
and publish,in a timely manner, an open process through which
other federal agencies can obtain waivers from that agency's
regulations--with an expedited appeals process. Rules adopting
this new waiver process would state that all future agency
regula-tions would be subject to the waiver process unless
explicitly prohibited. We will also ask Congress to specify that
legislation would be subject to waivers unless explicitly
prohibited.



Action: Reduce the burden of congressionally mandated reports.45

     Woodrow Wilson was right. Our country's 28th president once
wrote that "there is no distincter tendency in congressional
history than the tendency to subject even the details of
administration" to constant congressional supervision.  One place
to start in liberating agencies from congressional
micromanagement is the issue of reporting requirements. Over the
past decades, we have thrown layer upon layer of reporting
requirements on federal agencies, creating an almost endless
series of required audits, reports, and exhibits.

     Today the annual calendar is jammed with report deadlines.
On August 31 of each year, the Chief Financial Officers (CFO) Act
requires that agencies file a 5-year financial plan and a CFO
annual report. On September 1, budget exhibits for financial
management activities and high risk areas are due. On November
30, IG reports are expected, along with reports required by the
Prompt Payment Act. On January 31, reports under the Federal
Civil Penalties Inflation Report Adjustment Act of 1990 come due.
On March 31, financial state-ments are due and on May 1 annual
single-audit reports must be filed. On May 31 another round of IG
reports are due. At the end of July and December, "high-risk"
reports are filed. On August 31, it all begins again. And these
are just the major reports!

     In fiscal year 1993, Congress required executive branch
agencies to prepare 5,348 reports.46 Much of this work is
duplicative. And because there are so many different sources of
information, no one gets an integrated view of an agency's
condition--least of all the agency manager who needs accurate and
up to date numbers. Meanwhile, trapped in this blizzard of
paperwork, no one is looking at results.  We propose to
consolidate and simplify reporting requirements, and to redesign
them so that the manager will have a clear picture of the
agency's financial condition, the condition of individual
programs, and the extent to which the agency is meeting its
objectives. We will ask Congress to pass legislation granting OMB
the flexibility to consolidate and simplify statutory reports and
establishing a sunset provision in any reporting requirements
adopted by Congress in the future.


Chapter-1-Cutting-Red-Tape Step-6:---Empower-State-and--Local-Governments

     What we usually call "government" is, in fact, a tangle of
different levels of government agencies--some run from
Washington, some in state capitals, and some by cities and towns.
In the United States, in fact, some 80,000 "governments" run
everything from local schools and water supply systems to the
Defense Department and overseas embassies. Few taxpayers
differentiate among levels of government, however to the average
citizen, a tax is a tax--and a service a service--regardless of
which level of government is responsible. To reinvent government
in the public's eyes, we must address the web of
federal-state-local relations.

     Washington provides about 16 percent of the money that
states and localities spend and shapes a much larger share of
such spending through mandates. Much of Washington's domestic
agenda, $226 billion to be precise, consists of programs actually
run by states, cities, and counties. But the federal government
doesn't always distribute its money--or its mandates--wisely.
      For starters, Washington allocates federal money through an
array of more than 600 different grant programs. Many are small:
445 of them distribute less than $50 million a year nationwide;
some 275 distribute less than $10 million. Through grants,
Congress funds some 150 education and training programs, 100
social service programs, and more than 80 health care programs.
     Considered individually, many categorical grant programs
make sense. But together, they often work against the very
purposes for which they were established. When a department
operates small grant programs, it produces more bureaucracy, not
more services. Thousands of public employees--at all levels of
government--spend millions of hours writing regulations, writing
and reviewing grant applications, filling out forms, checking on
each other, and avoiding oversight. In this way, professionals
and bureaucrats siphon money from the programs' intended
customers: students, the poor urban residents and others. And
states, and local governments find their money fragmented into
hundreds of tiny pots, each with different, often contradictory
rules, procedures, and program requirements.

****************************
Were we directed from Washington when to sow and when to reap, we
should soon want for bread.

Thomas Jefferson
1826
****************************

     Henry Cisneros, Secretary of Housing and Urban Development,
likens federal grants to a system of pipelines spreading out
across the country. The "water," says Cisneros, reaches states
and localities through hundreds of individual pipelines. This
means there is little chance for the water to be mixed, properly
calibrated to local needs, or concentrated to address a specific
problem, geographic area, or population.

     In employment and training, for example, Washington funds
training programs, literacy programs, adult education programs,
tuition grant programs, and vocational education programs.
Different programs are designed for different groups--welfare
recipients, food stamp recipients, displaced homemakers, youth in
school, drop-outs, "dislocated workers," workers displaced by
foreign trade, and on and on.

     At a plant in Pittsfield, Massachusetts, General Electric
recently laid off a large group of workers. Some workers could
get Trade Adjustment Assistance benefits, because their jobs were
lost to foreign competition. Others could not; their jobs fell to
defense cutbacks. Because they have a union, people working in
one area began exercising their seniority rights and bumping
people in other areas. Some workers bumped from trade-affected
jobs to defense contracting jobs, then lost those a few weeks
later. Under federal regulations, they could no longer get Trade
Adjustment Assistance. Thus, friends who had spent years working
side by side found themselves with very different benefits. Some
got the standard 6 months of unemployment checks. Others got 2
years of unemployment checks and extensive retraining support.
Try explaining that to people who have lost the only jobs they've
ever held!

     People who run such programs struggle to knit together funds
from three, four, or five programs, hoping against hope that
workers get enough retraining to land decent new jobs. But the
task is difficult; each program has its own requirements, funding
cycles, eligibility criteria, and the like. One employment center
in Allegheny County, New York, has tried hard to bring several
programs together and make them appear as seamless as possible to
the customers. At the end of the day, to accommodate reporting
requirements, the staff enters information on each customer at
four different computer terminals: one for Job Training
Partnership Act (JTPA) programs, one for the JOBS program, one
for the Employment Service, and one for tracking purposes.

     When Congress enacted JTPA, it sought to avoid such
problems. It let local areas tailor their training programs to
local needs. But federal rules and regulations have gradually
undermined the good intentions. Title III, known as the Economic
Dislocation and Worker Adjustment Assistance Act (EDWAA), helps
states respond immediately to plant closings and large layoffs.
Yet even EDWAA's most flexible money, the "national reserve
fund," has become so tangled in red tape that many states won't
use it. As Congress's Office of Technology Assessment put it,
"the process is simply too obstacle ridden. ... many state EDWAA
managers cannot handle the complexities of the grant application,
and those that do know how are too busy responding to clients'
urgent needs to write demanding, detailed grant proposals."

     When Congress amended JTPA in 1993, targeting more funds to
those with "multiple barriers" to employment, homeless advocates
thought the change would help their clients. After all, who has
more barriers to employment than someone without an address or
phone number? But the new JTPA formula also emphasized training
over job search assistance. So a local program in Washington,
D.C. that had won a Labor Department award for placing 70 percent
of its clients in jobs--many of them service sector jobs paying
more than the minimum wage--lost its JTPA funding. Why? It didn't
offer training. It just helped the homeless find jobs.47

     But federal programs rarely focus on results. As structured
by Congress, they pay more attention to process than outcomes--in
this case, more to training than to jobs. Even in auditing state
and local programs, federal overseers often do little more than
check to see whether proper forms are filed in proper folders.

     The rules and regulations behind federal grant programs were
designed with the best of intentions--to ensure that funds flow
for the purposes Congress intended. Instead, they often ensure
that programs don't work as well as they could--or don't work at
all.

     Virtually every expert with whom we spoke agreed that this
system is fundamentally broken. No one argued for marginal or
incremental change. Everyone wants dramatic change--state and
local officials, federal managers, congressional staff. As in
managing its own affairs, the federal government must shift the
basic paradigm it uses in managing state and local affairs. It
must stop holding programs accountable for process and begin
holding them accountable for results.

      The task is daunting; it will take years to accomplish. We
propose several significant steps on the journey:

      Establish a Cabinet-level Enterprise Board to oversee new
initiatives in community empowerment;

      Cut the number of unfunded mandates that Washington
imposes;

      Consolidate 55 categorical grants into broader "flexible
grants;"

      Increase state and local flexibility in using the
remaining categorical grants;

      Let all agencies waive rules and regulations when they
conflict with results; and

      Deregulate the public housing program.

     The likely benefits are clear: administrative savings at all
levels; greater flexibility to design solutions; more effective
concentration of limited resources; and programs that work for
their customers.



Action: The President should establish a Cabinet-level Enterprise
Board to oversee new initiatives in community empowerment.48
     The federal government needs to better organize itself to
improve the way it works with states and localities. The
President should immediately establish a working group of
cabinet-level officials, with leadership from the Vice President,
the Domestic Policy Council, and the National Economic Council.
     The Board will look for ways to empower innovative
communities by reducing red tape and regulation on federal
programs. This group will be committed to solutions that respect
"bottom-up" initiatives rather than "top-down" requirements. It
will focus on the administration's community empowerment agenda,
beginning with the 9 Empowerment Zones and 95 Enterprise
Communities that passed Congress as part of the President's
economic plan.

*****************************
Sometimes we need to start out with a blank slate and say, "hey,
we've been doing this for the last 40, 50 years. It doesn't
work." Let's throw out everything, clear out minds...Let's have
as a goal doing the right thing for the right reasons, even if it
entails taking risks.

Vincent Lane,  Chairman, Chicago Housing Authority, Reinventing
Government Summit  Philadelphia, June 25, 1993
******************************

     In participating communities, for example, federal programs
could be consolidated and planning requirements could be
simplified; waivers would be granted to assure maximum
flexibility; federal funding cycles would be synchronized; and
surplus federal properties could be designated for community use.



Action: The President should issue a directive limiting the use
of unfunded mandates by the administration.49

     As the federal deficit mounted in the 1980s, Congress found
it more and more difficult to spend new money. Instead, it often
turned to "unfunded mandates"-- passing laws for the states and
localities to follow, but giving them little or no money to
implement those policies. As of December 1992, there were at
least 172 separate pieces of federal legislation in force that
imposed requirements on state and local governments. Many of
these, such as clean water standards and increased public access
for disabled citizens, are unquestionably noble goals.

     But the question remains: How will state and local
governments pay to meet those goals? We recommend that Congress
refrain from this practice and that the President's directive
establish that the executive branch will similarly limit its use
of unfunded mandates in policies, legislative proposals and
regulations.

     The directive would narrow the circumstances under which
departments and agencies could impose new unfunded burdens on
other governments. It also would direct federal agencies to
review their existing regulations and reduce the number of
mandates that interfere with effective service delivery. OMB's
Office of Information and Regulatory Affairs (OIRA) should review
all major regulations or legislation proposed by the executive
branch for possible adverse impacts on states and localities.
Finally, OIRA's director should create a forum in which federal,
state, and local officials could develop solutions to problems
involving unfunded mandates.



Action: Consolidate 55 categorical grant programs with funding of
$12.9 billion into six broad "flexible grants"--in job training,
education, water quality, defense conversion, environmental
management, and motor carrier safety.50

     This proposal came from the National Governors Association
(NGA) and National Conference of State Legislatures (NCSL), which
describe it as "a first step toward broader, more ambitious
reforms." It would consolidate some 20 education, employment and
training programs, with a combined $5.5 billion in fiscal year
1993 spending; roughly 10 other education programs ($1.6
billion); 10 small environmental programs ($392 million);  six
water quality programs ($2.66 billion); and six defense
conversion programs  ($460 million).

**********************************
How Much Do You Get for a 1983 Toyota?

     What does the price of a used car have to do with the
federal government's family policies?

     More than it should. Caseworkers employed by state and local
government to work with poor families are supposed to help those
families become self-sufficient. Their job is to understand how
federal programs work. But as it turns out, those caseworkers
also have to know something about used cars. Used cars? That's
right. Consider this example, recounted to Vice President Gore at
a July 1993 Progressive Foundation conference on family policy in
Nashville, Tennessee:

     Agencies administering any of the federal government's
programs for the poor must verify many details about people's
lives. For instance, they must verify that a family receiving
funds under Aid to Families with Dependent Children (AFDC) does
not own a car worth more than $1,500 in equity value. To give a
poor family food stamps, it must verify that the family doesn't
own a car worth more than $4,500 in market value. Medicaid
specifies a range that it allows for the value of a recipient's
car, depending on the recipient's Medicaid category. But under
food stamp rules, the car is exempt if it is used for work or
training or transporting a disabled person. And under AFDC, there
is no exemption for the car under any circumstances.
 Recounting that story to a meeting of the nation's governors,
the vice president asked this simple question: "Why can't we talk
about the same car in all three programs?"
***************************


Action: Congress should allow states and localities to
consolidate separate grant programs from the bottom up.51

     Recognizing the political and administrative obstacles to
wholesale reform of more than 600 existing categorical grants in
the short term, the National Performance Review focused on an
innovative solution to provide flexibility and to encourage
result-oriented performance at the state and local levels.

     Our proposal calls for Congress to authorize "bottom-up"
grant consolidation initiatives. Localities would have authority
to mix funding from different programs, with simple notification
to Washington, when combining grants smaller than $10 million
each. For a consolidation involving any program funded at more
than $10 million, the federal awarding office (and state, if
applicable), would have to approve it before implementation. In
return for such consolidation, the state and local governments
will waive all but one of the programs' administrative payments
from the federal government.

     When different grants' regulations conflict, the
consolidating agency would select which to follow. States and
localities that demonstrated effective service integration
through consolidation would receive preference in future grant
awards. Each of the partners in the intergovernmental system must
work collaboratively with others--federal, state, and local--to
refine this recommendation.

     The details of this proposal will be negotiated with
important state and local organizations, such as the NGA, the
NCSL, U.S. Conference of Mayors, and the National League of
Cities, before legislation is drafted. Bottom-up consolidation
will be given a high priority by the administration. It
represents a way to improve state and local performance without
tackling the thorny political problem involved in consolidating
600 grant programs, reconciling thousands of rules and
regulations, and anticipating every possible instance when
flexibility might be necessary. It puts the burden of identifying
obstacles and designing the best solution where it belongs--on
those who must make the programs work.


Action: Give all cabinet secretaries and agency heads authority
to grant states and localities selective waivers from federal
regulations or mandates.52

*********************************
The National Performance Review is not intended to be the final
word on reinventing government but rather a first step. This long
overdue effort will require continuing commitment from the very
top to truly change the way government does business.
U.S. Rep. John Conyers (D. Mich.)
August 28, 1993
*********************************

     For federal grant programs to work, managers must have
flexibility to waive rules that get in the way. Some departments
have this authority; others don't. Federal decisions on most
waivers come very slowly, and states often must apply to a
half-dozen agencies to get the waivers they need. Florida, for
example, has a two-year waiver allowing it to provide hospice
care to AIDS patients under Medicaid. Its renewal takes 18
months. So state officials have to reapply after only six months.
Waiver legislation should grant broad waiver authority, with the
exception of fair housing, non-discrimination, environmental, and
labor standards. We will ask Congress to grant such authority to
Cabinet officers. These waivers, should be granted under limited
circumstances, however. They must be time-limited and designed to
include performance measures. When each experiment is concluded,
the granting agency should decide whether the new way of doing
things should be included in standard practice.


Action: Give control of public housing to local public housing
authorities with histories of excellent management and
substantially deregulate the rest.53

     Public housing is a classic story of good intentions gone
awry. When the program began in the 1930s, it was hailed as an
enlightened response to European immigrants' squalid living
conditions in cities across the country. Through an enormous
bureaucracy stretching from Washington into virtually every city
in America, the public housing program brought clean, safe,
inexpensive living quarters to people who could not afford them
otherwise.

     Now, however, public housing is even more troubled than our
categorical grant programs. With its tight, centralized control,
it epitomizes the industrial-era program: hierarchical,
rule-bound, and bureaucratic. HUD's Washington, regional, and
local offices rigidly control local public housing authorities,
who struggle to help the very poor. Frustrated by the failure of
public housing, innovative state and local governments began to
experiment with new models of developing, designing, financing,
managing, and owning low-income housing. Successful efforts
tailored the housing to the characteristics of the surrounding
community. Local public housing authorities began to work with
local governments and non-profit organizations to create
innovative new models to serve low-income people.

     HUD recognizes that local authorities with proven records of
excellence can serve their customers far better if allowed to
make their own decisions. We and the secretary recommend that
Congress give HUD authority to create demonstration projects in
which local housing authorities would continue to receive
operating subsidies as long as they met a series of performance
targets, but would be free from other HUD control. Individual
demonstrations could vary, but all federal rules would be open
for waivers as long as HUD could measure performance in providing
long-term, affordable housing to those poor enough to be eligible
for public housing.

     In addition, HUD should work closely with local housing
authorities, their national organizations, public housing tenant
organizations, and state and local officials to eliminate
unnecessary rules, requirements, procedures, and regulations. In
particular, HUD should replace its detailed procurement and
operating manuals and design and site selection requirements with
performance measures, using annual ranking of local housing
authorities to encourage better service and greater
accountability. It should eliminate the annual budget review, an
exercise in which HUD field staff spend thousands of hours
reviewing and approving detailed budgets from local housing
authorities --even though the reviews do not influence federal
funding decisions. And it should work with Congress to change
current rent rules, which create strong incentives for people to
move from public housing as soon as they find jobs. Conclusion



Conclusion

     The changes described above are ambitious. They will take
enormous effort and enormous will. It will be many years before
all of them take root. But if they succeed, the American people
will have a government capable of attacking their problems with
far more energy, and far less waste, than they can today imagine.

     We must move quickly because the bureaucracy, by its nature,
resists change. As Tom Peters wrote in Thriving on Chaos, "Good
intentions and brilliant proposals will be dead-ended, delayed,
sabotaged, massaged to death, or reversed beyond recognition or
usefulness by the overlayered structures...."54

     But the changes we propose will produce their own momentum
to overcome bureaucratic resistance. As the red tape is being
cut, federal workers will become more and more impatient with the
red tape that remains. They will resist any reversal of the
process. And they will be strengthened in their resistance by the
steps we propose in the next chapters.

Chapter-2-Putting-Customers-First Introduction

*********************************
We are going to rationalize the way the federal government relates
to the  American people, and we are going to make the federal
government customer friendly. A lot of people don't realize that
the federal government has customers. We have customers. The
American people.

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

     All of us--bureaucrat or business owner, cabinet secretary or
office clerk--respond to incentives. We do more of what brings us
rewards and recognition, less of what brings us criticism. But our
government, built around a complex cluster of monopolies, insulates
both managers and workers from the power of incentives. We must
change the system. We must force our government to put the customer
first by injecting the dynamics of the marketplace.

     The best way to deal with monopoly is to expose it to
competition. Let us be clear: this does not mean we should run
government agencies exactly like private businesses. After all,
many of government's functions are public responsibilities
precisely because the private sector cannot, should not, or would
not manage them. But we can transplant some aspects of the business
world into the public arena. We can create an environment that
commits federal managers to the same struggle to cut costs and
improve customer service that compels private managers. We can
imbue the federal government--from top to bottom--with a driving
sense of accountability.

     Is it really possible to reinvent government in this way?
Horror stories about government waste are so abundant that many
doubt its ability to change. For some, the only solution is to cut
or abolish programs wholesale. In some instances those cuts make
sense and we are recommending them. But alone they do not address
the problem we face or move us decidedly toward a government that
works better and costs less. We propose a different approach. we
must make cuts where necessary; we also must make our government
effective and efficient. Some programs clearly should be
eliminated, others streamlined. We will offer many proposals to do
both in chapter 4. But reinventing government isn't just about
trimming programs; it's about fundamentally changing the way
government does business. By forcing  public agencies to compete
for their customers--between offices, with other agencies, and with
the private sector--we will create a permanent pressure to
streamline programs, abandon the obsolete, and improve what's left.

     This process will be neither quick nor easy. But as it
unfolds, a very different  type of government will emerge, one that
is accountable to its true customers--the public.

     We propose four specific steps to empower customers, break
federal monopolies, and provide incentives for federal employees to
better serve their customers.

     First, we will require that all federal agencies put customers
first by regularly asking them how they view government services,
what problems they encounter, and how they would like services
improved. We will ensure that all customers have a voice, and that
every voice is heard.

     Second, we will make agencies compete for their customers'
business. Wherever feasible, we will dismantle government's
monopolies, including those that buy goods and services, acquire
and maintain office space, and print public documents. These
internal monopolies serve their customers--government workers--so
poorly, it's no wonder those workers have such trouble serving
customers outside government.

     Third, where competition isn't feasible, we will turn
government monopolies into more businesslike
enterprises--enterprises in closer touch with both customers and
market incentives.

     Fourth, we will shift some federal functions from old-style
bureaucracies to market mechanisms. We will use federal powers to
structure private markets in ways that solve problems and meet
citizens' needs--such as for job training or safe
workplaces--without funding more and bigger public bureaucracies.

     Together, these strategies will enable us to create a
responsive, innovative, and entrepreneurial government. If we
inject market mechanisms into federal agencies as we are cutting
red tape, we will create new dynamics--and a new
dynamism--throughout the federal government.


Chapter-2-Putting-Customers-First Step-1:---Giving-Customers-A-Voice---And-A-
Choice

Setting Customer Service Standards

     Long lines, busy signals, bad information, and indifferent
workers at front counters-- these are all too common occurrences
when customers come in contact with their government. Quite simply,
the quality of government service is below what its customers
deserve.

     We propose to set a goal of providing customer services equal
to the best in business. Too many agencies have learned to overlook
their customers. After all, most of government's customers can't
really take their business elsewhere. Veterans who use veterans'
hospitals, companies that seek environmental permits, or retirees
applying for social security benefits must deal with public
agencies that hold monopolies. And monopolies, public or private,
have little sensitivity to customer needs. So government agencies
must do what many of America's best businesses have done: renew
their focus on customers. Some are already trying. The Internal
Revenue Service (IRS) and Social Security Administration (SSA) have
taken major steps to improve their telephone services to customers.
SSA, the U.S. Postal Service (USPS), and the Department of Veterans
Affairs are developing a combined government services kiosk,
providing a single point of access for services offered by the
three agencies. The Library of Congress, the Energy Department, the
National Aeronautics and Space Administration, the National Science
Foundation, and other federal agencies have placed their materials
on Internet, a worldwide computer network.1

     Good service means giving people what they need. To do that,
however, one must first find out what they want--a step few federal
agencies have taken. In the future, federal agencies will ask their
customers what they want, what problems they have, and how the
agencies can improve their services.

     Knowing what customers want, public agencies must set clear
and specific customer service standards. When Federal Express
promises to deliver a package the next day by 10:30 a.m., both
customers and employees understand precisely what that means.
Similarly, when the Air Force's Tactical Air Command discarded its
thick set of specifications about living quarters for visiting
pilots and adopted a simple standard- -equivalent to "a moderately
priced hotel, like Ramada"--employees understood exactly what it
meant.2

     Several federal agencies that frequently interact with
citizens have launched aggressive customer service initiatives. We
endorse strengthening these initiatives--described below- -and
expanding them across the federal government.

     Internal Revenue Service.

     The IRS, the federal agency most citizens prefer to avoid,
might seem the least likely to develop a customer focus. But it's
working hard to do just that.

     Four years ago, the General Accounting Office (GAO) discovered
that IRS staff gave a wrong answer to one of every three taxpayers
who called with a question. Since then, the agency has improved its
accuracy rate to 88 percent.3 And--in a switch that signals a basic
change in attitude--agency employees now refer to taxpayers as
customers. In IRS pilot projects across the country, employees now
have authority to change work processes on their own in order to
improve productivity. Front-line workers also have more authority
to resolve issues one-on-one with individual taxpayers. The agency
is fostering competition among its tax return centers, based on
customer service levels and efficiency at handling the 1.7 billion
pieces of paper the IRS receives each year. Centers that perform
better get higher budgets and workloads, and employees get
promotion opportunities. The IRS was among the first government
agencies to use 800 numbers and automated voice mail systems to
increase customer access to information. Today, the IRS is
beginning to survey its customers.

***********************************
Customer Service Standards: IRS

As part of the National Performance Review, the IRS is publishing
customer service standards, including these:
    If you file a paper return, your refund due will be mailed
     within 40 days.
    If you file an electronic return, your refund due will be sent
     within 14 days when you specify direct deposit, within 21 days
     when you request a check.
    Our goal is to resolve your account inquiry with one contact;
     repeat problems will be handled by a Problem Resolution Office
     in an average of 21 days.
    When you give our tax assistors sufficient and accurate
     information and they give you the wrong answers, we will
     cancel related penalties.
    With your feedback, by 1995 IRS forms and instructions will be
     so clear that 90 percent of individual tax returns will be
     error-free.
***********************************

     In addition, some centers are serving customers in truly
astonishing ways. One anecdote makes the point. At the Ogden, Utah
Service Center--a winner of the Presidential Award for Quality--a
down-on-his-luck man hitchhiked from out of state to get his refund
check. As it turns out, this center doesn't issue checks. But IRS
employees there discovered that a disbursing center had sent a
check to the hitchhiker's old address and that it had been
returned. They ordered a new check sent to Ogden and helped the
hitchhiker make ends meet until the check arrived.

     In the end, the IRS's efforts could affect all of us, not only
as filers of tax returns but as taxpayers. If IRS forms are easier
to understand and use, more taxpayers might file on time. If the
IRS develops an image as a more effective, user-friendly agency,
more taxpayers might decide to file in the first place. A mere
1-percent increase in voluntary compliance would add $7 billion in
government revenue each year.4

Social Security Administration.

     Every year, more than 47 million Americans come in contact
with the Social Security Administration, which administers old-age
pensions, survivors' and disability insurance, and the supplemental
security income (SSI) program. The agency has 1,300 field offices
and receives 60 million calls a year on its toll-free lines. As the
nation's population ages, the agency faces an ever-increasing
workload. Recently, an inspector general's report showed that
customer satisfaction had fallen 4 years in a row due to longer
waiting times in offices and increasing problems in reaching
someone on the phone.5

     Fortunately, the Social Security Administration is
strengthening its customer orientation. When Hurricane Andrew
struck South Florida, where 367,000 people collect social security
and SSI, agency workers took steps to ensure that senior citizens
would know how to get their checks despite the devastation. Local
offices used television, radio, and loudspeaker trucks touring the
area with messages in English, Spanish, and Creole. The agency also
hired an airplane to tow a banner with SSA's toll-free 800
telephone number over the hard-hit Homestead area.

***********************************

Customer Service Standards: Social Security Administration

As part of its participation in the National Performance Review,
the Social Security Administration will publish nationally, and
post in each of its offices, these performance standards:
    You will be treated with courtesy every time you contact us.
    We will tell you what benefits you qualify for and give you
     the information you need to use our programs.
    We will refer you to other programs that may help you.
    You will reach us the first time you try on our 800 number.

************************************

     More generally, the Social Security Administration recently
adopted a customer-oriented strategic plan, which includes
objectives such as issuing social security numbers orally within 24
hours of an application. Besides pinpointing some of their
objectives as standards to reach today, SSA is publishing all 34 of
its objectives and seeking customer feedback on whether it set the
right targets for service.

     U.S. Postal Service. The Postal Service, which delivered 166
billion pieces of mail in 1992, has begun improving customer
service for a good reason: It has competition. While most people
still use the Postal Service to deliver first class mail, the use
of private delivery services and electronic mail is rising quickly.

***********************************
Customer Service  Standards: USPS
As part of its participation in the National Performance Review,
the USPS will expand its plans to display these standards in post
offices:
 Your first class mail will be delivered anywhere in the United
States within 3 days.  Your local first class mail will be
delivered overnight.
 You will receive service at post office counters within 5
minutes.  You can get postal information 24 hours a day by calling
a local number.
************************************

     The Postal Service has decided to meet its competition
head-on. Using focus groups, the agency identified service areas
where its customers wanted improvement. It found that people wanted
shorter waiting lines at counters, better access to postal
information, and better responses to their complaints. Using these
standards to measure performance, the agency set a long range goal
of "100-percent satisfaction" and developed a customer satisfaction
index to measure progress toward it.

     The agency also is providing incentives for employee
performance: In cooperation with two postal unions, managers now
use customer satisfaction data to help determine employee bonuses.


     Action: The President should issue  a directive requiring all
federal agencies that deliver services to the public to create
customer service programs that identify and survey customers. The
order will establish the following standard for quality: Customer
service equal to the best in business.6

     The President's directive will lay out principles to govern
the provision of customer services. For example, organizations
should:

    survey their customers frequently to find out what kind and
     quality of services they want;
    post standards and results measured against them;
    benchmark performance against "the best in business";
    provide choices in both source of service and delivery means;
    make information, services, and complaint systems easily
     accessible;  handle inquiries and deliver services with
     courtesy;
    provide pleasant surroundings for customers; and
    provide redress for poor services.

     The order will direct all federal agencies that deal with the
public to:

    immediately identify who their customers are;
    survey their customers on services and results desired, and
     on satisfaction with existing services;
    survey front-line employees on barriers to, and ideas for,
     matching the best in business;
    in 6 months, report results on these three steps to the
     President; and
    develop and publish a customer service plan--including an
     initial set of customer service standards--within 1 year.

     The customer service plans will address the need to train
front-line employees in customer service skills. They will also
identify companies that agencies will use to judge how they compare
to the "best in business." The directive will ask cabinet
secretaries and agency heads to use improvement in customer
satisfaction as a primary criterion in judging the performance of
agency managers and front-line employees.

Action: For voluntary customer surveys, the Office of Management
and Budget will delegate its survey approval authority under the
Paperwork Reduction Act to departments that are able to comply with
the act.7

     The public's input is crucial to improving customer service.
But current law gives the Office of Management and Budget (OMB)
power to decide on virtually all agency requests to solicit
information from the public (OMB can delegate this authority). This
law was designed to minimize onerous paperwork burdens the federal
government imposes on businesses and citizens. But it also
minimizes the number of times agencies ask customers about their
needs. It often slows agencies down so much that they abandon the
idea of doing a survey altogether.

     For many agencies, customer surveys are the single most useful
way to measure performance. If OMB has to approve every request for
a customer survey, however, neither the directive described above
nor the Government Performance and Results Act, which the President
signed in August 1993, will work. Citizens do not like to be forced
to fill out forms by their government. But most Americans would be
pleased to receive a voluntary survey asking how their post office
or social security office could improve its customer service.

     We propose to delegate approval of voluntary customer surveys
to departments with the ability to comply with the law, and ensure
that they create rapid approval processes so bottlenecks don't
develop at lower levels.

     Customer-driven programs rarely cost more than others; indeed,
productivity gains in past federal experiments have more than
offset cost increases. At the Ogden Service Center, the IRS
office's new approach helped workers process 5 percent more tax
returns. When organizations shift their focus to customers, they
act like Avis--they try harder.

Crossing Agency Boundaries

     Unfortunately, even agencies that try harder find very real
obstacles in the way of putting their customers first. Perhaps the
worst is Washington's organizational chart. Time and again,
agencies find it impossible to meet their customers' needs, because
organizational boundaries stand in the way.

     Sometimes, programs housed in the same agency are only
tangentially related. While most Agriculture Department programs
relate to food, for instance, its customers range from farmers who
grow it to poor children whose families use food stamps. At other
times, programs dealing with the same customers are located in a
dozen different agencies. Rather than make people jump over
organizational boundaries on their own, we must remove the
boundaries at the point of customer contact. We must make the
delivery of services "seamless."

      The traditional solution is to shuffle the organizational
chart. But in Washington, such proposals set off monumental turf
wars between agencies in the executive branch, and between
committees in Congress. After years of struggle, one or two
agencies are reorganized -- or a new department is created.
Meanwhile, the nation's problems keep changing, so the new
structure is soon out of date.

      In a rapidly changing world, the best solution is not to keep
redesigning the organizational chart; it is to melt the rigid
boundaries between organizations. The federal government should
organize work according to customers' needs and anticipated
outcomes, not bureaucratic turf. It should learn from America's
best-run companies, in which employees no longer work in separate,
isolated divisions, but in project- or product-oriented teams.

      To do so, the government must make three changes. It must
give federal workers greater decision making authority, allowing
them to operate effectively in cross-cutting ventures. It must
strip federal laws of prohibitions against such cooperation. And it
must order agencies to reconsider their own regulations and
tradition-bound thinking. For example, the Forest Service found
that 70 percent of its regulatory barriers to new, creative ways of
doing business were self-imposed.8

      Despite these barriers, some noteworthy initiatives are
underway. Rural Development Councils, under the Agriculture
Department's direction, work with several federal departments as
well as states and localities to better coordinate rural aid
programs.  At the Federal Aviation Administration (FAA), a systems
manager helps coordinate the activities of the FAA, Defense
Department, international aviation organizations, and various
private interests on matters involving satellites, data links, and
traffic flow management.9

      We should bring the same approach to other parts of
government. The following examples illustrate the problems we face
and the solutions we must create.

Action: Create a system of competitive, one-stop, career
development centers open to all Americans.10

      Our nation's economic future depends on the quality of our
workforce. Our individual futures, too, depend on whether we have
marketable, flexible skills with which to adapt to the changing
demands of new technologies. In a country where the average worker
changes jobs seven times in a lifetime, those skills are more than
desirable; they are crucial.

      Our government invests heavily in education and training.
Together, 14 separate government departments and agencies invest
$24 billion a year, through 150 employment and training programs.11
But we do not invest this money well enough. For one thing, our
system is organized for the convenience of those who deliver
services, not those who use them. For another, the system lacks
competition and incentives for improvement.  "The United States has
a worldwide reputation for providing its youth extensive
opportunity to attend college," the General Accounting Office noted
recently. "However, our country falls short in employment
preparation of many noncollege-youth." Unlike our competitors, GAO
said, we have no national policy to systematically prepare
non-college educated youth for jobs.12

      Our system is badly fragmented. Each service -- from job
referral to retraining -- is designed for different people, with
different rules, regulations, and reporting requirements.
Bewildered, often dispirited, job seekers must trudge from office
to office, trying to fit themselves into a program. When they find
a program, they may find that they aren't eligible, that it's all
filled up, or that the classroom is across town.

     American workers deserve a better deal. Nowhere on the
government reinvention front is action more urgently needed or are
potential rewards greater. We envision a new workforce development
system, focused on the needs of workers and employers. We will
organize it around the customer -- whether an individual or a
business -- then provide that customer with good information about
the performance of different providers and plenty of choices. If we
do this, career centers and training providers will have to compete
for their customers' business, based on the quality of their
services.

     Specifically, we propose one-stop career management centers
across the country, open to all Americans -- regardless of race,
gender, age, income, employment experience, or skills. (One-stop
centers are also a key feature of the Workforce Investment Strategy
the Labor Department is developing.) Our centers would offer skills
assessment, information on jobs, access to education and training
-- everything people needed to make career decisions. The centers
would be linked to all federal, state, and local workforce
development programs, and to many private ones (which are, after
all, the source of most job-training money). Core services such as
labor market information and job search help would be offered free.
Some centers might offer other services, from comprehensive testing
to career counseling and workshops, on a fee-for-service basis.

     These centers would help their customers get access to funds
from any of the 150 programs for which they qualified. To make this
possible, the federal government would eliminate or waive many
rules and regulations that keep our workforce development programs
separate. The centers would also be allowed to generate their own
revenues, including fees collected from employers and employees
would could afford to pay.  Any organization, public or private,
would be allowed to seek a charter to operate one or more one-stop
career centers. The process would be performance-driven, with
contracts renewed only if centers met customers' demands. The
federal government would establish national chartering standards
for the centers, but states and local employment boards would
decide which organizations met the standards.

     Today, local organizations such as U S Employment Service and
Service Delivery Areas get most of their federal funds almost as a
matter of entitlement. They account for the money, but we do not
hold them accountable for whether they spend it effectively. We
would make funding for these new centers more competitive, opening
the process to public and private, nonprofit and for-profit,
entities.

      We would judge these centers in part by how many people
sought help at them -- on the theory that centers attracting the
most customers were clearly doing something right. But we would
focus as well on what happened after the customers left. Did they
enroll in meaningful training programs? Did they find jobs? Did
they keep their jobs? Did they increase their incomes? Finally, we
would give customers the necessary information to decide the same
thing for themselves: Which training program would meet their needs
best?

     We believe that the central problem in the Employment Service
is not the line workers, but the many rules and regulations that
prevent them from doing their jobs. Waiver of these antiquated
rules will free up these workers to perform well. In order for
state Employment Services to compete on a level playing field --
particularly after the negative effects of the last decade of
spending cuts and over-regulation -- line workers must be given the
opportunity to retool. The Labor Department should ensure that they
receive the necessary training to enable them to participate in the
process. The biggest single barrier to creating an integrated
system of one-stop career centers is the fragmented nature of
federal funds. The 150 federal programs have different rules,
different reporting requirements, even different fiscal years. To
synchronize these -- and to break down the walls between
categorical programs -- the National Economic Council should
convene a Workforce Development Council, with members from the
Departments of Labor, Education, and Health and Human Services; the
Office of Management and Budget; and other departments and agencies
with employment and training programs. This council should
standardize fiscal and administrative procedures, develop a
standard set of terms and definitions between programs, develop a
comprehensive set of results-oriented performance standards, and
improve the qualitative evaluation of program performance.

Action: The President shoud issue a directive that requires
collaborative efforts across the government to empower communities
and strengthen families.13

     At Vice President Gore's recent conference on family policy in
Nashville, experts agreed that effective family policy requires new
approaches at the federal, state, and local levels. We should stop
dividing up families' needs into health, education, welfare, and
shelter, each with its own set of agencies and programs, many of
which contradict one another and work at cross-purposes. Instead,
across all levels of government, we need collaborative,
community-based, customer-driven approaches through which providers
can integrate the full network of services.

     For instance, we spend about $60 billion a year on the
well-being of children. But we have created at least 340 separate
programs for families and children, administered by 11 different
federal agencies and departments.14 Thus, a poor family may need to
seek help from several departments--Agriculture for food stamps,
Housing and Urban Development for rental support, Health and Human
Services for health care and chasing down dead-beat parents. For
each program, they will have to visit different offices, learn
about services, fill out forms to establish eligibility--and wait.

     The system is fragmented and illogical. In Texas, where the
immunization rate among poor children is about 30 percent, the
state Health Department sought permission to have nurses who run
the Agriculture Department's Women, Infants and Children
supplemental food program also give immunization. The Agriculture
Department said no--unless Texas developed an elaborate cost
allocation plan. Consequently, mothers and children will have to
continue visiting more than one agency.15

     A few years ago, Governing magazine described a teenage girl
who was pregnant, had a juvenile record and was on welfare. Between
the three problems, she had more than six caseworkers--each from a
different agency. As one put it: "The kid has all these people
providing services, and everybody's doing their own thing and
Tasha's not getting better. We need to have one person who says,
'Now look, let's talk about a plan of action for Tasha.'"16
President Clinton's directive will help remove obstacles that
agencies face in trying to serve Tasha and others like her.

Action: The President should issue a directive and propose
legislation to reconstitute the Federal Coordinating Council for
Science, Engineering, and Technology as the National Science and
Technology Council, giving it a broader role in setting science and
technology policy.17

     Progress in science and technology is a key ingredient of
national economic success. President Clinton's A Vision of Change
for America, released in February, cites studies showing that
"investments in research and development (R&D) tend to be the
strongest and most consistent positive influence on productivity
growth."18 In an increasingly competitive world economy, the
American people need the best possible return on federal R&D
investments.

     The Federal Coordinating Council for Science, Engineering, and
Technology (FCCSET) is a White House-managed team that helps set
policy for technology development. With representatives from more
than a dozen agencies, it develops interagency projects, such as
biotechnology research and the high-performance computing
initiative. Unfortunately, FCCSET lacks the teeth to set
priorities, direct policy, and participate fully in the budget
process. It can't compel agencies to participate in its projects,
nor can it tell agencies how to spend funds. Its six funded
projects will account for just  16 percent of Washington's $76
billion R & D budget in 1994. At a time of declining federal
resources, experts in business, academia, and government recognize
the need for one-stop shopping for science and technology policy.

     A new National Science and Technology Council would direct
science and technology policy more forcefully, and would streamline
the White House's advisory apparatus by combining the functions of
FCCSET, the National Space Council, and the National Critical
Materials Council.

Action: The President should issue a directive to give the Trade
Promotion Coordinating Committee greater authority to control
federal export promotion efforts.19

     Unlike most of our economic competitors, the United States has
no national export strategy. Our export programs are fragmented
among 19 separate organizations- -including the Agriculture and
Commerce Departments and the Small Business Administration. The
U.S. and Foreign Commercial Service, in Commerce's International
Trade Administration, is the lead agency for trade promotion
overseas. But dozens of other entities--many within Commerce--also
have trade promotion roles.

     Our export programs provide little benefit to all but our
nation's largest businesses. The economic implications of such
selective assistance are serious. Exports are among our most
effective job-creating tools. They create about 20,000 new jobs for
every $1 billion in exports. Thousands of small and mid-sized
companies make products attractive for overseas markets, but are
discouraged by high transaction costs and a lack of information.
According to trade experts, the United States may be the "world's
biggest export underachiever."20

     The President's directive will give the Trade Promotion
Coordinating Committee (TPCC), chaired by the Commerce Secretary
and including representatives from 19 departments, agencies, and
executive offices, broader authority to create performance measures
and set allocation criteria for the nation's export promotion
programs. Working with the National Economic Council, TPCC will
ensure that such programs better serve the exporting community.

Action: The President should issue a directive to establish
ecosystem management policies across the government.21

     "For too long, contradictory policies from feuding agencies
have blocked progress, creating uncertainty, confusion,
controversy, and pain throughout the region," President Clinton
declared at the Forest Conference held in Portland, Oregon in April
1993. Shortly thereafter, the President announced his Forest
Plan--a proactive approach to ensuring a sustainable economy and a
sustainable environment through ecosystem management. We recommend
extending the concept of ecosystem management across the federal
government.

     Although economic growth has strained our ecological systems,
our government lacks a coordinated approach to ecosystem
management. A host of agencies have jurisdiction over individual
pieces of our natural heritage. The Bureau of Land Management
oversees more than 60 percent of all public lands; the Forest
Service manages our national forests and grasslands; the Fish and
Wildlife Service manages our National Wildlife Refuge System; the
National Park Service oversees the national parks; the
Environmental Protection Agency implements laws to regulate air and
water quality; the National Oceanic and Atmospheric Administration
(NOAA) manages marine resources; and various other agencies run
programs that affect the environment. Different agencies, with
jurisdictions over the same ecosystem, do not work well together.
Even within the same agency, bureaus fight one another.

     At the local level, a hodge podge of government agencies
control activities that affect the environment. Consider, for
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.22

     The White House Office on Environmental Policy has convened an
interagency task force of appropriate assistant secretaries to
develop and implement cross-agency ecosystem management projects.
The Office of Management and Budget will review the plans as part
of the fiscal 1995 budget process. In 1994, the assistant
secretaries will establish cross-agency teams to develop initial
ecosystem management plans for implementation in fiscal year 1995.
Also in 1994, the President should issue a directive that will
declare sustainable ecosystem management across the federal
government.

Action: The President should create a Federal Coordinating Council
for Economic Development.23

     The federal government has no coherent policy for regional
development and community dislocation. Instead, it offers a
fragmented and bureaucratic system of seven programs to assist
states and localities. The major programs are the Commerce
Department's Economic Development Administration, the Housing and
Urban Development Department's Community Development Block Grant
program, and the Agriculture Department's Rural Development
Administration and Rural Electrification Administration. The
Defense Department, Tennessee Valley Authority, and Appalachian
Regional Commission run smaller programs. Thus, states and
communities must turn to many different agencies and programs,
rather than a single coordinated system. Communities find it hard
to get help, and the dispersion of effort limits overall funding.

     Washington's economic and regional development activities
should be reconfigured to suit its customers--states and
communities. We propose a Federal Coordinating Council for Economic
Development, comprising the appropriate cabinet secretaries and
agency heads, to coordinate such activities and provide a central
source of information for states and localities. The council will
provide a unifying framework for economic and regional development
efforts, develop a governmentwide strategic plan and unified budget
to support the framework, prevent duplication in the various
programs, and assess appropriate funding levels for the agencies
involved.

Action: Eliminate statutory restrictions on cross-agency activities
that are in the public interest.24

     A series of legislative restrictions make it particularly
difficult to pursue solutions to problems that span agency
boundaries. For instance, to put together a working group on an
issue that cuts across agency lines, one agency has to fund all
costs for the group. Several agencies cannot combine their funds to
finance collaborative efforts. Rather than discourage cross-agency
operations, the federal government should encourage them. Congress
should repeal the restrictions that stand in the way of
cross-agency collaboration, and refrain from putting future
restrictions in appropriations bills. In addition, Congress should
modify the Intergovernmental Personnel Act to give cabinet members
and those working for them greater authority to enter into
cooperative agreements with other federal, state, and local
agencies.

Chapter-2-Putting-Customers-First Step-2:---Making-Service-Organizations-
Compete

     While our federal government has long opposed private
monopolies, it has deliberately created public ones. For instance,
most federal managers must use monopolies to handle their printing,
real estate, and support services. Originally, this approach was
supposed to offer economies of scale and protect against
profiteering and corruption. In an earlier time--of primitive
recordkeeping, less access to information, and industrial-era
retail systems--it may have offs absorb them. A monopoly's managers
don't even know when they are providing poor service or failing to
take advantage of new, cost-cutting technologies, because they
don't get signals from their customers. In contrast, competitive
firms get instant feedback when customers go elsewhere. No wonder
the bureaucracy defends the status quo, even when the quo has lost
its status. monopoly's managers don't even know when they are
providing poor service or failing to take advantage of new,
cost-cutting technologies, because they don't get signals from
their customers. In contrast, competitive firms get instant
feedback when customers go elsewhere. No wonder the bureaucracy
defends the status quo, even when the quo has lost its status.


************************************

The Air Combat Command--Flying High With Incentives and Competition

     The military: the most conservative, hierarchical and
traditional branch of the government and the bureaucracy least
likely to behave like a cutting-edge private company, right? Wrong.

     One of Washington's most promising reinvention stories comes
from the Air Combat Command. With 175,000 employees at 45 bases
across the country, the ACC owns and operates all of the Air
Force's combat aircraft. Says its commander, General John Michael
Loh, "We manage big, but we operate small."

     How? The ACC adopted overall performance standards, called
quality performance measures. Each ACC unit decides for itself how
to meet them. General Loh then provides lots of incentives and a
healthy dose of competition.

     The most powerful incentive is the chance to do creative work,
General Loh told the National Performance Review's Reinventing
Government Summit in Philadelphia. For instance, the Air Combat
Command allows maintenance workers to fix parts that otherwise
would have been discarded or returned to the depot for repair
"under the thesis that our people aren't smart enough to repair
parts at the local level." The results have been astonishing. Young
mechanics are taking parts from B-1s, F-15s, and F-16s- -some of
which cost $30,000 to $40,000--and fixing them for as little as
$10. The savings are expected to reach $100 million this year. ACC
managers have an incentive, too: Because they control their own
operating budgets, these savings accrue to their units.

     General Loh instilled competition by using benchmarking, which
measures performance against the ACC standard and shows commanders
exactly how their units compare to others. The ACC also compares
its air wings to similar units in the Army, Navy, and Marine Corps;
units in other Air forces; and even the private sector. Before
competition, the average F-16 refueling took 45 minutes. With
competition, teams cut that time to 36 minutes, then 28.

     The competition is against a standard, not a fellow ACC unit.
"If you meet the standard, you win," says General Loh. "There
aren't 50 percent winners and 50 percent losers. We keep the
improvement up by just doing that--by just measuring. If it doesn't
get measured, it doesn't get improved."

*****************************************

     As for economies of scale, the realities have changed. The
philosophy when these procurement systems were set up was that if
the government bought in bulk, costs would be lower, and taxpayers
would get the savings. But it no longer works that way.

     As we discuss more fully in chapter 1, we no longer need to
buy in bulk to buy cheaply. The last decade has brought more and
more discount stores, which sell everything from groceries to
office supplies to electronic equipment at a discount. The Vice
President heard story after story from federal workers who had
found equipment and supplies at discount stores--even local
hardware stores--at two-thirds the price the government paid.

**********************************

"It is better to abolish monopolies in all cases than not to do it
in any."
Thomas Jefferson
Letter to James Madison, 1788

***********************************

     Not all federal operations should be forced to compete, of
course. Competition between regulatory agencies is a terrible idea.
(Witness the regulation of banks, which can decide to charter with
the state or federal government, depending on where they can find
the most lenient regulations.) Nor should policy agencies compete.
In the development of policy, cooperation between different units
of government is essential. Competition creates turf wars, which
get in the way of creating rational policies and programs. It is in
service delivery that competition yields results--because
competition is the one force that gives public agencies no choice
but to improve.

The Government Printing Office

     Perhaps the oddest federal monopoly is the Government Printing
Office. In 1846, Congress established a Joint Committee on Printing
(JCP) to promote efficiency and protect agencies from profiteering
and abuse by commercial printers. The JCP sets standards for all
agency activities--including printing, photocopying, and color and
paper quality. When the Naval Academy wants to use parchment paper
for graduation certificates, for instance, the JCP must approve the
decision.

     The JCP also supervises the Government Printing Office, the
mandatory source of most government printing--a whopping $1 billion
a year. Along with printing federal publications, the GPO must
approve all privately contracted government printing jobs. This
even includes printing orders less than $1,000--of which there were
270,000 in 1992. Simply for processing orders to private companies,
GPO charges 6 to 9 percent.

     Such oversight doesn't work in an age of computers and
advanced telecommunications. Desktop publishing has replaced the
traditional cutting and pasting with computer graphics and
automated design. In private business, in-house printing
flourishes. Small printing companies specialize in strategic market
niches.

*******************************

The "government look"

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

***********************************

Action: Eliminate the Government Printing Office's monopoly.25

     For all executive branch printing, Congress should end the
JCP's oversight role. Congressional control of executive branch
printing may have made sense in the 1840s, when printing was in its
infancy, the government was tiny, there was no civil service, and
corruption flourished. But it makes much less sense today. We want
to encourage competition between GPO, private companies, and
agencies' in-house publishing operations. If GPO can compete, it
will win contracts. If it can't, government will print for less,
and taxpayers will benefit.

The General Services Administration

     Among government's more cumbersome bureaucracies is the
General Services Administration (GSA), which runs a host of federal
support services--from acquiring and managing 250 million square
feet of office space to managing $188 billion of real estate, from
brokering office furniture and supplies to disposing of the
government's car and truck fleets.

     With its monopoly, GSA can pass whatever costs it wants on to
tenants and customers. Often it rents the cheapest space it can
find, then orders federal agencies tooccupy it- -regardless of
location or quality. (Occasionally an agency with enough clout
refuses, and GSA ends up paying to rent empty space.) And this is
not all GSA's fault. Frequently, the agency is hemmed in by federal
budget and personnel rules. GSA admits that many of its customers
are unhappy. It has already permitted some agencies to make their
own real estate deals. We propose to open that door farther.

Action: The President should end GSA's real estate monopoly and
make the agency compete for business. GSA will seek legislation,
revise regulations, and transfer authority to its customers,
empowering them to choose among competing real estate management
enterprises, including those in the private sector. 26

     Specifically, GSA will create one or more property
enterprises, with separate budgets.  The enterprises will compete
with private companies--real estate developers and rental firms--to
provide and manage space for federal agencies.  Agencies, in turn,
will lease general purpose space and procure, at the lowest cost,
real property services--acquisition, design, management, and
construction.  Such competition should lower costs for federal
office space.

     All other federal agencies with real estate holdings,
including the Defense and Veterans Affairs Departments, will adopt
similarly competitive approaches.

********************************
Dialing for Dollars:  How Competition Cut the  Federal Phone Bill

     In the mid 1980s, a long-distance call on the federal system,
which the General Services Administration manages, cost 30 to 40
cents a minute, the "special government rate." AT&T's regular
commercial customers normally paid 20 cents a minute. The Defense
Department, citing GSA's rates, would not use the government-wide
system.

     Spurred by complaints about high costs and the loss of
customers, GSA put the government's contract up for bid among
long-distance phone companies. It offered 60 percent of the
business to the winner, 40 percent to the runner up.

     Today, the government pays 8 cents a minute for long-distance
calls. More agencies- -including the Defense Department--are using
the system. And taxpayers are saving a bundle.
*********************************

Competition in Support Services

     Every federal agency needs "support services"--accounting,
property management, payroll processing, legal advice, and so on.
Currently, most managers have little choice about where to get
them; they must use what's available in-house. But no manager
should be confined to an agency monopoly. Nor should agencies
provide services in-house unless the services can compete with
those of other agencies and private companies.

     Over the past decade, a few federal entrepreneurs have created
support service enterprises, which offer their expertise to other
agencies for a fee. Consider the Center for Applied Financial
Management, in the Treasury Department's Financial Management
Service. A few years ago, Treasury officials realized that many
agencies reporting to their central accounting system had problems
meeting the Treasury's reporting standards. Rather than send nasty
letters, they decided to offer help.

     The Treasury established a consulting business. The center
includes a small group of people who offer training, technical
assistance, and even a system for accounting programs so that
agencies need not own the software. The center markets its services
to government agencies, aggressively and successfully, competing
with accounting and consulting firms for agency business and
dollars. Its clients include the Small Business Administration and
the Nuclear Regulatory Commission. Already, the center's work has
reduced the errors in reports submitted to the Treasury and reduced
agencies' accounting costs. Opened 2 years ago, the center plans to
be profitable by 1995; if not, the Treasury will close it.

Action: The administration should encourage operations of one
agency to compete for work in other agencies.27

     We want to expand the approach exemplified by Treasury's
Center for Applied Financial Management throughout government. Just
as in business, competition is the surest way to cut costs and
improve customer service.

Competing with the Private Sector

     Forcing government's internal service bureaus to compete to
please their customers is one strategy. Forcing government's
external service organizations to do the same is another. In a time
of scarce public resources, we can no longer afford so many service
monopolies. Many federal organizations should begin to compete with
private companies. Consider the National Oceanic and Atmospheric
Administration.

Action: The National Oceanic and Atmospheric Administration (NOAA)
will experiment with a program of public-private competition to
help fulfill its mission.28

     NOAA, a part of the Commerce Department, maintains a fleet of
ships to support its research on oceans and marine life and its
nautical charting. But its fleet is reaching the end of its
projected life expectancy. And even with the fleet, NOAA has
consistently fallen far short of the 5,000 days at sea that it
claims to need each year to fulfill its mission. NOAA faces a basic
question--whether to undertake a total fleet replacement and
modernization plan, estimated to cost more than $1.6 billion in the
next 15 years, or charter some privately owned ships.

     The experience of the U.S. Army Corps of Engineers, which
contracts out 30 to 40 percent of its ocean floor charting to
private firms, shows that the private sector can and will do this
kind of work. Competition among private companies for these
services also might reduce costs.

Action: The Defense Department will implement a comprehensive
program of competitive contracting non-core functions
competitively.29

     The Defense Department is another agency in which necessity is
becoming the mother of invention. Facing a swiftly falling budget,
the department literally can't afford to do things in its usual
way--especially when private firms can perform DOD's non-core
functions better, cheaper, and faster. Functions such as command,
deployment, or rotation of troops cannot be contracted, of course.
But data processing, billing, payroll, and the like certainly can.

     Private firms--including many defense contractors--contract
out such functions. General Dynamics, for instance, has contracted
with Computer Services Corporation to provide all its information
technology functions, data center operations, and networking. But
at the Pentagon, a bias against out-sourcing remains strong. Only
a commitment by senior leaders will overcome that bias.

     In addition to the cultural barriers at the Pentagon, numerous
statutory roadblocks exist. In section 312 of the fiscal year 1993
DOD Authorization Act, for example, Congress stopped DOD from
shifting any more in-house work to contractors. Another law
requires agencies to obtain their construction and design services
from the Army Corps of Engineers or Naval Facilities Engineering
Command. The administration should draft legislation to remove both
of these roadblocks. It will also make contracting easier by
rescinding its orders on the performance of commercial activities
and issuing a new order, to establish a policy supporting the
acquisition of goods and services in the most economical manner
possible. OMB will review Circular A-76, which governs contracting
out, for potential changes that would simplify the contracting
process and increase the flexibility of managers.

Action: Amend the Job Training Partnership Act to authorize public
and private competition for the operation of Job Corps Civilian
Conservation Centers.30

     The Labor Department's Employment and Training Administration
(ETA) supervises 108 Job Corps Centers, which provide training and
work experience to poor youth. The ETA contracts with for-profit
and non-profit corporations to operate 78 of the centers. The
department has long sought to contract out the other 30, now run by
the Agriculture and Interior Departments as Civilian Conservation
Centers. But Congress under the Job Training Partnership Act, has
passed legislation barring such action.

     Because they are insulated from competition, CCC managers have
few incentives to cut costs and boost quality. For the past 5
years, average per-trainee costs at a CCC have run about $2,000
higher than at centers run by contractors. Competition would force
the Interior and Agriculture Departments to operate the rural
centers more efficiently--or risk losing their operations to
private competitors.

Truth in Budgeting

     If federal organizations are to compete for their customers,
they must do so on a level playing field. That means they must
include their full costs in the price they charge customers.
Businesses do this, but federal agencies hide many costs in
overhead, which is paid by a central office. Things like rent,
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.

     With a new accounting system that recognizes full costs--and
assigns rent, utilities, staff support, retirement benefits, and
all other costs to the unit that actually incurs them--we can
determine the true costs of what government produces. At that
point, we can compare costs across agencies, make agencies compete
on a level playing field, and decide whether we are getting what we
pay for.

Action: By the end of 1994, the Federal Accounting Standards
Advisory Board will issue a set of cost accounting standards for
all federal activities. These standards will provide a method for
identifying the true unit cost of all government activities.31

     Some government agencies have already moved in this direction.
Others have gone even further. The Defense Department is
experimenting with what it calls a Unit Cost Budget. It calculates
the costs of delivering a unit of service, then budgets for the
desired service levels.

     The Defense Logistics Agency (DLA) began this experiment,
hoping to ease pressures to contract out its supply depots to
private companies. DLA examined the cost of receiving and
delivering shipments, then attached a dollar figure to each item
received and another to each item delivered. All money was then
appropriated according to the number of items shipped or received.
Line items disappeared, incentives grew. The more boxes a depot
shipped or received, the more money that depot brought in. For the
first time, DLA could calculate its true costs, compare those of
various installations, and pinpoint problems. This approach, which
enables managers to set productivity targets, is now spreading to
other military installations.

Chapter-2-Putting-Customers-First Step-3:-Creating-Market-Dynamics

     Not all public activities should be subject to competition, as
noted above. In the private sector, we call these utilities and
regulate them to protect the consumer. They are run in a
businesslike fashion, and they respond to the market. (For
instance, they have stockholders and boards, and they can borrow on
the capital markets.) They simply don't face competition.

     Many governments, including our federal government, do
something very similar. They create government-owned corporations
to undertake specific tasks. The Postal Service and Tennessee
Valley Authority are two examples. Such corporations are free from
many restrictions and much of the red tape facing public agencies,
but most of them remain monopolies--or, as with the Postal Service,
partial monopolies.

     At other times governments subject public organizations to
market dynamics, stimulate the creation of private enterprises, or
spin off public enterprises to the private sector. To get the best
value for the taxpayer's dollar, the federal government needs to
use these options more often.

     Consider the National Technical Information Service (NTIS), a
once-failing agency in the Commerce Department that turned itself
around in a brief year's time. Established to disseminate federally
funded scientific and technical information, NTIS was, until
recently, not meeting its mission. The agency, which receives no
congressional appropriations, was suffering serious financial
problems, selling fewer documents each year to its mostly private
sector customers, and charging higher and higher prices on those it
did sell.

     Commerce--not surprisingly--considered abolishing the agency.
A year earlier, the department's inspector general had concluded
that NTIS's reported earnings of $3.7 million were vastly
overstated, that it suffered $674,000 in additional operating
losses in 1989, and that its procedures in handling such losses and
cash shortfalls violated government accounting principles and
standards.

     Commerce instead decided to turn the agency around. The effort
worked. NTIS's revenues and sales are both up. Why? Because the
agency was forced to respond to its customers' unhappiness. NTIS
reduced the turnaround time on its orders, cut complaints about
incorrect orders, and dramatically slashed the percentage of
unanswered phone calls. Consequently, most business customers who
turned away in the 1980s have returned. NTIS's turnaround shows
what can happen when public organizations face the pressure of
customer demands.32

     Other agencies may require a structural change to enhance
their customer service. Because it's run as a public agency, for
instance, the Federal Aviation Administration's air traffic control
(ATC) system is constantly hamstrung by budget, personnel, and
procurement restrictions. To ensure the safety of those who fly,
the FAA must frequently modernize air traffic control technology.
But this has been virtually impossible, because the FAA's money
comes in annual appropriations. How can the FAA maintain a massive,
state-of-the-art, nationwide computer system when it doesn't know
what its appropriation for next year or the years beyond will be?

     As a result, the 10-year National Airspace Plan, begun in
1981, is now 10 years behind schedule and 32 percent over budget.
Federal personnel rules aggravate the problems: The FAA has trouble
attracting experienced controllers to high-cost cities. With no
recent expansion, the system lacks the capacity to handle all air
travel demands. Consequently, airlines lose about $2 billion
annually in costs for additional personnel, equipment, and excess
fuel. Passengers lose an estimated $1 billion annually in delays.

     America needs one seamless air traffic control system from
coast to coast. It should be run in a businesslike fashion--able to
borrow on the capital markets, to do long-term financial planning,
to buy equipment it needs when it needs it, and to hire and fire in
reasonable fashion. The solution is a government-owned corporation.

Action: Restructure the nation's air traffic control system into a
corporation.33

     "There is an overwhelming consensus in the aviation community
that the ATC system requires fundamental change if aviation's
positive contribution to trade and tourism is to be sustained," one
study concluded earlier this year.34

     The ATC's problems can't be fixed without a major
reorganization. Under its current structure, the system is subject
to federal budget, procurement, and personnel rules designed to
prevent mismanagement and the misuse of funds. The rules, however,
prevent the system from reacting quickly to events, such as buying
the most up-to-date technology. In its recent report, Change,
Challenge, and Competition, the National Commission to Ensure a
Strong Competitive Airline Industry, (chaired by former Virginia
Governor Gerald Baliles), recommended the creation of an
independent federal corporate entity within the Transportation
Department. We agree.

     We should restructure the ATC into a government-owned
corporation, supported by user fees and governed by a board of
directors that represents the system's customers. As customer use
rises, so will revenues, providing the funds needed to answer
rising customer demands and finance new technologies to improve
safety. Relieved of its operational role, the FAA would focus on
regulating safety. With better, safer service, we all would
benefit. This approach has already worked in Great Britain, New
Zealand, and other countries.

Action: The General Services Administration will create a Real
Property Asset Management Enterprise, separating GSA's
responsibility for setting policy on federally owned real estate
from that of providing and managing office space.35

     In asset management, too, government could take a few lessons
from business. We must begin to manage assets based on their rates
of return. A good place to start is in the General Services
Administration.

     The federal government owns assets--land, buildings,
equipment--that are enormous in number and value. But it manages
them poorly. Like several other agencies, GSA wears two hats: with
one, it must provide office space to federal agencies. With the
other, it serves as manager and trustee of huge real estate
holdings for American taxpayers. It cannot do both--at least not
well. Should it maximize returns for taxpayers by selling a
valuable asset? Or, as the office space provider, should it require
an agency to occupy one of its own buildings when less expensive
leased space is available?

     GSA will create a Real Property Asset Management Enterprise,
solely responsible for managing federally owned real estate to
optimize the highest rate of return for taxpayers, while competing
with the private sector and better serving tenants' needs.

Action: The Department of Housing and Urban Development will turn
over management of its "market rate" rental properties and mortgage
loans to the private sector.36

     The Department of Housing and Urban Development has a growing
workload of problem multi-family loans and foreclosed properties.
In addition, restrictive rules and outdated practices hamper its
management of these assets. Rather than more staff, HUD needs a new
approach.

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


Chapter-2-Putting-Customers-First Step-4:---Using-Market-Mechanisms--To-
Solve-Problems

     Government cannot create a program for every problem facing
the nation. It cannot simply raise taxes and spend more money. We
need more than government programs to solve our problems. We need
governance.

     Governance means setting priorities, then using the federal
government's immense power to steer what happens in the private
sector. Governance can take many forms: setting regulations,
providing financial incentives, or ensuring that consumers have the
information they need to drive the market.

     When the Roosevelt administration made home ownership a
national priority, the government didn't build millions of homes or
distribute money so families could buy them. Instead, the Federal
Housing Administration helped to create a new kind of mortgage
loan. Rather than put down 50 percent, buyers could put down just
20 percent; rather than repay mortgages in 5 years, borrowers could
stretch the payments over 30 years. The government also helped to
create a secondary market for mortgages, helping even more
Americans buy homes.

     As we reinvent the federal government, we, too, must rely more
on market incentives and less on new programs.

Worker Safety and Health

     Today, 2,400 inspectors from the Occupational Safety and
Health Administration (OSHA) and approved state programs try to
ensure the safety and health of 93 million workers at 6.2 million
worksites. The system doesn't work well enough. There are only
enough inspectors to visit even the most hazardous workplace once
every several years. And OSHA has the personnel to follow up on
only 3 percent of its inspections.

Action: The Secretary of Labor will issue new regulations for
worksite safety and health, relying on private inspection companies
or non-management employees.37

     Government should assume a more appropriate and effective
role: setting standards and imposing penalties on workplaces that
don't comply. In this way, OSHA could ensure that all workplaces
are regularly inspected, without hiring thousands of new employees.
It would use the same basic technique the federal government uses
to force companies to keep honest financial books: setting
standards and requiring periodic certification of the books by
expert financial auditors. No army of federal auditors descends
upon American businesses to audit their books; the government
forces them to have the job done themselves. In the same way, no
army of OSHA inspectors need descend upon corporate America. The
health and safety of American workers could be vastly
improved--without bankrupting the federal treasury.

     The Labor Secretary already is authorized to require employers
to conduct certified self-inspections. OSHA should give employers
two options with which to do so: They could hire third parties,
such as private inspection companies; or they could authorize
non-management employees, after training and certification, to
conduct inspections. In either case, OSHA would set inspection and
reporting standards and conduct random reviews, audits, and
inspections to ensure quality.

     Within a year or two of issuing the new regulations, OSHA
should establish a sliding scale of incentives designed to
encourage workplaces to comply. Worksites with good health, safety,
and compliance records would be allowed to report less frequently
to the Labor Department, to undergo fewer audits, and to submit
less paperwork. OSHA could also impose higher fines for employers
whose health and safety records worsened or did not improve.

Environmental Protection

     As governments across the globe have begun to explore better
ways to protect the environment, they have discovered that market
mechanisms--fees on pollution, pollution trading systems, and
deposit-rebate systems--can be effective alternatives to
regulation. But while the idea of "making the polluter pay" is
widely accepted in this country, our governments have not widely
applied it. Many federal, state, and local regulations rely on an
earlier approach to environmental control: stipulating treatment,
not outcomes. Their wholesale shift to a new approach will take
time.

Action: Encourage market-based approaches to reduce pollution.38

Many federal agencies, lawmakers, and environmental groups endorse
using market-based incentives to meet environmental goals.  We
propose that both EPA and Congress use administrative and
legislative measures, for example, the Clean Water Act, to promote
market mechanisms to stop polution.

     One route is allowing polluters to "trade: pollution rights.
This would reward companies that not only meet legal requirements--
but for the extra mile to reduce pollution by more than the law
requires.

     Rather than dictating exactly which technologies industry
should use to reduce pollution, the government would set standards
and let the market handle the details.  The government could also
assess fees based on the amount and nature of pollution emissions
or discharges.  Fees could reflect the quality, toxicity, and other
adverse characteristics of pollutants.

     The federal government has used this approach before. In the
1970s, the Environmental Protection Agency (EPA) distributed
credits to companies that cut air pollution and let them trade
credits between different sources of their own pollution or sell
them to other companies located nearby. In the 1980s, the EPA used
a similar approach as it forced industry to remove lead from
gasoline. Both efforts were successful: industry met its targets,
while spending billions of dollars less than otherwise would have
been required. Then, as part of the 1990 Clean Air Act, the
President and Congress agreed to give credits to coal-burning
electric power plants for their allowable emissions of sulfur
dioxide, to cut down on acid rain. Power plants that cut their
emissions below a certain level can sell unused credits to other
plants. Experts estimate that this will cut the cost of reducing
sulfur dioxide emissions by several billion dollars a year.39

Public Housing


     Public housing is a classic story of good intentions gone
awry. When the program began in the 1930s, it was hailed as an
enlightened response to European immigrants' squalid living
conditions in cities across the nation. Through an enormous
bureaucracy stretching from Washington into virtually every city in
America, the public housing program brought clean, safe,
inexpensive living quarters to people who could not otherwise
afford them.

     For two decades, public housing was a success. But by the
1970s, it had come to symbolize everything wrong with the
"liberal" approach to social problems. Inflexible federal standards, an
overly centralized administrative structure, and local political pressures
combined to produce cookie-cutter high-rise projects in our worst urban
areas. Over time, many projects degenerated into hopeless concentrations of
welfare families beset by violence and crime.

     We spend $13 billion a year on public housing, but we create
few incentives for better management. In local housing agencies,
managers are hamstrung by endless federal regulations that offer
little flexibility. Any savings they generate are simply returned
to the government.

     Tenants enjoy even less flexibility. With housing subsidies
attached to buildings, not people, the program's clients have no
choice about where to live. They, therefore, have absolutely no
leverage--as customers--over the managers.

Action: Authorize the Department of Housing and Urban Development
to create demonstration projects that free managers from
regulations and give tenants new market powers, such as freedom of
choice to move out of old public housing buildings.40

     We want to let public housing authorities, through
not-for-profit subsidiaries, compete for new construction and
modernization funds that they would use to create market-rate
housing. The managers would manage this new housing free of most
regulations, provided they met performance standards set by HUD.
They would rent to a mix of publicly subsidized and market-rate
tenants. The rents of unsubsidized tenants would help to finance
the subsidies of assisted tenants.

     With portable subsidies, publicly assisted tenants could look
for housing wherever they could find it. Rather than dependent
beneficiaries, forced to live where the govern- -----ment says,
they would become "paying customers," able to choose where to live.
Thus, public housing managers would no longer have guaranteed
tenants in their buildings; they would have to compete for them.
Conclusion

     We know from experience that monopolies do not serve customers
well. It is an odd fact of American life that we attack monopolies
harshly when they are businesses, but embrace them warmly when they
are public institutions. In recent years, as fiscal pressures have
forced governments at all levels to streamline their operations,
this attitude has begun to break down. Governments have begun to
contract services competitively; school districts have begun to
give their customers a choice; public managers have begun to ask
their customers what they want.

     This trend will not be reversed. The quality revolution
sweeping through American businesses--and now penetrating the
public sector--has brought the issue of customer service front and
center. Some federal agencies have already begun to respond: the
IRS, the Social Security Administration, and others. But there is
much, much more to be done. By creating competition between public
organizations, contracting services out to private organizations,
listening to our customers, and embracing market incentives
wherever appropriate, we can transform the quality of services
delivered to the American people.

     In our democratic form of government, we have long sought to
give people a voice. As we reinvent government, it is time we also
gave them a choice.


Chapter-3-Empowering-Employees-to-Get-Results Introduction

****************************
Take two managers and give to each the same number of laborers
and let those laborers be equal in all respects. Let both
managers rise equally early, go equally late to rest, be equally
active, sober, and industrious, and yet, in the course of the
year, one of them, without pushing the hands that are under him
more than the other, shall have performed infinitely more work.
George Washington

When Nature has work to be done, she creates a genius to do it.
Ralph Waldo Emerson
***************************

     Two hundred years ago, George Washington recognized the
common sense in hiring and promoting productive managers--and
taking authority away from unproductive ones. One hundred years
ago, Emerson observed that we all share a common genius, ignited
simply by the work at hand. These American originals defined the
basic ingredients of a healthy, productive work environment:
managers who innovate and motivate, and workers who are free to
improvise and make decisions.

     Today, our federal government's executive branch includes 14
cabinet departments, 135 agencies and hundreds of boards and
commissions. These entities employ more than 2.1 million
civilians (not counting the Postal Service), and 1.9 million
members of the military, spend $1.5 trillion a year, and,
directly or indirectly, account for one third of our national
economy1. Their tasks are both massive and difficult. As the
National Academy of Public Administration wrote not long ago,
"The federal government now manages ... some of the most
important and complex enterprises in the world."2 But it does not
manage them well.

     Admittedly, "management" is a fuzzy concept, hard to
recognize or define. But poor management has real consequences.
Money is wasted. Programs don't work. People aren't helped.
That's what taxpayers and customers see.

     Inside government, bad management stifles the morale of
workers. The "system" kills initiative. As Vice President Gore,
responding to the concerns of Transportation Department
employees, put it:

     One of the problems with a centralized bureaucracy is that
people get placed in these rigid categories, regulations bind
them, procedures bind them, the organizational chart binds them
to the old ways of the past--The message over time to...employees
becomes: Don't try to do something new. Don't try to change
established procedures. Don't try to adapt to the new
circumstances your office or agency confronts. Because you're
going to get in trouble if you try to do things differently." 3

     Cutting red tape, organizing services around customers, and
creating competition will start to generate an environment that
rewards success. Now, we must encourage those within government
to change their ways. We must create a culture of public
entrepreneurship.

****************************
Our long-term goal is to change the very culture of the federal
government... A government that puts people first, puts its
employees first, too. It empowers them, freeing them from
mind-numbing rules and regulations. It delegates authority and
responsibility. And it provides for them a clear sense of
mission.  Vice President Al Gore
Speech to National Performance Review members
May 24, 1993
****************************

     But changing culture is a lot harder than changing rules and
regulations. An attitude of powerlessness and complacency
pervades the federal workplace. As one veteran of many government
reform initiatives observed, "Changing government is a bit like
moving the town cemetery. It's much harder to deal with the
feelings it arouses than with the relocation itself."

The Quality Imperative

     Of course, many thought that turning General Motors around
would be impossible. If you talked to their employees, the same
undoubtedly was true of General Electric, Motorola,
Harley-Davidson, and scores of leading corporations before they
embraced a new management philosophy. In the 1970s and 1980s, as
technology began to revolutionize everything and global
competitors began to take away market share, firms that had grown
fat and happy had to face the facts: This wasn't the 1950s
anymore.

      These firms quickly discovered that economists can be
wrong: More isn't always better: better is better. One by one,
they began to pursue a new goal--quality-- and to reorganize
their entire businesses around it.

     The quality imperative is simple: Do everything smarter,
better, faster, cheaper. It is not simple, however, to obey. It
means dismantling the old ways of doing business. The same tired
command hierarchies that continue to bind government are being
scrapped daily by companies on the rise. In their place, firms
seek new ways to manage and organize work that develop and use
the full talents of every employee. They want everyone to
contribute to the bottom line--that is, to produce goods and
services that match customer needs at the lowest cost and fastest
delivery time.
      The quality movement has spawned many proven methods and
mantras, each with its loyal fans: management by results; total
quality management; high-performance organization; business
process reengineering. But the quest for quality--in performance,
product, and service--unifies them all.

     Government has recognized the quality imperative. In 1987,
the U.S. Department of Commerce instituted the Malcolm Baldrige
National Quality Award. Now the object of fierce competition, it
recognizes private firms that achieve excellence by pursuing
quality management. In 1988, the Federal Quality Institute began
awarding the Presidential Award for Quality to federal agencies
that do the same. The Presidential Award criteria, modeled on
Baldrige, set new standards for federal government performance.
The President should encourage all department and agency heads to
manage with these criteria in mind.


Changing the Culture: Power and Accountability

     Companies do not achieve high quality simply by announcing
it. Nor can they get to quality by hiring the services of the
roving bands of consultants who promise to turn businesses around
overnight. They do it by turning their entire management systems
upside down--shedding the power to make decisions from the
sedimentary layers of management and giving it to the people on
the ground who do the work. This rewrites the relationship
between managers and the managed. The bright line that separates
the two vanishes as everyone is given greater authority over how
to get their job done.

*****************************
The Federal Quality Imperative

The Presidential Quality Award sets forth seven principles to
identify excellent government agencies:

      Leadership: Are your top leaders and managers personally
committed to creating and sustaining your organization's vision
and customer focus? Does your effort extend to the management
system, labor relations, external partnerships, and the
fulfillment of public responsibilities?

      Information and Analysis: Do your data, information, and
analysis systems help you improve customer satisfaction,
products, services, and processes?
      Strategic Quality Planning: Do you have short-term and
long-term plans that address customer requirements; the
capabilities necessary to meet key requirements or technological
opportunities; the capacities of external suppliers; and changing
work processes to improve performance, productivity improvement,
and waste reduction?
      Human Resource Development and Management: Is your
agency's entire workforce enabled to develop its full potential
and to pursue performance goals? Are you building and maintaining
an environment for workforce excellence that increases worker
involvement, education and training, employee performance and
recognition systems, and employee well-being and satisfaction?
      Management of Process Quality:  Does your agency
systematically and continually improve quality and performance?
Is every work unit redesigning its process to improve quality?
Are internal and external customer-supplier relationships managed
better?
      Quality and Operational Results: Are you measuring and
continuously improving the trends and quality of your products
and services, your business processes and support services, and
the goods and services of your suppliers? Are you comparing your
data against competitors and world-class standards?

      Customer Focus and Satisfaction: Do you know what your
customers need? Do you relate well to your customers? Do you have
a method to determine customer satisfaction?
*****************************

     But with greater authority comes greater responsibility.
People must be accountable for the results they achieve when they
exercise authority. Of course, we can only hold people
accountable if they know what is expected of them. The powerless
know they are expected only to obey the rules.  But with many
rules swept away, what is expected from the empowered?

     The answer is results. Results measured as the customer
would--by better and more efficiently delivered services. If the
staff in an agency field office are given greater voice over how
their workplace and their work are organized, then the customer
deserves to spend less time waiting in line, to receive a prompt
answer--and everything else we expect from a responsive
government.
****************************
Our bedrock premise is that ineffective government is not the
fault of people in it. Our government is full of
well-intentioned, hard-working, intelligent people--managers and
staff. We intend to let our workers pursue excellence.

Vice President Al Gore
Reinventing Government Summit
Philadelphia, June 25, 1993
****************************

     So how do we change culture? The answer is as broad as the
system that now holds us hostage. Part of it, outlined in chapter
1 , lies in liberating agencies from the cumbersome burden of
over-regulation and central control. Part of it, detailed in
chapter 2 , hinges on creating new incentives to accomplish more
through competition and customer choice.  And part of it depends
on shifting the focus of control: empowering employees to use
their judgment; supporting them with the tools and training they
need; and holding them accountable for producing results. Six
steps, described in this chapter, will start us down that road:

     First, we must give decisionmaking power to those who do the
work, pruning layer upon layer of managerial overgrowth.

     Second, we must hold every organization and individual
accountable for clearly understood, feasible outcomes.
Accountability for results will replace "command and control" as
the way we manage government.

     Third, we must give federal employees better tools for the
job--the training to handle their own work and to make decisions
cooperatively, good information, and the skills to take advantage
of modern computer and telecommunications technologies. Fourth,
we must make federal offices a better place to work. Flexibility
must extend not only to the definition of job tasks but also to
those workplace rules and conditions that still convey the
message that workers aren't trusted.

     Fifth, labor and management must forge a new partnership.
Government must learn a lesson from business: Change will never
happen unless unions and employers work together.

     Sixth, we must offer top-down support for bottom-up
decisionmaking. Large private corporations that have answered the
call for quality have succeeded only with the full backing of top
management. Chief Executive Officers--from the White House to
agency heads--must ensure that everyone understands that power
will never flow through the old channels again. That's how GE did
it; that's how we must do it as well.

Chapter-3-Empowering-Employees-to-Get-Results Step-1:---Decentralizing-
Decisionmaking-Power

     To people working in any large organization--public or
private--"headquarters" can be a dreaded word. It's where
cumbersome rules and regulations are created and good ideas are
buried. Headquarters never understands problems, never listens to
employees. When the Office of Personnel Management (OPM) surveyed
federal employees, fewer than half expressed any confidence in
supervisors two layers above them--or any confidence at all in
their organization's overall structure.4

      Yet everyone knows the truth: Management too often is
happily unaware of what occurs at the front desk or in the field.
In fact, it's the people who work closest to problems who know
the most about solving them. As one federal employee asked Vice
President Gore, "If we can't tell what we're doing right and
wrong, who better can?"

      The Social Security Administration's Atlanta field office
has shown the wisdom of empowering workers to fulfill their
mission. Since 1990, disability benefit claims have risen 40
percent, keeping folks in the Atlanta office busy. So workers
created a reinvention team. They quickly realized that if they
asked customers to bring along medical records when filing
claims, workers could reduce the time they spent contacting
doctors and requesting the records. That idea alone saved 60 days
on the average claim. Even better, it saved taxpayers $351,000 in
1993, and will save half a million dollars in 1994. The same
workers also found a better, cheaper way to process disability
claims in cases reviewed by administrative law judges. Instead of
asking judges to send them written decisions, they created a
system for judges to send decisions electronically. It's quicker,
and it eliminates paperwork, too.5

     Now here's the other side of the coin. A Denver Post
reporter recently uncovered this bureaucracy-shaking news: It
takes 43 people to change a light bulb.

      An internal memo written by a manager at the U.S.
Department  of Energy {Rocky Flats} plant recommended a new
safety procedure for "the replacement of a light bulb in a
criticality beacon." The beacon, similar to the revolving red
lamp atop a police car, warns workers of nuclear accidents. The
memo said that the job should take at least 43 people over
1,087.1 hours to replace the light. It added that the same job
used to take 12 workers 4.15 hours.
     The memo called for a planner to meet with six others at a
work-control meeting; talk with other workers who have done the
job before; meet again; get signatures from five people at that
work-control meeting; get the project plans approved by separate
officials overseeing safety, logistics, waste management and
plant scheduling; wait for a monthly criticality-beacon test;
direct electricians to replace the bulb; and then test and verify
the repair.6

****************************
I had seven teams of people each restructure our business...
After the third presentation, my executive assistant...said to
me, "Bill, this stuff is fabulous. In fact, we never would have
thought of these things.
But you've got to trust. People don't come to work with the
intent of screwing it up every day. They come here to make it
better.
Bill Goins, President
Xerox Integrated Systems Operations,
Reinventing Government Summit,  June 25, 1993
*****************************

     This example drives the point home: Too many rules have
created too many layers of supervisors and controllers who,
however well-intentioned, wind up "managing" simple tasks into
complex processes. They waste workers' time and squander the
taxpayers' money.

     Decentralizing the power to make decisions will energize
government to do everything smarter, better, faster, and
cheaper--if only because there will be more hands and heads on
the task at the same time. Vice President Gore likens the effect
of decentralization to the advent of "massive parallelism"--the
technology used in the world's fastest supercomputers. Standard
computers with central processors solve problems in sequence: One
by one, each element of information travels back and forth from
the machine's central processor. It's like running six errands on
Saturday, but going home between each stop. Even at the speed of
light, that takes time. In massively parallel computers, hundreds
of smaller processors solve different elements of the same
problem simultaneously. It's the equivalent of a team of six
people each deciding to take on one of the Saturday errands.

****************************
Roam on the Range

Ranchers, allowed to graze their cattle in Missouri's Mark Twain
National Forest, regularly must move their herds to avoid
over-grazing any plot of land. Until recently, ranchers had to
apply at the local Forest Service office for permits to move the
cattle. Typically, the local office sent them on to the regional
office for approval, which, in some cases, sent them on to the
national office in Washington. Approval could take up to 60
days--long enough, in a dry season, to hurt the forest, leave the
cows hungry, and annoy the rancher.
Thanks to an employee suggestion, the local staffer now can
settle the details of moving the herd directly with the rancher.
If the rancher comes in by 10 a.m., the cattle can be on the move
by noon. Ranchers are happier, cattle are fatter, the environment
is better protected--all because local workers now make decisions
well within their judgment.
****************************

     America's best-run businesses are realizing enormous cost
savings and improving the quality of their products by pushing
decisions down as far as possible and eliminating unnecessary
management layers. The federal government will adopt this
decentralized approach as its new standard operating procedure.
This technique can unearth hundreds of good ideas, eliminate
employee frustration, and raise the morale and productivity of an
entire organization.

     If offered greater responsibility, will employees rise to
the task? We are confident they will. After all, few people take
up federal work for the money. Our interviews with hundreds of
federal workers support what survey after survey of public
service workers have found: People want challenging jobs.7 Yet,
that's exactly what our rule-bound and over-managed system too
often denies them.
Action: Over the next five years, the executive branch will
decentralize decisionmaking, and increase the average span of a
manager's control.8

     Currently, the federal government averages one manager or
supervisor for every seven employees.9 Management expert Tom
Peters recommends that well-performing organizations should
operate in a range of 25 to 75 workers for every one
supervisor.10 One "best company" puts Peters' principle to shame:
"Never have so many been managed by so few," Ritz-Carlton Vice
President Patrick Mene told Vice President Gore at the
Philadelphia Summit. "There's only about 12 of us back in Atlanta
for 11,500 employees. And it really starts with passionate
leadership."11

      Working toward a quality government means reducing the
power of headquarters vis-- --vis field operations. As our
reinvented government begins to liberate agencies from
over-regulation, we no longer will need 280,000 separate
supervisory staff and 420,000 "systems control" staff to support
them.12 Instead, we will encourage more of our 2.1 million
federal employees to become managers of their own work.

      Put simply, all federal agencies will delegate,
decentralize, and empower employees to make decisions. This will
let front-line and front-office workers use their creative
judgment as they offer service to customers and solve problems.

      As part of their performance agreements with the President,
cabinet secretaries and agency CEOs will set goals for increasing
the span of control for every manager. (See Step 3.) The federal
government should seek to double its managerial span of control
in the coming years.

     Some employees may view such pruning as threatening--to
their jobs or their chances for promotion. It is true that the
size of the federal workforce will decrease. But our goal is to
make jobs meaningful and challenging. Removing a layer of
oversight that adds no value to customers does more than save
money: It demonstrates trust in our workers. It offers employees
in dead-end or deadly dull jobs a chance to use all their
abilities. It makes the federal government a better place to
work--which will in turn make federal workers more productive.

     As private companies have found, the key to improving
service while redeploying staff and resources is thinking about
the organization's staffing and operating needs from the
perspective of customer needs. What does each person's task add
in value to the customer? The Postal Service has developed a
single criterion: It asks, "Do they touch the mail?" Where
possible, other agencies should develop similar simple,
easy-to-understand criteria.
     Pioneering federal offices have used the full variety of
quality management techniques to decentralize. Many focus on
passing decisions on to the work teams that deal directly with
the customer. Some have produced impressive results, both in
productivity and management delayering.

     The Internal Revenue Service's Hartford district office
slashed the time required to process a form on "currently
non-collectible" taxes from 14.6 days to 1.4 days. Then it
replaced time-consuming case reviews with an automated case
management system and began using the manager's time to upgrade
employees' skills. Delinquent tax dollars collected rose by 22
percent. The office chose not to fill vacant management
positions, investing part of its staff savings in new technology
to boost productivity further. Eventually, it cut overall case
processing time from 40 to 21.6 weeks.13

      At the Robins Air Force Base, the 1926th
Communications-Computer Systems Group cut its supervisory staff
in half by organizing into teams.14 An Agriculture Department
personnel office that converted to self-managed work teams beefed
up customer satisfaction and now uses only one manager for every
23 employees. At the Defense Logistics Agency, self-managing
teams in the Defense Distribution Region Central eliminated an
entire level of management, saving more than $2.5 million a
year.15 In 1990, the Airways Facilities Division of the Federal
Aviation Administration maintained approximately 16,000 airspace
facilities, with roughly 14,000 employees. Today its workforce is
organized in self-managed teams instead of units with
supervisors. They now maintain more than 26,000 facilities with
only 9,000 employees.16

      Other decentralization and delayering plans are in the
works. After a successful pilot program in 11 field service
sites, the Department of Veterans Affairs is recommending an
agencywide effort.17 Over the next 5 years, the Department of
Housing and Urban Development (HUD) plans to convert HUD's field
structure from three to two levels, eliminating the regional
offices. HUD will free its five assistant secretaries to organize
their own functions in the field. It will transfer many of its
application and loan processing functions  to private firms.
While letting staff  attrition dictate staff reductions- - HUD
promises no layoffs--HUD plans to retrain and redeploy people
into more interesting jobs, with better career ladders and better
access to managers. HUD believes its restructuring effort will
improve customer service while saving $157.4 million in personnel
and overhead costs.18



Chapter-3-Empowering-Employees-to-Get-Results Step-2:---Hold-All-Federal-
Employees-Accountable-for-Results
     It's easy to understand why federal employees--including the
hundreds who aired their deep frustrations to the National
Performance Review--would care about empowerment. It adds new,
positive dimensions to their jobs.

     But why should taxpayers or social security recipients care?
Taxpayers aren't interested in what rules bureaucracy follows.
But they do care, deeply, about how well government serves them.
They want education programs to give young people basic skills
and teach them how to think, anti-poverty programs that bring the
unemployed into the economic mainstream for good, anti-crime
programs that keep criminals off the streets, and environmental
programs that preserve clean air and water. In other words, they
want programs that work.

     But management in government does not judge most programs by
whether they work or not. Instead, government typically measures
program activity--how much it spends on them, or how many people
it has assigned to staff them. Because government focuses on
these "inputs" instead of real results, it tends to throw good
money after mediocre. It pours more dollars into the old
education programs even as student performance sinks. It enrolls
jobless people in training programs that teach by the book, but
places few graduates in well-paid jobs.

****************************
What you do thunders so loudly, I cannot hear what you say to the
contrary.
              Ralph Waldo Emerson
****************************

     A recent management survey of the largest 103 federal
agencies sketches in stark relief this lack of focus on real
results. Two-thirds of the agencies reported that they had
strategic plans. But only nine said they could link those plans
to intended results.19 In other words, many had planned, but few
knew where they were going. That's a bit like trying to steer a
ship by looking at its wake. As a result, some of our worst
examples of "waste" are not rooted in corruption or incompetence,
but rather in the simple lack of knowing what we are actually
trying to
accomplish. As one despairing federal employee told us, "Process
is our most important product."

     Recommendations by the National Performance Review aim to
revolutionize our method of navigation. "Today," Vice President
Gore told one departmental meeting, "all we measure is inputs. We
don't measure outputs--and that's one of the things we're going
to change throughout the federal government."

     Measuring outputs is easy in principle. It means measuring
how many unemployed people get jobs, not how many people look for
help at local Employment Service offices. Or it means measuring
how many people received their social security checks on time,
not how many checks were sent out from a local office. "Outputs"
are, quite simply, measures of how government programs and
policies affect their customers. The importance of pursuing the
correct measures cannot be underestimated. As Craig Holt, an
Oregon Department of Transportation employee who has worked with
the ground-breaking Oregon Progress Board--our nation's first
statewide experiment in comprehensive performance
accountability--cautions: "Our focus has occurred through our
indicators, not through our strategic plans."20

     Implementing the Government Performance and Results Act
     To its credit, Congress has begun to recognize this need. In
July 1993, it passed the Government Performance and Results
Act--a pivotal first step toward measuring whether federal
programs are meeting their intended objectives. The act requires
that at least 10 federal agencies launch 3-year pilot projects,
beginning in fiscal 1994, to develop measures of progress. Each
agency pilot will develop annual performance plans that specify
measurable goals. They then must produce annual reports showing
how they are doing on those measures. At least five pilots will
also test "managerial flexibility waivers"--which exempt them
from some administrative regulations--to help them perform even
better. In exchange for greater flexibility, they must set higher
performance targets. This is exactly the process of measured
deregulation--"we agree to deregulate you if you agree to be held
accountable"--that must be the basis of an empowered and
accountable government.
     At the beginning of fiscal 1998, after learning from the
pilot programs, all federal agencies must develop 5-year
strategic plans--linked, this time, to measurable outcomes! By
the next year, every agency will be crafting detailed annual
performance
plans--that is, plans that describe what they intend to achieve,
not plans that detail how many pencils they will buy or people
they will hire. And they will have to report their successes and
failures in meeting those goals. The Office of Managenent and
Budget may exempt very small agencies, and those agencies that
cannot easily measure their outcomes will use qualitative rather
than quantitative goals and measurements. After all, any agency
can, at the very least, survey their customers and report the
rating they are given.

****************************
It may seem amazing to say, but like many big organizations, ours
is primarily dominated by considerations of input--how much money
do we spend on a program, how many people do you have on the
staff, what kind of regulations and rules are going to govern it;
and much less by output--does this work, is it changing people's
lives for the better?


President Bill Clinton
Remarks at the signing of the Government  Performance And Results
Act  August 3, 1993
****************************

     Setting goals is not something that agencies do once. It is
a continual process in which goals are raised higher and higher
to push agency managers and staff harder and harder to improve.
As the old business adage states, "If you're standing still,
you're falling behind."

     That is why we strongly support the act. But agencies should
not wait until fiscal 1999 to start integrating performance
measurement into their operations. Nor should they limit
themselves to the minimum mandates of the new law. The President,
through OMB, is encouraging every federal program and agency to
begin strategic planning and performance measurement, whether it
is selected as a pilot or not.


If government is to become customer-oriented, then managers
closest to the citizens must be empowered to act quickly. Why
must every decision be signed-off on by so many people? If
program managers were instead held accountable for the results
they achieve, they could be given more authority to be innovative
and responsive.  Senator William V. Roth, Jr.
Congressional Record, July 30, 1993


Action: All agencies will begin developing and using measurable
objectives and reporting results.21

     In early 1994--in time to prepare the fiscal 1996
budget--OMB will revise the budget instructions it gives agencies
to
incorporate performance objectives and results, to the greatest
extent possible. Agencies will start measuring and reporting on
their past goals and performance as part of their 1996 budget
requests. The OMB instructions, along with executive office
policy guidance, will guide agencies as they develop full-fledged
goal-setting and performance-monitoring systems for the first
time.
      At the outset, managers may feel unprepared to set
reasonable performance targets. Some will lack any program data
worth its salt on which to base any future goals or performance
projections. Others, overwhelmed with "input" indicators about
program staffing and spending, will find it difficult to figure
out whether--or how--those measures directly relate to achieving
desired outcomes. Agencies will start preparing themselves by
reallocating enough resources toward performance planning and
measurement over the long term.

     OMB will help. Its budget analysts will be trained to
provide feedback and broad oversight to help craft an effective
system, and encourage agencies to improve measures that are
clearly
ineffective. OMB will negotiate stronger goals for agencies that
set their sights too low or perform poorly against their
indicators.

      Agencies will gradually build performance information into
their own budget guidance and review procedures, into their
strategic and operational plans, and into revised position
descriptions for their budget, management, and program analysts.
Nothing, however, will replace peer pressure as agencies vie for
performance awards or seek public recognition for their
achievements.

Action: Clarify the objectives of federal programs.22

     Many agencies will be unable to set clear measurable goals
until Congress simplifies their responsibilities. Programs are
bound by multiple, often conflicting, legislative objectives. The
complex politics of passing enabling legislation and then
negotiating annual appropriations forces some programs to be all
things to all people.

      For example, a training program targeted at unemployed
steel workers soon is required to serve unemployed farm workers,
the disabled, and displaced homemakers. Originally, the program's
purpose may have been to refer people to jobs. But congressional
maneuvers first force it to offer them training; then to help
them find transportation and daycare. All these are important
activities. But, by now, the original appropriation is hopelessly
inadequate, reporting requirements have multiplied geometrically
along with the multiplicity of goals, and the program is not
simply unmanaged--it's unmanageable. If agencies are to set
measurable goals for their programs, Congress must demand less
and clarify priorities more.

     In the private sector, leaders do not simply drop goals on
their organizations from above. Hewlett-Packard, Microsoft,
Xerox, and others involve their full workforces in identifying a
few goals that have top priority, and then demand smaller work
teams to translate those overall goals into specific team
measures. This process enables the people directly responsible
for meeting the goals to help set them. It also ensures that
every part of an organization aims at the same goals, and that
everyone understands where they fit in. It may seem a time
consuming process, but boats travel much faster when everyone is
pulling their oar in the same direction.

     With a new joint spirit of accountability, the executive
branch plans to work with Congress to clarify program goals and
objectives, and to identify programs where lack of clarity is
making it difficult to get results.

     Holding Top Management Accountable

     When General Eisenhower took command of the Allied
Expeditionary Force in World War II, he was given a mission
statement that clearly delineated goals for his vast organization
of more than a million and a half men and women: "You will  enter
the continent of Europe and, in conjunction with the other united
nations, undertake operations aimed at the heart  of Germany and
the destruction of her armed forces."

      In 1961, President Kennedy gave NASA an even clearer
mission: Put a man on the moon and return him safely to earth by
the end of the decade. As Vice President Al Gore told his
audience at a meeting with Veterans Affairs Department employees:
"There has to be a clear, shared sense of mission. There have to
be clearly understood goals. There have to be common values
according to which decisions are made. There has to be trust
placed in the employees who actually do  the work."

     In Great Britain, Australia, and New Zealand, many
department and agency heads are appointed for limited terms and
given performance agreements. Their reappointments depend on
achieving measurable outcomes. Senior officials from these
countries say that these agreements have improved organizational
performance more than any other aspect of their reinventing
government efforts. In the United States, many local governments
do much the same: In Sunnyvale, California, managers can earn
bonuses of up to 10 percent if their agencies exceed performance
targets.

Action: The President should develop written performance
agreements with department and agency heads.23

     Past efforts to institute management by objectives have
collapsed under the weight of too many objectives and too much
reporting. The President should craft agreements with cabinet
secretaries and agency heads to focus on the administration's
strategy and policy objectives. These agreements should not
"micro-manage" the work of the agency heads. They do not row the
boat. They should set a course.

     These agreements will begin with the top 24 agency heads. In
fact, Secretaries Mike Espy at the Agriculture Department and
Henry Cisneros at the Department of Housing and Urban
Development, as well as Roger Johnson at the General Services
Administration (GSA), and Administrator J. Brian Atwood of the
Agency for International Development are already working with
their top managers on agreements.

     Not everyone will welcome outcome measures. People will have
trouble developing them. Public employees generally don't focus
on the outcomes of their work. For one thing, they've been
conditioned to think about process; for another, measures aren't
always easy to develop. Consequently, they tend to measure their
work volume, not their results. If they are working hard, they
believe they are doing all they can. Public organizations will
need the several years envisioned under the Government
Performance and Results Act to develop useful outcome measures
and outcome reporting.

***************************
Measuring Outcomes

Outcome-based management is new in the public sector. Some U.S.
cities have developed it over the past two decades; some states
are beginning to; and foreign countries such as Great Britain,
Australia, and New Zealand are on their way. Sunnyvale,
California, a city of 120,000 in the heart of the Silicon Valley,
began the experiment 20 years ago. In each policy area, the city
defines sets of "goals," "community condition indicators,"
"objectives," and "performance indicators." "In a normal
political process, most decisionmakers never spend much time
talking about the results they want from the money they spend,"
says City Manager Tom Lewcock. "With this system, for the first
time they understand what the money is actually buying, and they
can say yes or no."24
Sunnyvale measures performance to reward successful managers. If
a program exceeds its objectives for quality and productivity,
its manager can receive a bonus of up to 10 percent. This
generates pressure for ever-higher productivity. The result:
average annual productivity increases of four percent. From 1985
to 1990, the city's average cost of service dropped 20 percent,
in
inflation-adjusted dollars. According to a 1990 comparison,
Sunnyvale used 35 to 45 percent fewer people to deliver more
services than other cities of similar size and type.
At least a half-dozen states hope to follow in Sunnyvale's
footsteps. Oregon has gone farthest. In the late 1980s, Governor
Neil Goldschmidt developed long term goals, with significant
citizen input. He set up the Oregon Progress Board, comprising
public and private leaders, to manage the process. The board
developed goals and benchmarks through 12 statewide meetings and
written materials from over 200 groups and organizations.
"Oregon," the board stated, "will have the best chance of
achieving an attractive future if Oregonians agree clearly on
where we want to go and then join together to accomplish those
goals."25
The legislature approved the board's recommended 160 benchmarks,
measuring how Oregon is faring on three general goals:
exceptional individuals; outstanding quality of life; and a
diverse, robust economy. Seventeen measures are deemed short-term
"lead"
benchmarks, related to urgent problems on which the board seeks
progress within 5 years. They include reducing the teen pregnancy
rates, enrolling people in vocational programs, expanding access
to basic health care, and cutting worker compensation costs.
Another 13 benchmarks are listed as "key"--fundamental, enduring
measures of Oregon's vitality and health. These include improving
basic student skills, reducing the crime rate, and raising
Oregon's per capita income as a percentage of the U.S. average.
Barbara Roberts, today's governor, has translated the broad goals
and benchmarks into specific objectives for each agency. This
year, for the first time, objectives were integrated into the
budget--giving Oregon the first performance-based budget among
the states. Great Britain has instituted performance measurement
throughout its national government. In addition, the government
has begun writing 3-year performance contracts, called "Framework
Agreements," with about half its agencies. These agencies are run
by chief executive officers, many from the private sector, who
are hired in
competitive searches and then negotiate agreements specifying
objectives and performance measures. If they don't reach  their
objectives, the CEOs are told, their agencies' services may be
competitively bid  after the 3 years.
*****************************

      Ultimately, no one can generate results without knowing how
the "bottom line" is defined. Without a performance target,
managers manage blindly, employees have no guidance, policymakers
don't know what's working, and customers have no idea where they
may be served best. If, for example, jobless people know how well
graduates of local training programs fare when looking for work,
they can better choose which new careers and programs offer the
best prospects. Informed consumers are the strongest enforcers of
accountability in government.

Action: The administration will issue one set of Baldrige Awards
for quality in the federal government.26

     For years, the executive branch has taken steps to recognize
and support good performance. In typical fashion, however, we
have created three different award systems, each administered by
a different organization. The Federal Quality Institute (FQI)
administers the Presidential Award for Quality; the President's
Council on Management Improvement administers the Award for
Management Excellence; and the Office of Personnel Management
awards the Presidential Quality and Management Improvement Awards
for tangible savings to the government of more than $250,000.
     The administration will issue one set of presidential awards
for quality. The Baldrige Award Office of the National Institute
for Standards and Technology will combine the existing awards
into a new set of Baldrige Awards for public service--to go along
with its private sector award. The new award will recognize
agency and work unit quality initiatives and ideas, based on
program
performance, cost savings, innovation, and customer satisfaction.


Chapter-3-Empowering-Employees-to-Get-Results Step-3:---Giving-Federal-
Workers-the-Tools-They--Need-to-do
Their--Jobs

     Americans today demand a more responsive, more humane
government that costs less. Their expectations are neither
irrational nor 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 captive markets. To
compete, they must make things and deliver service better and
faster, and get their message out sooner. No one benefits more
than customers. It's no wonder these same people now turn to
government and ask, "Why can't you do things better too?"

     Transforming our federal government to do better will mean
recasting what people do as they work. They will turn from bosses
into coaches, from directors into negotiators, from employees
into thinkers and doers. Government has access to the same tools
that have helped business make this transformation; it's just
been slower to acquire and use them. We must change that. We must
give workers the tools they need to get results-- then make sure
they use them.


Employee Training

     After two decades of organizing for quality, business knows
one thing for sure: Empowered people need new skills--to work as
teams, use new computer software, interpret financial and
statistical information, cooperate with and manage other people,
and adapt. Indeed, business talks about a new breed of "knowledge
worker"--people who understand that, throughout their careers,
their most important task is to continue learning and applying
new knowledge to the challenge at hand. Knowledgeable workers are
our most important source of progress. They are, quite simply,
the currency of 21st century commerce.

     Business teaches us that ongoing training for every worker
is essential for organizations to work well. Not surprisingly,
the federal government under-spends on training and education,
just as it does on most other productivity-enhancing investments.
In 1989, the National Commission on the Public Service, headed by
Paul Volcker, estimated that while leading private firms spend 3
to 5 percent of their budgets on training, retraining, and
upgrading employee skills, the federal government spends less
than one percent.27

     And the little we do spend is not always allocated wisely. A
well-promoted 4-day training seminar packaged to appeal to
federal agency managers may seem like a good deal. It is not,
however, always what the agency needs. The Volcker Commission
concluded:
     Federal training is suffering from an identity crisis.
Agencies are not sure what they should train for (short term or
long term), who should get the lion's share of resources (entry
level or senior level)...and whether mid-career education is of
value...Career paths are poorly designed, executive succession is
accidental and unplanned, and real-time training for pressured
managers is virtually non-existent. At both the career and
presidential level, training is all-too-often ad hoc and
self-initiated.28

     Perhaps most striking is the paucity of career training for
people on the lowest rungs of the civil service ladder, or for
people without the leg-up of university degrees. These valued
employees may have the most tenure in an office. They may see and
know everything. Frequently, they are indispensable, because only
they know how the system works--and how to work the system.
Unfortunately, their abilities are rarely rewarded, despite their
desire to advance.

     One staffer in the Justice Department's Civil Division
alerted Vice President Gore to her quandary:

     I'm watching the role of our legal secretaries change. Less
and less of the typical secretarial duties are being performed,
simply because the attorneys do a lot of their own drafting of
documents... However, for a secretary to start to move into a
legal assistant position... or into a paralegal role, is frowned
upon... As far as training goes it's impossible... That prevents
a lot of people from...moving into new jobs that are going to be
of more benefit to the department...We've lost a good number of
secretaries who have moved elsewhere, because they cannot go any
further here.29

     Employees at the top rung, too, must keep learning. Managers
and executives face the same hurdles in keeping up with
technology as do front-line workers. Technicians must stay up to
date with system advances and new techniques. The growing band of
federal export and trade personnel must learn more than foreign
languages--they need to master the language of negotiation as
well. Indeed, employees in the Office of the U.S. Trade
Representative currently receive no systematic training in
negotiation skills or the cross-cultural styles and patterns they
are likely to encounter in their work--a situation the office is
now planning to correct.30
     Perhaps most important, training is the key that unlocks the
power of bottom-up decisionmaking. At the Reinventing Government
Summit, General Electric Executive Vice President Frank Doyle
detailed the GE experience: "We had to educate our entire
workforce to give them the tools to become meaningfully involved
in all aspects of work. Empowerment...is a disorderly and almost
meaningless gesture unless people doing the actual work are given
the tools and knowledge that self-direction demands."31

     During the National Performance Review process, almost every
one of the agency teams identified a specific learning need
critical to their agency's quality improvement and mission. In
addition, several common training concerns demand governmentwide
action.

Action: The administration will grant agencies the flexibility to
finance training needs.32

     Leading corporations view training as a strategic resource,
an investment. Federal managers tend to view it as a cost. So in
government, worker training isn't even included in most budget
estimates for new systems or programs. This is puzzling and quite
short-sighted, since new workplace innovations, like advanced
software, won't transform employee productivity unless those
employees know how to use them. Although training may be the best
and least costly way to improve worker performance, government
executives view it as a "quick fix," unworthy of any planning
effort.

     Perceptions are changing, however. Today's management
literature is full of talk about the value of
on-the-job-training, computer-based instruction, expert systems,
work exchange, mentors and other tools for learning. Since 1992,
OPM has been steering agencies toward more comprehensive training
initiatives.

     We will grant agencies a substantial portion of the savings
they realize from decentralizing staff and reducing operating
costs (see chapter 1) to invest in worker training, performance
measurement, and benchmarking.

     Budget directives further complicate an agency's ability to
train workers effectively, particularly when its own budget
office, OMB, or Congress cut line items for employee training.
Such over-specified reductions deny employees the access to
skills they need to be productive, to advance in their careers,
and to adapt to new technology.

Action: The federal government will upgrade information
technology training for all employees.33

     Every year, more and more federal workers must use
computer-based information technology in their jobs. If business
is any guide, our government reinvention efforts will only
quicken the trend. Pen and paper exercises keep moving to the
screen. Lateral files now form database records. Video- and
computer-based courses make learning possible anytime, anywhere.
Money no longer changes hands; it's transmitted digitally. People
not only talk, they "message." A meeting of the minds can take
place without the bodies present.

     Other chapters discuss how we will speed the procurement
process for technology and how we will deploy technology to alter
what we do and how well we do it. Here, we want to stress that
much of the federal workforce lacks the training and background
to use advanced information technologies.

     Compared to the private sector, the federal government
invests few dollars and scant time in technology training.34
Federal agencies provide insufficient incentives to motivate
their workforce to seek technology training, scarce opportunities
to obtain training--even when it's desired and necessary--and
rarely incorporate technology training in the strategic planning
process. The longer we wait, the farther behind we fall.

     This foot-dragging costs the taxpayer dearly. We do things
the old way, not the cheaper, more efficient way. Or we start
doing things the new way, but we don't go far enough: We buy
computers for our workers, but not the training to use them
properly, so the software and hardware investments are wasted. We
invest in new systems, and our people can't make them work.

     Training should begin with top nontechnical managers, to
help them focus on uses, management, planning, and acquisition of
state-of-the-art information technology. By May 1994, OPM and GSA
will jointly develop and administer information technology
training for non-technical managers and presidential appointees.
The New York City Department of Personnel, already in the
technology training business, offers a useful model of monthly
half-day sessions for executives covering ten topics: strategic
planning, reengineering, implementing systems, electronic mail,
video conferencing, voice-enhanced technologies, geographic
information systems, database management, imaging, and
multi-agency complaints and inspection systems. Our effort will
help every senior manager earn a certificate that signifies his
or her level of technology competency. Parallel training and
certification efforts will target Senior Executive Service
members and information resource managers.
     Anyone who has grappled with computers--from the basics of
word processing to the complexity of expert systems--knows that
we often learn best how to use software by finding a technology
"pal": someone who knows the ins and outs of a particular
software application and is willing to share that knowledge. To
spread information technology training and use in the entire
federal workforce, the existing Federal Information Resources
Management Policy Council will help motivated agencies set up a
program of collegial assistance for a wide range of technology
applications. We will tap the cadre of techno-proficient
individuals spread across the federal government to provide
occasional on-line help or personal assistance on demand to their
struggling colleagues.
      Finally, starting late in 1993, new contracts for
technology acquisition--or those in early stages--must include a
provision for training. If agencies work together, they can cut
such training costs dramatically. When Texas contracted with four
statewide technology training firms to train state employees, it
cut the price to $60 to $110 a day per worker for a wide range of
skills. An even larger customer, the federal government should be
able to land an even better bargain.

Action: Eliminate narrow restrictions on employee training to
help develop a multiskilled workforce.35

     The Government Employees Training Act (GETA), which
authorizes agencies to manage and determine their training needs,
defines training as a tool for "increasing economy and efficiency
in government." The rules written behind this 1958 wording
severely limit how agencies can use training today. Training too
often is ad hoc and seldom linked to strategic or human resource
planning. Managers generally are not able to get the information
to determine the return on their training investment. Even worse,
existing restrictions dictate that any training be related to an
employee's official duties--thus ensuring that our Justice
Department secretary does not become a paralegal. These rules
keep federal employees single-skilled in a multi-skilled world.

     By early 1994, OPM will draft legislation to amend GETA on
three fronts. OPM will redefine the objective of federal training
as the "improvement of individual and organizational
performance." It will relate the use of training to achieving an
agency's mission and performance goals, not to a worker's
official duties. And OPM will seek to end the distinction between
government and
nongovernment training, giving public employees access to the
best training services available, no matter who provides them.

      Clarifying the purpose of training in GETA will reinforce
the need to use training to improve performance and produce
results. Removing the distinction between government and
non-government training will deregulate the in-government
training monopoly, introducing competition that will improve the
quality of learning opportunities for federal employees. And
linking training to an agency's mission will ease employees'
efforts to become adept at all the skills they need as empowered
workers. We urge Congress to join in the quality effort by
passing these important amendments early in 1994.

     Management Information Systems

     Management isn't about guessing, it's about knowing. Those
in positions of responsibility must have the information they
need to make good decisions. Good managers have the right
information at their fingertips. Poor managers don't.

     Good information comes from good information systems.
Management information systems have improved in lockstep with
every advance in the telecommunications revolution. New
management information systems are transforming government, just
as they have business, in two ways. They can make government more
productive--the benefit we discuss in this chapter--and let us
deliver services to customers in new ways, which we take on in
chapter 4. Indeed, today's systems have enabled businesses to
slim down data processing staffs, while giving more employees
access to more accurate data. This shows up on the bottom line.
If federal decisionmakers are given the same type of financial
and performance information that private managers use, it too
will show up on the bottom line--and cut the cost of government.

     Sheer size alone would make the federal government difficult
to manage, even under the best of conditions. Unfortunately,
federal employees don't work under the best of conditions.
Indeed, when it comes to financial information, many are flying
blind. It's not for lack of staffing: Some 120,000
workers--almost 6 percent of non-postal service civilian
employees--perform budget, accounting, auditing, and financial
management tasks.36 But when OMB surveyed agency financial
reporting systems last year, it found that one-third were more
than a decade old, and only 6 percent were less than 2 years old.
One-third failed to meet Treasury and OMB reporting standards.
Two-fifths did not meet their own in-house reporting
standards--meaning they did not provide the information managers
wanted. And more than half simply lacked the computer power to
process the data being entered.37

     We all know the potential costs of lagging systems: They
contributed to the $300 billion savings and loan bailout,38 $47
billion in nontax delinquent debt, $3.6 billion in student loan
defaults, and so on.

     Fortunately, the process of updating our management
information systems has begun. In 1990, Congress passed the Chief
Financial Officers (CFO) Act.39 It designated an OMB deputy
director as the federal government's chief financial management
officer. The Office of Federal Financial Management was charged
with establishing financial management policies across the
government and monitoring agency audits. The act also created
chief financial officers in 23 agencies. The OMB deputy chairs a
CFO Council to deal with improving financial management across
government.

     But we need to do more--and quickly.

Action: The executive branch will create a coherent financial
management system, clarify responsibilities, and raise the
standards for financial officers.40

     Vastly improved financial management is critical to the
overall effort to reform government. First, it will save
taxpayers money. Trillions of dollars flow through the federal
government in any year; even a small improvement in managing
those funds could recover billions. Second, we need accurate and
timely financial information if managers are to have greater
authority to run federal agencies, and decisionmaking moves to
the front lines. Greater responsibility requires greater
accountability, or the best-intentioned reforms will only create
new problems. Finally, better financial management will present a
more accurate picture of the federal budget, enabling the
President, Congress, and agency leaders to make better policy
decisions.

     By the end of 1993, OMB and Treasury will sign a formal
agreement to clarify  their respective policymaking and
implementation roles, to eliminate regulatory confusion and
overlap for their governmental customers. OMB, working with
Treasury and the CFO Council, will charter a governmentwide
Budget and Financial Information Steering Group to oversee the
stewardship of financial planning and management data for the
federal government. In addition, by Spring, 1994, OMB will work
with the existing Joint Financial Management Improvement Program,
which currently develops and publishes financial system
requirements, and consult with Treasury and the agencies to
define exactly what constitutes an integrated budget and
financial system. At the same time, working with Treasury and the
CFO Council, OMB will develop a long-range strategic plan for
linking broad budget and financial information needs to the work
of agency managers and achieving performance goals.

     Finally, we will insist on higher qualifications for chief
financial officers. After all, many federal agencies are larger
than Fortune 500 companies. Americans deserve financial officers
with qualifications that match those in our best companies. By
March 1994, working with accounting and banking groups, the CFO
Council will create a continuing education program for federal
financial managers. At the same time, OMB guidelines will clarify
the precise financial functions the CFO should oversee, trimming
responsibilities like personnel or facilities management that lie
outside the CFO's main mission.

Action: Within 18 months the Federal Accounting Standards
Advisory Board will issue a comprehensive set of credible
accounting standards for the federal government. 41

     A recent GAO audit of the Internal Revenue Service unearthed
$500,000 of overpayments to vendors in just 280 transactions and
a video display terminal that cost only $752 listed at $5.6
million on the IRS books. Other GAO efforts found the Army and
Air Force guilty of $200 billion in accounting mistakes, NASA of
$500 million, and widespread recordkeeping problems across
government.42 In 1990, Congress concluded that "current financial
reporting standards of the federal government do not accurately
disclose the current and probable future cost of operating and
investment decisions including the future needs for cash and
other resources." In other words, if a publicly-traded
corporation kept its books the way the federal government does,
the Securities and Exchange Commission would close it down
immediately.

     It's not that we have no accounting procedures and
standards. It's that we have too many, and too many of them
conflict. Even worse, some budget and accounting practices
obscure the amount and type of resources managers might leverage
to produce savings and increase productivity.

     We must agree on stricter accounting standards for the
federal books. We require corporations to meet strict standards
of financial management before their stocks can be publicly
traded. They must fully disclose their financial condition,
operating results, cash flows, long-term obligations, and
contingent liabilities. Independent certified public accountants
audit their accounts. But we exempt the $1.5 trillion federal
government from comparable standards.

     Currently, the Federal Accounting Standards Advisory Board
(FASAB), established in October 1990, develops and recommends
federal accounting standards for OMB, Treasury, and GAO--which
together must approve them. Although we need almost a dozen sets
of standards, only one has been approved using this process in
more than two and a half years. We need to quicken the pace.

     The administration will give the Federal Accounting
Standards Advisory Board an 18-month deadline to release and get
approval of all 11 sets of standards. If it fails, the
administration will replace it with a new, independent board with
greater powers.
Action: The Administration should issue an Annual Accountability
Report to the Citizens.43

     The ultimate consumer of information about the performance
of federal organizations should be the American public. As
agencies develop output and outcome measures, they should publish
them. The customer service standards required by the President's
directive on improving customer service, outlined in chapter 2,
will be a first step.

     A second step will be a new report card on the financial
condition of the federal government. For the last 20 years, our
government has issued "prototype" financial statements, but no
one can assure their accuracy. Put simply, they would never pass
an audit. We believe Americans deserve numbers they can trust. By
1997, we will require the Department of the Treasury to provide
an audited consolidated annual report on federal
finances--including tax expenditures, hidden subsidies, and
hidden contingent
liabilities such as trust funds and government-sponsored
enterprises.44

     The Treasury and OMB will develop a simplified version of
the government's financial condition, to be published for public
consumption in 1995. Rather than a detailed, unreadable financial
account, it will be a straightforward description of the money
spent and its effects on achieving goals. We will call this the
Annual Accountability Report to the Citizens.

     Information Technology

     A few years ago in Massachusetts, a disabled veterans
caseworker who worked to  match veterans with available jobs took
some initiative. He decided to abandon his sole reliance on the
state's central office mainframe computer and take his personal
laptop, loaded with readily available software, on the road.
Suddenly, he was able to check a database, make a match, and
print a resume all during his first contact with an employer.
Quickly, he started beating the mainframe. His state
administrator took notice, and managed to squeak through a
request to the Department of Labor's Veterans Employment and
Training Service for grant funding and permission to reprogram
dollars in the fall of 1990. Soon after, 40 Massachusetts
caseworkers were working with laptops. In just one year,
Massachusetts jumped from 47th in the nation for its veterans job
placement rate to 23rd.

     Although this story screams success, it is unfortunately the
exception, not the rule. Normally, the Labor Department has to
approve the purchase of something as small as a $30 modem in the
field. Massachusetts got the funding only because it was the end
of the fiscal year and money had to be spent.45

     The point stands: When workers have current and flexible
technology to do their jobs, they improve performance. We need to
get more computers off the shelf and into the hands of federal
employees.

Action: The administration will develop a strategic plan for
using information technology throughout the federal government.46

     Transforming the federal government is an enormous, complex
undertaking that begins with leadership, not technology. Yet, in
helping to break down organizational boundaries and speed service
delivery, information technology can be a powerful tool for
reinvention. To use that tool, government employees must have a
clear vision of its benefits and a commitment to its use.

******************************
In short, it's time our government adjusted to the real world,
tightened its belt, managed its affairs in the context of an
economy that is information-based, rapidly changing, and puts a
premium on speed and function and service, not rules and
regulations.
President Bill Clinton
Remarks announcing the  National Performance Review
March 3, 1993
******************************

     Washington's attempts to integrate information technology
into the business of government have produced some successes but
many costly failures. Many federal executives continue to
overlook information technology's strategic role in reengineering
agency practices. Agency information resource management plans
aren't integrated, and their managers often aren't brought into
the top realm of agency decisionmaking. Modernization programs
tend to degenerate into loose collections of independent systems
solving unique problems. Or they simply automate, instead of
improve, how we do business.

     The President should expand the work of the existing
Information Infrastructure Task Force to include a Government
Information Technology Services Working Group. This working group
will develop a strategic vision for using government information
services and propose strategies to improve information resource
management. Also beginning in October 1993, OMB will convene
interagency teams to share information and solve common
information technology problems. In addition, OMB will work with
each agency to develop strategic plans and performance measures
that tie
technology use to the agency's mission and budget.

Chapter-3-Empowering-Employees-to-Get-Results Step-4:---Enhancing-the-
Quality--of-Worklife

     When it comes to the quality of worklife, as measured by
employee pay, benefits, schedule flexibility, and working
conditions, the federal government usually gets good marks. Uncle
Sam is a family-friendly employer, offering plenty of options
that help employees balance their life and work responsibilities.
Flextime, part-time, leave-sharing, and unpaid family and medical
leave are all available. Pilot projects in telecommuting allow
some workers who travel long distances to work at locations
closer to home.

     The federal government would be smart to keep abreast of
workplace trends. Our increasingly diverse workforce struggles to
manage child care, elder care, family emergencies, and other
personal commitments, while working conditions become ever more
important. Recent studies suggest that our ability to recruit and
retain the best employees--and motivate them to be
productive--depends on our ability to create a satisfying work
environment. Johnson & Johnson, for example, reported that its
employees who used flextime and family leave were absent 50
percent fewer days than its regular workforce. Moreover, 71
percent of those workers using benefits said that the policies
were "very important" to their decision to stay with the company,
as compared to 58 percent of the employees overall.46

     The federal government must maintain its "model employer"
status and keep the workplace a humane and healthy place. It must
also ensure that, as we move toward improving performance and
begin to rely on every worker for valuable ideas, we create a
workplace culture in which employees are trusted to do their
best.

Action: The federal government will update and expand
family-friendly workplace options.47

     Even under current workplace policies, federal workers still
encounter some problems. Many agencies do not fully advocate or
implement flexible work policies. For example, only 53 percent of
our employees with dependent care needs believe their agencies
understand and support family issues, according to OPM.
Thirty-eight percent indicated that their agencies do not provide
the full range of dependent-care services available. As one
example, OPM concluded that "...certain agencies may have
internal barriers that make supervisors reluctant to approve
employee requests to work part-time."48

     The President should issue a directive requiring that all
agencies adopt compressed/flexible time, part-time, and
job-sharing work schedules. Agencies will also be asked to
implement flexiplace and telecommuting policies, where
appropriate. Starting next year, we will allow federal employees
to use accrued sick leave to care for sick or elderly dependents
or for adoptions.49 We will also give credit for all sick leave
to employees who have been separated from and then rejoin federal
employment, no matter how long they were out of government
service.

     Congress has written into law some barriers to improving the
federal workplace. It should lift them. By January 1994, OPM will
submit legislation to remove limitations on dependent-care
programs and give agencies more authority to craft
employee-friendly programs, such as employee benefit packages. By
March 1994, OPM and GSA will propose legislation to enable
flexiplace and telecommuting arrangements.

     Finally, we urge Congress to reauthorize the Federal
Employees Leave Sharing Act which expires October 31, 1993 with a
few changes to improve program operations and allow interagency
transfers of annual leave. Voluntary leave enables employees with
family medical emergencies, who have exhausted all their
available annual leave, to receive donated annual leave from
their fellow federal workers. In just the last two years,
voluntary leave served more than 23,000 federal employees with
more than 3,742,600 hours of donated annual leave. The
dependent-care needs of more than 96 percent of federal employees
are met by the leave-sharing program.50


******************************
One of the things we learned... is that there's a strong
correlation between employee satisfaction and customer
satisfaction. If your employees are unhappy and worried about the
various baseline, basic needs, you know, of the quality of their
work life, they won't worry about customers.

Rosetta Riley
Director of Customer Satisfaction
General Motors
******************************

Action: The executive branch will abolish employee time sheets
and time cards for the standard work week.51

     In a productive workplace, where employees clearly
understand their agency's mission, how they fit into it, and what
they must accomplish to fulfill it, everyone is a professional.
The work culture must send this message in every way possible.
One easy way is to put an end--once and for all--to meaningless
employee sign-ins and sign-outs on time sheets.

     Many may consider this a trivial matter. But consider the
salaried Health and Human Services (HHS) employee who must still
sign in at a central location in her office every morning--and
sign out exactly 81/2 hours later. She must do this no matter how
many more hours she really works, and every employee in her
branch must sign the same list, in order of appearance.

     Occasionally, when she gets caught up in a meeting or lost
in concentration at her desk, she forgets to sign the book at her
appointed hour. Supervisors have "guided" her to avoid this
problem. She tells her supervisor, who agrees that the practice
is senseless, that it discourages her from working longer hours.
"What about us overachievers?" she asks him. "You lose," he
answers.

The truth is, we all lose. Yet HHS continues to spend dollars
training timekeepers.52

     The Department of Labor, by contrast, listened to complaints
from its employees about the needless paper-pushing and use  of
administrative time that repetitive timekeeping required. Under
the leadership of Secretary Robert Reich, and with full backing
of union presidents who represent department employees, Labor has
begun to dump the standard time card. After realizing that nearly
14,000 of its 18,000 employees work a standard 40-hour week,
department leaders decided to trust their workers to report only
exceptions, such as overtime and sick and annual leave. Since
only one third of Labor's workforce reports any exception in the
average week, the department is already saving paper and
time--and money. Standard time records are now submitted
electronically, without bothering employees.56

     The President should encourage all departments and agencies
to follow the Department of Labor's lead. The new policy will
allow for exceptions--for example, when labor contracts or
matters of public safety require them. But if we truly seek the
highest productivity from our workers, we must treat them like
responsible adults. In today's work environment, time cards are a
useless annoyance.

Action: The President should issue a directive committing the
administration to greater equal opportunity and diversity in the
federal workforce.54

     President Clinton launched his administration by appointing
cabinet and senior officials who, in his words, "look like
America." In doing so, he sent a clear message: A government that
strives for the best must continue to break down stubborn
barriers that too often keep us from employing, training, or
promoting the best people.

     While the President has set the stage, the current federal
workforce does not reflect the nation's diverse working
population. Overall, the federal government has yet to
successfully eliminate some discriminatory barriers to attracting
and retaining
underrepresented groups at every civil service grade level, or
advancing them into senior positions. A glass ceiling still hangs
over the employment and career prospects for women, minorities
and people with disabilities who work in the federal service.
Women account for only 12 percent of the top tier of the federal
employment ladder--the Senior Executive Service--and minorities,
nine percent.55 Serious disparity persists for both in promotion
rates to professional and administrative levels  that serve as
the gateway to further advancement. The numbers for Americans
with disabilities are even worse.

     Much can be done to make equal opportunity an integral part
of each agency's mission and strategic plan. The President should
issue a directive in 1993, committing the administration to
attaining a diverse federal workforce and increasing the
representation of qualified minorities, women, and people with
disabilities at all career levels. The order should instruct
agency heads to build equal employment opportunity and
affirmative employment elements into their agency strategic plans
and
performance agreements. In turn, agency leaders should require
managers and teams throughout their agencies to build the same
goals into their own performance plans--and should publicly
recognize those who succeed.


Chapter-3-Empowering-Employees-to-Get-Results Step-5:---Forming-a-Labor-
Management-Partnership

     The federal workforce is changing. While the number of
employees has remained constant for a decade, the workforce is
much more diverse, with more minorities and women. It is better
educated and more mobile. And more employees work in
professional,
scientific, and highly technical jobs than ever before.

     Today, more than 125 federal unions represent about 60
percent of the federal workforce. That's 1.3 million civilian,
non-postal employees, or 80 percent of the workforce eligible to
participate in federal unions. The three largest federal employee
unions are the American Federation of Government Employees
(AFGE), the National Treasury Employees Union (NTEU), and the
National Federation of Federal Employees (NFFE).

     Federal employees and their unions are as aware of the
quality revolution as are federal managers. Consistent with the
quality push, federal employees want to participate in decisions
that affect their work. Indeed, GAO estimates that 13 percent of
federal workers already are involved in formal quality management
processes.56 At the IRS, for example, a Joint Quality Improvement
Process with the NTEU has spread throughout the agency--saving
money, producing better service, and improving labor-management
relations.

     Corporate executives from unionized firms declare this truth
from experience: No move to reorganize for quality can succeed
without the full and equal participation of workers and their
unions. Indeed, a unionized workplace can provide a leg up
because forums already exist for labor and management exchange.
The primary barrier that unions and employers must surmount is
the adversarial relationship that binds them to noncooperation.
Based on mistrust, traditional union-employer relations are not
well-suited to handle a culture change that asks workers and
managers to think first about the customer and to work
hand-in-hand to improve quality.

*****************************
We want to be full partners. We want to work. We want government
to work better. We want to be there in partnership to help
identify the problems. We want to be there in partnership to help
craft the solution. We want to be there in partnership to help
implement together the solution that this government needs. And
we're prepared to work in partnership to make some bold leaps to
turn this government around and make it work the way it should
work.  John Sturdivant, President
American Federation of Government Employees
Reinventing Government Summit,  Philadelphia June 25, 1993
*****************************

     The current context for federal labor-management relations,
title VII of the 1978 Civil Service Reform Act, presents such a
barrier. In 1991, the GAO concluded after an exhaustive survey of
union leaders, government managers, federal employees and neutral
experts, that the federal labor-management relations program
embodied in title VII "is not working well." GAO characterized
the existing bargaining processes as too adversarial, bogged down
by litigation over minute details, plagued by slow and lengthy
dispute resolution, and weakened by poor management. One expert
interviewed by GAO summed up the prevailing view: "We have never
had so many people and agencies spend so much time, blood, sweat,
and tears on so little. In other words, I am saying I think it is
an awful waste of time and money on very little results." Indeed,
the cost of handling unfair labor practice disputes using this
system runs into tens of millions of dollars every year.57

     We can only transform government if we transform the
adversarial relationship that dominates federal union-management
interaction into a partnership for reinvention and change.
Action: The President should issue a directive that establishes
labor-management partnership as an executive branch goal and
establishes a National Partnership Council to help implement
it.58
     The President's executive order will articulate a new vision
of labor-management relations. It will outline the roles of
managers and unions in creating a high-performance, high-quality
government. It will call for systematic training in alternative
dispute resolution and other joint problem-solving approaches for
managers, supervisors and union officials. And it will call for
agencies to form their own internal councils.

     By October, 1993, the President should appoint the National
Partnership Council and charge it with the task of championing
these efforts and developing the next steps. The council will
include appropriate federal cabinet secretaries, deputy
secretaries, and agency directors; the presidents of AFGE, NTEU,
and NFFE; and a representative of the Public Employee Department
of the AFL-CIO. Federal agencies and unions will assign existing
personnel to staff the council.

Action: The National Partnership Council will propose the
statutory changes needed to make labor-management partnership a
reality.59
     GAO cited the need for a new labor-management relations
framework that "motivates labor and management to form productive
relationships to improve the public service."60 The Federal Labor
Relations Authority, The Federal Mediation and Conciliation
Service, and several agencies have been encouraging and
facilitating new labor-management cooperation efforts. However,
their efforts are being hampered by legal restrictions that focus
on the traditional adversarial models. The council will recommend
legislation to the President to create a better framework.

Chapter-3-Empowering-Employees-to-Get-Results Step-6:-Exerting-Leadership

     Despite the federal government's solid core of capable
employees, it lacks effective leadership and management
strategies. In 1992, GAO delivered a stark diagnosis of the
situation. Our government, GAO reported, lacks the "processes and
systems fundamental to a well-run organization. Most agencies
have not created a vision of their futures, most lack good
systems to collect and use financial information or  to gauge
operational success and accountability, and many people do not
have the skills to accomplish their missions." This situation,
GAO concluded in a burst of understatement, was "not good."61

     The sweeping change in work culture that quality government
promises won't happen by itself. Power won't decentralize of its
own accord. It must be pushed and pulled out of the hands of the
people who have wielded it for so long. It will be a struggle.
     We must look to the nation's top leaders and managers to
break new ground. The President, the Vice President, cabinet
secretaries, and agency heads are pivotal to bringing about
governmentwide change. It is they who must lead the charge. Under
President Clinton's leadership they are determined to make it
happen.
     If we want to make the federal government a better place,
our current leadership must make it clear by what we do that,
when we offer change, we mean business. That is a promise we must
make to the entire community of hardworking, committed federal
workers. It is a promise we must keep.

Action: The President should issue a directive detailing his
vision, plan, and commitment to creating quality government.62
     Graham Scott, who as Secretary of Treasury for New Zealand
helped shepherd reinvention of that country's government,
cautioned Vice President Gore, "Our experience is that government
won't change unless the chief executive is absolutely 100 percent
committed to making it change."63 CEOs of corporations the world
over echo Scott's call.

     The first directive issued along with this report will
clarify the President's vision of a quality federal government.
It will commit the administration to the principles of
reinventing government, quality management, and perpetual
reengineering, as well as the National Performance Review's other
recommendations. In addition, it will detail the strategic
leadership roles of the cabinet and agencies in implementing
them.

Action: Every federal department and agency will designate a
chief operating officer.64

     Transforming federal management systems and spreading the
culture of quality throughout the federal government is no small
task. To accomplish it, at least one senior official with
agencywide management authority from every agency will be needed
to make it happen.

     Every cabinet-level department and federal agency will
designate a chief operating officer (COO). In addition to
ensuring that the President's and agency heads' priorities are
implemented, COOs will be responsible for applying quality
principles in transforming the agencies' day-to-day management
cultures, for improving performance to achieve agencies' goals,
for reengineering administrative processes, and for implementing
other National Performance Review recommendations.

     The COO will not add an additional position in the
secretary's or director's staff. Secretaries and agency directors
should designate the deputy secretary or under secretary with
agencywide authority as the COO. The COO will report directly to
the agency's top official.

Action: The President should appoint a President's Management
Council to lead the quality revolution and ensure the
implementation of National Performance Review plans.65

     A new President's Management Council (PMC) will be the
President's chief instrument to retool management systems
throughout the executive branch. It will act as the institutional
lever to drive management and cultural changes throughout the
bureaucracy. The PMC will ensure that quality management
principles are adopted, processes are reengineered, performance
is assessed, and other National Performance Review
recommendations are
implemented.

******************************
Unless everyone understands what a work process is, how to map
it, how to analyze and quantify its essential elements, no
organization will be able to reap the enormous gains in
performance that come with an involved and empowered workforce.
Frank Doyle
Executive Vice President, General Electric
Reinventing Government Summit, Philadelphia  June 25, 1993
******************************

     The President should appoint the Deputy Director for
Management of OMB to chair the PMC, and its progress will be
overseen by the Vice President. The council will include the COOs
from 15 major agencies and three other agencies designated by the
chairperson, the heads of GSA and OPM, and the President's
Director of Cabinet Affairs (ex officio). Its agenda will include
setting priorities, identifying and resolving cross-agency
management issues; establishing interagency task forces to
transform governmentwide systems such as personnel, budget,
procurement, and information technology; and soliciting feedback
from the public and government employees. It will secure
assistance from the CEOs, officials and consultants who have
helped transform major American corporations, states and local
governments, and non-profit organizations. In addition, the PMC
will conduct an annual performance review of the federal
government and issue an annual report to the public on its
findings.

     Working together, the President, Vice President, PMC and
every agency head will carry the quality message into the
sleepiest corners of the bureaucracy. Successful and innovative
agencies will be cheered; slower moving organizations will be
prodded and encouraged until change occurs.

Action: The President's Management Council will launch quality
management "basic training" for all employees, starting with top
officials and cascading through the entire executive branch.66


     However pressing the need, we cannot expect leaders,
managers and employees caught up in old ways to change overnight.
To nurture a quality culture within government, we must help the
entire workforce understand the President's vision. Unless we
train everyone in the new skills they need--and help them
understand the new roles they are expected to play--they can,
through passive or active resistance, frustrate well-intentioned
attempts to progress. So first and foremost, everyone will need
to learn what working and managing for quality is all about.

     The President and agency heads must send a clear message
about their commitment by becoming directly involved in the
design and delivery of quality training in their agencies.
Therefore, the PMC, working with the Federal Quality Institute,
will begin quality training with the cabinet secretaries and
agency heads. Training sessions will focus on defining a shared
vision, developing a strategy to embed that vision in the each
department, committing participants to lead and be responsible
for change, and
establishing a process for training the next level of management.

     Even as agencies reorganize around quality and customers,
their staff may need training to fulfill expanded job
responsibilities. Line staff may need to learn budget and
procurement processes. Managers may need help in becoming coaches
rather than commanders. We will pursue the goal of reaching the
entire federal workforce with quality training.

     It is worth noting that some cabinet secretaries already are
up on the quality learning curve. During the past few months,
more than 60 top field managers, contract lab directors, and
assistant secretaries have joined Energy Secretary Hazel O'Leary
for 6 days of total quality management training at Motorola
University in Chicago. They've agreed on a mission statement, set
the
department's core values, and put strategic planning in motion.
In the process, skeptics have become energized, egos have been
subsumed, hidden agendas unearthed and dispensed. In the words of
one participant, "Everyone is working as a team. We're incredibly
excited about doing better. In just 6 days of quality training,
we have moved from 'I' to 'we'."67

     Other departments are hot on Energy's heels. Such agency
leadership is pivotal to moving quality forward. As quality
innovator Dr. Joseph Juran told Vice President Gore, "As we go at
it energetically in the federal government... we're still going
to see some of the agencies step out in front and everybody else
is going to watch. And as they get results and nobody's hurt in
the process, others will be stimulated to do the same thing."68


Conclusion

     To change the employee culture in government, to bring about
a democracy of leadership within our bureaucracies, we need more
than a leap of faith. We need a leap of practice. We must move
from control to collaboration, from headquarters to every
quarter. We must allow the people who face decisions to make
decisions. We must do everything we can to make sure that when
our federal workers exercise their judgment, they are prepared
with the best information, the best analysis, and the best tools
we have to offer. We must then trust that they will do their
best--and measure the results.

     Indeed, we must let our managers and workers fail, rather
than hold them up to public ridicule when they do. Only if they
fail from time to time on their way to success will we be sure
they are even trying to succeed. Someone once asked an old man
known for his wisdom why he was so smart. "Good judgment comes
from experience," he said. And experience? "Well, that comes from
bad judgment."
     To transform the culture of our government, we must learn to
let go. When we do, we will release the same kind of creativity,
energy, productivity, and performance in government service that
was unleashed 200 years ago, and that continues to guide us
today.

Chapter-4-Cutting-Back-to-Basics Introduction

***********************************
               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 "stealing" from the federal
government--at a rate of about $11 an hour. His job was checking
the weather in Russell, Kansas, every hour, and reporting to the
Federal Aviation Administration. The FAA used his information to
warn planes in the area about bad weather. But Russell isn't a busy
flight station any more. Bair saw just two landings in more than a
year during his night shift. Days were only slightly busier. Before
the advent of automated weather gathering devices, human weather
watchers at Russell and at other small stations throughout the
Midwest were vital for aircraft safety. Today, they could be
replaced with machines. "From my experience with the machine,"
wrote Bair, "it is very adequate to protect the air space over
Russell." In fact, Russell has had a machine for some time, but the
FAA had not yet eliminated the human staff.

     Bair concluded his letter to Vice President Gore with these
words: "I feel there is very little doubt among professionals that
we are basically useless here." A few months later, he quit. Now he
says, "I'm no longer stealing from the government."1

     Bruce Bair's story tells us much about our federal government:
its entrenchment in old ways, its reluctance to question
procedures, and its resistance to change. Its inflexibility has
preserved scores of obsolete programs. This is not news to most of
us--obsolescence is part of our stereotype of government.

     Why is it so difficult to close unneeded programs? Because
those who benefit from them fight to keep them alive. While the
savings from killing a program may be large, they are spread over
many taxpayers. In contrast, the benefits of keeping the program
are concentrated in a few hands. So special interests often prevail
over the general interest.

     That's why we can't eliminate unnecessary programs simply by
making lists. Politicians, task forces, commissions, and newspaper
articles have been ridiculing wasteful programs for as long as we
have enjoyed democratic government. But most programs survive
attack. After a decade of tight budget talk, for example, federal
budget expert Allen Schick says he can identify just three major
nondefense programs eliminated since 1980: general revenue sharing,
urban development action grants, and the fast breeder reactor
program.2

     To shut down programs, therefore, we must change the
underlying culture of government. As we described in the preceding
chapters, we will do this by introducing market dynamics, sharing
savings from cuts with agencies, exposing unnecessary programs to
the spotlight of annual performance measures, and giving customers
the power to reject what they do not need. As government begins
operating under these new rules, we are confident that agencies
will request the consolidation and elimination of programs.
Billions of dollars will be returned to taxpayers or passed on to
customers.

We will begin this process today:

     First, we will eliminate programs we do not need--the
obsolete, the duplicative, and those that serve special, not
national interests.

     Second, we will collect more--through imposing or increasing
user fees where pricing makes economic sense, and by collecting
what the government is owed in delinquent debt or fraudulent
overpayment of benefits.

     Third, we will reengineer government activities, making full
use of computer systems and telecommunications to revolutionize how
we deliver services.

     The actions and recommendations described in this Chapter are
the first dividend on what we can earn from streamlining
government. They won't be the last--or even the largest. The
strategy  of the National Performance Review differs from that of
previous budget cutting efforts. Our recommendations have been
discussed thoroughly with agency heads to determine which cuts are
warranted, feasible, and can be done quickly. We are ready to act
with the full force of the cabinet.


Chapter-4-Cutting-Back-to-Basics Step-1:-Eliminate-What-We-Don't-Need


     After World War II, a British commission on modernizing
government discovered that the civil service was paying a full-time
worker to light bonfires along the Dover cliffs if a Spanish Armada
was sighted. The last Spanish Armada had been defeated some years
before--in 1588, to be precise.

     This story may be apocryphal. But not all such stories are. In
Brooklyn, New York, there is a Federal Tea Room where a federal
employee sips imported tea to test its quality.3 For one hundred
years, taxpayers paid for the position. It was not until press
coverage angered enough members of Congress that things were
changed: now, tea importers pay to have their tea tested--although
the taster remains a government employee.

     These stories capture an essential truth about governments;
they rarely abandon anything. Like the FAA that employed Bruce Bair
to check the weather, federal agencies do many things not because
they make sense, but because they have always been done that way.
They become like the furniture: They are simply there.

     Other programs are not so much obsolete as duplicative. When
confronted with new problems, we instinctively create new programs.
But we seldom eliminate the old programs that have failed us in the
first place. Still other programs were never needed in the first
place. They were created to benefit influential industries or
interest groups. The National Performance Review has targeted
several programs in each of these categories for immediate
elimination.

     Although we make specific recommendations in the pages that
follow, we believe the government must tackle the problem
systematically. The single best method would be to give the
President greater power to eliminate pork that creeps into federal
budgets.


Action: Give the President greater power to cut items from spending
bills.4


     Today, the President's powers to cut spending are
limited--more limited than most of the nation's fifty governors. He
can either sign or veto appropriations bills; he can't veto
individual items--a power most governors have. For the President to
cut wasteful spending, he needs the power of what is called, in
Washington, "expedited rescission." Under current law, the
President can submit proposed rescissions to Congress, which then
has 45 legislative days to act. If Congress does not act, proposals
are rejected. The President should have greater authority to reject
individual items.

     Broader rescission powers were 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 it kill those requests by ignoring them, as under current
procedures. If enacted, the new procedure would, as President
Clinton wrote in a letter to House Speaker Thomas S. Foley,
"provide an effective means for curbing unnecessary or
inappropriate expenditures without blocking enactment of critical
appropriations bills."

Eliminate the Obsolete

     Not all employees of useless programs act with Bruce Bair's
forthrightness. But that doesn't mean their offices or programs are
any more useful. The vast nationwide network of 30,000 federal
government offices, for example, reflects an era when America was
a rural country and the word "telecommunications" was not yet in
the dictionary. While circumstances have changed, the government
hasn't. As a result, workloads are unevenly distributed--some field
offices are underworked, others are overworked, some are located
too far from their customers to serve them well, and few are
connected to customers through modern communications systems.


Action: Within 18 months, the President's Management Council will
review and submit to Congress a report on closing and consolidating
federal civilian facilities.5


     All agencies will develop strategies to cut back or
consolidate their field office systems in ways that are compatible
with our principle of better services to customers. The President's
Management Council will submit the report to Congress within 18
months showing which offices may be closed, which can be
consolidated and which can be slimmed. We urge Congress to act
quickly on this package.

*******************************

     This is a precious opportunity to make fundamental change in
government. I look forward to working together on areas of mutual
agreement.



     U.S. Rep. William F. Clinger (R. Penn.)

*******************************

     We are confident that the savings will be large because
several agencies are already committed to far-reaching reforms in
their field office systems. Their efforts will be models for those
that haven't moved as quickly as they prepare their plans for the
President's Management Council.


Action: The Department of Agriculture will close or consolidate
1,200 field offices.6


     The Department of Agriculture (USDA) operates the most
elaborate and extensive set of field offices--more than 12,000
across the country. Under Secretary Mike Espy's leadership, the
department is planning dramatic reforms. USDA runs 250 programs in
such vital but diverse areas as farm productivity, nutrition, food
safety, and conservation. Its focus has shifted dramatically since
the 1930s, when its present structure evolved: 60 percent of its
budget now deals with nutrition; less than 30 percent with
agriculture.

     As the basis for reorganization, USDA will concentrate its
activities on six key functions: commodity programs, rural
development, nutrition, conservation, food quality, and research.
This focus will allow it to consolidate from 42 to 30 agencies and
from 14 to six support staffs, cutting administrative costs by more
than $200 million over five years.

     As part of this process, USDA will consolidate or close about
1,200 field offices within the Agricultural Stabilization and
Conservation Service, the Soil Conservation Service, the Farmers
Home Administration, the Cooperative Extension System, and the
Federal Crop Insurance Corporation. Some of these offices now serve
suburban counties, others have few rural customers left. In 1991,
the General Accounting Office reported that in Gregg County, Texas,
the Agricultural Stabilization and Conservation Service office
served only 15 farmers; in Douglass County, Georgia, two USDA
programs served a total of 17 farmers.7

     Field office closings will be determined by a six-part scoring
system developed to evaluate each office. Once in place, this
restructuring will save more than $1.6 billion over five years and
eliminate the equivalent of 7,500 full time employees. Customers
will be better served because operations will be combined in
multi-purpose USDA field service offices.


Action: The Department of Housing and Urban Development will
streamline its regional office system.8


     The Department of Housing and Urban Development (HUD) has also
developed a strategy to close offices without cutting customer
services. Roughly 10,000 of HUD's 13,500 employees work in field
offices, but their workloads vary: the New York regional office
monitors 238,000 federal public housing units, the Seattle office
only 30,000 units. Management restructuring, described in the
previous chapter, will streamline HUD's field operations.9 Under a
five-year plan, HUD will eliminate all regional offices, pare down
its 80-field office system, and cut its field staff by 1,500
people.


Action: The Department of Energy will consolidate and redirect the
mission of its laboratories, production, and testing facilities to
meet post-Cold War national priorities.10


     For the first time in 50 years, the United States is not
engaged in producing or testing nuclear weapons. Significant
reductions in funding for these programs are already
underway--$1.25 billion in fiscal year 1994 alone. Yet, the
Department of Energy's weapons laboratories and production plants
represent an irreplaceable investment in world-class research and
development, intellectual, and computing capabilities, carefully
cultivated over five decades. As the department redirects its
facilities, the challenge is to eliminate unnecessary activities,
while shifting appropriate resources to meet non-defense
objectives.

     Under Secretary of Energy Hazel O'Leary's leadership, DOE will
review its labs, weapons production facilities, and testing sites
in the context of its mission--and will recommend the phased
consolidation or closure of obsolete or redundant facilities. The
secretary will also identify facilities that other government
agencies may find useful, encourage laboratory managers to bid on
contracts with other agencies, and increase cooperation with the
private sector.


Action: The U.S. Army Corps of Engineers will reduce the number of
regional offices.11


     The U.S. Army Corps of Engineers, too, has a plan: it will cut
its divisional offices from 11 to 6. It cannot, however, close
district offices because Congress prevented such actions by law--an
example of costly congressional micro-managing. The Corps has
carried out the nation's largest civil works projects. But its role
is changing: Fewer large projects, more complex environmental
projects.



Action: The Small Business Administration will reduce the number of
field offices and consolidate services.12



     The Small Business Administration is developing criteria for
consolidating field offices based on the customer load. It has
already demonstrated in pilot programs how to cut local office
staff by providing routine loan servicing for several local  SBA
offices and by adopting automated procedures for processing
applications for the agency's many different loan programs.


Action: The U.S. Agency for International Development will reduce
the number of its overseas missions.13


     With the dramatic changes in U.S. foreign policy, agencies
with overseas operations are rethinking their responsibilities. J.
Brian Atwood, administrator for the U.S. Agency for International
Development (AID), believes the number of countries in which his
agency operates missions can be cut from 105 to perhaps 50. Cuts
will be made in the number of missions in developed countries so
that the agency's efforts can focus on those nations that can't
absorb or manage assistance or on truly underdeveloped countries.


Action: The United States Information Agency will cut the number of
libraries and reference centers it pays for overseas.14


     Savings are also possible in overseas facilities maintained by
the United States Information Agency. USIA maintains libraries and
other facilities in many developed countries, as well as in
emerging countries. While facilities in the latter are often
crowded, those in developed countries attract few customers: In
Canada, for example, a USIA library attracted only 568 walk-in
visitors in a year. Eliminating some of these facilities or turning
them over to their host countries could save an estimated $51.5
million through 1999.15

**********************************


     We'll challenge the basic assumptions of every program, asking
does it work, does it provide quality service, does it encourage
innovation and reward hard work. If the answer is no, or it there's
a better way to do it or if there's something that the federal
government is doing, it should simply stop doing, we'll try to make
the changes needed."


                    President Bill Clinton

Announcement of initiative to streamline government March 3, 1993

********************************


Action: The Department of State will reduce by 11 the number of
Marine Guard detachments it employs.16


     By consolidating the storage of top secret documents in
overseas missions, the Department of State can reduce the need for
Marine Guard detachments. The Bureau of Diplomatic Security has
identified 11 posts where the Marine Security Guard program could
be eliminated simply by moving documents to other places.


Action: Pass legislation to allow the sale of the Alaska Power
Administration.17


     The federal government once played a crucial role in
financing, developing and operating the Alaska Power Administration
(APA). No longer. APA was created to encourage economic development
in Alaska by making low-cost hydro-power available to industry and
to residential customers. The project has succeeded and can now be
turned over to local ownership.

     The federal government retains four other Power Marketing
Administrations (PMAs) which own hydropower facilities and sell the
power they generate to public, private, and cooperative utilities
at cost. These PMAs serve customers spread throughout many states,
so the facilities cannot easily be sold to a local entity. APA, on
the other hand, is unique: Its facilities and customers are located
in a single state. Various public agencies have already urged the
federal government to sell the APA facilities. APA signed purchase
agreements to do so before 1993.

     The sale is supported by state and local officials, Alaska's
congressional delegation, the Energy Department, the Office of
Management and Budget and the House Appropriations Committee. But
Congress has yet to pass the necessary authorizing legislation. We
urge it to do so. The sale would bring $52.5 million into the U.S.
Treasury and save millions more in yearly operating costs.


Action: Terminate federal grant funding for Federal Aviation
Administration higher education programs.18


     Success has rendered two FAA federal subsidies obsolete. They
have met the objectives for which they were established and can now
be terminated. For example, in 1982, the Federal Aviation
Administration (FAA) launched a program to improve the development
and teaching of aviation curricula at universities and other
post-secondary schools. The goal was to produce graduates better
prepared for jobs in the industry.

     So far, the FAA has spent about $4 million on consultants to
upgrade schools' programs and another $100 million was
appropriated--most at Congress' insistence not at FAA's request--to
be given out in grants so that the schools could buy better
facilities and equipment. Many schools now offer high quality
aviation training programs without support from the FAA. Since $45
million of the appropriation remains unspent, stopping the program
now can save this money.

     Another program we no longer need is the Collegiate Training
Initiative for Air Traffic Controllers. It was set up to determine
whether other institutions could offer the same quality training
for controllers as the FAA Academy does. If they could, it would
save the government the $20,000 it costs to train each new
controller at the academy. The answer is clearly yes. Five schools
participating in the program are producing well-qualified
controllers, although only two are receiving government subsidies.
It is now time to phase out these remaining subsidies.



Action: Close the Uniformed Services University of the Health
Sciences.19


The Department of Defense once faced shortages of medical
personnel, particularly of physicians. So, in 1972, Congress
created the Uniformed Services University of the Health Sciences
(USUHS). Today, USUHS provides less than 10 percent of the
services' physicians at a cost much higher than other programs:
USUHS physicians cost the federal government $562,000 each, while
subsidies under the Health Professionals Scholarship Program cost
only $111,000 per physician. Closing the facility and relying on
the scholarship program and volunteers would save DOD $300 million
over five years.


Action: Suspend the acquisition of new federal office space.20


Over the next 5 years, the federal government is slated to spend
more than $800 million a year acquiring new federal office space
and courthouses. Under current conditions, however, those
acquisitions don't make sense.

     The federal workforce is being reduced, the Resolution Trust
Corporation is disposing of real estate once held by failed savings
and loans at 10 to 50 cents on the dollar, commercial office
vacancy rates are running in the 10 to 25 percent range, and U.S.
military bases are being closed. All of these factors suggest that
the government has many potential sources for office space without
buying any more buildings.

     The GSA administrator will place an immediate hold on GSA's
acquisition--through construction, purchase, or lease--of net new
office space. The administrator will begin aggressive negotiations
for existing and new leases to further reduce costs. And GSA will
reevaluate and reduce the costs of new courthouse construction.
These actions should save at least $2 billion over the next 5
years.


Eliminate Duplication


     Government programs accumulate like coral reefs--the slow and
unplanned accretion of tens of thousands of ideas, legislative
actions, and administrative initiatives. But, as a participant at
the Vice President's HUD meeting told us, "There isn't always a
rational basis for the way we are set up in this organization. Over
the years, branches have developed; they have been taken over by
divisions; and we don't look at the organization as a whole." Now
we must clear our way through these reefs.


     The National Performance Review has looked at government as a
whole. We have identified many areas of duplication. What follow
are recommendations for the first round of cuts and consolidations.


Action: Eliminate the President's Intelligence Oversight Board.21


     No branch of government--including the Executive Office of the
President--is free of duplication. We will begin the streamlining
process in the EOP, where there are two groups intended to oversee
intelligence--tripping over each other and allowing some issues to
fall through jurisdictional cracks. The President, by directive,
should terminate the President's Intelligence Oversight Board and
assign its functions to a standing committee of the President's
Foreign Intelligence Advisory Board.


Action: Consolidate training programs for unemployed people.22


     Government's response to changing circumstance often creates
duplication. As the economy has evolved, for example, we have
created at least four major programs to help laid-off workers: the
Economic Dislocation and Worker Adjustment Assistance Act (EDWAA),
which spends $517 million annually for those who lose their jobs
through plant closings or major layoffs; the Trade Adjustment
Assistance program (TAA), which distributes $170 million through
State Employment Security Agencies for those who lose jobs due to
increased imports; the Defense Conversion Adjustment program, which
dispenses $150 million for those unemployed because of defense
cuts; and a program that allocates $50 million for those unemployed
due to the enforcement of new clean air standards. Even more
programs are in the pipeline.

     But multiple programs aimed at common goals don't work well.
Administrative overhead is doubled and services suffer. Because
each training program is intended to help people rendered jobless
for different reasons, people seeking work must wait for help until
the government determines which program they are eligible for. The
process is slow. The General Accounting Office estimates that less
than one-tenth of TAA-eligible workers receive any benefits within
15 weeks of losing their jobs, for example.23

     The unemployed care less about why they lost their jobs than
about enrolling in training programs or finding other jobs. Labor
Secretary Robert Reich is proposing legislative changes to
consolidate programs for workers who lose their jobs, regardless of
the cause. His bill would also allow more funds 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.



Action: Consolidate the Veterans' Employment and Training Service
and the Food Stamp Training Program into the Employment and
Training Administration.24


Several training programs offer similar services through the same
offices--sometimes even using the same employees--but requiring
separate management and reporting systems. We can cut bureaucracy
and paperwork while improving services to the customer by merging
these programs.

     Consider the case of the Veterans' Employment and Training
Service (VETS) in the Department of Labor (DOL). Another operation
in DOL, the Employment and Training Administration (ETA), funds
local Employment Services, which, in turn, house staff dedicated to
providing veterans with advice on training programs. But these
staff are legally prohibited from serving non-veterans. So, if a
local office is crowded with non-veterans, these specialists cannot
help out--even if they have no veterans to serve. Moving VETS into
the ETA will generate much greater efficiency in the use of staff,
leading to shorter lines and better service.

     We also recommend moving the Food Stamp Training Program into
the ETA. Most training under the program is already performed under
contract by ETA staff, by the Employment Service, or by local
education institutions. Overall, ETA can offer poor people a much
more comprehensive range of job-search and training services than
can the Food Stamp Training Program.


Action: Reduce the number of Department of Education programs from
230 to 189.25


     The nation's concern with education has led to an explosion of
programs at all levels of government. The Education Department now
funds 230 programs, many of which overlap. Since many are grants to
state and local governments, we face duplication in
triplicate--multiple administrative systems at all levels of
government.

     Of these 230 programs, 160 will award money through 245
different national competitions this year. The cumbersome
administrative systems divert money from activities more central to
the department's mission. These programs should be reduced in
number and their procedures streamlined.

     The department has begun reforming and streamlining programs,
particularly those under the Elementary and Secondary Education
Act. This will make it easier for schools to get the money without
jumping through so many bureaucratic hoops. We propose to eliminate
and consolidate more programs that have served their original
purpose or would be more appropriately funded through non-federal
sources. The savings, as much as $515 million over 6 years, can be
better used for other departmental priorities. For example:

      The department administers two programs--the National
Academy of Space, Science, and Technology program and the National
Science Scholars program--that give scholarships to post-secondary
math, science, and engineering students. These two should be
combined.

      State Student Incentives Grants were created to encourage
states to develop needs-based student aid programs. Since all
states now have their own programs, the federal program is no
longer needed.

      The Research Libraries' program funds research libraries to
build their collections. University endowments could and should
support these efforts, without federal subsidy.



Action: Eliminate the Food Safety  and Inspection Service as a
separate agency by consolidating all food safety responsibilities
under the Food and Drug Administration.26


     Sometimes duplication among federal programs can make us
ill--even kill us. Take the way we inspect food for contamination.
Several agencies are involved, each operating under separate
legislation, with different standards, and with staff trained in
different procedures. In 1992, the Food and Drug Administration
(FDA)--part of the Department of Health and Human Services--devoted
about 255 staff years to inspecting 53,000 food stores, while the
Food Safety and Inspection Service (FSIS)--part of the Department
of Agriculture--devoted 9,000 staff years to inspecting 6,100 food
processing plants.

     But this duplication doesn't mean that we cover all sources of
contamination thoroughly. Meat and poultry products must be
inspected daily, while shellfish, which have the same risk of
causing food borne illness, are not required by law to be federally
inspected. Too many items fall through the bureaucratic cracks. Not
only that, enforcement powers vary among the different agencies. If
the FDA finds unsanitary plant conditions or contaminated products,
compliance is usually voluntary because the agency lacks FSIS's
powers to close plants or seize or detain suspect or known
contaminated products. And if one agency refers a problem to
another, follow up is at best slow and at worst ignored.27

     With no fewer than 21 agencies engaged in research on food
safety, often duplicating each other's efforts, we aren't
progressing fast enough in understanding and overcoming
life-threatening illness. As recent and fatal outbreaks of
food-borne illness attest, multiple agencies aren't adequately
protecting Americans.

     Under our recommended streamlining, the FDA would handle all
food safety regulations and inspection, spanning the work of the
many different agencies now involved. The new FDA would have the
power to require all food processing plants to identify the danger
points in their processes on which safety inspections would focus.
Where and how inspections are carried out, not the number or
frequency of inspections, determines the efficiency of the system.

     The FDA would also develop rigorous, scientifically based
systems for conducting inspections. Today, we rely, primarily, on
inspection by touch, sight, and smell. Modern technology allows
more reliable methods. We should employ the full power of modern
technology to detect the presence of microbes, giving Americans the
best possible protection. Wherever possible, reporting should be
automated so that high-risk foods and high-risk food processors can
be found quickly. Enforcement powers should be uniform for all
types of foods, with incentives built in to reward businesses with
strong safety records.


Action: Consolidate non-military international broadcasting.28


     The U.S. government funds several overseas broadcasting
services--including those operated by the United States Information
Agency's Bureau of Broadcasting, which accounts for one-third of
the agency's $1.2 billion budget, and services such as Radio Free
Europe and Radio Liberty, which have budgets totalling $220 million
a year. All non-military international broadcasting services should
be consolidated under the USIA. Part of this was propsed in the
President's budget request for fiscal year 1994.


Action: Create a single civilian polar satellite system.29


     Collecting temperature, moisture, and other weather and
environmental information from polar satellites is a vital task,
both for weather forecasting and for global climate studies. But we
have two different systems, one run by the Department of Defense
and the other by the National Oceanic and Atmospheric
Administration. On top of this, the National Aeronautics and Space
Administration is planning a third. Over the next ten years these
three systems will cost taxpayers about $6 billion. Congress should
enact legislation requiring these agencies to consolidate their
efforts into a single system, saving as much as $1.3 billion over
the same period.


Action: Transfer the functions of the Railroad Retirement Benefits
Board to other agencies.30



     The government can operate with fewer pension management
systems. In 1934, Congress set up the Railroad Retirement Board to
protect railroad workers in the face of financial problems, to
allow workers to transfer among railroads, and to encourage early
retirement to create jobs for the millions of younger workers. In
those days, the huge national public pension system, Social
Security, was not yet in place; neither were the state-federal
unemployment insurance systems nor Medicare.

     Today, it makes no sense for a separate agency to administer
benefits for a single industry. Social Security Administration  can
administer social security benefits for railroad workers as it
administers them for everyone else; unemployment insurance systems
can serve unemployed railroad workers as well as it serves other
unemployed people; and the Health Care Financing Administration can
incorporate railroad workers' health care benefits into the
Medicare system.31


Action: Transfer law enforcement functions of the Drug Enforcement
Administration and the Bureau of Alcohol, Tobacco, and Firearms to
the Federal Bureau of Investigation.32


     More than 140 federal agencies are responsible for enforcing
4,100 federal criminal laws. Most federal crimes involve violations
of several laws and fall under the jurisdiction of several
agencies; a drug case may involve violations of financial,
firearms, immigration and customs laws, as well as drug statutes.
Unfortunately, too many cooks spoil the broth. Agencies squabble
over turf, fail to cooperate, or delay matters while attempting to
agree on common policies.

     The first step in consolidating law enforcement efforts will
be major structural changes to integrate drug enforcement efforts
of the DEA and FBI. This will create savings in administrative and
support functions such as laboratories, legal services, training
facilities, and administration. Most important, the federal
government will get a much more powerful weapon in its fight
against crime.

     When this has been successfully accomplished, we will move
toward combining the enforcement functions of the Bureau of
Alcohol, Tobacco and Firearms (BATF) into the FBI and merge BATF's
regulatory and revenue functions into the IRS. BATF was originally
created as a revenue collection agency but, as the war on drugs
escalated, it was drafted into the law enforcement business. We
believe that war would be waged most successfully under the
auspices of a single federal agency.

Eliminate Special Interest Privileges

     Some programs were never needed. They exist only because
powerful special interest groups succeeded in pushing them through
Congress. Claiming to pursue national objectives, Congress, at
times, funds programs that guarantee profits to specific industries
by restricting imports, raising prices, or paying direct and
unnecessary subsidies.

     Special interest groups come in all shapes and sizes and their
privileges are as diverse. Producers of crops, residents of certain
areas, and holders of some occupations have all succeeded in
persuading Congress that their needs are special and their claim on
special treatment is deserving.


Action: Eliminate federal support payments for wool and mohair.33


     During World War II and the Korean conflict, the U.S. was
forced to import about half the wool needed for military uniforms.
To cut dependence on foreign suppliers, Congress in 1954 passed the
National Wool Act, providing direct payments to American wool
producers. The more wool a producer sold, the greater the
government subsidy. In 1960, the Pentagon removed wool from its
list of strategic materials. But the Wool Act remained in effect--a
tribute to adept lobbying.

     Between 1994 and 1999, wool subsidies will cost an estimated
$923 million. About half the payments will go to ranchers who raise
Angora goats for mohair--a product that is 80 percent exported. So
American taxpayers will subsidize the price of mohair sweaters
overseas! In some years, subsidies provide more income than sales.
The 1990 mohair checks, for example, totalled $3.87 for every
dollar's worth of mohair sold.

     Today, about half the beneficiaries receive only $44 a year
each. But the top one percent of sheep raisers capture a quarter of
the money--nearly $100,000 each. The national interest does not
require this program. It provides an unnecessary subsidy for the
wealthy.


Action: Eliminate federal price supports for honey.34


     World War II also brought us federal subsidies for honey
production. During the war, honey was declared essential because
the military used bees' wax to wrap ammunition, and citizens
replaced rationed sugar with honey. When honey prices dropped after
the war, the federal government began subsidizing honey production.

     The program was intended to be temporary--to last until there
were enough honeybees available for pollination. But more than 40
years later, every bee keeper in the U.S. is eligible for federal
loans. In 1992, the federal government paid 7 cents a pound more to
borrow money than it charged bee keepers. Taxpayers paid the
difference. If it were to scrap the program, Congress would save
taxpayers $15 million over the next six years.


Action: Rescind all unobligated contract authority and
appropriations for existing highway demonstration projects.35


     The practice of directing federal highway funds toward
spending on specific demonstration projects--and away from regular
state-level allocations--is increasing. This is not, for several
reasons, a good trend.

     In 1991, the General Accounting Office (GAO) examined the
contributions of demonstration projects--which range from paving a
gravel road to building a multi-lane highway--to the nation's
overall highway needs. Looking specifically at the $1.3 billion
authorized to fund 152 projects under the 1987 Surface
Transportation and Uniform Relocation and Assistance Act, GAO found
that "most of the projects...did not respond to states' and
regions' most critical federal-aid needs."  Indeed, in more than
half the cases, the projects weren't even included in regional and
state plan--typically because officials believed the projects would
provide only limited benefits. GAO also discovered that 10
projects--worth $31 million in demonstration funds--were for local
roads not even entitled to receive federal highway funding. In
other words, many highway demonstration projects are little more
than federal pork.

     Perhaps even worse, there's no guarantee that all these
highway demonstration projects, once started, will ever be
finished. GAO noted that project completion costs will greatly
exceed authorized federal and state contributions, and that state
officials are uncertain where they will find more funding. Further,
only 36 percent of the project funds GAO reviewed had even been
obligated by the beginning of fiscal year 1991, even though they
were authorized in 1987. Some projects with no activity since 1987
may never use their funds. Finally,  no federal provisions allow
for canceling  or redirecting funds, nor can states  redirect
demonstration funds to other transportation projects.36

     We urge Congress to rescind all unobligated authority and
appropriations for highway demonstration projects. Some of the
savings would go to the taxpayers. We recommend that all highway
projects be forced to compete for any remaining savings through the
normal allocation and planning processes set up in more recent
legislation.


Action: Cut Essential Air Service subsidies.37


     Sometimes, to push through controversial changes, Congress
grants affected groups special privileges. This was the case when
airlines were deregulated in 1978. Because people living in small
towns feared the loss of air service, Congress created the
Essential Air Service program. The program guaranteed continue
services for a decade--with federal subsidies if necessary. The
purpose was to allow these communities to learn to live in a
deregulated environment. But the program didn't end in 1988 as
scheduled. Quite the opposite. Congress extended it for another ten
years and its budget has grown- -from $30.6 million in 1988 to
$38.6 million in 1993.

     The program is unneeded: 25 subsidized communities are less
than 75 miles from hub airports. It is also costly: nine locations,
receiving $3 million in subsidies in 1992, carried five or fewer
passengers a day--one community, only 60 miles from a hub airport,
received subsidies averaging $433 per passenger.

     Opposition to the program is rising. The Transportation
Department's Inspector General has concluded that the program's
costs outweigh its benefits. And after many years of resistance, a
Congressional subcommittee agreed this year that the program lacks
merit-based criteria. It's time to prune these subsidies. We
recommend eliminating subsidies to locations in the 48 contiguous
states within 70 miles of a hub airport; limiting subsidies to no
more than $200 a passenger, and giving the Transportation
Department authority to establish more restrictive criteria over
time. This would save $13 million a year.


Chapter-4-Cutting-Back-to-Basics Step-2:-Collecting-More


     Given the size of the federal deficit, government must find
better, more efficient, and more effective ways to pay for its
activities. In Chapter 2, we showed how government could become
more businesslike. In this section, we propose three ways to
increase federal revenues: introducing or increasing market-based
user fees, collecting what is due the government in delinquent
loans and in accidental or fraudulent overpayment of benefits, and
refinancing debt at lower interest rates.

     Some people take advantage of government's largesse. They
default on loans, or they double claim for health insurance
benefits. Government has made it far too easy for people to get
away with such actions. As a result, honest people are subsidizing
their less scrupulous neighbors. Their actions raise the costs of
federal programs, divert money from where it was intended, and
discredit our system of governance. Here are the first steps we
will take to end these practices.


Raising User Fees



     Congress and federal agencies have shied away from charging
for federal services. But government surely produces many goods and
services for which consumers could, and should, pay." User fees can
serve exactly the same function as prices do--providing federal
managers with invaluable information about their customers. If
customers like the services they are paying for--if they find the
experience of visiting a particular national park enjoyable, for
example--revenues will increase. If the agency can keep some of its
additional revenues, it will be able to pay the increased operating
costs associated with its rising number of customers. It will, as
a result, learn to care about satisfying those customers.

     Paying for the services you receive also is an issue of
fairness. Why should taxpayers subsidize concessionaires or
visitors to National Parks, or pay the cost of determining whether
a business should dump sludge into the nation's waterways? Many
services government provides because they are in the national
interest or because we do not expect people to pay for them. But
the customers of some government activities could and should pay.
Many agencies, including the Food and Drug Administration, The
Patent and Trademark Office, the National Technical Information
Service, and the Securities and Exchange Commission already charge
their customers fees. In some cases, these fees cover the full cost
of operations. Taxpayers are not called upon to pay for the
services that others receive. But, most agencies aren't allowed to
keep the fees--the revenues are sent to the Treasury. Under these
circumstances, agencies have no incentive to increase fees if
market conditions merit it.

     Where fees are allowed, Congress often limits them--removing
any discretion from local managers. The National Park Service, for
example, cannot charge more than $5 per car or $3 a visitor at many
parks. At busy Yellowstone, Grand Teton, and the Grand Canyon, fees
are limited to $10 a vehicle and $5 a visitor. Ending subsidies to
concessionaires and moderately increasing fees would let the
National Park Service invest more in its crumbling infrastructure,
and spend more to protect America's priceless natural heritage.

     Two-thirds of all the National Park Services facilities charge
no admission fee at all. Yet the Park Service suffers from a
multi-billion dollar backlog in infrastructure repair and
rehabilitation projects for the National Park System. One-third of
NPS primary paved roads are in poor or failing condition; a tenth
of employee housing is obsolete or deteriorated; and 4,700 planned
natural and cultural resource projects are on the waiting list for
funding. Meanwhile, demands on the parks are rising sharply as the
number of visitors--both American and foreign--grows each year.38


Action: Allow all agencies greater freedom in setting fees for
services and in how the revenues from these fees may be used.39


     Even with a modest increase in fees, a family of four will pay
less to spend a week in Yellowstone National Park than they would
to see a first-run movie. The National Park Service should be
allowed to keep 50 percent of revenues from fees to pay for vital
services and projects.

     The natural fear is that federal facilities are monopolies
and, unless their pricing policies were regulated, they would
become price-gauging profiteers. The concern is appropriate, but
the policies it has led to are not. We would not recommend that
national parks or documents repositories, for example, become
federal profit centers--but they could, certainly, cover a larger
part of their costs. They cannot charge exorbitant prices--after
all, parks are in competition with each other, and with many
privately owned recreation areas. The market will control the
revenues they can realistically collect.

     Pricing policy is an important management tool, and we
recommend that Congress place it in the hands of many more federal
managers. The National Performance Review recommends increasing the
use of user fees for many activities. For example:

 The FDA must ensure that 1.5 million food products imported each
year meet the same safety and labeling standards as domestic
products. It also certifies the safety of exported foods.
Taxpayers, not manufacturers, pay for these inspections. User fees
could save taxpayers as much as $1.4 billion over 5 years.40 The
agency should also have the power to collect fees for conducting
inspections and reviews, processing petitions and applications,
analyzing samples and issuing device reports for food, drugs,
devices, and radiological products.

 The Department of Veterans Affairs runs a program to guarantee
home loans for veterans. It lets them borrow at lower costs and
make smaller down payments than would be possible without
assistance, because the guarantee protects lenders in the event of
foreclosure by reducing their potential loss. The department
collects fees for this service, yet they are set very low. A modest
increase in fees costing an extra $6 per month, for example, would
still provide homebuyers with better-than-market terms. Yet it
would generate an additional $811.4 million over 6 years.41

 Under the Clean Water Act, the Army Corps of Engineers issues
permits for discharges of dredged or filled materials into rivers,
lakes and streams. The Corps has processed 15,000 applications at
a total cost of $86 million. Yet it has charged only token fees for
its services, collecting only $400,000 annually. This amounts to a
$12 million annual subsidy for commercial customers, according to
Defense Department estimates. Higher fees would help not only
taxpayers but Corps customers, because additional revenues could
pay for faster processing of applications.42

 The Small Business Administration should have the power to
establish user fees for the services they provide through the
nationwide Small Business Development Center (SBDC) program. SBDC
customers like the services they get, so the revenues from fees
will enable the centers to expand successful programs.


Action: Increase revenues by refinancing debt or raising federal
hydropower rates to cover full operating costs.43


     The Power Marketing Administrations (PMAs), such as Alaska
Power, were mandated in 1944 to sell their power at low rates to
help promote development in sparsely populated areas. Rates are
still low today; in fact, the PMAs sell power to their public,
private and cooperative utility customers at below market rates.
Thus, the low electricity rates enjoyed by customers in some areas
are subsidized by American taxpayers in others. Taxpayers subsidize
PMA utility customers through low-interest loans. The interest
rates most PMAs pay the government are artifically low. As the
interest on the Treasury's long-term debt climbed in the 1960s,
1970s, and 1980s, the differential between those rates and rates on
PMA loans created federal subsidies for these projects.

     The Energy Department will take immediate steps to increase
revenues from hydropower operations. The department will set a new
rate policy for specified PMAs to seek recovery of full operating
costs. As an alternative, the Energy Department may attempt to
restructure the financing of the Bonneville Power Administration's
debt, allowing Bonneville to issue bonds at market rates and repay
its low-interest Treasury loans. The department will attempt to
achieve such a refinancing with minimal effects on the near-term
rates paid by its customers by seeking favorable bond interest
rates and lengthening terms of repayment.


Collecting Debt


     At the end of last year the federal government was owed $241
billion by former students, small businesses, farmers, companies
developing alternative energy sources-- even foreign companies and
governments. This makes the federal government the nation's largest
lender. Of this total, a shocking $47 billion--20 percent of the
total--was delinquent.44

     To some extent, the federal government's unpaid debts reflect
the fact that some of its loan programs operate more like grant
programs. They are designed to meet national policy goals such as
increasing the number of physicians in rural areas and supporting
democratic governments overseas. But in other cases agencies have
done a poor job in collecting what they are owed. After all,
agencies are rarely held accountable for unpaid loans. All too
frequently, neither are delinquent borrowers.

     If agencies were to put a higher priority on pursuing
delinquent debt and if Congress were to grant them greater
flexibility in their debt collection operations, the federal
government could collect more of what it is owed. The Office of
Management and Budget will work with each agency to develop debt
collecting strategies that employ the following expanded powers.


Action: Give agencies the flexibility to use some of the money they
collect from delinquent debts to pay for further debt collection
efforts, and to keep a portion of the increased collections.45


     Small investments in debt collecting can yield high returns.
In 1989, the GAO discovered that the Veterans Administration had
not recovered $223 million in health payments from third parties,
such as insurers. Congress then changed the rules, allowing the VA
to keep a portion of recovered third-party payments for
administrative costs. With this incentive, the VA increased its
recovery effort. The result: a four-fold increase in collections
since 1989.

     The VA, now called the Department of Veterans Affairs, wants
to go even further by expanding its cost recovery efforts into its
loan programs and establishing cost-sharing, performance
incentives. Local hospitals, for example, might be allowed to keep
some of the revenues they generate to buy new medical equipment.
Overall, VA believes it could pull in another $500 million through
1999.

     Opportunities like this occur throughout the federal
government. The Education Department, for example, wants to use the
additional repayments it would collect to pay for further
collections of Higher Education Act debts. Budget offices tend to
oppose the idea of sharing new earnings with the agency in
question, because they want 100 percent of the earnings to meet
deficit reduction targets. But unless the agencies have incentives
to generate the earnings, they rarely produce them in the first
place.

     The solution is twofold. First, Congress should allow agencies
to use some of the money they now collect from delinquent debts to
pay for further debt collection efforts. Second, it should increase
the incentives agencies have to pursue debt collections, by letting
them use a small portion of their increased collections to invest
in improving their overall operations.


Action: Eliminate restrictions that prevent federal agencies from
using private collection agencies to collect debt.46


     In addition to sharing in their earnings, agencies would
benefit from being able to use private debt collectors, as the
Department of Education has done. While we know how cost-effective
private collection agencies are, many agencies--including the
Farmers Home Administration, Social Security, the IRS, and the
Customs Service--are statutorily prohibited from using private
agencies for the job, even on a contingency-fee basis. Congress
should lift those restrictions.


Action: Authorize the Department of Justice to retain up to one
percent of amounts collected through civil debt collections to
cover costs.47


     When borrowers default on their federal loans, the first step
is for the lending agency to try to collect--or, if permissible, to
use a private debt collection agency. If these measures fail,
agencies refer claims to the Department of Justice. While the
Department handles the larger claims itself, it refers those under
$500,000--which constitute 90 percent of all claims--to local U.S.
attorneys' offices. In overworked U.S. Attorney's offices, debt
collection is often a low priority.

     To encourage the Department of Justice to collect debts,
Congress should allow the department to retain 1 percent of
everything it collects through litigating civil debt cases under
$500,000. These retained funds should be used for paying staff
working on debt collection, for paying case-related costs, and for
paying for training and other investments to improve local debt
collection programs.


Action: The Royalty Management Program will increase the royalty
payments it collects by developing new computer programs to analyze
and cross-verify data.48


     The federal government collects royalty payments from mining
companies recovering minerals from federal land. The Interior
Department's Minerals Management Service (MMS), the agency charged
with the job, collects $4.7 billion annually. But its auditing
system is limited and focuses heavily on the companies paying the
largest royalties--so smaller companies don't always pay their
share. The Department of the Interior will increase its
collections--by as much as $28 million over five years--by
developing better accounting and auditing systems. To make sure MMS
can collect its dues, the Interior Department will ask Congress for
permission to assess penalties on substantial underpayments and to
impose fees on a broader range of administrative costs.


Action: HUD should offer incentive contracts to private companies
to help federally subsidized home owners refinance their mortgages
at lower rates.49


     HUD has succeeded in extending the dream of home ownership to
many people. But the program does not take advantage of lower
interest rates because the assisted owners do not have enough
incentive to  go through the work and bother of refinancing.

     We recommend that HUD offer incentive contracts to private
companies to let them share a percentage of the savings to the
government of refinancing the mortgages. They could work with the
home owners to arrange refinancing, doing the necessary leg work
and make cost effective payments to home owners to induce them to
refinance. Projected savings from this program could exceed $210
million  over five years. Yet program beneficiaries would continue
to receive exactly the  same benefits.


Eliminating Fraud


     While many think government steals from people, the reverse is
also true: People steal from government. And, unlike private
companies, some government agencies aren't very good at finding and
prosecuting thieves. Moreover, the bureaucracy does too little to
deter dishonest people.


Action: Make it a felony to knowingly lie on an application for
benefits under the federal Employees' Compensation Act and amend
Federal law so individuals convicted of fraud are ineligible for
continued benefits.50


     The federal government manages many programs that provide
benefits to people injured or taken sick. Not all the recipients
are legitimate. When agencies discover fraud, however, they are
often hamstrung in their ability to terminate benefits--so they
keep paying fraudulent claims. For example, under the Federal
Employees' Compensation Act (FECA), the Office of Workers'
Compensation Programs cannot terminate benefits even after finding
that someone made false statements about a disability or an
illness.

     In one case, a former federal employee collected almost
$200,000 in benefits under the FECA disability program while
working. When a witness told the government about the fraud, the
employee hired someone to kill him. The employee was convicted of
falsifying his application for FECA benefits, but the government
could not cut off his compensation on the basis of his original
false statements alone.51


Action: Improve processes for removing people who are no longer
disabled from disability insurance rolls.52


     The Social Security Administration serves more than 10 million
people through two disability programs, Disability Insurance and
Supplemental Security Income. But the General Accounting Office has
estimated that 30,000 of these recipients are no longer eligible.
Overpayments from the trust funds to ineligible people are
projected to reach $1.4 billion by 1997.53 The Social Security
Administration faces a dual problem: overpayment to unlawful
claimants and lengthy delays in providing benefits to legitimate
claimants. Using present management practices, the agency lacks the
staff to review its rapidly escalating caseload. The backlog of
700,000 pending  claims is taking priority over reviewing
continuing cases.

     The agency is working to create a single disability claims
processing system, but it needs greater budget flexibility to
invest in hardware and software and to redeploy staff to meet
growing demands.54


Action:Create a clearinghouse for the reporting and disclosure of
death data.55


Obviously, no federal agency should continue paying benefits after
recipients have died. But stopping payments is not easy because
sharing death information among different levels of government is
restricted and not always reliable. The Social Security
Administration regularly obtains death information from states
under agreements with each of them (except Virginia). But most
agreements restrict SSA's disclosure of death data, so the
information the SSA collects cannot always be shared with those
running other federally- and state-administered benefits programs.
The result is millions of dollars in overpayments. For Americans
living overseas, the problem is even worse. SSA gives benefit
checks to overseas embassies to deliver. The State Department
claims that SSA must check that the recipients are still alive; SSA
says that it's the State Department's job.

     We need not serve customers who are no longer alive. Congress
should amend the Social Security Act to allow SSA to share death
information with other programs.56


Chapter-4-Cutting-Back-to-Basics Step-3:-Investing-in-Greater-Productivity


     One of the greatest obstacles to innovation in government is
the absence of investment capital. The appropriations for most
federal agencies last only one year: anything left over at the end
of the year disappears. So it's difficult for organizations to
scrape together enough money to make even small investments in
training, technology, new work processes, or program innovations.
We have recommended that agencies be allowed to keep half of any
savings they can generate. In addition, we propose a source of
innovation funds from which they can borrow. When managers and
their employees are allowed to borrow for long-term investments,
they have a real incentive to implement creative new ideas.

     The IRS and Interior Department already have innovation
funds.57 Treasury and Justice operate working capital funds that
finance specific innovations, such as modernizing information
technology and computer systems. And the Commerce Department has a
Pioneer Fund that gives employees cash grants (rather than loans)
of up to $50,000 to finance quality and productivity improvements.
The money can be used for supplies, equipment, or expert services.
Some funds have financed projects related to advanced technology,
such as the development of public information on CD-ROMs.

     State and local governments use this approach quite often.
Many cities have long had some form of innovation fund. In Florida,
Governor Lawton Chiles cut departmental budgets by five percent
across the board, then gave half back to agencies that developed
plans to invest in higher productivity and effectiveness.

*******************************

The Productivity Bank: Paying Big Interest in Philadelphia

Mayor Ed Rendell says it's not hard to change incentives so that
public employees save money.

     "We tell a department, 'You go out there and do good work,' "
Rendell told the National Performance Review's Reinventing
Government Summit in his city. "'You produce more revenue. You cut
waste. And we'll let you keep some of the savings of the increased
revenue.'"

     Traditionally, the mayor said, "every nickel that they would
have saved would have gone right back to the general fund-- They
would have gotten a pat on the back, but nothing else." Now, city
employees save because their departments can keep some of the
savings for projects to help them perform better.

     When the Department of License and Inspection beefed up
collection and enforcement efforts and generated $2.8 million more
than expected in 1992, Rendell said, the city let the department
keep $1 million of the savings to hire more inspectors and, in
turn, exceed the $2.8 million in 1993.

     The city also opened a Productivity Bank, from which
departments can borrow for investment-type projects--that is,
capital equipment--to produce either savings or enough revenues to
repay the loan in five years. To ensure that departments don't
apply frivolously, the city subtracts loan payments from annual
departmental budgets. Successes already abound. The Public Property
Department repaid a $350,000 loan to buy energy efficient lamps in
one year--after saving $700,000 in energy costs.


********************************

     At the federal level, one important use for such funds would
be technology investments. These are often considered too expensive
for agencies' operating budgets, even though they save money in the
future. The Agency for International Development, for instance,
needs a centralized information management system to coordinate its
central office with its international field offices. Because its
information systems lack essential data and are not coordinated,
they provide inconsistent, inaccurate, and incomplete reporting
that managers frequently do not trust. Agencies such as AID should
have authority to create innovation funds for capital investment
loans to reduce future operating costs.


Action: Allow all agencies and departments to create innovation
funds.58


     Congress should authorize a two tier system of innovation
funds: small loan funds within agencies; larger funds at the
departmental level. These would be capitalized through retained
savings from operational appropriations. For the new system to work
well, Congress should allow all new and existing innovation funds
to invest in joint projects with other agency funds, with state or
local governments, or with industry.

     If managed according to market principles, innovation funds
would produce measurable improvements in agency efficiency and
significant taxpayers savings. Strict repayment schedules, with
interest, would discourage careless borrowing.


Action: The government should ensure that there is no budget bias
against long-term investments.59


     Part of straightening out the govern--ment's books will
involve adopting some financial distinctions that business uses.
Federal bookkeeping rules discourage government investments in
productive fixed assets, like computer systems. Right now, we count
a $5 million investment to purchase a Local Area Network computer
system in exactly the same way as we count $5 million spent on
staff salaries. American businesses do it differently. Business
depreciates fixed assets over time: If the $5 million computer
system has a useful life of  five years, then its $5 million
acquisition costs will be spread out over five years. Poor choices
of capital investment and the acquisition methods are currently
costing the taxpayer millions of dollars each year.

     Listen to Eleanor Travers, the director of Pathology and
Laboratory Medicine for the Veterans--Hospital Administration. She
told the National Performance Review meeting at the Department of
Veterans Affairs in August 1993:

          "Procurement of equipment is held up because capital
     dollars to purchase equipment are frozen. And you asked what
     dumb rules there were we could change. Allow our hospital
     directors and our top managers to use operating dollars when
     they find it's necessary to do leasing rather than purchasing
     . . . Please help us loosen up the capital fund so that we
     don't have to go to Congress and wait two and a half years for
     this line item to change."

     The budget should recognize the  special nature and long-term
benefits of investments in fixed assets through a separate capital
budget, operating budget, and cash budget. The separate capital
budget will explicitly show expenditures on fixed assets, and will
help to steer our scarce resources toward the most economical means
of acquisition of the most needed assets. The cash budget reflects
the effect of both the capital and the operating budget on the
economy. Therefore, the discipline of the cash outlay caps in the
Budget Enforcement Act must be maintained.



Step 4: --Reengineering Programs  to Cut Costs


     In the past turbulent decade, many companies have been forced
to recognize that they weren't organized in the right way to do
what they were doing. Their organization structure reflected
history, not current needs. Reform wasn't easy--too many people had
vested interests in preserving their particular part of the
organization. As a result, most attempts at reorganization were
reduced to shifting things among different boxes on organizational
charts. Businesses found that the only way to break the mold was to
reengineer--to forget how they were organized, decide what they
needed to do, and design the best structure to do it. An obvious
insight? Perhaps. But the best ideas are always the ones that seem
obvious--after their discovery.

**********************************
     We are determined to move from an industrial age government to
information age government, from a government pre-occupied with
sustaining itself to a government clearly focused on serving the
people.



     Vice President Al Gore

     May 24, 1993

***********************************

     We will reengineer the work of government agencies in two
ways. First, we will expand the use of new technologies. With
computers and telecommunications, we need not do things as we have
in the past. We can design a customer-driven electronic government
that operates in ways that, 10 years ago, the most visionary
planner could not have imagined.

     Second, we will speed up the adoption of new ways to improve
federal operations. Most of this work will be done by the federal
agencies themselves. An outside performance review could never
learn enough about internal agency work processes to redesign them
intelligently. But we can begin to redesign several broad
government-wide processes: The way we design programs, develop
regulations, and resolve disputes.


Electronic Government


     The history of the closing decade of this century is being
written on computer. You wouldn't know it if you worked for many
federal agencies, however. While private businesses have spent the
past two decades either getting rich by developing new computer
technologies or frantically trying to keep up with them, government
is still doing things our parents--perhaps even our
grandparents--would recognize.

     Offshoots of the unexpected and fertile marriage between
computers and telephones have changed just about everything we
do--how we work, where we work, the design of the workplace, and
the skills we need to continue working.

     Organizations don't need as many people collecting information
because computers can do much of it automatically. They don't need
as many people processing that information because clever software
programs can give managers what they need at the press of a button.

     Factories don't need to stockpile large inventories because
smart machines on the assembly lines order components from equally
smart machines working for suppliers. Yet government agencies stand
guard over warehouses of unused office furniture. Retailers ship
the right size of clothing to customers as soon as they receive a
telephone order and a credit card number. Yet we can't pay our
taxes that way.

     Computer companies give technical advice for our computers and
software over the telephone 24 hours a day by fax, modem, or voice.
Yet, the Social Security Administration can't do the same.

     Failure to adapt to the information age threatens many aspects
of government. Take the State Department, a globe-spanning
organization dependent on fast and accurate communications. Its
equipment is so old-fashioned that the Office of Management and
Budget says "worldwide systems could suffer from significant
downtime and even failure."60 According to OMB, its systems are so
obsolete and incompatible that employees often have to re-enter
data several times. These problems jeopardize our ability to meet
our foreign policy objectives.

     Or think about the way our government sends out checks. For 15
years, electronic funds transfers have been widely used. They cost
only 6 cents per transfer, compared with 36 cents per check. Yet
each year, Treasury's Financial Management Service still disburses
some 100 million more checks than electronic funds transfers.

     We still pay about one federal employee in six by check and
reimburse about half of travel expenses by check. Only one-half of
Social Security payments--which account for 60 percent of all
federal payments--are made electronically, making SSA the world's
largest issuer of checks. Only 48 percent of the Veterans Affairs
Department's payments are made electronically. Fewer than one in
five Supplemental Security Income payments and one in ten tax
refunds are transferred electronically.61 We have only begun to
think about combining electronic funds transfers for welfare, food
stamps, subsidies for training programs, and many other government
activities.

     Private financial transactions have become a lot easier in the
past decade: bank cash machines are open 24 hours a day, credit
cards let us avoid carrying cash, and we can buy goods over the
telephone. This saves many of us a lot of time and money. It could
save the Government a lot of time and money, too. Consider the
paper chase involved in running the welfare system. The Food Stamp
Program, alone, involves billions of bits of paper that absorb
thousands of administrative staff years. More than 3 billion food
stamps will be printed this year and distributed to more than 10
million households. Each month, 210,000 authorized food retailers
receive these coupons in exchange for food. These retailers carry
stacks of coupons to 10,000 participating financial institutions,
which then exchange them with Federal Reserve Banks for currency.
The Federal Reserve Banks count the coupons--although they already
have been counted more than a dozen times--and destroy them. The
administrative cost of this system--shared equally by federal and
state governments--is almost $400 million a year.

     We will support Agriculture's commitment to the goal of
issuing food stamps electronically by 1996. Electronic benefits
transfer could eliminate the paper chase, improve services to
customers, and reduce fraud. At the same time, it could be used to
authorize Medicaid payments, distribute welfare payments, infant
nutrition support, state general assistance, and housing
assistance. It could eliminate billions of checks, coupons, and all
the other paperwork, record keeping and eligibility forms that
clutter the welfare system.

     Why has business moved faster than government into the
electronic marketplace? In the first place, government is a
monopoly. Public organizations don't go out of business if they
don't have the latest and smartest machines or the best approach to
managing resources. In the second, employees who do want to
modernize management have their hands tied with red tape--detailed
budgets and cumbersome procurement procedures-- that deter
investment. Finally, there is a natural inclination, familiar to
private and public managers alike, to do things as they've always
been done.

     What can we do to help our federal bureaucracy catch up?



Action: Support the rapid development of a nationwide system to
deliver government benefits electronically.62


     OMB has already begun the process. The electronic benefits
transfer steering committee, which OMB oversees, will develop an
implementation plan for electronic benefits transfer by March 1994.

     The system is workable with today's technology. For cash
programs such as federal retirement, social security, unemployment
insurance, or AFDC, benefits would be electronically deposited
directly into recipient bank accounts electronically. If people
didn't have bank accounts, these could be created once the
individual enrolled in a program. For "non-cash" programs such as
food stamps, participants would have accounts through which they
could make purchases at approved food stores--analogous to credit
cards with credit limits. Stores would debit accounts as eligible
items were purchased. The entire system could operate on or be
compatible with the existing commercial infrastructure through
which private funds are transferred electronically.

     Agencies have begun experiments with electronic benefits
transfers. Welfare checks, food stamps, and state-collected child
support, for example, are distributed electronically in Maryland.
There are test sites in Iowa, Minnesota, New Mexico, Ohio,
Pennsylvania, Texas, and Wyoming. We know that a joint
federal-state effort to transfer welfare benefits electronically
works--and works well. The system is strongly supported by
recipients, the state welfare agencies, food retailers, banks, and
participating commercial networks. We also know that direct federal
delivery of funds by electronics is cost-effective. We can't yet
project with certainty what the savings might be, but preliminary
estimates suggest $1 billion over five years once electronic
benefits transfer of food stamps is fully implemented.

     In the future, the concept of electronic government can go
beyond transferring money and other benefits by issuing plastic,
"smart" benefit cards. With a computer chip in the card,
participants could receive public assistance benefits, enroll in
training programs, receive veterans services, or pay for day care.
The card would contain information about participants' financial
positions and would separately track their benefit accounts--thus
minimizing fraud. Electronic government will be fairer, more
secure, more responsive to the customer, and more efficient than
our present paper based systems.

     Barriers still stand in the way. Agencies will have to work
together to develop a comprehensive nationwide strategy for
implementation; it will do no good for each agency to develop its
own process. We will need to strengthen the partnership between
state and federal governments in developing and operating the
system. We will have to eliminate some regulations that would
prevent this radical change in how government operates. And the
National Institute of Standards and Technology will have to issue
final standards and protocols for electronic signatures to
facilitate electronic funds transfers and the electronic approval
of budget and financial documents.


Action: Federal agencies will expand their use of electronic
government.63


     Opportunities abound for cutting operating costs by using
telecommunications technologies. The National Performance Review
has identified several projects that would improve government's
productivity and reduce the burden of reporting on individuals and
businesses.

     The IRS is introducing an efficient computer system,
automating tax returns, and creating a wholly new work environment
for its 115,000 full-time personnel. The agency currently operates
a computer system put together in the 1960s--not the tool our
principal revenue collector should be using. To make the new system
work, the agency will need to figure out how to train its staff to
operate in a reengineered agency. We will support the agency's
investments in new hardware and training, as discussed in
Chapter 3.

     The IRS will also manage the creation of an integrated
electronic system for financial filing, reporting, and tax payment
by 1996. The system will serve federal, state, and local taxpayers.
It will allow the electronic filing of tax returns by individuals
and companies, the electronic reporting of wages and withholding
information, and other data required by all levels of government.
In addition, the inter-agency Wage Reporting Simplification Project
(WRSP) will be in place quickly--allowing businesses to file
information once to serve many different purposes. The savings from
fully implementing this program over the life of the system have
been projected at $1.7 billion for government agencies and $13.5
billion for private employers. Individuals will be able to file
federal and state income taxes simultaneously through an Electronic
Data Interchange, with their privacy protected and fraud prevented
through digital signature standards. Electronic filing alone will
save the IRS and state agencies from having to mail out the
equivalent of 75 boxcars of forms.

     Working together, the Labor Department and IRS will develop an
automated system all employers can use to file electronically the
pension plan forms employers required by the Employee Retirement
Income Security Act.64 At present, it costs the Internal Revenue
Service more than $10 million a year to enter all these forms into
its data base.

     The Labor Department will develop computer programs to
determine quickly the appropriate wages on federal service
contracts.65 Currently, all federal agencies contracting for
services--from cleaning services to building management--must apply
to the department for a determination of appropriate wages. The
process is supposed to ensure that federal contracts don't
undermine local prevailing wages. The process takes an average of
57 days and, with a growing number of service contracts, more and
more are subject to delays.

     We will continue investing in the Social Security
Administration's massive project to create a single nationwide
disability processing system.66 This will require considerable
investments in new telecommunications and computer systems as well
as in staff retraining. It will also mean that the SSA will have to
work cooperatively with state-run disability determination offices,
set performance standards, and take over those that don't meet
standards. Many of the system's worst processing bottlenecks are in
the state offices that approve individual claims.

*******************************

Money for Numbers

     The National Technical Information Service runs a large and
complex information collection and marketing operation. It is the
nation's largest clearinghouse for scientific and technical
information. Yet it covers the costs of its operations without
receiving a penny in federal appropriations. Its customers pay --
and their numbers are growing every year.

     NTIS's archives contain about 2 million documents (from
research reports to patents), more than 2,000 data files on tape,
diskette, or CD-ROM, and 3,000 software programs. This resource is
growing at the rate of about 70,000 items each year. NTIS's press
releases, on-line services, and CD-ROMs serve 70,000 customers,
three-quarters of whom are from business and industry.

     In 1991, NTIS collected $30.7 million in revenues -- 77
percent from its clearinghouse activities, the rest from other
government agencies that reimburse NTIS for patent licensing
services, and from billing other agencies for producing and
distributing documents. NTIS is required by law to be
self-sufficient.

     Some of these investments will require Congressional
appropriations. But some can be financed through the innovation
funds, described above, and some will become possible to pay for as
soon as rigid budget regulations are relaxed.



Action: Federal agencies will develop and market data bases to
business.67


     Federal agencies must treat the data they compile and process
as potentially valuable resources. Congress alerted the bureaucracy
to the value of information in 1991 by passing the American
Technology Preeminence Act. The act required federal agencies to
transfer to the National Technical Information Service copies of
federally funded research. At NTIS, the information is organized
and made available to research scientists in academia and in
industry. NTIS has developed an aggressive marketing strategy and
pricing policy that have greatly increased its revenues.

     The Census Bureau has pioneered the use of computer technology
such as CD-ROM technology to make federal data available. By 1992,
the Bureau sold census data to 380,000 customers on tape or disc
directly, and served another 1.1 million customers indirectly.

     Unfortunately, some federal agencies lag behind private data
retailers in the services they offer their customers. People buying
Census data must order it through paper order forms or by telephone
during business hours--only 9 hours a day, 5 days a week. If
private software companies offer 24-hour a day technical support,
so should the Census Bureau.

     Other agencies will begin to exploit the potential of the
information they collect. The Commerce Department, for example,
will develop a manufacturing technology data bank that brings
together information residing in the National Institute of
Standards and Technology, the Defense Department, federal research
laboratories, and other organizations. Commerce will also use its
climate data as the basis for developing a National Environmental
Data Index. Good data will be vital in solving the problems
associated with global climate changes. The U.S. must be a leader
in developing these information resources.


Action: In partnership with state and local governments and private
companies, we will create a National Spatial Data Infrastructure.68


     Dozens of agencies collect spatial data--for example,
geophysical, environmental, land use, and transportation data. They
spend $1 to 3 billion a year on these efforts. The administration
will develop a National Spatial Data Infrastructure, (NSDI) to
integrate all of these data sources into a single digital resource
accessible to anyone with a personal computer. This resource will
help land developers and conservationists, transportation planners
and those concerned with mineral resources, and farmers and city
water departments.

     Because of the value of the data, it will be possible to
attract private sector funding for its collection, processing, and
distribution. The Federal Geographic Data Committee, which operates
under the auspices of OMB, plans to raise enough non-federal
funding to pay for at least 50 percent of the project's cost. It
will set the standards for data collection and processing by all
agencies to ensure that NSDI can be developed as economically as
possible.


Action: The Internal Revenue Service will develop a system that
lets people pay taxes by credit card.69


     The Customs Service lets people pay duties on imported goods
by credit card. Americans should have the same convenient way to
pay taxes. It will save time and cut the IRS's collection costs.70
There is one hitch: Those who pay by credit card could avoid paying
back taxes simply by filing for personal bankruptcy. This escape
mechanism can't be employed today because back taxes are, under
bankruptcy law, a "non-dischargeable" debt--that is, they are a deb
Conclusion

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

Henry David Thoreau
********************************

     Unlike many past efforts to change the government, the
National Performance Review will not end with the publication of
a report. We have identified what we must do to make government
work better and cost less: We must serve our customers, cut red
tape, empower employees to get results, and cut back to basics.
Now, we will take action.

     The task is immense. The federal government has 2.1 million
civilian employees, 800,000 postal workers, 1.8 million military
personnel, and a $1.5 trillion budget--more than the entire gross
domestic product of Germany, the world's third largest economy.
     The National Performance Review has identified the problems
and defined solutions. The President will issue  directives,
cabinet secretaries will change administrative practices, and
Office of Management and Budget will issue guidance. We will work
with Congress for legislation where it's needed. Senseless
regulations will be repealed; mechanisms to enhance customer
service will be created; change will begin.

     But we do not pretend to have solved every problem. We will
transform the federal government only if our actions--and the
Reinvention Teams and Labs now in place in every
department--succeed in planting a seed. That seed will sprout
only if we create a process of ongoing change that branches
outward from the work we have already done.

*****************************
This performance review will not produce another report just to
gather dust in some warehouse. We have enough of them already.
President Bill Clinton
Remarks announcing the National Performance Review, March 3, 1993
*****************************

     How we proceed will be as important as what we have done to
date. We must avoid the pull of implementation models that are
familiar and comfortable but poorly suited to today's world. We
must avoid creating new bureaucracies to reform the old. We must
actively involve government leaders at all levels. We must seek
the guidance of those who have successfully transformed large
organizations in both the private and public sectors.

     The nature of our strategies will no doubt cause discomfort.
They will be unfamiliar. They will not look like business as
usual. They will challenge the current federal culture. And they
will demand  risk-taking.

     If we are to bring about true change, however, some
discomfort is inevitable. Our strategies are not untested; they
have been used successfully by both public and private
organizations throughout the country.

*********************************
What we're trying to do is to create a large number of changes,
simultaneously, in the federal government. Because if you just
change one thing without changing some of the other things that
need to be changed, we won't get anywhere. We can bring the
quality revolution, for example, into the federal workforce as
well as it could possibly be done, and if we didn't fix some of
the other problems, it wouldn't amount to much. We could fix the
personnel system, but if we didn't fix the budgetary system and
the
procurement system, then we would still be mired in a lot of the
difficulties that we encounter today. We are trying to do a lot
of things at the same time.

Vice President Al Gore
Town Hall Meeting,
Department of Veterans Affairs
August 4, 1993
***********************************

     To succeed where others have failed, the President and Vice
President have committed to specific initiatives that will create
a culture capable of sustaining fundamental change. This shift in
culture will not occur overnight. To bring it about, we will
continue:

     - a cascading process of education, participation, and
ownership at the highest levels of the executive branch;

     - two-way communication with federal employees and
organizations;

     - bi-partisan partnership with Congress;

     - processes to listen to and use feedback from customers and
citizens; and

     - government-wide mechanisms to monitor, coordinate, and
facilitate plans for reinvention.



     The administration has already taken a number of steps to
bring about the changes we are recommending.

     First, we have launched Reinvention Teams and Reinvention
Labs in every department to continue seeking ways to improve the
government and put these ideas in practice.

     Second, we have begun to work--and will continue to expand
relationships--with leaders and representatives of federal
employees from throughout the government. Indeed, the National
Performance Review is the first government-wide change initiative
to be run and staffed by federal employees. Our actions will make
employees' jobs better, and their participation will make our
actions better.

     Third, the President and Vice President have begun to work
with the cabinet to develop performance agreements that will
institutionalize a commitment to and establish accountability for
change.

     Fourth, we have developed a mechanism to spread our basic
principles throughout the government. The President will meet
with the cabinet to develop strategies reflecting these
principles and ideas, committing all involved to take
responsibility for changing the way we do business. Cabinet
members will then go through the same process with their senior
managers, who will go through it with their senior managers, and
so on.

     Fifth, the President is establishing  a management council
to monitor change 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 initiatives, this models a
basic tenet of the behavior we recommend--encouraging managers to
define their own missions and tasks, but providing the support
they need to do a good job.

     Seventh, we will launch future reviews of the federal
government, targeted at specific problems. The National
Performance Review was a learning experience; we learned what we
could do in six months, and what we still need to do. We focused
heavily on the basic systems that drive federal agencies: the
budget, personnel, procurement, financial management,
accountability, and management systems. In subsequent reviews, we
will narrow our focus. For example, we plan a review of the
antiquated federal field office structure, which dates from the
1930s and contains some 30,000 field offices. (See Chapter 4.)
Other targets might include the abandonment of obsolete programs;
the elimination of unproductive subsidies; the redesign of failed
programs; the redefinition of relationships between the federal
government and state and local governments; and the
reinvigoration of relationships between the executive and
legislative branches.

     Finally, the National Performance Review will continue to
rely on its greatest asset: the federal employees who made it
happen. They have all worked hard for change, and many will
continue to work on reinvention in their own agencies. They
constitute a network that will reach out to other employees,
sharing their enthusiasm, energy, and ideas.

******************************
Our task is not to fix the blame for the past, but to fix the
course for the future.
President John F. Kennedy
******************************

     During this process, a vision of change will emerge beyond
that which is contained in this report. Leadership and management
values will, over time, change--not in response to a mandate, but
because people are working together to change their government.
If we have done our job well, the next generation of changes will
be built on the foundation we have laid with this report. We are
merely initial planners; the President, the Vice President, the
cabinet, federal managers and employees will be the architects
and builders.

     Despite all the horror stories and years of scorn heaped on
federal employees, our government is staffed by people committed
to their jobs, qualified to do them better, and hungry for the
opportunity to try. The environment and culture of government
have discouraged many of these people; the system has undermined
itself. But we can--and will--change that environment and
culture.

     Over time, it will become increasingly obvious that people
are not the problem. As old ways of thinking and acting are
replaced by a culture that promotes reinvention and quality, a
new face of government will appear--the face of employees newly
empowered and newly motivated, and of customers newly satisfied.



What Reinventing Government Means for You

     We have talked enough of what we will do and how we will
change. The more important question is how life will change for
you, the American people.

     If we succeed--if the administration can implement our
recommended actions and Congress can pass our legislative
package--you will begin to see a different government. Your mail
will be delivered more rapidly. When you call a Social Security
office, you'll get through. When you call the Internal Revenue
Service, you'll get accurate answers-- and if you don't, you will
no longer be penalized.

     If you lose your job, a local career center will help you
find a new one. If you want retraining, or you want to go back to
school, you'll find counselors who can help you sort out your
options, pick the best program, and pay for it. If you run a
small business, you will have fewer forms to fill out.

****************************
Make no little plans; they have no magic to stir men's blood, and
probably themselves will not be realized. Make big plans; aim
high in hope and work, remembering that a noble logical diagram,
once recorded, will never die, but long after we are gone will be
a living thing, asserting itself  with ever-growing insistency.
Daniel Burnham 1907
****************************
     If you live in public housing, your apartment complex might
get cleaner and safer. Perhaps you'll even be able to move your
family to a safer, quieter, more stable neighborhood.

     Our workplaces will get safer because they are inspected
more often. Our water will get cleaner. Your local government
will work better because it is no longer hamstrung by silly
federal
regulations.

     And perhaps the federal debt--that $4 trillion albatross
around the necks of our children and grandchildren--will slow its
rampage. Our federal agencies will begin to figure out, bit by
bit by bit, how to cut spending, eliminate the obsolete, and
provide better service for less money.

     You will begin to feel, when you walk into a post office or
social security office or employment service or veterans'
hospital, like a valued customer. We will begin to spend more
money on things you want and need--health care, training,
education, environmental protection--and less on 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 life--in 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 hard to improve their government.

     It will take citizens willing to push their social security
offices and unemployment offices to treat them like
customers--and to demand that their voices be heard when they
don't get satisfaction. It will take citizens willing to demand
information about the performance of their federal organizations.
And it will take citizens willing to act on the basis of that
information.

     As our President has said so often, the future is ours--if
we have the courage to create it.


Appendix-A-Major-Recommendations--By-Agency AGENCY-FOR-INTERNATIONAL-
DEVELOPMENT

AID01     Redefine and Focus AID's Mission and Priorities
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.
cbe  cbe

AID02     Reduce Funding, Spending and Reporting Micromanagement
Eliminate AID's outdated or unduly burdensome reporting
requirements and  reduce legislative earmarks to provide greater
operating flexibility.
cbe  cbe

AID03     Overhaul the AID Personnel System
Recommendations include changes in AID's personnel system to
integrate  its multiple systems and review benefits.
na   na

AID04     Manage AID Employees and Consultants as a Unified Work
Force
Lift some current personnel restrictions and give managers
authority to manage  staff resources more efficiently and
effectively.
cbe  cbe

AID05     Establish an AID Innovation Capital Fund
Create a capital investment fund to improve information and
financial  management systems and customer service.
na   na

AID06     Reengineer Management of AID Projects and Programs
AID should use pilot programs and new approaches to emphasize
flexibility, innovation, customer service and program results.
cbe  cbe

AID07     Consolidate or Close AID Overseas Missions
AID should regionalize missions and staff services overseas and
close  nonessential missions. It should establish "graduation"
criteria for  countries receiving U.S. assistance.
cbe  cbe

Appendix-A-Major-Recommendations--By-Agency Appendix-A-Key-&-Editors-Notes

KEY:

cbe = cannot be estimated (due to data limitations or uncertainties
about implementation time lines).

na = not applicable - recommendation improves efficiency or
redirects resources but does not directly reduce budget authority.

EDITOR'S NOTES:

This Appendix is in a two-column table format in the original
document.  The major heading for both columns is:

Fiscal Impact, 1994-99*
(Millions of Dollars)

[As a footnote: *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 first column title is:

Change in Spending

The second column title is:

Change in Revenues

The entries to these columns are shown on the last line of each
recommendation paragraph; the first number or letters relating to
the Change in Spending column, the second number or letters
relating to the Change in Revenues column.
****************************




Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-AGRICULTURE

USDA01    End the Wool and Mohair Subsidy
The subsidy is no longer needed since wool is no longer a strategic
commodity.
-923.0    0.0

USDA02    Eliminate Federal Support for Honey
Eliminate the honey subsidy because the program does not serve the
intended purpose of ensuring the availability of honeybees for crop
pollination.
-15.0     0.0

USDA03    Reorganize the Department of Agriculture to Better
Accomplish Its Mission, 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.
-1,673.6  0.0

USDA04    Implement a Consolidated Farm Management Plan
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.
cbe  cbe

USDA05    Administer the Employment and Training Requirements for
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.
-1,041.1**     0.0

[As a footnote:  **The NPR recommends that these savings be
redirected to alternative uses.  Savings totals exclude these
amounts.]

USDA06    Encourage Better Food Package Management Practices and
Facilitate Multi-State 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.
-500.0**  0.0

[As a footnote:  **The NPR recommends that these savings be
redirected to alternative uses.  Savings totals exclude these
amounts.]

USDA07    Deliver Food Stamp Benefits Via Electronic Benefits
Transfer to Improve Service 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.
cbe  cbe


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-COMMERCE

DOC01     Reinvent Federal Economic and Regional Development
Efforts
Improve coordination of federal economic development efforts with
the goals  of eliminating duplication and better directing federal
resources to improve  business conditions.
na   na

DOC02        Provide Better Coordination to Refocus and Leverage
Federal Export Promotion
This recommendation is designed to improve federal services to U.S.
businesses  competing in the world export markets.
na   na

DOC03     Reform the Federal Export Control System for Commercial
Goods
To help ensure leading U.S. industries are competitive in the
global marketplace,  changes should be made in the export control
system.
na   na

DOC04     Strengthen the Tourism Policy Council
Revitalize the Tourism Policy Council and give it greater authority
to coordinate  federal tourism promotion efforts.
na   na

DOC05     Create Public / Private Competition for the NOAA Fleet
A pilot program is recommended to open the National Oceanic and
Atmospheric  Administration fleet to public and private competition
to bolster the aging fleet.
cbe  cbe

DOC06     Improve Marine Fisheries Management
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.
0.0  375.0

DOC07     Provide EDA Public Works Loan Guarantees for
Infrastructure Assistance
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.
na   na

DOC08     Establish a Manufacturing Technology Data Bank
To help U.S. manufacturing firms increase their technical
capabilities, Commerce  should create a new database to provide
technical information and contacts.
na   na

DOC09     Expand the Electronic Availability of Census Data
To increase access to and use of census data, the Census Bureau
should  create a computerized census information center.
na   na

DOC10     Amend the Omnibus Trade and Competitiveness Act to
Increase the Data
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.
na   na

DOC11     Eliminate Legislative Barriers to the Exchange of
Business Data Among 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.
na   na

DOC12     Establish a Single Civilian Operational Environmental
Polar Satellite Program
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.
-300.0    0.0

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

DOC14     Build a Business and Economic Information Node for the
Information Highway
To assist in the distribution of government information to private
citizens,  Commerce should build a business and economic
information node to the  "information highway."
cbe  cbe

DOC15     Increase Access to Capital for Minority Businesses
Commerce and SBA should provide the President with recommendations
to  improve SBA and Minority Business Development Administration
programs.
na   na


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-DEFENSE

---The Bottom-Up Review
This is a general summary of the Bottom-Up Review of DOD's force
structure  and requirements and its part in the National
Performance Review effort.  A total of $79 billion in savings
through 1997 are already incorporated into the  President's 1994
budget. These savings are not included in the NPR analysis.

---Acquisition Reform
The DOD acquisition system is large and extraordinarily complex. It
needs  to enable DOD to take advantage of the technological
advances and efficient  procurement practices of the commercial
marketplace.

DOD01     Rewrite Policy Directives to Include Better Guidance and
Fewer Procedures
DOD should clarify policy directives and procedures to reduce
administrative  burden and unnecessary regulatory controls.
cbe  cbe

DOD02     Establish a Unified Budget for the Department of Defense
Give commanders greater flexibility to set priorities, solve
funding problems,  and resolve unplanned requirements at the lowest
appropriate operating level.
cbe  cbe

DOD03     Purchase Best Value Common Supplies and Services
Allow managers and commanders to purchase the best value common
supplies  and services from public, private, or nonprofit sources.
cbe  cbe

DOD04     Outsource Non-core Department of Defense Functions
By contracting out non-core functions (from towing services to
certain information technology functions), DOD will be better able
to focus on its core responsibilities.
cbe  cbe

DOD05     Create Incentives for the Department of Defense to
Generate Revenues
This recommendation proposes giving managers and commanders the
ability to  generate income at the installation level by allowing
the Corps of Engineers to recover its costs for processing certain
commerical applications and by establishing  goals for solid waste
reduction and recycling.
-500.0    60.0

DOD06     Establish and Promote a Productivity-Enhancing Capital
Investment Fund
DOD should be authorized to expand its capital investment fund
manage its  operations in a more business-like manner.
-110.3    0.0

DOD07     Create a Healthy and Safe Environment for Department of
Defense Activities
To create a safe environment, DOD must take action in the areas of
clean-up of  hazardous wastes, use of environmental technology, and
pollution prevention.
na   na

DOD08     Establish a Defense Quality Workplace
This is an internal department recommendation to encourage the use
of quality  management concepts at all levels of DOD.
cbe  cbe

DOD09     Maximize the Efficiency of DOD Health Care Operations
Use emerging technology to upgrade care at DOD health care
facilities.
-350.0    0.0

DOD10     Give Department of Defense Installation Commanders More
Authority and Responsibility Over Installation Management
By giving DOD installation commanders more authority over
installation  management, DOD will be better able to manage its
resources, provide services  to its employees and move toward more
entrepreneurial management.
cbe  cbe

DOD11     Reduce National Guard and Reserve Costs
This recommendation makes two changes in the current costs for
reservists:  (1) to limit compensation of federal employees on
reserve duty to the greater of  civilian or reserve compensation or
to allow the reservist to take annual leave; and  (2) to limit the
basic allowance for quarters only to reservists who actually bring
their dependents on short-term duty assignments when quarters are
not provided  to dependents.
-900.0    0.0

DOD12     Streamline and Reorganize the U.S. Army Corps of
Engineers
NPR recommends implementing a 1992 reorganization proposal that
would  reduce the number of division offices from 11 to six and
would allow the Corps  to work with OMB and other agencies to make
maximum use of Corps'  engineering and technical capabilities.
-68.0     0.0


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-EDUCATION

ED01 Redesign Chapter 1 of Elementary and Secondary Education Act
Recommendations focus education funds on the neediest students and
simplify requirements on schools receiving federal education aid.
Existing funds are redirected.
-3,000.0* 0.0

[As a footnote:  *The NPR recommends that these savings be
redirected to alternative uses.  Savings totals exclude these
amounts.]

ED02 Reduce the Number of Programs the Department of Education
Administers
Eliminate or consolidate more than 40 existing education grant
programs and  free up funds for use in other educational programs.
-515.0*   0.0

[As a footnote:  *The NPR recommends that these savings be
redirected to alternative uses.  Savings totals exclude these
amounts.]

ED03 Consolidate the Eisenhower Math and Science Education Program
with Chapter 2
NPR proposes combining this teacher training program, which is
largely consumed  with short-term training, with other ED programs
to create a new program with a  more coherent national focus on
teacher training and professional development.
na   na

ED04 Consolidate National Security Education Act Programs
The NSEA trust fund, administered by the Department of Defense,
should be  consolidated with the Center for International Education
in ED to strengthen  foreign language study and eliminate
duplication of effort.
na   na

ED05 Streamline and Improve the Department of Education's Grants
Process
Statutory restrictions on the department's rulemaking process
should be removed,  flexibility added to certain procedures, and
unnecessary requirements eliminated  to shorten the grant award
process.
cbe  cbe

ED06 Provide Incentives for the Department of Education's Debt
Collection Service
This recommendation would allow ED to use a portion of revenues
collected  from defaulted student loans to pay for collections
costs, thereby providing  an incentive for increased collections.
na   na

ED07 Simplify and Strengthen Institutional Eligibility and
Certification for Participation in Federal Student Aid
NPR recommends developing ways of measuring default indicators,
creating profiles  of high-risk institutions, and removing
elgibility of institutions to participate in  federal financial aid
programs once the schools have become ineligible to receive
federal student loan funds.
-175.0    0.0

ED08 Create a Single Point of Contact for Program and Grant
Information
ED should create an electronic system that can be used by students,
parents,  researchers and administrators to learn about department
programs, funding  opportunities, best practices and other
information.
1.8  0.0

ED09 Improve Employee Development Opportunities in Department of
Education
ED should create a full spectrum of activities which can contribute
to career  development, including conducting a departmentwide
assessment of training and  development needs.
na   na

ED10 Eliminate the Grantback Statutory Provision of the General
Education Provisions Act
NPR recommends repealing this provision which permits the
department to return  to a grantee a percentage of funds recovered
from the grantee as a result of an audit.
0.0*      0.0

[As a footnote:  *This recommendation saves an estimated $18.5
million in expenditures but makes no change in budget authority.]

ED11 Build a Professional, Mission-Driven Structure for Research
NPR recommends establishing a research advisory board,
consolidating and  targeting research and development efforts, and
establishing an office to translate research findings  into
education reform assistance.
na   na

ED12 Develop a Strategy  for Technical Assistance and Information
Dissemination
ED should develop a strategy for its $290 million technical
assistance efforts  designed to promote the National Goals 2000
themes.
na   na


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-ENERGY

DOE01     Improve Environmental Contract Management
NPR proposes improvements in DOE environmental clean-up contracts
to  achieve efficiency.
cbe  cbe

DOE02     Incorporate Land Use Planning in Cleanup
NPR recommends that DOE incorporate land use planning into the
nuclear  facilities clean-up process.
cbe  cbe

DOE03     Make Field Facility Contracts Outcome-Oriented
This recommendation would modify the current DOE contract process
at  field facilities to make the contracts more outcome-oriented to
improve efficiency  and contractor performance.
-570.0    0.0

DOE04     Increase Electrical Power Revenues and Study Rates
NPR proposes increasing federal income by allowing the Power
Marketing  Administrations to recover a larger portion of their
operating costs through  rate increases or by changing the
financing of Bonneville Power Administration.
0.0  3,601.0

DOE05     Strengthen the Federal Energy Management Program
NPR recommends a number of improvements to this program, designed
to  better management of federal energy use.
na   na

DOE06     Redirect Energy Laboratories to Post-Cold War Priorities
This recommendation provides guidance for use of the DOE energy
labs,  focusing on defining new missions, consolidating or
eliminating unneeded  facilities, and making their services of
greater benefit in the post-Cold War era.
-2,150.0  0.0

DOE07     Save Costs Through Private Power Cogeneration
This would allow the private sector to cogenerate power at DOE labs
as a means  of saving money. DOD has similar authority at this
time.
-112.0    0.0

DOE08     Support the Sale of the Alaska Power Administration
The federal government should divest its interests in the Alaska
Power Administration.
-20.5     -52.5

Appendix-A-Major-Recommendations--By-Agency 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
Services are the  delivery of health and welfare services to
individuals. Since the Administration has special, ongoing efforts
dealing with these areas, they are not covered by the  National
Performance Review.

HHS01     Promote Effective, Integrated Service Delivery for
Customers by Increasing Collaborative Efforts
These recommendations outline a number of steps needed to better
integrate and  deliver social services to communities and families.
cbe  cbe

HHS02     Reengineer the HHS Process for Issuing Regulations
HHS should improve the timeliness and quality of regulations issued
and should  involve stakeholders in the development of regulations.
cbe  cbe

HHS03     Develop a National, Uniform Inspection System to Ensure
a Safe Food Supply
Responsibility for food safety should be consolidated into a single
agency, and policies  and inspection systems should be implemented
on an objective, scientific basis.
cbe  cbe

HHS04     Reconfigure Support for Health Professions Education
Existing programs should be consolidated and/or eliminated.
na   na

HHS05     Restructure the Management of Railroad Industry Benefit
Programs
Railroad Retirement Board functions should be integrated into
existing programs administered by federal, state, and private
sector service providers.
cbe  cbe

HHS06     Improve Social Security Administration Disability Claims
Processing to Better Serve People with Disabilities and Safeguard
Trust Fund Assets
SSA should apply resources and management tools needed to reduce
backlogs and  to avoid paying benefits to individuals who are no
longer disabled.
-4,010.0*      0.0

[As a footnote:  *Savings will be realized in the Social Security
Trust Funds and will not affect discretionary spending levels.]

HHS07     Protect Social Security, Disability and Medicare Trust
Fund Assets by Removing Barriers to Funding Productive Oversight
Activities
HHS should aggressively pursue options to assure that adequate
investments are  made to avoid unnecessary payments from trust
funds.
na   na

HHS08     Coordinate Collection and Dissemination of Social
Security Administration 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 federal
program outlays.
cbe  cbe

HHS09     Take More Aggressive Actions to Collect Outstanding Debts
Owed to the Social Security Trust Fund
SSA should be given the authority to use a full range of debt
collection tools available  under the Debt Collection Act of 1982
to collect debts owed by individuals who are  no longer on benefit
rolls.
-335.0*   0.0

[As a footnote:  *Savings will be realized in the Social Security
Trust Funds and will not affect discretionary spending levels.]

HHS10     Institute and Collect User Fees on FDA's Inspection and
Approval Processes
Food, drug and medical device manufacturers, processors and
suppliers should be  required to pay for FDA services.
-1,439.8  0.0

HHS11     Redesign SSA Service Delivery and Make Better Use of
Technology to Provide Improved Access and Services to Customers

SSA's organizational structure needs to be updated to reflect
changing customer  needs and to take full advantage of emerging
technologies.
na   na

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

HHS13     Review the Field and Regional Office Structure of the HHS
and Develop a Plan for Shifting Resources to Match Workload Demands

The review should emphasize customer service, results and increased
accountability.
cbe  cbe

HHS14     Amend the Health Care Financing Administration's
Contracting Authority 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.
-985.0    0.0


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-HOUSING-AND-URBAN-
DEVELOPMENT

HUD01     Reinvent Public Housing
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.
cbe  cbe

HUD02     Improve Multi-Family Asset Management and Disposition
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.
na   na

HUD03     Improve Single-Family Asset Management and Disposition
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.
na   na

HUD04     Create an Assisted-Housing/Rent Subsidy Demonstration
Project
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.
na   na

HUD05     Establish a New Housing Production Program
HUD should stimulate housing production through FHA risk-sharing
arrangements  with housing finance agencies, stimulate a secondary
market for multi-family  properties, improve access to FHA
insurance for first-time home buyers, provide special FHA programs
to revitalize neighborhoods and improve FHA management.
na   na

HUD06     Streamline HUD Field Operations
HUD should streamline its Washington, regional and field office
structure and  consolidate and reduce its size over time.
-167.0    0.0

HUD07     Refinance Section 235 Mortgages
HUD should use incentive contracts to speed savings from
refinancing expensive  old mortgages subsidized by HUD.
-210.0    0.0

HUD08     Reduce Section 8 Contract Rent Payments
HUD should modify its process to reduce unjustified increases in
annual payments  to Section 8 projects.
-225.0    0.0

HUD09     Consolidate Section 8 Certificates and Vouchers
This recommendation would consolidate two overlapping projects to
eliminate  duplication.
cbe  cbe

HUD10     Reduce Operating Subsidies for Vacancies
This recommendation would encourage public housing agencies to make
better  use of their assets by reducing subsidies paid for
unjustifiably vacant units.
cbe  cbe

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.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]

INTEL02   Enhance Community Responsiveness to Customers
A 40-year emphasis on the Soviet Union allowed the Intelligence
Community  to develop a repertoire which was not dependent on a
close relationship with its  customers. That is no longer the case
today, and NPR makes recommendations  for improvements in this
area.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]


INTEL03   Reassess Information Collection to Meet New Analytical
Challenges
The analytical issues the Intelligence Community faces are far more
diverse and  complex today, requiring new focus and new techniques
to meet the intelligence  needs of policymakers.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]


INTEL04   Integrate Intelligence Community Information Management
Systems
The Intelligence Community lacks the connectivity and
interoperability in its  information systems to do its job
efficiently and effectively.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]


INTEL05   Develop Integrated Personnel and Training Systems
This recommendation focuses on organizational development and
training issues  within the Intelligence Community.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]


INTEL06   Merge the President's Intelligence Oversight Board with
the President's Foreign Intelligence Advisory Board
The roles of these two oversight bodies are sufficiently similar
that small savings  and some efficiencies can be achieved by
combining them.
*    *

[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]


INTEL07   Improve Support to Ground Troops During Combat Operations
Numerous studies of intelligence support during the Gulf War
focused on agency  or service-specific support issues. This issue
outlines a reinvention lab effort which  proposes an integrated
approach to studying support to ground forces during  combat
operations.
*    *
[As a footnote:  *The Intelligence Community budget is classified.
Savings from these recommendations cannot be shown in this report.]
Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-JUSTICE

DOJ01     Improve the Coordination and Structure of Federal Law
Enforcement Agencies*
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.
-187.0    0.0

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Treasury report; fiscal impact is for Justice only.]

DOJ02     Improve Border Management*
Federal border management should be significantly improved. NPR
recommends  a series of actions to be taken by Customs and INS to
make these improvements.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Treasury report; fiscal impact is for Justice only.]

DOJ03     Redirect and Better Coordinate Resources Dedicated to
Interdiction of Drugs*
This recommendation outlines changes that can be made to better
coordinate federal  programs directed at the air interdiction of
drugs.
na   na

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Treasury report; fiscal impact is for Justice only.]

DOJ04     Improve Department of Justice Debt Collection Efforts
This recommendation would make improvements in the Justice debt
collection  effort, including giving the department the ability to
retain a small percentage of  debts collected and allowing Justice
to credit its working capital fund with a  percentage of debt
collections to be used for the creation of a centralized debt
tracking and information system.
cbe  cbe

DOJ05     Improve the Bureau of Prisons Education, Job Training,
and Financial Responsibilities Programs
NPR makes a series of recommendations for improving prison
education, training,  and inmate financial responsibility policies.
0.0  13.5

DOJ06     Improve the Management of Federal Assets Targeted for
Disposition*
Improvements are needed in the methods by which the federal
government disposes  of various assets.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Treasury report; fiscal impact is for Justice only.]


DOJ07     Reduce the Duplication of Drug Intelligence Systems and
Improve Computer Security*
NPR recommends several changes to eliminate duplication in the
federal drug  intelligence system.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Treasury report; fiscal impact is for Justice only.]


DOJ08     Reinvent the Immigration and Naturalization Service's
Organization and Management
NPR recommends a number of changes in INS organization and
management  processes to provide an improved management structure
and a strategic vision for  the agency.
-48.0     0.0

DOJ09     Make the Department of Justice Operate More Effectively
as the U.S. Government Law Firm
Justice should undertake several improvements in the way it manages
its litigation  functions to improve service to its customers and
better manage its case load.
na   na

DOJ10     Improve White Collar Fraud Civil Enforcement
Civil fraud recovery should be established as a priority and the
department should  take steps to improve its white collar fraud
enforcement.
14.0      111.0

DOJ11        Reduce the Duplication of Law Enforcement Training
Facilities
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.
cbe  cbe

DOJ12     Streamline Background Investigations for Federal
Employees
The current method of completing background examinations on federal
employees  is time-consuming and inefficient. This recommendation
outlines improvements to  streamline the process without
sacrificing thoroughness.
-60.0     0.0

DOJ13     Adjust Civil Monetary Penalties to the Inflation Index
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 every four years.
0.0       193.0

DOJ14     Improve Federal Courthouse Security
This recommendation is intended to address concerns of the U.S.
Marshals Service  concerning security at federal courthouses.
24.0      0.0

DOJ15     Improve the Professionalism of the U.S. Marshals Service
U.S. Marshals should be selected based on merit by the Director of
the U.S.  Marshal Service and reduce some positions.
-36.0     0.0

DOJ16     Develop Lower Cost Solutions to Federal Prison Space
Problems
This recommendation describes approaches to solving existing prison
space problems.
cbe  cbe


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-LABOR

DOL01     Enhance Reemployment Programs for Occupationally Disabled
Federal Employees
These recommendations would help occupationally disabled federal
employees return  to productive careers by expanding DOL's
return-to-work program. This saves money  by reducing long-term
benefit costs to the government.
-125.7    0.0

DOL02     Develop a Single Comprehensive Worker Adjustment Strategy
Improve services to the unemployed--and those at risk of
dislocation--and make  better use of resources available for
assistance by developing a new worker adjustment  strategy.
na   na

DOL03     Expand Negotiated Rulemaking and Improve Up-front
Teamwork on Regulations
DOL should provide administrative guidance more quickly and cheaply
through  negotiated rulemaking and a streamlined team approach to
the rules development  process.
cbe  cbe

DOL04     Expand the Use of Alternative Dispute Resolution by the
Department of Labor
The increased use of alternative dispute resolution could reduce
litigation and produce  significant long-term savings.
cbe  cbe

DOL05     Automate the Processing of ERISA Annual Financial Reports
(Forms 5500) to Cut 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 and delays.
-49.7     0.0

DOL06     Amend the ERISA Requirement for Summary Plan Descriptions
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.
-0.6      0.0

DOL07     Redirect the Mine Safety and Health Administration's Role
in Mine Equipment 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.
na   na

DOL08     Create One-Stop Centers for Career Management
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.
cbe  cbe

DOL09     Create a Boundary-Spanning Work Force Development Council
Because the greatest barriers to creating an integrated work force
development system  are 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
"bottom-up grant consolidation" for states and localities.
na   na

DOL10     Refocus the Responsibility for Ensuring Workplace Safety
and Health
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.
cbe  cbe

DOL11     Open the Civilian Conservation Centers to Private and
Public Competition
A long-term reduction in costs is possible through expanded
competition for  contracts to operate Job Corps Civilian
Conservation Centers.
cbe  cbe

DOL12     Partially Fund Mine Safety and Health Enforcement Through
Service Fees
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.
-44.4     0.0

DOL13     Integrate Enforcement Activities within the Department of
Labor
Introduce greater coordination and flexibility in the DOL
enforcement agencies to  project a consistent message to customers
and integrate approaches to common issues.
cbe  cbe

DOL14     Apply Information Technology to Expedite Wage
Determinations for Federal 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.
0.1       0.0

DOL15     Provide Research and Development Authority for the DOL's
Mine Safety and 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.
na   na

DOL16     Increase Assistance to States in Collecting Delinquent
Unemployment Insurance Trust Fund Contributions
This recommendation outlines ways of improving state collections of
delinquent unemployment insurance contributions.
na   na

DOL17     Revise and Update the Consumer Price Index
The consumer price index has important consequences for both public
and private decisions. This important measure should be updated to
reflect recent inflation trends.
56.0      0.0

DOL18     Improve the Delivery of Legal Services by the Office of
the Solicitor in the Department of Labor
The delivery of legal services by the Office of the Solicitor can
be improved by using cooperative agreements, coordinated budgeting
and better use of resources.
na   na

DOL19     Transfer the Veterans' Employment and Training Service to
the Employment and Training Administration
The DOL can improve service delivery to veterans and save money by
consolidating administration of this function.
-66.0     0.0

DOL20     Reduce Federal Employees' Compensation Act Fraud
Congress needs to amend several sections of the United States Code
to enable DOL to eliminate benefits to persons who have been
convicted of defrauding the program.
-22.6     0.0

DOL21     Change the Focus of the Unemployment Insurance Benefits
Quality Control Program to Improve Performance
Re-examining the present mix of systems to shift the focus of this
program from error measurement to a constructive use of the results
would allow DOL to improve benefit payment quality and more
effectively achieve the program's goals.
na   na


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-STATE/U.S.-
INFORMATION-AGENCY

DOS01     Expand the Authority of Chiefs of Mission Overseas
This recommendation proposes a pilot program to expand the
management authority of Chiefs of Mission overseas in the
allocation of fiscal and staffing resources.
cbe  cbe

DOS02     Integrate the Foreign Affairs Resource Management Process
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.
na   na

DOS03     Improve State Department Efforts to Promote U.S. Business
Overseas
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.
cbe  cbe

DOS04     Provide Leadership in the Department's Information
Management
The Department of State should make significant changes in the way
it manages information technology policy. Several improvements are
recommended.
cbe  cbe

DOS05     Reduce Mission Operating Costs
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.
-57.8     0.0

DOS06     Consolidate U.S. Nonmilitary International Broadcasting
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.
na   na

DOS07     Relocate the Mexico City Regional Administrative
Management Center
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.
-0.1      0.0

DOS08     Improve the Collection of Receivables
The State Department should do a better job collecting debts, such
as medical expenses and others, owed to the department.
-9.8      0.0

DOS09     Change UN Administrative and Assessment Procedures
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.
-36.2     0.0

Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-THE-INTERIOR

DOI01     Establish a Hard Rock Mine Reclamation Fund to Restore
the Environment
To address health and safety threats and environmental damage
caused by toxic  metal and chemical leaching from abandoned mines,
the federal government should  establish a hard-rock mine
reclamation fund.
cbe  cbe

DOI02     Redefine Federal Oversight of Coal Mine Regulation
To overcome organizational problems that inhibit an effective
state-federal  relationship, federal oversight of coal mine
regulations should be redefined.
-28.0     0.0

DOI03     Establish a National Spatial Data Infrastructure
By supporting a cross-agency coordinating effort, the federal
government can develop  a coherent vision for the national spatial
data infrastructure (NSDI). (Spatial, or  geographic, data refers
to information that can be placed on a map.) This will allow
greatly improved information analysis in a wide range of areas,
including the analysis of environmental information and the
monitoring of endangered animals and sensitive  land areas.
36.0      0.0

DOI04     Promote Entrepreneurial Management of the National Park
Service**
The Park Service should be allowed to raise additional revenues
from appropriate  sources and to use a portion of the money for
investment in park infrastructure.  This proposal would increase
selected park entry fees and would increase fees on  park
concessionaires.
332.0     993.0

[As a footnote:  **NPR recommends redirecting half of increased
park income to investment in park infrastructure.]

DOI05     Obtain a Fair Return for Federal Resources
The federal government should institute reforms to guarantee a fair
return for  federal resources such as livestock grazing and
hard-rock mining. Some of the  programs regulating the commercial
sale and use of natural resources on federal  lands operate at a
loss to the taxpayers and fail to provide incentives for good
stewardship practices. The administration should also develop a new
fee schedule  for communications sites on DOI and Department of
Agriculture lands.
132.4     549.7

DOI06     Rationalize Federal Land Ownership
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.
na   na

DOI07     Improve the Land Acquisition Policies of the DOI
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.
na   na

DOI08     Improve Mineral Management Service Royalty Collections
Better management of DOI's royalty collection program would
increase revenues  and improve efficiency.
0.0  28.0

DOI09     Establish a System of Personnel Exchanges in DOI
A change in management philosophy is needed to address bureaucratic
barriers at  DOI. This recommendation outlines various approaches
to this problem.
na   na

DOI10     Consolidate Administrative and Programmatic Functions in
DOI
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.
-17.5     0.0

DOI11     Streamline Management Support Systems in DOI
To create a quality management culture, the department should
streamline its  management support systems, including
telecommunications, procurement,  financial management, and
paperwork control.
cbe  cbe

DOI12     Create a New Mission for the Bureau of Reclamation
The Bureau of Reclamation needs to redefine its mission toward new
environmental  priorities and clarify its role in water management.
The original mission to develop  water resources and provide for
economic development of the West--is almost complete.
-184.1    0.0

DOI13     Improve the Federal Helium Program
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 the helium debt, reduce costs, increase  efficiencies
in helium operations, and increase sales of crude helium as market
conditions permit.
-12.0     35.0

DOI14     Enhance Environmental Management by Remediating Hazardous
Material Sites
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.
18.7 0.0




Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-TRANSPORTATION

DOT01     Measure Transportation Safety
NPR recommends the development of common, government-wide measures
of transportation safety.
na   na

DOT02     Streamline the Enforcement Process
NPR recommends pilot programs in the U.S. Coast Guard, the Federal
Aviation Administration, and the Federal Highway Administration,
designed to offer greater flexibility in enforcement methods.
cbe  cbe

DOT03     Use a Consensus-Building Approach to Expedite
Transportation and Environmental Decisionmaking
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.
na   na

DOT04     Establish a Corporation to Provide Air Traffic Control
Services
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).
0.0  0.0

DOT05     Permit States to Use Federal Aid as a Capital Reserve
This recommendation would allow federal transportation grant
recipients to use grant funds capital reserve to back debt
financing to construct eligible transportation projects.
na   na

DOT06     Encourage Innovations in Automotive Safety
NPR recommends allowing the National Highway Traffic Safety
Administration to grant more exemptions from highway safety
standards to develop new safety systems.
na   na

DOT07     Examine User Fees for International Over-Flights
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.
0.0  9.0

DOT08     Increase FAA Fees for Inspection of Foreign Repair
Facilities
To ensure full cost recovery, increase the fees charged for
certification and surveillance of foreign aircraft repair stations.
0.0  8.0

DOT09     Contract for Level I Air Traffic Control Towers
NPR recommends converting 99 Level I (low-use) air control towers
to contract operation and reviewing the remaining Level I towers
for possible decommissioning.
-3.1      0.0

DOT10     Establish an Aeronautical Telecommunications Network to
Develop a Public-Private Consortium
FAA should pursue the creation of a public-private consortium under
a cooperative agreement with industry to develop an Aeronautical
Telecommunications Network.
na   na

DOT11     Improve Intermodal Transportation Policy Coordination and
Management
DOT should institute a strategic planning process to promulgate
national, integrated transportation policies.
na   na

DOT12     Develop an Integrated National Transportation Research
and Development Plan
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.
na   na

DOT13     Create and Evaluate Telecommuting Programs
DOT should implement a telecommuting plan within the agency and
should evaluate transportation-related behavior and other topics
requiring research in this area.
na   na

DOT14     Improve DOT Information Technology Management
The department should develop an information management strategy
which will enable the sharing of data among its component agencies
and reduce costs.
-224.5    0.0

DOT15     Provide Reemployment Rights for Merchant Mariners
Guarantee reemployment rights to U.S. seafarers at their private
sector jobs if called to serve during a war or national emergency.
na   na

DOT16     Establish an Independent Commission to Review U.S.
Maritime Industry
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.
na   na

DOT17     Eliminate Funding for Highway Demonstration Projects
Rescind funding for existing highway demonstration projects. These
demonstration projects should compete at the state level for the
limited highway resources available and not be singled out for
special treatment at the federal level.
-7,853.0  0.0

DOT18     Reduce Spending for the U.S. Merchant Marine Academy
As an economy measure, federal funding for the U.S. Merchant Marine
Academy should be cut by half. The Academy should be given the
ability to charge tuition to cover a portion of its operations.
-45.16    0.0

DOT19     Rescind Unobligated Earmarks for the FTA New Starts and
Bus Program
Rescind unobligated balances for fiscal year 1992 and prior
earmarked funding under this FTA program that remain unobligated
after three years. cbe = cannot be estimated (due to data
limitations or uncertainties about implementation time lines).
-131.5    0.0

DOT20     Reduce the Annual Essential Air Service Subsidies
This recommendation would set new, more restrictive criteria for
small airports to qualify for essential air service subsidies.
-65.0     0.0

DOT21     Terminate Grant Funding for Federal Aviation
Administration Higher Education Programs
To reduce costs, eliminate federal grant funding of two FAA
post-secondary education programs.
-45.4     0.0

DOT22     Assign Office of Motor Carriers (OMC) Field Staff to
Improve Program Effectiveness 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.
cbe  cbe

DOT23     Automate Administrative Requirements for Federal Aid
Highway Projects
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.
na   na

Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-
TREASURY/RESOLUTION-TRUST-CORPORATION

TRE01     Improve the Coordination and Structure of Federal Law
Enforcement Agencies*
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.
-92.9     0.0

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE02     Improve Border Management*
Federal border management should be significantly improved. NPR
recommends a series of actions to be taken by Customs and INS to
make these improvements.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE03     Redirect and Better Coordinate Resources Dedicated to the
Interdiction of Drugs*
This recommendation outlines changes that can be made to better
coordinate federal programs directed at the air interdiction of
drugs.
-186.6    0.0

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE04     Foster Federal-State Cooperative Initiatives by the IRS
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.
cbe  cbe

TRE05     Simplify Employer Wage Reporting
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.
cbe  cbe

TRE06     Establish Federal Firearms License User Fees to Cover
Costs
The current fee for a retail dealer's firearms license (authorized
in 1968) does not cover the cost of license processing and is low
enough to encourage applications from individuals wishing to
occasionally purchase firearms at reduced cost. Increased fees
would recover the cost of operating the firearms program.
0.0       132.5

TRE07     Improve the Management of Federal Assets Targeted for
Disposition*
Improvements are needed in the methods by which the federal
government disposes of various assets.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE08     Reduce the Duplication of Drug Intelligence Systems and
Improve Computer Security*
NPR recommends several changes to eliminate duplication in the
federal drug intelligence system.
na   na

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE09     Modernize the IRS
The IRS Tax System Modernization (TSM) initiative, currently in its
initial stages, 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.
cbe  cbe

TRE10     Modernize the U.S. Customs Service
NPR recommends a number of changes in Customs' organization and
management processes to provide an improved management structure
and strategic vision.
0.0       450.0

TRE11     Ensure the Efficient Merger of Resolution Trust
Corporation into the FDIC
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.
na   na

TRE12     Reduce the Duplication of Law Enforcement Training
Facilities*
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.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE13     Streamline Background Investigations for Federal
Employees*
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.
cbe  cbe

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE14     Adjust Civil Monetary Penalties to the Inflation Index*
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.
0.0       126.0

[As a footnote:  *Issue corresponds to an identical issue in the
Department of Justice report; fiscal impact is for Treasury only.]

TRE15     Increase IRS Collections Through Better Compliance
Efforts
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.
cbe  cbe

TRE16     Improve Agency Compliance with Employment Tax Reporting
Requirements
Many federal agencies do not fully comply with federal tax
reporting requirements. Responsibilities for compliance should be
more fully communicated and enforced.
cbe  cbe

TRE17     Authorize Federal Tax Payment by Credit Card
Legislation should be enacted to allow certain taxpayers to make
tax payments with a credit card.
cbe  cbe

TRE18     Modernize the Financial Management Systems
NPR recommends several changes to improve financial management with
Treasury, including consolidation of some operations, the improved
use of technology, and other actions.
-41.1     0.0

TRE19     Repeal Section 5010 of the Internal Revenue Code to
Eliminate Tax Credits for Wine and Flavors
The wine and flavors tax credit should be repealed.
0.0       500.0

TRE20     Amend or Repeal Section 5121 of the Internal Revenue Code
Requiring Special Occupational Taxes on Retail Alcohol Dealers
This recommendation would increase federal income from alcohol
dealers.
0.0       45.0


Appendix-A-Major-Recommendations--By-Agency DEPARTMENT-OF-VETERANS-AFFAIRS

DVA01     Develop the Master Veteran Record and Modernize the
Department's Information 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.
na   na

DVA02     Modernize Benefits Claims Processing
Modernization of the VA benefits claims processing system will
improve the quality of service and save taxpayer dollars over time.
na   na

DVA03     Eliminate Legislative Budget Constraints to Promote
Management Effectiveness
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.
cbe  cbe

DVA04     Streamline Benefits Claims Processing
VA should examine the usefulness of a New York Regional Office
approach to benefits claims processing that promises to streamline
the process. It should also examine regional staffing.
1.8  0.0

DVA05     Consolidate Department of Defense and Department of
Veterans Affairs Compensation and Retired Pay Programs
DOD and VA should create a task force to jointly examine their
disability compensation adjudication and disbursement processes.
cbe  cbe

DVA06     Enhance VA Cost Recovery Capabilities
Revise VA policy to use a portion of cost recovery funds to defray
debt collection costs and expand recoveries to save money.
0.0       486.5

DVA07     Establish a Working Capital Fund
This recommendation would allow creation of a working capital fund
using existing resources in the department to be used for certain
selected needs.
na   na

DVA08     Decentralize Decisionmaking Authority to Promote
Management Effectiveness
NPR recommends that VA headquarters and field management work
together to improve agency decisionmaking, including the delegation
of some decisionmaking to field activity directors.
na   na

DVA09     Establish a Comprehensive Resource Allocation Program
VA should design and develop a comprehensive, departmentwide,
performance and needs-based resource allocation program to replace
current approaches.
na   na

DVA10     Serve Veterans and Their Families as Customers
This recommendation outlines several approaches for VA to improve
its focus on veterans and their families as customers.
na   na

DVA11     Phase-Out and Close Supply Depots
VA should convert its existing centralized depot storage and
distribution program to a commercial just-in-time delivery system
and close unneeded supply depots.
-168.0    0.0

DVA12     Improve Business Practices through Electronic Commerce
VA should expand its use of electronic media to reduce paperwork
and save money. It should seek to make greater use of electronic
funds transfer of compensation and pension benefits.
-124.1    0.0

DVA13     Eliminate "Sunset" Dates in the Omnibus Budget
Reconciliation Act of 1990
To achieve cost savings, extend certain cost savings measures that
are due to expire in 1998.
-704.8    490.0

DVA14     Raise the Fees for Veterans Affairs' Guaranteed Home
Loans
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.
-811.4    0.0

DVA15     Restructure the Veterans Affairs' Health Care System
VA should reexamine its role and delivery structure after the
issuance of the report of the President's National Health Care
Reform Task Force and take actions to restructure the VA health
care system.
0.0  0.0

DVA16     Recover Administrative Costs of Veterans' Insurance
Program from Premiums and Dividends
VA should be permitted to recover certain insurance program costs
from insurance trust fund surpluses.
0.0  0.0

Grand Total   $28,110.3    $8,255.7


Appendix-A-Major-Recommendations--By-Agency ENVIRONMENTAL-PROTECTION-AGENCY

EPA01     Improve Environmental Protection Through Increased
Flexibility for Local  Government
EPA should amend the regulations it determines are most troublesome
for local  governments pursuant to the Regulatory Flexibility Act
of 1980. The goal is to  provide alternative, flexible approaches
to meeting environmental mandates.
na   na

EPA02     Streamline EPA's Permit Program
Streamlining efforts include establishing a permit clearinghouse to
serve as a single  point of contact and piloting a cross-program
permit tracking system.
-22.5     0.0

EPA03     Shift EPA's Emphasis Toward Pollution Prevention and Away
from Pollution Control
EPA needs to emphasize pollution prevention by implementing an
effective  pollution prevention strategy that includes amending
regulations and motivating  the private sector to invest in
cleaner, less polluting technologies and practices.
cbe  cbe

EPA04     Promote the Use of Economic and Market-Based Approaches
to Reduce Water Pollution
EPA should work with Congress to propose language amending the
Clean Water  Act to explicitly encourage market-based approaches to
reduce water pollution.  EPA should also identify wastewater
discharge fees that could be included in the Clean Water  Act
reauthorization.
cbe  cbe

EPA05     Increase Private Sector Partnerships to Accelerate
Development of Innovative Technologies
NPR recommends that EPA develop an action plan with specific
milestones for  improving the regulatory and statutory climate for
innovative technologies.
na   na


EPA06     Stop the Export of Banned Pesticides
EPA should work with Congress to develop legislation to stop the
exportation of  banned pesticides from the U.S. by June 1994.
na   na

EPA07     Establish Measurable Goals, Performance Standards and
Strategic Planning within EPA
EPA should draft measurable environmental goals for the range of
environmental  problems the U.S. faces. The agency should also
draft internal goals to provide  direction for assessing and
redirecting existing EPA strategies.
na   na

EPA08     Reform EPA's Contract Management Process
NPR recommends reforms in EPA's contract management process by
implementing  performance standards and by maximizing competition
in the contracting process.
cbe  cbe

EPA09     Establish a Blueprint for Environmental Justice Through
EPA's Operations
EPA should develop a blueprint of actions that will incorporate
environmental justice consideration into all aspects of EPA
operations.
na   na

EPA10     Promote Quality Science for Quality Decisions
Improvements include establishing guidelines for professional
development of EPA's scientific and technical staff and expanding
the use of peer-review and quality  assurance procedures.
na   na

EPA11     Reorganize EPA's Office of Enforcement
EPA should initiate a reorganization of its headquarter's
enforcement organization  by October 1, 1993.
-10.5     0.0



Appendix-A-Major-Recommendations--By-Agency EXECUTIVE-OFFICE-OF-THE-PRESIDENT

NOTE:  White House Office and Office of the Vice President
The White House Office and the Office of the Vice President are
regularly  "reinvented" with each change of administration. This
analysis focuses on the  other portions of the Executive Office of
the President.

EOP01     Delegate Routine Paperwork Review to the Agencies and
Redeploy OMB' Resources More Effectively
These recommendations outline improvements to streamline the
government's  paperwork review process and reduce unnecessary
burdens on agencies.
cbe  cbe

EOP02     Modify the OMB Circular System
OMB should reinvigorate the process for the review, updating, and
consolidation  of management circulars. It should also develop
uniform processes for developing  circulars and for obtaining input
during their development.
na   na

EOP03     Strengthen the Office of U.S. Trade Representative's
Coordination with State and Local Governments
The Trade Representative's Office should examine the trade policy
needs of state  and local governments and work with them on
relevant issues.
0.5  0.0

EOP04     Improve Federal Advisory Committee Management
Discontinuing the "anti pass the hat" language annually inserted
into  appropriations acts would allow appropriate pooling of
executive resources for  certain multi-agency projects.
-1.4 0.0

EOP05     Reinvent OMB's Management Mission
NPR recommends a series of actions by OMB to redirect resources to
provide  better management information for Presidential decision
making.
0.1  0.0

EOP06     Improve OMB's Relationship with Other Agencies
This recommendation outlines methods by which OMB can work more
effectively  with agencies and with states.
na   na

EOP07     Strengthen the Office of the U.S. Trade Representative's
Trade Policy Coordination Process
These recommendations outline ways to improve the interagency trade
policy  coordination process.
na   na

EOP08     Strengthen the Office of the U.S. Trade Representative's
Negotiation Process
The Office of the USTR should implement various techniques for
upgrading the  negotiating skills of its employees and the analysis
of the negotiation process itself.
cbe  cbe

EOP09     Establish a Customer Service Bureau in the EOP
Using available resources, EOP management should establish a small,
one-stop  customer service bureau within the EOP.
na   na

EOP10     Conduct Qualitative Self-Reviews of Critical
Administrative Processes
The Assistant to the President for Management and Administration
should establish  a formal program of ongoing, internal quality
reviews of administrative processes in  the EOP to save money and
improve service.
cbe  cbe

EOP11     Improve the Presidential Transition Process
Past difficulties with the Presidential transition should be
corrected by amendment of the Presidential Transition Act and
related actions.
cbe  cbe

EOP12     Improve Administrative Processes
This recommendation outlines a series of steps to improve internal
administrative  processes within the EOP, including mail
processing, paperwork flow, and supply  management.
na   na


Appendix-A-Major-Recommendations--By-Agency FEDERAL-EMERGENCY-MANAGEMENT-
AGENCY

FEMA01       Shift Emphasis to Preparing for and Responding to the
Consequences of All Disasters
FEMA's early focus was on preparedness for nuclear war. The current
world situation  and recent natural disasters highlight the need
for FEMA to continue to shift its  resources to respond to all
hazards.
na   na

FEMA02    Develop a More Anticipatory and Customer-Driven Response
to Catastrophic Disasters
These recommendations should make FEMA respond faster and more
effectively to catastrophic disasters.
na   na

FEMA03     Create Results-Oriented Incentives to Reduce the Costs
of a Disaster
The Midwest floods, Hurricanes Hugo and Andrew and the Loma Prieta
Earthquake  all illustrate the enormous costs of disaster to
society. These recommendations will  move toward reducing that
cost.
cbe  cbe

FEMA04    Develop A Skilled Management Team Among Political
Appointees and Career Staff
Leadership has been the weak link in FEMA's mission as the federal
government's  emergency management coordinator. These
recommendations strive to improve  FEMA leadership to successfully
implement its new, all-hazards mission. cbe = cannot be estimated
(due to data limitations or uncertainties about implementation time
lines).
na   na


Appendix-A-Major-Recommendations--By-Agency NATIONAL-AERONAUTICS-AND-SPACE-
ADMINISTRATION

NASA01    Improve NASA Contracting Practices
This recommendation outlines several steps NASA can take to 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.
cbe  cbe

NASA02    Increase NASA Technology Transfer Efforts and Eliminate
Barriers to Technology Development
NASA should expand its technology transfer efforts and promote the
development of new technologies.
na   na

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

NASA04    Strengthen and Restructure NASA Management
NASA program management should be aggressively overhauled. This
recommendation outlines a number of steps the agency should take,
both in overall management and in the management of the space
station program.
-1,982.0       0.0

NASA05    Clarify the Objectives of the Mission to Planet Earth
Program
This recommendation suggests a number of steps needed to improve
the management and performance of the Mission to Planet Earth
program.
na   na




Appendix-A-Major-Recommendations--By-Agency NATIONAL-SCIENCE-
FOUNDATION/OFFICE-OF-SCIENCE-AND-TECHNOLOGY-POLICY

NSF01     Strengthen Coordination of Science Policy
NPR recommends modifying the current structure of the Federal
Coordinating Council for Science, Engineering, and Technology
(FCCSET) to strengthen its role in science policy.
na   na

NSF02     Use a Federal Demonstration Project to Increase Research
Productivity
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.
na   na

NSF03     Continue Automation of NSF Research Support Functions
NSF should push forward with efforts to implement advanced
information technology in the proposal submission, review, award,
and information dissemination areas.
na   na


Appendix-A-Major-Recommendations--By-Agency SMALL-BUSINESS-ADMINISTRATION

SBA01     Allow Judicial Review of the Regulatory Flexibility Act
Allow access to the courts when federal agencies develop rules that
fail to properly examine alternatives that will lessen the burden
on small businesses.
cbe  cbe

SBA02     Improve Assistance to Minority Small Businesses
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.
na   na

SBA03     Reinvent the U.S. Small Business Administration's Credit
Programs
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.
na   na

SBA04     Examine Federal Guidelines for Small Business Lending
Requirements
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.
na   na

SBA05     Manage the Microloan Program to Increase Loans for Small
Business
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.
na   na

SBA06     Establish User Fees for Small Business Development Center
Services
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.
0.0       102.0

SBA07     Distribute SBA Staff Based on Workload and Administrative
Efficiency
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.
na   na

SBA08     Improve Federal Data on Small Businesses
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.
na   na


Appendix-B-Summary-of-Savings Estimates-of-Savings-from-NPR-systems-Teams-
Recommendations

Table B-1.     Estimates of Savings from NPR systems Teams
               Recommendations
                    (dollars in billions)

                         FY95 FY96 FY97 FY98 FY99      Total

1.   Streamlining the
     Bureaucracy through
     Reengineering       5.0  5.8  7.4  9.5  12.7      40.4

2.   Reinventing Federal
     Procurement         0.0  5.6  5.6  5.6  5.7       22.5

3.   Reengineering Through
     Information
     Technology          0.1  0.5  1.2  1.6  2.0        5.4

4.   Reducing Inter-
     governmental
     Administrative
     Costs               0.5  0.7  0.7  0.7  0.7        3.3

5.   Changes to Individual
     Agencies
     (see Appendix A)    7.0* 6.2  7.0  7.3  8.9       36.4


Total NPR Savings        12.6 18.8 21.9 24.7 30.0      108.0


*Includes $0.5 billion in FY1994
The assumptions used to develop these savings estimates follow.

Appendix-B-Summary-of-Savings Intragovernmental-Administrative-Costs

4. Intragovernmental Administrative Costs.
     Simplifying and reducing the federal government's reporting
requirements will generate savings at the federal, state, and
local levels. The estimate assumes that over 75% of the state and
local governments will accept a fee-for-service option in place
of existing cost reimbursement procedures from FY1995-1999 in
return for greater administrative flexibility. Eliminating cost
reimbursement procedures slows cost growth by 3% per year at the
federal level.



Appendix-B-Summary-of-Savings Introduction

     The NPR recommendations yield $108 billion in savings for
the 5 year period, FY1995-1999. $36.4 billion result from the
specific changes in individual agencies that were detailed in
Appendix A. The remaining $71 billion result from governmentwide
changes explained here.

     This appendix provides the estimates of the governmentwide
changes, and the assumptions underlying those estimates. Savings
by major issue area are shown in Table B-1.



Appendix-B-Summary-of-Savings Reeingeering-Through-Information-Technology

3. Reeingeering Through Information Technology
These estimates assume:
a.   A $25 billion baseline in information technology (IT)
     spending, based on obligations reported through OMB circular
     A-11 by executive branch agencies for acquisition,
     operation, and use of IT systems.
b.   30% savings in IT systems may be achieved through
     information infrastructure consolidation and standardization
     -- this savings estimate is extrapolated from the "Defense
     Information Infrastructure Initiative" (December 1992,
     Resource Summary). Since Defense IT spending constitutes
     roughly one-half of total IT spending it is assumed that
     equal savings can be obtained from the IT budgets of
     civilian agencies.
c.   Savings from electronic benefits transfer and from
     consolidation and modernization of the federal information
     infrastructure; offsetting costs result from consolidation
     and modernization of the law enforcement and safety mobile
     networks and a program to provide citizens with better
     access to government information.
d.   Savings for electronic benefits transfer nationally may be
     extrapolated from pilot programs in the states of New Mexico
     and Minnesota.
e.   Savings recommended for the Department of Transportation IT
     consolidation and modernization are subtracted to avoid
     double-counting.


Appendix-B-Summary-of-Savings Reinventing-Federal-Procurement

2. Reinventing Federal Procurement
These estimates assume:
a.   The General Service Administration's estimate that total
     annual procurement costs equal $200 billion (GSA Federal
     Procurement Report).
b.   Savings can be generated by a variety of reforms in
     procurement systems, including simplified acquisition
     thresholds, labor law reforms, IT procurement reforms,
     shifting from government specifications to commercial items,
     expanded use of purchase cards, and electronic commerce.
c.   Savings up to 12% of procurement spending may be achieved
     through these reforms (study by Defense Systems Management
     College). The NPR used 5% as a mid-range estimate.
d.   To avoid double-counting, savings associated with reductions
     in procurement personnel are excluded from this "reinventing
     procurement" savings estimate.


Appendix-B-Summary-of-Savings Streamlining-The-Bureaucracy-Through-
Reengineering

1. Streamlining The Bureaucracy Through Reengineering.
These estimates assume:
a.   Agency reengineering will allow a 12% reduction of civilian
     personnel over 5 years.
b.   Administrative and central control staffs and supervisors
     will be the primary areas for downsizing.
c.   Attrition, enhanced severance, reassignment, relocation,
     outplacement and retraining will be the primary tools to
     accomplish the reduction.
d.   Agencies will use other tools as necessary to accomplish the
     12% reduction.
e.   The 12% reduction includes and increases the
     Administration's previously established 4% personnel
     reduction goal for fiscal 1995.
f.   Indirect costs associated with personnel, such as office
     space and expenses, travel and supplies, are not included in
     the dollar estimates.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review CREATING-QUALITY-LEADERSHIP-AND-MANAGEMENT

QUAL01: 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 employees--starting with the President and
Cabinet--should attend appropriate 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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review GENERAL-SERVICES-ADMINISTRATION

GSA01: 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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review IMPROVING-CUSTOMER-SERVICES

ICS01: CREATE CUSTOMER-DRIVEN PROGRAMS IN ALL DEPARTMENTS AND
AGENCIES THAT PROVIDE SERVICES DIRECTLY TO THE PUBLIC Establish
an overall policy for quality of federal services delivered to
the public and initiate customer service programs in all agencies
that provide services directly to the public.

ICS02: CUSTOMER SERVICE PERFORMANCE STANDARDS--INTERNAL REVENUE
SERVICE As part of its participation in the NPR, the Internal
Revenue Service is publishing customer service performance
standards. To speed the delivery of taxpayer refunds, the
Secretary of the Treasury should delegate disbursing authority to
IRS in 1993 and future tax seasons.

ICS03: CUSTOMER SERVICE PERFORMANCE STANDARDS--SOCIAL SECURITY
ADMINISTRATION As part of its participation in the NPR, the
Social Security Administration is publishing customer service
performance standards. SSA will also obtain customer opinions on
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.

ICS04: CUSTOMER SERVICE PERFORMANCE STANDARDS--POSTAL SERVICE As
part of its participation in the NPR, the U.S. Postal Service
will expand its plans to display customer service standards in
Post Office retail lobbies.

ICS05: STREAMLINE WAYS TO COLLECT CUSTOMER SATISFACTION AND OTHER
INFORMATION FROM THE PUBLIC For voluntary information collection
requests directed at customers, OMB will delegate authority to
approve such requests if departments certifiy that they will
fully comply with Paperwork Reduction Act requirements. OMB will
also clarify rules on the use of focus groups and streamline
renewals of previously approved survey requests.





Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review IMPROVING-REGULATORY-SYSTEMS

REG01: CREATE AN INTERAGENCY REGULATORY COORDINATING GROUP Create
an interagency Regulatory Coordinating Group to share information
and coordinate approaches to regulatory issues.

REG02: ENCOURAGE MORE INNOVATIVE APPROACHES TO REGULATION Use
innovative regulatory approaches and develop a Deskbook on
Regulatory Design.

REG03: ENCOURAGE CONSENSUS-BASED RULEMAKING Encourage agencies to
use negotiated rulemaking more frequently in developing new
rules.

REG04: 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.

REG05: STREAMLINE AGENCY RULEMAKING PROCEDURES Streamline
internal agency rulemaking procedures, use "direct final"
rulemaking for noncontroversial rules and expedite treatment of
rulemaking petitions.

REG06: ENCOURAGE ALTERNATIVE DISPUTE RESOLUTION WHEN ENFORCING
REGULATIONS Increase the use of alternative means of dispute
resolution.

REG07: RANK RISKS AND ENGAGE IN "ANTICIPATORY" REGULATORY
PLANNING Rank the seriousness of environmental, health or safety
risks and develop anticipatory approaches to regulatory problems.

REG08: IMPROVE REGULATORY SCIENCE Create science advisory boards
for those regulatory agencies that depend heavily on scientific
information and judgments.

REG09: IMPROVE AGENCY AND CONGRESSIONAL RELATIONSHIPS Encourage
agencies to establish technical drafting services for
congressional committees and subcommittees.

REG10: PROVIDE BETTER TRAINING AND INCENTIVES FOR REGULATORS
Establish a basic training program for Presidential appointees
assigned to regulatory agencies and expand existing training
programs to cover career staff not currently being trained.



Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review MISSION-DRIVEN,-RESULTS-ORIENTED-BUDGETING

BGT01: DEVELOP PERFORMANCE AGREEMENTS WITH SENIOR POLITICAL
LEADERSHIP THAT REFLECT ORGANIZATIONAL AND POLICY GOALS The
President should develop performance agreements with agency
heads, starting with the top two dozen. Agency heads should also
use performance agreements within their agency to forge an
effective team committed to achieving organizational goals and
objectives.

BGT02: EFFECTIVELY IMPLEMENT THE GOVERNMENT PERFORMANCE AND
RESULTS ACT OF 1993 Accelerate planning and measurement efforts
to 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 objectives of federal programs. Incorporate performance
objectives and results as key elements in budget and management
reviews.

BGT03: EMPOWER MANAGERS TO PERFORM Restructure appropriations
accounts to reduce overitemization and to align them with
programs. Ensure that direct operating costs can be identified.
Reduce overly detailed restrictions and earmarks in
appropriations and report language. Simplify the apportionment
process. Reduce the excessive administrative subdivision of funds
in financial operating plans.

BGT04: ELIMINATE EMPLOYMENT CEILINGS AND FLOORS BY MANAGING
WITHIN BUDGET Budget and manage on the basis of operating costs
rather than full-time equivalents or employment ceilings. Request
Congress to remove FTE floors.

BGT05: PROVIDE LINE MANAGERS WITH GREATER FLEXIBILITY TO ACHIEVE
RESULTS Identify those appropriations that should be converted to
multi- or no-year status. Permit agencies to roll over 50 percent
of their unobligated year-end balances in annual operating costs
to the next year. Expedite reprogramming of funds within
agencies.

BGT06: STREAMLINE BUDGET DEVELOPMENT Begin the President's budget
formulation process with a mission-driven Executive Budget
Resolution process that will replace hierarchial budget
development, delegate more decision making to agency heads, and
promote a collaborative approach to crosscutting issues. In the
process, eliminate multiple requirements for detailed budget
justification materials. Negotiate a reduction in the detailed
budget justification provided to Congress.

BGT07: INSTITUTE BIENNIAL BUDGETS AND APPROPRIATIONS Submit a
legislative proposal to move from an annual to a biennial budget
submission by the President Establish biennial budget resolution
and biennial appropriation processes. Evaluate program
effectiveness and refine performance measures in the off-year.

BGT08: SEEK ENACTMENT OF EXPEDITED RESCISSION PROCEDURES Pursue
negotiations with the leadership of the House and Senate to gain
enactment of expedited rescission authority.

IMPROVING FINANCIAL MANAGEMENT

FM01: ACCELERATE THE ISSUANCE OF FEDERAL ACCOUNTING STANDARDS
Issue a comprehensive set of federal financial accounting
standards within 18 months. If all standards are not issued under
the present advisory board structure, create an independent
federal financial accounting standards board.

FM02: CLARIFY AND STRENGTHEN THE FINANCIAL MANAGEMENT ROLES OF
OMB AND TREASURY Develop a Memorandum of Understanding to clarify
the roles of OMB and Treasury in financial management. Create a
governmentwide budget and financial information steering group to
develop and provide guidance in implementing an integrated budget
and financial information strategic plan. Shift review of
Financial Management Service budget to the OMB Deputy Director
for Management.

FM03: FULLY INTEGRATE BUDGET, FINANCIAL AND PROGRAM INFORMATION
Ensure that agency financial systems are in compliance with a
revised OMB Circular A-127 , "Financial Management Systems," by
September 1996. Provide interagency funding for the joint
development of financial systems.

FM04: INCREASE THE USE OF TECHNOLOGY TO STREAMLINE FINANCIAL
SERVICES Use electronic funds transfer to pay and reimburse
expenses for all federal employees, to handle all interagency
payments, to make payments to state and local governments, and to
pay for purchases from the private sector. Similarly, all
payments to individuals should be done electronically.

FM05: USE THE CHIEF FINANCIAL OFFICERS (CFO) ACT TO IMPROVE
FINANCIAL SERVICES Identify the set of financial management
functions which should report to agency CFOs, and ensure that all
financial management personnel are fully-qualified when hired.
Ensure that information being collected, disseminated, and
reported on is useful, objective, timely, and accurate for the
benefit of program managers.

FM06: "FRANCHISE" INTERNAL SERVICES The President's Management
Council should encourage agencies to purchase common
administrative services, such as payroll, computer support, or
procurement, competitively from other federal agencies that may
be more responsive or offer better prices.

FM07: CREATE INNOVATION FUNDS Allow agencies to create innovation
capital funds from retained savings to invest in innovations that
can improve service and provide a return on investment.

FM08: REDUCE FINANCIAL REGULATIONS AND REQUIREMENTS Eliminate
timesheets and timecards and use technology to enter payroll data
only on an exception basis. Allow use of commercial checking
accounts instead of third-party accounts. Create a threshold
below which it is not cost effective to resolve audit findings.

FM09: SIMPLIFY THE FINANCIAL REPORTING PROCESS Grant OMB the
flexibility to consolidate and simplify over a dozen related
statutory reports to Congress and the President. Require agency
heads to provide two reports annually, a planning report and an
accountability report. Ensure that any future financial
management reporting requirements can be addressed in either the
planning or accountability reports.

FM10: PROVIDE AN ANNUAL FINANCIAL REPORT TO THE PUBLIC Provide a
simplified version of a consolidated report on the finances of
the federal government for distribution to the taxpayers by June
1995. Develop a method of identifying and budgeting for the
expected costs of contingent liabilities of the Federal
Government.

FM11: STRENGTHEN DEBT COLLECTION PROGRAMS Propose legislation to
allow debt collection activities to be funded by the revenues
generated from collections and to allow the agencies to keep a
certain percentage of any increased collection amounts. Propose
legislation to lift restrictions on the use of private
collection, and expand agency litigation authority for debt
collection through the designation of special assistant U.S.
Attorneys.

FM12: MANAGE FIXED ASSET INVESTMENTS FOR THE LONG TERM Establish
a long-term fixed asset planning and analysis process, and
incorporate it into the federal budget process. Ensure there is
no bias in the budget against long-term investments. FM13 CHARGE
AGENCIES FOR THE FULL COST OF EMPLOYEE BENEFITS Require all
agencies to pay the full accruing cost of Civil Service
Retirement and Pensions. OMB and the Office of Personnel
Management should also research the possibility of charging
agencies for civilian retiree health benefits.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review 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 to 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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review REENGINEER-THROUGH-THE-USE-OF-INFORMATION-TECHNOLOGY

IT01: PROVIDE CLEAR, STRONG LEADERSHIP TO INTEGRATE INFORMATION
TECHNOLOGY INTO THE BUSINESS OF GOVERNMENT Create a Government
Information Technology Services working group 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 for programs 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 creating a 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
for use by federal, state, and local law enforcement officials.

IT05: PROVIDE INTERGOVERNMENTAL TAX FILING, REPORTING, AND
PAYMENTS PROCESSING Integrate government financial filings,
reporting, and payments 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 System in
the Treasury Department.

IT07: CREATE A NATIONAL ENVIRONMENTAL DATA INDEX Organize the
implementation of a national environmental data index in the
Commerce Department.

IT08: PLAN, DEMONSTRATE, AND PROVIDE GOVERNMENTWIDE ELECTRONIC
MAIL Improve electronic mail and messaging among federal
agencies.

IT09: ESTABLISH AN INFORMATION INFRASTRUCTURE Develop a
Government Information Infrastructure to use government
information resources effectively and support electronic
government applications. Consolidate and modernize government
data processing centers.

IT10: DEVELOP SYSTEMS AND MECHANISMS TO ENSURE PRIVACY AND
SECURITY Establish a Privacy Protection Board. Establish uniform
privacy protection practices and generally acceptable
implementation methods for these practices. Develop a digital
signature standard for sensitive, unclassified data by January
1994.

IT11: IMPROVE METHODS OF INFORMATION TECHNOLOGY ACQUISITION (see
PROC 09, PROC10, PROC15, SUP04, and FM06)

IT12: PROVIDE INCENTIVES FOR INNOVATION Retain a portion of
agency information technology savings to reinvest in information
technology. Promote performance-based contracting for information
technology. Establish a governmentwide venture capital fund for
innovative information technology projects

IT13: PROVIDE TRAINING AND TECHNICAL ASSISTANCE IN INFORMATION
TECHNOLOGY TO FEDERAL EMPLOYEES Establish a program to train
non-technical senior executives and political appointees 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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review REINVENTING-ENVIRONMENTAL-MANAGEMENT

ENV01: IMPROVE FEDERAL DECISIONMAKING THROUGH ENVIRONMENTAL COST
ACCOUNTING Develop demonstration projects to test the
applicability of environmental cost accounting. Based on project
results, develop guidelines to implement environmental cost
accounting throughout the Federal Government. Issue an Executive
Order to encourage the use of environmental cost accounting by
federal agencies.

ENV02: DEVELOP CROSS-AGENCY ECOSYSTEM PLANNING AND MANAGEMENT
Issue an Executive Order to encourage sustainable economic
development and ensure sustainable ecosystems through a
cross-agency ecosystem management process. Begin phased-in
implementation of the policy with selected ecosystem management
demonstration projects. Conduct management and budget reviews of
the ecosystem management projects as a part of the fiscal year
1995 budget process.

ENV03: INCREASE ENERGY AND WATER EFFICIENCY Issue an Executive
Order to address energy efficiency and water conservation issues
at federal facilities. Propose legislation to allow the Defense
Department to retain savings from water efficiency projects.
Develop appropriate mechanisms to allow facilities to retain
rebates received from utility companies.

ENV04: INCREASE ENVIRONMENTALLY AND ECONOMICALLY BENEFICIAL
LANDSCAPING Issue an Executive Order to require the use of
environmentally beneficial landscaping techniques, including
increased use of native species and reduced use of water and
chemicals, at federal facilities and federally-funded projects,
where appropriate.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review REINVENTING-FEDERAL-PROCUREMENT

PROC01: REFRAME ACQUISITION POLICY Convert the 1,600 pages of the
Federal Acquisition Regulation from a set of rigid rules to a set
of guiding principles.

PROC02: BUILD AN INNOVATIVE PROCUREMENT WORKFORCE Establish an
interagency program to improve the governmentwide procurement
workforce. Provide civilian agencies with authority for improving
the acquisition workforce similar to that of the Defense
Department's.

PROC03: ENCOURAGE MORE PROCUREMENT INNOVATION Provide new
legislative authority to test innovative procurement methods.
Establish a mechanism to disseminate information governmentwide
on innovative procurement ideas.

PROC04: 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.

PROC05: 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.

PROC06: 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.

PROC07: 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.

PROC08: REFORM INFORMATION TECHNOLOGY PROCUREMENTS 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
indepth requirements for analyses of alternatives. Pilot-test
alternative ways of buying commercially available information
technology items.

PROC09: 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.

PROC10: 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.

PROC13: 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.

PROC14: EXPAND ELECTRONIC COMMERCE FOR FEDERAL ACQUISITION
Establish a governmentwide program to use electronic commerce for
federal procurements.

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 EXCELLENCE 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.

PROC18: AUTHORIZE MULTIYEAR CONTRACTS Authorize multiyear
contracts and allow contracts for severable services to cross
fiscal years.

PROC19: CONFORM CERTAIN STATUTORY REQUIREMENTS FOR CIVILIAN
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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review REINVENTING-HUMAN-RESOURCE-MANAGEMENT

HRM01: CREATE A FLEXIBLE AND RESPONSIVE HIRING SYSTEM Authorize
agencies to establish their own recruitment and examining
programs. Abolish centralized registers and standard application
forms. Allow federal departments and agencies to determine that
recruitment shortages exist and directly hire candidates without
ranking. Reduce the types of competitive service appointments to
three. Abolish the time-in-grade requirement.

HRM02: REFORM THE GENERAL SCHEDULE CLASSIFICATION AND BASIC PAY
SYSTEM Remove all grade-level classification criteria from the
law. Provide agencies with flexibility to establish broadbanding
systems built upon the General Schedule framework.

HRM03: AUTHORIZE AGENCIES TO DEVELOP PROGRAMS FOR IMPROVEMENT OF
INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE Authorize agencies to
design their own performance management programs which define and
measure success based on each agency's unique needs.

HRM04: AUTHORIZE AGENCIES TO DEVELOP INCENTIVE AWARD AND BONUS
SYSTEMS TO IMPROVE INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE
Authorize agencies to develop their own incentive award and bonus
systems. Encourage agencies to establish productivity gainsharing
programs to support their reinvention and change efforts.

HRM05: STRENGTHEN SYSTEMS TO SUPPORT MANAGEMENT IN DEALING WITH
POOR PERFORMERS Develop a culture of performance which provides
supervisors with the skills, knowledge, and support they need to
deal with poor performers, and holds supervisors accountable for
effectively managing their human resources. Reduce by half the
time needed to terminate federal employees for cause.

HRM06: CLEARLY DEFINE THE OBJECTIVE OF TRAINING AS THE
IMPROVEMENT OF INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE; MAKE
TRAINING MORE MARKET-DRIVEN Reduce restrictions on training to
allow managers to focus on organizational mission and to take
advantage of the available training marketplace.

HRM07: ENHANCE PROGRAMS TO PROVIDE FAMILY-FRIENDLY WORKPLACES
Implement family-friendly workplace practices (flex-time,
flexiplace, job sharing, telecommuting) while ensuring
accountability for customer service. Provide telecommunications
and administrative support necessary for employees participating
in flexiplace and telecommuting work arrangements. Expand the
authority to establish and fund dependent care programs. Allow
employees to use sick leave to care for dependents. Allow
employees who leave and then re-enter federal service to be given
credit for prior sick leave balances.

HRM08: IMPROVE PROCESSES AND PROCEDURES ESTABLISHED TO PROVIDE
WORKPLACE DUE PROCESS FOR EMPLOYEES Eliminate jurisdictional
overlaps. All agencies should establish alternative dispute
resolution methods and options for the informal disposition of
employment disputes.

HRM09: IMPROVE ACCOUNTABILITY FOR EQUAL OPPORTUNITY GOALS AND
ACCOMPLISHMENTS Charge all federal agency heads with the
responsibility for ensuring equal opportunity and increasing
representation of qualified women, minorities, and persons with
disabilities into all levels and job categories, including middle
and senior management positions.

HRM10: IMPROVE INTERAGENCY COLLABORATION AND CROSS TRAINING FOR
HUMAN RESOURCE PROFESSIONALS Establish an Interagency Equal
Employment Opportunity and Affirmative Employment Steering Group
under the joint chair of the Equal Employment Opportunity
Commission and the Office of Personnel Management. Require
appropriate cross training for human resource management
professionals.

HRM11: STRENGTHEN THE SENIOR EXECUTIVE SERVICE SO THAT IT BECOMES
A KEY ELEMENT IN THE GOVERNMENTWIDE CULTURE CHANGE EFFORT Create
and reinforce a corporate perspective within the Senior Executive
Service that supports governmentwide culture change. Promote a
corporate succession planning model to use to select and develop
senior staff. Enhance voluntary mobility within and between
agencies for top senior executive positions in government.

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 FPM 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.

HRM14: 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 be displaced.
Limit annual leave accumulation by senior executives to 240
hours.



Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review REINVENTING-SUPPORT-SERVICES

SUP01: 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
accessible 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 and
raise 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 governmentwide 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 for acquiring
small amounts of leased space under 10,000 square feet.

SUP10: 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 mail
management initiatives. Allow line managers to manage their own
postal budgets.

Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review RETHINKING-PROGRAM-DESIGN

DES01: ACTIVATE PROGRAM DESIGN AS A FORMAL DISCIPLINE The
President's Management Council should commission the development
of a handbook to help federal managers understand the strengths
and weaknesses of various forms of program design.

DES02: ESTABLISH PILOT PROGRAM DESIGN CAPABILITIES IN ONE OR TWO
AGENCIES Test the usefulness of the program design handbook and
the value of program design as a useful discipline.

DES03: ENCOURAGE THE STRENGTHENING OF PROGRAM DESIGN IN THE
LEGISLATIVE BRANCH The President's Management Council should work
with congressional support agencies to help them strengthen their
program design capacities.

DES04: COMMISSION PROGRAM DESIGN COURSES Develop training courses
for managers and policymakers on various program design
approaches.

Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review 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.

SMC02: 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.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review STRENGTHENING-THE-PARTNERSHIP-IN-INTERGOVERNMENTAL-
SERVICE-DELIVERY

FSL01: IMPROVE THE DELIVERY OF FEDERAL DOMESTIC GRANT PROGRAMS
Create flexibility and encourage innovation by designing a
bottom-up solution to the problem of grant proliferation and its
accompanying red tape. Also, support the pending proposal for
Federal-State Flexibility Grants that has been developed by the
National Governors Association and the National Conference of
State Legislatures. Establish a Cabinet-level Enterprise Board to
oversee NEW initiatives in community improvement.

FSL02: REDUCE RED TAPE THROUGH REGULATORY AND MANDATE RELIEF
Issue an Executive Order addressing the problems of unfunded
federal mandates and regulatory relief and authorize Cabinet
Secretaries and agency heads to obtain selective relief from
regulations or mandates in programs they oversee.

FSL03: SIMPLIFY REIMBURSEMENT PROCEDURES FOR ADMINISTRATIVE COSTS
OF FEDERAL GRANT DISBURSEMENT Modify OMB Circular A-87, "Cost
Principles for State and Local Governments," to provide a fixed
fee-for-service option in lieu of costly reimbursement procedures
covering actual administrative costs of grant disbursement.

FSL04: ELIMINATE NEEDLESS PAPERWORK BY SIMPLIFYING THE COMPLIANCE
CERTIFICATION PROCESS Simplify OMB's requirements to prepare
multiple grant compliance certifications by allowing state and
local governments to submit a single certification to a single
point of contact in the federal government.

FSL05: SIMPLIFY ADMINISTRATION BY MODIFYING THE COMMON GRANT
RULES ON SMALL PURCHASES Modify OMB Circular A-102, "Grants and
Cooperative Agreements to State and Local Governments", to
increase the dollar threshold for small purchases by local
governments from $25,000 to $100,000 (see also PROC04).

FSL06: STRENGTHEN THE INTERGOVERNMENTAL PARTNERSHIP Reinvent the
Advisory Commission on Intergovernmental Affairs (ACIR) and
charge it with the responsibility for continuous improvement in
federal, state and local partnership and intergovernmental
service delivery. Direct the AICR to identify opportunities to
improve intergovernmental service delivery and develop a set of
benchmarks.


Appendix-C-Major-Recommendations-Affecting-Governmental-Systems-National-
Performance-Review TRANSFORMING-ORGANIZATIONAL-STRUCTURES

ORG01: 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.

ORG02: USE MULTI-YEAR PEFORMANCE AGREEMENTS BETWEEN THE PRESIDENT
AND AGENCY HEADS TO GUIDE DOWNSIZING STRATEGIES Performance
agreements with agency heads (see BGT01) should be used to
identify progress toward agreed upon downsizing goals--not
central management agency controls such as across-the-board cuts
or ceilings on employment. In exchange, agencies will be
supported with increased management flexibilities.

ORG03: 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.

ORG04: THE PRESIDENT SHOULD REQUEST AUTHORITY TO REORGANIZE
AGENCIES Congress should restore to the President the authority
to restructure the executive branch.

ORG05: SPONSOR THREE OR MORE CROSS-DEPARTMENTAL INITIATIVES
ADDRESSING COMMON ISSUES OR CUSTOMERS The President's Management
Council should identify and sponsor three or more
cross-departmental initiatives in areas such as illegal
immigration, debt collection, and the problems of the homeless.

ORG06: IDENTIFY AND CHANGE LEGISLATIVE BARRIERS TO
CROSS-ORGANIZATIONAL COOPERATION As cross-organizational
collaborations become an integral part of government operations,
barriers to ready collaboration and funding should be removed.