President Clinton December 11, 1996

The President's challenge is an awesome one-literally, how to do more with less, and how to do it better.

But it is the challenge that we face, shaped by the fiscal and political realities of our times. The President has worked hard to reduce the deficit, and he wants to work with Congress to finish the job and balance the budget by 2002-a goal that is widely shared in Congress and across the Nation. Consequently, departments and agencies no longer can count on more funding each year. For the foreseeable future, their resources will be constrained, perhaps severely

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And yet, the Federal Government has a legitimate role to play in fulfilling the President's goals. Over the last four years, the President has used Federal resources and the power of his office to begin achieving educational excellence, expanding opportunity, cleaning up the environment, investing in promising research, ending welfare as we know it, protecting health care and pensions, making the tax system fairer, and keeping America strong. The public wants further progress on these and other issues and, with limited resources, the Federal Government must be able to respond effectively.

Led by Vice President Gore's National Performance Review, the Administration promised to create a Government that "works better and costs less." And we have made a good start. We are saving money, cutting the

for long-distance calls, compared to the 16cents-a-minute retail rate.

Works Better

Departments and agencies are:

• Eliminating 16,000 pages of regulations and dramatically simplifying 31,000.2

• Improving customer service. Spurred by the President's challenge to be the "best in the business," over 200 agencies have committed to meet over 3,000 customer service standards. The Social Security Administration was rated first in a 1995 independent survey of selected public and private 1-800 services. Agencies including the Postal Service, Veterans Affairs Department (VA), and the Bureau of Engraving and Printing have surveyed over a million customers in the past year to learn how they can improve services.

• Using emerging technologies, particularly the Internet and its World Wide Web, to make Government information readily accessible and easier to find. The White House expanded its home page (www.whitehouse.gov) to provide access to commonly requested services. For example, citizens can get passport applications, their earnings records from the Social Security Administration, or student loan applications. The Commerce Department's "FedWorld" system connects users to hundreds of agency resources and information-from Federal job opportunities, to automobile emission system repair instructions, to information on starting a small business. Users downloaded over 250,000 tax forms and instruction booklets from the IRS' home page during the 1996 tax

season.

• Creating "one-stop shops," such as the new U.S. General Stores, which give the public walk-in access to services across a wide range of agencies while cutting agency overhead costs. Similarly, the National Performance Review and the General Services Administration are working with phone companies across the country to

2 As of December 31, 1996, agencies had eliminated, or proposed for elimination, 87 percent of the 16,000; they had improved, or proposed for improvement, 78 percent of the 31,000.

convert Federal listings by agency to listings according to services, such as Food Stamps or AIDS information. Over 18 million Americans will get such listings this year.

• Launching pilot projects to shift regulatory enforcement approaches from adversarial relationships to partnerships. In the Maine 200 partnership program, in which both companies and workers look for hazards, workman's compensation claims have dropped 40 percent.

• Cutting "red tape" and paperwork. The President and Congress strengthened the Paperwork Reduction Act, establishing goals for agencies to cut by 25 percent, by 1998, the hours that the public spends filling out Government forms and paperwork.

A Toolkit of Strategies and Techniques

The Administration is proud of its accomplishments, but our work is not done. As we move forward, the challenge will only get harder. Spurred by the Vice President, the Administration has identified many ways for agencies to improve their performance and cut costs. Some of these tools focus on eliminating obsolete processes; others focus on improving the ones we have. Because agencies and programs operate in such different ways, not all of these tools, techniques, and strategies apply to each agency and department. But every agency and program can benefit from a number of them.

Based on what we have learned over the past four years, we plan to employ the following seven tools, as shown in Table IV-1.

1. Restructure Agencies

A smaller Government is not an end in itself. We want to change the way it operates. In place of highly-centralized, inflexible organizations that focused on inputs, the Administration is creating more flexible, decentralized management structures within agencies to focus on results. Agencies are streamlining their work forces, collapsing redundant layers, increasing spans of control, and creating leaner headquarters. Many are closing small, inefficient field offices while strengthening

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the services they provide to customers through increased electronic communications and systems. And some agencies are fundamentally changing the way they work with State and local governments and with the private sector by creating partnerships to focus on joint goals and the progress toward meeting them.

• Create more efficient, performance-based organizations (PBOs): PBOs, which the President has labeled a priority for his second term, are discrete units of a department that commit to clear management objectives, measurable goals, customer service standards, and specific targets for improved performance (see Table IV-2). Once designated, they would have greater personnel and procurement flexibilities and a competitively-hired CEO, who would sign an annual performance agreement with the Secretary and have a share of his or her pay depend on the organiza

tion's performance. The British, who have extensive experience with this concept, have found that such agencies have improved performance and cut administrative costs.

• Consolidate intergovernmental funding streams into Performance Partnerships: Performance Partnership grants with larger, more flexible funding pools can replace small categorical grants, improving financial incentives, rewarding results, eliminating overlapping authorities, and cutting Federal overhead, micro-management, and paperwork. States or Tribes can now combine up to 15 separate Environmental Protection Agency funding streams across water, air, hazardous waste, and similar programs to improve environmental outcomes. Agriculture Department (USDA) State Directors can combine funding for 18 programs into three funding streams

for rural housing, utilities and business or cooperative services.

• Accelerate implementation of of existing streamlining plans: The President and Congress are ahead of schedule on plans to cut 272,900 Federal positions, or 12 percent of the work force, by the end of this decade (see Chart IV-1). As Chart IV-2 shows, agencies are working hard to implement their streamlining plans-designed to cut overhead, eliminate vertical layers and redundant structures, particularly in headquarters operations, and increase spans of control.

• Eliminate excess field offices: Several agencies, including the Departments of Agriculture, Transportation, and the Treasury, and the Small Business Administration, have developed proposals to streamline their field office structures, while improving operations and customer service. Over 890,000 Federal employees work in almost

30,000 separate field offices that vary greatly in size. Although the average field office houses 30 employees, over 11,000 offices house five or fewer.

2. Improve Effectiveness of the Federal Workplace

What was true in 1993 remains true today. The main agents for change are Federal employees themselves. With a quarter of a million fewer of them than in 1993, we are asking those who remain to do more with less. They are working harder and smarter each and every day, and our efforts to reinvent Government would be nowhere near as successful were it not for their enthusiastic leadership and support. We must, however, continue to downsize and restructure, if only because of the limited resources that a balanced budget will offer. As with the previous personnel cuts, the Administration plans to closely manage and target further downsizing. Agencies need to avoid workplace

disruptions and employee disputes and, when they occur, resolve them quickly and fairly. Employees and managers need to plan and work together for common goals. In addition, the President proposes a 2.8 percent pay raise for both civilian employees and the military. 3

• Increase the number and effectiveness of labor-management partnerships: The Administration plans to add to the more than 850 labor-management partnerships already in place to improve relations between agencies and the unions representing their employees. With these partnerships, the two sides work together toward a common goal-providing the highestquality service at the lowest cost. The two sides cooperate to solve problems, implement changes, and jointly resolve worksite issues. Good partnerships breed good organizations, with an energized work force

3 Once again, the Administration will consult employee organizations and others before recommending how to allocate the civilian pay raise between locality pay and a national schedule adjustment.

focused on doing its job better and more efficiently.

• Use buyouts to adjust the size and skill mix of the work force: A well-planned, well-executed buyout program can minimize the need for involuntary layoffs by increasing attrition in targeted occupations, organizations, or locations. In response to changed conditions, missions, and resources, private and public organizations have used buyouts to make needed adjustments in the composition of the work force. Generally, they are less costly than formal reductions-in-force and are always less disruptive to workers to those who elect to leave and those who remain. Replace formal grievance procedures with Alternative Dispute Resolution (ADR): The early, voluntary use of ADR can quickly resolve workplace disputes, eliminating the costs, delays, and adverse effects on workplace morale of formal administrative procedures or litigation. ADR encompasses various techniques to resolve disputes and