reorganization | The Contracting Education Academy

January 20, 2012 By AMK

Obama reorganization bid faces challenges on Capitol Hill

President Obama’s Friday announcement that he is seeking authority to reorganize federal trade and business-related functions could face some fine-tuning or outright resistance in Congress.

Speaking to a group of small business owners at the White House, Obama said he was working to make government’s current “maze” more “consumer friendly” and transparent for small businesses. “We live in a 21st century economy, but we’ve still got a government organized for the 20th century,” he said. And though he sees the issue of leaner government as bipartisan, he said he would move on the issues “with or without” the help of Congress.

Under the White House-proposed Consolidation Authority Act, which would provide the president with fast-track priority in Congress, Obama intends to save $3 billion over a decade by whittling down six major departments and agencies that handle business and trade. These include core business and trade components of the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency. Obama called their disparate functions “redundant and inefficient” and proposed merging them into one department “with one website, one phone number and one mission.” Some 1,000 to 2,000 full-time equivalent jobs would be eliminated through attrition, officials said.

The single department, to be led by a new secretary, would be built around four economic pillars, Jeffrey Zients, deputy director of the Office of Management and Budget, said during a conference call with reporters on Friday. They would include trade and investment; small business and economic development; technology and innovation (which would include the U.S. Patent and Trademark Office); and statistics (which would include the Census Bureau).

Senate Minority Leader Mitch McConnell, R-Ky., was traveling to Myanmar, but his spokesman Don Stewart expressed skepticism — pending study and further details from the administration — about $3 billion in savings at a time when Obama also is asking for a new increase in the debt ceiling of $1.2 trillion.

“Americans want a government that’s simpler, streamlined and secure,” Stewart said, “so after presiding over one of the largest expansions of government in history, and a year after raising the issue in his last State of the Union, it’s interesting to see the president finally acknowledge that Washington is out of control.”

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, was more encouraged. “I stand ready to work with President Obama on proposals to reorganize federal agencies,” he said. “While I have been disappointed that the White House has not embraced earlier bipartisan congressional efforts seeking collaborative engagement on proposals to reorganize government, I hope this announcement represents the beginning of a sincere and dedicated effort to enact meaningful reforms.”

Sen. Tom Carper, D-Del., chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, praised the Obama team for “going big” in the long-anticipated plan. “As the federal government looks for ways to tighten its belt,” he said in a statement, “we have to be careful not to make cuts just for the sake of cutting — there’s always a great temptation to be penny-wise and pound foolish in the pursuit of savings — but I think this policy strikes the right balance of streamlining federal operations without fundamentally crippling agencies’ ability to do their jobs effectively.”

Sen. Mark Warner, D-Va., an activist on agency performance, called it “a promising start to what I hope will be a sustained effort to look for improved performance and greater efficiency among every agency and department across the federal government.” As an example of additional redundancies in government that need addressing, he mentioned that the federal government “operates 82 teacher quality programs within 10 separate agencies — and 56 separate programs spread across 20 agencies that deal with financial literacy.”

The bid to reorganize goes back to a December 2010 study on boosting competitiveness produced by the liberal-leaning Center for American Progress.

On Friday, its chairman, John Podesta, commended Obama for “the thoughtful and far-reaching plan to reshape the federal government to more effectively focus on ensuring U.S. long-term economic competitiveness. Just like any successful business, the federal government itself needs to streamline and organize for global competition.”

Podesta said the Obama plan “launches a long-term strategy that ensures American businesses find more investors and customers, that more jobs are created here — and that workers enjoy a rising standard of living.”

Also influencing the Obama administration as well as lawmakers of both parties was a March 2011 Government Accountability Office report documenting duplication of effort within departments and agencies.

Within days of the GAO report, Obama tasked Zients with establishing a Government Reform for Competitiveness and Innovation Initiative. Officials spent the next six months on a comprehensive review of agencies and programs involved in trade and global competitiveness, analyzing their scope and effectiveness, areas of overlap and duplication, unmet needs, and possible cost savings. They consulted with business groups and lawmakers as well.

The original goal of releasing the reorganization by last summer was left unmet as the administration battled with Congress over spending cuts and raising the debt ceiling. Also, Commerce switched secretaries, and John Bryson wasn’t sworn in until October.

The first clues of its general direction were visible in a report released in June by the Council of the Inspectors General on Integrity and Efficiency. Zients praised that report as offering a way to help “eliminate duplication and fragmentation and better support the nation’s competitiveness in a 21st-century global economy.” The professional body of government IGs found “inefficiencies” and “poor coordination” in trade and export functions after reviewing its past examinations of the structure of the Agriculture, Commerce, Homeland Security and State departments, as well as SBA, the Environmental Protection Agency and the Ex-Im Bank.

In Friday’s remarks, Obama singled out the proposed move of the National Oceanic and Atmospheric Administration from Commerce to the Interior Department, stating NOAA was situated in Commerce in 1970 only because President Nixon was having a feud with his Interior secretary over prosecution of the Vietnam War.

The new proposal does not sit well with some environmental groups. Frances Beinecke, president of the Natural Resources Defense Council, issued a statement saying, “This is not merely some technical, bureaucratic shift. The move could erode the capabilities and mute the voice of the government’s primary agency for protecting our oceans and the ecosystems and economies that depend on them. We understand the president’s interest in creating a more nimble, coherent entity for economic policy; but that can be done without sacrificing the scientific and environmental strengths of NOAA, and the independent perspectives it brings to critical issues.”

The business community, many of whose members at the White House on Friday applauded the president, might take a wait-and-see approach. “If the streamlining and efficiency undertaken in this proposed combination of agencies will mean that manufacturers will have less intellectual property protection, for example, it would be a devastating mistake,” Aric Newhouse, senior vice president for policy and government relations at the National Association of Manufacturers, wrote in a blog. “If, on the other hand, this leaning process will mean doing more with less, it would be a great step forward.”

White House officials noted that “with the exception of President Ford, every president from Herbert Hoover to Ronald Reagan had reorganization authority. Presidents had this sort of authority for almost the entire period from 1932 through 1984,” they said. “Unlike the authority granted in the past, the president’s proposal would initiate new accountability by mandating that any plan must consolidate government — reducing the number of agencies or saving taxpayer dollars.”

Donald Kettl, dean of the School of Public Policy at the University of Maryland, said, “Congress always guards its prerogatives, and every time the president seeks authority on his own it raises questions not only about committee jurisdictions but about what the executive branch has been up to.”

In the 1980s, Kettl said, Reagan’s vision of smaller government was opposed by Congress more than by the business community. “But today, the central thing is whether government can be made more supportive and transparent to make it easier for business people to do business without tripping over boundaries of separate agencies.”

— by Charles S. Clark – Government Executive – January 13, 2012 at http://www.govexec.com/story_page.cfm?articleid=49774&dcn=e_gvet

January 18, 2012 By AMK

SBA’s elevation to Cabinet-level is a symbolic move, experts say

President Obama’s announcement Friday that he was “elevating the Small Business Administration to a Cabinet-level agency” was a largely symbolic gesture, government scholars say.

“The president has the ability to designate his Cabinet and the SBA will be now part of his Cabinet,” Federal Chief Performance Officer Jeffrey Zients reiterated during the White House press briefing, after Obama’s remarks.

There is a distinction to be made, however, between the president inviting the head of an agency to his Cabinet, as Obama will do with SBA Administrator Karen Mills, and elevating the entire agency to “Cabinet-level status,” according to Paul Light, Paulette Goddard Professor of Public Service at New York University.

Light described Cabinet-level status as “a formal designation that only Congress can make by giving the individual and the agency a particular level in the executive pay structure.” He explained that Mills’ future attendance at Cabinet meetings is purely symbolic and will in no way affect her pay grade unless Congress passes additional legislation.

“He’s basically saying, ‘I’m going to call this person a BFF . . . and I’m going to invite this person to our clubhouse for our quarterly Cabinet meetings,’ ” Light said, comparing the process to the ceremonial act of knighthood.

Don Kettl, dean of the University of Maryland School of Public Policy, also sees the act as mostly symbolic.

“Whether an agency is Cabinet rank or not, in terms of getting the job done, doesn’t really matter a whole lot,” Kettl said. “It has much more to do with political symbolism.”

SBA has been on and off the presidential guest list for nearly two decades. President Clinton first extended an invitation to the agency head to join his Cabinet in 1994, when, according to Light, he also misused the legislative term “elevate.” President Bush rescinded the Cabinet invitation after he took office.

In 1988, Congress elevated the Veteran Affairs Department to Cabinet-level status. At the time, President George H.W. Bush remarked, “There is only one place for the veterans of America: in the Cabinet room, at the table with the president of the United States of America.”

VA’s promotion may have been a mixed blessing: “They got the name change, they got the accoutrements of Cabinet status, the limousine,” Light said. But the department couldn’t get additional employees or funding for new signs, thanks to provisions in the elevation legislation that prohibited such expenditures.

Light said in the grand scheme of things, federal agencies are “probably better off” not receiving Cabinet-level status. “That table’s not very important anymore — we don’t have Cabinet government as presidents once imagined,” he said.

SBA’s seat at the table is likely temporary. The president’s full reorganization plan, which must be approved by Congress, would roll SBA and five other trade-related entities into one, still-unnamed agency.

— by Andrew Lapin – Government Executive – January 13, 2012 at http://www.govexec.com/story_page.cfm?articleid=49775&dcn=e_gvet

January 13, 2012 By AMK

SBA, to be elevated to Cabinet level, is among agencies Obama wants consolidated

On Friday (Jan. 13, 2012) President Obama announced he will ask Congress for the power to merge six federal trade and commerce agencies, the Wall Street Journal reported.

The WSJ report said Obama will ask Congress for “reorganizational” power. The last president to have this power was Ronald Reagan.

The new power would allow the president to propose mergers in order to save money and make the government work more efficiently, according to the report.

The plan would allow Obama to propose mergers that would be “guaranteed an up-or-down vote from Congress within 90 days,” the report said.

The six agencies Obama wants to consolidate include the Commerce Department‘s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency.

The report cited a White House official who said the merger would save taxpayers around $3 billion over the next decade by eliminating duplicate overhead costs.

In addition, between 1,000 and 2,000 jobs would be eliminated through attrition, according to the WSJ.

February 10, 2011 By AMK

Contracting spending dips for the first time in 13 years

For the first time in 13 years, the government has cut its annual spending on federal contracting, Obama administration officials announced on Thursday.

Federal agencies spent $535 billion to purchase private sector goods and services in fiscal 2010, compared to $550 billion in fiscal 2009, according to Jeffrey Zients, deputy director for management at the Office of Management and Budget.

“We have reversed the trend of uncontrollable growth [in federal contracting],” Zients said in a conference call with reporters. “We’re saving money and making sure every taxpayer dollar is being well-spent.”

President Obama previously had called for a combined 7 percent reduction in baseline contract spending in fiscal 2010 and fiscal 2011 for a total savings of $40 billion. The administration says it is on pace to meet those targets, since the goal of the initiative was to reduce the overall rate of procurement spending. If the government had continued at its previous pace of contract spending, it would have spent roughly $615 billion in fiscal 2010, Zients said.

The decline in contracting spending is largely a reflection of agencies buying smarter — and often less from the private sector, said Daniel Gordon, administrator of the Office of Federal Procurement Policy at OMB.

For example, the Veterans Affairs Department has reduced its purchases of new information technology systems while the Justice Department eliminated an expensive case management system. The Housing and Urban Development Department, meanwhile, saved $44 million by eliminating a financial management system.

Several agencies also have focused on consolidating their purchases through strategic sourcing, introduced enhanced competition into their acquisitions and improved their contract management oversight, Gordon said.

“We have made real measurable progress,” he added, “progress that you can measure in dollars.”

The administration, however, is not willing to link the contract savings to its governmentwide insourcing initiative. The effort to bring some contractor functions back in-house, according to Gordon, is focused on the government regaining control of its core operations and less about taxpayer savings.

“We don’t view [insourcing] as a cost saving initiative,” he said. “We view it as a cost management initiative.”

While agencies met their overall goal of spending less on contracting, they failed to hit a series of targets for reducing their expenditures in several high-risk categories. A July 2009 memo from OMB called on agencies to reduce by 10 percent their use of sole-source, cost-reimbursement, and time-and-materials contracts. Gordon acknowledged those targets have not yet been met.

The procurement chief said the percentage of sole source contracts in fiscal 2010 dipped by 6 percent, although the percentage of contracts with only one bid declined by 11 percent.

The administration also made progress in cutting its spending on time-and-materials contracts, which are considered the highest risk to taxpayers because of the potential for escalating costs. It appears, however, that most of those contracts were converted to cost-reimbursement vehicles rather than fixed-price contracts, the administration’s preferred contracting type, Gordon said.

OMB did not immediately provide details on the time-and-materials or cost-reimbursement spending figures in fiscal 2010.

Contract spending, particularly for professional and technical services, is expected to decline further in the coming years. The administration plans to call for a 10 percent reduction on spending in these two categories, which Gordon loosely defined as the work contractors provide in assisting agency acquisition shops.

Zients, who will head up an effort to reorganize federal agencies to eliminate redundancy in government operations, declined to discuss the effort on Thursday, saying it was in its early stages.

– by Robert Brodsky – GovExec.com – February 3, 2011

January 26, 2011 By AMK

Obama pledges massive overhaul of government

In addition to a five-year discretionary spending freeze, President Obama on Tuesday night announced a reorganization effort to consolidate duplicative federal programs and reduce government waste.

Government hasn’t undergone a major restructuring in decades, leaving agencies with overlapping responsibilities, the president said during his State of the Union address. Efforts to cut waste haven’t gone far enough, and administration officials in the coming months will develop a proposal to merge and reorganize the federal government, he said.

“There are twelve different agencies that deal with exports. There are at least five different entities that deal with housing policy. Then there’s my favorite example: the Interior Department is in charge of salmon while they’re in fresh water, but the Commerce Department handles them in when they’re in saltwater. And I hear it gets even more complicated once they’re smoked,” said Obama.

The president also highlighted the role of technology in streamlining government. “We have made great strides over the last two years in using technology and getting rid of waste,” he said. “Veterans can now download their electronic medical records with a click of the mouse. We’re selling acres of federal office space that hasn’t been used in years, and we will cut through red tape to get rid of more. But we need to think bigger.”

As expected, Obama also announced a five-year freeze on non-security discretionary spending. He called the freeze “painful” but said the proposals would reduce the deficit by $400 billion during the next decade. Cuts include the two-year freeze on federal civilian salaries approved in December, tens of billions in Defense Department spending and other federal programs. “Already, we have frozen the salaries of hardworking federal employees for the next two years,” Obama said.

“Now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in,” the president said. “That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.”

Obama expressed support for even deeper cuts, noting lawmakers and the bipartisan deficit commission have developed a number of proposals to reduce spending. Other efficiencies could be found in health care programs, such as Medicare and Medicaid, beyond annual domestic spending, he said.

In addition, the president called for efforts to strengthen Social Security and emphasized his recent request for a review of government regulations. The White House last week issued an executive order mandating a regulatory review to improve or potentially repeal outdated, burdensome and inefficient rules that could be stifling private sector job growth.

Rep. Paul Ryan, R-Wisc., who delivered the Republican response to Obama’s address, said the president did not go far enough, and pledged that the GOP would work to limit the government’s reach and spending. “Limited government also means effective government,” he said. “When government takes on too many tasks, it usually doesn’t do any of them very well. It’s no coincidence that trust in government is at an all-time low now that the size of government is at an all-time high.”

— By Emily Long – GovExec.com – January 25, 2011

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