THE WHITE HOUSE
Office of the Press Secretary
Accompanying Report of the National Performance Review
Office of the Vice President
Washington, DC
September 1993
Improve GAO documentation of best practices and use of feedback loops. (1)
The President should work with the congressional leadership to encourage GAO to document best practices when found. GAO should also encourage agency management to spread best practices and institutionalize them. As part of GAO's ongoing TQM initiative, it should accelerate the process of developing feedback loops to GAO from executive branch agencies. In addition, it should revise the "Yellow Book" to further develop the concept of feedback loops.
The number of congressionally mandated reports required of federal executive branch agencies continues to grow rapidly, following a growth trend that has lasted a quarter century. In fiscal year 1980, agencies produced approximately 4,000 reports in response to congressional oversight requirements. Congress, this year, will require executive branch agencies to prepare approximately 5,000 reports.(1) The preparation costs of these reports is believed to exceed $100 million.
One reporting requirement can spawn multiple reports. For example, the Omnibus Budget Reconciliation Act of 1990 required more than 38 reports from a single agency. Reporting requirements can be either recurring (annual or semi-annual) or one-time. The Agency for International Development (AID), for example, must submit approximately 60 reports to Congress during fiscal year 1993; approximately half are one-time requirements, but the remainder are recurring reports.(2) But even one-time reports can impose substantial burdens. The Department of Defense produced 654 one-time reports in fiscal year 1993.(3) Reporting requirements affect small as well as large agencies. For example, the Merit Systems Protection Board (MSPB), an agency with a staff of about 300, must produce 70 congressionally mandated reports this year. These duties are assigned to 4.2 full-time employees at an estimated cost of $257,121.(4)
Various cost estimates of report production have been made over the last 12 years. In 1980, the General Accounting Office estimated the federal government spent $80 million producing 4,000 reports.(5) In 1983, $86 million was spent to produce 4,300 reports.(6)
In addition to reports by agencies directly to Congress, central oversight and management agencies such as the Office of Management and Budget (OMB), the General Services Administration (GSA), and the Office of Personnel Management (OPM) also collect information from federal agencies for submission to Congress.
Table 1 summarizes the number of reports required by Congress from selected agencies.(7)
Table 1:Reports Required of Selected Agencies by Congress, July 1993 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Agency No. of Reports Due ^^^^^^ ^^^^^^^^^^^^^^^^^^ President of the United States 773 Department of Defense 443 Department of the Interior 235 Department of Health and Human Services 203 Department of Energy 199 Department of State 197 Federally Chartered Corporations 176 Department of Transportation 170 Department of Agriculture 106 Department of Commerce 106 Department of Education 99 Department of Housing and Urban Development 99 Department of Justice 98 Department of the Treasury 97 Office of Management and Budget 78 Environmental Protection Agency 70 Department of Labor 52 General Services Administration 46 National Aeronautics and Space Administration 38 Agency for International Development 32 Office of Personnel Management 31 Federal Emergency Management Agency 26 Resolution Trust Corporation 25 Department of Veterans Affairs 23 National Science Foundation 21 Small Business Administration 17 The Intelligence Community (CIA, NSA) 14
All others, including Independent Agencies
and Commissions 1,524 ^^^^^ TOTAL 4,998
Source: House Information Systems, July 1993
Congress ensures adequate oversight of the executive branch by requiring agencies to regularly report on their activities. Some reports, however, seem to have little intrinsic value. For example, annual reports include the financial statements of Micronesia and the Marshall Islands, and a report on the cost effectiveness of furnishing therapeutic shoes to sample groups of Medicare beneficiaries. Eliminating unnecessary reports will improve the way government functions and streamline the bureaucracy.
In addition, some Inspectors General recommend that the Chief Financial Officers Act be amended to allow discretion as to reporting on the financial condition of government funds rather than requiring annual reports on all funds. In addition, a special task force of the President's Council on Integrity and Efficiency recommends eliminating annual compliance reports such as management controls over advisory and assistance awards and implementation of antiinfluencing requirements.(8) The cost of these reports is believed to greatly exceed their benefits.
Many reports, while initially valuable, may no longer be necessary for several reasons:
Alternatives exist that could provide needed information at a much lower cost. For example, an electronic information system shared by congressional committees and executive branch agencies could allow data to be exchanged quicker and at a lower cost.
Congress should set a goal of eliminating at least half of all congressionally mandated reports. Agency heads should identify candidate reports that can be combined with others or eliminated altogether and supply adequate justification to Congress for that action.
In the past, an essential factor in the elimination of reports has been the provision of convincing reasons. In 1988, the General Accounting Office concluded that inadequate justification of reports proposed for elimination significantly contributed to the failure of a 1986 congressional effort to reduce congressionally mandated reporting requirements. In that effort, Congress eliminated 71 percent of the reports whose elimination agencies had adequately justified. Elimination dropped to 10 percent when agencies did not provide adequate justification. As a result, only 23 reports were eliminated, out of a total of 240 recommended.(12)
The Senate Committee on Governmental Affairs, Subcommittee on Oversight of Government Management, has recently revisited this issue and is drafting legislation with bipartisan support to eliminate or modify unnecessary or outdated reporting requirements.
2. Review new reporting requirements for management impact, and include a sunset provision. (3)
The growth of new reporting requirements also must be controlled. Congress should assess the management implications, particularly the cost, of each newly proposed reporting requirement. The cost of requiring new information from the agencies should be compared with the ensuing benefit. Congress and OMB should jointly develop standards for Congress to apply when performing cost/benefit analyses on newly proposed reporting requirements. Congress should report in committee the cost/benefit comparison for each proposed reporting requirement before its enactment.
In addition, Congress should include a sunset provision requiring congressional reassessment of each newly adopted reporting requirement at least every two to four years. The sunset provision would ensure that the information requested still merits the cost of preparing and analyzing the report. Sunset provisions ensure that the burdens of congressionally mandated reports are controlled.
NPR's Improving Financial Management report proposes related measures with respect to federal financial reporting requirements. Specifically, that report proposes that the appropriate congressional committees subject future financial reporting requirements to a cost/benefit analysis.
Improving Financial Management, FM09: Simplify the Financial Reporting Process.
The cost of internal agency directives is tremendous. The cost of researching, writing, printing, storing, and maintaining internal directives, guidance, and procedures are themselves huge. However, the additional expenses of training, supervising, implementing, waiting for clearances, collecting and analyzing data, monitoring performance, and enforcing and auditing regulations, plus preparing the countless reports, generate further costs not always easy to measure but which are equally draining on limited agency resources. A full accounting must also include the cost of delay, confusion, loss of initiative, and paralysis resulting from the inevitable impression on so many workers that nothing is permitted, least of all creativity or initiative.
The demands of internal directives and regulations are growing faster than the executive branch itself over the past 10 years. Although executive branch personnel grew only 7 percent between 1980 and 1990/1991, in the personnel function the number of employees increased 11 percent, in financial management staff grew 27 percent, and in procurement it jumped 60 percent.(1) In the case of procurement, much of this growth is attributed to the increase in the number of internal directives.(2)
A Case Study. Figure 2 is a tally of internal regulations and the number of pages of directives and regulations affecting one field office in the Department of the Interior--a relatively unregulated state office of the Bureau of Land Management in Idaho. In other words, the total is a minimum rather than an average or a worst case. Using the most conservative estimates, there are nearly 33,000 pages of internal regulations and handbook requirements that apply to this office of less than 200 people.(3) The numerous additional agencies with at least partial jurisdiction, plus the case law and interpretations, and various other commentaries, would increase the total pages several fold, as would applicable state and local regulations.
This tally of directives, guidance, and regulations does not directly measure their burden. A single regulation may impose a huge burden, while in some cases there were several regulations per page. But the tally does indicate how obsessive the regulatory process has become. It is hard to believe that this number of regulations can be internally consistent and always the best approach for local circumstances.
Sources of Overregulation. It is easy to blame the proliferation of regulations on Congress, but the issue is more complex. Problems may be seen as falling into one of three categories: general system failures, individual failures (due to problems in training, judgement, or integrity), and acceptable error levels. The private sector approach, which admittedly may be very difficult in the public sector, is to treat system failures aggressively, provided the solution is cost-effective. It also rectifies individual failures by providing training or other remedies to the individual (like firing people who steal). General error rates are monitored to be sure they do not become uncontrollable. The current government approach, by contrast, is zero tolerance for error and treatment of every failure as a general system failure, remedied solely by law or regulation even if the occurrence was isolated.
There are perverse incentives that contribute to the proliferation of internal directives and regulations. For example, successful vendors have a self-interest in complex procurement regulations--they have adapted to them, they bar entry of competitors and, in certain costtype contracts, vendors get paid for the time required to comply with the regulations while outsiders do not. Federal employees rationalize requests for larger staffs and position upgrades on the ever more complex regulations their agencies must enforce.(4)
Figure 2
Tally of Internal Directives and Regulations Affecting The Idaho State Office of the Department of the Interior's Bureau of Land Management, 1993
Manual Biann. Fed Dir/ Circ/ Instr. Source Regs---Supplmnts---Bltns---Stmnts---Memos---ndbks ****** **** ********* ***** ****** ***** ***** #/Pgs. #/Pgs. #/Pgs. #/Pgs. #/Pgs. #/Pgs OPM */* 59/* GSA 6,160/2,687 OPM 2,260/1,131 2,040/1,721 OSHA. 587/1,456 EEOC. 45/30 */* DOT 136/61 */* DOE 63/258 DOI 1,628/3,081 830/1,890 BLM 19,052/9,546 750/* 7,366/8,093 State of Idaho BLM 109/917 227/2,047
Total 9,251/5,623 20,789/13,544 59/* 2,040/1,721 977/2,047 8,196/9,983
The tally of pages was conducted by actual count of pages. The tally of regulations was conducted by actual count using the tables of contents when available. Both tallies were conducted with assistance and guidance from the responsible offices. In some cases, there is more than one regulation to a page. Guidance in the handbooks is required, equivalent to a regulation. Totals for OMB Circulars and Bulletins and for BLM Instructional Memoranda are for Fiscal Year 1993--large quantities of additional ones are still in effect from previous years. The tallies from handbooks and interpretive statements are based on the number of directives within the handbooks and interpretive statements respectively. The asterisk (*) notes offices that were unable to provide tallies, usually because the totals were larger than they were willing to count.
Narrow definitions were used for regulations and handbooks. As a result, their tallies are vastly lower than other published figures, which include case law, interpretations, and other secondary sources. These secondary sources frequently exceed 5,000 pages per agency.
The tally is limited to the chain of command (the Department, the Bureau, and the state office itself) and the primary federal agencies with jurisdiction over the operations in the state office (Office of Management and Budget, General Services Administration, Office of Personnel Management, and the relevant portions from the Occupational Safety and Health Administration, the Equal Employment Opportunity Commission, the Department of the Treasury, and the Department of Energy). The tally excludes the regulations of numerous additional federal agencies with jurisdiction over aspects of the state office (e.g., Environmental Protection Agency, Historic Preservation, Small Business Administration, etc.).
The tally also excludes the regulations and case law covering various aspects of government legal process that also have jurisdiction over the state office. These include the Administrative Dispute Resolution Act, the Agency Practice Act, the Claims and Debt Collection Acts, the Contract Disputes Act, the Equal Access to Justice Act, the Federal Advisory Committee Act, the Federal Tort Claims Act, the Freedom of Information Act, the Government in the Sunshine Act, and so forth.
In short, the total of pages is a very conservative figure.
According to a 1992 study by the Merit Systems Protection Board, procurement regulations have become so complex that it is no longer reasonable to expect qualified procurement officers to use them effectively.(5)This impasse is due to a combination of the large number of complex regulations and the speed with which they must be applied.
Overregulation is not limited to procurement, but is a governmentwide problem, according to a still-relevant 1983 study by the National Academy of Public Administration:
Federal management systems are now over-regulated in the sense that, by accretion, each has acquired an overburden of controls, limitations and constraints, reviews and approvals, data requirements, and other mandates, which, in total, significantly reduce their value and effectiveness.(6)
Most regulations start with a law, usually designed to solve a specific problem. The central management agencies (Office of Management and Budget, Office of Personnel Management, General Services Administration) then develop a regulatory process to implement the law. The departments then interpret how the regulations should be applied in their agencies through additional regulations.(7) The agencies and bureaus then customize that process, frequently with regulations at both the national and regional level and occasionally at the local level. This chain produces an inevitable torrent of internal regulations. There is currently much variation in compliance and enforcement of these regulations within any given agency.
Goal of Internal Deregulation.
The goal of internal deregulation is to weed out needless regulations
so that: (1) the outcomes to be achieved are clearly articulated; (2)
responsibilities for decisionmaking and action are clearly assigned;
(3) direct and objective measures of accomplishment exist; (4)
oversight shifts from process to outcome; (5) there is a clear
understanding of the fiscal and ethical propriety required in public
administration; and (6) the remaining regulations and requirements
for uniformity are given highest priority.
Regulatory reform will greatly increase accountability, creativity, and motivation, while decreasing the administrative costs of completing work. The goal is certainly not to give federal workers carte blanche to do as they choose, but allow them to get the job done by the most sensible means possible within the bounds of fiscal and ethical propriety.
For years the burden of internal regulation has been something like Mark Twain's observation about the weather: Everyone talks about it, but no one does anything about it. But in the last few years there have been enough experiments that a best practices model has emerged.
A pivotal point was discovered at the Department of Commerce. According to Alan Balutis, the Department's Director for Budget, Planning and Organization, about two-thirds of the requests for waivers from internal regulations submitted as part of Commerce's reinvention effort seek relief from regulations not even required in the first place. Balutis concludes that much of the internal regulatory burden is self-inflicted, either from informal withdrawal of authority by non-required reviews, from a desire for "security blanket" documentation to avoid individual responsibility, or from a control mentality that confuses 100 percent review with an appropriate level of oversight. What is needed, Balutis said, is not an edit of the regulations but meaningful reform.
A Success Story: Forest Service.
Dale Robertson, then Associate Chief of the Forest Service, undertook
a bold reform in 1985. He saw his agency's budget declining while
overhead was increasing, and feared the Forest Service would strangle
in red tape.(8) The original 20-page handbook written by Gifford
Pinchot, the agency's founding director, had grown to a bloated tome
17 feet thick.
Robertson selected four test units (three forests and a research station) and completely deregulated them. He gave them authority to reach their planning targets in the most efficient way they could devise, discarding needless regulations on the condition that the participants remained within the bounds of the law, basic policy, budget integrity, and congressional direction.
Robertson also implemented "end-results budgeting." The test units were responsible for only one to eight line items, consolidating from nine to 15 programs in a single line item. Budget performance would be evaluated through output targets, such as number of acres reforested, rather than solely through strict, detailed spending targets. Appropriations would be biennial, and the four test units would be free to shift dollars among any of the programs in a consolidated line item.
The General Accounting Office found that "end results budgeting is conceptually sound."(9) Internal evaluations showed that the test units also saved money. In the Eastern Region, for example, 11 separate hierarchies were merged into five team groups with interlocking expertise and responsibilities. The regional office cut its budget by $2 million, reduced its staff by 40 positions, and reduced its overhead to the agency's lowest. The region provided 12,000 proposals that eliminated outdated rules, streamlined work procedures, and improved the quality of work life.(10)
It was only when the needless rules were stripped away and management was empowered to use the budget wisely that the managers themselves truly became accountable for goal accomplishment while maintaining fiscal and ethical propriety, according to Bill Delaney, the analyst responsible for evaluating the pilot program. In 1989, the Forest Service chief acknowledged the success of the pilot study and signed a new management philosophy establishing the pilot approach nationwide. (11)
Unfortunately, Congress rejected the proposal to permit service-wide end-results budgeting, and the service's deregulation effort lost a good deal of momentum. The 17 feet of regulations were reduced by about two-thirds. But objective measures were not established, and the revision of the hand-books was not included. Program managers quietly shifted many of the requirements to handbooks or directives, with the result that much of the deregulation progress was illusory. The emphasis on management controls and documentation is still so strong that the pilot efforts are "caught between two cultures," according to Delaney. He sees the current rate of progress as slow.
A Success Story: Department of Veterans Affairs. The Department of Veterans Affairs reported success in its Management Efficiency Pilot Program (MEPP). The MEPP, conceived as a three-year pilot program starting in 1987, was supported departmentwide and by the House Veterans Affairs Committee. The program's goals were to provide flexibility to managers in the field, cut red tape, and ease restrictions and reporting requirements.
The results were positive. MEPP approved over 1,000 waivers. This resulted in improved veterans service and millions in savings.(12) The MEPP experiment went so well that it is currently being expanded on an incremental basis beginning with 38 new MEPP sites. Waiver requests continue being processed on an ongoing basis.
A Success Story: Air Force.
In 1992, General Merrill A. McPeak, Air Force Chief of Staff,
established the Policy Review Initiative, headed by Brigadier General
M.L. Haines. The Initiative is replacing 1,510 regulations with 165
policy directives and 750 instructions. Each new policy averages
about five pages, of which no more than one page is the policy
itself, about three pages are the performance measurements, and the
remainder are definitions and applicability standards. The Initiative
will cut the 55,000 pages of intermingled policy and procedures to
approximately 18,000 pages, which will clearly separate policy from
procedure.
The deregulation effort is managed by a staff of about 10 plus the policy writers and various consulting editors. Full reform will require about 30 calendar months and will be completed in fiscal year 1994. Hand-books, manuals, and other non-directive publications will be produced over a five-year cycle.(13)
To develop the basic performance measures, the team first identified the decisions and the information bases for the decisions, and then selected the most important outcome.(14) For example, the basic performance measure for the motor pool is the percent of requests filled with a suitable vehicle. The basic performance measure for the lawyers was the number of case settlements favorable to the Air Force, counting both cases won and settlements more favorable than the expected trial outcome. The basic performance measure for longrange planning was the percent of plans incorporated into the budget. The basic performance measures for pollution prevention were reduction in pollutants purchased and pollutants discharged.
There were initially many skeptics to General McPeak's initiative. Developing the measures was difficult, requiring several versions to eliminate perverse incentives. It was also difficult for individuals to accept being held accountable to these standards. Most groups initially believed their areas could not be measured. However, the only areas where appropriate measures could not be developed were those where high-level policy regulations were inappropriate.
At the end of the initiative, the headquarters will be free to focus on policy, using real measures of outcomes. And the field will have clear guidance, clear delegations, clear accountability, and useful handbooks.
Now that all the policies, instructions, and handbooks are in digital form, the Air Force is converting the entire set of documents to CDROM disks because of the dramatic cost savings.(15) The process will be completed by mid-1994, at which point the Air Force will stop printing paper copies.
The entire Defense Department is now converting all its directives:
First, to clarify--from top to bottom--its policy guidance, and to ingrain forever the principle of clear, concise policy unmistakably separated from essential procedures. Second, once the policy is clarified and separated, policy accomplishment must be measured to assess how well it is carried out. Third, procedures must be pushed to the lowest possible level. People should be given the necessary latitude to carry out policy in a way that best fits local conditions.(16)
The agencies noted above have cut their own regulations, but have no power to reduce the thousands of regulations from the central management agencies with jurisdiction over them. Deregulation is often more difficult in the central management agencies, because so many of the requirements are statutory. But the results are worth the effort because of the appreciable cumulative effect on the remaining agencies. The following example shows that the central management agencies can also reduce the number of regulations.
A Success Story in Progress: General Services Administration. The Federal Acquisition Regulation (FAR) Improvement Project was designed by GSA and the Civilian Agency Acquisition Council to determine how the FAR could more effectively serve its customers: government contracting personnel and the contractors. GSA sent questionnaires for dissemination to 12 federal agencies, the Small Agency Council, and the National Contract Management Association. About 95 percent of the respondents suggested one or more ways to improve the FAR.(17) The most common suggestions were to provide greater flexibility in the FAR for exercising good business judgment, to consult users in the formulation of necessary regulations, to ensure that regulations are consistent and clear, to provide more guidance but less regulation wherever possible, and to notify users of regulatory revisions prior to their effective date. These are essentially the same issues as for internal deregulation. The FAR Council formed an Executive Committee, which reviewed the recommendations and established 19 implementation projects broken into four sub-groups: philosophy, policy, automation, and training.(18) Most of the projects are scheduled for completion by the end of 1995.
The GSA approach may serve as a model for other central management agencies to deregulate. In the future, such reform should include objective performance measures. The Bottom Line Outcome Measures developed by the OPM in conjunction with federal personnel directors illustrate that meaningful performance measurement is possible even in difficult-to-measure administrative areas.(19) A strong deregulation effort in the central management agencies would inspire other agencies by showing that deregulation is possible even in areas highly constrained by laws. While it would be possible to deregulate central management agencies first and then the remaining agencies later, such sequencing would delay total deregulation many years.
Two Basic Approaches.
There are two basic approaches to deregulation. The top-down method
(Air Force and GSA) is faster, more systematic, and emphasizes clear
headquarters policy. The bottom-up method is slower, but allows
testing and emphasizes field priorities. The bottom-up method can be
driven by either waivers (Veterans Affairs) or pilot sites (Forest
Service). Because waivers identify the specific decisions being
decentralized, they allow the changes to be more rapidly extended to
all offices. The experiences of these agencies show it is not only
possible to cut back on internal regulation, but also, with top
management support, it is relatively straightforward to dramatically
cut back, leading to better work at lower cost without endangering
fiscal and ethical propriety.
Lessons Learned.
Identifying the need for deregulation is not enough. The solution has
to be successfully carried through to completion. A GAO study of 12
governmentwide management initiatives undertaken between 1970 and
1980 concluded that these initiatives failed to achieve their
objectives for a number of reasons: rapid turnover in executive
branch leadership, a lack of real consensus on what constitutes good
management, lack of careful implementation planning and execution,
and lack of adequate staffing and management attention to management
concerns.(20)
The agency examples described above give some dimension to the levels of leadership, consensus building, planning, resources, administrative support, and sustained effort required to achieve deregulation objectives. The number of people required and the length of time will of course depend on the size and complexity of the agency, but the total is smaller than first assumed. The range in the agencies described above is 5-15 concentrated work years for the headquarters policy task force, and probably a similar but more dispersed number to write the field handbooks. Most agencies should be able to conduct an effort this size within current employment levels and budget.
In addition, the headquarters task force and field writers will need training. At the present time no such training exists, but the Department of Defense Policy Directive Team has prepared a very helpful work plan.(21) If there is a governmentwide push to reform internal regulations, it would be appropriate to assign training to federal training centers, which in turn could seek guidance in training design from the agencies that have already undertaken such efforts.
There is no alternative to sustained sponsorship from agency top management. Only senior staff can initiate radical deregulation and overcome the inevitable resistance and conflicts.
Reduce internal regulations by at least 50 percent over the next three years. (2)
The President should issue an executive order to all departments and agencies--including central management agencies such as OMB, OPM, and GSA--to cut the number and the pages of their internal directives and regulations in half. An exception can be made for agencies that have already recently met the goal, such as certain parts of GSA and the Air Force.
The Office of Management and Budget should be tasked with ensuring sustained support of this deregulation effort, including exchanging information, coordinating efforts, sharing solutions, and identifying training needs and methods.
To implement this executive order, departments and agencies should develop plans for deregulation that include these four steps:
Agency heads should establish a speedy timetable and provide the continuing resources, emphases, and conflict resolution needed to complete successful regulatory reform. Agency heads must also ensure that no "shadow" systems develop to retain decisionmaking at higher levels. Agency heads must also guarantee that once a high-level policy is established, there is rigorous, uniform enforcement and that performance assessment is pursuant to the new standards.
While law and regulation are essential to good government, their uniform application can stifle innovation, waste resources, and stymie rather than fulfill program objectives. State and local governments are often frustrated by federal requirements that offer little or no benefit to communities that do not "fit the mold" for which the requirement was created.(1) Categorical grants from the federal government may require activities or levels of expenditure for specific purposes (e.g., special education, drug rehabilitation) in every state regardless of need or community priorities. The enabling legislation usually prohibits federal agencies or state or local governments from reprogramming scarce funds to meet the goals of the program. Or overly detailed legislation may undermine implementation. For example, agencies administering any of the federal government's programs for the poor must verify many details about people's lives. They must verify that a family receiving funds under the Aid to Families with Dependent Children program does not own a car worth more than $1,500 in equity value. To give the same family food stamps, it must verify that the family doesn't own a car worth more than $4,500 in market value. Medicaid specifies a range that it allows for the value of a recipient's car. There are exceptions for each program."Why can't we talk about the same car in all three programs?" queried Vice President Gore.(2) With a system of waivers, it could be done.
Federal agencies encounter similar frustrations with the dictates of central management agencies, such as the Office of Management and Budget (OMB), the Office of Personnel Management (OPM), and the General Services Administration (GSA). These agencies are responsible for implementing governmentwide policies. Like state and local governments, federal line managers often find these rules and regulations inapplicable to their needs. A frequent example expressed in the Vice President's Town Hall meetings is the use of staffing ceilings that restrict civil service hiring and therefore force agencies to contract for services that would be more economically performed in-house.
A few agencies (Department of Health and Human Services, Department of Defense (DOD), Internal Revenue Service) have been granted some latitude under research and demonstration authorities to waive nonstatutory requirements--largely with positive results. One success is the Management Efficiency Pilot Program (MEPP) at the Department of Veterans Affairs. Established in 1987, MEPP approved over 1,000 waivers resulting in improved veterans service, better resource utilization, millions in cost savings, and improved employee morale.(3) Unfortunately this increased discretion has not spread widely throughout government.
Each of the numerous laws, regulations, rules, and policies was motivated by rational, well-intended, and fair-minded desires to serve a specific public purpose or to solve a particular problem. Taken together, however, they can create more problems than they solve. Solutions to isolated problems often have unintended consequences, often making a situation worse than the original problem.
One Size Fits All.
Our system of laws and regulations can never be perfect. First, it is
exceedingly difficult to create laws and regulations that fit the
wide range of conditions found across America. Those requirements
that fit "on average" may be dysfunctional in situations that are not
typical. Second, laws and regulations from different parts of the
government can and do result in conflicting or incompatible
requirements. For example, food industries may have difficulty
meeting both the Food and Drug Administration's requirement for
equipment that is easily cleaned and the Occupational Safety and
Health Administration's requirement for equipment with noise
suppression. Third, as conditions, circumstances, and public needs
change, laws and regulations become less effective and appropriate,
even if they were initially well-drafted. As societal change
accelerates, this becomes an increasing problem.
Exceptions? Change the Law.
The formal legal mechanisms to resolve these problems are changes in
the laws and regulations or the pursuit of judicial relief. These
processes, however, are time consuming, expensive, and uncertain.
Major statutory or regulatory changes can take years, and will not be
undertaken unless and until the authorities are truly convinced of
the need for change. Successful challenges to existing laws and
regulations require resources, expertise, and stamina to endure
lengthy and often frustrating appeals. Many potential petitioners are
intimidated by the high costs and slim chances of a successful
challenge. Instead, a state or local government may choose not to
apply for a federal program, or a federal manager may give only
minimal compliance or lip service to irrational restrictions. In the
end, the results sought by the Congress are only achieved at the cost
of decreased efficiency and effectiveness, or are not achieved at
all. The solution is waiver authority, which has the potential to
alert authors of laws or regulations to the need for change.
Experience with DOD's Model Installation Program, the reinvention labs of the Department of Veterans Affairs, and the Forest Service indicates that the returns from more liberal waiver approval are substantial and the risks of abuse and evasion are low.
There is an overwhelming need for appreciable relief from ineffective and unnecessary requirements, whether too general, ill-considered-- counterproductive in some instances--or obsolete. Cases in which strict adherence to law or regulation would result in unintended and undesirable consequences should be of immediate interest to lawmakers and regulators. Such circumstances provide opportunities for fruitful reforms. A proposed waiver in furtherance of the statutory intent, limited in scope and duration, and with measurable results is an excellent means for testing an alternative regulatory scheme. It is in the interest of lawmakers and regulators, as well as affected parties, to encourage carefully crafted waivers and an expeditious review process. In the best sense, such waivers are experiments for government's reinvention, not its wholesale abdication.
Improve Ways to Meet Program Goals. In the recently enacted Government Performance and Results Act (GPRA), Congress recognized this need and instituted a process for "granting of managerial accountability and flexibility waivers; that is, the opportunity to be exempt from specific types of non-statutory administrative procedural requirements, in return for achieving greater program results than would otherwise occur."(4) This provision of the GPRA applies to agencies in the executive branch with specific limitations. "The requirements eligible for waiver are exclusively those regarding the internal allocation and use of resources. They do not include any requirements that directly affect persons or activities outside the agency."(5)
While the Congress "believes that the Act provides an important first step in a direction that may pay significant dividends,"(6) realizing the full potential of waivers requires a greater effort by both the executive and legislative branches to extend the waiver process beyond the administrative activities of Federal agencies. In addition to the GPRA, other examples of current legislation providing waivers include the Economic Enterprise Zone bill with broad, general waiver authority and the Goals 2000: Educate America bill with tighter limits on the granting of waivers.(7)
A controlled waiver process must be based on the legal authority being waived. Except when the courts intervene, only Congress can legislate the conditions under which a statutory requirement can be waived. Consideration of legislative requirements should include the conditions under which waivers and exemptions would be appropriate; such provisions should be incorporated into the statute. Generally, it should encourage variations that improve chances for achieving intended program results. Similar consideration should go into the design of regulatory programs. A process that encourages waivers in furtherance of the statutory intent, limited in scope and duration, and with measurable results, can only foster the potential effectiveness and efficiency of regulation.
The controlling process for the waiver, however, should not in itself become a bureaucratic nightmare. For example, the two-year waiver process for certain state Medicaid grants requires 18 months of work. So state officials have to reapply after only six months. As a result, timeliness and the volume of paperwork required need to also be factors in designing such a process.
Establish a process for obtaining waivers from federal regulations and identify the regulations for which this process applies. (1)
The President should direct each agency to establish and publicize an open process for obtaining waivers from that agency's regulations. The process should address the following considerations:
Waiver authority should not be sought or instituted for all programs. Waivers should further the statutory intent, be limited in duration and scope, and have measurable results. Waiver authority is appropriate when the petitioner needs a waiver to innovate, such as a state developing a new welfare program. It is also appropriate when changes in circumstances outpace changes in rules. It is inappropriate when agencies are requiring public or private entities to act for health, safety, or environmental reasons. For example, states should not have any additional authority to seek waivers of Clean Air Act requirements, either for themselves or for private entities. Such waivers would not further the purposes of the legislation.
Agencies must designate those existing regulations or programs for which the waiver authority will apply. The waiver process should be instituted immediately for those regulations for which the agency has the authority to do so. Where agencies need a statutory change to institute the waiver process, the Administration should seek such legislation. As new legislative requirements are proposed, explicit provisions for waiver authority should be considered. The current presumption that legislative requirements cannot be waived should be reversed so that agency heads have authority to waive requirements unless legislation explicitly prohibits waivers. The Administration should seek legislation to accomplish such reversals.
Each agency should be responsible for maintaining a data base tracking waivers requested and granted by that agency, including the expected duration and results of each waiver. When a waiver demonstrates its value, or when significant patterns and trends detected by the agencies suggest that regulations or laws create pervasive problems, the agency should revise or abolish the requirement. For example, 48 state agencies have waivers from the Medicaid program allowing them to provide community-based services as an alternative to nursing home care, which is the service routinely covered by Medicaid.(8) With such a preponderance of states seeking waivers, the basic policy clearly demands attention.
Strengthening the Partnership in Intergovernmental Service Delivery, FSL02: Reduce Red Tape Through Regulatory and Mandate Relief.
Mission-Driven, Results-Oriented Budgeting, BGT05: Provide Line Managers With Greater Flexibility to Achieve Results.
Rethinking Program Design, DES: Preamble.
Executive Office of the President, EOP02: Modify the OMB Circular System.
Department of Health and Human Services, HHS02: Reengineer The HHS Process for Issuing Regulations.
Department of Veterans Affairs, DVA08: Decentralize Decisionmaking Authority to Promote Management Effectiveness.
Summary of Actions by Implementation Category
Each action item has been categorized by focus of implementation, as follows:
(1) Agency heads can do themselves:
SMC02.3 Revise government-sponsored management training to teach management control as an integral function of management, not as a reporting requirement.
SMC03.1 Change the emphasis of IG's from compliance auditing to evaluating management control systems.
SMC03.2 Change the IG's' method of operation to be more collaborative and less adversarial.
SMC03.3 Establish performance criteria for IG's.
SMC03.4 Do not offer bonuses to IG's.
SMC04.1 Define clearly the clients of the Offices of General Counsel.
SMC04.2 Use franchising and other market mechanisms to encourage OGC staffs to respond appropriately to their clients.
SMC04.3 Develop performance measures and feedback loops for general counsels to encourage close cooperation with clients.
SMC05.1 Improve GAO documentation of best practices and use of feedback loops.
SMC08.1 Establish a process for obtaining waivers from federal regulations and identify the regulations for which this process applies.
(2) President, Executive Office of the President, or Office of Management and Budget can do:
SMC01.1 Redesign the existing set of control mechanisms for the executive branch, using a systems design approach.
SMC02.1 Rewrite OMB Circular A-123, "Internal Control Systems," to be a succinct document that defines the policy for establishing and reviewing management controls.
SMC02.2 Replace OMB's existing Internal Control Guidelines with a handbook on management controls.
SMC02.3 Revise government-sponsored management training to teach management control as an integral function of management, not as a reporting requirement.
SMC07.1 Reduce internal regulations by at least 50 percent over the next three years.
(3) Requires legislative action:
SMC06.1 Eliminate at least half of all congressionally mandated reports.
SMC06.2 Review new reporting requirements for management impact, and include a sunset provision.
Sample of "External" Staff Review Functions
Function:
Performs audit, evaluation, inspection, investigation, & review
activities; reviews legislation; promotes economy, prevents fraud,
waste, & abuse.
Staff Years:
15,158*
Estimated Budget FY 1994
$1.3B
Overlap:
Broad investigative & audit authority.
Can overlap all other offices.
Schedule:
As needed.
Function:
Performs audits & evaluations as directed by Congress.
Staff Years:
4,900
Estimated Budget FY 1994:
$437M
Overlap:
Broad audit authority. Can overlap all other offices.
Schedule:
As requested
Function:
Preemptive activities. Intervention in management through the use of
SWAT Teams when there is breakdown or when there are budgetary
shortcomings .
Staff Years:
534
Estimated Budget FY 1994:
$53M
Overlap:
Agency management and budget offices.
Schedule:
As needed.
Function:
Controls environmental degradation, set standards, monitor compliance
and enforcement through audits, investigations, & reviews.
Staff Years:
3,500
Estimated Budget FY 1994:
$350M
Overlap:
State programs.
Schedule:
As needed.
Function:
Conducts special studies & reviews of OPM.
Staff Years:
280
Estimated Budget FY 1994:
$26.4M
Overlap:
Coordinates with GAO on some studies.
Schedule:
Annual studies on selected topics.
Function:
Audits federal agencies, compliance with government personnel laws &
regulations.
Staff Years:
40
Estimated Budget FY 1994:
$8.0M
Overlap:
Some overlap with OSC in area of prohibited personnel practices.
Schedule:
Every 5 years.
Function:
Reviews agency ethics programs, audits financial disclosure reports.
Staff Years:
39
Estimated Budget FY 1994:
$3.2M
Overlap:
Can overlap agency responsibilities.
Schedule:
Every 3 years.
Function:
Investigates allegations of prohibitive personnel practices & Hatch
Act violations.
Staff Years:
100
Estimated Budget FY 1994:
$8M
Overlap:
Overlap agency responsibilities.
Schedule:
As needed.
Function:
Limited investigations & some audits to ensure compliance with
federal EEO requirements.
Staff Years:
2,850
Estimated Budget FY 1994:
$230M
Overlap:
Overlap agency responsibilities.
Schedule:
As needed or requested.
Function:
Sets safety & health standards & inspection of employees & federal
workers.
Staff Years:
70
Estimated Budget FY 1994:
$8.7M
Overlap:
Some overlap in the private sector (migrant labor camps).
Schedule:
By priorities (inspects 6 million employers with 90 million
employees).
General Services Administration,
Function:
Audits agencies to determine level of procurement authority to
approve. Provides outside assessment of IRM program.
Staff Years:
15
Estimated Budget FY 1994:
Not reported
Overlap:
None.
Schedule:
Every 3 years.
Office of Management and Budget,
Function:
Provides procurement policy leadership. Brings consistency to federal
procurement policies & practices; advises the President on
procurement issues. Oversees federal agencies to ensure compliance.
Staff Years:
31
Estimated Budget FY 1994:
$3M
Overlap:
None.
Schedule:
As needed.
Function:
Performs contract administration on most DOD contracts. Also performs
audit, evaluation, inspection, investigation and review activities.
Staff Years:
3,900
Estimated Budget FY 1994:
$250M
Overlap:
None.
Schedule:
As needed.
Function:
Audits 95% of federal government contractors.
Staff Years:
5,524
Estimated Budget FY 1994:
$355M
Overlap:
None.
Schedule:
Annual.
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
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