Reorganization effort to start with trade, export agencies

Obama plan could face pushback from public and private sector constituencies invested in the status quo.

The White House's government reorganization initiative will begin with an examination of federal agencies and offices that deal with trade and exports, Obama administration officials announced on Sunday. But observers of federal management suggest the president's plan could face stiff resistance from entrenched public and private sector communities hoping to retain their level of influence in the nation's capital.

The reorganization effort, first announced in last Tuesday's State of the Union address, is designed to eliminate redundancy in government operations by consolidating duplicative functions. More than a dozen federal agencies are involved in exports, administration officials said.

"They all work with well with each other, but this is certainly not the optimal organization or allocation of resources if you were designing a system from scratch," White House Communications Director Dan Pfeiffer wrote on the White House blog on Sunday.

"This government is structured basically mid-last century, not for the 21st century," White House Chief of Staff William Daley said in an interview with CBS' Face the Nation on Sunday. "There's enormous duplication, so I think you're going to see a very concerted effort by the president. No doubt about it. It's a major task."

The White House announced in the blog post that the reorganization effort will be led by Jeffrey Zients, the administration's chief performance officer and deputy director of management at the Office of Management and Budget. Zients has led the administration's Accountable Government Initiative, which includes a host of federal management and transparency reforms. OMB did not respond to a request from Government Executiveto interview Zients.

Lisa Brown, who currently serves as an assistant to the president and a staff secretary, will work with Zients. Brown previously co-chaired a working group that reviewed agency operations for the Obama-Biden Presidential Transition team.

Few other details have emerged about how the reorganization effort would be structured, the agencies that could be involved or the potential savings associated with the initiative.

The most recent example of a government reorganization effort is the 2002 creation of the Homeland Security Department, which combined 22 diverse agencies.

Some have speculated that the administration's plans could resemble a proposal offered in December 2010 by the Center for American Progress, a progressive think tank with close ties to the White House. The group proposed creating a Business, Trade and Technology Department by combining agencies at the Commerce Department with several smaller trade and business-centered agencies and offices.

Additional options could include creating a larger umbrella agency that also includes job training and higher education programs from the Education and Labor departments, the report said. The new uber-agency also could subsume science and economic development programs from the Energy, Housing and Urban Development, and Transportation departments, the group proposed.

Some reorganization changes potentially could be implemented by executive order, but the most significant actions likely will require congressional approval.

Many of the agencies that might be involved in the reorganization declined to comment on Monday, or did not return calls. Among the tight-lipped agencies were Commerce, the Small Business Administration, U.S. Trade Representative, the Export-Import Bank of the United States, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

"It's obviously in the early stages right now," said Phil Cogan, a spokesman for the Export-Import Bank, an independent self-sustaining agency that assists in the financing of U.S. goods and services to international markets. "We're still trying to figure out what it all means."

If history is any guide, the administration faces an uphill battle fraught with lawmakers fiercely protective of their turf, well-entrenched bureaucrats experienced in backroom political fights and special interest groups invested in maintaining the status quo.

Resistance is likely to be particularly strong if the administration attempts to fold SBA into a larger agency, thereby further diluting its stature, which already has been hammered by years of budget cuts.

"SBA has such a vocal constituency who demand special attention," said Robert Shea, who served as the associate director for administration and government performance at OMB during George W. Bush's administration. "They also have their own committees on the Hill who would stand up and fight."

Every federal program, even those the administration might feel are redundant, has a constituency that thinks its functions are essential, said Larry Allen, who runs Allen Federal Business Partners, a consulting firm in Arlington, Va.

"These people will fight hard to keep their sphere of influence intact -- especially if the alternative is to turn it over to another government agency," said Allen, who previously ran the Coalition for Government Procurement, a contractor trade association. "Experienced federal hands know that turf battles can make even the 1985 Bears' defense seem porous when compared to the goal-line stands put up in this environment."

Case in point is the Bush administration's modest 2005 proposal to shift community and economic development programs from HUD to Commerce. Those plans died on the vine -- in a Republican-led Congress -- as did legislation that would have authorized the administration to create a handful of commissions to study areas within the government where duplication exists.

"When a Republican offers a government reorganization proposal, it is deemed to be biased against government," said Shea, is who now with the private consulting firm Grant Thornton LLP. "But when a Democrat offers the same proposal, they are given the benefit of the doubt. So, I am optimistic" about the administration's plans.

To avoid the pitfalls that bedeviled previous efforts, suggests Donald Kettl, dean of the School of Public Policy at the University of Maryland, the administration first needs to figure out what it wants to achieve through a reorganization -- whether it is cost savings, creating a more competitive economic structure or streamlining federal operations -- in order to sell it on Capitol Hill.

"There are literally 1,000 reasons to imagine why nothing is going to end up happening," Kettl said. "So it will take a very thoughtful structure if anything is going to happen."

And if the reorganization plan is to demonstrate real cost savings, he added, it must be expanded beyond trade and export agencies, which when combined do not even represent "a rounding error in the budget."

Shea argues that Republicans focusing on cutting federal spending might find much to like in the administration's reorganization plans. Federal consolidation, for example, could allow agencies to merge costly e-mail systems, financial management structures, procurement staff and information technology functions. The effort also would break down federal silos and allow better communication within agencies, he said.

The effort "is worth it," Shea added, "because the lack of interagency coordination so often gets in the way of doing things right."

The Government Accountability Office, which tracks duplication in federal agency operations, is planning to issue a new report on the subject in late February or early March, according to GAO spokesman Chuck Young.