Government Executive - Authors - Roger L. Sperry

Geographic Information Spans Borders

Roger L. Sperry — Sat, 01 May 1999 00:00:00 -0400

eographic information systems have offered the seductive promise of linking up all sorts of information now maintained in stovepiped systems. Rapid technological advances offer equally enticing opportunities for combining and giving the public access to spatial data; fostering cooperation among agencies, levels of government and the private sector; and reducing costs to the taxpayer. However, progress in reaping the full potential of these advances seems painfully slow and the outlook for overcoming major structural and behavioral barriers is not promising, at least in the near future.

Many federal agencies, state and local governments, and private firms produce and maintain spatial data. Usually the data are collected and arrayed to meet the specific mission needs of these organizations. The Census Bureau needs street addresses. Commercial fishermen, merchant vessels and recreational boaters need charts of harbors and coastal waters. The military needs intelligence and battlefield maps. States need highway maps to maintain their transportation systems. Local governments need maps for city planning and property records, and some are managing spatial data in new ways.

Fixing Overlap

Policy-makers have been concerned about overlap and duplication among surveying and mapping organizations for more than 100 years. Studies have been commissioned periodically since the late 1800s to find more efficient ways of producing and maintaining spatial data.

These concerns came to a head in 1994 when the newly elected Republican Congress launched plans to eliminate several departments and agencies. Those plans included shutting down the U.S. Geological Survey-the federal government's chief map maker-and a host of smaller units, some with spatial data responsibilities. The 104th Congress also mandated greater use of private firms to carry out federal spatial data functions. The House Appropriations Committee urged the USGS, in cooperation with the Office of Management and Budget, to identify options for consolidating federal mapping functions.

Leaders in the spatial data professions were concerned that Congress would take precipitous action to consolidate or eliminate these functions without a solid base of empirical data. In early 1995, the American Congress on Surveying and Mapping chartered a study to identify opportunities to streamline spatial data functions. The National Academy of Public Administration conducted the project, in cooperation with the Bureau of Land Management, the Forest Service, the U.S. Geological Survey and the National Oceanic and Atmospheric Administration.

In January 1998, a NAPA panel concluded that new institutional arrangements and a legislative charter were needed to fulfill the Clinton administration's promise of a computerized spatial data infrastructure. But the administration instead chose a "virtual government" approach for coordinating spatial data functions, opting for the status quo on organizational responsibilities.

Efforts have been under way for years to better coordinate federal geographic information functions. Various committees were formed by the Office of Management and Budget, the most current being the Federal Geographic Data Committee, to coordinate agency activities and develop common standards for spatial data. FGDC is chaired by the Interior Secretary and composed of representatives from about 15 federal agencies. Recently, the panel has included representatives from state and local government and professional organizations and has reached out to private-sector firms.

The administration also examined spatial data issues in its 1993 National Performance Review. An NPR report urged the federal government, given the limited resources available, to seek innovative ways to build a national spatial data infrastructure (NSDI). The goal was to promote cost-sharing and data-sharing partnerships rather than create a bureaucratic organization. The Federal Geographic Data Committee was to be "significantly strengthened by specifying enforcement authority and setting clear policy goals."

The NPR became a proponent of virtual government, which promoted cross-agency arrangements centered on customer needs. By 1996, about 25 cross-cutting initiatives, such as better coordination of governxment statistics, had been started.

Avoiding Legislation

Virtual government-an array of cross-servicing arrangements between agencies to promote cost- and data-sharing-as seen as an alternative to formal restructuring. NPR had recommended that the President seek authority from Congress to reorganize agencies, but such authority was elusive because of fundamental differences with the Republican Congress over the size and scope of government. Instead, the President turned to executive orders and joint executive agency arrangements to streamline operations and achieve efficiencies.

The NAPA panel endorsed the NSDI concept and acknowledged that remarkable progress had been achieved in the early stages. However, the panel said there were enormous challenges in achieving a spatial data infrastructure with a common foundation, easy access, broadly accepted standards and widely shared responsibility for creating and maintaining the data--ideals expressed by a cross-section of the professional community. The report said multiple governments and agencies have jurisdiction over and provide services for the same geographic area, often with independent administrative infrastructures of offices, personnel and systems. Differing and sometimes conflicting data often need to be reconciled to be useful.

The panel concluded that legislation was needed to provide a stronger policy base and make other changes needed to achieve a national spatial data infrastructure, but neither the administration, major agencies, nor Congress have proposed new laws. Program officials are reluctant to even explore the possibility of legislation because they believe the end product would hardly resemble any bill submitted by the administration.

The panel's report made about 40 recommendations that included limited restructuring of the agencies engaged in spatial data functions. The goal was to make NSDI the national endeavor its name implied, not just another initiative agencies could ignore. The panel sought:

A stronger voice for and participation by state and local governments and the private sector.
Better coordination among domestic and national security agencies.
Limited consolidation of federal civil spatial data functions to provide a critical mass for meeting the challenges of building an NSDI.
A national council, not just a federal committee, to provide strong participation in policy-making by all levels of government and the private sector.
By the time NAPA's report was released, the legislative climate had changed dramatically. The sponsoring agencies no longer felt threatened with extinction or major funding cuts. In fact, most opposed any restructuring of spatial data functions, and Interior Secretary Bruce Babbitt, chair of the FGDC, took all such options off the table before the broader spatial data community could respond to the report.

Since then the state of North Carolina and the American Society of Photogrammetry and Remote Sensing have endorsed the NAPA report, and other organizations are following suit. Meanwhile, the administration continues with its virtual government approach. The sponsoring agencies are still maintaining their program-focused and idiosyncratic methods for managing spatial data while cooperating at the margin through an FGDC that's insufficient for building the NSDI.

The United States has been surveyed and mapped in many ways. The visibility and glamour of the time-honored professions of collecting and maintaining spatial data have diminished. But the challenges of building and maintaining comprehensive inventories of these data are still with us. The frontier today involves the consolidation of data sources and full realization of opportunities a host of evolving technologies provide-mass communications and the Global Positioning System, to name but two.

Roger L. Sperry is a consultant in public management and was co-director of the National Academy of Public Administration study of geographic information.

]]>

Gold Rush

Roger L. Sperry — Sun, 01 Mar 1998 00:00:00 -0500

s soon as President Clinton announced earlier this year that he would submit a balanced budget for fiscal 1999, lawmakers and administration officials began talking of spending expected future surpluses on health care initiatives, new roads, tax cuts, and paying down the national debt. But if leaders of federal agencies and managers of government programs think they're going to see any of the money, they should think again.

Guaranteeing that the surpluses actually occur means that agencies will continue to operate under the strict limits on discretionary spending that they have lived with throughout the 1990s. Indeed, as soon as President Clinton announced he would balance the budget next year, Republican leaders tried to one-up him by suggesting rescissions in 1998 spending in order to reach balance by the end of this year.

At the same time, the public's demand for federal services and the backlog of investments needed to bring the government fully into the information age continue to grow. What are agencies to do? Increasingly, with the help of Congress, they are turning to sources of funding outside the regular appropriations process.

The General Accounting Office reported late last year that agency collections of user fees to fund operations have grown steadily since the early 1980s. Such fees amounted to about 12 percent of all federal revenues collected in fiscal 1996-more than twice the amount collected from excise taxes, estate and gift taxes, and customs duties combined. GAO's survey of 27 agencies that relied on fee revenues for 20 percent or more of their funding showed these agencies maintained or increased their reliance on fee income over a recent five-year period.

Several regulatory agencies have substantially increased their reliance on fees in recent years. For example:

The Federal Communications Commission received less than 1 percent of its budget authority from user fees in fiscal 1991, but such fees made up 73 percent of its funding by fiscal 1996.
In 1991, the Federal Trade Commission received 18 percent of its budget from user charges. After fee increases were instituted in 1993, this grew to 69 percent by 1996.
At the Securities and Exchange Commission, reliance on fees increased from 19 percent of the agency's budget in 1991 to 70 percent in 1996.
The Customs Service's reliance on fees increased from 41 percent of budget authority in 1991 to 71 percent in 1996.
The Agriculture Department's Animal and Plant Health Inspection Service received less than 9 percent of its budget in fees at the beginning of the decade, but relied on fees for 31 percent of its funding in 1996.

Other agencies that are not allowed to charge for their services have arranged to get all or part of their funding through special set-asides, extra-governmental funding sources such as foundations, and other creative financing schemes. In an era when both Democrats and Republicans have urged agencies to act more like private businesses, pay-as-you-go government is growing in popularity.

Tapping New Sources

The idea of charging users for the government services they receive has been around for a long time. Office of Management and Budget Circular A-25, issued in 1959, sets the policy for all federal activities that convey special benefits to recipients beyond those the general public receives. Its objectives are to ensure that such activities are self-sustaining, that the charges for services are equal to or greater than the costs of providing them, and that the private sector is able to compete with government in providing comparable services.

The government collects fees from a wide variety of sources, including the sale of postage stamps and electricity, admission fees to national parks, premiums for deposit insurance, and rents and royalties for the right to extract oil from the publicly owned Outer Continental Shelf. In fiscal 1997, OMB estimated total revenues, called "offsetting collections," at about $205 billion. About $57 billion of that came from postage stamp sales and other postal-related fees.

The Clinton administration is actively seeking to replace appropriations with user fees at a wide variety of agencies. As agency leaders prepared their fiscal 1999 budget proposals, OMB Director Franklin Raines sent them a memo encouraging them to pay for new initiatives by charging user fees instead of requesting bigger budgets.

Agencies responded with $22.9 billion in proposed new fees from 1999 to 2003. USDA's Food Safety and Inspection Service is proposing to charge meat, poultry and egg processors fees to cover all the direct costs of in-plant inspections. The Health Care Financing Administration wants to charge health-care providers seeking to participate in Medicare an enrollment fee and a subsequent renewal fee every five years. And the Coast Guard plans to make commercial cargo carriers pay for navigational assistance.

If recent history is a guide, Congress will approve many of these proposals. Last year, several fee hikes were included in the deficit reduction package passed in July, and others made their way into individual appropriations acts.

The idea of basing budgets at least partly on fees has won bipartisan support because it means that the cost of programs is borne mostly by the people who actually benefit from them. Forcing federal agencies to rely on fees also gives them a bottom line to manage and an incentive to hold costs down.

At the same time, the growing use of alternative funding sources raises several questions. What costs should be considered in setting fees? Is Congress willing to give agencies sufficient leeway in managing funds that come from fees or other alternative funding sources? Should appropriations committees on Capitol Hill be left out of the loop in funding important federal initiatives?

Recent experiences with setting fees for immigration-related services and launching an initiative to fight health-care fraud show how Congress, the Clinton administration and federal managers are dealing with these issues.

Cost of Immigration

The INS is required by law to charge fees for certain immigration adjudication and naturalization services. These fees, established in 1968, initially were deposited in the general fund of the Treasury, and Congress appropriated the money to pay for immigration services. The fees charged by INS were based on the average amount of time an INS employee needed to adjudicate an application. Other costs, such as those for records management and support services, were not considered in setting the fees.

Congress changed the ground rules in 1986, authorizing INS to collect fees covering the full costs of providing some of its services. More important, it allowed INS to retain the revenue to finance these services, thus eliminating the need for appropriated funds. Appropriations committees benefited by no longer having to count these costs toward their budget allocations, and INS was given more flexibility in administering its programs.

Now, every major INS program except the Border Patrol receives some funding from the fee accounts. Two years ago, when Congress and President Clinton reached an impasse on the budget and the government was shut down, INS employees funded by user fees continued on the job while colleagues whose salaries were paid from appropriated funds stayed home.

Before 1986, all of the agency's operations were funded from a single appropriations account. Since then, Congress has repeatedly added new accounts, resulting in literally thousands of agency funding allocations. A 1996 National Academy of Public Administration report concluded that INS field managers had trouble running their operations because Congress had carved the agency's budget into so many micro-categories.

Another problem is setting the fees themselves. On several occasions INS has been forced to seek substantial increases in fees when the number of immigrant applications grew much faster than anticipated.

In 1989, when Congress mandated that INS fees "more nearly reflect the current cost of providing the benefits," the agency increased the fee for an alien registration receipt card from $15 to $35. Two years later, fees were increased again by as much as 100 percent for several applications. In 1994, the INS revised its fee schedule yet again, but this time by much smaller amounts. It also recognized the need to improve the management of its fee accounts and the methods by which fee schedules were developed.

In 1995, the INS formed a study team and hired consultants to develop a more consistent and reliable cost accounting methodology. Congress added further complexity by transferring the costs of refugee and asylum applications and investigations, as well as resettlement programs funded by the INS, from appropriated funds to a fee account. This marked the first time that fees for processing certain INS benefits were used to cover the costs of other benefits for which fees are not charged.

The study team adopted an "activity-based costing" methodology designed to more accurately estimate the costs of providing immigration benefits. The result was better accounting practices but also another proposal for dramatically higher fees for certain types of applications. When the study results were first aired last August, immigrant constituent groups strongly opposed the idea of further large increases.

Nevertheless, in January, INS Commissioner Doris Meissner announced the agency was officially proposing to raise 30 different fees. Under the proposal, the cost of applying to become a citizen would rise from $95 to $225. The fee for becoming a legal resident would jump from $130 to $220. Replacing a green card would cost $110 instead of $75, and the fee for a work permit would rise from $70 to $100.

"INS is in a Catch-22 situation," Meissner said. "We want to improve our services, and we know our customers deserve better service, but in order to get there, we have to charge what it costs."

Meissner said INS would not implement the increases until:

The agency's case backlog begins to subside and applicant waiting time is reduced. Some applications now take an average of two years to process.
INS implements uniform use of a process by which applications are sent directly to the agency's service centers, so that district offices can focus on conducting interviews.
New software is installed to ensure consistency in processing naturalization applications.

INS expects to meet these goals by late spring.

The broad use of fee-based services clearly adds to the administrative complexity of managing the INS. But NAPA argued in its 1996 report that the advantages of a funding source that is not subject to the normal limits on discretionary accounts are so great that the difficulties pale in comparison. The core problem with the fee accounts-as in managing other INS activities-is inspiring a level of trust in Congress that will allow the agency to receive sufficient flexibility to manage its funds.

Fighting Health Fraud

Even for operations that are not fee-based, Congress has shown an inclination recently to approve new funding mechanisms.

One such effort is the fight against fraud and waste in the Medicare and Medicaid programs. With costs for these two programs growing rapidly to about $180 billion per year, even a small percentage of claims incorrectly or inappropriately paid represents a large drain on both federal and state treasuries.

But until recently, funding for government investigations of health-care fraud had not kept pace with the growth of the government's health programs. According to one congressional estimate, Medicare spent 30 percent less per claim on fraud and abuse activities in 1996 than in 1989, despite strong evidence that illegal activities were on the rise. The inspector general at the Department of Health and Human Services actually was forced to close field offices in recent years due to funding limitations.

In 1995, the Clinton administration launched Operation Restore Trust, a comprehensive initiative designed to test several innovations in fighting health fraud. The HHS IG, the Health Care Financing Administration and the HHS Administration on Aging were the principal partners.

Congress found a novel way to fund the effort. In the 1996 Health Insurance Portability and Accountability Act, lawmakers set up a Health Care Fraud and Abuse Control Account, administered jointly by the HHS secretary and the attorney general.

Money that had flowed into the general fund of the Treasury from criminal fines, civil penalties, fines and forfeitures related to health fraud was redirected to the Medicare Part A Trust Fund. The law appropriated money from the fund to the newly created control account to pay for anti-fraud and abuse efforts at HHS, the Justice Department, and state and local agencies.

So far, the results have been impressive. According to HHS IG June Gibbs Brown, total fines, penalties, restitutions and settlements totaled $1.2 billion in 1997, five times the comparable figure for 1996 and three times greater than the previous record for recoveries. Criminal and civil prosecutions in 1997 were double those of the previous year and three times higher than the year before that. And the total cost of the anti-fraud effort is less than $200 million per year.

In fiscal 1997, Brown received a $61 million increase in funding as a result of the program, enabling her to open six additional field offices and increase staffing for health- care fraud and abuse control by 20 percent. Six more field offices are scheduled to open this year and staff is expected to double by the year 2000-all without increases in annual appropriations.

The law creating the innovative effort originated in the House Ways and Means Committee, which acted like the Appropriations Committee by mandating spending from the trust fund. By the time the Appropriations Committee staff found out, it was too late to lodge a protest. The committee was essentially "asleep at the switch," one of its staffers says.

The results of the health-care fraud-fighting effort show how an assured source of increased funding and better program coordination can pay handsome dividends. But Congress-especially the appropriations committees-must agree to less control in funding new initiatives.

A Growing Trend

The trend toward user fees and other funding mechanisms outside traditional appropriations is likely to continue because of a bipartisan belief that such revenues can lead to better service in an era of spending constraints. But several issues continue to be problematic.

One is the question of how fees are categorized-whether they go to the Treasury or to offset program costs. This question has become increasingly important since the 1990 Budget Enforcement Act set spending caps for federal agencies.

In some cases, fees are counted against program budget authority and outlays, and additional spending enabled by higher fee revenues does not count against discretionary spending caps. But programs whose fee revenues go to the Treasury's general fund have such revenues counted against the caps, making it harder to get funding increases.

One congressional staffer is trying to get approval for a new category of spending he calls "money makers," that is, programs in which an additional dollar of spending results in more than a dollar of savings or collections. To the extent such savings are scored by the Congressional Budget Office as revenue offsetting appropriations, they would not count against discretionary caps.

Another problem with innovative funding efforts is opposition from appropriators who object to losing control over program funding. Some agencies now are cutting deals that allow them to generate revenue while appropriators retain funding control. For example, HHS operates a Medicare "choice-plus" program with appropriated funds, but it is authorized to collect fees from program beneficiaries to offset appropriated funds.

If President Clinton and Congress balance the budget and the economy continues to grow, there may come a time when agencies are freed from discretionary spending caps. Then some of the pressure to tap novel revenues sources will ease. But until that time, user fees and other independent revenue sources are likely to remain attractive to besieged program managers and congressional appropriators alike.

Roger L. Sperry is a consultant in public management and former director of management studies for the National Academy of Public Administration.

]]>

Reinvention: An Assessment

Roger L. Sperry — Fri, 01 Nov 1996 00:00:00 -0500

he Clinton Administration's three-and-a-half year effort to reform government management has seen Vice President Gore devote countless hours to his National Performance Review. Laws reforming procurement, information technology management and performance measurement have been passed. Federal workers have pushed the limits of reform in "reinvention laboratories." Now, as a new presidential term approaches, it's fair to ask what has been accomplished, how enduring the changes will be and what's ahead in the effort to make government work better and cost less.

Clinton made little of his government reform efforts during his reelection campaign this fall. Making government work better is at the bottom of the Clinton achievements listed on the White House Web site (www.whitehouse.gov). Even here, the President only touts cutting 240,000 federal jobs, eliminating unnecessary regulations and $58 billion saved by cutting "wasteful government practices and spending." There's no word about reforms to improve government's performance. Even the Democratic platform promises only to "make responsibility the rule in Washington." The means: "cutting bureaucracy further, demanding better performance, holding people and agencies accountable for producing best results." How can this be done? Stay tuned.

Yet among Clinton Administration officials, enthusiasm for improving government management appears unflagging. "More legislation has passed in the last three years affecting management than in recent administrations," Office of Management and Budget Deputy Director John Koskinen boasts.

Strong leadership is essential to sustain reform and Gore's NPR has provided it in many areas. But some observers have taken NPR to task for treading lightly over sensitive issues, such as the number and quality of presidential appointees and the political-career interface. Koskinen believes there is significant work to be done in understanding and improving how people actually manage the large and complex organizations in government. "Leadership and management are synonymous," he says. Koskinen acknowledges that political appointees generally are brought into leadership positions because of their policy experience, not their management skills. One of the Administration's goals, he says, is to have candidates for deputy secretary posts assessed in terms of management background. "Agencies will be under continued financial pressure," Koskinen says. "There, management counts."

NPR issued a report, "Creating Quality Leadership and Management," which recommended that the Administration designate agency chief operating officers, establish a President's Management Council and conduct periodic performance reviews of agencies. All the proposals have been or are being implemented. Other recommendations on quality management and strengthening the corps of senior leaders are not as far along.

Controlled Chaos

Koskinen cites the Administration's use of the President's Management Council as an example of leadership improvement. This council is chaired by Koskinen and composed of deputy secretaries or equivalent-level officials who are charged by executive order with policy-making and coordination of governmentwide reform initiatives such as customer service improvement, streamlining and civil service reform. Acknowledging the group has not reached its full potential, Koskinen nonetheless believes it has served a valuable function in allowing the deputy secretaries to come together to talk about problems of common interest. "They can initiate programs having governmentwide significance and can provide continuity of execution," he says. The group played a major role in the decision to offer federal employees buyouts of up to $25,000.

At last fall's annual meeting of the National Academy of Public Administration, five deputy secretaries serving on the council described the practical challenges they have faced. These included maintaining a focus on performance, adjusting to changing missions, and coping with deep reductions in staff and resources.

Labor Department Deputy Secretary Thomas Glynn described his organization's difficulties adjusting to restructuring. "The first two years of the Clinton Administration were like a hurricane," he said. "At least you could do what they told you and there would be damage, but by and large you could survive. Reforms coming out of this Congress, however, have been like a tornado-random and very difficult to plan for."

Koskinen is more sanguine about the Administration's relations with Congress, asserting that there is political consensus on about 80 percent to 90 percent of what government does. What's important is finding ways to hold people accountable, Koskinen says. He thinks the 1993 Government Performance and Results Act will help. "A high-performing program will not necessarily get more money and low-performing programs will not necessarily disappear, but performance will become part of the dialogue."

Agency officials, he says, must focus on how the performance-based approach will make their operations more effective program by program. Performance measurement cannot be set off in a corner apart from core agency operations, he says, adding that "the worst thing that can happen is for special GPRA bureaucracies" to spring up in the agencies.

The Administration also has proposed creating performance-based organizations (PBOs) to provide greater autonomy and flexibility to business-type operations in government. OMB is developing a base set of concepts for the new organizations. Although some PBO features-procurement flexibility, for example-are generally accepted, new personnel practices and the capability to hire a chief executive under a performance contract for a fixed term, a higher salary and potential bonus, pose major challenges. Congress did not pass legislation creating PBOs this year, and Koskinen acknowledges that legislators are going to want a closer look at each proposal to create such an organization.

High Expectations

High on the Administration's agenda, Koskinen says, is fundamentally rethinking the way government manages its workforce, including communication between supervisors and employees. "We tend to look at this in terms of poor performers," he says. "This is useful to get people's attention, but the key question is what generates poor performers in the first place." Because the personnel system is poorly designed, he says, people are forced into formal processes to appeal adverse rulings or actions. Koskinen says the situation cannot be fixed through legislative remedies alone.

The Clinton Administration has thus far focused its workforce management efforts on top officials. To forge a common set of performance expectations between Cabinet secretaries and the President, the White House has experimented with a series of agreements setting out goals and performance measures. For example, Labor Secretary Robert Reich was tasked with "preparing all Americans for good jobs, easing the transition of workers from job to job, creating high-performance American workplaces and reinventing the Department of Labor." Each goal included objectives and performance measures.

These agreements worked well at Labor and in some other departments, Koskinen says. But he acknowledges that some secretaries, especially those in the "inner Cabinet" (Defense, State, Justice and Treasury) did not adopt the agreements. Koskinen believes such agreements fold neatly into the GPRA framework, which requires every agency to have a strategic plan and annual performance plan focusing on its mission. The goal is to roll these up into a governmentwide plan which will result in performance agreements between the President and Cabinet secretaries.

But the prospects for achieving performance-based government are limited. It will be an enormous challenge to build and keep a complex matrix of personal and organizational goals and measures intact over a long enough period to enable any legitimate assessments of performance.

More Than Moving Boxes

During the 104th Congress, there was much talk of restructuring government by abolishing Cabinet departments, privatizing programs and even establishing a bipartisan commission-much like the Hoover commission a half century ago-to develop a new government organization chart. The talk was principally from Republicans, who had gained a majority in both the House and Senate in 1994.

Democrats weren't much interested, though the Clinton Administration did ask three Cabinet departments and two independent agencies to justify their existence during meetings in December 1994. Downsizing and restructuring were ordered up at the departments of Energy, Housing and Urban Development and Transportation, and at the General Services Administration and the Office of Personnel Management. At HUD, the number of employees was set at 7,500 by the turn of the century, down from about 12,000. The goal is still in place. At Transportation, several operating administrations were to be merged into three, but Congress didn't buy the proposal.

Koskinen is impatient with meat-ax restructuring and consolidation proposals. "Organization problems are more subtle than just abolishing the Commerce Department," he says. He prefers to concentrate on consolidating and coordinating programs serving similar constituencies.

But there can be little doubt that pressure for consolidations will continue, as government continues to react to tight budgets, the end of the Cold War and the cascading information revolution. To the extent that the Republican Party retains or enhances its power in Washington, the current structure of government will remain a prime target of attack.

With a new set of precepts focusing on customer service, decentralization, innovation and empowerment, the Clinton Administration set out to reinvent government from the bottom up. With reinvention labs, Hammer Awards and a team of federal employees in the vanguard, the National Performance Review delivered the message across government: Innovation was in, middle management and overhead positions were out, customers (however defined) were important and budgets were coming down.

Yet, the NPR initiatives are fragile, since there is no institution established by law to carry on the program. Without changes in law beyond those already enacted, there is little to embed reforms in the day-to-day practice of government.

Leading and managing government in the next presidential term will be no less challenging than during the last four years.

There will be more reliance on information technology and new opportunities to streamline and eliminate middle management will occur as a result. Performance-driven government will gradually gain hold, as additional features of GPRA kick in. We may actually approach an era where performance measurement does play a meaningful role in budget decisions and employees' assessments. Thus reinvention will continue its slow but steady pace, and government will continue to improve. But there will be plenty left to reform after the champagne is uncorked at the dawn of the third millennium.

]]>

Diplomatic Disorder

Roger L. Sperry — Mon, 01 Jul 1996 00:00:00 -0400

July 1996

FOREIGN AFFAIRS

Diplomatic Disorder

The urge to merge America's international agencies is forcing them to look for ways to work together like never before.

ere is the dilemma facing America's foreign affairs agencies: On one side is Sen. Jesse Helms, chairman of the Senate Foreign Relations Committee, who has been on a quest since the 1994 Republican takeover of Congress to downsize, consolidate and reorganize the foreign affairs apparatus. On the other side is the Clinton Administration, whose Secretary of State, Warren Christopher, has floated a consolidation plan of his own. Though the President resisted Christopher's plan, Clinton nevertheless has bragged that his effort to reinvent international operations "has allowed us to reduce funding significantly, eliminate positions and close embassies, consulates and other posts overseas."

Even before the Republicans convened the 104th Congress after the 1994 elections, rumblings stirred in the White House, at the State Department and on Capitol Hill about major changes in the four foreign affairs agencies-State, the Agency for International Development (AID), the Arms Control and Disarmament Agency (ACDA), and the United States Information Agency (USIA). Administration officials pushed their reinvention effort into a new phase that promised not only better government, but less of it. Rumors quickly circulated about plans to abolish whole Cabinet departments. Inside State, senior officials began to plan for merging the foreign affairs agencies.

In late 1994, Christopher proposed merging the other foreign affairs agencies into the State Department. The idea sparked a heated debate within the Administration. In January 1995, Vice President Gore announced steps to streamline foreign affairs operations and eliminate "unnecessary and duplicative practices," but he rejected the idea of a major consolidation.

Helms could barely conceal his glee at the division within the Administration. In a February 1995 op-ed piece in The Washington Post, Helms wrote, "It is my intent to support Secretary Christopher against the bureaucrats who feel threatened by this long-overdue reorganization of Foggy Bottom." On the House side, Speaker Newt Gingrich also supported consolidation, and two bills-HR 1561 and S 908-were drafted to spark action.

Helms shut down his committee for almost four months to force the Senate to take action on the idea of reorganizing the foreign affairs agencies. He stalled numerous AID assistance projects to gain leverage over the Administration. Then Helms and his counterpart in the House, Rep. Benjamin Gilman, R-NY, crafted an almost Machiavellian plan. Earlier this year, they inserted language in the State Department authorization bill requiring Clinton to eliminate at least one of the agencies, but forcing him to choose which one. If he failed to do so, all four agencies would be combined. The bill also cut the total foreign affairs budget by some $1.7 billion.

The bill finally reached the President's desk in April. Clinton promptly vetoed it, saying it would "seriously impede the President's authority to organize and administer foreign affairs agencies to best serve the nation's interests and the Administration's foreign policy priorities."

The fight to reorganize the foreign affairs apparatus, however, is far from over. And Clinton and Helms agree on one thing: America's international operations are in need of a serious overhaul. At the very least, the foreign affairs agencies need to learn to work together like never before.

Creaky Apparatus

The State Department dates back to the beginning of the republic, and its Secretary is the most senior Cabinet official, standing fourth in line of succession to the presidency. The department is officially charged with maintaining diplomatic relations with about 180 countries and numerous international organizations. State maintains more than 250 diplomatic and counselor posts around the world, and ambassadors reporting to the Secretary of State head "country teams" composed of numerous employees from other federal agencies. The department's own personnel are well-educated generalists whose work falls in four broad categories: political, economic, consular and administrative.

Over the years, foreign affairs activities deemed too specialized for State, such as foreign aid and arms control, have been spun off or turned over to new agencies. USIA for example, was created by President Eisenhower in 1953 to streamline overseas information programs and make them more effective. AID was established by President Kennedy in 1961 to administer economic aid programs that had evolved from the Marshall Plan and other development assistance initiatives following World War II. The Arms Control and Disarmament Agency was established that same year to deal with the spread of nuclear weapons.

Other parts of State have been transferred to other agencies. The Foreign Commercial Service, for example, was moved to the Commerce Department in the 1970s.

In addition, more than 50 other agencies outside the State Department are actively involved overseas. Four other departments-Agriculture, Commerce, Defense and Justice-have extensive operations abroad, and the intelligence agencies exercise enormous influence around the world. Still other, smaller agencies, such as the Peace Corps, the Export-Import Bank, the Overseas Private Investment Corp. and the Institute for Peace, play specialized roles. Some of these latter agencies also have come under attack by the Republican majority in Congress.

Despite the end of the Cold War, the onset of the information revolution, the emergence of a global economy, and the downsizing of government, the foreign affairs apparatus has remained basically unchanged for the last three decades. A recent report by the Cato Institute, a Washington think tank, concluded that "although the United States is gradually reducing the size of its foreign policy establishment in response to congressional budget pressures, the changes are mostly quantitative . . . . There is little evidence that the nature or value of the activities [the] establishment is engaged in has received serious examination."

Cultural Issues

It is precisely the nature of international activities that has opponents of consolidating or merging the foreign affairs agencies so concerned.

Harold Seidman, a guest scholar at Johns Hopkins University who was at the Bureau of the Budget in the late 1940s, remembers that when the first foreign aid programs were established under the Marshall Plan, an independent commission recommended administering them under an autonomous business-like organization. The commission wanted the new organization to be separate from the State Department, Seidman says, because of State's reputation as "a bunch of tea-drinking cookie-pushers in striped pants." In his trips overseas to monitor the Marshall Plan, Seidman found that State officers only wanted to talk to their counterparts in the foreign ministry, and didn't want to deal with the commerce ministry-a necessity for the plan to be effective in fostering economic recovery.

Seidman also says that while State's foreign service officers strove to "be someone," officials from other foreign affairs agencies wanted to "do something." Seidman noted that the foreign service is an "up or out" system which creates competition among officers. "You don't get teamwork," he says.

AID Administrator Brian Atwood agrees. "State Department people are good observers, reporters, diplomats, and conceptual policy people," he says. "But they're not good at managing resources or programs. This is what AID does. All of our reforms are aimed at making AID good at what it does, and moving AID into State would not contribute to that goal."

Undersecretary of State for Management Richard Moose says such characterizations of the department are unfair. A State Department review found customers and stakeholders viewed the department as having broad country and area knowledge and being adept at country-level integration of programs. Moose admits that State needs to better link program priorities to resources, but he argues that a new strategic review and planning process will help.

Alan Mendelowitz, executive vice president of the Export-Import Bank, says there are two kinds of foreign policy: "high policy," which involves diplomacy and reporting, and "low policy," which includes promoting exports and selling U.S. goods. After World War II, State got out of the low policy business by spinning off the Foreign Agricultural Service and the Foreign Export Service. But then, Mendelowitz notes, two factors combined to dampen some of the luster of high policy. First, with the end of the Cold War, U.S. priorities shifted from diplomacy to economics-specifically, the opening of foreign markets. Second, modern telecommunications brought an end to traditional foreign policy. Officials in other countries no longer were dependent on U.S. ambassadors and their staffs; they could send a fax or e-mail to anyone in the United States with comparable equipment.

So State now wants back into the low policy business. In congressional testimony on proposals to merge the foreign affairs agencies last year, Moose described how the department planned to take the lead in coordinating the work of those agencies. "From top-level policy coordination with the heads of AID, USIA and ACDA," he said, "to the desk officer who relies on inter-bureau and inter-agency country teams to manage relations, teamwork will sharpen our policy development and reduce bureaucratic red tape."

Cuts and Closures

Such teamwork must occur on two levels: in Washington and at overseas posts. Atwood says that cross-agency coordination works well overseas, where strategies in individual countries are fairly coherent. "The problem," he says, "is in Washington, where turf is more important because of resource considerations."

But it is precisely those resource considerations that are now forcing the heads of the foreign affairs agencies to work more closely together. At the same time Vice President Gore advised Congress that he would not be recommending consolidating the four foreign affairs agencies, he instructed the heads of those agencies to "establish common administrative services, eliminate unnecessary and duplicative practices, and use the private sector and competition to cut costs."

Gore announced that AID would close six additional missions beyond the 21 it had already slated for closure, would cut its internal regulations by 50 percent, and would reengineer its management systems. AID assistant administrator Larry Byrne says the agency has now cut its staff by 18 percent (from over 11,000 to less than 9,000) and eliminated 25 percent of top management posts.

At the State Department, Christopher announced a "strategic management initiative" in 1994 to accelerate reinvention efforts. Gore announced that in addition to the already announced closure of 17 overseas posts, 15 more would close. He also said State would eliminate at least one of its bureaus and downsize its public affairs, congressional relations, political-military affairs and policy planning components.

On Capitol Hill, the Appropriations Committees joined the parade. A Senate Appropriations subcommittee cut ACDA's fiscal 1996 budget by 70 percent below the Administration's request and 58 percent below its 1995 spending level. Overall, the congressional budget resolution passed last year provided $18.1 billion for foreign affairs operations, down from $20.1 billion the previous year. By the year 2000, foreign affairs spending under the resolution would be down to less than $15 billion a year.

The Policy-Budget Link

The budget process itself may provide a way to better coordinate the activities of the foreign affairs agencies.

State 2000, a 1992 report prepared by a task force of career State Department officers, recommended a stronger link between policy and budget in foreign affairs. "For the foreseeable future, resources will be constrained," the report concluded. "The President should make clear that all available resources in the federal budget which are designated for major foreign affairs programs will henceforth be integrated into an overall national strategy. We can no longer afford a budget process that results in duplication or programs that work at cross purposes."

As a result of the State 2000 report, President Clinton issued an executive order requiring the Secretary of State to coordinate the foreign affairs budget accounts. The order also established an Office of Resource Plans and Policy in the State Department. In addition, the Clinton team drafted the "Peace, Prosperity and Democracy Act" to update and overhaul the 1961 Foreign Assistance Act and foster sustainable development. Rather than linking foreign assistance funds to specific countries and programs, the bill would have linked resources to four policy objectives: encouraging broad-based economic growth; protecting the environment; supporting democratic participation; and stabilizing world population growth. Congress never enacted the bill, and any hope for it died with the Republican takeover of Congress.

While the link between goals and resources is weaker than prescribed by the State 2000 task force and the administration's draft legislation, State is getting better at tying funding to specific objectives. For example, the Office of Resource Plans and Policy has coordinated the allocation of resources for specific activities such as in Bosnia, by helping to determine how much funding from supplemental appropriations goes to specific agencies such as AID.

Foreign affairs agencies could better coordinate their activities by improving their use of information technology. Each agency now has its own stand-alone information system. For example, all of AID's employees around the world can now communicate with each other via e-mail, but the system is not linked to the State Department.

Security concerns have made it difficult to link the agencies together electronically. AID and USIA operate largely in an unclassified environment, so they can take advantage of the Internet and other unclassified networks. However, much of State's communications are classified, so its employees need secure networks similar to those used by the Defense Department and the intelligence agencies. In fact, State wants to take advantage of the technology used to create the Defense Messaging System, a secure network under construction at DoD.

But such a system won't be in place at State until at least 2010, according to Harry Geisel, the department's acting head of information technology-and that's only if State gets $60 million to $100 million per year in modernization funding. For fiscal 1996, the department requested $30 million and received $16 million.

Moose says he hopes that the Office of Management and Budget, the General Services Administration and the National Performance Review will push the other foreign affairs agencies to follow DMS standards. But with all the foreign affairs agencies being squeezed by budget constraints, it seems unlikely there will be a seamless web of communications among foreign affairs agencies in the foreseeable future.

Moose says State's basic mission is to collect, process and deliver information. In the 1970s, the department led the government with its automated worldwide information system. But it largely missed out on the personal computer revolution. And now the instantaneous flows of information over the Internet and via television networks are challenging traditional methods of gathering and reporting information. As one senior AID official says, "CNN is a better reporter than most State Department personnel. State needs to change the way it looks at information-what it gets and what it sends back."

Part of the problem may be an aversion on the part of foreign affairs employees-especially at the senior levels-to keep up with the latest technological trends. The Foreign Affairs Institute has tried to compensate by offering courses on technology.

Administrative Services

Even if the employees of the foreign affairs agencies won't be exchanging e-mail any time soon, they may be able to work together to procure administrative services at overseas posts. Such services cost about $600 million annually.

The State Department has for years provided a range of services-personnel, accounting, and security, for example-to all federal agencies operating overseas. State absorbed some of the costs and charged others to the agencies.

The problem with this system was that it was complex and didn't let the users know the actual cost of services. As a result, agencies perceived inequities in how costs and funds were distributed and whose priorities were being met. AID's Byrne says his agency's career employees "think State takes the money and runs; the ambassador's swimming pool gets priority over an AID employee's plumbing problem." State officials, on the other hand, were irked that they were being asked to absorb more costs, due to the growth in the number of non-State personnel overseas, at a time when State's budget was staying flat or declining.

To deal with these problems, a multi-agency working group led by USIA developed the International Cooperative Administrative Support System (ICASS), based on the Cooperative Administrative Support Unit program in place domestically. ICASS pilot tests are now under way in Rome, Riga, Warsaw, and San Salvador. State is planning worldwide implementation late this year.

Agencies will be charged full cost for common services supervised by multi-agency ICASS boards. Agencies other than State will need to provide an additional $120 million annually to fund the system. They will have the option of selecting services from ICASS or contracting for services from local providers.

The Politics of Consolidation

Over the last 50 years, there have been numerous efforts to fundamentally reorganize government systems like the foreign affairs apparatus. The vast majority have been unsuccessful. Moving the boxes on an organizational chart is now routinely denigrated as a waste of time and a diversion from important policy issues. Most recent presidents, including the current incumbent, have assiduously avoided such reorganizations.

As to the merits of consolidation, most people interviewed for this article were open to at least some restructuring and many believed it was all but inevitable. Helms is quick to note that five former secretaries of state (all Republicans) support reorganization. Their support, though, goes beyond mere partisan cheerleading for cutting back government.

Former secretary of State Lawrence Eagleburger and former national security advisor Brent Scowcroft presented a rationale for consolidation in congressional testimony last year. No one can deny, they argued, that there has been a proliferation of foreign affairs agencies and functions over the years. One result has been growing inefficiencies and increasingly wasteful duplication. But even more important, much of the growth occurred in response to security-related concerns which have since diminished or disappeared. So we are now encumbered by a plethora of programs which no longer are tied to, or clearly serve, U.S. national interests.

Even AID's Atwood, a staunch defender of his agency's independence, says the government "could not stand pat" on the issue of consolidating agencies and programs. An independent commission to look at the future of foreign affairs, operating after this fall's elections, may be necessary, he says.

Such a commission could provide a needed forum for broad debate on future goals and strategies for American foreign policy. When the late Sen. William Fulbright, D-Ark., headed it, the Senate Foreign Relations Committee performed that function, notes Mendelowitz. "Now there is no place on Capitol Hill where such debates can occur," he says. How, he asks, can the organization of foreign affairs agencies be devised without at least a modest national consensus on the missions and functions of foreign policy?

The final chapter of this story has yet to be written. Even after the President's veto of the authorization bill that would have forced consolidation, Helms was determined to press on.

"Those on the federal payroll at AID, ACDA and USIA might wisely defer popping the champagne corks," he said. "Their agencies have been given only a stay of execution. It is only a matter of time before these fiefdoms are eliminated."

]]>

Saving Energy

Roger L. Sperry — Mon, 01 Jan 1996 00:00:00 -0500

n the tumultuous first act of the Republican revolution, Congress may have featured its balanced-budget drive in the center ring, but a major sideshow was the freshmen-led effort to shrink government by eliminating four Cabinet departments.

The annals of government reorganization will record only that the Commerce Department was seriously threatened in 1995. But historians will also conclude that the Republicans' drive to cut government had a major impact on other targeted agencies, including the Energy Department, which took the ax to its own programs and staff as it struggled to avoid a grimmer fate.

Last year's debate about these and other agencies began to persuade lawmakers that a wholesale reorganization of federal responsibilities may be worth pursuing, even in light of failed reorganization efforts in the past. Legislation to establish a commission to issue recommendations on how to restructure the executive branch may be enacted, with recommendations ticketed for consideration in the 105th Congress.

The Energy Department's near-death experience in 1995 shed light on the difficulties involved in abolishing any large agency and redistributing functions that must continue. It also illuminated the need to rationalize Energy's missions and organization. DOE succeeded in stiff-arming the abolitionists for now, but at the same time it has brought into focus questions about its essential purpose and how long it should survive in its present form.

The department instituted significant internal reforms to streamline program administration and make its huge contractor operations more performance-driven. Its combative and articulate secretary, Hazel O'Leary, challenged her department's detractors with one initiative after another to demonstrate that change was possible within the current framework.

Nevertheless, the department has been a quiet casualty of the Cold War's end. The nuclear weapons program, which was once DOE's centerpiece and the glue that held together its vast network of field operations, is a virtual shadow of its former self. Instead of weapons development and manufacture, the program now focuses on "stockpile maintenance" and the massive cleanup of former production operations. Two-thirds of the department's funding still goes to weapons program-related tasks, but the urgency of this mission has disappeared like air rushing from a balloon.

Memories of long lines at gas stations during the 1970s oil embargoes have also faded, and the once all-powerful Organization of Oil Exporting Countries (OPEC) is no longer seen by consumers as a major economic threat. The American public's disillusionment with government and its perceived incompetence in allocating fuel supplies in times of crisis largely undercut one of the department's major original missions of planning and managing national energy reserves.

Target for Abolition

The Energy Department was one of four cabinet departments selected by a group of House Republican freshmen for abolition a month after the 1994 election. Flushed with their victory at the polls, the freshmen wanted to demonstrate by specific and bold actions that government could be made smaller and less intrusive for the average citizen. What better device than eliminating whole departments?

Initial sketches of their plans were made public in February 1995. A month later, Senate Majority Leader Robert Dole, R-Kan., endorsed elimination of the four departments. Then, on June 30, Rep. Todd Tiahrt, with nearly 50 of his colleagues as co-sponsors, introduced HR 1993, the "Department of Energy Abolishment Act." Tiahrt, who dealt with public utilities issues as a member of the Kansas legislature, believed that re-evaluating the Energy Department's roles was not enough; many functions needed to be eliminated, managed better by other departments or transferred to the private sector.

The Heritage Foundation and Cato Institute weighed in with reports supporting wholesale contracting out of Cabinet responsibilities and dramatic outsourcing of DOE's programs and facilities.

Heritage characterized Energy as a department in search of a mission: "Despite the lack of a purpose, DOE has grown in tax dollars spent and functions performed-the result of 15 years of searching for something to do." The foundation also criticized the department's inefficiency, citing problems with the Environmental Management Program. The General Accounting Office has estimated that over 30 years, potential losses in the program could total more than $70 billion.

In July testimony before the Senate Committee on Energy and Natural Resources, Cato's Jerry Taylor advocated abolishing the department; creating an independent National Nuclear Weapons Agency; privatizing DOE's national laboratories; selling assets of the power marketing administrations, the Strategic Petroleum Reserve, the Naval Petroleum Reserves and all oil shale reserves; eliminating energy conservation and renewable fuel subsidies; and canceling several other programs, including research and development. Annual savings, according to Taylor's "back-of-the-envelope calculation," would be about $10 billion.

Tiahrt's bill would accomplish most of this agenda. However, instead of creating an independent agency to manage the nuclear weapons program, the bill would transfer it to the Defense Department (a move strongly opposed by Defense Secretary William Perry) and establish a commission to evaluate the DOE national labs and research programs. The department would be redesignated the "Energy Programs Resolution Agency," which would wind up the department's affairs during a three-year termination period.

Anticipating those bold moves, the administration weighed in with a plan hurriedly constructed in December 1994 to significantly downsize DOE and four other federal organizations. Deputy Energy Secretary William White promised budget cuts of "at least $10.5 billion" from existing levels of funding. Change was already under way, he noted, through eliminating layers of middle management, reducing internal regulations and "historic changes" in DOE contracting practices to promote competition and better contractor performance. However, the specifics of what turned out to be a budget savings mandate of $14 billion over five years came later.

Shifting Missions

Of all the departments created in the 20th century, perhaps none has seen more change in its environment and raison d'etre than has the Energy Department in its relatively brief 18 years of existence. Its roots can be traced to the World War II Manhattan Project to develop the atomic bomb and to the decision in 1946 to place atomic energy under civilian control. For 30 years, the Atomic Energy Commission developed and built a huge stockpile of nuclear warheads for the Defense Department, and it helped create a civilian reactor program with dozens of nuclear power plants developed and owned by the nation's electric utilities.

With the OPEC oil embargo in 1973, the nation came to realize it had a larger problem than could be solved by nuclear energy alone. And nuclear energy itself was under attack, as environmentalists were increasingly raising health and safety questions about nuclear power plants, even raising the specter of a catastrophic nuclear plant meltdown. The accident and subsequent shutdown at the Three Mile Island plant in Pennsylvania in 1979 reinforced such fears.

Government began to broaden its energy focus during the Nixon Administration, says James R. Schlesinger, who was chairman of the AEC at the time and later became the first secretary of energy. President Nixon agreed in 1972 that the federal research focus on nuclear energy needed to change. Following the oil embargo a year later, the Federal Energy Office was created.

The Ford Administration was the first to consider forming a Department of Energy, and President Carter's plan, which served as the basis for congressional action, was heavily based on the Ford blueprint, Schlesinger says. Then-Sen. Henry M. Jackson, D-Wash., a powerful force in Congress on energy and defense matters, wanted to create a department of energy and natural resources which would include environmental programs. But Carter resisted this idea because he thought the President, not a Cabinet secretary, should decide on trade-offs between energy and the environment.

DOE was established in 1977 by Public Law 95-91, probably the longest and most complex organic statute for any federal department. The tensions between competing forces were reflected in a statement of purpose: The department was to coordinate energy policies in ways which promoted "maximum possible energy conservation measures." A "balanced and comprehensive" energy research and development program was to include requirements assessment, priority setting and program implementation for "optimal development of the various forms of energy development and conservation." No longer would the nuclear element dominate, and conservation would be promoted along with additional means of production.

One of the new department's key roles was the development of a comprehensive national energy policy to deal with the nation's near-term, intermediate, and long-term energy problems and needs. America was perceived to be facing an energy crisis threatening both its national security and economic well-being. Government was to step in and coordinate the response. Steps were taken, including establishment of the strategic petroleum reserve and investment in alternative energy development projects, but of course the sense of crisis abated before long. In 1995, 18 years later, the department issued another in a series of energy policy documents, as required by law, but it was more than two years late and has had little influence on private-sector energy suppliers, according to GAO officials interviewed by Government Executive.

In recent years, the Defense Department has been serving as the government's principal instrument for energy policy. The Gulf War serves as the best example. As Schlesinger said in a 1992 speech, "Put quite simply, what the American people learned from the Gulf War is that it's a helluva lot easier and a helluva lot more fun to 'kick ass' in the Middle East than it is to make any sacrifices to limit the U.S.'s dependency on imported crude."

In an August 1995 report, GAO said that DOE bore little resemblance to the department Congress created in 1977. "The end of the Cold War has dramatically altered DOE's missions and priorities," GAO said. "Making nuclear weapons, which dominated DOE's budget for years, has largely given way to environmental cleanup. The national laboratories are now highly diversified." GAO published a table contrasting the department's traditional missions with its current functions and found that none of the former were included in the latter. In a parallel exercise, O'Leary has issued a new "mission statement" for the department, summarizing in one sentence what it had taken Congress, 18 years earlier, 19 paragraphs to define. The statement was widely posted in department facilities. It was an ambitious characterization of DOE's goals-giving the department a role in environmental policy, economic competitiveness and national defense in addition to energy policy.

However one defined the department's contemporary missions, its basic operating methods remained the same. In World War II, the government called on a few of the nation's premier institutions, such as E.I. DuPont de Nemours and the University of California, to develop its nuclear complex. These and successor contractors remained in charge of the department's installations under multiple-year, cost-type contracts. While the department is changing both its contractors and incentives under which they work, the basic model of a large contractor workforce managed by a small cadre of civil servants in the department remains in place.

Qualifying for the Cabinet

Defining the goals of federal energy policy is one thing; deciding whether a Cabinet department is required to accomplish them is another. The federal government, for example, set up its basic programs for education assistance in the mid-1960s, but it took President Carter, with some prodding from the National Education Association, to generate the steam necessary to create a Department of Education a dozen years later. The Veterans Administration's large bureaucracy was in place for nearly 50 years before President Reagan gave the final push needed to achieve veterans' groups long-standing goal of a Cabinet department.

The advent of the Department of Veterans Affairs, however, provided an opportunity for the National Academy of Public Administration (NAPA), at congressional request, to develop some criteria for judging when a government function should achieve Cabinet status. These criteria have been cited repeatedly since they were published in 1988 as benchmarks for not only achieving but retaining Cabinet status.

Foremost among the criteria is whether an agency or set of programs "serves a broad national goal or purpose not exclusively identified with a single class, occupation, discipline, region, or sector of society." This criterion traces back to the first Hoover Commission of the 1940s, says Alan Dean, a member of the panel that wrote NAPA's criteria. Says Dean, "A department has to be responsible for major, ongoing and continuing purposes of government. The purpose must be broad enough that there are complex and multiple programs, preferably affecting all citizens and not a special-purpose clientele."

Clientele-based departments, such as Labor, have been less successful because their Cabinet secretaries are torn between administering programs on behalf of the public and serving as a representative in government policy circles for the client group, Dean argues.

The Energy Department seems to qualify as fulfilling a broad national purpose-that is, contributing to the national security and assuring energy supplies at reasonable prices. But the American public has looked to other sources to achieve this purpose in the last decade or so. When specific functions are examined, Dean noted that the four major purposes espoused by Secretary O'Leary bump up against responsibilities of other departments and agencies. Moreover, says Dean, "national security, economic competitiveness, advancing science and improving the environment do not provide a cohesive basis for an ongoing department."

The second NAPA criterion asks whether there are significant issues the President or Congress could better address by having them at the Cabinet table. The answer was yes at the time DOE was established, as the Cold War raged and government was seen as responsible for assuring energy supplies through a national energy strategy.

Now such issues are much less discussed in the White House. Maintaining the weapons stockpile, cleaning up nuclear waste and running the national laboratories are second- or third-order issues compared to deficit reduction, Medicare reform, welfare policy and the like.

A longer view is needed to provide continuing justification for Energy's Cabinet status. As Schlesinger warned in an interview with Government Executive, the benign structure that emerged from the collapse of the Soviet Union is not guaranteed in perpetuity. U.S. relationships with Saudi Arabia and other nations which emerged at the end of the Persian Gulf War and provide a stable market can scarcely be counted on to last forever. Robert Galvin, chairman of Motorola Corp.'s executive board and head of a task force that studied the national laboratories, provided more positive rationale for retaining the department. During an interview, Galvin observed that energy is key to the whole world's well-being. Assuring low-cost energy supplies while protecting the environment provides a long-term rationale for the laboratory complex and the department as well, he asserted.

The question is whether the American public and Congress see a department with a mixed track record of efficiency and accomplishment as fully necessary to achieve this goal.

O'Leary's Strategy

Secretary O'Leary has fended off DOE's critics by waging an aggressive campaign to downsize and reform the department while at the same time taking on her detractors face to face. Pete Didisheim, one of O'Leary's assistants, says: "She's gone to every battlefield and taken on her opponents successfully. She's also spent a lot of time one-on-one with Members of Congress."

The Clinton Administration's pledge of $14 billion in savings over five years would be achieved through downsizing, spinoffs and internal reforms. Staff would be cut in half by 2000 through a combination of office closings, job eliminations, and spinoffs of agencies. The Federal Energy Regulatory Commission would become independent, certain power marketing administrations would be privatized, and the Bonneville Power Administration would become a government corporation.

O'Leary detailed her initiatives in hearings before House and Senate committees in May and July. She outlined the department's core missions in national security and non-proliferation, weapons site cleanup, energy resources and science and technology, characterizing them as "inherently governmental responsibilities [which] cannot be abandoned." She said dismantlement of the department would simply be a "symbolic political victory" for its advocates and asserted that the price would be "severe disruption to missions that affect the security and quality of life of millions of Americans."

O'Leary's strong defense found a sympathetic ear among DOE's allies on Capitol Hill. Sen. Pete Domenici, R-N.M., as chairman of the Budget Committee and the Appropriations subcommittee responsible for the department, has been a key supporter. When the House Budget Committee targeted the department for elimination, its Senate counterpart refused to go along. Domenici vowed DOE abolitionists would lose a Senate vote if a bill were brought to the floor, according to one press report.

Major DOE facilities are located in New Mexico, including Sandia and Los Alamos laboratories, but Domenici has been careful to couch his concerns in broader terms than constituent interests. He has also been a stern taskmaster, cutting the department's 1996 budget well below the Administration request and warning O'Leary that DOE would continue to be in peril as long as the department's performance lagged on key programs.

While DOE's opponents appear to be stymied for the moment and downsizing initiatives are proceeding, there is much work to do to respond to the department's radically changed environment. Two task forces published reports on energy research and development operations in 1995 that provide a full plate for Energy Department executives.

One panel, chaired by Daniel Yergin, president of Cambridge Energy Research Associates, assessed the rationale for federal support of energy R&D and program priorities. Acknowledging that American R&D enterprise is in transition and that public support and funding have declined, the task force recommended last June that DOE develop an integrated strategic plan and process for research and development led by one person who reports directly to the secretary.

A task force headed by Galvin reported in February on alternatives for the DOE national laboratories. It was highly critical of what it called a "counterproductive federal system of operation," involving the department, contractors, the labs and Congress. "The long-term quality and effectiveness of these laboratories already is in serious jeopardy, owing to patterns of management and organization that have grown in complexity, cost and intrusiveness over a long period," the report said, blaming both Congress and the agency for the problem. The task force recommended an "independent management structure"-something like a government corporation-to provide greater independence from the department and encourage the labs to work more closely together. It also concluded the laboratory system was oversized for its assignments.

The department rejected the Galvin report's organizational recommendation in favor of a Laboratory Operations Board headed by the DOE undersecretary. Didisheim said the board-composed of eight top DOE officials and eight private-sector executives-does not have decision-making authority but instead serves as a "conscience to keep the department honest." But Galvin said in an interview that he thinks the board is counterproductive, because, in his view, it only adds another layer to departmental oversight.

Dispersing Agencies

If the Energy Department were dismantled, enormous and unpopular responsibilities would have to be shifted elsewhere. But the Defense Department doesn't want the weapons program. No one has stepped up to claim the national laboratories, nor to take on environmental cleanup and restoration programs. And energy policy planning is almost forgotten except in times of crisis.

The Environmental Protection Agency would have a tough time absorbing the cleanup task when it is facing a 20 percent to 30 percent cut in funding for its other programs. The National Science Foundation, a logical home for the labs, is primarily a grant-making agency, and its mission would change dramatically if it absorbed this major operational responsibility. Rep. Robert S. Walker, R-Pa., has suggested creating a Department of Science, but he has generated little support and has not even introduced a bill. There's potential synergy between some DOE and Interior Department programs, but no one has suggested a Department of Natural Resources since the Nixon years. Another possibility would be setting up a Department of Energy and Science, but few proponents of that idea have come forward.

A Grander Scheme

It is increasingly clear that abolishing departments one by one accomplishes little either to rationalize existing programs or to save money for the taxpayer. There would be significant dislocation of programs, federal employees and contractors, followed by years of uncertainty and adjustment for relocated or privatized programs and newly formed organizations.

Government organization specialists in the House and Senate have recognized this, and have been advocating that a study commission be created before major organizational reforms are undertaken. The Senate Governmental Affairs Committee in October reported a bill to create a "Commission 2000." The House actually passed a measure to establish a "Citizens Commission on 21st Century Government," though it never reached the President's desk.

Two phenomena appear to be occurring simultaneously. First, both Congress and the President (to a lesser extent) have come to realize that neither executive initiatives like the National Performance Review nor bills to abolish specific Cabinet departments are the appropriate vehicles for streamlining, modernizing and otherwise preparing government for the 21st century. Second, the specter of wholesale reorganization, given such a black eye by past failures, no longer seems unthinkable, if both branches and both parties get behind the effort.

The remaining question is one of timing. Can any of this be done before the next election? Perhaps a commission could get started, but it will be up to the next President and the 105th Congress to do most of the work and complete the task.

Whether or not there is such a commission, it is unlikely the Energy Department will survive in its present form. Proposals have already been made to spin off units such as FERC and the power marketing administrations. Notwithstanding the President's announcement that the three major weapons labs will remain open, it is unlikely that all 30 DOE labs will be retained in their present form, nor is the governance structure likely to survive for long.

DOE's basic mission remains largely undefined except in terms of its components, and the pieces no longer add up to a coherent whole. In an August 1995 report, GAO concluded that "until a more fundamental reevaluation of DOE's missions and alternatives is undertaken-including opportunities to restructure and privatize operations-it is not clear if the department and its missions are still needed in their present form." In an interview, GAO energy specialist Victor Rezendes suggested a "bipartisan effort between the President and Congress to determine what the government should be doing and how." Rezendes noted, however, that Congress lacks consensus on energy organization, and the secretary is reorienting the department according to the way she thinks it ought to be structured.

Results of next November's elections could accelerate the pace of reform at DOE, but even if voters don't continue to demand rapid change in government, the department's future will surely bear only modest resemblance to its past.

]]>