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39–381 CC 1997

THE GOVERNMENT PERFORMANCE AND RESULTS

ACT: SENSIBLE GOVERNMENT FOR THE NEXT

CENTURY

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENT REFORM

AND OVERSIGHT

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

FEBRUARY 12, 1997

Serial No. 105–2

Printed for the use of the Committee on Government Reform and Oversight

(

(II)

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

J. DENNIS HASTERT, Illinois

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

STEVEN H. SCHIFF, New Mexico

CHRISTOPHER COX, California

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

JOHN SHADEGG, Arizona

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

JOHN E. SUNUNU, New Hampshire

PETE SESSIONS, Texas

MIKE PAPPAS, New Jersey

VINCE SNOWBARGER, Kansas

BOB BARR, Georgia

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

CAROLYN B. MALONEY, New York

THOMAS M. BARRETT, Wisconsin

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

TIM HOLDEN, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JUDITH MCCOY, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on February 12, 1997 ....................................................................... 1

Statement of:

Armey, Hon. Richard, House Majority Leader ............................................... 33

Hinchman, James, acting Comptroller General of the United States, accompanied by Chris Mihm, Assistant Director, Federal Management

Issue Area, General Accounting Office ........................................................ 11

Koskinen, John, Deputy Director for Management, Office of Management

and Budget .................................................................................................... 51

Letters, statements, etc., submitted for the record by:

Armey, Hon. Richard, House Majority Leader, prepared statement of ....... 37

Burton, Hon. Dan, a Representative in Congress from the State of Indiana, prepared statement of .......................................................................... 3

Hinchman, James, acting Comptroller General of the United States, prepared statement of ........................................................................................ 13

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 9

Koskinen, John, Deputy Director for Management, Office of Management

and Budget:

Information concerning congressional consultations .............................. 75

Prepared statement of ............................................................................... 54

Morella, Hon. Constance, a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 68

Sessions, Hon. Pete, a Representative in Congress from the State of

Texas, prepared statement of ....................................................................... 48

(1)

THE GOVERNMENT PERFORMANCE AND RESULTS ACT: SENSIBLE GOVERNMENT FOR

THE NEXT CENTURY

WEDNESDAY, FEBRUARY 12, 1997

HOUSE OF REPRESENTATIVES,

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,

Washington, DC.

The committee met, pursuant to notice, at 10:05 a.m., in room

2154, Rayburn House Office Building, Hon. Dan Burton (chairman

of the committee) presiding.

Present: Representatives Burton, Shays, Horn, Mica, Davis (VA),

Shadegg, Sanford, Sununu, Sessions, Pappas, Snowbarger, Barr,

Condit, Sanders, Maloney, Barrett, Norton, and Holden.

Staff present: Kevin Binger, staff director; Dan Moll, deputy staff

director; John Rowley, general counsel; Jonathan Yates, counsel;

Kristine Simmons and Jane Cobb, professional staff members; Judy

McCoy, chief clerk; Teresa Austin, assistant clerk/calendar clerk;

Mark Stephenson, minority professional staff; and Jean Gosa, minority administrative staff.

Mr. BURTON. We have the most important members of the committee here, so far, so we’ll go ahead and start. Good morning, and

welcome to the first Government Reform and Oversight full committee hearing of the 105th Congress. I am pleased that the first

order of business on our full committee oversight agenda is the

Government Performance and Results Act, or GPRA.

We will, henceforth, be calling this the Results Act for simplicity

purposes. I want everybody to understand what we’re talking about

when you talk about GPRA. People probably think it’s some kind

of a disease, and we don’t want that to happen, so we’ll call it the

Results Act. For some of us this is familiar territory and for others

it’s brand new. But for all of us on both sides of the aisle and at

both ends of Pennsylvania Avenue, the Results Act is the key to

reforming government now and into the next century.

The Government Performance and Results Act requires agencies

to set performance goals and eventually tie their budgets to their

performance. This is a sound business practice that we should have

been employing for a long time. This act has the force of law to

make agencies do what they should be doing anyway, knowing

what their mission is and fulfilling that mission in the most efficient, cost-effective manner possible.

The subtitle of this hearing is Sensible Government for the Next

Century. And that is exactly what the Results Act is about—a government that makes sense and is based on performance and reVerDate 11-MAY-2000 14:50 Apr 29, 2002 Jkt 078737 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HEARINGS\39381 pfrm09 PsN: 39381
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sults. I hope this hearing will send a signal to the administration

and to American taxpayers that this committee is very serious

about using the act to make sure citizens are getting what they expect and pay for from Federal programs.

Throughout the 104th Congress, Chairman Steve Horn of the

Government Management Subcommittee worked diligently to oversee the results process. Mr. Horn’s efforts have taken the important first step of educating Members of Congress and the American

people about this act. It is essential that members of this committee and the other committees in Congress begin to understand

what the Results Act is and what role they must play if it is to be

implemented successfully.

Agencies are required under the law to consult with Congress on

their strategic goals and plans, which must formally be submitted

to Congress in September. Every committee in the House and Senate needs to take an active and immediate role in the consultative

process. The key to the Results Act is that it requires a cooperative

effort among agencies, Congress and, most importantly, the people

that are affected by these Federal programs.

To highlight the importance with which the House leadership regards this Results Act, we will be pleased, before too long, to welcome the House Majority Leader, Richard Armey, to speak. Mr.

Armey will be here, probably, in about 10 or 15 minutes, so I will

save his introduction for that time. We’re happy to have him and

we regret that his minority counterpart, Richard Gephardt, was

unable to join us due to a scheduling conflict.

Following the majority leader, we will welcome the Acting Comptroller General of the General Accounting Office, Mr. James

Hinchman, who will explain the requirements of the Results Act

and how we in Congress can use it as a vital oversight tool. Finally, John Koskinen the Deputy Director of the Office of Management and Budget, will testify regarding the priority the administration has placed on the Results Act implementation and the general readiness of agencies to comply with the act.

Since Mr. Armey is not yet here, I would like to now recognize

Mr. Waxman, who isn’t here, he’s detained at another meeting—

the ranking member of the subcommittee. Mrs. Maloney, I think,

has his statement and one of her own. So we’ll now recognize Mrs.

Maloney for her own statement.

[The prepared statement of Hon. Dan Burton follows:]

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Mrs. MALONEY. Thank you very much, Mr. Chairman, and thank

you for holding this hearing on the Government Performance and

Results Act. The Results Act is landmark legislation which has enjoyed wide bipartisan support since its passage in 1993.

The act is approaching a critical period of implementation, and

I am hopeful that bipartisanship will continue. The Results Act is

that latest in a series of laws, such as the Chief Financial Officers

Act and the Inspector General Act, meant to improve performance

and reduce waste, fraud and abuse in the Federal Government.

It is intended to improve the efficiency and the effectiveness of

the Federal Government and to begin a cultural change in the Federal workforce by forcing the agencies to focus on results. Mr.

Chairman, I am pleased you are holding this hearing at a time

when government is getting fewer and fewer resources yet being

expected to do at least as much as it always has. Improving the efficiency and effectiveness of the Federal Government is more important than ever.

I would just like to add that I am pleased that you are starting

the committee work on this important piece of legislation. It happens to be the very first piece of legislation that I managed on the

floor of the House of Representatives in 1993. And it was also a

cornerstone in Vice President Gore’s Reinventing Government,

which has worked so far to make government more effective and

cost effective and productive, even as we have moved, really, to the

smallest workforce in many years, since President Kennedy was in

office.

It will force our agencies to plan better, to come forward with

their priorities, and it will allow us to analyze their results. And

I—it’s a sensible, important bill. I look forward to working with you

on oversight of it. The importance that you place on it is underscored by the fact that the Majority Leader, Mr. Armey, will be

here. And I look forward to his testimony. In appreciation of time

restraints, I’ll put my formal remarks in the record. Thank you.

Mr. BURTON. Without objection, your remarks will be entered

into the record.

And I’d just like to say to Mrs. Maloney that, as you can see, we

are reaching out to the minority right off the bat because this is

one of your pet projects. Now, I’d like to recognize the chairman of

the Government Management, Information, and Technology Subcommittee, a good friend and a very fine legislator, Mr. Horn, who

held a number of hearings on the Results Act in the 104th Congress. And I’m sure he’ll continue to be a leader in this Congress

as well. Mr. Horn.

Mr. HORN. Thank you very much, Mr. Chairman, for holding this

hearing and your generous comments. I welcome this hearing as a

beginning step in what I think can be a sea change in the way our

government works. The Government Performance and Results Act

may be landmark legislation, in that it can simplify and de-mystify

our processes of government.

It does this by forcing Federal agencies to explain what they intend to do with the tax dollars we give them and by measuring

whether the agencies then live up to their word. The goal of this

law can be summed up in one word: accountability. That is, this

law creates the ability for government to actually account for the

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money it raises in taxes and then spends on a vast array of programs.

That goal may seem elementary to many Americans. Families

and businesses go through the exercise on a routine basis. But for

the Federal Government this is a startling and even wrenching exercise. Under this law, every Federal agency must ask itself some

basic common sense questions: What are we doing? Should we be

doing it? Can we do it better? Can we do it cheaper?

Under this law, every Federal agency must establish clear, realistic and understandable goals, and they must establish effective

ways to measure performance. Instead of focusing solely on the

bare minimum requirements of complying with the law, they will

be expected to produce real results, and they will have to produce

real balance sheets that can be verified by outside auditors and understood by ordinary taxpayers.

The Government Performance and Results Act has the potential

to produce enormous change, particularly as it is connected with

other landmark laws such as the Chief Financial Officers Act.

These laws, for the first time, put a premium on good management.

They are the beginning steps in reversing the Federal Government’s long legacy of inattention, indifference, and, at times, incompetence in managing the Nation’s affairs.

But Mr. Chairman, I also want to note that there’s another important fundamental change underway, and it’s demonstrated by

this hearing. That change is the commitment we’re making here in

Congress to give real life and energy to these laws through vigorous oversight of Federal agencies. The fact that the Majority

Leader, Mr. Armey, is here today is an illustration of that commitment.

Tomorrow, the Subcommittee on Government Management, Information, and Technology, which I chair and Mrs. Maloney serves

as the ranking Democrat, will continue this process with our opening hearing on the 25 high risk Federal agencies identified by the

General Accounting Office. The subcommittee will hold extensive

hearings on these programs and agencies over the next 2 years.

In short, Mr. Chairman, there’s a lot of work to do. I’m grateful

for your support of this effort, and I thank you.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. BURTON. I thank Mr. Horn. I’d just like to say to all the

Members who are here, including the new Members, that we will

introduce all of you and tell of your backgrounds this afternoon, at

our organizational meeting, but because of time constraints this

morning and because of other meetings that are being held, we’ll

hold your very important introductions until later.

Our next witness, pending the arrival of the majority leader, is

the distinguished Acting Comptroller General of the General Accounting Office, James Hinchman. GAO has done some outstanding

work tracking the implementation of the Results Act to date. We

look forward to Mr. Hinchman’s testimony this morning on the requirements of the act and how it can serve as an essential oversight tool for Congress.

Mr. Hinchman has with him an associate. And Mr. Hinchman,

if you’d like to introduce him at this time, I’d appreciate it.

Mr. HINCHMAN. Thank you, Mr. Chairman. It’s a pleasure to be

here this morning.

Mr. BURTON. Before you start your statement, would you mind

standing and being sworn in?

Mr. HINCHMAN. Of course.

Mr. BURTON. This is a common practice we have here. Would you

raise your right hand?

[Witnesses sworn.]

Mr. BURTON. OK. You may proceed, Mr. Hinchman.

STATEMENT OF JAMES HINCHMAN, ACTING COMPTROLLER

GENERAL OF THE UNITED STATES, ACCOMPANIED BY CHRIS

MIHM, ASSISTANT DIRECTOR, FEDERAL MANAGEMENT

ISSUE AREA, GENERAL ACCOUNTING OFFICE

Mr. HINCHMAN. As I said, thank you, Mr. Chairman. It is a

pleasure to be here this morning. With me is Chris Mihm, Assistant Director in GAO’s Federal Management Issue Area. And we

and GAO, as a whole, are honored to be a part of this important

hearing on the Government Performance and Results Act and its

implementation.

I have a prepared statement. With your permission, I would like

to summarize it briefly, and, if that’s acceptable to you, request

that that statement be put in the record.

Mr. BURTON. Without objection.

Mr. HINCHMAN. GAO has, over the past year or so, Mr. Chairman, done a great deal of work examining management issues

throughout the Federal Government, much of it for this committee.

This work includes our executive guide on implementing the Government Performance and Results Act. It also includes the work we

now have underway, to report to you by June 1 on the status of

GPRA implementation.

Three important conclusions come out of this work. And I want

to summarize them for you briefly. First, we need better management in the Federal Government. Our work has consistently shown

that Federal agencies have significant management problems that

undermine their ability to function efficiently and effectively. Missions are unclear. Planning is inadequate. There is too little goalsetting and performance measurement. And too little of what there

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is is not results-oriented. Financial management systems do not

work. Information technology is badly managed, as well.

The public will not accept, and we cannot afford, these poor management practices, particularly in these days of budget constraint.

Part of the solution to the Federal Government’s fiscal problems

must be more efficient and effective management of its programs

and activities, and I think there is growing and broad consensus

both in the government and among the students of its institutions

that this is so.

Second, Congress has put in place a sound statutory framework

for addressing these management problems. Much of that work has

been done under the leadership of this committee. This framework

includes the Chief Financial Officers Act, the Paperwork Reduction

Act of 1995, the Clinger-Cohen Act; and its cornerstone, its centerpiece, is the Government Performance and Results Act.

At the request of this committee, we studied management reform

in State governments, in foreign governments, in other public sector institutions, for lessons that can assist in the successful implementation of the Results Act. The results of this work are in our

executive guide, and they confirm the soundness that the course

that the Congress has established.

Effective management in all of these institutions defines clear

missions and outcomes, measures performance in achieving outcomes to gauge progress, and uses performance information to

make changes that will improve results. Our work shows that this

is the process that has worked for those successful public sector institutions that have reformed their management, and it is precisely

the process that the Results Act mandates.

Third, and finally, Congress has an important role to play in the

implementation of the Results Act. For every agency, one of the

first steps in the implementation of the Results Act is consultation

with Congress about its mission and strategic plan.

These consultations provide the opportunity for Congress to work

with the executive branch to ensure that missions are focused, that

goals are results oriented, and that they have been clearly established. In our work we have found that planning efforts that produced focused missions and results oriented goals virtually always

drive improved efficiency and effectiveness.

We have also urged in the past that congressional committees of

jurisdiction hold regular oversight hearings of major departments

and agencies. Our work for this committee underscores the importance of sustained leadership in assuring successful implementation of results oriented management in the public sector.

These hearings can be used to reinforce Congress’s commitment

to improve management in the Federal sector and ensure that

agencies continue to pursue the reforms mandated by the Results

Act. As I said a moment ago, Mr. Chairman, these are the three

correlessants of the large body of work that we have done for this

committee. They support the direction in which Congress has set

the government in the Results Act. And the test now before us is

to assure that it is effectively implemented. With that, let me conclude, Mr. Chairman, and take any questions that you or other

members of the committee may have.

[The prepared statement of Mr. Hinchman follows:]

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Mr. BURTON. Well, thank you, Mr. Hinchman, for that very concise summary of your views. Let me just ask a couple of questions.

Then I’ll yield to my colleague, Mr. Horn, and then to Mrs.

Maloney.

Can you give us an example of how the Results Act can be helpful in addressing the problem of overlapping Federal programs—for

instance, job training?

Mr. HINCHMAN. Yes. I think that there are many examples—one

to which I would return is food safety. The General Accounting Office did a review and we established that there are 35 laws affecting food safety in this country, administered by 12 agencies, and

that there is a lack of coordination among those agencies and overlapping jurisdiction in those laws.

The Results Act provides a framework in which agencies can

focus on the results of their efforts, and by focusing on results, to

identify these areas of overlap and inconsistency, because they

have to focus on the impact that these laws have on the safety of

the food supply. The strategic planning process provides a framework in which they can begin to coordinate their efforts and bring

greater rationality to the administration of those food laws.

And I think we are seeing the consequences of that in the proposals which are now before the Congress to bring greater rationality to the administration of those food safety laws.

Mr. BURTON. Let me ask you, Mr. Hinchman, if I can impose

upon you and Mr. Mihm. The majority leader has arrived, and he

is under severe time constraints.

Mr. HINCHMAN. Of course.

Mr. BURTON. And so if I could get back to questioning you?

Mr. HINCHMAN. It would be a privilege to yield to him.

Mr. BURTON. OK. Thank you. We’d like to now welcome the goodlooking, dynamic leader of the Republican party, Mr. Armey. I don’t

know if that’s a tan or whether I embarrassed you, Mr. Leader.

Mr. ARMEY. Right.

Mr. BURTON. But he’s a person who’s been interested in this area

for a long time. He’s been very concerned about reforming government to make it more effective, more business-like, and obviously,

he’s somebody that we all admire in the Republican party, and I

think a lot of our Democrats, as well. So Mr. Armey, we would love

to hear from you this morning.

STATEMENT OF HON. RICHARD ARMEY, HOUSE MAJORITY

LEADER

Mr. ARMEY. Well, thank you, Mr. Chairman. I appreciate your

accommodating me in my new role as chief disrupter of committee

hearings. And I want to thank our colleagues in the GAO for their

graciousness with allowing me to pop in as I do. It is, of course,

an exciting thing for me to see these hearings on what I call the

Results Act.

And Mr. Chairman, I would ask that my longer statement be

made a part of the record. Mr. Chairman, I would ask unanimous

consent that my—— Mr. BURTON. Without objection. Thank you, sir.

Mr. ARMEY. All right. That was a wise move, if you don’t mind

my saying. [Laughter.]

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Mr. Chairman, the Results Act is a law sponsored by Republicans and Democrats alike and was signed into law by President

Clinton in August 1993. It is the right tool to give us a more honest

glimpse of how our Federal Government works. This law will focus

on all existing Federal programs, and, for the first time mandated

by statute, measure government performance and report on results.

It is not an ideological law. It represents an opportunity for both

Democrats and Republicans, the Congress and the executive

branch, to work together to improve the way Washington works.

Whether you want a smaller, more limited government, or whether

you want a larger, more activist government, we can all agree—nobody wants government to waste money through inefficiencies, ineffectiveness, fraud, or bad management.

I expect the 105th Congress to be viewed as the implementation

Congress. With 1997 a critical implementation year for this new

law, our success or failure with the Results Act could play a large

part in defining this Congress. The Results Act gives us a common

sense tool to analyze and solve problems between the Congress and

the executive branch—a way to help us report to our shareholders

and taxpayers on their inventory and the effectiveness of their expenditures in government. In 1996, the Federal Government spent $1.56 trillion. Eighty-five

million families paid taxes in 1996. Washington is, therefore,

spending $18,355 per tax family in our Federal Government. It is

time to take stock of this spending. And I might add, Mr. Chairman, I just finished my own taxes last night, and I’m $10,000 over

that number and I wonder if I can get a refund. [Laughter.]

But it is good, at this time when we’re all aware of how much

we are giving to the government in taxes, that we put focus on this.

And by that way, I relate this to my own life. If I pay good money

to add insulation to my home, I’m going to be sure to check the

electric bill to see if I’ve saved any money.

The Results Act brings this common sense to the government. It

is the ultimate common sense tool to help us ask whether our taxpayer-funded programs are working. We all want safer streets,

cleaner air, and better schools for our children. Often, however, we

disagree on how to get there. In any given legislative cycle, we, in

the Congress, pass laws after negotiation and debate. We think

problems are solved when we pass a law.

In reality, the solution has only begun. We only win when, in

fact, our streets are clean, safer, our air is, in fact, cleaner, our

children are, in fact, well-educated. We must become more active

participants in the implementation of the programs we enact. As

the Congress and the Clinton administration prepare to make difficult decisions to balance the budget for our children and our Nation’s future, we need credible, objective information about programs and whether or not they are really working.

My testimony summarizes several areas where Federal jurisdiction overlaps and is calling out for better congressional oversight,

such as education, Federal food safety, drug treatment, rural water

treatment and job training. Let’s focus on our own lives for a moment.

If we found that services we were paying were not resulting in

what we wanted, we’d take action. You and I don’t rely on blind

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faith and continue paying in such instances. Take, for example, a

child’s medical care. When you take your child to the doctor, you

take extra care that the doctor is qualified and capable. You monitor each stage of your child’s treatment.

This is how we must approach Federal programs, scrutinizing

their implementation at every stage and making sure we get the

desired results. If an education program was created to ensure that

every third grader can read, improving literacy rate should be one

measure of the program’s effectiveness. The Results Act can be

such a common sense approach to help Congress and the executive

branch review our existing Federal Government with a focus on

achieving the best results for the money we are contributing.

The Results Act was passed out of frustration by the 103d Congress and signed into law by a Democrat President. This frustration was born out of our not knowing the government’s ability to

really affect critical issues in our world today: saving lives, preventing crime, and getting vital help to the American people.

Indeed, during this consideration of the Results Act, the Senate

Governmental Affairs Committee pointed to a recent poll which

showed that the Americans believe that 48 cents our of every tax

dollar is wasted. The committee noted that this could explain the

apparent inconsistency between the public’s desire for a wide range

of government services on the one hand, and its disdain for the

government and higher taxes on the other.

The committee viewed the Results Act as a way to make clear

what taxpayers are getting for their money. The Results Act should

foster an atmosphere in Federal service where employees better

understand what they do and the results their agency are trying

to achieve. This law was enacted to ensure that every employee’s

work would be value added to public service.

I commend you, Mr. Chairman, for holding this hearing today,

and for continuing the momentum that your predecessor, Bill

Clinger, started on this important law. I commend our colleague,

and your subcommittee chairman, Steve Horn, for continuing to devote his attention to something that will yield long term results

and better government for taxpayers.

I commend the GAO and others, who have encouraged the Congress to seriously—to take seriously the enactment of this law, as

well as the OMB for working seriously with Congress to enact this

law. And I should point out, it was a topic of conversation between

myself and Frank Raines when he made a courtesy call to me in

January. I also commend the Vice President for the reforms he’s

pursuing that are similarly motivated.

So what is to be done? We need the vital information on actual

performance that the Results Act can provide. For the success of

this new tool, each congressional committee and each elected Representative must devote more attention to each and every agency’s

major plans and objectives. For the Results Act to succeed, we all

must show a new willingness to re-examine pet projects with an

ear toward objective, credible information about the results of these

programs.

Good intentions are not enough; we must pay close attention to

the warning signs of operational disaster or excessive confusion in

a department or agency charged by us to perform specific tasks.

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Specifically, Congress can use the Results Act in a variety of formal

and informal settings, both immediately and in the long-term.

Starting now, and moving through August, committees should be

working with their executive branch departments to clarify what

we want from programs, how that will be accomplished and how

we expect to measure progress.

Agencies are required by the law to consult with Congress as

they prepare their 5-year strategic plans due in late September.

Once results-oriented and measurable program goals are adopted,

it is equally important that committees followup, through oversight

hearings, GAO reviews and other means, to assess whether these

goals are being met. Such program by program assessment should

provide a road map to determine how limited Federal tax dollars

can be applied most effectively in the future.

In conclusion, the Results Act provides this Congress, the public

and the President a management tool that has been widely used

in making private business more effective. The American people

and our children’s children deserve a government that is accountable for results, a government that is a wise steward of their hardearned money, and a government that directs resources to key priority areas, while ensuring the maximum impact for each and

every Federal dollar spent. With your help, we might just give our

children such a better government. And incidentally, we may just

belie Armey’s axiom that nobody spends somebody else’s money as

wisely as they spend their own.

And with those comments, Mr. Chairman, I want to thank you

for the opportunity to be here. And I guess I’m at your disposal,

like the plumber.

[The prepared statement of Hon. Richard Armey follows:]

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Mr. BURTON. Well, thank you. We’re always pleased to hear your

remarks, and, in particular, Armey’s axioms, because we don’t hear

them anyplace else. [Laughter.]

But they’re always very wise and well thought out. Did I understand you to say that in the Senate Oversight Committee hearing,

someone estimated that 48 cents out of every tax dollar is wasted?

Mr. ARMEY. I think there was a poll that showed the American

people believe that 48 percent out of every tax dollar is wasted,

cited in the committee by one of the Senators.

Mr. BURTON. So the American people feel very strongly that

we’re wasting a ton of money up here?

Mr. ARMEY. Well—— Mr. BURTON. Let me just ask you, I think our committee has become aware of the Results Act and the need to push very hard for

more business-like management in government. But a number of

other committees have oversight responsibilities. And I was wondering how the leadership on our side and, hopefully, the other side

plans to stimulate them, raise their antennae, if you will, so that

they will be a participant in trying to make sure that we literally

force some of these agencies to accept business-like practices?

Mr. ARMEY. Well, I appreciate your inquiry. Obviously, as you

know, the government is a very, very big organization, and we can

most effectively, I believe, do this oversight if we divide that labor

among the competing committees by definition of their jurisdiction.

GAO, once again, has been extremely helpful here. They are preparing, on a staff by staff basis—the committee staffs—for the process and procedures they should undertake. And I can just tell you

that it is a high priority of this leadership.

We will, in fact, do everything we can to encourage every committee. I would think that each committee—it seems almost a process of natural selection, that committees end up with people that

have an acute interest in the jurisdictional areas of the committee,

so that the committees, themselves, would find their own interest.

We work hard to report a bill out of committee, and we take a

great deal of satisfaction when we see that signed into law.

And we do that because we have serious intentions for what good

can be done in the lives of the American people. For us in our separate committees to have the opportunity to go back and revisit the

implementation of that law, to see that our intentions were, in fact,

met, I should think would be a welcome opportunity for every committee, and I’m going to encourage them to utilize that opportunity

to the fullest capacity.

Mr. BURTON. I thank you, Mr. Leader. I think that statements

from leadership that they utilize their committees to stimulate the

various agencies will be helpful. We’ll do our part, and if we can

get the others to help it would be great. Mr. Horn.

Mr. HORN. Thank you, Mr. Chairman and Mr. Leader. I want to

commend you, not only for your historic Base Closure Act, which

was a good way to get results out of an executive branch that had

never closed anything, but also thank you for that fact that you included the Debt Collection Act, which I authored and Mrs. Maloney

was co-author, into the omnibus appropriations bill. Very frankly,

that would not have become law without you making a decision

and getting it on a train that was leaving the station.

42

And following up on what the chairman opened up on, we know

Congress is a fragmented institution. We know there are very jealous jurisdictional lines that many have. Now, as one Member of

Congress, to get this effort moving, I would be delighted to see on

one of the walls in your offices, a matrix in which you’ve got authorizing committees, appropriation subcommittees, area to be

changed. And that the majority leader’s office coordinate that effort. And very frankly, if you don’t, it won’t happen. It will get lost

on the cutting room floors of several committees you and I can

think of.

So I know you hate to take on any power. You want to devolve

everything out of Washington, but may I suggest you save a wall

and coordinate this operation.

Mr. ARMEY. Well, let me, first of all, on the—we are developing

a matrix, and I have—I’m not sure I want to hang it on my wall,

but I would certainly make it available. But you are absolutely

right. I would see this not as an exercise of power by the majority

leader, but as an exercise of service. And I would be more than

happy to undertake that.

I wonder, Mr. Chairman, if I could just take a moment. Mr. Horn

raised the question of base closing, and I just saw something last

week, that this gives me an opportunity to cite one of my colleagues. Base closing was about bang for your buck, the effective

use of dollars. I set up efficiency criteria, defense preparedness criteria by which judgments would be made. And I should mention

that, as I reflected back on that, the chairman of the relevant subcommittee of armed services was one Mr. Dellums.

Mr. Dellums had, at that time, many bases in his district that

he could have—he could have put many obstacles in the way of

that legislation, but he saw it for what it was—an honest effort to

have a fair appraisal of the true effectiveness of deployment of resources in the Nation’s defense—and he was one of the first people

to hold hearings. He didn’t vote for it, and I understand that. But

I always felt that this was a commendable effort made very early

that is perfectly consistent with what we are doing here.

I saw a report the other day—and I have not talked to Ron Dellums about this—but it turns out, pursuant to base closing, every

base in his district has been closed. And I think we ought to pay

a little regard to our call. He must have known that risk, but he

said, ‘‘this is a necessary thing to do in the questions of efficiencies

and effectiveness in government. It’s a fair and honorable process.’’

And he did not stand in the way of it.

But if we would all be willing to be that objective and that committed to an objective that is more important and more dear than

ourselves and our own destinies in our own districts, I think we

could get a great deal of effectiveness. So if I may tip my hat to

Mr. Dellums in this. As a matter of fact, I think, Mr. Burton, you

were on that subcommittee, at the time, if I’m not mistaken.

Mr. BURTON. I believe I was.

Mr. HORN. If I might comment on that. It was also the ranking

Republican had a base closed in Charleston. It was rather ironic.

Both of the key people on that committee had major facilities

closed.

43

I might add, as a humble freshman in that exercise, after you

had passed the law, we now have every base in Long Beach, CA

closed. We were once headquarters of the Pacific fleet. They moved

to Hawaii, and you saw what happened to them. But we are now

free to look with a very objective eye to the Pentagon.

Mr. ARMEY. I appreciate that. And Mr. Horn, if you don’t mind,

I get nervous about my standing with my colleagues if these discussions of base closings go on for too long. So—[laughter.]

Mr. BURTON. Are you finished, Mr. Horn? Mrs. Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman. Mr. Majority Leader,

the Results Act says, ‘‘When developing a strategic plan, the agency

shall consult with the Congress.’’ And Mr. Armey, can you tell us what consulting with Congress

means to the Republican leadership and what do you see as the

role of the minority in the process? And also, the Results Act, if it

is going to work, do you think it’s a fair statement that we need

a true consensus of the agencies’ plans and Congress’s intent from

both sides of the aisle?

Mr. ARMEY. Yes. I think these are very important questions. I

think underlying your point is a very important point I’d like to

speak to right now. It is absolutely imperative, if this is to work,

for all Members of Congress, majority and minority, to be involved.

I am discussing with Mr. Gephardt a liaison role from his staff to

this process as I have established for my staff.

We would expect that consult be taken as a rigorous discussion

between the agency and the committee, and the committee as a

whole, regarding what are the goals defined in the agency’s report

and the extent to which they comply with and agree with the intent of Congress at the time the law was passed, or any amendments made thereto.

In the end, each of these programs is created by an act of Congress. Both the majority and the minority participate in that process. We all have a stake in what is actually done in the implementation, and we ought to work together. I would encourage you to

work with Mr. Burton and encourage you to come discuss this with

me. I do believe we must be inclusive in this process, in particular,

and I am devoted to that effort.

Mrs. MALONEY. Thank you. Do you think that the implementation of the Results Act in Congress may strengthen the case of

those who advocate a 2-year budget cycle, focusing on appropriations 1 year and oversight the next?

Mr. ARMEY. No. I really hadn’t thought about that. I may, now

that you’ve prompted me, I’ll go give some thought to that. I don’t

know what discussions might have been made regarding that point

at the time it was enacted. And it’s possible that could happen. I

don’t know.

But I do think that the focus should be—I think we should be

very focused on this in terms of the bang for the buck measurement that we get, the consistency of defining the activities of an

agency with respect to a law relative to the intent of Congress

when the law was passed.

And my own view would be that if the case is going to be made

for 2-year budgeting, it will have to be made on a far broader basis

than that.

44

Mrs. MALONEY. I would like to join the comments of my colleague, Mr. Horn, in complimenting you on your leadership on the

Base Closing Commission Act. This was a problem that Congress

confronted for years. We could never agree. You came up with a

unique and original approach, and we solved the problem.

I truly believe that if you never do another thing in your life, you

will have made a tremendous contribution to public policy enactment in this country. And to really pay you a very large compliment, I was so impressed with that bill and the accomplishments

of it, that I copied it. I took your bill, and I copied your bill on another very important issue before this Congress that we confront,

which is campaign finance reform.

And we have a tremendous division between the Republican

party and the Democratic party on how to control the role of money

and spending of money in campaigns. And we can’t seem to agree.

I’ve only been here—this is my third term, and Mr. Horn and I

have probably both been on around 15 different task forces on campaign finance reform.

So I copied your bill. And I would like to know whether you

would consider having an approach of your bill on campaign finance this year if the Republican—because even though we’re bipartisan—but if we cannot agree on a campaign finance proposal,

would you support your bill creating a commission, if a Republican

campaign finance plan fails, a Democratic campaign finance plan

fails, would you then support a commission to move this process

forward?

For years we could not close bases in this country. We all agreed.

Bases had to be closed. And you came up with an idea to take what

everybody agreed on and move it. We face the same problem now.

Whether it’s the President or Mr. Gingrich or Mr. Gephardt, everyone says they are for campaign finance. We cannot agree. Would

you support moving the Armey commission idea forward for campaign finance, so we could get it off of the discussion table and onto

the floor for a serious vote, to try to move forward in this critical

area of our country?

Mr. ARMEY. Well, let me just respond by first pointing out that

the base closing commission is one of the great ironies in my life,

because I ordinarily do not believe in Congress referring its work

to commissions. And I like to console myself by reminding people

that the Base Closing Commission was created to keep Congress

from continuing to meddle in other people’s business.

Now, insofar as Congress has its own responsibilities, I think

they should do this without a commission. I believe that we can,

if we will work together, through a congenial legislative process, I

think we can, in this Congress, between ourselves and the Senate,

on both sides of the aisle, and the White House, come up with campaign finance reform.

And I would prefer to see us do our own work. Now, what I’ve

also learned is don’t rule anything out. But the first thing I want

to do is—before I go to a commission—is I want to have clearly irrefutable evidence that it is, indeed, in fact, impossible for us to do

our job ourselves.

Mrs. MALONEY. May I add that the true genius of your last bill

on base closing was that it was not just a commission that came

45

back with a report, your bill forced a vote. Your bill was not just

a commission. It forced a conclusion or a step toward a conclusion

of a particular problem.

And if we cannot reach a conclusion, I would like to join you in

moving forward with a commission approach, so, at least, we can

get a product that can pass on the floor and move the project further in an area where everyone agrees something needs to be done.

Mr. ARMEY. Well, let’s—if you don’t mind—let’s stay in touch on

that while I—and I hope you will understand—I feel my obligation

is to, first, encourage the Congress, in every way, to take care of

this important job on its own.

Mrs. MALONEY. May I underscore that I would go to a commission only after the Republicans can’t pass it, the Democrats can’t.

Let’s go forward with a commission.

Mr. BURTON. Yes. The gentlelady’s time has expired. I understand that Mr. Shays of Connecticut has decided to pass, so we’ll

go to Mr. Mica of Florida.

Mr. SHAYS. I have other questions I could ask you, but—[laughter.]

Mr. BURTON. Mr. Mica.

Mr. MICA. Mr. Chairman, just one quick question, Mr. Armey, I

heard your testimony and read this written testimony, and—you

know—you cite part of the problem: education. We have 760 Federal education programs and 39 different agencies, food safety programs administered by 12 different agencies, rural water—8 agencies—job training—15 different agencies—I tried to consolidate our

international trade efforts, which are disorganized and disjointed

among 19 Federal agencies.

My legislation was referred to 11 committees of jurisdiction. It’s

almost impossible to change the bureaucracy. You’ve got two problems. One, which I just outlined, all the committees and their vast

jurisdiction. Second, the bureaucracies have now become effective

lobbying forces for the status quo and view the members as only

passing stars in the constellation, something to be ignored.

What about a bureaucracy closure commission, where we take

your same example, which has been cited now in reference to do

something with campaign reform, but for dealing with the problem

we have with closing down some of the bureaucracy and the duplication?

Mr. ARMEY. Well, again, let me remind you that this is within

the authority and the responsibility of the Congress. I believe that

what we may learn from the effective implementation of the Results Act will help us to gather the information by which we can

make the justifiable case for consolidation of efforts, where we see

so many duplications. But you know, again—I mean—this ridiculous position of having, apparently, one as sort of a place in the sun

for a commission.

And turning around and saying I’m not all that big on commissions. I think we should do that job. That is our job. And I think

we are capable of doing that job.

Mr. MICA. Without a bureaucracy closure commission?

Mr. ARMEY. Without it.

Mr. MICA. Thank you, Mr. Chairman.

Mr. BURTON. Mr. Sanders.

46

Mr. SANDERS. Mr. Armey, I’m very impressed by the discussion

today. Mrs. Maloney wants to emulate your efforts for campaign finance reform. Mr. Mica wants to emulate your efforts for bureaucracy reform. Do you want to write a new Constitution for the

United States while you’re here? [Laughter.]

I mean, it seems to me, everyone is very impressed.

But I would just say I think that regardless of one’s political persuasion and disagreement about the role of government in civil life,

I don’t think any sensible person feels good about government

waste, and we can all acknowledge that there is bureaucracy, inefficiency, and waste, and we want to, all of us, make the government more efficient.

But maybe picking up on Mr. Mica’s question, next year when

Congress is presented with a governmentwide performance plan for

fiscal year 1999, how do you anticipate that plan will be used in

Congress?

In other words, where do we go with it? Will it, for example, be

referred automatically to all committees with jurisdiction over

agency and program authorizations? How do you feel that the plan

will be used?

Mr. ARMEY. Well, first of all, let me just say this—and I mentioned this in my testimony—this is not an ideological discussion.

And I think that one of the reasons base closing got enacted was

it was clearly understood to be non-ideological.

So we’re talking about efficiency. The first thing we must do is

to undertake a period of discovery. And it’s almost as if we’re taking an inventory of the government, what is there, gaining information. Now, as we gather that information, I would think we would

distill from that, in our separate committees of jurisdiction, amendments to the law, a revision of the law, very likely some program

consolidations or closures.

One of the things I might say, I was laughing this morning. I

had some experience with this when I was with the university. Mr.

Horn, you may have encountered this, too. I remember as a department chairman receiving this elaborate set of instructions from the

dean about how I was to define my goals and come up with empirical bases for measuring achievement of those goals and so forth.

It’s not easy, and it’s not going to be something that is going to

be heartily welcomed by everybody that’s all of a sudden steamed

at this new effort. So we’ll have to encourage people to do a thorough job, and that’s where the consultation comes in.

We will have to be encouraging to them, because they are going

to feel a bit overwhelmed. In many cases, people will feel overwhelmed by it. So we’ll have to sort of lend a guiding hand.

Mr. SANDERS. But what I’m hearing you say is that you see this

going through the normal legislative process?

Mr. ARMEY. Yes. I have to say, Mr. Sanders, I am a big fan of

regular order.

Mr. SANDERS. Mm-hmm.

Mr. ARMEY. I’m an economist by trade, and I will tell you pursuant, of course, to Adam Smith, that all economic progress comes

from division of labor, and division of labor works best when people

mind their own business. So that for everything that we see, there

would be a legitimate jurisdiction and a committee of jurisdiction.

47

And we should then have that profession and that expertise and

that interest that has resulted in people joining these committees,

brought to bear on these discoveries so that they could be measured up and evaluated in a very sober and business-like fashion.

Mr. SANDERS. OK. Thank you very much.

Mr. BURTON. We’ll now recognize your colleague from Texas, Mr.

Sessions.

Mr. SESSIONS. Thank you, Mr. Chairman. Mr. Armey, it’s great

to see you here. As a freshman of this committee, I must confess

through the last few years, I didn’t know that I would be sitting

on this side of the bar and you on that side. It’s good to see you.

Yesterday, we had a press conference where there were fewer

people there than here today, and so I’d like to take this opportunity to let you know about my thoughts on this Government Performance and Results Act. Because I think that throughout the

media and, perhaps, in bureaucracy, there is a sense of fear of this

act.

And I had an opportunity, yesterday, to really say that I thought

it was essential that bureaucrats and the management of the Federal Government look at this as really a cleansing opportunity, an

opportunity to have dialog from not just at the upper end of management, but down to the lower ends, to where they could talk

about not only the things that are measurable and within their

control, but also an opportunity to look strategically at how they

are going to guide their departments in the era of lowering and

lessening budgets.

What I’d like to hear from you is whether this serious discussion

that’s going to begin and whether it’s near term, whether we’re

going to send the correct signal—which I think is correct—of this

is an opportunity to begin a serious dialog with the managers of

government, with the expectation that they will present these strategic views and that we will be able to work hand in hand.

I think that’s what it is, but I’m interested in hearing what you

have to say about that, sir.

[The prepared statement of Hon. Pete Sessions follows:]

48

49

Mr. ARMEY. Well, let me just say, first of all, I understand that

fear. I related earlier as a department chairman receiving these

complex papers from my dean. And I tell you, my first reaction is,

what is the dean up to? Deans are not very trustworthy people.

[Laughter.]

Every chairman knows that. So there is a tendency to be defensive. And now we have the GAO working, I think, very actively

here. The OMB is enthusiastic. I mentioned my discussions with

Frank Raines. But we ought to—I always believe that we ought to

take a service model, not a power model. And we ought to make

it clear to folks that we’re not here to hold a hammer over your

head, but to work in partnership with you toward that end of fulfilling what we most often find to be our mutual shared objectives.

I always kind of laugh. You know, one of our favorite whipping

boys in American political discourse is the bureaucrat. And I can

say ‘‘bureaucrat’’ with as much disdain in my voice as any, but

when you get right down to it, these are decent, hard-working men

and women that are trying to accomplish something. And often,

they are drawn to this agency because of their concern for this area

of what von Mieses called human action, just as we were drawn to

this committee because we had that concern.

And if we undertake our relationship with these folks as one that

is encouraging and not threatening and so forth, we can put at ease

a lot of those concerns. Now, I must say, after 20 years of being

a professor, I never got to the point where I accepted that deans

were people that were operating in my own best interest.

So it’s a tough job. I’m sure deans were frustrated, too, with my

doubt and skepticism along the way. But I think we need to understand that we do not come off hammering. Now, when we find people who are reluctant to move forward and, therefore—perhaps,

even, we will encounter some that are recalcitrant about it, I think

we have to be assertive.

But I think there’s a far, far difference in the effectiveness of

your demeanor when you understand to be assertive with somebody, as opposed to being angry at someone. And most people, I

think, do understand that most agencies, I believe, of the Federal

Government owe their existence to an act of Congress, and I’m sure

they understand that they can get caught up in consolidation, and

recalcitrance might encourage that.

So I think we just need to go forward on a business-like basis

with a good deal of respect and appreciation for each other, and I

think we can do a good job.

Mr. SESSIONS. Thank you. Well, it makes me feel good to know

that as our leader, you’re expecting the best from someone we have

no control over but someone that we do have oversight functions

with and that we can work hand in hand.

Mr. Chairman, just really the bottom line to our press conference

yesterday was that I was setting the expectation and the hopeful

expectation that what these strategic plans will result in is something that is measurable, something that is realistic, and something that represents the true nature of the business or the work

that these agencies are involved in.

And I believe if they will come hand in hand and work with us— but it’s up to them to make sure that their plan, their strategic

50

plan and their direction is given to us, then we’ll be able to work

very comfortably together.

I thank the majority leader for taking his time today, and I agree

with everything you said, sir. Thank you.

Mr. BURTON. Thank you, Mr. Sessions. I guess Ms. Norton

doesn’t have any questions? Is that correct? Mr. Barr.

Mr. BARR. Thank you, Mr. Chairman. Mr. Armey, the timetable

for implementation of GPRA and GPRA, itself, I think, is really an

important beginning, but it’s really fairly modest in terms of the

long-term goal that we have before us. As Mr. Mica pointed, just

the proliferation of agencies that are overlapping in their jurisdiction and so forth.

Is it your view—it is mine, but I’d be interested on the record,

Mr. Armey, if it’s your view that the time table set out for implementation of GPRA ought to be adhered to really is the minimum

requirement that we ought to have, and that this Congress ought

to resist efforts, which are starting already in the executive branch,

to soften it and postpone some of the requirements?

Mr. ARMEY. Well, yes, it is. First of all, the time table is set out

in the law. And—I hate to harken always back to my years as a

professor—— Mr. BARR. I think you take great delight in doing it, as a matter

of fact. [Laughter.]

Mr. ARMEY. I don’t remember a semester when I didn’t have a

host of students who found 100 reasons why they couldn’t get their

term paper in on time. And you just have to learn that’s the deadline. I was particularly impressed with the one young man that

had three dead grandmothers in the same semester. [Laughter.]

That didn’t upset me so much as their dying again the next semester. [Laughter.]

Mr. BARR. That’s a very dysfunctional family, apparently.

Mr. ARMEY. But again, I think a firm insistence that, you know,

deadlines are there and they must be met. And again, we will have

a process of discovery. You know, one of my great anticipations

about the implementation of this law is, what will we discover.

What will we find out? What can we learn?

That will, undoubtedly, generate the basis by which we can get

together on both sides of the committee room and write laws to improve and make more effective the public—could I say—apparatus,

for accomplishing the goals of the Congress and the President.

Mr. BARR. I appreciate that and I appreciate your stating on the

record how important that you think it is to adhere to the time

table and the requirements that are currently in there, and that we

ought to resist efforts to soften them or postpone them.

Thank you, Mr. Armey.

Mr. ARMEY. Thank you.

Mr. BURTON. Mr. Majority Leader, we want to thank you for taking time out of your very busy schedule to be with us. Your remarks were very cogent. We appreciate it, and thank you for being

with us.

Mr. ARMEY. Well, let me thank you. And again, if I can thank

the gentlemen behind me from GAO and OMB for their graciousness in letting me go. Gentlemen, I hope I didn’t say anything that

was too amusing. [Laughter.]

51

I did the best I could.

Mr. BURTON. Well, those Armey axioms are pretty interesting.

Thanks a lot. Could we have Mr. Hinchman and Mr. Mihm up

here, and, also, could we have your opening statement, Mr.

Koskinen, now? The reason for that, if it’s possible—it would help

expedite the hearing and make sure that everybody on the panel

gets a chance to question both of you, simultaneously, if necessary,

so we can speed things along.

So right now, we’ll recognize you, Mr. Koskinen, for your opening

remarks, and then we’ll go to questions. Oh, pardon me. Before we

do that.

[Witness sworn.]

Mr. BURTON. Please have a seat.

STATEMENT OF JOHN KOSKINEN, DEPUTY DIRECTOR FOR

MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

Mr. KOSKINEN. Thank you, Mr. Chairman. I seem to spend most

of my time testifying on panels with GAO and, in fact, these gentlemen.

So this works out just fine. I’m pleased to appear before this committee to discuss the importance of the Government Performance

and Results Act and to give you an assessment of our progress in

meeting its requirements. I will be brief to allow time for questions

and ask that my written statement be included in the record.

Mr. BURTON. Without objection.

Mr. KOSKINEN. Thank you. GPRA became law 31⁄2 years ago and

it will soon take effect governmentwide. This was bipartisan legislation that the administration strongly supported. This committee

played an important role in passing this act, and we look forward

to continue working with you and others in the Congress as we

carry out this law in the months ahead.

On behalf of the administration, Mr. Chairman, let me thank you

for holding this hearing, which signifies the importance we all attach to this very significant legislation. Let me also express our appreciation for the excellent work GAO has done in this area over

the past several years. We have found it to be of great assistance,

and have enjoyed our working relationship with them.

At its simplest, GPRA can be reduced to a single question: What

are we getting for the money we are spending? The answer to this

question is important to all of us in government and to the American public as well. Regaining public confidence requires that the

government not only work better, but that it be seen as working

better.

Let me summarize briefly those aspects of GPRA implementation

that are our most immediate focus. The basic foundation for what

agencies do under GPRA is their strategic plans. Agencies are required to send their strategic plans to Congress and OMB by this

September 30th. When developing its strategic plan, an agency is

to consult with Congress and consider the views of stake holders,

customers, and other interested parties.

Since last year, OMB has been encouraging agencies to begin

their congressional consultations. OMB issued guidance over 18

months ago on the preparation and submission of strategic plans.

In the summer of 1996, as a followup, OMB conducted a comVerDate 11-MAY-2000 14:50 Apr 29, 2002 Jkt 078737 PO 00000 Frm 00055 Fmt 6633 Sfmt 6602 E:\HEARINGS\39381 pfrm09 PsN: 39381
52

prehensive review of the agencies’ strategic planning efforts and

the status of their plans. The reviews’ objectives was to gauge how

the agencies were doing and identify any concerns with the plans

themselves or the process being followed.

Generally, the agency plans reflected a serious effort and allowed

us to conclude that agencies should be able to produce useful and

informative strategic plans by this fall. Their review also revealed

several challenges, including the need to ensure clear linkage between the general goals and objectives of these strategic plans and

the annual performance goals to be included in the annual performance plans. We also expect to see increasing inter-agency discussions on performance goals and measures for cross-cutting programs, and increased involvement by the senior leadership of the

departments in the completion of the strategic plans.

The first of the agency annual performance plans, as opposed to

strategic plans, for fiscal year 1999 will be sent to OMB this September with the agency’s budget request. These annual plans will

contain the specific performance goals that the agency intends to

achieve in the fiscal year. A subsequent iteration of the annual performance plan is sent to Congress concurrently with the release of

the President’s budget next year at this time. The agencies and

OMB gained valuable experience in preparing annual performance

plans through the pilot project phase of GPRA.

GPRA also requires that a governmentwide performance plan be

annually prepared and be made part of the President’s budget, as

noted. The first plan will be sent in February 1998, and will cover

fiscal year 1999. We would welcome your views on those futures

that this committee believes would make this governmentwide plan

informative and useful to Congress.

As I noted, we expect agencies to provide useful and informative

strategic and annual performance plans within the timeline specified by the act. However, as Mr. Armey noted, preparing a good

GPRA plan is not an easy task. No one should expect the first

plans to be perfect. We should view these plans as the beginning

of a process of improvement and refinement that will evolve over

several years. Even as these performance plans and measures become more refined, we should always bear in mind that using performance measures in the budgeting process will never be an exact

science or even a science at all.

Comparing results across program lines will always require political judgments about relative priorities of, for example, programs

for highways and education. And we should not lose sight of the

fact that performance information will often be used to adjust the

way the programs are managed, rather than to change the resources provided. Accurate, timely performance information is important in all these situations, and that is why the administration

is committed to the successful implementation of GPRA.

As I’ve said on other occasions, if we are successful over time,

GPRA should disappear. If GPRA works as envisioned, government

managers will absorb it into day-to-day agency administration and

program management. That’s why I suggest that the true measure

of the success of GPRA will be the extent to which the concepts of

management and good business practices set out in this law beVerDate 11-MAY-2000 14:50 Apr 29, 2002 Jkt 078737 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 E:\HEARINGS\39381 pfrm09 PsN: 39381
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come the accepted way that the government works, without reference to any particular statutory framework or requirements.

This concludes my brief oral statement, Mr. Chairman. I’d be

pleased to take any questions you may have and join in this panel.

Thank you.

[The prepared statement of Mr. Koskinen follows:]

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Mr. HORN [presiding]. Thank you very much for your testimony.

Mr. Hinchman, did you have some other remarks you want to

make in general on this? And then we’ll throw it open to questions.

Mr. HINCHMAN. Thank you for that offer, Mr. Chairman. I think

that the three central conclusions from our work that I described

are the important message that we have. I think that they are consistent with what Mr. Armey said and with what my friend Mr.

Koskinen said, as well. So I have nothing more to add to that.

Mr. HORN. OK. Mr. Shays. Do you have a question? Ms. Norton.

Do you have a question, at all? Mr. Sununu. Do you have a question? You do? OK. Well, let me pursue some of the things, here,

just in general.

One of the problems you face when you’re developing any strategic plan are the units of measurement, as well as not just relation to the budget, but how do you know we’re being successful?

How would you generalize, both from the Comptroller General

standpoint and the Office of Management and Budget standpoint,

where we are on achieving certain reasonable units of measurement?

You’re familiar, I think, both of you, with the Oregon experience,

when they went out and talked to the citizens, said what programs

do you like, how will you know if we got there and achieve those

goals, and so forth? What’s the—give me a good generalization here

as to where you think we are in the Federal Government on this.

Mr. HINCHMAN. We have been monitoring both the pilot projects

which OMB is conducting and the implementation in the 24 major

agencies that comprise 95 percent of the budget. I think I would

make one point. Progress is further in those agencies which are engaged in direct delivery of services. For example, the Social Security Administration, which can measure the effectiveness of its 800

telephone service and the timeliness of its check mailing.

Progress is slower in those agencies which work through third

parties, like State and local government, in which the precise goal

of the Federal involvement is less clear, at least less specifically defined, and in which—I think we have to say—the agency officials

are more concerned about committing themselves to outcome goals

over which they have less control.

On the other hand, I have to say that I think we will get—as Mr.

Koskinen said—we will get both strategic and annual performance

plans from those 24 agencies for fiscal year 1999. And while some

will be better than others, basically the framework for outcome

measurement is going to be there.

Mr. KOSKINEN. I would agree with that perspective. I would add

that our experience over the last three as we’ve worked with the

agencies, is that focusing on missions and goals is complicated, difficult and challenging. But your question goes right to the heart of

it. Trying to figure out what are our appropriate performance

measures is really the intellectually challenging and stimulating

task.

This is true partially because of the wide range of activities in

which the government engages. And besides the point Mr.

Hinchman, we say that when we get to areas like basic research,

and when we get to areas of operations like policy operations, even

OMB, for example, trying to figure out how to measure successful

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performance gets to be a very complicated process. This is why, as

I said in my testimony, I think what we have to expect is that

these first plans won’t be the last plans. And they should not be

the last plans.

We will find with some performance measures that—we’ll find

over time that they don’t appear to be appropriate. They measure

the wrong outcomes. We’ll find with other performance measures

that the data is either very difficult to obtain or too expensive to

obtain. And we will find with other performance measures that we

get a better understanding of the utility of those measures over

time.

I think your reference to the Oregon benchmark project is very

appropriate. There they had the same experience. Their measures

have gotten better over—with the passage of time. And I would

hope that we would understand that the provision of the strategic

plans in the fall of 1997 and the provision of the first performance

plans in the winter of 1998 will be the start of a dialog and not

the end of it, and that we do need a partnership, not only in a bipartisan nature in the Congress, but a partnership between the

Congress and the agencies as we continue to review what are the

appropriate, most effective performance measures.

Mr. HORN. Let me ask one more generality on this, then I’m

going to get down to specific agencies. What have you found were

the ‘‘performance measures’’ that really haven’t worked out? Can

we generalize from what you’ve seen in changes when you’ve

looked at the way some agencies have used ceratin measurements

and just decided, hey, this isn’t going to work? Any of those cases

you could describe for the committee?

Mr. HINCHMAN. The only point that I would make as generality

is the importance of result oriented performance standards, that

there is a temptation to look at outputs or ever process measures

and to shy away from commitment to measuring actual impact

which programs have on the lives of Americans. And that that’s a

temptation which has to be resisted. I think that we will get better

at that over time.

That is certainly the experience of GAO. We have been trying to

measure our performance. We currently have a mix of both outcome and output measures. We hope to evolve toward completely—

complete use of outcome measures, but it’s going to take us some

years to do that, I think.

Mr. KOSKINEN. Our review of the pilot showed that the biggest

problem at the front end as we’re dealing with this is, in fact, the

data collection. There may be an agreement that the measure looks

appropriate, but the question is can you accurately collect timely

data. As I said, going back to something to even something like research, a lot of impacts and outcomes are longitudinal, so you may

be spending the money now and you won’t see the results of that

expenditure over a longer period of time.

As we’ve told the agencies, that doesn’t mean you shouldn’t start

measuring now, because if it takes 3 to 5 years to see the results,

3 to 5 years from now, if we haven’t started, we won’t know what

the results were. But that’s one of the issues—is in terms of programs with a longitudinal impact. Another is a point Mr.

Hinchman made earlier, and that is how to obtain data when, in

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fact, the services are being provided by third parties, and we’re

making grants and there are actually intermediaries who are engaged in the activity. And what are appropriate measures—and—

that they can effectively collect.

Mr. HORN. In business, one of the measures would be, obviously,

client satisfaction, the attitude that the customer can do no wrong.

And businesses prosper that way. Now, with government, to what

extent have we tried actual surveys of client satisfaction, the taxpayer, in brief, or anybody we serve.

Mr. KOSKINEN. As they say in the trade, I’m glad you asked that

question. A major initiative of the Vice President’s National Performance Review has been directed in that area, which is focusing

on developing customer service standards and then surveying customers to find out how those standards are being met, as well as

collecting data. So there are not literally hundreds of standards

that have been designed and developed across the government. And

many of them depend upon government surveys.

Now, one of the interesting ironies is that when you want to collect survey data, you have to be very careful about Privacy Act and

Paperwork Reduction Act requirements that we do not want from

the Federal Government, to burden the public with a wide range

of data calls and data requests. So that—we are right now in the

process of trying to develop the right balance.

But I think you’re exactly right. A lot of what we do interfaces

directly with the government. Obviously, Social Security Administration, IRS, Veterans Administration, in the Customs Service, in

INS. And across the board, part of the effectiveness of that agency

has to be the perception and the satisfaction of the customers of

those agencies.

Mr. HORN. Has OMB rejected some of the proposed client satisfaction criteria?

Mr. KOSKINEN. At this point, we have not. But as I say, at this

point, the statute provides that we’re really focused now on trying

to get the strategic plans done and begin to focus on the development of the measures. The mechanics of how we collect that data

will then be in the performance plan discussions. And we are concerned about that in holding discussions about it.

Mr. HORN. So you’re saying it’s premature right now to consider

this? When is it not?

Mr. KOSKINEN. No. Actually, there are surveys that have been

done. And in fact, if you look at annual reports being put out by

agencies, you will see what those results are. The Social Security

Administration has one of the most effective performance measurement devices.

Mr. HORN. Mm-hmm.

Mr. KOSKINEN. It puts out an accountability report that measures all of its range of activities in terms of standards and goals.

Mr. HORN. Now, is that an in-house or is that contracted?

Mr. KOSKINEN. My understanding is that—well, I do not know

the answer to that question.

Mr. HORN. Yes. I think we ought to look at should we contract

this out to objective survey people or do we trust a particular agency and is it simply throwing things in the box as you leave the field

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office as to whether you were satisfied with the people at the

counter, sort of like a hotel does. [Laughter.]

And I’m just curious to what degree we’re looking at the credibility of the data and how we go about it.

Mr. HINCHMAN. Let me share one success story from SSA that

does rely on external data.

Mr. HORN. Sure.

Mr. HINCHMAN. I had mentioned earlier that SSA runs a very

large 800 number information system. They get over 60 million

phone calls a year. And when they became more customer focused,

they decided they needed to improve that service. They made a

large investment in that, and then had the quality of that service

tested by an outside firm, which measures, essentially, the quality

of 800 service.

Mr. HORN. Right.

Mr. HINCHMAN. And there was a study done by that firm, involved eight respected private sector companies and SSA, and SSA

won.

Mr. HORN. Now, was that merely looking at how rapidly that

phone was answered?

Mr. HINCHMAN. No.

Mr. HORN. Or was that talking about the end result?

Mr. HINCHMAN. It was about calling people who had used the

number and asking them about the quality of the service they received, how quickly the phone was answered, how polite the people

who spoke to them were, how knowledgeable they were, how quickly their problems were resolved.

Mr. HORN. Yes. Good.

Mr. KOSKINEN. And in fact, and across the range of those quality

indicators, the 800 number at Social Security did not answer the

fastest.

Mr. HORN. Mm-hmm.

Mr. HINCHMAN. But nonetheless, the overall satisfaction and

quality of the information made it the most effective 800 number

in that comparison.

Mr. HORN. Yes. I think that’s probably true. I’ve checked myself

every once in a while on Social Security. But an agency we have

real problems with, as you know in management—and I must say

the President has a choice now when he nominates people. This

agency, he needs not a good tax accountant, not a wonderful tax

lawyer. What he needs is a manager. And that’s the IRS. This is

obviously a basket case agency.

And we’ve had numerous congressional hearings on this. They’re

going through hearings in Ways and Means. Hopefully, they will be

included in the debt collection act that we passed here last year.

And they have not yet agreed to that. But I’m told by the chairman, Ms. Johnson of Connecticut, that she will generally follow

what was done here. And that’s long overdue.

Now, what worries me is when the thousands of citizens I have

heard from on this subject all over America, is that this is an agency they are frustrated by, in the sense they can’t get through to

somebody to solve the problem. And there needs to be some sort

of telephone tree that ends up, maybe, with an agent somewhere

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that can answer a question. And you know, the airlines have

worked on this, lots of different groups have worked on it.

It isn’t impossible. Social Security has already done some of it,

and we need to take a real good look at that. Because if we were

ranking agencies in customer satisfaction, that would be one right

at the bottom. And I just wonder what you are doing about it.

Mr. KOSKINEN. Well, I think we might disagree with whether it’s

a basket case or not. It fairly effectively collects a trillion-and-ahalf dollars a year in finances. But in terms of being—— Mr. HORN. But it very ineffectively has $100 million written off.

That bothered me. That’s what got me started on the Debt Collection Act.

Mr. KOSKINEN. As you know, we worked with you very closely on

that act and appreciate your support of it. What has happened is

that the issues of management of the IRS are receiving the highest

level of attention. The Secretary of the Treasury has set up a modernization management board, chaired by the deputy secretary, Mr.

Summers, that is working on a regular basis really as a board of

directors with the management of the IRS focused directly on those

questions, on its information technology systems.

As you know, we basically—that board made a decision to stop

a program for document processing which was going to cost a

$1,200,000,000 billion, and it wasn’t clear that it was going to, in fact, work. And over $1 billion was not spent as a result of that

decision. There is a focus on the 800 numbers, there’s a focus on

electronic filing, making it easier for people to file their returns.

And one of the great successes they’ve had is, in fact, increasing

the speed with which they provide refunds. But you’re right. One

of the questions taxpayers legitimately have is they’d like to be

able to get advice promptly and effectively. And we are focused on

that.

And I think you’re also correct that we need to focus on the management internally in the IRS. We’ve been very successful and very

fortunate to recruit a new chief information officer from the State

of New York, Art Gross, who, I think, is doing a phenomenal job.

And we have high expectations, but also high demands of the need

for improvement in that agency.

Mr. HORN. Before I yield to the gentlewoman from Maryland, let me make sure the record shows I said $100 billion, not million. I

think I mushed that a little.

But now, I yield to the gentlewoman from Maryland, Mrs.

Morella.

Mrs. MORELLA. Thank you, Mr. Chairman. We know that you always operate in the magnitude of billions. [Laughter.]

Gentlemen, particularly Mr. Hinchman and Mr. Koskinen, I

wanted to ask you about the Government Performance and Results

Act—usually requires agencies to consult with Congress in preparing their strategic plans. From my experience, agencies always

check in with OMB first before they move forward beyond that.

And so this happens with testimony before Congress. We find

out. And certainly, with the current budget process. So my question

to you is, whether agencies must clear through OMB every single

document, idea, goal, or mission that is required by the Government Performance and Results Act?

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Mr. KOSKINEN. No. That’s not required.

Mrs. MORELLA. It’s not?

Mr. KOSKINEN. Some people would like to think of us as all-powerful and all-encompassing, but the agencies actually have a lot of

dialog with the Congress that does not clear through us. We clear

testimony, but not, generally, materials provided. We have, as a I

noted in my testimony over a 11⁄2 years ago, sent out guidance to

the agencies which we reaffirmed last fall, encouraging them—reminding them of the statutory requirement that they consult with

Congress as their plans are developed, and encouraging them to

begin—engage in that consultation.

So quite the contrary in terms of resisting that, we think that

the statute not only requires it, but that it’s an important part of

the development of the strategic plan. The statute, I think, wisely

contemplates that the agency should consult with Congress. The

agency should consult with their stake holders, whether that be

State and local governments or the public, in the development of

their final plans.

And we are encouraging them to do that. We have spent, as a

I noted in my prepared testimony, a significant amount of time

over the last 3 years working with them, reviewing their processes,

trying to provide them my help, assistance and guidance, drawing

to their attention a lot of the good work that GAO has done in

terms of the development of strategic plans.

So on occasion, we hear that someone has said, well, gee, OMB

won’t let us do that. And I’d be delighted if anybody would refer

any difficulties they’re having getting consultation with their agencies. You can call me directly, because our—we’re at the other end

of that spectrum. We’re encouraging that consultation.

We think the time now is right, that it needs to be done this

spring and this summer, so that when those plans come in, as the

statute notes, to the extent that the agencies have consulted and

they have not reflected in the plans, views of anyone they consulted, their cover letters are supposed to highlight that for both

us and for you, so that they—when they publish these plans, which

will be submitted not only to the Congress, but available to the

public, it will be clear where the agency’s plan is going, with the

administration’s support, and what views are not—have been made

that have not been reflected, significant views, obviously, in that

plan.

So I think it’s an important process, and we support it significantly.

Mrs. MORELLA. And they don’t need to OK it with you? That’s

not mandatory?

Mr. KOSKINEN. No. At this point, they don’t have a plan to OK.

Mrs. MORELLA. When they do.

Mr. KOSKINEN. What they need to be discussing with you is what

are their proposed goals and objectives. We have—there is one

case, actually, in the press, if they start to produce long-term projections about the impacts of what’s going to happen to their performance before they’ve actually reviewed that in the budget process, then we actually do not allow that to happen, only because the

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selves, is to make sure that when you get those numbers, they

come with the imprimatur and support of the administration.

That—but that’s a level of detail that we’re not involved in at

this point. At this point, the agency should be discussing with you

what their views are and your views are of their goals, their missions, their objectives, and, as Mr. Horn stated, what are their performance measures going to look like in terms of categories, not the

details or what the numbers are actually going to be.

Mrs. MORELLA. They don’t need the clearance. Great. How about,

Mr. Hinchman, would you like to get back on this?

Mr. HINCHMAN. We are doing a review for Mr. Kasich of the consultation process required by the act. As you, I think, know, relatively few consultations have taken place so far, perhaps half a

dozen or so, I think, most of them initiated by Congress and its

staff, not by the agencies. As Mr. Koskinen has indicated, that pace

will pick up rapidly over the coming months. We’ll begin to get a

better idea of how it’s going to go as we get into a larger volume

of activity.

I would add one other note. I think that we have to recognize

that the Office of Management and Budget has a legitimate concern for ensuring that the President’s policies are reflected in all

the communications that occur between execute agencies and the

Congress, and that that concern is not going to go away.

What I think is important is to also recognize that GPRA is basically about improving the management of the government. And a

lot of what the government does is about the management of trillions of dollars of assets and billions of dollars in expenditures

every year, and that we all have a shared interests beyond the policy issues over which we disagree about making that management

process more effective.

And I would hope that these consultations can provide for frequent open dialog about how we can improve that management

process and what the goals and outcomes of that management undertaking ought to be.

Mrs. MORELLA. Could I ask one more question, and it’s simply

that when agencies form their strategic plan and their mission,

how do we ensure that the appropriate group is working on the

process? I mean, by that I mean, is there any kind of a mechanism

that would include a cross-section of employees, managers, budget

experts, policy experts, you know, stake holders and others that

might be appropriate?

Mr. KOSKINEN. In our guidance to the agencies and in our reviews with the agencies, we have stressed the importance of that

point. One of my concerns is that if we’re not careful in the implementation of this act, we’ll create what I call a GPRA bureaucracy,

and that is, in an agency we’ll have a group of people off on the

side, in a planning office or someplace, who fill in the blanks and

provide whatever documents the statute seems to require, without

drawing upon the expertise and the perspectives of everyone in the

organization.

Mr. Hinchman is exactly right, that this statute is not meant as

an abstract exercise in producing neat binders with blue covers.

The purpose of this statute is to improve the effectiveness of government operations. And one of our pitches to the agencies has

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been, what they should focus on is what data and information do

they need to effectively manage their programs, and to the extent

that they can work with us to define that data, we will guarantee

them that that will be acceptable performance data for the management of those programs and reporting.

Because, again, as I say, it will be counterproductive if we have

strategic plans to collect artificial information that no one is actually using in the day-to-day operations of the agencies, because one

of the key utilizations of this information is not just to make resource allocations, the most immediate impact of the information is

to adjust or change or modulate the way the program is organized

or managed.

If we never allocated a budget dollar differently because of GPRA

performance, it would not mean that the exercise was for nought.

If we do it well, all of that performance information will be reflected in changes in the way we actually manage or operate those

programs. So it’s critical that we focus on this. And that can only

be done effectively, as you note in your question, if the people focusing on this include the senior leadership in the agencies as well

as the people on the front lines.

Our responses to the agencies last summer, after our reviews

went to the cabinet secretaries, and noted wherever we thought it

was important, that those senior political appointees of the agency

have to be intimately involved in this process, just as much as the

front line workers.

Mrs. MORELLA. So the directions are that they—the assumption

is that they will do so?

Mr. KOSKINEN. Yes.

Mrs. MORELLA. And not make—— Mr. KOSKINEN. And we’ve—we’ve asked that question of them

and encouraged them to broaden the base of their planning effort.

Mrs. MORELLA. Thank you, Mr. Chairman.

[The prepared statement of Hon. Constance Morella follows:]

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Mr. HINCHMAN. If I could just add one note to that, Mr. Chairman. In our work with successful public sector reform efforts, one

of the best practices we’ve identified—and it’s reflected in our executive guide—is involving stake holders. And there are both internal

and external stake holders. And they all need to be part of the

planning process.

Mr. HORN. Before yielding to Mr. Sessions, let me round out

what Mrs. Morella has correctly begun. I think your answer is a

very good one in terms of what the data—what those data ought

to be down the line. And I guess my query is, does OMB plan to

have the agencies, when they come in for future budgets, show this

performance data as part of the budget review process in OMB,

and is it understood that secretaries will sign off on this? I agree

with everything you’ve said, because I’ve been through this, 35

years ago and 25 years ago.

The University of Toronto was the first to have university-wide

planning. I was at the second, in terms of California State University at Long Beach. And we started from the bottom up, just exactly as you’re talking about. You’ve got to really get people involved.

I was amused by my colleague, Mr. Armey’s, department chair.

That’s what most people do. Say, you have them file a report at the

end of the night. The people who are there rendering the service

are never involved. It’s just somebody writing it out, and it’s pieces

of paper moving around. And your comments lead me to believe

you’re very alert to that situation and you want involvement. And

you want something that works.

And that’s what we’re talking about.

Mr. KOSKINEN. Right.

Mr. HORN. Now, are you going to include it in the budget process?

Mr. KOSKINEN. As they say in the trade, you bet. Our hope is,

ultimately, that we would evolve an accountability report, as we

call it. And we’ve had pilot program experimentation with that, in

which we would pull all of the results of agency activities and reviews together in one document. And our hope would be that an

agency, ultimately, in the budget process, would come to OMB and,

ultimately, to the Congress, saying, these are the results of our activities thus far and our accountability report, and these are our resource requests. And if we get these resources, these are what our

performance plan show we will be able to receive with those.

And a year later, they would come in with an accountability report, saying, these are the resources you gave us, these are the results we got, these are the resources we’d like in the next cycle.

Mr. HORN. Mm-hmm.

Mr. KOSKINEN. It will take us some time to get from here to

there. But we started in the fall of 1994 with the 1996 budget process, asking for as much performance information as the agencies

had in their justifications to us. This last fall, in the 1998 budget

process, we told agencies it would be a very effective time to start

a pilot program for seeing how much performance information they

had. We ran a spring review in 1995, saying for your major key

programs, what measures would you use to judge their effectiveness?

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So we’ve engaged, over the last 2 years, 21⁄2 years, in an on-going

dialog, trying to bring to bear the focus of the agencies, not only

on the results, but, in fact, as you say, that these should be involved in the explanations as to what they’re going to be accomplishing with the additional resources they’re asking.

Mr. HORN. Now, does the gentleman from Texas have any questions he’d like to ask?

Mr. SESSIONS. Yes. I would. Thank you.

Mr. HORN. Yes.

Mr. SESSIONS. I would direct to either three of you, is there any

indication that you have when you hear back from these agencies

that there’s some reluctance or some unknowing of about what

these strategic directions might be, that you could direct them to

their IGs, Inspector Generals, and/or to this report that this committee came out with last year, as a good indication about realistic

approaches that need to be made within their agencies, at least as

a starting point?

Or do you find that they do understand this as strategic direction

and that they’ve got a good handle on it? So it’s just a general

question and comment about feedback from these agencies.

Mr. KOSKINEN. You’ve been doing well, Jim.

Mr. HINCHMAN. Chris, do we have any feedback from the agencies on that issue? Do you know of any? I’m not aware of any.

Mr. MIHM. Mr. Sessions, we haven’t heard specifically of agencies

referencing the committee report or thinking of going to their Inspectors General for decisions or questions about strategic direction. To the broader issue that you’re raising, though, about a lack

of strategic direction, that’s one of the major challenges to the implementation of GPRA. It’s one of the opportunities that GPRA affords, is that we’ve found an awful lot of agencies where the basic

approach of Federal program management has been an adaptive

approach over time, where we’ve had new responsibilities overlaid

on existing missions, such that now some agencies have really lost

their way.

And in Mr. Hinchman’s prepared statement, he talks about a

couple of those. And so, there is a real need as agencies go through

the strategic planning process, to start first with what is our purpose, what business are we in? And for some agencies, that’s going

to be quite a struggle.

Mr. KOSKINEN. We have not had any feedback that would indicate a difficulty. We have increasingly encouraged agencies,

though—and will again in a review and an assessment we’re doing

this spring—to take a look at their major, what we call, management challenges. And those challenges come in a lot of different

formats and have been drawn to their attention in a lot of different

ways. And encourage them to take a look at what are their performance measures going to be for solving or dealing with those

management challenges.

And to the extent that they are significant, they should be, we

think, reflected in their overall strategic planning effort. But as Mr.

Mihm noted, the strategic planning effort deals with, ultimately,

the basic goals and missions and drive of the agencies. And a lot

of the particular IG reports or other issues are significant, but not

clearly sufficient to cover the wide level of activities going on.

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I would note, also, in response to your earlier discussion with the

majority leader, that I very much appreciate your concern that

agencies not come forth with fear and trepidation and concern that

nothing good is going to come out of this for them. As Woody Hayes

once said when he was coach at Ohio State, why did he like forward passes, ‘‘two out of three things that happen to you are bad.’’ Part of my concern has been that the agencies may, over time,

feel that nothing, everything will be bad with measures, that it will

only be used as a way of justifying fewer resources. I think to the

extent that we can in a bipartisan way and in a cooperative way— a partnership between the administration and the Congress—get

everybody to understand our goal here really is to be effective.

We may argue, as noted earlier, about whether the government

ought to be doing one thing or another, but we all ought to agree,

once the government is in an activity, it ought to be doing it in the

most productive way possible. And as I noted in my prepared testimony, we need to have people understand that if an agency is not

performing well, the answer may not be fewer resources, the answer may be more resources.

On the other hand, an agency that’s continually moving along

may turn out to be a lower priority over time, and we may decide

that the performance isn’t good enough and we won’t get increased

performance, there just is no way to turn it around with resources

or management changes.

But those dialogs need to be held, and I think, as I say, your

focus on the positive aspects of it are important, because I think

agencies need to understand that this is an important dialog and,

at least, on occasion some good things will happen as a result of

a dialog, as well as some hard questions being asked.

Mr. SESSIONS. Good. Thank you. Let me just say this, that the

work that you do is in the best interest of the taxpayer, should continue. And I think, Mr. Chairman, this committee should do all we

can do to reinforce not only the work you’re going to do, but to

present a positive spin to all managers of the government, that

they must comply, but it’s up to them what they present.

And then we will get into an oversight, if necessary, of the discussion of the priorities. Thank you, Mr. Chairman.

Mr. HORN. Thank you. The gentlewoman from Maryland.

Mrs. MORELLA. Thanks. Just as a followup, Mr. Koskinen, I was

looking at an article here in the Washington Post, which quotes

Franklin Raines and states that—OK. ‘‘He encouraged agencies to

consult with congressional committees but requested that all substantive documents related to strategic plans should be provided to

OMB beforehand.’’ Is that accurate?

Mr. KOSKINEN. Well, they’ve all, actually, been provided to OMB.

I mean, as Mr. Hinchman stated, these plans have been under review with us for the last 2 years as they’ve evolved. And what

we’ve told the agencies is they need to consult with the Congress,

they need to provide the most updated information. And to the extent that they are providing to you, we’d like to know what that

information is. But at this point, as I say, they’ve already submitted the bulk of their material to us. So we have it under review.

So it’s not an obstacle.

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It’s not as if the agencies have been off on their own and we’ve

never seen it. We’ve seen the information and our encouragement

to the agencies now is they need to discuss their basic goals and

measures and where they’re going with you.

Mrs. MORELLA. So they’ve already—what you’re saying is that

since they’ve already presented some of this material to you, they

can move forward?

Mr. KOSKINEN. Yes. Right.

Mrs. MORELLA. But they need to present it to you. I mean, it is

a requirement.

Mr. KOSKINEN. Yes. It’s not an obstacle because they’ve already

done it. But it is part of the normal process, that they would continue to deal with us.

Mrs. MORELLA. It is part of the process that they report it.

Mr. KOSKINEN. I would renew my offer. If there is ever an area

where someone feels that an agency is not being forthcoming—and

worthy explanation for that, I would be delighted to make sure that

we resolve whatever issue there is promptly.

Mrs. MORELLA. Mm-hmm. Mm-hmm.

Mr. KOSKINEN. I’m not aware of any at this point.

Mrs. MORELLA. OK. I see that same statement is quoted here in

the memorandum for the heads of executive departments and agencies, ‘‘All substantive documents related to strategic plan should be

provided to OMB beforehand. And OMB comments ensuring consistency with national program and budget policies should be incorporated before the documents are given to Congress.’’ That’s correct, though? Right?

Mr. KOSKINEN. That’s correct.

Mrs. MORELLA. Thanks.

Mr. KOSKINEN. And in fact, I’d be happy to put into the record

that letter which pursues—is pursuant to the guidance we gave a

year earlier encouraging congressional consultation. As noted, our

goal is primarily to make sure that when you get engaged in a dialog with the agencies, you’re engaging with a dialog with the administration—with the administration’s support, that there’s—and

that’s our role in OMB, is not to think up new things, it’s basically

to make sure that when agencies make presentations to you on

major matters like this, that you’re not going to find out later on

that that presentation is disowned because it doesn’t reflect the understanding of the President’s priorities or our view of where we’re

going to be going with it.

But as I say, at this juncture, all of the agencies are sharing that

material with us. We’re giving them feedback. We expect to have

another assessment starting in the next couple weeks with them of

where they are. Our problem is less—our concern is less what

they’re doing with those plans. Our real concern is making sure

that they have the consultation with you and that they complete

acceptable and useful plans for submission to all of us by next September.

[The information referred to follows:]

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Mrs. MORELLA. OK. Thank you. Thank you.

Mr. HORN. As I understand, where we are on this question and

answer, the consultation can be oral up here.

Mr. KOSKINEN. Right.

Mr. HORN. And they can talk to us and we can talk to them. But

when the chips are down, what they put in writing is cleared

through OMB.

Mr. KOSKINEN. That’s correct. If they are going to give you a

plan, we should have seen it beforehand.

Mr. HORN. Right. Yes.

Mr. KOSKINEN. But—but there’s nothing that we——

Mr. HORN. So I don’t think any of us are deluded that OMB

won’t be involved. And I think if Members are concerned about

what the agency suggests that was knocked out, we can ask them.

Mr. KOSKINEN. You can ask them.

Mr. HORN. And they have to tell us, just as we do, what did you

ask them in money.

Mr. KOSKINEN. Exactly.

Mr. HORN. And then what did they do to you?

Mr. KOSKINEN. And at that point, you’ll have exactly the right

information you need, which is what the agency suggested and, for

whatever reason, we didn’t want to put in, and then we can have

a dialog about that. Our concern is that if we don’t have that process, you’ll get agency discussions and you’ll move forward with

them only to discover after the fact that that’s been—turned out to

be a problem and the administration is not supporting that position.

But the chairman has it exactly right, that the agencies are encouraged to have those discussions with you, freewheeling. They

should be talking with you. And we encourage them to engage you

in a dialog in your perspectives of what those goals and missions

and objectives ought to be, recognizing that the final plans will be

agency plans as part of the administration. But as I say, if you

have ideas that are not reflected, the cover letter for those plans

should reflect that for you.

So they should say, we had congressional consultations and the

Congress said we ought to have a mission statement that looked

like that. We have a mission statement that varies somewhat, and

now you can take a look at the differences. So the important point

is to get all of that out so people understand exactly where everyone is.

Mr. HORN. Let me go back, as the gentlewoman—let me go back

to a couple of areas. Mr. Hinchman, you mentioned the report on

‘‘consultation’’ that you are preparing for Budget Chairman Kasich.

If you would be good enough to send Mr. Burton and Mr. Waxman,

myself and Mrs. Maloney copies of that, we’d be most grateful.

Mr. HINCHMAN. Of course, Mr. Chairman.

Mr. HORN. We’d like to keep up on what’s going on here, and

there’s no use asking you twice. Just copy us. Now, let me ask you,

Mr. Hinchman, on the basis of what the General Accounting Office

has learned, do you plan to propose any changes to the legislation

when you report on June 1, 1997? Do you have a number of

changes that will be coming to——

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Mr. HINCHMAN. I think that we do not expect to report new

changes. I think our view is that the framework in the statute, as

I said in my testimony, is sound and that we need to try to make

it work. And that it’s not time yet to begin thinking about changes

in that structure.

Mr. HORN. OK. Now, one of the concerns that we have is on the

various pilots. Some of them relate to those agencies that are also

on your high risk list, which we will begin discussing tomorrow.

For example, the HUD Office of Chief Financial Officer. Apparently, the department cannot get an opinion on its audited financial statements and has serious and pervasive weaknesses in its internal controls that cause it to be on your 1997 high risk theories.

And the EPA Superfund program. There’s another one.

Mr. HINCHMAN. Mm-hmm.

Mr. HORN. What is your feeling on this in terms of being a pilot

when we have so many problems? Is that good, bad? Does that just

force them to focus more attention on it and solve the problem?

And why haven’t they?

Mr. HINCHMAN. I think, in general, we would say that participating in the pilot program has been good for agencies, that those

agencies that have been in the pilot program are a few steps ahead

of others in achieving effective implementation of the requirements

of the act. And I think we will see that when we see the 1999

plans. That is to say that those, in general, those pilot agencies,

will do the better jobs of meeting the requirements of the act that

time around.

With respect to specific cases like HUD, I don’t think that we can

expect that participation in the pilot program is going to solve

HUD’s problems. HUD has made progress, however, and I’m hopeful, I like to think that its involvement in the pilot project has

helped focus its thinking on the kind of steps which will lead to

progress. Our high risk report will say that things are better at

HUD than they were 2 years ago.

But you are right. Things are not OK, and there is more work

to be done there.

Mr. HORN. Let me move to the Forest Service. It’s also listed as

a pilot for performance plan phase. I’m told its cost accounting is

abysmal.

Mr. HINCHMAN. Mm-hmm.

Mr. HORN. It doesn’t track the cost with associated revenues on

a consistent, logical basis as good cost accounting practices dictate.

Mr. HINCHMAN. Mm-hmm.

Mr. HORN. It would seem that the pilot implementation would require better cost accounting. Have you seen any improvement in

the Forest Service management lately?

Mr. HINCHMAN. We currently have work underway concerning

Forest Service management. I am not in a position, today, to say

exactly what the outcome of that will be. There is no question,

though, that the Forest Service does have financial management

problems. It is not unique in that regard. I think that one of the

reasons I talk about the Results Act as being part of a framework

of statutes is because I think that solving our information technology and financial management problems is a critical part of

solving our general management problems.

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And we’re going to have to rely on those statutes working together to make the government a well run institution.

Mr. HORN. Do you want to comment on any of these?

Mr. KOSKINEN. I would just echo Mr. Hinchman’s comment that

I think wherever we’ve had agencies participating in pilots, it’s

been a benefit to them as well as to the statute. I think it has

helped focus them, not only on improvements, but actually on how

to measure those improvements, and that’s one of our biggest challenges, is to not just keep coming back every year saying, well,

things are a little better.

We need to have actual measures. And I think the application of

the statute and through the pilot program is a significant step in

the right direction.

Mr. HORN. As you know from the private sector, there have been

experiments with looking at a particular corporate culture of a

firm, a plant, especially when you’ve merged maybe three or four

unique companies under one conglomerate. Has anybody looked at

that from the point of the Federal Government, where you think

in these pilots, now, that you have a good cross-section of the government? Do you feel that you have or are there other ones, perhaps, you should convince to be pilots?

Mr. KOSKINEN. Well, the great genius of the act was to allow us

to have the pilot program phase and have the agencies as well as

us learn. Now what we’re doing is turning the whole government

into a pilot. In September of this year, everyone is supposed to

show up with a strategic plan, has to show up with a strategic

plan, and in February, next year, they will all show up with a performance plan.

So that at this point, we’re out of the pilot phase and we’re into

the actual full implementation phase.

Mr. HORN. Mr. Hinchman, back to you. In terms of your testimony, you stated that the Department of Defense is unable to properly manage its cost resources, and that the critical cost data are

absent for almost all of the department’s non-cash assets such inventory, equipment, aircraft, missiles.

Mr. HINCHMAN. Mm-hmm.

Mr. HORN. I’m just curious how they’re doing with implementing

the pilot project.

Mr. HINCHMAN. I think that financial management at the Department of Defense remains a very big challenge, and I don’t

think that we will see that problem fixed in the near term. And obviously, part of a good financial management system includes cost

accounting systems. And I think we all share the goal of reaching

a point at which financial management, including cost accounting

within the government, meets private sector standards. DOD is not

there today.

Mr. HORN. We found in our hearing last year of what did you do

with the $25 billion, and they said we didn’t steal, or nobody stole,

but we just can’t find it all. Forty-nine accounting systems exist in

the Department of Defense. Anything happening to consolidate

that? And if you were suddenly made the Chief Financial Officer

of Defense, what would you do?

Mr. HINCHMAN. I would begin——

Mr. HORN. Besides go to Australia. [Laughter.]

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Mr. KOSKINEN. That’s right.

Mr. HORN. What would you do?

Mr. HINCHMAN. I would begin a strategic planning process to determine what the goals of that system need to, and begin developing plans to move toward those goals year by year. I think it’s

going to be a long-term process.

Mr. KOSKINEN. There is—I would note—that there is a strategic

plan in this particular area, to over a reasonably definable period

of time, migrate those systems to five basic financial accounting

systems. It’s not easy. It’s been a project underway for some time,

but they have begun to make significant progress. But I think Mr.

Hinchman is right. This is one of the major challenges in the government, is to, in fact, work with the Department, which is very

focused on this, in bringing its financial system up to date.

Mr. HORN. Well, we know they won’t be able to give us a balance

sheet, I think. Both IRS and Defense, for 4 years now, everybody

said they can’t possibly meet the law on that. Do you feel that is

still true?

Mr. HINCHMAN. I believe that we will have financial statements

from the Department of Defense when it’s required under the CFO

act. I do not know, at this point, what the opinion in the statements will be.

Mr. KOSKINEN. Right.

Mr. HORN. Any reaction on that?

Mr. KOSKINEN. I think that’s correct. We are—we have actually

worked jointly—the Treasury Department, GAO and OMB—in developing and preparing for the governmentwide financial statement

required under the CFO Acts and Government Management and

Reform Act, and, clearly, we all are working together with the

areas you’ve discussed and some others, to make sure that we comply with the statute.

So I think, at this point, we’ve arrayed all the resources in the

government together in a very cooperative and very focused effort

to see if we can improve these problems.

Mr. HORN. Before I yield to Mr. Sessions, let me ask you one

question while we’re on this topic. IRS has had major problems implementing the new technology down there.

Mr. KOSKINEN. Yes.

Mr. HORN. We went through this with FAA 3 years ago.

Mr. KOSKINEN. Uh-huh.

Mr. HORN. Absolute basket case. And we have this throughout

the government, now. What have we learned from these experiences, either from the OMB side or the Comptroller General side.

Mr. KOSKINEN. Well, I won’t give you my full half hour speech

that I gave yesterday morning.

Mr. HORN. Give me your executive summary.

Mr. KOSKINEN. The executive summary is that thanks to the assistance of this committee and the Governmental Affairs Committee, we passed the Information Technology Management Reform

Act, now known and referred to as the Clinger-Cohen Act—— Mr. HORN. Right.

Mr. KOSKINEN. Which fundamentally changes the way the government plans for, acquires and manages information technology.

Again, it was—we had the benefit of a lot of insight and experience

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and reviews by GAO, in which we drew on the promising practices

or best practices of 10 of the best private sector companies who use

information technology. We know have Chief Information Officers

in every agency. They are focused on dealing with what we think

were the fundamental weaknesses in the prior system.

Mr. HORN. But what were those weaknesses?

Mr. KOSKINEN. Fundamental weaknesses are, first of all, partially driven by the nature of the procurement system. We tended

to design large complicated systems all on one procurement so that

we would be buying systems and planning them over 8 to 10 to 12-

year time horizons. The best private sector companies buy systems

with deliverables no farther out in time than 12 to 18 months.

A corollary to that means that if you are designing a large system, you need to, in fact, then buy it in modular or phases, with

testing of each phase to make sure you’re moving in the direction

in which you want to go. Another major lessen of the private sector

is that these are not technology questions—the problems—they are

actually management questions.

And the best companies, before anyone automates anything, ask

the question of A, do we need to do this work at all?; B, if it needs

to be done, is there someone else who can do it better? And probably most functionally and important in dealing with not only the

government’s problems, but the private sector’s problems, if we

need to do the work and no one else can do it better, have we restructured and re-engineered the way the work is done to be able

to maximize the impact of information technology.

A corollary to that is, have we re-engineered the work so that we

can take advantage of off the shelf software and existing systems,

rather than customizing a new system to meet what is often an idiosyncratic way of doing the work.

Mr. HORN. Yes. Since we knew all that 25 years ago, does this

mean the role of Assistant Secretary for management has failed in

these departments?

Mr. KOSKINEN. Well, I would tell you that A, people didn’t know

this 25 years ago. So I would challenge on that.

Mr. HORN. But we did. On the systems that—look, the dumbest

thing you can do is bring in a computer, which they will sell to you

with all the wonderful things they can do with it, and not clean up

your systems to start with, and ask, are you doing it, just as you

said, and get rid of it. And then you automate that. The other

dumb thing you do—and the FAA did that regular—is you don’t get

closure on everybody’s great idea. And there’s nobody managing it.

It’s everybody doing add-ons. McNamara got into that trouble in

the early 1960’s with building a plane that had to do everything,

which didn’t work.

Mr. KOSKINEN. I would respectfully note that the government

has no monopoly on these problems, that, in fact, there are vast

numbers of failed systems right now in the private sector. A study

last year showed that over half of the private sector systems being

designed last year and implemented either didn’t work or came in

over budget and did not come in on time.

So that these lessons which are straightforward and understandable are not technological lessons, have not necessarily been out

there in everybody’s mind for 25 years, and the government has not

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led the failure parade. There are, as I say, far more dollars that

have been spent on failed systems in the private sector in the last

few years than in the government.

That doesn’t mean that we don’t need to learn the lessons. And

that’s where GAO’s reviews were very helpful. They went out and

didn’t look at the private sector generally because if they had done

that, they would have seen a lot of failed systems as well as successes. What they said was what are the best companies and what

are their practices, and what can we learn from those. And I think

the government, if we implement the Clinger-Cohen Act effectively,

can become a state-of-the-art acquirer, manager and user of information technology. But we’ll continue to need the support of this

committee, as well as that of the agencies, if we’re going to do that.

Mr. HORN. Now, when you say effectively implement that act,

you’re talking about the CIO, I assume.

Mr. KOSKINEN. I’m talking, actually, about the CIO being a catalyst for the agency coming to grips with these problems.

Mr. HORN. Right. Now, are there situations where we have the

CIO also holding other responsibilities, as we have in Treasury

with the Assistant Secretary for management also being the Chief

Financial Officer, something I think is just crazy, and yet we

haven’t done anything about it?

Mr. KOSKINEN. There are those. If you’d like, we could hold a

hearing on this. There’s a long discussion going on about that.

Mr. HORN. No. When you’ve got a problem and we give you the

authorization to do something about it, it seems to me there’s got

to be focus. And why these problems continue is many of these people aren’t really devoting full time to either the CIO or the CFO.

It’s like having the Inspector General be chewed away by some

other agency responsibility.

Now, since that’s an adverse relationship in many cases is why

we don’t do that, I gather. But I must say it bothers me when we

have that kind of overlap.

Mr. KOSKINEN. Yes. Our premise and assumption has been that

we should not have that overlap. There are three or four cases

where we—on what we call an evaluation mode—have allowed the

agencies to combine the CIO and the CFO. That’s primarily where

the CFO both has significant IT background and experience and

where a significant part of the information technology problems in

the agency come within the CFO’s jurisdiction, so that bifurcation

did not necessarily look like the most logical way to proceed.

But in those cases we have told the agencies, we, with GAO, will

be evaluating, at the end of their first year, the effectiveness of

that operation. And virtually all of the other agencies where we’re

working, we have a CIO who is free standing. That, by itself, will

not self execute. There are other issues that need to be addressed

that we are working with the agencies on.

And to make sure that the CIO is a catalyst for reform, a leader

of effective implementation. But much like GPRA, effective implementation of information technology requires that the senior program managers and the senior managers of the agency participate

in the basic decisions, that it not be left to what I call the tekies

or the people who are knowledgeable about systems. They need to

be involved, but the basic questions and the basic failings often

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times are not technological issues, they are actually program management issues.

Mr. HORN. No. I agree with that. Mr. Hinchman, Mr. Mihm, do

you have any reaction to that?

Mr. HINCHMAN. No. I think that Mr. Koskinen is exactly right

about that. And I think the most important point he makes, and

one that we ought to all take some comfort in is that the ClingerCohen Act, in fact, reflects the lessons that we have learned both

from experience within the government and in our study of the experiences of others who have run successful information technology

programs. That act embodies what we know.

Mr. HORN. You’ve done a fine job on that best practices series

you have, and I think all of us have profited from it. Mr. Sessions.

Gentleman, Mr. Sessions.

Mr. SESSIONS. Thank you, Mr. Chairman. Mr. Koskinen, I appreciate you taking our questions and comments as the way they’re intended, and I hope that they can continue to be positive, but I must

confess you’ll probably be able to go home today to your Director

and say that you turned in an honest day’s work for an honest

day’s pay, and that he would not want to switch places with you.

I’d like to, if I could, to say a couple things. The chairman was

going into to some of the questions that I have about the IRS. Obviously, many people have known. It’s been widely publicized. Some

$4 billion that was spent by the IRS to begin the development of

a new computer program. I heard you say, probably many of the

problems are with program management within getting these data

systems up and working.

My background includes that of being at Bell labs for several

years where I was deeply involved in the intricate management of

programming and those systems. Start with me, if you can, on

some sort of a dialog on where the IRS is in this general process.

Were they in the pilot program? Were they considered for that?

What sort of help is OMB giving them to get them to direct themselves? Do they have any inward recollection that the perception is

that they are not as effective and efficient?

I’m not going to ask you to reach the final conclusion that really

begs itself with, do we have a system that we can put on a sheet

of paper to draw a flow chart to with our tax code? But let’s keep

this within the confines: Where’s the IRS? How realistic are they?

What is your working relationship with them? And where can we

expect any near term advantages or something that would be considered positive out of this agency?

Mr. KOSKINEN. I’m happy to respond. And I think that your point

is well taken that this is an important dialog. With regard to the

pay issue, I think if we hold three hearings for the price of one

here, then I’m going to ask for a bonus as it goes.

But let’s deal with the IRS. It’s an important question. First, I

think the leadership at the IRS as well as the Treasury Department, as I said earlier, recognizes that there are serious issues to

be addressed within the IRS. I think there is no sense of denial.

Whatever may have happened in the past, there is a real attempt

to come to grips with these issues. They are working very carefully

with GAO—people on their systems.

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But more significantly, under the leadership of people in the

Treasury, as well as in the IRS, triggered and headed by the Chief

Information Officer, they are looking at their strategic plan. They

are basically saying, what are our goals over the next 3 to 4 years,

what system developments match those goals, and which system

developments are a lower priority and, therefore, should not have

our attention.

Because one of the things they have discovered is that they have

a number of systems that will achieve various goals, but it’s clear

there’s no capacity there—and because of the huge undertaking— to do them all at once. And what they need is exactly what you’re

saying: Say, where are we going; what are our major problems;

what are the major expectations that people have that we need the

most improvements. Let’s focus on those. Let’s make sure that we

have a coherent plan for getting from here to there. And in particular, let us take a hard look at one of the fundamental pesky

questions, and that is, of the work that needs to be done, how

much of it has to be done here, how much of it can be done somewhere else, how much of it is out there already in systems or in

processes that we could take advantage of.

And I think that’s a big breakthrough for the Internal Revenue

Service that, historically, has prided itself, appropriately, on doing

all of the work internally, developing all of its systems internally.

But as life gets more complicated and as the alternatives get to be

more complex, that process hasn’t stood them in good stead recently. And I think they recognize that.

So I’m confident that they are addressing the problem, that they

understand the magnitude of it and that they are coming up with

constructive solutions. I mentioned that management—modernization management board that the Secretary of the Treasury has set

up. We have agreed—from OMB—to support that process. Steve

Kelman, the Administrator of the Office of Federal Procurement

Policy at OMB, and I serve as adjunct members of that committee.

We are not in a position where we could exercise direct authority. We attend the meetings, though, and have participated with

them, and have a better dialog now than we’ve ever had with the

IRS and the Treasury about the problematic implications of what

they’re doing and the budgetary implications of what they’re doing.

As we’ve said, we’re prepared to give them one stop shopping. That

is, they bring these issues up in the modernization management

board. If we have OMB perspectives, we will bring them to bear

there and we’ll engage in that dialog so they don’t have to go

through the process twice.

But the bottom line, much like defense, is—and, as you know far

better than most, with your background—these are very complicated, difficult problems. Were talking about literally hundreds

of millions of transactions and relationships, and it’s a phenomenal

amount of data. And they have major obstacles to overcome. So I

would be the last one to tell you that in the next year it will all

be done.

But I am very confident that in the next year, you will be able

to see measurable progress, that we will develop plans there, where

we will have benchmarks that basically have broken it down into

modules and components that can be monitored, and, also, that

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lead more directly and clearly to the achievement of mission goals

and strategic efforts.

Mr. SESSIONS. So what you’re saying is you believe that their

work will result in a document—a blue print—that will be a guiding principle for them, measurable, realistic, and it’s something

that represents the true nature of the business?

Mr. KOSKINEN. Yes. Over time I think that’s exactly right.

Mr. SESSIONS. Good. Mr. Chairman, thank you for the questions.

Best of luck. I hope that spirit in which you know that we’re involved in this process is one that will translate throughout the government. And I say this over and over again because I think that

every piece of government, all the agencies, need to recognize that

mission statement orientation will get them back to the point of

what their core business is. And if the taxpayer needs it supported,

then that will be done. Mr. Chairman, thank you for the question.

Mr. HORN. Well, we thank you for your good questions. Also,

there’s only a few more to go and you can all get a decent meal.

[Laughter.]

You’ll have put in your day’s work before noon, you can tell the

Director.

I want to start with Mr. Hinchman on this. Beginning in fiscal

year 1999, the performance plans required by the Results Act may

include proposals to OMB to waive certain administrative requirements, including staffing levels, limitations on compensation or remuneration, and prohibitions or restrictions on funding transfers

among budget classifications in return for specific individual or organization accountability to achieve a performance goal.

The expected improvements in performance that would result are

to be quantified as part of the request for the waiver. Now, the

pilot projects for this stage, called pilot projects for managerial accountability and flexibility, were never implemented because the

OMB did not improve any pilots. Did the GAO review these pilots?

Why, in your opinion, did OMB not improve any pilots? And what

impact does that have, in your opinion, on the potential success of

the Results Act? Mr. Hinchman, it’s all yours. We’ll get to your colleague in a minute.

Mr. KOSKINEN. In 30 words or less.

Mr. HINCHMAN. Yes.

Mr. HORN. That’s right.

Mr. HINCHMAN. I think that we do not yet know what the impact

of the waiver provisions in the Results Act are going to be. I think

we didn’t find any what OMB felt were some appropriate opportunities to apply the waiver authority. There were some situations,

I think, where agencies originally sought waivers and then later

concluded that, in fact, authority to do what they wanted to do existed anyway, or legislation changed the underlying constraints

against which they were working, and that, as a result, we just

haven’t had a good test of the waiver authority.

I don’t think that we’re in a position to say that OMB has been

unwilling to use that authority is circumstances where it seems to

us to be obviously appropriate. I don’t think that our work suggested OMB is opposed to the waiver authority. As I said, I think

it’s just that we haven’t yet had an environment in which we can

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get a good test of it. And we’re going to have to wait and see what

happens.

Mr. KOSKINEN. Yes. Let me just make clear, we are strong supporters of the concept of administrative and other flexibilities, regulatory flexibilities for people if they can tie it to our performance

measures. To some extent, part of the problem in the act is the success of this committee and the Congress in generally relieving

agencies of a lot of administrative requirements, a number of them

in the procurement area.

The major procurement reforms that this Congress and this committee have supported eliminated a lot of potential requests for

waivers. The Office of Personnel Management threw out a lot of old

time regulations and requirements on personnel that, again, would

have been very good subjects for—in contemplation for waivers.

So when we reached out to the agencies for proposals, we discovered that part of the reason, beyond that, that we didn’t get very

good candidates was, first of all, they wanted waivers from statutory requirements, which the statute does not allow. It really talks

about administrative waivers. So a lot of their waivers were from

statutory requirements. Or they wanted waivers from limitations

on agencies outside the executive branch that we did not have the

ability and the authority under the act to grant beyond that.

Also, when we then dwindle down to the precious few, we did not

have what we thought were very—we didn’t have a large number,

and the small number that we did have didn’t have a very clear

nexus between the relative limited waiver they wanted and any improvement in performance. And so, our judgment was that at this

point in time, we would not gain anything by pursuing the relatively small number of applicants for very minor waivers.

Mr. HORN. Who reviewed the pilots on managerial accountability

and flexibility, and how much time did they spend with the agencies before deciding the pilot proposals were unacceptable?

Mr. KOSKINEN. Those come through OMB. Ultimately, they—the

whole process reports to me. The development of the proposals and

the request for them were generated by inter-agency groups. So we

had a range of people that we taxed for this. The actual development of this particular number was handled under, at that time,

my supervision by one of our senior career people, who has, in fact,

been the guru of GPRA. And he spent a significant amount of time

trying to generate acceptable proposals, working with other agencies and OMB to make sure that we hadn’t overlooked any possibilities that would——

Mr. HORN. So these proposals were circulated around the program areas of OMB?

Mr. KOSKINEN. OMB.

Mr. HORN. And coordinated.

Mr. KOSKINEN. We went to the agencies in the program areas,

saying what are their—here’s a whole set of possibilities, which of

these are you willing to waive, in terms of the agencies, and in

terms of program managers, to try to, again, see what was there

out there that agencies might find attractive.

And we sent to the agencies, then, that list, saying here are a

whole set—it wasn’t very large by the time we got done—but here

are a range of waivers that you could apply for and participate in

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the pilot program for. And as I say, by the time we got done with

it, we got a number of responses back, but a number of them, most

of them were really out of bounds for the purposes of the statute.

Mr. HORN. Was this a written reaction or did you sit around a

table and go over it with them line by line and say, maybe we can

make a deal on this?

Mr. KOSKINEN. Yes. Most of it was by document. So we don’t

have—we don’t have enough people to go to all of the agencies and

have those conversations. But when we had applications, then we

would talk with the agency about that. But—— Mr. HORN. So they submitted it. OMB pursued it, asked their

program pro what they thought, maybe some other agencies,

maybe OPM, whatever?

Mr. KOSKINEN. Right. And then our final judgment—— Mr. HORN. Then you gave it back in paper, but nobody really sat

down and had a dialog on those?

Mr. KOSKINEN. About the ones we made? Yes. When we got down

with it all and looked at the final applications we had from the

agencies, our judgment was that it was not worth pursuing those

at this time.

Mr. HORN. Now, did the agencies make any reaction to that judgment in terms of suggesting improvements or suggesting changes

on their part or was that just the killer?

Mr. KOSKINEN. I’m not aware of any further conversations with

the agencies.

Mr. HORN. OK. Are you going to encourage any experimentation

with managerial flexibility and accountability before fiscal year

1999? Or is this it?

Mr. KOSKINEN. As you know, one of our major initiatives, only

partially growing out of this experience, but out of a number of

other experiences, is to propose a significant number of performance-based organizations, as we call them, in which we have pulled

together statutory waivers in procurement and personnel areas.

And we, in effect, think that those will serve very clearly as pilot

programs, as it were, for what improved performance can you get

if you eliminate some of the statutory limitations in procurement

and personnel.

And in fact, the proposals that we’re developing and the template

require that any of the performance-based organizations, to obtain

those flexibilities, have to enter into a very clear performance

agreement between the head of the organization and this cabinet

secretary, measured on an annual basis. And the new chief operating officer for the performance-based organization is there under

a term contract and can be dismissed if performance is not adequate.

So that, as I say, we did not design with the Vice President and

the National Performance Review the concept of performance-based

organizations in response to our differences here, but we think that

we will get more fulsome experimental results out of these performance-based organizations than looking at an individual, independent waiver and saying, what performance improvement do we

get from that.

Mr. HORN. Let me ask you now. In terms of encouraging agencies

to propose pilots in this managerial accountability, flexibility area,

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what do you plan to include in your report required under Section

9704C of the act? It’s apparently due in May of this year.

Mr. KOSKINEN. In May of this year we will give you the background and experience. GAO has a draft report out, as well, on

their own, and we will share that with you in May as required.

Mr. HORN. Yes. We’d like to ask formally that OMB provide the

staff on both sides of the aisle here and committee with copies of

all the proposals submitted to OMB for managerial flexibility and

accountability in the pilot phase including any notes or reasons the

proposals were not accepted. We just need to get a feel for this particular aspect of the process.

So if you and majority and minority staff could work out what

we need in that area, we’d appreciate the chance to review that on

both sides. Because I think there’s an interest in getting focus on

managerial flexibility.

Mr. KOSKINEN. I would commend to you, again—not to over sell

the point——

Mr. HORN. OK.

Mr. KOSKINEN. Your review and support of the performancebased organization concept, which, as I say, is really focused on

managerial flexibility in a much broader way than we’ve been able

to deal with under the statute, or will be able to deal with under

the statute.

Mr. HORN. Let me ask you one last question and then Mrs.

Maloney can have the final word on the subject. In terms of consultation, which we’ve talked about, with the authorizing committees and the agencies, do you have any feelings in terms of OMB

consultation with this committee or others?

Will that process be orchestrated to assure that the agencies do

talk to their congressional counterparts and not just make it a staff

thing, but sit down with Members in, say, agriculture, if you’re in

agriculture—this kind of thing—or you sit down with Government

Reform and Oversight and Governmental Affairs officials.

Mr. KOSKINEN. We are doing our own strategic planning exercise,

which has been instructive, I think, for all the staff at OMB. In

fact, later this month, as I noted in my prepared testimony, we’re

having an agency-wide stand down day to, in fact, develop the next

iteration of our plan. And we will be here consulting with you as

the other agencies are.

We are encouraging the agencies. We obviously can lead them to

water. We cannot necessarily make them drink. But I think, we

need also response from the hill. I think it’s very important, as you

noted—this committee did in a conversation with the majority leader—that the other committees, themselves, be forthcoming in expressing their interest and concern in this area, that the, in some

cases, as we start to evolve, it will be just as important for the congressional committees to be interested and responsive as it is for

the agencies to be willing to consult.

We can manage our end of the process by continuing to require

that. We need some support from the hill across the spectrum of

committee activities and authorizers and appropriators, for them to

both become knowledgeable about the act and then participate in

that dialog.

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Mr. HORN. Very good. Mr. Hinchman, do you have any comment

on these last few minutes of discussion?

Mr. HINCHMAN. No, sir. Mr. HORN. The distinguished gentlewoman from New York. Mrs. MALONEY. Following up on your last comment on your own

strategic plan, you’re required to consult with this committee on

that plan, and when may we expect to receive your consultation

and how do you propose to conduct it? Mr. KOSKINEN. We will be up here before summer, well in advance of our attempt to then finalize our plan. As I say, at this

point, we have an outline. We’ve had a strategic planning process

that started last summer. The budget process puts us in the limbo

from the first of October until about now, which is why we’re renewing it. I would expect that we would be here—our plans are to

have consultation with you and other stake holders certainly before

the end of May. And we would hope to do it as early as April. Mrs. MALONEY. OK. The Department of Defense is the largest

Federal agency and has components which are themselves larger

than some agencies. To date, DOD has not provided guidance to

the various services on how to link goals and performance measures, and GAO has found that many subordinate units are unsure

of how to implement the results law and are waiting for guidance.

And I’d just like you to comment on it. Do you know when DOD

plans to issue this guidance and if it doesn’t, how DOD plans to

assure that the services and other units support the overall DOD

plans and goals? Mr. KOSKINEN. I don’t know the answer to that now. As I noted,

we are about to begin yet another assessment, agency by agency,

of where they are in their strategic planning process. We had a detailed set of conversations with the Defense Department last summer, and we will pursue that further this spring. And one of the

questions we will be pursuing is what is their internal process, who

is involved in it, and when will they begin to have products. Mrs. MALONEY. Thank you very much. Mr. KOSKINEN. Thank you. Mr. HORN. Well, if there are no further questions, then we thank

all three of you for coming up and sharing your thoughts with us

on this very important subject. A lot of these seem to be very simple laws, in a way, long overdue, but, without question, they will

make a difference in the executive establishment and hopefully in

the congressional establishment. Because it’s going to take two working together to solve a lot of

these problems. And that’s why the consultation is so important between executive branch legislative committees. And that’s why Mr.

Armey’s role, in particular, in having the war room to make sure

a few things get done around here in the limited amount of time

that we have as elected Members.

And we thank you for your thoughts on that. We welcome any

ideas you have. But we’re not talking about amending laws, we’re

talking about implementing the law. Mr. KOSKINEN. Right. Mr. HORN. So without any further questions, this hearing is adjourned. [Whereupon, at 12:20 p.m., the committee was adjourned.]

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