GM 17-025

OMB Releases Memorandum on Reforming and Reducing the Federal Civilian Workforce; Hiring Freeze Lifted

On April 12, 2017, Office of Management and Budget (OMB) Director Mulvaney issued a Memorandum to Heads of Executive Departments and Agencies entitled “Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce” (Memorandum). The Memorandum addresses issues of: 1) immediate workforce reductions and cost-savings; 2) maximizing employee performance; and 3) long-term agency reform and workforce reductions which will be encompassed in a “Government-wide Reform Plan.” The Memorandum is a follow-on to President’s Trump’s hiring freeze order of January 23, 2017, which required a long-term plan to reduce the size of the federal workforce and his March 13, 2017, Executive Order 13781 which required a reorganization of executive branch departments and agencies. The 14-page OMB Memorandum is here:

The Memorandum lifts the hiring freeze but requires that agencies, in making near-term decisions, adhere to the Administration’s proposed FY 2018 preliminary or “skinny” budget recommendations regarding budget cuts. OMB Director Mulvaney cautioned that lifting the freeze does not mean that agencies can “hire people willy nilly.” For instance, the preliminary FY 2018 budget proposes to reduce funding for the Department of Health and Human Services (HHS) by 17.9 percent; the Department of Interior (DOI) by 12 percent; and the Environmental Protection Agency (EPA) by 31 percent. At the same time, the FY 2018 proposal is supportive of the Indian Health Service (IHS), referring to it as a “high priority” and the DOI section states that the Administration supports tribal sovereignty and self-determination while proposing to reduce funding for initiatives that serve only a few tribes. For more information see our General Memorandum 17-020 of March 20, 2017, regarding the Administration’s preliminary proposed FY 2018 budget. The detailed proposed FY 2018 budget is expected in mid-May.

The Memorandum requires with regard to employee performance that agencies develop and begin instituting plans to ensure enhanced employee performance oversight, including appropriate and rigorous training for managers and the ability, when necessary, to remove poor performing staff from their jobs. Each agency is also directed to create an “Agency Reform Plan” which will identify how the efficiency, effectiveness, and accountability of their respective agency can be improved. As part of this process, agencies are to determine whether their agency should or should not be performing certain activities, and whether such activities are correctly aligned with the mission and role of the agency. This review is to result in proposals in four categories: 1) eliminate; 2) restructure or merge; 3) improve organizational efficiency and effectiveness; and 4) workforce management. As part of this analysis, agencies are to consider whether an office, program or activity: is duplicative; is non-essential; is efficient and effective; could be better performed by a non-federal entity; what the cost-benefit is; and whether good customer service is provided. OMB will have a crucial role in working with agencies on these matters, including coordinating crosscutting proposals that may involve multiple agencies.

Looking further down the road, it will be the FY 2019 proposed budget that will contain the Government-wide Reform Plan. The Government-wide Reform Plan will encompass both agency-specific reforms and crosscutting reforms and will provide the significant detail with regard to budget reductions and the means (administrative actions and proposed legislative language) to make the proposals reality. The Memorandum provides that the FY 2019 budget is to align with the Government Performance and Results Act (GPRA) Modernization Act of 2010 in development of the Agency Reform Plans.

The Memorandum sets forth the following deadlines:

June 12, 2017 – OMB has established a website for the public to weigh in on the proposed workforce reduction and agency reorganization. The website prompts respondents to share which federal agencies and programs they think should be eliminated and why. Respondents are also encouraged to provide ideas on management reform, including procurement reform. Comments are due by June 12, 2017. The website is here:

June 30, 2017 – Agencies are to submit to OMB: 1) an “initial, high-level draft” of their Agency Reform Plan; 2) a report on near-term workforce reductions actions; and 3) a plan to maximize employee performance.

September 2017 – Agencies submit their proposed FY 2019 budgets and Agency Reform Plans to OMB.

Early 2018 – The Administration submits to Congress its Government-wide Reform Plan as part of the proposed FY 2019 budget and will begin tracking progress on the Plan.

Federal government reorganization is something many Administrations take an interest in, with varying degrees of success. In order to be fully implemented, this Memorandum would need substantial buy-in from Congress.

Please let us know if we may provide further information regarding the Administration’s Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce.