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CFOs say they need more cost-cutting latitude

Oct. 6, 2013 - 05:04PM   |  
By SEAN REILLY   |   Comments
HASC SCMR MWM 20130801
The Defense Department's top financial manager, Robert Hale. Hale and CFOs across government have bemoaned the limitations imposed by the sequester on their ability to manage steep budget cuts. (Mike Morones/Staff)

Many top federal financial managers believe cost-cutting efforts are manageable, but they want more discretion to decide where to prune, according to a new survey.

About three-quarters of the more than 100 unnamed chief financial officers and other senior leaders interviewed said economizing is “sustainable, at least over the short term,” according to the annual federal CFO survey conducted by the Association of Government Accountants and consultant Grant Thornton.

“Large flagship programs will probably be able to manage the cuts and still achieve goals, but the smaller programs are really going to struggle to be effective in the long term,” one unnamed CFO was quoted as saying in the survey. In some cases, the CFO said, “it would be more sustainable just to end them and direct the resources to keeping other programs afloat.”

Instead, programs have had to live with across-the-board cuts imposed by the fiscal 2013 sequester and appear likely to be similarly constrained this year unless a long-term deficit-cutting deal is struck.

Almost two-thirds of the financial managers said they work frequently or “all the time” with program managers, albeit with mixed results. Some of those surveyed voiced sympathy for program manager colleagues striving to navigate in difficult financial straits.

“These cuts have required that our managers approach their mission differently and find ways to do ‘less with less,’ ’’ one respondent said.

Another respondent quoted in the report wasn’t so charitable. “Program managers want to protect their programs and functions,” she said. “They’re concerned more with their own priorities than with the overall agency mission.”

CFOs said they’ve been able to cut some costs by sharing more services with other agencies and by using bulk-purchasing strategies known as strategic sourcing. But tracking those savings has been a challenge, they said.

“Though we are told there have been cost savings, we can’t quantify them,” one said. Another complained that most of the available cost information was from 2010.

The report doesn’t seek to explain the shortage of up-to-date information. Without it, however, “we will not be able to tell which savings are sustainable and which are not.”

The CFOs said the prolonged budget squeeze has so far not forced their agencies to fundamentally rethink relationships with their contractors. More than half of respondents rated their reliance on contractors as frequent or extensive, often turning to them for specialized skills they can’t find in the government workforce. Most of those surveyed said they do not see that changing unless budget cuts become more severe.

Among other findings:

■More than 60 percent of respondents said the Government Performance and Results Modernization Act, signed into law in early 2011, which is supposed to encourage better performance of federal programs, has had little effect on their agencies.

■More than two-thirds did not see pressure on federal pay as a barrier to recruiting, retaining or engaging employees. In a shaky economy, many said they have no problem finding applicants for vacancies, with one CFO noting that “we are still the employer of choice in many geographic locations.”

■Virtually all agreed that there is a greater need for a more analytical CFO organization that doesn’t just dish up figures but also explains them. According to one respondent: “Where CPAs once dominated, economist, budgeteers and other skill sets are now the CFO priority.”

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