oversight

Results Act: Observations on the U.S. Department of Agriculture's Fiscal Year 2000 Performance Plan

Published by the Government Accountability Office on 1999-06-07.

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

                  United States General Accounting Office

GAO               Report to Congressional Requesters




June 1999
                  RESULTS ACT
                  Observations on the
                  U.S. Department of
                  Agriculture’s Fiscal
                  Year 2000 Performance
                  Plan




GAO/RCED-99-187
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community, and
                   Economic Development Division

                   B-282658

                   June 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. By reinforcing the linkages
                   between the agencies’ long-term strategic goals and their day-to-day
                   program activities, the plans are intended to provide a basis for
                   establishing accountability for results.

                   The U.S. Department of Agriculture’s (USDA) performance plan for fiscal
                   year 2000, which includes 29 components—28 agency, office, and bureau
                   plans and a departmental overview plan1—was submitted to the Congress
                   in March 1999. To facilitate your use of the plan, you asked us to
                   summarize our observations on the plan’s usefulness to decisionmakers. In
                   that regard, our report provides information on the extent to which USDA’s
                   performance plan (1) provides a clear picture of intended performance
                   across the Department, (2) discusses the strategies and resources USDA
                   will use to achieve its goals, and (3) provides confidence that the
                   performance information will be credible. For each of these areas, we also
                   provide information on the degree to which USDA’s fiscal year 2000
                   performance plan represents an improvement over its fiscal year 1999
                   plan. Finally, the report provides our observations on USDA’s
                   implementation of performance-based management and the challenges it
                   faces in becoming performance-based.


                   The Department of Agriculture’s performance plan for fiscal year 2000
Results in Brief   should be a somewhat useful tool for decisionmakers. Overall, the plan
                   provides a general picture of intended performance across the
                   Department, a general discussion of the strategies and resources the
                   Department will use to achieve performance goals, and limited confidence
                   that its performance information will be credible. Figure 1 highlights the
                   plan’s major strengths and key weaknesses.




                   1
                    Although the plan includes 29 components, we limited our review to the plans of the 17 agencies most
                   directly responsible for accomplishing USDA’s mission and the Offices of the Chief Financial Officer
                   and the Chief Information Officer (2 plans). See app. II for a list of the agencies and offices whose
                   annual performance plans we reviewed.



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Figure 1: Major Strengths and Key
Weaknesses of USDA’s Fiscal Year
2000 Annual Performance Plan        Major strengths

                                    •Uses goals and measures that address program results and performance

                                    •Uses intermediate outputs to show progress toward intended results

                                    •Explains how proposed capital assets and management systems support the
                                    achievement of program results

                                    Key weaknesses

                                    •Does not consistently include strategies for mitigating external factors

                                    •Does not adequately describe efforts to verify and validate data

                                    •Does not consistently discuss the impact of data limitations

                                    USDA’s fiscal year 2000 performance plan represents a moderate
                                    improvement over the fiscal year 1999 plan in that it indicates some
                                    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 adequately (1) explain how USDA agencies are
                                    coordinating crosscutting issues within and outside the Department;
                                    (2) discuss mitigation strategies for significant external factors that may
                                    interfere with the achievement of performance goals; (3) describe the
                                    procedures that will be used to ensure that the data needed to measure
                                    progress in meeting performance goals are complete, accurate, and
                                    credible; and (4) identify what, if any, limitations exist with respect to the
                                    data used for measuring performance.2

                                    Among the improvements in the fiscal year 2000 plan are (1) better efforts
                                    to identify programs that contribute to similar results, (2) more consistent
                                    use of goals and measures that address program results and performance,
                                    and (3) improved linkages between program activities and performance
                                    goals. For example, the improved use of goals and measures was
                                    demonstrated in USDA’s Grain Inspection, Packers and Stockyards
                                    Administration’s plan. For its performance goal of increasing the efficiency
                                    of grain inspection and weighing processes, the plan provides two
                                    measures: (1) the percentage of evaluations completed to maintain critical
                                    methodology and (2) the number of new and/or improved methods or
                                    tests. These measures replaced the fiscal year 1999 measure “number of
                                    export facilities equipped with automated grain inspection systems”


                                    2
                                     Observations on USDA’s Annual Performance Plan (GAO/RCED-98-212R, June 11, 1998).



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             because the agency considered it to be an internal measure of process
             rather than of output or outcome.

             The Department’s plan, however, still needs improvement in a number of
             areas, particularly in (1) identifying strategies to mitigate external factors,
             (2) describing efforts to verify and validate performance data, and
             (3) discussing data limitations.3 For example, the Rural Utilities Service’s
             performance plan lists several performance goals and indicators for the
             Service’s electric program. However, the plan’s discussion concerning the
             verification and validation of data relating to these goals and indicators is
             limited primarily to stating that (1) the data are available in records from
             the Service’s automated systems, from the Service’s borrower-reported
             statistics, and from USDA’s Economic Research Service (ERS) and (2) the
             Service has had long experience with its internal data and is highly
             confident of its accuracy as well as the reliability of ERS’ data. The plan
             does not, however, discuss the basis for its confidence in the data’s
             accuracy and reliability nor how data limitations could adversely affect its
             ability to assess performance. Furthermore, the plan makes no mention of
             actions that the Rural Utilities Service will take to compensate for any
             unavailable or low-quality data.


             The Government Performance and Results Act of 1993 seeks to improve
Background   the effectiveness, efficiency, and accountability of federal programs by
             establishing a system for agencies to set goals for program performance
             and to measure results. Under the act, agencies’ performance plans are to
             (1) establish performance goals to define the levels of performance to be
             achieved; (2) express those goals in an objective, quantifiable, and
             measurable form; (3) briefly describe the strategies and resources to meet
             the goals; (4) establish performance indicators for assessing or measuring
             relevant outputs, service levels, and outcomes of each program activity;
             (5) provide a basis for comparing results with performance goals; and
             (6) describe the means to verify and validate information used to report on
             performance. USDA submitted to the Office of Management and Budget
             (OMB) and the Congress performance plans for fiscal years 1999 and 2000.




             3
              The areas listed are those we believe to be the major areas of weakness in USDA’s fiscal year 2000
             performance plan. Other areas needing improvement are noted elsewhere in this report.



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                        Overall, USDA’s performance plan provides a general picture of intended
USDA’s Performance      performance across the Department. USDA’s plan often includes
Plan Provides a         performance goals and quantifiable measures that address program
General Picture of      results. In addition, to show progress toward achieving these results, the
                        plan often includes intermediate outputs linked to program results as well
Intended Performance    as baseline data for past performance. However, the plan could be
Across the              improved by more consistently (1) identifying crosscutting programs and
                        coordination strategies for those programs and (2) describing how the
Department              Department will address the management challenges it faces, including
                        how it will address certain information technology and financial
                        management challenges identified by us and its Office of Inspector
                        General (OIG).


Performance Goals and   USDA’s  plan often includes goals and measures that address program
Measures                results and the important aspects of program performance. Through its
                        fairly consistent use of goals and measures that are expressed in a
                        quantifiable and measurable manner, the Department should be able to
                        gauge its progress toward achieving desired program results. For example,
                        the National Agricultural Statistics Service’s (NASS) plan includes a
                        performance goal of providing all market participants with timely and
                        impartial agricultural statistics that promote an economically viable and
                        competitive agricultural production system. One of its four performance
                        measures for achieving this goal is the percentage of NASS reports that are
                        complete, meet scheduled release dates, and contain no data errors. The
                        plan provides target levels for each of its performance measures to enable
                        NASS to assess its progress in meeting its performance goals.



Outputs Linked to       Frequently, the Department’s plans include intermediate outputs linked to
Outcomes and Program    and showing progress toward intended program results. For example,
                        USDA’s Farm Service Agency’s (FSA) plan has four strategic goals, each
Results
                        containing associated performance goals and measures. One of the
                        strategic goals is to assist agricultural producers and landowners in
                        achieving a high level of stewardship of soil, water, air, and wildlife
                        resources on America’s farms and ranches. This strategic goal includes
                        four performance goals with multiple quantifiable measures that enable
                        FSA to assess its progress toward achieving its goals. For example, one of
                        FSA’s performance goals is to reduce soil erosion by establishing
                        conservation cover and/or installing priority practices on enrolled
                        conservation reserve program acreage. This goal is accompanied by eight




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                          performance measures, including the number of acres of highly erodible
                          land retired.


Baseline and Trend Data   Similarly, USDA’s plan often includes baseline and trend data so that
                          anticipated performance can be compared with past performance. For
                          example, in order for the Food Safety and Inspection Service (FSIS) to have
                          a baseline for measuring progress toward its desired outcome of a
                          25-percent reduction in the number of foodborne illnesses associated with
                          meat, poultry, and egg products by the year 2000, the agency—in
                          cooperation with several academic and federal organizations—established
                          a baseline of about 5 million as the current annual number of foodborne
                          illnesses.


Crosscutting Programs     While USDA’s plan often identifies programs and agencies that contribute to
                          similar results or with which the Department’s agencies will need to
                          coordinate to achieve their goals, the plan does not as consistently discuss
                          coordination strategies or goals and measures that are being jointly
                          undertaken to support crosscutting programs. For example, the Animal
                          and Plant Health Inspection Service’s (APHIS) plan states that APHIS works
                          with partners of the Federal Inspection Services4 to improve service to
                          international travelers without compromising the health of U.S. plants and
                          animals. However, the plan does not address how APHIS will coordinate its
                          activities with these organizations or the role of APHIS and these
                          organizations in providing service to international travelers.

                          Similarly, the Cooperative State Research, Education, and Extension
                          Service’s (CSREES) plan states that one of CSREES’ activities relating to its
                          goal of enhancing economic opportunities and the quality of life among
                          families and communities will be to “encourage multi-state,
                          multi-disciplinary and integrated research and education strategies to
                          improve the quality of life in citizens—in cooperation with HHS, USDA/FNS,
                          Department of Education, etc.” However, the plan makes no mention of
                          how it will work with these agencies to develop the needed strategies.




                          4
                           The Federal Inspection Services include the U.S. Customs Service, the Immigration and Naturalization
                          Service, and the Animal and Plant Health Inspection Service.



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Efforts to Address      While USDA’s plan includes performance goals and strategies to resolve
Mission-Critical        some of the mission-critical management problems identified by us and/or
                        USDA’s OIG,5 in many instances the plan does not adequately address these
Management Problems
                        critical problems. (See app. I.) For example, we reported that USDA spends
                        more than $200 million annually for its telecommunications systems and
                        services and that it relies on these systems to effectively administer
                        federal programs and serve millions of its constituents. However, USDA has
                        wasted millions of dollars each year paying for unused, unnecessary, or
                        uneconomical services because it has not cost effectively managed and
                        planned these substantial investments. While USDA’s Office of the Chief
                        Information Officer’s plan mentions the need to improve departmentwide
                        telecommunications management as one of its six critical issue areas, it
                        does not provide an objective for addressing this critical issue or discuss
                        performance goals or corresponding strategy.

                        Regarding financial management issues, we reported that USDA has a
                        long-standing history of deficiencies in its accounting and financial
                        management systems. We further noted that USDA’s ability to comply with
                        report requirements for budgetary and financial statements was severely
                        hampered by its lack of adequate financial systems. However, while the
                        Office of the Chief Financial Officer’s plan should assist decisionmakers in
                        that it addresses overall financial management and systems issues, it does
                        not provide sufficient detail with regard to certain troublesome financial
                        management issues that should be resolved in order to accomplish the key
                        goal of achieving financial accountability. These issues include the need to
                        comply with credit reform reporting requirements and to accurately
                        account for property, plant, and equipment. At a minimum, a specific
                        performance goal or indicator for each of these two issues would improve
                        the Office’s plan.


Comparison With the     The fiscal year 2000 performance plan shows moderate improvement in
Fiscal Year 1999 Plan   addressing the weaknesses that we identified in our assessment of the
                        fiscal year 1999 performance plan as it relates to providing a clear picture
                        of intended performance across the agency. In our review of the fiscal year
                        1999 plan, we observed that the plan could be improved by more
                        consistently describing how agencies are coordinating crosscutting issues
                        both within and outside the Department. Among the improvements in the
                        fiscal year 2000 plan is that it more often identifies crosscutting programs

                        5
                          See Major Management Challenges and Program Risks: Department of Agriculture (GAO/OCG-99-2,
                        Jan. 1999) and Synopsis of Major USDA Program Issues (USDA/OIG, Dec. 1998). OMB Circular A-11, part
                        2, directs federal agencies to address mission-critical management challenges in their annual
                        performance plans.



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                        and agencies that are working towards similar results. However, the plan
                        could be further improved by a more comprehensive discussion of
                        planned strategies for coordinating these programs and resources.


                        USDA’s performance plan provides a general discussion of the strategies
USDA’s Performance      and resources the Department will use to achieve performance goals.
Plan Provides a         Although USDA’s plan generally associates funding levels with performance
General Discussion of   goals, some of the Department’s component plans were less clear than
                        others in showing how program activities related to performance goals. In
the Strategies and      particular, for the plans of the Agricultural Marketing Service (AMS), FSA,
Resources the           and the three agencies constituting the Rural Development mission area, it
                        is not clear how the program activities listed in the plans correspond to
Department Will Use     those in the President’s proposed $90 billion budget for fiscal year 2000.
to Achieve its Goals
                        USDA’s  component plans follow a Department-wide format that includes a
                        listing of objectives, program activities, and funding levels linked to
                        departmental strategic goals and agency performance goals. For example,
                        the Agricultural Research Service’s (ARS) plan lists for each of its five
                        strategic goals (1) the program activities associated with each goal and
                        their associated funding levels for fiscal year 1997 through fiscal year 2000;
                        (2) an objective based on statutory language—specifically, section 801 of
                        the Federal Agriculture Improvement and Reform Act of 1996; and (3) a
                        series of performance goals using alternative forms of measurement.6

                        In addition to listing objectives, program activities, and funding levels,
                        USDA’s plan often provides ample descriptions of how specific strategies
                        and/or programs will contribute toward accomplishing performance goals.
                        A case in point is the Risk Management Agency’s (RMA) plan that describes
                        in detail how its key strategies—expanding risk management tools
                        available for producers, increasing producers’ awareness of risk
                        management alternatives, increasing the number of producers who use
                        risk management alternatives, and reducing program vulnerabilities—will
                        support the achievement of its overall goal of strengthening the safety net
                        for agricultural producers through sound risk management programs and
                        education. For example, in order to increase the agricultural producers’
                        awareness of risk management alternatives, RMA plans to provide a
                        strategy to institutionalize a risk management education program and
                        enhance its outreach to underserved areas, producers, and members of the
                        agricultural community.

                        6
                         With OMB’s concurrence, ARS was able to use narrative descriptions of intermediate outcome
                        indicators.



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While USDA’s plan frequently explains how proposed capital assets and
management systems will support the achievement of program results, it
does so less consistently for human capital. For example, AMS’ plan
describes how a proposed funding increase will provide for the
modernization and the replacement of its Processed Commodities
Inventory Management System. This system, which supports activities
such as planning, procurement, and accounting for more than $1 billion of
domestic and $562 million of foreign commodities annually, is critical to
the missions of three agencies. The plan further notes that studies have
indicated that a modernized system will generate considerable efficiency
improvements and cost savings.

However, AMS’ plan limits its discussion of human capital primarily to a
management initiative that states that AMS will create and maintain a vital
workforce with appropriate skills and characteristics for serving its
diverse base of customers. The sole performance goal for this initiative is
to increase the representation of women, minorities, and people with
disabilities by fiscal year 2000. While this is an important goal, in order to
make the plan more useful to decisionmakers, AMS should elaborate on
how it will build, maintain, and marshal the human capital it needs to
achieve the agency’s goals.

USDA’s  fiscal year 2000 performance plan represents little improvement
over the fiscal year 1999 performance plan as it relates to providing a
specific discussion of strategies and resources the agency will use to
achieve performance goals. Specifically, the fiscal year 2000 performance
plan does not appear to consistently recognize the weakness that we
identified in our assessment of the fiscal year 1999 performance plan—that
is, that the plan could be improved by more consistently describing
strategies to leverage or mitigate external factors. For the most part,
descriptions of strategies to mitigate external factors were lacking in the
fiscal year 2000 plan. However, a few of the agencies’ plans showed
improvement in this area. In particular, the fiscal year 1999 Grain
Inspection, Packers and Stockyards Administration’s (GIPSA) plan did not
identify any external factors; however, in its fiscal year 2000 plan, GIPSA
identifies several important external factors and provides mitigation
strategies to address them. For example, GIPSA plans to increase the
efficiency of grain marketing by streamlining grain inspection and
weighing processes and by providing objective measurers of, among other
things, grain quality. GIPSA maintains that unusual crop quality is the
leading external factor affecting inspections; it plans to rely on a national
quality assurance and control program to mitigate this factor.



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                        The Department’s fiscal year 2000 performance plan provides limited
USDA’s Performance      confidence that the Department’s performance information will be
Plan Provides Limited   credible. While USDA’s plan sometimes describes how it will verify and
Confidence That the     validate performance data, it rarely discusses the implications of data
                        limitations or identifies planned actions to compensate for unavailable or
Performance             low-quality data. As a result, the Department has little assurance that
Information Will Be     performance information is complete, accurate, and consistent for
                        documenting performance and supporting decisions on how to best
Credible                manage programs.

                        A case in point is the Rural Utilities Service’s (RUS) performance plan. Its
                        discussion of the verification and validation of data relating to
                        performance goals and indicators for its electric program is limited
                        primarily to stating that (1) the relevant data are available in records from
                        RUS’ automated systems, RUS’ borrower-reported statistics, and USDA’s ERS;
                        (2) the Service has had long experience with its internal data and is highly
                        confident of its accuracy; and (3) it considers ERS’ data to be very reliable.
                        However, RUS does not discuss the basis for its confidence in its or ERS’
                        data accuracy and reliability nor how data limitations could adversely
                        affect its ability to assess performance. Furthermore, the plan makes no
                        mention of actions that RUS will take to compensate for any unavailable or
                        low-quality data.

                        For the most part, USDA’s fiscal year 2000 performance plan does not
                        appear to recognize the weaknesses that we identified in our assessment
                        of the fiscal year 1999 performance plan as it relates to providing full
                        confidence that the agency’s performance information will be credible. In
                        reviewing the Department’s fiscal year 1999 plan, we observed that the
                        plan fell short in (1) describing the procedures that will be used to ensure
                        that the data needed to measure progress in meeting performance goals
                        are complete, accurate, and credible and (2) identifying what, if any,
                        limitations exist with respect to the data used for measuring performance.
                        The fiscal year 2000 plan still does not consistently discuss the
                        implications of data limitations and the actions the Department plans to
                        take to compensate for unavailable or low-quality data. In addition, while
                        we found some improvement in the Department’s description of efforts to
                        verify and validate the accuracy of its data, further improvement is needed
                        in this area to ensure the credibility of performance information.




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                     USDA is making some progress in setting results-oriented goals, developing
Other Observations   measures to show progress, and establishing strategies to achieve its
on USDA’s            goals. However, the plan provides only limited confidence that the
Implementation of    Department’s financial management performance information will be
                     credible and only a limited picture of intended performance for improving
Performance-Based    its management of information technology.
Management
                     A major challenge that USDA faces in implementing performance-based
                     management is the lack of accountability for its financial activities.
                     Because some of the Department’s financial systems are unable to provide
                     accurate and timely accounting and financial reporting, it is not always
                     possible to know how well or poorly USDA’s component agencies have
                     performed in the area of financial management. In fact, serious
                     longstanding accounting and financial reporting weaknesses at the Forest
                     Service led us to designate the Service’s financial management as a
                     high-risk area. For the Department as a whole, the inadequacies of USDA’s
                     financial systems have been a key reason for USDA’s Inspector General’s
                     disclaimer of opinion on the consolidated financial statements for the past
                     5 years.7 This lack of accurate, reliable, and consistent financial
                     information hinders Department officials’ ability to make informed
                     decisions when the need for such information is a crucial factor in
                     managing the Department’s $122 billion in assets. The Department
                     recognizes the serious limitations of its financial systems and has set a
                     goal of achieving an unqualified audit opinion on its fiscal year 2000
                     financial statements.

                     Other major challenges that USDA faces in implementing performance
                     management are ensuring that (1) its mission-critical automated
                     information systems will work beyond 1999—that is, they will be Year 2000
                     compliant—and (2) USDA’s network and information technology (IT)
                     resources are made less vulnerable to illegal and malicious penetration by
                     internal and external sources.

                     Regarding the first issue, in January 1999, we reported that while USDA has
                     begun to address the Year 2000 problem,8 it still faces significant
                     challenges in renovating and replacing all of its mission-critical systems in
                     time and taking the necessary steps to ensure that vital public services are


                     7
                      A disclaimer of opinion means that the auditor is unable to form an opinion on the financial
                     statements. A disclaimer results when a pervasive material uncertainty exists, or there is a significant
                     restriction on the scope of the audit.
                     8
                      Major Management Challenges and Program Risks: Department of Agriculture (GAO/OCG-99-2, Jan.
                     1999).



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                  not disrupted. In response to our comments on its fiscal year 1999 plan,
                  the Office of the Chief Information Officer added to its fiscal year 2000
                  performance plan the specific objective of ensuring that USDA’s
                  mission-critical systems nationwide are Year 2000 compliant by March 31,
                  1999.9 The plan also describes USDA’s strategy for achieving Year 2000
                  compliance and the time frames and measures for doing so. However—as
                  we found in our review of the Department’s fiscal year 1999 performance
                  plan—performance goals, measures, and time frames for addressing the
                  Year 2000 issue are still not discussed in the fiscal year 2000 performance
                  plans of all of USDA’s component agencies. Moreover, while the Office’s
                  fiscal year 2000 plan states that every agency has prepared business
                  continuity and contingency plans to address unforeseen Year 2000 failures,
                  according to USDA officials, such plans have not been fully developed and
                  tested. Likewise, the Office’s plan includes no time frames for identifying
                  when USDA expects to complete this essential and time-critical work.

                  Regarding information security, the lack of any planned actions to address
                  this high-risk issue was noted in our review of the Office of the Chief
                  Information Officer’s fiscal year 1999 performance plan. While the Office’s
                  fiscal year 2000 plan recognizes USDA’s intention to strengthen its
                  information systems security program as part of developing and
                  implementing a departmentwide architecture, no performance goals or
                  measures are provided. Instead, the plan states that performance goals and
                  indicators will be included in the critical infrastructure protection plan
                  USDA is developing in response to Presidential Decision Directive 63.
                  However, although this plan was due to be released in early
                  February 1999, as of March 31, 1999, it had not yet been issued.


                  We provided the Department of Agriculture with the information in this
Agency Comments   report for review and comment. We met with USDA’s Chief Financial
                  Officer; the Director, Planning and Accountability Division; and other USDA
                  officials from the Office of the Chief Financial Officer and the Office of
                  Budget and Program Analysis. Overall, the Department concurred with our
                  observations, describing them as fair and balanced. However, USDA noted
                  that two issues cited in the management challenges table in appendix I of
                  the draft report were addressed in performance plans that were outside
                  the scope of our review.10 In response to USDA’s comments, we reviewed


                  9
                   On March 31, 1999, USDA reported that 338 of its 352 mission-critical systems were Year 2000
                  compliant.
                  10
                   The two annual performance plans are those of the Support Services Bureau and Departmental
                  Administration.



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              the plans it cited and made changes to the table as appropriate. (See app.
              I.) In addition, USDA provided clarifying comments and technical
              corrections to the report, which we have incorporated as appropriate.


              To evaluate whether the plan (1) provides a clear picture of intended
Scope and     performance across the agency; (2) discusses the strategies and resources
Methodology   USDA will use to achieve its goals; and (3) provides confidence that the
              performance information will be credible, we used criteria from our
              published guide on performance goals and measures, strategies and
              resources, and verification and validation.11 This guide was developed
              from the Results Act requirements for agency performance plans;
              guidelines contained in OMB Circular A-11, part 2; and other relevant
              documents. In addition, we relied on our knowledge of USDA’s operations
              and programs stemming from our numerous reviews of the Department.

              To determine the extent of improvement over its previous plan, we
              compared the Department’s fiscal year 2000 performance plan with our
              observations on its fiscal year 1999 plan. This comparison involved
              reviewing each of the plans of 17 USDA component agencies and the Offices
              of the Chief Financial Officer and the Chief Information Officer and
              comparing them with their prior year’s plans to identify areas of
              improvement. To determine whether the plan covered mission-critical
              management issues identified by us and USDA’s OIG,12 we reviewed the
              plans for goals, indicators, and measures specifically addressing these
              issues as well as general management and capacity-building goals.

              We conducted our work from March through May 1999 in accordance with
              generally accepted government auditing standards.


              As arranged with your offices, unless you publicly announce its contents
              earlier, we plan no further distribution of this report until 30 days from the
              date of this report. At that time, we will provide copies of this report to
              Representatives Larry Combest, Chairman, and Charles Stenholm,
              Ranking Minority Member, House Committee on Agriculture; Senators
              Richard G. Lugar, Chairman, and Tom Harkin, Ranking Minority Member,


              11
               The Results Act: An Evaluator’s Guide to Assessing Agency Annual Performance Plans
              (GAO/GGD-10.1.20, Apr. 1998).
              12
                 Major Management Challenges and Program Risks: Department of Agriculture (GAO/OCG-99-2,
              Jan. 1999) and USDA OIG’s report entitled Synopsis of Major USDA Program Issues (USDA/OIG,
              Dec. 1998).



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Senate Committee on Agriculture; the Honorable Joseph Lieberman,
Ranking Minority Member, Senate Committee on Governmental Affairs;
the Honorable Henry Waxman, Ranking Minority Member, House
Committee on Government Reform; the Honorable Daniel Glickman,
Secretary of Agriculture; the Honorable Jacob Lew, Director, Office of
Management and Budget; and other interested parties. We will also make
copies available upon request.

If you or your staff have any questions about this report, please call me at
(202) 512-5138. Major contributors to this report are listed in appendix III.




Lawrence J. Dyckman
Director, Food and
   Agriculture Issues




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List of Congressional Requesters

The Honorable Bob Goodlatte
Chairman
The Honorable Eva Clayton
Ranking Minority Member
Subcommittee on Department Operations,
Oversight, Nutrition, and Forestry
Committee on Agriculture
House of Representatives

The Honorable Dick 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




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Contents



Letter                                                                                               1


Appendix I                                                                                          18
Management
Challenges
Appendix II                                                                                         22
USDA Agencies and
Offices Whose Annual
Performance Plans
GAO Reviewed
Appendix III                                                                                        23
Major Contributors to
This Report
Tables                  Figure 1: Major Strengths and Key Weaknesses of USDA’s Fiscal                2
                          Year 2000 Annual Performance Plan
                        Table I.1: Management Challenges at USDA                                    18




                        Page 16                GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
Contents




Abbreviations

AMS        Agricultural Marketing Service
APHIS      Animal and Plant Health Inspection Service
ARS        Agricultural Research Service
CSREES     Cooperative State Research, Education and Extension
                Service
ERS        Economic Research Service
FNS        Food and Nutrition Service
FSA        Farm Service Agency
FSIS       Food Safety and Inspection Service
GAO        General Accounting Office
GIPSA      Grain Inspection, Packers and Stockyards Administration
IT         Information Technology
OIG        Office of Inspector General
OMB        Office of Management and Budget
NASS       National Agricultural Statistics Service
RMA        Risk Management Agency
RUS        Rural Utilities Service
USDA       Department of Agriculture USDA/FNS USDA/OIG


Page 17                 GAO/RCED-99-187 USDA’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 U.S. Department of
                                              Agriculture (USDA) in carrying out its mission.13 In December 1998, USDA’s
                                              Office of Inspector General (OIG) issued a similar report on the
                                              Department.14 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 USDA
                                                                       Applicable goals and measures in the fiscal year 2000 annual
Management challenge                                                   performance plan
USDA’s field structure for managing its farm programs is obsolete      USDA’s fiscal year 2000 performance plan provides an update on
and inefficient. (GAO)                                                 USDA’s plan to collocate county-based agencies in service
                                                                       centers, as well as on the current and next fiscal year plans. USDA
                                                                       anticipates that by the end of fiscal year 1999 it will have reached
                                                                       its target of 2,567 service centers. Administrative streamlining
                                                                       continues, including the updating of computer and
                                                                       telecommunications resources. The fiscal year 2000 plan includes
                                                                       targets and performance measures for these goals. For example,
                                                                       the new telecommunications system will be fully implemented in
                                                                       fiscal year 1999. To date, [it] has been installed in more than 1,800
                                                                       service centers. Other goals include reengineering service center
                                                                       business processes and reducing customer paperwork.
Fundamental changes are needed to improve food safety. The             The Food Safety and Inspection Service’s fiscal year 2000
increasing incidence of foodborne illness has heightened               performance plan concentrates on HACCP systems
concerns about the federal government’s effectiveness in ensuring      implementation, although the President’s Council on Food Safety is
food safety. The current federal food safety system is highly          also addressed. Four of the agency’s six goals pertain to various
fragmented—as many as 12 different federal agencies oversee            aspects of HACCP planning and implementation. USDA-wide, the
food safety. (GAO)                                                     Department’s plan calls for spending an additional $35 million on
                                                                       food safety, a total of $151 million, in fiscal year 2000. This
The OIG plans to monitor Hazard Analysis and Critical Control          includes funding for providing research, training, and emergency
Point (HACCP) implementation. (OIG)                                    response and establishing baseline data.
Inefficiency and waste throughout the Forest Service’s operations      None. While the Forest Service has a goal to ensure organizational
and organization have cost the taxpayers hundreds of millions of       effectiveness, the management initiative to achieve this goal is
dollars. (GAO and OIG)                                                 oriented toward ensuring diversity in the workforce and equal
                                                                       access to service.
                                                                                                                                  (continued)




                                              13
                                                 Major Management Challenges and Program Risks: Department of Agriculture (GAO/OCG-99-2, Jan.
                                              1999).
                                              14
                                                Synopsis of Major USDA Program Issues (USDA/OIG, Dec. 1998).



                                              Page 18                          GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
                                                Appendix I
                                                Management Challenges




                                                                       Applicable goals and measures in the fiscal year 2000 annual
Management challenge                                                   performance plan
USDA continues to carry a high level of delinquent farm loan debt      The Farm Service Agency’s fiscal year 2000 performance plan
and to write off large amounts of unpaid loans held by problem         includes performance goals to reduce loan delinquencies on
borrowers. (GAO)                                                       direct loans, reduce losses on these loans, and to maintain the
                                                                       guaranteed loan loss rate at or below 2 percent. The plan also
Management of the $21 billion farm loan portfolio is of major          includes a goal to increase the number of loans to beginning and
importance to the Department, including providing assistance to        socially disadvantaged farmers and ranchers as well as a goal to
beginning and socially disadvantaged farmers/ranchers. In              process 80 percent of all requests for loan servicing within 60 days.
addition to civil rights issues, other emphases include loan
servicing (ownership and operating loans) and shared
appreciation agreements. (OIG)
Millions of dollars in overpayments in the Food Stamp Program          The Food and Nutrition Service’s fiscal year 2000 plan includes
occur because eligible persons are paid too much or because            four performance goals to improve the integrity of the food stamp
ineligible individuals improperly participate in the program. (GAO     program. These goals are to maintain payment accuracy in the
and OIG)                                                               delivery of program benefits; increase claims collections; maintain
                                                                       the baseline number of sanctions against violating stores; and
                                                                       increase the percentage of authorized stores that meet all
                                                                       requirements to accept food stamps.
USDA lacks financial accountability over billions of dollars in        USDA’s fiscal year 2000 overview states that improved financial
assets. (GAO)                                                          management is a departmental priority. The overview asserts that
                                                                       better response to OIG audits and addressing Federal Manager’s
Financial management in USDA has not been sufficient to provide        Financial Integrity Act (FMFIA) internal control deficiencies will
assurance that its consolidated financial statements are reliable      improve management controls. The Office of the Chief Financial
and presented in accordance with federal accounting standards.         Officer’s fiscal year 2000 performance plan includes various goals
(GAO and OIG)                                                          and measures to promote financial accountability throughout the
                                                                       Department. The Office’s plan includes performance goals and
                                                                       measures to respond to OIG audit findings and FMFIA material
                                                                       weaknesses.
USDA can save millions of dollars by better managing its               None. The Office of the Chief Information Officer’s fiscal year 2000
telecommunications investments. Among other things, USDA has           performance plan mentions the need to improve departmentwide
not consolidated and optimized telecommunications or established       telecommunications management as one of its six critical issue
sound management practices to ensure that telecommunications           areas, but no objectives are provided for addressing this critical
resources are effectively managed and payments for unused,             issue and no performance goals or corresponding strategies are
unnecessary, or uneconomical services are terminated. (GAO)            discussed.
Significant weaknesses in USDA’s multibillion-dollar modernization     These weaknesses are not directly addressed in the Office of the
of service center information technology raise concerns regarding      Chief Information Officer’s performance plan. However, two goals
the extent to which this effort will achieve an adequate return on     included in the plan could indirectly begin to address aspects of
investment or significantly improve customer service. These risks      these weaknesses, such as the goal to ensure that service center
include (1) acquiring new information technology (IT) without first    IT is driven by business needs and processes and the goal to
determining how it will operate to provide required service, (2) not   establish a methodology for project management. Neither,
managing the IT projects as investments, and (3) not developing a      however, discusses how the risks we identified will be addressed
comprehensive plan and management structure. USDA also needs           prior to acquiring new IT for the service center implementation.
to develop a concept of operations and new mission-critical            Completing a comprehensive plan for the service center program
business processes for providing one-stop service to better ensure     or managing the IT projects as an investment are not addressed.a
the success of its IT modernization efforts. (GAO)
                                                                                                                                (continued)




                                                Page 19                       GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
                                                Appendix I
                                                Management Challenges




                                                                        Applicable goals and measures in the fiscal year 2000 annual
Management challenge                                                    performance plan
USDA faces serious Year 2000 computing challenges correcting,           USDA’s overview highlights Year 2000 compliance as one of the
testing, and implementing its mission-critical automated                most important challenges facing USDA during fiscal year 1999.
information systems to work beyond 1999—that is to become Year          The Office of the Chief Information Officer’s performance plan
2000 compliant—in time. While USDA has begun to address its             includes an objective for addressing the Department’s Year 2000
Year 2000 problem, it still faces significant challenges renovating     problems and the need to ensure that USDA’s mission-critical
and replacing all its mission-critical systems in time and taking the   systems are compliant by March 31, 1999. While the plan does not
necessary steps to ensure that vital public services are not            identify a specific performance goal for Year 2000 compliance, it
disrupted. (GAO and OIG)                                                describes USDA’s strategy and gives time frames and measures.
                                                                        While the plan mentions that every agency has prepared business
                                                                        continuity and contingency plans to address unforeseen Year 2000
                                                                        failures, such plans are not fully developed and tested, and no
                                                                        time frames and milestones are given for when USDA expects to
                                                                        complete this essential work. Moreover, despite being called one
                                                                        of USDA’s most important challenges, performance goals,
                                                                        measures, and time frames for addressing the Year 2000 issue are
                                                                        not discussed in the plans of all of USDA’s component agencies.
Crop insurance has become a major USDA “farmer safety net.”             The Risk Management Agency’s fiscal year 2000 performance
USDA/OIG audits have identified areas where crop insurance              plan includes an objective for the crop insurance program to
programs need to be strengthened:                                       improve program integrity and protect taxpayers’ funds. The plan
—oversight by reinsured companies and the Risk Management               does not specifically address the OIG audit findings. However, the
Agency;                                                                 plan does include performance goals and measures to complete
—conflicts of interest;                                                 audit findings and to correct FMFIA deficiencies.
—verification by loss adjusters;
—yield and total liability;
—insurance availability to all producers. (OIG)
Under the Conservation Reserve Program, producers receive               FSA’s fiscal year 2000 performance plan does provide goals to
annual payments from the Farm Service Agency (FSA) to take              establish conservation cover, rehabilitate damaged acreage, and
erodible land out of production and establish a vegetative cover on     improve site remediation. However, the plan does not provide
it. There have been inconsistencies in how the states have valued       specific goals and measures to address the OIG’s concerns.
the cover. (OIG)
The Child and Adult Care Food Program is intended to ensure that        The Food and Nutrition Service’s (FNS) fiscal year 2000
children and adults in day care receive nutritious meals.               performance plan includes an objective to improve the integrity of
Widespread breakdowns in controls have been found in the                the Child and Adult Care Food Program. FNS’ performance goal is
program and resulted in many abuses. A Presidential initiative was      to have state agencies do better targeted and higher-quality
begun to eliminate these abuses. (OIG)                                  program reviews of sponsors and providers. The plan does not
                                                                        provide any criteria, measures, or data by which to determine
                                                                        improvement.
There have been issues raised regarding USDA agencies’ use of           USDA’s overview acknowledges that agricultural activities have
funds intended for pollution cleanup and abatement and                  deleterious effects on the environment and outlines $191 million in
management practices to avert future liabilities. (OIG)                 USDA budgetary authority scheduled to be spent on
                                                                        environmental protection. In addition, the Departmental
                                                                        Administration plan includes performance goals to measure
                                                                        progress toward pollution cleanup and abatement and to extend
                                                                        quality management practices for reducing any adverse
                                                                        environmental effects of USDA activities.b
                                                                                                                                (continued)




                                                Page 20                        GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
                                              Appendix I
                                              Management Challenges




                                                                       Applicable goals and measures in the fiscal year 2000 annual
Management challenge                                                   performance plan
There have been concerns about the way research funds are              None. Taken together, the Research, Education, and Economics
distributed and the conformity of funding decisions to the needs of    mission area agencies proposed ambitious research agendas in
the agricultural and forestry communities. The Congress has            their fiscal year 2000 performance plans. However, there is no
determined that the Department needs a process to ensure that          mention of a process to (1) ensure that the agendas support the
high-risk agricultural issues are covered and assurances that          needs of the agricultural and forestry communities and (2) set
research funds are used for their intended purposes. (OIG)             priorities for research projects and ensure that funds are spent for
                                                                       intended purposes.
There has been a backlog of over 1,000 complaints regarding the        None. Although USDA’s fiscal year 2000 performance plan does
civil rights process and treatment of minority farmers when they       not address the backlog issue, FSA, which is responsible for the
applied for farm loans or loan servicing. The OIG reported on          farm loan program, includes a management initiative in its plan to
problems as to why this backlog was not being resolved at a faster     enhance the ability of small, limited-resource, and socially
rate. (OIG)                                                            disadvantaged family farmers/ranchers to operate successfully.
There has been a history of fraud and abuse in the Rural Housing       None. Almost all of the Rural Rental Housing Program’s
Service’s Rural Rental Housing Program. Owners and                     performance goals relate to providing either additional units of
management companies have also shown indifference toward the           housing or financial assistance for housing. There are no
health and safety of low-income and elderly tenants. (OIG)             performance goals relating to program integrity.

                                              a
                                               The Department noted that service center information technology issues are discussed in the
                                              Support Services Bureau performance plan, which was not in the scope of our review. In
                                              response to the Department’s comments, we reviewed the Bureau’s plan and found that while it
                                              discusses USDA’s modernization of service center information technology, the plan—as was the
                                              case with the Office of the Chief Information Officer’s plan—does not include goals, objectives,
                                              time frames, or resources for addressing the specific risks that we identified as being associated
                                              with this multibillion-dollar service center information technology modernization. As a result, we
                                              made no changes to this section of the table.
                                              b
                                               The Department noted that its plans to address the use of funds for pollution cleanup and
                                              abatement are discussed in the Departmental Administration performance plan, which was not in
                                              the scope of our review. In response to the Department’s comments, we reviewed the relevant
                                              sections of the Departmental Administration plan and changed this section of the table to reflect
                                              the relevant performance goals.




                                              Page 21                           GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
Appendix II

USDA Agencies and Offices Whose Annual
Performance Plans GAO Reviewed

              We reviewed the fiscal year 2000 performance plans for each of the 19
              agencies and offices listed below.15

              Agricultural Marketing Service
              Agricultural Research Service
              Animal and Plant Health Inspection Service
              Cooperative State Research, Education, and Extension Service
              Economic Research Service
              Farm Service Agency
              Food and Nutrition Service
              Food Safety and Inspection Service
              Foreign Agricultural Service
              Forest Service
              Grain Inspection, Packers and Stockyards Administration
              Office of the Chief Financial Officer
              Office of the Chief Information Officer
              National Agricultural Statistics Service
              Natural Resources Conservation Service
              Risk Management Agency
              Rural Business–Cooperative Service
              Rural Housing Service
              Rural Utilities Service




              15
               In addition, in response to USDA’s comments on a draft of this report, we reviewed relevant sections
              of the Departmental Administration and the Support Services Bureau performance plans.



              Page 22                           GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
Appendix III

Major Contributors to This Report


                       Jerilynn Hoy, Assistant Director
Resources,             Natalie Herzog, Evaluator-in-Charge
Community, and         Eugene Wisnoski
Economic
Development Division
                       Heather McIntyre
Accounting and         Lou Schuster
Information            Steve Schwartz
Management Division    Mark Shaw
                       McCoy Williams




(150137)               Page 23                 GAO/RCED-99-187 USDA’s Fiscal Year 2000 Performance Plan
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