<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:61821.wais]
TO ESTABLISH AN OFFICE OF MANAGEMENT IN THE EXECUTIVE OFFICE OF THE
PRESIDENT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
FEBRUARY 4, 1999
__________
Serial No. 106-70
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
61-821 CC WASHINGTON : 2000
COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARY A. CONDIT, California
THOMAS M. DAVIS, Virginia PATSY T. MINK, Hawaii
DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELEANOR HOLMES NORTON, Washington,
JOE SCARBOROUGH, Florida DC
STEVEN C. LaTOURETTE, Ohio CHAKA FATTAH, Pennsylvania
MARSHALL ``MARK'' SANFORD, South ELIJAH E. CUMMINGS, Maryland
Carolina DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida DANNY K. DAVIS, Illinois
ASA HUTCHINSON, Arkansas JOHN F. TIERNEY, Massachusetts
LEE TERRY, Nebraska JIM TURNER, Texas
JUDY BIGGERT, Illinois THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California ------
PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont
JOHN T. DOOLITTLE, California (Independent)
HELEN CHENOWETH, Idaho
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
David A. Kass, Deputy Counsel and Parliamentarian
Carla J. Martin, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on Government Management, Information, and Technology
STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois JIM TURNER, Texas
THOMAS M. DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon MAJOR R. OWENS, New York
DOUG OSE, California PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin CAROLYN B. MALONEY, New York
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. Russell George, Staff Director and Chief Counsel
Harrison Fox, Professional Staff Member
Mason Alinger, Clerk
Faith Weiss, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on February 4, 1999................................. 1
Statement of:
DeSeve, G. Edward, Deputy Director for Management, Office of
Management and Budget; Dwight A. Ink, president emeritus,
Institute of Public Administration, former Assistant
Director for Executive Management, Office of Management and
Budget; Harold Seidman, senior fellow, Center for the Study
of American Government, Johns Hopkins University, former
Assistant Director for Management and Organization, Bureau
of the Budget; and Herbert N. Jasper, fellow, National
Academy of Public Administration, former professional
management staff member, Bureau of Budget.................. 6
McMurtry, Virginia, Specialist, American National Government,
Congressional Research Service; J. Christopher Mihm,
Associate Director, Federal Management and Workforce
Issues, U.S. General Accounting Office; Paul Posner,
Director, Budget Issues, Accounting and Information
Management, U.S. General Accounting Office; and Ronald C.
Moe, Specialist, Government Organization and Management,
Congressional Research Service............................. 71
Letters, statements, et cetera, submitted for the record by:
DeSeve, G. Edward, Deputy Director for Management, Office of
Management and Budget, prepared statement of............... 10
Horn, Hon. Stephen, a Representative in Congress from the
State of California, prepared statement of................. 4
Ink, Dwight A., president emeritus, Institute of Public
Administration, former Assistant Director for Executive
Management, Office of Management and Budget, prepared
statement of............................................... 28
Jasper, Herbert N., fellow, National Academy of Public
Administration, former professional management staff
member, Bureau of Budget, prepared statement of............ 38
McMurtry, Virginia, Specialist, American National Government,
Congressional Research Service, prepared statement of...... 73
Mihm, J. Christopher, Associate Director, Federal Management
and Workforce Issues, U.S. General Accounting Office,
prepared statement of...................................... 97
Moe, Ronald C., Specialist, Government Organization and
Management, Congressional Research Service, prepared
statement of............................................... 79
Seidman, Harold, senior fellow, Center for the Study of
American Government, Johns Hopkins University, former
Assistant Director for Management and Organization, Bureau
of the Budget, prepared statement of....................... 21
Turner, Hon. Jim, a Representative in Congress from the State
of Texas, prepared statement of............................ 51
TO ESTABLISH AN OFFICE OF MANAGEMENT IN THE EXECUTIVE OFFICE OF THE
PRESIDENT
----------
THURSDAY, FEBRUARY 4, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. Stephen Horn
(chairman of the subcommittee) presiding.
Present: Representatives Horn, Biggert, Ose, and Turner.
Staff present: J. Russell George, staff director and chief
counsel; Bonnie Heald, director of information and professional
staff member; Harrison Fox, professional staff member; Mason
Alinger, staff assistant; Paul Wicker and Kacey Baker, interns;
Faith Weiss, minority professional staff member; and Earley
Green, minority staff assistant.
Mr. Horn. A quorum being present, the hearing of the
Subcommittee on Government Management, Information, and
Technology will come to order.
Our Federal Government is one of the largest, most complex
organizations on the planet. The President's budget, released
this week, records a government with over 1,300 budget
accounts, 20,000 programs and activities, and 4.2 million
employees, both civilian and military. Through the years, there
have been countless attempts to improve its management
structure. Nearly all have failed to control the government's
unwieldly and often overlapping functions.
Today, enlightened Federal management in the United States
lags far behind other, more progressive countries. In New
Zealand, for instance, improved management practices have
reduced government spending from 58 percent of gross domestic
product in 1990 to a projected 47 percent in 1999. This
improved management has decreased New Zealand's taxes by nearly
20 percent, and has dramatically improved government
performance. I guess we could ask the question: Why can't our
Federal Government do the same?
In the last 60 years, three Presidential commissions--the
Brownlow Committee in 1937, the first Hoover Commission report
in 1949, and finally, the Ash Council report in 1970--each
recommended strengthening management within the executive
branch. If that is to happen, the President needs a core group
whose professional staff members can advise him and his Cabinet
officers at his wishes on key management questions.
In 1998 hearings before the House Subcommittee on
Government Management, Information, and Technology, several
witnesses concluded that on a regular basis, OMB's management
leadership has been subordinated to budget concerns and
timeframes.
As many of you know, I was a very strong advocate of adding
the ``M'' to the Bureau of the Budget and making it the Office
of Management and Budget. I thought for once we could get the
budget its clout to have some focus on the management questions
that often are just thrown under the rug regardless of
administration. This has nothing to do with Republicans and
Democrats. This has nothing to do with liberals or
conservatives. Behavior has been the same. As my friends in the
senior civil service have been telling me for the last 10 to 15
years, it isn't working. So we are here today to discuss what
makes it work and what kind of task group can we have that will
really get management done.
Government management problems are regularly ignored
because short-term policy and spending issues drive out
valuable, long-term management stewardship.
Nearly everyone agrees that the executive branch of the
Federal Government needs better management.
We can either try--once again--to focus general management
responsibilities in the Office of Management and Budget where
they currently reside, or we can move management
responsibilities to a newly created Office of Management in the
Executive Office of the President.
The first choice has been tried and retried with little
success. The second would give the President two teams of
advisers: one for budgetary issues and another for management.
Resistance to the second alternative has been resolute
because many believe that the clout of the budget can force
management reform. And as I said earlier, empirical evidence,
fortified with experience, proves just the opposite. Long term-
employees in the Executive Office, three of whom are here today
to testify, confirm that within the Federal Government, the
budget often drives out good management.
In Theodore Roosevelt's speech on ``New Nationalism,'' he
provides a road map for effective government management. The
former President stated: ``No matter how honest and decent we
are in our private lives, if we do not have the right kind of
law and the right kind of administration of the law, we cannot
go forward as a Nation.''
An Office of Management is a key step to a more efficient,
effective, and responsive administration of government. My
friends in the Office of Management and Budget, both current
and past senior officers, surely understand that their
dedication, good intentions, and hard work are not being
criticized. The intent in creating the Office of Management is
to make it easier for dedicated public servants to succeed and,
therefore, to improve management throughout the executive
branch.
We now turn to a discussion on the best way to accomplish
that goal.
I think one of our sort of reference points here is the
various studies that the Government Accounting Office [GAO],
has done. And this year, as usual, they have done an excellent
study and this is ``Major Management Challenges and Program
Risks, Government-Wide Perspective,'' and just to take up one
of many, major management challenges and program risks, DOD.
A lot of these matters should have been dealt with many,
many years ago. The one that comes to mind more recently is the
year 2000 problem. That should have happened way back in 1989
when the Social Security Administration was the first agency on
its own initiative to face up to what was coming at the end of
the century.
And the example I have used so often of the Federal Highway
Administration where it had been brought to their attention by
one of their excellent employees and they didn't pay attention
to it. There was no system for management. This was 1989. This
has nothing to do with the current administration, but this is
the type of thing that happens where they don't face up to
these issues either at the Department level, the Cabinet level
or the executive branch level. I believe the trouble that we
are in and the procrastination that occurred over a decade is a
good example of when the Director of the Office of Management
should have been knocking on the door of the President and
saying, ``Look, we have a problem, we need your help and let's
discuss it.''
[The prepared statement of Hon. Stephen Horn follows:]
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Mr. Horn. We have two panels with us today.
On panel one, we welcome the Honorable Edward DeSeve, the
Acting Deputy Director for Management, Office of Management and
Budget; Mr. Dwight Ink, president emeritus, Institute of Public
Administration, former Assistant Director for Executive
Management, Office of Management and Budget; Mr. Harold
Seidman, senior fellow, Center for the Study of American
Government at John Hopkins University, former Assistant
Director for Management and Organization, Bureau of the Budget;
Mr. Herb Jasper, fellow, National Academy of Public
Administration, former professional management staff member of
the Bureau of the Budget.
And we will wait to introduce panel two. Could we have the
ones that I have named, Mr. DeSeve, Mr. Ink, Mr. Seidman and
Mr. Jasper come forward and take the oath.
[Witnesses sworn.]
Mr. Horn. Before I start the first panel, I do want to
introduce the members who are here and ask if they have any
opening statement. We would be glad to have it at this point.
The vice chairman, Mrs. Biggert, do you have any comments?
Mrs. Biggert. No, I don't have any comments. I would like
to hear the testimony.
Mr. Horn. The gentleman from California?
Mr. Ose. No.
Mr. Horn. The ranking member, if he has a statement, it
will be put in the record following my own opening remarks.
Now, let us start with Mr. DeSeve. It is always good to see
you here, and we would welcome your comments.
STATEMENTS OF G. EDWARD DeSEVE, DEPUTY DIRECTOR FOR MANAGEMENT,
OFFICE OF MANAGEMENT AND BUDGET; DWIGHT A. INK, PRESIDENT
EMERITUS, INSTITUTE OF PUBLIC ADMINISTRATION, FORMER ASSISTANT
DIRECTOR FOR EXECUTIVE MANAGEMENT, OFFICE OF MANAGEMENT AND
BUDGET; HAROLD SEIDMAN, SENIOR FELLOW, CENTER FOR THE STUDY OF
AMERICAN GOVERNMENT, JOHNS HOPKINS UNIVERSITY, FORMER ASSISTANT
DIRECTOR FOR MANAGEMENT AND ORGANIZATION, BUREAU OF THE BUDGET;
AND HERBERT N. JASPER, FELLOW, NATIONAL ACADEMY OF PUBLIC
ADMINISTRATION, FORMER PROFESSIONAL MANAGEMENT STAFF MEMBER,
BUREAU OF BUDGET
Mr. DeSeve. Mr. Chairman, I would like to submit my
testimony for the record, and then I have three points that I
would like to make. And we are going to use some charts over
here, if you would tell us what the best position for these
charts is so that the committee can best see them.
Mr. Horn. We need to move it forward.
Mr. DeSeve. Let's do that.
Mr. Horn. Do you have color charts to pass out to us?
Mr. DeSeve. I am afraid that our budget doesn't take us
that far. I also want to apologize for my own speaking voice
which is not normally this timbre.
What I want to do is make three points today in regard to
the linkage of management and budget and the imperative that I
believe will continue the need to link them in the future.
First, we will be preparing, and I am happy to submit an
early draft to the committee--this has just been bound today
and I have extra copies--of the Government-Wide Performance
Plan. That plan is required by the Government Performance and
Results Act and it is three sections of the President's budget
as it was last year, section 3, section 4 and section 6. I am
going to talk about two of the sections today and use those
two, section 3 and section 4, to show you what I believe is the
inextricable linkage between management and budget if you are
to use budget to lever management.
You and I disagree on that, and I appreciate your oversight
because it does keep us on our toes and keep us thinking about
how to best articulate the relevance of these issues.
The first chart on the left is one that Director Lew has
used and Deputy Director Mathews has used recently to
demonstrate to the general public both the peril that the
Nation faced during the years, Republican or Democrat, prior to
this administration and the way in which surplus was reached.
If the United States had been a European country under the
Maastricht agreement, it would not have been admitted to the
European Monetary Union because its deficit as a percent of GDP
exceeded 3 percent annually during the period.
As you can see, the receipts averaged 18\1/2\ percent
during that period and the outlays averaged 21.9 percent. So we
would have failed the Maastrict test of less than 3 percent of
GDP. Everyone says it is the wonderful economy that brought us
to this point.
This chart demonstrates that it is the decrease in outlays
as a percentage of GDP as well as the increase in revenues. And
much of that decrease in outlays can be laid to the oversight
of this committee and other committees of Congress as they took
very seriously their responsibilities under the Budget
Reconciliation Act of the past as well as under the Balanced
Budget Act. It was carefully crafted to put caps on domestic
discretionary spending. What that forced agencies to do was to
manage to those caps so that budget led the need for
management, and it was almost in lockstep.
What we see in the center chart is the decline in FTE,
full-time employment. That is the full time equivalent
employment during that same period. And the driver here again
was the notion of scarcity. If we are to constrain our budget,
we need to continue to constrain and streamline the way
government works. That budget constraint helped to drive
management constraint. Management without budget in that case
would perhaps have led to a line that was more gradual, but
this Congress committed that there would be more police on the
streets. It was a substantive decision, and funding those
police came in large measure from 365,000 fewer FTE, about a
16-percent decrease during the period 1993 through 1998
actually.
Now it will go up slightly this year. Why? Because we are
hiring a lot of census workers, about 64,000 census workers.
But the permanent work force will continue its decline while
the temporary census increase moves it up. So there are 365,000
fewer FTE on the payroll during the period ended September 30th
compared to 1993.
Again we had to manage to that. Each department had to
manage that budgetary constraint because of the desire to bring
those two lines together.
When we go to the far right, we see how the Office of
Management and Budget has reorganized itself to deal with those
challenges. The Office of the Director, and this is not a chart
that I created, I turned to the Budget Resources Division and I
said, ``Give me the latest chart.'' It is a chart that we use
all of the time.
It shows the OMB Director, Deputy Director, and Deputy
Director for Management are the Office of the Director. On the
right side are the three statutory offices which by statute
report to the Deputy Director for Management.
On the left side are the very important support functions
of OMB that in a new Department of Management would have to be
re-created. We would have to have an administrative division.
We would not have to have a budget review. We would have to
have some kind of a communications office. We would have to
have some kind of nexus with the economy, maybe not an Economic
Policy Office. We would have to have a Legislative Affairs
Office, and the use of our legislative reference division,
which sounds innocuous, but that is the clearance process that
is part of the guts of how OMB operates.
All of those entities on the left-hand side are
continuously available for management purposes. I really use
those folks. Section 3 of the budget talks about economic
performance, and it is part of the Government Performance Plan.
I worked very closely with those economists in preparing that
section and highlighting the performance targets we have for
the economy and for the deficit.
On the right-hand side, I supervise those offices. But as
we try to carry out the responsibilities of OMB--and if I move
over to the chart, will that be a problem for the stenographer?
Mr. Horn. There is microphone over there at the end.
Mr. DeSeve. The reason that I want to do that, these are
priority management objectives. This is the second year in the
budget that we have had these. We talked about them to you in
December when we began the process of creating them. There are
four different types. The first set are the governmentwide
priority management objectives.
The first is Y2K. A year ago at the urging of many--
certainly you and Congresswoman Morella were in the forefront--
the President agreed that it was appropriate to create the
Office of the President for Y2K conversion. John Koskinen is
dual hatted, as you probably know. He has a hat at OMB and a
hat in the White House. The way John and I work is we use each
of the Program Associate Directors here as the filters for all
of the budget information and the program information for Y2K.
They are the gatherers and the filterers of everything that the
Department does.
Similarly when I move down to section 3, these are the
audited financial statements of the government. We have a
target to have a clean opinion of the governmentwide financial
statement in a year. I expect to be before you again sometime
in early April talking about the progress that has been made
with GAO. Are we finished? No. Has progress been made? Yes, and
we will testify to that.
The way that we get that done is we use the resource
management offices, the RMOs, as our levers. First of all they
supply the dollars to the IGs for the audits and they nudge the
departments as they go forward to do better and ask them why
they are not doing better.
But the other important factor, as we go through other
PMOs, priority management objectives, many of them are budget
driven. Why do we want to improve contract management in DOE?
To save money.
Why do we want to strengthen HCFA's management capacity?
Because we took savings in the budget this year that now we
have to follow through with management reform.
Why do we want to implement IRS reform? Because this
Congress and OMB felt very strongly that the IRS reform is
needed. We supported legislation. We passed legislation with
sweeping management changes in salary structures,
accountability and reporting, putting a citizens' advocate in
the IRS. How do we do these things? We do them as a result of
the RMOs, the budget people bringing proposals forward that can
either save money or improve operations. My job is the part of
a coordinator.
When John Koskinen testified that there are 518 people in
OMB who work on management, he was simply expressing the notion
that this entire organization is available to him. To bifurcate
it, take this group out and perhaps some of these folks out and
to move them away would be to significantly weaken that linkage
and make more difficult our ability to carry out these, to keep
the pressure on to keep this going in this direction, and
ultimately to achieve the performance that we all care about
which is the nature of the surplus.
That is my testimony today. I would be happy to take
questions at this point.
[The prepared statement and charts of Mr. DeSeve follow:]
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Mr. Horn. Well, I am going to not only have Members ask you
some questions, but since we have a distinguished panel of your
ex-colleagues who have broad experience in five or six or seven
different administrations, have a dialog here, not just a Q and
A. When John answered that question that way, I thought he said
there were 540, so maybe you have dropped a few.
Mr. DeSeve. It is 518.
Mr. Horn. My answer was when you have that many people
involved, it means that you have nothing involved because you
just can't get the focus on that, and you don't have 500
people. Roosevelt and Truman and Eisenhower had probably 20 or
so that knew what they were doing in this area, which didn't
mean that they didn't call on their colleagues throughout the
Bureau of the Budget at that time, or call on the Cabinet
departments or call on outside people, whoever it is.
But they focused and they knew, they drafted the Marshall
Plan. They drafted Government Corporation Designs which was a
new delivery of service, and all of that, and nothing stops the
two offices from cooperating. They are both part of the
Executive Office of the President that came out of the Brownlow
Committee, and it doesn't mean that they are duplicating
resources. You don't. You work with the budget people. But the
fact is the ``M'' bit since Nixon has not worked. And if it was
working, we wouldn't be here today and GAO wouldn't be writing
reports on management things that haven't been dealt with.
There is a wonderful, nice group of people there. I am not
criticizing them. The five resource offices have been around
since at least the sixties, and they have a lot of skilled
persons, but their major concern is the budget and not
management, and that is where we need to have people that know
something about management and structure and can work on that
and can give the President that insight.
The fact is that President Reagan, President Bush, and
President Clinton did not really get good management advice out
of that system in the year 2000 situation. Until our hearing in
April 1996, not much was happening, only Social Security. When
I surveyed the Cabinet, several of them said, I have never
heard of the problem--Mrs. O'Leary and Mr. Pena to be exact.
They had no goals. They had no person in charge or their own
agencies, and it just went right down the line as a major
management failure under three administrations.
Here is Social Security. They are smart. They have always
have been considered the best run Federal administration in the
city. They were when I was on the Hill in the sixties, and they
are still today. So they saw it, and that idea should have gone
throughout the administration and not had to wait until
February 1998 to appoint someone in charge. If the President
had been briefed in 1988-1989, that person would have been back
there working throughout that decade. Now we have a time crunch
and we have had much procrastination, but we can't do anything
about it. The clock moves on, and so now we have to solve the
problem, maybe in a rush, maybe in a panic. Maybe it is costing
more money than if we had systematically done it, and those
things concern me.
Would any member of the panel like to get into this dialog?
Mr. DeSeve has to leave in a little while and this will be our
only chance to have this dialog.
Mr. Ink. In my testimony I have a number of points.
Mr. Horn. Move the microphone right up to you because these
hearing rooms were not designed with any great management
thought.
Mr. DeSeve is not going to be able to stay with us. I am
interested in what your perspective is and what questions you
would raise, because he isn't convinced that the separate
management office will help much.
What can you tell us in a nutshell as to what under
Roosevelt and Truman and Eisenhower worked, and then it sort of
slowly went down and there was political intrusion by both
parties and all of that?
Mr. Seidman. I think Ed DeSeve's testimony proved the
point. The two functions are not integrally related to each
other. What I don't find in his testimony is how you are
dealing with the basic cross-cutting issues. Their approach is
focused around agency and agency budgets.
The function of the management office when I was there was
primarily providing staff advice to the President and the
Congress in dealing with these across-the-board issues. Some of
the things that I was dealing with, for example, included such
questions as how do you govern the territories and possessions
of the United States? How do you bring new States into the
union? Pay comparability. How do you remove the obstacles that
States and local governments faced in dealing with the Federal
Government? Working cooperatively with the Governors'
Conference, with the mayors, these were the kind of things that
we did. We developed an organizational philosophy and criteria.
The two different functions are not integrally related. In
fact it was a handicap for us. We did not need budgetary clout.
I found clout to be a handicap. One of the things on the
management side we had to do was establish our independence of
the budget before we talked. As I pointed out in my testimony,
you don't get into really a rational debate with someone with a
club behind their back. I found it was a strength not to have
clout because it put the burden of proof on us to persuade
people of what we were proposing.
[The prepared statement of Mr. Seidman follows:]
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Mr. Ink. I found the same to be true. I found the more we
could distance ourselves from being identified with the budget
process, the greater our strength with the Cabinet members, the
greater our credibility with the Congress, the greater our
ability to help the President in advancing initiatives, the
greater our ability to develop legislative executive
initiatives and reforms on a bipartisan basis.
One of the problems is that: Mr. DeSeve is an extremely
able person, as was John Koskinen, and Jonathan Breal for whom
I have the greatest respect.
What we are really saying is that we would like to liberate
them from the handicaps and limitations of working within the
budget which is basically a long program, individual program
alliance. The tremendous pressure associated with the policy
disputes involved in these budget issues is very time-
consuming. It is very difficult for the very best people to
break away long enough to address these fundamental management
issues, particularly those that have a long-term impact that
don't fit into a 12-month annual budget cycle, which is the
focus of the budget.
I think we get a little confused because there are useful
things going on. There are good initiatives that are being
undertaken. What we fail to recognize is that the potential is
much greater than what is going on. The need, in my view, for
fundamental change is much greater than we recognize today.
My view of what ought to be done and many people think is
too radical, and it is if you don't have good management
underpinning those changes. It has always been my view that you
can be more creative, more innovative, take more radical steps
if you follow basic principles of management.
We need to be training people as we downsize to get them
better equipped for new roles. The smaller the work force, the
more important it is that the work force we retain are highly
qualified and well trained.
For example, we talk about outsourcing. This chart doesn't
show the number of people that the taxpayers are now supporting
through contracts. What it doesn't show either, and neither
does the GAO report, is the fact that in a number of these
agencies as we rely more and more upon private companies and
third-party arrangements to carry out governmental missions, we
are failing badly in a number of these agencies to retrain
people and develop people for entirely new roles, that of
administering third-party government.
[The prepared statement of Mr. Ink follows:]
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Mr. Horn. Mr. Jasper, let me get Mr. Jasper in on this in
terms of any example, and just reacting to the testimony of the
Deputy Director for Management on that.
Mr. Jasper. I would like to draw a sharp distinction which
may help us focus on some of the issues.
In Mr. DeSeve's prepared statement he suggests that somehow
or other your proposal would transfer responsibility for GPRA
to the new Office of Management. That is not necessarily true,
and it is not written in your draft bill.
One of the things that we emphasized, and that Harold
Seidman has just articulated, is that there are a number of
functions that we call governmentwide organization and
management. Those are the things that the new office would
focus on primarily things that are of great importance to the
President, not to discount the importance of internal agency
management. And nothing in the bill would reverse the ``OMB
2000'' reorganization as I see it. The RMOs would continue to
have responsibility for internal agency management matters and
budget matters, and thus could achieve most of the objectives
that Mr. DeSeve spoke about. But what is missing is some focus
on the government as a whole and the cross-cutting issues that
have been alluded to.
[The prepared statement of Mr. Jasper follows:]
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Mr. Seidman. In 1952 they did the same thing, integrated
the budget and the management functions, except that they did
preserve the government organization staff. It was a small
staff. They provided for Assistant Directors of each budget
division for management and organization. All of them
disappeared within 2 years and became budget examiners. And it
didn't work and without any change in the rules, the Office of
Management organization grew right back to where it was, to
perform the functions that it needed to perform, without any
formal statement of the change in purpose. It just did not
work.
Mr. Ink. That same merger that you talked about Harold, as
I mention in my testimony, directly led to major scandals in
the General Services Administration. The General Services
Administration knew that they had a very weak and problem-
ridden procurement system. They moved to reorganize it and set
it up anew. They persuaded the head of procurement in NASA to
come over to GSA and head it up and there would be no
additional cost whatever. But the merger left OMB without
management capacity, and OMB vetoed the procurement reform.
Consequently GSA was left vulnerable to the furniture scandals
that then began to emerge within months after that veto took
place.
There are other instances. You look at the earlier down
trend of HUD, and much of that goes back to a misguided budget
influence that concluded HUD did not need any auditors in the
management area, you need them all in the inspector general
area. Once you do that, and that happened in agency after
agency, once that happens, then you rob the secretary of a
department of much of his or her capacity for prevention, and
the emphasis on preventing fraud and abuse shifts to catching
the crook after the damage has been done. This I think was a
major problem that occurred, and it occurred largely because
the budget dominated the management considerations in OMB after
the merger.
Mr. Horn. I agree that deterrence helped win the cold war
in foreign policy, but in domestic policy deterrence sort of
got muddied away. That is really what you are saying. If you
can get that fraud, waste and abuse to have a team that is
reponsible to the person that the President is holding
responsible to run a series of programs, if they don't have
those people on their staff working, it just isn't going to
happen.
Let me ask Mr. DeSeve, we seem to be in agreement that we
must find ways to continually link up management and budget
within the Executive Office of the President, and I guess my
question to you is how do you do it organizationally? You say
that you can easily run to those five resource Directors; you
should. But nothing would stop the Director of the Office of
Management from doing the same thing. In fact, you wouldn't
even need to change offices.
What we are talking about, though, is getting a focus on
management questions so he can go bug those five Directors,
because if the budget has clout, it needs some guidance from
people who give their attention to management and not just
budget. The way that we organize government now, under many
administrations, we say let's squeeze them a little bit and
give us back a few full-time equivalents. We don't really think
through how we are delivering these programs.
Granted, Congress gets into this in some ways; some ways we
like and some ways we don't like, in terms of the authorizing
committees. And I won't say that they are always wrong and I
don't say that they were always right, but they are a factor
when it comes to Cabinet departments and what you will have
that Cabinet department do.
And so I guess I would like your views, Mr. DeSeve, as to
why would a Director of an Office of Management in the same
Executive Office of the President, where you can just walk next
door and coordinate, it doesn't stop these people from working
together just like you say that you are working together?
Mr. DeSeve. I have to go back to my own professor of public
administration, James C. ``Charles'' Worth. I suspect that
these gentlemen know Jim Charles Worth. Jim was a very gruff
fellow. He called himself a shiny-pants colonel from one of the
war procurement agencies.
And he said, ``Son, you can coordinate that which you can
control.'' I can coordinate my two hands because I can control
them. I have a much harder time controlling Mr. Ink's hand, and
he would take us by the hand and do that.
Without the unity of control shown in a single Office of
Management and Budget, it is much more difficult.
We have heard the perspective of these gentlemen on
fundamental changes in the nature of management over the last
80 years or 90 years, and I would like to give you my
perspective, and I hope that I can do it quickly.
If we go back to Theodore Roosevelt, we see the things that
Roosevelt was combating in putting in a personnel system that
was fundamentally civil service. He was combating the legacy of
the bootlegging and scandal in the Tweed administration in New
York, and he then moved on. When we turn to the thirties when
Gulick and Barnard were beginning the principles of
administration that were laid out for us in that period. They
were dealing with the existence and the coming of age of a
large bureaucratic form of government which had not previously
existed in the teens, twenties and thirties.
We are in a fundamentally different era now. We have
changed how government operates. When you asked me how I
administer cross-cutting programs, I do it through a network of
chief financial officers, chief information officers,
inspectors general and chief operating officers that come
together continuously. Literally I will get 20 e-mails a day
from the CIO council, the CFO council, the PMC and so on, and
they have taken on much of the burden of working together to
find new priorities.
One of the things that I didn't talk about in section 4, is
all of the goals and objectives of those councils, all of which
I chair. The goals are articulated in section 4. The councils
are doing much of the work of Y2K. Kate Adams from the Social
Security Administration is chair of the Y2K committee of the
CIO council, and she and her colleagues have been laying out
the pathway. I am the network manager. I make sure that they
have food, water, and sustenance authority, so in a flow
control way I cause that to happen.
This is fundamentally the same change that we have seen in
computing. We went from mainframe driven to one that is now
networked-based and distributed processing. So I think we are
in a brand new era of management where worrying about the shape
of organizational hierarchies was tremendously important as we
invented a new bureaucratic society.
As we move to a much more distributed network society, we
find a new way of managing, and I think that is where we are
now. I have a much longer presentation complete with slides
that I do, and if you would like to see that, I will be happy
to send it down. But I think we are in a different time and
place. I think management consists of more than organizational
structuring. It consists of allocating resources. It consists
of identifying the possibilities of technology. It consists in
the kind of customer service that we provide, and it consists
in tracing the root from political campaigns and the promises
made there, through the legislative hierarchy into program
implementation and beyond, into evaluation of the results of
those programs and back into an articulation to the public of
what those programs are actually delivering in terms of
service. All of that is management, not just a smaller view of
organizational structure.
Mr. Horn. Well, we agree with you on that. The whole
purpose of GPRA and others has been to get better delivery of
service by the executive branch.
Mr. DeSeve. And GPRA is in the budget; you will prepare in
the budget and submit with the budget a plan of how your
results are going to be achieved.
Mr. Horn. But I would hope they would be in the budget
because the budget should be based on the goals that Congress
and the President have given these agencies, and the budget
should be simply the unifying document where you translate it
into money to carry out the goals. But the problems come--as
you know we had major ones on GPRA. It was a new experience for
a lot of agencies when State government is going through this
around the country for years, universities have and other
public entities, and we are only just getting to this in terms
of the executive branch.
Now, would you consider yourself the senior management
officer within the Executive Office of the President, excluding
the President, obviously?
Mr. DeSeve. I think the statute suggests that. The Chief
Financial Officers Act creates the Office of Deputy Director
for Management, and I believe it suggests that that is the
case.
Mr. Horn. How many times have you met with the President in
the last few months?
Mr. DeSeve. Six or eight, I would say.
Mr. Horn. This is eyeball to eyeball?
Mr. DeSeve. In meetings. I don't have a one-on-one
relationship with the President.
Mr. Horn. The Director of the Budget presumably does have a
one-on-one relationship with the President.
Mr. DeSeve. It is typical to meet with the President in
groups. People who need to be there are there.
Mr. Horn. The chief of staff?
Mr. DeSeve. The chief of staff, head of the National
Economic Council, Domestic Policy Council, National Security
Council. There would be 8 or 10 people around a table.
Mr. Horn. I realize that there are a lot of things that go
on in terms of bringing people and cueing them in and cluing
them in, but it seems to me if you are going to get something
done, the Director of the Budget in this case, and now
Management and Budget, has to really say, Mr. President, let's
sit down and talk about this thing, and you should know there
are some real emergencies coming down the line and there are
some things that can blow up in our face.
The HUD example under Reagan is a very good example while
that whole apparatus that Brownlow suggested when he talked
about six administrative assistants who were anonymous, and we
have never had anyone anonymous in the White House staff since
then, but nevertheless the President needs to know before
something blows up and he reads it in the Washington Post and
the Washington Times in the morning. The Director of the
Budget, one of the most powerful positions in the government,
should have that relationship. It seems to me if--has anybody
talked to him about management in the last 6 months?
Mr. DeSeve. I certainly have talked to him about management
in the last 6 months. One of the things that the President did
very consciously is that he asked the Vice President in the
Office of the President to bear the primary responsibility, and
my interactions with the Vice President are much more direct
and much more frequent. And he has taken that role, just as in
other administrations the Vice President had other roles that
the President cared about, and I believe as I communicate to
the Vice President, we have a dialog going on right now on a
particular labor management issue where I and the Vice
President will communicate once or twice a week. He will be
continuously talking to the President about how the President
wants to handle that issue. The access that I have to the Vice
President is unparalleled, and I think it represents the Office
of the President in that way.
Mr. Horn. I think the President has made very good use of
the Vice President, and we all tried to support the National
Performance Review and hold hearings and all of the rest, but
that isn't always going to happen, and that is the problem.
Some Vice Presidents have been squeezed out by Presidents. The
staff of President Kennedy didn't have much use for or faith in
Vice President Lyndon Johnson.
Now, when Lyndon Johnson became President, he did the same
thing to Humphrey for 6 months, as a matter of fact, as
Humphrey would tell the story, that the Kennedy staff did to
him. And that is sort of a very iffy thing, as you know. And
then, of course, Vice President Bush was well known for going
to a lot of funerals.
When I was in the Eisenhower administration, President
Eisenhower did give Vice President Nixon, besides funeral duty,
he gave him the Equal Employment Commission and a number of
other things, but those are specific assignments that the
President can give a Vice President even though technically
under the Constitution he is a legislative officer; but he is a
person in waiting, and I think the President made good use of
Vice President Gore.
But that ad hockery is what we are trying to get away from.
We are trying to get an institutional memory that will go
between administrations, whether Democratic or Republican
administrations. Often the succeeding administration of the
same party has had a completely different approach to some of
these questions than the preceding administration of the same
party. So it isn't just partisan; it is just people and how
they look at large organizations and what they expect to get
out of it.
Is it not true that the budget demands often win out over
management concerns within OMB?
Mr. DeSeve. You see, I can't separate the two. If you had
sat with us in our Director's reviews this year, which is the
time of the year during September, October, and November when
the fundamental decisions are made, the first page would
summarize the financial information about the budget. The
second page would summarize the results expected under GPRA.
The departmental totals would then be carried. We would then go
into a series of issue papers. An issue paper, for example,
would be how do we get a lower spending level in HCFA by
eliminating some portion of the erroneous payments that need to
be eliminated? And in that discussion paper, performance
measures would be used to highlight what we were going to do
and how we were going to do it. I sat through every review and
asked all of the questions necessary. But the interrelationship
is almost unitary between management and budget in those
conversations.
Jack Lew, following on Frank Raines, following on Alice
Rivlin, has taken to a higher level the ability to manage
particular situations and make sure that in those particular
situations, especially cross-cutting ones, we have a priority
management objective verifying that the right person is getting
the right benefit. We will be using the new hire data base that
comes from trying to find deadbeat parents, people not paying
their child support. That is a current data base of
information. We will be using that to inform the people in
student loan about how to find some of the deadbeat student
loan folks. That is a management initiative across a series of
areas. We will be doing other things like that in the benefits
area. That stems from wanting to stay within the budgetary
constraints as they exist. As an abstract management technique,
it is something that cuts across eight or nine agencies in
trying to get benefit verification done properly. We use
certain kinds of IRS data, not confidential taxpayer
information, but other data. So Jack has been very forceful in
doing this and has demonstrated these management techniques as
being terribly important in preparing this year's budget.
Mr. Horn. I ask Mr. Turner for his round to his heart's
content, but first let me ask you: How many people from other
White House offices sat in on those budget reviews? Did the
head of Environmental Quality, did the chairman of the Economic
Advisers, did they sit in?
Mr. DeSeve. We have tried it both ways. During Dr. Rivlin's
tenure, we had the broader councils in to the conversation, and
we found that it made it very hard to have them effectively
deal because they didn't have good information.
So what we have done this year is disbursed it. We meet
separately with those councils and bring their views back to
Director's review, so we can represent the position of the
Office of Science and Technology Policy about NASA's
performance goals or Energy's performance goals.
The same thing with the Department of Environmental
Protection in managing the Superfund program. We had to make
some changes this year because the level of funding was not as
high as we had requested in the prior year, so we had to change
Superfund goals. In doing that we had to change some of the
ways that the program was managed. And so what we do is we
consult prior to the Directors' reviews, get the views of the
other organizations in the White House and bring those into
Directors' review. Honestly, it was just taking too long in the
process to try to bring the other agencies up to speed at the
table so we do it ahead of time.
Mr. Horn. But nothing stops a White House Director of equal
rank to the Director of Budget--like the chairman of Economic
Advisers, in particular, certainly has a long-standing role
beginning 1946.
Mr. DeSeve. Absolutely.
Mr. Horn. Nothing stops them from coming into those
Directors' reviews if they are invited?
Mr. DeSeve. That is correct.
Mr. Horn. We assume that, but it often doesn't happen.
Mr. DeSeve. They are seen as cousins, as opposed to
brothers and sisters.
Mr. Horn. Have you had a chance to read ``Inside OMB'' by
Shelley Lynn Tompkin?
Mr. DeSeve. I have not. I was interviewed for it, I
believe. I was hoping she would send me a free copy.
Mr. Horn. As I book collector, I feel the same way.
But a recent book, ``Inside OMB,'' she says on page 203,
``Budget management mergers tended to result in budgetary
pressures overshadowing the efforts of OMB staff to review
agency management issues.'' That is her summary after talking
to all of you experts.
Mr. Ink. And she didn't interview me, by the way.
Mr. DeSeve. Is there a page where she refers to how
excellently management is currently handled by Mr. Koskinen and
Mr. DeSeve? I think there is.
Mr. Horn. Is she right? Is she wrong?
Mr. DeSeve. I think she is reflecting the past rather than
the current state, and the state of the last several years. I
think she did the research for that book in 1995. I beg off on
the year.
Mr. Horn. I think it was fairly recent, the last 2 years.
Mr. DeSeve. I would stand with my colleagues at GAO who I
believe will testify later that it is important to keep the
functions together.
Mr. Horn. I now yield to Mr. Turner for such time as he
would like for questions.
Mr. Turner. Thank you, Mr. Chairman. First I apologize to
the Chair and this distinguished panel for my tardiness. I was
at the National Prayer Breakfast, and it tends to run a little
longer than we expect. I apologize.
Mr. Horn. You had a delightful speaker this morning. I
happened to listen on C-SPAN radio, and this is a plug for C-
SPAN, 90.1 on your FM dial. He was hilarious.
Mr. Turner. I hope the Chair will accept my opening
statement as part of the record.
[The prepared statement of Hon. Jim Turner follows:]
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Mr. Turner. My experience, of course, is not as deep, Mr.
Chairman, as yours in this issue. Inasmuch as I have not been
with you on this subcommittee, but for last year, I did have
some experience in management issues when I was in the State
legislature. Texas I think in many ways led the Nation in
performance-based budgeting and in performance reviews. Much of
the Vice President's initiative on performance or on
reinventing government came from the State of Texas where our
State Comptroller, John Sharp, initiated a ``reinventing
government'' effort for us there.
I fully appreciate the Chair's diligence in trying to
improve the management practices of the Federal Government to
be sure that taxpayers are getting the very best they can for
every dollar that they pay into the Federal Treasury.
It does somewhat disturb me, however, to contemplate the
legislation that we are having the hearing on, in spite of the
distinguished panel of experts you have assembled, when the
White House advises us they think that it would be a bad idea
inasmuch as we know that it is primarily a responsibility of
the President to execute the laws in an area of separating the
Office of Management and Budget. Many management changes, as we
all know, occur from time to time in government and business,
and if they are not acceptable to those that the change is
forced upon, they sometimes tend not to work.
I guess I would like to ask Mr. DeSeve to expand a little
bit more on the comments that he made earlier because I have
had the distinct impression, as we moved into this new age of
performance-based budgeting, that there is in fact a very
direct link between management and budget issues that does
represent somewhat of a change from the way that things used to
be done. If you don't mind commenting on that to be sure that I
am on the right track.
Mr. DeSeve. If I may use the analogy of historic eras, I
believe we have moved from what I call the hunter-gatherer era
into a fundamentally different era. Budgeting, until recently
and still in some places is, I will go to the Hill, I will kill
the beast, I will bring it back to my department. They will
have more.
And the department head who is most successful in bringing
resources home was rewarded. That is the hunter-gatherer
mentality in budgeting. We are hoping that is changing and
moving to what I call the agricultural era. I don't think that
we are in the Industrial Age yet.
The agricultural era says I will plant my corn in rows. I
will plan where those rows will be. I will attempt to have a
surplus to feed my family. That is what GPRA is. It is the
notion that there is an orderliness to the process of planning
the output, the crop that you will get, and the outcome, having
a surplus to feed your family and trade in the village.
This requires a new set of disciplines. It requires you to
have a new mind-set in how you approach budgeting. We are
starting to see that fundamental change in departments and
agencies. Certainly they want more, but in justifying that
more, they were beginning again and again to talk about if you
give me this, I can do that. I can reduce the time that it
takes to do this, or I can fundamentally change the way that we
deliver that service. So the relationship is becoming much more
integral. If we were a company, we would certainly want to
integrate our production with our financial results so we
understood our profitability. GPRA is the proxy of that. The
Results Act is the proxy of that for the Federal Government,
and it requires a more sophisticated kind of budget analysis
that is also management analysis at the same time.
Mr. Turner. Just as a followup on that, in watching our
experience in Texas, where I served in the State Senate, and as
we implemented performance-based budgeting ideas, I always was
impressed that it seems to take some period of time to develop
a sophisticated set of performance tools, and some of them in
the early stages seem to be somewhat elementary. I would like
to get your evaluation on where we are in the Federal
Government in regard to really developing a sophisticated
performance-based budgeting system.
Mr. DeSeve. I would like to make two points. First, I think
that this committee and Majority Leader Armey, and I have said
this here before, have been invaluable in causing the focus on
GPRA to occur. But I think GPRA fundamentally has three things
that need to be focused on.
First, the usefulness of the measures for the managers. Can
they use them in their everyday work to understand how to make
their operation work better internally and for their clients?
Second, can they be used in resource allocation? Can they
be used as appropriators make decisions?
Third, can they be used to change the fundamental nature of
programs and the way services are carried out? Can the
authorizers and the legislative base of those programs be
fundamentally shifted as a result of having measures available?
Right now I would assert we are at a point in developing
the measures where we have a good set of measures in many
places, but they need to be tested against the legislative
process of appropriation. We will need to get more and better
involvement of people like your legislative body in Texas to
ask the hard questions in the regular order of business.
Mr. Armey and Mr. Horn have excellent oversight hearings,
but in some ways it is oversight, not the regular order of
business, that dominates the Congress. The appropriations
process and the authorization process are much larger aspects
of the Congress' life. We are beginning to see performance
measures in the Higher Education Reauthorization Act last year.
The use of performance measurement of that act was very
appropriate, but we really don't see as much as we would like
to see in the use by the appropriators in the regular order of
business.
Part of the argument is that the measures have not been
good enough. We would ask them to tell us how they would like
them to be better. We are finding them useful in our own OMB
processes. We use them more in the OMB process each year. I
think the measures are getting better. They could get still
better and be built into the legislation at the front end as we
do authorization so it is clear.
One of the successes that we think that we have had is in
the drug area. The chairman and Mr. Armey have been very
complimentary to General McCaffrey's cross-cutting measures in
the drug arena. We are on our third set of measures there, and
they have great scrutiny in the authorizing process and in the
appropriating process.
Mr. Turner. In Texas I served on the Senate Finance
Committee which did the biannual budgeting, and it seemed to me
that in the process of developing our State budget, we went
into a much greater analysis of the performance measures that
had been developed than seems to occur here in the Congress
through the appropriations process.
I must say that I am not on the Appropriations Committee
and haven't had the opportunity to really go through the
process, but it seems to me that there could be an improvement
in terms of linking appropriations decisions to the
performance-based measures that you work so hard to develop.
In fact, if the data is useful to you in a management
sense, that is one thing, but at some point it has got to
translate over into the appropriations process, and I really
don't know if that is happening.
I guess what you are telling us is that you think that we
need to improve in terms of utilizing the measures that are
being developed.
Mr. DeSeve. OMB would never say that appropriators need to
improve. Let me be very clear about that. We believe that there
is the opportunity for you to use the measures. We are
providing the opportunity, but we would never be so bold as to
say the appropriators should improve the way they do business.
Mr. Ink. But I would say that.
Mr. Turner. You would.
Mr. Ink. Yes, I would.
Mr. Turner. I do not know if you could quantify where we
are in terms of developing a sound performance-based budgeting
system, but it would seem to me that we cannot be too far along
the road, and that we have a long way to go before we really
are able to realize the potential of the legislation that we
passed and develop a performance-based budget at the Federal
level.
Is that a fair assessment?
Mr. DeSeve. You and I are in complete agreement that there
is a long way to go before performance-based budgeting is the
order of the day. And agencies need to be not just reassured,
but prodded by their own appropriators and authorizers in the
process for them to sharpen their skills at measuring their
performance.
Even OMB, as powerful as we are deemed to be, pales in
comparison to a phone call from an appropriations Chair. They
certainly want to prepare the President's budget and get all
the numbers right, but the real action is with the cardinals.
Mr. Turner. You know, the President's budget laid out the
adminstration's management priorities, but where are we in
terms of having the resources for OMB to be able to implement
those priorities?
Mr. DeSeve. What we tried to do, and again, that is the set
right there, the 24 items, what we do is we have a management
system that tracks those 24 continuously. Most of the work to
achieve them is either done in the agencies with our helping
both from the RMO side as well as the statutory office side,
helping them do it; or in the various offices, the Chief
Financial Officer's office, the Chief Information Officer's
office.
When we talk, for example, about critical information
infrastructure protection, the National Security Council will
work through what's called the CIAO, the Critical
Infrastructure Assurance Office, with the CIOs and the PMC to
make sure that they have good practices. Under Presidential
Decision Directive 63, there are plans developed which we
participate in and the budget folks participate in, along with
the NSC and each of the agencies.
So when we have the resources, it is a collective, it is a
network that comes together that uses various nodes to create
an overall critical infrastructure network, just as we are
doing in Y2K. It's very similar to the way we are doing Y2K.
John Koskinen and staff is fewer than five people, but he
relies on the chief information officers throughout government
and then the sectors in the private sector--the electric
utility sector, the communications sector, the financial
sector--and he gets their involvement and engagement in helping
him do the work.
So we have enough resources to do the work because we find
ways to use the resources of others and get them moving in the
right direction. To me that is what management is about. There
is a whole theory that the best manager is a lazy manager
because he finds a way to get other people to do his job for
him. I somewhat subscribe to that theory, although I have to be
careful about calling myself lazy. I have to be real careful
about that.
Mr. Turner. Thank you very much.
Mr. Horn. The gentlewoman from Illinois and the vice
chairman, Mrs. Biggert.
Mrs. Biggert. Thank you, Mr. Chairman.
I think I am going to enjoy this committee and certainly
learn a lot about history. I have already had a lot to absorb
today, and I am afraid I do not know as much certainly as
probably most of the members who have been on this committee
about the issue, but I will try and ask some questions that
will help me and hopefully shed some light on this.
When you were talking about contractors, it does not show
the number of contractors. That was a question that was asked.
What are the contractors that are involved in this issue?
Mr. Ink. All I was saying is that, in addition to the
number of Federal employees shown on the chart, there are also
many contractor people that are funded by the taxpayers. In
some instances as we decrease Federal employment, we increase
the number of contractor people to carry out that particular
program. And all I was saying is that we see a part of the
equation here in this chart, which is a very interesting one,
but it does not reflect the total burden on the taxpayers.
Mr. DeSeve. Let me refer you to a recent article in
Government Executive Magazine called ``The True Size of
Government.'' It was written by a gentleman named Paul Light,
who is at the Brookings Institution, and what he found was
that, in addition to this work force, there is a very large
what he called shadow work force, which are the contractors. He
found that both have been in decline during the administration.
This number came down and the number of contractors came down
at the same time. But there is a large work force out there
that we support in the State and local arena as well with
Federal dollars that he adds to that also.
Mrs. Biggert. Do you have any idea how many Federal
Government management laws there are?
Mr. DeSeve. I actually have a book that was put together by
this committee when Mr. Clinger was here that is about that
thick, and it pertains to most of the management laws. It is
about that thick. But we also know that there are titles on
personnel management, other aspects of management, that are not
in the core volume.
Mr. Ink. And there are also, of course, many management
implications in other laws that are not regarded as management
laws per se.
Mr. Seidman. They are often written in appropriations acts.
Mr. DeSeve. Too often found in writing.
Mrs. Biggert. I do not think I want to read all those.
One of the CRS specialists, Ron Moe, has put them into five
major categories: Institutional and regulatory management,
financial management, budget and accounting, human resources
and ethics management, procurement and real estate, real
property management and intergovernmental relations management.
How do you, as the Deputy Director for Management, make
sure that the intent of these laws are being implemented?
Mr. DeSeve. In most cases, when you look at the chart,
there is a specific reference in the law to the
responsibilities of something like the Office of Federal
Financial Management [OFFM], or the Office of Federal
Procurement Policy [OFPP], or the Office of Information and
Regulatory Affairs. So the Director of those offices has
responsibility, for example, for implementing Clinger-Cohen,
which is the IT, that is in OIRA; or the Paperwork Reduction
Act, which is in OIRA; or the Chief Financial Officers Act, or
the Government National Reform Act, which is in OFFM.
So very often the statute points to the responsibility that
the individual entity has. Where it does not, we try to use
again the statutory reference; for example, ethics and waste
fraud and abuse. The inspectors general are the group as they
come together in the President's Council on Integrity and
Efficiency that are most worried about that. So where there
isn't a specific reference to an office in OMB, we more broadly
use the government officials who have that responsibility to
assist us in monitoring and making sure that the statutes are
carried out.
Mrs. Biggert. What would be the difference of, like, a
budget examiner and a management staff member?
Mr. DeSeve. We have actually have gone away from the word
``budget examiner'' at this point, although it continues to
crop up. When you use a word long enough, it is hard to get
away from it. There are now program analysts along the way.
You would be hard put to find the difference between people
in the statutory offices and their counterparts on the budget
side. The primary difference is, on a day-to-day basis, a
budget examiner will have organizational segments and budget
accounts within departments and agencies that they are
responsible for, whereas someone in one of the statutory
offices will have a crosscutting function or OMB circular. An
OMB circular will make your eyes glaze over.
But let me use the example of David Childs. David is
actually on the Budget Resources staff, although he does what
would you call management work. David is our A-76 expert. This
is a thing the committee has been concerned about, managed
competition. The committee was very active in the Fair Act last
year. So David will look across all the departments in a very
narrow segment of management called managed competition. He
will interact with his budget colleagues as they bring
submissions forward under that and provide guidance for it. So
he will be crosscutting on a fundamental management issue like
managed competition, and the budget examiner will be dealing
with the organizational issues.
They will intersect at various points, so various
management staffers dealing with A-21, A-110, all the oldies
but goodies. A-110 is also very current in the news now because
intellectual research and science has been challenged to
provide additional data according to A-110. So the people doing
A-110 work very closely with the people in the science and
technology community to make sure that it gets done properly.
Mrs. Biggert. Don't they have very different roles, then,
and need different skills? If one is a systems--what did you
call it?
Mr. DeSeve. Well, you can call it systems, or it can be a
variety of things. It is a fundamental narrow management area,
like procurement. Let's use procurement. That is perhaps a
better example. In the procurement arena, we will have a
specialist who knows a lot about performance-based contracts.
We had a circumstance the other day where in FAA, FAA has
an initiative on performance-based contracts. The people in
Michael Deich's area, which is one of the RMOs, dealing with
this, had a very strong point of view. The Department had a
very different point of view. They called their friends in
OFPP, the contract area, and said, would you please come in and
talk to us about how all this works elsewhere outside our
narrow area. The OFPP people were able to come in and strongly
support FAA and change the minds of the program examiners in
that arena once they saw the broader perspective. So one cuts
this way across the function, the other cuts this way through a
department, and they meet as needed around these kinds of
issues.
Mrs. Biggert. Thank you.
Mr. Horn. Let me pursue a few questions just for the record
here.
What changes would you suggest in the Office of Management
draft? There is one error here that legislative counsel put in
that I did not want where he calls it the Office of Federal
Budget Management. Sorry, knock the Federal out. It is Office
of Budget, which is what will be basically in the bill. But do
you have some suggestions to make to us?
Mr. DeSeve. The only other thing I noted, Mr. Chairman, was
on page 3, I do not know what the Office of the Chief Financial
Officer is, item No. 5 in section 1 on page 3.
Mr. Horn. Who is the one in the current chart of OMB that
works with the financial officers?
Mr. DeSeve. The Office of Federal Financial Management, and
that you have cited as No. 3.
Mr. Horn. OK, so that is all subsumed under that then.
Mr. DeSeve. That's correct. Technically, under the statute,
the Deputy Director for Management is the Chief Financial
Officer of the Federal Government.
Mr. Horn. Right.
Mr. DeSeve. However, the Controller, who is the head of the
Office of Federal Financial Management, carries out that
designation by cochairing the CFO council. There is no
designation of the Office of the Chief Financial Officer.
Mr. Horn. Should there be?
Mr. DeSeve. I don't think so. The Controller in OFFM has
that responsibility.
Mr. Horn. You also have the chief statistician, don't you,
in OMB?
Mr. DeSeve. That's correct. That is Kathy Wallman, and she
is in OIRA.
Mr. Horn. But she is not the Director of OIRA, she is part
of it?
Mr. DeSeve. That's correct, because OIRA has multiple
functions. I would say that OFFM has really a single function;
that is, financial management. That is why the Comptroller also
functions as the Chief Financial Officer. OIRA has regulations,
statistics and information and technology subsumed.
Mr. Horn. Personally I am not particularly interested in
loading down an Office of Management with a lot of other
functions, and I would just like your reading of the Office of
Federal Procurement Policy. Is that appropriate for an Office
of Management, and what are the reasons you would argue that it
should stay with the Office of Budget?
Mr. DeSeve. Having stipulated I am opposed to the Office of
Management here, I am trying to perfect your draft rather than
support it.
Mr. Horn. We look on you as a professional.
Mr. DeSeve. It is my disclaimer.
No, I think that the three statutory offices on the right-
hand side of my chart, which you have in No.s 1, 2 and 3, are
quite appropriate for that purpose.
Mr. Horn. For management?
Mr. DeSeve. Yes.
Mr. Horn. And right now are you the primary official of OMB
that relates to them?
Mr. DeSeve. Yes. That again is by statute. If you look at
the Chief Financial Officers Act, you will see that is the
case. They meet with me, as my staff, weekly, and then we
interact continuously on a daily basis.
Mr. Horn. Now, what is there under your jurisdiction
besides those statutory offices? Is it simply the crosscutting
role of bringing the right people together at Department and
OMB on management questions or what?
Mr. DeSeve. Again, the other way we work----
Mr. Horn. Because we also in this draft, the legislative
counsel felt we had to have the Office of the Deputy Director
for Managment as you merge it into a separate Office of
Management.
Mr. DeSeve. What would happen here is this office would
staff itself with some of the support functions on the left-
hand side. There is no way you could draw any of those out and
put them into the management office. Some portion of them would
have to be made available, or they would have to be recreated.
Mr. Horn. Well, as part of the Executive Office of the
President, you have a separate Office of Administration, which
is also statutory, in the White House that can handle the small
amount, hopefully, of either personnel transactions or budget
or anything else.
Mr. DeSeve. Certainly. I'm not trying to dispute that at
all.
The real authority in the Deputy Director for Management is
also resident in the way he relates across the government, so
that leaving the authority of chairing the CFO Council, the CIO
Council, the Executive order authority chairing the PMC, the
statutory authority chairing the PCIE, as long as all of those
authorities are in place in addition to oversight of the
statutory offices, then you have the network that you need to
do the job.
Mr. Horn. Is there anything else that we ought to be
thinking about?
Mr. DeSeve. Well, I got a call from both Dave Barram, the
head of GSA, and Janice LaChance, the head of OPM, who are both
nervous about what this implied for them. So I certainly would
not want to make them any more nervous by suggesting that.
I think the only additional item you would want to take out
is perhaps, when we set up the RMOs, the personnel aspect went
into the health and personnel arena so that if you were going
to have an Office of Management, you probably would take that
out, the personnel issues out, and put them in the Office of
Management. You would refer to personnel. I think that's the
only thing that is not there at this point.
Again, please, I continue in my opposition to this idea.
Mr. Horn. No, no, I understand that. But obviously,
management is management and that includes a lot of things such
as personnel.
Mr. DeSeve. That's correct.
Mr. Horn. But here you have, obviously, five resource
officers that are basically budget oriented and they, too, can
make suggestions on personnel, I would think. That is up to the
President really. I am willing to give the President
flexibility because different Presidents have different
approaches.
President Eisenhower walked into the White House, he said,
my heavens, the only thing around here was the Bureau of the
Budget practically. They had no real congressional liaison
staffing. President Truman had gotten two people over and put
them in the Bureau of the Budget to at least read the
Congressional Record for him every day and that was sort of the
start of a liaison. And then President Eisenhower created a
cabinet that actually he read the minutes and initialled them
and then they had to report as to have they done it or haven't
they.
So if you had a situation like the GAO material, in the
Eisenhower administration that would have been a cabinet brief
that would have gone out to all members, they would have talked
to their people at the department level, they would have come
back, and he would have gone over this and said, folks, we are
going to have a 3-month and a 6-month reporting period to see
that you clean up your act in relation to what the General
Accounting Office has followed.
Now, I do not see that happening nowadays. Does it? Am I
missing something?
Mr. DeSeve. Yesterday I went through with the President's
Management Council our tabulation of GAO's high-risk list and
other management challenges. We do that periodically. I then
looked at the priority management objectives as they link to
those challenges. And we monitor many of the high-risk lists on
a monthly basis.
When we review either monthly or quarterly the status of
various of these updates, we also talk about the high-risk
elements. We get the audits of the agencies in now, which
didn't exist in Eisenhower's day, and we and GAO actually go
out and meet with the agencies about how they are doing on
their audits. Many of the items on the high-risk list will come
up at the point.
So we use the PMC, the President's Management Council, as
that vehicle, as well as the review of the agency's performance
plans. President Clinton created the notion of the Chief
Operating Officer in the Department, essentially the Deputy
Secretary level, and we use them to deal with those issues as
opposed to the more policy-oriented issues that we have.
Mr. Horn. Usually it is the under secretary, now called
deputy secretary, that runs the department while the secretary
is out spreading the good word. And nobody disagrees with that.
Let's face it, somebody has got to run the store.
Mr. DeSeve. And that's the way we respond.
Mr. Horn. Well, that was true of the Eisenhower
administration also. The Secretary ran around the country
explaining administration policy and the good deeds or bad
deeds of Congress as the case may be.
Now, do you have any other suggestions for us of such a
fine constructive nature as you have provided this morning?
Mr. DeSeve. No, sir. I think I am suggested out.
Mr. Horn. Does anybody on the panel? Before we leave, we
will take one question. Because we do not have a gem like you
often here, Ed.
Have you a question for the distinguished Deputy Director
for Management?
Mr. Jasper. No. I was going to make a suggestion as to what
is missing from the bill.
Mr. Seidman. His concept of management is exactly what we
have. It is the broader concept. With reference to the councils
and committees, in our experience when everybody is responsible
for something, then nobody is.
Now, these councils are useful but I never saw a council
that really did the kind of creative thinking necessary to
solve problems. They can advise but somebody has to provide the
leadership for it to work.
Mr. Horn. Mr. Ink, do you have any comment for Mr. DeSeve?
Mr. Ink. Well, you know, I think the networking is useful
so long as they are not really a decisionmaking group. But I
want to add, it seems to me that you have developed some
networking beyond what we used to have in Washington, but I do
not see it in the field. We used to have a lot of networking in
the field that dealt with the field offices and with State and
local governments and interface between State and local
governments that dealt with how government impacted on
families, how it impacted on communities and so forth. I don't
see that happening now.
Mr. DeSeve. That is a good question. I think many of the
departments have built their networks locally and not used the
Nixonian principle of regional offices and field offices. We
can argue about that probably at another time.
We decided to deemphasize the regional office and emphasize
where we could the local office and local contact as well as
more electronic interaction along the way. And I think the jury
is still out on how that is going to work, whether you need a
regional presentation or not.
We tried to delayer but let the local folks in our
associations have greater access to headquarters rather than
working always through the field. That's another structure we
restructure from time to time. I am not as hard over on that
one.
Mr. Ink. I think that is worth looking at. And I would
argue that it doesn't really depend on whether you have
regional offices or don't have regional offices. The important
concept is the communication out in the field and networking
among the different agencies who have programs that are closely
related all of which impact on local businesses, on local
neighborhoods and so forth.
Mr. DeSeve. I agree with that. I would like to find a
better model for that.
Mr. Seidman. When I came into the Bureau, there was an
identifiable budget season and the examiners were able to spend
about half the year actively out in their agencies. They were
out in the field. They were to us a source of information when
we were doing the management work because they were intimately
involved.
It is my understanding that that is not true anymore, and
that they are pretty much tied to their desks.
Mr. DeSeve. I would agree with that. What has happened is
we have had what we call the perpetual budget season. In the
year where we are then trying to get to this gap closing,
especially around the Balanced Budget Act of 1997, it has been
necessary to continuously redo programs and policies to try to
fit them into an ever-narrowing box and it has been a
tremendous strain on the budget folks. It is not that they
don't want to get out in the field. It is just the demands.
Congress sat last year, and this is not a criticism, sat
last year through until October on budget issues and we were in
the process of preparing the 2000 budget and finalizing the
1999 budget. So there was no break during that time. And the
hearings were all through the summer.
Mr. Ink. I agree, it is not a criticism of those people,
but as that began to develop some years ago, the Office of
Executive Management then began arranging for people to spend
most of their time out in the field because the budget
examiners could no longer do that. This role could be restored
under an Office of Management.
Mr. Horn. Well, I agree with both of you on the field
situation. In the days of modern communication, you do not need
a regional office, you can get directly at people who are there
where they could have access on a person-to-person level. And
we might well hold a hearing on that. We have had a few field
hearings on regional offices a couple years ago and then we got
off on the year 2000 bit. But we will get back to that and I
think you both are right. Thank you very much for spending the
time. Sorry to hold you up.
Gentlemen, now we can proceed with you. Do not read us your
statement is all I ask. We are going to put about 10 minutes on
this for each person and then Mr. Turner and I or anybody else
who walks in on either side will ask you some questions. But we
are interested in having you deal with the draft bill. And at
this point we knock out ``Federal'' before ``Office of Budget''
on page 3. And as Mr. DeSeve suggested, we need to knock out
the ``Office of Chief Financial Officer.''
Mr. Jasper. Could I make one suggestion as to something
that is clearly missing, and it addresses Mr. Turner's question
in some way. It builds upon the comment you made about the
ephemeral nature of Vice-Presidential responsibilities.
Clearly, it will take a while to get this bill through the
Congress, and if it should pass you would have an effective
date that is sometime in the future so that there can be an
orderly transition. I would respectfully suggest that a proper
effective day for this bill would be early in 2001. So it would
be the next administration that would have to envision the
establishment of the Office of Management and appoint the first
Director. Thus, it wouldn't be at odds with this
administration's concern about the new office.
In fact, the NPR, as Mr. Turner knows, borrowed some people
from Texas. I think he mentioned that, about 10 as I recall. It
had a staff in the NPR. One incarnation, of close to 250
persons, more than I believe is the size of the management
staff reporting to Mr. DeSeve. So there is a nucleus of
management activity that has been going on outside of OMB. But
there is no continuity to it because these people are all on
loan from Federal agencies to the Vice President's NPR. And
they will go back to their agencies and the NPR will disappear.
If you had a permanent Office of Management, you could
think of it as simply institutionalizing the NPR in the next
administration.
Mr. Horn. I agree with you. Well, I don't know if I agree
about the expiration or the beginning point, but I certainly
agree with you about the need for an institutional memory that
the President can tap and not have it floating around in pieces
where you cannot find it, and that is what is missing here and
that is what got us into that.
Mr. Seidman. I think one of the suggestions with respect to
the bill is that the functions be transferred to the President,
not to the office. This was true initially of the Bureau of the
Budget and all of its functions were vested in the President.
This then allows the President to allocate these functions. It
avoids some of the problems where you have overlap, and I think
it simplifies some of the problems of organization. Within the
Executive Office of the President, I believe all the functions
should be vested in the President so he has the flexibility to
determine organization structure.
Mr. Jasper. Of course, as Harold said, it is not only true
of the Bureau of the Budget but also of OMB; the functions were
transferred to the President rather than directly to the new
office.
Mr. Seidman. I would also comment, since we are having a
kind of a dialog, there was one thing that was totally absent,
I thought, from Mr. DeSeve's presentation. Except for the
Appropriations Committee, he didn't talk about the Congress. I
don't think you can do this job without congressional support.
That was basically one of the conflicts in culture, I think,
between the budget examiner and the management analyst.
I spent a good deal of my time because of the President
working with the staff of this committee and the Senate
committee. You cannot deal with these problems unless you
involve the Congress. They are interactive. You cannot
separate. It is part of the process. We don't have separation
of powers. We have separated institutions sharing power.
And all of us here, I spent to the horror, frankly, of the
budget analyst because you didn't present legislation, you
didn't deal with Congress. That was patently contrary to the
role of what they did in the budget, which was behind the
scenes. I would testify from 20 to 30 times a year.
When they did a self survey that said that within the
budget side they were outside the mainstream, I said come back
and look at my calendar. At that time I was supposedly outside
the mainstream, I had testified 20 times. And as I think Dwight
would confirm this, we looked at our role in the process of
budget design, and I mentioned program design is an important
part of how you do things, you would rise in providing advice
when called upon to both the Congress and to the President.
Mr. Horn. Let me ask on that point, because Mr. DeSeve
mentioned it, there would have to be a duplication of services
with Office of Management from Office of Budget and that the
implication was that this would be a parallel system. I do not
see that. I do not see why you cannot draw on the services
already operated in the Office of Budget or the White House
Office of Administration, which is a huge operation now
compared to what it was 30 years ago. And I think the important
thing there is to talk for a minute about the Office of
Legislative Reference historically in the Bureau of the Budget.
It seems to me, in coordinating on behalf of the President
to see if the program is in accord with the program of the
President, they can ask the Director of Management, just as
they can every cabinet head, and piece it all together in one
place.
Mr. Seidman. That was our principal relationship, and
Dwight will confirm, with the Office of Legislative Reference
because they are not with the budget division.
Mr. Ink. What happened was that handling of management
legislation was in effect subcontracted out to the management
staff. My Office of Executive Management, for example, actually
handled the clearance of legislation that related to
management.
Also in our work with the Office of Legislative Reference,
they then farmed out to us the management aspects of other
legislation that was not basically management in nature. But on
the management issues, we did the clearing, we did the
negotiating with Congress on behalf of the President.
I was the representative of the President in persuading the
Congress to establish the Office of Management Budget in the
first place. And by the way, some of the Members of Congress,
such as Senator Bayh in the Senate, and Chet Holifield, who
used to chair this committee, said I was wrong. They said
management was going to be subordinated to the budget, and it
never will be able to stand on its own. Of course, they were
right and I was wrong.
Mr. Horn. Confession is good for the soul.
Mr. Jasper. As an alumnus of Legislative Reference, as well
as management at the former Budget Bureau, I would like to
comment on your question.
One of the things that has happened with the politicization
of senior positions in OMB, is there are now, of course,
Program Associate Directors who are political appointees. The
Legislative Reference policymaking function has virtually been
decentralized to the PADs. So what used to be a Government-wide
coherent view on what made good sense legislatively is now
subordinated to the programmatic and agency-focused view of the
Program Associate Directors. So that's a serious problem that
has arisen since those positions were created. And while the
functions of Legislative Reference have not diminished, the
power or the influence of it has, because of this political
reality.
Mr. Ink. Related to all this is the fact that so many
budget issues are heavily laden with political issues. They are
fiercely fought battles from a partisan political nature. By
setting up an Office of Management, you free it from those
kinds of political overtones. So an Office of Management is in
a far better position to represent the President in terms of
dealing on a bipartisan basis with Congress.
Mr. Horn. I remember I used to attend the appropriations
committees that had general government and the OMB budget was
in there and usually the House was filled, at least for the
appearance of the Director of the Budget, because Members here
had all sorts of beefs to unload on the poor Director when he
came up on either agricultural policy or something that one of
the budget examiners has done and they were not interested in
the management side so much as they were interested in what
have you done to my people. And whereas they could not take it
out on the President usually, they took it out on the Budget
Director.
Mr. Ink. On a new Presidential initiative, I would always,
and I think Harold did too, meet jointly with the chair and the
ranking minority, regardless of which party was in power. I
would meet with them jointly and go over the President's
proposal informally before any piece of paper ever came up. I
would carry back to the President any major suggestions that
they had, suggestions which the President might or might not
adopt. But at least there was an opportunity for congressional
input on a bipartisan basis before the formal proposals came
up. Every single proposal I've associated with reorganization
plan passed. Harold passed a lot more than I did.
Mr. Seidman. Well, that was the policy when I was there.
And certainly under Presidents Johnson, Kennedy and Eisenhower
we did not send up anything until we could discuss with
committees and staff. It was quite conceivable that the Members
of Congress had some constructive suggestions. We ought to pay
attention to them. We weren't telling them.
In fact, one of the things we tried it once to this
committee and they said, ``Well, you have such a big committee,
why don't you come up and meet the whole committee.'' I had to
present to this committee our program for the year, and what we
considered to be the principal management issues. You have to
work together.
Mr. Ink. But this bipartisan cooperative approach has been
lost, you see. As the budget has been dominated, this
dimension, which I think is terribly important in terms of the
effective functioning of our government in terms of the
legislative and executive branches working together, this has
been lost.
Mr. Horn. I think that is a good point.
Mr. Seidman. One of the things when I came up here I think
is illustrative of the problems, Congress has been more
interested in some of the management issues than the executive
branch. An example is the Office of Federal Procurement Policy.
That was a branch in my office when I was Assistant Director
dealing with the questions of procurement and procurement
policy. When the Bureau was looking for a way of finding
positions to create these new Associate Directors, what they
call them, PADs, Program Assistant Directors, on the budget
side, they dumped the procurement functions on the General
Service Administration with no positions.
It was the Congress that put the Office of Federal
Procurement Policy back in OMB as an independent agency.
Mr. Ink. That moved over when I went to GSA and the reason
was the whole management field of responsibilities was going to
be killed. And finally Mr. Ash decided, rather than killing
management, he would put it in exile with Mr. Ink over in GSA.
Fortunately, when I left GSA it came back to OMB.
Mr. Seidman. The other thing I think we did which
illustrates what wouldn't happen on the budget side and dealing
at that time with the intergovernmental problems, which is
again our systems, many programs are administered through State
and local governments. We started surveys and I invited the
Governors Conference, the Conference of Mayors, the Council of
State Governments, to include people. We sent up joint teams
out of my office, which had the people from the State and local
governments on those teams. We had the inputs of both. Those
would not have happened but on the budget side.
Mr. Ink. You will find in the record joint letters from the
heads of the big 7, the mayors, the Governors, the city
managers, the counties, the State legislatures, complimenting
this management group on the work that it did in streamlining
the Federal Government and reducing the negative impact on
State and local government and on communities. This is an
example of reaching out to the public.
What you hear today are some very impressive things with
respect to the budget. What you do not hear is how government
affects people and families, what is the burden of government
on families and people and businesses. That is missing. And you
find to some extent in the GAO report, the GAO report looked at
how the 2000 program affected the budget process. It really did
not look at how it affected the management issues we are
talking about. And I would hope in the next review that GAO
makes it can look at not only the budget but also look at the
management role of OMB.
Mr. Horn. Any other comments on this dialog?
Mr. Seidman. Well, the one thing which I think is always
important is it is not only what you do but how you do it. And
many programs fail because they are not properly designed.
The White House and the Congress both looked to us on the
management side that then existed in the Bureau of the Budget
for assistance in designing programs. This is another skill. If
you don't do it right then, you run into problems. Frankly,
there's sometimes conflicts between what makes administrative
sense and what makes political sense, which is part of the
problem.
Mr. Horn. I think the important point which very few people
on the Hill now realize is that over 30 and 40 years, we had a
group of professionals in the old Bureau of the Budget that
served every President in that period. They were not political
appointees. These were professionals that worked with whatever
administration was in power. And that is not true. I guess
starting with Kennedy there was more politicizing down into the
bowels of the Bureau of the Budget. And we ought to get a chart
on that from Mr. Moe.
Mr. Ink. This would have been invaluable to Mr. Clinton
early in his administration when he was struggling with health
care proposals. Having the kind of resources we are talking
about here, having an Office of Management, they could have
been a part of the health reform team. Looking at the
workability of these proposals before they were surfaced would
have been a tremendous help to Mr. Clinton. But he did not have
that help. It no longer exists.
Mr. Seidman. One of the things that Mr. DeSeve did mention,
with which I agree, is that we have a number of developments
where we should be looking at their implications to the
organization and management of the government. Such as the
technological revolution, the increasing reliance on third
parties to deliver government services. These are the things
that we ought to be looking at. I agree that we cannot go on
the old principles of that of change. Who is doing the
constructive creative thinking? This requires a different, a
longer-term perspective.
As I said, we have a cultural clash here. They are two
different jobs between the management analyst and the budget
analyst. One looks at long-term, one looks at the whole. But
these things are going by the board. I have been raising this.
We did this when I was there and we did what became the Bell
report, which was done out of my office and was on contracting
for research and development, you know, what are the
implications of this.
Mr. Ink. I recommend one change if I might.
Mr. Horn. Sure.
Mr. Ink. I would like to amend the bill so as to require
that the appointees to these top positions be men and women
with successful experience in managing large institutions,
ideally both public and private sector. I think it is very
important.
Mr. Horn. You mean to be either the Director or the Deputy
Director?
Mr. Ink. Yes.
Mr. Horn. How about if you are the head of a major
consulting firm, like Arthur D. Little, that has had management
analysis experience, as opposed to simply being the chief
executive? I am not against that, believe me. As an ex-chief
executive, I am all for somebody there. But some people have
also had deep experience in looking at a whole series of
different types of organizational entities, and should that
count?
Mr. Ink. I think it is fine to have it count, but I think
they also should have had some direct management experience.
Not just critiquing, not just teaching, but should have some
direct management experience.
Mr. Horn. I think back, and you can think back better than
I do, often when a Republican was President they would put an
accountant in charge of the Bureau of the Budget. When a
Democrat was President, they would put an economist or perhaps
a very skilled politician in that role.
Mr. Ink. I think that is fine for the budget. But again,
Mr. DeSeve has been talking all morning about the fine things
done for improving the budget and I think some of these are
excellent. I think some of these initiatives that have been
taken, that Mr. DeSeve has been taking are extremely good in
terms of improving the budget. What we are talking about today,
however, are these broad fundamental management issues which
have such an impact on people.
Mr. Horn. Does the gentlewoman from Illinois have any
questions on this? The gentleman from Texas?
Mr. Turner. No questions.
Mr. Horn. Well, we thank you. And if there are any last
points you want to make, please make them.
Mr. Seidman. We request that our statements be put in the
record.
Mr. Horn. It is automatic. On this committee, the minute
you are sworn in, the statement goes in the record.
Mr. Jasper. I would like to make one additional observation
about the NPR as it relates to this whole question.
The allegation that you ``can't separate management from
budget'' has of course been demonstrated to be false because
management has been vested primarily in the Vice President's
office during this administration.
Mr. DeSeve noted that his close working relationship with
the Vice President allows him to essentially have his hand in,
but he has his hand in something which is being executed
someplace else. If you look at the reports of the NPR, you will
find that they cover a wide range of management initiatives
that ought to be institutionalized, as we discussed earlier.
Furthermore, if you look at the functions of the DDM as
established by law in the Chief Financial Officers Act, I count
some 8 significant management responsibilities which were
nowhere reflected in his 24 management priorities. So the
result of this administration's focus on performance-based
government, as important as that is, is that it has overlooked
a whole bunch of other statutory responsibilities that the
Congress explicitly vested in the DDM.
I would submit that if there were a separate Office of
Management, it would adhere more faithfully to the strictures
of the CFO Act other than financial management--which is in a
different section of the act.
Mr. Ink. I have two quick comments.
One, departments and agencies long ago learned that it was
unwise to merge together the management and budget
capabilities. You don't find that around the departments. I
don't know why we are so slow to realize the same principle
applies to the Executive Office of the President.
Second, in establishing an Office of Management, while we
feel very strongly that you not only don't need the leverage of
the budget, and as a matter of fact in our experience that more
often was a negative than a plus because it was a forceful
action rather than a leadership action, nevertheless there are
tools that would be required in an Office of Management in
order for it to have stature, in order for it to be effective,
and these are listed in my testimony.
Mr. Jasper. I would like to add just one more point. I
reflected this in my prepared statement. And, given that there
are members present from both parties, I want to emphasize that
this is not a political statement, but it is a historical
statement.
The unwisdom of using the Vice President for such a
comprehensive management agenda is underscored by the fact that
Vice Presidents rarely succeed Presidents. In the 20th century,
only three sitting Vice Presidents have earned their party's
nomination and two of them were defeated. So, statistically, if
one thinks that what is in the Vice President's office is
working well, the likelihood that it will continue in the
future is slim, just from the standpoint of probabilities.
Mr. Ink. Which is different from Mr. Gore providing
political leadership, which we all feel has been a positive and
very helpful role, but that is very different from the
institutional capacity to make the system work.
Mr. Horn. Point well-taken.
We thank you gentlemen. You have had some great experience
and wisdom on this question and we deeply appreciate it. Thank
you for coming.
We now move to the last panel. This will be Dr. Harold C.
Relyea, Specialist, American National Goverment, Congressional
Research Service; Dr. Virginia McMurtry, Specialist, American
National Government, Congressional Research Service; Mr. J.
Christopher Mihm, the Associate Director, Federal Management
and Workforce Issues, U.S. General Accounting Office; Mr. Paul
Posner, the Director of Budget Issues, Accounting and
Information Management, U.S. General Accounting Office; and Dr.
Ronald C. Moe, Specialist, Government Organization and
Management, Congressional Research Service.
You bring a lot of institutional memories to the table. If
you will rise. Have we got everybody? Who are we missing?
Ms. McMurtry. Harold Relyea is not going to be able to join
us.
[Witnesses sworn.]
Mr. Horn. The clerk will note all four witness have been
sworn.
So why don't we start down the row with Dr. McMurtry and
give us about a 10-minute summary at the most. Why don't we
turn the clock on. We would like to have question period time.
It means a lot to us. Your fine papers are already in the
record.
STATEMENTS OF VIRGINIA McMURTRY, SPECIALIST, AMERICAN NATIONAL
GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE; J. CHRISTOPHER
MIHM, ASSOCIATE DIRECTOR, FEDERAL MANAGEMENT AND WORKFORCE
ISSUES, U.S. GENERAL ACCOUNTING OFFICE; PAUL POSNER, DIRECTOR,
BUDGET ISSUES, ACCOUNTING AND INFORMATION MANAGEMENT, U.S.
GENERAL ACCOUNTING OFFICE; AND RONALD C. MOE, SPECIALIST,
GOVERNMENT ORGANIZATION AND MANAGEMENT, CONGRESSIONAL RESEARCH
SERVICE
Ms. McMurtry. Mr. Chairman and members of the subcommittee,
my name is Virginia McMurtry and I am a Specialist in American
National Government with the Congressional Research Service of
the Library of Congress.
My colleague, Harold Relyea, also a CRS Specialist in
American National Government, had planned to participate today
with me in the presentation of our joint statement.
Unfortunately, he is unable to be here now due to a home
emergency. He has asked me to convey his regrets to the
subcommittee, he really is sorry that he has to miss this
session. We thank you for your invitation to appear here today
for this hearing.
In October 1997, Dr. Relyea and I began meeting with
subcommittee staff concerning the requested review of internal
reorganizations of the Bureau of the Budget and its successor,
the Office of Management and Budget, with a view to the
structuring of BOB/OMB capacity and capability to guide or
assess aspects of management, both governmentwide or by
sectors, and in the Federal executive departments and agencies.
The timeframe set for the review was 1921-1993; that is,
beginning with the creation of the BOB and concluding with OMB
structure on the eve of the arrival of the Clinton
administration and OMB 2000. The study was transmitted to the
subcommittee on May 7th, and we subsequently appeared before
you to discuss it at a hearing last spring on May 12, 1998.
Last year we offered six observations on the basis of that
study, and today I want to reiterate those findings and also
provide some additional comments.
First, the BOB/OMB has experienced an ever-changing
structuring of management responsibilities, reconfiguration
seeming to occur more and more frequently with the progression
of years after 1950. Over the years, the internal structure has
tended to alternate between two patterns, a bifurcated
structure with separate sides for management and budget staff,
and a programmatic structure with budget examiners and
management staff integrated in various functional units. The
current structure of OMB of course reflects this latter
approach. In 1994, the OMB 2000 reorganization merged the old
budget examining divisions and most management personnel and
units into the new resource management offices.
Second, the BOB/OMB has become responsible for various
kinds of management: Administrative, intergovernmental,
personnel utilization, procurement, paperwork/information,
statistical, regulatory, and financial, among others, which
appear generally to have increased with the progression of
years after 1960. The BOB/OMB has met these responsibilities in
various ways; for example, through analyses and evaluations,
coordination, and clearance with shifting resources.
While the accumulation and detailing of these diverse
responsibilities was intended to strengthen BOB/OMB's
management role, this legacy is likely to complicate any
efforts to separate entirely the management duties from budget
concerns in certain areas, such as intergovernmental and
financial management.
Third, especially since the early 1960's, when PPBS, or the
planning-programming-budgeting system, was introduced
throughout the executive branch, the BOB/OMB has been required
by successive administrations to adopt and adapt to a variety
of changing arrangements for planning and budgeting. While
these frameworks generally shared an orientation toward
objectives and outcomes, each system entailed some
modifications of BOB/OMB management capacity, sometimes for
brief periods of only a few years.
Now perhaps a more stabilized planning and budgeting
situation based upon a statutory mandate is evolving pursuant
to the Government Performance and Results Act of 1993. The
first governmentwide performance plan as required by that
statute was submitted as a part of the President's fiscal year
1999 budget. Then the second effort of a governmentwide
performance plan was of course included just released earlier
this week in the fiscal year 2000 budget submission.
Fourth, considering the management-budget relationship
within the BOB/OMB, it appears that the budget authority has
largely been used or threatened to accomplish or seriously
pursue management objectives but not vice versa.
Fifth, since the reconstitution of the BOB in 1970, the
resulting OMB has during the succeeding years experienced an
expansion of non-career middle managers and, consequently, a
more complex and extended hierarchy between the more senior
leaders of OMB and the first line staff. Moreover, specialized
entities, such as the Office of Federal Procurement Policy, the
Office of Information and Regulatory Affairs, and the Office of
Federal Financial Management have been grafted onto the OMB.
Sixth, and finally, recent developments may engender a
reexamination and reconsideration of OMB's management role and
the most suitable structure for fulfilling the management
responsibilities now vested in OMB. Experience with
implementing the Government Performance and Results Act would
be relevant to such a reassessment.
In addition, the achievement of a balanced budget in fiscal
year 1998 for the first time in many years and the projection
of continuing revenue surpluses might reduce OMB's
preoccupation with budget concerns prompted by decades of
Federal budget deficits. CRS, of course, takes no position on
any particular option Congress may elect to pursue in these
regards.
Thank you. I would be happy to respond to questions later.
[The prepared statement of Ms. McMurtry follows:]
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Mr. Horn. Well, we thank you for that very thorough report.
And not only will your testimony but the study that was
personified by your statement will be put in the record at this
point.
We will then go now, I think, to the next specialist from
the Congressional Research Service. That is Mr. Moe, who has
been very helpful to the committee over the years; and then we
will go to the General Accounting Office.
Mr. Moe.
Mr. Moe. Thank you, Mr. Chairman, for inviting me to
testify before your committee on the proposed Office of
Management Act of 1999. It is appropriate at the outset to note
that the opinions expressed here are my own and do not express
those of my employer, the Congressional Research Service.
In my extended written statement for the record, I have
attempted to trace the intellectual and political history of
the debate over whether or not the two subject fields, budget
and management, are best served by being in one agency or
separated into two agencies. If I understand correctly the view
of the subcommittee and its chairman, at any rate, this debate
has been largely settled in favor of providing the President
with two equal, separate offices, one for budget and one for
management. You requested the witnesses to come forth with some
ideas on what the Office of Management would do in the future.
However, as I listened to the overall discussion this
morning, I have thrown out my prepared remarks and I want to go
on some shaky ground but I think some things need to be fully
understood in this discussion.
There is a fundamental debate that is going on at all
levels of government, but particularly in the Federal
Government, and it is a debate over the premises of management.
What is the essential character of management in the
governmental sector?
One school, the school supported by OMB and Vice President
Gore and a host of professors argues, in essence, that business
and government are essentially alike, both being subject to the
same behavioral modes. They should use the same titles, that's
why they are making up titles like CEO. If you have a program
that works at General Electric, the odds of it working in the
Federal Government are very high. So that is one school that
argues on universality of administrative principles.
The opposing school argues that business and government are
essentially unalike, distinctive in their norms, with
surprising little carryover between the sectors. The first
school argues, that is universality of principles. Government,
they say, should be run like General Electric. And that's why
you never hear them discuss Congress.
Congress, to the new entrepreneurial managers, is a
nuisance. It is part of the old way, and remember the word
``old'' in their lexicon is bad; if you give an example that is
over 3 years old, they will inform you that you are
representing the old way of functioning.
Now, the second school argues that, in effect, public law
is the basis of our management system and that all behavioral
principles have to be within the construct of the law. The laws
are passed by Congress. Congress is the board of directors. It
is Congress that determines the mission of an agency. It is
Congress that determines its funding, its personnel systems
across the board. It is Congress that does this.
Now in the new system, in effect, that they are promoting,
they want the managerial class to make the missions. That's why
a lot of this GPRA stuff has to be taken with a grain of salt.
Performance is not the highest objective in the governmental
sector; accountability is. In most instances, accountability
and performance work together very well. But when there is a
direct challenge, as was the case with the IRS, the IRS was off
the boards. They were the model agency in terms of collecting
money and able to measure it. They forgot one thing however,
that's not the agency's highest job.
Their highest job is due process and the protection of the
citizens' interests, and you all came back and forced them to
go out to the performance system. And I promise that I won't
bother you with performance and quotas any more.
So what we have here is a fundamental culture clash. This
is why the panel here we are talking past each other.
Let me just mention four small points. One problem facing
this government is proliferation of general management laws.
The study that you asked for that we provided in 1997 is being
updated in 1999, and it goes through the various management
laws. There is no one overlooking them all. In fact, until this
came out, if you asked OMB what they were, they would be unable
to tell you.
Second, we are facing a situation where the disaggregation
of government is increasing rapidly. Agencies proliferate or
are spun off from departments. The civil service systems
proliferate. It is my understanding that less than half of the
civil servants remain in the general schedule as each agency
manipulates its subcommittee on the Hill to have its own
personnel system and preferably its own special pay system.
And what you have created with that chart that showed a
decrease in the permanent employment is totally misleading.
They decreased the middle managers by that amount, kept the
same number of political appointees, and we have upgrade not
only of personnel in the contractor sector but authorities
going to them.
I could give you my favorite example of Ginnie Mae. What we
have here is a situation where the government is
disintegrating.
Third, we have an amateur government. We are a government
run by political executives selected often because they were
successful on the outside, frequently with no experience in the
government. They come in for short periods, averaging 18
months; they leave; and they go out, typically, to a lobbying
firm here on K Street.
You will have a hard time even finding any Federal
employees in the Department of Energy because there is a 10 to
1 ratio of contractors to employees in that Department. We have
no comprehensive plan today to attract, train, deploy a
professional cadre of career civil servants, period. It is
unbelievable.
I don't suppose that any other country could function this
way. I talk to New Zealanders, when they come over here, and
they see very little of what we have done here could be done
there, and we don't know if we would ever do it again. They
have no political appointees in New Zealand. They don't try to
run their government with amateurs.
Entrepreneurial versus constitutional models of management.
That is the issue. The entrepreneurial model is reflected in
GPRA, and all of the literature that you see that is, for the
most part, from Harvard Business School. And you will note that
Congress is rarely, if ever, mentioned.
The other side are the constitutionalists who say Congress
is the key. In an entrepreneurial model, the budget is supreme.
It is the tool of control.
The constitutionalists argue that the purpose of management
is to build the capacity of the government to perform the
people's business.
Fifth and final, really what we hear that is passing for
the latest management terms is process triumphant over
substance. Performance is some sort of God put out there in
which people argue over how best we can get there. If there is
one thing that we have learned in this century, it is that the
life expectancy of the latest reform is getting shorter. Five
years from now we will be discussing a whole set of new words
and this sort of thing.
That doesn't mean that having a Government Performance
Results Act is a mistake. What it means is that you should
recognize that it handles only the mid part of management. It
has not gone up to the level of management that these gentlemen
were talking about earlier. It is a substitution, a process
over substance. So what we have is management by ad hoc groups.
The President's Management Council is not created by law.
It has, according to Mr. Koskinen, and I heard him personally
say that we have a 50 percent turnover at one of our rare
meetings. Therefore, they are caught in a bind. Do they bring
the last group up to speed or do they go on with half the group
not knowing what is going on?
What they are telling you is that the institutional
capacity of the President to supervise the Federal Government
hardly exists. I perceive that the top management of the
government of the United States is not getting better, but is
getting worse, and that it is the reality. Since the executive
branch isn't prepared to do anything about it, it is forcing
Congress.
One final political comment, if I may. Much of this debate
is really for an audience of one. That is, to really take on
management, we have to have a President who wants to think
about it once in awhile. It never will be his major concern,
but he has to have an institutional support, not friends and
neighbors, not part-timers from other departments, but
institutional support in order for real management corrections
to be made.
This being the case, it is very important that whoever is
running for Congress--for the Presidency, conservative or
liberal, to be aware of this debate at some level. Because if a
President comes in and says, ``this is important, I want to run
the system right.'' Such a President would be the most likely
to request Congress for this authority and during the honeymoon
period they would be likely to get it. And so Congress ought to
be thinking what do we want in this office and what don't we
want.
I take a more comprehensive view on this. Nonetheless, it
is a good reason for you to hold your hearings because your
hearings provide the record on this issue over the last 4
years. It is an issue that the next President may decide is
important, and that is what I think we are doing here.
Thank you.
Mr. Horn. We thank you. We always enjoy having contrarians
on our panel, and you do a great job at that and we thank you
very much. I know all of the fine documents that you have, we
will put the general management laws, the selective compendium
also in as an appendix if the budget isn't completely broken on
the Committee on Government Reform.
[The prepared statement of Mr. Moe follows:]
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Mr. Horn. Let us move now to our friends from the General
Accounting Office who do very thorough work, just as the
Congressional Research Service does, and that is Mr. J.
Christopher Mihm, the Associate Director, Federal Management
and Workforce Issues.
Mr. Mihm. Thank you, Mr. Chairman and Mr. Turner. It is an
honor to appear before you today. My colleague, Paul Posner,
and I are pleased to be here to discuss OMB's efforts to lead
the management of the executive branch.
Our colleagues, Susan Ragland, Denise Fantone, and Lauren
Alpert were instrumental in helping us prepare our statement.
As you mentioned, Mr. Chairman, last month we issued a new
series of reports--and you held up just two of them, but I must
hold up the whole group--entitled, ``Performance and
Accountability Series: Major Management Challenges and Program
Risks.'' We issued separate reports on 20 agencies as well as
reports providing a governmentwide perspective and an update on
our high risk series.
Collectively, the reports show that long-standing
performance and management challenges continue to hinder the
Federal Government's efforts to achieve results. The report
series highlights numerous opportunities for agencies to make
fundamental improvements in management, performance and
accountability.
At the same time, the reports also underscored the pivotal
role that OMB must play in guiding and overseeing agencies'
efforts to fix their shortcomings and implement needed changes.
As you observed in your opening statement, Mr. Chairman,
and as the discussion with the first panel clearly illustrated,
OMB's perennial challenge is to carry out its management
leadership responsibilities in such a way that leverages
opportunities of the budget process, while at the same time
ensuring that management concerns receive appropriate attention
in an environment driven by budget and policy decisions and the
tight timeframes that those efforts require.
Our prepared statement detailed OMB's efforts in 11
separate management issues that have been of special concern to
this committee and the focus of much of our work.
Implementation of the Results Act, financial management, the
year 2000 problem, and implementation of the OMB Circular A-76
are among the issues that we discuss. We show that, overall,
OMB has made uneven progress in fulfilling these important
management responsibilities.
In the interest of brevity, rather than go through each of
these issues, this morning we will offer observations in two
areas that are of particular importance to improving the
management of the Federal Government.
First, I will discuss the factors that are necessary for
successful management improvement. Second, Mr. Posner will
discuss our prior work on OMB's organization and how the
Governmentwide Performance Plan prepared under the Results Act
can be used to articulate a Federal management improvement
agenda.
Turning to our first point, the experiences to date suggest
that certain factors are associated with the successful
implementation of management initiatives. Building and
sustaining these factors is important regardless of the
specific organizational arrangements used to implement
management initiatives. I will touch on each of these factors
in turn.
First, top management support and commitment both within
OMB and the White House is often critical to providing a focus
on governmentwide management issues throughout the budget
process and within agencies. The commitment to achieving a
clean financial audit opinion that Mr. DeSeve referred to as
one of the priority management initiatives provides a case in
point. However, top leadership's focus can change over time,
which can undermine the follow-through needed to move an
initiative from policy development to successful
implementation.
Mr. Chairman, the point that you made in the first panel
about the importance of institutional memory, given the
turnover, is relevant here. This suggests that the top
leadership support is a necessary but not sufficient factor in
sustaining management improvements.
Second, a strong linkage with the budget formulation
process can be a key factor in gaining serious attention for
management initiatives throughout government. As you were
suggesting, Mr. Turner, many of the management policies require
budgetary resources for their effective implementation, things
like addressing the Y2K problem or improving human resource
improvement initiatives as well.
Furthermore, initiatives such as the Results Act seek to
improve decisionmaking by explicitly calling for performance
plans to be integrated within agnecies' budget requests. The
Results Act is intended to address exactly the type of issues
that you were raising, Mr. Turner. How do we integrate
performance planing within agencies as part of the resource
allocation system? We have found that previous management
reforms, such as the planning-programming-budgeting-system
[PPBS], which I know that the chairman has been kind enough to
instruct us all about, and management by objectives, suffered
when they were not integrated with routine budget presentations
and account structures.
In short, management initiatives need to be reflected in
and supported by the budget but, I would stress, no single
organizational arrangement by itself guarantees this will
happen.
Third, effective collaboration with the agencies, through
such approaches as task forces and interagency councils which
Mr. DeSeve referred as network management, has emerged as an
important central leadership strategy in developing policies
that are sensitive to implementation concerns and gaining
consensus and consistent follow-through within the executive
branch.
Finally, support from Congress has proved to be critical in
sustaining interest in management initiatives over time.
Congress has served as an institutional champion for many of
these initiatives, providing a consistent focus for oversight
and reinforcement of important policies. This subcommittee's
focus on the Y2K issue has, without question, had a major
influence in shedding the executive branch's initial optimism
about the nature and scope of the problem and the executive
branch's adopting a more aggressive posture to addressing the
crisis.
In conclusion, these four factors--top leadership,
commitment, linkages to the budget process, collaboration with
agencies, and congressional interest and oversight seem to be
critical to governmentwide improvement efforts no matter what
specific organizational arrangement is used.
With that, I conclude my statement.
[The prepared statement of Mr. Mihm follows:]
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Mr. Horn. Mr. Paul Posner is Director of Budget Issues,
Accounting and Information Management, U.S. General Accounting
Office. This is a joint statement, and we are delighted to have
you here since your division has also done some terrific work
for us.
Mr. Posner. Thank you, Mr. Chairman. It is a pleasure to be
here.
I want to reflect for a few minutes on the work that GAO
has done.
In 1989, we did a study of the management of OMB, of their
effectiveness in carrying out their management leadership
functions, and we returned to that subject in I think it was
1995-1996 with the study of OMB 2000. We looked at the first
year and we assessed how well management issues fared in that
new, integrated process over there, and we have been kind of
addressing this very question that you have been raising. And I
will tell you that, as someone said at a NAPA lunch that I
attended the other day, we are firmly on the fence. It is not
particularly comfortable, but we arrive at that uncomfortable
position honestly.
Mr. Horn. You know what Theodore Roosevelt called people on
the fence. Those were the mugwumps. Mug on one side and the
wump on the other.
If you don't mind, with those fine studies you mentioned in
1989 and I think 1996, we would like to have them for the
record. And Mr. Turner would like a set, and I would like a
set. And also the staff directors on both sides might like one.
[Note.--The May 1989 GAO report entitled, ``Managing the
Government--Revised Approach Could Improve OMB's
Effectiveness,'' GAO/GGD-89-65 is retained in subcommittee
files.]
Mr. Posner. Let me say that we do view the idea of
integrating management into the budget and vice versa as being
mutually reinforcing. We have talked to a number of people here
particularly about the benefit that management gets from being
associated with the clout of the budget, the fact that the
budget process is the single signaling device respected by
management, by managers. And, after all, it is agency managers
that are the linchpin to improving the way that these programs
are carried out; and getting their attention is obviously
critical.
I will note over the years when we have been studying this
that even when management has been encompassed at OMB, the
linkage is problematic and difficult. We looked at 1989, OMB
had a separate division; and we found that frequently those
people were often on their own pursuing their own agendas and
the budget examiners were pursuing theirs and the twain never
met, so to speak. What we called for there was a closer
integration so that the budget examiners would take some
ownership of these management issues, because after that is
what we felt was important to reinforce these important
policies.
But another thing about the integration that is also
important--budgeting can gain from the integration as well. In
other words, good budgeting should involve understanding the
financial management of agencies and the financial position,
financial statement. Good budgeting should involve a clear
understanding of the performance measures and indicators that
agencies are using and their track record.
Good budgeting, for example, should involve knowing the
quality of the data that you are getting about the spending
that agencies are doing. For the first time this year, we are
subjecting that data to the discipline of the financial audit
in the 1998 statements, and we are going to get some useful
information about whether agencies can even keep track of their
unobligated and obligated balances, essential things to knowing
what money we have spent, never been audited before.
I think there is a tremendous spin-off benefit from having
these management initiatives, from having budget people take
ownership of these things. I think it improves their ability to
do budget analysis in some sense.
Notwithstanding this, Chris has pointed to our work that
Mr. Turner talked about on performance budgeting where, you
know, just understanding that linkage has become a very
difficult question but essential, as we found looking at PPB
and ZBB and all of the other acronyms over the years. The key
feature that prompted the volatility and the short lives of
those initiatives was the fact that they were not firmly linked
into the budget process that people paid attention to, and we
are concerned that GPRA may go the same way if appropriators do
not pay attention to it.
Having said all of this, the reason why I think it is such
a difficult issue is because when you place management
initiation in the budget, as you have heard and to use someone
else's words, the urgent tends to drive out the important.
The real question that we raised on OMB 2000, while we
found some very positive results when Alice Rivlin was there
and a lot of attention was being paid to these things, we
raised the question, how sustainable is this? Will an
initiative that primarily devolves responsibility to these
things be sustainable over the long term without an
institutional gadfly or nudges, as Ed DeSeve called them, to
keep the focus on these things? And that, frankly, is a serious
question and one that is worthy of much of our time and
attention.
I think what has happened in this period as well is that,
in the absence of a defined focus on management, we have also
seen what I will call a differentiation of management
leadership responsibilities. We have seen the President appoint
an Assistant to the President for Y2K. We have seen the Vice
President take responsibility. We have seen responsibility spun
to agency counsels, and we have seen GAO taking some
responsibilities and issuing executive guides on a variety of
things. Perhaps that is healthy, but perhaps also it reflects a
lack of a sustained focus.
One of the devices, and I will conclude with this, that has
been developed I think which could be a management leadership
tool, are the performance plans, particularly the
governmentwide plan, that OMB has just issued. This plan
provides a vehicle to address the fragmentation that we point
to time and time again. So often when we look at things from an
outcome perspective we have so many programs that are
considered in isolation, tools that we use to address the same
problem, whether it is housing or agricultural and through tax
expenditures and loans, a variety of grant and spending
programs and the like that are never really thought about in a
fabric together.
And what we hope--and, again, we know OMB is perhaps the
only institutional focus that can do this--is that this plan
could become a vehicle to bring some attention to these cross-
cutting issues that Mr. Seidman referred to as an essential
part of management leadership. So we are looking for those
plans to become that vehicle possibly in the future.
That concludes my statement.
Mr. Horn. Any other comments that any member would like to
make reacting against other panelists' testimony? I regard you
experts as very expert people. If you didn't like what somebody
said or if you did like what they said, do you want to
reinforce it?
Dr. McMurtry, any comments on your colleagues and their
ideas?
Ms. McMurtry. I guess what strikes me, having heard the
various presentations this morning on the former panel as well
as this one, I am not sure that we are going to come up with a
perfect arrangement.
I think we all agree that management functions are very
important. They have been packaged various ways over the years
within BOB and then OMB. Is creating a separate office
necessarily going to be a cure-all? I don't think so.
Would having some kind of a statutory office within OMB be
an improvement? Perhaps. If we leave things as they are, with
the impact of developments such as the budget coming into
balance and continuing implementation of the Government
Performance and Results Act, perhaps if no organizational
changes occur, things will still improve.
I guess I am somewhat optimistic at the place we are. I
didn't expect to be at this place where we had a surplus in
1999. So from someone who has followed the budget more closely
than the management side, although I have been interested in
OMB as an institution, I think it is a fairly optimistic time.
Mr. Horn. OMB did not get us to a budget with no deficit.
Ms. McMurtry. This is true.
Mr. Horn. Regardless of who is in power.
Ms. McMurtry. I didn't mean to imply otherwise. I was just
notifying the circumstances now.
Mr. Horn. How about the General Accounting Office? Any
comments that you want to make on CRS?
Mr. Posner. I will defer.
Mr. Horn. Dr. Moe is not shy. Go ahead.
Mr. Moe. Well, this is an important issue, and a lot of us
have institutional constraints. You have the administration's
view from Mr. DeSeve, who presented it very well.
I would like to read one little part of the prepared
remarks I didn't read, and I hope that this raises some
interesting questions.
As Paul Light and others have argued, much of government is
``hollow.'' In an unenlightened attempt to keep the statistics
of government employment artificially low and to equate this
statistic with the size of government, thereby meaning if you
decrease the number of Federal employees, you are decreasing
the size of government. A high price has been paid for this
strategy by Congress, the President, the agencies and the
public.
At the same time that Federal employees have declined both
absolutely and relative as a percentage of the work force, the
work is increasingly assigned to third parties, principally
private firms with very different perspectives and interests
than those of the Federal Government.
Paul Light has recently estimated that 17 million persons
versus 2 plus million in direct civil employment are part of
this third party orbit of government. Let's look at one
instance of the consequences of this current practice of
equating Federal employment with the size of government.
The Federal National Mortgage Corporation, better known as
Fannie Mae, is a privately owned, government-sponsored
enterprise. Its portfolio is about $1 trillion in mortgage-
backed securities. The president of Fannie Mae received
approximately $7 million in compensation in 1996. All of the
other executive employees are paid similarly high salaries.
Performing a similar function with a half a trillion dollar
portfolio is the Government National Mortgage Association known
as Ginnie Mae. Fannie Mae, to perform its functions, has 3,400
employees. The salary of the president of Fannie Mae is
considerably larger than the compensation for all Ginnie Mae
employees put together. Ginnie Mae runs with only 53 employees.
Why is the Federal Government so much more efficient than
the private sector? I mean, any time you want to see something
luxurious, go to the Fannie Mae headquarters. And yet what we
have is 53 employees running Ginnie Mae, and they want to
decrease it. It was 72 a few years ago, and I phoned up and
found that they dropped employment to 53.
So how is it that we have a half a trillion dollars being
watched over by so few people? And the answer is that they have
essentially turned over the management of this function to some
private firms.
And if you read the GAO report on Ginnie Mae written in
1993, there are some very disturbing statistics in there and
very disturbing quotes. Because, in point of fact, even the
contractors themselves say we are not being properly
supervised. So what is the hidden cost when you use employment
numbers as a measure of size? We are paying a tremendous cost
in moral hazard as a people.
This is similar to when 2,500 savings and loans were going
under. We came up and asked for 43 employees at the Federal
Savings & Loan Insurance Corporation so they could begin to
look at these 2,500 insolvent savings and loans. OMB said, no,
you can't have them because that would disturb our policies of
cutting back on employees. I have heard people estimate that
ended up costing us $20 billion to $40 billion because we did
not have the capacity to go into governmentwide management
issues.
Ginnie Mae is a classic case here where we are
understaffed. They don't have their own legal staff. They
contract out 4,000 hours of legal work. I don't care how good
these law firms are, the fact is that, within Ginnie Mae, they
have very little capability to judge the quality of what they
are getting back on their legal work because they have no law
office.
So there is often a hidden cost to what I view as
relatively sim-
plistic proposals. What I just said to you does not appear in
any
of the process programs. You can read GPRA forever and building
management capacity will never come up because to them it is a
numerically driven concept without substance.
So I find it is not all bad, but I am telling you that it
is not the complete story and that is presumably why people
concluded that you will never have the complete story, never,
as long as management is subordinate to budget.
Mr. Horn. Mr. Posner.
Mr. Posner. I want to augment what Ron just said. Because I
think the more our programs involve third parties, State and
local governments and the private sector and really doing most
of what we find important in government, the more management
makes a difference, but also the more it makes a difference how
we design these programs. How do we design these incentives to
encourage or avoid things like moral hazards?
You look at a program like the student loan program. We had
a default rate exceeding 20 percent. Was it because we had bad
management at the Department of Education? It is unclear, but
we know that we were giving the banks absolutely no interest in
screening people or collecting these moneys. We had a situation
where we were encouraging all sorts of, frankly, fly-by-night
providers to enter the program and serve lower income people
with ineffective training that gave clients little prospect of
paying back the loans.
It was--retrospectively, when you look at how we designed
it, we couldn't have helped but had an over 20 percent default
rate. And Congress took that on with Department of Education's
insight, and managers stepped up and worked in the
implementation phase, and they redesigned it, and the default
rate has come down significantly.
That is a parable of how so many of our programs are really
run and why these performance problems reflect management, but
they reflect a lot more than just management.
Mr. Horn. That is a good point. You have raised a couple of
interesting issues, and certainly the Congress is partly at
fault on the thrift situation, and the Congress is also partly
at fault on the student rate default. Because when they put
proprietary schools into that mix, that is when the nonpayment
went up substantially.
I remember once trying to make a telephone call. I walked
across the floor and Representative Waters was taking on the
whole Committee on Education. This was in the Democratic-
controlled Congress of 1993 and 1994. I listened to her; and I
said, she is right. And so I waded in on her side. And my
friend Bill Ford, who I had worked with for 20 years in higher
education when he headed post-secondary ed, he and the
committee, both parties, they beat us solid because,
apparently, we had had a lot of interest of the proprietary
schools in Members of Congress of both parties, and that is
part of the problem.
As far as Fannie Mae, I have been wanting to hold a hearing
on that for a long time. There was a leak once out of my
committee on just an innocent five words in a report that got
to them and suddenly seven of the highest paid lobbyists in
Washington show up on Capitol Hill thinking, ``Gee, they might
be looking at us in a future year.'' We will be. We will get to
them. It is amazing, and you have made some very interesting
points.
I now yield all the time that he wishes to consume to the
gentleman from Texas, Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman.
This has been an interesting discussion; and I was
certainly interested in your comments Dr. Moe. You don't
hesitate to state your position, and I found that somewhat
enlightening, and I appreciate that.
When you labeled the management model and the
entrepreneurial model and the accountability model, is that
basically the way you would describe the two approaches?
Mr. Moe. Constitutional.
Mr. Turner. Constitutional.
The thing that has always impressed me in my years of
service in elected office is how, oftentimes, we fail to
appreciate the people in government who are the line managers.
Because I really believe to be a manager in government is
probably one of the most difficult management jobs you can ever
be assigned because, in essence, you are constantly faced with
that dilemma of those two models.
It seems to me to be easier to be in the business world and
be a manager because the bottom line is all you have to worry
about. You are looking for productivity and profit. In
government, these two models intersect.
I am one who has always expressed concerns about the move
toward privatization because I firmly believe, if government is
run right, we ought to be able to manage government as
efficiently as the business world does. But there is a concept
afoot in this country today that says somehow government is bad
and that business knows better and that we need to just run
government like a business and everything will be OK.
Certainly, we do need to have sound business management
practices in place in government, but it doesn't necessarily
mean that government can be run like a business, because we
know that businesses run on the entrepreneurial model and in a
democracy and constitutionally based form of government there
are other interests other than the bottom line that always have
to be protected.
Maybe one of the things that we can do to help improve
government is to be more sensitive, particularly those of us
who are in elected positions, to not making derogatory comments
about government as compared to business, and to try to end, if
we can, the attitudes that prevail in many quarters of our
country today that government is bad and business is good. We
need to make both of them good.
Maybe we need to work harder to try to encourage young
people to go to some of our schools of public affairs, like the
Lyndon B. Johnson school that I am familiar with in the State
of Texas, where we can train managers and make young people
feel proud to enter into the service of government.
But, I found your comments enlightening, and I guess the
conclusion I came to on this is that--and I think several of
the panelists have stated this position--I am not sure that the
structure is our big problem. I am not sure that we can even
say that simply institutionalizing government is the right
thing to do versus having ad hoc committees, because even in
the business world sometimes it is that ad hoc group that
shakes up the institutional structure and makes some
improvements in the institutional structure.
One of the good things about our democratic system is that
as we elect new people and new leaders, they do bring new
ideas. But we can improve the institutional structure and the
quality of the people who serve in those positions who
ultimately are going to make the government work efficiently
and effectively--not only like a business but also to serve the
needs of the people that we all collectively agree have to be
served.
So maybe there is no easy answer here, but it could be that
simply through a better effort on our part to enhance the
importance of the role of government and to clearly enunciate
what that role is, as you have done, and to talk about the
contrasting models, that perhaps through that effort we can
come to some better resolution of some of these management
issues. Because it is not easy, and actually very difficult.
I welcome your comments.
Mr. Moe. To talk briefly about the theoretical dispute that
you mentioned, oddly enough, it is very difficult to have a
mesh of the two. That is why they talk past each other as
models. The fact of the matter is that the fundamental
management of the executive branch is by the general management
laws. They provide the rules of the game.
The rules of the game in the private sector are the
maximization of equity return to owners. You don't do that, you
go to jail for fiduciary irresponsibility. But that is not the
objective in the Federal Government. It is designed to
implement the laws passed by Congress, wise and unwise.
When you do not have an agency downtown that is capable of
sending up to Congress an administrable program or an
administrable agency, no amount of process management will save
the day.
So what has also occurred is that, as the proliferation of
these general management laws have occurred, you see that book
explains what every manager in government has to have in front
of them, these are the laws that I have to follow. So the laws
are what drive them.
In order to have in the executive branch an institution
that takes these laws as seriously as Congress does, you have
to separate them from the budget. I know that this may sound
unusual, but budget to me is only one part of management. It is
the most important single part, but there are other elements to
the management equation. And those other elements, if they are
subordinated to the budget, will never get sufficient hearing.
This is why--for example, GAO reports 25 risk areas this
year. Notice that is all after the fact. How much time is spent
on not getting to the risk point? Not very much. I have been
here for 25 years, and I have never been to a discussion about
how to properly design an agency of the United States that had
great influence.
Structure is important. Proper structure is a necessary but
not sufficient basis for proper management in the Federal
Government because accountability remains our highest value.
That means we may have to sacrifice performance on occasion
because it is a political decision. You try to keep such trade-
offs to a minimum, but the two sets of values are different.
For years I believed that we could get what it is that we
are worried about and change the culture of OMB and not have to
split. I believed that until but 1986 or so, and then I finally
concluded it isn't going to happen because the current culture
of OMB cannot properly address the management issues which is--
this final thing on privatization.
If you had an Office of Management, presumably one of its
responsibilities would be to keep track of and to know all
about the various privatization--itself a term with many
definitions--activity going on in the country, in the Federal
Government, up here on the Hill, and be able to aid agencies
and inform committees about what are some of the rules that we
have learned historically about how to do a privatization
correctly, as opposed to incorrectly.
But we have none of that today. So what we have, in
essence, is that every agency is told you are on your own to
make a deal with your congressional committees. This is why the
FAA got its own civil service system. It went to its
committees, did not go to the Civil Service Subcommittee, and
got exempted from title 5 because everybody is on their own.
This is one of the hidden agenda objectives of the National
Performance Review. They believe that government should consist
of numerous organizations all competing with one another to
offer services to one another, we call this franchising, and so
forth.
Basically, there are not many rules on organizational
management. There is no law, for example, saying that the
executive branch can create a performance-based organization
[PBO]. This is just made up. And so what we have here is sort
of a disaggregation and disintegration of the concept of
fundamental management, and structure does play a big role in
any reassertion of our management responsibilities. It isn't
the whole thing, that is for sure, but I think OMB experiences
a failure.
Mr. Mihm. On the notion of accountability that Ron pointed
out, the point that I would make is that accountability for
most agencies is something that cuts in many, many different
directions at the same time and in opposing directions.
One of the places where the concept that government ought
to work like business breaks down most directly in my view is
that, unlike in the private sector, we don't have one bottom
line. Businesses have profit and market share and these all
create incentives for certain types of behavior.
The problem that managers in the public sector face is that
they have competing sets of priorities from which they have to
build goals. These competing priorities are embedded in the
very missions of organizations, that force them to
systematically create goals that tug agencies in different
directions.
In Ron's opening statement, I believe he mentioned the
situation at IRS. They have to create a goal that, on the one
hand, deals with the collection of revenues but, on the other
hand, ensures a directly competing priority to make sure that
IRS treats taxpayers in a fair and courteous manner. In fact,
Commissioner Rossotti has mentioned that customer service is
what the agency is now going to be about. So the notion of
accountability is very ambiguous at the Federal level.
One of the good things about the Government Performance and
Results Act is that it provides a venue through strategic plans
and annual performance plans for raising these types of issues
up for discussion, and to make sure that decisionmakers
understand the various tensions that agencies' operations are
under.
We did some work at the EPA a number of years ago, and they
told us one of the best things about reaching out to
stakeholders, which is a requirement of the Results Act, was
not so much that they heard from stakeholders but that they
educated the public about the different pressures that the EPA
is under. EPA needs to manage and deal with different
priorities that are placed on it, such as reducing burden on
businesses and at the same time protecting health and safety.
How does it strike the appropriate balance? There is no
immediate or easy answer for that, and EPA is accountable for
both.
Mr. Turner. You mentioned how the Results Act is working,
and I may be wrong on this, Dr. Moe, but it seems to me when we
talk about trying to place an emphasis on management
institutionally, that the National Performance Review effort
was that very thing. We know that it is not institutionalized,
and we know that it may not last past this administration, and
we may not agree with all of the theories that they are
pursuing, but, in essence, wasn't that what that was? Maybe it
was not planned and maybe nobody thought through that ``we need
to emphasize management,'' but that is what that amounted to,
to place emphasis on management?
Mr. Moe. It did. It implicitly made the case for a separate
Office of Federal Management. They knew right off the bat that
if they took their exercise into OMB, they were dead. They
didn't draw the right conclusion, however, from their
experience.
The proper conclusion should be--my view on this--would be
that you would have a separate Office of Management to continue
the activities that we did plus the activities we are talking
about. However they didn't draw that conclusion.
So it is sort of up for grabs. The future is sort of up for
grabs. That is the problem. When you have an institutional
problem, you should have an institutional response to it. And
merely asking somebody to do a good job doesn't generally get
it done and particularly in the government where our laws and
regulations are relatively strict.
One reason that it is important to have one agency watching
over all of these laws--and when you talk about clout, the real
clout comes from being able to design and implement the general
management laws, and here is why. It is an intellectual reason.
The purpose of a general management law is, in essence, a
contract between the executive branch and the Congress on how
certain procedures and laws shall be implemented. It remains in
effect unless an exemption is given by Congress to it. Notice
what we have done in this situation. We have created the
politics of generality. In other words, the burden of proof to
be exempted from some law or exception lies with the agency
that is seeking it, OK? So in the absence of a persuasive case,
the government is wholly accountable to OMB and to the
President through OMB.
The other politics, and this is the one represented by the
National Performance Review and that is the politics of
exceptionalism and that is you have very few general laws and
you don't have continuing institutions in place. But, in point
of fact, a thousand flowers shall bloom throughout the
government, all agencies with their own independent
compensation systems, and those seeking to have general
management laws apply across the board have the burden of
proof. That is why we are here.
So we are trying in this act to reimpose accountability
across the board and not have everybody with their own little
dukedom out there. We have to make a case for this argument.
That is what we are trying to do here, to restore some overall
accountability to the President.
Now, I have to say this. Presidents since Kennedy have
found the management function to not be politically rewarding.
They say, if you do something good in management, the benefit
will accrue to your successor; but if there is a problem with
it, you get the criticism. So their political advisers say that
management is not a very profitable thing to get involved with.
But we have paid a price for that, and that is it is the
President who has to support those actively who are concerned
about all these laws. For example, these laws are not related
very well to each other, you see. In 1933, we passed a law and
it reflected the values of 1933. We passed another law in
financial regulation law in 1993 to reflect the values of 1993.
We don't have anybody there to integrate the laws in a way
that makes them contemporary. We are a republic and the laws do
run things and the fact that you try to do everything outside
the legal system is a weakness and Congress doesn't realize it.
That is why I believe we do have to have a quality
constitutional system in which Congress is an active player and
we don't get caught up in business school jargon.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Horn. I thank the gentleman. There are some excellent
questions and dialog.
Let me ask Dr. Moe at this point, and then I will move to
the GAO. I just have a few more questions.
You noted, Dr. Moe, that major fields of government
activities are essentially unmanaged. Would you give examples
of how this has led to statutory laxity and the neglect of
standards for organizations, operations and accountability?
Mr. Moe. I am not sure that I followed your question well.
Mr. Horn. I can repeat it, because it is a cumbersome
question.
You note the major fields of government activities are
essentially unmanaged. Would you give us some examples of how
this has led to the statutory laxity and neglect of standards
for organizations, operations and accountability? Is this a
matter of statutory laxity or is it just that they don't know
what they are doing?
Mr. Moe. There is a sequence for proper management in the
Federal Government. Notice I am saying Federal Government,
which is different than GE or a university. At the top rung is
the law. If you have to design a law that is conceptually
sound, particularly in programmatic terms, knowing full well
because of the political process and if you require great
management perfection you are going to be discouraged, but
nonetheless you can avoid some of the worst problems because
history is not something to be ignored, which we have a
tendency to do, it is something that you build upon. You don't
need to make the same mistakes over and over again.
The second level has to do with your central management
agencies. One of the NPR's major points has been to downgrade
and to disembowel the central management agencies. That is OMB,
for example. They are shadow agencies now, and we have a hollow
central management operation. But central management remains
the absolute key to ensuring that all of the officials, most of
which, as I pointed out, are short term political appointees
are following on the same team. Without it, everybody goes
their own way.
So the second element is the quality of your central
management agencies.
And the third element has to do with the quality of your
leadership. It is very difficult to get an 18-month Assistant
Secretary in a department to get all enthusiastic about a 10-
year improvement program. Incidentally, the National
Performance Review has never addressed the question of
political appointees. They apparently want more of them. They
don't want to cut them, even in relationship to the mid-level
people.
So we have here this very large group of people who have
not been trained for this job, and yet we are asking them to be
management gurus. Well, the fact that we are going to be
disappointed shouldn't come as a surprise. There is a
dysfunction between the needs of the agencies and the quality
of leadership that we force upon them.
And a fourth element is the quality of the individual
agency structure itself. There are many activities that could
be properly designed, and that is the keyword, government
corporations rather than appropriated agencies, and they would
run very well. So we need to recognize that within the
governmental structure itself there is a wide range of options
available for us on how to design an agency and its program in
a way to maximize administrability, but this requires quality
people in a central location so that each subcommittee on the
Hill or each agency in government isn't designing itself.
I always view this as something of a conflict of interest.
This is where we have assigned the project since, if you got on
the telephone and tried to phone OMB and asked to speak to
their expert on government corporations, the odds are that they
would say that they don't have one. I have phoned them for
years, and they don't have one. The agencies themselves are at
a disadvantage in the absence of that type of managerial
assistance.
I hope that I answered your question or at least answered
toward it.
Mr. Horn. Well, you are warm on that one. There is no
question about it, that we lack that memory to give them
options in trying to deliver on a particular program.
When I was in the administration back in 1959 we had a crew
that worked with the Congress on, say, the Labor Management
Disclosure Act of 1959, and we were ready to implement that the
day that the President signed the law. And we had thought
through and gotten the basis for having that agency work. But,
as you say, when you phone up OMB, who is the expert on
government corporations? Who has had some experience with them,
and who has looked at the current ones, and are they doing what
we thought they should do? And that will start with TVA right
on up.
Mr. Mihm. We did a report on government corporations
several years ago, and they directed to us Dr. Seidman. They
said, go see him in NAPA.
Mr. Horn. That will look good in the committee report on
the floor.
Mr. Posner. Can I add to Ron's response?
Again, if you are looking at what really matters in terms
of the implementation of these programs and an interconnected
environment, it is true that agency matters, structure matters,
but what equally matters is the rules, the incentives and the
way we design these things. I do believe that has been kind of
a neglected area of public policy, public administration.
I was involved 10 years ago in the U.S. Administrative
Conference study that produced a guide to grant design for
Members of Congress. What do you do about something so obscure
as maintenance of effort which most people are very dimly aware
of which has a huge impact on whether Federal money is going to
get where it is supposed to go or not? And when you look at the
largest programs, most of them don't have a maintenance of
effort provision or it is outdated. It is no wonder why we are
not getting the performance we think we should be getting.
Chris mentioned the notion that we need better information
about what we are getting, so it is structure, but it is also
information. I mean, for many, many years GAO has had to become
the primary data collector of record on things that agencies
should very well understand and know. IRS didn't have any idea
who owed them delinquent tax debt. They had no idea how many
were businesses, how many were individuals and different types,
and now they are getting better information.
We had to do samples, very time-consuming work; and what
you are hopefully going to start seeing is we developed this
information infrastructure under GPRA and IT is that we are
going to become better able to understand how our programs are
linked to the behaviors that we are trying to implement. And
the interesting questions will get to be the things that Chris
said--what we really care about, how we are impacting or not
impacting the behavior, and which of these conflicting goals do
we want to put priority on. And that is where ``management''
becomes part of the policy debate.
Mr. Horn. I think the point that you are making also here
is that Presidents are busy people. They have demands from
every interest group in America, and so do their Cabinet
officers. But there is no great incentive to have good
management until the chickens come home to roost, and then you
have a major scandal, and then everybody scurries around and
says gee, not me, let's do something about that.
There is no question if a President starts on it in a 4-
year term--and we have had many Presidents with 4 years and not
8 years--if you do something worthwhile, credit may go to your
successor, whether your party or the opposite party, so there
is no great incentive in that. And the bureaucracy can wait you
out and say this, too, shall pass.
I remember PPBS, that was supposed to be across the board
with Mr. McNamara and later with President Carter, all that
zero-based budgeting. And they say, folks, this, too, shall
pass.
And that is what we are down to. Somewhere we need that
institutional memory that, even if the President can't spend
much time on it, he can give some leadership and direction and
he can let his Cabinet know that he is serious about it. And
that is essentially how President Eisenhower used a Cabinet.
Many Presidents haven't even had them in the room.
Certainly Franklin Roosevelt ran the government in a number
of unique ways and didn't very much care if his Cabinet ever
met, but at least his people knew here is what he wanted to
achieve. And then the question was, how can you most
effectively and economically achieve it? And until they know
that the President is serious, nothing much is going to happen,
no matter who is in the White House.
Let me ask one last question here of GAO. Has the
Congressional Budget Act of 1994 strengthened or hindered good
management? And what, if any, changes do you see in that act
that should be made? Any thought given to you that----
Mr. Posner. The Congressional Budget Act?
Mr. Horn. I testified on it at the time.
Mr. Posner. Well, I think that there were some information
provisions, as I recall. It was title VII, and I am not sure
that that has really had much of an impact at all.
It reminds me of the Intergovernmental Cooperation Act of
1968 that mandated that GAO do periodic studies of programs and
document the various agencies that were at play and recommend
ways to consolidate and streamline. We did not exactly receive
deafening interest following that up from our clients here. So
those things are all well and good.
I do think that the Congressional Budget Act did set up a
very interesting structure where the budget committees have to
assign spending by functions, the 17 broad mission areas, and I
think that has largely remained an academically interesting
exercise that does not drive resource allocation. And it gets
back to the governmentwide performance plan, that somehow we
need to be focusing on those as our unit of analysis for making
a decision, and we have not yet succeeded in doing that.
We focus on discretionary spending, $555 billion. It gets
divided up among 13 appropriations subcommittees, which is very
difficult to understand. So the promise of the act in that
regard as an allocational device across goals that we care
about as a Nation has yet to be fulfilled.
Mr. Horn. There is no question that we have a lot of
problems with that act, although we are stumbling and muddling
through with it, as the British might say. We certainly could
do better.
Let's face it, the aim of both the La Follette and Maloney
bill in 1946, which didn't last too long either when it came to
budgeting, and the 1974 act was to try to get the relevant
people together that make these decisions up here, namely the
Finance and the Ways and Mean Committees and the various
appropriations subcommittees and get them to relate to each
other since one is either going to have to raise revenue and
the other is going to have to cut spending if you are going to
have a balanced budget.
Unfortunately, that isn't the way that the process worked.
We have a Budget Committee that is sort of out there somewhere
that has some of these people on it and some other people on
it. It wasn't a bad idea because the other people presumably
would try to keep honest the appropriators and the revenuers.
Yet we don't have the guidance that is needed, and you get sort
of artificial caps, and you wonder this year if we are going to
have any caps.
The Budget Committee has been sort of a political obstacle
to most Members of whatever party that is in control because
they have a whole bunch of crazy ideas in there as to how they
might do this and this. And your opponent throws that at you on
the stump, and, by George, it is a document of the House, and
it is your party, whether it is Democratic in the 103d or
Republican in the 104th, and it really has no real impact. And
it is the appropriating committees that count, is reality, and
that is where they are segmented.
The President took 130 years, I think, for the President to
have a unified budget. It used to be that the department heads
sent it to the Secretary of the Treasury, and he put a binding
on it and shipped it up here. And we, unfortunately, have 13
subcommittees that we will never be able to get rid of. It
doesn't happen that easy.
I suggested 20 years ago, let's have five to match their
resource areas. The President brings that budget together in
five major areas. We could do that, too, but nobody is going to
give up their chairs unless there is a crash somewhere, but it
is a heck of a way to do business.
We appreciate all of your wisdom that you have given us. It
has been very helpful. These have been excellent statements,
and they will be in the record, and we will refer to them, and
over the next few months we will put the pieces together.
I am going to read the staff members into the record.
I want to thank not only the witnesses but the staff
members: J. Russell George, the staff director for the
Subcommittee on Government Management, Information, and
Technology and chief counsel. Bonnie Heald, our director of
information is sitting patiently back there wondering where the
media is. They are not interested in management, right?
Harrison Fox, to my left, professional staff member responsible
for this hearing; Mason Alinger, staff assistant. And we have
two interns here, Paul Wicker and Kacey Baker.
And then for the minority we have Faith Weiss the
professional staff member and Earley Green, staff assistant.
And we have two court reporters, and they are both here at
the same time: Doreen Dotzler and Ryan Jackson. We thank you
both. It is tough when we have all of the dialog going back and
forth, and we appreciate it.
With that, this meeting is adjourned.
[Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
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