March 21, 2012
The nation’s fragile economy and fractured politics have put federal agencies in a difficult position. Reduced budgets are inevitable, yet missions haven’t diminished -- in some cases they have become more complex. Increased workloads have forced the government to search for ways to leverage limited resources and improve efficiency. But times of great change are also times of great opportunity.
It seems easiest to cut a designated percentage of spending across each program, as the federal government has done many times in the past. If agencies fail to evaluate budgets with a critical eye, however, they risk hollowing out essential capabilities. A decision to reduce spending evenly across an entire agency rests squarely on the assumption that resources already are correctly allocated. This approach doesn’t take into account conditions that may have changed since the last resource allocation. More important, it does nothing to protect critical resources. Government leaders who fail to align assets with priorities might meet cost-reduction goals in the short run, but they jeopardize many mission objectives in the long run.
Agencies must be strategic and conduct a critical assessment of their missions to realign spending.
Not all activities and capabilities are equal. The “peanut butter spread” approach, which simply reduces spending by the same percentage across the board, not only weakens each program but also the entire mission. Agencies should employ the business case analysis model used in the private sector. Data and risk analysis would identify the programs and resources that are most closely aligned with core missions. Then agencies can reallocate assets to priority operations and cut the least mission-critical portions of their budgets, such as in-house travel services or printing facilities. In simple terms, they should identify the 20 percent of their budget that drives 80 percent of their mission.
Agencies should determine where there is overlap in their organizations -- the same type of work being done in different locations with different infrastructure and processes. Consider, for example, President Obama’s proposed consolidation of six departments and agencies that oversee various aspects of industry, including the Commerce Department and Small Business Administration. Across those six organizations, it is likely there are multiple groups performing functions such as administrative support. If left alone, the resulting redundancy and fragmentation would translate into unnecessary complexity.
The same holds true for agencies with overlapping missions. Low-return services or programs with similar capabilities -- call centers, data centers and real estate operations, for example -- often are good candidates for consolidation. This can be an effective way to trim the fat and shift resources to the broader mission.
When private sector organizations share assets to conserve resources, they also harness the power of a collaborative environment. The same holds true for federal agencies. Consolidation within an agency and collaboration across agencies -- a shared help desk, for example -- can reduce budgets and boost efficiency. Agencies should reduce investments in capital assets where possible. Information technology is one area where agencies can offload maintenance of expensive equipment, applications and services. The Office of Management and Budget, for example, already is promoting collaboration with its “cloud first” policy, which requires every agency to spin off at least one IT function to a Web-based program by June.
Agencies will have to work smarter and work together to reach their savings goals. The choices are difficult, but dodging them would jeopardize the real work that needs to be done. Historically, when this nation faces great adversity, it responds by forging an even stronger foundation. This could be government’s finest hour.
Robin Lineberger is chief executive officer of Federal Government Services at Deloitte Consulting LLP, and John Powers is a leader in the firm’s Merger and Acquisition Consultative Services.
March 21, 2012