oversight

Managing for Results: The Statutory Framework for Improving Federal Management and Effectiveness

Published by the Government Accountability Office on 1997-06-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Committee on Appropriations and
                          Committee on Governmental Affairs
                          U.S. Senate


For Release on Delivery
Expected at
10:00 a.m., EDT
                          MANAGING FOR RESULTS
Tuesday
June 24, 1997

                          The Statutory Framework
                          for Improving Federal
                          Management and
                          Effectiveness
                          Statement of
                          James F. Hinchman
                          Acting Comptroller General




GAO/T-GGD/AIMD-97-144
Statement

Managing for Results: The Statutory
Framework for Improving Federal
Management and Effectiveness
               Messrs. Chairmen and Members of the Committees:

               It is a pleasure to appear before you today to discuss how Congress can
               use the statutory framework that it enacted to help provide the more
               responsive and cost-effective government that the American people are
               demanding.

               There has been a groundswell movement in recent years toward
               performance-based management in public sector organizations. The
               federal government, as well as state, local, and foreign governments, have
               grappled with how best to improve effectiveness and service quality while
               limiting costs.1 In response, these governments have implemented reform
               agendas that have tended to include a common recognition that improved
               management was a critical part of the answer to meeting demands for a
               government that accomplishes more while economizing on resources.

               A part of this common recognition was the widespread acceptance of the
               need to shift the focus of government decisionmaking and accountability
               away from a preoccupation with the activities that are undertaken—such
               as grants or inspections made—to a focus on the results of those
               activities—such as real gains in employability, safety, responsiveness, or
               program quality. The key concepts of this performance-based management
               are the need to define clear agency missions, set results-oriented goals,
               measure progress toward the achievement of those goals, and use
               performance information to help make decisions and strengthen
               accountability.2

               Congress, too, has recognized the need for improved federal management
               and a greater focus on results and has put in place a statutory framework
               for achieving those ends. This framework includes the Chief Financial
               Officers (CFO) Act and information technology reform legislation, in
               particular the Clinger-Cohen Act of 1996 and the Paperwork Reduction Act
               of 1995. The Government Performance and Results Act—commonly know
               as “GPRA” or “the Results Act”—is the centerpiece of the framework. As
               agencies implement this framework, Congress also intended for the acts to
               be useful to Members by providing information pertinent to a broad range


               1
                See, for example, Managing for Results: Experiences Abroad Suggest Insights for Federal
               Management Reform (GAO/GGD-95-120, May 2, 1995); Managing for Results: State Experiences
               Provide Insights for Federal Management Reforms (GAO/GGD-95-22, Dec. 21, 1994); and Government
               Reform: Goal-setting and Performance (GAO/AIMD/GGD-95-130R, Mar. 27, 1995).
               2
                Executive Guide: Effectively Implementing the Government Performance and Results Act
               (GAO/GGD-96-118, June 1996).



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                       Managing for Results: The Statutory
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                       Management and Effectiveness




                       of management-related decisions in their capacities as Members of budget,
                       authorization, oversight, and appropriations committees.

                       The purpose of my testimony today is to provide an overview of this
                       statutory framework and discuss how Congress can use the framework, in
                       particular the Results Act, to help identify and address some of the key
                       management challenges that are undermining the effectiveness and
                       responsiveness of federal agencies. I will also highlight the key
                       implementation issues associated with linking the benefits of this statutory
                       reform framework with the budget process. Finally, I will suggest how this
                       framework, if fully implemented, can be used by Congress to strengthen
                       its decisionmaking and oversight and better assure that the public gets the
                       efficient and responsive government that is being demanded.

                       My comments today are based on a wide range of reports and testimonies
                       we have done in recent years on the federal management issues associated
                       with federal program performance, financial management, and
                       information technology. These reports include, most recently, our overall
                       assessment on the prospects for governmentwide implementation of the
                       Results Act.3 That report, mandated by the Results Act, included among its
                       addressees the Chairmen and Ranking Minority Members of the
                       Committees holding today’s hearing.


                       Congress’ desire to enhance agencies’ accountability for their performance
Congress Has Enacted   is at the heart of the statutory framework that Congress has put in place to
a Statutory            reform federal management. Congress enacted the CFO Act—as expanded
Framework for          by the Government Management Reform Act of 1994 (GMRA)—to remedy
                       decades of serious neglect in federal financial management by establishing
Improving Federal      chief financial officers across the government and requiring the
Management and         preparation and audit of annual financial statements. The information
                       technology reform legislation is based on the best practices used by
Decisionmaking         leading public and private organizations to more effectively manage
                       information technology.4 Under these laws, agencies are to better link
                       their technology plans and information technology use to their programs’
                       missions and goals.




                       3
                       The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be
                       Uneven (GAO/GGD-97-109, June 2, 1997).
                       4
                        Executive Guide: Improving Mission Performance Through Strategic Information Management and
                       Technology—Learning from Leading Organizations (GAO/AIMD-94-115, May 1994).



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Managing for Results: The Statutory
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Management and Effectiveness




Finally, in crafting the Results Act, Congress recognized that congressional
policymaking, spending decisions, and oversight all had been severely
handicapped by lack of sufficiently precise program goals and adequate
program performance information. The Act sought to remedy that
situation by requiring agencies to set multiyear strategic goals and
corresponding annual goals, measure performance toward the
achievement of those goals, and report on their progress.

This statutory framework seeks to create a more focused, results-oriented
management and decisionmaking process within both Congress and the
executive branch. It seeks to improve federal management by responding
to a need for accurate, reliable information for congressional and
executive branch decisionmaking, information that has been badly lacking
in the past, as much of our work had demonstrated. The framework
provides a powerful opportunity to develop fully integrated information
about agencies’ missions and strategic priorities, the results-oriented
performance goals that flow from those priorities, performance data to
show the achievement (or not) of those goals, the relationship of
information technology investments to the achievement of performance
goals, and accurate and audited financial information about the costs of
achieving mission results.

Our work has shown that when an agency adopts a disciplined approach
to setting results-oriented goals, measuring its performance, and using
performance information to improve effectiveness, significant
performance improvements occur. For example, we have reported on how
the Coast Guard reexamined its mission and shifted the focus of its marine
safety program from regulation to one that includes education.5 This
change contributed to a significant decline in the towing industry fatality
rate—from 91 per 100,000 industry employees in 1990 to 27 per 100,000 in
1995.

Similarly, the Veterans Health Administration improved services to
veterans by more rigorously assessing the results of the medical care it
provides to the nation’s veterans. In particular, the Veterans Health
Administration reported that it used performance information to target the
most important improvement opportunities and thereby lowered the
mortality rate for cardiac procedures by an average of 13 percent over the
last 8 years.



5
 GAO/GGD-96-118, June 1996.



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                            Statement
                            Managing for Results: The Statutory
                            Framework for Improving Federal
                            Management and Effectiveness




                            In another example, involving the Social Security Administration’s (SSA)
                            national toll-free 800 telephone number to handle citizen inquiries, SSA
                            used customer satisfaction and other performance information to identify
                            and make program changes, including providing additional staff to handle
                            phone calls from the public. As a result, the busy rate decreased from 49 to
                            34 percent, and the percentage of calls answered within 5 minutes
                            increased from 74 to 83 percent from fiscal year 1995 to fiscal year 1996.6


                            Although the Coast Guard, Veterans Health Administration, SSA, and other
Improving Federal           performance improvements are noteworthy, the reported examples of
Management Is Key to        substantial performance improvements are still relatively few. In fact, our
Increasing                  work has long identified serious weaknesses in federal management and
                            has pinpointed the actions that need to be taken to address those
Effectiveness and           weaknesses.7 In many cases, the effective implementation of the Results
Reducing Costs              Act will be an essential part of any successful effort to improve federal
                            management, and active congressional input into the executive branch
                            strategic planning process is an important first step in that effort. Our
                            recent guide, intended to help facilitate congressional review of agencies’
                            strategic plans, provided suggested questions for each of the key elements
                            of a strategic plan and for a plan as a whole.8

                            As I noted earlier, the information generated under the Results Act can be
                            useful to Congress in making a wide range of congressional decisions to
                            address the public demand for a more efficient and better managed
                            government. Today, I would like to highlight four key areas where our
                            work suggests that congressional attention could pay particularly
                            significant dividends in creating a more effective and less costly
                            government. These areas are (1) ensuring a coordinated response to
                            national needs across agency and program lines, (2) giving agencies a
                            clear sense of direction, (3) sustaining a systematic focus on results, and
                            (4) ensuring sound and realistic agency strategies.


A Coordinated Response to   First, although federal programs have been designed for different
National Needs              purposes or targeted for different population groups, coordination among
                            federal programs with related responsibilities is essential to efficiently and

                            6
                             Social Security Administration: Significant Challenges Await New Commissioner (GAO/HEHS-97-53,
                            Feb. 20, 1997) and Social Security Administration (GAO/HEHS-97-79, June 11, 1997).
                            7
                             See, most recently, High Risk Series (GAO/HR-97-20SET, Feb. 1997).
                            8
                             Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional Review
                            (GAO/GGD-10.1.16, Version 1, May 1997).



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Managing for Results: The Statutory
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effectively meet national concerns. Uncoordinated program efforts can
waste scarce funds, confuse and frustrate program customers, and limit
the overall effectiveness of the federal effort. A focus on results, as
envisioned by the Results Act, implies that federal programs contributing
to the same or similar results should be closely coordinated to ensure that
goals are consistent and that, where appropriate, program efforts are
mutually reinforcing. This suggests that federal agencies should look
beyond their organizational boundaries and coordinate with other
agencies to ensure that their efforts are aligned.

Our work has shown that, as the federal government has responded over
time to new needs and problems, many federal agencies have been given
responsibilities for addressing the same or similar national issues.9 Of the
18 national mission areas displayed in the federal budget, 14, including
health, international affairs, and justice, involved more than 1 executive
branch department or major agency in fiscal year 1996.10 Six of the
national mission areas, including education, income security, and
commerce and housing credit, were addressed by six or more executive
branch departments and major agencies. Of course, some of this shared
responsibility was intended, recognizing that addressing some issues from
a national perspective necessarily involves more than one federal agency
or more than one approach.

However, in many program areas—such as food safety, employment
training, early childhood development, at-risk and delinquent youth
programs, federal land management, and national laboratories—our work
suggests that significant overlap and fragmentation existed in the federal
response to national needs and problems.11 For example, in 1995 we
testified on the Department of Education’s programs that provided loans
and grants to students to help finance their higher education.12 We found
that, although the student loan and Pell grant programs provided the
majority of federal financial aid to students for postsecondary education,

9
 Government Restructuring: Identifying Potential Duplication in Federal Missions and Approaches
(GAO/T-AIMD-95-161, June 7, 1995).
10
 Budget Issues: Fiscal Year 1996 Agency Spending by Budget Function (GAO/AIMD-97-95, May 13,
1997).
11
 Government Reorganization: Issues and Principles (GAO/T-GGD/AIMD-95-166, May 17, 1995); At-Risk
and Delinquent Youth: Multiple Federal Programs Raise Efficiency Questions (GAO/ HEHS-96-34, Mar. 6,
1996); Federal Land Management: Streamlining and Reorganization Issues (GAO/T-RCED-96-209,
June 27, 1996); and Federal R&D Laboratories (GAO/RCED/NSIAD-96-78R, Feb. 29, 1996).
12
 Department of Education: Information on Consolidation Opportunities and Student Aid (GAO/
T-HEHS-95-130, Apr. 6, 1995) and Department of Education: Opportunities to Realize Savings
(GAO/T-HEHS-95-56, Jan. 18, 1995).



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another 22 smaller programs were targeted to specific segments of the
postsecondary school population, such as prospective students from
disadvantaged families or women and minorities, who are
underrepresented in graduate education.

These 22 programs were collectively funded at $1.1 billion for fiscal year
1995. We concluded that these smaller grant programs could be
considered candidates for consolidation—with other larger programs or
among themselves—with no adverse impact on students’ access to
postsecondary education, and that the federal government could
anticipate administrative savings of 10 percent each year, or a total of
$550 million in budget authority (adjusted for inflation) over 5 years.13

Similarly, we reported in 1995 on the federal programs that assisted urban
communities and their residents through a complex system involving
multiple federal agencies.14 We found that the government’s Catalog of
Federal Domestic Assistance listed over 340 federal economic
development-related programs administered by 13 agencies. These were in
the areas of housing, economic development, and social services. We
reported that, considered individually, many of these programs may have
made sense. However, the proliferation of federal programs and the lack
of coordination among agencies could impose a burden on local
organizations that attempted to piece together programs to serve their
communities. In particular, the neighborhood organizations we studied
found it burdensome to manage multiple programs with individual funding
streams, application requirements, and reporting expectations.

The Results Act requires that agencies consult with Congress as they
develop strategic plans. These consultations are under way now as
agencies prepare to issue their plans by September 30, 1997, as required by
the Act. As Congress provides input to agencies’ strategic plans, it can
insist that agencies show how their programs are aligned with related
efforts in other agencies. Congress can also use the planning process to
seek opportunities to streamline government by comparing the
effectiveness of similar program efforts carried out by different agencies.




13
 Addressing The Deficit: Budgetary Implications of Selected GAO Work for Fiscal Year 1998
(GAO/OCG-97-2, Mar. 14, 1997).
14
 Economic Development Programs (GAO/RCED-95-251R, July 28, 1995) and Community
Development: Comprehensive Approaches and Local Flexibility Issues (GAO/T-RCED-96-53, Dec. 5,
1995).



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                          Statement
                          Managing for Results: The Statutory
                          Framework for Improving Federal
                          Management and Effectiveness




A Clear Sense of Agency   Closely related to the issue of ensuring a coordinated response to national
Direction                 needs, is the issue of each agency having a clear sense of direction in
                          terms of what it is in business to accomplish. Sustained congressional
                          input into agencies’ strategic planning efforts is vital, both to ensure that
                          missions are based in statute and to identify cases where statutory
                          requirements need to be modified or clarified due to changed
                          circumstances.

                          Over the years, our work has identified instances where an agency’s
                          effectiveness was hampered by the lack of a clearly defined mission and
                          goals—a concrete sense of why the organization exists and what it is to
                          accomplish. For example, our work has shown that the Department of
                          Energy (DOE) needs to reevaluate its basic mission.15 DOE’s responsibilities
                          and priorities have changed dramatically over time. The DOE of today is a
                          very different organization from what it was in 1977, when as a newly
                          created agency, its mission was to respond to a perceived national energy
                          crisis. Thus, while energy research, conservation, and policymaking
                          dominated early DOE priorities, national defense and environmental
                          cleanup now overshadow those areas.

                          Meanwhile, new DOE mission areas in science and industrial
                          competitiveness have emerged and are pressing for priority attention. To
                          each new phase, DOE leadership responded with a vastly different agenda
                          concerning DOE’s basic responsibilities and how the agency should be
                          managed. We have reported that these shifts have contributed to uneven
                          performance in many mission areas. For example, during the time that DOE
                          emphasized nuclear weapons production, it gave little attention to the
                          environmental consequences. Partly as a result of this inattention,
                          environmental cleanup will now cost between $189 and $265 billion by
                          DOE’s estimate.


                          In another example, the Environmental Protection Agency (EPA) was
                          established in 1970 under a presidential reorganization plan in response to
                          concerns over protecting public health, as well as air, water, and land
                          resources. Subsequently, as environmental threats were identified,
                          Congress gave EPA responsibility for implementing over a dozen
                          environmental laws. We reported in May 1995 that, because it did not have
                          an overarching legislative mission and its environmental responsibilities
                          had not been integrated, EPA had not been able to target its resources to



                          15
                           Department of Energy: A Framework for Restructuring DOE and Its Missions (GAO/RCED-95-197,
                          Aug. 21, 1995).



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                        Managing for Results: The Statutory
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                        Management and Effectiveness




                        reduce the greatest risks to human health and the environment.16 EPA has
                        been working with state governments, industry, environmental groups,
                        and other interested parties since 1992 to select the most appropriate
                        national environmental goals. Building on these goals, EPA is also ranking
                        the relative risk of environmental problems to help identify the most
                        appropriate goals for the agency.

                        Congress can also use the Results Act to work with the executive branch
                        to clarify its expectations for the goals that agencies should seek to
                        achieve. Federal agencies often face a variety of competing priorities that
                        require them to strike balances among a variety of competing policy goals.
                        Multiple priorities, which in many cases are a natural by-product of the
                        need to build a legislative majority and are frequently built into the intent
                        and design of an agency or program, constitute one of the primary
                        challenges to government management and performance. For example,
                        agencies often must weigh the demands of program customers for
                        responsive services against the cost of providing those services. These and
                        other competing priorities continually need to be weighed against one
                        another; otherwise, one or two priorities may be inappropriately
                        overemphasized at the expense of others.


A Systematic Focus on   A third critical area where Congress can use the Results Act is in better
Results                 ensuring that agencies are managing to achieve results rather than just
                        focusing on activities or processes. Many agencies have a difficult time
                        moving from measuring program activities to establishing results-oriented
                        goals and performance measures. The fundamental reason that this is so
                        difficult is that, to manage on the basis of results, agencies must move
                        beyond what they control—that is, their activities—to focus on what they
                        merely influence—their results.

                        The often limited or indirect influence that the federal government has in
                        determining whether a desired result is achieved complicates efforts to
                        measure program performance. Our work has shown that measuring the
                        federal contribution can be particularly challenging for regulatory
                        programs; scientific research programs; and programs that deliver services
                        to taxpayers through third parties, such as state and local governments.

                        For example, isolating the effectiveness of the federal government’s
                        economic development programs is a daunting challenge. Numerous

                        16
                         Managing for Results: EPA’s Efforts to Implement Needed Management Systems and Processes
                        (GAO/T-RCED-97-133, Apr. 15, 1997); and Environmental Protection: Current Environmental
                        Challenges Require New Approaches (GAO/T-RCED-95-190, May 17, 1995).



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                      external forces, including broad national economic trends and assistance
                      communities may receive from state and local governments and the
                      private sector, contribute to local economic development. Despite the
                      challenge, a focus on results is critical to providing decisionmakers with
                      potentially vital information needed to assess the value of the federal
                      effort.

                      We reported in 1996 that a study of the effectiveness of the Department of
                      Commerce’s Economic Development Administration (EDA) programs
                      found that income in the counties that received EDA funding grew
                      significantly faster than income in the counties that received no aid.17
                      However, when the researchers simultaneously considered EDA’s programs
                      and factors unrelated to EDA, they found that EDA’s programs had a very
                      small effect on income growth rates during the period that the aid was
                      received and had no significant effects in the 3 years after the aid ceased.
                      EDA’s programs thus could explain only a small part of the difference in the
                      growth rates between the two groups of counties.

                      Congressional input into agencies’ strategic planning efforts may be
                      needed to ensure that agencies gather the performance information and
                      conduct the evaluations necessary to assess the worth of the federal
                      investment in programs. For example, we reported in April 1997 that
                      although an extensive body of literature exists on Head Start—a program
                      that over the last 30 years has served over 15 million children at a total
                      cost of $31 billion—the research is inadequate for drawing conclusions
                      about the impact of the national program in any area in which Head Start
                      provides services, such as school readiness or health-related services.18
                      We found that the Department of Health and Human Service’s planned
                      research will focus on new and innovative service delivery strategies and
                      demonstrations but will provide little information on the impact of regular
                      Head Start programs. We concluded that the size and costs of the Head
                      Start program appear to warrant an investment in the research needed to
                      provide information on the results of the program.


Sound and Realistic   Finally, the effective implementation of the Results Act can help Congress
Agency Strategies     and the executive branch ensure that agencies have in place the programs
                      and strategies that will best achieve results. As the example of the Coast

                      17
                       Economic Development: Limited Information Exists on the Impact of Assistance Provided by Three
                      Agencies (GAO/RCED-96-103, Apr. 3, 1996).
                      18
                       Head Start: Research Provides Little Information on Impact of Current Program (GAO/HEHS-97-59,
                      Apr. 15, 1997).



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Guard that I mentioned earlier suggests, once an agency begins to focus on
results and understand how its programs affect the degree to which
desired results occur, the agency often makes significant program changes
to better achieve those desired results.

Moreover, Congress should rightfully expect that each agency’s plans and
programs will make efficient use of budgetary resources and that, if
reductions need to be made, those resources will be used in a way that
maintains, to the fullest extent possible, the agency’s ability to carry out its
mission. Our work has shown that many agencies are currently struggling
to develop coherent strategies for restructuring their organizations,
workforces, and operations to meet results-oriented goals in a
cost-effective manner.

This need for a coherent strategy is particularly true in the area of
information technology.19 The sound application and management of
information technology to support strategic goals must be an important
part of any serious attempt to improve agency mission performance, cut
costs, and enhance responsiveness to the public. We have noted that the
successful implementation of information technology reform
legislation—which, among other things, requires that agencies have a
strategy that links technology investments to achieving programmatic
results—is critical to ensuring the wise use of the billions of dollars the
government is investing in information systems.20

We also have found that agencies need to do a better job of designing
mission-based strategies to improve efficiency and reduce costs. For
example, we recently reported that the Department of State does not have
a comprehensive strategy to restructure its operations to adjust to today’s
needs.21 State’s vast network of embassies and consulates, together with
the way they are configured and operated, has remained largely
unchanged despite communications and transportation advances,
geopolitical changes, and new budget realities. State has not been able to
make hard choices about resource priorities for its wide range of locations



19
 For further information see: Information Technology Investment: Agencies Can Improve
Performance, Reduce Costs, and Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996); Information
Management Reform: Effective Implementation Is Essential for Improving Federal Performance
(GAO/T-AIMD-96-132, July 17, 1996); and GAO/AIMD-94-115, May 1994.
20
  Information Management and Technology (GAO/HR-97-9, Feb. 1997).
21
 State Department: Options for Addressing Possible Budget Reductions (GAO/NSIAD-96-124, Aug. 29,
1996).



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                       and functions, or to fundamentally rethink the way that it does business, in
                       order to reduce its operating costs.


                       Ultimately, achieving the kinds of performance and management
Integrating            improvement discussed today will require close linkage with the federal
Performance            government’s budget and appropriations process. While providing needed
Information With       tools and approaches for agency managers, these statutory reforms will
                       also generate new information and perspectives that can be particularly
Budget and             useful to the process of allocating scarce resources among competing
Appropriations         national priorities. Although many factors appropriately influence
                       appropriations decisions, effective implementation of the Results Act will
Decisions Is a Key     add critical information about what citizens and the nation are receiving
Implementation Issue   for each dollar spent, thereby helping to restore public confidence at a
                       time when increasingly more difficult resource decisions must be made.

                       As we recently reported, the Results Act is a significant break from
                       previous federal initiatives that sought to more closely “connect resources
                       with results.”22 Under the Results Act, agencies are required to plan and
                       measure performance using program activity structures that are the basis
                       for agencies’ budget requests. Previous initiatives tended to devise unique
                       planning structures, and, not surprisingly, congressional interest and use
                       quickly waned as performance information reflecting the new planning
                       structures could not be directly tied to familiar oversight categories and
                       patterns.

                       The Results Act aims to provide systematic information on the
                       performance of government programs and to link this information with
                       current budget presentations. While this approach should improve
                       prospects for use within budgetary processes, it also presents a challenge.
                       An agency’s program activity structure is often the product of longstanding
                       negotiated agreements between individual appropriations subcommittees
                       and the executive branch. As such, program activity structures represent a
                       variety of organizational, process, project, or other orientations. For
                       example, the “space station” program activity in the National Aeronautics
                       and Space Administration’s budget is a discrete program. In contrast, the
                       “park service management” program activity under the National Park
                       Service’s budget represents process and/or functional efforts.




                       22
                        Performance Budgeting: Past Initiatives Offer Insights for GPRA Implementation (GAO/AIMD-97-46,
                       Mar. 27, 1997).



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                        Management and Effectiveness




                        Because of the wide variability across program activities, the suitability of
                        the current program activity structures for the Results Act’s performance
                        planning and measurement also will vary. Consequently, over time, some
                        modifications may be needed in program activity structures to achieve the
                        intended results-based orientation.


                        If effectively implemented, the statutory framework that Congress has put
Integrated              in place will result in a wealth of program performance and cost
Performance, Cost,      information not previously available to decisionmakers and the public.
and Management          The program performance information that agencies are to generate under
                        the Results Act will be a valuable new resource for Congress to use in its
Reports Provide Basis   program authorization, oversight, and appropriations responsibilities. To
for Improved            be most useful in these various contexts, the information needs to be
                        consolidated with critical financial and program cost data in financial
Decisionmaking and      statements, which agencies are to produce and have audited under the CFO
Oversight               Act.23

                        To promote the needed consolidation, and building on the requirements of
                        the Results Act and the CFO Act, reporting concepts and standards
                        developed by the Federal Accounting Standards Advisory Board (FASAB)
                        are intended to provide congressional and other decisionmakers for the
                        first time with annual “report cards” on the costs, management, and
                        effectiveness of federal agencies.24 The new reporting model for federal
                        agencies is geared to providing users with information about budgetary
                        integrity, operating performance, stewardship, and systems and controls.

                        As authorized by GMRA, OMB is piloting accountability reports that are
                        consistent with the FASAB accountability reporting concept. OMB worked
                        with six agencies to pilot the development of accountability reports for
                        fiscal year 1995 and added an additional eight agencies to the pilot test in
                        fiscal year 1996. According to OMB, additional agencies will produce
                        accountability reports for fiscal year 1997. By consolidating and
                        integrating the separate reporting requirements of the Results Act, the CFO
                        Act, and other specified acts, the accountability reports are to show the
                        degree to which an agency met its goals, at what cost, and whether the




                        23
                         Financial Management: Continued Momentum Essential to Achieve CFO Act Goals
                        (GAO/T-AIMD-96-10, Dec. 14, 1995).
                        24
                         FASAB was created in October 1990 by the Secretary of the Treasury, the Director of OMB, and the
                        Comptroller General to consider and recommend accounting principles for the federal government.



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Framework for Improving Federal
Management and Effectiveness




agency was well run.25 We have suggested that these accountability
reports could serve as a basis for annual or at least biennial
comprehensive oversight hearings on each department and major
independent agency.26

FASAB’s new cost accounting standards are intended to further strengthen
federal decisionmaking by requiring agencies to provide relevant and
reliable cost information that can be used, for example, to relate the costs
of various programs and activities to their performance outputs. The FASAB
concepts and standards underpin OMB’s guidance to agencies on the form
and content of their agencywide financial statements. Moreover, under the
Federal Financial Management Improvement Act of 1996, agencies’
financial management systems are to, among other things, comply with
FASAB standards beginning with fiscal year 1997.



In summary, Messrs. Chairmen, Congress has put in place a statutory
framework with the essential ingredients needed to address long-standing
weaknesses in federal management and to create a federal government
that is more responsive and cost-effective. The key now is for agencies to
implement that framework and for the executive branch and Congress to
use it to help make decisions and ensure accountability. Given the
experiences of the foreign and state governments that have been seeking
to instill a more results-oriented approach to management for some years
now, the implementation of the Results Act, and of the other key parts of
the framework, has not been, and will not be, quick or easy.

Moreover, addressing some of the challenges that I have highlighted today,
such as addressing crosscutting program efforts and balancing competing
priorities, will raise significant policy issues for Congress and the
administration to consider, some of which will likely be very difficult to
resolve. The Results Act’s success or failure should not be judged on
whether contentious policy issues are fully resolved; rather, judgment of
the success or failure of the Act should turn on the extent to which the
information produced through the required goal-setting and performance
measurement practices—once those practices are successfully
implemented—helps inform policy decisions and improve government
management and performance.


25
 Managing For Results: Using GPRA to Assist Congressional and Executive Branch Decisionmaking
(GAO/T-GGD-97-43, Feb. 12, 1997).
26
 Managing for Results: Achieving GPRA’s Objectives Requires Strong Congressional Role
(GAO/T-GGD-96-79, Mar. 6, 1996).


Page 13                                                               GAO/T-GGD/AIMD-97-144
           Statement
           Managing for Results: The Statutory
           Framework for Improving Federal
           Management and Effectiveness




           This concludes my prepared statement. I would be pleased to answer any
           questions.




(410154)   Page 14                                            GAO/T-GGD/AIMD-97-144
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