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TESTIMONY OF
JACOB J. LEW
DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
April 7, 2000
Mr. Chairman, Members of the Subcommittee, I am pleased to be here
this morning to discuss the
role of the Office of Management and Budget (OMB) in improving management
practices in the
Federal Government. Sally Katzen is here with me today. She is a
Counselor to the Director, and
is the President's nominee for Deputy Director for Management.
We welcome this oversight hearing because we too place importance on
improving management
throughout the Federal government. I would like to thank the Subcommittee
for its continued
interest in this issue. This Subcommittee has been a leader in providing
Federal managers with
the tools and incentives to perform effectively and with accountability.
In recent years, this has
led to the adoption of the Government Performance and Results Act, Federal
Financial
Management Improvement Act, Information Technology Management Reform
("Clinger-Cohen")
Act, Government Paperwork Elimination Act, Federal Acquisition Streamlining
Act, and Federal
Activities Inventory Reform Act.
The role of the Office of Management and Budget
As stated in OMB's Annual Performance Plan, OMB assists the
President by reviewing agency
proposals and programs on a variety of topics from budgets to regulations;
assuring that they are
consistent with relevant statutes and Presidential objectives; providing
analysis and advice on a
variety of subjects; and developing government-wide policies for the
effective and efficient
operations of the Executive Branch. Although housed within the Executive
Office of the
President, the majority of OMB's 518 staff are career employees who provide
"institutional
memory" and the most objective analysis possible for the President.
OMB operates in a fast-paced environment, dealing with a variety of
complex issues on a daily
basis. It has the lead role within the Executive Branch for maintaining
Federal fiscal discipline,
allocating scarce resources, and promoting program efficiency. OMB
provides leadership and
assistance in financial management, procurement, information collection and
dissemination, and
other government-wide management functions. These responsibilities are
carried out working
cooperatively with the Congress and congressional agencies such as the
Congressional Budget
Office and the General Accounting Office.
How We're Organized
OMB is composed of five resource management offices
(RMOs)(1) organized by agency and
program area, three statutory offices(2)
with functional management responsibilities, and seven
offices(3) that provide OMB-wide support.
These offices work together to assist the President in
developing fiscal policies and creating an environment for effective
management of Federal
programs.
The RMOs play a pivotal role in the development and
execution of Federal fiscal policies and
provide ongoing policy and management guidance to Federal agencies. RMOs
are organized by
policy subject matter and agency. Staff are experts in their program and
policy areas and are
responsible for the analysis, evaluation, and implementation of policy
options as well as the
implementation of government-wide management initiatives.
The Budget Review Divisions analyze trends in and the
consequences of aggregate budget policy.
They provide strategic and technical support for budget decision-making and
negotiations, and
they monitor Congressional action on spending legislation. In addition,
these offices provide
technical expertise in budget concepts and execution.
The Legislative Reference Division coordinates articulation
of the Administration's position on all
legislation. This office coordinates the review and clearance of the
Administration's legislative
proposals, testimony, and statements on bills progressing through Congress.
This responsibility
frequently requires resolution of conflicting agency views on legislation
or policy positions.
The three statutory offices play an important role in the work of
OMB. The Office of Federal
Financial Management (OFFM) develops and provides direction on the
implementation of
financial management policies and systems and coordinates activities of the
agency Inspectors
General and Chief Financial Officers. This includes activities ranging
from financial reports and
systems to debt and grants program management. The Office of Federal
Procurement Policy
(OFPP) leads efforts to improve Federal procurement law, policies, and
practices that affect the
full range of Federal acquisitions, including major systems, products,
services and construction.
The Office of Information and Regulatory Affairs (OIRA) oversees
the Federal regulatory,
information collection and dissemination processes, and Government
statistical policies and
practices. OIRA reviews agency proposals for new or revised Federal
regulations and
information requirements, and develops policies to improve regulatory and
paperwork processes
and information management. OFFM, OIRA and OFPP staff serve as consultants
to program
examiners in the RMOs and participate on teams reviewing significant
issues, such as reviews of
financial statements and major information technology investments.
While each unit has its own focus, OMB prepares its products, meets
its deadlines, and fulfills its
responsibilities because of continuing collaboration among its offices and
divisions. On a day-to-day basis, OMB operates as a collegial organization
in which OMB-wide and statutory offices
collaborate with the RMOs to support OMB's ongoing agency relationships.
For example, desk
officers in OIRA work closely with the RMOs on regulatory and information
issues. With respect
to regulations, OIRA tends to focus more on the economic and societal
consequences of the
regulation, assessing the full impact of each proposal, with particular
emphasis on the benefits
and costs of alternative approaches; the RMOs give particular attention to
programmatic and
fiscal implications. OFFM specialists in financial management, accounting,
and systems work
closely with each agency's financial management staff to monitor progress
and plans for
improving financial management; RMO staff who have extensive agency
relationships and
budget responsibility participate in these sessions. Together, OFFM and
RMO staff review
agency audit financial statements, and oversee the work of agency Chief
Financial Officers and
Inspectors General and agency preparation of annual audits as well as the
agency budget
submissions that affect financial systems. Likewise, OFPP's procurement
policy specialists work
closely with RMO staff and agencies to implement acquisition reforms to
advance better business
management of Federal acquisitions to support agency missions.
Our Traditional Responsibilities
Given its comprehensive and objective view of the government's
strategic interests and program
priorities, OMB has a hand in the development and resolution of budget,
policy, legislative,
regulatory, information, procurement, and management issues on behalf of
the President. This
places OMB in the middle of complex and sensitive distributional
policymaking and tradeoffs
necessary to develop and maintain coherence and consistency with the
President's priorities and
program.
OMB has the lead role in the Executive branch in maintaining
aggregate fiscal discipline,
proposing allocations and reallocations of resources to particular sectors
and programs based on
Presidential policy, and promoting the efficient delivery of services.
This is a continuing process
of interaction and adjustment with and between the departments and
agencies. The entire budget
formulation process, with its instructions, hearings, reviews, budget
drafting, and justifications,
drives much of the development and coordination of policy. OMB examines
efficiency and
effectiveness in order to improve programs; allocates resources in accord
with Presidential
priorities; and presents the President's program.
OMB performs these same functions in financial management,
procurement, information
collection and dissemination and other government-wide management functions
of the Executive
Branch. While doing so, OMB also provides leadership and serves as a
catalyst for interagency
groups such as the President's Management Council (consisting of
the Chief Operating Officers
of all Federal Departments and the largest agencies), the National
Partnership Council (including
representatives of Federal employee unions and Federal managers and
supervisors; the Federal
Mediation and Conciliation Service, the Federal Labor Relations Authority,
the Office of
Personnel Management, DOD, and the Department of Labor), the Chief
Financial Officers
Council, the Chief Information Officers Council, the
President's Council on Integrity and
Efficiency (comprising the major agencies' Inspectors General), the
Procurement Executives
Council and the Budget Officers' Advisory Council (BOAC).
Through these groups, OMB draws
together operational, financial, procurement, integrity, labor relations,
and systems technology
experts from across the government to establish government-wide goals in
their areas of expertise
and marshal the resources within individual agencies to improve government
performance.
Meeting our growing workload
Despite staffing levels that have decreased by almost 10 percent
since 1993, OMB continues to
carry out its traditional responsibilities and the new responsibilities
Congress has placed on it.
The Government Performance and Results Act, Federal Financial Management
Improvement Act,
Information Technology Management Reform ("Clinger-Cohen") Act, Government
Paperwork
Elimination Act, Federal Acquisition Streamlining Act, and Federal
Activities Inventory Reform
Act all require a significant investment of staff resources. More recent
requirements, ranging
from the "Stevens Report" on the costs and benefits of regulations to the
report on climate
change, also impose new workloads. Congress also has imposed a number of
new grant
management responsibilities on OMB, including revising Circular A-110 to
open access to
research data, preparing an inventory of all Federal grants, and fulfilling
the provisions of the
Grants Management Simplification Act. A complete list of the laws that
have increased OMB
workload since 1993 is attached to my testimony.
For FY 2001, I have asked our Appropriations Subcommittees for
increased resources for
additional OMB personnel. The request seeks an increase of $613,000 to
fund nine new FTEs to
oversee the numerous management initiatives required under current law,
analyze key budgetary
and economic areas, and assist in preparing the Federal Budget and the many
reports required of
OMB. As we approach the end of this Administration, it is an appropriate
time to ensure that the
next administration has the resources at OMB necessary to perform at the
level of excellence that
OMB has established. My request would provide those resources.
Our Management Role
There is no textbook definition of "good agency management." OMB
embraces a broad-based
concept of management that encompasses the roles and responsibilities of
the whole organization.
OMB is responsible for maximizing the extent to which Executive Branch
agencies carry out
effectively and efficiently all tasks related to excellence in agency
administration, and for
maximizing the quality of agency design, development, implementation,
evaluation, and
continuous improvement (including where necessary, termination or
replacement) of agency
programs and policies, consistent with the policies of the President.
Some people think of "management" solely in terms of a series of
administrative management
functions, present in virtually every agency, that are the essentials of
organizational operations,
without regard to what that organization's missions or functions may be.
These functions include
procurement, accounting, personnel management, space management, financial
management,
regulatory strategy, and the like. Doing them very well rarely garners
attention; failing to do them
well can destroy program and policy effectiveness as certainly as bad
policy decisions or
inadequate program implementation.
OMB has offices and divisions that exercise government-wide
leadership on key aspects of
agency administrative management: procurement (OFPP); financial systems and
audit (OFFM);
regulatory policy and paperwork management, information collection and
dissemination,
information technology policy and statistical policy (OIRA); legislative
development and
legislative reports and testimony processes (LRD);and budget formulation
and budget execution
processes (BRD). OMB shares responsibilities for leadership on some
functions with other
agencies, such as: financial management and budget execution shared by OFFM
and BRD with
Treasury; space management and building construction policy shared with
GSA; personnel policy
shared with OPM.
In our view, management includes not only administrative management
functions but also
program and policy management. It encompasses leadership and oversight of
how agencies
devise, obtain enactment of, implement, manage, evaluate, and then, if
necessary, modify the
statutory programs and policies for which they are responsible, consistent
with the policies of the
incumbent Administration.
Program and policy management is often profoundly influenced by
changes in Administrations. It
is not uncommon for OMB to work closely with an agency to obtain enactment
of and implement
a given policy, and then after a change in Administration, work just as
hard with successor agency
management to implement a different policy. This is the consequence of
being accountable first
and foremost to the President.
This responsibility in no way affects OMB's attention to agency
strategic planning, goal setting,
performance measurement, evaluation, data collection, or policy research.
These functions are
aspects of good government regardless of the program policies of the
Administration in office.
They are essential inputs to the policy and program direction advice OMB
provides. But they do
not dictate the form of final Presidential policy. The RMOs have the lead
OMB responsibility for
program policy and budget development for the agencies they cover, and for
integrating into those
responsibilities attention to how well the agency is managing statutory and
Administration policy.
Government Performance and Results Act
As you know, OMB played an early and important role in the initial
development and design of
GPRA. In one sense, what the Act requires is not new. We have always
asked for, and used,
performance information in budgeting decisions. In our roles as stewards
of the efficient use of
resources, both OMB and Congress have always sought to know what results
programs actually
produce. GPRA gives us a statutory framework for expanding the use of
performance
information into the decision-making process.
The review of the GPRA strategic and annual plans by OMB staff is a
good example of how
budget and management are intrinsically interwoven and interdependent. RMO
staff review the
agency plans and reports, and provide comments. The RMO staff are
especially well equipped to
do so, because these are the same staff that work with the agencies on
their annual budget
submissions so they were keenly aware of operations at the agencies.
Strategic goals and
performance measures are thus not some sort of abstract or independent
exercise; rather, they
exist and have meaning only in the context of real programs.
The FY 2001 budget process provides other examples of how OMB has
increased its use of
performance information in its review of agency budget requests. In June
of last year, I wrote to
agency heads that I expected them to focus attention in their FY 2001
submissions on the extent
to which current programs are achieving the results intended, and new
program initiatives are
structured to provide for clear definition of results and mechanisms for
accountability for
achieving them. Subsequently, in developing the President's FY 2001
Budget, OMB included
relevant performance information for every major budget issue presented
during our Director's
Review.
Priority Management Objectives
Implementing GPRA is a top management objective. For the last two
years, the Administration
has tackled the Government's biggest management challenges by designating
them priority
management objectives (PMOs) and working with the agencies throughout the
year to make real
change. Last year, for example, the Administration's first and foremost
management objective
was to resolve the Year 2000 (Y2K) computer problem. Y2K posed the single
largest technology
management challenge in history. It also is the best evidence of how
budget and management are
effectively interwoven at OMB. We are proud that the federal Government's
transition through
the date change was remarkably trouble-free.
Another PMO last year was Improving management of the decennial
census. The Bureau of the
Census in the Department of Commerce ensured that the necessary support
structure -- which
includes opening data capture centers, regional census offices, and local
census offices, printing
forms, establishing a telephone questionnaire assistance program, printing
language assistance
guides, and recruiting and training temporary census workers -- was
established and tested, and is
ready for operation.
This year's list of PMOs includes twenty-four agency-specific and
government-wide
management issues. In addition to implementing GPRA, let me give you
several examples:
- Improve financial management information. Working with OMB
and Federal agencies, the
Department of the Treasury issued timely government-wide audited
consolidated financial
statements for the third year in a row. These statements were issued as
part of the FY 1999
Financial Report of the United States Government. We also made
substantial progress in
agency financial statements: 19 of 24 were on time (compared with 15 on
time last year) and,
although two agencies slid back, 7 agencies improved to a qualified or to a
"clean" opinion.
So far, 13 of 24 received "clean" opinions -- last year at this time we had
8 -- double the
number of clean opinions received in 1996 and in sharp contrast to 1993
when most agencies
did not issue financial statements. We expect the two remaining financial
statements soon, and
we're hopeful that those will also be "clean."
- Modernize student aid delivery. The Department of
Education's performance-based
organization (PBO) has made significant progress in modernizing the
delivery of student aid
benefits. In order to align operations with its three primary goals
(improved customer
satisfaction, reduced costs and increased employee satisfaction), the PBO
has reorganized into
three customer oriented channels (students, schools and financial
partners). Based on an
assessment of customer needs, the PBO is utilizing new technologies to
expand electronic
access to benefits and revising program oversight practices to reduce
burden on participants.
In order to reduce costs and improve services, the new organization has
developed a detailed
modernization blueprint that defines an efficient information
infrastructure. Implementation of
key elements of this plan are currently underway. Additionally, the
organization has reformed
contracting practices to capitalize on performance based incentives.
Finally, the PBO is
investing in its employees through training and better information
technologies to ensure that
cost and customer goals will be achieved.
- Reengineer the naturalization
process and reducing the citizenship application backlog. The
Department of Justice's Immigration and Naturalization Service is
redesigning its
naturalization process to streamline and automate operations, while
simultaneously reducing a
backlog of more than 1.8 million applications for citizenship. In 1999,
INS completed over
1.2 million applications, and reduced the backlog by more than 500,000
applications. INS
reduced the average processing time between application and naturalization
of qualified
candidates from 27 months in 1998 to 12 months in 1999. In FY 2000, INS'
goal is to reduce
processing time further - to 6 to 9 months for qualified applicants - and
maintain this
processing standard in the future.
Conclusion
OMB's strength is its unique system-wide and government-wide
perspective: its staff draws on
experience in many areas of government to challenge the thinking of other
agencies, which often
cannot see beyond their own programs. None of the major policy issues with
which a modern
president must deal fit into the confines of a single department.
Revitalizing the economy,
designing a national health care system, controlling drugs, protecting the
environment, reforming
education, restructuring welfare, or creating jobs: each of these
issue-areas and dozens of others
require coordinated analysis and action across many executive branch
agencies.
In the real world, resource allocation and management are
fundamentally interdependent. Given
the complex systems that are necessary to address public problems, we must
operate with
considerations of management and budget together, not apart. This reflects
the realization that
these two sets of concerns are in fact intertwined in actual operation.
And as we continue to
work with the agencies to better integrate performance information into
budget and resource
allocations, the twin concerns of management and budget are likely to
become even more
intertwined over time.
I believe OMB continues to serve this Administration and the
American people extremely well.
Mr. Chairman, that concludes my statement. I would be happy to answer any
questions.
Attachment
Laws that have increased OMB workload since
1993
- Government Performance and Results Act (PL 103-62)
- Federal Acquisition Streamlining Act (PL 103-355)
- Government Management and Reform Act (PL 103-356)
- Evaluation of DC report (PL 103-373)
- Unfunded Mandates Reform Act (PL 104-4)
- Paperwork Reduction Act (PL 104-13)
- Federal Acquisition Reform Act (PL 104-106, Division D)
- Information Technology Management Reform Act (Div. E, PL
104-106)
- Regulatory Flexibility Act Amendments (Title II D, PL 104-121)
- Congressional Review of Agency Rulemaking (Title II E, PL
104-121)
- National Technology Transfer and Advancement Act (PL 104-113)
- Single Audit Amendment Act (PL 104-156)
- Federal Financial Management Improvement Act (Title VIII, PL
104-208
- Fiscal Year FY 1998 Defense Authorization Act (PL 105-85)
- Government Paperwork Elimination Act (Title XVII, PL 105-277)
- Federal Activities Inventory Reform Act (PL 105-270)
- Submission of an Accounting Statement and Report to Congress on the
Costs and Benefits of
Federal Rules and Paperwork Treasury/General Government (PL 106-58)
- Counterterrorism & Antiterrorism (PL 105-85, Sec. 1051)
- A report on total Federal expenditure of all official international
travel during the previous
fiscal year (Omnibus Consolidated & Emergency Supplemental
Appropriations Act)
- A report providing a final accounting of the finances and operations
of international agencies
abolished under Division G of the Act (Omnibus Consolidated & Emergency
Supplemental
Appropriations Act)
- Grants Management Simplification Act (PL 106-107)
- Submission to Congress of an inventory of Federal grant programs
(Treasury/General
Government Appropriations, PL 106-58)
- An accounting of climate change programs in the FY 2001 Budget
(Consolidated
Appropriation Act, PL 106-113)
- Designation of OMB to Chair the National Commission on Use of Offsets
in Defense Trade,
and submit a report to Congress (Section 1247(d) of FY 2000-01 Foreign
Relations
Authorization Act; PL 106-113)
1. The RMOs are National Security and International
Affairs; General Government and Finance;
Natural Resources, Energy and Science; Health/Personnel; and Education,
Income, Maintenance
and Labor.
2. The statutory offices are the Office of Federal
Financial Management, Office of Information
and Regulatory Affairs, and Office of Federal Procurement Policy.
3. The OMB-wide offices are Administration, Budget
Review, Communications, Economic
Policy, General Counsel, Legislative Affairs, and Legislative Reference.
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