My personal "Best Place to Start" with federal (and state) agencies would require a detailed, objective Cost/Benefit Analysis by an independent outside contractor as a part of their budget request every year.
If they ain't providing more service to the people than they're costing us, they just fold up their little thousand-dollar suitcoats, roll up their sleeves and update their resumes for a job running scams on somebody else.
(I'm sure this is preferable to another option I've considered......although a Weighted Alpha Strike could be just a wee tad over the top even with the current bunch of criminal scumsuckers.)
I like your Plan B.
We also have to stop the system that has everyone rushing at the end of the year to spend all money budgeted. If there are significant activities that are not finished, there should be a mechanism for determining that carrying over those funds makes sense. Also, a particular year’s spending should not be the basis for the next budget, but rather the important tasks that need doing or are unfinished.