For Federal Agencies, Standing Still is Not an Option

Agencies must navigate through evolving challenges on multiple fronts, but with the lessons learned in the private sector there appear to be clear opportunities for success.

The performance of federal agencies has never been under more scrutiny. Today, agencies are facing unprecedented pressure to do more with less in an environment that is shifting rapidly around them. From declining budgets to outdated IT systems to major workforce shifts, agencies must navigate through evolving challenges on multiple fronts, while improving efficiency, security, and service quality.

The challenge can seem overwhelming. But with the lessons learned in the private sector, as well as recent success stories from the public sector itself, there appear to be clear opportunities for success.

Understanding the Challenge

One framework for understanding the operational challenges facing agencies, and ultimately identifying the opportunities to address them, is the latest version of the Government Accountability Office (GAO)’s High Risk List. Updated this past February, the High Risk List is a catalog of government programs that, in the GAO’s opinion, are most at risk for fraud, waste, or mismanagement. The GAO makes these determinations by measuring programs against five criteria: (i) leadership commitment, (ii) capacity, (iii) action plan, (iv) monitoring, and (v) demonstrated progress. For 2017, the GAO has placed 34 programs on the High Risk List.1

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Declining budgets are common across many of the programs on the GAO’s list. According to the Center for Budget and Policy Priorities, discretionary spending across civilian agencies, as well as the Department of Defense (DoD), has fallen dramatically (as a percentage of gross domestic product).2

A further examination of the programs flagged by the GAO shows four functional areas dominate the list: (i) financial management, (ii) acquisition, (iii) security, and (iv) business operations. Many of these programs combine outdated IT systems and a lack of innovative management approaches. Last year, U.S. CIO Tony Scott commented that agency IT budgets are being consumed by maintenance, with minimal funds available for innovation, calling the federal IT situation “insanity at scale.”

One agency on the GAO list stands out as a useful case study. With seven of the 34 listed high risk programs, the DoD is facing multiple operational challenges, including areas such as financial management, acquisition, and contract management.

In addition, the DoD provides important lessons to others because it’s an example of an agency whose challenges are primarily internal. That is, it would seem the DoD’s financial management challenges are primarily addressable within the Department. Unlike, for example, Medicaid, another program on the High Risk List, where there are multiple stakeholders involved (state governments, healthcare providers, et al.), DoD controls many of these internal processes end-to-end.

“The DoD can fix its business operations activities by itself,” says Ed DeSeve, who served as CFO at HUD and is a former OMB deputy director for management. “Resolve is needed, but it’s getting easier through technology. There are new financial management systems, new communications systems, and cloud technology. Policies and procedures should be based on the latest technology and embrace new solutions.”

Enabling Innovation

With the new administration, the pressure to do more with less appears to be increasing. In January, there was a freeze on all federal hiring. Then in March, a new Office of Management and Budget (OMB) directive outlined further steps to simultaneously shrink the size of agencies while increasing their performance.

To meet these challenges, agencies will need to change the way they do things. But innovation comes with both risk and rewards. Given the risk, agencies have to be thoughtful and calculated in how they move forward.

“Sometimes the best way to maximize value to the agency mission is to revise existing procedure. It could be contracting out, it could be combining efforts with another agency or identifying a non-core activity,” says Cora Beebe-Fosdick, who held senior level policy positions at the Departments of Education, Commerce, EPA, and Treasury. “Technology can often enable a different, most cost-efficient way to accomplish the function. Without such thinking, we’re facing a perfect storm if agencies continue to try and do everything they’ve done, in the same way.”

"Technology can often enable a different, most cost-efficient way to accomplish the function"

Cora Beebe-Fosdick, Departments of Education, Commerce, EPA, and Treasury

While recent efforts have been launched to spur innovation in the federal sector, those efforts are still in their infancy in terms of achieving tangible results. But in today’s environment, there is an opportunity for agencies to instill new practices, take on appropriate risk, and adopt some of the more advanced (and proven) technologies and approaches from the private sector, or even elsewhere in government.

Results Can Be Remarkable

There are numerous examples of success when government re-evaluates and takes a different approach. One such example is the collaboration between the Department of Veterans Affairs, Housing and Urban Development, and the Labor Department to fight homelessness among veterans.

In cities where this new approach was taken, the results have been dramatic. Since January of 2015, over 40,000 veterans have been housed, and five communities have sustainably ended veteran homelessness. Through better analytical processes, over half of participating communities have now achieved real-time, by-name, data on local homeless populations.3

Results like these are possible in other governmental services. For example, preventing improper payments is a significant challenge in the federal government. However, there are examples within government of dramatic success in meeting the challenge. When Congress passed the Improper Payments Act in 2002, the Department of Agriculture and the state governments with whom it shares administration of Supplemental Nutrition Assistance Program (SNAP) had recently completed the conversion of the Food Stamp Program (FSP) from paper coupons to electronic benefit cards (EBT), a bold innovation. When the Act took effect, the FSP was one of very few federal programs that already met its standards, reviewing a substantial sample of program activity for eligibility and benefit decisions.

For 2014, the program reported an error rate of 3.66%4, far lower than many agencies achieve. USDA’s commitment to innovation and responsible management in the program, now called SNAP, continued. In fact, the migration to EBT drove not only substantial administrative savings for government, but also a substantial improvement in program fraud, reducing trafficking by nearly 75% from its rate in the 1990s to a rate of roughly 1% by the beginning of this decade.5

Meeting the Challenge

At a high level, DeSeve suggests there is a three-step process agencies can work toward that will improve performance, efficiency, and (eventually) increase public trust in the federal government:

  • Develop strategic foresight through better pre- decisional data, powered by analytic engine;

  • Carefully monitor results and performance (“quantifiable measurement”), again enabled by Big Data analysis tools;

  • Create an evidence-based approach to policy through consistency on these first two steps.

Strategic foresight is the systematic examination of potential future scenarios to determine which are sufficiently plausible to affect policy development. Quantifiable measurement requires that goals and objectives are carefully linked, and a performance reporting structure has been established that assures metrics for each objective have been created and are reviewed periodically at all levels of the organization. Once these things become standard operating procedure, it produces a rigorous evidence-based policy process that can validate the performance of agency programs.

These steps are far easier to describe than implement, of course. Efforts to reform the status quo will encounter resistance. Change agents within government need to factor this in, and be supported when they make tough decisions.

Beebe-Fosdick thinks federal CFOs are the best positioned to enact real change, given the proper climate: “The CFO role needs to be strengthened and supported. They are the executives that can take the broadest view, across and between agencies, can be more strategic. When they make the tough decisions around risk-based budgeting and resource management, leadership needs to stand with them and explain to stakeholders why the changes support higher performance.”

All elements of the federal government—agencies, Congress and the Executive branch—want to see higher performance and greater accountability in the delivery of services to the American people. Meeting these goals will require all parties to change the status quo, embrace new perspectives, processes, and technology, and demonstrate the collective will to see the process through.


1 “U.S. Accountability Office High Risk List.” (2017) 2 “Policy Basics: Non-Defense Discretionary Programs.” (2016) Center on Budget and Policy Priorities. non-defense-discretionary-programs 3 “Initiatives and Programs for Homeless Veteran Service Providers.” U.S. Department of Housing and Urban Development (2016) 4 “Supplemental Nutrition Assistance Program: Payment Error Rates FY 2014.” 5 “The Extent of Trafficking in the Supplemental Nutrition Assistance Program: 2009-2011.” U.S. Department of Agriculture. 

About Government Business Council


Government Business Council (GBC), the research arm of Government Executive Media Group, is dedicated to advancing the business of government through analysis and insight. GBC partners with industry to share best practices with top government decision makers, understanding the deep value inherent in industry’s experience engaging and supporting federal agencies.