59

I think in the end, what really matters is the determination of
the top leadership, from the President on down, to make manage-
ment important; to make performance important. And then what-
ever form of organization is chosen, to be sure that there is a staff
capacity, the clear desire from top leadership, that management
will be made to count, and that that is followed through on.

Mr. Horn. I’m just curious. You and I have discussed this before,
and of course, I’ve leaned with those who have said that, if you’re
a chief executive or a chief operating officer of an agency, a mem-
ber of the Cabinet, and they bring these questions up in your budg-
et review, and resources are related to that budget review, that
you're likely to listen more than if you’ve got a separate manage-
ment group either in OMB or outside that comes along and talks
to you about the glories of changing your structure and all the rest
of it.

But you’re saying that this experiment seems to have failed; or
are you saying that? Is it too early to tell?

Mr. FosLer. I think in this case, it’s too early to tell. This is one
more serious attempt to try to achieve that integration. And the ef-
forts to do so in the past have not been successful. But perhaps
with special determination from the leadership, perhaps it can be
made to work. I think much will depend on the extent to which
there really is a genuine focus on performance.

And to that extent, the GPRA can be an enormously important
tool in helping the OMB and the agencies to develop more of a con-
sistent structure for thinking through, what are the critical ele-
ments of performance and what will be expected of agencies in the
budget review?

Mr. Horn. I take it, Professor Light, you favor retaining the
management function within OMB, rather than having a separate
office of management with a director equivalent to what would
then become the office of budget, both reporting to the President?

Mr. Licut. That’s correct, right.

Mr. Horn. What do you think about the attempt being made so
far?

Mr. Licut. I think Scott is quite correct on the leadership issue.
But Presidential leadership is ephemeral at best, and the budget
tends to drive out all other attention most of the time. Budget ana-
lysts are well trained, highly professional in their area of policy
analysis for the most part, and have not traditionally bothered
much about management issues.

It’s not been a concern to them. They don’t have the professional
training, and often have little interest in management. They tend
to believe that management will take care of itself, as long as the
dollars are in Place. And I think that you have to have a credible
analysis unit doing management work within OMB. And I would
settle for the level of staffing that Richard Nixon had in place in
1970, when he created the management division.

That unit has been slowly decimated over the years so that
there’s really nothing left right now of the old management side of
OMB. I said at one point, in commentary, that eventually, M in the
OMB was made lower case, then it was dropped into subscript, and
now it might as well not be in the title at all—we should just be


25

These officials are best positioned to address the multiple com-
peting stakeholder and customer demands that confront many Fed-
eral programs. Obtaining top management support will be a major
challenge for many agencies because of the generally high turnover
rate among political appointees. We found that the median tenure
of top political appointees in large agencies is about 2 years.

GPRA, with its statutory planning and reporting requirements,
provides at least the possibility that the commitment of agencies’
top management to it will be sustained across the tenures of var-
ious political appointees. But for this to happen most effectively,
top career officials must join the political appointees in assuming
a Teadership role in implementing GPRA.

A committed, career leadership can help ensure that the goal-set-
ting and performance measurement processes encompassed by
GPRA will have some continuity, even with political turnover.

Mr. Horn. At this point we'll take a 15-minute recess and then
we'll pick up where we left off. You make a very important point
there.

Mr. FIncH. Thank you, Mr. Chairman.

Mr. Horn. We'll be in recess until about 3:15 p.m.

[Recess.]

Mr. Horn. Mr. Finch, you’re welcome to continue.

Mr. FincH. Thank you, Mr. Chairman. I had completed the first
point about the first emerging challenge. The second emerging
challenge is the need to build the capacity of agencies to implement
GPRA and to use the resulting performance information. One of
the most important areas in which top management can clearly
demonstrate commitment to GPRA is by ensuring that their agen-
cies have the capacity to make the needed changes and effectively
manage toward achieving desired outcomes.

Our review of leading State and foreign governments found that
they recognized the need to develop their expertise in performance
measurement, the use of performance information, and program
evaluation as they implemented their management reforms. The
governments found that agencies needed several years of experi-
ence before they felt comfortable with measuring their performance
directly and using performance information effectively.

It seems reasonable to assume that in the current environment
of severe resource constraints, maintaining existing Federal train-
ing budgets will be a formidable challenge for many agencies; and
that major increases in Federal training budgets are not likely.
Thus, agencies will need to seek new, creative and less costly ways
to build their capacities to implement GPRA and to use the result-
ing performance information to improve their programs.

nfortunately, most agencies have not yet developed or imple-
mented an agency-wide training strategy that identifies who needs
to be trained on what, how, and when. The absence of training and
capacity building strategies in many agencies is a source of some
concern because of the size and scope of the training and capacity
building effort that appear needed.

The third challenge is creating incentives to implement GPRA
and change the focus of management and accountability. The Fed-
eral Government will need to create internal and external incen-
tives that encourage and reinforce the focus on outcomes. Officials


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California

CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, JR., West Virginia

CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York

STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York

ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, Jr., South Carolina

WILLIAM H. ZELIFF, Jr, New Hampshire © LOUISE MCINTOSH SLAUGHTER, New

JOHN M. McHUGH, New York York

STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania

JOHN L. MICA, Florida GARY A. CONDIT, California

PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota

THOMAS M. DAVIS, Virginia KAREN L. THURMAN, Florida

DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York

JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin.

RANDY TATE, Washington GENE TAYLOR, Mississippi

DICK CHRYSLER, Michigan BARBARA-ROSE COLLINS, Michigan

GIL GUTKNECHT, Minnesota ELEANOR HOLMES NORTON, District of

MARK E. SOUDER, Indiana Columbia

WILLIAM J. MARTINI, New Jersey JAMES P. MORAN, Virginia

JOE SCARBOROUGH, Florida GENE GREEN, Texas

JOHN B. SHADEGG, Arizona CARRIE P. MEEK, Florida

MICHAEL PATRICK FLANAGAN, Illinois FRANK MASCARA, Pennsylvania

CHARLES F. BASS, New Hampshire CHAKA FATTAH, Pennsylvania

STEVEN C. LaTOURETTE, Ohio —

MARSHALL “MARK” SANFORD, South BERNARD SANDERS, Vermont
Carolina (Independent)

ROBERT L. EHRLICH, Jr., Maryland
JAMES L. CLARKE, Staff Director
KEVIN SABO, General Counsel
dJupirH McCoy, Chief Clerk
Bup Myers, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman
MICHAEL PATRICK FLANAGAN, Illinois | CAROLYN B. MALONEY, New York

PETER BLUTE, Massachusetts MAJOR R. OWENS, New York
THOMAS M. DAVIS, Virginia FRANK MASCARA, Pennsylvania

JON D. FOX, Pennsylvania ROBERT E. WISE, JR., West Virginia
RANDY TATE, Washington JOHN M. SPRATT, Jr., South Carolina
JOE SCARBOROUGH, Florida PAUL E. KANJORSKI, Pennsylvania

CHARLES F. BASS, New Hampshire

Ex OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois
J. RUSSELL GEORGE, Staff Director
ANNA GowaNs YOUNG, Professional Staff Member
ANDREW G. RICHARDSON, Clerk
Davip McMILLEN, Minority Professional Staff
MATTHEW PINKUS, Minority Professional Staff

di


68

8 a GPRA pilot, the FS had four simple objectives for the FY 1994 GPRA per-
nance plan:

¢ Establish a process that would be institutionalized;

« Establish a basic format;

* Get people thinking about how well current indicators/measures serve to
really tell us something; and

‘tart people thinking about clearly stated goals rather than assuming that
‘er ne” knows what they are.

‘he FY 1994 Performance Plan was successful with regard to the first three objec-
+s. A process was established which fit well with how the FS does business, re-
red staffs to develop their own goals and indicators, required management over-
at, and used resources efficiently. A basic format was also established. In addi-
1, many FS staffs were able to identify a need for new and better indicators. This
vrmation, coupled with the ARR effort, clearly indicated a need for the agency
ook closely at the measures it was using. Currently, FS has over 20 efforts ongo-
to improve performance measurement. These range from development of inter-
ional indicators of forest sustainability to indicators measuring the smallest com-
ents of recreation activities. The last objective was the weak tink in the FY 1994
formance Plan. Most goals were timeless and non-quantified rather than annual
| quantified; they were usually program, objective statements from the Budget
olanatory Notes rather than specific quantified annual goals.

1995 Performance Plan

sased on the FY 1994 experience, objectives for the FY 1995 Performance Plan
tered on goals development and measures. It was recognized that while based
strategic goals, annual goals could and should change based on a number of fac-
3 such as program shifts, budget emphases, completed tasks, the development of
icators by the ARR and Corporate Performance Task Groups, among others. As
2sult, the objectives of the 1995 Performance Plan were:

’Focus on developing annual performance goals rather than timeless pro-
gram objectives; and

¢ Implement the use of ARR measures as indicators wherever possible.
uccess in accomplishing these two objectives in the FY 1995 Performance Plan
3 mixed. Some goals were annual and could be clearly tied to the strategic goals.
1ers were still timeless program objectives. Some of the ARR measures were used
indicators, while some were not. The critique of the FY 1995 Performance Plan
) identified a lack of management involvement in goal development. Goal devel-
aent was generally placed in the hands of staff, who might or might not have
lear understanding of the goals the manager wanted to achieve, Given the itera-
» approach to developing these Plans that the agency is taking, the progress
de in the FY 1995 Performance Plan was deemed to be adequate.

1996 Performance Plan

1s a result of the critique of the FY 1995 Plan and of the fact that the FY 1996
n was the first to be formulated at close to the appropriate time in the budget
cess, a different approach was undertaken to ensure manager involvement in
1 development. For FY 1996, for the first time, FS’ management team used the
1995 Draft RPA Program strategic goals and actions under each strategic goal
jevelop a set of budget priorities for FY 1996. Based on these budget priorities,
at of meaningful GPRA goals were then developed. This resulted in a clear hier-
hy in which the agency strategic goals were tiered down through strategic ac-
1s, FY 1996 budget priorities and finally, FY 1996 GPRA goals. ;
'o better involve management in FY 1996 GPRA goals development and to begin
titutionalizing GPRA principles, each Deputy Area had the Staff Directors, as a
up, develop the GPRA goals for that Deputy Area using the strategic goals and
ions and budget priorities as a starting point. The Staff Directors then developed
‘ropriate indicators to measure achievements related to each GPRA goal. Indica-
‘trends were shown where available. In some cases, the indicators were new (ie.,
dlife) and no trend lines could be displayed. Further refinement of the indicators
each program will be a function of the performance measures efforts currently
jerway such as ARR, Corporate Performance Measures Task Force, Chief Finan-
| Officer Report, etc. ' ;

‘his approach was relatively successful in getting management involvement and
amitment to the GPRA goals, although some Staff Directors felt that GPRA was
reasing their workload rather than reducing it by replacing or eliminating other
uirements. The manager time required to develop the annual goals was approxi-
tely 6 - 12 hours each. Several managers invested significantly greater time
ile serving as coordinators for their Deputy Areas.


79

supported Coast Guard efforts, including experimentation and risk-taking through-
out the development of the pilot project. : —
Top management involvement was critical to the success of the project. Their in-
volvement has been a key ingredient in identifying program outcomes which cut
across organizational lines, and in sustaining commitment as the organization be-
gins to shed its “traditional” ways of doing business. The Coast Guard's top man-
agers recognized the intrinsic value of good planning and evaluation before begin-
ning the process, and they insisted on personally directing the planning efforts of

subordinate program managers.

GupsTION, ‘ARE BOTH CAREER STAFF AND POLITICAL APPOINTEES IN-
VOLVED IN THE GPRA IMPLEMENTATION EFFORTS? PLEASE DESCRIBE
HOW IT HAS AFFECTED THE PROJECT.

Answer. Coast Guard senior management support and involvement was a key ele-
ment of the pilot project’s success. Senior manager involvement conveyed a high
level of priority for the effort, ensured support from all levels of management, and
also provided the strategic thinking required to set the foals and establish the
framework for meeting ernment Performance and Results Act (GPRA) require-
ments.

Both career staff and political appointees have been involved in the GPRA effort
in the Department of Transportation (DOT). The four pilot Prolects all benefited
greatly from the strong support and commitment of the DOT Assistant Secretary
for Budget and Programs, whose personal involvement conveyed strong support for
the goals of the GPRA and the importance of senior management involvement in
the process. DOT Senior Executives provided continuous assistance through routine
interactive sessions for the pilot-project personnel and the development of a GPRA
measurement training program.

QUESTION. HOW, T ALL, DO TOP POLITICAL APPOINTEES AND CA-
REER MANAGERS SHOW THEIR SUPPORT FOR GPRA, AND HOW IS THAT
SUPPORT COMMUNICATED THROUGHOUT THE AGENCY?

Answer. Top political appointees in the Department of Transportation (DOT) and
career managers in DOT and the Coast Guard demonstrate their support for the
Government Performance and Results Act (GPRA) through personal involvement in
strategic planning and in sponsoring and participating in planning conferences,
briefings, interactive sessions to share lessons learned, etc.

For example, the Department of Transportation Assistant Secretary for Budget
and Programs, along with one of her senior career managers, participated at a meet-
ing of the Coast Guard top leadership (the Executive Steering Committee, consisting
of flag officers and 2 Senior Executive Service officers) to outline the GPRA and its
importance.

JUESTION. DESCRIBE HOW YOUR PILOT IS ASSESSING INTERNAL CON-
STRAINTS ON MANAGERS’ FLEXIBILITY IN ACHIEVING DESIRED OUT-
COMES? WHAT KIND OF CONSTRAINTS, IF ANY, HAVE BEEN REMOVED
AND WITH WHAT CONSEQUENCES?

‘Answer. In the early stages of the pilot project, the Coast Guard recognized the
need and opportunity to give managers the flexibility to achieve outcome-oriented
program goals. The Coast Guard looked first at internal rules and performance
standards, and found that over 80 percent of port safety and environmental protec-
tion mission performance standards could be relaxed or rescinded to give field com-
manders greater discretion in managing local risk. The Coast Guard retained only
those standards required by law, treaty, or regulation, or those judged essential for
national consistency. As a result, field commanders at Marine Safety Offices are
each developing their own mix of activities from their “toolbag,” and they have been
able to better target their activities such as harbor patrols, facility inspections or
cargo transfer monitoring based on local circumstances. This flexibility to redirect
activities and reinvest resources has been a major element in a new management
approach, and undoubtedly contributed greatly to the success in achieving the ambi-
tious goals set forth in our fiscal year 1994 Performance Plan.

QUESTION. HOW HAS IMPLEMENTING GPRA CHANGED THE ACTIVITIES
THAT STAFF FOCUS ON, ON A DAY-TO-DAY BASIS? IF IT HAS CHANGED
THINGS, IN WHAT WAYS HAVE THINGS CHANGED?

Answer. The Coast Guard has distilled six key areas of business focus to guide
the efforts and priorities of staff at all levels of the pilot organization. These areas
of business focus—such as fishing vessel safety, port state control, and human fac-
tors—reflect specific opportunities to refocus and bring activities more in line with
today’s maritime risks. As a result, the Coast Guard has begun testing all of the
Marine Safety, Security, and Environmental Protection program activities against
its goals and business focus. This has helped redirect priorities for research and de-
velopment projects as well as standards and regulatory projects, and helped lead to



15

If you go into a private sector company, it does not have a group
that actually run the company, and then a set of management ex-
perts on the side. The management of the company is the compa-
ny’s business. What we have to understand is, the management of
the government is the government’s business. Therefore, our goal
is quite contrary to creating a separate office of management. Our
goal is to make sure that every policy official, every leader of an
agency, every program manager is involved and concerned with
how the agency functions, how the programs function; in effect,
what the government gets for the resources that are deployed in
the charge of that agency.

Mr. Horn. I take it I should mark you down as undecided on this
answer.

Mr. KosKINEN. As the guy said, how do I really feel about this?

Mr. Horn. That was the answer the Republican Whip gave me
1 day, as he was checking on my vote. I had a little bit of passion,
just as you had, on the subject. Basically, I’ve always taken your
position, saying that, with the budget power, executives are likely
to pay more attention to you. I find my colleagues in public admin-
istration don’t think much of my opinion on that subject.

They see management being given short shrift, that the approach
is still the basic, “How much do you get and what do you get to
do with it;” and that management doesn’t really count. Now, you
sit through those budget examinations, I take it, or do you?

Mr. KOSKINEN. Yes, I do.

Mr. Horn. Or is it one of your deputies that sits through?

Mr. KoSKINEN. No, I actually sit through them.

Mr. Horn. OK. To what degree are management decisions raised
in the budget examination process that goes on annually?

Mr. KOSKINEN. Well, they have been raised. Last fall, we spent
a substantial amount of time examining every agency in terms of
its streamlining plans, in terms of its financial management, in
terms of where it is with its high risk. But actually, the magic of
GPRA, and the thing that we should not lose sight of is the way
we will have turned the budget process into a more management
focused exercise is if we begin to hold managers and programs ac-
countable for the results they achieve.

If, in a budget examination, we can move away from the input
question—how many resources can I get for this program—into the
outcome question, which is, what am I getting for the money we’re
spending—what are the results of this program—we will drive
agency managers and program managers to look at how those pro-
grams operate to achieve results, rather than simply the expendi-
ture of the resources that they have devoted to them.

So you and I may be a small cadre on this side, but I would sub-
mit that any experienced manager would understand that to have
management sidelined is, in fact, to disenfranchise it.

Mr. Horn. I now yield 5 minutes to the gentleman from Penn-
sylvania, Mr. Mascara.

Mr. Mascara. Thank you, Mr. Chairman. In your testimony, I
noted, on page 2, that other countries with more experience in
GPRA-style reforms indicated it can take up to 5 years or more be-
fore becoming the normal routine. And on page 5 of the testimonv


74

Department of Transportation will not be constrained by the past,
nor will we be deterred by the future. Our success within the de-
partment can be measured by several things.

First of all, the involvement and support of Secretary Pena and
the modo administrators; the commitment of senior managers to
give all levels of our department permission to excel; and finally,
an early head start, followed by just a lot of hard work by the folks
at the Department of Transportation. Thank you, sir.

[The prepared statement of Admiral Henn follows:]

PREPARED STATEMENT OF ARTHUR E. HENN, VICE ADMIRAL, U.S. DEPARTMENT OF
TRANSPORTATION, U.S. Coast GUARD

Good afternoon, Mr. Chairman, I appreciate the opportunity to share with the
subcommittee our experience as a pilot project for performance goals under the Gov-
ernment Performance and Results Act. As you know, the Coast Guard is participat-
ing as one of four pilots in the Department of Transportation, along with the Na-
tional Highway Traffic Safety Administration, and major programs within the Fed-
eral Highway Administration and the Federal Aviation Administration. Each project
has a different story to tell but at the same time, under Secretary Pena’s leadership,
there has been a good deal of synergy among these pilots as we collectively worked
through some of the issues and began preparing our plans. I know we learned a
good deal fom the other pilots and I expect they probably learned some things from
us as well.

This morning I would like to describe for you the context of our pilot project, our
planning approach, our program goals and major strategies for achieving those
goals, the results we achieved in 1994, and some of the lessons we learned in the
process. The statute has proven to be clear and workable. The costs have been quite
modest and the utility in managing programs has been substantial. There are issues
that remain to be resolved but none appear insurmountable. At this point, we would
continue our course with or without a statutory requirement to do so.

Coast GUARD'S MARINE SAFETY, SECURITY AND ENVIRONMENTAL PROTECTION
PROGRAMS

The Coast Guard's pilot project spans the full range of our Marine Safety, Secu-
rity, and Environmental Protection programs. The mission of these prograims is to
protect the public, the environment, and U.S. economic interests by preventing and
mitigating marine incidents, Our principal responsibilities include:

« establishing federal policies and standards for the design, construction
equipment, manning, operations and maintenance of commercial vessels, an
for the qualifications of their crew

« developing standards for the handling of hazardous materials on board ves-
sels and marine facilities

© negotiating international maritime safety and environmental protection
standards on behalf of the U.S.

© assuring U.S. vessel compliance with domestic and international standards
(our flag-state responsibilities) and compliance by all vessels and regulated fa-
cilities in U.S. ports and waters (our port-state responsibilities), through a com-
bination of education, monitoring, and enforcement

* controlling vessel and facility operations to correct or reduce significant
safety, security, or environmental threats

* coordinating national protocols for preparedness planning, training and ex-
ercising

« directing response activities to mitigate the effects of maritime casualties
and pollution

Historically, our Marine Safety Security and Environmental Protection program
operations hye been directed through nationwide performance standards for hun-
dreds of specific activities in prevention and response. National goals expressed by
Congress and the Administration were translated by the Coast Guard into fairly de-
tailed program designs. Funding and staffing levels were tied to the scope and fre-
quency of specific program elements, such as inspection of waterfront facilities or
harbor patrols.

‘Over the years, a number of studies have been used to optimize these activity lev-
els on a nation wide basis. However, while we gained some incremental improve-
ments in our programs, the changing environment quickly out paced these broad



32

how, and when. The absence of training and capacity-building strategies in many
agencies is a source of some concern because of the size and scope of the training
and capacity-building effort that appear needed.

CREATIVE INCENTIVES TO IMPLEMENT GPRA AND ENCOURAGE A FOCUS ON RESULTS

The federal government presently has a mixed system of incentives that does not
necessarily encourage agencies to set ambitious, outcome-oriented goals and meas-
ure and report performance accurately. In public organizations, the use of perform-
ance measurements and reporting can result in sharpened public criticism, over-em-

hhasis on inputs and processes, and reductions in dollar and staffing authorizations.

This too often leads federal mangers to focus on ensuring that their programs rig-
idly adhere to prescribed, processes, at the expense of focusing on outcomes. How-
ever, Congress recognized in passing GPRA that managerial flexibility and author-
ity are important to identifying innovative ways to "do more with less’, To bettor
achieve congressional intent, the federal government will need to create internal
and external incentives that encourage and reinforce a focus on outcomes.

Officials in a number of federal agencies said that one of the single most impor-
tant incentives to changing behavior in their agencies so that managers and staff
focus more on achieving desired outcomes will be the degree to which top leadership
actively demonstrates its support for such change. Our work has shown that when
top officials publicly focus on strategic goals, demand outcome-oriented information,
and make decisions guided by that information, this sends a clear message through-
out an agency that it is not doing business as usual. As I will discuss in a moment,
Congress has an equally important role in instilling a focus on outcomes in federal
agencies.

‘In our statement before this Subcommittee last week, we noted that our work has
shown that there is as yet no consensus on the best approach for holding individuals
accountable for results. While a focus on outcomes is critical for assessing the over-
all worth of an effort, line managers and staff understandably may be reluctant to
commit to achieving outcomes that they do not totally contro! for fear that negative
performance information will be used against them. Our work has shown that lead-
ing state and foreign governments—that in some cases have been seeking to make
their governments more outcome-focused for a decade or more—continue to grapple
with these same issues.

GPRA's intent to focus management and accountability on outcomes, coupled with
the significant downsizing taking place across the federal government, may require
a fundamental rethinking of how the public service system should operate, To help
address this challenge, we recently convened a 2-day symposium of 92 officials lead-
ing organizations in the private sector and from federal, state, local, and foreign

overnments. The connection between effectively managing staff and implementing

PRA was noted at the symposium. At the request of Congress, we are using the
results of that symposium to develop a framework of key principles that could be
considered as a starting point for discussing changes to the public service.

INTEGRATING GPRA INTO DAILY OPERATIONS

Our work has shown that if Planning and erformance measurement are going
to provide information that is both useful and used, they must be integrated with
dai 4 operations in the agencies. In our statement before this Subcommittee last,
week, we noted that even the best performance information is of limited value if
it is not used to identify performance gaps, set improvement targets, and improve
results. Our work on leading organizations in the private sector and in state and
foreign governments has shown that these organizations recognize that it is not
enough just to measure outcomes. Such organizations recognize that they also need
to continuously assess their core processes that contribute to achieving their desired
outcomes.

Our work reviewing goal-setting and performance measurement efforts in the fed-
gral government suggests that most federal agencies still have a long way to go be-
fore they will be able to identify and use outcome information as intended by GPRA.
For example, officials at federal research agencies, including the Department of En-
ergy and NASA, said that it is difficult to develop meaningful measures for basic
research programs whose outcomes may not be achieved for more than 20 years. Of-
ficials at many agencies believe it will take several years of experience in developing
performance measures and collecting and using performance information before the
agencies are comfortable that their measures are useful for assessing the progress
made toward achieving their long-term outcomes.

Tn addition. the exneriences of FEMA vrovide an examole of how agencies will


39

somehow we're not being insensitive to those people who made
commitments.

And I don’t want to sit up here and preach about the employees.
: think all the employees in this Government know what I stand
‘or. I stand for fairness. So it concerns me that we're just diving
n and everyone's trying to make a point—‘I’'ve saved this, I’m
going to save that.” And I just know I don’t think we can measure
what we want to measure, given the circumstances that exist cur-
sently on Capitol Hill. Thank you, Mr. Chairman.

Mr. Horn. I thank you. I’ve got two concluding questions. We
aave the second stage pilot projects. I take it not too many of those
were approved. Did you have a chance to review those? And what’s
your feeling, should they have been approved or shouldn’t they?

Mr. FINCH. We've just begun to look at that, sir, and basically,
we can’t add much more right now than what Mr. Koskinen men-
sioned to you both in his prepared statement and in his responses
and his dialog with you in the Q & As. We are continuing to look
at that, and we will be glad to share with you our results as we
get further into it.

Mr. Horn. Very good. I’ve got the June 26, 1995 issue of Federal
Computer Week. There’s an interesting article by Bureaucratis, a
former Federal employee. It’s a very interesting article. The head-
line reads “GAO Report on Federal Improvement Misses Mark.” I'll
just excerpt a few things, then we'll have a dialog on it.

He notes that there’s a long series of GAO reports, and he quotes
the one recently given to our particular full committee. He talks
about developing more precise program and business goals, improv-
ing operational effectiveness, strengthening financial management,
building the capacity of the Federal workforce to more effectively
and efficiently managing growth.

Tl get down to the nub of it. Since we’ve passed a number of
laws, and we all know them, we’re talking about the Government.
Performance and Results Act, the Chief Financial Officer’s Act and
we've held some annual hearings in previous Congresses on that,
the Government Management Reform Act, and the reauthorization
of the Paperwork Reduction Act.

This point is made by the author, a retired Federal employee
who is a regular contributor to Federal Computer Week. He says,
“When will Congress and GAO wake up to the fact that you can’t
legislate good management? Good management exists in an envi-
ronment where managers have an incentive to manage well. For
example, nice bonuses and good pay if you succeed, or look for an-
other job if you fail.”

With respect to GPRA, GAO concedes that most agencies and de-
partments have difficulty “setting goals and using performance in-
formation to make substantial improvement in agencies’ effective-
ness to g ide resource allocation decision.” The author then says,
‘No kidding. Who said it was going to be easy? However, GAO isn’t
daunted by this fact. Now GAO is going to provide agencies with
a methodology to help them with GPRA.”

And then it goes into where GAO is right on a number of things,
such as efficient, modern operation; and what it’s getting at, inept
government. Then he raises the question, Why can’t the Federal

overnment match the accomplishments that have occurred in the


64

owledge is—the real knowledge—which is the people that are
cng and learning.

And they can enhance that by sharing that experience with one
other.

Mr. Horn. Well, I appreciate that. I’m going to have to close out
8 part of the hearing. We have a vote on the floor, and we have
2 panel to go, of witnesses that are down there at the grass
its, living with how you get a Government Performance and Re-
‘ts Act implemented. Thank you again, all of you, and you also,
. Wye. We know you had a lot of input into this statement.
anks for coming.

We'll swear in panel four before I leave for the floor. Mr. Wil-
ms, Admiral Henn, Mr. Thompson and Colonel Ward please
ne forward and we'll swear you in.

Witnesses sworn.]

Mr. HORN. We will now go into a recess for 15 minutes, and
ven I come back we'll hear Mr. Williams’ opening statement.
Recess.]

Mr. Horn. The hearing will resume, as of 5:05 p.m., and we will
wt on panel four with Anthony Williams, the Chief Financial Of-
ar of the Department of Agriculture. Welcome.

ATEMENTS OF ANTHONY A. WILLIAMS, CHIEF FINANCIAL
)FFICER, U.S. DEPARTMENT OF AGRICULTURE; VICE ADMI-
tAL ARTHUR E. HENN, U.S. DEPARTMENT OF TRANSPOR-
(ATION, U.S. COAST GUARD; JOSEPH THOMPSON, DIRECTOR,
YEW YORK REGIONAL OFFICE, U.S. DEPARTMENT OF VETER-
\NS AFFAIRS; AND COL, F, EDWARD WARD, JR., DEPUTY
SOMPTROLLER, HEADQUARTERS AIR COMBAT COMMAND,
J.S. AIR FORCE

Mr. WILLIAMS. Yes, Mr. Chairman, thank you for the opportunity
speak to you today about USDA’s implementation of the Govern-
mt Performance and Results Act. I have with me Melinda Jones,
.o is our staff analyst in working with the agencies on this im-
rtant endeavor. I would like to enter, for the record, my formal
itement, and just make a few brief comments.

Mr. Horn. That’s automatic with all statements, and then a 5-
nute summary, if you could.

Mr. WILLIAMS. Thank you, sir.

Mr. Horn. The light system will help guide you. The last minute
ellow.

Mtr. WILLIAMs. OK. As I said before, responsibility for coordinat-
: GPRA lies with the CFO in USDA. We have some eight agen-
s that are pilots under the act. We have the Forest Service,
tich I’m going to speak on in just a second; the Agriculture Quar-
tine Inspection Program of the Animal and Plant Health Inspec-
n Service, APHIS; the Scales and Weighing Program of the
ain Inspection, Packers and Stockyards Administration.

We have the former Soil Conservation Service, now Natural Re-
irces Conservation Service, and in that subset, the Operations
rvey, Water Supply Forecasting Program and Conservation Op-
itions. We've got, interestingly, the Office of Civil Rights En-
‘cements; the entire Office of Communications; and the former


35

ave success stories, and use them as the trainers? I mean, they've
deen through it. We know it’s accomplished something; or at least
shey’re far enough along and it looks like they’re on the right track.
Has OPM done that, to your knowledge? .

Has OMB brought in those people? That’s the kind of thing a
Brookings would do or other groups that bring people together to
solve a problem. Does the Federal Government do it?

Mr. FINCH. The Federal Government does it, sir, probably not to
she extent that it should do it. To toot GAO’s horn a bit if I might,
we just did such a thing. We hosted a symposium on building the
workforce of the future. And in that symposium, we had leading or-
zanizations both from States, we had foreign governments, and we
aad private sector organizations—some of the leading organizations
n the private sector.

And we talked about those very kind of issues, such as
sightsizing the Federal workforce. I mean, what is the right size?
“ow do you go about establishing workforce capacity?

Mr. Horn. Sure.

Mr. Fincu. Decentralizing, streamlining issues, ensuring ac-
countability, and the point that you’re getting at—creating high
»erformance workplaces. We have provided support to OPM in
serms of developing some of their training.

Mr. Horn. At this point, without objection, the executive sum-
nary of the first studies you mentioned and the complete work will
ve included in the record at this point.

{NoTe.—Due to high printing costs, the information referred to
above may be found in subcommittee files.]

Mr. FINCH. Good, good. And we continue to provide support to
DPM’s training. Chris has actively participated in those sessions,
ind I'll let him discuss whether or not those sessions included some
of the other players that you're talking about.

Mr. Horn. I agree with you. I’ve been through this in several in-
sarnations, and it seems to me what we learn is very important so
we don’t have others replicate the mistakes we also make. Informa-
‘ion technology and how you relate that is, of course, key. But first,
vou’ve got to think through the basic goals; what are the best ways
‘© measure them; then what kind of study apparatus are you going
‘0 have to come up with that measurement.

I think that one thing, above all, that’s important, is to overcome
he climate of fear that often gets into an agency when a lot of
change is underway. How do we work with those problems to get
smployees to contribute positively or negatively, for that matter—
‘hhat’s often a help, too, if you can deal with it. But not just be im-
nobilized by constantly worrying, my heavens, are they going to
ake 10,000 out of this agency of 50,000, or what’s their hidden mo-
‘ive, and all the rest you go through.

It seems to me we have a lot of work to do in that area if we're
joing to be successful. That’s why I’m fishing for getting people
hat have lived through this, seen where they've made mistakes—
ve all do, and could we avoid some of those or at least minimize

em.

Mr. FINCH. I think you're right on target, Mr. Chairman.


67

integrate the GPRA requirements into existing management processes and require-
ments.

‘The FS was in a somewhat unique position with the regard to GPRA. Under the
Resources Planning Act (RPA), the agency has been preparing strategic plans every
5 years for the past 20 years. The 1995 RPA Program is currently in Grakt form and
the four strategic goals identified in that draft have been the basis for the FY 1996
and 1997 agency budget requests and the FY 1995 and 1996 GPRA Performance
Plans. Thus, the 1995 Draft RPA Program has been modified to meet both the re-
quirements of the RPA and the GPRA.

The RPA also requires the Preparation of an Annual Report of the Forest Service.
‘The report provides detailed narrative and tables deseribing agency accomplish-
ments during the fiscal year, For FY 1994, FS developed one document to meet the
requirements for the Chief Financial Officer’s Report required by the CFO Act and
for the FY 1994 GPRA Performance Plan.

The FS has also been working for the past 6 years on developing the All Re-
sources Reporting (ARR) system, an integrated financial and accomplishment re-
porting system w ich is being implemented in FY 1995. It is designed to show the
relationship between expenditures associated with management activities on a Na-
tional Forest, revenues and actual accomplishments. ARR measures include both ac-
complishments which are generally output oriented and results which are outcome
oriented. This differs from the past focus on management activity and input ori-
ented measures. Outcome measures in ARR generally focus on resource condition,
for example, Watershed Condition or species Delisted or Reclassified. However,
much work remains to be done in relation to outcome measures.

A third FS effort is to develop a set of “corporate performance measures” to en-
hance the implementation of GPRA. The intent is to develop a set of 8 to 10 “cor-
porate measures” that would measure how well the agency is doing overall, not onl
on a program by program basis. These measures will be outcome oriented. This ef-
fort envisions a hierarchy of goals and associated measures that tier down from the
FS mission and strategic goals to pro; and sub-program levels. Measurement in-
dicators would be associated with each goal and program and sub-program level per-
formance indicators would tier up to corporate measures. FS’ leadership intends to
use these corporate measures in evaluating individual performance of the National
Leadership Team by incorporating them into the Senior Executive Service perform-
ance appraisal standards.

Corporate Performance Measure Development is being the coordinated with a
similar effort at the Bureau of Land Management (BLM). The FS and BLM recently
sponsored a “round table” of resource management ncies to share information
and experiences with regard to strategic Planning and performance measurement.
The group has decided to meet on a trial basis for a period of 6 months with the
intent of identifying areas where they might share common interests, including po-
tentially common performance measurements.

FS’ leadership is meeting today and tomorrow (June 27 - 28, 1995) to identify
agency priorities over the next few years. Key input being used to frame the discus-
sion includes the RPA strategic goals, the initial results of the Corporate Perform-
ance effort, GPRA annual goals, and changing budget emphases. Results of this
meeting could include decisions to reduce or even eliminate some programs.

These major efforts are being further supplemented by over 20 program level per-
formance measurement efforts. Examples include the development of “meanit
measures for recreation,” an effort to develop activity-based costing for recreation;
criteria and indicators for sustainable development both nationally and internation-
ally; and performance indicators for cooperative forestry activities. The one area in
which the FS is encountering the most difficulty in measuring. outcomes is “Re-
search.” inputs such as scientist time and outputs such as publications are easil
identified, but capturing the outcome of research is proving to be difficult. The FS
is working closely with other scientific organizations such as the National Institutes
of Health on this issue. It may be that research will have to be measured through
input/output measures and some subjective assessment process.

erformance measurement within the FS is done through the Management At-
tainment Report (MAR). MAR includes all measures to be reported in a given year.
In FY 1995, the ARR measures are included for the first time. Accomplishments are

aggregated from the field level where they are reported into the system. Cur-
rently, Senior Executive Service employee ratings are based in part on accomplish-
ments reported through the MAR system and accomplishments are used to

help evaluate program accomplishments.

FS GPRA Performance Plans
FY 1994 Performance Plan


45

And I commend the chair as he conducts the hearings and study
necessary to actually attack some of the more difficult layers of the
Federal Government that tend to spring up, and that tend to be
immune from the kind of across the board quick cut that we’re
doing during this particular period.

I see an awful lot that’s happening in Congress and the executive
branch that is analogous to mowing down the weeds of hierarchy,
and there’s very little pulling out of weeds by the roots. And I think
that takes a great deal of deliberation and care. I offer in my testi-
mony four brief ideas dealing with efforts to eliminate the increas-
ing ranks of alter ego deputies within departments; efforts to re-
duce the numbers of one to one spans of control within depart-
ments.

In other words, relationships between assistant secretaries and
principal deputy’ assistant secretaries, which have accreted over the
years remarkably. So we see Federal departments now composed of
one to one to one to one to one to one spans of control, all the way
down through headquarters. And then we move out to the regions,
and we see a repeat of one to one spans.

And it’s only when we get to the field office that we actually see
rather ordinary spans of control. I think we have to struggle at how
to get at those one to one spans. I talk a little bit in the testimony
about height limits on government, and I really do encourage the
chair and this Congress to struggle with the current regional office
structure of the Federal Government. It is an anachronism.

I think the burden of proof on those who defend the regional of-
fice structure is to tell us why we still need such a variegated and
detailed office structure in an era where it is just incredibly expen-
sive to maintain, and likely, inefficient and in the way of the fine
public servants who do so clearly wish to deliver services effectively
at the bottom of the Federal hierarchy.

Tll leave the rest of this statement for the record, and entertain
questions as you wish, on this thickening phenomenon.

[The prepared statement of Mr. Light follows:]

PREPARED STATEMENT OF PAUL C. LiGHT, DIRECTOR PUBLIC POLICY PROGRAM, THE
PEW CHaRITABLE TRUSTS

I am pleased to appear before the House Government Reform and Oversight Sub-
committee today to discuss the Government Results and Performance Act. My com-
ments today flow from my ongoing research into fundamental issues of how to as-
sure greater accountability and improved performance in government, and do not
represent the views of The Pew Charitable Trusts.

t me begin by endorsing the general thrust of the Government Results and Per-
formance Act. I believe the federal government must move toward a performance-
based accountability system—that is, away from the command-and-control approach
currently used and toward an incentives-based approach implied in most discussions
of outcome- or performance-based accountability.

Basically, we have ices in designing accountability systems for organiza-
tions. The first is the traditional compliance system, with its heavy emphasis on
rules and hierarchy. Accountability resides in carefully designed jobs, clear chai
of command, and absolute specificity about what is to be done and who is to do it.
‘The costs of such a system are obvious: huge investments in “control” personnel,
endless review of even the simplest decision, and excessive layers of management.
Fear is the key driver of organizational improvement. As one Inspector General once
remarked to me, accountability exists in creating the “visible odium of deterrence.”

‘The second choice is what I have called a capacity system, with its heavy invest-
ments in work force training, new technologies, and proper motivation. Accountabil-
ity resides in giving employees the knowledge and tools to do their jobs, as well as
the pay needed to reward the organization's employees for a job well done. Trust



87

to devolve this responsibility on any large scale to states or local governments, al-
though VA has for many years offered grant programs to states for veterans’ ceme-
teries and veterans’ homes. Although veterans’ programs, by and large, cannot be
terminated or devolved, significant improvements can, and should, be made. VA is
proposing twelve specific initiatives. These include one program elimination and sig-
nificant privatizations, consolidations, and reengineerings. Even in a period of reas-
sessment of the proper role of the Federal government, the American public's com-
mitment to veterans and veterans’ programs remains very strong. VA has searched
for ways to improve service, maintain high quality of care, and become more effi-
cient. The savings identified are an important measure of VA’s resolve and may be
reinvested to improve veterans’ health care and benefits.

The initiatives of the second phase of Reinventing Government impact programs
administered by all of VBA’s regional offices in the areas of Insurance and Loan
Guaranty; These will be incorporated into initiatives already underway in the New
York Regional Office. When the reinvention initiatives are implemented, they will
enable us to provide better service to our customers and improve efficiency of oper-
ations in those programs we administer.

2. How many layers did the office have before the restructuring? How many did

it end up with? How many people did a manager supervise before the restructuring,
and how many did a team leader supervise afterwards?
ANSWER: There were seven operating divisions with 47 supervisors in the Re-
gional Office in 1901, Today there are four operating divisions, 12 supervisors and
16 team coaches. Bach operating division has lost at least one layer of management.
The supervisory ration in 1991 was 1:8. Today, counting each coach as a supervisor,
the ratio is 1:13.5,

3. How did the office calculate the unit cost of processing? What sort of system
is in place to accumulate the data required? By how much did unit cost decline as
a result of the changes put in place?

ANSWER: In broad terms, we divided the staff hours expended into costs, which
included salaries, equipment, rent, administrative overhead, etc., to determine a
“standard hour.” We multiply this standard hour against the number of hours it
takes to do a particular “unit” (claim) to determine the unit cost. The number of
hours required to process a unit is established by VBA’s work measurement system
and is based on national work sampling studies,

‘The experiences of the pilots are providing information that will be used in de-
signing a standard for all VBA programs to use in developing a unit cost. VBA does
not have a system in place to track the new performance measures (customer satis-
faction, employee development, and unit cost} across all five VBA programs, The de-
velopment of an automated system for accumulating unit cost data is part of VBA’s
GP! implementation plan. It is still too early in the use of unit cost to accurately
determine a decline in that cost.

4, You say that the improvements being made were done without the benefits of
modern technological tools. Does this mean you use a manual system to accumulate
costs to calculate unit gost per program?

ANSWER: Because the New York Regional Office had been scheduled to relocate
for some time, the Stage 1 Modernization technology available to other Regional Of-
fices was not installed until the move was actually completed, on June 19, 1995. As
a result, all of the changes brought about in the New York Regional Office used ex-
isting technology for the delivery of benefits. Regarding the cost accumulation, we
do have to gather data from a variety of systems and manually calculate our unit
costs.

5. You estimate that, as a result of adopting a unit cost approach, the office will
be able to save $14 million over a ten-year period. How exactly do you think that
will be accomplished?

ANSWER: Unit costs forced us to focus on expenses we normally wouldn't con-
sider. For example, our rent and phone bills are paid directly by our Headquarters
office, We typically do not. see the bills. As we began to add these charges into our
unit cost calculations, we discovered opportunities for saving money. Regarding rent,
we were able to demonstrate to GSA that the amount of rent being charged was
excessive given the state of the commercial real estate market in New York City.
GSA ay and lowered our bill by approximately $1.1 million in FY 1994 and
$780,000 in FY 1995. When we researched phone service for our new location, we
found out that purchasing our own system could be less expensive than leasing the
services from GSA, which is the typical arrangement for regional offices in multi-
tenant Federal Buildings. Based on a competitive bid process, we secured a system
for $1.1 million over the 10 year life cycle. The GSA bid for the same services was
$5.7 million. The difference is what we estimate to have saved. Finally, we made
a complete review of our proposed floor space needs in our new location to try to



8

This is a large and complex task. However, managed as separate
exercises, these varied laws and initiatives lose the synergy and
economy of effort that can result if the undertakings are fitted to-
gether. Even worse, failure to coordinate and integrate these initia-
tives risks undermining their effectiveness and creating confusion,
frustration, and aggravation.

Nether OMB nor the agencies have enough resources to continue
to try to carry out these activities in a non-integrated manner.
Longer term, GPRA should disappear. That may appear to be a
startling thought with which to conclude this statement, in light of
my enthusiasm for GPRA. However, if GPRA works as envisioned,
government managers will absorb it into day-to-day agency admin-
istration and program management.

For this to happen, we must guard against creating a separate
GPRA bureaucracy in each agency that provides the documents
and information required by the statute, in an effort that is di-
vorced from this day-to-day management of the agency. That’s why
I suggest that the true measure of success of GPRA will be the ex-
tent to which the concepts of management and good business prac-
tices set out in this law become the accepted way that the Govern-
ment works, without reference to any particular statutory frame-
work or requirement.

If GPRA carries through on its promise, I am confident it will ul-
timately be viewed as one of the most important pieces of legisla-
tion enacted in this decade, and will change the dialog between the
public, the Congress, and the executive branch about government
programs and their goals, performance and funding. Thank you,
Mr Chairman, I appreciate your allowing me to run over just a lit-
tle bit.

I'll be happy to answer any questions you or the committee may

ave.

[The prepared statement of Mr. Koskinen follows:]

PREPARED STATEMENT OF JOHN KOSKINEN, DEPUTY DIRECTOR FOR MANAGEMENT,
OFFICE OF MANAGEMENT AND BUDGET

Good afternoon, Mr. Chairman. I am very pleased to be here this afternoon to give
the Committee an update on our progress to date in carrying out the Government
Performance and Results Act of 1993 (GPRA).

GPRA seeks to bring about effective and efficient government, a goal that tran-
scends politics or ideology. This is truly a bi-partisan law, with an equal number
of members from both sides of the aisle sharing in the sponsorship of this legislation
during its consideration by the Congress. I would note particularly the leadership
shown by the present Chairman of the full Committee, Mr. Clinger, in supporting
this legislation before the House.

We are nearing the second anniversary of GPRA’s enactment, and about halfway
to that time in 1997 when GPRA comes into effect throughout the Federal Govern-
ment. So this is also a good point for taking stock of what has been done to date,
and what remains to be done in the months ahead.

Let me preface the assessment by stating that, as a government, we are con-
fronted with formidable challenges. This is an era of great fiscal constraint, and
very tight budget resources mean every dollar must count. This is also a time of
‘ow public trust in the government's ability to do things right. To regain the public’s
sonfidence, the government must work better, and be shown as working better.

‘We must, therefore, find ways for not only sustaining the delivery of services to
the public, but improving on that delivery. We must find ways to operate more effec-
tively, produce more efficiently, and be a government that looks to its citizens as
aaving rightful expectations for being treated fairly, responsively, and with good ef-
fect.


THE GOVERNMENT PERFORMANCE AND
RESULTS ACT

TUESDAY, JUNE 27, 1995

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room
2154, Rayburn House Office Building, Hon. Stephen Horn (chair-
man of the subcommittee) presiding.

Present: Representatives Horn, Davis, Maloney, and Mascara.

Staff present: J. Russell George, staff director; Anna Gowans
Young, professional staff member; Andrew G. Richardson, clerk;
Davie icMillen and Matthew Pinkus, minority professional staff;
and Elisabeth Campbell, minority staff assistant.

Mr. Horn. The subcommittee will come to order. This afternoon
is the last of nine hearings we have held on Making Government
Work. In this meeting, we'll learn how agencies are adapting to the
Government Performance and Results Act, or GPRA.

Our weekly “Making Government Work” hearings began 2
months ago with an overview of the administration’s National Per-
formance Review process. From there, we focused on what should
be the role of the Federal executive leadership in strengthening the
management of Cabinet-level departments. The third hearing
turned toward consolidating and restructuring the executive
branch, assessing various ideas for rearranging or reducing several
departments and agencies. We ended the month of May with a look
at consolidating the maze of Federal programs and organizations,
studying a number of the National Performance Review initiatives,
and evaluating whether they were actually working.

In the second half of our series, we turned our attention to the
Federal Government’s field establishment, trying to look at our-
selves as the public see us. We led by examining different kinds of
possible corporate structures for Federal programs, such as electric
power, aviation, and transportation. Next we called in several re-
gional field administrators from around the Federal Government to
understand their role better and to hear their ground-level sugges-
tions. To see firsthand what they were talking about, we followed
up with a field hearing in Chicago on June 19th, where we had
various regional administrators and area administrators testify.
Last week, we focused on quantifying governmental results
through performance management, benchmarking, and reengineer-
ing, as many private corporations and companies have done.

(e})


42

Mr. Horn. If you all will stand and raise your right hands, I'll
swear you in.

[Witnesses sworn.]

Mr. Horn. Let us begin with Professor Light, who is now director
of the public policy program for the PEW Charitable Trust in
Philadelphia, PA. I might say, Professor Light, I’ve had the pleas-
ure of reading your excellent work. I commend it to all intelligent
people in this audience who want to learn about government. It
validates all of my instincts for the last 35 years, and I’m glad to
have some solid scholarship behind my instincts.

I hope, in your testimony, that you will ge into some of your
major concepts. I do intend to put various charts out of your fine
work into the record. Your classic on the growth of titles, in par-
ticular, should be forever implanted in the records of the Congress.

A hundred years from now, I want to see what a similar chart
looks like. Hopefully, it will be simpler.

STATEMENTS OF PAUL C. LIGHT, DIRECTOR, PUBLIC POLICY
PROGRAM, THE PEW CHARITABLE TRUSTS; AND R. SCOTT
FOSLER, PRESIDENT, NATIONAL ACADEMY OF PUBLIC AD-
MINISTRATION, ACCOMPANIED BY CHRIS WYE, DIRECTOR,
PROGRAM ON IMPROVING GOVERNMENT PERFORMANCE,
NATIONAL ACADEMY OF PUBLIC ADMINISTRATION

Mr. Licut. Well, it’s a book that makes a great Christmas gift
as well, I'll tell you. My last book on the Federal Inspectors Gen-
eral came out 2 years ago. And I was in Boston last October for
a speech, and I went into a store titled, Books for a Buck, and I
saw the book on a remainder table—make us an offer. So it’s good
to have that kind of endorsement; I hope people take your advice.

Mr. Horn. My books, too, have been on the remainder table.

Mr. LiGHT. I’m delighted to be here. I worked over here in the
House on Barber Conable’s staff almost 15 years ago, on Social Se-
curity reform, and I had come back here, once I had gone to the
Senate with Senator Glenn, several times for conferences between
Governmental Affairs and Government Ops.

Last time I was here for a conference, it was on the elevation of
the Veterans Administration to Cabinet status, so I have to declare
at the beginning that I’ve played my small share in the thickening
of government.

As VA went up to Cabinet status, we added several new layers
of management. And of course, in elevating VA, we thickened the
Cabinet and added another seat at the Cabinet table for the Presi-
dent. I'll start out ever so briefly today—I have a statement to sub-
mit for the record—talking a bit about accountability, and then I’ll
talk a bit about thickening, which is the process, over the past 50
years, of adding both layers and width to the Federal organiza-
tional hierarchy.

Basically, on the accountability question, we have three options
in designing accountability systems for any organization, whether
public or private. And this goes to some of the questions raised by
the chair in the earlier segments of this hearing. The first is a com-
pliance based accountability in which we write careful rules and
prescribe behavior, and then monitor closely and enforce to a set
of very detailed rules through a rather structured hierarchy.


73

Those are basic questions, obviously. But I would tell you they’re
asic questions, I personally believe, that parts of agencies and in-
eed agencies themselves—many could not answer those basic
uestions today. The biggest problems the Coast Guard faced was
hanging the mind-set oF our middle management. This is at the
irector’s level. Here it was imperative for senior management—the
‘ecretary, the Commandant, the flag officers—to prove to our mid-
le management that they do have permission to excel.

You can take risks. You must get buy-in from the folks within
our organization at all levels. You have to get that buy-in if you’re
oing to be successful. Another problem the Coast Guard had was,
re knew we needed to do something, but we didn’t have the school-
ook solution.

We didn’t have a road map. So we did some backing and filling;
es, we zigged and we zagged. But first, we put together what we
alled—for lack of a better title at that time—a critical issues. And
iat was circa 1991—critical issues for an entire program.

We learned some more, and then we changed the name of critical
isues to our strategic plan. And that was in early 1992. But out
f our problems and out of our difficulties grew our success. For
ien, in 1993, we made some significant breakthroughs, and we
seated what we called our business plan that, in 1994, we pre-
2nted to you as our performance plan.

An important part of the performance plan is performance indi-
ators, tied to base lines, for each of the goals that you set. Let’s
uk about reporting requirements. Reporting requirements to OMB
: to the Congress really are not a problem for an agency, once you
ave your plan in place. If you don’t have a plan, you're lost. But
wr the Coast Guard, our problem was not reporting to you or OMB,
ar problem was in reporting to ourselves.

For one thing, we found that our reports were built around get-
ng information on activities—how many dollars and people we
ere pumping on the input side; and what we were achieving as
as number of inspections, number of boardings, things like
1at—not the effect we were having in maritime safety or environ-
ental protection. So we had to do something to get better infor-
ation.

Some of that resulted in actual data calls from the field that we
ided up doing pencil crunching on. Recommendations to other
yencies I would give: if you haven’t started down the road to meet
1e GPRA section 3 by now, you're in deep trouble; and you're prob-
aly going to have trouble meeting the deadlines. I would say that
ay agency not working on this today should realize they’re in the
Ith hour.

As far as legislative changes, we see no need for legislative
ianges. We believe that the GPRA, as it is written, is a win-win
r the Congress, the administration, and the American people. Our
commendation, if I could, to the subcommittee is, if you could,
vend some time looking at the reports required by Congress of the
sencies. I believe that you'll find these reports are activity ori-
ited; that they are reports that look at the resources applied and
e numbers and amounts of activities done.

They are not oriented to the results or the outcome; indeed, those
ings envisioned by the act. And finally, sir, I would say that the


82

der. We put controls at every level, and that added a lot to the
erhead of what we were doing.
And our quality measures tended to focus on our internal needs,
id productivity was really stifled by this whole process. The jobs
emselves were narrowly focused, and low employee commitment
as assumed. Employee control over work processes and their
1owledge of the outcomes was minimal. Pay was based on senior-
y and job title, and bonuses were based solely on individual per-
rmance, regardless of how well the organization did.
The results were inefficient operations, staffed by unhappy em-
oyees, providing inadequate service to veterans. In March 1992,
2 began to change this dynamic. We started with a blank sheet
paper, and used managers, union officials and rank and file em-
oyees, and basically redesigned the operations from scratch. A
var later, we opened a prototype unit to test this new model. By
igust 1994, three-quarters of the operation had converted to this
sw process.
The differences were striking. The assembly line had been re-
aced by self-managed teams who had end to end ownership of the
‘ocess. Entire organizations were eliminated. We had 12 separate
bs combined down into 3. The number of managers was reduced
, 40 percent. The number of organizations went from seven to
ur. The 20 to 30 step process was reduced to 8.
Performance measures were completely revised. Pay has begun
move toward a skill based and variable pay, or at-risk model.
ost importantly, teams are providing a level of individualized
rvice to veterans that was not possible under the old system. Em-
oyees have greater control and more authority, and find their
bs a lot more satisfying.
Under GPRA, the office was able to develop a comprehensive set
measures, designed to give a balanced picture of performance in
is new environment. We borrowed a term from the Harvard Busi-
28s Review—‘balanced score card.” In addition to VA’s traditional
easures of timeliness and accuracy, we added measures of cus-
mer satisfaction, employee development and unit costs. As a di-
ct result of one of these measures—unit costs—we were able to
roid $14 million in expenses over a 10-year period.
This new balanced measure approach is being adopted by the en-
-e Veterans Benefits Administration, and will be the basis for fu-
re planning processes. We're also restructuring our traditional
easures to look at how we measure timeliness and accuracy from
veteran’s perspective. The development of these measures in New
ork took about a year to do, and a lot remains to be done.
Probably most important is linking these measures and the en-
se process to the pay and rewards and performance evaluations
individuals within the regional office. We’re in fact working with
e Office of Personnel Management now, to become designated as
demonstration project to move away from the general schedule
id get into a skill based and variable base pay model.
We believe the experiences in New York will reduce development
me for these performance measures in other Veterans Benefits
dministration programs, and provide additional other useful infor-
ation. For example, this balanced score card approach has al-


THE GOVERNMENT PERFORMANCE AND RESULTS
ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

JUNE 27, 1995

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

ae

U.S. GOVERNMENT PRINTING OFFICE
26-806 CC WASHINGTON : 1996

For sale by the U.S. G
Superintendent of Documents, Congressi

ment Printing Office
Sales Office, Washington, DC 20402





30

theless need to begin now to prepare for government wide GPRA implementation
in 1997, OMB also recognizes the long lead time needed for agencies to identify
stakeholders and reach consensus on outcome-oriented goals. As a result, OMB has
been strongly encouraging agencies to begin implementing GPRA requirements in
their components that are not participating pilots well before 1997.

Our ongoing review of agencies’ initial efforts to prepare for and implement GPRA
suggests that the five emerging challenges I mentioned at the outset of my state-
ment will need to be addressed if GPRA is to be successfully implemented govern-
ment wide. Of these important challenges, developing and sustaining top manage-
ment and congressional commitment clearly are the most important. Building eapac-
ity, creating incentives, and integrating GPRA into daily operations will be ex-
tremely difficult if the top leadership in an agency and Congress do not have an
active, consistent, and continuing role in implementing GPRA and making it a suc-
cess.

DEVELOPING AND SUSTAINING TOP MANAGEMENT COMMITMENT

Our work has shown that the active involvement of agencies’ top officials in set-
ting goals, measuring performance, and using performance information is critical be-
cause these officials are best positioned to address the multiple competing stake
holder and customer demands that confront many federal programs. These officials
also control the resources necessary to implement the actions that are needed to
achieve agreed-upon strategic goals and objectives. As a result, strategic plans and
performance measures that do not have the active support of top management will
likely be of little or no value to an agency or Congress.

According to officials in most agencies, top managers appear to at least verbally
support, making the management changes envisioned by GPRA. In some cases, offi-
cials said that top managers’ support for the strategic planning required by GPRA
already has shown results. For example, officials at the departments of Energy and
Education and at the National Aeronautics and Space Administration (N. said
that strategic planning was used to make decisions about such things as priorities,
allocation of scarce resources, and restructuring to achieve En 's, Education’s,
and NASA's respective missions. The officials also said that their senior managers
were using strategic plans and performance measurement information to respond to
questions from, for example, the administration and Congress about the depart-
ments’ and agency’s basic missions, long-term objectives, and the major programs
necessary to achieve those objectives. By ensuring clarity on an agency's mission
and goals, the agency’s top management can better set priorities and guide the
agency during periods of downsizing and reorganization as well as during the nor-
mal course of operations.

However, sustaining that level of top management support will be a major chal-
lenge for many agencies because of the generally high turnover rate among political
appointees. We have found that the median tenure of top political appointees in
large agencies is about 2 years. We also have found that some positions are vacant
longer than they are filled. Officials at a couple of agencies said that turnover
among political appointees has hindered past long-term planning efforts. In fact,
turnover among the political leadership already has begun to affect the implementa-
tion of GPRA during the pilot phase. For example, according to a Department of
Labor official, disruption from political turnover at the Department contributed to
the late submission of the Department’s fiscal year 1994 GPRA pilot performance
reports.

‘urnover among political appointees is not the only problem. Another problem is
getting the top management that is in place actively involved in implementing

PRA. For example, an official at the Federal Emergency Management Agency
(FEMA) said that while senior management officials appeared to support the prin-
ciples of planning and performance measurement, some of these officials were not
actively involved in developing the goals and performance measures for the fiscal
year 1995 GPRA pilot performance plan. As a result, some managers did not agree
with the measures that were developed, and therefore some of the measures were
not being implemented. Since that time, according to the FEMA official, FEMA has
started to build better support and more active involvement in implementing GPRA
among its senior leadership. As a result, performance measures in FEMA’s current
pilot performance plan have a greater chance of being fully implemented, according
to this official.

® Political Appointees: Turnover Rates in Executive Schedule Positions Requiring Senate Con-
firmation (GAO/GGD-94-115FS, Apr. 21, 1994).


89

central management agencies? What efforts have you made to obtain waivers from
these regulations? How successful have these efforts been?

ANSWER: Pay and personnel regulations are the most limiting to us. We are
working with the Office of Personnel Management this summer to secure dem-
onstration project status for changing our pay system. If granted, we hope to move
from the General Schedule (GS) to a skills-based and variable (at risk) pay system.
The other major constraining area is the budget. Money seems to be earmarked at
gach stage of the allocation process so that by the time it gets to the hands of the
line manager, there is very little flexibility on how or when it can be spent. VBA
has given us’some relief in this area, but many of the constraints are imposed by

Congress.
12, In your testimony you state, “The experience gained through participation in
these pilot programs is being shared and applied throughout the Department.” How-
ever, « March 1995 report (CNA Report) tates thet the VA does not have a plan
to integrate these pilot projects into VA operations. What specific steps has the
York Office or the VA Gentral Office taken to develop a way to bring the valuable
lessons and experience from your GPRA projects to other VA regional offices?

ANSWER: The CNA Corporation report entitled “An Organizational Assessment
of VBA Modernization Activities” was completed in early 1995, before much of the
progress in GPRA was completed and before the VBA GPRA Steering Committee
Could utilize the lessons learned from the pilot programs and begin the VBA GPRA
implementation plan. The CNA findings indicated that VBA was beginning to imple-
ment, over a two to three-year period, a strategic planning process. This strategic

lanning process includes the planning and performance measurement criteria of

PRA. CNA mentioned as part of their recommendations, “For the long term, VBA
must follow through on its plans to implement a new strategic planning process.”
In addition, the GPRA Steering Committee has made major strides in development
of GPRA training material and the development of core measures for VBA, all based
on the experiences of the GPRA pilots.

13, In your testimony you state, “The Veterans Benefits Administration, or VBA,
developed a strategic plan several years ago and has recently taken steps to adjust
the strategic plan and the planning process to meet the GPRA requirements,” How-
ever, the FA fas ector General stated in his February 6, 1995, audit report that the
VA's strategic plan that the criteria for performance measures were not specific
enough to measure levels of improvement. What performance measures were in-
cluded in the revised strategic plan and how are they specific enough to measure
improvement in VA productivity and service?

ANSWER: I believe this report referred to efforts in the Veterans Health Adminis-
tration (VHA). As mentioned, within VBA, we have plans to bring the experiences
of our two pilot programs to our efforts to design meaningful strategic and tactical
measures to improve productivity and customer service. This is evident in our five
core measures that will apply to all VBA programs.

Mr. Horn. Thank you very much, Mr. Thompson. We appreciate
that statement. The last member of this panel is Col. F. Edward
Ward, Jr., Director of Field Offices for the Defense Finance Ac-
counting Service. Colonel Ward, welcome.

Colonel WarRD. Thank you, Mr. Chairman. Mr. Chairman, I ap-
preciate the opportunity to report on Air Combat Command’s in-
volvement in the performance measurement pilot of the Govern-
ment Performance and Results Act of 1993.

ACC’s mission is to organize, train and equip U.S. based combat
Air Forces to meet any possible aggressor. They provide the vast
majority of the combat air power our unified commanders depend
on to support the full specter of military operations in their thea-
ters.

In an era of downsizing and austere budgets, ACC has had to in-
tensify its efforts to perform its mission in the most cost effective
means possible. Improving productivity by actively streamlining op-
erations and cutting costs has become an integral part of daily op-
erations. ACC’s goal is for their leaders to foster an operating style
that creates for their people a working climate of trust, teamwork
and continuous measurable improvement. This leadership approach


83

ady proven useful in development of core performance measures
c all of VBA’s programs—compensation, pension, education.

And our efforts to identify unit costs for the office have also laid
e groundwork for VBA-wide systems for the identification and re-
rding of data to develop program unit costs. Before I close, I
yuld just like to say that I am an enthusiastic fan of the Govern-
ent Performance and Results Act. We volunteered to become in-
lved in this while it was still pending legislation.

We felt that, given the dramatic organizational changes we were
ing through, it certainly required a new way of measuring out-
mes. And we felt the GPRA was the perfect tool for us at that
ne. So I would just like to say that, for the New York regional
fice, it is a great tool and I’m an enthusiastic supporter. Mr.
airman, that concludes my statement. I’ll be happy to answer
ty questions.

(The prepared statement of Mr. Thompson follows:]

PREPARED STATEMENT OF JOSEPH THOMPSON, DIRECTOR, NEW YORK REGIONAL
Orrice, U.S. DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and Members of the Subcommittee:

am pleased to be here today to discuss the status of the implementation of the
vernment Performance and sults Act (GPRA) of 1993 in the Department of
terans Affairs (VA), specifically, at the New York Regional Office. GPRA rep-
tents the primary vehicle through which VA is developing more complete and re-
ed performance information to better determine how well its programs are meet-
: their intended objectives.
VA is an active participant in the pilot project phase of GPRA implementation.
ree formal pilot projects were launched in FY 1994 covering the National Ceme-
y System, the Loan Guaranty Program and the New York Regional Office. In ad-
ion, VA has a number of internal pilot Projects covering other key program areas,
luding pilots at several medical centers. All of the pilot organizations are develop-
{ performance plans that include measurable performance goals and objectives,
a performance reports that summarize how well they are doing in meeting their
‘formance objectives. The experience gained through participation in these pilot
yjects is being shared and applied throughout the Department so that VA wil
ationed to implement the performance planning provisions of GPRA in September
mplementation of GPRA is the avenue through which a more direct kink is being
ablished between strategic planning, performance measurement, budgeting an:
ancial management. A balanced set of performance measures tied to strategic
us and objectives is being developed for every VA program. These measures will
used to assess program outputs, effectiveness, efficiency, and outcomes with the
ective of improving the management of VA’s programs, As it is developed and
ted, this improved performance information will be included in future budgets,
ancial statements, and other performance reports.
Dur Nation has provided benefits and services to veterans and their families since
: Revolutionary War. The structures and processes for administering current pro-
uns—disability compensation, service pensions, education, housing, vocational re-
dilitation, burial allowances and survivors’ benefits—are rooted in American his-
y, some dating as far back as the eighteenth century. Today, benefit payments
Yadministered by fifty-eight regional offices.
The VA Regional Office in New York employs 350 people. Until recently, it was
vanized based on a hierarchical, control oriented mode. Claims processing was
‘ken down into small, discrete tasks which were handled via a sequential, assem-
line operation. Numerous elements, spread across division lines, handled each
im. For example, a disability claim could require 20-30 steps and involve a dozen
ployees, in seven different chains-of-command. Internal communications, as well
communications with customers, were difficult and tended to break down.
Managers focused on establishing order; controls were established at each step of
‘process and given their number, adding significant overhead and stifling produc-
ity. Quality measures were based on internally derived specifications only.
‘obs were narrowly focused and low employee commitment was assumed, Em-
yee control over work processes and knowledge of outcomes was minimal. Pay


12

aeans available, and not delay to begin applying as much of GPRA’s provisions as
ve reasonably and effectively can.

_ During the FY 1996 budget process, OMB called for more performance informa-
ion to be provided by the agencies. We also had a structured, OMB-wide dialogue
bout performance last September, which was unique in the recent history of OMB.
‘his set of 12, three-hour seminars engaged the entire OMB professional staff in
n analysis and elaboration of GPRA and performance measurement concepts. In an
ffort to continue OMB's cooperative work with the agencies in this area, the writ-
en results of this dialogue were shared with the agencies.

‘This fall dialogue also built on the underlying principles of OMB2000—a restruc-
uring of OMB that occurred last year. In OMB2000, the budget divisions assumed

greater role in overseeing agency management activities and execution.
the responsibility for policy guidance and general oversight of GPA implementa:
ion remains within the Director's Office at OMB, but GPRA, with all its ramifica-
ions, will fundamentally affect the programs and activities overseen or directed by
very OMB division. Because of this, OMB elected from the beginning not to create
_large staff whose sole responsibility would be GPRA implementation to the exclu-
ion of any other office having a role. This decision is premised on the fact that
JMB can be no more than a catalyst in the implementation of GPRA; it is on the
houlders of the agencies, and the tens of thousands of managers across the govern-
sent, that this law will succeed or fail.

Because of the need ultimately to rely on the efforts of agency managers to imple-
rent GPRA, we have been working with three interagency councils I chair to build
n their insight and suggestions and to encourage their ongoing participation. The
‘hief Financial Officer’s Council has created a GPRA subcommittee that has devel-
ped a thoughtful and thorough analysis of the role of the CFO in each agency in
ne operation of GPRA.

The President's Council on Integrity and Efficiency, which includes the Inspectors
feneral of the major agencies, has been developing a menu of possible performance
reasures for IG offices and discussing the role of the IG offices in reviewing agency
nplementation of GPRA. I joined two other senior OMB executives to conduct a
wo-hour IG forum on this subject just last week.

Finally, the President’s Management Council, comprised of the Chief Operating
Yficers of the major agencies, has established an accountability subgroup and is
voking at various ways to improve the ability of federal agencies to manage for re-

ults.

To help begin the FY 1997 budget process, we are just completing a Spring Re-
iew on Program Performance covering selected key programs in every Cabinet de-
artment and major agency. This Spring Review was an outgrowth, in part, of our
xperience with the FY 1996 budget process. This year, we have sought to engage
ne agencies in developing performance information much earlier in their budget
reparation cycle than was done for FY 1996.

e Spring Review on Program Performance was also a natural outgrowth of our
rork on Phase II of Reinventing Government. As you may recall, Phase I of the Na-
onal Performance Review, begun in 1993, focused on “how” government agencies
perate and provided a wide range of recommendations designed to cut red tape,
mpower ernplos ees, and improve customer service.

ase II of the National Performance Review focused on “what” the government
oes, asking each agency to define its basic Federal missions and to identify the key
rograms necessary to achieve those missions. Our Spring Review then asked what
erformance information is available now and what might be produced as part of
ae fiscal year 1997 budget submission for these key programs.

This Spring Review has been successful in highlightin the importance of per-
wmance information, both to the agencies and OMB staff. I am confident that the
Y 1997 budget will contain much more performance information than previous
udgets, and that, over time, such performance information will become an increas-
igly important factor in making budget decisions, beginning with the agencies, con-
nuing with the Executive Office of the President, and concluding with the Con-
ress.

For the FY 1998 budget process, we expect to build on FY 1997. In a very prelimi-
ary way, we are already looking at whether or how we might introduce certain
arts of GPRA into the FY 1998 budget. Some have suggested that FY 1998 might
e approached as ‘dry run’ for the GPRA FY 1999 requirements, but a more specific
ssessment of what this might entail is needed before we proceed further on such
proposal. One thing is certain. The pilots have taught us that we cannot wait until
ae Spring and Summer of 1997 to start merging GPRA provisions into the FY 1999
udget that will be developed beginning in the Fall of 1997.



54

mately will not be judged by a particular plan or even a set of performance indi-
ars so much as by its ability to improve public confidence in the ability of govern-
ot to produce the best results at the least cost.

‘uccessful implementation depends significantly on whether agencies, managers
1 employees have incentive to make the new system work. For example, knowing
t their supervisors, OMB, and Congress will ask for performance information in
er to assess their performance and determine their budget allocations would pro-
® managers and employees with a powerful incentive to develop the data in the
t place. Such incentive can also motivate managers to find ways of developing
capacity they need to make the new system work. They can seek out or develop
sting the skills of their employees, devise their own training courses, free up
ds to purchase training, or push to get the resources they need for effective train-

t this time, we do not recommend that the findings from the annual federal pro-
m performance reports be used as a principal basis for providing monetary com-
sation to federal employees. Por most programs, it will take several rounds of
a collection and analysis before a federal agency can gain an adequate perspec-
: on the relationship between program performance and the service outcome
asurements. While money can be a very powerful incentive, its use, however, as
incentive can also backfire, particularly if those who receive rewards and those
> do not, lack confidence in’ the fairness of those measurements. We do, however,
gest that nonmonetary rewards (such as recognition awards based on measured
gram outcomes) be used for employee motivation, even in early GPRA years.

ALIGNMENT WITH RELATED EFFORTS

iPRA efforts need to be closely aligned with related initiatives to restructure gov-
ment or otherwise improve performance.

iPRA’s overall performance management system—connecting planning annual
formance plans, and annual performance reports needs to berclosely linked with
er performance-based activities, such as the performance agreements recently
aed between the President and cabinet secretaries, customer service standards
t are now required of nearly all agencies under a 1994 executive order, and the
formance management systems envisioned in the administration's forthcominj
1 service reform bill. But these performance elements also need to be integrate
h other management systems such as those required by the Chief Financial Offi-
3 Act, the Government Management and Reform Act, and the Federal Acquisition
eamlining Act.

iPRA also needs to be more clearly linked to the other management reform ini-
ives that are absorbing a great deal of energy in the various agencies. The first
ort of the National Performance Review (NPR) established an ambitious agenda
‘eform for many agencies. The second phase of the NPR expands that agenda.
; while the administration and central management agencies continue to main-
1 that GPRA is an integral tool of overall reform, agency and program managers
not necessarily see that link, In addition, many agencies have launched their own
nagement reform efforts, so that the addition of GPRA, along with the NPR man-
e to reinvent government, appears to some as one more requirement, one more
iplication, rather than a new tool for performance improvement. ;
‘he combination of so many reforms in so many areas from so many different di-
ions has created an overall sense of confusion for many government personnel.
this context, GPRA can easily get lost in the shuffle, rather than being viewed
a possible organizing focus or integrating tool to assure that the new wave of
nagement reforms improves performance and does not just create a new genera-
1 of procedural requirements.

‘he administration has begun to recognize the seriousness of this problem and
e steps to coordinate better these various reform efforts. Strong leadership from
Congress will be key in establishing these links and assuring that the various
iatives are effectively integrated and focus on performance.

‘he recent interest by Congress and the executive branch on block grants and
rformance partnerships” emphasizes more than ever that performance measure-
at should be developed jointly with state and local governments. It is important
federal, state, and local agencies to coordinate their efforts and cooperate to pro-
2 information on service quality information that will help each level of govern-
at, It is equally important for state and local agencies themselves not only to col-
“information on service quality but also to use the data to improve their pro-
ms, Such data is also needed by federal agencies and the Congress to understand
impact of federal spending, While it will take considerable time and effort by
to work out these arrangements, over the long-run this will benefit all levels of


96

of the Department of Agriculture. That’s your nutrition and food
programs, in terms of dollar value, it’s about 70 percent of the De-
partment of Agriculture’s budget. Am I off on that?

Mr. WILLIAMS. That’s about the correct order of magnitude, Mr.
Chairman.

Mr. Horn. Yes. Was there any thought given to including them
in this process as a pilot program, some of them?

Mr. WILLIAMS. I would add, Mr. Chairman, the Forest Service
represents the greatest number of employees, and certainly the
first in a number of other areas. But when we went through the
pilot solicitation process, it was a voluntary process.

Mr. Horn. I see.

Mr. WILLIAMS. And so there wasn’t any active effort on our part
to go out and designate these pilots. So it was done on a voluntary
basis. But I might add that even though food and consumer serv-
ices is not an official pilot, they have efforts underway to begin
strategic planning, identification of mission goals, begin developing
strategies, begin to try to at least match that with their financial
system so that at such time when everyone is put under the roof
of the act, they’re going to be ready.

So I would say, in some regard, while they’re not officially a
pilot, they have launched some initial efforts.

Mr. Horn. Is that true of all of the agencies within the depart-
ment, that they’re sort of slowly being brought along, based on the
experience with the pilots?

ir. WILLIAMS. Well, one, I think this is one of the beauties of—
and I would like to, I guess, echo my colleague here from Veterans
Affairs. ’'m an enthusiastic supporter of the Government Perform-
ance and Results Act, speaking as someone down there on the
ground level, because I think it’s going to change the whole wa’
we're doing things. One of the things we're trying to do, and I thin!
one of the benefits of the act, is to take it as an interim process,
learn lessons from some of these initial pilots, and then try to dis-
seminate that information to the broader agencies.

And it’s our fervent hope, and I don’t want to get out of line here,
but as we finish the Farm bill, to take that Farm bill as a set of
guiding principles and begin some real strategic planning across
the entire department. I think the Farm bill gives us a really great
tool to do that.

Mr. Horn. Now, why do you feel the Farm bill does that? Has
it been substantially revamped? What’s your opinion?

Mr. WILLIAMS. The Farm bill, I think, Mr. Chairman, offers us
some initial guiding principles, a lode star, if you will, from which
to orient our mission and goals for the different mission areas and
sub-agencies. So it’s a launching point, a starting point. And I
think that’s healthy to have that in law.

Mr. Horn. So you're going to be using that as the base statement
of goals, at least by the Congress, in the administration’s inter-
action with the Congress?

Mr. WILLIAMS. That’s correct, sir. I think our base set of expecta-
tions on the accountability side, or aspirations from a vision side;
that’s correct, sir.

Mr. Horn. Let me ask Admiral Henn, I noticed on page 2 of the
Coast Guard presentation, you had a very good list of the goals of


15

studies. Additionally changing program mix fundamentally altered the equations
and local circumstances were commonly believed to be a more significant risk factor
chan was credited.

CHANGING THE WAY WE Do BUSINESS

In 1992, the Coast Guard Office of Marine Safety, Security and Environmental
Protection undertook a comprehensive organizational assessment, surveying stake
aolders, field offices, and program personnel at Districts and Headquarters. The
Yeedback we received clearly signaled the need for a change in the way we do busi-
ness. One broad, recurring theme was especially evident: centralized management
was undercutting the focus of field units on the purpose of their activities and limit-

their ability to contribute toward outcomes we really care about. .

‘he Vice President’s National Performance Review, in its report to the President,
outlined a plan for government operations founded on the principle of empowering
smployees to get results. The President subsequently issued a memorandum in Sep-
ember 1993 entitled Streamlining the Bureaucracy, and directed that government
sfforts at streamlining be characterized by delegation of authority, decentralization,
ampowerment of employees to make decisions, and mechanisms to hold managers
and employees accountable for their performance. Secretary Pena’s has made this
xansformation one of his eight Key goals in his strategic plan for the Department
of ‘Transportation, along with goals to promote safety and enhance the environ-
nent—the basic goals of our programs.

Roughly concurrent with the National Performance Review, the Government Per-
‘ormance; and Results Act of 1993 established a requirement for strategic plans
which set outcome oriented goals, as well as a requirement to measure progress to-
ward those goals. ‘The Act requires annual reports to Congress on program perform-
ance, and established the principle that Federal programs should be managed by
nutcomes rather than inputs. Amplifying guidance from the Office of Management
ind Budget emphasizes the need for focus on outcomes versus outputs, aiming at
che purposes of the, programs rather than simple measures of activity levels.
eneral direction of empowerment in both NPR and GPRA validate many of the
indings from our own earlier organizational assessment. It became clear that our
yreatest opportunities lay in getting away from detailed management of field activi-
‘eg, and letting those closest manage the risk.

‘Assembling the senior management for our marine safety programs, we began de-
relopi: larine Safety Business Plan to guide all of our activities, at every orga-
tizational level, in carrying out our mission. The intent was to distill our real pro-
ram priorities’ and to derive business decisions from those priorities rather than
nicro manage program activities. The approach hinges on setting and negotiating
lear goals or outcomes we want to achieve, and measuring their attainment.
validating these goals with our Districts and outlining some general strategies, we
sublished our first Marine Safety Business Plan in January 1994 and started execu-
ion. Our first Performance Plan as a GPRA pilot came two months later, and was
sssentially distilled from this business plan.

SETTING GOALS AND MEASURING PERFORMANCE AGAINST OUR GOALS

In our GPRA Performance Plan, strategic goals establish the outcomes we aim to
achieve over the next five years. Performance goals establish annual targets. To-
yether they reflect a judgment of what is really important, independent of how we
yet there. Some of our goals aim at broad, measurable progress; some aim at spe-
tific, major problems or risks we want to resolve. Collectively, they represent the
vardstick by which we will measure success.

Our FY94 Performance Plan contained eight performance goals which highlighted
sey outcomes we expected and were committed to achieving over five years:

In Marine Safety and Security, we aimed to:
(1) Reduce deaths and injuries from maritime casualties by 20%.
(2) Prevent any passenger vessel casualty with major loss of life.
_ (8) Improve the safety of commercial fishing from its “most hazardous” rank-
ing to at least halfway toward the median of all industrial occupations.
4) Eliminate substandard commercial vessels from U.S. waters.
In Marine Environmental Protection, we aimed to:
(1) Reduce the amount of oil and chemicals going into the water from mari-
time sources by 20%.
_ (2) Reduce the incidences of plastics/garbage going into the water from mari-
time sources by 20%.
(3) Reduce the total number of major and medium oil spills by 50%.
7

(A) Trewaace tha vamaval (anima) af enillad ail be OM


36

Mr. Horn. Yes, but where do we get those hands? Are they not
in those publications GAO has put out? That’s where the people
that have had the experience are, reflected in those projects.

Mr. FINCH. That’s right.

Mr. Horn. We need to put them to work. The Coast Guard is
going to testify. The Air Force is going to testify. They've obviously
been through some of this.

Mr. FINCH. They have.

Mr. Horn. We ought to be reaching out to grab them to share
some of their experiences.

Mr. FINCH. Right. I agree.

Mr. Horn. I think it’s something we need to face up to.

Mr. FINCH. I think we’re in total agreement, sir. I wait for the
next question.

Mr. Horn. Yes, well, let me get the next question out of my col-
league from Pennsylvania. I yield 5 minutes to the gentleman from
Pennsylvania.

Mr. Mascara. Thank you very much, Mr. Chairman. I asked a
question of Mr. Koskinen about the effects of the budget cuts on
morale of Federal managers and employees. And at the same time
we are wrestling with the—what I believe, anyway, is we’re asking
these people to demonstrate creativity and leadership in imple-
menting GPRA. In that context, it wasn’t necessarily reassuring to
see that the Merit Systems Protection Board was one of the hand-
ful of agencies to withdraw from the initial pilot program.

And I think I sort of asked that question, too, about these people
with John. Can you elaborate on why these people would with-

raw?

Mr. FINCH. I really can’t add much to what Mr. Koskinen said,
Mr. Mascara, not at the moment, at least. We've just begun to look
at that issue. And quite frankly, the preliminary information that
we have, that OMB told us, is pretty much what Mr. Koskinen
said, both in his statement and in his response. We are going to
be looking at that issue in more depth.

And as soon as we get more results, we will be happy to share
those results with you, as to the reasons for those peop! pie withdraw-
ing.

Mr. Mascara. I see. How do you compensate, in evaluating the
success of performance measurements, for the effects of external
factors over which the government has no control, but which can
nonetheless affect the outcomes of programs? Are there some uni-
form factors to keep in mind?

Mr. FINCH. Well, I think you’re probably talking about instances
where you have multiple stakeholders involved. And that truly
poses one of the most difficult challenges to implementing GPRA
or any kind of performance measuring and goal-setting exercise.

The key principle, I think, to get at that answer, sir—and it’s
easy to say, it’s much harder to fo—is that you have to have in-
volvement of all of the stakeholders in terms of reaching agreement
and trying to get consensus on those points that the chairman
mentioned earlier, and that Mr. Koskinen mentioned as well.

That is, what’s the purpose? What is it that we’re trying to do?
How are we going to know when we get there what are our meas-
ures? Then, how well are we doing and how do we need to change


48

top of their agencies. I cannot overstate my hope that this Committee will act on
this serious problem. Federal employees need to be measured by their performance
in handling problems, not in terms of the number of overseers who handle paper
on the way up and down the chain of command.

T would also encourage the committee to consider a number of simple legislative
devices for thinning the federal hierarchy:

1. Consider a sharp reduction in the number of what I call “alter-ego” depu-
ties in the federal government—that is, individuals whose primary responsibil-
ity is to fill in for the principal when he/she is vacant for one reason or another,

‘le there is no firm estimate of just how many such deputies exist, I would
guess that the number is well into the 100,000 level.

2. Consider ordering the federal government to eliminate all 1:1 spans of con-
trol. Although I believe Vice President Gore is on target in trying to increase
the government-wide span of control from 1:7 to 1:15, as already noted, I also
believe that much of the current effort is more semantic than substantive. We
have more team leaders in the federal government today than in all of Amer-
ican little league, A fat better way to widen the span is to inaugurate a delib-
erate, tough effort to remove all 1:1 spans of control. Indeed, I believe there are
only two 1:1 spans that can be justified: (1) President and Vice President, and
2) Secretary/Administrator and Deputy Secretary/Deputy Administrator. In
these budget times, all the rest should be scraped out.

3. Consider establishing a “height limit” on federal agencies. As I argue in
Thickening Government, creating such height limits are risky—who is to know
how tall the Federal Aviation Administration should be? Nevertheless, absent
some very strong signal to agencies to get on with the business of real reduc-
tions in height, I am not sure how best to make progress, The state of Iowa,
for example, has mandated by statute a sharp reduction in the number of layers
between the top and bottom of departments, along with clear language on how
each layer is to be defined and counted. Iowa has also mandated a significant
inerease in the span of control within departments, also with a tight definition
of terms. My concern about current efforts at the federal level is that the defini-
tion of layers and the methodology for counting distance between top and bot-
tom appears to vary department by department, and unit by unit. I would pro-
pose, for example, that we not define layers by job title, which is the current
methodology, but by job function. We should seriously endeavor to reduce the
number of hands that touch paperwork on the way down to the front-line and
on the way back up.

‘4, Consider wholesale abolishment of the regional office layers across the fed-
eral, government. Although several departments (Agriculture and HUD) have
made progress eliminating some of their regional office structure, the history of
thickening suggests that even a little bit of regional structure left intact will
soon grow back. Thickening is, therefore, analogous to dandelions—mowing
them down is far less effective than pulling them out.

Whatever the tactic Congress and the president choose in losing the weight, the
secret is to keep it off. I believe Congress can and should strengthen oversight agen-
cies such as OMB. Someone at the top of government must keep a closer watch on
what the departments and agencies are doing by way of position management, bet-
ter measurement, and so forth. Congress might also ask the federal Inspectors Gen-
eral to take a more active role in undertaking the organizational analysis necessary
to track the thickening and thinning of government. I have argued elsewhere that
the OIGs should be pushed to think harder about preventing fraud, waste, and
abuse, rather than catching it after the fact, and believe oversight of organizational
thickening falls well within that call. I would be pleased to give the subcommittee
more information on this proposal at your request.

I do not believe, however, that stronger oversight is enough by itself. If the natu-
ral tendency of organizations, whether public or private, is to thicken, tighter over-
sight is bound to fail as the oversight agencies themselves thicken. A’ more persua-
sive answer is to create greater government attention to the cost of, thickening.
Make performance matter by tying it much more explicitly to budget and pay, whi
is, of course, a hoped-for outcome of the Government Results and Performance Act.

T have also become convinced that we must address the life tenure question. This
is a particularly difficult topic, expecially for someone who has enjoyed the benefits
of life tenure as a university professor. But the question must be asked: is a lifetime
guarantee of employment in any field a help or hindrance to organizational perform-
ance? I am not yet prepared to suggest that all government employees and academ-
ics be placed on year-to-year contracts.

‘At the same time, I do believe that the public sector must create more flexible
systems for removing those who lose their commitment to service. The answer may



53

committees discussed the need for training, including a call for assistance from
NAPA. Individual federal agencies have undertaken a variety of efforts to provide
GPRA-related training, and technical assistance to at least some of their personnel.
In addition, the U.S. Office of Personnel Management, with the Federal ity In-
stitute, have undertaken efforts to develop training curricula. And NAPA is in the
process of establishing a consortium of agencies on improving government perform-
ance, similar to the one it has established for human resources management issues.
For the most part, however, there have been few resources committed by Congress or
the administration for training and building capacity for performance measurement
and implementing PRA,

The federal government contains many highly competent and dedicated employees
with considerable know-how and sophistication in the use of analytical and statis-
tical tools. However, the broad sweep of GPRA will inevitably strain agencies’ re-
sources, particularly in these times of downsizing.

While many of the tools used in the private sector, such as customer surveys and
strategic planning are applicable to the federal government, the scope of the results
sought by federal legislation is an order of magnitude more complicated than private
business. The private sector focuses on assessment of bottom-line indicators such as
net profits, sales and market share. This process of applying a  performance-meas-
urement focus on service quality and outcomes on as large a scale as the U.S. fed-
eral government, with its diversity of missions and goals, is unprecedented.

‘The difficulty is that the focus on results is new and, for the most part, still unde-
veloped and untried. It poses many data collection difficulties, particularly in times
when funds are very scarce. It requires training of those involved in the process and
establishment of an appropriate management organization. And it also requires set-
ting sound effectiveness indicators.

‘or example, in order to track the quality of their programs many federal pro-
grams will need to survey their customers regularly. Such extensive survey work
requires a substantial expansion of federal survey activities and capabilities. An-
other major example: many programs are delivered through state and local agen-
cies—such as programs of iS, HUD, Labor, Transportation, and Education. Ob-
taining comprehensive data on outcomes will require major new intergovernmental
efforts.

The most important training components for the future are: (a) to train managers
in the use of performance data (such as how to motivate employees, to help them for-
mulate their annual budgets and to help them to improve, continually, the quality
of their activities) and (6) to bring a focus on service quality to every public employee.
All federal employees should be encouraged to improve the quality of their services.
Providing employees regular feedback on the quality and outcomes of their pro-
grams be a big step in that direction.

IMPLEMENTATION

The implementation schedule for GPRA is not likely to be met if the pilot experi-
ence is a reliable indicator. Strategic plans are still in a preliminary state of devel-
opment in most agencies so it should not be surprising if a proven performance
measurement process is not available when it is required in fiscal year 1999. The
first performance report is due to Congress and the President in the spring of FY
2000. The executive branch is pressing to try to meet these dates. However, we
doubt that it will be possible for the executive branch to implement GPRA fully for
several years thereafter.

Although Congress should expect to receive good performance information on
many federal programs by FY 1999, and some even before, no one can predict what
proportion of the federal government's major programs will be covered by that tar
get date.

‘The GPRA legislation does not mandate an explicit strategy by which agencies are
to meet specific goals and timetables. This has allowed for useful experimentation
and flexibility in identifying targets of opportunity. Our early experience shows that
some agencies would benefit from reassessing the context and scope of their work
to ensure employees understand that GPRA is not just a demonstration project, but
the beginning of system-wide changes.

‘Initial lessons from the pilots have shown that GPRA can work. In particular,
measurable, quantitative performance goals can be set in advance. The pilots also
show that all of government needs to be engaged early if useful plans are to be
forthcoming in 1997.

Effective implementation will require clear and sustained communication between
the executive branch and the Congress, within the executive branch and among gov-
ernment agencies and their customers, stakeholders and the public. GPRA’s success



49

e in five or ten year contracts, with renewal based on clear measures of perform-
nee, not political affiliation. It may also be in longer probationary periods, although
ay experience has been that the problem of life tenure usually manifests itself later
nd higher in career. This is, incidentally, just the kind of contentious issue that
tight be best handled by the kind of blue-ribbon base-closure styled commission
roposed by Senators Glenn and Roth in the 103rd Congress.

Finally, 1 believe that a little competition cannot hurt. This competition does not
ave to be between the federal government and a private entity, however. Allowing
nits within the federal government to compete against each other for certain kinds
f business can be healthy, too. But such competition must not be allowed to drive
ae government to take short-cuts on essential functions such as safety and fairness.

Mr. Horn. Thank you very much, Professor Light. I think the
our points you make on pages 4 and 5 of your statement, this com-
aittee will take to heart. The question is drafting a legislative lan-
uage on the authorization side, and then encouraging the Appro-
rriations Committees to follow suit with the negative type of lan-
uage they can use in their various bills.

But more about that later. I’m delighted to welcome again before
he subcommittee Dr. Scott Fosler, president of the National Acad-
my of Public Administration. We want to thank you and the Acad-
my. The experts you’ve made available to us have been invaluable
a suggesting many of the topics for our hearings, as well as pro-
iding many of the witnesses for our hearings, and a number of
hem, testified themselves on more than one occasion.

So I thank you and the Academy for that help. I believe Mr. Wye
3 with you, who’s on the program staff at the Academy.

Mr. Foster. That’s correct, Mr. Chairman. We've been pleased to
e of assistance. Let me introduce Dr. Chris Wye, who is the direc-
or of the Academy’s program on Improving Government Perform-
nee. The Academy’s panel on improving government performance
eviewed several of the early GPRA pilots, and summarized their
indings in a 1994 report, “Toward Useful Performance Measure-
aent.

And my testimony draws largely on the work of that panel and
hat report, along with the fairly large body of work of the Acad-
my that deals with the issue of performance. You have my written
tatement. Let me simply highlight a few points from that state-
aent. First, the early pilot experience demonstrates that the GPRA
an be a critical tool in improving government performance, if it is
rroperly understood and effectively implemented.

It should not be viewed simply as a measurement system that
7ill churn out simple answers to complex questions, but rather it
hould be seen as providing the architecture for an overall perform-
nce management system, linking strategic planning, annual per-
ormance plans, and annual performance reports. And even more
mportantly, its real intent is to shift the culture of government
rom a preoccupation with inputs to an appropriate concern with
esults.

Second, sustained leadership within the executive branch and
he Congress is critical to its success. The GPRA has enjoyed bipar-
isan support in both the House and the Senate, and from the
-resident. But for the most part, agency and program managers
iave not shown the great interest or support that is going to be im-
vortant. Quite often, responsibility for developing the GPRA pilots
ias been delegated to mid- or lower-level managers and analysts,


78

IMPLICATIONS FOR FEDERAL PROGRAM MANAGEMENT

he central issue in GPRA may well be the shift in focus from activities and out-
3 to the realm of outcomes—not what the organization does, but the real-world
cts of what it does. This presents a number of difficulties and opportunities, and
‘itably creates organizational stress. Outcomes are inherently beyond our abilit
ontrel. This has important implications for our traditional sense of accountabil.
Outcomes also tend to be cross-organizational. Organizations which were set up
ptimize activities may be poorly aligned to address outcomes. This suggests the
\e of a cross-organizational approach at the outset. Most importantly, the shift
deus to outcomes is probing the very basis for existence of individual government
jams. GPRA requires that we ask “why?” to each of our activities, and that we
nately express the value of the program to the American public. Measurement
ais environment can be particularly threatening.

n the other hand, the advantages and benefits of this sort of planning and pro-
n evaluation have become clearer than ever. We get better management of our
grams. We have a better basis for making tradeoffs among programs and re-
“ces. We have a better basis for dialog with our stake holders, who are seriously
rested in outcomes but not so interested in activities. Finally, we have greater
ibility and better internal communication. Everyone in the organization knows
re we're headed and why. And there is a greater likelihood we'll achieve some-
g worthwhile.

FoLLow up EFFORTS

ver the past six months, the Coast Guard has begun an effort to extend the ex-
ence of its pilot project and integrate all of its operating programs with a com-
tensive set of goals and performance indicators for the organization. Instigated
Secretary Pena’s observations from the DOT pilot project experiences and his
ern for the long lead times needed to develop good goals and measures, this
ect has the attention and direct involvement of the Coast Guard’s senior leader-
. Although preliminary, the results of this expanded effort and its potential use
he Coast Guard are very promising.

1e Office of Management and Budget has been very supportive of our efforts,
has afforded much-needed room for experimentation in the process. The Gen-
Accounting Office has been very helpful in distilling key activities for successful
ementation of the Act, and offering a genuine partnership in making this work.
eve that the efforts of this Subcommittee demonstrate clear and essential Con-
sional engagement in the process, and will be most instrumental in paving the
for the more broad cultural changes we might expect throughout government
‘e change our management approaches to comply with the spirit of GPRA.
‘om our experience, I believe that GPRA can be implemented successfully with-
changes in the law, although others might identify opportunities to enhance cer-
provisions. We have not participated in the pilot phase of managerial flexibility
ers nor have we explores performance budgeting to any significant degree. As
ve testified, we have found substantial managerial flexibility from within our
organization. _.
tere remain a number of separate legislative requirements for program activities
h might be reexamined to provide er agency flexibility, but these will be
of a continuing process of working with our authorization and appropriations
nittees. Mr. Chairman, thank you for the opportunity to appear before this Sub-
nittee to discuss the Coast Guard’s experience with GPRA. I wouid be happy
iswer any questions you may have.

FOLLOW-UP QUESTIONS AND ANSWERS
IMPLEMENTATION OF GPRA

JESTION. IN WHAT WAYS HAS TOP MANAGEMENT SUPPORTED OR
DERED THE IMPLEMENTATION OF GPRA AT YOUR AGENCY OR PILOT
JECT?

iswer. The Coast Guard’s top management drove the Coast Guard’s involvement
e Government Performance and Results Act (GPRA) pilot project. The Program
stor and Deputy Director for Marine Safety, Security, and Environmental Pro-
on guided the entire planning process, led planning conferences, and were ac-
y and personally engaged in the deliberations on Coast Guard Marine Safety,
rity, and Environmental Protection missions, goals, strategies, and performance
sures. Moreover, the Secretary and Assistant Secretary of Transportation fully


88

luce our costs. These plans, which had already been through the architectural de-
n phase, were pulled back and redrawn, Even though it ultimately delayed the
ve by six months, we were able to consolidate a number of operations and save

sroximately 30,000 square feet. At approximately $28 per square foot, this saves
4 million over 10 years.

i, How did you measure customer satisfaction?

ANSWER: We have a vendor conduct a monthly phone survey of veterans or fam-
members who have recently contacted or filed claims with the New York Re-
nal Office, This survey is based on a test instrument called SERVQUAL, which
3 also used for a national survey conducted by VBA in late 1992.

. How do you see the experience gained through these pilot projects being used
oughout the VA? When more than one office or hospital is involved, will the sys-
1 be able to provide aggregate data on all units as well as disaggregated data
individual units?

\NSWER: The experiences of the GPRA pilot programs have assisted VBA in
‘ping the implementation plan for the five VBA programs (Loan Guaranty, Insur-
e, Compensation and Pension, Vocational Rehabilitation and Counseling, and
acation). The implementation of GPRA at the program level includes unit cost as
‘of the core measures, When VBA transitions from the pilot programs into imple-
atation, an automated system for GPRA performance measures will be designed
implemented. This system will be designed to accumulate data at many levels,
tuding program, VBA, and office; however, unit cost for each regional ‘fflce does
now exist.

.,Does the VA plan to extend performance measurement to the VA hospital sys-

2
\NSWER: For several years, VA’s Veterans Health Administration (VHA) has
tured and widely used’a variety of performance information in monitoring var-
3 program operations. Most recently, they have initiated two major efforts to ex-
id this activity.
irst, VHA is conducting pilot projects under the Government Performance and
ults Act of 1993 to identify and develop a process by which planning and per-
nance measurement will be more closely linked throughout the health care sys-
\. Six medical centers are participating in these pilot projects, all of which are
2g conducted internal to the Department, To date, the pilot organizations have
duced draft performance plans that identify goals and objectives as well as a se-
‘of performance measures to use in assessing progress in achieving the goals and
sctives. A balanced family of performance measures is being tested dealing with
incial management, access, customer satisfaction, and quality of care. The experi-
2 and lessons learned from these pilot projects will be used to extend the plan-
g and performance measurement efforts throughout the rest of the health care
em.
econd, the Under Secretary for Health has completed a reorganization proposal
ch is outlined in a document titled VISION FOR CHANGE. The reorganization
1 includes an extensive discussion of performance measurement at all levels of
health care system, i.e., system wide, Veterans Integrated Service Networks
3N), and individual facilities. As part of the VISN development effort, the Under
retary for Health established a Committee on Performance Measures. The final
rt of this committee is due in July and will include proposals for performance
sures to be used at different levels of the organization. :

You say a complete assessment of the New York experience will not be done
il after the completion of the project. When will that be? Shouldn't assessment
2n an ongoing basis over the Vife of the pilot? How else can you know if it is

BA has reviewed the New York pilot and has in fact adopted its major design
aent—the creation of a core group of measures—for use in all VBA programs and
onal offices. The office has undergone substantial change as a result of the NPR
also has recently moved to a new location. While VBA is monitoring the office’s
rts, a complete assessment will not be done until the first or second quarter of
1996, In the meantime, VBA will continue to stay active in working with the
.e to further implement the project. _

), Are you making any efforts to determine the effects of your initiatives? What
28 of measures (outcomes, outputs, or others) are you using to document the re-
s of the Regional Office's initiatives?

NSWER: We measure ourselves on the five core areas of our balanced scorecard
1 monthly basis. We do a bi-weekly review of our annual regional office plan to
:k the status of each initiative and meet quarterly to do more in-depth reviews.
|. Have you found that regulations are constraining your initiatives to improve
k processes? If so, are these regulations imposed at the department level or by


43

The second type of accountability is what we call a capacity
based accountability, in which we invest heavily in the capacity of
the workforce through training and technologies to do the job, and
give them relative freedom to accomplish the goals that they've
taken on, the missions of their programs; but basically imbue them
with the skills and motivation to do their jobs—give them the ca-
pacity to do their work.

The third type of accountability is a performance based account-
ability, which resides in providing incentives and disincentives for
certain activities, and establishing an accountability based on out-
comes. Now, most of the people who have testified here today, and
in fact all of us, I think, endorse the concept of a performance
based accountability, especially in an era of tight budgets.

We cannot afford the kind of heavy command and control ac-
countability systems that we currently have in the Federal Govern-
ment. And therefore, we’re drawn to a performance accountabilit:
system, many of us are, as a way to both trim the cost of the Fed-
eral Government and assure that resources are going down to the
delivery level, where the services actually are provided.

The problem in these three types of accountability is that they're
not necessarily compatible. And the chairman goes to the heart of
this when he asks, well, what are the incentives in the civil service
system for an accountability system based on outcomes?

And the answer is that the civil service system that we currently
use is based on a compliance model of accountability, and is not
compatible with many of the performance goals imbedded in the
Government Performance and Results Act.

In other words, compliance accountability systems are not nec-
essarily compatible with performance or outcome based account-
ability systems. In fact, I would liken the current effort to wed
compliance accountability to performance accountability as rather
like getting Princess Di and Prince Charles back together.

It’s extraordinarily difficult to achieve a performance based ac-
countability, when you're still operating with heavy command and
control accountability systems of the type we currently have in the
Federal Government.

Now, let me briefly go on to the issue of the thickening of govern-
ment, because that is one example of where we're trying to force
a performance based accountability system on a Federal hierarchy
that is extraordinarily resistant to allowing individual agencies the
freedom and flexibilities needed to achieve performance.

This research that you referenced earlier, this book that I’ve
written, is titled, Thickening Government. And it was published by
the Brookings Institute and the Governance Institute earlier this
year.

The basic concept of thickening is an effort to measure both the
width and the height of the Federal hierarchy. And I'd say, right
off the bat, that we have four simple findings that we can briefly
reference. No. 1 is that we found, over the last 50 years, that the
tendency of agencies to thicken, that is, to add both layers of man-
agement and to widen those layers with new occupants or new
units, is nearly inexorable.

We find very few examples of thinning of agencies. It’s just a fact
of life that agencies thicken, just as human beings do, I suppose,


CONTENTS

Hearing held on June 27, 1995
Statement of:

Finch, Johnny C., Assistant Comptroller General, General Government
Programs, Genéral Accounting Office, accompanied by J. Christopher
Mihm, Assistant Director, Federal Management Issues, General Ac-
counting Office .

Koskinen, John, Deputy
and Budget

Light, Paul C., director public’ policy program, the PEW Charitable
Trusts; and R. Scott Fosler, president, National Academy of Public
Administration, accompanied by Chris Wye, director, program on. im-
proving government performance, National Academy of Public Adminis-
tration .

Williams, Anthony A., Chief Financial Officer, U.S. Department of Agri-
culture; Vice Admiral Arthur E, Henn, U.S. Department of Transpor-
tation, U.S. Coast Guard; Joseph Thompson, director, New York Re-

ional Office, U.S. Department of Veterans Affairs; 'and Colonel F.
dward Ward, Jr., Deputy Comptroller, headquarters Air Combat Com-

mand, U.S. Air Force .
Letters, statements, etc., submitted for the record by

Finch, Johnny C. Assistant Comptroller General, General Government
Programs, General Accounting Office, prepared statement of .

Fosler, R. Scott, President, National Academy of Public Administration,
prepared statement of

Henn, Arthur E., Vice Admiral, U.S. Departme
Coast Guard, prepared statement of .

Koskinen, John, Deputy Director for M
and Budget, pra ared statement of ..

Light, Paul C., Director Public Policy
Trusts, prepared statement of .....

Maloney, Hon. Carolyn B., a Representative in Congress from
of New York, prepared statement of . vs

Thompson, Joseph, Director, New York Regional Office, U.S. Department
of Veterans Affairs, prepared statement of . ses

Ward, Col. F. Edward, Jr. Deputy Comptrolier, Headquarters Air Com-
bat ‘Command, U.S, Air Force, prepared statement of ...

Williams, Anthony A., Chief Financial Officer, U.S. Department of Agri-
culture, prepared statement of ... ve

(et00)

Page
1

24

42


66

port that begins to at least compile together and we hope, later,
synthesize requirements under the CFO Act, as well as GPRA per-
formance evaluation requirements. With that, Mr. Chairman, I’d
like to thank you for this opportunity. I’d be happy to answer any
questions.

[The prepared statement of Mr. Williams follows:]

PREPARED STATEMENT OF ANTHONY A. WILLIAMS, CHIEF FINANCIAL OFFICER, U.S.
DEPARTMENT OF AGRICULTURE

Mr. Chairman and Members of the Subcommittee. I am honored to be here today
as the Department of Agriculture's Chief Financial Officer to discuss the implemen-
tation of the Government Performance and Results Act of 1993 (GPRA) in USDA.
With me are Mr. Irwin T. David, USDA’s Deputy Chief Financial Officer and Ms.
Melinda Jones, USDA’s GPRA Coordinator.

In USDA the responsibility for coordinating GPRA implementation has been dele-
gated to the Office of the Chief Financial Oificer (OCFO). USDA is implementing

PRA through our individual mission organizations and agencies. The OCFO is
charged with providing policy guidance, oversight and technical assistance to USDA
agencies, coordinating our activities with the Office of Management and Budget
(OMB) and the General Accounting Office (GAO) and with developing Department-
wide GPRA plans. Our staff devotes significant effort to support USDA agencies in
developing strategic plans, performance plans and reports, and in coordinating with
the budget process.

Eight USDA agencies have participated as performance pilot projects of the GPRA
performance pilot program. USDA has submitted FY 1994, 1995, and 1996 Perform-
ance Plans for these agencies and is now finalizing the FY 1994 Performance Report

for the pilot programs.
The eight USDA pilot agencies and programs include:
« Animal and Plant Health Inspection Service;
—Agricultural Quarantine Inspection
* Cooperative State Research, Education and Extension Service;
—Communities in Economic Transition
—Plight of Young Children
—Decisions for Health
—Food Safety and Quality
—Integrated Pest Management
* Grain Inspection, Packers and Stockyards Administration;
—Scales and Weighing Program
* Forest Service;
—Entire Agency
+ Natural Resources Conservation Service;
—Snow Survey and Water Supply Forecasting Program
—Soil Survey Program
—Conservation Operations
* Office Rights Enforcement;
—Entire Office
* Office of Communications; and
—Entire Office
« Rural Housing and Community Development Service.
—Single Family Housing Program
USDA agencies are presently developing their strategic plans and annual per-
formance plans and determining appropriate performance measures. We anticipate
meeting all requirements of the Act within the scheduled time frames. To provide
the Subcommittee with insights into USDA’s experience with the Act, I have chosen
to focus on the Forest Service, USDA’s largest pilot project.

ForEST SERVICE

Forest Service (FS) has looked on the pilot GPRA efforts as an iterative process.
The staff expects to learn new things each year in the development of a performance
plan and then build that knowledge into the next plan. As a pilot project, the FS
also chose to cover all program activities of the agency. This approach has given the
FS a better appreciation of what it takes to develop goals and indicators for a total
agency program; they will be better prepared to deal with full implementation of

RA after the pilot phase. In addition, the FS has chosen, wherever possible, to


52

neral long-term goals, annual performance plans with specific performance targets
for each year, and annual performance reports that compare actual performance with
the targets.

‘A potential problem with GPRA is the danger of over-expectation by Congress, the
executive branch, and public administration experts. Once fully implemented, GPRA
will provide information, such as that contained in annual performance reports on
each major federal program, that should tell Congress and the executive branch
leadership the extent to which desired outcomes are achieved.

This information, however, will not tell Congress and federal executives what
caused those outcomes. Federal agencies usually have limited control over major
program outcomes, Similarly, GPRA information will not necessarily indicate who
or what is responsible for the outcomes. This is similar to the bottom lines of private
businesses; many external factors can affect profits, sales, and market share.

Another limitation of GPRA information is that the outcomes of many federal pro-
grams cannot be measured well on an annual basis. This applies to basic research
programs and planning activities, whose outcomes may not be observable for ma:
years. This also applies to various programs addressing social concerns that ten
to be experimental in many respects. At best, the executive branch can annually
track whether the activities mandated are implemented, but not their full impact.

Despite these limitations, GPRA can provide a significant tool for enhancing gov-
ernment performance and communicating progress.

‘LEADERSHIP

Sustained leadership within the executive branch and Congress is critical to the
success of GPRA. The President supported enactment of GPRA—a congressional ini-
tiative—and generally has embraced it as an important mechanism of his reinvent-
ing government initiative, led by the Vice President. However, despite support from
the highest levels of the administration, the reaction of lower level political and ca-
reer employees has been mixed.

Some managers have been enthusiastic, greeting GPRA and the pilot projects as
opportunities to push their own management agendas. But for the most part, top
agency and program managers have not yet shown great interest or support, an
esponsibility for developing the GPRA pilots has been delegated to mid. tolower-
level managers and analysts. One of the issues which surfaced in the NAPA review
was that many pilots were conducted in isolated, non-mainstream parts of an orga-
nization or at lower management levels with limited personnel capabilities. AS a
consequence, many of the measures developed do not reflect the real interests of top
managers or political executives, and so may have little influence in reflecting or
promoting program performance.

The predominance of lower-level staff members in formulating the GPRA pilots
not only separated higher-level executives and policy-makers from the process of de-
veloping valid measures, but also sent a message that the entire exercise was some-
thing less than a high priority for agencies. Some managers see GPRA as another
management fad that will eventually fade, and they doubt the seriousness of top-
level OMB and administration support for the effort. Managers are also reluctant
to-identify outcome measures that go beyond their immediate control. They are con-
cerned that such program performance data will be used against them unfairly by
agency heads, OMB, the Congress, the media and the public, who do not fully um
derstand the meaning of the indicators, the complexities of their programs, and
their limitations in affecting desired outcomes.

OMB leadership, however, has encouraged budget examiners to learn about
GPRA, visit the field operations of pilot efforts and develop good performance indica-
tors in the course of their agency and program budget reviews. Both the OMB direc-
tor and deputy director for management have announced their intentions to bring
performance measures into the budget dialogue, beginning with the spring reviews.

jut sustained leadership across all agencies 1s necessary for GPRA to succeed.

CAPACITY

A primary challenge to implementing GPRA is developing the required capac-
ities—the tools, systems, and skills. Our review of pilot performance plans indicate
that many organizations lacked the capacity to: 1) clearly define their vision, strate-
gic mission and annual performance plans; 2) develop performance measures and
collect data; and 3) develop effective ways of analyzing and presenting data and
communicating results for use by managers, customers, stakeholders, and policy
makers, including Congress.

The GPRA legislation recognized that such a new performance management sys-
tem requires new skills and explicitly called for training, In conference, the GP!


26

in a number of Federal agencies said that one of the single most
important incentives to changing behavior in their agencies so that
managers and staff focus more on achieving outcomes will be the
degree to which top leadership actively demonstrates its support
for such change.

Our work has shown that when top officials publicly focus on
strategic goals, demand outcome oriented information, and make
decisions guided by that information, this sends a clear message
throughout an agency that it is not doing business as usual. As I
will discuss in a moment, Congress has an equally important role
in instilling a focus on outcomes and Federal agencies.

In our statement before the subcommittee last week, we noted
that our work has shown that there is as yet no consensus on the
oest approach for holding individuals accountable for results. Our
work has shown that leading State and foreign governments, that
in some cases have been seeking to make their governments more
sutcome focused for a decade or more, continue to grapple with
these same issues.

As a result, GPRA’s intent to focus management and soot
ity on outcomes, coupled with the significant downsizin;
olace across the Federal Government, may require a fun taking
rethinking of how the public service system should operate.

The fourth key challenge is integrating GPRA into daily oper-
ations. Our work reviewing goal-setting and performance measure-
nent efforts in the Federal Government suggests that most Federal
agencies still have a long way to go before they will be able to iden-
sify and use outcome information as intended by GPRA. For exam-
dle, my prepared statement discussed the challenges that Federal
research agencies, such as the Department of Energy and NASA,
‘ace in developing meaningful measures for basic research pro-
zrams whose outcomes may not be achieved for more than 20
years.

The fifth key challenge is to build a more effective congressional
oversight approach. Congress as a prime user of performance and
jnancial information, has a major stake in ensuring that GPRA is
affectively implemented. This hearing is the first congressional
oversight hearing to focus exclusively on progress in implementing
SPRA. It is an important step in reinforcing to the agencies the im-
dortance that Congress places on setting outcome oriented goals,
neasuring performance, and using performance for decisionmaking
and accountability.

Congress needs to take more steps in this regard. One key step
30 sharpening agencies’ focus on outcomes would be for congres-
sional committees of jurisdiction to hold comprehensive oversight
iearings annually, or at least once during each Congress, using a
wide range of program and financial information.

Agencies’ program performance information that will be gen-
xrated under GPRA and the audited financial statements that are
yeing developed to comply with the Government Management Re-
‘orm Act should serve as the basis for these hearings, with addi-
ional, information from us and from others. Such information



22

Washington, it’s been very convenient to argue that Federal work-
ers are in fact not effective and not efficient, that the Government
doesn’t run well. If you say that long enough, after a while it risks
becoming a self-fulfilling prophecy.

And I think that what we need to do is focus on the fact that
it is not inconsistent, on the one hand, to say that we need to
streamline the Government and make it as effective as we can,
and, on the other hand, to say that people working in the Govern-
ment are hardworking, dedicated public service servants perform-
ing a major public service, and it’s indeed an appropriate and desir-
able career for people to pursue. And I think we have to be able
to remember both sides of that equation as we go forward.

Mr. Mascara. I concur with you on those latter statements,
about having a lot of hardworking, dedicated Federal employees.
And I think, for the most part, they're taking a bum rap; that we
do have good, hardworking people. And I hate to see the Govern-
ment dipping into their pockets in many instances, be it asking
them to pay more for their retirement or asking them to go to a
different type retirement system; and then ask those same people
to participate in this program to measure.

I mean, that’s where my question is coming from. How do you
think we’re successful in doing that, or do you find them being re-
calcitrant or not cooperative in developing this plan?

Mr. KOSKINEN. To their great credit—and I think it is consistent
with your point about their hardworking nature and their commit-
ment and dedication to the government—we have found nothing
but excitement in government employees not only about reinvent-
ing government and those projects, but actually about GPRA. I
think they understand that, as a general matter, the more we focus
on effective operation of programs, the more we'll be focusing on
management and encouraging good management.

And I think that my experience in the private sector, and it has
been certainly verified here in the government, is that if you want
to know something about a program or a policy or a company oper-
ation and what its problems are, go ask the people who are actu-
ally doing the work. And I think that my experience and the
speeches I’ve given and the talks I’ve given across the Government
are that for the first time, employees feel that we’re asking them
for their advice.

The NPR was built on the input of employees. The National
Partnership Council is focused on trying to involve actua! Govern-
ment workers more in the decisions about what goes on. And I
think that, managed well, even though it’s a difficult time of high
anxiety for workers, this can be an exciting time as well. Because
I think every worker who works for the Government wants it to
run better. Everyone managing a program wants it to be effective.

And to the extent we can actually now focus our dialog on those
particular facets of operations, I think people will become more
dedicated and more enthusiastic about their work.

Mr. Mascara. I appreciate your comments. Thank you very
much, Mr. Chairman.

Mr. Horn. Thank you very much. I have one closing question.
The staff might submit a few that you can answer at your leisure.
In the law, section 1116 talks of the program performance reports,


34

ovements in their performance. i it i
amework for making these neoded Tiproces eee uly implemented, provides the
is concludes my pre} i:
pleased te saan ny pre spares a statement, Mr. Chairman. My colleagues and I would
Mr. Horn. Thank you very much. That’s a very helpful state-
ent. Let me get to the training for a minute. I take it you feel
uch more should be done than has been done. What type of train-
g are we talking about? And does OPM or OMB or the executive
‘anch, generally, have the capability to deliver that type of train-
g? What type of training are we talking about?
Mr. FINCH. Well, training is a very important issue, Mr. Chair-
an, as you recognized and as you indicated in your questions to
r. Koskinen, the leading witness. We’ve discussed some of the is-
‘es about training in other hearings in your series of nine hear-
gs. For example, in I think it was probably the second hearing,
2 talked about the need to really develop the knowledge and skills
id abilities of agencies, and to develop their information tech-
dlogy abilities in both financial and programmatic information.
So that’s an area in which training is needed. Training is also
xeded in terms of setting performance goals, and establishing per-
rmance measures. More training is needed in helping agencies
iderstand how to take that performance information and decide
yw to improve their performance. In other words, the performance
formation will tell you how well you did. But it won’t necessarily
ll you the cause-effect relationship between what you did and
yw well you did. .
So there’s a real need for training in program evaluation as well.
Mr. Horn. Now, as you and I know, this Government, over the
st 30 years, has gone through various versions of program eval-
ation.
Mr. FINCH. Yes.
Mr. Horn. Do you feel somewhere in the Government we have
x0ple that could really explain some success stories; what made
em a success story; what types of particular training was essen-
al to that success story? Do we have that capability? I mean, has
mebody got the success story where they delivered the training,
at the end of it, they at least knew what training they needed?
And have we captured that to be used during a pilot program or
iy program? Do you know of one? If so, what is it; where is it?
Mr. FINCH. Where’s the secret key?
Mr. Horn. Right.
Mr. FINCH. I think there are some instructive examples that can
: learned from the foreign governments that we looked at.
Mr. Horn. Right. ;
Mr. FINcH. And we've issued a report in that regard. Experiences
sroad suggest some insights. And if you don’t have a copy of that,
r, we'd be glad to submit one for the record. We've also got State
:periences that provide some insights. And there have been some
vod examples in the State sector of that kind of thing. We've also
xt some indication from the private sector, as well. d we've is-
ted a product in that regard, about their recognition of the need
r training and how they brought that——
Mr. Horn. Well, shouldn’t we take some of those people from Or-
son, North Carolina, Minnesota, as well as the private sector, that


58

1e proposed partnership agreements would not only substantially implement our
as recommendation but also encompass all the basic elements of GPRA, that
trategic planning, annual performance plans, and performance measurement.
are especially attracted to FEMA’s emphasis on the federal government and the
2s working cooperatively to set goals, determine performance measures, and
e joint evaluations to disaster operations.

2ginning in fiscal year 1997, state/local performance and risk reduction will be
ors used to determine the amount of FEMA financial assistance. If a state ac-
olishes its annual outcomes, it may be eligible for additional funding the follow-
fiscal year, FEMA's underlying goal is to strengthen state and local capacities
ugh a comprehensive, risk-based, all-hazards emergency management system.
sees will depend, in large part, on financial resources being available to provide
additional funding, develop and deliver needed training and education, establish
mprehensive exercise program, and increase investment in state and local emer-
y management.

Ir. Horn. I thank you very much for those comments. Let me
both of you a couple of similar questions, and then some ques-
is individually. With Professor Light, I believe he mentioned
t OMB appears not Strong enough to properly fulfill its over-
it capacity. How should Congress, in your opinion, go about
mgthening the oversight capacity of OMB to strengthen its lead-
aip of the agencies? Or is that just wrong-headed, and we ought
really be encouraging leadership of the agencies, despite OMB?
ir. LicHT. Well, I think what you want is a pleasant blend of
tral policy guidance and decentralized implementation. And
it now, the fashion is complete decentralization. On the issue of
ition management, it’s very clear from past studies, going all
way back to the 1950’s, that agencies do not do well when given
iplete freedom to do position management on their own.

; just has not worked. The recent decision to break up the man-
ment division of OMB and basically integrate it at the budget
dyst level, I think is a wonderful effort to integrate budget and
nagement, but leaves the agency and the President ultimately
hout a single focus for management review. I do not believe in
ating an office of Federal management, separate from OMB.
think that leaves you with a problem of influence. I think you
as best you can to create a credible presence within OMB, and
jible integration across the two divisions, but I don’t think you
do it by completely dismantling the management division and
ding it into the budget units, which has been the case over the
; 1¥2 years or so. ;

o I would urge Congress and the administration to consider re-
Iding the management side of OMB and giving it a credible
sence in OMB and throughout the budget process.

Ir. HorN. Any comments, Mr. Fosler?

fr. Foster. Mr. Chairman, as you know, this is an issue of long-
ading debate within the Academy. There are different positions
t I think reflect different approaches that could be taken to try
jevelop a substantial management capacity. The ideal, I think,
arly, would be to try to fully integrate management with budget.
.ttempts to do that in the past have not been successful, which
ye of the reasons some of those with experience in those at-
ipts have suggested that while it may not be the ideal model,
haps a suboptimal approach is to separate out management and
re a separate office that’s devoted to it. Clearly, that can create
blems of its own.


76

+ is significant that each of these goals reflects a result clearly outside the Coast
ard’s control. We have broad influence over these outcomes, but external factors
ya major role as well. Each target level was judged to be realistically attainable,
intended also to be a reach. That is, each represented a level of improvement
ond the historical trend. They were a reach and required new approaches to
ines,

‘reliminary data indicate that by the end of 1994 we had achieved or surpassed
FY94 target levels for seven of the eight goals. Data for the remaining goal are
na non Coast Guard source and are not yet available.

Key Srratecies

angible managerial flexibility has been the underpinning of our management, ap-
ach. Accountability for results requires that managers be given euifiecce Ne inks
to manage their activities and reinvest resources toward goal achievement, At
same time, an “outcome” orientation inherently offers the opportunity to reduce
ailed, centralized direction of activities. Since the beginning of 1994, we have re-
ded or relaxed performance standards for all marine safety field activities not
aired by law, regulation or for national consistency. The scope and frequency of
vities like harbor patrols, cargo transfer monitoring, or waterfront facility in-
stions—previously subject to national standards—were deferred to the judgment
xcal commanders, who developed strategies for achieving program goals based on
ad policy guidance and risk assessment, By substituting command discretion for
internal mandates, managerial flexibility has been increased for over 460,000
k hours of activities annually. By further deactivating specific program activities
1 low return, another 60,000 work hours have been freed for reinvestment. These
k hours have been employed by local commanders in activities that best help
n accomplish overall performance goals.

ur plan further identified five areas of business focus. These areas of mission
thasis—like fishing vessel safety, port state control, and human factors—were
sed to reflect our best investments over the next 3-5 years toward achieving our
's. All of these have begun to drive structural changés in our programs. A focus
port state control, in particular, has generated a broad new targeting program,
ed at identifying flag states, classification societies, and vessel owners whose
sels are disproportionately represented in the population of substantially non-
pliant vessels, where intervention action is taken under international treaty.
5 program has substantially leveraged Coast Guard resources, as well as serving
model for other nations’ port state control programs.

USING PERFORMANCE INFORMATION TO MANAGE PROGRAMS

rogram use of performance information has been another essential ingredient in
eving results and iteratively tuning our plan. This depends on the ability to
geregate the primary measures into their component parts, from many different
ies and on the relevance of these measures to senior management for managing
vities and resources. ;
fter development of our program goals, we identified staff members with exper-
in policy analysis and rogram evaluation to begin developing performance indi-
rs fr each goal, These individuals created an ad hoc Program Evaluation Group
ort through potential measures, find and calibrate data, and present options to
or management. We found this separation of roles between the Board of Direc-
and the Program Evaluation Group to be important for the utility and credibil-
of our evaluation system. Where a post might focus on personal safety, the per-
ance indicator takes into account the relative reliability of fatality vs. injury re-
s, a common normalizing factor for changes in exposure, comparability in form
1 other safety data, and statistical methods for determining underlying trends.
ae Program Evaluation Group further identified a range of possible risk factors
ted to safety and environmental outcomes, external factors which may affect
evement of our goals, and possible unintended effects of our programs, for fur-
analysis. Several of their findings have helped redirect our programs and re-
‘ces. For example, evaluation of fatality rates by vessel service has shown an un-
cctedly high fatality rate for crew aboard uninspected towing vessels. This find-
has led to a collaborative effort with the towing industry to isolate the problem
cargeted, non-regulatory solutions, and to a new performance goal in our subse-
at E Y1995 Performance Plan. Furthermore, these measures are comparable with
ty measures for other industries and activities across a variety of government
yams. This potentially offers the ability to extend the Coast Guard's experience
ore broad, government-wide decision making.


28

work we and others have done in this area. I will discuss five emerging challenges
to the effective government wide implementation of GPRA. Our work and reports
on leading state, foreign, and private sector management reform efforts have under-
scored the importance of meeting these challenges if GPRA is to be effectively imple-
mented.? These five key challenges are
—eveloping and sustaining top management commitment to GPRA,
—building the capacity of agencies to implement GPRA and use the resulting
performance information,
—ereating incentives fo implement GPRA and change the focus of manage-
ment and accountability,
—integrating GPRA into daily operations, and
—building a more effective congressional oversight approach.
Working with this Subcommittee and other committees and subcommittees, we
will gontinue to monitor agencies’ efforts in meeting GPRA’s requirements and re-
port to Congress as required by the act.

OvERvIEW OF GPRA REQUIREMENTS

GPRA establishes a legislative framework for having agencies set strategic goals,
measure performance, and report on the degree to which goals were met. GPRA re-
guires each agency to submit to the Office of Management and Budget (OMB) and

‘ongress a strategic plan by September 30, 1997, covering at least 5 years, for the
agency's program activities. In this plan, an agency is to lay out its mission, long-
term goals and objectives, and strategies for achieving those goals and objectives.
To be updated at least every 3 years, the plan is to serve as the starting point and
basic underpinning of the agency's goal-setting and performance measurement proc-
ess.

GPRA then requires each agency to submit to OMB, beginning for fiscal year
1999, an annual program performance plan. The first plans are to be submitted in
the fall of 1997, The annual performance pian is to provide the direct linkage be-
tween the long-term strategic goals outlined in the agency's strategic plan and what
managers and employees do day to day. In essence, this plan is to contain annual
performance goals to gauge the agency's progress toward accomplishing its longer
term strategic goals and identify the performance measures the agency will use to
assess its progress.

Finally, by March 31, 2000, GPRA requires that each agency submit an annual

rogram performance report to the President and Congress covering the previous
Reeal year, This report is to provide important feedback to managers, policy makers,
and the public on what was actually accomplished in the agency for the resources
spent. The report is to have two primary elements: (1) a discussion of actual per-
formance achieved compared to the goals laid out in the annual performance plan
and (2) actions needed to achieve unmet goals.

INITIAL GPRA IMPLEMENTATION THROUGH PILOTS

Under GPRA, OMB is to select at least 10 agencies to pilot GPRA’s performance
planning and reporting requirements for one or more of the agencies’ major func-
tions and operations, in fiscal years 1994 through 1996. However, as an indication
of the significant support for GPRA across the federal government, 71 pilots are now
under way across most major federal agencies. While 77 pilots were designated by
OMB, 4 pilots have withdrawn (and 2 more are planning to do so) because they
overestimated their current abilities to meet the goal-setting and performance meas-
urement requirements of GPRA, changed the focus of the participating agency away
from the original focus of the pilot, or because of other reasons, according to agency
officials * We will continue to review the reasons these pilots withdrew of are with-

rawing.

J Managing for Results: State Experiences Provide Insights for Federal Management Reforms
(GAOK )-95-22, Dec. 21, 19194), Managing for Results: Experiences Abroad Suggest Insights
for Federal Management Reforms (GAO/GGD-95-120, May 2, 1995), and Organizational Culture:
Pechniques companies Use to Perpetuate or Change Beliefs and Values (GAO/NSIAD-92-105,

'eb. 27, 1992).

3An initial set of 52 pilots was selected in January 1994. Since then, an additional 25 pilots
have been announced. The four pilots that have withdrawn for fiscal year 1996 are the General
Service Administration’s Information Resources Management Service, the Merit Systems Protec-
tion Board, the National Science Foundation’s Education and Training Program, and the Na-
tional Archives and Records Administration. The two programs that are planning to withdraw


94

MANAGERIAL FLEXIBILITY & ACCOUNTABILITY PILOT

Question: Have you submitted any proposals for the Managerial Flexibility and
countability Pilot? If not, please explain the problems you are facing and suggest
lutions. If you have, was it rejected by OMB, and if so, for what reasons, or are
u still waiting to hear from them?

Col Ward: Air Combat Command has not submitted any proposals and does not
tend to participate in the Managerial Flexibility and Accountability Pilot program.
rwever, it does intend to continue its participation in the Performance Measure-
ont Pilot and hopes to participate in the Performance Budgeting Pilot when in be-
as in FY98.

JOCAS II

Question: You referred to JOCAS II in your written testimony. It sounds like the
ad of system other agencies can make use of to track costs. Could it be easily
apted for other agencies and projects?

Col Ward: The Job Order Cost Accounting System II, or JOCAS II, represents the
sdernized and redesigned Job Order Accounting System used in'the former Air
ree Systems Command, RDT&E arena. The Defense Finance and Accounting
rvice (DFAS) owns JOCAS II. ACC does not know how adaptable it would be to
aer agencies and projects, or the required software modifications, but encourages
yone interested to contact a DFAS systems administrator.

GPRA

Question: In what ways has top management supported or hindered the imple-
ontation of GPRA at your agency or pilot project?

Col Ward: Top management has encouraged the implementation of GPRA within
3C by providing guidance, instruction, funding, manpower, and publicity for the

jlementation effort.

Question: Are both career staff and political appointees involved in the GPRA im-
smentation efforts? Please describe how and how it has affected the project.

Col Ward: Yes. Secretary of the Air Force, Comptroller (SAF/FM) and Under Sec-
tary for Defense, Comptroller [USD(C)], specifically the Performance Measure-
mnt and Results Directorate, have provided excellent Support to ACC as a Perform-
ce Measurement Pilot. They both have furnished timely instruction and guidance

further ACC’s GPRA implementation efforts.
Question: How, if at all, do top political appointees and career managers show
air support for GPRA, and how is that support communicated throughout the
ency?

Col Ward: Secretary of the Air Force, Comptroller (SAF/FM) has publicized ACC's
>RA implementation efforts through letters to other Air Force agencies and at
esentations to financial managers at the Professional Military Comptroller School
MCS), the Financial Staff Officer Course (FMSOC), and the Air Force Quality In-
tute (AFQI). Both USD(C) and SAF/FM have expressed their intention to visit
e of the pilot wings within ACC to closer examine the implementation efforts.
tis level of interest demonstrates to wing level personnel the support for this pilot
ogram.
DESIRED OUTCOMES

Question: Describe how your pilot is assessing internal constraints on managers’
xibility in achieving desired outcomes. What kinds of constraints, if any, have
en removed and with what consequences?

Col Ward: ACC has a system in place that establishes desired outputs and out-
nes, On a quarterly basis, the headquarters staff and field agencies review the
3C Quality Performance Measures (QPMs) and their results. This system allows
“continuous improvement to the QPMs. Process owners at all levels refine and
date their goals, objectives, and processes as needed. Constraints on managers’
xibility should be identified during this process.

GPRA

Question: How has implementing GPRA changed the activities that staff focus on,
‘a day-to-day basis? If it has changed things, in what ways have things changed?
Col Ward: Implementing GPRA has not changed the activities that the ACC staff
muses on, on a day-to-day basis. The essence of GPRA was already in place. ACC's
ality program laid the foundation for performance planning and measurement
d strategic planning. GPRA provides a different opportunity for implementation
ite it is an actual statute, offering more incentive to adopt/practice quality con-



9

Some assert that if GPRA did not exist, we would—given these times—have hi
to invent it. The need for transforming how government functions and is manag
was recognized and acted on in other countries before we started on this path.
one sense, GPRA is an American analog to initiatives begun in Australia, the Un
ed Kingdom, and New Zealand over a decade ago. Similar initiatives are being stay
od elsewhere Sweden, for instance,—or are being given a new emphasis, such
in Canada, We are also not without counterpart efforts at the state level: Oreg
and Minnesota are two examples.

Nearly all these national and state efforts came about as government leade
sought the means for responding to tight fiscal pressures, and a recognition that t]
usual way of running government would no longer suffice. More importantly, the e
periences elsewhere are proving to be successful, are continuing, and are growin

A GENERAL OVERVIEW

Let me turn to the implementation of GPRA. We are, overall, making go:
progress, although it is uneven and we have much more to do. _

This law is carried out in two stages. The first stage primarily features two se
of pilot projects, and builds the foundation for the second stage of GPRA. The secot
stage begins in 1997, with government-wide implementation of GPRA requirement
It is during this second stage when GPRA should bring about very fundament
changes in the management and budgeting of government programs and operation

The pilot project stage has proven to be an invaluable aspect of this legislatio
providing departments and agencies time to prepare, test, and see what works ar
what does not. We must be mindful that ch: as fundamental as those GPF
seeks to introduce do not happen overnight. Other countries with more experien
in GPRA-type reforms indicate they can take five years and more before becomit
the normal routine in agency operations and administration. _

So far, the basic conceptual construct for GPRA as legislation seems to be soun
which is not surprising since GPRA is grounded in proven, common sense practic:
long used by American business. What GPRA seeks to change is an approach to go
erning and managing which has concentrated mainly on the money coming in at
the money y going out. Instead, GPRA focuses on what government programs accor
plish, or to accomplish; on what we as taxpayers and as a government are ge
ting for our money. Simply put, we are creating the government's bottom line.

ile, at this juncture, it appears that sufficient flexibility is already embedd&
in this legislation to allow any needed mid-course adjustments to be made witha:
having to revise the law, I do wish to raise a note of concern and caution.

GPRA is comprehensive, far-reaching legislation. As its potential becomes mo
widely understood, an increasing number of new legislative proposals would ada:
certain GPRA provisions, or overlay, new GPRA-related requirements on specii
government functions or programs. These separate legislative initiatives complica
our attempt to integrate various performance-related laws into a cohesive fram
work. I would hope that the full committee would take the lead in insuring th:
wwe continue to support the implementation of GPRA without the imposition of ne
and unnecessary additional performance requirements.

PERFORMANCE MEASUREMENT PILOT PROJECTS

As I remarked earlier, GPRA implementation occurs in two stages. Let me no
report in detail on the pilot projects.

‘he law specifies that OMB, in consultation with the agencies, should designa
at least ten departments and ‘agencies as pilot projects for performance meacur
ment. The agencies are to prepare for these pilot projects annual performance plat
with performance goals (targets), and annual program performance reports compa
ing actual performance with the target levels in the plans.

er the past 18 months, the Director of OMB has designated 27 departmen
and agencies as pilot projects.! All Cabinet departments and many of the larg:
agencies were designated. Within the designated departments and agencies, over’
individual program or component organization pilots were included in these 27 de
ignations.
The designations also meet the specification in the law that the pilot projects ¢
compass a representative range of government functions, from the military and fo

1The Social Security Administration (SSA) was designated as a pilot project when it was pe
of the Department of Health and Human Services. S8A has subsequently become. an indepen
ent agency, so the total number of departments and agencies covered by these designati
98. In the course of the ilot Droieet merind, several tthe dacioresioes Thee TomtematioNS W


77

Lessons LEARNED FROM GPRA PILOT IMPLEMENTATION

Our GPRA pilot experience has given us a number of insights into the planning
and evaluation process, many of which may be transferable to other agencies in
their implementation of GPRA. Some of our observations are:

* Senior line managers must be personally involved (more than passive advo-
cates) in formulating program goals. These goals will be the benchmarks which
define success for the organization.

* GPRA requires a fundamental rethinking of programs. You can’t go in try-
ing to document current business/ativities it is a strategic thinking exercise.
GPRA is not about what you do—it’s about why you exist.

* Goals and measures are pert of a bigger communication process—the idea
is to communicate the value of the programs, in terms which are ultimately
comparable with other Federal programs, for making high level decisions on rel-
ative priorities.

* Goals and indicators must extend beyond what the program/agency controls.
By definition, things you can control are not outcomes. You can’t comply with
the law without dealing in the realm of influence.

‘* Goals should be a reach. Safe target levels do not provide as much intrinsic
value to the public, and do not motivate employees to rethink how they do their
work, Goals must also be realistically achievable, but program managers
shouldn’t be punished for failing to meet goals,

* It helps to understand that goals/indicators aren’t direct measures of a pro-
gram’s performance—they are a window to the external world that we're trying
to influence. This fact allows managers to take the risk needed to set outcome-
oriented goals.

© Outcome-oriented goals inherently cut across organizational lines, and
therefore their development is facilitated by use of a cross-organizational group
(vs, delegation to smaller components of the organization to develop their own
goals).

* There are two basic questions for which GPRA requires answers: 1) are the
intended outcomes occurring? and 2) what is the program contribution to those
outcomes? The first question is more easily answered than the second, and can
provide a wealth of meaningful management information by itself (to help focus
activities and resources).

* Goals must be stated in terms that are clearly understandable to your “next
door neighbor.”

* Goals should include major functions only—the things that essentially char-
acterize the organization—not diluted with many trivial programs.

« The pursuit of unattainable precision in measures can be a distraction. Im-
perfect measures are OK. The process is iterative.

* Strategies for achieving goals are necessary before the first plan is pub-
lished. There should be some logical linkage between the goals and your plans
to achieve them,

 Outcome-oriented goals free the organization to explore alternative ap-
proaches to delivering products/services. Managerial flexibility is inherent (and
necessary) in the process. In fact, managers can’t be held accountable for
achieving outcome oriented goals without sufficient managerial flexibility to
achieve those goals.

Organizations must have the flexibility (from higher levels within the Ad-
ministration and from Congress) to reinvest their own resources toward higher
payback activities.

‘* Managerial flexibility can be increased dramatically by simply reducing the
organization's own internal rules and standards for activity performance.

* Implementing GPRA need not be an onerous, costly effort. The Coast
Guard's pilot project has been done entirely by Coast Guard personnel, without
any non-Federal assistance. The cost has been about four full-time staff, or
about one-tenth of one percent of our direct program staffing. However, there
may be increased costs to collect measurement data if expanded Coast Guard
or government-wide.

Plans must be simple.

* Incentive/reward systems need to be changed to encourage risk-taking.

* It is important not to underestimate the strain of reengineering. Implement-
ing GPRA involves new approaches to business which can challenge the more
familiar and comfortable management processes already in place.

* Using outcome-oriented goals and measures, as required by GPRA, may
take years to establish trends that show the results of an agency's influence.


84

ras based on seniority and job title. Bonuses were based solely on individual per-
yrmance, regardless of organizational outcomes. The results were inefficient oper-
tions, staffed by unhappy employees, providing inadequate service to veterans.

In March 1992, the Tce began to fundamentally change this dynamic. Starting
tabula rasa,” teams of managers, union officials and employees redesigned oper-
tions. One year later, a prototype unit, incorporating these changes, opened for
usiness. By August 1994, three-fourths of the office was using the new model. The
ifference between old and new was striking. ;

The multi-organizational assembly line was replaced by self managed teams with
ond-to-end” ownership of the process. Entire organizations were eliminated. Twelve
aparate jobs were combined into three. The number of managers and organiza-
onal layers were substantially reduced. The twenty to thirty process steps were re-
uced to eight. Performance measures were expanded to include customer satisfac-
on, unit costs and employee development. Pay began moving toward a skill-based
nd variable pay model. oe ;

Most importantly, teams provide a level of individualized service to veterans that
‘as not possible under the old system and employees have greater control, more au-
rority and find their job much more satisfying. .

The change process is approximately half completed. We will be testing a new pay
ystem and over the next three years, the remaining elements of the organization
‘ill move on to teams. ;

The office was designated as a “reinvention lab” under the National Performance
eview and was selected by the Office of Management and Budget as a pilot for the
‘overnment Performance and Results Act (GPRA). This provides the New York Re-
ional Office with a unique opportunity to test changes in process, organization and
erformance measurement.

Under GPRA, the New York office developed a comprehensive set of measures de-
igned to give a balanced picture of performance. In addition to the traditional
teasures of accuracy and timeliness, there now are measures of customer satisfac-
on, employee development and unit costs for a large number of the processes. As

direct result of using one of these measures, unit cost, the office has been able
> find an estimated $14 million in savings and cost avoidance (over a ten-year pe-
od) in space utilization, rent charges and telephone costs. This new balanced meas-
re approach is being adapted by the VBA and will become the basis for its future
lanning processes.

The dual GPRA pilot and reinvention lab role of the New York office has allowed

to take a different look at the traditional measures used by the VBA organization.
or example, the old timeliness measure was developed internally, based on what
vas assumed as a reasonable length of time. The new timeliness measures are de-
sloped from a customer perspective, what the customer believes is timely service.

This change agent role has not been a easy one; however, valuable lessons have
2en learned from the New York experience. Its successes were in no small part due
) the support it has received. Support for changes made through reinvention lab
nd GPRA pilot status was sought at all levels—managers, employees, union offi-
als (American Federation of Government Employees), veterans’ organizations and
‘A Headquarters. This support, coupled with “reinvention lab” flexibility, has al-
‘wed the office to deal with the challenges inherent in fundamental change.

The development of new measures to use in the New York GPRA Pilot Program
squired a one-year effort. Several obstacles had to be overcome. There was a tend-
acy to focus solely on internal (VA) process measures instead of outputs and out-
ames that are important to veterans and taxpayers. A system to adequately meas-
re customer satisfaction needed to be established without creating an undue ad-
unistrative burden on the veteran or ourselves. The data needed to create a unit
»st measure required information from separate data systems and required includ-
ig existing significant overhead in the calculations. Finally, it is difficult to build

measure to adequately determine the skill development needs of staff members
1a new working environment. Most important to the entire process is a link be-
veen all of the measures and the pay, rewards and performance of team members.
{uch remains to be done with the new measures; but the experiences of New York
ill reduce development time for new performance measures in other VBA pro-
rams.

The lessons learned in New York and the other VBA GPRA pilot, the Loan Guar-
ty Program, have created a framework for the phased implementation of the
PRA requirements for other VBA programs (Compensation and Pension, Edu-
ation, Insurance and Vocational Rehabilitation and Counseling), VBA has imple-
ented an GPRA implementation program that includes development of focused
arformance goals and measures for each of our benefit programs. VBA has used


5

do the other witnesses, immediately after the introduction. Please
proceed.

STATEMENT OF JOHN KOSKINEN, DEPUTY DIRECTOR FOR
MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

Mr. KosKINEN. Thank you, Mr. Chairman. I'll try to meet the 5
minute standard; I may go over just a little in terms of summariz-
ing what I have to say. I’m very pleased to be here this afternoon
to give the committee an update on our progress thus far in carry-
ing out the Government Performance and Results Act. This series
of hearings, which the chairman has just described, has provided
an excellent overview of the issues involved in improving the oper-
ation of the Federal Government. We're pleased to have played a
small part in this endeavor.

GPRA seeks to bring about effective and efficient government—
a goal that transcends politics or ideology. This is truly a biparti-
san law, with an equal number of Members from both sides of the
aisle sharing in a sponsorship of this legislation during its consid-
eration by the Congress. I would note particularly the leadership
shown by the chairman of the full committee, Mr. Clinger, in sup-
porting this legislation before the House.

Our general overview is that we are, overall, making good
progress, although it is uneven and we have much more to do. The
pilot project stage has proven to be an invaluable aspect of this leg-
islation, providing departments and agencies time to prepare, test,
and see what works and what does not. Over the past 18 months,
the Director of OMB has designated 27 departments and agencies
as pilot projects. All Cabinet departments and many of the larger
agencies were designated. Within the designated departments and
agencies, over 70 individual program or component organization pi-
lots were included in these 27 designations. The designations
meet the specification in the law that the pilot projects encompass
a representative range of government functions, from the military
and foreign affairs to regulation, research and development, and
processing of claims and providing benefits.

Of the 25 major government functions that OMB identified, we
lacked designated pilots in only 2—direct delivery of health care
and electric power generation and distribution. These pilots are not
being done on a limited scale. The pilots cover over 425,000 civilian
and military personnel.

In the aggregate, the pilots cover more employees than any Unit-
ed States corporation except General Motors; substantially exceed
the total number of civil service employees at the national level in
Australia, Canada, New Zealand, and Sweden; and are about 80
percent of the total civil service in the British central government.

As should be expected from any large endeavor, some of the pi-
lots have turned out better than others. We think of this as good
news on all counts. It is good news that some pilots have shown
that good performance plans can be produced, and the basic con-
cepts are sound. But having pilots which are struggling and finding
this a difficult course can also be good news, since we learn what

has gone awry, possible remedies, and what is essential for overall
success.


81

activities. It identified a heightened significance of local circumstances in the risk
equation than was being reflected in our nationwide mission performance standards.
Field commanders needed more flexibility, and the program needed a clear and com-
mon understanding of its program goals, This led to the development of a program
business plan, and the Government Performance and Results Act (GPRA) perform-
ance plan was distilled from the business plan.

QUESTION. WHAT HAVE BEEN THE MOST SIGNIFICANT CHANGES IN
THE NATURE OF THE COAST GUARD'S WORK SINCE RESULTS-ORIENTED
MANAGEMENT WAS ADOPTED? . .

Answer. While the Coast Guard’s primary Marine Safety, Security, and Environ-
mental Protection missions have not changed, adoption of results oriented manage-
ment under the Government Performance and Results Act has led to a fundamental
shange in the program’s business approach, broadly replacing detailed mission per-
formance standards with field discretion aimed at a set of outcome-oriented goals.
By deactivatii rogram activities with low return, 60,000 work hours have been
redirected. by field commanders to critical, local needs. This shift has required re-
thinking the relationship with stakeholders, approach to program evaluation and
measurement, models for staffing and allocating resources, an Bolicies for program
execution. As a result of these changes, progress can be measured in a more credible
way, and the program’s value and impact can be more easily demonstrated.

UESTION. HOW DO YOU PI! TO EVALUATE YOUR PROGRESS TO-
WARDS ATTAINING THE EIGHT PERFORMANCE GOALS YOU HIGHLIGHT IN
YOUR TESTIMONY? DOES YOUR REPORT FORMAT INCLUDE AN EXPLANA-
TORY SECTION WHERE YOU DISCUSS THE EXTERNAL FACTORS IMPACT-
ING THE OUTCOMES?

Answer. The Coast Guard's first evaluation report, comparing actual performance
xo the goals in our fiscal year 1994 plan, was submitted to Office of Management
and Budget in March. A copy is attached for review. External factors are addressed
generally (see page 6 in the report), and individually, as they impact the achieve-
‘nent of specific goals.

Mr. Horn. Thank you very much, Admiral. Our next speaker is
Mr. Joseph Thompson, the Director of the Veterans Affairs New
York regional office of the Department of Veterans Affairs. Mr.
Thompson, welcome.

Mr. THOMPSON. Thank you, Mr. Chairman. I am pleased to be
nere today to discuss the status of the implementation of GPRA in
the Department of Veterans Affairs; specifically in the New York
regional office. VA is active in the pilot project phase of GPRA im-
plementation. We had three pilot projects get started in fiscal year
34the National Cemetery System, our home Loan Program, and
the New York regional office.

I should point out the New York regional office is also a reinven-
sion lab, part of the National Performance Review. The feeling of
2xperience gained through participation in these pilot projects is
deing shared and applied throughout the agency, and we'll be posi-
sioned to implement the performance planning provisions of GPRA
ay September 1997.

To tell you a little bit about the regional office, we’re 1 of 58 ad-
ninistering veterans benefits throughout the country. Until re-
rently, we were organized based on a hierarchical control oriented
model. Benefits claim processing was broken down into small, dis-
sreet tasks, which were handled via a sequential assembly line
type operation. Numerous elements, spread across division lines,
handled each claim.

For example, a disability claim could require a dozen people and
20 to 30 different steps, and actually pass through seven separate
chains of command. Internal communications, as you would guess,
tended to break down not only with ourselves, but also with our
veteran customers. The manager's rale was tn fneue an actablichine


92

t their respective performance plans. Our FY95 Performance Report is due to the
ice of Management and Budget in February of 1996.
Although our progress with the Performance Measurement Pilot Project has been
id, one of the major challenges we encountered was developing a methodology to
‘ture and track cost per unit output. To meet this need, we are employing the
sting Job Order Cost Accounting System II (JOCAS II) to capture the cost associ-
d with the test QPMs. We are currently installing JOCAS i at the 355th Wing
Davis-Monthan. To get JOCAS II up and running at the base requires installing
v computer equipment, restructuring the wing's financial data to properly inter-
e with the system, and conducting operator training. We should have the system
rational in August of 1995 and will use it to map and cost three QPMs from the
gs FY95 Performance Plan. If this test is successful, we will install the system
e other two test wings. Eventually, we would like to use JOCAS II to capture
1 track cost per unit output data for every QPM in Air Combat Command.
‘he major lesson we learned from our experience with the Performance Measure-
nt Pilot Project thus far deals with the need to solidly link goals and performance
asures, We found that as our pilot wings developed their goals and objectives,
y needed to formulate the QPMs they intended to use to measure their success
meeting these goals at the same time. This will ensure they track areas impor-
+ to their organization’s future, and not just those areas that lend themselves
2asy measurement. In addition, the performance measures must be quantifiable
order to meet the requirement to link cost to our QPMs.
dur experience with the Performance Measurement Pilot Project has also given
insight into possible changes to some of the GPRA provisions to make implement-
the law easier and more efficient. We recommend extending the incubation pe-
i of the Performance Measurement Pilot Project by allowing a third round of per-
nance plans for FY97. The added experience will improve our understanding of
process before the law requires all federal agencies to submit strategic and per-
nance plans in 1997 to support the FY99 budgets.
n addition, we would hope work on the 1998 Performance Budgetin Pilot Project
ald begin soon with input from the entire executive branch. We believe perform-
:e budgeting will take more time and effort to implement across government than
previous two pilot projects. It represents a tremendous challenge for all federal
neies, requiring new ways of thinking about resource allocation.
n closing, GPRA has the potential to impact the federal government in a creative
1 positive way. It mirrors many of the same ideals and methods ACC has adopted
h our leadership style and quest for continuous improvement. Using strategic
ns, setting annual goals, and measuring how well they are achieved will improve
ountability and, very likely, productivity. We appreciate the committee’s interest
GPRA and look forward to helping other federal agencies implement its provi-
as.

FOLLOW-UP QUESTIONS AND ANSWERS
VIEW OF GPRA

Question: How do top-ranking officers view performance management and the
ious requirements of GPRA?

‘ol Ward: ACC's senior leaders are committed to performance management, stra-
ic planning, and performance planning. As the Air Force continues to downsize
| budgets are cut, ACC persists in identifying ways to perform its mission in the
st cost effective means possible. Performance management helps ACC identify
se methods and leads to continuous improvement and mission accomplishment.

GPRA IN OPERATIONS.

Question: What effect has GPRA had on the nature of operations of the Air Com-
‘Command? ;
‘ol Ward: ACC's involvement in the GPRA is a natural outgrowth of the commit-
at to quality improvement. ACC stresses continuous improvement through per-
nance measurement and thus has an immediate link with GPRA. The effect on
rations within ACC has been somewhat transparent compared to an organization
h less of a quality foundation, Among major impacts of GPRA on operations has
n the help provided in preparing ACC for full implementation of the Law as well
ntensifying the relationships between ACC goals and performance measures.


60

referring to the director of OB, rather than OMB. It’s just not there
an) ore.

uch as Deputy Director Koskinen and Director Rivlin care
about management, it is not the primary function in their day to
day work, I’m afraid.

Mr. Horn. Has any scholar done a thorough work of the manage-
ment function before and after the Nixon change of Bureau of
Budget to OMB, as to what type of projects they engaged in; what
was their degree of success?

Mr. LIGHT. There have been several that have done some very,
very good work on that issue.

Mr. Horn. Who are we thinking of?

Mr. LIGHT. Perry Arnold, who is at Notre Dame, I believe; Larry
Berman, who is at the University of California-Riverside; Ron Moe
at CRS has done some of this work. Of course, Ron is a very strong
advocate for the office of Federal management.

Mr. Horn. Very good. Do you want to add anything on the schol-
arship side of who’s analyzed that operation?

Mr. Foster. We've done some examinations at the Academy.
There are some pieces that I’d be happy to share with you, looking
at the history of the BOB and the Office of Management and Budg-
et over its tenure, with special emphasis on the issue of the role
of management, dating back to its inception in the 1930’s. I would
add, by the way, that there isn’t any incompatibility with attempt-
ing to integrate management into the budget side of OMB, and at
the same time, maintaining a substantial general management ca-
pacity that is outside of the budget divisions per se, or even of the
resource management offices that have been established.

You can have both. And I think there is a widespread consensus
that the management side of OMB at this point has been shrunk
to a point where it really is counterproductive; and that even with
the integration on the management side, if you had some capacity
in key areas, some of which have been the topics of hearings Before
your subcommittee, that that could be a major help.

Mr. Horn. I now yield to the gentleman from Virginia, Mr.
Davis.

Mr. Davis. Thank you, Mr. Chairman. I apologize for not being
here for the testimony. I did have a chance to review part of it be-
fore I came today. I was at another hearing. Let me just ask a
question—I'll start with Mr. Light, and then Mr. Fosler or anyone
else who has any comments, I’d be interested. I was head of a coun-
ty government before I came here, and we looked at all the tech-
niques in terms of bringing efficiencies and making changes—the
same kind of things the Federal Government is going through, but
the bureaucracies and the constituencies were probably less en-
trenched than they are here.

Do you know any effective way to punish ineffective organiza-
tions in a Federal Government environment? And the rules of the
marketplace really are not effective at the governmental level. And
once a department or agency or program is established, we find out
there’s probably nothing closer to eternal life. It’s just very difficult
to dismantle it or transfer it or do anything else.

What would you do if a program was clearly not working? Or an
agency? I'll start with you, Dr. Light.


56

wance of an annual “Report to the Nation” on annual program performance re-
8,

CONCLUSION

>erformance monitoring and measurement is difficult for any organization, and
the more so for service and knowledge-based organizations. But it is especially
ficult for government. Few governments have ever been able to implement and
itain effective performance measurement systems.
3ut while significant challenges confront GPRA, the early implementation experi-
te demonstrates GPRA’s potential as a powerful tool for improving government
‘rations and communicating progress and results.
*erformance management is at the heart of the transformation that is occurring
government around the world. While the Congress is currently focused on reduc-
costs and balancing the budget, it also confronts the task of redefining missions
i goals, allocating resources, and delivering effective services in those areas
ere it believes government has responsibility. GPRA could be a central tool to
p the federal maintain or improve performance, even as it scales back. The new
tem is beginning to work, and Congress has a key role to play in ensuring its
‘cessful implementation and use to improve the performance of government.

APPENDIX A: NAPA’s COMMITMENT TO PERFORMANCE

mproving government performance is central to the Academy’s mission as em-
lied in its congressional charter. The concept of performance-based public man-
ment has shaped activities of the Academy.
TAPA’s 1980 book, The Productivity Improvement Handbook for State and Local
vernment (John Wiley and Sons), was the first major collection on performance
ed management programs at all levels of government.
JAPA was an early leader supporting the development of the Government Per-
mance and Results Act. In 1991 the Academy adopted a resolution endorsing the
concepts embodied in the act, such as goal setting, performance monitoring and
ular reporting. Academy Fellows Joseph S. Wholey, now at OMB where he is as:
ing with GPRA implementation, and Harry P. Hatry, director of state and local
grams at the Urban Institute, both played key roles in the design of the legisla-
1 and continue to support development in a variety of ways.
fore recently, the Academy has actively worked to support a performance ori-
ed approach to the management of government. The NAPA Advisory Panel on
groving Government Performance, co-chaired by Hatry and Harold B. Fin-
; has supported a variety of activities to assist in GPRA implementation. These
te included formal testimony before Congress; informal guidance to the National
formance Review, Office of Management and Budget, and the General Account-
Office; and oversight of Academy contract work related to performance monitor-
. The Panel produced a report on the early experience with GPRA implementa-
i entitled, Toward Useful Performance Measurement: Lessons Learned From Ini-
Pilot Performance Plans Prepared Under the Government Performance and Re-
ts Act (1994). The Panel also sponsors a monthly Discussion Forum on Improving
yernment Performance to bring together people interested in the concept of per-
nance monitoring and in the effective implementation of GPRA.
\ variety of project based activity at NAPA focuses on improving government per-
nance, as does its various program concentrations, including the Program on Im-
ving Government Performance, Center for Information Resources Management,
1 Center for Human Resource Management, and Alliance for Redesigning Govern-
nt.

APPENDIX B: NAPA REVIEW OF GPRA PILOTS

n March 1994, the Academy's Panel on Improving Government Performance un-
took a systematic review of early experience with the GPRA pilots. All GPRA pi-
s were offered a no cost informal review of the initial plans which the statute re-
red. Seventeen agencies responded to this letter. ee

fembers of the Panel who reviewed the plans, all of whom are listed in the re-
t, represented a wide range of expertise. They included representatives from the
ice of Management and Budget, the General Accounting Office, the Congressional
iget Office, the Congressional Research Service, and the Office of Personnel Man-
ment. They also included practitioners from all levels of government, representa-
1s of major government agencies, and experts from universities, think tanks, and
vate industry.


18

This law requires OMB to be intimately involved in overseeing
the agencies, designating the pilots, consulting with the agencies,
reviewing their plans, reporting to Congress, helping the Office of
Personnel Management to include strategic planning performance
measurement in OPM’s management training program and provide
managers with an orientation on how to effect strategic planning
and program performance measurement.

Are you complying with the requirements of the GPRA by leav-
ing it up to the agencies, as you seem to indicate in your written
testimony?

Mr. KOSKINEN. I think we have to distinguish in that. My testi-
mony tried to make clear that OMB is a catalyst, and OMB is dis-
charging all of those responsibilities. But if we do all of that, which
I think we are doing and will do well, that by itself will not cause
this act to self-execute, that by itself will not come close to guaran-
teeing the success of the act.

This act is going to work, once the framework is up and people
understand it, according to how the people running those programs
manage those programs; how they collect the data; how they actu-
ally provide us the information. This is a Government with over 2
million civilian employees. There’s no way that a handful of people
at the top of any agency are going to be able to manage those pro-
grams themselves.

When I was confirmed, I was asked the OMB 2000 separate of-
fice of management question. I said then, and I continue to believe,
that you could give me 4 or 5 times as many people who now report
to me across the board in all the statutory offices, and it basically
would make no difference in our ability to implement a statute
such as GPRA. And I think what we have to understand is, there’s
a catalytic and leadership role to be played by OMB, which we are
discharging.

We have to understand that that’s what it is—it’s a leadership
role, it’s a catalytic role. But the work is going to be done in the
agencies, and that’s where we have to make sure that we have peo-
ple who understand what needs to be done, who are committed to
it. That’s why we have to have it integrated into the overall man-
agement structure of the agencies and the budget process and the
resource allocation process.

Only then will it really be meaningful for us to be talking about
a Government that is in fact focused on managing for results.

Mr. Horn. I know you've got a lot of things to do, but have you
had an opportunity to visit a number of the agencies and the teams
that are responsible for implementing this act at the agency level?

Mr. KOSKINEN. I have not specifically seen the GPRA pilots. I
have actually visited, in the field, several teams that are working
on reinvention programs and pilots in labor management partner-
ships. In addition to the interagency councils I chair, I’m a member
of the National Partnership Council as well. I’ve been to Customs,
Social Security, and several military operations, looking at what
they’re doing in terms of reengineering the way they do their work
and focusing more on results. But only one or two of those are actu-
ally pilots.

we Lamar Maar ann thasa macthy andar the NPR?


47

Welfare should have had minimal effects on the superstructure of government. After

all, Education was a tiny part of the much larger HEW. Nevertheless, compare the

old HEW in 1976 against the new HHS and Education in 1980. Whereas the old

HEW had but 15 assistant secretaries and 25 deputy assistant secretaries, the two
new departments had 25 assistant secretaries and 68 deputy assistant secretaries

just four years later. Splitting the two apart actually increased the space occupied
y

Fourth, departments have not done especially well when given the freedom to deter-
mine their own shape. It is hard to stay on a diet when temptations are so great.
Although there is much talk about decentralizing Personnel authority these days,
departments have long had nearly unchecked authority in position management.
And it was through this freedom that many departments thickened dramatically.

This should not be news to Congress, of course. The General Accounting Oitice
has long argued that federal position management is weak at best, absent at worst.
The ice of Personnel Management has never had the staff to closely monitor the
proliferation of layers within departments, and most certainly does not have that
capability now.

At the same time, the Office of Management and Budget has almost completely
dismantled its oversight capacity. Much as we can admire the effort to more closely
coordinate management with budget by combining the two at the budget analyst
level, I fear that the net effect is to leave the federal government with little over-
sight capacity at all. As a result, no one knows whether the Gore span-of-control
mandate, which is designed to increase the ratio of managers to employees from 1:7
to 1:15, is being faithfully executed by departments. Lacking such oversight, agen-
cies may be simply “gaming” the initiative by relabeling management positions as
something else.

I should note that there are at least two “victims” of thickening: the taxpayers
who do not get the service they deserve, and the legion of dedicated federal employ
ees who provide the service. The aftermath of the Oklahoma City bombing reminds

of us once again of the extraordinary commitment of front-line federal employees.
They are ridiculed daily, and need only tune in their local talk radio to get an earful
of pub) ‘ic vitriol, but they persevere in their work.
is quick tour of thickening government suggests two basic problems for Con-
gress as it considers proposals for changing the federal hierarch: (1) how to take the
t off, and (2) how to keep it off. ‘ou know, there is great political risk in
eliminating departments and layers. It is like curricular reform in a university set-
ting, which university residents liken to moving the bones in a grave yard. There-
fore, if we are to take the heat for significant structural reform, we ought to be sure
that the reform lasts.

The answer to the first challenge is simple. Cut and keep cutting. The problem
is that cutting broadly and without direction will leave government far less capable
of doing its job. We risk engaging in a “body count” war on hierarchy that produces
quick results such as the elimination of a department or two, but little long term
improvement in performance.

In fact, breaking down a mega-department such as Commerce or Energy may ac-
tually yield a thicker, not thinner, hierarchy. It might be more efficient, for example,
to keep the department, and its assorted off ices of administration, legal counsel,
budget, and so forth, while climinating duplicative offices of administration, etc.,
within NOAA, Census, Patents and Trademarks, and International Trade Moreover,
elevating these units to independent agency status, as Congress did with the Social
Security Administration last year, will clearly produce internal thickening that may
undermine effectiveness. Given the opportunity to create and fill a host of new lay-
ers between their current top at executive level IV and what would become their
new tops at executive level I (which is where SSA was placed), thickening would
be difficult to resist.

Beyond taking freater care in dismantling existing units, I strongly encourage
Congress to consider deep cuts in the number of presidential appointees. We cannot
trim only at the middle and lower levels of the hierarchy, if only because presi-
dential appointees constitute an important and oft-ignored source of delays and inef-
ficiency in the process. The standard view of the number of appointees is that the
number is too small to matter—after all, 3,000 appointees is but a fraction of total
employment.

However, my research on thickening government suggests that presidential ap-
pointees account for a very high percentage of the layers that exist between the top
and bottom of government. They may be but the tiniest fraction of total employ-
ment, but constitute between 25 and 40 ) percent of the layers of management that
exist between the air traffic controller, VA hospital nurse, weather forecaster, IRS
revenue agent, park ranger, food inspector, and other front-line employees and the



51

PREPARED STATEMENT OF R. SCOTT FOSLER, PRESIDENT, NATIONAL ACADEMY OF
PUBLIC ADMINISTRATION

Mr. Chairman and Members of the Subcommittee:

I am Scott Fosler, president of the National Academy of Public Administration
(NAPA), It is a privilege for me to be here to participate in your deliberations on
the implementation of the Government Performance and Results Act (GPRA).

It is both appropriate and timely that your subcommittee is considering experi-
ence with GPRA to date, and how you can be most effective in assisting with its
implementation.

NATIONAL ACADEMY OF PUBLIC ADMINISTRATION (NAPA)

The Academy is an independent, nonpartisan, nonprofit organization chartered by
Congress to identify emerging issues of governance and provide practical assistance
to federal, state, and local government on how to improve their performance.

‘To carry out this mission, the Academy draws on the expertise of more than 400
Fellows, who include current and former members of Congress, cabinet secretaries,
senior federal executives, state and local officials, business executives, scholars, anc
journalists. Our congressional charter is one of two granted to research organiza-
tions. The other charter is held by the National Academy of Sciences (NAS), which
specializes in scientific research. NAPA’s emphasis is on public administration—the
management of government operations.

‘The Academy undertakes assignments at the behest of Congress and executive
agencies. Recent Academy work for Congress has included reviews of the Environ-
mental Protection Agency (EPA), Federal Emergency Management Agency (FEMA),
the Department of Housing and Urban Development (HUD), the General Accounting
Office (GAO), and the Global Positioning System (GPS) as requested by the Depart-
ment of Defense.

‘The Academy has a long-standing commitment to improving government perform-
ance (see Appendix A) and has undertaken the design, installation, and review of
Rerformance monitoring systems, ike those envisioned by GPRA. For example, we

eveloped a set of performance indicators for five programs and a guidebook on de-
veloping performance measures for the Department of Education, and a set of indi-
cators for child health and foster care programs for the Department of Health and
Human Services, In addition, we are just finishing a study of the performance as-
pects of the National Science Foundation’s science and technology research centers.

‘We would be happy to share with the subcommittee these and any other project
reports and statements by Academy panels (including those specifically addressing
issues germane to GPRA). My presentation today will highlight key features of
GPRA based on this body of work, as well as a review of early pilots by the Acad-
emy’s Panel on Improving Government Performance summarized in its November
1984 report, Toward Useful Performance Measurement: Lessons Learned From Ini-
tial Pilot Performance Plans Prepared Under the Government Performance and Re-
sults Act (See Appendix B for background on the review).

PURPOSES, PROGRESS AND EXPECTATIONS OF GPRA

The Government Performance and Results Act of 1993 provides Congress and ex-
ecutive agencies with a major tool to orient policy making, legislative and program
development, budgeting, and oversight toward improving government erformance,
‘The explicit recognition of service quality and outcomes engendered by GPRA should
help elevate the auality of deliberations and improve resulting legislation.

r review of the early GPRA efforts (since August 1993) indicates healthy
progress. GPRA pilots now cover virtually the entire spectrum of government fune-
tions and activities. The size and scope of these activities—over 75 pilots in 27 agen-
cies, with over 450,000 full time positions and $50 billion in operating funds—now
dwarf the coverage of earlier combined performance-based activities in the govern-
ments of the United Kingdom, Australia and New Zealand combined.

But we are still only at the start of GPRA implementation. Our review indicates
that we have some way to go to make this an effective tool for both the executive
branch and Congress.

GPRA is not simply about measurement. It is about shifting the culture of govern-
ment beyond a preoccupation with inputs, such as dollars and numbers of employ-
ees, to include a proper concern with results, whether defined as outputs or out-
comes. GPRA reflects an awareness of the need to construct an overall performance
management system, linking strategic planning, annual performance plans, and an-
nual performance reports. GPRA will require nearly every agency of the U.S. federal
government to establish long-range strategic plans that define their missions and


80

a major program initiative to target human factors and processes in maritime oper-
ations. On a day-to-day basis, this is best reflected in the greater flexibility given
to field commanders to evaluate local risk and direct local resources accordingly.

QUESTION. WHAT APPROACH IS THE PILOT TAKING TO LINK P. ING
AND PERFORMANCE MEASUREMENT ACTIVITIES THROUGHOUT THE OR-
GANIZATION AND INTEGRATE THEM WITH PROCESSES IN PLACE AT VAR-
IOUS LEVELS OF THE ORGANIZATION, FROM THE TOP AGENCY OFFICIAL
TO LINE STAFF?

Answer. The Coast Guard’s Government Performance and Results Act (GPRA)
pilot project Marine Safety, Security, and Environmental Protection Performance

an was drawn from a more comprehensive Business Plan of these programs, first
published in January 1994, and was aimed at guiding all of the activities and prior-
ities at every level of the organization. The plan was developed collaboratively by
Headquarters program managers and district staff. Every individual in the program
was charged with focusing their efforts as outlined in this Business Plan. Existing
processes were opened for reexamination as program goals replaced detailed, activ-
ity-oriented performance standards. The plan showed the measurement and evalua-
tion function to be central to both prevention and response efforts, and managers
were specifically encouraged to expand their investigations and analysis operations.
Performance measures were shared with the district and field offices. In a very par-
ticipative process, data were developed for district and field analysis to use in man-
aging risk, and distributed quarterly. Headquarters experts were sent out to the dis-
tricts to help with tools and training. At the senior levels of the organization, top
management is using performance information derived from these same data to re-
direct activities and to help frame discussions with industry and other stakeholders,
particularly our recent joint initiatives with the towing industry. It has been essen-
tial that this plan was more than a descriptive document, but a complete guide that
was usable in setting priorities and managing business. Participation was impor-
tant, and replacing old systems instead of just adding new requirements was nec-
essary for organizational uy in

QUESTION. HOW ARE THE EXPERIENCES OF THE GPRA PILOTS BEING
SHARED WITH NONPILOT PARTICIPANTS WITHIN THE AGENCY?

Answer. Coast Guard personnel involved with the development and execution of
the pilot project are directly involved expanding the Government Performance and
Results Act (GPRA) effort beyond Marine Safety, Security, and Environmental Pro-
tection programs by ensuring that their experiences are shared and reflected in the
Coast Guard-wide effort.

Several “lessons learned” sessions for the four Department of Transportation
(DOT) GPRA teams have been sponsored by DOT's Assistant Secretary for Budget
and Programs to share experiences with the pilot projects. These sessions were well-
received and greatly enhanced understanding of GPRA and its implementation.
DOT also sponsored the development of a GPRA training program to assist all DOT
administrations in developing GPRA plans. One of the lessons learned by the DOT
pilots was that development of outcome-oriented goals and measures and establi
ing baselines may take several years. Therefore, DOT has directed all of its admit
trations to start to develop performance goals in support of GPRA. Copies of pilot
project GPRA plans and reports are shared throughout the agency and status brief-
ings at both worker levels and jpper management levels continue to keep agency

ersonnel updated on how GPRA planning is developing/progressing in each admin-
istration.

QUESTION. HOW HAVE YOU ENSURED THAT STAFF ARE ADEQUATELY
TRAINED OR KNOWLEDGEABLE IN THE TECHNIQUES THEY ARE USING?

Answer. Several members of the Coast Guard’s program evaluation staff have
postgraduate-level expertise in economics, operations research, and/or policy analy-
sis to assure credible performance measurement. Staff members regularly attend
academic workshops and seminars on total quality management, program evalua-
tion, performance measurement, and study the literature in the field of program
evaluation and interact with other Government Performance and Results Act
(GPRA) pilot project managers to share experiences. Periodic training in risk man-
agement and assessment is provided to field personnel by the program evaluation
staf and is incorporated into courses taught at the Coast Guard’s Marine Safety

chool.

QUESTION. WHAT HAS BEEN THE MAIN IMPETUS DRIVING THE IMPLE-
MENTATION OF THE GPRA PILOTS?

Answer. An 01 izational assessment performed in 1992 signaled the need to
change the way the Coast Guard’s Marine Safety, Security and Environmental Pro-
tection Program did business. It indicated a need to better align the basic aims of
the Marine Safety, Security and Environmental Protection program with its daily



13

THE LARGER DIMENSION

Within OMB—and with the agencies—we have begun developing an overarching
unifying framework for bringing together the various laws and initiatives whicl
have a performance focus. These include GPRA, the Government Management Re
form Act, the Chief Financial Officers Act, the Federal Acquisition Simplification
Act, the Federal Managers’ Financial Integrity Act, the Inspector General Act, a
well as initiatives originating from the National Performance Review, such as devel
opment of customer service standards and agency performance agreements, Ther
is widespread agreement that this integration needs to be done, and, to the exten
practicable, should be meshed into the various processes supporting budget prepara
tion, decisions, and execution.

This is a large and complex task. However, managed as separate exercises, thes
varied laws and initiatives lose the synergy and economy of effort that can resul
if the undertakings are fitted together. Even worse, failure to coordinate and inte
grate these initiatives risks undermining their effectiveness and creating confusior
frustration and aggravation. Neither OMB nor the agencies have enough resource
to continue to try to carry out these activities in a non-integrated manner.

While it has been difficult to sort through the complexity of the varying perform
ance initiatives, we are nearing a point in which we may have a prototype for hox
this integration might be accomplished. Within a few weeks, we hope to be read;
to begin discussions with the agencies and the Congress about this integratin;
framework,

While this effort seeks to match budget (the resources provided) with performane
(what those resources achieve or obtain), we must be mindful that this is not jus
a budget process, but an effort to transform how our government works, affectin
the budget, agency management practices, and how programs are being carried out

THE FUTURE

Longer term, GPRA should disappear. That may appear to be a startling though
with which to conclude this statement in light of my enthusiasm for GPRA. How
ever, if GPRA works as envisioned, government managers will absorb it into day
to-day agency administration and program management. For this to happen, w
must guard against creating a separate GPRA bureaucracy in each agency that prc
vides the documents and information required by the statute in an effort that is di
voreed from this day-to-day management of the agency. That’s why I suggest th
the true measure of the success of GPRA will be the extent to which the concept
of management and good business practices set out in this law become the sccepte
way that the government works without reference to any particular statutory frame
work or requirements.

CONCLUSION

While GPRA is little known outside of the government—some have referred to i
as a stealth’ law—its significance and importance will increase greatly if we suc
cessfully carry out its provisions over the next several years.

If GPRA carries through on its promise, I am confident it will ultimately b
vigwed as one of the most important pieces of legislation enacted in this decade an
will change the dialogue between the public, the Congress, and the Executiv
Branch about government programs, and their goals, performance, and funding,

Thank you, Mr. Chairman. I will be happy to answer any questions.

Mr. Horn. If you were a prize fighter that had been knocked out
you would appreciate that extra 5 minutes. In your written testi
mony, you state that under OMB 2000, the budget divisions as
sumed a greater role in overseeing agency management activitie
than before; and that you have chosen not to create a large stai
with sole responsibility for GPRA execution.

One apparent weakness in the current GPRA implementation i
the lack of capacity in the agencies to implement the act. Agencie
and the GAO all say that more training is needed. OMB is sut
posed to help the Office of Personnel and Management in providin
training. So how is the budget division staff able to help trai


55

government and the public they collectively serve. (Appendix A provides a case ex-
ample already underway through FEMA.)

ROLE OF CONGRESS

The 1993 GPRA legislation as it currently stands provides a sound foundation
from which to work. However, Congress still has an important role to play in assur-
ing its effective implementation GPRA. In particular:

* Congress should make full use of Section 306.(d) that requires agencies to consult
with Congress on their strategic plans. These are vital prerequisites for effective pro-
gram performance measurement and, in most cases, they are still undeveloped.

© Congressional committees and subcommittees should ask their staffs to review
agency performance plans, particularly the initial program plans, and provide sug-
gestions to the executive branch about significant omissions in mission statements
and performance indicators, and other problems with those plans. These reviews
should be undertaken well before September 30, 1997, when the pians are due, to
allow time for agency modification.

© Committees should ask the tough questions about whether programs are achiev-
ing the intended results, They should encourage agencies to provide information on
outputs and outcomes. This is especially important given the emphasis of the cur-
rent leadership on paring back government, challenging the cost-effectiveness of pro-
grams, and holding managers accountable for results and efficient operation.

« Authorizing and appropriating committees should begin focusing more in their
deliberations on program outcomes and service quality. To the extent that these
committees use the performance information froin the GPRA effort, they will pro-
vide a major incentive to federal managers to provide relevant, credible information,
Indeed, such congressional interest may help stimulate more active involvement of
agency leadership in strategic planning and performance measurement which the

‘A performance panel found lacking in many of the pilots it reviewed.

* Authorizing committees should review agencies’ strategic plans to assure that
agency programs are coordinated and jointly moving toward broad national goals.
Likewise, they can review annual plans to check progress toward long-term strategic

goals.

« Appropriating committees can use GPRA to focus on issues of efficiency, effective-
ness, and cost effectiveness. These committees will need to know how to interpret
data presented by agencies on such things as past performance trends, performance
targets, and actual program performance. They need to understand the differences
among effectiveness, cost effectiveness, and efficiency, and between long-and short-
term investments and returns.

* The budget process provides a special opportunity for Congress to make use of
GPRA performance information. Committees should question the executive branch
about the expected results and effects of their budget proposals on outcomes and serv-
ice quality. Similarly, they should assess the outcomes reported in the annual pro-
gram performance reports and explore reasons for success and failures. Suffice it to
say that if members of Congress do not make use of this information to ask ques-
tions about results and service quality, executive branch personnel are not likely to
take the performance requirements of GPRA seriously and the many potential bene-
fits of outcome information will probably be unrealized.

© Congress and its various committee and subcommittees, and its individual sen-
ators and representatives, no less than executive branch personnel, should also take
full advantage of GPRA performance information to help them focus on what service
quality programs are achieving for their customers and the public.

When legislative direction is unclear or leaves discretion to agencies and program
managers to define more specific missions, an agency has to develop its own mission
statement or clarify the statutory mission. The ives some possible guidance b
encouraging managers to define the needs and desires of customers and stakehold-
ers. Customer surveys, currently underway in most agencies, should reveal some
useful information about expectations. GPRA also requires federal agencies to con.
sult with congressional committees on program goals, but falls short of actually re-
quiring Congress and the executive branch to establish goals.

* Pursuant to the point made earlier regarding block grants and performance
partnerships, Congress should in future legislation identify ways that all three levels
of government can be encouraged to work together to focus on service quality and out-
comes 60 that the information provided will help each level improve its, programs,

* One of the major purposes of GPRA is to “improve the confidence of the Amer-
ican people in the capability of the federal government, by systematically holding
federal agencies accountable for achieving program results,” Sec. 2(b\(1). To this
end, subsequent to Fiscal Year 1999, Congress should support the preparation and



2

Our series ends today, focused where it started, on the adminis-
tration and how well it has complied thus far with the Government
Performance and Results Act. Following today’s meeting, we will
begin work on a comprehensive report of testimony, issues, delib-
erations, opinions, and recommendations on just what should be
our best approach to make Government work the way it is sup-
posed to. The report will take into account all that has been said;
the questions that have been raised; and the sense of this sub-
committee on where and how the Congress, the administration,
State and local governing bodies, and private America might best
proceed toward making Government work.

The 1993 Government Performance and Results Act took a big
step toward making the Federal Government more accountable and
work more efficiently, effectively, and at less cost to the taxpayers.
Congress recognized that developing the systems and expertise to
do those things would take some time. As a result, the act gives
executive agencies several years to try new things, run some “pilot
projects,” make mistakes, and learn from them. The first reports
are due to Congress in 1997. Meanwhile, hearings such as today’s
help us decide if we’re on the right track or need any mid-course
corrections.

According to the act’s provisions, Federal agencies should now be
in the process of evaluating their missions, concentrating on core
businesses, and streamlining their operations. They should also be
developing strategic plans and systems that can measure perform-
ance. These are important tools to help the entire Government
achieve better customer satisfaction and faster delivery times for
its services.

The first witness today is the Office of Management and Budget’s
Deputy Director for Management, John Koskinen, who will be ex-
plaining how the Office of Management and Budget has been mon-
itoring the agencies’ pilot performance plans and make sure that
they will meet the Government Performance and Results Act re-
quirements. Next, Johnny Finch of the General Accounting Office
will provide the GAO’s evaluation of the pilot projects and the over-
all process. In the third panel, author Paul Light and National
Academy of Public Administration President Scott Fosler will share
their perspectives on how Government should be moving toward re-
sults-oriented management.

We conclude with several reports of agency pilot projects cur-
rently underway. With us are Anthony Williams of the Department
of Agriculture; Joseph Thompson of Veterans Affairs; Vice Admiral]
Gene Henn of the Coast Guard; and Col. Ed Ward of the Air Force.

We thank you all for coming. We look forward to your testimony.
I now ask the gentleman from Pennsylvania, Mr. Mascara, the
ranking member, if he has an opening statement.

[The prepared statement of Hon. Carolyn B. Maloney follows:]

PREPARED STATEMENT OF Hon. CAROLYN B. MALONEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK

Thank you Mr. Chairman,
This is the second in a series of hearings on performance measurement
benchmarking and government, re-invention and T commend the Chairman for his


72

he information contained in the first section of the Annual Report is used in de-
rping the performance section of the agency’s CFO Report. The GPRA appendix
ies the GPRA reporting requirements, The entire report meets the RPA report.
requirements. Further integration of these reporti i i

FoPy eRe, Further integn porting requirements is expected

“ir. HoRN. We thank you, and we'll proceed with the reamining
nesses, and then have the questioning. Our next guest is Vice
miral Arthur Henn, the Vice Commandant of the U.S. Coast
ard. Welcome, Admiral.

\dmiral HENN. Thank you, Mr. Chairman, good afternoon. I ap-
‘ciate this opportunity to be here and share with the subcommit-
_the Department of Transportation’s experience with our pilot
jects. As you know, the Coast Guard is participating as one of
r pilots in the Department, along with the National Highwa:
iffic Safety Administration and major programs within the Fed.
1 Highway Administration and the Federal Aviation Administra-

2.

Jach project has a different story to tell, but at the same time,
jer Secretary Pena’s leadership, there’s been a good deal of syn-
y between these pilots. We've learned from each other; we've
wed. If I might, I will focus for the most part on the Coast
ard’s pilot project, which was distilled from a business plan that
first began within the Coast Guard in my previous office in
nL

t represents one of the major areas of work within our Coast
ard. This plan uses a simple formula to get the desired out-
1es—set goals, empower, manage risks, and measure. Measure
189 different activities within that specific program within the
ist Guard.
have to tell you that success has a key to it. And that key is,
. must give yourself permission to excel, whether you’re a sec-
of a department; whether you’re a modo administrator;
ether you’re an associate modo administrator; or whether you’re
irector. You must give yourself permission to excel.
‘ecretary Pena did this, as did the rest of the folks within our
vartment. If I could focus on success for a moment, and take you
k to 1992 in the Coast Guard, in our office of Marine Safety,
urity and Environmental Protection, we undertook a com-
hensive organizational assessment. We surveyed our stakehold-
—Congress was one of those stakeholders; our field offices; pro-
m personnel at both our district offices and at headquarters.
» feedback we received clearly signalled the need for a change
she way we were doing business. One thing that became clearer
| clearer was that centralized management here in Washington,
, was keeping our field units from focusing on their activities
| their ability to contribute to those outcomes which we really
ited to have come about. .
o we empowered our field commanders to get local mission per-
nance standards in place, and focus on local risk management.
other success of the organizational assessment was, it answered
¢ basic questions. And when we started down the road, I told
yper & Lybrand and Gallup I wanted these four basic questions
ed. And they are, who do we think we are; and who are we real-
and what do we think we’re doing; and what are we doing real-


27

In summary, Mr. Chairman, GPRA provides a legislative frame-
work for changing the basic orientation of Federal management
and accountability to a greater focus on achieving outcomes.

In recent appearances before this subcommittee, I have discussed
the need for Federal agencies to make substantial improvements in
their performance. GPRA, if successfully implemented, provides the
framework for making these needed improvements. That concludes
my prepared statement, Mr. Chairman. My colleague and I would

be pleased to respond to questions.
[The prepared statement of Mr. Finch follows:]

PREPARED STATEMENT OF JOHNNY C. FINCH, ASSISTANT COMPTROLLER GENERAL,
GENERAL GOVERNMENT PROGRAMS, GENERAL ACCOUNTING OFFICE

‘The Government Performance and Results Act (GPRA) seeks to fundamentally
change the focus of federal management and accountability from a preoccupation
with inputs and processes to a greater focus on the outcomes that are being
achieved. A focus on outcomes—in essence, a return-on-investment in federal pro-
grams—is especially important in the current environment in which the federal gov-
ernment faces severe and continuing budget pressure.

GPRA establishes a legislative framework for having agencies set strategic goals,
measure performance, and report on the degree to which goals were met, GPRA re-
quires each agency to submit (1) to the Office of Management and Budget (OMB)
and Congress a strategic plan by September 30, 1997, covering at least 5 years, for
the agency's program activities; (2) to OMB, an annual program performance plan,
beginning for fiscal year 1999; and (3) to the President and Congress, an annual
Program performance report, beginning in 2000, covering the previous fiscal year,

jongress recognized that implementing the changes required by GPRA would
take time. Thus, GPRA’s goal-setting, performance measurement, and performance
reporting requirements are being piloted in a number of programs and agencies dur-
ing fiscal years 1994 through 1996 before they are to be implemented government
wide in September 1997.

GAO's work on GPRA implementation to date suggests that continued efforts will
be needed to address five emerging challenges to the effective government wide im-
plementation of GPRA. These emerging challenges are

—developing and sustaining top management commitment to GPRA,

—building the capacity of agencies to implement GPRA and use the resulting
performance information,

—creating incentives to implement GPRA and change the focus of manage-
ment and accountability,

—integrating GPRA into daily operations, and

—building a more effective congressional oversight approach.

Of these important challenges, developing and sustaining top management and
congressional commitment clearly are the most important. Building capacity, creat-
ing incentives, and integrating GPRA into daily operations will be extremely di
ficult if top leadership in the agencies and Congress do not have an active, consist-
ent, and continuing role in implementing GPRA and making it a success.

‘Mr. Chairman and Members of the Subcommittee:

__ Iam pleased to be here today to discuss the efforts that federal agencies are mak-
ing in implementing the requirements of the Government Performance and Results
Act (GPRA). As you know, this landmark legislation seeks to fundamentally change
the focus of federal management and accountability from a preoccupation with in-
puts and processes to a greater focus on the outcomes that are being achieved. A
focus on outcomes—in essence, a return-on-investment in federal programs—is espe-
cially important in the current environment in which the federal government faces
severe and continuing budget pressure.

In our statement before this Subcommittee last week, we discussed how leading
organizations use performance information to help achieve desired outcomes and im-
prove processes.! My statement today will discuss our preliminary observations on
the status of the implementation of GPRA—the federal government's central goal,
setting and performance measurement statutory initiative. My comments are based
on our initial work at the 24 major executive departments and agencies and other

Managing for Results: Critical Acti Measuring Pe x
req fanaging for Re ions for Measuring Performance (GAO/T-GGD/AIMD-95-


70

Snow Survey Program constraints on managerial flexibility include:
(1) GPO printing regulations;
(2) ADP equipment procurements;
(3) Customer questionnaire limitations; and
(4) OMB rules related to restricting the agency from charging for products
and retaining those fees for program support.

5. How has implementing GPRA changed the activities that staff focuses on, on
a day-to-day basis? If it has changed things, in what ways have things changed?

Implementation of GPRA has affected agencies’ day-to-day activities of staff per-
sonnel in different ways. Agencies, such as the Forest Service, that had some strate-
gic planning and performance measures in place prior to pilot participation did not
experience much change. Other agencies’ staff now focus more on customer service,
goal setting, and developing performance measures than ever before. For example,
the Animal and Plant Health Inspection Service's ports of entry that are participat.
ing in the pilot have begun inspecting a random sample of airline passengers, mari-
time and air cargo, and vehicles crossing the Mexican border, These new inspection
activities has caused some port staff to view their routine functions in a different
way. However, significant changes to daily operations are not expected until the
strategic plans are completed and performance measures are linked to the budget.

6. What approach is the pilot taking to link planning and performance measure-
ment activities throughout the organization and integrate them with the processes
in place at various levels of the organization, from top agency officials to line staff?

encies are taking various steps to integrate planning and performance meas-
urement activities with other processes in place at various organizational levels.
Some of these integration efforts include the following:

Animal and Plant Health Inspection Service—The pilot facilitation team has set
up the measurement project to become fully integrated into normal activities at
ports of entry. Front-line employees have been involved from the beginning in plan-

ing and measuring program results.

e goals and indicators for the pilot performance plan are now included in the
agency's multi-year program plan and budget,

Grain Inspection, Packers and Stockyards Administration—Each regional office is
involved in implementing the GPRA pilot program and in preparing quarterly re-
ports on their performance. Input from regional field offices as well as top agency
officials will be sought in planning and developing performance measures for the
overall GPRA program performance plan.

Forest Service—FS has included GPRA information in their planning and budget-
ing exercises at National Leadership Conferences. Also, they have incorporated
GPRA performance plan information into their agency's’ Program Budget Advice
package.

Rural Housing and Community Development Service (RHCDS)—After the strate-
ic planning process and the setting of State-level performance goals are completed,

DS plans to link performance goal achievement with employees’ performance
ratings.

‘The Office of the Chief Financial Officer (OCFO) is planning a symposium to pro-
vide USDA program managers an understanding of the relationship between GPRA
and other management initiatives (such as the National Performance Review (NPR),
Business Process Re-engineering (BPR), Farm Bill, Chief Financial Officers (CFO)
Act, Customer Service, Culture Change, and Budget), and to stimulate ideas for in-
tegrating all of these initiatives’ performance planning and measurement require-
ments.

7. How are the experiences of the GPRA pilot being shared with non pilot partici-
pants within the agency?

'GPRA Coordinators have been appointed for every USDA agency. Regular meet-
ings, sponsored by the OCFO, are held that include the sharing of information be-
tween pilots and nonpilots. The OCFO has held several “Lessons Learned” forums
for the non pilot agencies within USDA. In addition, the pilot’s performance plans
were distributed to all USDA agencies. Also, intra-agency meetings and training
classes have been held to disseminate GPRA information to program management,
budget and other staff members. The OCFO is currently planning a symposium to
address the integration of strategic planning and performance measures required by
other management initiatives. The experiences of the GPRA pilots has provided use-
ful insights for all USDA agencies.

8. How have you ensured that staff is adequately trained or knowledgeable in the
techniques they are using?

In most agencies, staff has received external and internal training in planning
and performance measurement. The OCFO has provided guidance for meeting the
GPRA requirements. Agencies have also reviewed pilot plans from other USDA



63

Mr. Horn. You heard me mention that quote by Bureaucratis
om Federal Computer Week. Did you have any feeling on the sug-
:stion he made?
Mr. LicHT. Which quote was that? ;
Mr. Horn. This is the quote that we ought to have, hanging w
i the walls of the Controller General’s office, and maybe OMB’s
fice as well: “It’s not legislation, it’s management, stupid”; and
at we ought to provide some incentives for the managers, which
exactly what they do in New Zealand.
Mr. LicutT. Oh, I think it may be that we need a somewhat dif-
rent sign.
Mr. Horn. Financial incentives, we’re talking about.
Mr. LIGHT. Yes, that it’s the environment of management, stupid;
at it’s what’s at risk that’s most important for an agency. So I
ink you put on the table performance accountability reform. You
art talking about civil service reform; you start talking about de-
yering of agencies.
You put this all on the table and say, how do we get to perform-
.ce, how do we get better performance. And it’s a series of reforms
at are involved. not just one or another. But it’s a whole effort
get at a variety of issues.
I might say, in closing here that my students at the Humphrey
stitute are not demoralized by all this conversation in Washing-
1 about cutting agencies. What they're demoralized about is they
ink about working in the Federal Government, is the fact that
ere are very few chances for them to accomplish something
wthwhile. They are not motivated by pay, otherwise they never
vuld have come to the Humphrey Institute in the first place.
Public service is not a paying profession, I’m afraid. What they
2 motivated by is the chance to do something worthwhile, the
ance to have responsibility in employment, the chance to be able
advance in career. And I’m afraid at this point in time, the Fed-
al Government is increasingly an employer of last resort for our
ry best students.
[t’s the last place they would want to work, because it’s one of
2 places that gives them the least opportunity to be rewarded for
ceess and to have a chance to do something worthwhile, I’m
‘ald.
Mr. Horn. Mr. Fosler.
Mr. FOSLER. One point I would stress, Mr. Chairman, that came
repeatedly is, how do we develop the capacity to do the job? I
ree that providing the incentive to get the capacity is key if
Vre going to motivate people to find out what they need and get
Let me mention in that regard that one of the things we’re doing
the Academy is putting together a consortium of people from the
encies that are working on GPRA.
We're working with senior managers, and the intent is to develop
3e studies and practical experience from the agencies themselves,
they can share that experience with one another; look at the
allenges that they've dealt with, the solutions, the benefits, the
ablems; and to develop, in essence, a different kind of capacity-
ilding mechanism, not just the traditional kind of training, but
mally learning from the doing, which is not only more efficient,
‘en this era of scarce resources. but reallv goes to where the


20

Mr. Horn. When will you be completing your assessment of the
initial set of program performance reports? What’s the time period
on that?

Mr. KOSKINEN. We've completed our assessment of the perform-
ance reports from the 1994 pilots. We have in-house and are about
to complete the analysis and | the reviews of the 1995 performance—
actually, the plans. What we do is review the plans. The perform-
ance reports for 1994 are just being reviewed now, but the plans
for 1995 are being reviewed, and we just got the 1996 plans. We
oxpect, by the end of this month, to start reviewing those.

ir. HORN. Is there a summary, a formal report to the director
or the President? How does this work, in terms of what happens
after you and your staff go over these?

Mr. KosKINEN. There’s basically a review internally, and then
what we've tried tc do is share the experience and information with
the agencies. For example, with the design of the planning guid-
ance for strategic plans, we have a work group, as I noted in my
testimony, of 60 representatives from a wide range of agencies who
are working with us.

What we've been trying to do and use these reviews for is pri-
marily to share the experience back into the agencies not only on
an agency by agency basis, but on a cross-agency basis. But there
are no formal reports to the President involved in that.

Mr. Horn. Could you share copies of those reports with the sub-
sommittee so we could just get a feel for what’s going on?

Mr. KOSKINEN. Yes, the reports that we’ve sent to the agencies
we would be happy to share with this committee.

Mr. Horn. Very good. The gentleman from Pennsylvania.

Mr. Mascara. There’s a strong tendency for agencies to revert to
she outcome measures, like the number of tasks completed rather
shan how well they were done. They are, after all, much easier to
neasure. And in fact, I’m sure we will see some agencies reportin,
20 justifying output measures in the name of outcomes. Who shoul
arbitrate what is and what is not a good performance measure?

Mr. KOSKINEN. Well, over time, our hope is that that will be a
lialog that will be conducted between the agencies and OMB, and
»etween the executive branch and the Congress.

Our hope is that if we’re successful in our unified view of all this,
when a congressional committee is holding an oversight hearing,
and. authorizing committee on the annual appropriation process,
shat there will be a focus on just that issue—what is it that some-
me is claiming they’re getting as an outcome for this program; is
chat what we all agree we ought to be aiming for; and what do the
neasures look like?

Mr. Mascara. I wanted to hear more about your views on the
3PRA time tables. Based on the 2 years since the enactment of the
aw, do you think the time tables are still realistic? It has been
suggested by some that they are perhaps too slow to accommodate
the public’s desire, and the desire of some of our newer Members
‘or instant change. Yet at the same time, the time tables may be
‘00 rapid to be implemented well throughout the entire govern-
nent. I would appreciate your comments.

Mr. KOSKINEN. Yes. As I said last year, actually, at my confirma-

ian hearings 9% vears aon T worked as an administrative assistant.


387

hat? If you can get involvement of all of the stakeholders in there,
ou can get all of those things more properly developed. You can
et the outcomes much more targeted. .

Both the measures and the goals will be useful to a much wider
ange of people. And I think that’s key as well. If the goals and
aeasures are user friendly, and if people find them useful in man-
ging, they will accept them. They will come a lot nearer accepting
hem. So I think if there’s one key thing there, it’s getting as many
takeholders as possible involved in the development of the goals.

Oregon is a good example in that regard. Oregon has set what
: calls Oregon Benchmarks. And they did it through a series of 12
egional meetings where they got bipartisan discussion from busi-
ess, city, county, and community and State legislatures in reach-
1g agreement on the benchmarks. That’s the kind of exercise that
'm talking about.

Mr. Mascara. OK. OPM was to select 10 pilot programs to test
erformance planning plus reporting requirements. However, 71 pi-
ots are now underway. Is that too many? Can OMB effectively
ionitor that many agencies simultaneously?

Mr. Fincu. I don’t know how many is too many and how many
3 too little, sir. 1 guess where I would come from, at this point in
ime, the more the better. I think all of the experiences from the
itates and from abroad and from the private sector indicate that
his is a worthwhile exercise. It’s something that needs to be done.
ind to the extent that we can move the government in that direc-
ion, that has merit; and we should do that.

But it also takes time to do it. And I think this is one of the les-
ons that OMB has discovered from looking at the pilots that it has
nderway. That the rest of the government can’t wait until the pi-
ots get straightened out. The other agencies need to start moving
1 that direction as well. So I guess given that, I would say that
is not too many, sir.

Mr. Mascara. I’m going to say this in a different way. I think

said it earlier, and I don’t know whether you were here or not
then I asked the question. You said in your testimony, it’s impor-
ant to develop and sustain top management’s commitment to
tPRA. How are we going to do that in the current environment
there the main concern is the survival of an agency?

I mean, we’re contracting out services, investigations, and we're
oing all kinds of things and privatizing, contracting out. How do
nese people concentrate on how they're going to improve things
yhen any morning, they might be blindsided? It seems like there’s

lot of things on the plate at the same time. How do we sift
arough all of this?

You get up in the morning; you go to work; you don’t really know
that’s happening—whether your job is going to be eliminated or
ontracted out or you're going to be asked to participate in an
‘SOP. I mean, how do you measure performance when all of this
H foine on at one time? I’m a little bewildered. I’m new on Capitol
ill.

You'll pardon me for asking, maybe, a question that might not
e appropriate, but I’ve learned a lot in 6 months, and it seems to
ie that there’s a lot of divisiveness here on Capitol Hill. There are

lot of threats of people being fired, or their "obs being eliminated,


57

For the purposes of the review the panel was divided into teams, each of which
was responsible for reviewing several pilot plans. The teams were encouraged to
talk with and, if possible, to meet directly with agency personnel responsible for pre-

aring the plans. Most teams did in fact speak with agency people, and more
bait ly visited the agency, some teams several times. The panel develo
standard criteria for reviewing the individual pilot plans. These criteria included:

(1) The existence, reasonableness, clarity, and comprehensiveness of mission
statements and their relationship to the performance plans.

(2) The mix of performance indicators covering various types of performance,
such as input, process, outcome, efficiency, and service quality—but with a par-
ticular focus on coverage of program outcomes.

(3) The adequacy of plans for assessing the validity of the necessary data.

(4) The presence of numerical targets (the GPRA legislation uses the term
“goals”) for the performance indicators and the descriptions of the bases for the
performance targets. ;

(5) The likely usefulness of the proposed performance indicators to program
mana and policy makers for improving program performance.

(6) The likely usefulness of the Broposes performance indicators for commu-
nicating program accomplishments to Congress and the public. —_

Each GPRA pilot plan was reviewed by a Panel team according to these criteria.
Then each team presented its initial findings to the full Panel which, after consider-
ing reports covering all of the pilots included in the review, then formulated general
conclusions. These conclusions were then summarized in a report, Toward Useful
Performance Measurement: Lessons Learned From Initial Pilot Performance Plans
Prepared Under the Government Performance and Results Act (1994). Elements of
success included the following:

1. Provide sufficient time for plan preparation.

2. Training for plan preparation.

3. Include indicators over which managers have both limited and unlimited

control.

4. Involve top leadership; people who drafted plans are connected to higher
ups.
5. Pay attention to inter-program or inter-agency relationships.
6, Have a reasonable connection between indicators and legislative purpose
and program mission,

7, Base indicators on available data, as well as that which must be collected.

8. Open and regular identification of and dialogue with customers.

9. Open and identification of and dialogue with stakeholders.

10. Address both small and large programs.

11. Provide clear and precise definitions of terms and concepts.

12. Focus on outcome and process indicators.

13. Attend to quality control in data collection.

14. Provide a clear rationale for setting performance goals and targets.

15. Define desired increments of improvement.

16. Disaggregate data to reasonable sub-populations and programs.

17. Discuss where explanatory information would be included.

18. Link program context to performance information.

APPENDIX C: FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA)

We have seen some promising signs that the Government Performance and Re-
nults Act is already having some positive effects at a level broader than the pilot
activities, For example, the Federal Emergency Management Agency (FEMA) is de-
veloping “performance partnership agreements” with the states designed to provide
increased flexibility on how a state emergency management program is run in ex-
change for increased accountability for results.

In a 1993 report, Coping with Catastrophe, an Academy panel recommended that
FEMA develop a strategy for improving the capacity and consistency of state and
local governments for emergency management. This included:

—Assessing existing capabilities of states, territories and trusts in order to
gain baseline information for future actions.

—Setting performance and other stan: for cooperative program fundi
and other special programs and projects. P prow "8

Monitoring and evaluating state and local efforts with respect to meeting
those standards and, if need be, withholding funds to gain compliance.
__—Using financial incentives to reward effort and performance in meeting ob-
iectives. not. onlv for nre-disaster finding hit far nact-dicactar accictanna


23

and then we go over to 9703, managerial accountability/flexibility,
and then on 1119, we talk about pilot projects for performance
budgeting.

Is there any thinking that perhaps as part of the actual annual
budget of the United States that besides the numbers of what we
spend in a completed fiscal year and what’s being projected for the
future fiscal year, we would work in some of these performance re-
views in each agency submission and just print it in the budget?

Initially, we talked by March 31, 2000, and no later than March
31st of each year after, the head of each agency shall prepare and
submit to the President and the Congress a report on program per-
formance for the previous fiscal year. That’s fine; I don’t have a
problem with that. I like to see it in one place.

When we look at the numbers, we go agency by agency, and
you’ve got some basic performance indicators, goals; how far they
achieve; satisfactions by the clientele, namely the taxpayer in most
cases, unless it’s an interagency group such as OMB. You might
have the satisfaction standard be a little different there.

What’s the thinking on asking your clients? Any thought at this
point, or are you just waiting until the year 2000?

Mr. KosKINEN. No, actually, we might surprise you with next
year’s budget presentation. One of the things we hope to grow out
of the spring review on program performance and the request for
more performance information in the 1997 budget submissions
from the agencies is that we will be able to, in the budget presen-
tation—the President’s budget—include, in the text as well as in
the numbers, discussion, where appropriate, about performance in-
formation we have now—what the goals, objectives and measured
results are for programs that we’re looking at.

We've been talking with the agencies about over 100 major pro-
grams, in terms of the possibility of getting performance informa-
tion in this budget process.

Also, one of the things we are looking at and will be talking with
the agencies and with the Congress about is, as we look toward the
future, we’re looking at the way the budget process runs and what
kind of information we can provide on an annual basis that would
be consistent with the information you’ve just asked about. We
would like to have that done far before the year 2000.

Mr. Horn. I commend you for that, and I think it would be very
exciting if we had that type of presentation as we move in that di-
rection and get people acclimated to it, on both sides of Pennsylva-
nia Avenue. Thank you very much. You, as usual, have given excel-
lent testimony to this subcommittee. We appreciate you taking the
time this afternoon to come here.

There is a vote on the floor, but I can start with the next panel.
Thank you.

Mr. KOSKINEN. Thank you, Mr. Chairman.

Mr. Horn. And the next panel is your counterpart from the Gen-
eral Accounting Office—Johnny C. Finch, the Assistant Controller
General of the United States, the head of General Government Pro-
grams for the General Accounting Office. Mr. Finch, if you would
raise your right hand.

[Witness sworn.]}


90

an ongoing, evolving process, and they use it to constantly refine
le way they perform their mission and measure their progress.
ACC’s involvement in the performance measurement pilot of
PRA is a natural outgrowth of their commitment to quality im-
sovement. Their operating style agrees fundamentally with
PRA’s goals. Of the three GPRA pilots, ACC is currently partici-
ating only in the performance measurement pilot, but hopes to
ike part in the performance budgeting pilot in 1998.

There are three ACC wings participating in the GPRA perform-
1ce measurement pilot. The 314th Air Lift Wing at Little Rock Air
orce Base, Arkansas; the 20th Fighter Wing at Shaw Air Force
ase, South Carolina; and the 355th Wing at Davis Monthan Air
orce Base, Arizona. As part of the pilot project, the wings, with
ssistance from ACC headquarters, prepared fiscal year 95 and fis-
u year 96 performance plans. These include comprehensive mis-
on statements and goals and objectives covering their major func-
ons—operations, logistics, support, and medical. The plans also
clude performance measures with defined targets to validate
ieir results in each of the four functional areas. As an adjunct to
ie pilot project, ACC will attempt to tie cost per unit of output to
small number of performance measures. The wings are currently
recuting their fiscal year 95 performance plans; and the fiscal
2ar 95 performance report is due to the Office of Management and
udget in February 1996.

Although ACC’s progress with the performance plan pilot has
2en encouraging, one of the major challenges was developing a
ethodology to capture and track cost per unit of output. To meet
iis need, ACC is employing the Job Order Cost Accounting System
, or JOCAS II, to capture the costs associated with the test per-
rmance measures. They are currently installing JOCAS II at the
55th wing at Davis-Monthan.

A major lesson ACC learned from the experience with perform-
ace plan pilot deals with the need to solidly link goals and per-
rmance measures. ACC found that as pilot wings developed their
vals and objectives, they needed to formulate the indicators they
2eded to use to measure their success in meeting these goals. This
ill ensure the pilot wings track areas important to their organiza-
on’s future, and not just those areas that lend themselves to easy
easurement. In addition, performance measures must be quantifi-
ole in order to meet the requirement to link cost to the indicator.
ACC’s experience with the performance measurement pilot has
xen productive. Should you recommend a third round of perform-
1ce measurement pilots, the added experience may contribute to
1 even better understanding of the entire process before the law
squires all Federal agencies to submit strategic and performance
ans at fiscal year 97, to support the fiscal year 99 budgets.

In addition, ACC hopes work on the 1998 performance budgeting
lot will begin soon, with input from the entire executive branch.
CC believes performance budgeting will take more time and effort
» implement across government than the previous two pilot
cojects. It represents a tremendous challenge for all Federal agen-
es requiring new ways of thinking about resource allocation.

In closing, GPRA has the potential to impact the Federal Govern-
.ent in a creative and positive way. It mirrors many of the same


44

over time. We all thicken to a certain extent. The second finding
of this research was that this thickening has changed the basic
shape of government. And I’d ask you to think of some basic geo-
metric shapes here. Back in the 1950’s, the Federal Government
was shaped rather like a pyramid. By the 1970's, it was becoming
pentagonal in shape.

And according to my projections—and they’re rather tongue in
cheek—by the year 2020, the Federal Government, as a hierarchy,
will be shaped like a circle, with one last poor Federal employee
at the bottom, delivering services and horde upon horde upon horde
of managers who are overseeing those services and the contracts of
third party providers and the non-profit and private contractor
communities.

The third finding is that thickening tends to occur under all con-
ditions, whether there are Democrats in the White House or Re-
publicans; whether the Congress is controlled by Democrats or Re-
publicans; whether the department is new or old; whether there’s
being a push in government to reduce it. It is extraordinarily dif-
ficult to attack.

It’s rather like kudzu, which is, of course, a growth familiar here
in this part of the country. You continue to try to mow it down, but
it’s very difficult to get rid of, and it tends to grow back.

The fourth finding of our research is that departments and agen-
cies of government, despite all the rhetoric these days of the need
to devolve responsibility and decentralize authority to agencies, we
found that departments and agencies don’t do very well at all when
given authority to determine their own shape.

It’s just a fact of life that if you give departments the ability to
do all of their position management in house without any strong
oversight, they tend to thicken even more so than if you have tight
OMB or congressional oversight. In other words, we should as-
sume—all of us here—as we think about hierarchy that it is safe
to believe that thickening will occur, absent an increase in the
price of each new layer or each new management unit.

Now, there are two challenges as we confront the thickening of
Government. No. 1 is how do we lose the weight that has accumu-
lated over the years. And second, how do we keep it off. I think
that the chairman will agree that the political price of eliminating
departments or reducing thickness of the Federal hierarchy is quite
high. Therefore, once we take the weight off, whether it’s through
a fad diet or through careful exercise, we want to make sure that
5 or 10 years out in the future, it doesn’t come back.

And I think that’s a very difficult problem in the current struc-
ture of incentives. The civil service system, with its built in ten-
dencies, the way we monitor and oversee departments and agen-
cies, all tend to create an environment in which we pay a very low
price for the thickening of hierarchy. Let me just offer four brief
ideas on how you lose weight.

I do not believe, for example, that the best way to lose weight,
or to thin the Federal hierarchy, is through an across the board or
body count approach to eliminating departments, or a rather ran-
dom approach to eliminating units within Government. I think it
requires some deliberation.


85

the experiences of the two pilot projects in developing implementation criteria for
the other VBA benefit programs. ; ;

'GPRA is an ongoing and evolutionary process. VBA established a GPRA Steering
Committee to guide the organization through the GPRA processes and the develop-
ment of meaningful GPRA measures. We have obtained knowledge on performance

lanning and performance measures from our pilots and their experiences. The

PRA Steering Committee has established a strategic planning process for VBA
that complies with GPRA requirements and core measures to be used by each VBA
program. VBA developed a strategic plan several years ago and has recently taken
Steps to adjust the strategic plan and the planning process to meet GPRA require-
ments. VBA has always measured timeliness and quality. We have begun to focus
our measurements on balanced performance goals that include customer services
and unit cost, as well as the traditional performance measures. The development
of program outcome measures will be a difficult process and require data that are
not now collected. VBA will begin the process of developing outcome measures for
each VBA program with the FY 1998 planning process.

‘The improvements that are being made by the employees of New York were made
without the benefits of modern technological tools. Because the New York office was
scheduled to move to a different building in mid-1995, installation of VBA’s mod-
ernization equipment could not be accomplished prior to the changes instituted as
a Reinvention Lab and GPRA Pilot. A decision was made to postpone any significant
technological improvements until after the move.

To date, the Reinvention Lab and GPRA pilot initiatives at the New York Re-
gional Office have provided valuable information to the VBA organization. Although
a complete assessment of the New York experience is not scheduled until completion
of the GPRA pilot project, VBA is taking immediate advantage of improvement op-
portunities that result from the experiences of New York. The concept of teams is
being used at many of our offices and could be a basis for other agencies involved
in claims processing. The work of the New York office in identifying performance
goals, performance measures and the balanced scorecard approach to performance
measures has already proven useful in the development of core VBA performance
measures to be used by the VBA programs in GPRA implementation. New York’s
efforts to identify unit costs for its office lays the groundwork for a VBA-wide sys-
tem for the identification and recording of data to determine program unit costs.

Mr. Chairman, this concludes my statement. I will be happy to respond to any
questions that you or other members of the Subcommittee might have.

FOLLOW-UP QUESTIONS AND ANSWERS

1, In what way has top management supported or hindered the implementation
of GPRA at your agency or pilot project?

ANSWER: Top management has been very supportive of our efforts to implement
GPRA in our pilot project. Headquarters staff helped us to develop our new system
of output and outcome measures and provided funding when contractor support was

juired.
. Are both career staff and political appointees involved in the implementation
efforts? Please describe how and how it has affected the project?

ANSWER: We have had excellent support from the Office of the Under Secretary
for Benefits as well as the Office of the Assistant Secretary for Management. Last
fall, the Under Secretary for Benefits formed a GPRA Steering Committee to guide
the implementation of GPRA throughout the Veterans Benefits Administration
(VBA). As a member of this committee, I feel we've made good progress towards suc-
cessfully taking the experiences of our two pilot projects (the Loan Guaranty Pro-
gram and the New York Regional Office) and creating a system which can be used

out VBA.

eS Howicer all, do top political appointees and career managers show their sup-
port for GPRA, and how is that support communicated throughout the agency?

"ANSWER: The Secretary, Deputy Secretary, Assistant Seoretary for Management,
and eareer managers in VBA have fully supported our efforts in implementing the
New York GPRA pilot project. The Under Secretary for Benefits formed the GPRA
Steering Committee for the Veterans Benefits Administration (VBA). This Steering
Committee is made up of top career managers in VBA. The Under Secretary for
Benefits has agreed to our Steering Committee’s proposals for training the entire
VBA in the principles of GPRA. He and his Policy Board have approved several is-
sues that define process steps necessary to fully implement GPRA in VBA.


62

solved or nurtured go away. But it seems that when that happens,
the organizations seem to find new missions, seem to find a new
direction. And I don’t know what kind of a review that we’ve been
getting.

Butedo you know any successful experience, outside of Synfuels,
where we've been able to really terminate a department or function
of government?

Mr. Foster. In the Federal Government, I think, as Paul Light
has said, it has been difficult to find those examples. I do think you
find it more at the State, local level. You see some clear examples
of it abroad. New Zealand, which this committee has looked at in
some detail, clearly started asking, what is the real mission of this
national Government; what should it not be doing?

It privatized a good deal of those operations. It corporatized oth-
ers with forms of government corporation, which made them more
like private companies, with a higher degree of discipline and ac-
countability. And then it got its core public service down to a fairly
small, compact level.

Mr. Davis. OK. Thank you. Any other comment? All right, that’s
all I’ve got, Mr. Chairman. Thank you very much.

Mr. Horn. Thank you, Mr. Davis. Now, you gentlemen were here
when some of the other witnesses testified, I believe. Were you
here for both the administration and GAO? Do you have any com-
ments on what they said? Did they say anything that particularly
Sxcites you one way or the other, positively or negatively? If so,
what?

Mr. LiGHT. Well, let me—I have two basic comments. One is that
I heard quite a bit of talk on occasion about the experience in Min-
nesota. And I would urge the committee to take a closer look at
Minnesota as a very difficult case of trying to achieve a perform-
ance oriented budgeting process. Often from afar, many people in
the East believe that Minnesota resides someplace so far away that
we can’t possibly visit it.

Having just moved back from Minnesota to the East Coast, I can
tell you that performance budgeting has been an extraordinarily
difficult and uneven implementation at best; and possibly an ex-
traordinarily large investment of resources and training capacity
for very little gain at worst. I’d say, in the second comment, there’s
been a lot of talk about giving Federal employees the capacity to
do performance measurement and so forth.

I think at least, and equally important if not much more impor-
tant, issue for the committee to struggle with is giving Federal
agencies the incentive to care about creating the capacity to do per-
formance accountability. Do agencies have any reason to believe
that this is going to be at all an issue for their future; that there’s
anything at risk when they do not perform well; that there’s any-
thing to be gained when they do perform well?

And I think that’s the missing issue here. There’s a great deal
of exhortation right now, and I certainly agree that performance
accountability is the way to go. But what is at stake for an agency
that does not do this? What is at stake for an agency that does?
And that’s a question of incentives, and I’m afraid that the incen-
tive structure right now does not favor a durable and deep embrace
of performance accountability.


86

Describe how your pilot is assessing internal constraints on managers’ flexibil-
a achieving desired outcomes. What kinds of constraints, if any have been re-
4 sand with what consequences?
: Most of the constraints which we encountered in our pilot resulted

VA's own internal policies. VA headquarters gave us relief from all internal
directives as long as we kept the managers in headquarters apprised of what
vere changing. This allowed us to significantly alter our organizational struc-
workflow, and job structure. Without this relief, we could not have made these

Ss.

low has implementing GPRA changed the activities that staff focus on, on a
‘oday basis? If it has "changed things, in what ways have things changed?
ISWER: Our new measures (customer satisfaction, unit cost, and employee de-
ment) have been included with our traditional measures (speed and accuracy)
1 assessing performance. This has helped to shift our focus from strictly inter-
A concerns to areas of interest to our other stakeholders—veterans, taxpayers,
employees. Additionally, since the measures are of organizational performance,
are farting to be linked to pay, they should help to move us towards better
work.
What approach is the pilot taking to link planning and performance measure-
; activities throughout the organization and integrate them with processes in
: at various levels of the organization, from top agency officials to line staff?
ISWER: The GPRA pilot programs in VBA, the New York Regional Office and
.oan Guaranty Program, have provided a framework for VBA to develop an in-
ited planning and performance measurement program for all VBA programs as
implement the requirements of GPRA. The pilots have provided a Baste frame-
of “core performance measures” that will be used by all VBA programs. The
3, in conjunction with VBA’s GPRA Steering Committee, have developed the
steps of a planning process framework that will be used by our programs to
lop plans, performance measures, and budget requests.

low are the experiences of the GPRA pilots being shared with nonpilot partici-
3 within the agency?
ISWER: Both pilot programs and nonpilot Programs participate on the VBA
A Steering Committee. The experiences of the pilots are shared with the
ilot programs as the issues and processes for GPRA implementation are formu-
in . In addition, a comprehensive training plan for implementing GPRA
yeen developed for all VBA staff. One segment will teach program staff how to
op and use scores and specific measures under GPRA. Another will teach man-
3s and staff members who handle performance measures how the systems will
, The third segment will be a general orientation for all VBA employees. This
ing should be completed by early fall, as we begin the planning and budget
for FY 1998.
How have you ensured that staff are adequately trained or knowledgeable in
echniques they are using?
ISWER; Although changes to our processes are necessary to fully comply with
A requirements, VBA developed a strategic plan in 1991 and conducted a na-
1 customer survey in 1992. Additionally, timeliness and accuracy measures
been used for many years to evaluate performance. VBA will enhance its train-
f staff with the comprehensive GPRA training program.
What has been the main impetus driving the implementation of the GPRA pi-

ISWER: In the case of the New York Regional Office, GPRA and its emphasis
outcome measures was entirely consistent with the office’s attempts to fun-
mtally change its operations as a reinvention lab under the National Perform-
Review (NPR). In fact, NYRO volunteered to become a pilot program under
4 while the legislation was still pending. It was felt that the new measures de-
ed under GPRA would help to leverage the attempts to make the regional office
customer-focused and collaborative.

VETERANS AFFAIRS

What has the department done to reexamine the VA's mission under GPRA and
‘econd phase of the Administration's National Performance Review? How has
‘examination affected the New York region’s initiatives? as

(SWER: As part of Reinventing Government Phase II, VA examined its basic
ons, reviewed all of its major programs, and concluded that benefits and serv-
‘or Veterans are inherently the responsibility of the Federal government. Veter-
wore the uniforms of the United States and the United States is responsible
roviding the benefits and services that are due them. It would not be possible


31

GPRA, with its statutory planning and reporting requirements, provides at least
e possibility that the commitment of agencies’ top management to it will be sus-
ined across the tenures of various political appointees. But, for this to happen
st effectively, top career officials must join with political appointees in assuming
leadership role in implementing GPRA. A committed career leadership can help
sure that the goal-setting and performance measurement processes encompasse'
GPRA will have some continuity even with political turnover.

BUILDING CAPACITY TO IMPLEMENT GPRA AND USE PERFORMANCE INFORMATION

One of the most important areas in which top management can clearly dem-
strate commitment to GPRA is by ensuring that their agencies have the capacity
‘make the needed changes and effectively manage toward achieving desired out-
mes. In our testimony before this Subcommittee last week and in numerous other
ports and testimonies, we have noted that urgent attention is needed to strength-
the systems and processes agencies have for generating and using financial and
ogram information ® This information is critical for sound decision making. Equal-
important is the government’s need to build the knowledge and skills of its man-
‘ement and staff in setting goals, measuring performance, and using performance
formation to improve performance.’ The Office of Personnel Management (OPM)
timated in 1993 that there were more than 300,000 managers in the federal gov-
nment who would need to be trained in GPRA. ° — .
Our work has shown that one area sorely in need of capacity building is the abil-
7 of agencies to conduct systematic program evaluation.* Performance information
ovides valuable data on the degree to which an outcome has been attained, but
does not identify the extent to which an agency’s actions caused an outcome to
cur. Program evaluation is critical for agencies to determine the reason their goals
or are not being met and the actions needed to meet unmet goals. :
Our review of leading state and foreign governments found that they recognized
e need to develop their expertise in a variety of areas as they implemented their
anagement reforms.® These areas include performance measurement, the use of
formance information, and program evaluation. The governments found that
sencies needed several years of experience before they felt comfortable with meas-
‘ing their performance correctly and using performance information effectively.
milarly, our review of successful private sector organizations has shown that
aining and capacity building were critical to the success of their efforts.1° As a re-
ilt, these successful governments and private organizations made substantial in-
stments in providing training to staff at all levels in their organizations, from the
P management to the line staff who implemented programs on a day-to-day basis.
in Australia, for example, the government spends about 5 percent of its public
vice personnel budget on training, according to a recent report by Dr. Donald F.
ettl for the Brookings Institution's Center for Public Management.1! In contrast,
1e U.S. federal government invested only about 1.3 percent of its personnel budget
training in fiseal year 1991, according to Dr. Ket
It seems reasonable to assume that in the current environment of severe resource
straints, maintaining existing federal training budgets will be a formidable chal-
nge for many agencies and that major increases in federal training budgets are
ot likely. Thus, agencies will need to seek new, creative, and less costly ways to
iild their capacities to implement GPRA and to use the resulting performance in-
rmation to improve their programs. According to agency officials, several agencies
ave provided orientations on GPRA to senior managers and select groups within
te agency. In some cases, such as the departments of Health and Human Services
ad the Interior, in-house coordinators are leading training efforts and serving as
entors on GPRA, However, most agencies have not yet developed or implemented
1 agency wide training strategy that identifies who needs to be trained, on what,

‘Managing for Results: Steps for Strengthening Federal Management (GAO/T-GGD/AIMD-
58 Miay51d95) and CAOMGGDIAINIS-GS18E, Tune 20, 1608 Also ase our reports and test
onies included in footnotes and the Related GAG Products section of this statement.

7 GPRA requires OPM, in consultation with the Director of OMB and the Comptroller General
the United States, to develop a strategic planning and performance measurement, training
mponent for its management training program and otherwise provide managers with an ori-
tation on the development and use of strategic planning and program performance measure-
ent. At the request of OPM, we provided assistance in the development of its GPRA training
vurse and continue to provide support to its training efforts.

8 Program Evaluation Issues (GAO/OCG-98-6TR, Dec, 1992).

°GAO/GGD-95-22, December 21, 1994, and GAG/GGD-95-120, May 2, 1995.
°GAQ/NSIAD.99:105, February 27, 1902.

ir. Donald F. Kettl, Reinventing Government? Appraising the National Per i

he Brookinen Inatinition: Contar' fin Dubie Manaceovont Wackinemia he fermates Bee


7

We also had a structured OMB-wide dialog about performance last
September, which was unique in the recent history of OMB.

In an effort to continue our cooperative work with the agencies
in this area, the written results of this dialog were shared with the
agencies. OMB elected from the beginning not to create a large
staff whose sole responsibility would be GPRA implementation.
This decision is premised on the fact that OMB can be no more
than a catalyst in the implementation of GPRA.

It is on the shoulders of the agencies and the tens of thousands
of managers across the Government that this law will succeed or
fail. Based on the need, ultimately, to rely on the efforts of agency
managers to implement GPRA, we have been working with three
interagency councils I chair to build on their insights and sugges-
tions, and to encourage their ongoing participation.

Congressman Mascara noted the importance of involving organi-
zations such as the Chief Financial Officers Council, which has cre-
ated a GPRA subcommittee that has developed a thoughtful and
thorough analysis of the role of the CFO in each agency in the op-
eration of GPRA. The President’s Council on Integrity and Effi-
ciency, which includes the Inspectors General of the major agen-
cies, has been developing a menu of possible performance measures
for IG offices, and has been discussing the role of the IG offices in
reviewing agency implementation of GPRA.

Finally, the President’s Management Council, comprised of the
chief operating officers of the major agencies, has established an
accountability subgroup, and is looking at various ways to improve
the ability of Federal agencies to manage for results. To help begin
the fiscal 1997 budget process, we are just completing a spring re-
view on program performance at OMB, covering selected key pro-
grams in every Cabinet department and major agency.

The review on program performance was also a natural out-
growth of our work on Phase II of reinventing government. Again,
the Congressman raised his concern about whether GPRA imple-
mentation would be tied into reinventing government. Phase II of
the National Performance Review focused on the “what” of what
the government does, asking each agency to define its basic Federal
missions, and to identify the key programs necessary to achieve
those missions.

Our spring review then asked, what performance information is
available now, and what might be produced as part of the fiscal
year 1997 budget submission for these key programs? Our goal is,
in fact, to achieve the aim discussed by the Congressman, which
is to relate GPRA information, performance information, into not
only the budget process, but into the NPR reinventing government
process.

Within OMB and within the agencies, we have begun to develop
an overarching, unifying framework for bringing together the var-
ious laws and initiatives which have a performance focus. These in-
clude GPRA, the Government Management Reform Act, the Chief
Financial Officers Act, the Federal Acquisitions Simplification Act,
the Federal Managers Financial Integrity Act, the Inspector Gen-
eral Act, as well as initiatives originating from the National Per-

formance Review, such as development of customer service stand-
ards and agencv nerfarmance acraemante


46

ie key determinant of improvement. Allow manager:
«and all will be well. P) gers to manage, workers to
ie third choice is a performance system, with a clear focus on positive and nega-
sanctions for overall organization performance. The notion is that the organiza-
and its systems are responsible for most gains in productivity, etc., not any sit
ndividuals or units. By clearly defining expectations and measuring toward out-
2s, the organization is driven toward overall improvement, and given the free-
to abandon much of the hardware, or rules, of the old compliance systems. Ef-
ve organizations are rewarded, ineffective organizations are punished, and a
ket mentality of sorts is created in even the most non-market-like settings—e.g.,
ral departments and agencies.
yelieve performance accountability is the right choice in today’s public organiza-
We fimply do not have the dollars to pay for the compliance system that has
loped and blossomed over the years, and must increasingly choose between de-
‘ing services or paying for costly command and control systems. The problem,
ever, with performance accountability is that we are all just a bit unwilling to
v0 of the old systems. We want our performance and compliance systems to co-
which is rather like commanding Pri
not a marriage made in heaven.
us, the main point of my testimony today is that the path to performance ac-
itability requires strong measures to undo many of the past devices of compli-
accountability. That means, for example, asking the federal Inspectors General
vend more of their time examining performance and preventing mistakes, and
on piling up statistical accomplishments in search of yearly records. (I should
in passing that capacity-based accountability is quite compatible with a fully
are performance system. indeed: creating @ knowledgeable and well-equipped
¢ force is an essential part of an outcomes orientation.)
‘t me concentrate the rest of my testimony on the difficulty achieving perform-
accountability in today’s federal hierarchy. As the Chairman knows, I have just
aleted a rather extensive study of the changing structure of government, and
four quick lessons from the resulting book, Thickening Government, published
er this year by the Brookings Institution and Governance Institute.
rst, there is a nearly inexorable tendency for the federal hierarchy to thicken. As
rm of art, thickening measures the distance between the top and bottom of a
rnment hierarchy (height) and the growing number of occupants in each layer
te hierarchy (width). Height times width = thickness. It is safe to conclude that
federal government has never been thicker than today—there are more layers
anagement top to bottom, and more managers at each layer.
‘cond, the thickening of government has chanced the basic shape of the federal
archy. In the 1950s, the federal bureaucracy looked like a relatively flat bureau-
‘c pyramid, with few senior executives, a somewhat larger number of middle
agers, and a very large number of front-line employees. By the 1970s, the fed-
government was beginning to look like a circus tent, with a growing corps of
or political and career executives, a sizable “bulge” of middle managers and pro-
onals, and a shrinking number of front-line employees. By the end of the 1980s,
federal government was becoming a pentagonal shape, with even more political
career executives at the top, and almost equal numbers of many middle-level
front-line employees. In 1983, there was one employee at the middle for every
mn the front-line. By 1992, the ratio was moving down toward one-to-one.
current trends continue, the federal government may eventually resemble a cir-
with very few employees at the bottom, hordes of managers, supervisors, and
nical analysts of one kind or another at the middle, and a vast coterie of politi-
ind career executives at the top. The rest of the traditional bureaucratic pyra-
will still exist, of course, not filled in by federal employees, but by those who
‘ for the increasing number of contractors, non-profits, and state and local agen-
that deliver services once provided above. .
iird, the hierarchy tends to thicken under almost all conditions. There are far
nany suspects in the thickening of government to list here; suffice it to say that
re all guilty. There is no party of thickening (it occurs under Democrats and
ablicans alike), nor any institution of thickening (presidents have done it, Con-
s has done it, the Courts have done it). : ; :
iis is a particularly important finding as this subcommittee considers pending
lation to abolish one or more departments, for the research suggests that mere-
iminating a department from the books does not necessarily assure that govern-
t will be thinner as a result. Like any fad diet, government may wake up
ths or years later much thicker, indeed. -_
msider, as one example, the creation of the Department of Education in 1978.
reory, breaking Education out of the old Department of Health, Education, and

incess Di and Prince Charles to reunite.



6

In fact, we often learn more from those projects having problems
than from those which are an instant success. GPRA specifies, in
addition to the performance pilots that at least five departments
and agencies be designated as managerial, accountability, and
flexibility pilots. While the performance measurement pilots are
numerous and wide ranging, similar attributes do not apply to the
managerial, flexibility pilot project proposals. .

We have received only a quarter of the nominations of these pi-
lots than we did for the performance measurement pilots. And this
is a matter of some concern. We do not yet know the reasons why
we are having these difficulties. A number of explanations have
been offered, but the root causes are still to be ascertained. Based
on conversations with the agencies, let me cite several cir-
cumstances which may have contributed at least in part.

The first was the Workforce Restructuring Act, which was en-
acted after GPRA. The mandated reduction of Federal employment
requires that we monitor how agencies are reducing FTEs. Prior to
the enactment of that act, the agencies had signalled great interest
in obtaining waivers from non-statutory controls on employment
levels, thus enabling them to manage to dollars, not to people.

A second explanation is that the request for managerial flexibil-
ity pilots may have fallen too quickly on the heels of the perform-
ance measurement pilots. A third possible explanation is that agen-
cies, upon review, are finding that many of the restrictive require-
ments they would like to have waived are internally imposed and
were not required by central management agencies.

A half dozen other possible explanations have been offered, and
some of these may also have played a role. Thus, we have analytic
work to do, and we intend, in weeks ahead, to assess in more detail
why this portion of GPRA has encountered the difficulties it has.
Even though any pilot project designations would be made late in
fiscal year 1995, we believe we can obtain the full 2 year test of
these pilots that is contemplated by GPRA.

The second stage of GPRA begins with agencies’ strategic plans.
GPRA requires that agencies develop strategic plans that include
a mission statement, a description of long-term general goals and
objectives, and a description of how the goals and objectives will be
achieved, along with the relationship between these long-term
goals and the annual performance plan.

An agency’s strategic plan is to be submitted to Congress and
OMB by September 30, 1997. The strategic plans are the founda-
tion for GPRA implementation, and the annual performance plans
and reports are based on and derived from strategic plans. OMB
will soon issue guidance on the preparation and submission of
these plans. The guidance is being developed collaboratively with
the departments and agencies, relying on a working group with
over 60 representatives from approximately 30 departments and
agencies.

Beyond the pilot projects and strategic plan guidance, OMB and
the agencies are moving rapidly to develop and use more and bet-
ter performance information, both in the budget process and in the
budget itself. During the fiscal year 96 budget process, OMB called

for more verformance information tn he nrovided hv the agencies


40

private sector in some areas? Then he discusses that a little fur-
ther, and I find these paragraphs rather interesting.

“According to GAO, the critical factor for success in this and
similar strategic information management projects is stronger lead-
ership and personal commitments from government’s top execu-
tives.” You noted in your testimony that the problem with political
executives is, especially at the assistant secretary or implementing
level, that they often last not more than 2 years, on the average.

Under secretaries, as I remember, for the last 30 or 40 years,
usually last about 242 to 3¥2 years. Cabinet officers are lucky if
they make it for four. Some do make it for eight, which ups the av-
erage.

The author goes on to say, “How are we going to get that, when
top executives only stay in the government an average of 2 years?”

In its report, GAO also addressed its favorite topic: the need for
better financial systems. “Better financial systems would certainly
help the government control its operations better. But once again,
the answer isn’t legislation; the answer is people. Somebody ought
to put up a sign in the Controller General’s office that says, “You
can’t legislate good management, stupid.’

“The most laughable section of the GAO report,” says
Bureaucratis, “is the recommendation for continued oversight by
congressional committee. We don’t need more oversight. A better
reward and punishment system is what the Federal Government
needs. If Congress is not prepared to institute such a system, it
should not be surprised by the mediocre results derived from the
current system.

“One way to reinvent government is to reward managers hand-
somely for achieving results, and fire those who fail. Try that, and
you'll find the Federal Government can perform just as well as the
private sector.”

Do you have a reaction to that suggestion?

Mr. FINCH. Well, I look forward to reading that article, Mr.
Chairman.

Mr. Horn. We're going to put the article in this hearing record,
without objection, in full.

(Note—The article entitled, “GAO Report on Federal Improve-
ment Misses Mark,” Federal Computer Week, pg. 31, 34, can be
found in subcommittee files.]

Mr. Horn. I wondered if you were going to stop at a woodcarver
on the way back and say, “Mr. Bowsher, here’s your new sign.”

Mr. FINCH. Is there any particular part of that you’d like to pur-
sue?

Mr. Horn. In that vast reservoir of ideas that is contained in the
walls of the General Accounting Office, over the years, frankly I
have forgotten or it’s escaped me, has GAO ever come up with an
examination of the Federal Government’s personnel system and
said, wait a minute, we ought to have some incentive plans to en-
courage management, and we ought to have ways of getting rid of
managers?

I realize it’s one thing to get rid of the rank and file here, no
matter how incompetent a few might be, and that’s partly poor
management. I’ve found that you can get rid of the rank and file
if you put your mind to it and are willing to take the heat. Then


19

Mr. KOSKINEN. Those are actually under the National Partner
ship Council, which was set up by the NPR. i

Mr. Horn. Has NPR diverted those in budget interested in im
plementing GPRA, or how’s the balance of time going here?

Mr. KOSKINEN. Again, I don’t want to ride the same hobby horse
but our goal is in fact to integrate the GPRA enterprise into wha
the NPR is doing. So NPR has focused on a number of performanc
issues. Customer service standards is one. Performance agreement
between the agency heads and the President are another. Labo
management partnerships and the ability to get managers am
union people working together is another.

Our goal, and we said from the start, is all of those have to b
unified together. I became somewhat well-known for what I calle:
the unified field theory. When I started last summer, it was clea
to me—and the gravamen of your question is focused that way-
that if we kept all these as separate initiatives, we would in fac
undercut their ability to accomplish their results.

But on the other hand, if you see them as part of an overal
structure, designed to improve the performance and the perform
ance measurement of the government, then they actually are sup
portive of each other. I don’t think we need to think or worn
about, at this stage in the perspective, is the NPR function detract
ing from GPRA? As far as we're concerned, they’re all driven to
ward the same goal, which is to improve the performance and oper
ation of the government.

Mr. Horn. Well, I think that’s a worthy approach. We've had tes
timony, and there’s a lot that’s been written on the Oregor
Benchmarking project; what’s happening in New Zealand; what’
happening in Australia; what’s Jappening in Minnesota, North
Carolina, so forth.

At this point in time, given your current experience in Govern
ment, have you seen some exciting ventures at this point in hov
we, one, establish the goals; and then have a common sense meas
urement that is measuring what’s important, which is, are you
reaching those goals—not merely counting something that’s count
ables

What have you seen along those lines that excites you and say
gee, this thing might be working?

Mr. KOSKINEN. Well, we’ve got, as we noted in the first perform.
ance plans when we came, we analyzed those and we actually cam
up with 10 what we call exemplars that we thought—and we
shared those with the agencies—of what you can do when you actu
ally try to measure your results. I just spent time this morning
with the Department of Defense, which is running a 3-day semina)
on restructuring the way it does travel processing, focused on re
sults.

They want to cut significantly the amount of resources it taker
to process their travel orders. They spend several billion dollars <
year traveling. They’re measuring not only the outcome in terms o
how much money they save, they're measuring the improvement ir
customer service and customer satisfaction.

Our hope is that all of this is beginning to be integrated and sor
of insinuated into the agencies, and, across the board, we'll finc
more and more exciting events like that.


14

rained themselves? Should you perhaps reconsider your decision
‘ot to have any staff devoted solely to implementation of GPRA?

Mr. KosKINEN. Well, let’s work backwards. We have some staff
‘evoted solely to GPRA. But our goal has been not to create our
wn GPRA bureaucracy. The statute doesn’t contemplate that, and
t is normally not OMB’s function to provide training directly to the
gencies, although we have participated in supporting OPM trai
ag. It is clear, as GAO and the agencies have noted, no major ini-
iative in the management area—actually, no initiative at all—pro-
eeds well without training.

OPM provides about 10 percent of all Government training, as a
eneral matter, and has been successful with assistance from us
nd from agency experts in beginning to develop training modules
hat are available either in the Federal Executive Institute or other
raining areas. But we have discovered that often, the most effec-
ive training is that which is being conducted within the agencies
y themselves.

Again, our hope is that the OPM training modules and the infor-
ation and guidance that we’re continuing to provide from OMB
nd the use of other outside consultants—many of whom you've
eard during this series of hearings—who are working with the
gencies will provide the necessary training.

But I think Congressman Mascara put his finger on one of the
oints. It’s not whether there’s enough training available, but
thether there’s enough knowledge available. at we have to
yeus on is to ensure that there are enough resources available to
ae agencies to utilize this training and avail themselves of it. In
mes of difficult budget limitations, I think that’s one of the things
ll of us have to be paying close attention to.

Mr. Horn. Many very distinguished scholars and practitioners of
ublic administration have come before this committee and said,
Look, we’re making a major mistake in the Office of Management
nd Budget by having management responsibilities carried out
‘ithin the budget divisions by the budget examiners.” Now, with
ie implementation of this act, does this really cry out for a sepa-
ate office of management that ought to be directly responsible to
re President, headed by a director who could make sure that the
lanagement aspects of Government, the processes, the structures,
ie procedures, the relationships between headquarters and field,
yuld be very carefully focused on?

Mr. KOSKINEN. Well, as one who obviously is very concerned and
»mmitted to management, I would say my experience is that if we
seated that kind of an office, it would be a terrible mistake. This
ould marginalize management; it would put it off on the side. It
ould run counter to what we’re trying to do in OMB 2000, which

to make it clear to people that management issues do not arise
ad do not exist separate from program operations.

If indeed we are going to integrate all of the management initia-
ves we want to into day-to-day program operations of the agen-
es, we have to have people learn and understand that manage-
ent problems do not exist separately. They grow out of program
erations, program concepts, program goals. If we’re going to suc-
‘ed, as I said in my statement, we need to unify all of these efforts
ad build them into the budget process.



3

will focus specifically on the implementation of the Government Performance and
Results Act of 1993 (GPRA).

GPRA, which I was honored to manage on the House floor, was one of the first
major steps taken by the 103rd Congress to re-invent government. It requires execu-
tive agencies to develop strategic plans, set goals and then evaluate results in the
context of those goals. These steps, in turn, will help Congress in its consideration
of funding for specific agencies. ;

By the beginning of the next century, GPRA will hopefully have a dramatic effoct
on the way the Federal budget is prepared, and how agency performance is meas-
ured. This would produce a profound change, both in the mechanics and in the cul-
ture of government. However, the Act is currently in its infancy, with only a small
number of pilot programs being run. Nevertheless, this oversight hearing is very im-
portant—the best way to ensure that the plans of Congress are correctly imple-
mented is to start early.

Federal managers today are impeded in their attempts to improve efficiency and
affectiveness because they lack the program goals and performance measurements
which GPRA requires. And as they work to provide public services, they are increas-
ingly expected to perform with fewer resources, The implementation of GPRA, cou-
aled with other reinvention efforts currently in progress, will provide incentives for
aew ways of getting things done. Implementing GPRA will not be easy, but its bene-
its will be great.

Mr. Chairman, I hope that our colleagues consider carefully the information gath-
zred at this hearing as they ponder issues of government management and budget
policy in the 104th Congress. I would hate to see us abolish programs, and even
whole Cabinet Departments as recommended by this year’s budget resolution, in a
reckless and ill-advised way. We should consider the improvements in government
nanagement which have already been put in place, for they may help us resolve
some of our current fiscal problems without the indiscriminate, meat-ax approach
advocated by some.

Again, thank you for holding this hearing. I look forward to hearing from our wit-
aesses.

Mr. Mascara. Yes, I do. Good afternoon, Mr. Chairman. This is
zetting to be a habit—at the beginning of each week, I hurry and
irive back from my district, park my car downstairs, and come di-
cectly here for a hearing. If we keep this up, soon I will be reciting
sections of the Government Performance and Results Act, and actu-
ally know what I’m talking about.

All kidding aside, Mr. Chairman, I think you should be congratu-
ated for holding this series of hearings on “Making Government
Work.” I haven't been able to attend each one; still I am confident
shat the body of testimony built over the course of the past nine
aearings will prove to be useful to managers throughout the Gov-
2rnment, as they continue to deal with the new world order of Re-
nventing Government and downsizing.

However, 1 would not be candid if I did not say that the testi-
nony that will be presented this afternoon has only reinforced my
concern I expressed last week about the Government Performance
and Results Act. Departments and agencies certainly must rethink
their missions, with an eye toward satisfying their stakeholders;
hat is, taxpayers and Members of Congress.

In this time of budget constraints, it is imperative that they sit
jown and decide what really is their core mission. They have to
constantly reassess how they are going to deliver their govern-
nental product with less money. At the same time, they have to
iream up some method of measuring results that can prove to tax-

yayers and Members of Congress the ishi
something worthwhile. er Y are truly accomplishing

The problem is, 1 am more and more ennvinead that tha mans


69

Y 1997 Performance Plan
For FY 1997, FS will institutionalize its GPRA Performance Plan goal develop-
cent into its Budget process. The FY 1997 formulation of the Agency Request is

ased on budget priorities tied to the Draft RPA strategic goals. Currently, Deputy
reas are working on developing their GPRA goals tiering them to the budget pri-
‘ities in the FY 1997 Agency

uest. These goals will be adjusted based on the
epartmental Allowance and the FY 1997 GP! Performance Plan forwarded to

IB. Forest Service management anticipates using the GPRA Performance Plan
yals as one basis for allocating funding in FY 1997, thus further institutionalizing
PRA.

lexibility Pilot

The FS has decided not to participate in the second set of projects (managerial
countability and flexibility). In general, those areas where the FS would be re-
esting flexibility are under the purview of the Congress. It should also be noted
\at FS already has the benefit of some key “flexibilities” such as two-year funding.

CONCLUSION

GPRA has the potential to become an important management technique in USDA.
ur pilot project experience, as exemplified by the Forest Service has been a very
rsitive, albeit difficult, learning experience. The results and the lessons learned
ill be significant in Department-wide implementation. USDA is committed to a
‘overnment that works better and costs less.” Strategic and performance planning
ill help us achieve that goal.

FOLLOW-UP QUESTIONS AND ANSWERS
A, A, WILLIAMS, CHIEF FINANCIAL OFFICER, DEPARTMENT OF AGRICULTURE (USDA)

1. In what ways has top management supported or hindered the implementation
‘GPRA at your agency/department or pilot project?
Top management has provided significant support for the implementation of
PRA and the pilot projects by: (1) recognizing its importance, (2) communicatit
is importance to staff directors, (3) mal ing necessary resources available, includ-
g staff and training courses, to help devel lop performance plans, and (4) directly
irticipating in the development of annual performance goals and the strategic
anning process.
2. Are both career staff and political appointees involved in the GPRA implemen-
tion efforts? Please describe how and how it has affected the project.
Career staff and political appointees are involved in the strategic planning process
ad they actively communicate their endorsement of GPRA to all divisions within
eir agency. In most cases, only career staff is responsible for day-to-day implemen-
tion efforts.
3. How, if at all, do top political appointees and career managers show their sup-
ort for GPRA, and how is that support communicated throughout the agency?
Top political appointees and career managers show their support for GPRA by
king seriously their responsibilities regarding strategic planning and performance
easure development, and expressing this commitment to their staff. As stated in
e answer to #1, top management within USDA has provided significant support
r the implementation of GPRA. Their support is continually communicated at staff
eetings and conferences attended by employees, and during visits to regional of-
128.
4, Describe how your pilot is assessing internal constraints on managers’ flexibil-
7 in achieving desired outcomes. What kinds of constraints, if any, have been re-
oved and with what consequences?
USDA's agencies are not currently participating in the managerial flexibility pilot
‘ogram. Some agencies are still collecting information to assess internal con-
raints that may affect achievement of their desired outcomes. However, Natural
esources Conservation Service (NRCS) has identified several constraints for their
70 pilot programs:
Soil Survey Program has identified the following program constraints:
(1) Legislative language in their authorities prevents them from diversifying
their service to customers;
(2) USDA rules and regulations prevent rapid procurement of needed com-
puter equipment; and
(3) OMB rules relating to restricting the agency from charging for products
and retaining those fees for program support.


24

Mr. Horn. Why don’t we start with your presentation. You might
ant to identify your colleague.

CATEMENT OF JOHNNY C. FINCH, ASSISTANT COMPTROLLER
GENERAL, GENERAL GOVERNMENT PROGRAMS, GENERAL
ACCOUNTING OFFICE, ACCOMPANIED BY J. CHRISTOPHER
MIHM, ASSISTANT DIRECTOR, FEDERAL MANAGEMENT IS-
SUES, GENERAL ACCOUNTING OFFICE

Mr. FINCH. Thank you, Mr. Chairman. I am joined today by
hris Mihm, who is our Assistant Director, responsible for leadin,
1 of GAO’s work that relates to the Government Performance and
asults Act. We’re pleased to be here today to discuss the efforts
aderal agencies are making in implementing the requirements of
e act.
As you know, this landmark legislation seeks to fundamentally
ange the focus of Federal management and accountability from
preoccupation with inputs and processes to a greater focus on the
ttcomes that are being achieved.
I have a fairly lengthy detailed statement, which, with your per-
ission, I will submit for the record, and just briefly summarize.
3 detailed in my written statement, GPRA establishes a legisla-
ve framework for having agencies set strategic goals, measure
formance, and report on the degree to which goals were met. It
quires agencies to develop strategic plans by September 1997; an-
1al performance plans, beginning in fiscal year 1997; and annual
formance reports, beginning in the year 2000.
GPRA calls for OMB to select a series of pilots for fiscal years
194 through 1996 in performance planning and reporting. As an
dication of the significant support for GPRA across the Federal
overnment, 70-some such pilots are now underway across most
ajor Federal agencies; including, in some cases, entire agencies,
\ch as the Social Security Administration.
GPRA also requires OMB to designate the participants for a sec-
id set of pilots to focus on managerial flexibility for fiscal years
195 and 1996. Of these pilots, GPRA requires that at least five
fencies participate, and that all of the participants be drawn from
e first set of pilots working on performance planning and report-
g. As of today’s hearing, OMB has not yet designated any of the
anagerial flexibility pilots. And there was some dialog between
vu and Mr. Koskinen in that regard.
And you discussed, a number of the reasons, and we have some
those reasons included in our own statement. We are continuing
be—we have begun to look at that issue, and we’re continuing
look at the reasons why the managerial flexibility pilots aren’t
‘ogressing as envisioned by GPRA, and we will advise you of the
sults of that effort as it proceeds.
Our ongoing review of agencies’ initial efforts to prepare for and
iplement GPRA suggest that there are five emerging challenges
at will need to be addressed if GPRA is to be successfully imple-
ented government-wide. These five challenges include first, devel-
‘ing and sustaining top management commitment to GPRA. Our
ork has shown that the active involvement of agencies’ top offi-
als in setting goals. measuring verformance. and using verform-


10

gn affairs to regulation, research and development, and processing of claims and
‘oviding benefits. Of 25 major government functions that OMB identified, we lack
ssignated pilots in only two: direct delivery of health care, and electric power gen-
ation and distribution.
These pilots are not being done on a limited scale. The pilots cover over 425,000
vilian and military personnel. In the aggregate, the pilots cover more employees
an any US corporation except General Motors; substantially exceed the total num-
xr of civil service employees at the national level in Australia, Canada, New Zea-
nd, and Sweden; and are about 80 percent of total civil service in the British
ntral government.
Some pilots are very large, constituting whole agencies, such as the Social Secu-
xy Administration, or entire component agencies, such’as the Defense Logistics
gency, the IRS, and the Forest Service. Other pilots are quite small. We chose not
“impose limits on size because the pilots are a learning experience. Scale is less
itical than the knowledge gained and applied.
The pilot projects have submitted performance plans for fiscal years 1994 through
196. The initial program performance reports (for FY 1994) are also being submit-
d at this time.
As should be expected from any large endeavor, some of the pilots have turned
+ better than others. We think of this as good news on all counts. It is good news
at some pilots have shown that good performance plans can be produced, and the
sic concepts are sound. But having pilots which are struggling and finding this
difficult course can also be good news since we learn what has gone awry, possible
medies, and what is essential for overall success. In fact, we often learn more from
ose projects having problems than from those which are an instant success.
We must not lose sight of the fact that GPRA is a very demanding initiative: it
quires many government officials to manage programs and operations in a very
ferent way from the past, and it focuses on how well they are doing as managers.
we had an across-the-board, immediate success from all these pilots, I would be
acerned, if not convinced, that GPRA wasn’t changing very much in the way agen-
+s do business or managers run their programs.
From the better plans, we have been preparing excerpts—called exemplars—for
e by other pilot projects. We will also continue working with the agencies on de-
loping profiles of what is being done right, and what is off the mark. We have
liberately avoided sculpting a model plan or model report—for fear that this
vuld suggest that the governments many disparate programs and activities could
planned and managed in cookie-cutter fashion. Government managers are not ro-
ts, and the government is not an assembly line. GPRA places a premium on ini-
itive, on an entrepreneurial spirit, and this is best fostered by providing latitude
d recognizing that each program is unigue.
In the course of the past year, as the pilots gain experience with several iterations
these plans, we are seeing improvement, overall, in the quality of the plans. We
1l begin our assessment of the initial set of program performance reports in the
xt month.

MANAGERIAL ACCOUNTABILITY AND FLEXIBILITY PILOT PROJECTS

GPRA specifies that at least five departments and agencies be designated as man-
erial accountability and flexibility pilots. The pilots must be selected from the set
designated performance measurement pilot projects. These pilot projects pri-
wily involve waivers of administrative procedural requirements to give managers
ore discretion in how they manage, while holding them more accountable for pro-
am performance. The administrative requirements are those established by other
encies—usually a central management agency such as GSA, OMB, OPM, or
easury—and which impose limits or controls affecting how programs and oper-
ons are managed.

While the performance measurement pilots are numerous and wide-ranging, simi-
attributes do not apply to the managerial flexibility pilot projects. We have re-
ved only a quarter of the nominations for these pilots than we did for the per-
‘mance measurement pilots. The nominations were from seven Cabinet, depart
nts and one independent agency, and included 14 individual pilot projects. With
; nominations were approximately, 60 waiver requests. .

{n several instances, the proposed pilot project consisted of only a single waiver
juest. For some nominations, the group of requested waivers were narrowly
awn, leaving the potential impact on performance difficult to gauge. And some
minations consist of waivers that are substantive and, if authorized, could impact
ranizational or proeram verformance. Overall. however. this set of pilot project


29

The 71 ongoing pilot participants range from individual programs to entire agen
jes, such as the Social Security Administration, the Internal Revenue Service, anc
he ‘Defense Logistics Agency. Equally important, the pilots also cover a range 0
‘vernment activities and functions, including military operations in the Air Fore
\ir Combat Command in the Department of Defense; regulatory programs, such a:
hose conducted by the Occupational Safety and Health Administration in the De
‘artment of Labor; intergovernmental programs, such as those conducted by the Of
ice of Child Support Enforcement in the Department of Health and Human Serv
zes; and businesslike functions, such as those conducted by the United States Min
a the Department of the Treasury.

As required, all of the pilots submitted performance plans to OMB for fiscal year
994 and 1995. The initial set of 52 pilots selected in January 1994 also were re
ured to submit their annual program performance reports to OMB by March 31
995. By mid-June 1995, 34 of these pilots had submitted their reports. We arc
ow reviewing these reports to determine the degree to which they follow their re
pective performance plans and will provide the Subcommittee with a fuller assess
aent of the plans and reports in the coming months.

In crafting GPRA, Congress recognized that managerial accountability for result:
3 linked to managers having sufficient flexibility, discretion, and authority to ac
omplish desired results. Thus, a second part of the pilot phase of GPRA is to pilo
he effects of providing managers of federal programs with increased manageria
lexibility in exchange for the potential of improved performance. During this phase
)MB may approve waivers from certain types of nonstatutory administrative proce
‘ural requirements for agencies. GPRA authorizes agencies to apply for manageria
lexibility waivers in their annual performance plans beginning with fiscal yeai
999, The nonstatutory requirements that OMB can waive under GPRA generall
nvolve the allocation ‘and use of resources, such as restrictions on shifting fund:
mong items within a budget account. Such items may include, for example, con
ractual services and supplies, personnel compensation, personnel benefits, equip
nent, land, and structures.

Under GPRA, OMB is to designate the participants for a second set of pilots t
>eus on managerial accountability and flexibility for fiscal years 1995 and 1996. O
hese pilots, GPRA requires that at least five agencies participate and that all o
he participants be drawn from the first set of pilots working on performance plan
ing and reporting. However, as of today’s hearing—about three-fourths of the wat
hrough fiscal year 1095 OMB had not yet designated any of the managerial ac
ountability and flexibility pilots. OMB officials said that the delay is due fo a num
er of reasons. These reasons include priority being given to other GPRA work a
)MB and the “limited” nature of the waiver nominations submitted by the agencies
)MB officials said that they are concerned as to whether five worthy candidates car
e designated for the managerial flexibility pilots from the eight agencies that re
uested one or more waivers.

‘Our discussions with officials at OMB and in agencies suggest that a number o
easons may have contributed to the limited number of waiver nominations. For ex
mple, officials at a couple of agencies said that they had found that constraints t
aanagerial flexibility that they had confronted originated within their own agencie:
nnd were not necessarily imposed upon them by central management agencies
Shus, they were able to address these issues without having to request a waiver
Ve are continuing to look at the reasons that the managerial flexibility pilots ar:
it progressing as envisioned by GPRA and will report to the Subcommittee on ou
esults.

GPRA also calls for a third set of pilot projects. Beginning in fiscal year 1998, +
et of pilots are to be established to test the results of performance budgeting—link
ng proposed spending with expected performance levels. OMB is to designate a
east five agencies as pilots in performance budgeting for fiscal years 1998 and 1999
it least three of these pilot agencies are to be selected from the first set of pilot:
vorking on performance planning and reporting.

AGENCIES’ EFFORTS IN PREPARING FOR EFFECTIVE GOVERNMENTWIDE
IMPLEMENTATION OF GPRA

Our work suggests that because of the time needed for agencies to set strategi:
als, develop outcome-oriented performance measures, and gather and use perform
nee information, agency components that are not participating in the pilots never

“Of the 18 pilots that did not submit reports, 5 withdrew or were planning to do so. Of th:
emaining 13 pilots, some were still working on their reports, while others were negotiating


98

Well, to make a long story short, they really saw better business
thinking as a way to, one, give decisionmakers all the way up here
in Congress better information on what they're doing; and in ex-
change for that, more flexibility to meet some real needs on the
ground. So in other words, they could start generating good, use-
able, accurate information on what they’re doing right there in the
forest for you back here in Washington and everyone down the
chain in exchange for that.

And as part of that whole partnership, I think, implicated in the
act would have greater flexibility to meet some real needs there.
So they wouldn’t be faced with a situation where they’ve got a
recreation center with enormous demand closing down for lack of
appropriation. And at the same time, they've got more money for
parking lots than they could ever have anything to do with because
they can’t get the people in there to go to their recreation center.

So I think that’s a real example of what the career people are
doing down there. Speaking of the political staff, I think I'd sepa-
rate that into two different parts. I’d say there are the career man-
agement folks, and the career program folks. And frankly, I think
when we talk to a lot of the management people, we're talking to
the choir; that is to say the political appointees. And when we're
talking to the program people, I think we've got to face the fact
that we've got a challenge.

We've got to really show people, at least at that level, that what
we're doing is not just another 1 of 30 initiatives that have been
done over the last 30, 40 years; two, that it’s something that really
will capture and excite the interest of the public so that they have
that set of incentives. And right now, that isn’t always the case.
People think of inputs.

You’ve heard that before, Mr. Chairman. I think that’s true
throughout the Government. We've got to show them that outcomes
are also important. And people out there in the regular public care
about those outcomes.

Mr. Horn. Admiral Henn, how would you say the career staff
and political appointees were involved, and how did they affect the
outcomes so far?

Admiral HENN. Well, sir, actually, we have three groups we're
looking at—the political appointees, the career, and also the mili-
tary folks. Obviously, as we ratchet down, the political appointees
we see more at the higher grades. Certainly from the Secretary,
deputy secretary, modo administrator, deputy modo administrators,
there was complete not only support but buy-in early on.

And that goes across the board, whether they be political, career
or military. I would tell you, once you get down into the career em-
ployee, civilian employee, and military employee, at basically the
06 level and basically at the GM 15 maybe junior SES level, that
there’s where you really have to work on getting the buy-in. Frank-
ly, we’re 3 years into this process.

I had some of those folks work for me, military and civilian side.
You've got to select leaders; you’ve got to politically appoint lead-
ers; and you've got to promote military leaders. And the ones who
aren’t willing to do the job, perform, you have to fire them. And
that’s a tough job, but you’ve got to do it. I have to tell you, I've


91

jeals and methods ACC has adopted with its leadership style and
uest for continuous improvement. ACC appreciates the commit-

2e’s interest in GPRA, and the opportunity to participate in this
earing. I would be pleased to answer any questions you may have.
[The prepared statement of Colonel Ward follows:]

PREPARED STATEMENT OF COL. F. EDWARD WARD, JR., DEPUTY COMPTROLLER,
HEADQUARTERS AIR COMBAT COMMAND, U.S. AIR FORCE

Mr, Chairman and members of the committee, thank you for the opportunity to
sport on Air Combat Command’s involvement in the Performance Measurement
ilot Project of the Government Performance and Results Act of 1993 (GPRA).
Air Combat Command (ACC) is the largest command in the U.S. Air Force. Our
dssion is to organize, train, and equip U.S.based combat air forces to meet any
ossible aggressor. We provide the vast majority of the combat air power our unifie
immanders depend on to support the full spectrum of military operations in their
‘eaters. Our mission is big business, involving some 280,000 active-duty, reserve
mponent, and civilian personnel, 3,085 aircraft, major units on 32 installations,
ad an annual operating budget of $9.5B, Even in peacetime, our operations extend
orld-wide, with over 5,000 ACC people deployed to help keep the peace in south-
est Asia and the former Yugoslavia, as well as supporting counter narcotic oper-
dons and running Cuban refugee camps in our own hemisphere.
In an era of downsizing and austere budgets, we have had to find ways to perform
ir mission in the most cost effective means possible. We have improved productiv-
y by actively streamlining our operations and cutting costs. Such an approach has
‘come an integral part of our daily operations, Our goal is for ACC leaders to fos-
r an operating style that creates for our people a working climate of trust, team-
ork and continuous measurable improvement. This leadership approach is an on-
ving, evolving process, and we use it to constantly refine the way we perform our
ission and measure our progress.
Strategic planning is an essential element in our approach to improving produc-
vity. Our ‘Strategic Planning for Performance Improvement (SPPI) process is
igned with the quality principles and concepts described in the Malcolm Baldrid;
ational Quality Award criteria. Each of our 29 wings use SPPI to translate the
‘porate Air Force and ACC vision and mission statements into goals and objec-
ves for themselves and the 591 squadrons below them; the squadron is the basic
ait of production in ACC. The wings and squadrons also develop the performance
dicators they use to measure their progress in meeting those goals. We call these
dicators Quality Performance Measures (QPMs).
Today, we have 190 QPMs that encompass our four major mission areas—oper-
ions, logistics, support, and medical—and measure our performance in each
rainst quantifiable standards, Examples of ACC wing level QPMs include bombing
euracy, aircraft and vehicle in commission rates, civil engineering customer satis-
ction, and pharmacy waiting times. We aggregate the QPMs and review them
tarterly against the ACC standard for that particular activity.
Our involvement in the Performance Measurement Pilot of GPRA is a natural
itgrowth of our commitment to quality improvement. Our operating style agrees
ndamentally with GPRA's desire to make government more responsive and. ac-
untable by measuring and reporting on performance, stripping away unneeded re-
rictions, and ultimately linking performance to the budgeting process. Of the three
PRA pilot projects, our command is currently participating in the Performance
easurement Pilot, and we hope to take part in the Performance Budgeting Pilot
hen it starts in 1998, We do not have any ACC units participating in the Manage-
al Flexibility and Accountability Pilot Project.
There are three ACC wings participating in the GPRA Performance Measurement
lot Project: the 314th Airlift Wing at Little Rock Air Force Base, Arkansas: the
th Fighter Wing at Shaw Air Force Base, South Carolina; and, the 355th Wing
Davis-Monthan Air Force Base, Arizona. The wings, with assistance from our
sadquarters, prepared their FY95 and FY96 Performance Plans. The performance
ans they developed contain comprehensive mission statements, and goals and ob-
rtives covering their operations, logistics, support, and medical functions. The
ans also include QPMs with defined targets to validate their results in each of the
ur functional areas. As part of the pilot project, we have taken the normal ACC
easurement process one step farther by attempting to tie cost per unit output to
small number of the QPMs under study. The wings are currently executing their

¢95 Performance Plans and we ar iling data heii indi
rs. At the end af tha Roa ose are catTee Fe aso tnei pert Andica

a data ta datawrn


11

nominations is not likely to provide a full test of the managerial flexibility and ac-
countability provisions of GPRA. —_

This is a matter of some concern. In other countries with GPRA-type reforms,
managerial accountability and flexibility are viewed as key factors in the success of
these reforms and were the basis for these provisions inGPRA.

We do not yet know the reasons why we are having these difficulties. A number
of explanations have been offered, but the root causes are still to be ascertained,
Based on conversations with the agencies, let me cite several circumstances which
may have contributed, at least in part. The first was the Workforce Restructuring
‘Act, which was enacted after GPRA. The mandated reduction of Federal employ-
ment requires that we monitor how agencies are reducing FTEs. Prior to the
Workforce Restructuring Act, the agencies had signaled great interest in obtaining
waivers from non-statutory controls on employment levels, thus enabling them to
manage to dollars, not to people. : a

A second explanation is that the request for managerial flexibility pilot projects
followed too quickly on the heels of the performance measurement pilots. A third
possible reason is that agencies, upon review, are finding that many of the restric-
tive requirements they would like to have waived are internally imposed, and were
not required by the central management agencies.

A half dozen or more other possible explanations have been offered, and some of
these may also have played a role. Thus, we have some analytic work to do, and
we intend in the weeks ahead to assess in more detail why this part of GPRA has
encountered the difficulties it has.

With respect to the pilot project nominations we did receive, we are proceeding
with the review of the proposed waivers by the central management agencies that
established the requirements from which a waiver is sought. Following their review
and determinations on approving requested waivers, we will later this Summer
make final decisions on designating pilot projects.

Even though any pilot project designations would be made late in fiscal year 1995,
we believe we can obtain the full two-year test of these pilots that is contemplated
by GPRA. Although we had not anticipated this delay in designation nor the overall
shortcomings of these candidate pilot projects, the OMB guidance on these pilot
proieets did indicate that we would consider extending the waivers into FY 1997 and

Our decision at this point to proceed with review of the waiver requests is based
on a judgment that OMB, the agencies, and Congress can learn something from
having these pilots. Not only are we identifying requirements that prospectively
may be waived, we are gaining an insight into those requirements whether inter
nally imposed by an agency or by a central management agency—that significantly
affect managerial flexibility.

We are also prepared to consider additional nominations, or perhaps to work with
an agency in a more robust demonstration of GPRA’s managerial flexibility provi-
sions. Such a demonstration might combine relief from internally imposed require-
ments as well as external ones.

STRATEGIC PLANS

The second stage of GPRA begins with agency strategic plans. GPRA requires that
agencies develop strategic plans that include a mission statement, a description of
long-term general goals and objectives, and a description of how the goals and objec-
tives will be achieved along with the relationship between these long-term goals and
the goals in the annual performance plan. An agency's strategic plan is te be sub-
mitted to Congress and [B by September 30, i897.

‘The strategic plans are the foundation for GPRA implementation, and the annual
performance plans and reports are based on and derived from the strategic plan.

MB will soon issue guidance on the preparation and submission of these plans.
This guidance is being developed collaboratively with the departments and agencies,

relying on a working group with over 60 representative from approximately 30 de.
partments and agencies.

AN ACCELERATING EFFORT

Beyond the pilot projects and the strategic plan guidance, OMB and the agencies
are moving rapidly to develop and use more and better performance information
both in the budget process and in the budget itself. While this effort goes beyond
both the GPRA time line and the Act's requirements, this information can be of


97

ae Coast Guard. As I read it, and maybe I missed it, because I
vas skimming it, the one thing that means the most to me, and
omething I noted when I visited the 11th Coast Guard District, is
ae wonderful work you're doing in terms of illegal alien and drug
wterdiction. I didn’t see that that fit into any of those goals. Did
miss it?
Admiral HENN. No, sir, you didn’t miss it. And the reason why
ou didn’t miss it is that what we’ve put forward is from the pro-
ram of Marine Safety and Environmental Protection. Actually,
iis particular program has done quite a bit of work as far as put-
ng together staffing standards, identifying the 189 specific activi-
es that are performed within that program. What we are doing
ow is, since we are 3 years into this process, we are now going
ito our fourth iteration.
And that’s why I said, some agencies, if they haven’t started,
iey’re at the 11th hour. It’s not easy. You’ve got to work on this.
‘you wait until the last year to get started, you’re not going to
take it. But the point is, we now are migrating what we've done
. this one program to our program of operations, to our program
‘navigation. So indeed, their business plans are now beginning to
.odel what was done in this one program, and they, too, will follow
ith a performance plan much like we have.
Mr. Horn. Very good. Let me now ask some general questions
‘all of you. In your experience, in being responsible for imple-
enting these programs, were both career staff and political em-
oyees involved in the implementation effort? How would you de-
wribe the role of the career staff employees and the political staff
nployees? What sort of things did they particularly undertake, if
.ey were participants? Do you want to start, Mr. Williams?
Mr. WILLIAMS. I'd say the career staff, I think, at least in Agri-
uture—and I think this is emblematic of the entire government.
i like to echo what Mr. Mascara was saying and John Koskinen.
’s pretty much emblematic, I think, of the high level of profes-
onalism of Federal employees. You take the Forest Service, who
under tremendous pressure.
They had last year one of the worst fire seasons in memory for
long, long time. They’re under all the same constraints in terms
* downsizing, streamlining, reinventing, this and that, everyone
se is—and yet, I might also add, are also in the midst of all these
her related complementary initiatives. And when they're pre-
nted with this new approach to performance management, and
n speaking of the career folks, approach it enthusiastically.
I was out in your part of the world, sir, out in California, visiting
me of the national forests out there. And I just recount this story
you because of the Angeles National Forest and the San
2rmardino National Forest have tremendous demand for use of
creational space. And you had the forest supervisors out here, ca-
er people down on the ground, trying to meet this tremendous de-
and, and complaining as well as a lot of Federal staff about the
ngressional reports they've got to send up; about all the new
anagement controls they’ve got to adhere to; and about—and I

ink the Forest Service is a great example of this—the tremen-
sus lines of anvrovriation that. thev’ve ont ta ahide hv


65

Farmers Home Administration now the Rural Housing Community
Development Service; and the Single Family Housing Program.

RHCDS had, I might add, a study that they submitted to the
subcommittee on appropriations, on performance measurement;
which I think is interesting, because I think there’s a linkage there
with the appropriations process. And finally, we have had under-
way programs with the Cooperative State Research, Education and
Extension Service.

By way of summary, I’d like to refer back to what John Koskinen
said in his exchange with you, Mr. Chairman: in talking about per-
formance measurement in the overall program, we really need to
think about what are the goals of our program; how are we going
to measure our achievement according to those goals; and then fi-
nally, how are we going to build the accountability and report the
results of what we’ve done.

And when we talk about the Forest Service and the enormous
work that they’ve done, I think that they are a unique organization
not just because of their size and magnitude—and I think we can
all appreciate that—but because they have already underway a
number of measures that are related to the Government Perform-
ance and Results Act, and really show how an agency must grapple
with—as John would say, in the unified field theory—grapple with
combining and coordinating and integrating, synthesizing, if you
will, all these different initiatives.

For example, Mr. Chairman, they have had underway for some
20 years now, the Resource Planning Act, which requires them to
submit every 5 years a strategic plan, stretching for 5 years.
They’ve had to accommodate that. They have, very important! ‘a for
some time now, been implementing what they call the All Re-
sources Reporting System, which is a system integrating financial
and accomplishment reporting to show the relationship between ex-
penditures, revenues and accomplishments.

We think this is critical because good cost accounting systems
are the only way we're really going to show the cost of achieving
outcomes. Tes really the foundation, we believe for good perform-
ance management. Another important thing, getting at_manage-
ment support in your exchange with Dr. Light and Mr. Fosler on
how to build incentives. The Forest Service has underway, for some
time, something called the Management Attainment Report.

And what it’s tried to do, with its senior executives, to make a
long story short, is incorporate performance measurements into
that process of evaluating their senior executives. So in summary,
Mr. Chairman, how has the Forest Service tried to coordinate and
combine all these activities? How has it tried to address one, build-
ing better management support; two, better integration of all these
initiatives; and three, better accountability?

I think 1996’s performance report offers a good example. In 1996,
what the Forest Service is attempting to do is to take the goals
that they have to submit under the Resource Planning Act—take
those as a launching pad, if you will, because they’re for a 5-year

eriod—build budget priorities based on those goals, and then

‘PRA 1 year performance plan goals under that.

So you've got, at least as a start, a unified system. Then on the
back end, to begin in 1996, working toward an accountability re-


71

agencies and Departments and have used those reports as references in developing
their own pilot programs. Many agencies have used a team approach that consoli-
dates GPRA expertise and aids planning and implementation efforts. For example,
Forest Service l.as velied on a small cadre of personnel knowledgeable in the concep-
tual and technical aspects of performance measurement, goal development and cor-
porate processes. Additional personnel become involved in the development of each
successive performance plan and report. Animal and Plant Health Inspection Serv-
ice has at least one employee and manager who attended four monitoring system
design workshops at the ports of entry where results monitoring occurs in the pilot.
vod What has been the main impetus driving the implementation of the GPRA pi
ots?

For most agencies, the main impetus driving the implementation of the GPRA pi-
lots is management’s commitment to a results-oriented program that uses strategic
planning and performance measurement as management tools. Some agencies had
strategic plans and performance measures in place due to agency-specific legislation,
but GPRA offered the challenge of developing outcome measures. Also, the Forest
Service viewed GPRA as an excellent framework for developing and organizing in-
formation to simplify the evaluation of agency performance.

COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE

10. The Department of Agriculture is planning to ask to have the first stage pilot,
the Cooperative State Research, Education, and Extension (CSREES), withdrawn
from the pilots? It is a program that deals with state land grant universities, I
think, is that correct? Can you describe the department’s reasons? Are there inher-
ent difficulties in working cooperatively with the states? Is this something that
needs to be considered in light of the current enthusiasm for block grants?

Prior to the recent enacted USDA reorganization, the USDA Extension Service
was accepted as a pilot project under GPRA. In fact, the Extension Service was
noted by OMB as one of the exemplary pilot projects for 1994. The USDA reorga-
nization has combined the extension activities of the Extension Service with the re-
search and education activities of the Cooperative State Research Service. The re-
sulting organization, Cooperative State Research, Education and Extension Service,
is focusing its attention on the most appropriate combination of extension, research
and education services. Therefore, a pilot project focused on extension’ activities
alone is not appropriate in the new organizational arrangement.

FOREST SERVICE

2. What is the current status of the agency's ecosystem management approach in
terms of its integration into the agency? In other words, have senior managers, line
managers, and staff adopted and accepted this approach in its daily operations?

Ecosystem management is being fully integrated into the policy setting, planning,
budgeting, and project development and implementation phases of the agency's
management model. The concept of ecosystem management is an integral part of the
Course to the Future, the Draft 1995 Resources Planning Act (RPA) Program—the
agency’s long-term strategic plan, the proposed revision to the Land Management
Planning Regulations, the FY 1996 and FY 1997 budget submissions, and program
direction in the field. Line and staff involvement have occurred in these and other
efforts that are helping to define and communicate the mission, goals and objectives
of the agency. Field-level managers have been at the forefront of accepting and uti-
lizing ecosystem approach in the design and implementation of integrated resource
projects that implement the direction in land management plans.

3. The Forest Service has developed one Annual Report meeting the needs of both
the CFO Act and the 1994 GPRA Performance Plan. Can you describe the contents
of the document and explain a little about how it combines the reporting require-
ments?

The Forest Service is producing an Annual Report in response to requirements in
the Forest and Rangeland Renewable Resources Planning Act of 1974, the CFO Act
of 1990, and the GPRA of 1993. The FY 1994 Annual Report of the Forest Service
continues our efforts to combine as many of these reporting requirements as pos-
sible into a single document. The Report contains three major sections:

(1) an overview that contains some key information about the Forest Service,
accomplishments related to CFO performance measures, and Performance High-
lights related to the 1990 strategic RPA Program Themes;

(2) a GPRA appendix that contains the goals from the 1994 GPRA Perform-
ance Plan, planned and actual accomplishments, trend information and conclu-
sions related to the achievement of the goals; and

(3) a series of statistical tables on Forest Service activities and outputs.


16

lowed too quickly on the heels of the performance measurement:
pilot.

Do you think the remaining time tables are still realistic? Shoulé
Congress consider changing the statutory requirements? Or car
you deal with any problems administratively?

Mr. KosKINEN. I think we can deal with the problems. I think
great progress is being made. I think it would be a mistake, at this
stage, to extend the deadlines. As I noted in my testimony, anc
briefly in my comments, we have just completed a spring review on
program performance. This is basically jump-starting GPRA strate.
gic planning and statements of goals and objectives on an even
broader scale than the wide-ranging performance pilots we have
going.

It is not going to be easy. I do not think that, when we provide
the 1999 budget with Government-wide performance information, it
will self-execute. The experience of other governments and States
that have tried this, as you well noted, is that it takes time. But
the time doesn’t get shorter by waiting. We need to spend that time
working in this direction.

We need to understand that we won’t have immediate perfection.
However, I firmly believe that this statute is a significant water-
shed in the way that government programs are viewed, analyzed,
and managed. I think we need to continue to support it, and we
need to continue to hold agencies accountable under it.

Mr. Mascara. Why have several agencies dropped out of the ini-
tial pilot projects? GAO testimony says that four pilots have been
withdrawn, and two more are planning to do so because “they over-
estimated their current abilities to meet the goal-setting and per-
formance measurements requirements of GPRA, needed to change
the focus of the participating program of the original focus of the
pilot, and for other reasons.” Could you comment?

Mr. KOSKINEN. Yes. We had, between the 1994 and 1995 per-
formance pilots, we had 77. Of those, six, and perhaps seven, will

. have dropped out for several of the reasons you noted. This would
be about a 10 percent drop-out rate, which is not surprising and
is not of concern to us. We've asked each of those programs to ex-
plain in some detail what their difficulties are.

As I noted, you sometimes learn more from the difficulties and
the problems than you do from the successes. But we think, overall,
we will have, by the time we get done with it, we will have had
far more than the 10 performance pilots contemplated under the
act. And we will have very valuable experience across the board,
from those 70 as they report.

We will have some very good successes, and we will have some
that will have struggled, even if they kept their designation.

Mr. Mascara. You mentioned in your testimony that some of the
pilot projects were agency-wide, such as at the IRS and at the So-
cial Security. Both of those agencies are facing crises in informa-
tion management. Will the GPRA pilots detract from solving the
problems associated with information management? Will they help
solve those problems, or do these pilots have no effect on them?

Mr. KOsKINEN. The pilots will not directly solve the underlaying
problems. What the pilots will demonstrate. to some extent. is the


99

fired military and I’ve fired civilian career employees who wouldn’t
buy in.

We worked with them. Most of them—90 percent—bought in.
The ones who didn’t, they're gone. And you must do that if you're
going to have a performance organization. .

Mr. Horn. Very interesting, because it’s often said that, gee, it’s
impossible to fire them. Now, that isn’t true in the military. You
can send them to a distant post pretty easily, and have them count
icebergs or something.

Admiral HENN. Yes, sir. There’s other ways to fire them, too.
There’s also ways to fire career civilian employees. Just too often,
we take the excuse that you can’t.

Mr. Horn. Right. I agree with you. Mr. Thompson, how did you
handle it with the VA? How did the role of career staff, if any, dif-
fer from those of the political employees, in terms of trying to
achieve the goals you've set out to achieve?

Mr. THOMPSON. Mr. Chairman, my dealings with political staff
are limited, but from what I’ve seen from the Secretary’s office on
down into our organization, the support has been very good, and
the interest has been high. Within the Veterans Benefits Adminis-
tration itself, John Vogle, who is the Undersecretary for Benefits,
almost a year ago, created a steering committee which he ap-
pointed me to, simply to try to take these lessons learned in the
pilot projects and expand them throughout the VBA to increase the
knowledge and the experience and blend our budget, planning and
measurement systems together.

The level of support within the Veterans Benefits Administration
has been excellent. The career staff, I agree that you run into skep-
tics, but I’ve found that most people—if you sit down and spend
some time and talk through measuring outcomes and about trying
to find out what really is important and what really should be
done—most people, at least intellectually, will agree that that’s an
important thing to do.

There may be some skepticism as to the commitment, as to
whether government can hold the course and get it done, but I
think at least at one level, everybody would agree it needs to be
done. And I would say that within the career workforce, this can
be done. And I think within VA, it will be done.

Mr. Horn. Just for the record, now, are you a career employee,
as director?

Mr. THOMPSON. Yes, I am.

Mr. Horn. And how long have you been with the VA?

Mr. THOMPSON. Twenty years.

Mr. Horn. Did you find, as one who had been with the VA, when
you're talking to your fellow career employees at the senior level,
do some of them say, hey, wait a minute; we went through this a
few years ago on zero-based budgeting or whatever in the 1960’s—
T’ve forgotten now. I have a chapter on it somewhere, but it’s long
since out of my mind.

Mr. THOMPSON. They used to say that.

Mr. Horn. They don’t now?

Mr. THOMPSON. Well, everybody’s so shell-shocked from all of the
changes coming in, I think they believe anything is possible today.


21

to Senator Ribicoff while he was the chair of the Government Reor-
ganization Subcommittee on the Senate side. One of the things that
struck me when I read the act last summer was in fact that it had
provided this kind of a time table, with pilot programs, with re-
views of those before you actually went to government implementa-
tion.

The risk is, and, as you note, the temptation is that if we have
a good idea, it ought to be implemented by everybody tomorrow
morning. When you do that, as you can see by this, not much good
would happen. At the other end of the spectrum, in terms of wheth-
er we've allowed too much time, as you and I discussed just a
minute ago, I think that we are making good progress and I think
it would be a mistake to extend the timeframe.

But I think what we have to understand, whatever the time-
frame is, is that we’re not going to have perfection when we start.
We're going to continue to evolve. Hopefully we'll continue to have
the dialog I just mentioned between not only agencies and the Of-
fice of the sident, but between the executive branch and the
Congress, about how we're doing, program by program.

It’s very challenging. It’s really an intellectually stimulating ex-
ercise to move from one government function to another and ask
questions of what’s the goal of this program; how are we going to
measure it; what’s the appropriate measure; and how are we doing.
Because each program has a different set of answers to those ques-
tions. There’s no one-size fits all. And it’s a great challenge.

However, I think these are the right set of questions to ask, be-
cause the Congress and the public deserve answers to the questions
of what are we trying to accomplish with this program and how do
we measure that. You're exactly right that the temptation, histori-
cally, is to then argue at least only about inputs—how many re-
sources do we have. If anybody looks at anything more, it’s really,
as you say, only outputs or process: that is, we held so many in-
spections, we made so many grants.

What we need to do is get beyond that and say, what was the
impact, what was the outcome of the fact that we engaged in that
activity?

Mr. Mascara. One of the frequent complaints about government
managers is that they’re afraid to go out on a limb for an idea.
GPRA is designed to reward that sort of risk-taking. At the same
time, while we’re talking about downsizing and privatizing and
contracting out and cutting pay and cutting benefits that would go
to these managers, what affect, if any, are these assaults on gov-
ernment workers having on morale and on making GPRA work?

Mr. KOSKINEN. That’s a good question. You have a good set of
questions here. This is a question that goes beyond GPRA. I think
the question of morale of government employees and the rewards
we give to them and the way we characterize them is a great con-
cern across the board. If GPRA went away tomorrow, we would
still have that very important question. I’m concerned about it. I
think most government managers are concerned about the state of
employee morale.

We basically had, for 25 years, a situation where most people
coming to V ashington ran against Washington. | Starting with


50

o labor hard to do the work, but don’t always have the support
‘op management and leadership.

third, a primary challenge to implementing GPRA is to develop
» necessary capacities—the tools, systems, and skills to make it
rk. Our review of the pilots indicate that many of the agencies
k capacity to clearly define vision, strategic mission, put to-
‘her annual performance plans, to develop performance measures
i collect data, and to effectively analyze and present the data
1 communicate the results and actually use the information for
proving performance.

fourth, the implementation schedule for GPRA does not appear
ely to be met if the pilot experience is a reliable indicator. This
2s not mean that we should push back the schedule, but only
tt the Congress should be aware of the fact that that schedule
inlikely to be met.

‘ifth, GPRA efforts need to be closely aligned with related initia-
es to restructure government and improve performance.

[he GPRA ought to be seen not simply as a separate act, but as
integrating mechanism to link together some of the key areas
performance, such as the performance agreements between the
2»sident and the Cabinet secretaries; customer service standards;
: performance management system envisioned in the administra-
o’s forthcoming civil service bill; and the numerous pieces of leg-
ation, such as the Chief Financial Officers Act, the Government
wnagement Reform Act, the Federal Acquisitions Streamlining
:, and the like.

think Mr. Koskinen addressed this very cogently, and is aware
the need to integrate these different facets of management re-
m, if we’re not to have people stumbling over themselves and
:se efforts getting in the way of one another.

{nd then, sixth, Congress clearly has an important role to play
assuring the effective implementation of the GPRA. And Mr.
airman, the hearings that you are holding on this issue and on
: issue of making government work are a major step in that di-
tion of fulfilling the congressional role. There are other actions
it we have suggested in the testimony, including making full use
section 306(d) of the act, that requires agencies to consult with
ogress on their strategic plans.

3ut perhaps most important is that agencies know that Members
Congress and staff care about this act, and that they’re going to
< questions based on the information that the agencies will be
widing, or should be providing, to fulfill the mandate of the
"RA.

et me say, in summation, that there are significant challenges
it remain; but that the early implementation experience dem-
strates that the GPRA’s potential as a powerful tool for improv-
: government operations and communicating progress and re-
ts is quite substantial.

And Congress clearly has an important role to play in assuring
tt this act does achieve its potential.

The prepared statement of Mr. Fosler follows:]


95

pts. GPRA provides ACC further opportunity to smooth out its experiences gained
rough the quality program.

PILOT PROCESS INTEGRATION

Question: What approach is the pilot taking to link planning and performance
easurement activities throughout the organization and integrate them with proc-
ses in place at various levels of the organization, from top agency official to line

aff?

Col Ward: ACC has a “goal alignment” policy that starts at the Pentagon and cas-
des down through each level of command. The USAF vision, mission, and key pol-
y directives are integrated at ACC Headquarters and used to formulate broad “cor-
wrate” goals for the year. Subordinate units develop increasingly more specific
vals and objectives, all aligned with the ACC goals. —_

The squadron is ACC's basic unit of Production in each field organization. (ACC
1s almost 600 squadrons.) At the squadron level, leaders develop very specific goals
id objectives, along with appropriate measures to insure performance meets estab-
shed command standards. The whole ACC planning and measurement process is
ntinuously refined and updated.

SHARING GPRA EXPERIENCES

Question: How are the experiences of the GPRA pilots being shared with nonpilot
wticipants within the agency? ;

Col Ward: ACC feels that it is one of their responsibilities as a GPRA pilot to
.are their experiences and lessons learned. ACC will be participating in the 1995
aality Air Force Symposium held in Montgomery, Alabama, for the second con-
cutive per: Last year, ACC presented a paper on GPRA, while a panel discussion
ill be the highlight this year. ACC has had many requests for information about
eir experience in implementing GPRA. ACC developed a simple GPRA introduc-
ry package which can be tailored to meet the needs of the requester. Quarterly,
3C offers a working-level briefing to Air Force organizations outside the command.
°C has incorporated the GPRA message into its Senior Leader’s Course targeted
squadron commanders and above. A letter from Secretary of the Air Force, Comp-
oller (SAF/FM) provided a GPRA update to nonpilot participants within the agen-
this past spring.

‘TRAINED STAFF

Question: How have ou ensured that staff are adequately trained or knowledge-
ile in the techniques they are using?

Col Ward: Quality is a way of life in ACC. ACC stresses continuous improvement
rough performance measurement and thus has an immediate philosophical link
ith GPRA. GPRA’s basic intent is to make government more responsive and ac-
untable by measuring and reporting on performance, stripping away unneeded re-
rictions and finally, by linking performance to budgets.

The Air Force Quality Institute provides training to a few key personnel who in
in go to their units and teach others the basic premises and concepts: a ripple
fect

A three-day course for senior leaders within ACC is oriented toward quality that
cludes instructions on GPRA.

IMPETUS OF GPRA PLOTS

Question: What has been the main impetus driving the implementation of the
lots’

Col Ward: The main impetus driving the implementation of the GPRA pilots has
en ACC's search for continuous quality and productivity improvement, which is
rperative to perform its vast missions effectively and effciently. Productivity im.
‘ovement allows ACC to increase its output with less input. In an era of
rwnsizing and austere budgets, ACC has had to find ways to perform its mission
the most cost effective means possible. As ACC’s people continue to focus on proc-
s, product, customers, and output, it moves closer to the position of automatically
verating in a cycle of continuous improvement.

Mr. Horn. Thank you very much, Colonel. We appreciate your
sstimony. Let me ask a couple of questions about your presen-
itions. I want to start with Mr. Williams, the Chief Financial Offi-
or of Agriculture. I was interested in the pilot programs you listed.
here doesn’t seem to be any that represent the largest proportion



33

ced outcomes. One of FEMA’s desired outcomes is to help individuals and commu-
ties recover from natural disasters. During the mid western floods in 1993, FEMA
scovered that many of the victims did not have flood insurance. The lack of flood
surance meant that most flood victims had to rely on taxpayer-supported federal
saster assistance funds, which were not intended to cover all losses from the
rods. According to FEMA, its average individual family grant in the mid western
ods was between $2,000 and $3,000, and its maximum individual family grant
as $11,900. The maximum amount of Small Business Administration loans were
5 million for businesses and for individuals, $100,000 for real property, and
‘0,000 for personal property, Further, disaster loan recipients had to repay those
ans with interest, on top of their existing mortgages. However, for those who were
sured through the self supporting National Flood Insurance Program, the average
od insurance claim paid was about $25,000—more than double the amount of
3MA’s maximum disaster grant. As a result of this experience, FEMA launched
\ effort to increase the number of flood insurance policyholders—a program area
at had not been a traditional focus but that is now understood as being important
achieving FEMA's desired outcome of helping individuals and communities re-
ver from natural disasters while at the same time reducing the cost of that assist-

ice.
OMB's review of the pilots’ initial set of performance plans underscored the
aount of progress that agencies will need to make before the goal-setting and per-
rmance measurement requirements of GPRA can be used to drive daily operations
the federal government. OMB found that in about 20 percent of the performance
ans, the goals and measures were not precise enough to be useful in management

budgeting. For example, OMB noted that some agencies’ performance goals
cked the numerical values and baselines that will be important for the agencies
‘assess performance and target those areas most in need of improvement.

BUILDING A MORE EFFECTIVE CONGRESSIONAL OVERSIGHT APPROACH

Congress, as a prime user of performance and financial information, has a major
ake in ensuring that GPRA is effectively implemented. This is especially true if
Hformance information developed under GPRA is to be used to inform resource al-
tation decisions, as is intended by the act. OMB has sought to expand the amount
d prominence of performance information in helping to guide executive branch
ddget decisions. This effort is serving as a major impetus to accelerate agencies’
2RA efforts. However, our work at several states regarded as leaders in using per-
smance information in their executive-legislative budget process suggests that de-
loping performance measures that are credible enough to influence executive and
zislative budget decisions will be a significant challenge.1?
As a result, agencies’ GPRA efforts will be further reinforced if Congress too
ows a knowledgeable interest in performance information in its oversight of agen-
+s and their budgets. This hearing, as the first congressional oversight hearing to
wus exclusively on the status of GPRA implementation, is an important step in re-
forcing to the agencies the importance that Congrese places on setting outcome.
iented goals, measuring performance, and using performance for decision making
countability,
Congress needs to take more steps in this regard. One key step to sharpening
encies’ focus on outcomes would be for congressional committees of jurisdiction to
Id comprehensive oversight hearings—annually or at least once during each Con-
ess—using a wide range of program and financial information, Agencies’ program
formance information that will be generated under GPRA and the audited finan-
l statements that are being developed to comply with the Government Manage-
ant Reform Act should serve as the basis for these hearings, with additional infor-
ation from GAO and other congressional agencies, the Inspectors General, and
encies’ own program evaluations and audits. The information should provide Con-
ess with a comprehensive picture of what each agency is achieving and at what
In summary, Mr. Chairman, GPRA provides a legislative framework for changing
e basic orientation of federal management and accountability to a greater focus
achieving outcomes. But to be successful, GPRA will require that top officials in
Jeral agencies assume personal leadership for its implementation. Agencies will
30 need to build capacity and provide incentives for focusing on results and to inte-
ate GPRA into their daily operations. In recent appearances before this Sub-
mmittee, I have discussed the need for federal agencies to make substantial im-

2Performance Budgeting: State Experiences and Implicat the Federal
AO/APMD.93-41, Feb. 17, 1993). iplcations for the Federal Government


17

Again, what we need across the board, ultimately, is data that is
available to managers efficiently, effectively, and accurately. Across
the board in the Government, one of our major needs in informa-
tion management, particularly in the financial management area
and cost accounting area, is to have adequate, accurate, and timely
data.

And so I think that’s going to be a systemic problem that we're
dealing with, and we’ll need to continue to deal with.

Mr. Mascara. I have a whole host of questions, and perhaps we
can send those.

Mr. Horn. Sure, whatever you'd like. We’re going to go back and
forth, if you’d like, a few more.

Mr. Mascara. OK. Mr. Chairman, before I relinquish, I’ve been
asked by Mrs. Carolyn Maloney that her statement be entered into
the record, if there are no objections.

Mr. Horn. Without objection, it will be entered just after mine
and before yours. Go ahead, you've still got time, if you’d like.

Mr. Mascara. There’s a great deal of skepticism about GPRA. It
is fraught with jargon which most of us don’t understand. Everyone
talks about results in the next century. Frankly, much of this
seems like a good example of what Don Kettl called MEGO—my
eyes glaze over. But most people agree with the basic principal
focus on what gets done and how well it gets done. Could you sum-
marize for us the fundamental principles of how we get to a system
that measures and rewards performance?

Mr. KOSKINEN. Since I didn’t have anything to do with drafting
the statute, I can tell you that I continue to be supportive of it. The
statute lays out a very good framework. It basically says, before
you can start to measure what the results are that you're looking
for, you have to understand what are you trying to accomplish,
what are your goals.

So the basic thing you start with under GPRA, and you need to
do in any of these situations, you say, here’s a program: what are
we trying to accomplish; why are we spending this money; why did
we establish this program? Once we’ve got the goals, the next thing
you have to do is say, well, now, how are we going to measure
whether we’re accomplishing what we set out to do? Whether it’s
in education, health, training or in any other area—what’s our
benchmark; how do we measure that?

The next thing you have to ask is: Now, how are we doing? Do
we have a goal; do we actually have a benchmark against which
we're going to measure? At least are we going to know what the
basic data is? It’s really as straightforward as that. I think you're
right—we have to be very careful about jargon. My concern is we
have to be very careful about setting up GPRA bureaucracies on
the side with experts who know about this.

It’s basically a simple equation. What are we trying to accom-
plish; how are we going to know whether we accomplished it or not;
and how are we doing in that effort?

Mr. Mascara. Thank you, Mr. Chairman.

Mr. Horn. I thank the gentleman. You say, Mr. Koskinen, that

it ig an the chonidere af the acanciac and tha tane of thancande nf


61

Mr. LiGHT. Well, I think it’s up to Congress and the President
to decide whether to eliminate that program. And if you have credi-
ble evidence that the program isn’t working, and it’s obvious that
it’s not working, then somebody needs to create a rationale for it—
for spending the money or dedicating the employees to a program
that clearly cannot be done.

That starts here in the hearing rooms of Congress, with consider-
ation of workability in the legislative drafting process. So you have
to be willing, on the committees, to say, will this program we’re de-
signing work, and have credible witnesses involved in your process,
developing legislative history on that question. And then if you
find, after a reasonable period of time, that the program has clearly
failed, eliminate it, terminate it.

Mr. Davis. Do you have any good examples where that’s worked
up here?

Mr. LIGHT. Well, there’s a debate—you mean as to whether we've
ever been able to do it?

Mr. Davis. Right.

Mr. LicHT. I would defer to Herb Kaufman, who was a long-time
scholar at the Brookings Institution. The chairman may have
known him when he was there. He wrote a wonderful book titled,
Our Government Organizations Immortal. And his answer was, for
the most part, yes. So I don’t think we'll find too many.

Mr. Davis. So easier said than done.

Mr. LicHT. Well, Synfuels was eliminated in the early 1980's.
There was a question about whether it was working or whether it
wasn’t working. We have eliminated programs over the years, as
we have eliminated titles and positions from time to time. But
those are really the exception to the rule. There is a certain immor-
tality once we create an agency.

Mr. Davis. OK. Any other——

Mr. FOSLER. Yes. We now have more experience in looking at ter-
mination, elimination, substantial restructuring, both from the pri-
vate sector, from State and local government in the United States,
and in particular, from national governments abroad that have
been going through this process for about 10 years. And I think
that there is a series of lessons that come out of that experience;
that say that the key is to really ask, is this something that should
be done in the first place?

A business asks, is this our line of business? A government asks,
is this really our mission? And if it’s not, it shouldn’t be doing it,
whether the program is working or not. If it is a legitimate mis-
sion, and the program is not working, then the question is, why
isn’t it working? Is it because it’s poorly designed, it’s poorly struc-
tured, it has inadequate resources, it’s not effectively managed?

And if it really is important, then the question is, how can you
assure that it has the capacities to make it work? If it has every-
thing that you could possibly do to make it work and still doesn’t,
then it may be that it shouldn’t be done, even if it might otherwise
be a legitimate mission, because of the cost or difficulty of getting
it done. But those are the kind of questions that have been asked
elsewhere, and I think are now being asked by the Congress.

Mr. Davis. Of course, missions change and you get duplication.
Sometimes the problems that were originally envisioned to be


4

are too esoteric and arcane to achieve. They may be requiring more
yolicy wonking than even the most avid policy worker can tolerate.

GAO officials and the president of the National Academy of Pub-
ic Administration are going to testify that the agencies and depart-
nents are probably not going to be able to achieve the timetables
‘or reports and measurements required under the Government Per-
‘ormance and Results Act.

They will tell us that more than 300,000 Federal Government
nanagers must be trained, if all this is going to work; and that
agencies and departments simply do not have the money for such
raining. They will also tell us that agencies and departments do
iot have the funds, the computer systems, or the models needed to
neasure goals and customer satisfaction.

Apparently, the Office of Management and Budget has reviewed
‘ome pilot performance plans and found that agencies are having
»yroblems developing precise enough numerical values and base
ines that can be used in budgeting. In fact, GAO testifies that
ufter reviewing States regarded as leaders in this area, they have
‘oncluded that developing performance measurements that are
edible enough to influence executive and legislative budget deci-
‘ions will be a significant challenge, to put it mildly.

I guess my view is, has anybody thought about the possibility
hat what is required here may simply not be doable or useful.
What is even more disturbing is the revelation by the National
\cademy of Public Administration that the requirements of the
yovernment Performance and Results Act are not tied in with the
‘einventing government efforts, nor the Chief Financial Officers
\ct, or our efforts at procurement reform.

Federal managers apparently view the requirements of the Gov-
mment Performance and Results Act as just another complication
ind pain, not anything useful. This again begs the question of what
s the point. Leave it to the military, but I was most impressed
vith the testimony that will be presented by Vice Admiral Henn
mn the Coast Guard. He will clearly and concisely lay out the Coast
3uard’s goals and how they will measure results.

Perhaps other governmental agencies and departments need to
ake lessons from him on how to focus on the obvious, not the ob-
cure. The bottom line is, I am a very practical person. I helped
un a county government for years. I was a very hands-on,
traightforward manager. I’m afraid the Government Performance
and Results Act may actually be complicating rather than simplify-
ag government, as we all desire.

I say maybe this all needs to be rethought. Thank you very
auch, Mr. Chairman.

Mr. Horn. Thank you. As you know, we will swear in the first
vitness. We have a tradition on this committee of swearing in wit-
vesses.

[Witness sworn.]

Mr. Horn. We are delighted to welcome Mr. John Koskinen, the
Jeputy Director of Management for OMB. Please proceed. You

mow the routine—if you can summarize in 5 minutes, we’d appre-
iate it. It leaves more time far anectinne Rut ure aan ha a Heels


93

PROCESS DEVELOPMENT

Question: Who is responsible for making sure that the performance measures are
veloped, the necessary data accumulated, and the results actually used? _

Col Ward: Everyone, from the commander to the airman level, is responsible. The
verformance measures, or Quality Performance Measures (QPMs) as they are called
a ACC, are developed by the process owners. It is the process owners who accumu-
ate the necessary data and make sure the results are actually used. However, to
id this process, the 190 ACC QPMs are aggregated on a quarterly basis, not only
t wing level, but also at the command level where Headquarters ACC staif reviews
nd compares them against the ACC standard for that particular activity.

ASSIGNING RESPONSIBILITY

Question: How do you, assign responsibility to employees for outcome measures
hat may not be fully under the employees’ control?

Col Ward: Responsibility is assigned to the extent the employee has control over
he inputs. Positive outcomes are achieved using flexibility and empowerment.

MISSION STATEMENTS

Question: Are the comprehensive mission plans’ statements in the performance
lans the same mission statements you used before the GPRA projects started? Did
ou make any changes as a result of rethinking your missions or in response to
hanging external circumstances?

Cor ard: Yes to both questions, with a few exceptions. The overall ACC mission
tatement changed slightly from the FY95 ACC Performance Plan to the FY96 ACC
erformance Plan. The word “sustainable” was added during an annual review of
ae mission statement by ACC’s wing commanders. The statement now reads “ACC
rofessionals providing the world’s best combat air forces, delivering rapid, decisive,
nd sustainable airpower, anytime, anywhere.” As for the three pilot wings partici-
ating in the Performance Measurement Pilot, both Little Rock AFB’s and Shaw
FB’s mission statements are the same ones used before the GPRA projects started.
‘avis-Monthan AFB shortened its mission statement from the FY95 Performance
lan to the FY96 Performance Plan. This new mission statement is more com-
rehensive, yet succinct.

PERFORMANCE BUDGETING PILOT

Question: Do you plan to use any of the Performance Measurement Pilots to par-
cipate in the Performance Budgeting Pilot program?

1 Ward: Yes, it is our plan to nominate all three pilot wings (14th Airlift Wing,
ittle Rock AFB, Arkansas; 20th Fighter Wing, Shaw AFB, South Carolina; and
55th Wing, Davis-Monthan AFB, Arizona) to participate in the Performance Budg-
ting Pilot program.

PILOT PROJECT ADDITIONAL COST

Question: What were the additional cost of the pilot project?

Col Ward: Additional costs of the pilot Droject have Poon for additional manpower
2squired both at the headquarters and wing levels, computer hardware and software
ssociated with the cost per unit efforts (specifically at Davis-Monthan AFT), and
cher administrative costs such as travel. As a minimum, two temporary personnel
re required to operate the new computer hardware and software, as an adjunct to
1e Performance Measurement Pilot.

STANDARDS DEVELOPMENT

Question: In your testimony you say that quality performance measures are ag-
segated and compared to Air Combat Command standards for particular activities.
an you give an example of how these standards are developed?

Col Ward: Air Combat Command sets standards for performance based on mission
squirements and customer needs. ACC’s functional staffs at the headquarters, in
mnjunction with their field counterparts, establish ACC standards for each Quality
erformance Measure. For example, ACC sets its standards for Aircraft Utilization
ates (number of flights per aircraft per month on an annual basis) based on the
umber of pilot sorties needed to maintain the desired combat capability levels.
CC wants to set achievable standards, yet challenge its personnel to stretch for
igher levels of performance. Once ACC reaches an optimum standard, its efforts
‘cus on gains in efficiency for example, taking time, cost, or work out of existing
rocesses. while maintaining that ctandard


38

or being asked to join some group and buy out a Government serv-
ice that they came to work every morning, they planned on being
here until retirement.

And all of a sudden, we have all of these people running around
trying to figure out what’s going on. How do we do that and then
do this GPRA?

Mr. FINCH. There’s an old Chinese saying, sir. It goes something
to the effect of, may you always live in interesting times. And these
truly are interesting times. And I think you're absolutely right in
terms of all the concern that exists in terms of the downsizing and
all of those kinds of issues. They are counterincentives. And I think
the question that you really asked me centered on, how do you cre-
ate incentives to implement GPRA and focus on results?

I will echo what Mr. Koskinen said about the quality and the
work ethic of the Federal workforce. In my position in GAO, I have
seen a number of agencies—most agencies across the Federal sec-
tor, and invariably, I’m impressed with the Federal workforce. But
there are some counterincentives that exist in the way the govern-
ment goes about its oversight and the way managers look at their
processes that are underneath them.

Use of public reporting increases public scrutiny and in the pub-
lic arena, it can result in more public criticism. It can result in
overemphasis on inputs and processes, and it can result in some
very real perks in terms of reduction in dollars and reduction in
people. And if managers tend to focus on these kinds of things,
they tend to drive other managers in that direction, and really fo-
cused on inputs and processes as opposed to being focused on out-
comes.

The best way that I know how to create incentives, or the best
answer I can give you, sir, is that top management both the politi-
cal appointees, the career employees, and Congress as well—can
create incentives for agencies and agency people to really focus on
implementing GPRA by they themselves focusing on results and
demonstrating supportive behavior.

And to the extent that managers such as the Congress and politi-
cal appointees and top managers publicly focus on outcome goals,
demand outcome oriented information and use it in decisionmak-
ing, I think that sends a real message to the staff and the rest of
the Federal workforce.

Mr. Mascara. I'd just like to say for the record that in my former
life, I was an accountant. I like all of my ducks in order. Some peo-
ple on Capitol Hill get upset because I know how to add. And some-
how I get the impression that we make some political points if we
get there first. You know, how much can we decimate this Govern-
ment; how much can we tear it apart and end up with a shell, all
in the name of what looks good back home.

My voters back home will say, “Gee, Frank participated in deci-
mating that Federal Government agency; we didn’t need thein in
the first place.” They wake up the next morning and find out they
really did need it. And what concerns me is—and I spoke of the
ducks being in order—that we make sure that what we're doing is
right; that we think it through; that it’s in the best interest of this
Government; that it’s in the best interest of the employee; that


100

ing: you may have been successful under one system; you may not
look quite as successful under this; you should know what the new
rules are. That usually is enough to pique their interest. And I
found that with a little bit of understanding of it, they’re very in-
terested.

Mr. Horn. Yes. Colonel Ward.

Colonel WarD. Within Air Combat Command, we're dealing only
with career employees and career military. The support and buy-
in was excellent; ultimately, you have to sell the program. And
within the Department of Defense and the Office of the Assistant
Secretary of the Air Force for financial management, as well as the
Under Secretary of Defense Comptroller, particularly the perform-
ance measures and results directorate, tremendous support and as-
sistance was provided every way they could. They really helped us
make the thing happen.

Mr. Horn. Thank you, Colonel Ward, for your answer. I’m con-
scious that you all have waited very patiently, and I have a few
more questions. If you don’t mind responding, the staff will send
them to you. If you could respond in writing, we’d be most grateful.
Let me thank the staff that worked on this hearing, and I thank
each of you for your examples.

If you could send us some of your reports, the way they are now,
I think it would be an education for us to try and go through them
and see what we feel about them and give you some private feed-
back, if we have any. Because I think this is a tremendously impor-
tant endeavor, and it ought to spread rapidly throughout the Fed-
eral Government. Any organization that’s going to survive must
keep up with the times, the changing clienteles, and the changing
expectations of those clienteles.

+ me thank the majority and the minority staff—Russell
George, the staff director; Anna Young, who’s on my left, the pro-
fessional staff member primarily in charge of the hearing; Tony
Polzak, legislative fellow; Andrew Richardson, subcommittee clerk;
and then Matt Pinkus and Dave McMillen, from the minority staff;
and our official reporter, Marianne Nash.

Thank you all for coming, and with that, we'll adjourn this hear-

ing.
fihereupon, at 5:50 p.m., the hearing was adjourned, subject to
the call of the Chair.]
12)


41

people start getting the signals. But the question is, how do we get
rid of bad managers? And how do we keep the good ones?

Mr. FINCH. Well, those are very cogent issues, and very sub-
stantive issues. And I think we have done some things over the
years in that regard. I think we are really moving that way now,
with the symposium that I talked about. And I think managerial
flexibility is truly an issue. This is something that the foreign gov-
arnments have demonstrated that——

Mr. Horn. We had testimony that, in essence, the minister who
is equivalent of Alan Greenspan, when he holds inflation to 2 per-
zent, gets a very substantial increase in salary. And he’s paid about
what the President of the United States is paid for that feat.

Mr. Fincu. And that’s a good incentive.

Mr. Horn. Yes. Let’s face it, it’s a cheap payment if you have a
‘ew people that can hold down inflation just by their actions.

Mr. FINCH. I agree. And I think GAO does support those issues
‘n management flexibility. They do support the issue of incentives.
And I think we do need better incentives than we’ve had. And I
shink GPRA really provides, for the first time, a legislative frame-
work that will enable GAO and the Congress and the Federal agen-
ties to really try to get more science into management in the Fed-
2ral Government.

Mr. Horn. Yes. But I think you’d agree, that we also need some
ncentive plans, and that goes against the grain that one is sup-
dosed to sacrifice when one serves in the public service. You have
all the pressures, in a sense, against good management. You have
oressures of people in Congress against good management, just as
n a public university, you have pressure on lay members of the
ooard of trustees appointed by Governors to be the prairie populist
and say, well, you can’t reward good management.

I found when we did change that system, it was the major step
shat enabled us to pull off reform, if you will. Because you had
oroad ranges of people, and talk about affirmative action—it could
zo from the $30,000 job, supervisor of janitors, to the $100,000
jean. They could work their way up, go off, get an education, so
‘orth, so on.

It gave us flexibility to reward the people who were accomplish-
ng the goals. Now, there’s nothing in it for all these people to go
through the hard work, except personal satisfaction. But private in-
justry, and I realize money isn’t everything, private industry cer-
‘ainly would reward those that pull off the successes. Yet we don’t.
And the question is, shouldn’t we?

Mr. FINCH. Yes.

Mr. Horn. And is that an official position of GAO?

Mr. FINcu. Yes.

Mr. Horn. It’s always good to have you here, Mr. Finch, and Mr.
Mihm. Thank you for coming. We're going to have to break for a
rote now. When we come back, we'll begin with Professor Light and
?resident Fosler of the National Academy of Public Administration.
Aopefully, we can make it back in 15 minutes.

Mr. FINCH. Thank you, Mr. Chairman.

Mr. HORN. Thank you, Mr. Finch.