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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

May 2012: 

Streamlining Government: 

Questions to Consider When Evaluating Proposals to Consolidate 
Physical Infrastructure and Management Functions: 

GAO-12-542: 

GAO Highlights: 

Highlights of GAO-12-542, a report to congressional requesters. 

Why GAO Did This Study: 

GAO has previously reported on many areas that appear to be 
duplicative, overlapping, or fragmented and has suggested that 
agencies could increase their efficiency and effectiveness by 
consolidating their physical infrastructure, such as research 
facilities, or consolidating their management functions, such as 
information technology. Such consolidation, however, involves weighing 
costs as well as benefits and can be complex and challenging to 
implement. 

Given the potential benefits and costs of consolidation, it is 
imperative that Congress and the executive branch have the information 
needed to help effectively evaluate consolidation proposals. In this 
report, GAO identifies key questions that agencies should consider 
when evaluating whether to consolidate physical infrastructure and 
management functions and illustrates the questions with agency 
consolidation examples. GAO reviewed the consolidation literature; 
selected seven consolidation initiatives at the federal level in 
various stages of completion and one recommended consolidation; 
reviewed documentation and interviewed agency officials with 
responsibility for the initiatives; and interviewed public-management 
and government-reform experts with consolidation experience. GAO 
provided the draft for review and comment to the five agencies with 
consolidation initiatives that were not covered by prior GAO work and 
made technical changes as appropriate. GAO does not make 
recommendations in this report. 

What GAO Found: 

The following fundamental questions should be answered while 
considering a physical infrastructure or management function 
consolidation initiative. 

Table: Key Questions to Consider When Evaluating Consolidation 
Proposals: 

What are the goals of the consolidation? What opportunities will be 
addressed through the consolidation and what problems will be solved? 
What problems, if any, will be created? 

What will be the likely costs and benefits of the consolidation? Are 
sufficiently reliable data available to support a business-case 
analysis or cost-benefit analysis? 

How can the up-front costs associated with the consolidation be funded?
Who are the consolidation stakeholders, and how will they be affected? 
How have the stakeholders been involved in the decision, and how have 
their views been considered? On balance, do stakeholders understand 
the rationale for consolidation? 

To what extent do plans show that change management practices will be 
used to implement the consolidation? 

Source: GAO. 

[End of table] 

* The key to any consolidation initiative is the identification of and 
agreement on specific goals, with the consolidation goals being 
evaluated against a realistic expectation of how they can be achieved. 
Consolidation goals, for example, can be compromised and new problems 
introduced when an initiative is delayed or halted, with agencies 
running the risk of increased costs. 

* The initiative needs to be based on a clearly presented business-
case or cost-benefit analysis and grounded in accurate and reliable 
data, both of which can show stakeholders why a particular initiative 
is being considered and the range of alternatives considered. 

* Physical infrastructure and management function consolidations often 
have up-front costs, such as paying for equipment and furniture moves 
and funding employee transfers, and agencies find it challenging to 
pay for these upfront costs. 

* Since stakeholders often view consolidation as working against their 
own interests, it is critical that agencies identify who the relevant 
stakeholders are and develop a two-way communication strategy that 
both addresses their concerns and conveys the rationale for and 
overarching benefits associated with the consolidation. 

* Finally, implementing a large-scale organizational transformation, 
such as a consolidation, requires the concentrated efforts of both 
leadership and employees to accomplish new organizational goals. 
Agencies should have an implementation plan for the consolidation that 
includes essential change management practices such as active, engaged 
leadership of executives at the highest possible levels; a dedicated 
implementation team that can be held accountable for change; and a 
strategy for capturing best practices, measuring progress toward the 
established goals of the consolidation, retaining key talent, and 
assessing and mitigating risk, among others. 

View [hyperlink, http://www.gao.gov/products/GAO-12-542]. For more 
information, contact J. Christopher Mihm at (202) 512-6806 or 
mihmj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Key Questions to Consider When Evaluating Physical Infrastructure and 
Management Function Consolidation Proposals: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: Additional Questions Related to Physical Infrastructure 
and Management Function Consolidation Initiatives: 

Appendix III: Key Change Management Practices: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Descriptions of a Recommended Federal Agency Consolidation 
and Other Consolidation Initiatives in Various Stages of 
Implementation: 

Table 2: Key Questions to Consider When Evaluating Consolidation 
Proposals: 

Table 3: The Census Bureau's Eight Consolidation Goals: 

Table 4: Federal Agency Consolidation Examples in Various Stages of 
Implementation: 

Figures: 

Figure 1: Timeline for Census Bureau Consolidation Plan Announcement: 

Figure 2: Identification Form Census Managers Use to Monitor Risks: 

Abbreviations: 

BRAC: Base Realignment and Closure: 

COBRA: Cost of Base Realignment Actions: 

DOD: Department of Defense: 

EPA: Environmental Protection Agency: 

FDCCI: Federal Data Center Consolidation Initiative: 

FHCC: Federal Health Care Center: 

HUD: Department of Housing and Urban Development: 

ICASS: International Cooperative Administrative Support Services: 

IRS: Internal Revenue Service: 

OMB: Office of Management and Budget: 

OPM: Office of Personnel Management: 

State: Department of State: 

TIGTA: Treasury Inspector General for Tax Administration: 

USAID: U.S. Agency for International Development: 

VA: Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

May 23, 2012: 

The Honorable Daniel K. Akaka: 
Chairman: 
Subcommittee on Oversight of Government Management, the Federal 
Workforce, and the District of Columbia: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Thomas R. Carper: 
Chairman: 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services, and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Mark R. Warner: 
Chairman: 
Task Force on Government Performance: 
Committee on the Budget: 
United States Senate: 

The current fiscal crisis offers a window of opportunity for the 
federal government to examine how consolidating its operations can 
contribute to cost savings or effectiveness gains. With our nation 
facing serious, long-term fiscal challenges, a reevaluation of federal 
agencies' operations has never been more important than it is today, 
and over the past 2 years, we have reported on many areas that appear 
to be duplicative, overlapping, or fragmented. The first report, 
issued in March 2011, presented 81 opportunities to reduce potential 
government duplication, achieve cost savings, or enhance revenues, and 
the 2012 report presented 51 areas where programs may be able to 
achieve greater efficiencies or become more effective in providing 
government services. For example, the Army and Navy are planning to 
spend approximately $1.6 billion to acquire separate unmanned aircraft 
systems that are likely to have similar capabilities. In addition, 
landholding agencies have over 45,000 underused buildings, and 
individual agencies have hundreds of incompatible information-
technology networks and systems that were built over time and hinder 
governmentwide information sharing. This duplication of effort and the 
maintenance of these buildings and legacy systems are costly 
propositions for the federal government.[Footnote 1] 

In our past reports, we have suggested that federal agencies could 
increase their efficiency and effectiveness by consolidating their 
physical infrastructure, such as closing offices or other facilities 
like military bases, storage depots, and research facilities, or 
consolidating their management functions, such as information-
technology or administrative-support services.[Footnote 2] At your 
request, in this report we are examining key questions to consider 
when evaluating physical infrastructure and management function 
consolidation initiatives, with physical infrastructure consolidation 
defined as the combining of systems, equipment, and people into fewer 
buildings or facilities than they previously occupied and management 
function consolidation as the combining of formerly distinct systems, 
processes, and people in areas such as information technology, 
financial management, human resources management, and procurement. 
Both types of consolidation are intended to support improved customer 
service, increased efficiency and effectiveness, or cost avoidances 
and cost savings, or a mix of those goals. 

Consolidation is beneficial in some situations and not in others, and 
so a case-by-case analysis is necessary, evaluating the goals of the 
consolidation against the realistic possibility of the extent to which 
those goals would be achieved. Consolidation initiatives can be 
immensely complex, politically charged, and costly and are not quick, 
easy, or automatic ways of producing desired change. Decision makers 
need to balance the benefits of consolidation against the physical, up-
front financial, bureaucratic, and political costs, while considering 
alternatives such as increased cooperation or collaboration that may 
provide other paths to efficiency.[Footnote 3] In addition, 
consolidation initiatives may, but do not inevitably, save money and 
often require significant up-front costs to yield long-term benefits. 
There are, however, situations with clear potential for cost savings 
and operational efficiencies through physical infrastructure and 
management function consolidations. 

Given the potential benefits and challenges of consolidation, it is 
imperative that Congress and the executive branch have the tools and 
information needed to help effectively evaluate consolidation 
proposals and activities. In response to your request, the specific 
objective of this report was to identify key questions that federal 
agencies should consider when evaluating whether to consolidate 
physical infrastructure or management functions and illustrate the 
questions with agency consolidation examples. To address this 
objective, we identified and reviewed our reports on specific 
consolidation initiatives that have been undertaken.[Footnote 4] We 
used this to complement information gathered through a review of the 
relevant literature on public-sector consolidations produced by 
academic institutions, professional associations, think tanks, news 
outlets, and various other organizations. In addition, as illustrative 
examples, we reviewed selected consolidation initiatives at the 
federal agency level. These examples provided insights into how 
agencies addressed the key questions. The examples were selected from 
physical infrastructure and management function consolidations from a 
range of agencies in different stages of completion, including one 
that has been recommended but not acted upon. The examples represented 
both inter- and intra-agency activity. We obtained documentation on 
these initiatives and interviewed agency officials with responsibility 
for implementing the initiatives. We did not verify the estimated cost 
savings associated with the consolidation initiatives. Table 1 
provides a description of the illustrative examples we included in the 
report. We also interviewed a number of individuals selected for their 
expertise in public management and government reform. We conducted 
some of these interviews individually and met with a panel of Fellows 
from the National Academy of Public Administration, where participants 
shared their thoughts on the basis of their consolidation experiences. 
[Footnote 5] 

Table 1: Descriptions of a Recommended Federal Agency Consolidation 
and Other Consolidation Initiatives in Various Stages of 
Implementation: 

Consolidation initiative: Department of Commerce Census Bureau 
Regional Offices; 
Type of consolidation: Intra-agency/physical infrastructure; 
Description: The Census Bureau in 2011 announced plans to close 6 out 
of 12 regional offices by 2013 to reduce the cost and improve the 
quality of the hundreds of surveys the Census Bureau conducts 
annually. The Census Bureau estimates the initiative will save between 
$15 million and $18 million annually beginning in fiscal year 2014. 

Consolidation initiative: Department of Defense (DOD) Base Realignment 
and Closure (BRAC); 
Type of consolidation: Intra-agency/physical infrastructure; 
Description: BRAC recommendations are intended to generate savings, 
reduce excess property, and realign DOD's workload and workforce to 
achieve efficiencies through consolidating bases and military 
functions. The BRAC 2005 round, the fifth such round undertaken by DOD 
since 1988, is the biggest, most complex, and costliest BRAC round to 
date. DOD reported that as a result of prior BRAC rounds, billions of 
dollars had been saved annually that could be applied to higher 
priority defense needs. 

Consolidation initiative: Department of the Treasury Internal Revenue 
Service (IRS) Processing Centers; 
Type of consolidation: Intra-agency/physical infrastructure; 
Description: Beginning in 2000, IRS consolidated the total number of 
individual paper processing centers from eight to three sites to 
reduce overhead and real-estate costs and improve efficiency in 
response to the increase in electronic filing and subsequent decrease 
in paper filing. IRS estimates the initiative has saved $175 million 
through 2011. 

Consolidation initiative: Environmental Protection Agency (EPA) 
Laboratories; 
Type of consolidation: Recommended intra-agency/physical 
infrastructure; 
Description: Multiple independent evaluations over the past 20 years 
have recommended that EPA address planning, coordination, and 
leadership issues associated with EPA's science activities. EPA has 
also not fully addressed recommendations from a 1994 independent 
evaluation to consolidate and realign its laboratory facilities and 
workforce--even though this evaluation found that the geographic 
separation of laboratories hampered their efficiency and technical 
operations and that consolidation and realignment could improve 
planning and coordination issues that have disadvantaged its science 
and technical community for decades. 

Consolidation initiative: Office of Management and Budget (OMB) 
Federal Data Center Consolidation Initiative (FDCCI); 
Type of consolidation: Intra-agency/physical infrastructure and 
management function; 
Description: The FDCCI is intended to improve the efficiency, 
performance, and environmental footprint of federal data center 
activities through the consolidation of centers that support data 
transmissions. The initiative was announced in 2010 and is planned to 
continue through 2015. OMB estimated that the federal government will 
save approximately $3 billion between 2011 and 2015. 

Consolidation initiative: Office of Personnel Management (OPM) Payroll 
Systems; 
Type of consolidation: Interagency/management function; 
Description: The payroll consolidation initiative consolidated 26 
payroll systems to four shared-service centers, standardized payroll 
policies and procedures, and simplified and better integrated payroll, 
human resources, and finance functions between its announcement in 
2001 and its completion in 2009. OPM estimated the initiative would 
save the federal government $1.1 billion over 10 years. 

Consolidation initiative: Department of State (State) International 
Cooperative Administrative Support Services (ICASS) system; 
Type of consolidation: Interagency/management function; 
Description: ICASS is an interagency system established in 1997 for 
distributing the costs of administrative services at overseas posts 
and is intended to ensure that each agency bears the cost of its 
overseas presence. State has the primary responsibility for operating 
the system, and over 40 agencies share the costs of ICASS services, 
which totaled over $2 billion in fiscal year 2011. State estimated 
that the U.S. government saved millions of dollars per year by 
reducing staff and eliminating warehouses. However, there has been no 
quantitative study on cost savings because the necessary data are not 
available. 

Consolidation initiative: Department of Veterans Affairs (VA) and DOD 
Federal Health Care Center (FHCC); 
Type of consolidation: Interagency/physical infrastructure and 
management function; 
Description: The FHCC is an ongoing 5-year demonstration project 
running from 2010 to 2015 to integrate VA and DOD medical care into a 
first-of-its-kind joint facility that will provide health care 
services to approximately 118,000 VA and DOD patients per year. VA and 
DOD officials estimated that the first two phases of the initiative 
saved $11.2 million. 

Source: GAO. 

[End of table] 

We conducted our work from June 2011 to May 2012 in accordance with 
all sections of GAO's Quality Assurance Framework that are relevant to 
our objective. The framework requires that we plan and perform the 
engagement to obtain sufficient and appropriate evidence to meet our 
stated objectives and to discuss any limitations in our work. We 
believe that the information and data obtained, and the analysis 
conducted, provide a reasonable basis for any findings and conclusions 
in this report. More detailed information on our scope and methodology 
appears in appendix I. 

Background: 

Physical infrastructure and management function consolidations can be 
strategies to help improve the efficiency of federal agencies, an area 
with increased focus given our current fiscal challenges. In the 2013 
budget, for example, the administration reported that it is proposing 
cuts, consolidations, and savings across the government totaling more 
than $24 billion in the upcoming fiscal year and $520 billion through 
2022.[Footnote 6] The White House also posted an interactive map of 
excess federal properties on its website, noting that the map 
illustrates a sampling of over 7,000 buildings and structures 
designated as excess. To help address this problem, an executive 
order, signed by the President in February 2004, promotes efficient 
and economical use of the federal government's real property assets by 
requiring each agency to determine what it owns, what it needs, and 
what it costs to manage its real properties. The agencies then are 
required to develop and implement asset-management plans, develop and 
monitor real-property performance measures, and dispose of properties 
that are not needed.[Footnote 7] Another major approach that agencies 
can take to improve their cost effectiveness is to consolidate 
management or operational processes and functions to make them more 
efficient. This approach often involves examining administrative or 
operational processes to make them faster or to use fewer resources. 
While agency efficiency efforts will not resolve the long-term fiscal 
imbalance because of the size of that imbalance, they remain important 
to the federal government's ability to operate with fewer resources 
while maintaining or improving the critical services and functions 
that it provides. 

A recent effort underway to address the need for reexamining 
government is the consideration of the Reforming and Consolidating 
Government Act of 2012 (S. 2129), first proposed by the President and 
introduced in the Senate by Senators Lieberman and Warner.[Footnote 8] 
Under S. 2129, the President would be permitted to propose the 
creation of a new department (or renaming of an existing department), 
the abolishment or transfer of an executive department, or the 
consolidation of two or more departments.[Footnote 9] However, it 
should be noted that none of the consolidation initiatives discussed 
in this report required this type of broad reorganization authority to 
be implemented, although some had specifically related legislation. 

Key Questions to Consider When Evaluating Physical Infrastructure and 
Management Function Consolidation Proposals: 

The key questions we identified that federal agencies should consider 
when evaluating a physical infrastructure or management function 
consolidation initiative are presented in table 2. 

Table 2: Key Questions to Consider When Evaluating Consolidation 
Proposals: 

What are the goals of the consolidation? What opportunities will be 
addressed through the consolidation and what problems will be solved? 
What problems, if any, will be created?: What will be the likely costs 
and benefits of the consolidation? Are sufficiently reliable data 
available to support a business-case analysis or cost-benefit 
analysis?. 

What are the goals of the consolidation? What opportunities will be 
addressed through the consolidation and what problems will be solved? 
What problems, if any, will be created?: How can the up-front costs 
associated with the consolidation be funded?. 

What are the goals of the consolidation? What opportunities will be 
addressed through the consolidation and what problems will be solved? 
What problems, if any, will be created?: Who are the consolidation 
stakeholders, and how will they be affected? How have the stakeholders 
been involved in the decision, and how have their views been 
considered? On balance, do stakeholders understand the rationale for 
consolidation?. 

What are the goals of the consolidation? What opportunities will be 
addressed through the consolidation and what problems will be solved? 
What problems, if any, will be created?: To what extent do plans show 
that change management practices will be used to implement the 
consolidation?[A]. 

Source: GAO analysis. 

[A] For these practices, we drew from our prior reports: Highlights of 
a GAO Forum, Mergers and Transformation: Lessons Learned for a 
Department of Homeland Security and Other Federal Agencies, GAO-03-
293SP (Washington, D.C.: Nov. 14, 2002) and Results-Oriented Cultures: 
Implementation Steps to Assist Mergers and Organizational 
Transformations, GAO-03-669, (Washington, D.C.: July 23, 2003). 

[End of table] 

Appendix II has additional questions grouped by these five fundamental 
questions that are related to the ideas, strategies, and leading 
practices that may help facilitate physical infrastructure and 
management function consolidations. 

What Are the Goals of the Consolidation? What Opportunities Will Be 
Addressed through the Consolidation and What Problems Will Be Solved? 
What Problems, If Any, Will Be Created? 

We have previously reported and several experts we interviewed 
suggested that the key to any consolidation initiative is the 
identification of and agreement on specific goals, with the goals of 
the consolidation being evaluated against a realistic assessment of 
how the consolidation can achieve them. The process of defining goals 
can help decision makers reach a shared understanding of what problems 
genuinely need to be fixed, how to balance differing objectives, and 
what steps need to be taken to create not just short-term advantages 
but long-term gains.[Footnote 10] 

* For example, in 2000, Congress and IRS realized that some IRS paper 
processing site consolidation would be necessary to ensure efficient 
operations, while avoiding the expense of excess capacity. On the 
basis of the prior decreases in individual paper filings and the 
projected decreases that would become more dramatic in the future, IRS 
determined that it could process individual returns and satisfy 
customer needs at three sites, leading to the decision to close five 
other sites.[Footnote 11] 

* In fiscal year 2011, the Census Bureau decided to consolidate a 
field structure that had remained substantially unchanged for 50 years 
by closing 6 of 12 regional offices. The Census Bureau's overall goal 
for its regional office consolidation was creating a structure that 
would yield the highest quality data at the lowest possible cost. 
Census officials concluded that its current structure did not reflect 
advances in survey methodology and technology made in recent decades, 
such as the ability for home-based workers to have access to 
confidential data in full compliance with information technology 
security and legal restrictions. As a consequence, the bureau's method 
for conducting surveys was too costly, and survey sponsors, primarily 
other federal agencies, were demanding improved efficiency and 
increased responsiveness. Census established eight consolidation 
goals, shown in Table 3, each weighted by relative importance, and 
evaluated potential regional structures against these goals. According 
to Census officials, its consolidation will enable the bureau to save 
$15 million to $18 million starting in fiscal year 2014 and improve 
the agency's ability to conduct surveys. The new design will also use 
improved management information systems and tools to maintain high-
quality data collection. 

Table 3: The Census Bureau's Eight Consolidation Goals: 

Goals: 

1. Minimize cost of survey operations. 

2. Improve data quality. 

3. Create a real-time information-rich management environment to 
enhance employee performance and management efficiencies. 

4. Create a more flexible management environment capable of adapting 
to changing conditions. 

5. Support multiple response modes more flexibly, involving the use of 
mailed paper questionnaires, Internet collection, computer-assisted 
telephone interviewing, and computer-assisted personal interviewing. 

6. Leverage local knowledge and facilitate outreach; [Empty]. 

7. Build a tested and reliable infrastructure upon which to scale up 
for the 2020 decennial census. 

8. Minimize vulnerability to natural disasters and unplanned events. 

Source: Census Bureau. 

[End of table] 

* In the late 1980s, changes in the national security environment 
resulted in a defense infrastructure with more bases than DOD needed. 
To address the problem of excess capacity and to realize cost savings, 
the Base Closure and Realignment Commission made a series of 
recommendations to close or consolidate DOD bases and military 
functions.[Footnote 12] DOD has undergone five BRAC rounds beginning 
in 1988. Generally, the goals of the first four BRAC rounds were to 
generate savings to apply to other priorities, reduce property deemed 
excess to needs, and realign DOD's workload and workforce to achieve 
efficiencies in property management. As a result of prior BRAC rounds 
in 1988, 1991, 1993, and 1995, DOD reported that it had reduced its 
domestic infrastructure, transferred hundreds of thousands of acres of 
unneeded property to other federal and nonfederal entities, and saved 
billions of dollars annually that could be applied to other higher 
priority defense needs.[Footnote 13] For the BRAC 2005 round, the 
goals included transforming the military, fostering joint actions, and 
reducing excess infrastructure to produce savings. An example would be 
the BRAC recommendation to consolidate the supply, storage, and 
distribution function within the Defense Logistics Agency. As such, 
many of the BRAC 2005 recommendations involve complex realignments. 
Both DOD and the BRAC Commission reported that their primary 
consideration in making recommendations for the BRAC 2005 round was 
military value, which includes considerations such as an 
installation's current and future mission capabilities.[Footnote 14] 

* A central goal of the federal payroll consolidation initiative was 
achieving cost effectiveness through economies of scale and the 
elimination of duplicative systems. Other consolidation goals included 
standardizing payroll policies and procedures and simplifying and 
better integrating payroll, human resources, and finance functions. 
Cross-servicing and administrative consolidation initiatives began in 
the 1980s as part of the Reagan administration, and payroll was an 
early target of opportunity. In 2000, the Bush administration mandated 
e-government initiatives where common information technology solutions 
were identified. These were areas in which agencies historically had 
made significant individual investments to address needs that were 
common and duplicative. For example, OPM officials noted that many of 
the payroll systems were homegrown and on average about 20 years old, 
and many of the payroll service providers were considering capital 
investments in payroll-systems infrastructure. To avoid having 
individual agencies investing in new payroll systems, the 
administration selected 4 agency providers to serve as payroll 
providers in 2003; by 2009 these providers consolidated the payroll 
operations of the non-continuing agencies, absorbing their processing 
into existing systems. According to OPM officials, payroll 
consolidation was something that had been discussed for 30 years, but 
the e-government mandate from the Bush administration finally gave OPM 
the power to make the consolidation happen. 

Consolidation goals can be compromised and new problems introduced 
when an initiative is delayed, halted, or does not attract enough 
users to produce the economies of scale needed to generate cost 
savings. Under these fairly common conditions, participating agencies 
run the risk of seeing their costs increase. 

* For example, State developed the ICASS system to streamline the 
provision of administrative services and cut costs for agencies 
located at overseas posts. However, we recently reported that many 
agencies continue to obtain services independently rather than through 
the ICASS system, which limits ICASS's ability to achieve greater 
economies of scale and deliver services efficiently.[Footnote 15] To 
the extent that agencies do not participate in ICASS, and provide 
these services themselves, they are creating potentially duplicative 
administrative systems that may not be cost effective for the U.S. 
government as a whole. For example, we reported that several agencies 
procured their own appliances and shipped their own furniture rather 
than participate in the ICASS-managed collective pools. At one post, 
ICASS service providers had to remove and reinstall furniture at 
embassy-managed residences 67 times over a 6-month period as a result 
of agency officials being replaced in a home by officials from a 
different agency. Such additional work would not have been necessary 
if all agencies participated in the furniture and appliance pool. 

What Will Be the Likely Costs and Benefits of the Consolidation? Are 
Sufficiently Reliable Data Available to Support a Business-Case 
Analysis or Cost-Benefit Analysis? 

A business-case analysis or cost-benefit analysis can help agencies 
ensure they are using public funds most effectively and preparing to 
meet future performance goals.[Footnote 16] The National Research 
Council, in a 2004 report on federal facilities investments, 
maintained that a business-case analysis of investments can make clear 
underlying assumptions, alternatives considered, the full range of 
costs and benefits, and the potential consequences for an organization 
and its missions.[Footnote 17] Additionally, we have noted in prior 
work that a cost-benefit analysis can be a useful tool to inform 
decision making. It can provide an analytic framework that decision 
makers can use to consider factors in a systematic manner and clarify 
what is and is not known about effects.[Footnote 18] OMB, similarly, 
has issued guidelines for agencies to consider when conducting a cost-
benefit analysis of federal programs.[Footnote 19] These guidelines 
are intended to promote efficient resource allocation through well-
informed decision making, and in them OMB recommends that agencies 
conduct a sound cost-benefit analysis before initiating any long-term 
project that extends 3 or more years into the future. According to 
OMB's guidance, such analysis should include a policy rationale, 
explicit assumptions, an evaluation of the alternatives, and a plan to 
verify program results. 

Consolidation initiatives based on a clearly presented business-case 
or cost-benefit analysis, grounded in accurate and reliable data, can 
provide a data-driven rationale for why an agency is undertaking a 
particular initiative and show stakeholders that a range of 
alternatives has been considered. However, agencies may find it 
difficult to obtain sufficiently accurate data necessary to calculate 
the full potential costs and benefits associated with a consolidation 
initiative. We have previously reported, for instance, that agencies 
across the federal government have faced challenges employing 
systematic cost-accounting practices in their operations.[Footnote 20] 
A lack of these practices within agencies makes it more difficult for 
them to collect the data necessary to calculate precisely the costs 
and benefits of a consolidation. This limitation can increase a 
consolidation's risk and an agency's vulnerability to unintended 
consequences, such as increased costs or heightened stakeholder 
skepticism. 

A lack of accurate data should not, however, necessarily preclude 
agencies from considering the costs and benefits of consolidation. 
Agencies can work to analyze the information they have at hand on 
likely costs and benefits, as an analysis of this information can 
reasonably indicate the likelihood that a consolidation will offer 
more benefits than costs. Agencies can also use sensitivity analysis 
to determine whether costs and benefits within certain error ranges 
will result in net benefits. Sensitivity analysis examines the effect 
of changing assumptions and ground rules on estimated costs and 
benefits and helps decision makers choose between alternatives. On the 
other hand, if agencies cannot definitely conclude that benefits will 
outweigh costs, or an analysis of the sensitivity to error of key data 
used to calculate costs and benefits suggests that a consolidation 
initiative faces considerable risks, they may need to consider 
alternatives other than consolidation. 

* For example, we have previously reported that DOD established a 
structured process for obtaining and analyzing data during the BRAC 
2005 round. DOD used its Cost of Base Realignment Actions (COBRA) 
model to provide consistency in potential cost, savings, and return-on-
investment estimates for closure and realignment options.[Footnote 21] 
COBRA provides for several key outputs that may influence the decision-
making process, including (1) estimated costs for such factors as 
personnel severance, moving costs, or military construction over the 
implementation period; (2) estimated savings for personnel position 
eliminations, or reduced operations and maintenance costs over that 
same period; (3) the "payback" time required for estimated cumulative 
savings to outweigh cumulative costs for the actions; (4) net annual 
recurring savings; and (5) the net present value of BRAC actions, 
calculated over a 20-year time frame. We examined the model as part of 
our review of the 2005 and prior BRAC rounds and found it to be a 
generally reasonable estimator for comparing potential costs and 
savings among alternatives. The model provides important input into 
the selection process as decision makers weigh the financial 
implications of decisions regarding the suitability of various closure 
and realignment options. However, COBRA does not represent budget-
quality estimates that are developed once BRAC decisions are made and 
detailed implementation plans are developed. On the basis of our 
assessment of the BRAC 2005 round, actual costs and savings were 
different from the BRAC Commission's initial estimates. As we 
testified in March 2012, BRAC onetime implementation costs rose to 
about $35.1 billion using DOD's fiscal year 2011 budget data compared 
with the Commission's initial estimate of $21 billion in fiscal year 
2005. Also, we testified in 2012 that DOD expects to realize annual 
net recurring savings of $3.8 billion, a decrease of 9.5 percent 
compared to the Commission's estimate in 2005. We further testified 
that our analysis shows that the 20-year net present value is about 
$9.9 billion, a decrease of 73 percent, compared to the Commission's 
estimate of $36 billion in 2005.[Footnote 22] 

* VA and DOD officials told us that the departments' decision to 
consolidate their two health care facilities in North Chicago, 
Illinois, was based on a variety of factors, ranging from the 
facilities' proximity to each other to the opportunity created by the 
VA's having upgraded hospital infrastructure and identified clinical 
space with excess capacity, and the Navy's need to replace its aging 
facility.[Footnote 23] The two departments had earlier noted in a 
February 2009 analysis that the decision to consolidate the two 
facilities into the Captain James A. Lovell Federal Health Care Center 
(FHCC) in North Chicago was based on a sequential decision making 
process whereby each decision and cost-benefit analysis led to the 
next set of questions and options. In the analysis, they also laid out 
the consolidation's three sequential phases. In the first phase, the 
two departments developed a sharing relationship that included the 
consolidation of select medical services and the establishment of 
common administrative functions such as reimbursement methodology. In 
the second phase, they forged a network relationship that included 
VA's construction of new facilities, the consolidation of more medical 
services, and the development of additional reimbursement methodology. 
VA and DOD officials determined that the reduction of operating costs 
and full-time equivalents in the first two phases saved a total of 
$11.2 million, while allowing the two hospitals to maintain a high 
quality of care based on established metrics. VA and DOD also 
estimated that phase three, which includes the Navy's construction of 
new facilities and the opening of the fully-integrated FHCC, will lead 
to onetime construction avoidance savings of $67 million and annual 
recurring savings of $19.7 million. 

* Census officials told us that as the bureau was weighing 
alternatives for consolidating its field office structure, it 
developed costs and benefits for each alternative. Census officials 
told us that they had some difficulty identifying the consolidation's 
costs, but ultimately compiled a list of costs for the selected 
alternative. Costs ranged from relocation expenses for employees who 
would remain with the agency, to separation incentives and severance 
pay for those who could not or would not remain with the agency, to 
training costs for new positions. These costs totaled approximately 
$30 million over 3 fiscal years. Census also identified $15 million to 
$18 million in potentially recurring savings, which it attributed to 
the closure of six offices and the net reduction of 186 full-time 
equivalent positions across the field structure. A Census official 
said that such data helped to persuade stakeholders of the 
consolidation's value. 

* Sufficiently reliable data, however, are hindering OMB's efforts to 
create an inventory of data centers and estimate cost savings as 
agencies consolidate their data centers and move from housing data on 
site to cloud-computing solutions.[Footnote 24] Such a move to cloud 
computing can allow agencies to obtain computing services while 
freeing themselves from the burdens and costs of maintaining computing 
infrastructure. To help agencies improve their use of data centers, 
OMB is leading an effort to create a shared-services marketplace as 
part of a data center consolidation initiative. According to OMB, this 
initiative could lead to $3 billion in savings by 2015 as well as 
improve the efficiency, performance, and environmental footprint of 
federal data center activities.[Footnote 25] To help agencies plan for 
their data center consolidations, OMB directed them to first complete 
a data center inventory and a consolidation plan. Specifically, the 
inventories were to include descriptions of the assets present within 
individual data centers, as well as information about the physical 
data center. The consolidation plans were to address key elements, 
including goals, approaches, schedules, cost-benefit calculations, and 
risk management plans. However, we found that the majority of the 
agencies did not complete their inventories or consolidation plans, 
due in part to a lack of available data. For example, 19 of the 24 
agencies we reviewed reported that it was challenging to obtain power-
usage data. Certain agency facilities do not have power-metering 
capabilities, making estimations of power use necessary. We concluded 
that moving forward to consolidate obviously redundant or underused 
centers is nonetheless warranted and should result in immediate cost 
savings and increased efficiency. However, these data gaps place 
agencies at an increased risk of being ill prepared to manage such a 
significant transformation. We raised concerns that OMB cannot be 
assured that agencies are providing a sound baseline for estimating 
consolidation savings or accurately measuring their progress until 
those inventories and plans are complete and there is a better 
understanding of the validity of the agencies' data, and we 
recommended that OMB require agencies to complete the missing elements 
in their respective consolidation plans.[Footnote 26] OMB generally 
agreed with our report but did not comment on the recommendation. In 
July 2011, OMB directed agencies to complete all missing elements in 
their respective consolidation plans by the end of fiscal year 2011. 
In March 2012, OMB further established an annual requirement for 
agencies to complete missing elements from their plans and to submit 
an updated plan by the end of every fiscal year. 

* A past independent evaluation by the MITRE Corporation recommended 
that EPA consolidate its laboratories as a means to improve the 
efficiency and effectiveness of its operations, and in 2006, EPA's 
Chief Financial Officer requested that EPA develop a plan for reducing 
laboratory costs through their consolidation.[Footnote 27] In prior 
work, we reported that EPA lacks sufficiently complete and reliable 
data on which to base decisions about the management of its 
laboratories. For example, we reported that EPA does not use public 
and commercial benchmarks to calculate usage rates for its 
laboratories. Instead, EPA measures laboratory usage on the basis of 
subjective interviews with local laboratory officials.[Footnote 28] We 
recommended that EPA improve the completeness and reliability of 
operating-cost and other data needed to manage its real property, and 
if it determined that another independent study of its laboratories' 
management and operation was needed, include alternative options for 
organizing its laboratories' infrastructure, including consolidation. 
EPA said that it will work internally to upgrade and validate internal 
operating costs and other metrics, and that it is preparing a work 
assignment for the National Academy of Sciences to study EPA's 
laboratories. EPA stated that the study will consider alternate 
approaches for organizing the laboratories' infrastructure. 

* We have reported that as more agencies join ICASS, State has 
realized savings through economies of scale. However, we have also 
reported that ICASS and its customer agencies generally have 
insufficient data to perform a meaningful cost analysis to quantify 
the potential cost savings to individual agencies or the government as 
a whole from consolidating services. Responses to a survey we 
conducted for our 2012 report showed that agencies that have opted out 
of ICASS services have frequently cited lower costs as a reason for 
their decision, but many indicated that they had no basis to judge the 
relative costs of ICASS and non-ICASS services or did not respond to a 
question on this issue. Furthermore, State's ICASS cost data and other 
agencies' non-ICASS cost data are generally not comparable, which 
renders the cost implications for an agency's joining ICASS unclear. 
Without data that can help it quantify potential cost savings, ICASS 
management is poorly positioned to demonstrate to other agencies that 
greater participation in ICASS services is in their own interest or 
that of the U.S. government overall.[Footnote 29] We suggested that 
Congress may wish to consider requiring agencies to participate in 
ICASS services unless they provide a business case to show that they 
can obtain these services outside of ICASS without increasing overall 
costs to the U.S. government or they show that their mission cannot be 
achieved within ICASS. We also recommended that, where agencies are 
able to demonstrate, through a compelling business case, that they can 
provide a service more efficiently than the existing State ICASS 
provider without adverse effects on the overall government budget, the 
Secretary of State and the Administrator of the U.S. Agency for 
International Development (USAID) allow the creation of new ICASS 
service providers, in lieu of State, to provide administrative 
services to the other agencies at individual posts. State and USAID 
generally concurred with these recommendations. 

How Can the Up-Front Costs Associated with the Consolidation Be Funded? 

Physical infrastructure and management function consolidation 
initiatives often have up-front costs, and agencies must pay them 
before they can realize any intended gains or savings. For example, 
agencies may need to pay for equipment and furniture moves or fund 
employee transfers and buyouts, and agencies often find it challenging 
to obtain the funds necessary to pay for these up-front costs. A lack 
of up-front funding can prevent a potentially beneficial initiative 
from getting off the ground or derail an initiative already underway. 
In fact, our prior work on real property management has shown that a 
lack of funding for up-front costs is one of the most important 
reasons why many initiatives are never implemented.[Footnote 30] 

* In previous work on the BRAC process, we noted that the costs 
associated with closing bases can be significant. Congress has 
provided DOD with a dedicated mechanism to help meet the challenges of 
paying for BRAC's significant up-front costs: the Department of 
Defense Base Closure Account was established to fund base closures in 
the 1988 round; the Department of Defense Closure Account 1990 was 
established to fund base closures in the 1991, 1993, and 1995 rounds; 
and the Department of Defense Base Closure Account 2005 was 
established to fund base closures in the 2005 round. Congress, 
recognizing the complexities of realigning and closing bases, allowed 
DOD the flexibility to allocate funds by military service, budget 
function, and installation. Additionally, other revenues, including 
revenues generated from land sales, were required to be deposited into 
these accounts to offset closure and realignment costs. 

* As previously mentioned, Census collected data on costs and benefits 
as it weighed alternatives for consolidating its field office 
structure. The bureau's Chief Financial Officer noted that the bureau 
is finding it challenging to pay for the up-front costs, as it plans 
to absorb them and not pass them on to customers by charging higher 
fees for survey administration. He said that Census is planning to pay 
for the consolidation's up-front costs with money from Census's 
working capital fund.[Footnote 31] Census said that, as there will be 
no additional charges to customers, Census will use balances from its 
working capital fund collections while simultaneously conserving 
resources and finding efficiencies within the fund to pay for the 
consolidation's up-front costs. Another Census official noted that 
Census expects to realize cost savings from liquidating regional 
office space and reducing the number of employees in the consolidated 
regional office structure. However, Census will not fully realize 
these savings until fiscal year 2014. 

* We have reported that 11 of the agencies involved in the data center 
consolidation initiative have found it challenging to fund their 
consolidation efforts.[Footnote 32] For example, one agency noted that 
having to fund efforts long before any savings would be realized was 
difficult. There is no standard method by which agencies are paying 
for these up-front data center consolidation costs. Some agencies are 
using working capital funds while others use funds appropriated 
through the annual budget process; other agencies are using a 
combination of the two. The Department of Commerce, in its 2011 data 
center consolidation plan, noted that it has worked to overcome up-
front cost challenges and more effectively obtain funds to meet its 
data center consolidation requirements by streamlining information 
technology operations and by having its data center consolidation 
project team demonstrate the cost benefit of the initiative to the 
department's executive management. 

A former OMB official said that centrally administered incentive funds 
could be effective in helping agencies initiate a consolidation, 
particularly cross-government consolidations, such as those that were 
pursued under the Lines of Business initiative.[Footnote 33] As we 
have previously reported, the administration is undertaking one such 
effort by having OMB manage the Partnership Fund for Program Integrity 
Innovation, a fund that provides federal agencies money to pilot 
projects and evaluations that test ideas for improving the delivery of 
federal assistance programs administered through state and local 
governments.[Footnote 34] The fund is intended to help agencies, among 
other goals, improve administrative efficiency and is expected to help 
agencies achieve total cost savings that are equal to or greater than 
the fund's $32.5 million appropriation. Additionally, we have reported 
that the Department of Housing and Urban Development (HUD) has 
developed a centrally administered fund to support its Transformation 
Initiative, a multifaceted and multiyear effort intended to reexamine 
how HUD does business by focusing on improving performance, replacing 
outdated information technology systems, evaluating programs, and 
streamlining processes.[Footnote 35] In fiscal year 2010, HUD received 
authorization from Congress to transfer up to 1 percent of the budgets 
from selected program offices to a Transformation Initiative fund that 
is intended to support projects that improve the overall performance 
of the agency, including a few project areas that are specifically 
expected to improve efficiency.[Footnote 36] Furthermore, in September 
2011, we recommended that the Director of OMB work with Congress and 
federal agencies to develop proposals for funding mechanisms that 
assist federal agencies with the up-front costs associated with longer-
term efficiency improvement projects.[Footnote 37] We requested an 
update on the status of this recommendation in April 2012. However, 
OMB has not yet indicated how it will address the recommendation. 

The need for agencies to consolidate incompatible information 
technology systems can be one of the most challenging aspects of a 
consolidation, particularly if the initiative crosses departmental 
lines. We have previously reported that individual agencies have 
hundreds of incompatible networks and systems and that the maintenance 
of these legacy systems is costly. We have found that even now the 
architectures agencies are developing are duplicative, poorly 
integrated, unnecessarily costly to maintain and interface, and unable 
to respond quickly to shifting environmental factors.[Footnote 38] 

* In the early 2000s, when the payroll systems consolidation 
initiative was announced, many of the agencies' payroll systems were 
nearing the end of their estimated life cycles. OMB capitalized on the 
situation by not authorizing agencies, other than the four chosen 
payroll service providers, to spend money on modernizing their payroll 
systems, thereby leveraging the shift to the selected payroll 
providers. However, OPM officials also said that funding for systems 
modernization for the four remaining payroll service providers, which 
was promised at the outset of the payroll consolidation initiative, 
has not materialized. They noted that this lack of funding for systems 
modernization is a major problem and puts the long-term viability of 
the consolidated federal payroll services system at risk. 

Who Are the Consolidation Stakeholders, and How Will They Be Affected? 

Consolidation success depends on a wide range of factors, including 
getting incentives right for those affected by the consolidation. 
Stakeholders often view a consolidation as working against their own 
interests. For example, agency clients and customers may have concerns 
about potential reduction in service or access to agency officials. 
Contractors providing services or systems to multiple agencies may be 
concerned that consolidation will result in fewer agency customers and 
create a situation where they are competing with agencies to provide 
management or administrative services. Congress, which authorizes and 
funds federal agency operations, may be sensitive to these concerns, 
especially when Congressional members' constituencies are adversely 
affected. Moreover, stakeholders frequently raise valid concerns on 
the basis of their familiarity with an agency's operations, and the 
concerns need to be addressed openly and objectively. Failure to 
effectively engage with stakeholders and understand and address their 
views can undermine or derail the initiative. To that end, it is 
critical that agencies identify who the relevant stakeholders are and 
develop a two-way communication strategy that both addresses their 
concerns and conveys the rationale for and overarching benefits 
associated with a consolidation initiative. We have previously 
reported that communication is not just "pushing the message out," but 
should facilitate a two-way, honest exchange with and allow for 
feedback from employees, customers, and other stakeholders.[Footnote 
39] Full agreement among stakeholders is relatively uncommon because 
stakeholders' interests can differ significantly; a comprehensive two-
way communication strategy is central to forming the effective 
external and internal partnerships that are vital to the success of 
any organization. 

External Stakeholders: 

Closing regional offices or facilities, which may be necessary to 
generate cost savings or efficiency gains, may engender strong 
opposition from local residents and the population served by the 
office. We have previously described how independent commissions, 
which by design are to be less subject to parochial or political 
pressures, can more easily effect change, ensure that data collection 
and analysis are efficient and objective, and implement 
recommendations quickly.[Footnote 40] 

* For example, DOD and BRAC Commission officials cite the 
establishment of an independent commission and nomination of 
commissioners by the President, in consultation with congressional 
leadership, as one of the key elements that contributed to DOD's 
ability to eliminate excess capacity by closing or realigning military 
bases. In addition, the President and Congress have to accept or 
reject the commission's report in its entirety. More recently, we 
reported that an independent commission or governmentwide task force 
might be necessary to help overcome stakeholder influences in deciding 
how to dispose of unneeded real property.[Footnote 41] 

An effective and ongoing communication strategy tailored to address 
different stakeholder groups and their concerns is also essential. 

* For example, IRS and Census officials pursued a data-driven 
communication strategy that started well in advance of their regional 
office closures. Census officials said they used data to demonstrate 
to local elected officials how streamlining operations would allow 
Census to save money and conduct surveys more efficiently. In 
addition, Census developed scripts and timelines to roll out the 
announcement so key officials could deliver the same information and 
message throughout the country at the same time (see fig. 1). Census 
officials said their communication strategy allowed them to present a 
unified front and consistent information. 

Figure 1: Timeline for Census Bureau Consolidation Plan Announcement: 

[Refer to PDF for image: illustrated timeline] 

Start: 8 a.m., Wednesday, June 29, 2011; 
End 4 p.m., Wednesday, June 29, 2011. 

8:00 a.m. Eastern; 
7:00 a.m. Central; 
6:00 a.m. Mountain; 
5:00 a.m. Pacific: 
* National Processing Center mails memos to field interviewers. 

11:00 a.m. Eastern; 
10:00 a.m. Central; 
9:00 a.m. Mountain; 
8:00 a.m. Pacific: 
* Regional Directors brief regional staff by means of staff meetings 
and announce toll-free number and contacts for field staff questions; 
* Director e-mails former Census Bureau directors and calls key 
congressional members; 
* Associate Director for Field Operations conducts conference call 
with external stakeholders, such as State Data Centers and Census 
Information Centers. 

11:30 a.m. Eastern: 
* Director e-mails information package to other federal statistical 
agency heads and Deputy Director conducts conference call with 
statistical community.  

Noon Eastern; 
11:00 a.m. Central; 
10:00 a.m. Mountain; 
9:00 a.m. Pacific:   
* Regional Directors conduct teleconference with field interviewers. 

1:00 p.m. Eastern; 
Noon Central; 
11:00 a.m. Mountain; 
10:00 a.m. Pacific: 
* Regional Directors call regional stakeholders. 

2:00 p.m. Eastern; 
1:00 p.m. Central; 
Noon Mountain; 
11:00 a.m. Pacific: 
* Director sends broadcast e-mail and posts blog for Census Bureau 
staff; 
* Dedicated intranet page is launched; 
* Blast e-mail sent to external stakeholders; 
* Regional Directors and Office of Congressional and Intergovernmental 
Affairs make phone calls and visits, or both, to congressional members 
and key staff; 
* Office of Congressional and Intergovernmental Affairs makes phone 
calls to key governmental organizations; 
* Information released to general public by means of news 
release/Facebook/Twitter. 

4:00 p.m. Eastern; 
3:00 p.m. Central; 
2:00 p.m. Mountain; 
1:00 p.m. Pacific: 
* Field and Communications Directorates conduct brief conference call 
with Regional Directors to check in on status and update new Q&As. 

Source: U.S. Census Bureau. 

[End of figure] 

* To address congressional concerns about processing centers closing 
in their districts, IRS officials reported they developed a 
communication strategy based on data showing that they could close one 
site every other year without adversely affecting operations, due in 
large part to the steady increase in electronic filing and concurrent 
decline in paper filing of tax returns. Also, once the decision had 
been made to close processing centers, IRS took steps to communicate 
with taxpayers about changes in filing locations through a variety of 
media including websites, informational packages sent to taxpayers, 
and tax practitioner forums. 

Internal Stakeholders: 

Agency officials reported that a comprehensive communication strategy 
that involves employees is a key component of any consolidation 
effort. Consolidations of physical infrastructure or management 
support functions often generate uncertainty for agency employees 
through job loss, relocation, or considerable changes in the way jobs 
are done. Regular and early communication facilitates a two-way 
exchange, which allows for feedback and tailored information to meet 
employees' specific needs. The communication can help to build trust 
and an understanding of the planned change, potentially defusing the 
opposition while strengthening commitment to the effort. 

* Once IRS determined it was closing processing sites, agency 
officials and representatives from the National Treasury Employees 
Union said they negotiated how shutting down individual sites would 
occur and what mitigation measures would be available to employees. A 
variety of communication channels including websites, town hall 
meetings, and newsletters helped employees keep abreast of dates and 
the consolidation's progress. IRS also posted information on its 
internal websites regarding the range of services available to 
employees losing their jobs, such as separation packages, reassignment 
opportunities, retraining and placement assistance, and counseling. In 
addition, IRS began hiring limited term or temporary employees at 
sites slated for closure, allowing the agency to communicate realistic 
expectations about job duration. 

* Census officials also reported developing a comprehensive employee 
communication strategy. The strategy's intent was to address morale 
issues among employees keeping their jobs but with new or different 
responsibilities, as well as employees relocating or losing their 
jobs. The week following the consolidation's announcement, the Census 
Bureau Director visited the six closing regional offices to answer 
employees' questions and listen to concerns. Human resource 
representatives followed up quickly with regional office employees to 
discuss these concerns. Three months later, the representatives held 
video conferences with individual employees to explain the early 
retirement and buyout process. Census also created a consolidation 
intranet site accessible to all Census employees that contains a 
variety of information, including internal job postings. In addition, 
Census electronically distributes a monthly consolidation newsletter 
and has established an "800" telephone number employees can call with 
consolidation questions. Census has dedicated itself to answering all 
questions submitted through the 800 number and posting all questions 
and answers to the intranet site. 

Concerns about ceding control in a new consolidated environment of 
shared services can also be a major challenge. A report we issued in 
1980 looking at barriers to closing regional offices cited management 
resistance on the basis of concerns that participating in shared 
service arrangements would diminish their control and lead to a 
decrease in service.[Footnote 42] For example, we reported that many 
agencies were reluctant to adopt automatic airline ticket payment 
plans and teleticketing procedures even though these techniques had 
been shown to be cost effective and subsequently have become the norm. 
Agencies had developed their own travel systems to support important 
aspects of their operations, and many managers did not believe that a 
common support arrangement would satisfy their unique needs. Thirty 
years later, the same general issue resonates. 

* A former OPM official involved with the payroll consolidation 
initiative said that even though the payroll effort was an 
intellectually simple concept, it still required "brute force" to 
execute. She said that agencies resisted the effort because they 
claimed they had a type of payment necessitating a unique payroll 
system. To address these concerns and devise solutions, OPM 
established a Payroll Advisory Council that included representatives 
from the provider agencies and client agencies. The council met 
quarterly to develop migration and business processes. OPM officials 
said the council was a valuable vehicle for bringing together key 
stakeholders and encouraging them to feel they were part of the 
process. They said it helped get people on the same page and motivated 
them to move the project forward. 

Employee resistance to cultural change is a particularly thorny issue 
when consolidation involves more than one agency. Constructing a new 
organizational culture that respects the core values of the involved 
organizations and is welcoming to all employees is critical to the 
success of a multiagency consolidation effort. Our prior work has 
shown that many transformations fail because the cultures of the 
components were not fully understood or considered.[Footnote 43] Thus, 
managers need to understand the different cultures that are coming 
together, and the steps that can be taken to establish a common 
culture.[Footnote 44] 

* Federal Health Care Center (FHCC) officials reported that the center 
has sought to address the challenges of cultural integration through a 
wide variety of actions and approaches, such as involving all staff in 
establishing the mission, vision, and goal statements; creating its 
first strategic plan; and blending previously unique organizational 
celebrations and recognition events. According to the officials, 
ongoing assessments of progress with cultural integration have been 
maintained through staff satisfaction and climate surveys, as well as 
frequent communication opportunities with leadership through all-hands 
town hall meetings and other communication venues. From fiscal years 
2011 through 2012, FHCC improved in 12 of 13 measured categories 
including work group effectiveness and leadership cohesion; however, 
its score dropped slightly in the work group cohesion category. In 
addition, VA and DOD, through FHCC staff, use a staff satisfaction 
benchmark as one measure to assess the center's integration, a 
benchmark that has been met. Officials noted that establishing a 
common culture from two distinct and firmly established entities like 
the VA and the United States Navy has been challenging. However, with 
a focus from leadership and the actions mentioned above, officials 
said the center has seen progress in establishing its own common 
culture. 

To What Extent Do Plans Show That Change Management Practices Will Be 
Used to Implement the Consolidation? 

Implementing large-scale organizational mergers, acquisitions, and 
transformation initiatives, such as consolidations, are not simple 
endeavors and require the concentrated efforts of both leadership and 
employees to accomplish new organizational goals. As we have 
previously reported, productivity and effectiveness may actually 
decline in the period immediately following a private sector merger 
and acquisition.[Footnote 45] This happens for a number of reasons 
including that attention is concentrated on critical and immediate 
integration issues and diverted from longer-term mission issues. In 
addition, employees and managers inevitably worry about their place in 
the changed organization. 

As part of our body of work on organizational mergers, acquisitions, 
and other transformations, we recommended that to minimize the 
duration and the significance of any reduced productivity and 
effectiveness, agencies should have an implementation plan that 
includes essential change management practices such as active, engaged 
leadership of executives at the highest possible levels; a dedicated 
implementation team that can be held accountable for change; and a 
strategy for capturing best practices, measuring progress toward the 
established goals of the consolidation, retaining key talent, and 
assessing and mitigating risk, among others.[Footnote 46] Appendix III 
has a list of key change management practices. 

Will Top Leadership Be Engaged in Driving the Consolidation? 

Whether consolidations originate from within an agency in response to 
changing conditions or outside pressures, or from the most senior 
levels of government, it is essential that top government and agency 
leaders are committed to the consolidation and play a lead role in 
executing it. As we have previously reported, leadership must set the 
direction, pace, and tone and provide a clear, consistent rationale to 
agency staff to increase the likelihood of a successful consolidation. 
[Footnote 47] 

* According to OPM officials who managed the implementation of the 
payroll consolidation initiative, the initiative required sustained 
White House and OMB involvement as well as the creation of the 
advisory council discussed above that brought together the key players 
from each of the agencies. 

* The plan to consolidate Census Bureau regional offices originated 
among senior-level Census officials. Specifically, the director, 
deputy director, and Field Division's senior management developed 
various options on the basis of different configurations and multiple 
plans. According to Census officials, they maintained absolute secrecy 
during this planning stage, which they said allowed them to consider a 
range of options that may otherwise have encountered immediate 
resistance. Once the Director of the Census Bureau decided on the new 
structure, the agency developed a communication strategy and informed 
key stakeholders, including relevant congressional members and staff, 
state and local elected officials, affected regional office staff, and 
then all other regional Census Bureau employees. Census leaders noted 
that they are now involved with every implementation step of their 
internally-driven effort. 

* We recently observed that in light of current efforts to reduce the 
federal budget deficit, which include significant proposed cuts in the 
budgets of most departments and agencies, including EPA, the agency 
will need to more effectively use its scientific and laboratory 
resources across the agency to ensure the agency is best positioned to 
fulfill the critical scientific work for its core mission.[Footnote 
48] Although independent evaluations have identified problems with 
EPA's laboratories' operations and management and called for improved 
planning, coordination, and leadership, as well as consolidation of 
laboratories, EPA has not appointed a top science official with 
responsibility and authority over all of the agency's research, 
science, and technical activities. Instead, these activities remain 
fragmented and largely uncoordinated, reflecting the independent 
organizational and management structures of the 15 senior officials 
charged with managing the scientific work performed at each 
laboratory. To improve cohesion in the management and operation of 
EPA's laboratories, we recommended that EPA establish a top-level 
science official with the authority and responsibility to coordinate, 
oversee, and make management decisions regarding major scientific 
activities throughout the agency, including the work of all program 
and regional laboratories. In response to our recommendation, EPA 
proposed to increase the responsibilities of its science advisor. 
However, it is not clear that this will fully address the issue and it 
may ultimately introduce additional challenges for EPA. 

Will a Dedicated Implementation Team Lead the Consolidation? 

We have previously reported that successful major merger and 
transformation efforts dedicate a strong and stable consolidation 
implementation team to lead the day-to-day management of a 
transformation initiative. 

* For example, IRS determined that the oversight, planning, and 
implementation of its consolidation should be centralized. The agency 
assigned responsibility for the implementation of its processing site 
consolidation plan to two offices within the Wage & Investment 
Division--the Customer Account Services Project Management Office and 
the Submission Processing Project Management Office. IRS officials 
said that it was important to have the same people involved throughout 
the process, and they noted that it was also helpful to establish time 
lines. They also used action plans to detail needed tasks and issues 
encountered during the consolidation process. The plans contained 
specific action items, dates, and responsible parties to help ensure 
accountability. IRS executives and managers reported that they met 
frequently during the consolidation process to discuss the action 
plans and progress made. The IRS also developed website resources to 
help the implementation team communicate changes to the rest of the 
agency. 

A 2007 audit conducted by the Treasury Inspector General for Tax 
Administration (TIGTA) found that the IRS implementation team helped 
to ensure a smooth transition during the consolidation.[Footnote 49] 
Specifically, TIGTA noted that the implementation team developed 
detailed plans that contained specific action items, dates, and 
responsible parties to help ensure accountability. The implementation 
team also met frequently with IRS executives and managers to discuss 
issues and progress made and communicated often with employees. TIGTA 
also found that the reduction in the number of processing sites did 
not adversely affect the processing of individual tax returns, and the 
IRS continued to have successful filing seasons during the 
consolidation process. They reported that IRS efforts to maintain high 
productivity and minimize the effect on taxpayers during the 
transition were generally successful. 

* OPM officials credited the sustained involvement of top leadership 
at the White House and OMB and a small, but dedicated, implementation 
team as driving factors in the payroll consolidation initiative. To 
oversee the payroll initiative, OPM created a Program Management 
Office, which consisted of the payroll initiative director, five full-
time staff, and three contractors. The project director reported 
directly to the director of OPM. One OPM official emphasized that 
these were dedicated staff that spent all of their time on the 
project, rather than as an additional duty. 

Will the Implementation Plan Include Metrics to Measure Progress 
toward the Consolidation's Goals? 

We have previously reported that federal agencies engaging in large 
projects need to plan to monitor and evaluate their efforts to 
identify areas for improvement.[Footnote 50] Reporting on these 
activities can help key decision makers within the agencies, as well 
as stakeholders, obtain feedback for improving both policy and 
operational effectiveness. Establishing implementation goals and 
milestone dates, and tracking progress toward those goals helps agency 
officials pinpoint performance shortfalls and suggest midcourse 
corrections, including any needed adjustments to the organization's 
future goals and milestones. Moreover, transparent reporting tools can 
help agencies manage stakeholder expectations about how much is being 
spent, when savings will start to accrue, and whether the agency is 
meeting performance goals during the transition. Imprecise information 
can produce an unrealistic expectation of cost savings and undermine 
the public's trust. 

Agencies consolidating physical infrastructure or management functions 
should plan to have metrics of success. These measures should show an 
organization's progress toward achieving an intended level of 
performance or results. Meaningful performance measures should also be 
limited to the vital few and cover multiple government priorities such 
as quality, timeliness, cost of service, customer service, and 
outcomes. Performance measurement systems need to include incentives 
for managers to strike the difficult balance among competing 
interests. One or two priorities, such as timeliness and cost, should 
not be overemphasized at the expense of others such as quality. 
Finally, measures need to provide managers and other stakeholders with 
timely, action-oriented information in a format that helps them make 
decisions that improve program performance.[Footnote 51] 

* For example, we reported that the performance plan VA and DOD 
developed to assess the provision of care and operations at the FHCC 
lacked transparency and may not provide a meaningful and accurate 
measure of success.[Footnote 52] DOD and VA developed 15 integration 
benchmarks and their corresponding performance measures to help them 
monitor their performance in three main areas: patient and staff 
satisfaction; clinical and administrative functions; and external 
evaluation. FHCC staff developed a scorecard that calculates a single 
monthly summary score for the performance measures, which they planned 
to present at their regular Advisory Board meetings. We reported that 
although the scorecard has the potential to be useful in tracking 
performance results over time, it does not account for data collection 
variation; there are no designated target scores to indicate 
successful performance; and the scorecard initially contained a 
calculation error, all of which raised concerns about its ability to 
provide transparent, meaningful, and accurate information. To address 
these concerns, we recommended that the Secretaries of Veterans 
Affairs and Defense direct FHCC leadership to conduct further 
evaluation of the scorecard reporting tool and its methodology and 
make revisions that will better ensure the transparency and accuracy 
of the information reported. In response to our recommendations, the 
VA stated that it changed the calculation process for the scorecard's 
monthly score. Specifically, FHCC staff will populate the scorecard 
with a score for each measure every month using either data acquired 
that month, or the most recent available data for those measures. 

* Census officials reported that they developed several financial and 
non-financial measures to assess their performance as they reorganize 
their regional structure. Officials also reported that they asked 
their survey clients to identify key concerns and risks, and then 
developed performance metrics to track those concerns. The measures 
they developed and plan to monitor include product quality, 
stakeholder satisfaction, productivity, transition costs, accrued 
savings, employee morale, and progress made toward meeting project 
milestones. 

* According to TIGTA, IRS did not adequately monitor the costs and 
benefits that accrued as the consolidation plan was implemented and 
reported imprecise savings data.[Footnote 53] The IRS could not 
provide reliable financial information on technology or personnel 
costs. The IRS also included savings resulting from electronic filing--
and the subsequent decreased paper workload--in the savings it 
attributed to consolidation. To address TIGTA's concern, the agency 
developed a methodology for tracking costs and benefits related to 
site closures, which separated consolidation efforts from the effects 
of reduced paper workload due to electronic filing. Being able to 
accurately monitor costs and estimate when savings will begin to 
accrue is essential for providing sound information to congressional 
decision makers, maintaining public confidence in the agency's ability 
to carry out large operations, and ensuring that long-term, 
multimillion dollar projects proceed in the most efficient manner. 

To monitor the success of those consolidation initiatives that involve 
one agency taking over a management function for another agency, 
agencies may find it helpful to measure customer service. Customer 
service measures can include customer access to services, wait times, 
accuracy, and other factors.[Footnote 54] 

* As the managing partner of the Human Resources Line of Business, OPM 
regularly assesses the four payroll providers on their ability to 
deliver on different business practices that customer agencies 
consider important, including customer relationship management. 
Practices are defined as proven management ideas that include 
techniques, methods, processes, or activities that can help an agency 
deliver outcomes. For example, the customer relationship management 
category includes the following practices: (1) understand and 
proactively address provider's customer needs; (2) proactively 
communicate and build relationships with provider's customers; (3) 
effectively respond to customer inquiries and requests; and (4) employ 
formal change management techniques to help customers identify and 
manage change. For each of the practices, OPM developed a set of yes-
no assessment questions--such as, Does your provider make findings 
from customer surveys, interviews, focus groups, etc. available to 
you?--to substantiate a provider's ability to demonstrate the 
practice. Through this assessment, OPM can monitor and report on which 
customer relationship practices agency providers effectively employ 
and which need to be strengthened. 

* State developed uniform service standards to measure service 
delivery at overseas posts; however, we found that these standards did 
not always address common concerns of overseas customers. For example, 
some agencies have raised concerns that ICASS service providers cannot 
meet their unique requirements, priority is given to some agencies 
over others, and their annual ICASS invoices contain billing errors, 
which require a significant amount of time to correct. State's 
performance reporting does not disaggregate results by customer 
agency, and as such, does not reflect the extent to which service 
delivery is inequitable across agencies, nor do State's metrics gauge 
progress on reducing the incidence of billing errors. To help ensure 
that State can more adroitly identify and address customer complaints, 
we recommended that it develop additional performance measures that 
gauge ICASS service providers' progress in resolving major sources of 
customer dissatisfaction.[Footnote 55] State officials said they plan 
to increase the number of services for which performance data--
including customer satisfaction data--are collected as part of an 
effort to better identify and meet the needs of customer agencies. 

Will the Implementation Plan Include a Strategy for Attracting and 
Retaining Key Talent? 

We have previously recommended that officials need a strategy to 
ensure that employees will have the appropriate skills to perform what 
may be new roles following consolidation. As described earlier, 
agencies may choose to consolidate infrastructure or functions because 
the old way of operating has become obsolete. 

* For example, IRS consolidated processing sites to address the 
increase in electronic tax filing and subsequent decrease in paper 
filing. Officials from the National Treasury Employees Union said they 
worked with employees who were going to lose their jobs at the paper 
processing sites to apply to transfer and get the necessary training 
to work at IRS's phone centers. 

* Census officials also reported that some employees will have 
different and additional responsibilities, such as a greater 
supervisory role, under the new management structure. They are 
developing training that they plan to implement in waves as the 
consolidation progresses. 

We have previously reported that agencies may also expect to see 
higher rates of turnover following a consolidation because individuals 
do not see their place in the new organizations. As agency officials 
consider closing offices to reduce costs and streamline operations, 
they run the risk of losing their top performers located in affected 
offices. While some turnover is to be expected and is appropriate, the 
new organization must "re-recruit" its key talent to limit the loss of 
needed individuals. When re-recruiting key talent, top leaders should 
identify which competencies are vital to the success of the new 
organization and select individuals who demonstrate those competencies. 

* To minimize the risk of losing a considerable pool of talent and 
expertise all at once, Census officials told us that employees in the 
closing regional offices are being provided the opportunity to express 
interest in, and be considered for, existing vacancies elsewhere with 
the Census Bureau and Department of Commerce before any other internal 
or external recruitment actions are pursued. 

Will the Implementation Plan Include a Strategy for Assessing and 
Mitigating Risk? 

As we have demonstrated throughout this report, consolidations are 
inherently risky endeavors. There are up-front costs that can quickly 
spiral upward. Moreover, significant delays in the project timeline 
could negatively impact an agency's ability to carry out its core 
mission. To understand the various factors that could potentially 
derail a consolidation effort and make informed judgments concerning 
the actions needed to reduce those risks, we have previously described 
the importance and value of developing comprehensive plans for 
assessing and mitigating risks.[Footnote 56] An effective 
implementation plan should identify all factors that will affect the 
program's cost, schedule, or technical status, including political, 
organizational, or business issues. Budget and funding risks, as well 
as risks associated with start-up activities, staffing, and 
organizational issues, should also be considered. 

Identifying, analyzing, and developing ways to manage risks is a 
continuous process that leadership and managers should monitor on a 
regular and recurring basis throughout the consolidation. 

* To help mitigate some of the major risks associated with 
consolidating the Human Resources Line of Business--such as selecting 
a provider agency that cannot adequately meet the needs of the client 
agency--OPM provided agencies with templates for conducting a risk 
analysis report and a fit gap analysis. The fit gap analysis template 
instructs customer agencies to perform a walk-through of each business 
process from beginning to end for each process scenario, show how the 
steps are supported by the provider agency, identify all shortcomings, 
and describe options for resolving those gaps. This resolution plan 
should provide an estimate of the implementation effort including time 
and resources and be of sufficient detail to be used by other 
migration team members who are responsible for resolving the gap. 

* Census officials developed a risk management plan intended to 
minimize the effect of unplanned events. Census created a Risk Review 
Board that meets monthly to assess and evaluate the effect of 
different categories of risks and to control changes to their master 
schedule. Some of the areas they are monitoring include the impact of 
the restructuring on affected employees, comprehension of new roles 
and responsibilities in the new operating environment, and security 
given the change in information technology architecture. Each 
identified risk is assigned a risk owner who must develop an analysis 
that includes a description of the risk, root cause, and possible 
impact on three major categories of the project: performance, cost, 
and schedule. The risk owner and review board will also determine the 
likelihood of occurrence on the basis of five categories ranging from 
extremely unlikely to extremely likely. Figure 2 has an identification 
form Census managers use to monitor risks. In addition to these 
planning and management steps, Census also added a 5 percent 
contingency to its restructuring budget to help absorb unforeseen 
costs. 

Figure 2: Identification Form Census Managers Use to Monitor Risks: 

[Refer to PDF for image: form illustration] 

Risk Identification Form:  

Risk Identification:  
Risk Title: 
Risk Description: 
Root Cause: 
Impact Description: 
Timeframe of Risk: 
Risk Category:  

Risk Identified by: 
Name (Last name, first, name): 
E-mail:
Phone: 
Date: 

Reference Information: 
Project Team Name (if applicable): 
Risk Owner (Last name, first name): 
Phone: 
E-mail: 
Risk Monitor (Last name, first name):
Phone: 
E-mail: 

Source: U.S. Census Bureau. 

[End of figure] 

Is There a Strategy for Using the Consolidation Experiences of Other 
Organizations and Lessons Learned? 

We have previously reported that managers of successful 
transformations seek to learn from best practices wherever they may be 
found.[Footnote 57] Agency officials involved with consolidation 
efforts reported that they sought the advice of public and private 
sector managers about their consolidation experiences. 

* For example, Census officials consulted with officials from 
Statistics Canada, Canada's national statistical agency, which had 
recently consolidated their operations. Specifically, Census officials 
were looking for advice on how to communicate internally and 
externally their decision to consolidate and what to expect in terms 
of employee reaction and morale. They also consulted with other 
federal statistical agencies as well as a variety of private, non-
profit, and academic data collection organizations to better 
understand how these organizations manage field staff and provide them 
with secure access to sensitive programmatic and cost data. According 
to one Census official, the key lesson from these consultations was 
that consolidation is not only possible, but can lead to demonstrable 
gains in efficiency, at the same time that security can be maintained. 
He also reported that their counterparts advised that it is imperative 
to maintain constant communication at all levels and at every stage of 
the consolidation process. 

* IRS and OPM officials reported that they implemented a lessons 
learned process after each phase of their consolidation plan to 
identify what worked well and what needed to be improved in future 
phases. According to IRS officials, after each site closure, they 
created a complete, searchable file of all documents related to the 
consolidation, and gave the next sites scheduled to close access. One 
official said that this repository of action plans, employee 
notifications, and other communications provided a blueprint for 
future consolidations and prevented unnecessary duplication of effort. 
OPM officials reported that post-implementation, each payroll provider 
agency met with representatives from the customer agencies to assess 
different aspects of the initiative such as project management and 
communication. OPM and the providers used that information to better 
plan and manage future migrations. According to OPM officials, the 
provider agencies were able to institute some changes on the basis of 
this feedback, such as involving both senior level managers and line 
personnel early in the planning stages and maintaining frequent 
communication including weekly conference calls and biweekly reviews 
of the project plan. 

Agency Comments: 

We provided the draft for review and comment to the five agencies with 
consolidation initiatives that were not covered by prior GAO work and 
made technical changes as appropriate. 

We are sending copies of this report to the appropriate congressional 
committees and other interested parties. The report is also available 
at no charge on the GAO website at [hyperlink, http://www.gao.gov]. If 
you have any questions concerning this report, please contact me at 
(202) 512-6806 or mihmj@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Key contributors to this report are listed in 
appendix IV. 

Signed by: 

J. Christopher Mihm: 
Managing Director, Strategic Issues: 

[End of section] 

Appendix I: Scope and Methodology: 

To identify key questions that federal agencies should consider when 
evaluating whether to consolidate physical infrastructure or 
management functions, we identified and reviewed relevant literature 
on public sector consolidations produced by academic institutions, 
professional associations, think tanks, news outlets, and various 
other organizations. This information complemented our review of GAO's 
extensive body of work on government reform. Specifically, we reviewed 
close to 50 reports produced from 1980 to 2011 that recommended or 
commented on consolidation of physical infrastructure or management 
functions at the federal level. 

We interviewed practitioners and academic experts in public management 
and government reform including Jitinder Kohli from the Center for 
American Progress; John Koskinen from Freddie Mac; Rosemary O'Leary 
from the Maxwell School of Syracuse University; and Paul Posner from 
the School of Public and International Affairs, George Mason 
University. We also interviewed former officials from the Office of 
Management and Budget; Karen Evans, Mark Forman, John Marshall, and 
Robert Shea, knowledgeable about management function consolidations 
and the Lines of Business initiative. We selected these practitioners 
and experts on the basis of our literature review and recommendations 
from other experts. We also met with a panel of Fellows from the 
National Academy of Public Administration, comprising former 
government executives.[Footnote 58] Participants included Jonathan 
Breul; Doris Hausser; Dwight Ink; Susan Jacobs; Herbert Jasper; John 
Kamensky; Albert Kliman; F. Stevens Redburn; and Thomas Stanton. The 
participants described their consolidation experiences at federal 
agencies such as the Office of Management and Budget; the Office of 
Personnel Management; the U.S. Agency for International Development; 
the U.S. Department of Agriculture; the Department of Health and Human 
Services; and the Department of Housing and Urban Development. 

Using our literature review and interviews, we derived a set of 
questions to help decision makers evaluate whether consolidation of 
physical infrastructure or management functions will lead to greater 
efficiencies or effectiveness. We provided the questions to many of 
the individuals we interviewed for their review and incorporated their 
comments where appropriate. 

To illustrate how agencies have attempted to address the questions 
about consolidation, we selected eight consolidation examples at the 
federal agency level. These examples include a mix of physical 
infrastructure and management functions, intra-agency and interagency 
initiatives, and recommended, ongoing, and completed efforts. For our 
illustrative examples, we reviewed documentation such as cost analyses 
and performance plans to obtain information about how agencies planned 
and implemented consolidation efforts and collected through interviews 
and document requests information from the agencies on how they 
estimated, gathered, or calculated consolidation cost savings. Because 
it was not the purpose of this report to assess the anticipated or 
actual success of consolidation efforts, we did not attempt to 
independently verify the reliability of these data or estimates. As a 
result, the reported estimated or actual cost savings are of 
undetermined reliability. We also conducted interviews with agency 
officials responsible for implementing the consolidation initiatives, 
as well as union representatives from the National Treasury Employees 
Union. In the examples of the Department of Defense's Base Realignment 
and Closure, the Environmental Protection Agency's laboratories, the 
Office of Management and Budget's data center consolidation, and the 
Department of State's International Cooperative Administration Support 
Services, we relied on our recently published reports.[Footnote 59] 
Table 4 lists the consolidation initiatives and the types of 
consolidation for the examples we included in the report. 

Table 4: Federal Agency Consolidation Examples in Various Stages of 
Implementation: 

Consolidation initiative: Department of Commerce Census Bureau 
Regional Offices; 
Type of consolidation: Intra-agency/physical infrastructure. 

Consolidation initiative: Department of Defense Base Realignment and 
Closure; 
Type of consolidation: Intra-agency/physical infrastructure. 

Consolidation initiative: Department of the Treasury Internal Revenue 
Service Processing Centers; 
Type of consolidation: Intra-agency/physical infrastructure. 

Consolidation initiative: Environmental Protection Agency Laboratories; 
Type of consolidation: Recommended intra-agency/physical 
infrastructure. 

Consolidation initiative: Office of Management and Budget Federal Data 
Center Consolidation Initiative; 
Type of consolidation: Intra-agency/physical infrastructure and 
management function. 

Consolidation initiative: Office of Personnel Management Payroll 
Systems; 
Type of consolidation: Interagency/management function. 

Consolidation initiative: Department of State International 
Cooperative Administrative Support Services System; 
Type of consolidation: Interagency/management function. 

Consolidation initiative: Department of Veterans Affairs and 
Department of Defense Federal Health Care Center; 
Type of consolidation: Interagency/physical infrastructure and 
management function. 

Source: GAO. 

[End of table] 

We did not attempt to identify all consolidation efforts of physical 
infrastructure and management functions at the federal level that 
could have illustrated the questions, challenges, and practices that 
decision makers could adopt to help them overcome challenges. While we 
believe that these questions, challenges, and practices are applicable 
across different agencies and for various types of consolidation 
efforts, with our approach we are not able to definitively say that 
the experiences associated with these consolidation activities can be 
applied successfully to future federal consolidation initiatives. 

We provided the draft for review and comment to the five agencies with 
consolidation initiatives that were not covered by prior GAO work and 
made technical changes as appropriate. We conducted our work from June 
2011 to May 2012 in the Washington, D.C., metropolitan area in 
accordance with all sections of GAO's Quality Assurance Framework that 
are relevant to our objective. The framework requires that we plan and 
perform the engagement to obtain sufficient and appropriate evidence 
to meet our stated objectives and to discuss any limitations in our 
work. We believe that the information and data obtained, and the 
analysis conducted, provide a reasonable basis for any findings and 
conclusions in this product. 

[End of section] 

Appendix II: Additional Questions Related to Physical Infrastructure 
and Management Function Consolidation Initiatives: 

The following are additional sub-questions related to the ideas, 
strategies, and leading practices that may facilitate physical 
infrastructure or management function consolidations. This list is not 
exhaustive, nor is it necessary for an agency to consider every listed 
question. Rather, the presence of some of these considerations may 
indicate that agency officials have developed a sound consolidation 
strategy. Conversely, the absence of consideration of these questions 
could indicate that agency officials have not adequately planned their 
physical infrastructure or management function consolidation. 

What Are the Goals of the Consolidation? What Opportunities Will Be 
Addressed through the Consolidation and What Problems Will Be Solved? 
What Problems, If Any, Will Be Created? 

* Have agency leaders identified specific goals to be achieved through 
consolidation? 

* Have agency leaders assessed how consolidation can help an agency 
incorporate changes in technology, business processes, or the needs of 
customers or clients? 

* How have agency leaders weighed the importance of achieving the 
goals against a realistic assessment of the effort that will be 
required to achieve them? 

* How have agency leaders considered the risks to consolidation that 
could prevent the achievement of goals and planned for ways to manage 
them? 

* Are agency leaders defining the benefits associated with 
consolidation and describing how the future will be both different 
from and better than the past? 

* Are agency leaders providing a clear and compelling picture of what 
will constitute success? 

What Will Be the Likely Costs and Benefits of the Consolidation? Are 
Sufficiently Reliable Data Available to Support a Business-Case 
Analysis or Cost-Benefit Analysis? 

* What data on the likely costs and benefits of a consolidation are 
available? 

* Are the data sufficiently accurate and reliable? What data on the 
likely costs and benefits of a consolidation are unavailable, and has 
a plan been developed to mitigate the unavailability or unreliability 
of certain data? 

* On the basis of the data available, can a reasonable expectation of 
a consolidation's costs and benefits be drawn? 

* Have the likely costs and benefits been subjected to a sensitivity 
analysis? How sensitive are the estimated costs and benefits to 
variation in less reliable data or other key assumptions? 

How Can the Up-Front Costs Associated with the Consolidation Be Funded? 

* Can immediate efficiencies or uncommitted funds in other areas be 
redirected to pay for the up-front costs of a consolidation? 

* Has the agency considered how it will assess return on investment 
for any funding for up-front costs? 

* Can a working capital fund or other funds be drawn on as a funding 
mechanism? 

* Is Congress amenable to establishing a funding mechanism for a 
consolidation and appropriating funds for it? 

Who are the Consolidation Stakeholders, and How Will They Be Affected? 
How Have the Stakeholders Been Involved in the Decision, and How Have 
their Views Been Considered? On Balance, Do Stakeholders Understand 
the Rationale for Consolidation? 

* Have agency leaders identified affected stakeholders? 

* Have agency leaders determined the necessary frequency and timing of 
communication about the consolidation to internal and external 
stakeholders? 

* Does the communication strategy allow for a two-way exchange of 
information between management and stakeholders? 

* How is the agency planning to involve employees to obtain their 
ideas and get their support? Have union representatives been 
consulted? Are there employee task teams responsible for developing 
and proposing common solutions to particular issues related to the 
consolidation? 

* How does the agency plan to provide information to employees about 
how their jobs might be affected, what their rights and protections 
might be, or how their responsibilities might change with the new 
organization? 

* Is the agency planning to communicate information through different 
channels such as e-mail, face-to-face meetings, large and small group 
meetings, intranet websites, and town hall meetings? 

To What Extent Do Plans Show That Change Management Practices Will Be 
Used to Implement the Consolidation? 

Will Top Leadership Be Engaged in Driving the Consolidation Plan? 

* Do agency leaders have plans to move deliberately to demonstrate 
their conviction and commitment to making the needed changes? 

* Do agency leaders have plans to provide clear guidance to employees 
about how to conduct business during a potentially turbulent period? 

Will a Dedicated Implementation Team Lead the Consolidation? 

* Will the implementation team have strong program management skills 
and a proven record of successfully working through or overseeing 
major transformations? 

* Are there networks such as senior executive councils, functional 
teams, or cross-cutting teams that can ensure that changes are 
thoroughly implemented and sustained over time? 

Will the Implementation Plan Include Metrics to Measure Progress 
toward the Consolidation's Goals? 

* Will there be an action plan with goals and milestones to track 
progress and identify any needed mid-course adjustments? 

* Will an action plan identify critical phases and the essential 
activities that need to be completed by and on any given date? Are 
there plans to publicize and report progress on specific goals for 
each phase of the initiative? 

* Is there a strategy for tracking employee attitudes toward the 
consolidation and identifying any morale or productivity issues? 

* Will the implementation plan include a strategy for attracting and 
retaining key talent? 

Will the Implementation Plan Include a Strategy for Assessing and 
Mitigating Risk? 

* Will the implementation plan be informed by a risk assessment that 
includes the following five steps? 

* Set strategic goals and objectives, and determine constraints: 

* Assess risks: 

* Evaluate alternatives for addressing these risks: 

* Select the appropriate alternatives: 

* Implement the alternatives and monitor progress made and results 
achieved: 

Is there a Strategy for Using the Consolidation Experiences of Other 
Organizations and Lessons Learned? 

* Have agency officials involved with the consolidation initiative 
identified and consulted with other agencies or organizations that 
planned for or implemented a similar consolidation effort? 

* Is there a process for capturing lessons learned after each phase of 
the consolidation and using the information to improve the management 
of subsequent phases? 

[End of section] 

Appendix III: Key Change Management Practices: 

Highlights Of A GAO Forum: Highlights of GAO-03-293SP. 

Mergers and Transformation: Lessons Learned for a Department of 
Homeland Security and Other Federal Agencies: 

Why GAO Convened this Forum: 

The early years of the 21st century are proving to be a period of 
profound transition for our world, our country, and our government. The 
federal government needs to engage in a comprehensive review, 
reassessment, reprioritization, and as appropriate, re-engineering of 
what the government does, how it does business, and in some cases, who 
does the government’s business. Leading public and private 
organizations in the United States and abroad have found that for 
organizations to successfully transform themselves they must often 
fundamentally change their culture. 

On September 24, 2002, GAO convened a forum to identify and discuss 
useful practices and lessons learned from major private and public 
sector organizational mergers, acquisitions, and transformations that 
federal agencies could implement to successfully transform their 
cultures and a new Department of Homeland Security could use to merge 
its various originating components into a unified department. The 
invited participants have experience managing or studying large-scale 
organizational mergers, acquisitions, and transformations. 

What Participants Said: 

There are a number of key practices that have consistently been found 
at the center of successful mergers, acquisitions, and transformations 
and can serve as a basis for subsequent consideration as federal 
agencies seek to transform their cultures in response to governance 
challenges. These practices include the following: 

1. Ensure top leadership drives the transformation. Leadership must 
set the direction, pace, and tone and provide a clear, consistent 
rationale that brings everyone together behind a single mission; 

2. Establish a coherent mission and integrated strategic goals to guide 
he transformation. Together the mission and goals define the culture 
and serve as a vehicle for employees to unite and rally around; 

3. Focus on a key set of principles and priorities at the outset of the 
transformation. A clear set of principles and priorities serve as a 
framework to help the organization create a new culture and drive 
employee behaviors; 

4. Set implementation goals and a timeline to build momentum and show 
progress from day one. Goals and a timeline are essential because the 
transformation could take years to complete; 

5. Dedicate an implementation team to manage the transformation 
process. A strong and stable team is important to ensure that the 
transformation receives the needed attention to be sustained and 
successful; 

6. Use the performance management system to define responsibility and 
assure accountability for change. A “line of sight” shows how team, 
unit, and individual performance can contribute to overall 
organizational results; 

7. Establish a communication strategy to create shared expectations 
and report related progress. The strategy must reach out to employees, 
customers, and stakeholders and engage them in a two-way exchange; 

8. Involve employees to obtain their ideas and gain their ownership 
for the transformation. Employee involvement strengthens the process 
and allows them to share their experiences and shape policies; and; 

9. Build a world-class organization. Building on a vision of improved 
performance, the organization adopts the most efficient, effective, 
and economical personnel, system, and process changes and continually 
seeks to implement best practices. 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-293SP]. 

To view the full report, including the scope and methodology, click on 
the link above. For more information, contact J. Christopher Mihm at 
(202) 512-6806 or mihmj@gao.gov. 

[End of highlights] 

GAO Highlights: 

Highlights of GAO-03-669, a report to congressional requesters. 

Results-Oriented Cultures: 

Implementation Steps to Assist Mergers and Organizational 
Transformations: 

Why GAO Did This Study: 

The Comptroller General convened a forum in September 2002 to identify 
useful practices and lessons learned from major private and public 
sector mergers, acquisitions, and organizational transformations. This 
was done to help federal agencies implement successful transformations 
of their cultures, as well as the new Department of Homeland Security 
merge its various originating components into a unified department. 
There was general agreement on a number of key practices found at the 
center of successful mergers, acquisitions, and transformations. In 
this report, we identify the specific implementation steps for the key 
practices raised at the forum with illustrative private and public 
sector examples. 

To identify these implementation steps and examples, we relied 
primarily on interviews with selected forum participants and other 
experts about their experiences implementing mergers, acquisitions, and 
transformations and also conducted a literature review. 

What GAO Found: 

At the center of any serious change management initiative are the 
people. Thus, the key to a successful merger and transformation is to 
recognize the “people” element and implement strategies to help 
individuals maximize their full potential in the new organization, 
while simultaneously managing the risk of reduced productivity and 
effectiveness that often occurs as a result of the changes. Building on 
the lessons learned from the experiences of large private and public 
sector organizations, these key practices and implementation steps can 
help agencies transform their cultures so that they can be more results 
oriented, customer focused, and collaborative in nature. 

Key Practices and Implementation Steps for Mergers and Organizational 
Transformations: 

Practice: Ensure top leadership drives the transformation; 
Implementation Step: 
* Define and articulate a succinct and compelling reason for change; 
* Balance continued delivery of services with merger and transformation 
activities. 

Practice: Establish a coherent mission and integrated strategic goals 
to guide the transformation; 
Implementation Step: 
* Adopt leading practices for results-oriented strategic planning and 
reporting. 

Practice: Focus on a key set of principles and priorities at the outset 
of the transformation; 
Implementation Step: 
* Embed core values in every aspect of the organization to reinforce 
the new culture. 

Practice: Set implementation goals and a timeline to build momentum and 
show progress from day one; 
Implementation Step: 
* Make public implementation goals and timeline; 
* Seek and monitor employee attitudes and take appropriate follow-up 
actions; 
* Identify cultural features of merging organizations to increase 
understanding of former work environments; 
* Attract and retain key talent; 
* Establish an organizationwide knowledge and skills inventory to 
exchange knowledge among merging organizations. 

Practice: Dedicate an implementation team to manage the transformation 
process; 
Implementation Step: 
* Establish networks to support implementation team; 
* Select high-performing team members. 

Practice: Use the performance management system to define 
responsibility and assure accountability for change; 
Implementation Step: 
* Adopt leading practices to implement effective performance management 
systems with adequate safeguards. 

Practice: Establish a communication strategy to create shared 
expectations and report related progress; 
Implementation Step: 
* Communicate early and often to build trust; 
* Ensure consistency of message; 
* Encourage two-way communication; 
* Provide information to meet specific needs of employees. 

Practice: Involve employees to obtain their ideas and gain their 
ownership for the transformation; 
Implementation Step: 
* Use employee teams; 
* Involve employees in planning and sharing performance information; 
* Incorporate employee feedback into new policies and procedures; 
* Delegate authority to appropriate organizational levels. 

Practice: Build a world-class organization; 
Implementation Step: 
* Adopt leading practices to build a world-class organization. 

Source: GAO. 

[End of table] 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-669]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact J. Christopher Mihm, 
(202) 512-6806 or mihmj@gao.gov. 

[End of highlights] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Elizabeth Curda, Assistant 
Director, and Judith Kordahl, Analyst-in-Charge, supervised the 
development of this report. Jessica Nierenberg and Dan Webb made 
significant contributions to all aspects of this report. Martin De 
Alteriis assisted with the design and methodology. A.J. Stephens 
provided legal counsel. Janice Latimer and Kathleen Padulchick 
verified the information in the report, and Donna Miller developed the 
report's graphics. 

Other important contributors included Vijaykumar Barnabas; Jill 
Center; Carol Henn; David Hinchman; Diane LoFaro; James Michels; 
Angela Miles; Susan Offutt; Joanna Stamatiades; and Laura Talbott. 

[End of section] 

Footnotes: 

[1] GAO, 2012 Annual Report: Opportunities to Reduce Duplication, 
Overlap and Fragmentation, Achieve Savings, and Enhance Revenue, 
[hyperlink, http://www.gao.gov/products/GAO-12-342SP] (Washington, 
D.C.: Feb. 28, 2012) and Opportunities to Reduce Potential Duplication 
in Government Programs, Save Tax Dollars, and Enhance Revenue, 
[hyperlink, http://www.gao.gov/products/GAO-11-318SP] (Washington, 
D.C.: Mar. 1, 2011). 

[2] See, for example, GAO, Opportunities for Oversight and Improved 
Use of Taxpayer Funds, [hyperlink, 
http://www.gao.gov/products/GAO-03-1006] (Washington, D.C.: Aug. 1, 
2003); Best Practices: Elements Critical to Successfully Reducing 
Unneeded RDT&E Infrastructure, [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD/RCED-98-23] (Washington, D.C.: 
Jan. 8, 1998); and Embassy Management: Actions Are Needed to Increase 
Efficiency and Improve Delivery of Administrative Support Services, 
[hyperlink, http://www.gao.gov/products/GAO-04-511] (Washington, D.C.: 
Sept. 7, 2004). 

[3] See, for example, GAO, Results-Oriented Government: Practices That 
Can Help Enhance and Sustain Collaboration among Federal Agencies, 
[hyperlink, http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: 
Oct. 21, 2005). We are also in the process of assessing interagency 
collaboration mechanisms with a report scheduled for release in fall 
2012. 

[4] See, for example, GAO, Data Center Consolidation: Agencies Need to 
Complete Inventories and Plans to Achieve Expected Savings, 
[hyperlink, http://www.gao.gov/products/GAO-11-565] (Washington, D.C.: 
July 19, 2011); Embassy Management: State Department and Other 
Agencies Should Further Explore Opportunities to Save Administrative 
Costs Overseas, [hyperlink, http://www.gao.gov/products/GAO-12-317] 
(Washington, D.C.: Jan. 31, 2012); and Military Bases: Analysis of 
DOD's 2005 Selection Process and Recommendations for Base Closures and 
Realignments, [hyperlink, http://www.gao.gov/products/GAO-05-785] 
(Washington, D.C.: July 1, 2005). 

[5] Established in 1967 and chartered by Congress, the National 
Academy of Public Administration is a non-profit, independent 
coalition of public management and organizational leaders. For more 
information, go to [hyperlink, http://www.napawash.org]. 

[6] Executive Office of the President of the United States, Building a 
21st Century Government by Cutting Duplication, Fragmentation, and 
Waste (Washington, D.C.: Feb. 28, 2012). 

[7] Exec. Order No. 13,327, Federal Real Property Asset Management, 69 
Fed. Reg. 5897 (Feb. 4, 2004). 

[8] S. 2129 112th Cong. (2012). On April 19, 2012, a companion bill 
was introduced in the House of Representatives, H.R. 4409 112th Cong. 
(2012). 

[9] For our testimony on the legislation before the Senate Committee 
on Homeland Security and Governmental Affairs, see GAO, Government 
Efficiency and Effectiveness: Opportunities for Improvement and 
Considerations for Restructuring, [hyperlink, 
http://www.gao.gov/products/GAO-12-454T] (Washington, D.C.: Mar. 21, 
2010). 

[10] GAO, Executive Reorganization Authority: Balancing Executive and 
Congressional Roles in Shaping the Federal Government's Structure, 
[hyperlink, http://www.gao.gov/products/GAO-03-624T] (Washington, 
D.C.: Apr. 3, 2003). 

[11] Congress passed the Internal Revenue Service Restructuring and 
Reform Act of 1998, which established a performance goal of having 80 
percent of individual tax returns e-filed by 2007, among other 
requirements. Pub. L. No. 105-206, 112 Stat. 685 (1998). 

[12] The BRAC Commission for the 2005 round was a nine-member 
bipartisan commission, appointed by the President, which made 
recommendations on the basis of a review and analysis of 
recommendations from the Secretary of Defense, on base closures and 
realignments. The President and Congress had to accept or reject the 
commission's report in its entirety. National Defense Authorization 
Act for Fiscal Year 1990, Pub. L No. 101-510, title XXIX, Defense Base 
Closure and Realignment Act of 1990, 104 Stat. 1485, as amended by the 
National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 
107-107, title XXX, 115 Stat. 1012, 1342-1353 (2001). 

[13] GAO, Federal Real Property: Progress Made on Planning and Data, 
but Unneeded Owned and Leased Facilities Remain, [hyperlink, 
http://www.gao.gov/products/GAO-11-520T] (Washington, D.C.: Apr. 6, 
2011). 

[14] GAO, Streamlining Government: Opportunities Exist to Strengthen 
OMB's Approach to Improving Efficiency, [hyperlink, 
http://www.gao.gov/products/GAO-10-394] (Washington, D.C.: May 7, 
2010). 

[15] [hyperlink, http://www.gao.gov/products/GAO-12-317]. 

[16] A business-case analysis or cost-benefit analysis is a 
comparative analysis that presents facts and supporting details among 
competing alternatives. See GAO, Cost Estimating and Assessment Guide: 
Best Practices for Developing and Managing Capital Program Costs, 
GAO093SP (Washington, D.C.: March 2009). 

[17] National Research Council, Investments in Federal Facilities: 
Asset Management Strategies for the 21st Century (Washington, D.C., 
National Academies Press, 2004). 

[18] GAO, Highlights of an Expert Panel: The Benefits and Costs of 
Highway and Transit Investments, [hyperlink, 
http://www.gao.gov/products/GAO-05-423SP] (Washington, D.C.: May 6, 
2005). 

[19] OMB, Guidelines and Discount Rates for Benefit-Cost Analysis of 
Federal Programs, OMB Circular A-94 (Washington, D.C.: Oct. 29, 1992). 

[20] For example, see GAO, Human Capital: DOD Needs Better Internal 
Controls and Visibility over Costs for Implementing Its National 
Security Personnel System, [hyperlink, 
http://www.gao.gov/products/GAO-07-851] (Washington, D.C.: July 16, 
2007) and Financial Management: NOAA Needs to Better Document Its 
Policies and Procedures for Providing Management and Administration 
Services, [hyperlink, http://www.gao.gov/products/GAO-11-226] 
(Washington, D.C.: Jan. 31, 2011). 

[21] [hyperlink, http://www.gao.gov/products/GAO-11-520T]. 

[22] GAO, Military Base Realignments and Closures: Key Factors 
Contributing to BRAC 2005 Results, [hyperlink, 
http://www.gao.gov/products/GAO-12-513T] (Washington, D.C.: Mar. 8, 
2012). As we have previously reported, we and the BRAC Commission 
believe that DOD's net annual recurring savings estimates are 
overstated because they include savings from eliminating military 
personnel positions without corresponding decreases in end-strength. 
DOD disagrees with our position. See also, GAO, Military Base 
Realignments and Closures: Estimated Costs Have Increased While 
Savings Estimates Have Decreased Since Fiscal Year 2009, [hyperlink, 
http://www.gao.gov/products/GAO-10-98R] (Washington, D.C.: Nov. 13, 
2009). 

[23] DOD and VA integrated the Naval Health Clinic Great Lakes and the 
North Chicago VA Medical Center and are operating a system of 
healthcare known as the DOD/VA Medical Facility Demonstration Project, 
Federal Health Care Center (FHCC) from 2010 to 2015 pursuant to 
statutory authority. 10 U.S.C. § 1104; 38 U.S.C. § 8111; Duncan Hunter 
National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 
110-417, § 706, 122 Stat. 4356, 4500 (2008); National Defense 
Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, §§ 1701-
1706, 123 Stat 2190, 2567-2574 (2009). These provisions authorize the 
FHCC to provide health care services to VA and DOD beneficiaries, 
consistent with applicable policies of both departments. To accomplish 
the missions of both departments in this VA/DOD integration, the FHCC 
will support both VA/DOD Healthcare and DOD Operational readiness 
missions. 

[24] Cloud computing is location-independent computing, whereby shared 
servers provide resources, software, and data to computers and other 
devices on demand, as with the electricity grid. In May 2010, GAO 
issued a report on federal cloud computing efforts. See Information 
Security: Federal Guidance Needed to Address Control Issues with 
Implementing Cloud Computing, [hyperlink, 
http://www.gao.gov/products/GAO-10-513] (Washington, D.C.: May 27, 
2010). 

[25] In [hyperlink, http://www.gao.gov/products/GAO-11-565], we 
reported that 14 agencies initially reported savings between 2011 and 
2015 from the data center consolidation initiative of $700 million, 
but actual savings may be even higher because 12 of those agencies' 
estimates were incomplete. 

[26] [hyperlink, http://www.gao.gov/products/GAO-11-565]. 

[27] EPA tasked the MITRE Corporation to perform an independent 
evaluation of its laboratories to be used by the agency as one of the 
inputs in developing a report to Congress. The MITRE Corporation is a 
not-for-profit organization chartered to work in the public interest 
with expertise in systems engineering, information technology, 
operational concepts, and enterprise modernization. 

[28] GAO, Environmental Protection Agency: To Better Fulfill Its 
Mission, EPA Needs a More Coordinated Approach to Managing Its 
Laboratories, [hyperlink, http://www.gao.gov/products/GAO-11-347] 
(Washington, D.C.: July 25, 2011). 

[29] [hyperlink, http://www.gao.gov/products/GAO-12-317]. 

[30] See, for example, GAO, Federal Real Property: Overreliance on 
Leasing Contributed to High-Risk Designation, [hyperlink, 
http://www.gao.gov/products/GAO-11-879T] (Washington, D.C.: Aug. 4, 
2011). 

[31] A working capital fund is a type of intragovernmental revolving 
fund that generally finances the centralized provision of common 
services within an agency, such as building security or human capital 
management. Receipts come primarily from other government agencies, 
programs, or activities. See GAO, Principles of Federal Appropriations 
Law, [hyperlink, http://www.gao.gov/products/GAO-08-978SP] 
(Washington, D.C.: September 2008). Census's working capital fund 
contains money that the bureau collects for providing management and 
administrative services to its internal divisions and survey support 
services for other federal and nonfederal entities. See GAO, 
Intragovernmental Revolving Funds: Commerce Departmental and Census 
Working Capital Funds Should Better Reflect Key Operating Principles, 
[hyperlink, http://www.gao.gov/products/GAO-12-56] (Washington, D.C.: 
Nov. 18, 2011). 

[32] [hyperlink, http://www.gao.gov/products/GAO-11-565]. 

[33] The Bush administration's Lines of Business initiative was 
designed to improve the federal government's use of information 
technology and better business practices. In the spring of 2004, OMB 
announced the formation of Lines of Business task forces. The task 
forces analyzed data to identify ways where services could integrate 
common information technology and electronic government-related 
practices across agencies into a single unified standard. OMB planned 
to form "centers of excellence" or "shared service vendors" for each 
line of business to manage common functions and tasks across agencies. 

[34] GAO, Streamlining Government: Key Practices from Select 
Efficiency Initiatives Should Be Shared Governmentwide, [hyperlink, 
http://www.gao.gov/products/GAO-11-908] (Washington, D.C.: Sept. 30, 
2011). 

[35] [hyperlink, http://www.gao.gov/products/GAO-11-908]. 

[36] Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, 123 
Stat. 3034, 3093 (2010). 

[37] [hyperlink, http://www.gao.gov/products/GAO-11-908]. 

[38] [hyperlink, http://www.gao.gov/products/GAO-11-318SP]. 

[39] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, [hyperlink, 
http://www.gao.gov/products/GAO-03-669] (Washington, D.C. July 2, 
2003). 

[40] [hyperlink, http://www.gao.gov/products/GAO/NSIAD/RCED-98-23]. 
Also, in February 2012, the House passed as amended H.R. 1734, the 
Civilian Property Realignment Act. The legislation would establish an 
independent Civilian Property Realignment Commission to identify 
opportunities for the federal government to reduce its inventory of 
civilian real property and reduce costs. The legislation would require 
each federal agency to submit current data to the General Services 
Administration and OMB regarding the agency's federal civilian real 
property and to recommend sales or other dispositions of federal 
property, reductions in civilian property inventory, and operational 
efficiencies. 

[41] [hyperlink, http://www.gao.gov/products/GAO-11-520T]. 

[42] GAO, Streamlining the Federal Field Structure: Potential 
Opportunities, Barriers, and Actions That Can Be Taken, [hyperlink, 
http://www.gao.gov/products/FPCD-80-4] (Washington, D.C.: Aug. 5, 
1980). 

[43] [hyperlink, http://www.gao.gov/products/GAO-03-669]. 

[44] Peter Frumkin, Making Public Sector Mergers Work: Lessons Learned 
(Arlington, Va.: IBM Center for The Business of Government, August 
2003). 

[45] [hyperlink, http://www.gao.gov/products/GAO-03-293SP]. 

[46] [hyperlink, http://www.gao.gov/products/GAO-03-293SP]. 

[47] [hyperlink, http://www.gao.gov/products/GAO-03-239SP]. 

[48] [hyperlink, http://www.gao.gov/products/GAO-11-347]. 

[49] Treasury Inspector General for Tax Administration, Consolidation 
of Tax Return Processing Sites is Progressing Effectively, but 
Improved Project Management is Needed, 2007-40-165 (Washington, D.C.: 
Aug. 31, 2007). 

[50] [hyperlink, http://www.gao.gov/products/GAO-03-669]. 

[51] GAO, Tax Administration: IRS Needs to Further Refine Its Tax 
Filing Season Performance Measures, [hyperlink, 
http://www.gao.gov/products/GAO-03-143] (Washington, D.C.: Nov. 22, 
2002). 

[52] [hyperlink, http://www.gao.gov/products/GAO-11-570]. 

[53] Treasury Inspector General for Tax Administration, 2007-40-165. 

[54] GAO, Managing for Results: Opportunities to Strengthen Customer 
Service Efforts, [hyperlink, http://www.gao.gov/products/GAO-11-44] 
(Washington, D.C.: Oct. 27, 2010). 

[55] [hyperlink, http://www.gao.gov/products/GAO-12-317]. 

[56] GAO, Information Security Risk Assessment: Practices of Leading 
Organization, [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-33] 
(Washington, D.C.: November, 1999). 

[57] [hyperlink, http://www.gao.gov/products/GAO-03-239SP]. 

[58] Established in 1967 and chartered by Congress, the National 
Academy of Public Administration is a non-profit, independent 
coalition of public management and organizational leaders. For more 
information, go to [hyperlink, http://www.napawash.org]. 

[59] We drew from our prior reports: GAO, Military Base Realignments 
and Closures: Key Factors Contributing to BRAC 2005 Results, 
[hyperlink, http://www.gao.gov/products/GAO-12-513T] (Washington, 
D.C.: Mar. 8, 2012); Military Base Realignments and Closures: 
Estimated Costs Have Increased While Savings Estimates Have Decreased 
Since Fiscal Year 2009, [hyperlink, 
http://www.gao.gov/products/GAO-10-98R] (Washington D.C.: Nov. 13, 
2009); Military Bases: Analysis of DOD's 2005 Selection Process and 
Recommendations for Base Closures and Realignments, [hyperlink, 
http://www.gao.gov/products/GAO-05-785] (Washington, D.C.: July 1, 
2005); Environmental Protection Agency: To Better Fulfill Its Mission, 
EPA Needs a More Coordinated Approach to Managing its Laboratories, 
[hyperlink, http://www.gao.gov/products/GAO-11-347] (Washington, D.C.: 
July 25, 2011); Data Center Consolidation: Agencies Need to Complete 
Inventories and Plans to Achieve Expected Savings, [hyperlink, 
http://www.gao.gov/products/GAO-11-565] (Washington, D.C.: July 19, 
2011); and Embassy Management: State Department and Other Agencies 
Should Further Explore Opportunities to Save Administrative Costs 
Overseas, [hyperlink, http://www.gao.gov/products/GAO-12-317] 
(Washington, D.C.: Jan. 31, 2012). 

[End of section] 

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