Budget Issues:

Assessing Executive Order 12837 on Reducing Administrative Expenses

AIMD-94-15: Published: Nov 17, 1993. Publicly Released: Nov 17, 1993.

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Pursuant to a congressional request, GAO reviewed the implementation of Executive Order 12837, focusing on the: (1) Office of Management and Budget's (OMB) and executive agencies' efforts to develop a definition of administrative expenses; (2) presentation of fiscal year (FY) 1994 administrative expense budgets; and (3) potential budgetary and management implications of the required administrative cost reductions.

GAO found that: (1) OMB estimated administrative expense reductions based upon each agency's anticipated FY 1993 obligations; (2) although the agencies were required to provide a separate category for administrative expenses in their FY 1994 through 1997 budget requests, they did not report their detailed administrative expense budgets for FY 1994; (3) the effects of administrative expense reductions cannot yet be measured because Congress has not taken final action on agency appropriations; (4) administrative expense reductions will not likely improve federal government productivity; and (5) across-the-board expense reductions will affect all programs equally regardless of how well the programs are managed.

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