oversight

The Results Act: Observations on the Office of Management and Budget's July 1997 Draft Strategic Plan

Published by the Government Accountability Office on 1997-08-21.

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

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

      Accounting and Information
      Management Division

      B-277789

      August 21, 1997

      The Honorable Richard K. Armey
      Majority Leader
      House of Representatives

      The Honorable John R. 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 the Office of Management and
      Budget’s July 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 the 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 Office of Management and Budget
      (OMB).

      In reviewing OMB’s draft plan, it is important to recognize that the agency
      has two distinct but parallel roles. OMB supports the President by preparing
      the President’s budget, coordinating the President’s legislative agenda, and
      providing policy analysis and advice. This role poses certain challenges in
      designing measurable, results-oriented goals and specific performance
      measures. Many statutes have also assigned to OMB a leadership role for a
      variety of governmentwide responsibilities in areas such as financial,
      information resources, and general management as well as regulatory and
      procurement policy. For example, OMB is responsible for overseeing
      implementation of the Results Act, and its guidance forms an essential part




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                     of the criteria against which we have evaluated its and other agencies’
                     draft strategic plans.


                     Specifically, you asked us to review OMB’s draft plan and assess
Objectives, Scope,   (1) whether it would fulfill the requirements of the Results Act and its
and Methodology      overall quality, (2) whether it reflects OMB’s key statutory authorities,
                     (3) whether it reflects interagency coordination for crosscutting programs,
                     activities, or functions that are similar to or complementary with those of
                     other federal agencies, (4) whether it addresses management problems
                     that we have previously identified, and (5) the adequacy of OMB’s data and
                     information systems for providing reliable information for measuring
                     results.

                     OMB  prepared a draft strategic plan based on Results Act requirements, and
                     we analyzed the version of the plan that OMB provided to congressional
                     committees on July 23, 1997. Our overall assessment of this plan was
                     based on our knowledge of OMB’s operations and programs, our past
                     reviews of OMB, and other existing information available at the time of our
                     assessment. The criteria we used to determine whether OMB’s draft
                     strategic plan would comply with the requirements of the Results Act were
                     the act itself, supplemented by OMB’s guidance to agencies on developing
                     strategic plans (Circular A-11, Part 2, Preparation and Submission of
                     Strategic Plans and Annual Performance Plans). To make judgments about
                     the overall quality of the draft plan and its components, we used our
                     May 1997 guidance for congressional review of the plans as a tool.1 As
                     requested, in determining whether OMB’s draft strategic plan reflects its
                     major statutory responsibilities, we coordinated our review with the
                     Congressional Research Service. To determine whether the draft plan
                     contained information on interagency coordination and addressed
                     management problems that we previously identified, we relied on our
                     general knowledge of OMB’s operations and programs and the results of
                     our previous work. Our work was performed in July and August 1997. We
                     obtained comments on a draft of this letter from OMB. These comments are
                     discussed in the “Agency Comments” section and are reprinted in
                     enclosure I.

                     It is important to recognize that OMB’s final plan is not due to the Congress
                     until September 30, 1997. Furthermore, the Results Act anticipated that it
                     may take several planning cycles to perfect the process and that the final

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



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             plan would be continually refined as future planning cycles occur. Thus,
             our findings reflect a snapshot status of the plan at this time. We recognize
             that developing a strategic plan is a dynamic process and that OMB is
             continuing to revise this draft with input from congressional staff and
             other stakeholders.


             As a staff office to the President, OMB develops and executes the federal
Background   budget, oversees implementation of the President’s policies and programs,
             and advises and assists the President. It also develops and oversees
             implementation of various governmentwide legislative and administrative
             initiatives. OMB was established under presidential reorganization authority
             in 1970, in part to increase the attention given to management issues in the
             federal government. In fiscal year 1996, OMB obligated $56 million and
             employed over 500 staff.

             OMB plays a key role in both the presidential and congressional budget
             processes. In addition to preparing and submitting the President’s budget
             to the Congress, it monitors the congressional budget process to assess
             how congressional budget decisions address presidential policies. Once
             the Congress appropriates funds, OMB oversees the execution of budget
             authority to ensure compliance with applicable laws and presidential
             policies. The Budget Enforcement Act of 1990, moreover, gives OMB
             authority to enforce enacted spending ceilings and constraints.

             OMB also is responsible for ensuring the implementation of a number of
             statutory management policies and initiatives. Most importantly, it is the
             cornerstone agency for overseeing a framework of recently enacted
             financial, information resources, and performance management reforms
             designed to improve the effectiveness and responsiveness of federal
             agencies. The Chief Financial Officers (CFO) Act of 1990 established CFOs in
             24 major agencies to provide financial leadership and mandated significant
             reforms, which include increasing the accuracy of financial information,
             modernizing underlying systems, developing reliable cost and
             performance data, integrating budget and accounting information, and
             upgrading the quality of financial management personnel. The CFO Act also
             requires OMB to provide an annual report on progress made in achieving
             the act’s objectives. Additionally, the act established a Controller in OMB to
             head an Office of Federal Financial Management as well as a Deputy
             Director for Management within OMB to be the government’s key official
             for financial management. Later, the Government Management Reform Act
             of 1994 expanded the CFO requirements by charging OMB with (1) providing



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guidance for the annual preparation of financial statements by the 24
major federal agencies and (2) coordinating with the Secretary of the
Treasury in the preparation of audited governmentwide financial
statements.

The original Paperwork Reduction Act (PRA) of 1980, as well as the recent
1995 reauthorization, requires the Director of OMB to oversee the use of
information resources to improve the efficiency and effectiveness of
government operations. Specifically, the 1995 act requires the Director, in
consultation with agency heads, to set annual goals for reducing
information collection burdens imposed on the public and for improving
agencies’ use of information resources to increase the productivity,
efficiency, and effectiveness of their programs. The Director is also to
report to the Congress each year on how well agencies have achieved their
goals. The Clinger-Cohen Act of 1996 builds on the PRA by making the
Director of OMB responsible for improving the acquisition and use of
information technology by federal agencies and for developing, as part of
the budget process, a process for OMB to use in analyzing, tracking, and
evaluating the risks and results of all major capital investments for agency
information systems.

Under the Results Act, OMB is charged with overseeing and guiding
agencies’ strategic and annual performance planning and reporting and is
responsible for preparing an annual governmentwide performance plan
that presents a single cohesive picture of federal performance goals. The
act also required OMB to designate pilot projects on performance
measurement, managerial accountability and flexibility, and performance
budgeting and prepare a summary on the results of the pilot projects.

OMB has responsibilities for other management policies as well. The
Federal Acquisition Streamlining Act, for instance, requires that executive
agency heads set cost, performance, and schedule goals for major
acquisition programs and that OMB report to the Congress on agencies’
progress in meeting these goals. Under the PRA, the Director of OMB is
assigned several responsibilities related to federal information collection
and dissemination, including reviewing and approving proposed agency
collections of information and developing and overseeing the
implementation of governmentwide policies on statistical data.

In addition to its statutory management responsibilities, OMB is also
responsible for implementing presidential initiatives set forth in executive
orders and directives. For example, Executive Order 12866 directs OMB to



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                   coordinate the review of agencies’ rules and regulations to ensure that
                   they impose the least burden, are consistent between agencies, focus on
                   results over process, and are based on sound cost/benefit analysis. Since
                   1967, OMB has been responsible, through its Circular A-76, for carrying out
                   executive branch policy to rely on competition between the federal
                   workforce and the private sector for providing commercial goods and
                   services.

                   OMB faces perennial challenges in carrying out these management
                   responsibilities in an environment where its budgetary role necessarily
                   remains a vital and demanding part of its mission. At one time, its
                   management functions were carried out largely by separate staff units. In
                   1994, OMB undertook a major reorganization and process change, known as
                   OMB 2000, intended to integrate OMB’s budget analysis, management review,
                   and policy development roles. OMB 2000 created resource management
                   offices (RMOs) that are assigned integrated responsibilities for examining
                   agency management, budget, and policy issues and overseeing agency
                   implementation. The RMOs are supported by three statutory offices that
                   are responsible for developing governmentwide management policies: the
                   Office of Federal Financial Management, the Office of Federal
                   Procurement Policy, and the Office of Information and Regulatory Affairs.

                   Under the Results Act, executive agencies are required to develop
                   (1) strategic plans covering a period of at least 5 years by September 30,
                   1997, (2) annual performance plans for fiscal year 1999 and beyond, and
                   (3) annual performance reports, with the first report due by March 31,
                   2000. Each strategic plan is to include six elements: (1) a comprehensive
                   agency mission statement, (2) long-term goals and objectives for the major
                   functions and operations of the agency, (3) approaches or strategies to
                   achieve goals and objectives and the various resources needed to do so,
                   (4) the relationship between long-term goals/objectives and annual
                   performance goals, (5) an identification of key external factors beyond
                   agency control that could significantly affect achievement of strategic
                   goals, and (6) a description of how program evaluations were used to
                   establish or revise strategic goals and a schedule for future program
                   evaluations.


                   OMB’s strategic plan provides a beginning framework to articulate how OMB
Results in Brief   proposes to meet the wide range of presidential, congressional, and
                   federal agency expectations for its leadership on federal budget and
                   management issues. The plan includes four of the elements required by the



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Results Act—a mission statement, long-term goals and objectives,
strategies to achieve the goals and objectives, and key external
factors—but these elements could be enhanced to better reflect the
purposes of the Results Act and to permit an assessment of OMB’s
contribution to the many objectives the agency serves. For instance, while
defining specific results for OMB’s role as presidential advisor is
challenging, a more explicit definition of expected results and
accomplishments for many of OMB’s objectives could better highlight its
priorities and goals, particularly for governmentwide management
responsibilities. Similarly, the draft plan could be strengthened by more
explicitly describing how goals are to be achieved, in many cases drawing
on strategies OMB has articulated in other documents. For example, the
Congress and the President might be better able to determine OMB’s ability
to meet its objective of ensuring clean audit opinions on financial
statements if specific actions to achieve this objective, such as those in
OMB’s federal financial management status report and 5-year plan, were
identified.

Achieving many of the objectives in the draft plan will require attention to
several critical crosscutting and organizational issues. Strategies for
addressing governmentwide management issues, such as computer
security, agencies’ Year 2000 programs to change computer systems to
accommodate dates beyond 1999, and reorientation of the regulatory
process toward achievement of results, are not fully discussed in the draft
plan. Addressing crosscutting goals depends heavily on collaboration
between affected federal agencies, and the draft plan could more explicitly
define OMB’s strategies for promoting such interagency coordination. The
draft plan also does not discuss how OMB will use evaluations to develop
and assess progress toward its own goals or how it will use and encourage
agencies’ program evaluations to help make more informed budget and
management choices. Moreover, the draft plan does not describe how OMB
will ensure that it has the organizational capacity to provide the
multidisciplinary leadership needed to address critical budget and
management issues. It is important that OMB continue its ongoing efforts to
refine its draft strategic plan to provide a road map for achieving its own
objectives and a model for other agencies to follow as they develop their
own strategic plans.




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                        OMB’s draft plan includes elements addressing its mission, goals and
OMB’s Draft Strategic   objectives, strategies, and key external factors affecting its goals, but
Plan Includes Four of   enhancements could help make the plan more useful in guiding OMB and
Six Required            serving as a basis for assessing the agency’s performance. For example,
                        more explicit discussions of the expected results and accomplishments for
Elements, but           many of OMB’s objectives could better highlight its strategies and priorities
Enhancements Could      as well as permit a more informed analysis of the agency’s contributions to
                        public budgeting and management. The plan does not meet Results Act
Be Made                 requirements for two elements required under the Results Act: (1) the
                        relationship between the long-term and annual performance goals and
                        (2) the use of program evaluation in developing goals.


Mission Statement       The Results Act requires that each strategic plan contain a comprehensive
                        mission statement covering the major functions and operations of the
                        agency. According to OMB Circular A-11, Part 2, the statement should
                        define the basic purpose of the agency, with a particular focus on its core
                        programs and activities. The guidance also notes that the mission
                        statement may include a concise discussion of enabling or authorizing
                        legislation.

                        OMB’s mission statement begins with a description of its role—“to help the
                        President in carrying out his constitutional and statutory duties.” The
                        statement then lists the agency’s principal functions—policy-making,
                        overseeing execution of laws, and advising the President—and ends with
                        the statement, “Simply put, OMB helps to create policy and manage
                        execution, and provides analysis and advice.” Throughout this mission
                        statement, there is no reference to broader results that OMB seeks to
                        achieve or has been directed to achieve through legislation or presidential
                        decision. Specifically, the plan would be more useful if OMB explicitly
                        stated the linkage between what it does and what it wants to achieve.

                        Because hundreds of statutory authorities and executive orders have
                        assigned various responsibilities to OMB, the draft plan’s mission statement
                        is broad and general in its discussion of OMB’s purpose. OMB could consider
                        providing additional specificity to its mission statement as the plan is
                        further revised by, for example, discussing the major results expected
                        from key governmentwide management statutes. The breadth of OMB’s
                        mission makes it especially important that OMB develop well-defined and
                        results-oriented goals and objectives that address OMB’s roles in both
                        serving the President and overseeing the implementation of statutory
                        governmentwide management policies.



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Long-Term Goals and   Under the Results Act, a strategic plan is to list general goals and
Objectives            objectives, including outcome-related goals and objectives, for the major
                      functions and operations of the agency. OMB’s guidance states that the plan
                      should contain long-term programmatic, policy, and management goals for
                      the agency and outline planned accomplishments and the schedule for
                      their implementation. The guidance further provides that goals and
                      objectives, even if not quantifiable, should be stated in a manner that will
                      allow a future assessment of whether the goals were or are being
                      achieved.

                      Developing results-oriented goals for OMB will be challenging but critical.
                      Many of OMB’s responsibilities involve coordinating or facilitating the work
                      of others to achieve an end. Although OMB may not control an outcome, its
                      actions will, and are expected to, influence the results. Similarly, some of
                      OMB’s activities, such as developing the President’s budget or coordinating
                      the administration’s legislative program, present challenges for defining
                      quantifiable performance measures and implementation schedules.
                      Following the guidance in Circular A-11, the plan’s goals need not all be
                      quantitative, but they should be expressed in a manner permitting
                      subsequent assessment.

                      OMB’s draft plan sets four goals: (1) assist the President in creating policies
                      that allocate resources within the federal government, and establish
                      legislative and regulatory programs to achieve fiscal, economic, and
                      investment goals in a cost-effective manner, (2) ensure the faithful
                      execution of the enacted budget, programs, regulations, and policies,
                      (3) assist the President by providing analysis and advice on other
                      significant issues, and (4) improve OMB’s development and use of its
                      human resources and enhance its means of accomplishing work. Each
                      goal is supported by three or more objectives.

                      Some of OMB’s goals and objectives articulate explicit results and can be
                      evaluated to determine if they have been achieved. For example, one
                      objective is to achieve and sustain the agreement to balance the budget by
                      2002. OMB also commits to assuring reliable financial information capable
                      of generating clean audit opinions on financial statements.

                      Other objectives, such as assisting the President in developing the budget
                      and legislative agenda, could be stated in a more results-oriented manner.
                      OMB has objectives espoused outside this strategic plan that could guide
                      budget preparation. For example, a stated goal of OMB 2000 was to
                      integrate the review of management issues in the budget process—a goal



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that is amenable to assessment, as suggested by our 1995 report.2 Further
specification of the draft plan’s budget preparation goal could include the
use of financial statement data in budget reviews where appropriate and
the use of investment criteria when reviewing information technology
projects—both objectives OMB has articulated in other published
documents.3 Another potential budget preparation activity that could be
included in a strategic plan involves the analyses OMB conducts for the
Analytical Perspectives volume of the President’s budget covering such
areas as public investment, credit programs, tax expenditures, and the
long-term outlook for the budget and the economy; OMB could articulate
the kinds of issues that will become the focus of future analyses. OMB’s
responsibility for overseeing the implementation of accrual-based
estimates under the Federal Credit Reform Act of 1990 could also be
presented as a strategic activity with significant implications for the
budget estimation function.

The plan does state several other objectives with a bearing on budget
preparation and review, including providing for capital planning and
addressing programs with similar goals spanning multiple agencies. For
capital planning, no specific accomplishments or schedules are articulated
in the plan. In guidance to agencies, however, OMB has developed an
extensive set of criteria for the development and review of agency capital
plans and has articulated a potentially measurable standard of up-front
funding for capital items.4 With regard to multiple programs, the objective
is not sufficiently specified to indicate which areas OMB plans to address or
what criteria it has in mind for improving overall program effectiveness.

Identifying results-oriented goals and objectives and needed
accomplishments is especially important to determine whether OMB’s
statutory management mandates are being achieved. For example, OMB
reflects its specific statutory responsibilities for overseeing the use of
information resources to improve the efficiency and effectiveness of
government operations in a single objective to “obtain agency solutions to
identified mission-critical problems including the effective and efficient
use of information and information technology by agencies to support
their mission.” This objective could be strengthened if it briefly described
related problems or issues and relevant statutory authorities as well as a
concise schedule and accomplishments needed to fulfill OMB’s statutory

2
 Office of Management and Budget: Changes Resulting From the OMB 2000 Reorganization
(GAO/GGD/AIMD-96-50, December 29, 1995).
3
 See, for example, the OMB documents Evaluating Information Technology Investments (November
1995) and Federal Financial Management Status Report and Five-Year Plan (June 1997).
4
 See, for example, OMB Circular A-11, Part 3 (June 1997).


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                              responsibilities in this area. OMB’s strategy for overseeing sound
                              technology investments under the Clinger-Cohen Act could be discussed,
                              including how OMB will evaluate the results of and enforce accountability
                              for agency investment decisions.

                              Similarly, OMB’s Office of Federal Procurement Policy (OFPP) is by law
                              responsible for prescribing governmentwide procurement policies and
                              providing leadership, coordination, and oversight in the formulation and
                              implementation of executive branch positions on procurement-related
                              issues. It also has responsibility for (1) overseeing the collection,
                              development, and dissemination of procurement data through the Federal
                              Procurement Data System and (2) developing innovative procurement
                              methods and procedures to be tested by selected executive agencies. OMB
                              reflects these authorities in one objective—to “achieve savings, improve
                              quality, and increase customer satisfaction in agency procurement
                              programs”—without providing a brief discussion of accomplishments
                              needed to fulfill its statutory responsibilities.


Strategies to Achieve Goals   The Results Act requires that each strategic plan describe how the
and Objectives                long-term goals and objectives are to be achieved, including a description
                              of the processes, skills and technology, and other resources required to
                              meet the goals and objectives. OMB’s guidance also states that agencies are
                              to include schedules for completing significant actions and any underlying
                              assumptions or projections. The guidance states that this section of the
                              plan should outline the process for communicating goals and objectives
                              throughout the agency and for assigning accountability to managers and
                              staff to achieve objectives.

                              In narrative following each goal statement, OMB describes some general
                              strategies, such as issuing guidance and reviewing regulations, that will be
                              used to achieve its goals. For certain policy-making and advisory goals,
                              this description may be all that is needed to explain how goals and
                              objectives will be achieved. However, for goals related to long-term
                              management responsibilities, the plan could be strengthened by adding a
                              concise, organized statement of actions and resources needed to achieve a
                              specific goal or objective. For example, OMB could mention the specific
                              initiatives it is using to promote objectives, such as the effective utilization
                              of personnel across the government and achieving savings and quality
                              improvements in procurement. Clarifying and linking strategies to goals
                              and objectives is especially important because achieving many of OMB’s
                              goals depends on its acting in concert with other agencies.



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OMB’s draft plan briefly describes overall resource requirements and refers
the reader to separate capital and operating plans for details on the
information technology and human resource capabilities needed to
achieve its goals. The draft plan is predicated on an assumption of stable
funding and staffing levels and emphasizes the need for a high-quality,
diverse staff and the wise use of human, financial, and technological
resources. However, the draft plan does not discuss whether any specific
technology or training initiatives will be necessary. For example, OMB’s
effectiveness in overseeing the implementation of recent federal IRM
reforms will depend greatly on its staff’s capacity to produce sound
evaluations of the agencies’ information technology investment portfolios.
The draft plan does not indicate that any major training or outside support
is needed to build this capacity.

OMB’s  strategies generally are not associated with defined time frames.
Although such time frames may be statutorily- or self-defined for regular
activities such as budget preparation and policy advising, they are needed
for determining progress in achieving the longer-term expectations of
statutory mandates. The draft plan could be improved if critical actions
among its many activities were identified and ordered into steps needed to
achieve a goal or objective. For example, in its 5-year plan on
governmentwide efforts related to financial management, OMB has
identified priorities and milestones for its CFO Act efforts, but these
priorities and milestones are not mentioned or referred to in OMB’s draft
strategic plan.5

While OMB’s draft plan indicates that staff and managers were involved in
developing goals and strategies, it is not clear (1) how the final goals and
strategies will be communicated throughout OMB or to other agencies and
(2) how managers and staff will be held accountable. An OMB strategic plan
steering group invited all staff to meetings on identifying strategic issues,
and OMB held a “standdown day” where staff devoted a day to discussing
their units’ operating plans and the draft strategic plan. However, OMB’s
draft plan does not explain how managers and staff, or other agencies, will
be made aware of and held accountable for the goals that are ultimately
developed. As a result of OMB’s reorganization (OMB 2000) and various
governmentwide management reform legislation, OMB’s staff and managers
have a wide, expanded scope of responsibilities. They also generally have
more influence than control over the ultimate outcome of OMB’s work.
Additionally, many of OMB’s goals depend on concerted actions with other
agencies, but little mention is made of strategies to leverage the actions of

5
 See Federal Financial Management Status Report and Five-Year Plan (June 1997).



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                        other agencies to achieve OMB’s goals. In this operating environment,
                        communicating results and priorities, and assigning responsibility for
                        achieving them, are critical.


Relationship Between    The Results Act requires that each strategic plan describe how the
Long-term Goals and     agency’s annual performance goals will be related to its general, or
Objectives and Annual   long-term, goals and objectives. OMB guidance states that agencies should
                        briefly outline (1) the type, nature, and scope of the performance goals to
Performance Goals       be included in a performance plan, (2) the relation between the
                        performance goals and the long-term goals and objectives, and (3) the
                        relevance and use of performance goals in helping determine the
                        achievement of long-term goals and objectives.

                        Especially for OMB’s statutory responsibilities, linking long-term goals and
                        objectives and annual performance goals can (1) help clarify the meaning
                        of its long-term goals and objectives and (2) ensure that OMB’s day-to-day
                        operations produce desired long-term results. The section of OMB’s draft
                        plan entitled, “Relation of Annual Performance Goals to General Goals and
                        Objectives,” states OMB’s capability to meet its goals and measure its
                        performance, but it does not describe any relationship between annual and
                        long-term goals.

                        However, other sections of the draft plan discuss selected performance
                        measures for each of the long-term goals that might form the basis for
                        annual goals. For example, OMB lists several performance measures for its
                        goal of ensuring “faithful execution of the enacted budget, programs,
                        regulations and policies,” including the number of agency strategic plans
                        that comply with the Results Act and the receipt of clean audit opinions on
                        agency and governmentwide financial statements. Each of these measures
                        could be associated with specific performance indicators during the
                        development of the annual performance plan. It can be expected that the
                        relationship between long-term and annual performance goals will be
                        further defined as the Results Act planning process continues.


Key External Factors    The Results Act stipulates that the strategic plan must identify those key
                        factors external to the agency and beyond its control that could
                        significantly affect the agency’s ability to achieve its goals and objectives.
                        OMB’s guidance states that these factors may be economic, demographic,
                        social, or environmental and may result from action by the Congress, other
                        federal agencies, states, local governments, or other nonfederal entities.



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The guidance states that the strategic plan is to briefly describe each key
external factor, indicate its link with a particular goal, and describe how
each factor could affect achievement of a goal.

Throughout its draft plan, OMB acknowledges that its work is affected by
several outside factors. For example, OMB recognizes that national
economic circumstances, as well as different views about the appropriate
roles of government, can affect such goals as assisting the President in
resource allocation and fiscal and economic policy-making. However,
OMB’s plan does not consistently or completely discuss important external
factors. For instance, the plan does not discuss the potential influence that
the Federal Reserve Board or international economic developments can
have in achieving fiscal and economic policies. With regard to OMB’s goal
of executing statutory management policies, the plan could discuss the
need for the Congress to actively support the use of performance
measures in budget decisions and the impact of rapidly changing
technologies on agency information resources management.

For each goal, the plan discusses major barriers to achievement. Some of
these barriers include agency administrative capacity and cooperation and
the diversion of OMB staff to temporal crises. Although these factors clearly
constitute barriers to the achievement of several goals, it is not clear that
they are invariably beyond OMB’s control or influence. The short-term
pressures of the budget process clearly absorb significant staff and
management attention within OMB, but the strategic plan can outline
approaches to help sustain policy and management priorities in this
environment. For example, in fiscal year 1996, the OMB Director articulated
clear priorities for OMB’s examiners to consistently address agencies’
streamlining plans and performance information throughout that budget
cycle, and our evaluation showed that this direction transcended
immediate budgetary concerns and resulted in greater attention to
management issues.6 Statutory offices, such as the Office of Federal
Financial Management and the Office of Information and Regulatory
Affairs, also provide the expertise and longer-term focus to address certain
key policy and management issues throughout the year. With regard to
agency cooperation, OMB could discuss in its draft plan how it uses such
mechanisms as councils, task forces, and the engagement of agency
Inspectors General to gain agency input and support.




6
 GAO/GGD/AIMD-96-50, December 29, 1995.



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Program Evaluation   Under the Results Act, agencies’ strategic plans are to describe the
                     program evaluations used in establishing or revising long-term goals and
                     objectives, with a schedule for future program evaluations. Program
                     evaluation is defined by the Results Act as an assessment, through
                     objective measurement and systematic analysis, of the manner and extent
                     to which federal programs achieve their intended objectives. According to
                     OMB guidance, the strategic plan should describe the evaluations that were
                     used in preparing the plan and outline the general scope and methodology
                     for future evaluations, key issues to be addressed, and when such
                     evaluations are to occur.

                     OMB’s draft plan does not provide a description of program evaluations
                     used to prepare the plan nor does it include a schedule for future program
                     evaluations. In its draft plan, OMB states that it does not administer
                     programs and, therefore, “no program evaluations, as that term is usually
                     defined, were available for use in preparing the plan.” OMB’s plan, however,
                     could address the need for program evaluations in at least two ways. First,
                     OMB could address evaluations of its own internal operations and
                     programs. Second, OMB could be considered a consumer of agencies’
                     program evaluations to better inform its resource allocation role and, in
                     this capacity, could become a catalyst to enhance agencies’ evaluation
                     capabilities.

                     Evaluations are especially critical for OMB because it is charged with
                     overseeing and implementing some of the most critical managerial
                     functions of government. Such evaluations can provide a critical source of
                     information for the Congress and others to ensure the validity and
                     reasonableness of OMB’s goals and strategies and to identify factors likely
                     to affect the results of programs and initiatives overseen by OMB. In recent
                     years, we have conducted assessments of OMB’s functions or programs,
                     with particular emphasis on its management role and the factors
                     associated with sustaining attention to management issues in the budget
                     process.7

                     Additionally, OMB’s draft plan discusses a number of activities that would
                     benefit from program evaluation. The draft plan states that issuing
                     guidance to agencies is one strategy for its goal of ensuring the faithful
                     execution of the enacted budget, programs, regulations, and policies.
                     However, the draft plan is silent on whether OMB will assess the
                     effectiveness of its guidance to agencies. For example, the policy of

                     7
                     See, for example, GAO/GGD/AIMD-96-50, December 29, 1995, and Managing the Government: Revised
                     Approach Could Improve OMB’s Effectiveness (GAO/GGD-89-65, May 4, 1989).



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                       contracting out to the private sector for providing commercial goods and
                       services is embodied in OMB Circular A-76. This circular’s effectiveness has
                       been questioned both in the executive branch and in dozens of
                       congressional hearings. Because OMB views Circular A-76 as a tool for
                       achieving needed efficiencies in agency operations, an assessment of its
                       effectiveness would help determine how this guidance is working and
                       whether other changes are needed.

                       OMB is also statutorily required to undertake evaluations similar to those
                       intended under the Results Act. For example, the Paperwork Reduction
                       Act of 1995 requires the Director of OMB to “evaluate statistical program
                       performance and agency compliance with Governmentwide policies,
                       principles, standards, and guidelines.” Further, the act requires OMB, in
                       conjunction with four other federal agencies, to assess the efficiency and
                       effectiveness of agency IRM activities. The Federal Financial Management
                       Improvement Act of 1996 requires the Director of OMB to submit an annual
                       report to the Congress regarding implementation of the act. None of these
                       evaluation-related requirements are explicitly mentioned in OMB’s draft
                       strategic plan.

                       OMB’s draft plan could also discuss how it will use agencies’ program
                       evaluations to further its goals in both budgeting and management.
                       Improving program evaluation across government is vital for promoting
                       more informed budget choices in an environment of scarce resources. As
                       we have reported earlier this year,8 the lack of results-oriented
                       performance information will hamper Results Act implementation.
                       Furthermore, our review of other agencies’ draft strategic plans showed
                       that many agencies had not yet addressed the need for program
                       evaluations in their plans.


                       OMB’s draft strategic plan generally reflects and identifies many of OMB’s
Draft Plan Generally   key statutory authorities, but it could be improved if the goals and
Reflects Most of       objectives were more clearly linked to the underlying statutory authorities
OMB’s Key Statutory    upon which they rest. For the most part, the draft plan focuses much more
                       on OMB’s responsibilities to advise and assist the President and on its
Authorities            managerial and policy-making roles than it does on the specific statutory
                       requirements OMB must carry out. While the former responsibilities are
                       critically important, the draft plan could be improved if it contained an



                       8
                       The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be
                       Uneven (GAO/GGD-97-109, June 2, 1997).



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                      B-277789




                      enhanced discussion and reflected greater recognition of the specific
                      statutory mandates for which OMB is responsible.


                      OMB’s draft plan states that achieving its goals and objectives depends
Crosscutting Issues   heavily on “input from and the collaborative efforts of all Federal
Could Be More Fully   agencies.” Many of OMB’s activities, in addition to its annual collaboration
Discussed             with agencies to prepare the President’s Budget, involve coordination with
                      other agencies or facilitating coordination among agencies to address
                      crosscutting issues. Crosscutting issues have several dimensions for OMB.
                      OMB must engender the cooperation of all agencies to achieve many key
                      goals, such as financial and information management. For certain policies,
                      OMB shares leadership responsibility with one or more agencies, requiring
                      collaborative approaches to promote goals. Finally, several issues OMB
                      must address are interrelated and require cooperation across various
                      offices and functions within OMB.

                      Crosscutting goals and objectives require concerted efforts and strategies,
                      but it is unclear whether OMB coordinated with other agencies in preparing
                      this draft plan. OMB’s description of its draft plan development process
                      does not mention that its plan was shared with any other agencies or that
                      any external stakeholders were consulted. The draft plan also does not
                      explicitly mention coordination with other agencies that have related
                      functions. For example, OMB’s draft plan could recognize that other
                      entities—for example, the Department of the Treasury; the National
                      Economic Council; and the administration’s major management
                      improvement initiative, the National Performance Review; and two other
                      central management agencies, the Office of Personnel Management and
                      the General Services Administration—share its mission of creating policy,
                      managing execution, and providing analysis and advice to the President.

                      When OMB’s goals or objectives point to coordinated efforts, OMB’s draft
                      plan could be strengthened by referencing the plans of other agencies and
                      by discussing strategies to gain the cooperation and support of these
                      agencies. For example, the Paperwork Reduction Act of 1995 requires the
                      Director of OMB, in consultation with agency heads, to (1) set annual
                      governmentwide goals for reducing information collection burdens by at
                      least 10 percent during each of fiscal years 1996 and 1997 and 5 percent
                      during each of fiscal years 1998, 1999, 2000, and 2001 and (2) set annual
                      agency goals for reducing information collection burdens on the public to
                      the maximum extent practical. Although one of OMB’s objectives is to
                      review current and proposed policies to ensure consistency with the



                      Page 16                         GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
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President’s information collection policy priorities, the draft plan does not
describe how OMB will ensure burden reduction goals are incorporated in
agencies’ plans and hold agencies accountable for their actions to meet
these agency burden reduction goals.

OMB’s draft plan could better describe how it will achieve the coordination
needed to address other crosscutting issues as well. In the financial
management area, the draft plan articulates the objective of improving
financial management information to attain clean audit opinions.
However, it does not discuss OMB’s role and specific goals in working with
agencies to improve financial management practices throughout the
government. A separate document, the Federal Financial Management
Status Report and Five-Year Plan, contains objectives and strategies that
OMB might draw from for its strategic plan. This financial management plan
discusses strategies for working with agencies, councils, and other groups
and sets specific objectives and milestones for financial management
reform. For example, the financial management plan proposes such
specific tasks as issuing guidance on managerial cost accounting system
requirements, training agencies to implement audit guidance, and
providing guidance for the forthcoming governmentwide financial
statement audit. OMB’s strategic plan could note whether OMB intends to
review agencies’ strategic and financial management plans to ensure its
financial management objectives are also reflected in agency plans.

In the information management area, the draft plan proposes to promote
effective and efficient use of information resources but does not discuss
how it will work with agencies to resolve critical crosscutting issues. OMB
does not describe its strategy for carrying out its expanded responsibilities
in overseeing the effective implementation of PRA and the Clinger-Cohen
Act and for addressing specific issues, such as agencies’ Year 2000
programs to change computer systems to accommodate dates beyond
1999 and information security. We have previously reported on actions
OMB needs to take to implement sound technology investment in federal




Page 17                          GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789




agencies.9 Additionally, given the urgent need to accelerate federal
agencies’ year 2000 programs, the plan can specify how OMB intends to
monitor critical aspects of this problem. Similarly, in light of the increasing
importance of information security and the widespread security problems
that have already emerged, we have previously suggested that OMB, as
chair of the Chief Information Officers Council, take the lead in prompting
agencies to identify weaknesses and take corrective actions.10

In the regulatory management area, the draft plan notes that OMB reviews
agencies’ regulations and conducts certain analyses, but does not fully
discuss what those reviews and analyses are intended to achieve. The draft
plan states that OMB seeks to maximize the public benefits while
minimizing the public burden of regulations and that OMB reviews agency
documents for consistency. Additionally, Executive Order 12866 gives OMB
direct responsibility for ensuring that agencies’ regulations focus on
results instead of process and are based on sound economic analysis.
Delineating these kinds of outcomes in OMB’s plan would give the Congress
and others clear criteria that could be used to evaluate how well OMB is
carrying out its crosscutting regulatory management responsibilities.

The draft plan does not discuss most of the 25 issues we have identified as
high risk because of vulnerabilities to waste, fraud, abuse, and
mismanagement. OMB recently discontinued its high-risk list because it
determined that more progress could be made on these issues by helping
agencies focus on system changes and management challenges. The draft
plan could specify how OMB will provide the leadership needed to help
resolve high-risk problems. Although the plan discusses some of OMB’s
responsibilities related to recent management reform legislation, which, if
implemented successfully, will help resolve some of these problems, the


9
 In Information Technology Investment: Agencies Can Improve Performance, Reduce Costs, and
Minimize Risks (GAO/AIMD-96-64, September 30, 1996) and Information Management and Technology
(GAO/HR-97-9, February 1997), we reported that OMB needs to take action on several fronts to help
implement sound technology investment decision-making processes at federal agencies, including
(1) requiring agencies to use explicitly defined criteria in deciding what technology projects to fund,
(2) ensuring that agencies’ technology investment control processes comply with the new information
resources management legislation and OMB guidance, (3) improving OMB staff’s capacity to analyze
the soundness of the agencies’ technology portfolios, and (4) establishing an internal evaluation
process to determine whether its reviews of the agencies’ investment processes and results are having
an effect on reducing the risks and improving the returns on federal information technology
investments. OMB’s strategy for overseeing the implementation of the IRM reforms should also include
continuing to monitor the appointment of chief information officers and their efforts to develop and
implement integrated agencywide information architectures; build their agencies’ capacity to acquire
needed systems and deal with emerging technology issues; and devise effective performance measures
for OMB to assess the progress their agencies are making in using information technology to achieve
stated goals.
10
 See Information Security: Opportunities for Improved OMB Oversight of Agency Practices
(GAO/AIMD-96-110, September 24, 1996).


Page 18                                     GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
                     B-277789




                     high-risk areas involve long-standing problems that can be corrected only
                     with sustained management attention and congressional oversight.

                     Tackling crosscutting issues will also require extensive collaboration
                     between offices and functions within OMB, which the plan could discuss in
                     more detail. The draft strategic plan contains an objective to use internal
                     interdisciplinary and interagency work groups to address issues in more
                     depth but does not provide any specific strategies for or areas where these
                     groups will be used. OMB recognized the importance of integrating
                     management into the budget process through its 1994 reorganization
                     where RMOs were assigned responsibilities for examining agency
                     management issues during the budget review process.

                     Recent statutory management initiatives will challenge OMB to mount an
                     effective organizationwide effort. For example, collaboration across units
                     within OMB will be necessary to bring financial information systems into
                     compliance with both the Federal Financial Management Improvement
                     Act and the Clinger-Cohen Act. We have testified that the performance
                     information produced by the Results Act will be most useful to
                     congressional and executive branch decisionmakers if it is integrated with
                     accurate cost data drawn from agency financial accounting systems; OMB
                     has efforts underway to develop accountability reports that consolidate
                     and integrate the separate reporting requirements of the Results Act, CFO
                     Act, and other specified acts that could be discussed in its plan. Similarly,
                     preparation of the governmentwide performance plan under the Results
                     Act, due in early 1998, will call for OMB to draw on expertise across many
                     units within the agency.


                     We and other organizations have evaluated OMB’s ability to provide
Major Management     leadership on critical budget and management issues. Although some of
Challenges Are Not   the major challenges we have raised are mentioned in the draft plan, OMB
Fully Addressed      could more specifically describe how these challenges will be addressed.

                     Our 1989 report on OMB11 examined the agency’s repeated reorganizations
                     and management improvement efforts and concluded that OMB had been
                     unable to coordinate its management and budget functions effectively and
                     had not established a stable management capacity. We found that OMB’s
                     short-term, budget-driven focus often made it difficult for the agency to
                     address long-term management problems. OMB’s internal 1994 review of its
                     operations reached similar conclusions.

                     11
                       GAO/GGD-89-65, May 4, 1989.



                     Page 19                          GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
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We made recommendations to improve the agency’s effectiveness in
addressing management and budget issues, and OMB has implemented
some of them. For example, we recommended that a second Deputy
Director position be established to enhance OMB’s leadership role on
management issues, and OMB has filled this position, which was created by
the CFO Act. We also recommended that OMB budget divisions be explicitly
charged with overseeing agency implementation of selected management
improvement efforts, evaluating the effectiveness of the management of
individual agencies and programs, and ensuring that corrective action is
taken to solve identified problems. OMB’s 1994 reorganization (OMB
2000) was intended to integrate its budget analysis, management review,
and policy development roles.

In our 1995 review of OMB 2000,12 we observed that this approach has the
potential to improve the agency’s capacity to address management issues,
but it will require a sustained focus to institutionalize an integrated
approach over the longer term. We recommended that OMB review the
impact of its reorganization as part of its planned broader assessment of
its role in formulating and implementing management policies for the
government. We suggested that the review focus on specific concerns that
need to be addressed to promote more effective integration, including
(1) the way OMB currently trains its program examiners and whether this is
adequate given the additional management responsibilities assigned to
these examiners and (2) the effectiveness of the different approaches
taken by OMB in the statutory offices to coordinate with its resource
management offices and provide program examiners with access to
expertise. In commenting on our recommendation, OMB agreed that its
strategic planning process offered opportunities to evaluate this initiative
and would address issues raised by the reorganization. However, such a
review is not described in OMB’s draft plan and neither of the two concerns
we raised is explicitly discussed.13

Furthermore, OMB’s draft plan does not discuss initiatives to improve its
working relationship with other federal agencies and the Congress—a key
factor in its ability to effectively carry out its mission and responsibilities.
In our 1989 review of OMB’s management leadership, agency officials told
us that OMB is most effective when it serves as a catalyst and provides
leverage for officials to get attention within their agencies. These officials
also stressed the importance of consistent communication and
involvement of agency officials in formulating policies. A National

12
  GAO/GGD/AIMD-96-50, December 29, 1995.
13
  For a discussion of other management challenges, see GAO/GGD/AIMD-96-50, December 29, 1995.



Page 20                                   GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
                       B-277789




                       Academy of Public Administration study also supported a consultative
                       relationship for agencies and OMB. As previously mentioned in this
                       correspondence, OMB is working in such a manner with various
                       interagency councils, and its draft plan could discuss more of these
                       groups’ initiatives and responsibilities.

                       Similarly, we found that obtaining congressional cooperation has been an
                       important factor in OMB’s success. Our discussions with congressional staff
                       in conducting the 1989 study indicated that OMB could gain more support
                       for its initiatives through earlier and more frequent contact with the
                       Congress and a clearer communication of its priorities. OMB’s draft plan
                       recognizes the need to work cooperatively with the Congress but could
                       specify what changes, if any, it will seek in its relationship with the
                       Congress.


                       OMB’s draft plan indicates that it will need a variety of measures to
Capacity to Provide    determine whether its goals are being achieved. The draft plan suggests
Reliable Information   that many of its goals will be measured qualitatively. For example, OMB
on Achievement of      suggests performance in identifying less effective programs, improved
                       personnel utilization, and timeliness of analysis as potential performance
Goals                  indicators. OMB will need reliable tracking systems to support the
                       performance indicators it chooses. Additionally, determining whether
                       some of OMB’s objectives, such as savings in agency procurement
                       programs, have been achieved will depend on the quality of information
                       generated by agencies’ information systems. We have not reviewed OMB’s
                       financial and information systems in recent years; therefore, we cannot
                       comment on the capacity of OMB’s current systems or any plans to develop
                       such systems.


                       We requested comments on a draft of this letter from the Director of OMB.
Agency Comments        On August 15, the OMB Acting Deputy Director for Management provided
and Our Evaluation     written comments. (A copy of those comments is included in enclosure I.)
                       OMB’s comments characterized our letter as a comprehensive assessment
                       of OMB’s draft strategic plan and said that it contained constructive and
                       helpful suggestions for improving the plan. OMB also commented on our
                       observations regarding two elements missing from its strategic plan: (1) a
                       description of the relationship between general goals and objectives and
                       annual performance goals and (2) a discussion of the use of and future
                       schedule for program evaluations. Our response to OMB’s comments is
                       included in enclosure I.



                       Page 21                         GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
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As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this correspondence until 30
days from its issue date. At that time, we will send copies to the Minority
Leader of the House of Representatives, the Ranking Minority Members of
your Committees, and the Director of the Office of Management and
Budget. We will also send copies to the Chairmen and Ranking Minority
Members of the Senate Appropriations, Budget, and Governmental Affairs
Committees. Copies will be made available to others upon request.

Please contact Nye Stevens at (202) 512-8676 or Paul Posner at
(202) 512-9573 if you or your staffs have any questions concerning this
letter. Major contributors to this report are listed in enclosure II.




L. Nye Stevens
Director, Federal Management and Workforce Issues




Paul L. Posner
Director, Budget Issues

Enclosures




Page 22                         GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Page 23   GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure I

Comments From the Office of Management
and Budget

Note: GAO comments
supplementing those in
the letter appear at the
end of this enclosure.




See comment 1.




See comment 2.




                           Page 24   GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure I
Comments From the Office of Management
and Budget




Page 25                            GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
                 Enclosure I
                 Comments From the Office of Management
                 and Budget




                 The following are GAO’s comments on the Office of Management and
                 Budget’s letter dated August 15, 1997.


                 1. OMB commented on our observation that its draft plan did not describe
GAO’s Comments   the relationship between general goals and objectives and performance
                 goals. OMB said that its plan contains such a description. OMB also said that
                 an additional description of this relationship will be included in its annual
                 performance plan. OMB noted that the strategic plan should outline the
                 type, nature, and scope of the annual performance goals, but it was not
                 intended that the plan present a comprehensive list of specific measures.

                 We agree that strategic plans are not intended to provide comprehensive
                 listings of specific performance measures. However, our letter notes that
                 the section of OMB’s draft plan entitled “Relation of Annual Performance
                 Goals to General Goals and Objectives” does not describe any relationship
                 between annual and long-term goals. Thus, we continue to believe that
                 OMB’s plan could be more useful if it discussed the relationship between
                 the performance goals and the long-term goals and objectives and the
                 relevance and use of performance goals in helping determine the
                 achievement of long-term goals and objectives.

                 2. OMB commented on our observation that its draft plan did not include a
                 discussion of the use of and schedule for program evaluations. OMB
                 reiterated that it does not run programs and therefore it “did not use
                 Program Evaluations” to develop its plan. OMB said that “many evaluations.
                 . .while not technically Program Evaluations,” were used in developing its
                 strategic plan and that it “continues to be a strong supporter of Program
                 Evaluation.”

                 We note that the Senate report that accompanied the Results Act
                 described program evaluation in broad terms, specifically “including
                 evaluations of . . . operating policies and practices when the primary
                 concern is about these issues rather than program outcome.” In this
                 context, we believe that evaluations are especially critical for OMB because
                 it is charged with overseeing and implementing some of the most critical
                 managerial functions of government. Thus, we continue to believe that
                 OMB’s strategic plan could be more useful if OMB provided more
                 information on its use of program evaluations in developing its plan.




                 Page 26                            GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure II

Major Contributors to This Letter


                       Gloria L. Jarmon, Director
Accounting and         Michael J. Curro, Assistant Director
Information            John P. Finedore, Assistant Director
Management Division,   Danny R. Latta, Assistant Director
                       Denise M. Fantone, Senior Evaluator
Washington D.C.        Laura E. Hamilton, Senior Evaluator


                       J. Christopher Mihm, Acting Associate Director
General Government     Joseph S. Wholey, Senior Advisor for Evaluation Methodology
Division, Washington   Curtis W. Copeland, Assistant Director
D.C.                   John K. Needham, Assistant Director

                       Alan N. Belkin, Assistant General Counsel
Office of General      Carlos E. Diz, Attorney
Counsel




(935240/410179)        Page 27                        GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
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