Federal departments and agencies achieved new management milestones this past quarter, with the help of the President's Management Agenda.

• They (22 of 24) issued their audited financial statements within 45 days of the end of the fiscal year, which was thought to be impossible up until a few years ago because of a lack of sound financial management disciplines.
• They notified Congress that they had studied the highly commercial work of 12,000 positions in FY04 and found ways to get the same work done for $1.4 billion less, over a 3 to 5 year period. This is on top of the studies of 17,000 positions conducted in FY03 which found ways to get the same work done for $1.1 billion less over a 3 to 5 year period.
• They concluded and announced that total improper payments are estimated to be $45 billion, and that plans are in place to reduce this amount by $4 billion in FY05, $8 billion in FY06, and $12 billion in FY 07.

Some departments slipped, however: four departments had an initiative decline in status. One was downgraded because it wasn't announcing competitive sourcing competitions as planned, two because of IT security problems, and one because its auditor found a new material weakness. Each of these departments has a plan to get itself back on course. The message from these status downgrades is that implementing the PMA is hard work, requiring significant, unequivocal attention by management; and we are serious about holding departments accountable.

Where are we going with the PMA? What do we want to be able to say about the Federal government in four years, after having worked since the fall of 2001 to install the PMA disciplines and habits and use them to improve how the government works? Personally, four years from now, I believe we will be able to say proudly that, for the first time in history:

• Every Federal program is performing better than the year before.
• Improper payments have been reduced $10 billion to $15 billion per year (on the way to being completely eliminated by 2015).
• Program costs have been reduced by tens of billions of dollars by agencies committing to annual effectiveness and efficiency improvements.
• Commercial activity costs have been reduced $2.5 billion per year (on the way to being reduced $5+ billion per year by 2010). And
• Real property is being managed effectively, and billions of dollars of unneeded property is being liquidated and made available for reinvestment.

Pretty impressive, huh? All of us are forever changing the way the Federal government works.

Yours truly,

Clay Johnson III
Deputy Director for Management