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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

  THE OFFICE OF MANAGEMENT AND BUDGET: IS OMB FULFILLING ITS MISSION?

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 7, 2000

                               __________

                           Serial No. 106-187

                               __________

       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

                               __________

                   U.S. GOVERNMENT PRINTING OFFICE
70-219                     WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                    Lisa Smith Arafune, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
               Heather Bailey, Professional Staff Member
                           Bryan Sisk, Clerk
                    Trey Henderson, Minority Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 7, 2000....................................     1
Statement of:
    Lew, Jacob, Director, Office of Management and Budget........     5
    Miller James C., III, counselor, Citizens for a Sound 
      Economy; Dwight Ink, president, emeritus, Institute of 
      Public Administration; and Herbert N. Jasper, senior 
      associate, McManis Associates..............................   102
    Walker, David M., Comptroller General of the United States, 
      U.S. General Accounting Office.............................    64
Letters, statements, etc., submitted for the record by:
    Ink, Dwight, president, emeritus, Institute of Public 
      Administration, prepared statement of......................   111
    Jasper, Herbert N., senior associate, McManis Associates, 
      prepared statement of......................................   120
    Lew, Jacob, Director, Office of Management and Budget:
        FY 2000 INS border security request......................    55
        Illustrative examples of integration of management and 
          budget functions.......................................    60
        Letter dated February 28, 2000...........................    49
        Prepared statement of....................................     9
        Privacy Act backlogs at the Federal Bureau of 
          Investigation..........................................    57
    Miller James C., III, counselor, Citizens for a Sound 
      Economy, prepared statement of.............................   105
    Turner, Hon. Jim, a Representative in Congress from the State 
      of Texas, prepared statement of............................     4
    Walker, David M., Comptroller General of the United States, 
      U.S. General Accounting Office, prepared statement of......    68

 
  THE OFFICE OF MANAGEMENT AND BUDGET: IS OMB FULFILLING ITS MISSION?

                              ----------                              

                         FRIDAY, APRIL 7, 2000

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 2154, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn, Turner, and Biggert.
    Staff present: Russell George, staff director and chief 
counsel; Randy Kaplan, counsel; Matt Ryan, senior policy 
director; Louise Debenedetto, GAO detailee; Heather Bailey, 
professional staff member; Bonnie Heald, director of 
communications; Brian Sisk, clerk; Ryan McGee, staff assistant; 
Michael Soon, intern; Trey Henderson, minority counsel; and 
Jean Gosa, minority clerk.
    Mr. Horn. A quorum being present, the Subcommittee on 
Government Management, Information, and Technology will come to 
order.
    The Office of Management and Budget is one of the most 
important agencies in the executive branch of the Government. 
The OMB coordinates the legislative opinions of the 
administration and reviews and recommends budget requests to 
the President, which he then decides and submits an annual 
budget to Congress. The budget is a key document of State that 
affects the funding level of nearly every Federal program that 
Congress provides.
    OMB directors and some of the 500-member staff also 
coordinate the opinions of relevant departments and agencies. 
OMB reminds the President that legislation is not in accord 
with the program of the President, whether it should be signed 
or vetoed.
    In addition, the OMB has an enormous impact on U.S. 
businesses because of its role in determining Federal 
regulations that affect everything from how buildings are 
designed to the amount pollutants that industries may release 
into the environment. The OMB is clearly at the pinnacle of the 
executive branch of the Federal Government.
    During the Harding administration, the Budget and 
Accounting Act of 1921 created OBM, OMB's predecessor, 
otherwise known as the Bureau of the Budget. For housekeeping 
purposes, the Bureau of the Budget was lodged in the Department 
of the Treasury, but it reported to the President. A core group 
of professional staff members were attracted, and over time, 
for the first time the President was able to make a true 
integrated executive budget which recommended the choices of 
the Nation's Chief Executive.
    It used to be that every cabinet officer just sent their 
estimates in to the Treasury Secretary, he put a nice pretty 
binder on it, sent it up to Congress, they tore it all apart, 
and the 13 subcommittees of Appropriations probably go back to 
about 1865 when they created the Appropriations Committee out 
of Ways and Means.
    So for the first time in the 1920's, although a couple of 
Presidents had tried it, Harding was able to see it done. And 
we had an integrated budget where the Chief Executive could 
truly tell people that he had control over the executive 
branch. And over the years, the Bureau had a very fine 
professional staff it built up. It didn't matter whether they 
were serving Republicans, Democrats, or whoever. They were 
professionals.
    Under the Nixon administration, the word ``management'' was 
added to the agency's title with the hope that the power of the 
budgeting process would force Federal agencies to pay greater 
attention to management issues. And I happen to have been a 
very strong fan of that reorganization. It turns out I was dead 
wrong. That has not been the case. We have not had the 
management aspects that we should have.
    If the Federal Government had a proper management 
structure, all Government agencies would have begun preparing 
for the year 2000 computer problem a decade ago. But in fact, 
only the Social Security Administration had a management team 
with such foresight. Last week, the subcommittee learned that 
again this year the executive branch failed to produce 
governmentwide financial statements that auditors could say 
were reliable.
    It is important to note that this lack of leadership is not 
limited to the current administration. Throughout OMB's 
history, beginning with the Nixon administration, management 
and budget issues have competed for attention. And we all know 
the big problem with the budget and how to get it under 
control, how to get a balanced budget. When you have that, the 
director is fully occupied with his or her time.
    We have distinguished witnesses today who can discuss the 
inner workings of the Office of Management and Budget and we 
hope to learn whether the ``M'' in OMB stands for 
``management'' or ``mirage.''
    It is now my pleasure to yield time to the gentleman from 
Texas, Mr. Turner, the ranking member of the subcommittee.
    Mr. Turner. Thank you, Mr. Chairman.
    OMB's predominant mission is to assist the President in 
overseeing the preparation of the Federal budget and to 
supervise its administration in executive branch agencies. In 
carrying out this mission, OMB is forced to wear many hats. 
These duties include the development of management of budget, 
policy, legislative, regulatory, information, procurement, and 
management issues. In addition to these considerable 
responsibilities, Congress is constantly adding new ones.
    We can all agree that OMB has a very important and 
difficult job. We are here today to assess how OMB is carrying 
out its mission and to determine whether Congress is providing 
adequate funding and support to this entity. We want to make 
sure Federal managers have all the tools and all the incentives 
necessary to perform their jobs well.
    I want to welcome Director Jack Lew this morning and 
commend him and all OMB employees for the excellent work and 
dedication and professionalism they have exhibited. Jack, you 
have shown an even hand in running OMB. It has been reflected 
in the credibility that you enjoy on both sides of the aisle 
here in the Congress. And I believe it is the OMB's steadfast 
work on the budget that has helped us come to the point where 
we can enjoy surpluses in the Federal budget for the first time 
in 30 years.
    I want to thank the chairman for focusing on the issue this 
morning. It is a very important one. I look forward to hearing 
from all of our witnesses.
    [The prepared statement of Hon. Jim Turner follows:]
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    Mr. Horn. I thank the gentleman.
    We will now swear in the witness.
    [Witness sworn.]
    Mr. Horn. The clerk will note that the witness has affirmed 
the oath. We welcome you here and please proceed in any manner 
you like. You have a wonderful 30-page statement. Don't read 
it. But if you can get the high points, which is what our rule 
is, then we can have a dialog.

  STATEMENT OF JACOB LEW, DIRECTOR, OFFICE OF MANAGEMENT AND 
                             BUDGET

    Mr. Lew. Thank you, Mr. Chairman.
    I would be delighted to summarize my opening statement and 
would ask that the full statement be included in the record.
    Mr. Horn. Without objection, your prepared statement will 
appear in the record.
    Automatically every time we introduce the witness the full 
statement is in the record.
    Mr. Lew. Thank you, Mr. Chairman and Congressman Turner. It 
really is a pleasure to be here this morning to be able to take 
some time to talk about the many important functions that the 
Office of Management and Budget serves.
    I would like to begin by introducing Sally Katzen, who is 
with me here today, who serves as counselor to me, as Director. 
As you know, she has been nominated to be the Deputy Director 
for Management and works on many of the issues that we will be 
discussing today.
    Before going into my formal remarks, I would like to begin 
by saying a word about the OMB staff and associate myself with 
the comments of both of you. I think one of the secrets of 
Washington is the excellence of the OMB staff, the dedication 
of them, and the fact that it is not a political staff. In an 
organization with 518 full-time positions, the vast majority 
are career public servants who serve administration after 
administration. They are really the backbone of our efforts, 
both in terms of what we do in the budget and what we do in 
management, to give the President the kind of advice he needs, 
the guidance to agencies, and to work with Congress as 
effectively as we can.
    In my opening statement, I would like to talk briefly about 
the different functions of the Office of Management and Budget 
because I suspect there is going to be some interest this 
morning in talking about the breadth of functions, not just the 
budget functions that are fairly well known.
    As you noted in your opening remarks, it ranges from 
procurement policy and regulatory policy to funding levels for 
individual programs. It is really the full scope of the work 
that the Federal Government does.
    We are organized in a way designed to integrate the 
different functions that OMB has. We have five resource 
management offices, which have agency and program 
responsibility. They play a key role in developing the budget 
and executing the budget, and also in working with the agencies 
on an ongoing basis on implementing their programs.
    We have the Budget Review Division, which analyzes the 
aggregate trends. One of the things that has really changed in 
terms of budgeting over the last 25 years is the ability--
partially because of information technology--to do much more by 
way of aggregate analysis and to understand how the pieces add 
up and what the trends are in a way that you couldn't when you 
were doing it on manual kinds of ledgers.
    The Legislative Reference Division, as you noted, Mr. 
Chairman, gives us the ability to coordinate across the 
Government uniform positions so that agencies conform to the 
policy the President has made and so that agencies with 
competing interests have a way of working through their 
differences so that there is a single executive branch 
position.
    We also have three statutory offices, which are lesser 
known outside of Washington but perform key functions around 
the Government and in terms of coordinating the efforts of all 
of OMB's staff. We have the Office of Federal Financial 
Management, which develops and provides direction on the 
implementation of financial management policies. We have the 
Office of Federal Procurement Policy, which leads in our 
efforts to improve and make more efficient our procurement laws 
and the implementation of those laws. And we have the Office of 
Information and Regulatory Affairs, which participates in the 
rulemaking process, the information technology process, and 
monitoring paperwork burden.
    We have tried to organize, over the last 7 years, to have 
these different offices integrated, to have a kind of desk 
officer system. Within each of the statutory offices there are 
resources available to each of the resource management offices 
so that we can team together people who are expert in the 
substance and programs of an agency with other offices who have 
analytic technical skills that need to be available broadly 
across the organization.
    We have made tremendous progress in that ongoing effort. We 
will continue, and I hope my successor will also continue, with 
this effort.
    The traditional responsibilities we have are obviously 
development of the budget, the presentation of the budget, and 
the defense of the budget. And there is no doubt that that 
takes a considerable amount of our time. The budget process, 
being as it is, is not a 1-or 2-month process. It goes across 
the whole year. We have tried very hard to use the islands of 
time between the internal deadlines to produce a budget and the 
congressional schedule to focus senior management effort on the 
management issues as well as the budget issues over the course 
of the year.
    I probably have a slightly different perspective than many 
directors because I have been at OMB for 5\1/2\ years--I am 
right up there with our career staff in terms of length of 
tenure on average. Our workload burden has grown. It has grown 
for good reasons. We have worked well with the Congress on laws 
like Clinger-Cohen and GPRA that have given us new and modern 
tools to try to take the management responsibilities and really 
put some effective tools behind them.
    I would note that over the course of the increase in those 
responsibilities we have decreased the size of our staff. We 
have become more efficient, but we also have heavy workload 
burdens. And it is for that reason that in the budget we 
presented this year we asked for additional resources. I think 
it is an appropriate time, at a point of transition, for us to 
look ahead at the next administration, regardless of party, and 
say that these functions are important and we do need more 
resources to perform all of them.
    We have tried to take the management role very seriously in 
my time at OMB. And I think that evidence of that is apparent 
in both the formal mechanisms of the interagency committees 
that we have, that have done a lot to share best practices 
between agencies and help develop those practices, and the less 
formal approaches, such as the efforts to coordinate with heads 
of agencies and working levels in agencies on specific 
problems.
    There are really two kinds of management challenges. First, 
the governmentwide management challenges, which are very 
important. These range from dealing effectively with the Y2K 
problem--where I think we have a success we can be proud of--to 
trying to make the kind of progress on our audited financial 
statements that keeps us moving in the right direction.
    We also have agency-specific problems where we see that 
agencies either are not doing something that they need to do 
well; or areas where they could be getting a lot more done if 
they made changes. And we try to engage with the agencies both 
at the broad and at the agency-specific level. I won't contest 
the notion that there are limits on our time. There certainly 
are. But we try, within those limits, to be effective at both 
the governmentwide and the agency-specific level.
    I would like to say a word about GPRA because I know that 
this committee has a lot of interest in it.
    I have been very impressed at how much the culture of 
Government policy thinking has changed over the last couple of 
years. At my first Director's review, the ability to focus on 
results in terms of the analytic process was very different 
than it is now. Answers to questions about results more often 
gave you information about input than output. We are now at a 
stage where I think we have made enormous progress, though we 
have a lot more progress to make. We engage in discussions on 
virtually every major policy decision, probing on the question 
of output.
    We are not at the point where the measures are as refined 
as they should be, we are not at the point where I would want 
to have mechanical decisions flow from that analysis, but we 
have changed the way we think, which is the first stage you 
have to go through to incorporating the results-oriented 
analysis into budgetary policy.
    I would like to say one word in conclusion about the 
connection between the budget and the management issues. I have 
no doubt in my own mind that it is very important to have the 
budget and management functions together because the budget 
responsibilities give you the ability to raise management 
issues in a way that if the management issues stood on their 
own I fear you wouldn't be able to. There is something that 
focuses the mind when there is funding at stake.
    There is no question that OMB's ability to help shape the 
President's budget request and work with Congress on the 
ultimate funding levels has a lot to do with our ability to 
work with agencies on the management question. So while I think 
there are very important questions that we need to resolve in 
terms of how to do even better on the management side, I think 
there is a very important connection between those functions 
that I suspect we will talk some more about.
    It is a pleasure to be with you this morning and I look 
forward to answering any questions you may have.
    [Note.--The report entitled, ``FY 2001 Annual Performance 
Plan and FY 1999 Performance Report,'' may be found in 
subcommittee files.]
    [The prepared statement of Mr. Lew follows:]

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    Mr. Horn. Thank you very much for that statement.
    Mr. Turner and I will be alternating on questions. Each of 
us will take 10 minutes.
    So let me start in with the general management questions.
    What percentage of the Office of Management and Budget's 
staff of 518 is devoted full-time to governmentwide management 
issues?
    Mr. Lew. The exact number of employees is in the 80's; 89 
full-time employees are devoted to management issues.
    Mr. Horn. Could you tell me where they are put around? Are 
you counting OIRA and other groups like that?
    Mr. Lew. I am counting the statutory offices, in 
particular.
    I think that the difficulty of answering a question like 
that has a lot to do with the integration between the budget 
and the management functions. If you look at a division like 
our General Government Division, where we have program 
examiners, who are considered on the budget side. They are not 
full-time management, but if you look at the responsibilities 
they have, they include working with GSA on real property 
policy. They include working with our Health and Human 
Resources Division. They involve working with the Office of 
Personnel Management on governmentwide personnel policy.
    I think I would answer the question very differently if you 
asked me what percentage of OMB's staff efforts are put into 
management issues. I don't know that I would have an exact 
answer, but it is a much, much higher percentage. And the desk 
officer system gives us the ability to integrate the full-time 
management positions in a way that I don't think was possible 
before OMB 2000, when there was a much, much harder wall 
between the two functions.
    And I think we have made progress in bringing the wall down 
and having virtually all of OMB's 518 employees think about 
management in the course of everything that they do.
    Mr. Horn. What are the two major management examples that 
are a plus for the administration and the Office of Management 
and Budget over the last year? What would you say are your 
major two management successes?
    Mr. Lew. I know this is going to be contrary to your own 
opening remarks, but I think you have to start with Y2K. 
Managing the Y2K problem was probably the single largest 
management challenge the Federal Government has had in modern 
times. The relationship that we at OMB had with John Koskinen, 
who coordinated the effort on behalf of the President and the 
White House, was unique. John is a former Deputy Director for 
Management and he understood all the levers that OMB has, all 
the talent and ability that OMB had in this area. And it was 
full cooperation where we put the full resources of the Federal 
Government to work to tackle the task.
    Whether it should have begun a month or a year earlier is 
something we could have a long discussion about. I think we 
have responded well as the need to respond became apparent. But 
there is no doubt that we succeeded. We accomplished what 
people thought was an impossible task.
    Mr. Horn. You did not succeed until we got John in there. 
And of course, this committee started in April 1996. Nothing 
much was happening. John was there as Deputy Director for 
Management. Nothing was happening. Then he retired. Then he was 
brought out of retirement. The President made an excellent 
choice when he brought him out of retirement. But he wasn't 
doing that job which he should have been doing if that is a 
major management task--and I agree that it is.
    Here is Social Security, out in 1989, doing it. And nobody 
is pulling in everybody and saying, ``Look, Social Security 
says this is a problem. How about your affairs? Isn't that a 
problem for you?'' Nothing was happening.
    Mr. Lew. I think the characterization that nothing was 
happening is a bit unfair. I think there were a lot of things 
happening, but I won't contest that it wasn't as much of an 
effort as we ultimately put in.
    I think if you look at public and private response, we were 
responding in a way that was similar to the private sector. 
When we realized the problem was much larger, we put more 
resources into it. The decision for John to come back is one 
that we encouraged. We understood there was a need to do this 
in a way that was different from the way that normal management 
challenges were done. And I don't think it could have been done 
without the very, very significant devotion of resources at 
OMB.
    Let me give you an example.
    The funds that Congress provided for the Government to deal 
with the Y2K problem were provided in a fund that the President 
could disburse based on advice from the Office of Management 
and Budget. I don't think there is another entity in Government 
that could have worked with every agency in Government to 
effectively allocate limited resources.
    I can tell you that the demands for resources at the 
initial moments when that money was made available far exceeded 
what we could have used the money for, and wouldn't have solved 
the problem. We worked the way we can at OMB, agency by agency, 
separating out what are desires for more funds generally from 
what are desires for funds to deal with Y2K, and coordinating 
the effort in the way we did.
    So I think it was a model of partnership. I applaud you for 
the efforts you have made in this area. I don't think this is 
an area where there is really a lot of conflict between us. The 
only thing I am contesting is that we did nothing before. I 
think that as the problem grew, our efforts grew.
    Mr. Horn. Well, when your predecessor took command down 
there, I suggested to him that we not waste time on budget 
years, we reprogram existing money. He agreed with that and did 
it.
    Mrs. Maloney was then ranking member. She and I were 
sending quarterly surveys to the cabinet. We started with the 
cabinet. Two had never heard of the operation, and that was the 
Secretary of Transportation and the Secretary of Energy. I was 
sort of amazed. Then he said they would be glad to do that, and 
you did a fine job on getting the quarterly report.
    My problem was with 10 years gone by. We wrote the 
President and said that he needed a coordinator of this effort. 
And as I said, he made a very fine choice, but it took forever 
to do it. I call it the ``Perils of Pauline,'' strapped to the 
tracks and the train is coming. And somehow she escapes for the 
next Saturday movie. We were very fortunate.
    But even when John was picked, he didn't take office until 
April 1998. So a lot of time had been lost. And while we 
muddled through, as the British say--and we are fortunate in 
that--what else was going on at OMB besides Y2K, if you say 
something was going on there?
    Mr. Lew. During the period we were dealing with Y2K, we had 
also been working in procurement policy, and information 
technology generally. My predecessor worked very hard to try to 
take the Clinger-Cohen Act and to turn it into a tool that the 
Government would use. Since the act passed, we have used what 
we now call the Raines Rule to try and get the agency to focus 
on long-term information technology investment in an orderly 
way so that we won't have a repeat of the problems that we had 
seen before.
    It is not an easy thing. Agencies had difficulty with major 
information technology procurement. There were many, many 
experiences where agencies bought systems that were incomplete, 
where they couldn't finish the systems on budget, where they 
didn't have the ability to do what they needed when the systems 
were done. I think we are doing much better.
    Just in recent weeks, we have extended the same kind of 
approach that we have been using on procurement to security. We 
sent out guidance to the agencies just a few weeks ago to try 
and have the same kind of central focus. I think it is really a 
very good example of how the budgetary and management functions 
reinforce each other.
    The time of year I have the most leverage to look at the 
Clinger-Cohen Act and make it stick is when agencies are asking 
for money for their computer system. If I say that I am not 
going to recommend it to the President if they haven't complied 
with Clinger-Cohen and the Raines' Rule, they can't go forward. 
It is very difficult to make an appeal for your computer 
system.
    And we have gotten the agencies to understand that this is 
not a passing interest. It is part of the way we budget and 
part of the way we approach management. It is far from a job 
completed. And it is nothing that anybody will ever complete. 
Given the nature of the technology, it is always changing.
    Mr. Horn. I am delighted that you are doing that survey. We 
have asked the Comptroller General to do a survey of all the 
executive branch hardware and software because we certainly 
learned our lesson through Y2K. I am glad you are taking 
advantage of the data that were put together. We will be glad 
to work with you, just as we were on the Y2K. Two Speakers of 
the House said, ``Give them every dime they want on Y2K.'' So 
you did not have any problem up here on money. We gave it to 
you.
    Mr. Lew. Well, it took us quite a while to get the 
supplemental, if you recall. We were very worried when it was 
pending, but we did get it in the end, and we did it.
    Mr. Horn. You got every dime.
    Mr. Lew. In the interest of----
    Mr. Horn. We can't do what the other body does, and we 
won't even mention that.
    Mr. Lew. But in the spirit of GPRA, though, I would hope 
that we would look at the results of Y2K, which was a real 
success. And the success wasn't an accident. It was the result 
of hard work here, hard work by OMB, and hard work by all the 
agencies. I think we should be proud of it.
    Mr. Horn. Is it correct that you haven't got similar 
reporting for computer security issues? What is OMB doing 
there?
    Mr. Lew. In the guidance we put out, we tried to set up 
what will be a new kind of reporting on computer security 
issues. We are using the work that we did in terms of Y2K, 
identifying the critical missions and working through in 
priority order.
    The question of computer security is a very complicated 
one. There are competing goods that we have to balance. In the 
guidance, we tried to take appropriate concern for both keeping 
on a path toward becoming part of the electronic commerce, 
electronic government, and protecting privacy interests.
    And one of the things that was striking to me in putting 
that guidance together is that the solution is as much low-tech 
as it is high-tech. It is changing the culture of the system 
where people leave their computers on at night, they don't log 
off.
    It's not all a question of technology. Some of it is a 
question of just changing our practices. I think we have to 
deal with the fact that the threat to computer security 
involves people who are at the cutting edge who are always 
going to try to stay a step ahead of us. We can't think of this 
as a problem to solve today or tomorrow. We have to get 
involved in a process where we are always vigilant for what the 
threat is and how to stay a step ahead of those who would 
threaten computer security.
    Mr. Horn. My time has expired. I am going to yield 10 
minutes to the ranking member, Mr. Turner of Texas. We might 
get back to computer security if he does not pursue that.
    Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    Mr. Lew, I want to followup on some of the things the 
chairman got into.
    But first of all, I want to ask you to describe for me what 
the Office of Information and Regulatory Affairs does.
    Mr. Lew. They do a number of things, Congressman Turner. 
Regulations that agencies are promulgating are cleared by the 
Office of Information and Regulatory Affairs. Major rules go 
through a cost-benefit analysis. To the extent that agencies 
have concerns across jurisdictional lines, OIRA provides a 
mechanism for coordinating conflicting views. And that is one 
of the major responsibilities.
    Another major responsibility is working with agencies on 
their information technology management. A third is the 
Paperwork Reduction Act where OIRA works with the agencies 
approving new paperwork requirements. Actually one of the 
things we are about to do is to undertake an interagency effort 
to see what we can do to further reduce paperwork requirements.
    So there really are quite a wide range of responsibilities 
at OIRA. It is a very heavily worked division.
    Mr. Turner. Your answer made my point.
    I am very interested in the issue of trying to develop 
greater expertise and a more aggressive approach to 
implementing e-government. I am of the view that we are falling 
behind the private sector. It is a very rapidly evolving field 
and Government generally walks and the private sector is now 
running. We have to figure out how to run as well.
    Your discussion with Mr. Horn was relevant on this point, 
and that is your high regard for the efforts OMB made in 
cooperation with Mr. Koskinen, who is properly viewed as the 
Y2K czar. I think his official title was special assistant to 
the President.
    I am currently working to try to get the staff of our 
committee and Mr. Horn on the same page, to come up with some 
kind of proposal that will place the John Koskinen-type model 
within a context of information technology and the emphasis on 
e-government. I am convinced that unless we take this kind of 
very direct approach and create this kind of emphasis, that the 
Federal Government is going to continue to lag behind in the 
development of e-government.
    We have some issues that I am sure you and the OMB have 
some opinions to share with us on. I want to be sure that we 
have a chance here to air those out because I know when we talk 
about creating an information technology czar or an e-
government special assistant to the President that we begin to 
step on toes and have turf battles.
    But if it be true that the John Koskinen model worked to 
solve the Y2K problem, I think that type of model could also 
work to bring a greater emphasis in the Federal Government 
toward implementing e-government.
    One of the things that I wanted to explore a little bit 
with you was to get you to at least review the things that are 
currently being done to implement e-government. In answer to 
one of Mr. Horn's questions, you made mention of the fact that 
in the area of information technology we have taken steps to 
work with the agencies to improve procurement of hardware and 
software.
    That really was the beginning point, as I noted it as a 
former member of the Texas Legislature and every State around 
the country, to try to create some central agency to assist the 
various agencies of State government--and now the Federal 
Government, through your work--to make sure we are buying the 
right equipment, we are not throwing away money, and making the 
wrong purchases.
    Now, through the efforts of Mr. Horn, we have placed an 
emphasis in this committee on the issue of computer security, 
which probably ought to be described not only as computer 
security, but Internet security. It is a very troublesome 
problem, both in the public and private sector.
    I am of the view that both procurement issues and security 
issues fit within the broader context of this issue of e-
government, emphasis on information technology, and that if we 
had one person--a John Koskinen-type person--who could take 
information technology issues, computer security, procurement 
and place it in one office, have some cooperative working 
relationship between that individual, who would be directly 
accountable to the President, who had a good working 
relationship with OMB so we don't have a turf battle over this, 
that we could perhaps get emphasis on information technology 
that is needed to put the Federal Government into the 21st 
century.
    I am open to your suggestions, but perhaps the beginning 
point is to have you review what we are doing currently.
    Mr. Lew. Thank you, Congressman.
    Let me begin by just a general observation, and then some 
specific observations on what we are doing, and perhaps some 
thoughts about a separate office versus an OMB role.
    At the conference the President had the other day on the 
new economy, one of the executives of a high-tech company said 
that we are probably, as a broad economy, not even 10 percent 
into the ultimate potential of e-commerce. I don't know if that 
is right or wrong, but if it is the right order of magnitude, I 
don't know that we are very far behind as a Government.
    There is certainly a lot that can be done in the private 
sector and the public sector, but we are really accomplishing 
quite a lot. If you look at the number of people who will file 
their tax returns electronically, the number of people who will 
be able to fill out their census forms electronically, the 
number of people who were able to follow various NASA missions 
on-line, these are just a few of the many, many examples of the 
Federal Government being a real presence in terms of e-
commerce.
    I would not suggest that we are half-way down the road yet, 
but I think it is a very good beginning.
    One of the things that we worked on before people were 
talking a lot about e-commerce was electronic benefit transfer, 
which is connected. It has a lot of potential in terms of e-
commerce.
    I would note that our efforts on that were a result of 
coordination between John Koskinen, when he was Deputy Director 
for Management, and one of our program associate directors, Ken 
Apfel, who was at our Human Resources Division. I think there 
was a kind of synergy in the way they worked that overcame 
many, many hurdles, which could have been used as reasons to 
doom moving into electronic benefit transfer. It took years of 
work to get through the hurdles, and I don't think it could 
have been done without that kind of coordinated effort.
    The observation I was making earlier about the relationship 
we had with John Koskinen when he was working with the Y2K 
process and his own experience with OMB, I cannot overemphasize 
it. John was unique in that as a former Deputy Director for 
Management he had an understanding of how OMB could be 
effectively used as part of the process. I think if somebody 
had come in with expertise in information technology, but 
without John's familiarity with the different levers and tools, 
it would have been much more difficult, if not impossible, to 
be as effective as he was.
    I think that is suggestive of the importance of having the 
OMB functions in this area remain strong, and remain real 
leadership roles.
    I think the Deputy Director for Management at OMB is an 
official at a very senior level who reports to the President. 
We have been frustrated over the last 2\1/2\ years because we 
haven't had a confirmed Deputy Director for Management, but 
that is a separate issue. I think one can expect the Deputy 
Director for Management to have a leadership role in this area, 
working with the head of OIRA, who is a confirmed official, and 
coordinating with the agencies.
    I am afraid that if you were to split the function off and 
have a kind of permanent, independent Chief Information 
Officer, you would have to buildup resources to support that 
effort that would mirror the resources we have in the Office of 
Management and Budget if they were going to be effective. And 
the right answer is to figure out how to continue to use the 
authority and the leadership responsibilities at the Office of 
Management and Budget to play a lead role in this area.
    I would argue that the efforts we have made over the last 4 
years to improve the procurement processes could not be made 
outside the budget process. I don't believe agencies would do 
things differently today than they did 5 years ago if it wasn't 
a part of the budget process.
    On the other hand, the person sitting at the table in our 
director's review answering questions was a person who worked 
full-time in the area of information issues who was a senior 
official at OMB. There is a synergy there that can work.
    I would say that we have many goals still to achieve in 
this area. And I think that we look at the future as one with 
enormous opportunities, but we do have to balance concerns, 
like the privacy concern I mentioned and others. We have to be 
connected, but we have to protect people's rights as well.
    Mr. Turner. I think we both understand that in Government 
things occur, and action is usually taken when somebody says 
there is a crisis. Of course, the Y2K crisis generated a lot of 
interest, the right person was chosen for the job, and the 
relationship that OMB had with him was an excellent one.
    The concerns you just raised about placing someone in a 
high-profile position, someone of the type personality of Mr. 
Koskinen who had the credibility of Mr. Koskinen, to move 
forward on information technology. I think the objections you 
just raised to putting someone into that type of role could 
have been made by you and the OMB when it was initially 
suggested that there was going to be a special assistant to the 
President for Y2K.
    So what I am looking for is an understanding of why the 
John Koskinen-OMB relationship worked so that I can best figure 
out how to structure a relationship between a special assistant 
to the President on information technology--whatever you want 
to call him--that might be a little bit more friendly title to 
OMB than a Federal CIO--but whatever the title, the point is 
that the emphasis that was placed on Y2K was part of the reason 
we were successful. So I am looking for a way to highlight the 
importance of the Federal Government moving aggressively in the 
area of information technology.
    That is the ultimate goal I have. And I think Government, 
by nature, is going to function more effectively in areas where 
we can figure out how to structure something to give it the 
emphasis that we want it to have, to make people pay 
attention--both within and without government--to get the kind 
of support we need to move forward. That is what I am looking 
for.
    Mr. Lew. Congressman Turner, if you look at the process we 
went through in terms of setting up the office that John 
headed, it was not at all random that the President sought John 
to come back to do this. John brought the experience from OMB 
as well as the experience he had in the private sector in terms 
of crisis management. He really brought a unique set of skills 
and was just a tremendous person to work with, when he was 
Deputy Director and when he was the Y2K czar.
    I think it is difficult to generalize from that experience 
a kind of formal approach that says, therefore there needs to 
be an independent person. Regardless of the title. I agree with 
you that titles can often make the discussions more difficult 
to think through.
    If you're talking about long-term Government procurement of 
information technology, management of information systems, and 
the security of systems, I don't believe it can be separated 
from the broader question of agency management and agency 
budgeting. I think it has to be integrated.
    I don't disagree with you that it's something that my 
successors will have to pay considerable attention to. But I 
think it has been the case--at least for the last number of 
years--that OMB Directors have paid a lot of attention. OMB 
Deputy Directors have paid a lot of attention.
    The Y2K crisis was unique in that it was driving to a 
single day. If we didn't take care of it with the clock ticking 
down, we faced potentially very severe consequences. The longer 
term problems don't have that kind of a deadline where a crisis 
approach is going to be the most effective.
    We need to have an ongoing effort--where we don't say it is 
going to be a 1-year effort or a 2-year effort. I have absolute 
confidence that computer technology 10 years from now will be 
far, far ahead of anything I could predict. That has been the 
history of information technology. We can't do it once and then 
say that we are done. It has to become a process. It is going 
to be expensive. It involves the way agencies work and agency 
resources.
    I think it is central to how we do the business that we do. 
I don't disagree with you in terms of the fact that we need to 
pay very, very serious attention to it. But I believe we have. 
And we need to continue to do so, and I think more so.
    Mr. Horn. Thank you very much for that series of questions. 
We will now have 15 minutes, since Mr. Turner had 15 minutes. 
And then we will get back to 10 minutes.
    Let me go back to a few of these other things so we don't 
forget them.
    In OMB's fiscal year 1999 performance report, you 
identified a goal of ``working with all agencies to assure that 
their financial systems comply with the Federal Financial 
Management Improvement Act of 1996.''
    Last week, the Comptroller General of the United States 
testified that 19 of the 22 agencies that had submitted audit 
reports did not comply with the act.
    Considering this lack of compliance with this law, could 
you give me some feeling of what the Office of Management and 
Budget is doing to achieve that goal?
    Mr. Lew. Yes, Mr. Chairman.
    We, obviously, have set goals for ourselves in this and a 
number of other areas to try to stretch to do the very best we 
can. I think we have made a lot of progress. We did better this 
year than last year. We need to do better next year than we did 
this year.
    The process of doing the audited financial statements has 
been a difficult one. It was the first time in the history of 
our Government that we did this kind of stock-taking. And I 
think it is enormously important for agencies to get their 
hands on doing this right. To understand where your assets are 
and what your resources are is key to making policy judgments. 
And there have been many instances where if agencies had a 
better handle on their financial statements, they could have 
solved some of their own problems without having to come to 
Congress, without necessarily needing to make some other policy 
decisions that they made.
    The fact that we still have a ways to go is something we 
have acknowledged clearly. The fact that we have made progress 
is something that we have also pointed out, and I think that 
GAO has also pointed out.
    Mr. Horn. I commend you and the Office of Management and 
Budget on the results-oriented legislation of 1993-1994, which 
was truly bipartisan in terms of the Congress. When do you 
think these agencies will be in full compliance with the act? 
We gave them 5 years to give us a balance sheet with the 1996 
fiscal year, then they have had a chance at 1997, 1998, this is 
now 1999. How do you think we are going to get full compliance? 
Do they take this seriously?
    Mr. Lew. Yes, they do take it seriously, Mr. Chairman, and 
we take it seriously. If you look at our priority management 
objectives, this is right up there on our list of priority 
management objectives.
    We are going to continue to stretch to try and do it as 
quickly as possible. And I am going to hesitate to give you any 
kind of a date because, frankly, it will be beyond my term as 
Director, and that is for whoever sits here next to make a 
commitment on.
    I think we have performed well in terms of making progress. 
I am disappointed that it is a difficult process, but I think 
we all know it is a difficult process. And one can face a 
difficult challenge like that by saying that you can't do it in 
2 years or 5 years, therefore it is not important. Or you can 
say, we have made a lot of progress over 5 years, and we will 
make a lot more progress over the next 5 years.
    Mr. Horn. Ten years have passed since the enactment of the 
Chief Financial Officer's Act, and that also was a bipartisan 
act, just as was the Inspector General's and the Chief 
Information Officer's.
    As you can see from the report card, which we issued last 
week, 17 out of the 22 Federal agencies reported one or more 
material or significant weaknesses. And as you noted in your 
testimony, the Office of Federal Financial Management exists 
for the purpose of developing financial management policies.
    What is the office doing to address the serious problems of 
poor internal control throughout the Government? Practically 
every agency is inadequate in the internal controls.
    Let's move it closer to the director so he can see it.
    Mr. Lew. I am afraid it will have to get a lot closer 
before I am able to read it. [Laughter.]
    Mr. Horn. We have little charts around here, but they sure 
haven't increased in the size so any of us can read it.
    Move it up closer so he can see it. Just keep moving it, 
about 5 feet.
    Mr. Lew. I think the whole approach to solving a problem 
like financial management, having a situation where agencies do 
have internally consistent controls is one that is going to 
take some time. I personally have some questions about whether 
the grades are right or wrong. This isn't the place to go 
through line by line and question.
    Mr. Horn. We would welcome OMB giving us some standards. We 
are hoping to work with you on the computer security thing by 
agreeing on some standards that reasonable people could do in 
order to solve the computer security thing, which is a major 
situation that faces this country.
    Mr. Lew. As you know, we are working with the agencies 
trying to develop a coordinated approach. I think to have a 
single set of standards may not be the right approach there 
because the standards would evolve and change as the threats 
change. But, we agree there should be the protocols in terms of 
individual responsibility for their computers, agency 
responsibilities for having systems in place, coordination with 
the private sector. A few weeks ago, the President had a 
conference on Internet security. There was a very interesting 
spirit of cooperation that was cautious but optimistic. The 
Government would be good partner in not telling the private 
sector exactly what had to be done in the area of Internet 
security.
    It is a different world when we are interconnected. And we 
have to be careful not to impose such rigid requirements that 
they spill over and impede the private sector's ability to deal 
with many of these problems.
    We are working with them, and there is a cooperative, 
voluntary working arrangement that I think is very promising. 
But I think we have to be careful about being too rigid about 
it, or we could chill the progress.
    Mr. Horn. We would welcome what your standards are and take 
a look at it. We are not wedded to the grading. We do grade on 
an absolute. It is not a relative little curve. You can be all 
As or all Fs. Right now, we have a real problem.
    Mr. Lew. Yes, I think we have made a lot of progress in 
terms of the audited financial statements. The need for better 
internal controls is one that we share. I don't think that we 
would question the need to have better internal controls. But 
we have gone from a situation that was quite behind where it 
should be to a situation that is perhaps further along than 
this set of grades suggests, and the direction we need to 
continue, making improvements.
    I would hope we could work together on this. The notion of 
doing it on a report card basis has a certain kind of----
    Mr. Horn. Well, it hones it on people. Some of my friends 
in the cabinet have tapped their Y2K report card on their door 
to shape up their bureaucracy.
    Mr. Lew. I don't think there is any question that we want 
to work together on developing better internal financial 
controls. And we view that as something that is not a partisan 
issue. It is something that we should have a shared----
    Mr. Horn. Just good Government?
    Mr. Lew. Yes, just good Government.
    Mr. Horn. Last week, the Comptroller General also testified 
before the subcommittee that agency financial systems overall 
are in poor condition, cannot produce consistent reliable 
information to manage day-to-day Government operations, and 
that it took heroic efforts for agencies to obtain clean 
opinions.
    Given those statements by the Comptroller General, how can 
you say that agencies have improved their financial 
information? And what is OMB doing to address the issue?
    Mr. Lew. I would note that more agencies have clean 
opinions, more of them have timely clean opinions, and some of 
the agencies that have yet to get clean opinions are a lot 
closer.
    I would rather succeed in a heroic effort than fail to try.
    Mr. Horn. We agree with that. Boy Scout values are very 
good. I am all for them.
    The Debt Collection Improvement Act--dear to my heart--
passed and enacted in 1996, requires agencies to forward 
delinquent debt to the Treasury Department. The subcommittee 
has concerns because many agencies are doing a poor job 
submitting this debt for collection. This is money owed the 
taxpayer.
    What is the OMB operation doing to facilitate the referral 
of the billions of dollars of delinquent debt to the Treasury 
for collection?
    Mr. Lew. Over the last number of years, we have been trying 
to work quite broadly to improve our debt collection practices. 
We have worked with the Congress on a number of occasions on 
legislation that gave us tools that were more effective. In 
this last set of appropriations bills, in the area of student 
loan debt collection, we had an important provision which we 
very much supported that would permit us to be much more 
aggressive.
    We have a kind of structural problem in debt collection. 
Agencies in the past haven't felt the direct incentive to 
collect debt. It didn't affect their program one way or the 
other. It was a burden. It was something that wasn't very 
popular in the community they were working in. It is an area 
that we--working with this committee and others--have had to be 
very aggressive about saying, ``We just have the same 
obligation here that we have in terms of collecting taxes that 
are due and that the private lenders have in collecting loans 
that are due.''
    It is just not an acceptable standard that you can ignore 
the need for debts to be properly paid.
    I think we have made some progress. We have made progress 
in terms of defaulted loans. We have made progress in the 
student loan area. The challenge is one that I think we at OMB, 
this committee, and the appropriators with their broader view 
of Government, see more clearly than some of the constituent 
parts do. And I would hope this is an area where we could 
continue to work together on a bipartisan basis.
    Whether you believe in a big Government or a small 
Government, I think we all believe that people who make a 
commitment to repay should keep their commitment and there 
should be consequences if they don't repay.
    In terms of the mechanisms we use, the new-hire data base 
being made available for student loan debt collection is an 
enormously powerful new tool. On the other hand, we have to be 
careful not to so burden the new-hire data base that it becomes 
an unsustainable device to use for its basic purpose, which is 
child support enforcement.
    Suggestions have been made over the years that we be more 
aggressive in terms of using the Treasury IRS process. We are 
very worried that you have to be careful how you do that. The 
Treasury is very worried that in a system of voluntary tax 
compliance, if you go too far in that area, you may have a 
problem in terms of voluntary tax compliance that is greater 
than the debt collection benefit.
    I think these are areas where we have to proceed 
aggressively, but carefully. And I have been very focused on 
this myself just because it is one of those Government things 
we ought to do. If you believe that the Government should be 
making small business loans, then defaulted small business 
borrowers should be required to either repay or the assets 
should be sold and the Government should be in a position the 
bank would be in.
    And we are moving in that direction. We are doing better.
    Mr. Horn. Well, I am glad to hear it because it is long 
overdue. And it goes back to about 1991 with the Internal 
Revenue Service where they started getting about $100 billion 
that they claimed they couldn't collect. I think a lot has to 
be done by the authorizing committees here. Mostly in the 1996 
Act we handled the non-tax debt because there were little 
problems with jurisdiction.
    But let me move to the Government Performance and Results 
Act, on which OMB was very helpful. That, again, was a 
bipartisan bill in 1993.
    In your opinion, have the Federal agencies met the 
performance goals listed in the performance plans? What do you 
think about it?
    Mr. Lew. I think some have and some haven't. But I don't 
believe that meeting the goals 100 percent is necessarily the 
right measure. If every agency met the goals, I think it would 
tell us that the goals were set too conservatively and in too 
constrained a manner. The goals are meant to force agencies in 
the direction they should be moving. It ought not to be set at 
a safe level where they are 100 percent sure they will meet 
them. The idea of stretching to meet goals is as important as 
having 100 percent success meeting the goals.
    And I think the agencies are taking it very seriously. We 
have tried to integrate review of these performance measures 
with the budgetary reviews because that is the way to really 
get the sense of not just how we're doing on a numerical basis, 
but what it means in terms of the real programmatic results. It 
has been impressive to me that we have moved in a lot of cases 
from very soft input measures to output measures to outcome 
measures, where agencies are coming in with much more clearly 
defined senses of how many units of progress they expect to 
make.
    I don't think they should be expected to get 100 percent.
    Mr. Horn. Well, I agree.
    Is there a unit in OMB that can help the agencies in terms 
of figuring out measurements of either surveys of citizens so 
that they know whether they are getting, say, certain types of 
nutrition or not? It seems to me the financial indicators 
really don't mean a thing, but the delivery is what counts. Are 
we trying to make change and help people?
    How are those measured? Does OMB have any little unit that 
calculates this?
    Mr. Lew. I would say that it is a combination of a unit and 
the whole organization.
    The Deputy Director for Management has the lead in working 
on this issue. In order to really get into the programmatic 
details, we draw on the resources of our resource management 
organizations and work together.
    I think we have overcome some of the kind of cultural or 
jurisdictional barriers that may have existed 10 years ago in 
asking questions like this. If you asked a program examiner 
whether he or she needed any help in this, that is what we do 
in the first place. If you had asked someone 10 years ago if 
that was the budgetary reviews were done, they would say they 
are measuring inputs, not outcomes, not outputs.
    I think we are now at a place where the people who have the 
detailed programmatic knowledge of what is going on in terms of 
interdiction of drugs, what is going on in terms of achieving 
higher nutritional levels, and the people who have experience 
working on conceptual approaches to measurement in management 
are teaming together. We are working with the agencies and 
making real progress.
    In each and every review we had discussions that were much 
better than any of the discussions we had had in the six 
reviews I have been through. And it is not for lack of interest 
because my predecessors as Directors were as interested as I. 
But we have made progress. There is much, much more progress to 
be made.
    Mr. Horn. I am glad to hear that.
    I now yield 10 minutes for questioning to the gentleman 
from Texas, Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    Jack, if you will excuse me, I want to go back to the 
subject we discussed earlier.
    When I asked you to describe the Office of Information and 
Regulatory Affairs, you identified that as the office that is 
charged with information technology management, along with a 
host of other responsibilities you mentioned.
    I have always been a big fan of the effort the Vice 
President made in reinventing Government. I was particularly 
interested in that because when that effort was initiated, some 
of the ideas we had implemented in Texas on electronic benefit 
transfer on the Food Stamp Program were looked at by that 
working group. It was sort of the point at which the Federal 
Government began to move forward in what they had seen that we 
had already done in Texas, where we had been an advocate of 
using the smart card for food stamps way ahead of any other 
State in the Nation.
    And my impression was that because the Vice President's 
emphasis on reinventing Government was put in place at the 
Federal level, some new ideas flowed into the Federal 
Government and allowed us to make some improvements.
    Information technology, as we all know, holds the 
opportunity for both the public and private sector to make vast 
improvements in the way we deliver services. For the Federal 
Government, we know it is going to make it more accountable, 
more consumer/customer friendly, more accessible to the public, 
more efficient, cost-effective--the benefits are numerous.
    I really am interested in trying to work with you to be 
sure that we can accomplish this goal of gaining a greater 
emphasis on information technology than we currently have. I am 
not much to predict the future, but I would be very surprised 
if whoever is elected the next President of the United States 
doesn't have an aggressive initiative on the utilization of 
information technology in the Federal Government.
    The question I am trying to anticipate is, how do we 
structure that so that it works well, so that it is more than 
window dressing, so that the actual structure of that effort 
works within the framework of the Federal Government?
    Also, specifically, what is the current relationship 
between OMB and the CIO Council, if there is any relationship?
    Mr. Lew. OMB is the Chair of the CIO Council. Without a 
confirmed DDM, we are doing things on an acting basis, but we 
do Chair the Council. And I think the CIO Council has been a 
very useful arena for having these conversations. The guidance 
I just sent out regarding computer security was very much the 
subject of discussion at the CIO Council, drafts were 
circulated and discussed, and it was a forum for working 
through some of these very difficult issues.
    Regarding your characterization of my response on your 
first question on OIRA, if I created the wrong impression, I 
would like to correct it.
    OIRA coordinates many of the information technology issues, 
but by no means has sole responsibility at OMB. Let me give you 
three examples of where OMB's resources were drawn on broadly.
    EBT I mentioned earlier where we had our resource 
management office working with the DDM and OIRA. It was a real 
collaborative task force effort working with the agencies.
    Tax system modernization: working with our General 
Government Division, coordinating with the agency, with OIRA's 
expertise.
    The problems we have had over the years at HCFA with their 
computer system: our Health Division was very much involved.
    I think one of the things OIRA has the ability to do--and 
the Deputy Director for Management, more importantly, has the 
ability to do--is to draw broadly on all of OMB's resources. We 
have a capacity that is unequaled in the Federal Government to 
reach into agencies and work with them to help them solve these 
kinds of complicated problems. I am afraid that if you set 
somebody up in an independent office, they just couldn't do 
that. Or if they did, they would be doing it in a way that was 
less efficient.
    I am never comfortable when questions of this nature come 
up because I don't think we should be ``turfy'' about these 
discussions. If the best way to do this is to have an 
independent office, I would say that. I don't think in this 
case that that is correct. I believe that if there is a problem 
with how OMB is doing it, then we ought to solve that problem 
by giving it the proper place in our priorities. But I think to 
separate it from OMB is to weaken our ability to get our hands 
on the problem.
    And that doesn't mean that there can't be advisors in other 
places. Surely, in many issues, we coordinate with the National 
Economic Council, the Domestic Policy Council--there are 
numerous areas where we have core responsibility where we 
coordinate with other policy offices that report to the 
President. But I think this is a little different than most of 
those in that it is kind of cross-cutting. It is fundamental to 
what we are going to be doing as managers of the Federal 
Government over the coming decades. To suggest that you can 
separate it from other management and budget concerns almost 
has the effect of putting it more at risk.
    I know that is not your objective. I am giving you my frank 
view of the tools that we have. And I would welcome--and I am 
sure in the coming years my successors will welcome--the advice 
on how to do it better.
    Mr. Turner. And I certainly don't mean to leave the 
impression that I suggest that we separate it any more than 
John Koskinen's office was separated from the OMB. What I am 
looking for is an individual who can elevate the profile of 
information technology, who has a unique background and 
expertise in the area. John Koskinen seemed to fit perfectly 
for the job he was given. But when we talk about the subject of 
information technology, I suspect if we reviewed your 
background or the background of the Director of Management, you 
would not find the background I am looking for.
    Not only are we talking about background, but we are 
talking about profile. I am looking for a structure that would 
enable the Federal Government to place an emphasis on moving 
aggressively in the area of information technology. I get the 
impression that one of the roles the OMB performs rather well 
is the implementation of current laws that have impact in 
information technology.
    Your oversight role in implementing Federal law is, of 
course, critical. But I don't see a long-term emphasis on 
information technology policy of the nature that I think we 
need to see in the Federal Government. And I think a structure, 
an individual, an office directly accountable to the President 
can be the spark plug that is needed to allow aggressive 
implementation of information technology.
    I agree that we need--as you shared with me, OMB has the 
overview, if you look across agencies. This individual needs to 
have that ability. That person needs to be able to look into 
the Department of Human Services and say, I see some areas 
there where we can implement information technology in a way 
that perhaps we can do it immediately. We can do it in that 
agency perhaps better than we can some other. And that person 
can make the decision to say, We are going to move aggressively 
in this agency for this reason. Then perhaps establish a model 
or a pattern that then later other agencies can follow.
    So it is that kind of overview I am looking for. But it is 
also an elevation of the profile of the issue.
    Mr. Lew. I think it is important to separate the question 
of profile and expertise from the tools that we have. In terms 
of profile, to some extent that is something that one could 
change. If you look at my predecessor, by establishing as one 
of his major areas of concern putting rules out that govern 
information technology procurement, he was asserting that that 
was a central OMB responsibility. One of the decisions I made 
when I took over was to be focused very much on the 
implementation of those rules. It was very clear that that was 
a question I was going to ask at every single budget review. 
That word went through our organization, went back to the 
agencies, and was part of our discussion of every agency's 
budget request.
    The Clinger-Cohen Act was something we worked very closely 
with the Congress on. That was a law that was an important law 
where we played a creative and helpful role working with the 
Congress, who ultimately has the responsibility for making the 
law.
    I know John Koskinen pretty well, and don't believe that on 
paper his background is as a computer expert, either. He 
brought a special set of personal strengths in terms of crisis 
management, and knowledge of OMB as former Deputy Director for 
Management. He was given the task to generate a public 
profile--because it was as much a public education effort as it 
was a management responsibility.
    If you are looking at the long term, I would question 
whether sustaining it as a crisis is the right approach. I 
think we have to make it something that is just core and 
central to how we manage. And that I think is quite central to 
our traditional roles at OMB in terms of both management and 
information technology.
    We share a common goal. I don't think there is disagreement 
that this is an area of enormous importance for the level of 
attention you are describing. I just think we need to work 
together, thinking through what the present kinds of different 
approaches are. I have made clear my own view, but I am 
delighted to continue working with you on this.
    Mr. Turner. Thank you, Jack.
    Mr. Horn. Thank you very much. We now have 10 minutes of 
questioning.
    Just to round out a few things and then get back to Mr. 
Turner, the standards that I take it you will look for on 
computer security--will you look at what an agency really needs 
to have in this area? If you are going to do that, obviously we 
think that is a great idea and you ought to get quarterly 
reports and we would like to look at them, just like we did 
under the Y2K situation.
    What is your feeling on that? Can we count on OMB for 
standards in this area? And about when will they be put 
together?
    Mr. Lew. On February 28th, we sent out guidance to the 
departments with both a set of principles and a set of policies 
in terms of how they should incorporate computer security into 
their plan.
    Mr. Horn. Could we put it in the record at this point?
    Mr. Lew. Sure, I would be happy to.
    Mr. Horn. Without objection, that documentation will appear 
in the record.
    [The information referred to follows:]

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    Mr. Lew. Regular reporting is important. Integrating it 
with the budgetary decisions in terms of the IT budgets is 
important. Whether it is quarterly or some other period I think 
is something that we need to work on over time to determine the 
right frequency.
    Mr. Horn. On our general management situation on the goals 
under the Performance Act, I looked at page 17, on appendix 
three in the 1999 Performance Report, and you checked off that 
you had accomplished your goal of ``continuously working with 
agencies to improve management practices throughout the 
Government.'' Is that an immeasurable goal? If so, how are you 
planning to see that that checked-off item really has some 
teeth in it and where it would be accomplished, as it says 
here?
    I am dubious on that. That is why I am bringing it up to 
see if we can get a little focus.
    Mr. Lew. Again, it goes back to the efforts that we have 
that are governmentwide and the efforts that are agency-
specific. On a governmentwide basis, the things that we are 
doing in information technology, the things we are doing in 
financial management--while we have a ways to go to achieve our 
goals, we are making progress. We have discussed those at some 
length already.
    With specific agencies, of our 24 priority management 
objectives, 12 of them are very much focused on specific 
undertakings with agencies. I give regular reports on those and 
on not an infrequent occasion work with heads of agencies on 
those. I think we are making progress.
    I am very proud of the work we have done with the INS to 
try to take a backlog that was really, really unconscionable 
and turn it around. It did not happen by accident. It happened 
because of serious top-level by myself and by the Attorney 
General. It is not a problem entirely solved, but it is 
substantially remediated.
    I can go through other examples as well.
    Mr. Horn. No. On that, how much credit would you give OMB 
versus giving Charles Rossotti as commissioner?
    Mr. Lew. No, INS not IRS.
    Mr. Horn. OK. I thought you said IRS.
    Mr. Lew. But in the case of IRS, we have worked closely on 
many issues helping them get a handle on their own internal 
management issues. Mr. Rossotti brought with him the kind of 
expertise that you are lucky to bring into Government in terms 
of information technology.
    But even there, we worked very closely with him to make 
sure that the benchmarks required would be met and that it 
wasn't going to be a repeat of past problems which were very 
serious.
    Mr. Horn. Well, since you brought up INS--and I am a 
Californian, border State, if you will--what do you think needs 
to be done now? Do we need more agents? Is OMB willing to 
recommend to the President that that happen?
    I remember as a freshman making a speech on the subject 
that hadn't been made before, believe it or not, and we 
authorized a lot of people. And it took forever to educate and 
train them because you cannot just take anybody who is in 
enforcement and put them on the border. They need to know 
languages, they need to understand and be sensitive to what the 
situation is there.
    Mr. Lew. The priority management objective I was referring 
to had to do with the naturalization side of INS. You are 
asking about the border control piece of it.
    There have been a number of difficulties. Setting a goal of 
hiring new agents is one part of it. Actually being able to 
recruit and train the agents is another. And we are in an 
economy where we are competing with many other agencies and 
many other entities as we try to recruit people for those jobs. 
There are many slots that have been difficult to fill.
    We have made suggestions in the budgets of the last few 
years, which unfortunately have not been funded but I think 
would very much enhance the efficiency of border control.
    Mr. Horn. Have they been asked for in the budget?
    Mr. Lew. We have requested for several years now things to 
augment human agents on the border. For example, there are 
technologies where posting of cameras at regular frequency 
along the border and having SWAT teams come in when there is a 
problem is a way of leveraging our personnel to cover the 
border more effectively. That has not been funded. I hope we 
can work together on things like that.
    Mr. Horn. Definitely. And please file that for the record 
at this point in the record.
    Mr. Lew. I would be delighted to. It is both cheaper--
because you have a camera instead of the FTE--but when you 
don't have the FTEs and you can't recruit them, you have to be 
more efficient in how you use your resources, apart from just 
the money.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T0219.030
    
    Mr. Horn. Let me move to the Privacy Act now.
    I think OMB still has a responsibility for implementation 
of the Privacy Act.
    Mr. Lew. Yes.
    Mr. Horn. Are you aware of the extraordinary backlogs that 
exist in some of the agencies in responding to requests for 
information under the law? In other words, it isn't months, it 
is years.
    What do we know about that and what is OMB doing about it?
    Mr. Lew. The issue is more what is happening in the 
agencies than what is happening at OMB. We get several hundred 
submissions from the agencies. I am not aware of OMB backlogs 
of that sort, but I would be happy to go back and----
    Mr. Horn. When we had a hearing several years ago, there 
was a 4-year wait to get your file from the FBI. I know they 
have put more resources on that and we haven't scheduled that 
hearing yet, but I would appreciate it if OMB took a look at it 
and provided in recommending in the President's budget to get 
the resources so citizens can know what is in Government files 
and not be put off by 4 years.
    We even asked them--suppose a Member of Congress asked 
that--it would take 4 years, too. So finally, the excuse was, 
if you have a hearing about it--so I filed on that and we got 
the files. But do we have to hold a hearing for every American 
in order to see what is going on?
    Mr. Lew. Our role is at a more general level where we set 
guidelines and generally review. I will have to go back and get 
some more information about the backlogs that may be happening 
at the agency.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T0219.031
    
    Mr. Horn. I would appreciate it.
    In the absence of the Deputy Director for Management, who 
Chairs the President's Management Council?
    Mr. Lew. The Deputy Director designate is serving as the 
acting chair, but all the official functions are handled by a 
confirmed official. It is not an ideal arrangement.
    Mr. Horn. I can imagine.
    In OMB's fiscal year--we have handled that enough, and I 
only have a minute and a half.
    So let me ask, what is your view of the proposal that I am 
proposing on an Office of Management separate from the Office 
of Budget with both directors reporting to the President? And 
one of the reasons for this is that we need people who are 
directors, who know something about the field. And we have very 
few directors of the budget that have ever dealt in major 
management situations, never headed a huge consulting firm, 
let's say, that does this regularly for corporate America. So 
give me your best shot at that.
    Mr. Lew. I think that the benefits of keeping management 
and budget together far outweigh any of the benefits you might 
get from having separate individuals chosen for expertise in 
budget or management to head either one. It is inherent to the 
job of OMB Director that you will spend a lot of your time 
working on things you have never worked on before. There is no 
person who can come with prior knowledge of every agency of 
Government, every program of Government.
    The management issues are not different from the budget 
issues in that regard. The OMB Director couldn't do the job of 
OMB Director if not supported by an excellent staff. And I go 
back to the career staff, which is the heart and soul of OMB. 
We have the most talented group of people in Government working 
for OMB. They are a treasure, and we work constantly to 
strengthen that.
    To take the function of management and separate it would be 
to separate it from the tools that we have to focus attention 
to management issues.
    Let me go back to something I said a little earlier. The 
imperative of obtaining funding, both in the President's budget 
and the appropriations process, focuses the minds of agencies, 
unlike most other policy deliberation. I don't believe a 
Director for Management without the budget function would have 
the same ability to work with agencies on issues that agencies 
would just as soon not have help with sometimes. I think it is 
very important to keep them together.
    Mr. Horn. I used to agree with you on that. When I had been 
on President Nixon's White House Task Force, I thought it was 
such a great idea. They could use the budget to get some 
changes in management. When I got back here it was very clear 
my friends who were senior civil servants and real career 
people--they said that nothing was happening over there, that 
they weren't using that power. So if you have a list of things 
where you have used the budget to solve a management thing, I 
am glad to put it in the record at this point.
    Mr. Lew. There are examples of that, but I think more 
important than the use of it is the threat of it. You don't 
want to have the budget process used to force management 
change. What you want is a process where you get agencies to 
focus on management problems, solve them, and do it in a 
collegial way.
    It may be perhaps my philosophy of OMB and how the Director 
of OMB should function, but in general I think you get a lot 
more done by working with people than by holding a club over 
their head. But having the club in your back pocket is very 
useful.
    [The information referred to follows:]

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    [GRAPHIC] [TIFF OMITTED] T0219.034
    
    Mr. Horn. I now yield 11 minutes to my colleague from 
Texas, Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    I want to go back and just round out a couple of things 
that might be helpful to me.
    You acknowledged that OMB Chairs the CIO Council. I was 
asking about the relationship between OMB and the CIO Council. 
What I was really looking for was, What has resulted from the 
relationship between the CIO Council and OMB?
    How often do they meet together? How often does the CIO 
Council meet?
    Mr. Lew. It is a monthly meeting.
    Mr. Turner. Maybe the best way to get at this--do the CIO 
Council meetings have minutes of what takes place at the 
meeting?
    Mr. Lew. I have people report to me on what happens at the 
meetings, but I haven't seen minutes, per se.
    Mr. Turner. Maybe it would be helpful to me if I could just 
request, with the chairman's permission, copies of any minutes 
or any reports that relate what kind of discussion has taken 
place at these monthly meetings since the CIO Council has been 
in existence. That I think would be helpful.
    Mr. Lew. I am not sure that we have minutes in a formal 
sense, but we would be happy to get back to you with a 
description of things that the CIO Council has worked on and 
deliberated.
    Mr. Turner. My expectation is that we will read a lot about 
discussions on current law, discussions about procurement, 
maybe even some general discussions about the problems of 
computer security. I suspect that I will not find the kind of 
forward-thinking initiatives and discussions on long-term use 
of information technology about which I am concerned, but if 
you could provide me with that or the committee, that would be 
helpful to me to read that.
    Mr. Horn. Without objection, the referenced information 
will appear in the record.
    Mr. Turner. The other request that I think would be helpful 
to me would be to see the documentation and copies of any 
reports, memos, etc., that exist within OMB--at least for the 
last year--that would reflect specific proposals, 
recommendations, or initiatives for long-term utilization of 
information technology in order to make Government more 
accountable, more open, more efficient, more cost-effective--
those kinds of documents--so I can get a good picture of what 
OMB is actually doing in terms of actual initiatives or 
proposals for the greater use of information technology.
    Mr. Lew. I would be happy to respond for the record in more 
detail, but let me just note preliminarily that the way the CIO 
Council is organized, there are committees that work in a 
number of areas--there is a Security Committee, an 
Interoperability Committee, the Government Committee--and there 
are efforts underway in each of these areas to have 
collaborative thinking about the future.
    I would be happy to get back to you. I am not sure what 
formal documentation we have, but I would be happy to respond 
to what I understand to be your inquiry.
    Mr. Turner. And keep in mind that I am interested in what 
the CIO Council is doing, but these committees you are 
referring to within the CIO Council might be sort of mini-think 
tanks.
    Mr. Lew. No, these are program people who run their 
information offices. This is a not a think tank group. These 
are people with real responsibilities to implement.
    Mr. Turner. Right. I understand that. But my greater 
concern is, where is the point within the Federal Government 
where we have the ability to actually initiate change with 
regard to the utilization of information technology?
    I agree with you that this has to be a partnership between 
these agencies, CIO, and the OMB. I agree with many of your 
points, Mr. Lew, about the relationship between budget and 
management, because we are talking about dollars. In order to 
give anyone in a position of a special assistant to the 
President on information technology the ability to do anything, 
they are going to have to have some funds where they can direct 
it toward an agency to initiate some information technology 
improvement.
    So those issues certainly are linked. But I think it would 
be helpful to me to see what the work product has been with 
regard to specific recommendations for change, initiatives that 
are occurring and flowing from OMB out to the CIO or to the 
agencies themselves. That will give me a little bit better feel 
and understanding of where I think we might need to go.
    Mr. Lew. I would be happy to respond.
    Mr. Turner. Thank you very much.
    Mr. Horn. I thank the gentleman for an excellent series of 
questions, and I thank you, Mr. Director. Sorry to keep you so 
long, but we had a lot of things to ask about and you did a 
very good job.
    Mr. Lew. Thank you.
    These are very important questions that I think are central 
to what we do at OMB and in the long-term the issues we 
appropriate on every year are less important than some of these 
broader questions, which have to do with the direction that we 
are going and the challenges we face. We need to keep the 
forest in mind as we are pruning the trees.
    Mr. Horn. We are glad to have you here.
    We now have panel two, which is the Honorable David M. 
Walker, Comptroller of the United States.
    [Witness sworn.]
    Mr. Horn. Please proceed.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL OF THE UNITED 
             STATES, U.S. GENERAL ACCOUNTING OFFICE

    Mr. Walker. Thank you, Mr. Chairman and Mr. Turner. I 
appreciate the opportunity to appear again before this 
subcommittee. This is getting to be a regular occurrence. I 
think it was last Friday that I was here last.
    I would like to commend this committee at the outset for 
its continued focus on important management issues, and its 
willingness to lead by example in this regard. I can assure the 
taxpayers of the United States that they are getting their 
money's worth with regard to this subcommittee. I commend you 
for your combined efforts.
    I have mixed emotions about appearing at this hearing for 
several reasons. We have an ongoing and constructive working 
relationship with OMB in order to address a number of 
challenges that face Government and in order to maximize the 
performance and assure the accountability of Government for the 
benefit of the American people.
    I can note at the outset that just as GAO has a number of 
dedicated and hard-working professionals, OMB does as well in 
the area of management. However, at the same point in time, I 
would note that OMB does not have a confirmed leader as Deputy 
Director of Management, which is a major problem and obstacle. 
And second, OMB needs to have more people focused on management 
and needs to spend more time dealing with a number of major 
management issues.
    Mr. Chairman, we believe that the Nation is at an important 
crossroads. As you know, the cold war is over and we won. In 
addition, we are not fighting annual battles over budget 
deficits every year. At the same point in time, this is the 
time that we need to start asking ourselves not only what 
Government does, but how Government does business. It is this 
second issue that this hearing is about: how Government does 
business.
    Our recent strategic plan demonstrates that many of the 
challenges that face the Nation are growing in complexity and 
interdependency. In fact, they have no boundaries globally, 
domestically, or within the Government--either in the executive 
branch or the legislative branch.
    While individual departments, agencies, and program 
managers have the primary responsibility for strategic planning 
and management, it is critically important that OMB play a role 
in addressing current and emerging issues of importance, high-
risk areas, and cross-cutting governmentwide issues.
    In some ways, OMB is uniquely positioned to be able to 
address governmentwide management issues because they have the 
ability to leverage the budget process to assure that they get 
people's attention. As we know, Mr. Chairman, he or she who 
controls the money you better take seriously. But just having 
that ability has to be followed up by exercising and having 
accountability and consequences periodically in order for 
people to take it seriously.
    In OMB's discharging its responsibility, it is important 
that they serve in a variety of roles. They need to be a 
motivator, a facilitator, an integrator, and at times, Mr. 
Chairman, an enforcer. They need to assure there are 
consequences if appropriate actions are not taken.
    While OMB has taken a number of steps in this regard, much 
more needs to be done in the management areas. In addition, the 
management issues--a range of critical management issues--need 
to be an integral and ongoing part of the annual budget 
process. Individuals with management expertise in the relevant 
areas need to be at the table at the time these issues are 
considered as part of the annual budget process.
    For example, Mr. Chairman, as you know, to OMB's credit, 
they have identified a number of priority management objectives 
[PMOs]. In many cases there are a lot of commonality between 
their PMOs and our high-risk list or our major management 
challenges and program risks. They are not synonymous. There 
are some gaps. But there is a lot of overlap.
    But unfortunately, a lot of these PMOs do not have clearly 
defined or measurable goals. Therefore, it is very difficult to 
ascertain progress and to know when success truly has been 
achieved.
    You have pointed to the most recent report OMB has issued, 
which is the Fiscal Year 2001 Annual Performance Plan. If you 
look at a lot of their measures, they refer to ``working 
with.'' ``Working with'' is good, but it is not a result. It is 
important that we have clearly defined and measurable outcomes 
as the focus of what we are trying to achieve in a more 
results-oriented Government.
    In addition, OMB does not have enough people with the right 
skills to focus on certain critical management challenges. For 
example, strategic planning, change management, information 
technology, and human capital. These are critical management 
challenges that require a level of expertise in addition to 
leadership and other behavioral attributes.
    Furthermore, OMB needs to expand its horizons as to how it 
measures success in certain circumstances. For example, GPRA 
has to be much more than an annual paperwork exercise. GPRA 
must be a foundation and framework for how Government does 
business every day. It must be a foundation for moving toward 
more results-oriented, accountable Government.
    The CFO Act is much more than clean audit opinions. As you 
pointed out, sound internal controls and compliance with the 
Federal Financial Management Improvement Act are also important 
because what the CFO Act really is all about is how to ensure 
that we have timely, accurate, useful information to be able to 
make informed decisions every day.
    IT is much more than Y2K. Computer security, e-commerce, 
other issues are critical important as well. And human 
capital--people--represents the missing link in the 
Government's effort to try to achieve a more results-
orientation. We will never maximize the performance and ensure 
the accountability of the Federal Government for the benefit of 
the American people unless we spend a lot more time on the 
people element, and OMB has a critical role to play. This 
cannot be turned over to OPM. They can make contributions. They 
are making contributions. But this is a strategic issue of 
major importance to the Government and our Nation. OMB needs to 
focus more attention on the broader dimensions of these 
challenges, and they need to be able to have the human and 
financial capital to be able to do so.
    While OMB needs to focus on a broader range of management 
issues, there are several models that could be used in order to 
address these different challenges. I note several in my 
testimony. There are several models that have been used in the 
past and should be used in the future.
    Basically, we need to follow the concept. The form that is 
used must follow the function that is performed. And I will be 
happy to answer in questions and answers some examples of that. 
In the end, it really doesn't make as much of a difference how 
one is organized as whether or not you have the absolute 
commitment from the top, whether you have the people, the 
processes, and the technology to make it happen and to maximize 
results and assure accountability.
    As I have stated before, Mr. Chairman, we have worked in a 
constructive fashion with OMB in the past, and where we have 
considerable progress has been made. For example, Y2K and 
certain elements of financial management. We will continue to 
do so in the future, irrespective of OMB's role and their 
resource allocation. But we do believe that OMB needs to place 
more emphasis on the ``M.'' We think that is critically 
important.
    I would also close by saying, Mr. Chairman, in addition to 
OMB placing more attention on the ``M,'' I think it is also 
important that Congress pay more attention to the ``M.'' This 
subcommittee is leading by example in that regard, but much 
more needs to be done by the Congress in the area of concerted 
and ongoing oversight in this area as well.
    Thank you, Mr. Chairman. I would be happy to answer any 
questions you might have.
    [The prepared statement of Mr. Walker follows:]

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    Mr. Horn. Thank you.
    As usual, you come well prepared and you have a very fine 
professional force that backs you up in the General Accounting 
Office.
    Director Lew testified that agencies should not be expected 
to meet all their stated goals. He also said that OMB is making 
progress coordinating the Results Act implementation.
    What are your reactions to his comments?
    Mr. Walker. First, I think it is important that you set 
stretched--but attainable--goals. You don't want to set goals 
that are so easy to meet that they are a lay-up. I think you do 
want to try to stretch people. But you want them to be 
attainable. Therefore, I believe that a vast majority of the 
goals that you set for a particular year should be achieved.
    I think progress is being made with regard to the 
Government Performance and Results Act, but I don't think it is 
anywhere near where it needs to be. I think people still 
viewing GPRA too much as an annual paperwork exercise rather 
than recognizing that this is the foundation for how they ought 
to be operating. People need to recognize that in addition to 
preparing these plans, they need to effectively change the way 
they do business consistent with these plans in order to focus 
more on outcomes rather than outputs and to focus more on 
results rather than processes.
    Mr. Horn. Have you and your colleagues in the General 
Accounting Office had a chance to assess OMB's fiscal year 2001 
plan and the fiscal year 1999 performance report?
    Mr. Walker. We have looked at it on a preliminary basis. We 
haven't completed it. I would say that the plan that I just 
referred to, which is the 2001 plan--our preliminary review is 
that we are somewhat disappointed. While clearly they prepared 
it and it did meet the required timeframe, some of the goals 
and measures were not as clearly defined and as measurable as 
they should be. And candidly, I question whether they met their 
own standards for what the agencies are supposed to do.
    I think it is important for us at GAO, being the lead 
accountability organization, as well as for OMB, being the 
representative of the President in this area, to lead by 
example. So we haven't finished our review, but it is somewhat 
disappointing.
    Mr. Horn. Director Lew also testified that he would not 
separate management from the Office of Management and Budget 
because the budget issues drive the management ones.
    What are your reactions to those comments?
    Mr. Walker. Well, Mr. Chairman, I have mixed emotions about 
whether or not to separate management from budget. I care more 
about the result and what needs to be done rather than how it 
gets done.
    In theory, having the ability to leverage the budget 
process is a powerful tool. If properly exercised, I think it 
is desirable to keep them together. In practice, I think that 
we have seen that the ``M'' has been clearly secondary to the 
``B.'' I think there are different ways we can try to achieve 
more equilibrium. If we don't see more leveraging of the ``B,'' 
then other alternatives need to be looked at. But I care more 
about focusing more of the right kind of skills and attention 
on the ``M'' than what the organizational structure is.
    Mr. Horn. Your shop, the General Accounting Office, has 
done a marvelous job over the years at the beginning of each 
Congress to give us a high-risk series. Could you sort of 
summarize the five most important things that the executive 
branch, regardless of party--you can go back to 1991, if you 
want to--what is happening on that front? Are they listening to 
the General Accounting Office, which is part of the legislative 
branch? We depend on you very greatly for the fine work that 
you do. But what about some of these high-risk series? Are they 
just reports that gather dust for Ph.D. students to analyze? Or 
is the executive branch taking it seriously?
    Mr. Walker. OMB has reviewed our high-risk list. They are 
aware of it. In fact, with regard to the priority management 
objectives, most of the items--not all, but most--that are 
included in our high-risk list are addressed one way or the 
other in the priority management objectives. A couple of 
examples of ones that are not included would be the farm loan 
programs and NASA contracting activities.
    Yes, it is on their radar screen. As you know, Mr. 
Chairman, not many of these areas have come off the high-risk 
list--not as many as we would like--and in some cases they 
represent problems that it took years to create it and will 
take years to get them off. I do think it is important--as part 
of the agencies' performance plans, as part of the budget 
process and as part of the oversight process in Congress that 
this be one of the central elements that continually gets 
focused on as an important area. What kind of progress is being 
made in order to eventually deal effectively with these areas?
    Mr. Horn. What are the worst cases that we have? Medicare 
is certainly one under the high-risk, but what else is there?
    Mr. Walker. There are a number. Computer security is one 
that I know is of interest to yourself and Mr. Turner, in 
particular. That is an area that, quite frankly, I would say is 
bigger and more important than Y2K. Why do I say that? I say 
that because it relates not just to national security and 
economic security issues--those are obviously important in and 
of themselves--but it also deals with personal privacy. When 
you are talking about health records and financial records and 
things that individuals hold close and very dear to themselves, 
it cuts very close to the bone.
    Acquisitions, DOD management--whether it be financial 
management or whether it be acquisitions at DOD--major 
challenges. Much more needs to be done, and frankly, we are 
never probably going to get a clean opinion on the Government's 
financial statements until DOD gets its act together. And while 
DOD is clearly an ``A'' in fighting and winning armed 
conflicts, which is their primary mission, they are a ``D'' at 
best with regard to economy and efficiency.
    Those would be some examples, Mr. Chairman.
    Mr. Horn. Well, I am glad we agree on that. I once held a 
hearing, what did you do with the $25 billion we can't find? We 
gave them a couple of years and they finally got the 
inventories matched with the combined various purchase orders 
and all the rest and got it down to $10 billion. But you are 
right, that is a real mess. And the first Secretary, Mr. 
Forestall, should have said, we are not going to have 149 
different accounting systems, we are going to have one. I don't 
know how many they have now.
    Mr. Walker. For the record, Mr. Chairman, let me say that 
we have been somewhat encouraged by what we have seen at DOD 
over the last year or two. They do seem to be taking these 
issues more seriously, but they have a long way to go.
    Mr. Horn. Let me just mention one more question and then I 
will have Mr. Turner the rest of the time.
    Please elaborate on the point you made in your written 
testimony, ``OMB has not formally assessed the effectiveness of 
the different approaches taken by its statutory offices to 
promote the integration of management and budget issues.''
    How does this comport with the argument that budget and 
management must go hand in hand?
    Mr. Walker. There has been clearly some linkage in the 
past--and we issued a report within the last couple of years. 
That report looked at to what extent there has been some 
linkage between management and budget issues--and we noted that 
there had been greater linkage recently than there had been in 
the past. My point is, not nearly enough.
    And there hasn't been enough considered analysis of how 
best to go about doing that, which I think is important.
    Mr. Horn. I thank you and turn back my remaining minute and 
a half and 10 minutes to the gentleman from Texas, Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    Mr. Walker, you heard my questions directed to Mr. Lew. My 
first question to you, you have already answered. I was going 
to ask you if there was a need for greater emphasis on 
information technology and its utilization. That was one of 
your four items that you placed as areas of great need in our 
Federal Government.
    I was looking through your written statement and it is 
replete with thoughts about the importance of the emphasis on 
information technology. One of your statements is, ``The 
Government's use of information technology has suffered from 
management weaknesses that have resulted in widespread, 
untapped potential to improve service delivery.''
    Then later in your written statement you begin to discuss 
the various approaches to provide flexibility in addressing 
management issues. And you list several that I won't go into, 
but things like the single central leader approach, the council 
approach, the task force approach, etc.
    I want to thank you, at the outset, for the help your staff 
has given me. Dave McClure and Jack Brock have been working 
with me and my staff to try to address the issue I discussed at 
length with Mr. Lew. For that I am very grateful. They are 
outstanding individuals and they bring a lot to the issue. It 
has been very helpful and I appreciate them working through 
this with me and helping me draft some proposals.
    But let me just ask you, as a beginning point, if you can 
articulate your opinion regarding the way OMB addresses the 
issue of information technology. And in particular, Is it 
fulfilling the role of developing and implementing long-term 
information technology for the Federal Government?
    Mr. Walker. This is an area that OMB had been placing 
effort on, but frankly, they don't have enough people with the 
right type of skills to get the job done here. You mentioned 
before about OIRA, for example. The answer Director Lew gave 
was that OIRA has responsibility for the information technology 
area. At the same point in time, if you listened--which I am 
sure you did--to all the different responsibilities that OIRA 
has, all very important, but very diverse responsibilities. 
Then if you look at how many people OIRA has to be able to 
accomplish those responsibilities and if you look at the skills 
it takes in order to be successful in addressing each of those, 
they have almost an impossible task.
    We clearly need more focus on information technology. We 
need more skills in this area. We need to raise the profile of 
this issue. But I think there are different ways to accomplish 
that end. OMB is trying to do the best with what it has, but 
they need to do a lot more.
    Mr. Turner. In your testimony a moment ago, when you were 
discussing ways the Federal Government should address some of 
these issues--information technology, human capital, and the 
others that you mentioned--the first thing you said was that 
there needed to be an absolute commitment from the top. As you 
heard from my questions to Mr. Lew, that is really the place 
where I begin as well, trying to figure out how we can 
structure something that would put information technology in 
the hands of someone who actually had that commitment from the 
top to do the job, long-term information technology planning 
and implementation.
    You have two able staff members working with me, but I 
would invite you--if you have any thoughts of how, perhaps, we 
should structure our approach to dealing with this information 
technology issue--I have been pretty forthcoming regarding my 
suggestions. You noted the reluctance of OMB with regard to the 
Koskinen-type model.
    Do you have any thoughts? I welcome your input and your 
suggestions.
    Mr. Walker. Let me give you several thoughts, Mr. Turner.
    First, as I mentioned before, form has to follow function. 
There are various different forms that you can use in order to 
try to address a management challenge, and they are noted in my 
testimony. But part of it has to do with the function you are 
trying to achieve.
    I would say that in the information technology area we have 
certain short-term needs and certain recurring needs. One of 
our short-term needs is that we really need to raise the 
visibility, and raise the priority of a range of challenges in 
the area of information technology. Computer security is one 
example and e-commerce is another example. They are related, 
but not the same issue.
    Therefore, one might say, ``How best can that be done in 
order to jump start it, in order to get the attention of all 
the persons in the Government--and in some cases outside the 
Government--that need to be mobilized?'' That means cabinet 
officials as well. Therefore, one might make an argument that 
there might need to be some focal point similar to a John 
Koskinen-type situation in order to get this thing going, and 
in order to get it focused, and in order to try to achieve 
certain measurable milestones.
    However, there clearly is a recurring need in the area of 
information technology, in the area of knowledge management, 
for example, within the Government. There is clearly a 
recurring need for a CIO, and for that CIO to be able to have 
high-level visibility and support. And that is not something 
that I think in and of itself would necessarily call for the 
czar model or the special assistant to the President model.
    You may want to think about the different roles and 
functions that need to be achieved and what we are trying to 
accomplish over what timeframe. There might be more than one 
model that would make sense, depending on the functions that 
are involved.
    Mr. Turner. When you mention the CIO, are you referring to 
the concept of a Federal CIO that would have oversight over and 
the relationship of all the agency CIOs that are already 
provided for in present law?
    Mr. Walker. That is correct, Mr. Turner. That is a 
recurring need. That is a recurring function. And one could 
argue, as Director Lew did, whether or not you need a czar-type 
function because a lot of the activities the czar will be doing 
will be recurring in nature. Unlike Y2K where you had a date 
certain that you knew you were going out of business shortly 
after that date certain--either you got it right or you didn't 
and you would know, then there is a market test, and then you 
could end up closing that down.
    In the case of some of the activities in computer security 
and e-commerce, it will be ongoing. At the same point in time, 
I think that what you can say is, do you need to do some things 
differently to get it started, to get it on the right track, 
and then to put it back to another function and merge it with 
the CIO and recognize that it is part of ongoing 
responsibility. You might need to do something supplemental in 
order to jump start it.
    Mr. Turner. Maybe a short-term, year-long effort to place 
emphasis on it through some special high-profile type 
individual, but also in conjunction with that there should be a 
Federal CIO that would have ongoing, continued responsibility?
    Mr. Walker. I think you might want to consider that. As far 
as the length of time and the scope of responsibility, that is 
something that obviously deserves additional consideration and 
deliberation. It is tough to get a whole lot done in a year, 
especially by the time you get the thing started. But I think 
that is something you may want to consider.
    Mr. Turner. It could be a Federal CIO and this individual 
that is going to elevate the profile of the issue for a shorter 
period of time. Could that perhaps be the same person?
    Mr. Walker. It is possible that it could be the same 
person. And I think part of it has to do with what is trying to 
be accomplished. Whoever it is, obviously, is going to have to 
have a tremendous amount of support. And as Director Lew talked 
about, John Koskinen is one person. John Koskinen had to have 
the support of OMB, he had to have the support of the CIOs in 
all the different departments and agencies, and ultimately 
whoever has this responsibility or these responsibilities is 
going to have to have some backup support both on the central 
basis as well as decentralized.
    Mr. Turner. As you could tell from Mr. Lew's testimony, it 
is going to be somewhat of a problem to be sure we structure 
such a proposal so that we can get--as you pointed out in your 
written statement--the buy-in of OMB to this idea as well as 
the buy-in of the various agencies and CIOs in those agencies. 
But I am confident that your staff has the expertise to help us 
do that. I would like to thank you again for your efforts to 
help move us in that direction.
    Mr. Walker. Thank you, Mr. Turner.
    I might also note that while I agree with Dr. Lew that OMB 
has outstanding staff, I would hold the GAO staff up against 
them.
    Mr. Turner. Thank you.
    Mr. Horn. I thank the gentleman for that round of 
questioning. I think we have gotten very good answers from both 
you and Mr. Lew.
    General, we don't need to detain you any longer since we 
have had you on a number of committees here and working through 
the performance issues. We appreciate very much you coming up. 
I particularly enjoyed seeing your accountability study. That 
is a good masterpiece and you do have a first-rate staff that 
does these things.
    I am interested, obviously, in the measurement and what is 
a measurement while we are looking at some of these programs. I 
asked OMB if they had a unit to deal with that, so I may as 
well ask you, does the General Accounting Office have a unit 
that is functioning in that area?
    Mr. Walker. We have an Office of Quality and Risk 
Management. That unit, combined with our different operating 
units, works together to try to define appropriate measures. 
You mentioned, Mr. Chairman, that we just published our first 
accountability report, which really ought to be called a 
performance accountability report. Even in that, while we are 
trying to lead by example--and we think we are in that report--
there it is.
    Mr. Horn. That is Thomas Jefferson's memorial, correct?
    Mr. Walker. That is right. In fact, it includes a quote 
from Thomas Jefferson in 1802 on the inside cover talking about 
the importance of effective Federal financial management. It 
took us a little while. We are still not there yet, but we are 
working on it. That was 1802.
    Mr. Horn. Here it is, April 1802. ``I think,'' said Thomas 
Jefferson, ``it is an object of great importance to simplify 
our system of finance and to bring it within the comprehension 
of every Member of Congress. The whole system has been involved 
in impenetrable fog. There is a point on which I should wish to 
keep my eye, a simplification of the form of accounts, so as to 
bring everything to a single center.''
    He was quite a President. He was the first one to impound 
money when the Army had too many barrels of oats and not enough 
horses to eat them up. So he just impounded it. That is what 
Presidents ought to have now, sometimes.
    Mr. Walker. And let me just say that even for our report, 
while we are very proud of it--we are getting a number of 
positive compliments back--and while I might note for the 
record, Mr. Chairman, I believe on your grading scale, we would 
have gotten an ``A.'' Of course, we wouldn't want anything less 
than an ``A.''
    The fact of the matter is that we are constantly looking at 
how we can revise ours and how we can improve ours. We all need 
to be doing that.
    So, thank you, Mr. Chairman.
    Mr. Horn. We thank you. Thank you very much for coming.
    We now go to panel three: Mr. James C. Miller III, 
counselor, Citizens for a Sound Economy; Mr. Dwight Ink, 
president, emeritus, Institute of Public Administration; and 
Mr. Herbert N. Jasper, senior associate, McManis Associates.
    [Witnesses sworn.]
    Mr. Horn. We will begin with Mr. James C. Miller III, who 
is a former director of the Office of Management and Budget 
from the years 1985 to 1988. We are delighted to have you here.

 STATEMENTS OF JAMES C. MILLER III, COUNSELOR, CITIZENS FOR A 
 SOUND ECONOMY; DWIGHT INK, PRESIDENT, EMERITUS, INSTITUTE OF 
PUBLIC ADMINISTRATION; AND HERBERT N. JASPER, SENIOR ASSOCIATE, 
                       MCMANIS ASSOCIATES

    Mr. Miller. Thank you, Mr. Chairman. I have a statement I 
have prepared.
    Mr. Horn. Without objection, your prepared statement will 
appear in the record.
    If you could summarize your testimony, we could then get to 
questions.
    Mr. Miller. I will do that.
    First, I want to affirm a comment I heard from Director 
Lew. The OMB staff, in my judgment, is the best in the 
Government. It is the best I have ever seen. I think protecting 
and preserving the professionalism, and integrity of the OMB 
staff is something you ought to be concerned about and try to 
maintain.
    The management side of OMB is much more difficult than the 
budget side. When you talk money, people listen. When you talk 
management, they don't. The budget side is the benefits that 
agencies receive. The management side is the cost because you 
followup on what they are doing. The incentive structure is 
such that people in agencies don't want to pay attention to the 
management side.
    Let me just give you a case in point. Mr. Turner raised the 
business of collecting loans. Agencies don't care about 
collecting loans. Moreover, if you use information technology 
to engage in more efficient management, just think of the 
incentives. First of all, from the budgetary side, especially 
with hardware, you have to pay for it all up front. You don't 
amortize it in the Federal Government. You pay for it up front. 
The benefits flow over a long period of time--after most people 
who are heads of agencies are gone. Their incentives are not to 
do that.
    Second, if I had to add one recommendation to my testimony 
it would be to privatize as many functions as you can. But you 
have to bear in mind that sometimes you really get results. So 
be careful what you ask for because you might get it.
    During my tenure at OMB, we were successful in getting 
Congress to enact legislation that allowed the administration 
to farm out the collection of debts to private companies. And 
guess what? They collected the money. But there was such an 
uproar from some people that there was an estoppel on the 
collection of debts.
    So you realize that some of these things are going to 
generate some backlash as well.
    I don't want to suggest that it is impossible to improve 
management. There are some good case studies. Jerry Ellig, a 
colleague of mine at George Mason University, just finished a 
study where he found that FEMA was wonderfully productive and 
its leadership had turned the agency around. Mr. Witt's 
inspired leadership, the use of information technology, the 
redirection and the refocus of the agencys is a real success 
story. So it can be done.
    Let me give you several recommendations. Give managers more 
freedom to manage, but hold them responsible for results.
    Second, you need to recognize superior management and 
success cases, superior performance. I ask, rhetorically, when 
is the last time you had an agency head up here and said, 
``Joe, you and Sarah have done a terrific job. Tell us what you 
did and how we can apply those lessons to other agencies?'' So 
you need to use the carrot as well as the stick.
    I know, from experience, that Government officials are 
often the object of criticism. It is those few little times 
that you get praise that you remember and that spur you on.
    Three, I think we need to be honest about all this reform 
and what we can accomplish, what we can't accomplish, what we 
have accomplished, and what we haven't. Frankly, some of the 
representations made about the National Performance Review and 
the Results Act, are terribly disappointing and/or misleading. 
I don't think they have done well at all. Coining names like 
reinventing or reengineering--or all those acronyms--I mean, 
that is not going to improve the management of Government.
    Fourth, get rid of the agencies and the programs that don't 
work. Part of good management is knowing what works and what 
doesn't. If you are the CEO of a major firm, you are going to 
be constantly on the lookout for programs that work and expand 
those, and diminish on drop those programs that don't work. 
There is this long list of agency programs.
    My former boss, President Reagan, used to say that there is 
nothing quite so permanent as a Government agency.
    Fifth, you need to support OMB in grading of agencies. It 
is not an easy job. You need to give them a lot of support.
    Sixth, finally, I know it is controversial, but I urge you 
to try not to separate the management and budget functions. The 
budget is the stick that makes it work. Budgeteers pull on 
strings, management people push on strings. It seems to me that 
you need the power of the budget side to force the management 
responses.
    There is one suggestion I have if you really do separate 
the budget and management functions. You give the management 
person the right to fire people, even cabinet officers. You get 
their attention. I don't think the President is going to want 
to do that. After all, these agency heads report to the 
President, not the Director of
OMB or the management Deputy Director. But save that, it is 
going to be very difficult, without the stick of the budget, to 
get them to do something they don't want to do.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Miller follows:]

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    Mr. Horn. We thank you. That is a very interesting bit of 
testimony and you have had a vast experience on that.
    Mr. Ink.
    Dwight Ink is president, emeritus, Institute of Public 
Administration, former Assistant Director for Executive 
Management in the Office of Management and Budget. And that 
covers 1969 to 1973, the Nixon administration.
    Mr. Ink, we are going to have to move along a little, so 
don't read it. Just summarize it.
    Mr. Ink. I think I can summarize in about 5 minutes, if 
that is acceptable.
    Mr. Horn. That is terrific.
    Mr. Ink. My management views are based on a fair amount of 
experience both as agency and bureau heads and in the OMB. So 
it is an area where I have walked the walk.
    I also had lead responsibility for what you mentioned 
earlier, persuading Congress to support the establishment of 
OMB back in 1970, intended to give the President a better 
instrument for providing leadership in Government management. 
That has not worked. The OMB has become more dominated by the 
budget process rather than less, thereby limiting severely its 
capacity to provide this management leadership.
    OMB has had some very able people heading its management 
role people such as John Koskinen and Ed DeSeve, and they have 
done some very good work. But the budget dominated structure, 
in my view, has made it almost impossible to achieve the broad 
and sustained leadership role we and the Congress contemplated 
for OMB.
    Why? First, the budget process has become more complicated. 
Within this budget pressure cooker, there is very little 
opportunity or time left for top OMB officials to give more 
than just passing attention to more than a few management 
issues. That is one reason I support the chairman's concept of 
transferring management functions to an Office of Management 
within the Executive Office of the President, where the 
leadership could devote full time and energy to the task of 
making Government work better.
    Second, the OMB budget process fosters tunnel vision. That 
makes it very difficult to address cross-cutting issues that 
affect many different departments and many different programs. 
OMB examiners are extremely talented, but the work of each one 
is necessarily focused on a few related programs. And it is 
very difficult for them to shift attention from their main role 
to that of dealing with management problems that cut across 
organization lines.
    Third, the 12-month budget process places undue weight on 
the annual budget targets and gives priority to the annual 
objectives over long-term investments that can provide long-
term economies and higher quality. I found this contributed 
significantly, Mr. Chairman, to our difficulties in developing 
the computer and information systems and other technological 
improvements that are needed to modernize Government 
operations. Federal managers today have similar complaints.
    Fourth, the preoccupation with the budget has, at times, 
weakened the ability of agencies to improve operating 
effectiveness or prevent waste and abuse. I recall instances in 
which this budget domination directly, although inadvertently, 
contributed to scandals in agencies.
    Fifth, OMB is embroiled every year in fierce political 
battles over many budget issues, whereas the Office of 
Management would be free of most of the baggage--through not 
all of it--that handicaps bipartisan approaches to management 
reform.
    Sixth, as has just been mentioned by the Comptroller 
General, the OMB has neither the staff nor the type of contacts 
that provide adequate early warnings of emerging agency 
problems that become public issues.
    Seventh, OMB lacks much of the specialized expertise that 
cannot be stockpiled in the various individual agencies. This 
includes program management, Government corporations, 
decentralization, how to increase productivity, governmentwide 
reform--the list could be very long.
    An Office of Management would be freed of the mythology 
that one must have the leverage of the budget to force agencies 
to improve management. We found in the Executive Office of 
Management that in most cases, the more we could distance our 
staff from the budget process, as distinguished from distancing 
them from the knowledge of the budget examiners--which we 
didn't want to do--and substitute for budget threats the 
positive leadership and assistance, the greater our 
credibility, and the greater our influence, both with the 
agencies and with Congress.
    Although I do not regard direct involvement of the budget 
as necessary, an Office of Management would need important 
tools in order to have the necessary impact. In my written 
testimony I have listed a number of those tools, such as the 
drafting of Presidential Executive orders, legislative 
clearance, GPRA, and a number of other important tools.
    I believe that the needs of the President and the executive 
branch require a management leadership capacity that is not, 
and cannot be, provided by the OMB, no matter how able the 
Deputy Director for Management might be. The Congress, I 
believe, has a right to expect more with respect to the timely 
and effective implementation of legislation and Presidential 
initiatives. And perhaps even more important, our citizens have 
a right to expect a management leadership capacity, which OMB 
has provided, one that is not so preoccupied with the budget 
process that it has little time to focus on program outcomes 
and effectiveness of service delivery.
    Thank you.
    [The prepared statement of Mr. Ink follows:]
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    Mr. Horn. Thank you, Mr. Ink. I appreciate that.
    Herb Jasper is the senior associate for McManis Associates 
Consulting Firm. He is a former professional staff member for 
the Bureau of the Budget from 1956 to 1969. Now, despite my 
youth, I do remember those years. You were there when the 
Eisenhower administration was there, you went through Kennedy 
and up to Johnson. We are delighted to have you with us. You 
have had a vast experience there.
    Mr. Jasper. Thank you, Mr. Chairman and Mr. Turner. I 
appreciate the opportunity to offer my comments on oversight of 
the Office of Management and Budget. I understand that your 
principal focus is on the management functions, with which I 
have been associated for most of my career, particularly 
governmentwide management and organization. I would suggest 
that you would be hard put to find that OMB has spent much time 
during the past almost 20 years on governmentwide organization 
and management. So I am tempted to say you could have a brief 
oversight hearing, but that would perhaps be unfair and I will 
explain more about that.
    The 1993 OMB reorganization was based on the presumption 
that you have heard frequently, that you can't separate 
management from budget. I evaluated this curious claim in 
detail in my early 1999 testimony before this subcommittee on 
the proposal to create an Office of Management. Contrary to 
that theoretical proposition, this administration has 
demonstrated by its actions that one can, indeed, separate 
management from budget. I refer, of course, to the creation of 
the NPR whose work has not been distinguished by its 
integration with the budget process.
    Mr. Horn. The NPR being what?
    Mr. Jasper. The National Performance Review, initially, and 
now the National Partnership for Reinventing Government.
    But OMB insists that it has elevated the role of management 
by integrating it with the budget functions. GAO did find some 
evidence that management issues have received more attention 
during the budget process since then. But on the broader 
issues, I met with the GAO study team when the study was just 
getting underway and urged them to examine the totality of 
OMB's management responsibilities. Unfortunately, they didn't 
do that. You can read their report and you won't even find any 
recognition that there is no capacity left within OMB to deal 
with governmentwide organization and management issues, with 
the possible exception of GPRA and the three statutory offices 
of which you have heard, OIRA, Financial Management, and 
Procurement Policy. But I want to focus on what they have not 
done at all, rather than what they have not done well. And in 
that category, I would include the GPRA. But what they haven't 
done at all is working on governmentwide organization.
    You will recall I also had the privilege of testifying on 
executive branch restructuring in 1995. Curiously, you did not 
have an OMB witness. And that is because OMB doesn't know 
anything about executive branch organization. They have no 
people that work on that. They have no experts on the subject.
    Let me contrast that with the situation when I was in the 
former Bureau of the Budget. In addition to a Management 
Improvement Branch with about 10 professionals, there was a 
Government Organization Branch in which I was 1 out of about 9 
professionals. We worked nine people, full-time, year-round on 
governmentwide organization and management issues. They have 
nobody now who does that.
    We worked on interagency coordination matters, sometimes 
accomplished through Executive orders, we cleared legislation 
with respect to management issues; we wrote legislation; we 
wrote testimony; we wrote reorganization plans; we worked very 
closely with your predecessor committee and its counterpart in 
the Senate; and last but not least, we recommended vetoes of 
bills with unacceptable organization and management provisions, 
practically unheard of in recent years.
    The absence of professional expertise in matters I have 
talked about is illustrated by such developments as these. 
Executive orders are now handled by OMB's general counsel, not 
by the management staff. It is not known that lawyers are 
experts at issues of Federal management.
    Mr. Horn. Do you mean the counsel to the President?
    Mr. Jasper. No. OMB has a general counsel to whom many 
years ago, the responsibility to draft and review Executive 
orders was transferred. Those often deal with precisely the 
kinds of things I am talking about agency roles and 
responsibilities, interagency coordination arrangements, and so 
forth. They used to be handled in the Management and 
Organization Office, where I worked.
    Another point. Political appointees have multiplied from 
three or four when I was there to more than a dozen now. The 
five PADs, or program associate directors, have had 
decentralized responsibility for things that we used to do, at 
least in an advisory capacity, on a centralized basis either 
through the legislative reference process or through the Office 
of Management and Organization, to which the bills and 
testimony would be referred. I am again referring to these so-
called resource management offices where the perspective is 
typically programmatic and oriented toward the political image 
of the administration and its ability to get the bill passed, 
no matter what the consequences are in horrendous 
administrative and management provisions.
    The result is that your efforts to elevate the ``M'' by 
establishing a new post of Deputy Director for Management have 
been substantially in vain. That is notwithstanding the fact 
that there have been excellent people in that position when it 
was filled.
    It is said that the White House doesn't know or care 
anything about management. That is probably true, not only in 
this administration, but in others. That makes it all the more 
important that there be a non-political perspective on 
management issues somewhere in the President's family. We need 
to recreate the distinction between serving the President and 
serving the Presidency. So long as OMB is layered with 
political appointees and embroiled in the partisan politics 
surrounding budget decisions, that will not happen in OMB.
    During the Reagan administration, I was in a room where 
about six or seven former directors of management or OMB were 
present. They represented 40 years of experience in that 
position. Without exception, they had all come to the 
conclusion that it would never work effectively when harnessed 
with the budget process, which is not to say there is not a 
close relationship between the two. I fully agree that there 
is. But, bearing in mind Mr. Turner's question about how to 
elevate attention to information technology, we need to elevate 
attention to management across the board.
    I would respectfully suggest that the chairman's notion of 
a new Office of Management is the best way to achieve your 
objectives of elevating the attention to information technology 
because it can't logically be separated from financial 
management or from procurement policy, or from any of the other 
management issues in the agency. They must all be integrated.
    The chairman will also recall that I appeared here on 
behalf of the National Academy of Public Administration on IRS 
legislation. We forecast then that the ultimate consequences of 
that bill would be terrible, but they will be felt in the next 
administration, by the next Commissioner. So this 
administration doesn't care very much about that. And we have 
already begun to see some of the unfortunate consequences of 
that so-called reform legislation.
    I will conclude by saying that I think you need to 
institutionalize the professional expertise on management 
matters, and there are three things you can do in that regard. 
One is to create the Office of Management, which you have 
talked about for a couple of years now. I have a copy of my 
testimony from previous occasions if you want another one for 
the record.
    Mr. Horn. Without objection, your prepared statement will 
appear in the record.
    Mr. Jasper. Thank you.
    Second, mandate the reduction of political appointees in 
OMB by 50 percent. And third, support legislation to establish 
a new Commission on Government Organization, since OMB hasn't a 
clue as to how to deal with those issues.
    Thank you very much.
    [The prepared statement of Mr. Jasper follows:]

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    Mr. Horn. We thank you for that.
    I just want to recognize Mr. Ink. I believe you have 
testified before Congress for 50 years. Is that not correct?
    Mr. Ink. This is the 51st year.
    Mr. Horn. Well, you look younger than ever, so it must be 
good to testify before Congress. [Laughter.]
    I want to call on the gentleman, the ranking member, Mr. 
Turner, the gentleman from Texas.
    Mr. Turner. Thank you, Mr. Chairman. I don't have any 
questions. I just want to thank all three of our panelists. It 
is always a treat to have you before the committee. It is 
amazing how colorful and candid testimony can be from 
individuals who have ``former'' before their Government titles. 
We appreciate the fact that you have continued to try to help 
strengthen the operation of our Government, improve the 
management, and we always welcome your ideas. I think that our 
role as a committee is to try to highlight those suggestions in 
the best way we can. By having you come testify, it certainly 
helps that.
    I would just like to say that each of you have a little bit 
different perspective, but I gather that all of you believe 
rather strongly that we are deficient in terms of the emphasis 
on management. We will continue to work on those issues. As you 
all know, the chairman has been an advocate of this suggestion 
of separating budget and management for at least 2 years. And 
we want to continue to seek your input and your help.
    Thank you very much.
    Mr. Horn. I have just a few questions before we adjourn.
    Mr. Miller, looking back, did you devote more hours of your 
day as Director of OMB on management or budget matters?
    Mr. Miller. Budget, in part because that is where the 
political leadership, the elected officials, wanted to go. I 
don't think I ever recall receiving a call from a Member of 
Congress asking about a management issue. A lot of times I 
received calls about budget issues.
    Mr. Horn. So it is fair to say that you spent 100 percent 
of your time on the budget?
    Mr. Miller. No, not 100 percent, but probably more like 80/
20 than 50/50.
    Mr. Horn. And 20 percent were really on management?
    Mr. Miller. Yes. That would include regulation in that.
    Mr. Horn. But nobody was looking at reorganization, better 
efficiency, better measurement of programs, and all of that?
    Mr. Miller. Let me amend the statement by saying that my 
Deputy, Joe Wright, was an expert in management issues and we 
did have some division of labor. Joe spent more of his time--I 
would say greater than 50 percent of his time--on management 
issues.
    But I agree with these gentlemen that at least the 
potential for management improvement in Government has not been 
met. Where we disagree is over how you accomplish it. I think, 
frankly, and with all due respect, unless you have the 
management program or the chief manager with sufficient tools, 
the agencies simply are not going to pay attention to him or to 
her. You must have appropriate incentives. Providing leadership 
and encouraging positive results simply is not going to work, 
in my experience.
    Mr. Horn. In other words, you feel the budget clout 
presumably helps reform on management. But the evidence is they 
don't do anything.
    Mr. Miller. I was just sitting here thinking and listening 
to what they had to say. You wouldn't lose much by trying. That 
is to say, it hasn't worked so far very well. If you set up a 
separate Office of Management, I don't think it would work, 
either, but you might learn something from doing it.
    So I am not so opposed to it, except to say that you have 
to have the person who leads the office with appropriate 
incentives that are going to change behavior. Right now, the 
Director of OMB has the budget incentive to cause changes in 
behavior. If you split it off, what do you have left? You have 
to replace it with something.
    Mr. Horn. Let me ask these two gentlemen who preceded Mr. 
Miller's term as to the number of people that were interested 
in and responsible for management questions within the former 
Bureau of the Budget and what might be now.
    As I remember, in the Eisenhower administration, you had 
maybe two dozen people. Am I wrong on that?
    Mr. Jasper. Probably more.
    Mr. Horn. More?
    Mr. Jasper. What I think would dramatize it is if I 
contrasted the two branches, which I mentioned in my testimony, 
which aggregated about 19 professionals, with what is left now 
doing all of that. The answer is one. That is a counsellor to 
the DDM.
    But the point is that the rest of the people in the number 
you are remembering--it was probably more like 40--do have 
counterparts remaining in Procurement Policy, Financial 
Management, and OIRA. Those all had precursors back in the 
Office of Management and Organization that I was in before 
Dwight came. But the point is that we had about 19 people doing 
what one is doing now.
    Mr. Ink. I had about 60, but we were doing all kinds of 
things that OMB doesn't even attempt to do now. We had to put a 
great deal of effort, for example, into the outcome area, and 
not just the input. We were very much concerned about outcomes 
from the standpoint and perspective of families and 
communities. So I had a group of my staff spending almost half 
their time out in the field working with the field people. By 
the way, that is where most of the Federal bureaucracy is, out 
in the field, not in Washington. The OMB people now have no 
time to get out in the field. They have no time to get out and 
see what is really happening, how things are really working in 
the field where the interface with the public exists. I had a 
number of people focusing on that.
    We spent time drafting Presidential Executive orders, which 
by the way, gave us some real leverage. The congressional 
clearance process gave us leverage. But these were more in the 
way of positive leverages. They weren't threats to the 
agencies. Our influence grew the more we distanced ourselves 
from the budget.
    By the way, departments and agencies learned long ago not 
to mesh the budget and management people together the way they 
are at OMB.
    Mr. Horn. One of the things I remember was the development 
of the Marshall Plan. That was done within the old Bureau of 
the Budget, was it not?
    And TVA and Government corporations. They all had charters 
figured out by a management group in the old Bureau of the 
Budget.
    Mr. Jasper. And recently, when an issue arose about 
Government corporations, what they are, when to use them, and 
how to use them, there wasn't anybody at OMB who knew anything 
about it. So they came to alumni on those and similar issues.
    Mr. Horn. I think the important thing to remember is that 
the same group that helped Roosevelt and Truman also helped 
Eisenhower. There were not political intrusions on the 
professional staff under Eisenhower. He went in with more 
experience in management and administration than any President 
in the history of the country. He looked around the White House 
and he said, ``Good heavens, this place isn't even organized.'' 
He started with cabinet secretaries, staff secretaries, 
congressional liaison, and so forth. But he always had an 
interest in the management side.
    We didn't know and didn't care if they were Democrats or 
Republicans or Socialists or Libertarians or what. We just 
wanted their expertise as to doing something in the management 
area. And that is whom they called on.
    Mr. Ink. It was much easier for us to work with Congress on 
a bipartisan basis than it is now. That is in part because the 
budget issues are so formidable and there is so much 
partisanship associated with them. But it also grows out of the 
fact that when you are involved in these kinds of budget 
issues, it spills over into the management area.
    When I headed the Office of Executive Management, I had 
some distance from the budget process. When I came up to the 
Hill, as I did frequently, I didn't carry the political baggage 
with me that was associated with these controversial partisan 
budget issues.
    Mr. Jasper. Could I add just a point there?
    I did the statistics on this once before, so I don't have 
it readily at hand, but if you look at the split in party 
control between the Congress and the White House in the 20th 
century, you will find that in the first half it was an 
aberration to have other than the same party control both ends 
of the avenue. In the second half of the 20th century, it has 
become virtually the model.
    So the point is that partisanship has become much more of 
an issue in public policy. And Dwight is exactly right. If we 
could divorce the management from the budget, perhaps we could 
get more agreement on the management issues than will ever be 
possible to get with split party control on the budget issues.
    Mr. Ink. We always worked with the committees on a 
bipartisan basis. And I would generally meet together with the 
Chair and the ranking minority member, regardless of whether 
the Chair was from the same party as the President or not. I 
worked under several different Presidents and under those 
different circumstances.
    Mr. Horn. Mr. Miller.
    Mr. Miller. Mr. Chairman and Congressman Turner, I have a 
final suggestion.
    Do you know who the first Director of the Office of 
Management and Budget as opposed to Bureau of the Budget was?
    Mr. Horn. Wasn't it Dawes?
    Mr. Miller. No, it was George Schultz.
    Mr. Horn. You mean under Nixon. I was going back to 1921.
    Mr. Miller. No, he was the first BOB. But when they changed 
it to the Office of Management and Budget, it was under George 
Schultz.
    Mr. Horn. And Weinberger also.
    Mr. Miller. Yes, Weinberger was then his Deputy.
    Here is a person--actually, both of them--who have had 
enormous experience in very high levels of Government and 
leading corporations. They know management inside and out.
    I would urge you to ask of them what they think and whether 
they feel that their vision has been achieved. And if not, why 
not. And ask them what they recommend you do going forward.
    Mr. Horn. I was in to see the vice chairman of the U.S. 
Commission on Civil Rights and I went over to see them to get a 
cross-cutting analysis in the budget on how much we spent on 
civil rights activities. I had my own 12 lawyers go into every 
agency and we graded them. That is where we got our grading 
mania. We got some results, and they were very supportive on 
the management side to really make sure something happened.
    Any other questions, my colleague?
    I want to thank the staff that put this together, and I 
thank this panel. On my left, your right, is the staff director 
and chief counsel to the Subcommittee on Government Management, 
and Randy Kaplan is here with us also. And Matt Ryan and then 
Louise Debenedetto from the General Accounting Office, and 
Heather Bailey, professional staff member. Bonnie Heald is 
here, the director of communications, professional staff 
member, Brian Sisk, our clerk, and Ryan McGee, staff assistant, 
and Michael Soon, intern--welcome Michael--and minority staff 
to Mr. Turner is Trey Henderson, counsel, and Jean Gosa, 
minority clerk. In this last 2\1/2\ hours we have had our court 
reporter, Arthur Emmerson, and we thank you for coming.
    With that, we are adjourned.
    [Whereupon, at 12:37 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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