oversight

The Results Act: Observations on Commerce's June 1997 Draft Strategic Plan

Published by the Government Accountability Office on 1997-07-14.

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

                     United States
GAO                  General Accounting Office
                     Washington, D.C. 20548

                     General Government Division

                     B-277427

                     July 14, 1997

                     The Honorable Richard K. Armey
                     Majority Leader
                     House of Representatives

                     The Honorable John Kasich
                     Chairman, Committee on the Budget
                     House of Representatives

                     The Honorable Dan Burton
                     Chairman, Committee on Government
                       Reform and Oversight
                     House of Representatives

                     The Honorable Bob Livingston
                     Chairman, Committee on Appropriations
                     House of Representatives

                     Subject: The Results Act: Observations on Commerce’s June 1997 Draft
                     Strategic Plan

                     On June 12, 1997, you asked us to review the draft strategic plans
                     submitted by the cabinet departments and selected major agencies for
                     consultation with Congress as required by the Government Performance
                     and Results Act of 1993 (the Results Act). This letter is our response to
                     that request concerning the Department of Commerce.


                     Our overall objective was to review and evaluate the latest available
Objectives, Scope,   version of Commerce’s draft strategic plan. As you requested, we
and Methodology      (1) assessed the draft plan’s compliance with the Act’s six requirements
                     and its overall quality, (2) determined if the Department’s key statutory
                     authorities were reflected, (3) identified whether discussions about
                     crosscutting functions and coordination with other agencies having similar
                     functions were included, (4) determined if the draft plan addressed major
                     management challenges, and (5) provided a preliminary assessment of the
                     Department’s capacity to provide reliable information about performance.

                     We obtained the June 1997 draft strategic plan that Commerce provided to
                     the House of Representatives staff team working with the agency. As
                     agreed, our review of the Department’s draft plan was generally based on
                     previous work. In recent years, congressional requests for work at



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             Commerce have generally been limited to examinations of discrete issues
             relating to the Department’s components and functions, such as
             preparations for the decennial census and the National Weather Service’s
             modernization effort.

             Our overall assessment of Commerce’s draft strategic plan was generally
             based on our knowledge of Commerce’s operations and programs, our
             reviews of the Department’s entities, and other existing information
             available at the time of our assessment. Specifically, the criteria we used
             to determine whether Commerce’s draft strategic plan complied with the
             requirements of the Results Act were the Act itself, supplemented by the
             Office of Management and Budget’s (OMB) guidance on developing the
             plans (Circular No. A-11, Part 2). To make judgments about the overall
             quality of the draft plan and its elements, we used our May 1997 guidance
             for congressional review of the plans as a tool.1 To determine whether the
             draft plan contained information on interagency coordination and
             addressed major management challenges, we relied on our general
             knowledge of Commerce’s operations and programs and the results of our
             previous reports.

             A list of our major products related to Commerce’s operations is attached
             to this letter. As you requested, we coordinated our work on the
             Department’s key statutory authorities and its capacity to provide reliable
             information with the Congressional Research Service and Commerce’s
             Inspector General’s (IG) office, respectively. Commerce officials provided
             comments on a draft of this correspondence, which are reflected in the
             Agency Comments section on page 15.


             The Results Act seeks to shift the focus of federal management and
Background   decisionmaking away from a preoccupation with staffing, activity levels,
             and tasks completed to a focus on results—that is, the real difference that
             federal programs make in people’s lives. Under the Results Act, executive
             agencies are required to develop (1) strategic plans by September 30, 1997;
             (2) annual performance plans for fiscal year 1999 and beyond; and
             (3) annual performance reports beginning March 31, 2000. The Act states
             that agencies’ strategic plans should cover a period of at least 5 years and
             that these plans should include, among other requirements, a set of
             strategic goals. The Results Act does not require that all of an agency’s
             strategic goals be explicitly results oriented, although the intent of the Act

             1
              Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional Review
             (GAO/GGD-10.1.16, May 1997).



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                   is to have agencies’ focus their strategic goals on results to the extent
                   feasible.

                   Commerce’s missions and functions are among the most diverse of the
                   cabinet departments in the federal government. They include
                   responsibilities for management and stewardship of national resources,
                   advancement of commerce, economic development, scientific research
                   and technology, and statistical information collection and dissemination.
                   Because of the diversity of its functions, Commerce historically has not
                   been managed on the basis of a unifying mission and shared goals.
                   Further, this diversity of functions raises a number of challenges for the
                   Department in its development of a comprehensive strategic plan that
                   adequately addresses all of its responsibilities.

                   Commerce chose a thematic approach to present its draft strategic plan.
                   Specifically, Commerce identified three themes that are linked to its
                   mission statement, which, according to the draft plan, collectively
                   “encompass the full breadth of the Department of Commerce’s mission.”
                   Under each theme, there are sections on (1) goals and objectives;
                   (2) partnership activities; (3) the economic contributions of the programs
                   under each goal; (4) the programs’ legislative bases; (5) the programs’
                   international aspects; and (6) current trends, opportunities, challenges,
                   and issues influencing the programs. Dispersed throughout each of these
                   six sections is a discussion on the responsibilities of the relevant
                   Commerce component’s programs.

                   Commerce’s strategic plan is currently in its fourth draft. The Results Act
                   anticipated that it may take several planning cycles to perfect the process
                   and that strategic plans would be continually refined as various planning
                   cycles occur. Thus, our comments reflect a snapshot status of the draft
                   plan at a given point in time. We recognize that developing a strategic plan
                   is a dynamic process and that Commerce officials, with input from OMB
                   and congressional staff, are continuing work to revise the draft.


                   Commerce’s draft strategic plan is incomplete in several important
Results in Brief   respects. Of the six elements required by the Act, four are included in the
                   draft plan—a mission statement, goals and objectives, strategies to
                   achieving goals and objectives, and a discussion of key external
                   factors—but each of these has weaknesses, some more significant than
                   others. Two of the elements—the relationship between long-term goals
                   and objectives and annual performance goals and the description of



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    program evaluations used to establish general goals and objectives and a
    schedule for future program evaluations—are missing from the draft plan.
    The draft plan provides much useful information on Commerce’s statutory
    authorities. However, the draft plan could be more useful to Commerce,
    Congress, and other stakeholders if it provided a more explicit discussion
    of crosscutting activities and the major management challenges the
    Department faces. Also, with respect to Commerce’s ability to provide
    reliable program performance information, there is evidence that
    Commerce’s capacity to measure achievement of its goals is questionable
    in several respects.

    The four required elements that are included in the draft plan contained
    some, but not all, of the attributes that would be desirable to meet the
    purposes of the Act and be consistent with OMB Circular A-11, Part 2.
    Specifically:

•   The mission statement includes the core functions of the Department and
    mentions the role of businesses and universities as partners in the mission.
    However, the mission statement does not address the important role also
    played by other government entities.
•   While there are useful linkages among themes, goals, objectives, and
    responsible components, the goals and objectives are not as results
    oriented as they could be. For example, the goal to “restructure export
    controls for the twenty-first century” could be made more results oriented
    by identifying the purpose of the restructuring (for example, to increase
    export flexibility or, alternatively, better protect national security).
•   The strategies to achieving the goals and objectives do not meet the
    purposes of the Results Act and are not consistent with OMB guidance in
    that, for example, the strategies do not discuss the resources needed to
    achieve the goals identified.
•   Many key external factors are discussed in the draft plan, but they appear
    to be used to justify programs rather than to show how these factors may
    affect the achievement of Commerce’s goals. In addition, some key
    external factors that could affect the achievement of Commerce’s goals
    are not identified.

    The draft plan does not explicitly discuss information required by the Act
    on the other two required elements. For one of these—relating long-term
    goals and objectives to annual performance goals—the draft plan says
    only that this type of information will be provided in annual budget
    requests because, in the Department’s view, annual budget requests are
    the more appropriate vehicle for such a discussion. For the other



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element—concerning a discussion of the past and future role of program
evaluations—the draft plan makes limited references in various sections to
a few studies, but those references do not respond to the Act’s
requirements. In particular, the draft plan does not describe how the
studies were used to establish general goals and objectives, nor does the
draft provide a schedule for future program evaluations. Under the Results
Act, an evaluation strategy is considered to be a critical source of
information for ensuring the validity and reasonableness of strategic goals,
as well as for designing improvement strategies when goals are not met.

The draft plan appears to reflect Commerce’s consideration of its major
statutory responsibilities and provides a separate section under each
strategic theme that spells out the statutory support for the goals
articulated and helps stakeholders understand the complexity and
diversity of Commerce’s activities. To Commerce’s credit, few, if any, of
the other draft strategic plans we have seen provided this much detail
about the agency’s statutory responsibilities.

Commerce shares responsibility for certain core national issues, such as
natural resources and environment or community and regional
development, with a number of other federal departments and agencies.
Despite the potential for program duplication or overlap generated by
such shared responsibilities, the draft plan does not address how these
crosscutting activities correspond to or intersect with those of other
agencies or whether such shared responsibilities were coordinated in the
development of the draft plan.

The draft plan also does not adequately account for the major
management challenges the Department faces, such as the need to
implement a sound financial management system to ensure that programs
are managed efficiently and effectively to achieve the goals identified in
the draft plan. The Department reported that its financial systems are
seriously outdated and fragmented and are unable to provide reliable
information. The Department’s financial management weaknesses
undermine its ability to generate needed information about program
performance and costs.




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                        Of the six elements required by the Results Act, four are included in
Commerce’s Draft        Commerce’s draft strategic plan—a mission statement, goals and
Strategic Plan Does     objectives, strategies to achieving goals and objectives, and key external
Not Fully Achieve the   factors—but each of these could be improved. The other two required
                        elements of a strategic plan—the relationship between long-term goals and
Purposes of the         objectives and annual performance goals and the description of program
Results Act, and the    evaluations used to establish general goals and objectives and a schedule
                        for future program evaluations—are missing from the draft plan.
Quality of Individual
Elements Could Be
Improved
Mission Statement       The Results Act and OMB Circular A-11, Part 2, state that an agency’s
                        strategic plan is to contain a comprehensive mission statement defining
                        the basic purpose of the agency, with particular focus on its core programs
                        and activities. In addition, the Circular states that the mission statement
                        may include a concise discussion of enabling or authorizing legislation, as
                        well as identification of issues that Congress specifically charged the
                        agency to address. Commerce’s mission statement, along with its three
                        strategic themes, includes the core functions of the Department, as
                        follows:

                        “The Department of Commerce promotes job creation, economic growth,
                        sustainable development, and improved living standards for all Americans,
                        by working in partnership with business, universities, communities, and
                        workers to:

                        1.Build for the future and promote U.S. competitiveness in the global
                        marketplace, by strengthening and safeguarding the nation’s economic
                        infrastructure;

                        2.Keep America competitive with cutting-edge science and technology and
                        an unrivaled information base; and, 3.Provide effective management and
                        stewardship of our nation’s resources and assets to ensure sustainable
                        economic opportunities.”

                        In its mission statement, Commerce recognizes the role played by
                        “business, universities, communities, and workers.” The statement seems
                        incomplete in this regard since other federal agencies and state and local
                        governments also play major roles. For example, Commerce shares




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                           responsibility for major budget functions with 14 other departments and
                           agencies.2


Goals and Objectives       According to the Results Act, the strategic plan is to contain general goals
                           and objectives for the major functions and operations of the agency. The
                           goals and objectives are to elaborate or provide greater specificity on how
                           an agency will carry out its mission through its programs and activities.
                           Commerce’s draft plan provides linkages among themes, goals, objectives,
                           and responsible Commerce components. That is, for each of its strategic
                           themes, the Commerce draft plan lists general goals and objectives for
                           specific program efforts within Commerce agencies. For example, under
                           its first strategic theme, economic infrastructure, Commerce has identified
                           as a goal “enforce U.S. trade laws and agreements to promote free and fair
                           trade.” The objective associated with that goal is “expand trade law
                           enforcement and compliance monitoring.” Commerce’s International
                           Trade Administration (ITA), which has responsibility for promoting world
                           trade and strengthening the international trade and investment position of
                           the United States, is the Commerce component identified as having
                           responsibility for the objective.

                           While Commerce’s draft strategic plan includes a number of goals that are
                           results oriented, other goals are not as results oriented as they could be.
                           For example, one of the goals in the draft plan is to “implement the
                           President’s National Export Strategy in conjunction with the Trade
                           Promotion Coordinating Committee.” Commerce could make that goal
                           more results oriented by explicitly stating the outcome that is intended to
                           be achieved through the implementation of the President’s export strategy.
                           In another example, Commerce has a goal to set policies for managing the
                           federal use of the radio spectrum. Such efforts may be critically important
                           but do not directly relate to the result that is to be achieved. In a third
                           example, the goal to “restructure export controls for the twenty-first
                           century” could be made more results oriented by identifying the purpose
                           of the restructuring (for example, to increase export flexibility or,
                           alternatively, better protect national security).


Strategies for Achieving   Under the Act, strategic plans are to briefly describe the operational
Goals and Objectives       processes, staff skills, and technologies, as well as the human, capital,
                           information, and other resources, that are needed to achieve the goals and


                           2
                             Budget Issues: Fiscal Year 1996 Agency Spending by Budget Function (GAO/AIMD-97-95, May 13,
                           1997).



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                       objectives. According to OMB Circular No. A-11, Part 2, such strategies
                       should also outline how the agency will communicate strategic goals
                       throughout the organization and hold managers and staff accountable for
                       achieving these goals.

                       As one of its strengths, the Commerce draft plan links each of the
                       objectives of the general goals with a specific Commerce component and
                       the activities to be performed. For example, the draft plan links the
                       National Oceanic and Atmospheric Administration’s (NOAA) objective,
                       “examine the role of the ocean as a reservoir of both heat and carbon
                       dioxide to address a major source of uncertainty in climate models,” to the
                       goal “predict and assess decadal to centennial change.” Also, the goal to
                       “strengthen the intellectual property rights system and disseminate
                       intellectual information effectively” is linked to an objective for the Patent
                       and Trademark Office to “promote awareness of and provide effective
                       access to patent and trademark information.”

                       However, the draft plan does not identify how the strategic goals are to be
                       communicated throughout the organization and how managers and staff
                       will be held accountable for achieving the goals. Further, critical
                       information on the skills, technologies, and other resources required to
                       meet goals and objectives is not generally included. Such a discussion is
                       important because, in an era of fiscal constraint, an agency’s planning
                       processes should support an agency in making intelligent resource
                       allocation decisions that minimize, to the extent possible, the effect of
                       funding reductions on mission accomplishment.


Key External Factors   Strategic plans are to identify and discuss key factors external to the
                       agency and beyond its control that could occur during the period covered
                       by the strategic plan and could significantly affect the agency’s
                       achievement of its strategic goals. Without this assessment, it would be
                       difficult to judge the likelihood of the agency achieving the strategic goals
                       and actions needed to better meet those goals. According to OMB Circular
                       No. A-11, Part 2, the agency should briefly (1) describe each key external
                       factor, (2) indicate its link with a particular strategic goal or goals, and
                       (3) describe how the factor could affect achievement of the goals.

                       The Commerce draft plan identifies external factors and in some
                       cases—although not consistently—indicates the linkages between the
                       factors and particular strategic goals. Moreover, the discussions of
                       external factors often appear to be focused on justifying the need for the



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                        programs rather than on identifying factors that may impede the
                        Department’s ability to achieve its strategic goals. For example, in
                        discussing its goal to sustain healthy coasts and clean coastal waters for
                        recreation and the production of seafood, Commerce recognized the
                        threat posed by increasing populations living on coastlines: “by 2010,
                        coastal populations will increase 65 % from 80 million in 1960 to
                        132 million. . . . Without NOAA’s information and management capabilities,
                        careless or uninformed development decisions will lead to . . . losses of
                        habitats for commercial and recreational species, . . . and degraded coastal
                        water quality.” This seems to offer a justification for current NOAA
                        programs rather than providing insights into how the growth in coastal
                        populations will affect NOAA’s ability to achieve Commerce’s goal.

                        Also, in describing its goal to monitor and assess international research
                        and development and the barriers faced by U.S. industrial sectors,
                        Commerce’s draft plan discusses the “increasing recognition of the
                        important role technology plays in generating economic growth. . . .
                        Internationally, other nations are implementing science and technology
                        policies to develop cutting-edge domestic industries and attract the
                        engines of economic expansion to their shores.” The draft plan discusses
                        how technology policy has changed from a tool for management of
                        research budgets to an important complement to economic and trade
                        policy, but it does not discuss how other nations’ technology efforts may
                        affect Commerce’s economic development goals.

                        Finally, some major external factors that appear to threaten Commerce’s
                        ability to achieve its goals are not discussed. For example, regarding the
                        goal to improve national and local census data, the draft plan does not
                        mention congressional concerns about the Census Bureau’s plan for
                        conducting Census 2000.


Relationship Between    An agency’s strategic plan is to describe how the performance goals
Long-Term Goals and     included in the agency’s annual performance plans are related to the goals
Objectives and Annual   and objectives in its strategic plan. Such a discussion is important to show
                        that the agency is striving to link long-term strategic goals to annual
Performance Goals       performance plans and the day-to-day activities within the agency.
                        However, Commerce’s draft plan does not include the required discussion
                        of the relationship between long-term goals and the annual performance
                        goals. Instead, Commerce believes that “annual budget requests, which
                        can be more responsive to annual priorities and performance




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                      measures/targets, are the proper vehicle for that information to be
                      displayed and analyzed.”


Program Evaluations   Commerce’s draft plan does not discuss how program evaluations were
                      used to establish general goals and objectives, nor does the draft provide a
                      schedule for future program evaluations. Program evaluations are defined
                      in the Results Act as objective and formal assessment of the results,
                      impact, or effects of a program or policy. Program evaluations are to
                      include assessments of the implementation and results of programs,
                      operating policies, and practices. According to OMB Circular No. A-11, Part
                      2, the plan’s program evaluation section should briefly describe program
                      evaluations that were used in preparing the strategic plan and outline
                      (1) the general scope and methodology for the planned evaluations,
                      (2) key issues to be addressed, and (3) a schedule for future evaluations.
                      While Commerce’s draft plan includes limited references to a few studies
                      that have been done on specific Commerce programs, a fuller discussion
                      would be needed to meet the purposes of the Act in this area.

                      Program evaluations are particularly important for a department like
                      Commerce that shares functions with many other departments and
                      agencies. One of the purposes of the Results Act is to enable Congress to
                      direct resources to the programs and agencies that use them to the best
                      effect. We reported in 1996 on a study of the effectiveness of the
                      Department of Commerce’s Economic Development Administration (EDA)
                      programs. The study found that income in the counties that received EDA
                      funding grew significantly faster than income in the counties that received
                      no aid.3 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.




                      3
                      Economic Development: Limited Information Exists on the Impact of Assistance Provided by Three
                      Agencies (GAO/RCED-96-103, Apr. 3, 1996).



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                             The Commerce draft plan generally reflects the Department’s primary
Key Statutory                statutory responsibilities. Considering the panoply of programs,
Authorities Are              authorities, and components that fall under the aegis of the Department of
Generally Reflected in       Commerce, we recognize the challenge presented by the need to craft a
                             comprehensive mission statement that captures all of the Department’s
Commerce’s Draft             significant responsibilities and presents them in a coherent, integrated
Strategic Plan               fashion. Although the Results Act does not require a statement of the
                             Department’s major statutory responsibilities, the draft plan denotes a
                             separate section under each strategic theme to spell out statutory support
                             for the goals articulated. This information helps stakeholders understand
                             the complexity and diversity of Commerce’s activities. To Commerce’s
                             credit, few, if any, of the other draft strategic plans we have seen provide
                             this much detail.


                             Commerce’s shared responsibilities include, for example,
Crosscutting
Activities Are Not       •   natural resources and environment with the Departments of Agriculture,
Fully Discussed              Defense, the Interior, State, and Transportation; the Environmental
                             Protection Agency; and 3 independent agencies;
                         •   commerce and housing credit with the Departments of Agriculture,
                             Housing and Urban Development, and Treasury; the General Services
                             Administration (GSA), the Small Business Administration (SBA), the Library
                             of Congress, and 10 independent agencies;
                         •   community and regional development with the Departments of
                             Agriculture, Housing and Urban Development, the Interior, and Treasury;
                             GSA; SBA; and 6 independent agencies; and
                         •   education, training, employment, and social services with the Departments
                             of Education, Health and Human Services, the Interior, and Labor;
                             National Aeronautics and Space Administration; the Library of Congress;
                             and 20 independent agencies.

                             Commerce’s draft strategic plan could do a better job of addressing
                             crosscutting program activities. The draft plan describes, in very general
                             terms, some of the existing “partnerships” and “synergy” between
                             Commerce agencies and various public and private entities. However, the
                             draft plan does not (1) adequately identify crosscutting activities in key
                             areas, (2) fully disclose Commerce’s coordination with the other federal
                             departments and agencies that share responsibility for these areas, or
                             (3) address Commerce’s progress in minimizing duplication or overlap in
                             these areas generated by such shared responsibilities. More specifically,
                             despite the potential for program duplication or overlap, the draft plan



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    does not discuss how crosscutting program efforts correspond to or
    intersect with Commerce’s established strategic themes, goals, and
    objectives. For example:

•   In the technology area, Commerce’s draft plan acknowledges some
    potential overlap in radio spectrum and international telecommunications
    activities but not in the access to and use of advanced
    telecommunications. Specifically, the National Telecommunications and
    Information Administration (NTIA) is responsible for, among other things,
    managing federal government use of radio spectrum; and the Federal
    Communications Commission is responsible for managing spectrum use
    by others. However, the draft plan does not discuss the crosscutting
    nature of NTIA’s efforts to promote the use of advanced
    telecommunications, which is similar to the responsibilities of several
    other agencies. For example, NTIA operates a grant program to promote the
    use of advanced telecommunications in the public and nonprofit sectors,
    and a number of other federal agencies support telecommunications
    projects for similar constituencies. These agencies include the
    Departments of Agriculture, Education, and Health and Human Services,
    as well as the National Science Foundation.4
•   Commerce has a lead role in promoting U.S. exports. Several other federal
    agencies, including the Departments of Agriculture and Energy, the Trade
    Development Agency, and the U.S. Export-Import Bank, also have
    programs directed at promoting U.S. exports. The draft plan states that the
    export promotion efforts of these agencies are coordinated under the
    auspices of the Trade Promotion Coordinating Committee (TPCC), an
    interagency mechanism chaired by the Secretary of Commerce. However,
    the draft plan does not include a substantive discussion of how the
    International Trade Administration’s (ITA) role in export promotion differs
    from the roles of these other agencies. The draft plan also does not discuss
    efforts on the part of these agencies to coordinate joint activities, such as
    trade missions and trade fairs. Further, the draft plan does not address
    how Commerce will further TPCC’s efforts to develop a unified budget that
    supports a governmentwide export promotion strategy.5 As we have
    testified in the past, one obvious measure of the success of the unified
    budget process would be the extent to which the unified budget changes




    4
     See, for example, Rural Development: Steps Towards Realizing the Potential of Telecommunications
    Technologies (GAO/RCED-96-155, June 14, 1996).
    5
     The 1992 Export Enhancement Act required that TPCC establish a governmentwide strategy for
    promoting U.S. exports and a unified budget that supports the strategic plan.



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                          the distribution of resources to the various priorities, programs, and
                          agencies.6
                      •   The Commerce draft plan also does not acknowledge the export licensing
                          consultative responsibilities of other federal agencies. In addition, the
                          draft plan does not indicate how Commerce’s emphasis on restructuring
                          export controls to promote economic growth complements or contrasts
                          with the strong emphasis of two other organizations responsible for
                          licensing exports overseas on safeguarding against proliferation of
                          dual-use technology.7


                          Although the draft plan contains a section on current trends,
Commerce’s Draft          opportunities, challenges, and issues under each of the three strategic
Strategic Plan Does       themes, it does not adequately address major management challenges
Not Adequately            facing the Department. We and Commerce’s IG have reported in recent
                          years that Commerce faces numerous serious management challenges.
Address Major             Commerce could improve its draft plan by including an explicit discussion
Management                of such challenges. Such a discussion would help to assure Congress and
                          other key stakeholders that Commerce has a clear roadmap for addressing
Challenges                the serious management weaknesses that can undermine its ability to
                          achieve the Department’s strategic goals.

                          We recently worked with the Commerce IG to provide the Senate
                          Committee on Science, Transportation and Commerce with a joint
                          analysis of the 10 major management challenges facing the Department. Of
                          the 10 problem areas, Commerce’s draft strategic plan only mentions 4,
                          but it does not discuss how the problems will be addressed. The following
                          are among the management challenges that do not receive sufficient
                          attention in the draft plan.

                      •   The National Institute of Standards and Technology’s (NIST) Capital
                          Improvements Facilities Program to upgrade NIST’s laboratories has
                          escalated in cost from $540 million to at least $940 million and will take at
                          least 4 years longer than originally projected.
                      •   Along with Congress, OMB, Commerce’s IG, and others, we have repeatedly
                          urged NOAA to explore alternatives to using an agency-designed, -owned,
                          and -operated fleet for acquiring marine data. The IG recommended that

                          6
                            See Export Promotion: Initial Assessment of Governmentwide Strategic Plan (GAO/T-GGD-93-48,
                          Sept. 29, 1993). See also Export Promotion: Governmentwide Plan Contributes to Improvements
                          (GAO/T-GGD-94-35, Oct. 26, 1993); and Export Promotion Strategic Plan: Will It Be a Vehicle for
                          Change? (GAO/T-GGD-93-43, July 26, 1993).
                          7
                          These two organizations are the State Department’s Office of Defense Trade Controls and the U.S.
                          Nuclear Regulatory Commission.



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                            NOAA  terminate its fleet modernization plan efforts. However, NOAA
                            continues to plan on investing millions of dollars in its aging in-house fleet,
                            rather than using those funds for more cost-effective alternatives.
                        •   With the year 2000 fast approaching, the Census Bureau’s ability to design
                            and manage a satisfactory decennial census on time and at a reasonable
                            cost is in question. The Commerce Department has failed to convince
                            Congress that it can equitably and efficiently manage its proposed census
                            design. Consequently, this year we added the census to GAO’s
                            governmentwide list of high-risk programs.8
                        •   We have issued numerous reports on problems with information
                            technology modernization at the National Weather Service (NWS) and have
                            included this area among our 25 high-risk areas in our February 1997
                            report. We consider NWS modernization to be high risk because of its
                            estimated $4.5 billion cost, its complexity, its criticality to NWS’ mission of
                            helping to protect life and property through early forecasting and warnings
                            of potentially dangerous weather, and its past problems.9

                            In addition to helping address risks associated with the NWS
                            modernization, the Paperwork Reduction Act of 1995 and the
                            Clinger-Cohen Act of 1996 direct agencies to implement a framework of
                            modern technology management based on practices followed by leading
                            private sector and public sector organizations that have successfully used
                            technology to dramatically improve performance and meet strategic goals.
                            Yet, it is not clear from Commerce’s draft plan how it intends to implement
                            these provisions and address any significant information security
                            weaknesses or the “year 2000 problem”—which concerns the need for
                            computer systems to be changed to accommodate dates beyond 1999.


                            To efficiently and effectively operate, manage, and oversee its diverse
Commerce’s Capacity         array of responsibilities, Commerce needs reliable data. Commerce relies
to Provide Reliable         on a number of automated management information systems to carry out
Information on              its various roles. In its fiscal year 1996 Federal Managers’ Financial
                            Integrity Act Report, Commerce reported that it is not in compliance with
Achievement of              central agency requirements for a single, integrated financial system. In
Strategic and Program       addition, Commerce reported that its financial systems are considered a
                            material weakness, as these systems are seriously outdated and
Performance Is              fragmented; unable to provide timely, complete, and reliable financial
Questionable                information; inadequately controlled; and costly and difficult to maintain.


                            8
                             High-Risk Series: Quick Reference Guide (GAO/HR-97-2, February 1997).
                            9
                             High-Risk Series: Information Management and Technology (GAO/HR-97-9, February 1997).



                            Page 14                                    GAO/GGD-97-152R Commerce’s Draft Strategic Plan
                     B-277427




                     In the report on the audit of Commerce’s fiscal year 1996 Consolidating
                     Financial Statements, the IG identified 11 material weaknesses in the
                     internal control structures of the Department and its bureaus. Because of
                     the material deficiencies in accounting policies, practices, internal
                     controls, data, and automated systems, Commerce’s IG was unable to
                     determine whether the fiscal year 1996 financial statements fairly
                     presented the Department’s financial position and the results of operations
                     and changes in its net position for fiscal year 1996.

                     In addition, the IG reported that many portions of the overview of
                     Commerce’s financial statement contained misleading or inaccurate
                     information. Several weaknesses pertaining to performance measures in
                     the overview were noted, including: (1) many performance measures were
                     not directly relevant to the components’ activities, (2) the performance
                     measures did not consistently portray a clear picture of the outcomes of
                     activities, and (3) the performance measures often did not include
                     benchmarks to allow the reader to compare statistics and evaluate the
                     results that the components achieved. The IG further noted that the
                     Department needs to take the necessary corrective actions to ensure that
                     its overview and financial statements properly reflect its operations.

                     To support the Results Act implementation and to ensure that the
                     Department is complying with federal cost-accounting system standards,
                     Commerce will need to relate costs to financial and program performance
                     data. Key requirements of the Chief Financial Officers Act are the
                     development of cost information to enable the systematic measurement of
                     performance and the integrations of systems (meaning program,
                     accounting, and budget systems).


                     We provided a copy of a draft of this letter to the Secretary of Commerce
Agency Comments      for review and comment. On July 14, 1997, the Director for Budget,
and Our Evaluation   Management and Information/Deputy Chief Information Officer provided
                     us with comments. He agreed with our observations as discussed below
                     and said that he found our suggestions constructive.

                     The Director said that he and his staff have seen a number of other
                     agencies’ plans and did not consider them to be as extensive as
                     Commerce’s. However, he agreed that Commerce’s draft plan does not
                     include the required discussion of the relationship between long-term
                     goals and the annual performance goals. He said this relationship is not
                     discussed because Commerce looks to the annual performance plan as the



                     Page 15                          GAO/GGD-97-152R Commerce’s Draft Strategic Plan
B-277427




appropriate vehicle for stressing that relationship but suggested that the
point may warrant further discussion between agencies, OMB, and
Congress. We believe that without this relationship, Congress, the agency,
and other stakeholders may not be able to assess progress toward
achieving long-term goals.

The Director also agreed that Commerce’s draft plan could do a better job
of addressing crosscutting program activities. He said that to date, most
agencies have devoted priority efforts to getting their internal strategic
planning activities underway effectively, and are only then able to begin
reaching out to other agencies with complementary programs or goals.

Regarding our statement that the draft Commerce plan does not
adequately account for its major management challenges, he said that
earlier drafts of the Commerce plan had a specific chapter on management
issues. Instead of retaining this chapter, Commerce chose to discuss the
importance of effective management in the conceptual framework
underlying its planning approach. It is Commerce’s view that management
initiatives should be undertaken in support of program missions, rather
than being viewed or conducted as “standalone” activities but they will
consider replacing that chapter.

We agree that management initiatives should be undertaken in support of
program missions, rather than being viewed or conducted as “standalone”
activities. A fuller discussion than the draft plan contains about the most
pressing management issues confronting the Department and how they
will be addressed is critical to providing Congress with assurance that
Commerce is positioned to meet its program missions, and we encourage
Commerce to integrate that perspective into its discussion, whether or not
it uses a separate chapter to do so.

Finally, the Director agreed that Commerce did not fully address the role
of program evaluation activities in setting goals and objectives and said
they will add a greater discussion of that in their next draft. Similarly, he
agreed that some of the goals and objectives were not as results-oriented
as they could be and said they will make changes where appropriate.


As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this letter until 30 days from its
issue date. At that time, we will send copies of this letter to the Minority
Leader of the House of Representatives; Ranking Minority Members of



Page 16                            GAO/GGD-97-152R Commerce’s Draft Strategic Plan
B-277427




your Committees; the Chairmen and Ranking Minority Members of other
Committees that have jurisdiction over Commerce activities; the Secretary
of Commerce; and the Director, Office of Management and Budget. Copies
will be made available to others on request.

Please contact me on (202) 512-8676 or J. Christopher Mihm, Acting
Associate Director, Federal Management and Workforce Issues, on
(202) 512-3236 if you or your staffs have any questions concerning this
letter.




L. Nye Stevens
Director, Federal Management and
   Workforce Issues




Page 17                          GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Page 18   GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Page 19   GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Page 20   GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Related GAO Products


              High-Risk Program: Information on Selected High-Risk Areas (GAO/HR-97-30,
              May 16, 1997).

              Federal Management: Addressing Management Problems at the
              Department of Commerce (GAO/T-GGD/AIMD-97-115, May 14, 1997).

              Budget Issues: Fiscal Year 1996 Agency Spending by Budget Function
              (GAO/AIMD-97-95, May 13, 1997).

              Statistical Agencies: Consolidation and Quality Issues (GAO/T-GGD-97-78,
              Apr. 9, 1997).

              High-Risk Series: Information Management and Technology (GAO/HR-97-9,
              February 1997).

              High-Risk Series: Quick Reference Guide (GAO/HR-97-2, February 1997).

              Foreign Affairs: Perspectives on Foreign Affairs Programs and Structures
              (GAO/NSIAD-97-6, Nov. 8, 1996).

              Statistical Agencies: Statutory Requirements Affecting Government
              Policies and Programs (GAO/GGD-96-106, July 17, 1996).

              Managing For Results: Key Steps and Challenges In Implementing GPRA In
              Science Agencies (GAO/T-GGD/RCED-96-214, July 10, 1996).

              Federal Statistics: Principal Statistical Agencies’ Missions and Funding
              (GAO/GGD-96-107, July 1, 1996).

              Addressing the Deficit: Updating the Budgetary Implications of Selected
              GAOWork (GAO/OCG-96-5, June 28, 1996).

              Rural Development: Steps Towards Realizing the Potential of
              Telecommunications Technologies (GAO/RCED-96-155, June 14, 1996).

              Weather Forecasting: Recommendations to Address New Weather
              Processing System Development Risks (GAO/AIMD-96-74, May 13, 1996).

              Economic Development: Limited Information Exists on the Impact of
              Assistance Provided by Three Agencies (GAO/RCED-96-103, Apr. 3, 1996).

              National Export Strategy (GAO/NSIAD-96-132R, Mar. 26, 1996).



              Page 21                           GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Related GAO Products




Government Statistics: Proposal to Form a Federal Statistical Service
(GAO/T-GGD-96-93, Mar. 22, 1996).

Weather Forecasting: NWS Has Not Demonstrated That New Processing
System Will Improve Mission Effectiveness (GAO/AIMD-96-29, Feb. 29, 1996).

Federal R&D Laboratories (GAO/RCED/NSIAD-96-78R, Feb. 29, 1996).

Former Soviet Union: Information on U.S. Bilateral Program Funding
(GAO/NSIAD-96-37, Dec. 15, 1995).

Community Development: Comprehensive Approaches and Local
Flexibility Issues (GAO/T-RCED-96-53, Dec. 5, 1995).

Decennial Census: Fundamental Design Decisions Merit Congressional
Attention (GAO/T-GGD-96-37, Oct. 25, 1995).

Commerce Dismantlement: Observations on Proposed Implementation
Mechanism (GAO/T-GGD-95-233, Sept. 6, 1995).

Community Development: Challenges Face Comprehensive Approaches to
Address Needs of Distressed Neighborhoods (GAO/T-RCED-95-262, Aug. 3,
1995).

Economic Development Programs (GAO/RCED-95-251R, July 28, 1995).

Government Reorganization: Observations on the Department of
Commerce (GAO/T-GGD/RCED/AIMD-95-248, July 25, 1995).

Government Reorganization: Issues Relating to International Trade
Responsibilities (GAO/T-GGD-95-218, July 25, 1995).

Government Restructuring: Identifying Potential Duplication in Federal
Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995).

Weather Forecasting: Radar Availability Requirements Not Being Met
(GAO/AIMD-95-132, May 31, 1995).

Export Promotion: Rationales for and Against Government Programs and
Expenditures (GAO/T-GGD-95-169, May 23, 1995).




Page 22                          GAO/GGD-97-152R Commerce’s Draft Strategic Plan
Related GAO Products




Weather Forecasting: Unmet Needs and Unknown Costs Warrant
Reassessment of Observing System Plans (GAO/AIMD-95-81, Apr. 21, 1995).

Rural Development: Patchwork of Federal Water and Sewer Programs Is
Difficult to Use (GAO/RCED-95-160BR, Apr. 13, 1995).

Department Of Education: Information on Consolidation Opportunities
and Student Aid (GAO/T-HEHS-95-130, Apr. 6, 1995).

Multiple Employment Training Programs: Information Crosswalk on 163
Employment Training Programs (GAO/HEHS-95-85FS, Feb. 14, 1995).

Weather Forecasting: Improvements Needed in Laboratory Software
Development Processes (GAO/AIMD-95-24, Dec. 14, 1994).

Management Reform: Implementation of the National Performance
Review’s Recommendations (GAO/OCG-95-1, Dec. 5, 1994).

High Performance Computing and Communications; New Program
Direction Would Benefit From a More Focused Effort (GAO/AIMD-95-6,
Nov. 4, 1994).

Decennial Census: 1995 Census Test Presents Opportunities to Evaluate
New Census-Taking Methods (GAO/T-GGD-94-136, Sept. 27, 1994).

Food Safety: Changes Needed to Minimize Unsafe Chemicals in Food
(GAO/RCED-94-192, Sept. 26, 1994).

International Trade: Coordination of U.S. Export Promotion Activities in
Pacific Rim Countries (GAO/GGD-94-192, Aug. 29, 1994).

Rural Development: Patchwork of Federal Programs Needs to Be
Reappraised (GAO/RCED-94-165, July 28, 1994).

Weather Forecasting: Systems Architecture Needed for National Weather
Service Modernization (GAO/AIMD-94-28, Mar. 11, 1994).

Decennial Census: Promising Proposals, Some Progress, but Challenges
Remain (GAO/T-GGD-94-80, Jan. 26, 1994).

Export Promotion: Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct. 26, 1993).



Page 23                         GAO/GGD-97-152R Commerce’s Draft Strategic Plan
           Related GAO Products




           Decennial Census: Test Design Proposals Are Promising, but Fundamental
           Reform Is Still at Risk (GAO/T-GGD-94-12, Oct. 7, 1993).

           Export Promotion: Initial Assessment of Governmentwide Strategic Plan
           (GAO/T-GGD-93-48, Sept. 29, 1993).

           Export Promotion Strategic Plan: Will it Be a Vehicle for Change?
           (GAO/T-GGD-93-43, July 26, 1993).

           Exchange Programs: Inventory of International Educational, Cultural, and
           Training Programs (GAO/NSIAD-93-157BR, June 23, 1993).

           Decennial Census: Focused Action Needed Soon to Achieve Fundamental
           Breakthroughs (GAO/T-GGD-93-32, May 27, 1993).

           Export Promotion: Improving Small Businesses’ Access to Federal
           Programs (GAO/T-GGD-93-22, Apr. 28, 1993).

           Export Promotion: Governmentwide Strategy Needed for Federal
           Programs (GAO/T-GGD-93-7, Mar. 15, 1993).

           Commerce Issues (GAO/OCG-93-12TR, Dec. 1992).

           Export Promotion: Federal Approach Is Fragmented (GAO/T-GGD-92-68,
           Aug. 10, 1992).

           Decennial Census: 1990 Results Show Need for Fundamental Reform
           (GAO/GGD-92-94, June 9, 1992).

           Export Promotion: Overall U.S. Strategy Needed (GAO/T-GGD-92-40, May 20,
           1992).

           Export Promotion: U.S. Programs Lack Coherence (GAO/T-GGD-92-19, Mar. 4,
           1992).

           Export Promotion: Federal Programs Lack Organizational and Funding
           Cohesiveness (GAO/NSIAD-92-49, Jan. 10, 1992).




(410159)   Page 24                         GAO/GGD-97-152R Commerce’s Draft Strategic Plan
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