[Senate Prints 106-63]
[From the U.S. Government Publishing Office]
106th Congress S. Prt.
2d Session COMMITTEE PRINT 106-63
_______________________________________________________________________
R E P O R T
of
SENATOR FRED THOMPSON
Chairman of the
COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE
on
MAJOR MANAGEMENT CHALLENGES
FACING FEDERAL DEPARTMENTS
AND AGENCIES
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
OCTOBER 2000
__________
U.S. GOVERNMENT PRINTING OFFICE
67-658 WASHINGTON : 2000
C O N T E N T S
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Page
Preface.......................................................... 1
I. Executive Summary................................................3
II. Introduction and Background......................................5
III. Designation of Major Management Challenges and High-Risk Programs6
IV. Agency Efforts to Develop Performance Goals and Measures for
Management Challenges...........................................11
V. Agency Actions and Plans to Address Unmet Goals.................14
VI. Agency Efforts to Respond to GAO and IG Recommendations Related to
Management Challenges...........................................15
VII. Conclusions and Recommendations.................................16
VIII.Appendix: Summary of Major Management Challenges and High-Risk
Programs for 24 Federal Departments and Agencies..................
19
Department of Agriculture (USDA)......................... 19
Department of Commerce (DOC)............................. 20
Department of Defense (DOD).............................. 22
Department of Education.................................. 23
Department of Energy (DOE)............................... 25
Department of Health and Human Services (HHS)............ 27
Department of Housing and Urban Development (HUD)........ 29
Department of the Interior............................... 31
Department of Justice (DOJ).............................. 32
Department of Labor (DOL)................................ 34
Department of State...................................... 35
Department of Transportation (DOT)....................... 37
Department of the Treasury............................... 38
Department of Veterans Affairs (VA)...................... 40
Agency for International Development (USAID)............. 41
Environmental Protection Agency (EPA).................... 43
Federal Emergency Management Agency (FEMA)............... 44
General Services Administration (GSA).................... 45
National Aeronautics and Space Administration (NASA)..... 46
National Science Foundation (NSF)........................ 48
Nuclear Regulatory Commission (NRC)...................... 49
Office of Personnel Management (OPM)..................... 51
Small Business Administration (SBA)...................... 52
Social Security Administration (SSA)..................... 53
PREFACE
Waste, fraud, and abuse in the Federal Government have
become a cliche. The tremendous growth in the amount of money
the Federal Government wastes each year is too predictable.
Stories in the press have numbed the American public to the
fact that billions of dollars are squandered as the result of
mismanagement or malfeasance.
Last year, I released a report by the General Accounting
Office chronicling a disturbing trend in many Federal
programs--improper payments. The report tallied improper
payments in Federal programs at $19 billion for fiscal year
1998 alone. This year, such overpayments were estimated at
almost $21 billion. And because only 14 programs actually
estimate the amount of improper payments they make, the number
is likely higher--much, much higher. But because there was
scarcely a mention of the report in the press, commentator Paul
C. Light, The Brookings Institution, mused in Government
Executive magazine, ``Perhaps Americans simply believe the war
on waste cannot be won.''
Other problems plaguing government operations are equally
systemic. In 1990, the GAO began to compile a ``high-risk
list'' of Federal programs and activities that were most
vulnerable to waste, fraud, and abuse. This high-risk list
started with 14 problem areas and has been expanded with every
update issued by the GAO, listing problems like poor financial
management, weak information security, and shoddy oversight of
government contractors. The current list, released in 1999,
includes 26 Federal agency problem areas. Although new areas
are added regularly, few qualify for removal. In fact, only one
high-risk area has been removed since 1995. Ten of the 14
original high-risk areas in 1990 remain on the list, despite
the pressure to solve the problems.
A similar pattern is found in the reports of agency
Inspectors General. In each of the past 3 years, the IGs of
major Federal agencies reported to Congress the most serious
performance problems their agencies faced. The problems
identified by the IGs--like poor management of personnel,
disastrous handling of major information technology projects,
and ineffective controls over grant programs--remain much the
same year after year.
The effect of this waste and mismanagement year after year
is not inconsequential. Opinion polls consistently show low
levels of public trust and confidence in the Federal
Government. These low expectations of Federal performance are
the result of the constant barrage of information showing that
Washington is wasting a significant proportion of the tax
dollars Americans pay each year. In 1998, a survey conducted by
the Washington-based Pew Research Center found that 64 percent
of Americans view the government--with a burgeoning budget of
over $2 trillion--as ``inefficient and wasteful.''
The key component lacking in Federal Government management
is accountability. The Federal Government is so large and its
policies are so cumbersome that no one is held accountable for
the ineptitude with which its resources are managed. Until
someone is held accountable for the mess the current government
is in and until Congress stops throwing good money after bad,
the problems will go on.
To its credit, Congress in 1993 enacted a law that attempts
to make Federal agencies more accountable to the American
people about how their resources are managed. The Government
Performance and Results Act--the Results Act--tells agencies to
define their mission, set goals, and report on the extent to
which they are achieving them. I saw this as a chance to make
agencies set goals to solve their major management problems and
report on their progress to the Governmental Affairs Committee,
which has responsibility for the efficiency of government
operations.
In August 1999, I wrote to each major agency head and
listed in detail the major management problems that have
plagued their department or agency and asked them what they
were doing about them. In my letter, I wrote that ``it is
essential that agency heads and other managers commit
themselves to tangible steps that will eventually lead to
solutions and that they accept accountability for following
through on these commitments.'' The letter continued, ``Without
specific and measurable performance goals, it is difficult if
not impossible to assess progress in addressing major
management problems and to hold agencies accountable.'' After
receiving agency responses, Committee staff met with
representatives from each agency, their respective IGs, and
GAO. This report recounts the experience of the Committee in
gauging the progress of agencies in solving their major
management problems.
It is clear to me from this process that there are pockets
of progress throughout the Federal Government. Generally, where
such progress is occurring it is the result of dedicated civil
servants and political appointees working diligently to instill
performance based management in their agency. That is what it
will take to solve many of these problems.
Unfortunately, in many agencies there is insufficient
attention to the problems that are stifling effectiveness and
draining precious resources. In those cases, agency leaders
either don't realize the severity of the problems or don't
think such ``management minutiae'' deserves their attention.
This report recounts the process by which we interviewed
agency officials and provides some conclusions about the
current state of management in the Federal Government. Sound
management policies are critical to the future success of this
government in the new economy. We have a long way to go.
Fred Thompson,
Chairman
MAJOR MANAGEMENT CHALLENGES FACING FEDERAL DEPARTMENTS AND AGENCIES
----------
I. EXECUTIVE SUMMARY
Since enactment of the Government Performance and Results
Act--also known as ``GPRA'' or ``the Results Act''--several
independent assessments have shown that government-wide
implementation of GPRA has been uneven. One area where there
have been too few results is addressing major management
challenges that seem to persist year after year at many
agencies. Senator Fred Thompson, Chairman of the Senate
Governmental Affairs Committee, has urged Federal agencies to
apply GPRA's results-oriented principles--goal setting,
performance measurement, and reporting--to address these major
management problems. Without the consistent development and use
of such goals and measures, it is difficult for Congressional
decisionmakers to assess agencies' progress in addressing these
problems.
Chairman's Letters to 24 Agency Heads
On August 17, 1999, Chairman Thompson wrote individual
letters to the heads of the 24 largest Federal agencies to
request information on what actions they were taking to address
their long-standing management challenges and to determine the
extent to which agencies were using GPRA as a means to address
these management problems. In these letters to the agencies,
Chairman Thompson detailed each agency's most serious
management problems as identified by the General Accounting
Office (GAO) and by each agency's Inspector General (IG). Each
letter contained an analysis by Committee staff of how well
each of the 24 agencies' annual Results Act Performance Plans
for fiscal year 2000 addressed the agency's major management
challenges and how well the agency was responding to unresolved
GAO and IG audit recommendations designed to remedy these major
problems. In his letters to the agencies, Chairman Thompson
requested that representatives of each agency meet with
Committee staff to discuss the agency's response to the
Chairman's letter and to follow up on the agency's progress in
using performance planning and reporting to address major
management challenges and high-risk programs.
Follow-up Meetings by Committee Staff
From November 1999 through June 2000, Committee staff met
with management officials from each of the 24 agencies. The
Committee staff's meetings with agency officials and the
reviews of agency documents revealed that agencies have not
consistently developed performance goals and associated
measures that directly address their respective management
challenges and high-risk programs. The Committee staff found
that 11 of the 24 agencies reported few, if any, specific and
readily identifiable goals and measures that directly address
their major management problems. Eight of the 24 agencies
reported a moderate level of such goals and measures for these
management challenges. Only five of the 24 agencies reported
more extensive goals and measures that directly address these
challenges.
Recommendations
The Committee staff's review of agencies' efforts
unfortunately shows that the attention to management problems
has been insufficient to meet the challenges they pose. Poor
management of Federal agencies and programs still causes
tremendous waste of Federal dollars and, in many cases,
prevents the government from achieving its missions. To address
continued concerns about agencies' efforts to address their
major management challenges, the Committee staff has identified
some recommendations for improvement. These recommended actions
include the following:
OMB should clarify and strongly enforce its
Results Act guidance that requires agencies to develop
and report on performance goals and measures that
directly address major management challenges and high-
risk programs. Although there has been some progress in
this area, there are clearly too few goals and measures
to address the many major challenges that exist today.
In cases where agencies have valid reasons for not
developing such goals and measures, the agency should
describe how it is monitoring the progress in resolving
these management challenges and how it is being held
accountable to address these challenges.
Agencies should ensure that they include in
their Performance Reports specific and credible
information on how they plan to meet unmet goals in the
future. The review of agencies' Performance Reports
clearly showed that some agencies were less than
thorough in reporting this information.
OMB should develop and publish goals and
measures for the Priority Management Objectives and
report on the Federal Government's progress toward
meeting these goals. Each year, OMB designates this
list of significant management problems but currently
monitors progress without the benefit of specific and
publicly available measures.
Agencies should incorporate performance
measures for major management challenges into the
performance agreements of agency leaders and program
managers. The success of the Results Act and
performance-based management in Federal agencies
depends in large part on the extent to which agency
officials and employees understand the goals set forth
by the agency and are held accountable for achieving
them.
The IGs and GAO should take more direct and
frequent action to follow up on what the agencies have
done to respond to IG and GAO recommendations,
particularly on key recommendations addressing critical
management problems. The IGs should also provide more
information on open recommendations in their semiannual
reports, especially as such recommendations relate to
the IG top 10 management challenges. Although many
agencies are doing a respectable job in responding to
GAO and IG recommendations, some agencies will require
more active follow-up by the IGs and GAO on outstanding
recommendations.
By implementing these recommendations, the Federal
Government can redouble its efforts to bring about a culture
that values a results-oriented approach to managing Federal
agencies and programs. Although establishing specific and
measurable goals for these major management challenges can be a
complex undertaking, the development and reporting of such
goals is one of the most effective methods for ensuring
accountability for achieving results.
II. INTRODUCTION AND BACKGROUND
During the 1990's, Congress enacted a broad statutory
framework to improve the management and accountability of
Federal agencies. At its centerpiece is the Government
Performance and Results Act of 1993 (Public Law 103-62)--also
known as ``GPRA'' or ``the Results Act.'' GPRA is intended to
improve the efficiency and effectiveness of Federal programs by
establishing a system to set goals for program performance and
to measure results. GPRA requires that Federal agencies
establish long-term strategic goals, develop annual performance
goals, measure their performance against those goals, and
report publicly on how well they are doing. Agencies are to
meet these requirements through the preparation of multiyear
strategic plans, Annual Performance Plans, and Annual
Performance Reports.
Since GPRA's enactment, several independent assessments
have shown that government-wide implementation of GPRA has been
uneven. One area where there have been too few results is
addressing major management challenges that seem to persist
year after year at many agencies. Committee Chairman Thompson
has urged Federal agencies to apply results-oriented
principles--goal setting, performance measurement, and
reporting--to address these major management problems. Without
the consistent development and use of such goals and measures,
it is difficult for Congressional decisionmakers to assess
agencies' progress in addressing these problems.
The Federal Government's response to the Year 2000 (Y2K)
computer problem is illustrative of how a significant
management challenge can be successfully addressed. With
heightened public and media interest and a firm deadline of
January 1, 2000, Congressional and Executive Branch
decisionmakers were committed to dedicating sufficient
resources to address the problem. Federal managers provided
strong project leadership and sustained attention.
Congressional oversight throughout the remedial phases of the
Y2K effort also continued to ensure focus and attention on the
issue. Lessons learned from the Y2K computer problem can
clearly assist Federal managers in resolving many of these
other management challenges and high-risk programs that
continue to plague agencies year after year.
On August 17, 1999, Chairman Thompson wrote individual
letters to the heads of the 24 largest Federal agencies to
request information on what actions they were taking to address
their long-standing management challenges and to determine the
extent to which agencies were using GPRA as a means to address
these management problems. In these letters to the agencies,
Chairman Thompson detailed each agency's most serious
management problems as identified by the General Accounting
Office (GAO) and by each agency's Inspector General (IG). Each
letter contained an analysis by Committee staff of how well
each of the 24 agencies' annual Results Act Performance Plans
for fiscal year 2000 addresses the agency's major management
challenges and how well the agency is responding to unresolved
GAO and IG audit recommendations designed to remedy these major
problems. In his letters to the agencies, Chairman Thompson
requested that representatives of each agency meet with
Committee staff to discuss the agency's response to the
Chairman's letter and to follow up on the agency's progress in
using performance planning and reporting to address major
management challenges and high-risk programs.
From November 1999 through June 2000, Committee staff met
with management officials from each of the 24 agencies. This
report was prepared primarily on the basis of these meetings
along with the Committee's examination of agencies' Performance
Plans and Performance Reports as well as analyses by GAO, the
IGs, and the Congressional Research Service (CRS). Most, if not
all, of the management challenges described in this report have
been the subject of recurring reports by GAO, the IGs, and
others.
III. DESIGNATION OF MAJOR MANAGEMENT CHALLENGES AND HIGH-RISK PROGRAMS
The IGs, GAO, and the Office of Management and Budget (OMB)
each periodically designate a list of Federal programs and
activities that represent significant challenges or are deemed
to be at high risk for fraud, waste, abuse, and mismanagement.
Some of the management challenges on these lists are common
government-wide issues such as financial management and
information security. Other areas on the lists are distinctly
agency- and program-focused. As one would expect, there is
general consensus duplication in these lists of major
management challenges in the Federal Government.
To assess agencies' progress in using performance planning
and reporting to address mission-critical problems, the
Committee staff relied on the IG- and GAO-designated management
challenges and high-risk programs for each agency. The appendix
of this report contains a summary for each of the 24 Federal
departments and independent agencies on their efforts in using
performance planning and reporting to address their major
management challenges. The following is a discussion about the
designation of management challenges on the part of the IGs,
GAO, and OMB.
IG Designations of Agencies' Major Management Challenges
In December 1998, Chairman Thompson requested the IGs for
the 24 largest agencies to provide information on the most
serious management challenges facing their respective agencies.
Each IG responded to the Chairman with a list of these
management challenges, with many IGs designating 10 challenges
and referring to their designations as the ``top 10'' list.
These management challenges served are the bases for the
Chairman's August 17, 1999, letters to the heads of the 24
agencies requesting additional information about how the
agencies were addressing their management challenges and high-
risk programs. In September 1999, Chairman Thompson asked the
same IGs to provide updated information on the fiscal year 2000
major management challenges at their agencies. These updated
IG-identified management challenges are included in the summary
presented in the appendix of this report.
In April 2000, the President's Council on Integrity and
Efficiency (PCIE), which is comprised of all Presidentially
appointed Inspectors General, released the results of an
analysis of the various management challenges identified by the
IGs of the 24 agencies. As part of its analysis, the PCIE
identified seven challenges that have applicability across the
Federal Government. In order of most frequently identified by
the IGs, these management challenges are as follows:
Financial Management and Financial Statements
Information and Technology Resources
Security and Data Integrity
GPRA Compliance, Implementation and
Accountability
Procurement and Grant Management
Personal Security and Safety
Human Capital and Staffing
The PCIE undertook this analysis to assist the IG community
in looking for opportunities to improve communications in
pursuing solutions to these complex, government-wide issues.
GAO's Designation of High-Risk Federal Programs and Activities
In 1990, GAO began an initiative to place special emphasis
on ``high-risk'' Federal programs and activities that it
considered to be particularly vulnerable to fraud, waste,
abuse, and mismanagement. The GAO's original high-risk list
consisted of 14 areas. Over time, as some high-risk government
operations were corrected and other risks emerged, GAO removed
some risks from the list and added new ones to maintain focus
on areas that needed sustained management attention. Since
1995, however, GAO has removed only one problem from its high-
risk list. Today, GAO's high-risk list has grown to 26 problem
areas, and 10 of the 14 original high-risk problems from 1990
remain on the list.
GAO's most recent high-risk list, \1\ which was issued in
January 1999, is presented in table 1. Also included is the
respective year in which GAO designated the problem as high
risk. GAO is expected to update this list of high-risk areas at
the start of the new Congress in early 2001.
---------------------------------------------------------------------------
\1\ General Accounting Office, High-Risk Series: An Update (GAO/HR-
99-1, January 1999), pp. 170-171.
Table 1: GAO-Designated High-Risk Programs and Activities in the Federal
Government
------------------------------------------------------------------------
Year
High-risk program or activity designated
------------------------------------------------------------------------
Providing Basic Financial Accountability
DOD Financial Management.................. 1995
Forest Service Financial Management....... 1999
FAA Financial Management.................. 1999
IRS Financial Management.................. 1995
IRS Receivables........................... 1990
Ensuring Major Technology Investments Improve
Services
Air Traffic Control Modernization......... 1995
Tax Systems Modernization................. 1995
National Weather Service Modernization.... 1995
DOD Systems Development and Modernization 1995
Efforts...............................................
Resolving Serious Information Security Weaknesses.. 1997
Addressing Urgent Year 2000 Computing Challenge.... 1997
Managing Large Procurement Operations More
Efficiently
DOD Inventory Management.................. 1990
DOD Weapon Systems Acquisition............ 1990
DOD Contract Management................... 1992
Department of Energy Contract Management.. 1990
Superfund Contract Management............. 1990
NASA Contract Management.................. 1990
Reducing Inordinate Program Management Risks
Medicare.................................. 1990
Supplemental Security Income.............. 1997
IRS Tax Filing Fraud...................... 1995
DOD Infrastructure Management............. 1997
HUD Programs.............................. 1994
Student Financial Aid Programs............ 1990
Farm Loan Programs........................ 1990
Asset Forfeiture Programs................. 1990
The 2000 Census........................... 1997
------------------------------------------------------------------------
Source: GAO.
OMB's Designation of the Federal Government's Major Management Problems
In 1989, OMB initiated its own high-risk program, which was
featured in detailed reports in the President's annual budget.
In 1996, however, OMB dropped this high-risk program. In its
place, beginning with the fiscal year 1999 budget cycle, OMB
designated the government's most significant management
problems as Priority Management Objectives (PMO's). According
to the President's fiscal year 1999 budget, the establishment
of PMO's would allow the Administration to ``provide management
leadership to ensure the faithful execution of the enacted
budget, programs, regulations, and policies,'' and to ``work
within and across agencies to identify solutions to mission
critical problems.''
OMB issued its first set of PMO's as part of its initial
fiscal year 1999 Government-wide Performance Plan submitted
under GPRA. For fiscal year 1999, OMB identified 22 key
management objectives and developed performance measures or
commitments for each of the 11 government-wide and 11 agency-
or program-specific PMO's. OMB developed additional sets of
PMO's as part of the Government-wide Performance Plan for both
fiscal years 2000 and 2001. The lists for years 2000 and 2001
each included a total of 24 PMO's, with 12 having a government-
wide focus and the other 12 being agency- or program-focused.
For each year, some new management objectives are typically
added and other areas are dropped. Table 2 lists the OMB-
designated PMO's to be targeted in fiscal year 2001.\2\
---------------------------------------------------------------------------
\2\ Absent from OMB's fiscal year 2001 list of PMO's are ``Better
management of real property'' and ``Improve management of the Census.''
In each case, agencies did not directly solve the issues that made the
areas management challenges. Rather, they drafted proposals (General
Services Administration) or tested procedures (Bureau of the Census),
actions that do not represent adequate measures to solve major
management challenges.
------------------------------------------------------------------------
Table 2: OMB's Priority Management Objectives (PMO's) for Fiscal Year
2001
-------------------------------------------------------------------------
Strengthening Government-wide Management
Use performance information to improve program management and
budget decisionmaking.
Improve financial management information.
Use capital planning and investment control to better
management information technology.
Provide for computer security and protect critical
information infrastructure.
Strengthen statistical programs.
Implement acquisition reforms.
Implement electronic government initiatives.
Better manage Federal financial portfolios.
Align Federal human resources to support agency goals.
Verify that the right person is getting the right benefit.
Streamline and simplify Federal grants management.
Capitalize on Federal energy efficiency.
Improving Program Implementation
Modernize student aid delivery.
Improve DOE program and contract management.
Strengthen HCFA's management capacity.
Implement HUD reform.
Reform management of Indian trust funds.
Implement FAA management reforms.
Implement IRS reforms.
Streamline SSA's disability claims process.
Revolutionize DOD business affairs.
Manage risks in building the International Space Station.
Improve security and management of overseas presence.
Reengineer the naturalization process and reduce the
citizenship application backlog.
------------------------------------------------------------------------
Source: OMB.
Unlike the PMO's for fiscal year 1999, OMB did not
designate specific and readily identifiable performance goals
and measures for fiscal years 2000 and 2001. In an April 12,
2000, letter to the OMB Director, Chairman Thompson encouraged
OMB to develop and report specific commitments for the PMO's.
In his response, the OMB Director stated that the establishment
and dissemination of specific goals and measures for the PMO's
was not necessary, and that OMB officials ``work through the
problems internally to achieve the objectives in whatever way
is most effective.'' Nevertheless, establishing and reporting
specific commitments for the PMO's will ensure a more
coordinated and sustained effort in these significant
challenges and will instill within OMB and the agencies a
greater level of accountability for achieving results.
Agencies' Agreement With IG- and GAO-Designated Management Challenges
In their written responses and the meetings with Committee
staff, agency officials generally agreed with the management
challenges and high-risk programs that GAO and the respective
IGs had identified for each agency. Agency officials stated
that IG and GAO attention on these management problems has
challenged agency managers to draw toward a common focus in
resolving these issues. But some agency officials also pointed
out that many of these management challenges are long-standing
because they are often complex and difficult to resolve.
Committee staff noted some exceptions to this general
agreement concerning the designation of management challenges.
In these cases, agencies generally claimed that although
specific designated areas were indeed challenges for the
agency, these challenges were not deemed to be ``mission-
critical.'' For example, the General Services Administration
(GSA) said that for its designated list of management
challenges, many of the areas did ``not merit being categorized
as a major problem.'' In its written response, the National
Aeronautics and Space Administration (NASA) disagreed with the
``mission critical'' designation of two areas identified by GAO
and the IG as management problems (i.e., aerospace test
facility cooperation with the Department of Defense and the
development and use of launch vehicles).
A few agency officials at these meetings expressed some
frustration that when a particular management problem is
resolved, the agency's IG typically designates another new
``top 10'' challenge to replace it. Thus, it can appear that
the agency is not making progress when some issues are actually
being resolved. Agency officials also pointed out that since
GAO updates its ``high-risk'' list every 2 years, these
problems could have been resolved and still remain on GAO's
list, thus giving the appearance that it is still a problem.
Officials noted, for example, that the Federal Government made
significant progress on the Y2K computer problem, but this
challenge is still on GAO's high-risk list because GAO will not
likely update the list again until 2001.
In limited cases, the IG may agree that an issue placed on
its management challenges list is not deemed to be ``mission
critical.'' For example, the National Science Foundation's
(NSF) fiscal year 1999 Performance Report and fiscal year 2001
Performance Plan discussed two of the 10 major management
challenges identified by NSF's IG but did not address the other
eight challenges. Of these remaining eight challenges, the NSF
IG said that it no longer considers four of them to be
significant enough to require inclusion in NSF's Performance
Report or Performance Plan. The IG, however, continued to
stress the need for NSF to be alert to emerging situations that
could result in them becoming a problem.
Notwithstanding agencies' claims that certain GAO- and IG-
designated problems are not mission-critical, unless the IG or
GAO specifically conclude that a management challenge is not
deemed to be mission-critical, the major management challenges
identified by the independent auditors should receive
heightened management attention and should have specific and
measurable performance goals where possible and practicable.
Moreover, although an IG may add other management challenges to
its ``top 10'' list as an agency resolves previous challenges,
these changes in the listing of management challenges
demonstrate that an agency is indeed making progress on
important activities and programs.
IV. AGENCY EFFORTS TO DEVELOP PERFORMANCE GOALS AND MEASURES FOR
MANAGEMENT CHALLENGES
The Results Act requires that agencies establish (1)
performance goals to define the level of performance to be
achieved and (2) performance measures to be used in assessing
the progress in meeting these goals. Federal agencies in the
past have often used inferior measures to assess the progress
they were making in operating various programs and activities.
For example, agencies often measured performance by such
indicators as the amount of money directed toward a program,
the number of personnel deployed, or the number of proposals
developed. Under GPRA, agency leaders and managers should,
where possible and practicable, use outcome-oriented goals and
measures that demonstrate how well a program or activity is
doing in achieving its intended results.
In its guidance to Federal agencies for the preparation and
submission of Annual Performance Plans, OMB states that
agencies should develop and incorporate performance goals to
address management problems, particularly for those problems
whose resolution is mission-critical or which could potentially
impede achievement of program goals.\1\ Independent observers
have also commented on the importance of establishing such
goals. For example, in a report identifying and describing
practices that might improve the usefulness of agencies' Annual
Performance Plans, GAO noted that the value of Performance
Plans could be increased if agencies more fully included
performance goals to address mission-critical management
problems that may exist.\2\ GAO also reported that Performance
Plans containing specific strategies to resolve mission-
critical management problems more clearly provide Congressional
and other decisionmakers with an understanding of how the
agency plans to improve its management.\3\ Clearly, weaknesses
in internal management processes and systems undermine the
achievement of program results, and discussing the most
critical management problems ensures that those problems that
would have the greatest impact on results receive the most
attention.
---------------------------------------------------------------------------
\1\ OMB Circular No. A-11, Part 2, subsection 220.0(e).
\2\ General Accounting Office, Agency Performance Plans: Examples
of Practices That Can Improve Usefulness to Decisionmakers, (GGD/AIMD-
99-69, February 1999) p. 14.
\3\ Id., p. 26.
---------------------------------------------------------------------------
The Committee staff's meetings with agency officials and
the reviews of agency documents revealed that agencies have not
consistently developed performance goals and associated
measures that directly address their respective management
challenges and high-risk programs. To show the progress of the
24 agencies, Committee staff categorized the extent to which
the agencies developed and reported such goals and measures in
their fiscal year 2001 Performance Plans. Agencies that
reported direct goals for less than 30 percent of their major
management challenges were classified as reporting ``few, if
any'' such goals; agencies that reported direct goals for
between 30 and 69 percent of their challenges were classified
as reporting a ``moderate'' level of such goals; and agencies
that reported direct goals for 70 percent or more of their
challenges were classified as reporting ``more extensive''
goals. As shown in table 3, the Committee staff found that 11
of the 24 agencies reported few, if any, specific and readily
identifiable goals and measures that directly address their
major management problems. Eight of the 24 agencies reported a
moderate level of such goals and measures for these management
challenges. Only five of the 24 agencies reported more
extensive goals and measures that directly address these
challenges.
Table 3: Performance Goals that Directly Address the Management
Challenges for the 24 Departments and Agencies
------------------------------------------------------------------------
Extent of goals Percentage of
that directly goals that
Department or independent address major directly address
agency management major management
challenges challenges
------------------------------------------------------------------------
Department of Health and 8 of 8 100
Human Services................
Federal Emergency Management 10 of 12 83
Agency........................
Department of Defense........ 7 of 9 78
Office of Personnel 7 of 9 78
Management....................
Department of Transportation. 7 of 10 70
Department of Justice........ 9 of 15 60
National Aeronautics and 6 of 10 60
Space Administration..........
Department of Energy......... 8 of 14 57
Social Security 5 of 9 56
Administration................
U.S. Department of 7 of 13 54
Agriculture...................
Department of State.......... 3 of 6 50
Department of Housing and 5 of 11 45
Urban Development.............
Department of the Interior... 4 of 11 36
Environmental Protection 3 of 11 27
Agency........................
Department of Education...... 3 of 11 25
Department of Labor.......... 3 of 12 25
Department of Commerce....... 2 of 9 22
National Science Foundation.. 2 of 10 20
Department of Veterans 2 of 11 18
Affairs.......................
Department of the Treasury... 3 of 21 14
General Services 0 of 6 0
Administration................
U.S. Agency for International 0 of 7 0
Development...................
Small Business Administration 0 of 8 0
Nuclear Regulatory Commission 0 of 13 0
------------------------------------------------------------------------
Source: Committee staff analysis, based on review of agencies' fiscal
year 2001 Performance Plans and GAO reports.
Some of the 24 departments and agencies have made concerted
efforts to use Results Act performance goals to help resolve
their major management problems. Most notably, the fiscal year
2001 Performance Plan for the Department of Health and Human
Services (HHS) includes goals that directly address all of the
Department's major management challenges as identified by GAO
and the HHS IG. HHS has coupled disclosure of major Medicare
overpayments in its annual financial statements with specific
error-reduction goals in its Performance Plan; this approach
has achieved impressive results. Although projected
overpayments rose in fiscal year 1999, the estimated Medicare
error rate is still dramatically lower now than it was several
years ago. As shown in table 3, the Federal Emergency
Management Agency (FEMA), the Department of Defense (DOD), the
Office of Personnel Management (OPM), and the Department of
Transportation (DOT), also established performance goals that
directly addressed many of their core management challenges.
Although some agencies did a commendable job of including
goals to address their management challenges, many agencies
unfortunately did not. Four agencies--GSA, the U.S. Agency for
International Development (USAID), the Small Business
Administration (SBA), and the Nuclear Regulatory Commission
(NRC)--did not develop goals for any of their major management
problems as identified by GAO and the IGs. Other agencies
included goals for their management challenges only to a
moderate extent. The Departments of Agriculture and State, for
example, only included goals for about 50 percent of their
challenges.
While not all major management challenges lend themselves
to specific performance goals, some agencies failed to
establish such goals in many areas where they are sorely
needed. For example, the Treasury Department has performance
goals for only one of the five GAO-designated ``high-risk''
problems at the Department. Even these goals are
``inadequate,'' according to GAO. GAO also raised concerns
about the efforts of the Department of Education's Office of
Student Financial Assistance (OSFA), which was recently
established as a ``performance-based organization.'' GAO
reported that OSFA failed to establish any performance goals to
address the problems necessary to remove fraud and error in
student aid programs from the high-risk list.\4\ A number of
other agencies likewise have failed to establish any
performance goals to address well-documented and serious
problems, such as contractor overpayments at DOD and fraud and
error in the Federal Employee Health Benefits Program at OPM.
---------------------------------------------------------------------------
\4\ General Accounting Office, Education's FY 1999 Performance
Report and FY 2001 Performance Plan, (GAO/HEHS-00-128R, June 30, 2000)
pp. 1-2.
---------------------------------------------------------------------------
The Environmental Protection Agency (EPA) and SBA are
examples of agencies that described the general actions they
planned to take to address their management problems even
though they did not establish and report specific performance
goals and measures for these challenges. For example, although
EPA's fiscal year 2001 Performance Plan identified specific
goals and measures for only three of its 11 major management
challenges, EPA did describe planned strategies to resolve the
remaining eight challenges. Similarly, SBA's fiscal year 2001
Performance Plan reported specific goals and measures for none
of its eight management challenges. Like EPA's Performance
Plan, however, SBA's Performance Plan did include a description
of strategies for addressing these management challenges.
For those agencies that did not fully develop and report
performance goals and measures for their major management
problems, agency officials offered varied reasons for not doing
so. Some agency officials continued to report difficulties in
developing goals and measures for their management challenges.
They stated that in dealing with the major management
challenges--just as with other agency efforts--the link between
Federal programs and desired outcomes is sometimes difficult to
establish. The agencies said that in some cases they are still
challenged by the sometimes limited or indirect influence that
the Federal Government has in determining whether a desired
result is achieved, which complicates the effort to measure the
discrete Federal contribution to a specific result. GAO's work
has shown that measuring the Federal contribution is
particularly challenging for regulatory programs, scientific
research programs, and programs that deliver services to
taxpayers through third parties, such as State and local
governments.\5\
---------------------------------------------------------------------------
\5\ General Accounting Office, Government Performance and Results
Act: 1997 Implementation Will Be Uneven, (GAO/GGD-97-109, June 1997)
pp. 12-13.
---------------------------------------------------------------------------
Although establishing specific and measurable goals can be
a complex undertaking, the development and reporting of such
goals is one of the most effective methods for ensuring
accountability for achieving results. Even in cases where
agencies experience difficulties in developing more results-
oriented performance goals for some of their management
problems, OMB's guidance to agencies states that performance
goals for management problems can readily be expressed as
milestone events for specific remedial steps.\6\ Unless an
agency that is not fully developing and reporting performance
goals for these management problems can offer an alternative
approach for both instilling accountability for results and
demonstrating steady progress to resolve these problems,
Congressional committees overseeing these efforts will have
little information on which to assess an agency's progress.
---------------------------------------------------------------------------
\6\ OMB Circular No. A-11, Part 2, subsection 220.0(e).
---------------------------------------------------------------------------
V. AGENCY ACTIONS AND PLANS TO ADDRESS UNMET GOALS
In the Annual Performance Report required under the Results
Act, each agency must report the actual level of performance
for each performance goal and compare these results to the
target level of performance outlined in the agency's Annual
Performance Plan. For every performance goal whose target level
was not achieved, the agency should describe and explain (1)
why the goal was not met, (2) the plans and schedules to meet
the unmet goal in the future, and (3) if a performance goal is
found to be impractical or infeasible, the reason that the
particular goal is not practical or feasible and
recommendations for a course of action for the goal. OMB's
guidance on preparing Annual Performance Reports states that
agencies must provide this explanation ``even if the difference
between the goal target level and actual performance is
slight.''
The Committee staff's review of the fiscal year 1999
Performance Reports of the 24 agencies showed that agencies
were not always straightforward in their methods of designating
whether they had indeed met the level of targeted performance.
For example, the Commerce Department defined a goal as ``met''
if performance came within 10 percent of the target level and
defined a goal as ``substantially met'' if performance exceeded
two-thirds of the target level. NSF limited descriptions of its
performance to ``successful'' or ``marginally effective,''
ignoring ``unsuccessful'' or ``unmet'' as options.
A review of the Performance Reports also showed that
agencies had mixed results in describing and explaining the
reasons and future plans for unmet goals, including those
related to major management challenges. The Performance Reports
for DOT and USAID are good examples of agencies that seemed to
make a concerted effort to address unmet goals. For each of
their unmet goals--including management problems and high-risk
programs--both DOT and USAID described and explained why the
program was unable to achieve the goal and what actions they
planned to take to meet the goal in the future. These two
agencies demonstrated that a clear and thorough
characterization of unmet goals is important to convince
Congressional decisionmakers and the public that agency
management can adequately and appropriately respond to
performance shortfalls.
Other agencies, however, were less than thorough in their
Performance Reports in addressing unmet goals. The Justice
Department, for example, repeatedly dismissed performance
shortfalls in its Performance Report by using boilerplate
statements that the deviation from targeted performance was
``slight and did not affect overall program performance.'' FEMA
also neglected to provide the reader of its Performance Report
with much information about plans to address its unmet goals.
The Commerce Department's report described specific reasons for
some unmet goals but provided little information about other
unmet goals. For its goal related to the average processing
time for export control license applications, the Commerce
Department's Performance Report provided details about why the
average processing time had increased to 40 days in 1999.
However, for its goals related to patent and trademark
services, Commerce often simply stated that ``[m]eeting the
target remains a challenge.''
VI. AGENCY EFFORTS TO RESPOND TO GAO AND IG RECOMMENDATIONS RELATED TO
MANAGEMENT CHALLENGES
Corrective action taken by agency management on findings
and recommendations from GAO and IG audit reports is essential
to improving the effectiveness and efficiency of Federal
Government operations and resolving many long-standing
management problems. In its guidance to Federal agencies,\1\
OMB states that management officials are responsible for
receiving and analyzing GAO and IG audit reports, providing
timely responses to the audit organization, and taking
corrective action on the recommendations as appropriate. OMB
notes that audit followup is an integral part of good
management and that each agency should establish systems to
assure the prompt and proper resolution and implementation of
audit recommendations.
---------------------------------------------------------------------------
\1\ OMB Circular A-50.
---------------------------------------------------------------------------
In his August 1999 letters to Federal agencies, Chairman
Thompson stressed the need for agencies to resolve and
implement audit recommendations related to each agency's major
management problems. He noted that according to information
provided to the Committee by the respective IGs and GAO, many
agencies continued to have a number of open audit
recommendations that addressed these major management problems.
In these letters, the Chairman also asked the agencies whether
they disagreed with these GAO and IG recommendations and
requested that the agencies comment on the specific actions
that they were taking to implement those recommendations with
which they generally agreed.
On the basis of agency responses to the Chairman's letters
and Committee staff meetings with agency officials, most
agencies appear to have made some progress in taking timely and
appropriate action to deal with the IG and GAO recommendations
on management problems and in regularly tracking these open
recommendations. The Interior Department, the Social Security
Administration (SSA), and the Internal Revenue Service (IRS)
are examples of agencies that have made concerted efforts to
implement and clear open audit recommendations. Some agencies
have established specific performance goals related to
implementing audit recommendations. For example, the Interior
Department has set a goal for fiscal year 2001 to complete
implementation of 75 percent of IG and GAO audit
recommendations within 1 year of referral, and complete 80
percent of corrective action plans for material weaknesses by
their original target date.\2\
---------------------------------------------------------------------------
\2\ Department of Interior Fiscal Year 2001 Annual Performance
Plan, p. 101.
---------------------------------------------------------------------------
Some agencies, however, have been less attentive to
resolving open recommendations with auditors. For example, the
Department of Energy (DOE) demonstrated favorable progress in
clearing open recommendations from the DOE IG but was less
vigilant in clearing open GAO recommendations. DOE and GAO
officials found that DOE had often taken remedial action but
had not readily communicated the Department's efforts to GAO to
allow for the timely removal of the issue from GAO's inventory
of open recommendations. In another case, EPA's IG informed
Committee staff that, although EPA is generally receptive to
the findings of the IG's audit reports, the agency does not
generally implement these recommendations in a prompt and
timely manner.
VII. CONCLUSIONS AND RECOMMENDATIONS
On the basis of meetings with agency officials and reviews
of agency documents, the staff of the Senate Governmental
Affairs Committee found that the 24 largest Federal agencies
have not consistently developed performance goals and
associated measures that directly address the agencies' major
management challenges and high-risk programs. The Committee
staff's analysis showed that 11 of the 24 reviewed agencies
reported few, if any, specific and readily identifiable goals
and measures that directly address their major management
problems. Eight of the 24 agencies reported a moderate level of
such goals and measures for these management challenges. Only
five of the 24 agencies reported more extensive goals and
measures that directly address these challenges.
Although the move toward performance-based government is
positive, the attention to long-standing management problems
unfortunately has been insufficient to meet the challenges they
pose. Poor management of Federal agencies and programs still
causes tremendous waste of Federal dollars and, in many cases,
prevents the government from achieving its missions. The
Federal Government must concentrate its efforts to bring about
a culture that values a results-oriented approach to managing
Federal agencies and programs--one that emphasizes
accountability and rewards results. Recommendations that will
help in these efforts include the following:
OMB should clarify and strongly enforce its
Results Act guidance requiring agencies to develop and
report on performance goals and measures that directly
address major management challenges and high-risk
programs. Although there has been some progress in this
area, there are clearly too few goals and measures to
address the many major challenges that exist today. In
cases where agencies have valid reasons for not
developing such goals and measures, the agency should
describe how it is monitoring the progress in resolving
these management challenges and how it is being held
accountable to address these challenges.
Agencies should ensure that they include in
their Performance Reports specific and credible
information on how they plan to meet unmet goals in the
future. The review of agencies' Performance Reports
clearly showed that some agencies were less than
thorough in reporting this information.
OMB should develop and publish goals and
measures for the Priority Management Objectives and
report on the Federal Government's progress toward
meeting these goals. OMB currently monitors progress on
the PMO's without the benefit of specific and publicly
available measures.
Agencies should incorporate performance
measures for major management challenges into the
performance agreements of agency leaders and program
managers. The success of the Results Act and
performance-based management in Federal agencies
depends in large part on the extent to which agency
officials and employees understand the goals set forth
by the agency and are held accountable for achieving
them.
The IGs and GAO should take more direct and
frequent action to follow up on what the agencies have
done to respond to IG and GAO recommendations,
particularly on key recommendations addressing critical
management problems. The IGs should also provide more
information on open recommendations in their semiannual
reports, especially as such recommendations relate to
the IG top 10 management challenges. Although many
agencies are doing a respectable job in responding to
GAO and IG recommendations, some agencies will require
more active follow-up by the IGs and GAO on outstanding
recommendations.
VIII. APPENDIX: SUMMARY OF MAJOR MANAGEMENT CHALLENGES AND HIGH-RISK
PROGRAMS FOR 24 FEDERAL DEPARTMENTS AND AGENCIES:
----------
DEPARTMENT OF AGRICULTURE
Chairman Thompson's August 1999 letter to the U.S.
Department of Agriculture (USDA) listed the following 16 major
management challenges at USDA that GAO and the agency's IG had
identified:
USDA's obsolete and inefficient field
structure,
Fundamental changes needed to improve food
safety,
Inefficiency and waste throughout the Forest
Service's operations,
Carrying a high level of delinquent farm loan
debt and writing off large amounts of unpaid loans,
Food Stamp program overpayments,
Lack of financial accountability over
billions of dollars in assets,
Poor management of telecommunications
investments,
Weaknesses in managing information technology
investments,
Y2K computer conversion,
Crop insurance program administration,
Conservation Reserve Program administration,
Abuses in the Child and Adult Care Food
Program,
Pollution cleanup and abatement management
practices,
Research funding accountability,
Civil rights complaints, and
Fraud and abuse in the Rural Rental Housing
Program.
The Chairman's letter noted that improving Forest Service
financial management and improving farm loan program
administration and management were two challenges of particular
concern at USDA. The Chairman also noted GAO's finding that
USDA's fiscal year 2000 Performance Plan contained specific
performance goals to address only five of the 16 problem areas.
By a letter dated December 14, 1999, USDA Secretary
Glickman responded to the Chairman's letter. The Secretary's
response agreed with the GAO and IG designations of major
management challenges at USDA. However, he expressed the view
that not every challenge warranted a specific performance goal.
Rather, he stated, resolution of many management challenges was
embedded in broader program performance goals.
In December 1999, the IG submitted to the Committee an
updated list of the most serious management problems at USDA.
The updated list consisted of the following 12 items:
Federal Crop Insurance,
Farm Credit programs,
Food Stamp program,
Child and Adult Care Food program,
Food safety,
Forest Service management and program
delivery,
Research funding accountability,
Competitive grants program compliance,
Rural Rental Housing program,
Civil rights complaints,
Financial management, and
Information resources management.
On March 24, 2000, the Committee staff met with USDA
officials, along with GAO and IG representatives, to follow up
on the Chairman's letter and the agency's response. USDA
officials expressed agreement with the GAO and IG designations
of major management challenges and provided a briefing on their
actions to address each of the challenges. The officials
emphasized the difficulty of obtaining the resources necessary
to resolve some management challenges. For example, they
estimated that about $50 million dollars would be needed to fix
USDA's financial management systems. Ironically, they noted
that about $50 million in USDA appropriated funds expires each
year without being obligated.
GAO found that USDA's Performance Plan for fiscal year 2001
contained goals that directly addressed seven of the current
management problems at USDA.
DEPARTMENT OF COMMERCE
Chairman Thompson's August 1999 letter to the Department of
Commerce (DOC) referenced the following 10 management
challenges for the Department as identified by the DOC IG:
Increase the accuracy and control the cost of
the 2000 decennial census.
Obtain a clean opinion on the Department's
consolidated financial statements.
Address Y2K computer problem.
Successfully implement the Advanced Weather
Interactive Processing System (AWIPS).
Successfully implement a Department-wide
financial management system.
Reassess the mission and financial viability
of the National Technical Information Service (NTIS).
Expand private sector participation in the
National Oceanic and Atmospheric Administration's
(NOAA) Marine and Aeronautical data gathering.
Manage the Patent and Trademark Office's
(PTO) space requirements and lease costs.
Maximize competition in the Department's
financial assistance programs.
Continue to improve the Department's
strategic planning and performance measurement in
accordance with GPRA.
The Chairman's letter references two specific DOC
activities that are included on GAO's list of high risk Federal
programs and are also included on the IG's list of management
challenges: The National Weather Service Modernization Program
(which includes AWIPS) and the 2000 Census. The IG identified
essentially the same top challenges in its updated assessment
of the Department's major management challenges for fiscal year
2000.
In its response to the Chairman's request for information,
DOC's letter provided an overview of the Department's efforts
to address management challenges, but it did not provide
details of the Department's actions to implement
recommendations made by GAO and the IG. In the response, the
Commerce Secretary stated that he had been directly involved in
two problem areas identified on GAO's high-risk list--the
Decennial Census and the modernization of the National Weather
Service--and that he was satisfied with the progress that the
Department had made in both cases. The response also stated
that the Department was exploring possible ways to include IG
inspections and evaluations in the existing tracking and
reporting process for IG audits. According to the response, the
Secretary stated that DOC currently tracks IG audits every six
months and was taking a look at tracking GAO evaluations in the
Department in a similar manner.
On April 27, 2000, Committee staff met with representatives
from DOC, the DOC IG, and GAO at the DOC's headquarters
building. During this meeting, Committee staff noted that,
although DOC's Performance Report often provided a description
of strategies for addressing some of the Department's
management challenges, the Performance Report often did not
provide information on specific goals and measures that could
be used to assess progress on these management challenges. DOC
officials told Committee staff that the Department had not
adopted specific and measurable goals to address all the major
management problems because officials believed that Performance
Plans should primarily concentrate on program outcomes and not
specific management efforts. Nonetheless, DOC officials said
that the Department would likely establish a management
strategic goal in future GPRA planning efforts to complement
DOC's program goals. According to DOC officials, such a new
management strategic goal would link to annual performance
goals and measures that specifically address the major
management challenges and high-risk programs for the
Department. Also at this meeting, officials from the
Department's IG informed the Committee staff that DOC is
generally making progress on addressing the management
challenges that confront the Department.
Overall, DOC has made only minor improvements over the
previous year in its development and use of specific goals and
measures for its major management problems. Although DOC has
developed such goals and measures to a moderate extent, greater
management attention is needed to address all of the
significant challenges and problems that were identified by the
IG and GAO. DOC should move forward with its plans to establish
a new management strategic goal to ensure that all the
Department's major management challenges are incorporated into
future GPRA planning efforts.
DEPARTMENT OF DEFENSE
In his August 1999 letter to the Department of Defense
(DOD), Chairman Thompson asked for an update on the agency's
progress toward solving the following 10 management challenges
identified by both GAO and the DOD IG:
The Year 2000 computer problem,
Information security,
Financial management,
Weapons systems acquisition,
Contract management,
Defense infrastructure,
Inventory management,
Military personnel,
Military readiness, and
Turbulence from change.
The DOD's IG submitted to the Committee a new list of the
top 10 management challenges facing the Department after
Chairman Thompson's letter. In addition to the Year 2000 issue,
contract management and military personnel were removed from
the list. Added were management, health care, and ``other
security concerns management.''
The DOD's response to Chairman Thompson's letter included
individual letters from the many departmental components that
were the subject of outstanding recommendations for which
insufficient action had been taken. These included responses
from the Defense Information Systems Agency, the Defense
Logistics Agency, the Defense Finance and Accounting Service,
and the Coordinator for Drug Enforcement Policy and Support.
The number of the responses made it difficult to gauge the
status of many of the outstanding recommendations.
Many of the management challenges that beset DOD are
difficult and longstanding. DOD is responsible for roughly $1.3
trillion in assets; operates 638 major installations and
thousands of small sites around the world; and currently has
about 700,000 civilian employees and 2.4 million military
personnel in the active forces or the Ready and Standby
Reserves. The DOD IG's overall assessment of the Department's
responsiveness to management problems is that the DOD has
seldom before, if ever, been so committed to across the board
management improvement. However, even after several years of
concerted effort, much more needs to be done to cut costs and
improve effectiveness.
DOD continues to be unable to prepare auditable financial
statements. For fiscal year 1998, as in previous years, only
the Military Retirement Trust Fund received a favorable audit
opinion. The DOD financial statements for fiscal year 1998 were
less timely than ever and a record $1.7 trillion of unsupported
adjustments were made in preparing the statements. The lack of
adequate systems continues to be the major impediment to
achieving favorable audit opinions and producing reliable
financial reporting.
Information Technology problems at DOD include: Too many
systems, block obsolescence, insufficient interoperability,
security vulnerabilities, inconsistent budgeting and reporting,
noncompliance with policies on data standardization,
documentation and configuration management, user
dissatisfaction, frequent system acquisition schedule slippage
and cost overruns, and disconnects between evolving business
practices and their supporting system projects. The Defense
Appropriations Act for Fiscal Year 2000 levied stringent new
requirements on the Department to ensure a complete break with
overly decentralized and often inefficient past practices for
reviewing, approving, monitoring and funding information system
acquisition projects. In addition to improving management of
system acquisition, the Department needs to modernize and cut
support costs for communications and other information
technology infrastructure.
Of nine major management challenges, DOD includes in its
fiscal year 2001 Performance Plan only seven specific and
measurable performance goals. According to GAO, ``Defense's
Performance Report and Plan contain no goals, measures, or
assessment on whether it is achieving a reduction in erroneous
payments to contractors,'' a key measure for DOD's success in
contract management.
DEPARTMENT OF EDUCATION
Chairman Thompson's August 1999 letter to the Secretary of
Education listed the following 12 major management challenges
that had been identified by GAO and the agency's IG:
Inadequate effort to ensure access to
postsecondary institutions while protecting Federal
financial interests,
Lack of a sound, integrated information
technology strategy,
Lack of adequate financial data for
management of student financial aid programs,
Y2K computer conversion,
Balancing oversight of programs and program
flexibility,
Implementation of an effective performance-
based organization to operate student financial aid
programs,
Lack of information technology staff with the
technical expertise to negotiate and oversee systems
contracts,
Start-up and data integrity problems with the
agency's ``EDCAPS'' financial management system,
``Gatekeeping'' and institutional monitoring
in the student financial aid programs,
Implementing legislation authorizing a data
match with the Internal Revenue Service to improve
student financial aid eligibility determinations,
Controls over ``paperless'' systems for
student financial aid fund delivery, and
Performance reporting under the Results Act.
The Chairman's letter expressed concern that, based on the
GAO's analysis, Education's Performance Plan for fiscal year
2000 had no specific goals to address seven of these 12 problem
areas. The Chairman also noted that many of the problems
related to different aspects of student financial aid, a GAO
``high risk'' area, and had persisted for years.
In its September 23, 1999 response, Education disputed the
GAO analysis and stated that its Performance Plan addressed all
12 management challenges. The agency also noted that the
default rate for student loans had declined for 6 consecutive
years and was now at a record low 9.6 percent.
In December 1999, the Education IG provided to the
Committee an updated list of what they considered to be the
Agency's most serious management challenges. The updated list
included most of the items mentioned above, but consolidated
them into the following nine areas:
Financial management,
Year 2000 computer readiness,
Information systems security,
Implementation of the Student Financial
Assistance Modernization Blueprint and Performance
Plan,
Controls over ``paperless'' systems for
student financial aid fund delivery,
Implementation of the Clinger-Cohen Act to
improve information technology management,
Performance reporting under the Results Act,
Balancing compliance monitoring and technical
assistance for Elementary and Secondary Education
Programs, and
Implementing legislation authorizing a data
match with the Internal Revenue Service to improve
student financial aid eligibility determinations.
On April 4, 2000, Committee staff met with Education
officials, along with representatives from GAO and the IG's
office, to follow up on the Chairman's letter and the agency's
response. Education officials stated their agreement with the
nine management challenges identified in the IG's December 1999
submission. They discussed actions the agency was taking to
address each of these problems. Of particular note, Education
has undertaken impressive efforts to enhance the performance
data it uses for Results Act purposes. Given the nature of its
programs, the agency must rely on State and local governments
as well as other outside sources to supply much of the data
needed to assess performance under its outcome goals and
measures. It is working with these entities to improve the
timeliness and consistency of data. Education also has adopted
a performance measure to require agency managers to attest that
the data used for their program's performance measurement are
reliable, valid and timely, or have plans for improvement.
Education has not done a good job of establishing specific
and measurable performance goals to address its management
problems. As noted above, its fiscal year 2000 Performance Plan
set such goals for only three of its management challenges.
According to GAO and the IG, its fiscal year 2001 Performance
Plan likewise has goals for only three of the problems.\1\
These goals address financial management, information
technology management, and performance data improvement. Not
surprisingly, the lack of performance goals is reflected in the
Education's Performance Report for fiscal year 1999. The Report
demonstrates no progress toward resolving any of Education's
problems beyond these three.
---------------------------------------------------------------------------
\1\ One of the problems from last year, resolving the Y2K
conversion, was resolved and is no longer applicable.
---------------------------------------------------------------------------
As GAO notes, the absence of performance goals is
particularly disturbing in the case of the Office of Student
Financial Assistance. This Office, which was recently
established as a ``performance-based organization'' within the
Education Department, has not established performance goals or
objectives to address the problems necessary to remove fraud
and error in student aid programs from the high-risk list. The
Office also seems to be dragging its feet in addressing one of
the IG's key designated problems--implementing the data match
with the Internal Revenue Service. In 1998, Congress enacted a
law specifically designed to improve student aid eligibility
determinations by enabling Education to verify income
information with IRS.\2\ This law remains unimplemented nearly
2 years after its enactment, while Education, the Treasury
Department, and the Office of Management and Budget engage in
seemingly intractable discussions over what to do. Evidently,
they believe the language of the law may be inadequate to
accomplish its obvious purpose. Nevertheless, they seem unable
to come to closure on the legal issues--either by resolving
these issues or submitting proposed amendments to the Congress.
---------------------------------------------------------------------------
\2\ Section 484(q) of the Higher Education Act, as amended, 20
U.S.C. Sec. 1091(q).
---------------------------------------------------------------------------
DEPARTMENT OF ENERGY
Chairman Thompson's August 1999 letter to the Department of
Energy (DOE) listed the following 14 major management
challenges at DOE that GAO and the agency's IG had identified:
Y2K computer conversion,
Information security,
Contract management,
Difficulty completing large projects,
Slow transition to external regulations,
DOE's ineffective organizational structure,
DOE's staff lack technical and management
skills,
Environmental compliance and waste management
problems at DOE facilities,
Nuclear and occupational safety and health
deficiencies,
Delays in disposal of radioactive waste,
Extensive inventories of nuclear and
nonnuclear materials that may no longer be necessary,
Poor condition of DOE's infrastructure,
Deficiencies in control over government
personal property, and
Access to sensitive materials, areas, and
information, and physical security.
Among other things, the Chairman's letter noted that
contract management at DOE had been on GAO's high-risk list
since the inception of the list in 1990. This is a particularly
serious problem since DOE relies on contractors to perform
about 90 percent of its work. The Chairman's letter also noted
GAO's finding that DOE's fiscal year 2000 Performance Plan
contained specific performance goals to address nine of the 14
problem areas identified by GAO and the IG.
By a letter dated November 11, 1999, DOE responded to the
Chairman's letter. DOE did not indicate disagreement with the
Chairman's list of major management problems. DOE stated many
of the ``open'' GAO and IG audit recommendations dealing with
the major management problems actually are resolved. It said
DOE would work with GAO and the IG to sort out the status of
these recommendations. DOE's letter further stated that its
fiscal year 2001 Performance Plan would include goals for the
two management problems related to security. DOE maintained
that the others don't require fiscal year 2001 goals since they
were expected to be addressed in fiscal year 2000.
In December 1999, the IG submitted to the Committee an
updated list of the most serious management problems at DOE.
The only change from the previous year's list was the deletion
of Y2K readiness. The IG designated three of the management
challenges--security, project management, and contract
management--as special emphasis areas for the coming year.
According to the IG, DOE's recent performance in these areas
had been of particular concern.
On February 25, 2000, the Committee staff met with DOE
officials, along with GAO and IG representatives, to follow up
on the Chairman's letter and the agency's response. A number of
DOE's management problems were discussed. DOE officials
maintained that some of the problems had been resolved. For
others, they maintained that they had process improvements in
place and therefore did not need a performance goal. They
disagreed with the Committee staff's suggestion that it would
be difficult to determine whether the process improvements were
working unless they were tracked against performance goals.
With reference to contract management, the Committee staff
noted that DOE had provisions in its contracts to enforce
contractor accountability and asked what DOE was doing to
enforce these provisions. The DOE officials said they did not
have information on the extent to which DOE was enforcing these
contract provisions. Both GAO and the IG regarded contract
management as a continuing problem and questioned whether DOE
had done enough to enhance contractor accountability.
GAO found that DOE's Performance Plan for fiscal year 2001
contained goals that directly addressed eight of the current
management problems. However, GAO concluded that insufficient
progress had been made to consider any of them resolved. GAO
also questioned the adequacy of some DOE's goals to address its
management problems. For example, GAO said DOE's goals relating
to timely completion of large projects focus on procedures
rather than outcomes.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Chairman Thompson's August 1999 letter to the Secretary of
Health and Human Services (HHS) listed the following 14 major
management challenges that had been identified by GAO and the
agency's IG:
Y2K computer readiness,
Information security,
Medicare payment errors, in general,
Improper Medicare payments for mental health
services,
Inadequate controls over Medicare managed
care,
Inadequate controls over Medicare home health
benefits,
Implementation of payment reforms for nursing
facilities from Balanced Budget Act,
Implementation of other Balanced Budget Act
provisions,
Child support enforcement,
Additional Medicare reforms needed,
Scope and complexity of programs, including
the need for coordination, oversight and performance
measures,
Lack of reliable and comprehensive
performance data and data systems,
Lack of reliable and timely financial
statements, and
Other program integrity issues.\3\
---------------------------------------------------------------------------
\3\ In a December 1999 letter to Chairman Thompson, the HHS IG
updated its list of the most serious management challenges facing the
agency. Most of the challenges were the same or similar to those in
Chairman Thompson's August 1999 letter, although two challenges were
added. The new challenges were Medicare contractor oversight and
Medicare payments for rehabilitation services.
In her October 14, 1999 response to Chairman Thompson's
letter, HHS Secretary Shalala stated that HHS was making good
progress on major management challenges. In particular, she
cited progress on financial statements and reducing Medicare
error. She agreed that Results Act performance goals should be
established to address major management challenges, and she
noted that HHS had established such goals for most of the
challenges.
Secretary Shalala further stated that HHS is ``in general
agreement with almost every GAO or IG recommendation and major
management challenge'' that Chairman Thompson's August letter
listed as a concern. She said that GAO and IG recommendations
have been significantly integrated into HHS component agency
performance plans and many are covered directly by performance
goals.
Committee staff met with HHS officials on April 25, 2000,
to follow up on the Chairman's August letter and the
Secretary's response. Representatives from GAO and the agency's
IG also participated. The HHS officials agreed that the major
management challenges identified by the Chairman, GAO, and the
IG are ``on target.'' They stressed that more resources are
needed to resolve many of these problems. There needs to be a
consensus in the Executive Branch and Congress on the
importance of addressing these problems, and funding must be
provided. They cited the resolution of the Y2K problem as an
example of how this combination worked well. They suggested
that some form of separate or ``fenced off'' funding that would
be available only to resolve major management problems might
help. The IG endorsed this concept, noting dedicated funding
for management improvements should be regarded as an
``investment.''
With regard to specific management challenges, the HHS
officials noted that the agency got a ``clean'' audit opinion
on its financial statements for the first time, as did some HHS
components such as the Health Care Financing Administration
(HCFA). However, they recognized that clean audit opinions are
not in themselves solutions to financial management problems.
It is important to get financial systems in place that produce
useful information for real time management. The agency is
taking implementation of the Clinger-Cohen Act very seriously
and is developing a 3-year plan for computer security.
There was also lengthy discussion of the agency's progress
in resolving the many management problems associated with
Medicare and other health care programs. For example, HHS is
obtaining outside audits on Medicare contractors. There is a
need to enact Medicare contractor reforms. HHS has been
estimating Medicare error for the past few years since
milestones and measures are key to reducing error rates. HCFA
officials noted that the availability of adequate nursing home
care is ``an impending crisis.'' Four of the 10 major nursing
home chains are in bankruptcy, and another one is in trouble.
There is much fraud in nursing home care.
The IG representatives stated that HHS is making good
progress in combating Medicare error, but much remains to be
done. Many Medicare payment areas have error rates exceeding 50
percent. Both the IG and GAO representatives expressed
satisfaction with the receptivity of HHS to their work and
recommendations concerning major management problems.
HHS faces daunting management challenges, the majority of
which relate to the activities of HCFA. Most notably, the
Medicare fee-for-service program has error rates exceeding $10
billion annually. The estimated error rate for fiscal year 1999
was $13.5 billion, or about 8 percent of total program
expenditures. However, it is clear that HHS is serious about
resolving these challenges and is taking concrete steps in that
direction. HHS was one of the first agencies to provide an
estimate for major overpayments (Medicare) in its annual
financial statements. It coupled this disclosure with specific
performance goals to reduce the Medicare error rate in recent
years. The agency has been very successful with this approach
since the estimated Medicare fee-for-service error rate is
dramatically lower than it was several years ago. Nevertheless,
much more needs to be done.\4\
---------------------------------------------------------------------------
\4\ For example, the estimated error rate actually rose in fiscal
year 1999 from the previous year. Also, GAO has reported that
improvements are needed in the way HHS estimates Medicare error. See
Medicare Improper Payments: Challenges for Measuring Potential Fraud
and Abuse Remain Despite Planned Enhancements, (GAO/T-AIMD/OSI-00-251,
July 12, 2000).
---------------------------------------------------------------------------
The HHS Performance Report for fiscal year 1999
demonstrated progress toward resolving several of its major
management problems. Furthermore, HHS deserves special credit
for establishing goals in its fiscal year 2001 Performance Plan
that directly address all of the major management challenges
that have been identified by GAO and the agency's IG. Also, the
fiscal year 2001 Plan (pages 53-55) provides specific responses
to each of the management challenges identified by Chairman
Thompson.
One major improvement HHS could make is to develop error
estimates and error-reduction goals for Medicaid. HHS would
have to work with the States to accomplish this. However, the
need is as great as it was for Medicare and, one would hope,
similar results could be obtained. Indeed, it is likely
Medicaid erroneous payments also amount to tens of billions of
dollars annually.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Chairman Thompson's August 1999 letter to the Secretary of
the Department of Housing and Urban Development (HUD) listed
the following 11 major management challenges at HUD that GAO
and the agency's IG had identified:
Year 2000 computer challenge,
Information security,
Internal control weaknesses,
Information and financial management systems,
Organizational problems,
Insufficient mix of staff with proper skills,
Bringing on-line the Real Estate Assessment
Center,
Restructuring project mortgages to bring them
to market levels,
Defining relationship between Community
Builders and Public Trust Officers,
Section 8 program problems, and
Management of real estate owned properties.
The Chairman's letter noted that HUD had been a GAO-
designated ``high-risk'' area since 1994 because of four
serious, long-standing department-wide problems: Internal
control weaknesses; unreliable information and financial
management systems; organizational deficiencies; and an
insufficient mix of staff with the proper skills. The
Chairman's letter acknowledged that HUD had established a
``2020 Management Reform Plan'' to resolve its major management
problems, but expressed concern about the reportedly slow place
in implementing the 2020 reforms. He noted, in this regard, the
IG's assessment that the 2020 Reform Plan was ``still a work in
progress'' while ``disclosures of fraud, waste, and abuse
continue unabated.'' The Chairman also referenced GAO's finding
that HUD's fiscal year 2000 Performance Plan contained specific
performance goals to address only three of the 11 problem areas
identified by GAO and the IG.
By a letter dated October 18, 1999, HUD Secretary Cuomo
responded to the Chairman's letter. Secretary Cuomo stated that
the key elements of the 2020 Reform Plan were now in place. He
further stated that only mission-critical management problems
should be covered by GPRA performance goals, and that HUD had
established many such goals in its fiscal year 2000 Performance
Plan under a section entitled ``Restore Public Trust in HUD.''
Management challenges were also discussed in other parts of the
Performance Plan.
In December 1999, the IG submitted to the Committee an
updated list of the most serious management problems at HUD.
The IG's updated list consisted of the following nine items:
HUD 2020 Management Reform Plan development
and execution,
Staff resources,
Single family property disposition program,
Single family loss mitigation activities,
Troubled Agency Recovery Centers not
operating as intended,
Real estate assessment system,
Financial management systems,
Procurement systems, and
Section 8 program administration.
On May 23, 2000, the Committee staff met with HUD
officials, along with GAO and IG representatives, to follow up
on the Chairman's letter and the agency's response. HUD
officials stated that they use the eight material weaknesses
from the agency's financial statement audits as the proxy for
its major management challenges. According to HUD, these eight
material weaknesses relate to the Department's general control
environment and provide the basis for GAO's high-risk
designation. However, neither GAO nor IG representatives were
satisfied that these eight areas captured HUD's core management
problems. GAO recommended that HUD conduct a full-blown,
department-wide, program-by-program internal control risk
assessment to fully identify the management challenges. The IG
described HUD's management challenges as ``staggering.'' She
emphasized information technology system problems, lack of
adequate staff with proper skills, and contractor oversight.
She said HUD needed to prioritize and concentrate on the most
serious problems, rather than trying to deal with everything at
once.
The Committee staff noted that HUD's fiscal year 2001
Performance Plan discusses the eight material weaknesses, but
doesn't include specific and measurable performance goals to
address them. HUD emphasized that greater specificity was
provided by internal accountability measures. For example, HUD
ties progress on these problems to performance standards for
senior managers. However, the Committee staff emphasized that
while internal accountability measures are good, they don't
substitute for specific performance goals that will be tracked
in Annual Performance Reports. In particular, such goals would
provide greater transparency, accountability and impact
externally. The Committee staff and GAO recommended that HUD
develop goals to resolve material weaknesses to complement the
agency's goal to get a clean opinion on its financial
statement. The HUD officials expressed a willingness to
consider more specific performance goals for the next GPRA
cycle.
GAO found that HUD's Performance Plan for fiscal year 2001
contained goals that directly addressed five of the 11
management problems listed in Chairman Thompson's August 1999
letter.
DEPARTMENT OF THE INTERIOR
In his August 1999 letter to the Interior Department,
Chairman Thompson asked for an update on the agency's progress
toward solving the following 10 management challenges
identified by both GAO and the Interior's IG:
Streamlining agencies,
Resource management,
Better guidance and oversight,
Management of Tribal and Indian programs,
Bureau of Land Management ALMRS Project,
Financial management,
Land clean-up,
Revenue collection,
Land exchanges, and
Year 2000 computer problem.
Soon after Chairman Thompson wrote to Interior, the
Interior IG submitted a new list of Interior's top 10
management challenges. The only item that was eliminated from
the list was the Year 2000 computer problem. New to the list
was the management of the automated records system.
In its response, Interior agreed that performance goals and
measures are appropriate ways to address major management
challenges. John Berry, Assistant Secretary for Policy,
Management, and Budget, described in his letter to Chairman
Thompson the process Interior has in place to track progress in
the Department's attempts to cure management problems. Mr.
Berry wrote, ``Interior has a system in place to track all
these issues at the departmental level, even though most of the
actions to resolve these issues are carried out by Interior's
bureaus and offices.''
On May 17, 2000, Committee staff met with Mr. Berry, other
Interior officials, the IG, and representatives from GAO to
discuss Interior's progress in addressing management
challenges. One of the major concerns expressed by both
Department officials and the IG was the decentralization of
Interior and the difficulty that poses for management. The
discussion at the meeting centered on the Department's attempts
to overcome the problems associated with such decentralization.
Financial mismanagement, like in many other Federal
agencies, has been a problem at Interior. For instance, the
Bureau of Indian Affairs and insular area governments have been
unable to adequately account for revenues and expenditures
associated with their operations. Interior has shown
improvement in this area. Despite disclosing a number of
material weaknesses, the IG gave Interior's financial
statements an unqualified opinion. However, in the meeting with
Interior officials, the IG warned that he would be more closely
scrutinizing the financial systems in place at Interior to
ensure that the financial statements were produced in a more
timely fashion.
Problems with Interior's management of Tribal and Indian
programs are well documented. According to GAO, ``the $3
billion Indian Trust Fund has long been characterized by
inadequate accounting and information systems, untrained and
inexperienced staff, and a host of other problems.'' In its
response, Interior stated, ``The Department has developed a
High Level Implementation Plan that provides a general roadmap
to the 13 related projects which collectively comprise the
Department's Trust Management Improvement Program.'' In
addition, it listed several areas where it was making progress
in addressing longstanding problems with the management of the
trust funds.
GAO analyzed the extent to which Interior's fiscal year
2001 Performance Plan set specific and measurable goals to
address its management challenges. According to GAO, the
Performance Plan includes only four specific and measurable
performance goals to address Interior's management challenges.
DEPARTMENT OF JUSTICE
Chairman Thompson's August 1999 letter to the Attorney
General listed the following 16 major management challenges at
the Department of Justice (DOJ) that had been identified by GAO
and the agency's IG:
Y2K computer readiness,
Information security,
Management of forfeited assets,
Immigration and Naturalization Service (INS)
organizational structure,
INS internal communications and coordination
problems,
INS financial management,
The effectiveness of INS' southwest border
strategy,
INS process for removing criminal aliens,
INS procedures for granting citizenship,
Justice-wide financial management problems,
Internal control weaknesses within the Drug
Enforcement Administration (DEA),
Prison overcrowding,
Detention space and infrastructure for
criminals and illegal migrants,
INS' ineffective program to remove illegal
aliens,
INS' automation system vulnerability to waste
and abuse, and
Failed information systems planning and
implementation.
The letter pointed out that DOJ's Performance Plan for
fiscal year 2000 had performance goals directly addressing
eight of the 16 problems. The letter also noted a particular
concern over management of forfeited assets by the Department
of Justice and the Treasury Department. The two departments
maintain separate forfeited asset funds that have inventories
totaling about $1.8 billion. GAO designated forfeited asset
management at both Departments as a ``high-risk'' area in its
original 1990 high-risk list. According to GAO, there is no
acceptable reason for the long delays in completing the actions
necessary to remove this high-risk designation. Furthermore,
Justice and Treasury have refused to implement a GAO
recommendation dating back to 1991 to consolidate the
management and disposition of properties. Indeed, Justice and
Treasury maintain separate contractors to handle seized assets
at some of the same locations.
By a letter dated October 13, 1999, DOJ responded to the
Chairman's letter. Among other things, the response discussed
actions DOJ was taking on the designated management challenges.
In December 1999, the DOJ IG submitted to the Committee an
updated list of the most serious management problems at DOJ.
Because of to the DOJ's efforts in testing and renovating
mission critical computer systems, the IG removed Y2K from the
list. In addition, INS automation system problems has been
merged into information systems planning and implementation due
to the similarity of the two issues. Finally, the IG added two
new management challenges: Grants management and human capital.
On December 17, 1999, the Committee staff met with DOJ
officials, as well as GAO and IG representatives, to follow up
on the Chairman's letter and DOJ's response. The Committee
staff asked DOJ to do a study to see if the consolidation of
the management of the assets would be cost-effective. According
to GAO, such a study should look at: (1) the cost of storing
the assets in each location, (2) the administration costs of
one contract instead of two, and (3) which company would give
more back to the government after the selling of the assets.
The DOJ officials agreed to look into the possibility of doing
such a study.
The meeting also covered a discussion of DOJ's other
management challenges, including financial management and the
many problems at INS. The DOJ officials expressed their
commitment to continuing the Department's efforts to fully
address existing management challenges.
GAO's latest review concluded that 15 of the 16 items
listed in the Chairman's August letter remain management
challenges at DOJ. The only item that is no longer a problem is
the Y2K conversion. GAO found that DOJ's Performance Plan for
fiscal year 2001 contains goals that directly address nine of
the 15 problems. Management challenges that are not addressed
include internal control weaknesses at DEA and concerns about
the effectiveness of INS' organizational structure and internal
communications. Also, DOJ has no goals to address the high-risk
area of forfeited assets management. DOJ has not responded to
the Committee's request for a study on consolidating management
of DOJ and Treasury forfeited asset funds.
DEPARTMENT OF LABOR
Chairman Thompson's August 1999 letter to the Department of
Labor (DOL) referenced the following 10 management challenges
for the Department as identified by DOL's IG:
Effectiveness of Welfare-to-Work initiative,
Accounting for Employment and Training
Administration (ETA) grant and contract funds,
Quality of program results data,
Y2K computer problem,
Security of pension assets,
Protection of worker benefit funds,
Collection and disbursement of back wages and
related penalties,
Compliance with new financial management
requirements,
Stewardship over DOL information technology
resources, and
Accounting for equity in real property.
DOL's IG dropped the Y2K computer problem from last year's
list of management challenges and added a new challenge for
fiscal year 2000--Implementation of the Workforce Investment
Act. In addition, GAO identified three additional management
challenges for the Department. Specifically, GAO found that DOL
(1) lacked accurate and reliable information to assess program
performance; (2) had not effectively leveraged its limited
resources by using alternative enforcement strategies; and (3)
had limited capacity to effectively coordinate the activities
of the many units at the Federal, State, and local levels that
share responsibility for implementing worker protection
programs.
In response to the Chairman's August 1999 letter, DOL sent
a December 22, 1999, letter to the Committee acknowledging
receipt of the Chairman's request for information. The
acknowledgment letter stated that the Department was reviewing
the Department's major management issues in detail and would
respond to the Chairman's request in greater detail at a later
date. The Chairman did not receive DOL's written response until
April 14, 2000. In this response, DOL provided details
explaining how each of the management challenges had been
addressed in the Department's performance planning process and,
where not specifically addressed in the plans, the actions that
the Department was taking to resolve these management
challenges and problems. The response also included comments on
DOL's actions to address GAO and IG audit recommendations in
1999.
Although the Committee had yet to receive a written
response from the Department, Committee staff met with
representatives from DOL, DOL's IG, and GAO, at DOL
headquarters on April 7, 2000. DOL had recently issued its
fiscal year 1999 Performance Report and its fiscal year 2001
Performance Plan. During the meeting, Committee staff discussed
both of these documents as they related to management
challenges confronting the Department. Committee staff pointed
out that DOL's Performance Report did not directly nor
comprehensively address the Department's progress in resolving
major management challenges and included only a limited and
general discussion of strategies to be implemented in improving
mission performance as it related to these management
challenges. In its 2001 Performance Plan, DOL discussed some of
the program improvement opportunities identified by GAO and the
IG but again did not comprehensively address these management
challenges. DOL said that it did not believe that the GPRA
planning and reporting process was appropriate for addressing
some of its management challenges. Labor said it believes that
some of the challenges identified by the IG are of an
administrative nature and are already addressed within existing
audit resolution processes.
Overall, a review of DOL's efforts to use performance
measurement to address its management problems shows that the
Department did not comprehensively develop and use specific and
measurable goals for its major management challenges. The
Department also made only minor improvements in its development
and use of such goals and measures when compared to the
previous year. The Department needs to place additional
emphasis on developing more outcome-based indicators and using
performance planning and reporting as a basis to address its
long-standing major management problems.
DEPARTMENT OF STATE
In his August 1999 letter to the State Department, Chairman
Thompson asked for an update on the State Department's progress
toward solving the following eight management challenges
identified by both GAO and the State Department's IG:
Worldwide security,
Meeting Year 2000 computer challenges,
Information security,
Management of information resources,
Visa Processing System,
Financial management,
Reorganization of foreign affairs agencies,
and
Human capital management.
Since the date of Chairman Thompson's August letter, the
State Department's IG updated the list of the State
Department's top 10 management challenges. Gone from the list
were the Visa Processing System and Reorganization of Foreign
Affairs Agencies. Added to the list were Safeguarding U.S.
Borders, Maintaining Effective Export Controls, Improving Real
Property Management and Maintenance, and Strategic Planning.
The State Department responded to Chairman Thompson's
letter with a brief discussion of its progress in addressing
management challenges. The letter simply listed a number of
management challenges and stated that progress was being made
in those areas without specifying what that progress was.
Committee staff met with officials from the State
Department on January 14, 2000. Present from the Department
were officials representing the Office of Management and
Planning, the Chief Financial Officer, the Bureau of Consular
Affairs, the Bureau of Administration, the Bureau of Diplomatic
Security, the Office of Foreign Buildings Operations, the
Bureau of Information Resource Management, the Bureau of
Political-Military Affairs, and the Office of Resources, Plans,
and Policy.
One of the key areas of concern for the State Department is
in the area of security. Notable progress has been made in a
number of areas, including reestablishing operations in more
secure facilities at some locations, delivering technical
security equipment, and hiring and training staff. Although
there is a capital investment program in place, as well as a
major building program, the majority of missions remain
vulnerable to threats.
Like in the area of security, progress has been made to
address weaknesses in financial management at the State
Department. According to the IG, however, much work remains to
be done. Financial statements need to be issued more timely.
Internal controls must be strengthened. The Department's
financial and accounting system should comply with relevant
laws and regulations.
One area where there is disagreement between the IG and the
State Department is in the area of real property management and
maintenance. The Department holds 12,000 properties with a
value of approximately $4 billion. The current condition of
many of these properties has been described as ``shocking.''
The Department believes that its current plans to address the
backlog of maintenance projects have cured this as a ``material
weakness'' under the Federal Financial Managers' Integrity Act.
The IG adamantly disagrees and believes that this problem
requires continued and heightened scrutiny.
GAO analyzed the extent to which the State Department
adopted in its fiscal year 2001 Performance Plan specific and
measurable goals to address the Department's management
challenges. According to that analysis, the Department adopted
goals for only three of its six major management challenges.
DEPARTMENT OF TRANSPORTATION
Chairman Thompson's August 1999 letter to the Department of
Transportation (DOT) referenced the following 12 management
challenges for the Department as identified by DOT's IG:
Aviation safety,
Surface transportation safety,
Air traffic control modernization,
Federal Aviation Administration (FAA)
financing and reauthorization,
Surface, marine and airport infrastructure,
Transportation and computer security,
Y2K computer problem,
Financial accounting and Chief Financial
Officers Act,
Amtrak financial viability and modernization,
Coast Guard Deepwater capability replacement
project,
Ship disposal program, and
GPRA implementation.
GAO, which also identified many of the above issues as
significant challenges for DOT, noted an additional challenge
for DOT relating to the lack of aviation competition
contributing to high fares and poor service for some
communities. In its fiscal year 2000 update to its list of
management challenges for the Department, DOT's IG deleted the
``Y2K computer problem'' challenge because of significant
progress on the issue. The IG also separated the
``transportation and computer security'' challenge into two
items on the updated list because the IG believed that both of
these security issues are significant and warrant a high level
of attention.
In response to Chairman Thompson's August 1999 request for
information, DOT provided the Committee with a listing of
specific actions that the Department was taking to resolve the
management challenges along with an estimate of how long it
would likely take to complete the planned actions. The DOT
response also provided a summary of the various GAO and IG
recommendations and the status of the Department's efforts to
resolve and close these recommendations.
On March 21, 2000, Committee staff met with representatives
of DOT, DOT IG, and GAO. The participants discussed each of the
Department's management challenges and obtained a current
status of the Department's efforts. The DOT official leading
the Department's GPRA planning and reporting efforts told the
Committee staff that the Department was working on
incorporating specific milestones for its management challenges
into its updated Strategic Plan. She stated that this
additional information will give the reader of DOT's Strategic
Plan more of a detailed perspective on targeted performance
rather than only relying on the short-term focus of targets and
milestones in the DOT's Annual Performance Plan.
On April 3, 2000, DOT Secretary Slater publicly announced
the results of the Department's efforts as reported in its
fiscal year 1999 Performance Report. A review of the
Performance Report shows that it addressed many of the
management challenges identified by GAO and DOT's IG. To
highlight its responses to these major management problems, the
DOT Performance Report included a table identifying these
management challenges and the pages in the report on which each
is discussed. Where the DOT management challenge relates to an
outcome, the associated goal page is referenced. For most of
the management challenges, the Performance Report included
performance measures that directly related to the challenge or
related to a portion of the challenge. However, GAO pointed out
that, regarding the challenge related to the poor financial
condition of Amtrak, the DOT report did not address Amtrak's
continuing net losses and its ability to reach operational
self-sufficiency by the year 2002.
Overall, DOT has made considerable progress in the
developing goals and measures for its major management problems
and in using performance measurement to improve performance and
accountability. The Committee staff believe that DOT's
successful GPRA efforts should serve as a model for other
departments and agencies.
DEPARTMENT OF THE TREASURY
Chairman Thompson's August 1999 letter to the Department of
the Treasury referenced the following management challenges for
the Department:
Information technology (IT) investment
management,
Integration and reliability of financial
management systems,
Preparation of department-wide financial
statements,
Preparation of reliable consolidated
financial statements for the government,
Financial management and compliance with the
Federal Financial Management Improvement Act (FFMIA),
Accountability, internal controls and
reporting for asset forfeiture program,
Computer security controls,
Implementation of Treasury's responsibilities
under the Debt Collection Improvement Act of 1996
(DCIA),
Implementation of electronic funds transfer
accounts as required by DCIA,
Restructuring IRS' organization and business
practices,
IRS' systems modernization efforts,
Internal controls over taxpayer receipts and
sensitive taxpayer data,
Internal controls over unpaid tax
assessments,
Collection of Federal tax receivables and
other unpaid assessments,
IRS' inability to rely on general ledger to
support financial statements,