Streamlining Government:

Opportunities Exist to Strengthen OMB's Approach to Improving Efficiency

GAO-10-394: Published: May 7, 2010. Publicly Released: Jun 7, 2010.

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Given record budget deficits and continuing fiscal pressures, the federal government must seek to deliver results more efficiently. The prior Administration sought to improve efficiency under the Program Assessment Rating Tool (PART) by requiring programs to have at least one efficiency measure and procedures for improving efficiency, and show annual efficiency gains. The current administration has also emphasized efficiency in some initiatives. GAO was asked to examine (1) the types of PART efficiency measures and the extent to which they included typical elements of an efficiency measure; (2) the extent to which selected programs showed gains and how they used efficiency measures for decision making; (3) the challenges selected programs faced in developing and using efficiency measures; and (4) other strategies that can be used to improve efficiency. GAO analyzed the 36 efficiency measures in 21 selected programs in 5 agencies and a generalizable sample from the other 1,355 measures governmentwide, reviewed documents and interviewed officials from selected programs, reviewed literature on efficiency, and interviewed experts.

Under PART, most programs developed an efficiency measure. However, according to GAO's analysis, 26 percent did not include both typical efficiency measure elements--an input (e.g., labor hours or costs) as well as an output or outcome (e.g., the product, service, or result produced). Most frequently missing was the input (69 percent). For example, a measure developed by the National Nuclear Safety Security Administration considered the number of information assets reviewed for certification without considering costs of review. This could result in measures that do not capture efficiency. GAO has previously recommended agencies improve cost information for decision making, but they are in various stages of implementation. However, alternative forms of measurement, such as reducing costly error rates, could still be useful. Of the efficiency measures GAO reviewed that had both typical elements, a similar number reported gains and losses. Officials for some programs stated that the efficiency measures reported for PART were useful, and described ways in which they used the data, such as to evaluate proposals from field units, lower the cost of a contract, or make decisions to shift production. Others did not find the efficiency measures useful because, for example, the program lacked control over key cost drivers, such as contractually required staffing levels, or because of concern that raising output could lower quality. Officials for all of the programs reviewed described challenges to developing and using program-level efficiency measures and performance measures in general. Challenges included interpreting outcome-level efficiency information, such as the cost of improving or maintaining the condition of watershed acres, when factors other than program funding, such as past impacts from mining, affected conditions as well; achieving required annual efficiency gains in cases where a program intervention takes years to implement; and inconsistent or limited guidance and technical assistance from the Office of Management and Budget (OMB) to agencies on how to measure efficiency. A variety of approaches have been used to improve efficiency, including governmentwide reviews, agency restructurings, process and technology improvements, and strategic spending approaches. The Administration has some initiatives along these lines, such as information technology and procurement reforms. The Government Performance and Results Act (GPRA) provides a framework for planning future efficiency gains while maintaining or improving effectiveness and quality of outputs or outcomes. OMB, as the focal point for management in the executive branch, provides guidance and supports information-sharing mechanisms, such as the Performance Improvement Council, which could also be used to create a more strategic and crosscutting focus on agency efforts to improve efficiency. OMB has not clearly indicated whether programs should continue measuring efficiency nor has it emphasized efficiency in its GPRA guidance to agencies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In revising its Circular A-11 Guidance to agencies, OMB clarified that agencies do not have to continue developing efficiency measures for every program. Rather the guidance states that efficiency measures tend to be most useful for similar, repeated practices. Efficiency measures are not appropriate for every program, project, or goal but every agency, program, and goal-focused effort should continually search for practices to accomplish more with the same resources or the same value with fewer resources after effective actions have been identified.

    Recommendation: The Director of OMB should evolve toward a broader approach that emphasizes identifying and pursuing strategies and opportunities to improve efficiency at each of the governmentwide, agency, and program levels. At the program level, OMB should clarify whether agencies are to continue developing and using program-level efficiency measures. If so, OMB should provide enhanced guidance and technical support to agencies that addresses how to develop and use efficiency measures to improve efficiency and mitigate the challenges we identified.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: OMB issued revisions to its guidance in 2010, 2011, and 2012 that emphasized attention to efficiency and the development of agency-level efficiency goals and strategies.

    Recommendation: The Director of OMB should evolve toward a broader approach that emphasizes identifying and pursuing strategies and opportunities to improve efficiency at each of the governmentwide, agency, and program levels. At the agency level, OMB should clarify its A-11 guidance to agencies on establishing efficiency goals and strategies in their agency-level GPRA strategic and performance plans, and reporting on the results achieved in performance reports. Guidance should stress the importance of looking for efficiencies across as well as within components and programs and maintaining or improving key dimensions of performance such as effectiveness, quality, or customer satisfaction, while also striving for efficiency gains.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: Since we issued the report, the Administration has identified several governmentwide opportunities to improve efficiency. For example, in the President's February 2011 State of the Union speech and in subsequent statements by the Chief Performance Officer, the administration announced its intention to restructure federal export promotion functions to improve effectiveness and reduce waste. In addition, the President's Accountable Government Initiative, announced in October 2010 and updated in April 2011, described a number of governmentwide initiatives aimed at consolidating or restructuring inefficient operations, such as eliminating excess real property and adopting more efficient technologies, among other things.

    Recommendation: The Director of OMB should evolve toward a broader approach that emphasizes identifying and pursuing strategies and opportunities to improve efficiency at each of the governmentwide, agency, and program levels. At the governmentwide level, OMB should look for additional opportunities to consolidate or restructure duplicative or inefficient operations that cut across agency lines. One vehicle for doing this is the GPRA-required governmentwide performance plan.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Comments: OMB officials told us they have been leveraging the knowledge and expertise of members of the Performance Improvement Council (PIC) by forming various working groups intended to design and disseminate best practices, including ways to reduce waste and inefficiency. For example, as indicated in the Analytical Perspectives volume of the President's 2012 Budget, several cross-agency teams began sharing experiences and developing common tools. Performance Improvement Officers from agencies responsible for benefits processing identified priority areas of shared interest for future group action, including reducing improper payments and improving the experience of customers' processing their benefits faster and improving customer relationship management. In addition, the Goal Setting work group under the PIC developed a guide on setting priority goals, which includes examples of goals to improve efficiency.

    Recommendation: The Director of OMB should collect and disseminate information on strategies and lessons learned from successful efforts to improve efficiency by federal agencies, other governments, and the private sector. Possible vehicles for collection and dissemination of this information include good practices guides, workshops, Web sites, wikis, and management councils, such as the President's Management Council and the Performance Improvement Council.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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