Agencies can look to 1990s for budget-cutting lessons

Tuesday - 9/27/2011, 7:00am EDT

By Jolie Lee
Federal News Radio

As they brace for budget cuts in the coming fiscal year, agencies can look to the cost-cutting strategies that government took in the 1990s for what worked — and what didn't.

The Partnership for Public Service's new report warns the United States "must not repeat the mistakes of the past" with automatic across-the-board cuts.

In 1993, the Clinton administration set up the National Performance Review, an eight-year initiative headed by Vice President Al Gore to remove unneeded government regulations and find areas to cut in the workforce and programs.

The NPR had a goal of reducing the federal workforce by more than 250,000, and the federal civilian workforce ended up decreasing by 300,000. The cuts, however, were not equal across agencies. The results were a drain of talent and more reliance on contractors, the report said.

"Those agencies that are a bit bloated will be successful while those that manage well are penalized," said John Koskinen, former deputy director for management at the Office of Management and Budget, in the report.

The threat of across-the-board cuts are back. Automatic cuts will go into effect if the 12-member deficit reduction commission, dubbed the super committee, fails to come up with $1.5 trillion in recommended cuts for over the next decade, or if Congress fails to pass those recommendations. The deadline for the committee to make the recommendations is Nov. 23.

Some agencies are already anticipating budget reductions and have offered buyouts and early retirements.

The Partnership recommends OMB work with agencies to determine which mission-critical positions must be preserved.

The NPR's mission to streamline and reduce redundancies should sound familiar to feds. President Obama issued an executive order in June calling for agencies to cut waste and increase efficiency. The report also suggests the President appoint a "leader with enforcement clout" to carry out a vision for a new type of government.

Technology will also play a crucial role in cost-cutting, the report said. In the 1990s, agencies increasingly automated manual and paper processes. Agencies were able to get the greatest return on investment when they did not "over-customize commercial off-the-shelf software."

Today, agencies can achieve even greater cost-savings with technology, such as with cloud computing and data center consolidation, the report said.

Overall, the report takes an optimistic tone about the current budget times, which it said provides "a rare opportunity for leaders to make changes that weren't politically palatable before or even possible during normal times."