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TESTIMONY OF G. EDWARD DESEVE
DEPUTY DIRECTOR FOR MANAGEMENT
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SUBCOMMITTEE ON MANAGEMENT, INFORMATION AND
TECHNOLOGY
February 4, 1999
Chairman Horn and Members of the Subcommittee: I appreciate the
invitation to
appear today before the House Management, Information and Technology
Subcommittee to
discuss the creation of a separate Office of Federal Management (OFM).
The prospects for improving government management have been
strengthened
substantially by three initiatives. First, balancing the budget has forced
us to look at how, and
how well, programs are operating. As the President has explained:
"We made a decision that was profoundly important, that the
way
Government works matters, that we could not maintain the confidence of the
American people
and we could not have ideas that delivered unless the Government was
functioning in a sensible,
modern, and prudent way."
To enable programs to continue to operate at current levels and to
have a surplus that
is available to fix Social Security, it is necessary to exert tight fiscal
discipline which requires
even better management. It is interesting to note that the focus on
improved management in the
private sector has been spurred, to a large extent, by similar external
pressures - in that case,
competition both domestic and foreign.
Second, the implementation of the Government Performance and Results
Act (GPRA)
has given us a process for introducing and expanding the use of performance
information into the
decision-making process, particularly the resource allocation process in
the preparation and
execution of the Budget. One of my highest priorities as Deputy Director
for Management is to
make the resource allocation process more performance and less input
driven. The GPRA, an
initiative of this Committee, has given us the tools for connecting
resources to results in resource
allocation and management. At OMB Director's Review this year, each
presentation
incorporated key measures from agency plans and analysts used these
measures in describing the
effect of a proposed budget level.
Finally, the reorganization we call OMB2000, instituted in 1993 to
integrate OMB's
budget analysis, management review and policy development roles, gave us an
organizational
framework for making real management change happen. One example of this is
the preparation
by the President's Management Council's Electronic Processes Initiative's
Committee of the
"Electronic Commerce for Buyers and Sellers: A Strategic Plan for
Electronic Federal
Purchasing and Payment." In trying to advance this plan for
electronic commerce, the
Office of Federal Financial Management (OFFM) and the Office of Federal
Procurement Policy
(OFPP) enlisted a virtual staff from all of the Resource Management Offices
(RMOs).
Additionally, for some functions, like human resources, the lead for a
government-wide policy
area is now vested in an RMO. As a result our capacity in these areas has
been enhanced as well.
In short, I simply cannot imagine a bifurcated Office of Management
and Budget trying
to deal with agency streamlining, improving customer service or
implementing the GPRA. Let
me explain why, in a bit more detail.
Resource allocation and management are fundamentally
interdependent.
Management cannot somehow be divorced from budget issues. In the
real world,
resource allocation and management are synonymous. Given the complex
systems that are
necessary to address public problems, we must operate with considerations
of management and
budget together, not apart. This reflects the realization that these two
sets of concerns are in fact
intertwined in actual operation. And as we continue to operate in a
balanced budget environment
where fiscal discipline is linked to programmatic performance, the twin
concerns of
"management" and "budget" will become even more intertwined.
Lessons from OECD Countries
Lessons from the 29 largest democratic, market economies which
comprise the
Organization for Economic Cooperation and Development (OECD) confirm this
approach. Their
experience suggests that improved integration of budget and management
decision making is the
most productive and effective approach to realizing a better understanding
of the relationship
between investments and outcomes.
At a March 1996 Ministerial symposium, OECD Ministers responsible
for public
management met to identify common features of successful governance. What
became apparent
was that efforts to improve public management are likely to fail if
management considerations
are seen as distinct from (or worse, in opposition to) fiscal and budgetary
policies. Successful
countries have built alliances between these efforts and see them as
inherently budgetary in
nature. These include:
- controlling the costs of direct government operations;
- providing financial flexibility to permit resources to be used more
effectively;
- financing essential training;
- reallocating tasks to the private or public sectors; and
- assessing performance.
Rather than being an end in and of itself, improved public
management is seen as
fundamental to pursuing a government strategy that is designed to:
- support sound fiscal policy;
- improve service to the public;
- rationalize the distribution of tasks between the private and public
sectors; and
- lower the cost of government.
As you can see, the scope of public sector reform goes well beyond
the traditional
concern over organization and management. Countries that have had success
in carrying out
reforms have lodged responsibility in two central locations: "centers of
government" offices
such as the Prime Ministry (or in the case of the U.S., the Executive
Office of the President or the
White House), and "central management" bodies such as Finance Ministries.
Thus, elsewhere in the OECD countries, there is a strong sense that
they need an
integrated, rather than fragmented, approach to central budgeting and
management.
All of OMB's resources are available to the DDM
OMB 2000 expanded the focus of the "budget side" to more formally
and aggressively
recognize "management issues." The Deputy Director for Management's role
is to act as a
coordinator of all such management activity within OMB and to assure the
active participation of
all parts of OMB in dealing with management problems. Consistent with the
principles
underlying the Results act, we feel "management" is about enabling and
ensuring program
results. It cannot succeed if seen as being conducted for its own sake.
A good example of this involvement has been the development of the
Administration's
list of Priority Management Objectives which was published for the first
time in the President's
Fiscal Year 1999 Budget and which has been updated in the FY 2000 Budget.
This list contains
both crosscutting goals (e.g., manage implementation of the Year 2000
Conversion) and
agency-specific goals. Each of these goals reflects the desire of the
Administration to seek
accomplishment of specific results during the remaining two years of this
Administration. The
goals were developed by the RMOs and Statutory offices in concert. The
process for developing
them, reviewing them and monitoring them is coordinated by the DDM with
assistance from the
Budget Review Division. The National Partnership for Reinventing
Government has been a
third part of this team and its High Impact Agency commitments for improved
results that
Americans' care about were coordinated in each agency by the RMOs and in
general by the
DDM.
As Deputy Director for Management, I have at my disposal the
capacity of all of OMB,
rather than being the head of the management-side alone. For example,
rapid internal and
external review and clearance of work products by the Budget Review
Division and the
Legislative Review Division is tremendous resource for the DDM staff.
Further Economic
Policy provides institutional knowledge for many initiatives particularly
in the financial
management area. Communication with Congress is coordinated by Legislative
Affairs. In sum,
the entire organization works to support the DDM. This support is crucial
to the effective
execution of the DDM's responsibilities and the Administration's
priorities.
Another view
Two General Accounting Office (GAO) reports support this view. In
May 1998, GAO
concluded a comprehensive "general management review" of OMB's functions
and operations.
Significantly, the report, "Managing the Government," did not recommend
separating the "M"
and "B" or creating a new office of federal management. Quite the
contrary, GAO urged OMB
to take steps to further integrate its functions. That is, of course, what
occurred in the OMB2000
reorganization. In a follow up report, "Changes Resulting From the OMB2000
Reorganization"
(December 29, 1995), GAO described changes that occurred as a result:
"there was greater attention to agency management issues in
the fiscal year
1996 budget process (after OMB 2000 was implemented) than in the fiscal
year 1995 process. A
greater variety of management issues were presented in more depth in the
fiscal year 1996
documents than in previous years' documents. These results reflected the
clear commitment of
OMB's top official's to ensure the treatment of management issues in the
budget cycle."
OMB's system-wide perspective
Major policy issues with which a modern president must deal seldom
fit into the
confines of a single department. Revitalizing the economy, controlling
drugs, protecting the
environment, reforming education, restructuring welfare, or creating jobs:
each of these
issue-areas and dozens of others require coordinated analysis and action
across many executive
branch agencies.
OMB's strength is its unique system-wide perspective: its staff
draws on experience in
many areas of government to challenge the thinking of other agencies, which
often cannot see
beyond their own programs.
OMB's activities are part of a comprehensive whole -- from policy
development
through program implementation and evaluation. These important
responsibilities should be
carried out in an integrated a manner, not through fragmented
organizations. Management
reform is not an end in itself, but rather one aspect of government
strategy that is designed to
support sound fiscal policy, improve service to the public, rationalize the
distribution of tasks
between the private and public sectors, and lower the cost of government.
Conclusion
Only through an integrated approach can we best serve the President
and assist Federal
agencies in grappling with the complex issues raised by an era of fiscal
discipline, downsizing,
restructuring and other management challenges as they attempt to produce a
government that
"works better and costs less."
I would be pleased to answer any questions that you have.
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