oversight

Executive Reorganization Authority: Balancing Executive and Congressional Roles in Shaping the Federal Government's Structure

Published by the Government Accountability Office on 2003-04-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Committee on Government Reform,
                          House of Representatives




For Release on Delivery
Expected at 10 a.m. EST
Thursday,
                          EXECUTIVE
April 3, 2003
                          REORGANIZATION
                          AUTHORITY
                          Balancing Executive and
                          Congressional Roles in
                          Shaping the Federal
                          Government’s Structure
                          Statement of David M. Walker
                          Comptroller General of the United States




GAO-03-624T
                          A
                                               April 3, 2003


                                               EXECUTIVE REORGANIZATION
                                               AUTHORITY
Highlights of GAO-03-624T, testimony
before the Committee on Government             Balancing Executive and Congressional
Reform, House of Representatives
                                               Roles in Shaping the Federal
                                               Government's Structure

GAO has sought to assist the                   In view of the overarching trends and the growing fiscal challenges facing
Congress and the executive branch              our nation, there is a need to consider the proper role of the federal
in considering the actions needed              government, how the government should do business in the future, and in
to support the transition to a more            some instances, who should do the government’s business in the 21st
high performing, results-oriented,             century.
and accountable federal
government. At the Committee’s
request, GAO provided perspective              The fundamental issue raised by the proposal to grant reorganization
on the proposal to reinstate the               authority to the President is not whether the government’s organization can
authority for the President to                 and should be restructured, but rather, whether and how the Congress
submit government restructuring                wishes to change the nature of its normal deliberative process when
plans to the Congress for expedited            addressing proposals to restructure the federal government. This testimony
review.                                        makes the following key points:

                                               •   Given current trends and increasing fiscal challenges, a comprehensive
The President and the Congress                     review, reassessment, and reprioritization of what the government does
may wish to consider alternative                   and how it does it is clearly warranted. This is especially vital in view of
provisions geared toward whether                   changing priorities and the compelling need to examine the base of
policy or operational issues are                   government programs, policies, and operations since, given GAO’s long-
being considered. Further, they                    term budget simulations, the status quo is unsustainable over time.
may wish to consider establishing
processes (e.g., a commission) that            •   While the intent of such a review is desirable and some expedited
provide for the involvement of key                 congressional consideration may well be appropriate for specific issues,
players and a means to help reach                  the Congress also has an important role to play in government reform
consensus on any specific                          initiatives, especially from an authorization and oversight perspective.
restructuring proposals that would
                                                   In contrast to the past “one-size-fits-all” approaches in developing new
be submitted for consideration by
the Congress.                                      executive reorganization authority, the Congress may want to consider
                                                   different tracks for proposals that propose significant policy changes
                                                   versus those that focus more narrowly on government operations.
                                                   Further, Congress may want to consider establishing appropriate
                                                   processes to ensure the involvement of key players, particularly in the
                                                   legislative and executive branches, to help facilitate reaching consensus
                                                   on specific restructuring proposals that would be submitted for
                                                   consideration, should the Congress enact a new executive reorganization
                                                   authority.

                                               •   Modern management practices can provide a framework for developing
                                                   successful restructuring proposals. Such practices include: establishing
                                                   clear goals, following an integrated approach, developing an effective
                                                   human capital strategy, considering alternative program delivery
                                                   mechanisms, and planning for both initial and long-term implementation
                                                   issues to achieve a successful transformation. Furthermore, successful
                                                   implementation will depend in part on continuing congressional
www.gao.gov/cgi-bin/getrpt?GAO-03-624T.
                                                   oversight. The Congress could significantly enhance its efficiency and
To view the full report, including the scope       effectiveness by adapting its own organization to mirror changes in the
and methodology, click on the link above.          executive branch.
For more information, contact Patricia A.
Dalton at (202) 512-6806 or
daltonp@gao.gov.
Mr. Chairman and Members of the Committee:

Good morning. I appreciate the opportunity to discuss the proposal to
reinstate the authority for the President to submit government
restructuring plans to the Congress and obtain expedited review. Both the
Congress and the administration are to be complimented for stating their
intent to increase the focus on how to improve the efficiency and
effectiveness of the federal government as we begin the 21st century. This
hearing is evidence of such increased commitment.

GAO has sought to assist the Congress and the executive branch in
considering the actions needed to support the transition to a more high
performing, results-oriented, and accountable federal government. We
believe that it is crucial for both the Congress and the executive branch to
work together in a constructive manner on “good government” issues that
are designed to improve the economy, efficiency and effectiveness of
government on a continual basis. At the same time, the Congress has
important constitutional authorization, appropriation, and oversight roles
that must be considered.

The fundamental issue raised by the proposal to grant executive
reorganization authority to the President is not whether the government’s
organization can and should be restructured, but rather how best to deal
with this issue. In this regard, the recent Volcker Commission1 and GAO
have noted the need to review and revise the current federal government
structure. Given that historically executive reorganization authority has
included certain “fast track” provisions for congressional review, the
question at hand is whether and how the Congress wishes to change the
nature of its normal deliberative process when addressing proposals to
restructure the federal government.

My statement today will focus on several key issues:

1. Given current trends and increasing fiscal challenges, a comprehensive
   review, reassessment, and reprioritization of what the government does
   and how it does it is clearly warranted. This is especially vital in view of
   changing priorities and the compelling need to examine the base of



1
 National Commission on the Public Service, Urgent Business for America: Revitalizing
the Federal Government for the 21st Century (Washington, D.C.: January 2003).




Page 1                                                                    GAO-03-624T
    government programs, policies and operations since, given GAO’s long
    range budget simulations, the status quo is unsustainable over time.

2. While the intent of such a review is desirable and some expedited
   congressional consideration may well be appropriate for specific
   issues, the Congress has an important role to play in management
   reform initiatives, especially from an authorization and oversight
   perspective. In the past, the Congress has adopted “fast track”
   approaches for specific areas. However, depending on the nature of
   future legislative proposals that will be submitted, they could have
   profound implications for the relative role the Congress plays in
   developing legislation and conducting oversight to enhance the
   performance and ensure the accountability of the executive branch. In
   contrast to the past “one-size-fits-all” approaches, in developing new
   executive reorganization authority, the Congress may want to consider
   different tracks for proposals that propose significant policy changes
   versus those that focus more narrowly on operations. Further,
   Congress may want to consider establishing appropriate processes
   (e.g., a commission) to ensure the involvement of key players to help
   reach consensus on any specific reorganization proposals that would
   be submitted for consideration by the Congress, should the Congress
   enact new executive reorganization authority.

3. Modern management practices can provide a framework for developing
   successful restructuring proposals. Such practices include:
   establishing clear goals, following an integrated approach, developing
   an effective human capital strategy, considering alternative program
   delivery mechanisms, and planning for both initial as well as long-term
   implementation issues. Furthermore, successful implementation will
   depend in part on continuing congressional oversight. The Congress
   could significantly enhance its efficiency and effectiveness by adapting
   its own organization to mirror changes in the executive branch.

Presumably, the Congress will want to obtain the input of GAO and other
parties before enacting any substantive proposals. As a result, any
timeframes for expedited consideration should allow for a reasonable
period for this to occur.

This testimony draws upon our wide-ranging ongoing and completed work
on government transformation, organization, and management issues. We
also reviewed the history of major reorganization efforts as well as the
legislative history of executive reorganization authority. We conducted our



Page 2                                                          GAO-03-624T
                        work in accordance with generally accepted government auditing
                        standards.



Need to Reexamine       The federal government is in a period of profound transition and faces an
                        array of challenges and opportunities to enhance performance, ensure
Government Structures   accountability, and position the nation for the future. As you know, our
to Meet 21st Century    country’s transition into the 21st century is characterized by a number of
                        key trends including:
Challenges
                        • the national and global response to terrorism and other threats to
                          personal and national security;

                        • the increasing interdependence of enterprises, economies, civil society,
                          and national governments, referred to as globalization;

                        • the shift to market-oriented, knowledge-based economies;

                        • an aging and more diverse U.S. population;

                        • advances in science and technology and the opportunities and
                          challenges created by these changes;

                        • challenges and opportunities to maintain and improve the quality of life
                          for the nation, communities, families, and individuals; and

                        • the changing and increasingly diverse nature of governance structures
                          and tools.2

                        As the nation and government policymakers grapple with the challenges
                        presented by these evolving trends, they do so in the context of an
                        overwhelming fact: The fiscal pressures created by the retirement of the
                        baby boom generation and rising health care costs threaten to overwhelm
                        the nation’s fiscal future. Our latest long-term budget simulations reinforce
                        the need for change in the major cost drivers—Social Security and health
                        care programs. By midcentury, absent reform of these entitlement
                        programs and/or other major tax or spending policy changes, projected
                        federal revenues may be adequate to pay little beyond interest on the debt


                        2
                         U.S. General Accounting Office, Strategic Plan 2002-2007 (Washington, D.C.: June 2002).




                        Page 3                                                                      GAO-03-624T
and Social Security benefits. Further, our recent shift from surpluses to
deficits means that the nation is moving into the future in a weaker fiscal
position.

In response to the emerging trends and long-term fiscal challenges the
government faces in the coming years, we have an opportunity to create
highly effective, performance-based organizations that can strengthen the
nation’s ability to meet the challenges of the 21st century and reach beyond
our current level of achievement. The federal government cannot accept
the status quo as a “given”—we need to reexamine the base of government
programs, policies, and operations. We must strive to maintain a
government that is effective and relevant to a changing society—a
government that is as free as possible of outmoded commitments and
operations that can inappropriately encumber the future, reduce our fiscal
flexibility, and prevent future generations from being able to make choices
regarding what roles they think government should play.

Many departments and agencies were created in a different time and in
response to problems and priorities very different from today’s challenges.
Some have achieved their one-time missions and yet they are still in
business. Many have accumulated responsibilities beyond their original
purposes. Others have not been able to demonstrate how they are making a
difference in real and concrete terms. Still others have overlapping or
conflicting roles and responsibilities. Redundant, unfocused, and
uncoordinated programs waste scarce funds, confuse and frustrate
program customers, and limit overall program effectiveness.3




3
  U.S. General Accounting Office, Managing in the New Millennium: Shaping a More
Efficient and Effective Government for the 21st Century, GAO/T-OGC-00-9 (Washington,
D.C.: Mar. 29, 2000).




Page 4                                                                   GAO-03-624T
Our work has documented the widespread existence of fragmentation and
overlap from both the broad perspective of federal missions and from the
more specific viewpoint of individual federal programs. As new needs are
identified, the common response has been a proliferation of
responsibilities and roles to federal departments and agencies, perhaps
targeted on a newly identified clientele, or involving a new program
delivery approach, or, in the worse case scenario, merely layered onto
existing systems in response to programs that have failed or performed
poorly. Though our work also suggests that some issues may warrant
involvement of multiple agencies or more than one approach,
fragmentation and overlap adversely impacts the economy, efficiency and
effectiveness and of the federal government.4

It is obviously important to periodically reexamine whether current
programs and activities remain relevant, appropriate, and effective in
delivering the government that Americans want, need, and can afford. This
includes assessing the sustainability of the programs, as well as the
effectiveness of the tools—such as direct spending, loan guarantees, tax
incentives, regulation, and enforcement—that these programs embody.
Many federal programs—their goals, organizations, processes, and
infrastructures—were designed years ago to meet the needs and demands
as determined at that time and within the technological capabilities of that
earlier era. The recent report of the Volcker Commission similarly
observed that “[f]ifty years have passed since the last comprehensive
reorganization of the government” and that “[t]he relationship of the
federal government to the citizens it services became vastly broader and
deeper with each passing decade.”5 The commission recommended that a
fundamental reorganization of the federal government into a limited
number of mission-related executive departments was needed to improve
its capacity to design and implement public policy.

We now have both an opportunity and an obligation to take a
comprehensive look at what the government should be doing and how it
should go about doing its work. Based on GAO’s own recent experiences
with restructuring, such a fundamental reexamination of government


4
U.S. General Accounting Office, Managing for Results: Using the Results Act to Address
Mission Fragmentation and Program Overlap, GAO/AIMD-97-146 (Washington, D.C.:
Aug. 29, 1997).
5
 National Commission on the Public Service, Urgent Business for America: Revitalizing
the Federal Government for the 21st Century (Washington, D.C.: January 2003).




Page 5                                                                    GAO-03-624T
                         missions, functions, and activities could improve government effectiveness
                         and efficiency and enhance accountability by reducing the number of
                         entities managed, thereby broadening spans of control, increasing
                         flexibility, and fully integrating rather than merely coordinating related
                         government activities.



Balancing the Roles of   Given the obvious case for reexamining the government’s structure, the
                         major issue for debate today is the question of whether and how to change
the Congress and the     the Congress’ normal deliberative process for reviewing and shaping
Executive Branch in      executive branch restructuring proposals. Such authority can serve to
                         better enable presidential leadership to propose government designs that
Developing               would be more efficient and effective in meeting existing and emerging
Restructuring            challenges.
Proposals
                         Presidential leadership is critical to set goals and propose the means—the
                         organizational design and policy tools—needed to achieve the goals.
                         However, it is important to ensure a consensus on identified problems and
                         needs, and to be sure that the solutions our government legislates and
                         implements can effectively remedy the problems we face in a timely
                         manner. Fixing the wrong problems, or even worse, fixing the right
                         problems poorly, could cause more harm than good.

                         Congressional deliberative processes serve the vital function of both
                         gaining input from a variety of clientele and stakeholders affected by any
                         changes and providing an important constitutional check and
                         counterbalance to the executive branch. The statutory framework for
                         management reform enacted during the 1990s demonstrates the Congress’
                         capacity to deal with governmentwide management reform needs. The
                         Congress sought to improve the fiscal, program, and management
                         performance of federal agencies, programs, and activities. For example, the
                         Government Performance and Results Act (GPRA) is a central component
                         of the existing statutory management framework, which includes other
                         major elements, such as the Chief Financial Officers (CFO) Act, and
                         information resource management improvements, such as the Clinger-
                         Cohen Act. These laws provide information that is pertinent to a broad
                         range of management-related decisions to help promote a more results-
                         oriented management and decision-making process, regardless of what
                         organizational approach is employed.

                         The normal legislative process, which by design takes time to encourage
                         thorough debate, does help to ensure that any related actions are carefully



                         Page 6                                                          GAO-03-624T
considered and have broad support. The Congress has played a central
role in management improvement efforts throughout the executive branch
and has acted to address several high-risk areas through both legislative
and oversight activities. Traditionally, congressional and executive branch
considerations of policy trade-offs are needed to reach a reasonable degree
of consensus on the appropriate federal response to any substantive
national need.

It is imperative that the Congress and the administration form an effective
working relationship on restructuring initiatives. Any systemic changes to
federal structures and functions must be approved by the Congress and
implemented by the executive branch, so each has a stake in the outcome.
Even more importantly, all segments of the public that must regularly deal
with their government—individuals, private sector organizations, states,
and local governments—must be confident that the changes that are put in
place have been thoroughly considered and that the decisions made today
will make sense tomorrow.

Only the Congress can decide whether it wishes to limit its powers and role
in government reorganizations. As part of the legislative branch, we at
GAO obviously have some concerns regarding any serious diminution of
congressional authority. In certain circumstances, the Congress may deem
limitations appropriate; however, care should be taken regarding the
nature, timing, and scope of any related changes. Lessons can be learned
from prior approaches to granting reorganization authority to the
President. Prior successful reorganization initiatives reinforce the
importance of maintaining a balance between executive and legislative
roles in undertaking significant organizational changes. Safeguards are
needed to ensure congressional input and concurrence on the goals as well
as overall restructuring proposals. In the final analysis, the Congress must
agree with any restructuring proposals submitted for consideration by the
President in order for them to become a reality.




Page 7                                                           GAO-03-624T
Prior Executive              Periodically, between 1932 and 1984, the Congress provided the President
Reorganization Authority     one form or another of expedited reorganization authority. 6 Most of the
                             authority granted during this period shared three characteristics.
Reflected Changing Balance
between Legislative and      • First, most previous authorities established rules that allowed the
Executive Roles                President’s plan to go into effect unless either house acted by passing a
                               motion of disapproval within a fixed period. However, in accordance
                               with the 1983 Chadha decision,7 which held the one-house legislative
                               veto unconstitutional, the most recent expedited reorganization
                               authority, granted to President Reagan in 1984, required passage of a
                               joint affirmative resolution by both houses and signed by the President
                               to approve any presidential reorganization plan. Hence, the need for
                               both houses to positively approve a president’s plan for it to take effect
                               set a higher bar for success and in essence gave the Congress a stronger
                               role than in the past.

                             • Second, between 1949 and 1984, the Congress increasingly limited the
                               scope of what the President could propose in a reorganization plan,
                               which also had the effect of enhancing congressional control. For
                               example, whereas in 1949, there were few restrictions on what the
                               President could propose, the Reorganization Act of 1977 prohibited
                               plans that, among other things, established, abolished, transferred, or
                               consolidated departments or independent regulatory agencies.

                             • Third, expedited reorganization authority during this period limited the
                               period of time during which a President could propose any
                               reorganization plans. Clearly, the extent to which the Congress was
                               willing to cede its authority to oversee the President’s reorganization
                               plans has been an important variable in designing such provisions.




                             6
                             Ronald C. Moe, Congressional Research Service, The President’s Reorganization
                             Authority: Review and Analysis (Washington, D.C.: Mar. 8, 2001).
                             7
                              Immigration and Naturalization Service v. Chadha, 462 U.S. 919 (1983).




                             Page 8                                                                    GAO-03-624T
Successful Government       Throughout the 20th century, efforts to structure the federal government to
Restructurings Balanced     address the economic and political concerns of the time met with varying
                            degrees of success. The first Hoover Commission,8 which lasted from 1947
Executive and Legislative   to 1949, is considered by many to have been the most successful of
Roles                       government restructuring efforts. The membership was bipartisan,
                            including members of the administration and both houses of the Congress.
                            Half its members were from outside government. The commission had a
                            clear vision, making reorganization proposals that promoted what they
                            referred to as “greater rationality” in the organization and operation of
                            government agencies and enhanced the president's role as the manager of
                            the government—principles that were understood and accepted by both
                            the White House and the Congress.9 Former President Hoover himself
                            guided the creation of a citizens' committee to build public support for the
                            commission's work. More than 70 percent of the first Hoover Commission's
                            recommendations were implemented, including 26 out of 35 reorganization
                            plans. According to the Congressional Research Service, “the ease with
                            which most of the reorganization plans became effective reflected two
                            factors: the existence of a consensus that the President ought to be given
                            deference and assistance by Congress in meeting his managerial
                            responsibilities and the fact that most of the reorganization plans were
                            pretty straightforward proposals of an organizational character.”10




                            8
                            The commission's formal name was the Commission on Organization of the Executive
                            Branch. Its membership: Former President Herbert Hoover, Dean Acheson, Sen. George
                            Aiken, Rep. Clarence Brown, Arthur Flemming, James A. Forrestal, Joseph P. Kennedy, Rep.
                            Carter Manasco, Sen. John L. McClellan, George Mead, James K. Pollock, and James Rowe.
                            9
                             Ronald C. Moe, The Hoover Commissions Revisited (Boulder, Colorado: Westview Press,
                            1982), 2.
                            10
                             Ronald C. Moe, Congressional Research Service, The President’s Reorganization
                            Authority: Review and Analysis (Washington, D.C.: Mar. 8, 2001).




                            Page 9                                                                     GAO-03-624T
By contrast, the second Hoover Commission, which lasted from 1953 to
1954, had a makeup very similar to that of the first, but it did not have the
advance backing of the President and the Congress. Hoover II, as it was
called, got into policy areas with the goal of cutting government programs.
But it lacked the support of the President, who preferred to use his own
advisory group11 in managing the government. It also lacked the support of
the Congress and the public, neither of which cared to cut the government
at a time when federally run programs were generally held in high esteem
and considered efficient and beneficial.12 More than 60 percent of Hoover
II's recommendations were implemented, but these were mostly drawn
from the commission's technical recommendations rather than from its
major ones (such as changing the government's policies on lending,
subsidies, and water resources) that would have substantively cut federal
programs.13

The lesson of the two Hoover Commissions is clear: If plans to reorganize
government are to move from recommendation to reality, creating a
consensus for them is essential to the task. In this regard, both the process
employed and the players involved in making any specific reorganization
proposals are of critical importance. The success of the first Hoover
Commission can be tied to the involvement and commitment of both the
Congress and the President. Both the legislative branch and executive
branches agreed to the goals. With this agreement, a process was
established that provided for wide spread involvement, including citizens,
and transparency so that meaningful results could be achieved.

That lesson shows up again in the experience of the Ash Council, which
convened in 1969-70. Like the first Hoover Commission, the Ash Council
aimed its recommendations at structural changes to enhance the
effectiveness of the President as manager of the government. In addition to


11
 Called PACGO (the President's Advisory Council on Government Organization), it was
chaired by Nelson Rockefeller from 1953-1958. PACGO drafted 14 reorganization plans that
were presented to the President and accepted by the Congress. Ronald C. Moe,
Reorganizinq the Executive Branch in the Twentieth Century: Landmark
Commissions,(Washington, D.C.: Congressional Research Service, Mar. 19, 1992), 34.
12
     Moe, 105.
13
 Summary of the Objectives, Operations, and Results of the Commissions on
Organization of the Executive Branch of the Government (First and Second Hoover
Commissions), House Committee on Government Operations, (Washington,D.C.: May
1963), 31-33.




Page 10                                                                    GAO-03-624T
renaming the Bureau of the Budget the Office of Management and Budget,
the Ash Council proposed organizing government around broad national
purposes by integrating similar functions under major departments. It
proposed that four super departments be created—economic affairs,
community development, natural resources, and human services—with
State, Defense, Treasury, and Justice remaining in place. But the Ash
Council could not gain the support of the Congress. Its recommendations
would have drastically altered jurisdictions within the Congress and the
relationships between committees and the agencies for which they had
oversight responsibilities. The Congress was not thoroughly clear on the
implications of the four super departments, was not readily willing to
change its own structure to parallel the structure proposed by the council,
and was not eager to substantially strengthen the authority of the
presidency.

Once again, the lesson for today is that reorganizing government is an
immensely complex and politically charged activity. Those who would
reorganize government must make their rationale clear and must build a
consensus for change before specific proposed reorganizations are
submitted to Congress if they are to see their efforts bear fruit. It is
important that all players, particularly the Congress and the President,
reach agreement on restructuring goals and establish a process to achieve
their objectives that provides needed transparency if anything substantive
is to be achieved. The process may vary depending on the significance of
the changes sought. However, the risk of failure is high without having the
involvement of key players and a process to help reach consensus on
specific reorganization proposals that are submitted to the Congress for its
consideration.

A final important lesson from these prior experiences is that a balance
must be struck between the need for due deliberation and the need for
action. A distinction also needs to be made between policy choices and
operational choices. Relatively straightforward reorganization proposals
that focus on operational issues appear to have met with greater success
than those that addressed more complex policy issues. For example,
proposals to eliminate programs, functions, or activities typically involve
policy choices. On the other hand, a proposal to consolidate those same
activities within a single organization is more focused on management
effectiveness and efficiency, than on policy changes. Therefore, in
contrast to the past “one-size-fits-all” approaches, in again granting
expedited reorganization authority to the President, the Congress may wish
to consider different tracks that allow for a longer period for review and



Page 11                                                          GAO-03-624T
                      debate of proposals that include significant policy elements as opposed to
                      operational elements.



Modern Management     Three years ago, I testified that the challenge for the federal government at
                      the start of the 21st century is to continue to improve and to translate the
Practices Provide a   management reforms enacted by the Congress in the 1990s into a day-to-
Framework for         day management reality across government.14 Restructuring can be an
                      important tool in this effort. Restructuring efforts must, however, be
Restructuring         focused on clear goals. Further, irrespective of the number and nature of
Proposals             federal entities, creating high-performing organizations will require a
                      cultural transformation in government agencies. Hierarchical management
                      approaches will need to yield to partnerial approaches. Process-oriented
                      ways of doing business will need to yield to results-oriented ones. Siloed
                      organizations—burdened with overlapping functions, inefficiencies and
                      turf battles—will need to become more horizontal and integrated
                      organizations if they expect to make the most of the knowledge, skills, and
                      abilities of their people. Internally focused agencies will need to focus
                      externally in order to meet the needs and expectations of their ultimate
                      clients—the American people. In the coming month, I plan to convene a
                      forum to discuss steps federal agencies can take to become high-
                      performing organizations.

                      GAO is leading by example. To create a world-class professional services
                      organization, we have undertaken a comprehensive transformation effort
                      over the past few years. Our strategic plan, which is developed in
                      consultation with the Congress, is forward looking and built on several key
                      themes that relate to the United States and our position in the world
                      community. We restructured our organization in calendar year 2000 to
                      align with our goals, resulting in significant consolidation—going from 35
                      to 13 teams, eliminating an extra organizational layer, and reducing the
                      number of field offices from 16 to 11. We have become more strategic,
                      results-oriented, partnerial, integrated, and externally focused. Our scope
                      of activities includes a range of oversight-, insight-, and foresight-related
                      engagements. We have expanded and revised our products to better meet
                      client needs. In addition, we have re-defined success in results-oriented
                      terms and linked our institutional and individual performance measures.


                      14
                       U.S. General Accounting Office, Managing In The New Millennium : Shaping a More
                      Efficient and Effective Government for the 21st Century, GAO/T-OCG-00-9 (Washington,
                      D.C.: Mar. 29, 2000).




                      Page 12                                                                  GAO-03-624T
We have strengthened our client relations and employed a “constructive
engagement approach” to those we review. The impact on our results has
been dramatic. Several of our key performance measures have almost
doubled and our client feedback reports satisfaction has also improved.

There are six important elements to consider for a successful
reorganization—establishing clear goals, taking an integrated approach,
developing a comprehensive human capital strategy, selecting appropriate
service delivery mechanisms, managing the implementation, and providing
effective oversight.

Clear goals. The key to any reorganization plan is the creation of specific,
identifiable goals. The process to define goals will force decision makers
to reach a shared understanding of what really needs to be fixed in
government, what the federal role really ought to be, how to balance
differing objectives, and what steps need to be taken to create not just
short-term advantages but long-term gains. The mission and strategic goals
of an organization must become the focus of the transformation, define the
culture, and serve as a vehicle to build employee and organizational
identity and support. Mission clarity and a clear articulation of priorities
are critical, and strategic goals must align with and support the mission and
serve as continuing guideposts for decision making. New organizations
must have a clear set of principles and priorities that serve as a framework
for the organization, create a common culture, and establish organizational
and individual expectations.

The most recent restructuring, the formation of the Department of
Homeland Security (DHS), illuminates this point. There was clear national
consensus that a new national goal and priority was homeland security.
With agreement on the mission and goals of this new department, the
various activities and functions scattered throughout the government could
be identified and moved into the new department. Building a framework of
clearly articulated goals facilitates any restructuring effort. This is true for
both the initial design and the implementation.

The government today is faced with many challenges. In considering
restructuring, it is important to focus on not just the present but the future
trends and challenges. Identification of goals to address these trends and
challenges provides a framework for achieving consensus and
organizational design. In fact, the effects of any reorganization are felt
more in the future than they are today. The world is not static. Therefore,
it is vital to take the long view, positioning the government to meet the



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challenges of the 21st century. Regardless of the immediate objectives, any
reorganization should have in mind certain overarching goals: a
government that serves the public efficiently and economically, that is run
in a sound, businesslike fashion with full accountability, and that is flexible
enough to respond to change.

Integrated approach. The importance of seeing the overall picture cannot
be overestimated. Reorganization demands a coordinated approach,
within and across agency lines, supported by solid consensus for change.
One cannot underestimate the interconnectedness of government structure
and activities. Make changes here, and you will certainly affect something
over there. Our work has certainly illuminated the interconnectedness of
federal programs, functions, and activities.

DHS again provides lessons. Though many homeland security
responsibilities, functions, and activities have been brought under the
umbrella of DHS, many remain outside. DHS will have to form effective
partnerships throughout the federal government—on intelligence
functions, health issues, science activities. In addition, partnerships will
be required outside the federal government—state and local governments,
private sector organizations, and the international community, if DHS is to
successfully accomplish its mission.

We have previously reported that the Government Performance and
Results Act (Results Act) could provide a tool to reexamine roles and
structure at the governmentwide level. The Results Act requires the
President to include in his annual budget submission a federal government
performance plan. The Congress intended that this plan provide a “single
cohesive picture of the annual performance goals for the fiscal year.” The
governmentwide performance plan could be a unique tool to help the
Congress and the executive branch address critical federal performance
and management issues. It also could provide a framework for any
restructuring efforts. Unfortunately, this provision has not been fully
implemented.

Beyond an annual performance plan, a strategic plan for the federal
government might be an even more useful tool to provide broad goals and
facilitate integration of programs, functions, and activities, by providing a
longer planning horizon. In the strategic planning process, it is critical to
achieve mission clarity in the context of the environment in which we
operate. With the profound changes in the world, a re-examination of the
roles and missions of the federal government is certainly needed. From a



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clearly defined mission, goals can be defined and organizations aligned to
carrying out the mission and goals. Integration and synergy can be
achieved between components of the government and with external
partners to provide more focused efforts on goal achievement.

If fully developed, a governmentwide strategic plan can potentially provide
a cohesive perspective on the long-term goals for a wide array of federal
activities. Successful strategic planning requires the involvement of key
stakeholders. Thus, it could serve as a mechanism for building consensus.
The process of developing the plan could prompt a more integrated and
focused discussion between the Congress and the administration about
long-term priorities and how agencies interact in implementing those
priorities. Further, it could provide a vehicle for the President to articulate
long-term goals and a road map for achieving them. In the process, key
national performance indicators associated with the long-term goals could
be identified and measured.

In addition, a strategic plan can provide a much needed framework for
considering any organizational changes and making resource allocation
decisions. Essentially, organizations and resources (e.g., human, financial,
and technological) are the ways and means of achieving the goals
articulated by the strategic plan. Organizations should be aligned to be
consistent with the goals and objectives of the strategic plan. Clear
linkages should exist between the missions and functions of an
organization and the goals and objectives it is trying to achieve. In making
the trade-offs in resource decisions, a strategic plan identifies clear
priorities and forms a basis for allocating limited resources for maximum
effect.

The process of developing a strategic plan that is comprehensive,
integrated, and reflects the challenges of our changing world will not be
easy. However, the end result could be a government that serves the public
efficiently and economically, that is run more efficiently and effectively
with full accountability, and that is flexible enough to respond to our
rapidly changing world.

Human capital strategy. People are an organization’s most important asset,
and strategic human capital management should be the centerpiece of any
transformation or organizational change initiative. An organization’s
people define its character, affect its capacity to perform, and represent the
knowledge base of the organization.




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Since 2001, we have designated human capital management as a
governmentwide high risk. The Congress and the executive branch have
taken a number of steps to address the federal government’s human capital
shortfalls. However, serious human capital challenges continue to erode
the ability of many agencies, and threaten the ability of others, to
economically, efficiently, and effectively perform their missions. A
consistent, strategic approach to maximize government performance and
ensure its accountability is vital to the success of any reorganization efforts
as well as to existing organizations.

A high-performance organization focuses on human capital. Human capital
approaches are aligned with mission and goal accomplishment. Strategies
are designed, implemented, and assessed based on their ability to achieve
results and contribute to the organization’s mission. Leaders and managers
stay alert to emerging mission demands and human capital challenges.
They reevaluate their human capital approaches through the use of valid,
reliable, and current data, including an inventory of employee skills and
competencies. Recruiting, hiring, professional development, and retention
strategies are focused on having the needed talent to meet organizational
goals. Individual performance is clearly linked with organizational
performance. Effective performance management systems provide a “line
of sight” showing how unit, team, and individual performance can
contribute to overall organizational goals.

Human capital strategies need to be built into any restructuring efforts.
The Congress has recognized the importance of human capital in recent
restructuring efforts. For example, in the creation of DHS and the
Transportation Security Agency (TSA), human capital issues were
addressed directly with the granting of flexibilities to improve the
effectiveness of their workforces. Thus, human capital issues need to be
addressed in both the design and implementation of any organization.

Service delivery mechanisms. Once goals are defined, attention must be
paid not only to how the government organizes itself but also to the tools it
uses to achieve national goals. The tools for implementing federal
programs include, for example, direct spending, loans and loan guarantees,
tax expenditures, and regulations. A hallmark of a responsive and effective
government is the ability to mix public/private structures and tools in ways
that are consistent with overriding goals and principles while providing the
best match with the nature of the program or service. The choice of tools
will affect the results the government can achieve. Therefore,




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organizations must be designed to effectively use the tools they will
employ.

In most federal mission areas—from low-income housing to food safety to
higher education assistance—national goals are achieved through the use
of a variety of tools and, increasingly, through the participation of many
organizations that are beyond the direct control of the federal government.
This environment provides unprecedented opportunities to change the way
federal agencies are structured to do business internally and across
boundaries with state and local governments, nongovernmental
organizations, private businesses, and individual citizens.

Implementation. No matter what plans are made to reorganize the
government, fulfilling the promise of these plans will depend on their
effective implementation. The creation of a new organization may vary in
terms of size and complexity. However, building an effective organization
requires consistent and sustained leadership from top management to
ensure the needed transformation of disparate agencies, programs,
functions, and activities into an integrated organization. To achieve
success, the end result should not simply be a collection of component
units, but the transformation to an integrated, high-performance
organization. The implementation of a new organization is an extremely
complex task that can take years to accomplish. It is instructive to note
that the 1947 legislation creating the Department of Defense was further
changed four times by the Congress in order to improve the effectiveness
of the department. Despite these changes, DOD continues to face a range
of major management challenges, with six agency-specific challenges on
our 2003 list and three governmentwide challenges. Start-up problems
under any reorganization are inevitable but can be mitigated by
comprehensive planning and strong leadership.

An implementation plan anchored by an organization’s mission, goals and
core values is critical to success.15 An implementation plan should address
the complete transition period, not just the first day or the first year. It
must go beyond simply the timetable for the organization’s creation,
consolidation, or elimination. Effective implementation planning requires
identification of key activities and milestones to transform the organization


15
 U.S. General Accounting Office, Mergers and Transformation: Lessons Learned for a
Department of Homeland Security and Other Federal Agencies, GAO-03-293SP
(Washington, D.C.: Nov. 14, 2002).




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into a fully integrated, high-performance organization and establish
accountability for results. Careful planning and attention to management
practices and key success factors, such as strategic planning, information
technology, risk management, and human capital management, are
important to overall results. A human capital strategic plan must be
developed. It is vital to have key positions filled with people who possess
the critical competencies needed by the organization. Further, systems and
processes need to be tailored to and integrated within the organization.
The experiences of TSA highlight the need for long-term planning. A year
after being set up, although great progress has been made, TSA still faces
numerous challenges—ensuring adequate funding; establishing adequate
cost controls; forming effective partnerships to coordinate activities;
ensuring adequate workforce competence and staffing levels; ensuring
information systems security; and implementing national security
standards.

Top leadership must set priorities and focus on the most critical issues.
While top leadership is essential and indispensable, it will be important to
have a broad range of agency leaders and managers dedicated to the
transformation process to ensure that changes are thoroughly implemented
and sustained over time. Dedicated management leadership can free the
head of the organization from day-to-day operational and administrative
issues, allowing time to focus on mission priorities.

One approach to providing the sustained management attention essential
for addressing key infrastructure and stewardship issues while helping
facilitate the transition and transformation process is the creation of a chief
operating officer (COO) position within selected federal agencies. To be
successful, a COO must have a proven track record in a related position
and high profile—reporting directly to the agency head, and be vested with
sufficient authority to achieve results. Since successful restructurings
often take a considerable amount of time, 5 to 7 years being common, a
term appointment of up to 7 years might be warranted. To further clarify
accountability, the COO should be subject to a clearly defined, results-
oriented performance contract with appropriate incentives, rewards, and
accountability mechanisms.16



16
   U.S. General Accounting Office, Highlights of a GAO Roundtable: The Chief Operating
Officer Concept: A Potential Strategy to Address Federal Governance Challenges,
GAO-03-192SP (Washington, D.C.: Oct. 4, 2002).




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Oversight. Congressional involvement is needed not just in the initial
design of the organization, but in what can turn out to be a lengthy period
of implementation. The Congress has an important role to play—both in its
legislative and oversight capacities—in establishing, monitoring, and
maintaining progress to attain the goals envisioned by government
transformation and reorganization efforts.

Sustained oversight by the Congress is needed to ensure effective
implementation. The understanding by the Congress of the various
agencies will provide a measure of whether the reorganization is
accomplishing its goals and whether it needs further refinement. Assessing
progress is important to ensuring implementation is moving in the right
direction.

To ensure effective implementation, along with efficient and effective
oversight, the Congress will also need to consider realigning its own
structure. With changes in the executive branch, the Congress should
adapt its own organization in order to improve its efficiency and
effectiveness. Most recently, the Congress has undertaken a
reexamination of its committee structure, with the implementation of DHS.
In fact, the DHS legislation instructed both houses of Congress to review
their committee structures in light of the reorganization of homeland
security responsibilities within the executive branch.

In summary, the key issue at hand is how to make changes and reforms and
what the respective roles of the Congress and the executive branch should
be in the process. Only the Congress can decide whether it wishes to limit
its powers and role in government reorganizations. As part of the
legislative branch, I obviously have some concerns about any serious
diminution of your authority. In certain circumstances, the Congress may
deem it appropriate. A distinction needs to be made between policy
choices and operational choices, and a balance must be struck between the
need for due deliberation and the need for action in these different cases.
The Congress may wish to consider a longer period for review and debate
of proposals that include significant policy elements versus operational
elements. Further, the President and the Congress may wish to consider
establishing a process (e.g., a commission), that provides for the
involvement of the key players and a means to help reach consensus on any
specific restructuring proposals that would be submitted for consideration
by the Congress.




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           In view of the overarching trends and the long-term fiscal challenges facing
           our nation, there is a need to consider the proper role of the federal
           government, how the government should do business in the future, and in
           some instances, who should do the government’s business in the 21st
           century. Evaluating the role of government and the programs it delivers
           within the context of the major trends facing our nation and our increasing
           fiscal challenges it faces is key in determining how best to address the
           country's most pressing priorities. It is increasingly important that federal
           programs use tools to manage effectively across boundaries and work in
           conjunction with the priorities and needs of American citizens;
           international, federal, state, and local governments; and the private and
           nonprofit sectors. This is an opportune time for the Congress to carefully
           consider how to make needed changes in the short term to help agencies
           effectively manage their resources and link resource decisions to results as
           well as to work toward a comprehensive and fundamental reassessment of
           what the government does, how it does it, and who should do the
           government’s business.

           Mr. Chairman, this concludes my prepared statement. We at GAO look
           forward to continuing to “lead by example” in connection with government
           transformation efforts and to assisting the Congress with related matters. I
           would be pleased to respond to any questions that you or other Members of
           the Committee may have.




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