oversight

Major Management Challenges and Program Risks: Implementation Status of Open Recommendations

Published by the Government Accountability Office on 1999-07-30.

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

                United States General Accounting Office

GAO             Performance and Accountability Series



    July999     MAJOR MANAGEMENT
                CHALLENGES AND
                PROGRAM RISKS
                Implementation Status of
                Open Recommendations




                ~-   *   ~rAccountability
                          ***               *   Integrity * Reliability

GAO/OCG-99-28                                                7i/          25 f
               United States
               General Accounting Office
GAO   ~~~~~~Washington,D.C. 20548

                   Comptroller General
                   of the United States

                   B-282928

                   July 30, 1999

                   The Honorable Fred Thompson
                   Chairman
                   Committee on Governmental Affairs
                   United States Senate

                   Dear Mr. Chairman:

                   This responds to your May 11, 1999, request for a list of open
                   recommendations to help solve problems in areas we designated as major
                   management challenges in our January 1999 Performance and
                   Accountability Report Series. You also asked that we refer to the source
                   and date of those recommendations, whether or not the agency agreed
                   with the recommendations, and the status of agency actions to implement
                   them. In April 1999, we provided similar information on areas we have
                   designated as high-risk.' As in our April report, our responses are based on
                   our most recent comprehensive update on the implementation status of all
                   open recommendations completed in the fall of 1998, unless we have more
                   current information or have made new recommendations.

                   There are currently over 450 open GAO recommendations in these 84 major
                   management challenge areas. As agreed with your office, for those areas
                   with numerous open recommendations, we have focused on those that are
                   most important to solving the problem (generally 10 to 12 per management
                   challenge), and briefly summarized the other recommendations. For many
                   recommendations, agencies have indicated their agreement and intent to
                   implement them. In some cases, actions are underway and progress is
                   being made, while in others, implementation has not yet begun. In some
                   instances, agencies disagreed with our recommendations and plan no
                   action. To maximize the utility of the information, we have kept our
                   comments on agency actions brief. For each management challenge, we
                   include a point of contact who can provide additional information as
                   needed.




                   'High-Risk Series: Recommendations Need to Be Implemented (GAO/HR-99-2R, April 12, 1999).



                   Page 1      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
B-282928




We look: forward to working with you on resolving these problems. If you
or your office have any further questions or would like to discuss any of
the issues in more detail, please call me at (202) 512-5500 or the GAO
contact points.

We are sending a copy of this report to Senator Joseph Lieberman, the
Ranking Minority Member of your Committee, and to other interested
parties. Copies will be made available to others upon request.

Sincerely yours,




David M. Walker
Comptroller General
of the United States




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Page 3   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Contents



Letter                                                                                                  1
Appendix I                                                                                             12
Department of
Agriculture
Appendix II                                                                                            27
Department of
Commerce
Appendix III                                                                                           29
Department of
Defense
Appendix IV                                                                                            37
Department of
Education
Appendix V                                                                                             40
Department of Energy
Appendix VI
Department of Health
and Human Services
Appendix VII                                                                                           56
Department of the
Interior
Appendix VIII                                                                                          66
Department of Justice



                        Page 4   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                       Contents




Appendix IX                                                                                             75
Department of Labor
Appendix X                                                                                              84
Department of State
Appendix XI                                                                                             92
Department of
Transportation
Appendix XII                                                                                           105
Department of the
Treasury
Appendix XIII                                                                                          126
Department of
Veterans Affairs
Appendix XIV                                                                                           144
Agency for
International
Development
Appendix XV                                                                                            147
Environmental
Protection Agency
Appendix XVI                                                                                           152
National Aeronautics
and Space
Administration



                       Page 5     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                      Contents




Appendix XVII                                                                                        154
Nuclear Regulatory
Commission
Appendix XVIII                                                                                        159
Social Security
Administration
Appendix XIX                                                                                          167
U.S. Postal Service
Tables                Table 1.1: USDA's Field Structure Is Inefficient                                 12
                      Table I.2: Fundamental Changes Are Needed to Improve Food                        13
                        Safety
                      Table 1.3: Inefficiency and Waste Within the Forest Service                      15
                        Continue
                      Table I.4: Reducing Overpayments in the Food Stamp Program                       18
                      Table 1.5: USDA Lacks Financial Accountability Over Billions of                  19
                        Dollars in Assets
                      Table I.6: USDA Can Save Millions by Better Managing Its                         20
                        Telecommunications Investments
                      Table 1.7: Significant Weaknesses in USDA's Multibillion-Dollar                  24
                        Modernization of Service Center Information Technology Place
                        Effort at Risk
                      Table 1.8: USDA Faces Serious Year 2000 Computing Challenges                     26
                      Table II.1: Pursuing More Cost-Effective Alternatives to NOAA's                  27
                        Research Fleet
                      Table II.2: Improving Financial Management Systems and                           28
                         Processes
                      Table III.1: Information Management and Technology Issues Pose                   29
                        Major Concerns - Progress on Year 2000 Conversion
                      Table III.2: Information Management and Technology Issues Pose                   32
                         Major Concerns - Information Security
                      Table III.3: Military Personnel Issues Need Attention                            33
                      Table Il.l: Education's Administrative Effort Is Inadequate to                   37
                        Ensure Access to Postsecondary Institutions While Protecting
                        Federal Financial Interests
                      Table P1.2: Year 2000 Computer Compliance Lacking                                38




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Contents




Table IV.3: Balancing Oversight of Programs and Program                          39
  Flexibility
Table V.1: Department of Energy Has Had Difficulty Completing                    40
  Large Projects
Table V.2: Department of Energy's Transition To External                         41
  Regulation Is Slow
Table V.3: Department of Energy's Organizational Structure                      42
  Allows Challenges To Go Uncorrected
Table V.4: Department of Energy's Staff Lack Technical and                      45
  Management Skills
Table VI.1: Scope and Complexity of HHS Programs Create.                        47
  Challenges With Coordination, Oversight, and Performance
  Measurement
Table VI.2: HHS Needs Reliable and Comprehensive Data and                        51
  Data Systems to Manage Programs and Assess Results
Table VI.3: Program Integrity Is a Continuing Challenge for HHS                  54
Table VII.1: A Basic Reexamination of the Organization and                       56
  Functions of Land Management Agencies Is Needed
Table VII.2: Interior Does Not Have the Information It Needs to                  57
  Properly Protect, Preserve, and Maintain Resources
Table VII.3: Guidance, Oversight, and Accountability Need                        59
  Improvement
Table VII.4: Management Problems Continue to Plague Interior's                   60
  Tribal and Indian Programs
Table VII.5: Problems in Managing New Automated Records                         64
  System Put BLM Programs at Risk
Table VIII.1: INS Management Challenges Persist                                  66
Table VIII.2: Challenges With Implementation of INS' Programs                    69
Table VIII.3: Significant Departmental Financial Management                      73
  Weaknesses
Table VIII.4: Embezzlements and Financial Management Control                     74
  Weaknesses at DEA
Table IX.1: Labor Lacks Accurate and Reliable Information to                     75
  Assess Program Performance
Table IX.2: Decentralization Intensifies Labor's Coordination                    79
  Challenge
Table IX.3: Alternative Enforcement Strategies Could Leverage                    81
  Labor's Limited Resources
Table IX.4: Year 2000 Problem Could Jeopardize Benefits                          83
  Payments and Economic Statistics




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Contents




Table X. 1: Enhancing the Management of Security Programs for                    84
  Overseas Personnel and Property
Table X.2: Improving Information Management Systems                              85
Table X.3: Improving Financial Management Systems                                88
Table X.4: Effectively Managing the Visa Process                                 89
Table X.5: Effectively Reorganizing Foreign Affairs Agencies                     90
Table X.6: Strengthening Strategic and Performance Planning                      91
Table X][.1: The Acquisition of Major Aviation and Coast Guard                   92
  Systems Lacks Adequate Management and Planning
Table XI[.2: Serious Challenges Remain in Resolving FAA's Year                   96
  2000 Risks
Table XJ[.3: FAA and the Nation's Airports Face Funding                          97
  Uncertainties
Table XI.4: Aviation Safety and Security Programs Need                           98
  Strengthening
Table XI.5: Lack of Aviation Competition Contributes to High                    101
  Fares and Poor Service for Some Communities
Table XI[.6: DOT Needs to Continue Improving Oversight of                       102
  Surface Transportation Projects
Table X[.7: Amtrak's Financial Condition Is Tenuous                             104
Table X[I.1: IRS/The Need for Restructuring IRS' Organization                   105
  and Business Practices
Table X[I.2: IRS/The Need to Improve Security Controls Over                     106
  Information Systems
Table X[I.3: IRS/The Need to Confront the Challenges Presented                  108
  By the Year 2000 Computer Problem
Table X[I.4: U.S. Customs Service/Weaknesses Relating to                        109
  Internal Controls Over Data in Automated Systems
Table X[I.5: U.S. Customs Service/Weaknesses Relating to the                    114
  Development of Customs' Automated Commercial Environment
  System
Table X[I.6: Financial Management Service/The Need to Address                   116
  Issues Related to Preparing Reliable Consolidated Financial
  Statements for the Government
Table X[I.7: Financial Management Service/The Need to Improve                   118
  Computer Security Controls
Table X[I.8: Financial Management Service/The Need to                           120
  Effectively Implement the Debt Collection Improvement Act
Table X[I.9: Weaknesses Exist in Computer Systems Security                      122
Table XII.10: Weaknesses Relating to Integrated Financial                       123
  Management Systems




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Contents




Table XII. 11: Weaknesses Relating to the Process Used to                      124
  Prepare Departmentwide Financial Statements
Table XII. 12: Weaknesses Relating to the Compliance of Financial              125
  Management Systems With Federal Requirements
Table XIII.1: VA Health Care Infrastructure Does Not Meet                      126
  Current and Future Needs
Table XIII.2: VA Lacks Adequate Information to Ensure That                     128
  Veterans Have Access to Needed Health Care Services
Table XIII.3: VA Lacks Outcome Measures and Data to Assess                     132
  Impact of Managed Care Initiatives
Table XIII.4: VA Faces Major Challenges in Managing                            135
  Non-Health-Care Benefits Programs
Table XIII.5: VA Needs to Manage Its Information Systems More                  140
  Effectively
Table XIV.1: USAID Has Not Implemented a Comprehensive                         144
  Information Management System
Table XIV.2: USAID's Actions Not Adequate to Resolve the Year                  145
  2000 Problem
Table XIV.3: USAID Remains Vulnerable to Weak Financial                        146
  Management
Table XV.1: EPA Needs More Comprehensive Information on the                    147
  Environment
Table XV.2: EPA Faces Challenges in Reinventing Environmental                  149
  Regulations
Table XV.3: A Good Working Relationship With the States Has                    150
  Been a Long-Term Challenge for EPA
Table XVI.1: Controlling International Space Station Costs                     152
Table XVI.2: Following Through on Aerospace Test Facilities                    153
   Cooperative Efforts
Table XVII.1: NRC Lacks Assurance of Nuclear Plants' Safety                    154
Table XVII.2: NRC Is Slow to Require Corrective Action                         155
Table XVII.3: NRC's Culture and Organizational Structure Impede                157
   Effective Actions
Table XVIII.1: Long-Standing Supplemental Security Income                      159
   Issues Require More Active Management and Oversight
Table XVIII.2: Disability Programs Need Redesigning and More                   160
   Focus on Return to Work
Table XVIII.3: New Technology Required to Cope with Future                      163
   Workload Demands
Table XIX.1: Long-Standing Challenges in Labor-Management                       167
   Relations




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Contents




Table XIX.2: The Continuing Challenge of Containing Postal                      169
  Costs and Protecting Revenues
Table XIX.3: The Need to Implement Reliable Indicators of Postal                 170
  Performance
Table XIX.4: Postal Service at Risk of Year 2000 Problems                        171




Page 10    GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Page 11   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix I

Department of Agriculture


Table 1.1: USDA's Field Structure Is Inefficient

USDA's field structure for managing its farm programs is obsolete and inefficient. While USDA has made progress in closing about
1,000 county office locations, its field structure still includes about 2,700 county office locations that serve a decreasing number of
farmers. To improve the efficiency of its farm service operations, USDA needs to consider using alternative methods for delivering
services to farmers and reconsider the level of personalized service it provides to farmers. There are four open recommendations
related to this management challenge.

GAO Contact
Lawrence J. Dyckman, Director
Food and Agriculture Issues
Resources, Community, and Economic Development Division
(202) 512-5138
dyckmanl.rced@gao.gov


GAO product        Recommendation                                                Agency action
RCED-98-98         The Secretary of Agriculture should direct the               While USDA partially agreed with the recommendation, it
Apr. 20, 1998      Administrator, Farm Service Agency (FSA), in                  does not intend to implement it. In its response to the
                   coordination with the Natural Resources Conservation         Congress and OMB, USDA did not specifically address
                   Service and the Rural Development mission area (FSA's        our key point-the need to study the costs and benefits
                   Service Center partners), to study the costs and benefits    of using alternative delivery methods to accomplish
                   of using alternative delivery methods to accomplish           mission objectives. USDA stated that it must retain its
                   mission objectives.                                          county office structure to provide face-to-face service to
                                                                                selected minority and small farm program participants.
                                                                                We continue to believe that continued pressure to reduce
                                                                                federal expenditures requires USDA to look for ways to
                                                                                deliver services more efficiently.
RCED-99-34         To measure the economies and efficiencies gained by          USDA agreed with this recommendation and intends to
Dec. 11, 1998      the departmentwide administrative streamlining, the          implement it. While USDA has ongoing initiatives to
                   Secretary of Agriculture should require the leaders for      develop baselines necessary to develop performance
                   the seven mission areas, in consultation with the            measures, it has not yet begun to implement this
                   Assistant Secretary for Administration and the Chief         recommendation.
                   Financial Officer, to develop and implement performance
                   measures for the department's administrative operations
                   that assess service delivery, efficiency, and quality.
                   The Secretary of Agriculture should direct the               USDA agreed with this recommendation and has
                   Undersecretaries for the Farm and Foreign Agricultural       directed the Under Secretaries to work with the Office of
                   Services, Natural Resources and Environment, and Rural       Budget and Program Analysis on finalizing a strategy for
                   Development to develop cost estimates for the                addressing administrative budget and staffing levels to
                   completed implementation of administrative                   help determine the total estimated cost of
                   convergence.                                                 implementation. USDA is in the early stages of
                                                                                implementing this recommendation.
                   To facilitate the effective implementation of the            USDA agreed with this recommendation and has
                   Administrative Convergence Plan, the Secretary of            implemented a series of action items, including the
                   Agriculture, after approving the implementation plan,        appointment of an Acting Executive Director. USDA is in
                   should move quickly to fill key leadership positions for     the early stages of implementing this recommendation.
                   the Support Services Bureau and charge the appointed
                   officials with the responsibility to carry out the plan.




                                               Page 12     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                              Appendix I
                                              Department of Agriculture




Table 1.2: Fundamental Changes Are Needed to Improve Food Safety

The increasing incidence of foodborne illness has heightened concerns about the federal government's effectiveness in ensuring the
safety of food. This concern has resulted in, among other things, the use of more scientific approaches to meat and poultry inspections.
However, while these changes are important to better ensuring the safety of our food, they do not address the fundamental problem of
having the responsibilities for food safety scattered among 12 different federal agencies, which results in inconsistent oversight, poor
coordination, and the inefficient allocation of resources. The current highly fragmented federal system for food safety needs to be
replaced with a uniform, risk-based inspections system under a single food agency. There are three open recommendations related to
this management challenge.

GAO Contact

Lawrence J. Dyckman, Director
Food and Agriculture Issues
Resources, Community, and Economic Development Division
(202) 512-5138
dyckmanl.rced@gao.gov




                                               Page 13     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                             Appendix I
                                             Department of Agriculture




GAO product       Recommendation                                              Agency action
RCED-94-158      To strengthen the National Residue Program (NRP), the        USDA agreed with and is well along in implementing this
Sept. 26, 1994    Secretary of Agriculture should direct the Administrator,   recommendation. FSIS has drafted a report entitled,
                  Food Safety and Inspection Service (FSIS), to modify        "Proposed Process To Be Used By Public Health
                  port-of-entry residue testing for imported meat and         Residue Prioritization Committee," which describes a
                  poultry to include residues that domestic testing of the    three-phase risk assessment process that will be used to
                  exporting nation has shown to have high violation rates,    determine which compounds become part of the
                 such as heavy metals, as well as the banned and              monitoring portion of the National Residue Program.
                 unapproved compounds that the exporting nation               The new risk-based monitoring program will consider
                 identifies as being used domestically, or require'that the   drugs and pesticides used and environmental
                 exporting nation have programs to test specifically for      contaminants worldwide, regardless of their approval in
                 such residues prior to shipment. '                           the United States. In a few months, FSIS plans to seek
                                                                              public comment on the draft report by publishing it in the
                                                                              Federal Register.
RCED-98-103      To help the Food Safety and Inspection Service (FSIS)        USDA agreed with this recommendation and is in the
Apr. 30, 1998    better identify the risks associated with specific foods     early stage of implementation. However, rather than
                 and thereby further improve the Automated Import             focusing on just the Automated Import Information
                 Information System's usefulness in selecting high-risk       System, it plans to review the entire port-of-entry
                 products to inspect, the Secretary of Agriculture should     inspection procedures, including the Automated Import
                 direct the Administrator, FSIS, to modify the Automated      Information System. USDA said that, as it moves through
                 Import Information System so that it can identify patterns   this planned review, it will address the specific
                 between laboratory test results and specific foods,          recommendation. In this regard, USDA has an action
                 foreign firms, and exporting countries.                      plan with interim target dates and a final target
                                                                              completion date of January 2001.
RCED-99-74       In light of the emergence of antibiotic resistance in        USDA agreed with the recommendation but has not
Apr. 28, 1999    humans, questions about the extent that the agricultural     begun implementation. We are awaiting USDA's formal
                 use of antibiotics contributes to the human health           response, which is due within 60 days of the report's
                 burden, and the debate over whether further regulation       release, for its specific plans for implementation.
                 or restriction of use in agriculture is needed, the          However, successful implementation will depend on the
                 Secretaries of Agriculture and Health and Human              cooperation of the Department of Health and Human
                 Services should develop a plan with specific goals, time     Services, as well.
                 frames, and resources needed to evaluate the risks and
                 benefits of the existing and future use of antibiotics in
                 agriculture, including identifying any data gaps and
                 research methods.




                                            Page 14     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                               Appendix I
                                               Department of Agriculture




Table 1.3: Inefficiency and Waste Within the Forest Service Continue

Inefficiency and waste throughout USDA's Forest Service's operations and organization have cost taxpayers hundreds of millions of
dollars. In particular, the Forest Service' has not obtained fair market value for its goods or recovered its costs for services, cannot
accurately account for a significant amount of its assets and expenditures, has generally unreliable financial statements, and has weak
contracting practices. While the Forest Service has made progress in recent years, it is still far from achieving financial accountability
and possibly a decade or more away from being fully accountable for its performance. Since the financial problems at the Forest
Service are so pervasive and long-standing, we have designated the Forest Service's financial management a high-risk area. (Open
recommendations related to the Forest Service's financial management are detailed in GAO/HR-99-2R.) To improve its operational
efficiency and effectiveness, the Forest Service must be accountable for its financial operations and performance.
There are 25 open recommendations relating to this major management challenge. In addition to the 10 recommendations discussed in
the following table, there are 15 recommendations pertaining to a variety of Forest Service issues, including timber sale contract
defaults, the rights-of-way program, suspended or canceled timber sale contracts, use of the National Forest Fund, management of the
Salvage Sale Fund, contracting practices, and watershed issues.
GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product         Recommendation                                              Agency action
RCED-97-16          The Secretary of Agriculture should direct the Chief of     The Forest Service agreed with this recommendation and
Dec. 20, 1996       the Forest Service to update the methods used to            implementation is well along. The Forest Service is in its
                    calculate fees for commercial and noncommercial             third year of a 5-year effort to conduct appraisals and
                    special-use permits so that they better reflect fair market update fees on over 15,000 recreational residences. In
                    values and comply with the requirements of the              many cases, these appraisals have resulted, or will
                    Independent Offices Appropriations Act of 1952 and          result, in significantly increased fees. For many of the
                    Office of Management and Budget Circular A-25. To           recreational residences that have been affected by
                    minimize any impact that large increases in fees could       updated appraisals, the Forest Service began phasing in
                    have.on permittees, the Service may wish to consider        the new fee charges in January 1999. With regard to
                    phasing in new fees. In addition, once the fees are          commercial permits, the Forest Service is moving away
                    updated, the Service needs to routinely keep them up to     from its graduated rate fee system. During the summer
                    date.                                                        1999, the agency intends to begin implementing a new
                                                                                 fee system for winter resort permits that will be easier to
                                                                                 use and is expected to better reflect fair market value.
                    The Secretary of Agriculture should also consider           The Forest Service partially agreed with this
                    seeking legislation permitting the Forest Service to retain recommendation. Implementation has not yet begun, but
                    application and processing fees in the Forest Service        the agency wants the authority to retain application and
                    unit where the costs were incurred. Permitting the           processing fees. However, the agency has not yet
                    Service to retain the revenue necessary to offset the        decided whether it will seek authority to retain such fees
                    costs of the program would provide additional incentives in the Forest Service unit where the costs were incurred.
                    and resources for getting the necessary work done.           It expects to address this issue after it completes
                                                                                 developing and publishing cost recovery regulations.
                                                                                                                                  (continued)




                                                Page 15     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                           Appendix I
                                           Department of Agriculture




GAO product     Recommendation                                                 Agency action
                The Secretary of Agriculture should direct the Chief of        The Forest Service agreed with this recommendation and
                the Forest Service to develop and issue cost recovery          is well along in developing cost recovery regulations. The
                regulations so that the agency has the proper legal basis      agency expects to publish its draft regulations for
                for recouping the administrative costs incurred in             comment in the Federal Register in the summer 1999,
                reviewing and processing special-use permit                    and issue final regulations by July 2000.
                applications. In order to fully implement this
                recommendation, it will be necessary for the Service to
                develop a cost accounting system.
RCED-96-84      To meet the requirements of the Federal Land Policy and        The Forest Service agreed with this recommendation and
Apr. 22, 1996   Management Act, Mineral Leasing Act, and Office of             implementation is well along. The Forest Service is
                Management and Budget's Circular A-25, the Secretary           working with the Bureau of Land Management (BLM) to
                of Agriculture should direct the Chief of the Forest           develop a common fee system for rights-of-way that
                Service to develop a fee system that ensures that fair         better reflects fair market value. This is one part of an
                market value is obtained from companies that have              effort to revise its rights-of-way program, which will also
                rights-of-way to operate oil and gas pipelines, power          include the Forest Service and BLM issuing a common
                lines, and communications lines across Forest Service          authorization, such as an easement. The agencies
                lands. While there are a number of options available to        expect to complete this effort, and implement a new fee
                accomplish this goal, the option of establishing fees          system, by September 2000.
                based on local market data or site-specific appraisals
                paid for by the users of the rights-of-way appears to be
                the most attractive because it collects fair market value
                for each right-of-way and also reduces the agency's
                administrative costs.
RCED-98-58      Because the Forest Service has not exercised its               The Forest Service agreed with this recommendation but
Feb. 13, 1998   authority to obtain fair market value for certain goods and    implementation has not yet begun. While the Service said
                to recover costs for certain services and has not always       that such goals and performance measures would be
                acted to contain costs, even when requested to do so by        developed as part of the process leading to the revision
                the Congress, the Secretary of Agriculture should direct       of the agency's strategic plan in FY 2000, neither a
                the Chief of the Forest Service to revise the strategic plan   December 1998 draft of the revised strategic plan or the
                that the agency developed to comply with the                   agency's fiscal year 2000 annual performance plan
                requirements of the Government Performance and                 includes any goals or performance measures for
                Results Act to include goals and performance measures          obtaining fair market value for goods, recovering costs
                for obtaining fair market value for goods, recovering          for services, and containing expenses.
                costs for services, and containing expenses as the
                necessary first step in holding the Forest Service
                accountable for its performance.
RCED-98-88      Effective internal control is essential to safeguarding        The Forest Service agreed with this recommendation and
May 6, 1998     government assets and to conducting government                 is well along in its implementation. In May 1999, the
                business with full accountability. To improve compliance       Forest Service completed an overall internal control plan,
                with the Federal Managers' Financial Integrity Act and         which contains mechanisms for ensuring adequate
                our standards for internal control, the Secretary of           contract file documentation, routine supervisory review of
                Agriculture should direct the Chief of the Forest Service      contracting activities, and improved availability of
                to prepare and implement a written internal control plan       management information. The Forest Service has issued
                for contracting that includes methods for ensuring (1) the     informal guidance clarifying how to determine adequate
                complete documentation of critical actions in contract         warrant authority for various types of contracts and is in
                files, (2) the routine supervisory review of contracting       the process of drafting an acquisition regulation to
                activities, (3) more consistent monitoring of contractors'     formalize the guidance. The Forest Service expects to
                progress on service contracts through the                       use the Department of Agriculture's program for training
                implementation of a training and certification program for     and certifying contracting officers' representatives when
                contracting officers' representatives, (4) improved            that program becomes available in the fall 1999.
                summary management information, and (5) clarification
                of how to determine adequate warrant authority for
                various types of contracts.
                                                                                                                               (continued)

                                            Page 16     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                           Appendix I
                                           Department of Agriculture




GAO product     Recommendation                                                Agency action
RCED-97-7.1     Because the Forest Service has proposed removing from         The Forest Service agreed with this recommendation and
Apr. 29, 1997   its forest plans measurable objectives for goods and          implementation is in its early stages. The Forest Service's
                services, such as quantities of wood for lumber and           existing performance measures do not adequately reflect
                forage for livestock and numbers of opportunities for         accomplishments or progress toward achieving the
                recreation, the Secretary of Agriculture should direct the    agency's strategic goal and objectives for providing
                Chief of the Forest Service to identify how the agency will    goods and services, including high quality recreational
                link its long-term strategic goal of providing multiple       experiences in national forests. Although the Forest
                benefits to satisfy people's needs for uses, values,          Service is developing a process to identify measurable
                products, and services within the capabilities of              components of the recreation program, establish
                ecosystems with its annual performance goals and               standards of quality for each component, and monitor,
                measures for gauging the progress made toward                  measure, and report actual management attainment of
                achieving the long-term goal and holding line managers        the quality standards, the process is still evolving and
                accountable for their performance.                             has not been implemented.
RCED-99-2       To improve the Forest Service's accountability for results,    In commenting on a draft of this report, the Forest
Dec. 2, 1998    the Secretary of Agriculture should direct the Chief of the    Service generally agreed with this recommendation. As
                 Forest Service to: (1) revise the agency's budget             of early June 1999, we had not received the agency's
                structure, budget allocation criteria, and performance         response required by 31 U.S.C. 720.
                 measures to better link them to the Forest Service's
                 strategic goals and objectives; and (2) incorporate the
                 new performance measures into the management cost
                 and performance reporting system that the agency is
                 developing.
                To help ensure that the budget allocation criteria and        In commenting on a draft of this report, the Forest
                 performance measures are revised and the management          Service generally agreed with this recommendation. As
                 cost and performance reporting system is implemented         of early June 1999, we had not received the agency's
                 in a timely manner, the Secretary of Agriculture should      response required by 31 U.S.C. 720.
                 direct the Chief of the Forest Service to establish a firm
                 schedule to achieve performance accountability.
RCED-99-65       The Secretary of Agriculture should direct the Chief of      In commenting on a draft of this report, the Forest
Apr. 2, 1999     the Forest Service to develop, and formally communicate      Service agreed that it needs to develop a cohesive
                 to the Congress, a cohesive strategy for reducing and        strategy for reducing and maintaining accumulated fuels
                 maintaining accumulated fuels on national forests of the     on national forests of the interior West at acceptable
                 interior West at acceptable levels. The strategy should      levels. As of early June 1999, we had not received the
                 include (1) specific steps for: (a) acquiring the data       agency's response required by 31 U.S.C. 720.
                 needed to establish meaningful performance measures
                 and goals for reducing fuels; (b) identifying ways of
                 better reconciling different fuel reduction approaches
                 with other stewardship objectives; and (c) identifying
                 changes in incentives and statutorily defined contracting
                 procedures that would better facilitate the
                 accomplishment of fuel reduction goals; (2) a schedule
                  indicating dates for completing each of these steps; and
                  (3) estimates of the potential and likely overall and
                  annual costs of accomplishing this strategy based on
                  different options identified in the strategy as being
                  available for doing so.




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                                             Appendix I
                                             Department of Agriculture




Table 1.4: Reducing Overpayments in the Food Stamp Program


Millions of dollars in overpayments in the Food Stamp Program occur because eligible persons are paid too much or because ineligible
individuals improperly participated in the Food Stamp Program. Computer matching can provide a cost-effective mechanism to
accurately and independently identify households that include ineligible participants. Some states have taken actions to reduce food
stamp overpayments by using computer matching to identify ineligible participants. USDA can enhance the states' effectiveness in
identifying ineligible participants and reducing overpayments by taking a lead role in promoting the sharing of information among
federal and state agencies. There is one open recommendation related to this management challenge.

GAO Contact

Lawrence J. Dyckman, Director
Food and Agriculture Issues
Resources, Community, and Economic Development Division
(202) 512-5138
dyckmanl.rced@gao.gov


GAO product        Recommendation                                             Agency action
RCED-98-228        In the absence of a comprehensive national information      USDA agreed with this recommendation and has begun
Aug. 6, 1998      system on participants in all public assistance programs,   taking action. On November 12, 1998, the President
                  the Secretary of Agriculture should direct the               signed Public Law 105-379, amending the Food Stamp
                  Administrator of the Food and Nutrition Service (FNS) to    Act of 1997, to direct the Secretary of Agriculture to
                  consider establishing a central system to help ensure        study and report to the Congress on options for the
                  that individuals participating in the Food Stamp Program    design, development, implementation, and operation of a
                  are not being improperly included as household              national database to track participation in federal means
                  members in more than one state concurrently. As part of     tested programs (including the Food Stamp
                  this effort, FNS should conduct a feasibility study to      Program). USDA's Food and Nutrition Service has
                  identify options and provide a cost-benefit estimate for    initiated action on the study and has contracted with a
                  each option.                                                consulting firm for certain aspects of the study. The study
                                                                              is to be completed by November 1999.




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                                              Appendix I
                                              Department of Agriculture




Table 1.5: USDA Lacks Financial Accountability Over Billions of Dollars in Assets

USDA has a long-standing history of deficiencies in its accounting and financial management systems. Since 1991, because of these
deficiencies, USDA's Inspector General has issued a series of unfavorable financial audit reports on USDA and several of its
component agencies' financial statements. In addition, USDA's ability to comply with budgetary and financial statement reporting
requirements is severely hampered by its lack of adequate financial systems. USDA currently has an action plan for resolving its
accounting and financial systems' deficiencies that calls for full implementation by fiscal year 2000. Given the long-standing nature of
USDA's financial management deficiencies, complete resolution by fiscal year 2000 will be a significant challenge.
While currently we have no open recommendations directly related to USDA's overall financial management, the Inspector General's
(IGs) financial audits have resulted in detailed recommendations that, if adequately implemented, provide the path that USDA must
follow to achieve financial accountability. The IG's recommendations address the need for improving internal controls and implementing
a modern financial management system that meets federal accounting standards and requirements. Although USDA has measures
underway to correct its financial management deficiencies, few of the IG's recommendations have been fully implemented. As a result,
few of the department's financial problems have been fully resolved. As we have done for the past several years, we will continue to
monitor the efforts of USDA and its component agencies to achieve financial accountability. In addition, because the financial problems
at the Forest Service, a major USDA component agency, are so pervasive and long-standing, we have designated the Forest Service's
financial management a high-risk area.
GAO Contact

Linda M. Calbom, Director
Resources, Community, and Economic Development Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-8341
calboml.aimd@gao.gov




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                                             Appendix ]:
                                             Department of Agriculture




Table 1.6: USDA Can Save Millions by Better Managing Its Telecommunications Investments

USDA is not effectively managing its telecommunications systems and services. Among other things, USDA has not consolidated and
optimized telecommunications where opportunities exist to do so or established sound management practices to ensure that
telecommunications resources are effectively managed and payments for unused, unnecessary, or uneconomical services are
terminated. To respond to these problems, USDA has identified improvements it states could reduce its annual over $200 million
telecommunications investment by as much as $70 million each year. As a first step, USDA is developing a Telecommunications Action
Plan for correcting its telecommunications management deficiencies. However, once this plan is developed, USDA will need to
effectively implement it to correct deficiencies and achieve cost savings. The nine open recommendations related to this management
challenge are discussed in the following table.
GAO Contact

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov


GAO product       Recommendation                                               Agency action
AIMD-95-203       The Secretary of Agriculture should direct the under         USDA agreed with our recommendation and
Sept. 22, 1995    secretaries and assistant secretaries to establish and       implementation is in its early stages. On March 23, 1999,
                  implement procedures for reviewing telecommunications         USDA's Office of the Chief Information Officer (OCIO)
                  resources at offices USDA plans to either close or            issued an updated and expanded Departmental
                  relocate to ensure that (1) all unneeded                      Regulation (DR) 3300-1 ,Telecommunications and
                  telecommunications services are terminated promptly           Internet Services and Use, which requires
                  and vendor accounts are closed and (2)                        agencies/offices to identify outdated or no longer needed
                  telecommunications equipment is properly accounted for       telecommunications resources and ensure that the
                  and reused where it is practical and cost-beneficial to do    agencies/offices are paying for only those resources
                  so.                                                           being used. In May 1999, USDA said it is currently
                                                                                developing a strategy to implement a
                                                                               telecommunications compliance program. As a first step,
                                                                               the OCIO plans to instruct agency/office ClOs and
                                                                                managers to establish the necessary internal controls,
                                                                                including certification by the CIO or senior management
                                                                                official that these procedures have been developed and
                                                                                implemented.
                                                                                                                               (continued)




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                                        Appendix I
                                        Department of Agriculture




GAO product   Recommendation                                             Agency action
              The Secretary of Agriculture should direct the Assistant   USDA agreed with our recommendation and
              Secretary for Administration to require the Office of      implementation is well along. In response to our report,
              Information Resources Management (OIRM) to develop         USDA began reengineering the department's
              additional departmental policy requiring agencies to       telecommunications management activities in June 1996
              establish management controls over the acquisition and     and began a pilot project to evaluate an application to
              use of telecommunications resources and assist             support the department's new Telecommunications
              agencies in carrying out these requirements by             Ordering, Billing, and Inventory (TOBI) system and
              completing a systematic review of the agencies' current    reengineered processes. However, in May 1999, USDA
              telecommunications management practices to                 said that preliminary results of the pilot showed the
              (1) identify and correct telecommunications management     application was not adequate and the department is
              deficiencies that exist and (2) establish an agency        currently revising its implementation plan for TOBI.
              telecommunications management program that sets             USDA said it expects to begin to execute the revised
              performance expectations over agency                        plan by September 1999.
              telecommunications activities and assigns responsibility
              and accountability necessary to ensure that these
              activities are effectively carried out.
              The Secretary of Agriculture should direct the Assistant   USDA agreed with our recommendation and
              Secretary for Administration to require OIRM to            implementation is well along. In April 1997, USDA began
              strengthen oversight by conducting periodic reviews of     implementing the Telecommunications Network
              agency telecommunications management activities in         Stabilization and Migration Program (TNSMP), which
              accordance with federal requirements to ensure that        requires mission areas/agencies to establish inventories
              (1) inventories of telecommunications equipment and        of telecommunications equipment and services, effective
              services are properly maintained, (2) sufficient           management controls over telecommunications
              management controls exist over telecommunications          resources and expenditures, and processes for
              resources and expenditures, and (3) redundant or           identifying and eliminating redundant or uneconomical
              uneconomical services are eliminated.                      services. When TNSMP is fully implemented, USDA
                                                                         expects that oversight of all telecommunications
                                                                         management processes across the department will be
                                                                         strengthened and significantly improved. Work on
                                                                         implementing TNSMP is ongoing and USDA has not
                                                                         provided us with time frames for its completion.
              The Secretary of Agriculture should direct the Assistant   USDA agreed with our recommendation and
              Secretary for Administration to require OIRM to            implementation is in its early stages. In February 1997,
              determine, with assistance from the under secretaries       USDA developed a draft high-level architecture for
              and assistant secretaries for USDA's seven mission         establishing a departmentwide Enterprise Network.
              areas, interagency information sharing requirements         However, work necessary to define USDA's business
              necessary to effectively carry out USDA crosscutting        data and information sharing requirements for the
              programs and include these data sharing requirements        architecture is still ongoing and USDA has not provided
              in departmental and agency strategic IRM and                us with time frames for its completion.
              telecommunications plans.
                                                                                                                       (continued)




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                                           Appendix I
                                           Department of Agriculture




GAO product     Recommendation                                               Agency action
AIMD-96-59      The Secretary of Agriculture should direct the Assistant     USDA agreed with our recommendation. USDA has not
Apr. 16, 1996   Secretary for Administration and the Chief Financial         yet begun implementation, but it intends to do so. As we
                Officer, in cooperation with the under secretaries and the   reported in June 1998, USDA said it believed that the
                Office of the Inspector General, to determine the risk of    risks of departmentwide telephone abuse and fraud
                and vulnerability to telephone fraud, waste, and abuse       would be better addressed by implementing the
                departmentwide; develop an appropriate plan with             department's reengineered telecommunications
                cost-effective controls to mitigate these risks; and         management processes. To this end, USDA began work
                expeditiously implement this plan. In developing this        on the TOBI system, a USDA-wide telecommunications
                plan, among other things, the department should              information system. However, in May 1999, USDA said
                consider determining whether there is a need to continue      preliminary results of a pilot project evaluating a system
                to accept collect calls and, if deemed necessary,            application showed that it was inadequate to support
                evaluate the viability and cost-effectiveness of             TOBI and USDA is currently in the process of developing
                alternatives to collect calls such as offering toll-free      a revised implementation plan, which it expects to begin
                numbers.                                                     to implement by September 1999.

AIMD-97-67      The Secretary of the Interior and the Secretary of        Interior and USDA agreed with our recommendation and
May 8, 1997     Agriculture should ensure that their respective acting    implementation is well along. In response to our
                ClOs are responsible and accountable for implementing     recommendation, USDA placed a purchase moratorium
                the 1995 joint sharing agreement. At a minimum, the       on Forest Service radio systems on July 21, 1997, and
                acting ClOs should stop further radio system purchases,   Forest Service began making assessments to identify
                except those necessary for meeting immediate              sharing opportunities. According to USDA, in May 1999,
                technology needs that are critical to ongoing operations, all national forests completed these assessments
                until both departments jointly determine and document     by October 1998 and were using this information to
                where radio equipment and services can be                 evaluate requests from forests for authority to redesign
                cost effectively shared and savings achieved.             and replace radio systems. Sharing opportunities
                                                                          between USDA and Interior have been identified and are
                                                                          being included in forest system upgrade and
                                                                           replacement plans.
                The Secretary of the Interior and the Secretary of         USDA and Interior agreed with our recommendation and
                Agriculture should ensure that their respective acting     implementation is well along. Interior and Forest Service,
                ClOs are responsible and accountable for implementing USDA's lead agency for identifying sharing opportunities
                the 1995 joint sharing agreement. At a minimum, the       with Interior, identified 107 potential sharing sites and, in
                acting ClOs should monitor these activities and follow up January 1998, signed a memorandum of understanding
                where needed to ensure that all identified savings         providing for the joint optimization and consolidation of
                opportunities are acted upon.                             telephone services and data networks. As of May 1999,
                                                                           USDA reported that roughly 35 percent of the sites are
                                                                           currently sharing services, another 10 percent are in the
                                                                           process of doing so, and agreements have been
                                                                          established to share services at new Interior/Forest
                                                                           Service joint facilities.
                                                                                                                            (continued)




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                                           Appendix I
                                           Department of Agriculture




GAO product     Recommendation                                             Agency action
AIMD-98-131     The Secretary of Agriculture should direct that the CIO     USDA agreed with our recommendation and
June 30, 1998   complete and implement a departmentwide corrective          implementation is in its early stages. In October 1998,
                action plan that fully addresses all of our                 USDA said it would complete and begin implementing a
                recommendations for resolving the department's             departmentwide corrective action plan in December
                telecommunications management weaknesses and                1998 that would address all our previous
                achieving savings wherever possible.                       telecommunications management improvement
                                                                           recommendations. However, in May 1999, USDA said it
                                                                           was unable to devote the resources needed to make
                                                                           significant progress because it was working on the Year
                                                                           2000 computing problem. USDA said that it is currently
                                                                           refocusing its efforts on closing our recommendations
                                                                           and plans to provide us with a status on progress made
                                                                           near the end of June 1999.
                The Secretary of Agriculture should direct the CIO to      USDA agreed with our recommendation. USDA has not
                periodically report to the Secretary on the department's   yet begun implementation, but it intends to do so. In
                progress in (1) implementing this corrective action plan   October 1998, USDA said that 30 days after completing
                and (2) achieving the estimated $70 million in annual      its departmentwide corrective action plan in December
                savings identified by the department.                       1998, it planned to brief the Secretary on progress
                                                                           toward implementing the action plan and achieving
                                                                           estimated savings. However, in May 1999, USDA said
                                                                           that progress had been delayed by work on the Year
                                                                            2000 problem. USDA said it is currently refocusing its
                                                                            efforts on closing these recommendations and plans this
                                                                            summer to begin to brief the Deputy Secretary
                                                                            periodically on the status of the department's
                                                                           telecommunications management improvement efforts.




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                                              Appendix I
                                              Department of Agriculture




Table 1.7: Significant Weaknesses in USDA's Multibillion-Dollar Modernization of Service Center Information Technology
Place Effort at Risk

Since 1993, USDA has been attempting to modernize information technology (IT)for its service centers-the biggest, most costly, and
most challenging modernization in its history. USDA experienced a failure with its initial $2.6 billion modernization program-called Info
Share-which was disbanded in 1995. Then, in 1995, USDA initiated another modernization effort-called the Service Center
Implementation initiative-for the purpose of providing "one-stop" service to customers of the farm service, natural resources, and rural
development agencies. Plans under this initiative include modernizing business processes and IT for these agencies' 3,100 locations at
estimated life cycle costs that could ultimately exceed $3,billion. We found that USDA's current multibillion-dollar undertaking has
several weaknesses that place the entire effort at risk of not achieving an adequate return on investment or significantly improving
customer service. Such weaknesses include (1) acquiring new IT without first determining how it will operate to provide "one-stop"
service, (2) not managing the IT projects as investments, and (3) not developing a comprehensive plan and management structure for
an effort of this magnitude. Because USDA has failed in past efforts to plan and manage IT modernization, and because some of the
same weaknesses are present with the ongoing modernization, concerns exist that USDA could again fail unless it addresses these
weaknesses. The six open recommendations related to this major management challenge are discussed in the following table.

GAO Contact
Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov


GAO product        Recommendation                                             Agency action
AIMD-98-168        The Secretary of Agriculture should ensure that the        USDA agreed to develop a concept of operations and
Aug. 31,1998       following actions are completed before investing in any     new mission-critical business processes and to integrate
                   effort to modernize USDA's IT beyond that necessary for    the reengineering project with its county-based study,
                   making mission-critical systems Year 2000 compliant         but disagreed with the part of the recommendation that it
                   and for cost effectively supporting ongoing operations      not invest in ITbeyond that needed for Year 2000
                   and maintenance: (1) develop and document a concept         deficiencies before these actions are completed. USDA
                   of operations and the new mission-critical business        is well along in developing a concept of operations, but
                   processes necessary to provide one-stop service at all     is in the early stages of developing new business
                   sites and (2) integrate the service center business        processes and integrating the reengineering project with
                   process reengineering project with the county-based        the study. USDA expects to complete its concept of
                   study.                                                     operations in summer 1999, and shows in its 1999/2000
                                                                              performance plan a goal of reengineering 60 percent of
                                                                              the service center business processes by fiscal year
                                                                              2000. We were told that USDA is currently working with
                                                                              OMB in a joint study group to determine how the results
                                                                              for the study completed in fall 1998 will affect the service
                                                                              centers, and that this would include determining what
                                                                              changes, if any, need to be made to the reengineering
                                                                              project based on the study. Decisions are expected to
                                                                              be made in late summer 1999.
                   The Secretary of Agriculture should hold the CIO           USDA disagreed with the recommendation and does not
                   accountable, and provide her requisite authority and       intend to implement any action in this area.
                   responsibility for managing and implementing the service
                   center IT modernization.
                                                                                                                              (continued)



                                              Page 24     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                          Appendix I
                                          Department of Agriculture




GAO product   Recommendation                                                  Agency action
              The Secretary of Agriculture should direct that the CIO         USDA agreed with this recommendation and is in the
              identify, assess, and document the risks, costs, benefits,      early stages of addressing itUSDA reported that the
              and performance measures for each service center IT             service center IT projects will be subjected to the
              project before providing additional funding to ongoing          evolving USDA capital investment and control process,
              projects and approving any new projects, and then use           and that OCIO approval for the common computing
              this information to review, control, and evaluate these         environment deployment will depend on the project
              projects at specific milestones of the project's life cycles.   meeting capital investment planning and control
                                                                              requirements. The modernization plan, which is under
                                                                              development and expected to be completed during
                                                                              summer 1999, is supposed to include a documented
                                                                              assessment of the risks, costs, benefits, and
                                                                              performance measures for each project.
              The Secretary of Agriculture should direct that the CIO         USDA agreed with this recommendation and is well
              develop a comprehensive plan for the service center IT          along in establishing a comprehensive implementation
              modernization that documents and tracks all critical            plan for the service center ITmodernization as part of its
              milestones, dependencies among major segments, and              modernization plan due to be completed in summer 1999.
              resources needed to complete milestones, taking into
              account the resources that will be needed to make the
              service center agencies' systems Year 2000 compliant.
              The Secretary of Agriculture should direct that the CIO  USDA agreed with the recommendation regarding an
              develop an acquisition strategy that focuses on buying   acquisition strategy and is in the early stages of
              technology in manageable increments, where cost          addressing it. USDA says that procurements of any
              justification and performance measures are developed     mission-critical systems by the service centers will be
              and documented for each increment.                       carefully scrutinized to ensure that they are fully justified.
                                                                       The modernization plan expected to be completed in
                                                                       summer 1999 is supposed to have manageable
                                                                       increments of planned acquisitions, each of which has
                                                                       separate cost justifications and performance measures.
              The Deputy Secretary should report on a regular basis to USDA agreed with this recommendation, but has not yet
              the Secretary of Agriculture on the progress the         started the intended action.
              department is making to implement each of these
              recommendations, and notify the Secretary when all of
              the identified weaknesses have been fully addressed
              and resolved.




                                          Page 25      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                               Appendix I
                                               Department of Agriculture




Table 1.8: USDA Faces Serious Year 2000 Computing Challenges

In May 1998, we testified that USDA will have a great deal of difficulty in correcting, testing, and implementing its mission-critical
automated information systems in time for the Year 2000. While USDA has begun to address the Year 2000 problem, it still faces
significant challenges renovating and replacing all of its mission-critical systems in time and taking the necessary steps to ensure that
vital public services are not disrupted. The four open recommendations related to this management challenge are discussed in the
following table.
GAO Contact

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov


GAO product         Recommendation                                              Agency action
AIMD-99-178         The Secretary of Agriculture should direct that             Although the CIO agreed to implement the
May 21, 1999        the Chief Information Officer (CIO) advance the              recommendation during our exit briefing with USDA, the
                    department's December 1999 time frame for completing        department has not responded to the report, which was
                    and testing agencies' Business Continuity and               just released on June 3, 1999.
                    Contingency Plans (BCCPs) to no later than September
                    30, 1999.
                    The Secretary of Agriculture should direct that the         Although the CIO agreed to implement the
                    undersecretaries for USDA's seven mission areas, as          recommendation during our exit briefing with USDA, the
                    well as the CIO, Chief Financial Officer, and Assistant      department has not responded to the report, which was
                    Secretary for Administration, have their respective         just released on June 3, 1999.
                    agencies and offices develop priorities for completing
                    and testing BCCPs that are aligned with the
                    department's 43 highest priority business processes to
                    ensure the remaining work addresses these processes
                    first.
                    The Secretary of Agriculture should direct that the         Although the CIO agreed to implement the
                    undersecretaries for USDA's seven mission areas, as         recommendation during our exit briefing with USDA, the
                    well as the CIO, Chief Financial Officer, and Assistant     department has not responded to the report, which was
                    Secretary for Administration, have their respective         just released on June 3, 1999.
                    agencies and offices establish specific milestones to
                    complete key interim BCCP steps that have not yet been
                    addressed.
                    The Secretary of Agriculture should direct that the         Although the CIO agreed to implement the
                    undersecretaries for USDA's seven mission areas, as          recommendation during our exit briefing with USDA, the
                    well as the CIO, Chief Financial Officer, and Assistant     department has not responded to the report, which was
                    Secretary for Administration, have their respective         just released on June 3, 1999.
                    agencies and offices report regularly to the Secretary
                    progress on meeting milestones to ensure that the
                    agencies and offices adequately address all key BCCP
                    steps that are appropriate to each agency.




                                                Page 26     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix II

Department of Commerce


Table 11.1: Pursuing More Cost-Effective Alternatives to NOAA's Research Fleet

The Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) has an aging in-house fleet of 15 ships that
are used to support its programs in fisheries research, oceanographic research, and hydrographic charting and mapping. For more
than a decade we and others have urged NOAA to pursue more cost-effective alternatives. While NOAA has increased its outsourcing
for these services, it continues to rely on its aging fleet, most of which are inefficient to operate and maintain and lack the latest
technology. NOAA plans to spend at least $185 million over the next 5 years for four new replacement fisheries research ships. Greater
reliance on outsourcing raises questions about the continuing viability of the NOAA Corps of 240 officers who manage and operate
NOAA's ships. While we currently do not have any open recommendations related to this major management challenge, continuing
congressional oversight of NOAA's budget requests for replacement or upgraded ships is needed to ensure that NOAA is pursuing the
most cost-effective alternatives for acquiring marine data.

GAO Contact
L. Nye Stevens, Director
Federal Management and Workforce Issues
General Government Division
(202) 512-8676
stevensl.ggd@gao.gov




                                             Page 27     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                              Appendix II
                                              Department of Commerce




Table 11.2: Improving Financial Management Systems and Processes


The Department of Commerce faces several challenges in the financial management area. The department has a goal of obtaining an
unqualified audit opinion on its financial statements beginning for fiscal year 1999 (which will be audited in 2000) and is making
progress towards that goal. After receiving a disclaimer of audit opinion on its fiscal years 1996 and 1997 consolidated financial
statements, for fiscal year 1998, Commerce received an unqualified audit opinion on its balance sheet and a disclaimer of audit opinion
on its other financial statements. We currently do not have any open recommendations in this major management challenge area.
However, Commerce continues to face significant challenges in implementing new computer systems to meet federal requirements and
to make all of its systems Year 2000 compliant.

GAO Contact

Gregory D. Kutz, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
kutzg.aimd@gao.gov




                                             Page 28     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix III

Department of Defense


Table 111.1: Information Management and Technology Issues Pose Major Concerns - Progress on Year 2000 Conversion

The Department of Defense (DOD) relies on computer systems for virtually all of its operations, including strategic and tactical
operations; sophisticated weaponry; intelligence, surveillance, and security efforts; and more routine business functions such as payroll
and logistics. For an organization as large as DOD-with over 1.5 million computers, 28,000 systems, and 10,000 networks-addressing
the Year 2000 problem is a formidable task. While DOD has an enormous effort underway to remediate its mission-critical systems and
ensure that its key operations will continue to function after the century date change, its effort is at risk. DOD's early management of the
effort was hampered by inconsistent guidance, lack of reliable and timely information on program status, inaccuracies concerning
systems compliance in component-level reports, and poor contingency planning. Over the past year, DOD has improved its
management of its Year 2000 program by establishing a strong department-level program office, with active participation by the Deputy
Secretary of Defense, to oversee Year 2000 efforts. It has also improved its systems inventory and instituted a testing program aimed at
ensuring continuity of key missions and operations. However, DOD remains behind schedule in completing its systems remediation and
is still grappling with some of the program management issues previously described.

Our audit efforts resulted in 38 recommendations, covering DOD and its components, related to this major management challenge, of
which 14 remain open. Corrective actions on 8 of these 14 recommendations are in various stages of completion. Because DOD
determined that it could no longer use its initial systems inventory for Year 2000 purposes, and due to the limited time remaining before
January 1, 2000, the remaining six of the original recommendations are no longer applicable and will be closed.
GAO Contact

Jack L. Brock, Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov


GAO product         Recommendation                                              Agency action
AIMD-97-117         The Director of the Defense Finance and Accounting          DFAS agreed with our recommendation and is well along
Aug. 11, 1997       Service (DFAS) should. direct the Deputy Director for       in taking corrective action. The DFAS Year 2000
                    Information Management to require the full                  Management Plan requires that all mission-critical
                    implementation of the recently established Year 2000        systems be fully certified, and that the certification of
                    certification process and ensure that Year 2000             compliance be predicated on testing all systems,
                    compliance is predicated on testing all systems,            including COTS applications and personal computers
                    including commercial-off-the-shelf (COTS) applications      and servers. As of May 1999, DFAS had not completed
                    and personal computers and servers.                         the certification of all its systems, but was tracking the
                                                                                status of these efforts regarding COTS applications,
                                                                                personal computers, and servers. According to DFAS,
                                                                                certification of all systems is to take place in July 1999,
                                                                                after the completion of Year 2000 systems testing.
                   The Director of DFAS should direct the Deputy Director       DFAS agreed with our recommendation and is well along
                   for Information Management to devise a testing schedule in taking corrective action. As of April 1999, the DFAS
                   that identifies the test facilities and resources needed for Year 2000 testing program was still ongoing and was not
                   performing proper testing of DFAS systems to ensure          scheduled to be completed until July 1999. The Year
                   that all systems can operate in a Year 2000 environment. 2000 environment-level testing facilities have been
                                                                                identified, and DFAS is working with the Defense
                                                                                Information Systems Agency (DISA) to determine the
                                                                                resources needed, schedules, and readiness of DISA
                                                                                processing center platforms to test DFAS systems in a
                                                                                Year 2000 environment.
                                                                                                                                  (continued)


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                                            Appendix III
                                            Department of Defense




GAO product      Recommendation                                            Agency action
AIMD-97-149      The Director of the Logistics Systems Support Center      LSSC agreed with our recommendation and is well along
Sept. 26, 1997   (LSSC) should develop a contingency plan that includes    in taking c orrective action. LSSC completed a system
                 specific actions for ensuring that the Army's logistic    contingency plan for CCSS on February 5, 1999. In
                 functions continue to operate at appropriate levels if alladdition, each user command of CCSS has been
                 or part of the Commodity Command Standard System          directed to complete a functional contingency plan.
                 (CCSS) fails to work at the year 2000.                    According to LSSC, the DOD Inspector General
                                                                           reviewed the CCSS contingency plan for adequacy and
                                                                           indicated that the plan was sound, but should be tested.
                                                                           LSSC plans to test the plan prior to the end of fiscal year
                                                                           1999.
AIMD-98-150      The Secretary of the Navy should direct the Department The Navy agreed with our recommendation and is well
June 30, 1998    of the Navy's Chief Information Officer (CIO) to ensure   along in taking corrective action. The Navy Year 2000
                 that the Navy Year 2000 Coordination Office is provided Coordination Office increased its staffing level from 10
                 with sufficient staff and authority to ensure that        staff at the time of our review to a current level of 16 staff
                 components have identified and corrected interfaces       to ensure that adequate personnel were available, with
                 and developed written memorandums of agreement with the necessary authority, to correct the Year 2000
                 interface partners.                                       problems we identified. The Navy has tasked program
                                                                           managers with negotiating memorandums of agreement
                                                                           for each system interface and recording this information
                                                                           in its Year 2000 database. Senior-level management is
                                                                           responsible for ensuring the completion of these tasks.
                                                                           While the Navy reports that significant progress has been
                                                                           made in identifying the interfaces, preparing the
                                                                           agreements, and populating the database, the process
                                                                           is still ongoing. Senior management has emphasized to
                                                                           its managers the need to complete all of the required
                                                                           agreements and to record this information in the Year
                                                                           2000 database.
                 The Secretary of the Navy should direct the Department The Navy agreed with our recommendation and is well
                 of the Navy's CIO to ensure that the Navy Year 2000       along in taking corrective action. As stated above, the
                 Coordination Office is provided with sufficient staff and Navy Year 2000 Coordination Office increased its staffing
                 authority to ensure that Year 2000 contingency planning level from 10 staff at the time of our review to a current
                 focuses on the continuity of all of the Navy's critical   level of 16 staff to ensure that adequate personnel were
                 military operations and business processes rather than    available, with the necessary authority, to correct the
                 on only a small portion of mission-critical systems.      Year 2000 problems we identified. The Navy is also
                                                                           taking action to ensure that Year 2000 contingency
                                                                           planning fbcuses on the continuity of all of Navy's critical
                                                                           military operations and business processes. In
                                                                           November 1998, the Navy issued a Year 2000
                                                                           contingency planning guide for commanders to use in
                                                                           developing contingency plans and provided procedures
                                                                           for addressing potential Year 2000 readiness challenges
                                                                           and threats. The guide states that the adopted
                                                                           procedures should be exercised in Year 2000
                                                                           operational test events, which are currently ongoing. To
                                                                           ensure continuity of business operations at the user level,
                                                                           the Navy also is requiring contingency plans for all
                                                                           mission-critical systems. In some cases, these plans will
                                                                           be revised to account for problems identified during
                                                                           testing. The Navy's Year 2000 Coordination Office is
                                                                           monitoring the development of these contingency plans
                                                                           in order to promote continuity of business operations and
                                                                           ensure mission capability at the user level.
                                                                                                                             (continued)


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                                            Appendix III
                                            Department of Defense




GAO product     Recommendation                                              Agency action
AIMD-98-35      The Secretary of the Air Force should immediately           The Air Force agreed with our recommendation and is
Jan. 16, 1998   require that the Air Force ensure its cost estimates factor well along in taking corrective action. The Air Force
                in the actual resources it believes are needed to           tasked program offices with developing realistic cost
                renovate and implement systems so that it can make          estimates for Year 2000 systems renovation and
                informed resource trade-off decisions and ensure that       implementation and periodically refining these estimates.
                this estimate is periodically refined throughout the Year   In the May 1999 DOD Year 2000 quarterly report to OMB,
                2000 program.                                               the Air Force reported that it will cost about $1.2 billion to
                                                                            complete its Year 2000 program. The Air Force plans to
                                                                            continue to report its revised 'cost estimates to OMB on a
                                                                            quarterly basis.
                The Secretary of the Air Force should                       The Air Force agreed with our recommendation and is
                *ensure that components are developing test plans and well along in taking corrective action. The Air Force
                identifying the need for additional testing resources, and analyzed test resource needs and concluded that the
                *design an approach to obtain any needed testing            existing mix of in-house and contractor resources was
                resources that are identified by Air Force components.      sufficient. Also, the Air Force issued guidance directing
                                                                            its program/system managers to develop test plans for
                                                                            conducting system certification tests, functional
                                                                            end-to-end integration testing, and operational readiness
                                                                            evaluations, but has continued to rely on its individual
                                                                           components to ensure that these test plans are
                                                                            developed. In March 1999, the Air Force received
                                                                           $163.8 million in Year 2000 supplemental funds, of which
                                                                           about $113 million is to be used to complete its Year
                                                                           2000 testing. However, the Air Force does not expect to
                                                                            complete its Year 2000 testing until late 1999, and has
                                                                            acknowledged that additional test resources may be
                                                                            needed to procure new hardware and software to
                                                                           support testing, to develop additional test plans, and to
                                                                           conduct additional tests of some remediated systems.
                                                                           The Air Force is tracking test completion dates and costs
                                                                           through its Year 2000 database.
                The Secretary of the Air Force should ensure that          The Air Force agreed with our recommendation and is
                components have prepared contingency plans for their       well along in taking corrective action. The Air Force
                mission-critical systems.                                  revised and expanded its Year 2000 Management Plan
                                                                           to provide better guidance for completing contingency
                                                                           plans, and now requires Year 2000 contingency plans for
                                                                           all mission-critical and mission-essential systems. A plan
                                                                           is also required for any other system that did not
                                                                           complete implementation by December 31, 1998.
                                                                           According to the Air Force Year 2000 Program Office,
                                                                           while most system managers/owners have competed this
                                                                           important task, a few have not. The Program Office is
                                                                           monitoring the status of competed contingency plans via
                                                                           its Year 2000 database.




                                           Page 31.     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                               Appendix II
                                               Department of Defense




Table 111.2: Information Management and Technology Issues Pose Major Concerns - Information Security

Securing Defense's vast array of networked computers is a major challenge. Defense's computer systems are particularly susceptible
to attack through connections to the Internet, which Defense uses to enhance communications and information sharing. Audit reports
have identified a broad array of problems. One of the most fundamental issues, which we reported on in August 1998, is that DOD has
not completed development of an architecture, or blueprint, for its command, control, and communications systems. Without such an
architecture, DOD will find it difficult to ensure that these systems, which are essential to DOD's long-term plans for ensuring information
superiority, are adequately protected. Other reports have identified specific control weaknesses in existing systems that increase the
risks of damage from intrusions, as well as from malicious acts and inadvertent mistakes by authorized users.
Currently, there are 10 open recommendations related to this issue. All but one of these are restricted to limited official use and are not
detailed here. The recommendation below pertains to Defense's need to devote adequate human resources to its information security
efforts.
GAO Contact

Jack L. Brock, Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov


GAO product        Recommendation                                               Agency action
AIMD-96-84         The Secretary of Defense should strengthen the DOD           DOD agreed with this recommendation, and
May 22, 1996       computer security program by requiring information           implementation is in its early stages. It agreed to direct
                   system security officers at all installations and setting    that all military installations ensure that they have
                   specific standards for ensuring that these information       personnel assigned to the responsibilities of information
                   system security officers as well as system and network       systems security officer, network manager, and system
                   managers are given sufficient time and training to           administrator. DOD also agreed to expeditiously
                   perform their duties appropriately.                          determine the extent of shortfalls and determine the
                                                                                efforts and resources required to improve the training
                                                                                and availability of these responsible personnel. DOD has
                                                                                established Departmentwide Information Assurance
                                                                                Program (DIAP) to ensure that information assurance
                                                                                efforts are integrated and coordinated. Among its
                                                                                functions, DIAP ensures that sufficient adequately trained
                                                                                and educated personnel are available to carry out
                                                                                defensive information operations.




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                                                 Appendix III
                                                 Department of.Defense




Table 111.3: Military Personnel Issues Need Attention

 DOD faces a significant challenge in retaining the hundreds of thousands of new recruits that it enlists each year. Despite enlistees'
obligations to serve 2 to 6 years on initial contracts, we have found that between fiscal years 1982 and 1993, 31.7 percent of all
enlistees did not complete these first terms of service. This first-term attrition is costly in that the services' recruiting and training
investment in each enlistee averages almost $38,000. Assuming that the attrition rate for the enlistees who entered the services in fiscal
year 1998 is the same as the attrition rate for those who entered in fiscal year 1993-35.8 percent-we estimate that 64,400 of these
nearly 180,000 persons will be separated early. At a recruiting and training cost of $37,884 per enlistee, the services' total investment in
these persons will be $2.4 billion.

In four reports and five testimonies, we have made 21 recommendations for ways DOD could reduce the attrition of first-term enlistees,
16 of which are discussed in the following table and are in varying stages of implementation. DOD has asserted that each of the other
five recommendations that remain open in our system have been fully implemented. We plan follow-on work to track DOD's actions in
response to all 21 recommendations, including determining whether the 5 have been fully implemented.
GAO Contact

Mark E. Gebicke, Director
National Security Preparedness Issues
National Security and International Affairs Division
(202) 512-5140
gebickem.nsiad@gao.gov


GAO product         Recommendation                                                  Agency action
NSIAD-97-39         To provide a reliable database for DOD to manage                DOD has agreed with this recommendation, and
Jan. 6, 1997        attrition and for the services to set appropriate targets for   implementation is well along. In the area of medical
                    reducing attrition, the Secretary of Defense should issue       attrition, DOD has completed the groundwork for a
                    implementing guidance for DOD's separation codes.               complete analysis of why enlistees are being separated
                                                                                    for medical reasons. It has revised its directive on
                                                                                    physical standards for military service to include
                                                                                    International Classification of Disease codes to note any
                                                                                    medically disqualifying conditions of enlistees. In April
                                                                                    1998, DOD also began collecting data on nonmedical
                                                                                    separations. It has formed a joint working group to
                                                                                    standardize the current separation codes and to develop
                                                                                    common definitions across the services.
                    The Secretary of Defense should direct the services to          DOD has agreed with this recommendation, and
                    require all applicants for enlistment to (1) provide the        implementation is well along. The Military Entrance
                    names of their medical insurers and providers and (2)           Processing Command is formulating procedures to
                    sign a release form allowing the services to obtain past        comply with this requirement.
                    medical information.
                                                                                                                                  (continued)




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                                              Appendix III
                                              Department of Defense




GAO product      Recommendation                                                  Agency action
                 The Secretary of Defense should direct the services to          DOD has agreed with this recommendation and is well
                 revise their "Applicant Medical Prescreening Form" and          along in its implementation. A new form to collect
                 their "Report of Medical History" to ensure that medical        applicants' medical histories has been completed. DOD
                 questions are specific, unambiguous, and tied directly to       states that this new form will allow medical practitioners
                 the types of medical separations most common for               to obtain precise medical histories that will be reviewed
                 recruits during basic and follow-on training.                   by Military Entrance Processing Station physicians in
                                                                                 determining applicants' medical eligibility. This process
                                                                                will also allow Military Entrance Processing Station
                                                                                 physicians to request additional medical records or
                                                                                 information on applicants prior to their scheduled
                                                                                 physical examinations.
                 The Secretary of Defense should use! DOD's newly                DOD has agreed with this recommendation, and its
                 proposed database of medical diagnostic codes to                implementation is well along. DOD has revised its
                 determine whether adding medical screening tests to             directive on physical standards for military service to
                 pre-entrance physical examinations and/or providing             include International Classification of Disease codes to
                 more thorough medical examinations to selected groups note any medically disqualifying conditions of enlistees.
                 of applicants could cost effectively reduce attrition at        Once these codes have been entered into a database of
                 basic training.                                                 enlistees' medical waivers, DOD will be able to
                                                                                 determine whether attrition risks are higher for various
                                                                                types of medical conditions and whether it would be
                                                                                 cost-effective to add more medical screening tests to
                                                                                 pre-entrance physical examinations.
                 The Secretary of Defense should place the responsibility DOD originally disagreed with this recommendation, but
                 for reviewing medical separation files with an                 the recommendation was incorporated into the National
                 organization completely outside the screening process. Defense Authorization Act for Fiscal Year 1998
                                                                                (P.L. 105-85). Since then, DOD has made plans to form a
                                                                                team made up of officials from the Office of the Assistant
                                                                                Secretary of Defense (Health Affairs) and the Office of
                                                                                Accession Policy to conduct semiannual reviews of
                                                                                medical separations.
NSIAD-98-213     The Secretary of Defense should direct the service              DOD agreed to implement this recommendation but has
Sept. 15, 1998   secretaries to include as a separate category the              not yet done so. DOD said that it will direct the services
                 numbers of first-term personnel released more than 90          to review their 90-day release policies and the
                 days before the end of their contract terms when they          exceptions granted to those policies.
                 report first-term attrition rates.
                 The Secretary of Defense should direct the service             DOD agreed with this recommendation and is in the early
                 secretaries to use existing quality-of-life surveys or         stages of implementation. DOD said that it would direct
                 create new ones to (1) collect information on the factors the services to collect information on factors contributing
                 contributing to first-term enlistees' separation and           to first-term enlistees' separation and use that information
                 (2) identify quality-of-life initiatives aimed at reducing the to identify quality-of-life issues that could be addressed
                 attrition of first-term personnel.                             to reduce attrition. It also said that it would coordinate a
                                                                                plan of action and milestones with the services and ask
                                                                                them to prepare a report on their research findings.
                 The Secretary of Defense should direct the service             DOD agreed with this recommendation and is in the early
                 secretaries to continually emphasize to all commissioned stage of implementation. DOD stated that it would direct
                 and noncommissioned officers the costs of first-term           the services to continually emphasize the cost of
                 attrition, the difficulty of acquiring new enlistees to        first-term attrition, its impact on recruiting, and the
                 replace early losses, and the importance of providing          importance of positive leadership.
                 positive leadership intargeting first-:erm enlistees who
                 could be encouraged to complete their contractual
                 obligations.
                                                                                                                                   (continued)


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                                            Appendix III
                                            Department of Defense




GAO product     Recommendation                                               Agency action
                The Secretary of Defense should direct the service           DOD agreed to implement this recommendation and is in
                secretaries to collect more complete data on specific        the early stages of implementation. DOD said that it
                groups of enlistees whom the services wish to target for     would direct the services to collect data on specific
                remedial action and issue guidance and formal policy         types of attrition that they may consider targeting for
                changes to local commanders indicating what specific         remedial action. DOD said that guidance and formal
                actions-such as more counseling, optional testing,           policy changes would be issued to local commanders to
                further job choices, or remedial training-can be taken to    ensure appropriate actions.
                prevent the early discharge of these targeted groups.
                The Secretary of Defense should direct the service           DOD agreed with this recommendation and is in the early
                secretaries to reassess the appropriateness of providing     stages of implementation. DOD said that it would ask the
                favorable types of discharge to enlistees whose behavior     services to reassess the appropriateness of providing
                or performance led to their early separation and ensure      favorable types of discharges to enlistees whose
                that proper incentives exist to encourage enlistees to       behavior or performance led to their early separation and
                complete their first terms.                                  ensure that proper incentives exist to encourage
                                                                             enlistees to complete their first terms.
NSIAD-98-58     The Secretary of Defense should instruct the services to     DOD has agreed to implement this recommendation, and
Jan. 30, 1998   jointly explore the feasibility of developing or procuring   its efforts are well along. The Army and the Air Force are
                assessment tests that can aid in the selection of            now testing instruments to predict recruiters' success.
                recruiters.                                                  The Army's instrument is called a "Recruiter Selection
                                                                             Profile," and the Air Force's instrument is called the
                                                                             "Emotional Quotient Inventory."
                To maintain recruit quality and increase a recruit's         DOD disagreed with this recommendation and has no
                chances of graduating from basic training, the Secretary     plans to implement it. DOD does not plan to ask the
                of Defense should instruct the Army, the Navy, and the       services to administer a mandatory physical fitness test
                Air Force to implement the Marine Corps' practice of         to recruits before they report to basic training. DOD
                administering a physical fitness test to recruits before     believes that physical fitness tests, as well as any other
                they report to basic training.                               physical training during the Delayed Entry Program,
                                                                             should be voluntary.
                To enhance recruiters' working conditions and the            DOD disagreed with this recommendation and has no
                services' ability to attract qualified candidates for        plans to implement it. DOD does not plan to direct the
                recruiting duty, the Secretary of Defense should             services to adopt a quarterly goal system. The services
                encourage the use of quarterly floating goals as an          believe that they need to monitor recruiting missions on a
                alternative to the services' current systems of monthly      monthly basis and that they already take quarterly trends
                goals.                                                       for recruiters into account.
NSIAD-99-53     The Secretary of Defense should develop and monitor a        DOD agreed with this recommendation and is in the early
Feb. 23, 1999   DOD-wide plan to use initiatives in background check         stages of implementing it. DOD has established a panel,
                processes. At a minimum, DOD should incorporate the          led by the Office of the Assistant Secretary of Defense
                benefits of using the Defense Security Service's             (Command, Control, Communications and Intelligence)
                Electronic Personnel Security Questionnaire and the          to develop specific implementation plans to integrate
                Federal Bureau of Investigation's Integrated Automated       new criminal history information initiatives. The panel met
                Fingerprint Identification System. The plan should also      for the first time in January 1999 and expects to
                address the integration of these two initiatives with the    complete its implementation plan by the summer of 1999.
                expanded security clearance background investigation
                requirements contained in Executive Order 12968. The
                plan should include specific time frames and budget
                requirements for implementation.
                                                                                                                            (continued)




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                                         Appendix III
                                         Department of Defense




GAO product   Recommendation                                               Agency action
              The Secretary of Defense should require all national         DOD agreed to implement this recommendation and is in
              agency checks for enlistment into the military to be         the early stages. DOD plans to have purchased
              based on a full fingerprint search to (1) reduce the risks   automated fingerprint scanners at all 65 of its Military
              associated with enlisting individuals who have been          Entrance Processing Stations by the end of fiscal year
              convicted of the more serious misdemeanors and               2000.
              felonies and (2) identify individuals who have used
              aliases.
              The Secretary of Defense should direct the services,         DOD agreed with this recommendation. It is in the early
              after the initiatives available in 1999 are in use, to end   stages of implementation. DOD will fully implement this
              their practices of sending enlistees to training and to      recommendation only after it is confident that
              first-duty stations without having all available criminal    background checks can be conducted promptly. At this
              history information.                                         point, DOD wishes to maintain the flexibility of sending
                                                                           enlistees to training without a complete criminal history
                                                                           check.




                                         Page 36      GAO/OCG-99-28 Open'Recommendations: Performance and Accountability Series
Appendix IV

Department of Education



Table IV.1: Education's Administrative Effort Is Inadequate to Ensure Access to Postsecondary Institutions While
Protecting Federal Financial Interests

The Department of Education has had difficulty implementing and operating its new core financial management system. As a result, the
preparation of the fiscal year 1998 financial statement and related audit have been delayed until Education completes reconciling
general ledger data and resolves significant differences between the general ledger and other related information. Education did not
meet the March 1, 1999, deadline for completing the fiscal year 1998 audit, and may not complete it until October 1999. In addition to
the two recommendations discussed in the following table on credit reform after which Education took a number of steps to improve its
capabilities, there are 11 related open recommendations that were discussed in our earlier report on open recommendations in
high-risk areas (GAO/HR-99-2R; Apr. 12, 1999).

GAO Contact

 Gloria L. Jarmon, Director
 Health, Education, and Human Services Accounting and Financial Management
 Accounting and Information Management Division
 (202) 512-4476
jarmong.aimd@gao.gov


GAO product        Recommendation                                          Agency action
AIMD-98-14         The Secretaries of Agriculture, Education, Housing and  The Department of Education agreed with the
Mar. 30, 1998      Urban Development, and Veterans Affairs, and the         recommendations and is well along in their
                   Administrator of the Small Business Administration,     implementation. Education stated that it has already
                   should improve oversight of credit reform               taken a number of steps to improve its capabilities in this
                   implementation, including ensuring that estimates are   area. Education said that over the past several years it
                   prepared accurately.                                    has steadily increased staff, contractor, and system
                                                                           resources dedicated to developing accurate and timely
                   The Secretaries of Agriculture, Education, Housing and  estimates; formed a Cost Estimation and Analysis
                   Urban Development, and Veterans Affairs, and the        Division in the Budget Office to focus on credit estimates;
                   Administrator of the Small Business Administration,     improved historical data; and worked closely with
                   should improve oversight of credit reform               auditors, us, the Congressional Budget Office, the Office
                   implementation, including ensuring that documentation   of Management and Budget (OMB), and others to
                   supporting subsidy estimates included in the budget and improve technical capabilities. However, in its fiscal year
                   financial statements is prepared and retained.           1997 audit report, the Office of Inspector General (OIG)
                                                                           reported, as a material weakness, that Education needs
                                                                           to establish (1) the validity of its principal data store to
                                                                           provide a basis for preparing reliable loan estimates in
                                                                           the future and (2) sufficient controls to detect material
                                                                           errors in its loan estimates.
                                                                             Education's corrective action plan indicates that it is in
                                                                             the process of complying with OIG's recommendations,
                                                                             including (1) documenting data gathering and validation
                                                                             and its budget/finance model and its assumptions and
                                                                             (2) performing quality control reviews of loan estimates
                                                                             and documenting the results of these reviews. Education
                                                                             is implementing these recommendations.




                                             Page 37     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                              Appendix IV
                                              Department of Education




Table IV.2: Year 2000 Computer Compliance Lacking

Information systems are at the heart of the department's ability to carry out its mission. In many ways, Education's student financial aid
delivery system is similar to functions performed in the banking industry, such as making loans, reporting account status, and collecting
payments. The department currently maintains 11 major systems for administering student financial aid programs. These systems,
developed over time by multiple contractors in response to new programs or mandates, have resulted in a complex, heterogeneous
systems environment. Because of systems interdependencies, repercussions from Year 2000-related problems could be felt throughout
the student financial aid community. In September 1998, the department faced major risks that Year 2000 failures could seriously
disrupt the student financial aid delivery process.

While there are currently no open recommendations related to Education's Year 2000 compliance program, at the request of the
Congress, we continue to monitor the department's efforts in this area. In May 1999, we testified that Education had made progress
toward making its programs and supporting systems Year 2000 compliant. However, work remains to complete Education's planned
Year 2000 program so as to ensure that the risk of disruption to student financial aid delivery is minimized, and that the department is
prepared to handle emergencies. As of March 31, 1999, Education reported that all of its 14 mission-critical systems-including the 11
student financial aid delivery systems-were Year 2000 compliant and in operation. While much of the work on renovating and
validating mission-critical systems has been completed, and the risk of student financial aid delivery system failures has been
significantly reduced, the department needs to continue! making Year 2000 a top priority. Our review of three of these systems found
adequate test documentation. But the department has not yet closed out four of its systems as completing the Year 2000 compliance
process in accordance with Education-specific guidance; other systems issues also remain outstanding, although they are generally
considered low-risk. Testing of data exchanges and end-to-end testing of key business processes are continuing according to the
department's schedule as is the refinement of business continuity and contingency plans.
GAO Contact

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov




                                               Page 38     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                               Appendix IV
                                               Department of Education




Table IV.3: Balancing Oversight of Programs and Program Flexibility

Education faces challenges in administering programs that are a joint responsibility with state and local agencies. Such administration
requires striking a balance between program flexibility and program control. Education lacks enough information on program
effectiveness to meet the needs of the Congress and other decisionmakers. Our work has also shown that there may be overlap and
duplication in federal education programs. Two recommendations related to this management challenge remain open; each related to
oversight and management issues.
GAO Contact

Cynthia Fagnoni, Director
Education, Workforce and Income Security Issues
Health, Education, and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov


GAO product        Recommendation                                                  .Agency action
HEHS-98-84         The Secretary of Education should direct states to               The Department of Education agreed and is well on the
Apr. 30, 1998      include in their Title I plans information on the strategies,    way to implementing this recommendation as it develops
                   activities, and resources that the state educational             new regulations. In October 1998, the Congress enacted
                   agencies will use to ensure that Title I program resources       Public Law 105-278, the Charter School Expansion Act of
                   serve eligible charter school students.                          1998. Among other provisions, the act requires that state
                                                                                    education agencies specify in their applications for
                                                                                    charter school grant program funds how they will inform
                                                                                    charter schools of their eligibility for federal funds and
                                                                                    which federal education programs, including title I, they
                                                                                    may participate in. According to Education officials, OMB
                                                                                    is reviewing Education's draft regulations promulgated .
                                                                                    un'der the act. Education officials believe their regulations
                                                                                    will be fully responsive to our recommendation and will
                                                                                    forward them to us when OMB approves them.
                   The Secretary of Education should take the steps                 The Department of Education agreed and is well on the
                   necessary to direct states to include charter school             way to implementing this recommendation as it develops
                   representation on states' Title I committees of                  new regulations. In October 1998, the Congress enacted
                   practitioners that advise states on implementing their           Public Law 105-278, the Charter School Expansion Act of
                   Title I program responsibilities.                                1998. Among other provisions, the act directs the
                                                                                    Secretary of Education to ensure that charter school
                                                                                    representatives are consulted in developing any program
                                                                                    rules or regulations for federally funded education
                                                                                    programs. According to Education officials, OMB is
                                                                                    reviewing Education's draft regulations promulgated
                                                                                    under the act. Education officials believe that their
                                                                                    regulations will be fully responsive to our
                                                                                    recommendation and will forward them to us when OMB
                                                                                    approves them.




                                               Page 39      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix V

Department of Energy


Table V.1: Department of Energy Has Had Difficulty Completing Large Projects

DOE has had difficulty completing large projects on time and within budget. From 1980 through 1996, DOE terminated 31 of 80 major
system acquisitions (mission-critical projects costing over $100 million) after expenditures of over $10 billion. Of the 15 completed
projects, most were behind schedule and over budget. While there is currently only one open recommendation related to this
management challenge, we continue to monitor this issue because of lack of progress. DOE reported on Feb. 19, 1999, that it had
implemented changes to improve its project management, implying that it had addressed its problems in this area. However, some
current projects are in trouble, including the cleanup of radioactive waste at Pit 9 in Idaho. We reported in 1997 that the project was 26
months behind its original schedule, and that projected costs were more than double the contract's original $200 million estimate.
Recently, DOE scrapped this effort and decided to restart the project with another remedial assessment, to be completed in February
2003. At the Hanford site, management and oversight problems with the spent nuclear fuels project have also caused delays and
increased costs. DOE is storing spent nuclear fuels in two water basins that are well beyond their design life and are located just 1,400
feet from the Columbia River. Despite progress in designing and constructing new facilities, the effort is over 4 years behind schedule
and its costs have almost doubled to about $1.4 billion.

DOE's process to remove radioactive waste from tanks at the Savannah River site failed for a number of reasons-most notably,
ineffective project management and oversight. In 1985, DOE expected to spend $32 million over 3 years to construct a facility to
process this waste. However, after spending about $500 million, DOE suspended the project and began looking for an alternative.
Current estimates indicate that an alternative process may not be available until 2007 and could cost $3.5 billion over the projects
lifetime. DOE is also having difficulty managing the Spallation Neutron Source project, estimated to cost $1.36 billion over 7 years. This
is the largest interlaboratory collaborative scientific project ever attempted, bringing together the work of five national laboratories. DOE
does not have (1) an effective project team with the technical skills and experience to properly manage this project, (2) reliable cost
and schedule estimates, and (3) adequate contingency allowances for a project of this size. Finally, DOE has not effectively overseen
the acquisition and use of its supercomputers. Even though it uses only about 59 percent of its current supercomputing capacity, it is
planning to spend $257 million during fiscal year 1998 through 2002 to almost triple that capacity.
GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product Recommendation                                             Agency action
RCED-98-208 The Secretary   of Energy should designate the             DOE does not intend to implement this recommendation.
July 17, 1998 Department's most ambitious acquisitions of              In its March 30, 1999, letter, DOE indicated that the
              supercomputer systems-such as those in the ASCI          Department disagreed with the recommendation because
              program-as strategic systems warranting oversight at the it believes that the program already receives oversight at
              highest departmental level,                              the highest level.




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                                               Appendix V
                                               Department of Energy




Table V.2: Department of Energy's Transition to External Regulation Is Slow

With few exceptions, DOE's facilities are not licensed or inspected by independent regulators to help ensure safe operations. The
Department's own advisory committee concluded that "Widespread environmental contamination at DOE facilities and the immense
costs associated with their cleanup provide clear evidence that self-regulation has failed." While DOE agreed to external regulation in
these areas, its commitment appears to be lagging. There are two open recommendations addressing DOE's wavering position on the
external regulation of worker safety and nuclear facility safety.

GAO Contact
Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product        Recommendation                                                 Agency action
RCED-98-163        Given DOE's wavering position on external regulation           In a Sept. 11, 1998, letter to GAO, DOE disagreed that it
May 21, 1998       and the limitations in its pilots, the Secretary of Energy     needed to clarify its position on external regulation. DOE
                   should clarify the Department's position on the external       said it is pursuing external regulation through its pilot
                   regulation of worker safety and nuclear facility safety at     program and that it will submit legislation to enable
                   DOE's facilities.                                              certain facilities to be externally regulated as part of its
                                                                                  fiscal year 2000 budget process. The Secretary of
                                                                                  Energy has now reversed his opinion and recently
                                                                                  announced (Mar. 1999) that the Department would not
                                                                                  seek legislation exempting itself from departmental
                                                                                  regulation. DOE is also truncating its pilot program on the
                                                                                  basis that the results to date show that the costs of
                                                                                  externally regulating its facilities outweigh the benefits.

                                                                                  The Nuclear Regulatory Commission-DOE's partner in
                                                                                  the pilot program-disagrees with DOE on the lessons
                                                                                  learned from the pilots conducted to date and will be
                                                                                  issuing its own report on the results of the pilots. The pilot
                                                                                  program was intended to result in a joint report. As a
                                                                                  result of these developments, the future of external
                                                                                  regulation remains highly uncertain.
                   Given DOE's wavering position on external regulation           Although DOE agreed with this recommendation in its
                   and the limitations in its pilots, the Secretary of Energy     Sept. 11, 1998, letter to GAO, its agreement assumed a
                   should develop a strategy to implement the external            continuing joint DOE/NRC pilot program. Also, because
                   regulation of worker safety and nuclear facility safety that   DOE truncated its pilot program and NRC has not made
                   is consistent with the Department's position. This strategy    its official position public, there is no clear direction for
                   should include specific goals, objectives, and milestones      external regulation at the Department. As a result, DOE
                   and show how the information from the pilot projects, and      has not yet begun to implement this recommendation.
                   other techniques, will meet the strategy's goals and
                   objectives.




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                                                Appendix V
                                                Department of Energy




Table V.3: Department of Energy's Organizational Structure Allows Challenges to Go Uncorrected

DOE's ineffective organizational structure blurs accountability, allowing problems to go undetected and remain uncorrected. At
Brookhaven National Laboratory on Long Island, radioactive tritium leaked into groundwater for years because DOE's weak
organizational structure discouraged effective oversight of the contractor's operations. DOE eventually terminated its relationship with
the organization managing this facility because the laboratory lost public trust.

There are seven open recommendations focused on DOl-'s organizational structure. These recommendations range from better
aligning the Department's activities and missions to better defining its roles, responsibilities, and accountability for program activities
and specific projects. If DOE is unable to refocus the laboratories' missions and develop a management approach consistent with
these new missions, the Congress may wish to consider alternatives to the present DOE-laboratory relationship.
GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product        Recommendation                                                Agency action
RCED-95-10         The Secretary of Energy should evaluate alternatives for       DOE has taken partial action to address this
Jan. 27, 1995      managing the laboratories that more fully support clear        recommendation. In 1995, DOE created the Laboratory
                   missions, achieve results by linking the laboratories'        Operations Board to provide dedicated management
                   activities to DOE missions, and maximize the                  attention to laboratory issues on a continuing basis.
                   laboratories' resources. Such a strategy could start by        However, the Board's role is advisory and is not a
                   addressing the many management issues raised in this          substitute for strong DOE leadership and organizational
                   report and should be consistent with DOE's major efforts      accountability. Under the Board's guidance, DOE
                   to reform contract management. The strategy must also         developed a strategic laboratory mission plan in 1996,
                   support goals for DOE and the laboratories to comply          but this plan was primarily descriptive, did not direct
                   with environment, safety, and health initiatives.             resources or provide mission direction, and has not been
                                                                                 revised. DOE is also developing research and
                                                                                 development roadmaps to provide mission direction and
                                                                                 focus. This action, however, has not been fully
                                                                                 implemented. Finally, DOE recently announced a
                                                                                 reorganization in which its field offices and associated
                                                                                 laboratories report directly to program offices. The effect
                                                                                 of this action has not been evaluated. An important
                                                                                 feature of this reorganization is the creation of dedicated
                                                                                 program leadership positions for laboratory operations.
                                                                                                                                   (continued)




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                                           Appendix V
                                           Department of Energy




GAO product     Recommendation                                            Agency action
                To help achieve this goal, the Secretary should           DOE has not directly addressed this recommendation,
                strengthen the Office of Laboratory Management by         but has taken other actions that it believes achieve the
                providing it with sufficient resources and authority to   goals of having a strengthened Office of Laboratory
                                                                          Management. DOE believes its Laboratory Operations
                facilitate cooperation with the laboratories and resolution
                of management issues across all DOE program areas.        Board provides the focus and direction need to provide
                                                                          policy direction and advice to its national laboratories,
                                                                          but, as noted, this office is only advisory. DOE's recent
                                                                          reorganization may provide more direct accountability
                                                                          over the laboratories.
RCED-97-18      The Secretary of Energy should require that a mandatory DOE agreed with this recommendation and in March
Dec. 10,1996    standard contract clause be included in all management 1999 publish a regulation that gives the contracting
                and operating contracts that gives DOE the exclusive      officer the authority to unilaterally decide on contract
                authority to set contract goals and incentives that       goals and incentives if DOE and the contractor cannot
                support the strategic plans and missions of the           reach mutual agreement.
                Department.
RCED-98-68      The Secretary of Energy should ensure the timely and      DOE fully agrees with and accepts this recommendation
Apr. 17, 1998   cost-effective resolution of the wide range of issues     and has already taken action to develop and implement
                surrounding pit storage, including ensuring that the plan an Integrated Pit Storage Plan to address the long-term
                being developed by DOE addresses such key items as a storage of pits. This plan will address the recommended
                clear definition of responsibility and accountability for definition of responsibility and accountability.
                program activities.
RCED-98-80      The Secretary of Energy should develop a                  The Department agrees that it needs to develop a site
Mar. 13, 1998   comprehensive vadose zone strategy for the Hanford site wide strategy to assess the impact of contaminants in the
                that addresses cleaning up the high-level waste tank      vadose zone and groundwater at Hanford.
                farms and the cribs, ponds, trenches, and other waste     Implementation of the Department's approach for
                sites. The strategy should define leadership roles within developing a site wide strategy is underway. In April
                DOE and its contractors. The overall leadership for this   1998, the Department issued a plan for integrating
                program should be clearly defined, with measurable        groundwater and vadose zone monitoring activities. As a
                performance goals and accountability for meeting the      part of this plan, the Department is using its national
                goals established at the outset.                          laboratories to assist in establishing credible scientific
                                                                          activities to solve the vadose zone problem at Hanford,
                                                                          putting together a panel of technical experts to advise
                                                                          and assist the Department on groundwater and vadose
                                                                          zone issues, and conducting periodic public meetings
                                                                          and workshops. Out of these activities, DOE expects to
                                                                          develop, in partnership with the scientific community and
                                                                          the private sector, a comprehensive site wide vadose
                                                                          zone and groundwater characterization program.
                                                                                                                            (continued)




                                            Page 43      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                            Appendix V
                                            Department of Energy




GAO product      Recommendation                                            Agency action
RCED-98-94       The Secretary of Energy should review the Department's    In commenting on our report, DOE told us that it
Apr. 14, 1998    organizational structure and seek opportunities to better constantly seeks opportunities to better manage its
                 align the organization with its strategic plan's business complex and diverse organization. On April 21, 1999,
                 lines.                                                    DOE announced changes to its management and
                                                                           organizational structure. Among other changes, the
                                                                           Department's major operations and field offices will be
                                                                           reporting directly to one of its major program offices.
                                                                           However, these changes do not address the
                                                                           fundamental disconnection between DOE's strategic
                                                                           plan and its organization.
RCED-98-197      To ensure the timely and effective implementation of      DOE has not yet implemented this recommendation,
Sept. 10, 1998   recommendations from many past laboratory advisory        which was made to allow more systematic tracking and
                 groups, the Secretary of Energy should develop a          evaluation of recommendations made in over 20
                 comprehensive strategy with objectives, milestones,       separate studies on DOE and the national laboratories,
                 DOE offices and laboratories responsible for              many of which called for some sort of DOE
                 implementation actions, performance measures that will reorganization. DOE believes it is taking several actions
                 be used to assess success in meeting implementation       to address many of these past recommendations and
                 objectives, a tracking system to monitor progress, and    that the work of its Laboratory Operations Board will
                 regular progress reports on the status of implementation. significantly improve the laboratories' management.




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                                              Appendix V
                                              Department of Energy




Table V.4: Department of Energy's Staff Lack Technical and Management Skills

DOE's staff lack technical and management skills needed to oversee complex operations. At an Idaho facility, DOE turned to a private
contractor, in part, because it lacked the in-house expertise needed to evaluate technical cleanup proposals. At the Hanford site, where
DOE entered into a multibillion-dollar fixed-price contract for the next 20 years, DOE has no experts in fixed-price contracting. Finding
enough staff with the necessary skills presents a serious challenge to DOE, particularly in light of recent downsizing initiatives.
There are six open recommendations addressing the need to improve DOE's technical and management skills. These
recommendations include the need for DOE to develop comprehensive occupational training needs assessments throughout the
Department and to ensure that specific projects are fully staffed with the expertise required.
GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product        Recommendation                                              Agency action
RCED-99-13         The Secretary of Energy should take immediate action to     DOE agreed with GAO's recommendation on staffing
Oct. 8, 1998       fully implement the Department's management and             and has started to implement this recommendation.
                   oversight plan for the Hanford tank waste project,          DOE's primary initiative for improving the project's
                   including ensuring that (1) the oversight team is fully     oversight was establishing, in December 1998, the
                   staffed with the expertise required and (2) adequate        Hanford Office of River Protection to manage all aspects
                   funding is available to provide the site support services   of the tank waste project. DOE determined that the
                   called for in the contract.                                 unique skills needed to effectively manage the tank
                                                                               waste contract included expertise in fixed-price contract
                                                                               management, private financial markets, and
                                                                               technological design and engineering. DOE received
                                                                               authorization to add 27 federal employees with these
                                                                               unique skills to its Office of River Protection staff. It
                                                                               expected to complete staffing by March 1999. However,
                                                                               as of May 1999, DOE had hired only 10 staff, including
                                                                               the manager of the Office of River Protection, a safety
                                                                               engineer, and a private capital-financing expert. DOE
                                                                               officials now expect that it will hire all 27 employees by
                                                                               the end of fiscal year 1999.
                                                                                                                                  (continued)




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                                            Appendix V
                                            Department of Energy




GAO product     Recommendation                                                 Agency action
                                                                               DOE agreed with GAO's recommendation on funding
                                                                               and has started to implement this recommendation. DOE
                                                                               reported that it would ensure that the fiscal year 1999
                                                                               funding for site support projects is adequate and that
                                                                               fiscal year 2000 funding for site support projects is also
                                                                               expected to be adequate. Because of delays in the
                                                                               overall schedule for the tank waste project, some of the
                                                                               work for three primary support projects and various
                                                                               operating activities was recently deferred to future years.
                                                                               Consequently, the Congress approved DOE's proposal
                                                                               to reprogram about $53 million, initially appropriated in
                                                                               fiscal year 1999 for the three site support projects and
                                                                               various operating activities, to tank farm maitenance and
                                                                               operations activities intended to help ensure safe tank
                                                                               farm operations. The adequacy of funding in the years
                                                                               beyond fiscal year 2000 for site support projects cannot
                                                                               be determined at this time.
RCED-99-56      To improve the process for setting the training budget,        DOE fully agreed. By memorandum dated March 4,
Feb. 12, 1999   the Secretary of Energy should require the completion of       1999, the Secretary directed that this recommendation
                (1) annual training plans and (2) individual development       be implemented. However, implementation has not yet
                plans for all departmental employees, as required by a         begun.
                DOE order.
                To improve the process for setting the training budget,        DOE fully agreed. DOE indicated that it will continue to
                the Secretary of Energy should require the expeditious         assess occupational training needs within funding
                completion of a comprehensive occupational training            constraints and in accordance with priorities established
                needs assessment throughout the Department. Where              in its strategic plan. Implementation is in its early stages.
                the assessment process cannot be expedited, the
                priorities should be set for the order in which
                occupational groups will be assessed.
                To reduce spending on DOE training, the Secretary of           DOE fully agreed. By memorandum dated March 4,
                Energy should require the establishment of criteria for        1999, the Secretary directed the elimination of
                what type of nonmandatory training is appropriate and a        nonmandatory training that does not meet certain criteria.
                review and elimination of nonmandatory training courses        However, implementation has not yet begun.
                given across DOE that do not meet those criteria.
                To reduce spending on DOE training, the Secretary of           DOE agreed. DOE indicated that it will strengthen
                Energy should require the standardization of the               training that has general application across DOE through
                development and delivery of training that has general          the creation of centers of excellence. Implementation is
                application across DOE.                                        in the early stages.
                To implement DOE's new training plan, the Secretary of         DOE fully agreed. By memorandum dated March 4,
                Energy should require that the plan Include an                 1999, the Secretary directed that specific management
                identification of the steps necessary to improve               and results-based performance objectives be
                contractor training performance. At a minimum, those           established for contractor training programs. In addition,
                steps should include (1) establishing departmental             the Secretary directed that DOE contracts be amended
                guidance on the development, monitoring, and                   to include challenging, performance-based requirements
                evaluation of contractor training programs and budgets;        and evaluation criteria for contractor training.
                (2) incorporating a standard set of performance                Implementation has not yet begun.
                measures regarding training into its performance-based
                contracts; and (3) clarifying the roles and responsibilities
                for the oversight of contractor training performance
                departmentwide.




                                            Page 46      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix VI

Department of Health and Human Services



Table VI.1: Scope and Complexity of HHS Programs Create Challenges With Coordination, Oversight, and Performance
Measurement

Coordinating the efforts of the numerous administrators of the Department of Health and Human Services (HHS) programs-which
include HHS' 11 agencies and state and local governments-is critical to ensuring program efficiency and effectiveness. HHS must also
coordinate with a number of other federal, state, and local agencies that have programs with similar goals. While HHS recognizes these
needs, it has not delineated how it plans to ensure effective program coordination. Certain program characteristics-such as those that
give the states the flexibility to design their own programs-make coordination and oversight a daunting task. Compounding this
difficulty is the need for HHS to develop adequate performance measures to ensure accountability.

There are 49 open GAO recommendations related to this major management challenge. In addition to the 12 recommendations
discussed in the following table, there are 37 recommendations involving the Health Care Financing Administration's (HCFA) oversight
of institutions for persons with mental retardation, HCFA's release of data on health maintenance organization (HMO) performance,
Head Start programs, the Food and Drug Administration's (FDA) steps to improve the safety of human tissue banks, HCFA's
assessment of organ procurement organization performance, FDA's oversight of medical device tracking and recall systems, federal
lead poisoning screening programs, the Medicare managed care appeals process, HCFA's monitoring of the use of home oxygen
equipment, and the Substance Abuse and Mental Health Services Administration's monitoring and assessment of methadone
maintenance treatment programs.
GAO Contact
William J. Scanlon, Director
Health Financing and Public Health Issues
Health, Education, and Human Services Division
(202) 512-7114
scanlonw.hehs@gao.gov


GAO product        Recommendation                                             Agency action
HEHS-95-2          The Secretary of Health and Human Services should          HCFA agreed with our recommendation and is well along
Oct. 20, 1994      systematically review imaging utilization information      in implementing it. HCFA has not yet published
                   developed by the Health Care Financing Administration      regulations to fully implement the OBRA provisions that
                   (HCFA) and use the authority provided under the            restrict imaging referrals. HCFA published interim
                   Omnibus Budget Reconciliation Act of 1993 (OBRA) to        regulations on August 14, 1995, and December 11,
                   develop any additional regulations needed to reduce        1995. On January 9, 1998, HCFA published a Proposed
                   overutilization through abusive self-referral practices.   Rule on Physicians' Referrals to Health Care Entities With
                                                                              Which They Have Financial Relationships. As of June 1,
                                                                              1999, HCFA had not issued a final rule and does not
                                                                              expect to do so until May 2000.
HEHS-97-23         The Secretary of Health and Human Services should          HCFA partially agreed with this recommendation and is
Oct. 22, 1996      direct the Administrator of HCFA to require standard       in the early stages of implementing this part of the
                   formats and terminology for important aspects of health    recommendation. It is developing a standard Summary
                   maintenance organization (HMO) informational materials     of Benefits document and intends to require HMOs and
                   for beneficiaries, including benefits descriptions.        other Medicare+Choice organizations to use the
                                                                              document beginning in November 1999. HCFA may
                                                                              standardize aspects of other marketing materials by
                                                                              2000. HCFA's response, however, does not fully address
                                                                              our recommendation to require standard format and
                                                                              terminology for important aspects of HMOs' informational
                                                                              materials.
                                                                                                                              (continued)



                                              Page 47     GAO/OCG-99M2   8 Open Recommendations: Performance and Accountability Series
                                           Appendix VI
                                           Department of Health and Human Services




GAO product     Recommendation                                              Agency action
HEHS-98-25      The Secretary of Health and Human Services should           FDA agreed with this recommendation and is in the early
Dec. 5, 1997    direct FDA to act in several areas to improve the safety    stages of implementation. FDA's proposal that
                and efficacy of donated human tissue and to increase        manufacturers of human cellular and tissue-based
                FDA's ability to regulate tissue facility activities. FDA   products register with FDA and list their products would
                should move ahead with its plan to require reproductive     include stem cell and reproductive facilities. On
                and stem cell facilities to adhere to all requirements of   December 10, 1998, the agency reopened and extended
                the current regulation.                                     the period for comment on this rule. FDA plans to publish
                                                                            two proposed rules to address donor suitability, good
                                                                            tissue practices, and enforcement, one to be published
                                                                            in June 1999 and the other in September 1999. These
                                                                            proposals will discuss requirements for stem cell and
                                                                            reproductive tissue facilities.
HEHS-98-21      To improve the effectiveness of FDA's foreign inspection    FDA partially agreed with this recommendation and is in
Mar. 17, 1998   program to ensure that only safe, pure, and high quality    the early stages of implementing the part with which it
                drugs are imported into the United States, the              agreed. On May 14, 1999, FDA issued a proposed rule
                Commissioner of FDA should reexamine and revise             for foreign establishment registration and listing that
                FDA's foreign inspection strategy to provide adequate       would require foreign manufacturers to register with FDA
                assurance that all foreign manufacturers exporting          and list all the products they intend to import into the
                approved pharmaceutical products to the United States       United States. However, FDA does not now intend to
                comply with U.S. standards. At a minimum, the strategy      reassess its foreign inspection strategy. Moreover, FDA
                should include (1) timely follow-up inspections of all      does not intend to reinspect all foreign manufacturers
                foreign manufacturers that have been identified as          identified as having serious manufacturing deficiencies
                having serious manufacturing deficiencies and that          but that promise to correct them.
                promised to take corrective action and (2) periodic
                surveillance inspections of all foreign pharmaceutical
                manufacturers, not just those considered high-risk.
HEHS-98-186     To determine whether the Head Start program is making       HHS initially disagreed with this recommendation but has
June 30, 1998   a difference in the lives of those it serves, HHS should    agreed to fulfill requirements delineated in legislation.
                assess the impact of regular Head Start programs by         Implementation is in the early stages. HHS is developing
                conducting a study or studies that will definitively        a research plan to assess the effect of Head Start. Head
                compare the outcomes achieved by Head Start children        Start's reauthorization (Community Opportunities,
                and their families with those achieved by similar           Accountability, and Training and Educational Services
                non-Head Start children and families.                       Act of 1998) requires HHS to appoint an expert panel to
                                                                            design such an assessment. On the basis of
                                                                            recommendations of this panel, HHS is required to
                                                                            evaluate the program, using such methodological
                                                                            designs as longitudinal designs, control groups,
                                                                            nationally recognized standardized measures, and
                                                                            random selection and assignment, as appropriate. It is
                                                                            then required to submit reports on the research design
                                                                            and preliminary results and a final report. HHS has
                                                                            convened an advisory panel of experts who have met
                                                                            once, and plan future meetings to discuss research
                                                                            papers on various design and methodological issues. In
                                                                            addition, Head Start quality resource centers have been
                                                                            trying different approaches to random assignment of
                                                                            children to Head Start and comparison programs.
                                                                                                                             (continued)




                                           Page 48      GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                           Appendix VI
                                           Department of Health and Human Services




GAO product     Recommendation                                              Agency action
HEHS-99-18      To improve screening rates within federal health            HHS agreed with this recommendation and plans to
Jan. 15, 1999   programs, HCFA and the Health Resources and Services        implement it, but has not yet begun. HHS is developing a
                Administration (HRSA) should improve the monitoring of      departmentwide action plan for addressing our
                compliance with federal lead screening policies within      recommendations. As of June 1999, the draft action plan
                the Medicaid and health center programs. Specifically,      had been prepared and was under HHS' review.
                HCFA should require state Medicaid agencies to report
                on the lead screening services that are provided to
                children within the Early and Periodic Screening,
                Diagnosis, and Treatment (EPSDT) program and to
                document progress in meeting lead screening
                performance goals. HCFA should require the states that
                do not meet expectations to develop plans for improving
                their performance. HRSA should use current monitoring
                mechanisms to better ensure that health centers follow
                all federal lead screening policies.
HEHS-99-36      To improve management and oversight of the Medicare        HHS agreed with this recommendation and plans to
Feb. 26, 1999   Incentive Payment program, the Secretary of Health and     implement it, but has not yet begun. HHS indicated that
                Human Services should integrate the program into the       program objectives would be developed and integrated
                Department's overall access-to-care strategic planning     into its future efforts, under the Government Performance
                and performance measurement activities.                    and Results Act.
HEHS-99-46      To strengthen its ability to ensure that nursing homes     HHS agreed with this recommendation and is inthe early
Mar. 18, 1999   maintain compliance with Medicare and Medicaid             stages of implementation. HHS has requested an
                quality-of-care standards, the Administrator of HCFA       additional $9.5 million to bring about faster adjudication
                should improve the effectiveness of civil monetary         and collection of civil monetary penalties by (1) doubling
                penalties and continue to act to shorten the delay in      the number of administrative law judges hearing these
                adjudicating appeals, including monitoring progress        appeals at the Departmental Appeals Board, along with
                made in reducing the backlog of appeals.                   necessary supporting staff, and (2) increasing the
                                                                           number of attorneys in the HHS Office of General
                                                                           Counsel to deal with the increased number of appeals.
                To strengthen its ability to ensure that nursing homes     HCFA partially agreed with this recommendation and is
                maintain compliance with Medicare and Medicaid             in the early stages of implementing the part with which it
                quality-of-care standards, the Administrator of HCFA       agreed. HCFA is conducting a baseline study of 30
                should strengthen the use and effect of termination. The involuntary terminations in fiscal year 1998 to determine
                Administrator should (1) continue Medicare and             what oversight and payment practices were used during
                Medicaid payments beyond the termination date only if      the 30 days after termination in these cases and whether
                the home and state Medicaid agency are making              they were applied appropriately and consistently. HCFA
                reasonable efforts to transfer residents to other homes or will take actions it determines to be appropriate given the
                alternate modes of care, (2) ensure that reasonable        results of this study. HCFA is also working to develop
                assurance periods associated with reinstating terminated additional examples of cases to illustrate its policies for
                homes are of sufficient duration to effectively            setting the length of reasonable assurance periods and
                demonstrate that the reason for termination has been       to include them in the state operations manual. This is
                resolved and will not recur, and (3) revise existing       projected to be complete by November 30, 1999. HCFA
                polices so that the pre-termination history of a home is   has developed revised language for inclusion in the state
                taken into account in taking a subsequent enforcement      operations manual by September 30, 1999.
                action.
                                                                                                                           (continued)




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                                          Appendix VI
                                          Department of Health and Human Services




GAO product     Recommendation                                              Agency action
HEHS-99-80      To make complaint investigations a more effective tool      HCFA agreed with this recommendation and is in the
Mar. 22, 1999   for protecting nursing home residents' health and safety,   early stages of implementation. HCFA has instituted a
                the Administrator of HCFA should revise federal             policy directing the states to investigate any complaint
                guidance and ensure state agency compliance by              alleging actual harm within 10 days. The states are still
                developing additional standards for the prompt              waiting for additional guidance on this policy.
                investigation of serious complaints alleging situations
                that may harm residents but are categorized as less than
                immediate jeopardy. These standards should include
                maximum allowable timeframes for investigating serious
                complaints and for complaints that may be deferred until
                the next scheduled annual survey. States may continue
                to set priority levels and timeframes that are more
                stringent than these federal standards.
                To make complaint investigations a more effective tool      HCFA agreed with this recommendation and intends to
                for protecting nursing home residents' health and safety,   implement it, but has not yet begun. HCFA has initiated
                the Administrator of HCFA should revise federal             the Complaints Improvement Project to develop
                guidance and ensure state agency compliance by              additional standards and oversight, but these concerns
                strengthening federal oversight of state complaint          and actions related to improving oversight remain
                investigations, including monitoring states' practices       pending.
                regarding priority-setting, on-site investigation, and
                timely reporting of serious health and safety complaints.
HEHS-99-68      To help ensure that the Medicare managed care appeals       HCFA disagreed with this recommendation and does not
Apr. 12, 1999   process provides adequate protection to Medicare            intend to implement it. HCFA does not intend to develop
                beneficiaries, the Administrator of HCFA should develop     additional criteria for determining when initial decisions
                criteria for plans to use in determining when initial       and appeals should be expedited.
                decisions and appeals should be expedited.




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                                              Appendix VI
                                              Department of Health and Human Services




Table Vl.2: HHS Needs Reliable and Comprehensive Data and Data Systems to Manage Programs and Assess Results

HHS does not have access to the data needed to effectively manage its extensive health insurance programs, grant-making activities,
and regulatory responsibilities. Developing and maintaining systems to ensure access to such data, however, are challenging, since
many important HHS programs are administered by program partners, such as state and local governments. Yet without these systems,
HHS cannot adequately oversee its programs. Technical concerns about computer capabilities posed by the year 2000 add further
complexity. Of particular concern is the possible interruption of Medicare services and payments. There are 26 open recommendations
related to this major management challenge. In addition to the 10 recommendations discussed below, there are 16 recommendations
involving child support enforcement, Medicare billing, the Food and Drug Administration's (FDA) financial management of property, and
FDA's implementation of the Safe Medical Devices Act of 1990.
GAO Contact
William J. Scanlon, Director
Health Financing and Public Health Issues
Health, Education, and Human Services Division
(202) 512-7114
scanlonw.hehs@gao.gov


GAO product        Recommendation                                              Agency action
AIMD-97-78         To help HCFA improve its ability to use effective systems   HHS has not officially responded to or acted on this
May 16, 1997       development practices and improve its software              recommendation. Because of the magnitude of the
                   acquisition capability, the Secretary of Health and         problems we identified with the Medicare Transaction
                   Human Services should direct the Administrator of HCFA.     System (MTS) project, HHS/HCFA decided 3 months
                   to (1) obtain an independent assessment of its software     after our report was issued that it would be in the best
                   acquisition capabilities using the Software Engineering     interest of the government to terminate the MTS project.
                   Institute's software acquisition capability maturity model, However, this recommendation involved improving
                   and implement improvements to correct any identified        HCFA's ability to use effective systems development
                   weaknesses and (2) report its findings to both HHS and      practices and improve its software acquisition capability.
                   the Office of Management and Budget.                        HCFA has not planned to obtain an independent
                                                                               assessment of its software acquisition capabilities using
                                                                               the Software Engineering Institute's software acquisition
                                                                               capability maturity model.
AIMD-97-72         To maximize the federal government's return on costly       HHS agreed with this recommendation and is well along
June 30, 1997      technology investments, the Secretary of Health and         with implementing it. HHS issued a final rule on August
                   Human Services should direct and ensure that the            21, 1998 that provides for more systematic
                   Assistant Secretary of the Administration for Children and determinations and monitoring of key milestones in state
                   Families develops and implements a structured               systems developments, and more closely ties project
                   approach to reviewing automation projects to ensure that funding to those milestones. Language was added to
                   significant systems development milestones are              clarify that the Advanced Planning Document (APD) must
                   identified and that the costs of project decisions are      contain an estimated schedule of life cycle milestones
                   justified during the entire effort. Each major systems      and project deliverables (modules) related to the
                   phase should be reviewed and, at critical                   description of estimated expenditures by category.
                   points-analysis, design, coding, testing, conversion,       Specifically, the regulation requires that the APD must
                   and acceptance-the Office of Child Support                   include milestones relative to the size, complexity, and
                    Enforcement should, according to preestablished            cost of the project and address requirements analysis,
                   criteria, formally report to the state whether it considers  program design, procurement, and project management.
                   the state ready to proceed to the next milestone or phase. HHS recently took additional actions, which we are
                                                                                evaluating.
                                                                                                                                (continued)




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                                            Appendix VI
                                            Department of Health and Human Services




GAO product      Recommendation                                             Agency action
AIMD-98-91       To implement HCFA's current plans to expeditiously         HCFA agreed with this recommendation and is in the
Apr. 15, 1998    realize dollar savings in the Medicare program through     early stages of implementing it. HCFA plans to release a
                 the use of claims auditing edits, the Administrator of     request for proposal (RFP) to acquire claims-auditing
                 HCFA should require, in any competition, that vendors      edits for the Medicare program. When it is available, we
                 have comprehensive claims auditing edits, which at a       will review it to determine if it requires vendors to have
                 minimum address the mutually exclusive, incidental         comprehensive claims-auditing edits, that at a minimum
                 procedure, and diagnosis-to-procedure categories of        address the mutually exclusive, incidental procedure,
                 inappropriate billing codes.                               and diagnosis-to-procedure categories of inappropriate
                                                                            billing codes.
AIMD-99-51       To correct weaknesses identified in prior audit reports ·  FDA agreed and implementation is well along. According
Feb. 22,1999     and strengthen controls over automated data processing to FDA, it has developed and will continue to refine new
                 (ADP) equipment, the Commissioner of the Food and          procedures for performing inventories, and spot audits
                 Drug Administration (FDA) should finalize and implement have begun.
                 proposed procedures to conduct comprehensive
                 property inventories and component-specific spot audits.
HEHS-97-21       To improve FDA's adverse event reporting system's          FDA partially agreed with this recommendation and is
Jan. 29, 1997    ability to serve as an early warning system about medical well along in implementing the part with which it agreed.
                 device problems as intended by the Safe Medical            Under FDA's new medical device regulation,
                 Devices Act of 1990 (SMDA 90), the Commissioner of         manufacturers are required to document corrective
                 FDA should document corrective actions or adverse          actions and report them to FDA. FDA is still developing a
                 event reports that result from analysis and investigations methodology to add this information to its Manufacturer
                 of device problems.                                        and User Device Experience (MAUDE) database.
                 FDA's study of an adverse event reporting system based FDA partially agreed with this recommendation and is
                 on a representative sample of user facilities should focus well along in implementing the part with which it agreed.
                 on whether this approach can provide manufacturers         FDA has completed a pilot test of the sentinel system
                 and FDA with the quantity and quality of information       and is developing plans to implement the system.
                 needed to rapidly identify and correct problems with
                 devices that have varying usage rates.
HEHS-98-229      In keeping with its goal of improving slate reporting, the SAMHSA agreed with this recommendation and is in the
Sept. 15, 1998   Administrator of the Substance Abuse and Mental Health early stages of implementation. SAMHSA developed a
                 Services Administration (SAMHSA), should develop an        four-step action plan for how it will increase the states'
                 action plan for how the agency will increase states'        reporting of better treatment need data. The plan
                 reporting of accurate, complete, and consistent            includes the agency's communicating to the states its
                 treatment need data in block grant applications and        intention to respond affirmatively to the recommendation,
                 include a summary of these actions in the Department of encouraging them to develop a quality control process,
                 Health and Human Services' year 2000 performance           and performing quality control checks on the states'
                 plan.                                                      grant applications. The agency has notified the states of
                                                                            the need for and importance of accurate, complete, and
                                                                            consistent treatment need data and will soon begin
                                                                            reviewing needs assessment data in the states' fiscal
                                                                            year 1999 block grant applications. The results of the
                                                                             reviews will be communicated to the states and
                                                                            summarized in the agency's future reports under the
                                                                            Government Performance and Results Act.
                                                                                                                              (continued)




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                                           Appendix VI
                                           Department of Health and Human Services




GAO product     Recommendation                                               Agency action
HEHS-99-18      To improve the awareness of providers and the public         HHS agreed with this recommendation and intends to
Jan. 15, 1999   about the prevalence of elevated blood lead levels           implement it, but has not yet begun. HHS established a
                among young children in their communities and to             departmentwide initiative to develop an action plan for
                enhance the effectiveness of targeted screening efforts,     addressing our report's recommendations. As of June
                HCFA and CDC should work more closely with state             1999, the draft action plan had been prepared and was
                Medicaid and CDC-supported programs to encourage             under HHS' review.
                information-sharing and the development of data needed
                to better identify at-risk children. Specifically, state
                Medicaid programs should be encouraged to work with
                state health departments to develop systems to identify
                the prevalence of elevated blood lead
                 levels among children in Medicaid.
                To improve the awareness of providers and the public         HHS agreed with this recommendation and intends to
                 about the prevalence of elevated blood lead levels          implement it, but has not yet begun. HHS established a
                 among young children in their communities and to            departmentwide initiative to develop an action plan for
                 enhance the effectiveness of targeted screening efforts,    addressing our report's recommendations. As of June
                 HCFA and CDC should work more closely with state             1999, the draft action plan had been prepared and was
                 Medicaid and CDC-supported programs to encourage            under HHS' review.
                 information-sharing and the development of data needed
                to better identify at-risk children. Specifically, CDC
                 should require grant applicants to (1) demonstrate that
                 they have, or have systems to obtain, representative,
                 reliable data on the prevalence of elevated blood lead
                 levels in their states or communities or to commit to
                 conducting periodic surveys to obtain such data and
                 (2) commit to developing mechanisms for distributing
                 such information to the public and providers.
HEHS-99-46       To strengthen its ability to ensure that nursing homes      HCFA agreed with this recommendation and is in the
Mar. 18, 1999    maintain compliance with Medicare and Medicaid              early stages of implementation. HCFA has begun a
                 quality-of-care standards, the Administrator of HCFA        project to redesign OSCAR. A new management
                 should develop better management information systems.       information system for survey and certification is
                 The Administrator should enhance the Online Survey,         projected to be complete and operational by the end of
                 Certification, and Reporting (OSCAR) system or develop      January 2002.
                 some other information system that can be used both by
                 the states and by HCFA to integrate the results of
                 complaint investigations, track the status and history of
                 deficiencies, and monitor enforcement actions.




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                                              Appendix VI
                                              Department of Health and Human Services




Table VI.3: Program Integrity Is a Continuing Challenge for HHS


With HHS' broad range of programs, large numbers of grantees and contractors, huge volume of vendor payments, and millions of
beneficiaries, it must always be vigilant in protecting its programs from fraud, waste, abuse, and mismanagement. The sheer dollar size
of HHS' programs makes them attractive targets, and the consequences can be severe. HHS needs to improve its processes for
identifying and preventing fraud, waste, abuse, and mismanagement and to maintain constant vigilance in the future. The $200 billion
Medicare program exemplifies the importance of such efforts.

Four recommendations related to this major management challenge are open. Most of the open recommendations related to this
management challenge were included in a product that we issued on April 12, 1999, on open recommendations in high-risk areas
(GAO/HR-99-2R).

GAO Contact

William J. Scanlon, Director
Health Financing and Public Health Issues
Health, Education, and Human Services Division
(202) 512-7114
scanlonw.hehs@gao.gov




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                                             Appendix VI
                                             Department of Health and Human Services




GAO product     Recommendation                                              Agency action
HEHS-99-92      In order to help Medicare beneficiaries make informed       HCFA disagreed with this recommendation and does not
Apr. 12, 1999   health care decisions and reduce the administrative         plan to implement it. HCFA believed that some information
                burden on agency staff and managed care organizations       provided to beneficiaries should be more standard, but
                (MCO), the Administrator of HCFA should require MCOs to     disagreed that beneficiaries need one standard document
                produce one standard, Federal Employees Health Benefits     for each plan that completely describes plan benefit
                Program (FEHBP)-like document for each plan that            coverage and limitations, and it has no plans to develop
                completely describes plan benefit coverage and              such a document. Instead, HCFA is currently designing a
                limitations, and require MCOs to distribute this document   standard benefit summary document and intends to
                during sales presentations and upon request.                require MCOs to use it beginning in November 1999 to
                                                                            coincide with the Medicare+Choice open enrollment
                                                                            period.
                In order to help Medicare beneficiaries make informed       HCFA agreed with this recommendation and is in the early
                health care decisions and reduce the administrative         stages of implementation. HCFA is pilot testing the PBP
                burden on agency staff and managed care organizations       elements for the 2000 contract year and plans for full
                (MCO), the Administrator of HCFA should fully implement     implementation for the 2001 contract year.
                HCFA's new contract form for describing plans' benefit
                coverage, the Plan Benefit Package (PBP), for the 2001
                contract submissions to facilitate the collection of
                comparable benefit information and help ensure full
                disclosure of plans' benefits.
                In order to help Medicare beneficiaries make informed       HCFA partially agreed with this recommendation and is in
                health care decisions and reduce the administrative         the early stages of implementing the part with which it
                burden on agency staff and managed care organizations       agrees. HCFA has begun developing standard forms for
                (MCO), the Administrator of HCFA should develop             appeal and denial notices and plans to require mandatory
                standard forms for appeals and enrollment.                  use by Medicare+Choice organizations in 2000. However,
                                                                            it does not intend to develop standard enrollment forms.
                                                                            Instead, it plans to mandate the use of standard
                                                                            enrollment notification language at some future time.
                In order to help Medicare beneficiaries make informed       HCFA agreed with this recommendation and is in the early
                health care decisions and reduce the administrative         stages of implementation, HCFA has begun several
                burden on agency staff and MCOs, the Administrator of       efforts, which are in early implementation stages, related
                HCFA should take steps to ensure consistent application     to improving the consistency of its marketing review.
                of the agency's marketing material review policy.




                                             Page 55     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix VII

Department of the Interior



Table VII.1: A Basic Reexamination of the Organization and Functions of Land Management Agencies Is Needed

The four major land management agencies in the United States are the Bureau of Land Management (BLM), the National Park Service
(NPS), and the Fish and Wildlife Service (FWS) in Interior and the Forest Service in the Department of Agriculture. The responsibilities of
these agencies-particularly BLM and the Forest Service-have become similar over time. At the same time, managing these agencies
has become more complex; budgets have become tighter, and there is an increased understanding that the boundaries for natural
systems are not necessarily consistent with the existing jurisdictional and administrative boundaries of federal, state, and local
agencies. These conditions suggest a need to reexamine how these agencies are organized and function in order to streamline their
operations and become more efficient.

There are currently no open GAO recommendations related to reorganizing federal land management agencies. Nonetheless, in our
work at these four federal agencies we will continue to identify and address opportunities for streamlining and improving the efficiency
of the programs they are responsible for managing. However, unless and until there is a clear consensus in the Congress for pursuing
the kind of basic organizational changes suggested by our analyses, it is unrealistic to expect the agencies to accomplish them via
their own initiative.
GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov




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                                                Appendix VII
                                                Department of the Interior




Table V11.2: Interior Does Not Have the Information It Needs to Properly Protect, Preserve, and Maintain Resources


Even though Interior is the caretaker for much of the nation's natural, cultural, and historic resources, it frequently lacks critical
information on the condition of these resources. In addition, Interior does not know the scope and extent of maintenance problems at
the tens of thousands of buildings, dams, and other facilities for which it is responsible. As a result, Interior does not know the status of
 key issues like the nature or extent of many problems relating to the resources it is legislatively mandated to foster, protect, and
 preserve; the effectiveness of measures taken to deal with the problems; or the areas where the limited financial resources should be
 allocated to achieve the most good.
There are currently two open recommendations related to this area. Beyond these we have numerous reports highlighting problems
with the department's management of its basic stewardship responsibilities for the national, cultural, historic and other resources under
its care. The most common theme of these reports has been that the Interior agencies-the National Park Service, the Bureau of Land
Management, the Fish and Wildlife, and others-need to develop a better understanding and knowledge of the conditions of the
resources within their respective jurisdictions. Our body of work has helped to expose problems like the Park Service's lack of
knowledge about the condition of the national resources in our national parks, the large size of the deferred maintenance problems in
Interior agencies, and the lack of knowledge about what is needed to deal with and correct these problems. While our work has helped
to expose these problems, we have not recommended specific corrective actions. However, the department is progressing in each of
the areas highlighted in our work. For example, the National Parks Service is now developing baseline data on the conditions of many of
its key resources that will enable it to better determine whether these resources are being adequately preserved and protected as well
as where problems might be occurring. Similarly, the Department of the Interior is in the process of developing information systems and
management processes to better define and manage the deferred maintenance problem within its various bureaus. We will continue to
monitor the department's efforts and progress in each of these areas.
GAO Contact
Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov




                                                Page 57     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                             Appendix 'VII
                                             Department of the Interior




 GAO product     Recommendation                                             Agency action
 RCED-94-284      In order to better define its employee housing needs and  The agency agreed with our recommendation and is well
.Aug. 30, 1994   identify opportunities for reducing its housing inventory, along in its implementation. The Park Service has
                                                                            recently completed a park-by-park assessment of its
                 the Secretary of the Interior should require the Director of
                 the National Park Service to conduct a park-by-park        employee housing inventory and needs. It is now using
                 review of housing needs to determine whether its current   this information to determine whether each park has too
                 housing inventory at each location is needed and           many or too few housing units. The outcome of these
                 justified.                                                 decisions could have a substantial impact on the
                                                                            deferred maintenance problems facing the agency since
                                                                            any reductions in the existing housing inventory would
                                                                            reduce overall maintenance needs.
RCED-98-150      To ensure that the consistency and reliability of wetlands The agency agreed with our recommendation and is in
July 1, 1998     acreage data are improved, the Secretary of the Interior the early stages of implementing it. Interior, in
                 (as well as the Secretary of Agriculture) should develop conjunction with other executive branch organizations, is
                 and implement a strategy for ensuring that all actions     now developing a strategy consistent with our
                 contained in the Clean Water Action Plan relating to       recommendation. This includes (1) developing and
                 wetlands data are adopted governmentwide. Such             executing a plan to use existing data systems in a single
                 actions should include the development of consistent       wetlands status and trends report, (2) convening a peer
                 definitions and reporting standards for all federal        review panel to evaluate the plan, (3) issuing technical
                 agencies.                                                  guidance on the restoration, enhancement, and creation
                                                                            of wetlands functions, and (4) establishing an
                                                                            interagency tracking system to more accurately account
                                                                            for wetlands loss, restoration, creation, and enhancement.




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                                               Appendix VII
                                               Department of the Interior




Table V11.3: Guidance, Oversight, and Accountability Need Improvement


Decentralization of responsibility, coupled with inadequate guidance and oversight, has resulted in significant differences in how
Interior's field offices have implemented both legislative mandates and the administration's goals and objectives. For example, BLM
field offices vary widely in the organization and staffing of the oil and gas inspection and enforcement program, the degree of
supervisory oversight provided, and the number of inspections planned and conducted, among other things. As a result, BLM's oil and
gas inspection and enforcement program continues to be an area that is vulnerable to abuse and mismanagement. Similarly, in the
Park Service, decisions about spending and operating priorities are, to a large degree, delegated to the individual park managers.
Under this approach, park managers have broad discretion in deciding how to spend the parks' operating funds. The most significant
limitation associated with this decentralized approach is that it does not focus on the results that were achieved with the funds spent.
Thus, scarce park resources are not always spent in the best interests of the agency as a whole but rather on the more parochial
interests and preferences of individual park managers.

There is one open recommendation related to this issue. In addition, as part of Interior's implementation of the Results Act many of the
concerns we have expressed in this area should be addressed. The principles and objectives of the Results Act are aimed at getting at
the same issues we have identified in our work. For example, as part of its implementation of the Results Act, the Park Service is
requiring individual park managers to develop strategic and annual performance plans that are consistent with and support
Service-wide goals. The Park Service is also implementing an information system to track performance against established goals and to
link spending and goals. Other Interior agencies have similar initiatives to underway. Nonetheless, until these processes are fully
implemented, there is no effective means to monitor progress and hold managers accountable. Consequently, we will continue to
monitor the agencies' efforts and progress.
GAO Contact
Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov



GAO product        Recommendation                                                Agency action
RCED-99-121        To ensure that the South Florida ecosystem is restored        The agency agrees with our recommendation. In
Apr. 22, 1999      promptly and efficiently, the Secretary of the Interior, as   commenting on a draft of our report and in congressional
                   the Chairperson of the South Florida Ecosystem                testimony, agency officials said that they intend to
                   Restoration Task Force, in conjunction with the other         implement this recommendation. They are in the early
                   members of the Task Force, should (1) develop a               stages of implementation. A draft plan is now being
                   strategic plan that will (a) outline how the restoration of   developed and is expected to be completed in 2001.
                   the South Florida ecosystem will occur, (b) identify the
                   resources needed to achieve the restoration, (c) assign
                   accountability for accomplishing actions, and (d) link the
                   strategic goals established by the Task Force to
                   outcome-oriented annual goals, and (2) work with the
                   organizations and entities participating in the restoration
                   effort to develop and agree upon a decision-making
                   process to resolve conflicts.




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                                               Appendix VII
                                               Department of the Interior




Table VII.4: Management Problems Continue to Plague Interior's Tribal and Indian Programs

Interior administers the federal government's trust responsibilities to tribes and Indians. This responsibility includes managing $3 billion
of Indian trust funds and providing about $800 million annually for basic tribal services such as natural resource management and
social services. Management of the trust funds has long been characterized by inadequate accounting and information systems, poor
recordkeeping and internal controls, and other weaknesses that result in no assurance that fund assets are being properly managed. In
addition, federal funding to provide basic tribal services has been criticized for not being responsive because the funding does not
consider tribes' needs, the tribes' own revenues, or the funds necessary to fully fund the tribal programs.

There are nine open recommendations related to this issue. All of them deal with the Indian trust fund activities. While we currently have
no open recommendations related to Interior's distribution of funding for Indian tribes, we continue to monitor key issues associated
with this major management challenge. In July 1998, we reported that BIA's distribution of funds to tribes is not based on the needs of
the tribes and does not take into account tribal revenues; from such things as Indian gaming activities. As a result of our report the
Congress directed Interior to further study this issue. The study results were not completed as of May 1999.
GAO Contacts

Linda M. Calbom, Director
Resources, Community, and Economic Development Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-8341
calboml.aimd@gao.gov
Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product        Recommendation                                                 Agency action
T-AFMD-91-2        To ensure effective reconciliation, audit, and accounting      The Department of the Interior agreed with this
Apr. 11, 1991      for Indian trust funds, the Secretary of the Interior should   recommendation and implementation is well along. BIA
                   direct the Assistant Secretary for Indian Affairs to           completed two volumes of trust fund accounting
                   develop policies and procedures to ensure that balances        procedures for field office trust fund accountants and
                   remain accurate once the accounts are reconciled.              issued them to all field offices in 1995. The Secretary of
                                                                                  the Interior, in August 1997, established a trust
                                                                                  improvement project that includes a subproject, the
                                                                                  objective of which is to inventory, review and revise, and
                                                                                  develop and establish, where appropriate, policies and
                                                                                  procedures to facilitate the proper management,
                                                                                  accounting, investment, audit and reporting to account
                                                                                  holders of Indians' trust assets. That project is now under
                                                                                  way. However, as noted below, Interior was unable to
                                                                                  fully reconcile the Indian trust fund accounts and brought
                                                                                  its reconciliation effort to a close in the fall of 1995.
                                                                                                                                       (continued)




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                                             Appendix VII
                                             Department of the Interior




GAO product      Recommendation                                                Agency action
AFMD-92-38       The Secretary of the Interior should direct the Assistant     The Department of the Interior agreed with this
June 18, 1992    Secretary for Indian Affairs to seek alternatives to the       recommendation and implementation is well along. BIA
                 current reconciliation project and develop a proposal for      limited its contractor's reconstruction efforts to periods
                 reaching a satisfactory resolution of the trust fund          for which adequate records were available and excluded
                 account balances with account holders. In developing           Individual Indian Monies (IIM) accounts from the
                 this proposal, the Assistant Secretary for Indian Affairs      reconciliation effort due to prohibitive costs and
                 should consider (1) limiting contractor reconstruction         difficulties locating records. Although Interior spent over
                 efforts for tribal trust fund accounts to periods for which   5 years in a massive effort to locate supporting
                 adequate records are available, (2) accepting audited          documentation, it could not fully reconcile the Indian trust
                 balances from tribes, (3) negotiating agreements with         fund accounts. Interior brought the reconciliation process
                 individual Indians on balances reported on their account      to a close in fall 1995 and in January 1996 a report was
                 statements, or (4) requesting legislated settlements on all   issued to each tribe on the results associated with its
                 or selected accounts, based on the results of the other       accounts. In November 1997, the Secretary of the Interior
                 alternatives.                                                 sent to the Congress a final report on the reconciliation
                                                                               process with a legislative proposal for resolving disputed
                                                                               account balances where tribes disagree with the
                                                                               reconciliation results. In addition, IIM account balances
                                                                               are now the subject of litigation as the result of a
                                                                               class-action lawsuit brought on behalf of IIM account
                                                                               holders.
AIMD-94-185      The Secretary of the Interior should direct the Assistant     The Department of the Interior agreed with this
Sept. 22, 1994   Secretary for Indian Affairs to immediately ensure that       recommendation and implementation is well along. The
                 leases and other contractual information are maintained       Special Trustee for American Indians, in his April 1997
                 and validated to ensure that all earned trust fund            strategic plan to implement Indian trust fund
                 revenues are billed for, collected, and posted to the         management reforms, called for the acquisition of an
                 correct account.                                              accounts receivable/master lease subsystem data,
                                                                               tickler, and collection system that uses lease-contract
                                                                               and ownership information for trust income verification,
                                                                               reconciliation, billing, payments, collection, accounting,
                                                                               disbursement, audit, asset quality review, and
                                                                               compliance purposes. In August 1997, the Secretary of
                                                                               the Interior established a trust improvement project that
                                                                               included a subproject for acquiring a master
                                                                               lease/accounts receivable subsystem. A contract has
                                                                               been awarded and system acquisition efforts are
                                                                               underway. However, in April 1999, we questioned the
                                                                               adequacy of Interior's procedures for acquiring Indian
                                                                               trust systems and made additional recommendations
                                                                               noted below.
                 The Secretary of the Interior should direct the Assistant     The Department of the Interior agreed with this
                 Secretary for Indian Affairs to act immediately to            recommendation, however, implementation is in its early
                 eliminate title and ownership determination and               stages. According to the Land Records Officer in
                 recordkeeping backlogs by reprogramming existing              Interior's Office of Trust Responsibility, additional
                 resources, hiring temporary employees, or contracting         resources for eliminating the backlogs were not made
                 for services.                                                 available as a result of fiscal year 1995 and 1996 budget
                                                                               cuts. Interior's Special Trustee for American Indians, in
                                                                               his April 1997 strategic plan to implement Indian trust
                                                                               fund reforms, called for the elimination of title and
                                                                               ownership determination and recordkeeping backlogs. In
                                                                               August 1997, the Secretary of the Interior established a
                                                                               trust improvement project that includes two subprojects
                                                                               directed at eliminating probate backlogs. Those
                                                                               subprojects are now being planned.
                                                                                                                                  (continued)

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                                           Appendix 'VII
                                           Department of the Interior




GAO product     Recommendation                                                Agency action
                The Secretary of the Interior should direct the Assistant    The Department of the Interior agreed with this
                Secretary for Indian Affairs to immediately take action to    recommendation and implementation is well along. In
                ensure prompt action to replace the 131A subsidiary and      April 1997, the Special Trustee for American Indians
                Individual Indian Money accounting system with a              released his strategic plan, which called for the
                system that integrates BIA land records and ownership         acquisition of an integrated trust fund management
                information and trust fund accounting information.            system. In August 1997, the Secretary of the Interior
                                                                             established a Trust Improvement project that includes
                                                                              subprojects directed at (1) acquiring a new IIM
                                                                             accounting system and (2) acquiring a system that
                                                                              integrates BIA land records and ownership information
                                                                              and trust fund accounting information. Contracts have
                                                                              been awarded for both systems and acquisition and
                                                                             testing are underway.
AIMD-98-37      The Secretary of the Interior should direct the Special      The Department of the Interior agreed with this
Nov. 26, 1997   Trustee to work with the department's Chief Information       recommendation and implementation is in its early
                 Officer to identify all related business functions and       stages. In response to this recommendation, the
                obtain input on information requirements from all            department stated that (1) an extensive project
                stakeholders to (1) provide adequate evidence of a           management and oversight structure has been
                framework for sharing related business and functional        established, (2) business and functional information is
                information and program requirements among the               being exchanged and coordinated through the Trust
                cognizant organizations and functions and (2) support         Improvement Project Team, (3) formal concept of
                the design and development of management and                 operations documents will be prepared and exchanged
                information systems.                                         for the Trust Funds Management function and the Trust
                                                                             Asset Management functions, and (4) contacts were
                                                                              made with many stakeholders, including departmental
                                                                              land management and trust asset management
                                                                             elements, to explain project objectives and approach.
                                                                              However, we recently found that Interior did not follow a
                                                                             sound process for defining its requirements and, as
                                                                             ndted below, we made an additional recommendation to
                                                                             help Interior better address this area.
                The Secretary of the Interior should direct the Special      The Department of the Interior agreed with this
                Trustee to work with the department's Chief Information       recommendation and implementation is in its early
                Officer to comply with legal and regulatory requirements     stages. In response to this recommendation, the
                for major information technology investments by              department stated that (1) coordination efforts are
                developing a strategic information resources                 underway with the department's Chief Information Officer
                management plan, criteria for the evaluation of major        and various bureaus, (2) ongoing and future acquisitions
                information system investments, and an information           will comply with legal and regulatory requirements, the
                architecture that aligns technology with mission goals.      Clinger-Cohen Act, and OMB guidance, and (3) new
                                                                             trust systems will be included in the department's overall
                                                                             strategic Information Resources Management Plan,
                                                                             evaluated under criteria for major information system
                                                                             investments, and designed to align technology with
                                                                             mission goals. However, we recently found that the
                                                                             department has not yet defined an integrated
                                                                             architecture for Indian trust operations and, as noted
                                                                             below, reiterated our recommendation.
                                                                                                                              (continued)




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                                           Department of the Interior




GAO product     Recommendation                                                Agency action
AIMD-99-53      To ensure that Interior's information systems are             While the Department of the Interior has not responded
Apr. 28, 1999   compatible and effectively satisfy Interior's business        to this recommendation yet, implementation seems to be
                needs, the Secretary of the Interior should direct the        in its early stages. According to the department's
                Chief Information Officer to develop an information           Assistant Secretary for Policy, Management and Budget,
                systems architecture for Indian trust operations that (1)     preliminary work on a system architecture has started.
                provides a high-level description of Interior's mission and
                target concept of operations, (2) defines the business
                functions to be performed and the relationships among
                functions; the information needed to perform the
                functions; the users and locations of the functions and
                information; and the information systems needed to
                support the department's business needs, (3) identifies
                the improvement projects to be undertaken, specifying
                what they will do, how they are interrelated, what data
                they will exchange, and what their relative priorities are,
                and (4) details specific standards and approaches that
                will be used to build or acquire systems, including
                hardware, software, communications, data
                management, security, and performance characteristics.
                To reduce the risks GAO identified with the effort to         While the Department of the Interior has not responded
                acquire a service for managing assets and land records,       to this recommendation yet, it has taken some actions
                the Secretary of the Interior should direct the Chief         and implementation is in its early stages. A risk
                 Information Officer to (1) clearly define and validate       management plan for the acquisition has been
                functional requirements, security requirements, and data      developed and some requirements have been defined.
                management requirements, (2) develop and implement
                an effective risk management plan, and (3) ensure that
                all project decisions are based on objective data and
                demonstrated project accomplishments, and are not
                schedule driven.




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                                             Appendix 'VII
                                             Department of the Interior




Table VII.5: Problems in Managing New Automated Records System Put BLM Programs at Risk

The Bureau of Land Management (BLM) has been developing the Automated Land and Mineral Record System/Modernization
(ALMRS) for several years. In March 1997, we reported that BLM encountered problems that increased the risk of degraded system
performance and capability and had already resulted in higher costs. We also reported BLM would not be ready to deploy the ALMRS
software until it completed essential management plans, policies, and procedures to help ensure a successful transition and operating
environment. In May 1998, we reported that recent and potential delays in implementing the ALMRS software placed BLM at risk
because existing systems that were being used to support mission-critical business processes, which were to be replaced by the
ALMRS software, would be subject to the Year 2000 computer-date problem. On March 4, 1999, we testified that recent tests showed
that ALMRS did not meet BLM's business needs, and BLM decided not to deploy ALMRS. We made recommendations to
(1) thoroughly examine the ALMRS software to determine whether it could be cost beneficially modified and (2) reduce the risks that
future information technology efforts would result in a similar outcome.
There are currently four open recommendations related to this management challenge. These recommendations were transmitted to
BLM in our April 1999 testimony. We also closed all of the recommendations we made in 1997 and 1998 based on BLM's corrective
actions and decision not to deploy ALMRS. Those recommendations we summarized in Major Management Challenges and Program
Risks: Department of the Interior (GAO/OCG-99-9, January 1999) and focused on areas such as configuration management, security
planning and architecture, transition planning, operations and maintenance planning, and Year 2000 contingency planning.
GAO Contacts

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov
Victor S. Rezendes, Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov




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                                            Department of the Interior




GAO product      Recommendation                                                Agency action
AIMD-99-135     The Secretary of the Interior should ensure that BLM           The Director of BLM agreed with this recommendation;
Apr. 30, 1999   thoroughly analyzes the ALMRS Initial Operating                however, the bureau has not yet provided information on
                Capability (IOC) software, reported to cost more than          its implementation of the recommendations in this
                $67 million, to determine whether it can be cost               recently issued report.
                 beneficially modified to meet the bureau's needs. This
                analysis should be part of an overall effort to identify and
                assess all viable alternatives, including (1) modifying
                ALMRS IOC software, (2) modifying existing land and
                 recordation systems, (3) acquiring commercial,
                off-the-shelf software, or (4) developing new systems.
                The alternatives analysis should clearly identify the risks,
                costs, and benefits of each alternative, and should be
                 performed only after BLM is assured that it has fully
                verified its business requirements.
                The Secretary of the Interior should ensure that BLM           The Director of BLM agreed with this recommendation;
                assesses and strengthens its investment management              however, the bureau has not yet provided information on
                practices to help avoid future problems. The                   its implementation of the recommendations in this
                Clinger-Cohen Act of 1996 seeks to maximize the return         recently issued report.
                on investments in information systems by requiring
                agencies to institute sound capital investment
                decisionmaking. Under the act, agencies must design
                and implement a process for maximizing the value and
                assessing and managing the risks of information
                technology acquisitions. The act also requires agencies
                to (1) assess the knowledge and skills of their executive
                and management staff to meet agencies' information
                resources management requirements and rectify any
                deficiencies and (2) develop, maintain, and facilitate the
                implementation of a sound and integrated information
                technology architecture. Effectively enforcing a sound
                information technology architecture to guide and
                constrain a modernization program can preclude
                inconsistent systems design and development decisions,
                suboptimal performance, and excessive cost.
                The Secretary of the Interior should ensure that BLM           The Director of BLM agreed with this recommendation;
                obtains an independent assessment of its systems               however, the bureau has not yet provided information on
                acquisition capabilities, and ensure that it uses sound        its implementation of the recommendations in this
                systems acquisition processes.                                 recently issued report.
                The Secretary of the Interior should ensure that until such    The Director of BLM agreed with this recommendation;
                assessments are completed and corrective actions               however, the bureau has not yet provided information on
                taken, BLM not undertake any sizable systems                   its implementation of the recommendations in this
                acquisition or development efforts.                            recently issued report.




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Appendix VIII

Department of Justice


Table VIII.1: INS Management Challenges Persist

The Immigration and Naturalization Service (INS) has been in the process of developing a restructuring plan to meet various objectives,
including clearly dividing enforcement of immigration laws from delivery of immigration services. However, INS does not plan on
addressing certain management challenges, such as the absence of written guidance on appropriate channels of communication
within the agency, until the restructuring plan is approved. Other management challenges facing INS include the existence of outdated
policies and procedures on how to implement immigration laws, selecting a replacement financial management system without first
analyzing its business processes and developing a risk management plan, and not having appropriate accounting records and internal
controls to enable its auditor to express an opinion on INS' financial statement. The 13 open recommendations related to this issue are
discussed in the following table.

GAO Contact
Norman J. Rabkin, Director
Administration of Justice Issues
General Government Division
(202) 512-8777
rabkinn.ggd@gao.gov


GAO product        Recommendation                                              Agency action
GGD-97-132         The Commissioner of INS should take steps to mitigate       INS disagreed with the recommendation and does not
July 22, 1997      the risks associated with INS' planned approach for         intend to implement it. INS believes it has continued to
                   acquiring a new financial management system. Such           refine system implementation plans in a way that
                   steps should include fully implementing plans to analyze    mitigates risks and does not see the need for our
                   its current financial management processes and              recommendation action.
                   determining future financial management process needs,
                   finalizing a comprehensive implementation plan, and fully
                   developing and implementing a risk management plan.
                   To help achieve the reorganization coals, the              INS has agreed with this recommendation, and intends
                   Commissioner of INS should provide written guidance to     to act on it, but has not yet done so. INS has developed
                   all INS managers on the responsibilities and authority of  a plan to restructure the agency. INS says that upon
                   the Executive Associate Commissioners for Field            congressional approval of the plan, implementation will
                   Operations and Programs in relation to each other.         include the preparation of written guidance to all INS
                                                                              personnel.
                   To help achieve the reorganization goals, the              INS agreed with the recommendation. INS has not yet
                   Commissioner of INS should provide written guidance on begun to implement this recommendation, but it intends
                   the appropriate coordination and communication             to do so. The restructuring of INS may have an effect on
                   methods and channels between offices, including            the existence, function, and authorities of the offices
                   (1) when and how Field Operations and Programs should cited in the recommendation. INS plans to issue written
                   coordinate and communicate with each other, (2) when       guidance on coordination and communication after its
                   and how the Office of Programs should coordinate and       restructuring plan is approved.
                   communicate with the regional offices and the districts
                   and sectors, and (3) when and how the Office of Policy
                   and Planning should coordinate with the other offices.
                   To help achieve the reorganization goals, the              INS has agreed with the recommendation and is in the
                   Commissioner of INS should incorporate into INS' current proces of implementing it. Clarifying roles and
                   evaluation of the reorganization the issues raised in this responsibilities and improving communication are central
                   report so that they can be addressed as INS attempts to to the restructuring of the INS. These issues are to be
                   fully achieve the goals of the reorganization.             considered fully in the creation of an INS restructuring
                                                                              plan.
                                                                                                                               (continued)

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                                           Appendix VIII
                                           Department of Justice




GAO product     Recommendation                               .              - Agency action ' -
GGD-98-164      To help correct undercounts, reduce conceptual                INS has agreed with the recommendation but has not-yet
July 31, 1998   problems, and, where possible, fill gaps for information      begun to implement it. INS plans to utilize our typology
                on immigration flow, the Comissioner of INS should            on flow, based on demographic concepts, as a
                (1) evaluate and, were feasible, work toward improving        framework for reporting, analysis, and evaluation. Some
                data flow and (2) utilize a set of demographic categories of the categories identified in our typology, such as
                (or an information typology) that clarly distinguishes        newly arrived illegal immigrants, are extremely difficult to
                different concepts and helps determine which statistics       measure. INS has led the effort to develop more precise
                can fairly be compared to others.                             estimates and continues to seek new data sources and
                                                                              methods for estimating the flow of illegal imigrants. INS is
                                                                              also testing new systems that may be able to track the
                                                                              entrace of certain individuals admitted for temporary
                                                                              periods, such as business visitors and students. INS also
                                                                              seeks to improve information on nonimmigrants who
                                                                              adjust from one nonimmigrant status to another. INS
                                                                              plans to eliminate the information gap on all asylum
                                                                              seekers admitted during the year.
                To eliminate confused reporting of data and estimates         INS has agreed with the recommendation but has not yet
                concerning immigration flow, the Commissioner of INS          begun to implement it. INS plans to continue to report on
                -should more clearly report information about trends in       the number and characteristics of aliens granted legal
                legal immigration flow and about the difference between permanent, residence during a year; however, INS
                the concepts of flow and net change in the INS                reports plans to utilize demographic concepts (see
                Yearbook-or develop a new reporting format that               response to above recommendation) in order to eliminate
                communicates effectively to policymakers and interested confusion. More information will also be provided to
                members of the general public.                                describe how the various data series overlap. The effects
                                                                              of administrative processes on the trends in immigration
                                                                              should be discussed fully. As more complete information
                                                                              on the date of entry of the various categories of
                                                                              immigrants becomes available, INS plans to develop
                                                                              new reporting formats providing a more complete
                                                                               account of all foreign-born persons entering the United
                                                                              States in a year.
                To reduce the uncertainty associated with statistical          INS has agreed with the recommendation but has not yet
                 estimates of demographic concepts other than                  begun to implement it. INS and the Bureau of the Census
                immigration flow, fill information gaps for specific legal    have already entered into.an interagency agreement to
                 statuses, and address fragmented reporting, the              work together to evaluate and publish information on the
                Commissioner of INS and the Director of the Bureau of          population of foreign-born persons enumerated in the
                the Census should together devise a plan of joint             Current Population Survey. This formal arrangement is to
                 research for evaluating the quality of census and survey be used to address this recommendation. The
                 data on the foreign-born.                                     agreement states that the Census Bureau and INS plan
                                                                              to continue to address methodological problems and
                                                                               data quality issues associated with the development of
                                                                               population estimates and projections of the foreign-born
                                                                               population and their characteristics.
                To reduce the uncertainty associated with statistical          INS disagrees with this recommendation and does not
                 estimates of demographic concepts other than                  plan to take any action to implement it. In commenting on
                 immigration flow, fill information gaps for specific legal   the report, INS stated that it would provide "support and
                 statuses, and address fragmented reporting, the               consultation" to the Census Bureau for this activity, but
                 Commissioner of INS and the Director of.the Bureau of         INS would need an independent evaluation of the
                 the Census should together further develop, test, and        three-card method before committing funds to the
                 evaluate the three-card method that we devised for            method's development. The Census Bureau will not do
                surveying the foreign-born about their legal status,           the work without funding, and INS will not provide
                                                                               funding without an independent evaluation.
                                                                                                                               (continued)


                                            Page 67     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series.
                                              Appendix VIII
                                              Department of Justice




GAO product        Recommendation                                               Agency action
                  To reduce the uncertainty associated with statistical         INS agreed with the recommendation and has begun
                  estimates of demographic concepts other than                  implementation of it, but is still in an early stage. INS and
                  immigration flow, fill information gaps for specific legal    the Bureau of the Census have already entered into an
                  statuses, and address fragmented reporting, the               interagency agreement to work together to evaluate and
                  Commissioner of INS and the Director of the Bureau of         publish information on the population of foreign-born
                  the Census should together either publish a joint report      persons enumerated in the Current Population Survey.
                  or coordinate reports that present information on             This formal arrangement will be used to address this
                  population size, net change, and emigration.                  recommendation. The agreement states that the Census
                                                                                Bureau and INS will continue to address methodological
                                                                                problems and data quality issues associated with the
                                                                                development of population estimates and projections of
                                                                                the foreign-born population and their characteristics.
GGD-99-31         The Attorney General should direct the Commissioner of        INS agreed with the recommendation and is in the early
March 30, 1999.   INS to evaluate the effectiveness of integrity assurance      stages of implementation. It is too soon to assess
                  efforts, such as training, background investigations, and     specific agency actions.
                  reinvestigations.
                  The Attorney General should require the Commissioner          INS agreed with the recommendation and is in the early
                  of INS to comply with policies that require employment        stages of implementation. It is too soon to assess
                  reinvestigations to be completed when they are due.           specific agency actions.
                  The Attorney General should direct the Commissioner of INS agreed with the recommendation and is in the early
                  INS to strengthen internal controls at southwest border       stages of implementation. It is too soon to assess
                  ports-of-entry and at Border Control checkpoints by           specific agency actions.
                  establishing (1) one or more methods to deprive drivers
                  of their choice of inspection lanes at ports-of-entry, (2) a
                  policy for the inspection of law enforcement officers or
                  their vehicles at ports-of-entry and Elorder Patrol
                  checkpoints, and (3) a recusal policy concerning the
                  performance of inspections by Immigration Inspectors
                  and Border Patrol Agents where their objectivity may be
                  in question.
GGD-98-197        To improve confidence in the sampling methodologies           INS agreed with the recommendation and has begun to
Sept. 28, 1998    used to determine future immigration and naturalization       implement it, but is still in an early stage. According to an
                  fees, the Commissioner of INS should ensure that future INS Budget official, the Commissioner of INS, in
                  samples are consistent with generally accepted social         response to our recommendation, intends to ensure the
                  science techniques and that the statistical integrity of the integrity of future user fee study sampling plans. He also
                  sampling plans is maintained throughout the study.           said that a statistically valid sample was recently drawn
                                                                               for two applications in INS' current user fee study. Due to
                                                                                a budget cutback, INS couldn't fund a complete user fee
                                                                               analysis for its other applications. If adequate funding is
                                                                               available in the future, INS plans to develop statistically
                                                                               valid samples for its studies.




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                                              Appendix VIII
                                              Department of Justice




Table VIII.2: Challenges With Implementation of INS' Programs

The Attorney General has established a strategy to strengthen immigration enforcement; however, our review of three aspects of the
strategy has raised concerns about INS' efforts to achieve program objectives. First, INS has spent billions of dollars on border
enforcement but has not done a comprehensive evaluation to determine whether its strategy to deter illegal entry has been effective.
Second, INS has a program to place criminal aliens in removal proceeding while the aliens serve their prison sentences, but it has
failed to identify thousands of such aliens before their release into U.S. communities. Most of those whom INS identified were released
from prison and placed in detention before INS completed the removal proceedings, causing INS to incur millions of dollars in
avoidable detention costs. Third, INS is required to complete criminal history checks on all naturalization applicants before the
application is approved. INS' failure to do so in some cases has resulted in criminal aliens being improperly naturalized. INS issued
instructions to implement internal control procedures in the naturalization process, but questions about the process' integrity remain.
GAO Contact

Norman J. Rabkin, Director
Administration of Justice Issues
General Government Division
(202) 512-8777
rabkinn.ggd@gao.gov


GAO product        Recommendation                                              Agency action
GGD-97-47          The Attorney General should direct the Commissioner of      INS agreed with the recommendation and is in the early
May 20, 1997       INS to periodically determine and assess the production     stages of implementing it. INS receives monthly reports
                   rates and processing times in the INS field units.          by each application type for each processing unit and
                                                                               monitors the units' applications completed per hour and
                                                                               projected processing times by unit.
                   The Commissioner of INS should first ensure that the field INS agreed with the recommendation and is in the early
                   units are consistently reporting the data used to calculate stages of implementing it. INS' Benefits Division, along
                   the rates and times.                                        with a working group of field office staffs and other
                                                                               headquarters entities, streamlined and revised reports
                                                                               starting in fiscal year 1998. Training began in August
                                                                               1997 to promote consistency and accuracy of data. In
                                                                               addition, monthly telephone conferences with its four
                                                                               service centers are to be held to answer questions about
                                                                               reporting definitions and address data concerns.
                   After ensuring that data are consistently reported,         INS agreed with the recommendation and is in the early
                   including using the same definitions, the Commissioner      stages of implementing it. INS is using the naturalization
                   of INS should analyze the production rates and              application to analyze production rates and processing
                   processing times for each field unit by application type. times for each field unit. On the basis of this analysis, INS
                                                                               will analyze other application types to improve
                                                                               production rates and processing times.
                   After ensuring that data are consistently reported,         INS agreed with the recommendation and is in the early
                   including using the same definitions, the Commissioner      stages of implementing it. INS is using the naturalization
                   of INS should identify factors that contribute to making    application to identify factors that contribute to making
                   the field units more or less productive and timely.         field units more or less productive and timely. On the
                                                                               basis of this analysis, INS plans to review other
                                                                               application types to identify opportunities to improve
                                                                               productivity and timeliness.
                                                                                                                                 (continued)




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                                          Appendix VIII
                                          Department of Justice




GAO product    Recommendation                                               Agency action
               After ensuring that data are consistently reported,          INS agreed with the recommendation and is in the early
               including using the same definitions, the Commissioner       stages of implementing it. INS is using the naturalization'
               of INS should determine whether and what changes             applications to determine whether and what changes
               could be made to make individual field units more            could be made to make individual field units more
               productive and timely.                                       productive and timely. Based on this analysis, INS plans
                                                                            to include other application types to improve productivity
                                                                            and timeliness.
               After ensuring that data are consistently reported,          INS agreed with the recommendation and is in the early
               including using the same definitions, the Commissioner       stages of implementing it. INS has established a process
               of INS, should follow up with the field units to ensure that to monitor that field units are implementing appropriate
               appropriate changes are implemented.                         changes.
GGD-98-21      The Attorney General should develop and implement a          INS agreed with the recommendation and is in the early
Dec. 11,1997   plan for a formal, cost-effective, comprehensive,            stages of implementing it. The Commissioner of INS
               systematic evaluation of the strategy to deter illegal entry followed up with a letter to the Chairman of the Senate
               across the southwest border. This plan should describe Judiciary Committee on February 13, 1998, that
               (1) the indicators that would be required for the            described the actions INS would take to implement the
               evaluation, (2) the data that need to be collected,          recommendation.
               (3) mechanisms for collecting the data, (4) controls
               intended to ensure accuracy of the data collected, (5)       As we reported in our update of the border strategy
               expected relationships among indicators, and (6)             implementation (GGD-99-44) in May 1999, INS
               procedures for analyzing the data.                           contracted with a research firm to design an evaluation
                                                                            strategy, identify data needs and analytical approaches,
                                                                            and conduct a study of the results of the southwest
                                                                            border strategy. On June 3, 1999, an official with INS'
                                                                            Office of Policy and Planning stated that INS had
                                                                            received a report from the contractor in May 1999.
                                                                            However, results of the report were unavailable, so it is
                                                                            unclear whether the study has fulfilled the
                                                                            recommendation.
GGD-99-33      The Commissioner of INS, as a part of the outreach            INS agreed with the recommendation and is in the early
Apr. 2, 1999    program for INS' pilot programs, should seek assistance stages of implementing it. INS officials stated that a more
               from federal and state agencies, such as the Department systematic coordination with other agencies could be
                of Labor and state labor agencies, in disseminating          useful and that they would add this type of coordination
                information to employers about the programs.                effort to other recruitment efforts underway.
                The Commissioner of INS, in implementing the interior        In its agency comments, Justice did not specifically
                enforcement strategy, should clarify the criteria for       comment on this recommendation or indicate whether
                opening investigations of employers suspected of            they will take any action, nor has it formally responded to
                criminal activities.                                        the Congress regarding the recommendation. INS had
                                                                            just revised its interior enforcement strategy, and
                                                                             strategy specifics were not yet developed. Justice has
                                                                             not formally responded to the Congress regarding this
                                                                             recommendation. However, an INS official stated in a
                                                                             June 1, 1999, telephone conversation that INS was still in
                                                                             the process of developing implementation plans for the
                                                                             strategy, which would include, among other things,
                                                                             specific criteria for opening investigations of employers
                                                                             suspected of criminal activities.
                                                                                                                              (continued)




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                                           Appendix VIII
                                           Department of Justice




GAO product     Recommendation                                            Agency action
T-GGD-97-154    The Commissioner of INS should establish a nationwide     INS agreed with the recommendation and is in the early
July 15, 1997   data system containing the universe of foreign-born       stages of implementing it. Functional requirements for
                inmates reported to INS by the Bureau of Prisons (BOP)    the system were defined. On the basis of the
                and the state departments of corrections and use this     requirements, the Criminal Alien Investigations System
                system to track the Institutional Hearing Program (IHP)   (CAIS98) was developed, and, in April 1998, it was
                status of each inmate.                                    piloted in the federal IHP site in Oakdale, Louisiana. A
                                                                          User Acceptance Test was conducted in July 1998.
                                                                          Several modifications were suggested and made. In
                                                                          September 1998, the system was deployed further to the
                                                                          federal IHP site in Allenwood, Pennsylvania. In October
                                                                          1998, it was deployed to the federal IHP site in La Tuna,
                                                                          Texas. An updated version of CAIS98 has been
                                                                          completed, but expenditures for further deployment are
                                                                          under review by the INS Information Technology
                                                                          Investment Review Board.
                The Commissioner of INS should give priority to aliens    INS disagreed with this recommendation and does not
                serving time for aggravated felonies by establishing      intend to implement it. INS continues to prioritize
                controls to ensure that these aliens are identified from  institutional cases by release date and maintains that this
                among the universe of foreign-born inmates provided by is important because (1) detention space is currently in
                BOP and the states, are placed into deportation           short supply and (2) the vast majority of criminal aliens
                proceedings while in prison, and are taken into custody are aggravated felons. We reported in October 1998,
                upon their release.                                       however, that INS still failed to identify all deportable
                                                                          criminal aliens, including aggravated felons. INS has
                                                                          attempted to remedy this problem by addressing the
                                                                          backlog of unprocessed inmates in state prisons.
                The Commissioner of INS should (1) develop a workload INS agreed with the recommendation and is in the early
                analysis model to identify the IHP resources needed in    stages of implementing it. INS completed work on a draft
                any period to achieve overall program goals and the       workload analysis model in June 1998 and delivered a
                portion of those goals that would be achievable with      management briefing on the model in January 1999. The
                alternative levels of resources and (2) use the model to  model should be available for input to future budget
                support INS' IHP funding and staffing requests. Such a    cycles.
                model should consider several factors, including the
                number of foreign-born inmates, number of prisons that
                must be visited, number and types of IHP staff, length of
                time needed to process cases, and travel time and costs.
                The Commissioner of INS should identify the causes of'     INS agreed with the recommendation and is in the early
                immigration agent attrition and take steps to achieve IHP stages of implementing it. INS has identified what it
                program goals.                                            believes are the causes for the high attrition rate, but it
                                                                          has not determined the appropriate solution to the
                                                                          problem.
                The Commissioner of INS should establish and               INS agreed in part with this recommendation, and is in
                effectively communicate a clear policy on the role of     the early stages of implementing that portion of the
                special agents in the IHP and, using a workload analysis recommendation. With respect to clarifying policy, INS
                model, set IHP goals for district responsibilities.       communicated the role of special agents assigned to
                                                                          criminal alien removal work in an October 1997 memo to
                                                                          field managers. With respect to establishing IHP goals
                                                                          for district directors, INS prefers that regional directors
                                                                          have the flexibility to manage the district goals and
                                                                          therefore does not intend to implement this part of the
                                                                           recommendation.
                                                                                                                             (continued)




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                                         Appendix 'VIII
                                         Department of Justice




GAO product   Recommendation                                             Agency action
              If it appears that IHP goals will not be met, INS should   INS agreed with the recommendation and is in the early
              document any actions taken to correct the problem.         stages of implementing it. In May 1998, it appeared that
                                                                         INS might not be able to meet its removal goal for the
                                                                         fiscal year. As a result, INS regional mangers were
                                                                         tasked with developing plans for increasing criminal alien
                                                                         removals. When INS did not achieve its fiscal year 1998
                                                                         removal goal, it tasked each INS region with developing
                                                                         and implementing a program overhaul and improvement
                                                                         plan.




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                                              Appendix VIII
                                              Department of Justice




Table VIII.3: Significant Departmental Financial Management Weaknesses

Since our January 1999 report series, the audit of the Department of Justice's fiscal year 1998 Consolidated Balance Sheet and
Consolidated Statements of Net Cost and Changes in Net Position was completed and resulted in a disclaimer of opinion because the
auditors were unable to obtain sufficient evidence about certain balances and disclosures in the consolidated financial statements. The
department had also received a disclaimer of opinion on the Consolidated Statement of Financial Position for fiscal year 1997, and the
department's Inspector General noted that although improvements were being made in certain areas, overall, the department had not
substantially progressed towards an unqualified opinion. In connection with the audit of Justice's fiscal year 1998 consolidated financial
statements, auditors disclosed one material.weakness and three reportable conditions. In reporting on the separate audits of Justice's
component entities, auditors identified 13 material weaknesses and 18 reportable conditions related to internal controls. Some of these
problems affected the components' ability to receive opinions on their financial statements and produce reliable financial information on
a routine basis. Finally, auditors identified several noncompliance conditions related to the Federal Financial Management Improvement
Act of 1996, the Prompt Pay Act, appropriation law, and the Illegal Immigration Reform and Immigration Responsibility Acts.
While we do not have any open recommendations related to Justice's financial management weaknesses, the department's financial
statement auditors have open recommendations related to correcting material weaknesses and reportable conditions identified in the
audits. These recommendations include improving electronic data processing (EDP) controls, ensuring that financial transactions are
recorded in accordance with federal accounting standards, strengthening controls over Fund Balance With Treasury, and improving
fiscal year-end closing procedures. We and the Justice Office of Inspector General (OIG) will continue to monitor certain key financial
management issues at the department.

GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                               Department of Justice




Table V11I.4: Embezzlements and Financial Management Control Weaknesses at DEA

 In September 1998, we reported on two embezzlement cases at the Drug Enforcement Administration (DEA) and on some of the
financial management weaknesses identified and reported by DEA's external auditor. In our report, we stated that some of the financial
management weaknesses compromised DEA's overall control environment and are the type of control problems that could allow
embezzlements, such as those reported, to occur without prompt detection. For example, the external auditor reported in its fiscal year
 1997 financial statement audit report that, of 148 items sampled, documentation to support the proper receipt and acceptance of
goods and services had not been received for 14 expense transactions. The auditor reported similar instances in its fiscal year 1998
financial statement audit. Payment of expenses without adequate documentation is the type of control weakness that contributes to an
environment where embezzlements can take place. For instance, in one of the cases of reported embezzlements, DEA processed
transactions even though it lacked documents to establish that the amounts were owed. Although, DEA's external auditor issued an
unqualified opinion on DEA's fiscal year 1998 balance sheet, the auditor issued a disclaimer of opinion on all of DEA's other financial
statements. The disclaimer of opinion was issued because it was not practical for the external auditors to extend auditing procedures to
sufficiently satisfy themselves as to the beginning balances of assets, liabilities, and net position. Finally, the external auditors also
identified one material weakness and three reportable conditions related to DEA's internal control and identified two instances of
noncompliance related to the Prompt Pay Act and the Federal Financial Management Improvement Act of 1996.

While we do not have any open recommendations related to' DEA's embezzlements and financial management control weaknesses,
DEA's financialstatement auditors have open recommendations related to correcting the material weaknesses and reportable
conditions identified in the audits. These recommendations include implementing mainframe security software, 'accurately and
completely reporting seized drug information, reconciling differences between DEA's Fund Balance With Treasury Accounts and its
general ledger, and strengthening internal controls over accruals and disbursements. We and the Justice OIG will continue to monitor
certain key financial management issues at DEA.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




                                               Page 74     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix IX

Department of Labor


Table IX.1: Labor Lacks Accurate and Reliable Information to Assess Program Performance

The Department of Labor lacks accurate and reliable information needed to effectively assess whether many of its programs are
producing their intended results and to determine whether its resources are being used effectively. This deficiency is particularly
important for Labor, because many of its activities are fragmented or duplicated either within the department or by other departments or
state or local governments. Thus, major challenges facing Labor include determining how to provide consistent outcome information
across multiple programs with similar objectives, ensuring that Labor's outcome information is accurate, and monitoring program
implementation. In addition, Labor needs to rely less on its component offices and the Office of Inspector General to ensure the
reliability and validity of program performance data.
GAO Contact

Cynthia M. Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education,and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov


GAO product        Recommendation                                               Agency action
GGD/OCE-98-2       As long as a fixed market basket Consumer Price Index        BLS agreed and the implementation is well along. After a
Oct. 9, 1997       (CPI) is published, the Commissioner of the Bureau of        review to determine the optimal frequency for updating
                   Labor Statistics (BLS) should update the expenditure         the expenditure weights, BLS announced in December
                   weights of the CPI's market basket of goods and              1998 that future updates of the expenditure weights
                   services more frequently than every 10 years to make it      would take place every 2 years after data for January
                   more timely in its representation of consumer                2002 are released.
                   expenditures.
HEHS-98-1          Improvements are needed to make the measures used to       Labor agreed and the implementation is in its early
Oct. 21, 1997      assess Job Corps placement contractor performance          stages. Labor convened a workgroup to develop
                   more meaningful. Therefore, the Secretary of Labor         modifications to the performance measures, which
                   should modify certain measures for placement               studied whether to eliminate from the placement pool
                   contractors, including eliminating from the placement      participants whom contractors realistically could not or
                   pool participants whom contractors realistically could not should not be expected to place, such as participants
                   or should not be expected to place, such as participants   who were expelled for drugs or violent behavior. As a
                   who were expelled for criminal or violent behavior.        result, participants who are expelled from the program
                                                                              for drugs or violence within the first 45 days are to be
                                                                              eliminated from the placement pool.
                    Improvements are needed to make the measures used to Labor agreed and implementation is in its early stages.
                    assess Job Corps placement contractor performance         The Office of the Job Corps is making a transition to a
                    more meaningful. Therefore, the Secretary of Labor        new system based on the Occupational Employment
                    should modify certain measures for placement              Statistics, a design established by BLS. It expects the
                    contractors, including replacing the current job-training new system to be more accurate and easier to maintain
                    match system with one that captures realistic information and monitor in terms of eliminating erroneous job-training
                    and providing guidance to regional offices to ensure that matches. A pilot test was conducted with six placement
                    matches are correct and that the data are accurately       agencies using the new system in February and March
                    recorded.                                                  1998. This system will become operational in the summer
                                                                              of 1999.
                                                                                                                               (continued)




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                                           Department of Labor




GAO product     Recommendation                                                Agency action
                Improvements are needed to make the measures used to          Labor agreed and implementation is in its early stages.
                assess Job Corps placement contractor performance             The Office of the Job Corps convened a technical
                more meaningful. Therefore, the Secretary of Labor            workgroup to develop modifications to the performance
                should modify certain measures for placement                  measures. As a result, the Job Corps has developed
                contractors, including establishing separate placement        separate placement standards for graduates and
                performance standards for participants with different         nongraduates.
                levels of program accomplishment-for example, those
                who completed program requirements and those who
                dropped out early.
HEHS-98-20      To improve service to both employers and workers, the         Labor agreed and implementation is in its early stages.
Dec. 31, 1997   Secretary of Labor should regularly collect data on its       Labor has assigned a full-time staff member to draft a
                performance in meeting the H-2A regulatory and                work plan and timetable for an automated processing
                statutory deadlines for processing H-2A applications and      and performance tracking system. The work plan should
                should use these data to monitor and improve its              be completed by the summer of 1999.
                performance.
HEHS-98-193     To improve Labor's detection and reporting of illegal    Labor agreed with the concept but has no plans to
Aug. 21, 1998   child labor in agriculture, the Secretary of Labor shouldimplement this recommendation as stated. Alternatively,
                direct the Assistant Secretary for Employment Standards  it is adding a child labor component to the National
                                                                         Agricultural Workers Survey to measure issues specific
                to test the feasibility of collecting data on the number of
                minimum-wage and other labor law violations that involve to children working in agriculture. Its view is that using a
                anyone younger than 18.                                  statistically valid sample of this workforce is a more
                                                                         effective way of dealing with the underlying problem.
                The Secretary of Labor should direct the Assistant       Labor disagreed and will not be implementing this
                Secretary for Employment and Training to develop and     recommendation. Labor maintains termination data on
                analyze data on Migrant and Seasonal Farmworker          program participants that can be broken out by any age
                Program services and outcomes for children aged 14 to group. However, other data on program participants are
                17 to determine the number of these children served, the tracked by ages 14 to 22, and collecting data on a
                services provided, and the outcomes experienced by       subset of this group-that is, for ages 14 to 17-would
                these children.                                          require a different data collection strategy and could not
                                                                         be done without the approval of the Office of
                                                                         Management and Budget. Furthermore, the issue may be
                                                                         resolved with new program requirements as a result of
                                                                         the Workforce Investment Act.
                                                                                                                           (continued)




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                                          Department of Labor




GAO product     Recommendation                                               Agency action
HEHS-99-15      Improvements are needed to ensure that the information       Labor agreed and implementation is in its early stages.
Nov. 4, 1998    used to assess Job Corps program performance is              Labor has hired one contract employee in Seattle and is
                accurate and meaningful. Specifically, two of the            hiring a second contract employee who will be located at
                measures used to judge the success of the Job Corps          Job Corps headquarters and whose principal
                program-vocational completion and job training               responsibilities will be to verify job placement and
                match-provide misleading information that overstates         validate the training-relatedness of the placement.
                program outcomes. Therefore, the Secretary of Labor
                should more accurately define and report information on
                the extent to which program participants complete
                vocational training.

                Improvements are needed to ensure that the information
                used to assess Job Corps program performance is
                accurate and meaningful. Specifically, two of the
                measures used to judge the success of the Job Corps
                program-vocational completion and job training
                match-provide misleading information that overstates
                program outcomes. Therefore, the Secretary of Labor
                should develop a more accurate system of reporting
                training-related jobs and effectively monitor its
                implementation.
HEHS-99-21      To reduce the cost of verification related to the            Labor agreed and implementation is in its early stages.
Jan. 11, 1999   Davis-Bacon Act and increase the benefits, the Secretary     Labor will be increasing from 2 percent to 5 percent the
                of Labor should direct the Administrator of the Wage and     number of data collection forms randomly selected for
                Hour Division (WHD) to revise verification procedures to     telephone verification and will request supporting
                maximize the expected value to be gained from                documentation during this telephone verification.
                verification. Specifically, Labor should increase the use
                of telephone verification-while decreasing on-site
                verification audits-and increase efforts to obtain payroll
                documentation from all selected submitters.
                                                                                                                           (continued)




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                                         Appendix I:X
                                         Department of Labor




GAO product   Recommendation                                               Agency action
              To reduce the cost of verification related to the            Labor agreed and implementation is well along. For each
              Davis-Bacon Act and increase the benefits, the Secretary     craft for which a wage rate is proposed, Labor will
              of Labor should direct the Administrator of WHD to revise    identify the contractors with the biggest effect on the
              verification procedures to maximize the expected value       wage data and any contractor reporting wage rates
              to be gained from verification. Specifically, Labor should   outside a predetermined weighted mean. Following this
              change the procedures used to select wage data for           selection process, these contractors will be contacted by
              verification, using a judgmental sample of wage data         telephone to request that they submit supporting
              forms based on the potential impact of the data on           documentation. If it is not provided, these contractors will
              prevailing wage rate determinations rather than using a      be referred for possible on-site verification. Detailed
              random sample.                                               guidance for selecting the judgmental sample has been
                                                                           developed and is scheduled to be used beginning with
                                                                           all surveys completed in May 1999.
              To reduce the cost of verification related to the            Labor partially agreed and implementation of the
              Davis-Bacon Act and increase the benefits, the Secretary     changes to which it agreed is well along. Documentation
              of Labor should direct the Administrator of WHD to revise    will be requested in all telephone and on-site
              verification procedures to maximize the expected value       verifications. If a contractor is not able or willing to
              to be gained from verification. Specifically, Labor should   provide the documentation or access to the
              revise verification procedures to take more appropriate      documentation, the data submitted may still be used
              action when documentation cannot readily be obtained         unless the contractor has a history of not cooperating or
              from a contractor, such as not using data when               has previously provided inaccurate data. Labor is
              supporting documentation is requested but not provided,      developing a nationwide system for tracking these
              requiring documentation where possible, and giving third     contractors and will use it in deciding whether to use
              parties, such as representatives of unions and contractor    data that cannot be verified. The tracking system is
              associations, an opportunity to provide supporting           scheduled to be used beginning with all surveys
              documentation for data they submitted.                       completed in May 1999. Third parties will be given the
                                                                           opportunity to provide supporting documentation for all
                                                                           data they submit.




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                                              Appendix IX
                                              Department of Labor




Table IX.2: Decentralization Intensifies Labor's Coordination Challenge

Labor's decentralized structure and the numerous federal, state, and local partners that share responsibility for Labor's programs
complicate its efforts to effectively coordinate the many programs it oversees. Not only does Labor itself have 22 offices, many of which
have overlapping responsibilities, but for many of its programs, such as job training, enforcement, and data collection, Labor must work
with state and local governments or nongovernmental organizations that often manage the programs on a day-to-day basis. As a result,
the need for coordination, communication, and cooperation among Labor and its partners is vital to ensuring that program services are
delivered efficiently. While Labor's strategic and performance plans acknowledged the need for coordination among some of its
partners, such as in job training, the plans generally lacked detail on how such coordination will be achieved, especially given the
rapidly changing job training environment.
GAO Contact

Cynthia M. Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov




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                                           Appendix IX
                                           Department of Labor




GAO product     Recommendation                                                Agency action
HEHS-96-4       To better meet the Older Americans Act (OAA) title V          Labor agreed and implementation is in its early stages.
Nov. 2, 1995    goal of equitably distributing Senior Community Service       Labor has taken some additional actions to increase
                Employment Program (SCSEP) funds within the states,           coordination among sponsors. The Congress is
                the Secretary of Labor should require greater                 considering proposed reauthorization of the OAA that
                cooperation among national sponsors and states in             may change distributions of funds between state
                equitable distribution matters.                               sponsors and national sponsors.
                To better meet the OAA title V goal of equitably              Labor partially agreed but does not intend to implement
                distributing SCSEP funds within states, the Secretary of      the recommendation. Labor has taken some actions to
                Labor should adjust, as necessary, sponsors' funding          instruct sponsors to put new positions into underserved
                levels to reward sponsors that are willing to establish       areas; however, it has no plans to adjust sponsors'
                positions in underserved counties.                            funding levels solely on their ability to meet equitable
                                                                              distribution requirements. OAA reauthorization language
                                                                              being considered may significantly change the
                                                                              distribution of funds to and among national sponsors and
                                                                              states. OAA reauthorization is pending.
                The Secretary of Labor should enforce the statutory limit     Labor disagrees and does not intend to implement these
                on administrative expenses and be prepared to reduce          recommendations. Rather, Labor has issued program
                the funds available for administration of any grantee         guidance to sponsors on the charging of costs, allowing
                exceeding the legal limit by improperly categorizing          sponsors to charge certain costs to the category of
                costs or incurring improper indirect costs.                   enrollee costs rather than to administration.
                The Secretary of Labor should revise the 1995
                regulations to adopt the definition of administrative costs
                set out in the 1976 regulations.
HEHS-97-51      The Chairman of the Nuclear Regulatory Commission             Labor agreed and implementation is well along. Both the
Mar. 31, 1997   (NRC) and the Secretary of Labor should coordinate            NRC Chairman and the Secretary of Labor have signed a
                efforts to ensure that NRC's Allegation Management            revised memorandum of understanding in which Labor
                System includes information on the status of cases at         agrees to notify NRC promptly of additions or changes in
                Labor.                                                        the status of allegation cases.
HEHS-98-20      To improve service to both employers and workers, the         Labor agreed but has not yet begun to implement this
Dec. 31, 1997   Secretary of Labor should update and revise the H-2A          recommendation. Rather than revising the current H-2A
                handbook to include procedures for all agencies               handbook, it will issue a new handbook and will begin
                involved and key contact points, both at Labor and at         the process during fiscal year 2000.
                other agencies.
HEHS-98-193     To improve Labor's detection and reporting of illegal         Labor agreed and implementation is well along. Labor
Aug. 21, 1998   child labor in agriculture, the Secretary of Labor should     has developed specific procedures for handling potential
                direct the Assistant Secretary for Employment Standards       violations of child labor in agriculture, including those
                to ensure that procedures specified in the existing           procedures to be used in interactions with other federal
                agreements among WHD and other federal and state              and state agencies, and has distributed advanced
                agencies-especially regarding referrals to and from           copies of the procedures to WHD field staff. The final
                other agencies, joint inspections, and exchange of            versions were distributed in a revised handbook on July
                information-are being followed and, as required in some       15, 1999. We will review the procedures to determine if
                agreements, are being recorded and tracked.                   they comply with our recommendation.




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                                             Appendix IX
                                             Department of Labor




Table IX.3: Alternative Enforcement Strategies Could Leverage Labor's Limited Resources

Labor faces a formidable challenge in enforcing basic workplace protections, from ensuring that workers receive at least a minimum
wage to allowing parents to take leave to spend time with their newborn children to protecting workers from occupational hazards.
Labor must enforce these protections in millions of workplaces employing millions of workers throughout the nation. Given the breadth
of these mandates and the scope of its enforcement task, Labor needs to more effectively leverage its limited resources beyond
traditional inspections, citations, and fines by using alternative enforcement strategies.
GAO Contact

Cynthia M. Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov




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                                           Appendix IX
                                           Department of Labor




GAO product     Recommendation                                            Agency action
HRD-92-40       The Secretary of Labor should direct the Assistant        Labor agreed and implementation is in its early stages.
Mar. 10, 1992   Secretary for Pension and Welfare Benefits to develop a   The Health Insurance Portability and Accountability Act
                mechanism to help states identify Multiple Employer       of 1996 authorizes Labor to require certain MEWAs to file
                Welfare Arrangements (MEWA).                              annual reports. Labor plans to require such reporting
                                                                          and recently completed draft regulations implementing
                                                                          this requirement. It plans to issue final regulations by
                                                                          September 30, 1999.
HEHS-98-20      After the Attorney General has delegated the INS role in Labor agreed and the agency intends to implement this
Dec. 31, 1997   petition approval to Labor, to reduce total application   recommendation, but implementation depends upon
                processing time and facilitate better accuracy in         completion of the recommendation that the Attorney
                estimating the date workers will be needed, the           General delegate authority for approving H-2A petitions
                Secretary of Labor should amend the regulations to allow to Labor. Delegation of this authority is in process. The
                H-2A applications to be submitted up to 45, rather than   administration is initiating rule-making to implement this
                60, days before the date of need so long as INS does not recommendation. The proposed rule-making reduces the
                have a role in the petition approval process.             time period from 60 to 45 days. Publication is imminent.
                To better protect both domestic and H-2A workers, the     Labor agreed and intends to implement this
                Secretary of Labor should extend the authority to         recommendation, but implementation has not yet begun.
                suspend employers with serious labor standard or H-2A In its budget submission for fiscal year 2000, Labor has
                contract violations to WHD.                               requested that the function be transferred from the
                                                                          Employment and Training Administration to WHD.
                                                                          Implementation awaits congressional action on the
                                                                          budget.
                To better protect both domestic and I--2A workers, the    Labor has not yet determined whether it agrees with this
                Secretary of Labor should revise Labor's regulations to   recommendation or intends to implement it. The
                require agricultural employers to guarantee H-2A          guarantee for first week's wages is still under
                workers' wages for the first week after the date of need  consideration by the agency.
                and to pay workers those wages no later than 7 days
                after the date of need.
                To better protect both domestic and I-I-2A workers, the   Labor disagrees and does not intend to implement this
                Secretary of Labor should revise Labor's regulations      recommendation. Labor considers its current regulations
                regarding the three-quarter guarantee to remove           adequate to effectively deal with this issue.
                incentives to overestimate the contract period. Revisions
                Labor considers should include applying the guarantee
                incrementally during the duration of the H-2A contract in
                a manner that would improve the protection afforded to
                H-2A workers but also minimize any additional
                administrative burden on agriculural employers.
HEHS-98-193     To improve Labor's detection and reporting of illegal     Labor agreed with the concept but has no plans to
Aug. 21, 1998   child labor in agriculture, the Secretary of Labor should implement this recommendation. Rather, it is adding a
                direct the Assistant Secretary for Employment Standards child labor component to the National Agricultural
                to develop a method for identifying the number of         Workers Survey to measure issues specific to children
                 record-keeping violations resulting from employers not   working in agriculture. Its view is that using a statistically
                 having children's ages on file as required by the Fair   valid sample of this workforce is a more effective way of
                 Labor Standards Act.                                      dealing with the underlying problem.




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                                              Appendix IX
                                              Department of Labor




Table IX.4: Year 2000 Problem Could Jeopardize Benefits Payments and Economic Statistics

The Department of Labor has taken action to prepare its 61 mission-critica! systems for the impending century change. However, with
about 6 months remaining before the year 2000, Labor still remains at risk of Year 2000 disruptions in two areas as we highlighted last
fall: making benefits payments to laid-off workers and producing labor and economic statistics. Given these risks, Labor must focus on
testing activities and develop appropriate contingency plans to ensure business continuity in the event of system failures.

One of Labor's programs to help unemployed workers is the Unemployment Insurance Program. Operated under a federal-state
partnership, State Employment Security Agencies (SESA) operate their own systems to provide benefits to laid-off workers, collect taxes
from employers, and track employee earnings. In September 1998, we reported that many SESAs were at risk of Year 2000-induced
failures as early as January 1999 because of the inability of some systems to project the end of a claimant's benefit year past
December 1999. We urged Labor to initiate the development of contingency plans to ensure continuity of core business processes in
the event these systems became inoperable. Indeed, by instituting contingency measures, Labor was able to avert date problems in
January at four SESAs thus avoiding disruption of benefits. However, in spite of the agency's success in meeting its early Year 2000
challenge, many of these state-run systems are still not yet Year 2000 compliant and remain at risk.
The Bureau of Labor Statistics (BLS) is an independent national statistical agency that collects, processes, analyzes, and disseminates
essential statistical data for the American public, the Congress, other federal agencies, state and local governments, business, and
labor. In May 1999, we raised concerns regarding BLS' use of a noncompliant software product in several of its systems. In 1997, the
manufacturer discontinued support for the older version of the product as it was determined not to be "Year 2000 Ready." The vendor
 strongly recommended that customers upgrade to a compliant version and not attempt to use the noncompliant version in the next
 century. BLS conducted an assessment of the product and concluded that its systems would not be affected by the date problem
 identified by the manufacturer due to its limited use. Based on its assessment and testing, BLS made a management decision to
 accept the risks associated with a known product rather than take the chance of introducing addtional unknown risks by upgrading the
 product or accelerating the migration of the systems to a new technology before the year 2000.

While there are currently no open recommendations related to Labor's Year 2000 management challenge, we will continue to update
the Congress on Labor's progress in assuring that all state unemployment systems are Year 2000 compliant. We will also monitor
Labor's use of noncompliant products in its statistical systems and identify any additional concerns raised by the vendor over the next 6
months.
GAO Contact

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov




                                              Page 83     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix X

Department of State



Table X.1: Enhancing the Management of Security Programs for Overseas Personnel and Property

In the wake of the bombing of the U.S. embassies in Kenya and Tanzania, the Congress provided the Department of State $1.45 billion
in emergency funding in the Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999
(P.L. 105-277) to enhance security around the world. This includes funds for an immediate response to the bombings, such as medical
treatment, counterterrorism programs and rewards, and economic assistance, as well as funds to rebuild the embassies in Kenya and
Tanzania. In addition, State will likely request several billion dollars in funds for new capital construction in the upcoming years. State
will face several management challenges in administering an expanded security construction program, including whether it can bring
on board the appropriate amount of staff to plan and marage a large number of overseas construction projects.
While there currently are no open recommendations related to State's management of security programs, we are reviewing State's
handling of these efforts. In view of State's prior experiences and difficulties in implementing the security construction program, several
questions and issues need to be addressed as part of today's efforts to formulate strategies for enhancing security. Questions should
focus on the total costs to bring overseas posts into compliance with current security standards, the actions needed to ensure that
State has the management capability to implement a large-scale construction program, and whether there are adequate control
mechanisms to ensure efficient and effective use of available funding. One issue of utmost importance to address first is whether there
is a valid need for the large number of U.S. employees overseas. The security burden is directly associated with the size of the
overseas workforce so that State needs to take the lead in a broad examination of how the U.S. government carries out its overseas
roles and related missions and whether all requirements and alternatives have been explored.
GAO Contact

Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov




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                                                Department of State




Table X.2: Improving Information Management Systems

State's information resource management (IRM) infrastructure has historically been inadequate to support the agency's core foreign
policy and administrative functions. State officials have recognized that deficiencies exist. State is spending hundreds of millions of
dollars each year on IRM, including $100 million to $150 million to modernize its information technology (IT) hardware and software
systems, remediate Year 2000 problems, implement a comprehensive information security management system, and upgrade its
overall ITcapability. State estimated in 1997 that it would need $2.7 billion over 5 years to achieve a modernized global infrastructure.
However, this estimate was not prepared through the rigorous analytical process called for in federal guidance designed to control
costs and improve efficiency.
We recommended that State implement a number of corrective measures, including establishing a central information security unit and
adopting risk-based IT security management techniques. State concurred with the majority of our recommendations and has taken
steps to improve information security, such as establishing a central ITsecurity unit and department-level information systems security
officer, preparing new management guidance on IT security, and increasing IT security awareness activities.

GAO Contacts
Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov
Jack L. Brock Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov


GAO product Recommendation                                                     Agency action
AIMD-98-145 The Department of State should establish a central                 State agreed with this recommendation and
May 18, 1998 information security unit and assign it responsibility for        implementation is in its early stages. According to State,
             facilitating, coordinating, and overseeing the department's       the Under Secretary for Management will designate the
             information security activities. In doing so, State should        department's Designated Approving Authority (DAA), who
             assign the Chief Information Officer (CIO) the                    will be responsible for information systems security. State
             responsibility and authority for ensuring that the                did not give a time frame for this action.
             information security policies, procedures, and practices
             are adequate.
             The Department of State should establish a central                State agreed with this recommendation, and
             information security unit and assign it responsibility for        implementation is in its early stages. The DAA, being
             facilitating, coordinating, and overseeing the department's       responsible for overall information security, will ensure
             information security activities. In doing so, State should        implementation of the certification process and the
             clarify the computer security responsibilities of the Bureau      accreditation process at the appropriate management
             of Diplomatic Security, the Office of Information                 levels within the department.
             Management, and individual bureaus and diplomatic
             posts.
                                                                                                                                 (continued)




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                                             Department of State




GAO product Recommendation                                                     Agency action
            The Department of State should establish a central                 State agreed with.this recommendation and
            information security unit and assign it responsibility for         implementation is in its early stages. State plans to
            facilitating, coordinating, and overseeing the department's        consolidate certain aspects of its information security
            information security activities. In doing so, State should         program. Specifically,:the DAA will have management and
            consider whether some duties that have been assumed by             oversight responsibility for the certification and
            these offices can be assigned to, or at a minimum                  accreditation of information systems.
            coordinated with, the central information security unit.
            The Department of State should develop policy and                  State agreed with this recommendation, and
            procedures that require senior State managers to regularly         implementation is in its early stages. According to State,
            determine the (1) value and sensitivity of the information to      the implementation and subsequent application of the
            be protected, (2) vulnerabilities of their computers and           accreditation process will ensure the ongoing
            networks, (3) threats, including hackers, thieves,                 accomplishment of these items. Accreditation is the formal
            disgruntled employees, foreign adversaries, and spies, (4)         declaration by the DAA that an IT system is approved to
            countermeasures available to combat the problem, and (5)           operate in a particular security mode using a prescribed
            cost-effectiveness of the countermeasures.                         set of safeguards at an acceptable level of risk. The
                                                                               process analyzes specified system security features
                                                                               through extensive vulnerability and systems protections
                                                                               testing.
               The Department of State should revise the Foreign Affairs       State agreed with this recommendation, and
               Manual (FAM) so that it clearly describes the legislatively     implementation is in its early stages. According to State,
               mandated security responsibilities of the CIO, the security     the process for updating the FAM is ongoing with the
               responsibilities of senior managers and all computer            inclusion of a section addressing the duties and
               users, and the need for and use of risk assessments.            responsibilities of the CIO. State did not provide an
                                                                               estimate for completion of the revisions.
               The Department of State should establish and implement          State agreed with this recommendation, and
               key controls to help the department protect its information      implementation is in its early stages. State has contracted
               systems and information, including assessments of the           with Federal Computer Incident Response Capability
               department's ability to (1) react to intrusion and attacks on   (FedCIRC) to improve its incident response capability and
               its information systems, (2) respond quickly and effectively     began a limited Computer Emergency Response
               to security incidents, (3) help contain and repair any          Team-type response for selected networks. State officials
               damage caused, and (4) prevent future damage. State              have told us that they have begun to address the
               should also establish the central reporting and tracking of      long-term funding issues associated with establishing the
               information security incidents to ensure that knowledge of       infrastructure for intrusion detection. It is unclear, however,
               these problems can be shared across the department and          from responsible State officials' actions and statements
               with other federal agencies.                                     how and when the department will fully establish this
                                                                                incident response control.
               The Department of State should ensure that the results of        State agreed with this recommendation, and
               the annual financial statement audits required by the Chief      implementation is in its early stages. The department has
               Financial Officers Act of 1990 are used to track the             taken steps within the Federal Managers Financial Integrity
               department's progress in establishing, implementing, and         Act framework to address the fact that the department's
               adhering to sound information security controls.                 Information System Security Program lacks adequate
                                                                                focus and is fragmented among several bureaus.
                                                                                                                                    (continued)




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                                            Department of State




GAO product Recommendation                                                  Agency action
AIMD-98-162 Regarding the Year 2000 problem, the Secretary of State         The State Department agreed with our recommendation
Aug. 28,1998 should ensure that senior program managers and the CIO         and is in the early stages of implementing it. However, the
             reassess all of State's systems using the new                  new mission-based assessment (a departmentwide
             mission-based approach to identify those systems               business operations-based prioritization of mission-critical
             supporting the most critical business operations.              systems) has not yet been done. Instead, the Year 2000
                                                                            Program Management Office prioritized mission-critical
                                                                            systems within each of the major internal organizations at
                                                                            State and used this to guide its Year 2000 remediation
                                                                            efforts. State is currently implementing a mission-based
                                                                            prioritization of mission-critical systems in line with our
                                                                            recommendation.
NSIAD-98-242 The Secretary of State should make the development of a        State agreed with this recommendation and is well along
Sept. 29, 1998 fully implemented ITplanning and investment process a        in implementing it. It has strengthened its IRM Program
               top priority. The Secretary's implementation strategy        Board and is reactivating the Technical Review Board that
               should include establishing a fully functioning IRM          meets regularly to help manage its Capital Investment
               Technical Review Board and IRM Configuration Control         Fund. It has also converted one of its project-specific
               Board.                                                       configuration control boards into a departmentwide board
                                                                            that addresses all projects. Meetings include
                                                                            representatives from all bureaus and offices.
               The Secretary should include in State's implementation       State agreed with this recommendation and is well along
               strategy establishing a validated information technology     in implementing it. It now has a high-level architecture in
               architecture to help guide the department's IRM              place. However, it is considered a work-in-progress
               modernization and ongoing IT support decisions.              because additional detail is continually being added.
                                                                            Many of the standards contained in the architecture were
                                                                            derived from the work of the departmentwide
                                                                            Configuration Control Board.
               The Secretary should include in State's implementation       State agreed with this recommendation and is well along
               strategy revising (once the boards and architecture are in   in implementing it. It has drafted a new Strategic Plan that
               place) the strategic and tactical plans and 5-year cost      is under departmentwide review. State is preparing cost
               estimate and identifying potential cost savings expected     estimates that will be added to the plan, but they aren't yet
               from the modernization effort.                               completed. State has also taken action to update the
                                                                            Tactical Plan every 6 months.
               The Secretary should include in State's implementation       State agreed with this recommendation and is well along
               strategy establishing specific milestones for completing     in implementing it. It is including output and outcome
               the full implementation of the ITplanning and investment     performance measures and milestones for measuring
               process and a mechanism to measure progress against          progress in the new Strategic Plan and in subsequently
               these milestones.                                            revised IRM technical plans.




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                                                Department of State




Table X.3: Improving Financial Management Systems

One of State's long-standing shortcomings has been the absence of an effective financial management system that can assist
managers in making "cost-based" decisions. State received an unqualified audit opinion on its departmentwide financial statements
for fiscal year 1997, but the agency needs to continue to bring its systems into full compliance with federal accounting and information
management requirements. State must also work on solving related internal control weaknesses if it is to adequately protect its assets
and have timely, reliable data for cost-based decision-making, reporting, and performance management.
We identified weaknesses in State's financial management systems in connection with the audit of the financial statements of the
federal government. While there currently are no open recommendations related to State's financial management, we will continue to
monitor the agency's improvement efforts. For example, State has indicated that it is in the process of establishing a contract to study
the level of compliance with the Federal Financial Management Improvement Act. State has also indicated that additional reports and
procedures are being put into place to address internal control weaknesses. In addition, to improve coordination efforts with agencies
located at overseas posts, State has implemented a new system that is expected to better manage resources and allocate overseas
support costs.
GAO Contacts
 Lisa G. Jacobson, Director
 Defense Financial Audits
 Accounting and Information Management Division
 (202) 512-9095
jacobsonl.aimd@gao.gov
Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
512-4128
nelsonb.nsiad@gao.gov




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                                                Appendix X
                                                Department of State




Table X.4: Effectively Managing the Visa Process

State processes more than 8 million immigrant and nonimmigrant visa applications annually. State's own internal assessments have
categorized this process as being materially deficient due to unfilled computer systems needs, insufficient staffing overseas, and
inadequate interagency coordination, which have weakened management controls. To reduce the program's vulnerability to fraud,
State has put a number of controls in place to prevent unqualified individuals from receiving a visa, including a special computerized
logarithmic name-checking capability and an antiterrorism tip-off program. There is one open recommendation in this area, related to
the need for State to develop timeliness standards for processing nonimmigrant visas to determine the appropriate level and mix of
resources needed and to take full advantage of all ongoing efforts to improve visa operations.

GAO Contact

Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov


GAO product         Recommendation                                              Agency action
NSIAD-98-69         To determine the appropriate level and mix of resources     Initially, State said that it would establish timeliness
Mar. 13, 1998       needed and to take full advantage of all ongoing efforts    goals, which would serve to identify the posts with the
                    to improve visa operations, the Secretary of State should   greatest backlogs so that such posts would receive the
                    develop timeliness standards for processing                 necessary support for improved operational efficiency.
                    nonimmigrant visas.                                         However, in June 1999, State officials informed us that
                                                                                they do not intend to implement this recommendation
                                                                                due to staffing constraints.




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                                                Department of State




Table X.5: Effectively Reorganizing Foreign Affairs Agencies


In a major effort to improve the efficiency and effectiveness of U.S. foreign affairs operations, the Congress directed the abolishment of
the U.S. Information Agency (USIA) and the U.S. Arms Control and Disarmament Agency (ACDA) and the transfer of those functions
into State. A key issue is whether State can integrate these agencies in a manner that reduces overall costs while enhancing capability.

While there currently are no open recommendations related to State's reorganizing of the foreign affairs agencies, we will continue to
monitor this situation at State. For example, State has indicated that during the transition, costs will likely increase because of the need
to implement system conversions and transfers; in the longer term, overall staffing and costs may decrease. State faces several
challenges in achieving the objectives of this reorganization.

GAO Contact

Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov




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                                                Department of State




Table X.6: Strengthening Strategic and Performance Planning


State needs. to strengthen its strategic and performance planning as part of its overall efforts to improve management. In its first
strategic plan for foreign affairs, State formulated 16 foreign policy goals that cover a wide spectrum of U.S. national interests-national
security, economic prosperity, American citizens and U.S. borders, law enforcement, democracy, humanitarian response, and global
issues. The department's 1999 annual performance plan often fell short of Results Act requirements. Overall, the performance plan did
not clearly indicate the department's intended performance and was vague about how State will coordinate with other agencies.
Further, State's performance plan did not provide sufficient confidence that its performance information would be credible.

While there currently are no open recommendations related to State's strategic and performance planning, we will continue to monitor
State's actions in this area. For example, in response to our work, State is attempting improve its planning by developing clearer and
more objective performance measures linked to performance goals and identifying partnerships with other agencies or governments to
address crosscutting issues.

GAO Contact

Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov




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Appendix XI

Department of Transportation



Table XI.1: The Acquisition of Major Aviation and Coast Guard Systems Lacks Adequate Management and Planning

Faced with rapidly growing volumes of air traffic and aging equipment to control air traffic, in 1981 FAA initiated an ambitious air traffic
control modernization program. FAA expects air traffic control modernization to cost $42 billion through fiscal year 2004. Because of its
size, complexity, cost, and problem-plagued past, we designated the air traffic control modernization program as a high-risk
information technology initiative in 1995. Recommendations concerning this issue were addressed in our product on open
recommendations related to high-risk areas, issued on April 12, 1999 (GAO/HR-99-2R).

The U.S. Coast Guard is planning what is potentially the largest acquisition in its history. This effort, the Deepwater Capability
Replacement Project, involves replacing or modernizing many of the Coast Guard's 92 ships and 209 airplanes and helicopters. In
October 1998, we reported that the Coast Guard needs to more thoroughly address the project's justification and affordability. The
Coast Guard initially estimated that the project would cost $9.8 billion (in constant dollars) over a 20-year period. The project is still in its
early stages, but initial planning estimates call for spending $300 million starting in fiscal year 2001 and $500 million each year over the
next 19 years. Eight recommendations remain open related to this issue.
GAO Contact

John H. Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov


GAO product Recommendation                                                       Agency action
RCED-97-110 The Secretary of Transportation should direct the                    The Coast Guard agreed with our recommendation and is
May 14,1997 Commandant of the Coast Guard to incorporate the                     well along in implementation. According to the Coast
            following approach into the Coast Guard's strategy for               Guard, it has recently produced the FY 2000 Agency
            confronting and managing changes in the current budget               Capital Plan (ACP). The concepts in this ACP represent a
            climate: develop a more comprehensive strategy and                   significant step forward in Coast Guard capital planning,
            corresponding plan for addressing impending budget                   yet it is very much a work-in-progress. The ACP provides a
            targets, including systematically identifying and prioritizing       brief overview of capital planning concepts and key
            alternatives that could be considered if future budget               guiding principles in support of the mission and goals of
            targets require additional spending reductions. In so                the service, broadly tying classes of assets to operational
            doing, the Coast Guard should give serious consideration             activities and outcomes they produce. Further, the ACP
            to relevant but unimplemented recommendations from                    presents a baseline of current assets, examines the ability
            past studies and options identified in its recent National           of the service's capital inventory to meet current and future
            Streamlining Study. The agency should also identify the              operational requirements, and provides an overview of
            legislative actions necessary to implement these                     approved acquisitions. It examines affordability concerns,
            alternatives. Particularly in light of capital projects, the         identifies budget constraints and strategies, and lays out a
            Coast Guard should consider including a reassessment of              general plan for future investments and divestitures to
            its missions and its relationship to user groups as part of          ensure that the future capital base of the service will meet
            this activity.                                                       anticipated needs.
                                                                                                                                   (continued)




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                                               Department of Transportation




GAO product Recommendation                                                       Agency action
                                                                                According to the Coast Guard, work has begun on the FY
                                                                                 2001 ACP. The FY 2001 ACP development process
                                                                                 continues the effort to link capital planning to mission
                                                                                 performance and outcomes. The effort will focus on
                                                                                 identifying areas that need strengthening and
                                                                                 improvement in the previous ACP and further developing
                                                                                these areas, including format improvements and
                                                                                information considerations. Additionally, the next version
                                                                                will focus on developing decision rules for managing
                                                                                capital assets and aligning them with the business
                                                                                 planning and budget processes.
RCED-99-6       The Secretary of Transportation should direct the               The Coast Guard agreed with this recommendation and is
Oct. 26, 1998   Commandant of the Coast Guard to (1) evaluate whether           in the early stages of implementing it. According to the
                contracting teams should be instructed to base their            Coast Guard, the key issue is to ensure that its planning
                proposals for the Deepwater Project on the assumption           and contracting efforts fully comport with funding realities.
                that the funding level will be lower than $500 million a year   At this point, it is not possible for the Coast Guard to know,
                and (2) submit his decision on this matter to the               with reasonable specificity, what its outyear funding levels
                Department of Transportation (DOT) Transportation               will be. As a result, in these very early planning stages in
                System Acquisition Review Council or other appropriate          which the Deepwater Project is presently engaged, no
                offices within DOT for approval.                                single potential funding level holds any greater validity
                                                                                than the existing level. The Coast Guard fully recognizes
                                                                                the potential for variation from this planning figure, and will
                                                                                conduct a sensitivity analysis of the potential impact of
                                                                                varied funding levels on the project. According to the
                                                                                Coast Guard, it is not clear at this point to whom in DOT it
                                                                                should submit its decision. The department is still
                                                                                evaluating how major acquisition programs will be
                                                                                managed and how decisions such as these will be staffed
                                                                                in the future.
                The Secretary of Transportation should direct the Office of     The Coast Guard agreed with this recommendation and is
                the Assistant Secretary for Administration and the Coast        well along in implementation. According to the Coast
                Guard to expedite the development and issuance of               Guard, it will ensure that all updated information regarding
                updated information from internal studies to contractors        the condition of current assets is fully and appropriately
                involved in developing proposals for the Deepwater              provided to the contracting teams for effective
                Project. Information should include, but not necessarily be     consideration in their efforts. Its exceptions for completing
                limited to, the remaining service life of ships and aircraft,   the detailed analyses of asset condition coincide with the
                gaps between current and needed capabilities, and future        concept exploration process and provisions have been
                service levels.                                                 made for incorporating their results. Further, the Coast
                                                                                Guard, as part of its continual evaluation of the status of
                                                                                the project and the overall acquisition process plan, is
                                                                                evaluating the merits of modifying the duration and output
                                                                                of the concept exploration process. The intent of potential
                                                                                modifications is to increase the extent of interaction
                                                                                between the Coast Guard and the contracting teams, so
                                                                                that it continues further into the process. In addition, the
                                                                                Coast Guard will seek to have the final product of this
                                                                                phase provide sufficient information to accommodate full
                                                                                and effective evaluation of the competing designs.
                                                                                                                                    (continued)




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                                              Department of Transportation




GAO product Recommendation                                                   Agency action
            The Secretary of Transportation should direct the Office of      The Coast Guard partially agreed with this
            the Assistant Secretary for Administration and the Coast         recommendation and is well along in implementation.
            Guard to revise acquisition guidelines to better ensure that'    According to the Coast Guard, while it will strive to ensure
            mission analysis projects for future projects are based on       that mission analysis reports for future projects are based
            accurate and complete data on the condition of the               on accurate and complete data on the condition of current
            assets, as appropriate for assets or systems in question.        assets, it is not necessary to revise existing guidelines.
            Such revisions should stress the importance of using             The existing guidelines combined with effective oversight
            rigorous engineering or other data-based evaluations to          mechanisms served well to identify deficiencies with the
            estimate the remaining service life of assets rather than        Coast Guard's Deepwater mission analysis. Actions are
            using estimates made when the assets were produced or            underway to provide additional quantitative analysis of the
            modified.                                                        condition of existing assets.
            The Secretary of Transportation should direct the Office of      The Coast Guard partially agreed with this
            the Assistant Secretary for Administration and the Coast         recommendation and is in the early stages of
            Guard to revise acquisition guidelines to ensure that            implementing it. According to the Coast Guard, it agrees
            mission analysis reports and mission needs statements            that specific information regarding methodologies and
            disclose the methodologies and data sources used, and to         data sources should be available throughout the
            expand guidelines and emphasize the importance of using          acquisition process and will implement the
            more systematic data collection techniques, such as              recommendation once the structure of future department
            structured interviews, sampling techniques, and empirical        oversight for major systems acquisitions is determined. In
            data.                                                            addition, according to the Coast Guard, it fully supports
                                                                             the use of empirical data and quantitative analysis to
                                                                             support acquisition projects. Its information is based on
                                                                             operating experience with the assets and specific
                                                                             technical reviews of the assets by highly trained experts.
                                                                             The Coast Guard considers the existing acquisition
                                                                             guidelines sufficient and will continue to work with the
                                                                             operating administrations to ensure that major systems
                                                                             acquisitions are fully supported by empirical data and
                                                                             quantitative analysis.
                The Secretary of Transportation should direct the Office of The Coast Guard agreed with this recommendation and is
                the Assistant Secretary for Administration and the Coast     well along in implementation. According to the Coast
                Guard to develop a method to better ensure that existing     Guard, the process used for Deepwater provides
                acquisition requirements are carried out, such as            mechanisms to implement cutting-edge approaches to
                documenting the gap between current and needed               large-scale government procurement. A project the scale
                capabilities. Such actions could include the use of tools    of Deepwater is necessarily a complex and dynamic one.
                like checklists of key requirements or certification that    The Coast Guard will continue to ensure that acquisition
                requirements have been met.                                  requirements are being carried out once the structure of
                                                                             future department oversight for major systems acquisitions
                                                                             is determined.
RCED-95-62      To enable the Coast Guard to manage its cutter               The Coast Guard agreed with this recommendation and is
Jan. 24, 1995   inventories more effectively between now and when the        well along in implementation. According to the Coast
                Logistics Master Plan is fully implemented, the Secretary    Guard, the concept of regional support centers with
                of Transportation should direct the Commandant of the        centralized oversight of shore-side inventory is being
                Coast Guard to, where economically feasible, consolidate developed. The Coast Guard is identifying the resources
                at regional support centers those cutter inventories that    needed to support consolidated shore-side inventories.
                are located at individual onshore facilities, particularly   The Coast Guard has made interim progress in
                where several cutters from the same class are clustered or consolidating shore-side inventory at three locations and
                where the cutters' individual onshore storage facilities are an additional two locations will be added by 2000. The
                housed within a single building.                             information system that can support inventory ashore
                                                                             nationwide was scheduled to be completed in fiscal year
                                                                             2000, but now is scheduled to be implemented in 2002.
                                                                                                                                (continued)



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                                           Department of Transportation




GAO product Recommendation                                                Agency action
            To enable the Coast Guard to manage its cutter                The Coast Guard agreed with this recommendation and is
            inventories more effectively between now and when the         well along in implementation. According to the Coast
            Logistics Master Plan is fully implemented, the Secretary     Guard, it has over 578 units reporting operating materials
            of Transportation should direct the Commandant of the         and supplies electronically into a central database, of
            Coast Guard to make use of the current automated              which 125 are using CMplus. An inventory releveling effort
            inventory control program mandatory on all cutters that       for the 270-foot cutter was completed in April 1996. Efforts
            have sufficient computer hardware and have not                for all other cutters that can use CMplus should be
            implemented CMplus (a computerized inventory system),         completed in FY 2003.
            consolidate and analyze inventory data for each class,
            and redistribute excess parts from additional cutter
            classes as warranted.




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                                               Department of Transportation




Table XI.2: Serious Challenges Remain in Resolving IFAA's Year 2000 Risks

FAA faces challenges in making its computer systems ready for the Year 2000. In August 1998, we testified that FAA was unlikely to
complete all critical tests in time and that unresolved risks threatened aviation operations. The implications of FAA's not meeting the
Year 2000 deadline are enormous and could affect hundreds of thousands of people through customer inconvenience, increased
airline costs, grounded or delayed flights, or degraded levels of safety.
 FAA has made progress in addressing its Year 2000 computing challenge. While we currently do not have any open recommendations
in this area, we are continuing to monitor a number of challenges continuing to face the agency. These challenges include addressing
data exchanges, international coordination, reliance on the telecommunications infrastructure, and business continuity planning.
GAO Contact
Joel C. Willemssen
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov




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                                               Appendix XI
                                               Department of Transportation




Table XI.3: FAA and the Nation's Airports Face Funding Uncertainties

DOT and the Congress face a challenge in reaching agreement on the amount and source of long-term financing for FAA and the
nation's airports. Between 1982 and 1998, the Airport Improvement Program (AIP) provided about $2.2 billion in federal grants for
rehabilitating and maintaining airport runways. However, FAA's priority system is not equipped to determine which proposed
rehabilitation projects will deliver the best return for the dollars spent. The one open recommendation under this management challenge
concerns evaluating options for improving the quality of information on airfield pavement conditions.
GAO Contact

John H. Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov


GAO product        Recommendation                                                  Agency action
RCED-98-226        To enable FAA to make the most cost-effective decisions         FAA agreed with the recommendation and is in the early
July 31, 1998      when awarding AIP grants for runway rehabilitation              stages of implementation. FAA has requested the views
                   projects, the Secretary of Transportation should direct         of various airport interest groups. As of May 1999, FAA is
                   the Administrator of FAA to evaluate options for                synthesizing the responses into a position paper for
                   improving the quality of information on airfield pavement       internal review. FAA anticipated that the review would be
                   conditions for national system airports. These options          completed by the end of FY 1999. FAA's Director of
                   include, but are not limited to, (1) improving the existing     Airport Safety and Standards believes that option 1 does
                   runway condition information contained in the Airport           not provide an appropriate source for the level of
                   Safety Data Program by reviewing and revising rating            detailed data required and that implementing option 3
                   criteria, and providing adequate training for inspectors,       would be too expensive and disruptive to grant
                   (2) requiring airports to submit pavement condition index       administration. The Director believes that a modified
                   (PCI) information as part of their airport master plan or as    version of option 2 could be implemented.
                   support in applications for relevant discretionary AIP
                   grants, or (3) requiring all airports in the national airport
                   system to submit PCI information on a regular basis and
                   using the information to create a pavement condition
                   database that could be used in evaluating the
                   cost-effectiveness of project applications and forecasting
                   anticipated pavement needs.




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Table XI.4: Aviation Safety and Security Programs Need Strengthening

The aviation accident rate per mile traveled has remained low but flat over the last 2 decades. Unless the accident rate is reduced,
however, as air travel continues to grow, the actual number of accidents will increase. We have identified numerous weaknesses in
FAA's inspection, oversight, and enforcement activities. While FAA is taking steps to address the shortcomings in its safety programs,
eliminating those shortcomings will take considerable time and effort. In addition, while progress is being made in strengthening airport
security, it will take several years to address all problem areas, and FAA's weak computer security practices present significant
vulnerabilities to the air traffic control system. Fourteen recommendations remain open relating to FAA oversight of aviation safety and
security, focused on (1) targeting FAA's resources to the most serious problems, (2) improving documentation and analysis of findings
to provide early warnings of impending safety problems, (3) improving enforcement and compliance, and (4) improving computer and
physical security at air traffic control facilities. Other recommendations related to the computer security of new air traffic control systems
were addressed in our product on open recommendations related to high-risk areas issued on April 12, 1999 (GAO/HR-99-2R).
GAO Contact

John H: Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov


GAO product         Recommendation                                              Agency action
RCED-98-21          The Secretary of Transportation should instruct the         FAA agreed with the recommendation and is in the early
Oct. 24, 1997       Administrator of FAA to expand the use of locally based     stages of implementation. FAA has already begun
                    teams for repair station inspections, particularly for      experimenting with team inspections. Team oversight is
                    facilities that are large, complex, have higher rates of    an integral part of FAA's new Air Transportation
                    noncompliance or meet predetermined risk indicators:        Oversight System (ATOS), but this system has not yet
                                                                                been extended to repair stations.
                    To ensure that FAA inspectors are effectively               FAA agreed with the recommendation and is well along
                    documenting and resolving deficiencies found during         in implementing it. The agency has implemented data
                    inspections, the Secretary of Transportation should         quality assurance strategies recommended in its 1996
                    instruct the Administrator of FAA to monitor the            Comprehensive Data Quality Plan. ATOS (not yet applied
                    implementation of the strategy to improve data quality to to repair stations) includes dedicated data quality
                    ensure it is completed as soon as possible so that the      assurance staff, but has not yet resolved all data quality
                    data used in the Safety Performance Analysis System are problems.
                    reliable when the system is fully implemented in 1999.
                    To ensure that outdated regulations governing the           FAA agreed with the recommendation and is well along
                    oversight of repair stations and certification and training in implementing it. FAA has written the Notice of
                    requirements or maintenance personnel are updated as Proposed Rulemaking for revision to part 145 of the
                    soon as possible, the Secretary of Transportation should Federal Aviation Regulations. It is currently under review
                    instruct the Administrator of FAA to expedite efforts to    at the Office of the Secretary of Transportation.
                    update the regulations and to establish and meet
                    schedules for completing the updates.
                                                                                                                                 (continued)



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GAO product     Recommendation                                              Agency action
                The Secretary of Transportation should instruct the         FAA agieed with the recommendation and is in the early
                Administrator of FAA to develop and use checklists or       stages of implementing it. Under ATOS, standardized job
                job aids for inspectors that allow a greater degree of      aids have been developed and are being employed by
                comprehensiveness, standardization, and assurance that      inspectors at major airlines. FAA plans to apply the ATOS
                the repair station complies with regulatory requirements.   system to the inspection of repair stations.
RCED-98-6       To strengthen FAA's inspection process to provide more      FAA agreed with this recommendation and is well along
Feb. 27, 1998   complete and accurate information on potential problems     in implementing it. FAA plans to issue a change to FAA
                in aviation safety and security-so that information can     Order 2150.3A by January 2000. The delay in the original
                provide early warning of potential risks and serve as a     target completion date is due to budget restrictions on
                basis for allocating the agency's inspection                travel and increased workload in the offices that are
                 resources-the Secretary of Transportation should direct    jointly working on these issues.
                the Administrator of FAA to revise FAA Order 2150.3A to
                require that FAA's inspection staff report all observed
                 problems and violations in their respective program
                offices' tracking systems.
                To strengthen FAA's inspection process to provide more     FAA partially agreed with this recommendation. FAA's
                 complete and accurate information on potential problems   efforts to respond to this recommendation are in their
                 in aviation safety and security-so that information can   early stages of implementation. A work group has been
                 provide early warning of potential risks and serve as a   reviewing these issues and will be making its
                 basis for allocating the agency's inspection              recommendations by January 2000. The delay in the
                 resources-the Secretary of Transportation should direct   original target completion date is due to budget
                 the Administrator of FAA to develop guidance for          restrictions on travel and increased workload in the
                 inspectors to distinguish major from minor violations,    offices that are jointly working on these issues. In
                 improve FAA's inspection databases to incorporate these   addition, on October 1, 1998, FAA implemented a new
                 distinctions, and develop a plan for focusing on FAA's    aviation safety inspection system, ATOS, to oversee the
                 resources on the violations with the greatest potential   nation's 10 largest passenger airlines. ATOS
                 impact on aviation safety and security.                   incorporates features that direct inspection resources
                                                                           toward those situations where.a failure could lead to an
                                                                           unsafe condition. ATOS also incorporates features to
                                                                           improve the targeting of inspection resources to areas
                                                                           that present the greatest risk.
                To strengthen FAA's enforcement process and the            FAA agreed with this recommendation and is in the early
                agency's capacity to better encourage and monitor          stages of implementation. The Compliance Review Team
                compliance with aviation safety and security regulations, has reviewed the feasibility and the costs involved in
                the Secretary of Transportation should direct the           improving the accessibility of the Enforcement Database.
                Administrator of FAA to take steps to improve the          The use of the Intranet, combined with rehosting the data
                usefulness of FAA's databases for identifying and          onto a PC server, would allow various offices access to
                targeting enforcement resources to the most serious        these data. The cost will vary depending on how much
                aviation safety and security problems by (1) updating the mainframe programming is needed, whether the system
                cost estimates to directly link FAA's inspection and        is completely moved to a server, and the level of
                enforcement tracking systems and moving forward on         technology that is available. The cost for rehosting could
                this initiative if it would prove cost-effective and could  be as much as $800,000, which would be recouped in 2
                streamline the enforcement process and (2) developing years (savings of not using the mainframe). This estimate
                a process for distinguishing major from minor               does not include costs for training and the interface for
                enforcement cases and for focusing FAA's resources on each office accessing the data. This project has been
                the cases with the greatest potential impact on aviation    put on hold until budget issues that currently face the
                safety and security.                                        FAA are resolved.

                                                                            FAA has initiated work to develop a process for
                                                                            distinguishing major enforcement cases. An FAA
                                                                            workgroup has begun developing agencywide guidance
                                                                            for identifying major cases.
                                                                                                                          (continued)


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GAO product     Recommendation                                                Agency action
                To strengthen FAA's enforcement process and the               FAA agreed with the recommendation and is well along
                agency's capacity to better encourage and monitor             in implementing it. FAA plans to make appropriate
                compliance with aviation safety and security regulations,     changes to FAA Order 2150.3A by January 2000. The.
                the Secretary of Transportation should direct the             delay in the original target completion date is due to
                Administrator of FAA to require legal staff to inform         budget restrictions on travel and increased workload in
                inspectors periodically of the status of cases and to         the offices that are jointly working on these issues.
                explain why penalties are reduced.
RCED-98-7       To help ensure that airlines appropriately train pilots in    FAA agreed in part with the recommendation and is in
Nov. 24, 1997   crew resource management principles under part 121 of         the early stages of implementation. FAA has begun
                the federal aviation regulations and that FAA inspectors      rewriting the air carrier training requirements. The
                are able to uniformly evaluate this training, the Secretary   agency anticipates publishing a Notice of Proposed
                of Transportation should direct the Administrator of FAA      Rulemaking by the end of 1999. Pending FAA
                to develop a process that airlines must follow for creating   reauthorization legislation (S. 82) directs FAA to develop
                a crew resource management curriculum with                    specific training curricula similar to the Advanced
                measurable criteria under part 121 as it has for the          Qualification Program.
                Advanced Qualification Program.
AIMD-98-155     The Secretary of Transportation should direct the             FAA partially agreed with our recommendation and is
May 18, 1998    Administrator of FAA to develop and to develop and            well along in implementing it. The agency has completed
                execute a plan to inspect the 187 air traffic control (ATC)   inspections of all the facilities identified in our report and
                facilities that have not been inspected in over 4 years       has established priorities for completing work at those
                and correct any weaknesses identified so that these ATC       facilities with weaknesses before granting accreditation.
                facilities can be granted physical security accreditation
                as expeditiously as possible but no later than April 30,
                1999.
                The Secretary of Transportation should direct the             FAA partially agreed with our recommendation and is in
                Administrator of FAA to correct identified physical           the early stages of implementation. FAA is in the process
                security weaknesses at inspected facilities so that these     of correcting physical security weaknesses so that
                ATC facilities can be granted physical security               accreditation can be granted. However, FAA stated that
                accreditation as expeditiously as possible but no later       completion is linked to resource availability.
                than April 30, 1999.
                The Secretary of Transportation should direct the           FAA agreed with our recommendation and is in the early
                Administrator of FAA to ensure that the required annual     stages of implementation. FAA has issued explicit
                or triennial follow-up inspections are conducted,           direction to all regional security managers to ensure that
                deficiencies are promptly corrected, and accreditation is   all staffed facilities receive an initial survey and,
                kept current for all ATC facilities, as required by FAA     thereafter, comprehensive inspections annually for
                policy.                                                     category I facilities and every 3 years for category II
                                                                            facilities. FAA stated that deficiencies would be
                                                                            corrected as expeditiously as resources permit.
                The Secretary of Transportation should direct the           FAA partially agreed with our recommendation and is in
                Administrator of FAA to assess, certify, and accredit all   the early stages of implementation. FAA has completed
                ATC systems, as required by FAA policy, as                  vulnerability assessments on 12 systems and plans to
                expeditiously as possible but no later than April 30, 1999. certify and accredit other systems this year.
                The Secretary of Transportation should direct the           FAA agreed with our recommendation and is in the early
                Administrator of FAA to ensure that all systems are         stages of implementation. FAA has delegated this
                assessed, certified, and accredited at least every 3        responsibility to the newly created Chief Information
                years, as required by federal policy.                       Officer (CIO) organization.




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                                               Department of Transportation




Table Xl.5: Lack of Aviation Competition Contributes to High Fares and Poor Service for Some Communities

While deregulation of the airline industry is generally considered to be a success by DOT and others, a number of small- and
medium-sized communities have experienced higher fares and worse service since the airline industry was deregulated in 1978.
Deterrents to new entrant airlines include FAA-imposed limits on the number of takeoffs or landings at Chicago's O'Hare, Washington's
Ronald Reagan National, and New York's Kennedy and LaGuardia airports; the dominance of a few airlines serving many major
airports; and certain marketing strategies of established carriers. Additionally, proposed alliances between the nation's six largest
airlines raise concerns about competition. While we have no open recommendations under this management challenge, we continue to
monitor this area. In response to our recommendations, and to enhance competition, DOT has begun to grant a limited number of slots
to new entrants at O'Hare and LaGuardia airports. In addition, DOT has issued a controversial draft policy that identifies anticompetitive
behavior and factors that DOT will consider if it decides to pursue formal enforcement actions to correct such behavior. Finally, a
number of bills have been introduced, but not passed in the Congress that address barriers to competition.
GAO Contact

John H. Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov




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                                               Department of Transportation




Table XI.6: DOT Needs to Continue Improving Oversight of Surface Transportation Projects

Many large-dollar highway and transit projects, each costing hundreds of millions to billions of dollars, continue to incur cost increases,
experience delays, and have difficulties acquiring needed financing. We have found, particularly for large-dollar projects, that costs
have increased and financing has become more difficult at the same time that federal, state, and local governments must deal with the
need for balanced budgets and many competing priorities. This situation is even more critical in light of the recently passed 6-year,
$218 billion Transportation Equity Act for the 21S' Century, which will fund thousands of new major highway and mass transit projects.
Seven recommendations remain open in this area, four relating to Federal Transit Administration (FTA) grant oversight and three related
to the DOT's implementation of a new loan program authorized in the Transportation Infrastructure Finance and Innovation Act (TIFIA) of
1999.

GAO Contact

John H. Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov




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                                               Department of Transportation




GAO product Recomendation                                                      Agency action
RCED-98-89   To continue FTA's progress in improving grant oversight           DOT agreed with this recommendation and is well along in
Apr. 3, 1998 on a nationwide basis, the Secretary of Transportation            implementing it. DOT is taking steps such as issuing
             should direct the Administrator of FTA to require all             memoranda and conducting regularly scheduled meetings
             regional staff to consistently apply established procedures       with its regional staff that emphasize the need to ensure
             and practices for monitoring and correcting grantees'             application of standardized oversight procedures and
             noncompliance to ensure standardization throughout FTA.           practices while monitoring and correcting grantees' areas
                                                                               of noncompliance.
                The Secretary of Transportation should ensure that the         DOT agreed with this recommendation and is well along in
                Administrator of FTA requires all regional staff to provide    implementing it. DOT is implementing a new
                information on triennial reviews to the Triennial Review       Comprehensive Oversight Tracking System (OTRAK) that
                Information System on a consistent basis so that it can be     uses contractors to input the results of FTA's triennial
                used as the monitoring and tracking mechanism that FTA         reviews and other specialized reviews. FTA headquarters
                originally intended it to be. FTA should quickly move to       officials are now using the system to track both grantee
                incorporate the results of other specialized reviews, such     and regional oversight actions. This should assist FTA in
                as financial management oversight and procurement              monitoring and quickly correcting instances where
                reviews, into the system so that all instances in which        grantees are not in compliance with federal requirements.
                grantees are not in compliance with federal requirements
                can be monitored and tracked to their proper resolution.
                The Secretary of Transportation should require the             FTA agreed with this recommendation and is well along in
                Administrator of FTA to (1) enforce the time frames            implementing it. In March 1998, a memo was sent to all
                established by FTA for resolving noncompliance findings        regional offices stressing the importance of timely
                and closing out triennial reviews and (2) abide by             completion of grantees' corrective actions.
                established reporting time frames.
                The Secretary of Transportation should require that the        FTA agreed with this recommendation and is well along in
                Administrator of FTA have the Office of Oversight monitor      implementing it. FTA headquarters officials have increased
                the way regional staff are implementing oversight              the monitoring of regional oversight operations using
                procedures and policies to ensure dependable and               OTRAK to ensure renewed emphasis on resolving
                consistent application throughout the agency.                  noncompliance issues and meeting established
                                                                               timeframes for closing out the findings of triennial reviews.
RCED-99-44      In implementing the TIFIA program, the Secretary of            DOT agreed with all of our recommendations and is in the
Jan. 14, 1999   Transportation should direct appropriate department            early stages of implementing them. On June 2, 1999, the
                officials to evaluate the economic feasibility of projects     department published final regulations for the TIFIA
                applying for the program's funds.                              program. We are reviewing these regulations to determine
                                                                               whether they comply with our recommendations.
                Before providing a substantial amount of federal dollars to
                projects, the Secretary of Transportation should obtain and
                independently evaluate information including (1) a capital
                cost estimate based on detailed engineering plans (2) a
                finance plan that is based on the detailed cost estimate
                and that specifies the source and security of all public and
                private sector financial commitments, and (3) an operating
                plan that enumerates the project's future revenues and
                assesses the risks to the federal credit instrument should
                revenues be lower than projected.
                The Secretary of Transportation should ensure that the
                environmental review process has been completed before
                it makes substantial TIFIA program funding commitments.




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                                              Department of Transportation




Table XI.7: Amtrak's Financial Condition Is Tenuous

Since it began operating in 1971, Amtrak has never been profitable and, in recent years, has had to borrow money to meet its operating
expenses. Since its inception, Amtrak has received nearly $23 billion in federal subsidies for operating and capital expenses. Despite
efforts to control expenses and increase revenues, Amtrak's financial condition has substantially deteriorated in recent years, and it is
likely to remain heavily dependent on federal assistance well into the future. While we currently have no open recommendations
concerning this management challenge, we continue to monitor Amtrak's financial situation. Amtrak has stated that it will eliminate the
need for federal operating support by 2002. If Amtrak requires federal operating subsidies after December 2002, the Amtrak Reform
and Accountability Act of 1997, which ends federal subsidies, also provides for the Congress to consider either restructuring or
liquidating Amtrak.
GAO Contact

John H. Anderson, Jr., Director
Transportation Issues
Resources, Community, and Economic Development Division
(202) 512-2834
andersonj.rced@gao.gov




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Appendix XII

Department of the Treasury



Table XII.1: IRS/The Need for Restructuring IRS' Organization and Business Practices

IRS is planning the most comprehensive restructuring of its organization and business practices in decades. The impetus for change
stems from congressional concerns about tax administration, including concerns about IRS' treatment of taxpayers, which resulted in
the Congress passing the IRS Restructuring and Reform Act of 1998. To address these concerns and to institute his own initiatives, the
Commissioner of Internal Revenue announced a multiyear business modernization plan for IRS that emphasizes improving customer
service. Under the proposed changes, IRS would be organized into four units that would specialize in serving the needs of different
types of taxpayer groups. The four proposed units are (1) wage and investment income, (2) small business, self-employment, and
supplemental income, (3) large and mid-size business, and (4) tax exempt and government entities. Managing the restructuring will be
a challenge for IRS because the proposed changes to IRS' operations are extensive coupled with IRS' need to balance taxpayer
assistance efforts while applying appropriate enforcement actions and collecting taxes, and the necessity to coordinate restructuring
with systems modernization.

Restructuring is also the basis for IRS to change its organizational performance measures and the way it uses measures to focus
attention on priorities, assess organizational performance, and identify improvement opportunities. The new framework for
organizational performance will seek to balance customer satisfaction, business results, employee satisfaction, and productivity. On
that basis, IRS is developing a balanced set of measures to reinforce the appropriate relationship between providing service to
taxpayers and enforcing compliance with the tax laws. This too will be challenging for IRS, in particular as it develops and implements
performance measures to gauge it efforts to reduce taxpayer burden through improved customer service.

The Commissioner's restructuring plan acknowledges that new technology is essential to addressing the problems that have hampered
IRS' ability to better serve taxpayers. Deficiencies exist in IRS' computer systems and, as the plan points out, the new business
practices and organizational structure areto provide a basis for completing and implementing the modern systems outlined in the
technology modernization blueprint. One challenge for IRS is to ensure that the systems development plans under the modernization
blueprint and restructuring plan are aligned. In addition, the success of the Commissioner's restructuring plan depends on IRS
addressing and correcting its long-standing internal control and system weaknesses related to financial management.
There are no open recommendations related to the restructuring of IRS' organization and business practices. It is only recently that IRS
has begun to develop final implementation plans for restructuring. We are currently monitoring IRS' overall efforts in this area and we
plan to periodically share any observations we have with IRS on a real-time basis. In addition, we recently started work that focuses
specifically on how IRS' restructuring and businesses practices affect small business taxpayers but that work has not progressed far
enough for us to make recommendations.

GAO Contact

James R.White, Director
Tax Policy and Administration Issues
General Government Division
(202) 512-9110
whitej.ggd@gao.gov




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                                               Appendix X][I
                                               Department of the Treasury




Table X11.2: IRS/The Need to Improve Security Controls Over Information Systems

For the past 5 years, we have testified and reported numerous times on the ineffectiveness of IRS' security and general controls in
safeguarding IRS information systems and facilities. Although IRS has made progress improving computer security, weaknesses in IRS'
computer security controls continue to place IRS' automated systems and taxpayer data at serious risk. These weaknesses affect IRS'
ability to control physical access to its facilities and sensitive computing areas, control electronic access to sensitive taxpayer data and
computer programs, prevent and detect unauthorized changes to taxpayer data or computer software, and restore essential IRS
operations following an emergency or natural disaster. Until these weaknesses are mitigated, IRS continues to run the risk of its tax
processing operations being disrupted. Furthermore, sensitive taxpayer data entrusted to IRS could be disclosed to unauthorized
individuals, improperly used or modified, or destroyed, thereby exposing taxpayers to loss or damages resulting from identity fraud and
other financial crimes.

In addition to the three recommendations discussed in the following table, there are eight other open recommendations related to
specific computer control weaknesses at several IRS facilities. In GAO/AIMD-93-34, we recommended that IRS computer programs be
controlled by a program librarian and that the Philadelphia Service Center director review the card key system to ensure that only
authorized users have access to protected facilities. In GAO/AIMD-99-38, we recommended that IRS continue efforts to improve
computer controls over tape media, telecommunications equipment and remote access to IRS systems, modifications to computer
programs, and disaster recovery planning and to complete implementation of a servicewide computer security management program.
We will be conducting follow-up work to identify the status; of IRS efforts to implement these recommendations.
GAO Contact
Robert F. Dacey, Director
Consolidated Audit and Computer Security Issues
Accounting and Information Management Division
(202) 512-3317
daceyr.aimd@gao.gov




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                                                Department of the Treasury




GAO product Recommendation                                                        Agency action
AIMD-99-38    The Commissioner of Internal Revenue should direct the              IRS has corrected a large percentage of the system
Dec. 14, 1998 Chief Information Officer and Director of the Office of             weaknesses that we had previously reported, and we
              Systems Standards and Evaluation to work in conjunction             verified that these corrective actions were implemented.
              with the facility directors as appropriate to continue efforts      However, we continue to identify additional problems. IRS
              to implement appropriate control measures to limit                  has agreed with our new recommendations and stated
              physical access to facilities, computer rooms, and                  that it is taking additional actions to improve security and
              computing resources based on job responsibility.                    adequately address the remaining weaknesses. IRS is in
                                                                                  the early stages of correcting these weaknesses. We will
                 The Commissioner of Internal Revenue should direct the           review actions to address both new and previous
                 Chief Information Officer and Director of the Office of          recommendations as part of our audit of IRS' FY 1999
                 Systems Standards and Evaluation to work in conjunction          financial statements.
                 with the facility directors as appropriate to continue efforts
                 to limit access authority to only those computer programs
                 and data needed to perform job responsibilities and
                 review access authority regularly to identify and correct
                 inappropriate access.
                 The Commissioner of Internal Revenue should ensure that
                 IRS completes implementation of its servicewide computer
                 security management program. This program should
                 include procedures for assessing risks for all of IRS'
                 facilities, networks, major systems, and taxpayer data on a
                 regular, ongoing basis to ensure that controls are
                 adequate.




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                                               Appendix XII
                                               Department: of the Treasury




Table X1.3: IRS/The Need to Confront the Challenges Presented By the Year 2000 Computer Problem

 IRS' Year 2000 computer problem is a pervasive time-critical management challenge that IRS must successfully overcome to avoid
significant disruptions in its operations in the new millennium. Most of IRS' information systems, like those in many public and private
entities, were not designed to read dates beyond December 31, 1999. As a result, IRS, along with many other entities, is engaged in
massive efforts to make its information systems.Year 2000 compliant to avoid operational disruptions. IRS is challenged with managing
one of the largest civilian Year 2000 undertakings. Of the estimated $1.9 billion earmarked for the Treasury Department's Year 2000
program, $1.4 billion has been designated for IRS. Although much time and effort has been spent working to correct its Year 2000
problems, IRS was faced with significant challenges in making its systems Year 2000 compliant because it lacked a comprehensive
inventory of information systems infrastructure (i.e., systems software, hardware, and telecommunications networks) and IRS' Chief
 Information Officer did not control all mission-critical assets. We issued a report in June 1998 that addressed IRS' Year 2000 challenges
and identified two risk areas: (1) the absence of an integrated master schedule showing the interdependencies among the many Year
2000 efforts and (2) a limited approach to contingency planning. Our report recommended that IRS act to expand its contingency
 planning efforts to address potential system failures that could affect its core business processes. Since we issued our report, IRS has
acted to address many of our recommendations. One recommendation related to IRS' Year 2000 efforts focusing on developing and
testing contingency plans for IRS' core business processes remains open and is discussed in the following table.
GAO Contact

James R.White, Director
Tax Policy and Administration Issues
General Government Division
(202) 512-9110
whitej.ggd@gao.gov


GAO product         Recommendation                                             Agency action
GGD-98-138         The Commissioner of Internal Revenue should ensure           IRS agreed with our recommendation and is well along in
June 15, 1998      that IRS has adequately assessed the vulnerabilities of     implementing it. Specifically, IRS established business
                   its core business processes in the event of year            continuity working groups that identified the need to
                   2000-induced system failures by developing and testing      develop 35 contingency plans for its core business
                   contingency plans for core business processes if            processes and 4 plans for its key support services.
                   existing plans are not appropriate.                         According to IRS reports, it has (1) completed the
                                                                               development of 38 contingency plans, (2) developed test
                                                                               plans for 38 plans, and (3) completed testing for 18
                                                                               plans. According to IRS officials, they plan to complete
                                                                               contingency plan testing in September 1999. As part of
                                                                               an ongoing assignment to review IRS' Year 2000
                                                                               readiness for issuing refunds, we plan to review a subset
                                                                               of the contingency plans for IRS' tax return processing
                                                                               core business systems. The objective of this review is to
                                                                               determine the extent to which the plans conform to
                                                                               GAO's business continuity and contingency planning
                                                                               guide as well the Department of Treasury and IRS'
                                                                               contingency plan guidance.




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                                              Appendix XII
                                              Department of the Treasury




Table X11.4: U.S. Customs Service/Weaknesses Relating to Internal Controls Over Data in Automated Systems

Customs faces certain challenges that are primarily related to controlling access to sensitive data that are maintained in its automated
systems and maintaining complete and reliable information in its core financial systems. In its March 1998 audit report on Customs'
fiscal year 1997 financial statements, the Treasury Office of Inspector General (OIG) reported several internal control matters, including
(1) core financial management systems needed to be improved and integrated, (2) adherence to systems development standards for
certain financial management systems was lacking, (3) computer access vulnerabilities existed that could allow for unauthorized
modification and deletion of production programs, systems software, and data in Customs' systems, and (4) disaster recovery
capabilities were in need of improvement. In its March 1999 audit report on Customs' fiscal year 1998 financial statements, the Treasury
OIG continued to report these same matters. There are 13 open GAO recommendations related to this management challenge, which
are discussed in the following table. In addition, the Treasury OIG made similar recommendations to Customs related to access to its
computer systems and improvement and integration of its core financial management systems.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov


GAO product        Recommendation                                              Agency action
AFMD-92-30         The Commissioner of Customs should direct the Chief         Customs management agreed with the recommendation
Aug. 25, 1992      Financial Officer (CFO) to develop and implement an         and implementation is well along. Customs plans to
                   integrated accounts receivable system to record and         replace the Automated Commercial System (ACS) with
                   control all amounts (duties, fees, fines, and penalties)    the Automated Commercial Environment (ACE). In the
                   from the time they are owed until they are collected or     ACS redesign, Customs plans to incorporate a
                   determined to be uncollectible.                             customer-based accounts receivable (A/R) subsidiary
                                                                               ledger, rather than continuing to maintain information at
                                                                               the individual import transaction level. The new process
                                                                               will include the Automated Centralized Accounts
                                                                               Receivable Subsidiary Ledger and is expected to meet
                                                                               all financial reporting requirements when completed. The
                                                                               target date to test the initial prototype version of the A/R
                                                                               subsidiary ledger was March 1999. However, according
                                                                               to Customs officials, this date was not met due to the
                                                                               lack of available funding. The full implementation of ACE,
                                                                               scheduled for the year 2002, may also be delayed due to
                                                                               funding issues.
AIMD-94-5          To help strengthen the accuracy C of the accounts           ustoms management agreed with the recommendation
Nov. 8, 1993       receivable balance reported in Customs' financial           and implementation is well along. The Treasury OIG
                   statements, the Commissioner of Customs should direct       reported in its FY 1998 audit report that standard
                   the CFO to require supervisory personnel to review the      procedures and requisite changes to ACS have not been
                   work of staff responsible for updating and changing         implemented to provide for appropriate supervisory
                   information in ACS to ensure that all assessments are       review and authorization of critical changes. According
                   accurately and completely recorded.                         to Customs officials, Customs plans to replace ACS with
                                                                               ACE. The full implementation of ACE, scheduled for the
                                                                               year 2002, may be delayed due to funding issues.
                                                                                                                                 (continued)




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                                          Appendix X:II
                                          Department of the Treasury




GAO product    Recommendation                                            Agency action
               Customs should develop and maintain an integrated         Customs management agreed with the recommendation
               accounting system that can capture accurate and           and implementation is well along. Customs plans to
               reliable information on all types of assessments          replace ACS with ACE. In the ACS redesign, Customs
               (including duties, taxes, fines, and penalties) from      plans to incorporate a customer-based accounts
               assessment through collection of any related amounts.     receivable (A/R) subsidiary ledger, rather than continuing
                                                                         to maintain information at the individual import
                                                                         transaction level. The new process will include the
                                                                         Automated Centralized Accounts Receivable Subsidiary
                                                                         Ledger and is expected to meet all financial reporting
                                                                         requirements when completed. The target date to test
                                                                         the initial prototype version of the A/R subsidiary ledger
                                                                         was March 1999. However, according to Customs
                                                                         officials, this date was not met due to the lack of
                                                                         available funding. The full implementation of ACE,
                                                                         scheduled for the year 2002, may also be delayed due to
                                                                         funding issues.
AIMD-94-23     The Commissioner of Customs should direct the CFO to Customs management agreed with the recommendation
Dec. 14,1993    revise Customs' accounting systems and procedures to and implementation is well along. According to Customs
                properly account for the receipt of goods and services.  officials, the Department of the Treasury has an initiative
               Specifically, the CFO should (1) modify the accounting    to standardize bureau procurement systems. Until this
               systems for Automated Receiving Report System (ARRS) initiative is complete, modifications to Customs' financial
               transactions to automatically liquidate obligations and   systems that would record accounts payable upon
               post the related entries in the proprietary accounts      receipt of goods and services are on hold. In its FY 1998
               immediately upon receipt of goods and services, (2)       audit report, the Treasury OIG concluded that Customs
               develop and implement a mechanism for non-ARRS            was unable to record a liability in the general ledger
               transactions to acknowledge and transmit receiving data system upon receipt of goods and services. Accordingly,
               and use such data to post the appropriate budgetary       Customs uses manual procedures after the fiscal year
               and proprietary accounting entries, and (3) expand.the    end to establish the accounts payable balance.
                use of the Report on Open Obligations, as a short-term  According to Customs officials, Customs' Quality
               measure, by instructing program office personnel to       Planning for Asset Management (QPAM) initiated plans
               review the report and notify the National Finance Center to replace the current Federal Financial System with a
               when goods and services have been received.              Joint Financial Management Improvement Program
                                                                        (JFMIP)-approved core financial system that would
                                                                        enable Customs to record transactions on an accrual
                                                                         basis. This initiative has been submitted to Customs'
                                                                         Investment Review Board for approval.
AIMD-94-38     The Commissioner of Customs should direct the            Customs management agreed with the recommendation
Mar. 7, 1994   Assistant Commissioner for Inspection and Control to      and implementation is well along. In FY 1998, Customs
               develop and implement, in conjunction with Customs'       continued its Compliance Measurement Program (CMP)
               CFO, a strategy for inspecting cargo from both high- and which is a statistically based examination program. The
               low-risk carriers to help provide reasonable assurance   result of these programs allows Customs to identify low
               that all cargo delivered is accurately and completely    compliance areas, track improvement in key sectors,
               identified on manifests and entry documents. Carriers     identify revenue gap commodities, and measure
               undergoing such inspections should be randomly           improvements resulting from interventions. According to
               selected to ensure that they are representative of all   Customs officials, the carrier manifest CMP has now
               carriers.                                                 been expanded to include actual physical verification of
                                                                        the contents of containers. According to the Treasury
                                                                        OIG, these procedures were recently implemented but it
                                                                        has not yet tested the procedures.
                                                                                                                          (continued)




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                                        Department of the Treasury




GAO product   Recommendation                                             Agency action
              The Commissioner of Customs should monitor                 Customs management agreed with the recommendation
              implementation of the new procedures for accounting for  'and implementation is well along. In FY 1999, selected
              in-bond transfers to ensure that they address the          items shipped in-bond will be examined. This requires
              weaknesses that have been identified. In conjunction       Customs to inspect selected cargo at the port of origin or
              with this effort, the Commissioner should provide          the port of destination. According to the Treasury OIG,
              personnel involved in maintaining data on in-bond          the results of Customs' in-bond tests will allow it to
              transfers with clear and detailed guidance and adequate    determine a compliance rate, but will not allow it to
              training on complying with the new procedures.              project a revenue gap (i.e., amount of under or over
                                                                         collections). In November 1998, Customs implemented
                                                                         the Automated Broker Interchange (ABI) link to allow
                                                                         automated brokers and importers to transmit in-bond
                                                                          data directly into the Automated Manifest System (AMS).
                                                                          Customs plans to implement a post-audit in-bond
                                                                          compliance program to also address the weaknesses
                                                                          identified with in-bond transfers.
              The Commissioner of Customs should direct the               Customs management partially agreed with our
              Assistant Commissioner for Inspection and Control, in       recommendation and intends to implement a CMP for
              conjunction with the CFO, to require district offices to    FTZs. However, according to the Treasury OIG's fiscal
              maintain perpetual inventory records of goods held in       year 1998 financial audit report, Customs has not yet
              bonded warehouses and foreign trade zones (FTZ) that done so. Customs has deferred the issue until it
              they are responsible for overseeing.                        completes its Bonded Warehouse CMP. In its FY 1998
                                                                          audit report, the Treasury OIG reported that Customs has
                                                                          designed a CMP for bonded warehouses; however,
                                                                          Customs did not conduct any bonded warehouse CMP
                                                                          examination in FY 1998.
              The Commissioner of Customs should direct the                Customs management partially agreed with our
              Assistant Commissioner for Inspection and Control, in        recommendation, however implementation has not yet
              conjunction with the CFO, to enhance the Automated           begun. Customs has deferred action on this
              Commercial System (ACS) so that the district offices         recommendation pending the results of the compliance
              could use this system to maintain perpetual records of       measurement test for bonded warehouses. According to
              merchandise quantities at each warehouse and FTZ.            Customs officials, Customs has not developed a specific
                                                                           CMP for FTZs because of the difficulty in tracing the
                                                                           goods entered into and withdrawn from FTZs. This
                                                                           difficulty exists because most big FTZs are
                                                                           manufacturing operations that incorporate imported
                                                                           components into larger items that are eventually
                                                                           withdrawn and either entered into U.S. commerce or
                                                                           exported. Customs plans to implement a CMP for FTZs
                                                                           and will determine whether the bonded warehouse CMP
                                                                           methodology could be applied to FTZs.
                                                                                                                           (continued)




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                                         Appendix Xll
                                         Department of the Treasury




GAO product   Recommendation                                            Agency action
              The Commissioner of Customs should direct the             Customs management agreed with the recommendation
              Assistant Commissioner for Commercial Operations, in      and implementation is well along. In FY 1995, Customs
              conjunction with the CFO, to develop a means of           programmed ACS to detect drawback claims that
              automatically entering information needed to verify       exceeded the total amount of duty and tax paid on
              drawback claims into ACS so that liquidators can use the  related import entries. However, ACS cannot link
              system to automatically verify drawback claims.           drawback claims related to import entries filed prior to FY
                                                                        1995. According to the Treasury OIG's FY 1998 audit
                                                                        results, a reportable condition still exists in this area. The
                                                                        Treasury OIG reported that Customs now requires import
                                                                        specialists to annotate on the original import entry the
                                                                        line items and quantity for which the drawback is
                                                                        claimed. Also, in FY 1998, Customs continued sampling
                                                                        drawback payments and liquidations to ensure that
                                                                        appropriate amounts were paid. The Treasury OIG tested
                                                                        Customs' sample and agreed that no significant
                                                                        duplicate, excessive, or otherwise improper
                                                                        disbursements were made in FY 1998. However, the
                                                                        Treasury OIG reiterated its recommendation that
                                                                        Customs needs to implement effective controls over
                                                                        drawback claims as part of the ACE implementation.
              The Commissioner of Customs should direct the             Customs management agreed with the recommendation
              Assistant Commissioner for Commercial Operations, in      and implementation is well along. Limited profile
              conjunction with the CFO, to enhance ACS so that          information is available inACS, such as bond data and
              historical information on drawback claimants such as      year-to-date and cumulative claim amounts. Customs
              accelerated claim privileges, excessive claims previously officials also stated that ACS will include a profile on
              filed, overdue receivables, and regulatory audit results  each claimant that will be accessible online by Customs
              are available to liquidators in a national database.      drawback specialists. The profile will include
                                                                        information such as whether the claimant is approved to
              The Commissioner of Customs should direct the             receive accelerated drawbacks. A national database
              Assistant Commissioner for Commercial Operations, in      with this claimant profile information is part of the ACE
              conjunction with the CFO, to require that liquidators     planned implementation. According to Customs officials,
              review this database to ensure that special privileges,   ACE will electronically reference the claimant profile for
              such as accelerated drawback payments, are granted        approved privileges or adverse information when claims
              only to claimants who have consistently complied with     are processed. The full implementation of ACE,
              Customs claim filing requirements.                        scheduled for the year 2002, may be delayed due to
                                                                        funding issues.
                                                                                                                            (continued)




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                                          Appendix Xll
                                          Department of the Treasury




GAO product     Recommendation                                             Agency action
                The Commissioner of Customs should direct the              Customs management agreed with recommendation and
                Assistant Commissioner for Commercial Operations, in       implementation is well along, To monitor the sufficiency
                conjunction with the CFO, to enhance the bond liability    of bonds posted for drawback transactions, Customs
                module to monitor the sufficiency of bonds posted for      implemented new procedures for use with the dedicated
                drawback transactions, including the ability to alert      bond liability module in October 1994. In October 1995,
                liquidators when coverage is exceeded.                     the bond liability module was revised to allow persons in
                                                                           the field to query bond usage. In addition, the revised
                                                                           module includes warning messages when bond amounts
                                                                           are exceeded. Under the new procedures, Customs will
                                                                            accept only a bond type activity code "1   la" for the
                                                                            Drawback Program. A bond type activity code "1,la" will
                                                                            no longer be accepted. Any bonds with activity code
                                                                            "1,la" on file with Customs when the new procedures are
                                                                            implemented will be invalid. Further, the new procedures
                                                                            will require that the bond amount for accelerated
                                                                            drawback payments match the claim amount. Despite
                                                                            these corrective actions, the results of the Treasury OIG's
                                                                            audit of Customs' FY 1998 financial statements showed
                                                                            that this control can still be overridden and that ACS
                                                                            would require reprogramming to generate reports of
                                                                            these overrides for supervisory review.
AIMD-94-119     The Commissioner of Customs should direct the               Customs management agreed with the recommendation
June 15, 1994   Assistant Commissioner for Inspection and Control to        and implementation is well along. Customs directed all
                require personnel at ports of entry to maintain accurate    jurisdictions to reconcile discrepant AMS bills of lading
                and up-to-date data in AMS and to routinely investigate      or supply an alternative method for completing the task.
                all shipments that have not been replaced by the end of      However, according to the Treasury OIG's FY 1998 audit
                a prescribed period.                                         results, Customs' controls over bills of lading and
                                                                             in-bond shipments still need to be strengthened. The
                                                                             ACS generated exception reports of the open items were
                                                                             not being analyzed promptly, due to a high rate of data
                                                                             input errors and a lack of edit controls in ACS. In
                                                                             September 1998, Customs implemented a nationwide
                                                                             statistically based compliance measurement
                                                                             program-TIN MAN-to reduce the number of erroneous
                                                                             open in-bond exceptions in ACS. Customs is considering
                                                                              implementing a similar program to address open bills of
                                                                              lading in AMS.




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                                             Appendix Xll
                                             Department. of the Treasury




Table X1.5: U.S. Customs Service/Weaknesses Relating to the Development of Customs' Automated Commercial
Environment System

Our work showed that an incomplete systems architecture hindered Customs' ability to manage information technology investments,
 particularly large, mission-critical systems such as its Automated Commercial Environment (ACE) system. Since our January 1999
report, we identified additional serious management and technical weaknesses that have hindered Customs' ability to develop and
acquire ACE. The additional weaknesses that we reported are that Customs (1) invested in ACE without a firm basis for knowing that it
is a cost-effective system solution and (2) built ACE without employing software engineering rigor and discipline.

Our work on Customs' systems architecture resulted in recommendations for Customs to complete and enforce an enterprise systems
architecture. Customs agreed with these recommendations and has acted to fully address them and we have, therefore, closed the two
architecture-related recommendations. As a result of our subsequent work, there are now three open recommendations related to this
major management challenge.
GAO Contact

Jack L. Brock, Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov




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                                              Department of the Treasury




GAO product Recommendation                                                     Agency action
AIMD-99-41    In addition to previous recommendations to improve               Customs agreed with this recommendation and is in the
Feb. 26, 1999 Customs' management of information technology, we                early stages of implementation. Specifically, Customs is
              recommended that Customs correct the management and              planning to conduct a cost analysis that will include
              technical weaknesses discussed in this report before             consideration of a reconfigured Automated Commercial
              building ACE. To accomplish this, the Commissioner of            System and other information technology alternatives to
              Customs should, with the support of Customs' chief               ACE. Additionally, Customs plans to use the International
              information officer (CIO), ensure that Customs rigorously        Trade Data System as the interface between the trade
              analyzes alternative approaches to building ACE,                 community and ACE.
              including exploring the International Trade Data System as
               an alternative to developing ACE entirely within Customs.
               In addition to previous recommendations to improve              Customs agreed with this recommendation and is in the
               Customs' management of information technology, we               early stages of implementation. Specifically, Customs
               recommended that Customs correct the management and             plans to incrementally develop life cycle cost estimates
               technical weaknesses discussed in this report before            and anticipated benefits for ACE. Customs will then use
               building ACE. To accomplish this, the Commissioner of           this information to make investment decisions in
               Customs should, with the support of the Customs CIO,            accordance with Customs' existing information technology
               ensure that Customs makes investment decisions                  (IT) investment management process, which now requires
               incrementally, i.e., for each increment: (1) use                that proposed ITinvestments expect a favorable return on
               disciplined processes to prepare a rigorous life-cycle cost     investment and compliance with Customs' enterprise
               estimate, including an explicit discussion of its inherent      information systems architecture, and also requires
               uncertainty, (2) prepare realistic and supportable benefit      Customs to conduct post-implementation reviews of major
               expectations, (3) require a favorable return-on-investment       ITprojects, such as ACE, to determine actual costs and
               and compliance with Customs' architecture before making         benefits. Customs plans to begin this incremental
               any investment, and (4) validate actual costs and benefits      approach before the end of fiscal year 1999.
               once an increment is piloted, compare these with
               estimates, use the results in making further decisions on
               subsequent increments, and report the results to Customs'
                House and Senate appropriations and authorizing
                committees.
                In addition to previous recommendations to improve             Customs agreed with this recommendation and is in the
                Customs' management of information technology, we              early stages of implementation. Specifically, Customs is
                recommended that Customs correct the management and            exploring options for establishing a software acquisition
                technical weaknesses discussed in this report before           process improvement program. As a first step, Customs
                building ACE. To accomplish this, the Commissioner of          has assigned organizational responsibility and authority for
                Customs should, with the support of the Customs CIO,           software process improvement. Additionally, Customs has
                ensure that Customs strengthens ACE software acquisition       recently established a policy requiring that all software
                management by (1) establishing an effective process            contractors that conduct business with Customs be
                improvement program and correcting weaknesses in ACE           certified at least at SEI level 2.
                software acquisition processes identified in this report,
                thereby bringing ACE processes to at least Software
                Engineering Institute (SEI) level 2, and (2) requiring at
                least SEI level 2 processes of all ACE software contractors.




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                                                Department of the Treasury




Table X11.6: Financial Management Service/The Need to Address Issues Related to Preparing Reliable Consolidated
Financial Statements for the Government

In our March 1998 audit report on the government's fiscal year 1997 consolidated financial statements (CFS), we reported that
problems with fundamental recordkeeping, incomplete documentation, and weak internal controls prevent the government from
accurately reporting a large portion of assets, liabilities, and costs. These deficiencies affect the reliability of the CFS and much of the
underlying financial information. As preparer of the CFS, FMS has a key responsibility to work with agencies to address some of these
problems, including the government's inability to (1) properly account for billions of dollars of basic transactions, especially those
between governmental entities, (2) ensure that the information in the CFS is consistent with agencies' financial statements, and
(3) ensure that all disbursements are properly recorded. While there currently are no open recommendations related to the first two
issues, FMS has developed actions plans and is working with us, OMB, and key agencies to address the noted problems. However,
fixing all of these problems represents a significant challenge because of the size and complexity of the government and the discipline
needed to comply with new accounting and reporting requirements. Meeting these challenges will require a significant commitment of
agencies' and FMS' management as well as adequately trained staff and effective automated financial systems.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                             Department of the Treasury




GAO product Recommendation                                                  Agency action
AIMD-99-3     The Secretary of the Treasury should direct the               FMS agreed with the recommendation and implementation
Oct. 14, 1998 Commissioner of FMS to work with agencies and provide         is well along. FMS' Fund Balance Team has contracted
              sufficient resources to develop supplemental written          with FMS' Center for Applied Financial Management to
              guidance, including step-by-step procedures for               develop a comprehensive set of standard operating
              reconciliations, targeted to agencies with reconciliation     procedures (SOP) for use by federal agencies in
              problems to assist them in clearly understanding their        reconciling fund balances with Treasury accounts. The
              responsibilities.                                             procedures will include steps for reconciling monthly
                                                                            statement of differences and fund balances with Treasury
                                                                            accounts. Overall, the SOPs will cover the routine
                                                                            transactions an agency may have to record and ultimately
                                                                            reconcile that affect its fund balances accounts. FMS is
                                                                            also in the process of updating agency reporting and
                                                                             reconciliation requirements and procedures published in
                                                                            the Treasury Financial manual. FMS expects these actions
                                                                             to be completed in June 1999.
                The Secretary of the Treasury should direct the              FMS agreed with the recommendation and implementation
                Commissioner of FMS to work with agencies and provide        is well along. FMS is developing a curriculum for providing
                sufficient resources to develop training courses for         a core competency for reconciling fund balances with
                agencies' use in training personnel who are involved in      Treasury accounts. The curriculum will include training
                reconciling fund balances with Treasury accounts.            courses, guidelines, on-site visits by FMS, and
                                                                             conferences. Training courses have been developed and
                                                                             are available through FMS' Center for Applied Financial
                                                                             Management. These course materials can be used by
                                                                             agencies to develop in-house training programs.
                                                                             According to FMS officials, guidelines on reconciliation,
                                                                             including standard operating procedures for agencies and
                                                                             updates to the Treasury Financial Manual, will be
                                                                             completed and distributed to the agencies in June 1999.
                                                                             Also, an FMS Fund Balance Team was created and is
                                                                             currently making on-site visits to assist agencies with their
                                                                              reconciliation needs.
                Treasury should make enhancements to the Government           FMS agreed with the recommendation and intends to
                On-line Accounting Link System as soon as it is practical     implement it as soon as practical. Due to other priorities,
                in order to provide agencies with the technology needed       such as Year 2000 computer conversion issues and other
                to promote efficient and effective reconciliations.           significant challenges associated with the
                                                                              nonstandardized agency systems across the federal
                                                                              government, it is not practical for Treasury to make
                                                                              enhancements to the Government On-line Accounting Link
                                                                              System at this time.




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                                              Department of the Treasury




Table X1.7: Financial Management Service/The Need to Improve Computer Security Controls

FMS faces considerable challenges in overseeing the development, implementation, and operation of its entitywide information
systems, including the establishment of appropriate computer controls. FMS maintains a wide array of financial and information
systems to help it process and reconcile money disbursed and collected by the various government agencies. Multiple banking,
collection, and disbursement systems are also used to process agency transactions, capture relevant data, transfer funds to and from
Treasury accounts, and facilitate the reconciliation of these transactions. In addition to operating six regional financial centers, FMS
relies on a network of contractors and the Federal Reserve Banks to help carry out its financial management responsibilities. In October
1998, we reported that general computer control weaknesses at FMS and its contractor data centers place the data maintained in FMS'
financial systems at significant risk of unauthorized modification, disclosure, loss, or impairment. The weaknesses we found included
(1) inappropriate access to computer programs, data, and equipment, (2) inadequate segregation of duties, (3) improper application
software development and change control procedures, and (4) incomplete or untested service continuity plans. Weak controls over
FMS' computer systems place billions of dollars of payments and collections at risk of fraud. These weaknesses existed primarily
because FMS does not have an effective entitywide computer security planning and management program. Because of the large
volume of transactions, the significance of the related amounts involved, and the number of weaknesses identified at the FMS data
centers visited, we considered FMS' general computer control problems a material weakness. In connection with fulfilling our
requirement to audit the U.S. government's fiscal year 1998 financial statements, we reviewed the computer controls over key FMS
financial systems and we also reviewed the status of computer weaknesses at FMS identified during our fiscal year 1997 audit. We
noted that general computer control problems continue to exist and be identified as a material weakness.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                              Department of the Treasury




GAO product Recommendation                                                    Agency action
AIMD-99-10    To address weaknesses in general controls cited in our          Treasury agreed with this recommendation and
Oct. 20, 1998 July 31, 1998, "Limited Official Use" version of this report,   implementation is well along. FMS officials have
              we recommended that the Secretary of the Treasury direct        completed corrective actions for 24 of the 67 weaknesses
              the Commissioner of the Financial Management Service,           that were identified. Specifically, action has been taken
              along with the FMS Information Resources Assistant              that corrected 14 of the 29 weaknesses related to logical
              Commissioner, to take the following actions: (1) correct the    security controls, 1 of the 5 weaknesses related to
              individual weaknesses that we identified and                    physical security controls, and 1 of the 4 weaknesses
              communicated to FMS management during our testing,              related to segregation of duties. In addition, corrective
              which were summarized in the "Limited Official Use"             actions have been completed for 5 of the 10 weaknesses
               report, and (2) assign responsibility and accountability for   related to application development and software change
              correcting each weakness to designated individuals.             control process, 2 of the 6 weaknesses related to service
              These individuals should report to the Commissioner on          continuity, and 1 of the 10 weaknesses related to an
              the status of all weaknesses, including actions taken to        entitywide security plan; while action has not been
               correct them.                                                  completed on any of the 3 weaknesses related to system
                                                                              software security controls. FMS officials believe planned
                                                                              system enhancements will resolve 6 of the 43 open
                                                                              weaknesses and work is in progress to address the 37
                                                                              remaining open weaknesses.
                To address weaknesses in general controls cited in our        Treasury agreed with this recommendation and
                July 31, 1998, "Limited Official Use" version of this report, implementation is in its early stages. FMS officials are
                we recommended that the Secretary of the Treasury direct working to implement this recommendation and have
                the Commissioner of the Financial Management Service,         informed us that an outline and instructions for the security
                along with the FMS Information Resources Assistant             handbook that will include the security plan have been
                Commissioner, to work with other appropriate assistant         drafted. Also, FMS officials said that they have conducted
                commissioners to ensure that an effective entitywide           information technology security awareness training at
                security planning and management program is in place.          several FMS offices and conducted on-site reviews at
                This program should include the following elements: (1) a various sites.
                strong central security management focal point to ensure
                that major elements of a risk management program are
                carried out and to provide a communications link among
                organizational units, (2) periodic risk assessments and
                needs determinations, (3) policy and controls
                implementation, (4) promotion of computer control
                awareness through training and other attention-getting
                techniques, and (5) evaluation and monitoring of policy.
                and control effectiveness.




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                                              Appendix XI:
                                              Department of the Treasury




Table X11.8: Financial Management Service/The Need to Effectively Implement the Debt Collection Improvement Act

The Congress has raised concerns about the slow pace at which the Debt Collection Improvement Act of 1996 (DCIA) has been
implemented by the Department of the Treasury's FMS and the other agencies with related responsibilities. We reported in June 1997
that improved reporting for billions of dollars of delinquent debt was needed. In June 1998, we testified that FMS did not have a system
capable of matching all federal payments against nontax delinquent debts owed the government, as envisioned by DCIA, because of
systems development problems. Progress is being made by FMS; however, challenges remain in effectively fulfilling its responsibilities
under DCIA.

There are six open recommendations related to improving delinquent debt reporting, which are discussed in the following table. In
addition, we identified several areas in which actions by FMS are needed to reduce the risk of costly system modifications and further
delays in the Treasury Offset Program (TOP). FMS has acted to address these areas; however, enhancements to the TOP system to
incorporate additional payment types (e.g., Social Security benefit payments) have not yet been completed.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                             Department of the Treasury




GAO product Recommendation                                                    Agency action
AIMD-97-48   The Secretary of the Treasury should revise the framework        The Department of the Treasury's FMS agreed with our
June 2, 1997 and data requirements for agency reporting on debt               recommendations and is well along in implementing them.
             collection to ensure that reports to the Congress                FMS has revised the Report on Receivables Due from the
                                                                              Public (TROR) for agencies' use as of the second quarter
               *provide complete and consistent reporting on the status       of fiscal year 1999. The report was revised to incorporate
               of agency efforts to collect delinquent debt,                  our recommendations and to capture data relevant to the
                                                                              provisions of the Debt Collection Improvement Act (DCIA)
               · provide amounts that agencies are actually trying to         of 1996. Agencies now access and submit the report via
               collect. For example, agencies should report amounts that      the Internet and are required to use footnotes to document
               have been written off but that are still being pursued,        inconsistencies or to provide further details. Two
                                                                              enhancements remain to be implemented- verification
               *provide information that is reliable based on independent     from the CFO that amounts reported on the TROR agree
               audits and disclose information about account balances         with audited financial statements and implementation of a
               that are questioned through audits, and                        write-off policy. According to FMS, these enhancements
                                                                              will be implemented during fiscal year 2000. FMS reported
               -report delinquent debt consistently from agency to            in its May 28, 1999, corrective action plan to address our
               agency or disclose inconsistencies.                            recommendations that the necessary actions to implement
                                                                              our recommendations have been completed; however, we
                                                                              believe that the two remaining enhancements mentioned
                                                                              above and the framework to be used to report receivable
                                                                              information to the Congress must be completed before
                                                                              FMS has fully implemented these recommendations.
               The Secretary of the Treasury should revise the framework      FMS agreed with this recommendation and is well along in
               and data requirements for agency reporting on debt             implementing it. FMS believes that it has completed the
               collection to ensure that reports to the Congress offer an     actions required to implement it, however we believe that
               evaluation of agency use of individual collection tools. The   additional actions are needed. Specifically, while the
               reports should include the number of cases and dollar          revised TROR requires agencies to report collections by
               amount against which each tool was applied, the success        type of tool, it does not require agencies to report their
               rate, and the cost of using each tool.                         success rate or the cost of using each tool.
               The Secretary of the Treasury should revise the framework      FMS agreed with this recommendation and is inthe early
               and data requirements for agency reporting on debt             stages of implementation. FMS is currently developing
               collection to ensure that reports to the Congress              enhancements to the TROR reporting system to implement
               aggregate credit data by similar program characteristics       it. FMS reported in its May 28, 1999, corrective action plan
               and provide explanatory information where necessary in         to address our recommendations that the enhancements
               order to more appropriately portray program differences        will be tested and implemented before September 1999.
               and focus on collection challenges unique to similar
               programs.




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                                              Department of the Treasury




Table X11.9: Weaknesses Exist in Computer Systems Security

In its auditors' reports on Treasury's fiscal year 1997 and 1998 departmentwide financial statements, the Treasury OIG reported as a
material weakness that computer security controls, which are designed to safeguard data, protect computer application programs,
prevent system software from unauthorized access, and ensure continued computer operations, need to be strengthened. Although
some improvements have been made, computer control weaknesses in financial systems access and physical security controls at
certain bureaus reported by the Treasury OIG in previous years continued to exist during fiscal years 1997 and 1998 and additional
weaknesses were identified.

Our work and that of the Treasury OIG have identified significant problems at three bureaus-IRS, Customs, and FMS. Our
recommendations have been made at the bureau level. A description of the weaknesses and our open recommendations are contained
in the separate sections on each of these bureaus. Additionally, we are continuing to monitor actions in response to recommendations
made by the Treasury OIG through our work related to the OIG's audit of Treasury's departmentwide financial statements in conjunction
with our audit of the consolidated financial statements of -the U.S. government.

GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                               Department of the Treasury




Table X11.10: Weaknesses Relating to Integrated Financial Management Systems

In its auditors' report on Treasury's fiscal year 1996 departmentwide financial statements, the Treasury OIG reported that Treasury's
lack of integrated financial management systems was a material weakness. An integrated system would perform basic accounting
functions and provide integrated budget, financial, and performance information that managers could reliably use to make decisions.
The auditors reported that several component entities maintained separate systems to support programs and financial management
and that these nonintegrated systems could not be relied on to provide complete and accurate information without extensive manual
procedures, analyses, and reconciliations. The Treasury OIG had recommended that the Treasury Chief Financial Officers Council
develop a strategy for improving the level of financial systems integration within and among the department's bureaus.
The Treasury OIG reported in its fiscal year 1997 audit report that the CFO Council had initiated a project to define core financial data
requirements, evaluate current systems capabilities, and develop recommendations for implementation of a departmentwide data
stewardship process. However, in both its fiscal year 1997 and 1998 audit reports, the Treasury OIG reported that financial system
integration issues continued to exist.

There are currently no open GAO recommendations related to this issue. The Treasury OIG has one open recommendation related to
the need for the Treasury Chief Financial Officer to ensure that component entities develop appropriate plans to improve and integrate
their financial management systems and monitor the implementation of these plans. We are continuing to monitor the status of this
major management challenge through our work related to the OIG's audit of Treasury's departmentwide financial statements in
conjunction with our audit of the consolidated financial statements of the U.S. government.
GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Financial Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                              Department of the Treasury




Table X1I.11: Weaknesses Relating to the Process Used to Prepare Departmentwide Financial Statements

 In its auditors'.reports on Treasury's fiscal year 1996 and 1997 departmentwide financial statements, the Treasury OIG reported
material weaknesses related to the department's process used to prepare the departmentwide financial statements. These weaknesses
primarily related to financial data submitted by bureaus which was in the wrong format, contained inconsistencies, incorrect
classifications and inaccurate reporting, and had intradepartmental account balances and transactions that were out of balance in
excess of $100 million. The Treasury OIG reported that, if not mitigated by actions that required a significant amount of the
department's and Treasury OIG's resources, these weaknesses may have caused material misstatements in the departmentwide
financial statements. In its auditors' report on the fiscal year 1998 departmentwide financial statements, the Treasury OIG reported that
the department has made significant enhancements in this area. However, the Treasury OIG also reported that there are continuing
challenges, including timely submission of audited financial statements and integrity of financial data produced by the component
entities. While there are currently no open GAO recommendations related to this issue, we will continue to monitor this issue through our
work related to the OIG's audit of Treasury's departmentwide financial statements in conjunction with our audit of the consolidated
financial statements of the U.S. government.

GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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                                              Department of the Treasury




Table X11.12: Weaknesses Relating to the Compliance of Financial Management Systems With Federal Requirements

The Federal Financial Management Improvement Act of 1996 (FFMIA) requires auditors performing financial audits to report whether
agencies' financial management systems substantially comply with federal accounting standards, financial systems requirements, and
the government's standard general ledger at the transaction level. In its fiscal year 1997 and 1998 auditors' reports on compliance with
laws and regulations, the Treasury OIG identified instances where the department's financial management systems did not substantially
comply with requirements detailed in FFMIA. Treasury reported that it had various actions planned to correct the problems. For
example, according to a Treasury official, one of its bureaus recently implemented a new system that complies with FFMIA
requirements. While there currently are no open GAO recommendations related to this issue, the Treasury OIG has one open
 recommendation-for Treasury to continue to monitor and assess the progress of the bureaus in developing and implementing their
remediation plans to address identified instances of noncompliance. We are continuing to monitor the status of this major management
challenge through our work related to the OIG's audit of Treasury's departmentwide financial statements in conjunction with our audit of
the consolidated financial statements of the U.S. government.

GAO Contact

Gary T. Engel, Associate Director
Governmentwide Accounting and Financial Management Issues
Accounting and Information Management Division
(202) 512-3406
engelg.aimd@gao.gov




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Appendix XIII

Department of Veterans Affairs



Table XIII.1: VA Health Care Infrastructure Does Not Meet Current and Future Needs

Many Department of Veterans Affairs (VA) facilities are deteriorating, unneeded, or inappropriately configured. As VA shifts its
emphasis from providing specialized inpatient services to providing primary outpatient care, less of VA's existing hospital space is
needed. Unneeded, vacant buildings and grounds create a financial drain on VA. Maintaining unproductive assets siphons valuable
resources away from providing direct medical services. In confronting this challenge, VA needs to decide whether and how to maintain,
renovate, liquidate, or redirect the use of these assets. VA needs to decide which services could be consolidated across its facilities as
well as those that could be offered more efficiently by other public and private providers who contract with VA. These decisions must
be made in the context of a decreasing population of veterans-one that has a rapidly increasing proportion of members aged 85 and
older who may require more intensive services, such as nursing home care. Furthermore, these decisions are likely to affect how VA
meets its medical education mission to train physicians and other clinical care providers and will require VA to restructure its affiliation
agreements with medical schools and other institutions. All these decisions will be of critical importance in shaping how VA fulfills its
health care role well into the next century.

There are six open recommendations related to this major management challenge. They address the need for (1) VA to improve its
planning and budgeting for capital assets, (2) VA to more accurately collect information on nursing home availability costs, and (3) the
Great Lakes Veterans Integrated Service Network to develop and implement a detailed plan for meeting veterans' needs in the Chicago
area with three hospitals instead of four.
GAO Contact

Stephen P. Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division
(202) 512-7101
backhuss.hehs@gao.gov




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                                             Department of Veterans Affairs




GAO product Recommendation                                                Agency action
HEHS-97-27    As part of VA's ongoing efforts to improve nursing home     VA agreed with our recommendation and has initiated
Dec. 20, 1996 resource management decisions, the Secretary of             efforts, which are in varying stages of completion by
              Veterans Affairs should direct the Under Secretary for      location, to improve the accuracy of its data collection
              Health to more accurately accumulate and report nursing     processes through the implementation of the Decision
              home costs, assess the availability of community nursing    Support System (DSS) at VA medical facilities and
              home resources, and identify locations where current        Veterans Integrated Service Network (ViSN) offices. VA is
              reimbursement rates are not competitive.                    also implementing the Minimum Data Set (MDS)
                                                                          developed by the Health Care Financing Administration in
                                                                          order to collect clinical data on patient care that is
                                                                          compatible with the private sector. As the new MDS data
                                                                          become available electronically, VA's present Patient
                                                                          Assessment instrument data will no longer be needed or
                                                                          maintained.
HEHS-98-64    The Secretary of Veterans Affairs should direct the Great   VA disagreed with the recommendation to develop and
Apr. 16, 1998 Lakes network director to develop and implement a           implement a detailed plan for meeting veterans' needs in
              detailed plan for meeting veterans' needs in three          three Chicago-area hospitals. Rather, VA believed that
              hospitals. This plan should explore all options available   further analysis was needed before making such a
              and select those that maximize veterans' access to          decision. On August 21, 1998, VA officially awarded a
              services while minimizing to the extent practical, the      contract to a consulting firm to assess VA's facilities and
              impact on employees, medical schools, and others. The       recommend the most efficient means for meeting the
              plan should also identify which of the four Veterans Health health care needs of veterans under the Veterans
              Administration (VHA) hospitals in the Chicago area to       Integrated Service Network's (VISN) 12 jurisdictions. A VA
              close.                                                      working group identified seven factors for the contractor to
                                                                          consider when deciding how the hospitals should be
                                                                          structured and included six hospitals for study. VA
                                                                          instructed the contractor to include the Milwaukee and
                                                                          Madison VA hospitals in its analyses in addition to the four
                                                                          Chicago-area VA hospitals. The contractor began its work
                                                                          (notice to proceed) on September 17, 1998, and is
                                                                          scheduled to submit a final report to VA by June 30, 1999.
T-HEHS-99-83 The Secretary of Veterans Affairs should require the Under During recent testimony, VA indicated its agreement with
Mar. 10, 1999 Secretary for Health to (1) use VA's centralized budget     our recommendations, however, we have not yet received
              process for a larger share of its investment decisions, (2) its official response, nor are we aware of specific actions
              ensure that the fundamental principles underlying that      on these recommendations.
              process are rigorously implemented when making
              decentralized investment decisions, (3) modify written
              guidelines to describe, in greater detail, minimum
              quanitative data required for each decision criteria, and
              (4) exclude, from the prioritization process, all proposals
              that fail to meet the information requirements.




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                                                Department of Veterans Affairs




Table Xl11.2: VA Lacks Adequate Information to Ensure That Veterans Have Access to Needed Health Care Services

Because VA lacks accurate, reliable, and consistent information on how resources are being allocated, it cannot ensure that veterans
are receiving equitable access to care across the country, as mandated by the Congress. The Congress was concerned that the
dramatic shift in the veteran population from the Northeast and Midwest to the South and West had occurred without a corresponding
shift in VA health care resources. In fiscal year 1997, therefore, VA introduced a new resource allocation system to begin to correct
historical inequities in allocating resources, with the intent of improving the equity of veterans' access to care. However, VA does not
know if it is making progress in providing similar services to similarly situated veterans. VA has also been unable to ensure that veterans
who need costly specialized treatment and rehabilitative services have access to such care. Also, the Congress required VA to ensure
that its capacity for specialized treatment and rehabilitative services for certain conditions is not reduced below October 1996 levels
and that veterans with these conditions have reasonable access to care. However, as a result of VA's changing definitions for data,
inaccurate data reporting at the local level, and irreconcilable data differences within VA, it is difficult to determine the extent to which
VA is maintaining its national capacity to treat special disability groups. Finally, VA has not developed information that will enable it to
ensure that it meets the increased demand for care generated by its new enrollment process. VA projects that by the end of fiscal year
1999, it will have enrolled about 4.4 million veterans. If each of these veterans receives medical services from VA infiscal year 1999, the
percentage of veterans receiving VA care will increase about 47 percent compared with the percentage of those served annually in
recent years.

Twenty recommendations related to this major management challenge are open. In addition to the 13 recommendations discussed
below, 7 recommendations are related to VA's Medical Care Cost Recovery authority and participation rates in Persian Gulf Spouse and
Children Examinations.

GAO Contact

Stephen P. Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division
(202) 512-7101
backhuss.hehs@gao.gov


GAO product         Recommendation                                             Agency action
HEHS-96-121         The Secretary of Veterans Affairs should provide the       VA did not agree but did issue a preliminary report on
July 25, 1996       Congress, through future budget submissions, data on       eligibility reform implementation in the fall of 1998. It
                    the extent to which VA services were provided to           intends to issue another report on the effect of enrollment
                    veterans in the mandatory and discretionary care           in June 1999. Also, VA's enrollment process,
                    categories for both inpatient and outpatient care.         implemented in October 1998, has greatly lessened the
                                                                               need for the recommended action and GAO plans to
                                                                               close this recommendation.
HEHS-97-7           The Secretary of Veterans Affairs should direct the Under VA did not agree that it is necessary to provide the
Oct. 25, 1996       Secretary for Health to provide the Congress a report      Congress with a report on how many, where, and when
                    that presents the overall VA plan and time schedule for    access points would be established throughout the
                    the systemwide establishment of access points to assist country. However, VA has since reported that it will
                    the Congress in determining the affordability of the VA    develop a national analysis to identify any remaining
                    plan.                                                      major gaps in access not already covered by current
                                                                               and planned access points. VA is well along in drafting
                                                                              .the report containing the results of that analysis. This
                                                                               report should meet the intent of GAO's recommendation.
                                                                                                                                 (continued)




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                                            Department of Veterans Affairs




GAO product      Recommendation                                              Agency action
HEHS-97-178      The Secretary of Veterans Affairs should direct the Under VA agreed in principle and appears to be well along in
Sept. 17, 1997   Secretary for Health to develop more timely and detailed its efforts to respond to this recommendation, but action
                 indicators of changes in key Veterans Equitable           has not been completed. VA found that the number of
                 Resource Allocation (VERA) workload measures and          patients who had made only one visit increased
                 medical care practices to maintain VERA's ability to      substantially in some Veterans Integrated Service
                 equitably allocate resources in the future and help       Networks (VISN) after VERA was introduced and that
                 ensure that veterans receive the most appropriate care.   continuing the basic care capitation rate for such
                                                                           patients would provide greater allocations to these VISNs
                                                                           than appropriate. To correct this problem, VA is
                                                                           establishing a third capitation rate of $100 for single-visit
                                                                           patients in fiscal year 1999, in addition to the existing
                                                                           rates for basic and special care patients. This rate is
                                                                           substantially less than the capitation rate for basic care,
                                                                           under which such patients were previously categorized.
                                                                           We found that VERA incentives could lead to the
                                                                           behavior and distortions VA found and that VA was not
                                                                           monitoring single-visit patients. A subsequent contractor
                                                                           study made a similar point. VA is also monitoring
                                                                           changes in the number of special care patients served.
                                                                           However, VA has not addressed the recommendation to
                                                                           develop similar workload indicators and monitor changes
                                                                           in medical care practices.
                 The Secretary of Veterans Affairs should direct the Under VA agreed with this recommendation. Implementation is
                 Secretary for Health to improve oversight of VISNs'       underway, appears well along, but has not been
                 allocation of resources to their facilities by: (1)       completed. VA has added a criterion to its allocation
                 developing criteria for use in designing VISN resource    principles for VISNs to use in allocating resources to their
                 allocation methods, (2) reviewing and approving these     facilities (VHA Directive 97-054). VA's directive says that
                 methods, and (3) monitoring the impact of the methods     VISNs' allocations to their facilities shall "support the
                 on veterans' equitable access to care.                    goal of improving equitable access to care and ensure
                                                                           appropriate allocation to facilities to meet that goal."
                                                                           VA's "bridge document" requires each VISN to report on
                                                                           how it allocates its resources each year to facilities. Each
                                                                           VISN must also provide additional narrative to explain
                                                                           how its allocations address the goal of ensuring
                                                                           equitable resource allocation and improving equitable
                                                                           access. These documents are reviewed by the Office of
                                                                           the Under Secretary for Health.
HEHS-98-4        The Secretary of Veterans Affairs should, in designing      VA agreed with this recommendation and is well along in
Oct. 17, 1997    the enrollment process for the veterans' health care        implementation. VA has developed enrollment
                 program, develop procedures for gathering and               procedures for gathering and updating information on
                 updating detailed information on veterans' employment,      veterans' employment, insurance, and
                 insurance, and service-connected disabilities.              service-connected disabilities. This information is
                                                                             collected as part of the application-for-care screens
                                                                             during initial enrollment, can be updated at any time at
                                                                             the veteran's request, and will be updated annually for
                                                                             priority 5 veterans (veterans whose annual income and
                                                                             net worth fall below the means test threshold) along with
                                                                             an updated means test. VA Form 10-10EZ, Application
                                                                             for Health Benefits, was developed in part to respond to
                                                                             our recommendation.
                                                                                                                            (continued)




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                                            Department of Veterans Affairs




GAO product     Recommendation                                               Agency action
                The Secretary of Veterans Affairs should develop             VA agreed with our recommendation's intent but
                procedures to ensure that authority to retain health         disagreed with the need for procedures to accomplish
                insurance recoveries would not detract from services to      this goal. VA believes that it is already taking a number of
                veterans who lack private health insurance.                  actions-such as setting principles of funding allocations
                                                                             to be consistent with eligibility requirements and
                                                                             priorities-to preserve access for veterans who do not
                                                                             have private insurance. While VA says that it is well
                                                                             along, GAO will continue to monitor these actions to
                                                                             determine if they are responsive to our recommendation.
HEHS-98-116     The Secretary of Veterans Affairs should direct the Under VA agreed in principle that access to its health care
June 15, 1998   Secretary for Health to set a national target level of       varies. VA intends to act on our recommendation,
                performance that focuses each network on a goal of           however, implementation has not yet begun. VA has
                providing reasonable geographic access to VA primary reported that it plans to incorporate the recommendation
                care for highest percentage of current users practical by into future planning guidance.
                2002.
                The Secretary of Veterans Affairs should direct the Under VA agreed with this recommendation and implementation
                Secretary for Health to require networks to include in       is well along. VA will require that this information be
                their business plans the percentage of: (1) current users, included in each Community-Based Outpatient Clinic
                by priority status, who have reasonable access, (2) the      (CBOC) proposal for consideration during the approval
                remaining current users (without reasonable access), by process. VA will also issue guidance that requires this
                priority status, who are targeted to receive improved        information to be included in fiscal year 2000 network
                access through the establishment of community clinics        plans.
                by 2002, and (3) current users, by priority status, who will
                not have reasonable access by 2002.
                The Secretary of Veterans Affairs should direct the Under VA agreed in principle with this recommendation and
                Secretary for Health to require networks to plan and         implementation is well underway. VA reported that this
                propose new community-based clinics in a manner that         information is needed in conjunction with experiential
                ensures that veterans with highest statutory priorities      information it is collecting resulting from the requirement,
                achieve reasonable access as quickly as possible,            effective October 1, 1998, that veterans enroll in its
                consistent with the requirements of the Veteran Health       health care system.
                Care Reform Act of 1996.
                The Secretary of Veterans Affairs should direct the Under VA agreed in principle with this recommendation and
                Secretary for Health to establish minimum criteria that all implementation is well underway. VA reported that it
                networks are to use annually for eva uating new clinics'     would identify a minimum criteria set for all networks to
                performance.                                                 use that focuses on evaluating outcomes rather than
                                                                             performance. VHA also reported that new clinics'
                                                                             performance and workload evaluations will also be
                                                                             incorporated into the planning process.
                The Secretary of Veterans Affairs should direct the Under VA disagreed with the necessity for an annual report,
                Secretary for Health to require networks to annually         considering it to be excessive. Instead, VA said that it
                report their evaluation results to the Capital Budgeting     would determine what it considers to be a reasonable
                and Oversight Service, a unit within VA, and others for      period for evaluating new clinics and report the results as
                their use in reviewing proposals for new clinics and other recommended. Thereafter, it will incorporate
                purposes.                                                    performance and workload results into the planning
                                                                             process and review and adjust them as needed. GAO
                                                                             agrees that VA's suggested action, when completed, will
                                                                             be responsive to the intent of this recommendation. That
                                                                             action has not yet been taken.
                                                                                                                                (continued)




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                                            Appendix XIII
                                            Department of Veterans Affairs




GAO product     Recommendation                                                 Agency action
HEHS-98-226     The Secretary of Veterans Affairs should direct the Under      VA said it is working to improve its information systems
Aug. 28, 1998   Secretary for Health to develop uniform definitions and        so that they will be more useful to VISN and
                institute timely reporting of changes in access to care,       headquarters management. This action is in its early
                including the number and eligibility priority of patients      stages.
                served, waiting times for care, and patient satisfaction for
                specific services at the VISN and facility level.
                The Secretary of Veterans Affairs should direct the Under      VA agreed and had made progress toward responding
                Secretary for Health to develop criteria for equitably         to the recommendation. Action appears to be well along
                allocating resources to facilities and monitor any             but not yet completed. (See also agency action on
                improvements in equity of access among and within              recommendations in report number HEHS-97-178,
                VISNs.                                                         above.)




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                                               Department of Veterans Affairs




Table X11.3: VA Lacks Outcome Measures and Data to Assess Impact of Managed Care Initiatives

VA does not know how its rapid move toward managed care is affecting the health status of veterans because measures of the effects
on patient outcomes of changes in its service delivery have not been established. VA, like many other public and private health care
providers, has recognized the necessity for and the difficulty of creating such measures. VA's challenges in assessing outcomes are
further complicated by poor data. We and others have reported numerous concerns about VA's outcome data, including inconsistent,
incompatible, and inaccurate databases; changes in data definitions over time; and the lack of timely and useful reporting of
information to medical center, VISN, and national program managers.

Our work on health care for Persian Gulf War and homeless veterans has resulted in eight open recommendations related to this
management challenge. They involve the development and uniform implementation of a process focusing on the integration of
diagnostic services, treatment and evaluation of the effectiveness of that treatment, and periodic reevaluation of veterans with
undiagnosed illnesses.
GAO Contacts

Stephen P. Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division
(202) 512-7101
backhuss.hehs@gao.gov
Kwai-Cheung Chan, Director
Special Studies and Evaluations
National Security and International Affairs Division
(202) 512-3092
chank.nsiad@gao.gov


GAO product         Recommendation                                              Agency action
HEHS-98-197         The Secretary of Veterans Affairs should direct the Under   VA agreed with these recommendations and
Aug. 19, 1998       Secretary for Health to uniformly implement a health care   implementation is in the early stages. The Under
                    process for Gulf War veterans that provides for the         Secretary for Health established the Gulf War Field
                    coordination of diagnoses of illnesses.                     Advisory Group to provide advice regarding the broad
                                                                                range of Gulf War-related veterans' programs VA offers.
                    The Secretary of Veterans Affairs should direct the Under   The group will assess progress and make further
                    Secretary for Health to uniformly implement a health care   recommendations concerning the implementation of a
                    process for Gulf War veterans that provides for the         more uniform, coordinated health care program for Gulf
                    coordination of treatment of symptoms and illnesses.        War veterans. The group held an initial telephone
                                                                                conference on March 23, 1999, and future meetings are
                    The Secretary of Veterans Affairs should direct the Under   planned. An annual report will be submitted to the Under
                    Secretary for Health to uniformly implement a health care   Secretary for Health.
                    process for Gulf War veterans that provides for
                    coordinating evaluations of treatment effectiveness.
                    The Secretary of Veterans Affairs should direct the Under
                    Secretary for Health to uniformly implement a health care
                    process for Gulf War veterans that provides for the
                    coordination of periodic reevaluation of those veterans
                    whose illnesses remain undiagnosed.
                                                                                                                             (continued)




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                                            Department of Veterans Affairs




GAO product     Recommendation                                                 Agency action
HEHS-99-53      The Secretary of Veterans Affairs should direct the Under      VA agreed and implementation is in its early stages. VA's
Apr. 1, 1999    Secretary for Health and the Assistant                          Northeast Program Evaluation Center (NEPEC) has taken
                Secretary for Planning and Analysis to collaborate on          the lead in developing evaluation studies on VA's
                conducting a series of program evaluation studies to           homeless veterans' programs, including a 3-year
                clarify the effectiveness of VA's core homeless programs       outcome evaluation of four VA medical centers to
                and provide information about how to improve those             determine the effectiveness of (1) the HUD-VA
                programs. Where appropriate, VA should make                    Supported Housing (VASH) Program (permanent
                decisions about these studies (including the type of data       housing plus long-term case management), (2) case
                needed and the methods to be used) in coordination with        management only, and (3) the traditional contract
                other federal agencies with homeless programs,                 community-based residential treatment with case
                including the Department of Health and Human Services          management provided by the Health Care for Homeless
                (HHS), the Department of Housing and Urban                     Veterans (HCHV) Program. The Mental Health Strategic
                Development (HUD), and the Department of Labor                  Healthcare Group and four VISNs have been approved
                (Labor).                                                       to develop a pilot initiative to provide critical time
                                                                               intervention case management for homeless veterans in
                                                                               inpatient treatment. NEPEC will direct the program
                                                                               evaluation to determine the effectiveness of this
                                                                               treatment strategy. The Center for Mental Health Services
                                                                               of the Substance Abuse and Mental Health Services
                                                                               Administration within the HHS has agreed to train VA
                                                                               staff in the use of this treatment model and will be
                                                                               consulted on program evaluation.
NSIAD-97-163    Because of the numbers of Gulf War veterans who                VA agreed and implementation is in its early stages.
June 23, 1997   continue to experience illnesses that may be related to         However, VA has contracted with the National Academy
                their service during the Gulf War, the Secretary of            of Sciences to review methodologies for monitoring the
                Defense, in conjunction with the Secretary of Veterans         health of Gulf War veterans, and this project is under way.
                Affairs, should develop and implement a plan to monitor
                the clinical progress of Gulf War veterans in order to help
                promote appropriate and effective treatment and provide
                direction to the research agenda.
                Because of the numbers of Gulf War veterans who                VA agreed and implementation is in its early stages. Two
                continue to experience illnesses that may be related to        specific initiatives directed toward the treatment of Gulf
                their service during the Gulf War, the Secretary of            War veterans' illnesses have been undertaken. A
                Defense, in conjunction with the Secretary of Veterans         planning committee of clinical researchers has been
                Affairs, should give greater priority to research on           formed to develop a protocol for a multisite trial of
                treatment for ill veterans and on low-level exposures to       treatments for chronic fatigue syndrome and fibromyalgia
                chemicals and their interactive effects and less priority to   among Gulf War veterans. In addition, a program
                further epidemiological studies.                               announcement, released in 1998, announced an
                                                                               open-ended solicitation, using VA funds, to support
                                                                               additional multisite treatment trials for Gulf War veterans'
                                                                               illnesses. Finally, the Research Working Group (chaired
                                                                               by VA) of the Persian Gulf Veterans Coordinating Board
                                                                               worked cooperatively with the Department of Defense
                                                                               (DOD) to develop a Broad Agency Announcement
                                                                               soliciting research on the health effects of low-level
                                                                               exposure to chemicals, including chemical warfare nerve
                                                                               agents. Twelve new research projects were
                                                                               subsequently awarded, three specifically addressing the
                                                                               effects of low-level exposures and three specifically
                                                                               addressing problems of interactions.
                                                                                                                                 (continued)




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GAO product    Recommendation                                               Agency action
NSIAD-98-89     In order to evaluate more effectively the incidence of      VA agreed and implementation is in the early stages. VA
Mar. 3, 1998   tumors and other Gulf War illnesses over time, the           and DOD have indicated they are working to improve
               Secretaries of Defense and Veterans Affairs should           health information, including the transfer of data between
               continue to strengthen existing monitoring capabilities.     the departments and the development of a joint
               Attention should be directed toward improving the utility    computerized patient record system.
               of existing data systems and particularly in developing
               cost-effective ways to make data systems more
               compatible with one another so that information from
               different sources can be linked. In addition, steps should
               be taken to address the data quality concerns identified
               in this report.




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                                              Department of Veterans Affairs




Table Xl11.4: VA Faces Major Challenges in Managing Non-Health-Care Benefits Programs

In managing its non-health-care benefits programs, VA needs to overcome a variety of difficulties. Currently, VA cannot ensure that its
veterans' disability compensation benefits are appropriately and equitably distributed because its disability rating schedule does not
accurately reflect veterans' economic losses from their disabilities. Also VA is compensating veterans for diseases that are neither
caused nor aggravated by military service. In addition, claims-processing in VA's compensation and pension program continues to be
slow, and the vocational rehabilitation program has yielded limited results. Moreover, the data that VA will use to measure
compensation and pension program performance are questionable. Finally, VA has inadequate control and accountability over the
direct loan and loan sales activities within its Housing Credit Assistance program.
There are 33 open recommendations related to the management of various VA non-health-care benefits, including the administration of
disability and pension benefits, vocational rehabilitation benefits, and direct loan and loan sale activities. Some of the most important
open recommendations are discussed in the table below.
GAO Contacts

Stephen P. Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division
(202) 512-7101
backhuss.hehs@gao.gov
Gloria L. Jarmon, Director
 Health, Education and Human Services Accounting and
   Financial Management
Accounting and Information Management Division
(202) 512-4476
jarmong.aimd@gao.gov




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GAO product Recommendation                                                   Agency action
AIMD-99-24   (The following seven recommendations relate to                  VA generally agreed with these recommendations and is
Mar. 24,1999 management of loan assets and cash flows associated             in the early stages of implementing them. VA officials told
             with VA's direct loans):                                        us that the specifications for the direct loan database are
                                                                             complete and hardware is being ordered, but they could
              The Secretary of Veterans Affairs should direct the Under      not tell us when the project will be completed. While VA
              Secretary for Benefits to:                                     did not agree with our recommendation regarding
                                                                             independent verification of data to validate servicer
              1. Provide a basis for monitoring and controlling loan and     reimbursement requests, VA officials told us that they are
              property assets and any related cash flows managed by          making changes. For example, VA has initiated an effort to
              contractors by establishing a database for direct loans,       record the tax information into the PMS. Such information
              through the development of a complete inventory of all         can be used to verify amounts before reimbursing the
              loans originated. The database should be similar to the        servicer. VA officials told us that a centralized database for
              information systems in place at major owners of housing        recording assumed loans is a feature of the new Loan
              loan portfolios.                                               Servicing and Claims system. VA is beginning to reconcile
                                                                             all loan records in the contractor's database to VA's
              2. Implement processes to allow immediate improvements         general ledger. In addition, VA is updating its policies and
              in VA's capability to monitor contractor servicing of direct   procedures related to the outsourcing of portfolio loan
              loans and disbursements related to VA-owned properties.        servicing and is conducting training for all regional offices.
              These improvements would include periodically obtaining        VA agreed with the first part of our recommendation
              tax bills for VA-owned properties from independent             pertaining to cash management practices but has not
              sources and comparing this information to that in its          begun to implement it.The issue of recoupment of interest
              Property Management System (PMS) to validate servicer          is under review by VA's legal counsel. VA has not yet
              requests for reimbursement of expenses.                        established suspense accounts or a control account in
                                                                             VA's general ledger to record collections that cannot be
              3. Develop a centralized database to immediately record        allocated to specific accounts.
              loans in the process of being assumed by VA in order to
              establish timely and thorough visibility over those assets
              and to facilitate transferring such information to the
              contract servicer expeditiously.
              4. Reconcile all loan records in the contractor's database
              to VA's general ledger on a monthly basis, by the end of
              the following month.

              5. Continue to develop standardized policies and
              procedures intended to ensure completeness,
              consistency, and accuracy of data obtained and recorded
              concerning individual loans and properties. Implement
              quality assurance steps to ensure the accuracy of these
              data.

              6. Adhere to federal legislation and guidance regarding
              cash management. Servicers should be instructed to remit
              all proceeds to VA's Treasury accounts daily upon receipt.
              Further, VA should recoup the total interest on Season's
              Mortgage Group's (SMG) account balances from the
              inception of VA's contract with Computer Data Systems,
              Incorporated/SMG.
              7. Establish suspense accounts, and a control account in
              VA's general ledger, to record all collections that cannot
              be allocated to specific loan accounts.
                                                                                                                               (continued)


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                                            Department of Veterans Affairs




GAO product   Recommendation                                                  Agency action
              (The following five recommendations relate to operational       VA concurred with recommendation 1 but has not
              and accounting control over loan sales):                        implemented it. VA concurred with recommendations 2
                                                                              through 5 and is in the early stages of implementation. VA
              The Secretary of Veterans Affairs should direct the Under       contracted with an independent public accountant to
              Secretary for Benefits to:
                                                                         *correct accounting and budget reporting deficiencies to
              1. Establish adequate separation of duties and supervision comply with the Federal Credit Reform Act of 1990 and
              over VA staff involved in all loan sale operational and    OMB Circular A-1i 1,
              administrative activities.
                                                                         *develop new procedures for promptly providing
              2. Disclose cash flows related to loan sales and related   servicers' and trustee/custodian data to VA offices
              guarantees in VA's budget records, calculate and report    responsible for managing the loan program,
              the cost of direct loans and loan guarantees, and budget
              for the subsidy and administrative cost of the loans and   *reconstruct the historical data on loan sale activities,
              guarantees in accordance with the Federal Credit Reform
              Act of 1990 and Office of Management and Budget (OMB) *design a system for recording loan sale transactions and
              Circular A-11.                                             all subsequent activity, and

              3. Develop and implement procedures to ensure that              *calculate and report the cost of direct loans and loan
              relevant data from servicers and the trustee/custodian are      guarantees.
              provided promptly to VA offices responsible for managing
              or recording trust activities and transactions.
              4. Complete the reconstruction of the historical data for the
              loan sales, the resulting trust, and financing for the
              required reserve accounts for each trust.
              5. Record loan sale transactions and all subsequent
              activity associated with the trusts consistent with federal
              accounting standards and any related guidance. This
              would include: (1) making appropriate accounting
              adjustments to accurately reflect the results of prior years'
              transactions and (2) recording all financial transactions
              relating to trust activities, including those associated with
              the original sale, the establishment of the reserves,
              drawdowns to satisfy the federal guarantee, subsidy
              reestimates, and replenishments to satisfy trust agreement
              provisions as well as revenue from trust investments and
              assets.
              The Secretary of Veterans Affairs should direct the Under VA concurred but has not begun to implement this
              Secretary for Benefits to establish and implement             recommendation.
              adequate monitoring activities of outsourced activities to
              include both direct loans and VA property servicing as
              well as activities associated with the loan sales. These
              efforts should be designed to comply with OMB Circular
              A-129 and be stringent, given the risks inherent in the
              existing servicing environment.
                                                                                                                     (continued)




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                                             Appendix X]:II
                                             Department of Veterans Affairs




GAO product Recommendation                                                    Agency action
HRD-92-100    The Secretary of Veterans Affairs should implement the          VA generally agreed with the recommendation. Action
Sept. 4, 1992 requirements of the 1980 amendments related to finding          appears to be in its early stages. During fiscal year 1998,
              and maintaining suitable employment for disabled                a task force was created to study policies and procedures
              veterans.                                                       related to contracting for vocational rehabilitation services.
                                                                              That task force completed its work and submitted a report
                                                                              to the Director of the Vocational Rehabilitation and
                                                                              Counseling (VR&C) Service. The recommendations of the
                                                                              task force will be used to shape future contracting policy
                                                                              and procedures.
               The Secretary of Veterans Affairs should take the lead in      VA generally agreed with this recommendation and
               developing more effective working arrangements with the        implementation is well along. VR&C partnered with Labor
               Department of Labor (DOL), state rehabilitation agencies,      to expand and improve employment services for veterans
               and private contractors for providing job placement            who are job-ready. A cooperative training program for
               services to disabled veterans.                                 VR&C and Labor staffs was conducted in July 1998, and
                                                                              additional joint training programs are planned for fiscal
                                                                              years 1999 and 2000. Both national and state cooperative
                                                                              agreements have been developed with state rehabilitation
                                                                              agencies for obtaining employment assistance from state
                                                                              agencies when a veteran's case indicates that such help
                                                                              would be profitable. VA also has plans to include staffs of
                                                                              state agencies in the joint training activities in fiscal years
                                                                               1999 and 2000. VA field staffs have worked closely with
                                                                              private contractors that provided employment services to
                                                                              2,500 job-ready veterans during the first three quarters of
                                                                              fiscal year 1998. The cost-benefit analysis on contracted
                                                                              services will provide VA information to plan future policy
                                                                              and procedures in contracting for services.
               The Secretary of Veterans Affairs should                       VA generally agreed with this recommendation and
                                                                              implementation is well along-in the final stages. The
               -determine why so many disabled veterans drop out              Office of the Assistant Secretary for Policy and Planning
               before successfully completing the vocational                  will perform an attrition study that will be completed
               rehabilitation program, and                                    sometime in fiscal year 1999. The results of this study will
                                                                              allow VA to
               -take action aimed at reducing the number of dropouts
               and increasing the numbers who are successfully                -develop specific actions to increase the number of
               rehabilitated.                                                 program participants who are successfully rehabilitated
                                                                              and
                                                                              -generate policies and procedures and other input that
                                                                              will be developed and distributed to field staff.
               The Secretary of Veterans Affairs should review the            VA generally agreed with this recommendation and
               performance standards established for the vocational           implementation is well along-in the final stages. Using the
               rehabilitation program and determine whether services to       four-member VR&C Field Advisory Committee as
               the veterans can be improved by establishing a realistic       consultants, the review will be accomplished, and revised
               performance measurement system, such as                        performance standards will be developed. In Veterans
               benchmarking, that clearly focuses on the program's            Benefits Administration's (VBA) work to develop a
               objectives and continually measures progress toward            balanced scorecard, VR&C developed performance
               achieving them.                                                measures and goals. According to a VA official, although
                                                                              the balanced scorecard is being refined, it has brought
                                                                              VBA a long way toward establishing a performance
                                                                              measurement system that focuses on key operational
                                                                              areas.
                                                                                                                                (continued)


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                                             Department of Veterans Affairs




GAO product     Recommendation                                                Agency action
HEHS-99-35      To further strengthen VA's ability to identify error-prone    VA agreed in principle with this recommendation and
Mar. 1, 1999    cases, ensure the integrity of accuracy rate-related          implementation is in the early stages. VA will regularly
                performance data reported under the Government                review the STAR process and assess it for strengths and
                Performance and Results Act (Results Act), and keep the       weaknesses. VA will seek areas where more detailed,
                Congress informed about VA's progress in addressing           stratified, or different data would be helpful. In addition, VA
                challenges that must be met in order to improve accuracy,     will conduct an examination pilot project to address
                the Secretary of Veterans Affairs should direct the Under     examination quality and process issues. VA plans to
                Secretary for Benefits to revise Systematic Technical         review more than 60,000 examinations for quality. These
               Accuracy Review (STAR) to collect more detailed medical        reviews will include both VA-provided and contract
                characteristics data, such as the human body systems,         examinations. Information about specific examination
               the specific impairments, and the specific deficiencies in     categories within each body system group and data
                medical evidence involved in those disability claims which    based on specialist versus nonspecialist examinations are
                are found to be in error, so that VA can identify and focus   being collected. A customer survey will also be conducted.
               corrective actions on specific problems that Regional
               Office adjudicators have in correctly evaluating certain
               types of medical conditions or in correctly determining
               whether medical evidence is adequate to make a decision.
               To further strengthen VA's ability to identify error-prone     VA disagreed with and has not acted on this
                cases, ensure the integrity of accuracy rate-related          recommendation. Instead, the Compensation & Pension
                performance data reported under the Results Act, and          Service gathered a dedicated staff to conduct sufficient
                keep the Congress informed about VA's progress in             reviews to establish statistically valid accuracy rates for
                addressing challenges that must be met in order to            each Service Delivery Network (SDN) and the nation, with
                improve accuracy, the Secretary of Veterans Affairs should    local reviews required to assess individual regional office
               direct the Under Secretary for Benefits to implement a         accuracy. Unless VA provides adequate separation of
               claims-processing accuracy review function that meets the      duties and organizational independence for accuracy
               government's internal control standard on separation of        reviewers, potential questions about the integrity of
               duties and the program performance audit standard on           accuracy-related performance data will likely persist.
               organizational independence.
               To further strengthen VA's ability to identify error-prone     VA agreed with this recommendation and implementation
               cases, ensure the integrity of accuracy rate-related           is in the final stages. VA indicated that in its annual Results
               performance data reported under the Results Act, and           Act report, it would include the implementation status of
               keep the Congress informed about VA's progress in              the balanced scorecard approach, including an
               addressing challenges that must be met inorder to              assessment of its effectiveness in establishing clear and
               improve accuracy, the Secretary of Veterans Affairs should     fair accountability at all organizational levels. In addition,
               direct the Under Secretary for Benefits to inform the          VA is creating a variety of training packages to ensure
               Congress on VA's progress in the annual Results Act            more effective, standardized training of decisionmakers
               reports by (1) establishing stricter employee accountability   and clerical support staff. The packages will be used to
               for the achievement of performance goals and (2)               train new hires and merit promotees when they enter a
               developing more effective training for claims adjudicators.    new position and to improve skills for journeymen
                                                                              employees. Results will be measured by
                                                                              criterion-referenced performance tests developed with
                                                                              validity and reliability assessments. Furthermore, VA has
                                                                              begun to develop a certification-of-skills package that will
                                                                              require employees to demonstrate acquisition of skills and
                                                                              competencies before developmental and career ladder
                                                                              promotions.




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                                              Department of Veterans Affairs




Table Xl11.5: VA Needs to Manage Its Information Systems More Effectively

We have recently reported on several key issues related to VA information systems. First, in July 1998 we reported that VA had not yet
institutionalized a disciplined process for selecting, controlling, and evaluating information technology investments as required by the
Clinger-Cohen Act. Second, we reported in September 1998 that VA lacked adequate control and oversight of access to its computer
systems. Third, we reported in April 1999 that VA has progressed in addressing year 2000 challenges but still has a number of
associated issues to address.

Twenty-two recommendations related to this major management challenge are open. We discuss below five recommendations on VA's
implementation of Clinger-Cohen Act requirements, two recommendations related to the development of year 2000 contingency plans,
and five recommendations on VA's need to implement comprehensive departmentwide computer security planning and management.
Ten other recommendations related to VA's computer security management are not separately addressed. Finally, VA has acted on six
recommendations related to its year 2000 readiness and they are being closed.

GAO Contact
Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov


GAO product        Recommendation                                              Agency action
AIMD-98-154        The'Secretary of Veterans Affairs should direct the         VA agreed with this recommendation and, although
July 7, 1998       Assistant Secretary for Policy and Planning to develop a    action has not yet begun, it intends to implement the
                   departmentwide strategy that details how VA will            recommendation.
                   reengineer its business processes, including identifying
                   and prioritizing process improvement projects, and
                   delineating their interrelationships.
                   To fulfill the requirements of the Clinger-Cohen Act and    VA agreed with this recommendation and implementation
                   other information technology legislative reforms, the       appears to be well along. VA stated that it has published
                   Secretary of Veterans Affairs should direct VA's Chief      a departmentwide technology architecture, which
                   Information Officer (CIO) to develop a detailed             includes a Technical Reference Model, a Standards
                   implementation plan with milestones for completing an       Profile, and a Security Standards Profile. According to
                   integrated, departmentwide information technology           VA, this fulfills the Clinger-Cohen requirement for
                   architecture.                                               technology architecture. We have requested
                                                                               documentation of VA's architecture and will review it
                                                                               when we receive it.
                                                                                                                               (continued)




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                                          Department of Veterans Affairs




GAO product     Recommendation                                               Agency action
                To fulfill the requirements of the Clinger-Cohen Act and     VA agreed with this recommendation and implementation
                other information technology legislative reforms, the        appears to be well along. VA stated that it has developed
                Secretary of Veterans Affairs should direct VA's CIO to      and implemented a capital investment process for
                fully implement a disciplined process for selecting          information technology that takes into account a variety
                information technology investments in which all decisions    of factors, including estimated project costs, benefits,
                are based upon complete and current project                  projected scheduling issues, and risks. This process,
                information, including estimated project costs, expected     according to VA, is fully integrated with its overall capital
                mission-related benefits, projected schedule, and risks.     investment review process and includes two steps. First,
                                                                             a chartered panel tasked by VA's CIO Council evaluates
                                                                             information technology projects against one another for
                                                                             merit and sufficiency. Second, the projects that pass this
                                                                             screening are then submitted for review and evaluation in
                                                                             the VA's capital investment review process. We have
                                                                             requested documentation of this process and will review
                                                                             it when we receive it.
                To fulfill the requirements of the Clinger-Cohen Act and     VA agreed with this recommendation and implementation
                other information technology legislative reforms, the        appears to be well along. VA stated that it is conducting
                Secretary of Veterans Affairs should direct VA's CIO to      in-process reviews and has developed a schedule for
                conduct formal in-process reviews at key milestones in a     in-process reviews for fiscal year 1999. In addition, VA
                project's life cycle, including comparing actual estimated    plans to implement an Internet-based, automated,
                project costs, benefits, schedule, and risks, and provide     project management tool to assist in collecting
                these results, as well as the results of periodic project    project-level information for use during these reviews.
                status reviews performed by VA components, to                After this project management tool is implemented,
                decisionmakers who will determine whether to continue,        quarterly reviews of information technology projects will
                accelerate, or terminate information technology projects.     be made, the results of which will be reported to the CIO
                                                                              Council. VA expects that its efforts to improve the
                                                                              qualitative reviews of information technology initiatives
                                                                             will evolve over the next 6 to 12 months.
                To fulfill the requirements of the Clinger-Cohen Act and     VA agreed with this recommendation and implementation
                other information technology legislative reforms, the         appears to be well along. VA stated that it is conducting
                Secretary of Veterans Affairs should direct VA's CIO to       postimplementation reviews and has developed a
                initiate postimplementation reviews for information           schedule of postimplementation reviews for fiscal year
                technology projects within 12 months of implementation,       1999. In addition, VA plans to implement an
                to compare completed project cost, schedule,                  Internet-based, automated, project management tool to
                performance, and mission improvement outcomes with            assist in collecting project-level information for use
                original estimates, and provide the results of these          during these reviews. The results of postimplementation
                reviews to decisionmakers so that improvements can be         reviews will be provided to the CIO Council quarterly. VA
                made to VA's information technology investment process.       expects that its efforts to improve the qualitative reviews
                                                                             of information technology initiatives will evolve over the
                                                                              next 6 to 12 months.
AIMD-98-237     To reduce the likelihood of delayed or interrupted            VA agreed with this recommendation and implementation
Aug. 21, 1998    benefits, the Secretary of Veterans Affairs, with support    appears to be well along. In January 1999, VBA
                 from VBA's CIO, should ensure that VBA establishes a         completed a draft of its Business Continuity and
                 milestone for the contractor-developed business              Contingency Plan, which contains an assessment of how
                 continuity framework and subsequent critical dates for       VBA's major business areas will be affected if the year
                 the preparation of business continuity and contingency       2000 problem is not corrected in time as well as
                 plans for each core business process or program service      contingencies to invoke should mission-critical systems
                 so that mission-critical functions affecting benefits        or infrastructure fail. The plan provides a high-level
                 delivery can be carried out if software applications and     overview and describes resources, staff roles,
                 commercial off-the-shelf (COTS) products fail. These         procedures, and timetables for its implementation. VBA's
                 plans should provide a description of resources, staff       regional offices are expected to have similar plans in
                roles, procedures, and timetables needed for                  place by June 30, 1999.
                implementation.
                                                                                                                              (continued)

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                                             Department; of Veterans Affairs




GAO product      Recommendation                                                  Agency action
                 The Secretary of Veterans Affairs, with support from the        VA agreed with this recommendation and implementation
                 VHA CIO, should ensure the rapid development of                 appears to be well along. In March 1999, VHA issued a
                 business continuity and contingency plans for each              Patient-Focused Year 2000 Contingency Planning
                 medical facility so that mission-critical functions affecting   Guidebook to its medical facilities. The guidebook
                 patient care can be carried out if software applications,        discusses how the facilities should develop contingency
                 COTS products, or facility-related systems and                   plans for each major hospital function-such as
                 equipment do not function properly. These plans should           radiology, laboratory, and pharmacy-as well as each
                 address issues, such as when to invoke alternative              major support function-such as telecommunications,
                 solutions or options if the manufacturer, who VHA               facility systems, medical devices, and automated
                 depends on for compliance information, does not submit          information systems. The medical centers were tasked
                 any. The plans also should describe resources, staff            with developing business continuity and contingency
                 roles, procedures, and timetables needed for                    plans. According to VHA's Year 2000 Project Manager,
                 implementation.                                                 the majority of medical centers have completed their
                                                                                 plans.
AIMD-98-175      The Secretary of Veterans Affairs should develop and            VA agreed with this recommendation and implementation
Sept. 23, 1998   implement a comprehensive departmentwide computer               appears to be well along. In February 1999, VA's CIO
                 security planning and management program. Included in           approved the formation of a project team to develop
                 this program should be procedures for ensuring that             requirements for establishing a departmentwide
                 risks are assessed periodically to ensure that controls         computer security planning and management program,
                 are appropriate.                                                which will include a risk management cycle. The project
                                                                                 team is scheduled to complete the requirements phase
                                                                                 by June 30, 1999.
                 The Secretary of Veterans Affairs should develop and            VA agreed with this recommendation and implementation
                 implement a comprehensive departmentwide computer               appears to be well along. In February 1999, VA's CIO
                 security planning and management program. Included in           approved the formation of a project team to develop
                 this program should be procedures for ensuring that             requirements for establishing a departmentwide
                 security policies and procedures comprehensively                computer security planning and management program to
                 address all aspects of VA's interconnected environment.         include provisions for establishing and maintaining
                                                                                 comprehensive security policies and procedures. The
                                                                                 project team is scheduled to complete the requirements
                                                                                 phase by June 30, 1999.
                 The Secretary of Veterans Affairs should direct the VA          VA agreed with this recommendation and implementation
                 CIO to work in conjunction with the V13A and VHA ClOs           appears to be well along. In October 1998, VA's CIO
                 and the facility directors, as appropriate, to establish        directed the security components at VA, VBA, and VHA
                 controls to ensure that disaster recovery plans are             to work with facility directors to review their disaster
                 comprehensive, current, fully tested, and maintained at         recovery plans and develop plans to improve them as
                 the off-site storage facility.                                  needed. In developing corrective action plans, emphasis
                                                                                 is to be given to ensuring that all plans are complete,
                                                                                 current, and fully tested, and to maintain copies off-site.
                 The Secretary of Veterans Affairs should direct the VA          VA agreed with this recommendation and implementation
                 CIO to review and assess computer control weaknesses            appears to be well along. VA's CIO and the two major
                 that have been identified throughout the department and         administrative ClOs have been working together with the
                 establish a process to ensure that these weaknesses are         VA's Inspector General to determine previously identified
                 being addressed,                                                computer security weaknesses and have developed a
                                                                                 plan to address them. However, this plan does not
                                                                                 include other computer security weaknesses cited
                                                                                 through internal reviews performed at various VA
                                                                                 facilities. VA has not yet decided on including these
                                                                                 other security weaknesses in its security action plan. No
                                                                                 time period has been established to complete this effort.
                                                                                                                                    (continued)




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GAO product   Recommendation                                             Agency action
              The Secretary of Veterans Affairs should direct the VA     VA agreed with this recommendation and implementation
              CIO to work in conjunction with the VBA and VHA ClOs       appears to be well along. In October 1998, VA's CIO
              and the facility directors, as appropriate, to separate    directed the security components at VA, VBA, and VHA
              incompatible computer responsibilities, such as system     to work with facility directors to ensure adherence to the
              programming and security administration, and ensure        segregation of duties principles and to develop plans to
              that access controls enforce segregation of duties         improve this area if needed. Corrective actions are to
              principles.                                                include efforts to provide adequate oversight to ensure
                                                                         the enforcement of these principles. VA security staff are
                                                                         still working to complete this effort. No time period has
                                                                         been established for completion.




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Appendix XIV

Agency for International Development



Table XIV.1: USAID Has Not Implemented a Comprehensive Information Management System

The U.S. Agency for International Development's (USAID) effort to develop and implement its New Management System (NMS), which
is meant to consolidate primary information systems into a single integrated network, has not been fully successful. The NMS is only
partially functional and has created problems in agency operations. In 1996, USAID deployed the system without sufficient testing, and
subsequent difficulties forced USAID to suspend its use for most administrative functions in overseas missions in April 1997. Despite an
expenditure of at least $92 million as of January 1999, the NMS is not likely to be fully operational and compliant with federal accounting
standards for several more years. Until then, USAID will not have accurate information to ensure that its operations and programs are
being managed in a cost-effective and efficient manner.
While there currently are no open recommendations related to USAID's NMS, we will continue to monitor USAID's reform efforts. These
efforts include steps being taken by USAID to correct the deficiencies of the NMS, including appointing a Chief Information Officer, who
has instituted more disciplined processes for planning, developing, and implementing information technology. An NMS program
manager has also been appointed to handle deficiencies and implement remedial actions within the NMS. However, USAID does not
anticipate fully implementing the NMS across the agency for several more years.
GAO Contact

Benjamin F. Nelson, Director
International Relations and Trade Issues
National Security and International Affairs Division
(202) 512-4128
nelsonb.nsiad@gao.gov




                                                Page 144   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                            Appendix XIV
                                            Agency for International Development




Table XIV.2: USAID's Actions Not Adequate to Resolve the Year 2000 Problem

Although OMB recognizes that USAID is making progress in achieving Year 2000 compliance for its seven mission-critical systems,
USAID has not completed implementation for four of these systems. System remediation and implementation are scheduled to be
complete in July 1999. While we currently have no open recommendations related to USAID's Year 2000 problem, we will continue to
monitor its remediation efforts.

GAO Contact

Jack L. Brock, Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov




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                                               Appendix X:[V
                                               Agency for International Development




Table XIV.3: USAID Remains Vulnerable to Weak Financial Management

USAID continues to face financial management challenges. The lack of an integrated financial management system and the existence
of material control weaknesses hinder the agency's ability to routinely produce reliable and timely financial management information or
to prepare auditable financial statements. As we discussed in our January 1999 Performance and Accountability Series report, USAID's
Office of Inspector General (OIG) was unable to express an opinion on the agency's financial statements for fiscal years 1996 and
1997. In March 1999, the OIG also disclaimed an opinion on the fiscal year 1998 financial statements. The process of preparing
financial statements and subjecting them to independent audit is the first step in generating, on a routine basis, complete, reliable, and
timely financial information for decisionmakers at all levels. Without financial integration and strong controls, USAID's systems do not
comply with federal accounting and management requirements.

Our work leading us to identify financial management as a major management challenge at USAID was done as part of our overall audit
of the consolidated financial statements of the federal government. USAID is in the process of correcting some of its deficiencies in this
area in part by contracting a number of its financial management functions to organizations outside the agency, including a private
bank and another U.S. government agency. In addition, lJSAID submitted a plan to the Office of Management and Budget outlining
these and other steps to address some of its financial management deficiencies over the next 5 years. While there currently are no
open recommendations related to USAID's financial management, we will continue to monitor the agency's efforts to overcome its
long-standing problems in this area.
GAO Contact

Lisa G. Jacobson, Director
Defense Financial Audits
Accounting and Information Management Division
(202) 512-9095
jacobsonl.aimd@gao.gov




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Appendix XV

Environmental Protection Agency



Table XV.1: EPA Needs More Comprehensive Information on the Environment

The Environmental Protection Agency (EPA) needs more comprehensive information on the condition of the environment to effectively
set priorities, assess progress in achieving its goals and objectives, and report on its accomplishments in a credible way. Although EPA
and the states collect a considerable amount of data, the agency's data systems are often outmoded and difficult to integrate in order
to produce comprehensive environmental information. Important gaps inthe data also exist.

Seven open recommendations are related to this management challenge. Collectively, these recommendations focus on the need for
EPA to develop agencywide policies and procedures for disseminating information, find ways to make data more accessible to the
public, develop agencywide information systems architecture, and improve information resources planning and quality assurance
activities.

We are currently performing a broad review that focuses on the key information management issues facing EPA. This review will identify
the major information problems related to data inaccuracies, fragmentation, and gaps; the initiatives that EPA has implemented to
address these problems; and the role of EPA's new central information office, which the agency plans to create to manage its
information requirements. A report on this review will be issued in September 1999.
GAO Contact

Peter F. Guerrero, Director
Environmental Protection Issues
Resources, Community, and Economic Development Division
(202) 512-4907
guerrerop.rced@gao.gov


GAO product        Recommendation                                                Agency action
RCED-98-245        To help ensure that EPA provides the public with data         EPA agrees with this recommendation, and
Sept. 24, 1998     that are accurate, complete, and relevant to its needs,       implementation is in the early stages. In October 1998,
                   the Administrator of EPA should supplement the                the Administrator of EPA announced a reorganization of
                   agency's existing policies on information resources           the agency's information management activities into a
                   management by developing agencywide policies and              single office. According to EPA officials, the new office
                   procedures that specify guidance and standards for           will be responsible for, among other things, developing
                   program offices involved in designing, developing, and        and implementing standards to improve the quality of
                   implementing information dissemination projects. Such         EPA's information. EPA has not yet begun to develop the
                   guidance and standards should address obtaining               policies and procedures we recommended. However, in
                   stakeholders' involvement in the projects' design and         responding to our report in January 1999, EPA stated
                   development, testing for and correcting errors inthe         that given the expected implementation dates for the
                   data, and communicating contextual information on the         new office, EPA "should be developing and issuing
                   data's uses and limitations.                                 standards such as those called for in the
                                                                                recommendation by April 2000."
                   Given the potential usefulness of the Emergency              EPA agrees with this recommendation to evaluate
                   Planning and Community Right-to-Know Act of 1986             options for making the data more accessible.
                   section 312 data to the public, the Administrator of EPA      Implementation has not yet begun, but EPA intends to
                   should evaluate options to make the data more                implement the recommendation. However, EPA told us
                   accessible and implement the most cost-effective option that it would not do so until the agency's new information
                   that provides availability on a regional and national basis. office is established in September 1999 and the office
                   In implementing the project, EPA should use the policies has time to develop agencywide policies and
                   and standards for dissemination projects that we have        procedures. Once these policies and procedures are
                   recommended.                                                 established, the agency will evaluate options with
                                                                                respect to the broader availability of data.
                                                                                                                                 (continued)


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                                            Appendix XV
                                            Environmental Protection Agency




GAO product      Recommendation                                               Agency action
IMTEC-92-14     To strengthen EPA's overall ability to accomplish its         EPA agreed with this recommendation and is inthe early
April 2, 1992   cross-media mission, the Administrator of EPA should          stages of implementing it. EPA has issued a framework
                complete the agency's cross-media information                 for developing an information systems architecture.
                 resources management (IRM) strategy by developing an
                agencywide information systems architecture that
                explains the structure of and communications among the
                agency's information resources that are needed to
                achieve its single- and cross-media missions.
AIMD-94-25      To assist the Office of Pollution Prevention and Toxics       EPA agreed with this recommendation and is well along
Nov. 17, 1993   (OPPT) in its efforts to provide efficient and effective      in implementing it. The agency reported that it has
                collection, dissemination, and use of Toxic Substances        produced an information management strategy and
                Control Act (TSCA) data as required by the act, the           initiated a systems architecture study. On the basis of
                Administrator of EPA should direct the Assistant              this study, EPA plans to select a target systems
                Administrator for the Office of Prevention, Pesticides, and   architecture by August 1999.
                Toxic Substances to (1) complete a strategic IRM plan
                based on an analysis of internal users' functional and
                informational needs, (2) evaluate alternative system
                architectures for meeting those needs, and (3) select a
                target architecture to guide the development and
                evolution of OPPT systems.
                To assist OPPT in its efforts to provide efficient and        EPA agreed with this recommendation and is well along
                effective collection, dissemination, and use of TSCA data     in implementing it. EPA officials stated that they have
                as required by the act, the Administrator of EPA should       limited major system development efforts until the
                limit new OPPT system development efforts until the IRM       agency selects a target architecture.
                plan and target systems architecture are completed.
AIMD-95-167     As a part of the recently initiated reassessment of           EPA agreed with this recommendation and is well along
Aug. 22, 1995   Resource Conservation Recovery Act (RCRA) information         in implementing it. The agency reported that this
                needs, the Administrator of EPA should require the            recommendation will be addressed through its Waste
                Assistant Administrator of the Office of Solid Waste and      Information Needs (WIN) initiative. EPA reported that a
                Emergency Response to develop clear data definitions          key principle in its WIN information strategy plan is to
                for all EPA-required data.                                    develop consistent data definitions. EPA plans to achieve
                                                                              this by specifying the data for which nationally consistent
                                                                              definitions must be established and developing those
                                                                              definitions as it completes five Program Area Analyses
                                                                              (PAA). EPA estimates that definitions associated with two
                                                                              PAAs will be completed by the end of 1999.
                As a part of the recently initiated reassessment of RCRA      EPA agreed with this recommendation and is well along
                information needs, the Administrator of EPA should            in implementing it. The agency reported that this
                require the Assistant Administrator of the Office of Solid    recommendation would be addressed through its WIN
                Waste and Emergency Response to develop a data                initiative. Data quality standards are to be developed as
                quality assurance program that establishes data               EPA conducts its five PAAs.
                reliability standards and methods to ensure data
                reliability.




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                                               Appendix XV
                                               Environmental Protection Agency




Table XV.2: EPA Faces Challenges in Reinventing Environmental Regulations

Although the current regulatory system for environmental protection has its successes, it has proven to be costly and, at times,
inflexible. Noting that complex future environmental challenges will require fundamentally different regulatory approaches, EPA has
initiated a variety of actions aimed at reinventing environmental regulation. For example, in March 1995, EPA announced a series of
high-priority and significant actions to improve the current regulatory system and lay the groundwork for a new system of environmental
protection. However, as we concluded in July 1997, the agency faces several challenges that need to be addressed to create a climate
in which regulatory reinvention can succeed. These broad issues include helping its rank-and-file employees understand and support
changes to the current regulatory system, obtaining consensus among the agency's varied stakeholders on what these changes should
be, and effectively evaluating the success of many of its regulatory reform initiatives. EPA has initiated actions to deal with these issues.
We do not currently have any open recommendations in this area. However, reinvention, by its nature, is an ongoing process that will
require continual improvement by the agency. It will also require continued involvement by GAO, the Congress, and other stakeholders
in the environmental regulatory process.
GAO Contact

Peter F.Guerrero, Director
Environmental Protection Issues
Resources, Community, and Economic Development Division
(202) 512-4907
guerrerop.rced@gao.gov




                                                Page 149    GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                                Appendix XV
                                                Environmental Protection Agency




Table XV.3: A Good Working Relationship With the States Has Been a Long-Term Challenge for EPA

As authorized by environmental statutes, EPA has delegated the responsibility for the day-to-day implementation of most federal
environmental programs to the states. The working relationship between EPA and the states has often been characterized by
fundamental disagreements over such issues as EPA's and state environmental agencies' respective roles, appropriate priorities
among state environmental programs, and the appropriate degree of federal oversight. For example, our May 1998 report on EPA's and
states' efforts to focus state enforcement programs on achieving environmental results cited unanimous concerns among the 10 states
contacted that different EPA offices convey an inconsistent message on the appropriate use of compliance tools. Oregon officials, for
example, cited "internal battles" between EPA's Office of Enforcement and Compliance Assurance and the agency's program offices,
noting that the offices tend to have different initiatives and priorities, which has led to confusion for both the EPA regions and the states.
Officials in Colorado, Massachusetts, and Pennsylvania cited similar problems. EPA and the states are pursuing an initiative with the
potential to address many of these concerns. The National Environmental Performance Partnership System (NEPPS), which was
established by EPA and state leaders in May 1995, is intended to focus the efforts of EPA and state regulators more on results and less
on administrative management and oversight. The details of how NEPPS will work are still evolving as the system is currently being
implemented and refined. We recently did a review of NEPPS and issued a report on June 21, 1999 (GAO/RCED-99-171). We
recommended that EPA work with senior-level state officials to initiate a joint evaluation process that would identify the key issues which
are impeding further NEPPS progress and that would develop mutually agreed upon remedies for the identified issues. Because the
report only recently was issued, we have not included a detailed discussion of our recommendation and EPA's actions in the below
discussion.
There are two open recommendations related to EPA's working relationship with the states, which were made in our May 1988 report.

GAO Contact

Peter F.Guerrero, Director
Environmental Protection Issues
Resources, Community, and Economic Development Division
(202) 512-4907
guerrerop.rced@gao.gov




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                                          Appendix XV
                                          Environmental Protection Agency




GAO product    Recommendation                                               Agency action
RCED-98-113    The Administrator of EPA should ensure that the              EPA agreed with our recommendation and
May 27, 1998   development of the Office of Enforcement and                 implementation is well along. The agency has formed
               Compliance Assurance's (OECA) Performance Profile            working groups of headquarters and regional staff to
               stays on the schedule outlined in its National               address key problems and has obtained contractor
               Performance Measures Strategy, the profile will be           support to provide expertise and statistical analysis. The
               developed collaboratively with interested states in a        agency has also initiated efforts to engage interested
               manner that helps these states meet their own                states in pilot projects so that their efforts to improve
               performance measurement needs, and that OECA                 performance measurement benefit the states as well.
               periodically disseminates information (as it becomes         Specifically, in March 1999, the office indicated that it
               available) among the states on effective practices in        was making funds available for cooperative agreements
               measuring enforcement programs' results.                     to enhance states' abilities to engage in outcome-based
                                                                            compliance measurement.
               The Administrator of EPA should promote greater              EPA agreed with our recommendation. EPA plans to
               consistency in what has been a fragmented and                implement this recommendation, but has not yet begun
               inconsistent message by different EPA offices on the         to do so. Senior management in EPA's OECA met with
               appropriate balance in EPA's enforcement program             staff in all 10 EPA regions and with senior managers to
               between enforcement and compliance assurance                 stress internal coordination as a priority. The office also
               activities. In doing so, the Administrator should build on   added outcome-oriented measures to its FY 2000 Annual
               EPA's recent efforts to address this issue by ensuring       Performance Plan. Specifically, whereas measures in the
               that (1) the expectations set for OECA, program offices,     previous plan had focused exclusively on outputs, such
               and other EPA headquarters and regional offices are          as the numbers of inspections conducted and
               consistent with the agency's policy calling for an           enforcement actions taken, the latest plan also includes
               appropriate mix of tools to achieve compliance,              the use of statistically valid noncompliance rates for
               (2) different EPA offices with enforcement responsibility    selected environmental problems or selected sectors (an
               more systematically coordinate their negotiations with,      outcome measure).
               and oversight of, state agencies on enforcement-related
               matters, and (3) the enforcement-related provisions of
               EPA's Performance Plan, prepared pursuant to the
               Government Performance and Results Act, focus on
               outcomes in a manner consistent with that of the core
               performance measures developed under EPA's National
               Performance Measures Strategy, the National
               Environmental Performance Partnership System, and the
               agency's other results-oriented initiatives.




                                          Page 151    GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix XVI

National Aeronautics and Space
Administration


Table XVI.1: Controlling International Space Station Costs

The National Aeronautics and Space Administration (NASA) and its international partners-Japan, Canada, the European Space
Agency, and Russia-are building a space station as a permanently orbiting laboratory to conduct research on materials and life
sciences, to observe the Earth, and to provide for commercial opportunities under nearly weightless conditions. In December 1998, the
first two parts of the space station were successfully coupled in orbit.
In May 1998, we reported that the life cycle cost estimate to develop, operate, and decommission the station had increased by about
$2 billion since 1995, to about $95.6 billion. Regarding the prime contractor's performance, its estimate of a cost overrun at completion
has increased several times; it stands at $986 million as of April 1999. Since May 1998, the program has continued to face cost and
schedule problems and the effects of funding shortfalls in Russia. Delivery of a key Russian part of the station-the Service
Module-has slipped by 8 months. On April 29, 1999, we testified before the Congress that uncertainty regarding Russian involvement
will require NASA to continually plan and implement contingency initiatives. Although NASA has a contingency plan to mitigate Russian
nonperformance, it does not have an approved overall contingency plan to address issues such as late delivery or loss of critical
hardware. The agency acknowledges that the lack of an overall contingency plan makes the program more risky.
Until recently, two recommendations have been open related to this major management challenge. However, we now consider these
recommendations as having been addressed by the Congress, and consequently, we will close them during the current fiscal year. In
September 1997, we stated that the Congress may wish to consider reviewing the space station program focusing on reaching
agreement with the executive branch on the future scope and cost level of the program. We also stated that if the Congress decides to
continue the space station program, it may wish to consider reestablishing funding limitations that include firm criteria for measuring
compliance. The House Science Committee conducted a hearing on June 24, 1998, on the direction of the space station program. This
hearing provided a forum for a thorough review of the space station program. A bill introduced in the 1 05 th Congress authorizing
NASA's appropriations for fiscal years 1998 and 1999 included funding cap language. However, the 1 05th Congress did not pass
NASA's authorization bill.

GAO Contact
Louis J. Rodrigues, Director
Defense Acquisitions Issues
National Security and International Affairs Division
(202) 512-4841
rodriguesx.nsiad@gao.gov




                                                Page 152   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                               Appendix XVI
                                               National Aeronautics and Space
                                               Administration




Table XVI.2: Following Through on Aerospace Test Facilities Cooperative Efforts

NASA is cooperating with the Department of Defense (DOD) to address issues of mutual interest regarding investment in, and use of,
aerospace test facilities. In April 1996, NASA and DOD agreed to form joint working groups for six types of major test facilities,
including wind tunnels and rocket engine test stands. In September 1996, the Congress added to this effort by requiring NASA and
DOD to prepare a joint plan on rocket propulsion test facilities.
In March 1998, we reported that the promise of closer NASA/DOD cooperation remains largely unfulfilled because NASA and DOD
(1) had not convened most test facility working groups, (2) have competed with each other to test engines for new rockets, and (3) had
not prepared a congressionally required joint plan on rocket propulsion test facilities. We also reported that although NASA and DOD
had agreed to go beyond cooperative working groups in aeronautics and jointly manage their aeronautical test facilities, they had not
yet reached agreement on key aspects of a new management organization to be called the National Aeronautical Test Alliance.
Ultimately, if this alliance is successful, the adoption of joint management by other working groups could be considered.
There is one open recommendation related to this major management challenge that would require congressional action. In a March
1998 report, we stated that congressional intent, as reflected in the statutory requirement for joint planning of rocket propulsion test
facilities, is not being fully met by NASA and DOD. We further stated that the Congress may wish to consider reaffirming its intention in
this regard and extend its joint planning requirement to other types of aerospace test facilities, including a requirement that NASA and
DOD assess the possible extension of joint management of aeronautical facilities to other types of test facilities, especially rocket
propulsion. Since our report, a joint meeting of most working groups was held in May 1998. An inaugural meeting of the working group
for wind tunnels was held in August 1998. NASA and DOD did not prepare the legislatively mandated joint plan to coordinate rocket
propulsion test facilities. However, according to a NASA official, the rocket propulsion test working group is performing joint planning
and preparing guidance to ensure the best use of each agency's test facilities. On May 24, 1999, a NASA official said that NASA and
DOD expect to establish the new National Aeronautical Test Alliance in the summer of 1999.
GAO Contact

Louis J. Rodrigues, Director
Defense Acquisitions Issues
National Security and International Affairs Division
(202) 512-4841
rodriguesx.nsiad@gao.gov




                                                Page 153   GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
Appendix XVII

Nuclear Regulatory Commission



Table XVII.1: NRC Lacks Assurance of Nuclear Plants' Safety

The Nuclear Regulatory Commission (NRC) lacks assurance that its current regulatory approach ensures safety. NRC assumes that
 plants are safe if they operate as designed and follow NRC's regulations. However, NRC's regulations and other guidance do not
define, for either a licensee or the public, the conditions necessary for a plant's safety; therefore, determining safety is subjective.
Furthermore, six major reviews of NRC since 1979 have pointed out that NRC's regulatory approach is punitive rather than results
oriented, licensees are forced to expend considerable resources on complying with regulations that may have limited impact on safety,
and NRC's focus on achieving compliance with paperwork requirements can divert attention from safety activities. NRC and the nuclear
utility industry have embarked on initiatives to address long-standing regulatory issues in a way that would ensure that NRC carries out
its regulatory mission more effectively and efficiently. These initiatives are designed to improve safety decision-making through the
analysis of risk, use agency resources more efficiently, and reduce unnecessary burdens on utilities.

GAO Contact

Victor S. Rezendes, Director
Energy, Resources, and Sciences Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov


GAO product        Recommendation                                              Agency action
RCED-97-145        To enhance licensees' accountability, the Commissioners     NRC agreed with and is well along in implementing this
May 30, 1997       should direct NRC staff to develop strategies to act more   recommendation. For example, NRC has changed its
                   aggressively on safety deficiencies when they are           inspection program by requiring more frequent reviews
                   discovered. To achieve this goal, NRC should require        of licensees' corrective action programs. NRC plans to
                   inspection reports to fully document for all plants the     periodically review a risk-informed sample of NRC and
                   status of the licensees' actions to address identified      licensee identified issues to ensure that appropriate
                   problems under NRC's corrective action requirements,        actions have been taken. NRC is also developing
                   including timetables for the completion of corrective       guidance for the appropriate place in which to document
                   actions and how NRC will respond to nonconformance          commitments (i.e., technical specifications, safety
                   with planned actions.                                       analysis report, or some other document). However, NRC
                                                                               did not agree that it should document and track
                                                                               corrective actions for all violations in inspection reports.
                                                                               In addition, NRC did not address how it would establish
                                                                               timetables for licensees to complete the corrective
                                                                               actions or how it would respond to nonconformance with
                                                                               such actions.




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                                              Appendix XVII
                                              Nuclear Regulatory Commission




Table XVII.2: NRC Is Slow to Require Corrective Action

NRC's oversight has been inadequate and slow. Although NRC's indicators show that conditions throughout the nuclear energy
industry have generally improved, they also show that several plants are chronically poor performers. At three nuclear plants with
long-standing safety problems that we reviewed, NRC did not take aggressive action to ensure that the utilities corrected the problems.
The problems ranged from failures of equipment to work properly when tested to weaknesses in licensees' conduct of maintenance
programs. NRC's programs are designed to ensure that utilities comply with its regulations, take prompt actions to correct any
deficiencies found, and operate their plants safely. NRC gives utilities considerable latitude to fix their problems. This strategy works
well when the utilities' managers place priority on maintaining a strong safety culture. We found, however, that this condition was not
present in the three plants we examined and that the problems worsened when NRC did not hold utilities accountable for fixing them.
As a result of NRC's inaction, the conditions at the plants worsened, reducing safety margins. NRC is examining its inspection,
enforcement, and plant performance assessment programs, in part, to address these issues. These efforts show a commitment by NRC
to strengthen its oversight.
GAO Contact
Victor S. Rezendes, Director
Energy, Resources, and Sciences Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov




                                              Page 155    GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                             Appendix XVII
                                             Nuclear Regulatory Commission




GAO product Recommendation                                                   Agency action
RCED-97-145 To enhance licensees' accountability, the Commissioners           NRC agreed with and is well along in implementing this
May 30, 1997 should direct NRC staff to develop strategies to more            recommendation. For example, NRC developed a process
             aggressively act on safety deficiencies when they are           to identify and track licensees' commitments and to verify
             discovered. To achieve this goal, NRC should require            their implementation. NRC is developing guidance for the
             inspection reports to fully document for all plants the         appropriate place in which to document commitments
             status of the licensees' actions to address; identified         (i.e., technical specifications, safety analysis report, or
             problems under NRC's corrective action requirements,             some other reports). NRC plans to have its inspectors
             including timetables for the completion of corrective           sample the more risk-significant actions and ensure that
             actions and how NRC will respond to nonconformance               licensees have taken appropriate corrective actions on a
             with planned actions.                                           schedule commensurate with the risk and safety
                                                                             significance of the issue. However, NRC did not agree that
                                                                              it should document and track corrective actions in
                                                                              inspection reports for all violations. In addition, NRC did
                                                                              not address how it would establish timetables for licensees
                                                                             to complete the corrective actions or how it would respond
                                                                             to nonconformance with such actions.
               To enhance licensees' accountability, the Commissioners        NRC agreed with and is well along in implementing this
               should direct NRC staff to develop strategies to act more      recommendation. However, the method in which NRC
               aggressively on safety deficiencies when they are             expects to do so differs from that envisioned in our report.
               discovered. To achieve this goal, NRC should make              In January 1999, NRC issued for public comment a new
               licensees' responsiveness to identified problems a major      safety inspection, assessment, and enforcement process
               feature of the information provided to the participants of    that includes seven cornerstones (i.e., initiating events,
               the Senior Management Meetings, including how NRC will        mitigation systems, barrier integrity, emergency
               respond if problems go uncorrected. For example, NRC           preparedness, and public protection, occupational
               should describe the range of sanctions that it will impose     protection, and physical protection). For each cornerstone,
               on the licensees on the basis of the potential seriousness     NRC will identify the desired results, important attributes
               of their failure to resolve problems within a predetermined   that contribute to achieving the desired result, areas to be
               time. These sanctions should range from assessing fines       measured, and various options for measuring the
               to involuntary shutdown of the plant.                          identified areas. As proposed, the process would use
                                                                              performance indicators; inspection results; utilities'
                                                                             self-assessments; and clearly defined objective thresholds
                                                                             for making decisions. The process is anchored in a
                                                                              number of principles, including the belief that a certain
                                                                              level of safety performance could warrant decreased NRC
                                                                             oversight and performance thresholds should be set high
                                                                             enough to permit NRC to arrest declining performance.
                                                                             The new process sets out the actions that NRC will take
                                                                             when plant performance declines. NRC expects to begin
                                                                             pilot testing the process at 13 plants in June 1999 and to
                                                                             implement the program during fiscal year 2000.




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                                                Appendix XVII
                                                Nuclear Regulatory Commission




Table XVI1.3: NRC's Culture and Organizational Structure Impede Effective Actions

NRC's culture and organizational structure have made the process of addressing concerns with the agency's regulatory approach slow
and ineffective. At the heart of safe plant operations is NRC's holding utilities accountable for fixing problems more promptly and
addressing management issues more directly. The need to ensure that NRC's regulatory programs work as effectively as possible is
extremely important, particularly in light of major changes taking place in the electric utility industry. Yet changing NRC's culture will not
be easy. Six major reviews conducted since 1979 found chronic and significant problems with NRC's regulatory culture. The various
reviews have concluded that NRC's organizational structure, inadequate management control, and inability to oversee itself have
impeded its effectiveness. NRC has taken various actions to improve its organization and culture. For example, in 1996 NRC began to
strengthen its skills in certain key processes and to identify opportunities for efficiency and effectiveness. Despite its efforts, in June
1998, NRC's Office of the Inspector General reported that staff were uncertain and confused about the new directions in regulatory
practices and challenges facing the agency. According to staff, NRC recognizes the need to communicate effectively with its staff and
other stakeholders and is developing plans to do so.

GAO Contact
Victor S. Rezendes, Director
Energy, Resources, and Sciences Issues
Resources, Community, and Economic Development Division
(202) 512-3841
rezendesv.rced@gao.gov




                                                Page 157     GAO/OCG-99-28 Open Recommendations: Performance and Accountability Series
                                            Appendix XVII
                                            Nuclear Regulatory Commission




GAO product Recommendation                                                  Agency action
RCED-99-95    To help ensure the safe operation of plants and the           NRC agreed with and is in the process of implementing
Mar. 19, 1999 continued protection of public health and safety in a         this recommendation. NRC staff is developing a document
              competitive environment, the Commissioners of NRC             that describes the agency's strategy for risk-informed
              should direct the staff to develop a comprehensive            regulation. The document will also describe the activities
              strategy that includes, but is not limited to, objectives,    that NRC wants to risk-inform and the actions, schedule,
              goals, activities, and time frames for the transition to      and resources needed to do so. One activity will specify
              risk-informed regulation; specifies how the commission        the manner in which NRC will ensure the free exchange of
              expects to define the scope and implementation'of             operational information. In addition, NRC expects to
              risk-informed regulation; and identifies the manner in        restructure its PRA Implementation Plan to more clearly
              which it expects to continue the free exchange of             link its risk-informed activities to its strategy.
              operational information necessary to improve the quality
              and reliability of risk assessments.
RCED-97-145 To enhance licensees' accountability, the Commissioners         Although NRC agrees that licensees' management
May 30, 1997 should direct NRC staff to develop strategies to more          performance is instrumental to safe plant operations, NRC
              aggressively act on safety deficiencies when they are         disagreed with-and does not expect to implement-this
              discovered. To achieve this goal, NRC should require that     recommendation. In response to the recommendation and
              the assessment of management's competency and                 as part of its effort to improve the senior management
              performance be a mandatory component of NRC's                 process, NRC investigated the development of tools to
              inspection process.                                           assess management performance. In March 1998, the
                                                                            staff provided five options to the commission for assessing
                                                                            the performance and competency of licensee
                                                                            management. On the basis of that information, the
                                                                            commission directed the staff to continue the practice of
                                                                            inferring licensee management performance from
                                                                            inspections, routine assessments, and event follow-up.
                                                                            The commission also eliminated resources directed
                                                                            toward developing a systematic method of inferring
                                                                            management performance and did not approve the use of
                                                                            fiscal year 1999 and 2000 resources for this purpose.




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Appendix XVIII

Social Security Administration



Table XVIII.1: Long-Standing Supplemental Security Income Issues Require More Active Management and Oversight

Since the Social Security Administration (SSA) assumed responsibility in 1974 for the Supplemental Security Income (SSI) program,
SSA officials have been challenged to serve the diverse needs of program recipients while still protecting the program's overall
financial health and integrity. Long-standing challenges-such as program abuses and mismanagement, increasing SSI overpayments,
and SSA's inability to recover outstanding SSI debt-have continued, contributing to recent congressional criticism of SSA's ability to
effectively manage SSI and ensure program integrity. We recently reported that SSI difficulties are attributable to two underlying
causes: an organizational culture that places greater priority on processing and paying claims than on controlling program
expenditures and a management approach characterized by SSA's reluctance to fulfill its policy development and planning role in
advance of major program crises. Several recommendations dealing with SSI, a component of this management challenge, remain
open and were included in a product issued on April 12, 1999, on open recommendations related to high-risk areas (GAO/HR-99-2R).
There are no other open recommendations related to this management challenge.
GAO Contact

Cynthia M. Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov




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                                               Appendix XVIII
                                               Social Security Administration




Table XVI11.2: Disability Programs Need Redesigning and More Focus on Return to Work

The Social Security Administration's (SSA's) complex process for determining whether an individual qualifies for a disability benefit-the
disability claims process-is plagued by a number of long-standing weaknesses. In reviewing SSA's efforts to redesign its disability
claims process, we have found that SSA has been unable to keep its activities on schedule or demonstrate that proposed changes will
significantly improve its claims process. In addition, SSA has placed little priority on helping eligible disability program claimants move
off the disability rolls and return to work.

There are 12 open recommendations related to this management challenge. In addition to the nine recommendations discussed in the
following table, there are three recommendations addressing the need for SSA to redesign its disability claims process. However, these
recommendations have been superseded, for the most part, by the more recent recommendations presented below.

GAO Contact

Cynthia M. Fagnoni, Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division
(202) 512-7215
fagnonic.hehs@gao.gov


GAO product        Recommendation                                                Agency action
HEHS-97-28         Because the Short Term Disability Plan (STDP) has             SSA agreed and determined that STDP has enhanced its
Nov. 21, 1996      shown that it can help reduce the backlog of appealed         ability to manage its caseload of hearing requests.
                   cases, and if SSA determines that accurate decisions are      Therefore, SSA extended one of the plan's key initiatives,
                   being made, the Commissioner should extend the plan           the senior attorney position, through April 2000. With
                   until SSA institutes a permanent process that ensures the     these actions, SSA was well along with implementing the
                   timely and expeditious disposition of appeals.                recommendation; however, SSA has recently changed its
                                                                                 plan and now does not expect to extend the senior
                                                                                 attorney initiative beyond the end of fiscal year 1999.
                                                                                Thus, SSA still has a significant backlog of appealed
                                                                                 cases and has not yet instituted a permanent process
                                                                                that ensures the timely and expeditious disposition of
                                                                                 cases.
HEHS-97-102        To better ensure that adjudicators review the same            SSA agreed and is in the early stages of implementing
Aug. 12,1997       record, SSA should increase the number of cases it           this recommendation. Hearing offices are returning
                   plans to return to Disability Determination Services          selected appealed cases to the DDSs for consideration
                   (DDSs) when new evidence is submitted on appeal.             of new evidence introduced at the administrative law
                                                                                judge (ALJ) hearing. However, SSA has been unable to
                                                                                 meet its goal of remanding 100,000 cases per year. SSA
                                                                                 changed its remand criteria in September 1998 to assist
                                                                                ALJs with processing older cases; it plans to pursue its
                                                                                 remanding goals through other process unification
                                                                                initiatives.
                                                                                                                                 (continued)




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                                            Social Security Administration




GAO product     Recommendation                                              Agency action
HEHS-99-25      As SSA proceeds with further exploration and testing of     SSA agreed that process unification and quality
Mar. 12, 1999   redesign initiatives and considers implementation           assurance initiatives should be pursued and is in the
                options, it should further focus resources on those         early stages of implementing a number of process
                initiatives, such as process unification, quality assurance,unification initiatives. The agency also agreed that
                and computer support systems, that offer the greatest       systems technologies must continue to be an important
                potential for achieving SSA's most critical objectives.     focus of resources. SSA noted that significant
                                                                            improvements to the disability claims process could and
                                                                            should be made in advance of full implementation of
                                                                            these systems technologies. Thus, SSA has not begun to
                                                                            implement this recommendation but plans to do so.
                As SSA proceeds with further exploration and testing of SSA agreed that testing promising concepts in an
                redesign initiatives and considers implementation           integrated fashion at a few sites is appropriate. However,
                options, it should test promising concepts at a few sites SSA's recent decision to introduce several prototype
                in an integrated fashion.                                   redesign concepts at a large number of sites appears
                                                                            inconsistent with our recommendation. Therefore, SSA
                                                                             has not begun to implement this recommendation and
                                                                            does not intend to do so.
                As SSA proceeds with further exploration and testing of SSA agreed, believing that its testing of the DCM
                redesign initiatives and considers implementation            initiative is in accordance with our recommendation.
                options, it should establish key supports and explore        However, we are concerned that SSA continues to test
                feasible alternatives before committing significant          this initiative on a large scale without having explored the
                resources toward testing of specific initiatives, such as    position's potential efficacy through limited pilot testing
                the disability claims manager (DCM).                         or adequately exploring feasible alternatives. In its
                                                                             comments, SSA noted that it would consider the time
                                                                             lines and effect of critical supports before launching
                                                                             future tests. Therefore, SSA has not begun to implement
                                                                             this recommendation and does not intend to do so.
                As SSA proceeds with further exploration     and testing of  SSA disagreed that a more comprehensive set of
                redesign initiatives and considers implementation            performance goals and measures is needed to monitor
                options, it should develop a comprehensive set of            and evaluate its disability claims process and has not
                performance goals and measures to assess and monitor begun action on the recommendation. However, in its
                changes in the disability claims process.                    fiscal year 2000 annual performance plan, SSA indicates
                                                                             that it plans to develop additional goals and performance
                                                                             measures.
                As SSA proceeds further with exploration and testing of SSA agreed that appropriate and supportive quality
                redesign initiatives and considers implementation            assurance processes must be developed as part of any
                options, it should ensure that quality assurance              successful implementation strategy. However, SSA
                processes that both monitor and promote the quality of        disagreed that a redesigned quality assurance system is
                disability decisions are in place.                            needed or can reasonably be developed in advance of
                                                                             the adjudicative process whose quality it is designed to
                                                                              ensure. Thus, SSA has deferred substantive action on
                                                                              quality assurance redesign until the adjudicative process
                                                                              has been adequately defined. The agency expects to
                                                                              move forward with quality assurance redesign sometime
                                                                              in 1999.
                                                                                                                               (continued)




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                                             Social Security Administration




GAO product     Recommendation                                            Agency action
HEHS-96-133     The Commissioner of SSA should develop a                  SSA agreed and action is in the early stages. SSA has
July 11, 1996   comprehensive return-to-work strategy that integrates, as contracted with more than 400 public and private
                                                                          vocational rehabilitation (VR) providers, trained state VR
                appropriate, earlier intervention, earlier identification, and
                provision of necessary return-to-work assistance for      agency staff on SSA work incentives and reimbursement
                applicants and beneficiaries, and changes in the          procedures, positioned itself to contract with state
                structure of cash and medical benefits. The               agencies to research ways to improve service integration
                Commissioner should also identify legislative changes     for beneficiaries attempting to return to work, and
                needed to implement such a program.                       proposed to demonstrate the effectiveness of vouchers
                                                                          for beneficiaries to obtain VR services from providers
HEHS-96-62      The Commissioner of SSA should take immediate action reimbursed on an outcome basis. Effective July 1999,
Apr. 24, 1996   to place a greater priority on return-to-work, including  SSA will increase the substantial gainful activity level for
                designing more effective means to more accurately         beneficiaries, thereby allowing them to have higher
                identify and expand beneficiaries' work capacities and    earned incomes before leaving the disabilityrolls. These
                better implementing existing return-to-work mechanisms. steps indicate a greater agency priority on return-to-work
                As part of this effort, the Commissioner should develop a and illustrate that the agency has begun responding to
                legislative package for those areas in which SSA does     our recommendations. However, SSA's efforts would
                not currently have authority to enact change in order to  have greater effect if they were integrated into a unified
                position SSA to expeditiously redirect its emphasis on    and consistent return-to-work strategy and cash and
                return-to-work.                                           medical benefits were structured to give beneficiaries
                                                                          better impetus to attempt work. Assistance should also
                                                                          be provided earlier in the process. It remains incumbent
                                                                          on SSA to identify legislative action necessary to support
                                                                          these changes.




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                                               Social Security Administration




Table XV11.3: New Technology Required to Cope With Future Workload Demands

To cope with increased workload demands-caused, in part, by the forthcoming retirement of the baby boom generation-SSA is
counting on its effective use of technology to allow the agency to serve the increasing numbers of applicants and beneficiaries with
fewer staff. However, concerns have been raised about the implementation of new computer equipment under the Intelligent
Workstation/Local Area Network (IWS/LAN) initiative, which is intended to play a major role in SSA's redesigned work processes and in
better serving a larger beneficiary population. SSA also needs to address deficiencies in its information systems' internal controls. The
SSA fiscal year 1998 financial statement audit noted continuing deficiencies in the design and operation of information systems' internal
controls. These deficiencies raise concerns regarding information protection, continuity of operations, and separation of duties. Specific
information protection weaknesses were noted in SSA's local area network, distributed systems, and mainframe computer security. The
audit also noted that SSA remains vulnerable should a near-term disaster occur because of deficiencies in components of its disaster
recovery plan and related testing of that plan. In addition, the audit noted instances of insufficient separation of duties, particularly in
the data operations and customer service staff position.

The seven open recommendations regarding SSA's effective use of technology to serve its beneficiaries are discussed in the following
table. While there are no open GAO recommendations related to information systems' internal controls, an audit by an independent
public accounting firm (which can be found in the Social Security Accountability Report for fiscal year 1998) identified deficiencies that
need to be addressed to ensure appropriate information security. GAO continues to monitor SSA's progress in addressing its internal
control deficiencies as part of GAO's efforts on the governmentwide consolidated financial statement audit.
GAO Contacts

Joel C. Willemssen, Director
Civil Agencies Information Systems
Accounting and Information Management Division
(202) 512-6408
willemssenj.aimd@gao.gov
Gloria L. Jarmon, Director
Health, Education, and Human Services Accounting and Financial Management
Accounting and Information Management Division
(202) 512-4476
jarmong.aimd@gao.gov


GAO product         Recommendation                                              Agency action
AIMD-94-143         The Commissioner of Social Security should better define    SSA agreed with, and is in its early stages of
Sept. 19, 1994      IWS/LAN requirements by linking the agency's planning       implementing this recommendation. SSA began pilot
                    and reengineering efforts to its automation initiatives,    tests on its Reengineered Disability System (RDS) in
                    including implementing fully functioning pilots to assess   August 1997 to assess the ability of IWS/LAN to support
                    the ability of IWS/LAN to support reengineered              reengineered processes. However, SSA encountered
                    processes at locations offering the most potential          performance problems during its RDS pilot tests and
                    benefits.                                                   tasked a contractor to evaluate the RDS software
                                                                                development project. Based on the contractor's
                                                                                evaluation, SSA expected to select an option for
                                                                                proceeding to achieve the objectives of the RDS project.
                                                                                As of mid-May 1999, however, Systems officials stated
                                                                                that the contractor's report had not been finalized and
                                                                                delivered to SSA.
                                                                                                                                 (continued)




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                                            Social Security Administration




GAO product     Recommendation                                                   Agency action
                The Commissioner of Social Security should better define         SSA agreed with, and is well along in implementing this
                IWS/LAN requirements by linking the agency's planning            recommendation. SSA initiated steps to work with state
                and reengineering efforts to its automation initiatives.         Disability Determination Services (DDS) officials in
                This includes working closely with states in reassessing         determining systems requirements to support the
                systems requirements for state Disability Determination          reengineered disability process. DDS officials have been
                Services to ensure that they support SSA business and            included in SSA's Disability Process Reengineering pilot
                service delivery needs and state requirements.                   efforts, including those for the RDS software system. SSA
                                                                                 encountered performance problems during RDS pilot
                                                                                 tests and Systems officials have indicated that additional
                                                                                 workstations will be needed to satisfy all of SSA's and the
                                                                                 DDS' requirements. As a result, the CIO has requested
                                                                                 that SSA reassess its needs and identify the total number
                                                                                 of workstations required to support the IWS/LAN
                                                                                 initiative. SSA must continue working with state DDSs in
                                                                                 assessing systems requirements to ensure that they
                                                                                 support SSA business needs and state requirements.
                The Commissioner of Social Security should estimate              SSA agreed with, and is in its early stages of
                and annually report the total cost and benefits of process       implementing this recommendation. SSA is enhancing its
                and systems changes. This should include establishing            investment review process to assess major investments
                measurable cost and performance goals that will provide          at key decision points to ensure the proposed initiatives
                SSA and its oversight bodies with adequate information           are well founded, are redirected or terminated when
                to assess the reasonableness of SSA goals and progress           necessary, are achieved within the approved cost and
                during testing and implementation of l\NS/LAN.                   schedule, and provide expected benefits. SSA also
                                                                                 initiated pilot tests to assess the ability of IWS/LAN to
                                                                                 support reengineered processes. SSA encountered
                                                                                  performance problems during RDS pilot tests, and
                                                                                 tasked a contractor to evaluate RDS. Based on the
                                                                                 contractor's evaluation, SSA intended to select an option
                                                                                 for proceeding to achieve the objectives of the RDS
                                                                                 project including the definition of an operational testing
                                                                                 and cost-benefit evaluation strategy that ensured RDS
                                                                                 releases were operationally sound and cost-beneficial
                                                                                  before further IWS/LAN investments were made.
                                                                                  However, as of mid-May 1999, Systems officials stated
                                                                                 that the contractor's report had not been finalized and
                                                                                  delivered to SSA.
AIMD-98-39      To strengthen SSA's software process improvement                  SSA agreed with, and is well along in implementing this
Jan. 28, 1998   program, as part of its recently initiated pilot projects, the    recommendation. SSA established a Software
                Commissioner of Social Security should direct the                 Measurement Team to work closely with its Software
                Deputy Commissioner for Systems to develop and                    Process Improvement Team to ensure that proper
                implement plans that explicitly articulate SSA's strategy         measures and goals are put into place for its software
                and time frames for (1) developing baseline data, (2)             process improvement effort. In July 1998, SSA
                identifying specific, measurable goals for its                    completed a plan that delineates tasks and activities
                improvement initiative, and (3) monitoring and measuring          needed to develop its baseline data and specific
                progress in achieving these goals.                                measurable goals for its software process improvement
                                                                                  initiative. SSA has now implemented the plan to collect
                                                                                  baseline data, focusing initially on five new projects,
                                                                                  including three Capability Maturity Model pilot projects.
                                                                                  However, SSA's goal is to collect baseline data from
                                                                                  about 30 projects in total, and it needs to reflect the
                                                                                  additional projects in its plan. SSA has stated that it will
                                                                                  revise the plan to reflect the increased scope of this
                                                                                  effort.
                                                                                                                                    (continued)


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                                           Social Security Administration




GAO product     Recommendation                                              Agency action
AIMD-98-136     To strengthen SSA's management of its IWS/LAN               SSA agreed with, and is well along in implementing this
June 19, 1998   investment, the Commissioner of Social Security should      recommendation. In August 1998, SSA reported that it
                direct the Deputy Commissioner for Systems to               had determined the number of workstations required to
                immediately assess the adequacy of workstations             implement IWS/LAN. Since then, Systems officials have
                specified in the IWS/LAN contract, and based on this        indicated that additional workstations beyond the 56,500
                assessment, determine (1) the number and capacity of        specified in the contract will be required to meet all of
                workstations required to support the IWS/LAN initiative,    SSA's and the state DDS' needs. In April 1999, the CIO
                and (2) its impact on the IWS/LAN implementation            requested that SSA conduct a study to reassess its
                schedule.                                                   needs and identify the total number of workstations
                                                                            required to support the IWS/LAN initiative. SSA plans to
                                                                            use the results of this study to revise the IWS/LAN
                                                                            workyear savings and return on investment beyond the
                                                                            initial 56,500 workstations. SSA is also in the process of
                                                                            awarding an IWS/LAN follow-on contract to complete the
                                                                            national IWS/LAN rollout. Once the contract is awarded,
                                                                            SSA plans to update its IWS/LAN implementation
                                                                            schedule.
                To strengthen SSA's management of its IWS/LAN               SSA agreed with, and is well along in implementing this
                investment, the Commissioner of Social Security should      recommendation. SSA continues to work with the DDSs
                direct the Deputy Commissioner for Systems to work          to identify and resolve IWS/LAN network management
                closely with state DDSs to promptly identify and resolve    concerns at DDS offices and establish a strategy for
                network management concerns and establish a strategy        ensuring the compliance of those states relying on
                for ensuring the compliance of those states relying on      IWS/LAN hardware for Year 2000 corrections. As of
                IWS/LAN hardware for year 2000 corrections.                 March 1999, SSA has only provided one DDS an
                                                                            alternative capability for increased network control and
                                                                            the agency has not yet resolved other network control
                                                                            and management issues throughout the DDS community.
                                                                            In addition, while SSA has identified equipment in each
                                                                            DDS that is not Year 2000 compliant, it must still
                                                                            complete its strategy for addressing these needs
                                                                            promptly.
                                                                                                                             (continued)




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                                        Social Secumity Administration




GAO product   Recommendation                                             Agency action
              To strengthen SSA's management of its IWS/LAN              SSA agreed with this recommendation. However, it has
              investment, the Commissioner of Social Security should     not yet begun implementing the recommendation,
              direct the Deputy Commissioner for Systems to establish    although it intends to do so. SSA agrees that
              a formal oversight process for measuring the actual        performance goals and measures should be prescribed
              performance of each phase of IWS/LAN, including            to determine how well information technology
              identifying the impact that each IWS/LAN phase has on      investments support its programs and provide expected
              mission performance and conducting                         results. SSA stated that it is determining whether
              post-implementation reviews of the IWS/LAN project         expected benefits are being realized from IWS/LAN
              once it is fully implemented.                              installations through in-process and post-implementation
                                                                         assessments. SSA further stated that its planning and
                                                                         budgeting process ensures that it regularly assesses the
                                                                         impact of IWS/LAN on agency productivity and mission
                                                                         performance. However, SSA could not provide specific
                                                                          information to show how its planning and budgeting
                                                                         process and data on workyear savings resulting from
                                                                          IWS/LAN installations were being used to assess the
                                                                         project's actual contributions to improved productivity
                                                                         and mission performance. In addition, SSA has not yet
                                                                         scheduled a post-implementation review for Phase I of
                                                                         the IWS/LAN initiative, although, in April 1999, the CIO
                                                                          requested that an IWS/LAN investment review be
                                                                          performed. To ensure that its investments are sound, it is
                                                                         crucial that SSA develop measures to assess
                                                                         mission-related benefits, and use them in making project
                                                                         decisions.




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Appendix XIX

U.S. Postal Service


Table XIX.1: Long-Standing Challenges in Labor-Management Relations

The Postal Service has been hampered by long-standing challenges in labor-management relations that, in many instances, resulted
from autocratic management styles; adversarial attitudes of employees, unions, and management; and an inappropriate and
inadequate performance management system. Labor-management relations have been exemplified by numerous unresolved employee
grievances; disagreements that have impaired initiatives to improve the efficiency of postal operations, such as disagreements over
implementation of postal automation between the Service and the labor union that represents city letter carriers; and frequent reliance
upon third-party arbitration to settle contract negotiations. Although achieving consensus does not come quickly or easily, we believe
that continued labor-management problems may lead to escalating workplace difficulties and hamper efforts to achieve desired
improvements.

We have one open recommendation in this area. In 1994, we recommended that the parties establish a framework agreement that
would outline common goals and strategies to set the stage for improving the postal work environment. The Service accepted our
recommendations.

GAO Contact
Bernard L. Ungar, Director
Government Business Operations Issues
General Government Division
(202) 512-8387
ungarb.ggd@gao.gov




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                                              U.S. Postal Service




GAO product      Recommendation                                            Agency action
GGD-94-          The Postal Service and its unions and management          The Postal Service agreed with this recommendation. The
201A&B           associations should develop a long-term framework         Postal Service and its unions and management
Sept. 29, 1994   agreement to change the workplace climate in mail         associations have initiated efforts to improve
                 processing and delivery functions. The agreement should   labor-management relations, but a framework agreement
                 provide for the following principles and                  between the Service and all of its unions and employee
                 values:                                                   organizations has not been achieved. The Service has
                                                                           recently negotiated contract agreements with two major
                 (1)structure the work to give employees greater           unions, while contract negotiation with a third union is in
                 responsibility and accountability for results;            binding arbitration. In addition, the Service has held a
                 (2)provide incentives to encourage all employees to share series of summit meetings involving the major unions and
                 in the tasks necessary for success and to allow for       management associations under the auspices of the
                 recognition and reward for corporate and unit             Federal Mediation and Conciliation Service to address
                 performance;                                              concerns raised in our report. The Service reports that it
                 (3)train employees and hold them accountable, with a      has reached individual agreements with its unions that
                 focus on customer service;                                focus on reducing conflict in the workplace, identifying
                 (4)select and train supervisors to be facilitators/       and eliminating root causes of labor disputes, and
                 counselors who will have the skills, experience, and      improving the effectiveness of grievance arbitration
                 interest to treat employees with respect, motivate them,  procedures.
                 recognize and reward them, promote teamwork, and deal
                 with poor performers; and                                 The Service also reported that it has several initiatives
                 (5)counsel, train, and if necessary, remove supervisors   under way to improve the quality of postal management.
                 and employees who show a lack of commitment to            Some of these initiatives include training programs to
                 work-unit goals, values, and principles.                  enhance the skills and abilities of mid-level managers and
                                                                           first-line supervisors.
                                                                           The Service states that it intends to build on its efforts to
                                                                           improve labor-management relations and that it eventually
                                                                           may be possible to pursue a framework agreement
                                                                           encompassing all organizations once there is increased
                                                                           trust among the parties.




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                                              U.S. Postal Service




Table XIX.2: The Continuing Challenge of Containing Postal Costs and Protecting Revenues

The Postal Service's continued success will depend heavily on controlling operating costs, strengthening internal controls, and
ensuring the integrity of its services. The Service has recognized that it needs aggressive cost management and strong and effective
internal operating controls to avoid unwarranted costs. However, in recent years we have reported on needed actions to control costs
and protect postal revenues in several areas, such as its automation program to improve the efficiency of letter carriers; its program to
receive postage due from bulk business mail that has accounted for almost one-half of the Service's annual revenue; and its efforts to
prevent and detect fraudulent use of mechanical postage meters. We have also reported that the Service has experienced cost
overruns on a number of major capital projects and failed to realize some opportunities to achieve savings. This situation has been
exacerbated by weak internal controls. Finally, as competition grows and places billions of dollars of revenues at risk, the Service has
said that it will be challenged to find new revenue sources. Recent efforts by the Postal Service to introduce new products and services
have frequently met opposition and caused controversy as competitors and others have questioned whether it is appropriate for the
Service, a government entity with monopoly protection, to provide nontraditional products and services, such as retail merchandise and
new electronic initiatives, in competition with the private sector.

While we do not currently have any open recommendations in this area, we plan to continuously monitor the Service's operational and
financial performance and assess the need for further improvements. As competition increases, we also have continuing concerns
about the Service's ability to control costs and improve productivity while meeting its goals to maintain and improve service.
GAO Contact

Bernard L. Ungar, Director
Government Business Operations Issues
General Government Division
(202) 512-8387
ungarb.ggd@gao.gov




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                                              U.S. Postal Service




Table XIX.3: The Need to Implement Reliable Indicators of Postal Performance


Major mailers and the public remain concerned about obtaining quality service at reasonable prices. The Postal Service has committed
to developing reliable indicators of postal performance corresponding to each of its performance goals so that it can track progress
and meet the requirements of the Government Performance and Results Act of 1993 (the Results Act). Recently, the Service has
reported improvements in delivery service, including its record of on-time delivery of overnight First-Class Mail, which improved from 82
percent in fiscal year 1994 to 93 percent in fiscal year 1998. However, we have reported on concerns that past achievements in
overnight mail delivery came at the expense of other mail service, such as 2-day and 3-day letter mail, advertising mail, and
periodicals. In addition, the Service has acknowledged that some employees sought to undermine the integrity of performance data on
overnight mail delivery.

The Postal Service continues to progress in this area, and we do not currently have any open recommendations. During our reviews of
the Postal Service's fiscal year 1999 and fiscal year 2000 .annual performance plans, the Service acknowledged that it had not
completed its process of developing measurable indicators for all of its performance goals. The Service recognized that development
of additional performance indicators would be an ongoing process and stated its intention to continue developing and adding new
performance indicators in subsequent annual performance plans. We will continue to monitor the Service's progress in this area,
because without adequate performance indicators, it will not be possible to measure the Service's progress toward meeting its
performance goals.
GAO Contact
Bernard L. Ungar, Director
Government Business Operations Issues
General Government Division
(202) 512-8387
ungarb.ggd@gao.gov




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                                              Appendix XIX
                                              U.S. Postal Service




Table XIX.4: Postal Service at Risk of Year 2000 Problems

The Postal Service faces a major challenge in updating its computer systems to avoid Year 2000 malfunctions that could disrupt mail
delivery. The Service has a special responsibility to correct its computers because a number of private sector and government groups
may need to use the Postal Service as a backup delivery system if their computers malfunction. For this reason, the Postal Service is
concerned about the prospect of a mail surge in January 2000. An early assessment by the Postal Service's Office of Inspector General
showed that the Service was slow to recognize the scope of the challenge and act to ensure that its computer systems were Year 2000
compliant. The Service estimated last year that the total cost of fixing its Year 2000 problem could be as much as $500 million to
$700 million.
We have not made formal recommendations in this area, but have continued to monitor the Service's progress in addressing the Year
2000 problem. We identified the major challenges still facing the Postal Service in our testimony in February 1999. These challenges
included (1) completing systems renovation and mail processing equipment correction and testing, (2) ensuring the readiness of
hundreds of local facilities, (3) determining the ability of key suppliers and interface partners to be Year 2000 ready, (4) completing
simulation testing of business process areas, and (5) completing the development and testing of business continuity and contingency
plans. Further, these challenges are exacerbated by the fact that the Service anticipates a surge in workload beginning in September
due to the holiday business rush, which typically requires greater management attention. Our testimony noted that top postal managers
should ensure that an overall management plan is developed and followed, continue to provide resources and support for the program,
and ensure that all components and business areas fully support and participate in the process. The Service has developed the overall
management plan and continues to act to address the remaining challenges that are critical to ensuring that the Service is ready for the
year 2000.
GAO Contact

Jack L. Brock, Jr., Director
Governmentwide and Defense Information Systems
Accounting and Information Management Division
(202) 512-6240
brockj.aimd@gao.gov




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