United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Civil Service, Committee on

Government Reform and Oversight,

House of Representatives

March 1998 FEDERAL

DOWNSIZING

Agency Officials’ Views

on Maintaining

Performance During

Downsizing at Selected

Agencies

GAO/GGD-98-46

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-276566 

March 24, 1998

The Honorable John Mica

Chairman, Subcommittee on Civil Service

Committee on Government Reform and Oversight

House of Representatives

Dear Mr. Chairman:

A bipartisan consensus has emerged that the federal government must find

ways to meet the public’s demand for services with a reduced but more

effective workforce. In response to this consensus, the number of civilian

employees governmentwide decreased by about 12 percent between fiscal

years 1993 and 1996. On an agency-by-agency basis, some agencies had

reductions larger than 12 percent, including the Department of Housing

and Urban Development (HUD), the Department of the Interior (DOI), the

General Services Administration (GSA), the National Aeronautics and

Space Administration (NASA), and the Office of Personnel Management

(OPM).

In light of the demand for a smaller but more effective workforce, you

asked us to review these five agencies to obtain information on the effects

downsizing has had on their performance and what actions were taken to

maintain performance. In response to your request, our objectives were to

(1) determine which components within the five agencies were downsized

and to what extent; (2) determine what actions were taken to maintain

performance for one selected downsized component at each parent

agency, the results of those actions on the component’s performance, and

the effect of the downsizing on customer service; and (3) identify lessons

the five components learned about maintaining performance during a

period of downsizing. The selected components were HUD’s Office of

Housing, DOI’s Bureau of Reclamation (BOR), GSA’s Public Buildings Service

(PBS), NASA’s Kennedy Space Center (KSC), and OPM’s Investigations Service.

Each of these components had experienced a sizeable downsizing of its

workforce. In the case of the Investigations Service, unlike the other four

components, most of its activities and employees were privatized (made

part of a private company - see app. V).

Results in Brief Most components within the five parent agencies were downsized to some

extent, although how much varied considerably. The percentage of agency

components’ full-time equivalent (FTE) reductions from fiscal year 1993

through 1996 ranged from 3 percent to 100 percent at HUD, 2 percent to

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87.5 percent at DOI, 10 percent to 37 percent at GSA, 3 percent to 42 percent

at NASA, and 2 percent to 100 percent at OPM.

1

According to officials of the parent agencies and the five selected

components, several actions helped the components maintain

performance levels during the period of downsizing. They explained that it

was difficult to isolate actions taken independently of downsizing from

those taken because of downsizing. However, the actions the officials told

us about generally fell into three categories: (1) refocusing of missions,

(2) reengineering of work processes,2

 and (3) building and maintaining

employee skills.

The officials said the five components were generally able to maintain

performance and fulfill the requirements of their missions despite the

relatively large downsizing that occurred from fiscal year 1993 to fiscal

year 1996. The Investigations Service downsized by 61 percent,3 PBS by

21 percent, BOR by 20 percent, Office of Housing by 16 percent, and KSC

also by 16 percent. Although the officials told us they could not connect

specific actions taken with specific outcomes, they said that without the

three actions mentioned earlier, the performance levels of the components

would not have been maintained. Officials at some components also said

that additional downsizing could hamper future performance. It should be

noted that our results primarily reflect the viewpoints of officials from the

agencies and components and are a snapshot at the time of our review.

Performance measurement data, particularly baseline data with which

current data could be compared, that would support agency officials’

views or enable policymakers to track program performance and make

informed decisions were limited. The data that were available tended to

substantiate the views of component officials that they were meeting goals

they had set for themselves.

According to component officials and employees or their representatives

at the five components, customers remained satisfied with the

1

According to Office of Management and Budget (OMB) guidance, an FTE or work year generally

includes 260 compensable days or 2,080 hours. These hours include straight-time hours only and

exclude overtime and holiday hours.

2

Commonly defined as a systematic, disciplined improvement approach that critically examines,

rethinks, and redesigns mission-delivery processes to achieve dramatic improvements in performance

in areas important to customers and stakeholders.

3

Although the Investigations Service downsized by 61 percent according to its full FY 1996 FTE usage,

the OPM GAO Liaison noted that if the Investigations Service downsizing was measured using the FTE

complement at the close of FY 1996, a reduction of 96 percent occurred from the FY 1993 level. The

privatization of Investigations occurred in the last quarter of FY 1996, which dramatically lowered the

end-of-year staffing level.

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components’ performance during the period of downsizing. This view was

generally supported by the limited customer survey data we reviewed. For

example, surveys during the period covered by our review of building

tenants under PBS and customers of KSC over time both showed stable rates

of relatively high customer satisfaction. More limited survey data from a

power program under BOR showed high satisfaction, and responses from a

small group of lenders and realtors using HUD’s Office of Housing services

showed moderate satisfaction. On the other hand, our inquiries of a small

number of Investigations Service, BOR, and Office of Housing customers

showed mixed customer satisfaction. Investigations Service customers

indicated continued satisfaction, while BOR and Housing customers

revealed some dissatisfaction. BOR customers, however, stated that their

dissatisfaction was not due to the downsizing.

Among the lessons that component officials said they learned, the most

important was the need for early planning and open communication with

employees. In emphasizing the need for early planning, one component

official said that targeting buyouts (i.e., cash incentives for employees to

resign) could have prevented mismatches at his component between

buyout results and organizational needs. Another official said that his

component should have communicated better with employees to minimize

the inherent distrust and fear generated by downsizing.

Background Beginning in 1993, both Congress and the administration agreed that

federal employment levels should be cut as a means of reducing federal

costs and controlling deficits. Through a series of executive orders and

legislation, goals were established for reducing federal staffing levels. Two

driving forces in the reductions were the Federal Workforce Restructuring

Act of 1994 and the National Performance Review. The act, passed in

March 1994, mandated governmentwide reductions of 272,900 FTE

positions through fiscal year 1999. The National Performance Review, the

administration’s major management reform initiative, recommended that

any reductions be accomplished through agency efforts to streamline

operations, reduce management control and headquarters positions, and

improve government operations through reinvention and quality

management techniques.

In addition to reducing their workforces and streamlining their operations,

agencies are required to measure their performance. The Government

Performance and Results Act of 1993 requires agencies to (1) develop

strategic plans covering a period of at least 5 years and submit the first of

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B-276566 

these plans to Congress and OMB by the end of fiscal year 1997, (2) develop

and submit annual performance plans to OMB and Congress beginning for

fiscal year 1999 containing the agencies’ annual performance goals and the

measures they will use to gauge progress toward achieving the goals, and

(3) submit annual reports on program performance for the previous fiscal

year to Congress and the President beginning with fiscal year 2000. In

addition, the Results Act established requirements for pilot projects so

that participating agencies could gain experience in using key provisions

of the Results Act and provide lessons for other agencies as well. Over 70

federal organizations, including GSA, HUD, and OPM, participated in the pilot

projects for performance planning and reporting.

Between fiscal years 1993 and 1996, when the federal civilian workforce

was cut by about 12 percent, the workforces of certain agencies were

reduced by larger percentages. These included cuts of 14 percent at HUD,

13 percent at DOI, 22 percent at GSA, 13 percent at NASA, and 42 percent at

OPM.

Scope and

Methodology

To determine which components within HUD, DOI, GSA, NASA, and OPM were

downsized and to what extent, we examined agency FTE data for fiscal

years 1993 through 1996. These data were organized by component.

To address our remaining objectives, we selected one component from

each agency, primarily on the basis of the percentage it downsized;

however, we also considered such factors as public interest, the effects of

downsizing on safety, and privatization of agency functions as selection

criteria. We selected HUD’s Office of Housing and GSA’s PBS because, on a

percentage basis, they accounted for the largest portion of their parent

agencies’ staffing reductions. We selected DOI’s BOR because it was one of

the most heavily downsized of DOI’s components, and within BOR, we

focused on the Denver Reclamation Service Center because of its central

role in BOR operations. Within NASA, the Human Space Flight Program

experienced the greatest percentage of downsizing, and from the

program’s centers, we focused on KSC because of its high profile as the

space shuttle launch and recovery site and because of public concerns that

had been expressed about shuttle safety. We selected OPM’s Investigations

Service because many of its functions had been privatized.

To determine what actions were taken to maintain performance in the

selected components as a result of downsizing, the results of these actions

on performance, the effects of downsizing on customer satisfaction, and

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B-276566 

lessons learned, we interviewed officials from the parent agencies,

components, unions, and employee associations. We also interviewed a

small number of randomly selected BOR and KSC employees who were not

represented by unions to obtain their views on agency performance during

downsizing. We reviewed streamlining, performance, and customer service

plans; where available, we examined performance and customer

satisfaction measurement data.

We did not evaluate the performance or customer satisfaction measures

used by the components or verify their performance measurement or

customer satisfaction scores. Because of limited customer satisfaction

data at the Office of Housing, BOR, and the Investigations Service, we

interviewed a small number of randomly selected customers to determine

their satisfaction with performance during downsizing. The lessons

learned by components reflect the judgment of component officials. We

did not independently assess how well these lessons were followed during

components’ actual downsizing experiences. The results of our work are

limited to the components reviewed and cannot be projected to the entire

agency or governmentwide.

Our work was performed at the headquarters of the parent agencies and

components in Washington, D.C.; at the KSC in Florida; and at BOR’s

Reclamation Service Center in Denver, CO. We also interviewed BOR

employees, KSC employees, HUD customers, BOR customers, and OPM

customers in various locations throughout the United States. We

performed our work between October 1996 and November 1997 in

accordance with generally accepted government auditing standards.

We asked HUD, DOI, GSA, NASA, and OPM to provide comments on a draft of

this report. The comments provided are discussed at the end of this letter.

Extent of Downsizing

Varied Among

Components and in Its

Effect on Total

Agency Reductions

Nearly all organizational components in each agency were affected, some

more than others. The downsizing of components at the five parent

agencies we reviewed ranged from around 2 percent to 100 percent. In

addition, the effect of each component’s downsizing on the parent

agency’s total reductions varied. For example, HUD’s Office of Housing’s

FTE reductions between fiscal years 1993 and 1996 were 52 percent of

HUD’s total reductions, while BOR’s FTE reductions were 15 percent of DOI’s

total reductions for the period. The extent of agency downsizing by

selected organizational component is shown in table 1.

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B-276566 

Table 1: Downsizing Between Fiscal

Years 1993 and 1996 at Five Selected

Agencies, by Organizational

Components and Percentage of Total

Agency FTE Reductions

Agency Components

FTE reductions

between FYs 1993

and 1996

Percentage of

total agency

reductions

HUD Office of Housing 977 51.9 %

Office of Administration 187 9.9

Community Planning and

Development

172 9.0

Public and Indian Housing 171 9.0

Field Directorate &

Operational Support

157 8.3

Other 230 12.1

DOI Bureau of Indian Affairs 2,394 23.5

Bureau of Mines 2,016 19.8

Bureau of Reclamation 1,518 14.9

Geological Survey 1,445 14.2

Bureau of Land

Management

1,162 11.4

Other 1,641 16.1

GSA Public Buildings Service 2,114 46.6

Federal Supply Service 1,026 22.6

Federal

Telecommunications Service

903 19.9

Other 492 10.8

NASA Human Space Flight 1,909 48.2

Center Management and

Operations

807 20.4

Science, Aeronautics,

Technology

347 8.6

Mission Support 348 8.8

Other 553 14.0

OPM Investigations Service 898 36.1

Human Resources

Development

520 20.9

Administrative Services 518 20.8

Employment Services 469 18.8

Personnel Systems and

Oversight

380 15.3

Othera +296 +11.9

aIncludes three components that lost FTEs, and three components that gained FTEs, resulting in a

combined FTE increase.

Source: GAO calculations based on agency-provided data.

Page 6 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
B-276566 

Components Took

Three Categories of

Actions to Maintain

Performance

Although officials told us it was difficult to isolate actions that agencies

and their components took to maintain performance independently of

downsizing from those taken because of downsizing, the actions they said

were taken to maintain performance amid downsizing fell into three

categories: refocusing their missions, reengineering their work processes,

and taking steps to build and maintain employee skills. Detailed

information on each component is provided in appendixes I through V.

Most Components

Refocused Their Missions

The National Performance Review, budget reductions, and workforce

reductions generally have led federal agencies to rethink how they operate

and work to reinvent themselves to become more efficient organizations.

According to component officials, most of the five components, under the

guidance of their parent agencies, refocused their missions primarily to

increase their efficiency. For example, BOR changed its emphasis from

water project construction to water resources management because of the

increased demand on limited water resources and cutbacks in federal

spending. NASA’s Human Space Flight program shifted its focus and scarce

resources from operations—which it believed could be conducted more

efficiently by private vendors—to its primary mission, research and

development. OPM created US Investigations Services (USIS), Inc., to do the

background investigations work OPM’s Investigations Service previously

provided to other agencies.

Components Reengineered

Their Work Processes

In addition to refocusing missions, components reengineered their work

processes to improve effectiveness and/or efficiency. Changes to work

processes included consolidating functions into fewer locations, aligning

operations more closely with private sector business practices,

modernizing data processing systems, placing increased decisionmaking

authority in field offices, and increasing reliance on contractors. HUD’s

Office of Housing, for example, consolidated single family housing

activities from 17 field offices into 1 homeownership center, which

officials said helped reduce processing times. The Office plans further

consolidations by the year 2000. KSC changed from its traditional

contractor oversight role to one of “insight.” Under oversight, KSC directly

oversaw contractors on a continual basis, but under insight, KSC will

directly oversee contractor processes on a periodic basis. Another

component, OPM’s Investigations Service, privatized its investigations

operations through the establishment of a private corporation owned by

former Investigations Services employees under an Employee Stock

Ownership Plan. An Investigations Service official said that USIS completed

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B-276566 

about 20 percent more investigations in fiscal year 1997 than the

Investigations Service did in fiscal year 1996.

Components Took Steps to

Build and Maintain

Employee Skills

Along with reengineering their work processes, components generally

took steps to help ensure that they had the skilled workforces needed to

maintain their performance in a downsized environment. These steps

included retraining employees for additional responsibilities and

consolidating expertise in fewer locations. For example, according to a PBS

official, PBS lacked a workforce suited to its mission; however, it was

training its staff to develop a workforce with the necessary skills. BOR

officials said that although their workforce had retained the appropriate

skills and experience, employees were being retrained and rotated among

functions to develop future supervisors and managers.

Nevertheless, some officials were concerned about the sufficiency of

current or future workforces for some components. In March 1997, the

HUD Inspector General (IG) reported that the Office of Housing did not

have the staffing levels and skill mixes it needed. The IG also reported

staffing shortages in some areas, barriers to effective staff redeployment,

and mismatches between skills and needs. The report stated that staff

reductions would be compounded as anticipated budget restrictions led to

further reductions by the end of fiscal year 2000. The report also said

staffing needs continued to be most critical in the multifamily insured

portfolio monitoring area and, to a lesser degree, in the multifamily note

servicing area. The IG said this prevented the component from placing

adequate resources on multifamily loss mitigation functions and properly

managing troubled multifamily assets. In October 1997, HUD began

implementing its 2020 Management Reform Plan, which included a specific

initiative to refocus HUD’s mission and retrain its workforce to perform a

wider variety of interdisciplinary tasks. Office of Housing officials

reported to us that one expected effect of the HUD 2020 Management

Reforms will be that Housing will be able to focus a highly trained staff

with adequate automated systems on the multifamily portfolio. Also,

because of concern about the safety of the space shuttle as KSC downsized

and a new contract for shuttle operations was implemented, NASA’s

Aerospace Safety Advisory Panel reviewed issues associated with program

safety and management. It found that, overall, efforts to streamline the

space shuttle program had not created unacceptable risks, but it was

concerned with the long-term loss of critical skills and experience. The

panel said these personnel issues were challenging and had the potential

to adversely affect risk in the future.

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Officials and

Employees of the Five

Components

Generally Believed

Performance Was

Maintained and

Customers Remained

Satisfied

Component officials, employee representatives, and employees we spoke

with believed that efforts to maintain performance had generally been

successful. However, some expressed concern about whether

performance could be maintained with additional downsizing. They also

largely believed that their customers remained satisfied, a view generally

supported by the limited customer survey data available; however,

customers we spoke with did not always agree with that assessment.

According to Component

Officials and Employees,

Actions Taken to Maintain

Performance Were

Generally Successful

Officials, employee representatives, and employees we spoke with at all

five components said that they generally believed performance had been

maintained; however, some officials expressed concern about whether

performance could be maintained with additional downsizing. Office of

Housing officials, for example, believed downsizing had not greatly

affected the Office’s performance. Further, they reported to us that they

anticipate the component’s performance would not only be maintained but

would improve after the additional downsizing called for by HUD’s

management reform plan is completed in the year 2000. Office of Housing

union representatives had mixed opinions, with one agreeing with the

Housing officials that there were few performance problems to date and

another believing that performance had been negatively affected. KSC

officials said they believed KSC was still able to perform its mission.

However, they also said they were concerned about retaining the human

resources needed to react to problems, meet unplanned requirements, and

sustain work as the workforce continued to decline. Most KSC employees

we spoke with supported their management’s view. They said mission

performance had been unaffected by downsizing but that it could be

affected by future downsizing.

We found limited performance measurement baseline or trend data to

validate the belief of component officials and employees that performance

had been maintained. However, the data that were available showed that

the components generally met performance goals they set for themselves.

For example, at the time of our review, PBS had been developing

performance measures under a Government Performance and Results Act

pilot project, and while there were little trend data, the data that existed

showed that PBS met or exceeded more than half of the goals it set for

itself during downsizing. At KSC, available performance measurement data

indicated that KSC had maintained performance during downsizing. The

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B-276566 

data showed that KSC had maintained its shuttle launch schedule at lower

cost and that the number of in-flight problems caused by ground

processing had declined. BOR officials were unable to provide any BOR-wide

performance measurement data to use in corroborating officials’ views

that performance had been maintained. The Results Act requires that

agencies collect performance measurement data for managing their

programs, and component officials told us they are currently developing

these data.

Customer Satisfaction

During Change Has Been

Mixed

Officials, employee representatives, and employees we spoke with at all

five components largely believed that their customers remained satisfied

even as the organizations took action to maintain their performance

during downsizing. This view was generally supported by the limited

customer survey data available. However, customers of the Office of

Housing and BOR that we spoke with did not always agree.

PBS and KSC officials cited customer survey results that supported their

positive views of customer satisfaction during downsizing. PBS reported

surveys of its buildings’ tenants showed satisfaction increasing from

74 percent to 77 percent between fiscal years 1993 and 1996. KSC reported

that its payload customers’ satisfaction remained at about 4.2 on a scale of

1 to 5 with 5 being excellent service, despite downsizing, during fiscal

years 1993 through 1996.

Because BOR, the Office of Housing, and the Investigations Service had

little customer satisfaction data to support their opinions, we interviewed

a small number of their customers. We interviewed seven randomly

selected BOR customers consisting of six water districts located in rural

areas in the western United States and one state agency. One customer

was satisfied with BOR’s performance, five were not satisfied, and one

reported declining satisfaction. The most common reason cited for

dissatisfaction was the view that BOR more often favored the water

demands of politically powerful groups at the expense of rural farmers.

However, none of the customers we talked to blamed their dissatisfaction

on downsizing. Of the five Office of Housing customers we interviewed,

three either were not satisfied or had mixed feelings with Housing’s

performance. All three said downsizing caused major losses of staff with

adequate technical expertise. The two Investigations Service customers

we spoke with said there had been no change in their satisfaction level

since the Service had privatized.

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Lessons Learned by

Officials Include

Maintaining Open

Communication and

Involving Employees

in Advance Planning

Although officials from the components identified a number of lessons

that they said helped them maintain performance during downsizing, most

cited two overarching lessons. They believed that open lines of

communication between management and employees were a must and

that management must solicit employee input into the planning process.

NASA officials told us that unions, employee associations, and employees

should be involved with developing the agency downsizing

implementation strategy. In addition, officials said that (1) people must be

treated with compassion and must know they are valued by the agency;

(2) there must be no favoritism even though management may be reluctant

to let some people leave; (3) buyouts need to be planned to prevent a

sudden loss of expertise; and (4) critical skills should be backed up by

more than one person so that, if people leave, the agency still has

employees with the required skills.

Agency Comments We requested comments on a draft of this report from the heads of each of

the five agencies or their designees from which we had obtained

information. We received written comments from NASA in a letter dated

January 22, 1998, from the Acting Deputy Administrator. The Acting

Deputy Administrator had no comments on any of the substantive content

of the draft report. However, he did suggest one technical change, which

we have made in the report. See appendix VI for a reprint of NASA’s letter.

We requested comments from the Administrator, GSA, but despite several

follow-up inquiries, no comments were received.

On January 28 and 29, 1998, we spoke with the GAO Liaisons at OPM, DOI,

and HUD, respectively. The OPM GAO Liaison said that OPM had no

substantive comments on the draft report. He suggested several technical

comments to improve the accuracy or context in the draft report; we made

these changes in this report where appropriate. The DOI GAO Liaison had no

comments on the draft report. The HUD GAO Liaison told us that except for

one statement attributed to Office of Housing officials that the Department

cannot support, the agency had no comments on the draft report.

Consequently, we deleted the sentence from this report.

As arranged with your office, unless you announce the contents of this

report earlier, we plan no further distribution until 30 days after its issue

date. At that time, we will send copies to the Ranking Minority Member of

the Subcommittee on Civil Service, House Committee on Government

Reform and Oversight, and to the Chairman and Ranking Minority Member

Page 11 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
B-276566 

of the Senate Committee on Governmental Affairs. We will also send

copies to the Secretaries of HUD and DOI, the Administrators of GSA and

NASA, and the Director of OPM. We will make copies available to others on

request.

The major contributors to this report are listed in appendix VII. If you have

any questions about the report, please call me on (202) 512-8676.

Sincerely yours,

Michael Brostek

Associate Director, Federal Management

 and Workforce Issues

Page 12 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Page 13 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Contents

Letter 1

Appendix I 

Office of Housing,

Department of

Housing and Urban

Development

18

Extent of Downsizing Varied by Component 18

HUD and Office of Housing Took Three Actions to Maintain

Performance During Downsizing

18

Actions Taken During Downsizing Were Generally Successful in

Maintaining Performance, According to Officials

20

Customer Satisfaction During Downsizing Was Mixed 21

Lessons Learned Include Maintaining Open Communication and

Involving Employees in Advance Planning

22

Appendix II 

Bureau of

Reclamation,

Department of the

Interior

23

Extent of Downsizing Varied by Component 23

BOR Took Three Actions to Maintain Performance During

Downsizing

23

Actions Taken During Downsizing Were Generally Successful in

Maintaining Performance, According to Officials

24

Customer Satisfaction Was Mixed, but Dissatisfaction Was Not

Linked to Downsizing

25

Lessons Learned Include Maintaining Open Communication and

Involving Employees in Advance Planning

26

Appendix III 

Public Buildings

Service, General

Services

Administration

28

Extent of Downsizing Varied by Organizational Component 28

GSA and PBS Took Actions to Maintain Performance During

Downsizing

28

Actions Taken During Downsizing Were Generally Successful in

Maintaining Performance, According to Officials

30

Customers Remained Satisfied During Downsizing 30

Lessons Learned Include the Need to Target Buyouts 31

Appendix IV 

Kennedy Space

Center, National

Aeronautics and

Space Administration

32

Extent of Downsizing Varied by Component 32

NASA and KSC Took Three Actions to Maintain Performance

During Downsizing

32

Actions Taken During Downsizing Were Generally Successful in

Maintaining Performance, According to Officials

34

Customers Remained Satisfied During Downsizing 34

Downsizing Reportedly Has Not Affected Shuttle Safety 35

Page 14 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Contents

Lessons Learned Include Maintaining Open Communication and

Involving Employees in Advance Planning

36

Appendix V 

Investigations Service,

Office of Personnel

Management

37

Extent of Downsizing Varied by Component 37

Investigations Service Took Actions to Maintain Performance

During Downsizing

37

Actions Taken During Downsizing Were Generally Successful in

Maintaining Performance, According to Officials

39

Customers Remained Satisfied During Downsizing 39

Lessons Learned Include Maintaining Open Communication and

Taking Customer Satisfaction Into Account

39

Appendix VI 

Comments From the

National Aeronautics

and Space

Administration

40

Appendix VII 

Major Contributors to

This Report

41

Tables Table 1: Downsizing Between Fiscal Years 1993 and 1996 at Five

Selected Agencies, by Organizational Components and

Percentage of Total Agency FTE Reductions

6

Table I.1: FTE Reductions at HUD Components Between Fiscal

Years 1993 and 1996

18

Table II.1: FTE Reductions at DOI Components Between Fiscal

Years 1993 and 1996

23

Table III.1: FTE Reductions at GSA Organizational Components

Between Fiscal Years 1993 and 1996

28

Table IV.1: FTE Reductions at NASA Components Between Fiscal

Years 1993 and 1996

32

Table IV.2: FTE Reductions at NASA Space Flight Centers

Between Fiscal Years 1993 and 1996

32

Table V.1: FTE Reductions at OPM Components Between Fiscal

Years 1993 and 1996

37

Page 15 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Contents

Abbreviations

BOR Bureau of Reclamation

DOI Department of the Interior

FTE full time equivalent

GSA General Services Administration

HUD Department of Housing and Urban Development

IG Inspector General

KSC Kennedy Space Center

NASA National Aeronautics and Space Administration

OMB Office of Management and Budget

OPM Office of Personnel Management

PBS Public Buildings Service

USIS US Investigations Service, Inc.

Page 16 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Page 17 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix I 

Office of Housing, Department of Housing

and Urban Development

Extent of Downsizing

Varied by Component

The Department of Housing and Urban Development (HUD) reduced its

workforce by 1,894 FTEs between fiscal years 1993 and 1996. As shown in

Table I.1, the Office of Housing accounted for the largest percentage of

HUD’s downsizing.

Table I.1: FTE Reductions at HUD

Components Between Fiscal Years

1993 and 1996

Component

FTE reduction

between FYs 1993

and 1996

Percent of FY 1993

FTEs reduced

Percent of total

HUD FTE reduction

Office of Housing 977 15.9% 51.6%

Office of Administration 187 15.9 9.9

Community Planning

 and Development

172 16.9 9.1

Public and Indian

 Housing

171 11.2 9.0

Field Directorate &

 Operational Support

157 31.8 8.3

Other components 230 7.8 12.1

Total 1,894 14.2% 100%

Source: GAO calculations based on agency-provided data.

HUD and Office of

Housing Took Three

Actions to Maintain

Performance During

Downsizing

Actions taken that helped HUD’s Office of Housing maintain performance

during downsizing can be categorized into three general areas: (1) HUD

refocused its mission, (2) Office of Housing reengineered its work

processes, and (3) Office of Housing took steps to build and maintain

employee skills.

HUD, according to its streamlining plan, had operated for years without a

clear mission, resulting in an inability to mobilize its resources to meet the

needs of America’s communities. In a 1996 statement highlighting the

agency’s reinvention efforts, the Secretary of HUD stated that HUD’s mission

is to help people create communities of opportunities and that the

programs and resources of HUD help Americans create cohesive,

economically healthy communities.

HUD’s Office of Housing has responsibility for (1) underwriting single

family, multifamily, property improvement, and manufactured home loans

and (2) administering special purpose programs designed specifically for

the elderly, the handicapped, and the chronically mentally ill. In addition,

the Office of Housing administers assisted-housing programs for

low-income families, administers grants to fund resident ownership of

Page 18 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix I 

Office of Housing, Department of Housing

and Urban Development

multifamily housing properties development, and protects consumers

against fraudulent practices of land developers and promoters. In support

of its mission, HUD officials said that Office of Housing took or planned a

number of actions to help maintain performance during this period of

downsizing. Routine, location neutral activities were consolidated into

fewer offices. In August 1994, the Office of Housing consolidated single

family housing activities from 17 field offices into the Denver

Homeownership Center and reported reduced processing times as a result.

By 2000, Housing plans to consolidate remaining single family loan

processing, quality assurance, marketing and outreach, and asset

management activities from its 81 field offices into 4 homeownership

centers (including Denver), which officials said should enable them to

reduce single family personnel by 50 percent. The multifamily housing

program consolidated voucher processing in Kansas City in August 1995,

property disposition in Atlanta and Fort Worth in October 1996, and

risk-sharing lender activities in Greensboro, NC, in January 1997 to reduce

processing time, improve customer service, and use staff resources more

efficiently.

Multifamily housing officials planned to continue consolidating its 51 hub

locations until activities are located in 18 hub locations and 33 additional

smaller sites by fiscal year 1998. According to these officials, this will

create economies of scale and maximize use of limited resources while

still maintaining a local presence. They explained these consolidations

were not done specifically because of downsizing, but they were part of an

ongoing HUD reinvention effort, which permitted HUD to adjust to a

fluctuating workload and maintain performance during downsizing. In

addition to the consolidations, the Office of Housing began implementing

paperless processing of mortgage record changes, default reporting, and

other record changes.

Office of Housing officials told us their employees generally had the

appropriate skills and experience to maintain performance during this

downsizing period. However, in certain instances, the Office of Housing

used contractors to supplement shrinking staff and provide technical

expertise, such as physical inspections and property disposition

rehabilitation reviews. The various consolidations reduced the need to

have expertise in all functions in all offices. To augment employee skills,

the multifamily housing program implemented work sharing using a

“matrix” scheme of 5 teams consisting of 18 to 20 offices each. Under this

scheme, offices within a matrix shared work so that, if an office needed

help with a function, it could get it from another office in the team. Union

Page 19 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix I 

Office of Housing, Department of Housing

and Urban Development

officials we spoke with also believed that Office of Housing employees had

the skills and experience needed to maintain performance in most but not

all locations; however, they warned that the skills would not be available

as downsizing continued.

Although Office of Housing and union officials believed Housing had the

skills and experience necessary to maintain performance, a March 1997

IG’s audit was less optimistic. It found staffing shortages in some areas,

barriers to effective staff redeployment, and mismatches between skills

and needs. The IG report stated that staff reductions would be

compounded as anticipated budget restrictions led to further reductions

by the end of fiscal year 2000. The report said staffing needs continued to

be most critical in the multifamily insured portfolio monitoring area and,

to a lesser degree, in the multifamily note servicing area. Office of Housing

officials reported to us that the realignment of functions and

responsibilities as outlined in HUD’s 2020 Management Reform Plan,

initiated in October 1997, will enable Housing to focus a highly trained

staff with adequate automated systems on the multifamily portfolio.

Actions Taken During

Downsizing Were

Generally Successful

in Maintaining

Performance,

According to Officials

The Office of Housing reported that the creation of new methods to deal

with its workload, such as the single family homeownership centers and

work sharing, had allowed it to maintain, and in some cases, improve

performance. Union officials differed on whether downsizing had affected

performance. Two union officials thought performance had been

negatively affected, while one union official said it had not been because

employees took pride in their work and were willing to do what was

necessary to get it done. Office of Housing performance measurement

goals changed from year to year so there were few trend data, but the

available data showed that Housing generally met or exceeded the goals it

set for itself during this downsizing period. Trend data for one goal, to

close sales on 95 percent of each year’s single family inventory, were

available. They showed closed sales were 95 percent of inventory in fiscal

year 1994, 109 percent in fiscal year 1995, and 194 percent in fiscal year

1996. Housing officials told us that HUD was developing performance

measures in compliance with the Government Performance and Results

Act.

HUD’s 2020 Management Reform Plan seeks to (1) consolidate most of its

recordkeeping and many program activities in selected cities around the

country and (2) focus the agency on assessing the quality of the

government housing stock, and curtailing waste, fraud, and abuse. As part

Page 20 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix I 

Office of Housing, Department of Housing

and Urban Development

of this plan, HUD would continue its downsizing efforts. In a November 25,

1997, audit-related memorandum providing for an interim review of HUD’s

reform plan, HUD’s IG criticized the plan for setting a downsizing target

without first analyzing HUD’s workload and mission. The IG reported that

HUD’s staff reductions are resulting in a serious loss of technical expertise

leading to concerns about the relative capacity of HUD’s remaining staff to

carry out their mission and responsibilities once reforms are in place. HUD

officials had not yet responded to the audit-related memorandum at the

time we concluded our work.

Customer Satisfaction

During Downsizing

Was Mixed

Office of Housing officials, citing feedback from lending institutions and a

decreased number of complaints, believed customers were satisfied with

their performance. A union official believed that customer satisfaction on

the part of the private real estate industry had increased because private

companies were asked to do more for themselves, which they applaud, but

satisfaction on the part of the public had decreased because downsizing

had reduced the opportunities for the public to interact with the Office of

Housing. Another union official believed that customers had generally

remained satisfied in spite of downsizing because the extra time

employees were devoting to their jobs enabled the Office of Housing to

continue providing levels of service after downsizing that were

comparable to those provided before downsizing.

The Office of Housing provided results of two customer satisfaction

surveys done during downsizing. A Denver Single Family Processing

Center customer survey in 1995 with an 8 percent response rate indicated

that the respondents were satisfied. A 1996 survey found moderate

satisfaction among lenders and low satisfaction among realtors for the

Section 203(k) Rehabilitation Mortgage Insurance Program, and it found

high satisfaction among lenders and moderate satisfaction among realtors

for the Section 203(b) Mortgage Insurance Program. However, in the

absence of any similar surveys prior to downsizing, we could not tell if

satisfaction among these customers had increased or decreased during

downsizing. Further, the low response rates for the surveys undermine

their value as accurate measures of customer satisfaction.

In the absence of agency data measuring changes in customer satisfaction

during downsizing, we interviewed a small number of Office of Housing

customers. The Office of Housing provided customer lists containing 80

customers composed primarily of nonprofit organizations representing

industry groups and homeowners. From the 80 customers, we randomly

Page 21 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix I 

Office of Housing, Department of Housing

and Urban Development

selected 10. We asked them if their satisfaction with the Office of

Housing’s performance had changed since 1992 and if their satisfaction

had been affected by downsizing. Three of the organizations denied being

customers, one could not be contacted, and one did not respond to our

questions. Of the remaining five, two were satisfied with the Office of

Housing’s performance, but three were either dissatisfied or had mixed

feelings. The dissatisfaction all three expressed was due to major losses, at

headquarters or field offices, of staff with adequate technical expertise,

and all three blamed downsizing. The organizations said these losses made

it difficult for the organizations and their constituents to obtain

information they needed. One organization described the situation at the

Office of Housing as a “brain drain.”

Lessons Learned

Include Maintaining

Open Communication

and Involving

Employees in

Advance Planning

Office of Housing officials identified a number of lessons learned they

believed helped maintain performance during downsizing. They said

agencies should involve employees who will be affected by downsizing in

the planning and development of new organizational procedures. They

said managers need to “be straight” with employees about what is

happening because it makes acceptance easier; tell employees the

situation as soon as possible so they can make decisions about their

futures; not change direction after the inevitable is accepted because that

causes downtime while employees become reoriented; and make every

effort to convey to the employees how important they are to the agency’s

success and to ensure that the employees feel they are part of a team.

Officials also said it is important to develop a cooperative relationship

with employee unions.

Page 22 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix II 

Bureau of Reclamation, Department of the

Interior

Extent of Downsizing

Varied by Component

The Department of the Interior (DOI) reduced its workforce by almost

10,200 FTEs between fiscal years 1993 and 1996. Table II.1 shows

components with the largest downsizing percentages.

Table II.1: FTE Reductions at DOI

Components Between Fiscal Years

1993 and 1996

Component

FTE reduction

between FYs 1993

and 1996

Percent of FY 1993

FTEs reduced

Percent of total

DOI FTE reduction

Indian Affairs 2,394 18.3% 23.5%

Minesa 2,016 87.5 19.8

Reclamation 1,518 20.1 14.9

Geological Survey 1,445 12.6 14.2

Land Management 1,162 10.5 11.4

Other programs 1,641 5.2 16.1

Total 10,176 13.2% 100%

aThe Bureau of Mines closed in February 1995. Some FTEs remained to shut down facilities.

Source: GAO calculations based on agency-provided data.

BOR Took Three

Actions to Maintain

Performance During

Downsizing

Actions taken that helped Bureau of Reclamation (BOR) maintain

performance amid downsizing can be categorized into three general areas:

BOR (1) refocused its mission, (2) reengineered its work processes, and

(3) took steps to build and maintain employee skills.

According to the Secretary of the Interior, his agency’s mission is to

protect and provide access to the nation’s natural and cultural heritage

and to honor its trust responsibilities to tribes. DOI’s internal operating

manual states that BOR’s mission is to manage, develop, and protect water

and related resources in an environmentally and economically sound

manner in the interest of the American public. In fulfilling its mission, BOR

designs and constructs water resources projects; develops and enhances

recreational uses at BOR projects; conducts research and encourages

technology transfer to improve resource management development and

protection; assists other federal and state agencies in protecting and

restoring surface water and ground water resources from hazardous waste

contamination; and provides engineering and technical support to federal

and state agencies, Native American tribes, and other nations.

Over the past decade, BOR shifted its mission emphasis from water project

construction to water resources management, including water

conservation, environmental restoration, and solutions to the water

Page 23 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix II 

Bureau of Reclamation, Department of the

Interior

problems of Native Americans and urban water suppliers. According to

BOR officials, this reemphasis occurred at the same time as downsizing, but

not because of downsizing.

In October 1994, BOR reengineered its Denver facilities into the

Reclamation Service Center to provide administrative, research, scientific,

and technical services to BOR, other DOI organizational components, water

districts, and others. These services are provided through four major units,

specifically, the Administrative Service Center, the Human Resources

Office, the Management Services Office, and the Technical Service Center.

As part of the restructuring, the Technical Service Center became

self-supporting—dependent on client payments for its financing. In

addition to establishing the Reclamation Service Center, BOR’s 35 project

offices were consolidated into 26 area offices.

BOR officials believed that BOR employees had the appropriate skills and

experience to maintain performance amid downsizing, although they also

believed additional younger people needed to be hired. To develop a cadre

of people to be future supervisors and managers, the officials said BOR was

rotating people among functions and retraining them. A union official also

believed that BOR had the appropriate skills and experience to maintain

acceptable performance with the workforce currently on board.

Employees we spoke with generally agreed that BOR had the necessary

skills, but they were concerned about the future. One employee said that

skills were thinly spread, and although the work would get done, its

quality might suffer. Another employee said there were skill gaps, and

unless BOR was careful, it would not have the skills needed. Some

employees also expressed concern that employees were leaving who

would have been BOR’s future leaders and that few young people were

being hired.

Actions Taken During

Downsizing Were

Generally Successful

in Maintaining

Performance,

According to Officials

BOR headquarters officials believed no performance problems had emerged

because of downsizing; however, Reclamation Service Center officials

were less positive. While Service Center officials generally agreed

performance had not suffered greatly, they also noted that some problems

had emerged, particularly in the Service Center’s ability to provide

computer support to other BOR units. Service Center officials believed that

people were working harder and were tired because of fewer people to

carry the same or even an increased workload, and performance may

ultimately suffer because stress leads to mistakes. Service Center officials

said there had already been incidents such as threats of violence and

Page 24 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix II 

Bureau of Reclamation, Department of the

Interior

bizarre behavior brought on by stress. A union official concurred that

some performance problems had emerged, particularly the ability to

provide all the computer support needed. Employees we spoke with, for

the most part, agreed with headquarters officials that downsizing had not

yet led to performance problems, although some said downsizing had

caused a loss of expertise.

We found no BOR-wide performance measurement data to use in

corroborating officials’ views that performance had been maintained. The

Power Programs’ Power Management Laboratory had identified a number

of fiscal year 1994 measures, such as FTEs per operating unit and per

megawatt, but there were no data for other fiscal years. A Power Program

official said data for other fiscal years were being gathered but would not

be available for several months, and consequently there were no data

showing performance trends during downsizing. The 1994 data showed

that BOR was performing within an acceptable range of the power

industry’s standards. At the Reclamation Service Center, an official

suggested one performance measure would be whether its Technical

Service Center unit broke even each year. The official pointed out that,

although the Technical Service Center suffered a deficit of about $180,000

in its first year of operation as a self-supporting activity in fiscal year 1995,

it earned a surplus of about $270,000 in its second year even after

recovering the previous year’s deficit. BOR officials said the agency was

developing performance measures in compliance with the Government

Performance and Results Act.

Customer Satisfaction

Was Mixed, but

Dissatisfaction Was

Not Linked to

Downsizing

BOR officials told us that, based on informal feedback, their customers

remained satisfied with their work. One measure of satisfaction cited was

that Technical Service Center customers continued to seek and pay for

services. Furthermore, an official said, downsizing had benefited customer

satisfaction because it forced BOR employees to become more

customer-oriented. Employees we spoke with were not unanimous, but

most employees felt that customers remained satisfied. One employee

echoed management’s statement that downsizing had benefited customer

satisfaction because BOR employees had become more customer-oriented

and added that having fewer people on projects resulted in more direct

communication with customers about routine matters. On the other hand,

one employee said BOR had been unable to adequately service two federal

agencies and a water district, and another employee said it was hard to

provide staff for all of the unit’s projects.

Page 25 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix II 

Bureau of Reclamation, Department of the

Interior

A BOR official said there were no agencywide customer satisfaction data;

however, BOR was developing an agencywide customer satisfaction survey

that it hoped to administer at 3-year intervals. BOR’s Power Program

surveyed 942 customers in 1995 and found that 84 percent of the

respondents thought BOR was doing a good to excellent job. There were no

predownsizing data for comparison, but the Power Program intended to

continue seeking customer feedback in the future.

In the absence of BOR-wide customer satisfaction data, we interviewed a

small number of customers. BOR provided customer lists containing 627

customers. Customers included other federal agencies, international

customers, and state agencies, but most of them were water districts

located in rural areas in the western United States. From the 627

customers, we randomly selected 10 to survey of which 9 were rural water

districts and 1 was a state agency. We asked them if their satisfaction with

BOR’s performance had changed since 1992 and if their satisfaction had

been affected by downsizing. Two organizations denied being BOR

customers, and one did not respond. Of the remaining seven, one was

satisfied with BOR’s performance, five were not satisfied, and one reported

declining satisfaction. Reasons cited for dissatisfaction included longer

turnaround time for decisions, diminished technical support, increased

reporting requirements, and higher water fees. However, the most

common reason cited for dissatisfaction was customers’ belief that BOR is

prone to favor the water demands of politically powerful groups, such as

large population centers and environmental groups, at the expense of rural

farmers. Four of the dissatisfied customers did not think that downsizing

caused their dissatisfaction, and two were not sure.

Lessons Learned

Include Maintaining

Open Communication

and Involving

Employees in

Advance Planning

BOR officials identified a number of lessons learned they believed helped

maintain performance amid downsizing. First, officials said that agencies

should include employees in planning and implementing the downsizing.

The officials believed it was impossible to communicate with employees

too much, and said to be open and honest with them. If there must be a

reduction-in-force, officials said it should be conducted without favoritism

even though there are some employees managers may not want to lose. By

adhering to this principle, they said only two appeals resulted from BOR’s

reduction-in-force, both of which they said were quickly resolved. Officials

also stressed the need to plan for buyouts. Although BOR’s first buyout

round was open to everyone, by phasing the time when employees left,

officials said BOR prevented a sudden loss of expertise. In addition, the

officials cited the need to provide training for employees in coping with

Page 26 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix II 

Bureau of Reclamation, Department of the

Interior

downsizing, and to also provide them time to talk out troubling issues with

their peers. One official said, in addition to rewarding employees, agencies

should also hold them accountable for their actions. The official said BOR

cannot afford to tolerate poor performers since it has downsized and relies

on customer reimbursement for funding.

Page 27 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix III 

Public Buildings Service, General Services

Administration

Extent of Downsizing

Varied by

Organizational

Component

The General Services Administration (GSA) reduced its workforce by 4,535

FTEs between fiscal years 1993 and 1996. As shown in table III.1, the Public

Buildings Service (PBS) accounted for the largest percentage of GSA’s

downsizing.

Table III.1: FTE Reductions at GSA

Organizational Components Between

Fiscal Years 1993 and 1996

Component

FTE reduction

between FYs 1993

and 1996

Percent of FY

1993 FTEs

reduced

Percent of total

GSA FTE

reduction

Public Buildings Service 2,114 21.0% 46.6%

Federal Supply Service 1,026 21.8 22.6

Federal

Telecommunications

Service

903 36.9 19.9

Other components 492 16.3 10.9

Total 4,535 22.4% 100%

Source: GAO calculations based on agency-provided data.

GSA and PBS Took

Actions to Maintain

Performance During

Downsizing

Actions taken that helped PBS maintain performance during downsizing

can be categorized into two general areas: (1) reengineering work

processes and (2) PBS taking steps to build and maintain employee skills.

According to its fiscal year 1998 budget overview, GSA’s mission is to

improve the effectiveness of the federal government by ensuring quality

work environments for its employees. To that end, GSA began moving from

being a mandatory source of services to being a provider of choice, which

must compete with other providers in terms of cost, quality, and

timeliness. GSA reported it is increasingly competing effectively for

customer purchases of real property services. In support of GSA’s mission,

PBS is responsible for the design, construction, management, operation,

alteration, and remodeling of space, owned and leased, in which

accommodations for government activities are provided, and where

authorized, for the acquisition, use, custody, and accountability of GSA real

property and related personal property. In addition, PBS has responsibility

for providing leadership in the development and maintenance of needed

property management information systems for the government.

In January 1995, PBS reengineered its work processes to align itself more

closely with private sector business practices, allow regional offices to

operate more independently, and fill gaps left by downsizing. PBS

decentralized property development operations to field offices to allow for

Page 28 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix III 

Public Buildings Service, General Services

Administration

increased contact with customers. In July 1996, GSA implemented the

“Can’t Beat GSA Leasing” program to reduce delivery times and enhance

cost-effectiveness by cutting procedures and offering greater competition

and choices to federal agencies. In November 1996, it initiated the “Can’t

Beat GSA Space Alterations” program for the procurement of construction

services that aim to be better, cheaper, and faster for customers.

According to an official, PBS also solicited several national real estate

services to identify private sector service providers with which PBS could

contract to deliver leasing services to federal agencies. The official said

these contracts will allow PBS’ smaller staff to continue to satisfy

customers by outsourcing routine transactional details. Further, the

official said PBS planned, in fiscal year 1998, to begin transitioning its

automated data processing system from multiple applications operating on

an antiquated mainframe computer to the use of integrated commercial

applications to provide on-line transaction processing, permit data

sharing, and support an easy to use query facility.

A PBS official said PBS lacked the necessary skills mix suited to today’s

mission; however, it was developing the necessary mix, for example, by

retraining staff in asset management and empty building space disposal.

The official further said that PBS was losing experienced employees,

forcing those remaining to assume higher-level responsibilities, but this

situation also allowed PBS to train people to replace lost managers by

providing opportunities for employees to act in management roles.4

 The

official added that PBS would have sufficient staff with the appropriate

skills and experience to maintain performance only if its improved

automated data processing system is successfully implemented.

PBS employee representatives differed in their views about whether PBS

had the necessary employee skill mix. Officials of one union believed that

PBS did not have the appropriate skill mix and experience to maintain

performance, while an official of another union believed the skill mix and

experience were sufficient to maintain acceptable performance. An

employee association official also believed that PBS currently had a

sufficient skill and experience mix and added that GSA had greatly

increased employee training.

4

During interviews with PBS officials for a separate GAO review, PBS officials noted that the

inexperience of some staff has affected performance. For example, officials said a lack of experience

was a contributing factor to significantly overestimating rental revenues for fiscal years 1996, 1997,

and 1998 for the Federal Buildings Fund.

Page 29 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix III 

Public Buildings Service, General Services

Administration

Actions Taken During

Downsizing Were

Generally Successful

in Maintaining

Performance,

According to Officials

A PBS official said it was not possible to describe the effects of downsizing

alone on PBS performance because it occurred concurrently with changes

GSA had already planned to make before downsizing was mandated.

However, the official said streamlining its operations enabled PBS to

maintain its performance, and implementation of the new data processing

system planned for fiscal year 1998 will further enhance its ability to

maintain performance. In addition, the official said downsizing forced PBS

to implement changes faster, and in that respect, downsizing had been

healthy. Employee representatives we spoke with disagreed about the

effect of downsizing on PBS performance. Officials of one union believed it

had been affected because constant change did not allow people to settle

in and learn their jobs and because, in his opinion, contractor employees

cannot perform the work as well as federal employees. An official of

another union believed performance had not been greatly affected because

of good planning and preparation by the agency. An employee association

official said performance was initially affected because employees were

placed in jobs for which they were not qualified, and experienced

employees were replaced by temporary workers.

The PBS official said GSA did not have good baseline performance

measurement data because it had historically done little performance

measurement; however, it is now focusing its attention on developing

performance measures to meet Results Act requirements. PBS had

developed performance measures under a Results Act pilot project, but

they had been evolving from year to year, and there were little data

showing trends. The data did show, however, that PBS met or exceeded

more than half of the pilot project goals it set for itself during fiscal years

1994, 1995, and 1996.

Customers Remained

Satisfied During

Downsizing

PBS surveyed its buildings’ tenants between fiscal years 1993 and 1996, and

the results showed an upward trend in satisfaction ranging from

74 percent in fiscal year 1993 to 77 percent in fiscal year 1996. However,

because different buildings’ tenants were surveyed in different years, the

results did not measure changes in satisfaction of the same tenants.

Union officials we spoke with disagreed on the extent of customer

satisfaction. One union believed that the customer survey data

misrepresented customer satisfaction because of a low response rate;

however, another union believed that customer satisfaction was

improving.

Page 30 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix III 

Public Buildings Service, General Services

Administration

Lessons Learned

Include the Need to

Target Buyouts

A PBS official said GSA made a mistake in its first round of buyouts by not

targeting them. In some areas and occupations, too many employees left,

while in others, too few left, causing a mismatch between buyout results

and organization needs. GSA had to use the staff who remained as best it

could to repair the damage. The official said it was also a mistake for GSA

to offer deferred buyouts over an 18-month period. Although deferred

buyouts gave GSA more time to adjust to a downsized workforce, according

to the official, the motivation of employees who knew they would be

leaving was never the same.

Page 31 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix IV 

Kennedy Space Center, National

Aeronautics and Space Administration

Extent of Downsizing

Varied by Component

NASA reduced its workforce by nearly 4,000 FTEs between fiscal years 1993

and 1996. Table IV.1 shows the components with the largest percentage in

downsizing.

Table IV.1: FTE Reductions at NASA

Components Between Fiscal Years

1993 and 1996

Component

FTE reduction

between FYs 1993

and 1996

Percent of FY 1993

FTEs reduced

Percent of total

NASA FTE

reduction

Human Space Flight 1,909 24.3% 48.2%

Center Mgmt. and

Operations

807 16.7 20.4

Science,

Aeronautics,

Technology

347 3.4 8.6

Mission Support 348 42.0 8.8

Other components 553 45.9 14.0

Total 3,964 15.9% 100%

Source: GAO calculations based on agency-provided data.

FTE Reductions at NASA

Space Flight Centers

As table IV.1 shows, NASA’s Human Space Flight Program experienced the

largest percentage FTE reduction between fiscal years 1993 and 1996. Table

IV.2 shows downsizing at Johnson, Kennedy, Marshall, and Stennis space

centers, which are part of the Human Space Flight Program.

Table IV.2: FTE Reductions at NASA

Space Flight Centers Between Fiscal

Years 1993 and 1996 Center

FTE reduction between

FYs 1993 and 1996

Percent of FY 1993 FTEs

reduced

Marshall Space Flight

Center

668 17.6%

Kennedy Space Center

(KSC)

409 15.6

Johnson Space Center 316 8.4

Stennis Space Center 11 4.9

Source: GAO calculations based on agency-provided data.

NASA and KSC Took

Three Actions to

Maintain Performance

During Downsizing

Actions taken that helped KSC maintain performance can be categorized

into three general areas: (1) refocusing its mission (NASA),

(2) reengineering its work processes (KSC), and (3) taking steps to build

and maintain employee skills (KSC).

Page 32 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix IV 

Kennedy Space Center, National

Aeronautics and Space Administration

According to the Administrator of NASA, NASA’s mission encompasses the

following: (1) explore, use, and enable the development of space for

human enterprise; (2) advance scientific knowledge and understanding of

the Earth, the solar system, and the universe; (3) use the environment of

space for research; and (4) research, develop, verify, and transfer

advanced aeronautics, space, and related technologies. NASA has shifted

the focus of its mission from operations to research and development. It

has cut back on operations, bought commercial services from the private

sector, and focused its efforts on technology development. In carrying out

its part of NASA’s refocused mission, KSC designs, constructs, operates, and

maintains space vehicle facilities and ground support equipment for

launch and recovery operations. It maintains responsibility for prelaunch

and launch operations, payload processing for the space shuttle and

expendable launch vehicle programs, landing operations for the space

shuttle orbiter, and recovery and refurbishment of the reusable solid

rocket booster.

As NASA refocused on being a high-tech research and development agency,

it turned over more of its operations to contractors and in September 1996,

it awarded a space flight operations contract to United Space Alliance.

This contract consolidated a number of existing contracts under one

prime contractor and gave the prime contractor overall responsibility for

space shuttle operations, including orbiter vehicles, solid rocket boosters,

external fuel tank, flight crew equipment, ground support systems, and

integration of payloads. The space shuttle program remained NASA

managed; however, according to KSC officials KSC changed from its

traditional oversight role to “insight.” Under oversight, KSC maintained

continual surveillance over the contractor, telling it not only what to do

but how to do it. Under insight, KSC will directly oversee contractor

processes only periodically. KSC officials said they will maintain technical

visibility through audit, surveillance, assessment of trends, software

verification, the flight readiness review process, and independent

assessment of problems.

KSC officials believed KSC had the workforce needed to carry out its shuttle

operations; however, they were concerned about the future. Because KSC

programs had lost “centuries” of operating and engineering knowledge, the

officials worried about having the appropriate skills mix and experience to

maintain performance as downsizing continued. Employees we spoke with

generally agreed that KSC’s skill mix and experience remained adequate,

but some employees believed that if downsizing continued, skills and

experience would become inadequate.

Page 33 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix IV 

Kennedy Space Center, National

Aeronautics and Space Administration

To help ensure that KSC would continue to have needed skills, its fiscal

year 1997 buyout plan was designed to limit skill loss by limiting the

number of buyouts in shuttle processing, safety and mission assurance,

and payload processing. Further, some senior executive service positions,

for example, shuttle processing and safety and mission assurance program

directors, were excluded from buyout eligibility. In addition, KSC officials

said they were planning for the succession of managers and other senior

people that did leave. KSC instituted individual development plans for

future managers and, as part of its senior executive service candidate

program, offered programs in management development, project

management, and skills training. To prepare for work on the international

space station, KSC was cross-utilizing people currently working on the

space laboratory program, which was winding down.

Actions Taken During

Downsizing Were

Generally Successful

in Maintaining

Performance,

According to Officials

KSC officials said that KSC was still able to perform its mission. However,

they were concerned about retaining the human resources needed to react

to problems, to meet unplanned and new requirements, and to sustain the

work as the workforce continued to decrease. Most of the employees we

spoke with believed downsizing had not yet affected KSC’s performance or

shuttle safety. One employee, however, believed downsizing had begun

affecting performance and said the quality of safety inspections would

decline if personnel were not restored and the workload was not reduced.

The employee believed safety of the shuttle program had been affected

and cited a wrench left inside a solid rocket booster and water spilled on a

maneuver pod as causes for concern. Other employees said, although the

work gets done, they were concerned about the effect of further

downsizing or overload of remaining employees on performance.

Performance measurement data showed KSC maintained its shuttle launch

schedule at lower cost during downsizing. In addition, as flight costs

decreased, quality increased as measured by the decrease in the number of

in-flight problems caused by ground processing.

Customers Remained

Satisfied During

Downsizing

According to KSC surveys, customers remained satisfied with KSC’s

performance during downsizing. Payload customers rated KSC’s service on

a five-point scale ranging from 1 for poor service to 5 for excellent service.

Ratings during downsizing were 4.2 in 1993, 4.3 in 1994, 4.2 in 1995, and 4.2

in 1996. KSC found the apparent leveling off of satisfaction disturbing but

attributed it to several factors: (1) during the survey’s early years, KSC

concentrated on improving those issues that drew the most frequent

customer comments, but subsequently it concentrated on smaller, but

Page 34 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix IV 

Kennedy Space Center, National

Aeronautics and Space Administration

important, improvements; (2) inconsistent methods for counting survey

results may have skewed the results; and (3) as KSC’s performance

improved, customers came to expect even more from it and became more

critical in their survey responses. KSC viewed this critical customer

feedback as positive because its customers recognized its commitment to

improving customer service and became increasingly forthcoming with

suggestions for improvements. Employees we spoke with also believed

that customers so far remained satisfied with KSC’s performance.

Downsizing

Reportedly Has Not

Affected Shuttle

Safety

As KSC downsized and transitioned to the space flight operations contract

negotiated with United Space Alliance, concern grew about the safety of

the space shuttle. This led to a review by NASA’s Aerospace Safety Advisory

Panel of issues associated with the safe operation and management of the

space shuttle program. The panel’s conclusion concurred with NASA

officials’ beliefs that shuttle safety had not been adversely affected.

The panel found that NASA’s efforts to streamline the space shuttle program

had not created unacceptable risks. However, the panel also said there

was a clear need for NASA to take steps to ensure the availability of a

skilled and experienced civil service workforce in sufficient numbers to

meet ongoing safety needs. The panel said these personnel issues were

challenging and had the potential to adversely affect risk in the future. The

panel said the space flight operations contract appeared to be a

comprehensive and workable document espousing safety as paramount

throughout. It also said there were minimal adverse safety implications,

especially in the short term, largely because the people currently in place

were dedicated to making the new scheme work. However, the panel was

concerned with the loss of critical skills and experience among NASA

personnel over the long term. It said that NASA should not be misled by the

apparent initial success of all the transition efforts and that a major test of

the new approach would likely be faced after there was significant

turnover among incumbents at all levels.

Page 35 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix IV 

Kennedy Space Center, National

Aeronautics and Space Administration

Lessons Learned

Include Maintaining

Open Communication

and Involving

Employees in

Advance Planning

KSC officials identified a number of lessons learned that helped maintain

performance during downsizing. The officials said agencies should

recognize that they are going to have to downsize, be proactive, and not

wait for downsizing to happen before acting. They said unions, employee

associations, and employees should be involved in developing the agency

downsizing implementation strategy. The officials said communication

with employees should be open and honest. Communication, the officials

said, builds credibility, while silence makes workers think something is

going on behind the scenes, and openness helps retain key people by

reducing their concerns about their jobs. The officials suggested that

agencies should do positive things for employees—for example, hold job

fairs, which promote the message that the agency is trying to help them,

and offer training courses to help people cope with change. The officials

said employee anxiety should be recognized and addressed. They believed

that employees should be treated with compassion and should know that

they are valued by the agency. Employees should be told the agency does

not want them to leave, but if they do leave, respect them for taking

actions they feel are in their own best interests. The officials said agencies

should back up critical skills so that, if people leave, the agency still has

employees with those skills.

Page 36 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix V 

Investigations Service, Office of Personnel

Management

Extent of Downsizing

Varied by Component

The Office of Personnel Management (OPM) reduced its workforce by 2,489

FTEs between fiscal years 1993 and 1996. Components experiencing the

largest downsizing percentages are shown in table V.1. Although the

Investigations Service downsized by 61 percent according to its full fiscal

year 1996 usage, the OPM GAO Liaison noted that if the Investigations

Service downsizing was measured using the FTE complement at the close

of fiscal year 1996, a reduction of 96 percent occurred from the fiscal year

1993 level. The privatization of Investigations occurred in the last quarter

of fiscal year 1996, which dramatically lowered the end-of-year staffing

level.

Table V.1: FTE Reductions at OPM

Components Between Fiscal Years

1993 and 1996

Component

FTE reduction

between FYs 1993

and 1996

Percent of FY 1993

FTEs reduced

Percent of total

OPM FTE reduction

Investigations

Service

898 60.6% 36.1%

Human Resources

Development

520 100 20.9

Administrative

Services

518 76.3 20.8

Employment Services 469 40.7 18.8

Personnel Systems

and Oversight

380 100 15.3

Other componentsa + 296 + 17.8 + 11.9

Total 2,489 42.3% 100%

aIncludes three components that lost FTEs, and three components that gained FTEs, resulting in a

combined FTE increase.

Source: GAO calculations based on agency-provided data.

Investigations Service

Took Actions to

Maintain Performance

During Downsizing

Actions taken that helped OPM’s Investigations Service maintain

performance during downsizing can be categorized into two general areas.

The Investigations Service (1) refocused its mission, and (2) reengineered

its work processes.

Among other things, OPM’s mission includes supporting agencies in

merit-based examining and hiring. OPM oversees the merit principles and

hiring and retention procedures used by agencies to select applicants for

competitive positions in the federal service at general schedule grades and

for federal wage system positions. Personnel background investigations

are used in support of the selection and appointment process. The Office

Page 37 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix V 

Investigations Service, Office of Personnel

Management

of Investigations formerly performed these background investigations of

federal employees, contractors, and applicants to provide a basis for

determining an individual’s suitability for federal employment and whether

an individual should be granted clearance for access to national security

information.

Investigation Service officials said they began downsizing the

Investigations Service in 1993 by offering buyouts to employees. In

May 1994 the Investigations Service laid off approximately 440 (of about

1,440) employees. As a result of continuing downsizing and reinvention of

government initiatives, the investigations function was privatized in 1996

through the establishment of a private corporation known as the US

Investigations Service, Inc. (USIS). USIS’ workforce, with the exception of

people with specialized skills, primarily marketing, finance, and human

resources, was drawn from OPM’s Investigations Service staff. At the time

the Investigations Service was privatized, approximately 90 percent of

those who worked in the office and received reduction-in-force notices

accepted USIS job offers at the same salary, and with comparable benefits.

The other 10 percent either stayed as part of OPM’s Investigations Service,

transferred to another agency, or retired. With a total staff of about 40

individuals, OPM’s Investigations Service currently limits its functions to

policy, agency oversight, contract management, processing of Freedom of

Information and Privacy Act requests, adjudicating cases, and the making

of suitability determinations.

The Investigations Service reengineered its work processes, which

enabled it to maintain performance during downsizing. No longer designed

to do background investigations, the Investigations Service oversees the

government’s contract with USIS. Officials told us that the creation of USIS,

an employee-owned firm (owned by former federal civil servants) and the

subsequent award of a 3-year contract to USIS to conduct federal

background investigations, resulted in a seamless transition for OPM’s

former federal customers.

Page 38 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix V 

Investigations Service, Office of Personnel

Management

Actions Taken During

Downsizing Were

Generally Successful

in Maintaining

Performance,

According to Officials

An Investigations Service official said performance was maintained or

improved even as investigations were privatized. The official said that USIS

completed about 20 percent more investigations in fiscal year 1997 than

the Investigations Service did in fiscal year 1996, and also maintained the

Service’s timeliness record. In addition, the official said there had been no

decrease in the quality of cases processed by USIS. A May 1997 USIS

employee survey showed that 85 percent of the respondents recognized

the importance of quality, and 80 percent believed that USIS puts the

customer’s needs first.

Customers Remained

Satisfied During

Downsizing

Investigations Service officials believed that USIS’ customers were satisfied

with its investigations; however, we found no customer satisfaction survey

data to support this position. Two customers we spoke with said there had

been no change in their respective satisfaction levels since prior to

privatization. An OPM employee association official said there was no

indication that customers were dissatisfied.

Lessons Learned

Include Maintaining

Open Communication

and Taking Customer

Satisfaction Into

Account

An OPM union representative said that the union wanted to be more

proactive and discuss the downsizing and possible impacts with OPM

management early on, but that initial communications between

management, employees, and union representatives were not very good.

An Investigations Service official identified open communication as a

lesson learned during the Investigation Service’s downsizing and ensuing

privatization. The official said there was no such thing as too much

communication, and there should be open lines of communication

whereby information can be passed in all directions. The official added

that agencies and components should realize they will not be able to do

everything and should concentrate on their most critical areas and

functions. They should listen to their customers and ensure that their

satisfaction is taken into account before making major decisions.

Page 39 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix VI 

Comments From the National Aeronautics

and Space Administration

Page 40 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
Appendix VII 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Steven J. Wozny, Assistant Director, Federal Management

 and Workforce Issues

Clifton G. Douglas, Jr., Assignment Manager

Denver Field Office Robert P. Pickering, Evaluator-in-Charge

Robert W. Stewart, Evaluator

(410088) Page 41 GAO/GGD-98-46 Maintaining Performance Amid Downsizing
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