For federal agencies, the Biden budget proposal is like a lottery nearly everyone wins

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The Biden administration has proposed showering every federal agency with expanded money, with the exceptions of the departments of Homeland Security and Defense. If it get enacted, how would agencies deal with double digit increases? For some possible answers, Federal Drive with Tom Temin turned to former federal chief financial officer and White House official Doug Criscitello, now with Grant Thornton.

Interview transcript:

Tom Temin: Doug, good to have you back.

Doug Criscitello: Great to be here, Tom.

Tom Temin: So you’re an agency CFO, for example, or you’re a program person and all of a sudden, your program, again, this all has to be enacted yet, but your program gets 10, 20 – in some cases 25% more money all of a sudden, it’s not such an easy proposition to take that all in and deal with it properly, is it?

Doug Criscitello: Managing change is difficult, right. I think the status quo for a government agency is operating in a steady state, it’s the most straightforward way to do your business. But change is difficult. Whether you’re taking budgetary cuts or significant increases – either way, there are challenges that accompany both of those scenarios.

Tom Temin: And if you get a large amount of money, I guess, increase and there’s a sudden expansion of a program or a whole new program, you’ve got the problems of setting up that program. And in a way that is also accountable. And I think we learned maybe from some of the pandemic relief money, couple of trillion that flowed there. It’s not even all expended yet. And now all the reports of fraud and abuse are starting to come in from different quarters. So there’s the issue of accountability. And how do you establish that early on?

Doug Criscitello: You know, it seems that agencies when they receive funds, in response to an external event, whether it was the financial crisis of 2008 or the recent pandemic, it’s always accompanied with a mandate to get those funds on the street quickly. So that’s very challenging for agencies, particularly for the financial professionals within an organizations who have a very strict set of procedures that they use for funds control. So a very poor motto for a CFOs office is we spend money quickly. That should not be an operating principle at all. But unfortunately, these organizations are faced with those challenges when these new programs spring up, and the mandate is given, get this money out now. So it’s enormously difficult. And unfortunately, there’s a lot of cleanup that’s frequently required after the fact.

Tom Temin: So therefore, I would think it’s incumbent on the financial people to tell the program people – I mean I’ll make another example: IRS, it could give a huge boost to hire people, and to boost up some of their enforcement or auditing programs. Those people in charge of those programs are really obligated to have a very detailed plan for the sudden increase, both on the hiring side and the program improvement side. Otherwise, the money could either go unspent or worse, it could get spent in the wrong way.

Doug Criscitello: Yes, agreed. So agencies need to be operating on their strategic plans, but also constantly revising it. And I think any substantial influx of additional dollars for a particular agency, they need to go back and sort of reconsider their strategic plan. How can we accomplish our mission, given this new set of directions from the Congress, right, which is where the funds come from, ultimately? So I’m a big champion of thinking strategically and having a plan and executing on it. But agencies also need to be nimble, and they need to be willing to go in and revisit their strategic plan and reprioritize what they’re trying to do in both the near and midterm.

Tom Temin: We’re speaking with Doug Criscitello, managing director of Grant Thornton Public sector, and a former federal chief financial officer. So here we are in June, and Congress has barely begun to even take up this budget proposal. And the way things are looking, it could be a continuing resolution once again, because that seems to be the one universal constant, no matter what administration or policy is in place. And so the money could come sometime by January, let’s say just to put a stake somewhere down. What should agencies be doing now, anticipating that there will be somewhat more money than they are probably expecting, had the Biden administration not changed the policies across the government?

Doug Criscitello: Yeah, I think clearly, agencies need to be thinking in terms of how are they going to staff up. I think it’s one thing to plan for additional program dollars and that presents a series of challenges, unto itself, but separately, receiving significant additional operating funds takes an equivalent amount of focus by an agency to ensure that it can adhere to its new statutory mandates. And hiring isn’t something that can occur quickly in an agency. You know, there were some hints in President Biden’s fiscal 2022 request that gets to what his management agenda might look like. And there’s some talk in the budget document about expanding and enhancing the recruitment and hiring of talent within agencies, providing some centralized support for agencies to do that. So I’m very curious to see the details of that proposal, as they emerge in the form of president’s management agenda.

Tom Temin: And in submitting plans for any given year ahead, is it generally the practice of program managers and financial officials and agencies to have maybe three plans: A cut plan, a continuing as we have plan – level budget – and an increase plan so that least you have something you can pull down off the shelf as kind of playbook depending on what actually happens?

Doug Criscitello: Yeah, I think that is worthwhile. And you could clearly rank each of those plans by which is most likely. I think, clearly from Congress to Congress, you can get a pretty good sense as to whether at an agency, whether your budget is likely to go down, remain stable or go up. So I think that’s a fantastic idea to have those plans in place. And the fact of the matter is financial management professionals that have been around for years, our budget career officials, they’ve seen this before, right? So they have a track record, and they have experience living through times of budget austerity, budget stability and budget increases. All three have happened, even in the last decade.

Tom Temin: And what about the acquisition side, because we’ve talked about operating money increases, and staff increase money, and they present their own challenges. But then sometimes these increases, and the demands that are related to them, might cause an acquisition spike to be required. You have to buy stuff, services, or even equipment in some cases, and there’s a lag in being able to do that. And yet, you can’t commit too early to do it in case you don’t get the money. So is that a wrinkle they need to start thinking about also?

Doug Criscitello: Yeah, agreed. My hat goes off to the procurement professionals in this town, and that that is an activity that is always very full and busy. So again, though, this is another area that the budget, the 2022 budget does includes a discussion about trying to modernize the Federal Acquisition System, which will be another component of the President’s Management Agenda. So I’m looking forward to seeing that as well. It’s challenging, there’s a lot to be done. And this, this is another area where we could see hiring increases, and I think the folks that do procurement across government would welcome that. So they’re going to have multiple moving parts here, both trying to hopefully staff up and also handling much more demand from their internal clients in terms of providing support for procurement.

Tom Temin: So having read these documents pretty carefully, any other advice you want to make sure people know before the money hits the fan?

Doug Criscitello: Well, look, the way I took this budget request – I thought it was imaginative and that – and very inclusive. There is a lot in this document. And whether you agree with the policy proposals offered or not, the president, as you know, is using the correct forum to offer this vision and his bold strategic plan. There’s a lot in there. There’s the components of what will become the President’s Management Agenda. So something other administrations have been slow to develop. So kudos to the administration for taking immediate action in that regard. I think it’s wise to do scenario planning to understand what’s likely to come in the budget year. But now, as you know, agencies are still trying to absorb all of the pandemic recovery funds that have been provided for them so they’re already drinking out of the fire hose. So it’s going to be a major challenge for agencies to take a step back and think about a relatively normal year fiscal 2022 and how they might manage their priorities going forward.

Tom Temin: Doug Criscitello is managing director of Grant Thornton Public Sector, former federal financial official, thanks so much for joining me.

Doug Criscitello: Great, thank you, Tom.

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