For Release on Delivery

Expected at

10 a.m. EDT

Friday,

April 7, 2000

GAO/T-GGD/AIMD-00-141

OFFICE OF

MANAGEMENT AND

BUDGET

Future Challenges to

Management

Statement of David M. Walker

Comptroller General of the United States

Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform, House of Representatives

United States General Accounting Office

GAO
Page 1 GAO/T-GGD/AIMD-00-141

Mr. Chairman, Mr. Turner, and Members of the Subcommittee:

I am pleased to be here today to discuss the role of the Office of

Management and Budget (OMB) in addressing the governmentwide

management challenges facing the federal government. In an earlier

testimony before this subcommittee on OMB’s managerial leadership, we

discussed in some detail OMB’s effectiveness in a range of specific

management areas.1 My statement today will build on this by emphasizing

the broader challenges facing the nation and the federal government now

and in the future and their implications for central leadership approaches

in general, and OMB in particular.

This hearing comes at an opportune time. As I recently testified before the

Senate Governmental Affairs Committee, it is critical to take stock of

where we are as a nation and as a government.2 The newly emerging policy

and management issues are truly different in kind from those we have

faced before and call for different kinds of approaches and solutions. We

need to take a comprehensive view of government’s structure and role as

we think about these new challenges. How can we best provide the kind of

governmentwide leadership to tackle these new problems and

opportunities?

In my statement today, I want to make a number of points:

• Meeting the governance challenges of the new century calls for us to build

on the management reforms enacted in the 1990s to address a broader

range of governmentwide issues. Many of the policy and management

challenges that face the nation and the government are multidimensional

and cross program, department, and agency boundaries. At the same time,

sustaining real performance improvements in government will require

transformations in the day-to-day management, cultures, and structures of

many federal agencies.

• As a result, our policy development and management processes need to

become more integrated and comprehensive while at the same time

promoting concerted action and support by federal agencies and their

third-party providers who bear ultimate responsibility for delivering

services to the people.

1Government Management: Observations on OMB’s Management Leadership Efforts (GAO/TGGD/AIMD-99-65, Feb. 4, 1999).

2Managing in the New Millennium: Shaping a More Efficient and Effective Government for the 21st

Century (GAO/T-OCG-00-9, March 29, 2000).
Page 2 GAO/T-GGD/AIMD-00-141

• Since the challenges we face are diverse, no single leadership strategy or

structure will serve to address all of them. Rather, a variety of strategies

and structures provides flexibility and can be designed to fit the specific

challenges, ranging from a central review approach to more devolved

strategies focusing on agency buy-in.

• Although meeting these challenges will require participation of the

relevant departments and/or third-party entities, OMB needs to take a

more active role. OMB must take the initiative to look across boundaries

and identify both management and policy issues where greater attention is

needed and take appropriate steps to ensure they are effectively

addressed.

As we consider OMB’s role, it is important to think about changes in

society and the world at large that will place new demands on

management leadership. We see that to a great extent we have succeeded

as a nation in overcoming some of the central problems that have

dominated public discourse and debate in the latter part of the 20th

Century. The cold war has ended and we won. The chronic deficits that

cast a long shadow over government and the economy for so many years

have been replaced with surpluses that are now projected to last for many

years, assuming no further policy actions. We should rightly celebrate our

successes at this time, for they were hard-earned and remind us that our

public sector—political leaders and career civil servants alike at many

levels of government—have contributed greatly to the achievement of

these ends.

At the same time that we recognize these successes, however, we face a

wide range of challenges and opportunities—both in policy and

management—as we look ahead to the future. They include globalization

trends, changing security threats, new and emerging technological

innovations, demographic changes, quality of life challenges, and

government performance and accountability issues. These interconnected

challenges and opportunities—which have no borders either domestically

or internationally—are both exciting and somewhat daunting. The

globalization of our economy for instance not only provides new

opportunities for U.S. producers and consumers, but also raises new

issues associated with our growing economic and social interdependence

and national security. Technological innovation continues to be a major

driver of economic growth, transforming, among other things, the way we

communicate, learn, and conduct commerce. At the same time, the

explosion in technology presents the federal government with a host of

new public policy and management issues associated with widespread use

of information, including the areas of computer security and personal
Page 3 GAO/T-GGD/AIMD-00-141

privacy in an electronic age. I have spoken in many forums of the

challenges presented by the aging of our population and about how we

provide economic security for a growing elderly population without

imposing an unreasonable burden on workers, the economy, or the federal

budget in future years.

Although the American people expect world-class public services and are

demanding more of government, the public’s confidence in the

government’s ability to address its demands remains all too low. Real

constraints continue to hamper federal agencies. For example, the

development of modern financial systems is still a work-in-progress for

many agencies, and the government’s use of information technology has

suffered from management weaknesses that have resulted in widespread

untapped potential to improve service delivery. Although major reforms

under way in performance, financial, and information systems

management are already showing encouraging progress, they should be

viewed as a foundation that is necessary but not sufficient to address longstanding performance issues in the federal government. Human capital is

missing from the statutory management framework, and it is important to

recognize that people are the linchpin for progress in any organization so

that nothing less than a transformation in how we think about human

capital at the federal level will be necessary. We must address what

amounts to an emerging human capital crisis in government. Given the

importance and interdependency of these issues, central governmentwide

leadership is critical to resolving these long-standing problems in federal

management systems.

To address the challenges of the new century, however, the agenda for

governmentwide leadership must be broader and deeper. Now it is time to

build on the management reform initiatives of the 1990s to institutionalize

real change in what the government does and how it does it. In order to

transition agencies from process-oriented business practices to more of a

results orientation while taking greater advantage of technological

advances will require nothing less than a structural and cultural

transformation of the federal government.

Although agency-level reforms are of critical importance, many of the

leading performance goals and missions of government transcend

individual agency boundaries—and, increasingly, levels of government or

sectors of the economy. The results of federal programs are realized by the

public as the sum of various and often conflicting federal, state, local, and

private initiatives addressing a problem or concern. A more

comprehensive approach to sorting out and integrating related initiatives
Page 4 GAO/T-GGD/AIMD-00-141

addressing common performance goals is vital to meeting the public’s

expectations.

Meeting the governance challenges of the new century has wide-ranging

implications for our decisionmaking and management processes. In some

respects, these issues call for more and stronger governmentwide

leadership. Many of the challenges transcend traditional boundaries and

demand a more comprehensive and coordinated decisionmaking and

implementation framework to achieve greater policy coherence, improved

performance, and enhanced accountability. On the other hand, improving

government performance invariably rests on the actions of many agencies

and nonfederal third parties whose commitment to change is uncertain—a

factor that becomes more critical as the focus of management reform

shifts to improving the day-to-day management of federal agencies and

programs. This all leads to a broader and deeper definition of

governmentwide management reform, making the roles and tasks

associated with it more intricate and complicated.

Management improvement has been defined by the statutory management

reforms enacted in the 1990s for performance management, financial

management, and information systems. As I indicated in my previous

testimony, we are still a long way from successful implementation of these

initiatives.3 Over the years, our work has shown that federal functions and

programs critical to personal and national security, ranging from Medicare

to weapons acquisition, have been hampered by daunting financial and

program management problems, exposing the federal government to

waste and abuse. Since 1990, as part of our high-risk initiative, we have

reported on specific federal activities and functions that are particularly

vulnerable to waste, fraud, abuse, and mismanagement.4

• Widespread financial system weaknesses, problems with fundamental

recordkeeping, incomplete documentation, and weak internal controls

prevented the government from having the information needed to

effectively and efficiently manage operations or accurately reporting a

large portion of its assets, liabilities, and costs.

• Federal information systems have been plagued by huge cost overruns;

schedule slippages measured in years; and marginal benefits in improving

3GAO/T-OCG-00-9.

4High-Risk Series: An Update (GAO/HR-99-1, Jan. 1999).

Implications of New

Challenges for the

Governmentwide

Management Reform

Agenda
Page 5 GAO/T-GGD/AIMD-00-141

mission performance, cutting costs, and enhancing responsiveness.

Continuing computer security weaknesses put critical federal operations

and assets at great risk.

• Underlying weaknesses in several program management areas raise

inordinate risks—the loss of billions of dollars annually due to improper

payments in certain benefit programs, difficulty in controlling tax filing

fraud, inefficient and weak lending programs, and challenges in reducing

Defense infrastructure costs.

It is increasingly clear that the enactment of statutory management

reforms, while critically important, is necessary but not sufficient to

achieve sustainable improvements in government performance. Continued

perseverance in addressing statutory management reforms and the areas

that are the focus of our current high-risk initiative will ultimately yield

significant benefits. However, a more daunting agenda lies ahead of us if

we are to bring about fundamental improvements.

First, progress on many performance problems calls for an integrated

multifunctional approach cutting across traditional programmatic and

functional boundaries. Achieving results calls for coordinated responses

from numerous public and private entities. In a recent report, for instance,

we identified widespread mission fragmentation and program overlap

throughout the major mission areas at the federal level. For example, 23

programs operated by 4 agencies offered housing services and 26

programs administered by 6 agencies offered food and nutrition services.5

Even more broadly, many missions are characterized by the presence of

multiple tools, such as tax expenditures, grants, loans, and direct federal

spending programs. For instance, in fiscal year 2000, the federal health

care mission area includes $34 billion in discretionary budget authority,

$123 billion in entitlement outlays, $100 million in loan guarantees, and

$89 billion in tax expenditures.

The outcomes achieved by these programs and tools are in a very real

sense highly interdependent. Any debate on policy in these areas and any

consideration of the management and performance of the government

should consider the broader picture of federal involvement. However,

currently some tools, such as discretionary spending, receive more

scrutiny in the budget and authorization processes than others do, such as

tax expenditures and regulations. In our view, one of the main agendas for

5Managing for Results: Barriers to Interagency Coordination (GAO/GGD-00-106, March 29, 2000).
Page 6 GAO/T-GGD/AIMD-00-141

governmentwide management leadership is to promote more transparency

and coordination across tools and programs so that the costs and

performance consequences of each can be more readily compared.

The foregoing illustrates that the management issues facing the

government are increasingly complex and wide-ranging. It also suggests

how critical Congress and the President are to governmentwide

performance issues. Congressional committees often tend to favor

different approaches and tools to address common problems. Competition

among different approaches can be productive, but we have not had a

decisionmaking and oversight vehicle or forum for a healthy debate about

those different approaches. There is no neat way to separate management

from policy or from program design—especially to the public on the

receiving end. I will discuss later on how the governmentwide

performance plan could provide a decisionmaking framework to help both

the President and Congress bring about greater coherence in the design

and management of our programs and policy tools.

The foregoing also suggests how intertwined management issues are with

the budget process. I understand that over the years the debate over

central management leadership has proceeded as if budgeting and

management were mutually exclusive processes. In fact, I think this is a

Hobson’s choice. Regardless of where the responsibility for central

management leadership is located, integration with budgeting is absolutely

critical for progress in government performance and management. I say

this not just because the budget provides clout and reinforces the

priorities of federal agencies’ management goals. Rather, the budget is the

only annual process we have in government where programs and activities

come up for regular review and reexamination. If we really believe that

there is a need to reexamine what we are doing as a government and how

we are doing it, the budget process is undeniably the focal point.

Moreover, good budgeting stands to gain from being integrated with

management. Good budget analysis should lead to the critical examination

of the performance and implementation of federal programs. From this

perspective, the new tools provided by performance measures, audited

financial statements, and information systems planning can help budget

analysts improve their own review of competing claims and programs

within the federal government.

Second, transforming federal agencies into high-performing organizations

will require that performance, financial, and information systems and

human capital reforms become embedded in day-to-day management

across government. To transition agencies from process-oriented business

practices to results-oriented ones will require both structural and cultural
Page 7 GAO/T-GGD/AIMD-00-141

transformation. High performance and accountability depend on the three

enablers—people, process, and technology—and therefore it is important

to focus on each of these components to effectively enable agencies to

achieve their missions and visions for the future.

The agenda for federal management reform needs to expand to recognize

that both federal agencies and nonfederal third parties play key roles in

determining the results of federal initiatives. Increasingly, the federal

government has come to rely on a variety of third parties—state and local

governments, nonprofit agencies, and for-profit businesses—to achieve

federal objectives. It has done this by using a range of tools—grants, loans,

tax expenditures, and regulations—to engage third parties as the

workhorses of our federal system, rather than using federal employees to

directly implement national programs. Third-party government presents

diverse accountability challenges. In addition, the goals and interests of

these third parties may conflict with national goals and interests.

The choice and design of the tools for a program at its inception play a

large role in influencing the performance achieved through the complex

networks of third parties. This is why program design should be seen as a

critical part of the management agenda. As we seek to manage programs

indirectly and often at some distance from the client, we must pay

attention to how relatively mundane program requirements affect actual

results. The uncertainties between the creation and the outcomes of

programs have probably grown over the years as the federal role has

become more ambitious and as delivery networks have grown more

complex. One analyst described the governmental policy processes as

“ready, fire, aim” —we initiate programs armed with imperfect information

and revise our approaches as we gain experience and feedback. His point

here was not that we should wait for perfect information—which would be

impossible—but that we need a way to get feedback and adjust in

response. The Government Performance and Results Act (GPRA) is

designed to help agencies sort out and measure the strategies used to

achieve objectives, whether directly through federal action or indirectly

through third parties. GPRA provides a feedback mechanism about the

extent to which agencies achieve their goals.

As the governmentwide management reform agenda broadens and

deepens, we must recognize that the complexity of the issues suggests that

taking a single institutional or structural approach to the leadership of the

governmentwide management agenda would not be appropriate—one size

does not fit all types of situations. The simple assignment of responsibility,

by statute or executive order, to a single central organization does not fit

Evolving Approaches

to Address

Governmentwide

Issues
Page 8 GAO/T-GGD/AIMD-00-141

with today’s complex agenda. Although the leadership and oversight of the

entire agenda may be vested in a single office, we should not expect that

office to have the capacity, competency, or the base of political support

necessary to promote this agenda across the board. Rather, a mix of

different leadership approaches and styles must be tailored to the unique

and vastly different issues to be addressed.

Primary responsibility for addressing the fundamental performance

challenges facing the government rests in no small part with the federal

agencies and their third-party partners. Central leadership at the

governmentwide level can provide the impetus for change, but agencies

and their networks must actually implement the reform agenda for

meaningful change to occur—and that means we must find a way to get

their “buy-in” and sustained commitment. It also bears repeating that

Congress is an essential part of the leadership. It can either reinforce or

frustrate the implementation of reforms and other needed changes. In this

regard, congressional oversight is key to ensuring that continuing progress

is made to maximize the government’s performance and ensure its

accountability.

Both Congress and OMB have developed a set of approaches to address

the different governmentwide management issues. Although it is still too

early to reach definitive conclusions about success, these different

approaches, sometimes used in combination with one another, have

shown promise in dealing with many difficult problems.

• The “single central leader” approach was used for the year 2000 computing

crisis. The President appointed an assistant to deal with year 2000 issues

in the federal government and to coordinate with other sectors of the

world economy, both here and abroad. This was a time-critical issue that

was a high priority for agencies, the President, and Congress. Appointing a

high-level official outside OMB provided leverage and visibility for this

role.

• The “council” approach can help foster communication across the

executive branch, build commitment to reform efforts, tap talents that

exist within agencies, focus attention on management issues, and initiate

improvements. In the case of the Chief Financial Officers (CFO) Council,

implementing these reforms involves sharing best practices and expertise

among agencies to achieve changes over a span of several years. Similarly,

the Chief Information Officers (CIO) Council provides a forum for senior

officials to interact and work towards achieving strategic information

technology (IT) performance goals, improving work processes, integrating

A Variety of Approaches

Provides Flexibility in

Addressing Management

Issues
Page 9 GAO/T-GGD/AIMD-00-141

information technology architecture, and strengthening IT knowledge,

skills, and capabilities.

• A “task force” approach offers the benefit of an interagency council for

technical or short-term tasks. This approach can bring expert knowledge

outside of the federal government to bear on management problems and to

concentrate federal efforts in addressing relatively narrow crosscutting

issues. For example, 17 Offices of Inspectors General recently reviewed

non-tax delinquent debt in order to highlight the importance of federal

agencies’ compliance with statutory debt collection requirements. Capital

planning for federal assets also used a task force approach.

• The “lead agency” approach can be effective in developing complementary

goals; mutually reinforcing strategies; and where appropriate, common

performance measures when policies cut across agencies and programs.

An example is drug control, where responsibilities for governmentwide

leadership have been assigned to a particular agency (the Office of

National Drug Control Policy—ONDCP) outside of OMB. ONDCP is the

President’s primary policy office for drug issues, providing advice and

oversight of drug programs and coordinating development of the

President’s National Drug Control Strategy. By developing a national drug

control strategy, ONDCP has been able to enlist the support of federal

agencies as well as nonfederal partners, such as state and local

governments and the private sector.

• The “integrated” approach can help achieve a more cohesive picture of

government performance. To portray and analyze the performance of the

federal government comprehensively, an integrated approach includes all

federal strategies and tools—including tax expenditures and regulations—

with key agency performance goals associated with federal spending. For

example, OMB reviews agency performance plans within the context of

agency budget requests. Implementation of GPRA requires leadership on

the part of OMB to ensure that performance data are used to inform

budget decisions and that agencies take GPRA seriously and use it to run

their organizations.

• The “partnership” approach offers various models in which other actors

help articulate central leadership initiatives. The National Partnership for

Reinventing Government, formerly known as the National Performance

Review (NPR) for instance, played a key role in encouraging agencies to

develop customer service standards. Another type of partnership provides

a vertical approach to management and accountability for programs and

policies implemented by third parties. The President’s Management

Council is chaired by OMB’s Deputy Director for Management and
Page 10 GAO/T-GGD/AIMD-00-141

includes Chief Operating Officers or equivalents from major agencies. Its

agenda includes setting priorities, identifying and resolving cross-agency

management issues, and establishing interagency task forces to transform

governmentwide systems. Performance-based intergovernmental

partnerships allow the federal government to extend its management role

beyond its workforce. In exchange for greater recognition and say in the

design and implementation of programs, states and others are held to

agreed-upon results. When successful, this approach can improve service

and lead to greater accountability.

• The “central review” approach can be used to resolve potential conflicts

stemming from differing perspectives or goals within the executive

branch. For example, OMB brings a presidential, rather than single agency,

perspective to its reviews of major regulations. The regulatory side of

OMB’s Office of Information and Regulatory Affairs acts on 3,000 to 5,000

information collection requests from agencies per year, reviews about 500

proposed and final rules each year, and is responsible for calculating the

costs and benefits of all federal regulations.

This list is not meant to be exhaustive, but rather suggestive, of the variety

of approaches that has evolved to address emerging issues. Although each

approach is inevitably linked to the budget process in some manner,

OMB’s role varies considerably in terms of control and oversight. In some

cases the importance of agency buy-in and the need for longer-term

development of capacity to fully implement needed changes argue for a

devolved approach. In other cases, conflicting goals and/or the timesensitivity of the issues may demand more centralized approaches.

Our policymaking and management processes need to become more

integrated and comprehensive if we are effectively to address current and

emerging issues. Multiple approaches can bring together the various

competencies and capacities needed to address a particular situation.

Computer security is the first of three examples demonstrating the

complexity of problems facing the federal government that can no longer

be met by anything short of a broad-based, integrated approach.

• Computer Security: The dramatic increase of computer

interconnectivity—while facilitating communications, business processes,

and access to information—has increased the risk that problems affecting

one system will also affect other connected systems. Massive computer

networks provide pathways among systems that, if not properly secured,

can be used to gain unauthorized access to data and operations.

Emerging Issues Use

Several Approaches
Page 11 GAO/T-GGD/AIMD-00-141

The administration’s recently released Defending America’s Cyberspace:

National Plan for Information Systems Protection discusses various

proposals to protect critical information assets and infrastructures. The

plan clearly recognizes OMB’s core responsibility for managing federal

computer security and information technology. The administration’s call

to action through this plan’s development indicates a heightened concern

over cyber-security and provides a basis for increased oversight. OMB has

a role in ensuring agencies fulfill their obligations to set and evaluate

meaningful controls over their information environment. At the same time,

this plan recognizes that the effort to safeguard information systems is

well beyond the capacity of one agency to manage.

The plan introduces or formalizes a number of new entities, interagency

working groups, and projects that will have to be integrated into the

existing framework of computer security activities. Examples of these new

entities and efforts include an Expert Review Team for evaluating agency

infrastructure protection plans, a Federal Intrusion Detection Network,

and an interagency working group on system security practices. The lead

agency approach may be appropriate for some of these activities, such as

the Expert Review Team, which anticipates giving the National Institute of

Standards and Technology the lead in assisting agencies governmentwide.

For other activities, the plan focuses on developing a public-private

partnership. Information sharing about actual threats and vulnerabilities is

one area where partnerships can provide for the common defense of the

infrastructure. Because of the number of entities involved (some

established by law, some by executive order, and others with less formal

mandates), strong and effective leadership will be essential to ensure that

their efforts are appropriately linked with broader computer security

efforts.

• Human Capital Initiatives: An organization’s human capital policies must

be aligned to support its shared vision—that is, the mission, vision for the

future, core values, goals, and strategies—by which the organization has

defined its direction and its expectations for itself and its people. To meet

the changing environment, federal agencies need to give human capital a

higher priority than ever before and rethink how their workforces are

developed and deployed to enhance achievement of organizational

performance goals. Two principles are central to the human capital idea:

investing in employees and aligning “people policies” to fulfill the

organization’s shared vision. The civil service has been evolving to be

more and more decentralized.

OMB is using the integrated and central review approaches to oversee

agencies’ development of their strategic and annual performance plans
Page 12 GAO/T-GGD/AIMD-00-141

under GPRA. OMB should try to ensure that agencies have well-thoughtout strategies, in particular that they have integrated human capital

planning into their strategic planning processes. Using an integrated

approach OMB, along with congressional oversight, can encourage

discussion of agency efforts to ensure that they have the needed human

capital and that the agency’s human capital strategies are linked to

strategic and programmatic planning and accountability mechanisms. It is

the agencies’ responsibility to rethink how their workforces are developed

and deployed to enhance achievement of organizational performance

goals. Of course, the Office of Personnel Management has an important

role to play in helping agencies develop effective tools and strategies, and

we believe that this leadership can be strengthened.

Using a central review approach, OMB has the opportunity in many cases

to directly influence agencies’ human capital management practices

through its oversight of agencies’ budgets. OMB can, for example, review

the adequacy of agencies’ workforce planning and resource levels to meet

targets and goals.

Using a partnership approach, the NPR illustrates another approach that

can also be used to significantly influence human capital matters. NPR

supports, for instance, partnership efforts between agency managers and

unions and one of its recommendations led to the establishment of

Partnership Councils in several major agencies to enhance labormanagement relations.

• Crosscutting Issues: Our work has repeatedly shown that mission

fragmentation and program overlap are widespread in the federal

government and that crosscutting program efforts are not well

coordinated. It also has shown the importance of coordinating these

programs. Without such coordination, scarce funds are wasted, program

customers are confused and frustrated, and the overall effectiveness of the

federal effort is limited.

As part of an integrated approach, one strategy that OMB could use is the

governmentwide performance plan, which is a key component of GPRA, to

address more cohesively the various programs and tools contributing to

broad federal performance goals. It could also be used to more clearly

relate and address the contributions of alternative federal strategies.

Agencies, in turn, could use the annual performance planning cycle and

subsequent annual performance reports to highlight crosscutting program

efforts and to provide evidence of the coordination of those efforts. Under

a central review approach, OMB could also help to ensure that agencies

develop common or complementary performance measures. In addition,
Page 13 GAO/T-GGD/AIMD-00-141

the council approach could involve the CIO Council in efforts to

encourage data-sharing and other ways to employ information technology

to reduce fragmentation and overlap.

The more routine integration of performance measures and information

should, over time, also help facilitate this kind of debate in the budget

process itself. GPRA provides for such integration through the program

activity structure of the federal budget, but in many cases the program

activities need to be better aligned with the goals in performance plans to

prompt performance-oriented budgeting.6 In some cases, agencies may

need to develop effective crosswalks between strategic plans and the

budget; in other cases, agencies and Congress may decide to change the

program activity structure in the budget. Improved financial reporting and

auditing, as required by the CFO Act, will further strengthen the cost basis

and reliability of data underlying the link between performance

information and the budget. But GPRA should not be expected to

eliminate the conflict inherent in the political process of resource

allocation; and final decisions will appropriately take into account many

factors, including performance.7

In short, Mr. Chairman, we face a daunting set of governmentwide

management challenges and issues. Although one single approach and

structure is not going to suffice for all of these issues, we do feel that a

strong central focal point is critical to provide the leadership across the

range of issues. Our system has shown the ability to respond well once

something becomes a management crisis—for example, the response to

the Year 2000 computing problem. However, many of the more long-term

and chronic management problems—such as those on our High-Risk list—

require sustained attention over many years to be successfully resolved

and to avert crises from happening in the first place. Unfortunately, such

management issues often generate limited interest on a daily basis and

may not receive sustained attention from top officials. We face the very

real danger of having the urgent drive out the truly important because

Congress, the Executive Office of the President, and the agencies all have

many competing priorities demanding their attention.

6Managing for Results: Opportunities for Continued Improvements in Agencies’ Performance Plans

(GAO/GGD/AIMD-99-215, July 20, 1999); and Managing for Results: An Agenda To Improve the

Usefulness of Agencies’ Annual Performance Plans (GAO/GGD/AIMD-98-228, Sept. 8, 1998).

7Performance Budgeting: Past Initiatives Offer Insights for GPRA Implementation (GAO/AIMD-97-46,

March 27, 1997).

The Central

Leadership Challenge
Page 14 GAO/T-GGD/AIMD-00-141

A central focal point can play the essential role of ensuring that our system

sustains attention to management and other crosscutting issues needed to

improve government performance. Increasingly the challenges that we

face are multidimensional problems that cut across numerous programs,

agencies, and governmental tools. Although the respective departments

and agencies should have the primary responsibility and accountability to

address their own issues, central leadership has the responsibility to keep

everyone focused on the big picture by identifying the agenda of

governmentwide issues needing attention and ensuring that related efforts

are complementary rather than duplicative.

The challenge is to decide which approach—or mix of approaches—is

most appropriate to building and sustaining the support necessary to

resolve a given management problem over the long term. The real

responsibility for addressing these problems rests with the departments

and agencies and the networks of third parties they rely on to delivery

program services. As I have stated before, the support of agencies is

particularly critical if we are to transition government to more resultsoriented business processes, structures, and cultures.

Accordingly, the task facing central leadership is not to fulfill the nearly

impossible role of identifying and resolving all major problems itself.

Rather, it is to serve as the catalyst and strategist to prompt agencies and

other critical players to come to the table and take ownership for

addressing the agenda of governmentwide management issues. As we have

discussed, a number of approaches are already used in which OMB plays a

more supportive role, thereby emphasizing and reinforcing the

accountability of departments and agencies to take ownership and

implement needed changes. If well-chosen and managed, these

approaches have the potential for expanding the capacity of our system to

address pressing management issues.

These strategies reinforce the point that any central leadership focal point

is ultimately dependent on support from others in the system to achieve a

sustained focus and lasting results. Experience from the past suggests

sustaining support for the implementation of governmentwide initiatives is

dependent on support from four critical actors.

• Top management support and commitment within both OMB and the

White House is often critical to providing a focus on governmentwide

management issues throughout both the budget process and the executive

agencies themselves. As our study of OMB 2000 pointed out, management

and performance measurement issues gained considerable attention in the

budget formulation process initially because of the clear commitment of
Page 15 GAO/T-GGD/AIMD-00-141

OMB’s leadership.8 However, top leadership’s focus can change over time,

which can undermine the follow-through needed to move an initiative

from policy development to successful implementation.

• A strong linkage with the budget formulation process is a key factor in

gaining serious attention for management initiatives throughout

government. Management initiatives need to be reflected in and supported

by the budget. Many management policies require budgetary resources for

their effective implementation, whether it is financial management reform

or information systems investment. Furthermore, initiatives such as GPRA

seek to improve decisionmaking by explicitly calling for performance

plans to be integrated with budget requests. We have found that previous

management reforms, such as the Planning-Programming-BudgetingSystem and Management by Objectives, suffered when they were not

integrated with routine budget presentations and account structures.

• Effective coordination and collaboration with the agencies—through such

approaches as task forces and interagency councils—has, as I have noted,

emerged as an important central leadership strategy in both developing

policies that are sensitive to implementation concerns and gaining

consensus and consistent follow-through within the executive branch.

• Support from Congress has proven to be critical in sustaining interest in

management initiatives over time. Congress has, in effect, served as the

institutional champion for many of these initiatives, providing a consistent

focus for oversight and reinforcement of important policies. In fact, a

study of management reforms over the postwar period found that the

responsibility for initiating management reforms shifted from the

president to Congress since 1974, although it was recognized that the

executive branch played an important role in developing these statutory

approaches.9 For example, Congress’—and in particular this

Subcommittee’s—attention to the Year 2000 problem, information

management, and financial management has served to elevate these

problems on the administration’s management agenda.

Any number of organizational arrangements is possible, but I believe that

OMB can serve as the executive branch’s management focal point.

However, several additional steps must be taken by OMB for

governmentwide management issues to be effectively addressed. First,

8Office of Management and Budget: Changes Resulting From the OMB 2000 Reorganization

(GAO/GGD/AIMD-96-50, Dec. 29, 1995).

9Paul Light, The Tides of Reform: Making Government Work 1945-1995 (Yale University Press, 1997).
Page 16 GAO/T-GGD/AIMD-00-141

OMB needs to take more initiative in setting the agenda of

governmentwide issues. Crosscutting issues such as human capital,

computer security, and program fragmentation call for a more decisive

and assertive OMB role in defining the problem, developing appropriate

strategies and approaches to implementation, and overseeing progress. As

I have noted, this often might entail devolving principal responsibility to

others, such as federal agencies, with OMB serving more as a catalyst and

convenor. In other cases, more active encouragement and review might be

called for, including such activities as developing guidance, benchmarking,

and disseminating best practices.

OMB can take more advantage of the new governmentwide management

reforms as leadership tools. For instance, the governmentwide

performance plan has great promise to provide a decisionmaking

framework for considering crosscutting policy, program, and management

issues. The process of preparing the plan can help prompt decisionmakers

to focus on the relative contributions of programs and tools addressing

common performance goals. The planning process can, thus, present

tradeoffs for decisionmakers that cut across conventional program,

department, and OMB organizational lines.

I recognize that positioning OMB to be an effective focal point for

governmentwide management issues may raise issues about OMB’s

capacity and resources to do the job. First and foremost, there is a need

for a confirmed Deputy Director for Management to provide a champion

for management issues at the highest levels of OMB. OMB also needs to

understand how its organization affects its capacity to provide sustained

management leadership. In our 1995 assessment of OMB 2000, we

recommended that OMB review the impact of its reorganization as part of

its planned broader assessment of its role in formulating and implementing

management policies for the government. OMB has not formally assessed

the effectiveness, for example, of the different approaches taken by its

statutory offices to promote the integration of management and budget

issues, nor has it formally assessed the skills and training of its program

examining staff. Additional targeted resources could ultimately be part of

a broader strategy to enhance OMB’s leadership capacity.

In summary Mr. Chairman, the government faces important challenges and

opportunities as we look ahead to the future. Many of these issues call for

an integrated and comprehensive approach if we are to make real

sustainable progress in improving performance governmentwide. Marked

changes in federal agencies’ workforce, technology, cultures, and service

delivery networks may very well be necessary as well. These kinds of

Conclusions
Page 17 GAO/T-GGD/AIMD-00-141

changes call for an effective central leadership focal point that can both

identify the agenda of governmentwide management issues and prompt

concerted action and support by federal agencies and other actors who

bear ultimate responsibility for delivering services to the American people.

Although we have suggested a central focal point in the executive branch,

Congress is clearly a key player in improving governmentwide

performance as well, and its leadership in enacting governmentwide

performance, financial, and information management reforms has already

had a substantial impact. Congressional oversight of individual programs

and agencies is also absolutely vital to promoting and sustaining needed

performance improvements. The new performance and financial

information arising from recent management reforms will provide new

opportunities for congressional oversight to identify weaknesses and

reinforce programs that are working effectively. For instance, the

performance reports recently issued by agencies should help Congress

pinpoint problems more systematically.

However, just as we are challenging the executive branch to strengthen its

focus on crosscutting issues, so too should Congress consider approaches

to enable it to more effectively address common performance and

management issues that cut across its own jurisdictional and committee

boundaries. Elsewhere, I have suggested that Congress could use the

governmentwide performance plan as a starting point to prompt a more

concerted oversight agenda to focus its attention on the most pressing

crosscutting management concerns and alternative strategies offering the

greatest promise to achieve performance goals and federal missions. A

more coordinated congressional oversight agenda could be identified by

the oversight committees of each chamber and possibly in a

“congressional performance resolution” linked to the budget resolution.10

Ultimately, the broad-based and rapid changes confronting government

may call for a longer term and more fundamental review of the structure

for major federal activities and the processes used for service delivery,

decisionmaking, and oversight. We stand at an important crossroads, and

the new challenges may indeed call for a comprehensive reexamination of

what government should be doing and how it does it. Freed of the

constraints of the cold war and chronic deficits, this current situation may

provide a golden opportunity to review the legacy of existing activities and

programs with an eye toward weeding out or reforming those proven to be

10Budget Issues: Effective Oversight and Budget Discipline Are Essential—Even in a Time of Surplus

(GAO/T-AIMD-00-73, Feb. 1, 2000).
Page 18 GAO/T-GGD/AIMD-00-141

outdated and freeing up resources to address emerging needs. A recently

proposed Commission on Government Restructuring offers one

mechanism to institute such a systematic reexamination.

We at GAO are ready to assist both Congress and the executive branch in

addressing the agenda of important governmentwide management issues

facing us. Our work, including our Performance and Accountability and

High-Risk Series, the Budget Implications reports, as well as other

information and issues identified in our Strategic Plan could help identify

the agenda of key issues as well as potential solutions to improve

performance for key areas of government.11 When our work is coupled

with the GPRA plans and reports, financial audits, the work of inspectors

general, and other government reports, we can engage both Congress and

the executive branch in constructive partnerships to make real and

sustainable progress in improving government performance.

This concludes my statement. I would be pleased to answer any questions

that you or other Members of the Subcommittee may have.

(410573/935363)

11Performance and Accountability Series: Major Management Challenges and Program Risks

(GAO/OCG-99-22SET, Jan. 1999), and Budget Issues: Budgetary Implications of Selected GAO Work for

Fiscal Year 2001 (GAO/OCG-00-8, March 2000).
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