United States General Accounting Office

GAO Report to the Senate Committee on

Governmental Affairs and the House

Committee on Government Reform and

Oversight

March 1996 MANAGEMENT

REFORM

Status of Agency

Reinvention Lab

Efforts

G O A

years

1921 - 1996

GAO/GGD-96-69

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-260087 

March 20, 1996

The Honorable Ted Stevens, Chairman

The Honorable John Glenn, Ranking

 Minority Member

Committee on Governmental Affairs

United States Senate

The Honorable William F. Clinger, Jr., Chairman

The Honorable Cardiss Collins, Ranking

 Minority Member

Committee on Government Reform and Oversight

House of Representatives

One part of the President’s National Performance Review (NPR) initiative has been the

establishment of reinvention labs in a number of departments and agencies. This report on the

reinvention lab effort was prepared as part of our ongoing body of work examining NPR-related

issues.

We are sending copies of the report to the Vice President and the Director of the Office of

Management and Budget. Copies will also be made available to others upon request.

If you have any questions about this report or would like to discuss it further, please contact me

on (202) 512-8676. Major contributors are listed in appendix XV.

L. Nye Stevens

Director, Federal Management and

 Workforce Issues
Executive Summary

Purpose The National Performance Review (NPR) is a major management reform

initiative begun by the President in 1993 and placed under the direction of

the Vice President. A key part of that initiative has been the establishment

of agency “reinvention labs,” which are designed to test ways that agencies

could improve their performance and customer service by reengineering

work processes and eliminating unnecessary regulations. Although a great

deal has been written about other NPR-related activities, no one has

systematically studied the operation of these labs. Therefore, as part of its

ongoing body of work examining NPR issues, GAO reviewed (1) the focus

and developmental status of the labs, (2) factors that hindered or assisted

their development, (3) whether the labs were collecting performance data,

and (4) whether the labs had achieved any results. To accomplish these

objectives, GAO visited 12 labs and conducted a telephone and fax survey

of all 185 of the labs.

Background An interagency task force comprising staff temporarily assigned from

many federal agencies was established to implement NPR. Although it has

collected and disseminated information about the labs and encouraged

their progress, the NPR task force has deliberately taken a “hands-off”

approach to overseeing the labs. This approach has allowed agencies to

decide whether they will have any labs and has not required the labs to

make any progress reports. The Office of Management and Budget (OMB),

which is responsible for providing management leadership across the

executive branch, has been less actively involved in the labs’ development

or oversight than the task force.

Other management reform proposals have been initiated in recent years,

including significant downsizing of the federal workforce, the Government

Performance and Results Act’s (GPRA) requirements that agencies establish

strategic goals and plans to measure results, and agency restructuring

proposals made as part of a second NPR phase initiated in December 1994.

Several congressional proposals have also been made to eliminate entire

agencies or to consolidate the functions of several agencies.

Results in Brief Officials representing agency reinvention labs throughout the country

indicated that the labs addressed a variety of topics. Although nearly all of

the survey respondents reported that customer service was a primary goal

of their labs, they frequently said that the labs’ customers were other

governmental organizations, not the general public as the Vice President

originally suggested. At the time of GAO’s survey, about half of the labs had

Page 2 GAO/GGD-96-69 Reinvention Labs
Executive Summary

been fully implemented at the lab site while the rest were still in the

planning stage. Over 75 percent of the respondents who expressed an

opinion said that the labs had the support of both top political and career

managers. However, 60 percent of lab officials said they had not needed

the regulatory waivers that NPR officials and others believed would be

needed to develop the labs. Those labs that had requested waivers often

found them difficult to obtain, particularly from central management

agencies. Also, most of the lab officials said they had not had a substantial

amount of communication with either other labs or with the NPR task

force. However, respondents who said their labs did engage in those types

of communication indicated that they were helpful. Lab officials indicated

that contemporaneous reform efforts, such as workforce downsizing, had

both positive and negative effects on the labs.

About two-thirds of the respondents indicated that they collected data on

their labs’ performance, and more than 80 percent said these data

indicated that the labs had improved service, productivity, and employee

morale. Officials from most of the labs that had not collected performance

data said they intended to do so when their labs were more developed.

However, some lab or agency officials said they did not believe such data

were important. Other labs were collecting informal comments or, more

frequently, had no baseline data against which post-lab data could be

compared. Some agency officials reportedly had not used the data the labs

had collected. GAO believes that the labs’ results suggest a number of

promising approaches to improving existing agency work processes.

However, GAO also points out that the real value of the labs will be realized

only when the operational improvements they initiated, tested, and

validated achieve wider adoption.

Principal Findings

Labs Varied in

Development and Subject

Areas

At the time of GAO’s survey, more than 2 dozen agencies and other federal

entities had developed a total of 185 reinvention labs in various parts of

the country. Many of the labs were in progress, about 50 percent had not

been fully implemented at the lab site, and less than 20 percent had been

implemented beyond the lab site. Many of the lab efforts reportedly began

before the President initiated the NPR effort, often as an outgrowth of the

agencies’ quality improvement efforts. However, several lab officials said

Page 3 GAO/GGD-96-69 Reinvention Labs
Executive Summary

that the designation of those initiatives as reinvention labs had

reinvigorated them and given them more latitude and visibility.

The labs covered a variety of issues, with topics ranging from such

traditional issues as personnel management and procurement systems

(each addressed by 45 percent of the labs) to such crosscutting themes as

how agencies could use technology to improve their operations (38 labs).

Nearly three-fourths of the respondents said their labs addressed more

than one subject area, and more than one-third of the labs had multiple

lines of effort.

The Vice President said that the labs were to be initiated where the

government served the public in a highly visible way, and virtually all of

the lab officials GAO surveyed indicated that customer service was a

primary goal of their efforts. However, the labs’ customers varied by lab

and did not always directly involve the public. Most of the lab officials

viewed at least one of their labs’ customers as other governmental

organizations, and for some of the labs, a government organization was

their only customer. (See ch. 2.)

A Variety of Factors

Affected the Labs’

Development

NPR officials and others expected management support, the use of

regulatory waivers, communication about the labs’ progress, and other

factors to help the development of the labs. GAO survey results often

confirmed those expectations. Lab officials said that top political and

career managers generally supported the labs and that the support was

important to the development of many labs. Many of the labs requested

and received waivers from both agency-specific and governmentwide

regulations involving a range of issues. However, the survey respondents

frequently said that it was difficult to obtain regulatory waivers,

particularly from central management agencies, such as the Office of

Personnel Management, the General Services Administration, and OMB.

Lab officials also reported that some of the factors they originally believed

important for the development of the labs were, in fact, not always needed

or used. For example, most of the lab officials said they had not sought

any regulatory waivers at the time of GAO’s survey. Even among labs that

were fully implemented at the lab site, officials from nearly half said they

had never sought a waiver. Some lab officials indicated that the regulatory

restrictions they believed were present either never existed or had been

removed by blanket agency action or by passage of reform legislation.

Only 11 percent of the lab officials reported extensive communications

Page 4 GAO/GGD-96-69 Reinvention Labs
Executive Summary

with other labs, and 18 percent reported extensive communications with

the NPR task force. Those labs that did communicate with other labs or the

NPR task force found the discussions helpful to the development of their

labs.

Contemporaneous reform efforts reportedly had both positive and

negative effects on the labs. For example, the respondents said that the

downsizing of the federal workforce both stimulated the types of reforms

the Vice President contemplated and made it more difficult to implement

them. The respondents indicated that the effects of GPRA and the agency

restructuring in NPR’s second phase were less clear but that they were

much more likely to view GPRA as having a positive effect than a negative

effect. They said GPRA complemented their reform efforts and emphasized

the importance of performance measures. Lab officials also indicated that

it was difficult to generate and sustain lab efforts that crossed agency

boundaries or that significantly challenged agencies’ existing culture.

Some officials said that certain statutory provisions stood in the way of

their reinvention efforts. (See ch. 3.)

Labs’ Measurement of

Performance Varied

Over two-thirds of the respondents said their labs had collected or were

collecting some type of performance data at the time of GAO’s survey,

usually data on their units’ outputs and/or informal comments from staff

or customers. However, many of the respondents said that it was too early

in the reinvention process to collect performance data, and analysis of the

survey responses indicated that the labs that were fully implemented at

the lab site were more likely to have collected performance data compared

to those labs in earlier stages of development. Over 80 percent of the

respondents who said their labs had not collected performance data said

they planned to do so in the future.

On the other hand, some of the respondents said that neither they nor

other agency officials believed that the collection of performance data was

necessary or worthwhile. Other lab officials said that they had difficulty

developing measures of performance or that data had been collected but

not used by decisionmakers.

Some of the data being collected were informal comments from customers

or staff—data that may not be convincing to skeptics of the reinvention

process. A number of respondents collecting post-lab data said they did

not collect similar types of data before the start of their labs. Without such

pre-lab data there will be no baseline against which post-lab data can be

Page 5 GAO/GGD-96-69 Reinvention Labs
Executive Summary

compared to determine the efforts’ effects, thereby making it difficult for

decisionmakers to reach any conclusions about the labs. (See ch. 4.)

Lab Efforts Have Yielded

Results

The respondents often said that the data the reinvention labs were

collecting indicated that the labs’ changes were yielding

results—improved service to their customers, heightened productivity in

their units, and/or increased employee morale. The 12 labs GAO visited

provided a number of examples of improved operations. (See apps. II

through XIII.) For example:

• Officials from the Department of Energy’s Hanford site reinvention lab in

Washington State said that the lab had saved $29 million over a 4-year

period by changing the nature of the installation’s security operations.

• Surveys of physicians, patients, and family members at the Department of

Veterans Affairs’ Zablocki Medical Center in Milwaukee indicated that

customer service had been improved when social workers were teamed

with primary physicians to coordinate veterans’ outpatient and inpatient

care.

• Officials from the Defense Logistics Agency said their lab had reduced the

agency’s pharmaceutical inventories by $48.6 million and achieved similar

inventory reductions and cost savings at Department of Defense medical

facilities.

However, the true value of the reinvention labs will be realized only when

lab efforts proven to be effective spread beyond the lab sites. The absence

of both pre- and post-lab data may make it difficult for lab officials to

convince skeptics that the labs’ changes should be expanded to the rest of

the agency or to other federal entities. Also, dissemination of lab results is

made difficult by the lack of substantial communication among labs and

between labs and the NPR task force. Finally, the diffusion of lab

information is hampered by the incomplete nature of the data the NPR task

force maintains and, in the long run, by the temporary nature of the task

force itself. There is no certainty that the task force will be in existence

when some of the labs reach maturity. Therefore, some type of

information “clearinghouse,” placed in a relatively stable environment, is

needed to allow other organizations to become aware of the labs and to

learn about the labs’ experiences. The clearinghouse could, among other

things, provide information and guidance to labs on the development of

appropriate performance measures, including baseline data against which

the lab’s performance could be judged. OMB or some other entity could

perform this function.

Page 6 GAO/GGD-96-69 Reinvention Labs
Executive Summary

Recommendation GAO recommends that the Director of OMB ensure that a clearinghouse of

information about the labs be established. Working with the NPR task

force, the Director should identify which agency or other federal entity

can effectively serve as that clearinghouse. The clearinghouse should

contain information that identifies the location of each lab, the issues

being addressed, points of contact for further information about the lab,

and any performance information demonstrating the lab’s results.

Agency Comments GAO provided a draft of this report to the Vice President and the OMB

Director and met with the Senior Policy Advisor to the Vice President for

NPR issues, the Deputy Director of the NPR task force, and OMB’s Deputy

Director for Management to obtain their comments. All of the officials

indicated that information in the report was generally accurate,

interesting, and helpful. Certain technical changes the officials suggested

were incorporated into the report as appropriate.

In the draft report provided to the officials, GAO recommended that OMB

itself serve as the clearinghouse for information about the labs. While

agreeing that a clearinghouse was needed, none of the officials were

convinced that OMB was necessarily the best location for it. The OMB

Deputy Director for Management suggested that the recommendation be

changed to allow for options other than OMB itself as the clearinghouse.

GAO agreed to change the recommendation to state that the OMB Director

should ensure that a clearinghouse is established and, working with the

NPR task force, should identify the appropriate site for the clearinghouse.

(See ch. 5.)

Page 7 GAO/GGD-96-69 Reinvention Labs
Contents

Executive Summary 2

Chapter 1 

Introduction

12

Origins of the Reinvention Lab Concept 12

NPR Task Force Supports Lab Effort 13

No Specific Definition of a Reinvention Lab 14

Several Contemporaneous Reform Efforts 15

No Comprehensive Review of Lab Efforts Has Been Published 17

Objectives, Scope, and Methodology 18

Chapter 2 

Overview of the

Reinvention Labs

21

Labs Were Designated in Various Agencies and Regions 21

Origins and Status of Labs 25

Lab Officials Reported Significant Changes Focused on Customer

Service

27

Reported Stage of Development, Scope, and Subject Areas

Covered by Labs Varied

29

Crosscutting Themes Reported in Labs 32

Chapter 3 

Factors Affecting

Labs’ Development

35

NPR Encouraged Labs to Seek Waivers 35

Respondents Report Top Management Support 41

Substantial Communication About Reinvention Labs Was Rare 43

Downsizing Had Both Positive and Negative Effects on the Labs 44

NPR II and GPRA Effects on Most Labs Unclear 45

Other Issues Affect Labs’ Development 46

Chapter 4 

Measuring the Labs’

Performance

50

Most Labs Were Reportedly Collecting Performance Data 50

Some Respondents Indicated Data Not Needed or Used 53

Respondents Reported Improved Productivity and Customer

Service Through Labs

54

Respondents Said Labs Often Did Not Have Pre-Lab Performance

Data

55

Chapter 5 

Conclusions and

Recommendation

57

Moving Beyond the Labs 59

Recommendation 60

Agency Comments 61

Page 8 GAO/GGD-96-69 Reinvention Labs
Contents

Appendixes Appendix I: List of Reinvention Labs Responding to Survey by

Agency and Subject Categories

62

Appendix II: U.S. Department of Agriculture: Baggage Inspection

Operations at the Miami International Airport

76

Appendix III: Department of Commerce: Administrative Services

for the Boulder Scientific Research Laboratories

80

Appendix IV: Department of Defense: Defense Logistics Agency’s

Inventory Management

86

Appendix V: Department of Energy: Site Security and Economic

Diversification at Hanford

92

Appendix VI: General Services Administration: Quality Assurance

of Office Products

98

Appendix VII: General Services Administration: Mid-Atlantic

Region’s Work Processes

102

Appendix VIII: Department of Housing and Urban Development:

Oversight of Public Housing Authorities

108

Appendix IX: Department of the Interior: Operations at the U.S.

Bureau of Mines’ Pittsburgh Research Center

114

Appendix X: Department of the Interior: U.S. Geological Survey’s

Product Distribution

120

Appendix XI: U.S. Department of the Treasury: Work Processes

at the Internal Revenue Service’s Helena District Office

125

Appendix XII: Department of Veterans Affairs: Health Care at the

Zablocki Medical Center

131

Appendix XIII: Department of Veterans Affairs: Claims

Processing at the New York Regional Office

137

Appendix XIV: GAO’s Surveys of the Reinvention Labs 142

Appendix XV: Major Contributors to This Report 157

Tables Table 2.1: Number of Reinvention Labs Varied by Agency 22

Table 2.2: Number of Reinvention Labs by Standard Federal

Region

25

Figures Figure 2.1: Reinvention Labs by Standard Federal Region 24

Figure 2.2: Most Labs Were Reported as Being Voluntary, Trying

to Address Problems

26

Figure 2.3: Lab Officials Indicated Stage of Lab Development

Varied

30

Figure 2.4: DOD Labs Reported Being More Likely to Have

Multiple Lines of Effort

31

Page 9 GAO/GGD-96-69 Reinvention Labs
Contents

Figure 3.1: Respondents Reporting Waiver Requests Were Most

Likely in Fully Implemented Labs

37

Figure 3.2: Most Waiver Requests Focused on Agency-Specific

Regulations

39

Figure 3.3: Respondents Reporting Waivers From

Agency-Specific Rules Were More Likely To Be Approved

40

Figure 4.1: Most Labs Reported Collecting Performance Data 51

Figure 4.2: Fully Implemented Labs Were More Likely to Collect

Performance Data

52

Figure 4.3: Labs Implemented Beyond the Lab Site Were More

Likely to Collect Performance Data

53

Figure 4.4: Many Labs Reported That They Did Not Collect

Pre-Lab Performance Data

56

Abbreviations

APHIS Animal and Plant Health Inspection Service

CAMS Commerce Administrative Management System

CHA Chicago Housing Authority

CIA Central Intelligence Agency

CMD Contract Management Division

DAS/DI Deputy Assistant Secretary of Defense for Installations

DLA Defense Logistics Agency

DOD Department of Defense

DOE Department of Energy

DOI Department of the Interior

EC Electronic Commerce

EDI Electronic Data Interchange

FAR Federal Acquisition Regulations

FSS Federal Supply Service

GPRA Government Performance and Results Act

GPO Government Printing Office

GSA General Services Administration

HUD Department of Housing and Urban Development

IRS Internal Revenue Service

IS Information Services

ITS Information Technology Service

KPI Key Performance Indicators

MASC Mountain Administrative Support Center

NIST National Institute of Standards and Technology

NOAA National Oceanic and Atmospheric Administration

NTIA National Telecommunications and Information

Administration

Page 10 GAO/GGD-96-69 Reinvention Labs
Contents

NPR National Performance Review

NYRO New York Regional Office

OMB Office of Management and Budget

OPM Office of Personnel Management

PBS Public Buildings Service

PHA Public Housing Authority

PHMAP Public Housing Management Assessment Program

PPQ Plant Protection and Quarantine

QI Quality Improvement

SDWT Self Directed Work Teams

SPC Statistical Process Control

STAR System to Target Assistance Resources

USBM United States Bureau of Mines

USDA United States Department of Agriculture

USGS United States Geological Survey

VA Department of Veterans Affairs

VACO Veterans Affairs Central Office

VAMC Veterans Affairs Medical Center

VHA Veterans Health Administration

Page 11 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

The National Performance Review (NPR) was begun by the President in

March 1993 and is a major management reform initiative by the

administration under the direction of the Vice President. In

September 1993, the Vice President published 384 NPR recommendations

designed to make the government work better and cost less.1

 We have

commented on these recommendations and discussed their

implementation in two previous reports.2

A key part of the NPR initiative has been the creation of agency

“reinvention labs.” In April 1993, the Vice President sent a letter to the

heads of major federal departments and agencies asking them to

“designate two or three programs or units to be laboratories for

reinventing government” and to notify him about the lab designations by

May 1, 1993, according to an NPR official. In the letter, the Vice President

said the objectives of the lab effort were

“to pick a few places where we can immediately unshackle our workers so they can

re-engineer their work processes to fully accomplish their missions—places where we can

fully delegate authority and responsibility, replace regulations with incentives, and

measure our success by customer satisfaction.”

In response to the Vice President’s request, dozens of federal agencies

have established reinvention labs throughout the government.

Origins of the

Reinvention Lab

Concept

Although similar in some respects to pilot projects that have been used on

numerous occasions in federal agencies to test new procedures,3

 the

reinvention lab concept originated at the Department of Defense (DOD)

during the mid-1980s. DOD’s model installation program was initiated by

the then Deputy Assistant Secretary of Defense for Installations (DAS/DI).

The program focused on reducing the amount of regulation governing

administrative functions at certain military installations. Through this

program, DOD identified hundreds of pages of regulations governing

military installations that it believed did not make sense or wasted time

1

See From Red Tape to Results: Creating a Government That Works Better and Costs Less, report of

the National Performance Review, Vice President Al Gore, Sept. 7, 1993.

2

See Management Reform: GAO’s Comments on the National Performance Review’s Recommendations

(GAO/OCG-94-1, Dec. 3, 1993); and Management Reform: Implementation of the National Performance

Review’s Recommendations (GAO/OCG-95-1, Dec. 5, 1994).

3

See Federal Research: Lessons Learned From the Pilot Technology Access Program

(GAO/RCED-95-212, Sept. 18, 1995); Food Assistance: Early Results of USDA’s No-Fee School Meal

Pilot Program (GAO/T-RCED-94-184, Apr. 14, 1994); and NASA Procurement: Planning for Pilot Test of

New Procurement Procedures Is Adequate (GAO/NSIAD-94-67, Nov. 4, 1993).

Page 12 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

and money. The DAS/DI waived as many DOD regulations as possible and

allowed the base commanders to operate the installations in their own

way. According to an NPR official, the program was enthusiastically

supported by the installations, which began to improve not only

administrative operations but also mission-related functions. The model

installations program became so successful that DOD opened the program

to all military installations in March 1986.

In early 1993, the DAS/DI was appointed the Director of the overall NPR

effort. According to an NPR official, the Director suggested to the Vice

President that “reinvention labs” similar to the model installations be

established within all federal agencies as part of the administration’s

governmentwide effort to improve government operations and save

money.

NPR Task Force

Supports Lab Effort

The NPR effort is headed by the Vice President, but the day-to-day

operation of the effort is the responsibility of an NPR task force that

comprises staff from various federal departments and agencies. The staff

are assigned to the task force for a temporary period of time, usually 3 to 6

months. The total number of staff assigned to the task force has varied

over time but has usually been between 40 and 60. About 10 of these staff

have worked on the NPR task force since it was established in 1993, but

even they technically remain employees of their home agencies.

The NPR task force has attempted to advertise and promote the reinvention

lab effort in a variety of ways. For example, the task force has sponsored

or cosponsored several reinvention lab conferences (with another

scheduled for March 25-27, 1996) and has periodically published

information about the labs.4

 It has also developed a lab database using

information voluntarily submitted by the labs identifying their agencies,

location, contact persons, and other general information about the

reinvention efforts.

However, consistent with its overall philosophy, the NPR task force has

avoided control mechanisms and has consciously taken a “hands-off”

approach to the development and oversight of the labs. NPR officials said it

is up to each agency to decide whether it will have any labs and, if so, how

they should be structured and operated. The NPR task force has not

required agencies to notify it when labs are created or to report to NPR on

their progress. In fact, the task force recommended that labs not be

4

NPR has published this information as a hard copy newsletter and electronically on the Internet.

Page 13 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

required to file progress reports with their agencies’ management. Overall,

agencies have been allowed to operate reinvention labs as they believe

appropriate, without top-down control or interference from the task force.

The task force views its role as encouraging federal agencies to establish

reinvention labs and highlighting those labs that are “success stories” and

that focus on customer service.

The Office of Management and Budget (OMB) has played less of a role in

the reinvention lab effort than the NPR task force. OMB has not been

involved in the labs’ designation or their oversight and does not collect or

disseminate information about the labs. However, OMB officials said that

OMB program examiners are generally aware of the existence of labs in the

agencies for which the examiners have responsibility.

OMB is responsible for providing management leadership across the

executive branch and therefore can be important to the implementation of

NPR management improvement ideas. In fact, OMB has already begun to

play that role in some areas. For example, during the fiscal year 1996

budget cycle, OMB stressed agency downsizing plans and the use of

performance information—key elements of the overall NPR effort—during

its reviews of agencies’ budget submissions. OMB itself was “reinvented” as

part of the NPR effort when its budget analysis, management review, and

policy development roles were integrated into a new structure designed to

improve the decisionmaking process and the oversight of executive

branch operations.5

No Specific Definition

of a Reinvention Lab

After the Vice President’s April 1993 letter, each federal agency was made

responsible for designating organizational units, programs, or new or

ongoing initiatives as reinvention labs. Although their comments in the

intervening period provide some indication of what kinds of reinvention

projects they envisioned, neither the Vice President nor the NPR task force

has established specific criteria defining a lab.

The Vice President said that the lab sites should ideally be places where

the federal government directly serves the public in a highly visible way.

He also said that “[t]his effort is about more than just making marginal

improvements in the efficiency of our current government—it is about

fundamental cultural change in the federal government.” A similar tone

was struck in the September 1993 NPR report, which said that

5

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

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

Page 14 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

“[w]e hope this process will involve not only the thousands of federal employees now at

work on Reinvention Teams and in Reinvention Labs, but millions more who are not yet

engaged. We hope it will transform the habits, culture, and performance of all federal

organizations.”

In October 1993, representatives from reinvention labs at a number of

agencies attended a conference in Hunt Valley, MD, at which they

discussed their ideas and experiences. One of the key topics of discussion

at the conference was, “What is a reinvention lab?” The conference

proceedings stated that a lab “is a place that cuts through ’red tape,’

exceeds customer expectations, and unleashes innovations for

improvement from its employees.” The proceedings listed five areas of

consensus about the characteristics of a reinvention lab: (1) vision

(continually improving value to customers); (2) leadership (unleashing the

creativity and wisdom in everyone); (3) empowerment (providing

employee teams with resources, mission, and accountability);

(4) incentives (offering timely “carrots” for innovation and risk-taking);

and (5) accountability (ensuring the customer is always right). The Vice

President said that reinvention labs were doing the same things as the rest

of the agencies, “only they’re doing them faster.”

Several of the Vice President’s and NPR officials’ comments about the

reinvention labs centered on the labs’ ability to avoid complying with

regulations that could encumber their efforts. As noted previously, the

Vice President told agencies in his April 1993 letter that regulations should

be replaced with “incentives” in the labs. NPR officials also told the

reinvention labs that they should be provided freedom from regulations. A

number of the comments at the Hunt Valley conference focused on

eliminating red tape and unnecessary regulations.

Another recurring theme in the Vice President’s comments and NPR

publications has been the need to communicate about lab results. At the

Hunt Valley conference, the Vice President said that reinvention labs “will

need to share what they learn and forge alliances for change.” A 1993 NPR

report also voiced support for spreading reinvention ideas.

Several

Contemporaneous

Reform Efforts

Reinvention labs are but one of a number of efforts initiated in recent

years by the administration or Congress to reform the operation of the

federal government. Because these other reform efforts were being

implemented at the same time that the reinvention labs were being

initiated, they may have affected the labs’ development.

Page 15 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

For example, the Government Performance and Results Act (GPRA),

enacted in August 1993, was designed to improve the effectiveness and

efficiency of federal programs by establishing a system to set goals for

program performance and to measure results.6 GPRA requires federal

agencies to (1) establish 5-year strategic plans by September 30, 1997;

(2) prepare annual plans setting performance goals beginning with fiscal

year 1999; and (3) report annually on actual performance toward achieving

those goals, beginning in March 2000. As a result of GPRA’s requirements,

greater emphasis is to be placed on the results or outcomes of federal

programs. OMB is responsible for leading the GPRA implementation effort

and has designated more than 70 programs and agencies as pilots.

As noted previously, the reinvention lab effort was initiated in 1993 at

about the same time that the original NPR recommendations were being

developed. As part of that effort, the 1993 NPR report said that the civilian,

nonpostal workforce could be reduced by 252,000 positions during a

5-year period. The report said these cuts would be made possible by

changes in agencies’ work processes and would bring the federal

workforce to its lowest level since the mid-1960s. In 1994, Congress

enacted the Federal Workforce Restructuring Act, which mandated an

even greater 5-year workforce reduction of 272,900. The September 1995

NPR status report estimated that more than 160,000 jobs had already been

eliminated from the federal government.7

In December 1994, the administration launched a second phase of the NPR

effort, referred to as NPR II. One aspect of NPR II was an

agency-restructuring initiative in which the Vice President asked the heads

of each agency to reexamine all of their agencies’ functions and determine

what functions could be eliminated, privatized, devolved to state or local

governments, or implemented in a different way. The agencies developed a

total of 186 agency-restructuring recommendations, which were

aggregated and published in the September 1995 NPR status report. For

example, the Department of Housing and Urban Development (HUD)

proposed consolidating 60 grant programs into 3, giving greater flexibility

to governors and mayors.

There have also been several recent congressional proposals to reform the

federal government. For example, in May 1995, the Senate Committee on

6

See Managing for Results: Status of the Government Performance and Results Act

(GAO/T-GGD-95-193).

7

Common Sense Government: Works Better and Costs Less, Third Report of the National Performance

Review, Vice President Al Gore, September 7, 1995.

Page 16 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

Governmental Affairs held hearings on proposals for the elimination of the

Departments of Commerce, Housing and Urban Development, Energy, and

Education. In February 1995, the House Committee on Economic and

Educational Opportunities proposed merging the Departments of

Education and Labor and the Equal Employment Opportunity Commission

into a single department.8

 There has also been a proposal to combine

elements of the Departments of Commerce and Energy with the

Environmental Protection Agency and other independent agencies to

create a Department of Science.

No Comprehensive

Review of Lab Efforts

Has Been Published

Although reinventing government and the NPR effort have been frequently

discussed in the professional literature, relatively little has been written

about reinvention labs. In the Brookings Institution’s Inside the

Reinvention Machine: Appraising Governmental Reform, one author

briefly mentioned several agencies’ labs and said they were but one

component in the agencies’ reinvention efforts.9

 She also said the labs

frequently were “bottom-up” reform processes, sending a message to the

staff that we’re all in this together. Another author in this volume said that

the labs “represent exciting innovations in the federal government” and

that they were generating “an impressive amount of fresh ideas and

information about how government workers can do their jobs better.”10

However, he also noted that there had been no systematic survey of what

the labs had accomplished.

An article exclusively about reinvention labs described the lab effort as

being a struggle between advocates for change and those individuals with

power within the agencies.11 The author describes labs at several agencies

(e.g., the Departments of Agriculture and Education and the General

Services Administration), noting that in some cases entire agencies have

become labs (e.g., the Agency for International Development and the

Federal Emergency Management Agency). Other articles have briefly

8

See Federal Reorganization: Congressional Proposal to Merge Education, Labor, and EEOC

(GAO/HEHS-95-140, June 7, 1995) for a discussion of this proposal.

9

Beryl A. Radin, “Varieties of Reinvention: Six NPR ’Success Stories,’” Inside the Reinvention Machine:

Appraising Governmental Reform (Washington, D.C.: The Brookings Institution, 1995), pp. 107-130.

10Donald F. Kettl, “Building Lasting Reform: Enduring Questions, Missing Answers,” Inside the

Reinvention Machine, (Washington, D.C.: The Brookings Institution, 1995), pp. 9-83.

11James Thompson, “Eureka?,” Government Executive, June 1995, p. 30.

Page 17 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

discussed the activities of a few reinvention labs,12 but no research efforts

have systematically collected information about all of the labs.

Objectives, Scope,

and Methodology

We initiated this review of the reinvention labs as part of our ongoing body

of work examining NPR issues. The objectives of this review were to

determine (1) the focus and developmental status of the labs, (2) the

factors that hindered or assisted the development of the labs, (3) whether

the labs were collecting performance data, and (4) whether the labs had

achieved any results.

We addressed all of these objectives by conducting a telephone and fax

survey of all of the reinvention labs. However, to design and conduct the

survey, we had to obtain preliminary information from the NPR task force,

agencies, and some of the labs themselves.

We obtained information from the NPR task force’s database about the labs’

locations, their developmental status, subject areas covered, and a contact

person at each of the lab sites. As of February 1995, NPR’s database

indicated that there were 172 labs. However, NPR’s database did not

include some labs and double-counted others. After contacting officials

responsible for the labs in each of the agencies that the task force reported

had ongoing efforts, we later concluded there were 185 labs active as of

early 1995.

The NPR task force told us that the regional labs were further along in the

implementation process than the labs in the Washington, D.C., area.

Therefore, we conducted a structured interview of the regional labs by

telephone in the summer of 1994 to obtain information on their status, the

type of procedure or process being reinvented, and any results the labs

had produced. Using the information obtained from these contacts, we

selected 12 labs to visit on the basis of two criteria: (1) labs that

represented a variety of procedures or processes being reinvented (e.g.,

procurement, personnel, financial management, or general operations);

and (2) labs that had generally progressed to at least the planning stage.

We visited each of these 12 labs and obtained detailed information

concerning each of our objectives. We developed case studies on each of

the 12 labs and subsequently sent them to both the lab officials from

whom we gathered the data and the agencies’ headquarters for their

review and comment. Their comments were incorporated into the final

12See Peter F. Drucker, “Really Reinventing Government,” The Atlantic Monthly, February 1995, pp.

49-61 and James Thompson, “Joe Versus the Bureaucracy,” Government Executive, October 1995, pp.

49-55.

Page 18 GAO/GGD-96-69 Reinvention Labs
Chapter 1 

Introduction

version of the case studies. (For a list of these labs, see app. I. See apps. II

through XIII for the full case studies.)

We then conducted two surveys of all 185 of the labs—first a telephone

then a fax survey—and received responses from 181 of the labs

(98 percent). The telephone survey was primarily designed to obtain a

general description and overview of the labs’ operations. We sent the

second survey to the respondents by fax after the completion of the

telephone survey. If a lab focused on more than one area for reinvention

(i.e., the lab was engaged in multiple lines of effort), we asked the

respondent to focus his or her answers to the fax survey on the lab’s

primary line of effort. (See app. I for a list of the labs by agency and

subject category.)

The fax survey consisted primarily of structured multiple-choice items that

focused on each of our objectives. (See app. XIV for copies of the

telephone and fax surveys.) Questions focused on such issues as the lab’s

developmental status and the nature and extent of performance data being

collected. We also asked questions about a number of factors that could

affect the labs’ development—e.g., waivers from certain regulations,

communication with other labs and the NPR task force, and agency

management support. On the basis of comments made by lab officials

during our site visits, we selected these factors for specific follow-up in

the survey phase of our work. They may not cover all possible factors

affecting lab development.

We did not independently verify the information we received from any of

the information sources—the NPR task force, the site visits, the telephone

survey, or the fax survey. For example, if a survey respondent said that his

or her lab had collected performance data or had communicated with

other labs, we did not assess those data or check with the other labs.

However, we did collect some relevant documents or data regarding these

issues during our site visits to the 12 labs.

We conducted our work between June 1994 and August 1995 in

accordance with generally accepted government auditing standards. The

telephone and fax surveys were administered between April and July 1995,

so the survey data are as of those dates. Although we attempted to survey

all of the reinvention labs in the federal government, we cannot be sure

that the 185 labs we contacted included all agencies’ labs. Others may have

been active at the time of our survey, but we were not aware of them

either because of the lack of a specific definition for reinvention labs, the

Page 19 GAO/GGD-96-69 Reinvention Labs
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Introduction

NPR task force did not keep an accurate record on the number of operating

labs, or we were denied access to agency officials. In one instance, we

were unable to verify the existence of a lab appearing on NPR’s list as being

at the Central Intelligence Agency (CIA) because a CIA official said that it

was their standard policy to deny GAO access to CIA reinvention activities.

Also, other labs may have been developed since the survey was conducted.

We submitted a draft of each case study to the relevant lab and agency

headquarters officials for their review and have incorporated their

comments into the final version of each appendix. On December 27, 1995,

we submitted a draft of this report to the Vice President (as head of the

NPR effort) and to the Director of OMB for their review and comment. Their

comments are described at the end of chapter 5.

Page 20 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

In the reinvention labs, agencies were supposed to experiment with new

ways of doing business, and the NPR task force purposely gave agencies

wide latitude in how the labs could be structured and what topics they

could address. Agencies were also free to build on existing management

reform efforts or to start their reinvention labs from scratch. Aside from

the general parameters of customer service and employee empowerment,

few restrictions were placed on the labs’ initiation or development.

Federal agencies responded to the Vice President’s call for the creation of

reinvention labs in earnest. Labs were designated in dozens of agencies

and in virtually every region of the country. Our survey indicated that the

labs varied widely in terms of their origin, their stage of development at

the time of the survey, the number of reinvention efforts addressed by

each lab, and the subject areas covered by the labs. Also, although many of

the labs shared a common customer service focus, they differed in who

they defined as their customers. Finally, the survey indicated that a

number of the labs’ efforts actually began before the NPR effort was

initiated.

Labs Were Designated

in Various Agencies

and Regions

As table 2.1 shows, the 185 reinvention labs that had been designated at

the time of our survey were spread across 26 federal departments,

agencies, and other federal entities. DOD had the most labs (54), followed

by the Department of the Interior (DOI) (28). The number of labs in each

agency was not always related to its size. Some large agencies had

relatively few labs (e.g., the Department of Veterans Affairs); while some

comparatively small agencies had initiated a number of labs, e.g., the

General Services Administration (GSA). Some agencies that serve the

public directly and that had been the subject of both the 1993 and 1995 NPR

recommendations had not started any labs at the time of the survey (e.g.,

the Small Business Administration).

Page 21 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

Table 2.1: Number of Reinvention Labs

Varied by Agency

Agencies

Number of

labs

Department of Defensea 54

Department of the Interiora 28

General Services Administrationa 14

Department of Agriculturea 12

Department of Justice 10

Department of Health and Human Services 8

Department of the Treasurya 8

Department of Energya 6

Department of Commercea 5

Department of Housing and Urban Developmenta 5

National Aeronautics and Space Administration 5

Department of Veterans Affairsa 5

Office of Personnel Management 3

Department of State 3

Department of Transportation 3

Department of Education 2

Environmental Protection Agency 2

Department of Labor 2

Agency for International Development 1

Federal Emergency Management Agency 1

Nuclear Regulatory Commission 1

National Science Foundation 1

Securities and Exchange Commission 1

Tennessee Valley Authority 1

Other entities

Federal Executive Boardsb 3

REGNETc 1

Total 185

aAgencies with reinvention labs that were included as case studies for this report.

bFederal Executive Boards were established by presidential directive in 1961 to improve internal

federal management practices and to provide a central focus for federal participation in civic

affairs in major metropolitan centers of federal activity.

cREGNET is a multiagency effort supporting the mission of the Regulatory Coordinating Group

and helping agencies implement the NPR regulatory reform recommendations.

Source: GAO analysis.

Page 22 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

Figure 2.1 and table 2.2 show the number of reinvention labs at the time of

our survey within each standard federal region.1

 As the figure illustrates,

labs had been established in virtually every federal region, but the

mid-Atlantic region (region 3) had over two-thirds of the labs. Most of

these labs were located in the Washington, D.C., area, but some affected

operations in other areas. Relatively few labs were located in the northeast

(regions 1 and 2) or the northwest (region 10). Some of the labs were

operated in multiple locations within a single region. For example, one HUD

lab effort had several sites that included HUD’s offices at Chicago,

Milwaukee, and Cleveland. (See app. VIII for a discussion of this lab.)

Other labs had multiple sites located in different standard federal regions.

For example, GSA’s Federal Supply Service lab was headquartered in New

York City (region 2), but some aspects of the lab were being implemented

in Boston (region 1). (See app. VI for a discussion of this lab.)

1

OMB Circular A-105 establishes 10 standard federal regions to provide more uniformity in the location

of federal field offices, create opportunities for securing management improvements and economies,

and promote greater interagency and intergovernmental coordination.

Page 23 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

Figure 2.1: Reinvention Labs by Standard Federal Region

MN WI

IL

IN OH

KY

NC

TN

SC

GA MS AL

FL

MI

NY

NJ

2

(1)

PR

VI

2

PA

WV VA

DE

MD

3

(122)

5

(11)

4

(14)

TX

AZ

OK

LA

AR

6

(3)

NB

KS

IA

MO

7

(4)

MT

WY

CO

UT

ND

SD

8

(13)

OR

WA

ID

10

(3)

AK

10

CA NV

NM

9

(12)

HI

9

ME VT

NH

MA

CT

RI

1

(1)

DC

Legend

1 through 10 = Region numbers

( ) = Number of labs in region

Note: Some labs have been implemented beyond their pilot sites and have multiple locations.

Labs have been placed in these regions according to their primary sites.

Source: GAO analysis.

Page 24 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

Table 2.2: Number of Reinvention Labs

by Standard Federal Region

Standard federal regions

Number of

labs

Region 1 1

Region 2 1

Region 3 122

Region 4 14

Region 5 11

Region 6 3

Region 7 4

Region 8 13

Region 9 12

Region 10 3

Overseas 1a

Total 185

aOne DOD reinvention lab is located in Frankfurt, Germany.

Source: GAO analysis.

Origins and Status of

Labs

We asked the survey respondents why their labs were initiated, allowing

them to designate more than one closed-ended response category and/or

add additional reasons. They indicated that the reinvention efforts were

generally focused and uncoerced. As shown in figure 2.2, nearly two-thirds

of the respondents said that they were trying to address a specific

problem, and over half indicated that they volunteered to become a lab.2

Only 13 percent of the respondents reported that they were told to pursue

their labs by agency officials. Forty percent said their labs were an

outgrowth of quality improvement efforts in their agencies.

2

The fax survey usually provided respondents with closed-ended category responses. Therefore, when

we report that a survey respondent “said” a response, it usually indicates the selection of one of these

categories. See the questionnaire in appendix XIV for the exact wording of this and other questions in

the telephone and fax surveys.

Page 25 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

Figure 2.2: Most Labs Were Reported

as Being Voluntary, Trying to Address

Problems

Address

problem

Volunteered Outgrowth

of quality

efforts

Told to by

agency

Other

0

20

40

60

80

100

65

53

40

13

10

Percent

Source: GAO analysis.

We also asked the respondents when their labs’ efforts actually began,

regardless of when the labs were officially designated as labs. The lab start

dates varied widely, ranging from as early as 1984 to as recently as

March 1995—1 month before the start of our survey. About one-third of

the respondents indicated that their labs’ efforts began before the

announcement of the NPR effort in March 1993. The early beginning of so

many lab efforts is not surprising given that 40 percent of the respondents

said that their labs originated in their agencies’ quality improvement

efforts—efforts that started in some federal agencies in the early 1990s.3

For example, lab officials at the sites we visited told us the following:

3

See Quality Management: Survey of Federal Organizations (GAO/GGD-93-9BR, Oct. 1, 1992) for a

discussion of agencies’ quality improvement efforts.

Page 26 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

• GSA’s reinvention labs in two regional offices originated with the offices’

quality assurance programs that began in 1988 and 1989. (See app. VI and

app. VII.)

• The Internal Revenue Service’s (IRS) reinvention lab in Helena, MT, began

as a joint quality improvement process launched in 1988 by IRS and the

National Treasury Employees Union. (See app. XI.)

• The United States Department of Agriculture’s (USDA) lab on baggage

inspection operations in Miami started in 1989 as an effort to improve

productivity as staff resources declined and the workload increased. (See

app. II.)

• DOI’s efforts to improve information dissemination at the U.S. Geological

Survey began in 1986 when it attempted to establish a more efficient and

responsive order entry, inventory control, and distribution system. (See

app. X.)

Officials from 14 of the labs we surveyed said that they sought lab

designations for existing management improvement efforts because the

officials thought such designations would give them more latitude to make

changes and provide greater visibility for their efforts. For example, one of

the survey respondents said that reinvention lab designation provided the

lab team with the momentum needed to overcome common barriers to

change. During one of the site visits, an official from HUD’s lab on

reinventing the field operations of the Office of Public and Indian Housing

said that before its lab designation “we could not get in the door at

headquarters.” However, he said that after the lab’s designation “the

waters parted” and that headquarters officials became interested in the

new oversight approach. (See app. VIII for a discussion of this lab.) Other

respondents said that being designated as a reinvention lab provided the

mechanism by which they could seek waivers from cumbersome rules and

regulations that had been an impediment to previous management reform

efforts.

Lab Officials Reported

Significant Changes

Focused on Customer

Service

The 1993 NPR report called for a new customer service contract with the

American people—a new guarantee of effective, efficient, and responsive

government. The report also stated that federal agencies were to provide

customer service equal to the best in business. In his April 1993 letter

calling for the creation of reinvention labs, the Vice President said the labs

were to measure their success by customer satisfaction. Consistent with

this goal, 99 percent of our survey respondents said that customer service

improvement was a primary goal of their labs to at least “some extent”;

93 percent of the respondents said this was true to a “great” or “very great”

Page 27 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

extent. (See ch. 4 for information on the labs’ collection of performance

data.)

The survey respondents frequently indicated that the changes that were

occurring in their reinvention labs represented a substantially different

mode of operation, not simply a minor change in procedures. Over

65 percent of the respondents said that their reinvention labs involved

changing the way staff in their agencies did their work to a “great” or “very

great” extent. Over 20 percent said that changes in work processes

occurred to a “moderate” or “some” extent.

Lab officials reported the following examples:

• The Defense Logistics Agency’s (DLA) lab on inventory management made

significant changes in its work processes and staff roles. DLA officials said

they shifted from acting as a wholesaler who buys, stores, and sells

inventory to acting as a broker who obtains the most efficient and

effective military support for its customers through any appropriate

mechanism—including the use of private-sector vendors to store and

distribute inventories. (See app. IV.)

• The U.S. Geological Survey’s information dissemination lab improved

internal communications and job processes by combining the

organizational unit that took map purchasing orders with the unit that

filled the orders and by cross-training staff. (See app. X.)

• GSA’s mid-Atlantic regionwide lab improved customer service in the

region’s Public Buildings Service office by shifting staff from working as

teams of specialists responsible for moving projects through their

segments of a work process to working as multidisciplinary teams made

up of specialists responsible for processing one project. (See app. VII.)

About two-thirds of the respondents who said that their labs were involved

in changing the way staff did their work indicated that the changes

improved customer service to a “great” or “very great” extent. However,

only 20 percent of the respondents indicated that these changes required

substantial alterations in their agencies’ personnel systems.

The labs’ definition of their customers varied depending on the lab. Given

the opportunity to choose more than one response category, the

respondents described their labs’ customers as the general public; their

agencies’ constituencies; another government organization (e.g., federal,

state, or local); and/or other offices within their own agencies. Almost

two-thirds of the respondents said their labs’ customers were both internal

Page 28 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

and external to the government. For example, officials in HUD’s lab on

reinventing the field operations of the Office of Public and Indian Housing

said that their lab’s customers included the residents of the public housing

units and the local governments’ public housing authorities who operated

the housing units. (See app. VIII.)

Overall, the two most frequently selected response categories for

customers were “another government organization” and “other offices

within the lab’s agency”; 18 percent of the respondents said that these

were their labs’ only customers. For example, the Department of

Commerce’s reinvention lab in Boulder, CO, defined its customers as the

scientists and engineers working within the department’s scientific

laboratories. (See app. III.)

Reported Stage of

Development, Scope,

and Subject Areas

Covered by Labs

Varied

We asked the survey respondents to characterize their labs’ stage of

development in one of five categories: (1) planning stage (no

implementation begun), (2) implementation begun but not completed at

the lab site, (3) implemented at the lab site only, (4) implemented at the

lab site and planning or implementation begun at other sites,

(5) implemented at the lab site and at other sites, or (6) other. As figure 2.3

shows, the respondents were equally divided between those who said that

their labs had been at least implemented at the lab site (responses 3

through 5) and those that had not gotten to that stage of development

(responses 1 and 2). The most common single response (35 percent) was

“implementation begun but not completed.”

Page 29 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

Figure 2.3 : Lab Officials Indicated

Stage of Lab Development Varied

(2) Implementation begun, but not 

completed 

(1) Planning stage, no 

 implementation 

Other 2%

(3) Implementation at site 

only 

(4) Implementation at 

site and planning at

others 

(5) Implementation at lab

site and other sites

Planning stage or implementation incomplete (49%)

Implementation at or beyond site (49%)

12%

18%

19%

14%

35%

Source: GAO analysis.

Page 30 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

We also asked the respondents whether their labs were focused on a

single effort or multiple lines of effort.4

 Nearly two-thirds (63 percent) of

the respondents said that their reinvention labs had only one line of effort.

As figure 2.4 shows, DOD labs reported they were much more likely to have

multiple lines of effort (58 percent) than were civilian labs (29 percent).

Figure 2.4: DOD Labs Reported Being

More Likely to Have Multiple Lines of

Effort

All labs DOD labs Civilian labs

0

20

40

60

80

100

63

42

71

37

58

29

Percent of labs

Single line of effort

Multiple lines of effort

Source: GAO analysis.

A line of effort is not the same as a subject category. For example, a lab

with only one line of effort can address a variety of subjects, including

personnel management, procurement, information technology, and

financial management. Nearly three-fourths of the survey respondents

indicated that their labs were focused on more than one subject area. The

most commonly cited subject area was operations (72 percent), followed

4

A “line of effort” is a discrete area of emphasis in the lab that is unrelated to the lab’s other areas of

emphasis.

Page 31 GAO/GGD-96-69 Reinvention Labs
Chapter 2 

Overview of the Reinvention Labs

by information technology (60 percent), personnel (45 percent),

procurement (45 percent), and financial management (39 percent).

Examples of these subject areas include the following:

• In an operations lab, USDA officials examined ways to improve the

operation of their airport baggage inspection program by permitting more

self-direction by employees and allowing them to identify ways to improve

procedures. (See app. II.)

• An information technology lab explored the use of electronic media, such

as the Internet, E-mail servers, fax on demand, and the Worldwide Web to

disseminate information on the latest medical research from sources

around the world.

• A procurement lab established teams of customers, contractors, and

contract administration officials to identify areas for process

improvements. The lab was also trying to develop a “risk management”

approach to contract administration in which the lab’s level of contractor

oversight would be linked to an assessment of the contractor’s

performance.

Crosscutting Themes

Reported in Labs

In addition to the traditional subject area categories previously mentioned,

analysis of survey respondents’ comments in the survey and during our

site visits indicated three crosscutting areas of interest: (1) marketing

services and expertise; (2) using electronic commerce (EC) and electronic

data interchange (EDI) to improve operations, such as procurement and

benefit transfers;5

 and (3) developing partnerships with other levels of

government, the private sector, and customers. (See app. I for a complete

list of these reinvention labs.)

Marketing Services and

Expertise

The 1993 NPR report advocated creating competition between in-house

agency support services and what it termed “support service

enterprises”—federal agencies that offer their expertise to other agencies

for a fee. Officials from 20 reinvention labs said that their labs were

planning or implementing these kinds of reforms, using marketing

techniques to expand their customer base. Examples of marketing services

include the following:

• Two of the labs were department training centers that were attempting to

become self-sufficient by charging fees for their services. In addition to

5

EC and EDI involve the comprehensive, end-to-end electronic exchange of information between an

agency and other organizations as the agency conducts its business.

Page 32 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

marketing their training courses, officials from both centers said they were

contracting with other agencies to provide consulting services.

• One respondent said that his lab was experimenting with franchising its

contracting services to civilian agencies. Lab officials developed a

standard rate to be charged for their services and had signed agreements

with other agencies to provide those services.

• One respondent said that his lab had successfully marketed its organic

waste disposal services to other federal, state, and local agencies. He also

said that the lab generated additional income by recycling these wastes for

resale as compost.

One DOD official said that existing statutes had prevented his lab from

marketing its duplicating services to non-DOD agencies. He said Congress

requires federal agencies to contract printing and duplicating to the

private sector via the Government Printing Office (GPO), which applies a

surcharge. However, he said that one of our recent reports noted that

some of the agency’s in-house duplicating services were about 57 percent

cheaper than GPO’s prices.6

Using Electronic

Commerce and Electronic

Data Interchange

The 1993 NPR report recommended that federal agencies adopt EC and EDI

techniques that the private sector had been using for some time because,

NPR said, they can save money. Respondents for 38 labs said that their labs

were in the process of implementing EC and EDI systems to enable them to

easily transfer information on financial and procurement transactions and

on client services and benefits. For example, DLA officials said the agency

was using EC and EDI to develop a paperless, automated system for critical

documents in the contracting process, including delivery orders, requests

for quotations, bid responses, and awards. They said that this system

would ultimately provide a standard link among DLA, its customers, and

suppliers in the private sector. (See app. IV.)

Establishing Partnerships At the time of our survey, 54 labs reported attempting to develop

partnerships with other levels of government, labor organizations,

contractors, and/or their customers. Several of these partnership efforts

focused solely on intra- or intergovernmental relations. For example, one

official said his lab was working with other federal agencies and state and

local government agencies to design an ecosystem management strategy.

6

See Government Printing: Comparison of DOD and GPO Prices for Printing and Duplicating Work

(GAO/NSIAD-95-65, Feb. 17, 1995).

Page 33 GAO/GGD-96-69 Reinvention Labs
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Overview of the Reinvention Labs

Another lab was focused on developing an automated prisoner processing

system for use by five federal law enforcement entities.

Officials for 16 other labs also said that their labs were developing

partnerships with contractors, academia, or the private sector. For

example, at the Department of Energy’s (DOE) Hanford reinvention lab, the

department entered into an agreement allowing a private company to

disassemble and use excess equipment, saving the government $2.6 million

in disposal costs. In another lab, agency officials and contractors formed

teams to rework contracting processes and shift oversight from an

adversarial position to a team approach so that both the agency and its

contractors could lower oversight costs.

Nine respondents said that their labs were establishing partnerships with

employee unions. For example, officials at the Commerce Department’s

Boulder reinvention lab said that their efforts had built a strong

union-management relationship by changing the rigid work environment

so that skilled workers would be able to work together as teams and

supervisors could perform more as coaches than managers.

Page 34 GAO/GGD-96-69 Reinvention Labs
Chapter 3 

Factors Affecting Labs’ Development

Reinvention labs were intended to be agents of change in the federal

government. As such, they have faced many of the same challenges as

other change agents—eliminating rules that stand in the way of progress,

ensuring top management support, communicating with others attempting

similar changes, and coping with cultural resistance. However, some of the

challenges the reinvention labs faced were difficult, such as attempting to

initiate new ideas or new work processes while their organizations were

shrinking and while other management reform efforts were being

implemented.

We asked the survey respondents to provide information on a variety of

factors that could have hindered or helped the development of the labs,

and some of the results were contrary to our initial expectations. For

example, many of the lab officials said they had not sought waivers from

regulations, even in labs that were fully implemented at the lab site. Few

reported substantial communication with other labs or with the NPR task

force. However, over 80 percent enjoyed top management support.

Analysis of the survey responses also indicated other factors that the

respondents said affected the development of their labs.

NPR Encouraged Labs

to Seek Waivers

One of the NPR effort’s recurring themes is that regulations and red tape

stifle the creativity and ability of federal workers to solve problems and

improve service to the public. At the Hunt Valley reinvention lab

conference in October 1993, NPR officials encouraged the labs to request

waivers from requirements imposed on them “which are barriers to

reinvention.” The Vice President said that he was looking to the

reinvention labs to identify “barriers that stand in the way of getting the

job done in the right way” and to “drive out rules and regulations that just

don’t make sense anymore.” A September 1993 NPR report noted that

carefully crafted waiver requests and prompt review of these requests can

be “experiments for government’s reinvention.”1

Regulations can come from a variety of sources. Some regulations are

promulgated by central management agencies—e.g., OMB, GSA, or the Office

of Personnel Management (OPM)—and apply to all or virtually all federal

agencies. Other regulations are issued by line agencies and apply only to

the issuing agency. In the reinvention lab effort, the entity that establishes

a regulation is to receive and rule on any waiver requests.

1

National Performance Review Accompanying Report, Streamlining Management Control

(Washington, DC: U.S. GPO, Sept. 1993).

Page 35 GAO/GGD-96-69 Reinvention Labs
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Factors Affecting Labs’ Development

Majority of Labs Did Not

Request Waivers

Although they were encouraged to seek regulatory waivers, 60 percent of

the survey respondents who answered the question said that their labs had

not sought such waivers. Of these respondents, about half said that they

considered seeking a waiver, but they did not do so; half said they had not

even considered seeking a waiver. When asked why their labs did not seek

waivers, the respondents most commonly indicated that waivers were not

needed to accomplish their labs’ goals (54 percent) or that it was too early

in the reinvention process to seek waivers (30 percent). (Respondents

were allowed to select more than one response category to this question.)

The relationship between the labs’ stage of development and their

propensity to seek waivers was supported by other data in the survey. As

figure 3.1 shows, labs that were at least fully implemented at the lab site

were almost twice as likely to have requested a waiver than labs that had

not reached that stage of development. However, nearly half of the fully

implemented labs had not sought any regulatory waivers at the time of the

survey.

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Figure 3.1: Respondents Reporting

Waiver Requests Were Most Likely in

Fully Implemented Labs

0

20

40

60

80

100

52

29

48

71

At least fully

implemented

at lab site

Not fully implemented

at lab site

Percent of total responses

Request for waiver

No request for waiver

Source: GAO analysis.

Over two-thirds of the respondents for the fully implemented labs that had

not sought a waiver said that a specific waiver was not needed to

accomplish their labs’ goals, and they cited a variety of reasons. For

example:

• In some labs, the agencies reported that constraints on pre-lab operations

were nonregulatory and that removal of the constraints did not require a

waiver. For example, officials from one reinvention lab planned to request

a general waiver from using GSA’s supply schedule to enable the site’s

supply room to seek the best value for each product it provides. According

to an official, this request was dropped because lab officials discovered

that procurement rules allowed agencies to ignore the supply schedule if a

local source can provide the product at a lower price.

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• In other labs, a blanket waiver of internal regulations, or a delegation of

authority, provided by agency headquarters eliminated the need for

individual waiver requests. In blanket waivers, agency headquarters

typically granted labs the authority to make their own decisions on which

agency-specific rules to eliminate without asking for prior permission. For

example, GSA gave the Mid-Atlantic Regional Administrator a blanket

waiver from nonstatutory internal rules and regulations that might hinder

the development of the region’s lab. (See app. VII.)

• In another lab, officials told us that passage of the Federal Acquisition

Streamlining Act removed the legislative barriers to the lab’s reform

efforts. Therefore, lab officials said they did not need to go forward with

their proposals to waive contracting rules and regulations.

Waiver Requests Most

Commonly Directed at

Agency-Specific Rules

The survey respondents indicated that their labs had requested nearly

1,000 waivers from regulatory requirements. Some respondents said their

labs had requested only one waiver, but other labs reported requesting

dozens of waivers. The respondents also indicated that their labs’ waiver

requests involved regulations in a range of subject areas. One-third of all

the waivers requested involved agency work process rules or regulations,

with the remaining two-thirds about equally divided between personnel

rules, procurement rules, and other rules. Examples of agency work

process regulations include the following:

• Officials from GSA’s office products lab requested a waiver from an agency

work process regulation requiring the use of a certain quality assurance

technique so that they could replace it with another, reportedly better,

technique. (See app. VI.)

• The reinvention teams at the U.S. Bureau of Mines’2 reinvention lab

proposed 21 changes to departmental procedures, such as altering the

review process for computer equipment acquisition, removing restrictions

on the use of local attorneys to process patent paperwork, and eliminating

one level of supervision within the lab’s research center. (See app. IX.)

• Contracting officials from the Department of Veterans Affairs’ (VA)

reinvention lab in Milwaukee requested nine waivers from both

departmental regulations and governmentwide Federal Acquisition

Regulations (FAR). Eight of these waivers were pending at the time of our

review, including an authorization to remove annual contracts from the

current fiscal year cycle and to permit the lab to participate with

private-sector purchasing groups in best value purchasing. (See app. XII.)

2

Congress has passsed legislation providing for the elimination of the U.S. Bureau of Mines, with the

exception of some programs being transferred to other federal agencies.

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As shown in figure 3.2, over half of the waivers the labs sought were

reported to be from agency-specific rules issued by the respondent’s own

agency, and nearly one-third of the requested waivers were from

governmentwide rules issued by central management agencies. The

respondents said the remaining 16 percent of the waiver requests focused

on rules from other sources (e.g., executive memorandum), or the

respondents were unsure of the source of the regulation from which the

waiver was requested.

Figure 3.2: Most Waiver Requests

Focused on Agency-Specific

Regulations

Other sources

Governmentwide

rules

Agency specific

rules

52%

32%

16%

Source: GAO analysis.

Lab Officials Reported

Difficulties Getting Some

Waivers

The survey respondents frequently said that it was difficult to obtain

waivers from both governmentwide and agency-specific regulations, but

they indicated that waivers of governmentwide rules issued by central

management agencies, such as GSA, OMB, or OPM, were the most difficult to

obtain. More than three-fourths of the respondents who offered an opinion

said it was difficult to obtain a waiver from governmentwide rules, with

nearly twice as many choosing the “very difficult” response category

compared with the “somewhat difficult” category. Only 7 percent of the

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respondents said it was “easy” to obtain waivers from governmentwide

rules. In contrast, 50 percent of the respondents who sought a waiver from

rules issued by their own agencies said such waivers were “difficult” to

obtain. Of these respondents, most said obtaining agency-specific waivers

was only “somewhat difficult,” and 31 percent said it was “easy.”

The difficulty survey respondents reported in receiving waivers from

governmentwide regulations was also indicated by waiver approval rates.

As shown in figure 3.3, lab officials said that over 60 percent of their labs’

requests for waivers from agency-specific rules had been approved at the

time of our survey, compared with only about 30 percent of the requests

for waivers from governmentwide regulations.

Figure 3.3: Respondents Reporting

Waivers From Agency-Specific Rules

Were More Likely to Be Approved

Govntwide Agency Other

0

20

40

60

80

100

31

64

60

41

23

28 28

13 12

Percent of total requested

n = 317 n = 506 n = 154

Approved

Pending

Denied

Source: GAO analysis.

Page 40 GAO/GGD-96-69 Reinvention Labs
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Lab officials also reported other types of problems when they requested

regulatory waivers. For example, officials from the Pittsburgh Research

Center lab in the U.S. Bureau of Mines said the lab team spent a

substantial amount of time concentrating on waiver requests that were

beyond the scope anticipated by NPR officials.3

 The lab team said they were

not clearly warned by DOI management that “overturning statutes was

off-limits” when requesting waivers. (See app. IX.)

Officials from three different reinvention labs said that they found it

difficult to use the delegation of authority to waive regulations that had

been given to them by their agencies’ headquarters. For example, officials

from these labs said that they had to obtain approval from legal counsels

to use that authority and that getting this approval proved to be just as

time-consuming as it would have been to get a specific waiver from

headquarters.

Officials from the Commerce Department’s Boulder reinvention lab said

that they tried to use their waiver authority to develop alternative

procedures to abolish three staff positions. In keeping with one of the lab’s

areas of emphasis to build management and labor partnerships, field

managers worked with the local union president to develop an alternative

procedure that was less disruptive than the traditional one. However, one

lab official said that even though the lab had been given authority to

deviate from procedures, headquarters officials required extensive

documentation and heavily reviewed the proposal. The lab official said as

many as 19 headquarters officials were involved in reviewing and

approving every aspect of these procedural changes. (See app. III.)

Respondents Report

Top Management

Support

Top management support is crucial to the successful management of

changes within organizations, particularly changes of the magnitude

envisioned by the Vice President. Top management can provide needed

resources and remove barriers that may stand in the way of organizational

changes. On the other hand, managers can also negatively affect changes

by withholding needed resources and erecting barriers that effectively

prevent changes from occurring.

Eighty-three percent of the survey respondents who expressed an opinion

said top management in their agencies (i.e., Office of the Secretary/Agency

Head) were supportive of their reinvention labs, and 77 percent said that

3

At the October 1993 Hunt Valley Conference, reinvention labs were encouraged to request waivers to

requirements imposed upon them that were barriers to reinvention.

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upper level career managers were also supportive. In some cases, lab

officials said that top management was the leading force behind the

reinvention labs. For example, staff developing DOI’s U.S. Geological

Survey lab said their lab proposal was approved by headquarters because

of the active support of the department’s leadership. (See app. X.) DLA

officials said that their top management pushed for a total overhaul of the

agency before the start of the NPR effort and that the reinvention labs

provided a vehicle for enhancing the visibility of these reforms. (See app.

IV.) An official from IRS’ reinvention lab said that IRS management

expressed its support for that lab by approving a memorandum of

understanding between the lab and its regional office. Included in the

memorandum was a commitment from the regional commissioner to

provide oversight and program support to the lab, to reduce the reporting

requirements on front-line managers, and to offer assistance in

implementing the reinvention ideas. (See app. XI.)

However, in a few cases labs reported that they were adversely affected by

a lack of top management support or attention. For example, one lab

official said his lab initially had a high-level supporter in headquarters who

could get waivers and delegations of decisionmaking authority approved.

However, he said that when the lab lost this supporter, other headquarters

officials began to actively resist the lab’s efforts, and some even engaged

in what he termed “pay-back.” Another survey respondent said managers

in his agency were inattentive to the agency’s lab. The respondent also

reported that management was unconcerned about the lab’s progress; did

not provide needed resources (e.g., relieving the reinvention team of their

usual duties); and did not direct field offices to participate in the lab.

Survey respondents also related examples of resistance to their

reinvention efforts from nonmanagerial staff in headquarters. One

respondent said that the lab was set up in such a manner that staff

members at headquarters, whom he said were threatened by the lab’s

goals, could obstruct its progress. Another respondent said that staff at her

facility had been “frustrated with the NPR experience” and questioned the

point of the labs. She said that the lab staff had submitted a proposal to

their headquarters that would have allowed them to buy fuel oil from a

local supplier at a cheaper price than from their in-house supplier. The

headquarters staff sought feedback on the idea from their in-house

supplier, who naturally objected to the proposal. On the basis of this

response, the headquarters staff denied the request.

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Substantial

Communication

About Reinvention

Labs Was Rare

The Vice President said that reinvention labs “will need to share what they

learn and forge alliances for change.” A September 1993 NPR report stated

that:

“We will transform the federal government only if our actions—and the Reinvention Teams

and Labs now in place in every department—succeed in planting a seed. That seed will

sprout only if we create a process of ongoing change that branches outward from the work

we have already done.”

If the reinvention labs are to “plant seeds” for organizational change,

communication of information about what they have tried and how it has

worked is essential. Therefore, we asked lab officials about

communication with other reinvention labs and with the NPR task force.

The respondents who offered an opinion indicated that substantial

communication among labs or between the labs and the NPR task force was

relatively rare. Only 11 percent of the respondents said that their labs had

communicated with other labs to a “great” or “very great” extent, and only

18 percent reported that level of communication between their labs and

the NPR task force. Twenty-three percent of the respondents said they had

communicated to a “moderate” extent with other labs and with the NPR

task force; the stage of lab development had little effect on their

responses. Officials in fully implemented labs were no more likely to have

communicated with their colleagues in other labs or with NPR staff than

officials in labs that had not gotten to that stage of development.

Nevertheless, over 70 percent of the respondents who said they had at

least some communication with other labs said it was helpful to the

development of their labs. About 68 percent of the respondents reporting

that level of communication with NPR staff said it was helpful. For

example, one respondent said that DOD held a reinvention lab conference

in March 1995 that allowed the agency’s labs to share experiences and

exchange ideas. According to lab officials from DOE’s Hanford site

reinvention lab, NPR staff assisted them in seeking a waiver enabling DOE to

privatize some laboratory services. (See app. V.)

There were clear differences in the responses in this area between DOD lab

officials and respondents for the other labs. Where over two-thirds of the

DOD respondents said that they had at least some communication with

other labs, only half of the non-DOD labs indicated this level of lab-to-lab

communication. Similarly, DOD lab officials were much more likely to

report that this communication had aided in the development of their labs

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(83 percent) than respondents from other agencies (59 percent).

Interestingly, DOD and non-DOD labs did not differ in the degree to which

they communicated with the NPR task force (62 percent for both

responses) or the extent to which they believed that the communication

had assisted in their labs’ development (62 percent for DOD labs versus

60 percent for non-DOD labs).

Downsizing Had Both

Positive and Negative

Effects on the Labs

As noted in chapter 1, many of the reinvention labs were initiated or were

being implemented at a time when federal agencies were being reduced in

size. The September 1995 NPR report estimated that at least 160,000

positions had been eliminated from the federal workforce since early 1993.

Because they were operating in this environment, we asked the survey

respondents whether agency downsizing had a positive, negative, or other

effect on their reinvention labs. (The respondents were allowed to check

multiple categories.)

About 44 percent of the respondents reported that downsizing had a

positive effect on their labs, but about 53 percent reported that downsizing

had a negative effect. The respondents mentioned such negative effects of

downsizing as slower implementation of lab efforts; loss of corporate

memory; and morale problems (e.g., fear, stress, and uncertainty) that

resulted in less interest in and support of management reforms and less

risk-taking. In addition, some respondents said that downsizing had

jeopardized their labs’ ability to achieve desired outcomes and raised

concerns that decreasing manpower, coupled with the same or increasing

work requirements, would reduce the amount of time respondents had

available to focus on lab activities.

The respondents who said downsizing had a positive effect on their labs

commonly indicated that it was a catalyst for real change in their agencies.

Several of the respondents noted that downsizing forced management and

staff to rethink agency operations, support reforms, adopt NPR efforts and

labs, and work more collaboratively. A few of these respondents also

noted that downsizing led to greater innovation and creativity. Five other

respondents said that their labs benefited from the downsizing of other

agencies. For example, one lab reported that reductions in other agencies’

contract administration staff increased interest in the contract

administration services that the lab was marketing.

Thirty-three percent of the respondents reported both positive and

negative effects from agency downsizing. For example, one respondent

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said that although downsizing had forced staff to consider radical changes

that would have otherwise been rejected, it had also reduced the amount

of staff, time, and resources available for concentrating on making these

improvements.

NPR II and GPRA

Effects on Most Labs

Unclear

We also asked the survey respondents what effect, if any, the

implementation of GPRA and the agency restructuring initiative in the

second phase of the NPR effort (NPR II) had on their reinvention labs.

Compared to their views on downsizing, the respondents were less clear

about the effects of GPRA implementation and NPR II’s restructuring on their

labs. They were more likely to say that they did not know the effects of

GPRA or NPR II on their labs, perhaps because these reforms had not been

fully implemented at the time of our survey.

However, the survey respondents were much more likely to indicate that

GPRA had a positive effect on the development of their labs (33 percent)

than a negative effect (6 percent). For example, they said that GPRA

• complemented and reinforced their labs’ ongoing reinvention efforts;

• promoted the development of performance measures and results-based

management systems that were a part of their labs’ goals;

• forced their organization to focus on performance, redefining mission,

corporate goals, and objectives;

• compelled management to think about how to integrate various

management reform legislation, such as the Federal Managers’ Financial

Integrity Act of 1982 and the Chief Financial Officers Act of 1990,4

 with the

reinvention labs; and

• provided a driving force for interest in, and design of, a new operations

evaluation process for the lab.

At least one of the labs was also participating in a GPRA pilot program. As a

pilot site, VA’s New York Regional Office’s claims processing lab developed

a new system of measures, including one that VA officials said enabled

teams to determine how productive they were by comparing the dollar

value of the claims they processed to the relative salary of the team. (See

app. XIII.)

4

The Federal Managers’ Financial Integrity Act was designed to strengthen internal controls by

requiring annual evaluation and reports as to their adequacy. The Chief Financial Officers Act was

intended, among other things, to improve agencies’ systems of accounting, financial management, and

internal controls to ensure the issuance of reliable financial information.

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Officials from six labs said that developing performance measures and

complying with GPRA requirements were integral parts of their reinvention

efforts. Labs’ performance-based reform initiatives included

(1) developing GPRA performance measures and defining a matrix program

of performance-based management techniques, (2) building GPRA

requirements into the lab’s strategic planning effort, and (3) integrating

planning and performance measurement requirements into a standard

agencywide system. However, two survey respondents said that the

implementation of GPRA had little effect on their labs because they were

already developing and using performance measures.

Less than 6 percent of the respondents said that GPRA had a negative effect

on their reinvention labs. These respondents typically said that GPRA was

perceived as “busy work” or as having increased the staff’s workload.

In contrast to the respondents’ comments on GPRA, the proportion of

positive and negative responses about NPR II restructuring was relatively

close—31 and 24 percent, respectively. One respondent said that agency

restructuring had resulted in greater cooperation between his lab and OPM

on personnel issues. Another respondent said that restructuring provided

the framework to take the lab initiative to the next level of improvement.

Yet another respondent said that officials at his lab viewed NPR II

restructuring as basically a budget exercise.

Other Issues Affect

Labs’ Development

In their comments, the survey respondents also mentioned three other

barriers to the development of their reinvention labs—lack of interagency

coordination, existing legislation, and organizational culture. Several

respondents provided examples of the difficulties they experienced in

undertaking management reforms that crossed agency boundaries, even

when those agencies are within the same department. Other respondents

said that existing statutory requirements, which would require an act of

Congress to change, had hindered their labs’ performance. Still other

survey respondents said that implementation of the reforms in the lab

required changing the organizational culture within their agencies—that is,

the underlying assumptions, beliefs, values, practices, and expectations of

employees and managers.

Interagency Coordination Many governmental functions are performed by more than one agency or

level of government. In some cases, the federal government is addressing

very broad issues, such as environmental degradation or the need for job

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training, that fall within the missions of several agencies.5 Therefore,

similar programs have been established in different federal agencies. Other

federal programs require the cooperation of state and local governments.

Federal agencies also have similar administrative responsibilities (e.g.,

personnel, procurement, and contracting) that require the provision of

resources in each agency to fulfill those functions. In all of these areas,

opportunities exist for greater cooperation and sharing of resources.

As noted in chapter 2, at the time of our survey, 54 labs were attempting to

develop partnerships with other levels of government, labor organizations,

contractors, and/or customers. Other labs were attempting to consolidate

activities among different federal organizations. The survey respondents

provided several examples of the difficulties involved in enacting

management reforms across agency boundaries. For example, one

respondent said that statutes requiring the use of different contracting

procedures in different agencies were a significant barrier to his lab’s goal

of consolidating multiagency programs. The respondent said that one

agency had to use competition when awarding contracts, while other

agencies were required to set aside a percentage of contract awards for

minority contractors. Officials at the Commerce Department’s Boulder

reinvention lab said that they established a multiagency team to address

the issue of funding for administrative services. However, they said the

team was ultimately disbanded because it could not reach consensus on

proposed funding alternatives. According to one lab official, the team

lacked sufficient authority needed to push a proposal forward. (See app.

III.) Other difficulties that the lab officials described in such multiagency

efforts included (1) nonparticipation in or withdrawal from the lab by

some relevant agencies, (2) resistance from top management at one or

more of the agencies, and (3) failure by some agencies to send staff to

NPR-related training courses.

Statutory and Regulatory

Constraints Reported by

Labs

Some of the survey respondents said certain statutory requirements had a

negative effect on their labs. For example, some respondents mentioned

federal contracting laws as a constraint on reinvention labs. In one case, a

lab official said it was difficult to determine the extent of the lab’s

authority to reform contracting procedures because of the myriad of

different contracting statutes. Another respondent noted that the FAR was

designed to prevent close relationships from developing between federal

contracting units and contractors. The respondent said this FAR-required

5

See Budget Function Classification: Agency Spending and Personnel Levels for Fiscal Years 1994 and

1995 (GAO/AIMD-95-115FS, Apr. 11, 1995) for a discussion of the distribution of governmental

functions by agency.

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“arms length” relationship prevented sharing costs and resources with

contractors and was not conducive to cost savings and cycle time

reductions.

Lab officials at VA’s Clement J. Zablocki Medical Center in Milwaukee

provided an interesting example of how such constraints affected the lab’s

performance. The officials said VA classifies eyeglasses as a prosthetic

device, and statutorily based regulations state that prosthetics can be

provided only to veterans with nonservice-related medical conditions who

have been admitted to the hospital. Therefore, patients having outpatient

cataract surgery must be admitted to the hospital for a 2-day stay in order

to receive corrective eyeglasses. Medical center officials said this is an

unnecessary and costly requirement, and they have sought a waiver from

the regulation.6

Changing the Federal

Culture

According to the President, one of the goals of the reinvention effort is

changing the culture of the national bureaucracy “away from complacency

and entitlement toward initiative and empowerment.” A 1993 NPR report

stated that traditional cultural values in the federal government resist

change, preserve mistrust and control, and operate within a rigid and

hierarchical structure. The report also said that this segmented system

creates artificial organizational boundaries that separate staff within and

among agencies that work on related problems.

Several lab officials indicated that this traditional culture had hindered the

process of change in their organizations. In an attempt to change their

units’ culture, several organizations combined organizational restructuring

with changes in individual performance measurement systems as a way to

reinforce new employee behaviors. This type of organizational

restructuring typically involved moving from hierarchical, specialized

departments that were responsible for the performance of a single

component of a work process (commonly known as stovepipes) to

multidisciplinary work teams responsible for the performance of an entire

process. To ensure that incentive systems were aligned with restructured

operations, labs were evaluating the use of self-directed work teams by

6

The waiver request was submitted to VA’s central office, which recommended that OMB draft

legislation to change this eligibility requirement. However, medical center staff said the

recommendation had not yet been acted upon. Relatedly, the September 1995 NPR report recommends

reforming veterans’ health care eligibility and treatment. It stated that “existing laws limit the ability of

VA to provide the most appropriate care in the most appropriate setting. For example, VA doctors are

presently forced to hospitalize veterans who only need such care as blood pressure treatment or

crutches.”

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• creating business contracts with built-in product delivery and customer

satisfaction targets, with both the customer and the team evaluating the

team’s overall performance and each member’s contribution;

• having the team leader conduct evaluations rather than the management of

the functional units; and

• creating an award system that ties group awards to the team’s contribution

to the achievement of the agency’s goals.

By creating work teams within their organizations, these labs have tried to

address the Vice President’s goal to change the culture of the federal

government.

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Measuring the Labs’ Performance

The collection and analysis of performance data are key elements in

changing the way the federal government operates, particularly when

those changes are initiated as pilot projects.1

 At the most basic level,

performance data are needed to determine whether the changes being

implemented are producing the expected results. If the data indicate that

the changes are successful and merit wider implementation, performance

data can be used to make a compelling argument for changing what may

be long-standing policies and practices.

Because reinvention labs are intended to explore new ways of

accomplishing agencies’ existing missions, often on a small scale before

broader implementation begins, data about the labs’ performance can be

crucial to the labs’ long-range success. Without such data, decisionmakers

will not know whether the changes are an improvement over existing

practices. Also, without performance data, lab officials will find it difficult

to obtain support for full-scale implementation within their agency or for

diffusion beyond their agency to other federal entities.

The survey respondents frequently said their labs were collecting various

types of performance data. Those labs not collecting data were commonly

described as not being sufficiently developed to do so. Where data were

collected, the respondents indicated that it showed the labs were

improving productivity and customer service. However, the respondents

also frequently said that their labs did not have pre-lab data against which

post-lab data could be compared. Some respondents also indicated other

problems with their labs’ data collection efforts.

Most Labs Were

Reportedly Collecting

Performance Data

As figure 4.1 shows, over two-thirds of the respondents said that their labs

had collected or were collecting some type of performance data. Even

those respondents who said data were not being collected generally

recognized its importance. Over 80 percent said their labs planned to

gather such data in the future.

1

See Managing for Results: Critical Actions for Measuring Performance (GAO/T-GGD/AIMD-95-187,

June 20, 1995); Managing for Results: Steps for Strengthening Federal Management

(GAO/T-GGD/AIMD-95-158, May 9, 1995); Government Reform: Goal-Setting and Performance

(GAO/AIMD/GGD-95-130R, Mar. 27, 1995); and Program Performance Measures: Federal Agency

Collection and Use of Performance Data (GAO/GGD-92-65, May 4, 1992).

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Figure 4.1: Most Labs Reported

Collecting Performance Data

31% No data collected

69% Data collected

Source: GAO analysis.

We asked the survey respondents who said their labs were collecting

performance data to identify the kinds of data being collected from the

following categories: (1) informal, ad hoc comments from staff or

customers; (2) customer opinion survey data; (3) staff opinion survey data;

(4) output data reflecting the unit’s level of activity or effort (e.g., the

number of claims processed); (5) outcome data indicating the unit’s

results, effects, or program impacts (e.g., changes in infant mortality

rates); and/or (6) some other kind of data. (Survey respondents were

allowed to identify more than one type of data for their labs.) The

respondents most commonly said their labs were collecting data on the

units’ outputs (77 percent) and/or were collecting informal comments

from staff or customers (69 percent). Other frequent responses were

customer opinion survey data (57 percent), outcome data (52 percent),

and staff opinion survey data (40 percent). Many of the labs (88 percent)

reported collecting more than one type of data.

Of those respondents who said their labs were not collecting performance

data, over three-fourths said that it was too early in the reinvention

Page 51 GAO/GGD-96-69 Reinvention Labs
Chapter 4 

Measuring the Labs’ Performance

process to do so. Analysis of the labs’ stage of development and whether

or not they collected data supports the lab officials’ opinion that it was too

early in the reinvention process to be collecting performance data. As

shown in figure 4.2, nearly 90 percent of the labs that were at least fully

implemented at the lab site said they had collected or were collecting

performance data. In contrast, only about half of the labs in the planning

or beginning implementation stages of development had collected or were

collecting such data.

Figure 4.2: Fully Implemented Labs

Were More Likely to Collect

Performance Data

Planning or

incomplete

Fully implemented at

least at site

0

20

40

60

80

100

51

88

49

12

Percent

Data

No data

Source: GAO analysis.

A more detailed breakdown of the responses from fully implemented labs

further demonstrates this relationship between stage of development and

data collection. As figure 4.3 shows, although more than three-fourths of

the labs implemented at only the lab site were collecting performance

Page 52 GAO/GGD-96-69 Reinvention Labs
Chapter 4 

Measuring the Labs’ Performance

data, over 90 percent of the labs implemented at the lab site and beyond

were collecting such data. Therefore, the more developed the lab, the

more likely that it would have collected performance data.

Figure 4.3: Labs Implemented Beyond

the Lab Site Were More Likely to

Collect Performance Data

Planning or

incomplete

Implementation

only at lab site

Implementation 

at lab site and 

beyond 

Data

No data

0

20

40

60

80

100

51

77

94

49

23

6

Percent

Source: GAO analysis.

Some Respondents

Indicated Data Not

Needed or Used

Although most of the survey respondents indicated their labs were

collecting performance data, 14 percent of the respondents who said their

labs were not collecting such data said they did not do so because

gathering performance data was not seen as essential to their labs’ efforts.

For example, lab officials from GSA’s Mid-Atlantic Regional Office and the

Commerce Department’s Boulder reinvention lab said that efforts to

measure “obvious improvements” were unnecessary. One official from the

Boulder lab said that data collection efforts should be concentrated on

those changes in which outcomes are more dubious. Other officials from

this lab said that they had planned to use the agency’s Inspector General to

Page 53 GAO/GGD-96-69 Reinvention Labs
Chapter 4 

Measuring the Labs’ Performance

monitor the lab’s progress, but the Inspector General told them that many

of the lab’s changes were based on common sense and, therefore, did not

require measurement to prove their worthiness. (See app. III.) Another

12 percent of the respondents said that they had not collected

performance data because they had experienced difficulty in identifying

and/or developing appropriate performance measures.

To be valuable, performance data must not only be collected but also be

used by decisionmakers to assess the changes being made in agencies’

operations. However, not all of the data the labs collected appear to have

been used. For example, officials from USDA’s lab reinventing the baggage

inspection operations in Miami said that they had collected data that could

have been used to judge the lab’s performance, but the data were never

used by anyone in the agency or the lab for that purpose. (See app. II.)

Respondents

Reported Improved

Productivity and

Customer Service

Through Labs

Eighty-two percent of the respondents who said their labs had collected or

were collecting performance data said that the data had allowed them to

reach conclusions regarding the performance of their labs. Of these

respondents who offered an opinion, 98 percent reported improved

customer service, nearly 92 percent noted improved productivity in their

units, and 84 percent said their labs had improved staff morale. Examples

of customer service improvements follow:

• VA’s New York Regional Office claims processing lab said that the average

amount of time veterans had to wait before being seen for an interview

had been reduced from about 20 minutes before the lab to less than 3

minutes after the lab was established. Lab officials also said that VA

employees had greater control and more authority and found their jobs

much more satisfying. (See app. XIII.)

• VA’s reinvention lab at the Zablocki Medical Center in Milwaukee said two

surveys—one of physicians and the other of patients and their family

members—indicated that customer satisfaction had improved as a result

of the lab’s effort to coordinate veterans’ outpatient and inpatient care by

teaming social workers with primary care physicians. (See app. XII.)

• DOE’s reinvention lab at the Hanford site in Washington State said that the

lab had reduced the safeguard and security budget by $29 million over a

4-year period by changing the installation’s security operations from a

large paramilitary organization that supported a national defense mission

to an industrial-style organization that supports environmental cleanup.

(See app. V.)

Page 54 GAO/GGD-96-69 Reinvention Labs
Chapter 4 

Measuring the Labs’ Performance

• HUD’s reinvention lab in Chicago, Milwaukee, and Cleveland said that by

developing partnerships with public housing authorities the lab had

improved the satisfaction of the public housing residents. Lab officials also

said that an overall measure of the public housing authorities’

management performance in such areas as rent collected, condition of the

housing units, and operating reserve had improved since the lab was

initiated. (See app. VIII.)

• DLA’s lab said the lab reduced the agency’s overall pharmaceutical

inventories by $48.6 million and achieved similar inventory reductions and

cost savings at DOD medical facilities. (See app. IV.)

Respondents Said

Labs Often Did Not

Have Pre-Lab

Performance Data

Respondents frequently said that performance data allowed them to

conclude that their labs had improved units’ productivity, customer

satisfaction, and staff morale. However, conclusively documenting these

improvements may be very difficult. As figure 4.4 indicates, many of the

respondents who said their labs were collecting performance data did not

collect similar types of data before the start of the lab to serve as a

baseline for documenting the labs’ effects.

Page 55 GAO/GGD-96-69 Reinvention Labs
Chapter 4 

Measuring the Labs’ Performance

Figure 4.4: Many Labs Reported That

They Did Not Collect Pre-Lab

Performance Data

0

20

40

60

80

100

77

69

57

40

52 53

57

24

17

31

Outputs Informal Customer

 surveys

Staff

surveys

Outcomes

Most likely to have

baseline data

Least likely to have

baseline data

Percentage of labs collecting data

Post lab

Baseline data

Source: GAO analysis.

The most common forms of pre-lab performance data (baseline data) that

respondents indicated existed concerned a unit’s outputs (53 percent of

the respondents) and informal comments (57 percent). Labs reported that

they were least likely to have such data on customer (24 percent) and staff

(17 percent) opinions.

Page 56 GAO/GGD-96-69 Reinvention Labs
Chapter 5 

Conclusions and Recommendation

At the time of our survey, 26 agencies and other federal entities had

designated a total of 185 reinvention labs in various parts of the country.

The survey respondents indicated that the labs generally were established

to do what the Vice President suggested in his April 1993 letter to federal

departments and agencies—improve customer service; address specific

problems; and, ultimately, improve the operation of federal agencies.

Because many of the labs had not been implemented at the time of our

review, it is too early to tell whether they will accomplish these goals.

Even for the labs that the respondents said had been fully implemented, it

may take years before it can be determined whether the changes will have

a long-lasting effect on federal agencies beyond the lab site. Also, because

there is not a specific definition of a reinvention lab or guidance from

either the NPR task force or OMB as to how labs should operate, few clear

criteria exist against which to judge the labs’ performance. Nevertheless,

some preliminary observations about the labs are possible based on

comments the Vice President and others have made about the labs and the

information developed during this review.

For example, the Vice President said that the labs should ideally be

initiated where the government serves the public in a highly visible way.

Although virtually all of the survey respondents indicated that improving

customer service was a primary goal of their labs, they did not always

define their labs’ customers as the public. In fact, lab officials most

commonly viewed their labs’ customers as other governmental

organizations, and, for some of the labs, a government organization was

their only customer. Although the linkage of these labs to the public may

not have been as direct as the Vice President envisioned, the public or the

agency’s constituency appeared to be at least indirectly served in virtually

all of the labs.

Although the survey respondents indicated that the labs’ changes

represented a substantially different mode of operation, the scope of the

reforms being developed in the labs was relatively narrow compared to the

sweeping changes contemplated by GPRA, the NPR II agency-restructuring

recommendations, and the congressional proposals to consolidate

agencies’ functions or eliminate agencies entirely. However, the labs’

comparatively narrow scope is a natural consequence of the Vice

President’s charge that they “reengineer work processes.” Agencies and

employees were not asked to suggest macro-level changes, such as

whether entire agencies or programs should be abolished or whether

multiple agencies should be merged into a single structure. Ultimately,

though, the diffusion and widespread adoption of the labs’ reengineering

Page 57 GAO/GGD-96-69 Reinvention Labs
Chapter 5 

Conclusions and Recommendation

proposals could lead to the “fundamental culture change” that the Vice

President envisioned in 1993.

At the beginning of the lab effort, a number of observers indicated that a

key factor in the success of the effort would be the labs’ ability to obtain

waivers from federal regulations. Although the respondents said many labs

sought and received regulatory waivers, a large number of the efforts were

able to be implemented without such waivers. Some lab officials said they

believed waivers would be needed, but they later discovered that they

already had the authority needed to change their work processes.

Although some impediments to the labs were clearly real, the experiences

of those officials suggest that at least some barriers to organizational

change may be more a function of perception than reality.

Most of the survey respondents said they were collecting performance

data to measure the effect of their labs’ reinvented work processes.

However, some of the respondents’ comments raised questions about their

commitment to measuring performance or the quality of the data being

collected. Some lab officials said that either they or other agency officials

did not believe that the collection of performance data was necessary or

worthwhile. Other lab officials said that they had difficulty developing

measures of performance or that data had been collected but had not been

used by decisionmakers. One of the most common types of data reportedly

being collected by the labs was informal comments from customers or

staff—anecdotal data that are not measurable and, therefore, may not be

convincing to skeptics of the reinvention process.

Of particular concern to us are the labs that were reportedly collecting

data about their reinvention efforts but had not collected similar types of

data before the start of their labs. Without such pre-lab data, lab officials

have no baseline for documenting a lab’s effects and therefore will find it

difficult, if not impossible, to reach persuasive conclusions about the lab’s

effects. The absence of both pre- and post-lab data will also make it

difficult to support expanding a lab’s changes to the rest of its agency or to

other organizations. Development of pre-lab performance measures is

particularly important for the substantial number of labs reportedly still in

the planning stage.

Nevertheless, the reinvention lab effort has produced hundreds of ideas to

reengineer work processes and improve agencies’ performance—ideas

drawn from employees with hands-on experience in operating government

programs. Many of the labs are addressing issues that are at the cutting

Page 58 GAO/GGD-96-69 Reinvention Labs
Chapter 5 

Conclusions and Recommendation

edge of government management, such as how agencies can use

technology to improve their operations; how they can be more

self-sufficient in an era of tight budgetary resources; and how agencies can

work in partnership with other agencies, other levels of government, or

the private sector to solve problems. This progress notwithstanding, even

more innovations are possible in these and other areas as agencies review

and rethink their existing work processes.

Moving Beyond the

Labs

The labs we surveyed were at varying stages of development. About half

had not been fully implemented at the lab sites and were still in the

planning or developmental stages. The rest of the labs had been fully

implemented at the lab sites, and some had proven that the innovations

being tested can save money, improve service, and/or increase

organizational productivity. However, relatively few of the labs’ proposals

had been implemented beyond the original lab site.

The types of assistance the labs need depend on their stage of

development. Labs that are in the planning or developmental stages need

the support, encouragement, and, at times, the protection that a “change

agent” in a position of influence can provide. Governmentwide, the Vice

President and the NPR task force have attempted to perform that role.

There have also been change agents within particular agencies that have

encouraged and supported the labs’ development.

Labs that have been fully implemented, particularly those that have

demonstrated ways to save money and/or improve federal operations,

need a different type of assistance if the ideas they represent are to spread

beyond the lab sites. Nonlab organizations both within the labs’ agencies

and in other agencies need to become aware of the labs, recognize the

applicability and value of the ideas the labs represent to their own

organizations, and learn from the labs’ experiences. As the Vice President

said, for the labs to achieve their full potential they “will need to share

what they learn and forge alliances for change.” The real value of the labs

will be realized only when the operational improvements they initiated,

tested, and validated achieve wider adoption. Also, by learning from the

labs’ experiences, other organizations can avoid the pitfalls that some of

the labs experienced. Sharing this information will keep other

organizations from having to “reinvent the wheel” as they reinvent their

work processes. If the changes the labs represent end at the lab sites, a

valuable resource will have been wasted. Therefore, communication about

Page 59 GAO/GGD-96-69 Reinvention Labs
Chapter 5 

Conclusions and Recommendation

the labs is crucial to the long-term success of this part of the overall

reinvention effort.

However, the survey respondents indicated that relatively few labs have

had substantial communication either with other labs or with the NPR task

force. Also, although it has encouraged the labs’ development and made

certain information available about them, the NPR task force has not

actively solicited information from the labs, has encouraged agencies to

focus on reinventing rather than reporting, and has not systematically

contacted the labs to provide them with information or direction. As a

result, the NPR task force was not able to provide us with an accurate

listing of all of the labs. The task force’s “hands-off” approach to the

reinvention lab effort was a conscious decision by NPR officials not to

micromanage the labs and impose a top-down “command and control”

structure. This approach, while appropriate to encourage and empower

employees and agencies to find the solutions they believe most

appropriate to reengineer their work processes, may not be the best

strategy for moving the labs’ results beyond their experimental

environments. Furthermore, there is no certainty that the NPR task force

will still be in existence when some of the labs reach maturity.

Therefore, we believe that some type of information “clearinghouse,”

placed in a relatively stable environment, is needed to allow other

organizations to become aware of the labs and to learn about the labs’

experiences. The clearinghouse could, among other things, provide

information and guidance to labs on the development of appropriate

performance measures, including baseline data against which the labs’

performance could be judged. A number of federal organizations could

conceivably perform this clearinghouse role. For example, OMB’s

responsibility for providing management leadership across the executive

branch makes it a candidate to serve as the clearinghouse. Other possible

candidates include OPM, GSA, the President’s Management Council, or an

executive agency interested in tracking innovations.

Recommendation We recommend that the Director of OMB ensure that a clearinghouse of

information about the labs be established. Working with the NPR task

force, the Director should identify which agency or other federal entity

can effectively serve as that clearinghouse. The clearinghouse should

contain information that identifies the location of each lab, the issues

being addressed, points of contact for further information about the lab,

and any performance information demonstrating the lab’s results.

Page 60 GAO/GGD-96-69 Reinvention Labs
Chapter 5 

Conclusions and Recommendation

Agency Comments We provided a draft of this report to the Vice President and the OMB

Director for their review and comment. On January 17, 1996, we met with

the Senior Policy Advisor to the Vice President for NPR issues and the

Deputy Director of the NPR task force. On January 22, 1996, we met with

OMB’s Deputy Director for Management. All of the officials indicated that

the report was generally accurate, interesting, and helpful. The OMB and

NPR Deputy Directors said the report was the most comprehensive analysis

of the reinvention labs to date. Certain technical changes the officials

suggested were incorporated into the report as appropriate.

In the draft, we recommended that OMB serve as the clearinghouse for

information about the labs. All of the officials expressed concerns about

this recommendation. The Senior Policy Advisor and the NPR Deputy

Director were somewhat concerned that the recommendation might be

read as implying that OMB, rather than NPR, should have had responsibility

for initiating and promoting reinvention labs. They pointed out that OMB’s

historical role, its budget responsibilities, and its statutory management

responsibilities compete with its role as a “change agent” fostering

innovation. We explained that our recommendation was intended to

emphasize OMB’s responsibility to facilitate the dissemination of work

process innovations beyond the lab sites, not make them change agents

responsible for initiating the labs. The Senior Policy Advisor and the

Deputy Director agreed that this innovation dissemination function is

important and agreed that OMB was one place where this responsibility

could be placed.

The OMB Deputy Director for Management suggested that the

recommendation be changed to allow for options other than OMB itself as

the clearinghouse. He said that although OMB has a leadership role to play

in this regard, OMB may not be the best candidate to collect and provide

information about the labs. Other possible candidates, he said, include the

President’s Management Council, other central management agencies, and

the Chief Financial Officers Council. We agreed to change the

recommendation to state that the OMB Director should ensure that a

clearinghouse is established and, working with the NPR task force, should

identify the appropriate site for the clearinghouse.

Page 61 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Agency for 

International

Development

Agency for International Development—Agencywide Lab

Agriculture Automated Records Management System

Coordinate Public and Private 4-H Programmatic Functions

Dispute Resolution Board

Emphasizing Prevention In Pre-Harvest Food Safety

Empowering Employees Through Self-Directed Work Teams

Enhancing Service Delivery Through Decentralization

Expanding Options For User Fees

Focusing On Results In Resources Management

Meeting Customer Needs For Small Purchasing and

Leasing

Organizational Change: Toward Improving Information and

Education Technology

Simplifying Rulemaking in APHIS

Streamlining the Travel Accounting Process

Commerce Administrative Management for the Boulder Laboratories

Computer-Assisted Survey Information Collection—Census

Bureau

Electronic Marketplace/Information Partnerships/Automated

Document Storage and Retrieval System—National

Technical Information Service

Flexiplace Reinvention Lab—Patent and Trademark Office

Reinventing the Bureau of Export Administration

Defense 45th Space Wing Lab—Air Force

Acquisition Reform—Navy

Air Force DLA Express Service—U.S. Transportation

Command

Army Battle Labs

Army Chemical and Biological Command Lab

Army Concept Analysis Agency

Army Missile Command Reinvention Lab

Army Personnel Information Systems Command

Best Value Supply and Services—Marine Corps Air Station,

El Toro, CA

Best Value Supply and Services—Marine Corps Air Ground

Combat Center, Twenty-nine Palms, CA

Page 62 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• • • • • •

• •

• • •

•

• • •

s • • •

• • • • •

• • • •

• • •

• • •

• •

• • •

•

• •

• • •

• • • •

• •

•

• • • •

• • • • •

• • •

• • • •

• • • • •

•

• • • • • •

• • • • • • •

• • •

• • • • • •

(continued)

Page 63 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Defense (cont.) Best Value Supply and Services—Marine Corps Air Station,

Cherry Point, NC

Best Value Supply and Services—Marine Corps Base,

Camp Lejeune, NC

Best Value Supply and Services—Marine Corps Logistics

Base, Albany, GA

Buy Response Vice Inventory—Defense Logistics Agency

Central Penn Regional Public Works Center—Army

Civilian Human Resource Management Lab—Army

Closed-Loop Wood Recycling—Defense Logistics Agency

Customer Value Contracting—Defense Logistics Agency

Defense Printing Service—Department of Defense

Defense Reutilization and Marketing Service—Defense

Logistics Agency

Naval Postgraduate School: Delivery of Graduate

Education and Related Research and Consulting

Services—Navy

Defense Transportation Reinvention Lab—U.S.

Transportation Command

Enterprise Integration—Defense Information Systems

Agency

Federal Automated System for Travel—Air Force

Federal Contract Administrative Services—Defense

Logistics Agency

Facilitating Our Customers’ Ultimate Satisfaction—Defense

Logistics Agency

Full Business Cycle Electronic Data Interchange—Defense

Logistics Agency

Health Care Systems Support—Army

Infusing Best Business Practices Into The Federal

Government—Army

Initiative To Improve On-Time Delivery of Government

Contract Line Items—Defense Logistics Agency

Installations and Logistics Lab—National Security Agency

Medical Technology Lab—Air Force

Naval Safety and Survivability—Navy

Naval Shore Activities—Navy

NSA Travel Reinvention Lab—National Security Agency

Performance Labor Accounting System—Defense Logistics

Agency

Premium Service Lab—Defense Logistics Agency

Page 64 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• • • • •

• • • • • •

• • •

• • • • • • •

• • • • •

• • •

• • • • • • •

• • • • •

• • • • • • • •

• • • • •

• • • • • • • •

• • •

• • • • •

• • • •

• • • • • •

• • • • • •

• • • • • •

• • • • •

• • • • • • • •

• •

• •

• • •

• • •

• • • • • •

• • •

• • • •

• • • •

(continued)

Page 65 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Defense (cont.) Process Oriented Contract Administration

Services—Defense Logistics Agency

Recycled Packaging—Defense Logistics Agency

Reduce Policy and Procedures to “One Book”—Defense

Logistics Agency

Reducing Oversight Costs—Defense Logistics Agency

Reinvent the Essential Mission of Supporting DOD Activities

in the National Capital Region—Department of Defense

Science and Technology Labs—Department of Defense

Software Engineering Productivity Improvement—National

Security Agency

Streamlining Procurement of Commercial Items—Defense

Mapping Agency

Support to the Combat Operator—National Security Agency

Tailored Logistics Support Detachment—Defense Logistics

Agency

Total Activity Reinvention Lab—Marine Corps Logistics

Base, Barstow, CA

Total Activity Reinvention Lab—Marine Corps Base, Camp

Pendleton, CA

Total Agency Reinvention Lab—Defense Mapping Agency

Variable Pricing—Defense Logistics Agency

Wood Products—Defense Logistics Agency

Education Debt Collection Service—Office of Postsecondary

Education

Development of Performance Indicators

Energy Implementing a Business Model for Power Marketing

Operation—Bonneville Power Administration

Declassification of Information (Openness Initiative)

Energy Efficiency and Renewable Energy: Reinventing the

Federal-State-Local Partnership for Energy

Policy, Planning, and Program Evaluation: National Clean

Industry Initiative

Real-Time Access to Oil and Gas Information

Reinventing Government at Hanford

Environmental

Protection Agency

Reengineering Management Integrity at EPA

The Learning, Information, and Performance Support

System

Federal Executive

Board

The Atlanta Federal Executive Board

Page 66 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• • • • •

• • • • •

• • •

• •

s

• • • • • •

• • • • •

•

• • •

y •

• • • •

• • • • •

• • •

• • • • •

• • •

• • •

• •

•

• • • • • •

• • •

• • • •

• • • •

• •

• •

• •

• •

•

(continued)

Page 67 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Federal Executive

Board (cont.)

The Alamo Federal Executive Board

The Greater Los Angeles Federal Executive Board

Federal Emergency

Management Agency

Federal Emergency Management Agency—Agencywide

Lab

General Services

Administration

Commercial Products Acquisition Lab

Direct Ordering of Technical Support Services for Risk

Analysis and Security Audits

Electronic Time and Attendance Reporting Lab

Federal Supply Service, GSA, Northeast and Caribbean

Region

Governmentwide E-Mail Lab

Governmentwide Real Property Standards Lab

Interagency Fleet Consolidation Lab

Lease Lab

Local Telecommunications Services Lab

Regionwide Lab: Mid-Atlantic Region

Regionwide Lab: Rocky Mountain Region

Revised Public Buildings Service Contract Review

Procedures

Telecommuting Lab

Health and Human

Services

Alaska Native Medical Center

Georgia Common Access Project

International Cancer Information Center

Internet Lab

National Library of Medicine Systems Reinvention Lab

Negotiated Rulemaking (Reg-Neg)

Phoenix Indian Medical Center

Reinventing the National Institutes of Health’s Research

Grants

Housing and Urban

Development

Affirmative Fair Housing Marketing

Community Partnerships Against Crime

District of Columbia Homeless Initiative

Reinventing Public and Indian Housing’s Field Operations

Single Family Property Disposition

Interior Affirmative Employment Program Lab

Page 68 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• • • • • •

• • • • • •

• • • • • •

• •

•

• •

• •

• •

• •

• •

•

•

• • • • • • •

• • • • •

•

• • •

• • •

• • • • •

• • • •

• •

• • • •

•

• • • •

• • •

•

• • •

• • • • • •

• • • •

• •

•

(continued)

Page 69 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Interior (cont.) Cadastral Survey—Bureau of Land Management

California Desert Ecosystem Management and

Planning—Bureau of Land Management

Common Reference Data—Minerals Management Service

Consolidation of Administrative Services

Denver Service Center—Bureau of Land Management

Discrimination Complaints Processing

End User Support—Office of Information Resources

Management

Ethics Reengineering Lab: Financial Disclosure

Requirements

Ethics Reengineering Lab: Standards of Conduct and

Training

Ethics Reengineering Lab: Management Decision Making

and the Enforcement of Ethics

Federal Financially Assisted Programs

Fort Collins: Natural Resources Research Center—National

Biological Service

Four Corners Indian Trust Service Lab

Freedom of Information Act Process Reinvention Lab

Housing Improvement Program Reinvention Management

Lab—Bureau of Indian Affairs

Information Dissemination System—U.S. Geological Survey

Information Management—Office of Information Resources

Management

Inter-Department Indian Program—Bureau of Indian Affairs

National Training Center NPR Lab—Bureau of Land

Management

Partnership San Antonio—National Park Service

Pittsburgh Research Center—Bureau of Mines

Power Management Laboratory—Bureau of Reclamation

Redesign and Reorient the Operations Evaluation

Process—National Park Service

Reengineering the Evaluation Program—Bureau of Land

Management

Review of Planning, Design and Construction

Documents—National Park Service

Royalty Management Program—Minerals Management

Service

Use of Internet and Other External Networks

Page 70 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• •

• • • • • •

• • •

• • •

• • • • • •

• • •

• •

• •

• • •

• • •

• •

• • • • • •

• • • •

• •

• • • • •

• • • • • •

•

• • • • • •

• • •

• • • • •

• • • •

• • • • • • •

• •

•

• •

• • • •

• • •

(continued)

Page 71 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Justice “Operation Payback” Debt Collection Lab—U.S. Marshals

Service

Airfleet Management

Comprehensive Anti-Crime and Social Service Delivery

Strategies

Computer Security Technology

Detainee Medical Services

Freedom of Information and Privacy Acts Laboratory

Customer Service Initiative—Immigration and Naturalization

Service

Joint Automated Booking System (JABS)

Partners Against Violence Network

Special Access Inspections Lane

Labor Cincinnati 2000

One Stop Career Centers

National Aeronautics

and Space

Administration

Enhancing the Accessibility of Earth Science Data

Functional Management Reinvention Lab

Improving Instrument Integration For Mission To Planet

Earth

Procurement Reinvention Lab

Shuttle/Payload Processing

Nuclear Regulatory

Commission

Procurement Reinvention Lab

National Science

Foundation

National Science Foundation—Agencywide Lab

Office of Personnel

Management

Project ABLE (Able Beneficiaries Link To Employers)

Self Directed Work Team

Telephone Application Processing

Securities and

Exchange

Commission

Reinventing Personnel Management

State Consular Reinvention Lab

Diplomatic Security

Office of Coordinator for Business Affairs

Tennessee Valley

Authority

Tennessee Valley Authority—Agencywide Lab

Transportation Air Traffic Control System Command Center—Federal

Aviation Administration

Page 72 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• •

• • •

• •

•

• •

• • • •

• • • • • •

• • • •

• • • •

• • • • • •

• •

• • • •

• • •

• • • • • •

• • • • • • •

• • • •

• • • • • •

• • • •

• • • • • •

• • •

• •

•

•

• • •

• • • • •

• • • • • •

• • • • • •

•

(continued)

Page 73 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Agency Lab name

Transportation (cont.) Electronic Signature Project—Federal Highway

Administration

Merchant Mariner Licensing and Documentation

System—U.S. Coast Guard

Treasury Air Passenger Processing—U.S. Customs Service

Application Processing—Office of Thrift Supervision

Check Claims Reinvention Lab—Financial Management

Service

Eliminating Imprest Funds Through Electronic Commerce

Public Tours—Bureau of Engraving and Printing

Reengineering Work Processes—Internal Revenue Service

Reinventing Prompt Payment Initiative—Financial

Management Service

Streamline Initiative For Noncompetitive

Procurement—Bureau of Engraving and Printing

Veterans Affairs Claims Processing—Lab New York Regional Office

Customer-Focused Health Care—Sioux Falls VA Medical

and Regional Office Center

Customer-Focused Health Care—Milwaukee VAMC

Customer-Focused Health Care—Baltimore VAMC

Customer-Focused Health Care—West Palm Beach VAMC

Page 74 GAO/GGD-96-69 Reinvention Labs
Appendix I 

List of Reinvention Labs Responding to

Survey by Agency and Subject Categories

Subject categories of reinvention labs’ primary line of efforta

Crosscutting themesb

Personnel

/HRM Procurement

Information

technology

Financial

management Operations Other Marketing EC/EDI Partnerships

• • • •

• •

•

•

• • • • •

• • • •

•

• • •

• • • • • •

• •

• • • • •

• • • •

• •

• • •

• • • • •

aThese categories were reported by a contact person from each of the reinvention labs during

GAO’s telephone survey.

bThese themes were identified from a GAO analysis of comments volunteered by respondents in

addition to the mandatory survey responses.

Source: Responses to fax survey from 181 reinvention labs.

Page 75 GAO/GGD-96-69 Reinvention Labs
Appendix II 

U.S. Department of Agriculture: Baggage

Inspection Operations at the Miami

International Airport

Overview of the

Reinvention Lab Site

The U.S. Department of Agriculture’s (USDA) baggage inspection operation

at Miami International Airport is responsible for inspecting the baggage of

arriving international passengers for undeclared and/or illegal agricultural

products. The goal of the operation is to ensure that exotic plant pests and

animal diseases do not enter the United States and cause economic

distress to America’s agriculture.

Baggage inspection operations at the airport are carried out 24 hours a

day, 7 days a week, reflecting the nearly constant arrival of international

flights. International passengers must first go through Immigration and

Naturalization Service processing and Customs Service inspections. Then,

those passengers who either have declared that they are bringing in

agricultural products or who are suspected of bringing them in have their

baggage inspected by personnel from the Plant Protection and Quarantine

(PPQ) program of USDA’s Animal and Plant Health Inspection Service

(APHIS). If travelers are found to have brought prohibited agricultural

products into the country, they can be assessed civil penalties ranging

from $50 to $250, according to Miami PPQ officials.

The PPQ baggage inspection program creates stressful working conditions

because inspectors must perform an important enforcement activity while

serving international travelers in a positive way. Also, the volume of

international travelers at the airport has increased dramatically in recent

years. According to PPQ management, international passenger volume at

the airport was about 17,000 per day in 1991 and increased to about 30,000

passengers per day in 1995. During the same period, budget constraints

prevented any significant increase in PPQ baggage inspection staffing

levels.

Initiation of the

Reinvention Lab

The origins of the lab can be traced to 1989, when PPQ began efforts to

improve productivity. Recognizing that work was increasing but that staff

resources were not, PPQ management undertook an employee utilization

study in an attempt to address the problem. The study indicated that the

quality of worklife was a key factor in improving staff productivity, so PPQ

decided to attempt to improve job satisfaction and morale. A union

representative suggested the team concept be explored, which ultimately

led to the development of self-directed work teams (SDWT).1

 The goal of

SDWTs was to permit more self-direction by employees and to allow them

to identify ways of improving procedures, efficiency, and effectiveness. In

1

The self-directed work team is formed along process lines and empowered to make process

improvements with only limited managerial oversight as well as to make many of the day-to-day

decisions formerly made by supervisors.

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Appendix II 

U.S. Department of Agriculture: Baggage

Inspection Operations at the Miami

International Airport

April 1991, two SDWTs became operational as a pilot project in the baggage

inspection program at Miami International Airport.

In August 1993, the pilot project was designated as a reinvention lab.

According to Miami PPQ management officials, that designation brought

the project recognition, attention, and a needed boost. However, the

officials also said that the lab designation revealed certain barriers they

were facing. They said that if the pilot project had not been designated a

lab, it would have been left as a small, struggling, internal effort.

Description of the

Reinvention Lab

The overall objective of the lab was to improve morale, provide the

opportunity for self-development, and enhance the quality of worklife by

giving employees greater decisionmaking power and actively involving

them in decisions that influenced their working environments. The lab also

was intended to achieve improvements in program productivity as the

employees examined ways to improve the operations of the baggage

inspection program.

Before SDWTs, the baggage inspection function operated in a traditional

organizational arrangement with a rigid hierarchical structure of

supervisors, officers, and technicians. A supervisor directed all aspects of

employee activities, even specifying when employees could take bathroom

breaks. Furthermore, PPQ management said the work area was considered

poor by both managers and employees and was known as the “purple

dungeon” because of the windowless, closed working space.

Since the advent of SDWTs in April 1991, officers and technicians as a group

determined their shift schedules and break arrangements and worked out

annual leave conflicts. In some cases, SDWTs arranged for compressed

schedules that allowed for 10- instead of 8-hour workdays. Employees also

were permitted to rearrange their workspace to make it more efficient.

Supervisors became facilitators to coach and mentor the SDWT effort. Both

employees and management said that the SDWT effort improved morale and

the working environment.

The SDWT effort also reportedly led to changes in the order of inspection

operations that USDA shares with the Customs Service. Before the pilot,

USDA’s PPQ profilers/screeners would mark passengers’ declarations and, if

USDA needed to inspect their luggage, would direct passengers to USDA after

they went through Customs’ checkpoint. As a result of the SDWT effort,

USDA and Customs rethought the operation, changed some of the order of

Page 77 GAO/GGD-96-69 Reinvention Labs
Appendix II 

U.S. Department of Agriculture: Baggage

Inspection Operations at the Miami

International Airport

inspection, and rearranged the inspection area. According to Miami PPQ

management, these changes resulted in a more efficient operation that

moves passengers through the airport more quickly and provides PPQ

better control in determining which passengers to select to have their

baggage inspected.

APHIS headquarters formed a work group to help implement the team

approaches at other APHIS locations. As a result of lessons learned at the

SDWT lab, similar, team-based work efforts were started at the other PPQ

operations in Miami and at more than 20 other APHIS locations across the

country. The work group is also seeking to address system barriers that

currently prevent the use of certain team approach techniques, such as the

team-based performance assessments.

Use of Waivers All of the lab’s efforts were done within existing regulations because PPQ

officials said they believed it would have been too difficult to obtain a

waiver from governmentwide and agency-specific regulations. However,

lab officials said that informal arrangements were sometimes developed to

work around certain regulations. For example, regulations require that all

leave be approved by a supervisor. In the lab, the SDWT collectively

arranged its members’ schedules and agreed when annual leave could be

taken. To ensure consistency with regulations, a supervisor signed

employee leave slips. Although the action was not considered a regulatory

waiver, the local union agreed to ease some contract rules that conflicted

with the SDWT approach because the union supported that approach.

Lab officials said some elements of traditional SDWTs could not be

accomplished under federal regulations and therefore were not included in

the lab. These elements included allowing SDWT members to conduct

team-based appraisals and to make hiring or firing decisions. A member of

the APHIS work group said that it was identifying ways to overcome these

barriers and that it may seek regulatory waivers in the future that would

allow it to include these elements in the lab. Because of the limitations on

what the SDWT was able to do, Miami PPQ management no longer uses the

term “self-directed work teams” and refers to the lab’s efforts as “moving

toward a team-based organization.”

Performance

Measures

Miami PPQ officials said that a June 1991 survey conducted shortly after

the start of the pilot project showed that employee job satisfaction and

morale had increased from levels reported before the project. However,

Page 78 GAO/GGD-96-69 Reinvention Labs
Appendix II 

U.S. Department of Agriculture: Baggage

Inspection Operations at the Miami

International Airport

there has been no other attempt to measure employee job satisfaction or

morale to indicate the effect of the project or, after 1993, the lab.

One possible measure of the lab’s effectiveness—pest interception

data—was collected before the pilot and after the start of the lab.

However, lab officials said these data were not analyzed to identify the

possible impact of the SDWTs. PPQ Miami management officials said that

they may conduct such an analysis in the future to demonstrate the need

for more staff to deal with the increase in international passenger volume.

Other Issues

Lessons Learned Although top management in APHIS supported the lab from the beginning,

Miami PPQ officials said that the organizational support services necessary

for the SDWT effort proved to be insufficient. Specifically, they said that

these services lacked ongoing guidance and failed to provide adequate,

timely, and sufficient training, especially in preparing the team members

for their responsibilities associated with the new team roles. The officials

attributed this lack of support to an underestimation of the extent of

support that would be required by all involved, including top management

in APHIS and PPQ. They also said that certain PPQ management actions

communicated messages that were contradictory to the teamwork efforts,

causing setbacks and distrust. PPQ employees said that local Miami PPQ

managers were very supportive throughout the whole effort. Within the

SDWTs, morale reportedly improved as team members were able to work

together as a team and make decisions on their work.

Miami PPQ management said that as a result of being one of the first efforts

to use SDWTs in the federal government they learned over time from their

successes and failures. They said that the APHIS work group could help

team members resolve problems at the lab site and prevent problems

elsewhere as similar team efforts are implemented.

Communication With

Other Labs

APHIS held a reinvention lab conference in November 1994. Miami PPQ

managers said that the sharing of lab experiences was very helpful and

provided them with useful ideas for their lab.

Page 79 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

Overview of the

Reinvention Lab Site

The Department of Commerce’s scientific research laboratories in

Boulder, CO are under the administration of three Commerce agencies:

the National Institute of Standards and Technology (NIST), the National

Oceanic and Atmospheric Administration (NOAA), and the National

Telecommunications and Information Administration (NTIA). These

laboratories conduct various types of research in support of industry,

other government agencies, and academia. This research includes

developing technology to improve product quality, describing and

predicting changes in the earth’s environment, promoting standards to

help the development of U.S. products and services, modernizing

manufacturing processes, ensuring product reliability, and helping rapid

commercialization of products based on scientific breakthroughs. The

Mountain Administrative Support Center (MASC), which is organizationally

located within NOAA, provides administrative support to the scientific

research laboratories operated by NIST, NTIA, and NOAA.

Initiation of the

Reinvention Lab

In response to the National Performance Review’s (NPR) request,

Commerce selected five components, including the Boulder Laboratories,

to test reinvention ideas. The Boulder site was officially designated a

reinvention lab in June 1993.

A Reinvention Committee was organized by the Boulder site senior

management to develop a conceptual plan for the reinvention lab and to

review all reinvention recommendations. The recommendations were

developed by four reinvention teams in the following functional areas:

(1) personnel, (2) equipment and services, (3) information management

and flow, and (4) facilities and logistics. The Reinvention Committee also

established an Automation Strategies Group and a Funding Strategies

Group to assist the reinvention teams.

In addition, the Reinvention Committee had the responsibility of

presenting the recommendations to a Reinvention Board of Directors

comprising the directors of the Commerce agencies at the Boulder site.

The Board was responsible for approving all of the recommendations, with

general concurrence on major changes from Commerce’s Performance

Review Steering Committee, which oversees all five of the department’s

reinvention labs.

Description of the

Reinvention Lab

The overall purpose of the reinvention lab was to improve the delivery of

administrative services to NIST, NOAA, and NTIA scientists and engineers

Page 80 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

working at the Boulder site. In July 1993, the Reinvention Committee

issued the lab’s conceptual plan, which proposed 112 actions designed to

create an administrative system that would empower agency employees to

work better for their customers. Of these 112 actions, 34 were short-term

“quick-fixes,” although some required waivers from regulations. The

remaining 78 recommendations required more planning and long-term

work, most of which the lab has discussed extensively but has not yet

acted upon. All the recommendations were placed into four major

categories: decentralization of decisionmaking, service responsiveness,

funding of services, and site-specific services. Most of the reinvention

teams focused on the short-term quick fixes. The following is a discussion

of the most significant efforts by some of the lab’s teams and groups.

Decentralization of

Decisionmaking

A primary focus of the lab was decentralizing administrative

decisionmaking to the lowest practical level. In response to this goal, the

lab’s Personnel Team made nine “quick-fix” recommendations that

delegated the authority to make personnel decisions from the personnel

office to line managers.

Six of the team’s nine recommendations were approved by the lab’s Board:

(1) authorize managers to permit the use of alternate and/or compressed

work schedules, (2) allow managers to account for the work hours of their

employees on alternative work schedules, (3) enable employees to use

leave in 15-minute intervals, (4) authorize managers to approve flexiplace

arrangements, (5) permit managers to develop their own incentive award

systems, and (6) use E-mail to automate the employee clearance process.

The Board did not approve other recommendations covering alternative

discipline procedures, ethics training, and requirements for and storage of

financial disclosure statements because those recommendations were

beyond the scope of the lab and were sent to departmental management

for resolution.

Service Responsiveness Another critical element of the reinvention lab was to improve service

responsiveness through enhanced automation and communications. An

Automation Strategies Group, consisting of computer experts from all

three Commerce agencies at the Boulder site, was created to develop a

sitewide computer network, which would include local databases,

automated systems, interfaces with Boulder agencies and Commerce

systems, and electronic communication links. The Automation Strategies

Group’s primary accomplishment was developing a “white pages”

Page 81 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

directory service accessible through the Internet that provided names,

phone numbers, mail codes, locations, and security clearances for all

employees at the Boulder site.

Lab officials said that the implementation of some of the other automation

recommendations was discontinued or delayed because of questions

among site staff regarding how MASC wanted to proceed with automation.

In addition, lab officials needed to consider the impact of the

departmentwide Commerce Administrative Management System (CAMS) on

the lab’s automation proposals. Currently being implemented, CAMS is an

automated management system that integrates various administrative

functions, including financial management, travel, requisitioning, and

training. Lab officials said that they intend to develop their own

interconnectable systems that will also connect with CAMS when it is

implemented at the Boulder site. However, they noted that fulfilling this

strategy will be difficult given the limited funds available for automation.

Funding of Central and

On-Site Services

Another lab objective was to provide the agencies at the Boulder site with

greater control over funding decisions for the administrative services

provided by MASC. NTIA and NIST are billed at specific levels for the

administrative services provided; however, funding for NOAA’s Boulder

administrative support comes directly from NOAA headquarters. As a result,

lab officials said that because the billing methods among the three

Commerce agencies are different, the funding decisions for administrative

services could be viewed as inequitable and not necessarily based on the

needs of the scientific research projects. Furthermore, lab officials said

that because MASC was organizationally within NOAA, NTIA and NIST had little

control over the level of administrative services they received.

The Reinvention Committee established a Funding Strategies Group to

address this issue. However, the group ultimately disbanded because the

agencies represented in the group could not reach a consensus on the

group’s alternative funding proposals. According to one lab official, the

group, comprising representatives from all of the Boulder site agencies,

lacked sufficient authority to push a proposal forward.

In spite of this experience, lab officials said that the reinvention effort had

succeeded in developing budding partnerships among the agencies at the

Boulder site. An example of these partnerships included a proposed

administrative council with representatives from all three agencies.

Page 82 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

Use of Waivers According to the lab’s status report, the lab planned to request seven

waivers from departmental and governmentwide regulations. As of

October 1995, four waivers had been approved. Three departmental

waivers were approved that allowed the use of alternative work schedules,

authorized managers to create their own promotion and staffing

processes, and permitted managers to recruit federal workers to fill job

vacancies.

The department approved a fourth waiver in the form of a blanket

delegation of authority allowing the agency directors at the Boulder site to

have full authority to suspend or deviate from the policies of Commerce’s

Central Office, its bureaus, or other nonstatutory policies and procedures

when it was determined to be in the best interest of the government.

In addition, Commerce officials received Office of Personnel Management

(OPM) approval for the expansion of a personnel demonstration project

that was originally implemented in NIST in January 1988. Lab officials

stated that they sought to include the other Boulder agencies in the project

because their position classification system was superior to the traditional

system.

A departmental waiver to change the processing of personnel actions also

was pending because of Commerce’s plans to consolidate all of its

personnel processing into one or two offices.

Finally, officials planned to request a general waiver from using the

General Service Administration’s (GSA) supply schedule to enable the site’s

supply room to seek the best value for each product it sells. According to

an official, this request was dropped because reinvention lab team

members did not realize that procurement rules allowed agencies to

ignore the supply schedule if a local source could provide the product at a

lower price.

Performance

Measures

The lab’s conceptual plan states that the basis for monitoring and

evaluating the results of reinvention will be the measurement methods

designed by reinvention teams and reported in their reform proposals.

Each proposal was also required to include a checkpoint for determining if

the reform had generated any improvements. Lab officials said that they

planned to use Commerce’s Office of the Inspector General to assist in

evaluating the lab’s progress as well as to investigate potential savings and

cost avoidance.

Page 83 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

One official said that although an effort will be made by the Reinvention

Committee to review each proposal and measure its progress, not all

proposals will have specific measures. In his view, developing specific

measures for some reinvention changes is too difficult or the changes

cannot be quantified. He said, in some cases, a methodological approach

does not exist to measure a particular type of change or the cost of

measuring the change outweighs the potential benefits of measurement.

Improvements may be so obvious that performance measures are not

needed. According to the official, more effort should be concentrated on

those changes in which the outcomes are more dubious. He offered an

alternative approach to performance measurements for those

improvements lacking clear performance measures—conducting opinion

surveys of participants and other people intimately involved with the work

process.

Another lab official stated that the Reinvention Committee would not be

evaluating the lab’s activities. This official said that Commerce’s Inspector

General had told lab officials not to waste their time evaluating their lab

activities. After being briefed on the lab’s activities, the Inspector General

said that many of the changes made by the lab were “common sense

changes” not requiring measurements to prove their worthiness.

Other Issues

Union-Management

Relations

Lab officials said that attitudes have changed between the site’s

management and the local union since the two groups worked together on

the lab. According to officials, the Reinvention Committee’s decision to

include the union in the early development of the lab was a key factor in

alleviating communication problems and increasing cooperation. Lab

officials stated that union and management had begun to change the rigid

work environment so that skilled workers would be able to work together

as teams and on more than one project at a time. Supervisors also had

begun to perform more as coaches rather than just managers.

Headquarters Support Commerce’s Inspector General stated that the Boulder site had not been

involved in “real reinvention” and encouraged lab officials to be more

ambitious. He stated that much of the reinvention activity had been

stovepiped into the different Commerce agencies at the Boulder site and,

Page 84 GAO/GGD-96-69 Reinvention Labs
Appendix III 

Department of Commerce: Administrative

Services for the Boulder Scientific Research

Laboratories

instead, these agencies should have been working together as one

installation.

Lab officials said that they completed the first phase of their reinvention

lab, having started the implementation of more than half of the “quick-fix”

recommendations. Officials said that they believed the blanket delegation

of authority from departmental headquarters would help the lab move into

a second phase with fewer but more flexible reinvention teams.

One example of the use of the blanket delegation was NIST officials’

attempt at reinventing the reduction-in-force procedures. In an effort to

abolish three positions, Boulder site managers and the local union

president worked in partnership to develop an alternative

reduction-in-force procedure that was less disruptive than the traditional

one.

One lab official said that the amount of resistance encountered in making

changes to these procedures was staggering. According to lab

documentation, up to 19 headquarters officials were involved in reviewing

and approving every aspect of these procedural changes. A union official

said that the union was frustrated that agency management was reluctant

to endorse the lab’s efforts to reinvent the reduction-in-force procedures.

Although the highest department officials and the Inspector General had

encouraged lab officials to be ambitious and innovative, resistance

remained strong within the middle layers of the department not to change

the established procedures. Despite this frustration and resistance, a union

official said that the effort built a strong union-management relationship at

the Boulder site that eventually was able to develop and implement an

alternative to the traditional reduction-in-force procedures.

Page 85 GAO/GGD-96-69 Reinvention Labs
Appendix IV 

Department of Defense: Defense Logistics

Agency’s Inventory Management

Overview of the

Reinvention Lab Site

The Defense Logistics Agency’s (DLA) Supply Management Business Area

is headquartered at Fort Belvoir, VA, and its six field offices, which are

located in Ohio, Pennsylvania, and Virginia, are responsible for the

purchase and inventory management of consumable items for the military

services, some civilian agencies, and emergency relief organizations. DLA

defines consumable items as those items that are not repairable or are

consumed during normal use. They include spare parts, weapon systems

items, fuel, medical supplies, food, and clothing.

Initiation of the

Reinvention Lab

Designated by the Department of Defense (DOD) as a reinvention lab in

August 1994, the Supply Management Business Area’s Buy Response Vice

Inventory lab was originally a component of the total quality management1

and business process reengineering effort put together by DLA’s Director in

1992. The Director’s overall goal was to revamp the entire agency by,

among other things, changing its business philosophy. Lab officials said

they requested designation as a reinvention lab because it provided a

mechanism to seek any needed waiver requests and to increase the

visibility of the Director’s reform efforts.

Before the current Director’s tenure, DLA had traditionally maintained

inventories of consumable items—sometimes for years—to ensure that

they were available to customers when needed. To receive, store, and

issue these items, DLA maintained over 1,400 warehouses at 27 distribution

depots throughout the country. We recently reported that as a result of

this philosophy and mode of operation, DLA inventory often turned over

slowly, thereby producing large amounts of old, obsolete, and excess

items. DLA officials said that many people in and outside of DLA no longer

found this massive logistics infrastructure appropriate because of the

post-cold war military downsizing and because of growing concern over

the federal government’s budget deficit.

Description of the

Reinvention Lab

The Buy Response Vice Inventory lab is an umbrella effort that

encompasses a number of management reforms in the Supply

Management Business Area, including its six field offices. The overall

purpose of this lab is to minimize operating and inventory costs while

supporting military service readiness requirements. Inventory managers

1

Total quality management, which includes quality improvement, is a leadership philosophy that makes

quality the primary goal of an organization. Under such management, an organization strives to satisfy

customers by involving staff and customers in an effort to continually improve products and services,

the processes used to produce them, and the interpersonal relationships that are at the heart of those

processes.

Page 86 GAO/GGD-96-69 Reinvention Labs
Appendix IV 

Department of Defense: Defense Logistics

Agency’s Inventory Management

are encouraged to adopt best commercial practices, such as shifting the

logistics management functions to contractors when they can provide

timely support at lower costs. According to lab officials, the use of

commercial practices represented a major shift in DLA’s business

philosophy and required a commensurate cultural change within the

organization. They also said training, the use of interdisciplinary teams,

and new performance measurement and reward systems were needed to

support this cultural change. The two primary elements of the lab are the

use of (1) new contracting strategies that take advantage of commercial

practices; and (2) new electronic commerce (EC) and electronic data

interchange (EDI) systems that provide direct electronic communication

between DLA and its vendors, contractors, and customers. Although

implementation has begun, lab officials said that completion of all the lab’s

reform efforts will take a number of years.

New Contracting

Strategies

In its attempt to modernize military logistics practices, lab officials said

that the Buy Response Vice Inventory lab focused on the following

methods of support and contracting strategies:

• Direct vendor delivery is a method of support in which the vendor ships

items purchased by DLA directly to the customer. This procedure avoids

the costs associated with receiving, storing, and issuing items from a

government warehouse. According to lab officials, many long-term

contractual agreements for direct vendor delivery are in place for

commodities managed by DLA, such as diesel engine parts, electrical items,

helicopter parts, and auto parts.

• Prime vendor expands upon direct vendor delivery by having the customer

both order and receive commercial items directly from the vendor. A

prime vendor is a distributor that has been awarded a contract to buy,

store, and distribute items to customers, thereby reducing the need for DLA

and the armed services to maintain inventory and distribution systems.

Under prime vendor delivery, DLA uses its national buying power to

negotiate pricing agreements directly with the manufacturer or supplier.

Regional agreements are then negotiated with prime vendors who

purchase, warehouse, and deliver the items directly to the customer. DLA

uses data from both customers and the prime vendor to process financial

transactions and monitor prime vendor performance.

• Corporate contracting is a type of long-term contract in which DLA

leverages its buying power by consolidating the procurement needs of

multiple customers under a single contract. In addition to maximizing

buying power, combining all requirements on a single contract reduces the

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Agency’s Inventory Management

cost associated with negotiating and administrating multiple contracts.

DLA’s first attempts at implementing the corporate contracting concept

included contracts with Bell Helicopter and Cummins Engine.

• Long-term contracting involves a change from short-term contracts that

define specific quantities at set delivery schedules to the use of long-term

agreements that emphasize indefinite quantities with multiple deliveries

and multiple option years. A goal of long-term contracting is the

development of stable partnerships between DLA and manufacturers and

suppliers, ultimately reducing costs to both parties. DLA’s long-term

contracts often incorporate EC and EDI procedures, direct vendor delivery

support methodology, and multiple items on a single contract.

DLA expects that 50 percent of its sales will use direct vendor delivery and

prime vendors by fiscal year 1997 and that 80 percent of the dollars

obligated will be under long-term contracts by fiscal year 1997.

However, lab officials said these strategies have already resulted in

dramatic improvements in response time and price, and DLA has avoided

the costs associated with receiving, warehousing, and shipping items. For

example, they said before the initiation of the Buy Response Vice

Inventory procedures, DLA and the armed services had to stock batteries

for combat vehicles because locally procured commercial batteries did not

always comply with military specifications. Under the Buy Response Vice

Inventory lab strategy, a contractor will place military specification

batteries on consignment at designated user locations throughout the

United States. There is no charge to the government until the battery is

actually used. The contractor then replenishes the stock and is responsible

for disposing of used batteries in compliance with environmental laws.

The Army Audit Agency estimated that the use of this strategy may save

DOD $17 million annually.

Lab officials also cited the use of the prime vendor strategy at

approximately 150 military medical facilities as an example of improved

contracting practices. As a result of this strategy, DLA has reportedly

reduced its overall pharmaceutical inventories by $48.6 million and has

achieved similar inventory reductions and cost savings at medical

facilities. The Walter Reed Army Medical Center is aggressively applying

this strategy and has reported an inventory reduction of $3.8 million and

an estimated savings of over $6 million annually in related inventory

management expenses. One of our reports said the medical prime vendor

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Agency’s Inventory Management

program should be more consistently and aggressively applied at all

military medical facilities.2

Electronic Commerce and

Electronic Data

Interchange

According to the lab’s fiscal year 1996 performance plan, EC and EDI refer

to a paperless, automated system for delivery orders, requests for

quotations, bid responses, and awards, and EC and EDI are to provide a

standard link with the private sector. Lab officials stated that the use of EC

and EDI is another aspect of their attempt to use commercial practices and

is the enabling technology for the operation of most of the lab’s other

initiatives. They said conversion to EC and EDI is being done incrementally.

DLA officials reported that they achieved their goal that 65 percent of

orders with suppliers would be electronically transmitted in fiscal year

1995.

Training According to lab officials, training was needed to overcome resistance that

DLA and other DOD employees had to DLA’s new business philosophy of

adopting commercial practices. They said DLA employees and their

customers were wedded to the traditional inventory approach as the best

way to ensure military readiness. Use of commercial practices was also

reportedly counter to a long-held military assumption that the private

sector could not meet the military’s needs.

Lab officials said staff from the lab spent over a year designing a Buy

Response training course with the assistance of commanders and other

senior staff. The goal of the course was to enable employees to apply Buy

Response commercial business practices and to create new customer

support arrangements in their daily operations. By August 1995, we were

told, the majority of Supply Management’s managers and procurement

staff had received the training.

Interdisciplinary Teams Under the traditional mode of operations, field offices were organized by

function in units, such as contracting, technical, and inventory

management. Employees reported to and were rewarded by management

of their respective functional units. This organizational approach, coupled

with personnel and reward systems that reportedly did not encourage

communication between functions and did not reinforce behaviors that

benefited DLA as a whole, created functional barriers within the field

2

See Inventory Management: DOD Can Build on Progress in Using Best Practices to Achieve

Substantial Savings (GAO/NSIAD-95-142, Aug. 4, 1995).

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Agency’s Inventory Management

offices. These functional barriers often inhibited staff from placing the

customer’s needs over their unit’s bureaucratic needs.

The Buy Response Vice Inventory lab used the concept of interdisciplinary

teams to eliminate these functional barriers, with the teams designed to

provide “cradle-to-grave” customer support for assigned consumable

items. To ensure successful implementation of the team concept,

commanders of each of the six offices designed employee incentive

systems that linked awards to achievement of agency objectives and

overall team performance. Another mechanism used to reinforce the team

concept was having the team leader, rather than functional units, conduct

individual performance appraisals.

Use of Waivers Lab officials said a key advantage of being a reinvention lab was a blanket

contracting waiver provided by DOD to contracting activities participating

in a designated reinvention lab. The labs were given authority to deviate

from federal and DOD acquisition regulations, with some exceptions. One

exception was that labs could not deviate from regulations that had a

significant effect beyond internal DOD operating procedures, and they

could not deviate from statutory requirements. Consequently, the only

specific waiver the Buy Response Vice Inventory lab requested was from

GSA’s regulations concerning federal excess property management. Lab

officials said the waiver was approved 5 months after it was requested.

In further explaining the relatively small number of waiver requests, lab

officials pointed out that many of the barriers to effective management are

internal cultural barriers and that changing them does not require a change

in regulations. For example, they said that part of the bureaucratic culture

is not questioning the rationale for regulations or the assumptions that

these regulations are based on legislative or statutory authority.

Performance

Measures

DLA as a whole is a pilot program under the Government Performance and

Results Act (GPRA). According to its fiscal year 1996 GPRA performance

plan, DLA has made significant progress in developing a performance

measurement system. Lab officials said they are using this system, as

implemented by the Supply Management Business Area, to evaluate the

reinvention lab. They said this system uses fiscal year 1995 (the first year

new performance measures were used) as the base year for performance

measurement because old measures did not reflect current operations and

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Agency’s Inventory Management

it would have been too costly to retroactively apply new measures to

historical data.

The officials said the new performance measurement system has shifted

DLA’s evaluative focus from internally focused input and output measures

(e.g., percentage of requisitions filled) to externally focused outcome

measures (e.g., customer price change). According to the fiscal year 1996

performance plan, the Supply Management’s performance measures

covered such areas as responsiveness, timeliness, operating efficiency,

financial performance, and quality. One lab official said that the Supply

Management’s primary outcome measure is “logistics response time.”

Total “logistics response time” measures the time that elapses between the

date a requisition is established by a customer and the date that the

customer actually receives the material. The timeliness of DLA’s

performance may be determined by analyzing segments of the total

“logistics pipeline.” Other outcome-based measures include (1) product

conformance verification, a quality measure based on the number of items

that pass a random testing for critical and major defects divided by the

total number tested; (2) the customer satisfaction index, a measure based

on survey data and the results of focus groups; and (3) the customer price

change, a financial performance measure based on the change in customer

price expressed as a percentage of the difference in the price charged for

an item from one year to the next.

Other Issues

Communication Lab officials said they did not communicate directly with the national NPR

task force and that this lack of communication was neither a help nor a

hindrance to the lab. They stated the lab was represented by the DLA NPR

team that maintained communication with the NPR office. Lab officials

noted that the Buy Response Vice Inventory lab’s reform effort was

initiated before NPR existed and resulted from the leadership of DLA’s

Director and his goal to transform the agency by focusing on quality

improvement and business process reengineering principles.

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Appendix V 

Department of Energy: Site Security and

Economic Diversification at Hanford

Overview of the

Reinvention Lab Site

The Hanford site is a major Department of Energy (DOE) facility in

southeastern Washington State, occupying 560 square miles and employing

over 14,000 people. From 1942 until the end of the cold war, Hanford’s

mission was the production of nuclear defense material. Currently,

Hanford is the world’s largest environmental cleanup project, having the

largest amount of radioactive and toxic chemicals ever concentrated in

one area. Hanford also includes a high-technology center established

through the operation of the Pacific Northwest Laboratory, a DOE national

laboratory.

The environmental cleanup of Hanford is projected to last 30 years, after

which DOE intends to shut down the site. To accomplish its mission to shut

down the site, Hanford’s management is focusing on site cleanup, the

development and deployment of science and technology to industry, and

the diversification of the region’s economy to rely less on Hanford’s

presence.

Initiation of the

Reinvention Lab

Because of the site’s new mission, Hanford’s units, such as the economic

transition, security, and personnel offices, needed to reexamine and

reinvent their own roles in the organization. By the time DOE designated

the Hanford site as a reinvention lab in the summer of 1993, the site’s

major reinvention efforts were already under way. According to lab

officials, the designation provided positive reinforcement for the work

already started at the Hanford site and for new reinvention efforts.

Description of the

Reinvention Lab

The Hanford reinvention lab consists of several different reinvention

efforts, each at a different stage of development and each relating to

different parts of the site. Descriptions of the four most significant efforts

of the Hanford reinvention lab—security transition, economic transition,

human resource reinvention, and commercial facilities standards—follow.

Security Transition During the 1970s and 1980s, Hanford’s security measures included a highly

mobile and heavily armed security force trained to respond quickly to

terrorists or other security threats. Using armored personnel carriers and

helicopters, this paramilitary force complemented other measures

designed to provide Hanford with a high level of security.

In 1990, Hanford officials began to change from this high level of security

by reducing the number of staff required to have security clearances. In

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Department of Energy: Site Security and

Economic Diversification at Hanford

addition, Hanford officials established a series of security review teams to

review the site’s security needs. During this time, Hanford also began to

consolidate nuclear materials into fewer facilities at the site.

In 1992, a security planning team reviewed the costs of security at

Hanford. They found that Hanford was spending about $15 million to

protect the public from theft or sabotage of nuclear materials, $12 million

on site management, and $11 million on protecting government property.

The team determined that these costs were high because of Hanford’s

practice of protecting the whole site rather than focusing on the protection

of specific assets or facilities.

To provide a benchmark for the security transition, the team visited the

Boeing and Microsoft companies to review their security measures. In

consultation with Boeing, Hanford officials were able to develop more

customer-oriented security procedures that guided facility managers to

take more ownership for security of all but certain critical assets that

would still receive a high level of security.

Hanford management determined that they needed to transition to an

industrial-style security that was supplemented to protect the remaining

nuclear materials and classified information. In addition to the

consolidation of nuclear material into fewer protected facilities, the

security transition included eliminating selected security posts,

consolidating its alarm monitoring system, reorganizing its dispatch

centers, decreasing the number of staff required to have security

clearances, and reducing the amount of classified information.

Economic Transition As the major employer in the region, Hanford’s eventual shutdown will

have dramatic effects on the region’s economy. As of October 1995,

Hanford’s estimated 14,000 employees constituted about 25 percent of the

local workforce and represented about 50 percent of the local economy’s

payroll. The average wage in the surrounding area (not including Hanford)

was $22,000 per year, compared to an average Hanford wage of $45,000

per year.

DOE’s Office of Economic Transition is working closely with regional and

local community organizations to diversify the local economy and depend

less on federal appropriations at Hanford. Although it is projected to take

more than 30 years to complete the site cleanup, community officials

estimated they would need to create more than 1.5 jobs each day during

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Department of Energy: Site Security and

Economic Diversification at Hanford

this period to replace all of the jobs expected to be lost by the closure of

the site.

Lab officials are using several strategies to diversify the local economy.

According to lab officials, an example of a successful strategy has been the

privatization of some excess equipment and resources at Hanford.

Metalworking equipment was converted to the City of Richland, and the

building at Hanford where the equipment is located was leased to a private

company that was contracted to use the equipment. This conversion of

equipment was accomplished through the first-time use of section 120 of

the Atomic Energy Community Act. Lab officials said that the conversion

of the equipment created a new private metalworking business that will

create 25 new jobs for the local economy in the near future and potentially

200 additional jobs within 3 to 5 years if the private venture is a success. In

addition, the private venture has produced approximately $2.4 million in

lease revenues to the federal government and avoided the cost of

removing the equipment from the building.

Lab officials also reported transferring other excess equipment to another

private company. In January 1995, DOE entered into an agreement that

allowed a private company to disassemble and use equipment for the

development of a specialized electrical generator. The agreement has

enabled DOE to avoid paying for disassembling and disposing of the

equipment at an estimated cost of $2.6 million. In addition, the federal

government has obtained royalty and stock option rights potentially worth

$4 million if the generator becomes fully developed and a commercial

success.

Also privatized was Hanford’s laundry service, which had been used to

clean and decontaminate 3.5 million pounds of laundry per year.

According to lab officials, the laundry service had been

government-owned and -operated for the past 40 years and would need to

be replaced to remain operational. Rather than spend funds to rebuild the

facility, lab officials contracted with a private company to build and

operate a new laundry facility in Richland, WA. Lab officials said that they

expect this facility to receive business from Hanford and other

government and commercial entities and has created 56 new jobs. Lab

officials also said that by contracting with a private company, the

government avoided $22 million in capital costs and saved $3 million per

year in operation costs.

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Department of Energy: Site Security and

Economic Diversification at Hanford

Human Resources

Reinvention

To stay in step with the changing mission at Hanford, officials reorganized

the personnel office into three teams: (1) employee development,

(2) employee recognition, and (3) contract and industrial relations.

According to a lab official, one of the personnel office’s major efforts was

the institution of what they termed a “360-degree feedback loop” that

provides staff with input on their job performance from both their

supervisors and their coworkers. Started as an OPM demonstration project

in July 1993, this feedback program also served as an evaluation process

for employees. Lab officials said that by receiving input from multiple

sources, the program created more realistic evaluations of staff

performance and curbed “rating inflation.” After the feedback program

was instituted, the percentage of staff receiving outstanding ratings

dropped from 40 percent to 5 percent, according to lab officials.

Commercial Facilities

Standards

DOE is responsible for the construction and renovation for many of the

facilities located at Hanford. Beginning in 1992, a team consisting of staff

from DOE’s Project Management Division and the facilities and project

management offices of several DOE contractors began to examine how to

improve on these activities. Known as the Commercial Facilities

Implementation Team, the team examined these activities during a “stand

down,” in which all activity performed by these offices was halted to allow

employees to examine how they performed their particular jobs. The

stand-down review revealed that project management often blindly

followed DOE requirements and previously used standards.

The team wanted to create a more flexible and responsive approach to

project management and, therefore, designed an approach that would

emphasize state and local building and safety codes rather than DOE

requirements. The team was given permission to manage construction and

renovation projects worth up to $2 million, while GSA retained

responsibility for larger projects. According to team members, this new

flexible approach will reduce costs in almost all phases of the project,

from development to completion.

Use of Waivers The security transition did not require any regulatory waivers, although

Hanford officials originally assumed that they would be needed. The

officials conducted an extensive review of DOE orders on security to

identify the minimum security measures required for a particular asset or

facility in light of Hanford’s new mission. Because the orders provided

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Department of Energy: Site Security and

Economic Diversification at Hanford

options to meet the security requirements, Hanford officials said that they

realized that waivers were not needed to modify the facility’s security

measures.

A similar strategy was used by the Commercial Facilities Implementation

Team, which did not seek waivers from regulations but used DOE orders as

guidance during the design and construction of its facilities projects. The

team used a strategy that followed state and local building and safety

codes and attempted to be more responsive to the needs of its customer.

For the lab’s privatization of analytical laboratory services, lab officials

needed a waiver from the 5-year contract limitation provided under the

Service Contract Act.1

 A waiver of this provision would allow a private

company additional time to recover its capital investment in performing

these services. With some assistance from the NPR task force, lab officials

worked with the Department of Labor and received a waiver from that

provision of the act. The waiver allowed lab officials to select a private

vendor using a contract with an 8-year term of performance provision.

Performance

Measures

The security transition team measured its results by measuring cost

savings associated with moving to the new security arrangement.

According to lab officials, the security transition cost $14 million to

implement but reduced the security office’s annual budget over a 4-year

period by more than $29 million—a savings of roughly 2 dollars for every

dollar spent.

Lab officials reported that the first pilot project of the Commercial

Facilities Implementation Team was canceled and the current project has

not yet completed construction. The team plans to measure the quality of

the facility by whether the final product will meet or exceed construction

specifications and a subjective review of the finished facility in

comparison to other commercial and DOE constructed facilities.

Other Issues Lab officials said that developing ideas for the security transition and the

economic transition efforts was possible only through a change in the

culture at Hanford. To develop ideas for these efforts, they said staff

1

The Service Contract Act of 1965 provides that service contracts entered into by the U.S. government

in excess of $2,500 may be for any length of time not to exceed 5 years. However, the statute provides

that the Department of Labor can allow reasonable variations and exemptions from this and other

provisions of the act.

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Department of Energy: Site Security and

Economic Diversification at Hanford

needed to think “outside the box” and beyond the regulations that seemed

to define their environment.

Lab officials also said that making the changes visible early in the

reinvention process was very helpful to the long-range success of the

projects. For example, the security office discontinued badge checks on

individuals leaving the facility as a visible signal that changes in security

procedures could and would occur.

For the economic transition, lab officials said that they realized the need

to take more risks and change their organization from within if they were

to accomplish their objective of diversifying the local economy. In

addition, the officials said they learned to question whether the

government needed to be performing all of the activities at the Hanford

site.

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General Services Administration: Quality

Assurance of Office Products

Overview of the

Reinvention Lab Site

The Northeast and Caribbean Region of GSA’s Federal Supply Service (FSS)

is headquartered in New York City. The region’s Office Supplies and Paper

Products Commodity Center is responsible for providing federal agencies

with common-use office supplies and services worldwide. The center does

so by managing and ensuring the quality of those products and providing

them via various methods, including the stockage and issuance of selected

items.

The quality assurance function is the responsibility of the Contract

Management Division (CMD), which is located in the region’s Boston office.

GSA has five CMDs located throughout the country in New York, Chicago,

Atlanta, Dallas-Ft. Worth, and San Francisco. When GSA issues a

solicitation, any company in the country can bid on it. However, once the

contract is awarded, it is managed by CMD staff in the area in which the

company’s manufacturing plant is located. CMD staff audit prospective

manufacturing plants to determine whether they will be able to meet

contract obligations. Once contracts to manufacture products are in effect,

CMD staff monitor the manufacturing processes and audit processes to

ensure product quality.

Initiation of the

Reinvention Lab

In March 1993, GSA headquarters management asked all GSA offices to

identify areas for reinvention. The Northeast and Caribbean Region

applied for and received designation as a reinvention lab in June 1993, but

many process improvement initiatives were already well under way.

According to lab officials, designation as a reinvention lab renewed the

staff’s belief that they were going in the right direction by trying to

streamline procurement and improve product quality.

Description of the

Reinvention Lab

The overall objective of the lab was to increase the reliability of the

services provided by the region’s Office Supplies and Paper Products

Commodity Center. To meet this objective the following two lines of effort

were developed: (1) improve the quality of GSA’s products by teaching

suppliers proactive quality assurance techniques and (2) amend the “scope

of contract” clause in GSA’s contracts with its suppliers to enable the

center to have quality products available when customer agencies need

them.

Quality Assurance

Techniques

The lab’s focus on quality assurance techniques actually began in 1988,

when staff in the Boston CMD began reexamining the way it assessed the

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General Services Administration: Quality

Assurance of Office Products

quality of GSA suppliers’ manufacturing processes. The staff believed that

the poor quality of some products manufactured by GSA suppliers was

causing GSA to lose customers. For example, the U.S. Postal Service, one of

the region’s largest customers, took its contract for plastic bags to a

private company because of the poor-quality bags provided by GSA through

previous contracts. CMD staff believed that statistical process control (SPC)

techniques were better able to ensure product quality than the method

prescribed in FSS’ Quality Assurance Handbook.

1 SPC techniques identified

critical processes that occurred during the manufacturing of products and

helped prevent the production of “nonconforming products” by predicting

unacceptable variations in those critical processes before defective

products were manufactured. Whereas the handbook’s techniques

emphasized defect detection, SPC techniques focused on defect prevention.

On the basis of earlier management improvement efforts, CMD staff

developed a 5-year plan for adopting and teaching suppliers SPC

techniques. Part of the plan included automating the process by which the

staff ensured the quality of products manufactured by GSA suppliers. SPC

software was added to laptop computers used by CMD staff at suppliers’

manufacturing plants. The staff also developed computerized forms for

use with the SPC software to assist in assessing the manufacturing

processes. The computerized forms enabled CMD staff to quickly share the

results of their inspections with suppliers.

CMD staff began teaching GSA suppliers to use SPC techniques to monitor the

quality of their products during the manufacturing process. Using

information generated by the SPC software, suppliers could adjust their

manufacturing processes and practice the SPC techniques taught by the GSA

quality assurance specialists. For example, after learning about SPC, the

National Industries for the Blind, one of GSA’s main paper suppliers,

reportedly delayed production until it built the SPC system into its

manufacturing processes. According to lab officials, the National

Industries for the Blind cut the amount of waste in its paper manufacturing

process by almost 10 percent between September 1993 and December

1993. CMD staff wrote an eight-page conceptual guideline incorporating SPC

techniques into the Quality Assurance Handbook. On the basis of this

prototype, GSA headquarters amended the handbook for use nationwide.

As of August 1995, SPC techniques had been fully implemented at the

Boston CMD and the other four CMDs were at least planning

implementation.

1

The handbook provides guidance for quality assurance specialists to follow when auditing suppliers’

facilities and processes.

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General Services Administration: Quality

Assurance of Office Products

Changes to Scope of

Contract Clause

According to lab officials, to provide products for its customer agencies,

GSA enters into contracts with its suppliers to manufacture those products.

Lab officials further stated that a “scope of contract” clause in the

contracts obligates GSA to purchase products covered by the contract. If

the contractor is unable to supply the agreed-upon products, GSA is

precluded from using alternative suppliers until either specific purchase

orders are terminated or the entire contract is terminated. According to

lab officials, the process for a formal “termination for default” action is

time-consuming and frequently causes product back orders to increase.

Additionally, the default notice is coupled with an invitation to the

terminated party to appeal the notice. Therefore, poor performers have the

potential to delay contract termination and manipulate the process,

according to lab officials.

The reinvention lab’s second line of effort changed the scope of contract

clause to allow GSA to purchase from alternative suppliers when a

determination is made that back orders exist or are likely to occur as a

result of late deliveries. According to lab officials, the revised clause states

that these purchases could be made without taking a formal default action

and without having to charge the initial suppliers for the excess costs that

might occur when purchases are made from alternative sources. As of

August 1995, the lab manager said that the new scope of contract clause

had been written into about 100 contracts, and its authority had been

exercised successfully in a number of instances.

Use of Waivers When GSA headquarters asked its offices to identify areas for reinvention, it

required units requesting lab designation to identify specific regulations

that needed to be waived. Units were told to focus on requesting waivers

from GSA’s internal nonstatutory regulations that could be approved within

the agency. In its June 1993 proposal, the lab requested a waiver of the

Quality Assurance Handbook and the scope of contract clause in the FSS

requirements contracts for depot stock replenishment. It was given

authority to modify portions of the Quality Assurance Handbook, to use

SPC techniques when inspecting product samples for deviation, and to

change the scope of contract clause to allow for purchases from

alternative suppliers when necessary.

Performance

Measures

CMD staff have measured the success of their SPC efforts by determining the

number of suppliers who have modified their manufacturing processes to

include the new techniques. After the lab designation was received in

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General Services Administration: Quality

Assurance of Office Products

June 1993, CMD staff surveyed GSA’s 400 suppliers and found that 15 percent

were using SPC techniques. By August 1995, lab officials reported that all of

GSA’s suppliers had been introduced to SPC techniques, 20 percent of them

had modified their inspection processes to adopt SPC techniques, and 17

contracts had been modified to include a clause about using SPC

techniques.

Lab officials said they plan to track back orders and conduct customer

satisfaction surveys to determine the effectiveness of the new scope of

contract clause. Lab officials said they believed the increase in requests for

products from both civilian and military agencies, some of which are

downsizing, is the result of improved product quality.

Other Issues Lab officials stated that the efforts undertaken in this reinvention lab

helped improve GSA’s competitiveness, especially in the area of quality

assurance. They noted that these efforts were occurring while GSA adhered

to laws and regulations that required or encouraged procurement of

(1) environmentally friendly products; and (2) supplies from small

businesses, minority-owned businesses, and workshops of the National

Industries for the Blind and the National Industries for the Severely

Handicapped.

Reportedly, early publicity about the success of the lab was hindered

because its results contradicted prevailing notions that purchasing from

private office supply stores was cheaper and easier than purchasing from

GSA. In August 1995, the lab was acknowledged as a model of federal

excellence by the Federal Quality Institute with the receipt of a Quality

Improvement Prototype Award from Vice President Gore for having

achieved high standards of customer service and quality.

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Appendix VII 

General Services Administration:

Mid-Atlantic Region’s Work Processes

Overview of the

Reinvention Lab Site

GSA’s Mid-Atlantic Regional Office in Philadelphia is responsible for

managing federally owned and leased property located in southern New

Jersey, Pennsylvania, Delaware, Maryland, West Virginia, and Virginia. In

addition to its Office of Management Services and Human Resources

(formerly the Office of Administration), the region operates the following

three services:

• The Federal Supply Service (FSS) manages the procurement and

distribution of supplies and administers programs for transportation and

travel management, for vehicle fleet management, and for the utilization

and disposal of personal property.

• The Information Technology Service (ITS) manages the automatic data

processing resources and telecommunications program.

• The Public Buildings Service (PBS) manages the construction and

operation of federally owned and leased buildings.

Before the start of the reinvention lab, each of the services reportedly

executed its duties without much interaction with other services. For

example, FSS and PBS did not necessarily coordinate the services they

provided to ensure that supplies were available to a customer agency at

the time it moved into GSA-leased office space.

Initiation of the

Reinvention Lab

According to lab officials, the Mid-Atlantic Region had been using

continuous improvement and quality improvement concepts as a part of its

operating practices since 1989. In the spring of 1993, when GSA’s

Administrator requested proposals for reinvention labs, officials in the

Mid-Atlantic Region proposed that the entire region become a reinvention

lab. GSA headquarters designated the region as a lab in July 1993, which lab

officials said encouraged employees to think about and suggest ways to

improve their work processes.

Description of the

Reinvention Lab

According to the lab’s vision statement developed by regional staff, the

overall goal of the lab was to provide the best possible services to

customer agencies in the region by empowering regional staff to improve

their work processes. The lab was structured to accomplish this goal by

eliciting suggestions directly from employees and by developing

service-specific initiatives. Lab officials said that the lab created a culture

in which all employees were empowered to identify and remove

nonstatutory obstacles that inhibited optimal performance.

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General Services Administration:

Mid-Atlantic Region’s Work Processes

In addition to a regionwide effort to get employee ideas on how to improve

work processes, each of the region’s three services developed its own

initiatives. As of August 1995, these initiatives were at various phases of

development. Even within a particular service, some efforts were still in

the conceptual phase while others had been fully implemented. Some of

the efforts that were initiated regionwide and in each of the services are

described below.

Regionwide Effort to

Obtain

Employee-Generated Ideas

Lab officials stated that the Office of Management Services and Human

Resources managed the region’s effort to get staff ideas on how to remove

barriers to improving work processes. As originally designed, ideas were

to be submitted simultaneously to first-line supervisors and the Office of

the Regional Administrator, with the supervisor principally responsible for

approving and implementing the ideas. According to the lab coordinator,

the policy was later changed to allow employees to submit ideas directly

to a reinvention lab team made up of staff from all of the services and the

Office of Management Services and Human Resources. The team used a

software program to track the ideas, and all staff could access this

program to submit an idea or review the status of ideas already submitted.

The reinvention lab team said that when an idea was submitted, a team

member researched the feasibility of the idea and reported the result of

the research to the team, which then recommended either the idea’s

approval or disapproval. All ideas, along with the team’s recommendation,

were forwarded to a Reinvention Board of Directors, which comprised the

Regional Administrator and the Assistant Regional Administrator for each

service. The final decision to disapprove a recommendation could be made

only by the Regional Administrator.

As of August 1, 1995, 485 ideas had been submitted to the lab. Of those,

249 had been approved; 109 were not approved; 36 required additional

research; 74 were classified in the “other” category, which included ideas

that addressed organization rather than process changes; and 17 were

under consideration in headquarters. Those ideas submitted to

headquarters were ones that the reinvention lab team said it believed

required waivers from statutory requirements. Reportedly, over half of all

the ideas were submitted during the first 3 months of the reinvention

effort, but ideas were still being submitted at the time of our review. Some

of the ideas that were implemented regionwide included: (1) automate and

extend the operating hours of the region’s imprest fund, (2) decrease

signature authority for lease reviews from seven levels to three levels, and

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(3) eliminate the need for the Regional Administrator to formally approve

official travel outside of the region.

Public Buildings Service According to lab officials, PBS staff discussed new ways of doing business

and agreed to focus on improving customer service. PBS staff were

originally organized in teams by function. For example, one team

comprised all contract specialists, and another team comprised all

engineers. PBS officials said that when a problem arose, this structure gave

teams the opportunity to blame each other rather than help each other

resolve the problem. To address this, interdisciplinary teams were formed

with staff from the different functions and organized around specific

projects to provide more integrated services to customer agencies.

Employees were reportedly resistant to this reorganization because they

were used to the collegiality that existed in their functional teams. Lab

officials said that they were trying, with the reorganization, to create

networks to allow specialists to continue to interact with each other even

though they were no longer collocated. A team was also formed to

perform administrative services (e.g., personnel matters) for the

interdisciplinary teams. Lab officials told us that customer agencies were

very supportive of the new organization.

Office of Management

Services and Human

Resources

Lab officials said that one lab effort in the Office of Management Services

and Human Resources involved automating the personnel system. They

said that under the old system, staff entered data on several different

forms, a process that provided many opportunities for errors. In addition,

personnel documents had to be handled by staff at many different work

stations, making it hard to locate specific documents.

Shortly after the lab was started, staff in the region’s personnel office

learned about an automated personnel system used by the Department of

the Navy that allowed personnel forms to be processed electronically and

could generate about 20 standardized reports. The region then purchased

the system from the Navy and modified it for its use. By automating the

region’s personnel system, lab officials said personnel information about

all staff could be directly accessed by the personnel director or other

authorized staff. In September 1994, GSA headquarters granted authority

for the Mid-Atlantic Region to share this system with other GSA regions.

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Federal Supply Service In the area of fleet management, lab officials said that FSS had

implemented a streamlined process for obtaining vehicle damage repair

estimates. Lab officials said that before the lab, GSA regulations required

customer agencies to obtain at least three repair estimates before

contacting GSA for authorization of any accident repair. Often an FSS

automotive equipment inspector had to go to the vehicle to assess the

damage before approving the repairs. Under the lab authority, when the

customer agency notifies FSS of vehicle damage, FSS is to dispatch an

inspector to take the vehicle for an estimate. Only one estimate is required

under the lab authority, but the inspector is to compare each repair item

listed to the current “crash estimating guide” to determine if the estimate

is within established acceptable guidelines. The fleet manager is to give

the final approval for the estimated repairs. The region’s fleet of about

14,000 vehicles reportedly had about 1,200 accidents each year. FSS staff

calculated that reducing the number of repair estimates from 3 to 1 would

result in a savings of 4,800 staff hours and $96,000 each year. GSA

headquarters officials have noted that the reported workload savings are a

combination of GSA and customer agencies’ staff hours.

Lab officials also said that FSS had improved its relationships with both its

external and internal customers by working in partnership with them.

Externally, FSS formed a quality partnership group with customers and

vendors at its furniture commodity center in Crystal City, VA. The group

consisted of 15 members: 5 customer agencies, 5 contractors, and 5 GSA

employees. Internally, FSS worked in partnership with PBS on projects to

provide office supplies and office space to customer agencies.

Information Technology

Service

According to lab officials, ITS staff streamlined the region’s procurement

process. For example, ITS staff awarded a 5-year business systems and

programming contract without using some of the traditional evaluation

factors, such as performing a cost analysis and benchmarking. Staff

calculated that using the streamlined process reduced the time needed to

award this contract by 3 months, with estimated savings to the taxpayers

of $225,000. ITS staff also said there had been no protests of any contract

awarded since the streamlined process had been in place.

In another reinvention effort, ITS has discontinued printing and distributing

the Regional Telephone Book. Previously, it cost $75,000 for employees to

update, print, and distribute the directory. By automating the directory via

an electronic method (Lotus Notes), employees can have immediate

access and updates can be done more frequently. ITS is looking to further

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this process by expanding the electronic media to eventually include the

Internet, CD-Rom, and electronic bulletin boards.

Lab officials said that to meet anticipated staff reductions, ITS staff

planned changes in the way the service was operated and organized and

that they believed these changes would result in a more flexible

workforce. For example, they said the planned changes should (1) flatten

the service’s hierarchy by organizing around work processes, not

occupations, such as computer specialists; (2) eliminate activities that do

not add value or contribute to key objectives; and (3) eliminate specific

position descriptions and replace them with generic ones. In conjunction

with the new position descriptions, ITS staff said that they would rewrite

performance expectations.

Use of Waivers According to lab officials, the region received a delegation of authority

from GSA headquarters to implement regionwide reinvention activities. The

delegation gave the Regional Administrator the authority to waive internal

GSA rules and regulations not bound by statute. However, lab officials said

that reinvention ideas that the reinvention lab team believed required a

change in legislation were sent to headquarters for consideration. The

disposition of an idea—whether it was approved or disapproved—was

entered into the database.

Performance

Measures

GSA headquarters required each of its reinvention labs to report on how the

outcomes of reinvention activities would be measured. Lab officials in the

region said that they believed efforts to measure what they described as

“obvious improvements” were unnecessary. For example, they said that

flexitime was “readily recognized” as a positive change and that

developing measures to document this was unnecessary. In addition, they

said developing measures to show improvements in work processes was

sometimes difficult because a reinvented work process often differed

significantly from the traditional work process.

Therefore, the region established measurement task forces in each service

and in the Office of Management Services and Human Resources to

develop measures to determine whether approved ideas resulted in

improved performance. For example, the Office of Management Services

and Human Resources’ measurement task force measured the value of

expanded operating hours of the imprest fund by comparing the amount of

money transacted under the new expanded hours of operation to the

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amount that had been transacted under the old hours. Also, the FSS task

force measured the effectiveness of the change in motor vehicle repair

estimate requirements in terms of staff hours and dollars saved. Lab

officials said that they planned to use GSA’s annual quality survey to gauge

employees’ sense of empowerment because it asked questions about staff

morale.

GSA headquarters officials have noted that the region’s FSS option for

addressing process improvements for obtaining vehicle damage repairs

does represent an enhancement over the previous accident management

system in place in the region. However, they further noted that the

numbers reported were preliminary, and any potential for expanding this

accident management approach beyond the region would require an

assessment of final numbers and an analysis of whether the approach

would be practical for other locations outside of the region.

Other Issues

Communications Lab officials said that they were using computer software to share

information on reinvention ideas within the region. They also said that

they submitted a quarterly report to GSA headquarters on the status of lab

activities within the region. Lab officials said they made presentations on

the regionwide reinvention effort to GSA top management and to all

interested employees at GSA headquarters in August 1994. In addition, GSA’s

Office of Public Affairs published many of the region’s reinvention ideas in

its Message from the Administrator pamphlet, which is distributed to GSA

offices nationwide.

Scope of the Lab Lab officials said that although they asked employees to look at work

processes that affected them, the officials still encouraged employees to

“think big.” Lab officials said that employees seemed to identify barriers

that required reinvention of incremental policy matters, such as expanding

flexitime, as opposed to broader process changes, such as working in

partnership with customer agencies.

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Appendix VIII 

Department of Housing and Urban

Development: Oversight of Public Housing

Authorities

Overview of the

Reinvention Lab Site

The Department of Housing and Urban Development’s (HUD) Office of

Public and Indian Housing administers public and Indian housing

programs, including rental and homeownership programs, and provides

technical and financial assistance in planning, developing, and managing

low-income housing projects. To administer these low-income housing

projects, HUD enters into contracts with local public housing authorities

(PHA) that build, own, and operate the public housing. HUD field offices

located across the country are responsible for overseeing PHAs by

conducting compliance reviews of PHAs and the housing units. HUD field

offices also provide technical assistance to PHA management. HUD’s

Chicago, Milwaukee, and Cleveland field offices were located in HUD’s

formerly designated Region V, which consisted of Illinois, Ohio, Michigan,

Indiana, Wisconsin, and Minnesota.1

Initiation of the

Reinvention Lab

In 1991, the Assistant Secretary for Public and Indian Housing hired the

firm of Price Waterhouse to recommend improvements to HUD’s oversight

of PHAs. According to a Price Waterhouse report, HUD management

recognized that the narrowly focused, compliance-oriented reviews being

used were not addressing some PHAs’ deep-rooted, interrelated problems,

such as the constant need to repair the housing units while having very

limited resources. Price Waterhouse interviewed HUD and PHA staff and, in

April 1992, recommended changes to the mission, objectives, and

organizational structure of HUD’s regional and field offices involved with

public housing programs. On the basis of these recommendations, a pilot

project was implemented that outlined a new approach to overseeing PHAs.

HUD staff were trained to manage the proposed changes, and Price

Waterhouse was retained as a consultant to monitor the pilot. In the

summer of 1992, HUD’s Region V volunteered and was selected by HUD

management to be the pilot site. In the spring of 1993, HUD management

designated the pilot as a reinvention lab. HUD’s Chicago, Milwaukee, and

Cleveland field offices were some of the first locations to implement the

proposed changes of the pilot project and reinvention lab.

Description of the

Reinvention Lab

The lab had six objectives in restructuring Region V’s oversight of PHAs.

Four of these objectives were (1) targeted monitoring of PHAs, (2) problem

1

In April 1994, HUD implemented a new reorganization plan, which restructured the field offices along

single-family and multifamily lines of business and made the field office staff directly accountable to

the program office assistant secretaries. The reorganization also eliminated many traditional review

and management oversight functions of the regional offices, in effect, abolishing HUD’s regional

organizational structure.

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solving by HUD staff, (3) reorganizing HUD staff into functional groups, and

(4) streamlining work processes.2

 Descriptions of these objectives follow.

Targeted Monitoring of

PHAs and Problem Solving

by HUD Staff

Before the lab, HUD field office staff were required to conduct a

standardized set of reviews of all PHAs on a prescribed schedule. These

reviews used the Public Housing Management Assessment Program (or

PHMAP), which is an analytical tool developed in 1991 separate from the

reinvention lab. According to HUD officials, PHMAP is used by HUD field

office staff to ensure content consistency of the PHA assessments. PHMAP

measures PHAs’ management performance using 12 indicators, such as

rents uncollected, condition of units, and PHA’s operating reserve.

However, a lab official said increased responsibilities, such as increasing

low-income families’ homeownership rates and combating drugs and

drug-related crime, coupled with decreased staffing and travel funds, made

it impossible for HUD staff to even come close to the required number of

reviews. In fact, he said HUD staff avoided reviews of the larger or troubled

PHAs because they would take too much time and effort. Even in those

PHAs that were reviewed, he said HUD staff could only “find the obvious and

conclude that the PHA should fix it.”

As part of the reinvention lab, Region V staff developed a computerized

“System to Target Assistance Resources” (STAR) based on the PHMAP scores

and other data.3 STAR would give each PHA a score based on its potential

risk to HUD. A troubled PHA, or one with a substantial investment of HUD

dollars, would be considered a potential high risk and therefore would

require the attention of HUD field office staff.

According to lab officials, STAR changed the attitude of the HUD and PHA

staffs. Rather than simply pointing out problems in a compliance mindset,

STAR helped HUD staff develop a partnership with PHAs to help solve the

problems identified by STAR. Lab officials said that STAR enabled HUD staff

to move from a mode of policing to a mode of assisting PHAs. For example,

2

The other two objectives were (1) strengthening analytical capabilities and (2) leveraging non-HUD

resources. They are not discussed here because of space limitations and because HUD staff did not

emphasize them in our discussions.

3

In addition to the PHMAP indicators, STAR scores were based on the federal funds available to each

PHA, the number of units assisted at each PHA, crime and unemployment statistics for the PHA

locality, and Section 8 Program characteristics.

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staff are now more likely to ask why the units are vacant and dilapidated,

identify the cause, and help PHAs find the solutions.4

Reorganizing HUD Staff According to a lab official, the proliferation of new HUD programs in the

late 1980s and early 1990s overwhelmed HUD housing management

specialists, who were actually generalists not adequately trained for the

job’s new demands. To address the inadequate training and guidance, staff

at Region V field offices were reorganized into five functional groups.

Each group focused on a specific aspect of PHA operations:

(1) organization, management, and personnel; (2) marketing and leasing;

(3) community relations and involvement; (4) facilities management; and

(5) finance and budget. This arrangement was implemented to allow HUD

staff to specialize and focus their attention on particular functions instead

of having to be, in the words of a lab official, a “jack of all trades and

master of none.” Lab officials said that cross-functional teams were

established to conduct on-site reviews or provide technical assistance for

PHAs.

Streamlining Work

Processes

Another lab objective was the elimination of unnecessary procedures and

paperwork. According to lab officials, dozens of HUD requirements and

processes have reportedly been reexamined and changed since the

designation of the lab. For example, before the lab, PHAs were required to

prepare quarterly requisitions for monthly Section 8 payments from HUD.

5

Lab officials said that review of the estimated 3,000 budget submissions

and 10,000 requisitions per year by the HUD Chicago Field Office was

time-consuming and unnecessary.6

 Furthermore, since the PHAs’ budgets

were prepared annually, the quarterly requisitions and monthly payments

were not significantly different. Therefore, HUD staff proposed that

payments to PHAs be based on one requisition at the beginning of the year

4

On May 30, 1995, HUD took over the Chicago Housing Authority (CHA) because of the poor physical

condition of CHA’s housing stock and troubled management. According to lab officials, the STAR

program consistently indicated that the housing authority was always the Illinois office’s highest risk.

Using the STAR scores, the HUD Chicago Field Office was able to focus its resources to assist CHA but

did not conclude that a takeover was necessary. Lab officials stated that additional detailed analysis

and a change in the local political environment led to the intervention by HUD headquarters’ office.

5

Section 8 of the U.S. Housing Act of 1937 authorizes rental assistance programs that provide subsidies

to lower income households to assist them in obtaining decent, safe, and sanitary housing.

6

Before April 1994, PHA’s requisitions were first reviewed by HUD field office staff. If approved, the

requisition was then forwarded to the Accounting Division in the regional office, which was

responsible for authorizing and disbursing the funds to PHAs. In April 1994, HUD’s structural

reorganization placed the responsibility of the HUD Field Accounting Budget and Requisition

processing function with the Public and Indian Housing field office staff.

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instead of on annual budget submissions and quarterly requisitions. Lab

officials estimated that changing the process would save $300,000 per year

in processing costs at the HUD Chicago Field Office.

Use of Waivers A lab official said the lab was given the authority to waive any

nonstatutory HUD rules or procedures. However, he stated that the lab did

not need waivers to proceed with most of its activities. Lab officials did

receive a waiver from departmental procedures to change the Section 8

budget and requisition process.

Performance

Measures

In May 1993, Price Waterhouse assessed the lab by visiting the field offices

involved in the lab, reviewing documentation, interviewing a limited

number of PHAs’ officials, and surveying all HUD staff members below the

supervisor level. A Price Waterhouse report concluded that the new

approach represented “a significant improvement over prior operations.”

This conclusion was based on the fact that (1) most HUD and PHA staff

endorsed the lab as sensible and effective and (2) HUD staff at all the

participating sites had taken steps toward understanding the new

approach’s concepts and had begun to implement them. Price Waterhouse

also concluded that the lab should be extended to other offices.7

A lab official located at HUD headquarters stated that increases in the

PHMAP scores for some PHAs in Region V indicated improved satisfaction on

behalf of the public housing residents whom HUD considers its ultimate

customers. Another lab official said that HUD had not surveyed public

housing residents to determine whether the lab’s changes had improved

housing conditions, but the official acknowledged that HUD should do such

a survey.

7

Price Waterhouse’s report did not include any assessment of changes in the program’s outcome, such

as a reduction in the number of troubled PHAs.

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Other Issues

Scope of the Lab A lab official acknowledged that the scope of the HUD reinvention lab was

relatively limited.8

 The official said that innovative ideas—such as

distributing HUD funds directly to low-income families—has traditionally

never been solicited from HUD employees because HUD rewards its

employees for complying with the system, not challenging it.

Lab officials said several innovative suggestions about public housing had

surfaced during the reinvention process, but they had not been acted

upon. They said that one of the suggestions discussed before the creation

of the lab was to divide PHAs into several groups according to the number

of tenants served. PHAs within each particular-sized group would then

compete for assistance from HUD on the basis of their administrative costs

and the improvement in the quality of life for their clients.

Headquarters’

Support/Communication

A lab official said that the designation of the pilot as a reinvention lab

produced a dramatic difference in recognition and cooperation from

officials at HUD headquarters. Before the pilot was designated as a lab, the

lab official said “we could not get in the door at headquarters.” After the

lab’s designation, the official said “the waters parted” and HUD

headquarters became more interested in the implementation of the new

approach.

However, lab officials at HUD’s Cleveland Field Office told us that they had

received inconsistent messages regarding HUD headquarters’ support for

the lab. They said that HUD headquarters paid little attention to the lab’s

implementation and had dedicated only two people to work as liaisons

with the field offices. They also said the lab’s progress had been hindered

by a lack of communication between the lab and HUD headquarters and

among the different HUD field offices.

A lab official from the headquarters office of Public and Indian Housing

said that his office should have played a greater role in implementing the

8

Since the development of the reinvention lab, HUD Secretary Cisneros has proposed a major overhaul

of HUD, including the deregulation of the nation’s 3,400 PHAs and eventually forcing them to compete

with the private sector for tenants holding rent subsidy vouchers. In addition, HUD’s current budget

request proposes “consolidating 60 major categorical programs into three flexible performance based

funds.” This consolidation is intended “to shift substantial control of resources from HUD to state and

local governments.” Under this plan, state and local governments would be given the flexibility to

design housing programs to meet their local needs.

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new approach through training sessions and other methods to elicit more

buy-in from field office staff. Furthermore, the official said that

knowledgeable headquarters staff should have been assigned to act as

functional area contacts for field office staff with specific questions. In

addition, the official said that more site-to-site communication would have

been helpful, but it was hampered by access problems to HUD’s E-mail

system.

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Appendix IX 

Department of the Interior: Operations at

the U.S. Bureau of Mines’ Pittsburgh

Research Center

Overview of the

Reinvention Lab Site

The Pittsburgh Research Center, established in 1910, is the largest of nine

research centers administered by the Department of the Interior’s (DOI)

U.S. Bureau of Mines (USBM).1

 The research center’s mission is to promote

the safety and health of miners, improve mine productivity, enhance the

recovery of mineral resources, and minimize the environmental impact of

mining. Special facilities at the center include

• the Experimental Mine, which permits research on the prevention of mine

fires and explosions;

• the Safety Research Coal Mine, where tests of new equipment and

technology are conducted before transferring them to industry;

• the Mining Equipment Test Facility, which houses a variety of specialized

testing laboratories;

• the Wire Rope Research Laboratory, where research is conducted to

improve safety in hoisting personnel and materials; and

• the Lake Lynn Laboratory, where large-scale explosion tests and mine fire

research are conducted.

As of August 1995, approximately 350 federal employees and more than

100 contract employees worked at the research center. Their technical

skills spanned several disciplines, including engineering, geology,

chemistry, industrial hygiene, and computer science.

Initiation of the

Reinvention Lab

In 1991, the Pittsburgh Research Center established a quality

improvement(QI)2

 program under the direction of a steering committee,

which was composed equally of the center’s management and staff

(members of the American Federation of Government Employees Union).

Four quality improvement teams were formed by the steering committee:

teamwork, communication, morale, and employee orientation and training

(also referred to as “planning for success”). In June 1993, DOI invited the

research center to participate in the NPR effort as one of DOI’s reinvention

labs. The research center’s management chartered the QI steering

committee to form a reinvention team that would reengineer the research

center as if it were starting anew.

1

This case study was completed before Congress passed legislation providing for the elimination of

USBM. Some of the bureau’s programs are expected to be transferred to the U.S. Geological Survey

(USGS) and DOE.

2

See footnote 1 in appendix IV.

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Department of the Interior: Operations at

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Research Center

Description of the

Reinvention Lab

With the overall goal of improving its operations, the research center’s

reinvention teams developed three principal recommendations:

(1) improving the process for selecting research projects, (2) creating

SDWTs3 to conduct research, and (3) revising the personnel evaluation

system. As of August 1995, the lab was planning the implementation of the

research selection process and the SDWTs. DOI’s management was

addressing the third recommendation, the revision of the performance

appraisal system.

Another effort developed by the reinvention teams was a series of

procedural changes designed to improve the operations of the research

center. These changes included ideas such as establishing a centerwide

awards process and receiving a waiver from DOI’s restrictions on using

local solicitors to review patent work. A few of the most significant

procedural changes had been approved, while other changes were still

pending.

Reengineering the

Research Selection

Process

In response to a recommendation from one of the lab’s reinvention teams,

a committee was created to design a new process for selecting research

projects. The lab’s documentation stated that the previous selection

system often solicited a wide variety of research ideas that did not

correspond to USBM’s goals or the customer’s needs. It also stated that the

system had too many steps and did not provide enough feedback between

the researchers and the selecting officials.

Once implemented, the new research selection process is to revise how

research priorities are developed, how research projects are selected, and

how resources are assigned. According to documentation on the new

process, research priorities are to be determined by the research center’s

program office with input from its customers, which could include mine

unions, other government agencies, private industry, and/or the public.

The lab’s documentation stated that these research priorities are to be

refined into problem statements by a technical evaluation team that

consists of researchers and a customer representative. This team is to

solicit research proposals from the center’s researchers and scientists to

address the research problem statements. Proposals are then to be

evaluated and ranked by the team that submits final recommendations on

the selected proposals and research funding levels to the research center’s

management. The team also is to be responsible for providing written

3

See footnote 1 in appendix II.

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Research Center

feedback for the proposals so that the originators of ideas will be assured

that their ideas were communicated and understood.

Creating Self-Directed

Work Teams

Another of the lab’s reinvention teams concluded that the research

center’s hierarchical supervisory structure discouraged cross-functional

research and trapped researchers into narrow career tracks. Therefore, it

recommended the use of SDWTs to conduct research under a matrix

management approach. Under this approach, multidisciplinary teams are

to manage research projects until their completion, and then the teams are

to disband. A team leader is to coach and facilitate the team’s development

and be the single point of contact between the team and its customers and

managers.

SDWTs are also to be used to flatten the research center’s hierarchical

structure by eliminating middle management positions. The lab’s

documentation stated that accountability for work will be established

through the use of “contracts” between the research center’s top

management and the SDWTs. For example, a contract may require that

project spending stay within 1 percent of the proposed budget and that

products are submitted within proposed time frames. Lab officials noted

that although the teams are to be self-directed, they are not to be

self-managed. The officials said that the research center’s management is

to retain responsibility for conducting performance appraisals for

individual team members.

Revising the Personnel

Evaluation System

The lab’s third reinvention team recommended that the Pittsburgh

Research Center revise the way employees are evaluated. According to lab

officials, revising the evaluation system will help (1) eliminate the negative

impressions of the appraisal process held by both management and

employees and (2) management and employees use the process as a career

development and mentoring tool for the future. Reforms anticipated in the

design of a new performance evaluation system include the following:

• develop specific measures of research performance that currently do not

exist;

• combine two evaluation instruments—DOI’s Individual Performance Plan

and the Individual Development Plan—into one document to provide

employee feedback on training and developmental needs;

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• conduct performance evaluations at different points during the year (e.g.,

on the employee’s service anniversary date) to reduce the administrative

burden on management of completing all of the evaluations at the same

time; and

• adopt a simplified format for annual performance reviews, such as

pass/fail or feedback on elements not summarized by grade.

The recommendation to revise the personnel evaluation system has been

placed on hold because of DOI’s effort to revise the structure of its

individual performance plan used for evaluating personnel. Despite this

delay, research center officials said they anticipate implementing a

two-tier (pass/fail) performance evaluation system for fiscal year 1996.4

Changing Research Center

and Departmental

Procedures

In addition to the three principal recommendations of the lab, the

reinvention teams proposed 21 changes to some research center and DOI

procedures. Lab officials said that some of the more significant changes

proposed included the following: alter the review process for computer

equipment acquisition, remove departmental restrictions on the use of

local attorneys to process patent paperwork, and revise the procedure for

processing memorandums of agreement with contractors. A lab official

said that a proposal to eliminate one level of supervision within the

research center was pending because of DOI’s current reorganization.

Another proposal to create a centerwide personnel awards system was

stalled because of a lack of support from the local union.

Use of Waivers Team members said that at the beginning of the lab the team was

instructed by DOI management to consider all reinvention possibilities,

with no restrictions on the types of waivers it could request. They said

they were not clearly warned by DOI management that “overturning

statutes was off-limits” when making waiver requests. Consequently, the

team spent a substantial amount of time concentrating on waiver requests

that were beyond the scope anticipated by NPR officials.

Of the eight waiver requests that the research center submitted to other

federal agencies for review, none were approved. While it did not waive

provisions of the Paperwork Reduction Act, OMB did develop a simplified

4

According to an OPM official, OPM was not considering any waivers from regulations affecting

agencies’ appraisal programs because, at the time, OPM was preparing to issue new regulations. A final

version of these regulations was issued (effective date September 22, 1995) that allowed agencies to

create appraisal programs that use as few as two appraisal levels, with one level being “Fully

Successful” or its equivalent and another level being “Unacceptable.” (60 Fed. Reg. 43,943 (1995) to be

codified at 5 C.F.R. Part 430).

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Appendix IX 

Department of the Interior: Operations at

the U.S. Bureau of Mines’ Pittsburgh

Research Center

process for agencies to use in seeking approval to conduct customer

satisfaction surveys. Two waiver requests involving Federal Acquisition

Regulations were denied by the Small Business Administration because

the regulations were mandated by statute. A waiver from a procurement

regulation was denied by GSA officials because the waiver would be a

breach of contract. A second waiver request to GSA on regulations for

excess property management was also denied because some modifications

to the regulations were pending, which might have provided some

flexibility. Department of Labor officials also denied the lab’s waiver

request from a provision of the Service Contract Act. Lastly, OMB denied a

waiver from full-time-equivalent ceiling restrictions to provide more

personnel for the reinvention lab.

The eighth waiver request to allow servicing personnel offices to handle

the recruitment process was unnecessary because, according to OPM

officials, the authority already existed.

Performance

Measures

The written proposals for the recommendation on the research selection

process and the SDWTs outlined measurement and evaluation strategies.

Specific performance measures and other details were not included in the

proposal because research center officials were waiting for approval to

implement the recommendations. However, the officials said they

recognized that the success of the lab hinged on its ability to measure the

impact of the recommended changes. The lab’s plan indicated that an

evaluation team would be established and charged with defining a

comprehensive performance measurement plan for those changes.

In developing the recommendations, the reinvention teams benchmarked

the center’s research activities against private research organizations, such

as the Mayo Clinic, the Massachusetts Institute of Technology, and the

Dupont Corporation. The teams attempted to identify the critical

characteristics of these successful organizations and how those

characteristics could be integrated into the environment at the Pittsburgh

Research Center.

Other Issues

Pittsburgh Research

Center and NPR Relations

Officials from the research center said that miscommunication existed

between the reinvention teams and NPR staff. Those officials said that they

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Department of the Interior: Operations at

the U.S. Bureau of Mines’ Pittsburgh

Research Center

were under the impression that the lab’s reinvention recommendations

were needed by a particular time to be included in a September 1993 NPR

report. This short time frame hampered the research center’s efforts to do

follow-up work on its reinvention activities. For example, the reinvention

teams had planned to hold town meetings with the research center’s

employees, but they were unable to do so because they ran out of time. A

research center official stated that he expected the lab’s recommendations

and report to be included in the September 1993 NPR report, but they were

not.

Culture Change Lab officials said they recognized the importance of organizational culture

change to the success of their proposals. They said that changing the

organizational culture of the research center would be a factor in

implementing the recommendations to revise the research selection

process and establish SDWTs. The lab’s documentation noted that the new

process would be a major change from the research center’s long-standing

mode of empire building and competition between research groups for

funding. Officials from the reinvention teams anticipated that loyalties

would need to shift from individual research groups to the research center

as a whole. Furthermore, team members stated that a matrix management

approach (resulting from the use of SDWTs) might result in conflicting

management direction, changes in physical location, and changes to the

work environment that had been considered stable by employees.

However, team members stated that the advantages of the proposals

outweighed these disadvantages.

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Appendix X 

Department of the Interior: U.S. Geological

Survey’s Product Distribution

Overview of the

Reinvention Lab Site

DOI’s USGS publishes and disseminates the results of its scientific

investigations in thousands of products, such as general interest

publications, maps, books, and pamphlets. USGS is also authorized to sell

and distribute these and similar products of other federal agencies. While

these scientific products are prepared primarily for federal and state

governments, they are also available to the public. USGS has one central

warehouse and distribution facility, the Rocky Mountain Mapping Center,

in Denver.

As of August 1995, the Mapping Center employed about 100 people in the

information and product delivery activity, a part of the Information

Services Branch (IS). The IS branch currently handles about 340,000

inquiries per year by phone, fax, mail order, and walk-in customers. The

branch also includes 14 contractors whose primary function is to enter

product orders into the financial computer system. At the time of our

review, most of the orders were received by mail, but customers could

order products in person at the facility. For these customers, staff at the

facility’s Sales and Research Counter enter orders into the system; the

orders are generated for product retrieval, and the customer receives the

materials. Within the current fiscal year, USGS plans to transition some

customer orders to a more efficient, electronic version, which will greatly

reduce the delivery time for all customers.

The financial computer system, which is used by the IS Branch, processes

orders and decreases inventory as the orders are entered. Before the

implementation of the financial computer system in July 1995, order

placement and product retrieval was much slower, requiring customers to

wait considerably longer to get the needed products. Many more manual

steps were also required, which meant that employees’ time was not being

used effectively.

Initiation of the

Reinvention Lab

Since 1986, USGS has attempted to establish an efficient and responsive

order entry, inventory control, and distribution system. Options developed

have included, among other things, contracting out the distribution

function to a private company. In USGS’ 1993 proposal to DOI asking to

become a reinvention lab, the Director of USGS said that the fundamental

objective of the lab would be to develop options for modernizing the

distribution function and to move all basic product distribution functions

into the private sector.

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Appendix X 

Department of the Interior: U.S. Geological

Survey’s Product Distribution

In June 1993, DOI officially designated the USGS information dissemination

and product distribution functions at the Denver Mapping Center as a

reinvention lab. A lab team was formed that reviewed previous studies,

interviewed private-sector organizations known for their distribution

capabilities, and interviewed USGS employees for their suggestions on how

to improve the distribution function. In addition, the lab team attended a

2-week training session sponsored by DOI in which trainers charged

attendees to consider their agencies’ true missions. According to the lab

team, this training forced it to look closely at its work processes to find

new solutions. In October 1993, the lab team’s recommendations for

improving the function were approved, and the team began to develop its

implementation plan.

Description of the

Reinvention Lab

According to the lab team, contracting out USGS’ product distribution

function was considered initially. However, the lab team ultimately

concluded that wholesale contracting out would result in, among other

things, a loss of corporate knowledge about earth science information and

products. Reportedly, the lab team had discovered in its interviews with

private-sector organizations that only repetitive, basic tasks were

contracted out and that often the best staff dealt directly with customers.

The lab team said that it found that USGS employees had the core

knowledge and expertise needed to do their jobs, but that the distribution

process had become bogged down. The lab team also said it believed that

contracting out the product distribution function would result in a loss of

government control over wholesale and retail prices that ensured

reasonable public access to information.

The lab team’s implementation plan separated the information and

product distribution functions into three distinct parts: (1) information

dissemination (how customers obtain information about products);

(2) product distribution (how customers receive products); and (3) the

input system (how the product is printed, shipped, and received).

According to a lab official, the lab team was initially tasked to focus on

product distribution. However, it became apparent to the lab team that

this process could not occur in a vacuum. Therefore, one of the lab team’s

recommendations was to establish teams to reengineer the information

dissemination and input systems so that those activities could be

coordinated in a systematic fashion to meet customers’ needs. According

to the lab team leader, certain parts of the distribution function, such as

taking telephone orders, are being evaluated for possible contracting out.

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Department of the Interior: U.S. Geological

Survey’s Product Distribution

DOI has instructed all of its lab teams to “reengineer the system to meet

customers’ needs.” The distribution center had not systematically

collected data on customer satisfaction, but from anecdotal information

the center’s staff knew there had been complaints about the lack of

timeliness in product receipt, receipt of incorrect products, and the lack of

space to spread out products in the front counter area. Therefore,

implementation teams were established to work on these issues.

Redesigned Counter In one of the first improvements to be implemented, the front counter was

redesigned to create a more library-like atmosphere in which customers

could look through catalogues and spread out maps. A separate space was

also set aside for map dealers. Employee-generated ideas, such as creating

a slide show for customers to watch while waiting for their orders to be

filled, are also being implemented, according to a headquarters official.

Elimination of

Organizational

“Stovepipes”

Before the lab was established, the front counter staff who took the orders

and the map-pulling staff who filled the orders in the warehouse reported

to different branches of USGS and only rarely communicated with each

other. As part of the lab, the two groups were combined into one

group—the IS branch—and the staff was cross-trained, allowing the

map-pullers and map-orderers to do each others’ jobs. By August 1995,

waiting time for map orders had been reduced from 45 minutes before the

reorganization to 15 minutes or less. The lab team said it believed that

cross-training allowed staff to be more productive and provided for some

career advancement because of increased knowledge and skills. The lab

team also said that combining the staff improved internal communication.

A new generic position description was written for employees performing

cross-functional tasks.

Reportedly, the IS branch has a much more horizontal structure based on

three primary program areas—Information Access, Product Delivery, and

Inventory Management. The supervisor-to-employee ratio is about 1 to 25,

with the IS branch teams, team leaders, and team sponsors involved in

meeting customers’ needs. Only three employees are involved in direct

supervision, according to USGS officials.

Bar Coding Before the lab was established, communication among the distribution,

production, and printing branches was hindered because each branch

used different product codes. The production branch also used different

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Department of the Interior: U.S. Geological

Survey’s Product Distribution

numbers for creating a product and for ordering a reprint of that same

product. The lab team said that it believed that standardized bar coding of

all products would help correct this problem. Bar coding labels each

product with a unique set of printed and variously patterned markings that

can be read electronically. At the John Deere Company, the lab team

learned that bar coding reduced the error rate involved in sending

products to customers from 1 in 200 to 1 in 1,000. Furthermore, the lab

team said it believed that bar coding would allow better product

management at all stages of inventory control, which involves tracking the

product from the time it is (1) printed and shipped, (2) received at the

loading dock in Denver, (3) placed on the shelf, and (4) delivered to the

customer. Lab team members told us that the bar coding also assisted in

the ordering process, the reprinting process, and identifying the location

of the product in the warehouse.

Revamped Telephone

System

Currently, USGS’ telephone number, 1-800-USA-MAPS, can be used only for

inquiries about USGS products, not to order products. Customers calling

this number are sent an index or are given the 1-800-Help-Map number for

Information Services in Denver. USGS is working on expanding the services

available on the 1-800 numbers to include the capability of ordering

products over the telephone using a credit card. According to the plan, a

contract may be put in place to handle customers ordering over the 1-800

number. The lab team leader said that to ensure correct and timely

responses to inquiries, USGS staff would be involved in additional training

on products and information resources.

Use of Waivers Eventually, the lab team said it may need waivers from governmentwide

regulations in order to institute new procedures, such as using local

printing companies to print products. The lab team said that when fully

implemented, the distribution system is intended to be self-sustaining,

with generated revenues being returned to the system. Under 43 U.S.C. 42,

the Director of the Geological Survey, on approval by the Secretary of the

Interior, has the authority to set prices for maps.

Performance

Measures

According to the lab team, USGS previously had some data about the costs

and revenue generated by the information dissemination and product

distribution functions. However, the lab team said USGS lacked other types

of data. For example, before the lab, orders were recorded manually as

they came in and went out, but the type of products ordered (e.g., maps

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Department of the Interior: U.S. Geological

Survey’s Product Distribution

versus books) was not tracked. Therefore, USGS staff could not

systematically determine which products were sold and which sat on the

shelf.

Now, the lab team said the system is collecting data on product type, sales

history, inventory, and revenues, which helps to make decisions about the

product delivery processes. This information will be used to reduce

certain stock and to determine reprint numbers. Before the lab was

established, a set number of reprints were made for all products needing

additional stock regardless of demand, causing some products to be

overstocked. Now, stock reductions can be based on maintaining a 5-year

supply of a product, which is expected to reduce current space needs by

half.

In the past, the lab team said USGS did not systematically collect data about

customer service, relying instead on anecdotal information for feedback.

Now, as a result of an employee suggestion, reply cards are enclosed with

each product order. Since January 1995, the Mapping Center has received

about 20,000 customer reply cards indicating, among other things, how

customers became aware of USGS products, whether they liked the

products, and whether delivery of the products was timely.

Other Issues The lab team said that it received active support from the USGS Director,

Associate Director, and the Chief of the Mapping Division. (The Mapping

Center Chief participated in the team’s planning and the brainstorming

sessions.) The lab team said that their support assisted the lab team in

getting headquarters to sign off on the plan for the reinvention lab and the

lab team’s recommendations for implementation.

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Appendix XI 

U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

Overview of the

Reinvention Lab Site

As of August 1995, the Internal Revenue Service’s (IRS) Helena, MT, district

office employed about 160 people in its central office and 5 satellite offices

throughout the state. The district office served approximately 800,000

taxpayers and had three basic functions: collecting taxes, auditing tax

returns, and providing information and assistance to taxpayers.

Before the reinvention lab, the process by which the district office

performed these functions involved staff from different divisions. A tax

return was to be examined by either a tax auditor or revenue agent within

the Examination Division. If the examination resulted in the assessment of

additional taxes against the taxpayer, the return was then handed over to a

collections officer within the Collection Division. If the collection process

resulted in the Collection Division’s establishing a payment schedule with

the taxpayer, the return then became the responsibility of a revenue

officer within the Collection Division. This separation of duties between

different personnel in two of the office’s divisions reportedly confused

taxpayers trying to respond to IRS’ requirements or to inquire about their

returns.

Initiation of the

Reinvention Lab

The Helena reinvention lab’s origins can be traced to 1988, when officials

from IRS and the National Treasury Employees Union launched a joint

quality improvement process designed to improve the office’s

organizational structure and work processes. The office’s management

surveyed staff to learn about their concerns and to build trust among the

staff about the management team. Soon thereafter, the district office’s

management and staff received quality improvement training and formed

teams to work on a variety of processes.

In October 1992, district officials established three additional teams,

known as organizational renewal teams, to focus on three areas of

concern: (1) organizational structure, (2) performance measures, and

(3) performance evaluation. By the time the office was designated a

reinvention lab in August 1993, district office management had already

begun evaluating the recommendations proposed by the organizational

renewal teams. For example, the team focusing on the office’s

organizational structure found that the taxpayer service, collection, and

examination processes were “stovepiped” into separate processes that did

not relate to or support each other. For example, managers of the

Examination Division said that they often concentrated their examinations

on a particular business or industry, such as restaurants, without

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U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

considering the collectability of the taxes involved or the effect of their

division’s examinations on the workload of the Collection Division.

Description of the

Reinvention Lab

To provide guidance for the three organizational renewal teams, district

officials requested that the teams’ recommendations address one or more

of the following criteria: (1) improve voluntary compliance, (2) reduce

taxpayer burden, (3) improve the quality of employees’ work, (4) improve

customer satisfaction, (5) improve cost-effectiveness, and (6) increase

managerial span of control. District officials approved and launched

several initiatives as a result of the teams’ recommendations. A discussion

of a sample of these initiatives follows.

Eliminating Stovepipes To address the problem of organizational stovepipes that had led to

functional barriers across divisions, the district office combined the

Collection, Taxpayer Service, and Examination Divisions into a single

Operations Division. To achieve this new organizational structure, some

positions were combined and others were eliminated. The office created

multifunctional work teams with beginning-to-end responsibility for

providing “counter service” to taxpayers as well as examining tax returns

and collecting taxes. The teams were organized by the type of customer

located within certain geographic areas. Subgroups of these teams focused

on certain types of customers, such as lumber companies or the tourist

industry.

Customer Service To improve customer service, the district office created a one-stop counter

service staffed by a customer service technician. This new position was

created by combining the job functions of the taxpayer service

representative and the field collection representative into one position

authorized to handle a variety of collection and examination problems and

to answer most customer questions. In addition, tax auditors were placed

in each satellite office to provide more convenient access to auditors to

taxpayers who were being audited. Auditors were empowered to schedule

their own appointments and to contact taxpayers before beginning an

audit to clarify any outstanding issues. During the tax filing season, the

auditors also helped the customer service technicians answer taxpayers’

questions at the counter.

The office also formed a public outreach team to increase taxpayers’

voluntary compliance and to reduce their tax burden. This team, known as

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U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

the Public Education Cadre, comprised district managers and technical

staff and was created to educate the public through seminars targeted to

specific audiences. However, because IRS headquarters found that the

team was performing fewer of its primary duties, the team was

discontinued. Furthermore, the team was not measuring the effects of its

outreach program and, therefore, was unable to document the results of

its work.

Awards and Personnel

Evaluation System

Changes

The office created a performance awards system based on a

recommendation from an organizational renewal team. Under this system,

group awards were given on the basis of the team’s ability to achieve IRS’

mission goals, rather than solely on the basis of individual performance.

To reinforce this team concept, teamwork was added as a critical element

on the evaluation of all district office employees. District officials also

attempted to change their current personnel appraisal program to a

two-tiered or pass/fail program. In doing so, the officials said they

expected to reduce the managers’ burden of evaluating personnel and to

promote teamwork among employees.

Performance Indicators IRS uses key performance indicators (KPI) to measure the progress of the

agency’s work, including the percentage of returns filed electronically, the

dollars collected per hour of staff time, and the cycle time for completing

an examination. However, the district office and IRS’ Midwest Regional

Office recently analyzed 200 KPIs and concluded that only 2 were directly

tied to IRS’ mission objectives. Therefore, IRS headquarters began to change

the KPI system to better align it with the agency’s strategic plan. The lab’s

team focusing on performance measures tried to develop a new set of

measures that would be more closely tied to IRS’ mission objectives, but

that effort was not successful. A lab official said that one barrier was that

a reporting system did not exist to collect data related to mission

objectives. Another barrier was reportedly the difficulty of measuring

voluntary compliance.

Use of Waivers A district official said IRS headquarters had made the process of obtaining

waivers from governmentwide and agency-specific regulations relatively

easy. The official said that some of the waivers could be granted directly

by IRS or the U.S. Department of the Treasury, but other waiver requests

had been directed to central management agencies. For example, Treasury

submitted a waiver request for a two-tiered appraisal program to OPM for

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U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

consideration.1 In the meantime, the district office was permitted, under

existing regulations, to use a three-tiered evaluation system, which rates

personnel achievements as either outstanding, successful, or failed.

The district office also said it planned to take advantage of a generic

waiver from OMB that allowed agencies to survey their customers more

often than federal regulations allowed. The proposed survey would enable

the office to gather data on taxpayer burden and customer service.

Performance

Measures

District management and staff said that they recognized the need to use

measures other than KPIs developed by IRS headquarters. District officials

developed 11 types of KPIs to measure the results of the lab’s work teams

and the district office’s progress in meeting IRS’ mission goals. According

to an official, the 11 districtwide KPIs included such measures as revenue

agents’ dollars collected per hour, timeliness of the Operations Division’s

congressional responses, and the percentage of cases meeting quality

standards. The officials said the 11 KPIs were also selected to help district

officials monitor the office’s progress on IRS headquarters’ KPIs.

To measure their progress, district officials required each work team to

use at least two measures selected from either the IRS-wide KPIs, the

office’s KPIs, or measures developed by the work teams. Furthermore,

district officials required one of the measures to be a performance- or

results-based measure, such as the number of tax returns received and

audited, and the other measure to be a process measure, such as the

amount of resources (e.g., staff years) used to complete the work.

The performance-based measures were sometimes exclusive to a team’s

efforts and sometimes used by more than one team. For the process

measures, the teams were allowed to develop new measures or to use an

existing IRS or district KPI measure. At least some of the teams developed

their own measures because they recognized that none of the KPIs

measured the team’s performance. For example, a team responsible for

processing applications for lien certificates developed its own measures

because neither IRS’ nor the district office’s KPIs were tracking the

activities of the lien certificate program. By measuring the amount of

dollars collected through the program (performance-based measure), the

team discovered that the program collected about $1 million per staff year.

The team also measured the number of days spent to process an

application and discovered it took up to 30 days. After meeting with some

1

See footnote 4 in appendix IX.

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U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

of its customers to seek improvements to the application process, the

team revised the process and reduced the processing time to 5 days.

Other Issues District officials said that IRS management was initially resistant to some of

the changes proposed by the district office. However, frequent meetings

between IRS headquarters and district officials helped IRS management

understand the need for changes, such as those in the personnel

evaluation system.

District officials had differing opinions as to whether IRS management and

regional officials had been supportive of the district office’s reinvention

activities. One district official said top IRS management had been

supportive and that the IRS Midwest Regional Office had given the district

some support through a memorandum of understanding. The district and

regional offices’ memorandum of understanding outlined the district

office’s effort to reorganize its structure through reengineering and quality

improvement activities that supported IRS’ mission objectives. It also

contained a commitment from the Midwest Regional Commissioner to

(1) provide oversight and program support to the district office, (2) reduce

the reporting requirements on frontline managers, and (3) offer assistance

in implementing the reinvention ideas.

However, other district officials said that there had been a lack of support

for the lab’s activities from the regional office. One district official said

regional office management was not available during the reinvention

process because the region was involved in its own reorganization.

Without the regional office’s involvement, the official said, IRS

headquarters did not become involved in the lab either. A second district

official said that neither IRS headquarters nor the regional office provided

the resources necessary to support the lab’s activities. A third district

official said that IRS headquarters did not like the changes developed by

the lab and did not reinforce the ideas developed through the earlier

quality improvement process. The official said that the quality

improvement process teams were an effort to make accountants more

people-oriented and to increase staff participation in management

decisionmaking. This was a new approach to which IRS personnel were

unaccustomed.

Despite these problems, the second district official said that the lab had

been a success because employees saw an opportunity to change and

improve their work processes. The district office also reportedly had some

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U.S. Department of the Treasury: Work

Processes at the Internal Revenue Service’s

Helena District Office

success at implementing these changes because it was relatively unnoticed

by IRS headquarters until the district office was designated a reinvention

lab. However, the district office’s staff was then reportedly pressured into

producing results quickly.

According to another district official, the relatively small size of the Helena

District Office was a hindrance in gaining IRS headquarters’ attention or

cooperation in establishing the lab. The district office also reportedly

lacked the expertise to reorganize the office, and an official said that he

felt as though the office staff were reinventing their work processes in a

vacuum. The official also said that the district office could have benefited

from having experts in personnel management issues and

union-management relations law when it planned different strategies of

restructuring.

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Appendix XII 

Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

Overview of the

Reinvention Lab Site

The Clement J. Zablocki Veterans Affairs Medical Center (VAMC) in

Milwaukee is one of the largest of the 172 medical centers operated by the

Department of Veterans Affairs’ (VA) Veterans Health Administration (VHA).

In June 1995, the Zablocki VAMC employed 2,200 full-time equivalent staff

and had an annual budget of $158 million. Its facilities and services

included a hospital, a nursing home, a domiciliary, and an extensive

outpatient program. VA’s Central Region Contract Service Center, located

on the Zablocki VAMC’s campus, provides contracting services to eight

VAMCs in Wisconsin, Illinois, and Michigan and participates in the

reinvention lab activities.

Initiation of the

Reinvention Lab

The Zablocki VAMC was designated as a reinvention lab in May 1993.

According to lab officials, the lab originated from management’s desire to

make the Zablocki VAMC the hospital of choice, not only for veterans

entitled to free medical care, but also for veterans who have a choice of

medical care facilities.

The reinvention activities began with a request to all employees that they

submit ideas and requests for waivers from governmentwide and

agency-specific regulations for the purpose of improving the center’s

health care delivery and administrative processes. The Zablocki VAMC’s

staff submitted over 200 reinvention ideas for consideration. From the

initial ideas, 29 requests for waivers were generated. The approval of three

of these waivers permitted the budget and full-time equivalent flexibility

that significantly affected the implementation of several of the reinvention

lab’s activities. Several of the remaining ideas were the basis of four

Zablocki VAMC-wide continuous quality improvement teams, while many

other ideas were simply implemented by management, if appropriate.

Description of the

Reinvention Lab

The overall goal of the lab was to increase customer service and reduce

costs while improving the quality and timeliness of the delivery of health

care. The lab’s activities were categorized by lab officials into the

following five general areas: (1) improve customer service, (2) reduce

costs, (3) improve quality, (4) improve timeliness and efficiency, and

(5) improve contracting. Reinvention teams were created and assigned to

implement many of the lab’s efforts. Examples from each of these areas

follow.

Improving Customer

Service

According to lab officials, the Zablocki VAMC improved the continuity of

health care to its customers by assigning a social worker to patients

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Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

receiving primary care. Before the lab, outpatients were assigned a

primary physician who served as the point of contact regarding the

patient’s status for the patient, family members, and other VAMC staff. By

assigning a social worker to work with the primary physician, lab officials

stated that the patient’s social needs and medical care could be better

coordinated and continually evaluated, and physicians could focus on the

patient’s medical issues. According to lab officials, the social worker

coordinates the patient’s outpatient and/or inpatient care; provides

post-hospitalization placement; and, if necessary, arranges social work

services to the patient.

Reducing Costs The Zablocki VAMC created a patient transfer team to reduce back injuries

to the nursing staff and therefore reduce worker compensation costs. The

two-person team assisted the nursing staff by moving patients to and from

beds, wheelchairs, and gurneys. Under the direction of the VAMC’s physical

therapy service, the team was trained extensively in safe lifting techniques.

The team also is available to help with scheduled transfers and to respond

to paged requests for assistance from the nursing staff.

Improving Quality The Zablocki VAMC hired an infectious disease pharmacist to lower the cost

and improve the quality of antibiotic treatment. Unless antibiotics are

carefully prescribed and monitored, drug interactions and toxicities could

result in serious side effects for patients, thereby lengthening a patient’s

hospital stay. Lab officials said that the appropriate use of these drugs

could reduce patients’ length of stay and medical costs.

Improving Timeliness and

Efficiency

A telephone triage system was created to increase the timeliness and

accessibility of medical care. According to lab officials, the telephone

triage system was needed because patients with nonemergency conditions

or health care questions were frequently making unscheduled visits to the

admission center and emergency room. Frequently, these patients’ needs

could be met via a telephone contact with the appropriate provider or a

scheduled clinic appointment. In the telephone triage system, nurses could

assist patients over the telephone with their clinical concerns between

visits to the Zablocki VAMC. In May 1995, this system was expanded to

include the outpatient prescription renewal process. A pharmacist and a

pharmacy technician were added to the registered nurse and clerical staff

team.

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Appendix XII 

Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

Improving Contracting Lab officials said that the Central Region Contract Service Center reduced

costs by promoting “best value contracting” rather than “low bidder”

contracting. Contract service center officials stated that their customers

were not only the eight VAMCs in their geographic area, but also vendors

with VA contracts. To improve their customer service effort, contract

service center officials designated their contracting officers as customer

service champions and assigned a champion to each of the eight VAMCs

served by their office. These officials said they have reduced the number

of contract award protests by better training contracting officers and

educating vendors on VA contracting regulations and procedures.

Use of Waivers According to lab officials, the number of waivers from governmentwide

and agency-specific regulations sought by management has increased

since the lab began. By July 1995, the Zablocki VAMC had forwarded a total

of 62 waiver requests to VA’s Central Office (VACO), 16 of which had been

approved and 4 disapproved. Over half of the waiver requests were still

pending, and the remainder had been withdrawn because lab officials

discovered the waivers were not required or were no longer needed due to

changes after the requests were sent forward. Included in the 62 waiver

requests were 9 requests submitted by contract service center officials.

Approved Waivers Lab officials said three waivers approved in November 1993 provided the

budget and staffing flexibility they needed to begin the reinvention

process. The waivers allowed the Zablocki VAMC to submit a new budget

for fiscal years 1994 and 1995 that moved funds between different

budgetary accounts (e.g., travel or training) provided that its total

appropriations were not exceeded. A lab official said that the waivers also

allowed the Zablocki VAMC funds to be spent throughout the year instead of

only in designated quarters, which better enabled the VAMC to meet

required patient-care needs and reduce expenses. Through this budget

flexibility, the lab was able to gain 15 additional full-time equivalents

through fiscal year 1995 on a nonrecurring funding basis to support the

lab’s activities. For example, the Zablocki VAMC was able to hire the

infectious disease pharmacist using the funds his activities generated in

savings in antibiotic and other inpatient costs. The lab also was able to

transfer $105,000 from an operational account to other accounts, which

were used for training to support the recruitment and retention of

administrative and clinical staff. These funds also enabled staff to receive

training on reengineering the activities of the Zablocki VAMC.

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Appendix XII 

Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

Lab officials also received a waiver from a VA regulation that permitted the

lab to reward physicians for specific performance-related activities, such

as providing primary care to patients. Through these changes, Zablocki

VAMC staff said they were able to reward a physician for activities directly

related to improved patient care rather than for the physician’s tenure or

specialty. The funds were to be used strictly as a bonus and were not to

become part of the physician’s base pay.

Disapproved Waivers According to a lab official, VACO disapproved four waiver requests. Lab

officials sought the first waiver to give them the authority to allocate

physician residents between disciplines and to appoint residents on the

basis of facility need. These placements are presently overseen by the

Under Secretary for Health of the Veterans Health Administration, who

needs to retain this authority because of VHA’s responsibility to allocate

residents consistent with the needs of VA nationwide. Lab officials sought a

second waiver to change the locale for the evaluation of community

nursing homes to the local VAMC. Because VHA would remain accountable

to Congress (via a required report) for the evaluation of these facilities,

VHA officials denied the request. VHA officials also disapproved a third

waiver request to exempt the Zablocki VAMC from providing a semiannual

neurological surgical report to VHA. Although the Zablocki VAMC does not

use the report, VHA officials stated that they use the report to monitor

neurosurgery programs and, therefore, disapproved the waiver. Finally,

lab officials sought a fourth waiver to extend locality pay systems to

additional professionals, such as pharmacists. VHA officials did not approve

this waiver, but they issued new rules to provide VAMCs with more

flexibility within the existing special salary rate policy.

Pending Waivers Some of the waiver requests were pending because the regulation involved

was based in statute. For example, VA classifies eyeglasses as a prosthetic

device, and regulations state that prosthetics can be provided only to

veterans (with nonservice-related medical conditions) who have been

admitted to the hospital. Therefore, the Zablocki VAMC sought a waiver

from veteran eligibility requirements that require patients having

outpatient cataract surgery to be admitted to the hospital for a 2-day stay

in order to receive corrective eyeglasses. Lab officials said this is an

unnecessary and costly requirement because the medical community’s

standard for cataract surgery is to perform it on an outpatient basis. The

waiver request was submitted to VACO, which recommended that OMB draft

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Appendix XII 

Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

legislation to change this eligibility requirement. However, Zablocki VAMC

staff said the recommendation had not yet been acted upon.1

Waivers Not Needed or

Withdrawn

Zablocki VAMC staff found that six of the waivers they requested were not

needed because of interpretations of the regulations by VACO or because of

changes in legislation. For example, the Federal Employees Family Leave

Act allowed the Zablocki VAMC certain leave flexibilities that had been the

subject of a waiver request. Three of the six waiver requests were

withdrawn because they were no longer required. For example, the

Zablocki VAMC requested a waiver to use the building services equipment

fund and the minor improvement fund to provide a new state-of-the-art

pneumatic tube system to transport medical test samples and their results

quickly through VAMC. However, because Zablocki VAMC officials found that

the system could be modified and updated in phases, the waiver was no

longer needed.

Contract Service Center

Waivers

The Central Region Contract Service Center had submitted 9 of the 62

waiver requests made by the Zablocki VAMC. The subjects of the waivers

included both departmental regulations and governmentwide Federal

Acquisition Regulations. One waiver from a VA regulation was approved

that allowed the contract service center to negotiate special rates when

contracting with community nursing centers. Previously, these special

rates could be negotiated only by the VA Regional Director’s office. As of

July 1995, eight of the nine waiver requests were still pending. Two of the

pending waivers include requests for authorizations to remove annual

contracts from the currently devised fiscal year cycle and to permit the

contract service center to participate with private sector purchasing

groups for best value purchasing.

Performance

Measures

Zablocki VAMC officials said that they were committed to defining,

measuring, and documenting pre- and post-lab outcome measures. Each

reinvention team was required to develop such measures to evaluate the

success and viability of its reinvention effort. For example, the patient

transfer team measured the number of nursing staff injuries and lost

workdays due to those injuries for the 9 months before and after the

1

The NPR’s third report entitled Common Sense Government: Works Better and Costs Less

recommends reforming veterans health care eligibility and treatment. It states that “existing laws limit

the ability of the VA to provide the most appropriate care in the most appropriate setting. For example,

VA doctors are presently forced to hospitalize veterans who only need such care as blood pressure

treatment or crutches.”

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Department of Veterans Affairs: Health Care

at the Zablocki Medical Center

establishment of the patient transfer team. It found that the number of

injuries declined from 8 to 4, and the number of lost workdays dropped

from 97 to 9. Zablocki VAMC officials estimated that the establishment of

the team had saved the center over $73,000 in worker compensation costs

and over $84,000 in replacement compensation costs. Furthermore, a

survey of the nursing staff indicated that they were overwhelmingly

supportive of the transfer team.

Other Issues Lab officials said that the Zablocki VAMC’s assigned staff ceilings were

reduced by 77 full-time equivalents in fiscal year 1995 but that its overall

workload would continue to increase. They said this staffing reduction

would reduce the flexibility the lab was intended to create. Furthermore,

they said, downsizing does not provide a good environment for reinvention

because it affects the staff’s morale and ability to improve customer

service.

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Appendix XIII 

Department of Veterans Affairs: Claims

Processing at the New York Regional Office

Overview of the

Reinvention Lab Site

As of June 1995, VA’s New York Regional Office (NYRO) had about 340 staff

positions. One of NYRO’s responsibilities is to process claims submitted by

veterans (or their families) in the region for compensation, pension, and

death benefits.1

 Before the reinvention lab, claims were processed using

an assembly-line approach in which each claim went through 20 to 30

specific steps involving 12 or more different clerks, adjudicators, and

ratings specialists. A veteran inquiring about his or her claim talked with a

Veterans Benefits Counselor, who often had little contact with the

veteran’s claims folder as it moved through the processing system. The

veteran’s claims folder was often difficult to locate, and only limited

information was available to the counselor from VA’s computerized

tracking system. As a result, lab officials said some veterans believed that

no one knew what was happening to their claims and that the VA staff’s

role was to move claims folders from one processing step to another.

Initiation of the

Reinvention Lab

NYRO’s effort to improve the claims processing function began in April 1991

with its total quality management initiatives.2

 Lab officials reported that

the quality improvement training helped lay a foundation; however, they

recognized that incremental empowerment would not achieve the

necessary results from a customer’s perspective. In April 1992, regional

staff said they believed a fundamental change had to be made to the

organizational structure and work processes. Staff researched topics such

as work process reengineering and SDWTs3

 and benchmarked their efforts

against companies that were using SDWTs. NYRO used two consulting firms

during this year of planning. One firm focused on the office’s

organizational structure, workflow, job structure, and performance

measures. The other firm provided a structured training program that

included courses on teamwork and the social aspects of cultural change.

In May 1993, NYRO opened a prototype unit with 50 staff from the

adjudication and veterans services divisions of its claims processing

office—about one-fourth of the entire claims processing staff. The claims

processing function was officially designated as a reinvention lab in

September 1993.

1

NYRO’s other business lines are VA’s home loan program and vocational rehabilitation program. The

region includes the eastern half of New York State, New York City, and Long Island.

2

See footnote 1 in appendix IV.

3

See footnote 1 in appendix II.

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Appendix XIII 

Department of Veterans Affairs: Claims

Processing at the New York Regional Office

Description of the

Reinvention Lab

The overall goal of the lab was to improve claims processing by

empowering SDWTs to handle a veteran’s claim from start to finish, with the

team interacting directly with the veteran to improve communications.

This approach was also expected to reduce the time it took to process a

claim by reducing the number of staff and work steps involved.

When the prototype unit was established, employees were formed into

SDWTs and physically moved into the same work area. Claims folders

assigned to this unit were also moved into the team’s work area for

processing. In this environment, the team could review a claim and request

any additional information needed for its adjudication. The team also

entered data and did the final processing of the claim in its work area.

When inquiries were made about the claim, staff in the prototype unit were

reportedly more knowledgeable about the issues involved and had easier

access to the claims folder.

Personnel System Reforms New positions in the SDWTs were created by administratively reclassifying

existing positions. Under the new job classifications, a case technician

performed duties formerly assigned to four clerks. The case manager

adjudicated claims and interacted with claimants in person and by

telephone, thereby performing duties previously assigned to employees in

four other positions. Each team also had a coach who performed some of

the duties previously assigned to supervisors, such as giving individual

employee performance evaluations. Reviews of the team’s overall

performance and other quality control processes eventually are to become

the responsibility of the team. According to lab officials, decisions about

workload control and work assignment were also devolving to the teams.

As of August 1995, NYRO’s personnel compensation system was being

redesigned to be compatible with the SDWT model. The old compensation

system was based on positions held and time in grade. Annual rewards

were based on individual activity, such as the number of claims processed.

Lab officials said that they anticipate that the new system will consist of

skill-based pay and variable pay that support the team environment.

Variable pay is pay that would be based on how well the organization as a

whole met its goals.

According to lab officials, NYRO developed an interim compensation system

to recognize employees’ skill development while a new system was being

designed. Additionally, VACO and OPM have assisted NYRO in developing an

OPM demonstration project for the new system. In July 1995, NYRO officials

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Appendix XIII 

Department of Veterans Affairs: Claims

Processing at the New York Regional Office

were at OPM headquarters for a 3-day session to work on the proposal for

the demonstration project.

Status of the Lab By August 1994, the entire claims processing function was operating in 16

SDWTs. Although all staff had been placed in the new job classifications,

not all had acquired the skills needed for their new positions. Lab officials

said they recognized that skill acquisition would take time. They also said

that the team approach had helped allay the fears of those employees not

comfortable with some of the different tasks they were to perform.

Use of Waivers To establish SDWTs, NYRO received a delegation of authority from VACO that

allowed it to waive certain VA administrative and procedural requirements

applying to claims processing. However, after designation as a reinvention

lab NYRO initially submitted about 140 waivers from governmentwide and

agency-specific regulations. Subsequently, knowledgeable staff were

brought in to help decide what waivers were really needed. As of

June 1995, the lab had requested 31 waivers of both governmentwide and

agency-specific regulations, and lab officials said that the process of

requesting and receiving waivers was still ongoing. Some of the requested

waivers related to how veterans’ claims are paid. For example, the lab

requested a waiver of certain requirements needed to verify the death of a

veteran.

Performance

Measures

Lab officials said that the key to the success of their new claims

processing system was determining what kinds of performance measures

to use. Under the old measurement system, VA’s performance standards

centered on productivity, timeliness, and the accuracy of claims

processing. (Accuracy refers to the correctness of the decision made on a

claim.) However, the lab staff said that they believed that from a veteran’s

perspective those standards alone would not lead to improvements in the

quality of claims processing. Therefore, the lab staff developed additional

measures based on customer satisfaction, employee development, and

costs. In fiscal year 1992, a contractor was hired by VACO to do a national

survey of veterans and establish a baseline for customer service

expectations. Additionally, a gain/loss statement was developed that lab

officials said enabled the teams to determine how productive they were by

comparing the dollar value of the claims they processed to the relative

salary of the team.

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Appendix XIII 

Department of Veterans Affairs: Claims

Processing at the New York Regional Office

Lab officials said they believed that it will take several years for the new

organization to demonstrate improvement in all five measures (customer

satisfaction, employee development, speed, accuracy, and cost). However,

they do plan to compare fiscal year 1993 data to fiscal year 1995 data, the

year in which the entire claims processing office would have been working

as SDWTs.4

Measuring Claims Activity

in the Prototype Unit

Lab officials reported that early results were encouraging. Mature teams

(those established in May 1993) had backlogs that were 25 percent smaller,

processed claims 15 percent faster, and at a 7 percent lower cost than

teams that processed claims in the traditional way, despite having to spend

a significant amount of time learning new skills. Lab officials also said that

excellent progress had been made in (1) reducing the waiting time to see a

counselor in a personal interview from 20 minutes to less than 3 minutes;

and (2) increasing phone responsiveness, as measured by veterans getting

through on the first attempt, from 16 percent to 96 percent. The most

important result of the team approach, according to lab officials, had been

that teams provided a level of individualized service to veterans that was

not possible under the old system and employees had greater control, had

more authority, and found their jobs much more satisfying.

Lab officials also said inquiries to VACO on behalf of veterans had been

reduced for claims handled by the prototype unit because it was able to

respond to veterans’ inquiries directly and completely.

According to lab officials, the prototype unit reduced its pending caseload

from about 5,900 on May 17, 1993, to less than 3,450 at the end of

September 1994—a reduction of more than 40 percent. Lab officials said

that the number of cases waiting to be rated declined by less than

10 percent during this period because only a few trained rating specialists

were available to rate these claims for disability.5

4

We believe the fiscal year 1993 data are flawed because they do not distinguish between data for the

self-directed work teams and data for claims processed the traditional way. The flaw will not allow

comparison of the traditional approach to the SDWT model.

5

Rating a claim is the process of determining the degree of a veteran’s disability and whether the

disability is service-connected and therefore eligible for compensation.

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Appendix XIII 

Department of Veterans Affairs: Claims

Processing at the New York Regional Office

Other Issues

Culture Change Lab officials said that the lab’s central principles are a direct link to

customer service, teamwork, and the broadening of the duties of staff

members. They said that thinking in these terms represented a culture

change for everyone and that old habits were hard to overcome. Lab

officials said they have tried to help this culture change by continually

meeting with staff.

Before teams were established, lab officials said adjudication and veterans

services staff often did not know what was going on with other aspects of

a claim or in other parts of the office. Under the integrated case

management approach, they said all staff members knew about all facets

of the claims on which they worked. However, some aspects of teamwork

were still being addressed, according to lab officials. For example, staff

received classroom training in group dynamics and held meetings once a

week with the coaches leading the discussion. Lab officials said teamwork

had reduced the intragroup competition that existed before the lab

because now the entire team was working toward the completion of a

claim.

Union-Management

Partnership

According to lab officials, although union officials were involved in all

aspects of the changes, there were some difficult times from 1993 to 1994

when the then new president filed over 350 unfair labor charges with the

Federal Labor Relations Authority concerning the organizational changes

taking place in the lab. Responding to these charges took up a

considerable amount of management time. Lab officials stated that they

were able to resolve these differences and the union dropped all charges.

Development of a partnership agreement, which puts a framework in place

for continued good union-management relations, is being finalized by a

joint union and management committee.

Effect of the Lab on Other

Units

In November 1994, the Deputy Under Secretary for Benefits sent a memo

to all the regional offices stating they should strive to blend veterans

services and adjudication. He listed several models as examples of good

work processes, among them the one used by NYRO. NYRO’s Loan Guaranty

Division is beginning its reengineering process using some of the lessons

learned from reinventing the claims processing function.

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

Telephone Survey

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GAO’s Surveys of the Reinvention Labs

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

Fax Survey

Note: Results contained in

this appendix include a

category for labs that were

surveyed but did not

respond to a

question-“Did not answer.”

Also, results in the report

may differ from those in

the appendix because, in

some cases, they are

based only on those labs

that provided an answer to

a question.

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

Note: The total number of

waivers sought in question

5b does not equal the total

number of waivers sought

in question 5c. The reason

for the difference is that

we did not include the

waivers for two labs in

question 5b because

those labs reported only

totals without indicating a

breakout by subject area.

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Appendix XIV 

GAO’s Surveys of the Reinvention Labs

Note: The total number of

waivers sought under

category “a” for question

5c includes one waiver

that was reported be be

withdrawn. The total

number of waivers sought

under category “b” for

question 5c includes three

waivers that were reported

to be withdrawn.

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GAO’s Surveys of the Reinvention Labs

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GAO’s Surveys of the Reinvention Labs

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GAO’s Surveys of the Reinvention Labs

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GAO’s Surveys of the Reinvention Labs

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GAO’s Surveys of the Reinvention Labs

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GAO’s Surveys of the Reinvention Labs

Page 156 GAO/GGD-96-69 Reinvention Labs
Appendix XV 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Curtis Copeland, Assistant Director, (202) 512-8101

Tom Beall, Technical Advisor

Steven G. Lozano, Evaluator-in-Charge

Theresa Roberson, Senior Evaluator

Theodore Saks, Senior Evaluator

Donna Byers, Senior Evaluator

Kiki Theodoropoulos, Evaluator (Communications Analyst)

(246072) Page 157 GAO/GGD-96-69 Reinvention Labs
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