oversight

Forest Service: Little Progress on Performance Accountability Likely Unless Management Addresses Key Challenges

Published by the Government Accountability Office on 2003-05-01.

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

             United States General Accounting Office

GAO          Report to the Subcommittee on Forests
             and Forest Health, Committee on
             Resources, House of Representatives


May 2003
             FOREST SERVICE

             Little Progress on
             Performance
             Accountability Likely
             Unless Management
             Addresses Key
             Challenges




GAO-03-503
                                               May 2003


                                               FOREST SERVICE

                                               Little Progress on Performance
Highlights of GAO-03-503, a report to the
Subcommittee on Forests and Forest             Accountability Likely Unless Management
Health, Committee on Resources, House
of Representatives                             Addresses Key Challenges


Historically, the Forest Service has           The Forest Service has made little real progress in resolving its long-standing
not been able to provide Congress              performance accountability problems and, based on the status of its current
or the public with a clear                     efforts, remains years away from implementing a credible performance
understanding of what the Forest               accountability system. Since June 2000, when we last reported on
Service’s 30,000 employees                     performance accountability at the Forest Service, the agency has continued
accomplish with the approximately
$5 billion the agency receives every
                                               to study the issue but has made little real progress. For example, in March
year. Since 1990, GAO has                      2002, the agency initiated a study of how several other federal agencies
reported 7 times on performance                implemented their performance accountability systems and, by September
accountability weaknesses at the               2002, had devised a draft plan for implementing a system of its own.
Forest Service, including its                  However, broad support within the agency for implementing this plan could
inability to systematically link               not be achieved, and an executive steering team was recently established to
planning, budgeting, and results               restudy the issue. While the agency continues to study and restudy the issue,
reporting. This report reviews the             opportunities to establish key linkages among components of a performance
recent progress the Forest Service             accountability system have been missed. For example, in April 2000, the
has made in resolving previously               agency began considering a new budget system and, in August 2001, a new
identified performance                         work-plan system—two critical components that should be part of a
accountability problems and
identifies key challenges the Forest
                                               performance accountability system. However, the Forest Service has yet to
Service must overcome to resolve               develop clear linkages between these new systems and its strategic goals
these problems.                                and performance results. Without these linkages, the agency will be unable
                                               to report in an integrated, results-oriented way on what activities it
                                               completed, how much they cost, and what they accomplished—key elements
                                               of an effective performance accountability system. While we recognize that
The Secretary of Agriculture should            developing a performance accountability system is a complex, time-
direct that the Chief of the Forest            consuming process, other federal agencies with land management
Service appoint a senior executive
                                               responsibilities have developed and implemented performance
to develop a comprehensive plan
with milestones to ensure the                  accountability systems and believe that their systems have produced
timely implementation of an                    multiple benefits.
effective performance
accountability system. The Chief               The Forest Service faces three key challenges that it must meet if it is to
should also report, beginning in               make more progress. First, the agency needs to establish clear lines of
2004, on (1) the agency’s progress             authority and responsibility for developing and implementing a performance
in implementing a performance                  accountability system. Currently, various senior executives have
accountability system in the                   responsibilities for components of performance accountability; however, no
agency’s annual performance plans              one has overall responsibility and authority for ensuring these components
and (2) its accomplishments in                 are developed and properly linked. Second, the Forest Service needs to
implementing its performance
                                               address its culture of consensus decision-making, which has made it difficult
accountability system in its annual
performance report to the                      for the Forest Service to agree on how to develop and implement an
Congress. In commenting on a                   integrated performance accountability system. Third, top agency leadership
draft of this report, the Forest               needs to give sufficient emphasis and priority to establishing a performance
Service agreed with these                      accountability system. The agency is currently giving greater emphasis to
recommendations.                               other priorities, like financial accountability. GAO recognizes the
                                               importance of, and need for, addressing the Forest Service’s long-standing
www.gao.gov/cgi-bin/getrpt?GAO-03-503.
                                               financial accountability problems, but believes more can and should be done
To view the full report, including the scope   to address the agency’s performance accountability problems so that both
and methodology, click on the link above.      performance and financial accountability can work in concert to assess and,
For more information, contact Barry T. Hill
(202) 512-3841 or Hillbt@gao.gov.
                                               ultimately, to improve the agency’s overall performance.
Contents


Letter                                                                                             1
                       Results in Brief                                                            3
                       Background                                                                  4
                       Forest Service Has Made Little Progress in Resolving Known
                         Performance Accountability Problems, unlike Other Federal
                         Land Management Agencies                                                  9
                       Forest Service’s Inability to Address Organizational, Cultural, and
                         Leadership Challenges Continues to Impede Its Progress on
                         Performance Accountability                                              15
                       Conclusions                                                               16
                       Recommendations for Executive Action                                      17
                       Agency Comments                                                           18
                       Scope and Methodology                                                     18

Appendix I             Forest Service’s Progress on GAO-Reported
                       Performance Accountability Problems                                       20



Appendix II            Detailed Forest Service Organizational Chart                              22



Appendix III           Comments from the Forest Service                                          24



Appendix IV            GAO Contacts and Staff Acknowledgments                                    25



Related GAO Products                                                                             26




Figures
                       Figure 1: Forest Service’s Organizational Structure                         5
                       Figure 2: The Linkage among Components in GPRA Legislative
                                Framework                                                          7




                       Page i                                              GAO-03-503 Forest Service
Abbreviations

BLM       Bureau of Land Management
BFES      Budget Formulation and Execution System
GPRA      Government Performance and Results Act
NRCS      Natural Resources and Conservation Service
OMB       Office of Management and Budget
PART      Program Assessment Rating Tool
USDA      Department of Agriculture



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Page ii                                                        GAO-03-503 Forest Service
United States General Accounting Office
Washington, DC 20548




                                   May 1, 2003

                                   The Honorable Scott McInnis
                                   Chairman
                                   The Honorable Jay Inslee
                                   Ranking Minority Member
                                   Subcommittee on Forests and Forest Health
                                   Committee on Resources
                                   House of Representatives

                                   For 10 years, Congress and the administration have focused on making
                                   federal agencies more accountable for what they accomplish with the
                                   dollars they receive. To this end, the Congress mandated in legislation that
                                   federal agencies undertake a number of major management reforms that,
                                   together, constitute a statutory framework for linking plans, budgets, and
                                   results.1 Over this period, GAO has reviewed agencies’ efforts to achieve
                                   the accountability for financial management and performance envisioned
                                   by this framework. Since 1999, in a series of reports identifying agencies
                                   with major management challenges and at high risk of waste, fraud, abuse,
                                   and mismanagement, GAO has consistently reported serious financial and
                                   performance accountability weaknesses at the U.S. Department of
                                   Agriculture’s (USDA’s) Forest Service. As a result of these weaknesses, the
                                   Forest Service has not been able to provide Congress and the public with a
                                   clear understanding of what its 30,000 employees accomplish with the
                                   approximately $5 billion it receives every year.

                                   The Forest Service has an enormous stewardship responsibility: to
                                   maintain the health, productivity, and diversity of the nation’s forests and
                                   grasslands for current and future generations of Americans. The agency
                                   manages 192 million acres of land, including a national forest system that
                                   comprises 155 national forests, 20 national grasslands, and 17 recreation
                                   areas. On these lands, the Forest Service, among other things, supports
                                   recreation; sells timber; provides rangeland for grazing; maintains and


                                   1
                                    The Government Performance and Results Act of 1993, as well as certain other laws,
                                   comprise this statutory framework. In particular, the Chief Financial Officers Act of 1990
                                   was designed to bring more effective general and financial management practices to
                                   federal agencies; the Paperwork Reduction Act of 1995 was intended to ensure that
                                   information technology is managed to improve the performance of agencies; and the
                                   Clinger-Cohen Act of 1996 requires agencies to establish goals for improving agency
                                   operations through the effective use of information technology. The framework also
                                   includes the Federal Managers Financial Integrity Act and the Inspector General Act.



                                   Page 1                                                         GAO-03-503 Forest Service
protects watersheds, wilderness, fish and wildlife; and works with other
federal agencies to prevent and suppress wildfires. In addition, the Forest
Service provides financial and program support for state and private
forests and undertakes research activities. The Forest Service, headed by a
Chief, conducts these activities through three levels of field
management—-9 regional offices, 123 forest offices, and about 600 district
offices. The managers of these field offices have considerable discretion in
interpreting and applying the agency’s policies and directions. The Chief of
the Forest Service reports to the Under Secretary of Agriculture for
Natural Resources and Environment.

In our previous reports, dating back to 1991, we noted that the agency’s
lack of performance accountability in recent years occurred, at least in
part, because it had not developed a performance accountability system
that links its budget and organizational structures, planning processes, and
resource allocations with its strategic goals, objectives, and performance
measures. We also reported that the agency had difficulty in developing
good performance measures and monitoring progress, both of which are
critical to ensuring accountability. Furthermore, while the agency had
made numerous commitments in recent years to provide the Congress and
the public with a better understanding of what it accomplishes with
appropriated funds, it did not appear to be fully committed to establishing
the key linkages, measures, monitoring, and coordination needed for
accountability. We reported that the Forest Service has studied options to
address performance accountability but has done little else. In addition,
we determined that the Forest Service has found it difficult to develop a
performance accountability system because responsibilities for
accountability have been fragmented among organizational components
and because the agency’s culture allows field managers significant
independence in deciding whether to implement headquarters’ guidance.

You asked us to (1) review the progress the Forest Service is making in
resolving known performance accountability problems and (2) identify
key challenges impeding the Forest Service’s ability to resolve its
performance accountability problems. This report updates our reviews of
the Forest Service since we last testified before your Subcommittee in
June 2000.2



2
 U.S. General Accounting Office, Forest Service: Actions Needed for the Agency to Become
More Accountable for Its Performance, GAO/T-RCED-00-236 (Washington, D.C.: June 29,
2000).




Page 2                                                      GAO-03-503 Forest Service
                   The Forest Service has made little progress in resolving its long-standing
Results in Brief   performance accountability problems and, based on the status of its
                   current efforts, remains years away from establishing a credible
                   performance accountability system. Nearly 2 years after we testified on
                   the agency’s performance accountability problems in June 2000, the Forest
                   Service once again began to study its options. In March 2002, it initiated a
                   study of other federal agencies’ performance accountability systems to
                   learn how to develop, evaluate, and implement a performance
                   accountability system, and by September 2002, the Forest Service had
                   formulated a draft plan for implementing one of its own. However, the
                   draft plan never received broad support within the agency, and the agency
                   established an executive steering team to restudy the issue. However, this
                   team was not appointed until December 2002, nearly 2½ years since we
                   last testified on this issue and more than 11 years after we first reported on
                   it. While the agency continues to study and restudy the issue,
                   opportunities to establish key linkages among components of a
                   performance accountability system have been missed. For example, the
                   Forest Service is developing two systems that should be integral to a
                   performance accountability system—budget and work-plan systems.
                   However, the Forest Service has not developed clear linkages between
                   these new systems and its strategic goals and performance results.
                   Without these linkages, the agency will not be able to report in an
                   integrated, results-oriented way on what activities it completed, how much
                   they cost, and what they accomplished—key elements of any effective
                   performance accountability system. While we recognize that developing a
                   performance accountability system is a complex, time-consuming process,
                   we found that other federal agencies with land management
                   responsibilities have developed and implemented performance
                   accountability systems and believe that their systems have produced
                   multiple benefits.

                   The Forest Service faces three key challenges that it must meet if it is to
                   implement a credible performance accountability system: (1) establishing
                   clear authority and responsibility within the current organizational
                   structure, (2) making and implementing decisions in an agency culture
                   that relies heavily on consensus, and (3) establishing sufficient leadership
                   emphasis and making performance accountability a higher priority. With
                   respect to the first challenge, several senior executives have been assigned
                   responsibilities for components of performance accountability. However,
                   none of these executives has overall responsibility and authority for
                   ensuring these components are properly linked, and effective coordination
                   continues to be difficult within the Forest Service’s existing organizational
                   structure. Second, the Forest Service’s culture of making major decisions


                   Page 3                                               GAO-03-503 Forest Service
             by agencywide consensus serves as a major impediment to more
             concerted action on this front. Currently, the Forest Service cannot agree
             on an integrated approach to creating a performance accountability
             system, and without this agreement the agency’s progress is essentially
             stalemated. Finally, top agency leadership has not given sufficient
             emphasis and priority to establishing a performance accountability
             system. According to the Under Secretary of Agriculture for Natural
             Resources and Environment and the Chief of the Forest Service, the
             agency is focusing its efforts on achieving financial accountability before
             addressing its performance accountability needs. While we recognize the
             importance of, and the need for, addressing the Forest Service’s long-
             standing financial accountability problems, we believe that more can and
             should be done to also address its performance accountability problems
             so that both performance and financial accountability can work in concert
             to assess and, ultimately, to improve the agency’s overall performance.

             GAO is recommending a series of steps to ensure that the Forest Service
             makes substantive progress towards developing and implementing a
             performance accountability system. The Forest Service commented on a
             draft of this report and agreed with our findings and recommendations.


             The Forest Service is organized into six areas, each headed by a deputy
Background   chief, who reports directly to the Chief of the Forest Service. These deputy
             chiefs are responsible for the National Forest System; State and Private
             Forestry; Research and Development; Budget and Finance; Programs,
             Legislation and Communications; and Business Operations, as shown in
             figure 1.




             Page 4                                              GAO-03-503 Forest Service
Figure 1: Forest Service’s Organizational Structure




Other Federal Agencies                    The Forest Service is one of four federal agencies that manage public
Have Land Management                      lands. The other three are the National Park Service, the Bureau of Land
Responsibilities                          Management (BLM), and the Fish and Wildlife Service, within the
                                          Department of the Interior (Interior). The Natural Resources and
                                          Conservation Service (NRCS), within USDA, provides land management
                                          assistance to the owners of private lands. The Forest Service and the three
                                          agencies within Interior manage 95 percent of all federal lands, while
                                          NRCS is primarily responsible for conserving and protecting natural
                                          resources on private lands, which constitute about 75 percent of all
                                          acreage in the contiguous United States. NRCS has a budget of
                                          approximately $1 billion and 11,500 employees. BLM is responsible for
                                          administering more public lands than any other federal agency, with a
                                          budget of approximately $1.7 billion and 10,900 employees. Although




                                          Page 5                                             GAO-03-503 Forest Service
                           somewhat smaller than the Forest Service, NRCS and BLM have important
                           land management responsibilities.


Statutory and              Over the past decade, Congress and the executive branch have sought to
Administrative Framework   improve federal management by focusing more on results. The Congress
for Performance            enacted several laws to create a statutory framework for results-oriented
                           management. The Government Performance and Results Act of 1993
Accountability             (GPRA) is a key element of this statutory framework. GPRA requires
                           agencies to develop strategic plans that have outcome-related goals and
                           objectives. Agencies must also develop annual performance plans that
                           establish goals for program activities and that create performance
                           measures to assess program outcomes and to provide a basis for linking
                           program results with established goals. The strategic plan must describe
                           how the annual performance goals relate to the strategic plan’s goals and
                           objectives. Finally, GPRA requires agencies to report annually on their
                           results—that is, the extent to which their annual performance goals have
                           been met. Figure 2 illustrates the relationship of the different components
                           of this legislative framework.




                           Page 6                                              GAO-03-503 Forest Service
Figure 2: The Linkage among Components in GPRA Legislative Framework




Implementation of the legislative framework is evolving. Currently, for
example, improving the integration of budget and performance is a high-
priority initiative in the President’s Management Agenda.3 The Office of
Management and Budget’s (OMB) Program Assessment Rating Tool
(PART) is central to this initiative. This diagnostic tool is intended to
provide a consistent approach to reviewing program design, planning, and


3
 The President’s Management Agenda seeks to improve the management and
performance of the federal government by focusing on 14 targeted areas—5
governmentwide goals and 9 program initiatives.




Page 7                                                    GAO-03-503 Forest Service
                          goal development as well as program management and results. OMB has
                          begun using PART to assess 20 percent of programs annually, beginning
                          with the fiscal year 2004 President’s budget request to the Congress.


Prior GAO Reports         GAO has documented the Forest Service’s struggles with achieving
Document Long-Standing    performance accountability for over a decade. (See Related GAO
Performance               Products.) GAO concluded that the agency’s lack of performance
                          accountability occurred, at least in part, because it had not developed a
Accountability Problems   performance accountability system that linked its budget and
                          organizational structures, planning processes, and resource allocations
                          with its strategic goals, objectives, and performance measures.

                          Adequate performance measures are key to linking components of a
                          performance accountability system. However, as we reported, the Forest
                          Service had not established objective and verifiable performance
                          measures. Nor had it established specific and quantifiable objectives that
                          link its strategic goals with its annual performance measures. We reported
                          that the agency had difficulty establishing these linkages because the
                          authority for these components was fragmented among three different
                          deputy chiefs, with no method for resolving differences on how to best
                          link these components. This lack of coordination at headquarters
                          undermined performance accountability.

                          Finally, we reported that the agency’s leadership had failed to credibly
                          emphasize performance management at either the headquarters or field
                          levels. We reported that in 1991 the Chief of the Forest Service had formed
                          a task force to review performance accountability. The task force found
                          that the agency had consistently promised to take corrective actions
                          recommended by GAO and USDA’s Inspector General, but had most often
                          failed to do so and that there was “compelling” evidence of a need for
                          increased accountability. As a result, the task force recommended that the
                          Forest Service (1) institutionalize accountability in managers’ performance
                          contracts, (2) accelerate cultural change in the agency, and (3) monitor
                          and track accountability through indicators or benchmarks.4 The agency’s
                          leadership team adopted these concepts and distributed them agencywide.
                          However, as we reported in 1997, agency leadership did not follow up with




                          4
                           Forest Service, Individual and Organizational Accountability in the Forest Service:
                          Successful Management of Work Agreements, (Washington, D.C.: Forest Service, 1994).




                          Page 8                                                      GAO-03-503 Forest Service
                       actions to implement these concepts and, as a result, the task force’s
                       recommendations were never carried out.


                       The Forest Service has made little progress in resolving previously
Forest Service Has     identified performance accountability problems and remains years away
Made Little Progress   from implementing a credible performance accountability system. Rather
                       than developing and implementing a functioning performance
in Resolving Known     accountability system like other federal land management agencies, the
Performance            Forest Service, for the most part, continues to study its options, as it has
                       for the last 11 years. The agency is developing or has implemented two
Accountability         systems that should be important components of a performance
Problems, unlike       accountability system—a budget formulation and execution system and a
Other Federal Land     work-planning system—but neither was originally designed to be part of a
                       performance accountability system, nor has the Forest Service developed
Management Agencies    the clear linkages needed between these new systems and its strategic
                       goal-setting and results-reporting functions.


The Forest Service     To understand how other agencies have established clear linkages among
Continues to Study     key components of a performance accountability system, the Forest
Performance            Service initiated a benchmarking study of other agencies’ performance
                       accountability systems in March 2002, including USDA’s NRCS and
Accountability         Interior’s BLM and National Park Service.5 This study reports on lessons
                       learned for successfully developing, evaluating, and implementing a
                       performance accountability system. In particular, a good performance
                       accountability system, among other things, should include

                       •   senior leadership commitment to performance accountability;
                       •   clear delineation of organizational responsibilities for performance
                           measurement, budget integration, performance evaluation, and
                           reporting;
                       •   close coordination of performance accountability activities;
                       •   national performance measures;
                       •   linkages from the strategic plan to annual performance measures to
                           budget activities; and
                       •   the ability to track total costs and tie those costs to desired outcomes.



                       5
                        Forest Service, Budget and Performance Integration: Benchmarking of Other
                       Organizational Approaches—Initial Report, (Washington, D.C.: Forest Service, 2002).
                       Two other agencies studied were the U.S. Coast Guard and the U.S. Air Force.




                       Page 9                                                      GAO-03-503 Forest Service
Not until July 2002 did the Chief of the Forest Service emphasize his
intention to “get started” on studying how performance accountability
could be implemented at the Forest Service. In September 2002, in
response to the Chief’s direction, the strategic planning and budget staffs
completed a draft plan for an agencywide performance accountability
system that incorporated the lessons learned from their benchmarking
study. The Forest Service’s Draft Performance Accountability System
Implementation Plan provides a conceptual framework and time frames
for developing a performance accountability system. It is designed to
develop the critical links among performance accountability components:
the strategic plan, annual performance plan, project planning, budget, and
annual reporting of results. The plan also explains how existing Forest
Service databases, such as those for formulating the budget and the annual
work plans, could be used to provide the information needed for
performance accountability. Although the Chief endorsed the concept of
performance accountability outlined in the plan, it did not receive broad
support throughout the agency. As a result, the Chief decided to further
assess performance accountability options through an executive steering
team, rather than adopt the system envisioned in the draft implementation
plan.

The executive steering team, chaired by the Deputy Chief for Programs,
Legislation, and Communications, comprises nine senior executives in key
agency positions.6 This team is to study the Forest Service’s own processes
and systems and further consider options available for implementing a
Forest Service performance accountability system and to report to the
Chief by June 2003 on the viability of these options. However, this team
was not appointed until December 2002, nearly 2½ years after we last
testified on this issue and more 11 years after we first reported on it. As a
result, the Forest Service has made little progress since 1991, when it first
formed a task force to review performance accountability.




6
 Deputy Chief for Programs, Legislation, and Communications (Chair); Deputy Chief for
Business Operations; Chief Financial Officer; Deputy Chief for the National Forest System;
Chief Information Officer; Regional Forester (region 10); Station Director, Pacific
Northwest; Deputy Regional Forester for State and Private Forestry (region 8); and
Director of Strategic Planning and Resource Assessment, serves as the non-voting
executive secretary to the team.




Page 10                                                       GAO-03-503 Forest Service
Forest Service Has           The Forest Service began considering new budget and work-planning
Developed Two Systems        systems in April 2000 and August 2001, respectively, long before the Chief
That Should Be Part of a     emphasized his intention to “get started” on performance accountability in
                             July 2002. These new systems should be integral parts of a performance
Performance                  accountability system, but the Forest Service has not developed clear
Accountability System, but   linkages between these new systems’ main outputs—budgets and work
It Has Not Established       activities—and its strategic goals and performance results. Without these
Clear Linkages between       linkages, the agency will not be able to report in an integrated, results-
These Systems and Its        oriented way on what activities it completed, how much they cost, and
Strategic Goals and          what they accomplished—key elements of any effective performance
                             accountability system.
Performance Results
                             In June 2000, the House Committee on Appropriations reported it was
                             concerned that the agency devoted too much of its funding to
                             headquarters initiatives and special projects, to the detriment of
                             conservation and public service activities the Committee believed to be
                             important. As a result, the Committee directed the Forest Service to better
                             link its budget formulation and allocation systems to the actual work
                             planned for the nation’s forests.

                             The Forest Service developed such a system—the Budget Formulation and
                             Execution System (BFES)—and in March 2001 began using it to formulate
                             its fiscal year 2003 budget. The agency viewed BFES as an answer to the
                             Committee’s concerns, but not necessarily part of any effort to achieve
                             performance accountability. The Forest Service designed BFES to allow
                             field units to have more input into the budget formulation process, to plan
                             activities and their associated funding throughout the annual budget
                             development process, and to serve as a basis for subsequent field unit
                             allocations. If BFES accomplishes these goals, according to senior officials
                             in the budget office, it could allow field units to estimate their ability to
                             carry out program activities in light of the agency’s strategic goals,
                             headquarters priorities, and local priorities. Furthermore, according to
                             these officials, BFES’s potential to establish such linkages could make it
                             integral to the agency’s recent attempt to develop a performance
                             accountability system. However, as of May 2003—more than 3 years after
                             the Forest Service began work on BFES and 2 years after its first use—
                             only a portion of the agency’s budget is included in the system.

                             Despite the expectations for BFES to link the agency’s strategic goals with
                             headquarters and local priorities, the Forest Service has not established
                             clear linkages between its strategic goals and field units’ local priorities,
                             which makes it harder for the Forest Service to achieve performance
                             accountability. In particular, budget instructions for fiscal years 2003 and


                             Page 11                                              GAO-03-503 Forest Service
2004 attempted to guide field units on how to make these linkages.
According to these instructions, as field units planned their activities and
associated funding, they were to weigh the agency’s strategic goals in
making budgetary trade-offs between competing local priorities. In fiscal
year 2003, field units found it impossible to deal effectively with the large
number of priorities—50—headquarters identified. For fiscal year 2004,
the agency’s guidance did not provide a formal process to document such
linkages. Field managers used their “professional judgment” to draw these
linkages. Consequently, for both fiscal years 2003 and 2004, field units
used BFES estimates to set local priorities based on incremental
adjustments to their previous year’s funding. Such a process does not meet
the criteria for performance accountability because it is not clearly based
on the strategic plan and associated outcomes. However, according to
senior budget officials, the BFES approach to budget formulation for these
years represents an improvement over the Forest Service’s previous
process, a more arbitrary practice based almost entirely on the previous
year’s funding.

Although the Forest Service’s budget formulation effort for fiscal year 2005
is an improvement over the budget formulation process for the prior 2
fiscal years, it once again falls short of establishing clear linkages between
the agency’s strategic goals and field unit priorities. In December 2002, the
National Leadership Team—60 senior executives in the agency—reviewed
a set of draft management objectives7 developed by the planning staff and
tentatively approved 11 of them for field units to consider in developing
their fiscal year 2005 budget submissions. Field units have been instructed
to use these management objectives in integrating local forest plan
priorities with agency objectives. Agency officials reported this initial step
was intended to have field staff become “comfortable” in seeing budget
and strategic goals together and to begin linking performance goals to the
budget. However, staff in the planning office as well as some senior
executives questioned the extent to which the fiscal year 2005
management objectives mirrored strategic goals, primarily because
National Leadership Team members did not have sufficient time to
carefully review the draft management objectives.

The Forest Service decided to replace its work-planning system in August
2001, when conversion to new computer hardware caused the existing



7
 Management objectives define intermediate outcomes toward strategic goals. They are
tangible objectives against which progress toward strategic goals can be measured.




Page 12                                                     GAO-03-503 Forest Service
work-planning system to lose some of its usefulness. The agency sought a
national work-planning system to, among other things, help field units plan
and manage work activities at the project level. According to agency
officials, the new work-planning system—called WorkPlan—will be
completed and implemented in two phases. The first phase is scheduled to
be completed by May 1, 2003, but it will include only a planning
component. WorkPlan should be available to field units in time to help
them develop their fiscal year 2004 work plans. The agency expects to
complete the second phase in October 2003, which is to add tracking
completed activities and reporting accomplishments to WorkPlan’s
capabilities. According to the draft performance accountability system
implementation plan, WorkPlan may eventually link field units’ work
activities to Forest Service planning, budgeting, and results reporting
functions. These linkages, if established, could assist program managers
in, among other things, reporting accomplishments and their related
expenditures and integrating these functions with the Forest Service’s
strategic goals—key functions in a performance accountability system.

However, it is not clear whether the agency will be able to establish the
necessary linkages that would enable WorkPlan to meet these
expectations. For example, it is unclear how accurately the Forest Service
will be able to report on the actual costs of individual work activities.
Currently, the agency’s financial information system reports actual
expenditures only at the budget line item level, while WorkPlan is being
designed to provide the planned costs of individual work activities at the
project level. The Forest Service is planning to develop linkages to bridge
this discrepancy between levels of reporting and thus to provide estimates
of project activities’ actual costs. Forest Service officials believe that such
estimates could provide sufficient detail and clarity to adequately address
performance accountability concerns. However, until such linkages are, in
fact, established and evaluated, it is uncertain that the agency will ever be
able to accurately report the actual cost of project activities.

WorkPlan’s future ability to report accomplishments depends heavily on
the Forest Service making significantly more progress on developing
outcome performance measures for all of its goals and objectives. While
we understand the difficulty in developing meaningful performance
measures, the Forest Service is in the process of developing such
measures only for its wildfire program. For example, in Forest Service’s
fiscal year 2005 draft Performance Management Plan, the measure for
reducing hazardous fuels is expressed in terms of how much the risk of
catastrophic fire has been reduced, an outcome-based performance
measure. However, officials from the wildfire, wildlife and fish,


Page 13                                               GAO-03-503 Forest Service
                         engineering, and water and air programs told us that relating work
                         activities, such as those that will likely be reported in WorkPlan, to
                         achieving results requires systematic monitoring of the changing
                         conditions in the forests over time in order to validate the effects of these
                         different work activities. These program officials told us that with the
                         exception of the wildfire program, currently they do not have plans to
                         undertake this systematic monitoring for their other programs.


Other Federal Land       Other federal agencies with land management responsibilities have made
Management Agencies      more progress in developing and implementing performance
Have Implemented         accountability systems. The Natural Resources Conservation Service
                         (NRCS) and the Bureau of Land Management (BLM) have developed Web-
Performance              based performance accountability systems that link planning, budgeting,
Accountability Systems   and results. Both agencies continue to improve their systems and
                         processes, and the Department of the Interior plans to implement BLM’s
                         system departmentwide as part of Interior’s vision for effective program
                         management.

                         According to NRCS and BLM officials, the primary factor driving the
                         development and implementation of their performance accountability
                         systems was a strong desire to report accurately on what they had
                         accomplished with the dollars they received. Furthermore, strong
                         leadership commitment enabled the agencies to develop and begin
                         implementing their systems with existing resources within a few years—4
                         years for NRCS and 3 years for BLM. Finally, several other factors also
                         contributed to the agencies’ success: taking the risk of investing time and
                         resources into developing a performance accountability system, using the
                         strategic plan to guide their efforts, and having an implementation plan
                         with time frames for completing steps throughout the development and
                         implementation phases.

                         Both NRCS and BLM believe that their accountability systems have
                         produced multiple benefits. Specifically, managers can make more
                         informed decisions on resource allocation because the systems align
                         actual costs with program work. For example, BLM officials report they
                         can track actual costs to projects and tasks. In addition, their budget can
                         show how these tasks and associated costs link with the agency’s strategic
                         plan. NRCS officials can also report on the actual costs of the agency’s
                         programs as well as how workload and time frames will change as
                         resources change. Both agencies also told us that their Web-based systems
                         enable them to know what they are accomplishing with the money they
                         spend at any given moment. As a result, BLM officials report that they can


                         Page 14                                               GAO-03-503 Forest Service
                       reallocate dollars as priorities shift because it is easy to determine where
                       dollars are available. At both agencies, transparent data promoted
                       competition among units in the agency to improve performance because
                       performance data can be viewed by anyone in the agency.


                       Three key challenges continue to keep the Forest Service from resolving
Forest Service’s       its performance accountability problems: (1) establishing clear authority
Inability to Address   and responsibility within the current organizational structure, (2) making
                       and implementing decisions in an agency culture that relies on consensus,
Organizational,        and (3) establishing sufficient leadership emphasis and making
Cultural, and          performance accountability a higher priority.
Leadership             Organizationally, several senior executives have been assigned
Challenges Continues   responsibilities for components of performance accountability, but none
to Impede Its          of them has overall responsibility and authority for ensuring that these
                       components are properly linked or that the agency achieves performance
Progress on            accountability. For example, the Deputy Chief for Programs, Legislation,
Performance            and Communications is in charge of the strategic planning component,
                       while the Deputy Chief for Budget and Finance is responsible for the
Accountability         budget and finance components. The agency will find it difficult to make
                       progress in achieving performance accountability if the decisions and
                       activities of the separate staffs responsible for the various accountability
                       system components are not effectively coordinated. However, effective
                       coordination continues to be a challenge within the Forest Service’s
                       existing organizational structure. The fact that the agency’s efforts since
                       our last report have not resulted in an approved performance
                       accountability plan underscores the importance of addressing the issue of
                       fragmentation and the need for more effective coordination.

                       Culturally, the Forest Service makes and implements major decisions by
                       obtaining consensus throughout all levels of the agency—headquarters,
                       regions, and local units. At times, this approach slows the agency’s ability
                       to make progress on important issues. According to senior Forest Service
                       officials, the agency has a collaborative leadership management style—
                       senior managers from all levels moving forward together—so that
                       progress depends on a collective acceptance of any new proposal. These
                       officials added that progress on new proposals could slow or even stop if
                       consensus cannot be achieved in the developmental process. The Forest
                       Service has been unable to develop and implement a performance
                       accountability system, largely because it cannot agree on an integrated
                       approach. The executive steering team’s current effort to study available
                       options for a performance accountability system is an indication that the


                       Page 15                                              GAO-03-503 Forest Service
              draft plan for implementing such a system does not have broad support
              throughout the agency. According to one deputy chief, the executive
              steering team must build support throughout the agency in order to make
              progress toward implementing a performance accountability system.

              Finally, agency leadership has not given the emphasis and priority to
              performance accountability that is needed to overcome the Forest
              Service’s organizational and cultural challenges. Currently, the Chief and
              the Under Secretary of Agriculture for Natural Resources and
              Environment, who both have held their positions for less than 2 years, are
              emphasizing other priorities. The Chief is focusing on achieving financial
              accountability, while the Under Secretary counts performance
              accountability as his third priority, behind improvements to the agency’s
              decision-making process and financial accountability. Furthermore, the
              Under Secretary stated that, without progress on the first two priorities,
              performance accountability would be meaningless. Both the Chief and the
              Under Secretary acknowledge that the emphasis on performance
              accountability has lagged behind other priorities. However, the Chief told
              us that he intends to review GAO and USDA Inspector General’s
              recommendations to see whether the agency had taken actions as
              promised and also intends to include accountability for results in agency
              managers’ contracts.


              Our analysis of the Forest Service’s actions with respect to performance
Conclusions   accountability shows that the agency is essentially in the same position it
              was more than a decade ago—studying how it might achieve performance
              accountability. By establishing another task force to again “review
              options” for implementing a performance accountability system, the
              agency has delayed any real action on this important front. Moreover, the
              Chief’s intentions—to review GAO and Inspector General reports to see if
              the agency had taken promised actions and to consider incorporating
              performance accountability into the managers’ contracts—are not new.
              The 1994 task force performed the same review and made the same
              recommendation on making performance accountability part of senior
              managers’ contracts.

              We understand that the Forest Service has important competing
              priorities—improving financial and performance accountability as well as
              its decision-making process—but we do not believe that these priorities
              need to be addressed sequentially. To the contrary, progress on these
              priorities is interdependent and can be and should be achieved
              concurrently so that both may be used to assess the overall performance


              Page 16                                             GAO-03-503 Forest Service
                      of the agency. Accountability requires not only accurately informing
                      Congress and the public on expenditures but also reporting the results of
                      these expenditures. Without senior leadership’s placing sufficient
                      emphasis, however, we believe that the Forest Service will continue to
                      take only small, slow steps, if any, toward achieving performance
                      accountability.

                      If the future is to be different than the past, the challenges we identified
                      have to be addressed aggressively. The Chief and the senior leadership
                      have to decide to make performance accountability a reality, not a subject
                      of continued study. To achieve more progress, the Forest Service will need
                      to assign overall authority and responsibility for a performance
                      accountability system to one official and then hold that person
                      accountable for the effort. It is also crucial for Congress to monitor the
                      Forest Service’s progress in developing a performance accountability
                      system. Unlike other land management agencies that have developed and
                      implemented performance accountability systems within the last 3 years,
                      the Forest Service has yet to come to this commitment on its own.


                      To ensure progress in achieving performance accountability, we
Recommendations for   recommend that the Secretary of Agriculture direct the Chief of the Forest
Executive Action      Service to appoint a senior executive with decision-making authority and
                      responsibility for developing a comprehensive plan, with milestones, to
                      ensure the timely implementation of an effective performance
                      accountability system. This executive should be held accountable for

                      •   ensuring that the Forest Service’s performance accountability system
                          clearly links the key components needed to manage for results—plans,
                          performance measures, budgets, work activities, expenditures, and
                          accomplishments;
                      •   meeting specific milestones for implementing the system; and
                      •   ensuring full implementation of the performance accountability system
                          throughout all levels of the agency.

                      The Secretary of Agriculture should also direct the Chief of the Forest
                      Service to report, beginning in 2004, on the agency’s (1) progress in
                      implementing a performance accountability system and the additional
                      milestones to be accomplished in the agency’s annual performance plans
                      and (2) accomplishments in implementing its performance accountability
                      system in its annual performance report to the Congress.




                      Page 17                                             GAO-03-503 Forest Service
                  We provided a draft of this report to USDA for its review and comment. In
Agency Comments   response, the Forest Service stated that it agrees with the report’s findings
                  and recommendations. Specifically, the Forest Service stated that it would
                  propose a comprehensive plan by May 30, 2003, to ensure the timely
                  implementation of an effective performance accountability system.

                  The Forest Service’s written comments are presented in appendix III.

                  To assess the progress the Forest Service has made in addressing
Scope and         previously identified performance accountability problems and key
Methodology       challenges impeding its ability to resolve these problems, we interviewed
                  the Chief of the Forest Service, members of the executive steering team,
                  and officials in various offices, including the Office of Budget and Program
                  Analysis, the Office of Strategic Planning and Resource Assessment, and
                  selected field offices. The Office of Strategic Planning and Resource
                  Assessment and the Office of Budget and Program Analysis are
                  responsible for designing and implementing the agency’s performance
                  accountability system. The Office of Budget and Program Analysis and
                  selected field offices are responsible for the budget formulation and
                  execution system, and work-planning system. We also reviewed reports,
                  planning documents, USDA OIG audits, and other documents on past
                  performance accountability problems in the Forest Service and on the
                  status of the development and implementation of the agency’s efforts to
                  improve its planning, budgeting, performance measurement, and
                  accomplishment reporting processes. Additionally, we interviewed
                  officials at NRCS and BLM about their efforts to develop and implement
                  Web-based accountability systems and reviewed related documents.
                  Finally, we reviewed recent OMB directives related to agency performance
                  management and budgeting and their recent PART analysis of two Forest
                  Service programs.

                  We conducted our review from August 2002 through March 2003 in
                  accordance with generally accepted government auditing standards.


                  As agreed with your offices, unless you publicly announce its contents
                  earlier, we plan no further distribution of this report for 30 days after the
                  date of this letter. At that time, copies of this report will be sent to the




                  Page 18                                               GAO-03-503 Forest Service
congressional committees with jurisdiction over the Forest Service and its
activities; the Honorable Ann Veneman, Secretary of Agriculture; and the
Honorable Mitchell E. Daniels, Jr., Director, Office of Management and
Budget. This report will also be available at no charge on GAO’s home
page at http://www.gao.gov.

If you have any questions about this report, please contact me at (202) 512-
3841. Key contributors to this report are listed in appendix V.




Barry T. Hill
Director, Natural Resources and Environment




Page 19                                             GAO-03-503 Forest Service
                                               Appendix I: Forest Service’s Progress on
Appendix I: Forest Service’s Progress on       GAO-Reported Performance Accountability
                                               Problems


GAO-Reported Performance Accountability
Problems

 GAO’s reported performance
 accountability problems at the Forest                                  Forest Service’s progress as of             Related key
 Service                                           Date(s) reported     April 1, 2003                               challenges
 Forest Service budgets and allocates              June 29, 2000        Forest Service's Budget Formulation         Leadership
 appropriated funds on the basis of historic       October 13, 1999     and Execution System partially              Organization
 funding levels.                                                        addresses this problem.

 Forest Service also budgets and allocates      June 29, 2000           Forest Service attempted to link            Leadership
 funds on the basis of its programs, many of    February 16, 2000       budget formulation and the agency's         Organization
 which are not linked to the agency's strategic April 26, 1994          strategic plan with the FY05 budget
 plan or how work is actually done in the                               instructions. Forest Service is
 national forests.                                                      developing a national work-planning
                                                                        system for national forests to plan
                                                                        work.

 Forest Service intends for forest plans to        June 29, 2000        No progress has been made to link           Leadership
 serve as the basis of future budgets, but it is   October 13, 1999     forest plans to budgets. The Forest         Organization
 unclear how national forests will blend                                Service attempted to blend agency-
 agencywide goals with local priorities.                                wide goals with local priorities for its
                                                                        fiscal year 2005 budget.

 Forest Service relies on performance              June 29, 2000        Forest Service is developing                Culture
 measures that are not always clearly linked       February 16, 2000    performance measures it believes            Leadership
 to strategic goals and objectives because         October 13, 1999     better link to the agency's strategic
 they do not always assess outputs, service                             goals. However, the performance
 levels, and outcomes the agency intends to                             measures still need improvement.
 achieve.

 Forest Service is working to refine its           February 16, 2000    No progress in this area.                   Culture
 performance measures so they better reflect                                                                        Leadership
 strategic goals, but the agency has not
 determined how long it will take to gather
 and analyze the needed data.

 Forest Service's line managers cannot be          October 13, 1999     No progress in this area.                   Culture
 held accountable for achieving strategic          March 26, 1998                                                   Leadership
 goals and objectives because of poor              April 26, 1994                                                   Organization
 performance measures.

 Even when performance accountability        March 26, 1998             No progress in this area.                   Culture
 improvements are adopted by Forest Service                                                                         Leadership
 management, implementation is often left to                                                                        Organization
 field units which often leaves uneven and
 mixed results.

 Agreement does not exist within the Forest     April 29, 1997          The National Leadership Team is             Culture
 Service on its long-term strategic goals. This                         discussing long-term goals for the          Leadership
 is the result of broader disagreement over                             Forest Service's Strategic and
 the agency's priorities under its multiple-use                         Performance Management Plans.
 and sustained-yield mandate.
Source: GAO.




                                               Page 20                                                          GAO-03-503 Forest Service
Page 21   GAO-03-503 Forest Service
               Appendix II: Detailed Forest Service
Appendix II: Detailed Forest Service
               Organizational Chart



Organizational Chart




               Page 22                                GAO-03-503 Forest Service
Appendix II: Detailed Forest Service
Organizational Chart




Page 23                                GAO-03-503 Forest Service
                   Appendix III: Comments from the Forest
Appendix III: Comments from the Forest
                   Service



Service




         Page 24                                            GAO-03-503 Forest Service
                  Appendix IV: GAO Contacts and Staff
Appendix IV: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Andrea Wamstad Brown (202) 512-3319
GAO Contacts      Eugene W. Wisnoski (202) 512-6545



                  In addition to those named above Chester M. Joy, Carol Herrnstadt
Acknowledgments   Shulman, and Kelli Ann Walther made key contributions to this report.




                  Page 25                                           GAO-03-503 Forest Service
             Related GAO Products
Related GAO Products


             Major Management Challenges and Program Risks: Department of
             Agriculture. GAO-03-96. Washington, D.C.: January 2003.

             Wildland Fire Management: Reducing the Threat of Wildland Fires
             Requires Sustained and Coordinated Effort. GAO-02-843T. Washington,
             D.C.: June 13, 2002.

             Wildland Fire Management: Improved Planning Will Help Agencies
             Better Identify Fire-Fighting Preparedness Needs. GAO-02-158.
             Washington, D.C.: March 29, 2002.

             Severe Wildland Fires: Leadership and Accountability Needed to Reduce
             Risks to Communities and Resources. GAO-02-259. Washington, D.C.:
             January 31, 2002.

             The National Fire Plan: Federal Agencies Are Not Organized to
             Effectively and Efficiently Implement the Plan. GAO-01-1022T.
             Washington, D.C.: July 31, 2001.

             Major Management Challenges and Program Risks: Department of
             Agriculture. GAO-01-242. Washington, D.C.: January 2001.

             Forest Service: Actions Needed for the Agency to Become More
             Accountable for Its Performance. GAO/T-RCED-00-236. Washington, D.C.:
             June 29, 2000.

             Natural Resources Conservation Service: Additional Actions Needed to
             Strengthen Program and Financial Accountability. GAO/RCED-00-83.
             Washington, D.C.: April 7, 2000.

             Forest Service: Status of Efforts to Improve Accountability. GAO/T-
             RCED/AIMD-00-93. Washington, D.C.: February 16, 2000.

             Forest Service: A Framework for Improving Accountability.
             GAO/RCED/AIMD-00-2. Washington, D.C.: October 13, 1999.

             Western National Forests: A Cohesive Strategy is Needed to Address
             Catastrophic Wildfire Threats. GAO/RCED-99-65. Washington, D.C.: April
             2, 1999.

             Major Management Challenges and Program Risks: Department of
             Agriculture. OCG-99-2. Washington, D.C.: January 1, 1999.



             Page 26                                           GAO-03-503 Forest Service
           Related GAO Products




           Managing for Results: The Statutory Framework for Performance-Based
           Management and Accountability. GGD/AIMD-98-52. Washington,
           D.C.: January 28, 1998.

           Forest Service Decision-Making: A Framework for Improving
           Performance. GAO/RCED-97-71. Washington, D.C.: April 29, 1997.

           Forest Service: Status of Efforts to Achieve Cost Efficiency. GAO/RCED-
           94-185FS. Washington, D.C.: April 26, 1994.

           Performance Measurement: An Important Tool in Managing for Results.
           T-GGD-92-35. Washington, D.C.: May 5, 1992.

           Wilderness Management: Accountability for Forest Service Funds Needs
           Improvement. GAO/RCED-92-33. Washington, D.C.: November 4, 1991.




(360222)
           Page 27                                           GAO-03-503 Forest Service
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