Tuesday, June 22, 2010
The White House and OMB have released a blizzard of cost-cutting memos and directives in recent weeks. Agency leaders are understandably overwhelmed! Here’s a handy checklist of the top dozen initiatives.
It may be hot in Washington this summer, but agency leaders -- especially budget officers -- are facing a blizzard of memos from the White House on actions they are expected to undertake to pare back spending. Last week, Tim Kauffman and Tom Spoth wrote an article in Federal Times listing out some of the directives, but more were added before the week was out. Here’s a handy checklist (and if you have more, please add them!):
Following is a checklist of various initiatives announced in recent weeks:
1. Give President authority to line-item veto congressional earmarks. President Obama sent proposed legislation, “Reduce Unnecessary Spending Act of 2010” to Congress last month. According to OMB Director Peter Orszag, this bill would be an expedited rescission tool that would meet a constitutional test over its legitimacy by returning specific items to Congress for an up-or-down vote. According to the Washington Post, in fiscal year 2010, there were 9,413 earmark provisions, totaling $16 billion.
2. Reform the procurement process and reduce reliance on contractors.   Last year, President Obama and OMB directed agencies to change their approach to contracting by (1) increasing competition, (2) increasing the use of fixed-price contracts, (3) increasing the capacity of the contracting officer workforce, (4) revisiting the definition of “inherently governmental” work, and (5) revisiting the kinds of work contracted out, with a goal of reducing reliance on contractors by reducing total value of contracts by $40 billion a year. These various steps were articulated in a series of presidential memoranda and OMB guidance:
·         Government Contracting,” Presidential Memorandum, March 4, 2009
·         Managing the Multi-Sector Workforce,” OMB Memorandum M-09-26, July 29, 2009
·         Improving Government Acquisition,” OMB Memorandum, M-09-25, July 29, 2009
·         AcquisitionWorkforce Development Strategic Plan for Civilian Agencies,- FY 2010- 2014,” OMB Office of Federal Procurement Policy Memorandum, October 27, 2009.
Separate, but related, a recent survey of government procurement executives says the government could save up to $158 billion a year through better training and project management.
3. Use technology to streamline operations. OMB Director Peter Orszag spoke in early June at the Center for American Progress on “government reform and fiscal responsibility.” He said: “Closing the IT gap is perhaps the single-most important step we can take in creating a more efficient and productive government. Indeed, I would say the IT gap is the key differentiator between our effort to modernize government and those that have come before.” To act on this, his chief information officer, Vivek Kundra, has required agencies to publicly post on a “dashboard” the progress of their technology projects and he holds regular “TechStat” meetings to assess progress.
4. Consolidate Federal Data Centers and move to cloud computing. Orszag said one area the government could do better is in consolidating the use of data centers. While leading private-sector companies are reducing their number of data center, the federal government has increased from 432 in 1998 to over 1,l00 today. President Obama ordered a moratorium on any new federal data centers, and directed agencies to submit plans by August 30th on how they will consolidate or reduce existing data centers over the next five years. OMB has directed agencies to “evaluate the potential to adopt cloud computing” and choose it if costs and security support its use. Some studies show savings of around 30 percent of current operating costs. GSA has a proposal on the street to find appropriate vendors for agencies to use.
5. Continue non-security spending freeze and submit budget proposal for FY 2012 that is 5 percent less. OMB’s fiscal year 2012 budget guidance to agencies directs “. . . each non-security agency submit a budget request five percent below the discretionary total provided for that agency for FY 2012 in the FY 2011 Budget.” It also stipulates: “Agencies should also not use an across-the-board cut to meet the guidance level,” and that agencies should not cut presidential priorities or agency high priority performance goals.
6. Identify the 5 percent lowest priority programs in each agency. In a separate memo, to all agencies, OMB Director Orszag and White House Chief of Staff Rahm Emmanuel directed all agencies to “identify the programs and subprograms that have the lowest impact on your agency’s mission and constitute at least five percent of your agency’s discretionary budget.” This list would accompany agencies’ budget submission for FY 2012 on September 13.
7. Reduce energy consumption by 30 Percent. President Obama signed EO 13514 on October 5, 2009, directing agencies to improve energy efficiency and reduce greenhouse initiatives by 30 percent by 2015. But this directive has been re-emphasized recently as a strategy for how agencies can meet some of their cost-savings initiatives. 
8. Dispose of Unneeded Federal Real Estate. President Obama signed a memo directing agencies to dispose of unneeded real estate. A recently completed inventory of federal properties found that the federal government owned 14,000 and 55,000 under-used buildings. He asked for agency plans by September 8th, with targets to saving a total of $3 billion. 
9. Reduce Improper Payments.   President Obama directed agencies to outline specific actions for FY 2012 that will contribute to the governmentwide goal of reducing improper payments by $20 billion and recapturing $2 billion in payments that have been mistakenly paid to vendors. The government made $110 billion in improper payments in 2009.
10. Improve payment accuracy via a “Do Not Pay” List. In mid-June, President Obama signed a directive requiring agencies to check a series of existing databases before making payments to contractors and individuals to determine if such payments should be withheld. Vice President Biden noted that, during the past three years, the government paid out benefits totaling more than $180 million to approximately 20,000 deceased Americans and more than $230 million in benefits to approximately 14,000 fugitive felons or incarcerated individuals ineligible for benefits. Agencies must have a plan of action in place by mid-October.
11. Cut and re-invest Defense administrative costs.   Secretary Robert Gates says that about 43 percent of the Defense Department’s operating budget is spent on administrative support activities. He announced in May a five-year effort to reduce departmental overhead expenses by $102 billion. He told the military services that he would allow them to reinvest these savings into critical
12. Civilian agency administrative cost reduction initiative. The White House announced in early June its “. . . intention to create a new incentive for agencies to save on administrative expenses by allowing them to keep half of any savings they identify with the other half going to deficit reduction. The Pentagon already has a similar authority which is assisting Secretary Gates in his efforts to cut waste in the Defense Department, and this would add to that and apply to all agencies.”