Efficiency: Increasing Quality and Value in Core Operations
Over time, duplicative efforts have made Government less effective, wasting taxpayer dollars and making it harder for the American people to navigate their Government. To address this issue, the President has focused on improving Government efficiency. The Budget invests in expanding shared services, simplifying Federal contracting, continued benchmarking to drive data-driven Federal management, and shrinking the Federal real property footprint.
3.2.1
Expanding Shared Services to Increase Quality and Savings
It will come as no surprise that most Federal agencies have similar administrative functions that require the investment of increasingly scarce resources. Human resources, financial management, and payroll, for example, are common administrative functions that all agencies need, but not all agencies are equally efficient at managing. By creating Shared Service Providers (SSPs), and concentrating the delivery of administrative services within a smaller number of agencies, duplicative efforts can be reduced. Further, by giving this task to agencies with the right expertise, we can free up resources for mission critical activities, and deliver cost-effective support to agencies.
The use of shared services has grown in recent years, with smaller agencies leading the charge. In 2014, cabinet-level agencies took steps to realize the benefit of shared service agreements. For instance, in the Federal Government’s largest shared service arrangement to date, the Department of Housing and Urban Development (HUD) has begun transitioning all of its core financial management functions — as well as select administrative and human-resource functions — to the Department of the Treasury, with other cabinet-level agencies expected to follow. To support greater adoption of shared services by all agencies for a broad range of functions, the Office of Management and Budget (OMB), in partnership with the Department of the Treasury’s Office of Financial Innovation and Transformation, has developed a new governance model for SSPs that incorporates feedback from early adopters and builds on lessons learned from shared services in private sector companies.
The move to SSPs also supports the ability to modernize agency financial systems to allow for greater spending transparency. It will also allow more efficient implementation and adoption of the Digital Accountability and Transparency Act (DATA Act) of 2014. This Act requires the creation and adoption of standard definitions for Government spending data and the display of that data on USASpending.gov. The Budget includes funding that will allow agencies to make progress in implementing the DATA Act and increase Federal spending transparency.
Buying as One through Category Management. Federal contracting is often seen as a highly complex process that ultimately leads to less innovation, higher costs, and weaker performance. Today, proposals for contracts are lengthy, overly prescriptive, and laden with Government-specific requirements. There is also staggering duplication of contracts across Government and very little information sharing between agencies on pricing or other important contractual information. In order to fundamentally improve how taxpayer dollars are used in the Federal contracting space, the Administration is embarking on a comprehensive initiative to enhance collaboration and cooperation and drive greater innovation and improved performance. The category management initiative draws upon private sector best practices to create categories of commonly purchased items such as computers, software licenses, fuel for vehicle fleets, and human capital training services that are each managed with their own set of Government-wide strategies. This new approach will build on the progress made in the strategic sourcing initiative, leveraging the consolidated purchasing power of the Government to buy smarter and reduce duplication. Increased use of strategic sourcing has saved over $417 million since 2010, and reduced some areas of contract duplication by up to 40 percent. The Budget better leverages resources across categories to increase efficiencies, reduce duplicative contracts, and increase cost savings for both Government and industry.
The category management approach is a fundamental shift from the practice of handling purchasing, analyzing pricing, and developing vendor relationships individually within thousands of procurement units across Government. Under category management, the Administration will “buy as one” by creating common categories of products and services across Government, and managing each category as a mini-business with its own set of strategies. Each category will be led by a senior team with expertise in its assigned category, operating out of agencies identified as “centers of excellence.” Strategic sourcing will continue to be one effective strategy that a category manager may implement to drive down total costs and improve overall performance for that category. Bringing common spending under management of knowledgeable category leaders, including collecting prices paid and other key performance information to allow easy comparisons, will ensure that agencies get a more competitive price and quality of performance when they are buying similar commodities under similar circumstances. This will also free up agency acquisition personnel to focus on complex agency-specific procurements.
To complement these efforts, the Administration will propose legislation making it easier for vendors seeking to bid on modestly-sized procurements and bringing more new companies into the Federal marketplace. The Administration will request authority to raise the simplified acquisition threshold from $150,000 to $500,000 in order to broaden the range of purchases that can be accomplished with minimal complexity and Government-unique requirements. The Administration will also seek new pilot authority allowing agencies to set aside work for new small businesses and other firms that have limited experience selling to the Government, but can offer cutting-edge technology and more creative solutions to address the Government’s needs.
3.2.2
Shrinking the Federal Real Property Footprint
The Federal Government is the largest property owner in the United States. For example, the domestic building inventory contains almost 300,000 buildings requiring approximately $21 billion of annual operation and maintenance expenditures, including approximately $6.8 billion of annual lease costs. As a result, there are numerous opportunities to save by using Federal space more efficiently and disposing of unneeded buildings, land, and structures. In 2012, the Administration issued a “Freeze the Footprint” policy and directed agencies to freeze the growth in their office and warehouse real estate inventory. This led to a 10.2 million square foot reduction in Federal office and warehouse holdings in 2013. In 2015, the Administration will implement a five-year national strategy to continue reducing the size of the portfolio, and agencies will be required to set annual reduction targets for office and warehouse space and annual disposal targets for all building types to further reduce costs.
The Administration is also expanding the General Services Administration (GSA) Consolidation Activities program, first proposed and enacted in 2014. The Administration proposes to use $200 million in annual rental payments collected from agencies, $130 million over the 2015 enacted level, to execute additional office space consolidations. This will allow the Government to more effectively use real property by relocating Federal agencies into more efficient, lower cost or consolidated locations that also enable improved delivery of Government services. More than a dozen consolidations were implemented in 2014, the first year of the program, and the changes begun in that year alone will ultimately yield more than $16 million in annual cost avoidance to the taxpayer each year that the Government leases or owns the properties involved. Over time, this will result in significant avoided cost for this portfolio and will reduce the Federal real property footprint by approximately 500,000 square feet.
In addition to these administrative actions, the Budget includes a $57 million proposal to implement the Civilian Property Realignment Act (CPRA). If enacted, CPRA would create an independent board of private and public sector real estate experts that would perform Government-wide, independent portfolio analysis and make recommendations to the Congress on properties that should be disposed, consolidated, co-located, or reconfigured. Enactment of CPRA would help consolidate Government operations, streamline the disposal process, generate an estimated $1.2 billion in sales proceeds over 10 years, further reduce operations and maintenance costs associated with excess buildings, and provide funds for real property reinvestment.
3.2.3
The Benchmarking Initiative
The Benchmarking initiative is aimed at improving the performance of Federal mission-support functions, and identifying areas that may be ripe for innovative thinking or new efficiencies.
The Administration began the initiative in 2014 by measuring an initial set of five administrative functions — acquisition, financial management, human capital, IT management, and real property — at major bureaus/components within the 24 Chief Financial Officers Act Federal agencies. Agencies were able to see for the first time both how their internal bureaus compared against each other, and how they performed compared to peer agencies and the Government-wide average. Results of this effort are already being realized. For example, some agencies have experienced as much as a 10-percent increase in their reporting of contractor past performance, a vital way in which the Federal Government tracks the performance of its contractors. In 2015 and 2016, the Benchmarking program will be expanded to include customer satisfaction metrics and to make the results part of agency performance reviews and strategic planning exercises.
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Efficiency: Increasing Quality and Value in Core Operations
