Article 99. Massive Tax Savings through Government Reform

Massive Tax Savings through Government Reform
By Lawrence Rosier Principal Consultant

The answer to the problem of rising Federal debt and the necessity of raising the debt ceiling is the implementation of the recommended management and efficiency reforms in the Federal Government. Upon implementation of reforms within a year the federal debt will start to decrease and it is no longer necessary to raise the debt ceiling. This article describes the process for achieving a balanced budget and a significant tax reduction through the implementation of government reforms.

The Office of Veterans Affairs (VA) because of its problems in serving Veterans it is the logical choice for a prototype.  Article 96. Highlights the details for the reform of specific problems found in the VA by taking the general approach we can surmise how the Federal Government can be reformed in similar functioning areas.  The result over time in using the reform process with management controls and the Continuous Improvement technique will result in a possible savings of as much as 50% or more.

Before Making Government Efficient
Before  making government efficient we must build a new kind of Federal Budget that eliminates waste.  In building this budget we must identify and remove items that do not meet an “Effectiveness test” (how well an item serves its intended use). See Article 49. LawrenceRosierConsulting Blog.

Another group of Items are those that are duplicated. There are thousands of these items which need to consolidated into a single organization or to a manageable few organizations using my Consolidation Model.  An example is: while most people think that there are only three or four Intelligence agencies there are actually seventeen contributing to government waste. See article 48. LawrenceRosierConsulting Blog.

The reason for doing this before implementing government reforms is best explained by Peter Drucker  “It is best not to make efficient those things that are going away”.  Key References to Government Efficiency and Reforms are found at the end of Article 96. LawrenceRosierConsulting Blog.

Responsibilities of the Principal Consultant
The Principle Consultant will provide broad support for all aspects of the Federal Reform process of overseeing the training of OIG Analysts to support the Federal Government Reform implementations.  The Principle Consultant will review and make recommendations for ongoing implementation of reforms by all Departmental OIG organizations. This includes the implementation of: Effectiveness Tests, The Consolidation Model, the General Reform Model and the development of new approaches needed to make the Federal Government Efficient. The Principal Consultant will provide specific support for the transfer of all Departments from the Bureaucratic organization to the new Team Management organization.

The General Reform Model
The “General Reform Model” implements Right-Sizing and the development of bottoms-up manpower budgets.  It also implements Enterprise Lean also known as “Continuous Improvement”  using the Lean Teams as a basis to convert the Department’s Bureaucratic organization to a Team Management organization. The Principal Consultant will play a key role in being sure that the Lean teams are properly trained. The Principal Consultant will also insure that the activities of OIG Analysts are trained in Right-Sizing and can determine the correct staffing level through Work Measurement.  Data on the number of occurrences of the function over time, is obtained from a daily log kept by each Lean Team and provides the basis for an accurate functional manpower budget.  OIG Analysts will summarize data in a OMB managed Lean database where all of the Department’s functional data is stored. OIG Analysts will assume the responsibility for the management and reporting of government activities and will be followed closely during the implementation by the Principal Consultant.

It is important to realize that this article represents a simplification of what should happen during the implementation of Reforms the Principal Consultant provides the guidance needed in actuality. 


The Phases of the Implementation of Federal Government Reforms

Phase 1. Committee for Oversight Of Federal Government Reforms
A Governmental Reform Oversight Committee involving representatives from all OIG organizations should be established and be chaired jointly by  The Secretary of the Office Management and Budgets (OMB) and the Principal Consultant. Members of the Committee will include heads of Departmental OIGs who will have the responsibility for the implementation of the Federal Government Reforms in their departments.

Departmental OIG Analysts will act as facilitators supporting the implementation of Enterprise Lean until it has been implemented in its entirety throughout their departments. When the implementation has been completed the OIG Analysts will assume a management function maintaining the new Bottoms-up Budget databases. The Department’s budget databases may be stored in an OMB managed database such as Google’s cloud storage “Google Drive” at limited cost.
 
Phase 2. Training OIG Analysts to Facilitate Enterprise Lean and Data Collection
The Principal Consultant will participate in a train the trainer program beginning with the VA pilot implementation. The knowledge gained in the VA pilot implementation will allow OIGs from the VA to communicate their experience by establishing a training program for OIG Analysts in other departments.

Each Departmental OIG head will also have the responsibility to train their OIG Analysts as Facilitators.  Planning for all Training should done by the OIG Reform Committee meeting with the counsel of the Principal Consultant.  OIG Analysts acting as Lean Facilitators will organize and train each employee functional Lean Team work group which usually meets for one hour on a weekly basis.

The principle duty of each Lean Team will be the development of flow charts depicting the flow of processes which the team is responsible for, also called work load balancing.  I have had the best success in placing these flows on a wall chart such that the entire process is visible to all members of the team.  The goal is to establish the most efficient operations such that no members of the team must wait until others complete their tasks.  In the case of the VA hospital teams when the flow chart has been completed a Template is made of the wall chart and it is made available to other VA hospitals.

The management data resulting from building the wall chart will be used by OIG Analysts to build a bottoms up budget and to schedule operations.  In the case of the VA the data will be used to schedule and reduce patient backlogs.
 
Establishment of Management Lean Teams
There are two major Lean Team groups, high level Management Lean Teams and at-the-work-place Functional Lean Teams. Management Lean Teams are organized and lead by members of management. They are tasked to study individual high level systems problems within the Department and those that interact with other Departments, mostly document flows.

Phase 3. Review of Lean Team Results and Collection of Lean Data
After a period of about three months most Functional Lean Teams, those that were organized and trained by Facilitators, should have their Lean Data collection completed and wall charts completed.  An OIG Facilitator Analyst will document the lean Team's savings findings in a spreadsheet.

Details of the Data Collection and Reform Process
The technical reform process begins after the decision to implement Enterprise Lean and after the functional Lean teams have completed their lean studies. The important data that is necessary for reform is the functional cost data developed by the Functional Lean Teams from their individual functions.

The data may be collected in electronic tablets or Google Chrome books using a spreadsheet program specifically designed for this process.  All tablet spread sheets will be continuously updated using a special Google App (application).   Each Departmental OIG head will provide training of OIG Analysts in the collection of this data and all subsequent reform steps.

Lean Team Data that is collected and allowed to accumulate
The following steps show how the Lean Team Data is collected and allowed to accumulate in the spreadsheet program and how the summarized data is used. 
1. The Lean Data for each function will be documented in the spreadsheet.

2. All labor and expense cost data will be documented and allowed to accumulate as functions are added to the spreadsheet until all functions have been accounted for (bottoms-up manpower budget).

3. The names of the employees working on the function will be documented with any special expertise they are using in performing the function. Each employee’s labor hours expended in doing the function will be documented and allowed to accumulate. This data will be used during the Right-Sizing process.

4. Where there is interaction between several employees during the performance of the function as a part of a work load balancing chart will be a part of the documentation. This work load chart can be used later to balance the function’s work load. (prevents employees from waiting on other employees).

5. When all of a Departments Functions have been logged into the spread sheet the final labor hours and expense numbers will have been automatically tallied in the spread sheet along with the total hours worked by each employee in the particular function.

6. A key question asked of employees is the estimate for the number of times that the function is done per week this is tallied and recorded in the spread sheet. This number is authenticated by history and other knowledgeable personnel including the enumeration of purchased goods consumed by the function.

7. The total annual accumulated functional hours rated at 100% productivity and must be converted to provide a realistic number at 75% productivity. To make this conversion you will add 25% more time to the total or multiply the total time by 125%. This becomes the labor hours for staffing and budgeting and is what is referred to as a Gross Load among consultants. When all of the Agency’s functional labor hours have been accumulated at 125% and we add in the total annual expenses, Vacations etc. we have what is called a Bottoms-up Functional Budget.

8. Next we will compare the Bottoms-up Budget with the current Top-Down Agency Budget. To do this we remove all management and overhead expenditures from the Agency’s Top-Down Budget to obtain an equal expenditure. Then we compare the Bottoms-up Budget with the Top-Down Budget. The Bottoms-up Budget should be 20% or more less than the Top-Down Budget.  This can be verified by the number of times that a Function is being performed annually. This is determined by reviewing the Lean data in the Agency’s spreadsheet.

9. We can do Right-Sizing using the employee accumulated Lean data from the spreadsheet. As a rule of thumb the employee accumulated hours is separated between those who have accumulated more than 20 hours per week average and those who have accumulated less than 20 hours per week. Those who have accumulated less than 20 hours per week are considered to be redundant and slated for retraining for a new job. Their accumulated hours are spread among those with more than 20 hours per week increasing their hours to at least 37 hours per week. This involves reviewing each function and reassigning tasks to employees according to their capability and availability.

10. We need to review the spreadsheet for those jobs noted as occurring on a random basis. These special jobs need to be separated form those jobs that occur on a continuing basis. An individual employee is specially trained to do the job of Work Planning, forecasting scheduling these jobs on a weekly basis.

11. The spreadsheets can be stored on thumb drives for each Department and protected. The labor data for each function is stored in a Database at 100% to be used for calculating productivity where required. The Database also includes the staffing and bottoms-up budgeting data. I recommend that the data be protected by an independent organization such as the OMB. This allows availability of the data for all who want to review the actual labor and expense cost of a Department’s function including the Bottoms-up Budget.

Phase 4. Organization Reform
In the final step of the General Reform Model the Principal Consultant will support the process of organizational reform by replacing the Bureaucratic organization with a Team Management organization with top management managing the Agency’s activities through Group Teams with each managing several Functional Teams. The Lean Teams at the Functional level will become self managed Functional Teams with each of their elected leaders reporting directly to a Group Managed team. Group Managed Teams will assume their management role from the pre-organized high level Lean Six Sigma Teams (where used). There is some flexibility in how this process actually occurs but it is necessary in order to eliminate the problems caused by the Bureaucratic organization. The important advantage in changing from a Bureaucratic organization to a Team Managed organization is that the savings continues annually for years. But if the bureaucracy is allowed to stay in place after only a few years of mismanagement the level of staffing could grow to where it originally was.