Meaningful efficiency measures consider the benefit to the customer and serve as indicators of how well the program performs. For example, reducing processing time means little if error rates increase. A balanced approach is required to enhance the performance of both variables in pursuit of excellence to customers. In these instances, one measure (e.g., increase in customer satisfaction) may be used in conjunction with another complementary measure (e.g., reduction in processing time).

In all cases, efficiency measures must be useful, relevant to program purpose, and help improve program performance. An efficiency measure for a Federal program tracks the ratio of total outputs or outcomes to total inputs (Federal plus non-Federal). Leveraging program resources can be a rational policy decision, as it leads to risk or cost sharing; however, it is not an acceptable efficiency measure, because the leveraging ratio of non-Federal to Federal dollars represents only inputs. Although increasing the amount leveraging in a program may stretch Federal program dollars, this does not measure improvements in the management of total program resources, systems, or outcomes.

3.4: Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Purpose: To determine whether the program has effective management procedures and measures in place to ensure the most efficient use of each dollar spent on program execution.

Elements of Yes: A Yes answer needs to clearly explain and provide evidence of each of the following [see Box I-1]:

• The program has regular procedures in place to achieve efficiencies and cost effectiveness.

• The program has at least one efficiency measure with baseline and targets.