A Short History of the Office of Management and Budget
- Jon Johnson
- Oct 31
- 6 min read
As the nation emerged from the Great Depression and World War II President Roosevelt’s New Deal continued to place the federal government in the predominate position of providing the economic support, security support, and social support implemented to carry the country through troubling times.
In the 60’s debates emerged as to whether this was a sustainable role for the federal government, or whether the government should return certain powers back to the states.[1] President Nixon advanced his concept of “New Federalism”, a predecessor to the Federalism advanced by President Reagan[2], as a policy principle that envisioned the federal and state governments working together in different ways to advance policy objectives.
Part of President Nixon’s federal reform was to position the federal government in a management role, rather than the one responsible for program implementation. To do so he called for decentralizing nine federal agencies into regional areas meant to “bring government closer to the people.”[1] Another reform occurred with “Reorganization Plan No 2 of 1970”[2] that established the Office of Management and Budget within the Executive Office of the President.
In 1921 Congress passed “The General Accounting Act of 1921”, requiring the President to submit an annual budget to Congress. The Bureau of Budget was established to manage fiscal controls and prepare the budget. However, as the federal government expanded, it became clear that effective management required more than just budget preparation; it demanded greater capacity to analyze, plan, and oversee federal programs. On July 1, 1970 the President created the Office of Management and Budget to meet this need.
At its creation, OMB’s responsibilities were explicitly broader than those of the former Bureau of Budget. In addition to managing the federal budget, OMB was tasked with evaluating program effectiveness, coordinating interagency policy, developing management improvements, and assisting in the review of proposed agency legislation and testimony. This expansion was designed to transform the budget process into a policy management tool, linking money to measurable results.
As with Jackson’s civil service reform, a public sector principle shared by the Trump Administration, Nixon also sought to strengthen Presidential control over the Executive Branch of government over the Administrative State. Nixon and his advisers sought to centralize decision-making in the White House. By creating OMB within the Executive Office of the President (EOP), they ensured the President had a direct mechanism for oversight of departments and agencies, helping the White House with reviewing agency regulations and proposals, ensuring policy consistency across agencies, and reinforcing the President’s program priorities through the budget process.
OMB and GSA
Concerns about the performance and limitations of the General Services Administration (GSA) were one of the underlying factors behind establishing the Office of Management and Budget (OMB). While the OMB was not created to directly replace GSA functions, its establishment reflected a larger critique of how administrative and management responsibilities were fragmented across the executive branch, including GSA itself.
When GSA was created in 1949, its function was to handle the administrative housekeeping of government which included procurement, buildings, supplies, records, and transportation. By the late 1960s, however, GSA’s role remained largely operational, not strategic. It managed day-to-day logistics but had little capacity for policy analysis, program evaluation, or government-wide planning.
By 1970, executive branch management responsibilities were scattered. Budgeting and fiscal control responsibilities resided in the Bureau of the Budget (EOP), administrative management (property, procurement, facilities) resided in GSA, personnel management resided within the Civil Service Commission (which became OPM in 1979), and program planning and evaluation were weakly coordinated across agencies.
This made it difficult for the President to exercise unified control over management, policy implementation, and spending priorities. OMB was designed to integrate these management perspectives thereby giving the White House a central, strategic coordination point rather than relying on agencies like GSA, which focused on support services.
There was also dissatisfaction with GSA’s modernization and efficiency. By the late 1960s, several studies, such as including reports by the President’s Advisory Council on Executive Organization (the Ash Council), found that GSA was bureaucratically slow, outdated in its systems, and not equipped for performance-oriented management. It could manage office space and supplies but not drive management reform or innovation across government.[3] OMB, therefore, absorbed some of the policy and oversight functions for administrative management, especially those involving government-wide management improvement, information systems, and organization analysis.
President Nixon and his advisers viewed the postwar administrative structure, including GSA, as a remnant of a New Deal–era bureaucracy that limited presidential control. They wanted an entity within the Executive Office of the President that could review agency organization and management practices, lead reform initiatives, and tie management improvement directly to budget and policy priorities.
Thus, OMB took over what was previously the “management improvement” function that GSA had nominally shared responsibility for. Although the plan did not strip GSA of its operational authority (procurement, property, records, etc.), it formally transferred government-wide management improvement and organizational analysis responsibilities to OMB. In that dynamic GSA continued to manage how government bought and housed things and OMB managed how well government organized, coordinated, and evaluated its management systems. But this was not the case for long.
Between 1970 and 1974 the federal government still wrestled with how to divide “management” and “government” operations, specifically in procurement, which was still fragmented, inefficient, and chaotic under GSA’s leadership. GSA was still the statutory leader for federal procurement operations (under the Federal Property and Administrative Services Act of 1949), but each agency had its own procurement regulations and standards, leading to duplication, inconsistency, and inefficiency. Further, OMB lacked the staff and specialized expertise to drive procurement reform from the Executive Office. So, while OMB had the authority to improve management government-wide, procurement remained a weak link bogged down by GSA’s bureaucratic machinery.
By the early 1970s, reports from the GAO, the Commission on Government Procurement (established by Congress in 1969), and various OMB task forces identified deep problems including overly complex and inconsistent procurement rules, slow and cumbersome contracting processes, poor coordination between GSA’s procurement policies and agencies’ needs, and weak competition and innovation incentives.
The Commission on Government Procurement’s final report in 1972[4] was especially influential. It recommended the creation of a central policy office in the Executive Office of the President to “Provide overall direction for procurement policy, develop uniform regulations, and ensure consistent interpretation across agencies.”[5] This directly laid the groundwork for Congress to pass the Office of Federal Procurement Policy (OFPP) in 1974 formally established OFPP within the Office of Management and Budget (EOP), and marking a decisive shift of procurement policy leadership from GSA to OMB.
Under the 1974 Act, OFPP’s responsibilities now included: providing overall direction of procurement policies, regulations, and procedures for all executive agencies; promoting economy, efficiency, and effectiveness in acquisition; developing uniform procurement regulations (later leading to the Federal Acquisition Regulation, or FAR, in 1984); overseeing agency procurement performance; and resolving interagency procurement policy conflicts.
The OFPP Administrator (a presidential appointee confirmed by the Senate) was placed under the OMB Director, giving the White House direct policy influence, but left operations (e.g., contract execution, supply management) to GSA and the agencies.
Essentially, GSA lost its government-wide policy authority in procurement, retaining only operational functions (e.g., managing the Federal Supply Schedules, government property, fleet, and buildings). OFPP, under OMB, became the policy brain, while GSA became the service hands.
The devolution of agency responsibilities due to their inefficiency and ineffectiveness in 1970. Additional responsibilities were taken from them in 1974. But things did not stop there as initiatives like the Federal Acquisition Reform Act/Clinger-Cohen and initiatives like e-Gov further diminished GSA’s standing as an agency to be relied on and stripped them of the authority they once had.
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Today’s rhetoric from GSA-related interests is revealed when one examines history. In their own words, some seek to dial the clock back to 1949, and after some research it’s clear why. They were kings of the castle. It’s also understandable why Director Vought and Dr. Rhodes might have reconsidered the extent of GSA’s authority in the Consolidation Executive Order. GSA-centric interests seem to be positioning itself to reclaim the central authority it once held. Unfortunately, its track record falls well short of the Trump Administration’s emphasis on efficiency and effectiveness. These are facts that are on the table through which OMB and OFPP can arrive at their decisions.
People are their patterns, and agencies are as well. Since the 1950’s and 1960’s GSA has established a clear pattern of inefficiency and ineffectiveness throughout that agency’s history. They likely cannot help it as they still see their answers to everything to be the same program (the Federal Schedule of Supplies) that proved incapable of innovation.
I can understand why those involved in Project 2025 proposed folding GSA’s functions into OMB rather than as a standalone entity. It certainly would fulfill the objective of centralizing the Executive Branch responsibilities as envisioned with the creation of OMB. Rather than empowering GSA, the Administration may be right to further limit their role to something more basic.
[3] President's Advisory Council on Executive Organization (White House Central Files: Staff Member and Office Files) | Richard Nixon Museum and Library
[4] Procurement Commission Recommendations on Competitively Awarding Government Contracts | U.S. GAO
[5] Ibid
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