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Office of the Press Secretary

For Immediate Release June 30, 1994

Streamlining Management Control -- Part 2

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.


  1. U.S. General Accounting Office, The Role of the General Accounting Office, GAO/T-OPP-93-1 (Washington, D.C.: U.S. General Accounting Office [GAO], June 10, 1993).
  2. Ibid, pp. 16-17.
  3. Ibid, p. 2.
  4. U.S. General Accounting Office, Quality Improvement Plan: An Update, "Continuous Improvement: The Quality Challenge," March 1993.
  5. U.S. General Accounting Office, Government Auditing Standards (Washington, D.C.: GAO, 1988 Revisions), pp. 7-10 and 7-11.

SMC06: Reduce the Burden of Congressionally Mandated Reports


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

Need for Change

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.


  1. Eliminate at least half of all congressionally mandated reports. (3)

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.

Cross References to Other NPR Accompanying Reports

Improving Financial Management, FM09: Simplify the Financial Reporting Process.


  1. U.S. Congress, House, House Information Systems (HIS) Database, Reports Due to Congress (Washington, D.C., July 1993).
  2. NPR Accompanying Report Agency for International Development, AID02: Reduce Funding, Spending, and Reporting Micromanagement.
  3. U.S. Department of Defense, Office of the Comptroller, "Memorandum on Assignment of Responsibility for Reports Required by Congress," January 21, 1993, attached graph. These figures do not correspond to the data in the House Information Systems.
  4. Interview with Paul Mahoney and Marsha Scialdo Boyd, Merit Systems Protection Board, July 1993. The 4.2 employees are responsible for completing reports to executive branch central oversight agencies as well as reports to Congress.
  5. U.S. General Accounting Office, A Systematic Management Approach Is Needed For Congressional Reporting Requirements, PAD-82-12 (Washington, D.C.: U.S. General Accounting Office [GAO], November 25, 1981).
  6. U.S. President's Private Sector Survey on Cost Control, Management Office Selected Issues, Volume VIII: "The Cost of Congressional Encroachment" (Winter 1983), p. 83.
  7. Because some agency reports are reported twice, separately and also in the All Others category, the total number of reports listed in the HIS Database, Reports Due to Congress is approximately 4,998, and not 5,348, as originally reported.
  8. Special Task Force of the President's Council on Integrity and Efficiency (PCIE), July 1993.
  9. Congressional Reports Elimination Act of 1985, Senate Report 99- 211, p. 2.
  10. Ibid., p. 2.
  11. Ibid., p. 3.
  12. U.S. General Accounting Office, Congressional Reports: Efforts to Eliminate or Modify Reporting Requirements Need to be Improved, GAO/AFMD-88-4 (Washington, D.C.: GAO, April 19, 1988), p. 5.

SMC07: Reduce Internal Regulations by More Than 50 Percent


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


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.

Need for Change

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:

  1. Purge agency internal regulations. Excise everything but the highest level policy guidance plus the requirements of laws or other immutable outside guidance, requirements of health and safety, and requirements where national uniformity is absolutely required.
  2. Establish an objective output measure for each policy. Agree on terms.(22) Define the measure and show a sample bar chart as part of the policy, so that it is evident what will be tracked and how. Incorporate user satisfaction and economic measures as appropriate. These measures may change with experience--plan for flexibility and periodic review. Update measures in other systems (e.g., Chief Financial Officer Act) as measures are proven to be successful.
  3. Provide useful handbooks of best practices, technical assistance, and other optional help. Get field practitioners to write the handbooks rather than headquarters policy staff. This tends to provide appropriate language and real help, and ensures that writers do not have vested interests in inserting requirements into these publications. If economical, publish the handbooks along with the policies electronically or on CD-ROM.
  4. Allow field staff to identify authorities and systems for decentralization by requesting waivers from regulations. The presumption is that most waiver requests will be granted, and the requests will identify areas needing permanent decentralization. Both the top-down deregulation and the bottom-up waiver requests are needed so there is a "push-pull" effect, with deregulation driven both by the headquarters and the field (also see SMC08: Expand the Use of Waivers to Encourage Innovation).

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.


  1. See Figure 1: Staff Growth in Selected Staff Functions, 1980 - 1990/91, p. 10 of this report.
  2. See NPR Accompanying Report Reinventing Federal Procurement, PROC2: Build an Innovative Procurement Workforce.
  3. According to the BLM Idaho personnel office, there are 195 permanent and 30 temporary employees in that office. There are approximately 350 additional permanent employees in the Idaho District and Resource areas, but these offices also have additional regulations.
  4. Interview with the Assistant Director for General Management, Office of Management and Budget.
  5. Merit Systems Protection Board, Workforce Quality and Federal Procurement: An Assessment (Washington, D.C., July 1992).
  6. National Academy of Public Administration, Revitalizing Federal Management: Managers and Their Overburdened Systems (Washington, D.C., November 1983), p. 2.
  7. The nomenclature of government entities can be confusing. Technically, the heads of both departments and agencies report to the president, while the heads of bureaus report to department heads. In this paper, the term agency is used generically to refer to agencies, bureaus, departments, commissions, and other entities.
  8. Robertson, Dale, "How to Overcome a Sluggish Bureaucracy and Tap Into the Strengths of Your People," Vital Speeches (1987).
  9. U.S. General Accounting Office, Forest Service: Evaluation of "End-Results" Budgeting Test (Washington, D.C. : U.S. General Accounting Office, March 1988).
  10. United States Forest Service, Shaping a New Culture (1992).
  11. United States Forest Service, Chartering a Management Philosophy for the Forest Service (December 19, 1989).
  12. Department of Veterans Affairs, Management Efficiency Pilot Program: Innovative Test is Meeting Overall Expectations (March 1990).
  13. Department of the Air Force, Policy Development and Management Information System Storyboard (September 1992).
  14. Ibid.
  15. Department of Defense, Defense Performance Review, Policy Directives Team, DOD Policy Directive Team Report (July 14, 1993). The Defense Logistics Agency (DLA) made a one-time capital investment of $900,000, which allowed annual cost savings of $600,000 by eliminating conventional printing of publications and reducing distribution and storage costs, plus annual cost avoidance of $1,370,000 through the elimination of inserting page changes in DLA publications. The CD-ROM disks are replaced every three months with updated versions. In other words, the savings more than paid for the conversion in the first year. The issues in comparing CD-ROM to traditional printing are clearly identified and easy to understand: See U.S. Department of Transportation, Federal Aviation Administration, If, When, Why and How to Publish with CD-ROM, A Guide to the Planning Process (1992).
  16. Ibid.
  17. General Services Administration, The FAR Improvement Project: An Assessment of User Views (June 1991).
  18. General Services Administration, FAR Improvement Project Executive Committee Report (October 1992).
  19. Office of Personnel Management, Strategic Plan for Federal Human Resource Management, Appendix (1989). This report is currently being updated.
  20. National Academy of Public Administration, p. 7.
  21. See DOD, Defense Performance Review.
  22. Duquette, Dennis, "Enter the Era of Performance Measurement Reporting," Government Accountants Journal (Summer 1992).

SMC08: Expand the Use of Waivers to Encourage Innovation


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.

Need for Change

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.

Cross References to Other NPR Accompanying Reports

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.


  1. See the discussion on federal mandates and regulatory relief in the NPR Accompanying Report Strengthening the Partnership in Intergovernmental Service Delivery.
  2. Vice President Al Gore, From Red Tape to Results: Creating a Government That Works Better and Costs Less (Washington, D.C.: U.S. Government Printing Office, September 1993), p. 38.
  3. See recommendation on decentralized decisionmaking in the NPR Accompanying Report Department of Veterans Affairs. See also U. S. Department of Veterans Affairs, Management Efficiency Pilot Program Final Report (Washington, D.C., 1991).
  4. U.S. Congress, Senate, Government Performance and Results Act of 1993, Report of the Committee on Governmental Affairs, Report No. 103-58 (Washington, D.C., undated), p. 17.
  5. Ibid.
  6. Ibid.
  7. Economic Enterprise Zone Act of 1993 (H. R. 850) and the Goals
  8. Educate America Act (S. 846).
  9. See the NPR Accompanying Report Department of Health and Human Services, HHS02: Reengineer the HHS Process for Issuing Regulations.


Appendix A:

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.

Appendix B:

Sample of "External" Staff Review Functions

Office of Inspectors General

Inspector General Act 1978, As Amended, 5 USC, App (1982); OMB Circular A-73 & A-110

Performs audit, evaluation, inspection, investigation, & review activities; reviews legislation; promotes economy, prevents fraud, waste, & abuse.

Staff Years:

Estimated Budget FY 1994

Broad investigative & audit authority. Can overlap all other offices.

As needed.

General Accounting Office

31 USC 712

Performs audits & evaluations as directed by Congress.

Staff Years:

Estimated Budget FY 1994:

Broad audit authority. Can overlap all other offices.

As requested

Office of Management and Budget

Presidential Directives and EO 11541, EO 12151

Preemptive activities. Intervention in management through the use of SWAT Teams when there is breakdown or when there are budgetary shortcomings .

Staff Years:

Estimated Budget FY 1994:

Agency management and budget offices.

As needed.

Environmental Protection Agency

Clean Water Act, Clean Air Act, Superfund, etc.

Controls environmental degradation, set standards, monitor compliance and enforcement through audits, investigations, & reviews.

Staff Years:

Estimated Budget FY 1994:

State programs.

As needed.

Merit Systems Protection Board

Civil Service Reform Act 1978, Reorganization Act 1204 (a) (3) and 1206

Conducts special studies & reviews of OPM.

Staff Years:

Estimated Budget FY 1994:

Coordinates with GAO on some studies.

Annual studies on selected topics.

Office of Personnel Management, Agency Compliance & Evaluation

Civil Service Reform Act, Title 5 USC 1103 & 1104

Audits federal agencies, compliance with government personnel laws & regulations.

Staff Years:

Estimated Budget FY 1994:

Some overlap with OSC in area of prohibited personnel practices.

Every 5 years.

Office of Government Ethics

Ethics in Government Act 1978, Title 4

Reviews agency ethics programs, audits financial disclosure reports.

Staff Years:

Estimated Budget FY 1994:

Can overlap agency responsibilities.

Every 3 years.

Office of Special Counsel

Civil Service Reform Act 1978, Reorganization Act, 5 USC, Section 1214 (a) (1) (A)

Investigates allegations of prohibitive personnel practices & Hatch Act violations.

Staff Years:

Estimated Budget FY 1994:

Overlap agency responsibilities.

As needed.

Equal Employment Opportunity Commission

Title 7 of Civil Right Acts of 1964. Expanded Authority under the Civil Service Reform Act 1978

Limited investigations & some audits to ensure compliance with federal EEO requirements.

Staff Years:

Estimated Budget FY 1994:

Overlap agency responsibilities.

As needed or requested.

Occupational Safety & Health Administration

Occupational Safety & Health Administration Act

Sets safety & health standards & inspection of employees & federal workers.

Staff Years:

Estimated Budget FY 1994:

Some overlap in the private sector (migrant labor camps).

By priorities (inspects 6 million employers with 90 million employees).

General Services Administration,

In-formation Resource Management Policy

Paperwork Reduction Act, Brooks Act

Audits agencies to determine level of procurement authority to approve. Provides outside assessment of IRM program.

Staff Years:

Estimated Budget FY 1994:
Not reported


Every 3 years.

Office of Management and Budget,

Office of Federal Procurement Policy

Public Law 98-191 1974 Public Law 93-4000 Amended at least 4 times

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:

Estimated Budget FY 1994:


As needed.

Defense Contract Management Command

Defense Management Review Decision 916. DAR FAR Supplement Part 42

Performs contract administration on most DOD contracts. Also performs audit, evaluation, inspection, investigation and review activities.

Staff Years:

Estimated Budget FY 1994:


As needed.

Defense Contract Audit Agency

DOD Directive 5105.36. OMB Circular 73

Audits 95% of federal government contractors.

Staff Years:

Estimated Budget FY 1994:


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

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