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THE WHITE HOUSE

Office of the Vice President


For Immediate Release Septemebr 1, 1993

Transforming Organizational Structures -- Part 2

                      Accompanying Report of the 
                     National Performance Review
        
                    Office of the Vice President
        
                          Washington, DC
                          September 1993

Recommendations and Actions


ORG01: Reduce the Costs and Numbers of Positions Associated with Management Control Structures by Half

Action

Reduce the costs associated with management control structures by one half over a five-year period.

The costs of management control structures should be cut roughly in half as a consequence of the implementation of decentralization, empowerment, reduced regulation, and other NPR recommendations over the next five years. Roughly 650,000 to 700,000 individuals work in management control positions at an estimated annual cost of $35 billion to $40 billion annually (see Appendix B for an illustrative breakout by major agency). A portion of the savings should be reinvested in quality management initiatives, improved technology, training of administrative staff reassigned to line positions, and methods to continuously reduce control structures. Significant savings, however, are not expected in the first few years due to early outs, buyouts, severance pay, training, relocation, and guaranteed outplacement services, which will be provided to the affected staff.(1)

As part of the initiative to streamline management control structures, the President should

Reengineering work processes will require legislative changes in some cases, but this strategy will also play a major role in streamlining management control structures.

The preferred method for both reducing the costs of the central control positions and increasing the span of control is through a broad offering of separation incentives-- not just to the estimated 650,000 to 700,000 employees in positions related to the control structures. In this way, employees in the targeted positions, who are not eligible for early outs or do not elect a buyout, can be transferred to line positions as they become vacant. With a broad offering of incentives coupled with a commitment to train and reassign staff, a reduction-in-force--the least desirable method of streamlining--might be minimized.

The President's Management Council (PMC) will oversee and coordinate the strategic plans for reductions in costs of central control structures and in increasing the management span of control. The PMC consists of chief operating officers--the senior leaders of cabinetlevel departments as well as large agencies--who are in a position to know the best way to cut administrative costs while improving performance.

Traditionally, streamlining efforts directed by central management agencies have been across-the-board cuts. While these efforts led successfully to temporary cuts in staffing, they did not result in improved performance and left behind many of the same problems without changing the culture. The PMC is charged with a very different streamlining initiative that is driven by a reduction in costs--not just people--and is specifically directed toward better government at less cost. PMC will need operational assistance in this effort and should identify the type of assistance needed from the Office of Management and Budget (OMB), the Office of Personnel Management (OPM), and the Federal Quality Institute, as required.

NPR's estimates in the magnitude of existing management controls and their associated costs are hampered by a lack of a clear measure of their scope. Therefore, an early charge to the PMC from the President should be to define baseline costs and expected savings in a standardized way that is acceptable to and understandable by most people. For much the same reason, PMC--supported operationally by OMB and OPM--should define and track progress toward increasing the ratio of workers in relation to managers in the federal government.(3)

Endnotes

  1. See NPR's Accompanying Report Reinventing Human Resource Management, HRM14: Provide Incentives to Encourage Voluntary Separations.
  2. The reduction in 252,000 positions includes the 100,000 FTE cuts required by Executive Order 12839.
  3. See NPR's Accompanying Report Streamlining Management Control, SMC01: Implement a Systems Design Approach to Management Control.

ORG02: Use Multi-Year Performance Agreements Between

the President and Agency Heads to Guide Downsizing Strategies

Action

Use multi-year performance agreements between the President and agency heads as a tool or guide for downsizing, reengineering, partnering across established boundaries, and empowering teams with authority, skill, and accountability. (2)

Performance agreements should be used to identify methods for measuring progress toward agreed-upon results and systemic changes that will allow major reductions in the costs and number of staff dedicated to central control structures.(1) In exchange for these commitments, the Executive Office of the President should support agencies with increased flexibility through regulatory relief, executive orders, or legislative initiatives. Service reductions should not be accepted if they are across-the-board or if substantial administrative costs and staff remain in headquarters or regional offices. Where possible a criteria like the Postal Service's "Do they touch the mail?" should be developed by each agency.

Endnotes

  1. See NPR's Accompanying Report Mission-Driven, Results-Oriented Budgeting, BGT01: Develop Performance Agreements With Senior Political Leadership That Reflect Organizational and Policy Goals.

ORG03: Establish a List of Specific Field Offices to be Closed

Action

Within 18 months, establish a list of specific field offices to be closed and submit this list to Congress for approval. (2)

The President should charge the President's Management Council (PMC) with coordinating an 18-month government-wide review culminating in the submission to Congress of a list of civilian field offices that should be closed. This should be a participative process between the agencies, the Executive Office of the President, and congressional leaders using objective criteria and review processes to establish the closure lists.

Agencies with existing plans for restructuring field offices should remain on schedule and not await the PMC submission.


ORG04: The President Should Request Authority to Reorganize Agencies

Action

Legislation should be enacted to grant the President reorganization authority. (3)

Congress should reinstate the President's authority to restructure agencies in the executive branch. Congress has given the President statutory reorganization authority several times (for limited periods) since the 1930's. The last authority was granted through the Reorganization Act Amendments of 1984, which expired at the end of 1984. In the absence of such authority, the President can only reorganize through the standard, time-consuming legislative process.


ORG05: Sponsor Three or More Cross-Departmental Initiatives Addressing Common Issues or Customers
Action

Initiate three or more cross-agency efforts to improve service delivery or policies addressing common issues or customers. (2)

To establish cooperative efforts between agencies on issues such as illegal immigration, food safety, debt collection, welfare reform, and homelessness, the President's Management Council (PMC) should initiate three or more initiatives, starting in fiscal year 1995. The PMC should identify lead officials, clearly define the mission, and help establish performance agreements between the participating agencies. The PMC and the participating agencies should establish reporting schedules and use the results to foster and better implement other cooperative efforts.


ORG06: Identify and Change Legislative Barriers to CrossOrganizational Cooperation

Action

Identify restrictive regulations and laws that are barriers to crossorganizational cooperation and develop legislative proposals to eliminate them. (3)

Restrictive legislative provisions such as those contained in the Treasury, Postal Service, and General Appropriations Act of 1993 (P.L. 102-393), the Intergovernmental Personnel Act, and Title 31 of the U.S. Code, should be modified to make funding of cross-agency activities easier when it is in the public's best interest.

Eliminate phrases such as "no part of any appropriation contained in this or any other Act shall be available for interagency financing of boards, commissions, councils, committees, or similar groups" and "which do not have a prior and specific statutory approval to receive financial support from more than one agency or instrumentality."


Appendices

Appendix A:

Summary of Actions by Implementation Category ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

(2) President, Executive Office of the President, or Office of Management and Budget can do

ORG01: Reduce the costs associated with management control structures by one half over a five-year period.

ORG02: Use multi-year performance agreements between the President and agency heads as a tool to guide agency efforts to streamline, reengineer, partner across established boundaries, and empower teams with authority, skills, and accountability.

ORG03: Prepare a list of specific field offices to be closed and submit it to Congress for action.

(3) Requires legislative action

ORG04: Legislation should be enacted to grant the President reorganization authority.

ORG05: The President's Management Council should initiate three or more cross-agency efforts to improve service delivery or policies addressing common issues or customers.

ORG06: Remove legislative barriers to cross-organizational cooperation.

Appendix B:

Illustrative Table of Areas of Management Control that Should be Considered as Potential Targets for Streamlining

Numbers of Personnel*

 Table 1         Supervisors,       Personnel        Budget      
 *******          Managers &      Administrators      Staff    
                    SES
                ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Air Force         26,915            3,687           1,875
 
 Agricultur        14,017            2,047             565
 
 Army              40,400            5,676           4,903
 
 Commerce           5,556              547             214
 
 Defense           16,259            1,458             472
 
 Justice           15,661            1,483             296
 
 Labor              3,013            1,438              95
 
 Energy             4,073              424             245
 
 Education            786               91              51
 
 EPA                3,098              236              88
 
 GSA                3,589              323             209
 
 HHS               16,789            1,753             483
 
 HUD                2,094              263              50
 
 Interior          10,915            1,399             482
 
 NASA               4,351              397              40
 
 Navy              35,822            4,278           3,699
 
 OPM                  865            1,549              21
 
 State              2,455              210              97
 
 DOT               11,313              913             236
 
 Treasury          18,826            3,531             291

Veterans
Affairs 26,403 2,323 358

Other 15,258 2,244 494 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total 278,458 36,270 15,264

 Table 2       Accountants    Acquisition   Headquarters   
 *******       & Auditors     Specialists    Personnel     Total**
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Air Force          5,867         10,323       4,544       53,211
 
 Agricultur         3,360          5,327       9,643       34,959
 
 Army              11,275         11,513       7,362       81,129
 
 Commerce             613          1,068       2,221       10,219
 
 Defense           11,201         16,301       3,799       49,490
 
 Justice            1,643            685      11,164       30,932
 
 Labor                376            196       4,218        9,336
 
 Energy               820            970       5,167       11,699
 
 Education            351            364       2,512        4,155
 
 EPA                  519            377       4,118        8,436
 
 GSA                  996          1,097       2,046        6,546
 
 Interior           2,001          1,687       7,340       23,824
 
 NASA                 639          1,229       1,437        8,093
 
 Navy               9,164         11,274       4,383       68,620
 
 OPM                  199             32       1,430        4,096
 
 State                402             72       6,078        9,314
 
 DOT                1,427          1,028       8,581       23,498
 
 Treasury           6,854            769      16,472       46,743

Veterans
Affairs 4,477 1,984 3,113 38,658

Other 4,329 2,965 38,115 63,405 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total 70,190 72,597 188,587 661,366

*Note: Totals reflect the rounding off of full-time equivalent allocations

**Note: Agency totals in Table 2 include Table 1.

Sources Used to Make Estimate

The following sources were used to develop estimates of the types of categories of staff that should be considered in the development of agency streamlining efforts. Because agencies use different Education approaches to the use of personnel classification categories, these numbers are not definitive sources on which to base staffing reductions. Also, because of differences in definitions, the numbers included in defining management control and headquarters can vary substantially. For example, some agencies would include certain types of contractors; others would not.

Supervisors, Managers, and Senior Executives

These figures were taken from Office of Personnel Management reports. They are the sum of supervisors and managers as of March 1993 and allocations of Senior Executives as of September 1990.

Personnel Administrators

This refers to the number of personnel by agency in the 200 series less military personnel specialists (series 204 and 205). The data were published in OPM publication MW-56-22 dated September 30, 1991. The numbers were adjusted to exclude supervisors based on each agency's supervisor to nonsupervisor ratio (derived from OPM reports).

Budget Staff

These figures represent the number of personnel by agency in the 560 and 561 series published in OPM publication MW-56-22 dated September 30, 1991. The numbers were adjusted to exclude supervisors based on each agency's supervisor to nonsupervisor ratio. For this reason, these numbers are lower than the 17,550 reported in the MissionDriven, Results-Oriented Budgeting report.

Financial Management, Accountants, and Auditors

This includes the number of personnel by agency in the 500 series less budget staff (560s and 561s) and tax personnel (512s, 526s, 545s, 570s, 592s,and 593s) published in OPM publication MW-56-22 dated September 30, 1991. The numbers were adjusted to exclude supervisors based on each agency's supervisor to nonsupervisor ratio. This estimate is lower than the figure of 120,000 reported in the Improving Financial Management report because that report includes budget specialists, supervisors, and some management and budget analysts' staff in series 343.

Acquisition Specialists

This refers to the number of personnel in the 1101, 1102, 1103, 1105, 1106, 1150, and 1910 series from OPM publication MW-56-22 dated September 30, 1991. The numbers were adjusted to exclude supervisors based on each agency's supervisor to nonsupervisor ratio. This estimate is lower than the figure of 142,000 reported in the Reinventing Federal Procurement report because that report includes other logistics functions as well as supervisors.

Headquarters Personnel

Headquarters personnel are the personnel constituting headquarters staff as reported to the National Performance Review by the agencies; a proxy was used for Department of the Treasury and "Other." The proxy is the number of personnel by agency in the Washington, D.C., area. The numbers were reduced by 28.5 percent to account for duplication of headquarters personnel who might also be supervisors or specialists. The 28.5 percent factor is the ratio of supervisors and specialists to total civilians in the Washington, D.C., area.

Total Management Control Staff

This figure represents the number of management control personnel, by agency. It is the sum of all previous columns, and should be the primary target for streamlining reductions.

Appendix C:

Accompanying Reports of the National Performance Review

Governmental Systems Abbr.

Changing Internal Culture

Creating Quality Leadership and Management QUAL

Streamlining Management Control SMC

Transforming Organizational Structures ORG

Improving Customer Service ICS

Reinventing Processes and Systems

Mission-Driven, Results-Oriented Budgeting BGT

Improving Financial Management FM

Reinventing Human Resource Management HRM

Reinventing Federal Procurement PROC

Reinventing Support Services SUP

Reengineering Through Information Technology IT

Rethinking Program Design DES

Restructuring the Federal Role

Strengthening the Partnership in
Intergovernmental Service Delivery FSL

Reinventing Environmental Management ENV

Improving Regulatory Systems REG

Agencies and Departments Abbr.

Agency for International Development AID

Department of Agriculture USDA

Department of Commerce DOC

Department of Defense DOD

Department of Education ED

Department of Energy DOE

Environmental Protection Agency EPA

Executive Office of the President EOP

Federal Emergency Management Agency FEMA

General Services Administration GSA

Department of Health and Human Services HHS

Department of Housing and Urban Development HUD

Intelligence Community INTEL

Department of the Interior DOI

Department of Justice DOJ

Department of Labor DOL

National Aeronautics and Space Administration NASA

National Science Foundation/Office
of Science and Technology Policy NSF

Office of Personnel Management OPM

Small Business Administration SBA

Department of State/ U.S. Information Agency DOS

Department of Transportation DOT

Department of the Treasury/ Resolution Trust Corporation TRE

Department of Veterans Affairs DVA