U.S. GOVERNMENT PRINTING OFFICE

70–219 DTP WASHINGTON : 2001

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

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

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

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

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

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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

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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

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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

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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 fulltime 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.

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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 51⁄2 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

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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 imVerDate 11-MAY-2000 10:30 Mar 02, 2001 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\70219.TXT HGOVREF1 PsN: HGOVREF1
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portant 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 fulltime 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.

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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.

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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 ClingerCohen 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 ClingerCohen 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.

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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.

37

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 egovernment.

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

38

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 21⁄2 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

39

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 fulltime 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 highprofile 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.

40

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.

41

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.

42

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

43

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.

44

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

45

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.

46

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

47

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

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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.

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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:]

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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:]

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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

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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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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.

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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.

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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 chalVerDate 11-MAY-2000 10:30 Mar 02, 2001 Jkt 000000 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 C:\DOCS\70219.TXT HGOVREF1 PsN: HGOVREF1
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lenges 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 resultsoriented, 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 techVerDate 11-MAY-2000 10:30 Mar 02, 2001 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 C:\DOCS\70219.TXT HGOVREF1 PsN: HGOVREF1
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nology 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.

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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

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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?

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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, longterm 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.

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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 ecommerce, 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

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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.’’

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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?

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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

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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

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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 OrgaVerDate 11-MAY-2000 10:30 Mar 02, 2001 Jkt 000000 PO 00000 Frm 00121 Fmt 6633 Sfmt 6633 C:\DOCS\70219.TXT HGOVREF1 PsN: HGOVREF1
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nization 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

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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

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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.

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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.

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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 crosscutting 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 21⁄2

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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