The following guidelines and procedures are issued to clarify the provisions of Memorandum Order No. 27, dated 14 August 1992 which mandates the streamlining of agency operations and organizations:

PART I
Objectives
1.      To provide agencies with information on existing laws, rules and regulations governing the various aspects of the implementation of Memorandum Order No. 2; as well as guidelines on the institutional processes involved.

2.      To present the options and parameters available within existing laws, rules and regulations, for the rationalization, refocusing, and improvement of agency functions, projects and activities, structure, staffing pattern, and, budgetary allocations.

3.      To ensure uniformity and consistency in the interpretation and application of the provisions of Memorandum Order No. 27.

PART 2
Streamlining Procedure
1.      Functions, Activities and Projects

1.1    Definition of Terms

a) Program refers to the functions and activities necessary for the performance of a major purpose for which a government agency is established (Sec. 2.12, Book VI, National Government Budgeting, EO 292).

Program components are listed as functions, activities and projects with corresponding budgetary allocations under the General Appropriations Act.

b) Project means a component of a program covering a homogeneous group of activities that result in the accomplishment of an identifiable output (Sec. 2.13, Book VI, National Government Budgeting, EO 292), and undertaken within a definite time frame.

Projects are categorized as locally-funded and foreign-assisted in the General Appropriations Act (GAA).

c) Abolition means the one-time elimination or discontinuance of the operation of a function, activity or project.

d) Phase-out refers to the gradual elimination or discontinuance of a function, activity or project through the sequential or selective abolition of its component parts, until such time that the said function, activity or project ceases to exist.

e) Scale down means a reduction in the intensity or magnitude of a function, activity or project either by eliminating selected components; or reducing its geographical, demographic or clientele coverage, the types of services rendered, or the level of outputs.

f) Strengthening or Expansion means an increase in targets, expected outputs/services and desired impact, or widening of clientele/geographical coverage; and, the infusion of the required additional physical, financial and other resources.

1.2 General Principles

a) Functions, activities and projects shall be prioritized according to their level of contribution to the agency mandate, the agency thrusts, or government priorities in general.

b) All agency functions, activities and projects that are devolved pursuant to the Local Government Code shall be excluded from the agency functions, activities and projects.

c)      The abolition of functions, activities and projects shall not violate pertinent laws or agency enabling act which may specifically provide for their existence.

1.3    Specific Guidelines

a)      The following functions, activities and projects may be abolished or phased out as indicated:

• Those that are no longer relevant to the agency mandate, or government thrusts and priorities.
  
  
• Those that duplicate, or unnecessarily overlap with other functions, activities and projects or those that are redundant or outdated.

Duplication or overlapping occurs if the objectives, geographical or clientele coverage, expected outputs and desired impact of agency functions, activities and projects are the same or similar.

• Those that are not producing the desired effects, and no longer achieve the objectives for which they were originally designed and implemented.
  
  
• Those that are not cost-efficient and do not generate the level of physical and socio-economic returns intended for specific amounts of resource inputs.

For this purpose, each agency shall review and validate the criteria against which the cost-efficiency of functions, activities or projects are determined.  Those whose cost-efficiency levels fall under the minimum shall be considered for abolition or phase out.

• Those that unnecessarily duplicate or compete with the private sector and can be done more efficiently and effectively by it.

Government participation in areas/services which have socioeconomic development impact but where limited or no private sector participation has been generated, shall be considered in determining unnecessary duplication or competition with the private sector.

For the purposes of these guidelines, a function, activity or project, or component thereof is considered unnecessary duplication or competition if a similar private endeavor is also being undertaken for the same purpose, over the same clientele/geographical coverage, and with the same targeted results/outputs.

b)      Functions, activities and projects may be scaled down based on the following:

• Reduction in Geographical Coverage.  Implementation may be stopped in some areas and focused on those considered priority.  A priority area could be a region, province, city, municipality, barangays, or a combination thereof.
  
  
• Reduction in Demographic or Clientele Coverage.  The size or types of population/clientele being served may be reduced, focusing only on those requiring most urgently this particular government service.

c)      Functions, activities and projects may be expanded or strengthened based on the following criteria:

• Those functions, activities and projects that are not being undertaken but which are necessary may be subsumed under existing functions, activities and projects to which they are related;
  
  
• Those that are considered priority based on the provisions of these guidelines may be strengthened or expanded in any of the following forms:

2.      Department/Agency Formal Structure

2.1    Definition of Terms

• Organic units are offices, bureaus, staffs, services, divisions and other units within a department or agency which are integral parts of the internal organization of that department or agency.

• For the purposes of these guidelines, attached agencies refer to those entities which are not organic parts of the structure of a department, but which may be attached to it for operational and policy coordination; and which have separate budgets as provided for in the General Appropriations Act.

2.2    General Principles

a)      The function/activity/project distribution to various agency formal units should be clear. Where more than one office, bureau, service or division performs a function, activity or project, their specific role should be defined.

b)      Where the enabling act specifically provides for the existence of an office, bureau, service, or division; its internal structure may be modified in accordance with the guidelines prescribed hereunder.  Where its functions, activities, or projects are abolished or transferred, such that its active operation is no longer necessary, such unit may be rendered dormant or inoperational, but not abolished.

  For the purposes of these guidelines, an office, bureau, service or division, duly created by law is rendered "dormant" or "inoperational" if its operational existence is terminated but its formal existence continues.  The said unit is devoid of any activity, personnel, and financial and physical resources.

c)      Where the existence of an office, bureau, service or division has not been specifically provided for by law, and where its functions, activities and projects are abolished it may likewise be abolished.

For the purposes of these guidelines, an office, bureau, service, or division is considered abolished if its formal and operational existence is terminated.

d)      The internal structure of a department or attached agency may be expanded and organic units thereof may be established, merged, consolidated, rendered dormant or abolished, provided that the total structural size of the department or attached agency should not be bigger than its present structure, in terms of the total number of organic units.

2.3    Specific Guidelines

a)      Merger/Consolidation of existing organic units

Existing offices, bureaus, services or divisions, performing similar or overlapping functions, activities or projects may be merged or consolidated into only one unit with a redefined set of functions, activities and projects, and corresponding manpower, financial as well as physical resources.

b)      Expansion of Existing Organic Units

• An existing bureau, office, service or division may be expanded if additional functions, activities and projects have been transferred to it from other units which have been abolished, if its existing programs are expanded in coverage or scope, or if it is the surviving unit of the merger or consolidation with another unit.

c)      Creation, Abolition, Merger or Consolidation and Expansion of Attached Agencies

• No new agencies shall be created.  Existing attached agencies with independent budgets provided for in the General Appropriations Act may not be merged, consolidated, abolished, or rendered dormant or inoperational.
  
  
• If there is an expansion in agency functions, activities and projects, the internal formal structure may be expanded in conformity with the agency’s mandate as provided by law; provided that such expansion will not result in an increase in the number of supervisory levels.  Likewise, the internal structure may be streamlined in accordance with the guidelines provided herein.

3.      Staffing Pattern

3.1    General Principles

a)      The determination of the individual position titles and their corresponding salary rates and statement of duties and responsibilities should conform with the provisions of RA 6758 (Salary Standardization Law) and its associated implementing issuances, as well as with pertinent laws, rules and regulations on compensation and position classification.

b)      The staffing modifications should enhance the application of management policies such as unity of command, and matching of authority, responsibility and accountability.  It should not result in the increase in the number of key positions.

c)      The distribution of positions should give priority to units performing front-line services and substantive functions.

d)      The streamlining of department or attached agency staffing should not result in the increase in the budget for salaries of permanent positions over that authorized for FY 1992 for the department or attached agency.

3.2    Specific Guidelines

a)      Total Number of Positions

•  The resultant number of regular positions for the department or attached agency, should not exceed the present number of incumbents to permanent positions of that department or attached agency as of 1 January 1992.

b)      Filling of Vacant Positions

• Vacant positions may be filled consistent with the department’s streamlining agenda and subject to the approval of the Civil Service Commission pursuant to RA 7430.

c)      Creation, Abolition, Modification of Positions

• xisting vacant positions may be reclassified, upgraded, merged, consolidated, or abolished and new positions created in their stead as required, subject to existing laws on compensation and classification.
  
  
• A filled position may be upgraded, reclassified, merged or consolidated with a vacant position, subject to pertinent position classification and compensation laws, rules and regulations and pertinent Civil Service laws.
  
  
• The total number of positions in one organic unit may be increased by the transfer of permanent positions from other organic units.
  
  
• All positions vacant or vacated as a result of the implementation of Memorandum Order No. 27 shall be abolished.

d)      Transfer of Personnel

• Personnel may be transfered from one organic unit to another within a department, or from one organic unit to another within an attached agency, consistent with Civil Service laws, rules and regulations.

4.      Use of Savings in Programmed Appropriations

4.1    Definition

Savings refer to portions or balances of any programmed appropriation (net of reserves) free of any obligation or encumbrance still available after the satisfactory completion or unavoidable discontinuance or abandonment of the work, activity, or purpose for which the appropriation is authorized, or arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay (Section 19, General Provisions, RA 7180).

4.2    Uses

Savings generated by departments or attached agencies on the abolition, phase out or scaling down of unnecessary activities may be used by said departments or attached agencies for the augmentation of their respective programs, projects and activities.

In the use of savings priority shall be given to the augmentation of the amounts set aside for salary standardization, bonus, and retirement, and terminal leave benefits in the order listed, as provided for in Sec. 18, General Provisions, RA 7180.

The use of savings shall however be subject to Section 14, General Provisions, RA 7180 which states that no government funds shall be utilized for the following purposes:

To purchase motor vehicles, except medical ambulances, military and police patrol vehicles, other utility vehicles, and those used for mass transport, and those specifically authorized in this Act;

To defray foreign travel expenses . . . .except in the case of training, seminar or conference abroad when the officials and other personnel of the foreign mission cannot effectively represent the country therein and travels necessitated by international commitments;

To provide fuel, parts, repair and maintenance of any government vehicle which is not permanently marked “FOR OFFICIAL USE ONLY” with the name or logo of the agency, nor otherwise properly identified as a government vehicle assigned to the President, Vice-President, Senate President, Speaker of the House of Representative, Chief Justice of the Supreme Court, and Chairmen of the Constitutional Commissions and those used by personnel performing intelligence and national security functions . . .;

To pay honoraria, allowances and other forms of compensation to any government official or employee, except those specifically authorized by law;

To be invested in non-government securities, money market placements and similar investments or deposited in private banking institutions."

These provisions are implemented through Executive Order 265 which prescribes the economy measures.

4.3    Procedural Guidelines

a)      All budget modifications and corresponding realignments shall be forwarded to DBM.  DBM shall issue the necessary Advices of Allotments authorizing such realignments, within 15 days upon receipt of the agency report.

b)      All realignments shall be within the specific amounts programmed in accordance with the approved agency work and financial plans.

PART 3
Streamlining Process
Following the experience of some agencies, the streamlining of functions, activities and projects, as well as the organization structure and staffing may be facilitated if conducted on the basis of a planned process.  The suggested process reflected in Annex A* hereof, may be adopted by departments and agencies as guide for their staff.

PART 4
Reporting Procedure
3.1    Submission Specifications

• All departments shall submit a Department Streamlining Report covering all the organic units and attached agencies of the department, in accordance with the format prescribed in Sec. 5.1 of Memorandum Order No. 27 (forms attached*).

3.2    Submission Schedule

• The Streamlining Report shall be forwarded to DBM not later than 3 October 1992, for confirmation by the Office of the President.

PART 5
Provision of Technical Assistance
The Department of Budget and Management shall provide all agencies, upon request, with technical assistance in the implementation of the provisions of Memorandum Order No. 27.

The cooperation of all department heads, bureau directors, planning officers, budget officers and all other agency staff involved will be critical in the success of the President’s efforts to streamline the bureaucracy.

Adopted: 1 Sept. 1992

(Sgd.) SALVADOR M. ENRIQUEZ, JR.
Acting Secretary