Prehearing Questionnaire for Bolten as Nominee for OMB Director

I believe the President chose me for this nomination because of my experiences working for him during the past 29 months as his Deputy Chief of Staff for Policy, as well as my prior experiences with government and economic policy.

2. Were any conditions, expressed or implied, attached to your nomination? If so, please explain.

No.

3. What specific background and experience affirmatively qualifies you to be Director of the Office of Management and Budget?

During my tenure as White House Deputy Chief of Staff for Policy, I have had the opportunity to work with each Cabinet department and agency -- and particularly with Director Daniels and other senior officials of the Office of Management and Budget (OMB) - - on matters of Administration policy. I believe this exposure would be useful to performing both the overall management and budget roles of the OMB Director. Among my prior experiences, I believe my nearly four years on the staff of the Senate Finance Committee, as well as subsequent experience working with the Congress, would be especially useful to me in fulfilling the OMB Director's many responsibilities involving the Congress.

4. Have you made any commitments with respect to the policies and principles you will attempt to implement as Director of the Office of Management and Budget? If so, what are they and to whom have the commitments been made?

I have committed to the President, members of this Committee, and others that I would be dedicated to achieving the President's priorities and to doing so with a watchful eye on the taxpayers' dollars.

5. If confirmed, are there any issues from which you may have to recuse or disqualify yourself because of a conflict of interest or the appearance of a conflict of interest? If so, please explain what procedures you will use to carry out such a recusal or disqualification.

I am unaware of anything that might constitute a conflict of interest, or appearance thereof, that might cause me to recuse or disqualify myself from any issue.

My background includes experiences in the White House as Deputy Chief of Staff for Policy; as policy director in a presidential campaign; as executive director, legal and government affairs, of a U.S. investment bank's European operations; as General Counsel to the U.S. Trade Representative; as International Trade Counsel to the Senate Finance Committee; in private law practice; and as an attorney at the U.S. State Department. With relevance to OMB's various roles, these jobs have given me: broad exposure to government policy-making, including budget development; experience with the workings of both the Executive and Legislative branches; familiarity with financial markets and domestic and international economic issues; and some substantial management responsibility.

2. What will be your highest priorities as OMB Director and what do you anticipate to be the greatest challenges?

My highest priority is to serve the President and faithfully work toward the implementation of his program and his priorities, which include: winning the war on terror, protecting the homeland, and strengthening our economy. The greatest challenge for the OMB Director is to ensure that the nation's resources are properly aligned with its challenges and priorities. In addition, the implementation of the President's Management Agenda, with its focus on ensuring accountability for results, represents both a high priority and an important challenge.

3. How do you plan to communicate and work with Congress to improve management in the federal government and carry out OMB's other responsibilities?

The President has already elevated the importance of government management through his Management Agenda, released in a message to Congress in August 2001. OMB currently monitors closely the status and progress on the Presidents Management Agenda. The Senate recently confirmed Clay Johnson as the Deputy Director for Management, who will take the lead in OMB and for the Administration on management issues. If confirmed as Director, I would continue to emphasize improved management of federal agencies and programs, and I am committed to working with Congress on this important issue.

4. In your responses to the Committee's Biographical and Financial Questionnaire, you stated that At least one recent [tax] return was not timely filed and some others have also involved payment of penalties and interest for underpayment during the tax year. Please explain the circumstances that led to this late filing and the need to pay penalties and interest.

For my 2000 tax return, I had obtained from IRS an extension for filing through 10/15/01. Due in part to the 9/11 attack (which also affected my New York-based accountant), I missed the 10/15 deadline by about two weeks. IRS subsequently granted an extension and waived late-filing penalties for those affected by 9/11. I have owed -- and promptly paid at the time of filing -- routine penalties and interest associated with making payments later than April 15.

1. Agencies are required to submit strategic plans. What are your main goals for the agency? How well does OMB's current strategic plan reflect what you plan to accomplish during your tenure as Director? What would you change?

I agree that strategic and performance planning are important, and, if confirmed as OMB Director, I plan to work closely with OMB policy officials and senior career staff to communicate goals and objectives, and to ensure that those goals are achieved. I plan to review OMB's current strategic and performance planning processes and goals in more detail, and will revisit as necessary. I look forward to an ongoing dialogue with the Members of the Committee on these issues.

2. How would you plan to hold yourself and OMB's senior executives accountable for implementing the goals and objectives set forth in the strategic plan and ensuring integration of the implementation of OMB's statutory management, budget, and policy responsibilities?

OMB's success will be determined in large part by our success in implementing the President's program. If confirmed as Director, I will use OMB's Senior Executive Service (SES) performance appraisal process to identify our goals and objectives and then to hold our managers accountable for achieving them. We will use this assessment to evaluate ourselves and to make decisions on SES compensation, including promotions and award determinations. The performance appraisal process will be a valuable tool to ensure OMB staff is working together in an integrated fashion to implement OMB's management, budget, and policy responsibilities.

3. How will you use OMB's strategic planning process to focus on OMB's important statutory management responsibilities and lead agencies' management improvement efforts?

If confirmed, I see my role as using the OMB strategic planning process to clearly define missions, objectives, and goals for all of its responsibilities, including its statutory management responsibilities. With respect to leading agencies' management improvement efforts, the President's Management Agenda identifies a set of government-wide initiatives that agencies are expected to carry out over the next several years.

4. Do you plan to enhance the integration of agency strategic and annual planning with OMB's budget reviews? If so, how?

Budget and Performance Integration is one of the five government-wide initiatives in the President's Management Agenda. In pursuit of that initiative, OMB developed the Program Assessment Rating Tool (PART) to measure the effectiveness of programs. My understanding is that OMB now integrates management and program performance reviews as part of the budget reviews that lead to the development of the President's budget. In order to implement the President's vision of a results-based government, I believe it is important that we continue to enhance this integration.

5. What changes, if any, do you expect to make in OMB's human capital strategic planning? In particular, how would you plan to ensure that OMB staff have sufficient training and expertise to effectively oversee financial management, performance measurement, information resources management, and procurement issues as well as to identify potential systemic problems in the agencies they examine?

OMB is a staff organization whose effectiveness is dependent on the skills and performance of its staff. If confirmed, I will work with senior policy staff at OMB to ensure that appropriate human capital strategic goals and objectives for OMB are developed and implemented.

6. As part of OMB's continuous improvement efforts, are there areas at OMB where you think that reengineering its operations or activities could enable OMB to work more efficiently? Please explain. How would you prepare OMB to meet future challenges of overseeing federal government operations in a global environment and in an integrated, knowledge-based economy?

If confirmed, I intend to review OMB's structure periodically to ensure that OMB is as effective as possible, including making sure that OMB can meet future challenges.

7. What will you do as OMB Director to assure effective leadership and management within OMB itself? Please address such areas as results-oriented management, financial management, information and technology, and human resources. What specific background and experience do you bring to this task?

Like other agencies throughout the government, OMB works to address the areas mentioned in the question by implementing the President's Management Agenda. OMB's progress and status is assessed quarterly on the Executive Branch Management Scorecard. If confirmed as Director, I will use OMB's Senior Executive Service performance appraisal process to hold our managers accountable for achieving our goals and objectives, including improving the management of OMB. My experience in this regard is discussed above, in response to questions I(3) and II(1).

OMB Access

1. Because of the critical nature of OMB's mission, the Congress has considerable interest in, and oversight responsibility for, OMB's implementation of its statutory responsibilities. Accordingly, having complete, accurate, and timely information about OMB's activities is paramount to Congress' ability to carry out its responsibilities.

Government Transformation

1. Both GAO and the National Commission on the Public Service (the Volcker Commission) have called for a comprehensive review and reassessment of the federal government's role and organization to meet the challenges of the 21st century. What are your views on the need for such a reexamination? Will you urge the Administration to undertake this review? If so, what would be the goals of such a review?

I have not yet formed a view as to whether a full scale reexamination of government organization is warranted at this time. As it oversees the management of the Executive Branch, OMB is in a prime position to recognize the areas of government that could benefit from reorganization or enhanced coordination. Where appropriate, I intend to advance proposals to reorganize the government so that it provides better, more efficient service to the American people. I look forward with great interest to reviewing GAO's and the Volcker Commission's recommendations on this subject.

2. Strategic planning is an important tool for setting goals and monitoring progress. Several national strategies, including the National Strategy for Homeland Security, require efforts from multiple agencies. What do you believe OMB's role should be, if any, in coordinating these efforts?

I believe OMB plays an appropriate role in reviewing such strategies to ensure they are coordinated and represent the Administration's policies and priorities, as well as ensuring that such strategies are oriented toward measurable results.

Governmentwide Performance-Based Management and Accountability

1. What do you see as the top three major management challenges confronting the federal government?

The President's Management Agenda identifies five major management challenges facing the Federal government: Strategic Management of Human Capital; Competitive Sourcing; Improved Financial Performance; Expanded Electronic Government; and Budget and Performance Integration. I believe these five areas are well designed to address the greatest government-wide management challenges.

2. What role can OMB play in fostering a results-oriented culture in the management of federal programs and the use of performance information in daily program decision making?

OMB continues to lead a government-wide commitment towards a more results-oriented federal government. Over the past two years, this leadership is most directly illustrated by the Budget Performance Integration initiative in the President's Management Agenda, and the ongoing work to evaluate the effectiveness of all federal programs using the Program Assessment Rating Tool (PART). The President's Management Agenda consists of broad goals, specific work plans for achieving these goals, and regular and public assessments of progress in goal achievement.

I believe both these efforts signal to agency managers, and I hope to Congress as well, how serious OMB is about its leadership role in ensuring effective and efficient use of taxpayers' dollars.

The criteria for success for the Budget Performance Integration initiative specify that performance and financial data be reviewed regularly by agency managers and officials. Having such criteria highlights the importance the Administration places on agency managers continually using performance data to ensure their programs are producing results, and intervening appropriately when progress is lagging.

3. How can OMB help improve the overall quality of agency strategic plans, annual performance plans, and performance reports?

OMB can do this in several ways. The most important will be for agencies to see OMB using these documents to inform funding decisions and management improvement efforts. I understand that agency strategic plans are a key element in the PART evaluations. The annual performance reports show how well agencies have done in achieving performance goals, and are essential for public accountability. These reports will also be critical to ongoing PART evaluations, in examining past performance and determining program effectiveness.

4. How can OMB help improve the timeliness and quality of program performance information?

The quality of performance information will improve as OMB and the agencies make greater use of the PART in evaluating programs. The PART relies on a set of selective key measures that support the PART assessments. If current measures are inadequate or don't yet exist for these assessments, the agencies must develop them. This process should lead to an overall improvement in the quality of the performance measures.

The Budget and Performance Integration initiative under the President's Management Agenda calls for agency officials to meet regularly through the year to review the ongoing performance of their agency's programs. This should lead to information for some measures being collected more frequently and more contemporaneously than in the past.

5. OMB is required under the Government Performance and Results Act to annually develop a governmentwide performance plan; this plan is expected to provide a comprehensive picture of government performance. In the past, the Governmentwide Performance Plan has been viewed as a derivative document, reflecting the budget and management decisions made throughout the process of formulating the President's budget submission. There was no governmentwide plan this year or last.

6. Do you propose any changes to enhance OMB's ability to lead and coordinate agencies' implementation of statutory management efforts (such as those under the Government Performance and Results Act (GPRA), the Chief Financial Officers (CFO) Act, and the Clinger- Cohen Act) and improve management practices generally? Describe what in your background and experience will prepare you for leading and coordinating such efforts.

As I am not yet well familiar with the internal operations of OMB, I cannot make a judgment on whether changes are needed. I am confident that, as a high-performing organization, OMB will remain committed to continuing improvements in its operations. If confirmed, I will carefully look at ways for further enhancing OMB capabilities and leadership.

7. Under GPRA, agencies are required to set quantitative measures by which performance can be assessed. This has not always proven to be an easy task. For instance, many federal programs are carried out and implemented by state and local governments. This has made some federal agencies wary of setting outcome-oriented measures for these programs, over which they do not have complete control. Another problem is that in some cases there is a lack of data, or at least standardized and verifiable data, to measure performance in a meaningful way. Other programs, such as law enforcement programs, are difficult to measure in outcome-oriented terms. Given limited agency budgets and staff, performance measurement under GPRA has often suffered. What guidance and assistance would you, as OMB Director, provide agencies to help them cope with such problems?

I believe that OMB's efforts -- both in using the PART process to identify the several key measures of program performance and in collaborating with the agencies on having their performance and budget documents include a selective suite of measures useful to managers and decision-makers alike -- are helping address the concerns you have raised.

The importance of having a good yet limited set of measures is underscored by OMB's efforts, as part of the Budget Performance Integration initiative in the President's Management Agenda, to secure commitments from the agencies to identify and include key measures of performance, and eliminate less useful or unnecessary measures.

I also understand that agencies continue to make progress in defining outcome goals for programs administered at the state and local levels. All programs should be accountable for achieving results; in some cases identifying the appropriate performance measures may be more challenging.

Budget and Performance Integration

1. To get a green light for the budget and performance integration initiative on the Executive Branch Management Scorecard, an agency must meet five criteria, including creation of an integrated performance budget that charges programs for the full cost of budgetary resources. These budgetary changes, however, raise trade- offs between the various uses of the federal budget for resource allocation, congressional oversight, and managerial flexibility and accountability.

2. The FY2004 President's Budget provides a preview of what OMB promises will be an integrated performance budget for FY2005 with informational tables that substitute outputs and outcomes for existing program activities in selected budget accounts. In other cases, the President's Budget advocates a more fundamental restructuring across accounts.

3. In October 2001, the Administration transmitted legislation to Congress to charge the employer's share of the full cost of accrued federal employee retirement benefits. It was not adopted. Subsequently, in the President's FY2003 Budget, budget authority was requested for the fully accrued cost. In the President's FY2004 Budget however, the full costs of accruing federal employee retirement benefits were included as notational entries to the program and financing schedules throughout the budget; budget authority was not requested.

My understanding is that the Administration has proposed legislation that would fully reflect the costs associated with retirement benefits and continues to support this proposal. I am advised that the Administration has not submitted legislation to charge mission accounts for other support costs.

4. OMB's goal in creating the Program Assessment Rating Tool (PART) was to establish a way to make the program assessment process more consistent, objective, credible, and transparent. Using the Tool's four point scale, how would you rate the results for FY2004 and why?

The purpose of the PART is to provide an objective rating of program performance. The tool places an emphasis on the existence of accurate performance measures and data. Because it is still early in the PART's implementation and in many cases there are not yet good measures or data, I would give the PART a "Results Not Demonstrated." OMB and agencies are now completing ratings for the second set of programs, covering an additional 20 percent of federal programs, for a total of 40% of over the two years.

However, the PART is clearly a useful tool for identifying program strengths and weaknesses and promoting the establishment of clear accountability for program performance. It holds the promise, not yet realized, of promoting results-oriented government and serves as a mechanism for measuring improvements in performance. Our success in remedying problems and improving program performance and accountability will be how we demonstrate the success of the PART effort overall.

5. According to OMB, "over half of the programs analyzed under PART received a rating of 'Results Not Demonstrated' because of the lack of outcome performance measures and poor or insufficient performance data."

6. A June 13, 2003 article on the Gov Exec website, "OMB Ratings Have Little Impact on Hill Budget Decisions," stated "Lawmakers make funding decisions based on traditional budget justification documents, and pay little attention to the Office of Management and Budget's recent evaluations of federal programs [ under PART]." Are you committed to continuing the PART reviews? What changes, if any, should be made?

Yes, I am committed to continuing the PART reviews. The President has committed to making the federal government more results-oriented; a central component of this pledge is assessing program performance and either fixing or ending ineffective programs. Early experience using the PART suggests that it can be an effective tool for achieving the President's goal.

For FY 2005, I expect the PART and the process for completing the ratings will remain largely unchanged from the prior year. While the PART has been revised somewhat, these revisions were mostly technical and aimed to make the instrument easier to use. Because the PART process is still relatively new and we are learning through implementation, I also expect that additional improvements may be necessary.

7. GPRA was created to involve both the executive and legislative branches in the performance planning process. The PART is solely an Executive Branch effort. Essentially the PART suggests the executive branch alone -- through OMB budget examiners -- has the legitimacy and power to define program purpose, relevance, and the federal role. Do you foresee any problems with OMB assuming the role of setting program priorities in the assessment process? Does OMB's actions lead to second-guessing Congress in terms of program purpose and design? If OMB determines that a program has a low performance assessment, does that suggest that the program should receive more resources to improve performance, less resources because performance is poor, or something else? How will OMB make this determination?

The primary goal of the PART is to improve program performance, a goal shared by Congress and the Administration. The PART is a tool used to identify program strengths and weaknesses and take appropriate action. The PART does not assess whether a program serves an appropriate federal role, but it can be used to identify flaws in program design. Both Congress and the Executive Branch can benefit from this examination, as they are then able to take whatever actions are necessary to improve program performance.

It is my understanding that the PART has been a useful tool to OMB in informing funding requests. Low-performing programs may be recommended for funding reductions when there are similar programs that are more effective at achieving the same goal. On the other hand, I am also informed that some low-performing programs received additional funding in the President's Budget to address their performance deficiencies.

8. The administration has devoted an entire volume of the President's FY 2004 budget to the PART evaluations. At the same time there appears to be less emphasis on the Government Performance and Results Act, even as agencies are required to continue to do their GPRA reports. Are the PART and GPRA related, and if so, how? What role will each play in assessing program performance if you are director of OMB? Do you have other approaches that you plan to employ to evaluate programs?

I believe the PART has served to strengthen and focus GPRA implementation efforts by highlighting the importance of having outcome-oriented performance goals and producing results. I am told that when completing the PART, OMB and agencies engaged in extensive, valuable discussions to ensure that all programs had strong performance measures. When existing GPRA measures have been outcome-oriented and appropriately reflect the purpose of the program, they were used in completing the PART. When new or improved measures were developed when completing the PART, they have been incorporated into agency GPRA plans. I would intend for OMB to continue to use information from GPRA plans and reports in its execution of the PART.

9. The Administration's FY 2004 Budget acknowledges that the PART tool still has "limitations and shortcomings," and that these "shortcomings" identified by the Administration are often significant. For example, the Budget notes problems with ensuring consistency and objectivity in the raters' answers to the questions; difficulties faced by agencies in designing good performance measures (and that "there are no 'right' measures for some programs"); failure to give credit for interim progress toward program goals; and the absence of criteria to assess how well a program complements other programs. What do you intend to do to correct these deficiencies?

I understand that OMB has modified some of the PART questions and has enhanced the guidance to make the PART easier to use. In addition, OMB has conducted training on using the PART and addressing performance measurement challenges. As was done in the first year, I expect that OMB will continue to perform consistency checks of completed PARTs and take corrective actions when necessary. All these actions should help strengthen the use of the PART. I expect additional improvements in the PART as we gain more experience using it.

10. The Budget's presentation of PART seems to suggest that the government's primary emphasis in evaluation should focus on program efficiency and effectiveness. Some contend that this emphasis may not reflect the goals of a number of programs that seek to increase access to resources and promote fairness in the way that funds are distributed, particularly among disadvantaged groups and vulnerable populations. Do you agree? If so, how do you propose to make sure that the PART process addresses these goals? Do you see any tension between OMB and Congress in evaluating the value of a program that may not fit easily into more quantifiable measures of efficiency or effectiveness?

A program is effective when it achieves its intended goals. If the goal of a program is to increase access to resources for disadvantaged individuals, then the PART should be used to assess how well the program achieves that goal. While developing quantitative measures is challenging in some areas, I believe that both Congress and OMB will benefit from continued efforts to demonstrate how well programs are achieving their intended results.

Budget

1. Do you advocate any changes in current budgetary laws, rules, or procedures to improve budget discipline? What provisions, if any, of the Congressional Budget and Impoundment Control Act of 1974 or the Balanced Budget and Emergency Deficit Control Act of 1985 would you advocate amending, how, and for what purpose?

The Administration supports a two-year extension of the Budget Enforcement Act (BEA) with discretionary caps equal to the President's request for FY2004 and FY2005 and the pay-as-you-go (PAYGO) requirements that are consistent with the President's priorities. Additional proposals for BEA changes include a stricter definition of emergency spending and a cap on advance appropriations at the FY2002 level.

In addition, the Administration supports four other measures that would enhance budget discipline: biennial budgeting; a joint budget resolution that is signed by the President and would have the force of law; an automatic continuing resolution to prevent a government shutdown; and a constitutional alternative to the line- item veto law that the Supreme Court struck down.

2. Enforcement provisions established by the Budget Enforcement Act (sequestration enforcing pay-as-you-go and discretionary spending caps) expired at the end of fiscal year 2002. Do you believe that these should be reinstated? If so, for how long should they be reinstated, and should they be changed in any way from their previous form? If you would reinstate statutory discretionary spending caps, at what levels would you set those caps, and for what years?

The President supports a two-year extension of the BEA with discretionary caps, with separate firewalls for highways and mass transit, for FY2004 and FY2005 equal to the budget authority and outlay levels set forth in his 2004 Budget. The President also supports a two-year extension of the pay-as-you-go requirement that is consistent with the President's priorities. Reaching agreement on a two-year extension of the BEA provides a realistic framework for revenue, discretionary, and mandatory policy that would allow the Congress and the President to plan more effectively.

In addition, to ensure effectiveness of the caps, the Administration supports limiting advance appropriations to the level set in the Congressional budget resolution and establishing criteria that would restrict use of the emergency designation (which allows for spending above the caps) to situations that are true emergencies.

3. What do you think is an appropriate rate of growth for discretionary spending over time? Commencing with his State of the Union address, the President has stated repeatedly that he believes that 4 percent is an appropriate rate for discretionary spending -- do you agree, and if so, why?

In this year's State of the Union Address, the President stated: "We must work together to fund only our most important priorities. I will send you a budget that increases discretionary spending by 4 percent next year -- about as much as the average family's income is expected to grow. And that is a good benchmark for us. Federal spending should not rise any faster than the paychecks of American families."

I agree completely that the government should grow at a rate that is sustainable in the long-term, and a good current benchmark for sustainable growth in discretionary spending is the growth in family income, which has grown recently at about 4 percent per year.

4. If Congress acts this year to reauthorize statutory discretionary spending caps for fiscal years 2004 and beyond, would you support the reauthorization of separate discretionary outlay caps for the highway and mass transit categories, and if so, for how many years? Should a new mass transit discretionary budget authority cap be created? At what level should these outlay caps (and a potential new mass transit discretionary budget authority cap) be set?

It is my understanding that the Administration's surface transportation reauthorization proposal supports separate and specific discretionary outlay caps for the highway and mass transit categories for a six-year reauthorization period.

For all remaining discretionary programs, the Administration supports a two-year extension of the overall, general purpose discretionary spending caps at the levels set forth in the President's 2004 Budget. Discretionary mass transit budget authority would be included in the general purpose spending caps.

5. In the two and a half years since the current administration took office, we've gone from record surpluses to record debt, and we've just had to raise the debt ceiling by $1 trillion. This month departing OMB Director Mitch Daniels was quoted in the Washington Post as saying that the government is fiscally "in fine shape." Do agree with that assessment?

As I understand it, the full quote that appeared in the Post was "in fine shape, given the situation the country's come through." With that important qualification, I agree with Director Daniels' assessment. When we think back to all that the country has gone through -- a stock market that began collapsing in the Spring of 2000, an economy that was entering recession as the President took office, the September 11 terrorist attacks, war in Afghanistan, war in Iraq, and fluctuating energy prices -- the fiscal outcome could have been far worse than we have experienced. The important task going forward is to return the economy to strong growth and healthy job creation, which will begin to move the government's finances back into balance.

6. The Congressional Budget Office estimates that the 2003 deficit is $246 billion before the enactment of the 2003 tax cuts. With the currently enacted tax cut, the deficit is expected to be $61 billion larger. Is the current deficit harmful to the economy? If so, please explain how. If not, please explain why you don't think so.

The deficit was caused overwhelmingly by economic factors. Nearly all economists note that it is appropriate to run a temporary deficit during times of economic slowdown or national emergency. The Administration believes that once strong economic growth is restored -- which tax cuts enacted in recent years have been well designed to accomplish -- and spending growth is restrained, a reduction in the deficit over time will follow. In evaluating deficits, it is important to consider the situation in which they occur and their relative size. Our current deficit -- as measured as a percentage of Gross Domestic Product (GDP) -- is not large by historical standards and is manageable within the overall context of our economy. In fact, long-term interest rates, mortgage rates, and student loan rates are all at record lows.

7. Current provisions in the tax law are scheduled to expire over the next 10 years. The Center on Budget and Policy Priorities and the Tax Policy Center both estimate that if we extend the provisions that are set to expire, deficits over 10 years are expected to increase by $800 billion to $1 trillion. Will the Administration seek to extend the tax cuts that are set to expire? If so, do you agree that current forecasts of the deficit over the next 10 years are too low?

The President's Budget has identified tax provisions that the Administration seeks to make permanent. Their extension is reflected in the Administration's Budget estimates.

8. Do you think the current deficit is large? How large will it have to be before you view it as being a drag on private investment and economic growth? Do you believe that the current deficit is sustainable over 10 years? What about when the baby-boomers are retiring and claiming Social Security and Medicare benefits?

There is no clear consensus about how large a deficit would have to be in order to have a negative effect on the economy. As discussed in question 6, above, the current deficit, as a percentage of GDP, is not large by historical standards and is manageable within the overall context of our economy. Moreover, today's deficit was caused overwhelmingly by economic factors. Nearly all economists note that it is appropriate to run a temporary deficit during times of economic slowdown or national emergency. The Administration believes that once strong economic growth is restored and spending growth is restrained, a reduction in the deficit over time will follow.

9. Do you have a strategy for reducing the deficit? If spending reductions are a part of the strategy, what programs would you recommend be cut or eliminated? And by how much?

The Administration's strategy for reducing the deficit is to grow the economy so revenue growth will accelerate, and to restrain growth in spending. For FY2004, the Administration has proposed a Budget that would limit the growth in discretionary spending to 4 percent, which is about as much as the average family income is expected to grow.

10. The Congressional Budget Office indicates that the 2003 tax cuts have accounted for 20% of the current deficit. Do you agree or disagree and why?

That figure is in the same range as Administration estimates.

11. Recent reports have suggested that the administration is intent on passing a tax cut every year. Is this an accurate assessment of the administration's intentions? What additional revenue cuts do you see on the agenda for the remainder of the year and next year?

The President's FY2004 Budget includes a number of tax cuts in addition to those specifically enumerated as part of the President's Jobs and Growth plan, many of which were adopted by Congress in the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003. The President has not indicated that he will seek tax cuts in addition to those specified in the Budget or those currently pending before Congress.

12. Grover Norquist recently described the current administration's tax policy as "taking deliberate steps" towards a flat tax. Do you think a flat tax is a good idea? Do you think it is fair?

The President has made no decision with regard to a flat tax or any other manner of general tax reform.

13. Recent data released by the Department of Labor show a worsening employment situation. Since the peak in February 2001, the private sector has lost 3.1 million jobs. How do you explain this rate of job loss? What could the Administration have done differently to prevent or reduce this rate of job loss?

The job loss is attributable directly to an economy that was slowing down well before this Administration took office and then a rate of economic recovery that has been too weak to generate employment gains. This Administration has proposed a series of tax packages designed to accelerate the rate of economic growth. Many economists agree that the 2001 tax relief was instrumental in ensuring that the latest recession was one of the most shallow in history. The Jobs and Growth Tax Relief Reconciliation Act of 2003 also accelerated the effective date of some of the 2001 tax cuts and included a variety of other provisions, so that economic growth could increase and more jobs could be created.

14. In your opinion, what economic outcome would indicate a successful versus a failed economic policy? Do we measure the economy by jobs created? By the unemployment rate? By growth?

An economic policy is successful if the economy performs better with the policy than without it. On this basis, the 2001 and 2002 tax cuts have been very successful, and the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 is well designed to promote economic growth and job creation.

15. If the economy does recover, do you think the tax cuts should continue? If so, why? How much revenue would be lost by making tax cuts permanent?

The tax cuts detailed in the President's FY2004 Budget should be made permanent because they are fair and well designed to strengthen the economy in the long-run as well as the short-run. According to the President's Budget, making these tax cuts permanent would reduce receipts by $498 billion over the next 10 years.

16. While the federal government is able to reduce taxes even in a time of recession and deficits, state governments are often not able to do this. Do you support aiding states in their time of crisis so that they won't have to raise taxes, cut programs, or fire employees?

The President recently signed the Jobs and Growth Tax Reconciliation Act of 2003 that contained $20 billion in state aid. This will help the states re-align their budgets. Stronger economic growth resulting from federal tax cuts will generate additional state tax receipts. The federal government can best assist states by enacting policies, like the Jobs and Growth Tax Relief Reconciliation Act of 2003, that help assure a strong economy and strong state revenue growth.

17. OMB has so-far resisted employing so-called "dynamic" scoring in the scoring of tax bills and other legislation. Your predecessor, Mitch Daniels, stated in a recent interview with the National Journal that he believes that dynamic scoring "ought to be approached in the abstract, not the concrete -- that is to say, not with reference to a specific bill because everybody's got a vested interest in that. It ought to be approached in an intellectually honest way in between controversies." Do you agree with Mr. Daniels, and do you plan to continue OMB's policy of not employing dynamic scoring in the estimates of legislation? If not, how do you plan to incorporate such information into OMB analyses?

I am unaware of any plans to alter the traditional scoring of tax or spending legislation. However, policymakers should be able to consider legislation with the best possible information available. To the extent we can develop methods of providing additional information about the actual effect a proposal will have on economic growth and therefore revenues, we should do so and let policymakers decide for themselves how to avail themselves of that information. I believe we should continue to explore how to best provide this supplemental information.

18. Are you aware of CBO's dynamic analysis of the effects of the President's latest tax cut and budget proposal, which concluded that the impact of the President's budget on economic output could be negative or positive and that, either way, the net effect on long- term growth through changes to the supply side of the economy would probably be small? What is your opinion of CBO's analysis?

I am aware of CBO's analysis, but have not yet had an opportunity to review it.

19. The President's budget proposed to change fundamentally the calculation of the baseline under the Budget Enforcement Act by not extending discretionary funding for emergencies in subsequent years. The budget justified the decision on the basis that emergencies are not ongoing, annual events. Isn't it true, however, that while the government might not know exactly the extent and nature of emergencies that will occur in a given year, that it does know that emergencies have occurred on a consistent basis over time? Thus, wouldn't excluding such funding actually produce a less realistic baseline of future discretionary spending? Wouldn't this proposal also create a lack of symmetry in the baseline rules, which make no allowance for adding in new items or increasing funding for existing items above the baseline rate of inflation -- even if it is clear that additional resources will be needed in subsequent years (e.g., the ramp-up in funding for the decennial census or new funding initiatives recently enacted in the areas of homeland security and election reform)? Are you concerned that this proposal might introduce a bias in producing a baseline level for discretionary programs?

Under current rules, emergency spending increases the discretionary baseline in the budget year -- and subsequent years -- from expenditures that do not continue because the need has been addressed and passed. The best example of this would be funding for rebuilding the Pentagon and lower-Manhattan after the September 11 attacks. This proposal attempts to correct that problem.

The Administration supports fully funding "predictable" levels of emergency spending in base accounts for the 5-or 10-year average for typical emergency expenditures. Programs that respond to such emergencies include, for example, the Disaster Relief account in the Department of Homeland Security, and Wildland Firefighting in the Departments of Agriculture and the Interior.

20. The President's budget also proposed to create a standard definition of emergency designations that meets all of the following elements: a necessary expenditure, sudden, urgent, unforeseen, and temporary. However, the budget provides little explanation about and no examples of what would (or would not) meet each of these tests. In your opinion, which emergencies declared under the BEA would meet the five elements mentioned above and which ones would not?

Clearly, the tragic events of September 11, 2001 would meet these criteria, as would events such as Hurricane Andrew and the Midwest Floods of the mid-1990's.

The emergency designation, however, can be used to circumvent the discretionary caps. One example is the declaration of the decennial census in 2000 as an emergency, an event that is required in the Constitution and has occurred every 10 years for the past 200 years.

The President intends to ensure strict criteria are met before an item is declared as an emergency under a new BEA. The purpose behind the emergency designation is both to provide a constraint and a safety-valve -- to enforce the limitations of the BEA, while not preventing the enactment of funding to address truly dire emergency situations.

Budget Process Reform

Biennial Budgeting

1. The President's budget proposes a biennial budget with funding decisions made in odd-numbered years and with even-numbered years devoted to authorizing legislation. One of the major benefits attributed to biennial budgeting is that, by providing funding for a longer period of time, it will enhance agencies' abilities to manage their operations. How would this be achieved?

2. If biennial budgeting became law, how would you see integrating such a shift with GPRA? What changes would be required to the basic GPRA framework?

I have not formed a view on the specific changes that should be made to GPRA if a biennial budget were enacted into law. My understanding is that OMB has shared suggested changes with the Committee. If confirmed, I would be happy to discuss this issue in more detail with the Committee.

3. Congress routinely has provided multiple-year or no-year appropriations for accounts when it seemed to make sense to do so. Especially in some programs, such as defense procurement and education programs, multi-year appropriations tend to smooth program functioning. While a shift of the entire budget cycle to biennial might ease planning and increase predictability for all program managers, multi-year or advance funding can be provided for those programs for which 1-year money seriously impairs program effectiveness without that shift.

Almost any program would benefit from greater certainty of funding. However, the programs that would benefit the most are those that require long lead times, such as procurement, or those that are carried out over longer periods of time, such as research and development. The recipients of grant programs would also benefit from the greater certainty that funds would be available.

4. One of the major benefits attributed to biennial budgeting is that, by providing funding for a longer period of time, it will enhance agencies' abilities to manage their operations. Do you agree? How would you expect to achieve this goal? Would agency time and energy be shifted to improved financial management or better program evaluation? How would OMB ensure that this happens? What federal programs do you believe would benefit from biennial budgeting?

The President strongly supports converting the federal government to biennial budgeting. Annual budgeting is an inefficient process. Freeing up time and ensuring funding over a longer period should allow agencies to devote more time to program evaluation and all aspects of management, including financial management. It would also give OMB and Congress more time to concentrate on programmatic issues and management initiatives in greater detail and to engage in additional oversight. As mentioned in the previous question, almost any program would benefit from greater certainty of funding. However, the programs that would benefit the most are those that require long lead times, such as procurement, or those that are carried out over longer periods of time, such as research and development. The recipients of grant programs would also benefit from the greater certainty that funds would be available.

5. How would biennial budgeting be integrated into the Government Performance and Results Act requirements for annual plans and reports on performance?

As mentioned in question 2, I have not formed a view on the specific changes that should be made to GPRA if a biennial budget were enacted into law. My understanding is that OMB has shared suggested changes with the Committee. If confirmed, I would be happy to discuss this issue in more detail with the Committee.

Automatic Continuing Resolution

6. President Bush has expressed support for legislation to prevent government shutdowns through automatic continuing resolutions. Do you share this position, and if so, why?

The President supports permanent law that would provide funding for programs at a level that is the lower of either the amount proposed in the President's Budget for the applicable fiscal year or the amount enacted by Congress for the previous fiscal year whenever an appropriations bill has not been signed by the beginning of the fiscal year. Every fiscal year during this Administration, the Congress and the Administration have spent considerable time and effort passing short-term stop-gap continuing resolutions to avoid government shutdowns. I share the President's view that a measure of this kind is needed to ensure that the continued operation of government programs is not unnecessarily threatened.

7. Isn't it possible that if legislation were enacted providing for an automatic continuing resolution, certain pressing needs that have increased because of changed economic circumstances would go underfunded? For example, if the market price for the food products made available to pregnant women and mothers of infants and small children under the Women, Infants and Children (WIC) program were to rise in a given year, wouldn't an automatic continuing resolution automatically set a rate below that year's needs?

The automatic continuing resolution is intended to be a stop-gap funding measure that would provide funds for the government to continue to operate programs, such as the Women, Infants and Children (WIC) program, that would otherwise have to shut down entirely if regular appropriations had not been enacted.

Budgeting and Planning for Federal Capital

8. Congress, GAO, and the President's Commission to Study Capital Budgeting have identified the need to improve the planning, budgeting and acquisition of capital assets. OMB has provided additional guidance in this area to the federal agencies and GAO has developed an executive guide on best practices used by leading private and state and local government entities in making decisions about capital investments. What do you think are the main impediments to improving the performance of agencies' capital decision-making practices and how do you think these impediments could be alleviated?

The President's Commission to Study Capital Budgeting found that insufficient attention is paid to the long-run consequences of budget decisions. Capital spending in particular is inefficiently allocated among projects. The annual focus of the budget process and annual appropriations for capital projects are among the main impediments to effective budgeting for capital. Moreover, the current process shortchanges the maintenance of existing assets. The Commission made a number of recommendations to strengthen budgeting for capital, including: better use of strategic plans; ongoing review of benefit- cost assessments; full funding for capital projects; adhering to the scoring of leases; and improving incentives for asset management. It is my understanding that OMB is making progress on budgeting for capital, particularly for investments in information systems.

Financial Management

1. The government faces significant challenges in achieving accountability and generating reliable financial and management information on a timely basis for decision making due to pervasive, longstanding financial management problems. Describe your views on the importance of financial management improvement, in general-, and OMB's role in addressing these challenges.

Improving financial management is crucial to the performance of the federal government. Accurate and timely financial information will help agencies determine whether programs are achieving their goals as efficiently and effectively as possible, as well as whether such programs are at risk of loss from waste, fraud, and abuse. Through implementation of the Improved Financial Performance initiative of the President's Management Agenda, OMB can work with agencies to improve dramatically the quality and timeliness of agency financial information.

2. The majority of federal agencies' financial management systems do not meet statutory requirements, such as having the capability to produce information on the costs of programs and projects, and integrating program, budget and financial information for evaluating agency results. These systems cannot provide reliable financial information for managing day-to-day government operations and holding managers accountable. What will you do to help agencies implement effective financial management systems to meet these statutory requirements to improve the quality of data for decision making and improve accountability?

Through the Improved Financial Performance initiative of the President's Management Agenda, OMB has a system in place to monitor the compliance of agency financial systems with statutory and other requirements. OMB will also monitor the implementation of financial systems governmentwide to ensure that they accomplish the goal of producing reliable financial information on demand.

3. Over the past 2 years, the principals of the Joint Financial Management Improvement Program (JFMIP) -- the Director of OMB, the Secretary of the Treasury, the Director of OPM, and the Comptroller General -- have personally worked together and met on a regular basis to provide the leadership necessary to address pressing governmentwide financial management issues. The chairmanship of the group rotates among the Principals every two years and is currently held by OMB. Do you plan to continue OMB's active involvement and the regular, personal involvement of the JFMIP Principals in achieving federal financial management reform?

Yes.

4. Specific financial management and control issues often arise that call for close governmentwide attention and oversight. The President's Management Agenda highlights for particular attention erroneous payments that, according to OMB, total more than $35 billion annually. Other governmentwide financial management and control issues have been identified in the GAO report on the U.S. government's consolidated financial statements, involving billions of dollars. What do you see as OMB's role in identifying and solving governmentwide financial management issues?

As with the erroneous payment initiative, OMB can provide central guidance on how to address these issues and ensure accountability for solutions.

5. The Improper Payments Information Act of 2002 requires agencies to reduce their improper payments. What steps will OMB take under your direction to implement the requirements of that Act?

It is my understanding that OMB recently provided agencies with guidance on what steps they needed to take to implement the Improper Payments Information Act of 2002, which requires agencies to assess the risk of erroneous payments in the programs they administer, determine the cause of them, and take necessary steps to prevent them. Reducing erroneous payments is an important component of the President's Management Agenda and, if confirmed I will work with OMB's Controller and agency CFOs to achieve our goal of improving the integrity of the government's payments.

6. Agencies are required to prepare annual Performance and Accountability Reports that are intended to provide meaningful information on the results on agency operations and demonstrate accountability to the Congress and taxpayers. Additionally, the Financial Report of the U.S. Government is prepared for the government as a whole on a consolidated basis. Although progress has been made in recent years, much remains to be done to improve the usefulness and reliability of these reports. How can OMB help agencies improve the quality of agency Performance and Accountability Reports and the U.S. Government's Financial Report?

OMB is requiring agencies to provide more regular and more timely financial reports. This should improve the quality and usefulness of annual financial statements, as well as the governmentwide report.

7. With regard to financial management, the President's Management Agenda identifies Improved Financial Performance as one of five governmentwide goals and indicates that OMB will work with agencies to improve financial information timeliness, reliability, and usefulness. To date, the majority of agencies have not achieved a successful rating of green in financial management on the Executive Management Scorecard and many are scored as red reflecting the tremendous challenges faced in this area. What are your plans for helping agencies achieve success in financial management through this initiative?

The President's Management Agenda and the Executive Branch Management Scorecard are excellent vehicles for setting clear goals and monitoring the progress of the government's financial management. If confirmed, I will promote the continued sharing of best practices among agencies in this area.

8. Many agencies use inefficient, time-consuming, and costly procedures to prepare financial statements. Beginning in FY 2004, agencies will be required to submit their audited financial statements by November 15 of each year as part of their performance and accountability reports.

Human Capital Management

1. The recent agency scores as part of the President's Management Agenda, along with GAO's high risk designation, demonstrate that much more still needs to be done to address the federal government's human capital crisis. What specific steps do you think agencies need to take to achieve necessary improvements in their management of human capital?

Agencies have taken important steps to improve their management of human capital. Nonetheless, I agree that much remains to be done. Agencies must do the hard work of implementing their human capital plans, by focusing more on service to citizens, ensuring that staff have the right skills to get the job done, and holding employees accountable for results. The President's Human Capital Performance Fund would provide resources to agencies to reward superior performance by federal employees and to recruit the best possible individuals to government service.

2. Many of the human capital issues that agencies face will require at least short-term targeted investments of resources, e.g., for enhanced recruitment and retention efforts, training and other workforce shaping efforts. How would you work with agencies to develop the business case for additional resources and would you be an advocate for such investments within the Administration?

The President's Management Agenda identifies Strategic Management of Human Capital as one of the governmentwide initiatives. If confirmed, I would continue to work with agencies to advance this initiative, as well as complementary initiatives. The Administration has proposed a $500 million Human Capital Performance Fund in order to reward employee performance. The Administration also has efforts underway to better manage our investments in information technology, to recruit top quality candidates to government service, and to provide the training that employees need. I understand that agencies are also now beginning to take advantage of governmentwide flexibilities in the Homeland Security Act -- such as enhanced early- out and buy-out authorities, and new streamlined hiring authorities - - to restructure their workforces, to help them achieve results for our citizens.

3. What is your view on the respective roles and responsibilities of OPM and OMB in federal human capital management?

OPM serves as the President's chief advisor on issues related to the federal civil service. Furthermore, under the President's Management Agenda, OPM has the lead role in assuring progress in the Strategic Management of Human Capital Initiative. OMB works closely with OPM to ensure that the Human Capital Initiative is implemented in concert with, and in support of, the President's other management and policy initiatives. OMB also assesses the budgetary implications of the government's personnel policies and practices.

4. The President has proposed moving to a greater focus on pay- for-performance. What is your view of the argument that compensation should be based more on performance, rather than length of service? What is your view of the concern that, without adequate safeguards, expanded authority to base pay on performance can enable greater favoritism, discrimination, and politicization in personnel decisions? What steps, if any, do you think should be undertaken in the area of pay-for-performance?

In my view, pay and performance are insufficiently connected in the federal civil service system. Rewarding high-performing employees and those with critical skills is preferable to the current method of evenly spreading pay raises across the federal workforce regardless of performance or contribution. For this reason, I strongly support the Administration's proposal to create the Human Capital Performance Fund for 2004 to allow managers to provide additional pay beyond annual raises for high-performing and most valuable employees.

I believe that the Office of Personnel Management takes seriously its responsibility to ensure that all the federal agencies uphold and operate their personnel systems and decisions, based on merit system principles. Moreover, all employees have a right to appeal prohibited personnel practices. With these safeguards, I believe that the authority to base pay on performance would not result in greater favoritism, discrimination, or politicization.

If confirmed, I will promote OMB's close working relationship with the Office of Personnel Management to help agencies develop a performance management system that effectively differentiates between high and low performance and links employee performance to organizational goals and desired results. In addition, the Administration will work together with you and other member of Congress to enact the Human Capital Performance Fund and the Administration's Senior Executive Service pay reform proposals.

5. What role should federal employees and their unions play in the design and implementation of federal human capital policies and practices? What steps would you take in this regard?

Federal employees, and their unions and professional organizations, should have significant input in the shaping and implementation of federal human capital policies and practices. Their involvement is essential to the success of the Administration's Human Capital Initiative. The process currently underway in the Department of Homeland Security to develop a contemporary personnel system founded on merit and accountability is a model for the involvement of federal employees and their unions and professional organizations.

6. What role do you believe that agencies' individual performance management (appraisal) systems should play in addressing programs that OMB determines are either ineffective or whose effectiveness is not known? In addition, what role should such performance management systems play in efforts to achieve necessary improvements in agency management?

The Administration will continue to make substantive efforts to foster performance-and results-oriented government. The PART emphasizes the importance of having sound programmatic performance measures and being accountable for achieving results, and the Presidents Management Agenda sets out broad goals for the management improvement of the government. My understanding is that as a part of the Human Capital Initiative, agencies are also expected to link individual employee performance appraisal plans to agency mission, goals, and outcomes, effectively differentiate between various levels of performance, and provide consequences based on performance. I believe this multi-pronged approach will result in a better performing government that deliver results the American public demands.

7. It is often argued that one function of statutory civil service protections, such as statutory assurances of job and pay, is to enable career civil servants to serve as a bulwark against improper politicization and abuse of the organs of government.

The Federal government has an array of important mechanisms to uphold the merit system principles, detect and prevent prohibited personnel practices, and protect whistleblowers. If confirmed as Director, I will work with agencies to ensure that strong and effective protections are maintained as we improve human capital management.

Acquisition Planning and Contract Management

1. The federal government spends over $200 billion a year acquiring goods and services. What views do you have on any changes that are necessary to make the contracting process easier and more productive? To what degree would you anticipate examining commercial best practices in procurement, acquisition and contract management and adopting them for government use?

The government's contracting processes must be effective and responsive so that agencies may successfully meet increasingly complex demands. Agencies need to evaluate continually their practices and make changes when they are not meeting these objectives.

Agencies should consider contracting practices with proven success in the commercial marketplace. In doing so, however, agencies must take into account that some commercial practices will lack the degree of transparency that the public rightfully expects of federal agencies as stewards of their resources.

2. The Administration anticipates realizing cost savings and improvements in the performance of commercial-type functions by competing these functions between public and private sources. Should public-private competitions be the primary tool agencies use to determine which sector should perform commercial functions? Given the inherent differences between the public and private sectors, what can be done to ensure that these competitions are fair to both sectors? In your view, how should the government decide which services should be provided by government employees and which would be appropriate to be provided by contractors?

Public-private competitions should be used more routinely to determine if an agency should perform a commercial activity or use a private sector contractor to deliver the service. However, public- private competition is not the only tool available to manage commercial activities. Agencies should always be encouraged to seek and utilize innovative alternatives.

A level playing field can be achieved with processes that promote transparency and integrity and by taking into account special considerations that arise from differences between the public and private sectors. My understanding is that OMB's new Circular A-76 addresses these issues. If confirmed, I will work to ensure that both sectors are treated fairly as envisioned by the new circular A-76.

Public-private competition is an effective and appropriate tool for determining if an agency should continue to perform a commercial activity or use a private sector contractor to deliver the service. Agencies have developed individualized competition plans, in consultation with OMB, to identify the most suitable opportunities for the application of competition based on the agency's mission and workforce mix.

Workforce Planning

3. With a significant portion of the acquisition workforce eligible to retire in the next few years, the federal government must begin initiatives to recruit, develop, and retain its future acquisition workforce. After a decade of consecutive years of downsizing, we face serious imbalances in the skills and experience of our acquisition workforce. How would you respond to this challenge?

Agencies must provide their acquisition workforces with the skills necessary to make strategic and cost-effective decisions. I would expect these considerations to be taken into account as agencies address their overall and acquisition workforce needs as part of the Strategic Management of Human Capital Initiative. If confirmed, I will ask the Deputy Director for Management and the Administrator for Federal Procurement Policy to give appropriate priority to assessing and promoting agency progress in this area.

New Contracting Techniques

4. Recent years have seen an explosion of governmentwide and interagency contract vehicles. Some have praised these as simpler and more responsive vehicles for meeting agency needs while others have raised concerns that agencies are using these vehicles to short-cut competition requirements and are wasting taxpayer dollars. How would you ensure that these contracts are used to best leverage the government's buying power while satisfying contractual requirements?

Interagency contracting, like any other form of contracting, will achieve effective results for the taxpayer when it is the product of sound planning and market research, effective use of competition, and solid contract administration. If confirmed, I will look to the Administrator for Federal Procurement Policy to ensure that agencies are using this contracting tool properly and responsibly.

Buying Services

5. Over the past decade the federal government has significantly increased its acquisition of services. Annually, the government acquires nearly $130 billion of services, more than twice the amount spent on products. However, the GAO and others continue to find instances in which the government is not obtaining fair and reasonable prices, is avoiding competition, and is not otherwise ensuring that the government obtains best value.

Competitive Sourcing

1. Competitive sourcing is a major initiative under the President's Management Agenda and OMB has set ambitious goals for the program. OMB's short-term goal is for agencies to compete 15 percent of the positions identified in their fiscal year 2000 Federal Activities Inventory Reform Act inventory with the eventual goal of studying at least 50 percent of those positions. In general, reengineering efforts by the agencies are not considered to count towards OMB's competitive sourcing goals.

2. DOD has been encouraging its components to distinguish between core and noncore functions and to consider alternatives to A-76 studies in making sourcing decisions for non-core functions. Such alternatives could range from public-private partnering, employee stock ownership, quasi-governmental organizations, or in-house reengineering.

3. In the FY'03 Omnibus Appropriations Bill, the conferees included this report language:

4. What alternatives to privatization exist to make the delivery of services more efficient and what are the costs of those alternatives in relation to the cost of conducting a competition and perhaps privatizing the work.

As a general matter, public-private competition should be the most cost effective means of ensuring the efficient delivery of services. Where innovative alternatives can offer better results for the taxpayer, we should consider them.

5. OMB officials have indicated that there will be no government- wide quota established for FY04. Is this still true?

Yes. My understanding is that agencies are not required to meet a government-wide competitive sourcing quota. Competitive sourcing strategies should be tailored to the specific needs of individual agencies.

6. The OMB has made clear that the President's goal of having at least 50% of agencies' commercial workforces reviewed for privatization is still in place. How will this requirement be enforced in the next fiscal year? If OMB intends to pursue a more agency-specific approach, will OMB share with the Committee the quotas it imposes on agencies?

I believe the use of broad goals, such as the President's goal of subjecting half of commercial functions to competition, is a reasonable means for securing management commitment. However, I would expect the agency-specific plans to be tailored to the unique circumstances of the agency and, if confirmed, I will continue to use the management scorecard for accountability. I will also work with the Committee to ensure that implementation of agency competition plans is transparent and fair.

7. Although the OMB official responsible for the rewrite of OMB Circular A-76 has said that she has removed the obstacles that prevented federal employees from competing for new work and contractor work, the "competitive sourcing" quotas still apply almost exclusively to work performed by federal employees. Given that contractors have acquired almost all of their work without public- private competition, and in many cases, according to GAO and the Department of Defense Inspector General, without private-private competition, and given that new work has never been competed before, why has OMB not established goals, targets, or quotas for allowing federal employees to compete for new work and contractor work, if the intention of the Administration's competitive sourcing initiative is to save money for the taxpayers?

It is my understanding that the competitive sourcing initiative has emphasized government-performed commercial activities because these activities have been insulated from the forces of competition to a much greater degree than work awarded to private sector contractors. However, this focus should not obscure the importance of promoting competition in other areas. If confirmed, I will ask the Administrator for Federal Procurement Policy to pursue appropriate steps to improve the use of competition where it is not being used as consistently as it should be.

8. OMB Circular A-76 requires inventories for all commercial and inherently governmental functions.

9. What is the rationale for setting quotas for agencies to consider privatizing employee positions (as opposed to a less arbitrary goal)?

Goals can help to bring clear focus to management activities. I do not support the use of arbitrary quotas.

10. What steps will you take to reach out to federal employees and ensure that they are treated fairly under the A-76 process? How will you ensure that the new, subjective factor of "best value" is not abused in the awarding of contracts under the A-76 process?

My understanding of OMB's approach is that the new OMB Circular A-76 levels the playing field for federal employees and has appropriate limitations on the use of best value.

11. OMB has repeatedly said that federal employees have nothing to fear from the rewrite of A-76 because they win more than one-half of all competitions. Given that that percentage could very well change under the revised process, will OMB provide timely information to the Committee on how federal employees are faring under the new A-76, particularly with respect to the streamlined and best value competitions, which many have argued place federal employees at a competitive disadvantage?

Yes.

Information and Technology Management

1. In general, OMB is responsible for providing direction on governmentwide information resources and technology management and for overseeing agency activities in these areas, including analyzing major agency information technology investments.

2. Regarding information technology policy, what is the relationship between the Office of Information and Regulatory Affairs (OIRA) and the Office of E-Government and Information Technology? How will they effectively coordinate their efforts to encourage agencies to use information technology to accomplish their mission? What is the unique contribution each makes to OMB's mission?

It is my understanding that OIRA and the Office of E-Government coordinate their activities closely and I expect that to continue. Issues related to electronic government and information technology management will be the responsibility of the newly authorized Office of E-Government and Information Technology. Issues related to information collection policy and information quality will be the responsibility of OIRA. Each office brings a different and valuable perspective, and I intend to ensure that both offices continue to make their unique contributions.

3. How do you, the OIRA Administrator, and the E-Government Administrator expect to work with the federal Chief Information Officers (CIO) Council? What do you see as the primary role of the agency Chief Information Officers created by the Clinger-Cohen Act?

I expect that the Administrator for E-Government, under the leadership of the Deputy Director for Management, will continue his active work with the CIO Council to maintain their current role. The CIO Council, which is made up of agency CIOs, should remain a powerful tool in the development of information technology policy advice, and also for the implementation of government-wide initiatives.

4. How will the recent agreement between OMB and the Government Printing Office (GPO) -- which allows executive branch agencies to choose their own printers -- affect printing and dissemination in the federal government? Also, what are your views on the role of GPO in the emerging age of digital information dissemination?

Although I did not participate in this agreement, my understanding is that the agreement is designed to get the best value for taxpayers in federal printing, while preserving and expanding on GPO's responsibility to provide the public access to government information. GPO can play an increasingly important role in ensuring retention and access to important government information that is made available electronically.

5. The Clinger-Cohen Act authorizes OMB to enforce accountability for agency IRM and information technology investment decisions through the use of the budgetary process (40 U.S.C. 1413(b)(5)). Initial guidance from then-OMB Director Franklin Raines provided criteria for OMB's evaluation of major information systems (OMB Memorandum M-97-02, Oct. 25, 1996). What are your views on the use of the budget process to improve information technology management? What other incentives does OMB have at its disposal to encourage good management practices? As Director, how do you intend to enhance coordination between the Statutory Offices and the Resource Management Offices in order to improve the adoption of OMB policies and guidance across government?

The budget process is a powerful tool to use in motivating agencies to improve the management of information technology and other elements of the President's Management Agenda. If confirmed, I will work with agencies through the budget process and other venues, including the statutory authorities that Congress gave the Director of OMB in the Clinger-Cohen Act to strengthen agency IT management practices. Coordination across OMB will be enhanced by our ongoing work on the President's Management Agenda and the scorecard.

6. As noted in the Analytical Perspectives in the FY2004 budget submission, the current federal information technology workforce is not able to respond to recent increases in agency workload and the rapidly changing information technology environment.

If confirmed, I will work with the Director of OPM and the CIO Council as they pursue and continue to introduce innovative human capital marketing and development to the Federal government.

7. Has the President designated Clay Johnson the Federal Chief Information Officer? If so, what is the significance of that designation?

The President appointed Clay Johnson as Deputy Director for Management. In that role, he will ensure that information technology and electronic government issues are fully integrated with the other elements of the President's Management Agenda. Because the E- government Act assigned many responsibilities involving IT and e- government issues to the E-government Administrator, it is not necessary to make such a designation.

Information Security and Privacy Issues

8. OMB recently issued its fiscal year 2002 report to the Congress on government information security, noting that agencies had made significant progress, but that much work remains. In particular, OMB reported that the fiscal year 2004 budget contains over 500 systems, representing an investment of nearly $18 billion that are at risk either solely or in part due to weaknesses in information technology security. What are your views on the current status of federal information security? How would you ensure that agencies correct their information security weaknesses?

The FY 2002 report points to real progress from FY01 to FY02 in the use of quantitative performance measures of agency information security practices. Those measures reveal that compliance with security requirements is too low. To ensure that agencies continue to make progress in securing their information and systems, if confirmed, I plan to hold agencies accountable for their security performance through both management and budget processes.

9. OMB is required by law to oversee agency compliance with statutory information security requirements, to review agency information security programs at least annually, and to approve or disapprove these programs. How will you ensure that these functions are adequately supported in OMB?

The Administration has made IT security a top priority. The key to effective OMB oversight of agency IT security is through the joint efforts of management and budget staff in reviewing and assessing performance. I understand that OMB assesses agency compliance in this area through the execution of the Executive Branch Management Scorecard, as well as in the ongoing budget process.

10. How do you intend to use the results of agency computer security reviews and evaluations, now required by law, to improve OMB's oversight of federal information security?

If confirmed, I will work with agencies to ensure they understand their responsibilities in this area. As agencies conduct their annual evaluations and identify IT security weaknesses, OMB policy requires them to develop and implement corrective action plans for every system with a security weakness. These plans must be tied directly to the budget requirements for the corresponding system to ensure that IT security performance is linked with the costs to achieve that performance. OMB also uses these evaluations to assess agency progress on the E-Gov Initiative of the President's Management Agenda.

11. Do you think that OMB needs to designate a specific information security oversight position to help focus and manage the federal government's overall information security activities?

My initial view is that IT security should not be viewed as a stand-alone issue but rather a critical component of the Federal government's IT management. Therefore, IT security should be part of all of the government's IT policy and guidance.

12. How important do you consider information security to be in undertaking the President's e-government initiatives?

IT security is a critical component of all of the President's E- government initiatives.

13. National events have reinforced the importance of information, information technology, and critical infrastructure to national security, the economy, and public health and safety. How do you see OMB working on governmentwide issues such as homeland security, criminal justice information sharing, and cyber security to ensure that the critical information and technology resources are reliable, secured, and made available to all legitimate parties?

For the Federal government's homeland security, information sharing, and IT security goals to be realized in an effective, efficient, and secure manner, agencies must coordinate and leverage their resources where appropriate. OMB both promotes, and in many cases, requires this type of interagency collaboration through the submission of joint IT business cases. Additionally, in the case of IT security, OMB will continue to advance the Federal government's effort to improve IT security and maximize resources to address common government-wide IT security weaknesses.

14. How do you plan to link information security and critical infrastructure protection needs to the budget process?

I am advised that both IT security and critical infrastructure protection requirements are directly incorporated into the budget process. OMB requires agencies to integrate and justify their IT security and critical infrastructure protection requirements into their IT budget requests.

15. Federal agencies' use of data mining techniques may raise privacy concerns. What would you do to ensure that OMB adequately monitors these agency activities so that the public's right to privacy is protected?

The Administration is strongly committed to protecting the privacy of citizens. If confirmed, I will make certain OMB retains its strong role in ensuring that the need for data analysis by agencies does not infringe the privacy rights to which Americans are entitled.

16. Do you believe that government in its actions should continually strive to preserve individuals' privacy rights? What are your thoughts regarding the balancing of individuals' privacy interests against the use of personal information by federal agencies entrusted with homeland security missions?

I believe that government should strive in all its activities to preserve individuals' privacy rights. This goal need not be inconsistent with agencies' use of personal information for appropriate homeland security purposes. The goal of information privacy is to ensure that information is restricted to appropriate and authorized uses. While Congress has enacted laws authorizing access to and use of information for certain homeland security activities, the legal, regulatory and policy framework for protecting the privacy and integrity of personal information in government hands remains intact.

17. What measures should OMB take to ensure the quality of the data (including accuracy, completeness and timeliness) relied on by federal agencies, including law enforcement agencies?

It is my understanding that OMB issued guidelines to agencies for "ensuring and maximizing the quality, objectivity, utility, integrity of information (including statistical information) disseminated to the public." All agencies subject to the Paperwork Reduction Act have complied with this requirement.

I believe that law enforcement agencies are subject to OMB's information quality guidelines and are required to ensure that their information is of high quality.

18. In the previous Administration, OMB had a high-level Chief Counselor for Privacy solely focused on privacy issues. Do you think OMB should have a Privacy Counselor charged with coordinating Administration policy on the use of personal information in the public and private sectors?

My understanding is that OMB currently pays significant attention to privacy issues under both OIRA and the Office of E- government and IT. I do not yet have a view on whether this should be supplemented by changes to OMB staffing.

19. Who is the highest level federal official, at OMB or elsewhere, focused solely on government-wide privacy policies? How many federal employees, at OMB or elsewhere, are solely devoted to working on government-wide privacy issues?

I am advised that the Director of OMB has specific authorities for government privacy issues under the Privacy Act, and is supported by the Administrator for E-government and IT (under the E- government Act) and the Administrator of OIRA (under the Paperwork Reduction Act). Agencies are appointing senior level privacy officers, such as the new Chief Privacy Officer for the Department of Homeland Security. In terms of implementing government-wide privacy policies, I understand that each federal agency employs several individuals largely dedicated to privacy issues, e.g., the Chief Information Officer, the Privacy Act Officer and a senior official for privacy policy designated by the head of the agency.

20. The E-Government Act of 2002 requires agencies to conduct privacy impact assessments (PIA's) whenever they develop or buy new information technology systems and whenever they initiate new collections of personal information. How would you ensure that agencies comply with this mandate?

I am advised that OMB staff in the Office of Information and Regulatory Affairs will be checking for the PIA when agencies submit Information Collection Requests (ICRs) under the Paperwork Reduction Act and when they submit business cases to support IT funding requests in their budget submissions.

21. What is the OMB's current timetable for developing guidance for agencies to implement the E-Government Act's PIA mandate?

I am advised that OMB staff have been working on the guidance in consultation with privacy experts from other federal agencies for several months and are close to a final product. They expect shortly to finalize the document, making it possible to disseminate the product in final form by mid-summer, for use in the FY05 budget process.

E-government

22. In the President's Management Agenda for fiscal year 2002, the Administration emphasized the need to expand electronic government. In response to this emphasis, OMB developed its Quicksilver initiative, which created multi-agency teams to develop and deploy 23 major e-government initiatives.

Firstgov is one way to meet the demands of the public by delivering information and services in a citizen-centered manner, a fundamental goal of the President's Management Agenda. We should strive to meet the operating goal of FirstGov, which is to make key information and services available to citizens within three clicks of the mouse. I support the continued growth of FirstGov as one of the key interfaces between the government and its citizens.

24. What do you see as OMB's role in ensuring the successful governmentwide implementation of the Government Paperwork Elimination Act (GPEA) and the E-Government Act of 2002?

Where agencies are required to collect information, we should continue to work with them to expand the extent to which that information is collected electronically. It is my understanding that OMB reviews agency information collection procedures regularly and assesses agency compliance with GPEA through the Executive Branch Management Scorecard. If confirmed, I will encourage continued efforts to meet the requirements of the act, which will continue beyond the October 2003 statutory deadline for agencies to provide electronic options for their information-based transactions. However, I believe that information collection is not less of a burden just because it is automated. Agencies should rethink the processes they use to collect information and whether they can rely on other sources for the same information.

25. In its April 2002 e-government strategy, OMB identified the need to focus on migrating agency-unique information technology systems to cross-agency systems. How will OMB determine whether agencies are making a good-faith effort to identify duplication and plan for migration to cross-agency systems? How can OMB ensure that agencies are actively collaborating on the implementation of electronic government? How does OMB plan to use the E-Gov fund, authorized by the E-Gov Act of 2002, to provide incentives for agencies to make E-Gov innovations? Does the fund provide enough funds to have a significant impact on e-government progress?

My understanding is that OMB is in the process of exploring potential opportunities to unify and simplify government processes and supporting technology. Working with agencies, OMB is getting a unique, agency view of business functions, data, applications and technology, the first step in unifying and simplifying government processes and supporting technology.

I am advised that OMB plans to use the E-Gov Fund for consolidations and innovative interagency e-government projects that improve service to the citizen and reduce operating costs. OMB plans to work with the Congress and agencies to ensure appropriate funding.

26. The Council for Excellence in Government recently reported that while citizens say e-government makes their lives easier, they are concerned about data security and privacy. What role do you see OMB playing in ensuring that these concerns over data security and privacy are addressed as more e-government services are offered to the public?

OMB's role in ensuring security of e-government services is the same as with all other Federal IT investments. I expect OMB to continue to assess IT security and privacy planning and implementation through management and budget processes to determine if our continued investment in IT is adequately supported by appropriate planning for security and privacy protection.

27. Do you intend to make e-government initiatives a high priority?

Yes.

28. What is your view on the potential for e-government to improve the participation in and efficiency of government processes?

E-Government can leverage technology, and the people and processes that implement technology, to improve government performance and serve citizens better.

29. Given the broad overview role that OMB plays across Federal agencies and the leadership responsibilities provided by the E- Government Act, what role do you see OMB playing in identifying the most useful next steps that should be taken to make government more accessible?

OMB has taken a lead role in encouraging agencies to make government information and services more accessible to citizens. In accordance with the Paperwork Reduction Act and the Electronic Freedom of Information Act, agencies are beginning to evaluate their past information transactions with the public, to anticipate the needs of current and future transactions in making "repeatedly requested" documents accessible online and in electronic form, and to use the Internet as a forum for communications between the agency and its customers.

The office of Electronic Government and IT will continue to work with agencies on this process to make it more results-oriented and citizen-centered, consistent with the goals of the Expanding Electronic Government initiative of the President's Management Agenda.

30. The E-Government Act of 2002 requires the OMB Director to establish an Interagency Committee on Government Information. The Committee will recommend standards for organizing government information in ways that makes it electronically searchable. The OMB Director will then be required to issue policies implementing these standards. What is your commitment to ensuring the adoption and implementation of effective policies and standards? How will you ensure that the Interagency Committee engages in public consultation?

The Interagency Committee on Government Information has a critical role in establishing important government standards for electronic information, and doing so in a way that involves public consultation. The amount of information that agencies create, use, and disseminate is rapidly increasing, and the work of the Committee will lead to recommendations to ensure that electronic information is properly managed. I am committed to implementing effective policies through guidance and oversight.

31. The E-Government Act of 2002 requires the establishment of a public domain directory of federal government websites. How will you ensure that an effective directory of websites is developed? What do you see as the purpose of the directory, and how would you ensure that vision is realized?

The Administration believes that federal websites, as the primary means by which citizens access information about federal agencies and services, should be available to the citizen in ways that are most useful to the citizen. This commitment led to the "no more than three clicks to service" re-design of the FirstGov.gov portal. Likewise, the Administration expects the public domain directory required by the E-government Act to be citizen-centered and user friendly.

I understand that OMB and the General Services Administration are working together to ensure that federal websites are organized in a way that benefits the citizen, and I would expect to leverage this ongoing work in the development of the public domain directory.

32. The E-Government Act of 2002 requires the establishment of a federal website providing access to information about research and development funded by the federal government? How will you ensure that a comprehensive database and website is developed and maintained? How much of the information on the website should be available to the public?

As I understand it, the R&D repository and website required by the E-government Act is intended to increase public access to information about research and development funded by the federal government, as well as to provide a means of increasing accountability. This database should be as complete as possible. I understand that OMB is currently assessing options for developing, maintaining, and providing access to detailed information on federal research and development. I also understand that OMB has yet to assess and decide how it will collect and what access to provide for information that is either classified or sensitive.

33. What steps will you take to achieve interoperable electronic signatures among federal agencies? Do you support the development of the federal bridge certification authority for digital signature compatibility?

It is my understanding that one of the President's E-Government Initiatives called E-Authentication is directly addressing this issue, and OMB is actively engaged in it. I am not yet familiar with the role of the federal bridge certification authority.

Information Technology Investment Management

34. What actions would you have OMB take to mitigate the risks presented by the several hundred information technology projects that OMB currently considers to be "at risk"? What conditions must exist for a project to be considered at risk? Are there higher levels of ongoing review provided for these projects, and are there specific criteria in place that would trigger a halt in funding if the projects fail to improve?

If confirmed, I would continue ongoing activities at OMB to mitigate the risks currently presented by those projects that are currently on the "at-risk" list. OMB should continue to insist that agencies address security adequately in their IT investments and that they have sufficient skills to manage their IT investments. One of the most important tools for mitigating the risks from these at-risk projects is through increased review by OMB, which I will encourage if confirmed as Director.

35. The budget Exhibit 300 has evolved significantly over the past few years to become a significant source of useful information on each major information technology project. However, it is not clear what OMB has done to validate the information being provided. What would you do at OMB to ensure that the information is accurate?

It is my understanding that OMB ensures the information in the budget is correct by having budget examiners work closely with the agencies to ensure that they have provided the most up to date and accurate information. As part of its review and oversight of the Federal IT portfolio, OMB often requests that the agencies provide source documentation that was used to generate the 300. Overall, I would promote an ongoing commitment to ensure that the information disseminated as part of the President's budget is subject to OMB's information quality guidelines.

Enterprise Architecture

36. OMB Circular A-130 (November 30, 2000) requires executive branch agencies to create, use, and maintain enterprise architectures to, among other things, describe the current and desired relationships among business and management processes and information technology. What are your views on OMB's role in promoting and overseeing agencies' use of enterprise architectures?

I have not had the opportunity to review the details of OMB Circular A-130 or to assess the individual application of agencies use of enterprise architectures. E-government and the effective management of IT systems should continue to be a high priority for OMB.

37. GAO's governmentwide survey of federal agencies identified two primary challenges that agencies face in their efforts to develop, implement, and maintain enterprise architectures -- agency executive management understanding of enterprise architectures and a sufficient number of staff with enterprise architecture expertise. How can OMB best help agencies address these challenges?

One thing OMB can do is to bring agency officials from across government together to share best practices and lessons learned from past experiences. If confirmed, I will explore other ways to help agencies meet these challenges.

38. OMB has recently focused on development of a Federal Enterprise Architecture (FEA), which it describes as a "business- based framework for cross-agency, governmentwide improvement" that will result in "maximizing technology investments." What should be the relationship between the FEA and individual agency enterprise architectures? What is OMB's approach to ensuring consistency between the FEA and individual agency enterprise architectures?

I am not yet familiar with the manner in which OMB integrates the Federal enterprise architecture with those of individual agencies. I am told there is close coordination between government- wide and individual agency efforts to create enterprise architectures, which should enhance their consistency. If confirmed as Director, I would support this close coordination.

39. GAO recently published Information Technology: A Framework for Assessing and Improving Enterprise Architecture Management (Version 1.1), which incorporates elements indicating the maturity of an organization's enterprise architecture management. The framework provides OMB and agencies with a common benchmarking tool for planning and measuring their efforts to improve enterprise architecture management. Would you support OMB's use of the GAO framework by requiring agencies to submit an annual update of their status with regard to each of the elements in the framework?

I am advised that the GAO Framework for Assessing and Improving Enterprise Architecture Management is an excellent tool for evaluating an agency's maturity in terms of its development and implementation of an enterprise architecture. Part of its value is the way in which it assesses consistency of governmentwide and agency enterprise architectures. If confirmed, I plan to support the use of this tool by agencies. I am not familiar enough with all the elements of the framework to suggest using it as a way to assess agency progress.

Government In Information, Openness and Transparency

1. Given the regular involvement that OMB has with other federal agencies, along with its dissemination responsibilities delineated under the Paperwork Reduction Act, what steps can OMB take to ensure that other agencies achieve the high standard of disclosure and access necessary for the government to be fully accountable to and interactive with the public? Are there steps you would like to undertake to strengthen public access to government information? If so, what are they?

The public disclosure of information -- when properly balanced with the Executive Branch's legitimate constitutional interests to maintain the confidentiality of its internal deliberations -- can improve government accountability and accessibility. If confirmed, I would be receptive to considering proposals for enhanced disclosure and transparency that are consistent with the responsibilities and proper functioning of the Executive Branch.

2. Executive Order 12866, on Regulatory Planning and Review, establishes disclosure requirements for OMB's contacts between OMB and parties outside the government regarding proposed rules under review by OMB. Do you believe OMB should disclose contacts with outside parties, and materials submitted to OMB by outside parties, on subjects other than rules undergoing OIRA review?

I have not considered possible new disclosures by OMB of its communications with outside parties. As a general matter, I support public disclosure of information to the extent it does not improperly inhibit internal Executive Branch deliberations. I would evaluate any proposed additional disclosures by OMB in light of their impact on the ability of OMB staff to carry out their responsibilities.

3. Under the Paperwork Reduction Act, the Electronic amendments to the Freedom of Information Act, the E-Government Act, and current OMB circulars, there is a general policy that supports disseminating government information, and encourages use of the Internet for dissemination purposes. The other approach to making information accessible is for the public to request records from agencies through the Freedom of Information Act. What criteria should be applied in deciding when it is better for government to be more proactive in its dissemination of information to the public or when to release information only in response to specific requests, such as under the Freedom of Information Act?

The Administration's position is that citizens should be given the opportunity to choose information in a way that is most useful for their needs. OMB's long held policy position on information dissemination has been to maximize the dissemination of useful and necessary information while minimizing the costs of dissemination to the government and the public. OMB's information management policies, administered pursuant to the Paperwork Reduction Act, the Freedom of Information Act and its electronic amendments, the Government Paperwork Elimination Act and the E-government Act, have encouraged agencies to make such information available.

4. Section 892(a)(1)(B) of the Homeland Security Act of 2002 requires the President to "identify and safeguard homeland security information that is sensitive but unclassified." OMB has also been in the process of developing agency guidance on homeland security sensitive information. Are these two activities connected? What will be OMB's process for identifying and safeguarding homeland security information that is sensitive but unclassified? What is your understanding of the type of information that would be considered "sensitive but unclassified" or homeland security sensitive? How will this information be handled?

I understand Section 892 requires guidance very similar to the work that OMB has been doing on this issue, and the two efforts have been merged. I intend to review this issue if confirmed.

Regulatory Issues

1. What do you believe are the principal challenges facing the Office of Information and Regulatory Affairs (OIRA)? How would you, as OMB Director, strive to help OIRA meet those challenges?

While I am still in the process of learning about OIRA's important responsibilities and activities, I do believe that OIRA faces many challenges. Working with Administrator Graham, I intend to review OIRA's ongoing activities and identify areas that warrant attention.

2. The Office of Information and Regulatory Affairs (OIRA) has a variety of responsibilities under a number of statutes and executive orders, including development of information resources, information security, data quality, and statistical policies; reviewing hundreds of significant regulations each year, and reviewing and approving thousands of information collection requests.

I support the Administration's efforts to ensure that all Federal regulations are sensible and based on sound science, economics, and the law. To the extent that OIRA uses prompt letters and return letters as appropriate tools to improve the quality of Federal regulation, I expect to encourage those activities.

4. E.O. 12866 is the executive order that governs review of proposed regulations by OIRA. Are there any changes to E.O. 12866, or to applicable policies and guidance for implementing it, that the Administration intends or contemplates, and are there any changes that you would recommend should be made?

I am unaware of any contemplated changes to E.O. 12866, and at this point, I have no plans to recommend changes.

5. E.O. 12866 establishes very important public disclosure requirements for OIRA and the regulatory agencies with respect to OIRA review of submitted proposed rules. For example, disclosure requirements apply to substantive communications between OIRA personnel and persons outside the executive branch; OMB must provide a written explanation for all regulations returned to the agency; the agency must publicly identify changes made after OIRA review; and documents exchanged between OMB and the agency must be made public. Do you support the disclosure requirements of E.O. 12866?

I support OIRA's implementation of the E.O. 12866 disclosure requirements and Administrator Graham's commitment to timely, fair, transparent, and accountable regulatory reviews.

6. OIRA Administrator Graham has played, in his words, a more "upfront" role in the regulatory process, collaborating with agencies before rules are submitted to OIRA for review. This "upfront" role is not governed by E.O. 12866, which accordingly establishes no transparency rules for OIRA and the agencies. Therefore, during the time before the agency submits a regulatory proposal to OIRA, the Administrator or other personnel of OIRA can meet with outside parties, including those directly affected by the regulatory proposal, can receive written submissions of data and arguments, and can meanwhile potentially shape the rulemaking without any obligation under the Executive Order to disclose its activities or the submissions and communications for Congress or the public.

1. OMB has been engaged in following up on the high risk issues that GAO identified in its 2003 High-Risk Series. How do you see that process unfolding? What mechanisms does OMB plan to use to ensure that agencies take appropriate actions to address these high risk areas?

It is my understanding that OMB is working with agencies and GAO to clarify what specific actions agencies need to take to address the challenges identified in GAO's High-Risk List. Once that exercise is complete, I expect OMB to monitor agency progress in taking those actions and ensure accountability is clearly defined.

2. In January 2003, GAO designated federal real property as a new high-risk area. What actions is OMB taking in light of GAO's call for a transformation strategy for federal real property?

The Federal government's asset management challenges are a priority within the President's Management Agenda. If confirmed, I will monitor the progress of this initiative, which seeks to ensure that agencies justify and account for their assets and that they adequately plan for purchases, management, maintenance, and operation of those assets.

3. Some have suggested that one factor for the existing problems with federal real property is the need to provide federal agencies with more incentives and flexibilities to better manage their real property inventories. Do you believe there is a need to pass a law giving federal agencies greater flexibilities, including the ability to enter into public-private partnerships, to improve the management of real property?

I support the President's proposal, first included in the President's October 2001 Managerial Flexibility proposal, to give agencies greater flexibility in the management of their assets.

Inspectors General

1. What are your views on the contributions made by the Inspectors General (IG) to improving government oversight over the last quarter century?

I believe Inspectors General have made important contributions to the management of the Executive Branch.

2. According to the most recent progress report by the President's Council on Integrity and Efficiency (PCIE), in FY2002 federal Inspectors General (IGs) and their staffs conducted audits, reviews and investigations that (1) identified nearly $72 billion in federal agency savings, (2) resulted in more than 10,600 successful criminal prosecutions and the filing of over 5,700 new indictments and criminal informations, (3) resulted in over 570 successful civil actions and over 7,600 suspensions or disbarments of vendors, contractors, grantees, or others who engaged in improper conduct, and (4) led to their agencies initiating over 1,600 personnel actions against government, contractor, or grantee employees in FY 2002. Since the terrorist attacks of 9/11, IGs have also been asked to shoulder additional homeland security responsibilities within their agencies and have received less support from other federal law enforcement resources. Notwithstanding these new challenges and the savings and benefits to the taxpayer that IGs and their staffs provide, IGs have generally been given few, if any, increases in resources. What actions will you take to ensure that IGs receive adequate resources?

If confirmed, I will be an advocate for providing IGs sufficient resources to accomplish their mission.

3. The President's Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE) are comprised principally of the IGs and are chaired by the OMB Deputy Director for Management. The PCIE and ECIE were established by executive orders to coordinate and enhance the work of the IGs. What overall guidance would you provide to these organizations? What will be your role regarding the activities of the PCIE and ECIE? What mission do you see for the IGs?

IGs should provide the information and expertise necessary to address major management challenges at agencies. If confirmed, I expect to provide the PCIE and ECIE, through the Deputy Director for Management, the support they require to accomplish their important mission.

4. A recent GAO report (GAO-02-575) concluded that the PCIE and ECIE could be strengthened if (1) a statutory alternative to these councils were established, (2) a specified funding source were provided for the councils, (3) the roles and responsibilities of the members were clearly stated, and (4) coordination with other federal oversight organizations including GAO were enhanced. What are your views on each of these conclusions?

I have not yet formed a view on the sufficiency of the PCIE and ECIE as organizations in support of the role of IGs. Any such organization should support and not detract from the IG mission to provide the information and expertise necessary to address major management challenges at agencies.

5. A longstanding issue has been the adequacy and effectiveness of dedicated IG's at smaller agencies. These IG's generally have smaller staffs and fewer resources as is commensurate with their agencies and there is a question as to whether they possess a critical mass of personnel and resources to be effective. In 1998, Chairman Collins introduced legislation that amended the Inspector General Act. One of the provisions in the bill called for consolidating very small IG offices with other IG offices that have related agency missions. For example, the Office of Inspector General (OIG) for the National Archives and Records Administration would have been consolidated with the General Services Administration's OIG, and the Peace Corps IG would have been consolidated with the State Department IG.

The consolidations could provide more effective and efficient oversight, while maximizing government resources. GAO has also recently suggested that the Congress consider consolidating smaller IG offices with larger ones and also consider converting several IGs with relatively large offices from appointment by their agency heads to appointment by the President and confirmation by the Senate. In the alternative, resource assessments and peer reviews could assist the IG's and their staffs at these smaller agencies to ensure their proficiency as could additional resources, including additional training and personnel.

What are your views on ensuring the proficiency and effectiveness of IG offices at smaller agencies, including (1) consolidation of IG offices; (2) conversion of the appointment process for selected IG's, and (3) other alternatives?

Although I have not yet formed a view on the consolidation of IG offices or the utility of the appointment process affecting certain IGs, I look forward to working with the Governmental Affairs Committee to consider the important issues addressed in Senator Collins' legislation.

6. During consideration of the Homeland Security Act last year, Congress followed the recommendation of the Senate Governmental Affairs Committee and clarified the IGs' law enforcement authority. In light of the new-9/11 demands being placed on IGs, what actions will you undertake to ensure that this takes place?

If confirmed as Director, I will take whatever steps are called for in the law to see that it is implemented in a timely and effective manner.

7. The IGs are responsible for the audits of their agencies' financial statements. GAO uses the results of these audits to complete audits of the government's consolidated financial statements. Many IGs use the services of contractors to complete these audits, and the number of unqualified or "clean" opinions resulting from these financial statement audits has increased. In order to provide an opinion on the government's consolidated financial statements, GAO will require access to the audit plans and audit documents of both the IGs and the contractors during the agencies' financial statement audits. Are you supportive of the IGs' and GAO's role in the audits of agencies' financial statements and the need to have unlimited access to the audit documents?

I am supportive of an independent audit function both governmentwide and at individual agencies. I am not aware of any issues related to the accessibility of audit documents. If confirmed as Director, I will support legal and legitimate need for access by independent auditors to the information they require to conduct their audit function.

Defense Issues

1. In its January 2003 High Risk and Performance and Accountability series, GAO noted that DOD leadership has placed high priority and great attention on transformation, but that significant management problems continue to impact the economy, effectiveness, and efficiency of DOD's business processes. GAO concluded that this situation places mission capabilities at risk by unnecessarily spending funds that could be directed to higher priorities such as modernization and readiness. In particular, GAO identified DOD's financial management, information technology, inventory management, infrastructure, contracting, and weapons acquisition as high risk areas. What is your view of DOD's management problems? What would you do to ensure that DOD takes corrective action to improve management and reduce program risks?

The President's Management Agenda sets the framework within which OMB and the Department of Defense are working to improve the management of the Department. The Department of Defense and OMB mutually set goals and milestones for improvement. If confirmed, I would fully support the efforts of the Deputy Director for Management in implementing this effort across the government.

2. GAO's January 2003 High Risk and Performance and Accountability series cites limitations in DOD's strategic planning and budgeting, including that DOD has not issued performance plans for fiscal years 2003 or 2004 or reported on fiscal year 2001 performance results. According to DOD, it is formulating new performance goals and metrics to align with outcomes described in its strategic plan -- the September 2001 Quadrennial Defense Review. In your view, what is OMB's role in ensuring that agencies, such as DOD, adopt a results- oriented management approach and take the necessary steps to better link plans, programs, and outcomes? Also, what action will you take to encourage DOD to move more quickly towards accomplishing these goals?

I understand that OMB is working closely with the Department of Defense to link budget and performance integration as part of the President's Management Agenda. Using PART, OMB is examining programs and focusing on results. I am fully supportive of these efforts.

3. The Administration has projected defense budgets to increase annually, over the Future Year Defense Program (FYDP), to well over $450 billion a year. How you will you meet the Administration's defense spending targets?

The Department of Defense has a Future Year Defense Program, referred to as FYDP, which represents a current blueprint for the allocation of required resources in the next few years. As has been the case in the past, the FYDP is subject to change annually as part of the overall budget and program review process conducted jointly by OMB and the Department of Defense.

4. During the FY 2004 appropriations cycle, defense contractors have proposed an increased amount of multi-year procurements. What are your views on such arrangements for defense contractors, both pro and con? If asked by DOD, will you endorse such proposals?

I believe that multiyear procurements can result in substantial savings for the government if used for suitable programs, such as programs that are unlikely to be cancelled by the agency and that have a stable design with low technical risk. If confirmed, I will seek to ensure careful review of each proposed multiyear procurement program for consistency with sound policy and the requirements of the law.

5. Currently, there is a proposal before Congress to allow the Defense Department to lease 100 airborne refueling tankers from the Boeing Corporation, at a cost of approximately $20 billion. What are your views regarding government leases on this scale? If asked, will you support such proposals in the future? Do you believe there should be limits on such arrangements and, if so, what should those limits be?

I have not yet formed a view on the proper scale and limits of government leases.

6. Congress supports the Administration's efforts to stabilize, reconstruct, and democratize Iraq in the wake of Saddam Hussein's downfall. There have been no estimates provided by the Administration on the potential long-term costs of peacekeeping and nation-building in Iraq. The President's 2004 budget did not account for the cost of these items. Congress requires this information in order to adequately and responsibly budget for this important national endeavor. What information can you provide to the Congress on the long-term costs to the federal government of reconstructing Iraq and waging the war on terrorism? Is it your intention to provide the Congress with more information on the extent of these long-term financial commitments? Will you incorporate such costs in the President's 2005 budget request? As OMB Director, will you pledge to fully share with Congress the Administration's detailed estimates on the potential short- and long-term costs of peacekeeping and reconstruction in Iraq, and will you do so starting in this fiscal cycle?

I am advised that the FY 2003 supplemental for Iraq included funds for U.S. troops in the post-hostilities phase and $2.5 billion for relief and reconstruction efforts. The Administrator of the Coalition Provisional Authority has recently been appointed and is working together with the Department of Defense, other participant countries, the United Nations and other international organizations, and the Iraqi people to define and meet Iraq's short- and long-term requirements. The Administration is actively pursuing international support and using billions of dollars in Iraqi assets from the former Iraqi regime for the benefit of the Iraqi people.

While I am not yet familiar with what additional resources may be needed, if confirmed, I expect to work closely with the Congress in addressing future requirements.

Homeland Security

1. OMB is required to submit an annual report to Congress on Combating Terrorism that must:

• include a listing of proposed amounts to be expended for combating terrorism programs and activities in the current and next fiscal year

• describe specific programs and activities

• identify duplication of efforts

• summarize certain obligations and expenditures related to emergency preparedness and weapons of mass destruction

• Publish the report by the required March 1 deadline to provide more timely information for congressional budget deliberations.

• Collect and report (to Congress) data on obligations for programs to combat terrorism.

• Include in the report an analysis of areas where overlap in programs could result in unnecessary duplication.

• Work with the Office of Homeland Security, the National Security Council, and agencies to develop better performance measures for combating terrorism in national strategies to combat terrorism and in agency performance plans.

• a. What will you do to ensure that the Annual Report on Combating Terrorism, initially due March 1, is submitted to Congress?

  My understanding is that OMB is currently finalizing this year's Annual Report on Combating Terrorism. The report is expected to be finalized and submitted to Congress in July.

  b. Does OMB plan to implement the recommendation from GAO to include obligations data in its Annual Report to Congress? If not, why?

  OMB is committed to improving the data collection across the federal government with respect to homeland security and combating terrorism. To respond to Congress' request for more timely and transparent information on resources for combating terrorism, OMB instituted a new process this year to provide additional budget data in the President's Budget and the forthcoming annual report.

  c. Has OMB done an analysis of Homeland Security and Combating Terrorism programs to identify overlap that could result in unnecessary duplication? What process is used to identify and resolve such overlap and duplication? How has the creation of the new Department of Homeland Security affected overlap among programs?

  Identifying overlap and duplication is an important OMB responsibility. OMB works with agencies throughout the year, and particularly when developing budgetary recommendations, to ensure that programs are clearly focused and do not duplicate effort. In the areas of homeland security and combating terrorism, it is my understanding that OMB has worked with various homeland security agencies in a variety of forums to ensure that programs in similar areas complement each other and work toward broader policy goals.

  The creation of the Department of Homeland Security has provided an historic opportunity to consolidate programs with similar objectives and operations and redirect resources to the front- line protection of our Nation. In the areas of border and transportation security, emergency preparedness and response, and critical infrastructure protection, in particular, OMB and the Department of Homeland Security are working to eliminate unnecessary duplication and avoid stove-piping.

  d. What is the status of OMB efforts to improve governmentwide and agency-specific performance measures to improve the relationship between national strategies to combat terrorism, funding for such programs, and program results?

Department of Homeland Security

1. In the past, the Director of the Office of Management and Budget (OMB) stated that federal agencies -- especially those agencies with homeland security missions -- can expect increased oversight and more pressure to demonstrate performance to justify funding increases. What steps should OMB take to hold federal agencies and their officials responsible for homeland security performance?

The Administration is committed to monitoring agency performance in the area of homeland security. To promote performance management and accountability, I understand OMB has worked with agencies to:

• Increase transparency into the programs that support homeland security.

• Identify and prioritize the specific programs that advance the key capacities outlined in the National Strategy for Homeland Security.

• Develop performance measures to benchmark progress in developing those capacities and measure the effectiveness of specific programs in doing so.

• Clarify roles and responsibilities so that we are working towards mutual supportive policy goals, not duplicating effort.

2. The National Strategy for Homeland Security, as well as the many other strategies dealing with aspects of homeland security and combating terrorism, does not clearly define the accountability structure to ensure the implementation of efforts to strengthen and sustain homeland security. What should be the appropriate interrelationship between OHS, OMB, and the Department of Homeland Security that will create the best structure for national strategies' implementation and accountability?

I believe that OMB should work with the appropriate agencies to ensure coordination between, and effective implementation of, the National Strategy for Homeland Security and other strategies. OMB plays a central role in coordinating strategic planning and performance management across the government. It should work to ensure that the various strategies are performance-based, the programs that support them are technically sound, and that the government's resources are aligned to promote effective implementation of these strategies. To that end, OMB should hold the Department of Homeland Security and other agencies accountable for their performance in this area.

3. The Homeland Security Act of 2002 requires the maintenance of non-homeland security missions transferred to DHS. What is OMB's approach in monitoring the performance of these non-homeland security missions, and ensuring they are not diminished under DHS's control?

I understand that OMB has worked with the Department of Homeland Security to ensure effective performance of non-homeland security missions in a variety of ways. They have monitored the allocation and execution of non-homeland security funding. They have encouraged comprehensive performance planning that recognizes the importance of non-homeland security missions through the FYHSP process, the Executive Management Scorecard, and other efforts. OMB has encouraged the Department to recognize and prioritize key Administration objectives in non-homeland security areas, such as achieving the President's goal for reducing backlog in immigration applications. Across the Department, I expect that OMB will continue to monitor the performance of non-homeland security missions.

4. The Governmental Affairs Committee has held a series of hearings with Secretary Ridge, state and local officials, and first responders on how best to streamline and strengthen the way we help our states, communities, and first responders protect our homeland. Senator Collins introduced legislation, the Homeland Security Enhancement Act, to restructure the Department of Homeland Security's state and local homeland security grant program, to make it easier to apply for federal funds, and coordinate the many grant programs that provide homeland security funds.

5. Although it has been four months since the President signed the FY 2003 omnibus appropriations bill, OMB has yet to provide the Congress with detailed, account-by-account information on the amount of resources designated as homeland security funding. This lack of information has made it virtually impossible for Congress to track homeland security spending. When can we expect OMB to provide us with a detailed display of the 2003 homeland security budget, both for the new Department of Homeland Security, and all homeland security activities throughout the government? Why has this taken so long? What steps will you take to improve the reporting by OMB to the Congress -- including in the presentation of the President's 2005 budget -- on amounts appropriated and spent on homeland security? Do you support tracking and recording homeland security funding in a separate budget function?

As I understand it, OMB has provided the Congressional Budget Office and the Appropriations and Budget Committee account-level information on homeland security funding. Additional programmatic information will be provided in the Annual Report on Combating Terrorism. My understanding is that this year, for the first time, OMB embedded estimates for homeland security into the budget database -- an important step for improving budgetary transparency. If confirmed, I will work with Congress to consider measures to further improve transparency for the homeland security resources, and I expect the homeland security presentation in the 2005 Budget will do so. Tracking and recording homeland security as a separate budget function should be the subject of further consideration by the Administration and Congress, especially the Congressional Budget Committees

6. Sec. 889 of P.L. 107-206, the law that established the Department of Homeland Security, requires "a detailed, separate analysis, by budget function, by agency, and by initiative area" for homeland security activities beginning with the FY 2005 budget submission. When the President's FY 2005 budget is submitted, will it comply with the requirements of Sec. 889?

Yes.

7. The Homeland Security Act established within the Department of Homeland Security and Information Analysis and Infrastructure Protection Division charged with analyzing intelligence from all- sources related to terrorist threats. During this State of the Union address, the President announced creation of a new Terrorist Threat Integration Center (TTIC) under the direction of the Director of Central Intelligence. The Counter Terrorism Center at the CIA has responsibility for analyzing intelligence related to foreign terrorism, and the FBI has also created a new Counter Terrorism Division and an Office of Intelligence to analyze intelligence. Please describe OMB's role in clarifying responsibilities, and increasing cooperation and information sharing, among these and other organizations involved in analyzing and disseminating intelligence related to homeland security. What is OMB's approach to ensuring that systems are designed and funded in order to share appropriate homeland security information with state and local officials?

The Terrorist Threat Integration Center (TTIC) has not supplanted the intelligence responsibilities of the CIA, FBI, or other members of the intelligence community, including the Department of Homeland Security. Rather, it is a joint effort of these agencies to "fuse" intelligence information from all sources so that it is more timely and useful.

Even before the creation of the TTIC, OMB was working with the intelligence and law enforcement agencies to improve cooperation and information sharing, including information sharing with state and local officials. I am advised OMB's current efforts are focused on housing the TTIC employees and systems development efforts to link key intelligence data bases.

8. The President proposed $3.5 billion in funding for first responders in his FY 2004 budget. However, New York City alone has identified more than $900 million in urgent first responder needs. These include fundamental needs such as securing the city's emergency command facilities, creating additional HazMat units to cope with a suspected chemical, biological or nuclear attack, evaluating and addressing communications equipment needs for first responders, and creating medical laboratories to conduct testing for bioterror incidents. Other cities have developed similar assessments. How will OMB utilize such assessments when developing homeland security funding proposals?

The Department of Homeland Security is the primary agency responsible for first responder terrorism preparedness. I am advised that the Department will be working closely with states and localities to complete risk assessments and formulate comprehensive statewide strategies. This approach will foster much needed coordination at the state level. Additionally, the Department will work with states and localities to determine national priorities and ensure that state and local governments are upgrading their level of preparedness consistent with state plans. These assessments and plans will identify resource needs, and I expect that OMB will work closely with the Department and the Homeland Security Council to determine appropriate funding levels.

9. First responders across the country still cannot communicate effectively with one another in an emergency. This issue was highlighted after the Air Florida incident over 20 years ago, the first bombing of the World Trade Center in 1993, and the Oklahoma City bombing in 1995, and yet again when fire fighters died because they couldn't communicate with the police on September 11. The Public Safety Wireless Network (PSWN), a joint Treasury and Justice Department policy group, estimates that the cost of replacing all communications equipment used by state and local governments to ensure interoperability would be $18 billion. What factors will OMB consider when determining the appropriate federal role in funding solutions to this long-standing problem?

The President's 2004 Budget provides substantial resources to grant programs that support interoperability, most notably the $3.6 billion First Responders Initiative. I am also advised that, through Project SAFECOM, the Administration is working across agencies to ensure that federal programs are coordinated, easy-to-access, and complementary, rather than duplicative. The overwhelming percentage of communications infrastructure is owned and operated at the state and local levels. OMB will continue to work with the Department of Homeland Security and other federal agencies to ensure that the federal government promotes steady progress toward interoperability at and among all levels of government.

Research and Development

1. During the 2000 Presidential campaign, then-Governor Bush recognized the importance of government support for research and development for our future economic growth, security, and health by promising to support a permanent tax credit for R&D, and to increase the defense R&D budget by $20 billion from FY 2002 - FY 2006.

• Do you intend to budget for implementing these commitments and, if so, on what schedule?

•  

  The President's Budgets have consistently proposed the permanent extension of the Research and Experimentation (R&E) tax credit. As highlighted in the FY 2004 Budget, the proposed extension will cost nearly $23 billion over the period of 2004 to 2008, and $68 billion through 2013.

  The defense research and development (R&D) budget for FY 2001 was approximately $42.2 billion dollars. The 2004 Budget requests more than $62.7 billion dollars, which demonstrates a $20 billion increase in only three years. In addition, the President's Management Agenda will help ensure that the nation's R&D investments are made effectively and efficiently.

• The Congress has indicated its desire to double the budget for the National Science Foundation, but the President's 2004 budget only provides for half the rate of increase needed to double the NSF budget in 5 years. Do you believe increases in the science budgets at the National Science Foundation (NSF) and at other mission agencies are warranted? If so, what plans do you have to budget for such increases?

•  

  The President's 2004 Budget focuses on winning the war against terrorism and securing the homeland, while moderating the growth in overall spending. Relative to the President's 2003 Budget, the nine percent increase requested for the National Science Foundation (NSF) is more than double the four percent increase for overall non- defense discretionary spending (including homeland security) in the President's 2004 Budget. This increase indicates the priority the Administration has given NSF, as well as science at other agencies.

  While research investments at NSF continue to be important to the Administration, I expect future funding requests will continue to balance our research investments with other national priorities.

• Although the NSF Doubling Act was signed into law, the President's budget request for FY2004 does not reflect the increase in funds for the NSF budget which would allow for a doubling. What are your plans to implement a budget request which would be in line with the NSF Doubling Act authorizations?

2. A growing concern is the imbalance between the amount of government research support for the life sciences, for which Congress has appropriated funds to double NIH's budget over recent years (with Bush Administration support), and the amount for the physical sciences, which has actually been eroding. These two parts of scientific research are in fact mutually dependent, and advances in the physical sciences have become essential to further advances in the life sciences. Do you agree with this concern, and, if so, will you act to adjust the budgetary imbalance between these two sectors of federal research support by increasing the amount for physical sciences?

The Administration agrees with reviewing the balance of the portfolio, in the sense of monitoring and maintaining an appropriate investment across critical areas. The emphasis in the President's 2004 Budget on the physical sciences responds to recommendations from the President's Council of Advisors on Science and Technology and others.

The 2004 Budget focuses on strengthening investments in:

• R&D for national and homeland defense;

• Broad investments in basic research at NSF; and

• Federal R&D in general, across the agencies.

• Will you support increased funding for research and development (R&D), that would be used to support cooperative government-industry research programs, and to develop joint production agreements and other innovative partnership arrangements with the semiconductor industry?

• Will you support R&D funding to maintain the critical senticonductor equipment industry (i.e. lithography, photomasks) in the U.S., such as through a government-industry consortium?

4. Research in nanotechnology will eventually enable the development of materials and systems with dramatic new properties relevant to virtually every sector of the economy. There is currently a serious concern about the coordination between various government agencies (including the Department of Defense) which would ensure focused research and development on nanotechnology efforts within the federal government. Legislation is currently moving through Congress to place the Administration's National Nanotechnology Initiative into statute to tackle these science management problems.

• As OMB Director, will you support this legislation (S.189)?

• I am advised that the National Nanotechnology Initiative currently supports coordinated nanotechnology research and development across the federal agencies. And, as demonstrated in recent Office of Science and Technology Policy-OMB guidance to agencies, the Administration continues to consider coordinated nanotechnology research a priority.

• As funding levels for nanotechnology within the National Institute of Health (NIH) are substantially smaller than those within NSF (despite the numerous benefits the bio-medical community could derive from nanotechnology research), will you increase the level of funding support within NIH in this area?

• The FY 2004 Budget requests a significant increase for nanotechnology research at the National Institutes of Health (NIH). As is true of any agency, NIH considers the need for and benefits of investments in nanotechnology relative to other needs and priorities. As the lead agency in the National Nanotechnology initiative, NSF funds basic research that could potentially have broad impacts in any number of fields, including benefits for the bio-medical community. I am advised that NIH will continue to make investments in nanotechnology and will continue to coordinate planning and application of nanotechnology investments with the other agencies.

The Administration has transmitted to the Congress a proposal for a simplified, uniform personnel system the Department of Defense believes can substantially improve its ability to recruit and retain personnel across a broad range of jobs, including engineering and scientific positions. I am aware the Committee recently voted on a version of those reforms. If confirmed, I look forward to working with the Committee, which I understand has strong interest and experience in issues related to personnel management, to provide the Department of Defense with the reforms necessary to recruit and retain the personnel it needs to accomplish its mission.

Health Policy

1. Medicare. The Administration has spoken repeatedly about its desire to increase the number of Medicare beneficiaries relying on private health insurance plans to receive their Medicare benefits. The new Medicare prescription drug bill before the Senate (S.1) would even establish a new agency with the Department of Health and Human Services (HHS) to oversee the interface between HHS and a growing number of private insurers. The magnitude of this proposed transition raises several questions.

It is my understanding that the bills currently under consideration in the House and Senate -- which are broadly consistent with the framework -- include the kinds of market-oriented features that should help attract beneficiaries and plans, as well as enhance the prospects for restraining Medicare spending over the long term.

For example, the bills before Congress include new private plan options that will offer beneficiaries a prescription drug benefit that is integrated into broader medical coverage, and the opportunity to choose the coverage that makes the most sense to them. By expanding private sector innovation and competition within Medicare, this new option should provide seniors with quality health care at more reasonable prices. And, beneficiaries who wish to stay in traditional Medicare continue to have that option as well. Beyond measures currently under consideration, I look forward to working with Members of Congress to improve and strengthen Medicare for both the short- and long-term.

2. Medicaid. The President has proposed changing the financing structure of the Medicaid program. He has offered states short-term fiscal relief, in the form of loans that will be deducted from subsequent federal Medicaid payments. In exchange for this short-term infusion, states would be required to accept caps on federal Medicaid payments in the future. This proposal has raised concerns with many organizations, including the National Governors' Association (NGA).

• Please describe the financial details of this plan, including projected savings over time.

• The draft NGA Medicaid counter proposal pointed out that the Administration's block grant plan could hurt states that encounter economic downturns or face epidemics. Under the Administration's proposal, how would the federal government support states facing sudden increases in their Medicaid roles or Medicaid costs?

3. Medical Research. Congress recently completed doubling budget,for the National Institutes of Health (NIH). The President proposed a 2% increase in the NIH FY2004 budget. What increase in funding for biomedical research would you propose? Will this be sufficient to continue promising research?

After five years of outstanding growth that doubled the NIH budget, the President's 2004 Budget provides almost $28 billion, an additional investment over $700 million. NIH's overall research investment grows not by 2 percent, but by 7 percent, excluding facilities construction and one-time anthrax vaccine costs. This increase should allow NIH to award almost 300 new research grants in FY 2004 and sustain the momentum gained over the last five years.

4. Veterans' Health Care. The Department of Veterans' Affairs (VA) faces growing budget shortfalls, yet the number of new veterans and aging veterans will only increase. Many older veterans are turning to the VA as their only source of affordable medications. Although some had hoped that a new generous prescription drug benefit would help, the current Medicare legislation is unlikely to do anything to remedy this situation. Some have proposed allowing the VA to charge Medicare for the services they provide to older veterans, so-called Medicare subvention. What is your view of this potential transfer of federal funds between agencies?

I am advised that the Department of Veterans Affairs is currently working with the Department of Health and Human Services to implement the Administration's plan by which Priority Level 8 veterans aged 65 and older, who cannot enroll in VA's health care system, can gain access to a new "VA+Choice Medicare" plan. This would allow these veterans to use their Medicare benefits to obtain care from VA. In return, VA would receive payment from a private health plan contracting with Medicare to cover the cost of the health care it provides. The "VA+Choice Medicare" plan will become effective later this year as the two Departments finalize the details of the plan.

Transportation

1. If Congress acts this year to reauthorize statutory discretionary spending caps for fiscal years 2004 and beyond, would you support the reauthorization of separate discretionary outlay caps for the highway and mass transit categories, and if so, for how many years? Should a new mass transit discretionary budget authority cap be created? At what level should these outlay caps (and a potential new mass transit discretionary budget authority cap) be set?

It is my understanding that the Administration's surface transportation reauthorization proposal supports separate and specific discretionary outlay caps for the highway and mass transit categories for a six-year reauthorization period.

For all remaining discretionary programs, the Administration supports a two-year extension of the overall, general purpose discretionary spending caps at the levels set forth in the President's 2004 Budget. Discretionary mass transit budget authority would be included in the general purpose spending caps.

Environment

1. Title VIII of the FY 2001 Interior appropriations conference report established the Land, Conservation, Preservation, and Infrastructure Improvement fund (LCPII). The purpose of the fund was to create a dedicated level of discretionary appropriations for environmental activities through 2006. In the President's 2004 budget where the administration proposed to extend discretionary caps, it did not include the conservation spending category. Why does the administration propose to eliminate these caps?

The Administration supports many conservation programs, whether in LCPII or not, but the current fiscal climate requires maximum flexibility in allocating discretionary funding. The past few years have also shown that a separate spending cap is not an effective tool to protect a particular budget activity. In fact, Congress itself chose to drop the use of this device in the FY 2003 appropriations process.

2. An article in The New York Times on June 19, 2003, reports that White House officials have edited an upcoming report by the Environmental Protection Agency (EPA) to omit evidence and conclusions that human activity is contributing to harmful global warming. According to the article, administration officials deleted references to two important studies regarding the likely human contribution to global warming -- one of them by the highly respected National Research Council and replaced them with a skeptical assessment from a study financed in part by the oil industry. According to the article, EPA officials were so troubled by the changes that they preferred to delete the section on global warming altogether rather than include the White House-dictated language which "no longer accurately represents scientific consensus on climate change.'"

a. What was the role of OMB in editing this report?

One of OMB's key functions is to coordinate the activities of Executive Branch agencies to avoid duplication of effort and avoid sending contradictory messages to the public. OMB performs this function on a wide range of issues including budget, legislation, regulations, management, and program performance. While I am not in a position to comment on OMB's actions in a particular case, I understand that, as a routine matter, OMB would work with CEQ on coordinating comments received as part of the interagency review process. A range of OMB analysts would also be expected to provide comments on programs within their expertise.

Social Security and Net Present Value Accounting

1. The retirement of the baby-boom generation marks the beginning of a major demographic shift towards fewer workers per retiree. The so-called "graying of America" will have a significant impact on the costs associated with entitlement programs such as Social Security. What guidance will you provide the President in restoring long-term solvency to the Social Security program? What impact would the costs associated with any partial-privatization of Social Security have on the Federal budget over the next 20 to 30 years? Will you advise the President to pursue a budget policy which restores on-budget balance and saves all of the Social Security surpluses?

The long-run financial condition of Social Security is a serious concern. Recognizing this problem, the President appointed a bipartisan Commission on Social Security, which issued its report in August 2001. The Commission presented three options for moving towards a financially sustainable Social Security program. If confirmed, I will work with other members of the Administration and members of Congress to ensure that Social Security is placed on a sound financial footing for future generations. The Federal budget implications will depend on the details of any long term solution.

2. Do you believe it is useful to assess government liabilities and commitments using net present value (NPV) accounting?

See answer to question 11, below.

3. How would NPV accounting be used to supplement the current cash flow measures?

See answer to question 11, below.

4. Do you believe it is useful to prepare NPV estimates for a 75- year period or an indefinite period?

See answer to question 11, below.

5. How would you move to incorporate NPV estimates more prominently in government financial reporting?

See answer to question 11, below.

6. Are you aware of the NPV estimates of government's entitlement commitments prepared by Dr. Kent Smetters and Dr. Jagadeesh Gokhale, at the Treasury Department, for inclusion in the government FY 2004 budget?

See answer to question 11, below.

7. On May 9,2003 Dr. Smetters and Dr. Gokhale have now published the estimates that they prepared for the government. http://www.aei.org/docLib/20030508_gokhale.pdf Do their findings reflect the estimates of the Administration?

See answer to question 11, below.

8. Do you agree with the basic findings of their study? In what ways do you disagree with their basic findings?

See answer to question 11, below.

9. Do you agree that the long-term fiscal imbalance is a useful measure to supplement the short-term focus on the deficits and public debt?

See answer to question 11, below.

10. Do you agree that the long-term fiscal imbalance for the government is roughly $44 trillion? If not, what is your estimate and how was it derived?

See answer to question 11, below.

11. Do you agree that this fiscal imbalance will grow by $1.5 trillion per year through 2008 unless we corrective policies are implemented before then?

I am not familiar with the net present value estimates that are referred to in the question. It may be that these estimates have some technical advantages over the traditional 75-year estimates. Even so, the traditional estimates are more than sufficient to demonstrate the critical need to reform Social Security and Medicare, and that is where we need to focus our efforts.

12. If Congress asked in connection with an oversight investigation, would you provide drafts of a Budget of the U.S. Government?

My understanding is that, it would not be appropriate to disclose confidential, internal, and pre-decisional deliberative documents.

Other Issues

1. The Washington Post has reported that Commerce Secretary Don Evans contacted you "from time to time" regarding the collapse of the Enron Corporation. Is this correct, and if so, how many times did Secretary Evans contact you and what specifically did you discuss? Did you discuss a possible bailout of Enron with the Commerce Secretary or any other individual within the administration? If so, please provide-details of these discussions.

I refer the Committee to two letters sent to it last year by White House Counsel Alberto Gonzalez, dated April 19, 2002, and May 22, 2002. Those letters describe my limited contacts regarding the Enron matter.

2. The U.S. Agency for International Development (USAID) has indicated that the Office of Management and Budget and the National Security Council began contingency planning in September 2002 for the possibility of rebuilding a post-war Iraq. However, USAID did not begin the formal procurement process for contracts related to this rebuilding process until January. Because of this delay, the Agency had only a short period of time in which to award the rebuilding contracts for Iraq. As a result, USAID said it was forced to use a closed bidding process that allowed only a select number of companies to bid on these contracts. Federal procurement regulations generally require that contracts be awarded through a full and open bidding process to ensure that taxpayer funds are spent in an effective and efficient manner. These regulations allow a closed bidding process only in rare instances where the procurement addresses an urgent need. While the rebuilding of Iraq is undoubtedly an urgent need, it is possible that the bidding process could have begun much sooner, thus making a more competitive process possible. What role, if any, did you play in the administration's contingency planning for rebuilding post-war Iraq? Do you believe steps should have been taken during the contingency planning regarding Iraq to ensure that USAID, and other federal agencies, began their procurement processes sooner so that competitive bidding could have been used to award the rebuilding contracts?

While I am unfamiliar with these USAID procurements, I have no reason to believe that the government entities involved acted in contravention of relevant regulations and statutes. If confirmed, I will of course be willing to work with the Committee on any specific concerns it may have.

I do.

2. Do you agree without reservation to reply to any reasonable request for information from any duly constituted committee of the Congress, if confirmed?

I do.

I have worked with staff in OMB and the White House to craft answers to the Committee's questions. The answers are my own.