OMB lowers management grades of four agencies

Federal agencies received a harsh report card for their management efforts from the Office of Management and Budget this week.

On the President's Management Agenda score card, the Defense Department's rating on competitive sourcing score fell from green, the highest rating, to yellow, the middle rating. Three other agencies--the Veterans Affairs Department, the Small Business Administration and the Office of Personnel Management--also experienced declining scores.

The score card rates agencies on five key initiatives: human capital, competitive sourcing, financial performance, e-government, and budget/performance integration. Only one previous report, in 2002, has downgraded an agency's score.

"The message from these status downgrades is that implementing the PMA is hard work, requiring significant, unequivocal attention by management; and we are serious about holding departments accountable," said Clay Johnson, OMB's deputy director for management, in written remarks.

Defense's score dropped because it wasn't continuing with planned job competitions, said Johnson. According to OMB's fiscal 2003 competitive sourcing report, Defense job competitions affect the highest number of full-time equivalent employees in government. As of Sept. 30, 2003, Defense agencies had completed or were holding competitions affecting almost 12,000 workers, which is almost half of the total throughout all agencies.

The problem is that the job competition process is so highly regulated that it has become difficult to execute, said Stan Soloway, president of the Professional Services Council in Arlington, Va. Contractors that formerly bid in job competitions are dropping out because in-house teams win the vast majority of the time, he said.

"The few [contractors] who are left are very upset.… Business opportunities are not there," he said.

A Defense Department spokesman said no one was available to comment on competitive sourcing Thursday because it was a federal holiday.

Veterans Affairs' and Small Business Administration's scores on e-government initiatives dropped because of security flaws, OMB reported. The Office of Personnel Management's financial performance score dropped to red as a result of a new material weakness in its financial statements.

A handful of agencies saw improved grades: The Treasury and State departments boosted their competitive sourcing scores, the State and Commerce departments reached green on financial management, and the Homeland Security and Commerce departments moved up on their human capital ratings. No agency has yet received green scores across all five initiatives, although Energy, Labor, State, Transportation and the Social Security Administration scored green on four out of five initiatives.

"The progression is still to green. Four years ago, you saw a sea of red; today, you're seeing green cropping up. This is great news," said Carl DeMaio, president of the Performance Institute, an Arlington, Va., think tank devoted to the study of government management.

The fact that four scores were lowered is "a shot across the bow for those who may start to get lethargic on management reform," said DeMaio.

The tougher scores may signal that in its second term, the Bush administration will be tougher on agencies, said Soloway. "Anybody who thought the score card was entirely a sham is wrong," he said.

The score card gave most agencies a yellow rating on their faith-based initiatives and real property asset management, and for the first time rated agencies on their progress toward eliminating improper payments. Treasury reported that in fiscal 2004 the government made over $45 billion in improper payments.

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