[CRS Issue Brief for Congress]

93026: Executive Branch Reorganization

Updated December 6, 1996

Harold C. Relyea
Government Division

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Reinventing Government
Alternative Reforms
NPR Phase 2
A New Beginning

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

CHRONOLOGY

FOR ADDITIONAL READING


SUMMARY

At the beginning of his tenure, President Clinton pledged his Administration to a program of "reinventing government," beginning with a National Performance Review (NPR), announced shortly after the inauguration, to find ways to make the federal government more efficient, economical, and effective. The result was a September 1993 report proposing various organizational and operational changes.

In a third-year anniversary report, the NPR indicated that 43% of its initial 833 agency action items were completed and 42% were in progress, and that 38% of its initial 130 management systems action items were completed and 49% were in progress. Of an additional 187 agency recommendations, 19% were completed and 62% were in progress. As of January 1996, the executive workforce had been reduced by nearly 240,000. In addition, almost 2,000 obsolete field offices had been closed and approximately 200 programs and agencies -- such as the Tea-Tasters Board, Bureau of Mines, and wool and mohair subsidies -- had been eliminated. As of September 1996, said the report, "savings of about $97.4 billion have been ensured through legislative or administrative action." Of the original $108 billion in savings projected in 1993, about $73.4 billion had been realized.

Some major NPR recommendations were still awaiting implementation when the November 1994 congressional elections gave the Republicans majority party control of both houses of the 104th Congress. Republican leaders had unveiled a "Contract With America" reform plan in late September 1994. Its core principles regarded the federal government as being too big, spending too much, unresponsive to the citizenry, and the perpetrator of burdensome regulations. Measures responsive to these conditions were among the first bills to be offered with the convening of the 104th Congress. Among these were proposals to eliminate four departments -- Commerce, Education, Energy, and Housing and Urban Development -- to consolidate all foreign affairs function in the Department of State, and to downsize or eliminate several independent agencies.

Consequently, at least two distinct agendas for reforming and restructuring the federal government were before the 104th Congress. Furthermore, NPR recommendations undergoing implementation were revisited by congressional committees to analyze and assess their effects and to consider alternatives. At the conclusion of the 104th Congress, both the President and Republican congressional leaders could claim some victories in downsizing government. No department, however, was eliminated, and only a few small agencies, such as the Administrative Conference of the United States, Interstate Commerce Commission, and Office of Technology Assessment, were abolished.

This issue brief views reorganization as involving the alteration and relocation of both programs and the administrative structure of the executive branch for reasons of efficiency, economy, and direction. The issue is who reorganizes -- Congress or the President -- and by what authority and, also, for what purpose? Some other related administrative and management reforms are tracked as well.


MOST RECENT DEVELOPMENTS

Although the outcome of the November elections suggests that two agendas for reforming and restructuring the federal government may come before the 105th Congress, early indications are that at least one agency, the Export-Import Bank, may be targeted for restructuring. Congressional overseers indicated unhappiness earlier this year with the Ex-Im Bank's chairman, who recently asked the President not to renominate him. The Bank's charter must be renewed by Congress next year. Under discussion in executive branch circles is a proposal to merge the Bank, which provides loans and loan guarantees to finance the sale of U.S. goods and services abroad, with the Overseas Private Investment Corporation, which insures the foreign investments of U.S. companies against expropriation and other political risks. The proposal may find presidential and congressional support at a time when leadership of the new entity might be less complicated as a result of a vacancy in the Ex-Im Bank leadership.


BACKGROUND AND ANALYSIS

For well over a century, the structure and program responsibilities of the federal executive branch, including all of the departments and agencies, were determined by Congress. In the aftermath of World War I, however, with the rise of the new public administration profession and growing sentiment for attaining efficiency and economy in government, came efforts to strengthen the President's management ability. In 1932, the Chief Executive was statutorily authorized to issue executive orders proposing reorganization within the executive branch for purposes of reducing expenditures and increasing efficiency in government. A reorganization order became effective after 60 days unless either House of Congress adopted a resolution of disapproval. When President Herbert Hoover submitted 11 different reorganization orders, all were disapproved by the House of Representatives on the grounds that his newly elected successor, Franklin D. Roosevelt, might have different reorganization ideas.

President Roosevelt did submit a number of reorganization orders pursuant to a revised and extended version of the 1932 statute, which eventually expired automatically in 1935. Some major actions taken in these orders included creating procurement and disbursement divisions in the Treasury Department, establishing an enlarged National Park Service in the Interior Department, and making the Farm Credit Administration an independent agency.

Congress subsequently mandated a similar arrangement in a 1939 statute. Once again, the objective was to achieve efficiency and economy in administration. A presidential reorganization plan, submitted to Congress, became effective after 60 days unless both houses of Congress adopted a concurrent resolution of disapproval. In his initial reorganization plan, President Franklin D. Roosevelt created the Executive Office of the President.

Such reorganization authority, renewed periodically a dozen times between 1945 and 1984, with slight variation, remained available to the President for nearly half a century. At different junctures, qualifications were placed upon its exercise. For example, reorganization plans could not abolish or create an entire department, or deal with more than one logically consistent subject matter. Also, the President was prohibited from submitting more than one plan within a 30-day period and was required to include a clear statement on the projected economic savings expected to result from a reorganization.

Modification of the President's reorganization plan authority was made necessary in 1983 when the Supreme Court, in the Chadha case (462 U.S. 919), effectively invalidated continued congressional reliance upon a concurrent resolution to disapprove a proposed plan. Under the Reorganization Act Amendments of 1984, which were signed by President Reagan on November 8, several significant changes were made in the reorganization plan law. Any time during the period of 60 calendar days of continuous session of Congress following the submission of a reorganization plan, the President might make amendments or modifications to it. Within 90 calendar days of continuous session of Congress following the submission of a reorganization plan, both houses must adopt a joint resolution (which, unlike a concurrent resolution, becomes law with the President's signature -- a central issue in the Chadha case) for a plan to be approved. This amendment, however, continued the President's reorganization plan authority only to the end of 1984, when it automatically expired. Neither President Reagan nor President Bush requested its reauthorization. Likewise, President Clinton did not seek its renewal during the 103rd Congress, although the National Performance Review (see below) had recommended this course of action in September 1993 (see 5 U.S.C. 901-912 (1988)).

Currently, in the absence of reorganization plan authority, the President may propose executive branch reorganizations to be realized through the normal legislative process. The Departments of Energy, Education, and Veterans Affairs were established in this manner in recent years. This approach, however, is devoid of the action timeframe and required final vote of the reorganization plan arrangement that expedites reorganization matters. The President might also attempt a minor reorganization, such as establishing a small, temporary entity within the Executive Office of the President, through the issuance of a directive, such as an executive order. Attempting more ambitious reorganizations through a presidential directive may, if not ultimately found to be illegal, incur congressional displeasure and subsequent legislative and fiscal reaction.

Reinventing Government

A major new effort at realizing executive branch reorganization and reform got underway on March 3, 1993, when President Clinton initiated a National Performance Review (NPR) to be conducted over the next six months under the leadership of Vice President Albert Gore, Jr. "Our goal," said the President, "is to make the entire federal government both less expensive and more efficient, and to change the culture of our national bureaucracy away from complacency and entitlement toward initiative and empowerment. We intend to redesign, to reinvent, to reinvigorate the entire national government."

Staffed by senior department and agency managers, auditors, and front-line workers, as well as management analysts from the Office of Management and Budget (OMB), the NPR began its work in mid-April 1993. While evaluating the efficiency of federal programs and services, it was also to identify specific spending cuts in federal programs and services not operating effectively and no longer advancing the mission they were intended to serve; recommend ways to streamline the bureaucracy by eliminating unnecessary layers of management and reducing duplication of effort; and find ways to improve services by making better use of new information technology and by making government programs more responsive to the clientele being served.

The resulting NPR report, From Red Tape to Results: Creating a Government That Works Better & Costs Less, was delivered to the President on September 7, 1993. Various accompanying supplemental reports on both specific agencies and functional areas of government were subsequently published during 1994. Although the bulk of the report's almost 380 major recommendations (broken into over 1,230 action items) were directed to management reforms, several proposals addressed executive reorganization, including one for congressional restoration of presidential reorganization plan authority. Others recommended, for example, reorganization of the Department of Agriculture, the U.S. Army Corps of Engineers, the Environmental Protection Agency's Office of Enforcement, Department of Housing and Urban Development field operations, the Immigration and Naturalization Service, the Internal Revenue Service, U.S. Customs Service, and the Department of Veterans Affairs' health care system.

To pursue its many recommendations, the NPR proposed the creation of the President's Management Council to "ensure that quality management principles are adopted, processes are reengineered, performance is assessed, and other National Performance Review recommendations are implemented." Subsequently established by an October 1, 1993 presidential memorandum (3 CFR, 1993 Comp., p. 788), the Council is composed of the chief operating officers of 18 major agencies, the Director of the Office of Personnel Management (OPM), the Administrator of General Services, and the President's Director of Cabinet Affairs (ex officio). It is chaired by the Deputy Director for Management, Office of Management and Budget (OMB).

During the 12 months after the issuance of the NPR report, its recommendations were implemented by 22 presidential directives, several enacted bills, and a variety of agency actions. Anniversary reports, marking progress in the implementation of NPR recommendations, have been issued in September of each succeeding year. The 1996 report indicated that 43% of the NPR's initial 833 agency action items were completed and 42% were in progress, and that 38% of its initial 430 management systems action items were completed and 49% were in progress. Of an additional 187 agency recommendations, 19% were completed and 62% were in progress. As of January 1996, the executive workforce had been reduced by nearly 240,000. In addition, almost 2,000 obsolete field offices had been closed and approximately 200 programs and agencies -- such as the Tea-Tasters Board, Bureau of Mines, and wool and mohair subsidies -- had been eliminated. As of September 1996, said the report, "savings of about $97.4 billion have been ensured through legislative or administrative action." Of the original $108 billion in savings projected in 1993, about $73.4 billion had been realized.

Alternative Reforms

Shortly after the NPR released its first status report, the November 1994 congressional elections gave the Republicans majority party control of both houses of the 104th Congress. Republican leaders had unveiled a "Contract With America" reform plan in late September 1994. Its core principles regarded the federal government as being too big, spending too much, unresponsive to the citizenry, and the perpetrator of burdensome regulations. Measures responsive to these conditions were among the first bills introduced in the new Congress.

Consequently, two distinct agendas for reforming and restructuring the federal government came before the 104th Congress. Furthermore, NPR recommendations undergoing implementation were revisited by congressional committees to analyze and assess their effects and to consider alternatives. As the 104th Congress progressed, a number of major reorganization target areas emerged.

In the early months of 1995, a number of entities were mentioned for reduction or elimination. At a mid-February press conference, House Republican freshmen announced the creation of four task forces to eliminate the Departments of Commerce, Education, Energy, and Housing and Urban Development (which were spending a collective $78 billion annually). The following day, another House Republican group proposed merging the Departments of Education and Labor and eliminating the Equal Opportunity Employment Commission. Savings were expected to be achieved by ending duplications among federal education and job training programs and the demise of the Commission. Later, in early April, Senate Majority Leader Robert Dole announced he was establishing a Task Force on Elimination of Government Agencies.

Subsequently, bills targeting these departments and various agencies for elimination were introduced in both houses. At the conclusion of the 104th Congress, both the President and Republican congressional leaders could claim some victories in downsizing government. No department, however, was eliminated, and only a few small agencies, such as the Administrative Conference of the United States, Interstate Commerce Commission, and Office of Technology Assessment, were abolished.

An agency of particular interest to both the Clinton Administration and Congress was the Federal Aviation Administration (FAA). The NPR recommended the establishment of a federal corporation to provide air traffic control services currently performed by the Federal Aviation Administration. Clinton Administration pursuit of this proposal in 1994 had encountered significant congressional opposition from members of the President's own party, even though Secretary of Transportation Federico Pena projected that the change could save the taxpayers as much as $18 billion over a decade. Subsequently, the chairmen of congressional subcommittees having jurisdiction over such legislation offered an alternative proposal removing the FAA from the Department of Transportation (DOT) and making it a streamlined independent agency.

The Clinton Administration's corporation proposal was introduced in the House in early April 1995 but was subsequently abandoned and, in mid-September, the Secretary of Transportation endorsed a Senate bill giving the FAA more autonomy as an agency within DOT. This measure, however, did not receive floor consideration. A House bill reestablishing the FAA as an independent agency did reach the floor of that chamber and was adopted under a suspension of the rules in mid-March 1996. No further action on this bill or other proposals affecting the organizational status of the FAA occurred prior to the final adjournment of the 104th Congress.

The restructuring of foreign relations entities was another area of reorganization activity in the 104th Congress. In response to the Vice President's call for reinvention ideas for Phase 2 of the NPR (see below), the Department of State, in early January 1995, proposed absorbing the Agency for International Development (AID), the Arms Control and Disarmament Agency (ACDA), and the U.S. Information Agency (USIA). Late in the month, the Vice President and the NPR staff rejected this plan but gave the State Department some other streamlining objectives.

A few weeks later, the Chairman of the Senate Committee on Foreign Relations, Senator Jesse Helms, indicated agreement with the State Department proposal. He sought to merge AID, ACDA, and USIA, along with the Foreign Commercial Service of the Commerce Department and the Foreign Agricultural Service of the Agriculture Department, into a new International Development Foundation. In pursuit of his plan, Senator Helms inaugurated hearings on the reorganization and revitalization of American foreign affairs institutions in March 1995.

In the House, the Committee on International Relations began counterpart hearings on the reorganization of the Department of State in early April. A few weeks later, in mid-May, the Committee adopted legislation abolishing AID, ACDA, and USIA by March 1997 and transferring their functions to the Department of State. House debate on the bill began on May 23 but, in the face of a threatened presidential veto, was suspended; efforts were made to resolve areas of disagreement and the measure, with some amendments, was approved by the House in early June.

The Senate Committee on Foreign Relations approved its version of the reorganization legislation in mid-May 17 and the Senate began discussing the bill on July 28, but subsequent attempts to close debate and force final passage of the measure were unsuccessful. On two occasions, Senator Helms blocked consideration of all ambassadorial nominations and treaties for several weeks during the autumn months to force a compromise with the White House concerning his foreign relations reorganization. In early December, the impasse was resolved. While insisting on some spending cuts that could force consolidations he was seeking, Senator Helms agreed to allowing the Clinton Administration six months to devise a foreign relations reorganization or otherwise face a restructuring legislated by Congress.

Conferees, however, produced a compromise requiring the President to abolish one foreign policy agency -- AID, ACDA, or USIA -- and to transfer the functions of that entity to the Department of State to effect savings of $1.7 billion over the next four years. This version was given House approval on March 12; Senate acceptance came on March 28. President Clinton vetoed the measure on April 12; a House override attempt on April 30 failed on a 234-188 vote.

NPR Phase 2

The Clinton Administration renewed its effort at reinventing government in mid-January 1995 when the Vice President, OMB Director Alice Rivlin, and the Vice President's senior policy advisor, Elaine Kamarck, formally launched Phase 2 of the NPR. A January 3 memorandum from the Vice President to the heads of executive departments and agencies indicated that Phase 2 would "examine the basic missions of government, looking at every single government program and agency to find and eliminate things that don't need to be done by the federal government."

Details about the Clinton Administration's Phase 2 reinvention plans were revealed in the President's FY1996 budget, presented to Congress on February 6, 1995. Among the proposals proffered were:

Late in February, the President announced new proposals in regulatory reform, including a page-by-page review of federal regulations to determine those that are obsolete, replaceable by private sector alternatives, or better administered by state and local government. He also directed that the performance of regulatory agencies and front-line regulators be measured in terms of results and not process accomplishments; sought to convene immediately, in locations throughout the country, consultative meetings between the front-line regulators and persons affected by their regulations; and promoted a regulatory process based upon consensual negotiations between regulators and regulatees. A complete list of Phase 2 recommendations by agency and in the regulatory reform area would appear in the second NPR status report issued in September 1995.

Clinton Administration proposals for abolishing the ICC, reorganizing DOT, and reconstituting the Federal Aviation Administration's air traffic control services in a wholly-owned government corporation were introduced in Congress in early April. The elimination of the ICC was subsequently realized in December 1995. Certain functions of the Commission were transferred to the Surface Transportation Board, newly established within DOT by the termination statute (109 Stat. 803).

Comprehensive hearings on NPR reforms were begun by the House Subcommittee on Government Management, Information, and Technology in early May 1995. Although witnesses viewed the NPR effort as commendable in many regards, they also faulted it for failing to involve Congress in its reform activities at the outset, for proposing arbitrary personnel cuts without proper planning, and for scattering governmentwide management leadership responsibilities across too many offices, including that of the Vice President. An OMB official rejected the idea of creating an outside panel of distinguished citizens to advise on government reorganization, preferring instead agency-generated proposals.

The Subcommittee held nine additional hearings on related considerations. In late December, the Committee on Government Reform and Oversight issued a report on these proceedings (H.Rept. 104-435). Among its many findings were that the "capacity of the President as the chief executive officer of the Federal Government and its principal manager has been diminished over several Administrations;" that the "capacity available to the President in the Office of Management and Budget (OMB) to reform or improve management has steadily declined and now barely exists;" that the "NPR, in its ad-hoc and episodic approach to management issues, reveals the weakened state of management capacity of the Executive Office of the President;" that the NPR "contributed to identifying the need to improve the Federal Government and lower its operating costs;" that "[b]y not establishing first what activities the Federal Government should be performing, the NPR was flawed from the outset and did not achieve enough progress;" and that the "ad-hoc, even disjointed, nature of NPR is a telling sign of the disconnect between policy and management, and an admission that the President has no organized capacity to manage the executive branch."

Among the recommendations offered in the report proposals for strengthening the President's role as chief executive officer of the executive branch, endorsement of the establishment of an Office of Management within the Executive Office of the President (to perform, at a minimum, the "M" functions of OMB), and support of the creation of a temporary Commission on Federal Reorganization composed of "experts from the business, academic, and nonprofit sectors and Federal, State and local government to recommend to the President and Congress in early 1997: (i) ways to organize more efficiently the functions the Federal Government performs, and (ii) changes in law that would reduce, transfer, or eliminate Federal functions."

A New Beginning

A mandate for the continuation of Clinton Administration and congressional reinvention efforts or the initiation of new reforms, including reorganization and further downsizing of government, awaits determination in the aftermath of the November elections returning President Clinton to the White House and Republican majorities to both houses of Congress.


CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Congress. House. Committee on Government Reform and Oversight. The National Performance Review. Hearing, 104th Congress, 1st session. May 2, 1995. Washington, U.S. Govt. Print. Off., 1996. 105 p.

-----Creating a 21st Century Government. H.Rept. 104-434, 104th Congress, 1st session. Washington, U.S. Govt. Print. Off., 1995. 31 p.

-----Making Government Work: Fulfilling the Mandate for Change. H.Rept. 104-435, 104th Congress, 1st session. Washington, U.S. Govt. Print. Off., 1995. 60 p.

-----Senate. Committee on Governmental Affairs. Executuive Branch Reorganization. Hearings, 104th Congress, 1st session. May 17, 18, 1995. Washington, U.S. Govt. Print. Off., 1996. 261 p.

-----Reforming and Restructuring the Federal Government. Hearings, 104th Congress, 2nd session. February 13, 14, and 15, 1996. Washington, U.S. Govt. Print. Off., 1996. 206 p.

-----Managing the Public's Business: Federal Government Corporations. S.Rept. 104-18, 104th Congress, 1st session. Washington, U.S. Govt. Print. Off., 1995. 85 p.


CHRONOLOGY

09/09/96 ---The National Performance Review marked its third-year anniversary, reporting that 43% of its initial 833 agency action items were completed and 42% were in progress, and 49% of its initial 430 management systems action items were completed and 49% were in progress; of an additional 187 recommendations, 19% were completed and 62% were in progress; "savings of about $97.4 billion have been ensured through legislative or administrative action" and an "additional $5.2 billion in savings is contained in legislation pending before Congress;" and, as of January 1996, an executive workforce reduction of nearly 240,000 employees had been realized.

09/11/95 ---The National Performance Review marked its second year anniversary, reporting that 32% of its initial agency action items were completed and 61% were in progress, and 27% of its initial 417 management systems action items were completed and 63% were in progress; more than 180 additional recommendations had been made; and "about $57.7 billion of [approximately $108 billion] projected savings have been achieved" and an "additional $4.3 billion in savings are currently pending before Congress."

01/12/95 ---Vice President Gore, OMB Director Alice Rivlin, and other officials formally launch Phase 2 of the National Performance Review.

09/27/94 ---Republican leaders of the House of Representatives unveiled a "Contract With America" reform plan with core principles that regard the federal government as being too big, spending too much, unresponsive to the citizenry, and the perpetrator of burdensome regulations.

09/14/94 ---The National Performance Review marked its one-year anniversary, reporting that over 90% of its recommendations "are under way," implementation occurring through 22 presidential directives, several enacted bills, and a variety of agency actions, with the result that "$46.9 billion of NPR's $108 billion in proposed savings are already enacted" and another "$16 billion in savings is pending before Congress."

09/07/93 ---The Task Force on National Performance Review provided its final report to President Clinton, offering some 380 major recommendations for government reform. The bulk of these proposals concerned management improvement, but several were directed at agency reorganization, consolidation, and field structure overhaul.

03/03/93 ---President Clinton announced he was establishing a task force, to be headed by Vice President Gore, to evaluate the efficiency, economy, and effectiveness of every federal program and service, and make recommendations for "reinventing government," including proposals for executive branch reorganization.


FOR ADDITIONAL READING

Carroll, James D. "The Rhetoric of Reform and Political Reality in the National Performance Review," Public Administration Review, v. 55, May-June 1995: 302-312.

Kettl, Donald F. Reinventing Government? Appraising the National Performance Review. Washington, Brookings Institution, 1994. 78 p.

-----and John J. DiIulio, Jr. Cutting Government. Washington, Brookings Institution, 1995. 56 p.

-----and John J. DiIulio, Jr., eds. Inside the Reinvention Machine: Appraising Governmental Reform. Washington, Brookings Institution, 1995. 198 p.

Office of the Vice President. Common Sense Government Works Better & Costs Less. Washington, U.S. Govt. Print. Off., September 1995. 158 p.

-----From Red Tape to Results: Creating a Government That Works Better & Costs Less. Report of the National Performance Review. Washington, U.S. Govt. Print. Off., September 1993. 168 p.

-----From Red Tape to Results: Creating a Government That Works Better & Costs Less: Status Report, September 1994. Report of the National Performance Review. Washington, U.S. Govt. Print. Off., September 1994. 127 p.

-----The Best Kept Secrets In Government. A Report to President Bill Clinton. National Performance Review. Washington, U.S. Govt. Print. Off., September 1996. 245 p.

Peters, Katherine McIntyre. "The Cutting Edge." Government Executive, v. 28, March 1996: 10-14, 16, 18-19.

-----"The Hard Sell ." Government Executive, v. 28, February 1996: 20-24.

Sperry, Roger L. "Saving Energy." Government Executive, v. 28, January 1996: 28-33.

Sundquist, James L. "The Concept of Governmental Management: Or, What's Missing in the Gore Report." Public Administration Review, v. 55, July-August 1995: 398-399.

Thompson, James. "Reinvention Revolution." Government Executive, v. 28, May 1996: 39-41.

U.S. General Accounting Office. Executive Guide: Effectively Implementing the Government Performance and Results Act. GAO/GGD-96-118. [Washington] June 1996. 56 p.

-----Management Reform: Status of Agency Reinvention Lab Efforts. GAO/GGD-96-69. [Washington] March 1996. 157 p.

CRS Reports

CRS Report 95-235. A Department of Science and Technology: A Recurring Theme, by William C. Boesman. [Washington]

CRS Report 95-452. A New HUD? The Administration Proposal, by Susan Vanhorenbeck. [Washington]

CRS Report 95-508. Department of Energy Programs: History, Status, Options, coordinated by Carl L. Behrens and Richard E. Rowberg. [Washington]

CRS Report 95-693. Education Department: Debate Over Its Cabinet-Level Status, by Wayne Riddle, Susan B. Boren, James B. Stedman, Liane White, and Laura Monagle. [Washington]

CRS Report 95-834. Proposals to Eliminate the U.S. Department of Commerce: An Issue Overview, by Edward Knight. [Washington]

CRS Report 95-209. Reinventing Government: The First Year, by Harold C. Relyea. [Washington]

CRS Report 92-293. Reorganizing the Executive Branch in the Twentieth Century: Landmark Commissions, by Ronald C. Moe. [Washington]