GSA Operating Expenses Down $192 M FY 93 $174 M FY 94 $159 M FY 96 (proposed) DOWN $33 M DOWN 17% While Customer Service is Improving: "We always referred to GSA as GA in the past because they never had any customer service . . the current changes are dramatic." Chuck Davis, U.S. Fish & Wild Life Service "Reinvention has empowered GSA employees to use their best professional judgment." Chandler Peter, U.S. Army Corps of Engineers Let me pursue the capital planning, capital budget process a bit. I understand the differentiation, in both cases, to have a legitimate process you obviously need criteria that make some sense in terms of why this project and why not this particular project in terms of either a mathematical ratio of cost-benefit or long-term national plan to achieve certain goals through development of infrastructure to support those goals. In the California State budget you do not have a separate capital budget but you do have a capital budget that is funded differently than the operational budget, but in terms of the legislative review both are in one budget bill. What we are talking about now in Congress very seriously in the next few months is a capital budget process that would have both the planning process you are talking about as well as a separateness from the general operational budget that we work on through appropriations committees, authorization committees, and all the rest. What do you see as the main complaints to the capital budget as often practiced in a number of American corporations? Mr. ROGER JOHNSON. Well, I think you have got a different situation in the corporation because you are dealing there with tax laws, so you have an issue that you need to match the expense with the revenue which is driven off the Tax Code. That is really the basic foundation now for depreciation, which is what people worry about if you gave the accounting part of capital budgeting to the Federal Government. I would say it is a moot issue. Since we don't have taxes in the Federal Government, you don't need to go through all that accounting, you can still score the money up front from a budgeting standpoint and eliminate the argument and the fear that evil people will just capitalize air-right?-out over 10 years and take what ought to be today's expenditure of $10 billion and spread it out over 10 years and get us in all kinds of trouble. You don't need to do that. I think you can have all the benefits if you just put a process in place and you could pick any one of a number of corporate or even some State capital budgeting processes and get all of the benefit without any of those concerns. Mr. HORN. Now in your own planning process within GSA in terms of which Federal buildings would come on line first, in terms of need, you have a whole series of criteria I assume as to either need to be served, do we save money on rentals in the community, long-term amortization, et cetera. What are some of those criteria? Mr. ROGER JOHNSON. Well, in the Federal buildings process, the way it is structured, Mr. Chairman, the process is an annual budgeting process. We don't really have the time to put that kind of a process together, so about all I can tell you is that we have reviewed those programs assuming they are needed, and we do some checking to see that they are not grossly unneeded, and then we try to assure that if the Congress wants us to build them that in fact we will build them in the most efficient manner. One of the problems of not having a capital planning process is that there is never time to do it, because this town is in one continuous state of budgeting annually. I have tried to come forward with some kind of a process, but I am just not able to have the time to get through the process the first time. So it's a little like the chicken and the egg. So the answer to you is, we do not have a way to prioritize on the basis of rate of return or any other way. We tried to come through with a conversion of leased property to purchased property on that basis. In other words, we took leases that were costing us 2 and 3 times what a purchase would be over a life cycle and tried to bring forward a process that said please allow us to have X millions of dollars this year to convert these properties coming off lease and in turn we will commit to you three X savings over the period with a return. There the reverse hit us, and the scoring would not allow us to do that this year even though the long-term savings were there. Mr. HORN. Is this essentially OMB making that decision? Mr. ROGER JOHNSON. Well, I think it is OMB, but I think they have a lot of help. Mr. HORN. Well, I don't know. Usually it is the budget examiner or the director that is calling that shot. Mr. ROGER JOHNSON. Well, I think the Congress at that point was unwilling to change that also. Mr. HORN. Really? Mr. ROGER JOHNSON. Yes. Mr. HORN. In other words, they talked to various people on some of the oversight committees? Mr. ROGER JOHNSON. Yes. Mr. HORN. Because I would think that is something we ought to do. The Corps of Engineers does it, the Bureau of Reclamation has done it, and they have both done it for 30, 50 years. Mr. ROGER JOHNSON. Yes. We are continuing to look at our real estate as a portfolio of course. We did stop all new office buildings when we came here, and I think Secretary Rumsfeld was correct, we don't need any more office buildings, but the next step now with downsizing would be to take a good look across the Nation and come back to you with a total real estate plan including collapsing leases, including a question of, is a Federal building built somewhere a better investment? Should we do that and plan to collapse these 10 leases into it over time? That is where I think leverage would be if you could ask us to do it. Right now it would be a wasted effort because the budgeting process wouldn't allow it to come forward anyhow. Mr. HORN. I yield to the gentleman from Illinois, Mr. Flanagan, for 5 minutes. Mr. MICHAEL FLANAGAN. Thank you, Mr. Chairman. To my knowledge, you are the only CEO from a large business concern in the Federal Government or in the administration. Mr. ROGER JOHNSON. So I'm told. Mr. MICHAEL FLANAGAN. How do you think it would help if at all if we had more of, if not Cabinet level, certainly director level or other members who have had your similar experience and background in helping Government run better? Mr. ROGER JOHNSON. Well, I think what would happen is, there would be a larger body of thinking that has to do with the things we were just talking about. We are no smarter, we are no more patriotic, no more well intended than people here, we just have a different experience base. For example, in the GSA when I first came, as I would with any troubled situation, I put a hard freeze on all hiring, all replacements. It is instinctive with me because I have done it 20 times and I'm able to handle immediately and sensibly questions that say, well, how will we get the work done? Well, one way we will get the work done is to stop doing that 10 percent of the work that we shouldn't be doing anyway. That just comes from having done it, experience, and telling people. Because of that freeze, and buyouts, we now have 4,000 fewer people than on the day I came, 20 percent less. Haven't laid off a soul, and our customers say we are doing better. That is not because I'm any particular genius, that is just because I have done this a lot of times and know how. If we had more people with that kind of experience, I think you would get many more instinctive moves based on their experience and quicker implementation of a lot of things in the National Performance Review which are very sensible, very logical, and very well analyzed. We are still missing people who really have had the background and say now here's how we are really going to get that done. Mr. MICHAEL FLANAGAN. In the general perception it is believed that civil servants have inviolable employment, it will go on as long as they choose for it to go on, and that it cannot be terminated. Assuming that that is not absolutely correct, can you describe what process you would go through to assess someone as ineffective at their job and consequently dismiss them from employment? Mr. ROGER JOHNSON. Here or in a private company? Mr. MICHAEL FLANAGAN. No, here. Mr. ROGER JOHNSON. Here? Mr. MICHAEL FLANAGAN. Yes. Mr. ROGER JOHNSON. Well, first of all, I believe that the people that we have in our agency in the main are as good a work force as I have had anywhere. My job is to get stuff out of their way, so I've tried to convince them of that. It was hard in the beginning. I think they have gotten sort of convinced that this is true, and I have said to them, "Go ahead and make judgments. If you make mistakes, that's OK, just don't keep making them, and we'll judge you on the results." It gets very difficult, Congressman, because we keep coming back and I can't even get them judged on results because the whole system judges on process. We put through a very good performance measurement based piece of legislation, I think. I think it has bipartisan support, and yet I have discovered that one of the reasons some of it isn't implemented is that there are committees around trying to figure out a process that will make sure the performance measurements are fair. I mean it is just instinctive. So that, even with a piece of legislation that is aimed at solving this problem, the process is now moving in to stop the process. Mr. MICHAEL FLANAGAN. If I may borrow my favorite Est saying, if I hear what you are saying, you are saying that their employment is inviolable, that the process protects them, and that it is virtually impossible to eliminate someone who is not getting the job done in whatever management technique you have selected, and whether that works well or not, in your judgment as a department head or something else, that if you have some weight that you cannot move, the best you can do is transfer it, that you cannot dismiss it. Mr. ROGER JOHNSON. Yes, Congressman, but don't get me wrong. It is my opinion that that is not the first place I go, because I don't think we have got too many people because we have got a bunch of bad performers. Mr. MICHAEL FLANAGAN. No, and I don't mean to suggest that, that the Federal Government needs to have mass firings, but I'm saying this is not a tool at your disposal to implement manage ment. Mr. ROGER JOHNSON. No, but I don't really need it yet. Mr. ROGER JOHNSON. The big leverage here is on things we have talked about earlier. First of all-and the whole process that this agency is going through now is to ask the first question: Why are we doing that? Is it our mission? Should we be doing it at all? If the answer turns out to be no, then we are trying to get rid of it. If it turns out to be yes, then the next question is: Well, who can do it as well? Who else does this? Do we have any measurements? Do we even know what the results are going to be? This analysis is beginning to pay off a great deal. The Federal worker wants to do a good job. Most of them know exactly how to do it. So if we can just get this stuff out of their |