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THE RESULTS ACT: HAS IT MET CONGRESSIONAL

EXPECTATIONS?

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,

FINANCIAL MANAGEMENT AND

INTERGOVERNMENTAL RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JUNE 19, 2001

Serial No. 107–75

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

——— ———

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY, FINANCIAL MANAGEMENT AND

INTERGOVERNMENTAL RELATIONS

STEPHEN HORN, California, Chairman

RON LEWIS, Kentucky

DAN MILLER, Florida

DOUG OSE, California

ADAM H. PUTNAM, Florida

JANICE D. SCHAKOWSKY, Illinois

MAJOR R. OWENS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

EARL PIERCE, Professional Staff Member

CHRIS BARKLEY, Staff Assistant

DAVID MCMILLEN, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on June 19, 2001 ............................................................................... 1

Statement of:

O’Keefe, Sean, Deputy Director, Office of Management and Budget;

Christopher Mihm, Associate Director, Federal Management and Workforce Issues, U.S. General Accounting Office; Maurice McTigue, distinguished visiting scholar, Mercatus Center, George Mason University;

and John Mercer, Deputy Director for Government Performance,

Logicon, Inc. .................................................................................................. 11

Thompson, Hon. Fred, a U.S. Senator from the State of Tennessee ............ 12

Letters, statements, etc., submitted for the record by:

Horn, Hon. Stephen, a Representative in Congress from the State of

California:

CRS Report to Congress ........................................................................... 2

Prepared statement of ............................................................................... 9

McTigue, Maurice, distinguished visiting scholar, Mercatus Center,

George Mason University, prepared statement of ..................................... 53

Mercer, John, Deputy Director for Government Performance, Logicon,

Inc., prepared statement of .......................................................................... 63

Mihm, Christopher, Associate Director, Federal Management and Workforce Issues, U.S. General Accounting Office, prepared statement of ...... 20

O’Keefe, Sean, Deputy Director, Office of Management and Budget, prepared statement of ........................................................................................ 37

(1)

THE RESULTS ACT: HAS IT MET

CONGRESSIONAL EXPECTATIONS?

TUESDAY, JUNE 19, 2001

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY, FINANCIAL

MANAGEMENT AND INTERGOVERNMENTAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:35 p.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present: Representatives Horn and Putnam.

Staff present: J. Russell George, staff director and chief counsel;

Bonnie Heald, director of communications, Earl Pierce, professional

staff member; Chris Barkley, staff assistant; Alex Hurowitz and

Ryan Sullivan, interns; David McMillen, minority professional staff

member; and Teresa Coufal, minority staff assistant.

Mr. HORN. The Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations will come to

order.

Today we will examine the progress being made by the government’s executive branch departments and agencies to comply with

the Government Performance and Results Act of 1993, often called

the Results Act.

[The information referred to follows:]

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Mr. HORN. One of the goals of this bipartisan law was to improve

the Federal Government’s efficiency and accountability by shifting

its focus away from a preoccupation with day-to-day activities. Instead, the law requires departments and agencies to focus on the

results or outcomes of those activities. Once that goal is achieved,

Congress will be able to make knowledgeable decisions on which

Federal programs are worthy of support and which should be abandoned. The process is called results-oriented budgeting.

To achieve this goal the Results Act required that beginning in

1997, Federal agencies were to submit long-range strategic plans to

Congress. These plans are updated every 3 years. The law also required agencies to submit annual performance plans and reports on

their success in meeting those goals.

Agencies have now had 2 years of experience in developing measurable goals and reporting on their success in achieving those

goals. Yet, many still have difficulty linking their long- and shortterm strategic plans to the cost of their activities, even though this

process is supposed to form the basis of their budget requests.

In 1998, House Majority Leader Representative Dick Armey of

Texas stated that the agency plans failed to address management

problems and lacked reliable data to verify and validate performance. In 1999, the General Accounting Office found that only 14 of

the 35 Federal departments and agencies it examined were able to

define some type of relationship between program activities on

their proposed budgets and the performance goals cited in their

plans.

To paraphrase Benjamin Franklin, reforming the government, no

matter how good the changes, requires educating and enlightening

the people and convincing them that their interests will be promoted by the proposed changes. Said Franklin, ‘‘This is not the

work of a day,’’ and so it may be said of the government’s slowness

in embracing the Results Act.

Unquestionably, the challenge of genuine reform in the Federal

Government is formidable. Clearly, implementation of the Results

Act remains a work in progress. Once completed, however, American taxpayers will ultimately have a more accountable, bettermanaged government, which is what they want and most certainly

deserve.

Today, we will discuss recent agency progress in complying with

the law. We are honored to have with us the ranking member of

the Senate Governmental Affairs Committee, Senator Fred Thompson, a Republican of Tennessee, who has been an aggressive proponent of the Results Act. Senator Thompson has requested the

General Accounting Office to review the most recent round of agency performance reports, covering fiscal year 2000. The General Accounting Office has just reported its findings for most of the agencies. And for that we are grateful.

In addition, we will hear from a panel of witnesses who have

closely followed the government’s efforts to implement the Results

Act. They will discuss the successes, the failures, and the challenges that lie ahead.

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

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Mr. HORN. We welcome today Mr. Sean O’Keefe, the Deputy Director of the Office of Management and Budget; Mr. Christopher

Mihm, Associate Director of the U.S. General Accounting Office;

Mr. Maurice McTigue, distinguished visiting scholar at the

Mercatus Center of George Mason University; and Mr. John Mercer, deputy director for government performance at Logicon, Inc.

We welcome all of you and look forward to your testimony.

We will have to wait a little while because Senator Thompson is

in a meeting right now in the Senate in terms of ranking members.

But he’s on his way and will be here in a few minutes.

And we might start with Mr. Christopher Mihm, and that way

we’ll open it up. You’ll probably have a good punctual statement,

Chris; I understand that. So I think we’re going to swear you in.

[Witness sworn.]

Mr. HORN. Thank you. Please proceed.

STATEMENTS OF SEAN O’KEEFE, DEPUTY DIRECTOR, OFFICE

OF MANAGEMENT AND BUDGET; CHRISTOPHER MIHM, ASSOCIATE DIRECTOR, FEDERAL MANAGEMENT AND WORKFORCE ISSUES, U.S. GENERAL ACCOUNTING OFFICE; MAURICE McTIGUE, DISTINGUISHED VISITING SCHOLAR,

MERCATUS CENTER, GEORGE MASON UNIVERSITY; AND

JOHN MERCER, DEPUTY DIRECTOR FOR GOVERNMENT PERFORMANCE, LOGICON INC.

Mr. MIHM. Thank you, Mr. Chairman. And once again it is a

great honor and pleasure to appear before you and this subcommittee to discuss how the Government Performance and Results Act

can be used to assist Congress in its oversight and decisionmaking.

Over the last decade, Congress and the executive branch have

implemented a statutory framework to improve Federal agencies’ performance and executive branch and congressional decisionmaking. That framework includes as its core elements financial

management and information technology reforms which have been

the subject of extensive support and oversight from this subcommittee, as well as results-oriented legislation, especially GPRA.

Our work confirms the views that you expressed in your opening

statement, sir; that is, while much work remains before this framework is effectively implemented across the government, there has

been substantial progress in the last few years in establishing the

basic infrastructure to create high-performing Federal organizations. The task now is to move to the more important phase of

GPRA implementation; that is, using results-oriented performance

information on a routine basis for an agency’s day-to-day management and congressional and executive branch decisionmaking.

As a Nation, we face two overriding questions to effective Federal

governance in the 21st century: What is the proper role of the Federal Government and how should government do business? As detailed in my written statement, GPRA can serve as a bridge between these two questions by linking the results the Federal Government seeks to achieve to the program approaches and resources

that are necessary to achieve those results. In the interest of brevity, I’ll hit just the highlights of two issues where we see GPRA

making the greatest contribution to congressional decisionmaking.

12

Those two issues are, first, instilling the results orientation and,

second, ensuring that daily operations contribute to results.

First, in regards to instilling the results orientation, as you mentioned in your opening statement, Mr. Chairman, the cornerstone

of Federal efforts to successfully meet current and emerging public

demands is to adopt a results orientation. That is to develop a clear

sense of the results an agency wants to achieve as opposed to the

products and services an agency produces, to move away from that

preoccupation with outputs that you mentioned. Adopting such an

orientation requires a cultural transformation for many agencies,

one that can be accomplished only through the active and sustained attention of top leadership.

Unfortunately, our work has shown that attention is too often

lacking. We recently reported the findings of our government-wide

survey of Federal managers that showed that many agencies faced

significant challenges in instilling such an orientation. For example, at 11 agencies, less than half of the Federal managers perceived, to at least a great extent, that a strong top leadership commitment to achieving results existed. At 26 of the 28 agencies we

surveyed, less than half of the managers perceived—and I can suspend comments there in deference to the Senator.

Mr. HORN. Senator, you’ve got a willing member of GAO that will

now yield some time to you. And we know you’re busy today. So

thank you very much for coming.

We’re delighted to have the former chairman of Governmental

Affairs in the Senate. He has taken a great interest in the Results

Act, and we want to hear what he has to say.

STATEMENT OF HON. FRED THOMPSON, A U.S. SENATOR

FROM THE STATE OF TENNESSEE

Senator THOMPSON. Thank you, Mr. Chairman. I’m not used to

hearings actually starting on time, so I’m having a little adjustment to make here.

But I want to congratulate you for it, and I want to thank you

for the opportunity of coming over and spending a little time on

something that for too long has been under the radar screen. I

think it underlies everything the government is trying to do, and

that is trying to develop a government that is more results-oriented—instead of looking at inputs, look at what government is actually achieving.

As you know, the Results Act requires Federal agencies to develop 5-year strategic plans, annual performance plans, and submit

annual performance reports. The act is intended to shift the focus

of accountability from process to results. What matters is what

these activities actually accomplish in real results that are important to the American people, such as things like workplace safety,

fewer transportation accidents, less crime, better education and

healthcare.

All this sounds like basic common sense, and it is. We need to

work harder to reorient the Federal Government’s thinking. Setting

results-oriented performance goals and then using them to track

progress, make resource decisions and manage day-to-day operations should come as second nature. Many State and local governments operate this way, as does much of the private sector. HowVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
13

ever, these concepts represent a fundamental cultural change in

Washington.

Moving the Federal Government in this direction has been a real

struggle. We’ve now completed two rounds of performance reports

under the Results Act covering fiscal years 1999 and 2000. Both

sets of performance reports were analyzed by the Mercatus Center,

George Mason University, the General Accounting Office and the

Senate Governmental Affairs Committee and others. All these

analyses demonstrate that we have a long way to go before these

reports will be anywhere near as informative and useful as they

ought to be.

Let me touch on four major problems that we see with these reports: While the fiscal year 2000 version shows some improvement

in each of these four areas, these problems affect most agency reports for both years 1999 and 2000.

First of all, with regard to assessing results, we can’t tell from

most of the reports whether agencies are making any progress toward achieving key performance results or not.

In each of the past 2 years, I asked the GAO to determine from

the performance reports how well agencies were actually achieving

certain key outcomes. In all, we looked at over 90 key outcomes

across 24 major agencies. That includes such things as maintaining

the Nation’s combat readiness, maintaining the security of the U.S.

borders, ensuring our tax laws are administered effectively, helping

poor and disadvantaged families become self-sufficient, denying

criminals access to firearms, reducing the availability and use of illegal drugs—things of that nature.

We found for the year 1999, again, fiscal year 2000, that you

can’t really tell from the reports whether the agencies were making

progress on many of their key outcomes including the ones that I

just mentioned. With the subcommittee’s permission, I’d like to

submit for the record a table that summarizes our findings in this

regard.

Mr. HORN. Without objection, it will be put in the record at this

point.

Senator THOMPSON. Thank you very much.

Second, we looked at making sense out of these overlapping programs that we have so many of. The performance reports don’t tell

decisionmakers or the public what’s working and what’s not within

the mass of overlapping programs that exist in virtually every area

of Federal activity. This is a huge problem when you consider how

much overlap and duplication we have.

I just issued a two-volume report called Government at the

Brink. I’ll leave a copy of this report for the subcommittee.

Among other things, this report describes the extent of duplication and overlap that we have. Just to cite a few examples: 7 different agencies operate 40 different job training programs; 18—I’m

sorry, 8 different agencies operate 50 different programs to aid the

homeless; and 17 agencies operate 515 research and development

labs.

These multiple programs hardly ever use consistent performance

goals and measures that allow for comparisons among them. You’re

always comparing apples and oranges to pears. Nobody can seriously argue that all these programs are equally effective and necVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
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essary, yet we lack the performance information to make rational

choices among the programs and allocate resources to where they’ll

do the most good.

Another area we asked for, had to do with inadequate performance data. One fundamental barrier to the usefulness of the performance reports is the lack of reliable and timely performance

data.

Mr. Chairman, I think it has to do, too, with the overall highrisk area that the GAO tells us about, having to do with financial

mismanagement of the Federal Government. It is a growing problem that erodes the basis of all else that government is trying to

do.

And I think of trying to come up with data, accurate data that

we can measure, so we can see whether or not these agencies are

doing any good, we fall flat. And it’s a part of that bigger problem.

This is the data that shows whether we’re meeting the stated goals

these agencies have for various problems.

GAO reports only 3 of the 24 major agencies can produce credible

performance data. Now, this is a law. As you know, it was passed

back in 1993. Most inspectors general likewise question the credibility of their agencies’ performance data.

Congress passed a law last year intended to get agencies to pay

attention to their data problems, and explain what they’re doing to

solve them. Unfortunately, it appears that few agencies took this

mandate seriously. Agencies often failed to acknowledge specific

data problems that had been highlighted by GAO and their IGs.

I’ve asked the GAO to look at this in more depth.

I would also like to submit for the record my request letter to the

GAO which outlines my concerns.

Mr. HORN. Without objection, it will be put in the record at this

point.

Senator THOMPSON. Thank you.

Also, with regard to the area of resolving mission-critical management problems, I’ve heard the agency for years used the Results

Act as a tool to resolve these massive management problems. I

pointed out financial mismanagement and lack of ability to handle

information technology projects. We spend billions of dollars, then

throw up our hands and give up on the projects.

The revolution that’s happening out there in the private sector,

as you well know, Mr. Chairman, has not been brought into government. We don’t get the benefit of it, but we spend billions of dollars trying to.

The human capital problem is that our people don’t fit our jobs

anymore. We downsize without any strategic plan at all. And the

high-tech world we live in, when we need certain people in certain

areas that are crucial to national security and to our government,

we’re losing those people. We’re not recruiting new people. Our civil

service system is out of date. Overlap and duplication, are massive,

crucial, endemic management problems that the GAO has so eloquently told us about, and they threaten our ability to achieve

these performance results. The Government in the Brink report I

mentioned, catalogues these problems in detail.

As you are well aware, most agencies have had critical financial

management problems that make them highly vulnerable to waste,

15

fraud and abuse. I’m happy to say that most agencies are now

doing a better job of acknowledging these critical management

problems in the performance report and describing in general

terms what they’re trying to do to resolve them. However, to generate serious action, agencies need to establish specific and measurable performance goals to directly address these problems, publicly track progress and ensure accountability. There is so much

room for improvement here.

Unfortunately, agencies have established direct performance

goals for less than half of the critical management problems that

the GAO and their IG’s have identified. So here we are, all these

years later, and finally we haven’t managed to even identify goals

for half of these problems that everybody knows are crucial to the

operation of our government. Somebody is not paying attention.

In short, there are still major deficiencies in agencies’ performance reports and plans in the Results Act, and the act does not

even come close to reaching its potential as a tool to improve government performance.

That said, the more important point is that the act is only a tool.

It must be used to be effective. Good plans and reports are not ends

in and of themselves; the end result is that managers and policymakers use the information they provide to help government performance.

So far, this hasn’t happened. Results Act information has yet to

be used significantly by either the executive branch or congressional decisionmakers to oversee program performance, allocate

funding or reform non-performing programs. Likewise, according to

a just-released GAO report, the Results Act has yet to take hold

in the agencies as a tool for day-to-day management. The GAO reports leadership commitment is needed to sustain high levels of

performance is not widely perceived among managers across government, and progress in fostering such leadership has remained

stagnant.

My staff handed me something just today, Mr. Chairman, I think

points this out probably better than anything else. It’s from the

Federal Times of June 18th, and it says, ‘‘Defense may be the next

performance push.’’ As you know, defense has been a poster child

for financial mismanagement.

Mr. HORN. Right.

Senator THOMPSON. They can’t balance their books, they can’t

pass an audit. They lose billions of dollars in stuff they can’t account for. After all this Results Act talk, let’s look and see how they

look at it over there.

It says, ‘‘Some former and current defense insiders said they suspect the benefits of DOD’s complying with the Results Act will be

limited.’’

‘‘ ‘Most of the blood has already been squeezed out of the turnip

on the business side,’ said Robert Sole, Director of Program Analysis and Evaluation for the Office of the Secretary of Defense.’’ ‘‘There are not much savings that can be expected from changing

business practices.’’ ‘‘ ‘The Defense Department is not focused on the Results Act, and

the senior leadership is not interested in it,’ Sole said. ‘Nor are

many in Congress,’ according to Robert Hale, former Assistant SecVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
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retary of Financial Management and Comptroller of the Air Force.

‘During my tenure as Air Force comptroller, I’ve never been asked

about the Results Act by Defense authorizing and appropriating

committees.’ ’’

I think that’s a pretty serious reflection on both the Department

of Defense and Congress.

Can we turn this around? It seems to me that the jury is very

much out on this question. What we seem to have now is a chickenand-egg situation. A huge amount of time and effort has gone into

implementing the Results Act, but it’s not yet produced much really useful information. For example, the Congressional Budget Office stated that, ‘‘Its analysis found little in Fiscal Year 1999 performance report to guide the Congress in making choices about

spending.’’

On the other hand, there is little incentive to invest lots more

time and effort into making the information more useful, unless

and until it’s used. We need to break out of this cycle and start

using performance information agencies and have them produce as

best we can. Once we do this, the agencies will start paying attention and will start producing better information.

We can’t let a desire for perfection be the enemy of the good. The

important thing now is to get the ball rolling. If we can’t do it, we

might as well hang it up and consign the Results Act to the scrap

heap of failed management reforms. We might as well go on with

business as usual in Washington, where expectations of the Federal Government are so low that we simply accept high levels of

waste, fraud and inefficiency as the normal cost of operation, and

where each year we basically throw money at programs that sound

good, and simply accept with blind faith that they’re accomplishing

something.

Obviously, I hope this doesn’t happen. I’m very encouraged that

the executive branch leadership is firmly committed to turning

things around. OMB Director Mitch Daniels reaffirmed in a press

conference, as he did with me on the Government at the Brink report, that using the Results Act to actually make decisions and run

the government is a top priority for the administration. I’ll certainly do everything I can to help make this a reality. I challenge

my colleagues in the Senate and the House to do likewise. We can’t

afford to let this opportunity pass us by.

Thank you, Mr. Chairman. And I would be remiss if I didn’t acknowledge and express my appreciation for your leadership in this

area. Thank you very much.

Mr. HORN. Well, thank you, Senator.

Usually we don’t ask questions of Senators and our own colleagues, but let me go for one that I think you and I have talked

about before; and that is, we need some of the leadership on both

sides of the rotunda—and that would be the majority leaders working together with the minority leaders, and the people that are

elected in the Senate, not just the staff, and the people elected in

the House, not just the staff—and get them in a room of the people

that the President has appointed as his Ambassadors, and get

them around the table to ask, ‘‘Is this what we really mean by this

particular program?’’

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And often they would find, ‘‘Wait a minute, folks, just because we

went into conference and tried to get this thing into a series of euphemisms so we can get out of here, and try to get on, what is the

particular goal that should be sought, is it working, is it measurable, so forth?’’ In all the papers you’ve read—and you’ve read a lot

of them, more than most Members in either body—what’s the best

standard of measurement that you’ve seen that would make some

sense?

Senator THOMPSON. Government-wide or with regard to any

particular—— Mr. HORN. Government-wide or particular.

Senator THOMPSON. Well, I haven’t seen very many good ones.

But if you were talking about specific goals that are supposed to

be set out in a performance report, we have some that demonstrate

the problem.

With regard to the Commerce Department, they say that they

have a goal to assess its success in keeping the United States secure from proliferation of dual-use commodities and chemical weapons. The Bureau of Export Administration sets goals like the number of strategic industry analyses completed, the number of enforcement outreach visits conducted, and the number of in-use visits conducted, thus, Commerce progress related to this particular

outcome. In other words, how many pieces of paper we shuffle, how

many times we answer the telephone and things of that nature.

This is endemic.

I don’t think that throughout all these—the Department of Energy’s Office of Counterintelligence reported that they performed 11

inspections during fiscal year 2000, but failed to note what security

improvements resulted from those inspections. In other words, total

input and not output is endemic across government.

I don’t think that there is any government-wide performance

standard. I think you have to look at every agency, and every agency has to identify what its goal is, or set-up goals are, and what

its mission is. Why did we create it? If we were starting over again,

would we create this agency or this department? And if so, why?

What are we really trying to do here? It’s not to shuffle pieces of

paper, it’s to save lives. It’s not to answer telephones, it’s to catch

people, illegal people at the borders, you know. What are the results of what you’re trying to do?

It’s extremely difficult to focus agencies in on that, on an agencyby-agency basis. I don’t think you could ever do it governmentwide. But I think that, with leadership, it can be done.

I think we’re gradually moving a little bit in the right direction.

And that’s why my comments sometimes might seem a little bit

rough, but it’s time we got some people’s attention on this if we’re

serious about it. I mean, we pass a lot of legislation, you know, we

might as well ignore, I suppose, or repeal; let’s decide if this is one

of them. If it is, let’s get rid of it and forget it and just say that

a few billion every year is the price we pay for democracy and don’t

ask any questions about it.

But if we don’t take that attitude, if we think we can do better,

then let’s have some leadership. The President is going to have to

lead. Members of Congress are going to have to lead. It’s going to

have to be integrated in the authorization process, probably more

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importantly integrated into the appropriations process. Until people are required to give decent reports, No. 1, and then looking at

those reports, you can tell that somebody is succeeding or failing

and they’re either rewarded or punished based on that—until that

happens, this is a meaningless exercise.

Now, as I say, I think we’re glacially moving in the right direction. But there is going to come a time when we need to decide,

are we serious about this or not. And thanks to people such as

yourself over here, I still think that we’ve got an opportunity to do

some good, because we’ve got such a low floor to operate off of. We

ought to, by accident, be able to save a few billion dollars a year

without really doing very much. To that extent, I’m optimistic.

Mr. HORN. Well, we appreciate you coming over here and sharing

your ideas. They’re very pertinent and very useful to this issue.

Senator THOMPSON. Thank you very much.

Mr. HORN. Thank you.

We will now go back to Christopher Mihm, Associate Director,

Federal Management Work Force Issues, U.S. General Accounting

Office, so he can go through his preparation. And then we’ll go back

to the administration represented by Sean O’Keefe, Deputy Director, Office of Management and Budget.

Mr. MIHM. Thank you again, Mr. Chairman, Mr. Putnam. It’s

again an honor to be here.

When I suspended my comments in deference to the Senator, we

were talking about the importance of top leadership attention. And

I would just underscore what the Senator was saying, both in its

importance, and that attention has often been lacking.

Senator Thompson hit the highlights of our recent report containing the survey results of Federal managers across the 24 CFO

Act agencies. And just to reiterate some of those, at 11 agencies

less than half of the managers perceived, to at least a great extent,

that a strong top leadership commitment to achieving results existed. So this is less than half of the managers.

At 26 of the 28 agencies, less than half of the managers perceived, to at least a great extent, that employees received positive

recognition for helping the agency accomplish its strategic goals.

At 22 agencies, at least half of the managers reported they were

held accountable for the results of programs, to at least a great extent, but at only one agency did more than one-half of the managers report they had the decisionmaking authority that they needed to a comparable extent. In other words, at only one—and that’s

OPM—of the 28 agencies we surveyed did over 50 percent of the

mangers say they had the decisionmaking authority they needed in

order to achieve results.

To build leadership commitment and to help ensure that managing for results become a standard way of doing business some agencies using performance agreements need to define accountability for

specific goals, monitor progress, and evaluate results. These are basically contracts rather than between government and private sector, between the senior political leadership and the senior career

leadership.

We reported last October that performance agreements can be an

effective mechanism to align the daily activities of agencies with reVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
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sults that take place outside those agencies. This then leads to the

second point I was going to cover this afternoon.

GPRA is showing itself to be an important tool in helping Congress and the executive branch assess how agencies’ daily activities

contribute to results that benefit the American people. As Senator

Thompson underscored, GPRA provides a vehicle for examining

agencies’ internal management capabilities and ensuring that they

are positioned to achieve results.

As you know, Mr. Chairman, this past January we updated our

high-risk and performance accountability series that outlined the

major management challenges and program risks that Federal

agencies face. Unfortunately, as the Senator noted, we have found

that agencies are not consistently using GPRA to show how they

plan to address these challenges and risks.

For example, when we looked at agencies’ fiscal year 2001 performance plans, we found that there was a need to increase the

breadth, depth and specificity of goals and strategies related to

human capital and to better link them to agencies’ program goals.

They didn’t have the goals they needed, and often when those goals

were there, they weren’t linked back to the programmatic results

agencies are trying to achieve.

In summary then, Congress and the executive branch working together have put in place a management infrastructure with GPRA

as its centerpiece. However, much more needs to be done before

this infrastructure is effectively implemented across the Federal

Government. The planning and reporting efforts under GPRA nevertheless are generating new and important information that has

not been available in the past; information that congressional and

executive branch decisionmakers can use to help assess what government should do in the 21st century and how it should do it.

Mr. Chairman, Mr. Putnam, this concludes my statement; and I

would be pleased to respond to any questions you may have.

Mr. HORN. Thank you very much.

[The prepared statement of Mr. Mihm follows:]

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Mr. HORN. We’ll now have Mr. O’Keefe come to the table. And

we might as well swear in everybody at once here. So if the gentlemen from George Mason University and Logicon will raise your

right hand.

[Witnesses sworn.]

Mr. HORN. The clerk will note all witnesses have taken the oath.

And we will now get to the representative of the administration,

Mr. O’Keefe, Deputy Director, Office of Management and Budget.

We know you’re a very busy person, but we’d certainly like to get

your testimony in the record and some questions.

Mr. O’KEEFE. Thank you, Mr. Chairman. It’s a pleasure to be

with you and Mr. Putnam this afternoon. I’d like to submit for the

record the prepared statement and summarize that if I could, for

just a couple of moments.

Mr. HORN. All of these statements go in the record automatically

once we call you in.

Just remember on that pleasure bit that you’re under oath.

Mr. O’KEEFE. In that case, I’m just delighted to be here to see

you, sir.

For all that I’ve learned about the Government Performance and

Results Act over the last several years, I owe a tremendous debt

of gratitude to a great faculty colleague friend of mine at Syracuse

University by the name of Patricia Ingraham, who is the director

of the Alan K. Campbell Institute for Public Affairs there, and has

been conducting a government performance project for several

years now.

Since enactment of the act, Ms. Ingrahm, Government Executive

magazine and George Washington University have been engaged in

an effort I’m sure your subcommittee is well aware of to measure

State, local and Federal performance criteria and to publish those

results on an annual basis. As a consequence, it has had a very

compelling effect in changing the approach of many different levels

of government—different government institutions—and resulting in

a routine and regular assessment of how the performance is conducted.

I’m a native New Orleanian from, New Orleans, LA, where the

city itself, under this particular criteria that the project was conducted, I think overall got a D minus. As a result, the citizenry of

that city found it necessary and appropriate to comment on the city

management. Their comments were quite loud and well understood

in terms of the level of satisfaction relative to those performance

criteria which had not been conducted for a long time.

It made the city management far more defensive about exactly

what they were doing, but in the process of doing so, drew attention to the conduct of activity there, which had not been felt for a

very long time. So, at a minimum, this particular effort on the part

of so many different institutions, be it Federal, State or local, for

the purpose of trying to identify where the shortcomings or advantages and successes of various public institutions have resided, is

nonetheless, I think, an opportunity to focus the attention on what

citizens expect relative to what is appropriate. It also measures

what that performance requirement is. Sometimes it can have some

very dramatic results as a result of that attention.

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Having said that, I’m sure, Mr. Chairman, it comes as no surprise to you, that I concur wholeheartedly to your assessment and

that of Senator Thompson. We find ourselves in the Federal Government, across the board in every department and agency, implementing the Government Performance and Results Act. I think it’s

been discouraging at best.

Again, having seen this from a distance and looking at the effort—as Senator Thompson alluded to, in State and local governments—there are so many that are so far ahead of where we are

that as a consequence, I think this has been not a particularly impressive implementation effort. Although we’ve done a great job,

from what I can gather, in trying to determine how to comply with

the law at its minimums; and that, as a result, may in turn be the

nature of the problem we’re confronting.

This is a way of expressing a little more, I think, to what Senator

Thompson referred to as the ‘‘cultural phenomenon’’ that we’re

dealing with here. GPRA, with all due respect, has been treated by

Federal agencies and departments, by and large as another reporting requirement; something else that needs to be complied with.

And as a consequence of that, for it to be useful, for it to be really

useful for any management purpose, it has to be introduced into

the regular day-in-and-day-out management processes that are conducted throughout every Federal department and agency. It’s nowhere near there. There are a very few interesting examples of

how it’s beginning to take hold, but those are noticeable by their

distinguished nature of being so few, not because it’s pervasive.

I am influenced very heavily by a mind-set that is captured as

follows: government should be results-oriented; guided not by process, but guided by performance. There comes a time when every

program must be judged either a success or a failure. When we find

success, we should repeat it, share it and make it the standard.

When we find failure, we must call it by its name.

A government action that fails in its purpose must be reformed

or ended. That was President Bush’s comment during the campaign, and he has lived by that since Inauguration Day of this

year.

And, as a function of the management agenda that he has just

completed, there are five primary issues on that agenda. No. 1 on

that agenda, is the integration of the the performance criteria within the budget itself. This is, in my estimation, the only way that

we’re ever going to see a tangible kind of improvement, not in

terms of reporting requirements, not in terms of producing lots of

strategic plans that make mighty fine doorstops, but instead become a management objective that is laid-out and measured.

Therefore, success or failure is determined each year in the budget

process by whether or not those resources are provided to recognize

the appropriate means by which to accomplish that task.

In a career engaged in the resource management business, by

and large the dominant part of my professional career in public

service, I have found it frustrating that the process culture in the

administration and, with all due respect, in Congress as well, is

largely input-oriented. We look at individual parts, different items,

whatever else. We measure success or failure by the percentage differential, the delta between last year and this year.

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Headlines of newspapers celebrate increases by, you know, multiple percentage points, and lament decreases by the same amount

as if somehow that was a measure of how well or poorly various

programs are performing. As a consequence of that, we are doomed

to the proposition, under this kind of approach and this kind of

process, that every single year looks at that delta as if everything

that was performed the prior year was done absolutely to perfection. As a result all we’re arguing about is dollars at the margin,

the differential between last year and this year.

That’s the approach that is taken within every department and

agency. It’s taken by the various committees of Congress, as well.

In looking at those relative measures of failure or success, we

spend more time analyzing that difference than anything else and

presume again that the composition or conduct of how programs

are conducted is just fine, when all we’re doing is just measuring

increments.

Well, beginning in 2003 as a consequence of the President’s initiative, the No. 1 item on his five-item management agenda, the

budget will incorporate specific linkages of performance criteria

and indicators with the budget requests for very specific programs.

Let me quickly give you the criteria for those programs, or those

projects, in those agencies and departments that will be reflected

in the 2003 budget that will carry these criteria and what they’re

going to call for.

In order to apply this, it’s got to be clearly stated. No. 1, there

has to be a specified, desired outcome that is articulated; and it

can’t be, with all due respect to my good friends and colleagues at

the State Department, stating that for the purposes of accomplishment of agenda for the State Department, achievement of world

peace is the outcome. It needs to be a lot more specific than that.

It needs to be narrowed down to a specific program objective that

can be seen, and has a result that is measurable for which we can

see the distinction. That’s going to take time and a lot of negotiation. An awful lot of platitudes can be passed off as outcomes. As

a result, there needs to be an effort for sorting through it all. In

order to really follow through to make this a meaningful effort, it’s

going to require that we be diligent and purposeful about how we

define those outcomes. If we fail in our definitions, we will have to

wonder about why the program is in business in the first place and

resort back to President Bush’s quote on this point.

Second, there is going to be an examination of multiple means

to accomplish that outcome, not just the one stock way it’s going

or the way it’s been done. It has to be an examination of what the

alternatives are, how you achieve that same result that is defined.

Third, there has to be a third identification of the outputs. What

are we using as a means to determine whether or not that result,

that outcome, has been achieved? What would we use for the purpose of defining that as a performance measure?

The fourth, that there be a complete—and I mean in its truest

sense, a complete inventory of all of the inputs required. By virtue

of the fact that we look at the budget as an input-oriented kind of

process from agencies and departments all the way through Congress—we are fixated and more focused on itemizing individual inputs in ways and arrays that suit budget officers, not program

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managers. As a consequence, it is easier for them to array those

kinds of expenses and identify them in order to comply with the requirements that you can spend no more than what’s been appropriated for those purposes, and less so on the program’s success.

So, as a consequence, all the inputs required have to be tallied

up, rather than buried in lots of different locations; and that’s

going to take work.

So, when you think through these criteria, it basically means

that there’s going to be a selected number of programs and projects

that can pass through this kind of test that require this many answers to that many circumstances.

And last, but maybe most important, from my view with a bias

as a resource manager, is the identification of cost-per-output,

which includes all the costs to accomplish and achieve the task.

Right now, what we do more often than not is satisfy ourselves as

long as we captured most of the costs; maybe it’s a good enough

reflection. Now, until we get to the stage where we are accurately

measuring all the expenses it takes to carry out the task and the

manner in which it’s being done—we’ll never be able to appropriately judge what the cost or the relative performance comparison would be of any other way to achieve the same result. As a result, this becomes the fool’s errand that we have been trapped by

for so many years of permitting or being permissive about how we

capture costs as we go through this.

So, in that regard—and I’m very hopeful that this committee will

be helpful in this endeavor in the weeks ahead—we hope to submit

or advance to you a legislative proposal to begin this long effort,

which it’s going to take, in order to capture all these costs to truly

measure what the cost-per-output will be. And it begins within the

weeks ahead.

Again, a couple of initiatives we’re going to advance for the purpose of trying to calculate just the cost of all expenses to support

individual full-time-equivalent civilian personnel throughout the

Federal Government. As it stands now there are lots of different

ways to measure that, and lots of different ways in which the

sources and costs of individuals to be supported are, in some cases,

budgeted directly within a department or agency, and in other

cases, they’re budgeted centrally through other parts of the Federal

Government and allocated back.

As a means to at least try to corral all the parts that go with

that, this is the first step in a long series of efforts we hope to enlist your support and endorsement of, to at least begin that process

of capturing all expenses necessary and then working through the

criteria described here a moment ago.

In conclusion, I would say that as the 2003 budget is submitted,

there will be a selected number of programs that are going to meet

these criteria. These are very rigid, extremely specific kinds of criteria that have to be complied with, and errors or compromises

along the way of how you would conduct this particular approach

are, in turn, the very things that would bring it to its downfall.

So, as a result, we have to be very diligent in making sure only

those programs we incorporate within the 2003 budget fully meet

these criteria. Absent doing that, all we’ve done is simply created

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curately measured. But in that regard, we hope to bring life to

GPRA, use the tools that were enacted several years ago for the

purposes for which they were intended, and carry them out in a

way that we can assure a little more reasonably, that indeed, they

are an accurate reflection of how well the performance of various

programs will exist.

Again, thank you for the opportunity to testify, Mr. Chairman.

It’s a pleasure to see you.

[The prepared statement of Mr. O’Keefe follows:]

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Mr. HORN. Thank you.

Let me ask a few questions before you leave here. Are you putting together a team within OMB to help you on the measurements

and the bringing together and getting rid of the stagnation, but

getting performance-based management and budget all on the

same thing by the year 2003? Is that on track now? What are your

plans as to how you’ll get some help?

Mr. O’KEEFE. Again, I am of the mind that the talent for this resides throughout this entire Federal Government. This is a very

professional workforce. There is no question, if properly challenged

and focused in the direction of this endeavor, there is no absence

of talent to accomplish this task.

What I defined are real basic fundamentals of how you go about

devising performance relative to budget criteria. This is not something that in my professional experience, in lots of different places,

both here on Capitol Hill, as well as in an agency and department

and on the White House staff, there has never been any absence,

in my mind, of talent sufficient to carry this out. It means we must

be more specific about the guidance we want to see implemented.

In that regard, I think we are very well equipped from a stafftalent standpoint within the Office of Management and Budget to

devise that guidance properly and to do it in a way that is more

specific. And again we have to be. The biggest challenge is not necessarily whether there is sufficient depth of talent within the organizations, it’s being specific about the guidelines that meet these

criteria that will pass muster for inclusion in the 2003 budget and

thereafter. I expect there will be a limited number that we’ll see

in 2003, but the ones we’ll see will truly be a reflection of the concept I’ve talked about today.

Mr. HORN. Well, what will you do with the budget examiners in

this role? They’re going to be going through the same thing they’ve

done for 40 years, and it’s going to occur in certain months. So

where’s the programmatic analysis, as opposed to simply the budget analysis? And do you have those people in mind to help you with

that?

Mr. O’KEEFE. Well, sir, I must confess, in 1978, I started off at

GS–0 step, minus 23. I am therefore a Luddite and testimony to

the fact that we’re trainable. There is, I think, lots of opportunity

to make sure that the talent pool we have—the very professional

financial management talent we have throughout the Federal Government in departments and agencies—can begin to look at these

issues as program analysts and more in terms of analyzing this

particular approach to it rather than concentrating on the increments.

Again, with all due respect, sir, it is the entirety of the process

that motivates our financial managers, our resource managers

throughout the Federal Government to focus on the incremental

differences between last year and this year. Because that’s what

every department and agency seeks, that’s what the headline of

every newspaper demands, and that’s what the Congress looks at

in making appropriations year after year. Until we break that circumstance, we should not be surprised that resource managers respond exactly as we’ve trained them to.

41

This is an effort to begin going down another road, which is

again based in its logic on basic simplicity, asking the fundamental

question, what is it you seek as a result and an outcome? Why is

it in business in the first place? What are the elements and expenses required to carry it out? What are the different ways you

go about doing it? How do you take process steps out and then

measure it, based on its success or failure? It’s not that rough.

As a result, it just means we’ve got to be disciplined about it and

start to provide the motivations, as well as the incentives, for people to begin to look at it that way. And that’s why we’re carefully

selecting those programs and projects that will meet these criteria

rather than trying to do it across the board.

Mr. HORN. Have you had a chace to look at the Mercatus studies

that——

Mr. O’KEEFE. Yes, sir.

Mr. HORN. What’s your reaction?

Mr. O’KEEFE. I am well familiar with the results and the accomplishments of Mr. McTigue in that regard. I guess, suffice it to say,

that if the results and achievements that he and the Mercatus

study reveal in this circumstance can be achieved in the circumstances they had to deal with, by goodness, we should have a

leg up on the challenges we have to sword with. Because at least

it’s focused in the same direction, it’s focused on the same results

that we’re looking for in terms of improvement.

I don’t think there’s a Federal manager out there that’s driven

by malice or different political, philosophical objectives that is diametrically opposed to a democratic system. As a consequence, we’re

all on the same page in that regard, and it should be a much easier

hurdle to deal with.

Mr. HORN. Let me yield 10 minutes to the gentleman from Florida for questioning the witnesses.

Mr. PUTNAM. Thank you, Mr. Chairman.

Beginning with Mr. O’Keefe, what institutional changes would

you recommend to the Congress in terms of the bifurcated authorization and appropriations process, the fact that agencies have

barely had an opportunity to begin spending their budget when

they’re making preparations for the next budget cycle? What institutional changes would—should Congress make to have a more

performance-driven executive branch?

Mr. O’KEEFE. Well, again I would suggest that it is incumbent

upon the administration, as it has been for as long as, you know,

the Budget Act of 1921, that the President propose the programs

and various resource levels that he considers to be appropriate and

necessary to conduct and carry out the conduct of the Federal Government.

As a result, it is incumbent upon you to set the debate in that

regard, and the Congress, in turn, to determine what is the best

way for the power of the purse to be exerted and to determine what

you think is the most efficient way to dispose of that particular set

of proposals.

And as a result, in my mind, I don’t think organizationally or institutionally there is any dramatic change that needs to occur other

than simply to be on the same proposition we’ve discussed here,

which is that the outcome, the result, that we’re seeking is what

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will become the criteria. And, therefore, flexibility of how the appropriations structure may be made, how the various programs

may be justified, is more driven by that particular objective rather

than what is the input and how many fulltime equivalents are

there at Depot X or Y or whatever else.

That will all flow from the information. It will all be readily apparent and visible. If, instead, the result or the concentration is

looking at what the performance result is, I don’t think there needs

to be a dramatic change in the way the authorizing and appropriations process works throughout the Congress, other than an acceptance of a change in recognition of those committees in examining

how you measure what success is.

Mr. PUTNAM. You don’t think there should be an increase in resources and time spent by the Congress on oversight, as the Senator pointed out in panel one?

Mr. O’KEEFE. Well, sir, again I’ve spent half of my public service

time as part of the congressional institution and the other half in

the executive branch in various positions. In the course of that

time, I’ve learned that I’ve never been in a position where I’ve

asked for more congressional oversight, sir.

Mr. PUTNAM. Mr. Mercer, do you think that there are any congressional institutional changes that could result in a more performance-driven Federal Government?

Mr. MERCER. Certainly. And would you like me to address those

now or wait until after I’ve made my statement? What would be

your preference?

Mr. HORN. Why don’t we do both? Let’s answer the questions

now and then you’re going to have a chance to give your statement.

Mr. MERCER. If I were king and could impose some changes on

Congress that I thought would make it more results-oriented, two

thoughts come to mind.

One is a thought that was originally reflected in the earliest

drafts of the Results Act, which would have required that Congress

include measurable performance goals in any authorization or appropriation legislation; otherwise, the legislation would be subject

to a point-of-order. This provision would have applied to both

House and Senate legislation. That’s one change.

I understand the House rules have been amended to sort of head

in that direction beginning this year by requiring some notion of

addressing performance—what results programs are expected to

achieve—in the report that accompanies the legislation to the

Rules Committee. But I’m going to be very interested to see how

high the Rules Committee sets that bar, because the reason they

didn’t put many teeth into the requirement was that the committees objected to the notion of when they send legislation to the

Rules Committee, they would actually have to say what the program is supposed to accomplish, which is exactly the same standard we expect the agencies to meet.

Another change I might make is with respect to oversight. If I

had my preference, I would require each committee to issue a report at the beginning of the year stating all the issues over which

they have jurisdiction. And you can be sure that would be an expansive list; committees like to think their jurisdiction would be

fairly large. Then I would require them, next to that, to cite when

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they’re going to have an oversight hearing on that, when was the

last one and when is the next one. That might indicate that they

haven’t had and don’t plan to have any oversight hearings, and

hopefully that would embarrass them into scheduling one.

I would also have a definition of what oversight is. In my experience—I had 8 years in the Senate with the oversight committee

there, the Governmental Affairs Committee, in watching congressional oversight—and generally in other committees it was picking

at particular issues, but they rarely would ask questions about the

financial management of a program: Why does this agency not get

a clean opinion? They rarely, if ever—I say rarely, probably

never—had a copy of the agency’s strategic plan, or annual performance plan in front of them and went through that as a basis

for oversight. But I would define ‘‘oversight’’ as including those general issues. I would call them out and say that this is what an

oversight hearing has to look at in order to be called, dignified,

with the term ‘‘oversight.’’ Then I would require them to issue a report on each hearing that

they’ve had as to what their findings were with respect to financial

management, what their findings were with respect to the quality

of the strategic plan, what their findings were with respect to the

quality of the recent annual performance plan—the most recent annual performance report—and maybe some Clinger-Cohen issues. I

would define, in other words, ‘‘oversight’’ as including those issues

that you have to address, and to issue a report on it.

Now, Congress doesn’t usually want to put requirements on

itself, certainly nothing that specific. But like I say, if I were king,

that’s what I would do.

Mr. PUTNAM. Thank you.

Mr. O’Keefe, what consequences will OMB contemplate for agencies who fail to comply with the Results Act?

Mr. O’KEEFE. I’m parsing through the very words you’ve used in

that question, because I think that’s the nature of the issue we’re

consorting with right now. The agencies and departments, by and

large, comply.

Mr. PUTNAM. They haven’t produced a clean audit report on a

consistent basis in the history of the government, and three have

managed to produce a snapshot over the course of the last several

years. So clearly there’s a lack of compliance.

Mr. O’KEEFE. I guess we’re parsing through words here, because

with all due respect, sir, the act itself doesn’t say you have to have

a clean opinion. It says you have to have an opinion, you have to

have an audit. The CFO Act of 1990 says that.

So, as a result, in terms of filling out the paperwork and complying, the agencies and departments are filling out papers. They’re

doing strategic plans or what passes for them. But again, in many

respects I don’t think they make much more than mighty fine

doorstops. We’re focused more on compliance and less on how you

use the tools of the act to actually fulfill its objectives.

So, as a result, if I said, here are the penalties for not complying,

what I would get is slavish adherence, slavish compliance; they

would make sure they got every single paper that is defined by the

act submitted on time right there, and it would be meaningless— right now they don’t use it for management purposes.

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What I think is victory or success is getting Cabinet officers, as

President Bush did, to sign up to the proposition that the No. 1

item in the criteria for his management agenda, that is going to be

implemented in every department, is to begin the long process of

infusing the performance criteria to the budget. And that means

identifying what an outcome is, what the result is you want, why

it’s in business in the first place, going through all those rigid criteria and ultimately then coming up with a determination about

how successful or not a program is and, therefore, what resources

should it have to carry out those objectives.

That’s a different way of looking at it than being traffic cops or

enforcers at OMB, which we’re going to do. We can always ask that

they comply with this. Frankly, I find that to be not nearly so significant a mission as the one the President has identified as No.

1 on his management agenda.

Mr. PUTNAM. I agree it’s not nearly as significant, but since they

can’t even accomplish the baby step, I’m pretty pessimistic on their

accomplishing the long haul. If they don’t know how much money

they spent, then I’m pretty cynical about their knowing where it

went.

So I’m hopeful, as we embark on this, there are a number of

States, including Florida, that are now several years into a performance-based budgeting program. There are a number of States

whose mistakes we can learn from, whose successes we can learn

from. And we look forward to the continuation of this discussion.

My time has expired, Mr. Chairman.

Mr. HORN. You can have 5 minutes more if that will help.

Mr. PUTNAM. No. Thank you.

Mr. HORN. OK. I still am not quite clear on what you’re thinking

is in that 2003 section where you relate performance and budget.

Are there going to be various pilot programs, or is it going to be

across the board in the government? What’s the thinking on this?

Mr. O’KEEFE. It will not be across the board. It has to meet the

criteria that I outlined in the commentary, which is, first and foremost, you have to identify what the outcome is and have everyone

agree with what that’s supposed to be. Again, it can’t be as lofty

or as ethereal or as platitudinous as achievement of world peace.

It has been to be definable as, for example, the proposal that has

been submitted to the Congress, as a matter of fact, in an amendment submitted just last week, the establishment of an AIDS trust

fund.

As a result, that would, in my mind, lend itself nicely, very successfully to the kind of criteria we’re talking about here, to determine how much we should put into that particular task; because

the identification of the outcome, the objective in that circumstance, has been very specifically identified by Secretary Colin

Powell and Secretary Tommy Thompson. They have signed-up to

what they want the result of that to be. They said, ‘‘Here is the

consequence we want to see happen as a result of creating this financial mechanism.’’

From there, there are a lot of different ways to do it. Spirited debates over whether or not you should, in the achievement of the

outcome, try to reduce and influence the proliferation, expansion of

that horrendous disease in a series of very, very spirited apVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
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proaches or, excuse me, spirited debate about what approaches are

more effective, whether it’s treatment, whether it’s something as

fundamental as sanitation programs—a range of different approaches—that in developing circumstances, there’s an advocacy for

lots of different schools of thought.

So during the course of the 2003 review, my bet is—and, again,

just picking this one at random—there is likely to be a very conscientious effort applied toward saying, what are the various methods that we could go about achieving the result that both the Secretary of State and the Secretary of Health and Human Services

have identified as the outcome. They can say, ‘‘That’s what I want

to see happen,’’ and say, ‘‘Here are the various approaches we could

use to accomplish that task. Here are the inputs that are necessary

to go do it.’’ How many people, what kind of assets, things, etc., do

you need to do that?

In the case of treatment, it’s one set of professional skills. In the

case of improving, again, living conditions, sanitation circumstances, whatever, in whatever location they’re trying to

achieve this, it could be more of an economic development-related

kind of approach. Two very different ways to go do it, requiring

very different inputs, very different kinds of assets and capabilities

to bring to bear aren’t mixable parts; you have to be able to figure

out what it is you want to do.

Last, to determine what is the output desired, what is it we’re

seeking to go do, how would we measure success or failure or movement in the direction of achieving that success or failure? Is it the

number of folks who have contracted the disease or reduction

thereof? Is it the number of people treated? Whatever the criterion

is going to be, that’s the—there are varying ways to go about doing

it.

And last, to look at what is the cost-per-output, once you’ve decided what that output is, as a measure of determining what the

result is. What is the cost to accomplish that, and how do we corral

up those expenses and make them relative to all the other alternatives?

That’s the kind of program I think is going to lend itself most

specifically, again just at random, to achievement of the result

we’re looking for; as opposed to this year you put X number of

bucks into it, and last year you put Y number of dollars into it, and

are we better off relative to this year versus last because that percentage is high or low?

Mr. HORN. Let’s apply that scheme that you’ve just spelled out,

which certainly is one way to go at it.

Secretary Thompson spent a few weeks up in Baltimore looking

into the so-called HCFA, the Health Care Financing Administration. And as he said, everywhere he goes, people are griping about

HCFA; and one of his ideas was everybody likes Medicare and

Medicaid and maybe we can have the Medicare organization and

Medicaid—and that’s M-O-M, mom, and nobody gets mad at

mom—so maybe that would get HCFA off the books.

But at HCFA let’s apply what they do there. They have fees that

are allowed or not allowed by professional doctors. They have intermediaries that are very difficult to really have much to say by the

planning group of the Health Care Financing Administration; and

46

a lot of it is handled by the so-called intermediaries, and I think

that’s one thing that ought to be looked at. If it takes legislation,

we ought to get it.

And so there would be a little more flexibility. But we have doctors across the country that say, I can’t practice medicine at those

rates and something ought to be done. And I think something

ought to be done. And I believe, Chris—again, remind me of the

figure for Medicare. It’s—as I remember, it was something like $13.5 billion misuse.

Mr. MIHM. Improper payments. That’s my recollection yes, sir.

Mr. HORN. That’s not hay. And the Columbus Army Processing

Center on checks know that’s not hay. Those people are spewing

out and have been over 5 years—maybe it’s solved now—but $1 billion worth of checks, and they just went wondering where the

paper was to back it up. And doesn’t that lead to malfeasance, to

fraud, to abuse and so forth? And are we serious about that? What

can we do?

Mr. O’KEEFE. Well, I think, you know, you’ve raised—a priority

should be placed toward those programs which are identified, for

example on the GAO high-risk list, that are perennial favorites.

Having said that, I think you’ve got to be able to identify them

as specifically as you’ve just done. If, instead, I were to select one

that Congressman Putnam, for example, referred to of saying,

‘‘Gee, they can’t pass a financial statement, a clean audit opinion.’’ Well, in and of itself a clean audit opinion doesn’t make me rest

any better. It just doesn’t. I don’t think I’m going to sit back and

feel like, boy, we’ve really licked the problem today.

If the Defense Department next year suddenly gets a clean audit

opinion. I’m not sure I believe that any more than the one they’ve

got right now. If, instead, the answer is, as Secretary Rumsfeld has

said, the achievement of improvements to the financial systems,

which he is dedicated to doing, in turn is going to provide greater

visibility over management of programs, visibility over cost—so I

can answer the kind of questions that you posed, very rightly

posed—then, all right. This is the truest form of oversight in that

context.

If he can answer those kinds of situations, if the result, oh, by

the way, happens to be a clean opinion all the better. But achievement of that outcome in and of itself is not a result. It is a consequence, a happy one, but it isn’t an objective all by itself; and it

is the end condition of what is exposed there. It should be a management device. It should be something that should inform management decisionmaking, not an end in and of itself.

Whereas you rightly say or, I think, correctly point out that the

kind of conditions we look at of Medicare, Medicaid, etc., kinds of

payments in which the erroneous payment—that’s one that is a

ripe example of a set of program objectives that should lend itself

quite nicely to the approach that I’ve defined here. Those will be

the kinds of programs we’re going to look at first.

But, again, I don’t want to prejudge the outcome of what ultimately is going to pass muster in this case. I think, again not to

sound too rigid on this point, but I’m really quite convinced that

it is a criterion that has to be adhered to. It’s got to meet all the

gates I’ve talked about. You’ve got to be able to identify clearly

47

enough what the outcome is, and have everybody agree to what

that is.

You have to be able to identify all the inputs, be able to develop

a cost-per-output, have all the costs necessary and included in that

particular equation to be able to measure that properly. If you

don’t meet all those criteria, you’re kidding yourself. You’ve basically just gone ahead and developed something that, in turn, may

yield a different answer or a wrong answer relative to other alternatives and other approaches on how to accomplish the same objective.

I’d rather make sure that the programs we select, the areas we

select to apply this, lend themselves best toward this solution and

then start to work through the successes, as opposed to try to slap

something on that will pass for compliance in this area.

In a previous incarnation, I made a mistake of having done that

before. I don’t want to do it again.

Mr. HORN. You’ve had a lot of experience across the government

looking at it from Congress, looking at it within the major complex

organizations that are part of the executive branch. And I wonder

if you would agree that there’s a little, simple thing that ought to

be before executives every Monday morning if they’re working with

their fellow administrators in a particular area; and that is simply

to get the accounting processes, so the Secretary of the Navy or

Army or Air Force or Defense can see percentage-wise what was

spent in the last month. And if it’s—let’s say 12 percent of the year

has gone by, and they’ve got 24 percent of the money going, then

the question is, what is that buying?

Is it buying equipment? It might be prudent to do that. Let’s get

all the equipment out before the prices go up.

Let’s—if you’ve got personnel intensive, just as I found in the

university, that you expect those to be on a little more prudence

of, say, 15 percent year expanded, you should be about 15 percent

for personnel. Because that’s just clear that there—now, is that

helpful to a management group or isn’t it? And if so, what else

could be done to put on their plate, to say to the Secretary of Defense, ‘‘Here’s where it is, Chief, this month, in case you have to

move money around.’’

Mr. O’KEEFE. No. Positively that is a very helpful accounting

tool, and there’s no question that kind of visibility is desirable, no

doubt about it whatsoever.

I’ll tell you that based on, I guess, my impression in the course

of the professional experiences I’ve had the privilege of working

through in public service, by and large—there are some very notable exceptions, but by and large—the general proposition, the financial management community throughout the Federal Government is reasonably good at spending money only on those programs

for which Congress has provided the money, and spending only

those amounts that Congress has provided.

As a general rule, pretty high marks. Big time exceptions to that,

and when they happen, they’re front page news; but as a general

proposition, pretty good at those two principles.

If you chase them back, those are the same two principles that

were the centerpiece of the Budget and Accounting Act of 1921. As

a result, we haven’t really progressed a whole lot in terms of matuVerDate 11-MAY-2000 10:40 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\80373.TXT HGOVREF1 PsN: HGOVREF1
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ration of the systems to do much more than simply identify as a

matter of accountancy where it’s going to and restricting the

amount that can be available for those purposes.

It’s taken a long time. Again, in the last 10 years, an amazing

array of tools that Congress has enacted that are far more modern

in forcing the administration to look at this differently—the CFO

Act, GPRA, a range of different initiatives that have gone on in

order to focus the attention more in the direction of thinking precisely in the manner you’ve described. How do you make it realtime for management information purposes as opposed to either

compliance or demonstrating that the thieves didn’t run away with

the Treasury?

Matter of fact, the two things that were the fundamentals of

what motivated the 1921 act to be enacted in the first place. It was

a success. Great. Now, let’s declare it a success and move on to the

next phase. I think that’s what GPRA and the CFO Act and others

have helped do.

Mr. HORN. Let me ask you one more question, and then you’re

free, and we’ll hear from our friends at George Mason.

The President’s budget proposes a new account in the General

Services Administration that provides what appears to be a new,

or at least expanded, role for the Office of Management and Budget

involving the direct control of a program, the Electronic Government Fund.

Does this added responsibility require new specific authorization?

If not, why not? And who controls it? And is this a supplemental

fund?

Mr. O’KEEFE. Let me provide you a far more explicit answer for

the record, if you would permit me, sir. Because in terms of the

first part of your question of what legal authorities are required,

if memory serves me right, we have included language, or at least

a provision, for an account within the General Services Administration for the purposes of administering their E-Government Fund

for that purpose.

But in terms of exactly the legislative language required, let me

defer and give you a better answer for the record itself.

In terms of what its purpose is, I can speak to that; and it is——

Mr. HORN. Without objection, it will be put in the record at this

point.

Mr. O’KEEFE. Thank you, Mr. Chairman.

The purpose and the objective of why it was set up this way is

an attempt to leverage the $45-plus billion we spend every single

year for information technology throughout the Federal Government. That’s a lot of money to go out for the purposes of developing, maintaining, continuing or introducing new information technology.

And as a consequence, it is typically the case that it’s not a point

that we haven’t availed ourselves throughout the Federal process

of the most modern or the most useful or the most up-to-date or

the most contemporary information technology advances. Typically,

the argument from the Defense Department for example has been,

‘‘Oh, yes, we’re busy introducing, you know, last generation’s technology into today’s systems that are coming out.’’

49

In this particular case, the technology is moving so rapidly, and

we are so far ahead of it, that in many respects it is far more capacity than we can actually utilize as efficiently as we could. So,

as a consequence, the E-Government Fund is intended to try to leverage those cases specifically in which there is commonality across

departments and agencies, and which will have an opportunity to

try to have a user base that is adaptable for lots of different applications, those circumstances which lend themselves not necessarily

to an individual discipline but a multitude of disciplines.

So it’s more integrated management systems, those are the kinds

of things we’re looking for, again as a way to stay ahead of and encourage the kinds of opportunities for utilizing the advances in information technology on as wide an application as we possibly can

government-wide, and to motivate different departments and agencies to participate in that program.

It is purposely not designed as a means to substitute for the

modernization efforts of any individual agency or department. That

clearly is the effort we’re about throughout the entire Federal process and will again be more evidenced in the 2003 budget submission to you, to try to leverage that across the entire Federal Government; but also to require agencies and departments to engage

in the information technology modernization necessary. At $45 billion a year, that is not an absence of resources; it’s a question of

where it’s being applied and how efficiently.

Mr. HORN. I think that makes a lot of sense in many ways. In

the Debt Collection Act of 1996 we provided an incentive for departments that would bring in the debts, and they would get certain percentages just for that purpose of improving their computing

capacity.

And I think some of those things would help in terms of not just

waiting for the annual budget, but dealing with the problem of the

new software, new hardware. And it would make some sense, I

would think, because as you say, it’s going awfully fast.

Mr. O’KEEFE. Yes, sir.

Mr. HORN. Well, you needed to be back downtown. We’re glad

you came. Thank you very much.

Mr. O’KEEFE. Thank you, Mr. Chairman. I appreciate your patience.

Mr. HORN. We will now go back to our friends, Mr. Maurice

McTigue, distinguished visiting scholar, Mercatus Center, George

Mason University; and Mr. John Mercer, deputy director for Government Performance at Logicon.

So, Mr. McTigue, it’s all yours.

Mr. MCTIGUE. Thank you, Mr. Chairman.

I wanted to start by saying that at this stage, I think we’ve been

through the boring part of the Government Performance and Results Act and now we’re getting to the exciting part. The first two

stages were really planning and implementation. Now we have

some information. And the exciting part is about, what do we do

with the information that’s being produced?

The Government Performance and Results Act doesn’t do anything on its own. It’s a tool. Compliance with the Government Performance and Results Act doesn’t do anything either unless the information produced is used in some way to actually change the

50

quality of the performance of the organizations that are covered by

the Performance and Results Act.

I want to pick out five issues and spend a moment or two on

them. And the first one is examining outcomes, not agencies. And

I think that we’re going to be getting a change in the behavior and

the performance of government only if we start to look at outcomes

as the issue, not an agency as an entity in its own right and it’s

worth preserving just because it’s been there for 140 years or something like that.

The agency is actually the deliverer of services, and we can judge

its performance in delivering the service.

But the politicians and the public should be interested in, what

is the result that you’re aiming to achieve by the use of that organization. If it’s in defense, it’s readiness and superiority. So how

much has our readiness and superiority improved during the year

is the issue, not the Department of Defense?

Most outcomes have multiple agencies and programs that are addressing those outcomes. And it’s our view that it would be much

better to look at the outcome and all of the programs and agencies

that are trying to impact that outcome and make comparisons between the level of impact or success that they’re having on bringing

about improvement in that issue.

If you were to do that, you introduce competition between government activity, and in the introduction of that competition, all of

the benefits that normally come with competition come as well. You

will have new avenues of innovation, discovery; and all of those

processes will look for better ways of being able to achieve the result, because effectively people will see that they’re competing for

a common pool of money rather than having a guaranteed appropriation.

That brings me to the second part, which I think was addressed

in part by your colleague, Mr. Putnam, in one of his questions; and

that is linking performance and appropriations. Unless there is a

consequence for either complying or not complying, and either

using or not using the information, then of course you’re not going

to change behavior.

In Congress, I think there are two cultures that need to be addressed in Congress itself. The first of those cultures is the culture

of the committees of Congress. And I think that without having a

structural change, if committees would start to view their activities

that the experts on issues would be the oversight and authorizing

committees that know this particular issue in great depth, and

what they become then is the research arm of the appropriators

and the appropriators; pick that expert opinion up and make decisions based upon that. Essentially what you’re doing is linking performance and appropriation.

Until such time there is a linkage between performance and the

allocation of money, we’re not going to see a major change in the

way in which government organizations work. That will bring

about a very rapid change, of course, if such a situation were to

occur. It’s very encouraging to see that the administration is looking at exactly that, as Mr. O’Keefe has just set out for us.

The third issue is requiring agencies to measure outcomes of importance. And I think that in a number of areas the government

51

isn’t well served in actually addressing a primary issue in terms

of what is the state of knowledge on that issue.

For many years, you’ve had programs that have worked on the

issue of homelessness. But who knows anything about the state of

homelessness in the United States at this particular point in time?

Why is it that on one of the wealthiest countries in the world we

have one of the highest rates of homelessness? What is it about the

programs that are addressing that issue that is currently not successful?

Well, one of the issues that might view, that might actually be

there, that hasn’t been identified in the past, is that many of the

activities of governments have been directed at the consequences of

problems rather than the causes, the political processes, that there

are homeless people, so it starts to put in programs to house the

homeless people. But who’s out there looking at the cause?

And unless you address the cause, what you do by addressing the

consequence is that you start to build in dependency. So the programs you’re putting in place are actually creating dependency

rather than solving the dependency that was your original intent.

And it is by focusing on outcomes that you start to identify that

there are factors here that we’re not addressing, that are making

this problem worse rather than better.

I think a classic case is the feeding programs that are run by

USDA, instituted in the first instance, as I understand it, to use

up agricultural surpluses. But you now have some of the biggest

feeding programs in the world, and are quite probably creating a

lot of dependency as a result of that. So the problem is having negative effects in many instances rather than positive effects. Until

such time as somebody starts looking at the causes of the hunger,

I think that the program is going to have some negative effects

while it actually feeds hungry people.

The last comment I want to make is this: changing the political

value equation. What I’m talking about here is that political commitment to issues are too frequently measured in terms of how

many additional dollars you spend on that issue. An election is

coming up: Congress spends more dollars on the drug issues because drugs are topical at that time. But there’s no indication

whatsoever whether those additional dollars are going to have positive or negative effects. And I think in that case, in some instances,

the expenditure of dollars has had negative rather than positive effects.

So if you were actually to follow through, in an ideal world, the

concepts that come out of the Government Performance and Results Act, what you would see is that the value equation would

gradually change so that things weren’t measured in terms of how

many additional dollars you spent, and political commitment

wouldn’t be measured in terms of how many additional dollars you

spent; it would be measured in terms of what was the public benefit that arose from the expenditure of those dollars, how successful

have we been in eliminating that problem or diminishing that problem, how successful have we been at enhancing that good?

In my view, that is the real value of the Government Performance and Results Act. Until such time as you go through all of

those other stages, you won’t start to impact that value equation.

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But when you succeed in impacting that value equation, then I

think the political scenario and the success ratio of government will

change dramatically.

Thank you, Mr. Chairman. I’m very happy to answer questions.

Mr. HORN. Well, we thank you.

[NOTE.—The publication entitled, ‘‘2nd Annual Performance Report Scorecard: Which Federal Agencies Inform the Public,’’ may be

found in subcommittee files.]

[The prepared statement of Mr. McTigue follows:]

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57

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Mr. HORN. And let’s go back now to Mr. Mercer. Do you have

some comments on either Mr. O’Keefe’s remarks, Mr. Mihm’s and

Mr. McTigue’s. Plus any other things you want to get on the

record.

Mr. MERCER. I understand my full written statement will be put

in the record.

Mr. HORN. Automatic.

Mr. MERCER. Of course. And I’ll just hit some of the key points

and like to lay some items out.

First of all, I’m John Mercer and I’m here testifying before you

today solely in my capacity as the former counsel to the Senate

Governmental Affairs Committee who led the development of the

Government Performance and Results Act of 1993. I’m not testifying as a representative of any other interest.

I first want to say how much I appreciate the continued interest

this subcommittee has shown in GPRA and particularly your leadership, Mr. Chairman.

First, a little bit of background on the legislation. I served from

1989 to 1997 as Republican counsel to the Senate Governmental

Affairs Committee. GPRA, as a specific piece of legislation, began

with a conversation I had with Senator Bill Roth, for whom I

worked, in January 1990, about a real-life example of a performance-based management and budget system that had proven to be

very effective and which I thought applicable to the Federal Government. So he asked me to develop the legislation on his behalf.

And I would be remiss if I didn’t acknowledge the very important

input I got in developing that from Walter Groszyk of OMB.

The law was intended to point the Federal Government toward

a vision of improved government performance and then to begin

moving it down the road toward fulfilling this vision. GPRA, in

other words, was intended to lay a firm foundation upon which to

build a more complete structure of performance management, but

wasn’t intended to achieve that full vision by itself. Clearly, other

reforms would be needed.

GPRA intended to encourage this primarily through two means,

increased transparency and accountability.

There are some who sincerely believe that this effort wouldn’t

work because government is inherently inefficient, in this view, because it has little or no competition. You hear that often. But this

is exactly what GPRA intended to provide, competition for every

Federal agency and program by making them compete against

their own past performance. When performance is tracked and reported over time, there is inevitably pressure to show steady improvement.

The actual inspiration for GPRA was the performance-based

management and budget system of the city of Sunnyvale, CA. I had

served there as mayor and city councilmember. I think it’s relevant

to look at that city.

Mr. HORN. I was fascinated by your sort of case study there. Was

John Deever city manager before or after or during it?

Mr. MERCER. John Deever was city manager in 1973 when the

city first started developing performance audits for programs; and

he put some of the elements in place.

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As you know, he left for Long Beach, I think in 1977, and Tom

Lewcock came in as city manager and really turned it into performance-based budgeting. Lewcock came in 1978–79 and developed the

performance-based budgeting system.

I’ll say that when I was developing GPRA, a team from GAO and

OMB went out and visited the city. This was in 1991. The following

year in congressional testimony—I think this is interesting because

it gives an indication of what we’d like to see happen in the Federal Government—OMB said in testimony before the Governmental

Affairs Committee, ‘‘As indicated, the city of Sunnyvale, California,

stands out as the single best example of a comprehensive approach

to performance measurement that we have found in the United

States.’’ And I should say that New Zealand is not in the United States.

Now this is the key sentence. ‘‘One underlying reason for the success achieved in Sunnyvale is

the fact that every program manager uses the system to plan, manage and assess progress on a day-to-day basis.’’ We hope to get to

that in the Federal Government, but as we’ve heard, we’re a long

way from that. Sunnyvale’s performance budget is actually a fully

integrated program performance plan and annual budget, using

performance-based budgeting with full cost accounting.

Now, GPRA itself contains no specific requirement for real performance-based budgeting nor do the requirements for performance

planning reach every activity and employee of a department. However, these elements were important aspects of the vision underlying GPRA.

I’ll talk a little bit more about performance budgeting in my

statement, but I’d like to make a couple of key points about it.

I think it’s important to understand that a true performance

budget is not simply an object class budget with some program

goals attached. Real performance-based budgeting gives a meaningful indication of how the dollars are expected to turn into results,

not necessarily with scientific precision but at least through a general chain of cause and effect.

The most effective governmental performance-based budgeting

does this by showing how dollars fund day-to-day activities, how

those activities generate outputs, and then what outcomes should

result. The basic building block of a sophisticated performance

budgeting and management system, in my opinion, is the cost-perunit of activity which rolls up into cost-per-unit of output. This is

a powerful format because it directly measures what most managers actually manage on a day-to-day basis, dollar expenditures

and staff activity, in order to achieve certain outputs. These elements serve as the underpinnings for achieving higher level objectives including program outcomes.

The earliest drafts of the statute, in fact, contain provisions requiring agency plans and reports to include, ‘‘trends in costs-perunit of result, unit of service or other unit of output.’’ Unfortunately, I had to remove those provisions when I discovered that

agencies did not have in place and weren’t required to have in

place the requisite cost accounting systems.

I am pleased to say that in 1998 the Federal Accounting Standards Advisory Board issued a requirement that agencies develop

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this type of information. And quoting just briefly from it, what they

said is that, ‘‘The managerial cost accounting statement and standards contained in the statement are aimed at providing reliable

and timely information on the full cost of Federal programs, their

activities and outputs.’’ Those standards will provide a method for

identifying the unit cost of all government activities.

Now, I recognize agencies have scarcely begun to do this, but at

least it’s a requirement. And that’s a fundamental building-block of

a really powerful performance-based budgeting system, amongst

other uses.

There’s more potentially good news, and we heard it reflected

here today in Mr. O’Keefe’s statement, that in the President’s

budget he announced that agencies will be asked to submit performance-based budgets this September for a selected set of programs. I’m hopeful they will set the bar high enough that we will

see in those performance budgets that they pilot how activities are

funded and those activities turn into outputs which, in turn, become outcomes.

Now, what’s the big deal about performance-based budgeting? I

have outlined in my written statement a little bit more some of the

uses of it, but just in general, it not only shows that there is a relationship between dollars and results, but done right, it gives some

indication of what that relationship is, how those dollars become

results. When you do that, you can then begin to, at least in a general sense, see what the impact of increased dollars or budget cuts

could have.

It allows for more informed contracting-out decisions, because

you see the full costs, if you do this right, of the results you get

when you think about contracting. It’s certainly useful in promoting performance management. And perhaps my favorite use of it,

as we use it throughout Sunnyvale, is that program goals became

two-part goals.

We hear about program goals under GPRA right now as what

level of result. When you put a cost factor, particularly unit cost,

then you can have goals that are two-part, achieve a certain result

at a certain cost-per-unit. When you do that and you link that to

pay-for-performance systems or some other methodology for tracking this, you can begin to create incentives for actually reducing

the cost of government.

Right now, the incentive in every Federal agency is to spend

every nickel of your budget. Now, under GPRA, it’s spend every

nickel and get a certain level of result. In Sunnyvale, it was to get

a certain level of result at a certain unit cost, and by the way, if

you drive down the unit cost you’re eligible for a bonus. So at the

end of the fiscal year there was a disincentive to sweep money out

the door, because that just raised your unit costs and blew your

chances of getting a bonus.

And now GPRA’s relevance to day-to-day management; I have to

say that I had expected that within a couple of years of the performance plans, these plans would have cascaded down to the lowest levels of the organization. This has not happened and it is a

major reason that the government-wide movement toward managing for results has been impeded.

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Too many Federal managers still believe that GPRA does not

apply to them; and in a literal, legal sense I suppose it doesn’t. But

for GPRA to work, every Federal employee must be involved.

At the lowest organizational level there must be an annual plan

that shows how the activities of the manager and the staff directly

support achievement of the next-higher level plan. Each higher

level plan should, in turn, do the same until all such plans can be

traced clearly up through the organization to support the agencywide plan. Otherwise, departmental and agency plans will be little

more than wish lists, if you can’t literally trace that plan back

down in the organization to day-to-day activities. There are methodologies for formally linking that, and I have appended an example at the end of my testimony.

At this point, I’ll say that the final area—and I won’t go into it

because I touched on it earlier, and I’d be glad to address it in the

questions—I’ve been disappointed in the lack of use of this by Congress. There is still, as we all know, much room for improvement

there, in things that should be done.

Mr. Chairman, I thank you for this opportunity to talk about my

favorite subject.

[The prepared statement of Mr. Mercer follows:]

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Mr. HORN. I take it Sunnyvale still uses those processes?

Mr. MERCER. Absolutely. Their most recent budget, an example

from it—the budget they adopted this month—is the appendix. I

use an example from police services. If you look at that, the appendix in my testimony, you will see what is frankly the most sophisticated performance-based budgeting system in the United States.

Countries come from all over the world to look at it.

They’re not going to stop that. It’s very powerful stuff. The citizens love the fact that the level of result keeps going up and the

cost of government drops steadily, and they get lots of attention.

Mr. HORN. Where would be the second or third or fourth city that

would have this type of approach?

Mr. MERCER. Well, I don’t know. Which is not to say that nobody

does it now, but I know if they did, it’s fairly recent. I don’t know

of any city that links it to day-to-day activities, so that in these

performance budgets you see all of the work hours for all the employees covered, linked to activities. Somebody may have done that.

But just short of that, actually having goals and driving it down

and that sort of thing, Phoenix, AZ, ought to be recognized. It’s obviously a much larger city than Sunnyvale and was one of the cowinners of the Bertlesman Award for being the best-run city in the

world. Christchurch, New Zealand, was the other one, and Phoenix,

AZ.

Cities in the West with council-manager forms of government

tend to be where you would want to look for examples. If you’re

looking at big cities, then San Diego and Dallas and cities like that.

But if you’re looking for the best of the best, well, it’s Sunnyvale.

Mr. HORN. How about the State of Oregon, are you familiar with

what they’re doing?

Mr. MERCER. The Oregon benchmarks?

Mr. HORN. Right.

Mr. MERCER. Yes. I’m not familiar with what they’re doing now.

When I was counsel to the committee, I was familiar with what

they were doing. It got a lot of publicity.

I was probably less impressed than most people that looked at

it only because—not because their heart wasn’t in the right place

and they weren’t a leader in a lot of this—they had lots and lots

of measures for things; arguably, too many in some instances. But

in any event—and they had a lot of input from the public in developing these—all that was very good.

But they didn’t drive it down to the actual operations of the government. That is, you set—these are the benchmarks for where we

want—certain indicators of health, education, whatever, to be 5

years, 10 years, 20 years from now for the State, that was a wish

list. When I looked behind the curtain, I didn’t see anything that

said, OK, to get there 5 years from now here’s what we have to do

for each of the next 4, 5 years. And that means, you know, here’s

how many work hours we’re going to apply to this task which will

create this outcome, which should generate the outcome—at least

we hope. That, they haven’t done, so here’s a great wish list; now

let’s go off about our business and hope we hit the targets.

Unless you drive it down—and in my opinion, you have to formally link it down to day-to-day activities—like I say, you’ve got

to cascade it down. In Sunnyvale, there are task codes. There’s a

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five-digit task code for everything everybody does. And some people

would look at that and say, that’s overkill. I would say the proof

is in the pudding. It works.

They do it right. And they drive down the unit cost of government. And they drive up performance because it’s linked to day-today activities in a formal, meaningful way.

Mr. HORN. Mr. McTigue, the New Zealand plan has a lot of aspects of that, I gather. Could you give us a little idea of what would

happen in Christchurch, let’s say? Or the government generally?

What did they do with their Ambassadors who have to account for

everything in the embassy, or is it out of their pocket?

Mr. MCTIGUE. Can I just link it into something that Mr. O’Keefe

said a few moments ago in a response to a question from you, Mr.

Chairman? He was talking about the approach that the administration is taking at the moment in identifying very clearly the outcome, what is the issue that you’re addressing; and then looking

around at the multitude of different ways in which you might address that in making choices among those that might be biased, impacting that, and they might be quite different activities. That was

at the heart of most of the reform of the central government of New

Zealand. By looking just for exactly what is the outcome if it’s dependency, then let’s look at the variety of programs that impact dependency.

Then taking something that Mr. Mercer said, what we looked for

was not really the unit cost, but the cost-per-unit of success which

is slightly different, because some of these programs might have

higher costs but better success rates or they might be dealing with

a different cohort of people and the cost might be different. So we

looked at costs-per-unit of success. And then what you left on the

table was a decision for the elected politicians to make in terms of,

is the value to the community in this program justified given the

known level of success and the cost-per-unit of success. And in

some cases the answer was yes.

I can give you a clear example from my own experience where

there were two programs that were seeking additional funding,

both designed to try and get people back into the work force. One

of them was a very basic program that had a high success rate, 70

percent of their participants got back into work at a relatively low

cost of $256 per week per person.

There was another program designed for at-risk youth that had

a similar success rate, about 70 percent of their people went to

work, but at a much higher cost, $932 per week per participant.

The difference, though, was for those people who got jobs out of

that youth program, their criminality rate dropped by 60 percent.

That far outweighed the additional cost.

But what you had was all of the elements on the table, so that

the political process was able to make a good decision and say,

‘‘yes, this program at four times the cost is good value because

keeping people out of the criminal justice system more than compensates for that additional cost.’’

In the case of a place like Christchurch, it manages itself in a

very similar way to that which has been outlined for Sunnyvale or

for Phoenix. But it’s a concentration on what are the essential services that the public needs and delivering those services in the best

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possible way, using competition in many instances as a meaning of

finding the best way of delivering the services; and in some instances, deciding that these are services that the government

should no longer deliver, that there are other people who would be

better or more appropriate to deliver these programs. And to a degree, that parallels some of the President’s ideas with the concept

of using faith-based organizations; not because they were faithbased, but just because they happened to have a very high success

level in dealing with people in dependency, dealing with families

that were at-risk and things like that.

It was their success level rather than the fact that they were

faith-based. But that’s what we’re really looking for, who’s the best

provider, and the government should actually buy the services from

the best provider of those services.

Mr. HORN. Mr. Mihm, what’s your thinking now? Your colleagues

in the General Accounting Office have spent a lot of time looking

at these proposals. Can we learn anything from Sunnyvale, Christchurch, Oregon and the Mercatus Center of George Mason University?

Mr. MIHM. I think, Mr. Chairman, we can learn an awful lot

from those examples. I have been fortunate to be involved in some

of those studies. I certainly was very fortunate and honored to assist the subcommittee in its examinations of Australia and New

Zealand management reforms a year—I guess 2 years ago.

One of the interesting points of the whole trend toward resultsoriented management is that all the Western democracies and

State and local governments are basically moving in the same direction, and that is despite differences in cultures and histories and

forms of government, whether it be Western or Republican forms,

as we have here. There is a worldwide trend basically toward a

greater focus on results, a greater focus on trying to link performance and results as part of the budget of the appropriations process.

I would underscore a couple of points that you’ve heard, I think,

running throughout the entire theme. The first is how important

it is to bring good cost information, program cost information, performance information and budget information together. And the

power of the management reforms that Congress has put in place

were really begining to pay off, once those three actually come together.

The second point, though, is how difficult that is going to be. I

was intrigued by the list that Mr. O’Keefe listed of the very high

bar that they’re going to have in order to accept programs into this

new budget approach. I think it’s great that bar is high. What I

would remind us all, though, is the very difficult time that we all

had with the performance budgeting pilots under GPRA.

I know this subcommittee worked—expended quite a bit of energy with OMB over the last 3 years to, first, get them to identify

pilots and then, second, to find out what was going on for those.

The bar for those pilots was much lower than what Mr. O’Keefe is

suggesting. This is in no way saying you ought to adjust the bar.

Mr. HORN. My conclusion on that was that it was laughable.

Mr. MIHM. And one of the challenges that they had, sir, as you

know, was just finding enough places around government that had

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program cost information. And as a result, they did come up with

some pilots that were perhaps not as robust or prominent as the

authors envisioned when they wrote the provision for the performance budget pilot.

So I would just underscore that this really is the long haul. John

and Morris have underscored that what’s going on in Sunnyvale,

and New Zealand began well over a decade ago. What’s been impressive with the United States is that we’ve put the infrastructure

in place just over the last half-dozen or so years, but we’re still lagging behind the rest of the world in terms of being able to use that

infrastructure to be making decisions.

Mr. HORN. So where do we go from here in terms of the General

Accounting Office? You’re doing another study now for Senator

Thompson, I believe.

Mr. MIHM. Yes, sir. There’s a couple of things that we’re doing.

We’re looking at each of the annual performance plans and reports, as the Senator indicated, for usually up to four or five key

outcome areas for each agency, and will be reporting out in separate reports on each of the 24 largest agencies. Over the next basically 2 weeks or so those reports will come out. This is part of our

commitment to move beyond—as we’ve all been discussing—questions of just compliance and quality with GPRA to more substantive discussions as to the value of GPRA to informed decisionmaking.

The second thing that we’re continuing to do is look at the attention that agencies are paying to the major management issues.

This subcommittee and certainly my colleagues back at the GAO,

the Comptroller General, have invested an awful lot of attention

and energy into making sure that agencies pay due attention to

their major management problems; those high-risk areas to make

sure there are people accountable for getting off those lists. This

list has been around, as you know, since 1990 and many of these

things have been on there right from the very beginning. We need

to have people accountable for getting this thing off of there, so we

don’t have to come up each year and give the Congress a new and

somewhat augmented list.

The third thing that we’re doing is paying particular attention to

human capital in the annual performance plans. Too often the

human capital, the personnel aspect, has been seen as just yet another functional area to be stove-piped and, OK, we’ll have the personnel office kind of write us some nice goals. And that’s not to

deprecate those; those can be important goals, but they’re not integrated into the programmatic thinking that is taking place in the

agencies.

Then, I guess the final area we are spending a lot of attention

on are the performance management aspects, as to how do we specifically link programmatic outcomes to day-to-day difficulties within agencies? We’ve had a lot of discussion here about the budget

aspect of that. We’re focused on a lot of the incentives that are

given to managers and how individual managers are held accountable.

Mr. HORN. The General Accounting Office has found that the

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clined since 1997. What do you think might have caused that decline and how might Congress help resolve the problem?

Mr. MIHM. Well, the finding that you’re mentioning there is from

our survey of Federal managers, and it is one of the most disturbing aspects of the responses that we get.

We surveyed managers in 1997 and again in 2000. As you indicate, we have got lower levels of reported use of performance information in a variety of very important categories, that is, managers

using it to allocate resources, to set program priorities, to coordinate with cost-cutting programs, which has been a major topic of

discussion here today.

And what was most disturbing about that, Mr. Chairman, is, we

were asking, if you will, a methodologically impure question; that

is, we were asking managers to report on themselves which—my

colleagues have designed questionnaires saying, you never want to

do that because you’ll always get an inflated and more positive answer because you know people will try and give you what they

think you want to hear—we still got bad responses so that kind of

even heightened my concern on that. We’re getting behind the data

to try and find out what’s going on.

I think one of the problems—there’s a couple of things that can’t

be going on there. One is that we’re—whereas in the early years

of GPRA—that is, in 1993–94 up through 1997—we had an awful

lot of attention, a lot of congressional attention, certainly a lot of

attention, at least a lot of rhetorical attention, from OMB, over the

last couple of years there hasn’t been an equivalent level of attention.

It runs the very real risk of becoming, as Mr. O’Keefe was mentioning, a paperwork-driven exercise in agencies that becomes overly focused on measurement and not focused on what it really ought

to be about, which is agencies in Congress engaging in conversations about, what are we trying to achieve, how are we doing and

how are we improving performance? Which gets directly to the second part of your question, what can Congress do on this?

The single most important thing that Congress can do is continue to have oversight hearings like this, continue to bring up performance and performance-related questions and programmatic

oversight when you meet with the people from GSA and the other

committees under—or other agencies under this subcommittee’s jurisdiction, and certainly in your appropriation capacities to start or

to continue to ask performance-related questions during the budget

process. People’s hearts and minds will follow when they see congressional leadership on that and OMB leadership.

Mr. HORN. Couldn’t you think of a sort of matrix-type questionnaire where you get the managers of the Federal Government to

say not what they do, but what they think the other managers do?

And I think we could get a lot of data from that, where they

wouldn’t be saying, I did it. Don’t put bars in the State and all

that. But it just seems to me that’s the way to get at it and not

say, ‘‘this is what I do or don’t do, but my, you know, fellow manager does that.’’ Mr. MIHM. We did ask a series of questions related to that about

the extent to which top leadership and their agency used performance information for a variety of tasks. We even asked questions,

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and I’ve conveniently forgotten the responses, about whether or not

they felt GAO was using performance information in assessing

their progress. As I said, it can be newly forgotten, the responses

to that particular question. But we do try and tease that out from

them.

Mr. HORN. And have you identified any of the positive trends, as

opposed to the negative trends between this year’s performance reports and last year’s? Is there anything that’s making that difference?

Mr. MIHM. I think we’re seeing a couple of things that are positive, in our view. We see—while the weaknesses in agency data

certainly continues to be a very real problem—greater attention by

agencies within their annual performance plans and reports to explaining those data limitations, to being able to tell Congress and

other stakeholders and decisionmakers, here are the decisionmaking consequences of this poor data. So that’s one positive

achievement.

Second, we’re seeing greater attention to cost-cutting programs

and the need to effectively coordinate those cost-cutting programs— still very much a work in progress. We don’t have the common performance measures for similar functions that Mr. McTigue and Mr.

Mercer mentioned, but at least we’re getting recognition that other

agencies are involved.

Third, a lot of the effort that’s been expended over the last few

years to try and get agencies to articulate outcome-oriented sets of

goals is beginning to pay off. We do have some—as Mr. O’Keefe

mentioned, there are still the world peace or what typically is also

known as the ‘‘end world hunger’’ goals where, you know, just give

us more money and we promise hunger goes away.

I think those are becoming fewer and farther between. We are

seeing greater understanding of agencies that they need to focus on

results.

The real problem that we’re still seeing within agencies is this

linking daily activities, linking budgets, linking the use of resources to results that take place outside those agencies. That is

still the fundamental struggle that they’re facing.

Mr. HORN. The ability to link performance information to cost

seems to be the common failure. What solution would you suggest?

Mr. MIHM. Well, I think one of the single most important things

we need to do is to continue to put pressure on agencies to effectively implement the statutory framework that Congress has done.

In getting back a little bit to Mr. Putnam’s question about, are

there structural changes, my view is that Congress has done its

part. It’s now up to the executive branch agencies; and Congress

can still do more and OMB can do more. It’s up to them to step

up to the plate.

Congress has made known, through FFMIA, that the cost accounting standards are to be implemented. As Mr. Mercer mentioned, we’re still quite a ways away from there. We’re still, as Mr.

O’Keefe mentioned, quite a ways away from agencies even being

able to produce clean audit opinion.

As you well know, we chair—the Comptroller General sits basically in this chair and explains why we offer a disclaimer on the

government-wide financial statement.

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So we need to still, as a Federal Government, continue to make

progress in implementing the statutory framework, the tools that

Congress has already given to agencies. We can explore whether

other tools are needed, but that’s the first step. Let’s implement

what Congress has already told us to implement.

Mr. HORN. Some of us believe in moving to a 2-year budget appropriations cycle. How does the Comptroller General of the United

States feel about that? Do we know?

Mr. MIHM. I don’t know sir. I know we have testified on it. And

rather than give you something that I would have to correct for the

record, let me go back, find out and then get back to you immediately with the proper answer.

Mr. HORN. We’ll put it in the record at this point, without objection.

This will be my last question to you.

Some programs produce their benefits on an annual basis, while

other government programs, such as those that conduct research

and development, find it more difficult to estimate the timing of

the scientific discovery. That’s obvious—or the measure of a result

from a research program.

And do you have any advice on how the government agencies

that conduct these types of programs can provide meaningful performance metrics? And that would be Agriculture, NIH, HHS, some

of the others, or social science and so forth; what’s your feeling on

that?

Mr. MIHM. Actually I’ll start and say, there are provisions within

the Government Performance and Results Act that allow for agencies to use qualitative goals, or even with the authorization of

OMB, where it’s characterized as the alternative form of measurement. The National Science Foundation is one agency.

At GAO we use a qualitative goal as the alternative form of

measurement. That is exactly designed to get at situations where

the performance, or the outcome, is exceedingly hard to measure

and where the outcome takes place or can be achieved over years.

Just to really drive home the point you were making in the question, Mr. Chairman, I was once talking with someone from the National Science Foundation, and they put it to me in a very direct

way; they said, how do we set annual performance goals this year

for people who are going through post-doctoral fellowships in part

funded or supported for National Science Foundation when their

outcome will be the discovery of cures for diseases 20 and 25 years

from now that we don’t even know the name of yet, because the

people that are now doing cutting-edge AIDS research were in postdoc programs before we even know AIDS existed? So how do we set

goals like that?

Well, there has been work on that. And the National Science

Foundation has done quite a bit of work on this alternative form

of measurement.

The key thing that we advise agencies is, don’t turn this into a

technical debate. Sit down with Congress, sit down with the authorizers, sit down with the appropriators and your other stakeholders and develop a common understanding about how progress

will be measured, what we’re trying to achieve, how we’re going to

know we’re on the right track. If agencies do that, then they’ve

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done GPRA the way GPRA should be done and have not turned it

merely into a measurement exercise.

Mr. HORN. You’re very right on that. And that’s exactly what we

want to do.

Yes, Mr. Mercer.

Mr. MERCER. I’d like to respond to that same question. Two

thoughts: First, to echo what Mr. Mihm just pointed out, that the

statute actually does envision alternative forms of measurement

other than objective, quantifiable, measurable, which is what it

prefers first and foremost. In wrestling with the notion of, what

kind of measurable goal would I expect from the State Department

for some of its diplomacy programs, I knew I had to have an escape

hatch in the legislation, something other than just throwing up

your hands and saying, well, we can’t measure anything.

So I took a whack at it, and it stayed in the law. It allows you

to come up with something on your own, but getting approval from

OMB first of all. Then it suggests one, and this is the one that’s

used.

It says, first define a successful program, you know, a written

narrative, a subjective statement. And then, being a little queasy

about leaving that in there just like that, thinking, well, you could

write something—‘‘we want to improve the quality of life of people

living below the poverty level’’ or some mushy thing. It says, you

have to have a second statement, and that is of a minimally effective program. In other words, presumably something that shows

some positive value, but not enough that you could call it a success.

In other words, success had to be measured in context; and the

context was something that was less by definition, less than successful, but not a total failure. Presumably, if it didn’t meet either

standard, then it would be a failure. It says, you have to write the

definitions in terms that would allow an outside, objective analysis

of looking at your program’s results for the year to be able to determine which of those categories it fit into.

As Mr. Mihm points out, the National Science Foundation has

made pretty good use of that. And, in fact, it’s probably one of the

most underutilized aspects of GPRA; and I hate to point it out, because I love to see measurable goals, but recognizing that’s not always possible, especially for outcomes.

Mr. HORN. Could you get us that section of the law that you had

something to say with? And we’ll put it in the record at this point.

Mr. MERCER. Sure. I’ll cite that.

But I’d like to answer more broadly because it’s an answer I give,

and it’s almost tongue in cheek, but I’m just sort of overstating it,

but it literally—there are some elements of truth to this test—

when confronted with a program that says, there aren’t ways, there

are not any good ways to measure the effectiveness of what I do,

when a manager says that for their program, then what we did in

Sunnyvale—though we did it more delicately than I will state it

here—you say to the manager, you’re saying that the nature of this

program that you manage is such that it’s not easy to come up with

measures of success?

He says, that’s right.

Well, we pay you a pretty good salary; but it occurs to me that

we could probably save ourselves a lot of money if we replaced you

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with somebody that we pay half as much, get somebody in here

pretty mediocre, because as you indicate, nobody could tell the difference.

Of course, at that point, the manager will start to give you ideas

on how to measure effectiveness. Because if you let them say that

this program can’t have goals for effectiveness, then what you’re

really saying is, we can’t tell the difference between excellence and

mediocrity.

If they can’t write down, using even the alternative format that

GPRA allows, a clear distinction that an objective observer looking

at the program could tell which category it fits into, if they can’t

tell the difference between excellence and mediocrity, then why

don’t we just slash our personnel budgets, hire a lot of

mediocritites and nobody is going to know the difference. We will

save ourselves some money.

That is usually a motivation for people to tell you what they’re

doing is really good, and you can measure it. Often it would be

somebody else complaining about it.

Mr. HORN. Mr. McTigue.

Mr. MCTIGUE. Mr. Chairman, just very briefly, the first thing is

that you should not absolve anybody from providing you with a

measure just because what they do is difficult to measure. There

are varieties of ways in which you can find surrogates which will

show, maybe not the progress on a particular program, but the

progress on a body of work, what’s happening to the volume of

knowledge that’s being acquired in this area. And I think that’s

very appropriate for places like the National Cancer Institute, the

science foundations, etc.

Getting into the detail that Mr. Mihm was referring to, in my

view, is a way of trying to escape being measured. In the private

sector, there’s a huge range of measures that are used to look at

research and development and technology development and taking

into account risk and the fact that not all of the investments are

going to produce a positive result.

So there is a whole body of knowledge there where the private

sector also uses surrogate measures to be able to show whether or

not there is value in these activities. So I think that it can be done.

The thing that’s important is that it should not be excused because

it’s difficult to do.

Mr. HORN. Thank you.

Mr. Mihm, anything to add?

Mr. MIHM. No, sir, unless you have additional questions.

Mr. HORN. If there are no additional comments, why we’re now

adjourned. The staff will be put together for Russell George, staff

director/chief counsel; Bonnie Heald, director of communications;

Earl Pierce, professional staff member; Scott Fagan, assistant to

the committee; Chris Barkley, staff assistant; Alex Hurowitz, Ryan

Sullivan, and Fariha Khaliq, interns.

Minority staff: Michelle Ash, minority counsel; Earley Green, assistant minority clerk; and Theresa Coufal, minority staff assistant.

And court reporter: Julie Thomas. Thank you, Julie, very much.

We appreciate it.

[Whereupon, at 4:48 p.m., the subcommittee was adjourned.]

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