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Appendix C:
Summary of Savings to Date

Over the past three years, the National Performance Review (NPR) has made a series of recommendations that, when implemented, would save approximately $177.4 billion. To date, savings of about $97.4 billion have been ensured through legislative or administrative action. Another $5.2 billion in savings is contained in legislation pending before Congress.

NPR's original September 7, 1993, report estimated that approximately $108 billion would be saved over the five-year period, fiscal years (FYs) 1995-1999, if its recommendations all were implemented. As of September 1, 1996, about $73.4 billion of these projected savings have been realized, either through administrative actions or enactments by Congress. An additional $1.3 billion in savings are currently pending before Congress, awaiting approval.
NPR offered additional recommendations in September 1995 that, if implemented, would yield additional savings of $69.4 billion over the five-year period, FYs 1996-2000. (1) To date, $24.0 billion of these savings have been locked into place and an additional $3.9 billion are pending in Congress. The remainder are still in process.

Besides acting on recommendations made by NPR, agencies have achieved more than $21.5 billion in additional savings based on reinvention principles; these savings are beyond those proposed in NPR's reports.

Table C-1 compares NPR's September 1993 savings estimates to the 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 C-2 compares NPR's September 1995 savings estimates to the savings that have accrued to date as a result of changes made as well as those that may occur in the near future as a result of current legislative actions.

Following is a brief explanation of these savings estimates and how they were derived:

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 111,900 FTE positions by fiscal year 1995. The Administration, however, has reduced the civilian workforce by 185,000 FTE positions 73,100 positions more than required under the act. The Administration estimates that by FY 1997, nearly 90 percent of the workforce reduction goal will have been achieved.(2)

As a result of the fast pace in FTE cuts, total five-year savings are projected to be $46.4 billion at the end of FY 1999 an increase of $6 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.(3) The Administration calculated the FY 1995 average cost to the government of each federal employee at $42,950.

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. (4) In early 1996, a second procurement bill, the Federal Acquisition Reform Act of 1996 (contained in Public Law 104 106), was signed into law. These additional reforms will help ensure that these savings will be met if 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 was operational nationwide beginning in 1999. To date, 35 states have 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. Estimates will be recalculated in the future based on actual experiences with this approach.

5. Changes in Individual Agencies

During the past three years, President Clinton signed 54 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 (see Appendix E for details). In addition, agencies have realized billions of dollars in savings through administrative actions they have taken, such as recommended 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 $20.3 billion since 1993, and the General Services Administration's time out and review of federal construction projects has resulted in savings of more than $1.2 billion. These savings, while included in the President's balanced budget proposal, are not included in the following tables, which only cover savings specifically recommended in NPR's 1993 and 1995 reports.

Table C-1. 1993 Estimates of Savings From NPR
Recommendations Compared With
Savings Estimates From Actions to Date
(in billions of dollars)

	FY95	FY96	FY97	FY98	FY99	Total
1. Streamlining the Bureaucracy Through Reengineering
Savings estimated in September 1993 report	5.0	5.8	7.4	9.5	12.7	40.4
Savings based on actions to date	4.4*	8.2	9.8	11.5	12.5	46.4
2. Reinventing Federal Procurement
Savings estimated in September 1993 report	0	5.6	5.6	5.6	5.7	22.5
Savings based on actions to date	0.7	2.8	2.8	2.9	3.1	12.3
3. Reengineering Through Information Technology
Savings estimated in September 1993 report	0.1	0.5	1.2	1.6	2.0	5.4
Savings based on actions to date	0	0	0	0	0.4	0.4
4. Reducing Intergovernmental Administrative Costs
Savings estimated in September 1993 report	0.5	0.7	0.7	0.7	0.7	3.3
Savings based on actions to date	0	CBE	CBE	CBE	CBE	CBE
5. Changes in Individual Agencies
Savings estimated in September 1993 report	7.0*	6.2	7.0	7.3	8.9	36.4
Savings based on actions to date	4.3*	3.9	2.0	2.1	2.1	14.4
Savings pending in legislation	0	0	0.4	0.4	0.5	1.3
Total Savings for NPR Phase 1
Savings estimated in September 1993 report	12.6*	18.8	21.9	24.7	30.0	108.0
Savings based on actions to date	9.4*	14.9	14.5	16.4	18.2	73.4
Savings pending in legislation	0	0	0.4	0.4	0.5	1.3

CBE=Cannot be estimated at this time; estimates will be developed later.
*Figures include some FY 1994 savings.
Note: Details may not equal totals due to rounding.

NPR Phase II Savings

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. A number of these savings were incorporated in the President's 1997 budget proposal.

Table C-2. Estimates of Five-Year Savings From New
NPR Recommendations: FY1996-2000
(budget authority, in millions of dollars)

	FY96	FY97	FY98	FY99	FY00	Total
Savings estimated in September 1995 report	4.9	12.4	16.5	15.9	19.8	69.4
Savings based on actions to date	3.0	4.0	4.8	5.7	6.5	24.0
Savings pending in legislation	0.0	0.3	0.7	1.4	1.6	3.9

Note: 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.

(1) Savings are calculated using the current services baseline approach. They include mandatory as well as discretionary savings and revenue increases.

(2) See Executive Office of the President, "Analytical Perspectives," Budget of the United States, Fiscal Year 1997 (Washington, DC: U.S. Government Printing Office), p.180.

(3) This 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 the departing personnel, since many of the people leaving are older and more highly paid than the average employee. A report by the Congressional Budget Office (CBO) estimates higher savings $61 billion from personnel reductions between FYs 1994 1999. See CBO Memorandum, Changes in Federal Civilian Employment, July 1996, p.9

(4) Department 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.

Appendix C: Summary of Savings to Date