U.S. Department of Agriculture: Administrative Streamlining Is Expected to Continue Through 2002
Released: 1999-01-11T00:00:00

Letter

Background

In response to the Government Performance and Results Act of 1993 and the Vice-President’s National Performance Review (NPR), the Secretary of Agriculture initiated a departmental reorganization to refocus and simplify the Department’s headquarters structure, improve accountability and service to customers, reform the Department’s field structure, and reduce costs. Several components of the Secretary’s reorganization required enabling legislation, which the Congress provided in the Reorganization Act of 1994.

In addition to granting USDA broad authority for streamlining and reorganization, the Reorganization Act of 1994 directed USDA to (1) reduce the number of full-time-equivalent staff by at least 7,500 by the end of fiscal year 1999, (2) reduce the number of staff so that the percentage of the reduction in headquarters is at least twice that in the field offices, (3) consolidate headquarters offices, and (4) combine field offices and have them share resources.

By the end of fiscal year 1997, USDA had achieved most of the act’s goals. It had reduced its overall staff-years by nearly 20,000, from about 129,500 in 1993 to about 110,000 by the end of 1997; 22 percent of the reductions occurred in headquarters, and about 13 percent occurred in field offices. In addition, the number of USDA agencies fell from 43 to 29, most of which are under seven mission areas. (App. I shows USDA’s staff by mission area and agencies and headquarters staff offices.) Of the seven mission areas, five include more than one agency. In four of these five mission areas,USDA has designated one agency as the lead administrative agency for the mission area. (USDA’s current administrative structure is shown in app. II.) Finally, USDA reduced the number of its county office locations by about 30 percent, from about 3,760 in 1994 to about 2,700 in 1997.

The Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Rural Development (RD)—through the Rural Housing Service—operate three separate administrative structures to provide administrative support for seven field-based agencies in 50 states, two territories, and several Foreign Agricultural Service (FAS) overseas offices.

These seven agencies employed about 37,900 staff, or about 35 percent of USDA’s total staff, in 1997 and are located in headquarters, about 150 state offices, 5,800 county-based service centers, over 500 other support offices, and several consolidated operations centers, such as FSA’s Management Office in Kansas City, Missouri; RD’s Centralized Servicing Center in St. Louis, Missouri; and NRCS’ National Science and Technology Consortium in Fort Worth, Texas.

USDA Has Reduced Administrative Positions Overall

From fiscal year 1993 through fiscal year 1998, USDA reduced its departmentwide administrative staff by 15 percent, from about 10,300 to an estimated 8,800, in four areas identified by the NPR—human resources, budgeting, accounting and auditing, and acquisition. Administrative staff provide internal services for USDA’s program delivery staff, such as payroll processing, financial management and reporting, and the purchasing of supplies and equipment. USDA plans to have about 8,550 administrative staff supporting a departmentwide program staff of approximately 98,500 by the end of fiscal year 1999.

Figure 1 shows the changes in the number of administrative staff for each of the four administrative functions for fiscal years 1993 and 1998. (Administrative staffing is shown in app. III.)

Changes to Administrative Operations for Field-Based Agencies Will Not Be Fully Implemented Until 2002

As of November 1998, USDA had not consolidated administrative functions for its field-based agencies at the state office level. However, in October 1998, a USDA team submitted a plan (known as the Administrative Convergence Plan) to the Secretary of Agriculture that will, upon approval, implement this consolidation by 2002. USDA officials explained that the plan, when fully implemented, is expected to reduce costs and improve customer service and operating efficiencies. In addition, they said the plan will require up to 4 years to implement because the Department will need to complete a number of time-consuming and complex actions—relocating offices, developing common policies and procedures, and instituting common computing systems. Even though these actions are expected to provide savings and efficiencies in the long term, the Department has not identified the costs it will incur in the short term to achieve these savings. Furthermore, USDA officials commented that these tasks are not likely to be accomplished in a timely and effective manner unless a strong leader is appointed to oversee them.

USDA Has Not Yet Begun to Implement Its Administrative Convergence Plan at the State Level

USDA expects to begin consolidating administrative functions at the state level for its field-based agencies approximately 6 to 9 months following the Secretary’s approval of the proposed October 1998 convergence plan. Under the plan, a new office headquartered in Washington, D.C.—the Support Services Bureau—will provide the administrative support now provided separately by FSA, NRCS, and RD for seven field-based agencies. (See fig. 2.)

Current Admin Support Structure

(as of Nov. 1998)

In addition to its office in Washington, D.C., the bureau will have a single administrative support unit in each state and in each of its four consolidated operations centers to carry out combined administrative functions. The new state offices will receive policy guidance from the headquarters Support Services Bureau and will report to a board of directors composed of the state leaders of FSA, NRCS, and RD.

While the NPR specifies only four administrative functions (personnel, budgeting, accountants and auditors, and acquisition), USDA’s Administrative Convergence Plan includes additional functions and categorizes them differently. The plan’s functions include financial management (excluding budgeting), human resources, civil rights, information technology, and management services (such as procurement and printing). By consolidating these functions into a single administrative support unit in each state or consolidated operations center, USDA expects to reduce the administrative staff for the seven field-based agencies by 45 percent from fiscal year 1993 through fiscal year 2002. However, by 1997, two-thirds of these reductions had already occurred. (See table 1.) (30.9%) (377) (33.3%) (38.6%) (380) (44.6%) (38.8%) (614) (60.3%) (22.7%) (796) (40.7%) (35.4%) (474) (80.3%) (30.6%) (2,551) (45.4%)

According to USDA officials, they did not implement streamlining at the state office level earlier for two reasons. First, they were focused on implementing the Secretary’s initiative to create consolidated county-based service centers. And second, they were unable to reach agreement among the affected agencies on how to achieve consolidation.

A Number of Challenges Need to Be Addressed Before Implementation Can Be Completed

USDA officials stated they must deal with several challenges to fully achieve the cost savings, benefits, and efficiencies expected to be realized as a result of implementing the administrative consolidation plan. These challenges include relocating offices, developing common policies and procedures, and adopting a common computing environment. In addition, USDA officials said that strong leadership will be needed to implement the plan and additional investments for collocating offices and modernizing business processes and information technology will be required.

Relocating Offices

Currently, in 28 states, the state offices for each of the different field-based agencies are not located in the same facility (collocated), and in 19 of these states, the offices are not even located in the same city. USDA is planning to begin consolidating administrative functions before many of these state offices have collocated. In those instances, the agencies will continue to maintain staff in up to three separate offices. Consequently, in these states, the benefits of sharing resources—reducing staff and equipment and expanding staff expertise—will not be fully realized until the agencies’ state offices are collocated. For example, in Kansas, the FSA, NRCS, and RD state offices are located from 50 to 100 miles apart in three separate cities. As a result, even though these agencies’ administrative staff will be one organization on paper, they will continue to function in up to three separate locations until the offices are collocated, requiring USDA to retain more administrative staff and continue to pay for separate equipment and facilities.

In addition, at least some of the 24 collocated state offices will need to be reorganized before they can operate efficiently under the Administrative Convergence Plan. For example, several collocated state offices have separate office suites for each agency’s staff. Agency officials acknowledged that to combine administrative staff into functional work units under administrative convergence, it will be necessary to move staff within existing office space, reconfigure existing office space, or move agency operations to new facilities.

In other cases, collocated offices are already designed to operate effectively under the planned administrative convergence. For example, the new state office for FSA, NRCS, and RD in Boise, Idaho—opened in February 1998—is expected to facilitate administrative convergence once the plan is implemented. When the three agencies planned the new office, they required that all employees in a functional area—such as human resources or information technology—share a common work space. In addition, the agencies share common mail rooms, printing equipment, and other office facilities. According to state officials, their location in a shared facility has already increased the efficiency of their operations by allowing them to have fewer staff, less space, and less equipment.

USDA estimates that it will cost as much as $29 million to collocate offices in 24 of the 28 states where they are not currently collocated, including moving personnel and acquiring new space, and an undetermined amount to reconfigure existing space for collocated offices. Figure 3 shows the states with collocated offices, and those with noncollocated offices. (App. IV provides more detailed information on the noncollocated locations).

While FSA, NRCS, and RD are subject to the same administrative regulations, each has developed a different approach to implementing them. As a result, there are slight to significant differences in the policies, procedures, and business processes that each agency follows.

For example, NRCS and RD state offices have authority over personnel actions for employees up to the level of General Schedule-13 and are delegated authority to obligate funds for most categories of procurement. In contrast, FSA state offices have far less authority over personnel actions and procurement.

For budgeting, NRCS provides each state with a single budget allocation for its program and administrative expenses. However, RD allocates specific budget line items to its state offices for their individual programs, salaries, and administrative expenses. FSA headquarters allocates the total number of staff that each state may have each fiscal year and retains control over certain state-level administrative expenses, such as office leasing and information technology.

State office officials note that their agencies also need to develop common business processes to standardize their personnel and recordkeeping systems. Currently, the National Finance Center provides payroll processing for USDA employees. However, NRCS uses a different process than FSA and RD for entering personnel and payroll transactions transmitted to the center.

Developing a Common Computing Environment

To modernize and integrate the separate information systems currently used by the agencies undergoing administrative convergence, USDA plans to acquire a single, integrated information system—referred to as the common computing environment. The common computing environment, as part of USDA’s effort to modernize its business processes and information technology, will consist of new computer hardware and software applications. This new integrated system may require as many as 38,000 new personal computers and 24,000 printers, which will be expected to operate in more than 3,000 locations nationwide. As we reported in August 1998, USDA estimates that the costs of implementing a common computing environment may exceed $2.6 billion over its expected 15-year life cycle.

The effort to acquire and install this system will be significant, complex, time-consuming, and costly. Achieving a common computing environment requires these agencies to accomplish many activities, such as reengineering and creating a common set of business processes, designing common software, and determining the requirements for hardware. In addition, FSA, NRCS, and RD have 150 existing software applications, many of which must be modified. It is not clear when USDA will complete these tasks. Some planning documents show that the tasks may be completed by fiscal year 2002, while others show a completion date as late as fiscal year 2008. Until existing business applications are modified, USDA plans to maintain and operate both the old and new information systems.

In our August 1998 report, we found several fundamental planning and management weaknesses in the Department’s effort to modernize business processes and technology for the agencies undergoing administrative convergence. In light of these weaknesses, we suggested that the Congress consider limiting funding for information technology for these agencies’ field offices to no more than the level needed to meet Year 2000 compliance requirements until appropriate action was taken to resolve these weaknesses. USDA started acquiring new hardware and software for its common computing environment at the end of fiscal year 1998, when it purchased over 16,000 personal computers. While this purchase was principally made to replace computers that are not Year 2000 compliant, USDA also expects this procurement to enable its field-based agencies to use common software applications that will support administrative convergence in such areas as human resources, procurement, and travel.

Need for Strong Leadership

USDA officials emphasized the need for the Secretary to move quickly to fill key leadership positions for the Support Services Bureau and charge the appointed officials with the responsibility to implement the Administrative Convergence Plan once it has been approved. According to the leader of the implementation planning team, assigning leadership responsibilities and providing the appropriate authority to carry out those responsibilities are critical to the plan’s success, given the host of decisions to be made and actions to be taken in implementing the convergence plan. These decisions include determining how the new organization will be funded in the long term, how authority will be delegated within the organization, and how staff will be classified.

Currently, three separate administrative structures provide support to seven agencies in 50 states, two territories, and several FAS overseas offices. As mentioned earlier, these agencies have developed different approaches to delivering administrative services to their customers. The administrators for these three structures are focused on the delivery of several programs in addition to administrative support. USDA officials said, and we agree, that unless the Secretary moves quickly to appoint the leaders to translate the plan into a workable operation, it is unlikely that substantial progress will be made.

Additional Investments Will Be Required Before Long-Term Administrative Savings Are Realized

While USDA has estimated the savings it will achieve through staff reductions resulting from the administrative convergence, it has not estimated the costs associated with the convergence. USDA officials believe that administrative convergence will allow the Department to reduce the number of administrative staff by 45 percent from 1993 through 2002. However, they acknowledge that budgetary savings from staff reductions will be decreased in the next several years by the costs of collocating state offices, modernizing business processes, and acquiring and implementing a common computing environment. If the administrative convergence is fully implemented in 2002, the savings in administrative staff is projected to total about $144 million annually. However, these savings will be reduced by the approximately $29 million associated with merging offices in 24 of the 28 states that do not yet have collocated offices and by several million dollars annually for modernizing business processes and implementing a common computing environment. The Administrative Convergence Plan does not provide an estimate of these costs.

Savings and Efficiencies Measures Lacking

USDA has not instituted, and has made no plans to develop, performance measures to determine the economies and efficiencies realized as a result of its departmentwide administrative streamlining. According to USDA officials, staff reductions should serve as a sufficient indicator of the Department’s savings and efficiencies because employees’ salary and benefit costs typically represent a majority—about 85 percent—of salary and administrative expenses. However, although it has developed savings estimates associated with staff-year reductions, these estimates do not include any offsetting expenses as a result of employee buyouts and reductions in force. While staff-year reductions are certainly one indicator of savings, absent other measures, USDA does not know the extent to which it has improved service delivery, efficiency, and quality—key objectives of the 1994 act and desired outcomes of the agencies’ ongoing restructuring efforts. Additional outcome-oriented performance measures could help USDA determine when it is achieving the overall objectives of the Reorganization Act of 1994. For example, using the ratio of the number of employees served per personnel specialist as a broad measure of efficiency, we found that although USDA had reduced its personnel staff departmentwide by 17 percent from September 1993 to September 1997, the ratio decreased from 55 to 54 employees served by one personnel specialist, indicating that the personnel reductions had not increased efficiency. Other measures of effectiveness could include (1) financial measures, such as cost per employee hired; (2) customer satisfaction measures, such as those associated with responsiveness and quality; and (3) process effectiveness measures, such as the time it takes to complete specific administrative functions.

Conclusions

USDA has made a number of organizational changes since 1994 to reduce its staff and streamline its operations. However, USDA does not plan to determine the extent to which its streamlining efforts have achieved the objectives of the Reorganization Act of 1994, other than determining the savings associated with staff reductions. The 1994 act also had as its objectives more efficient operations to better carry out the Department’s missions. Without an assessment of the overall effects of its departmentwide streamlining efforts, USDA cannot know the extent to which its efforts have been successful in achieving all of the objectives mandated by the 1994 act.

USDA’s current reorganization task—the convergence of administrative functions at the state level for the field-based agencies—is complex and, even under the best of circumstances, will be difficult to implement effectively and efficiently. However, we believe that there are weaknesses in USDA’s current plans for administrative convergence that could hinder its successful implementation. First, while the convergence is likely to save money in the long run, USDA has not calculated the costs associated with implementing the plan. As a result, USDA managers lack key cost information that could be used to evaluate the effectiveness of various actions that the Department has taken or will take in connection with administrative convergence. Second, USDA has not yet assigned leadership responsibilities for implementing the convergence plan. In our view, this is critical to establishing the accountability needed to help ensure the plan’s successful implementation.

Recommendations to Secretary of Agriculture

To measure the economies and efficiencies gained by the departmentwide administrative streamlining, we recommend that the Secretary of Agriculture require the leaders for the seven mission areas, in consultation with the Assistant Secretary for Administration, the Chief Information Officer, and the Chief Financial Officer, to develop and implement performance measures for the Department’s administrative operations that assess service delivery, efficiency, and quality.

We further recommend that the Secretary direct the Undersecretaries for the Farm and Foreign Agricultural Services, Natural Resources and Environment, and Rural Development to develop cost estimates for the complete implementation of administrative convergence.

Finally, to facilitate the effective implementation of the Administrative Convergence Plan, we recommend that the Secretary, after approving the implementation plan, move quickly to fill key leadership positions for the Support Services Bureau and charge the appointed officials with the responsibilities to carry out the plan.

Agency Comments

We provided USDA with a draft of this report for its review and comment. We met with the Deputy Assistant Secretary for Administration; Acting Director for Human Resources Management; and officials from the Office of Departmental Administration, the Office of Budget and Program Analysis, the Office of the Chief Financial Officer, the Office of Inspector General, the National Food and Agriculture Council, the Farm Service Agency, Rural Development, and the Natural Resources Conservation Service.

USDA generally agreed with the report and our recommendations and noted that USDA’s field-based agencies have made progress in developing certain common policies and administrative systems for areas such as employee recognition, evaluation of human resources management, merit promotion, telecommuting, and work scheduling. In addition, USDA noted that most of the savings associated with administrative consolidation will be achieved by merging the three agencies’—FSA’s, NRCS’, and RD’s—administrative functions, not from collocating offices. Finally, USDA agreed with our recommendation to develop and implement performance measures to evaluate the efficiency and effectiveness of the Department’s administrative operations. However, USDA noted that it would be difficult to develop historical baseline data for fiscal year 1993—the baseline date established by the National Performance Review and the Federal Workforce Restructuring Act of 1994—and therefore suggested that more recent baseline data be used to measure changes in administrative operations. While we recognize it would be difficult to develop baseline data for certain indicators that date back to fiscal year 1993, we continue to believe that USDA, to the extent practicable, should develop measures using baseline data for this time period to demonstrate the progress it has made in streamlining the Department since the passage of the Reorganization Act.

USDA provided a number of technical changes and clarifications to the report, which we have incorporated as appropriate.

Scope and Methodology

To obtain information on USDA’s progress in reducing administrative staff departmentwide, we interviewed administrative officials in Departmental Administration, the Office of Budget and Program Analysis, and each mission area and reviewed relevant documents. To understand USDA’s plans for consolidating administrative functions, we interviewed the implementation team leader and reviewed relevant documents.

To determine USDA’s progress in consolidating state office administrative functions for FSA, NRCS, and RD, we interviewed headquarters officials in each agency and state office officials in five states where these agency offices are collocated and five states where the agency offices are not collocated. We also obtained relevant data and documentation. We also met with the appropriate officials in USDA agencies in Kansas City and St Louis to obtain data on the status of (1) FSA’s, NRCS’, and RD’s efforts to collocate their state offices into single facilities; (2) the reduction of administrative staff that has occurred since 1993; (3) USDA’s plans to implement administrative convergence, including the benefits the Department hopes to achieve and the problems associated with this action; and (4) USDA’s attempts to quantify the savings associated with streamlining efforts, including administrative convergence.

To determine USDA’s progress in measuring the savings and efficiencies realized as a result of its departmentwide reorganization and streamlining, we interviewed Department and agency officials involved in reorganization and streamlining and reviewed documents pertaining to their performance measures.

We conducted our review from May through November 1998 in accordance with generally accepted government auditing standards.

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If you have any questions, please call me at (202) 512-5138. Major contributors to this report are listed in appendix V.

USDA’s Staff by Mission Area, Agency and Office for Fiscal Years 1993 Through 1999

Farm Service Agency (FSA) (federal)

Farm Service Agency (nonfederal)

Alternative Agricultural Research and Commercialization Corporation Natural Resources and Environment Natural Resources Conservation Service (NRCS)

Cooperative State Research, Education and Extension Service Office of Chief Financial Officer Office of Chief Information Officer (continued)

Office of Budget and Program Analysis Office of the Chief Economist Office of the General Counsel 129,495 124,241 117,388 113,539 109,886 109,850 107,031 Offices included under the Assistant Secretary for Administration are the Office of Administrative Support, Board of Contract Appeals, Office of the Judicial Officer, Office of Administrative Law Judges, Office of Civil Rights, Office of Procurement and Property Management, Office of Operations, Office of Human Resources Management, Office of Small and Disadvantaged Business Utilization, and Office of Outreach.

USDA’s Current Departmentwide Administrative Support Structure

Agricultural Research Service Cooperative State Research, Education, and Extension Service Economics Research Service National Agricultural Statistics Service Other staff offices and activities(Table notes on next page)

USDA’s Departmentwide Administrative Staff, Fiscal Years 1993 Through 1999

Location of Noncollocated State Offices

State offices less than 50 miles apart 949 East 36th Avenue Anchorage 3003 North Central Avenue Phoenix 77 East Thomas Road Phoenix 16 Professional Park Road Storrs 88 Day Hill Road Windsor 1201-03 College Park Drive Dover 5201 South DuPont Highway Camden Federal Building 210 Walnut Street Des Moines 10500 Buena Vista Court Des Moines 339 Busch’s Frontage Road Annapolis 1045 South Harrison Road East Lansing 3001 Coolidge Road East Lansing Federal Building 100 West Capitol Street Jackson Federal Building 10 East Babcock Bozeman (continued)

Federal Building 100 Centennial Mall Lincoln 1755 East Plumb Lane Reno 1390 South Curry Street Carson City Federal Building 2 Madbury Street Durham Mastoris Professional Plaza Route 130 Bordentown Tarnsfield Plaza 790 Woodlane Road Mt. Holly 101 Southwest Main Street Portland IBM Building 654 Munoz Rivera Avenue Hato Rey 1607 Ponce de Leon Avenue Santurce New San Juan Office Building 159 Carlos E. Chardon Street Hato Rey Strom Thurmond Federal Building 1835 Assembly Street Columbia (continued)

Federal Building 300 Ala Moana Boulevard Honolulu Federal Building 154 Waianuenue Avenue Hilo 1817 South Neil Street Champaign 1200 Southwest Executive Drive Topeka 220 East Rosser Avenue Bismark (continued)

Major Contributors to This Report

Resources, Community, and Economic Development Division

Ronald E. Maxon Jr, Assistant Director John C. Smith, Evaluator-in-Charge Robert G. Hammons Carol Herrnstadt Shulman The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent.

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