NPR’s SAVINGS

Claimed Agency

Savings Cannot All Be

Attributed to NPR

United States General Accounting Office

GAO Report to the Chairman, Committee on

Government Reform

House of Representatives

July 1999

GAO/GGD-99-120

United States General Accounting Office General Government Division

Washington, D.C. 20548

Page 1 GAO/GGD-99-120 NPR’s Savings

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July 23, 1999

The Honorable Dan Burton

Chairman, Committee on Government Reform

House of Representatives

 Dear Mr. Chairman:

As you requested, this report discusses savings claims from the National

Performance Review, which has been renamed the National Partnership

for Reinventing Government (for both of which we use the acronym NPR)

and the methodologies that the Office of Management and Budget (OMB)

used in estimating these claims. NPR claimed that about $137 billion in

savings has resulted from its efforts to reinvent the federal government,

including about $34.3 billion in savings that is not expected to be realized

until fiscal years 1999 and 2000. Of the $137 billion in estimated savings,

about $44.3 billion was claimed from recommendations that were targeted

toward individual agencies. About $67.5 billion was claimed from

recommendations designed to be implemented governmentwide, and

another $24.9 billion was claimed from items not originated by NPR but,

according to NPR, were consistent with the principles of reinventing

government.

Our objective was to describe and assess how OMB estimated savings

from selected NPR recommendations targeted toward individual agencies.

We reviewed recommendations representing over two-thirds of the $44.3

billion in savings that NPR claimed had been achieved from its

recommendations to individual federal agencies. Specifically, we

examined the savings estimates for two recommendations each from three

agencies: the U.S. Department of Agriculture (USDA), the Department of

Energy (DOE), and the National Aeronautics and Space Administration

(NASA). (Appendixes I through VI contain detailed information on the six

recommendations.) The claims we reviewed at these three agencies

constituted about 22 percent of the total estimated savings from NPR. As

agreed with your office, we did not determine the amount of savings NPR

should have claimed but rather focused on describing how OMB estimated

savings from agency-specific recommendations, specifically these six

recommendations.

NPR claimed savings from agency-specific recommendations that could Results in Brief not be fully attributed to its efforts. OMB generally did not distinguish
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Page 2 GAO/GGD-99-120 NPR’s Savings

NPR’s contributions from other initiatives or factors that influenced

budget reductions at the agencies we reviewed. Therefore, the relationship

between the recommended action and the savings claimed from the

recommendations we reviewed was not clear. For example, OMB

attributed all $8.5 billion of expected reductions to NASA’s budget for

fiscal years 1996 through 2000 directly to NPR’s recommendation to

reinvent NASA but did not account for other factors that influenced

NASA’s budget during this period. Such factors included ongoing NASA

management reform initiatives undertaken separately from the NPR and

budgetary spending caps.

To estimate the savings from the agency-specific recommendations, OMB

said it used the same types of procedures and analytic techniques that

have long been used in developing the President’s budget. These

procedures and techniques are intended to support point-in-time budget

estimates that are based on policies and economic forecasts in effect at a

given time. As our previous reviews of budget estimates have shown, it is

difficult to reconstruct the specific assumptions used and track savings for

estimates produced several years ago.1

 Moreover, we have reported that it

is often impossible to isolate the impacts of particular proposals or

recommendations on actual savings achieved due to the multiple factors

involved. OMB relied on these point-in-time estimates rather than

attempting to measure actual savings. OMB last updated its estimates in

1997, so any changes that have occurred since then are not reflected in

NPR’s claimed savings.

We identified two instances where OMB counted at least part of the

estimated savings twice. OMB counted the same $770 million in estimated

savings for two different NPR initiatives—once for agency-specific

changes (from reorganizing USDA) and again as part of a NPR

governmentwide initiative to reduce the size of the federal workforce.

OMB also counted some savings twice—potentially up to $1.4 billion in

estimated savings—for two NPR recommendations we reviewed, one

made in 1993 to strengthen and restructure NASA management and

another made in 1995 to reinvent NASA. Therefore, the total estimated

savings from the USDA and NASA recommendations were overstated.

For one recommendation where OMB and the Congressional Budget Office

(CBO) both estimated savings, we found that offsetting program costs may

not have been fully included in OMB’s estimates. In estimating savings that

 

1

 NPR Savings Estimates (GAO/GGD/AIMD-96-149R, July 24, 1996) and Budget Process: Issues

Concerning the 1990 Reconciliation Act (GAO/AIMD-95-3, Oct. 7, 1994).
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Page 3 GAO/GGD-99-120 NPR’s Savings

resulted from personnel reductions at USDA (part of the NPR

recommendation to reorganize USDA), OMB and CBO considered different

offsetting costs and arrived at different estimates, with CBO’s estimate

being $324 million less than OMB’s $770 million estimate. According to

CBO, it assumed that severance benefits and relocation costs would

reduce the potential savings, while OMB assumed that the agency could

absorb those costs.

Consistent with OMB’s normal budget practices, OMB examiners generally

did not retain documentation when estimating NPR savings. The program

examiners were unable to document estimates for four of the six

recommendations we reviewed, constituting $21.8 billion in savings claims.

Instead, the OMB examiners attempted to reconstruct how they thought

the savings had been estimated through approximating rather than

replicating savings estimates. OMB had documentation for two of the

recommendations we reviewed. However, we found that the savings were

reported incorrectly, understating NPR’s estimated savings for those two

recommendations by about $1.9 billion.

The administration launched NPR in March 1993, when President Clinton

announced a 6-month review of the federal government to be led by Vice

President Gore. The first NPR report was released in September 1993 and

made recommendations intended to make the government “work better

and cost less.”2

 The first NPR phase, called NPR I, included

recommendations to reinvent individual agencies’ programs and

organizations. It also included governmentwide recommendations for (1)

reducing the size of the federal bureaucracy, (2) reducing procurement

costs through streamlining, (3) reengineering processes through the better

use of information technology, and (4) reducing administrative costs. The

estimates for NPR I savings covered fiscal years 1994 through 1999.

Vice President Gore launched the second NPR phase (called NPR II) in

December 1994 and reported on this phase’s savings estimates in

September 1995.3 According to NPR, this second phase expanded the

agenda for governmental reform. NPR II efforts focused on identifying

additional programs that could be reinvented, terminated, or privatized, as

well as on reinventing the federal regulatory process. The estimates for

NPR II savings covered fiscal years 1996 through 2000.

 

2

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

National Performance Review, Vice President Al Gore, September 7, 1993.

3

Common Sense Government: Works Better and Costs Less, third report of the National Performance

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

Background
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Page 4 GAO/GGD-99-120 NPR’s Savings

As shown in table I, NPR claimed estimated savings of $82.2 billion from

NPR I recommendations. NPR similarly reported that $29.6 billion had

been “locked into place” from program changes in individual agencies

under NPR II.

Source of estimated savings Amount of estimated savings claimed

 (in billions) a

NPR I

Reducing the size of the bureaucracy $54.8

Reducing procurement costs and

reengineering information technology

12.7

Program and organizational changes in

individual agencies 14.7

 Subtotal of estimated savings from NPR I 82.2

NPR II

Program changes in individual agencies 29.6

Total estimated savings claimed from

NPR I and II recommendations

$111.8

a

OMB estimated savings for NPR I in 1993 and for NPR II in 1995. It updated its savings database in

1996 and again in 1997.

Sources: NPR’s web page (www.npr.gov), as of October 15, 1997, and OMB data.

In addition to the $111.8 billion NPR claimed from the NPR I and II

recommendations, NPR claimed $24.9 billion in estimated savings based

on reinvention principles. These additional claimed savings included, for

example, $23.1 billion from the Federal Communications Commission’s

auctions of wireless licenses. This $24.9 billion brings the total amount of

reinvention savings claimed by NPR to about $137 billion. This $137 billion

savings figure is the one NPR most commonly cites as the savings it has

achieved.

NPR relied on OMB to estimate the savings it claimed from its NPR I and II

recommendations. OMB’s program examiners were responsible for

developing the estimates in their role as focal points for all matters

pertaining to their specific assignment area. One of the examiners’ major

duties is to oversee the formulation and execution of the budget process.

They are also expected to perform legislative, economic, policy, program,

organizational, and management analyses. OMB made the initial estimates

for the 1993 and 1995 NPR reports and updated its database on the savings

claimed in the summers of 1996 and 1997. These updates, according to an

OMB official, were primarily to ensure that all the estimates for

recommendations that NPR considered implemented were included in the

total amount of savings claimed.

Table 1: Estimated Savings Claimed

from NPR Recommendations
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Page 5 GAO/GGD-99-120 NPR’s Savings

To describe and assess how OMB estimated the savings from NPR, we

focused on three agencies (USDA, DOE, and NASA), where relatively large

savings were claimed and that provided a variety of types of actions taken.

At each agency, we selected two recommendations with claims of at least

$700 million in savings each. The six recommendations we reviewed

accounted for $10.45 billion of the $14.7 billion claimed from changes in

individual agencies under NPR I and $19.17 billion of the $29.6 billion

claimed from NPR II savings. Overall, the claimed savings from the

recommendations we reviewed accounted for over two-thirds of the $44.3

billion in savings claimed from NPR’s recommendations to individual

agencies and 22 percent of the total amount of NPR’s savings claims.

Following is a listing of the six recommendations we reviewed and the

estimated savings, in millions of dollars, that NPR claimed for each of

those recommendations. (See apps. I through VI for detailed information

on each of the recommendations.)

• reorganize USDA to better accomplish its mission, streamline its field

structure, and improve service to its customers ($770 million);

• end USDA’s wool and mohair subsidy ($702 million);

• redirect DOE laboratories to post-Cold War priorities ($6,996 million);

• realign DOE, including terminating the Clean Coal Technology Program;

privatizing the naval petroleum reserves in Elk Hills, CA; selling uranium

no longer needed for national defense purposes; reducing costs in DOE’s

applied research programs; improving program effectiveness and

efficiencies in environmental management of nuclear waste cleanups; and

strategically aligning headquarters and field operations ($10,649 million);

• strengthen and restructure NASA management, both overall management

and management of the space station program ($1,982 million); and

• reinvent NASA, including eliminating duplication and overlap between

NASA centers, transferring functions to universities or the private sector,

reducing civil service involvement with and expecting more accountability

from NASA contractors, emphasizing objective contracting, using private

sector capabilities, changing NASA regulations, and returning NASA to its

status as a research and development center ($8,519 million).

Since these recommendations are not representative of all NPR

recommendations, our findings cannot be generalized to apply to other

savings claimed by NPR. As agreed with your office, we did not

independently estimate the actual amount of savings achieved from these

six recommendations.

Scope and

Methodology
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Page 6 GAO/GGD-99-120 NPR’s Savings

We interviewed NPR and OMB officials about how they estimated and

claimed savings and also requested relevant documentation. We also

examined a database OMB maintained showing the amount of savings

achieved from the recommendations. The NPR I data covered fiscal years

1994 through 1999, and the NPR II data covered fiscal years 1996 through

2000. Both sets of data were most recently updated in the summer of 1997.

We reviewed NPR data, including a description of the status of the

recommendations and reports containing background information, on the

three agencies and the relevant recommendations where available. We also

interviewed officials from these agencies about the savings OMB estimated

for the recommendations we reviewed.

We conducted our review in Washington, D.C., from April 1998 through

February 1999 in accordance with generally accepted government auditing

standards. We requested comments on a draft of this report from OMB, the

Departments of Agriculture and Energy, and NASA. These comments are

discussed at the end of this letter.

OMB generally did not distinguish between NPR’s and other contributions

for the agency-specific recommendations we reviewed. NPR attempted to

build on prior management reforms and operated in an atmosphere where

other factors, such as agencies’ ongoing reforms as well as the political

environment, also influenced actions taken to address NPR’s

recommendations. The relationship between the recommendations we

reviewed and the savings claimed was not clear because OMB attributed a

broad range of changes to NPR.

Savings estimated from the recommendation to reinvent NASA illustrate

how OMB attributed a broad range of changes to NPR and did not

distinguish NPR’s contribution from other factors. To estimate savings for

that recommendation, OMB consolidated seven somewhat related

recommendations into one savings estimate of $8.519 billion. OMB

estimated savings by totaling expected reductions to NASA’s entire budget

for fiscal years 1996 through 2000. According to a NASA official, NASA’s

funding during this period was limited as the result of several initiatives,

including direction from the NASA administrator that began before NPR

was initiated and congressionally imposed spending caps. Nevertheless,

OMB attributed all of the $8.519 billion in savings from estimated

reductions in the entire NASA budget to NPR.

OMB followed similar procedures in estimating savings from the other

NPR recommendation concerning NASA that we reviewed—the

recommendation to strengthen and restructure NASA management. The

The Relationship

Between NPR

Recommendations and

Agency Savings Claims

Was Not Clear
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Page 7 GAO/GGD-99-120 NPR’s Savings

examiner estimated savings of $1.982 billion on the basis of expected

reductions in funding levels for one of NASA’s three budget accounts for

fiscal years 1994 through 1999. The estimated savings were based on

expectations for lower levels of budget authority due to the combined

effects of several factors, such as budgetary spending caps and ongoing

NASA management reform efforts.

In the case of the NPR recommendation for DOE to shift its laboratory

facilities’ priorities in response to conditions that accompanied the end of

the Cold War, NPR recognized that changes were already under way. For

example, as part of this recommendation, NPR called for DOE to

“continue” the reduction of funding for nuclear weapons production,

research, testing programs, and infrastructure. Considering the

comprehensive nuclear test ban treaty agreements and other factors, it

was apparent that the DOE laboratories’ priorities would have changed

regardless of whether NPR had made the recommendation. However, as

figure 1 shows, when OMB estimated savings from this recommendation, it

credited all savings from estimated reductions in the weapons activity

budget account ($6.996 billion) to NPR.
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Page 8 GAO/GGD-99-120 NPR’s Savings

Note: OMB used budget data based on actual numbers through fiscal year 1997 and budget

estimates for fiscal years 1998 and 1999.

Source: GAO analysis of OMB data.

Similarly, efforts related to NPR’s recommendation to reorganize USDA

were under way prior to or simultaneously with the NPR recommendation.

These efforts included USDA reorganization plans and the introduction of

legislation to streamline USDA. For example, the Federal Crop Insurance

Reform and Department of Agriculture Reorganization Act of 1994 (P.L.

103-354, Oct. 13, 1994), required USDA to reduce the number of federal

staff years by at least 7,500 by the end of fiscal year 1999. Therefore,

USDA’s reorganization could be viewed as part of a continuous

management improvement effort. OMB attributed the entire $770 million in

estimated savings it reported from USDA’s staffing reductions to NPR.

In contrast, the relationship between the recommended action and the

estimated savings was relatively straightforward for the NPR

recommendation to end USDA’s wool and mohair subsidy program. In that

Figure 1: Savings OMB Estimated From

NPR’s Recommendation to Redirect

DOE Laboratories’ Priorities
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Page 9 GAO/GGD-99-120 NPR’s Savings

case, program costs, primarily subsidy amounts that were reduced by

phasing out the program and subsequently eliminated by ending the

program, were counted as savings.

According to OMB, the procedures and techniques it used to estimate NPR

savings were those that it commonly follows in developing the President’s

budget. Therefore the NPR savings estimates were to provide a “snapshot”

showing the amount of savings OMB expected would result from the

recommendations. For example, in 1993, OMB projected savings from the

NPR recommendation to strengthen and restructure NASA management

covering fiscal years 1994 through 1999. OMB characterized these

estimated savings as achieved in 1996, and NPR has continued to report

these estimated savings (based on the 1993 estimate) as achieved. More

generally, OMB’s savings estimates for agency-specific recommendations

included about $34.3 billion in savings that were not expected to be

realized until fiscal years 1999 and 2000. OMB last updated its estimates in

1997, so any changes that have occurred since then are not reflected in

NPR’s claimed savings.

OMB’s budget estimating procedures and techniques use policies and

economic forecasts in effect at a given time. The estimates OMB prepared

for NPR initiatives involved projecting changes from a given baseline and

identifying the difference as savings. OMB said that it generally used a

fiscal year 1994 current services baseline for the NPR I agency-specific

recommendations and a fiscal year 1996 Omnibus Budget Reconciliation

Act baseline for the NPR II recommendations. OMB said, however, that in

both cases, program examiners could use other savings baselines where

the examiners believed it made better sense for a particular program or

NPR recommendation. The OMB examiners also had latitude in

determining the most appropriate analytical approach to use, based on

their knowledge of the agency and the specific characteristics of the

individual NPR recommendation.

Our prior reviews of budget estimates have shown that it is difficult to

reconstruct the specific assumptions used or to track savings for estimates

produced several years ago. As we reported in 1996, once an estimate is

prepared and time passes, it becomes difficult to retrace the original steps

and reconstruct events in order to replicate the original estimate.4

Moreover, it is often difficult to isolate the impacts of particular proposals

on actual savings achieved due to the multiple factors involved. In our 1994

report on issues concerning the 1990 Reconciliation Act, we found that it is

 

4

 GAO/GGD/AIMD-96-149R, July 24, 1996.

OMB Used Standard

Budget Estimating

Techniques to Estimate

Savings
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Page 10 GAO/GGD-99-120 NPR’s Savings

generally not possible to identify or track precise savings by isolating the

budgetary effects of individual provisions from the effects of other factors

such as intervening actions or subsequent legislation.5

In two instances, OMB counted some of the estimated savings NPR

claimed twice. In the first instance, OMB counted the same estimated

savings on two different NPR I initiatives—once for agency-specific

changes (from reorganizing USDA) and again as part of a NPR

governmentwide initiative to reduce the bureaucracy. In the second

instance, OMB appears to have counted the same savings twice when

separately estimating savings from the two NASA recommendations we

reviewed. Therefore, the total estimated savings NPR claimed in both of

these instances were overstated.

OMB estimated that $770 million in cost savings resulted from NPR’s

recommendation to reorganize USDA on the basis of workforce

reductions. OMB also counted these workforce reductions when

estimating the total of $54.8 billion in savings NPR claimed from its

governmentwide initiative to reduce the size of the bureaucracy. While

acknowledging that this occurred, OMB officials stated that the level of

double counting appeared to be quite small in relation to total NPR

savings—less than 1 percent of the total savings claimed from NPR

recommendations. They said that the double counting was small because

the recommendation to reorganize USDA was the only agency-specific

recommendation with a significant staffing effect.

However, OMB officials told us that they had not established a mechanism

to prevent double counting from savings claimed for the agency-specific

recommendations and from the governmentwide initiative. Officials from

the other two agencies we reviewed—DOE and NASA—said that their staff

also had been reduced and counted as part of the savings claimed for the

agency-specific recommendations to streamline DOE and strengthen

NASA management. Therefore, in the absence of OMB processes to guard

against including savings from personnel reductions in both agencyspecific and governmentwide savings claims, additional double counting of

workforce reductions could have occurred.

In the second instance, a portion of the estimated savings appears to have

been counted twice for two NASA recommendations we reviewed, one

from NPR I (to strengthen and restructure NASA management) and the

other from NPR II (to reinvent NASA). Some of the actions NPR

 

5

 GAO/AIMD-95-3, Oct. 7, 1994.

Some Estimated NPR

Savings Were Claimed

Twice
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Page 11 GAO/GGD-99-120 NPR’s Savings

recommended, such as restructuring NASA centers, were components of

both the NPR I and NPR II recommendations. The OMB examiner

acknowledged that some of the savings could have been counted twice and

that there was no mechanism to distinguish the sweeping changes that

were occurring at NASA. She said that the NPR II recommendation built on

the NPR I recommendation. NASA officials also said that they were not

able to assign savings precisely to one recommendation or the other

because the recommendations were similar and there was no clear

demarcation where one ended and the other began.

OMB estimated savings from the NPR I recommendation for fiscal years

1994 through 1999 and from the NPR II recommendation for fiscal years

1996 through 2000. Estimated savings from both recommendations were

included when OMB aggregated total NPR-estimated savings. As figure 2

shows, a portion of the savings claimed from these two recommendations

overlapped during fiscal years 1996 through 1999. For those years, claimed

savings totaled about $7 billion (about $1.6 billion from the NPR I

recommendation and about $5.4 billion from the NPR II recommendation).

OMB appears to have counted some portion of that amount twice—

potentially up to $1.4 billion. The NPR savings claims in these two

instances were overstated.
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Page 12 GAO/GGD-99-120 NPR’s Savings

a. No savings were claimed in 1994 for the NPR I recommendation.

Source: GAO analysis of OMB estimates.

OMB and CBO both estimated savings for the recommendation to

streamline USDA, and these estimates differed. While OMB estimated the

savings to be $770 million, CBO’s estimate was $446 million—a difference

of $324 million. We did not evaluate the differences between these

estimates. However, according to a November 15, 1993, letter from the

CBO director to the then House Minority Leader, CBO’s estimate differed

from OMB’s “. . . with respect to the costs associated with severance

benefits and relocation. While the administration assumes that agency

baseline budgets are large enough to absorb these costs, CBO assumes

that the costs would reduce the potential savings. The administration also

estimates larger savings in employee overhead costs.” According to CBO,

due to the differences in the consideration of offsetting costs, OMB’s

estimate for the 5-year budget period (fiscal years 1994 through 1998)

exceeded CBO’s estimate by $324 million.

OMB provided documentation showing that, in fiscal year 1996 and again

in fiscal year 1997, OMB factored “up-front” costs of $40 million into the

Figure 2: Potential Overlap in Estimated Savings From NASA Recommendations

Offsetting Costs May

Not Have Been Fully

Included
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Page 13 GAO/GGD-99-120 NPR’s Savings

estimates it reported. The responsible OMB branch chief stated that

although he did not recall what the up-front costs for this recommendation

specifically encompassed, these costs typically consist of buyouts (i.e.,

financial incentives of up to $25,000 for employees who voluntarily leave

the federal government), lease breakage costs, and moving expenses.

According to OMB, consistent with its normal budget practices, OMB

examiners generally did not retain documentation for NPR savings

estimates. The budget examiners were unable to document estimates for

four of the six recommendations we reviewed, constituting $21.8 billion in

savings claims. Instead, the OMB examiners attempted to reconstruct how

they thought the savings had been estimated through approximating rather

than replicating savings estimates.

OMB did, however, provide documentation on the estimated savings for

two of the six recommendations we reviewed. These recommendations

were to reorganize USDA (with estimated savings of $770 million) and to

redirect the DOE laboratories’ priorities (with estimated savings of $6.996

billion). Even when documentation for the NPR savings estimates was

available, OMB could not always provide complete information about how

the estimates were calculated. For example, the responsible OMB branch

chief could not specifically remember what comprised the up-front costs

shown on documentation for the recommendation to reorganize USDA.

The NPR savings claims for both cases where OMB provided

documentation were reported incorrectly. These errors led NPR to

understate the estimated savings from those recommendations. One of the

errors involved a math mistake that affected the amount of savings

claimed. When updating the estimate, a subtraction error led to $10 million

in estimated savings being omitted from the total claimed for the

recommendation to redirect the DOE laboratories’ priorities. The other

error occurred because savings of $1.859 billion that the examiner

estimated would occur from the recommendation to reorganize USDA for

fiscal years 1997 through 1999 were not reported.

NPR claimed savings from agency-specific recommendations that could

not be fully attributed to its efforts. In general, the savings estimates we

reviewed could not be replicated, and there was no way to substantiate the

savings claimed. We also found that some savings were overstated

because OMB counted savings twice, and two of the estimates were

reported incorrectly, resulting in claims that were understated.

OMB Lacked

Documentation and

Reported Estimates

Incorrectly

Conclusions
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Page 14 GAO/GGD-99-120 NPR’s Savings

We requested comments on a draft of this report from the Director of

OMB, the Secretaries of Agriculture and Energy, and the NASA

Administrator, or their designees. On June 14, 1999, we met with OMB staff

who provided clarifying and technical comments on the draft report. We

incorporated their suggestions in this report where appropriate.

We obtained written comments on the draft report from the Director of

USDA’s Office of Budget and Program Analysis. He said that a loan

program for mohair producers established in fiscal year 1999 provides

substantially different incentives than the original wool and mohair

program. His letter stated that the costs associated with the 1999 program

did not negate the savings derived from eliminating the earlier program. As

a result, we eliminated our discussion concerning this loan program from

the report.

We also obtained written comments on the draft report from DOE’s

Controller. She said that OMB’s use of the weapons activity budget

account to estimate savings from the recommendation to redirect the

energy laboratories to post-Cold War priorities is more reasonable than is

implied by the report. She explained that while the title of the NPR

recommendation suggests that only laboratories would be affected by the

recommendation, related NPR information indicates that the

recommendation affected facilities beyond just the laboratories. We added

language to the report recognizing that the recommendation, although

focused on the laboratories, did include actions to reduce the production

and testing of nuclear weapons. Secondly, she said that DOE had

progressed beyond the status NPR reported for the initiatives included in

the recommendation to realign DOE, and we included the updated

information in appendix IV.

On June 2, 1999, a NASA official reported that NASA had no comments on

our draft report.

As agreed, unless you announce the contents of this report earlier, we plan

no further distribution until 30 days from the date of this letter. At that

time, we will send copies of this report to Representative Henry A.

Waxman, Ranking Minority Member of the House Government Reform

Committee and to Senator Fred Thompson, Chairman, and Senator Joseph

I. Lieberman, Ranking Minority Member, of the Senate Governmental

Affairs Committee. We will also send copies to the Honorable Jacob J.

Lew, Director of OMB; Mr. Morley Winograd, Director of NPR; the

Honorable Daniel R. Glickman, Secretary of Agriculture; the Honorable

Bill Richardson, Secretary of Energy; and the Honorable Daniel S. Goldin,

Agency Comments and

Our Evaluation
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Page 15 GAO/GGD-99-120 NPR’s Savings

Administrator of NASA. We will also make copies available to others on

request.

Major contributors to this report appear in appendix VII. Please contact

me or Susan Ragland, Assistant Director, on (202) 512-8676 if you have

questions about this report.

Sincerely yours,

J. Christopher Mihm

Associate Director

Federal Management and Workforce Issues
Page 16 GAO/GGD-99-120 NPR’s Savings

Contents

1 Letter

18

NPR Recommendation 18

Key Actions Reported 18

Methodology Used to Estimate Savings 18

Appendix I

Reorganize USDA

19

NPR Recommendation 19

Key Actions Reported 19

Methodology Used to Estimate Savings 19

Appendix II

End the Wool and

Mohair Subsidy

20

NPR Recommendation 20

Key Actions Reported 20

Methodology Used to Estimate Savings 20

Appendix III

Redirect DOE's

Laboratories to PostCold War Priorities

21

NPR Recommendation 21

Key Actions Reported 21

Methodology Used to Estimate Savings 21

Appendix IV

Summary of Savings

From Realigning DOE

22

NPR Recommendation 22

Key Actions Reported 22

Methodology Used to Estimate Savings 22

Appendix V

Strengthen and

Restructure NASA

Management

23

NPR Recommendation 23

Key Actions Reported 23

Methodology Used to Estimate Savings 23

Appendix VI

Reinvent NASA
Contents

Page 17 GAO/GGD-99-120 NPR’s Savings

Appendix VII

GAO Contacts and

Staff

Acknowledgments

24

Table 1: Estimated Savings Claimed from NPR

Recommendations

4

Table I.1: Claimed Savings 18

Table II.1: Claimed Savings 19

Table III.1: Claimed Savings 20

Table IV.1: Claimed Savings 21

Table V.1: Claimed Savings 22

Table VI.1: Claimed Savings 23

Tables

Figure 1: Savings OMB Estimated From NPR’s

Recommendation to Redirect DOE Laboratories’

Priorities

8

Figure 2: Potential Overlap in Estimated Savings From

NASA Recommendations

12

Figures

Abbreviations

CBO Congressional Budget Office

DOE Department of Energy

FTE full-time equivalent

NASA National Aeronautics and Space Administration

NPR National Performance Review

OMB Office of Management and Budget

PMC Program Management Council

R&D research and development

USDA United States Department of Agriculture
Appendix I

Reorganize USDA

Page 18 GAO/GGD-99-120 NPR’s Savings

In September 1993, NPR recommended that USDA be reorganized to better

accomplish its mission, streamline its field structure, and improve service

to its customers. NPR had recommended that USDA reorganize its

structure, submit legislation to enact the reorganization, and review its

field office structure to eliminate and restructure those elements no longer

appropriate.1

NPR reported that USDA has made progress towards reorganizing at its

headquarters and field office structure. USDA submitted reorganization

legislation, and Congress enacted the Federal Crop Insurance Reform and

Department of Agriculture Reorganization Act of 1994 (P.L. 103-354) on

October 13, 1994. The reorganization at the headquarters level has reduced

the number of agencies from 43 to 29 and has established 7 “mission areas”

to carry out program responsibilities.2

 USDA also implemented a field

office streamlining plan that consolidates the county-based agencies to

provide services to customers from all agencies at one location. This effort

is to result in streamlining the number of field office locations from over

3,700 to 2,550. As of May 1998, the total number of field office locations

had been reduced to about 2,700.

Dollars in millions

1994 1995 1996 1997 1998 1999 Total

OMB estimate 130 355 285 0 0 0 770

Source: OMB, revised estimates as of summer 1996.

OMB officials stated that savings for this recommendation were derived

solely from the number of full-time equivalent (FTE) reductions USDA

made.3

 OMB took the difference between the fiscal year 1994 current

services baseline and actual and updated reductions and then multiplied

that amount by an average salary that was comprised of both headquarters

and field office salary data. From that amount, OMB subtracted offsetting

costs. OMB officials provided documentation on how these savings were

estimated.

 

1

 USDA’s structure consists of headquarters, regional, state, and county-based offices.

2

 USDA is composed of various component agencies, including the Forest Service, the Farm Service

Agency, and the Natural Resources Conservation Service. Mission areas are groupings of agencies at

USDA that perform a common function. For example, the Natural Resources and Environment Mission

Area is comprised of the Forest Service and the Natural Resources Conservation Service.

3

 FTEs are used to measure civilian employment, and 1 FTE is equal to 1 workyear of 2,080 hours.

NPR Recommendation

Key Actions Reported

Table I.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix II

End the Wool and Mohair Subsidy

Page 19 GAO/GGD-99-120 NPR’s Savings

In September 1993, NPR recommended that USDA end this subsidy

program, which was implemented in 1954 to increase domestic production

of wool by providing direct payments to farmers. At that time, Congress

declared wool a strategic commodity to reduce dependence on foreign

fibers, which was caused by imports needed during World War II and the

Korean conflict. NPR said that this subsidy was outdated, since wool was

no longer a strategic commodity.

NPR reported that this subsidy had been eliminated as a result of

legislation amending the National Wool Act of 1954 (P.L. 103-130,

November 1, 1993). The act mandated the reduction of subsidies during

fiscal years 1994 and 1995 and the elimination of subsidies for fiscal year

1996. Payments were reduced by 25 percent in fiscal year 1994, 50 percent

in fiscal year 1995, and eliminated entirely beginning in fiscal year 1996.

Dollars in millions

1994 1995 1996 1997 1998 1999 Total

OMB estimate 0 47 103 183 181 188 702

Source: OMB, revised estimates as of summer 1996.

In response to our questions, although they were unable to provide

documentation on how savings were estimated, OMB generally could

reconstruct how savings would have been estimated. This involved

subtracting the payments that farmers were receiving as a result of the

subsidy reductions mandated in P.L.103-130 from the amount of subsidies

that were projected to have been paid, had the legislation not been

enacted, for fiscal years 1994 through 1999. OMB said that the source of

the projected subsidy information was 1993 data from the Commodity

Credit Corporation, which analyzes budget projections and assumptions.

NPR Recommendation

Key Actions Reported

Table II.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix III

Redirect DOE's Laboratories to Post-Cold War

Priorities 

Page 20 GAO/GGD-99-120 NPR’s Savings

In 1993, NPR recommended that DOE shift laboratory facilities’ priorities

to accommodate conditions that accompanied the end of the Cold War—

such as the dramatic decrease in the arms race and cutbacks in defenserelated energy and nuclear research funding. NPR recommended, among

other things, that DOE continue to reduce funding for nuclear weapons

production, research, testing programs, and infrastructure that are needed

to meet current defense requirements; develop a vision for the DOE

laboratory complex; and encourage laboratory managers to work with the

private sector on high-priority research and development (R&D) needs.

NPR reported that DOE is restructuring and refocusing its laboratories by

developing new strategic plans and implementing a science-based

stockpile stewardship program. The stockpile stewardship program is

designed to support the testing of nuclear weapons in a safe manner as

directed by the comprehensive nuclear test ban treaty, which banned the

production of nuclear weapons after the Cold War. DOE has also

established the Laboratory Operations Board and the R&D Council. These

organizations study the use of government/private partnerships to increase

productivity of DOE R&D programs.

Dollars in millions

1994 1995 1996 1997 1998 1999 Total

OMB estimate 991 1,519 1,409 1,077 1,000 1,000 6,996

Source: OMB, revised estimates as of summer 1997.

OMB calculated savings for redirecting energy laboratories to post-Cold

War priorities by taking the difference in the weapons activities budget

account between the fiscal year 1994 current services baseline and the

actual appropriations for that fiscal year and counting the savings through

fiscal year 1999. The DOE laboratories’ budget is subsumed within the

weapons activities account of the President’s budget. This account

includes R&D to support the safety and reliability of the nuclear weapons

stockpile as well as personnel and contractual services for certain defense

programs’ missions. OMB considered DOE laboratories as well as the

entire weapons complex, of which the laboratories are a component, when

estimating savings for this recommendation. OMB officials provided

documentation on how these savings were estimated.

NPR Recommendation

Key Actions Reported

Table III.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix IV

Summary of Savings From Realigning DOE

Page 21 GAO/GGD-99-120 NPR’s Savings

In 1995, NPR had six recommendations concerning realignment of DOE.

NPR consolidated reporting on these recommendations for purposes of

developing savings estimates. These recommendations were to (1)

terminate the Clean Coal Technology Program; (2) privatize the naval

petroleum reserves in Elk Hills, CA; (3) sell uranium no longer needed for

national defense purposes; (4) reduce costs in DOE’s applied research

programs; (5) improve program effectiveness and efficiencies in

environmental management of nuclear waste cleanups; and (6)

strategically align headquarters and field operations.

NPR reported that DOE has implemented actions consistent with these

recommendations. For instance, NPR reported that DOE is planning to

terminate the Clean Coal Technology Program by September 2000. DOE

has reorganized the department by implementing the Strategic Alignment

Initiative, which is intended to reduce staffing, support service contracting,

and travel costs; streamline the National Environmental Policy Act;

increase asset sales; and improve information resources management.

DOE has also established performance measures to improve effectiveness

of nuclear waste cleanups, developed a plan for selling uranium reserves,

and is developing ways to reduce administrative costs in DOE’s research

programs. More recently, DOE noted that the Elk Hills Naval Petroleum

Reserves were sold in February 1998 for $3.1 billion. Similarly, in fiscal

year 1998, $0.4 billion was realized due to DOE’s uranium being a part of

the sale of the United States Enrichment Corporation.

Dollars in millions

1996 1997 1998 1999 2000 Total

OMB estimate 1,673 2,244 2,244 2,244 2,244 10,649

Source: OMB, revised estimates as of summer 1996.

OMB could not reconstruct calculations for the savings estimated for this

recommendation.

NPR Recommendation

Key Actions Reported

Table IV.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix V

Strengthen and Restructure NASA

Management

Page 22 GAO/GGD-99-120 NPR’s Savings

In September 1993, NPR recommended that NASA take a number of

restructuring steps, both in overall management and in the management of

the space station program. It recommended that NASA, among other

things, aggressively complete its overhaul of space station program

management, implement the management principles developed for the

redesigned space station program, and formally institute its Program

Management Council (PMC), an organization charged with improving

NASA’s internal management processes.

NPR reported that NASA has taken and is continuing to take steps to

improve the management of the agency and the space station. According

to NPR, NASA’s overhaul of space station program management was

accomplished through enactment of the fiscal year 1995 Appropriations

Act (P.L. 103-327, September 28, 1994). Also, the PMC was established in

June 1993 and is fully operational.

Dollars in millions

1994 1995 1996 1997 1998 1999 Total

OMB estimate 0 396 396 396 397 397 1,982

Source: OMB, original estimated savings from September 1993.

In response to our questions, OMB attempted to reconstruct how savings

were estimated, but could not provide documentation to support its

calculation. OMB officials said the methodology they would have used to

estimate savings for this recommendation was to take the difference

between the fiscal year 1994 current services baseline and the actual

appropriations for that fiscal year and count the savings through fiscal year

1999.

NPR Recommendation

Key Actions Reported

Table V.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix VI

Reinvent NASA

Page 23 GAO/GGD-99-120 NPR’s Savings

In 1995, NPR recommended that NASA be reinvented. This

recommendation built on the earlier NPR recommendation to strengthen

and restructure NASA management. OMB consolidated seven

recommendations that related to reinventing NASA for developing savings

estimates. These recommendations included (1) eliminating duplication

and overlap between NASA centers; (2) transferring functions to

universities or the private sector; (3) reducing civil service involvement

with and expecting more accountability from NASA contractors; (4)

emphasizing objective contracting; (5) using private sector capabilities; (6)

changing NASA regulations; and (7) returning NASA to its status as a

research and development agency.

NPR reported that NASA has completed actions consistent with this

consolidated recommendation. For instance, NPR reported that NASA has

restructured its centers to eliminate overlap and duplication of functions

and has implemented techniques, such as forming partnerships and

outsourcing functions. NPR also reported that NASA was creating

alliances with academic and industrial centers and consolidating all space

shuttle operations management under a single, private sector prime

contractor. In addition, NPR reported that NASA has implemented a

performance-based contracting initiative.

Dollars in millions

1996 1997 1998 1999 2000 Total

OMB estimate 226 1,024 1,715 2,418 3,136 8,519

 Source: OMB, original estimated savings from September 1995.

In response to our questions, OMB attempted to reconstruct how savings

were estimated, but could not provide documentation to support its

calculation. An OMB official said she took the difference between the

fiscal year 1996 current services baseline and the actual appropriations for

that fiscal year and counted savings through fiscal year 2000.

 NPR Recommendation

Key Actions Reported

Table VI.1: Claimed Savings

Methodology Used to

Estimate Savings
Appendix VII

GAO Contacts and Staff Acknowledgments

Page 24 GAO/GGD-99-120 NPR’s Savings

J. Christopher Mihm, (202) 512-8676

Susan Ragland, (202) 512-8486

In addition to those named above, Carole Buncher, Lauren Alpert, and

Jenny Kao made key contributions to this report.

GAO Contacts

Acknowledgments
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