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June 19, 2001

Mr. Chairman, thank you very much for inviting me to appear today before your subcommittee. For over half a decade, the House Committee on Government Reform has helped shepherd OMB and the agencies over the course of implementing the Government Performance and Results Act. We welcome your insights and counsel, and we appreciate your continuing leadership and commitment in this endeavor. Let me also acknowledge the leadership and effort of Senator Thompson during his years as Chairman of the Senate Committee on Governmental Affairs, and the active and ongoing role that Committee has played in overseeing and assisting in the implementation of this Act.

In 1993, Congress enacted the Government Performance and Results Act to get the Federal Government to focus Federal programs on performance. After 8 years of experience, the use of performance information for program management has been discouraging. We plan to change this. To provide a greater focus on performance, the President?s top management initiative involves integrating performance with budget decisions. OMB will begin this effort in the context of the FY 2003 budget submission. We will work with agencies to select outcomes for a few important programs, the outputs that influence these outcomes, how much the outputs cost, and how program effectiveness could be improved.

Government-wide implementation of the Results Act began in earnest in 1997, with the transmittal of the first set of strategic plans and annual performance plans. The agencies have already prepared a second set of strategic plans, and will send the fifth set of performance plans -- for FY 2003 -- to OMB in several months. The second set of annual performance reports, covering FY 2000, were sent to the President and Congress this past March.

An FY 2000 performance report is governed by what an agency included in its FY 2000 performance plan. The Act does not allow agencies to engage in retrospective revisionism, such as adding new performance goals, omitting existing ones, or rewriting and tinkering with others. For its annual performance report, an agency is captive -- for better or worse -- to what was written in its performance plan. This does not mean we cannot learn and profit from reviews and critiques of these reports, in fact, this should improve the product. But the greater value of assessments such as those prepared by Maurice McTigue and his colleagues at the Mercatus Center will be in applying the findings and suggestions to future performance plans. For example, the Campbell Institute within Syracuse University's Maxwell School is studying the link between management capacity and performance in government. Patricia Ingraham lead an effort last year to grade the 50 States based upon their management capabilities. These efforts are a useful tool for both the Committee and the OMB to review when planning federal initiatives.

By our yardstick, simply measuring the quality of the plans and reports, or gauging the processes the agencies used to prepare these plans and reports is only part of the assessment we must make as we look at where we are and what more we have to do. The more important question is how the information in the plans and reports is used to manage the agencies, make resource, policy, and program decisions, and improve the efficiency and effectiveness of what the government provides and delivers.

OMB staff regularly have conversations with their government counterparts in other countries. The experience elsewhere, in countries such as Australia and Great Britain, is that it has taken from five to eight years to put performance-based management fully in place. So we are nearing that critical point when GPRA must take hold as an essential and valuable tool in the management of our government.

I believe we are doing our part to make GPRA implementation a success. Let me outline the actions we are taking in this regard. First and most critically is the President's very clear signal that he wants his Administration and our government to be results-oriented. This was highlighted in February in the President's Budget Overview, "A Blueprint for New Beginnings", and buttressed in the President's April Budget transmittal. The forthcoming "President's Management and Performance Plan" will further reinforce the priority he has placed on this effort.

Within OMB, we have just completed 19 'Spring Reviews'. These reviews were an unprecedented look, both in their scope and detail, at the performance of agency programs across the government, and at what is needed to make some programs more effective. These reviews also identified those areas where, quite frankly, we are in need of better data before we can determine what, if anything, needs to be done to improve performance.

The Spring Reviews also aided us in selecting a group of outcome and related output goals on which we will focus during the Fall Review of the agency budget requests. Following Fall Review, OMB traditionally 'passes back' to an agency the budget amounts that would be included in the President's budget. As part of its FY 2003 passback, OMB expects to include target values for the performance goals for the selected sets of outcome/output goals. Our intention is that the number of performance goals covered in passback will substantially increase in future years.

We are using the passback process to underscore the importance we place on fully integrating performance and budget. The passback values are informed by the budget and performance data received from the agency and reviewed by OMB. In pairing budget dollars with performance target levels, we will be showing our use of and reliance on program performance data in budget formulation.

Let me sketch several related initiatives for making our government more results-oriented. We will soon propose legislation to the Congress that will fully charge the costs of certain retirement and health benefits to an agency and its programs. We would like to begin this charging in FY 2003, and expand this full charging of costs in future years to cover support services, capital acquisition, and hazardous waste cleanup. This should provide managers with a much more accurate picture of what it costs to administer programs and operations, and promote greater competition between the government and the private sector in conducting activities that are commercial in nature.

We will be using workforce planning to anticipate critical skills, reduce organizational layers, re-align staff for better service delivery, and reward employees for achieving results. We will be improving the reliability, usefulness, and timeliness of financial reports. And we will be making greater use of performance-based contracts. Together, these initiatives mark a sea-change in our use of performance information in managing the Federal government and giving the American public the results they deserve.

Mr. Chairman, that concludes my prepared statement. I will happy to answer any questions you may have.