mittee I had could continue to be given to the IRS and could continue to recommend to this Committee further technical items. With that, I will stop and try to answer any questions you may have. Senator GLENN. Thank you. We will wait until everyone has had a chance to testify. Mr. Gioia? TESTIMONY OF JOHN GIOIA,1 PRESIDENT AND CHIEF Mr. GIOIA. I also will submit my comments for the record, and summarize what I think are the high points. You mentioned some of them. I have read some of the best plans written and not implemented well—not only in IRS, but in many other agencies. And I have asked myself the question over the years-why is that so. The IRS does understand PERT charts-although they are more complicated now. They do understand change process, earned value, and all those things, and they do have the plans to execute them— but they do not get it done. So you wonder why, and I reached a conclusion, and I think I can validate it. It is that a decision process is lacking; a good, strong, disciplined and controlled decision process does not exist. It does not exist for a lot of reasons; mostly, it is because of the culture and the core competencies within the agencies. And I am not picking on IRS. As I said, I can make the same case for the FAA, Social Security, and others. Agencies must have a discipline and control process and a successful program environment. I am talking now about a program environment for managing programs, not for managing the total IRS. Such as managing a program within the IRS like TSM, that you can bound, that has a set of objectives that you can define, that can be measured to achieve success. In that kind of an environment, you must have a discipline and control process. You must be able to minimize micro management. You have got to have a streamlined decision process but also some checks and balances. You have also got to have minimum but effective oversight and, most important, you must have effective communications with all the stakeholders involved so they help you rather than try to crucify you. Industry succeeds in making a lot of these things happen. You heard testimony this morning that in industry, VISA and companies like that, seem to get these jobs done, and the government does not. I suggest that in order to build this kind of environment and process that I have just described, which is really very simple-I mean, we are not talking about magic bullets or things that are esoteric; we are talking about something that is basic in management that most people understand-but you have to implement it. As you said, the Congress cannot direct the implementation, but you should be able to make sure it is being accommodated. In the implementation process, to ensure that the agency has a disciplined and controlled environment, I suggest a control board, similar to what Mr. Clagett just referred to, very similar to a board 1 The prepared statement of Mr. Gioia appears on page 347. of directors in a big corporation; an independent, strong board with the ability to make the decisions, approve the requirements, redirect the program if it is necessary to be redirected, not be influenced by any time or political change, hold changes to a minimum, and redirect or cancel the program if it requires that. The board should be independently manned. It should be manned by people who do not have any skin in the game. A member of the government should not chair the board. Nor should members of industry who are suppliers to the particular agency executing the program. That board should be in place prior to program implementation and that board should exist under some kind of a charter that allows them to continue through a political environment such as a reelection or a change of administrators or a redirection of the program by any other external influence. That board should have the authority to validate requirements and control changes, which is critical. It is because of requirement creep, lack of change control, and poor program management and implementation that these programs ultimately fail. The next thing below the board organizationally should be a good program management environment with a good discipline and control process that allows the kinds of things that you were referring to, Senator Glenn-good PERT charts, good understanding of interdependency, the ability to integrate various systems together as a whole, the ability to measure progress against a set of metrics, to know when you have variances and to have the ability to adjust for those metrics or variances when they occur. That is, again, nothing that is uncommon, but it is very, very hard to implement. It is hard to implement if you do not have a control process on board that forces decisions to be made, allows people to say "no," minimizes changes, has the authority and the responsibility to execute and act as a corporate entity. I think, in my humble opinion, that is the way to improve the process for fielding programs that we are facing throughout the Federal Government, particularly within the IRS. With that, I will conclude and let you ask any questions. Senator GLENN. Thank you very much. Robert Tobias, national president of the National Treasury Employees Union. Bob, we are glad to welcome you again. You have appeared before this Committee before. TESTIMONY OF ROBERT M. TOBIAS,1 NATIONAL PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION Mr. TOBIAS. Thank you very much, Senator Glenn. Senator GLENN. We welcome your accompanist from Ohio as well. Welcome, Steve. Mr. HERRINGTON. Thank you, Senator. Mr. TOBIAS. I am pleased that this Committee in general and you in particular, Senator, are interested in the views of employees on the most important issues that are before this Committee today. My written testimony discusses funding for tax systems modernization and the associated issues of buyouts, but I would like to 1 The prepared statement of Mr. Tobias appears on page 362. focus my oral testimony and summary on the IRS plan to fire 2,500 field employees and rehire 1,500 employees in different locations doing the same work. This is an unwise plan which will decrease customer service, cost $45.6 million in fiscal year 97, money which the IRS does not have, and constitutes a serious breach of trust with Congress and IRS employees. The IRS is proposing to consolidate at a time when the rest of the world is decentralizing. Alaska will lose 32 of 205, or 15.6 percent, of its employees to Seattle. Ohio will lose 180 IRS employees. Arkansas will lose 60 of 321, or 18.7 percent, of its employees to Oklahoma City. And Delaware will lose 30 out of 193, or 15.5 percent, to Maryland. Maine will lose 38 of 221, or 17.2 percent, to Massachusetts. The taxpayers in these States will have less, not more, customer service. And I use the term "customer service" differently than Mr. Dolan was using it in his testimony when he appeared just before this panel. I use the term "customer service" not as someone specifically designed to do customer service, as I think the term was being used by Mr. Dolan, but in the broadest sense-contact with taxpayers, customer satisfaction, not just those who answer the telephone. Many of these locations will lose problem resolution officers, the contact who solves problems that others cannot; Federal-State coordinators who work primarily with small businesses and others who timely process closed cases, thereby reducing the time necessary to have an open case with the taxpayer. I define that as lost customer service. Now, 800 number telephone responses are no substitute in the IRS right now-perhaps in the future, but not now. IRS answered only 38.6 percent of its calls last year and is projected to answer fewer calls in fiscal year 96 than in fiscal year 95. There will be less customer service. Second, RIFS of field employees will cost $45.6 million in fiscal year 97, not save $2.1 million, as suggested by the IRS, using the IRS' own numbers. And if all costs were included-increased rent, higher pay, recruiting and training 1,500 new employees, paying for promotions and within-grade increases for newly-hired employees, and moving costs the costs would increase dramatically, and the projected savings IRS puts forth would significantly decline. The problem we have here is implementation without planning, implementation without cost justification. We have had problems with that in the past, and I urge that it not be done here at this time. Third, IRS promised employees and the Congress that it would not conduct RIFS when it announced its reorganization. The IRS should keep its promises to you and to IRS employees. Credibility is an important commodity, and the IRS should be made to maintain its credibility. Now, the IRS can pay for these positions under the current funding level. There is no question about that. It is not denied by the IRS. It can pay for these positions in these locations with the funding level put forward in the Senate mark which will be voted on this afternoon. In order to conduct a RIF, the IRS therefore should be able to clearly and unequivocally justify its actions with improved customer service or cost savings. It should be able to prove that it can and should operate with 1,000 fewer employees. The IRS has not made that case because it cannot make that case. These people can do the work where they are, and they can do it well. I ask that you let them do it. I ask all the Members of this Committee and you particularly, Senator Glenn, to recommend that the IRS proposed RIF of field employees be rejected. It is unwise, unjustified and, in my view, unconscionable. Thank you very much. Senator GLENN. Thank you. Mr. Herrington? Mr. HERRINGTON. Thank you, Senator. Senator GLENN. In Ohio, we have-what-a 180 loss on this? Senator GLENN. Go ahead. TESTIMONY OF STEVE HERRINGTON, PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION, CHAPTER 27, COLUMBUS, OHIO Mr. HERRINGTON. I am the NTEU chapter president in Columbus, Ohio and a revenue officer for IRS. I would like to share with the Committee the events in Ohio that have led to the proposed reduction in force or RIF that we are now facing. In August of 1995, as a result of the IRS District Office Study, DOS-2, we began the process of consolidating the Cleveland and Cincinnati districts into what is now known as the Ohio District. The deadline for this consolidation was October 1, 1996. To begin this consolidation process, we formed teams within each business function made up of front-line employees and managers. Our task was to create a cost-effective and efficient organization to accomplish the mission of the service in what would become the 5th-largest district in the United States. These teams were directed to look at the best practices for accomplishing work for each function. They were to identify a means to improve efficiency and decrease costs. In February of 1996, we submitted our proposed Ohio District consolidation plan to the IRS Northeast Regional Director for approval. Our plan created what we believed to be a lean, efficient district. It identified 97 positions to be eliminated. We requested permission to begin operating as the Ohio Director on April 1, 1996. How ironic. On March 7, 1996, the regional commissioner issued a memo to the Ohio district director certifying us to begin operating at the Ohio District based on the organizational structure and the number of positions shown on our organizational charts. There was a concern raised regarding our recommended spans of control, which was not enough employees per group manager. There was no concern raised regarding the fact that our organizational charts anticipated and proposed processing positions which would be located outside district headquarters, but closer to the actual work being performed. In May of 1996, we received a memo from Dave Mader, asking for clarification concerning what he termed "exceptions to the organization's structure that allowed off-site processing positions." Our transition steering committee was in a state of disbelief. Six weeks after everything had been approved, and we were operating at the Ohio District, we were suddenly being questioned about our organizational structure. If all the processing positions currently located in the Cleveland office were eliminated, we would be forced to take people from field compliance positions in the headquarters office just to process the work. This would be contrary to the purpose of the district realignment, which was to put more people back into field compliance positions. We submitted our response to the northeast regional commissioner on May 15. It made no business sense to eliminate people who were trained, skilled and experienced in performing processing work and then turn around and hire people off the street and wait for them to get the knowledge necessary to perform the work. It would slow the processing of the examinations, the timeliness of collections, and it would reduce the quality of service to the public. I would like to read three of the comments that we provided in our response to the region. First, the lien payoff desk located in Cleveland collects nearly $300,000 each month. Without customer service for Federal tax liens, the exposure to lost revenue is enor mous. Second, centralizing our examination support and processing in headquarters would result in significant delays in processing cases. Our efforts would have to concentrate on statute and large deficiency cases. all other examination work would backlog and be worked as time was available. Priority work would increase as statutes became eminent. The system would eventually collapse under the weight of the backlog. Our examiners and clerical support close an average of 550 units per person per year. Therefore each support position we eliminate in Cleveland reduces our closed units by 550. Finally, we believe that we would have difficulty recruiting qualified employees. The Cincinnati service center is experiencing difficultly filling similar jobs. Training and development of new employees would cause a serious drain on our existing resources. We would need to maintain a Cleveland operation for several years to handle the workload while the headquarters operation gets up to speed. The response we received from the region on our request was negative. They did not provide any explanation or any evidence to contradict our business case; they just said no. We were told to RIF approximately 100 employees in the Cleveland office. These positions consist primarily of employees at the GS-4 to GS-7 pay levels. The majority of these employees have 10 or more years of job experience, the type of experience you cannot hire off the street and expect to accomplish the mission of the service. It is a slap in the face to all IRS employees that they are being fired and being replaced with new employees with no experience. It is also interesting to note that no manager in our district realignment was negatively impacted in this process. They were taken care of prior to the decision to conduct this RIF. In every |