Archive
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Document Name: Chapter 1 -- Cutting Red Tape Part II
Date: 09/07/94
Owner: National Performance Review
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Title:Chapter 1 -- Cutting Red Tape Part II
Author: Vice President Albert Gore's National Performance Review
Date:7 September 1993 10:00:00 EST
Content-Type: text/ascii charset=US ASCII
Content-Length: 106599
Managers who find it nearly impossible to hire the people they
need sometimes flaunt the system by hiring people as consultants
at higher rates than those same people would earn as federal
employees. The average manager needs a year to fire an
incompetent employee, even with solid proof. During layoffs,
employees slated to be laid off can "bump" employees with less
seniority, regardless of their abilities or performance--putting
people in jobs they don't understand and never wanted.
Vice
he listened to federal workers at meetings in their agencies. A
supervisor at the Centers for Disease Control complained that it
can take six to eight months and as many as 15 revisions to a job
description in order to get approval for a position he needs to
fill. A secretary from the Justice Department told the Vice
President she was discouraged and overworked in an office where
some secretaries were slacking off--with no system in place to
reward the hard workers and take action against the slackers.
A worker from the Agency for International Development
expressed her frustration at being so narrowly "slotted" in a
particular GS series that she wasn't allowed to apply for a job
in a slightly different GS series --even though she was qualified
for the job. An Air Force lieutenant colonel told the vice
president that her secretary was abandoning government for the
private sector because she was blocked from any more promotions
in her current job series. The loss would be enormous, the
colonel told Gore, because her secretary was her "right-hand
person". One of the Labor Department's regional directors for
unemployment insurance complained that even though he is charged
with running a multimillion a year program, he isn't allowed to
hire a $45,000-a-year program specialist without getting approval
from Washington.
To create an effective federal government, we must reform
virtually the entire personnel system: recruitment, hiring,
classification, promotion, pay, and reward systems. We must make
it easier for federal managers to hire the workers they need, to
reward those who do good work, and to fire those who do not. As
the National Academy of Public Administration concluded in 1993,
"It is not a question of whether the federal government should
change how it manages its human resources. It must change."
Action: OPM will deregulate personnel policy by phasing out the
10,000-page Federal Personnel Manual and all agency implementing
directives.24
We must enable all managers to pursue their missions, freed
from the cumbersome red tape of current personnel rules. The
President should issue a directive phasing out the Federal
Personnel Manual and all agency implementing directives. The
order will require that most personnel management authority be
delegated to agencies' line managers at the lowest level
practical in each agency. It will direct OPM to work with
agencies to determine which FPM chapters, provisions, or
supplements are essential, which are useful, and which are
unnecessary. OPM will then replace the FPM and agency directives
with manuals tailored to user needs, automated personnel
processes, and electronic decision support systems.
Once some of the paperwork burden is eased, our next
priority must be to give agency managers more control over who
comes to work for them. To accomplish this, we propose to
radically decentralize the government's hiring process.
Action: Give all departments and agencies authority to conduct
their own recruiting and examining for all positions, and abolish
all central registers and standard application forms.25
We will ask Congress to pass legislation decentralizing
authority over recruitment, hiring, and promotion. Under the
present system, OPM controls the examination system for external
candidates and recruits and screens candidates for positions that
are common to all agencies, with agencies then hiring from among
candidates presented by OPM. Under the new system, OPM could
offer to screen candidates for agencies, but agencies need not
accept OPM's offer.
Under this decentralized system, agencies will also be
allowed to make their own decisions about when to hire candidates
directly--without examinations or rankings - -under guidelines to
be drafted by OPM. Agencies able to do so should also be
permitted to conduct their own background investigations of
potential candidates. We will make sure the system is fair and
easy for job applicants to use, however, by making information
about federal job openings available in one place. In place of a
central register, OPM will create a government-wide, employment
information system that allows the public to go to one place for
information about all job opportunities in the federal
government.
**************************
First, we must cut the waste and make government operations more
responsive to the American people. It is time to shift from
top-down bureaucracy to entrepreneurial government that generates
change from the bottom up. We must reward the people and ideas
that work and get rid of those that don't.
President Bill Clinton
February 17, 1993
**************************
Next, we must change the classification system, introduced
in 1949 to create fairness across agencies but now widely
regarded as time-consuming, expensive, cumbersome, and intensely
frustrating--for both workers and managers.
After an exhaustive 1991 study of the system, the National
Academy of Public Administration recommended a complete overhaul
of the system. Classification standards, NAPA argued, are "too
complex, inflexible, out-of-date, and inaccurate," creating
"rigid job hierarchies that cannot change with organizational
structure." They drive some of the best employees out of their
fields of expertise and into management positions, for higher
pay. And managers seeking to create new positions often fight the
system for months to get them classified and filled.26
There is strong evidence that agencies given authority to do
these things themselves can do better. Using demonstration
authority under the 1978 Civil Service Reform Act, several
agencies have experimented with simpler systems. In one
experiment, at the Naval Weapons Center in China Lake,
California, and the Naval Oceans Systems Center, in San Diego,
the system was simplified to a few career paths and only
four-to-six broad pay bands within each path. Known as the "China
Lake Experiment," it solved many of the problems faced by the two
naval facilities. It:
-- classified all jobs in just five career
paths--professional, technical, specialist, administrative and
clerical;
-- folded all GS (General Schedule) grades into four, five,
or six pay bands within each career path;
-- allowed managers to pay market salaries to recruit
people,
to increase the pay of outstanding employees without having to
reclassify them, and to give performance-based bonuses and salary
increases;
-- automatically moved employees with repeated marginal
performance evaluations down to the next pay band; and
-- limited bumping to one career path, and based it
primarily
on performance ratings, not seniority.
Another demonstration at McClellan Air Force Base, in
Sacramento, California, involved "gainsharing"--allowing
employees to pocket some of the savings they achieved through
cooperative labor-management efforts to cut costs. It generated
$5 million in productivity savings in four years and saw improved
employee performance; fewer grievances; less sick leave and
absenteeism; and improved labor-management relations.
A third demonstration at more than 200 Agriculture
Department sites tested a streamlined, agency-based recruiting
and hiring system that replaced OPM's register process. Under
OPM's system, candidates are arrayed and scored based on OPM's
written tests or other examinations. In USDA's demonstration,
however, the agency grouped candidates by its own criteria, such
as education, experience or ability, then picked from those
candidates. A candidate might qualify for a job, for example,
with a 2.7 college grade point average. Agencies could create
their own recruitment incentives, do their own hiring, and extend
the probationary period for some new hires. Managers were far
more satisfied with this system than the existing one.
Action: Dramatically simplify the current classification system,
to give agencies greater flexibility in how they classify and pay
their employees.27
We will urge Congress to remove all the 1940s-era
grade-level descriptions from the law and adopt an approach that
is more modern. In addition, Congress should allow agencies to
move from the General Schedule system to a broad-band system. OPM
should develop such standard banding patterns, and agencies
should be free to adopt one without seeking OPM's approval.
When agency proposals do not fit under a standard pattern,
OPM should approve them as five-year demonstration projects that
would be converted to permanent "alternative systems" if
successful. OPM should establish criteria for broad-banding
demonstration projects, and agencies' projects meeting those
criteria should receive automatic approval.
These changes would give agencies greater flexibility to
hire, retain, and promote the best people they find. They would
help agencies flatten their hierarchies and promote high
achievers without having to make them supervisors. They would
eliminate much valuable time now lost to battles between managers
seeking to promote or reward employees and personnel specialists
administering a classification system with rigid limits. Finally,
they would remove OPM from its role as "classification police."
To accompany agencies' new flexibility on classification and pay,
they must also be given authority to set standards for their own
workers and to reward those who do well.
Action: Agencies should be allowed to design their own
performance management and reward systems, with the objective of
improving the performance of individuals and organizations. 28
The current government performance appraisal process is
frequently criticized as a meaningless exercise in which most
federal employees are given above-average ratings. We believe
that agencies will be able to develop performance appraisals that
are more meaningful to their employees. If they succeed, these
new approaches will send a message that job performance is
directly linked to workers' chances for promotion and higher pay.
Current systems to assess on-the-job performance were
designed to serve multiple purposes: to enhance performance, to
authorize higher pay for high performers, to retain high
performers, and to promote staff development. Not surprisingly,
they serve none of these purposes well.
Performance management programs should have a single goal:
to improve the performance of individuals and organizations.
Agencies should be allowed to develop programs that meet their
needs and reflect their cultures, including incentive programs,
gainsharing programs, and awards that link pay and performance.
If agencies--in cooperation with employees--design their own
systems, managers and employees alike should feel more ownership
of them.
Finally, if performance measures are to be taken seriously,
managers must have authority to fire workers who do not measure
up. It is possible to fire a poor worker in the federal
government, but it takes far too long. We believe this undermines
good management and diminishes workers' incentives to improve.
Action: Reduce by half the time required to terminate federal
managers and employees for cause and improve the system for
dealing with poor performers.29
Agencies will reduce the time for terminating employees for
cause by half. For example, agencies could halve the length of
time during which managers and employees with unsatisfactory
performance ratings are allowed to demonstrate improved
performance.
To support this effort, we will ask OPM to draft and
Congress to pass legislation to change the required time for
notice of termination from 30 to 15 days. This legislation should
also require the waiting period for a within-grade increase to be
extended by the amount of time an employee's performance does not
meet expectations. In other words, only the time that an employee
is doing satisfactory work should be credited toward the required
waiting period for a pay raise.
Step 3: Streamlining Procurement
Every year, Washington spends about $200 billion buying
goods and services. That's $800 per American. With a price tag
like that, taxpayers have a right t Our system relies on rigid
rules and procedures, extensive paperwork, detailed design
specifications, and multiple inspections and audits. It is an
extraordinary example of bureaucratic red tape.ore pages of
agency-specific supplements.
These numbers document what most federal workers and many
taxpayers already know: Our system relies on rigid rules and
procedures, extensive paperwork, detailed design specifications,
and multiple inspections and audits. It is an extraordinary
example of bureaucratic red tape.
Like the budget and personnel systems, the procurement
system was designed with the best of intentions. To prevent
profiteering and fraud, it includes rigid safeguards. To take
advantage of bulk purchasing, it is highly centralized. But the
government wrote its procurement rules when retailing was highly
stratified, with many markups by intermediaries. Today the game
has changed considerably. Retail giants like Wal-Mart, Office
Depot and Price Club are vertically integrated, eliminating the
markups of intermediaries. Federal managers can buy 90 percent of
what they need over the phone, from mail-order discounters. Bulk
purchasing still has its advantages, but it is not always
necessary to get the best price.
Our overly centralized purchasing system takes decisions
away from managers who know what they need, and allows
strangers--often thousands of miles away--to make purchasing
decisions. The frequent result: Procurement officers, who make
their own decisions about what to buy and how soon to buy it,
purchase low-quality items, or even the wrong ones, that arrive
too late.
This "secondhand" approach to purchasing creates another
problem. When line managers' needs and experiences are not
understood by the procurement officer, the government is unable
to make decisions that reward good vendors and punish bad ones.
As a result, vendors often "game" contracts--exploiting loopholes
to require expensive changes. For example, in a major government
contract for a computerized data network a few years ago, a
vendor used slight underestimates of system demand in the
contract specifications as an excuse to charge exorbitant prices
for system upgrades. In the private sector, a manager could have
used the incentive of future contracts to prevent such gaming; in
the government, there is no such leverage.
The symptoms of what's wrong are apparent, too, from stories
about small purchases.
One story that Vice President Gore has repeated in
Washington over the past six months concerns steam traps. Steam
traps remove condensation from steam lines in heating systems.
Each costs about $100. But when one breaks, it leaks as much as
$50 of steam a week. Obviously, a leaking steam trap should be
replaced quickly.
When plumbers at the Sacramento Army Depot found leaking
traps, however, their manager followed standard operating
procedure. He called the procurement office, where an officer,
who knew nothing about steam traps, followed common practice. He
waited for enough orders to buy in bulk, saving the government
about $10 per trap. There was no rule requiring him to wait--
just a powerful tradition. So the Sacramento Depot didn't get new
steam traps for a year. In the meantime, each of their leaking
traps spewed $2,500 of steam. To save $10, the central
procurement system wasted $2,500.
As the Vice President visited government agencies, he heard
many more stories of wasteful spending--most of them produced by
the very rules we have designed to prevent it. Take the case of
government travel.
Because GSA selects a "contract airline" for each route,
federal employees have few choices. If Northwest has the
Washington-Tampa route, for instance, federal employees get
routed through Detroit. If Northwest has the Boston-Washington
route, employees have to use Northwest--even if USAir has more
frequent flights at more convenient times. Workers told the Vice
President of being routed through thousands of miles out of their
way even if it cost them a day's worth of time--and a day's worth
of taxpayers' money. Others told of being unable to take
advantage of cheap "special fares" because they were not
"government fares." And one worker showed the National
Performance Review a memo from the Resolution Trust Corporation
explaining that RTC workers would not be reimbursed for any
travel expenses unless they signed their travel vouchers in blue
ink!
*****************************
"Ash receivers, tobacco (desk type)..."
Our federal procurement system leaves little to chance.
When the General Services Administration wanted to buy ashtrays,
it has some very specific ideas how those ashtrays--better known
to GSA as "ash receivers, tobacco (desk type)," should be
constructed.
In March 1993, the GSA outlined, in nine full pages of
specifications and drawings, the precise dimensions, color,
polish and markings required for simple glass ashtrays that would
pass U.S. government standards.
A Type I, glass, square, 41/2 inch (114.3 mm) ash receiver
must include several features: "A minimum of four cigarette
rests, spaced equidistant around the periphery and aimed at the
center of the receiver, molded into the top. The cigarette rests
shall be sloped toward the center of the ash receiver. The rests
shall be parallel to the outside top edge of the receiver or in
each corner, at the manufacturer's option. All surfaces shall be
smooth."
Government ashtrays must be sturdy too. To guard against the
purchase of defective ash receivers, the GSA required that all
ashtrays be tested. "The test shall be made by placing the
specimen on its base upon a solid support (a 1 3/4 inch, 44.5mm
maple plank), placing a steel center punch (point ground to a
60-degree included angle) in contact with the center of the
inside surface of the bottom and striking with a hammer in
successive blows of increasing severity until breakage occurs."
Then, according to paragraph 4.5.2., "The specimen should break
into a small number of irregular shaped pieces not greater in
number than 35, and it must not dice." What does "dice" mean? The
paragraph goes on to explain: "Any piece 1/4 inch (6.4 mm) or
more on any three of its adjacent edges (excluding the thickness
dimension) shall be included in the number counted. Smaller
fragments shall not be counted."
Regulation AA-A-710E, (superseding Regulation AA-A-710D).
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Beyond travel, at every federal agency the Vice President
visited, employees told stories about not getting supplies and
equipment they needed, getting them late, or watching the
government spend too much for them. At the Department of Health
and Human Services, a worker told the Vice President that no
matter how much his office needed a FAX machine--and how much
time the machine would save workers--the purchase wouldn't be
possible "without the signature of everyone in this room." An
engineer from the National Institutes of Health added that in his
agency, it takes more than a year to buy a computer, not a
mainframe, but a personal computer! At the Transportation
Department, a hearing-impaired employee told the Vice President
of watching with dismay as her agency spent $600 to buy her a
Telephone Device for the Deaf (TDD), when she knew she could buy
one off the shelf for $300.
Anecdotes like these were documented in January 1993, when
the Office of Federal Procurement Policy and the U.S. Merit
Systems Protection Board collaborated on a survey of the
procurement system's customers: federal managers. More than 1,000
responded. Their message: The system is not achieving what its
customers want. It ignores its customers' needs, pays higher
prices than necessary, is filled with peripheral objectives, and
assumes that line managers cannot be trusted. A study by the
Center for Strategic and International Studies added several
other conclusions. The procurement system adds costs without
adding value; it impedes government's access to state-of-the-art
commercial technology; and its complexity forces businesses to
alter standard procedures and raise prices when dealing with the
government.31
There is little disagreement that federal procurement must
be reconfigured. We must radically decentralize authority to line
managers, letting them buy much of what they need. We must
radically simplify procurement regulations and processes. We
must empower the system's customers by ending most government
service monopolies, including those of the General Services
Administration. As we detailed in Chapter 1, we must make the
system competitive by allowing managers to use any procurement
office that meets their needs.
As we take these actions, we must embrace these fundamental
principles: integrity, accountability, professionalism, openness,
competition--and value.
Action: Simplify the procurement process by rewriting federal
regulations--shifting from rigid rules to guiding principles.32
The Federal Acquisition Regulation (FAR), the government's
principal set of procurement regulations, contains too many
rules. Rules are changed too often and are so process-oriented
that they minimize discretion and stifle innovation, according to
a Merit Systems Protection Board survey.33 As one frustrated
manager noted, the FAR does not even clearly state the main goal
of procurement policy: "Is it to avoid waste, fraud, and abuse?
Is it to implement a social-economic agenda? Is it to procure the
government's requirements at a fair and reasonable cost?"
This administration will rewrite the 1,600-page FAR, the
2,900 pages of agency supplements that accompany it, and
Executive Order 12352, which governs federal procurement. The new
regulations will:
-- shift from rigid rules to guiding principles;
-- promote decision making at the lowest possible level;
-- end unnecessary regulatory requirements;
-- foster competitiveness and commercial practices;
-- shift to a new emphasis on choosing "best value"
products;
-- facilitate innovative contracting approaches; and
-- recommend acquisition methods that reflect information
technology's short life cycle.
-- develop a more effective process to listen to its
customers: line managers, government procurement officers and
vendors who do business with the government.
Action: The GSA will significantly increase its delegated
authority to federal agencies for the purchase of information
technology, including hardware, software, and services.34
In 1965, when "automated data processing" meant large,
mainframe computers --often developed specifically for one
customer--Congress passed the Brooks Act. It directed GSA to
purchase, lease, and maintain such equipment for the entire
federal government. The Act also gave GSA authority to delegate
to agencies these same authorities. In 1986, Congress extended
the requirement to software and support services.
Today, with most computer equipment commercially available
in highly competitive markets, the advantages of centralized
purchasing have faded and the disadvantages grown. The federal
government takes, on average, more than four years to buy major
information technology systems; the private sector takes 13
months. Due to rapidly changing technology, the government often
buys computers that are state-of-the-art when the purchase
process begins and when prices are negotiated, but which are
almost obsolete when computers are delivered. The phenomenon is
what one observer calls "getting a 286 at a 486 price."
Currently, the GSA authorizes agencies to make individual
purchases up to $2.5 million in equipment and services on their
own. The GSA Administrator will raise authorization levels to $50
million, $20 million and $5 million. These levels will be
calculated according to each agency's size, the size of its
information technology budget, and its management record. In some
cases, GSA may grant an agency greater or unlimited delegation.
GSA will also waive requirements that agencies justify their
decisions to buy information technology items under $500,000 that
are mass-produced and offered on the open market.
Action: GSA will simplify the procurement process by allowing
agencies to buy where they want, and testing a fully "electronic
marketplace." 35
The government buys everything from forklifts and snowplows
to flak jackets and test tubes through a system called the
Multiple Award Schedule program, which includes more than one
million separate items.
Under this program, GSA negotiates and awards contracts to
multiple vendors of comparable products and services, at varying
prices. GSA then creates a "supply schedule" for a particular
good or service, identifying all vendors that have won contracts
as well as the negotiated prices. Of GSA's 154 schedules,
civilian agencies must must buy from 117. In ordering from
schedules, agencies still must comply--in addition- -with the
Federal Acquisition Regulation, Federal Information Resources
Management Regulation, and Federal Property Management
Regulation.
In most cases, we should not limit managers to items on the
supply schedules. If they can find the same or a comparable
product for less, they should be free to buy it. Mandatory
schedules should apply only when required by law, to ensure
standardization, or when agencies voluntarily create team pools
that buy in bulk for lower prices. In addition, GSA should revise
regulations that currently limit agencies from buying more than
$300,000 of information technology items on supply schedules,
raise them to $500,000 and provide a higher limit for individual
items costing more than $500,000.
To make supply schedules more user-friendly, GSA should
conduct several pilot tests. One should test an "electronic
marketplace," in which GSA would not negotiate prices. Instead,
suppliers would list products and prices electronically, and
agencies would electronically order the lowest-priced item that
met their needs. Suppliers, at any time, would be able to add new
products and change prices. Such a pilot would test whether
visible price competition will cut prices and give line managers
easier access to rapidly changing products.
Action: Allow agencies to make purchases under $100,000 through
simplified purchase procedures.36
Under current law, agencies are allowed to make purchases of
less than $25,000 on their own, using simple procurement
procedures. These small purchases, on average, take less than a
month to complete; purchases of more than $25,000 normally take
more than three months. If Congress raised the threshold to
$100,000, agencies could use simplified procedures on another
45,550 procurements--with a total value of $2.5 billion.
Congress should keep current rules that reserve small
purchases for small businesses and should improve access to
information on procurements of more than $25,000. To ensure that
small business receives adequate notice of possible procurements,
the federal government, with OMB as the lead agency, should adopt
an electronic notification system.
Action: Rely more on the commercial marketplace.37
The government can save enormous amounts of money by buying
more commercial products instead of requiring products to be
designed to government-unique specifications. Our government buys
such items as integrated circuits, pillows, and oil pans,
designed to government specifications--even when there are
equally good commercial products available.
We recommend that all agency heads be instructed to review
and revise internal purchasing procedures and rules to allow
their agencies to buy commercial products whenever practical and
to take advantage of market conditions. We will ask the Office of
Management and Budget to draft a new federal commercial code with
commercial-style procedures, and then ask Congress to adopt the
new code and remove impediments to this money-saving approach to
procurement.
Action: Bring federal procurement laws up to date.38
There are four federal labor laws implemented through the
federal procurement process. Each was passed because of valid and
well founded concerns about the welfare of working Americans. But
as part of our effort to make the government's procurement
process work more efficiently, we must consider whether those
laws are still necessary- -and whether the burdens they impose on
the procurement system are reasonable ones.
The Davis-Bacon Act of 1931 requires that each repair or
construction contract in excess of $2,000 for work on a public
building specify that the prevailing area minimum wage be paid to
workers on that contract. The law was passed because Congress
feared that without it, federal contracts awarded through a
sealed bid process could undermine local prevailing wages. While
Congress shifted the government's focus to an open bidding
process in 1984, we acknowledge that concerns about the impact of
government contracts on prevailing wages are still valid.
Recognizing that the original $2,000 threshold in the law
was set more than 60 years ago, we recommend that Congress modify
the Davis-Bacon Act by raising the threshold for compliance to
$100,000, a change similar to that proposed by Senator Kennedy in
March 1993.
The Service Contract Act of 1965 has purposes similar to
those of the Davis-Bacon Act, and applies to service contracts in
excess of $2,500. It requires contractors to pay the minimum
prevailing wage and specified fringe benefits. To keep
contractors from "locking in" their wage agreements at low
levels, the law imposes a five-year limit on service contracts
and requires new wage determinations every two years.
We suggest that the five-year limit is inconsistent with the
government's interest in entering into long-range contracts. We
will urge Congress to increase the limit up to 10 years while
retaining the two-year wage adjustment requirement.
The Copeland Anti-Kickback Act of 1934 regulates payroll
deductions on federal and federally assisted construction. The
law prohibits anyone from inducing employees to give up any part
of their compensation and requires contractors to submit weekly
statements of compliance and detailed weekly payroll reports to
the Labor Department.
We suggest that such detailed reporting is an unreasonable
burden on federal contractors, and we will urge Congress to
modify the act. We suggest eliminating requirements for weekly
reports and requiring contractors instead to certify with each
payment that they have complied with the law. Contractors would
also be required to keep records to prove their compliance for
three years.
The Walsh-Healey Public Contracts Act requires contractors
that supply materials to the federal government through contracts
in excess of $10,000 to pay all workers the federal minimum wage,
to agree that no employee is required to work more than 40 hours
a week, and to avoid using convict labor or workers under the age
of 16.
Over time, each of the requirements of the Walsh-Healey
Act--with the exception of the provision relating to convict
labor--has been superseded by other federal legislation. We
therefore urge Congress to remove the burden of certifying
compliance with redundant laws from federal contractors. Within
30 days of the repeal of that law, the President should amend
Executive Order 11755 to include the convict labor provisions of
the Walsh-Healey Act.
Step 4: --Reorienting The Inspectors General
Responding to growing concern about waste, fraud, and abuse
in government, Congress passed the Inspector General Act in 1978.
This act and subsequent amendments created the 60 Inspectors
General offices that today employ 15,000 federal workers,
including postal inspectors.
The act was broad in scope, requiring IGs to promote the
efficiency, economy and integrity of federal programs with
auditing program expenditures, and investigating possible fraud
and abuse.
The inspectors general, who are independent of the agencies
in which they operate, report to Congress twice a year. These
reports detail how much money IG audits have recovered or put to
better use and the number of convictions resulting from their
criminal investigations. The IGs also send the audit reports to
the heads of their agencies and forward investigations for
criminal prosecution to the U.S. attorney general. The Inspector
General Act's two central mandates, combined with the last two
administrations' eagerness to highlight "waste, fraud and abuse,"
have shaped the evolution of the IG offices. The standard by
which they are evaluated is finding error or fraud: The more
frequently they find mistakes, the more successful they are
judged to be. As a result, the IG staffs often develop
adversarial relations with agency managers--who, in trying to do
things better, may break rules.
At virtually every agency he visited, the Vice President
heard federal employees complain that the IGs' basic approach
inhibits innovation and risk taking. Heavy-handed
enforcement--with the IG watchfulness compelling employees to
follow every rule, document every decision, and fill out every
form--has had a negative effect in some agencies.
Action: Broaden the focus of the Inspectors General from strict
compliance auditing to evaluating management control systems.39
In a government focused on results, the Inspectors General
can play a key role not only in controlling managers' behavior by
monitoring it, but in helping to improve it. Today, they audit
for strict compliance with rules and regulations. In the future,
they should help managers evaluate their management control
systems. Today, they look for "waste, fraud, and abuse." In the
future, they should also help improve systems to prevent waste,
fraud and abuse, and ensure efficient, effective service.
Many IGs have already begun to help their agencies this way.
At the Justice Department, for example some offices were
inefficient in completing background and security clearances. The
Inspector General's office examined the problem, then recommended
setting up a central database to manage the clearance process and
warn officials automatically when they are about to miss
deadlines for completing investigations. Similarly, the Inspector
General of the Department of Health and Human Services has long
been engaged in program evaluations to help agencies uncover
inefficiencies. While the Inspector General's office retains the
right to conduct formal audits and criminal investigations, it
also uses its role as a neutral observer to collaborate on making
programs work better.
Congress need pass no legislation to make this happen.
Promoting the efficiency and integrity of government programs was
part of the IGs' original mandate. But such change will require a
cultural revolution within many IG offices, and we recommend two
steps to help guide such a change. First-line managers, who are
the IG front-line customers, should be surveyed periodically to
see whether they believe the IGs are helping them improve
performance. Second, criteria should be established for judging
IG performance.
Step 5: Eliminating Regulatory Overkill
Reinventing our budget, personnel and procurement systems
will strip away much--but not all--of the red tape that makes our
governing processes so cumbersome. Thousands upon thousands of
outdated, overlapping regulations remain in place. These
regulations affect the people inside government and those who
deal with it from the outside. Inside government, we have no
precise measurement of how much regulation costs or how much time
it steals from productive work. But there's no disagreement that
the costs are enormous. And on the matter of external regulation,
a 1993 study concluded that the cost to the private sector of
complying with regulations is at least $430 billion annually-- 9
percent of our gross domestic product! 40
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We can lick gravity, but sometimes the paperwork is overwhelming.
Wernher von Braun
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We must clear the thicket of regulation by undertaking a
thorough review of the regulations already in place and
redesigning regulatory processes to end the proliferation of
unnecessary and unproductive rules. We have worked closely with
administration officials responsible for developing a new
approach to regulatory review, and incorporated that work into
the following action.
Action: The President should issue a directive requiring all
federal agencies to review internal government regulations over
the next 3 years, with a goal of eliminating 50 percent of those
regulations.41
Can regulations be eliminated? The answer is yes, as
evidenced by promising experiments in several federal agencies.
In the Management Efficiency Pilot Program (MEPP) in five of the
Department of Veterans' Affairs regional benefits offices, the
offices were encouraged to do away with red tape.42 At several
benefits offices, 895 of 1,969 regulations were dropped, saving
the staff more than 3,000 hours and $640,000 in one year. And
productivity at MEPP centers increased by 35 percent in one year
(1988-89), more than double the increase at other centers. A
similar effort by five VA medical centers redirected $13.1
million to much-needed funding for acute care centers.
An even more sweeping example of a fresh start in internal
regulations comes from the Air Force, where the chief of staff
has established a servicewide program to streamline the
organization and cut out bureaucracy. Under the Policy Review
Initiative begun in 1992, the Air Force is replacing 1,510
regulations with 165 policy directives and 750 sets of
instructions. This effort will cut 55,000 pages of intermingled
policy and procedure to about 18,000 pages clearly separating
policy from procedure. This deregulation effort, managed by a
staff of 10, is expected to be completed in fiscal year 1994.
Over the next 3 years, each federal agency will undertake a
thorough and systematic review of its internal regulations.
Agencies may choose their own strategies for reaching the goal of
reducing internal regulations by 50 percent.
Action: Improve inter-agency coordination of regulations to
reduce unnecessary regulation and red tape.43
In 1981, frustrated at the inconsistencies and duplication
among federal regulatory efforts and their burden on government
and the private sector, President Reagan required the Office of
Management and Budget specifically, the Office of Information and
Regulatory Affairs (OIRA) to review all regulations proposed by
executive agencies.
With a limited staff, many of whom are also involved with
paperwork reduction issues, the review process for proposed
regulations can be lengthy. And while a lengthy review process
may be appropriate for significant rules, it is a waste of time
for others. In early 1993, Vice President Gore convened an
informal working group to recommend changes in the regulatory
review process. The working group and the National Performance
Review coordinated their efforts closely. We endorse the
recommendations of the working group and the President's
executive order, which will implement those changes and
streamline the regulatory review process.
The order will enhance the planning process and encourage
agencies to consult with the public early in that process. In
addition, in an effort to coordinate the regulatory actions of
all executive agencies, the Vice President will meet annually
with agency heads, and the Administrator of OIRA will hold
quarterly meetings with representatives of executive agencies and
the administration.
Improving the regulatory review process also means being
selective in reviewing regulations. Through this order, the
President will instruct OIRA to review only significant
regulations--not, as under the current process, all regulations.
The new review process, which will take into account a broad
range of costs and benefits, will be more useful and realistic.
To ease the adverse effects of regulation on citizens,
businesses, and the economy as a whole, the executive order also
will require an ongoing review of existing regulations. Agencies
will identify regulations that are cumulative, obsolete, or
inconsistent, and, where appropriate, eliminate or modify them.
They will also identify legislative mandates that require them to
impose unnecessary or outdated regulations.
Action: Establish a process by which agencies can more widely
obtain waivers from regulations.44
With the advent of the Government Performance and Results
Act, which Congress passed in July 1993, we have begun to
acknowledge the important principle of "flexibility in return for
accountability."