OMBlog

  • Health Care Reform Check-Up

    Today, the House Budget Committee is holding a hearing about the fiscal impacts of the Affordable Care Act (ACA), which the President signed into law last year and has already given Americans new freedoms and protections. It’s important to get the facts straight about what impact the Affordable Care Act has on our deficits and long-range fiscal situation.

    Rising health care costs are the biggest driver of our long-term deficits, and getting them under control is crucial if we want to grow the economy, create jobs, compete in the world economy and win the future. The Affordable Care Act helps us achieve that goal.

    As the Congressional Budget Office (CBO) made clear in a letter sent earlier this month to the Speaker of the House, repealing the Affordable Care Act would increase the budget deficit by hundreds of billions of dollars over the next decade. The CBO letter notes that “over the 2012–2021 period, the effect of H.R. 2 [the repeal of ACA] on federal deficits … is likely to be an increase in the vicinity of $230 billion.”  And in the decade after that, we will save more than $1 trillion thanks to the new law.

  • Regulatory Strategy

    OMB plays a central role in implementing a President’s regulatory agenda. Through our Office of Information and Regulatory Affairs (OIRA), OMB acts as a clearinghouse for the most significant regulations and rules, making sure that policies are consistent across the federal government and with the agenda of the President.  OMB also ensures that analysis of rules is done properly, according to one set of standards.

    With that in mind, I want to point readers to the op-ed that President Obama wrote in today’s Wall Street Journal, detailing his approach to regulation and the strategy that has guided his Administration from the start.  As the President wrote, our aim is to “strike the right balance” between what is needed to protect the safety and health of all Americans, and what we need to foster economic growth, job creation, and competitiveness. The Administration has followed this balanced approach since taking office, and this executive order formally details our basic operating principles.

    With this EO, there should be no confusion about what guides this Administration when crafting regulations. The basic tenets are: to consider costs and how best to reduce burdens for American businesses and consumers; to expand opportunities for public participation and stakeholder involvement; to seek the most flexible, least burdensome approaches; to ensure that regulations are scientifically-driven; and to review old regulations so that rules which are no longer needed can be modified or withdrawn. This smarter approach builds on the best practices of the past, while adapting to serious economic challenges the country faces today.

  • Celebrating MLK Day with City Year

    Today, I am joining hundreds of volunteers at Intermediate School 292 in Brooklyn as part of City Year’s celebration of the Martin Luther King, Jr. holiday. I look forward to seeing the hundreds of energetic and idealistic City Year corps members who are always an inspiration.

    I helped to launch City Year New York after September 11 as part of our City's healing, and was honored to chair its board. MLK day at City Year always brings together hundreds of people eager and excited to give something of themselves, not just to honor Dr. King, but also to improve their community.

    Advancing the idea that MLK day should be a "day on" doing service rather than just another "day off", more than 20 members of the Cabinet are at schools, homeless shelters, and other community service organizations pitching in.

  • A New Deputy Director

    Earlier today, the President announced that he intends to nominate Heather Higginbottom as the Deputy Director of OMB.

    Many of us at OMB know Heather from her work as Deputy Director of the Domestic Policy Council. In that position, she has played an integral role on issues ranging from education to poverty to food safety. Before she joined the Administration, Heather was the Policy Director for Obama for America. She came to that job after eight years working in the US Senate for Senator John Kerry, culminating in serving as his Legislative Director. Heather also founded and served as Executive Director of the American Security Project, a national security think tank. A Binghamton, New York native, Heather holds a bachelors degree in Political Science from the University of Rochester and a Masters degree in Public Policy from the George Washington University.

    Heather has a passion for her work and has demonstrated throughout her career a dedication to sound public policy that makes a difference in people’s lives.

    Heather is replacing a trusted colleague and a good friend, Rob Nabors. Rob’s willingness to take a leave from his new job in the West Wing to help steward OMB through this recent period of transition demonstrates the depth of his commitment to what OMB does and to the institution itself, and his own commitment to serve. I am personally grateful to him for once again being part of my team as we produce the 2012 Budget.

    I am confident that Heather will be an outstanding addition to the OMB team, and I look forward to her joining OMB as soon as possible.

     Jack Lew is the Director of the Office of Management and Budget

  • New Year, New Estimate, Same Result

    The new year starts with a renewed focus on the Affordable Care Act (ACA), which the President signed into law last year and has already delivered a host of consumer protections and benefits to millions of Americans.

    Yesterday, the House Republican leadership introduced a bill to repeal the ACA. Today, the Congressional Budget Office (CBO) sent a letter to the Speaker of the House giving its assessment of the budgetary effects of a repeal: it would increase the budget deficit by hundreds of billions of dollars over the next decade. The CBO letter notes that “over the 2012–2021 period, the effect of H.R. 2 [the repeal of ACA] on federal deficits … is likely to be an increase in the vicinity of $230 billion.”  This result is not surprising since CBO scored the ACA as reducing the deficit by more than $100 billion through 2019 and by more than $1 trillion in the decade after that.

    To be fair, CBO is clear that this is a preliminary estimate that does not take into account a host of changes in the economy, technical matters, and the effects of the implementation to date. But even after a more comprehensive analysis, we should expect the same outcome: the deficit would increase substantially if ACA were repealed. As CBO Director Elmendorf wrote in his blog today, “those developments will probably not have a major effect on the overall budgetary impact of repealing the legislation.”

    For those in both parties who care about the deficit and our future fiscal course, the repeal of the ACA should concern them deeply. Rising health care costs are the biggest driver of our long-term deficits, and getting them under control is crucial for the fiscal health of the nation and to keep our economy growing, creating jobs, and competing in the world economy. Beyond that, we need to keep in mind that repealing the ACA also would roll back what the bill already has done to help millions of Americans -- from the families benefitting from the end to lifetime dollar limits on essential benefits to the young people now able to join their parents’ policies and the seniors who now are able to afford their prescription drugs. And repeal would deny an estimated 32 million American citizens health insurance in years to come.

    Jack Lew is the Director of the Office of Management and Budget

  • More on USASpending

    A cornerstone of the President’s Accountable Government Initiative and Open Government Initiative is the belief that transparency leads to more oversight, less waste, and more accountability, resulting in a more effective government. For too long, many government resources have been difficult to navigate or inaccessible.

    This fall, we have taken another important step toward making government more open and accountable to the American people with a major addition to the type of data available on USASpending.gov.

    For the first time on USAspending.gov, you will be able to track payments made by federal agencies not only to direct recipients, but also those made by those recipients to other entities – such as by a prime contractor to a sub-contractor.   Leveraging the lessons learned from previous transparency efforts, such as those associated with the American Recovery and Reinvestment Act, we have worked hard with stakeholders to reduce the burden of reporting, while ensuring that the information provided to the public is useful.

    This was not an easy task.

    The prior Administration made little headway on this issue, so the team at OMB already was running behind the schedule for implementation set by the Federal Funding Accountability and Transparency Act (Transparency Act).   In addition, they needed to change regulations and reporting guidance; develop, test, and deploy a new IT solution to capture data; and undertake extensive outreach to contractors and grantees so that they would be ready for the change.

    Last month, sub-award information on contracts began to appear on USAspending.gov for the first time.  And beginning last week, USAspending.gov is displaying sub-award information associated with new prime grant awards (made on or after October 1, 2010) over $25,000.  So far this week, we reported 930 sub-awards, related to a variety of grants in areas such as health, food and nutrition, and transportation.  In total, these 930 sub-awards account for $750 million in Federal funding.  We expect this number to increase significantly over-time, but it represents a critical milestone in our efforts providing the public with unprecedented transparency into how and where tax dollars are spent.

    Improving the data available on USAspending.gov is part of a larger effort to use transparency to boost government accountability. Already, we launched the IT Dashboard to provide the American people with unfiltered access to Federal technology spending information and progress made on IT projects across the government. And earlier this year, we stood up PaymentAccuracy.gov which allows the public to track progress in preventing improper payments.

     

    Jack Lew is the Director of the Office of Management and Budget.

  • Tightening Our Belts

    As I wrote last week upon my return to the Office of Management and Budget, the fiscal and economic situation we face today is very different than the projected surpluses we left behind the last time I served as OMB Director in the 1990's. After years of fiscal irresponsibility, President Obama inherited a $1.3 trillion projected deficit and the worst economic downturn since the Great Depression.

    The President and his economic team worked quickly to address the crisis, and we are seeing our economy recover – albeit more slowly than anyone would like. Families and businesses are still hurting, and too many who want to work are not able to find a job. Our top priority must be to do what we can to help boost economic growth and spur private sector job creation.

    But to lay the foundation for long-term economic growth and to make our nation competitive for years to come, we must put the United States back on a sustainable fiscal course. And that’s going to require some tough choices.

    Today, the President made one of those: proposing a two-year pay freeze for all civilian federal workers. This will save  $2 billion over the remainder of this fiscal year, $28 billion in cumulative savings over the next five years, and more than $60 billion over the next 10 years. The freeze will apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense – but not military personnel.

    We are announcing this move today because tomorrow is the legal deadline to submit to Congress the President’s decision about locality pay, a key component of overall federal worker pay.  In addition, we are in the midst of the 2012 budget process, and need to make a decision about pay to develop the 2012 budget. Simply, the time to decide about pay for those two years is now.

    Make no mistake: this decision was not made lightly.

    Like everyone honored to serve in the White House or the Cabinet, we work with extraordinarily talented public servants every day. Throughout my career in the Congress, at  the State department, and here at OMB, I have met federal workers who have sacrificed more lucrative jobs and hours with their families - -and, in some cases, put their lives in harm’s way -- in order to serve their fellow Americans.  Indeed, anyone who has flown safely, enjoyed our national parks, received a Pell grant to go to college, or relied on a Social Security check to retire in dignity has benefited from the service of federal workers.

    This pay freeze is not a reflection on their fine work. It is a reflection of the fiscal reality that we face: just as families and businesses across the nation have tightened their belts, so must the federal government.

    Already, the Administration has taken a number of steps in this regard  as part of its Accountable Government Initiative from the President freezing the salaries for all senior White House officials and other top political appointees upon taking office to his efforts to get rid of $8 billion of excess federal real property over the next two years, reduce improper payments by $50 billion by the end of 2012, and freeze non-security spending for three years – which will bring non-security discretionary spending to its lowest level as a share of the economy in 50 years.

    Moving forward, we will need to make many more tough choices to construct a plan to pay down these deficits and put our nation on sound fiscal footing. Later this week, the Fiscal Commission will release its report laying out its approach, and I look forward to working with people from across the spectrum on this challenge in the weeks to come.

     

    Jack Lew is the Director of the Office of Management and Budget.

  • Happy to be Back

    On Thursday night, the Senate confirmed my nomination to be the Director of OMB, and yesterday was the start of my first week in the job.

    I wanted to take a minute to say how great it is to back at OMB and to join the talented team here that is already hard at work producing a Budget for 2012. Many of the people I am working with are old friends from my previous time spent at OMB, and many more are new colleagues. I look forward to getting to know everyone in the busy weeks and months ahead. I also want to thank everyone at OMB for their support during the confirmation process, and in particular, I am grateful to Jeff Zients and Rob Nabors for their leadership during the transition period.

    The fiscal and economic situation we face today is very different than what we faced the last time I served as OMB Director. A series of policy choices and the worst economic downturn since the Great Depression present us with a very different set of challenges than those posed by the forecast of surpluses at the end of the 1990’s.  Now, we must put our nation back on a sustainable fiscal course in the medium-term and shore up our fiscal position for decades to come while spurring job creation and boosting the competitiveness of the US in the global economy. And while we should aspire not to waste taxpayer dollars regardless of whether the budget is in surplus or deficit, the management of the federal government is particularly important during lean times. That is why we must make sure every dollar we spend has the desired impact and makes a difference.

    As the President has said, it will take tough choices – and putting partisan differences aside -- in order to do what is right for our country today and for our children and grandchildren in the years ahead. I look forward to working – as I have throughout my career -- collaboratively across partisan and ideological divides with all those committed to taking constructive steps to rejuvenating our nation’s economy and its fiscal standing.

    Finally, I am new to blogging, but I recognize how OMBlog has become an important tool to communicate directly with the public about what the Administration is doing across a wide range of issues – and to dive deeply into some matters that may be only of interest to real budget wonks. So as I get settled, I look forward to using this platform as a way to keep you informed and share details about our continued progress. 

    Jack Lew is the Director of the Office of Management and Budget

  • Driving IT Reform: An Update

    Tackling the information technology gap  between the public and private sectors is one of most effective ways we can make government work more effectively and efficiently for the American people. IT has been at the center of the private sector’s productivity gains, but for too long Federal IT projects have run over budget, behind schedule, or failed to deliver what on their promise. That’s why fixing IT is a cornerstone of the President’s Accountable Government initiative.

    This effort began in earnest  this summer when we undertook a three-part strategy to reform how the federal government purchases and uses IT – cutting waste and saving money.

    First, Chief Information Officer Vivek Kundra launched detailed reviews of the highest priority IT projects across the Federal Government; these are critically important IT modernization projects that have not yet delivered. Since then, we’ve held dozens of TechStat review sessions, resulting in faster deliverables, terminations of projects that didn’t work, and most importantly turned around projects that were in trouble.

    Second, since far too many financial system modernization projects were running behind schedule and over budget, we halted all new work on those projects pending review and approval by OMB. Across the government, over 30 financial systems projects, with budgets totaling $20 billion, were affected by this policy.  

    Our review of 20 agencies’ projects is now complete, and I am proud to report that we have taken steps to save $1.6 billion on these projects.
     
    Through our reviews, we determined that half the projects were basically on track. Of the half that were not, we took the following actions:

    • At two agencies – the Department of Housing and Urban Development and the Environmental Protection Agency  -- we pulled forward meaningful functionality, resulting in almost $230 million in budget reductions.

    • At two agencies – the Department of Veterans Affairs and the Small Business Administration –  we canceled their projects as a result of the review, resulting in over $500 million in budget reductions.

    • At three agencies – the Departments of Homeland Security, Justice, and Health and Human Services, we are moving forward with plans to decrease the scope of and improve their financial system projects, resulting in reduced costs and a greater focus on critical business needs.  This revaluation of these projects resulted in over $680 million in budget reductions. 

    • An additional $200 million in budget reductions was identified in various agencies, with more to come.

    While this is great progress toward getting these IT systems online and working for the American people, we also recognize that it’s better to get them right from the get-go. 

    Third, we were tasked with developing a new strategy to fundamentally change how the federal government purchases and uses IT, which I discussed in a speech to the Northern Virginia Technology Council today: 

    • Aligning the Budget and Acquisition Process with the Technology Cycle. Between increasing budget flexibility and speeding up acquisitions, we’re going to eliminate the structural disconnect between the government’s process and the technology cycle. To start, we’ll work with Congress to identify a dozen pilot projects where we can develop a framework for increased budget flexibility and greater oversight.

    • Strengthening Program Management. We’re creating a formal career track for professional program managers and we’ll only green light IT projects with effective program management teams hardwired into the agency’s organizational structure.

    • Streamlining Governance and Increase Accountability. We’re going to revamp the Investment Review Boards along the TechStat model – bringing senior executives to the table armed with the right information and expertise to provide meaningful oversight and drive interventions and decision making on specific projects.

    • Increasing Engagement with the IT Community. We’ll be launching a “myth busters” campaign to promote greater engagement with industry and remove barriers to communication that are hurting our productivity. We’ll also develop mechanisms for sharing best practices and solutions between agencies and IT community on a regular basis.

    • Adopt Light Technologies and Shared Solutions. We are reducing our data center footprint by 40 percent by 2015 and shifting the agency default approach to IT to a cloud-first policy as part of the 2012 budget process.  Consolidating more than 2,000 government data centers will save money, increase security and improve performance.

    Changing how we invest the $80 billion we spend each year on IT and making sure what we buy is helping us deliver better results at a cheaper price is a big challenge. But the hard work of many people throughout the agencies shows that it can be done, and we will work with our colleagues across the government and partners in the tech and business communities to build on these successes in the months to come.

  • Improper Payment Progress

    Readers of OMBlog are now quite familiar with the Administration’s determined effort to cut the billions of dollars wasted each year in improper payments -- payments made by the government to the wrong person, at the wrong time, or in the wrong amount. These include payments made in error by a government agency sending a benefit check, inadequate documentation by a local provider, or outright fraud by a contractor or other recipient.

    As part of the President’s Accountable Government Initiative, we’ve worked hard to bring down the rate of improper payments, recapture misallocated funds, and meet the President’s goal of reducing improper payments by $50 billion by the end of 2012. Yesterday, federal agencies finished their year-end financial statements, and I’m pleased to report that we have made significant progress on these fronts.

    For 2010, the government-wide improper payment rate declined to 5.49 percent, a decrease from the 5.65 percent reported in 2009. This means that we prevented an additional $3.8 billion in improper payments from being made in 2010, and are headed in the right direction as we work to meet the President’s goal.

    In fact, eight of the 10 high-priority programs (programs which account for the majority of government-wide improper payments) reported lower improper payment rates in 2010 compared to 2009. It’s worth noting that Medicare and Medicaid both achieved lower error rates in 2010, avoiding approximately $8 billion in improper payments if those declines had not been achieved.

    Agencies also reported that they recaptured almost $687 million in improper payments in 2010, a significant amount of payment recaptures. This total includes approximately $611 million recaptured through payment recapture audit reviews of agency contract payments – a specialized audit in which auditors are given an incentive to find more misspent money. This was the highest recaptured amount reported in the seven years that agencies have conducted payment recapture audits, and more than doubled from 2009. All told, the $687 million recaptured in 2010 puts us on track to achieve the Administration’s goal of recapturing at least $2 billion between 2010 and 2012.

    Now, because many of the targeted programs – such as Unemployment Insurance and Medicaid – are paying out more benefits as the economic downturn creates more demand for these benefits, the total number paid out in improper payments increased to $125 billion last fiscal year even though the overall error rate declined. This is an unfortunate result of the recession and of basic math: the more that is paid out, the more paid out in error even if the overall rate declines.

    Looking ahead, we are not stopping in our efforts to reduce improper payments. Today, we are releasing guidance to agencies on steps that they should take to comply with the Presidential memorandum on intensifying and expanding payment recapture audits, and steps on how agencies can begin to implement the new recapture authorities contained within the Improper Payments Elimination and Recovery Act (IPERA). We also are launching a partnership with the Department of Veterans Affairs (VA) to pilot www.VerifyPayment.Gov, a new portal for the new Do Not Pay List that will create a central clearinghouse of information to prevent payments to ineligible recipients.

    And because, ultimately, it’s your money at stake, information about agencies’ improper payments will be available later today at www.PaymentAccuracy.gov.

    The results today demonstrate that we can cut waste, boost effectiveness, and create a government where tax dollars are respected. As the steps we have taken over the past several months continue to take root, I am confident that with the continued hard work of folks across the federal government and with the leadership of President Obama, we will see continued progress in reducing improper payments and toward a more efficient federal government.

  • And the Top SAVER is...

    Over 57,000 of you have spoken, and the winner of the 2010 SAVE Award is Trudy Givens of Portage, Wisconsin.

    Trudy is a 19-year veteran of the US Bureau of Prisons, working now as a Business Administrator in the Federal Correctional Institution in Oxford, Wisconsin. Over the course of her career, Trudy noticed that copies from the Federal Register -- the federal government’s official daily publication for rules, proposed rules, and notices of Federal agencies and organizations, as well as executive orders and other presidential documents-- were delivered to her workplace several times per week, but employees rarely referenced the documents. The Federal Register was made available online years ago, and most members of the interested public reference that online version now. Trudy thought that in keeping with the President’s spirit of cutting out waste and going green, the government should end the printing and mailing of thousands of Federal Registers to employees.

  • Every Vote Counts to SAVE

    More than 45,000 people have made their voices heard in selecting this year’s winner of the President’s SAVE Award – and there is still time for you to vote too. Just go to www.SAVEAward.gov, take a few seconds, and help select the best idea from our Final Four on how government can cut waste and improve performance.

    As I’ve written about before,  President Obama launched the second annual SAVE Award earlier this year— a program that offers every federal employee the chance to submit ideas about how government can be more efficient and effective in its work. Over the course of three weeks, federal employees submitted more than 18,000 ideas.

    Voting began on Monday, and as of the close of business yesterday, we had 45,000 votes. Voting is open until 8:00 PM ET on Friday. So, cast your vote – and the person whose idea is voted the best will get to meet the President, present the winning idea directly to him, and will have that idea included in the FY2012 Budget.

    Once again, vote  – and spread the word about how everyone can help choose this year’s winner.

  • Vote Now: The President's 2010 SAVE Award Finalists

    President Obama and this Administration have taken steady steps to change the way business is done in Washington and make government more effective and efficient for the American people – for today and for years to come. That’s what is driving our Accountable Government Initiative  and all its parts from our effort to stop huge cost overruns in IT projects  to getting rid of unneeded federal properties  and bringing more competition to contracting.

    One of the most important changes that the President has brought to Washington is the belief that the best ideas usually come from outside of Washington.  That’s why he launched the first ever SAVE Award last year to get ideas from federal employees on the frontlines to make government work smarter for the American people and to make sure taxpayer dollars are spent wisely. And it’s why we are now asking the American people to help us select this year’s winner.

    As they did for the first award, federal employees across America and stationed around the globe answered in droves the President’s call for ideas on how to cut waste, save money, and boost performance.
    More than 18,000 ideas were submitted this year, and federal employees weighed in with more than 164,000 votes to help the Administration identify promising ideas to save. Our budget team then went through the ideas to see what we were already in the process of fixing, what needed a closer look, and which where worthy of being our four finalists.

    Today, we’re announcing our Final Four -- and asking you to weigh in and vote for your favorite idea on www.SAVEAward.gov.

    The winner will get to present his or her idea directly to President Obama at the White House. Others will be sent to the responsible agencies for potential action. Last year, 20 SAVE Award ideas made their way directly into the President’s 2011 Budget, and others helped identify cost-savings across an array of areas.
    Most importantly, the idea that each employee has both the ability and responsibility for making every taxpayer dollar count is becoming part of the culture in the federal government – not just each year with the SAVE Award, but all year round.

    Here are the 2010 finalists:

    Stop the Express Delivery of Empty Containers. Marjorie Cook from Gobles, Michigan is a food inspector in USDA’s Food Safety and Inspection Service (FSIS). FSIS inspectors ship 125,000 samples to labs each year using “Express Next Day” service. Those labs use the same costly shipping method to send empty containers back. As Marjorie put it, “We could save a bundle by having those boxes shipped back through regular ground service.”

    Require Mine Operators to Submit Reports Online. Thomas Koenning of Littleton, Colorado works in the Mine Safety and Health Administration’s Information Technology Center. Currently, mine operators are mailed paper forms in order to report quarterly data. Koenning suggests requiring mine operators to make these reports online to save money on costly form production and postage, reduce input errors, and decrease the time it takes to analyze this data which is important to MSHA’s efforts to protect the safety of America’s mine workers.

    Post Public Notice of Seized Property Online, Not in Newspapers.  Paul Behe is a Paralegal Specialist for the Department of Homeland Security in Cleveland, Ohio. He suggests advertising property seized by Customs and Border Protection – such as counterfeit watches and purses – online instead of in newspapers. As Paul notes, “In addition to the immense cost reduction for the ads, DHS would be able to save the cost of storage for the seized items that are at the contractors, awaiting adjudication.”

    End the Mailing of Thousands of Federal Registers to Government Employees. Trudy Givens from Portage, Wisconsin works for the Bureau of Prisons. The Federal Register is currently mailed to her workplace and nearly 10,000 Federal employees every workday.  Most of the interested public now accesses the Federal Register online. While statute requires that hard copies be available, allowing recipients to opt-in for hard copy delivery could yield savings associated with printing and postage. When a similar “opt-in” (with fee) option was offered to the public, the number of hard copies mailed was reduced from roughly 25,000 to 500 recipients. 

    Make no mistake: the SAVE Award will not balance the budget. But cutting waste and restoring accountability for taxpayer dollars is important if the budget is in surplus or in deficit. Pick your favorite from the list, and spread the word to all your family, friends, and colleagues to make their voices heard and help us pick this year’s SAVE Award winner.

  • Ceasing Checks to the Deceased

    Whether the budget is in surplus or in deficit, we cannot tolerate the wasting of taxpayer dollars – and there are few more egregious examples of waste than improper payments. These are payments made by the government to the wrong person, at the wrong time, or in the wrong amount, and last year, they totaled approximately $110 billion.

    This morning, Senator Tom Coburn released a report highlighting one aspect of improper payments: government benefits being sent to the deceased. Senator Coburn found that over the past decade, $1 billion has been sent improperly to individuals clearly ineligible for earthly benefits. While the vast bulk of these improper payments happened during the previous Administration, it’s critical that we move aggressively to curb them – and that’s what we have been doing since the early days of the Obama Administration. In fact, the President has set an aggressive goal: to eliminate $50 billion in improper payments between 2010 and the end of FY 2012.

    How are we going to do that?

    First, on November 19, 2009, the President issued an executive order laying out a strategy to reduce improper payments through boosting transparency, holding agencies accountable, and creating strong incentives for compliance. Specifically, the executive order required the identification of high-priority programs, the selection of accountable officials to coordinate agency program integrity efforts, the development of supplemental measures of payment error for high-priority programs, a public website to track progress in reducing improper payments (PaymentAccuracy.gov), and the pursuit of tough penalties on contractors for failing to timely disclose credible evidence of significant overpayments received on government contracts.

    Second, on March 10, 2010, the President signed a presidential memorandum directing all Federal departments and agencies to expand and intensify their use of payment recapture audits. These are audits which offer specialized private auditors financial incentives to root out improper payments, and have been demonstrated through pilot programs to be highly effective.

    Third, on June 8, the President announced that the Administration would cut the improper payment rate in the Medicare Fee for Service program in half by 2012. Doing so will eliminate more than $20 billion in payment errors by FY 2012.

    Fourth, on June 18, the President issued a memorandum directing that a Do Not Pay List be established to provide a single source through which all agencies can check the status of a potential contractor or individual. Too often, an agency does not check all the different databases the government has or finds it unnecessarily difficult to do so. This denies agencies essential information they need to determine, for example, if an individual is alive or dead or if a contractor had been debarred. The Do Not Pay List will allow Federal agencies to access this information in a more timely and cost effective manner and will help reduce improper payments made by the Government and help save taxpayer dollars. 

    That same day, the Vice President announced the expansion of a cutting-edge fraud mapping tool that the Recovery Accountability Transparency Board has deployed that gathers enormous quantities of information in real time and then analyzes the data and helps connect the dots to identify indicators of possible fraud or error. The Administration is piloting it first at the Centers for Medicare & Medicaid Services before expanding the use of this type of tool across government.

    Finally, in a ceremony in the State Dining Room on July 22, the President signed the bi-partisan Improper Payments Elimination and Recovery Act (IPERA) into law, which will strengthen and complement the efforts already undertaken to reduce improper payments. 

    There is still more work to be done as the team here works hard to implement these new strategies and the IPERA legislation. We welcome Senator Coburn’s highlighting of this important issue, and look forward to continue working with Congress to reduce improper payments, combat fraud, cut waste, and make government more effective and efficient.

  • Real Update on Real Property

    As I’ve written about before, as part of the President’s Accountable Government Initiative, we are taking aggressive steps to save taxpayer dollars while making government work better, harder and more efficiently for the American people.

    That’s why on June 10, 2010, President Obama issued a Presidential Memorandum titled “Disposing of Unneeded Federal Real Estate” directing agencies to accelerate efforts to remove excess and surplus property for a savings of $8 billion by the end of FY 2012. And as part of the President’s FY 2012 budget process, we are working closely with Federal agencies to achieve that goal.

    Federal agencies have detailed plans to cut excess property costs and implement cost cutting measures. To date, Federal agencies have identified $1.7 billion of the $3 billion in non-defense savings opportunities that the President has required us to achieve by the end of FY 2012. And we are off to a good start in converting these opportunities to bottom line savings for taxpayers. For instance, we are selling buildings such as one office building in Omaha, Nebraska for $1.3 million, one in Springfield, Massachusetts for $2.5 million, and one in Bethesda, Maryland for $12.4 million.

    The Department of Defense is also on track to achieve the $5 billion in real property cost savings through the Base Realignment and Closure (BRAC) process in the same time period.

    While there is still work to be done, we are pleased with the progress made thus far and we are working with the agencies to identify further opportunities for cost reductions.

    As the country’s largest property owner and energy user, it is critical that we remain vigilant about our operating costs. By selling buildings, reducing maintenance costs, cutting energy costs, consolidating and re-aligning existing space and reducing leases, we are saving taxpayer dollars and making government work better for everyone.

  • Closing the IT Gap: An Update

    As part of the President’s Accountable Government Initiative, OMB along with our colleagues throughout the federal government has been launching a series of initiatives to close the “technology gap” between the private and public sectors to cut waste and boost performance.  As part of that effort, my team was directed to develop a comprehensive strategy to reform how IT projects are built and procured.

    On November 19, I’ll be presenting this strategy at a talk to the Northern Virginia Technology Council, in the heart of the capital region’s “Silicon Valley.” I’ll offer recommendations on reforming federal IT, ranging from project management to procurement to budgeting and personnel reforms – and I hope to discuss with the private sector there and in other venues how best we can transform federal IT.

    We’re particularly excited about our IT reform efforts because, first, it represents $79 billion a year that can be better spent; and, second, these dollars are invested in technologies that can generate further cost-savings and better, more convenient services for the American public.

    To that end, we have been moving forward over the past few months on the other parts of our IT reform agenda, including:

    • Reforming and cutting costly IT systems. The Federal Chief Information Officer Vivek Kundra is undertaking detailed reviews of the highest priority IT projects across the federal government. After reviewing dozens of projects, IT project budgets have been reduced dramatically, including cancellation of the Justice Department's Litigation Case Management System and the significant restructuring of the Interior Department's Incident Management Analysis and Reporting System.

    • Bringing Transparency to IT Spending. To provide the American people with unfiltered access to federal technology spending information, the Administration launched the IT Dashboard – a graphically-rich, user-friendly website that enables anyone to track spending on and progress of IT projects across the federal government.

    • Increasing Oversight of Financial System Modernization Projects. We directed all executive departments and agencies to stop issuing new task orders or procurements for all financial system modernization projects – an area of persistent problems – pending review and approval by OMB of new, more streamlined project plans.

    • Moving to consolidate data centers and deploy cloud computing technology to reduce IT, real estate, and energy costs. Already, we have implemented a zero-growth policy on federal data centers, we are working with agencies to review their plans, and we are on track to meet the president's objective to consolidate and significantly reduce the number of data centers within five years.

  • Keeping a Close Eye on Recovery Act Dollars

    From the beginning, the President and Vice President have demanded an unprecedented level of accountability and transparency from recipients of Recovery Act funds.  Tens of thousands of recipients are required to report in every quarter on how exactly they are putting their Recovery Act contract, grant or loan to work -- and those reports are posted in full public view on Recovery.gov.  You can see them for yourself HERE.  This is a pioneering transparency effort and, while there may have been some initial skepticism that it could be pulled off, last quarter nearly 100 percent of recipients required to report did so.  This unprecedented level of disclosure has been lauded by government watchdogs and transparency groups as a significant achievement for open government.

    Now, it would be easy to rest on this accomplishment of near 100 percent participation, but frankly, we’re not satisfied -- we believe that everyone that is required to share with the public how they are putting Recovery dollars to work should be doing so.  That’s why Federal agencies have been charged with aggressively pursuing the .5 percent of cases where recipients have failed to file. 

    But each case is a little bit different --  and that’s why agencies have been empowered to pursue them with action ranging from an initial warning letter to withholding or rescinding of funds and even litigation, if it becomes necessary.  Here is how it breaks down:

    • Of the 74,244 prime recipients required to file last quarter, just 352 failed to file a report last quarter -- that’s 99.5 percent participation. 

    • Of the 352 who failed to file, 89 percent of them -- or 312 -- were first-time non-reporters.  Often one-time non-filers have technical problems reporting, so the relevant agency contacts them with a warning letter that also offers the necessary technical or other assistance.  Other cases of first-time non-reporting have been as simple as internal company or organization miscommunication or personnel changes.  In the vast majority of these cases, the recipient simply resolves their internal technical or staffing issue and files the next quarter.

    • Of the remaining 40 non-reporters, 32 failed to comply twice, 4 failed to comply three times, and 4 failed to comply four times.  Each of these cases is aggressively pursued by the relevant agency with punitive action ranging from withholding or rescinding funds to litigation, if necessary.  You can take a look at the action being taken in each of these 40 cases HERE . We take these cases seriously, but overall, they represent .1 percent of Recovery Act recipients and involve less than .001 percent of total Recovery Act funding.

    Changing the way business is done in Washington doesn’t happen overnight -- we are constantly working to improve transparency processes and help recipients of Recovery Act funds adjust to meet our high standards.  But we agree with government watchdogs that the unprecedented level of transparency provided with the Recovery Act over the last year-and-a-half has been a meaningful step in the right direction.

  • Seeing Eye to Eye with the Tech CEO Council

    Today, the Technology CEO Council released a report outlining a plan to “maximize productivity…and enhance government services” through the use of technology. This distinguished group of corporate leaders -- from companies such as IBM, Dell, and Motorola -- believe that by utilizing some of the best practices of the private sector, the government can realize significant savings and improve the service delivered to you, the taxpayers.

    We couldn’t agree more -- and that’s why for the past 20 months, as part of the President’s Accountable Government Initiative, the team at OMB along with our colleagues throughout the federal government has been launching a series of initiatives to close the “technology gap” between the private and public sectors to cut waste and boost performance. In fact, this list of initiatives closely mirrors those outlined by these tech industry leaders.

    For instance, we are moving aggressively to reform how information technology is used and procured. A review of financial systems modernization efforts already has led to cancellations and reforms that will save $750 million, and our team is also reviewing 30 high-priority IT projects across the government to find further savings and areas for improvement. We are moving to consolidate data centers, and use cloud computing to reduce IT, real estate, and energy costs. And I am leading an effort to fundamentally reform how IT projects are procured and managed so that best practices are identified, shared, and built in from the get-go.

    Similarly, we are achieving savings by changing how the federal government purchases goods and services. We have reversed the trend of significant growth in high-risk contracts -- such as "no-bid" contracts -- and the percentage of dollars awarded in new contracts without competition has dropped by 10 percent. We are on a path to realize the President’s goal of saving $40 billion in contracting savings by the end of FY 2011. In addition, we are working to centralize some purchasing so that the federal government gets the best deal for taxpayers. For instance, by consolidating the purchase of office supplies, we will save 20 percent or $200 million over four years.

    Finally, when it comes to the roughly $110 billion in improper payments sent out by the federal government each year, the President has set an ambitious goal of reducing them by $50 billion between now and 2012. To meet this challenge, the Administration has embarked on a range of strategies from creating a government-wide Do Not Pay List to expanding the use of payment recapture audits, audits in which there is a financial incentive for recovering misused funds.

    These are just three examples of where we have moved the ball on cutting waste and modernizing government. Whether it’s reforming and cutting costly IT systems, implementing unprecedented transparency and reporting efforts, pursuing $40 billion in contracting savings, buying in bulk, establishing a government-wide Do Not Pay list, or moving toward electronic government payments, we’re making real progress in changing the way government does business.

    In its report, the Technology CEO Council writes that the key to creating a government that is more efficient and more effective is "leadership -- and it must come from all sectors of society." We couldn’t agree more, and look forward to working with this group and people from across the country to create a government that is more effective and efficient, more open and accountable.

  • Cutting Costs in Financial Systems

    As I’ve blogged about previously, the President is committed to changing how Washington does business. That’s why we launched the Accountable Government Initiative - to eliminate what doesn’t work, crack down on waste, and make government more open and responsive to the American people. Closing the technology gap that exists between the public and private sectors will be critical to achieving these goals.  Over the past 10 to 15 years, the government has significantly lagged behind the private sector in using information technology to cut costs and deliver better services. And when federal information technology projects are undertaken, they too often cost more than they should, take longer than necessary to deploy, and fail to deliver solutions that meet our business needs.
     
    To address these problems, we recently launched a set of IT reform efforts as part of the Accountable Government Initiative. We focused on three key areas:  the federal government’s overall IT procurement and management practices, high-priority IT projects in need of additional attention, and financial system modernization projects – an area of persistent problems. In this final category, financial system modernization projects, we immediately froze all activity pending review and approval of more streamlined plans.
     
    Today, we are seeing the fruits of that review.
     
    Three agencies – the Environmental Protection Agency, the Department of Housing and Urban Development, and the Small Business Administration – just completed a review of their systems and are moving forward with plans to reset the scope of and improve their financial system projects, resulting in reduced costs and a greater focus on critical business needs.  Together with a recent decision from the Department of Veterans Affairs to cancel their own large-scale financial systems project in favor of more urgent agency priorities, the budgets for these projects have been reduced by a combined $750 million. 
     
    Moreover, we are harnessing the power of IT to drive productivity gains and improve customer service across government agencies. 
     
    These results are just the beginning.  Agencies are taking the lessons learned from the financial systems reform effort and applying them across their portfolio of IT projects, and we are using the best practices to inform our work on fundamental reform of IT procurement and management practices across all agencies.
     
    These reforms are a great example of our Administration-wide efforts to take a hard look at what’s working and what isn’t – and make tough decisions about how to get the most out of taxpayer dollars. Changing the way government does business isn’t easy, but we’re excited about the improvements that these choices will yield, resulting in better services and lower costs for the American people.  I look forward to sharing continued progress with you in the weeks ahead.

  • Sending Out to SES

    The country faces extraordinary challenges – from growing our economy to transforming our energy supply, improving our children’s education, safeguarding our Nation, and restoring its fiscal health. There is a distinct role for government in addressing these challenges, but it will only be possible with a government that runs effectively and efficiently.   That’s the central goal of our Accountable Government Initiative – to cut waste and make government work better and faster. 

    As the Administration’s Chief Performance Officer, I’m pleased to report that we’re making good progress in these efforts.  Today, I sent a memo out to the more than 7,000 members of the Senior Executive Service (SES), to update them on the progress we are making and to make clear the President’s commitment to and strategy for modernizing and reforming government.  The SES leads and manages operations across all Federal agencies, and they serve as the link between senior  political appointees and the rest of the Federal work force.  Effective performance improvement efforts are driven by senior leaders, and the SES is critical to our efforts.  We need these senior managers to continue to work with frontline workers to drive our performance improvement initiatives, and also to use their leadership positions to spread the belief and expectation that we are going to make government work more efficiently and effectively for the American people.

    As I detail in the memo, our performance management efforts are focused on six strategies that have the highest potential for achieving meaningful performance improvement within and across Federal agencies: driving agency top priorities; cutting waste; reforming contracting; closing the IT gap; promoting accountability and innovation through open government; and attracting and motivating top talent. We have already made significant progress in these areas. Whether it’s reforming and cutting costly IT systems, implementing unprecedented transparency and reporting efforts, pursuing $40 billion in contracting savings, buying in bulk, establishing a government-wide Do Not Pay list, or moving toward electronic government payments, we’re making real progress in changing the way government does business.

    Today’s memo is about maintaining this momentum, and strengthening communications and accountability with key government employees to achieve lasting, step-function improvements in government efficiency and effectiveness. It may sound like bureaucratic jargon, but the effects of these changes matter to the American people. As the President said in his letter to SES employees today, “This is not just about lines on a spreadsheet or numbers in a budget. When government does not work like it should, it has a real effect on people’s lives – on small business owners who need loans, on young people who want to go to college, on the men and women in our armed forces who need the best resources when in uniform and deserve the benefits they have earned after they have left.”

    Read today’s memo to SES members on the performance management agenda here.