APPENXIX B National Performance Review Summary of Savings

Introduction

The NPR recommendations yield $108 billion in savings for the 5 year period, FY1995-1999. $36.4 billion result from the specific changes in individual agencies that were detailed in Appendix A. The remaining $71 billion result from governmentwide changes explained here.

This appendix provides the estimates of the governmentwide changes, and the assumptions underlying those estimates. Savings by major issue area are shown in Table B-1.

1. Streamlining The Bureaucracy Through Reengineering. These estimates assume: a. Agency reengineering will allow a 12% reduction of civilian personnel over 5 years.

b. Administrative and central control staffs and supervisors will be the primary areas for downsizing.

c. Attrition, enhanced severance, reassignment, relocation, outplacement and retraining will be the primary tools to accomplish the reduction.

d. Agencies will use other tools as necessary to accomplish the 12% reduction.

e. The 12% reduction includes and increases the Administration's previously established 4% personnel reduction goal for fiscal 1995.

f. Indirect costs associated with personnel, such as office space and expenses, travel and supplies, are not included in the dollar estimates.

2. Reinventing Federal Procurement These estimates assume: a. The General Service Administration's estimate that total annual procurement costs equal $200 billion (GSA Federal Procurement Report).

b. Savings can be generated by a variety of reforms in procurement systems, including simplified acquisition thresholds, labor law reforms, IT procurement reforms, shifting from government specifications to commercial items, expanded use of purchase cards, and electronic commerce.

c. Savings up to 12% of procurement spending may be achieved through these reforms (study by Defense Systems Management College). The NPR used 5% as a mid-range estimate.

d. To avoid double-counting, savings associated with reductions in procurement personnel are excluded from this "reinventing procurement" savings estimate.

3. Reeingeering Through Information Technology These estimates assume: a. A $25 billion baseline in information technology (IT) spending, based on obligations reported through OMB circular A-11 by executive branch agencies for acquisition, operation, and use of IT systems.

b. 30% savings in IT systems may be achieved through information infrastructure consolidation and standardization -- this savings estimate is extrapolated from the "Defense Information Infrastructure Initiative" (December 1992, Resource Summary). Since Defense IT spending constitutes roughly one-half of total IT spending it is assumed that equal savings can be obtained from the IT budgets of civilian agencies.

c. Savings from electronic benefits transfer and from consolidation and modernization of the federal information infrastructure; offsetting costs result from consolidation and modernization of the law enforcement and safety mobile networks and a program to provide citizens with better access to government information.

d. Savings for electronic benefits transfer nationally may be extrapolated from pilot programs in the states of New Mexico and Minnesota.

e. Savings recommended for the Department of Transportation IT consolidation and modernization are subtracted to avoid double-counting.

4. Intragovernmental Administrative Costs. Simplifying and reducing the federal government's reporting requirements will generate savings at the federal, state, and local levels. The estimate assumes that over 75% of the state and local governments will accept a fee-for-service option in place of existing cost reimbursement procedures from FY1995-1999 in return for greater administrative flexibility. Eliminating cost reimbursement procedures slows cost growth by 3% per year at the federal level.

Table B-1.     Estimates of Savings from NPR systems Teams
               Recommendations
                    (dollars in billions)

                         FY95 FY96 FY97 FY98 FY99      Total

1.   Streamlining the
     Bureaucracy through
     Reengineering       5.0  5.8  7.4  9.5  12.7      40.4

2.   Reinventing Federal
     Procurement         0.0  5.6  5.6  5.6  5.7       22.5

3.   Reengineering Through
     Information
     Technology          0.1  0.5  1.2  1.6  2.0        5.4

4.   Reducing Inter-
     governmental
     Administrative
     Costs               0.5  0.7  0.7  0.7  0.7        3.3

5.   Changes to Individual
     Agencies
     (see Appendix A)    7.0* 6.2  7.0  7.3  8.9       36.4


Total NPR Savings        12.6 18.8 21.9 24.7 30.0      108.0


*Includes $0.5 billion in FY1994
The assumptions used to develop these savings estimates follow.