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STATEMENT OF JOHN A. KOSKINEN DEPUTY DIRECTOR FOR MANAGEMENT OFFICE OF MANAGEMENT AND BUDGET BEFORE THE 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.
IV. CONCLUSIONS
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.
The Budget | Legislative Information | Management Reform/GPRA |