Chiefs Rule

Responsibility for improving federal operations increasingly falls to top executives.

First came CFOs. In 1990, frustrated by the appalling state of financial management at most federal agencies, Congress passed the Chief Financial Officers Act to force the adoption of modern accounting practices. Subsequent laws mandated chief information officers, chief human resources officers and chief acquisition officers, spawning an entire set of positions aimed at improving business operations.

Although most would agree that substantial progress has been made in improving management, few would disagree that the government has a long way to go before it can reliably account for the way it spends and manages taxpayers' money. It still can take managers a year or longer to hire employees because of inefficient personnel systems; the federal treasury is annually cheated out of million of dollars in tax revenue because agencies incorrectly report contract awards; hundreds of millions are squandered on ineffective computer systems.

The management chiefs tapped to focus high-level attention on these problems come from a mix of backgrounds: Some are political appointees, others entered government straight out of college. They also vary in their level of on-the-ground involvement, with some wearing as many as three chief hats at once. A number of observers agree that agencies should stop handing multiple chief titles to a single executive; there's plenty of work to be done in each respective area.

In financial management, most departments already have achieved clean audit opinions and, in 2004, managed to submit paperwork to the Office of Management and Budget just 45 days after the close of the fiscal year. This marks an improvement of more than three months. The next frontier: strengthening checks and balances to prevent waste and fraud. Financial chiefs would be wise to prepare in case Congress requires every CFO Act agency to follow in the Homeland Security Department's footsteps and obtain an annual audit opinion on internal controls.

CIOs are struggling to be seen as exceptional managers as well as technical gurus. They're also concerned with eliminating redundant technology and ensuring that IT systems are compatible and fit larger agency and governmentwide blueprints known as enterprise architecture. Chief human capital officers have the unenviable task of pushing sweeping personnel reforms de-spite pushback from employees, unions and some lawmakers. And chief acquisition officers are working to handle a wave of retirements and bring in fresh blood. They are striving to beef up training programs and to establish creative performance-based contracting methods while staying within acquisition regulations. Under a cloud of procurement ethics violations, they are trying to speed purchases, especially during wartime, and better track and consolidate procurements.

Certain departments arguably face greater challenges than others because of their size, mission, age, or all three. Chiefs at the Homeland Security Department, for instance, must integrate management practices inherited from 22 agencies. The Government Accountability Office has suggested that Homeland Security might need a chief operating officer, appointed for a limited term of five years and held to a performance agreement, to help evaluate management issues.

Nowhere are inefficient business practices more apparent than at the Defense Department. Of 25 federal management areas identified by GAO as facing high risk for fraud and abuse, Defense is fully or partially responsible for 14. The department's operations involve $1.2 trillion in assets, $1.7 trillion in liabilities, more than 3.3 million civilian and military personnel and more than $605 billion in net operation costs, according to GAO. "DoD's substantial financial and business management weaknesses adversely affect not only its ability to produce auditable financial information, but also to provide accurate and timely information for management and Congress to use in making informed decisions," GAO reported in June (GAO-05-723T).

To help solve long-standing management issues, GAO is recommending that Congress require Defense to create a senior management position to lead the agency's overall business transformation efforts. This über manager-or CMO, for chief management officer-could be the first of a new cadre of C-titles at other federal agencies.

• Clay Johnson
  Office of Management and Budget
  Deputy Director for Management