Step 1: Streamlining The Budget Process
Step 2: Decentralizing Personnel Policy
Step 3: Streamlining Procurement
Step 4: --Reorienting The Inspectors General
Step 5: Eliminating Regulatory Overkill
Step 6: --Empower State and Local Governments
About 10 years ago, two foresters returned from a hard day in the field to make plans for the coming week. Searching for a detail of agency policy, they found themselves overwhelmed by voluminous editions of policy manuals, reports, and binders filled with thousands of directives. One forester recalled the very first Forest Service manual- -small enough to fit into every ranger's shirt pocket, yet containing everything foresters needed to know to do their jobs.
"Why is it that when we have a problem," the other forester asked, "the solution is always to add something--a report, a system, a policy--but never take something away?"
The first replied: "What if . . . we could just start over?" See Note 1
The federal government does at least one thing well: It generates red tape. But not one inch of that red tape appears by accident. In fact, the government creates it all with the best of intentions. It is time now to put aside our reverence for those good intentions and examine what they have created--a system that makes it hard for our civil servants to do what we pay them for, and frustrates taxpayers who rightfully expect their money's worth.
Because we don't want politicians' families, friends, and supporters placed in "no-show" jobs, we have more than 100,000 pages of personnel rules and regulations defining in exquisite detail how to hire, promote, or fire federal employees. See Note 2 Because we don't want employees or private companies profiteering from federal contracts, we create procurement processes that require endless signatures and long months to buy almost anything. Because we don't want agencies using tax dollars for any unapproved purpose, we dictate precisely how much they can spend on everything from staff to telephones to travel.
And because we don't want state and local governments using federal funds for purposes that Congress did not intend, we write regulations telling them exactly how to run most programs that receive federal funds. We call for their partnership in dealing with our country's most urgent domestic problems, yet we do not treat them as equal partners.
Consider some examples from the daily lives of federal workers, people for whom red tape means being unable to do their jobs as well as they can--or as well as we deserve. The district managers of Oregon's million-acre Ochoco National Forest have 53 separate budgets--one for fence maintenance, one for fence construction, one for brush burning- -divided into 557 management codes and 1,769 accounting lines. To transfer money between accounts, they need approval from headquarters. They estimate the task of tracking spending in each account consumes at least 30 days of their time every year, days they could spend doing their real jobs. See Note 3 It also sends a message: You are not trusted with even the simplest responsibilities.
Or consider the federal employees who repair cars and trucks at naval bases. Each time they need a spare part, they order it through a central purchasing office--a procedure that can keep vehicles in the shop for a month. This keeps one-tenth of the fleet out of commission, so the Navy buys 10 percent more vehicles than it needs. See Note 4 Or how about the new Energy Department petroleum engineer who requested a specific kind of calculator to do her job? Three months later, she received an adding machine. Six months after that, the procurement office got her a calculator--a tiny, hand-held model that could not perform the complex calculations her work required. Disgusted, she bought her own. See Note 5
Federal managers read the same books and attend the same conferences as private sector managers. They know what good management looks like. They just can't put it into practice--because they face constraints few managers in the private sector could imagine.
Hamstrung by rules and regulations, federal managers simply do not have the power to shape their organizations enjoyed by private sector managers. Their job is to make sure that every dollar is spent in the budget category and the year for which it was appropriated, that every promotion is consistent with central guidelines, and that every piece of equipment is bought through competitive bidding. In an age of personal computers, they are asked to write with quill pens.
Never tell people how to do things. Tell them what you want to achieve, and they will surprise you with their ingenuity.
General George S. Patton 1944
This thicket of rules and regulations has layer upon layer of additional oversight. Each new procedure necessitates someone's approval. The result is fewer people doing real work, more people getting in their way. As management sage Peter Drucker once said, "So much of what we call management consists of making it difficult for people to work." See Note 6
As Robert Tobias, president of the National Treasury Employees Union, told participants at the Philadelphia Summit on Reinventing Government, "The regulations and statutes that bind federal employees from exercising discretion available in the private sector all come about as a response to the humiliations, mistakes, embarrassments of the past." Even though, as Tobias noted, "those problems are 15, 20, 30 years old," and "the regulations and the statutes don't change." The need to enforce the regulations and statutes, in turn, creates needless layers of bureaucracy.
The layers begin with "staff" agencies, such as the General Services Administration (GSA) and the Office of Personnel Management (OPM). These staff agencies were designed originally to provide specialized support for "line" agencies, such as the Interior and Commerce departments, that do government's real work. But as rules and regulations began to proliferate, support turned into control. The Office of Management and Budget (OMB) which serves the President in the budget process, runs more than 50 compliance, clearance, and review processes. Some of this review is necessary to ensure budget control and consistency of agency actions--with each other and with the President's program--but much of it is overkill.
Line agencies then wrap themselves in even more red tape by creating their own budget offices, personnel offices, and procurement offices. Largely in response to appropriations committees, budget offices divide congressional budgets into increasingly tiny line items. A few years ago, for example, base managers in one branch of the military had 26 line items for housing repairs alone. See Note 7 Personnel offices tell managers when they can and cannot promote, reward, or move employees. And procurement offices force managers to buy through a central monopoly, precluding agencies from getting what they need, when they need it.
What the staff agencies don't control, Congress does. Congressional appropriations often come with hundreds of strings attached. The Interior Department found that language in its 1992 House, Senate, and conference committee reports included some 2,150 directives, earmarks, instructions, and prohibitions. See Note 8 As the federal budget tightens, lawmakers request increasingly specific report language to protect activities in their districts. Indeed, 1993 was a record year for such requests. In one appropriations bill alone, senators required the U.S. Customs Service to add new employees to its Honolulu office, prohibited closing any small or rural post office or U.S. Forest Service offices; and forbade the U.S. Mint and the Bureau of Engraving and Printing from even studying the idea of contracting out guard duties.
Even worse, Congress often gives a single agency multiple missions, some of which are contradictory. The Agency for International Development has more than 40 different objectives, disposing of American farm surpluses, building democratic institutions, and even strengthening the American land grant college system. See Note 9 No wonder it has trouble accomplishing its real mission--promoting international development.
In Washington, we must work together to untangle the knots of red tape that prevent government from serving the American people well. We must give cabinet secretaries, program directors and line managers much greater authority to pursue their real purposes.
As Theodore Roosevelt said: "The best executive is the one who has the sense to pick good men to do what he wants done, and self-restraint enough to keep from meddling with them while they do it."
Our path is clear: We must shift from systems that hold people accountable for process to systems that hold them accountable for results. We discuss accountability for results in chapter 3. In this chapter, we focus on six steps necessary to strip away the red tape that so engulfs our federal employees and frustrates the American people.
First, we will streamline the budget process, to remove the manifold restrictions that consume managers' time and literally force them to waste money.
Second, we will decentralize personnel policy, to give managers the tools they need to manage effectively--the authority to hire, promote, reward, and fire.
Third, we will streamline procurement, to reduce the enormous waste built into the process we use to buy $200 billion a year in goods and services.
Fourth, we will reorient the inspectors general, to shift their focus from punishing those who violate rules and regulations to helping agencies learn to perform better.
Fifth, we will eliminate thousands of other regulations that hamstring federal employees, to cut the final Lilliputian ropes on the federal giant.
Finally, we will deregulate state and local governments, to empower them to spend more time meeting customer needs--particularly with their 600 federal grant programs--and less time jumping through bureaucratic hoops.
As we pare down the systems of over-control and micromanagement in government, we must also pare down the structures that go with them: the oversized headquarters, multiple layers of supervisors and auditors, and offices specializing in the arcane rules of budgeting, personnel, procurement, and finance. We cannot entirely do without headquarters, supervisors, auditors, or specialists, but these structures have grown twice as large as they should be.
Counting all personnel, budget, procurement, accounting, auditing, and headquarters staff, plus supervisory personnel in field offices, there are roughly 700,000 federal employees whose job it is to manage, control, check up on or audit others. See Note 10 This is one third of all federal civilian employees.
Not counting the suffocating impact these management control structures have on line managers and workers, they consume $35 billion a year in salary and benefits alone. See Note 11 If Congress enacts the management reforms outlined in this report, we will dramatically cut the cost of these structures. We will reinvest some of the savings in the new management tools we need, including performance measurement, quality management, and training. Overall, these reforms will result in the net elimination of approximately 252,000 positions. (This will include the 100,000 position reduction the President has already set in motion.)
A reduction of 252,000 positions will reduce the civilian, non-postal work force by almost 12 percent--bringing it below two million for the first time since the 1966. See Note 12
This reduction, targeted at the structures of control and micromanagement, is designed to improve working conditions for the average federal employee. We cannot empower employees to give us their best work unless we eliminate much of the red tape that now prevents it. We will do everything in the government's power to ease the transition for workers, whether they choose to stay with government, retire, or move to the private sector.
Our commitment is this: If an employee whose job is eliminated cannot retire through our early retirement program, and does not elect to take a cash incentive to leave government service, we will help that employee find another job offer, either with government or in the private sector.
Normal attrition will contribute to the reduction. In addition, we will introduce legislation to permit all agencies to offer cash payments to those who leave federal service voluntarily, whether by retirement or resignation. The Department of Defense (DOD) and intelligence community already have this "buy-out" authority; we will ask Congress to extend it to all agencies. We will also give agencies broad authority to offer early retirement and to expand their retraining, out-placement efforts, and other tools as necessary to accomplish the 12% reduction. Agencies will be able to use these tools as long as they meet their cost reduction targets.
These options will give federal managers the same tools commonly used to downsize private businesses. Even with these investments, the downsizing we propose will save the taxpayer billions over the next 5 years.
None of this will be easy. Downsizing never is. But the result will not only be a smaller workforce, it will also be a more empowered, more inspired, and more productive workforce. As one federal employee told Vice President Gore at one of his many town meetings, "If you always do what you've always done, you'll always get what you always got." We can no longer afford to get what we've always got.