McKinsey on DoGE actions

• We have extensively researched the US government productivity opportunity and published our findings.
• The savings achievable through greater productivity are indeed vast.
• But getting there will require responsible, difficult choices.
• As Robert Frost suggested, the only way out is through.
• We believe that systematic, analytical approaches are likely the key to rapid and sustained results that save money without impairing the delivery of critical government functions.

The value at stake:

• Because of the lack of economically measurable outputs, the productivity of the public sector is challenging to calculate, making it difficult to make comparisons with other sectors of the economy.
• We estimate a total potential productivity opportunity of up to $1 trillion, which is nearly 15% of the annual budget, and includes two elements:
  • Approximately $233 billion to $521 billion in fraud, waste, and abuse
  • $400 billion to $450 billion in more efficient service delivery, mostly within departments.
• Because these numbers are so large, it won’t be easy to capture the productivity opportunity while also maintaining the essential functions of government.
• Simple cost cuts may achieve some savings, but spending tends to creep back in, and essential services may suffer.
• Furthermore, our research shows that 80% of major change efforts in government fail to meet their goals.

Tackle fraud, waste, and abuse

• Despite decades of efforts, government fraud remains a major challenge, often more so than in the private sector due to a lack of risk mitigation skills within agencies, lack of a mandate from top leadership, and inconsistency in how the workforce executes fraud mitigation.
• Fraud interventions that have proved effective in other sectors include sharing data across agencies, verifying customer information in real time, auditing areas of highest risk, and monitoring compliance.
• However, deploying these tools requires substantial investment.
• Even with a potential 100-to-1 return on investment, the scale of fraud suggests a need for hundreds of millions of dollars to build the right systems and to hire a workforce with the right skills.

Improving productivity in mission delivery

• Although most agree that the government delivers essential services (Reform question some e.g. involving climate change and diversity issues), many question the cost.
• Getting more out of each government dollar—quickly, in a sustainable way, and without degrading services, requires an approach that focuses on outcomes.
• With government agencies, it is important to start with a robust baseline of specific outcomes that the agency is tasked to achieve.
• Once identified, the next step is to align different types of resources needed (government versus vendor, fixed versus variable) with these outcomes.
• With this baseline, an effective redesign process and then implementation plan follows,  centered on five levers:
  • Enhancing processes
  • Optimising the organisational structure
  • Sourcing smarter
  • Managing demand
  • Digitising and automating.
• We believe these five levers are the most salient for the US government today.

Enhancing processes:

• Complete process redesign (building processes from scratch rather than fixing existing ones) focuses on reducing pain points, redundancies, hand-offs, and overall time to output for both agency customers and employees.
• To get this right, and to sustain the cost savings, the focus has to be on creating easy, satisfying customer journeys.
• For instance, the US State Department has recently created fully online passport renewal options – this saves time for both staff and, more important, for the many citizens who no longer need to mail documents or show up at a passport office.

Optimising the organizational structure:

• As new ways of working take shape, it is important to remember that successful organisational transformations go beyond the “lines and boxes” of formal structure or new “process maps.”
• Our research and experience show that organisations should:
  • Revisit and realign their mission to identify those components that will remain critical in the future.
  • Eliminate duplicate roles in the enterprise.
  • Simplify reporting lines and consolidate management roles where necessary.
  • Deploy advanced tools such as AI and automation to eliminate cumbersome activities and improve productivity across the entire organisation.
  • Prioritise people through a strategic workforce plan.
• The combination of these tactics can dramatically increase the odds of achieving enduring impact.

Sourcing smarter:

• The federal government spends over $750 billion annually on outside contracts for goods and services, according to the GAO.
• In our experience, savings of up to 30% can be captured.
• The largest spending categories are often similar across multiple departments.
• Centralising management of this spending can reduce redundancy, lower costs through bulk purchasing, and create better conditions to more effectively manage suppliers.

Managing demand:

• A similar opportunity exists in managing demand for assets that the government has already paid for, mainly real estate but also infrastructure, raw land, equipment, and vehicles.
• The federal government can rethink the use and management of some government-owned property whose value may not be fully realised.
• In some cases, outright sales of assets can make both economic and practical sense.
• There’s precedent for this: a 1990 Act successfully closed and combined hundreds of military bases, producing billions in savings.
• And some localities have raised revenues by selling naming rights for buildings and even metro stops.

Digitising and automating:

• McKinsey analyzed 95 recent projects to modernise core IT at federal agencies.
• We found that 72% of the projects cost more than expected, took longer, or both.
• The largest projects did worse: 85% exceeded cost or timing estimates.
• In our analysis, most of these projects went poorly because of insufficient up-front discovery and planning; limited alignment among business, IT, and end users; and weak, process-focused program management and oversight.
• Crucially, as one federal chief information officer told us, IT and mission teams are often poorly aligned, and projects are launched based on what IT thinks the business wants rather than what it truly needs.

CONCLUSION:

• We don’t claim to have all the answers, but in our experience, the comprehensive approaches described above  can enhance mission outcomes, use limited resources more efficiently, and help restore public trust in critical institutions.