oversight

Results Act: Observations on the Department of Transportation's Fiscal Year 2000 Performance Plan

Published by the Government Accountability Office on 1999-05-07.

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

                  United States General Accounting Office

GAO               Report to Congressional Requesters




May 1999
                  RESULTS ACT
                  Observations on the
                  Department of
                  Transportation’s Fiscal
                  Year 2000 Performance
                  Plan




GAO/RCED-99-153
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community, and
                   Economic Development Division

                   B-282558

                   May 7, 1999

                   Congressional Requesters

                   Under the Government Performance and Results Act of 1993 (the Results
                   Act), federal agencies prepare annual performance plans covering the
                   program activities set out in their budgets. You asked us to summarize our
                   observations on the Department of Transportation’s (DOT) performance
                   plan for fiscal year 2000 to facilitate your review of the plan, which was
                   submitted to the Congress in February 1999. This report provides
                   information on the usefulness of DOT’s plan for decision-making in terms of
                   (1) providing a clear picture of intended performance across the
                   Department, (2) discussing the strategies and resources that DOT will use
                   to achieve its goals, and (3) providing confidence that the performance
                   information will be credible. For each of these areas, we also provide
                   information on the degree to which DOT’s fiscal year 2000 performance
                   plan represents an improvement over the fiscal year 1999 plan. In addition,
                   this report provides observations on the extent to which the Department
                   has implemented performance-based management and the challenges the
                   Department faces in becoming performance-based.


                   Overall, DOT’s performance plan for fiscal year 2000 should be a useful tool
Results in Brief   for decisionmakers. It provides a clear picture of intended performance
                   across the Department, a specific discussion of the strategies and
                   resources that the Department will use to achieve its goals, and general
                   confidence that the Department’s performance information will be
                   credible. For example, the performance goal for reducing recreational
                   boating fatalities from 819 in fiscal year 1997 to 720 or fewer in fiscal year
                   2000 will be accomplished by activities of several U.S. Coast Guard
                   programs—boating safety grants provided to the states, regulations
                   developed by the Recreational Boating Safety program, and boat
                   inspections conducted by the Coast Guard auxiliary. Figure 1 highlights
                   the plan’s major strengths and key weaknesses as DOT seeks to make
                   additional improvements to its plan.




                   Page 1                     GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
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Figure 1: Major Strengths and Key
Weaknesses of DOT’s Fiscal Year 2000
Performance Plan                       Major strengths
                                       •Contains results-oriented goals and quantifiable measures.
                                       •Discusses strategies and resources for achieving intended performance.
                                       •Describes efforts to verify and validate performance data and the data’s limitations.
                                       Key weaknesses
                                       •Does not consistently link the strategic outcomes to the performance goals.
                                       •Does not consistently explain coordination strategies with outside organizations.
                                       •Does not consistently include goals and measures for addressing the management
                                       challenges facing the Department.

                                       DOT’s fiscal year 2000 performance plan represents a moderate
                                       improvement over the fiscal year 1999 plan in that it indicates some degree
                                       of progress in addressing the weaknesses that we identified in our
                                       assessment of the fiscal year 1999 plan. We observed that the fiscal year
                                       1999 plan did not (1) sufficiently address management challenges facing
                                       the Department; (2) consistently link strategic goals, program activities,
                                       and performance goals; (3) indicate interagency coordination for
                                       crosscutting areas; or (4) provide sufficient information on external
                                       factors, the processes and resources for achieving the goals, and the
                                       performance data. Among the improvements in the fiscal year 2000 plan
                                       are more consistent linkages among the program activities and
                                       performance goals, additional information on external factors and
                                       strategies for achieving the goals, and a more comprehensive discussion of
                                       the data’s quality. These improvements and other activities indicate that
                                       DOT has clearly made good progress in implementing performance-based
                                       management. For example, the plan indicates that the Department is
                                       incorporating the performance goals into performance agreements
                                       between the administrators of DOT’s agencies and the Secretary. However,
                                       the plan still needs further improvement, especially in explaining how
                                       certain management challenges, such as financial management
                                       weaknesses, will be addressed. For example, DOT’s Office of Inspector
                                       General (OIG) reported that the Department’s accounting system could not
                                       be used as the only source of financial information to prepare its financial
                                       statements. While the fiscal year 2000 plan does not address this issue, the
                                       Department has recognized the financial reporting deficiencies identified
                                       by the OIG and is taking actions to correct them. The lack of accountability
                                       for financial activities is a key challenge that DOT faces in implementing
                                       performance-based management.




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                        The Results Act requires annual performance plans to cover each program
Background              activity set out in the agencies’ budgets. The act requires the plans to
                        (1) establish performance goals to define the level of performance to be
                        achieved by a program activity; (2) express such goals in an objective,
                        quantifiable, and measurable form; (3) briefly describe the strategies and
                        resources required to meet performance goals; (4) establish performance
                        indicators to be used in measuring or assessing the relevant outputs,
                        service levels, and outcomes of each program activity; (5) provide a basis
                        for comparing actual results with the performance goals; and (6) describe
                        the means to verify and validate information used to report on
                        performance. DOT submitted to the Congress performance plans for fiscal
                        years 1999 and 2000.


                        DOT’s performance plan provides a clear statement of the performance
DOT’s Performance       goals and measures that address program results. Program goals and
Plan Provides a Clear   measures are expressed in a quantifiable and measurable manner and
Picture of Intended     define the levels of performance. However, the plan could be improved by
                        consistently linking the performance goals and strategic outcomes and
Performance Across      consistently describing interagency coordination for crosscutting
the Department          programs and the Department’s contribution to these programs. In
                        addition, the plan could be improved by consistently describing how the
                        management challenges facing the Department will be addressed,
                        including how the Department will address certain financial management
                        challenges identified by its OIG.


Performance Goals and   DOT’s plan includes performance goals and measures that address program
Measures                results and the important dimensions of program performance. The goals
                        and measures define the level of performance and activities for specific
                        programs. For example, the performance goal for reducing recreational
                        boating fatalities from 819 in fiscal year 1997 to 720 or fewer in fiscal year
                        2000 will be accomplished by the core activities of several U.S. Coast
                        Guard programs—boating safety grants provided to the states, regulations
                        developed by the Recreational Boating Safety program, and boat
                        inspections conducted by the Coast Guard auxiliary.

                        The plan’s goals and measures are objective, quantifiable, and measurable.
                        For all except a few performance goals, DOT’s plan includes projected
                        target levels of performance for fiscal year 2000; for several goals, the plan
                        includes multiyear targets. For goals that have no targets, an appendix to
                        the plan explains why a target was not included. For nearly all of the goals



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and measures, the plan includes graphs that show baseline and trend data
as well as the targets for fiscal years 1999 and 2000. The graphs clearly
indicate trends and provide a basis for comparing actual program results
with the established performance goals. For example, the performance
goal for hazardous materials incidents has a graph that shows the number
of serious hazardous materials incidents in transportation from 1985
through 1997. The graph also includes target levels for fiscal years 1999
and 2000 so a reader can conclude that this goal is not new in the fiscal
year 2000 plan. If only a fiscal year 2000 target is indicated on a graph, the
reader can assume that this is a new goal; however, this point is not
explicit. The plan could be improved by indicating new goals that do not
have a counterpart in the previous version.

In addition, the plan includes performance goals to resolve a few
mission-critical management challenges identified by us and/or DOT’s OIG.1
(See app. I.) For example, we reported that the Federal Aviation
Administration (FAA) had encountered delays in implementing security
initiatives at airports. The plan includes a performance goal to increase the
detection rate of explosive devices and weapons that may be brought
aboard aircraft, which will help measure progress in implementing the
security initiatives. However, for the majority of the management
challenges that have been identified, the plan does not include goals and
measures. For example, the plan lists several activities to address
problems with FAA’s $41 billion air traffic control modernization program,
which since 1995 we have identified as a high-risk information technology
initiative. The plan could be improved by consistently including goals and
specific measures for addressing the challenges.

In addition, the plan could be improved by more fully explaining how the
Department will address certain financial management challenges
identified by the OIG. For example, the OIG reported that the Department’s
accounting system could not be used as the only source of financial
information to prepare its financial statements. The fiscal year 2000 plan
does not address this issue. Additionally, we question whether the plan
includes the most current or complete milestones for solving long-standing
financial management weaknesses. For example, the plan states that in
fiscal year 1999, FAA’s new cost accounting system will capture financial
information by project and activity for all of FAA’s projects. However,
according to FAA’s fiscal year 1998 audit report, the cost accounting system


1
 See our report entitled Major Management Challenges and Program Risks: Department of
Transportation (GAO/OCG-99-13, Jan. 1999) and DOT OIG’s report entitled Top Ten Management
Issues: Department of Transportation (TW-1999-031, Dec. 9, 1998).



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                        that was scheduled to be operational by October 1, 1998, will not be fully
                        implemented until March 31, 2001.


Strategic Outcomes      DOT’s plan includes strategic outcomes for each of the Department’s five
                        strategic goals.2 For example, for the strategic goal of safety, the
                        Department aims to achieve six strategic outcomes—such as reducing the
                        number of transportation-related deaths, the number and severity of
                        transportation-related injuries, and the number of reportable
                        transportation incidents and their related economic costs. The plan then
                        lists specific annual performance goals that the Department will use to
                        gauge its progress. However, in a few cases, the strategic outcomes have
                        no related annual performance goals. For example, a strategic outcome
                        related to mobility—to provide preventative measures and expeditious
                        responses to natural and man-made disasters in partnership with other
                        agencies to ensure that the Department provides for the rapid recovery of
                        the transportation system—cannot be logically linked to any annual
                        performance goals. The plan could be improved by including at least one
                        annual performance goal for each strategic outcome.


Crosscutting Programs   For each performance goal, the plan typically mentions those federal
                        agencies that have outcomes in common with the Department. The plan
                        also indicates goals and measures that are being mutually undertaken to
                        support crosscutting programs. For example, the plan states that both FAA
                        and the National Aeronautics and Space Administration (NASA) have
                        complementary performance goals to decrease by 80 percent the rate of
                        aviation fatalities by the year 2007. However, the plan could be improved
                        by describing the nature of the coordination and consistently discussing
                        the Department’s contribution to the crosscutting programs. The plan does
                        not discuss the roles played by FAA and NASA and how their partnership will
                        help reduce the rate of aviation fatalities.


Comparison With the     The discussion of performance goals and measures in DOT’s fiscal year
Fiscal Year 1999 Plan   2000 performance plan is a moderate improvement over the discussion in
                        the fiscal year 1999 performance plan and shows some degree of progress
                        in addressing the weaknesses that we identified in the fiscal year 1999
                        plan. We observed that the fiscal year 1999 plan could have been improved
                        by (1) explaining how the management challenges are related to the rest of

                        2
                         DOT has five strategic goals relating to safety, mobility, economic growth and trade, the human and
                        natural environment, and national security.



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                         the performance plan and by including goals and specific measures for
                         addressing the challenges; (2) consistently linking strategic goals, program
                         activities, and performance goals; and (3) indicating interagency
                         coordination for the crosscutting programs and consistently discussing the
                         Department’s contribution to these programs. Among the improvements,
                         the fiscal year 2000 plan describes the management challenges facing the
                         Department, explains activities that will be undertaken to address them,
                         and provides page citations for specific performance goals that address
                         the challenges discussed elsewhere in the plan.


                         DOT’s plan provides a specific discussion of the strategies and resources
DOT’s Performance        that the Department will use to achieve its performance goals. The plan
Plan Provides a          covers each program activity in the Department’s $51 billion proposed
Specific Discussion of   budget for fiscal year 2000. An appendix to the performance plan lists the
                         Department’s program activities and proposed funding levels by strategic
the Strategies and       goal. These funds are also mentioned in the discussions of strategic goals
Resources the            in the body of the plan.
Department Will Use      For each performance goal, the plan lists an overall strategy for achieving
to Achieve Its Goals     it, as well as specific activities and initiatives. For example, DOT expects to
                         increase transit ridership through investments in transit infrastructure,
                         financial assistance to metropolitan planning organizations and state
                         departments of transportation for planning activities, research on
                         improving train control systems, and fleet management to provide more
                         customer service.

                         However, our work has identified problems associated with some
                         strategies. The plan identifies the rehabilitation of approximately 200
                         airport runways in the year 2000 as one of the activities contributing to the
                         performance goal concerning the condition of runway pavement. We
                         reported that there is a lack of information identifying the point at which
                         rehabilitation or maintenance of pavement can be done before relatively
                         rapid deterioration sets in. As a result, FAA is not in a position to determine
                         which projects are being proposed at the most economical time.3 We have
                         also reported on strategies for addressing the performance goal of
                         reducing the rate of crashes at rail-grade crossings, some of which are
                         included in the performance plan. For example, the plan addresses two
                         strategies noted in our report—closing more railroad crossings and



                         3
                         See Airfield Pavement: Keeping Nation’s Runways in Good Condition Could Require Substantially
                         Higher Spending (GAO/RCED-98-226, July 31, 1998).



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developing education and law enforcement programs—but does not
address the installation of new technologies.4

For each performance goal, the plan also describes external factors, called
special challenges, that can affect the Department’s ability to accomplish
the goal. For example, the performance goal for passenger vessel safety
includes the external factors of (1) the remote and unforgiving
environment at sea and human factors, which play an important role in
maritime accidents; (2) the complexity of the operation and maintenance
of passenger vessels; and (3) foreign and international standards that
apply to vessels. The plan describes how particular programs, such as the
marine safety program, will contribute to reducing the number of
casualties associated with high-risk passenger vessels. The plan also
indicates activities to address the external factors, including conducting
oversight of technologically advanced vessels, such as high-speed ferries,
and implementing and marketing the International Safety Management
Code.

In discussing corporate management strategies, the plan briefly describes
how the Department plans to build, maintain, and marshal the resources,
such as human capital, needed to achieve results and greater efficiency in
departmental operations. The corporate strategies are broadly linked to
the strategic goals. For example, the plan states that the human resource
management strategy supports the strategic goals by ensuring that DOT’s
workforce has the required skills and competencies to support program
challenges. The plan lists four key factors that will contribute to this
corporate strategy: workforce planning that will identify the need for key
occupations; managing diversity; learning and development activities to
support employees’ professional growth; and redesigning human resource
management programs, such as personnel and payroll processing.

In some cases, the plan lists specific programs under the corporate
strategies but does not consistently identify the resources associated with
them. For example, the plan discusses the completion of all remediation or
appropriate contingency plans to make the computer systems ready for
the year 2000 so that there are no critical system disruptions. However,
there is no discussion of the resources needed to support this strategy.

The discussion of strategies and resources in DOT’s fiscal year 2000
performance plan is much improved over the fiscal year 1999 plan. We


4
 See Railroad Safety: DOT Faces Challenges in Improving Grade Crossing Safety, Track Inspection
Standards, and Passenger Car Safety (GAO/T-RCED-96-114, Apr. 1, 1996).



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                        observed that the fiscal year 1999 plan generally did a good job of
                        discussing the Department’s strategies and resources for accomplishing its
                        goals. However, we noted that the plan could have been improved in
                        several ways, such as by more clearly describing the processes and
                        resources required to meet the performance goals and recognizing
                        additional external factors—such as demographic and economic trends
                        that could affect the Department’s ability to meet its goals. DOT’s fiscal
                        year 2000 plan contains such information.


                        The Department’s fiscal year 2000 performance plan generally provides a
DOT’s Performance       clear and comprehensive discussion of the performance information. The
Plan Provides General   plan discusses the quality control procedures for verifying and validating
Confidence That the     data, which, it says, DOT managers follow as part of their daily activities, as
                        well as an overall limitation to DOT’s data—a lack of timeliness—and how
Performance             the Department plans to compensate for this problem. In addition, for
Information Will Be     each performance measure, the plan provides a definition of the measure,
                        data limitations and their implications for assessing performance,
Credible                procedures to verify and validate data, the source database, and the
                        baseline measure—or a reason why such information is missing. For
                        example, the plan defines the performance measure for maritime oil
                        spills—the gallons spilled per million gallons shipped—as counting only
                        spills of less than 1 million gallons from regulated vessels and waterfront
                        facilities and not counting other spills. The plan further explains that a
                        limitation to the data is that they may underreport the amount spilled
                        because they exclude nonregulated sources and major oil spills. However,
                        the plan explains that large oil spills are excluded because they occur
                        rarely, and, when they do occur, they would have an inordinate influence
                        on statistical trends. The plan also explains that measuring only spills from
                        regulated sources is more meaningful for program management.

                        However, in some cases, we found additional problems with DOT’s data
                        systems that could limit the Department’s ability to assess performance.
                        For example, the performance measure for runway pavement
                        condition—the percentage of runway pavements in good or fair
                        condition—is collected under FAA’s Airport Safety Data Program. We
                        reported that this information provides only a general pavement
                        assessment for all runways. This information is designed to inform airport
                        users of the overall conditions of the airports, not to serve as a pavement
                        management tool. We further noted that these assessments are made by
                        safety inspectors who receive little training in how to examine pavement




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                           conditions.5 The performance plan acknowledges our concerns and states
                           that FAA will update its guidance for inspecting and reporting the condition
                           of runway pavement and will ensure that inspectors are aware of the
                           guidance. However, as of March 1999, FAA had not updated its guidance for
                           inspectors. According to the National Association of State Aviation
                           Officials, which is under contract to FAA to conduct inspections and
                           provide data on runway conditions, new guidance would require
                           additional training for all inspectors, which is not provided for in the
                           contract. In addition, we discuss problems with DOT’s financial
                           management information later in this report.

                           The discussion of data issues in DOT’s fiscal year 2000 performance plan is
                           much improved over that in the fiscal year 1999 plan and is well on its way
                           to addressing the weaknesses that we identified in the fiscal year 1999
                           plan. We observed that the fiscal year 1999 plan provided a general
                           discussion of procedures to verify and validate data, which was not linked
                           to specific measures in the plan. For most measures, information about
                           the data’s quality was lacking. Among the improvements in the fiscal year
                           2000 plan is detailed information about each performance measure, which
                           includes information on verification, validation, and limitations.


                           DOT is making good progress in setting results-oriented goals, developing
Other Observations         measures to show progress, and establishing strategies to achieve those
on DOT’s                   goals. However, the Department’s progress in implementing
Implementation of          performance-based management is impeded primarily by the lack of
                           adequate financial management information.
Performance-Based
Management
Progress in Implementing   DOT has clearly made good progress in implementing performance-based
Performance-Based          management. The Department’s September 1997 strategic plan and
Management                 performance plan for fiscal year 1999 were both considered among the
                           best in the federal government. And, as discussed in this report, DOT’s
                           fiscal year 2000 performance plan improves upon the fiscal year 1999 plan.
                           Furthermore, our work has shown that prior to these Department-wide
                           efforts, several of DOT’s agencies made notable efforts in becoming
                           performance-based.




                           5
                           See Airfield Pavement: Keeping Nation’s Runways in Good Condition Could Require Substantially
                           Higher Spending (GAO/RCED-98-226, July 31, 1998).



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For example, in reviewing programs designated as pilots under the Results
Act, we noted the successful progress of the Coast Guard’s marine safety
program. We reported that the Coast Guard’s pilot program became more
performance-based, changing its focus from outputs (such as the number
of vessel inspections) to outcomes (saving lives). The Coast Guard’s data
on marine casualties indicated that accidents were often caused by human
error—not by deficiencies in the vessels. Putting this information to use,
the Coast Guard shifted its resources and realigned its processes away
from inspections and toward other efforts to reduce marine casualties. We
reported that the marine safety program not only improved its mission
effectiveness—for example, the fatality rate in the towing industry
declined significantly—but did so with fewer people and at lower cost.6

Additionally, in 1997, we cited the National Highway Traffic Safety
Administration (NHTSA) as a good example of an agency that was
improving the usefulness of performance information.7 The agency’s fiscal
year 1994 pilot performance report provided useful information by
discussing the sources and, in some cases, the limitations of its
performance data. In 1998, we again cited NHTSA as a good example of an
agency that was developing performance measures for outcome goals that
are influenced by external factors.8 Additionally, in 1997, we reported that
the Federal Railroad Administration had shifted its safety program to
focus on results—reducing railroad accidents, fatalities, and
injuries—rather than the number of inspections and enforcement actions.9

The fiscal year 2000 performance plan indicates that the Department is
taking further steps to instill performance-based management into its daily
operations. According to the plan, DOT has incorporated all of its fiscal
year 1999 performance goals into performance agreements between the
administrators of DOT’s agencies and the Secretary. At monthly meetings
with the Deputy Secretary, the administrators are expected to report
progress toward meeting these goals and program adjustments that may
be undertaken throughout the year.


6
 Executive Guide: Effectively Implementing the Government Performance and Results Act
(GAO/GGD-96-118, June 1996).
7
The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be
Uneven (GAO/GGD-97-109, June 2, 1997).
8
 Managing for Results: Measuring Program Results That Are Under Limited Federal Control
(GAO/GGD-99-16, Dec. 11, 1998).
9
 Rail Transportation: Federal Railroad Administration’s New Approach to Railroad Safety
(GAO/RCED-97-142, July 23, 1997).



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                    Finally, some individual agencies in DOT have developed performance
                    information that includes leading indicators associated with the
                    Department-wide goals. For example, the Department’s fiscal year 2000
                    budget submission for FAA’s facilities and equipment includes 10
                    performance goals—such as reducing the rate of accidents or incidents in
                    which an aircraft leaves the pavement—related to reducing the fatal
                    accident rate for commercial air carriers. According to DOT’s performance
                    plan, such indicators will be used to help assess the results of DOT’s
                    programs and provide a basis for redirecting them.


Challenges in       A key challenge that DOT faces in implementing performance-based
Implementing        management is the lack of accountability for its financial activities. In fact,
Performance-Based   serious accounting and financial reporting weaknesses at FAA led us to
                    designate FAA’s financial management as a high-risk area. From an overall
Management          perspective, DOT’s accounting information system does not provide reliable
                    information about the Department’s financial performance. DOT’s OIG has
                    consistently reported that it has been unable to express an opinion on the
                    reliability of DOT’s financial statements because of, among other things,
                    problems in the Department’s accounting system. Although the fiscal year
                    1998 audit report stated that FAA is making significant progress, it cited
                    deficiencies that include inaccurate general ledger balances and
                    unreconciled discrepancies between the general ledger balances
                    maintained in FAA’s accounting system and subsidiary records. The OIG also
                    cited problems with the Department’s accounting systems that prevented
                    the systems from complying with the requirements of the Federal
                    Financial Management Improvement Act of 1996. The OIG concluded that
                    for the Department’s systems to comply with the requirements of the act,
                    the Department needs, among other things, to modify its accounting
                    system so that it is the only source of financial information for the
                    consolidated financial statements. Concerns have also been expressed by
                    the OIG about the number and total dollar amount of adjusting entries
                    made outside the accounting system to prepare the financial statements.
                    For example, FAA made 349 adjustments to its accounting records, which
                    totaled $51 billion, in the process of manually preparing its fiscal year 1998
                    financial statement.

                    DOT is taking actions to correct the financial reporting deficiencies that
                    were identified by the OIG. On September 30, 1998, the Department
                    submitted to the Office of Management and Budget (OMB) a plan that
                    identified actions by DOT, especially FAA and the Coast Guard, to correct
                    the weaknesses reported in the OIG’s audits. For example, the plan called



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                  for DOT to complete physical counts of and develop appropriate support
                  for the valuation of property, plant, equipment, and inventory at FAA and
                  the Coast Guard.

                  Furthermore, the Department’s ability to implement performance
                  management is limited by the lack of a reliable cost accounting system or
                  an alternative means to accumulate costs. As a result, DOT’s financial
                  reports (1) may not be capturing the full cost of specific projects and
                  activities and (2) may lack a reliable “Statement of Net Cost,” which
                  includes functional cost allocations. The lack of cost accounting
                  information also limits the Department’s ability to make effective
                  decisions about resource needs and to adequately control the costs of
                  major projects, such as FAA’s $41 billion air traffic control modernization
                  program. For example, without good cost accounting information, FAA
                  cannot reliably measure the actual costs of its modernization program
                  against established baselines, which impedes its ability to effectively
                  estimate future costs. Finally, the lack of reliable cost information limits
                  DOT’s ability to evaluate performance in terms of efficiency and
                  effectiveness, as called for by the Results Act.


                  We provided the Department of Transportation (DOT) with the information
Agency Comments   contained in this report for review and comment. The Department stated
                  that it appreciated our favorable review of its fiscal year 2000 performance
                  plan and indicated that it had put much work into improving on the fiscal
                  year 1999 plan by addressing our comments on that plan. DOT made several
                  suggestions to clarify the discussion of its financial accounting system,
                  which we incorporated. The Department acknowledged that work remains
                  to be done to improve its financial accounting system and stated that it has
                  established plans to do this. DOT also acknowledged the more general need
                  for good data systems to implement the Results Act and indicated that it is
                  working to enhance those systems.


                  To assess the plan’s usefulness for decisionmakers and maintain
Scope and         consistency with our approach in reviewing the fiscal year 1999
Methodology       performance plan, we used criteria from our guide on performance goals
                  and measures, strategies and resources, and verification and validation.10
                  This guide was developed from the Results Act’s requirements for annual
                  performance plans; guidelines contained in OMB Circular No. A-11, part 2;

                  10
                   The Results Act: An Evaluator’s Guide to Assessing Agency Annual Performance Plans, Version 1
                  (GAO/GGD-10.1.20, Apr. 1998).



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and other relevant documents. The criteria were supplemented by our
report entitled Agency Performance Plans: Examples of Practices That
Can Improve Usefulness to Decisionmakers (GAO/GGD/AIMD-99-69, Feb. 26,
1999), which builds on the opportunities for improvement that we
identified in the fiscal year 1999 performance plans.11 In addition, we
relied on our knowledge of DOT’s operations and programs from our
numerous reviews of the Department. To determine whether the
performance plan covered the program activities set out in DOT’s budget,
we compared the plan with the President’s fiscal year 2000 budget request
for DOT. To determine whether the plan covered mission-critical
management issues, we assessed whether the plan included goals,
measures, or strategies to address major management challenges
identified by us or the OIG.12 To identify the degree of improvement over
the fiscal year 1999 plan, we compared the fiscal year 2000 plan with our
observations on the previous plan.13 We performed our review in
accordance with generally accepted government auditing standards from
February through April 1999.


We are providing the Honorable Rodney E. Slater, Secretary of
Transportation, and the Honorable Jacob J. Lew, Director, OMB, with
copies of this report. We will make copies available to others on request. If
you or your staff have any questions about this report, please call me at
(202) 512-2834. Major contributors to this report are listed in appendix II.




Phyllis F. Scheinberg
Associate Director,
  Transportation Issues



11
 Managing for Results: An Agenda to Improve the Usefulness of Agencies’ Annual Performance Plans
(GAO/GGD/AIMD-98-228, Sept. 8, 1998).
12
 See Major Management Challenges and Program Risks: Department of Transportation
(GAO/OCG-99-13, Jan. 1999) and DOT OIG’s report entitled Top Ten Management Issues: Department
of Transportation (TW-1999-031, Dec. 9, 1998).
13
 Results Act: Observations on the Department of Transportation’s Annual Performance Plan for Fiscal
Year 1999 (GAO/RCED-98-180R, May 12, 1998).
Page 13                           GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
B-282558




List of Congressional Requesters

The Honorable Richard K. Armey
Majority Leader
House of Representatives

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

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

The Honorable Richard C. Shelby
Chairman, Subcommittee on Transportation
Committee on Appropriations
United States Senate

The Honorable John McCain
Chairman
The Honorable Ernest F. Hollings
Ranking Minority Member
Committee on Commerce,
  Science, and Transportation
United States Senate

The Honorable Frank R. Wolf
Chairman, Subcommittee on Transportation
Committee on Appropriations
House of Representatives

The Honorable Bud Shuster
Chairman
The Honorable James L. Oberstar
Ranking Democratic Member
Committee on Transportation
  and Infrastructure
House of Representatives




Page 14                  GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
Page 15   GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
Appendix I

Management Challenges


                                                In January 1999, we reported on major performance and management
                                                challenges that have limited the effectiveness of the Department of
                                                Transportation (DOT) in carrying out its mission.14 In December 1998, the
                                                Department’s Office of Inspector General (OIG) issued a similar report on
                                                the Department.15 Table I.1 lists the issues covered in those two reports
                                                and the applicable goals and measures in the fiscal year 2000 performance
                                                plan.


Table I.1: Management Challenges at DOT
                                                                                  Applicable goals and measures in the fiscal year 2000
Management challenge                                                              performance plan
Acquisition of major aviation and U.S. Coast Guard systems lacks adequate None. The plan, however, acknowledges that air traffic
management and planning.                                                     control modernization is a management issue that needs
                                                                             to be addressed. Furthermore, the plan states that DOT
•The Federal Aviation Administration’s (FAA) $41 billion air traffic control has formulated activities to address this issue.
modernization program has experienced cost overruns, delays, and
performance shortfalls.                                                      The plan also identifies the Coast Guard’s acquisition
                                                                             project as a management issue and describes activities
•The Coast Guard needs to more thoroughly address the justification and      to address it.
affordability of its $9.8 billion project to replace/modernize its ships and
aircraft.

(DOT’s OIG also identified air traffic control modernization as a top priority
management issue.)
Important challenges remain in resolving FAA’s Year 2000 risks.                   None. However, the plan’s corporate management
                                                                                  strategies include an objective to complete all Year 2000
(The OIG also identified this area as a management issue.)                        remediation or contingency plans so that there are no
                                                                                  critical system disruptions.

                                                                                  In addition, the plan states that the Year 2000 issue is a
                                                                                  management challenge that needs to be addressed and
                                                                                  identifies activities and milestones for addressing it.
FAA and the nation’s airports face funding uncertainties. DOT and the             None. However, the plan identifies financing for FAA’s
Congress face a challenge in reaching agreement on the amount and                 activities as a major issue that the Department, the
source of long-term financing for FAA and airports.                               Congress, and the aviation community need to address.
                                                                                  The plan also lists activities that FAA is undertaking to
(The OIG also identified this area as a management issue.)                        develop the information needed to make financing
                                                                                  decisions.
                                                                                                                                     (continued)




                                                14
                                                   Major Management Challenges and Program Risks: Department of Transportation (GAO/OCG-99-13,
                                                Jan. 1999).
                                                15
                                                  Top Ten Management Issues: Department of Transportation (TW-1999-031, Dec. 9, 1998).



                                                Page 16                           GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
                                                Appendix I
                                                Management Challenges




                                                                                Applicable goals and measures in the fiscal year 2000
Management challenge                                                            performance plan
Aviation safety and security programs need strengthening.                       The plan includes performance goals to

•Shortcomings in aviation safety programs include the need for FAA to           •reduce the fatal aviation accident rate for commercial air
improve its oversight of the aviation industry, record complete information     carriers and general aviation,
on inspections and enforcement actions, provide consistent information and
adequate training for users of weather information, and resolve data            •reduce the number of runway incursions,a
protection issues to enhance the proactive use of recorded flight data to
prevent accidents.                                                              •reduce the rate of operational errors and deviations,b

•FAA has encountered delays in implementing security initiatives at             •increase the detection rate for explosive devices and
airports. Completing the initiatives will require additional funding and        weapons that may be brought aboard aircraft, and
sustained commitment from FAA and the aviation industry.
                                                                                •get threat information to those who need to act within 24
•FAA’s computer security of its air traffic control systems is weak.            hours.

(The OIG also identified aviation safety and transportation security as         In addition, the plan’s corporate management strategies
management issues.)                                                             include objectives to

                                                                                •conduct vulnerability assessments on all new information
                                                                                technology systems to be deployed in fiscal year 2001
                                                                                that fall under the purview of Presidential Decision
                                                                                Directive 63c and

                                                                                •ensure that all DOT employees receive or have received
                                                                                general security awareness training in fiscal years 1999 or
                                                                                2000 and that 60 percent of the systems administrators
                                                                                receive specialized security training by September 30,
                                                                                2000.

                                                                                The plan also identifies computer security as a
                                                                                management challenge that needs to be addressed.
A lack of aviation competition contributes to high fares and poor service for   None. The plan identifies airline competition as a
some communities. Increasing competition and improving air service will         management challenge. DOT has submitted to the
entail a range of solutions by DOT, the Congress, and the private sector.       Congress a number of legislative proposals to address
                                                                                the issue.
DOT needs to continue improving oversight of surface transportation             None. The plan identifies surface transportation
projects. Many highway and transit projects continue to incur cost              infrastructure needs as a management challenge and
increases, experience delays, and have difficulties acquiring needed            identifies activities to address the issue.
funding.

(The OIG also identified this area as a management issue.)
Amtrak’s financial condition is tenuous. Since it began operations in 1971,     None. The plan identifies the financial viability of Amtrak
Amtrak has received $22 billion in federal subsidies. Because there is no       as a management challenge and states that, as a
clear public policy that defines the role of passenger rail in the national     member of Amtrak’s Board, DOT will work to address the
transportation system and because Amtrak is likely to remain heavily            issue.
dependent on federal assistance, the Congress needs to decide on the
nation’s expectations for intercity rail and the scope of Amtrak’s mission in
providing that service.

(The OIG also identified this area a management issue.)
                                                                                                                                (continued)




                                                Page 17                         GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
                                                 Appendix I
                                                 Management Challenges




                                                                                   Applicable goals and measures in the fiscal year 2000
Management challenge                                                               performance plan
DOT’s lack of accountability for its financial activities impairs its ability to   None. However, the plan’s corporate management
manage programs and exposes the Department to potential waste, fraud,              strategies include objectives to
mismanagement, and abuse. Since 1993, the OIG has been unable to
express an opinion on the reliability of the financial statements of certain       •receive an “unqualified,” or “clean,” audit opinion on
agencies within the Department. DOT also lacks a cost accounting system            the Department’s fiscal year 2000 consolidated financial
or alternative means of accumulating the full costs of specific projects or        statement and stand-alone financial statements;
activities.
                                                                                   •enhance the efficiency of the accounting operation in a
(The OIG also identified this area as a management issue.)                         manner consistent with increased accountability and
                                                                                   reliable reporting; and

                                                                                   •implement a pilot of the improved financial systems
                                                                                   environment in at least one operating administration.

                                                                                   The plan identifies financial accounting as a management
                                                                                   challenge facing the Department and addresses key
                                                                                   weaknesses that should be resolved before DOT can
                                                                                   obtain a “clean” opinion in fiscal year 2000.
Other areas identified by DOT’s OIG
DOT needs to address major surface transportation safety issues, such as           DOT’s plan includes performance goals to

•improving the Department’s motor carrier safety program and taking                •reduce the rate of fatalities involving large trucks,
prompt and meaningful enforcement actions for noncompliance,
                                                                              •increase seat belt usage nationwide,
•increasing the level of safety of commercial trucks and drivers entering the
United States from Mexico,                                                    •reduce the rate of grade-crossing crashes,

•increasing seat belt usage,                                                       •reduce the rate of rail-related fatalities for trespassers,

•reducing railroad grade-crossing and trespasser accidents,                        •reduce the number of serious hazardous materials
                                                                                   incidents in transportation, and
•improving compliance with safety regulations by entities responsible for
transporting hazardous materials, and                                              •reduce the rate of rail-related crashes and fatalities.

•enhancing the effectiveness of the Federal Railroad Administration’s Safety
Assurance and Compliance Program.
DOT needs to provide leadership to maintain, improve, and develop the      DOT’s plan includes performance goals to
port, waterway, and intermodal infrastructure to meet current and future
needs. There is also a need to identify funding mechanisms to maintain and •reduce the percentage of ports reporting landside
improve the harbor infrastructure of the United States.                    impediments to the flow of commerce and

                                                                                   •ensure the availability and long-term reliability of the St.
                                                                                   Lawrence Seaway’s locks and related navigation facilities
                                                                                   in the St. Lawrence River.
                                                                                                                                     (continued)




                                                 Page 18                           GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
                                               Appendix I
                                               Management Challenges




                                                                                   Applicable goals and measures in the fiscal year 2000
Management challenge                                                               performance plan
DOT faces several challenges in implementing the Government                      None. The plan identifies the Department’s
Performance and Results Act. Many of DOT’s performance outcomes, such implementation of the Results Act as a management
as improved safety, a reduction in fatalities and injuries, and                  challenge and mentions activities to address the issue.
well-maintained highways, depend in large part on actions by other federal
agencies, states, and the transportation industry. Their assistance will be
critical in meeting DOT’s goals, which were developed under the Results
Act. DOT’s ability to achieve its goals will also be influenced by the effective
utilization of human resources.

                                               a
                                                A runway incursion occurs when an aircraft, ground vehicle, or person enters or crosses a
                                               runway that is in active use for takeoffs or landings without adequate separation from aircraft
                                               cleared to use the runway.
                                               b
                                                Pilots using instrument procedures rely on air traffic controllers’ instructions to guide them. When
                                               aircraft are allowed to violate these separation standards, an operational error occurs. When
                                               aircraft are allowed to penetrate airspace that has not been precoordinated for that aircraft’s use,
                                               an operational deviation occurs.
                                               c
                                                Presidential Decision Directive 63, Critical Infrastructure Protection, requires the federal
                                               government to achieve and maintain the ability to protect our nation’s critical infrastructure by
                                               2003.




                                               Page 19                             GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
Appendix II

Major Contributors to This Report


                        Janet Barbee
Resources,              Tina Kinney
Community, and          Lewison Lem
Economic                Teresa Spisak
Development Division
                        Laura Castro
Accounting and          John Fretwell
Information             Elizabeth Martinez
Management Division     Colleen Phillips

                        Helen Desaulniers
Office of the General
Counsel




(348166)                Page 20              GAO/RCED-99-153 DOT’s Fiscal Year 2000 Performance Plan
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