United States General Accounting Office Testimony Before the Committee on Governmental Affairs United States Senate For Releaseon Delivery Expectedat 9 30 am ThuxSday February241995 GOVERNMENTREFORM Using Reengineeringand Technology to Improve Government Performance Statement of Charles A Bowsher Comptroller General of the United States GAO T -OCG-95-2 OG aooc i 3YQ- P Mr Chairman and Members of the Committee Enormous budget pressures and widespread dissatisfaction with the government’s performance have heightened the urgency to reform and modernize the operations of federal agencies However agencies are encountering tremendous problems in attempting to take advantage of information technology to improve government and cut costs Meanwhile the American people are becoming increasingly frustrated with business as usual they want a smaller more responsive government that can live within its means and better ensure accountability for achieving real results Reengineering and modem technology offer huge opportunities to reduce federal costs while also improving the quality of government services Unfortunately the federal sector lags far behind leading organizations that have used process improvement and information technology to cut costs streamline operations and enhance service levels After having spent over $200 billion on information systems over the past 12 years our national government is in the worst possible situation--having invested heavily in costly information system projects that often fail to produce dramatic service improvements or significant reductions in personnel and administrative costs Moreover the Congress and federal managers remain information poor severely lacking in reliable data to measure the costs and results of agency operations The federal government is still a long way from achieving the most basic financial accountability to the public--largely due to inadequate information systems This has been a serious obstacle preventing major departments and agencies from passing the test of an independent audit Mr Chairman I know you and other members of this Committee are deeply concerned about solving these persistent problems The legislation supported by this Committee has laid a solid foundation for reforming federal management practices This includes the Chief Financial Officers Act CFO of 1990 the Government Performance and Results Act GPRA of 1993 and the Federal Acquisition Streamlining Act FASA and Government Management Reform Act GMRA of 1994 The Committee’s current work to enhance the Paperwork Reduction Act PRA also will help instill modern management practices throughout government Successful implementation of all these legislative initiatives however hinges greatly on bringing our national government into the information technology age Federal agencies must close the large and widening gap between the public’s expectations for efficient modern service and the government’s performance--a gap that is undermining the effectiveness and credibility of our government institutions More and more the American people are enjoying the everyday benefits of technology-driven service improvements in the private sector such as 24-hour one-stop customer service numbers automated bank tellers overnight package delivery and point-of-sale or telephone credit card payment Americans are perplexed by their government’s seeming inability to achieve similar improvements Significant federal innovations to improve public convenience have simply been too few and far between And when innovations are attempted a dearth of skills and knowledge along with entrenched bureaucracies often conspire to produce failure or significantly degrade projected benefits I strongly believe we must move to a smaller more efficient government one that stresses accountability and managing for results But this will require reengineering federal operations and supporting them with modern information technology As in successful private sector reengineering efforts ambitious improvement goals and targets need to be set for the government to focus attention and mobilize resources for achieving change The experiences of leading organizations also have demonstrated that information technology must be used wisely in conjunction with redesigning business processes that agencies use to carry out their responsibilities and interact with the public Furthermore today’s technology demands a highly skilled workforce with strong incentives to continually adapt and improve over time If these essential elements become more commonplace major improvements are definitely attainable in strengthening accountability reducing costs and enhancing service to the public Mr Chairman today I will focus on -- the critical risks in how the government is mismanaging its $25 billion annual investment in information technology -- management practices used by leading organizations to reduce the risks of bad investments and increase the chances of successfully exploiting technology opportunities and actions that executive agencies and the Congress can take now to bring about the type of government that we would all like to see--one that is smaller works better and costs less CRITICAL RISKS IN FEDERAL INFORMATION TECHNOLOGY INVESTMENTS Our reports have consistently concluded that despite huge expenditures federal agencies continue to lack critical information needed to properly manage their funds and effectively meet mission goals ’ As a result two kinds of risks permeate government 1 deteriorating program performance and unnecessary costs due to the failure to redesign outmoded operations and effectively employ information technology and 2 poor accountability waste and fraud due to inadequate financial systems ’ A listing of our major reports on this topic is contained in attachment I 2 There is growing consensus that poor technology investments are an extremely serious problem -_ The General Services Administration GSA in an effort intended to highlight the problem of failed technology investments announced recently that it has suspended procurement authority for $6 8 billion of new information systems and put another $7 billion on its “watch list ” -- This Committee in its report last session on the Paperwork Reduction Act noted that the government’s huge technology investment is “seriously compromised by inadequate and irresponsible systems planning design acquisition and management ” -_ Senator Cohen of the Government Management Subcommittee released a report last year entitled “Computer Chaos” detailing dozens of examples of failed information technology efforts underscoring how the government uses old obsolete computer systems while wasting millions of dollars in failed modernization efforts -- Many areas on the President’s High-Risk List involve weaknesses in financial management or information systems More recently the Office of Management and Budget’s OMB Circular A-130 on information resources management noted the dangers of developing information systems that merely improve the efficiency of paper-based processes that may no longer be needed -- The administration’s National Performance Review noted that when it comes to information management “the federal government is woefully behind the times unable to use even the most basic technology to conduct its business ” Let me now outline how management problems are preventing the government from improving program performance and instilling financial accountability Risks to Effective Program Performance and Cost Reduction Strategies While well-intentioned and expensive computer modernizations are underway across government we often find these complex undertakings are at great risk due to the failure to 1 adequately select plan and control system and software development projects and 2 use technology to simplify and reengineer processes in ways that reduce costs increase productivity and improve service In fact due to our growing concern about this issue we are adding a new category in our own list of high-risk areas that we monitor major information systems modernization efforts Examples of poor information systems management have plagued efforts to improve some of the government’s most critical activities such as air traffic control and tax processing -- After investing over 12 years and more than $2 5 billion the Federal Aviation 3 Administration FAA chose to cut its losses in its problem-plagued $6-billion Advanced Automation System AAS by either cancelling or extensively restructuring elements of this effort to modernize our nation’s air traffic control system For example a piece of AAS expected to cost about $1 billion and intended to control aircraft in the lower ahitudes around busy airports was cancelled after spending $250 million and was replaced by another $1-billion system development effort The reasons for AAS’ problems include FAA’s failure to 1 accurately estimate the technical complexity and resource requirements of the effort 2 stabilize system requirements and 3 adequately oversee contractor activities Through fiscal year 1995 the Internal Revenue Service IRS will have spent or obligated over $2 5 billion on its $ billion Tax System Modernization TSM initiative to automate selected tax processing functions Yet as we reported in 1994 the overall design of TSM remains incomplete and IRS is continuing to automate existing functions with limited demonstration of how or whether the pieces of the system will eventually fit together to improve tax processing overall Given such concerns and budget constraints the Congress reduced IRS’ fiscal year 1995 budget request by $339 million and IRS has agreed to put the needed business and technical foundation in pIace to better achieve TSM’s objectives The tremendous potential of reengineering business functions prior to automating is also not being fully tapped unlike successful private sector efforts For the government to reduce costs increase service and raise productivity new information systems should not be developed simply to automate existing inefficient or ineffective processes This has been a hard lesson for federal agencies to learn as the following cases vividly illustrate -- In 1993 the Department of Agriculture USDA embarked on a $2 6 billion project called Info Share designed to improve operations and provide better service to farmers such as supporting the establishment of one-stop Field Office Service Centers However we found in 1994 that USDA was managing Info Share primarily as a vehicle to acquire new information technology rather than as an opportunity to fundamentally improve business processes Key steps in process reengineering were not being followed For example senior USDA officials were not involved in managing Info Share and integrating it into the Department’s structural reorganization efforts--a key accountability shortcoming Nor did USDA adequately analyze its current business processes and establish improvement goals Based on our review GSA withdrew its $2 6-billion procurement authority delegation for Info Share and USDA has agreed to refocus the program on improving business processes -- The Veterans Benefits Administration VBA embarked on a modernization effort to speed up the processing of veterans’ compensation claims This effort involves procuring up to $680 million in computer and communications equipment and associated commercial software products However VBA did not set new performance goals and redesign its processes before acquiring this equipment and 4 P software In our 1992 review we determined that without any business process reengineering this substantial technology investment would potentially eliminate only 6 to 12 days from the average of 151 days it took VBA to process an original compensation claim In 1993 VBA and OMB entered into an agreement to redirect the modernization program to obtain better gains in service delivery and cost reduction -- In 1989 the Department of Defense DOD began its Corporate Information Management CIM initiative to streamline its operations Defense originally estimated that CIM could save $36 billion over 6 years To date however CIM has achieved no demonstrable savings largely because it has not focused on making fundamental improvements in major DOD business processes that span across functions Instead Defense has focused on trying to pick the best of its hundreds of existing automated systems and standardizing their use across the military components without thoroughly analyzing the technical cost and performance risks of this approach As a result Defense may lock itself into automated ways of doing business that do not serve its goals for the future and cannot provide promised benefits and cost savings Risks to Sound Financial Accountabilitv As we have testified on numerous occasions before this Committee widespread weaknesses in financial systems are crippling our government’s ability to monitor and manage its $1 3 trillion in annual revenue $1 5 trillion in net outlays and over a trillion dollars of assets For example due to poor financial records and systems we were unable to express financial audit opinions for five major agencies--IRS U S Customs Service Army Air Force and Education’s Federal Family Education Loan Program These agencies collect and account for virtually all of the government’s revenues and a substantial portion of its outlays The shortcomings of poor financial accountability are alarming Our audits have identified hundreds of billions of dollars in accounting mistakes and omissions that render information provided to managers and the Congress virtually useless More often than not the information needed to measure agency performance and costs is either unavailable or unreliable The deficiencies at two major federal agencies DOD and IRS vividly illustrate these problems While public confidence in our country’s superior military capabilities is deserved the same cannot be said of DOD’s ability to accurately account for and manage its annual budget of over $250 billion and over $1 trillion in assets worldwide No military service or major component of DOD has been able to obtain an audit opinion because 1 financial reports were not reliable despite hundreds of billions of dollars in audit adjustments 2 billions of dollars of assets had not been properly accounted for and 3 countless problems were found in performing basic bookkeeping tasks For example DOD disbursed $25 biJlion to vendors that cannot be properly matched to the necessary supporting documentation to determine 5 whether the payments were proper DOD’s inability to adequately correct well-known areas of waste and vulnerability also is draining precious resources and undermining efforts to further enhance military training and readiness For example 1 the Army paid approximately $8 million of payroll to unauthorized individuals including “ghost” soldiers and deserters 2 the Navy paid an estimated $3 million to a former Navy supply officer for 108 false invoice claims and 3 DOD relies on contractors to voluntariIy return hundreds of millions of dollars that primarily result from overpayments--in one h-month period in fiscal year FY 1993 contractors returned $751 million and in FY 1994 they returned $957 million Similarly IRS has not kept its own books and records with the same degree of accuracy that it expects of taxpayers For the last 2 years we have been unable to express an opinion on IRS’ financial statements due to serious accounting and internal control weaknesses For example as of September 30 1993 IRS 1 did not have reliable data to help collect an estimated $29 billion of collectible accounts receivable and 2 had not posted over $90 billion in transactions to the taxpayer account balances supporting reported amounts or properly included over $58 billion in credit balances in its financial reports Recent expansion of the CFO Act provides a good basis for addressing financial accountability problems However there is still a long way to go particularIy in the area of developing integrated automated systems As I will discuss later this area provides an excellent opportunity for reengineering Without concerted efforts to implement modern financial management systems the Congress is at great risk of not being fully informed as it attempts to exploit cost and public service improvement opportunities and hold agencies accountable for achieving results CLOSING THE GOVERNMENT’S ORGANIZATIONS PERFORMANCE GAP LEARNING FROM LEADING To help federal agencies achieve their potential for improvement GAO studied a number of successful private and public sector organizations to learn how they reached their own ambitious improvement goals In OUTresulting report we describe a strategic integrated set of fundamental management practices that were instrumental in these organizations’ success These practices can be readily adopted by federal agencies The most critical factor for success was the leadership and personal commitment of top executives to improve strategic information management Successful leaders approached information management issues in a seamless fashion they recognized that technology is 2Executive Guide Improving Mission Performance Through Strategic Information Management and Technology--Learning From Leading Organizations GAO AIMD-94May 1994 6 115 integral to providing the information for effective decisionmaking and supporting the work processes that accomplish the organization’s mission Figure 1 below summarizes this critical interrelationship Figure I Integration of Strategic Management Issues They make certain that the mission is clearly defined and tied to external customer needs n 1 Guide Decisions I 1 They define core management and work processes and link them to mission outcomes They ensure that decisions support mission accomplishment and work processes They ensure that information is accurate timely secure and is being used to support mission goals processes and decisions involved in choosing information technologies and systems that are appropriate for intended mission outcome Top executives understood the value of information and information technology They actively spent the time to manage down risks and maximize the return on scarce investment funds These leaders managed through three fundamental areas of practice -- First they decided to work differently by quantitatively assessing performance against the best in the world and recognizing that program managers and stakeholders need to be held accountable for using information technology well In contrast the federal government frequently fails to benchmark itself against the best delegates information 7 issues to technical staff and sustains rates of management turnover that seriously hinder true ownership and accountability -- Second they directed scarce technology resources toward high-value uses by reengineering critical functions and carefully controlling and evaluating the results of information systems spending through specific performance and cost measures Federal agencies on the other hand often buy hardware before they evaluate their business functions lack discipline and accountability for their investments and fail to rigorously monitor the results produced -- Third they supported major cost reduction and service improvement qforts with the up-to-date professional skills and organizational roles and responsibilities required to do the job The federal government all too often is held back by an antiquated skill base and confused roles and responsibilities that consistently inhibit the effectiveness of major system development and modernization efforts Figure 2 below provides additional detail on the specific practices within these fundamental management areas Figure 2 Key Manapement Areas and Fundamental Practices 1 Recognizeand communicate 4 Anchor strategicplanningin the urgency to change customerneedsand mission informationmanagement goals 9 relationshipsbetweenline and information practices 2 Get line management involved and create ownership 3 managementprofession 5 Measurethe performanceof key missiondeliveryprocesses 10 6 Focus on processimprovement in the context of an architecture Take action and maintain momentum Establishcustomer supplier s 11 7 Manageinformationsystems projectsas investments Position a Chief Information Officer as a senior managementpartner Upgrade skills and knowledge of line and information management professionals 8 Integrate the planning budgeting and evaluation pKxesses It is important to recognize that these 11 practices form an integrated set It is not enough for agencies to advance in only one or two management areas The leading organizations were able to transform their operations because they implemented the full range of strategic 8 information management practices needed to initiate direct and support change Unless federal decisionmakers engage in concerted efforts to learn and apply these practices there is little hope of bringing the federal government into the 21st century at a level of excellence comparable to other leading American organizations ACTIONS FOR ACHIEVING REAL IMPROVEMENT IN COST AND PERFORMANCE Achieving true “order of magnitude” improvements will be a formidable undertaking requiring constancy of purpose and the resolve to make tough decisions Many cultural barriers need to be overcome and near-term investments may be necessary to gain continuing Long-term cost reductions The time frames for achieving substantive results may span years as private sector experience has shown in even the best cases The Importance of Goals Setting improvement goals is an important step in getting the government to engage seriously in the difficult task of change Leading organizations understand the value of setting aggressive goals to break through institutional complacency and stimulate the redesign of long-established business practices Targets that call for an “order of magnitude” improvement provide agencies with a powerful incentive to clarify their strategic goals design work processes that best support those goals and create a streamlined organizational structure staffed by a skilled and responsive workforce Goals should be based on a careful fact-based analysis of the organization’s performance and its environment They should be driven by customer and stakeholder needs and stated in measurable terms of cost quality and time Benchmarking against world-class organizations is important in setting specific targets that are both aggressive and attainable Leading organizations recognize that goal-setting is a dynamic process They reexamine targets as needed without allowing refinements to become an excuse for evading the task of improvement Goals and the goal-setting process are taken seriously and top managers are held accountable for setting the right targets--and meeting them Fortunately the federal government already has a legislative mechanism for establishing and managing toward goals that are necessary for fundamental improvements in program and service delivery The landmark GPRA legidation enacted under the leadership of this Committee is intended to provide a greater focus on the results of federal programs GPRA requires agencies to establish a strategic direction systematically measure their performance and publicly report on progress in meeting their goals The central features of GPRA-strategic planning performance measurement and public reporting and accountability--can serve as powerful tools for changing the basic culture of government Improving the Federal Workforce The capabilities of people play an important role in achieving the highest levels of performance improvement and cost savings The federal government continues to pay the price for not having an adequate cadre of professionals in the information management and financial management areas who can help make change happen and improve the accountability of agencies The private sector has painfully learned that reengineer-ing and streamlining projects can easily be delayed or fail if personnel issues are not addressed In particular three issues need to be directly confronted -- the uses of information technology in the workplace are becoming more complex requiring higher levels of technical sophistication from the workforce -- rapid technological changes lead to continually evolving opportunities to improve business processes and -- reengineering business processes necessarily changes the status quo altering employees’ roles responsibilities and skill needs and changing or eliminating jobs To address these three issues the federal government needs to attract and retain qualified people especially in the areas of financial and information management We need a core set of experienced professional staff and managers who can take full advantage of opportunities for working with the private sector through outsourcing and partnerships to improve federal information management In addition the government needs to develop a human resources system that gives federal workers the incentives training and support to help them continually learn and adapt Mr Chairman we strongly endorse your civil service reform goal of developing a highly skilled educated and trained workforce that is held accountable for what they do and are more responsive to taxpayers’ needs Information Management Initiatives for Federal Apencies Little can be achieved in streamlining processes unless agency leaders take the initiative to institutionalize sound strategic information management practices We have found that many agencies need and want help to close the cost and performance gap with the leading organizations Over 14 000 copies of our report on best practices of leading organizations have been requested and we have given 120 briefings to over 2 000 federal decisionmakers to explain our work The following steps are needed to get these practices implemented not just talked about -- Agencies should benchmark their current information management practices against the practices of successful leading organizations to 1 understand where they are deficient and 2 develop an action plan for putting the leading practices in place We 10 have developed a methodology for agencies to use in doing self-assessments and are working with several agencies such as the Department of Housing and Urban Development and IRS to help them do this Agencies’ top executives must assert control over technology investment decisions and ensure that improvement efforts are well-managed and directed toward achieving maximum value in improving operations The vital area of information technology expenditure warrants a new level of scrutiny-governmentwide--to determine just where risks are highest and how they then can be managed more effectively To this end we are working with both OMB and GSA to infuse more discipline and accountability into the government’s decisions regarding information technology expenditures For example OMB with our assistance is developing a guide to help its budget examiners rigorously evaluate technology investments __ Agencies should be held accountable for understanding what their key information assets are and for protecting their value This refers not merely to physical systems hardware and software but to data assets as well In addition program managers themselves need to be held accountable for managing the information resources that support their programs Information Management Initiatives for the Congress This Committee has played an important role in building consensus on the need for adopting proven practices for effective strategic information management We appreciate the letter that you Mr Chairman and Senator Glenn sent to the heads of agencies endorsing the management practices outlined in our study of leading organizations This stimulated great interest and support for our findings For example GM3 has incorporated the essence of these practices into its revision of A-130--the basic policy circular for federal information resources management This Committee can take additional actions to strengthen the legislative foundation that it has been building so carefully Presently the Paperwork Reduction Act provides the primary legislative framework for managing information technology In the 14 years since its passage rapid changes in information technology have occurred--changes that now demand new approaches We encourage the Committee’s efforts to refine the act and to develop other legislation to improve accountability for information technology investments and results Such 1egisIation at a minimum should -- require agencies to implement sound strategic information management practices such as making sure that investments are driven by effective business plans aimed at reengineering outmoded processes and that controls over the investments are in place -- emphasize that information management is an integral part of the government’s overall management responsibility and ensure that senior managers are responsible and 11 accountable for maximizing the net benefits and appropriately managing the risks associated with major information systems initiatives -- establish a chief information officer CIO within each agency to work with the agency’s senior management to 1 define and implement effective strategic management practices that integrate information technology decisions with budget financial and program management decisions and 2 support program officials and the chief financial officer in defining information needs and developing strategies to meet those needs -- establish a CIO within OMB who can guide the development of governmentwide plans and identify effective ways to better support information management within agencies and -- establish measures and accountability for achieving results from information technology investments These would all be positive steps But given the scope of the government’s performance problems and the rapid evolution of technology broader legislative reforms may be needed We are working with this Committee and Senator Cohen’s Subcommittee in defining major potential areas of reform and alternatives for congressional action Opportunities to Improve Government Operations The Committee can also keep the momentum for improvement going by focusing on specific areas where agencies can use reengineering and technology to improve service delivery and reduce costs Current efforts at IRS Defense Agriculture SSA and V3A all have tremendous potential if properly designed and managed In addition it is important to consider opportunities to streamline across individual agencies by standardizing and consolidating functions such as financial management logistics payroll and data center services where the private sector has found a rich harvest of improvement opportunities especially among larger organizations Let me point to a few candidates that illustrate this vast potential Increasing Efficiency and Responsiveness of Disability Claims Processes Over the next few decades SSA will face unprecedented growth in the number of beneficiaries placing its current work processes under increasing stress Between 1990 and 2005 the number of persons 65 and over will increase by 4 8 million and the number of disability insurance beneficiaries is expected to more than double to over 8 7 million SSA’s ability to serve this increasing customer base wil1 depend greatly on its ability to improve the efficiency and effectiveness of its work processes For example SSA’s disability determination process is highly inefficient and paper-driven A disability claim can pass 12 through as many as 26 people to reach an initial disability decision SSA reports that the average claimant waits up to 155 days from first contact with SSA for an initial decision although only about 13 hours are spent actually working on a claim The remainder of the time is associated with waiting for medical evidence handing off the case to the next step in the process and waiting between steps To SSA’s credit it has recognized the need to improve service and has initiated an effort to reengineer its disability determination process to reduce the average waiting time to approximately 60 days SSA’s effort to reengineer its business processes is an effort we have encouraged and supported However as we reported in 1994 SSA’s previously planned $1 125 billion acquisition of 64 000 intelligent workstations and 2 200 local area networks needs to be refocused to support reengineered operations it cannot continue to be directed at SSA’s current inefficient work processes Also a business plan is needed that addresses the resources necessary to adequately handle current and future workloads Unfortunately the inefficiencies inherent in disability determination processes are not unique to SS4 The Veterans Benefits Administration faces a similar challenge In 1992 a veteran had to wait more than a third of a year for an original compensation claim to be processed while only about 5 hours were actually spent working on the claim Most of the remaining time involved the claim waiting in queue between the steps in the process The claims processing functions such as those at SSA and VBA represent ideal candidates for reengineering with modem information technology The gains in service to the public and reduced government costs could be enormous provided that the effort is properly designed implemented and managed Similarly other agencies across the government have similar improvement opportunities in functions such as processing and reviewing loans Reducing the Cost of Inventory Management For more than a decade leading businesses have been streamlining inventory processes and stocks on hand to reduce overhead increase responsiveness and cut unnecessary carrqring costs The federal government however has only begun to take advantage of this opportunity For example DOD has spent billions of dollars on excess supplies burdened itself with the need to maintain them and failed to acquire the tools or expertise needed to manage them effectively In September 1993 DOD reported that although it had an inventory of $77 5 billion about $36 3 billion or about 47 percent of the inventory represented items not needed to be on hand to support current operating requirements DOD generally agrees that it could lower costs and reduce inventories by using commercial practices For example DOD stores duplicate inventories of construction general and industrial supplies at wholesale and retail locations In contrast private sector companies encourage direct delivery of supplies to industrial centers by locating suppliers at “supplier parks” near the centers and by streamlining the ordering bill paying and distribution processes through the use of electronic data interchange systems The Defense Logistics 13 Agency DLA is currently implementing some commercial practices For example DLA has implemented a prime vendor program for medical supplies which has reduced overall wholesale inventories by $400 million and is achieving cost reductions to military hospitals nationwide Improving Accountability Through Effective Financial Management Systems The antiquated inefficient financial systems of the federal government are excellent candidates for reengineering through information technology For example according to OMB 34 percent of agency financial management systems are over 10 years old 54 percent fail to meet agencies’ processing requirements and 51 percent do not meet internal reporting requirements The private and public sector have achieved significant cost reductions and improved service through financial management systems redesign efforts For example -- Electronic Data Systems Corp EDS changed its accounts payable process from a paper-burdened process requiring a series of reviews between the field and central offices to a paperless central on-line computer system resulting in a 50-percent reduction in staff and a 75percent reduction in costs -- Minnesota’s Department of Revenue reported redesigning its sales tax system to achieve Cl faster resolution of delinquent filings and payments which resulted in $4 3 million in increased receivable collections 2 $50 million in taxes received through increased compliance and 3 over $900 000 in reduced operating costs Other Potential Opportunities for Cost Reduction and Service Improvement The administration’s National Performance Review NPR which builds on many past efforts to target areas for improvement identified numerous opportunities for federal agencies to work better and with lower costs Some of these opportunities involve improving functions like debt collection at the Departments of Treasury Justice and State to increase collection rates as well as reduce redundancies in personnel and administrative infrastructure Others involve streamlining field office operations like those at USDA to eliminate unnecessary offices data centers and telecommunications networks in order to reduce costs and better serve the public Over 40 percent of the projected cost savings of the NPR efforts depend on implementing ideas involving reengineering with information technology Although most of these opportunities as yet remain unachieved NPR is taking initial steps toward meaningful cost and service improvements It is sending a strong signal to agencies on the need to change and is encouraging creative solutions to existing problems NPR is also beginning to define customer service requirements--a critically important activity As we note in our recent review of NPR many of its improvement proposals warrant consideration and further illustrate the potential benefits that a modern government could offer 14 r At your request we are working with this Committee to assess and prioritize a wide range of functional and programmatic areas that can be redesigned consolidated privatized or eliminated altogether Our work includes selecting a priority group of target opportunities analyzing the relevant business processes benchmarking them against world-class organizations with similar processes and quantifying potential cost savings We plan to report back to the Committee on our progress with this effort in the spring Mr Chairman I look forward to working with this Committee as it strives for a better managed government We would be glad to answer any questions that you or other members of the Committee may have at this time 15 ATTACHMENT I RELATED GAO PRODUCTS Governmentwide Reengineering Organizations Results of a GAO Symposium GAO NSIAD-95-34 Dec 13 1994 Management Reform Implementation of the National Performance Review’s Recommendations GAO OCG-95 1 Dec 5 1994 Executive Guide Improving Mission Performance Through StrateEic Information Management and Technolofiv--Learning From Leading Organizations GAO AIMD-94-115 May 1994 Improvine Government GAO’s Views on H R 3400 Management Initiatives GAO T-AIMD GGD-94-97 Feb 23 1994 Management Reforms Examples of Public and Private Innovations to Improve Service Delivery GAO AIMD GGD-94-9OBR Feb 11 1994 Improving Government Actions Needed to Sustain and Enhance Management Reforms GAO T-OCG-94-1 Jan 27 1994 Information Resources Summary of Federal Agencies’ Information Resources Management Problems GAO lMTEC-92- 13FS Feb 13 1992 Financial Management Issues Financial Audits July 28 1994 CFO Implementation at IRS and Customs GAO T-AIMD-94-164 Financial Management Status of CFO Act Implementation at the Department of the Treasury GAO T-AIMD-94- 157 July 13 1994 Financial Audit Federal Family Education Loan Program’s Financial Statements for Fiscal Years 1993 and 1992 GAO AIMD-94- 131 June 30 1994 Financial Management GAO T-AIMD GGD-94- CFO Act Is Achieving Meaningful Progress 149 June 2 1 1994 Financial Audit Examination of Customs’ Fiscal Year 1993 Financial Statements GAO AIMD-94- 119 June 15 1994 16 Financial Audit Examination of IRS’ Fiscal Year 1993 Financial Statements GAO AIMD-94-120 June 15 1994 Financial Management DOD’s Efforts to Improve Operations of the Defense Business Operations Fund GAO T-AIMD-94- 146 Mar 24 1994 Financial Management Control and System Weaknesses Continue to Waste DOD Resources and Undermine Operations GAO T-AIMD NSIAD-94- 154 Apr 12 1994 Financial Management IRS Lacks Accountabilitv Over Its ADP Resources GAO AIMD-93-24 Aug 5 1993 Financial Management DOD Has Not Responded Effectively to Serious Long-Standing Problems GAO T-AIMD-93-1 July 1 1993 Financial Audit Examination of Army’s Financial Statements for Fiscal Years 1992 and 1991 GAO AIMD-93-1 June 30 1993 Financial Management Issues GAO OCG-93-4TR December 1992 Financial Management NASA’s Financial Reports Are Based on Unreliable Data GAO AFMD-93-3 Oct 29 1992 Financial Audit Aggressive Actions Needed for Air Force to Meet Obiectives of the CFO t GAO AFMD-92-12 Feb 19 1992 Department of Defense Defense Management Imuediments Jeopardize Logistics Corporate Information Management GAO NSIAD-95-28 Oct 2 1 1994 DOD’s CALS Initiative GACVAIMD-94- 197R Sept 30 1994 Commercial Practices ODportunities Exist to Enhance DOD’s Sales of Surplus Aircraft Parts GAO NSIAD-94- 189 Sept 23 1994 DOD Procurement Overpayments and Underpayments at Selected Contractors Show Major Problem GAO NSIAD-94-245 Aug 5 1994 Commercial Practices DOD Could Reduce Electronics Inventories by Using Private Sector Techniques GAO NSIAD-94-110 June 29 1994 17 Army Inventory Opportunities Exist for Additional Reductions to Retail Level Inventories GAQ’NSIAD-94- 129 June 6 1994 Army Inventory More Effective Review of Proposed Inventory Buys Could Reduce Unneeded Procurements GAOINSIAD-94-130 June 2 1994 Defense ADP Consolidation GAO A ID-94-85R Apr 26 1994 Defense Management Initiatives Limited Progress in Implementing Management Improvement Initiatives GAO T-AIMD-94- 105 Apr 14 1994 Defense Management Stronger Support Needed for Corporate Information Management Initiative to Succeed GAO AIMD NSIAD-94-101 Apr 12 1994 Defense Procurement Millions in Ovemayments Returned by Contractors GAOINSIAD-94-106 Mar 14 1994 Corporate Information Management Shortcomings in Defense’s Data Administration Initiative Must Be Addressed GAO AIMD-93-16 July 19 1993 DOD Computer Contracting Inadequate Management Wasted Millions of Dollars GAO IMTEC-93-31 June 25 1993 Defense Weapons Systems Acquisition GAO HR-93-7 December 1992 Defense Inventory Management GAO HR-93-12 December 1992 Defense ADP Corporate Information Management Must Overcome Major Problems GAO IMTEC-92-77 Sept 14 1992 Internal Revenue Service Tax System Modernization Status of Planning and Technical Foundation GAO T-ALMD GGD-94-104 Mar 2 1994 IRS Information Systems Weaknesses Increase Risk of Fraud and Impair Reliability of Management Ififormation GAO AIMD-93-34 Sept 22 1993 Tax Administration Achieving Business and Technical Goals In Tax Systems Modernization GAO T-GGD-93-24 Apr 27 1993 Tax Administration Opportunities to Increase the Use of Electronic Filing GAOIGGD-93-40 Jan 22 1993 18 Tax Administration IRS Can Imurove Controls Over Electronic Filing Fraud GAO GGD-93-27 Dec 30 1992 Internal Revenue Service Receivables GAO HR-93- 13 December 1992 Tax System Modernization May 13 1992 Update on Critical Issues Facing IRS GAO T-IMTEC-92-18 Social Securitv Administration Social Security Administration Risks Associated With Information Technology Investment Continue GAO AIMD-94-143 Sept 19 1994 Social Security Administration Maior Changes in SSA’s Business Processes Are Imperative GAO T-AIMD-94- 1136 Apr 14 1994 Medicare New Claims Processing System Benefits and Acauisition Risks GAO HEHS AIMD-94-79 Jan 25 1994 Welfare Programs Prescription Drugs Automated Prospective Review Systems Offer Potential Benefits for Medicaid GAO AIMD-94- 130 Aug 5 1994 Child Welfare HHS Begins to Assume Leadership to Implement National and State Systems GAO AIMD-94-37 June 8 1994 Welfare to Work JOBS Automated Systems Do Not Focus on Program’s Employment Objective GAO AIMD-94-44 June 8 1994 Automated Welfare Systems Historical Costs and Proiections GAO A ID-94-52FS Feb 25 1994 Department of Veterans Affairs Veterans Benefits Redirected Modernization Shows Promise GAO AIMD-94-26 Dec 9 1993 Veterans Benefits Accruisition of Information Resources for Modernization Is Premature GAO IMTEC-93-6 Nov 4 1992 19 Department of Commerce Weather Forecasting Systems Architecture Needed for National Weather Service Modernization GAO AIMD-94-28 Mar 11 1994 Patent And Trademark Office Key Processes for Managing Automated Patent System Develoument Are Weak IGAO AIMD-93-15 Sept 30 1993 Department of Agriculture USDA Restructuring Refocus Info Share Program on Business Processes Rather Than Technology GAO AIMD-94-156 Aug 5 1994 Department of Housing and Urban Development HUD Information Resources Strategic Focus and Improved Management Controls Needed GAO AIMD-94-34 Apr 14 1994 Federal Aviation Administration Advanced Automation System Implications of Problems and Recent Chances GAO T-RCED-94-188 Apr 13 1994 Environmental Protection Agency Environmental Protection EPA’s Plans to Improve Longstanding Information Resources Management Problems GAO AIMD-93-8 Sept 16 1993 Department of Energy Department of Eneray Better Information Resources Management Needed to Accomplish Missions GAO lMTEC-92-53 Sept 29 1992 5 10976 20 Ordering Information The fust copy of each GAO report and testimony is free Additional copies are $2 each Orders should be sent to the following address accompanied by a check or money order made out to the Superintendent of Documents when necessary Orders for 100 or more copies to be mailed to a single address are discounted 25 percent Orders by mail U S 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