Testimony of John A. Koskinen
JOHN A. KOSKINEN
DEPUTY DIRECTOR FOR MANAGEMENT
OFFICE OF MANAGEMENT AND BUDGET
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION AND TECHNOLOGY
HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
JUNE 3, 1997
Mr. Chairman, I am pleased to appear before the Committee this morning to discuss implementation of the Government Performance and Results Act of 1993 (GPRA) and to provide an assessment of our progress to date in meeting its major requirements. GPRA was enacted three and a half years ago as the result of a bipartisan effort in the Congress, with the support of the Administration, to increase our focus on the results from government programs and activities. This Committee was one of the leaders in the passage of the Act and we look forward to continuing to work with you and the Congress as implementation proceeds.
GPRA strives to answer these important questions: What are we getting for the money we are spending? What are federal programs and organizations trying to achieve? How can the effectiveness of these activities be determined?
As a government, we face major challenges. This is a time of great fiscal constraint. Tight budget resources demand that every dollar count. During a period of much public skepticism about the government's ability to do things right, the government must not only work better, but be shown as working better, if we are to regain public confidence. GPRA, if successfully implemented, will help this effort to improve public confidence in the efforts of its government.
To be successful, implementation of GPRA will also have to be a bipartisan effort. Recently the House Majority Leader and other members of the Congressional leadership have facilitated the consultation process GPRA requires between the Congress and the agencies by coordinating meetings between agencies and the appropriate Congressional staff to discuss the agencies' strategic plans. We look forward to continuing this cooperative consultation process during the next few weeks. It is important to note that the strategic plans currently being reviewed are in draft and that suggestions from the Congress and other interested parties together with further internal consideration will undoubtedly improve their quality.
Let me now summarize the conclusions of the report on GPRA, which the Director of OMB submitted to the Congress on May 19, 1997 pursuant to the Act, and discuss those aspects of GPRA implementation that are our most immediate focus.
I. PLANS AND REPORTS REQUIRED BY GPRA
A. Strategic Plans
GPRA requires that Federal agencies submit a strategic plan to Congress and OMB not later than September 30, 1997. The strategic plan covers the major functions and operations of the agency, and contains:
- a comprehensive mission statement
- general goals and objectives
- a description of how the general goals and objectives will be achieved
- a description of the relationship between the performance goals in the annual performance plan and the general goals and objectives in the strategic plan
- an identification of those key factors, external to the agency and beyond its control, that could significantly affect achievement of the goals and objectives
- a description of program evaluations used in the strategic plan, and a schedule for future program evaluations.
The strategic plan spans a minimum six year period: the fiscal year it is submitted, and at least five fiscal years forward from that fiscal year. A strategic plan is to be revised and updated at least once every three years. There is no more important element in performance-based management than strategic plans. These plans set the agency's strategic course, its overall programmatic and policy goals, indicate how these goals will be achieved, and are the foundation and framework for implementing all other parts of GPRA.
GPRA requires agencies, when preparing their strategic plan, to consult with Congress, and solicit and consider the views and suggestions of stakeholders, customers, and other potentially interested or affected parties. As a result of a review of agency strategic planning efforts in 1996, OMB concluded that further guidance on Congressional consultation was needed. In November of last year, OMB issued a memorandum to agencies reinforcing the importance of early consultation with Congress on strategic plans. In February 1997, the Speaker of the House of Representatives, the Senate Majority Leader, the House Majority Leader, and seven Senate and House Committee chairmen joined in a letter to OMB setting out Congressional expectations for the consultation process under GPRA. This letter, and OMB's response to it, became the basis for a second OMB issuance on Congressional consultation.
The Administration is currently undertaking a strategic assessment of agency goals and commitments. This assessment is being conducted jointly by the agencies and OMB. A focus of the strategic assessment is the agencies' implementation of GPRA, and the preparation of the strategic plans and the annual performance plans that are due in September.
Generally, the agency plans reflect a serious effort and allow us to conclude that agencies should be able to produce useful and informative strategic plans by this Fall. OMB's reviews of agency efforts have also revealed several challenges. Last summer, most agencies were only beginning to link the general goals and objectives of their plans with the annual performance goals they would be including in their annual performance plan. Further inter-agency coordination on programs or activities that are cross-cutting in nature is also necessary. The efforts of the Office of National Drug Control Policy provide a useful model for how such coordination across agencies with overlapping responsibilities might be carried out.
B. Annual Performance Plans
Pursuant to the statute, the first of the agency annual performance plans will be sent to OMB this September. These plans will be for fiscal year 1999, and will be submitted with the agency's budget request for that year. The annual performance plans will contain the specific performance goals that the agency intends to achieve in the fiscal year. GPRA provides that a subsequent iteration of the annual performance plan be sent to Congress concurrently with release of the President's budget.
The agencies and OMB gained valuable experience in preparing annual performance plans through the pilot project phase of GPRA. OMB has initiated a review of the performance goals that agencies proposed to include in their annual performance plans for FY 1999. This review is still ongoing. The agencies are providing OMB with descriptions of their proposed performance goals, illustrating what will be measured and the nature and type of measurement. Gaining an early consensus on these goals will not only help assure that they are appropriate and relevant but will allow agencies to measure current performance, creating a baseline from which to set future performance levels or targets.
In another joint collaboration with the agencies, OMB has prepared guidance on the preparation and submission of annual performance plans for FY 1999. This guidance was issued last week. We expect agencies to produce useful and informative annual performance plans for FY 1999.
C. Government-wide performance plan
GPRA requires that a government-wide performance plan be annually prepared and made part of the President's budget. The government-wide performance plan is based on the agency annual performance plans. The first government-wide plan will be sent to Congress in February 1998, and cover FY 1999. In this regard, we would welcome your views on those features that you believe would make the plan informative and useful to the Congress.
D. Program Performance Reports
The agency's program performance report is the annual concluding element of GPRA. These reports are required within six months of the end of a fiscal year, and compare actual performance with the performance goal target levels in the annual performance plan. In cases of unmet goals, agencies will explain why and describe the actions being taken to achieve the goal in the future. The first program performance reports, for FY 1999, are to be sent to the President and Congress by March 31, 2000.
Some agencies are experimenting with different formats for performance reporting in the Accountability Report pilot program authorized by the Government Management Reform Act. For FY 1996, 8 agencies are issuing Accountability Reports, and are including various information on the agency's performance as well as other statutorily-required information such as the agency's audited financial statement and the Federal Managers' Financial Integrity Act report.
II. PILOT PROJECTS REQUIRED BY GPRA
GPRA provided for three sets of pilot projects. The performance measurement pilot projects tested whether the specifications and structure for the annual performance plan and program performance report would work as intended. The managerial accountability and flexibility pilot projects were to assess the effect of giving managers and staff greater latitude in administering and managing programs. Both sets of pilot projects were timed to precede the implementation of GPRA government-wide.
The third set of pilot projects are for performance budgeting. These pilots will examine the practicability of determining and presenting the changes in performance levels that result from different funding levels. The performance budgeting concept that will be tested by these pilot projects is the only provision in GPRA that cannot be implemented government-wide without further legislation.
A. Performance Measurement Pilot Projects
GPRA required that at least ten departments or agencies be designated as pilot projects for performance plans and program performance reports. The pilot projects covered three fiscal years and tested the ability of agencies to establish performance goals, and subsequently measure and report actual performance against these goals. Pilot projects were designated in all 14 Cabinet departments and an equal number of independent agencies. The 28 designations included over 70 individual pilots in the departments and agencies.
The performance measurement pilot projects became a substantial initiative. Approximately a quarter of the entire Federal civilian workforce were covered by the pilots. The size of individual pilots ranged from complete agencies to small component organizations. The largest pilots included the entirety of the Internal Revenue Service, Social Security Administration, Defense Logistics Agency, and the Forest Service. Several agencies covered a large proportion of their programs through individual pilots.
The most important conclusion reached on completion of the performance measurement pilot projects is that -- without these pilots and the time given agencies across the government to gain experience in performance-based management -- there would be little prospect for a successful implementation of GPRA government-wide. The scope and dimension of these pilots confirmed that virtually every activity done by government can be measured in some manner, although not perfectly.
Over the course of the three years, improvement was generally seen in the pilot projects' ability to set goals, and measure and report performance against these goals. The improvement was uneven, and not always immediate. Goals often were changed or refined from year to year. While this is to be expected in any pilot project process, it also indicates that the first years of full-scale implementation of GPRA will be the start of a dialogue about performance and performance measures, not the end of it. Measures will be modified, better and more appropriate goals will be defined, performance data will increase in both volume and quality. Over time the overall quality of agency plans and reports should improve significantly.
B. Managerial Flexibility Pilots
The second set of pilot projects called for by GPRA are those for managerial accountability and flexibility. At least five departments or agencies were to be designated as pilot projects for fiscal years 1995 and 1996. While agency nominations for these pilot projects were solicited and received, no pilot projects were designated.
An unanticipated combination of circumstance and timing had a major effect on the flexibility pilots. GPRA was substantially drafted in 1992, and became law the following year. Two initiatives subsequently reduced the universe of possible waivers. These were the Workforce Restructuring Act of 1994, and the elimination of many non-statutory requirements by several central management agencies through the efforts of the National Performance Review.
The Workforce Restructuring Act effectively prevented OMB from approving any FTE ceiling waiver requests at the time when these pilot project nominations were solicited and reviewed. Such FTE waivers would have been an important component of many proposed pilots. At the same time, the Administration was eliminating and simplifying many requirements affecting the operation of Federal agencies. The Federal Personnel Manual was eliminated by OPM, and thousands of pages of instructions and requirements disappeared. Procurement regulations were substantially streamlined. With far fewer requirements in place, waiver demand was lessened as well.
In this context, OMB concluded that too few waivers would be authorized to designate any pilot project, and have that pilot serve as a credible test of the managerial accountability and flexibility provisions of GPRA. We also decided that it was better to have no flexibility pilots than to proceed with designations that would be viewed as not being a serious demonstration or test of the managerial flexibility and accountability provisions of GPRA.
A major effort currently underway to create Performance Based Organizations (PBOs) may be the preferred means for some agencies to obtain managerial flexibility in the near-term. PBOs are given greater personnel and procurement flexibility for a commitment to achieve specific improvements in performance. The PBOs must be legislatively authorized, and their flexibility may encompass relief from selected statutory requirements as well as administrative requirements. The PBOs present a much closer analog to the flexibility given managers in other countries using a performance-based approach to management then is available under GPRA.
While no flexibility pilot projects were designated, the collaboration among the four central management agencies both in defining a process for reviewing and deciding on waivers and identifying possible waivers, forms a good foundation for government-wide implementation of this aspect of GPRA.
C. Performance Budgeting Pilot Projects
GPRA requires that not less than five departments or agencies be designated as performance budgeting pilots for fiscal years 1998 and 1999. These pilots are to develop budgets that display the varying levels of performance resulting from different budgeted amounts. The pilot project must cover one or more of the major functions or operations of the agency.
OMB has notified the chairmen of the Senate Committee on Governmental Affairs and the House Committee on Government Reform and Oversight that it plans to defer the start of the performance budgeting pilot projects by one year. This would reschedule the alternative presentation of the pilot project performance budgets until the fiscal year 2000 budget. This deferral does not affect the schedule or content requirements for agency strategic plans and annual performance plans.
III. EXEMPTIONS AND POTENTIAL CHANGES TO GPRA
Congress also asked that OMB address a number of specific issues in the May 1997 report.
A. Agency Exemptions
OMB is authorized to exempt certain agencies from having to meet the requirements of the Act for strategic plans, annual performance plans, and annual program performance reports. Independent agencies with $20 million or less in annual outlays are eligible for an exemption. Approximately half the agencies requesting an exemption received one. The agencies exempted from the statute are listed in our report. Not every eligible agency sought an exemption; the exempted agencies comprise about a third of the eligible agencies. OMB believes no change in the $20 million amount is needed at this time.
B. Framework for Tax Expenditure Analysis
The Senate Committee on Governmental Affairs report on GPRA requests that the Director of OMB establish and describe a framework for analysis of tax expenditure provisions. The framework used to evaluate tax expenditures is expected to follow the basic structure for performance measurement, which is concerned with inputs, outputs, and outcomes. The framework is also expected to promote comparisons of tax expenditures with other means of addressing their main objectives or budget functions, such as spending or regulatory programs.
To explore methods for tax expenditure evaluation, the Department of the Treasury this year will have lead responsibility for pilot evaluations of several selected tax-expenditure provisions. These provisions involve individual, business, and international taxation issues. This approach will enable Treasury to gather experience on a cross-section of issues and also to spread the evaluation effort across its staff resources. As this work progresses, the General Accounting Office and the Joint Committee on Taxation will also be consulted. The expectation is that a schedule of additional evaluations of tax expenditures will be included in the government wide performance plan that will be published as a part of the President's Fiscal Year 1999 Budget.
Developing a framework that is appropriately comprehensive, accurate, and flexible to reflect the objectives and effects of the wide range of tax expenditures will be a significant challenge. It is expected that this framework will evolve and improve over the next several years and that quantitative estimates will be made to the extent possible. The measures developed could then be compared with the costs of the provisions and with the costs and benefits of other means of achieving similar performance goals.
C. Amending the Government Performance and Results Act
Section 6 of the GPRA required OMB to include in its May 1997 report any recommended changes in the various provisions of the Act. The experience to date in implementing GPRA has not identified any provisions that require change. OMB has separately described certain changes in GPRA timelines that would be needed if GPRA schedules were to conform to a biennial Federal budget, if a two-year budget became law.
As noted earlier, we expect agencies to provide useful and informative strategic and annual performance plans within the timeline specified by the Act. Even as performance measures become more refined, however, we should always bear in mind that using performance measures in the budgeting process will never be an exact science. For example, an under-performing program may benefit from additional resources, not fewer. Comparing results across program lines will always require political judgments about the relative priorities, for example, of programs for highways and education. And we should not lose sight of the fact that performance information will often be used to adjust the way programs are managed rather than to change the resources provided. Accurate, timely performance information is important in all these situations and this is why the Administration is committed to the successful implementation of GPRA.
This concludes my statement, Mr. Chairman. I'd be pleased to take any questions you may have.