59

government-wide financial statements, OMB also provides analyses of aspects of
the financial condition of the Government, and prepares and publishes long-range
estimates that present the effects of various demographic, economic, and other
assumptions on the Federal budget.

External Factors

Assessments of the financial condition of the Federal Government will depend
greatly on data supplied by individual Federal agencies, and generally the
assessment can only be as accurate as the data supplied. In addition, OMB
depends on other outside information, and the accuracy of this information can
influence the accuracy of the OMB assessment

Develop and present accurate long-range demographic, fiscal and economic
trends each year in coordination with the Treasury and the Council of
Economic Advisors (CEA).

1 in is

The accuracy of economic and technical assumptions is measurable through
comparison to actual economic data. A difficulty with such measurement is the
time lag that occurs between the development of the assumption and the
availability of data with which to measure its accuracy For example, it may be a
number of years before the accuracy of default rate assumptions for longer-term
Joans can be measured

Means and Strategies

The “Troika” consultation with Treasury and CEA, which develops the major
economic assumptions for the President's Budget, is based on analysis of the
historical trends and relationships among economic indicators, assisted by a
macroeconomic model, However, considerable judgement is required to assess
incomplete data, and to identify changes and discontinuities in economic
relationships. Technical assumptions for the programs are made by the responsible
agencies, with OMB exercising some quality control, Because of the nature of
government programs, many of these assumptions are extremely difficult to
estimate; in these cases, the strategy is experimentation with alternative methods
and specifications with a goal of improving the estimates over time

External Factors

The economic and technical assumptions on which the Budget is based represent
the Administration's estimates of what is most likely to occur if the President's

15


25

want us bothering him about managing questions. Get us a few
copies of that classic report of which I am not aware until right
now.

Mr. Posner. OK.

Mr. Horn. We will wade through it.

Let me ask you, is it fair to summarize your comments, Mr.
Posner, with the following: OMB has made real improvements in
its strategic plan since the July draft, but they still have a long
way to go. Is that a fair comment?

Mr. Posner. There are really two ways to address that. One is
with regard to the strategic plan, I think it is fair to say they have
made considerable progress. They do have some more areas, as I
indicated in my testimony, that they could specify objectives more
clearly; focus on some things that we think were overlooked, like
the crosscutting program problem, if you will; better flesh out how
they are going to address the way they evaluate their own initia-
tives and the kinds of information they are going to use to know
whether they are on the right track. So I would say that from that
perspective, we, as we are fond of saying, progress with problems,
if you will.

In the overall context, beyond the strategic planning, I think
there are a variety of elements that need attention beyond just
what is in the strategic plan. As I said earlier, to focus on the kinds
of management capacity questions, the leadership strategies that
are used, how effective they are at different approaches, focusing
more on evaluation and how that is used in this whole process,
and, most importantly, what kind of followthrough exists with
these kinds of initiatives. Are we making sure that we are not fo-
cusing on policies for the particular year, but that we are sustain-
ing them over the long term, particularly in the budget review

rocess, because that is where agencies really look to read the tea
leaves and see how serious the Government is going to be commit-
ted to a variety of different programs and objectives.

So those are all what I would consider open questions at this
point that need to be continually monitored.

Mr. Mimo. If I could add briefly to that, Mr. Chairman. The key
issue we need to be concerned about is attention to cross-cutting
program-particular issues. In that regard, the Governmentwide
performance plan that OMB will deliver with the President’s budg-
et in February is the key document. As you know, we don’t have
a Governmentwide strategic plan requirement under the Results
Act, so it is going to be absolutely critical that the Governmentwide
performance plan be a key document that can address Government-
wide programmatic issues, and we understand from OMB that
their thinking is leaning in that direction.

Mr. Horn. You know the high-risk series. Let’s take two exam-
ples. Is there any evidence of the degree to which OMB—and we
will ask Mr. DeSeve that question also—the degree to which OMB
has tried to do something about examples of major computer fail-
ure, if not scandal, of FAA and IRS, both at the $4 billion, with
a B, mark? Is there any followup that you have seen evidence of?

Mr. Posner. I can address the broader question about their lead-
ership and information systems. As to the questions about FAA
and IRS, I would probably defer to Mr. DeSeve—


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

J. DENNIS HASTERT, Illinois
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut

JOHN M. McHUGH, New York
STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. McINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

JOHN B. SHADEGG, Arizona

STEVEN C. LATOURETTE, Ohio
MARSHALL “MARK” SANFORD, South

Carolina

JOHN E. SUNUNU, New Hampshire
PETE SESSIONS, Texas

MICHAEL PAPPAS, New Jersey
VINCE SNOWBARGER, Kansas
BOB BARR, Georgia

ROB PORTMAN, Ohio

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, Jr., West Virginia
MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

CAROLYN B. MALONEY, New York
THOMAS M. BARRETT, Wisconsin
ELEANOR HOLMES NORTON, Washington,

CHAKA FATTAH, Pennsylvania
ELIJAH E. CUMMINGS, Maryland
DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois
DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts
JIM TURNER, Texas

THOMAS H. ALLEN, Maine
HAROLD E. FORD, JR., Tennessee

BERNARD SANDERS, Vermont
(Independent)

KEVIN BINGER, Staff Director
Danie R. MOLL, Deputy Staff Director
WILLIAM MOSCHELLA, Deputy Counsel and Parliamentarian
Jupiry McCoy, Chief Clerk
Put SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
STEPHEN HORN, California, Chairman

PETE SESSIONS, Texas

THOMAS M. DAVIS, Virginia

JOE SCARBOROUGH Florida

MARSHALL “MARK” SANFORD, South
Carolina

JOHN E. SUNUNU, New Hampshire

ROB PORTMAN, Ohio

DAN BURTON, Indiana

CAROLYN B. MALONEY, New York
PAUL E. KANJORSKI, Pennsylvania
MAJOR R. OWENS, New York
ROD R. BLAGOJEVICH, Illinoi
DANNY K. DAVIS, Illinois

EX OFFICIO

HENRY A. WAXMAN, California

J. RUSSELL GeoraE, Staff Director and Chief Counsel
JOHN HYNES, Professional Staff Member
ANDREA MILLER, Clerk
MARK STEPHENSON, Minority Professional Staff Member

ap


68

we'll be convening these groups in detail next spring. But until we
have performance plans, which don’t come in until February, it’s
very difficult to sort through the crosscuts, because you don’t know
the exact performance objectives for those agencies.

Program evaluation is similar in the GAO critique. I’ve talked to
Mr. Posner and would extend the invitation to this staff as well.
I would like to sit down for several hours and talk broadly about
what we all think program evaluation means. There’s been a his-
toric context in program evaluation where you would, over a long
period of time—7, 8, 10 years—evaluate the success of the WIC
Program, for example, or the Joint Training Partnership Act pro-
gram, by looking at outcomes in terms of the lives of those youths,
or Head Start, and you would then make a judgment on that.

If that’s program evaluation, then we have to decide where we’re
going with it. I’m not sure that that is the same kind of program
evaluation that’s in everyone’s mind.

I would like to get some definitions behind us. That certainly was
the kind of program evaluation that the statute seemed to con-
template, that fairly long and linear look at how well the programs
have done. We very much need that look, but we also need to have
other looks in benchmarking our programs against other perhaps
even outside entities. Your point about privatization is an example.
That’s a kind of program evaluation that is looking at the bench-
mark of how well we do something.

So I would like to start a dialog with our friends here on the Hill,
as well as at GAO and in the agencies, to improve upon our pro-
gram evaluation efforts. But even that has to follow understanding
what you’re supposed to be doing in your missions, goals, and ob-
jectives, in which you will be doing performance objectives on an
annual basis. Obviously, it would be nice if we had program eval-
uations to feed into it. And we do in some cases, but we don’t in
others.

So I would like to have an agreed-upon definition of program
evaluation, and then we'll be happy to hand out guidance. We're in
the guidance business. And we will be happy to hand out guidance
on this just as we have in other areas.

Mr. Davis of Illinois. What would you consider to be the real
strength of OMB as it relates to the ability to develop the kind of
management leadership that we need for all of our agencies?

Mr. DESEVE. Well, this is going to sound self-serving, but it’s
really the commitment of the President and the Vice President, and
their ability to work with Congress, as recently demonstrated over
roughly the last 2 years, to come together and solve problems.

Acting alone the executive branch, as Mr. Horn noted, nor the
congressional branch can focus on and bring solutions to problems.
So our greatest strength is working together and that’s where we
do the best. The Balanced Budget Act is a very good example. The
Debt Collection Act is a good example. The folks in Treasury, Mr.
Horn, know that they have to come up here periodically, quite
often, probably more often than they would like, to testity about
the success of that particular bill, but it’s one we crafted together.

So, Mr. Davis, our ability to be successful depends upon our abil-
ity to use our authorities and powers, and the authorities and pow-


7 USC 1736f

7: USC 1765

7 USC 2235

8 USC 1525

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10 usc

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14 usc
15 usc

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15 USC

126

221

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1827

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638

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Agricultural commodities, transfer
of funds... ee ee ee

Application of Foreign Service
appropriations to Agriculture Dept.
personnel abroad. rr ararar

Working capital fund, Agriculture
Department. ee ee

U.S. Coordinator for Refugee Affairs.

. Defense Department reorganizations,

transfer of appropriations. .....

. National Defense account, report on

scoring of outlays. See

. DOD Aircraft, lease and charter. .:

Commissary surcharge proceeds. we

Federal Deposit Insurance Corporation,
reporting of financial information.

Coast Guard Supply Fund. . .. 2.

. Paperwork burden, SEC. see eens

+ National Institute of Standards and

Technology, computer systems standards.

Computer System Security and Privacy
Advisory Board, report. tees

National Weather Service, surplus
equipment for Arctic weather stations.

Small Business Innovation Research
Program. ee

Contracts awarded to handicapped
concerns, reports of. ......- +

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. Federal expenditures to businesses,

reports of. . 1 eee eee ee es

. Working capital fund, Commerce

Department. 6... ee ee ee

ii


15

Furthermore, the July draft plan did not contain a discussion of two elements required
under the Results Act: (1) the relationship between the long-term and annual performance
goals and (2) the use of program evaluation in developing goals.

[B'S STRATEGK EFL
EF REI

The structural and substantive changes OMB made to its July 1997 strategic plan
constitute a significant improvement in key areas. In general, OMB's revised plan
provides a more structured and explicit presentation of its objectives, strategies, and the
influence of external factors. Each objective contains a discussion of these common
elements, facilitating an understanding of OMB's goals and strategies. OMB's September
plan addresses the six required elements of the Results Act. At the same time,
enhancements could make the plan more useful to OMB and the Congress in assessing

OMB's progress in meeting its goals.

The September plan's mission statement recognizes both OMB's statutory responsibilities
and its responsibilities to advise the President, and the goals and obiectives are more
results-oriented and comprehensive than in the July draft. For example, the plan contains
a new, results-oriented objective for a key statutory mission to "maximize social benefits
of regulation while minimizing the costs and burdens of regulation." ‘The breadth of
OMB's mission makes it especially important that OMB emphasize well-defined and
results-oriented goals and objectives that address OMB's roles in both serving the
President and overseeing the implementation of statutory governmentwide management
policies.

OMB more clearly defines its strategies for reaching its objectives in the September plan,
particularly with regard to some of its management objectives. For example, in the draft
plan, OMB did not discuss the accomplishments needed to fulfill its statutory
procurement responsibilities. In contrast, the September plan lays out OMB's long-term

Page 4 GAO/T-AIMD/GGD-98-10


14

But even GAO is beginning to see the light at the end of the tun-
nel in respect to the . When we get it from the GAO, if you read
the IRS 1996 audit, you'll see that GAO has begun—both on the
administrative expenses as well as on the revenue systems side—
to see the light at the end of the tunnel on progress on cleaning
up that data.

The State Department did an extraordinary job in cleaning up
their data this year. The Energy Department did an extraordinary
job. Now, what we don’t yet have is cost accounting data. And I
think of when my old friend Morgan Kinghorn, who used to be the
CFO at the IRS, was asked why he didn’t have audited financial
statements. And somebody said, well, no one ever asked for them.
That was not a good answer.

We're going to need cost accounting systems. We are working
very closely with the agencies, GAO and the Treasury in trying to
incentivize this. NASA is about to undertake a major procurement.
I believe they have actually announced the procurement at this
point, to help them, talk to Dan Golden sometime about the need

for cost information.

So agencies are coming to that point and it’s going to take sev-
eral years. But the fundamental financial information is available.
Again, I’m not going to speak for DOD. And we understand the
problems. We’re cleaning it up. And the cost accounting data will
be available as we go forward.

We're supposed to provide guidance. We’re supposed to provide
technical assistance. We’re supposed to provide resources where
necessary. I will have to talk to the budget folks about funding the
NASA system. They'll have to understand why it’s a priority, and
Til do that.

Mr. Horn. As you’ve said and GAO has said, obviously a base
report to help in getting accurate cost data are the reports of the
inspectors general. Well, I would assume the Chief Financial Offi-
cers’ reports and the Chief Information Officers’ reports would also
be helpful. Do you use them and the Golden case right now with

Mr. DESEVE. Yes.

Mr. Horn. Have your analysts poured over these reports?

Mr. DESEVE. Yes; very much so. Again, I wish you could see it.
I wish you could see what happens when the NASA IG comes out
with one of her reports. Our folks will literally, as soon as they get
the report become consumers of it. They'll check it against the last
semiannual report to see how well or poorly things have been done.

The NASA IG has looked at financial management systems and
given us some good advice, and we make sure that NASA feeds
that advice back into the process. We don’t have the same tradition
in the CIO Council, and I think we need to create something like
that. But we haven’t done that yet.

Mr. Horn. Just to round out some of the GAO testimony, we
have touched it in various phrases General Accounting Office, was
concerned about your plan and various agency plans on the strate-
gic side, feeling they did not adequately cover management and
other high-risk areas the GAO has carefully anointed at the begin-
ning and identified at the beginning of each Congress in recent


32

STATEMENT OF EDWARD DESEVE, ACTING DEPUTY
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

Mr. DESEvE. Thank you, Mr. Chairman. I would like to talk
about two things today. First, I'd like to talk about the Govern-
mentwide strategic plans that have been received so far. Second, I
would like to talk about OMB’s strategic plan. But before I begin,
because I know that you're a professor of management, I brought
with me my well-thumbed copy of Peter Drucker’s “Management,
Tasks and Responsibilities,” so that we could have a reliable source
to fall back on.

Drucker talks about strategic planning. Now you’ve seen the
quote in my testimony, but I would like to comment on it again,
because I think it’s apt. He says: “Management has no choice but
to anticipate the future, to attempt to mold it, and to balance short-
range and long-range goals. It is not given to mortals to do well
any of these things. But lacking divine guidance * * *” Other than
that provided by GAO management. I’m sorry, he didn’t actually
say that—“management must make sure that these difficult re-
sponsibilities are not overlooked or neglected, but taken care of as
well as humanly possible.”

And I think this is where we are at OMB. We are certainly not
purveyors of divine guidance, but we are purveyors of guidance.
And it’s very important to distinguish, as you look at our own
work, the role of guidance from that of actualization along the way.

In terms of the Governmentwide plans, I’ve provided or will pro-
vide a list to you. Do they have the list?

Mr. Horn. I think we have it.

Mr. DESEVE. Do you have this list? Good. This is a list of 94
agencies. I did not personally count them. They were counted by
Mr. Groszyk, who is one of the fathers of the GPRA process. These
agencies represent approximately 94 percent of the number of stra-
tegic plans that agencies were required to file. They were timely
and they were compliant.

How did these plans come to be? Did the M in OMB cause them
to happen? Yes. Did the B in OMB cause them to happen? Yes. Did
the resource management offices [RMO’s] who represent both the
M and B cause them to happen? Yes. In terms of guidance, we pro-
vide agencies with guidance on the budget each year, as well as a
series of bulletins and circulars and manuals; the guidance, while
not divine, is OMB guidance on how to do it.

As the plans arrived in July, OMB reviewed each plan. It was
not done by the M side or the B side. Nor was not done by the
RMO side. It was done by all. And the working together of people
who were intimately familiar with the programs, the budget exam-
iners, if you will, we now call them program examiners, along with
the people who were intimately familiar with the budget process,
folks in the budget review division [BRD], as well as my good
friend, Mr. Groszyk, and the folks on the M side we believe caused
themselves to become more perfected, but not totally perfect. It’s
not given to human beings to be perfect or even perfectible.

We believe that when GAO studies the plans, they will take out
their two stamps. One stamp says progress made, the other says
more progress needed. And we'll see the progress made, and others


103

the IT strategy. Its not here. { am looking for OMB quality control of agency IT strategic
plans; the success rate of IT projects; fewer IRS billion dollar computer failures; etc.
‘Where are they?

Under goal 2.F the plan states, "OMB can help agencies decrease the number of troubled
IT systems... .." This directly addresses the success rate of IT projects and will be
accomplished by promoting sound capital programming practices -- aligning investments
with strategic missions -- in the agencies.

16. The high-risk projects are well known and have been well documented by GAO and
others for years, but I do not see them getting fixed. Everybody has known about the
‘Management problems at the IRS, now thanks to the Senate hearings, there is some
publicity. I assume its Goal 2, Objective A which is supposed to address these known
management problems. But, how will next year be any different from this year? If OMB
did not have the resources to do anything about these known problems last year, or this

year, why should I believe you will next year?

7.

I would take issue with your statement that these known problems, such as the IRS
modernization, languished last year or this year. The IRS is a good example to reflect on
the progress that has been made. The IRS Modernization Board (IRSMB) was first
established in late 1996, with a mission statement and charter approved by the Secretary of
the Treasury. Later, the President issued an Executive Order on June 24, 1997 extending
the authority for the IRSMB. The Deputy Director for Management (Acting) fully
participates and attends the monthly IRS Modernization Board meeting. OMB staff from
the Resource Management Office (RMO) participate extensively on the IRSMB and work
closely with the IRS on a day-to-day basis, and staff from the Office of Information and
Regulatory Affairs (OIRA), the Office of Federal Procurement Policy (OFPP), and the
Office of Federal Financial Management (OFFM) contribute to issues in their area of
expertise. OMB worked with the Treasury Department to recruit the new IRS
‘Commissioner whose vast management and information systems knowledge are necessary
for modernizing the IRS, Further, a new Chief Information Officer and the new Assistant
Commissioner for Electronic Tax Administration were recruited, both with extensive
experience in information systems development and electronic filing and software,
respectively. Finally, the development of the IRS Modernization Blueprint and the
advance funding in FY 1998 for the first phase of the modernization project are important
steps in the effort to reform the IRS. These are just a few of the action items that have
been completed; and more remains to be done. The Administration is working with the
Congress on this and other serious management issues.

To summarize, it looks to me like OMB’s obligations for management

provement

are considerable. This strategic plan, in contrast, looks too light. Missing obligations.
Insufficient resources. Strategies that appear unreslistic in light of your obligations. Tell
me, Mr. DeSeve, how are you going to pull this off?


39

Goal No. 3 looks more long range. It looks at the policy aspects
of the OMB. And, again, as Mr. Posner testified, on the one hand
this is the most difficult for us. On the other hand, when we begin
starting to work with agencies on creating accountability reports
under the Government Management Reform Act, we believe we’re
assembling information in one place on the financial status of each
agency. This happens to be Social Security’s report.

They'll be adding, Mr. Horn, their IG’s reports under FMFIA and
their own reports under FMFIA to this fairly readable document,
which has performance measures, financial information, and inter-
nal control information. It also will have the IG’s semiannual re-
Port for that period at the same time. The IG has already agreed
to that.

We need to expand this prototype. We need to carry this proto-
type forward Governmentwide, which we will be doing this year.
The guidance Mr. Posner talked about and others is, again, an ex-
ample of us frequently trying to manage the Federal Government
often through guidance.

We didn’t create this report. We created the framework and
structure. We created the leadership on the Hill to get GPRA to in-
clude it. And then we created the form and content guidance that
allowed agencies to understand how to do this. And that’s our job.

We do the same thing in statistical areas, in long-term forecast-
ing. The budget isn’t just the main budget document. It’s also, as
I mentioned earlier, historical tables and analytic perspectives that
give both the scholar and practitioner an ability to relate forward,
as well as backward, to what’s going on.

We couldn’t do any of these first three goals without goal four,
which is recruiting a diverse and strong work force, and repeatedly
training that work force, both on-the-job training, which has been
a practical OMB way. We just sponsored a seminar last week for
about 70 examiners who felt they needed help in financial manage-
ment. And we did the same thing the week before in information
technology. We do that kind of training continuously.

But, in addition, we have to find ways to get them out into the
agencies to understand more about, not just data, but reality, as
our friends in IBM have said.

Finally, technology. OMB now, more than ever, is technology
driven. If I didn’t have the e-mail, if I didn’t have a word process-
ing program, if I didn’t have my spreadsheet programs, if I didn’t
have access to the MAX system, which shows me budgetary ac-
counts, I couldn’t function. Now, it’s all on my console. I have a lot
of ability and flexibility because of it.

But it can be better. It can be better integrated with agency sys-
tems. We can create a better way for Treasury data to flow in. And
we'll be more explicit about that with Mr. Posner than we have
been in the past and we will be in the future.

I think I’ve exhausted my exhibits, Mr. Chairman, and I would
be happy to answer any questions.

{The prepared statement of Mr. DeSeve follows:]


Appendix |
Plan Development

This section provides a brief description of the process used by OMB to develop its
strategic plan.

Steering Group: In the early summer of 1995, a “Steering Group” (SG) was established within
OMB to oversee the process of preparing an OMB strategic plan. Chaired by OMB's Deputy
Director for Management (DDM), the SG was composed of about a dozen staff from various
units in OMB, and assured that all OMB staff had an opportunity to participate in the evolution of
the plan.

First Phase: The first phase of the development of OMB’s plan lasted about a year -- from early
in the summer of 1995 to the end of the summer in 1996. Initially the SG reviewed a broad range
of information about the development of GPRA, strategic planning techniques, the historical
context of OMB, and experiences with strategic planning in other countries and agencies.

‘After reviewing the information and holding a number of discussions, the SG concluded
that a wide-ranging dialogue about OMB's mission, organization, functions and priorities among
senior OMB staff was required in order to establish the foundation for an effective OMB strategic
plan. It was decided that a two-day, off-site meeting in August 1996 was the best forum for such
a dialogue

‘The SG developed the agenda and put together the background materials for the meeting
A series of four “brown bag” meetings, o which all OMB staff were invited, was held in July
1996 on “the strategic issues likely to confront OMB in the next decade” as part of the
preparation for the August session. A summary of these discussions was included in the materials
provided to those attending the off-site meeting

The OMB Strategic Plan Working Session was held on August 15-16. The participants
included almost all OMB policy officials and senior career staff but there were also a number of
other career staff present including branch chiefs, support staff and examiners/analysts

Second Phase’ This phase lasted from August 1996 until July 1997. The objective was to
produce a draft OMB strategic plan that could serve as the basis for Congressional consultations
and review and comment by other stakeholders

Several activities were the focus of this stage of the process:

% Briefing the Director: Franklin D. Raines, the Director of OMB. was confirmed by the

Senate on September 6, 1996. In early fall, the SG briefed the new Director on the
planning process to date and received his views and guidance on both process and

20


35

All roads lead to OMB. You can’t get to the Hill with a legitimate
piece of testimony unless you came from OMB. You can’t get to the
Hill with a legislative proposal unless you come through OMB. We
then send it out to the appropriate agencies for review and com-
ment. We then receive their comments and resolve disputes.

That, sir, is management. It is managing a very thoughtful, com-
plicated process. And the consistency that we ensure comes largely
through the coordination that we undergo.

We then move on to goal 2, which is really—if goal 1 could be
characterized as the budget goal—making sure the budget is con-
sistent with policy, the budget is of high quality and timely, and
is balanced—goal 2 is management. And this is more focused than
anything else because we already talked about the management as-
pects of goal 1.

The first objective is working with agencies on mission-critical
tasks. Mr. Posner was exactly right. In the OMB performance plan,
you will see a detailed list of these. Following the Director’s review
this year, we intend to work with you and your staff, as I’ve pre-
viously indicated, to see if there are any that we have overlooked,
and we will ask you to add them.

We will then publish those in the management chapter of budget
document, for want of a better word and again as a performance
plan for goal 2.

One of the difficulties we had was, again, following your dictum.
You said to make it the right length. But there’s no right length
or wrong length. We made it a length that’s consistent with OMB
needs. This gave us the ability to do it, to make it that length. Mr.
Posner would have, to get a couple of steps ahead of ourselves.
And, remember, I look for guidance to the folks from GAO. I’m a
real consumer of their reports.

But it’s time in the performance plans to be very explicit. But
first, we need to consult. This is the list of the Director’s objectives.
As soon as we’ve taken it through, which we're doing over the next
month or so, the Director’s review process we'll be sitting down
with you. It will be very explicit.

It talks about FAA reform. It talks about the IRS. It talks about
HUD management. But it also talks about some things that we
would like to do proactively that don’t necessarily represent the
risks, but we want to discuss that with you as we go along.

The second item is GPRA itself. We don’t think that GPRA is fin-
ished. And I would like to make one correction in the record. There
is nothing called the Governmentwide strategic plan. There is no
such thing. And it’s not due in the next several weeks. The statute
does not provide for one, and I know of no other statutory basis.
Pve checked with Mr. Mihm and Mr. Posner. They know of none.

The next milestone that you will begin to see is agency perform-
ance plans coming up with their budget as well as the Government-
wide performance plan, which will obviously include OMB’s per-
formance plan. And although we will be talking with you, but pri-
marily with the appropriations committees. Why? They will be the
recipients of the plans. The plans will come, as they were supposed
to interleaved with the budget documents themselves, because
we're trying to make resources and results parallel.


67

Mr. Horn. They’re very interesting exhibits. And if OMB can do
it, I would like to have sets sent to both majority and minority staff
and sets sent to the Members that want it, and I would start with
myself, Mr. Davis, Mrs. Maloney, Mr. Davis of Virginia, and Mr.
Sessions of Texas who are the ones that have the main interest in
this operation.

Mr. DESEVE. We'll be very happy to, sir.

Mr. Horn. Give us both sets of all those wonderful reports you
just told us about.

Mr. DESEVE. I would be very happy to do it.

ty, Horn. Very good. Do you have any concluding statement,
then?

Mr. DESEVE. No, sir.

Mr. Horn. I now yield to Mr. Davis of Illinois for 5 minutes.

Mr. Davis of Illinois. Well, thank you very much, Mr. Chairman.

You know, Mr. DeSeve, I was thinking that maybe GAO takes
the position that OMB is always becoming, that you’re on the way,
that you’re moving.

Let me just ask you, do I understand you to suggest that, in
order to really get a handle on what you do and how well you're
doing it, that you need to look at, not only the strategic plan, but
also the performance plans, pretty much at the same time, that is,
you-——

Mr. DESEVE. Yes, sir.

Mr. Davis of Illinois [continuing]. Balance the two.

Mr. DESEVE. It’s not enough to look at the Ten Commandments.
You have to see how the congregation is doing. We had the Promise
Keepers over the weekend who showed us very strongly that they
were committed to getting it done. So we have to go beyond just
a strategy and get down into the bowels of Performance by making
very specific annual commitments that can be measured in the fol-
lowing year as to how they’ve been achieved.

Mr. Davis of Illinois. And so some of the questions that might
get raised about the strategic plan, the answers are really found
in the performance plans?

Mr. DESEVE. We completely agree with that.

Mr. Davis of Illinois. Let me ask you, how do you respond to the
overall, I guess, characterization of OMB’s strategic plan by GAO?

Mr. DeSeve. I think it’s very good. I think it’s a very positive
characterization. The two things that GAO really focused on were
crosscutting responsibilities and program evaluation. I’ve taken a
very strong, focused approach that says I need to be satisfied that
the performance plans of each agency are consistent with the goals
and objectives of that agency before I can get in the business of
doing crosscutting evaluation.

Next spring, as part of an organized process called spring review,
we will look at those crosscuts. We’re trying to organize them func-
tionally. For example, the people at the Office of Drug Control Pol-
icy [ONDCP], the drug control folks, have looked at a drug control
crosscut. And you'll see that as part of their performance plan. But
that crosscut requires them to understand the measurements for
other agencies.

And, on another front, the Federal Credit Policy Working Group
has looked at debt management and debt collection initiatives. So


104

‘As have stated in responding to this comprehensive set of questions, I believe that the
‘OMB Strategic Plan reflects our mission, goals and objectives; that OMB has adequate
resources to address to its Strategic Goals; and that we achieve our objectives drawing,
upon the full resources of the Federal Government.

18. look at your Appendix 2, the list of Interageacy Working Groups. That is a lot of
Processes. However, this is The Results Act. What will OMB do? Where are your
resources? What are your measurable performance goals? How can we judge OMB, in
fact, how can you judge OMB performance on all these Councils? Do they like you? Or
rather, did agency management improve?

The OMB annual Performance Plan will provide more information about performance
goals in support of the Strategic Plan. For example, the measure in support of the
financial management objective will be the number of agencies that obtain an unqualified
and timely opinion on their agency's audited financial statement. This is a measure that
looks to a result, but it is also a measure that indirectly is affected by OMB’s actions.
Each agency CFO and IG are responsible for issuing and auditing the agency's financial
statement. OMB has no direct role or responsibility. However, OMB has a major role
and responsibility for assisting each of the agencies in achieving this goal. OMB (a) issues
policy; (b) trains agency staff in implementation and understanding of these policies; (c)
works to remove obstacles to achieving policy; and (d) partners with Treasury, GAO and
the agency CFOs and IGs to obtain the end result — unqualified audit opinions. And yet,
we do not issue the financial statement, and we do not audit the financial statement.

OMB’s performance can also be measured through the commitments and priorities that
are adopted by the inter-agency groups. For example, the CFO Council and the CIO
Couneil both have published strategic plans that identify priorities and workplans for
achieving these priorities. These plans are updated and progress is measured annually.

19, OMBs February performance plan may make the measurements clear, but, I still
have real problems with the goals and objectives, both the ones that are here and the ones
that are missing. Do you think your strategic plan needs revision now rather than waiting 3
years?

Prior to submitting our strategic plan to Congress, several consultations on the content of
the plan were held with both Congressional members and staff. We received numerous
views on the draft plan, and made significant revisions to it based on these views. We
would be pleased to receive and consider any further specific suggestions for either new
‘goals or changes to the goals they we now have. Ultimately, however, a strategic plan is
an agency product reflecting agency decisions on what it will accomplish, and how these
‘accomplishments will be achieved.



45

STATEMENT OF MISSION

The mission of the Office of Management and Budget (OMB) is to help the President in
carrying out his constitutional and statutory duties, OMB fulfills this mission primarily by
assisting the President

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To create policy relating to expenditures and receipts, regulations, information and
legislation;

To manage the Executive Branch of the government in the faithful execution of
laws, policies and programs,

By providing the highest quality of analysis and advice on a broad range of topics.

In assisting the President in managing the Executive Branch, OMB carries out numerous,
OMB-specific, statutory responsibilities, and exercises various delegated authorities.

GOALS

Four general goals related to OMB's major management and policy responsibilities are
presented in this Strategic Plan

Goal 1

Goal 2:

Goal 3.

Goal 4

Recommend to the President spending, regulatory, tax. and other policies that
fulfil the President's policy goals and promote sustainable economic growth

Provide management leadership to ensure the faithful execution of the enacted
budget, programs, regulations and policies.

Assist the President by providing analysis and advice on critical longer-range
demographic, fiscal and economic trends, and on other significant issues

Improve OMB's means for accomplishing work, including development and use of
its human resources and information systems.


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buildings. Se ee ee

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efficiency. eee

Office of Alcohol Fuels, budget
and legislative submissions.

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National Contingency Plan,
revisions to. tee ee

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Interim Storage Fund, budget. .
Nuclear Waste Fund, budget. :
State Justice Institute, budget.
Enterprise zones. ....-.-.-

Working capital fund, Bureau
of Reclamation. tee

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Records creation, maintenance,
use and disposition. .....

National Archives assists OIRA
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Paperwork Reduction Act of 1995.

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Commerce Department frequency
assignments, appeals. ... ~~

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transfer of air traffic functions.

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8

it is a unique agency in several res . Needless to say, one is
its own oversight role of GPRA itself. With regard to the prepara-
tion of performance plans, OMB embodies essentially two distinct
roles.

One is its role in presenting advice and policy and budget propos-
als to the President. This role obviously involves certain inherent
measurement challenges, as well as challenges to Presenting, long-
term performance criteria that spans the terms of any one Presi-
dent. The second role that we believe lends itself to measurement
in the traditional sense—the leadership role for congressional and
other management priorities and programs, and those are the
kinds of things that we have addressed in our comments today.

Let me first reprise what we said about the July draft plan pre-
sented in GAO’s August 21 letter to Messrs. Armey, Burton, Ka-
sich, and Livingston. In that study we did say that OMB’s plan in-
cluded elements addressing mission, goals, strategies, and key ex-
ternal factors. We said, however, that more explicit discussion of
the long-term goals and strategies would be in order to better high-
light the agency’s priorities and plans and be more useful for a va-
riety of actors to assess its direction.

We recognized the difficulty in specifying objectives and meas-
ures for policy advice. However, we were concerned at that point
that there was insufficient specification of some of the management
objectives in such areas as financial management and information
systems. We also said at that time that the draft plan did not meet
two of the Results Act elements. It did not specify how program
evaluations were used in developing the plan or how they would be
used in monitoring the performance, and it did not specifically have
a section discussing the relationship of the plan to annual goals. I
will say this was a problem that characterized many of the draft
strategic plans that we looked at.

Let me now talk about what we saw when we looked at the most
recent September plan. Overall, we would characterize this as a se-
rious effort to address many of the issues that we brought to the
table when we looked at the earlier plan. We think that the final
plan represents a significant improvement in a number of key
areas that makes the plan much more useful as a way to chart
OMB’s course in its pe forming its functions.

First of all, the plan, we think, is much better structured. It is
much clearer as to how the goals and objectives are laid out. There
is a much more structured and explicit discussion of how each ob-
jective will be achieved through strategies, its relationship to an-
nual goals, and the external factors that may inhibit or constrain
the goals’ achievement. Moreover, all six elements that are con-
templated under the act for strategic plans are addressed in this
plan.

With regard to the goals and objectives, we found them to be far
more results oriented. A good example is its goal on regulation and
oversight, where they specifically set forth their goal of maximizing
social benefits and minimizing costs, and then provide a detaile:
agenda of some of the issues they want to focus on in that area.

Strategies are much more explicit and defined in this plan as
compared to the last one. The procurement objective sets forth a

variety of activities, such as working with agencies to promote com-


OVERSIGHT OF OMB’S GPRA STRATEGIC
PLAN

WEDNESDAY, OCTOBER 6, 1997

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

The subcommittee met, pursuant to notice, at 10:30 a.m., in room
2154, Rayburn House Office Building, Hon. Stephen Horn (chair-
man of the subcommittee) presiding.

Present: Representatives Horn and Davis of Illinois.

Staff present: J. Russell George, staff director and chief counsel;
Jane Cobb, Robert Alloway, and John Hynes, professional staff
members; Andrea Miller, clerk; Matthew Ebert, staff assistant;
Mark Stephenson, minority professional staff member; and Ellen
Rayner, minority chief clerk.

Mr. Horn. The Subcommittee on Government Management will
come to order. We will have the gentleman from GAO first this
morning, and we will just start with the opening statements.

This is the fourth in a continuing series of oversight hearings on
the Government Performance and Results Act of 1993, commonly
known as the Results Act. As we have learned in the previous
hearings, the Results Act has enormous potential to improve agen-
cy performance. It will help to align agency objectives with legisla-
tive intent; to eliminate ineffective and duplicate programs; and to
improve measurable program results. I underline measurable.

ir focus today is on the role of the Office of Management and
Budget in the implementation of the Results Act. We want to know
whether OMB is fulfilling its vital role as the primary agent of the
executive branch in management reform.

The Results Act advances management reforms by requiring, for
the first time, that Federal agencies develop a results-oriented stra-
tegic plan, a performance plan that establishes measurable goals,
and an annual report of the actual versus planned performance
measures.

Agencies must answer the kind of commonsense questions that
every business has been asking for years: What is the agency’s mis-
sion; what are its specific goals and. objectives; what strategies and
resources are necessary to achieve them; what are the measurable
results targets for each program; and what are the actual results
achieved?

If the plans and reports are done correctly, agency management,
the President, Congress, and the American people will have the

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42

The plan contains four general goals, complemented by 16 objectives. The first goal is
centered on the President’s budget, its formulation and execution. Allied with this goal are those
actions of an economic, fiscal, and regulatory nature that support the President’s policies and
courses of action.

The second goal focuses on OMB's various management responsibilities, the primary
statutes that address how programs are carried out and the government is managed. Many of
these statutes originated with this Committee, and this section defines our leadership role for
implementing these laws.

The third goal covers the development of analyses and studies of longer-term issues,
particularly those of an economic, fiscal, and demographic nature. OMB's fourth goal addresses
the internal functioning and capability of OMB.

This plan is much revised from the earlier draft used for consultation with Congress, and
to obtain the comments and views of agencies and interested parties. A major change was made
to the format and presentation of the various elements of the plan, and we have striven to coalesce
various plan elements, such as external factors, with each objective so that both elements and
objective can be read in context.

Earlier, I listed the six elements of a strategic plan that is prepared under the Results Act.
Four of these elements, the general goals and objectives, the linkage between the general goals
and the annual goals, the means and strategies, and the external factors can be found throughout
the plan. The mission statement appears once, at the beginning, and a discussion of program
evaluations appears in the first section of the plan

‘The initial portion of the plan also includes a summarized but comprehensive description
of what OMB does, as well as summaries of the relationship of the annual performance goals to
the general goals and objectives in the strategic plan, the means and strategies OMB expects to
use in achieving these goals and objectives, and the external factors.

Unlike nearly every other Federal agency, OMB has no direct responsibility for an
operational program. By not having such programs, we are unable to look at programmatic
purpose as a guide for defining the outcomes and results we would seek to achieve. I think it fair
to say this introduced a particular challenge to us as we developed our plan.

The very nature oi providing policy advice to the President also means that much of the
specifics of this advice cannot be anticipated nor described in a strategic plan, An indication of
this is that our plan spans two Presidents. We are looking to the annual performance plans, with
their more immediate and temporal focus, to provide further detail on specific policies and
initiatives to be pursued over a particular fiscal year.


73

Mr. DESEVE. Yes; and we need a lot more work. I can’t promise
you that between now and February I can go in and show you how
x number of training Programs and x number of education pro-
grams can be combined. Part of the reason is that we all labor
under the “iron triangle.”

One of the reasons those programs are there is because there are
many people who support them in communities, for a lot of dif-
ferent reasons, and each of them has a sponsor, or sponsors, on the
Hill. So pointing out the overlapping nature and the redundant na-
ture is one thing, finding ways to eliminate them is something else.

Mr. Horn. Well, my friend Wilbur Cohen used to describe to me
that, every time he devised a program, he had an interest group
to back it up. You’re absolutely right.

Mr. DESEvE. I'm not sure which is the chicken and which is the
interest group.

Mr. Horn. Long before we called it the iron triangle. Do you
have your feeling that in this annual report, which I think is a
great idea, that you're prioritizing what is the first emergency to

leal with and then the second, the third, and the fourth. Obviously
the year 2000 bit is one of them because we've got a date certain
to end the ball game. But I assume some process is——

Mr. DESEVE. Let me use an example. The Director's management
list, has about 15 items that are of the highest priority out of about
45. Of those, about five or six are crosscuts like the year 2000 prob-
lem. And then of the 15 and then about 10 are agency specific
items—DOD accounting practices, Bureau of Indian Affairs trust
funds, FAA, HUD management, and so on. So we have done some
triage in that way. We agree that prioritization is very important.

ir. HorN. I’ve got two more questions in this area, and then I’m
going to ask Mr. Davis to question and give him all the time I’ve
taken.

What role do you believe that you have with regard to ensuring
the adequacy or reliability of the agency's data sources and infor-
mation and accounting systems that must exist to support perform-
ance plans and reports required by the Results Act?

Now, I think that’s a very valid question given my hearing on
DOD, which is what did you do with the $25 billion, fellows? We
can’t find it. And they have 49 accounting systems, and they have
several thousand computer systems. So how do we know we can
have reconciliation of the data base that you have to depend on in
that budget spreadsheet you mentioned? Who's anointing that
there are some comparability here so you're adding apples and ap-
ples, not apples and oranges?

Mr. DESEVE. Let me separate the data into two parts: financial
data and performance data. We believe that for proprietary finan-
cial information and proprietary financial statements, the process
of audit that we began with the CFO’s act in 1991—and fiscal 1996
is the first year that all of the agencies have been audited—we be-
lieve that that process has scrubbed that data to the point where
GAO is satisfied and we're satisfied with the data.

Now, having said that, we know where the problems are. We
know about the big problems and the little problems. We track
those problems agency by agency, month by month, day by day. So,
yes, DOD continues to be our largest problem.


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systems. se ee

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and functions. =. 2 ee et ee
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Apportionment authority. ......-

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Intergovernmental agreements. ee

Obligations and balances, reports of. -


OVERSIGHT OF OMB’S GPRA STRATEGIC PLAN

HEARING

BEFORE THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
FIRST SESSION

OCTOBER 6, 1997

Serial No. 105-100

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

ae

U.S. GOVERNMENT PRINTING OFFICE
47-811 WASHINGTON : 1998

For sale by the U.S. Government Printing Office
‘Superintendent of Documents, Congressional Sales Office, Washington, DC. 20402

ISBN 0-16-056551-0
3





30

agement offices has been improved as a result of those 68 people
moving from management staffs to the resource management of-
fices?

Mr. POSNER. Well, we have no recent data to base this answer,
but I will tell you what we saw in OMB 2000 when we did that
report several years ago, which was just the first year of implemen-
tation, was a mixed picture. In other words, in some cases, these
additional management people that moved over were working side-
by-side with the program examiners to enhance their ability to ad-
dress issues. In other cases, these management people were essen-
tially given budget accounts to examine.

And so there were a variety of practices across the agency that
complicate the answer to that question. And I also want to say one
other thing. We found it a mixed picture, too, in terms of the im-

ct that this shift had on the examiner’s focus on management.

jome of them felt, frankly, uncomfortable at that time, al though
this was the first year, in addressing issues that they had very lit-
tle familiarity with, the financial management and statement anal-
ysis being a good example.

On the other hand, we did record impressions at the very least
and looked at the budget documents that suggested that there was
more attention given to some of those management issues after the
reorganization than there was before. Part of that clearly reflected
the top commitment that the director at the time conveyed to the
staff about addressing performance information. But part of it also
reflected that there was a greater sense of ownership by the RMO’s
over these issues, that there was a ater sense that they were
being held accountable in the director’s reviews, for example, to ad-
dress some of these issues.

Now that—obviously we haven’t been there for 2 years. Whether
that’s being sustained at this point, whether some of the initial
nervousness and discomfort ‘about addressing these issues has
evaporated with the passage of time, we don’t know.

ir. HORN. Has GAO kept any data in terms of what New Zea-
land, Australia, and the benchmark program in Oregon are doing?
These are good examples of best practices of public management in
public programs.

Obviously, in the private sector, one can say, hey, it’s the bottom
line. Either you make a profit, or you’re out of here. We can’t say
that, in the public sector. Our goal is to serve people, meet certain
needs.

Now, is there sort of a data bank where you have examples of
what a performance measure really is? I think I've said in this
committee before, the idiocy I once saw by the Department of Jus-
tice on this subject when I was chairman of the National Institute
of Corrections. Without any consultation with the agency, not even.
hello, they send over a dumb report made on the one thing they
knew that they could consider effectiveness. Which was a crazy
bunch of numbers they found somewhere that had nothing to do
with effectiveness. They never asked us how effective are you and
they never consulted with us.

I'm trying to avoid that in this type of endeavor, where we could
talk about what are reasonable performance standards, just as Or-
egon talked with its citizens, its taxpayers, its agency executives,


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89

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Telecommunications coordination. . .

Lead Exposure rules/statistical
model for risk-based capital test. .

Small Business Technology Transfer. -
NASA study on risk allocation. ...
Government Performance/Results Act. .
OBRA ‘93; BEA Extension, .....
Corp. for Nat’1/Community Service. .
GSA report on transportation payments
Closing Overseas Installations. .. .
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Foreign Currency Exchange Rates...
Community Service Block Grants. .. .
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Social Security Transition. .... .
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study on Interest Rates. . . 2...
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DoD information systems/emergencies .
Federal Acquisition Streamlining Act.

Government Management Reform Act. . -
Evaluation of D.C. report. . .. -

National Center/Education Statistics.

Census Address List Appeals. . . . -
Loan/Obligation Prepayments. . . . +
School lunches. . 2... 1 2 ee es

xii


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buildings, transfer of custody. .


12

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to provide our observations on the Office of Management
and Budget's (OMB) strategic plan submitted to the Congress on September 30, 1997. As
you requested, our testimony today will discuss how well this strategic plan addresses the
Government Performance and Results Act (the Results Act) requirements. We will also
identify some of the challenges remaining for OMB to address in future strategic planning
efforts.

The Results Act is intended to improve the efficiency and effectiveness of federal
programs by establishing a system to set goals for program performance and to measure
results. Specifically, the Act requires executive agencies to prepare multiyear strategic
plans, annual performance plans, and annual performance reports. OMB has a crucial
and multifaceted role to play in the successful implementation of the Results Act. Under
the Act, OMB is charged with overseeing and guiding agencies’ strategic and annual
performance planning and reporting. OMB has also prepared its own strategic plan based
‘on Results Act requirements. OMB's strategic plan is important as both a statement of
the agency's objectives and to underscore to other federal agencies the importance of
effectively implementing the Results Act.

Our comments today are based on our review of OMB's strategic plan and our body of
work on OMB and the issues the agency is responsible for addressing. In July 1997, OMB
prepared a draft strategic plan, and we reviewed it to assess whether it met Results Act
requirements and provided information useful for congressional decision-making.’ On
September 30, 1997, we obtained the strategic plan OMB submitted to the Congress to
comply with the Results Act. Our testimony will provide preliminary observations on the
September plan.

h

n the Office of M
Strategic Plan (GAO/AIMD/GGD-97-169R, Aug. 21, 1997).
Page 1 GAO/T-AIMD/GGD.98-10


54

wide performance plan presentation is consistent with the format and content
specification in the objective, the meeting of milestone dates for designating
performance budget pilot projects, preparing the required alternative presentation
in the President's budget, and transmittal of the OMB report to Congress. and the
issuance of guidance covering preparation and submission of an integrated
program performance and accountability report.

Means and Strategies

OMB will use its processes for budget formulation to promote integration of the
performance plans with the budget process. A function-based presentation of
performance goals will provide a context for cross-cutting analyses and
presentations. OMB must consult with potential pilot project agencies to
identify candidate pilots, and develop adequate selection criteria that will allow
pilots to be designated and proceed. The evolving relationship of the program
performance and accountability reports will be discussed with the agencies and
Congress.

ern rs
‘None identified

Achieve savings, improve quality and increase customer satisfaction in
agency procurements.

Relationship to Amual Performance Goals

OMB's long term goal is a Federal procurement system comparable to those of
high performing commercial enterprises. OMB will identify annual goals that
gauge OMB's success in promoting establishment of a high performing
procurement system in which agencies pay less for products and services, increase
the value received for the dollars spent, and ultimately improve the support
acquisition provides to government programs.

To achieve this goal, OMB will work with agencies to facilitate and promote
agency use of commercial buying strategies and practices. In doing so, OMB will
work with the National Performance Review in maximizing the use of discretion
and business judgment by contracting officials and minimizing rule-based
procedures to permit negotiation of the most advantageous agreements OMB will
also collaborate with the Federal Acquisition Regulation (FAR) Council, the
Federal Procurement Council, and front-line contracting professionals 10

10


Questions for OMB
OMB’s Results Act Strategic Plan
October 6, 1997 at 10:00 in 2154

1

‘You have already answered one of my questions by your comments about the

dynamic nature of OMB’ s plan. Apparently you agree that strategic plans should be
revised every year. If there are no revisions (a very unlikely event) then, just change the
date. But update those portions of the plan that require changes. Do you agree?

2

A dynamic strategic planning process does not require annual revisions to strategic plans.
The Government Performance and Results Act calls for two sets of plans -- a long-range
strategic plan, and a short-range annual performance plan. The strategic plan is intended
to form a stable foundation so that government managers can use it in setting out specific
courses of action for what their programs will do in any year. As GPRA requires an
agency to undertake a significant, months-long consultation and outreach process when
preparing a strategic plan, a yearly revision cycle would mean that an agency would no
sooner complete one year’s plan when it would begin revising it. This does not mean a
strategic plan should be a static document. OMB guidance allows agencies to use the
annual plan as a vehicle for making minor changes to a strategic plan to keep it current
during the two years before the next full-ranging revision and update of a strategic plan is
required. Any time that major changes to a strategic plan are required, the agency is
expected to make those changes to its plan as quickly as possible, using the process
established for preparing and submitting the initial strategic plans to Congress and OMB in
September 1997.

It is my understanding that OMB has a number of Presidential obligations to

improve agency management. For example: the Executive Order that created COOs, your
coordination of anti-terrorism, and implementation of NPR recommendations. Are there
major ones, just off the top of my head, that I am forgetting?

Presidential Executive Orders assign a number of management responsibilities 1o OMB
(from membership on committees to receiving and reviewing agency reports), Below are
major interagency management groups headed by OMB under Presidential Direction:

President's Management Council (PMC) -- Presidential Memorandum of October 1, 1993 --
OMB Deputy Director for Management and the agencies’ Chief Operating Officers.

President's Council on Integrity and Efficiency (PCIE) -- Executive Order 12805 -- OMB
peraty Director for “Management and the establishment agencies’ Inspectors General; and

(ECIE) comprised of designated Federal
ny Inspectors General.


15

years. I wonder what is your feeling as to whether that will be in-
cluded, since they give us a high-risk series?

I don’t think there should be any secrets around here. It would
be nice if you all had their next batch of high risk in the budget
so you could be dealing with it. Particularly, in your management
review you are now talking about, going along with the budgetary
analysis, and shipping that up as part of the President’s budget to
the American people and to Congress.

Mr. DESEVE. I think that is what I testified to earlier. We call
them management objectives. For example, implementing GPRA is
not a high risk, but it is one of our objectives. So we will be doing
that.

Mr. Horn. I take it the high-risk series of GAO would be, would
you say, a first or second priority to deal with in each of these
areas, where they have written something?

Mr. DESEVE. It is very hard to put them into a second priority
category. Some of them are agency specific; some of them are cost-
cutting. I would have to review the whole series. There are eight
or nine volumes, and I don’t have them all in mind. I actually have
done a crosswalk, which I didn’t bring with me today, that shows
me where they are, and then where some of the positive things are.

But we want to make sure that, if there is something in the stud-
ies that needs to be addressed, we help the agency create a man-
agement plan that addresses that issue.

HUD management is a classic example. I work very closely with
Inspector General Gaffney, with Secretary Cuomo, and with Dep-
uty Secretary Robinson in trying to understand the issues and help
implement those.

Mr. Horn. I thank you, and I now yield 17 minutes to the gen-
tleman from Illinois. I thank his indulgence of me.

Mr. Davis of Illinois. I will not take 17 minutes, Mr. Chairman,
but I thank you very much.

Mr. DeSeve, in an independent assessment of OMB by both the
GAO and CRS, both of them have indicated that they think OMB
should make a better effort of specifying its functions and roles as
mandated by statutes, Presidential directives, and administrative
authorities, all of those things that become a part of determining
function. It seems to me that the final plan still does not have a
full range of OMB functions and the authorities from which they
come. Could you comment on those, and perhaps could you maybe
provide the committee with a list of what they are with the legal
authorities mandated in them?

Mr. DESEVvE. I will be happy to do that. I will have our general
counsel work with the committee counsel. We have such a list. I
have one here that runs to about five pages that we use internally.
It has the major authorities. There is a second list that outlines
about 200 authorities. Our dilemma—we consolidate them down
into about 30 or 40 important ones—was whether to give a list of
200 in the strategic plan. I believe we make reference in the plan
to our having more than 200 authorities.


36

We'll be talking to the appropriators about new program struc-
tures that would enable these objectives to be shown in a more
comprehensive way. Rather than having 20 or 30 different appro-
priations that are tin-cupped, perhaps we can collapse those into
5 or 6, just as you would collapse the appropriations committee
structure. We would—I shouldn’t say we would—I would applaud
such a reorganization, and we would be happy to work with you
on it at any point.

‘0 —

Mr. Horn. Let me just say to the gentleman, if he’ll agree to the
Office of Management, we'll be glad to work together on that.

Mr. DESEVE. Mr. Chairman, I would be delighted to agree to the
Office of Management as soon as you decide that it’s required, hav-
ing looked at the functions of management in the Federal Govern-
ment and, at the same time, we'll pass them in the same bill.

Mr. Horn. Let me just note on that appropriations bill, I assume
you're also sending that document to the authorizing committee.

Mr. DESEve. It will go to everyone.

Mr. Horn. Because the rule of the House is you cannot legislate
on an appropriations bill.

Mr. DESEVE. Absolutely.

Mr. Horn. That rule is regularly waived by the Rules Commit-
tee. And we all know they legislate on appropriations bills. But
they do it in this Congress only if the Chair of the authorizing com-
mittee has concurred.

Mr. DESEve. Absolutely.

Mr. Horn. And we need to clue in everybody around here.

Mr. DESEVE. Absolutely. I was really talking more about the
structure in the way in which the plans will come up, because we
would like to have—just a parenthetical—we would love to see, and
GAO would as well, a single budget submission that came to OMB
in September and then—except for numbers and verbiage about
changes in those numbers—have the same thing that was ulti-
mately enacted the next fall.

I realize that we’re a long way from that. But I think in individ-
ual appropriations committees, as we begin to get that, other ap-
propriators will see the wealth of information that can be tied to
the budget and will begin moving in that direction from the jus-
tification they currently have.

Right now, agencies have to prepare two budgets—one for us and
one for the Appropriations Committee. We would like to work
around that. I’m sorry, I do digress.

When we talk about the third objective under management, we
talk about the Office of Federal Procurement Policy. Mr. Posner
was nice enough to talk about the capital programming guide. It’s
this kind of guidance that we refer to in our strategic plan and we
make reference to. We will use this tool as a way to evaluate how
well agencies are programming.

You asked earlier about information technology systems and
other elements of capital programming. Again, we're in the guid-
ance business. Agencies never had this guidance before. Why?
There was never a capital budget. If there’s no capital budget, ar-
guably, you don’t need a capital program. So the discipline of plan-


48

OMB works cooperatively with the Congress and with congressional agencies
such as the Congressional Budget Office and the General Accounting Office (GAO).
OMB also works continuously with the agencies on a wide variety of policy development,
budget, coordination and management issues. This contact occurs through formal
Councils, informal working groups and individual meetings and conversations

OMB does not operate programs, make grants or transfers, extend credit or
insurance, collect revenues, or benefit from tax expenditures. OMB issues very few
regulations

‘The OMB annual performance plan will provide more information linking annual
performance goals to OMB's overall goals and objectives. This plan will be consistent
with OMB's internal planning process and will reflect the information and analyses used in
preparing the fiscal year 1999 Budget, including program, policy, and management
initiatives that may emanate from agency strategic and performance plans

D External Factors

‘A number of external factors, several of which are similar to those identified by
other Federal agencies, can affect OMB's ability to achieve its goals and objectives These
include: a significant change in future OMB funding amounts from the assumed levels,
enacted legislation that changes the statutorily-prescribed scope of several of OMB's
functions, or changes in the respective policy or analytic responsibilities of various offices
within the Executive Office of the President (EXOP), Particular external factors that
could affect specific OMB goals and objectives are described in Part I of this plan

E Program Evaluation

In the course of drafting the plan, OMB reviewed and considered several analyses
or studies of OMB's organization, work environment and processes, and implementation
of several statutes These analyses or studies were prepared both by OMB and by other
parties, such as GAO.

OMB does not operate programs and a future determination of whether the
general goals and objectives in this strategic plan were achieved will not require a program
evaluation as such, and no program evaluations are scheduled However, OMB will
continue to prepare specific analyses or studies of its operational processes, organizational
structure, and workforce utilization and effectiveness. OMB expects that these studies
will be complemented by reviews of particular facets of OMB operations by outside
parties, such as GAO


Objectives
A. Work within and across agencies to identify solutions to mission critical
problems,

‘ions min

OMB works continuously with the agencies on a range of management initiatives
including identifying major management problems and, in cooperation with the
agency or agencies affected, attempting to find ways of reducing or eliminating the
problems. In each year’s budget, major cross-cutting and agency specific

initiatives will be presented along with approaches to solving them
clearly highlighted. These presentations will serve as one
source of information for the OMB annual performance plan

Means and Strategies

For cross-cutting issues such as credit policy, financial systems standards, the year
2000 and others, OMB will work closely with agency representatives, the
Congress, the GAO, the National Performance Review and others inside and
outside government to find the best resolution to these issues. For individual
agency problems, general guidance is supplemented with the sharing of good
practices and hands-on assistance in resolving specific problems

External Factors

Responsibility for accomplishing this objective largely rests with agency managers,
who must actively and effectively carry out both agency-specific and cross-cutting
management initiatives

B. _ In carrying out the Government Performance and Results Act: ensure that
agency performance plans are fully integrated into the budget process;
prepare & government-wide performance plan that presents performance
goals on a functional basis and includes performance information for
program and policy es in the budget; complete the performance
budgeting pilot projects; and, ensure that agency program performance
reports are coordinated with the agency accountability reports prepared
under the Government Management Reform Act.

Relavonship to Annual Performance Goals

Prospective measures include: the extent that performance information was
available to be used in making budget decisions, the extent that the government-


49

Tl, General Goals and Objectives

Four general goals and 16 objectives related to OMB's major management and
policy responsibilities are presented in this part of the plan

The first goal focuses on OMB's assistance to the President in developing policies
that will contribute to the fiscal strength of the Federal Government and the economic
health of the Nation. This is reflected every year in the annual budget process which
promotes analysis of options, policy and program recommendations, and resource
allocation decisions.

AILOMB staff are involved in assuring effective: management of programs,
execution of statutory responsibilities, and implementation of policies and regulations in
Federal agencies. OMB provides leadership, guidance and coordination to agencies in
developing and administering systems and processes that promote greater efficiency and
enhance managerial performance, These activities are the subject of goal two

OMB provides analyses. estimates, projections and advice on a wide array of
longer- range demographic, fiscal, and economic trends, and on other significant issues
that affect the entire government. Goal three describes these functions.

Finally, to carry out these goals, OMB must attract and retain a high quality,
diverse staff and wisely use its human, financial, and technological resources. Goal four
indicates what actions OMB proposes to take to provide an attractive and effective
workplace environment

Goal 1. Recommend to the President spending, regulatory, tax, and other policies
that fulfill the President's policy goals and promote sustainable economic
growth.

The annual budget process provides a structure for the analysis and prioritization
of spending, tax and other policies. Much of the work done by OMB is longer
range (see Goal 3) but the results of that work are continuously reflected in the
President's Budget

Objectives

A. Implement the five-year budget agreement to reach balance by 2002. Follow
up in each succeeding year to obtain enactment of tax, appropriations, and
mandatory spending program policies consistent with the balanced budget
agreement.


Citation

2 USC 621-87,

o

o

w

usc
usc
usc

use

usc

usc
usc
usc
usc

usc
usc
usc
usc
usc
usc

usc

usc

900-22

302
305

552

552a

1213-14

3133
4111
4112

5304

5377
5707
5911
5948
8147
App.
App.3

499

18

Subject

Congressional Budget Act, Balanced
Budget and Emergency Deficit Control
Act of 1985 (booklet). eo ee
Presidential delegation authority. .
systematic review of agency operations.

OMB issues Freedom of Information Act
fee guidelines. Dee ee eee

Privacy Act, computer matching,
systems of records, guidelines. .. .

Special Counsel notifies OMB of
criminal violations. ........

Senior Executive Service positions. .
Non-profit payments of travel expenses.
Employee training programs, costs. .

President's Pay Agent for locality-
based comparability payments. ae

Critical pay authority. wee
Travel expenses by employees, reports.
Quarters for civilian employees, rules.
Physicians Comparability Allowances.
Employee's Compensation Fund. ae
OMB reorganization. see

List of designated Federal entities
under the Inspector General Act.

Perishable Agricultural Commodities
Act Fund, financial statements. oe


49 USC App.

50 USC 403f

50 USC 403g

50 USC 404a

50 USC App.
50 USC App.

50 USC App.

50 USC App.

50 USC App.

PL.

P.L.
P.L.
P.L.

191-576

101-168
102-25
102-190

102-242

102-245

102-484

102-486

16074

2099
2158

2261

2170

2260

88

Procurement systems of transportation
block grant recipients. ......~

Transfer of CIA monies. ...-.-

Reports on CIA, prohibition. sae

. Transfer of CIA monies. .....- -

Annual report on impact of offsets.

Advisory committees for voluntary
agreements on preparedness. see

Defense Production Act, allocation
or transfer of funds. ..... ~~

Review of mergers involving
foreign entities. see

Federal Civil Defense Act,
allocation or transfer of funds. .

. Chief Financial Officers Act of

1990. ee ee eee
Federal water/sewer payment to D.C.
Desert Storm, report on costs. . «

OMB report on deficit effect of
"M" account law. see eee

OMB study on de minimus levels for
appraisals of commercial real estate.

Study and report on FEDLINE. te

Environmental contractor indemnity/
Defense Operations Fund. see

Agency energy consumption and
conservation, guidelines and study.

xi


43

‘Writing a strategic plan can never be an overnight assignment. OMB began writing this
plan over two years ago, and we have used various approaches -- top-down, bottom-up, and
organizationally stratified teams -- in the course of its preparation. It is no exaggeration to say
that virtually every OMB employee at some point in the past two years has been involved in some
way in helping write this plan, This has been an organization-wide effort. Development of the
plan began under the leadership of OMB's former Deputy Director for Management, John
Koskinen, and has had the active support and involvement of OMB's top leadership, including
both Alice Rivlin and our current Director, Frank Raines. As the leader of the group that has
produced this September 1997 plan, I would like very much to acknowledge and thank all those in
OMB who have worked over these months to help produce this plan.

‘As we proceed to complete our annual performance plan, our strategic plan will be used as
a basis for the annual plan. That will require a close correspondence between the general goals
and objectives and the annual performance goals. As we further develop that correspondence,
there may be a need to make minor adjustments to our strategic plan. If we do so, we will use the
annual performance plan that we send to the Congress next February to identify and describe
those changes to the strategic plan. The President of the United States -- our primary customer —~
has received a copy of the plan.

The prospect for change in a document so new should neither surprise nor disturb. We
must never view these plans as immutable. They are only good and useful when they are able to
reflect and represent current circumstances and thinking.

Mr. Chairman, that concludes my written statement, and I am ready to answer the
questions you may have


CONTENTS

Hearing held on October 6, 1997 ..
Statement of:

DeSeve, G. Edward, Acting Deputy Director, Office of Management and
get.

Posner, Paul Director of Budget Issues, U.S. General Accounting
Office, accompanied by J. Christopher Mihm, Assistant Director, F
eral Management and Workforce Issues, General Government Divi on,
U.S. General Accounting Office ......

Letters, , Statements, etc., submitted for the record by

Hon. Danny K., a Representative in Congress from the State

vet of illinois, ois. prepared statement of ..

DeSeve, G. dward, Acting Deputy Director, Office of Management and
mt

Followup questions and responses ...

Information concernin; ng year 2000 activities

Prepared statement of

Selected major OMB statutory authorities

Horn, Hon. Stephen, a Representative in Congress from the State of
California, prepared statement of .
Posner, Paul L., Director of Budget Issues, U.S. General Accounting
fice, prepared statement of .,

32

dap


106

Mr. Horn. I would now like to ask our friends from GAO, do
they have any comments they want to make after this round on
OMB? Any thoughts? You could come back to the table if you like.
You are ail still under oath and so forth.

Mr. PosNnER. We have nothing further to add to our testimony at
this point.

Mr. Horn. OK. Did we miss anything?

Mr. Posner. I don’t think so. It was very comprehensive.

Mr. Horn. Well, we are getting there. We will give us a C this
morning on my interchanges then. I am a tough grader.

I now want to thank the following people that are responsible for
preparing this hearing. Russell George, the staff director and chief
counsel to the subcommittee; Jane Cobb a professional staff mem-
ber on the full committee; Robert Alloway, the professional staff
member in this area and on my immediate left, and he has a fine
creative mind that will generate numerous hearings down the line;
John Hynes, professional staff member next to the staff director;
Andrea Miller, our clerk; and then Matthew Ebert, staff assistant.
We are delighted to have his services.

On the minority side we have Mark Stephenson; and we have the
chief clerk, Ellen Rayner; and we also have two great court report-
ers, Bob Cochran and Vicky Stallsworth.

With that, this meeting is adjourned.

(Whereupon, at 12:50 p.m., the subcommittee was adjourned.]

O


Appendix 2

Mustrative Li
Interagency Working Groups

Accounting and Auditing Policy Committee
Budget Officers Advisory Council

Chief Financial Officers Councit

Chief Information Officers Council

Electronic Processes Initiatives Committee
Encryption Task Force

Executive Council on Integrity and Efficiency
Federat Accounting Standards Advisory Board
Federal Acquisition Regulation Council

Federal Credit Policy Working Group

Federal Procurement Counci!

Government Information Technology Services Board
Information Technology Resources Board
Interagency Council on Administrative Management
Joint Financial Management Improvement Program
National Partnership Council

President's Council on Integrity and Efficiency
President's Management Council

Regulatory Working Group

SBREFA Smatl Business Panels



Goal 2:

52

costs, and increasing the efficiency of government operations. OMB also reviews
current and proposed policies, including regulatory policies, to ensure that they are
consistent with statutory principles and the fiscal, economic, regulatory and
information policy priorities of the President. As appropriate. OMB staff will
include the impact of policy decisions on growth in their budget, legislative, and
regulatory review issue papers

External Factors

OMB's ability to achieve this objective will depend to at least some extent on the
other offices in the Executive Office of the President and other agencies that may
have important roles in such policy development.

Provide management leadership to ensure the faithful execution of the
enacted budget, programs, regulations and policies.

Management of the Federal government is a complex process that requires OMB
to provide policy guidance, coordinate activities and assist with implementation
within and across agencies All organizational units within OMB are actively
involved in the tasks of management: planning, analysis, organization and
direction

To leverage its own staff capacities, OMB provides leadership to groups of agency
‘managers who share the work of policy development and identifying and
implementing the means to better manage Federal resources. (For a
list of these groups see Appendix 2.)

Linking budgetary resource decisions to the management of agency programs is
critical, For example, implementation of new information technology initiatives
fequires both thoughtful guidance and proper allocation of budget resources over
the expected development period

To more effectively link resource allocations and program management, OMB
undertook a major reorganization in 1994. This reorganization, called OMB2000,
placed the responsibility for oversight of program management in OMB’s
Resource Management Offices. In their role, the Resource Management Offices
receive support from OMB staff offices, and technical assistance from the three
statutory offices (the Office of Federal Financial Management. the Office of
Federal Procurement Policy, and the Office of Information and Regulatory
Affairs) The statutory offices retain the responsibility for developing and issuing
policy.


101

10. Next, lets look at Goal 2, Objective B OMB's obligations for the Results Act itself.
Nowhere in this objective is quality mentioned at all. This concerns me as we begin looking
at Results Act strategic plans from all the agencies. In Goal 3, Objective B you recognize
your obligation to exercise quality control, but not here. Is part of OMB’s objective to
improve the quality of these plans? And, should we judge the performance of OMB on the
quality and the quality improvement of agency plans?

OMB has and will continue to work with the agencies and the Congress in developing
‘agency strategic and annual performance plans. We have engaged in a major effort to
ensure that plans are transmitted to Congress as required by law on a timely basis. We
plan to work with appropriators, authorizers, oversight committees and others to ensure
that these plans are usefull in making resource and other policy decisions.

11, There seems to be a few objectives missing if OMB is to fulfill all its management
improvement obligations. Where is IT strategic planning as required by the Clinger-Cohen
Act? Where is program de-duplication as part of your administrative obligations? Where
is anti-terrorism per Executive Order? Where is the government-wide strategic plan, the
government-wide performance plan, and the government-wide performance report as
required by the Results Act? Where are these obligations covered?

Although some of these items may not be specifically identified in the OMB Strategic Plan
bby name since we tried to keep the Plan to a manageable length, they are, nonetheless,
activities that OMB undertakes. To answer your specific questions, IT strategic planning
is covered in Goal 2, Objective F. There are no specific “administrative obligations” on
“program de-duplication,” but as a regular part of budget formulation, OMB takes into
consideration programs that have similar legislative authorization as budget proposals are
developed. With respect to the Presidential Decision Directive on U.S. Policy on
Counterterrorism (PDD-39), this fall OMB conducted its first crosscut review of
government-wide funding to combat terrorism to ensure the adequacy of funding for FY
1999 of top priority programs to combat terrorism. This effort helped us minimize the
duplication of efforts in FY 1999 and provides a basis for future government-wide
programmatic and budgetary reviews. While there is no requirement for a government-
wide strategic plan, the government-wide performance plan and agency performance
reports are addressed in Goal 2, Objective B

12, Your Goal 2, Objective A, I assume, includes fixing the GAO high-risk projects.
However, I just do not see the level of resources, the strategy and resources, necessary to
actually make a difference. The objective may be OK, but how do you expect to pull it off?
‘Where is the strategy and resources?

OMB works continuously with the agencies on a range of management initiatives
including identifying major management problems and, in cooperation with the agency or
agencies affected, attempting to find ways of reducing or eliminating the problems. As
previously discussed, the FY 1999 Budget identifies 22 priority management objectives on
which substantial progress will be made in the next 18 to 24 months. For the eleven cross-


26

Mr. Horn. He will get his licks in.

Mr. Posner. I think basically on the information area, it is one
that is still in the process of being—where the leadership function
is being articulated. As you know, there is a CIO Council, and
CIO’s are being appointed. OMB has articulated a process through
both the Raines rules, which is a series of criteria they are going
to apply in making their budget decisions, as well as a variety of
formats that agencies are required to submit data to them on infor-
mation acquisitions.

So there is a lot of development that is in the Process of taking
place. I would say in our view, they are not as far along as they
are in financial management. Of course, they have not been at it
as long.

‘Again, the key question is whether these initiatives bear fruit in
making more appropriate investment decisions in the budget. I
know we have on record expressed concern about the budget pro-
posal last year for IRS suggesting that IRS have a 2-year budget
for a large information system for the TSM program without what
we felt was a detailed plan specifying how that was going to be
spent, and given their track record, we raised some serious ques-
tions about proceeding with that proposal.

Mr. Horn. One last question on this area, and that is leaving
aside the OMB budgetary responsibilities, do you feel that OM!
has a sufficient mandate in various management agencies, and
that mandate, to what degree are they not fulfilling it? In other
words, it has a lot of obligations that they need to do under the
management area throughout the Federal Government. Do we have
any idea through the General Accounting Office that they are not
fulfilling some of those obligations?

Mr. Posner. I can address a portion of that by saying that we
have been heartened by—recognizing there are numerous manage-
ment policies that OMB is responsible for, and their limited staff—
the development of their role not as a doer, but as a catalyst and
as a provocateur in engaging agency partnership in implementing
many of these as being absolutely critical. The CFOC Council being
perhaps the best example of that, the way they developed their re-
cent capital Planning idance is another good instance of how
they achieved partnerships with a variety of Government agencies
involved in planning.

Having said that, I feel like there are some areas where we feel
that O. probably could be focusing more on some issues that are
important, and Chris mentioned one with the crosscutting pro-
grams, which is an area that has not received the kind of push that
it needs. Lacking a central push, agencies probably need to focus
on issues where they are performing related activities that perhaps
they themselves are not sufficiently aware of. That is the kind of
example where central leadership is called for; not necessarily cen-
tral doing, but a convening role to stimulate agencies to get going
on some of that.

Another one as I talked about earlier is program evaluation, and
really Program design issues, where we think that OMB can do
more. They have indicated an interest in doing more to stimulate
that infrastructure out there to make sure as GPRA is coming on-
line, we are getting the kind of studies we need to generate the in-


22

has been instrumental in that regard, both in OMB and up here
on the Hill as well.

Mr. Posner. I think another successful example is the financial
management area, where OMB has convened the Chief Financial
Manager’s Council, that has taken oversight of objectives and guid-
ance, all in the interests of trying to improve the data used in deci-
sions and the financial management of agencies.

Mr. Davis of Illinois. Mr. Posner, you indicated that you thought
that OMB had made tremendous progress in leadership develop-
ment, but had not gone far enough. at might be some of the
areas that you would see progress being needed?

Mr. PosNER. Well, I think the whole question of, again, the de-
velopment of skills and training among the examiners is going to
be important as we move forward with this approach. Our ability
to develop good evaluations of the programs and the management
policies that we have so that people are working with data that is
validated is important. And I tl one of the keys that we all need
to keep an eye on is that it is important to sustain interest and
attention, for a lot of these initiatives take many years to success-
fully implement. We have been at improving financial management
now since the 1990 CFO Act, the 1994 GPRA, and what we needed.
to reach even the level we have is an institutionalized focus so that
leaders may come and go, but there is a process in place, and the
leaders themselves maintain a commitment from the top to make
these things work.

As Chris said, agencies will take a close look at the signals being
sent from OMB and the Congress on how seriously these initiatives
are being taken. Both of those kinds of things, the leadership from,
frankly, the Congress and the President, are important to sustain
the kind of commitment we are talking about.

Mr. Davis of Illinois. Strategic planning isn’t always easy to get
at in terms of just simply jumping out at you, and sometimes the
establishment of goals, that is, where you are really headed and
when you are going to get there, takes a great deal.

Do you find the other agencies are as involved in their own stra-
tegic Planning as you interact with the OMB effort as would be de-
sirable?

Mr. Miu. I think, Mr. Davis, the extent of agency progress on
strategic plans has been very uneven. This is based primarily on
our reviews of the draft plans which we did at the request of Con-
gress. We are now looking at the plans that came in on September
30 and will report on them as well.

One of the problems that we saw consistently across agencies
was weaknesses in thinking through the strategic goals. it is,
often the goals were not nearly as results oriented as they could
be, and that is even recognizing, as you mentioned, for many agen-
cies developing such goals is a substantial challenge. But there
were just some obvious cases where they were not nearly as results
oriented as they could be. In other cases, agencies established goals
that did not cover all the major functions of their agency, so there
would be a large part of the statutory responsibilities not covered
by the draft strategic plans.

A third froblem we saw in terms of the goals, which is hard to
get a handle on for agencies, there was the lack of clear linkages



105

20, I still have problems with your strategies and resources, or lack thereof. Even
Director Raines’ cover letter says these are dynamic plans that will be periodically updated.
Ti ask you again, do you think its time to revise your strategic plan next month, rather
than waiting 3 years?

‘As OMB completes its annual performance plan for fiscal year 1999, we have found no
reason to undertake a substantive revision of our strategic plan. Any interim revisions to
the strategic plan will be identified, and communicated to Congress when we send the
annual plan to Congress in February, 1998.

21, ‘The Results Act legislation provides for consultation with Congress. This
subcommittee is the cognizant oversight for OMB. Lets do just that, lets get together and
consult on the content of this strategic plan - the management improvement areas. Is that
agreeable to you Mr. DeSeve?

‘We are, of course, pleased to work with you and other interested Members of Congress
‘on the OMB Strategic Plan and other matters of interest to the Chairman. In fact we look
forward to working with you on the Management Agenda that is included in the
President’s Budget.


34

So we can find no way, as some would have us do, to separate
management and budget, or even as Mr. Posner suggests to have
a big M and a little M. We think managing social impacts and the
economic environment, the long-range nature of the economy, and
the balanced budget is itself management. It is the organ of the in-
stitution, the essence of the institution.

Turning to the OMB strategic plan, it’s easiest, perhaps, to look
at it on a goal-by-goal basis. You were very thoughtful in your cri-
tique. You said we should put the goals on the first page. To be
quite honest with you, and it has been very handy for me, as I’ve
had to go through the goals with people, to have them on the first
page.

The goals are then followed by a series of objectives. You asked
about priorities. If you would like me to prioritize, I’ll be happy to
say along with the Director, that objective one, is balancing the
budget by the year 2002. It has the highest priority.

But to do that, there are other priorities that have to come into
play as well. And under each of the goals, I’ll indicate those ele-
ments which I think have the highest category of priority. I think
it’s probably safer to say that, rather than a list of the top 10,
where 1 is much higher than 5, a banding is probably more appro-
priate.

Balancing the budget. How will we know if we've done it? Well,
this is the budget. You’re going to receive one in January or Feb-
ruary. Congress will then fund appropriately, because it has the
power of the purse, to make the decisions necessary to reach bal-
ance. We will provide guidance. We will provide help. We will pro-
vide a roadmap. We will argue back and forth with our counter-
parts in the departments, and with you, about what “balanced”
means. But we are fully, firmly, and completely committed to the
Balanced Budget Act, which we helped draft along with the Con-
gress, and we are very excited about its implementation.

The second objective is quality. I don’t mean to diminish the ob-
jective that quality is a priority of OMB, but quality is always a
priority at OMB. We believe the quality of the budget document is
extraordinarily high. The information available to Members of Con-
gress and scholars, regardless of which volume, the cross-sectional
historical analysis over long periods of time will enable us to do the
Governmentwide performance plan on a much more thoughtful
timetrack than would otherwise be possible.

In your own statement, you mentioned this is really the first
time we've actually had to do this. That’s true for writing it out
and laying it down. But we think the budget is a very strong tem-
plate, and we'll use that very thoughtfully.

The third element is consistency with the President’s plan. The
aspect of management, and I'll mention this twice in my comments
this morning. That is very much overlooked at OMB is that of co-
ordination. It’s one thing to provide guidance, but it’s quite another
to try to shepherd people along as they work.

The clearance function within OMB is one of the strongest pow-
ers we have to ensure consistency. Anyone who thinks that a man-
agement activity can occur without the kind of coordination that
comes through our A-19 legislative clearance process, is very mis-
taken.


Goal 3:

Means and Strategies

OMB strives to ensure that the views of all concerned agencies are taken into
account and addressed in communications to Congress on legislation and that
these communications reflect Administration policies accurately. OMB also strives
to ensure that the views of all concerned agencies are taken into account and
addressed in draft executive orders that are submitted to the President for
consideration OMB will continue to work cooperatively with Executive branch
agencies to manage effectively functioning interagency legislative and executive
order coordination and clearance processes.

External Factors
The primary external factor is the cooperation of agencies in the interagency

legislative and executive order coordination and clearance processes and allocation
of appropriate resources by the agencies to these activities

Assist the President by providing analysis and advice on ci
demographic, fiscal and economic trends, and on other si

ical longer-range
ificant issues.

OMB provides the President with analysis and advice on long range demographic,
fiscal and economic trends and other issues. OMB maintains expertise across a
broad range of programs, policies and economic issues and uses a variety of
analytical tools, including macroeconomic analysis and cost-benefit analysis.

Objectives

Provide accurate and timely assessments of the financial condition of the
Federal Government.

elanions)

OMB will continue to publish with the President's Budget annual analyses of how
the Government's and the Nation’s financial condition have changed and may
change in the future as a result of the Government's operations. These analyses
may be judged by the comprehensiveness of the conceptual framework, the quality
of the data, the clarity of the assumptions on which the projections depend, and the
usefulness to decision-makers of the results

Means and Strategies

Providing assessments of the financial condition of the Federal Government has
both management and analytic components. In addition to its work on agency and

14


76

We will be happy to sit down with your counsel, and anyone else
who wants to and have our counsel go over the authorities. You
will be able to see the crosswalk. We know how the crosswalk
works,

{The information referred to follows:]


28

sion, figure out your goals, and then focus on the strategies you
will be using to achieve that.

You are quite right, we don’t want to have every single thing de-
tailed in a plan, but what concerned us is often in plans, we did not
see a level of detail that would even give an external user such as
the Congress a good road map for how is this organization planning
on achieving its goals.

Mr. Davis of Illinois. I just have one additional question. When
we talk about becoming more results oriented, are we talking about
becoming more cost effective at the same time that we are talking
about becoming more efficient in reaching the goal; that we are
going to do two things in all likelihood: We are going to do a better
job of reaching the goal, and we are going to do it more efficiently
and more cost effectively?

Mr. POSNER. I would endorse that. I think that both issues
should be focused on.

If I can address an issue regarding that, it is important in this
whole process to not lose sight of the cost side. As we focus on re-
sults and outcomes and seek to understand the impact our pro-
grams are having on improving societal well-being and other objec-
tives we are trying to pursue, we have to focus on what is the most
cost-effective way of doing that. That means it rests on making
sure we have adequate cost data.

Agencies do not have cost accounting systems. There is a process
under way that hopefully in several years will ensure that agencies
can generate data so that you can associate how much it costs to

rovide this service to the public, for example. We don’t have that
ind of information readily available right now. Very often it has
to be hand generated and generated on an ad hoc basis.

Hopefully down the road we will be able to systematically associ-
ate the costs of doing a particular line of business and the costs of
alternative levels of what our target performance will be. Until we
do that, it is going to be more difficult to address the second part
of your question, how we more cost-effectively achieve these things.

ir. DAvis of Illinois. Do you think that might be one of the rea-
sons we have so much conversation about privatizing and
outsourcing; that if we had this handle on costs internally, in terms
of what it was costing us to do, that this may reduce some of that
conversation?

Mr. PosNER. Well, at the very least it would promote a more
level playing field to analyze those alternatives.

Mr. Mum. I would add it would also inform that conversation.
One of the things that we have seen in our examinations over-
seas—in fact, a deputy defense minister for Australia was over at
the GAO just a few days ago, and he was underscoring for us that
you want to have good cost information on hand that shows how
much is it costing the government to do an activity before you
make contracting and privatization decisions. Other than that, you
could be giving away the store and not know it.

Mr. Davis of Illinois. Thank you, gentleman, very much.

Mr. Horn. I thank you. That was an excellent series of questions
and dialog. Let me pursue a few more here, and some of them re-
late to what has been brought up by Mr. Davis and myself in ear-
lier questions.


94

is a lot of that going on in the agencies. I think you are right, a
joint service would be helpful as well. It is a little harder.

Mr. Horn. I think on the year 2000 issue which you and I dis-
cussed a little earlier, various things have popped up already, and
we have seen some horrible examples of what can happen if we do
not do that job in time.

You agreed to file the reprogramming of funds in the record at
an earlier point, but some of my constituents have been harmed be-
cause of hasty postings of the year 2000 compliance rumors on the
Internet. I realize none of us can do anything about the freedom
of speech of the Internet, and I have said, and others have rec-
ommended, that we need to focus on this in OMB or anyplace else
the President wants to focus on it. But, somebody in the executive
branch has to be the coordinator to make sure this is happening.

The Director cannot spend all his time on it. He has done very
well, I think, in getting them to reprogram the money, which was
certainly one of his aims from the beginning, and that is something
which I heartily agree with.

Do you have any suggestions as to how we solve the executive
direction problem to get that thing in on time in the executive
branch?

Mr. DESEVE. Well, I think that Administrator Katzen has testi-
fied here and in other places about this issue, and she is the official
responsible. She and I have worked together, along with the CIO
Council, to try to get it done. I think the quarterly reports that she
submits to you, with the feedback that you give her, will be a very
strong guide, and I think it is just continual blocking and tackling
at this point.

Mr. Horn. With all due respect to Administrator Katzen, she has
a full plate without having this dumped on her. I mean, her office
must have the phones ringing all day in terms of proposed regula-
tions.

Mr. DESEVE. And all night.

Mr. Horn. And all night. And I just think when you pile on
something else to an executive that is already up to their neck and
working long hours, as you all do down there, that we are not solv-
ing the problem. I have suggested that to the President, to Mr.
Raines, and to anybody else that would listen. We need somebody
that will give this focus, because it isn’t happening as rapidly as
it should, and, of course, it will not be mud on the Congress’ face,
because we have been on this subject for 2 years trying to get the
executive branch moving in it. It is now moving. It needs somebody
to be the daily nudge and nag.

Mr. DESEVE. I would say Mrs. Katzen is good at that, but she
wouldn't be happy if I said that.

Mr. Horn. I am saying we need someone in that role. I don’t
think she is the person because I think she already has plenty of
work to do. Somewhere the executive branch is going to have to or-
ganize itself in a task force way, a Rickover way, if you will, a
project where a person is in to solve that problem and that is it.

Now, maybe that is one of your CIO’s that becomes a lead CIO
for the Nation, at least in the Federal executive branch. I think the
self-reports we got from the agencies, you talk about data base and
the purification of it, so we are adding apples and apples, not ap-


9

mercial buying, enhancing agency discretion to adopt best prac-
tices, and sets forth as one of their strategies the publication of a
document on the best practices in this area.

The objective regarding financial management clearly references
the 5-year CFOC, Chief Financial Office Council, plan in this area,
which is a very explicit document. It sets forth a detailed agenda
of change and improvement across a variety of issues in financial
management. Moreover, the plan contains far more explicit ref-
erences to the OMB’s use of interagency councils, which has be-
come a key leadership approach as OMB seeks to partner with
agencies in implementing a variety of complicated management
goals and objectives.

We also found that the plan had a far better discussion of the
relationship of each objective to the annual goals and potential
measures. Noteworthy because in many of these cases it is not an
easy thing to specify, particularly in budget preparation, how such
objectives will be measured. For example, in the financial manage-
ment area, they clearly discuss the goals of achieving a clean audit
opinion for all 24 agencies, and that is something that is measur-
able, if not difficult to achieve.

We also found there was improved treatment of the external fac-
tors relating to each objective and discussion of the kinds of bar-
riers and potential problems that will stand in the way, although
we do feel in some cases OMB could say more about how it in its
own leadership role will attempt to mitigate some of those barriers.

For example, in the area of promoting accuracy in budget data,
while they do say, and understandably, that much of this goal de-
pends on the agency’s own budget submissions, OMB clearly does
play a role in assisting agencies to improve budget presentations.
In such areas as credit reform, for example, OMB has taken on a
proactive role by developing models for agencies to estimate their
subsidy costs, by sponsoring a working group on credit policy; even
with that, some agencies that we have talked about in the review
recently still feel a need for more guidance from OMB in this area.

Let me talk about some areas where we see further enhance-
ments being useful in the plan to further clarify their goals and ob-
jectives and make the plan still more useful.

In some areas, for example, the long-term goals and objectives
are set forth, but we think that OMB could more explicitly address
how it will resolve and address some of these issues. For example,
they do have an objective on information technology, in improving
the Federal management of information resources, that pledges to
reduce the problems experienced with IT, to resolve the year 2000
problem, and to improve information security, among others. But
we are hard pressed to find in this plan a specific strategy on how
they will meet this goal.

Another example is an area that they mention on capital plan-
ning, where they reference a guidance that they have done else-
where, but not enough is provided for the reader to get a sense of
really what they have done here. That is a model of how a central
leadership agency should provide proactive leadership to define an
issue as a problem and, working with the agencies, develop a very
excellent set of guidance for them in developing capital plans and
programs and budgets. This is an area where perhaps more discus-


7

Selected Major OMB Statutory Authorities

2 USC 621-92, 900-22 Congressional Budget Act (incl. Line Item Veto Act),
Balanced Budget and Emergency Deficit Control Act

2 USC 1531-38 Unfunded Mandates Reform Act

5 USC 305 Systematic review of agency operations

5 USC 306 Government Performance and Results Act

31 USC 1115-19, 9703-04

5 USC 552a Privacy Act

5 USC 609 Regulatory Flexibility Act (small business review panels)
5 USC 801-08 Congressional Review Act

31 USC 501-06, 521-22 OMB, establishment and organization

31 USC 902-03 Chief Financial Officers Act

31 USC 1101-14 Budget and appropriations authority and functions
31 USC 1511-19 Apportionment authority

31 USC 1531 ‘Transfer authority

(Various provisions in Federal Managers Financial Integrity Act
Title 31 and uncodified) | Government Management Reform Act
Federal Financial Management Improvement Act

40 USC 1401-1503 Clinger-Cohen Act (Information Technology
Management Reform Act)
41 USC 403-34 Office of Federal Procurement Policy Act

44 USC 3501-20 Paperwork Reduction Act


31

31

31

31

31
31
32

31

31

31
31

31

a1

31
a1

31

31

33

33

33

usc

usc

usc

usc

usc
usc
usc
usc

usc

usc
usc
usc

usc

usc
usc

usc

usc

usc

usc

usc

1556.

3511.

3512

3515.

3719.
3726
3901-07

5134

6101-06

6201-07
6307.

6503,
6506

7504-05,
7507

9103).
9105-06

9109.

9503.

1329.

1703.

1803.

83

Comptroller General provides

reports on audit activities. ...
Accounting principles, standards,
and requirements. eee ee ee
Accounting and other financial
management report and plans. . - -
Submission of annual agency
financial statement to OMB. tae
Debt collection. ....----.

Miscellaneous receipts, reports of.
Prompt Payment Act. tee

Numismatic Public Enterprise Fund,
report of. rs

Collection of Federal program
assistance data. rrr

Consolidated federal funds report.
Procurement guidelines. eae

Intergovernmental Cooperation
Rete ee

State and local single audit
requirements. et ee

Government corporations, budgets. .
Government corporations, reports of.

Wholly~owned Government corporations,
agency for fiscal matters. tees

Government pension plans, reports of.
Environmental Protection Agency,

list of programs under Federal-State
intergovernnental review. see

Ocean pollution research and
development and monitoring, budget.

User charges, inland waterways. . .

vi


ther agencies. Two, OMB must ensure the improvement of management, including Results Act
implementation, throughout the entre Executive Branch. Hence, OMB's strategic plan is of particular
imerest to the success ofthe Results Act.

In 1994, the Office of Management and Budget implemented its OMB 2000 smdy. This study
included a re-organization plan meant to increase emphasis on management issues in the agencies ~
‘management issues like the Results Act. Three years later, it is time to ask whether this re-
organization has produced results: Are management practices throughout the government improving?
Has OMB improved the quality of the Results Act strategic plans that we received last week? I assume
they al have the minimal six elements to be legal, but what is their quality? Are all their goals derived
from: legislative authority? Are their strategies and resources realistic? Did they use evaluations of
previous and existing programs to shape their goals and strategies? Has OMB performed its job of
quality contro!?

(OMB is required by the Results Act to deliver a government-wide strategic plan in the next
‘month or so. This appears to be a large and difficult task, ly in light of the coordination and
duplication aspects of a consolidated plan. Further, OMB is scheduled to deliver a government-wide
performance plan shorlly after the agency performance plans are due in February. OMB is also

ible for an annual government-wide performance report. { would anticipate considerable
difficulty dealing with the volume, establishing common performance measures for similar programs,
and producing a consolidated report. This isa task that looks as large as the annual budget
consolidations but must be accomplished without the years of experience. Recognition of the realities
of this task seem to be missing from OMB's plan

Another common element of strategic planning seems to be missing from OMB's plan:
Priorities. Everything is a number one priority. This simply is not realistic. OMB?s guidance for
agencies also seems to ignore the element of prioritization. Perhaps this should be added to our
‘growing list of legistative amendments for the Results Act.

Director Raines, in his cover leter for OMB's plan, recognizes the necessity for consultation

‘would expect a revised draft in August. We expect more from OMB, especially in its role of guiding
the behavior ofall other agencies.

‘The leadership in Congress has made an extraordinary commitment to this effort. We are
serious about changing the quality of management in the Federal Government. Management needs to
tbe much more results-oriented, The highest levels of the Legislative and Executive Branches of the
Federal Government need to work in parmership to implement the Results Act successfully, Only with
actual results, instead of fancy promises, will the public know that changes are finally taking place in
the performance of their Federal Government,

‘This morning we will hear from G. Edward DeSeve, who serves as Deputy Director for
‘Management at the Office of Management and Budget; and Paul Posner, who is Director for Budget
Issues at the General Accounting Office, accompanied by J. Christopher Mihm, Assistant Director,
Federal Management and Workforce Issues. General Government Division, General Accounting
Office.


22

22

22

22
22

22

22

22

22

22

22
22
22

22
24

25
26

28

usc

usc

usc

usc
usc
usc

usc

usc

usc

usc

usc

usc
usc

usc

usc

usc

usc
usc

usc

2679.

2684.

2695.

2776.
2877.
3101~08

3144

34250.

3714.

3793.

3922.

39250.
3930.

4067.

4608.

41s .

385c
6203

527 .

81

Per diem rates, foreign exchange
programs. te ee

Working capital fund, State
Department. . - ee ee ee ee ee

Administrative services, State
Department. Se ee

Arms sales, reports of. see
Radio Free Europe. tee ee

International Investment and Trade
in Services Survey Act. . - wae

Information exchanges between Bureau
of Economic Analysis and Bureau
of Labor Statistics. Boe ee eee

Multinational Force and Observers,
reports of. ee

Panama Canal Commission, reports
on borrowing. 2. ee et ee

Panama Canal Commission, value of
property transferred. tee

Use of Foreign Service personnel by
Agriculture and Commerce Departments.

Foreign Service personnel system. :
Board of the Foreign Service. oe
Maintain conformity of Foreign Service
and civilian retirement systems. . .
Institute of Peace, budget. tae
Retirement Home Board, OMB

member of, ee ee ee ee
Indian irrigation projects. .....

Tax return matching on loan
applications. Fe eee

Working capital fund, Justice
Department. ee ee ee

iv


92

into the whole that we see here today. That was our job, to admin-
ister that network.

So when I get this paper a little further along, I am going to
share copies with you and Mr. Horn to see if you can give me ideas
and comments on how to make it better. But I believe there is a
new essence of leadership evolving in that way.

Mr. Davis of ‘tinois. Thank you very much. I have no further
questions. It seems to me like that process fits with my very simple
definition. I always liked to say that leadership is the ability to get
other people to do what you want them to do, but because they
want to do it, and it seems to me that this kind of networking
might lead into that direction. So, I thank you very much.

Mr. DESEVE. Thank you very much.

Mr. Horn. We only have a few more questions here. As is our
usual routine, we might send them down to you, and you can have
those bright young analysts on your staff help us answer some for
the record. So I will not get into too many. But it is my under-
standing that OMB has a number of Presidential obligations to im-
prove agency management; for example, the Executive order that
created the chief operating officer, your coordination of
antiterrorism, and the implementation of the National Performance
Review recommendations. Are these the major ones, just off the top
of my head? Or what am I basically forgetting here besides statu-
tory ones that you have mentioned?

Mr. DESEVE. The streamlining plans Executive order was over-
taken by the Federal Work Force Restructuring Act. That is a big
one. There is a new one out on IG internal investigative complaints
that is very important to us.

Mr. Horn. The process?

Mr. DESEVE. Yes.

Mr. HoRN. We would like to see that, because we did hold a
hearing on that, and the way I left it was that the IG’s would get
together and give us a process that we could discuss here by the
end of August. I haven’t seen that yet.

Mr. DESEVE. We need to remind them. This is the Executive
order on setting up the Integrity Committee. We administer that
Executive order. There is a new one on the President’s Interagency
Council on Administrative Management. The old PCMI was aboi-
ished by that Executive order, and we are creating a new network.
Basically, the assistant secretaries for management are under Ex-
ecutive order as well.

What am I missing, guys?

Mr. Horn. I gather you have mentioned a couple of times the
President has 10 or 15 different priorities. Will that appear first in
your budget document?

Mr. DESEVE. These are actually the Director’s priorities. When
they become part of his budget, yes, they will be in the manage-
ment chapter, chapter 4, in the President’s budget. They then be-
come Presidential priorities at the point at ‘which they are in the
President’s budget. They haven’t gotten that far yet. Some of them
may be eliminated along the way for one reason or another.

Mr. HORN. It will wait until what, the end of January, early Feb-
ruary?


60

policies are enacted and implemented. Thus, they may not match the “actual” data
if some of the President's policies are not enacted and implemented, if
understanding of the effects of policies or the underlying relationships is less than
perfect, orf unexpected events occur. Economic assumptions are affected by the
quality of economic statistics, such as the measurement of productivity and prices
Technical assuntptions are affected by the quality of agencies’ program data, their
accessibility, and the quality of analysis of the factors that influence them.

‘Complete objective and high-quality analyses on priority policy issues, and
disseminate the results to the President and/or other appropriate policy
officials in the Executive Office of the President.

on muual Perfor:

Neutral, dispassionate analysis of programs is among the most fundamental
functions of OMB. Perhaps more than any other function. this is, and has been,
the way OMB can best serve the President. While final recommendations will and
must consider other factors as well, OMB has historically performed this type of
analysis Analysis can be essentially of two types (1) analysis of programs in
preparation for events (appropriating or authorizing legislation) that can be readily
identified well in advance, or (2) analysis of fast breaking issues or problems (such
as the desired response to a natural disaster) Providing judgments informed by
analysis unfettered by biases others may bring to the matter is a goal to be sought
consistently by OMB

wis and Strategies

During annual planning processes and throughout each year, OMB identifies policy
issues appropriate for analysis. Some of those issues will be for purely internal
OMB consumption, some of those issues will be for consumption outside OMB;
up to and including the President. Some of the those issues will be prepared by
individual OMB staff, and some will be prepared by OMB teams, possibly in
combination with other agency staff or in consultation with other EXOP agencies
OMB involvement in policy analysis and advice may include participation in
interagency meetings on Administration policy development, both short- and long-
range, or other discussions among policy officials. In most cases, OMB analysis of
issues will include discussions of the advantages and disadvantages of a variety of
policy choices, and the implications and tradeoffs among policy choices

External Factors

External factors that could affect achievement of this objective, in part, include
the need for cooperation of other participating agencies, and the extent to which

16


External Factors

Continued progress in systems development for both core and feeder financial
systems in the agencies is essential to meet the objective. This progress wil
depend on timely joint development of new systems specifications and a new
approach for procuring these systems. The number of clean audit opinions is
contingent, in part, on OMB, GAO, Treasury, and the agencies resolving several
crosscutting issues in audit policies and procedures both on an agency-specific and
government-wide basis.

Maximize social benefits of regulation while mit ig the costs and

burdens of regulation.

fons) mu "mi Is

OMB conducts comprehensive, timely and objective reviews of regulations, in
particular to assess their benefits and costs, to assure that they accurately reflect
Administration policy. and to assure that they appropriately carry out statutory
requirements

Means and Strategies

OMB will work to ensure that the quality of data and analyses used by agencies to
make regulatory decisions improves. This will require more focussed use of
agency resources and better planning to ensure adequate time and support for such
data gathering and analysis. OMB will work with agencies to support further
research to develop and improve techniques to measure benefits and costs. Using
its role as central regulatory reviewer, OMB will support more uniform application
of standardized assumptions and methodologies across regulatory programs and
agencies. Similarly, OMB will work with agencies to develop data and
methodologies to determine whether existing regulations need to be reformed and,
if so, how resources should be devoted to such reform. OMB will develop a pilot
baseline measure of net benefits for Federal regulations, and will work with
agencies to increase quantitative measures of net benefits. OMB will work with
agencies in seeking to maximize net benefits for all regulations reviewed by OMB

Exiernal Factors

Performance depends to a great extent on agency capability, which in turn is
affected by current program demands; by the need in some agencies to respond
quickly to emergencies, such as health, safety or environmental crises, and
Administration and legislative priorities. Also, potential regulatory reform
legislation or oversight activities may affect OMB's ability 10 achieve this goal

12


18

and submit as part of its responsibilities under the Results Act, will provide the "context
for cross-cutting analyses and presentations," but provides no additional specification.

OMB's strategic plan also does not explicitly discuss how goals and objectives will be
communicated to staff and how staff will be held accountable. For example, OMB's plan
states that OMB staff are expected to provide leadership for and to be catalysts within
interagency groups. Yet, the plan does not explain how OMB's managers and staff will be
made aware of and held accountable for this or other strategies for achieving OMB's
goals. As we noted in our review of the July draft plan, OMB's staff and managers have a
wide, expanded scope of responsibilities and many of OMB's goals depend on concerted
actions with other agencies. In particular, tackling crosscutting issues will also require
extensive collaboration between offices and functions within OMB, which the plan could
discuss in more detail. In this environment, communicating results and priorities and
assigning responsibility for achieving them are critical.

‘The September plan more consistently discusses the relationship between annual and
long-term goals as part of a discussion of each of its objectives. The plan provides useful
descriptions of the performance measures OMB may use to assess its progress in its
annual performance plan. For example, the plan suggests that "clean audit opinions"
could measure how OMB is achieving its objective in the area of financial management.
‘Such efforts are noteworthy because some of OMB's activities, such as developing the
President's budget or coordinating the administration's legislative program, present
challenges for defining quantifiable performance measures and implementation schedules.

Although the September plan provides a more consistent and thorough treatment of key
external factors in achieving its goals, OMB could explain how it can mitigate the
consequences of these factors. For example, OMB states that its goal of ensuring timely,
accurate, and high quality budget documents depends on the accuracy and timeliness of
agency submissions of technical budget information. However, there is a role for OMB in

Page 7 GAO/T-AIMD/GGD-98-10


al

using measures such as the timeliness of its products, the degree to which specific goals
are achieved, and its role in the formulation and discussion of major Administration
policies and issues.

Several annual performance measures will require OMB to develop baseline
information. While OMB does record certain workload data, the amount and type of
information collected will need to be expanded.

Cc. Means and Strategies Used in Achieving Goals and Objectives

Means and strategies specific to each general goal are described in Part Il of this
plan

Over the next five years, OMB has assumed essentially stable funding, as contained
in the President’s fiscal year 1998 Budget. Most of OMB’s funding is used to pay staff
salaries and benefits, and the goals and objectives are premised on future OMB staffing
that corresponds to present levels, The expertise and experience af OMB's staff is crucial
to dealing with the broad array of major issues that have to be addressed, many on very
short time lines, and to providing leadership for the development of policy and the
improvement of management across the Executive Branch. OMB's resources are also
used for information technology, which not only assists OMB staff to do its work in
support of the President's Budget and many other endeavors, but also helps to provide the
Congress with timely, accurate, coordinated information.

OMB uses many strategies to achieve its goals and objectives. The entire budget
process, with its instructions, hearings, reviews, budget drafting, and justifications drives
the development and coordination of policy, examines efficiency and effectiveness in order
to improve programs, allocates resources in accord with Presidential priorities. and
presents the President's program. The legislative and regulatory review processes
likewise helps to sharpen and coordinate policies. OMB has many authorities to require
and define the budgetary, performance, accounting, and other information that agencies
must develop, the systems they use to keep and share it, and the analyses they should
undertake

OMB has other authorities to improve, by providing guidance and other means.
the financial, procurement, grant, and other management functions of the Executive
Branch. OMB staffs expected to provide leadership for and to be catalysts within
interagency groups, including the President’s Management Council, the Chief Financial
Officers Council, the Budget Officers Advisory Council, the Chief Information Officers
(ClO) Council, and other professional and programmatic groups. (See illustrative list at
Appendix 2.)


51

ms frat

Offices in OMB will continue their well-defined roles in reviewing and critiquing
agency plans and budget requests, making resource allocation recommendations,
producing the budget documents, supporting the budget during the Congressional
budget process, and working to sustain budget concepts. OMB will propose
policy options that meet overall budgetary objectives and shift resources away
from programs which are less effective or important in order to fund programs
which support economic growth or advance Presidential priorities. OMB will
make recommendations to the President for budget requests to Congress based on
critical review of agency planning and budget submissions. In this context, for
example, a significant effort is underway to improve agency planning for capital
projects.

Exiernal Factors

While OMB has overall control over the development of the annual budget
documents, and over legislative scoring, its ability to develop the budget accurately
and on time depends to a large extent on the accuracy and timeliness of agency
submissions of technical budget information and the timeliness of Congressional
action on yearly appropriation bills. While OMB should be expected to detect and
correct serious errors in agency submissions, it would be impossible to prepare an
accurate and timely budget if agency submissions were significantly delayed or of
poor quality

Ensure that policies developed and reviewed by OMB are consistent wi
President's fiscal, economic and other policy priorities as reflected in the
budget.

Relanonship to Annual Performance Goals

Each annual budget contains a series of new initiatives as well as descriptions of
ongoing programs designed to achieve policy objectives, The extent to which
these initiatives and objectives are achieved and lead to improved results can be
described in both quantitative and qualitative terms. 11 will be important to
properly characterize OMB's role in the results achieved

the

Means and Strategies

OMB provides fiscal, economic, and other advice to the President on ways to
shape his policy goals and on methods to achieve those goals, with emphasis on
such issues as increasing economic growth by improving fiscal discipline. assessing
whether the benefits of current and proposed government programs outweigh


15
15
15

15
15

15

16
16
26

20

20

20

2.
22
22
22
22
22

22
22

22

usc
usc

usc

usc
usc

usc

usc
usc

usc

usc

usc

usc

use
usc
usc
usc
usc

usc

usc

usc

usc

1525
2904
2932

4109
4902

5511

5441
742e

1221-3

3424

3483

4353

1502
1475h
2124a
2186
2194

2226

2413

2454

2576

80

Joint projects, waiver of costs.
National Climate program, budget.

Committee on Earth and Environmental
Sciences, OMB member of. tee

Arctic Research program, budget.

Interagency Trade Data Advisory
Committee, OMB member of. a

National High-Performance Computing
Program, 6 ee eee ee ee

Scenic areas, OMB certification.
Commercial fisheries. eee

Education information and data,
acquisition. bo ee eee

Federal Interagency Committee
on Education. . +... 2. - 0

Working capital fund, Education
Department. Se eee

Gallaudet University, allowable
expenditures. 2... . eee

Drug control budget requests. :
USIA grants. ee eee
Tourism Policy Council. wee
Israel loan guarantee program.

Foreign currencies.  ......

Voluntary contributions to international

organizations, reports of. ...
Foreign assistance, reports of.

International cultural and
educational exchanges. tee

Arms control. eee ee

iii


13

Since the July draft, OMB has made changes to the plan based on its continuing planning
efforts, congressional consultations, and comments from others. Overall, OMB's
September plan addresses all required elements of the Results Act and reflects several of
the enhancements we suggested in our review of the July draft. Specific improvements
include (1) goals and objectives that show a clearer results-orientation, (2) more clearly
defined strategies for achieving these goals and objectives, and (3) an increased
recognition of some of the crosscutting issues OMB needs to address. However,
additional enhancements to several of the plan's required elements and a fuller discussion
of major management challenges confronting the federal government could help make the
plan more useful to the Congress and OMB. For example, the plan could provide a more
explicit discussion of OMB's strategies on such issues as information technology,
crosscutting high-risk issues, overlap among federal missions and programs, and
strengthening program evaluation.

OMB's strategic plan indicates that the agency will use its annual performance plan, the
governmentwide performance plan, other functional management plans, and the
President's Budget to provide additional information about how it plans to address some
of these and other critical management issues. To support the needs of this and other
committees, we will continue to review OMB's plans and proposals as additional detail
concerning objectives, time frames, and priorities are established. Our intention is to
apply an integrated perspective in looking at these plans, consistent with the intent of the
Results Act, to ensure that OMB achieves the results expected by its statutory authorities.

BACKGROUND

Since its creation in 1970, OMB has had two distinct but parallel roles, OMB serves as a
principal staff office to the President by preparing the President's budget, coordinating
the President's legislative agenda, and providing policy analysis and advice. The Congress
has also assigned OMB specific responsibilities for ensuring the implementation of a
number of statutory management policies and initiatives. Most importantly, it is the

Page 2 GAO/T-AIMD/GGD-98-10


55

accomplish these goals. Specifically, to increase agency use of commercial buying
strategies and processes, OMB will work with these groups to secure the
discretion under applicable laws and regulations necessary to employ commercial
buying practices and will issue appropriate policy guidance. For example, in
seeking to make consideration of past performance the norm in source selection,
OMB will work with the FAR Council to complete necessary regulatory revisions
and will publish a revised best practices document. In addition, OMB will
encourage and monitor agency progress in adopting reforms with high potential for
improving acquisition For example, OMB will obtain, review, and conduct
follow-up on agency plans to convert services contracts to performance-based
ones, And to facilitate conversion, OMB will work with agencies to draft model
contract documents.

External Factors

These efforts cannot succeed without the assistance of the agencies. In particular,
the Department of Defense, the General Services Administration, and the National
Aeronautics and Space Administration, as members of the FAR Council and the
largest buying and procurement training entities, as well as other major procuring
agencies, have a critical role in institutionalizing tnese reforms

Partner with agencies to achieve the goals set forth in each year's Federal
Financial Management Status Report and Five Year Plan, emphasizing
particularly the priority goals relating to financial systems, audited financial
statements and GPRA implementation.

wouship to Aimual Performan al

OMB will assist agencies in their efforts to obtain clean audit opinions on their
financial statements (for the 24 agencies subject to the CFOs Act) and on the
government-wide financial statement. As part of the fiscal year 1997 financial
statement audits, OMB and the Congress will receive information on the extent 10
which agency financial systems comply with the Federal Financial Management
Improvement Act of 1996, As part of the overall effort to integrate agency
systems, OMB will work with the agencies to increase the use of the multi-purpose
application card to make payments for travel, small purchase transactions and fleet
management

To accomplish this objective, OMB will issue policy and guidance to agencies,
offer expert advice to solve problems, help agencies address cross-cutting issues,
and help remove obstacles


2

facts to judge government performance agency by agency and pro-
gram by program. They will have a side-by-side comparison of
planned and actual results on an annual basis. This will be a his-
toric achievement, but one that depends entirely on the successful
implementation of the Results Act. We must make an extraor-
dinary commitment in both the executive branch and Congress to
complete the goals set by this legislation.

The Results Act involves a major reform of Federal practices.
Any such reform requires both vigilant oversight by Congress and
vigorous administration within the executive branch. The Office of
Management and Budget is the specified administrator of this act.
The burden on OMB is, therefore, twofold: One, it must improve its
planning and results in accordance with the Results Act, just like
all other agencies. Two, OMB must ensure the improvement of
management, including Results Act implementation, throughout
the entire executive branch. Hence, OMB’s strategic plan is of par-
ticular interest to the success of the Results Act.

In 1994, the Office of Management and Budget implemented its
OMB 2000 study. This study included a reorganization plan meant
to increase emphasis on management issues in the agencies, man-
agement issues such as the Results Act. Three years later, it is
time to ask whether this reorganization has produced results. Are
management practices throughout the government improving? Has
OMB improved the quality of the Results Act strategic plans that
we received last week? I assume they will all have the minimal six
elements to meet the legislative criteria, but what is their quality?
Are all their goals derived from legislative authority? Are their
strategies and resources realistic? Did they use evaluations of pre-
vious and existing programs to shape their goals and strategies?
Has OMB performed its job of quality control?

OMB is required by the Results Act to deliver a governmentwide
strategic plan in the next month or so. This appears to be a large
and a difficult task, especially in terms of the coordination and du-
plication aspect of a consolidated plan. Further, OMB is scheduled
to deliver the governmentwide performance plan shortly after the
agency performance plans are due in February. OMB is also re-
sponsible for an annual governmentwide performance report. I
would anticipate considerable difficulty dealing with the volume,
establishing common performance measures for similar programs,
and producing a consolidated report.

This is a task that looks as large as the annual budget consolida-
tions, but it must be accomplished without the years of experience.
Recognition of the realities of this task seem to be missing from
OMB’s plan.

Another common element of strategic planning that seems to be
missing from OMB’s plan: priorities. verything is a No. 1 priority.
I understand that. That is the way I ran an organization, too. It
isn’t the right way, but we get enthusiastic. President Carter had
that problem also. This simply is not realistic. OMB’s guidance for
agencies also seems to ignore the element of prioritization. Perhaps
this should be added to our growing list of legislative amendments
for the Results Act.

Director Raines, in his cover letter for OMB’s plan, recognizes
the necessity for consultation with Congress on the development of


712

$4 billion mark, realizing they weren’t getting anywhere. And I
guess OMB’s main role, in my humble opinion, is the early warning
signal. If you don’t have those links coming in from inspectors gen-
eral reports, CFO’s, now CIO’s, then OMB isn’t serving the Presi-
dent.

Mr. DESEvVE. I think that’s exactly right.

Mr. Horn. It’s the one purpose of OMB to serve the President
of the United States in his policy formulation functions and his
management functions as Chief Executive of the executive branch.
And it just seems to me, when these disasters happen, and we've
poured money in it at both ends of Pennsylvania Avenue, that
OMB, I don’t care if it was a Republican President or a Democratic
President, they ill-serve the President when they don’t say we’ve
got a problem here and send the people over that are now being
sent.

But it took $4 billion down the drain to get those people as-
signed. That’s what bothers me and why IJ think the merger of
OMB which I supported 100 percent with President Nixon, I was
on his reorganization of the ite House task force, and it just
isn’t working—and those are the big examples of why it isn’t work-
ing. If you can do something to patch it up, I'll listen with great
interest.

Mr. DrSevs. See, that’s where I beg to differ with you. OMB
2000 came into being in 1994. It didn’t come in with the tax system
modernization plan. You've heard that as well as I have. In fact,
it came in because of those kinds of problems.

One of the first things we did was to work with Mr. Clinger, and
Secretary Cohen to create ITMRA, which was a recognition of those
problems. It was an act that we were delighted to join in the cre-
ation of.

So I would say that the OMB 2000 initiative was a reaction to
the things that you’ve talked about. And I’m glad to hear you say
you supported the merger. It’s what’s going to help us solve the
problems. And if I can’t convince you of that over the next 6
months or so, I’m going to have to find another occupation, because
you won't invite me up here anymore, and I won't be able to testify.

I really do believe——

Mr. Horn. You would as Director of the Office of Management,
assuming you had the President’s pleasure satisfied. Those are
pleasure appointments, both Director of OMB and any son or
daughter or grandchildren of OMB as the case may be.

ir. DESEVE. Right.

Mr. Horn. Well, when OMB’s Governmentwide performance plan
is due early next year, are you going to get into the crosscutting
or duplicating functions that were stressed by GAO in that report?

Mr. DESEVE. The report, as structured, will do that, and the
agency performance plans will do that, but not to the extent that
T want to see done in the future. It will be a first step. And, again,
part of this is me modeling that in my own mind, as others are now
doing as well.

Mr. Horn. It’s become an annual report——

Mr. DESEVE. Oh, yes.

Mr. Horn [continuing]. Is your idea?


27

formation to validate some of these measures. So those are two
areas that we think——

Mr. Horn. I yield 7 minutes to my colleague, Mr. Davis.

Mr. Davis of Illinois. Thank you very much, Mr. Chairman.

Mr. Posner, I, know that in planning it is not always as easy to
be as specific as those of us who want to look at the plats would
like to be able to have in front of us, but it seemed -to me the
means and strategies used to achieve goals in the plan are some-
what general and do not suggest what resources-are needed; what
are we going to have to do to really move. Could you share some
more detailed thoughts and ideas about what we are going to need?

Mr. Posner. I think in our reading of the plan, it is fair to say
it is uneven across the various objectives. For example, in the pro-
curement, in the regulatory objectives we felt that given the con-
straints of a plan that it was a pretty good effort to indicate the
kinds of strategies that they were going to pursue to achieve those
goals: In the procurement area, working with agencies to develop
a best practices guide, for example, and working with agencies to
improve access to commercial products.

In other areas, we felt that it was too vague to give us a sense
of how they were going to be working to pursue these objectives.
Information technology was one example of that. Critical mission
areas of problems was another, where we really didn’t get a sense
as to what specific areas they were going to target.

Now, in fairness, I think, I will leave this to Mr. DeSeve to fill
in, these are some areas that OMB may decide to defer to the an-
nual performance plan or the governmentwide plan, and perhaps
what is more important for those of us who have an oversight in-
terest is making sure that the variety of goals and purposes and
strategies become publicly accountable in some forum. The plan is
obviously one opportunity. There are a variety of others that OMB
may choose to use. But what is really important is making sure
that we follow them as they articulate these approaches and review

em.

Mr. Min. Mr. Davis, I can speak more broadly to all the agen-
cies’ draft plans from the summer that we reviewed. Questions of
strategy were one of the things that we focused on most directly.
I quite agree with you, it would be unreasonable in a general sense
and foolish in the specific sense of anyone to be expecting that
every day-to-day element be detailed in the strategic plan. You
would end up with a document that wasn’t strategic, and you could
break your foot if it fell on it. Indeed, some of the plans that came
in their strategic plans were quite voluminous in that regard. The
threshold question we were asking ourselves is, the strategies ar-
ticulated in this plan, would they give an external user of the
plan—that is, the Congress; OMB; or a key manager within the
agency—a fairly good feel for how this organization is going to
achieve its goals?

One of the concerns that we had is that it often seemed to us
that what agencies were taking their existing program structure—
the existing things they did every day—and then building the goals
off of that, rather than the other way around, which is exactly
what you want to do in a strategic plan, start out with your mis-


70

Mr. DESEVE. We didn’t ask him to approve it. It wasn’t sent for
his approval.

Mr. Horn, But he did—

Mr. DESEvE. Director of OMB is the agency

Mr. Horn. Let’s look at the negative. He did see it, but he didn’t
disapprove it.

Mr. DESEVE. He did see it, but he didn’t disapprove it. As far as
I know, your statement is correct.

Mr. Horn. OK. We'll ask the Director that also.

Let me ask you now on some of the things we asked GAO, par-
ticularly on these crosscutting high-risk issues. I agree with your
approach here. If you're talking about crosscutting with most of
these agencies, I think that’s quite in order. But I would then ask
you the questions I asked them: to what degree are your people
taking into account the inspector general's report, the chief finan-
cial officer’s report, and hopefully the CIO’s?

Mr. DESEVE. We meet almost continuously with the IG’s and the
CFO’s on the problems that are listed in the GAO high-risk series.
And when I say we, I’m really talking now about program examin-
ers as well as the management office.

Now, you can’t talk about HUD management, without looking at
Susan Gaffney’s reports. Alan Rhinesmith, who is the deputy asso-
ciate director for that area, and his staff were on the P jone con-
tinuously with Ms. Gaffney about those reports, as well as the fi-
nancial reports.

When agency financial reports arrive at OMB, they come through
the RMO’s. The RMO’s review them and then get them to the stat-
utory offices. We review them. The RMOs then send them up to the

ill.

So if you looked at the clearance chain, the financial report
would have originated with the program examiner and gone
through two or three people in their office, then to my office to be
reviewed by two or three people, and then it would have been sent
up to the Hill. They make comments as it moves along the chain.

Mr. Horn. Well, the question is, do they make use of these re-
ports in the budget “management process”?

Mr. DESEVE. Yes, very much so. And, again, on an account-by-
account basis, you have to look at how things have changed. But
the Director’s review this year will feature a series of questions
that focus on findings from the inspectors general, or elements in
CFO reports, as well as questions about, whether we are going to
achieve the goals in the 5-year financial management plan for a
full audit of financial statements across the board.

Mr. Horn. As you know, your predecessor John Koskinen was
Deputy Director for Management of OMB. When I asked him the
Guestion of how many People were involved in management at

MB, he said, “oh, 540.” They’re all involved. Well, this is, of
course, nonsense. Everybody involved means nobody’s involved. So
I guess I would ask the question, if they’re all involved, how many
recommendations did we have for ending the duplication of Federal
programs, which GAO noted in its testimony?

rr, DESEve. I guess I would say, and I think John would agree,
that if we took a matrix and laid out an allocation of time study,
I truly believe, setting aside the approximately 35 or 40 purely sup-


63

OMB and the agencies, and facilitating “Work from Home" via personal
‘computers.

External Factors

Implementation of each of the above depends heavily on the availability of
resources, not only in OMB but also in the Office of Administration (OA) in the
Executive Office of the President. Progress is dependent not only on assistance
from OA, but also on further refinements in the products which are available from
vendors. Agency cooperation is needed to make progress in moving to the
electronic transfer of information.


20

In our 1995 review of OMB's reorganization, 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.® We suggested
that the review focus on specific concerns that need to be addressed to promote more
effective integration, including (1) the way OMB currently trains its program examiners
and whether this
these examiners and (2) the effectiveness of the different approaches taken by OMB in

is adequate given the additional management responsibilities assigned to
the statutory offices to coordinate with its resource management offices and provide
program examiners with access to expertise. In commenting on our recommendation,
OMB agreed that its strategic planning process offered opportunities to evaluate this
initiative and could address issues raised by the reorganization. Although OMB's plan
states that it will increase the opportunities for all staff to enhance their skills and
capabilities, it does not describe the kinds of knowledge, skills, and abilities needed to
accomplish its mission nor a process to identify alternatives to best meet those needs.

In summary, OMB has made significant improvements in its strategic plan. However,
much remains to be done in improving federal management. We will be looking to OMB
to more explicitly define its strategies to address important management issues and work
with federal agencies and the Congress to resolve these issues.

Mr. Chairman, this concludes our statement this morning, We would be pleased to
respond to any questions you or other Members of the Subcommittee may have.

(935246/410194)

m: FY
Reorganization (GAO/GGD/AIMD-96-50, Dec. 29, 1995).
Page 9 GAO/T-AIMD/GGD-98-10


37

ning, budgeting, procurement, management, and use was lost in
the Federal Government.

I come from an environment of State and local government, as
do you in the university system, where that would have been intol-
erable. So this is the first time there’s ever been a guide for capital
programming. The Office of Federal Procurement Policy put that
out as well as the changes in the FAR.

We talked about the fourth objective, which is improving finan-
cial management. And, again, Mr. Posner was nice enough to refer
to the CFO 5-year plan and status report. Part of the reason I’m
bringing these documents today is to incorporate them by ref-
erence. We think that things like the 5-year plan and status report
are elements of the OMB strategic plan by reference.

What do I mean by that? If this blue-back document is the home
page, you should be able to hot link to the individual component
plans. We will very shortly be working with the CIO Council, in
fact, in about a month, at their retreat to create a plan that par-
alleis this one, and over a year or two has the same kind of com-
mitments.

Our work in information technology is relatively new. We talk
about it under objective 6. Mr. Clinger, who I see looking down on
me from Center County, PA, at the airport there, looks fondly at
us; and he realizes that there was a need in information technology
for that same kind of parallel planning. We will be doing that, and
then, by reference, a CIO Council plan will have that same level
of incorporation.

But when you get down to the detailed nature of planning, you
have to get to our friends in the regulatory arena. When we talk
about preparing the annual regulatory plan of the Federal Govern-
ment under the regulations section, there it is. It may be mam-
moth, but it can also be summarized. This is really a summary of
the important regulations and how they’ve been achieved. Who did
this? M did this. Who does this? The RMOs do this. They work
with the agencies, they screen the regulations through the clear-
ance process.

Mr. Horn, Just for the record, so the average citizen will under-
stand what you're talking about, if you don’t mind, spell them out.
Don’t give me the initial bit.

Mr. DESEVE. I will be happy to. This is the Regulatory Plan and
Uniform Agenda of Federal Regulatory and Deregulatory Activities.
The new one will be out very shortly. This one is dated October
1996, and I would say it’s somewhat larger than the Manhattan
phone book for those of you who will read the transcript as opposed
to those who will see it.

Within that context, we think there is a way to create a smaller
document that is a report to the President from the Office of Man-
agement and Budget, Office of Information and Regulatory Affairs,
tha’: offers guidance on the right way to do some regulations as
well as some principles about how regulatory burden should be ad-
justed.

, We're in both businesses. We're in the retail business, as this big
book demonstrates, but we’re also in the wholesale guidance busi-
ness as the B and M sides as they interact with each other.


57

Improve the performance of Federal programs and the quality of public
access to information and services by promoting sound Federal and national
information, information technology, ical policies and practices.

ionship 10 An 1

Although OMB does not control how agencies use information and technology,
‘OMB can help agencies decrease the number of troubled IT systems, solve the
year 2000 problem, eliminate unnecessary duplication, increase electronic
dissemination of information, improve the Federal statistical system, and improve
information security and privacy

Means and Strategies

To achieve this objective, OMB creates policy and oversees its implementation by
the agencies. OMB leverages the efforts of interagency groups such as the Chief
Information Officers Council to improve the quality of policy, increase its
adoption, share best practices, and reduce duplication of effort. For example,
OMB developed reporting requirements to measure agency year 2000 progress in
consultation with the CIO Council and the Congress. These reports are being used
as a management tool by the agencies, OMB and the Congress to assure that all
mission-critical Federal systems are year 2000 compliant by December 31, 1999

External Factors

Performance depends to a great extent on agency capability. Policy changes in
turn are subject to the astonishing speed with which technology is advancing in the
information technology area

Conduct an effective interagency legislative and executive order coordination
and clearance process

om mnt

Two traditional and long-standing OMB functions are to coordinate the
interagency review and clearance for submission to Congress of agencies’
legislative proposals, testimony, and views letters on legislation, and to coordinate
the interagency review and clearance of draft executive orders for submission to
the President


23

throughout strategic plans. They would set goals, and we would see
strategies in a different place, and it wasn’t clear how strategies
were tied to goals.

As Paul mentioned in the initial comments, that was one of the
strengths we saw in the OMB plan this time around, and we un-
derstand from a number of the plans that came in on September
30 these types of issues have been dealt with at least to some ex-
tent. But we expect, based on experience here in the United States
and other countries that have done something like the Results Act,
that it will take us a few years before we get to goals with agen-
cies; that is, they are as results oriented as they could be.

Mr. Davis of Illinois. Thank you very much.

It seems like even though it is tough, we are headed seemingly
in the right direction, and ultimately it looks like we might get
there.

Mr. Miu. One of the things we need to keep in mind is we are
at the beginning of the process. We have certainly had a 3-year
pilot phase. Other countries, such as Australia, New Zealand, Can-
ada, Great Britain, have spent years doing something like the Re-
sults Act. When we have talked with officials in those countries,
they have underscored two things. First, how far we believe they
have to go, and second, based upon how far they have come, how
comfortable they are with the progress they made. They say you
want to scope your eye on the price at the end, but it certainly is
worth going down the journey. You will start seeing improvements
as you do implement reforms.

We have heard from a number of agencies, just the congressional
consultations they went through last summer, before the plans
were done, led to substantial improvements in the quality of their
strategic plans.

Mr. Horn. We will have another round. I will yield myself the
8 minutes I gave Mr. Davis. We will start the dialog and then go
back to 5 minutes.

I was very interested in the High-Risk Series on which you have
done such an excellent job and the lack you feel of followup by
OMB in a lot of these matters, which are clearly of interest to Con-
gress in their various authorization and appropriation subcommit-
tees. But I would like to also ask, do you have any sense of the de-
gree to which inspector general reports are reviewed, chief financial
officer reports are reviewed, and now chief information officer re-
ports? Do you have any feeling as to what degree OMB follows up
on what surfaces in those reports?

Mr. PosNeER. That is a good question. I am not sure I can directly
answer that. I know when we looked at OMB 2000, I would say it
was probably selective in terms of, for example, in the financial
statement area. Some RMO’s seem to be focusing quite a bit on
that, on the financial statement audit reports, and others were
still, I would say, in the transitional phase. I am not sure whether
these were valuable. Some of the staff indicated they were not sure
they quite understood what their implications were or even how to
read them.

Whether that has changed in the years that we have looked at
it, I don’t know at this point. But I think the thing on the high risk
that just warrants some mention is that we feel like there should—


PL.

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Congressional Review of Agency Rulemaking .

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. Federal Financial Management Improvement Act, Title

VIII Federal Financial Management Improvement

Voluntary Separation Incentives for Employees of Certain
Federal Agencies ©0000... .000 00.2 0eceeeeeeee eee

xiii



44

Office of Management and Budget

Strategic Plan
FY 1998 - FY 2003

September 30, 1997



40

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components. See ee

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Policy, . ee ee eee ee ee

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for establishment of. ...-..

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reports of. . . eee ee ee

Approval of hospital sites for
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quarantines. =... 2-2 ee eee

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reports of...) ee ee ee

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reports, review of. ..-....-

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appropriations. ..........

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reports of OMB actions. ......

Recreational or day-care centers
for national defense, transfers of
appropriations. Dee ee

Compensation for damages involving
nuclear reactors on U.S. warships.

National space grant college and
fellowship program, reports of. . .

vili


62

elsewhere, each division develops and carries out a staff training and development
plan; training and development opportunities are available to all staff, and the
performance appraisal and awards process for all staff is strengthened and
enhanced

‘Means and Strategies

To accomplish this objective, OMB will: increase the number of staff participating
in both internal and external rotational opportunities; continue to assign an “on the
job" coach for the initial year of each new employee, encourage managers and staff
to develop and fulfill individual development plans, especially for new hires

External Factors

None identified,

Leverage information technology resources to aid OMB staff in fulfilling
their mission requirements.

Belationship to Annual Performance Goals

‘Among the performance goals OMB may use to record achievement of this
objective are: an increase in the number and types of information resources

lable to the OMB staff, improved methods of accessing information and
information processes to make information more readily available, ensure that the
computer systems used in support of OMB's responsibilities for budget decision
making, preparation and execution keep pace with technological change and
evolving budgeting requirements, and improved methods for communicating
information internally and between OMB and other agencies

Means and Suaiegies

Examples of activities that have been or will be undertaken to achieve this
objective include: placing official statements of policy on the external Homepage;
broadening the content and facilitating the use of OMB’s internal Homepage,
improving the tracking of controlled correspondence; automating routinely used
forms; making legislation-related information and statistics and status reports on
paperwork reviews and regulatory reviews available electronically to OMB staff,
using electronic means to deliver to OMB staff current economic data, economic
and technical assumptions, analytical databases and models, staff analyses of short-
and-long term economic and fiscal conditions, and other cross-cutting analyses;
moving budget systems over the next few years from an outdated mainframe
computer to distributed technology; improving electronic communications between

18


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recovery from liable third parties.

Legal Services Corp., budget. .

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eligibility. .. +--+ esses

Legal Services Corp., support
functions for. 9. . ee ee ee ee

Development loan applications,
guidelines for local review.  . - -

Housing and Urban Development Dept.
rulemakings, reports of OMB actions.

Housing and housing finance programs,
paperwork burden. er?

Requests for aid under two or more
programs, policy functions regarding.

Energy conservation plan for Federal
buildings, 6. eee ee ee ee

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Policy, budget advice and assistance.

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Policy, statutory functions.  .. .

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and technology functions. eee

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Operating Committee, sponsorship
agreement. er ee

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OMB member of. et

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draft Clean Air Act rules, OMB
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Corporation, budget. see

ix


31

and the non-profits that relate often to government programs.
What can you tell us to be helpful in that area?

Mr. MIHM. Mr. Horn, we've issued separate reports within a cou-
ple years ago on the lessons from leading foreign countries, Aus-
tralia, New Zealand, Canada, and Great Britain in particular.
We've issued reports looking at leading States here in the United
States, both in terms of performance budgeting and results-ori-
ented management more generally; and part of that included a re-
view of Oregon.

More recently we’ve been continuing to track work that has been
done through the OECD and I know that OMB has been particu-
larly involved in this. Former OMB Director Rivlin was at a Min-
ister meeting, I believe, in March 1996 on this in which they talked
about public management initiatives and how to share ideas among
the OECD countries.

So there is a fairly robust body of information that is beginning
to emerge from around the world on what's going on. One of the
things I will let you know about is, although a number of other
countries have been at this longer than we have and that we have
some important lessons to learn from them, in terms of the scope
of the effort and the seriousness of the effort, the United States is
really pretty far out ahead of the rest of the world. Certainly just
the size of our government means that we would be a bigger effort
than the rest of the world.

But we’re dealing more directly with some of the very difficult
issues in performance measurement and goal setting that Mr.
Davis was alluding to earlier. More so than other countries around
the world. So while we’re learning from them, they're learning
equally from us as well.

Mr. Horn. That’s an excellent summary. And furnish another set
of the reports for the minority and majority members.

Mr. Mino. Yes, sir; I’d be happy to.

Mr. Horn. My question comes, since you brought it up, on the
duplication of programs there. Have you seen anywhere near 540
staff members talking about ending the duplication of the Federal
programs in the Office of Management and Budget? Is there any
evidence that even 10 have talked about the duplication of Federal
programs?

Mr. PosNER. We haven’t been in there to really ascertain that.

Mr. Horn. Let’s ask Mr. DeSeve that. If you can—Mr. Davis, do
you have any more questions?

Mr. Davis of Illinois. [Nodding in the negative.]

Mr. Horn. If you can wait through Mr. DeSeve’s testimony. It
would be helpful, I think, if you heard it and gave us whatever
your perspective is. So we’re going to now have the Acting Deputy

irector of the Office of Management and Budget, Mr. DeSeve.

I think we want to swear in Mr. DeSeve and those who will be
testifying, if you’ve got aides that will also be testifying.

Mr. DESEVE. No. We're just organizing the materials. Thank you.

(Witness sworn.)

Mr. Horn. The clerk will note that the witness has confirmed.
And we'll be glad to give you 10 minutes, 15 minutes for your open-
ing statement. I know it can be read in that time. But I would just
sort of really like your summary of it.


7

may prevent OMB from achievement of its strategic plan. Therefore, I look forward
to hearing from our distinguished panels of witnesses.

Again, thank you, Mr. irman, for this opportunity.

Mr. Horn. With that, we will now swear in the first panel from
the General Accounting Office. Will Mr. Posner and Mr. Mihm
come forward and raise your right hands.

[Witnesses sworn.]

Mr. Horn. Please take a seat. What our usual routine here is for
everybody, I think most of the witnesses know it, your full state-
ment is put in the record automatically after I have introduced you.
We then would like you to summarize that statement, if you could,
let’s say within 10 minutes for GAO and I am not going to press
you on the time because what you have to say is very valuable. But
just for the record, why don’t we summarize it. We will do the
same with OMB, 10 minutes, that leaves us time for Mr. Davis and
myself to question the witnesses.

How would you like to proceed?

STATEMENT OF PAUL L. POSNER, DIRECTOR OF BUDGET
ISSUES, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED
BY J. CHRISTOPHER MIHM, ASSISTANT DIRECTOR, FEDERAL
MANAGEMENT AND WORKFORCE ISSUES, GENERAL GOV-
ERNMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE

Mr. Posner. Thank you, Mr. Chairman. I will discuss our state-
ment. Again, as you did, I acknowledge Chris Mihm here, who is
the Associate Director in our Federal Management Group and
works to coordinate all of our work on GPRA.

Let me tell you about the purpose of our study in looking at the
strategic plan. Basically in this case it was to discuss OMB’s strate-
gic plan and how well it addresses the Results Act, and then to also

ive some insight on our thinking about what challenges remain
for OMB in ad ssing its overall mission.

What we did is really in two stages. First, we reviewed and re-
ported to Members of Congress our assessment of the July 1997
draft OMB plan. Second, having done that, we reviewed the most
recent plan, the September 30 plan, to assess the kinds of changes
they made since that earlier draft.

In reviewing the plans, we looked at six elements as defined in
the act for strategic planning and as further articulated in OMB’s
own guidance. We looked to assess the mission statement, the long-
term goals and objectives that were set forth for the major func-
tions, the strategies that were proposed to be used in implementing
those goals and objectives, the relationship between those goals
and the annual performance goals, the key external factors that are
suggested as potential barriers to implementing those objectives,
and then, finally, how program evaluation was said to have been
used in preparing the plan.

In addition, in our discussion of the July plan, we addressed
some other issues that the congressional requesters were interested
in, including whether the plan reflected crosscutting issues and co-
ordination with other agencies and how the plan addressed man-
agement problems that GAO has identified in prior work.

Let me say at the outset that we have, in looking at OMB’s plan,
recognized that OMB does play a unique role in our system, and


46

Introduction

The Office of Management and Budget has served the Presidency since 1921,
when it was established as the Bureau of the Budget. The career staff of OMB works with
policy officials to provide an institutional memory for the President and competent,
objective staff support to help develop and carry out Presidential policies and programs
and implement Executive Branch responsibilities

A. QMB's Functions

OMB advocates the appropriate allocation and effective utilization of government
resources. OMB assists the President in the preparation of the Federal budget and in
managing its execution in the departments and agencies. In helping formulate the
President's spending plans, OMB examines the effectiveness of agency programs, policies,
and procedures; assesses competing funding demands among agencies: recommends
funding priorities: and provides policy options. OMB works to assure that proposed
legislation, and agency testimony, reports, and policies are consistent with Administration
policies, including the President's Budget. Particular emphasis is placed on managing the
coordination and integration of policies for cross-cutting interagency programs. On behalf
of the President, OMB often leads in presenting and justifying major policies and
initiatives related to the budget and government management before Congress

OMB has a central role in providing leadership in the development, oversight and
coordination of the Federal government's procurement, financial management,
information, and regulatory policies as well as in their implementation. OMB helps to
promote better program management, strengthen administrative management, develop
better performance measures, and improve coordination of Executive Branch operations.

OMB carries out responsibilities under more than 200 statutory provisions,
including the Budget and Accounting Act, the Budget Enforcement Act, the
Antideficiency Act, the Balanced Budget Act of 1997, the Impoundment Control Act, the
Line-Item Veto Act, the Government Performance and Results Act (GPRA), the Chief
Financial Officers Act (CFOs Act), the Government Management Reform Act, the Federal
Acquisition Streamlining Act, the Office of Federal Procurement Policy Act, the
Paperwork Reduction Act, the Clinger-Cohen Act, and the Federal Credit Reform Act

B. Relation of Annual Performance Goals to General Goals and Objectives

Selective descriptions of the performance goals and indicators that OMB expects,
to include in its annual performance plan are displayed for each of the four general goals in
Part Il of this strategic plan. Annual performance goals will be used in assessing the
achievement of the general goals and objectives

Frequently, policy issues that OMB addresses cannot be forecast in advance
Nevertheless, judgments can be made about the performance of some of OMB’s work

2


6

Mr. Horn. I am delighted now to yield to the gentleman from II-
linois, Mr. Davis, who is the ranking Democrat for this hearing.

Mr. Davis.

Mr. Davis of Illinois. Thank you very much, Mr. Chairman. Let
me just say good morning to you, and certainly to all of those who
are present. I want to thank you for convening this hearing regard-
ing oversight of the Office of Management and Budget’s strategic
plan as required by the Government Performance and Results Act
of 1993.

I also want to thank our distinguished witnesses for taking time
to share with us their expertise as it relates to this issue.

This hearing will focus on the content of OMB’s strategic plan
with respect to its management improvement responsibilities. In
addition, we will review the initial compliance of all agencies with
the September 30 view date and the schedule for subsequent re-
ports from agencies and OMB.

OMB has broad and specific obligations to improve management
throughout the Federal Government. The GPRA is intended to im-

rove the efficiency and effectiveness of Federal programs by estab-
ishing a system of goals for program performance and to measure
results.

Specifically, the Results Act requires all agencies over $20 mil-
lion to submit to Congress results-oriented plans that include mis-
sion statements, long-term goals and objectives, strategies and re-
sources to achieve goals, and external factors that may affect the
plans, to name a few.

It is my hope that this hearing will ensure that the mission
statements and strategic plans will have the desired effect of pro-
viding improved results for the American people. Moreover, I am
interested in hearing some of the external factors that may prevent
OMB from achievement of its strategic plan. Therefore, I look for-
ward to hearing from our distinguished panel of witnesses, and,
again, I thank you, Mr. Chairman, for convening this hearing, and
we are eager to hear from those who will provide us some expert
information. Thank you very much.

[The prepared statement of Hon. Danny K. Davis follows:]

PREPARED STATEMENT OF Hon. Danny K. Davis, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF ILLINOIS

Thank you, Mr. Chairman, for convening this hearing regarding oversight of the
Office of Management and Budget’s [OMB] strategic plan as required by the Gov-
ernment Performance and Results Act (GPRA] of 1993. I also want to thank our dis-
finguished witnesses for taking time to share with us their expertise as it relates
to this issue. This hearing will focus on the content of OMB’s strategic plan with
respect to its management improvement responsibilities. In addition, we will review
the initial compliance of all agencies with the September 30 due date and the sched-
ule for subsequent reports from agencies and OMB. OMB has broad and specific ob-
ligations to improve management throughout the Federal Government. The GPRA
is intended to improve the efficiency and effectiveness of Federal programs by estab-
lishing a system of goals for program performance and to measure results. Specifi
cally, the Results Act requires all agencies over $20 million to submit to Con;
results-oriented plans that include mission statements, long term goals and objec-
tives, strategies and resources to achieve goals, and external factors that may affect
the plans to name a few.

Ie is my hope that this hearing will ensure that the mission statements and stra-
tegic plans will have the desired affect of providing improved results for the Amer.
ican people. Moreover, I am interested in hearing some of the external factors that


40

STATEMENT OF
G. EDWARD DESEVE
ACTING DEPUTY DIRECTOR FOR MANAGEMENT
OFFICE OF MANAGEMENT AND BUDGET

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION,
AND TECHNOLOGY
HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
OCTOBER 6, 1997

Mr. Chairman, I am here this morning before this subcommittee to discuss the OMB
strategic plan. This plan was transmitted to Congress on September 30, 1997, as required by the
Government Performance and Results Act of 1993 (GPRA).

GPRA -- or as itis often called, the Results Act -- requires that a strategic plan cover the
major functions and operations of an agency. The strategic plan is for a minimum six year period,
with the statute requiring that it be revised and updated within three years of the previous
submission.

The strategic plan includes the statutorily required elements: a comprehensive mission
statement; a set of long-term goals and objectives; a description of how the goals and objectives
will be achieved, which we refer to as means and strategies, a description of the relationship
between the long-term goals and objectives in the strategic plan and the performance goals in the
annual performance plan; an identification of those key factors, external to the agency and
beyond its control, that could significantly affect achievement of the goals and objectives; and a
description of any program evaluations used in preparing the strategic plan, and a schedule for
future program evaluations. The OMB strategic plan addresses each of these six elements,

‘Nearly 100 Federal agencies are submitting strategic plans to Congress, as well as to.
OMB. The submission of these plans is the first step in the government-wide implementation of
the Results Act. The second step, which is already underway, requires agencies to submit annual
performance plans to OMB, and subsequently to Congress. The annual performance plans
contain measurable goals defining what an agency will accomplish in a specific fiscal year. The
first of the annual performance plans ~- for fiscal year 1999 — are now at OMB. These plans,
revised as necessary to reflect the President’s budget decisions, will be sent to Congress as part of
the annual budget submissions in February. OMB will use the agency annual plans and other
analyses to form the government-wide performance plan, which will be part of the President’s
budget. The government-wide plan will also be sent to Congress in February. The third step is
the annual program performance report, comparing actual performance to the goal targets in the
annual performance plan, The first of these reports, covering fiscal year 1999 performance, is due
to the President and Congress by March 31, 2000.


19

assisting agencies to improve the accuracy and timeliness of data, particularly for such
complex issues as estimating subsidy costs for loan and loan guarantee programs.

OMB's discussion of program evaluation could provide more information about how
evaluations were used in developing its plan and how evaluations will be used to assess
OMB's and federal agencies’ capacity and progress in achieving the purposes of the
Results Act. In preparing its strategic plan, OMB states that it reviewed and considered
several studies of its operations prepared by OMB, GAO, and other parties. The plan also
states that OMB will continue to prepare studies of its operational processes,
organizational structures, and workforce utilization and effectiveness. However, OMB
does not indicate clearly how prior studies were used, and OMB does not provide details
on a schedule for its future studies, both of which are required by the Results Act. OMB
officials have said it would be worthwhile to more fully discuss the nature and dimension
of program evaluation in the context of the Results Act. As we noted in our review of the
July draft plan, evaluations are especially critical for providing a source of information for
the Congress and others to ensure the validity and reasonableness of OMB's goals and
strategies and to identify factors likely to affect the results of programs and initiatives.

A clearer discussion of OMB's responses to and plans for future evaluations could also
provide insight into how the agency intends to address its major internal management
challenges. For example, a critical question facing OMB is whether the approach it has
adopted toward integrating management and budgeting, as well as its implementation of
statutory management responsibilities, can be sustained over the long term. In view of
OMB's significant and numerous management responsibilities and the historic tension
between the two concepts-of integrating or segregating management and budget
responsibilities-we believe it is important that OMB understand how the reorganization
has affected its capacity to provide sustained management leadership.

°M ve
(GAO/GGD-89-65, May 4, 1989).

Page 8 GAO/T-AIMD/GGD-98-10



14

comerstone agency for overseeing a framework of recently enacted financial, information
resources, and performance management reforms designed to improve the effectiveness
and responsiveness of federal departments and agencies. ‘This framework includes the
1995 Paperwork Reduction Act and the 1996 Clinger-Cohen Act; the 1990 Chief Financial
Officers Act, as expanded by the Government Management Reform Act of 1994; and the
Results Act.

OMB faces perennial challenges in carrying out these and other management
responsibilities in an environment where its budgetary role necessarily remains a vital and
demanding part of its mission. OMB's resource management offices (RMOs) have
integrated responsibilities for examining agency management, budget, and policy issues.
‘The RMOs are supported by three statutory offices whose responsibilities include
developing governmentwide management policies: the Office of Federal Financial
Management, the Office of Federal Procurement Policy, and the Office of Information and
Regulatory Affairs. In fiscal year 1996, OMB obligated $56 million and employed over 500
staff to carry out its budget and management responsibilities.

The Results Act requires a strategic plan which include six elements: (1) a comprehensive
agency mission statement, (2) long-term goals and objectives for the major functions and
operations of the agency, (3) approaches or strategies to achieve goals and objectives and
the various resources needed to do so, (4) the relationship between long-term
goals/objectives and annual performance goals, (5) an identification of key extemal
factors beyond agency control that could significantly affect achievement of strategic
goals, and (6) a description of how program evaluations were used to establish or revise
strategic goals and a schedule for future program evaluations.

Although OMB's July draft included elements addressing its mission, goals and objectives,
strategies, and key external factors affecting its goals, we suggested that these elements
could be enhanced to better reflect the purposes of the Results Act and to more explicitly

discuss how OMB will achieve its governmentwide management responsibilities.

Page 3 GAO/T-AIMD/GGD-98-10


3

these plans. However, we apparently have a different expectation.
One draft in July does not comply with the consultations require-
ment. At a minimum, I would expect a revised draft in August. We
expect more from OMB, especially in its role of guiding the behav-
ior of all other agencies.

The leadership in Congress has made an extraordinary commit-
ment to this effort. All of us are serious about changing the quality
of management in the Federal Government. Management needs to
be much more results oriented. The highest levels of the legislative
and executive branches of the Federal Government need to work in
partnership to implement the Results Act successfully. Only with
actual results, instead of fancy promises, will the public know that
changes are finally taking place in the performance of their Federal
Government.

This morning we will hear from Paul Posner, who is Director for
Budget Issues in the General Accounting Office, accompanied by J.
Christopher Mihm, the Assistant Director, Federal Management
and Workplace Issues, General Government Division, General Ac-
counting Office. We will then hear from G. Edward DeSeve, who
serves as Acting Deputy Director for Management at the Office of
Management and Budget.

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


69

ers of Congress to motivate and guide the agencies. That’s how we
are successful in managing.

Mr. Davis of Illinois. How do you respond, if I might, to the idea
of separating the functions, that is, taking the management func-
tion, separating it from the budgeting function? Do you think there
would be any real purpose or reason to do that?

Mr. DESEVE. I don’t know yet. Now, that’s a kind of weasel an-
swer, but let me try to clarify that. What I’ve said to Mr. Horn and
to Mr. Sessions and will say to you, is that we want to work to-
gether with you to more carefully and closely define what we all
mean when we use the term “management.” I’ve given you some
examples today.

It’s my belief that the proper integration, with proper resources
devoted and a proper set of techniques, that the integration is the
best way to go. You can separate hydrogen and oxygen, and you
can still have hydrogen and oxygen, but you don’t have water. I
want water.

So that’s my belief. But I’ve also said that I’m willing to learn
about this. I don’t rule it out. Others in the past may have ruled
out any idea of a separate office. I think that, as we all explore this
together, we'll conclude that it makes sense to have them hanging
together as opposed to hanging separately. And as Solomon, I
think, said, “You can break any one twig, but if you put the twigs
together in a stack, it’s very hard to break them.” That’s what I
think about the concepts of management and budget.

Mr. Davis of Illinois. Well, I'll wait. I think I’m done for right
now. And thank you very much, Mr. Chairman.

Mr. Horn. I thank you for those questions. Let me ask, on the
oe strategic plan, what input did the President have to that

an?

Mr. DESEVE. I would not comment on any discussions that we
had with the President of the United States. We don’t talk about
what he says or said.

Mr. Horn. Well, did he see this?

Mr. DESEVE. Yes, he did.

Mr. Horn. Did he approve it?

Mr. DESEVE. We didn’t ask him to approve it.

Mr. Horn. OK. But he did see it?

Mr. DESEVE. He did see it, yes, sir. I've stated so in my testi-
mony.

Mr. BuRTON. Did he send comments back to OMB?

Mr. DESEVE. I didn’t see any.

Mr. Horn. It would have gone to the Director.

Mr. DESEVE. They would have gone to the Director. But I prob-
ably would have seen them.

Mr. Horn. Because this is his office.

Mr. DESEvE. Right.

Mr. Horn. And I would be amazed if he didn’t approve it. I
would be amazed, since he’s an avid reader and has a lot of views
on things if he didn’t make a lot of comments. I'm not asking for
those, I’m just asking did he approve it?

Mr. DESEvE. And I’ve already testified, sir.

Mr. Horn. Well, I’m not quite——


24

in terms of the overall strategy, that we have sustained a commit-
ment to addressing these issues as a body of work, recognizing that
these issues take many, many r pigars to resolve. I think you may
find further specification by 'B in terms of how they are going
to address some of these specific issues in other contexts down the
road. But resolving the variety of issues, whether it is student
loans, HUD management, or whatever, as you well know, takes
many years of sustained commitment.

Mr. Miu. May I add to that, Mr. Chairman? I think one of the
challenges that we face is taking these various different reporting
requirements and making them more results oriented; that is, more
informative for the types of decisions that Congress faces and with
OMB and what the agencies face.

We certainly have been making some progress or can expect
some progress because of the Clinger-Cohen Act, which requires
agencies to be more disciplined and strategic in their information
technology usage. Under the FASAB requirements and the require-
ments coming out for audited financial statements and the account-
ability reports, we can expect those to be more improved and useful
documents as well.

The next element or the next piece of the puzzle that needs to
fall in are reports from the inspectors general. I know this commit-
tee has expressed some interest and concern and is working with
OMB in making sure that the inspectors general are focusing on
Results Act-type questions, and looking at the results of agencies,
as well as being positioned to provide Congress and agency deci-
sionmakers with the information they need. So it is getting these
reports to provide useful information that is the key thing we think
that progress needs to be made on.

Mr. Horn. That is a very important point. Has the General Ac-
counting Office ever done a complete indepth study of OMB and
how it functions? Are the people in certain positions at least in the
paper record qualified to deal with management issues and not
simply budget issues? Have we ever had you look at OMB from
that standpoint?

Mr. POSNER. We issued a report in 1989 which was a manage-
ment review of OMB, which largely did focus on the management
process and their approach to implementing a variety of manage-
ment policies. That report focused on the kinds of instrumentalities
OMB uses to implement its leadership, how it sets its priorities. It
focused on some of the problems that were occurring that we saw.
One of them in particular was the lack of integration between the
initiatives pursued on the management side and the budgeters and
how the agencies perceived wide disconnects between those two
units, as they pursued seemingly either conflicting or separate
agendas.

So that was the last time we have taken a real indepth look at
the institution itself.

Mr. Horn. Was that report asked for by Mr. Panetta, then chair-
man of the Budget Committee?

Mr. Posner. I don’t believe so.

Mr. Horn. I just wondered, in other words, because at one point
he felt they were overlooking the management function completely.
He changed his view when he became Director of OMB. He didn’t


10

sion could have been made about their initiatives that they have
piloted elsewhere.

In other areas, certain Governmentwide issues in the manage-
ment area and problems are not anywhere explicitly discussed in
the plan, and these are issues that we have raised in other contexts
as being important. One is the high-risk area. There is not an ex-
plicit focus on the high-risk program and, as you know, GAO has
maintained a focus in this ourselves. Although it very well could
be that this is what OMB has in mind in their objective where they
discuss working with agencies to solve mission-critical problems,
not enough is presented to give a feel for what those problems are
and whether they, in fact, & relate to the high-risk areas that we
have identified elsewhere.

Another area that has not really been touched on directly in the
plan is the whole issue of mission overlap and program duplication,
an important area that we have identified. In a recent report we
developed for Mr. Armey, among others, we have identified over 30
Program areas of GAO’s work and documented extensive overlap
and duplication among programs. This occurred in such areas as
163 job training programs, 90 early childhood education programs,
and a variety of programs in the food safety program. We have,
moreover, suggested that GPRA in its strategic plans and the an-
nual performance plans can be a vehicle to address this kind of an
issue by ensuring that many of these programs adopt common
measures so that we can stack them up against one another. In en-
suring that such vehicles as a Governmentwide performance plan
also can highlight some of these kinds of issues.

These are longstanding, perennial problems that are not easy to
resolve, and yet critical to promoting a more efficient and effective
program delivery apparatus from the Federal level down to State
and local governments.

Another area that we think could benefit from more attention in
the future is the program evaluation area. OMB does discuss some
of the evaluations that it referred to, including some of ours, in de-
veloping the plan in general, but it does not indicate how they were
used in developing particular objectives or strategies. It also does
not give a sense of what future studies the agency plans in this
area to evaluate its own progress.

Now, I will say there is another concern about evaluation relat-
ing to OMB’s role as a consumer of evaluations. In other words,
sound budget analysis and assessment of performance rests on
good qualitative and quantitative studies addressing what we are
getting for the Federal program dollars in a variety of areas.

The role of stimulating and supporting, nurturing, if you will, the
evaluation infrastructure among the agencies is one that we cer-
tainly have defined as needing more central guidance and leader-
ship, and we were encouraged by recent discussions we have had
with OMB suggesting they are interested in working on this with

us.

Finally, OMB’s internal management challenges in promoting a
consistent management focus in the budget process in particular
could be more explicitly addressed, either in plans or elsewhere,
particularly to deal with some concerns that we raised when we did
our study of OMB 2000 shortly after it was implemented.


29

The previous Deputy Director for Management, in one of his last
appearances on the Hill before this committee, insisted that all 540
people at the Office of Management and Budget are focused on
management improvement. Now, does GAO see that level of effort
impacting the agencies last year?

Mr. Posner. Well, I think it is important to distinguish between
the big M and the small M. When you talk about the big M, how
many people were involved in looking at financial management, the
CFO implementation, IT, GPRA, well, we don’t know. I mean,
again, we have not been in there for several years to even really
address these questions. But I would be able to probably say that
every budget analyst should be doing small M management; that
is, how well is my program working, what data do I have, how
well-designed is it, what does the implementation record look like,
do we need to rethink the formulas we are using, the matchin,
rates, the administrative arrangements, and that kind of thing. If
they are not doing that, they are not doing good budget analysis.

‘hat is why integrating budget and management together really
not only, as OMB argues, may give you more leverage in the man-
agement side, but should improve the quality of your budget analy-
sis. It is hard to imagine a budgeter overlooking financial state-
ment data and doing an analysis of an important agency program
or making decisions on IT without using some of the tools that we
have now given in that process.

So it’s a question that we have not addressed directly, but I
think it partly depends on what specific management focus you

ave.

Mr. Horn. We will give you a large list of questions to which
you're free to add your own on this very subject.

In the OMB 2000 reorganization, as I remember, OMB moved a
total of 68 staff members from management staffs to the five re-
source management offices where the budget is considered. I agree
now and I agreed 30 years or so ago, when I wrote “Unused Power:
The Work of the Senate Committee and Appropriations.” I sug-
gested we merge committees up here, which, you know, that will
be the day, but we could merge appropriations subcommittees into
a similar five areas so we could deal with the budget.

They sent up a unified budget. We rip it into 13 congressional
appropriations subcommittees on both sides of the rotunda. I have
always felt that was a little silly, but we’d have to have the un-
happy departure of eight people before we ever get to that.

But I’m interested in the business of moving the management
staff into these offices. Now, you’d think, and we will be asking—
Mr. DeSeve has had an hour there to know what kind of questions
he’s going to get, which is rare around here, but I want you on the
record, too. But I think that ought to help with budget examiners.
But a good management team can send over a whole bunch of

uestions to every budget examiner, also. You don’t need to sit
there, but you just need to make sure that the budget examiner un-
derstands what the management problems are in that particular
agency.

Obviously, my query to GAO, and maybe this will be in your
forthcoming study, a best seller, do you see that the level of man-
agement improvement being delivered through the resource man-


98

{As part of the Government-wide Performance Plan, required by the Government
Performance and Results Act, there is a three part description of the executive branch’s
Management Agenda. This includes a list of 22 Priority Management Objectives. 11 of
these are cross-cutting Objectives and 11 are agency specific. Commitments for each of
these Objectives are included in the President’s Budget and measures will be available on
the OMB Home Page.

4. Of course, OMB also has a number of legislative obligations to improve agency
management, like:

Federal Managers Financial Integrity Act

Paperwork Reduction Act

Chief Financial Officers Act

Government Performance and Results Act

Government Management Reform Act

Regulatory Reform Act

Federal Financial Management Improvement Act

IT Management Reform Act

Do you have any more to add?

This information was already submitted for the record with the hearing transcript on
December 19, 1997.

5S. Plus, of course, things that pop-up from time to time. Like the Y2K problem that
this subcommittee has spent so much time investigating. OMB has been a major factor in
helping agencies report their progress but I am afraid it may be too little too late. Some say
we need a Y2K czar to prevent these kinds of problems and provide the focused
‘management attention required. Do you think OMB can handle the workload of Y2K and
other things that pop-up?

As it does on many management issues, OMB works cooperatively with an interagency
group — in this case, the CIO Council ~ to leverage its resources, In the Y2K arena, the
‘CIO Council is proving to be an effective means of developing and sharing best practices
and communicating OMB's management priorities. This collaborative approach permits

OMB to remain a small, effective organization that integrates management and budget in
its oversight of Federal agencies. We will continue to evaluate our needs for resources on
a case by case basis.

6. __ Have you heard of Larry Olsen, CIO for the State of Pennsylvania. He has only »
andful of people but has provided free to his state agencies database software that does
agency management and tracking with electronic updating for his central reporting. It is
embarrassing when a couple of state guys out-do the whole Federal Goverament. Why
didn’t OMB have the resources to do what PA did and avoid the waste and duplication of


91

Mr. Davis of Illinois. I only have one additional question. We
have talked a great deal about the leadership issue and that being
a direction for the Office of Management and Budget to provide
leadership initiatives and directives. What would you consider to be
the most critical leadership issue that we are facing right now?

Mr. DESEvE. I am actually going to give you and Chairman Horn
an opportunity to help me with that one. I think we have moved
in a new direction. I don’t have my briefcase with me, but there
is a wonderful piece that the Harvard Business Review did on the
history of management. I think they probably started in the 1890’s,
they didn’t go all the way back.

‘here it is. Thank you.

It is kind of a management timeline. It takes into account the
changes in management. Let me just see where they start here. Of
course, they pinpoint all the Harvard Business Review articles
along the way. They start in 1922.

Mr. Horn. This is like going from the caveman up to the Renais-
sance.

Mr. DESEVE. Yes, sir. They actually started in 1922 when the
Harvard Business Review was created. They don’t admit manage-
ment before then.

Mr. Horn. I take it we will get a few copies for members? How
do, we do that? Do they want hard cash at the Harvard Business

ool?

Mr. DESEvE. I don’t know. I think we are evolving now in a new
direction. In fact, I am going to give a speech tomorrow. Mr. Horn
leads off this afternoon, I think, & wn in Richmond.

Mr. Horn. I did it last night. I only had to sit on the highway
coming back an hour and a half. They are paving the road. ff you
leave at 10 p.m., you are in trouble.

, Mr. DESEVE. nk you for telling me. I will try to get out ear-
ier.

I am going to talk about a concept, and this is going to sound
like the flavor of the week or the buzz word, called network man-
agement. I think what is evolving now, instead of command and
control management, is we are moving away from the mainframe
strategies that we have seen historically toward a strategy where
a set of users can band together in the presence of authority—and
they need to have authority available to them—to solve problems
collectively and then take those solutions back to their own home
agencies or back to their own functional groups.

OMB needs to be the network administrator. We need to help the
information flow back and forth. We need to maintain the network.
We need to assemble it and maintain it. We need to route and re-
route information, and we need to deal with rules and regulations
that help that information flow back and forth.

So I think there is a new analog to leadership. It isn’t by doing,
and it isn’t even by just providing guidance and walking away. It
is leadership by continuously making sure that problems are
solved, that partnerships are formed, and that information is taken
back and forth.

Again, when we did the capital programming guide, we had 80
people at different stages working on the four phases of this, doing
the things they did well. And our job at OMB was to integrate it


ll

Basically, as you are well aware, Mr. Chairman, implementing
management initiatives in a budget environment is not a self-exe-
cuting proposition. It requires quite a bit of development and insti-
tutionalization. We did find that OMB gave attention in the budget
cycle we reviewed to management issues. However, we raised some
concerns about whether that attention will be sustained over the
long term, and particularly focused on a couple of concerns. One
that was brought to us by some of the examiners that we talked
to was their own capacity to address some of the more technical
management issues, such as financial management and informa-
tion technology. We suggested that OMB develop a more explicit
strategy for how that capacity could be enhanced.

We also were able to focus on several different models that ex-
isted across different RMO’s for relationships with the experts in
the statutory offices, regarding a variety of management policies.
We suggested that more explicit study be given to the question of
how expertise is integrated within OMB itself.

Their fourth major goal in their plan focusing on management
addresses some of these issues like training, but we think it does
not go as far as perhaps it could in the future to more explicitly
address the critical success factors involved in sustaining an
institutionwide focus on management leadership.

Having said that, I want to conclude by saying that in general,
we found that OMB has made substantial improvements in its
strategic plan. Validating GPRA, the plan really for the first time
provides a public explanation of OMB’s priorities and strategies in
a variety of areas and is a very useful document for a variety of
people, both within OMB as well as in the Congress, to assess
progress made in some of these critical areas. The agenda of Fed-
eral management issues remains daunting, and OMB will clearly
be expected to provide leadership across a variety of areas.

We recognize there are a number of forums where OMB will fur-
ther articulate some of their strategies and objectives in addressing
some of the issues I have talked about here. Forums such as the
Governmentwide strategic plan, the annual performance plan that
is due in February; other areas where they may very well articu-
late more specifically their management priorities. We intend to
work with the Congress and OMB and the agencies to review these
initiatives as they become more specified and help work together
to resolve the outstanding problems we face.

Thank you.

Mr. Horn. I thank you. That is a very useful statement, as are
your written documents, all of which will be in the record.

[The prepared statement of Mr. Posner follows:]


7

Chief Information Officers Council (CIOC) — Executive Order 13011 -- OMB Deputy
Director for Management, other OMB/EOP officials, and the agencies’ Chief Information
Officers.

Regulatory Working Group (RWG) -- Executive Order 12866 —- OIRA Administrator,
other EOP officials, and representatives of regulatory agency heads.

Interagency Council on Administrative Management (ICAM) -- Executive Order 13048 —
OMB Deputy Director for Management and agency senior administrative management
officials.

OMB chairs other Councils that are established in statute (e.g., the Chief Financial Officers
Council) or administratively (e.g, Electronic Processes initiative Committee (EPIC), the Federal
Credit Policy Working Group, and the Federal Procurement Council.) These Councils assist
OMB iin policy development, and help to identify and implement ways to better manage Federal
resources. The groups meet regularly to initiate action, undertake projects, exchange information,
set priorities, and recommend policy direction.

3. believe that OMB also has « number of what I call Administrative obligations to
improve agency management. What level of effort has OMB expended in the past and
what kind of help can agencies expect from you to address the GAO high-risk projects?

OMB expends considerable resources to improve agency management. Throughout the
budget formulation and execution processes, resources are identified for agency
management and program needs; and OMB staff assist agencies in their efforts to improve
program operations and administrative management. For example, OMB staff are
working with nearly 100 departments and agencies as they prepare to issue annual

plans required under GPRA. OMB, Treasury and GAO are working closely
with the agencies subject to the Chief Financial Officers Act to remove obstacles to
agency efforts to issue unqualified and timely audited financial statements. To leverage its
‘own staff capacities, OMB also provides leadership to inter-agency working groups which
share the work of policy development and identifying and implementing the means to
better manage Federal resources.

‘Other examples of OMB’s leadership on management improvement initiatives include:
spearheading year 2000 compliance; pushing for better debt collection results; actively

implementation of performance-based service
contracting. Several of these initiatives are also on GAO's high risk list, Resources for
staffing these initiatives are drawn from across OMB — the Resource Management
Offices, the Office of Federal Financial Management, the Office of Federal Procurement
Policy, the Office of Information and Regulatory Affairs, and the Budget Review
Divigens


102

cutting objectives (e.g., year 2000, GPRA, loan portfolio management, debt collection),
‘OMB and appropriate inter-agency working groups are identifying and implementing
solutions. OMB staff and agency managers are pursuing a number of different approaches
to the eleven agency-specific objectives. For example, OMB participates on Education’s
Student Aid Modernization Board and the IRS Modernization Board, which are
responsible for resolving those problems, For each of the 22 objectives, the Budget
includes a performance measurement/commitment on what will be accomplished, and each
of these objectives will be backed up by an action plan. In looking at the overall
Management Agenda and the GAO high risk list, you will see that there is considerable
overlap between the two.

13. Tam simply concerned about OMB's capacity to accomplish all its obligations. Are
you confident that OMB’s resources are sufficient for its strategies, objectives, goals, and
mission?

Tam confident that OMB’s resources are sufficient for the accomplishment of our mission,
goals and objectives.

14, We should be able to see a clear logical connection from mission to goals and
objectives to strategies and resources to performance goals. What is the linkage between
performance and Goal 2, Objective E? Maximize social benefits of regulation while
minimizing the costs and burdens of regulation. Is it just how many regulations OMB
reviews? Which, of course, is process not results. Is it, rather, how many are eliminated?
What results measures does OMB intend?

‘A major objective of regulations is to produce the greatest amount of benefits for society
with the least amount of costs to society. Before issuing a significant regulation, agencies
are required by Executive Order 12866 to provide OMB with information on the costs and
benefits of the regulation and its feasible alternatives. OMB assesses the information and
works with the agency to, among other things, “maximize net benefits” and “impose the
Teast burden on society.” The number of regulations reviewed or the number eliminated
are not meaningful indicators without information on the net impact those regulations
produce on society. OMB will work with agencies to improve techniques to measure
benefits and costs, and by using its role as central regulatory reviewer, OMB will support
more uniform application of standardized assumptions and methodologies across
regulatory programs and agencies.

15. Lets take another, Goal 2, Objective F. Improve the performance of Federal
programs and the quality of public access to information and services by promoting sound
Federal and national information, information technology, and statistical policies and
practices. Your performance discussion on this objective looks more measurable but it is
missing IT strategic planning, Clinger-Cohen says OMB shall ensure IT strategic plans
derived directly from agency strategies. In other words, the Results Act plans should drive


65

substance. He took an active rote in preparing the Mission Statement and has carefully
reviewed the entire plan.

e Producing a Draft Plan: The SG prepared a summary of the August Working Session, and
subsequently produced outlines and then drafts of an OMB strategic plan. These
documents were reviewed and commented on by OMB staff in an iterative process.

© Operating Plans: In order to meet the needs of the agency's internal planning process,
each office in OMB was asked to prepare an operating plan covering its activities. The
units were asked to prepare their plans in the context of the draft outline of the OMB
strategic plan. The SG then reviewed the individual plans to assure that there was
consistency between the OMB strategic plan and the operating plans and that they
reinforced one another.

@ — “Standdown” Day: At the end of February 1997, all OMB units devoted an entire day to
having their staffS discuss two subjects: (1) the unit's operating plan (then under
development), and (2) the draft outline of the OMB strategic plan (each unit was asked to
provide written comments on the draft).

The various reviews and multipte discussions described above culminated in a draft plan
(dated July 23, 1997) that was used as the basis for Congressional consultation and stakeholder
review. Copies of the draft strategic plan were provided to the House and Senate Appropriations
Committees, the House Government Reform and Oversight Committee, and the Senate
Governmental Affairs Committee. Copies of the draft plan were also made available to GAO and
the Congressional Research Service (CRS) in the Library of Congress. Several Congressional
consultation meetings were held on the plan

Copies of the draft plan were also provided to all Cabinet departments, many independent
agencies, and other offices within the Executive Office of the President _A specific distribution
was made to all agency Chief Financial Officers, Inspectors General, Chief Information Officers
and members of the President's Management Council, In addition, the draft plan was posted on
OMB's website so that the general public could have access to it

The draft strategic plan was revised significantly as a result of views expressed during the
Congressional consultation meetings, written assessments prepared by GAO and CRS, and
comments from several agencies and public individuals. The final plan reflects the salient
comments received during the consultation process and a final internal review within OMB.

Third Phase: The operating plans referred to above are currently being reviewed in the context
of the strategic plan to elicit from them key performance measures which will be used in the
development of the OMB performance plan.


71

porting individuals, you would have to allocate their time as you
allocate any overhead to the other functions, but if you took any
program examiner in OMB, that some significant portion—what do
I mean by significant? It would vary by account. But at a minimum
of 10 to 15 percent of a program examiner’s time will be devoted
to tasks that would fall under what Mr. Posner would call big M,
whether they be financial statements or information technology.
There is a significant amount of big M infused with everybody.

So while 85 percent of this—this one junior analyst who just
came on Tuesday—I was sitting in my office when a junior analyst
showed up who has probably been on the job 2 or 3 months. He
wanted to talk to me about the organizational structure in the
Commerce Department. With him was somebody from our Legisla-
tive Reference Division, Mr. Breul, and I don’t know who the other
guy was. I’ve got to find out who that was. He may have been with
the NEC. Anyway, this young analyst and I talked about whether
we should do this. Should we have this kind of a PBO? What
should the procurement authorities be? That mentality is infused
throughout the organization.

So when John said there were 540 people involved in manage-
ment, I don’t think he meant to convey that they were working
every day, all day, only on those issues. Rather, I think he meant
they had a significant familiarity and had a tool box of things that
they needed to do.

In terms of the high-risk series, how are we getting from those
folks? It would be useful, though it’s not something that we could
ever do, to have you sit through an IRS modernization manage-
ment board meeting and watch Kathleen Turco, who is a GS-15
program analyst who is one of the folks who used to work in
OFFM, sent over to the other side to work with Art Gross, Larry
Summers, and Mike Dolan—I realize I’m bringing up IRS—to try
to recraft the way they’re doing information technology practices.

And I think you will find in the next couple of years that IRS
will have gone from being what you quite often refer to as an infor-
mation technology basket case to be someone who’s leading the
pack.

There’s enough money there. They've forged a very strong part-
nership with their vendors, as well as their strategic vendors.
They’ve taken Raines’ rules to heart.

But it’s Kathleen who, on a day-to-day basis, interacts with them
on that management issue. She probably spends 40 or 50 percent
of her time on management issues, because IRS is facing those
kinds of management challenges.

Mr. Horn. Well, I guess I would ask the question, if she can
spend that time now, where was she, and where was OMB some-
where between the $4 million mark, the $40 million mark, or the
$400 million mark before it got to the $4 billion mark.

Mr. DESEVE. I would like to get the basis for the $4 billion mark
I don’t have the $4 billion engraved in my mind. That seems a lit-
tle larger than any number I have. But I'll be happy to go back and
take a look at it.

Mr. Horn. I think you'll find the implementation costs down the
line would be near $30 billion. But, apparently, they stopped at the


16

goal to achieve a federal procurement system comparable to those of high performing
commercial enterprises. It says that OMB will identify annual goals to gauge OMB's
success, and discusses the means and strategies (such as working with agencies to
promote the use of commercial buying practices) it will use to accomplish this goal.
OMB also commits to working with the Federal Acquisition Regulation Council to revise
regulations and publish a best practices document. In the area of regulatory reform,
OMB also commits to improving the quality of data and analyses used in regulatory
decision-making and to developing a baseline measure of the net benefits for Federal
regulations. OMB's clear and specific description of its strategies for its procurement and
regulatory review objectives could serve as models for developing strategies for its
Results Act and crosscutting objectives.

Although strategies to provide management leadership in certain areas are more specific,
other strategies could benefit from a clearer discussion of time frames, priorities, and
expected accomplishments. For example, to meet its objective of working within and

across agencies to identify solutions to mis

jon-critical problems, OMB states it will work
closely with agencies and a list of other organizations to resolve these issues. However,
OMB does not describe specific problems it will seek to address in the coming years or
OMBs role and strategies for solving these issues.

In defining its mission, goals, objectives, and strategies, OMB's plan recognizes its central
role in "managing the coordination and integration of policies for cross-cutting

interagency programs." The plan states that in each year's budget, major crosscutting and
agency specific management i

tiatives will be presented along with approaches to solving
them. The plan also provides a fuller discussion than was included in the July draft of
the nature and extent of interagency groups that OMB actively works with in addressing a
variety of functional management issues. Specific functional management areas, such as
procurement, financial, and information management, are incorporated as long-term
objectives.

Page 5 GAO/T-AIMD/GGD-98-10


99

every Federal agency doing its own? Plus, of course, the confusion and error from having
each agency count things differently, despite OMB guidance. Has OMB looked at this
software that PA is giving away free?

OMB has worked with Larry Olsen to organize a very successful State-Federal summit on
the year 2000 computer problem in November 1997. We will contact Mr. Olsen about his
software. Today, agencies already track their management objectives using their existing
management information systems, many of which are commercial products that have been.
acquired from the private sector.

1. Collectively your workload is pretty impressive. OMB has obligations to improve
agency management in general and in specific from both the President and the Congress.
Lets turn now to your strategic plan and see just how you intend to accomplish all this.
Are our lists of obligations adequately covered in your mission statement and long term
goals?

OMB?’s Strategic Plan adequately covers all of our obligations. The Strategic Plan is
supported, with more detail in the FY 1999 President’s Budget and the OMB Performance
Plan, In the President’s FY 1999 Budget, Section IV, Improving Performance Through
Better Management, we present a comprehensive discussion of the full Management
‘Agenda which includes the National Performance Review's High Impact Agencies, the 22
Priority Management Objectives, other critical management initiatives, and the work of the
many interagency Councils, such as the CIO Council and CFO Council. These initiatives
are supported in even more detail in published documents and usually also made available
on Internet web sites. For example, the CFO Council’s Status Report and Five-Year Plan,
issued in June 1997, describes the eight CFO Council priorities, is posted on the OMB
Home Page and is footnoted in Section IV of the Budget. The version of the Management
Agenda that is posted on the OMB Home Page will include “hotlinks” to each of the
websites that is footnoted in the budget so that the reader will be able to see the breath
and depth of the broad Management Agenda.

8 When [look at your mission statement I get concerned. Management seems to be
taking a back seat to the budget. When I look at Goal 2, I just see oversight not any doing.
OMB does the budget, but apparently OMB doesn’t do management. Now I agree that the
budget is vitally important, but, does budget pressure just elbow-out improving
management in the agencies?

Goal 2 in OMB's Strategic Plan is: Provide management leadership to ensure the faithful
execution of the enacted budget, programs, regulations and policies. The Strategic Plan
‘goes on to state that “Management of the Federal Government is a complex process that
requires OMB to provide policy guidance, coordinate activities and assist with
implementation within and across agencies.” Goa! 2 includes 7 objectives ranging from
identifying solutions to mission critical problems; carrying out GPRA requirements;


21

Mr. Horn. I now yield 5 minutes to the gentleman from Illinois,
Mr. Davis.

Mr. Davis of Illinois. Thank you very much, Mr. Chairman.

I found your testimony to be quite interesting. Let me ask, if you
had to choose one area for OMB to focus on, given all of the param-
eters and all of the needs, what would that area be?

Mr. Posner. If in terms of enhancing its own capacity to provide
leadership for the Federal Government in management issues, I
think probably would be the one area that I would suggest. Al-
though there are a variety of issues that regard specific manage-
ment problems, but really how it is going to, as I said a little Cit
ago, sustain its own institutional capacity and focus consistently
across budget years on these management issues, I think is one
thing that really warrants further attention.

The strategic plan is one factor among many that will condition
their success in this area. There is a whole set of questions when
you have an integrated focus, like they do on management, as to
the skills and training of the examiners that are focusing on spe-
cific agencies as to their capacity to address some of these issues.

There is the question about how successful collaboration is with-
in OMB among experts in areas with the examiners, as well as
with agencies. One of the things that OMB has been doing far more
effectively, in our view, is working on councils with agencies so that
you have a partnering approach and a collaboration. Those kinds
of strategies need to be examined as well.

Most importantly, the whole premise of OMB 2000 is the fact
that you can use the budget to reinforce management priorities and
objectives. A real key question is to ensure that that happens con-
sistently so that such criteria as the Raines rules and information
technology performance evaluations can be integrated into OMB’s
review of the budget itself. So there are a variety of critical and in-
ternal factors that will be important to sustain this focus over the
years.

Mr. Davis of Illinois. How well would you Bay that operating
agencies are responding to OMB recommendations?

Mr. Posner. Well, I don’t know.

Chris, do you want to look at that?

Mr. Miu. In any particular area, Mr. Davis?

Mr. Davis of Illinois. No, just pretty much across the board, in
terms of the overall responsiveness to OMB directives and rec-
ommendations.

Mr. Mino. Using examples from our work on the Results Act, I
think agencies have been pretty good in responding to OMB direc-
tion. One of the things that has helped a lot, aside from the fact
that when OMB gives guidance, agencies have a tendency to listen,
is the attempt to integrate management and performance informa-
tion into the budget process.

Agencies have seen OMB get serious about that, and increasingly
they are seeing Congress get very, very serious about that as well.
That has a tendency to focus the minds of agencies and let them
know this is not a separate drill to be done by some staff office,
but the Results Act is something to speak right to the heart of how
they run their agencies and how resources are to be allocated. So
the integration of performance information into the budget process


50

Relationship to Annual Performance Goals

The ultimate achievement of a balanced budget is not controlled by OMB.
However, OMB’s contributions in developing policy to affect this outcome can be
measured, In particular, OMB's role in achieving enactment of a budget that
conforms to the agreement can be assessed. In addition, the President's Budget
contains recommendations for reforming or, where necessary, eliminating less
effective or lower priority programs, and for shifis in resource allocations or policy
changes to meet Presidential priorities more effectively within a balanced budget
framework. Goals based on these recommendations will be included in the OMB
annual performance plan.

Means and Strategies

OMB will work with the Congress to follow up on the Balanced Budget Act and
seek to assure that balance is achieved in 2002 and sustained thereafter. In
particular, OMB will follow up to ensure that, (1) the discretionary caps and
PAYGO limits are not breached, and (2) within those limits, the President's
priorities and policies are protected to the maximum extent possible. OMB’s work
will include analyses of the effects of particular tax, appropriation, and mandatory
spending policies, continued enforcement of sound budget concepts, and cross-
cutting efforts to enhance fiscal discipline

External Factors

Achievement of a balanced budget by 2002 is premised on spending and revenue
projections that are based on economic assumptions for the next five years A
significant change in economic conditions could affect the ability to achieve this
objective. In addition, Congressional cooperation, through the enactment of
revenue and spending measures that achieve balance by 2002, is essential

Ensure that the budget documents are timely, accurate and of high quality.
Provide prompt and accurate scoring for legislation that affects the budget.

elationshi nual Perfor)

This objective lends itself to clear, quantifiable measures of performance, such as
the timeliness and accuracy of budgetary documents and of the scoring of
legislation, OMB currently asks users to comment on the quality of the budget
document


95

ples and oranges. That is a good example of what we have gone
through on that. We don’t know how truthful that is. GAO looked
into five of them, and they certainly pave us an earful on the de-
gree to which the agencies knew what was happening. I think
somewhere the Director and the President have to face up to this
issue.

Any thoughts?

Mr. DESEVE. Again, I would ask you to invite Sally up here and
have a chat with her, and I am sure you will very shortly. I think
she believes that, with the quarterly reporting process and the
work she has done with the CIO Councils and IG’s, they are mak-
ing good progress. But I can’t testify for her.

Mr. Horn. We will be holding more hearings on this. We will be
also holding hearings on the implementation of the Clinger-Cohen
Act and the degree to which agencies have taken advantage of the
flexibility that your fine agency, this committee, the Senate com-
mittee, and the Congress, as a whole, authorized them to do. If we
are still in the same old rut and haven’t had creative proposals and
initiatives in this area, we are missing a major opportunity.

Mr. DESEVE. That is correct.

Mr. Horn. OK. Well, we thank you, and we will have other ques-
tions to submit to you, which we will put at this point in the record
without objection.

(The information referred to follows:]


33

will have room for improvement. We will see that in the headlines
as we go forward.

Our commitment, like yours, is to consistently over a long period
of time to make things better. OMB had a strong hand in creating
the Government Performance and Results Act, working with Mr.
Roth, Mr. Glenn, and others to create that bill, as well as Members
here, as Mr. Clinger and others here in this House. So we're in for
the long haul.

We agree with you that it’s necessary and appropriate to empha-
size not only a plan’s timeliness and compliance of the plan with
the statute, but its quality as well. And you have our commitment
that we will continue to emphasize that quality.

We believe you will see most definitively in the performance
plans that have begun to arrive with the budget and will be coming
in as we go forward.

On my far right is a stack of probably 8 or 10 strategic plans.
Beyond those plans there were performance plans that were at
least as detailed and in many cases more detailed. In terms of the
list I gave you earlier, we will be happy to make available copies
of any of those plans. If you want all of the plans, the size of the
stack would multiply about 10 or 12 times, just because of the
scope of the agencies.

We talked about how the plans came into existence, that is, the
OMB guidance, the review, and the work done to perfect those
plans. That was done by 540 people. It was done by program exam-
iners who met continuously with the agencies as well as my staff,
and the BRD staff, supported by the administrative staff.

Why did we do that? Well, if you look at OMB’s mission, you will
see that it is to help the President carry out his constitutional and
statutory duties; to create policy relating to expenditures, receipts,
regulations, information, and legislation; to manage the executive
branch of the Government in the faithful execution of laws, poli-
cies, and programs; and to provide the highest quality analysis. In
assisting the President with the management of the executive
branch, OMB has numerous OMB-specific statutory responsibilities
and, there, exercises various delegated authorities.

But if we use the word “manage,” I believe, other than in the
title of OMB, at least twice and maybe already three times, we
should define what management is. So, again, I pick up my well-
thumbed copy of Drucker. This page is even dog-eared. It says:
“Management in turn is the organ of the institution.” And I believe
he means internal organ as opposed to pipe organ here. I wasn’t
quite sure when I read it. “It has no function in itself, indeed, no
existence in itself. Management divorced from the institution it
serves is not management.” He then goes on to define management.
He says that management is the enabler to achieve the specific
purposes and missions of an institution, whether it be a business,
enterprise, hospital, or university. Management is about making
work productive and the worker achieving and managing social im-
pacts and social responsibilities.

The comportment between Drucker’s definition of management
and OMB’s overall mission statement, of the indecipherable Office
of Management and Budget, is, I think, very high. There’s a high
degree of consonance between the two.


WwW

However, OMB's plan could more specifically address how OMB intends to work with
agencies to resolve long-standing management problems and high-risk issues with
governmentwide implications” For example, in the information management area, OMB's
September plan refers to critical information technology issues, but it does not provide
specific strategies for solving these issues. OMB discusses the ability of agencies’
computer systems to accommodate dates beyond 1999 (the year 2000 problem) as a
potential performance measure and states how it will monitor agencies’ progress.
However, the plan does not describe any specific actions OMB will take to ensure this
goal is met. We have previously reported on actions OMB needs to take to implement
sound technology investment in federal agencies.’ In a related area, OMB has elsewhere
defined strategies and guidance for agency capital plans that are not explicitly discussed
in the strategic plan.

With respect to programmatic crosscutting issues, questions dealing with mission and
program overlap are discussed only generically as components of broader objectives
(such as working with agencies to identify solutions or to carry out the Results Act). The
Congress and a large body of our work have identified the fragmented nature of many
federal activities as the basis for a fundamental reexamination of federal programs and
structures. Our recent report identified fragmentation and overlap in nearly a dozen
federal missions and over 30 programs.‘ Such unfocused efforts can waste scarce funds,
confuse and frustrate program customers, and limit overall program effectiveness. The
OMB plan states that the governmentwide performance plan, which OMB must prepare

"High-Risk Series: An Overview (GAO/HR-97-1, Feb. 1997).

and Minimize Risks (GAO/AIMD.96-6, “September 20, 1996) and Information Management
and Technology (GAO/HR-97-9, February 1997).

4

Managing for Results: sing the Re: A to Address
Program Overlap (GAO/AIMD-97-146, Aug. 29, 1997).
Page 6 GAO/T-AIMD/GGD-98-10


Goal 4;

61

other key actors can provide the primary data and analyses necessary as inputs to
OMB analyses. Also, longer range analysis of programs can be interrupted by
shorter range, more immediate fiscal crises and/or "firefighting" assignments

Improve OMB's means for accomplishing work, including development and
use of its human resources and information systems.

Objectives

A

Recruit, develop, and retain a high quality and diverse staff.
Relationshi p Goal

The following performance measures may be used for this objective: differences
‘between current staff and recruited staff with respect to gender, ethnicity, and
disability (reporting will be against a baseline, no quantitative goals will be set);
turnover rate among entry level staff compared with their government cohort, and
increase in opportunities for staff access to mentors.

Means and Strategies

To accomplish this objective, OMB will: develop and carry out a plan for
improving the effectiveness of on-campus and mid level recruiting: explore options
for creating a work place environment that recognizes individual needs within

workload and resource constraints, and continue and enhance mentorship
programs, encouraging highly qualified senior staff members to serve as mentors.

‘External Factors

‘The training and experience of OMB staff make them highly attractive in the job
market. Despite the importance of the work done at OMB and the high value
placed on it, a substantial upward change in the current private-public sector pay
differential for OMB staff with highly valued analytic and knowledge-based skills
in certain high-demand business areas, e.g., health care economics, could offset
OMB's initiatives to improve retention.

Increase the opportunities for all staff to enhance their skills and capability.
Belationship to Annual Performance Goals
Among the performance goals OMB may use to record achievement of this,

objective are: the percentage of OMB staff during the fiscal year in rotational
assignments (internal and external), or on temporary assignment or detail

7


‘ONE MUNORED FIFTH CONGRESS. Ses
Congress of the United States a
Mouse of Representatives: SGeurg caus"
‘COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT ies
2187 Pavounn House Orrick Buon Paes
Wasinaron, OC 20516-6149

“OMB’s Results Act Strategic Plan”
October 6, 1997

OPENING STATEMENT
REPRESENTATIVE STEPHEN HORN (R-CA)

Chairman, Subcommittee on Government Management,
Information, and Technology

‘This is the fourth in a continuing series of oversight hearings on the Government Performance
‘and Results Act of 1993, commonly known as the Results Act. As we have learned in the previous
hearings, the Results Act has enormous potential to improve agency performance. It will help to align
agency objectives with legislative intent, o eliminate ineffective and duplicate programs, and to
improve measurable program results. Our focus today is on the role of the Office of Management and
‘Budget in the implementation of the Results Act. We want to know whether OMB is fulfilling its vital
role as the primary agent of Executive Branch management reform.

‘The Results Act advances management reforms by requiring - for the first time ~ that Federal
agencies develop (1) a results-oriented strategic plan, (2) a performance plan that establishes
‘measurable goals, and (3) an annual report of actual versus planned performance measures. Agencies
‘must answer the kind of common sense questions that every business has been asking for years: What
is the agency's mission; what are its specific goals and objectives? What strategies and resources are
necessary to achieve them? What are the measurable results targets for each program? What are the
actual results achieved?

If the plans and reports are done correctly, agency management, the President, Congress, and
the American people will have the facts to judge government performance agency by agency and
program by program. They will havea side-by-side comparison of planned and actual results on an
‘annual basis, This will be a historic achievement, but one that depends eniely on successful
itaplementation ofthe Results Act. We must make an extraordinary commitment to that efor.

‘The Results Act involves a major reform of Federal practices. Any such reform requires both
vigilant oversight by Congress and vigorous administration within the Executive Branch. The Office of
Management and Budget is the specified administrator of this Act. The burden on OMB is therefore
twofold. One, it must improve its planning and results in accordance with the Results Act just like all


93

Mr. DESEVE. You will get a preview of them in early December.
And I want to sit and talk with this committee about them. You
will see them at that point. You may have ones that we don’t have.
There are some areas in which we had to prioritize and didn’t in-
clude things that may be close to your heart.

Mr. Horn. I will tell you one that really isn’t the jurisdiction of
this subcommittee, but it is close to my heart. I think President
Carter deserves great praise for having been able to create the Sen-
ior Executive Service, and I would hope that as part of the admin-
istrative obligations to improve agency management, that we look
at the Service and the degree to which it is really fulfilling its
promise and mission.

For example, last night when I was speaking at this leadership
conference, many of them there are senior executive people. The old
worry if they leave their agency and go to another one, is that
looked down upon? Or if they leave their agency and go work a
year in the private sector, is that looked down upon?

My bias is that it is marvelous. They are getting a new perspec-
tive and they don’t have to stay forever with one agency. I think
moving around among agencies, just as we mandated with the mili-
tary; that if you are going to be a general or an admiral in this De-
partment of Defense, you need joint service on the way up. Not just
after you become a general or an admiral, you need to work on that
as a lieutenant colonel, colonel, and so forth.

So I, for one, while it is in Mr. Mica’s jurisdiction, would like to
see some creative work done here by OPM, at your direction, that
might appear in that budget, because if we do not have the top
leadership in the civil service, we are in trouble, no matter who is
in charge at the White House. We need the first-rate people re-
cruited out of the schools of America, and we need incentives to
keep good people in the Government. There were a lot of retirees
down there last night.

Mr. DESEVE. Let me give you a sense of how we are going to try
to operate. We had a very extensive 3-hour discussion about the
SES among the Deputy Secretaries that was led by Janice
LaChance, the new Director-designate for OPM. I think although
I would like to be able to tell you that everything will be in the
list of the top 15 priorities, that this will be a priority of the Presi-
dent. It has been and will be, as office closures were a priority of
the President’s Management Council, just as some of the other
things are priorities of the CFO Council; and although by reference,
we will incorporate helping the President’s Management Council
and that certainly will be one of the things that we worry about.
You may have to look down the list a little bit to find it, because
the PMC cares very much about this.

Janice was wonderful. She put a big manual together on the his-
tory of the SES, that looked at staffing levels by function. What we
are finding is it has been a reward in some cases in terms of tech-
nical expertise, but that expertise is not transferable outside the
agency. So we get folks stuck with a supergrade that would not be
very helpful in other places. So we agree with you.

If you talk to James Lee Witt from FEMA, if you talk to Gen.
Jack Dailey from NASA, they are moving their SES’s all over the
place, out into the field and bringing them back and so on. So there


38

Mr. Horn. Without objection, I would like to have the staff on
both sides try to put some of the examples in the record. We obvi-
ously can’t put everything in but——

Mr. DESEVE. We'll be happy to.

Mr. Horn. We will put some examples so people know what
you're talking about.

Mr. DESEVE. I’m going to ask Mr. Breul and Mr. Groszyk to work
with your staff to get that done.

Mr. Horw. Fine.

Mr. DESEvE. And at least they can fully be incorporated by ref-
erences and a number of exhibits.

And finally our last objective, and I mentioned this earlier, is leg-
islative clearance. We call it legislative clearance, but it’s really
testimony clearance and other things. Again, it too is tremendously
important coordinate of force.

Before I move on, I’m sorry, I missed one thing. We call this the
Steve Horn Companion Report. When we talk about Y2K, we again
see the power of management and budget working together. As you
know, the sanctions in M for Y2K are budget related. You’re famil-
iar with this report. And you saw that what we did was to draw
on the very good work that you’ve done, in our efforts to report to
you and other Members of Congress, on the agencies’ progress on
Y2K.

We've put in place budget sanctions on three agencies. We've told
them that they will get no more money in 1999, because that’s the
next budget, but also that there will be strictures put in place for
1998 until they get the money to do the Y2K fix that needs to be
done. Again, this is the integration that we see time and time
again within OMB. That’s important. And managing across that
interface is important.

Goal 3 talks about——

Mr. Horn. I might add that we will be asking the Director for
a list of the reprogrammngs that have been done at the close of fis-
cal year 1997 directed to the year 2000 problem.

Mr. DESEvE. Thank you.

Mr. Horn. And without objection, it will be put in the record at
this point, plus the appropriate hearings that will follow.

[The information referred to follows:]

Most agencies were able to cover their FY 1997 Year 2000 activities within the
amounts already programmed for Year 2000 or other information technology activi-

ies,

Agencies which did reprogram FY 1997 funds include the IRS, in the amount of
$80 million, the Marine Corps, in the amount of $4 million, and the US Agency for
International Development, in the amount of $4 million.

Mr. DESEVE. Fine. Would you like us to respond in that way? Or
are you going to be sending a letter as well? I’m happy to do it ei-
ther way.

Mr. Horn. Well, let’s do it the easiest way we can.

Mr. DESEVE. Fine.
hi Mr. Horn. If you want to get a staff to put it in the record that’s

fine.

Mr. DESEVE. I'll ask Ms. Kountoupes to take that, and we'll get
the folks started working on it.


x

100

improving the acquisition process, financial management, information technology, and
statistical policies and practices, regulation management; and legislative coordination and
executive order clearance.

OMB staff work on the full range of management and budget functions. There’s no
question that for three months of the year the process of formulating the President’s
budget is a primary activity of OMB staff. But budget formulation includes management,
and still is just one of the many functions that OMB staff perform. OMB staff developed
the budget, and assessed agency performance for Year 2000 transition; worked with
Treasury and GAO to identify and work to remove obstacles to agencies efforts to obtain
unqualified opinions on audited financial statements, and worked with the agencies to
implement GPRA, among other tasks.

In addition to OMB resources, we also leverage the efforts of inter-agency Councils to
help us achieve our goals, what I call Network Management. In Section IV of the
Budget, the work of the these inter-agency groups is highlighted. These groups meet
regularly to initiate action, undertake projects, exchange information, set priorities, and
recommend policy direction. The groups include the President’s Management Council,
the President’s Council on Integrity and Efficiency, the Joint Financial Management
Improvement Program, the National Partnership Council, the CFO Council, the CIO
Council, the Electronic Processes Initiative Committee, the Federal Credit Policy Working
Group, and the Federal Procurement Council,

Let us look at a couple of the objectives in the plan. They sound great but it is not

clear what OMB intends to accomplish. For example, Goal 2, Object A: Work within and
across agencies to identify solutions to mission critical problems. Could you comment please
on just what it is that OMB expects to da? Perhaps it would help me if we looked briefly at
what OMB did this year: How many new mission critical problems did OMB identify?
How many did OMB improve? How many did OMB fix? Does OMB do these things or
just oversee others doing them?

As I briefly mentioned in my testimony, the Director has identified 22 Priority
Management Objectives, some of which are long-standing weaknesses that need to be
fixed, while others are areas that we have identified so that we can take a proactive stance
to assure efficient and effective Government. The Priority Management Objectives are
divided into two categories — inter-agency and agency specific. Included on the inter-
agency list are: Year 2000, GPRA, Financial Management, Information Technology,
‘Selected inter-agency systems, Acquisition Reform, Loan Portfolio Management, Debt
Collection, International Credit Programs, Statistical Programs, and Regulation. On the
Agency-specific list, objectives are identified for the following agencies: DOD, Education,
Energy, HUD, Interior, Transportation, Treasury, VA and the Social Security
Administration. These 22 objectives are discussed in more detail in Section IV of the
Budget and also are posted on OMB’s Home Page.


4

‘Let me hasten to add that as these plans and reports are sent to Congress, they are made
available to the public as well, so we should not overlook that we have embarked on a very public
journey of responsibility and accountability.

Even more unprecedented, by nearly any historic measure, is the sheer scope of
government enterprise encompassed by these agency strategic plans. Together, these plans set
out a general course of action for how approximately ten trillion dollars will be spent, and what
that money will buy -- whether it be products, service, benefits, or security -- for the American
taxpayer. Certainly, no Western democracy has prepared strategic plans on this scale, or even
attempted the task.

This first set of plans is not perfect, each will have flaws to some degree. This lack of
perfection is widely recognized, Renowned management expert Peter Drucker says of strategic
planning, “Management has no choice but to anticipate the future, to attempt to mold it, and to
balance short-range and long-range goals. It is not given to mortals to do well any of these
things. But lacking divine guidance, management must make sure that these difficult
responsibilities are not overlooked or neglected but taken care of as well as is humanly possible.”

We are still learning how to do this, and so changes will be made, improvements
introduced, and future plans will be better. And I hope never to see a ‘perfect’ plan. We must
look at these plans as dynamic instruments, not immutable documents for a museum case or dusty
shelf.

I noted earlier that nearly 100 agencies are submitting plans to meet the strategic plan
requirement of the Results Act. I have available today a list of more than 90 agencies whose
plans are characterized as timely and compliant. This represents a total timely compliance ratio of
94 percent ~ an “A” in anybody's book. For a handful of agencies, their plans will be delayed by
several weeks to several months, but all will be sent to Congress well in advance of the transmittal
of their annual performance plans next February.

‘The OMB plan is the first-ever strategic plan prepared by OMB under the Results Act.
Working to prepare such a plan has been an experience we have shared with many agencies. It
has not been easy, nor should it be easy. While a strategic plan may be simple in concept, it is
difficult to execute well. And we have learned and profited from our effort, including our
consultation with Congress and our stakeholders, and we have a better sense of what we will do,
and how we will doit.

While every agency is unique, OMB has many characteristics which set it apart from
others. Our strategic plan tries to capture the dimension of our uniqueness -- as a primary source
of policy advice and assistance to the President, and having very specific statutorily-assigned roles
and responsibilities that cover the entirety of the Executive Branch, and its many and varied
programs and functions.