Running the Rapids

President Bush has a message for agency heads on management improvements: Keep up the pace.

Gale Norton already knew that public management is no cakewalk when she joined President Bush's Cabinet in January 2001. Before she was tapped to be Interior secretary, Norton spent eight years as Colorado's attorney general. There, she grew accustomed to managing what was in fiscal 1998, her last full year, a 300-person, $26-million-a-year office without access to the precise financial information available to heads of private companies. She recalls asking how much she had left to spend in various categories and receiving one of two answers:

"There's still some there" or "It's gone." It was, she says, "like getting into a car with no steering wheel. You had a gas pedal.You could go ahead, but you couldn't steer."

Seven years later, after a stint practicing law in the private sector, Norton is in charge of the Interior Department's nearly $10.8 billion discretionary budget and 70,000 employees, and again she finds herself looking for more precise numbers.

She would like, for instance, to have instant access to figures on how much the department spends on visitor centers and wildlife refuges. She would like to know how much Interior, entrenched in a lengthy legal battle over management of Indian trust funds, spends on litigation. "It's incredibly difficult to answer something like that, but it has tremendous policy implications," she says. "It would be important for Congress to know that."

Interior still is "struggling to get the tools that will really provide that kind of necessary management information," she says. "We're making a lot of progress. But it requires a sustained commitment over a long time to get that done."

Improved financial management is one of five main items on President Bush's agenda for reforming the federal bureaucracy. Bush's biggest management-related challenge for his second term will be to ensure that Norton and her colleagues' desire for achieving his goals doesn't diminish. The administration also must educate new political appointees about the merits of its goals, and convince holdouts to buy into the reform agenda.

Shades of Change

Bush has generated headlines by announcing plans to push for Social Security reform, caps on medical malpractice suits, tax code simplification and a host of other policy changes in his second term.

But followers of the President's Management Agenda-Bush's plan for building a more results-oriented, efficient federal government-shouldn't expect a fresh set of priorities for the next three years. What they should expect, says Clay Johnson, the president's primary management adviser, is a continued focus on the five main areas outlined at the beginning of Bush's presidency: personnel reform, financial management, electronic government, performance-based budgeting and the opening of commercial work to private sector bids.

Property management and the reduction of erroneous payments to beneficiaries of federal programs, both recent additions to the agenda, also will remain in the spotlight. "There's a whole lot of substance here," Johnson says. "This is not [going to be] about spinning any different."

The quarterly, traffic-light-style score card used to track progress and accomplishments on agenda items isn't about to go away either. It will continue to appear at Cabinet meetings, says Johnson.

Staying the course might not seem the most exciting move, but the strategy is praised by a number of outside observers. The Clinton administration erred on the side of too many changes, says John Kamensky, deputy director of Clinton's reinventing government effort and now a consultant at the IBM Center for the Business of Government. That approach was good for "generating new activity and new thinking," he says, but did not leave enough room for execution. "We probably had too many things on the agenda, and they were evolving over the eight-year term," Kamensky adds. "That made it hard for agencies to be successful because there was always something else."

There could be subtle changes as the administration continues to fine-tune the guidelines on each of the agenda items, and Johnson isn't ruling out the possibility of adding more. But his primary goal is to make improvements in the existing areas so that programs perform better every year.

To help this along, Johnson plans to employ a little "public shame and humiliation." Starting later this year, the administration will post information about how major federal programs that the White House has evaluated are performing relative to last year and the goals managers are setting for future enhancements. Such information is available, but in a format best understood by OMB budget examiners, not the public. By the end of the second term, the administration says it will have rated all 1,200 major programs and will have information about their progress available for viewing, feedback and criticism.

At the close of the second term, Bush's management team would like to be able to boast of accomplishments in several areas, Johnson says. OMB wants to quantify the reduction of erroneous federal payments, and the disposal of "unnecessary real property"-numbers that so far have proved elusive. Johnson would like to be able to say that agencies not only have identified gaps in workforce skills but have hired or trained people to fill the holes.

OMB also wants to quantify savings achieved through its controversial competitive sourcing initiative, under which contractors bid on federal jobs considered commercial in nature. To date, the administration has only been able to project savings.

The White House has asked inspectors general to assess whether competitive sourcing studies are "delivering the results promised," according to an OMB official who requested anonymity. Such reviews are common at the Defense Department, which has been undertaking public-private competitions for more than 50 years, but are just beginning to take hold at civilian agencies. The evaluations usually begin at least a year after a contest has been completed, and "in most cases [at civilian agencies], there has not been a full year of performance to evaluate," the official notes.

Stones in the Path

The Bush administration is under no illusion that all agencies will achieve "green" ratings-the highest of the three marks on its management agenda score card. So while Johnson, for example, would like to see almost all of the 24 agencies covered by the 1990 Chief Financial Officers Act earn clean audit opinions by the end of the second term, he acknowledges that the Defense Department, notorious for the poor state of its financial systems, could take longer to get its books in shape. At the same time, Johnson isn't giving Homeland Security, the newest department covered by the CFO Act, a break.

When the administration's final score card is tallied in 2008, "shame on us if it's not a field of green," Johnson says. Agencies made substantial improvements in each of the agenda areas over the first term, bringing the number of green ratings to 39 out of 130 at the end of 2004. But there's no guarantee that agencies won't backslide. In describing their progress, administration officials like to quote Kermit the Frog's famous song, "It's Not Easy Being Green." It's not easy staying green, either.

Take the Labor Department, for example. With green lights in all of the five major areas except competitive sourcing (where the agency has a yellow, indicating "mixed results"), one might think there's little left to do. But asked if his department has enough to strive for in the next several years, Patrick Pizzella, Labor's assistant secretary for administration and management, doesn't hesitate. "Oh my gosh, yes," he says. "Every day there's something to keep you busy."

One way to maintain momentum, Pizzella says, is to make sure that the political appointees who have joined Labor for the second term are quickly brought up to speed. He'd like OMB to conduct day-long management agenda training sessions for appointees and "young people right from the campaign" entering federal service. The sessions would best be conducted in the next few months, before the process of developing the fiscal 2007 budget begins, he says.

Pizzella told Johnson as much in an e-mail, and says he received a response "bright and early the next morning" praising the idea. The details haven't been ironed out, but Johnson says he is making communications with new Cabinet members a priority. The White House recently invited Cabinet secretaries to spend more time in offices in the Old Executive Office Building next to the White House, a move Johnson feels will prompt better communication among White House staff, department chiefs and agency employees. "Any time we can facilitate communication, we are contributing to improved management," he says.

Factors outside the Bush management team's immediate control, including the push to reduce the growing budget deficit, also could force agencies to pay attention to management, says Jacques Gansler, vice president for research at the University of Maryland and a former undersecretary of Defense. As agencies face flat or declining budgets, they'll have to figure out how to deliver services more efficiently, he says. "It's hard to change an institution rapidly. So you try to take advantage of the trends."

Under Norton, the assumption has been that "regardless of what the budget is . . . we should be diligent in ensuring that we're focused on priorities, that we are achieving the goals we set out to achieve, that we're actually not just engaging in a lot of actions but that we're achieving results," says Lynn Scarlett, Norton's assistant secretary for policy, management and budget. But the roughly 1 percent reduction in discretionary funds proposed in the fiscal 2006 budget would make smart spending more critical, she and Norton agree.

Interior officials are looking at options for co-locating offices to save money. "It's something we encourage at the local level, and our managers are finding that it not only saves money but allows them to share resources and ideas with other agencies with similar missions," Norton says. The department also is consolidating computer software and databases-an effort that will cost upfront but save in the long term.

Interior is streamlining management systems as well. Its Financial and Business Management System, scheduled to be introduced at several bureaus this fall and at all eight bureaus by fall 2007, is designed to standardize business practices across the department. It will replace 80 systems and allow managers to access finance, property management, travel and acquisition information using one password. They need as many as 30 now.

Despite these and other efforts, Interior has all yellow or red marks under "status" on OMB's score card. These scores don't really reflect what the agency has accomplished, Scarlett and Norton argue. Interior is "not necessarily the biggest department, but we're one of the most complex," Scarlett says. Interior's eight bureaus are accustomed to operating autonomously-some with missions at odds with one another.

"We have within one department the people who build dams and the people who make sure endangered fish survive," Scarlett says. "And so we have to work together from the very beginning on being sure that, as we're providing water for irrigation, we're also making sure water is available for fish."

Interior executives also have been affected by the legal dispute over the management of Indian trust funds. The department has made progress in solving problems that developed over nearly a century, Norton says. For instance, trust officers now will reside at Bureau of Indian Affairs facilities to "answer questions for people about how we're managing their resources," she notes. But the going has "not been easy," Norton admits, partly because the issues are long-standing and complex, and partly because the department needs to involve the Indian community in the decision-making process. A federal judge repeatedly has held Interior officials in contempt of court in connection with the case, and ordered shutdowns of its computer networks. Meeting accounting requirements imposed by the judge would cost $10 to $12 billion, Norton says. "Since our entire budget for the Bureau of Indian Affairs is only a little over $2 billion, that's very significant, and we're appealing that."

Mismanagement of the trust fund is one of the key reasons Interior still has a red rating on financial management. Scarlett insists the department has a framework in place to get to green, but she acknowledges the changes may take a while to implement.

OMB's Johnson says that some agencies, like Interior, are moving in the right direction but could take several years to move up a notch-especially in financial management. Interior received all green lights on the "progress in implementation" section of the latest score card, indicating the agency is moving in the right direction. But Johnson cautions that such marks shouldn't be viewed as exceptional. "Progress is basically a measure of the agency doing what [it] said," he says. If agency officials aren't at least showing progress, "personally I consider them to have an attitude problem," he says.

Norton says no attitude adjustment is necessary at Interior. "The management agenda is something that is important to the president personally," she says. "He is an MBA and wants to see that things are managed well. It is important to me personally because I believe that we need to use taxpayers' money wisely. I think a great deal about the perspective of the individual taxpayer. Somebody says, 'Well, it's only a few thousand dollars.' Well, that may be the $500 that four families gave up that they could have used for other things."