ArchiveNational Partnership for Reinventing Government
(formerly the National Partnership Review)
SAVINGS ASSOCIATED WITH NPR
NPR-related savings total $136.6 billion over a five-year period. Of this amount, $111.8 billion result from specific NPR recommendations. Agencies have saved an additional $24.8 billion as a result of applying reinvention principles to their operations.
The National Performance Review (NPR) made recommendations in 1993 and 1995 that, when implemented, would save approximately $177.4 billion. To date, $111.8 billion of these estimated savings have been ensured through legislative or administrative action.
Table 1 compares NPR's September 1993 savings estimates to the portion of those savings that have accrued to date as a result of changes made and those that will occur in the future if these changes remain in place. It also identifies those savings that may occur in the near future as a result of legislative actions now well under way.
Table 2 compares NPR's September 1995 savings estimates to the portion of those savings that have accrued to date as a result of changes made.
Following is a brief explanation of these savings estimates and how we derived them:
NPR Phase I Savings
1. Streamlining the Bureaucracy Through Reengineering
The Administration is well ahead of schedule in reducing the size of the federal civilian workforce by 272,900 full-time equivalent (FTE) positions between the beginning of the Clinton Administration in January 1993 and the end of FY 1999. Specifically, the Federal Workforce Restructuring Act of 1994 (Public Law 103-226) mandated a civilian workforce reduction of 272,900 FTEs by the end of fiscal year 1999. As of the end of FY 1998, the Administration had reduced the civilian workforce by 365,000 FTE s-92,100 FTEs more than required under the act.3
As a result of the fast pace in FTE cuts, total five-year savings are projected to be $61.1 billion by the end of FY 1999Can increase of $20.7 billion over NPR's 1993 estimate of $40.4 billion. Savings were derived by multiplying the total number of reductions by the average cost to the government for a federal employee for the year(s) following departure from federal service.4 The FY 1998 average cost to the government of each federal employee was estimated to be $50,491.5
2. Reinventing Federal Procurement
The Federal Acquisition Streamlining Act of 1994 (Public Law 103-355), signed into law in October 1994, incorporates many of NPR's recommendations. The Congressional Budget Office did not estimate savings from this legislation, but the Administration estimated a five-year savings of $12.3 billion. For example, the Defense Department identified savings of $4.7 billion in just three programs that it attributes to the passage of this law.6 In early 1996, a second procurement bill, the Federal Acquisition Reform Act of 1996 (contained in Public Law 104-106), was signed into law. Also in 1996, a third procurement reform bill, this time targeted to reforms of federal purchases of information technology, was signed into law (also contained in Public Law 104-106). These additional reforms will help ensure that these savings will be metCif not exceeded.
3. Reengineering Through Information Technology
NPR's 1993 estimated savings included decreases in federal employment due to an increased use of information technology. Because these savings are not easily separable from total savings related to overall agency streamlining, they are reflected above in item 1, Streamlining the Bureaucracy Through Reengineering. Besides these FTE savings, the additional savings due to information technology include those from the implementation of electronic benefits transfer. The Federal Electronic Benefits Task Force estimated savings of about $200 million per year once the system is operational nationwide beginning in 1999. As of September 30, 1997, 44 states had selected vendors, and the average bid prices were lower than expected, thus generating higher than estimated savings. If this trend continues, savings will likely be as much as $230 million per year. Other information technology-related savings include the closure of several large government data processing centers, beginning with $200 million in FY 1999.
4. Reducing Intergovernmental Administrative Costs
NPR originally recommended modifying the Office of Management and Budget (OMB) Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments," to provide a fixed fee-for-service option in lieu of costly reimbursement procedures used to calculate the actual administrative costs of disbursing grants. It was originally estimated that half of the states and localities would adopt this approach, and that savings of up to $700 million a year could be realized. OMB revised Circular A-87 on April 19, 1995, to allow this approach. It is unclear, however, whether the projected cost savings will be realized.
5. Changes in Individual Agencies
Between 1993 and 1997, President Clinton signed 75 laws containing NPR-related actions affecting individual agencies. About half of these included savings, such as the Department of Agriculture's reorganization bill, the Customs Modernization Act, and a wide range of appropriations bills. In addition, agencies have realized billions of dollars in savings through administrative actions they have taken, such as by reengineering internal operations.
Additional savings related to reinvention are also being achieved by agencies beyond those savings claimed in NPR's original report. For example, the Federal Communications Commission began auctioning wireless licenses and has raised $23.0 billion since 1993, the General Services Administration's time out and review of federal construction projects has resulted in savings of $1.2 billion, and the USDA's improved food stamp error reduction effort has saved $600 million. These savings, while included in the recently enacted balanced budget law, are not included in the following tables, which only cover savings specifically recommended in NPR's 1993 and 1995 reports.
Table 1. 1993 Estimates of Savings From NPR Recommendations Compared With Savings Estimates From Actions as of October 1997
CBE = Cannot be estimated at this time; estimates will be developed later.
NPR Phase II Savings: Additional Changes to Individual Agencies
In December 1994, President Clinton asked Vice President Gore to conduct a second review of federal agencies, focusing on whether existing functions could be terminated, privatized, or restructured. These recommendations resulted in cost savings totaling $69.4 billion over the five-year period, FYs 1996-2000. The following table summarizes savings for each major agency.
Table 2. Estimates of Five-Year Savings From New NPR Recommendations:
Notes: Savings are calculated from the current services baseline approach. They include mandatory as well as discretionary savings and revenue increases. Details may not equal totals due to rounding.
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1Savings are calculated using the current services baseline approach. They include mandatory as well as discretionary savings and revenue increases.
2Like NPR's original savings, these savings are calculated using the current services baseline approach and also include mandatory as well as discretionary savings and revenue increases.
3See Executive Office of the President, "Analytical Perspectives," Budget of the United States, Fiscal Year 2000 (Washington, DC: U.S. Government Printing Office), p. 247-250.
4This methodology does not account for severance pay, increases in annuity expenses, or the point in the year at which a person leaves federal service (obviously, savings are greater if a person leaves earlier rather than later in a year). This is why savings are not claimed until the following year. Note that the average employee cost may be lower than the actual salaries of departing personnel, since many of the people leaving are older and more highly paid than the average employee. Using a different methodology, the Congressional Budget Office, in a July 1996 report, concluded that the savings between 1994 and 1999 would be several billion greater than the Administration's estimates. See CBO, Changes in Federal Civilian Employment, p. 9.
5This paper estimates savings as of September 30, 1997, which was $54.8 billion for the streamlining initiative in Table 1. The average government salary in FY 1996, which was used to calculate the savings in 1997, was $47,036.
6Department of Defense, "Defense Acquisition Pilot Programs Forecast Cost/Schedule Savings of Up to 50 Percent From Acquisition Reform," News Release No. 138-96, March 14, 1996.