ACTION SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85B00552R001000040018-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 17
• Document Creation Date: December 20, 2016
• Document Release Date: September 8, 2007
• Sequence Number: 18
• Publication Date: September 22, 1982
• Content Type: REPORT

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I. President Reagan has taken the following two actions:
1. Established the Cabinet Council on Management and
Administration. This Cabinet Council will handle
those matters pertaining to the management of the
Executive Branch on a government-wide basis and will
be charged with overseeing the management improve-
ment programs.
Edwin Meese, Counsellor to the President, will serve
as Chairman pro tem. Other members are: Secretary
of the Treasury, Secretary of Defense, Secretary of
Commerce, Secretary of Health and Human Services,
Secretary of Transportation, Director of the Office
of Management and Budget, Administrator of the
General Service Administration, and Director of the
Office of Personnel Management. The Vice President,
Chief of Staff to the President, and Assistant to the
President for Policy Development are ex officio
members.
2. Established the President's Task Force on Management
Reform. This group will implement REFORM '88, a
long-term program to improve the management and
administrative systems of the federal government.
Martha 0. Hesse is the Executive Director. Larry
Byrne is Deputy Executive Director; Jack Lichtenstein
is Communications Director; Guy Chamberlin, Howard
Messner and Seymour Greenstone serve as senior
advisors.
II. The following projects of REFORM '88 are either in
process or now completed:
Departments, to be used initially in t e ca inet
b
council scheduling/agenda/reporting process.
1. Implement an administrative online communications
system linking the White House and Cabinet
h
- AA
2. Review and reduce central agency regulations,
beginning with OMB.
3. Implement nine cost savings projects to reduce the
budget deficit in 1983-85 and to improve government
operations and controls.
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4. Inventory agency management projects and systems
to determine what we have, what's best, and how
to share what works.
5. Begin short and long-term-planning effort for
improvement of overall management systems.
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September 22, 1982
REFORM '88
SUMMARY
Presidential Counsellor Edwin Meese has announced a six-year
program of the Reagan Administration to make permanent
improvements in the management and administrative systems of
the federal government. A Presidential Task Force on
Management Reform, comprised. of federal managers, will
examine administrative systems government-wide. The Task
Force will examine systems in budget and financial management,
property management, personnel, and management information.
It will receive policy guidance from the newly-established
Cabinet Council on Management and Administration and will
report directly to the Office of Management and Budget and
the Office of Policy Development. Management improvement
initiatives, developed over the past 18 months, will provide
the Task Force with a strong foundation for management
reform.
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MANAGEMENT REFORM IN THE REAGAN ADMINISTRATION
The Reagan Administration is committed to improving the
way the federal government is run. President Reagan has
repeatedly emphasized his personal commitment to making
the government responsive to the people and to stop waste
of tax dollars. When he first came into office, President
Reagan asked OMB to begin an active campaign to make
management improvements that will have a lasting impact on
the federal government. Reform '88 is the next step to
advance the progress made since January, 1981. The results
to date include:
? President's Council on Integrity and Efficiency:
When President Reagan assumed office there was no
effective way for the Inspectors General to work
together. The President's Council on Integrity and
Efficiency was created in March, 1981, to enhance
interagency efforts to reduce fraud and waste, and to
give the Inspectors General a direct link to the
President. In the first six months of fiscal year 1982,
the Inspectors General program yielded savings and
improved use of federal funds totaling $5.8 billion.
Audit Followup:
When the President established the Council on Integrity
and Efficiency in March, 1981, to strengthen the role of
the Inspectors General, he also directed agency heads to
designate a senior management official to be responsible
for seeing that the recommendations of theolGs_and the
GAO were implemented. OMB immediately began to develop
standards for effective followup by reviewing existing
agency practices and getting agencies to make needed
changes.
The value of greater emphasis on followup audits and
other reports was immediately apparent: unresolved
audits were reduced from over $1.5 billion, reported
by the GAO in January, 1981, to less than $200 million
in only nine months.
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Improved Internal Controls:
Many of the problems of fraud and waste in government
programs are due to weaknesses in internal agency
caon or breakdowns in compliance. The, President
ordered an aggressive, government-wide program to
strengthen the controls, and in October, 1981, OMB
issued a policy statement charging agency heads to
establish and maintain improved control systems and make
regular reviews to see that controls are followed. The
.Administration has also supported legislation, the
Federal Managers's Financial Integrity Act, that
reinforces and strengthens the OMB directive.
Debt Collection:
As a result of years of inattention and neglect,
more than $33 billion of the $239 billion owed the
government is delinquent or in default and the
government is now writing off over $1 billion each
year in bad debts. Daily interest on delinquent
debts is over $14 million. The President directed
federal agencies to implement an aggressive program to
recover delinquent debts, improve credit programs
and, for the first time, report progress on outstanding
debts to Treasury. Federal agencies are now taking
administrative actions to improve the process for
screening credit applicants, extending credit, and
training collections personnel and holding them
directly accountable for improved collection efforts.
In addition, the President is seeking legislation
that will strengthen federal debt collection. Over
$1.5 billion in delinquent debts will be recovered
this year as a result of administrative improvements
alone.
plagued by excessive costs needless ov hea ,
inconsistent -regulation and cumbersome procedures
an paperwor . The President called for improve-
'n in agency travel policies and practices to
simplify travel regulations, to tighten travel
authorization procedures, and to maximize the use
of available discounts. These reforms are
expected to result in savings of $200 million
annually.
Travel Management:
The federal government spends nearly $5 billion
annually for travel. Federal travel management is
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? Periodicals, Pamphlets and Audiovisual Products:
In April, 1981, the President determined that the
federal government was spending excessive amounts
on public relations, publicity and advertising.
He directed reductions in spending on government
magazines, pamphlets and audiovisual products.
OMB imposed a moratorium on all new products in this
area, required a comprehensive review of all
existing products, and required stricter internal
controls over future production. Improvements
have resulted in the elimination or consolidation
of almost 2,000 publications and cost reductions
on an additional 2,300, more than one out of every
three publications. Savings of over $20 million
annually are projected in the coming years.
These are just a few of the initiatives currently underway
to improve the management of the federal government All
these activities will be brought together and aggr si ely
pursued under Reform 188. In addition to these, of r
management improvement projects are being carried out by
the Administration and outside groups on which the
Administration will draw for expertise and recommenda-
tions. These include projects of the President's Private
Sector Survey on Cost Control, the National Academy of
Public Administration, and the Assistant Secretaries for
Management Group. Utilizing the best available resources,
Reform '88 will greatly enhance our ability to permanently
improve the federal government.
The following projects of Reform '88 are either in process
or now completed:
? Implement an administrative online communications
system linking the White House and Cabinet
Departments, to be used initially in the cabinet
council scheduling/agenda/reporting process.
Review and reduce central agency regulations,
beginning with OMB.
? Implement nine cost savings projects to reduce the
budget deficit in 1983-85 and to improve government
operations and controls.
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Inventory agency management projects and systems
to determine what we have, what's best, and how to
share what works.
0 Begin short and long-term planning efforts for
improvement of overall management systems.
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REFORM '88
PROPOSES A FEDERAL STRUCTURE OPERATING IN A BUSINESSLIKE MANNER,
PROVIDING ESSENTIAL PUBLIC SERVICES OF HIGH QUALITY AS EFFICIENTLY
AS POSSIBLE.
1. We envision a federal government management system
based on a "holding company" approach -- central policy and
coordination, with decentralized responsibility of agency
heads for carrying out programs. There would be simple,
integrated, consolidated management systems, characterized
by:
? incentives to control costs
7
? efficient contribution by central management agencies
to streamlined management
? consolidated units to handle high volume activities in
a compatible, cost-effective manner
? freedom from unnecessary internal regulatory requirements
application of modern technology
? productive utilization of federal personnel with practical
performance standards.
2. Reform '88 will be a phased project, spanning more than six
wears, directed by the White House and OMB, and implemented
in the agencies by project teams.
A Cabinet Council on Management and Administration has been
established to handle those matters pertaining to the management
of the Executive Branch on a government-wide basis, including
such areas,as personnel management, financial management,
information systems, and logistics management. Specifically,
this Cabinet Council will be charged with overseeing the
management improvement programs.
Joseph R. Wright, Deputy Director of OMB, will direct the
Reform '88 oversight activities of the Cabinet Council.
The program will be planned and directed by the President's
Task Force on Management Reform, located in OMB and under
the direction of Martha 0. Hesse. Other key Task Force
members include: Larry Byrne, Deputy Executive Director;
Jack Lichtenstein, Communications Director; and
Guy Chamberlin, Howard Messner and Seymour Greenstone,
senior advisors.
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Members of the Task Force are appointed and career federal
managers, selected from the various agencies for their
knowledge of and experience in management and administrative
systems, particulary those of the federal government. As a
small cadre detailed to the Office of Management and Budget,
they will work closely with the management divisions of OMB
that have been working on this effort to date. and with managers
in the departments and agencies, identifying and developing
model systems and applying their principles to systems that are
now incompatible, redundant or obsolete. The projects will be
developed and implemented in the agencies.
3. The Task Force has begun a number of management activities,
and has already implemented the online communications
system linking the White House and the Cabinet Departments.
Announcements of new projects and or new management
improvements will be made in the coming weeks.
The President has committed his Administration to budget
deficit reductions in 1983-85 through management improvements.
Dollar goals for these improvements will be assigned to the
agencies. Achievement of these goals is the responsibility
of Reform '88. The nine projects already underway are:
? increase debt collection
0 improve cash management
increase excess property sales
? reduce waste, fraud, and abuse
? reduce non-defense employment 75,000 by 1985
0 procurement reforms
? reduce unliquidated obligations
paperwork reduction
0 other ongoing projects
The immediate plan is to begin work on both short and
long-term management system improvements.
First (October '82)
? OPD/OMB develop plans and policies with agencies
for Presidential approval
? Online communication system linking the White House
and agencies to be used first in Cabinet Council
scheduling/agenda process and reporting process
? Nine actions for savings, reported online to OMB
Second (December '82)
?
Complete review and reduce OMB regulations
0
Begin implementing President's Private Sector Survey
on Cost Control recommendations
?
Review and recommend changes in responsibilities of
Assistant Secretary for Management
?
Propose options for longer-term management system
changes
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Third (March '83)
Review and reduce GSA, OPM, Office of Federal
Procurement Policy and Treasury regulations
Begin longer-term implementation of new management
system
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WHY MANAGEMENT REFORM?
THE U.S. HAS A LARGE, GROWING, CHANGING GOVERNMENT THAT IS
DIFFICULT TO DIRECT AND ADMINISTER -- AND IS VERY EXPENSIVE.
OUR ANTIQUATED MANAGEMENT PROCESSES AND TECHNOLOGIES MAKE
IT DIFFICULT TO ACCOMPLISH PRESIDENTIAL GOALS.
1. The Office of Management and Budget (OMB) reviewed
management systems in the private and public sectors.
Four of the most professional, effective and cost
efficient are:
City government of Dallas, Texas
State government of Oregon
? Government of Japan
International Telephone and Telegraph
Each of these is unique but has certain characteristics
which can be applied to the U.S. Government:
? a clear planning and goal-setting process
? an effective budgeting system tied into the
planning process
? a clear definition of responsibility for central
staff in support of line management implementation
? an accurate, integrated financial system
? compatible, administrative communication and
reporting systems
? a fair, incentive-oriented personnel process
? an effective results analysis and audit process
2. The federal government does not do well when measured
against these standards:
Plan/goals -Spotty, not organized, not routinely
set in the past by the White House
and agencies
Budget -Complicated; not necessarily set to
achieve policies and goals, 'too
people-intensive
Staff/Line -Cabinet Councils help, Cabinet
Secretary role fairly well defined;
lack of agreement on some goals
causes confusion
Financial -Decentralized, incompatible; many
systems unapproved by the General
Accounting Office (GAO)
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MIS -Manual, project-oriented
Personnel -Very structured, complicated, few
incentives
Results Analysis -Tied to budget only
And this is further complicated by:
Hundreds of incompatible management systems using
and producing incompatible data
Lack of information on cost and impact of program
delivery in many cases
Computer technology for administrative services that
is at least 10 years behind private sector
? No automated auditing, so prevention of waste, fraud
and abuse very difficult
Inadequate cash and debt management systems
? Inadequate property and personnel management systems
3. This situation makes it difficult to meet Presidential
goals and effectively manage for results, and is very
expensive:
? There are a minimum of 325 separate agency
financial/accounting systems that are:
? Basically incompatible
? Not online to OMB or Treasury or usually
even within an agency
? Only 60% approved by GAO
? Separate from operational data, impeding
results analysis
Without automated audit capabilities
? Expensive to operate
100 million checks are issued every year based on "hard
copy" listings. Treasury central accounts receives 3,000
pounds a month of adding machine tapes, forms, etc. which
must be manually input into the central system. Twelve
hundred statements of "Transaction and Accountability" are
sent to Treasury. These are monthly revenue and expense
reports. Only 20, from the Department of Defense (DOD),
are on magnetic tape. The rest are submitted in hard
copy.
Most budget revenue submissions to OMB are on hard copy.
? There are at least 350 different payroll systems that
are:
? Basically incompatible
? Not online to office of Personnel Management
(OPM) or OMB
? Lacking productivity or any other analysis
capabilities
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0 Without automated audit capabilities
? Without consistent links to personnel systems
0 Expensive to operate
There are 1,750 operating personnel offices in the U.S.
most transactions are on tape to the central file, but
monthly employment reports are transmitted on hard copy.
American Management Association recently reported that
the ratio of personnel specialists in the government is
three times that in the private sector because of
antiquated systems.
The Navy spent $150 million and 12 years trying to
upgrade its payroll system and still has a 50% error
rate.
? There are more than 2,300 administrative payment
centers throughout the country, processing more
than 700 million documents per year, where:
- Documents processed per hour range
from 2 to 18
- Direct labor cost per payment in one
department ranges from $3.30 to $29.00
- Direct labor cost probably exceeds $600
million/year
- GAO believes at least 1/3 increase in
productivity is possible and recommends
consolidation or elimination of low
volume operations.
? The lack of comprehensive and integrated systems is
a problem not only in managing the government but also
in preventing waste, fraud and abuse. We use manual
auditing methods in almost all cases. No holding
company could effectively manage its business with the
federal government administrative system.
? The information systems in many agencies are also
far behind the state of the art or are incompatible
across agency lines. The federal government cannot
centrally determine:
?
Property in
Delinquency
government
t
a
wi
he hands of contractors
nd aging of debt owed the
th compatible definitions across
agency lines
?
Cash held by
grantees
?
Cash balances
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Real time financial data--value of procurements,
grants, obligations, commitments
Number of consultants in the government
? Market value of government real estate
Performance records of contractors and grantees
(government-wide)
? Total federal funds committed to individual
states and localities
? State and local government and private sector
initiatives that will affect our programs
? Effectiveness measures of programs and
operations (as viewed by client groups, general
population, and Congress)
? Use of personnel resources and skill availability
on a real time basis, for purposes of making
assignments
Pending program decisions in agencies that will
affect Presidential policy interests
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THE ROOTS OF THE PROBLEM
GOVERNMENT HAS GROWN LARGER AND
MORE
COMPLEX AT A FASTER
PACE THAN ALMOST ANY SEGMENT OF
U.S.
S9CIETY -- GOVERNMENT
ABILITY TO MANAGE HAS NOT KEPT
PACE.
1. In recent years, government sectors of the U.S. have
grown at a faster pace than population or GNP. The
federal budget has doubled in the past ten years and
grown by nearly 700% in the past twenty.
2. The number of employees has not grown as quickly, but
their jobs have become more complex because of:
? a changing mix of programs
- Human resources programs grew twice as fast
as the total budget in the past 20 years
- Defense grew 40% as fast
- But delivery and administrative systems
are geared toward those programs of 20
years ago.
a dispersed delivery system throughout the U.S.
An overall antiquated management system that has
not been planned or upgraded over the years -- it
has just happened. There are some bright spots
in those agencies that have worked to improve
systems and manage effectively -- but this is not
the norm and the systems are incompatible across
government.
3. The 2.5 million federal civilian employees are located
throughout the U.S. (2.8 million world-wide) to provide
as much local service as possible. Management of
resources and responsibilities would be difficult, even
with a modern management system:
- 24,500 installations in the U.S.
? 90% outside of D.C.
- 405,200 buildings in the U.S.
2.6 billion square feet
?
Four times more than total
office space
in nation's ten largest
cities
?
Also, 210 million square
feet
leased
?
40,000 Federal employees
maintain this space
clean
and
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- 450,000 non-military cars/trucks
General Services Administration (GSA)
vehicles driven a billion miles/year
and cost nearly $300 million to
operate
- 104 million pounds of paper printed per
year (could circle the earth 30 times)
There are an additional three million employees on
contract to the federal government who are part of
the management task and five million state and local
employees whom the federal government has to work with
and through.
4.
2,000 programs are now administered by 153 units of
federal government:
Executive Office of the President
9
Cabinet Departments
13
Independent Agencies and Corporations
35
Regulatory Agencies
22
Boards and Commissions
68
153
Quasi-Official Agencies
6
Advisory Committees
853
Field Offices
24,520
Over 60 heads of offices and agencies now report directly
to the President!
Since 1965, four new Cabinet Departments have been formed
while only one major agency has been eliminated:
Energy Community Services
? Transportation Administration (CSA)
? Housing and Urban Development
Education
5. Growth in government agencies has not been uniform or
consistent.
New agencies tend to be created or spun off from existing
structures. They inherit antiquated administrative
systems and worsen them via "patching."
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Existing agencies also decentralize and divide their
administrative structures, losing efficiencies. As
stated earlier, there are some bright spots -- but
these are few.
6. Because of the size, complexity, dispersed locations
and lack of management systems, the resources
dedicated to management and administration in the
federal government are substantial:
- More than 60% of 2.5 million employees
are "white collar"
- Over 30%, or 705,000, are classified as
strictly administrative and clerical,
costing more than $45 billion/year
- 150,000 employees operate 16,000
computers at a cost of $6 billion/year,
but we don't know how many of these are
administrative computers
- 32,000 procurement specialists costing
$2 billion/year write more than 17 million
contracts
- And we don't really know the total cost
of administration, which means simply:
we don't know the cost of doing business.
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