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United States Government Accountability Office:
GAO: 

Report to the Committee on Homeland Security and Governmental Affairs, 
and Its Subcommittee on Oversight of Government Management, the 
Federal Workforce, and District of Columbia, U.S. Senate: 

September 2011: 

Streamlining Government: 

Key Practices from Select Efficiency Initiatives Should Be Shared 
Governmentwide: 

GAO-11-908: 

GAO Highlights: 

Highlights of GAO-11-908, a report to the Committee on Homeland 
Security and Governmental Affairs, and Its Subcommittee on Oversight 
of Government Management, the Federal Workforce, and District of 
Columbia, U.S. Senate. 

Why GAO Did This Study: 

Given continuing budget pressures combined with the focus on 
performance envisioned in the GPRA Modernization Act of 2010, federal 
agencies need to identify ways to operate more efficiently. GAO was 
asked to (1) describe selected initiatives that federal departments 
are implementing to achieve efficiencies; and (2) identify key 
practices associated with implementing these initiatives, as well as 
selected state initiatives, that can be applied more broadly in the 
federal government. GAO reviewed agency documents and interviewed 
officials from the Departments of Homeland Security (DHS), Veterans 
Affairs (VA), Defense (DOD), and Housing and Urban Development (HUD), 
as well as officials from five states-—Virginia, Iowa, Texas, 
Washington, and Georgia. 

What GAO Found: 

Federal departments in our review used different approaches to improve 
efficiency. Their efficiency initiatives generally fell within two 
categories—-(1) reexamining programs, structures, and functions to 
determine whether they effectively and efficiently achieved their 
mission; and (2) streamlining and consolidating operations to make 
them more cost effective. For example, the Secretary of Defense’s 
Efficiency Initiative, HUD’s Transformation Initiative (including 
HUDStat), and VA’s Operational Management Reviews implemented broad 
examinations of their programs, structures, and related processes. DHS’
s Efficiency Review, VA’s Project Management Accountability System, 
and DOD’s Continuous Process Improvement/Lean Six Sigma Program 
employed targeted methods to streamline and consolidate processes and 
systems. Most of the federal initiatives were relatively new; 
consequently, their overall impact has yet to be determined. However, 
each of these initiatives, as well as select state initiatives—such as 
the Virginia Productivity Investment Fund—demonstrated key practices 
from which federal agencies could learn, as exemplified below. 

Table: Key Practices in Select Federal and State Efficiency 
Initiatives: 

Key practice: Use change management practices to implement and sustain 
efficiency initiatives:
* Ensure top leadership drives the transformation; 
* Dedicate an implementation team to manage the transformation process
* Set implementation goals and a time line to build momentum and show 
progress from day one; 
* Involve employees to obtain their ideas and gain their ownership of 
the transformation; 
Examples of how practices were implemented: 
* Held regular sessions led by Secretary or Deputy Secretary to track 
progress of major departmental initiatives (e.g., HUDStat and VA’s 
OMR); 
* Used COOs or CMOs to lead efficiency efforts (e.g.,involvement of 
the Army, Navy, and Air Force CMOs in the Secretary of Defense’s 
Efficiency Initiative and HUD Transformation Initiative); 
* Created a dedicated department-level team to identify, track, and 
report on efficiencies (e.g.,DHS’s ER, VA’s OMR, HUD Transformation 
Initiative, and Texas Sunset Advisory Commission); 
* Set specific departmentwide cost savings and/or efficiency goals and 
an implementation time line (e.g., Secretary of Defense’s Efficiency 
Initiative, Washington’s Government Management Accountability and 
Performance); 
* Created an ongoing formal and collaborative structure that involves 
employees and leadership in identifying and developing efficiency 
policies (e.g., DHS’s ER, VA’s OMR and PMAS); 
* Provided financial or nonfinancial employee incentives for 
identifying efficiencies (e.g., DHS’s ER, Secretary of Defense’s 
Efficiency Initiative, DOD’s CPI/LSS, Virginia’s Productivity 
Investment Fund, and Iowa’s Charter Agencies). 

Key practice: Target both short-term and long-term efficiency 
initiatives; 
Examples of how practices were implemented: 
* Identified efficiency initiatives that can generate immediate 
returns as well as more substantive changes to operating procedures, 
programs, and organizational structures (e.g., DHS’s ER, DOD’s 
CPI/LSS, and Secretary of Defense’s Efficiency Initiative); 
* Identified dedicated funding mechanisms to support the up-front 
costs associated with long-term efficiency improvements (e.g., 
Virginia’s Productivity Investment Fund, and HUD’s Transformation 
Initiative). 

Key practice: Build capacity for improving efficiency; 
Examples of how practices were implemented: 
* Used a department-level office to standardize guidance and training 
and facilitate sharing best practices (DOD’s CPI/LSS); 
* Identified and shared performance trends and best practices during 
regular sessions that involved headquarters and regional leaders of 
major operations and programs (e.g., VA’s OMR and HUDStat); 
* Identified and formally solicited input from experts in business and 
government operations (e.g., DOD’s Secretary of Defense’s Efficiency 
Initiative, Georgia’s Commission, and Virginia’s Council on the 
Future). 

[End of table] 

What GAO Recommends: 

GAO recommends that OMB share the key practices for implementing 
efficiency initiatives identified in this report, and develop 
proposals for funding mechanisms to support up-front investment costs 
of longer-term efficiency projects that could result in greater cost 
savings or other efficiencies in the future. OMB staff stated that the 
report does not give sufficient weight to its sharing of information 
consistent with the key practices GAO has identified. While the report 
recognizes a number of OMB’s initiatives, GAO is unaware of the extent 
of OMB’s efforts to share the practices identified in this report. 
DHS, DOD, VA and HUD had no comments on the recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-11-908]. For more 
information, contact J. Christopher Mihm at (202) 512-6806 or 
mihmj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Federal Departments Reviewed are Implementing a Variety of Initiatives 
to Improve Efficiency, and Have Reported Some Initial Results: 

Key Practices Show Promise for Implementing Efficiency Efforts Across 
Government: 

Key Practice: Use Change Management Practices to Implement and Sustain 
Efficiency Initiatives: 

Key Practice: Target Both Short-term and Long-term Efficiency 
Initiatives: 

Key Practice: Building Capacity For Improving Efficiency Through 
Standardizing Guidance and Sharing Best Practices: 

Governmentwide Initiatives May Provide a Platform for Building on 
Federal and State Efficiency Practices: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Key Executive Orders and Memos Related to Efficiency: 

Appendix III: List of Department of Homeland Security Ongoing 
Efficiency Review Projects: 

Appendix IV: Comments from the Department of Homeland Security: 

Appendix V: Contact and Staff Acknowledgments: 

Related GAO Reports: 

Tables: 

Table 1: Federal Initiatives Selected as Case Studies: 

Table 2: Description of State Initiatives Included the Review: 

Table 3: Description of the Four Tracks of the Secretary of Defense's 
Efficiency Initiative: 

Table 4: Projected Cost Savings Identified by the Military Services 
and Special Operations Command Under the Secretary of Defense's 
Efficiency Initiative (Fiscal Years 2012 to 2016): 

Table 5: HUD Transformation Initiative Projects: 

Table 6: Key Practices in Selected Federal and State Efficiency 
Initiatives and Illustrative Examples: 

Table 7: DHS Efficiency Review Project Cost Avoidances, As of July 
2011: 

Table 8: Federal Initiatives Selected as Case Studies: 

Table 9: Description of State Initiatives Included the Review: 

Table 10: Select Key Executive Orders and Memos Related to Efficiency 
Improvement or Cost Savings: 

Figures: 

Figure 1: VA's Operational Management Review (OMR) Process: 

Figure 2: DHS Efficiency Review Process: 

Figure 3: List of DHS Ongoing Efficiency Review Projects: 

Figure 4: VA's Project Management Accountability System Process: 

Figure 5: List of DHS Ongoing Efficiency Review Projects: 

Abbreviations: 

CFO: Chief Financial Officer: 

CIO: Chief Information Officer: 

CNG: Commission for a New Georgia: 

CMO: Chief Management Officer: 

COO: Chief Operating Officer: 

CPI/LSS: Continuous Process Improvement/Lean Six Sigma: 

DCMO: Deputy Chief Management Officer: 

DHS: U.S. Department of Homeland Security: 

DOD: U.S. Department of Defense: 

ER: Efficiency Review: 

FY: Fiscal Year: 

FIT: Office of Financial Innovation and Transformation: 

GMAP: Government Management Accountability and Performance: 

GPRA: Government Performance and Results Act of 1993: 

GPRAMA: Government Performance Results Modernization Act of 2010: 

HUD: U.S. Department of Housing and Urban Development: 

IG: Inspector General: 

IPERA: Improper Payments Elimination and Recovery Act: 

IT: Information Technology: 

OMB: Office of Management and Budget: 

OOR: Office of Responsibility: 

OSPM: Office of Strategic Planning and Management: 

PIC: Performance Improvement Council: 

PIF: Productivity Investment Fund: 

PIO: Performance Improvement Officer: 

PMAB: President's Management Advisory Board: 

PMAS: Project Management Accountability System: 

PMC: President's Management Council: 

SAVE: Securing Americans' Value and Efficiency: 

TI: Transformation Initiative: 

TA: Technical Assistance: 

VA: U.S. Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 
September 30, 2011: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

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

Addressing the federal government's long-term fiscal challenge will 
require a multipronged approach, including constraining discretionary 
spending. The Budget Control Act of 2011, signed on August 2, 2011, 
established a 10-year cap on discretionary spending as part of a 
process to lead to about $2 trillion in deficit reduction.[Footnote 1] 
These spending constraints combined with the focus on performance 
envisioned in the Government Performance and Results Modernization Act 
of 2010 (GPRAMA) mean that agencies will need to find ways to 
eliminate ineffective and wasteful practices and become more efficient 
with fewer resources. We recently identified some ways to improve the 
efficiency and effectiveness of federal agencies. In March 2011, we 
reported on over 80 areas that appear to be outmoded, overlapping, 
duplicative, or fragmented, as well as opportunities for potential 
cost savings or enhanced revenues.[Footnote 2] In May 2011, we 
testified before Congress that all federal programs and activities--
discretionary programs, mandatory spending, revenues, and tax 
expenditures--need to be reexamined to determine whether they should 
be streamlined or corrected, in order to better achieve outcomes for 
the American public.[Footnote 3] The administration is aware of these 
challenges and is directing federal agencies to continue to identify 
ways to operate more efficiently and effectively. 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. 

You asked us to examine federal and state government efforts to 
improve efficiency.[Footnote 4] Specifically, we (1) describe selected 
initiatives that federal departments are implementing to achieve 
efficiencies--including the reported or expected results, how these 
results are being tracked and reported, and the extent to which these 
initiatives are being institutionalized; and (2) identify key 
practices associated with implementing these efficiency initiatives in 
federal departments, as well as selected initiatives in state 
governments, that can be applied more broadly across the federal 
government. 

For the purposes of this review, we define "efficiency" as maintaining 
federal government services or outcomes using fewer resources (such as 
time and money) or improving or increasing the quality or quantity of 
services or outcomes while maintaining (or reducing) resources. 
[Footnote 5] Based on discussions with management experts and federal 
and state officials, we identified the following primary approaches 
that agencies can take to improve efficiency: 

* reexamining programs and related processes and/or organizational 
structures to determine whether they effectively or efficiently 
achieve the mission; 

* streamlining or consolidating management or operational processes 
and functions to make them more cost-effective. 

We selected federal initiatives that are being implemented 
departmentwide, involved reexamining federal programs and their 
related processes or structures or streamlining or consolidating 
existing processes to become more efficient, and were identified by 
the Office of Management and Budget (OMB) or government management 
experts as having potentially promising practices, among other things. 
(For a full list of our criteria, see appendix I). 

Based on these criteria, we selected the following initiatives within 
several federal departments for review: 

Table 1: Federal Initiatives Selected as Case Studies: 

Initiatives focused on reexamining federal programs and their related 
processes and/or structures: 

Initiative: The Secretary of Defense's Efficiency Initiative; 

Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2010. 

Initiative: Department of Housing and Urban Development's (HUD) 
Transformation Initiative; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2010. 

Initiative: Department of Veterans Affairs' (VA) Operational 
Management Reviews (OMR); 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiatives focused on streamlining or consolidating existing 
processes and functions: 

Initiative: Department of Homeland Security's (DHS) Efficiency Review 
(ER); 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiative: VA's Project Management Accountability System (PMAS); 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiative: Department of Defense's (DOD) Continuous Process 
Improvement/Lean Six Sigma Continuous Process Improvement (CPI/LSS) 
Program; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2007. 

Source: GAO Analysis of Agencies Documents. 

[End of table] 

We highlighted examples of initiatives that offer some potentially 
promising practices that may be adapted by other federal agencies, but 
did not review all initiatives that these departments have underway or 
have completed to improve efficiency. To describe the initiatives, we 
examined information provided in DOD, HUD, VA, and DHS policies, 
guidance, reports, budget submissions, strategic plans, and other 
documents specifically related to the selected initiatives and 
interviews, as well as recent and ongoing GAO work on efficiency 
efforts within these departments. We also collected through interviews 
and document requests information from the agencies on how they 
estimated, gathered, or calculated cost savings and efficiencies. The 
amount and level of detail of this information varied greatly across 
agencies and efficiency efforts. Because it was not the purpose of 
this report to assess the anticipated or actual success of efficiency 
efforts and because the amount and quality of data on how estimated 
and actual savings were determined varied so much across 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 and efficiencies are of undetermined reliability. To identify 
key practices within our case study initiatives, we synthesized 
practices identified by federal and state officials and also compared 
them with leading practices identified in Government Performance and 
Results Act of 1993 (GPRA) and GPRAMA, relevant literature, and past 
GAO reports on organizational transformation, management integration, 
efficiency measures, and tracking and reporting agency results. Along 
with examining the federal initiatives described above, we obtained 
reports and other documents from and interviewed officials leading 
selected statewide efficiency initiatives that involved streamlining 
or consolidating existing processes and functions or reexamining state 
programs. For a description of the state examples included in our 
review, see table 2. We also discussed key practices in improving 
efficiency with other federal and state government management experts. 
We selected experts that have experience in reviewing or assisting in 
the implementation of multiple federal or state efficiency initiatives. 

We conducted this performance audit from March 2010 to September 2011, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. Further 
details of our objectives, scope, and methodology are provided in 
appendix I. 

Table 2: Description of State Initiatives Included in the Review[A]: 

Initiatives Focused on Reexamining State Programs and their Related 
Processes and/or Structures: 

Name of initiative: Council on Virginia's Future; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Virginia; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: The 
Council on Virginia's Future was established by legislation to develop 
a vision and long-term goals for Virginia and to regularly review 
progress. The Council consists of members of the business community 
and the state's legislative leadership and acts as an advisory board 
to the Governor and General Assembly. The Governor chairs the Council; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2003 - present; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: Variety of results 
including the implementation of the Productivity Investment Fund and 
improved performance data used for decision making. 

Name of initiative: Iowa Charter Agencies; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Iowa; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: Iowa's 
charter agencies were created under the agreement that agencies would 
receive items such as relief from certain administrative restrictions 
and access to a charter agency grant fund in exchange for upfront and 
annual savings and measurable performance improvements; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2003 - 2008; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: For fiscal years 2004-
2006 reported $92 million in savings and improvements in performance 
such as more tax refunds issued within 45 days and 33 percent more 
children with health insurance. 

Name of initiative: Texas Sunset Advisory Commission; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Texas; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: The 
Texas Sunset Advisory Commission is responsible for reviewing more 
than 150 Texas agencies every 12 years. An independent staff reviews 
agencies based on a set of criteria and makes recommendations to the 
legislature for improvement, consolidation, or elimination of agencies 
no longer needed; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 1977 - present; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: Estimates through 2009 
indicate a potential revenue savings of approximately $783.7 million 
with a return on investment of $27 for every $1 spent. 

Name of initiative: Washington State's Government Management 
Accountability and Performance (GMAP); 

State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Washington; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: 
Washington's GMAP was established to review program performance by 
policy area, such as education, health care, and government reform. 
The Governor and her staff regularly meet with the heads of state 
agencies and departments to evaluate the performance results that 
these organizations are currently delivering; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2005 - present; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: GMAP has made important 
steps toward integrating the major performance and accountability 
efforts throughout state government. 

Initiatives Focused on Streamlining or Consolidating Existing 
Processes and Functions: 

Name of initiative: Commission for a New Georgia; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Georgia; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: The 
Commission for a New Georgia was created to engage Georgia's top-level 
business and professional executives to assist state government in 
rethinking its bureaucracy's management. 24 Commission Task Forces 
were created to analyze a wide range of management area operations 
across state government to make actionable recommendations; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2003 - 2010; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: Generated 130 
recommendations resulting in dozens of pieces of legislation and a 
reported $700 million in savings. 

Name of initiative: Iowa Lean Enterprise Office; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Iowa; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: Iowa's 
Lean Enterprise Office was created to ensure the use of Lean tools for 
all executive branch agencies. The initiative includes an annual award 
given to public sector employees that significantly and measurably 
increase productivity and promote innovation; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2009 - present; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: 125 Lean events, 
improving several processes that range from permitting to criminal 
intelligence processes. 

Name of initiative: Virginia Productivity Investment Fund; 
State: Initiatives Focused on Reexamining State Programs and their 
Related Processes and/or Structures: Virginia; 
General description and purpose: Initiatives Focused on Reexamining 
State Programs and their Related Processes and/or Structures: The 
Virginia Productivity Investment Fund makes loans and grants to 
agencies for projects with the overall purpose of raising 
productivity, increasing efficiency, and making state government more 
cost effective; 
Implementation time frame: Initiatives Focused on Reexamining State 
Programs and their Related Processes and/or Structures: 2007 - present; 
Reported results: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures: The Fund has funded 38 
projects across 23 state agencies with an expected return on 
investment of $4 for every $1 spent. 

Source: GAO analysis of Virginia, Iowa, Texas, Washington, and Georgia 
interviews and documents. 

[A] In 2005, we identified performance budgeting practices employed by 
Virginia, Washington, and Texas that offered useful lessons for the 
federal government. See GAO, Performance Budgeting: States' 
Experiences Can Inform Federal Efforts, GAO-05-215 (Washington, D.C.: 
Feb. 28, 2005). 

[End of table] 

Background: 

As previously mentioned, the administration has increased its focus on 
improving the efficiency of federal agencies. For example, in 2009, 
the President requested that his cabinet departments collectively 
reduce administrative spending by $100 million--which reportedly led 
to identifying $243 million in immediate cost saving measures. 

In July 2010, the President also announced the administration's 
Accountable Government Initiative to cut waste and modernize 
government, which focuses on six key areas.[Footnote 6] While federal 
agencies are charged with leading most of the initiatives within their 
own agencies, OMB is leading some of these efforts: 

1. Driving agency top priorities by focusing on priority goals, 
improving key citizen programs, and evaluating program effectiveness. 
[Footnote 7] 

2. Cutting waste by ending ineffective programs, reducing and 
recapturing improper payments, and eliminating excess real property. 

3. Reforming contracting by promoting strategic sourcing and building 
acquisition workforce capacity.[Footnote 8] 

4. Closing the IT gap by fixing large-scale Information Technology 
(IT) management through implementing TechStat Accountability Sessions 
for High-Risk IT projects throughout the federal government[Footnote 
9]; adopting more efficient technologies, such as cloud 
computing;[Footnote 10] consolidating data centers; and enhancing 
federal cyberspace security. 

5. Promoting accountability and innovation by casting a wide net for 
the best ideas, such as engaging the public and federal employees in 
governmentwide contests for identifying federal improvements and 
promoting open government initiatives that make federal performance 
data transparent to the public. 

6. Attracting and motivating top talent by improving the hiring 
process, engaging and retaining top talent, and enhancing leadership 
development training. 

In support of the Accountable Government Initiative and other cost- 
cutting efforts, the President has issued more than 35 executive memos 
and orders directing agencies to reduce their spending or increase 
their efficiency. This guidance included memos directing nonsecurity 
agencies to submit discretionary budgets for 2012 that were 5 percent 
lower than previous estimates for that fiscal year and overall budgets 
for fiscal year 2013 that are at least 5 percent below their 2011 
enacted discretionary appropriation, among other things (see appendix 
II for a list of select efficiency executive orders and memos). As 
part of the 2012 budget proposal, the President proposed $2 billion in 
administrative cost savings and a 5-year freeze on nondefense 
discretionary spending, which would keep about 12 percent of the 
federal budget from expanding above current levels.[Footnote 11] As 
previously mentioned, because of the new caps on discretionary 
spending that resulted from the agreement to raise the debt limit, 
agencies will be required to identify additional savings in future 
budgets. 

Federal Departments Reviewed are Implementing a Variety of Initiatives 
to Improve Efficiency, and Have Reported Some Initial Results: 

One major approach that agencies can take to improve their efficiency 
involves a fundamental reexamination of programs and related 
organizational structures and processes to determine whether they 
effectively and efficiently achieve the mission--that is examining 
"what" the agency does. In 2005, we reported that a reexamination of 
government operations is important to federal efforts to address the 
nation's growing fiscal imbalance and should include an assessment of 
the goals, designs, and strategies underlying the portfolio of federal 
programs.[Footnote 12] Further, in a May 2010 report on opportunities 
to strengthen OMB's approach to improving efficiency, we highlighted 
that such program assessments can also be used to determine the 
resources needed to achieve outcomes, which can aid in identifying the 
most cost-effective program designs and that other activities--such as 
restructuring outmoded government organizations and operations and 
taking a strategic approach to spending--can contribute to 
improvements in efficiency.[Footnote 13] This approach can lead to 
identification of significant longer-term savings, although it may 
also require more time and an upfront investment to implement. 

Another major approach that agencies may take to improve their 
efficiency is to streamline or consolidate management or operational 
processes and functions to make them more cost effective--that is to 
examine "how" the agency operates. This approach focuses less on 
whether an agency is engaged in the right mission activities, but 
rather whether they can implement the existing activities more cost- 
effectively. It often involves examining administrative or operational 
processes to make them faster or to use fewer resources. In our May 
2010 report, we stated that such process improvements can increase 
product quality and decrease costs, resulting in improved efficiency, 
and that various techniques can be employed to achieve this goal. 
[Footnote 14] For example, agencies can employ Lean Six Sigma, which 
is a data-driven approach based on the idea of eliminating defects and 
errors that contribute to losses of time, money, opportunities, or 
business. Another tool is Business Process Reengineering, which 
redesigns the way work is done to better support the organization's 
mission and reduce costs.[Footnote 15] Examining processes this way 
can lead to identifying efficiency projects that take relatively less 
time and resources to implement and result in immediate incremental 
efficiency gains that are relatively small individually, but 
collectively add up to more significant results. 

We found that agencies were implementing initiatives that fell within 
both categories--reexamining their programs, structures, and functions 
to determine whether they effectively and efficiently achieved their 
mission and streamlining and consolidating operations to make them 
more cost effective--and that they used a variety of promising 
practices and tools to implement them. Some of the initiatives 
included activities that fell into both categories, but we placed them 
in the category that reflects most of their activities. In addition, 
some of the initiatives were specifically focused on finding 
efficiencies, while others were more focused on improving the 
effectiveness of programs and operations, with implications for 
improving efficiency. Most of the initiatives in our review are 
relatively new; consequently, their overall results have yet to be 
determined. However, we found that each initiative contained 
potentially promising practices from which other federal agencies 
could learn. 

Approaches to Reexamine Federal Programs, Structures, and/or Processes: 

The Secretary of Defense's Efficiency Initiative: 

In May 2010,[Footnote 16] the Secretary of Defense directed DOD to 
undertake a departmentwide initiative to assess how the department is 
staffed, organized, and operated with the goal of reducing excess 
overhead costs and reinvesting these savings in sustaining DOD's 
current force structure[Footnote 17] and modernizing its weapons 
portfolio. The Secretary's initiative targeted both shorter and longer-
term improvements and set specific goals and targets for achieving 
cost savings and efficiencies, which are expected to be achieved 
between fiscal years 2012 to 2016. To guide the initiative, the 
Secretary established certain parameters. For example, he: 

* directed the department to identify specific, actionable, and 
measurable efficiencies and instructed that neither percentage nor 
across-the-board reductions were acceptable; 

* set short deadlines and directed that efficiencies be incorporated 
into the fiscal year 2012 budget request; 

* assigned specific cost savings targets, such as finding savings of 
about $100 billion in overhead costs and reducing the number of senior 
military positions by a minimum of 50 positions; 

* instructed the military services to keep their overhead costs 
savings and decide how to reinvest them; and: 

* identified some specific areas where immediate action could be 
taken, such as reducing funding for service support contractors by 10 
percent per year from fiscal years 2011 to 2013. 

The Secretary's initiative was organized along four tracks--each of 
which had a different focus (see table 3). 

Table 3: Description of the Four Tracks of the Secretary of Defense's 
Efficiency Initiative: 

Tracks: Track 1; 
Purpose: Military services and other components: Tasked to find 
savings of about $100 billion in overhead costs that are to be 
reinvested over 5 years, starting with DOD's fiscal year 2012 budget. 

Tracks: Track 2; 
Purpose: External and internal suggestions: Sought ideas, suggestions, 
and proposals for efficiencies from outside normal, official DOD 
channels (e.g., "think tanks", industry, external boards, and DOD 
employees). 

Tracks: Track 3; 
Purpose: Departmentwide review of certain areas: Assessed personnel 
and health care policies, logistics, and acquisition to identify 
efficiencies. 

Tracks: Track 4; 
Purpose: Specific areas identified by the Secretary: Focused on 
specific areas where DOD could take immediate action to reduce 
inefficiencies and overhead, in particular, to reduce headquarters and 
support bureaucracies and to instill a culture of cost-consciousness 
and restraint in the department. 

Source: DOD. 

Note: Other components include various offices within the Office of 
the Secretary of Defense, the combatant commands, DOD agencies, and 
DOD field activities. 

[End of table] 

To execute the Secretary's initiative, DOD's process involved all 
components within the department. For example, the Under Secretaries 
of the Army, Navy, and Air Force--in their capacities as Chief 
Management Officers (CMOs)--were responsible for leading the 
initiative within their respective organizations.[Footnote 18] They 
relied on existing personnel, organizations, and processes or formed 
groups to implement the initiative. In addition, senior level 
officials within the Office of the Secretary of Defense, including the 
Under Secretary of Defense (Comptroller)/Chief Financial Officer and 
the Director of the Cost Assessment and Program Evaluation office, 
were involved in reviewing many of the cost savings ideas. Ultimately, 
according to multiple DOD officials, these proposals were presented to 
the Secretary of Defense for his feedback and approval. The department 
also sought input and received suggestions on efficiencies from DOD 
employees at all levels. Further, at the direction of the Secretary of 
Defense, officials from the Office of the Under Secretary of Defense 
(Comptroller), Office of the Under Secretary of Defense for Personnel 
and Readiness, and the Office of the Under Secretary of Defense for 
Acquisition, Technology and Logistics conducted front-end assessments 
in collaboration with the military services to identify savings in key 
areas of acquisition, logistics, personnel, and health care policy. 
The Secretary of Defense also established a temporary task force, 
chaired by his Chief of Staff, to address the specific areas in which 
immediate action could be taken departmentwide. 

As part of its fiscal year 2012 budget request, DOD outlined projected 
savings of $178 billion to be realized over a 5-year time period 
beginning in fiscal year 2012. According to DOD, these savings include 
projected savings of about $154 billion from the Secretary's 
initiative and about $24 billion from other sources. Specifically, 

* The military services and Special Operations Command identified a 
total of $100 billion in savings as a result of their efforts to find 
efficiencies to support the Secretary's initiative. A majority of the 
projected savings identified by the military services (approximately 
$70 billion out of $100 billion, or 70 percent) will be reinvested in 
high-priority military needs--such as enhancing weapon systems--while 
the remainder will be used to address operating costs resulting from 
areas such as health care and training. 

* The department proposed a $78 billion reduction in its overall 
budget over a 5-year time period, covering fiscal years 2012 through 
2016, which reflects a 2.6 percent reduction from DOD's fiscal year 
2011 budget submission over the same time period. Of this amount, $54 
billion reflected projected savings identified from the health care 
policy assessment, governmentwide civilian pay freeze, and other 
specific areas identified by the Secretary where immediate action 
could be taken departmentwide. The remaining $24 billion reflected 
revised economic assumptions, projected savings from restructuring the 
Joint Strike Fighter weapons program, and projected savings from 
reducing the size of the Army and Marine Corps beginning in fiscal 
year 2015. 

While DOD is reporting these projected savings, we did not 
independently verify this information, including whether DOD's 
projections reflected cost savings or cost avoidances. As part of this 
review, we also did not examine the extent of analysis that DOD 
performed in selecting these initiatives but we will be addressing 
this topic in other work. 

* The budget request catalogued the projected $100 billion in savings 
from the military services and Special Operations Command into the 
following four categories. 

* Reorganizations, such as restructuring headquarters management and 
eliminating unneeded task forces. 

* Better business practices, such as reducing energy consumption. 

* Program reductions and terminations, such as terminating weapon 
systems programs. 

* Reduced lower priority programs, such as shifting funds from 
military construction projects to base operations. 

Table 4 shows the specific amounts of projected cost savings reported 
for each category and organization. 

Table 4: Projected Cost Savings Identified by the Military Services 
and Special Operations Command Under the Secretary of Defense's 
Efficiency Initiative (Fiscal Years 2012 to 2016):
Reorganizations; 
Fiscal years 2012 - 2016: 
Army: $5.4 billion; 
Navy: $15.4 billion; 
Air Force: $4.2 billion; 
Special Operations Command: 0; 
Totals for fiscal years 2012-2016: $25 billion. 

Better business practices; 
Fiscal years 2012 - 2016: 
Army: $10.3 billion; 
Navy: $14.1 billion; 
Air Force: $20.6 billion; 
Special Operations Command: $0.4 billion; 
Totals for fiscal years 2012-2016: $45.4 billion. 

Program reductions/terminations; 
Fiscal years 2012 - 2016: 
Army: $11 billion; 
Navy: $5.5 billion; 
Air Force: $3.7 billion; 
Special Operations Command: $1.3 billion; 
Totals for fiscal years 2012-2016: $21.5 billion. 

Reduced lower priority programs; 
Fiscal years 2012 - 2016: 
Army: $2.8 billion; 
Navy: 0; 
Air Force: $4.8 billion; 
Special Operations Command: $0.6 billion; 
Totals for fiscal years 2012-2016: $8.2 billion. 

Total; 
Fiscal years 2012 - 2016: 
Army: $29.5 billion; 
Navy: $35 billion; 
Air Force: $33.3 billion; 
Special Operations Command: $2.3 billion; 
Totals for fiscal years 2012-2016: $100.1 billion. 

Source: DOD: 

Note: While DOD is reporting these projected savings, we did not 
independently verify this information, including whether DOD's 
projections reflected cost savings or cost avoidances. 

[End of table] 

According to DOD officials, after DOD submitted its fiscal year 2012 
budget request which reflected the projected savings of the efficiency 
initiative, the Deputy Chief Management Officer (DCMO) and the Under 
Secretary of Defense (Comptroller)/Chief Financial Officer were 
assigned as the co-leads to be involved in developing an approach for 
tracking and reporting on efforts to implement the initiative. As of 
July 2011, the DOD DCMOs and the Under Secretary of Defense 
(Comptroller's) office were still developing the planned approach for 
tracking and reporting. Officials noted that they intend to use an 
existing database that the department uses to measure efforts to 
improve performance, called the DOD Enterprise Performance Management 
System. The military services and other DOD components have been asked 
to enter preliminary data, such as the types of actions needed to 
implement the efficiency initiative results and any associated metrics 
into the database. Further, the DOD DCMO anticipates that quarterly 
reporting on the implementation of the efficiency results will occur. 
The DOD DCMO and an official from the Under Secretary of Defense 
(Comptroller's) office noted that the performance management database 
is not integrated with DOD's financial accounting systems. In 
addition, officials from the military services stated they are 
currently examining options for using their financial accounting 
systems to help track results. Since these efforts are evolving, it is 
too soon to tell the extent of information that the department will be 
able to track and report in both the performance management database 
and financial accounting systems and whether the data will be 
consistent. 

DOD has taken some steps to institutionalize the efficiency 
initiative, including beginning to integrate efforts to identify 
efficiencies into the department's planning, programming, budget, and 
execution process. For example, the initial effort to identify 
efficiencies was initiated while the department was formulating its 
fiscal year 2012 budget request and the request was adjusted to 
reflect the projected savings of the efficiency initiative, including 
adjustments to programs and reinvesting savings among programs. 
Further, the Under Secretaries of the Army, Navy, and Air Force in 
their capacities as CMOs stated they will rely on existing personnel, 
organizations, and processes to monitor the implementation of the 
announced initiative results and continue to look for additional 
efficiencies as they formulate the fiscal year 2013 budget. 

Beyond the Secretary of Defense's Efficiency Initiative, DOD is 
implementing additional efforts to seek efficiencies. For example, in 
response to the President's efforts to reduce the federal deficit, 
including his April 2011 announcement to hold the growth in future 
national security spending which is projected to save $400 billion, 
the Secretary of Defense directed DOD to undertake a comprehensive 
review of the department's roles and missions. He directed that the 
review develop specific program options in four categories, one of 
which is a continuation of the previous efficiency initiative. As of 
August 2011, this review was ongoing. 

HUD's Transformation Initiative: 

HUD's Transformation Initiative (TI) is a multifaceted and multiyear 
effort intended to reexamine how HUD does business by focusing on 
improving performance, replacing outdated IT systems, evaluating 
programs, and streamlining processes. In fiscal year 2010 HUD received 
authorization from Congress to transfer up to 1 percent of the budgets 
from selected program offices to contribute to a TI fund.[Footnote 19] 
In the same fiscal year, the department also received funding from 
Congress for a Chief Operating Officer (COO) and the Office of 
Strategic Planning and Management (OSPM), which both manage the 
initiative. Congress also oversees the TI fund by requiring 
congressional approval of plans for expending funds for projects and 
our review of IT projects supported by the fund.[Footnote 20] As seen 
in table 5, the initiative consists of two major components: a set of 
projects funded by the TI fund to replace outdated IT systems, 
evaluate programs, and improve technical assistance provided to HUD's 
customers; and a group of projects that HUD is initiating outside of 
the fund to improve the management of its operations--including 
improving HUD's acquisition and performance management processes. 

Table 5: HUD Transformation Initiative Projects: 

Program transformation projects (funded by the TI fund): 

IT Systems: Update outdated systems and improve the processes that 
they support in order to make HUD operate more efficiently. There are 
currently seven major IT projects funded through the TI fund. 

Research, Evaluation, Program Metrics, and Demonstration Projects: 
Research aspects of programs are expected to result in research-based 
improvements to programs and identify programs that should be 
eliminated. There are currently 11 research, evaluation, and program 
metrics projects and 6 demonstration projects funded through the TI 
fund. 

Technical Assistance: Improve the effectiveness and efficiency of 
HUD's assistance and thereby make HUD's partners, such as state or 
local governments, profit and nonprofit organizations, and public 
housing authorities, more efficient and effective in delivering HUD 
programs. There are currently 16 Technical Assistance projects funded 
through the TI fund. 

HUD management transformation project examples: 

Human Capital: Reduce the number of days it takes to hire HUD 
employees, which has required attention to process improvement. 

Acquisition: Make HUD's acquisition process more effective, efficient, 
and transparent through automation. 

Customer Service: Decrease the time it takes HUD to deliver funds to 
grantees. 

Performance Management: Institute a data-driven process for 
performance management, called HUDStat. 

Source: GAO analysis of HUD interviews and documentation. 

[End of table] 

HUD's TI projects are intended to improve the overall performance of 
the agency; including a few project areas within this initiative that 
are specifically expected to improve efficiency. These projects 
include: centralized technical assistance (TA), acquisition reform, 
and HUDStat. HUD is centralizing its TA to its partners under the TI, 
which HUD officials reported will make its TA less duplicative, more 
efficient, and effective. Officials in OSPM stated that this is 
intended to also result in more efficient and effective delivery of 
HUD services by its partners. The acquisition reform effort is 
expected to directly increase efficiency as HUD replaces outdated, 
paper-based systems and corresponding processes with an automated 
system and new processes. Finally, HUDStat, a series of monthly, data-
driven meetings led by the Secretary, is an integral part of this 
initiative's effort to improve HUD's performance, which HUD officials 
believe may indirectly increase efficiency. According to HUD's COO, 
the department had held nine HUDStat meetings as of July 2011, each of 
which focused on one its high-priority performance goals or its 
internal goal on transforming HUD. 

While the department does not track and report on efficiency targets 
for many of its efforts--partly because many projects are not focused 
on improving efficiency and others are too new to have results--they 
have begun tracking and reporting on efficiency targets for IT system 
projects and related process improvements in key areas, such as 
acquisition reform. In addition, HUDStat meetings are used to track 
progress on the department's performance in achieving their High 
Priority Performance Goals and efforts to transform HUD.[Footnote 21] 

As part of its effort to integrate the TI into HUD operations, the 
department incorporated the TI into a fifth Performance Goal-- 
"Transform the Way HUD Does Business"--in its draft fiscal year 2010- 
2015 Strategic Plan. According to officials in the Office of Strategic 
Planning and Management, HUD originally began the TI before updating 
its strategic plan under the new Secretary, which made it difficult to 
link the initial TI projects to the department's current strategic 
vision and track project results against their goals. However, in 
HUD's updated Strategic plan, the department incorporated the TI as a 
fifth Performance Goal to address this challenge. The department is 
also taking steps to integrate HUDStat data into its budget process. 
Lastly, a senior official told us that they are trying to 
institutionalize transformation changes by further developing their 
career staff in order to build their capacity and desire to carry out 
the TI projects beyond the current administration. 

VA's Operational Management Review: 

Similar to HUDStat, VA's Operational Management Review (OMR) is a 
performance management process that involves holding weekly meetings 
that focus on improving and streamlining VA's operations by assessing 
the status of the 16 Major Initiatives from VA's 2011-2015 strategic 
plan, such that each of the Major Initiatives is reviewed at least 
once a month. Some of these Major Initiatives are linked to the 
department's high-priority performance goals.[Footnote 22] For 
example, eliminating veteran homelessness is a Major Initiative 
jointly shared with HUD that also appears as a high-priority 
performance goal. In December 2009, VA began the OMR process in 
support of the departments' strategic management transformation. As 
shown in figure 1, the OMR process tracks the progress of Major 
Initiatives against cost, schedule, and scope baseline and ongoing 
performance targets through monthly status reports and formal OMR 
meetings. VA's Deputy Secretary leads the meetings and the Office of 
Policy and Planning facilitates them. The OMR process also assesses 
any risks or issues that arise during project execution. Once a Major 
Initiative transitions from the OMR process to a sustained operations 
status, progress in meeting milestones is monitored by Monthly 
Performance Review meetings.[Footnote 23] VA officials have not 
attempted to calculate specific savings or efficiency gains under the 
OMR process. However, they believe that the process provides 
opportunity for efficiency through better accountability and 
management oversight. 

Figure 1: VA's Operational Management Review (OMR) Process: 

[Refer to PDF for image: illustration of circular process] 

Continuous Monitoring and Problem Solving: 

Step A: Major Initiative Activation: Initiative is identified as 
supporting Strategic Plan and is incorporated into OMR process. 
Operating Plan Approval. 

Step B: Pre-OMR Meeting Actions: Compile monthly status reports and 
prepare for OMR session. 

Step C: OMR Review: Attend OMR meeting to brief VA senior leadership 
on Initiative progress. 

Step D: Post-OMR Meeting Actions: Finalize meeting notes and action
items. Continue Initiative operations. 

Step E: Major Initiative Transition: Major Initiative is moved from
initiative status to sustained operations. 

Source: VA documentation. 

[End of figure] 

According to a VA official in the Office of Policy and Planning, the 
Deputy Secretary's leadership has provided the highest level of 
management visibility and support for the Major Initiatives, which 
drives the OMR process. To further institutionalize and integrate this 
process, VA has developed standard operating procedures for the 
process and recently established and staffed the Enterprise Program 
Management Office which helps to support the OMR process. The Director 
of this office told us that its purpose is to develop project 
management standards, methodologies, doctrine, and processes to 
execute VA's Major Initiatives. He also said that the Enterprise 
Program Management Office plans to assist the Major Initiative teams 
in developing project plans that directly support VA's strategic goals. 

Approaches to Streamline or Consolidate Existing Processes and 
Functions: 

DHS' Efficiency Review: 

DHS established a departmentwide Efficiency Review initiative (ER) in 
2009. The focus of the ER is to improve efficiency and streamline 
decision making through a series of agencywide projects that 
individually may result in relatively small efficiency improvements, 
but that the agency expects will collectively result in greater 
efficiency gains. The ER initiative targets three main categories for 
improved efficiency: day-to-day expenditures, personnel, and physical 
assets.[Footnote 24] The initiative is led by an Efficiency Review 
Office located within the Office of the Secretary of Homeland Security 
and implemented throughout the department. 

DHS employs both a bottom-up and top-down approach to implementing 
this ER process. Project ideas come from a variety of sources in the 
department, including employees, management staff, and the Office of 
the Secretary of Homeland Security. As a new method of obtaining 
employee input, in May 2011, DHS launched a "Think Efficiency 
campaign" that allows employees to submit efficiency ideas to an e-
mail box that is reviewed through the ER process. Employee-generated 
proposals and ideas are assessed for their feasibility, 
appropriateness, and potential departmentwide impact and benefits. If 
a proposal is approved for departmentwide implementation, a 
departmentwide Action Directive, with requirements for its execution, 
is issued. Figure 2 illustrates DHS' Efficiency Review process. 

Figure 2: DHS Efficiency Review Process: 

[Refer to PDF for image: illustration] 

Collect and review efficiency proposals from employees; 
Components (4 weeks). 

Select proposals for further consideration; 
Steering committee (1-2 weeks). 

Conduct cost-benefit assessments of proposals; 
Efficiency Review Office, technical leads, and cost-benefit assessment 
team (2-3 months). 

Review cost-benefit assessments and recommend proposals to ER Office; 
Steering committee: Depends on the next meeting date. 

Develop an action directive to implement efficiency project; 
Efficiency Review Office and technical leads (4 weeks). 

Comment on and revise draft efficiency review action directive; 
Component heads & efficiency representatives, and Technical Leads (9-
11 days). 

Finalize and issue efficiency review action directive; 
Efficiency Review Office (1-2 business days). 

Implement action directive; 
Components. 

Monitor components' progress and reports to the DHS leadership; 
Efficiency Review Office: Immediately after issuance. 

Source: GAO analysis of DHS documents. 

[End of figure] 

The department had 36 ongoing Efficiency Review projects, as of July 
2011 (see figure 3 for list of DHS projects). The first 20 projects 
were initiated between April-July 2009. In 2010, the agency approved 
13 additional projects for implementation, and added 3 new projects as 
of July 2011. DHS officials characterized some of the projects as "low-
hanging fruit"--those projects that were easily implemented and that 
reduced costs in the short term, such as elimination of printed 
documents that could easily be sent electronically or posted on line 
and the consolidation of subscriptions to professional publications 
and newspapers. Other projects were intended to improve the 
department's performance over the longer term, such as energy 
efficiencies, the standardization of employee training and 
orientation, and the establishment of a departmentwide contracting 
vehicle for purchasing bulk fuel for fleet, aircraft, and marine 
vessels. 

Figure 3: List of DHS Ongoing Efficiency Review Projects: 

[Refer to PDF for image: illustration (Interactive graphic)] 

April 17, 2009 (30-day initiatives): 
1. Eliminate non-mission-critical travel. 
2. Consolidate subscriptions. 
3. Eliminate printing and distribution of some reports. 
4. Maximize government space. 

May 27, 2009 (60-day initiatives): 
5. Implement electronic fleet usage tracking tool. 
6. Conduct workforce assessment. 
7. Reutilize refurbished IT equipment. 
8. Leverage software license buying power. 
9. Eliminate new seals and logo contract. 

June 26, 2009 (90-day initiatives): 
10. Develop cross component training. 
11. Develop preliminary applicant security process. 
12. Convert multi-functionl devices. 
13. Streamline decision-making processes. 
14. Increase office supply blanket purchase agreement. 
15. Improve DHS communication. 

July 24, 2009 (120-day initiatives): 
16. Ensure sufficient workforce skills. 
17. Initiate acquisition/leasing hybrid vehicles. 
18. Implement energy efficiencies. 
19. Standardize employee orientation and mandatory training. 
20. Increase Coordination across DHS. 

Subsequent initiatives (April 7, 2010 - December 20, 2010): 

21. Implement paperless earning and leave statements. 
22. Improve personnel security and suitability processes. 
23. DHS-wide sourcing for non-military uniforms. 
24. DHS-wide sourcing for tactical communications. 
25. DHS-wide sourcing for wireless communication. 
26. DHS-wide sourcing encrypted thumb drives. 
27. DHS-wide sourcing for furniture. 
28. Increase DHS-wide contracting for background investigations. 
29. DHS-wide sourcing for bulk fuel. 
30. Conduct optimization of communication services. 
31. Improve energy management in DHS. 
32. Reduce cost of contractor investigations. 
33. Develop and execute a strategy for web-content management. 

June 1, 2011: 
34. Post property seizure notifications online. 

July 13, 2011: 
35. DHS center for Excellence for energy savings contracts. 
36. Establish and implement an Integrated Facility Assessment Center 
of Excellence. 

Source: DHS. 

[End of figure] 

DHS officials reported that the first 30 ER are expected to result in 
cost avoidances of approximately $716 million. The components had the 
authority to reallocate these savings to other mission-critical 
activities, consistent with congressional appropriations. Although the 
DHS Secretary required all of the components to identify their ER 
initiatives' cost avoidance amounts as part of the fiscal year 2012 
budget submissions, the ER initiatives did not lead to a decrease in 
the department's overall budget. Instead, the savings were reallocated 
to other mission-critical activities. For example, the U.S. Coast 
Guard and U.S. Customs and Border Protection components reported using 
efficiency gains from ER initiatives to support mission-critical 
activities, such as securing the border, while also facilitating the 
flow of legitimate trade and travel. 

The ER office tracks and reports on gains from the 36 ER projects and 
other component-specific efficiency projects. Components are required 
to provide an update on the cost savings or other measures of 
efficiency gains related to the initiatives using an automated data 
collection system called the Efficiency Review Quarterly Report. This 
information is combined into a quarterly report that is presented to 
the Secretary and other DHS leadership.[Footnote 25] Currently, DHS' 
components have the responsibility to verify the accuracy of the cost 
avoidance estimates that they provide to the ER office. However, the 
ER staff are working with the department's Chief Financial Officer 
(CFO) to develop a standard cost avoidance verification process that 
will function as an additional step in validating components' cost 
avoidance estimates after they are submitted to the ER office. 

DHS is taking steps to institutionalize the efficiency improvements 
resulting from its ER initiative. According to DHS officials, one of 
the primary ways the department institutionalizes its ER projects is 
through Action Directives announced by the Secretary's office which 
provide management guidance and direction to the components. Based on 
these Action Directives and the management guidance, components 
develop similar guidance to further ensure improvements resulting from 
its ER become the new business practices at the department. DHS is 
also in the early stages of linking its ER initiative to the budget 
process. The department recently began initiating a base budgeting 
process that incorporates decisions related to their Efficiency Review 
activities. As previously noted, DHS components reallocate to other 
mission-critical activities the funds that they avoid spending because 
of the ER initiative. However, the department did not have a formal 
departmentwide process or set of criteria for prioritizing which 
mission-critical activities will receive the reallocated funds and 
linking this to the budget decision-making process. In recognition of 
the need to create this linkage, the department is developing a 
process that is intended to examine the base budget of each component 
and standardize the procedures that components use to make these 
resource reallocation decisions, among other things. 

VA's Project Management Accountability System (PMAS): 

As one of its approaches to improving efficiency, VA has implemented a 
departmentwide Project Management Accountability System (PMAS), which 
is a performance-based project management discipline for planning and 
managing the agency's information and technology projects. In June 
2009, VA's Chief Information Officer (CIO) mandated the use of PMAS 
for all IT development and infrastructure projects, as shown in figure 
4 below. 

Figure 4: VA's Project Management Accountability System Process: 

[Refer to PDF for image: illustration] 

Ongoing PMAS projects (both new and existing projects): 

Project managers (PM) report monthly to the Office of Responsibility 
(OOR) on key performance indicators; 

CIO and OOR review projects; those missing deadlines trigger CIO 
review (TechStat); 

OOR reviews project and submits findings/recommendations to CIO; 

Project continues, or: 

Project paused for replan; 

OOR reviews revised project plan submitted by PM and makes 
recommendation to CIO to restart under new project plan or to stop 
project; 

Project restarts; or: 

Project shutdown. 

Source: GAO analysis of VA memorandum. 

[End of figure] 

According to VA officials from the Office of Information and 
Technology, since the inception of PMAS, at least 12 projects have 
been canceled or restructured, resulting in approximately $129 million 
in costs avoided from fiscal year 2010 to fiscal year 2014.[Footnote 
26] For example, VA officials reported that VA's Rights Management 
Server project was improved because of the PMAS process, and also 
resulted in cost avoidances. The project was intended to provide 
security by encrypting e-mail messages and attachments by controlling 
what recipients could do with the messages and attached documents 
(i.e., controlling rights for forwarding, copying, printing, etc.). 
Because of findings from the PMAS review, the project was paused for 
replanning. The replanning resulted in a solution that better 
integrated with other VA encryption tools and is vastly simplified 
from an end-user perspective and resulted in $100,000 in cost 
avoidance for fiscal year 2010. According to VA officials, they do not 
yet have an automated system in place to regularly track and document 
cost avoidances, such as these, that result from the changes made to 
projects because of PMAS reviews. However, they monitor the PMAS 
projects using a PMAS Dashboard that tracks "real time data" on the 
cost, schedule, and other metrics of performance for the projects. 

To institutionalize the PMAS process, VA issued standard guidance for 
the process and has provided training to IT project managers. 
According to officials, these factors and the support of the CIO have 
helped to establish the PMAS process as the new standard practice for 
managing IT projects. In addition, VA's Deputy Secretary and an 
official from the office of Corporate Analysis and Evaluation reported 
that the department is in the early stages of integrating the PMAS and 
other management improvement processes with its budget activities, 
which would allow them to become better informed about trade-offs when 
making decisions about how to improve agency performance and best 
utilize or reduce agency resources.[Footnote 27] 

DOD's Continuous Process Improvement/Lean Six Sigma Program: 

The objective of DOD's Continuous Process Improvement/Lean Six Sigma 
(CPI/LSS) program is to improve how products and services are provided 
and internal operations are conducted. As a continuous process 
improvement methodology, LSS uses data and statistical analyses to 
measure and improve the performance of an organization's operations by 
identifying and eliminating defects in manufacturing and service- 
related processes. By DOD policy and practice[Footnote 28] the CPI/LSS 
methodology is applied by DOD organizational entities--including the 
military services, agencies, and field activities. In addition, the 
military services, DOD agencies, and field activities using CPI/LSS 
are allowed to retain financial benefits that CPI/LSS activities 
generate. 

In April 2007, the Deputy Secretary of Defense created a program 
office to provide a departmentwide CPI/LSS focal point. After the 
establishment of the DOD DCMO position, the Deputy Secretary of 
Defense assigned oversight responsibility of the CPI/LSS program 
office to the DCMO in May 2008. Among other things, the program 
office's director is responsible for (1) developing guidance for 
CPI/LSS implementation and management; (2) providing DOD components 
with a centralized database and knowledge-sharing site; (3) developing 
and maintaining departmentwide CPI/LSS training standards; and (4) 
overseeing an annual CPI/LSS symposium which is to provide 
opportunities to exchange ideas, methods, technology solutions, and 
experiences. The CPI/LSS program office's director also chairs a 
CPI/LSS Senior Steering Committee that is intended to meet 
periodically to discuss departmentwide CPI/LSS activities and includes 
representatives from the military services, DOD agencies and field 
activities, and various offices in the Office of Secretary of Defense. 
Since it was established, the CPI/LSS program office has completed 
several CPI/LSS activities and has others that are ongoing; however, 
the bulk of CPI/LSS activities occur within the military services. 

According to DOD officials, most of the CPI/LSS activities may not 
always directly result in cost savings but rather other efficiencies 
(such as time savings and improved quality in the process). For 
example, after the completion of a CPI/LSS activity in April 2010, the 
Marine Corps Logistics Base in Barstow, California, reported doubling 
the monthly repair and maintenance output for M-16 rifles from 625 
rifles to 1,250 rifles.[Footnote 29] Both the military services and 
the CPI/LSS program office have centralized systems in place to track 
and report on their respective CPI/LSS activities. As of July 2011, 
these systems were not integrated with one another but CPI/LSS program 
office officials stated that they are working towards establishing 
this integration. In the meantime, CPI/LSS program office officials 
indicated that information about CPI/LSS activities across the 
department are shared during CPI/LSS Senior Steering Committee 
meetings. 

DOD has taken some steps to institutionalize the use of the CPI/LSS 
methodology within the department. For example, as previously 
mentioned, it has established a departmentwide program office to be a 
focal point. DOD has also issued policy guidance for implementing 
CPI/LSS and has referred to it in its Strategic Management Plan 
[Footnote 30]--the department's highest-level plan for improving 
business operations. Among other things, the policy sets training 
targets and outlines other procedures for DOD organizational entities 
to follow to implement the program. For example, the policy sets 
percentage goals for the workforce in DOD organizational entities to 
be certified at various levels of expertise. Within DOD, personnel may 
be trained and certified to have increasing levels of expertise 
starting with a Green Belt and then progressing to Black Belt, and 
Master Black Belt levels.[Footnote 31] For each participating 
organization, DOD has set a goal for 1 percent and 5 percent of its 
employee population to be Black and Green Belt-certified, 
respectively. According to CPI/LSS program office officials, in July 
2011, there were approximately 32,776 CPI/LSS-trained personnel in DOD. 

The department's Strategic Management Plan identifies CPI/LSS as a 
tool that can be used to improve processes that will improve overall 
performance. According to CPI/LSS program office officials, they are 
seeking to more closely align the selection of their CPI/LSS 
activities with goals that are set forth in the Strategic Management 
Plan. For example, the CPI/LSS program office officials stated they 
have conducted a CPI/LSS project to streamline the civilian hiring 
process in order to reduce the time for hiring DOD civilians from the 
average cycle time of 155 days to the goal of 80 days or fewer as set 
by the Office of Personnel Management. Starting in October 2010, the 
Army piloted the streamlined civilian hiring process at an Army 
location which resulted in hiring two civilians in less than 80 days. 
As of July 2011, the Army is planning to expand the pilot to other 
locations for the remainder of fiscal year 2011 and is planning to 
implement the streamlined civilian hiring process across the military 
service in fiscal year 2012. According to these officials, improving 
civilian hiring would support the goal of "Enhance the Civilian 
Workforce" in DOD's Strategic Management Plan. The department's DCMO 
noted a greater number of civilians will need to be hired via the 
streamlined process in order to confirm the success of the project 
prior to making any departmentwide policy changes. 

Key Practices Show Promise for Implementing Efficiency Efforts Across 
Government: 

Key practices used in federal and statewide efficiency initiatives, 
and examples of how to implement these practices, may provide valuable 
insights into ways to improve efficiency in the federal government. 
While some of these practices were applicable to a number of 
initiatives in our review, we highlight examples from a few of the 
federal and state initiatives, to illustrate the point (see summary in 
table 6). Also, see appendix I for details on how we identified these 
key practices. In addition to these initiatives, the administration is 
undertaking various governmentwide efforts to improve the 
effectiveness and efficiency of federal agencies that may provide a 
platform for building on these key practices. 

Table 6: Key Practices in Selected Federal and State Efficiency 
Initiatives and Illustrative Examples: 

Key practice: Use change management practices to implement and sustain 
efficiency initiatives: 
* Ensure top leadership drives the transformation; 
* Dedicate an implementation team to manage the transformation process; 
* Set implementation goals and a time line to build momentum and show 
progress from day one; 
* Involve employees to obtain their ideas and gain their ownership of 
the transformation; 
Examples of how practices were implemented: 
* Held regular sessions led by Secretary or Deputy Secretary to track 
progress of major departmental initiatives (e.g., HUDStat and VA's 
OMR); 
* Used COOs or CMOs to lead efficiency efforts (e.g., Involvement of 
the Army, Navy, and Air Force CMOs in the Secretary of Defense's 
Efficiency Initiative and HUD Transformation Initiative); 
* Created a dedicated department-level team to identify, track and 
report on efficiencies (e.g.,DHS's ER, VA's OMR, HUD TI, and Texas 
Sunset Advisory Commission); 
* Set specific departmentwide cost savings and/or efficiency goals and 
an implementation time line (e.g., Secretary of Defense's Efficiency 
Initiative, Washington's GMAP); 
* Created an ongoing formal and collaborative structure that involves 
employees and leadership in identifying and developing efficiency 
policies (e.g., DHS's ER, VA's OMR and PMAS); 
* Provided financial or nonfinancial employee incentives for 
identifying efficiencies (e.g., DHS's ER, Secretary of Defense's 
Efficiency Initiative, DOD's CPI/LSS, Virginia's Productivity 
Investment Fund, and Iowa's Charter Agencies). 

Key practice: Target both short-term and long-term efficiency 
initiatives; 
Examples of how practices were implemented: 
* Identified efficiency initiatives that can generate immediate 
returns as well as more substantive changes to operating procedures, 
programs, and organizational structures (e.g., DHS's ER, DOD's 
CPI/LSS, and Secretary of Defense's Efficiency Initiative); 
* Identified dedicated funding mechanisms to support the upfront costs 
associated with long-term efficiency improvements (e.g., Virginia's 
Productivity Investment Fund, and HUD's Transformation Initiative ). 

Key practice: Build capacity for improving efficiency; 
Examples of how practices were implemented: 
* Used a department-level office to standardize guidance and training 
and facilitate sharing best practices (DOD's CPI/LSS); 
* Identified and shared performance trends and best practices during 
regular sessions that involved headquarters and regional leaders of 
major operations and programs (e.g., VA's OMR and HUDStat); 
* Identified and formally solicited input from experts in business and 
government operations (e.g., Secretary of Defense's Efficiency 
Initiative, Georgia's Commission, and Virginia's Council on the 
Future). 

Source: GAO. 

[End of table] 

Key Practice: Use Change Management Practices to Implement and Sustain 
Efficiency Initiatives: 

Top-level leadership: held regular sessions to track progress of major 
departmental initiatives, led by the Secretary or Deputy Secretary: 

As we have identified in the past, a leading practice in any change 
management initiative is having clear and personal top leadership-- 
including the Secretary, Deputy Secretary, or other high-level 
political appointees--involved in setting the direction, pace, and 
tone for the agency's major change.[Footnote 32] HUD and VA officials 
identified the direct top leadership of regular sessions to track the 
progress of the agencies' major initiatives as a critical factor in 
the implementation of their initiatives. As previously noted, HUD is 
holding regular HUDStat sessions that are led by the HUD Secretary. 
According to officials in various HUD offices, the Secretary's 
leadership at these meetings has been instrumental in fulfilling one 
of HUDStat's purposes, which is to overcome barriers to effective 
implementation of programs. HUD officials reported that the Secretary 
forms collaborative groups to develop solutions to problems identified 
at the HUDStat meetings. Similarly, the Deputy Secretary of VA leads 
the agency's OMR reviews and is directly briefed on the status of IT 
projects reviewed under PMAS. Various VA officials that we spoke with 
stated that this involvement has been critical because the Deputy, who 
also serves as the COO of VA, also tracks the process for staffing and 
training for the department's operational initiatives, chairs the 
department's Strategic Management Council, and leads other key 
management meetings.[Footnote 33] Therefore, he has key knowledge 
about the resources that are available to resolve problems and a 
strategic view of changes that need to occur throughout the 
department. Similarly, VA's CIO leads PMAS meetings and has central 
control over VA's IT budget, which allows him to have access to 
resources that facilitates problem-solving at PMAS meetings. 

Top-level leadership: designated COOs and CMOs to lead efficiency 
efforts: 

As we have noted in previous reports, COOs and CMOs can play a key 
role in integrating various key management and transformation efforts 
within federal agencies.[Footnote 34] In accordance with the GPRAMA, 
each agency must designate its deputy head, or the equivalent, as the 
COO. The COO is to be responsible for leading performance and 
management reform efforts--such as reducing wasteful or ineffective 
programs, and for conducting frequent data-driven reviews of agency 
progress toward goals that are critical to performance improvement 
across agencies, or that the agency head identifies as top near-term 
priorities. In DOD, the Under Secretaries of the Army, Navy, and Air 
Force in their capacities as CMOs, are leading efforts to implement 
the Secretary of Defense's Efficiency Initiative in their respective 
organizations and to identify additional efficiencies. These officials 
stated that they will continue to play a key role in implementing 
changes resulting from the initiative and identifying additional 
efficiencies. In January 2011,[Footnote 35] we reported that 
opportunities exist for DOD's CMO and DCMO to take on a greater 
leadership role in implementing the Secretary of Defense's Efficiency 
Initiative. Specifically, we recommended that the DOD CMO and DCMO be 
assigned specific roles and responsibilities for integrating the 
initiative with ongoing reform efforts, overseeing its implementation, 
and otherwise institutionalizing the effort for the long term. As of 
August 2011, DOD had taken some actions with respect to assigning 
roles and responsibilities. For example, according to DOD officials, 
after DOD submitted its fiscal year 2012 budget request which 
reflected the projected savings of the efficiency initiative, the DCMO 
and the Under Secretary of Defense (Comptroller)/CFO were assigned as 
the co-leads to be involved in developing an approach for tracking and 
reporting on the results' implementation. As of August 2011, these 
efforts to develop the planned approach were still underway. 

Similarly, HUD created a COO position in fiscal year 2010 and 
dedicated this position to overseeing the operations of the agency on 
a day-to-day basis, including providing oversight over the 
department's TI. According to various HUD officials, the COO's 
involvement has been important to creating cohesion between the senior 
leaders of operations and establishing accountability for meeting 
goals. Further, according to the COO and other senior leaders, HUD has 
historically had limited tracking and accountability for its 
performance goals. However, the COO has been regularly engaged in 
helping the department's program offices set new performance goals, 
holding them accountable for achieving results, and regularly 
monitoring progress. For example, her office has quarterly meetings 
with the General Deputy Assistant Secretaries from HUD's various 
program offices about the status of the budget, personnel, 
procurement, and IT--some of the discussions are related to the TI, 
while others are related to general HUD operations. 

Dedicated implementation team: created department-level team to 
identify, track, and report on efficiencies: 

We and other experts have reported that dedicating a strong and stable 
implementation or integration team that will be responsible for the 
day-to-day management of key change efforts is important to ensuring 
that it receives the focused, full-time attention needed to be 
sustained and successful. However, it must be given the necessary 
authority and resources to set priorities, make timely decisions, and 
move quickly to implement top leadership's decisions regarding the 
major change.[Footnote 36] DHS established a formal ER office with a 
dedicated team of staff who were given the necessary visibility and 
access to information to facilitate departmentwide efficiency 
improvements. According to DHS officials, the Secretary of DHS placed 
the ER Office within the Office of Secretary so that it would have the 
necessary attention, authority, and access to technical expertise 
needed to successfully oversee and facilitate departmentwide 
efficiency improvements. The ER office has access to technical 
assistance from Under Secretary for Management staff--who often 
provide technical expertise for ER initiatives--and direct reporting 
lines to the Secretary. This team plays a central role in informing 
the Secretary of the progress and challenges of ER efforts through 
managing departmentwide tracking and reporting on ER progress and 
engaging the Secretary in key ER meetings with components. Based on 
information provided by this team, the Secretary communicates directly 
to all DHS staff regarding the status of the efficiency initiative, 
including highlights of positive results achieved. Components and 
leaders from the Under Secretary for Management reported that these 
communications have demonstrated a high level of commitment by the 
Secretary, which has been an important factor in the successes 
achieved by the ER initiative. 

VA's OMR and HUD's TI also have dedicated staff to work on the 
initiatives, which the departments' officials reported was important 
to being able to facilitate identifying, tracking, and reporting on 
the progress of efficiency efforts.[Footnote 37] As an example, HUD 
officials reported that establishing OSPM to lead the TI has been 
instrumental to the department because it has elevated the status of 
performance management within HUD, facilitated communication about 
transformation projects between staff and top-level management, and 
placed higher qualified individuals in leadership over monitoring the 
multiple aspects of the transformation. 

In a different approach to using a dedicated team, Texas officials 
told us that having an independent dedicated team of staff to review 
state programs has allowed the state to more effectively implement 
reviews of their agencies. By law, most of Texas' state agencies are 
subject to a sunset review every 12 years.[Footnote 38] Agencies under 
Sunset review are automatically abolished unless legislation is 
adopted to continue them. A 12-member Texas Sunset Advisory Commission 
is responsible for making recommendations to the legislature on 
whether to continue an agency or function. According to the Director 
of the Commission's staff and documentation on the reviews, the state 
has abolished about 58 agencies since the initiative started in 1977 
and has eliminated or consolidated unnecessary or duplicative 
functions of many others. As an example, in their most recent report 
issued in February 2011, the commission recommended abolishing four 
agencies and merging two others.[Footnote 39] The commission has 33 
staff members that support the members in reviewing each agency. This 
dedicated team of commission staff analyzes findings from agencies and 
recommends to the members whether to close an agency or function, 
which is subsequently decided by the state legislators.[Footnote 40] 
The Director of the Texas Sunset Advisory Commission told us that, 
having an established team of independent and objective staff review 
the agencies has been important to the success of the state's efforts 
to become more efficient because these staff offer a more systematic 
and objective assessment of agency operations. However, he also noted 
that, even with a dedicated team of staff, the breadth of work 
required under the sunset provision requires them to be selective 
about focusing their reviews on the issues that are most critical to 
improving effectiveness and efficiency. 

Set goals and a time line: established specific departmentwide cost 
savings and efficiency goals and an implementation time line: 

In the Secretary of Defense's Efficiency Initiative, the Secretary set 
specific financial and nonfinancial efficiency goals and announced 
them to the public. We and other management experts have previously 
reported that by setting and making public implementation goals and a 
time line, an organization builds momentum and keeps employees 
motivated about the opportunities change brings and thereby helps to 
ensure the change initiative's successful completion.[Footnote 41] The 
demand for transparency and accountability from stakeholders and 
interested parties means that they are concerned not only with what 
results are to be achieved, but also which processes are to be used to 
achieve those results. According to military service and Office of the 
Secretary of Defense officials, the Secretary's specific directions 
set clear goals for the department and facilitated getting everyone on 
board to achieve them. In addition, his public announcement of the 
goals increased accountability of the department to achieve them. 
Several DOD officials highlighted the importance of having established 
targets and time lines to guide the initiative. However, other DOD 
officials noted that such goals and targets may limit the possibility 
of realizing additional efficiencies that exist beyond the 
efficiencies that satisfy the set goals or targets. 

In the state of Washington, state officials track and report on 
several performance measures using a program known as Government 
Management Accountability and Performance (GMAP). These performance 
measures include explicit efficiency targets that focus on government 
reform efforts, such as consolidating similar functions and 
streamlining processes for services needed by all agencies (personnel, 
property management, IT support, etc.). The status of progress toward 
the cost savings efficiency goals is made available to the public on 
the state's Web site.[Footnote 42] According to the officials and 
state performance reports, as a result of setting explicit targets and 
measures and establishing regular tracking, reporting, and problem-
solving discussions, Washington has seen a number of improvements in 
the performance and efficiency of state services (both within and 
across departments).[Footnote 43] For example, the department of 
social and health services programs implemented changes in their Basic 
Food program that resulted in a 75 percent reduction in application 
processing times, including reducing interview wait times by over 99 
percent (from 3-4 weeks to 5-30 minutes), which earned the program 
national recognition. In other cases, the state reduced state costs by 
millions by streamlining processes in areas such as tax e-filing for 
businesses, unemployment claim processes, and online healthcare 
benefit enrollment, among other things. 

While setting goals can be a helpful tool for achieving efficiencies, 
some departments did not believe that setting an efficiency target was 
best for their initiative. In DHS, ER Directors stated that there is 
no specific financial or nonfinancial target that DHS is trying to 
reach with the ER initiative. The goal of the ER initiative is broader 
than just achieving a certain level of cost savings. It exists to 
create lasting changes to their processes and a culture that 
encourages employees to regularly focus on ways to become a more 
efficient department. The officials believed that if they set specific 
cost avoidance goals in the department, components might assume that 
they were done improving their processes once they met that goal. 

Involve employees to gain their ownership: created an ongoing formal 
and collaborative structure that involved employees in identifying and 
implementing efficiencies: 

As previously mentioned, the DHS ER initiative is based on obtaining 
input from staff at every level of the organization--from lower-level 
subject matter experts to leadership officials. We have previously 
reported that, as a leading practice, successful change initiatives 
must involve employees from the beginning to gain their ownership for 
the changes that are occurring in the organization.[Footnote 44] 
Employee involvement strengthens the transformation process by 
including frontline perspectives and experiences. There are a number 
of ways to build employee buy-in, including using employee teams, 
involving unions and employees in planning and sharing information, 
and incorporating employee or union feedback into new policies and 
procedures. In DHS, employee ideas for improving efficiency are 
submitted in various ways and ultimately assessed for their 
feasibility, appropriateness, and potential departmentwide impact and 
benefits by a departmentwide steering committee consisting of all of 
the leaders of components and other technical experts. Based on the 
committee's recommendation, the ER office and a cross-component 
working group develop a departmentwide Action Directive that is issued 
by the Secretary and establishes the new standard operating procedures 
for the department. According to the DHS officials, this collaborative 
process was important not only because it involved employees who had 
the expertise needed to identify problems and solutions, but also 
because once these employees became involved in the decision-making 
process, they had a stake in ensuring that the changes were 
implemented. Further, a key part of DHS's success in getting consensus 
on departmentwide efficiency changes has been not only creating this 
collaborative process, but also recognizing and respecting differences 
between the needs of various component agencies. 

Similarly, VA officials stated that involving employees from various 
levels of leadership in IT and management projects to openly discuss 
challenges, problems, and resource needs in their PMAS and OMR 
sessions encouraged employees to more readily identify impediments to 
their projects and have candid discussions about solutions, which 
contributed to the success of projects. 

Involve employees to gain their ownership: provided financial or 
nonfinancial incentives for identifying efficiencies: 

Some federal and state agencies provided financial or nonfinancial 
incentives by allowing employees in components to reallocate dollars 
they avoided spending in one area into other priority areas and 
providing in-kind support or flexibilities in exchange for identifying 
efficiencies. DOD and DHS officials reported that providing gain- 
sharing incentives to components in the departments created important 
incentives for a component's employees to find efficiencies. Multiple 
DOD officials involved in the Secretary of Defense's efficiency 
initiative stated that the ability to reinvest identified overhead 
cost savings found in their organizations into their higher priority 
areas encouraged leaders in the military services to seek out areas in 
which savings could be identified and efficiencies could be gained. 
Similarly, in the CPI/LSS program, DOD officials noted that allowing 
DOD organizational entities to retain financial benefits that their 
CPI/LSS activities generate has also been an incentive. DHS officials 
also reported that DHS components have been more motivated to find 
efficiencies because they are allowed to keep the savings that they 
identify and reinvest them in other areas within their components. 

State efficiency initiatives illustrate that incentives can be 
provided in various forms. The Virginia Productivity Investment Fund 
(PIF), which has been operating since 2007, is a fund that makes loans 
and grants to agencies for projects intended to raise productivity, 
increase efficiency, and make state government more cost effective. 
The commonwealth's Secretary of Finance and officials who administer 
the PIF told us that the primary impetus for creating the fund was to 
create an incentive for employees to be more efficient and to keep 
Virginia's productivity improvements moving forward. Virginia 
officials reported that the development of the PIF started when the 
business community expressed concern that there was no reward or 
incentive system for agency efforts to become more efficient. 
Previously, any savings achieved by agencies all went to the 
Commonwealth's general fund without any recognition or reward. 
According to the officials and PIF reports, because the fund provides 
investment money for efficiency projects and, at times, a percent of 
the savings that result from PIF projects are shared with the agency, 
the fund has helped to build employee buy-in for finding efficiencies 
over the last several years and has also alleviated fears that 
agencies will lose funding if they report their efficiency-related 
savings. In addition to financial incentives, Virginia agencies can 
also request an in-kind gain share, such as temporary staff or 
equipment. 

In another example of approaches to gain-sharing incentives, in Iowa, 
the state created "charter agencies" from 2003 to 2008, which were 
agencies that agreed to produce measurable benefits--and improvements 
in those benefits--for the people they serve in exchange for 
administrative and regulatory flexibilities.[Footnote 45] Agencies 
agreed to take an up-front budget cut that would collectively help to 
close the state's budget gap through contributed savings or additional 
entrepreneurial revenues of at least $15 million each year in exchange 
for flexibilities. These flexibilities included the authority to waive 
administrative rules in personnel, general services, and IT as well as 
to retain proceeds from certain sales and revenue streams, and 
exemptions from full-time-equivalent employee caps, among other 
things. As a result of the effort, agencies reported collectively 
achieving the $15 million savings to the state while making a wide 
range of program and process improvements, such as reducing child 
welfare stays in shelter care by 20 percent, or 10 days; and improving 
the rate of individual income tax refunds issued within 45 days from 
75 percent to 94 percent, among many other things.[Footnote 46] 

Key Practice: Target Both Short-term and Long-term Efficiency 
initiatives: 

Identify easily accomplished initiatives that can generate immediate 
returns as well as more substantive changes to operating procedures, 
programs, and organizational structures: 

Federal and state officials and other government experts included in 
our review highlighted the importance of identifying easily 
accomplished initiatives that can generate immediate returns as a 
means to gain momentum as well as more substantive improvements, such 
as changes to operating procedures, programs, and organizational 
structures to achieve longer-term efficiencies. Federal efficiency 
initiatives in our review illustrated both approaches. For example, 
DHS's ER initiative primarily targets administrative projects that 
individually result in relatively small savings and nonfinancial 
efficiencies, but that collectively added up to more significant 
efficiency gains. DHS officials reported that focusing on "low-hanging 
fruit" that can produce early tangible results helps make a case for 
change, builds momentum for larger efficiency efforts in the future, 
and leads to attaining employee buy-in. (See table 7 below for a 
description of reported cost avoidances for ER projects designed to 
produce financial results). 

Table 7: DHS Efficiency Review Expected Project Cost Avoidances, as of 
July 2011: 

DHS ER Initiatives: Encrypted Thumb Drives Blank Purchase Agreement; 
FY2009: $0; 
FY2010: $0; 
FY2011: $0; 
Outyears: $720,000; 
Total[A]: $720,000. 

DHS ER Initiatives: Energy Efficiencies; 
FY2009: $44,800; 
FY2010: $1,246,800; 
FY2011: $54,800; 
Outyears: $1,764,200; 
Total[A]: $3,110,600. 

DHS ER Initiatives: Facilities Initiative; 
FY2009: $3,211,789; 
FY2010: $2,130,386; 
FY2011: $537,515; 
Outyears: $0; 
Total[A]: $5,879,690. 

DHS ER Initiatives: Fleet Management; 
FY2009: $294,582; 
FY2010: $1,066,322; 
FY2011: $10,803,150; 
Outyears: $26,956,526; 
Total[A]: $39,120,580. 

DHS ER Initiatives: Furniture (in the National Capital Region) Blank 
Purchase Agreement; 
FY2009: $0; 
FY2010: $0; 
FY2011: $0; 
Outyears: $6,600,000; 
Total[A]: $6,600,000. 

DHS ER Initiatives: IT Equipment Management Initiative; 
FY2009: $3,345,019; 
FY2010: $2,699,311; 
FY2011: $6,976,415; 
Outyears: $0; 
Total[A]: $13,020,745. 

DHS ER Initiatives: MFDs Initiative; 
FY2009: ($930,798); 
FY2010: $3,030,207; 
FY2011: $679,135; 
Outyears: $0; 
Total[A]: $2,778,544. 

DHS ER Initiatives: Non-Military Uniforms Blank Purchase Agreement; 
FY2009: $0; 
FY2010: $0; 
FY2011: $0; 
Outyears: $11,400,000; 
Total[A]: $11,400,000. 

DHS ER Initiatives: Office Supplies Blank Purchase Agreement; 
FY2009: $6,622; 
FY2010: $1,926,889; 
FY2011: $2,037,951; 
Outyears: $0; 
Total[A]: $3,971,462. 

DHS ER Initiatives: Paperless ELS; 
FY2009: $100,900; 
FY2010: $260,859; 
FY2011: $1,648,000; 
Outyears: $249,000; 
Total[A]: $2,258,759. 

DHS ER Initiatives: Personal Wireless Communications Devices/Services 
Optimization; 
FY2009: $654,397; 
FY2010: $8,394,424; 
FY2011: $808,287; 
Outyears: $70,000; 
Total[A]: $9,927,108. 

DHS ER Initiatives: Printing/Reproduction; 
FY2009: $5,222,063; 
FY2010: ($1,244,348); 
FY2011: ($534,100); 
Outyears: $0; 
Total[A]: $3,443,615. 

DHS ER Initiatives: Security/Hiring; 
FY2009: $11,382,395; 
FY2010: $83,547,449; 
FY2011: $92,247,697; 
Outyears: $0; 
Total[A]: $187,177,541. 

DHS ER Initiatives: Software Licenses Blank Purchase Agreement 
Initiative; 
FY2009: $14,583,333; 
FY2010: $61,388,459; 
FY2011: $33,069,043; 
Outyears: $71,359,164; 
Total[A]: $180,399,999. 

DHS ER Initiatives: Subscriptions; 
FY2009: $7,160; 
FY2010: $2,086,292; 
FY2011: $2,491,087; 
Outyears: $0; 
Total[A]: $4,584,539. 

DHS ER Initiatives: Tactical Communications Equipment and Services 
Blank Purchase Agreement; 
FY2009: $0; 
FY2010: $0; 
FY2011: $0; 
Outyears: $90,000,000; 
Total[A]: $90,000,000. 

DHS ER Initiatives: Wireless Communications Devices and Services Blank 
Purchase Agreement; 
FY2009: $0; 
FY2010: $0; 
FY2011: $0; 
Outyears: $34,000,000; 
Total[A]: $34,000,000. 

DHS ER Initiatives: Workforce Assessment Initiative; 
FY2009: $0; 
FY2010: $5,280,000; 
FY2011: $30,150,000; 
Outyears: $81,858,000; 
Total[A]: $117,288,000. 

DHS ER Initiatives: Subtotal; 
FY2009: $37,922,262; 
FY2010: $171,813,050; 
FY2011: $180,968,980; 
Outyears: $324,976,890; 
Total[A]: $715,681,182. 

Source: DHS. 

[A] According to DHS officials, results reported for fiscal year 2009, 
2010, and 2011 include both actual and expected cost avoidances. 
Results for the outyears are expected cost avoidances. These figures 
were not adjusted for inflation. 

[End of table] 

Officials from DHS's components highlighted that, while ER's 
departmentwide administrative projects were valuable, other 
substantive longer-term projects will likely result in the most 
significant savings. However, these projects sometimes require a 
significant up-front investment. Some components have taken on 
projects outside of the ER to obtain more significant longer-term 
efficiency improvements. For example, in a December 2009 memo, the 
Acting Commissioner of the U.S. Customs and Border Protection noted 
that the agency had engaged in DHS's departmentwide "efficiency 
review" for several months and it had demonstrated some true savings. 
However, the component needed to focus on much larger and more complex 
cost saving projects than anything they had tackled to date. 
Consequently, he called for a review of the component's major spend 
categories to find the potential for larger savings, stating that this 
was "not just to find 'efficiencies' i.e., those items that can be 
reduced with zero or minimal operational impact. This is to find 
solutions for how we operate with a shrinking budget." The department 
initiated an examination of its staffing and compensations; IT 
facilities; contractor, contracting, and in-sourcing; travel and 
training; and asset management, including vehicles among other things. 
In addition, the Office of Human Resource Management, working with 
other offices as appropriate, was requested to develop more specific 
performance measures centered on stewardship and resource management 
in executives' performance plans. As of July 2011, these review 
initiatives were still ongoing. 

According to DOD officials, DOD's CPI/LSS projects also target some 
efficiency improvements that can produce immediate results that may, 
at times, be small efficiency improvements, but that collectively make 
a more significant difference in productivity and building employee 
buy-in for larger efficiency efforts. For example, in March 2011, the 
Army reported that since 2006, it had collectively achieved $18.2 
billion in financial benefits from CPI/LSS activities, although we did 
not independently verify these reported savings. The Secretary of 
Defense's efficiency initiative targeted both shorter-term and longer-
term efficiency improvements. The department was able to identify 
areas for immediate gain, such as the elimination of boards and 
commissions, which do not require much time or funding to implement. 
However, in addition, the department identified larger, more complex 
means for savings, such as the consolidation of Air Force Air 
Operations Centers, which will require more time and potentially up-
front investment to implement. 

Identify funding mechanisms to support the up-front costs associated 
with longer-term substantive efficiency improvements: 

To support the up-front costs associated with longer-term efficiency 
improvements some agencies have obtained authority to use allocated 
funding mechanisms. For example, Virginia's $5.1 million PIF serves as 
a mechanism to support the up-front costs associated with longer-term 
substantive efficiency improvements. As previously mentioned, the 
fund--which the state still actively uses--provides seed money for 
projects that need an up-front investment to achieve efficiency 
results. Collectively, the projects from this fund must return at 
least what they spend. Funding is provided in three ways: (1) a grant 
when the project is not expected to earn a return because it is 
designed to improve customer service, (2) a loan when the project is 
designed to create a cost savings or revenue, or (3) a gain share when 
the agency retains a percentage of the cost savings or revenue 
associated with the project. The fund is administered by an Oversight 
Board made up of the Secretaries of Administration, Finance, and 
Technology as well as other senior leaders of administrative functions 
in the state.[Footnote 47] According to the Secretary of Finance and 
staff that administer the fund and PIF documents, both private and 
public sector entities propose projects in collaboration with Virginia 
agencies and the PIF Oversight Board decides on the projects to fund. 
Since its inception, the Commonwealth of Virginia reported that the 
fund has invested $5.1 million in 38 projects across 23 agencies, and 
expects a return on investment of $4 for every $1 lent.[Footnote 48] 
These saving returns are used to perpetuate the fund--making it self-
sustaining. 

In another approach previously mentioned, HUD received authorization 
from Congress to transfer up to 1 percent of the budgets from selected 
program offices to contribute to a TI fund in fiscal year 2010. The TI 
Fund serves as a centralized funding source for initiatives that are 
intended to improve the department's effectiveness and efficiency. 
According to HUD officials, through this funding mechanism, efficiency 
and performance improvement projects that were in need of funding for 
a number of years were recently initiated. For example, for a number 
of years HUD desired to replace its outdated, paper-based acquisition 
system with a more up-to-date system that could improve its 
procurement processes and has recently begun to do so with funding 
from the TI. The department expects significant efficiencies to result 
from this project, including: 

* increasing transparency and ensuring accountability by providing an 
integrated system that aligns HUD's business processes throughout the 
acquisition cycle with time, 

* decreasing paper-based processing of HUD's acquisition transactions 
by 80 percent through the use of the HUD Integrated Acquisition 
Management System fully electronic environment, 

* decreasing the established procurement acquisition lead times for 
majority of acquisition strategies by 10 percent, 

* improving customer satisfaction to a level of at least 65 percent, 
and: 

* increasing direct access of contract obligations, expenditures, and 
reports from 0 to 60 percent. 

In our prior work on high-performing organizations, we also 
highlighted the idea of a governmentwide transformation fund as one 
proposal for helping federal agencies transition into higher 
performance.[Footnote 49] For example, we discussed establishing a 
governmentwide fund where agencies, based on a well-developed business 
case, could apply for funds to modernize their performance management 
systems and ensure that those systems have adequate safeguards to 
prevent abuse. We pointed out a special funding program in the United 
Kingdom intended to assist government agencies in implementing 
reforms, which required the agencies to reimburse the government. We 
also noted that, in 2004, Congress authorized the Secretary of Defense 
to implement a pilot program whereby selected DOD organizations were 
provided incentives to reengineer their operations in order to become 
high-performing organizations.[Footnote 50] OMB is implementing a 
pilot program using a centralized fund to support projects that will 
improve efficiency and effectiveness of federal programs that are 
administered by states--which we describe more thoroughly later in 
this report. 

Key Practice: Building Capacity for Improving Efficiency through 
Standardizing Guidance and Sharing Best Practices: 

Use a department-level office to standardize guidance and training and 
facilitate sharing best practices: 

As part of its functions, the department-level CPI/LSS program office 
has issued standardized CPI/LSS guidance and training and--on a case- 
by-case basis--helped to facilitate sharing information about 
efficiency in operations across components. For example, in May 2006, 
DOD published a guidebook to standardize terminology and present CPI 
best practices from the private sector's and the department's 
experience which the program office updated in July 2008. Also, in 
March 2009, the department's DCMO issued minimum training standards 
for DOD personnel seeking to be certified in CPI/LSS techniques. 

We also found examples of where the CPI/LSS program office reported it 
helped to facilitate knowledge sharing. Internally, the CPI/LSS 
program office's civilian hiring reform project, which is being 
piloted at an Army location, is one example where the program office 
has facilitated sharing lessons learned with other DOD components. 
Specifically, CPI/LSS program office officials told us they shared the 
pilot's results with senior level officials in the military services 
and the Defense Logistics Agency with the objective of replicating the 
revised civilian hiring process within the department. According to 
the department's DCMO, the pilot results have also been shared with 
the department's civilian human resource policy office for potential 
implementation in all DOD components. However, the official noted a 
greater number of civilians will need to be hired via the streamlined 
process in order to confirm the success of the project prior to making 
any departmentwide policy changes. In addition to sharing lessons 
internally, CPI/LSS program office officials told us that they shared 
lessons learned from this pilot project with VA. According to CPI/LSS 
program office officials, the office has also shared lessons through 
the Performance Improvement Council (PIC) subgroup on LSS.[Footnote 
51] In June 2011, the program office--in collaboration with the PIC--
presented a symposium where over 600 staff from DOD and other federal 
agencies enrolled to share lessons about CPI/LSS, among other topics. 

Other initiatives in our review were in beginning stages of using 
similar mechanisms to build capacity. As previously mentioned, VA 
recently established and staffed the Enterprise Program Management 
Office, which is intended to develop project management standards, 
methodologies, doctrine, and processes to execute the Major 
Initiatives that are reviewed under the OMR process, as well as to 
identify and facilitate the use of best practices and industry 
standards in VA processes throughout the department. 

Identified and shared performance trends and best practices during 
performance review meetings that involve headquarters and regional 
leaders of major operations and programs: 

Some departments are also using performance review meetings that 
involve staff from various offices and regions to identify and share 
performance trends and best practices throughout the department. While 
VA's OMR and PMAS sessions are focused on improving agency 
performance, officials reported that the sessions have also provided 
the forum for key stakeholders involved in major initiatives and PMAS 
projects to identify cross-initiative trends, dependencies, and best 
practices; and to highlight potential challenges and solutions from 
which others in the department could learn. For example, a VA official 
from the Office of Information and Technology reported that 
information collectively shared during PMAS reviews allowed senior 
officials to notice that the seemingly minor staffing problems in one 
initiative or project actually had cross-cutting effects that 
jeopardized the timely completion of other projects and initiatives. 
According to the official, these cross-cutting interdependencies would 
have gone unnoticed without PMAS reporting and reviews. As a result, 
VA senior management initiated a new hiring program, which officials 
reported resulted in hiring new staff and shifting existing staff to 
key projects suffering from staffing deficiencies, which contributed 
to 69 projects moving forward with the staffing levels needed. 

Similarly, although HUDStat meetings are focused on tracking 
performance and identifying solutions to performance challenges, HUD 
officials reported that they have also used the sessions to identify 
best practices occurring in some HUD regions and to share them with 
other regions or offices for replication. For example, because of 
HUDStat meeting discussions and follow-up, the department learned that 
one reason they were not successfully meeting their desired goal for 
getting more families in rental housing units through their rental 
assistance housing voucher program was because the program did not 
cover rental deposits that were required by landlords before voucher 
recipients could move in. However, officials reported that because of 
the discussion at the HUDstat meeting, one regional office shared its 
practice for overcoming this barrier with other regional offices, 
resulting in HUD filling more vacancies and serving more families. 
[Footnote 52] In accordance with the Administration's guidance in 
implementing GPRAMA, all federal agencies will be required to hold 
data-driven performance meetings, such as these, in the future. 

Identified and formally solicited input from experts in the 
department's mission field or in government operations: 

Federal and state officials reported that it was valuable to solicit 
input from knowledgeable outside experts to either confirm areas that 
agencies should focus on to improve efficiency or provide fresh ideas. 
For example, as part of the Secretary of Defense's Efficiency 
Initiative, the Under Secretary of Defense (Comptroller)/CFO solicited 
ideas for DOD-wide efficiency gains from external groups with 
knowledge of and interaction with DOD, such as public and private 
sector research organizations as well as other federal agencies. 
According to officials in the Office of the Under Secretary of Defense 
(Comptroller), the input that they received confirmed the areas that 
the department needed to focus on as part of the Secretary's 
initiative. 

States have utilized commissions and boards of external experts to 
generate insightful ideas on improving efficiency. In 2003, the 
Governor of Georgia created the Commission for a New Georgia (CNG) to 
engage Georgia's top-level business and professional executives in 
assisting the state government in rethinking its bureaucracy's 
management. A senior Georgia state official involved in leading the 
CNG told us that involving members of the business community in the 
commission brought business acumen and professional expertise to 
improvement efforts. Further, the CNG enlisted hundreds of Georgians 
with diverse business expertise and experience in a series of 24 short-
term task forces, covering a wide range of management areas. The 
commission ended in 2010 along with the term of the governor leading 
the effort. However, according to CNG reports, during its 7-year 
tenure, the task forces analyzed operations across state government 
and recommended actionable improvements on a fast track, resulting in 
generating 130 actionable recommendations, 98 percent of which have 
been implemented. For example, as of December 2010, the Commission's 
major cost-saving recommendation called for modernizing state 
procurement, which contracts over $5.7 billion in purchasing a year. 
According to state officials, as a result of the transformation of 
their purchasing process, the state cut costs on big contract items 
like computers, office supplies, and industrial materials. Based on 
previous spending, they expect savings to exceed $100 million. In 
other examples, the state reported that it sold its surplus real 
estate holdings--netting $22 million as of July 2011--and returned the 
savings to county tax rolls; consolidated and renegotiated leases, 
reportedly saving $10 million; and renegotiated phone service and 
utility rates, saving $10 million a year on utility bills. [Footnote 
53] 

Similarly, in Virginia, the Governor created a task force in 2003 
consisting of leaders from the business community to identify 
opportunities to improve Virginia's operational efficiency. The task 
force identified the frequent turnover of Virginia's Governors as a 
major barrier to the sustainability of improvement efforts in 
Virginia. (Governors are allowed by the Commonwealth constitution to 
serve only one 4-year term). To overcome the effects of this turnover 
and establish continuity in Virginia's government, the task force 
proposed a mechanism for long-term planning and execution of 
improvement efforts that led to the formation of the Council on 
Virginia's Future. The Council now performs several key functions for 
the Commonwealth, including conducting long-term planning and 
assessing Virginia's progress toward their long-term goals and 
overseeing Virginia Performs, an accountability system that requires 
state agencies to report progress on performance objectives and 
measures to the Virginia Performs Web site and the General Assembly. 
[Footnote 54] The Council also involves members of the business 
community and the state's legislative leadership. 

Governmentwide Initiatives May Provide a Platform for Building on 
Federal and State Efficiency Practices: 

As previously discussed, the administration is undertaking various 
efforts to improve the effectiveness and efficiency of federal 
agencies, and a law was recently enacted to further support agency 
efforts to improve performance. GPRAMA requires that agencies 
establish priority goals and metrics and report on them quarterly. 
These goals include performance and efficiency improvements to program 
activities, regulations, policies, and agency management. The act also 
requires each department to assign a COO and Performance Improvement 
Officer (PIO) to be responsible for overseeing these management and 
performance improvements. In a June 13, 2011, an executive order on 
delivering an effective, efficient, and accountable government, the 
President also required the COO of each agency to be accountable for 
conducting frequent data-driven reviews of agency progress toward 
goals that are critical to performance improvement across agencies or 
that the agency head identifies as top near-term priorities.[Footnote 
55] Further, in an August 17, 2011, memo, the Director of OMB and the 
Federal Chief Performance Officer/Deputy Director for Management 
directed COO's to set agency priority goals that include improving 
efficiency and to ensure that a leadership team in their agency 
reviews the program improvement and cost-saving recommendations 
identified in our annual report on program duplication, overlap, and 
fragmentation, as well as areas GAO has identified as high-risk. On 
August 25, 2011, the Administration launched performance.gov--a public 
Web site, which, according to OMB, is intended to provide a window on 
the administration's efforts to deliver a more effective, smarter, and 
leaner government, including progress in cutting waste, streamlining 
government, and improving performance. 

In the June 13, 2011, executive order and subsequent guidance issued 
on June 28, 2011, from the OMB Controller, the Administration also 
outlined a significant role for CFOs in identifying cost savings. The 
June 28, 2011, memo issued by the OMB Controller to the CFOs of all 
agencies entitled "Campaign to Cut Waste" outlined specific steps that 
CFOs should take to address the President's directive to identify 
immediate administrative cost savings, including steps to identify and 
share government practices that cut costs and improve efficiencies. 
These steps included having CFOs from various departments serve as a 
steering committee to help coordinate the CFO Council's efforts to 
establish performance benchmarks that will identify efficiencies and 
surface areas of potential cost savings.[Footnote 56] In addition, 
each CFO was requested to (1) initiate the collection of existing 
examples, practices, and success stories of efforts to improve 
efficiency, avoid unnecessary expenditures, and cut costs within their 
agency; (2) review and rank submissions for improvements within their 
agency made by federal employees for the President's 2011 Securing 
Americans' Value and Efficiency (SAVE) Award; and (3) establish within 
their agency tactics for identifying, discussing, and promoting 
practical approaches to eliminating unnecessary costs and inefficient 
practices. The CFOs were further encouraged to explore whether 
practices are already in place that can be leveraged for this 
initiative, or concrete steps that can be taken to formalize new 
common sense cost-cutting measures. 

OMB also manages a new dedicated governmentwide fund for improving 
efficiency in certain programs. This concept of having a dedicated 
fund to support the up-front investments of efficiency-related 
projects is similar to other federal and state practices we identified 
in this report. The Partnership Fund for Program Integrity Innovation 
(the Partnership Fund) funds pilot projects and evaluations that test 
ideas for improving federal assistance programs to states through 
reducing improper payments, improving administrative efficiency, 
improving service delivery, and protecting and improving program 
access for eligible beneficiaries. This fund received an appropriation 
of $32.5 million for fiscal year 2010, available for 3 years, to 
provide seed money for efficiency and integrity projects that 
collectively are expected to achieve a savings that is equal to or 
greater than the funding provided by the Partnership Fund.[Footnote 
57] There are currently five pilot projects underway with a total 
authorized funding of $8.25 million. Some of these projects are 
intended to achieve actual results, while others are simulations 
intended to show potential results. In one example, the Partnership 
Fund is providing $2 million for a project that will help to improve 
the Earned Income Tax Credit eligibility process, which could 
potentially lead to an annual return of about $100 million if 
ultimately implemented in all states. [Footnote 58] Anyone can submit 
an idea for a pilot online at partner4solutions.gov. However, OMB 
selects the final pilot projects after consultation with a forum of 
state and local government representatives and federal agencies, among 
others. According to OMB staff, these agencies collaborate regularly 
to identify opportunities to implement changes that cut across federal 
agencies or states and share lessons learned from the pilots.[Footnote 
59] Congress also oversees the fund by requiring that OMB and its 
federal, state, and other stakeholders report to it semiannually on 
its progress.[Footnote 60] 

OMB staff responsible for the fund described some additional benefits 
that they believe have resulted from having a centralized multiyear 
source of dedicated funding for efficiency projects, including: 

* enhancing agencies' abilities to undertake efficiency issues that 
need to be reviewed over time or that are affected by multiple federal 
agencies (e.g., service areas that involve programs administered by 
multiple agencies like reducing homelessness or improving health and 
human service delivery, etc.); 

* creating a collaborative environment that enhances agencies' ability 
to learn from efficiency projects being initiated in other agencies, 

* allowing agencies to simulate the benefits that could be gained from 
improvements in programs in which they do not currently have the 
authority to make changes, in order to demonstrate results to 
Congress; and: 

* piloting projects that could potentially help reduce the federal 
deficit in the long run by reducing costs resulting from improper 
payments and wasteful and inefficient government processes, among 
other things. 

Congress and the Administration also are establishing requirements 
that are intended to better leverage existing interagency councils 
that can be used to share lessons on how to improve the effectiveness 
and efficiency of agency operations. In our previous report on 
strengthening OMB's approach to improving efficiency, OMB agreed with 
our recommendation that it should collect and disseminate information 
on strategies and lessons learned from successful efforts to improve 
efficiency by federal agencies, other governments, and the private 
sector using various venues that could include the governmentwide 
management councils, such as the Performance Improvement Council (PIC) 
and President's Management Council (PMC).[Footnote 61] The PIC and 
PMC, which are comprised of PIOs and COOs of agencies respectively, 
have served as networks for sharing information among agencies and 
OMB.[Footnote 62] Consistent with our recommendation, Congress and the 
President formally established additional knowledge-sharing 
responsibilities for the PIC, PMC, and other governmentwide management 
councils. GPRAMA requires the PIC to facilitate the exchange among 
agencies of practices that have led to performance improvements within 
specific programs, agencies, or across agencies; coordinate with other 
interagency management councils; seek advice and information from 
nonmember agencies; and to consider the performance improvement 
experiences of nongovernmental entities. In addition, according to the 
President's Fiscal Year 2011 budget submission, the PIC will serve as 
a home for federal communities of practice that will develop tools and 
provide expert advice and assistance to their federal colleagues. 
[Footnote 63] In an Executive Order issued on June 13, 2011, and in 
subsequent guidance from OMB, the Administration also directed the 
Federal Chief Performance Officer and agency CFOs to work with the PMC 
and the CFO council to share practices across agencies. 

Conclusions: 

Given the pressure to reduce the federal deficit, and in particular 
federal spending, agencies are obligated to find ways to operate more 
efficiently now and over the long term. The efficiency initiatives 
that we reviewed, which focused on reexamining federal programs and 
organizational structures and streamlining operations, demonstrate 
agencies' recognition that everything must be considered in order to 
address fiscal challenges. Yet, these efforts must occur while still 
ensuring that the federal government can provide the critical services 
and functions needed. This is a difficult balance, and departments can 
improve their chances of being successful by learning from each 
other's experiences as well as those of the states. How these 
initiatives are implemented will be critical to their success. 

Some federal and state experiences in implementing efficiency 
initiatives reinforce key change management practices we have 
highlighted in our prior work, such as having direct leadership 
involvement and increasing employee buy-in for implementing change. 
Other practices highlight more tactical ways to achieve efficiency 
results by focusing both on the immediate projects to help build 
momentum, and the more complex projects that are likely to result in 
longer-term and more significant efficiency gains. OMB can play an 
important role in ensuring that agencies learn from and coordinate 
with each other on ways to improve efficiency. If effectively 
implemented, the new responsibilities of the COOs, PIOs, PMC, and the 
PIC under GPRAMA and the President's Executive Order and related memos 
on delivering efficient, effective, and accountable government, 
provide an opportunity for OMB and departments to facilitate sharing 
the practices that we and others have identified that will assist 
agencies in transforming into more efficient organizations. 

To help address the long-term fiscal challenge, agencies must 
undertake fundamental reexaminations of their operations, programs, 
and organizational structures--which may require an up-front 
investment of resources. However, the need to implement these types of 
reforms will continue to compete with the need to identify immediate 
savings in the current budget environment. Key efficiency practices 
and examples we identified indicate that efficiency projects can be 
funded using allocated funding mechanisms that have the potential to 
save more than they cost. OMB may want to work with Congress, as well 
as federal agencies, to consider similar funding mechanisms as it 
identifies ways to encourage department efforts to make 
transformational changes to the way they operate. Such mechanisms 
could include expanding the Partnership Fund for Program Innovation 
pilot program or creating a separate pilot program to fund efficiency 
projects that have a substantial up-front investment, but that 
demonstrate that they can increase the productivity of agencies and 
return a cost savings of more or at least the amount of the assistance 
they were given. Another approach could be to authorize more agencies 
to allocate a portion of their budget for projects that are expected 
to improve their long-term efficiency, similar to HUD's TI Fund. In 
any case, there needs to be rigorous continued oversight requiring the 
investor to ensure that the intended long-term savings are achieved. 

Recommendations for Executive Action: 

In order to assist federal agencies' efforts to improve their 
efficiency, we recommend that the Director of the OMB, through the 
Deputy Director for Management/Federal Chief Performance Officer, take 
the following two actions. 

* Building on our prior recommendation to use governmentwide 
management councils and other venues to share lessons learned from 
efforts to improve efficiency, work with these councils to share the 
specific key efficiency practices that we have identified in this 
report. 

* Work with Congress and federal agencies to develop proposals for 
funding mechanisms that assist federal agencies with the up-front 
costs associated with some longer-term efficiency improvement projects 
that are expected to result in more significant cost savings or other 
efficiencies in the future. If such proposals are implemented, 
collectively, the projects should return more than or at least the 
amount of the assistance provided. 

Agency Comments and Our Evaluation: 

We provided a draft of this report for review and comment to the 
Director of OMB, the Secretaries of Defense, Homeland Security, 
Housing and Urban Development, and Veterans Affairs. The Department of 
Defense, Department of Housing and Urban Affairs, and Department of 
Veterans Affairs stated that they had no comments. In written 
comments, the Director of the DHS GAO/Office of the Inspector General 
Liaison Office responded that DHS was pleased that the report 
recognizes the achievements of the DHS ER initiative. DHS also 
provided technical comments, which we incorporated into the report. 
DHS's comments are reprinted in appendix IV. 

In a September 12, 2011 e-mail, OMB staff provided comments related to 
our recommendation that OMB work with the governmentwide management 
councils to share key practices that we identified in this report. OMB 
staff stated that the report does not give sufficient weight to 
efforts that it is undertaking that are consistent with the practices 
we identify, and that, at a minimum, the report title and highlights 
page should reflect that OMB has been sharing and will continue to 
share these practices. Among other efforts, OMB reported that it has 
held quarterly reviews of progress on priority goals for over a year, 
conducted SAVE award competitions to involve employees in contributing 
ideas, and coordinated with the General Services Administration to 
work with management councils to share best practices. Our report 
recognizes a number of these governmentwide activities, and we also 
modified the report with additional information on new initiatives. We 
are also already evaluating some of these governmentwide efforts, such 
as contracting reforms, in other reports and ongoing reviews. However, 
we do not describe all of the efforts that OMB is undertaking because 
the purpose of our review was to assess specific federal agency and 
state government efficiency initiatives, and the lessons that could be 
learned from them. Further, we are unaware of the extent to which 
lessons on these practices are being shared, since OMB did not provide 
this information to us during our audit. OMB did not comment on our 
second recommendation that it develop proposals for funding mechanisms 
that can assist federal agencies with the upfront costs associated 
with some longer-term efficiency improvement projects. OMB provided 
other technical comments, which we incorporated as appropriate. 

We are sending copies of this report to the appropriate congressional 
committees and other interested parties. The report will also be 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. If you have any questions concerning this report, 
please contact J. Christopher Mihm 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 the report. Key contributors 
to this report are listed in appendix V. 

Signed by: 

J. Christopher Mihm: 
Managing Director Strategic Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

You asked us to examine federal and state government efforts to 
improve efficiency. Specifically, we (1) describe selected initiatives 
that federal departments are implementing to achieve efficiencies-- 
including the reported or expected results, how these results are 
being tracked and reported, and the extent to which these initiatives 
are being institutionalized; and (2) identify key practices from 
implementing these efficiency initiatives in federal departments, as 
well as selected initiatives in state governments, that can be applied 
more broadly across the federal government. 

[End of section] 

For the purposes of this review, we define "efficiency" as maintaining 
federal government services or outcomes using fewer resources (such as 
time and money) or improving or increasing the quality or quantity of 
services or outcomes while maintaining (or reducing) 
resources.[Footnote 64] Based on discussions with management experts 
and federal and state officials, we identified the following primary 
approaches that agencies can take to improve efficiency: 

* reexamining programs and related processes and/or organizational 
structures to determine whether they effectively or efficiently 
achieve the mission, and: 

* streamlining or consolidating management or operational processes 
and functions to make them more cost effective; and: 

* To respond to the first objective, we selected specific efficiency 
initiatives within federal departments that: 

* are being implemented departmentwide; 

* demonstrate the two major approaches to improving efficiency 
identified by experts and officials: 

- reexamining federal programs that do not effectively or efficiently 
achieve a department's mission and their related processes and/or 
structures; or: 

- streamlining or consolidating existing processes and functions to 
make them more cost effective; 

* are within departments that identified themselves as having the 
potential to gain efficiencies in their administrative operations. 
These departments identified over $40 million in administrative cost 
savings in the Terminations, Reductions, and Savings portion of either 
the President's 2010 or 2011 fiscal year budget proposals; 

* were identified by GAO in 2010 as having opportunities for major 
cost savings; and: 

* were identified by Office of Management and Budget or government 
management experts as having potentially promising practices. 

* Based on these criteria, we selected the following initiatives 
within several federal departments for review: 

Table 8: Federal Initiatives Selected as Case Studies: 

Initiatives focused on reexamining federal programs and their related 
processes and/or structures: 

Initiative: Secretary of Defense's Efficiency Initiative; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2010. 

Initiative: Department of Housing and Urban Development's (HUD) 
Transformation Initiative; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2010. 

Initiative: Department of Veterans Affairs' (VA) Operational 
Management Reviews (OMR); 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiatives focused on streamlining or consolidating existing 
processes and functions: 

Initiative: Department of Homeland Security's (DHS) Efficiency Review; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiative: VA's Project Management Accountability System (PMAS); 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2009. 

Initiative: Department of Defense's (DOD) Continuous Process 
Improvement/Lean Six Sigma Continuous Process Improvement (CPI/LSS) 
Process; 
Date Instituted: Initiatives focused on reexamining federal programs 
and their related processes and/or structures: 2007. 

Source: GAO Analysis of Agencies Documentation. 

[End of table] 

We highlighted examples of initiatives that offer potentially 
promising practices that may be adapted by other federal agencies, but 
did not review all initiatives that these departments are completing 
or have completed to improve efficiency. To describe these 
initiatives, we examined information provided in Department of 
Defense, Department of Housing and Urban Development, Department of 
Veterans Affairs, and Department of Homeland Security policies, 
guidance, reports, budget submissions, strategic plans, and other 
documents specifically related to the selected initiatives and in 
interviews, as well as our recent and ongoing work on efficiency 
efforts within these departments. As part of this assessment, we asked 
agencies to describe the process that they are using to identify and 
implement efficiency improvements and efficiency results that they 
have achieved or expect to achieve. We also collected through 
interviews and document requests information from the agencies on how 
they estimated, gathered, or calculated cost savings and efficiencies. 
The amount and level of detail of this information varied greatly 
across agencies and efficiency efforts. Because it was not the purpose 
of this report to assess the anticipated or actual success of 
efficiency efforts and because the amount and quality of data on how 
estimated and actual savings were determined varied so much across 
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 and efficiencies are of undetermined reliability. We did 
examine the extent to which the departments are tracking and reporting 
on these efficiencies, as well as institutionalizing efficiency 
improvements by incorporating them into structured and formalized 
departmental processes and systems--including strategic planning and 
budget processes and standard operating procedures. 

To examine the selected initiatives, we met with federal officials 
from various offices and components in the departments included in our 
review. 

* To discuss DOD's initiatives, we met with officials and reviewed key 
documents from the offices of the DOD DCMO including the DCMO; Under 
Secretary of Defense (Comptroller); Under Secretary of Defense for 
Acquisition, Technology, and Logistics; Under Secretary of Defense for 
Personnel and Readiness, Cost Assessment and Program Evaluation; and 
Air Force, Army, Marine Corps, and Navy headquarters including the 
Under Secretaries of the Air Force, Army, and Navy in their capacities 
as CMOs. 

* To discuss HUD's Transformation Initiative, we met with and reviewed 
key documents from officials within the Offices of: Strategic Planning 
and Management, Policy Development and Research, Chief Procurement 
Officer, Chief Financial Officer, and Chief Information Officer, the 
Deputy Secretary, and the Secretary. 

* To discuss VA's Project Management Accountability System and 
Operational Management Review processes, we met with and reviewed key 
documents provided by officials within the Offices of Information and 
Technology, Policy and Planning, Corporate Analysis and Evaluation, 
and the Secretary. We also observed a session of VA's OMR which was 
led by VA's Deputy Secretary. 

* To discuss DHS's Efficiency Review, we met with and reviewed key 
documents from officials in the Efficiency Review Office, Directorate 
for Management (including the Chief Administrative Officer and Chief 
Financial Officer), and two component agencies--the U.S. Coast Guard 
and U.S. Customs and Border Protection. 

* To provide context on efficiency initiatives being implemented more 
broadly across the government, including efforts under the Accountable 
Government Initiative, we also met with and reviewed key documents 
from officials within the Offices of: Performance and Personnel 
Management, E-Government and Information Technology, and Federal 
Financial Management within OMB as well as the Office of Citizen 
Services and Innovative Technologies in the General Services 
Administration. 

To identify key practices within our case study initiatives, we 
synthesized practices identified by federal and state officials and 
also compared them with leading practices identified in the 1993 
Government Performance and Results Act (GPRA) and GPRA Modernization 
Act of 2010 (GPRAMA), relevant literature, and past GAO reports on 
organizational transformation, management integration, efficiency 
measures, and transparently tracking and reporting agency results. 
Along with examining the federal initiatives described above, we 
selected statewide efficiency initiatives that demonstrated one of the 
two of the major approaches to improving efficiency--reexamining state 
programs or streamlining or consolidating existing processes--and that 
were identified by OMB and government management experts as having 
potentially promising practices. We assessed the initiatives to 
identify illustrative examples of promising key practices that may be 
transferable to the federal government. We met with officials or staff 
currently or formerly involved in: Virginia's Productivity Investment 
Fund and Council on Virginia's Future; the Commission for a New 
Georgia; Iowa's Lean Six Sigma and Charter Agencies; Washington 
Government Management and Accountability Program; and the Texas Sunset 
Advisory Commission. For a description of the state examples included 
in our review, see table 9. We also discussed key practices in 
improving efficiency with other federal and state government 
management experts in McKinsey and Co., the Center for American 
Progress, the IBM Center for the Business of Government, OMB Watch, 
the Pew Center on States, the National Governors Association, National 
Association of State Budget Officers, Public Works LLC, Public 
Strategies Group, and others. 

We conducted this performance audit from March 2010 to August 2011, in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Table 9: Description of State Initiatives Included in the Review[A]: 

Name of initiative: Initiatives Focused on Reexamining State Programs 
and their Related Processes and/or Structures. 

Initiatives Focused on Reexamining State Programs and their Related 
Processes and/or Structures: 

Name of initiative: Council on Virginia's Future; 
State: Virginia; 
General description and purpose: The Council on Virginia's Future was 
established by legislation to develop a vision and long-term goals for 
Virginia and to regularly review progress. The Council consists of 
members of the business community and the state's legislative 
leadership and acts as an advisory board to the Governor and General 
Assembly. The Governor chairs the Council; 
Implementation time frame: 2003 - present; 
Reported results: Variety of results including the implementation of 
the Productivity Investment Fund and improved performance data used 
for decision making. 

Name of initiative: Iowa Charter Agencies; 
State: Iowa; 
General description and purpose: Iowa's charter agencies were created 
under the agreement that agencies would receive items such as relief 
from certain administrative restrictions and access to a charter 
agency grant fund in exchange for upfront and annual savings and 
measurable performance improvements; 
Implementation time frame: 2003 - 2008; 
Reported results: For fiscal years 2004-2006 reported $92 million in 
savings and improvements in performance such as more tax refunds 
issued within 45 days and 33 percent more children with health 
insurance. 

Name of initiative: Texas Sunset Advisory Commission; 
State: Texas; 
General description and purpose: The Texas Sunset Advisory Commission 
is responsible for reviewing more than 150 Texas agencies every 12 
years. An independent staff reviews agencies based on a set of 
criteria and makes recommendations to the legislature for improvement, 
consolidation, or elimination of agencies no longer needed; 
Implementation time frame: 1977 - present; 
Reported results: Estimates through 2009 indicate a potential revenue 
savings of approximately $783.7 million with a return on investment of 
$27 for every $1 spent. 

Name of initiative: Washington State's Government Management 
Accountability and Performance (GMAP); 
State: Washington; 
General description and purpose: Washington's GMAP was established to 
review program performance by policy area, such as education, health 
care, and government reform. The Governor and her staff regularly meet 
with the heads of state agencies and departments to evaluate the 
performance results that these organizations are currently delivering; 
Implementation time frame: 2005 - present; 
Reported results: GMAP has made important steps toward integrating the 
major performance and accountability efforts throughout state 
government. 

Initiatives Focused on Streamlining or Consolidating Existing 
Processes and Functions: 

Name of initiative: Commission for a New Georgia; 
State: Georgia; 
General description and purpose: The Commission for a New Georgia was 
created to engage Georgia's top-level business and professional 
executives to assist state government in rethinking its bureaucracy's 
management. 24 Commission Task Forces were created to analyze a wide 
range of management area operations across state government to make 
actionable recommendations; 
Implementation time frame: 2003 - 2010; 
Reported results: Generated 130 recommendations resulting in dozens of 
pieces of legislation and a reported $700 million in savings. 

Name of initiative: Iowa Lean Enterprise Office; 
State: Iowa; 
General description and purpose: Iowa's Lean Enterprise Office was 
created to ensure the use of Lean tools for all executive branch 
agencies. The initiative includes an annual award given to public 
sector employees that significantly and measurably increase 
productivity and promote innovation; 
Implementation time frame: 2009 - present; 
Reported results: 125 Lean events, improving several processes that 
range from permitting to criminal intelligence processes. 

Name of initiative: Virginia Productivity Investment Fund; 
State: Virginia; 
General description and purpose: The Virginia Productivity Investment 
Fund using gain sharing by making loans and grants to agencies for 
projects with the overall purpose of raising productivity, increasing 
efficiency, and making state government more cost effective; 
Implementation time frame: 2007 - present; 
Reported results: The Fund has funded 38 projects across 23 state 
agencies with an expected return on investment of $4 for every $1 
spent. 

Source: GAO analysis of Virginia, Iowa, Texas, Washington, and Georgia 
interviews and documents: 

[A] In 2005, we identified performance budgeting practices employed by 
Virginia, Washington, and Texas that offered useful lessons for the 
federal government. See GAO, Performance Budgeting: States' 
Experiences Can Inform Federal Efforts, GAO-05-215 (Washington, D.C.: 
Feb. 28, 2005). 

[End of table] 

[End of section] 

Appendix II: Key Executive Orders and Memos Related to Efficiency: 

Table 10: Select Key Executive Orders and Memos Related to Efficiency 
Improvement or Cost Savings: 

Budget, regulatory, and performance management: 

Memo: Memo M-II-31; (8/17/2011); 
Brief description: Budget, regulatory, and performance management: 
Memo providing additional guidance to agencies on (1) implementing 
responsibilities required by the GPRA Modernization Act, including 
specific responsibilities for Chief Operating Officers and Performance 
Improvement Officers, and (2) agency responsibilities in implementing 
efforts to cut waste, as required by Executive Order 13576, 
"Delivering an Efficient, Effective and Accountable Government," which 
established the "Campaign to Cut Waste"; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-
31.pdf. 

Memo: Memo M-II-30; 
(8/17/2011); 
Brief description: Budget, regulatory, and performance management: 
Memorandum providing fiscal year 2013 budget guidance requesting 
agencies to (1) submit an overall budget request for 2013 that is at 
least 5 percent below their 2011 enacted discretionary appropriation, 
and (2) identify additional discretionary funding reductions that 
would bring their request to a level that is at least 10 percent below 
their 2011 enacted discretionary appropriation; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-
30.pdf. 

Memo: Executive Memo (6/28/2011); 
Brief description: Budget, regulatory, and performance management: 
Memorandum outlining additional guidance for agency Chief Financial 
Officers to implement previous guidance from the Administration on 
steps to cut costs and drive efficiencies governmentwide, including 
steps to execute the President's June 13 Executive Order to identify, 
execute, and report on administrative cost savings within the agencies; 
http://www.whitehouse.gov/sites/default/files/omb/financial/campaign-
to-cut-waste.pdf. 

Memo: Executive Order (6/13/2011); 
Brief description: Budget, regulatory, and performance management: 
Executive Order--"Delivering an Efficient, Effective, and Accountable 
Government" outlining steps that agencies will take to cut waste, 
streamline government operations, and reinforce performance and 
management reform, including (among other things): (1) systematically 
identifying additional reforms necessary to eliminate wasteful, 
duplicative, or otherwise inefficient programs and sharing them across 
the federal government; (2) convening periodic meetings with the Vice 
President, Cabinet members, and the director of the Office of 
Management and Budget (OMB) to report on improvements from the 
Accountable Government Initiative; (3) requiring the federal Chief 
Performance Officer to work with the President's Management Council to 
identify practices that should be adopted across agencies; (4) 
requiring the Chief Operating Officer of each agency to be accountable 
for conducting frequent data-driven reviews of agency progress toward 
OMB-identified goals; (5) requiring the Director of OMB to provide 
guidance to agencies as part of the fiscal year 2013 budget process 
for identifying areas of program overlap and duplication within and 
across agencies, and for proposing consolidations and reductions; 
and (6) requiring the Chief Financial Officers to be responsible for 
achieving agency cost savings in various areas, including 
discretionary travel, the use of consultants, and other administrative 
expenses and reporting this information to the President's Management 
Council and on performance.gov; 
http://www.whitehouse.gov/the-press-office/2011/06/13/executive-order-
delivering-efficient-effective-and-accountable-government. 

Memo: Memo (6/10/11); 
Brief description: Budget, regulatory, and performance management: 
Memo provides guidance on awards for fiscal years 2011 and 2012. 
Office of Personnel Management and OMB issued this memorandum on 
budgetary limits on individual awards during these 2 fiscal years. The 
guidance directs agencies to adopt more rigorous employee performance 
management processes that incorporate consistent supervisor 
communication and feedback, establish accountability at all levels, 
and provide transparent and credible appraisal systems. Agencies must 
also reduce total spending on individual performance awards for 
members of the Senior Executive Service (SES) and senior-level and 
scientific and professional employees (SL/ST) to no more than 5 
percent of aggregate salaries. Agencies were also directed to reduce 
award spending for nonSES/SL/ST performance awards and individual 
contribution awards (e.g., special act) for all employees to no more 
than 1 percent of their aggregate salaries; 
http://www.chcoc.gov/Transmittals/TransmittalDetails.aspx?TransmittalID=
3997. 

Memo: Memo M-11-17 (04/14/2011); 
Brief description: Budget, regulatory, and performance management: OMB 
memo alerting agencies to key requirements from GPRAMA and the related 
immediate actions required of agency leaders. These include 
identification of the agency's Chief Operating Officer (Deputy 
Secretary or equivalent) by May 2, 2011, naming a senior executive to 
be the agency's Performance Improvement Officer by June 1, 2011, and 
beginning data-driven progress reviews on near-term Priority Goals 
(High Priority Performance Goals identified in the fiscal year 2011 
Budget) by agency leaders or COOs no later than June 30, 2011. In 
addition, the attachment asks agencies to begin selecting these goals 
for fiscal years 2012-2013, to be submitted to OMB concurrent with 
submission of the fiscal year 2013 Budget; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-
17.pdf. 

Memo: Memo (2/28/11); 
Brief description: Budget, regulatory, and performance management: 
Presidential memo on administrative flexibility, lower costs, and 
better results for federal, state, and local governments. The memo 
instructs federal agencies to work closely with state, local, and 
tribal governments to identify administrative, regulatory, and 
legislative barriers in federally funded programs that currently 
prevent states, localities, and tribes from efficiently using tax 
dollars to achieve the best results for their constituents; 
http://www.whitehouse.gov/the-press-office/2011/02/28/presidential-
memorandum-administrative-flexibility. 

Memo: Executive Order (01/18/2011); 
Brief description: Budget, regulatory, and performance management: 
Executive Order that sets forth a regulatory strategy calling for (1) 
public participation; 
(2) greater coordination across agencies to reduce costs, simplify and 
harmonize rules, and promote innovation; 
(3) flexibility and freedom of choice for the public; 
(4) objectivity of any scientific and technological information and 
processes used to support the agency's regulatory actions; 
and (5) retrospective analyses of existing rules that may be outmoded, 
ineffective, insufficient, or excessively burdensome. The strategy is 
supplemental to and reaffirms the principles, structures, and 
definitions governing contemporary regulatory review that were 
established in Executive Order 12866 of September 30, 1993; 
http://www.whitehouse.gov/the-press-office/2011/01/18/improving-
regulation-and-regulatory-review-executive-order. 

Memo: Memo M-11-01 (10/19/2010); 
Brief description: Budget, regulatory, and performance management: 
Presidential memo outlines the purpose and agency responsibilities for 
the new Partnership Fund for Program Integrity Innovation (the 
Partnership Fund) established by the Consolidated Appropriations Act 
of 2010 (P.L. 111-117). The program is intended to fund pilot projects 
to improve delivery of federal assistance programs administered 
through state and local governments, or where federal-state 
cooperation could be beneficial. The memorandum includes: (1) the 
Partnership Fund's purpose and goals; (2) the respective roles of OMB, 
federal agencies, and other stakeholders in the Partnership Fund; 
(3) the selection process for pilot projects; and (4) the template and 
process agencies should use to submit ideas for pilot projects; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-
01.pdf. 

Memo: Memo (09/14/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
Memo for the SES Service that lays out the administration's approach 
to performance management, details their strategy and key initiatives, 
and describes the early progress they have achieved; 
http://www.whitehouse.gov/the-press-office/2010/09/14/presidential-
memorandum-accountable-government-initiative. 

Memo: Memo 10-32 (07/29/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
guidance on evaluating programs for efficacy and cost-efficiency to 
aid in meeting the President's request for agencies to submit a budget 
request 5 percent below the agency's fiscal year 2012 discretionary 
total in the fiscal year 2011 Budget; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2010/m10-
32.pdf. 

Memo: Memo 10-20 (06/08/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo requiring agencies to identify programs and subprograms that have 
the lowest impact on their agency's mission and constitute at least 5 
percent of their agency's discretionary budget, and specifications on 
whether the programs are proposed for termination or reduction in 
fiscal year 2012 budget requests; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m10-20.pdf. 

Memo: Memo 10-09 (12/21/2009); 
Brief description: Budget, regulatory, and performance management: OMB 
memorandum addressing some of the suggestions from the President's 
Securing Americans' Value and Efficiency (SAVE) Award by directing 
agencies to respond with a series of immediate and longer-term steps. 
Agencies are directed to undertake two specific sets of activities, 
including: (1) implementing a series of immediate, concrete changes to 
address simple inefficiencies; and (2) evaluating existing agency and 
departmental policies and practices to assess compliance with existing 
Administration priorities; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m10-09.pdf. 

Memo: Memo (07/27/2009); 
Brief description: Budget, regulatory, and performance management: OMB 
briefing memo to the president updating him on administrative savings 
proposals that would amount to $243 million in savings through 2010. 
The memo highlighted the source of savings in each agency; 
http://www.whitehouse.gov/sites/default/files/omb/assets/blog/admin_savi
ngs_memo_--_final.pdf. 

Memo: Memo 09-20 (06/11/2009); 
Brief description: Budget, regulatory, and performance management: OMB 
memo providing guidance on: (1) identification of a limited number of 
high-priority performance goals; (2) submission of the fiscal year 
2011 budget; (3) steps to reform agency hiring processes; and (4) 
steps to improve employee satisfaction and wellness; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy200
9/m09-20.pdf. 

Contracting, procurement, property and acquisitions management: 

Memo: Memo 11-04 (11/16/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo providing instructions for agencies on intensifying and expanding 
payment recapture audit reviews that will serve as interim guidance 
for the broader program of payment recapture audits established under 
the Improper Payments Elimination and Recovery Act (IPERA). All 
agencies are required to submit one payment recapture audit plan that 
describes their current payment recapture efforts under authorities 
that predate IPERA and their planned recapture efforts based on new 
authorities contained within IPERA; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-
04.pdf. 

Memo: Memo (06/18/2010); 
Brief description: Budget, regulatory, and performance management: 
Presidential memo establishing "Do Not Pay List" and directing 
agencies to review prepayment and reward procedures and ensure that a 
thorough review of available databases with relevant information on 
eligibility occurs before the release of any federal funds; 
http://www.whitehouse.gov/the-press-office/presidential-memorandum-
enhancing-payment-accuracy-through-a-do-not-pay-list. 

Memo: Memo (06/10/2010); 
Brief description: Budget, regulatory, and performance management: 
Presidential memo directing executive departments and agencies to 
identify and eliminate excess properties, cut operating costs, and 
improve energy efficiency; 
http://www.whitehouse.gov/the-press-office/presidential-memorandum-
disposing-unneeded-federal-real-estate. 

Memo: Executive Order 13520 - (11/23/2009); 
Brief description: Budget, regulatory, and performance management: 
Executive order directing agencies to reduce improper payments by 
intensifying efforts to eliminate payment error, waste, fraud, and 
abuse in the major programs administered by the federal government, 
while continuing to ensure that federal programs serve and provide 
access to their intended beneficiaries. No single step will fully 
achieve these goals. Therefore, this order adopts a comprehensive set 
of policies, including transparency and public scrutiny of significant 
payment errors throughout the federal government; a focus on 
identifying and eliminating the highest improper payments; 
accountability for reducing improper payments among executive branch 
agencies and officials; and coordinated federal, state, and local 
government action in identifying and eliminating improper payments; 
http://www.whitehouse.gov/the-press-office/executive-order-reducing-
improper-payments. 

Memo: Memo 09-25 (07/29/2009); 
Brief description: Budget, regulatory, and performance management: OMB 
memo calling on federal agencies to improve effectiveness of their 
acquisition practices and the results achieved from their contracts. 
The Administration set a net savings target of $40 billion a year 
through acquisition and acquisition-related program practices; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy200
9/m-09-25.pdf. 

Memo: Memo (03/04/2009); 
Brief description: Budget, regulatory, and performance management: 
Presidential memo directing OMB to develop and issue by July 1, 2009, 
governmentwide guidance to assist agencies in reviewing, and creating 
processes for ongoing review of contracts. Also directs OMB to develop 
and issue by September 30, 2009, governmentwide guidance on contract 
and acquisition management; 
http://www.whitehouse.gov/the-press-office/memorandum-heads-executive-
departments-and-agencies-subject-government-contracting. 

Financial systems management: 

Memo: Memo 10-26 (06/28/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
guidance that requires all CFO Act agencies to immediately halt the 
issuance of new task orders or new procurements for all financial 
system projects pending review and approval from OMB. Guidance also: 
(1) sets forth the guiding principles for the acquisition and project 
management of new financial systems; (2) specifies the procedures for 
an immediate review and evaluation of current financial system 
modernization projects; and (3) clarifies and updates OMB policies on 
financial management shared services, financial system standards, and 
financial software testing and certification; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m-10-26.pdf. 

Memo: Memo; (3/30/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo establishing the Office of Financial Innovation and 
Transformation (FIT) within Treasury to identify and facilitate the 
acquisition or development of initial operating capabilities for 
automated solutions for transaction capture and processing as well as 
financial report production that would greatly reduce duplicate work 
at individual agencies; 
http://www.whitehouse.gov/sites/default/files/omb/assets/financial_pdf/O
FIT_Memo_03302010.pdf. 

Memo: Memo (03/16/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo from the Controller on the role of the Financial Systems 
Integration Office and the status of the objectives achieved under the 
financial management line of business;
http://www.whitehouse.gov/sites/default/files/omb/assets/financial_pdf/2
010_FMLoB_FSIO_Update.pdf. 

IT management: 

Memo: Memo 10-31 (07/28/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo calling for the immediate review of IT projects to: (1) identify 
high-risk projects, (2) develop improvement plans for them, and 3) 
present improvement plans in TechStat sessions; 
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2010/m10-
31.pdf. 

Memo: Memo 10-28 (07/06/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo "Clarifying Cybersecurity Responsibilities and Activities of the 
Executive Office of the President and DHS"; 
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m10-28.pdf. 

Memo: Memo 10-27 (6/28/2010); 
Brief description: Budget, regulatory, and performance management: OMB 
memo providing policy direction for development of agency IT 
investment baseline management policies with the goal of improving 
transparency, performance management, and effective investment 
oversight;
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m10-27.pdf. 

Memo: Budget, regulatory, and performance management: Memo (02/26/10); 
Brief description: Budget, regulatory, and performance management: OMB 
memo describing the goals of the Federal Data Center Consolidation 
Initiative; 
http://cio.gov/documents/Federal-Data-Center-Consolidation-Initiative-
02-26-2010.pdf. 

Source: GAO analysis of OMB memos. 

[End of table] 

[End of section] 

Appendix III: List of Department of Homeland Security Ongoing 
Efficiency Review Projects: 

Figure 5: List of DHS Ongoing Efficiency Review Projects: 

[Refer to PDF for image: illustration] 

April 17, 2009 (30-day initiatives): 
1. Eliminate non-mission-critical travel; maximize use of conference 
calls and Web-based training and meetings. 
2. Consolidate subscriptions to professional publications and 
newspapers. 
3. Eliminate printing and distribution of all reports and documents 
that can be sent electronically or posted online. 
4. Maximize usage of government office space for meetings and 
conferences in place of renting facilities. 

May 27, 2009 (60-day initiatives: 
5. Implement an electronic tracking tool for fleet usage data to 
identify opportunities for alternative fuel usage and optimize fleet 
management. 
6. Conduct an assessment of the number of full-time and part-time 
employees and contractors to better manage DHS workforce. 
7. Utilize refurbished IT equipment and redeploy the current inventory
throughout DHS. 
8. Leverage buying power to acquire software licenses for departmentwide
usage. 
9. Eliminate all external contracts for the design and production of
new seals and logos. 

June 26, 2009 (90-day initiatives): 
10. Develop cross-component training opportunities for employees. 
11. Develop a process for obtaining preliminary applicant security 
background data for candidates referred for final consideration. 
12. As replacements are needed, convert new printers/faxes/copiers 
into all-in-one machines. 
13. Streamline decision-making processes in headquarters offices to 
eliminate redundancies. 
14. Increase usage of DHS-wide blanket purchase agreements for office
supplies. 
15. Improve DHS communications by ensuring consistency and 
coordination. 

June 24, 2009 (120-day initiatives): 
16. Establish a plan to ensure that the DHS workforce has employees 
sufficient in number and skill to deliver the core mission. 
17. Initiate leasing of hybrid vehicles for administrative use and 
alternative-fuel vehicles in cases where hybrids are not feasible. 
18. Implement energy efficiencies in all facility management projects. 
19. Standardize content for new employee orientation and mandatory 
annual training modules DHS-wide. 
20. Increase coordination across all headquarters and operating 
components. 

Subsequent initiatives (April 7, 2010 - December 20, 2010): 
21. Implement paperless earning and leave statements DHS-wide. 
22. Implement improvements and efficiencies to the personnel security 
and suitability processes. 
23. Establish a DHS-wide sourcing vehicle for the acquisition of 
nonmilitary uniforms. 
24. Establish a DHS-wide sourcing vehicle for the acquisition of 
tactical communications equipment and services. 
25. Establish a DHS-wide sourcing vehicle for the acquisition of 
wireless communication devices and services. 
26. Establish a DHS-wide sourcing vehicle for the acquisition of
encrypted thumb drives. 
27. Establish a DHS-wide sourcing vehicle for the acquisition of
furniture in the National Capital Region. 
28. Increase usage of DHS-wide contracting vehicles for background
investigations. 
29. Establish a DHS-wide vehicle for purchasing bulk fuel for fleet,
aircraft, and marine vessels. 
30. Conduct annual optimization and validation of personal wireless
communication services and devices DHS-wide. 
31. Improve energy management by maximizing opportunities to reduce 
energy consumption at DHS-owned facilities. 
32. Reduce DHS expenditures on DHS contractor background 
investigations. 
33. Develop and execute a customer-focused strategy for Web content
management and Web hosting services for all DHS public-facing Web 
sites. 

June 1, 2011: 
34. Establish a system and supporting processes for posting all 
notifications of seized property pending forfeiture online rather than 
in print media. 

July 13, 2011: 
35. Establish a DHS Center of Excellence responsible for 
administration of alternatively financed energy savings contracts 
within the Department. 
36. Establish and implement a DHS Integrated Facility Assessment (IFA) 
center of Excellence (COE) to develop and manage an integrated 
approach to facility condition assessments, systems lifecycle 
assessments, facility energy audits and analyses, water conservation
assessments, and building and systems commissioning/recommissioning 
across DHS Component facilities. 

Source: DHS. 

[End of figure] 

[End of section] 

Appendix IV: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

September 13, 2011: 

J. Christopher Mihm: 
Managing Director, Strategic Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: Draft Report GAO-11-908, "Streamlining Government: Key Practices 
from Select Efficiency Initiatives Should Be Shared Government-wide" 

Dear Mr. Mihm: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Homeland Security (DHS) appreciates the 
U.S. Government Accountability Office's (GAO's) work in planning and 
conducting its review and issuing of this report. The Department is 
pleased to note the report recognizes achievements of the DHS 
Efficiency Review (ER) initiative. 

In March 2009, Secretary Napolitano launched the Department-wide ER, 
which has changed the way DHS does business by streamlining operations 
and fostering a culture of greater transparency, accountability, and 
fiscal discipline. To date, the DHS ER has launched 36 initiatives 
designed to reduce costs, improve communication, and streamline 
processes. The DIIS ER develops initiatives on the basis of employee 
input, including ideas submitted to the President's Securing 
Americans' Value and Efficiency award competition, and successful 
initiatives implemented at the Component level. 

We are proud to say that we have identified more than $2.5 billion in 
cost avoidances through the ER as well as other cost-saving 
initiatives, including the Department's Fiscal Year 2012 budget 
request, which included more than $800 million in reductions. These 
savings have enabled us to sustain frontline operations and become a 
leaner, smarter agency better equipped to protect the Nation. They 
also reflect the dedication of the hard-working men and women 
throughout DHS. From saving $180 million through enterprise software 
licensing agreements to avoiding more than $15 million by transferring 
excess IT equipment within the Department, rather than buying new 
equipment, DHS is working hard to maximize the effectiveness and 
efficiency of its resources to best support frontline operations. 

Again, thank you for the opportunity to review and comment on this 
draft report We note the report does not contain any recommendations 
for DHS. Technical comments were submitted under separate cover. We 
look forward to working with you on future homeland security issues. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix V: Contact and Staff Acknowledgments: 

GAO Contact: 

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

Acknowledgments: 

In addition to the contact named above, Sarah E. Veale, Assistant 
Director; Bernice Steinhardt; Sharon L. Pickup; James A. Reynolds; 
Latesha A. Love; Gabrielle A. Carrington; Shvetal Khanna; Veronica O. 
Mayhand; Crystal Robinson; Amy C. Friedlander; Brendan Kretzchmar; 
Andrew C. Moore; Teakoe S. Coleman; Jennifer C. Madison; and Marquita 
N. Campbell made key contributions to this report. 

[End of section] 

Related GAO Reports: 

Managing For Results: GPRA Modernization Act Implementation Provides 
Important Opportunities to Address Government Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-11-617T]. Washington, D.C.: May 10, 
2011. 

Information Technology: OMB Has Made Improvements to Its Dashboard, 
but Further Work Is Needed by Agencies and OMB to Ensure Date 
Accuracy. [hyperlink, http://www.gao.gov/products/GAO-11-262]. 
Washington, D.C.: March 15, 2011. 

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.: March 1, 
2011. 

High-Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-11-278]. Washington, D.C.: February 
16, 2011. 

Defense Business Transformation: DOD Needs to Take Additional Actions 
to Further Define Key Management Roles, Develop Measurable Goals, and 
Align Planning Efforts. [hyperlink, 
http://www.gao.gov/products/GAO-11-181R]. Washington, D.C.: January, 
26, 2011. 

Financial Management Systems: Experience with Prior Migration and 
Modernization Efforts Provide Lessons Learned for New Approach. 
[hyperlink, http://www.gao.gov/products/GAO-10-808]. Washington, D.C.: 
September 8, 2010. 

Information Technology: OMB's Dashboard Has Increased Transparency and 
Oversight, but Improvements Needed. [hyperlink, 
http://www.gao.gov/products/GAO-10-701]. Washington, D.C.: July 16, 
2010. 

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. 

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. 

Information Technology: HUD Needs to Strengthen Its Capacity to Manage 
and Modernize Its Environment. [hyperlink, 
http://www.gao.gov/products/GAO-09-675]. Washington, D.C.: July 31, 
2009. 

Performance Budgeting: States' Experiences Can Inform Federal Efforts. 
[hyperlink, http://www.gao.gov/products/GAO-05-215]. Washington, D.C.: 
February 28, 2005. 

[End of section] 

Footnotes: 

[1] On August 2, 2011, the President signed the Budget Control Act of 
2011, Pub. L. No. 112-25, which raised the federal government's debt 
limit and established discretionary spending caps for the next 10 
years, among other things. 

[2] See GAO, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-
318SP (Washington, D.C.: Mar. 1, 2011). A web-based version of this 
report can be found on our Web site: [hyperlink, 
http://www.gao.gov/ereport/GAO-11-318sp]. 

[3] See GAO, Managing for Results: GPRA Modernization Act 
Implementation Provides Important Opportunities to Address Government 
Challenges, [hyperlink, http://www.gao.gov/products/GAO-11-617T] 
(Washington, D.C.: May 10, 2011). 

[4] Other recent reports related to efficiency are listed at the end 
of this report. 

[5] See a similar use of this definition in describing efficiency 
measures in 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). 

[6] GAO reports assessing some of these six governmentwide areas are 
listed at the end of this report. 

[7] Agencies were asked by the President to choose High Priority 
Performance Goals (Priority Goals) that did not require additional 
resources or legislative action to achieve within an 18-24-month time 
frame, but rather hinged on strong execution. OMB conducts quarterly 
reviews of agency progress on all Priority Goals to find opportunities 
for improvement and, where problems have arisen, to understand why and 
make sure agencies are addressing them. 

[8] GAO has ongoing work reviewing acquisition savings and high-risk 
contract reduction efforts of the 24 agencies subject to the Chief 
Financial Officer's Act as part of an OMB initiative to save $40 
billion annually by fiscal year 2011. 

[9] OMB's IT dashboard is a public Web site that provides information 
on federal agencies' major IT investments, including assessments of 
actual performance against cost and schedule targets. According to 
OMB, these data are intended to provide both a near real-time and 
historical perspective of the performance of these investments, as 
well as budget and other relevant data. OMB also holds related 
TechStat Accountability Sessions, which are meetings held between the 
Federal Chief Information Officer and agency chief information 
officers to examine high-risk IT projects that may be underperforming. 
The session is designed to enable the government to turn around, halt, 
or terminate (IT) investments that are not productive. These sessions 
are now being held within agencies as well. Starting in July 2010, GAO 
began issuing a series of reports on the IT dashboard. See Information 
Technology: OMB Has Made Improvements to Its Dashboard, but Further 
Work Is Needed by Agencies and OMB to Ensure Data Accuracy, 
[hyperlink, http://www.gao.gov/products/GAO-11-262], (Washington, 
D.C.: Mar. 15, 2011). GAO has also issued reports and testified on the 
related TechStat sessions. See Information Technology: Continued 
Improvements in Investment Oversight and Management Can Yield Billions 
in Savings, [hyperlink, http://www.gao.gov/products/GAO-11-511T] 
(Washington, D.C.: Apr. 12, 2011). 

[10] 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, GAO-10-513. (Washington, D.C.: May 27, 
2010). 

[11] According to the President's budget request, the proposed 
spending freeze will still allow for investments in areas critical for 
long-term economic growth and job creation. 

[12] See GAO, 21st Century Challenges: Reexamining the Base of the 
Federal Government [hyperlink, 
http://www.gao.gov/products/GAO-05-325SP], (Washington, D.C.: February 
2005). 

[13] See [hyperlink, http://www.gao.gov/products/GAO-10-394]. 

[14] See [hyperlink, http://www.gao.gov/products/GAO-10-394]. 

[15] Reengineering starts with a high-level assessment of the 
organization's mission, strategic goals, and customers. As a result of 
the strategic assessment, Business Process Reengineering identifies, 
analyzes, and redesigns an organization's core business processes with 
the aim of achieving dramatic improvements in critical performance 
measures, such as cost, quality, service, and speed. 

[16] Remarks as delivered by former Secretary of Defense Robert M. 
Gates, Abilene, Kansas, May 8, 2010. 

[17] Force structure is the numbers, size, and composition of the 
units that comprise U.S. defense forces (e.g., divisions, brigades, 
ships, air wings, and/or squadrons). 

[18] Congress enacted the National Defense Authorization Act for 
Fiscal Year 2008, Pub. L. No. 110-181, § 904 (2008). Among other 
things, it designated the Deputy Secretary of Defense position as the 
Chief Management Officer for DOD; created a deputy chief management 
officer position to assist the Chief Management Officer; and required 
the secretaries of the Army, Navy, and Air Force to designate the 
department under secretaries as Chief Management Officers with primary 
management responsibility for business operations. 

[19] HUD requested a $434 million (or 1 percent of its total program 
budget) set-aside in its fiscal year 2010 budget for funding efforts 
to transform the department. The department received authority to 
transfer $238 million from select programs and obtained $20 million 
through direct appropriation in order to create the Transformation 
Initiative Fund, which is the main source of funding for the 
initiative. The agency received funding for the TI Fund again in 
fiscal year 2011. 

[20] As prescribed by the legislation granting authority to establish 
this fund, the Secretary of HUD must submit a plan for approval to the 
Appropriations Committees detailing how funds will be allocated to 
each of the four categories within the fund, and for what projects and 
activities the funds will be used. Amendments to the plan also require 
approval. Further, Congress mandated that not more than 25 percent of 
funds for IT projects be obligated before the Committee approves a 
plan for expenditures that, among other things, has been reviewed by 
GAO. 

[21] High Priority Performance Goals are also now known as agency 
"Priority Goals". 

[22] VA's high-priority performance goals include: (1) reducing the 
disability claims backlog, (2) eliminating veteran homelessness, (3) 
automating the GI Bill benefits system, (4) establishing a Virtual 
Lifetime Electronic Record, (5) improving mental health care, and (6) 
deploying a Veterans Relationship Management System. 

[23] The Monthly Performance Review process involves monthly meetings 
to review and track detailed performance data for all of the agencies' 
performance metrics and to determine whether additional actions are 
needed to achieve desired results. VA has been using this process 
since 2001. 

[24] According to DHS documents, "day-to-day expenditures" include 
items such as background investigations, communication devices, 
facilities, office supplies, software licenses, subscriptions, and 
travel, etc. "Personnel" includes employee orientation and training, 
hiring and security suitability processes, coordination and decision-
making, paperless earning and leave statements, Web systems 
optimization, workforce assessment, retention, etc. "Physical Assets" 
include bulk fuel acquisition, energy management, fleet management, 
hybrid vehicles, and IT and office equipment. 

[25] As of July 2011, DHS has issued nine of these reports. 

[26] From July 2010 to June 2011 the VA Inspector General (IG) 
conducted an audit to determine whether the VA's Office of Information 
and Technology has planned and implemented PMAS with the management 
controls needed for effective oversight of the department's IT 
initiatives. In an August 29, 2011 report, VA's IG reported that key 
management controls to ensure PMAS data reliability, verify project 
compliance, and track project costs have not been well established, 
including detailed guidance on how such controls will be used within 
the framework of PMAS to manage and oversee IT projects. The IG 
recommended that the Assistant Secretary establish controls for 
ensuring data reliability, verifying project compliance, and tracking 
costs to strengthen PMAS oversight. For the full report "Department of 
Veterans Affairs Audit of the Project Management Accountability System 
Implementation" see [hyperlink, 
http://www.va.gov/oig/52/reports/2011/VAOIG-10-03162-262.pdf]. 

[27] The August 2011 report by VA's IG stated that the Office of 
Information and Technology has made progress establishing PMAS by 
publishing the PMAS Guide, developing a system for monitoring project 
status, and using an oversight approach to better manage projects. 
However, PMAS lacked key elements, such as a detailed implementation 
plan to include performance measures and a designated PMAS office and 
Director who would be responsible for developing and implementing 
them. The IG recommended that they develop an implementation plan and 
assign adequate leadership and staff needed to fully execute PMAS, as 
well as have the Assistant Secretary provide more detailed guidance on 
using PMAS to ensure IT project success. 

[28] Department of Defense Instruction 5010.43, Implementation and 
Management of the DOD-Wide Continuous Process Improvement/Lean Six 
Sigma (CPI/LSS) Program (July 17, 2009). 

[29] We did not verify the completeness of this information. 

[30] DOD Fiscal Year 2011 Strategic Management Plan (Dec. 30, 2010). 

[31] A Master Black Belt, for example, has completed 280 training 
hours and is capable of completing complex activities such as those 
that span across many organizations. In comparison, a Green Belt has 
completed 40 training hours and is capable of contributing to simpler 
activities. 

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

[33] The Strategic Management Council is chaired by the Deputy 
Secretary and includes VA's Assistant Secretaries; the Deputy Under 
Secretaries for Health, Benefits, and Memorial Affairs; the General 
Counsel; Chair of the Board of Veterans' Appeals; and the Chief of 
Staff. The Strategic Management Council serves as a collaborative and 
deliberative body that provides oversight and guidance on key 
strategic and operational issues that are likely to require action by 
VA decision makers. 

[34] See GAO, Organizational Transformation: Implementing Chief 
Operating Officer/Chief Management Officer Positions in Federal 
Agencies, [hyperlink, http://www.gao.gov/products/GAO-08-34] 
(Washington, DC: Nov. 1, 2007) and GAO, Highlights of a GAO 
Roundtable: The Chief Operating Officer Concept: A Potential Strategy 
to Address Federal Governance Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-03-192SP] (Washington, D.C.: Oct. 4, 
2002). 

[35] See GAO, Defense Business Transformation: DOD Needs to Take 
Additional Actions to Further Define Key Management Roles, Develop 
Measurable Goals, and Align Planning Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-11-181R] (Washington, D.C.: Jan. 26, 
2011). 

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

[37] In its August 2011 report, VA's IG recommended that VA should 
also establish a dedicated team to implement PMAS, including a 
director and a central office or group of individuals responsible for 
fully implementing and executing the initiative. 

[38] Texas has a biennial budget cycle so they have biennial 
congressional sessions. This means that they operate under a 2-year 
cycle, translating into 6 sunset reviews over a 12-year period. The 
Texas Sunset Advisory Commission reviews about 20 to 25 agencies every 
2 years. 

[39] The February 2011 Sunset Advisory Report to the 82nd Legislature 
recommended abolishing the Coastal Coordination Council, Equine 
Research Account Advisory Committee, On-site Wastewater Treatment 
Council, and Electronic Government Program Management Office. Two 
other agencies--the Texas Juvenile Probation Commission and Texas 
Youth Commission--were recommended for merger into a newly created 
Texas Juvenile Justice Department. According to the Director of the 
commission, the commission has not yet experienced a case where an 
abolished agency or program was needed again and the legislature had 
to reinstitute the agency or function. 

[40] When commission staff review an agency they examine (1) whether 
the agency or agency's function is needed (2) is the agency working 
efficiently and effectively and (3) if there are overlap and 
duplication in agency functions. For more information on the 
implementation of these reviews, see the Sunset Advisory Commission: 
Guide to the Sunset Process listed on [hyperlink, 
http://www.sunset.state.tx.us/guide.pdf]. After input from the public 
and Texas Advisory Sunset Commission, recommendations from these 
review are incorporated into legislation that is debated in 
congressional committees. 

[41] See GAO-03-669. 

[42] For specific efficiency measures and targets tracked for 
Washington's government reform and related progress, see [hyperlink, 
http://performance.wa.gov/GR/GR061511/ImprovingEfficiency/Pages/Default.
aspx].  

[43] Because of its results, Washington's GMAP program has received a 
number of awards from various National State Associations and was one 
of two state programs highlighted by the National Governor's 
Association in their 2005 report on "Innovative Strategies to Achieve 
Better Results." 

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

[45] By signing agreements with Iowa's Governor that specify their 
status as "chartered," some state agencies agreed to be held strictly 
accountable for measurable benefits in return for exemption from many 
of the state's bureaucratic requirements. The state granted six Iowa 
agencies charter status from 2003-2007: the Department of Revenue, 
Department of Corrections, Department of Human Services, Department of 
Natural Resources, the Iowa Veterans Home, and the Alcoholic Beverage 
Division. 

[46] In 2005, Iowa's charter agency program received the "Innovations 
in American Government Award" from Harvard University's Kennedy School 
of Government and the Council of State Governments Innovation Award. 
In February 2011, the Iowa state Auditor's Office issued a report 
stating that they believe the charter agencies achieved a savings less 
than the $15 million goal and that agencies did not effectively 
document savings and, therefore, could not prove a direct correlation 
between cost savings and this efficiency effort. See the report at 
[hyperlink, http://auditor.iowa.gov/specials/0860-8990-B0P4.pdf]. GAO 
did not evaluate the results achieved or assess the affects of Iowa's 
waiver of the rules on internal controls. While we highlight this 
example as an approach to providing incentives that has reportedly led 
to results, we also maintain that internal controls are necessary to 
reduce the risk of fraud, waste, or abuse. 

[47] In addition to the three Secretaries, the Oversight Board 
includes the Chief Information Officer of the Commonwealth, the Chief 
Applications Officer, the Director of the Department of Human Resource 
Management, the Director of Planning and Budget, and the Director of 
the Council on Virginia's Future administer this fund. The board is 
also supported by an advisory panel that, according to PIF documents, 
is made up of a broad and diversified group of experts from the public 
and private sector. Members of the advisory panel offer guidance based 
on their unique experience or skill set on a program-by-program basis. 

[48] See additional reported results from the PIF on [hyperlink, 
http://www.pif.virginia.gov/programs.shtml]. We did not independently 
verify these reported returns on investments. 

[49] See GAO, Highlights of a GAO Forum on High-Performing 
Organizations: Metrics, Means, and Mechanisms for Achieving High 
Performance in the 21st Century Public Management Environment, 
[hyperlink, http://www.gao.gov/products/GAO-04-343SP] (Washington, 
D.C.: Feb. 13, 2004). 

[50] National Defense Authorization Act for Fiscal Year 2004, Pub. L. 
No. 108-136, §337 (2003). 

[51] Executive Order 13450 of November 13, 2007, created the 
Performance Improvement Council. The council serves as home for 
federal communities of practice, among other things. For example, the 
LSS subgroup was established to share best practices according to OMB 
officials. In 2010, GPRAMA formally established this council's 
information-sharing responsibilities in statute. 

[52] We did not verify whether HUD has filled more rental vacancies 
because of this effort. 

[53] More information, including results, is also outlined on the 
commission's Web site [hyperlink, 
http://newgeorgia.org/commission.html] and in the Governor's Office of 
Implementation's final report on the commission in December 2010, 
Implementation: Progress Reports 2004-2010. We did not independently 
verify these reported returns on investments. 

[54] We previously identified lessons learned from "Virginia Performs" 
that may be useful to the federal government in GAO, Key Indicator 
Systems: Experiences of Other National and Subnational Systems Offer 
Insights for the United State, [hyperlink, 
http://www.gao.gov/products/GAO-11-396],(Washington, D.C.: Mar. 31, 
2011). 

[55] Executive Order 13576 of June 13, 2011 "Delivering an Efficient, 
Effective, and Accountable Government" also established a Government 
Accountability and Transparency Board to provide strategic direction 
for enhancing the transparency of federal spending and advance efforts 
to detect and remediate fraud, waste, and abuse in federal programs. 
The Board is intended to be composed of 11 members designated by the 
President from among agency Inspectors General, agency Chief Financial 
Officers or Deputy Secretaries, a senior official of OMB, and such 
other members as the President shall designate. 

[56] The memo specifically requested the CFOs from the Departments of 
Treasury, Justice, HUD, Health and Human Services, as well as the 
Environmental Protection Agency and Office of Personnel Management to 
serve on this steering committee. 

[57] The Partnership Fund was established by the Consolidated 
Appropriations Act of 2010 (Pub. L. No. 111-117). The initial fiscal 
year 2010 appropriation for the Partnership Fund was for $37.5 
million. This appropriation has been reduced to $32.5 million due to a 
$5 million rescission in Pub. L. No. 112-10 (2011). 

[58] According to the President's 2012 Budget Proposal and OMB 
officials, the Partnership Fund awarded its first pilot to the 
Department of the Treasury to test a new way to reduce the annual $12 
billion of improper payments associated with the Earned Income Tax 
Credit program. Treasury believes that there is an opportunity to 
avoid as much as $100 million or more in improper payments by 
cooperating with states to access data such as income and child 
dependency from state-administered benefit programs. Thus, this $2 
million investment from the Partnership Fund could ultimately yield a 
50 times annual return if the pilot is enacted at scale. 

[59] As part of implementing the Partnership Fund, OMB established a 
Federal Steering Committee, consisting of senior policy officials from 
federal agencies that administer benefits programs and formed the 
"Collaborative Forum". The Collaborative Forum is made up of state 
representatives and stakeholder experts--including federal agencies, 
nongovernmental organizations, and others--who collaborate to 
generate, develop, and consult on potential pilot projects. The forum 
also has a Web site, [hyperlink, http://collaborativeforumonline.com], 
which is used to hold discussions about potential projects and to 
share lessons and best practices among members. 

[60] OMB's most recent report to Congress on the Partnership Fund was 
issued on May 19, 2011. 

[61] See [hyperlink, http://www.gao.gov/products/GAO-10-394]. We 
suggested that possible vehicles for sharing lessons on efficiency 
information could include good practices guides, workshops, Web sites, 
wikis, and management councils, such as the PMC and the PIC. 

[62] The PIC, composed of the Performance Improvement Officers (PIOs) 
of agencies and departments and senior OMB officials, collaborates to 
improve the performance of federal programs. The PMC is comprised of 
the COOs of major executive branch agencies, primarily their Deputy 
Secretaries and Deputy Administrators, and OMB officials. The PMC 
provides performance and management leadership throughout the 
executive branch of the federal government and advises and assists the 
President on government reform. In addition to the PIC and PMC, 
various other federal agency management councils exist to share 
information across agencies. 

[63] The PIC also sponsors the President's Management Advisory Board 
(PMAB) which is a board of private sector leaders who are responsible 
for developing recommendations on effective strategies for the 
implementation of best business practices on matters related to 
federal government management and operation. The board was established 
by Executive Order on April 19, 2010, and had its first meeting in 
March 2011. 

[64] See 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). 

[End of section] 

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