Summary

Recognizing the need for a smaller, less costly government, the Energy Department (DOE) last year unveiled its Strategic Alignment and Downsizing Initiative, which is intended to save $1.7 billion over five years. The savings planned under the Initiative are on target. By amending its fiscal year 1996 budget request and selling excess assets, DOE will reach its goal of $221 million in savings this year. DOE is depending on process improvements and reengineering efforts to fulfill its missions under the reduced budgets called for by the Initiative. It is too soon to know, however, whether DOE will cut costs to the extent planned in its budget reductions. Moreover, some overly optimistic initial reports of cost savings underscore the need for DOE to be vigilant in validating such claims, lest managers believe that those savings are occurring in specific activities when, in fact, targeted reductions are being absorbed elsewhere. Discussions with DOE officials revealed opportunities to achieve further cost savings by more broadly applying some aspects of the Initiative. For example, DOE could encourage its contractors to sell more of the agency's excess assets by providing incentives and policies for the contractors to identify and sell them. GAO summarized this report in testimony before Congress; see: Department of Energy: Progress Made Under Its Strategic Alignment and Downsizing Initiative, by Bernice Steinhardt, Associate Director for Energy, Resources, and Science Issues, before the Subcommittee on Energy and Power, House Committee on Commerce. GAO/T-RCED-96-197, June 12 (six pages).

GAO found that: (1) DOE will save $221 million under the planned initiative; (2) DOE plans to expand its first-year savings through additional budget reductions that will total $1.7 billion; (3) DOE plans to meet savings targets by reducing its federal staffing levels, travel budget, and support services contracts, improving information resources management, streamlining national environmental policies, and reengineering its mission; (4) it is unclear whether DOE will be able to reduce certain costs because many of its budget plans are in the early stages; (5) DOE management needs to be diligent in validating its cost savings estimates because reductions are not always occurring as planned; (6) DOE could achieve greater cost savings by more broadly applying certain aspects of the initiative; and (7) DOE could achieve these additional savings by encouraging its contractors to sell more of its assets, including DOE managers and contractors in its information management strategy and consolidating transportation and packaging functions.