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+$250,000 and five workyears for a transfer of responsibility from the Office of the Inspector General for negotiating indirect cost rates with Department contractors;

+$167,000 and three workyears related to an expansion of measures to enable EEO staff and program managers in the Department to become proficient in reducing the number of complaints and therefore costs;

+$250,000 and four workyears for audit follow-up and related workload to ensure reporting requirements are met and timely responses are made to audit reports;

+$945,000 and six workyears to analyze long-term issues of significance to energy and natural resource management and to secure technical expertise in regards to the Superfund law, the Safe Drinking Water Act, and ground water; and

+$406,000 and six workyears applied to offices throughout the account to provide for an effective level of operations for these offices,

consistent with predicted workload and service requirements anticipated in FY 1989.

I would like to mention that since the budget for 1989 was transmitted, we have submitted to the Committee a reprogramming request for 1988 which would allow the implementation of a proposed reorganization of the Office of Policy, Budget and Administration, and in effect change our plans for use of part of the $945,000 requested to analyze long-term policy issues. This alternate use of requested funds would not change the overall amount requested for the Office of the Secretary appropriation.

Base Adjustments ($369,000)

This includes increases for GSA office space rent, the January 1988 pay increase, executive and clerical pay raises, Working Capital Fund expenses, and other such items. These increases are offset to a considerable degree by decreased retirement costs from the FY 1988 enacted level.

Construction Management

This appropriation provides for the expenses of the Office of Construction Management (OCM) to assist in the planning, construction and operation of facilities. Resources requested for this activity total $1,800,000 and 18 workyears, the same level as 1988. Based on this Committee's directive of March 26, 1987, we have expanded and intensified our efforts to assist the BIA's facilities program. Many accomplishments have been realized in this area during the past year.

First, we have accomplished, or are on schedule with, the five major program objectives established by both the Bouse and Senate Appropriation Committees. These include:

Improvement in the rate of Facilities Improvement and Repair

obligations and procurements. Seventy-seven percent of the FY 1987
appropriation was obligated in that fiscal year. We expect even
better performance this year.

Acceleration of the reduction of excess BIA space. We have reduced
our inventory by more than 340,000 square feet this fiscal year
with annual Operation and Maintenance savings of $240,000 and
repair items savings of $4.2 million.

Completion of the final draft report on BIA Education on March 17
of this year. This report is a comprehensive analysis of BIA

funded schools.

Committee and Departmental approval of the reorganization of the Office of Facilities Management in Albuquerque, employees formally began operating under the new structure on April 11, 1988.

Development of a revised Operations and Maintenance formula for allocating Facilities Improvement and Repair funds with a planned implementation date of October 1, 1988.

We have complied with all other facilities directives as well for the first time in ten years.

These accomplishments have been possible because of cooperative efforts between BIA and OCM. All have been accomplished with the overall objective of building the capacity in the Bureau to fully manage its program in the future. We have secured resources from a number of organizations including other Federal agencies in order to provide Bureau managers with the expertise and support they need. Our accomplishments in this program speak for themselves.

Preservation of the Main Interior Building

We are requesting $1,200,000 to begin a program of preservation and maintenance needs of the historic Main Interior Building, for which we have recently assumed management responsibility under a delegation from the General Services Administration (GSA). GSA has awarded a contract to do a basic analysis of the preservation and maintenance needs of this building, which was listed in the National Register of Historic Places in late 1986. This report will be completed this month. Since it is nearly certain that GSA will not be able to provide funds to us to follow

through with the report's recommendations in the near future, our request for funding is made to ensure the long-term preservation of the Interior Building and its works of art. The bulk of the request will fund high priority projects, such as: (1) restoring the building's twenty-two murals, many of which are damaged and discolored; (2) updating and revitalizing the Departmental Museum, including exhibit and collection rehabilitation; and (3) training on appropriate preservation and maintenance techniques for building managers and mechanics responsible for the maintenance of the building.

Management Improvements

The Department is continuing its efforts towards management improvement, and I would like to provide a status report on some of these efforts.

Productivity Improvement: In 1987 policies and procedures were
developed for a new program designed to finance innovative, low
cost, high-payback productivity improvement projects. Since this
program focuses on improving the delivery of products and services
to the public, we are reaching out to our managers in the field
where we think the greatest opportunity to improve efficiency,
quality, and timeliness of operations exists. The Bureaus are
supportive of this program. The Productivity Enhancement Funding
Program (PEP), as part of Interior's overall Productivity
Improvement Program, has received over 140 proposals from bureaus
and offices. The program is under pilot testing during 1988 and
will encompass 21 projects funded by the bureaus during the first
year. If these projects are successful, cost savings of over $11
million are projected over the next three years. Two awards of
$10,000 each will be made to recognize employees of two units whose
projects demonstrate the highest rate of return and the most
significant improvement in service delivery. In 1989, we estimate
40 projects will be funded under this program. The Secretary has
proposed establishing a fund of $500,000 which will be used to
partially finance PEP projects on a matching basis with the
bureaus.

Financial Integration Review for Management (PIRM): The FIRM initiative began as an effort to establish a sound Departmental strategy to improve financial operations. PIRM was undertaken for several reasons. First, our financial systems are old and cannot communicate with each other. In order to provide management with better data for making decisions, these systems must be improved. Second, the reduction in the number of systems (10 administrative accounting systems and 30 payment centers) will lead to efficiencies. Most of these systems are based on 1960/1970's technology which cannot provide improved financial operations without major systems modifications. Moreover, they utilize

different hardware, coding structures, and software. The purpose of FIRM is to implement a standardized administrative accounting and payment system for the Department to be operated at two locations. Within the standardized system, unique bureau requirements related to budget structure and geographic locations will be preserved. The Geological Survey has been chosen as the lead agency for this project with Departmental oversight. Standard accounting system software was competitively procured in September 1987. The system will be implemented in the Geological Survey and the Bureau of Reclamation at the beginning of 1989, with the remaining bureaus joining the system in 1990 and 1991.

Payroll/Personnel System (PAY/PERS): System development for PAY/PERS was initiated in 1976 and implemented in 1979 for the Bureau of Land Management, the Bureau of Reclamation, and several small agencies. In 1982, it was selected as the single Departmental payroll/personnel system. All Interior Bureaus and three non-Interior agencies were converted to the system by 1984. Today this one system services over 116,000 accounts for all Bureaus of the Department and three other agencies (the Education Department, the Selective Service System and the Federal Labor Relations Authority). In order to upgrade PAY/PERS, the Department is considering a proposal to adapt the FBI's Payroll/Personnel software for this purpose and has completed a cost-benefit analysis of the system.

Unemployment Compensation: An initial review by the Department's Office of Financial Management identified certain internal control weaknesses in our unemployment compensation process. To correct these problems a contractor was engaged to conduct the technical aspects of the program, including training bureau personnel, appealing claims, etc. Between January 1, 1986 and the end of February, 1988, the Department has avoided costs of more than $4 million through this effort, primarily through appealing improper claims.

Overtime Costs: In 1985 the Department spent more than $52 million for overtime. Efforts to improve the management and control of overtime have resulted in savings of approximately $4.1 million in 1987, and an additional $4.3 million is expected to be saved during 1988.

Cash Management:

Interior is considered a leader in cash

management in the Federal government. From 1983 through 1987 Interior saved the U.S. Treasury approximately $23 million, with an additional $4 million in savings expected in 1988. Examples of

activities include: (1) the use of wire transfers for receipts and expenditures; (2) a reduction of travel advances from $12 million

to $4 million as of December 1987; and (3) the initiation of credit card technology to collect Federal funds.

Administrative Provisions

Appropriation language is requested to provide authorization for the acquisition of eleven aircraft, seven of which shall be for replacement for the Office of Aircraft Services (OAS) fleet. As part of the budget process, each year OAS reviews records and estimates of how many aircraft will need to be replaced or new additional aircraft purchased in a given year. This estimate provides for general replacement of older aircraft and some contingency in case of destruction of existing aircraft. We are continuing our efforts in the area of aviation safety and are assisting the bureaus in developing their own safety plans.

Consultant Services

The Department proposes to increase from $300,000 to $810,000 the limitation on consultant services as authorized by 5 U.S.C. 3109. When the $300,000 limitation was included in the FY 1968 Department of the Interior and Related Agencies Appropriations Act, the salary rate for a GS-15, step 10, which is the highest rate at which consultant services can be reimbursed, was $25,711. The current salary rate for that grade is $71,377 or 270 percent of the 1968 level. As salary rates have risen, the $300,000 limitation has increasingly become a problem for the Department. In order to approximate the same amount of consultant services in 1989 as was available in 1968, we propose to increase the limitation from $300,000 to $810,000.

PBA Reorganization

Pinally, in order to improve the management within the Office of the Secretary we have proposed to the Subcommittee in a letter dated March 8, 1988, a reorganization and reprogramming affecting some offices within the Office of Policy, Budget and Administration. The reasons for the new organization and the special features of it focus on increased management emphasis in several functional areas, better coordination and efficiency, and changes in individual responsibilities to accomplish these goals. We hope that the Subcommittee will respond favorably to this proposal.

This concludes my opening statement, Mr. Chairman. I appreciate the opportunity to discuss these matters with you. I will be pleased to answer any questions this Committee may have with regard to this request.

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