oversight

Status of the Food and Agriculture Councils Needs to Be Elevated

Published by the Government Accountability Office on 1990-02-28.

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

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                                   United States General Accciunting Office 1
1’
4111                               Testimony
* GAO
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                                                                                     IIIlll
                                                                                      140732

         For Release.              Status of the Food and Agriculture           Councils
         on Delivery               Needs to be Elevated
         Expected at
         9 6.m. EST
         Wednesday
         February 28, 1990




                                   Statement of
                                   John W . Harman, Director
                                   Food and Agriculture    Issues
                                   Resources, Community, and Economic
                                   Development Division
                                   Before the Government Information,   Justice,
                                   and Agriculture Subcommittee
                                   Committee on Government Operations
                                   United States House of Representatives




            0-m    - 90 - 36   .
                                                                                   QAo?mm1ao(lr/n)
 Mr. Chairman and Members of the Subcommittee:

        We are pleased to discuss the U.S. Department of
Agriculture's       (USDA) management of its field delivery          systems in
general,      and specifically,      our November 1989 report on the
Department's      Food and Agriculture       Councils (FACs).l       This work is
part of GAO's ongoing general management review of USDA that is
similar     to management reviews by GAO at numerous other federal
departments and agencies in recent years.               In contrast   to our
traditional      programmatic reviews, general management reviews
examine the effectiveness           of management processes and systems of
all or major portions           of Departments and agencies.       We issued an
interim     report on the results        of our initial   management review work
at USDA in October 1989.2 During the remainder of this year, we
will issue a series of reports on underlying              causes of specific
problems discussed in our interim report and recommend specific
actions for improving departmental,operations.

       In summary, USDA established     the FACs to provide a crucial
communication link between headquarters         and its agencies in the
field,   as well as other federal    agencies.      Comprised of
representatives    from the various USDA agencies, notably the farm
agencies,3    the FACs are in a position     to serve a vital    management
function    in the Department.   Unfortunately,      a lack of top
management support has diminished       the effectiveness     of the FACs in
recent years.     At the time of our review, the FACs had no liaison

'U.S. Department of Aqriculture:   Status of the Food and
Agriculture  Councils Needs to Be Elevated (GAO/RCED-90-29).
2U.S. Department of Agriculture:           Interim         Report          on Ways to Enhance
Management (GAO/RCED-9049).
3Agricultural    Stabilization and Conservation Service (ASCS), Soil
Conservation   Service (SCS), Farmers Eome Administration   (FmRA),
Federal Crop nsurance Corporation     (FCIC), and the Extension
Service, (ES). 5

                                       1



                                                ._-.   _   ,-   ..__   1    -   --,.._--   ---.   1-.--
    in USDA headquarters     , which created a leadership vacuum. USDA is
    currently reviewing      options for properly managing the FACs.

          We believe that FACs have a potentially         important   role as
    ongoing trends, particularly      declining    federal budgets, place
    pressure on the Department to reassess the mission and design of
    its 1930s-era system of delivering         farm programs.    Given changes in
    USDA's mission and the external       environment over the years, the
    FACs, if properly     structured,  can provide USDA's top management and
    the Congress with valuable input for periodically           evaluating  how
    well the field    system is performing.

    PACS CAN PROVIDE CRITICAL HEADQUARTERS-FIELDLINKAGE

           USDA's extensive      field   structure  requires   constant,    committed
    interagency    coordination       if the programs are to work most
    economically     and efficiently.        Also, absent a coordination
    mechanism such as the FACs, directives            intended to carry a
    Department-wide     perspective      can be recast to reflect     individual
    agency priorities,      thereby hindering      attainment   of the Secretary's
    objectives.

           We believe the Councils,       created in 1982, provide the
    foundation     upon which USDA can aggressively       pursue productivity
    improvements and organizational          changes that can be implemented in
    USDA field offices        nationwide.    Bowever, the FACs need high-level
    representation       at USDA headquarters    if they are to perform their
    functions    effectively.       At the time of our review, such
.   representation      did not exist.

            The FAC concept is not new to         USDA: the Department has had
    similar     coordinating     groups since    at least 1962. Former Secretary
    Block established         the current FAC    mechanism to function  under his
    direct puthority        to (1) facilitate     the flow of USDA-wide
    initiatives      to the state and local       levels and (2) provide a source
                                            2



                                            _.      ..,                -   _-._.   .---.-   _-
                                                           -t-.
    of feedback    from the field     on pressing    issues   affecting   farm
    communities.

          USDA organized the FACs on three levels.             The state FACs are
    comprised of senior officials          of the individual    USDA agencies in a
    given state.     The local FACs consist of USDA representatives             at the
.
    county, parish,      borough, or multi-county       level.   In headquarters,
    the National    Food   and Agriculture      Council has served as liaison      for
    the FACs, with responsibility          for coordinating    USDA initiatives
    that require cooperation       among USDA agencies operating         at the state
    and local levels.

         All state and local        FAC officials     perform their FAC functions
    as part of their official        duties for their respective        agencies.   In
    this sense, the FACs may        be considered     "budget neutral,"    that is,
    the Department incurs no        additional    costs.

           In May 1989, the Inspector      General (IG) provided an example of
    why an aggressive coordination        mechanism is necessary if the field
    structure   is to work efficiently.       The IG's audit of 27 counties in
    6 states found almost $1.2 million        in government overpayments and
    lost rental   income because of improper internal        controls.
    According to the IG report,       over $500,000 of improper ASCS benefits
    were paid out because FmHA did not notify         ASCS that it had acquired
    eight farm properties.

           Headquarters  farm agency officials    told us that their
    agencies'   internal   control systems would not normally identify
    problems resulting     from communication lapses with other field
    agencies.    We believe that active FACs, aggressively         pursuing
    their mandate for improving interagency       coordination,     could help
    identify   and remedy such situations.      Eowever, we do not believe
    the FACs will perform this mandate consistently          without the support
    and guidance of the Department's       top management.

                                            3
      We believe      a high-level      liaison     in Washington, D.C., and
ongoing communication between headquarters                 and the state and local
FACs are needed to make FAC ideas a reality.                  The liaison     could
provide the oversight          and direction      needed to more fully      involve
the field     in helping to implement program, policy,               and
administrative      initiatives.       Therefore,      we'recommended     in November
1989 that the Secretary institutionallee                the headquarters      liaison
for the FACs in the O ffice of the Secretary.                 We also provided a
number of suggestions           for the Secretary's      consideration,     including
improving FAC accountability           and increasing       PAC mmber incentives,
that could help elevate the status               of the FACs and allow them to
operate as the budget-neutral,             strategic    management tools that
they were originally          intended to be.

      In response to our recommendation, the Department stated that
it recognized the importance of the FACs as a management function,
but USDA was still  studying internal  proposals on which management
unit should oversee this function.

REASSESSINGTHE FARM DELIVERY SYSTEM

       One area where participation        by a strong and active FAC could
be important     is in reassessing      of the structure      of USDA's delivery
system    for farm programs.      During our management review, numerous
former USDA officials       expressed concern about the cost and
effectiveness      of USDA's field delivery      (Btructure.     Three recent
Secretaries    of Agriculture     expressed   their frustration       over
attempts to streamline       the field.     One emphasised that our work
would not be complete if we did not take a hard look at identifying
ways to streamline      USDA's field delivery       system.     Their reasoning
was consistent.       Each saw a responsive but expensive field
structure:     About 90 percent of the Department's over 110,000 full-
time employees work outside Washington, D.C., in almost every
county %n the United States and in many cities.                USDA's farm
agencies alone spent nearly $2.1 billion            in fiscal    year 1988 and
                                                             4



                          _   “_^.   --   .   ..^   -   ._   .   _..-   -   .-   .   ---.   __   -   ..-.   -_-*_.   x..   ___   --   ._
used over     63,000 staff years to administer     their farm programs
through     about 10,600 local office networks     operating in over 3,000
counties.

        Also, although many public and private        organizations
periodically      reorganize   to respond to external      changes, few
adjustments have been made to USDA's field           structure    since it was
first    shaped in the 1930s. The last 50 years have brought vast
improvements in transportation         and communication systems, a
continuing      decline in the number of farmers, and most recently,
significant      budget tightening.     In addition,    a growing number of
emerging policy issues- such as addressing agricultural-related
environmental       issues, enhancing farm sector competitiveness,         and
revitalizing      rural America- cut across traditional        agency lines,
resulting     in new coordination    and management challenges.

       Largely out of concern that the quality     of service to
constituents     might suffer, proponents of the existing     field
delivery    system have successfully    resisted change. Taking action
that may affect local offices,       however, is a highly emotional issue
that generates concern not only in the local area, but in the
Congress as well- much like closing a post office.          Given the
opposition    this generates, USDA has been reluctant     to embark on a
course of change.

       Opposition notwithstanding,    perceived inefficiencies        in the
delivery    system have prompted frequent suggestions for change. A8
early as 1945, initiatives      were suggested to streamline        USDA's
field structure.     Further,   USDA's field   structure      has been the
subject of eight studies conducted during the past 2 decades, many
of which recommended substantial      changes, including
reorganizations.     The most recent, a Secretary's         1985 task force
report on streamlining     USDA, found many instances where costs could
be redueed and service improved by bringing USDA employees closer
together and sharing services and facilities,           either through more
                                      5
aggressive collocation  and consolidation            policies   or by
restructuring  USDA's agencies.                         /

        Office collocations      can be a particularly       effective      raechanism
for reducing field       structure   costs.     In a collocated       field'office,
WO Or mxe USDA agencies are able to provide convenient,                       one-stop
services to farmers.         Equally important , these offices           present
numerous opportunities         to share equipment, supplies,          and support
services among the collocated          agencies, according to USDA
officials,       thereby increasing    cost savings.      For example,
officials      told us that a resource-sharing        project     in collocated
offices      in Georgia is expected to yield total cost savings of $12.6
million      over a lo-year period.

       State and local FACs are well-positioned             to assess the
potential    for improved efficiency           and possible   cost savings through
integrated     administrative       support services and field office
collocations     at the state and county levels.            When Secretary Block
asked all state FACs in 1985 to prepare preliminary                plans for
streamlining     state operations         and other suggestions    for improving
USDA's organizational         structure,     the response was very positive.
Por example, all 50 state FACs supported one or more resource-
sharing concepts,       including      the sharing of equipment and supplies:
8 proposed the closure         of agency offices      where declining    work loads
no longer justified        a full-time      USDA presence; and 16 supported the
merger of 2 or more agencies or farm programs into 1 to eliminate
duplications     of service.

      Unfortunately  I USDA did not maintain the 1985 streamlining
momentum. Only 5 of the proposals submitted by the 50 state FACs
were implemented, and these proposals ultimately      suffered    from
reduced headquarters    interest   in the PACs. For example, USDA was
slow to implement a Colorado FAC telecommunications       project    in
selected USDA offices     across the country and consequently     realized
only $1.44 million or less than two-fifths              of the $3.75 million        in
savings it had expected from the project.

        Office consolidations,          oombining the operations         of two or more
offices      of an agency at a single location,           can also provide
significant      cost savings opportunities.            For example, FmHA
headquarters      officials    were able to identify         24 office
consolidations        in 10 states since 1987, projecting            first-year
savings     of $1.2 million.        Typically,    offices    were closed or reduced
to part-time      status where increased urbanization            had caused loan
work loads to drop, or where loan servicing                was done by phone or
correspondence.          ASCS officials     in Washington also told us that
they have closed county offices             over the past few years and are
aware of other offices         that are candidates        for consolidation
because of a diminishing           number of clients.

      We believe these examples suggest the potential      for
substantially    greater cost savings to USDA. However, we found that
at present USDA does not adequately promote or closely monitor
cost-savings    initiatives  undertaken in collocated offices.
Moreover, USDA has not taken full advantage of potential
consolidations.

      We further     believe the only way to        move toward changing the
field   structure    is to marshal the proper        mix of leadership   from
headquarters      and input from USDA's state        and local offices.
Commitment from USDA's top management in             pursuing a more
streamlined     and efficient   Department is       a necessary first   step.

       Management analysts in both the private        and public   sectors
generally   believe that a well-run      organization   is responsive to      .
changes in its overall      environment and conscious of controlling
costs.    USDA needs to periodically      engage the FACs, along with its
top management, farm clients,       and the Congress,     in the task of
seeking more cost-effective       methods for delivering     the Department's
                                         7
field services in an ever-changing     agricultural     environment.    As
part of the process, an assessment of the mission,          design, and
service delivery  system of its present field       structure    could help
USDA foster an attitude  receptive   to change.
                               -a---
     This concludes    my statement.         We would be glad to respond to
your questions.




                                       8




                                           _ . . _ -_- -   _
                                                                      SUMMARY
Mr. Chairman                  and Members of                         the Committee:


We appreciate                    this      opportunity                    to appear               before      the Committee
today        to discuss                 Senate           Bill         S. 1379 to reauthorize                         and amend the
Defense            Production              Act     of           1950 (DPA).


In recent               years        the United                  States          has moved to a more
interdependent                      approach             in procuring                  parts         and components              for      its
major        weapon systems.                        It          is    apparent             that      national        security           is
increasingly                  tied        to the           strength              of     the       nation's       economy and the
ability            of    industry           to compete , particularly                                     in areas     where
technology               leadership               is       important.


We agree            with         the      emphasis               that      S. 1379 places                    on a healthy
        .I
industrial               and technological                            base.           We also         generally        agree           with
the       thrust         of      several          provisions                    in S. 1379 that                 seek to
modernize               the Defense               Production                  Act      of     1950 by providing                  or
authorizing                  mechanisms            or tools                to enhance               the      competitiveness                  of
defense            industries.                   In particular,                       we support             those    provisions
that       seek         to    (1)       foster           development                  of    technologies             and advanced
processes               by providing               protection                    from       the     antitrust         provisions
inhibiting               joint          undertakings,                     (2)     encourage            contractors           to
invest        in modern equipment                                to     increase            productivity,             (3)    improve
the       integration                of    national                  security          and economic             policy,          and
(4)     ensure           a realistic               assessment                   of     the demands placed                   on
indultry            by national                  defense              plans.
In addition,               we‘ have some observations                             for      your      consideration.
DPA requires               an annual           report         to the Congress                     on the       impact          of
offsets          on U.S.          defense       preparedness,                    industrial           competitiveness,
employment,             and trade.              We believe               that       S. 1379 should                be changed
to better          provide           for     disclosure            of         significant            dissenting            agency
views       in the         report.           Such views            have not              been disclosed                 in the
past.        S. 1379 currently                   does not propose                        this       change.


We have          two concerns               regarding          the       DPA fund           that      S. 1379 would
create.           First,          acquiring           the     initial            $200 million            for      the      fund
from       the    national           stockpile          could           have a detrimental                     effect          on
the     stockpile           program.            Second,           S. 1379 would                   authorize
stockpiling             components             and subassemblies                        in sufficient             quantities
to meet mobilization                        needs:      but       rapid          technological             developments
increase          the      risk      that      inventories               of      such goods           could       become

obsolete.


Finally,         we would            like      to emphasize               that          effective
implementation                of DPA requires                  systematic                information            gathering
and analysis               to accurately               assess           the     health          of our defense
industrial           and technology                   base at all                levels,          and ensure            that
critical          items       and technologies                    are     available.                 We believe            that
the Congress               should          consider         the    need for              adequate        information                on
selected         defense           industries           that       support           major          weapon systems,
including          critical           subtier          industries.