APPENDIX B National Performance Review Summary of Savings

Introduction

     The NPR recommendations yield $108 billion in savings for
the 5 year period, FY1995-1999. $36.4 billion result from the
specific changes in individual agencies that were detailed in
Appendix A. The remaining $71 billion result from governmentwide
changes explained here.

     This appendix provides the estimates of the governmentwide
changes, and the assumptions underlying those estimates. Savings
by major issue area are shown in Table B-1.

1. Streamlining The Bureaucracy Through Reengineering.
These estimates assume:
a.   Agency reengineering will allow a 12% reduction of civilian
     personnel over 5 years.
b.   Administrative and central control staffs and supervisors
     will be the primary areas for downsizing.
c.   Attrition, enhanced severance, reassignment, relocation,
     outplacement and retraining will be the primary tools to
     accomplish the reduction.
d.   Agencies will use other tools as necessary to accomplish the
     12% reduction.
e.   The 12% reduction includes and increases the
     Administration's previously established 4% personnel
     reduction goal for fiscal 1995.
f.   Indirect costs associated with personnel, such as office
     space and expenses, travel and supplies, are not included in
     the dollar estimates.

2. Reinventing Federal Procurement
These estimates assume:
a.   The General Service Administration's estimate that total
     annual procurement costs equal $200 billion (GSA Federal
     Procurement Report).
b.   Savings can be generated by a variety of reforms in
     procurement systems, including simplified acquisition
     thresholds, labor law reforms, IT procurement reforms,
     shifting from government specifications to commercial items,
     expanded use of purchase cards, and electronic commerce.
c.   Savings up to 12% of procurement spending may be achieved
     through these reforms (study by Defense Systems Management
     College). The NPR used 5% as a mid-range estimate.
d.   To avoid double-counting, savings associated with reductions
     in procurement personnel are excluded from this "reinventing
     procurement" savings estimate.

3. Reeingeering Through Information Technology
These estimates assume:
a.   A $25 billion baseline in information technology (IT)
     spending, based on obligations reported through OMB circular
     A-11 by executive branch agencies for acquisition,
     operation, and use of IT systems.
b.   30% savings in IT systems may be achieved through
     information infrastructure consolidation and standardization
     -- this savings estimate is extrapolated from the "Defense
     Information Infrastructure Initiative" (December 1992,
     Resource Summary). Since Defense IT spending constitutes
     roughly one-half of total IT spending it is assumed that
     equal savings can be obtained from the IT budgets of
     civilian agencies.
c.   Savings from electronic benefits transfer and from
     consolidation and modernization of the federal information
     infrastructure; offsetting costs result from consolidation
     and modernization of the law enforcement and safety mobile
     networks and a program to provide citizens with better
     access to government information.
d.   Savings for electronic benefits transfer nationally may be
     extrapolated from pilot programs in the states of New Mexico
     and Minnesota.
e.   Savings recommended for the Department of Transportation IT
     consolidation and modernization are subtracted to avoid
     double-counting.

4. Intragovernmental Administrative Costs.
     Simplifying and reducing the federal government's reporting
requirements will generate savings at the federal, state, and
local levels. The estimate assumes that over 75% of the state and
local governments will accept a fee-for-service option in place
of existing cost reimbursement procedures from FY1995-1999 in
return for greater administrative flexibility. Eliminating cost
reimbursement procedures slows cost growth by 3% per year at the
federal level.

Table B-1.     Estimates of Savings from NPR systems Teams
               Recommendations
                    (dollars in billions)

                         FY95 FY96 FY97 FY98 FY99      Total

1.   Streamlining the
     Bureaucracy through
     Reengineering       5.0  5.8  7.4  9.5  12.7      40.4

2.   Reinventing Federal
     Procurement         0.0  5.6  5.6  5.6  5.7       22.5

3.   Reengineering Through
     Information
     Technology          0.1  0.5  1.2  1.6  2.0        5.4

4.   Reducing Inter-
     governmental
     Administrative
     Costs               0.5  0.7  0.7  0.7  0.7        3.3

5.   Changes to Individual
     Agencies
     (see Appendix A)    7.0* 6.2  7.0  7.3  8.9       36.4


Total NPR Savings        12.6 18.8 21.9 24.7 30.0      108.0


*Includes $0.5 billion in FY1994
The assumptions used to develop these savings estimates follow.