OMBlog

Ending the Overpayment of Federal Contractor Executives

Last fall, the President called on Congress to scrap an outdated law that requires taxpayers to foot the bill for excessive payments to CEOs and other senior executives of companies that contract with the Government. Under certain Government contracts, the Government reimburses the contractor for its incurred costs – which includes salaries for employees. Congress put a cap on how much taxpayers would reimburse these executives in the 1990s, but that cap was tied to pay levels of the nation’s top private sector CEOs and other senior executives. As a result of skyrocketing CEO pay, the tab for taxpayers has soared to unreasonable heights in the intervening years. Unfortunately, Congress failed to reform the current reimbursement formula for contractor executives and, until it does, taxpayers will continue to foot a bill that is both unjustified and unnecessary.    

Here are the facts: since 1995, the Government has been required by statute to reimburse senior executives under Federal contracts up to the annu­al compensation for the top executives at large publicly-traded companies. In 2010, this meant that the Government had to reimburse up to nearly $694,000 – more than 2 ½ times the $250,000 the Government paid when the cap was first instituted in 1995. As a result of this rapid growth of private sector executive compensation over the past 15 years, taxpayers are being forced to reimburse contractors at a rate which has outpaced the growth of inflation and the wages of most of America’s working families – as well as the growth of Federal salaries.

OMB Transitions

Today, President Obama announced that following my departure from OMB next month to become his Chief of Staff, Jeff Zients will serve as Acting Director. With Jeff serving as Acting Director and Heather Higginbottom continuing her excellent work as Deputy Director, OMB will have strong continuity of leadership.

Jeff returns to the role of Acting Director after serving ably in that role from July to November in 2010. In his nearly three years at OMB, Jeff has worked closely with agencies to cut waste and make government more efficient and effective for the American people, developing deep knowledge of the federal government, and applying lessons learned from his private sector experience to save taxpayer dollars.

Having worked at the highest levels of policymaking in the legislative and executive branches for over a decade, Heather has been an invaluable addition to the team, working closely with me and the OMB staff on the budget these past months.

With Jeff and Heather at the helm, I am confident OMB will continue to serve the President and the American taxpayers well. Departing OMB next month will be bittersweet. It has been a privilege to return to such a vital institution and serve beside such talented and dedicated public servants at a time when their expertise was called upon again and again. I am honored for the opportunity to continue to serve this President as his Chief of Staff, and I look forward to continuing to work closely with my colleagues at OMB in that role as we continue to move forward the President’s agenda.

Jack Lew is Director of the Office of Management and Budget 

Super Duper Space Toolbox

President Barack Obama talks with Matthew Ritsko, the winner of the 2011 Presidential Securing Americans' Value and Efficiency (SAVE) award, in the Oval Office, Jan. 9, 2012. Ritsko, a financial manager at NASA's Goddard Space Flight Center, proposed the space agency create a "lending library" where specialized space tools and hardware purchased by one NASA organization will be made available to other NASA programs and projects. (Official White House Photo by Pete Souza)

From the start of the Administration, President Obama has been committed to delivering the American people an efficient, effective government that cuts waste and uses taxpayer dollars wisely. Recognizing that frontline federal workers know best where the waste is, he has made federal employees an essential partner in that effort. 

In 2009, the President launched the SAVE Award – an annual contest to enlist frontline Federal workers in the effort to cut waste and make government work better for the American people. This year, we received nearly 20,000 entries, and 48,000 votes were cast rating the ideas. Last November, the American people then voted on a final four of the best ideas, and the winner was Matthew Ritsko of Crofton, Maryland. Today, Matthew came to the Oval Office to discuss his idea with the President.

Expanding our Efforts on Data Centers

The President has been clear that every Federal dollar spent must generate a positive return for the American people and that as we tackle our long term fiscal challenges, we must root out waste in government. One area that we know we can do better in is with the thousands of duplicative data centers that sprung up across the last decade. These data centers – some as big as a football field, others as small as a closet –  represent billions in wasted capital that could be better used to improve upon critical services for American taxpayers.By closing data centers, agencies are on track to save taxpayers billions of dollars by cutting spending on wasteful, underutilized hardware, software and operations as well as enhance our cybersecurity; shrink our energy and real estate footprints; and take advantage of transformational technologies like cloud computing to make government work better for our nation’s families. 

Last year, we set an ambitious target of closing 800 data centers by the end of 2015. After a year of agencies working hard to develop plans and targets, we are not only on track – but exceeding that goal: 

• Agencies plan to close 215 data centers in 2011;
• Agencies plan to close 525 data centers by the end of 2012;
• Agencies plan to close 1,080 data centers by the end of 2015.

More Sunshine, Less Fraud

From his first day in office, President Obama has been committed to making the federal government more transparent and accountable to the American people than ever before.  As dedicated stewards of the taxpayers’ dollars, we have a responsibility to provide information to the public on how Federal funds are being spent and do everything possible to root out and prevent waste, fraud, or abuse in Federal programs.  The American people expect nothing less from our government than rigorous accountability for every taxpayer dollar.

Over the past three years, we have made tremendous strides towards the President’s goal of full transparency and accountability in Federal spending.  We have made progress on many fronts  including stepped up efforts to crack down on fraud that led to the recovery of billions of dollars last year alone; publicly posting budgets and status reports for Federal IT projects for the very first time; reductions in payment errors known as improper payments in programs like Medicare and Medicaid and making detailed information about spending available to citizens on-line  through USAspending.gov.  But there is more that we can, and must, do.

That’s why the President created the Government Accountability and Transparency Board, comprised of senior leaders with proven records as fraud and waste watchdogs, back in June of this year as part of his commitment to cutting waste and making government more accountable to the American people.  The GATB was charged with recommending ways to improve the tracking and display of Federal spending data and broaden the use of cutting-edge forensic fraud detection technologies.  And the President directed the GATB to work in close concert with the Recovery Accountability and Transparency Board, which established a new benchmark for how we should collect, display and oversee Federal spending data under the Recovery Act through Recovery.gov and its innovative Recovery Operations Center.

A Year of Change in Federal IT

As technologists in the private sector know, when money is tight, it’s often technology that enables us to do more with less. In a lean fiscal environment, organizations look for ways to take existing resources and use the latest advances and tools to do the seemingly impossible: improve and expand services while cutting costs. It is no different with the Federal Government. To deliver on the President’s commitment to an effective and efficient government, we are leveraging the latest advances in technology to save taxpayer dollars and cut waste. We are working aggressively to meet the challenge of doing more with less, and we are seeing real results.

By holding underperforming IT projects accountable, we are identifying efficiencies and eliminating waste to deliver better technology solutions sooner, and at a lower cost. This year we took our rigorous Techstat accountability sessions and open sourced the model, giving agencies the tools to turnaround or terminate failing projects at the agency-level. As a result agencies identified nearly $1 billion in efficiencies, bringing the grand total of Techstat efficiencies to $4 billion in less than two years. You can read more about that in the TechStat Report published today.

Having the right people matters too. In order to ensure we have the experienced and talented managers we need to oversee these large, complex IT investments and maximize the return on taxpayer dollars at every step in the process, we created a new role for IT program managers with more rigorous requirements.  We also launched the Presidential Technology Fellows Program this fall to attract new talent to the federal IT workforce by reducing barriers to entry for talented young IT professionals.

The Power of Goal Setting and Data-Driven Reviews: Cutting Crime in Indian Country

Today, President Obama and OMB Deputy Director Heather Higginbottom joined Interior Secretary Ken Salazar at the 2011 White House Tribal Nations Conference.  The President celebrated change in several areas, including making Indian Country a safer place to live.  Deputy Director Higginbottom commended Interior for its tremendous work to reduce crime on targeted Indian reservations. That change is thanks to the success of the Safe Indian Communities initiative, led by Secretary Salazar.  This initiative reduced violent crime a remarkable 35 percent across four Indian reservations with high crime rates.

Almost two years ago, in the FY2011 budget, Secretary Salazar set an agency high priority performance goal to reduce crime at least 5 percent on four reservations: Rocky Boy’s Reservation in Montana, home to the Chippewa-Cree Tribe; the Standing Rock Sioux Tribe’s reservation in North and South Dakota; the Mescalero Apache Tribe’s reservation in New Mexico; and the Shoshone and Arapahoe Tribes’ Wind River Reservation in Wyoming.  When the goal was set, most considered it to be very ambitious; Interior had never before adopted a crime reduction goal and does not control most of the factors affecting the crime rate.

Bargain Hunters Be Wary

As Americans kick off the holiday shopping season, it's a good time to remember the importance of making responsible purchases and rejecting counterfeits that pose a threat to American jobs, safety and health. Today I joined Attorney General Eric Holder and other Administration officials at the White House to announce progress we’ve made cracking down on intellectual property theft crimes, and to launch a public awareness campaign to combat the purchase and sale of counterfeit and pirated products.

As President Obama has said, in order to win the future in the global economy America must out innovate our competitors. Intellectual property theft undermines our nation's innovators and entrepreneurs. The new campaign will educate the public about the full range of intellectual property crimes we confront, from counterfeit consumer goods and fake pharmaceuticals laced with potentially dangerous substances to illegal downloads, while highlighting the potential threat these crimes pose to economic prosperity and public safety. The campaign will include a television PSA, materials delivered through social media, and radio, web, and print ads. 

The Administration has been proactive on multiple fronts in order to increase intellectual property enforcement. We have increased law enforcement efficiency, advocated for legislative reform, informed the public about the negative impacts of intellectual property theft, and engaged the private sector to foster cooperation and create voluntary solutions through productive conversations. Today’s announcement marks an important milestone in the Administration’s ongoing efforts to curb intellectual property theft that harms the economy, undermines job creation, undermines innovation, and jeopardizes the health and safety of American consumers.  

At the event, Attorney General Holder and I were joined by Acting Deputy Secretary of Commerce Rebecca Blank, who discussed the ways in which counterfeit goods impact the everyday lives of American families. Director of Immigration and Customs Enforcement John Morton was also in attendance to discuss ongoing Administration law enforcement efforts concerning counterfeit goods and intellectual property crimes. And Ann Harkins, National Crime Prevention Council President and CEO, was on hand to unveil the products of the campaign that will help build awareness about the harm caused by counterfeit goods and engage the public in stopping intellectual property theft. 

For more information about the campaign, visit: http://www.ncpc.org/getreal.

Audits In; Records Broken

As careful stewards of the taxpayers’ dollars, the Federal Government has a responsibility to ensure that it is spending money responsibly and keeping its books in order for all to see.  Just like companies in the private sector, our Federal agencies must undergo thorough audits each year to ensure that we are practicing sound financial management.  And today, I am pleased to announce that - for the first time since the passage of the Chief Financial Officers (CFO) Act over twenty years ago - twenty-three of the twenty-four applicable agencies obtained an opinion from the independent auditors on their financial statements. 

These results are not just about numbers on a ledger.  They are about this Administration’s commitment to watching every dollar that goes out the door and making sure that we have the proper controls, practices, and safeguards in place on those dollars.  And although this effort is an ongoing challenge, we are excited that we continue to make progress on improving financial reporting and internal controls.  This year’s audit results are evidence of this progress, showing twenty-one “clean” opinions, two qualified opinions, and only one remaining disclaimer.