Summary: Recognizing the need for a smaller, less costly government, the Energy Department (DOE) last year unveiled its Strategic Alignment and Downsizing Initiative, which is intended to save $1.7 billion over five years. The savings planned under the Initiative are on target. By amending its fiscal year 1996 budget request and selling excess assets, DOE will reach its goal of $221 million in savings this year. DOE is depending on process improvements and reengineering efforts to fulfill its missions under the reduced budgets called for by the Initiative. It is too soon to know, however, whether DOE will cut costs to the extent planned in its budget reductions. Moreover, some overly optimistic initial reports of cost savings underscore the need for DOE to be vigilant in validating such claims, lest managers believe that those savings are occurring in specific activities when, in fact, targeted reductions are being absorbed elsewhere. Discussions with DOE officials revealed opportunities to achieve further cost savings by more broadly applying some aspects of the Initiative. For example, DOE could encourage its contractors to sell more of the agency's excess assets by providing incentives and policies for the contractors to identify and sell them.
