directed at controlling inflation while avoiding excessive taxation and government regulation if we are to see further improvements in productivity in the decade ahead.

Question 9. Some analysts have commented that our current budgetary process does not incorporate methods for addressing long-term problems such as the greenhouse effect or the cleanup and revitaliztion of our nuclear weapons production facilities. Do you share this assessment? If so, what actions might you take as OMB Deputy Director to give long-term planning more emphasis in the budget process? Answer. I think there is a need for more long-term planning in the budget process. Director Darman is of the same view, as he has testified. We are jointly considering the best means of accomplishing this, including anticipating problems such as the greenhouse effect.

Question 10. OMB is developing a consolidated budget and financial information system. How would you envision this system correlating budget and financial management information once it becomes operational?

Answer. First, we believe that correlating budget and financial information is a key to better management of the Government. We need better program information, not just on budgetary allowances and budget results, but resource balances, program efforts, and accomplishments. This information will allow agencies to manage programs bettter, and will allow the Executive Office and the Congress better to evaluate the efficacy of programs.

Second, to obtain better progammatic information, we would carefully structure the Federal and agency budget and accounting data. The previous Administration put in place the Standard General Ledger and Core Financial Systems Standards: we will build on that work.

Our efforts are expected to result in a data structure that provides common data and a mechanical intergration between budgetary and financial data. However, more improvements are needed. Our goal is to produce performance data to assess progress in programs and to ensure compliance with Presidential and legislative intent. Financial information will be oriented toward reporting on the execution of budgetary decisions and facilitating future decisions. In short, we will work toward the goal of making all financial data available to program managers and oversight bodies in forms they can use.

VI. THE PAPERWORK REDUCTION ACT, REGULATORY REFORM, INFORMATION POLICY, AND THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS

Question 1. What do you believe are the fundamental purposes of: (a) The Paperwork Reduction Act; (b) Executive Order 12291; and, (c) Executive Order 12498? How would you describe your responsibilities, as Deputy Director, under each of these measures?

Answer. (a). The Paperwork Reduction Act of 1980, as amended, is an attempt to control and manage the government's collection and use of information. Building on the Federal Reports Act of 1942, the Federal Records Act, the Brooks Act, the Privacy Act, and related laws, it requires that OMB examine and improve the management of Federal information activites toward four ends:

To minimize the burden of Federal paperwork on the public (including individuals, businesses, and State and local government); to minimize the cost and maximize the usefulness of information collected, maintained, and disseminated by the Federal government; to coordinate and integrate Federal information policies, including ensuring the privacy and confidentiality of Federal information; and to oversee the acquisition and use of information technology (computers and telecommunications) to assure that this important technology is used efficiently and in a manner that improves the operation of government.

The unifying theme of the Act is that information is a scarce resource. Federal requirements affecting the production or use of information have both benefits and costs. In reviewing collections of information submitted by agencies for OMB approval or disapproval under the Paperwork Reduction Act, OMB assures that the benefits of collecting data outweigh the costs of obtaining and using it. In reviewing major information systems and proposed information technology investments as part of the fiscal budget process, OMB is charged with assuring that the Federal government exploits the potential of modern technology to improve governmental efficiency and responsiveness while not unduly intruding into the personal lives of Americans.

(b) and (c). Executive Orders No. 12291 and 12498 institutionalize a process of Presidential regulatory review. This process is intended to ensure better analysis of regulatory impacts, greater interagency coordination, more public notice of planned

Federal regulation, and increased executive involvement in the regulatory process. Under Executive Order No. 12291, regulatory agencies have to justify their need to regulate, and demonstrate the likely benefits and costs of a regulation to the President's Executive Office before the agency issues a regulation.

Under Executive Order No. 12498, the Office of Management and Budget issues the annual Regulatory Program of the United States Government. Development of this document is intended to improve agency regulatory management by providing the President and his appointees a direct opportunity to review major regulatory activities planned for the coming year, to focus regulatory priorities, and to coordinate with each other.

The Paperwork Reduction Act and these two Executive Orders create mutually supportive, interactive Presidential oversight mechanisms that focus on the paperwork and regulatory impacts of Federal programs. Other oversight mechanisms in OMB focus on different aspects of Federal programs, including their direct cost to the Treasury, the Federal manpower required, and their fiscal management, including contract, grant, and procurement procedures.

My responsibilities, if confirmed to be Deputy Director, would be to support the Director in carrying out Executive oversight for the President, and to assist the Administrator of the Office of Information and Regulatory Affairs in implementing the Presidential oversight mechanisms assigned to him in as effective and appropriate ways as feasible.

Question 2. What do you see as the relationship between the Director's responsibilities for information policies and the clearance of information requests set out in the Paperwork Reduction Act and the regulatory review responsibilities prescribed by Executive Orders No. 12291 and 12498? How would you describe your responsibility, as Deputy Director, to carry out the Director's obligations under these measures?

Answer. OMB's responsibilities for information policies under the Paperwork Reduction Act and its responsibilities for regulatory review under Executive Orders No. 12291 adn 12498 are complementary and mutually supportive. Under the Paperwork Reduction Act, Congress provided broad oversight authority for OMB to review and reduce the burden of unnecessary Federally-imposed reporting and recordkeeping. In carrying this out, OMB does not separate its review of paperwork activities from its reviews of agency regulations. At least 75 percent of the total Federal paperwork burden is imposed for regulatory or compliance purposes. OMB cannot review Federal paperwork without reviewing agency regulations.

Moreover, OMB examines more than the underlying regulation in which the paperwork requirement is embedded. OMB also examines the extent to which related statutory, budgetary, and broad policy mandates may be driving such paperwork requirements. In short, proper review of paperwork burdens, as required by the Paperwork Reduction Act, must of necessity include a careful understanding of the underlying source of the paperwork requirement.

Similarly, the requirements for executive oversight of regulatory planning and review set forth in Executive Orders No. 12291 and 12498 have created a process for OMB to oversee regulations dealings with information resources management. These regulations include GSA's Federal Information Resources Management Regulations (FIRMRs) and the Department of Commerce's Federal Information Processing Standards (FIPS). To the extent that agencies operate major systems through grant and contracts with States, localities, and other entities, agency program regulations are increasingly an instrument of information policy. Such review of regulations permits OMB to identify and resolve important information policy issues; such as prescribing information technology requirements in program regulations, and assuring compliance with the Computer Security Act of 1987 and the Privacy Act of 1974 especially as amended in 1988 to deal with computer matching.

In summary, the functions of information and regulatory review overlap and complement each other. The Office of Information and Regulatory Affairs (OIRA) in OMB is responsible for clearance of agency information collection requests, and for implementing Executive Orders No. 12291 and 12498. Agency requests for OMB review of paperwork as well as regulatory matters are conveyed on the same form, the SF-83. Agencies submit their draft regulatory programs for review and coordination by OIRA. Assigning staff to designated agencies also provides a consistent, clear line of responsibility for oversight and appropriate coordination of agency information and regulatory activities.

As I indicated above, my responsibilities, if confirmed to be Deputy Director, would be to support the Director in carrying out Executive oversight for the President, and to assist the Administrator of the Office of Information and Regulatory

Affairs, in implementing the Presidential oversight mechanisms assigned to him in as effective and appropriate ways as feasible.

Question 3. It has been suggested that OMB's leadership role in information policy mandated by the Paperwork Reduction Act has been adversely affected by the resource demands of Executive Order No. 12291. Do you agree?

Answer. No.

To the contrary, the two oversight mechanisms overlap, and are mutually reinforcing. The substance of the review is basically the same. Under the Paperwork Reduction Act, OMB is obligated to balance the needs of the agency for the information against the burdens of the collection on respondents. Under Executive Order No. 12291, agencies are to demonstrate to OMB that the direct and indirect benefits of a draft rule exceed its costs, both economic and social.

For OIRA staff to analyze the policy implications of a particular rule, or the information collection contained in that same rule, requires basically the same steps. To the extent that Paperwork Reduction Act oversight relates to information resources management, OMB will also be overseeing the budget expenditures or regulatory implementation involved.

Question 4. Some commentators have proposed that OMB's regulatory review functions prescribed in Executive Orders No. 12291 and 12498 should be separate from OMB's information clearance responsibilities contained in the Paperwork Reduction Act. What is your view?

Answer. For the reasons I stated above, I would oppose such separation. There is too much substantive overlap between information and regulatory review to have separate individuals performing separate reviews. Such a bifurcated system would be inefficient, result in duplicative review, waste staff effort and add to review time through the need to coordinate, and dilute the existing clear lines of administrative authority.

Question 5. How do you envision the Office of Information and Regulatory Affairs functioning with the newly-created Presidential Council on Competitiveness?

Answer. On February 9, 1989, President Bush announced that he would establish a Council on Competitiveness, chaired by Vice President Quayle. At that time, the President stated that the Council would "review regulatory issues, and such other issues as may be referred by the President, bearing on competitiveness. In reviewing regulatory matters, the Council will be continuing the work of the former President's Task Force on Regulatory Relief." We anticipate that we will work closely with the Council and that OIRA will have a major role in the Council's work, particularly when regulations are involved.

Question 6. The President's Task Force on Regulatory Relief and OMB have supported efforts to reduce administrative costs and increase productivity for federallyfunded university research under the Federal (nee Florida) Demonstration Project. Last year, this project was expanded to incorporate research contracts in addition to grants and further made applicable to institutions outside the State of Florida. What is your opinion of this effort, and how can we best use the data and experience generated from this project.

Answer. The Federal Demonstration Project has shown considerable success to date. In its original form, as the Florida Demonstration Project, it helped share the benefits of the effect of streamlining and eliminating much of the Federal-imposed paperwork required of those involved with government sponsored university research. By expanding the project to add 26 universities to the original eight in Florida, and by including contracts as well as grants, our capacity to test innovative changes has been greatly enhanced.

I strongly support the goal of this Project—that effective means be developed to enable researchers to spend more time on their research and devote less time on Federal regulatory requirements and unnecessary paperwork. The data and experience generated from the Federal Demonstration Project can be used to identify reforms in this area that can be adopted permanently on a nationwide basis. By doing so we can receive maximum leverage from our Federal research dollars and thereby strengthen our national security and economic health.

Question 7. As you know, this Committee must consider the reauthorization of appropriations for the Office of Information and Regulatory Affairs (OIRA) established pursuant to the Paperwork Reduction Act.

(a) Do you support the reauthorization of OIRA?

(b) Do you plan to recommend any changes for amendments to the Paperwork Reduction Act?

Answer. (a) Yes. We have submitted a request to the Congress for reauthorization of appropriations for OIRA to carry out the Paperwork Reduction Act with my support.

(b) No.

Question 8. It has been reported that OIRA is currently considering the revision of OMB Circular A-130 (Management of Federal Information Resources).

(a) What is the status of this effort, and how does OMB intend to incorporate public participation in this review?

(b) Can you explain the relationship of this Circular to the Paperwork Reduction Act?

Answer. (a) OMB issued a proposed draft policy on electronic information dissemination on December 28, 1988, and published the proposal in the Federal Register on January 4, 1989. The public comment period was due to expire on March 6, but has been extended until April 10. The issue of access to, and dissemination of, government information is an important and sensitive one. I have been assured that OMB is proceeding in a manner that permits substantial opportunity for public participation before final policy is issued. Because of the extent of the public comments thus far received, OMB is considering issuing a second draft for public comment.

(b) The original Paperwork Reduction Act stipulated "general information policy" functions for OMB, which were to include developing and implementing uniform and consistent information resources management policies and overseeing the development of information management principles, standards, and guidelines and promoting their use (44 U.S.C. 3504 (b)(1). A 1986 amendment to the Paperwork Reduction Act requires that OMB “maintain a comprehensive set of information resources management policies" (44 U.S.C. 3505 (5)). The legislative history explains that this provision refers to OMB Circular No. A-130 and requires OMB to maintain this Circular.

Question 9. The "public protection" section of the Paperwork Reduction Act is designed to ensure that before any government demand upon the public to provide or maintain information is made, the request has been reviewed for need and efficacy. If an information collection request does not display a validly assigned control number, then it is considered a "bootleg" and is in violation of the Act's provisions. (a) How do you view the OMB Director's responsibility when a member of the public or a federal official brings a "bootleg request" to the Director's attention? (b) What actions do you believe the Deputy Director of OMB should take if the Deputy becomes aware of a "bootleg" request?

Answer. (a) "Bootlegs" are taken very seriously at OMB. The Director's office would not generally become directly involved in investigations of "bootlegs;" that is the responsibility of the Administrator of OIRA. If a "bootleg" does come to the director's attention, I can assure you that it will be handled expeditiously.

(b) As soon as OIRA is made aware of potential "bootlegs," OIRA contacts the affected agency immediately. Once it is established that a "bootleg" exists, OIRA asks the agency to request approval under the Paperwork Reduction Act, and to notify the public of the error.

VII. GOVERNMEnt Oversight and ReorganizATION

Question 1. Early in his first term, President Reagan established by Executive Order, the President's Council on Integrity and Efficiency (PCIE), composed of all statutory Inspectors General and other law enforcement officers in the Executive Branch. Under President Reagan, the Deputy Director of OMB chaired the PCIE, with day-to-day management provided by a Vice Chairman chosen from its members.

Do you expect the PCIE to continue, and will you, as Deputy Director, be its chair? If so, what areas would you like the PCIE to emphasize in the next four years?

Answer. The PCIE will continue to play a major role in the Administration's efforts to reduce fraud, abuse and mismanagement. When the President met with the Inspectors General on January 27th he emphasized the key role the Inspectors General will continue to play in improving the quality of goverment operations and ensuring the integrity of programs. He also commended them for their emphasis on ensuring that the highest ethical standards are maintained.

The President's Council initially will be asked to focus attention in the following

areas:

Identifying and assisting in correcting government-wide weaknesses and vulnerability to fraud, abuse and waste through the development of coordinated planning for the use of audit and investigative resources, e.g., long-term audit plans.

Developing and implementing policies encouraging Inspectors General to develop well-trained and highly skilled staffs.

Encouraging members of the Council to actively participate in the Council projects and to help implement selected PCIE projects.

Either the Director or myself will chair the PCIE. We intended to heavily involve the Executive Associate Director in our activities on the PCIE.

Question 2. Inspectors General, according to the 1978 authorizing statute, are to be selected without regard to political considerations and solely on the basis of demonstrated ability. Recent practice has been for an ad-hoc committee of the PCIE to review each Inspector General candidate's qualifications. Would you anticipate continuing this practice?

Answer. Yes.

Question 3. The PCIE currently has procedures governing allegations of wrongdoing against agency heads and Inspectors General. These procedures provide that Inspectors General will investigate allegations against agency heads and refer them to the Department of Justice or the Office of Government Ethics, as appropriate. Do you favor continuing this approach?

Answer. We plan to continue this procedure which was carefully worked out by the PCIE, OMB, the Department of Justice, and the Office of Government Ethics, and endorsed by President Reagan.

Question 4. As previously stated, Inspectors General are to be chosen for their positions on the basis on integrity and demonstrated ability in a variety of career fields including investigations. Career law enforcement personnel of the federal government are covered by a special retirement program provided that they serve in a position covered by this retirement program for a period of 20 years. Many such people are understandably reluctant to forfeit this retirement coverage in order to accept Inspectors General positions, a fact which may limit the President's ability to consider the full range of qualified persons for these jobs.

Would you support a selection system which ensures that federal career law enforcement personnel will retain their law enforcement retirement should they be nominated and confirmed by the Senate for an Inspector General position?

Answer. Yes. Under current law, there is a process by which I.G. positions may be designated as law enforcement provisions, allowing the occupant of the position to qualify for special law enforcement retirement benefits (See 5 CFR Section 831.901 et. seq.); however, such designation is not required.

Question 5. In your opinion, is there is any need to revise the E.O. 12625 which provides the structure for OMB coordination and support of IG activities?

Answer. Generally, we feel that E.O. 12625 provides the necessary guidance and structure effectively to emphasize and coordinate IG activities.

Question 6. What steps will OMB be taking to oversee each agency's annual report to the President under the Federal Managers Financial Integrity Act (FMFIA)?

Answer. OMB has proscribed policies for agency implementation of FMFIA. These are contained in Circular A-123 (“Internal Control Systems"), Circular A-112 (“Financial Management Systems"), and annual calls to agencies for FMFIA reports. OMB analyzes and evaluates agency reports, follows up in meetings with the agencies throughout the year, and summarizes highlights in the President's Management Report. Problems reflected in these reports include environmental and safety concerns with Federal facilities, ADP security, and procurement problems.

While we will continue to implement the two circulars and continue the annual calls, we are considering ways to monitor program operations more aggressively and implement key management objectives (e.g., past experiences with savings and loan banks, nuclear plants, embassy security, and prison overcrowding). We will seek to identify and track early indicators of problems and see that appropriate officials learn of them as quickly as possible.

Question 7. Some analysts contend that outside of the normal budget review process, OMB does little in the way of examining potential improvements in the (re)organization of the executive branch. Do you agree with this statement, and, if so, what steps can you take to address it?

Answer. Although OMB does not have a specific division to handle reorganization issues, it has the staff capability for organization planning. An important responsibility of OMB is to review ideas for improved organization of the executive branch. This is done routinely as part of the budget process.

While individual agencies undertake internal organization changes, OMB is in the best position to coordinate organizations changes involving several agencies. This interagency coordination role assists in resolving disputes and objectively assessing cross-cutting issues.

Question 8. Included in the recently enacted Department of Veterans Affairs Act is a provision recommending the creation of a Bi-Partisan Commission to study any