oversight

Managing for Results: Observations on OMB's September 1997 Strategic Plan

Published by the Government Accountability Office on 1997-10-06.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Government
                          Management, Information and Technology
                          Committee on Government Reform and Oversight
                          House of Representatives

For Release on Delivery
Expected at
10:30 a.m.
                          MANAGING FOR RESULTS
Monday,
October 6, 1997

                          Observations on OMB’s
                          September 1997 Strategic
                          Plan
                          Statement of Paul L. Posner
                          Director, Budget Issues
                          Accounting and Information Management Division

                          and

                          J. Christopher Mihm, Acting Associate Director
                          Federal Management and Workforce Issues
                          General Government Division




GAO/T-AIMD/GGD-98-10
Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to provide our observations on the Office
of Management and Budget’s (OMB) strategic plan submitted to the
Congress on September 30, 1997. As you requested, our testimony today
will discuss how well this strategic plan addresses the Government
Performance and Results Act (the Results Act) requirements. We will also
identify some of the challenges remaining for OMB to address in future
planning efforts.

The Results Act is intended to improve the efficiency and effectiveness of
federal programs by establishing a system to set goals for program
performance and to measure results. Specifically, the Act requires
executive agencies to prepare multiyear strategic plans, annual
performance plans, and annual performance reports. OMB has a crucial and
multifaceted role to play in the successful implementation of the Results
Act. Under the Act, OMB is charged with overseeing and guiding agencies’
strategic and annual performance planning and reporting. OMB has also
prepared its own strategic plan based on Results Act requirements. OMB’s
strategic plan is important as both a statement of the agency’s objectives
and to underscore to other federal agencies the importance of effectively
implementing the Results Act.

Our comments today are based on our review of OMB’s strategic plan and
our body of work on OMB and the issues the agency is responsible for
addressing. In July 1997, OMB prepared a draft strategic plan, and we
reviewed it to assess whether it met Results Act requirements and
provided information useful for congressional decision-making.1 On
September 30, 1997, we obtained the strategic plan OMB submitted to the
Congress to comply with the Results Act. Our testimony will provide
preliminary observations on the September plan.

Since the July draft, OMB has made changes to the plan based on its
continuing planning efforts, congressional consultations, and comments
from others. Overall, OMB’s September plan addresses all required
elements of the Results Act and reflects several of the enhancements we
suggested in our review of the July draft. Specific improvements include
(1) goals and objectives that show a clearer results-orientation, (2) more
clearly defined strategies for achieving these goals and objectives, and
(3) an increased recognition of some of the crosscutting issues OMB needs

1
 The Results Act: Observations on the Office of Management and Budget’s July 1997 Draft Strategic
Plan (GAO/AIMD/GGD-97-169R, Aug. 21, 1997).



Page 1                                                                    GAO/T-AIMD/GGD-98-10
             to address. However, additional enhancements to several of the plan’s
             required elements and a fuller discussion of major management challenges
             confronting the federal government could help make the plan more useful
             to the Congress and OMB. For example, the plan could provide a more
             explicit discussion of OMB’s strategies on such subjects as information
             technology, high-risk issues, overlap among federal missions and
             programs, and strengthening program evaluation.

             OMB’s strategic plan indicates that the agency will use its annual
             performance plan, the governmentwide performance plan, other
             functional management plans, and the President’s Budget to provide
             additional information about how it plans to address some of these and
             other critical management issues. To support the needs of this and other
             committees, we will continue to review OMB’s plans and proposals as
             additional detail concerning objectives, time frames, and priorities is
             established. Our intention is to apply an integrated perspective in looking
             at these plans, consistent with the intent of the Results Act, to ensure that
             OMB achieves the results expected by its statutory authorities.



             Since its creation in 1970, OMB has had two distinct but parallel roles. OMB
Background   serves as a principal staff office to the President by preparing the
             President’s budget, coordinating the President’s legislative agenda, and
             providing policy analysis and advice. The Congress has also assigned OMB
             specific responsibilities 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
             departments and agencies. This framework includes the 1995 Paperwork
             Reduction Act and the 1996 Clinger-Cohen Act; the 1990 Chief Financial
             Officers Act, as expanded by the 1994 Government Management Reform
             Act; and the 1993 Government Performance and Results Act.

             OMB faces perennial challenges in carrying out these and other
             management responsibilities in an environment where its budgetary role
             necessarily remains a vital and demanding part of its mission. OMB’s
             resource management offices (RMOs) have integrated responsibilities for
             examining agency management, budget, and policy issues. The RMOs are
             supported by three statutory offices whose responsibilities include
             developing governmentwide management policies: the Office of Federal
             Financial Management, the Office of Federal Procurement Policy, and the



             Page 2                                                   GAO/T-AIMD/GGD-98-10
                          Office of Information and Regulatory Affairs. In fiscal year 1996, OMB
                          obligated $56 million and employed over 500 staff to carry out its budget
                          and management responsibilities.

                          The Results Act requires a strategic plan that includes 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) a discussion of 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.

                          Although OMB’s July draft included elements addressing its mission, goals
                          and objectives, strategies, and key external factors affecting its goals, we
                          suggested that these elements could be enhanced to better reflect the
                          purposes of the Results Act and to more explicitly discuss how OMB will
                          achieve its governmentwide management responsibilities. Furthermore,
                          the July draft plan did not contain a discussion of 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.


                          The structural and substantive changes OMB made to its July 1997 strategic
OMB’s Strategic Plan      plan constitute a significant improvement in key areas. In general, OMB’s
Reflects the Purposes     revised plan provides a more structured and explicit presentation of its
of the Results Act, but   objectives, strategies, and the influence of external factors. Each objective
                          contains a discussion of these common elements, facilitating an
Challenges Remain         understanding of OMB’s goals and strategies. OMB’s September plan
                          addresses the six required elements of the Results Act. At the same time,
                          enhancements could make the plan more useful to OMB and the Congress
                          in assessing OMB’s progress in meeting its goals.

                          The September plan’s mission statement recognizes both OMB’s statutory
                          responsibilities and its responsibilities to advise the President, and the
                          goals and objectives are more results-oriented and comprehensive than in
                          the July draft. For example, the plan contains a new, results-oriented
                          objective—“maximize social benefits of regulation while minimizing the
                          costs and burdens of regulation”—for its key statutory responsibility



                          Page 3                                                   GAO/T-AIMD/GGD-98-10
regarding federal regulation review. The breadth of OMB’s mission makes it
especially important that OMB emphasize 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.

OMB   more clearly defines its strategies for reaching its objectives in the
September plan, particularly with regard to some of its management
objectives. For example, in the draft plan, OMB did not discuss the
accomplishments needed to fulfill its statutory procurement
responsibilities. In contrast, the September plan lays out OMB’s long-term
goal to achieve a federal procurement system comparable to those of high
performing commercial enterprises. It says that OMB will identify annual
goals to gauge OMB’s success, and discusses the means and strategies (such
as working with agencies to promote the use of commercial buying
practices) it will use to accomplish this goal. OMB also commits to working
with the Federal Acquisition Regulation Council to revise regulations and
publish a best practices document. In the area of regulatory reform, OMB
also commits to improving the quality of data and analyses used in
regulatory decision-making and to developing a baseline measure of the
net benefits for Federal regulations. OMB’s clear and specific description of
its strategies for its procurement and regulatory review objectives could
serve as models for developing strategies for its Results Act and
crosscutting objectives.

Although strategies to provide management leadership in certain areas are
more specific, other strategies could benefit from a clearer discussion of
time frames, priorities, and expected accomplishments. For example, to
meet its objective of working within and across agencies to identify
solutions to mission-critical problems, OMB states it will work closely with
agencies and a list of other organizations to resolve these issues. However,
OMB does not describe specific problems it will seek to address in the
coming years or OMB’s role and strategies for solving these issues.

In defining its mission, goals and objectives, and strategies, OMB’s plan
recognizes its central role in “managing the coordination and integration
of policies for cross-cutting interagency programs.” The plan states that in
each year’s budget, major crosscutting and agency-specific management
initiatives will be presented along with approaches to solving them. The
plan also provides a fuller discussion than was included in the July draft of
the nature and extent of interagency groups that OMB actively works with
in addressing a variety of functional management issues. Specific



Page 4                                                  GAO/T-AIMD/GGD-98-10
functional management areas, such as procurement, financial, and
information management, are incorporated as long-term objectives.

However, OMB’s plan could more specifically address how OMB intends to
work with agencies to resolve long-standing management problems and
high-risk issues with governmentwide implications.2 For example, in the
information management area, OMB’s September plan refers to critical
information technology issues, but it does not provide specific strategies
for solving these issues. OMB discusses the ability of agencies’ computer
systems to accommodate dates beyond 1999 (the Year 2000 problem) as a
potential performance measure and states how it will monitor agencies’
progress. However, the plan does not describe any specific actions OMB
will take to ensure this goal is met. We have previously reported on
actions OMB needs to take to implement sound technology investment in
federal agencies.3 In a related area, OMB has elsewhere defined strategies
and guidance for agency capital plans that are not explicitly discussed in
the strategic plan.

With respect to programmatic crosscutting issues, questions dealing with
mission and program overlap are discussed only generically as
components of broader objectives (such as working with agencies to
identify solutions or to carry out the Results Act). The Congress and a
large body of our work have identified the fragmented nature of many
federal activities as the basis for a fundamental reexamination of federal
programs and structures. Our recent report identified fragmentation and
overlap in nearly a dozen federal missions and over 30 programs.4 Such
unfocused efforts can waste scarce funds, confuse and frustrate program
customers, and limit overall program effectiveness. The OMB plan states
that the governmentwide performance plan, which OMB must prepare and
submit as part of its responsibilities under the Results Act, will provide the
“context for cross-cutting analyses and presentations,” but provides no
additional specification.

OMB’s strategic plan also does not explicitly discuss how goals and
objectives will be communicated to staff and how staff will be held
accountable. For example, OMB’s plan states that OMB staff are expected to

2
 High-Risk Series: An Overview (GAO/HR-97-1, Feb. 1997).
3
 Information Technology Investment: Agencies Can Improve Performance, Reduce Costs, and
Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996) and High-Risk Series: Information Management and
Technology (GAO/HR-97-9, Feb. 1997).
4
 Managing for Results: Using the Results Act to Address Mission Fragmentation and Program Overlap
(GAO/AIMD-97-146, Aug. 29, 1997).



Page 5                                                                  GAO/T-AIMD/GGD-98-10
provide leadership for and to be catalysts within interagency groups. Yet,
the plan does not explain how OMB’s managers and staff will be made
aware of and held accountable for this or other strategies for achieving
OMB’s goals. As we noted in our review of the July draft plan, OMB’s staff
and managers have a wide and expanded scope of responsibilities, and
many of OMB’s goals depend on concerted actions with other agencies. In
particular, tackling crosscutting issues will also require extensive
collaboration between offices and functions within OMB, which the plan
could discuss in more detail. In this environment, communicating results
and priorities and assigning responsibility for achieving them are critical.

The September plan more consistently discusses the relationship between
annual and long-term goals as part of a discussion of each of its objectives.
The plan provides useful descriptions of the performance measures OMB
may use to assess its progress in its annual performance plan. For
example, the plan suggests that “clean audit opinions” could measure how
OMB is achieving its objective in the area of financial management. Such
efforts are noteworthy because 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.

Although the September plan provides a more consistent and thorough
treatment of key external factors in achieving its goals, OMB could explain
how it can mitigate the consequences of these factors. For example, OMB
states that its goal of ensuring timely, accurate, and high-quality budget
documents depends on the accuracy and timeliness of agency submissions
of technical budget information. However, there is a role for OMB in
assisting agencies to improve the accuracy and timeliness of data,
particularly for such complex issues as estimating subsidy costs for loan
and loan guarantee programs.

OMB’s  discussion of program evaluation could provide more information
about how evaluations were used in developing its plan and how
evaluations will be used to assess OMB’s and federal agencies’ capacity and
progress in achieving the purposes of the Results Act. In preparing its
strategic plan, OMB states that it reviewed and considered several studies
of its operations prepared by OMB, GAO, and other parties. The plan also
states that OMB will continue to prepare studies of its operational
processes, organizational structures, and workforce utilization and
effectiveness. However, OMB does not indicate clearly how prior studies
were used, and OMB does not provide details on a schedule for its future



Page 6                                                   GAO/T-AIMD/GGD-98-10
studies, both of which are required by the Results Act. OMB officials have
said it would be worthwhile to more fully discuss the nature and
dimension of program evaluation in the context of the Results Act. As we
noted in our review of the July draft plan, evaluations are especially
critical for providing a 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.

A clearer discussion of OMB’s responses to and plans for future evaluations
could also provide insight into how the agency intends to address its major
internal management challenges. For example, a critical question facing
OMB is whether the approach it has adopted toward integrating
management and budgeting, as well as its implementation of statutory
management responsibilities, can be sustained over the long term. In view
of OMB’s significant and numerous management responsibilities and the
historic tension between the two concepts—of integrating or segregating
management and budget responsibilities—we believe it is important that
OMB understand how the reorganization has affected its capacity to provide
sustained management leadership.5

In our 1995 review of OMB’s reorganization, 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.6 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 could address issues raised by
the reorganization. Although OMB’s plan states that it will increase the
opportunities for all staff to enhance their skills and capabilities, it does
not describe the kinds of knowledge, skills, and abilities needed to
accomplish its mission nor a process to identify alternatives to best meet
those needs.

5
Managing the Government: Revised Approach Could Improve OMB’s Effectiveness (GAO/GGD-89-65,
May 4, 1989).
6
 Office of Management and Budget: Changes Resulting From the OMB 2000 Reorganization
(GAO/GGD/AIMD-96-50, Dec. 29, 1995).



Page 7                                                               GAO/T-AIMD/GGD-98-10
                  In summary, OMB has made significant improvements in its strategic plan.
                  However, much remains to be done in improving federal management. We
                  will be looking to OMB to more explicitly define its strategies to address
                  important management issues and work with federal agencies and the
                  Congress to resolve these issues.


                  Mr. Chairman, this concludes our statement this morning. We would be
                  pleased to respond to any questions you or other Members of the
                  Subcommittee may have.




(935246/410194)   Page 8                                                GAO/T-AIMD/GGD-98-10
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