Who is the Director of the Office of Management and Budget

Jacques Jiha, Ph.D., serves as Director of the New York City Mayor’s Office of Management and Budget. In this role, he oversees New York City’s fiscal policy, including the development of the Expense and Capital Budgets, the City’s bond and borrowing program, and the budgets of more than 90 City agencies and entities. He is also responsible for evaluating the efficiency and cost-effectiveness of City services and proposals, and providing vital information to government officials on the local, national, and world economies. As Budget Director, he has helped lead New York City out of the financial crisis brought on by the COVID-19 pandemic through strong fiscal management.

Previously he served as Commissioner of the Department of Finance, responsible for leading an agency that collects more than $40 billion annually in revenue for the city and assesses over 1.1 million properties with a total combined value of $1.3 trillion. He led the transformation of the Department of Finance into a dynamic, forward-looking, and customer-centric agency, and under his leadership the City reformed and modernized its corporate tax laws, reducing taxes for many small businesses, and introduced many new services for its customers.

Prior to becoming Commissioner of the Department of Finance, Director Jiha was the Chief Operating Officer and Chief Financial Officer of Earl G. Graves, Ltd., a multi-media company with properties in print and digital media. Previously, he served as Deputy Comptroller for Pension Investment and Public Finance. As the state’s chief investment officer, he oversaw the New York State Common Retirement Fund, the New York’s College Savings Program and the state’s short-term investment pool. Prior to this, he served as Deputy Comptroller for Nassau County, Deputy Comptroller for Budget and Chief Economist for the New York City Office of the Comptroller, Executive Director of the New York State Legislative Tax Study Commission, and Principal Economist for the New York State Assembly Committee on Ways and Means.

A staunch advocate of public service, Director Jiha served on a number of government and not-for-profit boards, including the Ronald McDonald House of New York, the Public Health Solutions and the Dormitory Authority of New York State.

Director Jiha holds a Ph.D. and a master’s degree in economics from the New School for Social Research and a bachelor’s degree in economics from Fordham University.

[House Hearing, 106 Congress] [From the U.S. Government Printing Office] THE OFFICE OF MANAGEMENT AND BUDGET: IS OMB FULFILLING ITS MISSION? ======================================================================= HEARING before the SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION __________ APRIL 7, 2000 __________ Serial No. 106-187 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform __________ U.S. GOVERNMENT PRINTING OFFICE 70-219 WASHINGTON : 2001 _______________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania JOHN L. MICA, Florida PATSY T. MINK, Hawaii THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington, MARK E. SOUDER, Indiana DC JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio Carolina ROD R. BLAGOJEVICH, Illinois BOB BARR, Georgia DANNY K. DAVIS, Illinois DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas LEE TERRY, Nebraska THOMAS H. ALLEN, Maine JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois DOUG OSE, California ------ PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont HELEN CHENOWETH-HAGE, Idaho (Independent) DAVID VITTER, Louisiana Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director David A. Kass, Deputy Counsel and Parliamentarian Lisa Smith Arafune, Chief Clerk Phil Schiliro, Minority Staff Director ------ Subcommittee on Government Management, Information, and Technology STEPHEN HORN, California, Chairman JUDY BIGGERT, Illinois JIM TURNER, Texas THOMAS M. DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania GREG WALDEN, Oregon MAJOR R. OWENS, New York DOUG OSE, California PATSY T. MINK, Hawaii PAUL RYAN, Wisconsin CAROLYN B. MALONEY, New York Ex Officio DAN BURTON, Indiana HENRY A. WAXMAN, California J. Russell George, Staff Director and Chief Counsel Heather Bailey, Professional Staff Member Bryan Sisk, Clerk Trey Henderson, Minority Counsel C O N T E N T S ---------- Page Hearing held on April 7, 2000.................................... 1 Statement of: Lew, Jacob, Director, Office of Management and Budget........ 5 Miller James C., III, counselor, Citizens for a Sound Economy; Dwight Ink, president, emeritus, Institute of Public Administration; and Herbert N. Jasper, senior associate, McManis Associates.............................. 102 Walker, David M., Comptroller General of the United States, U.S. General Accounting Office............................. 64 Letters, statements, etc., submitted for the record by: Ink, Dwight, president, emeritus, Institute of Public Administration, prepared statement of...................... 111 Jasper, Herbert N., senior associate, McManis Associates, prepared statement of...................................... 120 Lew, Jacob, Director, Office of Management and Budget: FY 2000 INS border security request...................... 55 Illustrative examples of integration of management and budget functions....................................... 60 Letter dated February 28, 2000........................... 49 Prepared statement of.................................... 9 Privacy Act backlogs at the Federal Bureau of Investigation.......................................... 57 Miller James C., III, counselor, Citizens for a Sound Economy, prepared statement of............................. 105 Turner, Hon. Jim, a Representative in Congress from the State of Texas, prepared statement of............................ 4 Walker, David M., Comptroller General of the United States, U.S. General Accounting Office, prepared statement of...... 68 THE OFFICE OF MANAGEMENT AND BUDGET: IS OMB FULFILLING ITS MISSION? ---------- FRIDAY, APRIL 7, 2000 House of Representatives, Subcommittee on Government Management, Information, and Technology, Committee on Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 10:04 a.m., in room 2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding. Present: Representatives Horn, Turner, and Biggert. Staff present: Russell George, staff director and chief counsel; Randy Kaplan, counsel; Matt Ryan, senior policy director; Louise Debenedetto, GAO detailee; Heather Bailey, professional staff member; Bonnie Heald, director of communications; Brian Sisk, clerk; Ryan McGee, staff assistant; Michael Soon, intern; Trey Henderson, minority counsel; and Jean Gosa, minority clerk. Mr. Horn. A quorum being present, the Subcommittee on Government Management, Information, and Technology will come to order. The Office of Management and Budget is one of the most important agencies in the executive branch of the Government. The OMB coordinates the legislative opinions of the administration and reviews and recommends budget requests to the President, which he then decides and submits an annual budget to Congress. The budget is a key document of State that affects the funding level of nearly every Federal program that Congress provides. OMB directors and some of the 500-member staff also coordinate the opinions of relevant departments and agencies. OMB reminds the President that legislation is not in accord with the program of the President, whether it should be signed or vetoed. In addition, the OMB has an enormous impact on U.S. businesses because of its role in determining Federal regulations that affect everything from how buildings are designed to the amount pollutants that industries may release into the environment. The OMB is clearly at the pinnacle of the executive branch of the Federal Government. During the Harding administration, the Budget and Accounting Act of 1921 created OBM, OMB's predecessor, otherwise known as the Bureau of the Budget. For housekeeping purposes, the Bureau of the Budget was lodged in the Department of the Treasury, but it reported to the President. A core group of professional staff members were attracted, and over time, for the first time the President was able to make a true integrated executive budget which recommended the choices of the Nation's Chief Executive. It used to be that every cabinet officer just sent their estimates in to the Treasury Secretary, he put a nice pretty binder on it, sent it up to Congress, they tore it all apart, and the 13 subcommittees of Appropriations probably go back to about 1865 when they created the Appropriations Committee out of Ways and Means. So for the first time in the 1920's, although a couple of Presidents had tried it, Harding was able to see it done. And we had an integrated budget where the Chief Executive could truly tell people that he had control over the executive branch. And over the years, the Bureau had a very fine professional staff it built up. It didn't matter whether they were serving Republicans, Democrats, or whoever. They were professionals. Under the Nixon administration, the word ``management'' was added to the agency's title with the hope that the power of the budgeting process would force Federal agencies to pay greater attention to management issues. And I happen to have been a very strong fan of that reorganization. It turns out I was dead wrong. That has not been the case. We have not had the management aspects that we should have. If the Federal Government had a proper management structure, all Government agencies would have begun preparing for the year 2000 computer problem a decade ago. But in fact, only the Social Security Administration had a management team with such foresight. Last week, the subcommittee learned that again this year the executive branch failed to produce governmentwide financial statements that auditors could say were reliable. It is important to note that this lack of leadership is not limited to the current administration. Throughout OMB's history, beginning with the Nixon administration, management and budget issues have competed for attention. And we all know the big problem with the budget and how to get it under control, how to get a balanced budget. When you have that, the director is fully occupied with his or her time. We have distinguished witnesses today who can discuss the inner workings of the Office of Management and Budget and we hope to learn whether the ``M'' in OMB stands for ``management'' or ``mirage.'' It is now my pleasure to yield time to the gentleman from Texas, Mr. Turner, the ranking member of the subcommittee. Mr. Turner. Thank you, Mr. Chairman. OMB's predominant mission is to assist the President in overseeing the preparation of the Federal budget and to supervise its administration in executive branch agencies. In carrying out this mission, OMB is forced to wear many hats. These duties include the development of management of budget, policy, legislative, regulatory, information, procurement, and management issues. In addition to these considerable responsibilities, Congress is constantly adding new ones. We can all agree that OMB has a very important and difficult job. We are here today to assess how OMB is carrying out its mission and to determine whether Congress is providing adequate funding and support to this entity. We want to make sure Federal managers have all the tools and all the incentives necessary to perform their jobs well. I want to welcome Director Jack Lew this morning and commend him and all OMB employees for the excellent work and dedication and professionalism they have exhibited. Jack, you have shown an even hand in running OMB. It has been reflected in the credibility that you enjoy on both sides of the aisle here in the Congress. And I believe it is the OMB's steadfast work on the budget that has helped us come to the point where we can enjoy surpluses in the Federal budget for the first time in 30 years. I want to thank the chairman for focusing on the issue this morning. It is a very important one. I look forward to hearing from all of our witnesses. [The prepared statement of Hon. Jim Turner follows:] [GRAPHIC] [TIFF OMITTED] T0219.001 Mr. Horn. I thank the gentleman. We will now swear in the witness. [Witness sworn.] Mr. Horn. The clerk will note that the witness has affirmed the oath. We welcome you here and please proceed in any manner you like. You have a wonderful 30-page statement. Don't read it. But if you can get the high points, which is what our rule is, then we can have a dialog. STATEMENT OF JACOB LEW, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET Mr. Lew. Thank you, Mr. Chairman. I would be delighted to summarize my opening statement and would ask that the full statement be included in the record. Mr. Horn. Without objection, your prepared statement will appear in the record. Automatically every time we introduce the witness the full statement is in the record. Mr. Lew. Thank you, Mr. Chairman and Congressman Turner. It really is a pleasure to be here this morning to be able to take some time to talk about the many important functions that the Office of Management and Budget serves. I would like to begin by introducing Sally Katzen, who is with me here today, who serves as counselor to me, as Director. As you know, she has been nominated to be the Deputy Director for Management and works on many of the issues that we will be discussing today. Before going into my formal remarks, I would like to begin by saying a word about the OMB staff and associate myself with the comments of both of you. I think one of the secrets of Washington is the excellence of the OMB staff, the dedication of them, and the fact that it is not a political staff. In an organization with 518 full-time positions, the vast majority are career public servants who serve administration after administration. They are really the backbone of our efforts, both in terms of what we do in the budget and what we do in management, to give the President the kind of advice he needs, the guidance to agencies, and to work with Congress as effectively as we can. In my opening statement, I would like to talk briefly about the different functions of the Office of Management and Budget because I suspect there is going to be some interest this morning in talking about the breadth of functions, not just the budget functions that are fairly well known. As you noted in your opening remarks, it ranges from procurement policy and regulatory policy to funding levels for individual programs. It is really the full scope of the work that the Federal Government does. We are organized in a way designed to integrate the different functions that OMB has. We have five resource management offices, which have agency and program responsibility. They play a key role in developing the budget and executing the budget, and also in working with the agencies on an ongoing basis on implementing their programs. We have the Budget Review Division, which analyzes the aggregate trends. One of the things that has really changed in terms of budgeting over the last 25 years is the ability-- partially because of information technology--to do much more by way of aggregate analysis and to understand how the pieces add up and what the trends are in a way that you couldn't when you were doing it on manual kinds of ledgers. The Legislative Reference Division, as you noted, Mr. Chairman, gives us the ability to coordinate across the Government uniform positions so that agencies conform to the policy the President has made and so that agencies with competing interests have a way of working through their differences so that there is a single executive branch position. We also have three statutory offices, which are lesser known outside of Washington but perform key functions around the Government and in terms of coordinating the efforts of all of OMB's staff. We have the Office of Federal Financial Management, which develops and provides direction on the implementation of financial management policies. We have the Office of Federal Procurement Policy, which leads in our efforts to improve and make more efficient our procurement laws and the implementation of those laws. And we have the Office of Information and Regulatory Affairs, which participates in the rulemaking process, the information technology process, and monitoring paperwork burden. We have tried to organize, over the last 7 years, to have these different offices integrated, to have a kind of desk officer system. Within each of the statutory offices there are resources available to each of the resource management offices so that we can team together people who are expert in the substance and programs of an agency with other offices who have analytic technical skills that need to be available broadly across the organization. We have made tremendous progress in that ongoing effort. We will continue, and I hope my successor will also continue, with this effort. The traditional responsibilities we have are obviously development of the budget, the presentation of the budget, and the defense of the budget. And there is no doubt that that takes a considerable amount of our time. The budget process, being as it is, is not a 1-or 2-month process. It goes across the whole year. We have tried very hard to use the islands of time between the internal deadlines to produce a budget and the congressional schedule to focus senior management effort on the management issues as well as the budget issues over the course of the year. I probably have a slightly different perspective than many directors because I have been at OMB for 5\1/2\ years--I am right up there with our career staff in terms of length of tenure on average. Our workload burden has grown. It has grown for good reasons. We have worked well with the Congress on laws like Clinger-Cohen and GPRA that have given us new and modern tools to try to take the management responsibilities and really put some effective tools behind them. I would note that over the course of the increase in those responsibilities we have decreased the size of our staff. We have become more efficient, but we also have heavy workload burdens. And it is for that reason that in the budget we presented this year we asked for additional resources. I think it is an appropriate time, at a point of transition, for us to look ahead at the next administration, regardless of party, and say that these functions are important and we do need more resources to perform all of them. We have tried to take the management role very seriously in my time at OMB. And I think that evidence of that is apparent in both the formal mechanisms of the interagency committees that we have, that have done a lot to share best practices between agencies and help develop those practices, and the less formal approaches, such as the efforts to coordinate with heads of agencies and working levels in agencies on specific problems. There are really two kinds of management challenges. First, the governmentwide management challenges, which are very important. These range from dealing effectively with the Y2K problem--where I think we have a success we can be proud of--to trying to make the kind of progress on our audited financial statements that keeps us moving in the right direction. We also have agency-specific problems where we see that agencies either are not doing something that they need to do well; or areas where they could be getting a lot more done if they made changes. And we try to engage with the agencies both at the broad and at the agency-specific level. I won't contest the notion that there are limits on our time. There certainly are. But we try, within those limits, to be effective at both the governmentwide and the agency-specific level. I would like to say a word about GPRA because I know that this committee has a lot of interest in it. I have been very impressed at how much the culture of Government policy thinking has changed over the last couple of years. At my first Director's review, the ability to focus on results in terms of the analytic process was very different than it is now. Answers to questions about results more often gave you information about input than output. We are now at a stage where I think we have made enormous progress, though we have a lot more progress to make. We engage in discussions on virtually every major policy decision, probing on the question of output. We are not at the point where the measures are as refined as they should be, we are not at the point where I would want to have mechanical decisions flow from that analysis, but we have changed the way we think, which is the first stage you have to go through to incorporating the results-oriented analysis into budgetary policy. I would like to say one word in conclusion about the connection between the budget and the management issues. I have no doubt in my own mind that it is very important to have the budget and management functions together because the budget responsibilities give you the ability to raise management issues in a way that if the management issues stood on their own I fear you wouldn't be able to. There is something that focuses the mind when there is funding at stake. There is no question that OMB's ability to help shape the President's budget request and work with Congress on the ultimate funding levels has a lot to do with our ability to work with agencies on the management question. So while I think there are very important questions that we need to resolve in terms of how to do even better on the management side, I think there is a very important connection between those functions that I suspect we will talk some more about. It is a pleasure to be with you this morning and I look forward to answering any questions you may have. 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Thank you very much for that statement. Mr. Turner and I will be alternating on questions. Each of us will take 10 minutes. So let me start in with the general management questions. What percentage of the Office of Management and Budget's staff of 518 is devoted full-time to governmentwide management issues? Mr. Lew. The exact number of employees is in the 80's; 89 full-time employees are devoted to management issues. Mr. Horn. Could you tell me where they are put around? Are you counting OIRA and other groups like that? Mr. Lew. I am counting the statutory offices, in particular. I think that the difficulty of answering a question like that has a lot to do with the integration between the budget and the management functions. If you look at a division like our General Government Division, where we have program examiners, who are considered on the budget side. They are not full-time management, but if you look at the responsibilities they have, they include working with GSA on real property policy. They include working with our Health and Human Resources Division. They involve working with the Office of Personnel Management on governmentwide personnel policy. I think I would answer the question very differently if you asked me what percentage of OMB's staff efforts are put into management issues. I don't know that I would have an exact answer, but it is a much, much higher percentage. And the desk officer system gives us the ability to integrate the full-time management positions in a way that I don't think was possible before OMB 2000, when there was a much, much harder wall between the two functions. And I think we have made progress in bringing the wall down and having virtually all of OMB's 518 employees think about management in the course of everything that they do. Mr. Horn. What are the two major management examples that are a plus for the administration and the Office of Management and Budget over the last year? What would you say are your major two management successes? Mr. Lew. I know this is going to be contrary to your own opening remarks, but I think you have to start with Y2K. Managing the Y2K problem was probably the single largest management challenge the Federal Government has had in modern times. The relationship that we at OMB had with John Koskinen, who coordinated the effort on behalf of the President and the White House, was unique. John is a former Deputy Director for Management and he understood all the levers that OMB has, all the talent and ability that OMB had in this area. And it was full cooperation where we put the full resources of the Federal Government to work to tackle the task. Whether it should have begun a month or a year earlier is something we could have a long discussion about. I think we have responded well as the need to respond became apparent. But there is no doubt that we succeeded. We accomplished what people thought was an impossible task. Mr. Horn. You did not succeed until we got John in there. And of course, this committee started in April 1996. Nothing much was happening. John was there as Deputy Director for Management. Nothing was happening. Then he retired. Then he was brought out of retirement. The President made an excellent choice when he brought him out of retirement. But he wasn't doing that job which he should have been doing if that is a major management task--and I agree that it is. Here is Social Security, out in 1989, doing it. And nobody is pulling in everybody and saying, ``Look, Social Security says this is a problem. How about your affairs? Isn't that a problem for you?'' Nothing was happening. Mr. Lew. I think the characterization that nothing was happening is a bit unfair. I think there were a lot of things happening, but I won't contest that it wasn't as much of an effort as we ultimately put in. I think if you look at public and private response, we were responding in a way that was similar to the private sector. When we realized the problem was much larger, we put more resources into it. The decision for John to come back is one that we encouraged. We understood there was a need to do this in a way that was different from the way that normal management challenges were done. And I don't think it could have been done without the very, very significant devotion of resources at OMB. Let me give you an example. The funds that Congress provided for the Government to deal with the Y2K problem were provided in a fund that the President could disburse based on advice from the Office of Management and Budget. I don't think there is another entity in Government that could have worked with every agency in Government to effectively allocate limited resources. I can tell you that the demands for resources at the initial moments when that money was made available far exceeded what we could have used the money for, and wouldn't have solved the problem. We worked the way we can at OMB, agency by agency, separating out what are desires for more funds generally from what are desires for funds to deal with Y2K, and coordinating the effort in the way we did. So I think it was a model of partnership. I applaud you for the efforts you have made in this area. I don't think this is an area where there is really a lot of conflict between us. The only thing I am contesting is that we did nothing before. I think that as the problem grew, our efforts grew. Mr. Horn. Well, when your predecessor took command down there, I suggested to him that we not waste time on budget years, we reprogram existing money. He agreed with that and did it. Mrs. Maloney was then ranking member. She and I were sending quarterly surveys to the cabinet. We started with the cabinet. Two had never heard of the operation, and that was the Secretary of Transportation and the Secretary of Energy. I was sort of amazed. Then he said they would be glad to do that, and you did a fine job on getting the quarterly report. My problem was with 10 years gone by. We wrote the President and said that he needed a coordinator of this effort. And as I said, he made a very fine choice, but it took forever to do it. I call it the ``Perils of Pauline,'' strapped to the tracks and the train is coming. And somehow she escapes for the next Saturday movie. We were very fortunate. But even when John was picked, he didn't take office until April 1998. So a lot of time had been lost. And while we muddled through, as the British say--and we are fortunate in that--what else was going on at OMB besides Y2K, if you say something was going on there? Mr. Lew. During the period we were dealing with Y2K, we had also been working in procurement policy, and information technology generally. My predecessor worked very hard to try to take the Clinger-Cohen Act and to turn it into a tool that the Government would use. Since the act passed, we have used what we now call the Raines Rule to try and get the agency to focus on long-term information technology investment in an orderly way so that we won't have a repeat of the problems that we had seen before. It is not an easy thing. Agencies had difficulty with major information technology procurement. There were many, many experiences where agencies bought systems that were incomplete, where they couldn't finish the systems on budget, where they didn't have the ability to do what they needed when the systems were done. I think we are doing much better. Just in recent weeks, we have extended the same kind of approach that we have been using on procurement to security. We sent out guidance to the agencies just a few weeks ago to try and have the same kind of central focus. I think it is really a very good example of how the budgetary and management functions reinforce each other. The time of year I have the most leverage to look at the Clinger-Cohen Act and make it stick is when agencies are asking for money for their computer system. If I say that I am not going to recommend it to the President if they haven't complied with Clinger-Cohen and the Raines' Rule, they can't go forward. It is very difficult to make an appeal for your computer system. And we have gotten the agencies to understand that this is not a passing interest. It is part of the way we budget and part of the way we approach management. It is far from a job completed. And it is nothing that anybody will ever complete. Given the nature of the technology, it is always changing. Mr. Horn. I am delighted that you are doing that survey. We have asked the Comptroller General to do a survey of all the executive branch hardware and software because we certainly learned our lesson through Y2K. I am glad you are taking advantage of the data that were put together. We will be glad to work with you, just as we were on the Y2K. Two Speakers of the House said, ``Give them every dime they want on Y2K.'' So you did not have any problem up here on money. We gave it to you. Mr. Lew. Well, it took us quite a while to get the supplemental, if you recall. We were very worried when it was pending, but we did get it in the end, and we did it. Mr. Horn. You got every dime. Mr. Lew. In the interest of---- Mr. Horn. We can't do what the other body does, and we won't even mention that. Mr. Lew. But in the spirit of GPRA, though, I would hope that we would look at the results of Y2K, which was a real success. And the success wasn't an accident. It was the result of hard work here, hard work by OMB, and hard work by all the agencies. I think we should be proud of it. Mr. Horn. Is it correct that you haven't got similar reporting for computer security issues? What is OMB doing there? Mr. Lew. In the guidance we put out, we tried to set up what will be a new kind of reporting on computer security issues. We are using the work that we did in terms of Y2K, identifying the critical missions and working through in priority order. The question of computer security is a very complicated one. There are competing goods that we have to balance. In the guidance, we tried to take appropriate concern for both keeping on a path toward becoming part of the electronic commerce, electronic government, and protecting privacy interests. And one of the things that was striking to me in putting that guidance together is that the solution is as much low-tech as it is high-tech. It is changing the culture of the system where people leave their computers on at night, they don't log off. It's not all a question of technology. Some of it is a question of just changing our practices. I think we have to deal with the fact that the threat to computer security involves people who are at the cutting edge who are always going to try to stay a step ahead of us. We can't think of this as a problem to solve today or tomorrow. We have to get involved in a process where we are always vigilant for what the threat is and how to stay a step ahead of those who would threaten computer security. Mr. Horn. My time has expired. I am going to yield 10 minutes to the ranking member, Mr. Turner of Texas. We might get back to computer security if he does not pursue that. Mr. Turner. Mr. Turner. Thank you, Mr. Chairman. Mr. Lew, I want to followup on some of the things the chairman got into. But first of all, I want to ask you to describe for me what the Office of Information and Regulatory Affairs does. Mr. Lew. They do a number of things, Congressman Turner. Regulations that agencies are promulgating are cleared by the Office of Information and Regulatory Affairs. Major rules go through a cost-benefit analysis. To the extent that agencies have concerns across jurisdictional lines, OIRA provides a mechanism for coordinating conflicting views. And that is one of the major responsibilities. Another major responsibility is working with agencies on their information technology management. A third is the Paperwork Reduction Act where OIRA works with the agencies approving new paperwork requirements. Actually one of the things we are about to do is to undertake an interagency effort to see what we can do to further reduce paperwork requirements. So there really are quite a wide range of responsibilities at OIRA. It is a very heavily worked division. Mr. Turner. Your answer made my point. I am very interested in the issue of trying to develop greater expertise and a more aggressive approach to implementing e-government. I am of the view that we are falling behind the private sector. It is a very rapidly evolving field and Government generally walks and the private sector is now running. We have to figure out how to run as well. Your discussion with Mr. Horn was relevant on this point, and that is your high regard for the efforts OMB made in cooperation with Mr. Koskinen, who is properly viewed as the Y2K czar. I think his official title was special assistant to the President. I am currently working to try to get the staff of our committee and Mr. Horn on the same page, to come up with some kind of proposal that will place the John Koskinen-type model within a context of information technology and the emphasis on e-government. I am convinced that unless we take this kind of very direct approach and create this kind of emphasis, that the Federal Government is going to continue to lag behind in the development of e-government. We have some issues that I am sure you and the OMB have some opinions to share with us on. I want to be sure that we have a chance here to air those out because I know when we talk about creating an information technology czar or an e- government special assistant to the President that we begin to step on toes and have turf battles. But if it be true that the John Koskinen model worked to solve the Y2K problem, I think that type of model could also work to bring a greater emphasis in the Federal Government toward implementing e-government. One of the things that I wanted to explore a little bit with you was to get you to at least review the things that are currently being done to implement e-government. In answer to one of Mr. Horn's questions, you made mention of the fact that in the area of information technology we have taken steps to work with the agencies to improve procurement of hardware and software. That really was the beginning point, as I noted it as a former member of the Texas Legislature and every State around the country, to try to create some central agency to assist the various agencies of State government--and now the Federal Government, through your work--to make sure we are buying the right equipment, we are not throwing away money, and making the wrong purchases. Now, through the efforts of Mr. Horn, we have placed an emphasis in this committee on the issue of computer security, which probably ought to be described not only as computer security, but Internet security. It is a very troublesome problem, both in the public and private sector. I am of the view that both procurement issues and security issues fit within the broader context of this issue of e- government, emphasis on information technology, and that if we had one person--a John Koskinen-type person--who could take information technology issues, computer security, procurement and place it in one office, have some cooperative working relationship between that individual, who would be directly accountable to the President, who had a good working relationship with OMB so we don't have a turf battle over this, that we could perhaps get emphasis on information technology that is needed to put the Federal Government into the 21st century. I am open to your suggestions, but perhaps the beginning point is to have you review what we are doing currently. Mr. Lew. Thank you, Congressman. Let me begin by just a general observation, and then some specific observations on what we are doing, and perhaps some thoughts about a separate office versus an OMB role. At the conference the President had the other day on the new economy, one of the executives of a high-tech company said that we are probably, as a broad economy, not even 10 percent into the ultimate potential of e-commerce. I don't know if that is right or wrong, but if it is the right order of magnitude, I don't know that we are very far behind as a Government. There is certainly a lot that can be done in the private sector and the public sector, but we are really accomplishing quite a lot. If you look at the number of people who will file their tax returns electronically, the number of people who will be able to fill out their census forms electronically, the number of people who were able to follow various NASA missions on-line, these are just a few of the many, many examples of the Federal Government being a real presence in terms of e- commerce. I would not suggest that we are half-way down the road yet, but I think it is a very good beginning. One of the things that we worked on before people were talking a lot about e-commerce was electronic benefit transfer, which is connected. It has a lot of potential in terms of e- commerce. I would note that our efforts on that were a result of coordination between John Koskinen, when he was Deputy Director for Management, and one of our program associate directors, Ken Apfel, who was at our Human Resources Division. I think there was a kind of synergy in the way they worked that overcame many, many hurdles, which could have been used as reasons to doom moving into electronic benefit transfer. It took years of work to get through the hurdles, and I don't think it could have been done without that kind of coordinated effort. The observation I was making earlier about the relationship we had with John Koskinen when he was working with the Y2K process and his own experience with OMB, I cannot overemphasize it. John was unique in that as a former Deputy Director for Management he had an understanding of how OMB could be effectively used as part of the process. I think if somebody had come in with expertise in information technology, but without John's familiarity with the different levers and tools, it would have been much more difficult, if not impossible, to be as effective as he was. I think that is suggestive of the importance of having the OMB functions in this area remain strong, and remain real leadership roles. I think the Deputy Director for Management at OMB is an official at a very senior level who reports to the President. We have been frustrated over the last 2\1/2\ years because we haven't had a confirmed Deputy Director for Management, but that is a separate issue. I think one can expect the Deputy Director for Management to have a leadership role in this area, working with the head of OIRA, who is a confirmed official, and coordinating with the agencies. I am afraid that if you were to split the function off and have a kind of permanent, independent Chief Information Officer, you would have to buildup resources to support that effort that would mirror the resources we have in the Office of Management and Budget if they were going to be effective. And the right answer is to figure out how to continue to use the authority and the leadership responsibilities at the Office of Management and Budget to play a lead role in this area. I would argue that the efforts we have made over the last 4 years to improve the procurement processes could not be made outside the budget process. I don't believe agencies would do things differently today than they did 5 years ago if it wasn't a part of the budget process. On the other hand, the person sitting at the table in our director's review answering questions was a person who worked full-time in the area of information issues who was a senior official at OMB. There is a synergy there that can work. I would say that we have many goals still to achieve in this area. And I think that we look at the future as one with enormous opportunities, but we do have to balance concerns, like the privacy concern I mentioned and others. We have to be connected, but we have to protect people's rights as well. Mr. Turner. I think we both understand that in Government things occur, and action is usually taken when somebody says there is a crisis. Of course, the Y2K crisis generated a lot of interest, the right person was chosen for the job, and the relationship that OMB had with him was an excellent one. The concerns you just raised about placing someone in a high-profile position, someone of the type personality of Mr. Koskinen who had the credibility of Mr. Koskinen, to move forward on information technology. I think the objections you just raised to putting someone into that type of role could have been made by you and the OMB when it was initially suggested that there was going to be a special assistant to the President for Y2K. So what I am looking for is an understanding of why the John Koskinen-OMB relationship worked so that I can best figure out how to structure a relationship between a special assistant to the President on information technology--whatever you want to call him--that might be a little bit more friendly title to OMB than a Federal CIO--but whatever the title, the point is that the emphasis that was placed on Y2K was part of the reason we were successful. So I am looking for a way to highlight the importance of the Federal Government moving aggressively in the area of information technology. That is the ultimate goal I have. And I think Government, by nature, is going to function more effectively in areas where we can figure out how to structure something to give it the emphasis that we want it to have, to make people pay attention--both within and without government--to get the kind of support we need to move forward. That is what I am looking for. Mr. Lew. Congressman Turner, if you look at the process we went through in terms of setting up the office that John headed, it was not at all random that the President sought John to come back to do this. John brought the experience from OMB as well as the experience he had in the private sector in terms of crisis management. He really brought a unique set of skills and was just a tremendous person to work with, when he was Deputy Director and when he was the Y2K czar. I think it is difficult to generalize from that experience a kind of formal approach that says, therefore there needs to be an independent person. Regardless of the title. I agree with you that titles can often make the discussions more difficult to think through. If you're talking about long-term Government procurement of information technology, management of information systems, and the security of systems, I don't believe it can be separated from the broader question of agency management and agency budgeting. I think it has to be integrated. I don't disagree with you that it's something that my successors will have to pay considerable attention to. But I think it has been the case--at least for the last number of years--that OMB Directors have paid a lot of attention. OMB Deputy Directors have paid a lot of attention. The Y2K crisis was unique in that it was driving to a single day. If we didn't take care of it with the clock ticking down, we faced potentially very severe consequences. The longer term problems don't have that kind of a deadline where a crisis approach is going to be the most effective. We need to have an ongoing effort--where we don't say it is going to be a 1-year effort or a 2-year effort. I have absolute confidence that computer technology 10 years from now will be far, far ahead of anything I could predict. That has been the history of information technology. We can't do it once and then say that we are done. It has to become a process. It is going to be expensive. It involves the way agencies work and agency resources. I think it is central to how we do the business that we do. I don't disagree with you in terms of the fact that we need to pay very, very serious attention to it. But I believe we have. And we need to continue to do so, and I think more so. Mr. Horn. Thank you very much for that series of questions. We will now have 15 minutes, since Mr. Turner had 15 minutes. And then we will get back to 10 minutes. Let me go back to a few of these other things so we don't forget them. In OMB's fiscal year 1999 performance report, you identified a goal of ``working with all agencies to assure that their financial systems comply with the Federal Financial Management Improvement Act of 1996.'' Last week, the Comptroller General of the United States testified that 19 of the 22 agencies that had submitted audit reports did not comply with the act. Considering this lack of compliance with this law, could you give me some feeling of what the Office of Management and Budget is doing to achieve that goal? Mr. Lew. Yes, Mr. Chairman. We, obviously, have set goals for ourselves in this and a number of other areas to try to stretch to do the very best we can. I think we have made a lot of progress. We did better this year than last year. We need to do better next year than we did this year. The process of doing the audited financial statements has been a difficult one. It was the first time in the history of our Government that we did this kind of stock-taking. And I think it is enormously important for agencies to get their hands on doing this right. To understand where your assets are and what your resources are is key to making policy judgments. And there have been many instances where if agencies had a better handle on their financial statements, they could have solved some of their own problems without having to come to Congress, without necessarily needing to make some other policy decisions that they made. The fact that we still have a ways to go is something we have acknowledged clearly. The fact that we have made progress is something that we have also pointed out, and I think that GAO has also pointed out. Mr. Horn. I commend you and the Office of Management and Budget on the results-oriented legislation of 1993-1994, which was truly bipartisan in terms of the Congress. When do you think these agencies will be in full compliance with the act? We gave them 5 years to give us a balance sheet with the 1996 fiscal year, then they have had a chance at 1997, 1998, this is now 1999. How do you think we are going to get full compliance? Do they take this seriously? Mr. Lew. Yes, they do take it seriously, Mr. Chairman, and we take it seriously. If you look at our priority management objectives, this is right up there on our list of priority management objectives. We are going to continue to stretch to try and do it as quickly as possible. And I am going to hesitate to give you any kind of a date because, frankly, it will be beyond my term as Director, and that is for whoever sits here next to make a commitment on. I think we have performed well in terms of making progress. I am disappointed that it is a difficult process, but I think we all know it is a difficult process. And one can face a difficult challenge like that by saying that you can't do it in 2 years or 5 years, therefore it is not important. Or you can say, we have made a lot of progress over 5 years, and we will make a lot more progress over the next 5 years. Mr. Horn. Ten years have passed since the enactment of the Chief Financial Officer's Act, and that also was a bipartisan act, just as was the Inspector General's and the Chief Information Officer's. As you can see from the report card, which we issued last week, 17 out of the 22 Federal agencies reported one or more material or significant weaknesses. And as you noted in your testimony, the Office of Federal Financial Management exists for the purpose of developing financial management policies. What is the office doing to address the serious problems of poor internal control throughout the Government? Practically every agency is inadequate in the internal controls. Let's move it closer to the director so he can see it. Mr. Lew. I am afraid it will have to get a lot closer before I am able to read it. [Laughter.] Mr. Horn. We have little charts around here, but they sure haven't increased in the size so any of us can read it. Move it up closer so he can see it. Just keep moving it, about 5 feet. Mr. Lew. I think the whole approach to solving a problem like financial management, having a situation where agencies do have internally consistent controls is one that is going to take some time. I personally have some questions about whether the grades are right or wrong. This isn't the place to go through line by line and question. Mr. Horn. We would welcome OMB giving us some standards. We are hoping to work with you on the computer security thing by agreeing on some standards that reasonable people could do in order to solve the computer security thing, which is a major situation that faces this country. Mr. Lew. As you know, we are working with the agencies trying to develop a coordinated approach. I think to have a single set of standards may not be the right approach there because the standards would evolve and change as the threats change. But, we agree there should be the protocols in terms of individual responsibility for their computers, agency responsibilities for having systems in place, coordination with the private sector. A few weeks ago, the President had a conference on Internet security. There was a very interesting spirit of cooperation that was cautious but optimistic. The Government would be good partner in not telling the private sector exactly what had to be done in the area of Internet security. It is a different world when we are interconnected. And we have to be careful not to impose such rigid requirements that they spill over and impede the private sector's ability to deal with many of these problems. We are working with them, and there is a cooperative, voluntary working arrangement that I think is very promising. But I think we have to be careful about being too rigid about it, or we could chill the progress. Mr. Horn. We would welcome what your standards are and take a look at it. We are not wedded to the grading. We do grade on an absolute. It is not a relative little curve. You can be all As or all Fs. Right now, we have a real problem. Mr. Lew. Yes, I think we have made a lot of progress in terms of the audited financial statements. The need for better internal controls is one that we share. I don't think that we would question the need to have better internal controls. But we have gone from a situation that was quite behind where it should be to a situation that is perhaps further along than this set of grades suggests, and the direction we need to continue, making improvements. I would hope we could work together on this. The notion of doing it on a report card basis has a certain kind of---- Mr. Horn. Well, it hones it on people. Some of my friends in the cabinet have tapped their Y2K report card on their door to shape up their bureaucracy. Mr. Lew. I don't think there is any question that we want to work together on developing better internal financial controls. And we view that as something that is not a partisan issue. It is something that we should have a shared---- Mr. Horn. Just good Government? Mr. Lew. Yes, just good Government. Mr. Horn. Last week, the Comptroller General also testified before the subcommittee that agency financial systems overall are in poor condition, cannot produce consistent reliable information to manage day-to-day Government operations, and that it took heroic efforts for agencies to obtain clean opinions. Given those statements by the Comptroller General, how can you say that agencies have improved their financial information? And what is OMB doing to address the issue? Mr. Lew. I would note that more agencies have clean opinions, more of them have timely clean opinions, and some of the agencies that have yet to get clean opinions are a lot closer. I would rather succeed in a heroic effort than fail to try. Mr. Horn. We agree with that. Boy Scout values are very good. I am all for them. The Debt Collection Improvement Act--dear to my heart-- passed and enacted in 1996, requires agencies to forward delinquent debt to the Treasury Department. The subcommittee has concerns because many agencies are doing a poor job submitting this debt for collection. This is money owed the taxpayer. What is the OMB operation doing to facilitate the referral of the billions of dollars of delinquent debt to the Treasury for collection? Mr. Lew. Over the last number of years, we have been trying to work quite broadly to improve our debt collection practices. We have worked with the Congress on a number of occasions on legislation that gave us tools that were more effective. In this last set of appropriations bills, in the area of student loan debt collection, we had an important provision which we very much supported that would permit us to be much more aggressive. We have a kind of structural problem in debt collection. Agencies in the past haven't felt the direct incentive to collect debt. It didn't affect their program one way or the other. It was a burden. It was something that wasn't very popular in the community they were working in. It is an area that we--working with this committee and others--have had to be very aggressive about saying, ``We just have the same obligation here that we have in terms of collecting taxes that are due and that the private lenders have in collecting loans that are due.'' It is just not an acceptable standard that you can ignore the need for debts to be properly paid. I think we have made some progress. We have made progress in terms of defaulted loans. We have made progress in the student loan area. The challenge is one that I think we at OMB, this committee, and the appropriators with their broader view of Government, see more clearly than some of the constituent parts do. And I would hope this is an area where we could continue to work together on a bipartisan basis. Whether you believe in a big Government or a small Government, I think we all believe that people who make a commitment to repay should keep their commitment and there should be consequences if they don't repay. In terms of the mechanisms we use, the new-hire data base being made available for student loan debt collection is an enormously powerful new tool. On the other hand, we have to be careful not to so burden the new-hire data base that it becomes an unsustainable device to use for its basic purpose, which is child support enforcement. Suggestions have been made over the years that we be more aggressive in terms of using the Treasury IRS process. We are very worried that you have to be careful how you do that. The Treasury is very worried that in a system of voluntary tax compliance, if you go too far in that area, you may have a problem in terms of voluntary tax compliance that is greater than the debt collection benefit. I think these are areas where we have to proceed aggressively, but carefully. And I have been very focused on this myself just because it is one of those Government things we ought to do. If you believe that the Government should be making small business loans, then defaulted small business borrowers should be required to either repay or the assets should be sold and the Government should be in a position the bank would be in. And we are moving in that direction. We are doing better. Mr. Horn. Well, I am glad to hear it because it is long overdue. And it goes back to about 1991 with the Internal Revenue Service where they started getting about $100 billion that they claimed they couldn't collect. I think a lot has to be done by the authorizing committees here. Mostly in the 1996 Act we handled the non-tax debt because there were little problems with jurisdiction. But let me move to the Government Performance and Results Act, on which OMB was very helpful. That, again, was a bipartisan bill in 1993. In your opinion, have the Federal agencies met the performance goals listed in the performance plans? What do you think about it? Mr. Lew. I think some have and some haven't. But I don't believe that meeting the goals 100 percent is necessarily the right measure. If every agency met the goals, I think it would tell us that the goals were set too conservatively and in too constrained a manner. The goals are meant to force agencies in the direction they should be moving. It ought not to be set at a safe level where they are 100 percent sure they will meet them. The idea of stretching to meet goals is as important as having 100 percent success meeting the goals. And I think the agencies are taking it very seriously. We have tried to integrate review of these performance measures with the budgetary reviews because that is the way to really get the sense of not just how we're doing on a numerical basis, but what it means in terms of the real programmatic results. It has been impressive to me that we have moved in a lot of cases from very soft input measures to output measures to outcome measures, where agencies are coming in with much more clearly defined senses of how many units of progress they expect to make. I don't think they should be expected to get 100 percent. Mr. Horn. Well, I agree. Is there a unit in OMB that can help the agencies in terms of figuring out measurements of either surveys of citizens so that they know whether they are getting, say, certain types of nutrition or not? It seems to me the financial indicators really don't mean a thing, but the delivery is what counts. Are we trying to make change and help people? How are those measured? Does OMB have any little unit that calculates this? Mr. Lew. I would say that it is a combination of a unit and the whole organization. The Deputy Director for Management has the lead in working on this issue. In order to really get into the programmatic details, we draw on the resources of our resource management organizations and work together. I think we have overcome some of the kind of cultural or jurisdictional barriers that may have existed 10 years ago in asking questions like this. If you asked a program examiner whether he or she needed any help in this, that is what we do in the first place. If you had asked someone 10 years ago if that was the budgetary reviews were done, they would say they are measuring inputs, not outcomes, not outputs. I think we are now at a place where the people who have the detailed programmatic knowledge of what is going on in terms of interdiction of drugs, what is going on in terms of achieving higher nutritional levels, and the people who have experience working on conceptual approaches to measurement in management are teaming together. We are working with the agencies and making real progress. In each and every review we had discussions that were much better than any of the discussions we had had in the six reviews I have been through. And it is not for lack of interest because my predecessors as Directors were as interested as I. But we have made progress. There is much, much more progress to be made. Mr. Horn. I am glad to hear that. I now yield 10 minutes for questioning to the gentleman from Texas, Mr. Turner. Mr. Turner. Thank you, Mr. Chairman. Jack, if you will excuse me, I want to go back to the subject we discussed earlier. When I asked you to describe the Office of Information and Regulatory Affairs, you identified that as the office that is charged with information technology management, along with a host of other responsibilities you mentioned. I have always been a big fan of the effort the Vice President made in reinventing Government. I was particularly interested in that because when that effort was initiated, some of the ideas we had implemented in Texas on electronic benefit transfer on the Food Stamp Program were looked at by that working group. It was sort of the point at which the Federal Government began to move forward in what they had seen that we had already done in Texas, where we had been an advocate of using the smart card for food stamps way ahead of any other State in the Nation. And my impression was that because the Vice President's emphasis on reinventing Government was put in place at the Federal level, some new ideas flowed into the Federal Government and allowed us to make some improvements. Information technology, as we all know, holds the opportunity for both the public and private sector to make vast improvements in the way we deliver services. For the Federal Government, we know it is going to make it more accountable, more consumer/customer friendly, more accessible to the public, more efficient, cost-effective--the benefits are numerous. I really am interested in trying to work with you to be sure that we can accomplish this goal of gaining a greater emphasis on information technology than we currently have. I am not much to predict the future, but I would be very surprised if whoever is elected the next President of the United States doesn't have an aggressive initiative on the utilization of information technology in the Federal Government. The question I am trying to anticipate is, how do we structure that so that it works well, so that it is more than window dressing, so that the actual structure of that effort works within the framework of the Federal Government? Also, specifically, what is the current relationship between OMB and the CIO Council, if there is any relationship? Mr. Lew. OMB is the Chair of the CIO Council. Without a confirmed DDM, we are doing things on an acting basis, but we do Chair the Council. And I think the CIO Council has been a very useful arena for having these conversations. The guidance I just sent out regarding computer security was very much the subject of discussion at the CIO Council, drafts were circulated and discussed, and it was a forum for working through some of these very difficult issues. Regarding your characterization of my response on your first question on OIRA, if I created the wrong impression, I would like to correct it. OIRA coordinates many of the information technology issues, but by no means has sole responsibility at OMB. Let me give you three examples of where OMB's resources were drawn on broadly. EBT I mentioned earlier where we had our resource management office working with the DDM and OIRA. It was a real collaborative task force effort working with the agencies. Tax system modernization: working with our General Government Division, coordinating with the agency, with OIRA's expertise. The problems we have had over the years at HCFA with their computer system: our Health Division was very much involved. I think one of the things OIRA has the ability to do--and the Deputy Director for Management, more importantly, has the ability to do--is to draw broadly on all of OMB's resources. We have a capacity that is unequaled in the Federal Government to reach into agencies and work with them to help them solve these kinds of complicated problems. I am afraid that if you set somebody up in an independent office, they just couldn't do that. Or if they did, they would be doing it in a way that was less efficient. I am never comfortable when questions of this nature come up because I don't think we should be ``turfy'' about these discussions. If the best way to do this is to have an independent office, I would say that. I don't think in this case that that is correct. I believe that if there is a problem with how OMB is doing it, then we ought to solve that problem by giving it the proper place in our priorities. But I think to separate it from OMB is to weaken our ability to get our hands on the problem. And that doesn't mean that there can't be advisors in other places. Surely, in many issues, we coordinate with the National Economic Council, the Domestic Policy Council--there are numerous areas where we have core responsibility where we coordinate with other policy offices that report to the President. But I think this is a little different than most of those in that it is kind of cross-cutting. It is fundamental to what we are going to be doing as managers of the Federal Government over the coming decades. To suggest that you can separate it from other management and budget concerns almost has the effect of putting it more at risk. I know that is not your objective. I am giving you my frank view of the tools that we have. And I would welcome--and I am sure in the coming years my successors will welcome--the advice on how to do it better. Mr. Turner. And I certainly don't mean to leave the impression that I suggest that we separate it any more than John Koskinen's office was separated from the OMB. What I am looking for is an individual who can elevate the profile of information technology, who has a unique background and expertise in the area. John Koskinen seemed to fit perfectly for the job he was given. But when we talk about the subject of information technology, I suspect if we reviewed your background or the background of the Director of Management, you would not find the background I am looking for. Not only are we talking about background, but we are talking about profile. I am looking for a structure that would enable the Federal Government to place an emphasis on moving aggressively in the area of information technology. I get the impression that one of the roles the OMB performs rather well is the implementation of current laws that have impact in information technology. Your oversight role in implementing Federal law is, of course, critical. But I don't see a long-term emphasis on information technology policy of the nature that I think we need to see in the Federal Government. And I think a structure, an individual, an office directly accountable to the President can be the spark plug that is needed to allow aggressive implementation of information technology. I agree that we need--as you shared with me, OMB has the overview, if you look across agencies. This individual needs to have that ability. That person needs to be able to look into the Department of Human Services and say, I see some areas there where we can implement information technology in a way that perhaps we can do it immediately. We can do it in that agency perhaps better than we can some other. And that person can make the decision to say, We are going to move aggressively in this agency for this reason. Then perhaps establish a model or a pattern that then later other agencies can follow. So it is that kind of overview I am looking for. But it is also an elevation of the profile of the issue. Mr. Lew. I think it is important to separate the question of profile and expertise from the tools that we have. In terms of profile, to some extent that is something that one could change. If you look at my predecessor, by establishing as one of his major areas of concern putting rules out that govern information technology procurement, he was asserting that that was a central OMB responsibility. One of the decisions I made when I took over was to be focused very much on the implementation of those rules. It was very clear that that was a question I was going to ask at every single budget review. That word went through our organization, went back to the agencies, and was part of our discussion of every agency's budget request. The Clinger-Cohen Act was something we worked very closely with the Congress on. That was a law that was an important law where we played a creative and helpful role working with the Congress, who ultimately has the responsibility for making the law. I know John Koskinen pretty well, and don't believe that on paper his background is as a computer expert, either. He brought a special set of personal strengths in terms of crisis management, and knowledge of OMB as former Deputy Director for Management. He was given the task to generate a public profile--because it was as much a public education effort as it was a management responsibility. If you are looking at the long term, I would question whether sustaining it as a crisis is the right approach. I think we have to make it something that is just core and central to how we manage. And that I think is quite central to our traditional roles at OMB in terms of both management and information technology. We share a common goal. I don't think there is disagreement that this is an area of enormous importance for the level of attention you are describing. I just think we need to work together, thinking through what the present kinds of different approaches are. I have made clear my own view, but I am delighted to continue working with you on this. Mr. Turner. Thank you, Jack. Mr. Horn. Thank you very much. We now have 10 minutes of questioning. Just to round out a few things and then get back to Mr. Turner, the standards that I take it you will look for on computer security--will you look at what an agency really needs to have in this area? If you are going to do that, obviously we think that is a great idea and you ought to get quarterly reports and we would like to look at them, just like we did under the Y2K situation. What is your feeling on that? Can we count on OMB for standards in this area? And about when will they be put together? Mr. Lew. On February 28th, we sent out guidance to the departments with both a set of principles and a set of policies in terms of how they should incorporate computer security into their plan. Mr. Horn. Could we put it in the record at this point? Mr. Lew. Sure, I would be happy to. Mr. Horn. Without objection, that documentation will appear in the record. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0219.026 [GRAPHIC] [TIFF OMITTED] T0219.027 [GRAPHIC] [TIFF OMITTED] T0219.028 [GRAPHIC] [TIFF OMITTED] T0219.029 Mr. Lew. Regular reporting is important. Integrating it with the budgetary decisions in terms of the IT budgets is important. Whether it is quarterly or some other period I think is something that we need to work on over time to determine the right frequency. Mr. Horn. On our general management situation on the goals under the Performance Act, I looked at page 17, on appendix three in the 1999 Performance Report, and you checked off that you had accomplished your goal of ``continuously working with agencies to improve management practices throughout the Government.'' Is that an immeasurable goal? If so, how are you planning to see that that checked-off item really has some teeth in it and where it would be accomplished, as it says here? I am dubious on that. That is why I am bringing it up to see if we can get a little focus. Mr. Lew. Again, it goes back to the efforts that we have that are governmentwide and the efforts that are agency- specific. On a governmentwide basis, the things that we are doing in information technology, the things we are doing in financial management--while we have a ways to go to achieve our goals, we are making progress. We have discussed those at some length already. With specific agencies, of our 24 priority management objectives, 12 of them are very much focused on specific undertakings with agencies. I give regular reports on those and on not an infrequent occasion work with heads of agencies on those. I think we are making progress. I am very proud of the work we have done with the INS to try to take a backlog that was really, really unconscionable and turn it around. It did not happen by accident. It happened because of serious top-level by myself and by the Attorney General. It is not a problem entirely solved, but it is substantially remediated. I can go through other examples as well. Mr. Horn. No. On that, how much credit would you give OMB versus giving Charles Rossotti as commissioner? Mr. Lew. No, INS not IRS. Mr. Horn. OK. I thought you said IRS. Mr. Lew. But in the case of IRS, we have worked closely on many issues helping them get a handle on their own internal management issues. Mr. Rossotti brought with him the kind of expertise that you are lucky to bring into Government in terms of information technology. But even there, we worked very closely with him to make sure that the benchmarks required would be met and that it wasn't going to be a repeat of past problems which were very serious. Mr. Horn. Well, since you brought up INS--and I am a Californian, border State, if you will--what do you think needs to be done now? Do we need more agents? Is OMB willing to recommend to the President that that happen? I remember as a freshman making a speech on the subject that hadn't been made before, believe it or not, and we authorized a lot of people. And it took forever to educate and train them because you cannot just take anybody who is in enforcement and put them on the border. They need to know languages, they need to understand and be sensitive to what the situation is there. Mr. Lew. The priority management objective I was referring to had to do with the naturalization side of INS. You are asking about the border control piece of it. There have been a number of difficulties. Setting a goal of hiring new agents is one part of it. Actually being able to recruit and train the agents is another. And we are in an economy where we are competing with many other agencies and many other entities as we try to recruit people for those jobs. There are many slots that have been difficult to fill. We have made suggestions in the budgets of the last few years, which unfortunately have not been funded but I think would very much enhance the efficiency of border control. Mr. Horn. Have they been asked for in the budget? Mr. Lew. We have requested for several years now things to augment human agents on the border. For example, there are technologies where posting of cameras at regular frequency along the border and having SWAT teams come in when there is a problem is a way of leveraging our personnel to cover the border more effectively. That has not been funded. I hope we can work together on things like that. Mr. Horn. Definitely. And please file that for the record at this point in the record. Mr. Lew. I would be delighted to. It is both cheaper-- because you have a camera instead of the FTE--but when you don't have the FTEs and you can't recruit them, you have to be more efficient in how you use your resources, apart from just the money. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0219.030 Mr. Horn. Let me move to the Privacy Act now. I think OMB still has a responsibility for implementation of the Privacy Act. Mr. Lew. Yes. Mr. Horn. Are you aware of the extraordinary backlogs that exist in some of the agencies in responding to requests for information under the law? In other words, it isn't months, it is years. What do we know about that and what is OMB doing about it? Mr. Lew. The issue is more what is happening in the agencies than what is happening at OMB. We get several hundred submissions from the agencies. I am not aware of OMB backlogs of that sort, but I would be happy to go back and---- Mr. Horn. When we had a hearing several years ago, there was a 4-year wait to get your file from the FBI. I know they have put more resources on that and we haven't scheduled that hearing yet, but I would appreciate it if OMB took a look at it and provided in recommending in the President's budget to get the resources so citizens can know what is in Government files and not be put off by 4 years. We even asked them--suppose a Member of Congress asked that--it would take 4 years, too. So finally, the excuse was, if you have a hearing about it--so I filed on that and we got the files. But do we have to hold a hearing for every American in order to see what is going on? Mr. Lew. Our role is at a more general level where we set guidelines and generally review. I will have to go back and get some more information about the backlogs that may be happening at the agency. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0219.031 Mr. Horn. I would appreciate it. In the absence of the Deputy Director for Management, who Chairs the President's Management Council? Mr. Lew. The Deputy Director designate is serving as the acting chair, but all the official functions are handled by a confirmed official. It is not an ideal arrangement. Mr. Horn. I can imagine. In OMB's fiscal year--we have handled that enough, and I only have a minute and a half. So let me ask, what is your view of the proposal that I am proposing on an Office of Management separate from the Office of Budget with both directors reporting to the President? And one of the reasons for this is that we need people who are directors, who know something about the field. And we have very few directors of the budget that have ever dealt in major management situations, never headed a huge consulting firm, let's say, that does this regularly for corporate America. So give me your best shot at that. Mr. Lew. I think that the benefits of keeping management and budget together far outweigh any of the benefits you might get from having separate individuals chosen for expertise in budget or management to head either one. It is inherent to the job of OMB Director that you will spend a lot of your time working on things you have never worked on before. There is no person who can come with prior knowledge of every agency of Government, every program of Government. The management issues are not different from the budget issues in that regard. The OMB Director couldn't do the job of OMB Director if not supported by an excellent staff. And I go back to the career staff, which is the heart and soul of OMB. We have the most talented group of people in Government working for OMB. They are a treasure, and we work constantly to strengthen that. To take the function of management and separate it would be to separate it from the tools that we have to focus attention to management issues. Let me go back to something I said a little earlier. The imperative of obtaining funding, both in the President's budget and the appropriations process, focuses the minds of agencies, unlike most other policy deliberation. I don't believe a Director for Management without the budget function would have the same ability to work with agencies on issues that agencies would just as soon not have help with sometimes. I think it is very important to keep them together. Mr. Horn. I used to agree with you on that. When I had been on President Nixon's White House Task Force, I thought it was such a great idea. They could use the budget to get some changes in management. When I got back here it was very clear my friends who were senior civil servants and real career people--they said that nothing was happening over there, that they weren't using that power. So if you have a list of things where you have used the budget to solve a management thing, I am glad to put it in the record at this point. Mr. Lew. There are examples of that, but I think more important than the use of it is the threat of it. You don't want to have the budget process used to force management change. What you want is a process where you get agencies to focus on management problems, solve them, and do it in a collegial way. It may be perhaps my philosophy of OMB and how the Director of OMB should function, but in general I think you get a lot more done by working with people than by holding a club over their head. But having the club in your back pocket is very useful. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0219.032 [GRAPHIC] [TIFF OMITTED] T0219.033 [GRAPHIC] [TIFF OMITTED] T0219.034 Mr. Horn. I now yield 11 minutes to my colleague from Texas, Mr. Turner. Mr. Turner. Thank you, Mr. Chairman. I want to go back and just round out a couple of things that might be helpful to me. You acknowledged that OMB Chairs the CIO Council. I was asking about the relationship between OMB and the CIO Council. What I was really looking for was, What has resulted from the relationship between the CIO Council and OMB? How often do they meet together? How often does the CIO Council meet? Mr. Lew. It is a monthly meeting. Mr. Turner. Maybe the best way to get at this--do the CIO Council meetings have minutes of what takes place at the meeting? Mr. Lew. I have people report to me on what happens at the meetings, but I haven't seen minutes, per se. Mr. Turner. Maybe it would be helpful to me if I could just request, with the chairman's permission, copies of any minutes or any reports that relate what kind of discussion has taken place at these monthly meetings since the CIO Council has been in existence. That I think would be helpful. Mr. Lew. I am not sure that we have minutes in a formal sense, but we would be happy to get back to you with a description of things that the CIO Council has worked on and deliberated. Mr. Turner. My expectation is that we will read a lot about discussions on current law, discussions about procurement, maybe even some general discussions about the problems of computer security. I suspect that I will not find the kind of forward-thinking initiatives and discussions on long-term use of information technology about which I am concerned, but if you could provide me with that or the committee, that would be helpful to me to read that. Mr. Horn. Without objection, the referenced information will appear in the record. Mr. Turner. The other request that I think would be helpful to me would be to see the documentation and copies of any reports, memos, etc., that exist within OMB--at least for the last year--that would reflect specific proposals, recommendations, or initiatives for long-term utilization of information technology in order to make Government more accountable, more open, more efficient, more cost-effective-- those kinds of documents--so I can get a good picture of what OMB is actually doing in terms of actual initiatives or proposals for the greater use of information technology. Mr. Lew. I would be happy to respond for the record in more detail, but let me just note preliminarily that the way the CIO Council is organized, there are committees that work in a number of areas--there is a Security Committee, an Interoperability Committee, the Government Committee--and there are efforts underway in each of these areas to have collaborative thinking about the future. I would be happy to get back to you. I am not sure what formal documentation we have, but I would be happy to respond to what I understand to be your inquiry. Mr. Turner. And keep in mind that I am interested in what the CIO Council is doing, but these committees you are referring to within the CIO Council might be sort of mini-think tanks. Mr. Lew. No, these are program people who run their information offices. This is a not a think tank group. These are people with real responsibilities to implement. Mr. Turner. Right. I understand that. But my greater concern is, where is the point within the Federal Government where we have the ability to actually initiate change with regard to the utilization of information technology? I agree with you that this has to be a partnership between these agencies, CIO, and the OMB. I agree with many of your points, Mr. Lew, about the relationship between budget and management, because we are talking about dollars. In order to give anyone in a position of a special assistant to the President on information technology the ability to do anything, they are going to have to have some funds where they can direct it toward an agency to initiate some information technology improvement. So those issues certainly are linked. But I think it would be helpful to me to see what the work product has been with regard to specific recommendations for change, initiatives that are occurring and flowing from OMB out to the CIO or to the agencies themselves. That will give me a little bit better feel and understanding of where I think we might need to go. Mr. Lew. I would be happy to respond. Mr. Turner. Thank you very much. Mr. Horn. I thank the gentleman for an excellent series of questions, and I thank you, Mr. Director. Sorry to keep you so long, but we had a lot of things to ask about and you did a very good job. Mr. Lew. Thank you. These are very important questions that I think are central to what we do at OMB and in the long-term the issues we appropriate on every year are less important than some of these broader questions, which have to do with the direction that we are going and the challenges we face. We need to keep the forest in mind as we are pruning the trees. Mr. Horn. We are glad to have you here. We now have panel two, which is the Honorable David M. Walker, Comptroller of the United States. [Witness sworn.] Mr. Horn. Please proceed. STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GENERAL ACCOUNTING OFFICE Mr. Walker. Thank you, Mr. Chairman and Mr. Turner. I appreciate the opportunity to appear again before this subcommittee. This is getting to be a regular occurrence. I think it was last Friday that I was here last. I would like to commend this committee at the outset for its continued focus on important management issues, and its willingness to lead by example in this regard. I can assure the taxpayers of the United States that they are getting their money's worth with regard to this subcommittee. I commend you for your combined efforts. I have mixed emotions about appearing at this hearing for several reasons. We have an ongoing and constructive working relationship with OMB in order to address a number of challenges that face Government and in order to maximize the performance and assure the accountability of Government for the benefit of the American people. I can note at the outset that just as GAO has a number of dedicated and hard-working professionals, OMB does as well in the area of management. However, at the same point in time, I would note that OMB does not have a confirmed leader as Deputy Director of Management, which is a major problem and obstacle. And second, OMB needs to have more people focused on management and needs to spend more time dealing with a number of major management issues. Mr. Chairman, we believe that the Nation is at an important crossroads. As you know, the cold war is over and we won. In addition, we are not fighting annual battles over budget deficits every year. At the same point in time, this is the time that we need to start asking ourselves not only what Government does, but how Government does business. It is this second issue that this hearing is about: how Government does business. Our recent strategic plan demonstrates that many of the challenges that face the Nation are growing in complexity and interdependency. In fact, they have no boundaries globally, domestically, or within the Government--either in the executive branch or the legislative branch. While individual departments, agencies, and program managers have the primary responsibility for strategic planning and management, it is critically important that OMB play a role in addressing current and emerging issues of importance, high- risk areas, and cross-cutting governmentwide issues. In some ways, OMB is uniquely positioned to be able to address governmentwide management issues because they have the ability to leverage the budget process to assure that they get people's attention. As we know, Mr. Chairman, he or she who controls the money you better take seriously. But just having that ability has to be followed up by exercising and having accountability and consequences periodically in order for people to take it seriously. In OMB's discharging its responsibility, it is important that they serve in a variety of roles. They need to be a motivator, a facilitator, an integrator, and at times, Mr. Chairman, an enforcer. They need to assure there are consequences if appropriate actions are not taken. While OMB has taken a number of steps in this regard, much more needs to be done in the management areas. In addition, the management issues--a range of critical management issues--need to be an integral and ongoing part of the annual budget process. Individuals with management expertise in the relevant areas need to be at the table at the time these issues are considered as part of the annual budget process. For example, Mr. Chairman, as you know, to OMB's credit, they have identified a number of priority management objectives [PMOs]. In many cases there are a lot of commonality between their PMOs and our high-risk list or our major management challenges and program risks. They are not synonymous. There are some gaps. But there is a lot of overlap. But unfortunately, a lot of these PMOs do not have clearly defined or measurable goals. Therefore, it is very difficult to ascertain progress and to know when success truly has been achieved. You have pointed to the most recent report OMB has issued, which is the Fiscal Year 2001 Annual Performance Plan. If you look at a lot of their measures, they refer to ``working with.'' ``Working with'' is good, but it is not a result. It is important that we have clearly defined and measurable outcomes as the focus of what we are trying to achieve in a more results-oriented Government. In addition, OMB does not have enough people with the right skills to focus on certain critical management challenges. For example, strategic planning, change management, information technology, and human capital. These are critical management challenges that require a level of expertise in addition to leadership and other behavioral attributes. Furthermore, OMB needs to expand its horizons as to how it measures success in certain circumstances. For example, GPRA has to be much more than an annual paperwork exercise. GPRA must be a foundation and framework for how Government does business every day. It must be a foundation for moving toward more results-oriented, accountable Government. The CFO Act is much more than clean audit opinions. As you pointed out, sound internal controls and compliance with the Federal Financial Management Improvement Act are also important because what the CFO Act really is all about is how to ensure that we have timely, accurate, useful information to be able to make informed decisions every day. IT is much more than Y2K. Computer security, e-commerce, other issues are critical important as well. And human capital--people--represents the missing link in the Government's effort to try to achieve a more results- orientation. We will never maximize the performance and ensure the accountability of the Federal Government for the benefit of the American people unless we spend a lot more time on the people element, and OMB has a critical role to play. This cannot be turned over to OPM. They can make contributions. They are making contributions. But this is a strategic issue of major importance to the Government and our Nation. OMB needs to focus more attention on the broader dimensions of these challenges, and they need to be able to have the human and financial capital to be able to do so. While OMB needs to focus on a broader range of management issues, there are several models that could be used in order to address these different challenges. I note several in my testimony. There are several models that have been used in the past and should be used in the future. Basically, we need to follow the concept. The form that is used must follow the function that is performed. And I will be happy to answer in questions and answers some examples of that. In the end, it really doesn't make as much of a difference how one is organized as whether or not you have the absolute commitment from the top, whether you have the people, the processes, and the technology to make it happen and to maximize results and assure accountability. As I have stated before, Mr. Chairman, we have worked in a constructive fashion with OMB in the past, and where we have considerable progress has been made. For example, Y2K and certain elements of financial management. We will continue to do so in the future, irrespective of OMB's role and their resource allocation. But we do believe that OMB needs to place more emphasis on the ``M.'' We think that is critically important. I would also close by saying, Mr. Chairman, in addition to OMB placing more attention on the ``M,'' I think it is also important that Congress pay more attention to the ``M.'' This subcommittee is leading by example in that regard, but much more needs to be done by the Congress in the area of concerted and ongoing oversight in this area as well. Thank you, Mr. Chairman. I would be happy to answer any questions you might have. 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Thank you. As usual, you come well prepared and you have a very fine professional force that backs you up in the General Accounting Office. Director Lew testified that agencies should not be expected to meet all their stated goals. He also said that OMB is making progress coordinating the Results Act implementation. What are your reactions to his comments? Mr. Walker. First, I think it is important that you set stretched--but attainable--goals. You don't want to set goals that are so easy to meet that they are a lay-up. I think you do want to try to stretch people. But you want them to be attainable. Therefore, I believe that a vast majority of the goals that you set for a particular year should be achieved. I think progress is being made with regard to the Government Performance and Results Act, but I don't think it is anywhere near where it needs to be. I think people still viewing GPRA too much as an annual paperwork exercise rather than recognizing that this is the foundation for how they ought to be operating. People need to recognize that in addition to preparing these plans, they need to effectively change the way they do business consistent with these plans in order to focus more on outcomes rather than outputs and to focus more on results rather than processes. Mr. Horn. Have you and your colleagues in the General Accounting Office had a chance to assess OMB's fiscal year 2001 plan and the fiscal year 1999 performance report? Mr. Walker. We have looked at it on a preliminary basis. We haven't completed it. I would say that the plan that I just referred to, which is the 2001 plan--our preliminary review is that we are somewhat disappointed. While clearly they prepared it and it did meet the required timeframe, some of the goals and measures were not as clearly defined and as measurable as they should be. And candidly, I question whether they met their own standards for what the agencies are supposed to do. I think it is important for us at GAO, being the lead accountability organization, as well as for OMB, being the representative of the President in this area, to lead by example. So we haven't finished our review, but it is somewhat disappointing. Mr. Horn. Director Lew also testified that he would not separate management from the Office of Management and Budget because the budget issues drive the management ones. What are your reactions to those comments? Mr. Walker. Well, Mr. Chairman, I have mixed emotions about whether or not to separate management from budget. I care more about the result and what needs to be done rather than how it gets done. In theory, having the ability to leverage the budget process is a powerful tool. If properly exercised, I think it is desirable to keep them together. In practice, I think that we have seen that the ``M'' has been clearly secondary to the ``B.'' I think there are different ways we can try to achieve more equilibrium. If we don't see more leveraging of the ``B,'' then other alternatives need to be looked at. But I care more about focusing more of the right kind of skills and attention on the ``M'' than what the organizational structure is. Mr. Horn. Your shop, the General Accounting Office, has done a marvelous job over the years at the beginning of each Congress to give us a high-risk series. Could you sort of summarize the five most important things that the executive branch, regardless of party--you can go back to 1991, if you want to--what is happening on that front? Are they listening to the General Accounting Office, which is part of the legislative branch? We depend on you very greatly for the fine work that you do. But what about some of these high-risk series? Are they just reports that gather dust for Ph.D. students to analyze? Or is the executive branch taking it seriously? Mr. Walker. OMB has reviewed our high-risk list. They are aware of it. In fact, with regard to the priority management objectives, most of the items--not all, but most--that are included in our high-risk list are addressed one way or the other in the priority management objectives. A couple of examples of ones that are not included would be the farm loan programs and NASA contracting activities. Yes, it is on their radar screen. As you know, Mr. Chairman, not many of these areas have come off the high-risk list--not as many as we would like--and in some cases they represent problems that it took years to create it and will take years to get them off. I do think it is important--as part of the agencies' performance plans, as part of the budget process and as part of the oversight process in Congress that this be one of the central elements that continually gets focused on as an important area. What kind of progress is being made in order to eventually deal effectively with these areas? Mr. Horn. What are the worst cases that we have? Medicare is certainly one under the high-risk, but what else is there? Mr. Walker. There are a number. Computer security is one that I know is of interest to yourself and Mr. Turner, in particular. That is an area that, quite frankly, I would say is bigger and more important than Y2K. Why do I say that? I say that because it relates not just to national security and economic security issues--those are obviously important in and of themselves--but it also deals with personal privacy. When you are talking about health records and financial records and things that individuals hold close and very dear to themselves, it cuts very close to the bone. Acquisitions, DOD management--whether it be financial management or whether it be acquisitions at DOD--major challenges. Much more needs to be done, and frankly, we are never probably going to get a clean opinion on the Government's financial statements until DOD gets its act together. And while DOD is clearly an ``A'' in fighting and winning armed conflicts, which is their primary mission, they are a ``D'' at best with regard to economy and efficiency. Those would be some examples, Mr. Chairman. Mr. Horn. Well, I am glad we agree on that. I once held a hearing, what did you do with the $25 billion we can't find? We gave them a couple of years and they finally got the inventories matched with the combined various purchase orders and all the rest and got it down to $10 billion. But you are right, that is a real mess. And the first Secretary, Mr. Forestall, should have said, we are not going to have 149 different accounting systems, we are going to have one. I don't know how many they have now. Mr. Walker. For the record, Mr. Chairman, let me say that we have been somewhat encouraged by what we have seen at DOD over the last year or two. They do seem to be taking these issues more seriously, but they have a long way to go. Mr. Horn. Let me just mention one more question and then I will have Mr. Turner the rest of the time. Please elaborate on the point you made in your written testimony, ``OMB has not formally assessed the effectiveness of the different approaches taken by its statutory offices to promote the integration of management and budget issues.'' How does this comport with the argument that budget and management must go hand in hand? Mr. Walker. There has been clearly some linkage in the past--and we issued a report within the last couple of years. That report looked at to what extent there has been some linkage between management and budget issues--and we noted that there had been greater linkage recently than there had been in the past. My point is, not nearly enough. And there hasn't been enough considered analysis of how best to go about doing that, which I think is important. Mr. Horn. I thank you and turn back my remaining minute and a half and 10 minutes to the gentleman from Texas, Mr. Turner. Mr. Turner. Thank you, Mr. Chairman. Mr. Walker, you heard my questions directed to Mr. Lew. My first question to you, you have already answered. I was going to ask you if there was a need for greater emphasis on information technology and its utilization. That was one of your four items that you placed as areas of great need in our Federal Government. I was looking through your written statement and it is replete with thoughts about the importance of the emphasis on information technology. One of your statements is, ``The Government's use of information technology has suffered from management weaknesses that have resulted in widespread, untapped potential to improve service delivery.'' Then later in your written statement you begin to discuss the various approaches to provide flexibility in addressing management issues. And you list several that I won't go into, but things like the single central leader approach, the council approach, the task force approach, etc. I want to thank you, at the outset, for the help your staff has given me. Dave McClure and Jack Brock have been working with me and my staff to try to address the issue I discussed at length with Mr. Lew. For that I am very grateful. They are outstanding individuals and they bring a lot to the issue. It has been very helpful and I appreciate them working through this with me and helping me draft some proposals. But let me just ask you, as a beginning point, if you can articulate your opinion regarding the way OMB addresses the issue of information technology. And in particular, Is it fulfilling the role of developing and implementing long-term information technology for the Federal Government? Mr. Walker. This is an area that OMB had been placing effort on, but frankly, they don't have enough people with the right type of skills to get the job done here. You mentioned before about OIRA, for example. The answer Director Lew gave was that OIRA has responsibility for the information technology area. At the same point in time, if you listened--which I am sure you did--to all the different responsibilities that OIRA has, all very important, but very diverse responsibilities. Then if you look at how many people OIRA has to be able to accomplish those responsibilities and if you look at the skills it takes in order to be successful in addressing each of those, they have almost an impossible task. We clearly need more focus on information technology. We need more skills in this area. We need to raise the profile of this issue. But I think there are different ways to accomplish that end. OMB is trying to do the best with what it has, but they need to do a lot more. Mr. Turner. In your testimony a moment ago, when you were discussing ways the Federal Government should address some of these issues--information technology, human capital, and the others that you mentioned--the first thing you said was that there needed to be an absolute commitment from the top. As you heard from my questions to Mr. Lew, that is really the place where I begin as well, trying to figure out how we can structure something that would put information technology in the hands of someone who actually had that commitment from the top to do the job, long-term information technology planning and implementation. You have two able staff members working with me, but I would invite you--if you have any thoughts of how, perhaps, we should structure our approach to dealing with this information technology issue--I have been pretty forthcoming regarding my suggestions. You noted the reluctance of OMB with regard to the Koskinen-type model. Do you have any thoughts? I welcome your input and your suggestions. Mr. Walker. Let me give you several thoughts, Mr. Turner. First, as I mentioned before, form has to follow function. There are various different forms that you can use in order to try to address a management challenge, and they are noted in my testimony. But part of it has to do with the function you are trying to achieve. I would say that in the information technology area we have certain short-term needs and certain recurring needs. One of our short-term needs is that we really need to raise the visibility, and raise the priority of a range of challenges in the area of information technology. Computer security is one example and e-commerce is another example. They are related, but not the same issue. Therefore, one might say, ``How best can that be done in order to jump start it, in order to get the attention of all the persons in the Government--and in some cases outside the Government--that need to be mobilized?'' That means cabinet officials as well. Therefore, one might make an argument that there might need to be some focal point similar to a John Koskinen-type situation in order to get this thing going, and in order to get it focused, and in order to try to achieve certain measurable milestones. However, there clearly is a recurring need in the area of information technology, in the area of knowledge management, for example, within the Government. There is clearly a recurring need for a CIO, and for that CIO to be able to have high-level visibility and support. And that is not something that I think in and of itself would necessarily call for the czar model or the special assistant to the President model. You may want to think about the different roles and functions that need to be achieved and what we are trying to accomplish over what timeframe. There might be more than one model that would make sense, depending on the functions that are involved. Mr. Turner. When you mention the CIO, are you referring to the concept of a Federal CIO that would have oversight over and the relationship of all the agency CIOs that are already provided for in present law? Mr. Walker. That is correct, Mr. Turner. That is a recurring need. That is a recurring function. And one could argue, as Director Lew did, whether or not you need a czar-type function because a lot of the activities the czar will be doing will be recurring in nature. Unlike Y2K where you had a date certain that you knew you were going out of business shortly after that date certain--either you got it right or you didn't and you would know, then there is a market test, and then you could end up closing that down. In the case of some of the activities in computer security and e-commerce, it will be ongoing. At the same point in time, I think that what you can say is, do you need to do some things differently to get it started, to get it on the right track, and then to put it back to another function and merge it with the CIO and recognize that it is part of ongoing responsibility. You might need to do something supplemental in order to jump start it. Mr. Turner. Maybe a short-term, year-long effort to place emphasis on it through some special high-profile type individual, but also in conjunction with that there should be a Federal CIO that would have ongoing, continued responsibility? Mr. Walker. I think you might want to consider that. As far as the length of time and the scope of responsibility, that is something that obviously deserves additional consideration and deliberation. It is tough to get a whole lot done in a year, especially by the time you get the thing started. But I think that is something you may want to consider. Mr. Turner. It could be a Federal CIO and this individual that is going to elevate the profile of the issue for a shorter period of time. Could that perhaps be the same person? Mr. Walker. It is possible that it could be the same person. And I think part of it has to do with what is trying to be accomplished. Whoever it is, obviously, is going to have to have a tremendous amount of support. And as Director Lew talked about, John Koskinen is one person. John Koskinen had to have the support of OMB, he had to have the support of the CIOs in all the different departments and agencies, and ultimately whoever has this responsibility or these responsibilities is going to have to have some backup support both on the central basis as well as decentralized. Mr. Turner. As you could tell from Mr. Lew's testimony, it is going to be somewhat of a problem to be sure we structure such a proposal so that we can get--as you pointed out in your written statement--the buy-in of OMB to this idea as well as the buy-in of the various agencies and CIOs in those agencies. But I am confident that your staff has the expertise to help us do that. I would like to thank you again for your efforts to help move us in that direction. Mr. Walker. Thank you, Mr. Turner. I might also note that while I agree with Dr. Lew that OMB has outstanding staff, I would hold the GAO staff up against them. Mr. Turner. Thank you. Mr. Horn. I thank the gentleman for that round of questioning. I think we have gotten very good answers from both you and Mr. Lew. General, we don't need to detain you any longer since we have had you on a number of committees here and working through the performance issues. We appreciate very much you coming up. I particularly enjoyed seeing your accountability study. That is a good masterpiece and you do have a first-rate staff that does these things. I am interested, obviously, in the measurement and what is a measurement while we are looking at some of these programs. I asked OMB if they had a unit to deal with that, so I may as well ask you, does the General Accounting Office have a unit that is functioning in that area? Mr. Walker. We have an Office of Quality and Risk Management. That unit, combined with our different operating units, works together to try to define appropriate measures. You mentioned, Mr. Chairman, that we just published our first accountability report, which really ought to be called a performance accountability report. Even in that, while we are trying to lead by example--and we think we are in that report-- there it is. Mr. Horn. That is Thomas Jefferson's memorial, correct? Mr. Walker. That is right. In fact, it includes a quote from Thomas Jefferson in 1802 on the inside cover talking about the importance of effective Federal financial management. It took us a little while. We are still not there yet, but we are working on it. That was 1802. Mr. Horn. Here it is, April 1802. ``I think,'' said Thomas Jefferson, ``it is an object of great importance to simplify our system of finance and to bring it within the comprehension of every Member of Congress. The whole system has been involved in impenetrable fog. There is a point on which I should wish to keep my eye, a simplification of the form of accounts, so as to bring everything to a single center.'' He was quite a President. He was the first one to impound money when the Army had too many barrels of oats and not enough horses to eat them up. So he just impounded it. That is what Presidents ought to have now, sometimes. Mr. Walker. And let me just say that even for our report, while we are very proud of it--we are getting a number of positive compliments back--and while I might note for the record, Mr. Chairman, I believe on your grading scale, we would have gotten an ``A.'' Of course, we wouldn't want anything less than an ``A.'' The fact of the matter is that we are constantly looking at how we can revise ours and how we can improve ours. We all need to be doing that. So, thank you, Mr. Chairman. Mr. Horn. We thank you. Thank you very much for coming. We now go to panel three: Mr. James C. Miller III, counselor, Citizens for a Sound Economy; Mr. Dwight Ink, president, emeritus, Institute of Public Administration; and Mr. Herbert N. Jasper, senior associate, McManis Associates. [Witnesses sworn.] Mr. Horn. We will begin with Mr. James C. Miller III, who is a former director of the Office of Management and Budget from the years 1985 to 1988. We are delighted to have you here. STATEMENTS OF JAMES C. MILLER III, COUNSELOR, CITIZENS FOR A SOUND ECONOMY; DWIGHT INK, PRESIDENT, EMERITUS, INSTITUTE OF PUBLIC ADMINISTRATION; AND HERBERT N. JASPER, SENIOR ASSOCIATE, MCMANIS ASSOCIATES Mr. Miller. Thank you, Mr. Chairman. I have a statement I have prepared. Mr. Horn. Without objection, your prepared statement will appear in the record. If you could summarize your testimony, we could then get to questions. Mr. Miller. I will do that. First, I want to affirm a comment I heard from Director Lew. The OMB staff, in my judgment, is the best in the Government. It is the best I have ever seen. I think protecting and preserving the professionalism, and integrity of the OMB staff is something you ought to be concerned about and try to maintain. The management side of OMB is much more difficult than the budget side. When you talk money, people listen. When you talk management, they don't. The budget side is the benefits that agencies receive. The management side is the cost because you followup on what they are doing. The incentive structure is such that people in agencies don't want to pay attention to the management side. Let me just give you a case in point. Mr. Turner raised the business of collecting loans. Agencies don't care about collecting loans. Moreover, if you use information technology to engage in more efficient management, just think of the incentives. First of all, from the budgetary side, especially with hardware, you have to pay for it all up front. You don't amortize it in the Federal Government. You pay for it up front. The benefits flow over a long period of time--after most people who are heads of agencies are gone. Their incentives are not to do that. Second, if I had to add one recommendation to my testimony it would be to privatize as many functions as you can. But you have to bear in mind that sometimes you really get results. So be careful what you ask for because you might get it. During my tenure at OMB, we were successful in getting Congress to enact legislation that allowed the administration to farm out the collection of debts to private companies. And guess what? They collected the money. But there was such an uproar from some people that there was an estoppel on the collection of debts. So you realize that some of these things are going to generate some backlash as well. I don't want to suggest that it is impossible to improve management. There are some good case studies. Jerry Ellig, a colleague of mine at George Mason University, just finished a study where he found that FEMA was wonderfully productive and its leadership had turned the agency around. Mr. Witt's inspired leadership, the use of information technology, the redirection and the refocus of the agencys is a real success story. So it can be done. Let me give you several recommendations. Give managers more freedom to manage, but hold them responsible for results. Second, you need to recognize superior management and success cases, superior performance. I ask, rhetorically, when is the last time you had an agency head up here and said, ``Joe, you and Sarah have done a terrific job. Tell us what you did and how we can apply those lessons to other agencies?'' So you need to use the carrot as well as the stick. I know, from experience, that Government officials are often the object of criticism. It is those few little times that you get praise that you remember and that spur you on. Three, I think we need to be honest about all this reform and what we can accomplish, what we can't accomplish, what we have accomplished, and what we haven't. Frankly, some of the representations made about the National Performance Review and the Results Act, are terribly disappointing and/or misleading. I don't think they have done well at all. Coining names like reinventing or reengineering--or all those acronyms--I mean, that is not going to improve the management of Government. Fourth, get rid of the agencies and the programs that don't work. Part of good management is knowing what works and what doesn't. If you are the CEO of a major firm, you are going to be constantly on the lookout for programs that work and expand those, and diminish on drop those programs that don't work. There is this long list of agency programs. My former boss, President Reagan, used to say that there is nothing quite so permanent as a Government agency. Fifth, you need to support OMB in grading of agencies. It is not an easy job. You need to give them a lot of support. Sixth, finally, I know it is controversial, but I urge you to try not to separate the management and budget functions. The budget is the stick that makes it work. Budgeteers pull on strings, management people push on strings. It seems to me that you need the power of the budget side to force the management responses. There is one suggestion I have if you really do separate the budget and management functions. You give the management person the right to fire people, even cabinet officers. You get their attention. I don't think the President is going to want to do that. After all, these agency heads report to the President, not the Director of OMB or the management Deputy Director. But save that, it is going to be very difficult, without the stick of the budget, to get them to do something they don't want to do. Thank you, Mr. Chairman. [The prepared statement of Mr. Miller follows:] [GRAPHIC] [TIFF OMITTED] T0219.063 [GRAPHIC] [TIFF OMITTED] T0219.064 [GRAPHIC] [TIFF OMITTED] T0219.065 [GRAPHIC] [TIFF OMITTED] T0219.066 Mr. Horn. We thank you. That is a very interesting bit of testimony and you have had a vast experience on that. Mr. Ink. Dwight Ink is president, emeritus, Institute of Public Administration, former Assistant Director for Executive Management in the Office of Management and Budget. And that covers 1969 to 1973, the Nixon administration. Mr. Ink, we are going to have to move along a little, so don't read it. Just summarize it. Mr. Ink. I think I can summarize in about 5 minutes, if that is acceptable. Mr. Horn. That is terrific. Mr. Ink. My management views are based on a fair amount of experience both as agency and bureau heads and in the OMB. So it is an area where I have walked the walk. I also had lead responsibility for what you mentioned earlier, persuading Congress to support the establishment of OMB back in 1970, intended to give the President a better instrument for providing leadership in Government management. That has not worked. The OMB has become more dominated by the budget process rather than less, thereby limiting severely its capacity to provide this management leadership. OMB has had some very able people heading its management role people such as John Koskinen and Ed DeSeve, and they have done some very good work. But the budget dominated structure, in my view, has made it almost impossible to achieve the broad and sustained leadership role we and the Congress contemplated for OMB. Why? First, the budget process has become more complicated. Within this budget pressure cooker, there is very little opportunity or time left for top OMB officials to give more than just passing attention to more than a few management issues. That is one reason I support the chairman's concept of transferring management functions to an Office of Management within the Executive Office of the President, where the leadership could devote full time and energy to the task of making Government work better. Second, the OMB budget process fosters tunnel vision. That makes it very difficult to address cross-cutting issues that affect many different departments and many different programs. OMB examiners are extremely talented, but the work of each one is necessarily focused on a few related programs. And it is very difficult for them to shift attention from their main role to that of dealing with management problems that cut across organization lines. Third, the 12-month budget process places undue weight on the annual budget targets and gives priority to the annual objectives over long-term investments that can provide long- term economies and higher quality. I found this contributed significantly, Mr. Chairman, to our difficulties in developing the computer and information systems and other technological improvements that are needed to modernize Government operations. Federal managers today have similar complaints. Fourth, the preoccupation with the budget has, at times, weakened the ability of agencies to improve operating effectiveness or prevent waste and abuse. I recall instances in which this budget domination directly, although inadvertently, contributed to scandals in agencies. Fifth, OMB is embroiled every year in fierce political battles over many budget issues, whereas the Office of Management would be free of most of the baggage--through not all of it--that handicaps bipartisan approaches to management reform. Sixth, as has just been mentioned by the Comptroller General, the OMB has neither the staff nor the type of contacts that provide adequate early warnings of emerging agency problems that become public issues. Seventh, OMB lacks much of the specialized expertise that cannot be stockpiled in the various individual agencies. This includes program management, Government corporations, decentralization, how to increase productivity, governmentwide reform--the list could be very long. An Office of Management would be freed of the mythology that one must have the leverage of the budget to force agencies to improve management. We found in the Executive Office of Management that in most cases, the more we could distance our staff from the budget process, as distinguished from distancing them from the knowledge of the budget examiners--which we didn't want to do--and substitute for budget threats the positive leadership and assistance, the greater our credibility, and the greater our influence, both with the agencies and with Congress. Although I do not regard direct involvement of the budget as necessary, an Office of Management would need important tools in order to have the necessary impact. In my written testimony I have listed a number of those tools, such as the drafting of Presidential Executive orders, legislative clearance, GPRA, and a number of other important tools. I believe that the needs of the President and the executive branch require a management leadership capacity that is not, and cannot be, provided by the OMB, no matter how able the Deputy Director for Management might be. The Congress, I believe, has a right to expect more with respect to the timely and effective implementation of legislation and Presidential initiatives. And perhaps even more important, our citizens have a right to expect a management leadership capacity, which OMB has provided, one that is not so preoccupied with the budget process that it has little time to focus on program outcomes and effectiveness of service delivery. Thank you. [The prepared statement of Mr. Ink follows:] [GRAPHIC] [TIFF OMITTED] T0219.067 [GRAPHIC] [TIFF OMITTED] T0219.068 [GRAPHIC] [TIFF OMITTED] T0219.069 [GRAPHIC] [TIFF OMITTED] T0219.070 [GRAPHIC] [TIFF OMITTED] T0219.071 [GRAPHIC] [TIFF OMITTED] T0219.072 Mr. Horn. Thank you, Mr. Ink. I appreciate that. Herb Jasper is the senior associate for McManis Associates Consulting Firm. He is a former professional staff member for the Bureau of the Budget from 1956 to 1969. Now, despite my youth, I do remember those years. You were there when the Eisenhower administration was there, you went through Kennedy and up to Johnson. We are delighted to have you with us. You have had a vast experience there. Mr. Jasper. Thank you, Mr. Chairman and Mr. Turner. I appreciate the opportunity to offer my comments on oversight of the Office of Management and Budget. I understand that your principal focus is on the management functions, with which I have been associated for most of my career, particularly governmentwide management and organization. I would suggest that you would be hard put to find that OMB has spent much time during the past almost 20 years on governmentwide organization and management. So I am tempted to say you could have a brief oversight hearing, but that would perhaps be unfair and I will explain more about that. The 1993 OMB reorganization was based on the presumption that you have heard frequently, that you can't separate management from budget. I evaluated this curious claim in detail in my early 1999 testimony before this subcommittee on the proposal to create an Office of Management. Contrary to that theoretical proposition, this administration has demonstrated by its actions that one can, indeed, separate management from budget. I refer, of course, to the creation of the NPR whose work has not been distinguished by its integration with the budget process. Mr. Horn. The NPR being what? Mr. Jasper. The National Performance Review, initially, and now the National Partnership for Reinventing Government. But OMB insists that it has elevated the role of management by integrating it with the budget functions. GAO did find some evidence that management issues have received more attention during the budget process since then. But on the broader issues, I met with the GAO study team when the study was just getting underway and urged them to examine the totality of OMB's management responsibilities. Unfortunately, they didn't do that. You can read their report and you won't even find any recognition that there is no capacity left within OMB to deal with governmentwide organization and management issues, with the possible exception of GPRA and the three statutory offices of which you have heard, OIRA, Financial Management, and Procurement Policy. But I want to focus on what they have not done at all, rather than what they have not done well. And in that category, I would include the GPRA. But what they haven't done at all is working on governmentwide organization. You will recall I also had the privilege of testifying on executive branch restructuring in 1995. Curiously, you did not have an OMB witness. And that is because OMB doesn't know anything about executive branch organization. They have no people that work on that. They have no experts on the subject. Let me contrast that with the situation when I was in the former Bureau of the Budget. In addition to a Management Improvement Branch with about 10 professionals, there was a Government Organization Branch in which I was 1 out of about 9 professionals. We worked nine people, full-time, year-round on governmentwide organization and management issues. They have nobody now who does that. We worked on interagency coordination matters, sometimes accomplished through Executive orders, we cleared legislation with respect to management issues; we wrote legislation; we wrote testimony; we wrote reorganization plans; we worked very closely with your predecessor committee and its counterpart in the Senate; and last but not least, we recommended vetoes of bills with unacceptable organization and management provisions, practically unheard of in recent years. The absence of professional expertise in matters I have talked about is illustrated by such developments as these. Executive orders are now handled by OMB's general counsel, not by the management staff. It is not known that lawyers are experts at issues of Federal management. Mr. Horn. Do you mean the counsel to the President? Mr. Jasper. No. OMB has a general counsel to whom many years ago, the responsibility to draft and review Executive orders was transferred. Those often deal with precisely the kinds of things I am talking about agency roles and responsibilities, interagency coordination arrangements, and so forth. They used to be handled in the Management and Organization Office, where I worked. Another point. Political appointees have multiplied from three or four when I was there to more than a dozen now. The five PADs, or program associate directors, have had decentralized responsibility for things that we used to do, at least in an advisory capacity, on a centralized basis either through the legislative reference process or through the Office of Management and Organization, to which the bills and testimony would be referred. I am again referring to these so- called resource management offices where the perspective is typically programmatic and oriented toward the political image of the administration and its ability to get the bill passed, no matter what the consequences are in horrendous administrative and management provisions. The result is that your efforts to elevate the ``M'' by establishing a new post of Deputy Director for Management have been substantially in vain. That is notwithstanding the fact that there have been excellent people in that position when it was filled. It is said that the White House doesn't know or care anything about management. That is probably true, not only in this administration, but in others. That makes it all the more important that there be a non-political perspective on management issues somewhere in the President's family. We need to recreate the distinction between serving the President and serving the Presidency. So long as OMB is layered with political appointees and embroiled in the partisan politics surrounding budget decisions, that will not happen in OMB. During the Reagan administration, I was in a room where about six or seven former directors of management or OMB were present. They represented 40 years of experience in that position. Without exception, they had all come to the conclusion that it would never work effectively when harnessed with the budget process, which is not to say there is not a close relationship between the two. I fully agree that there is. But, bearing in mind Mr. Turner's question about how to elevate attention to information technology, we need to elevate attention to management across the board. I would respectfully suggest that the chairman's notion of a new Office of Management is the best way to achieve your objectives of elevating the attention to information technology because it can't logically be separated from financial management or from procurement policy, or from any of the other management issues in the agency. They must all be integrated. The chairman will also recall that I appeared here on behalf of the National Academy of Public Administration on IRS legislation. We forecast then that the ultimate consequences of that bill would be terrible, but they will be felt in the next administration, by the next Commissioner. So this administration doesn't care very much about that. And we have already begun to see some of the unfortunate consequences of that so-called reform legislation. I will conclude by saying that I think you need to institutionalize the professional expertise on management matters, and there are three things you can do in that regard. One is to create the Office of Management, which you have talked about for a couple of years now. I have a copy of my testimony from previous occasions if you want another one for the record. Mr. Horn. Without objection, your prepared statement will appear in the record. Mr. Jasper. Thank you. Second, mandate the reduction of political appointees in OMB by 50 percent. And third, support legislation to establish a new Commission on Government Organization, since OMB hasn't a clue as to how to deal with those issues. Thank you very much. [The prepared statement of Mr. Jasper follows:] [GRAPHIC] [TIFF OMITTED] T0219.073 [GRAPHIC] [TIFF OMITTED] T0219.074 [GRAPHIC] [TIFF OMITTED] T0219.075 [GRAPHIC] [TIFF OMITTED] T0219.076 [GRAPHIC] [TIFF OMITTED] T0219.077 [GRAPHIC] [TIFF OMITTED] T0219.078 [GRAPHIC] [TIFF OMITTED] T0219.079 Mr. Horn. We thank you for that. I just want to recognize Mr. Ink. I believe you have testified before Congress for 50 years. Is that not correct? Mr. Ink. This is the 51st year. Mr. Horn. Well, you look younger than ever, so it must be good to testify before Congress. [Laughter.] I want to call on the gentleman, the ranking member, Mr. Turner, the gentleman from Texas. Mr. Turner. Thank you, Mr. Chairman. I don't have any questions. I just want to thank all three of our panelists. It is always a treat to have you before the committee. It is amazing how colorful and candid testimony can be from individuals who have ``former'' before their Government titles. We appreciate the fact that you have continued to try to help strengthen the operation of our Government, improve the management, and we always welcome your ideas. I think that our role as a committee is to try to highlight those suggestions in the best way we can. By having you come testify, it certainly helps that. I would just like to say that each of you have a little bit different perspective, but I gather that all of you believe rather strongly that we are deficient in terms of the emphasis on management. We will continue to work on those issues. As you all know, the chairman has been an advocate of this suggestion of separating budget and management for at least 2 years. And we want to continue to seek your input and your help. Thank you very much. Mr. Horn. I have just a few questions before we adjourn. Mr. Miller, looking back, did you devote more hours of your day as Director of OMB on management or budget matters? Mr. Miller. Budget, in part because that is where the political leadership, the elected officials, wanted to go. I don't think I ever recall receiving a call from a Member of Congress asking about a management issue. A lot of times I received calls about budget issues. Mr. Horn. So it is fair to say that you spent 100 percent of your time on the budget? Mr. Miller. No, not 100 percent, but probably more like 80/ 20 than 50/50. Mr. Horn. And 20 percent were really on management? Mr. Miller. Yes. That would include regulation in that. Mr. Horn. But nobody was looking at reorganization, better efficiency, better measurement of programs, and all of that? Mr. Miller. Let me amend the statement by saying that my Deputy, Joe Wright, was an expert in management issues and we did have some division of labor. Joe spent more of his time--I would say greater than 50 percent of his time--on management issues. But I agree with these gentlemen that at least the potential for management improvement in Government has not been met. Where we disagree is over how you accomplish it. I think, frankly, and with all due respect, unless you have the management program or the chief manager with sufficient tools, the agencies simply are not going to pay attention to him or to her. You must have appropriate incentives. Providing leadership and encouraging positive results simply is not going to work, in my experience. Mr. Horn. In other words, you feel the budget clout presumably helps reform on management. But the evidence is they don't do anything. Mr. Miller. I was just sitting here thinking and listening to what they had to say. You wouldn't lose much by trying. That is to say, it hasn't worked so far very well. If you set up a separate Office of Management, I don't think it would work, either, but you might learn something from doing it. So I am not so opposed to it, except to say that you have to have the person who leads the office with appropriate incentives that are going to change behavior. Right now, the Director of OMB has the budget incentive to cause changes in behavior. If you split it off, what do you have left? You have to replace it with something. Mr. Horn. Let me ask these two gentlemen who preceded Mr. Miller's term as to the number of people that were interested in and responsible for management questions within the former Bureau of the Budget and what might be now. As I remember, in the Eisenhower administration, you had maybe two dozen people. Am I wrong on that? Mr. Jasper. Probably more. Mr. Horn. More? Mr. Jasper. What I think would dramatize it is if I contrasted the two branches, which I mentioned in my testimony, which aggregated about 19 professionals, with what is left now doing all of that. The answer is one. That is a counsellor to the DDM. But the point is that the rest of the people in the number you are remembering--it was probably more like 40--do have counterparts remaining in Procurement Policy, Financial Management, and OIRA. Those all had precursors back in the Office of Management and Organization that I was in before Dwight came. But the point is that we had about 19 people doing what one is doing now. Mr. Ink. I had about 60, but we were doing all kinds of things that OMB doesn't even attempt to do now. We had to put a great deal of effort, for example, into the outcome area, and not just the input. We were very much concerned about outcomes from the standpoint and perspective of families and communities. So I had a group of my staff spending almost half their time out in the field working with the field people. By the way, that is where most of the Federal bureaucracy is, out in the field, not in Washington. The OMB people now have no time to get out in the field. They have no time to get out and see what is really happening, how things are really working in the field where the interface with the public exists. I had a number of people focusing on that. We spent time drafting Presidential Executive orders, which by the way, gave us some real leverage. The congressional clearance process gave us leverage. But these were more in the way of positive leverages. They weren't threats to the agencies. Our influence grew the more we distanced ourselves from the budget. By the way, departments and agencies learned long ago not to mesh the budget and management people together the way they are at OMB. Mr. Horn. One of the things I remember was the development of the Marshall Plan. That was done within the old Bureau of the Budget, was it not? And TVA and Government corporations. They all had charters figured out by a management group in the old Bureau of the Budget. Mr. Jasper. And recently, when an issue arose about Government corporations, what they are, when to use them, and how to use them, there wasn't anybody at OMB who knew anything about it. So they came to alumni on those and similar issues. Mr. Horn. I think the important thing to remember is that the same group that helped Roosevelt and Truman also helped Eisenhower. There were not political intrusions on the professional staff under Eisenhower. He went in with more experience in management and administration than any President in the history of the country. He looked around the White House and he said, ``Good heavens, this place isn't even organized.'' He started with cabinet secretaries, staff secretaries, congressional liaison, and so forth. But he always had an interest in the management side. We didn't know and didn't care if they were Democrats or Republicans or Socialists or Libertarians or what. We just wanted their expertise as to doing something in the management area. And that is whom they called on. Mr. Ink. It was much easier for us to work with Congress on a bipartisan basis than it is now. That is in part because the budget issues are so formidable and there is so much partisanship associated with them. But it also grows out of the fact that when you are involved in these kinds of budget issues, it spills over into the management area. When I headed the Office of Executive Management, I had some distance from the budget process. When I came up to the Hill, as I did frequently, I didn't carry the political baggage with me that was associated with these controversial partisan budget issues. Mr. Jasper. Could I add just a point there? I did the statistics on this once before, so I don't have it readily at hand, but if you look at the split in party control between the Congress and the White House in the 20th century, you will find that in the first half it was an aberration to have other than the same party control both ends of the avenue. In the second half of the 20th century, it has become virtually the model. So the point is that partisanship has become much more of an issue in public policy. And Dwight is exactly right. If we could divorce the management from the budget, perhaps we could get more agreement on the management issues than will ever be possible to get with split party control on the budget issues. Mr. Ink. We always worked with the committees on a bipartisan basis. And I would generally meet together with the Chair and the ranking minority member, regardless of whether the Chair was from the same party as the President or not. I worked under several different Presidents and under those different circumstances. Mr. Horn. Mr. Miller. Mr. Miller. Mr. Chairman and Congressman Turner, I have a final suggestion. Do you know who the first Director of the Office of Management and Budget as opposed to Bureau of the Budget was? Mr. Horn. Wasn't it Dawes? Mr. Miller. No, it was George Schultz. Mr. Horn. You mean under Nixon. I was going back to 1921. Mr. Miller. No, he was the first BOB. But when they changed it to the Office of Management and Budget, it was under George Schultz. Mr. Horn. And Weinberger also. Mr. Miller. Yes, Weinberger was then his Deputy. Here is a person--actually, both of them--who have had enormous experience in very high levels of Government and leading corporations. They know management inside and out. I would urge you to ask of them what they think and whether they feel that their vision has been achieved. And if not, why not. And ask them what they recommend you do going forward. Mr. Horn. I was in to see the vice chairman of the U.S. Commission on Civil Rights and I went over to see them to get a cross-cutting analysis in the budget on how much we spent on civil rights activities. I had my own 12 lawyers go into every agency and we graded them. That is where we got our grading mania. We got some results, and they were very supportive on the management side to really make sure something happened. Any other questions, my colleague? I want to thank the staff that put this together, and I thank this panel. On my left, your right, is the staff director and chief counsel to the Subcommittee on Government Management, and Randy Kaplan is here with us also. And Matt Ryan and then Louise Debenedetto from the General Accounting Office, and Heather Bailey, professional staff member. Bonnie Heald is here, the director of communications, professional staff member, Brian Sisk, our clerk, and Ryan McGee, staff assistant, and Michael Soon, intern--welcome Michael--and minority staff to Mr. Turner is Trey Henderson, counsel, and Jean Gosa, minority clerk. In this last 2\1/2\ hours we have had our court reporter, Arthur Emmerson, and we thank you for coming. With that, we are adjourned. [Whereupon, at 12:37 p.m., the subcommittee was adjourned.] [Additional information submitted for the hearing record follows:] [GRAPHIC] [TIFF OMITTED] T0219.080 [GRAPHIC] [TIFF OMITTED] T0219.081 [GRAPHIC] [TIFF OMITTED] T0219.082 

Who is the office of management and budget leader?

Who are the members of the Office of Management and Budget?

What is the Office of Management and Budget in government?

Is the Office of Management and Budget a department?