**March 15, 2004**

# INSPECTION MEMORANDUM

**To:** Philip Maestri, Director

Management Improvement Team

**From:** Cathy H. Lewis

Assistant Inspector General

Evaluation, Inspections, and Management Services

**Subject:** **Completion of Blueprint for Management Excellence Numbers
153, 154 and 155** (ED/OIG I13E0013)

This memorandum provides the results of our inspection of three Action
Items from the Department of Education's (Department's) Blueprint for
Management Excellence. The EIMS group is examining several Action Items
related to Human Capital. Our objective is two-fold: 1) to determine if
the item was completed as described; and, 2) as completed, does the
action taken help the Department towards its stated Blueprint objective.
In this report, we examined items 153, 154, and 155 completed June 18,
2002, concerning organizational layers, supervisory ratio and improved
citizen access.

## Background

All Executive agencies were required to submit to the Office of
Management and Budget (OMB) a five-year restructuring plan as part of
their FY 2003 budget submission and annual performance plan. The
Department submitted the One-ED plan as its answer to this request,
which was accepted by OMB. A Restructuring Team was established with
three sub-teams: Cross-Cutting; Administrative Services and Program to
answer the following questions: the current state; the future state;
what gaps exist between the current state and the future state, and what
would a Five-Year Plan for moving forward look like. Their incomplete
draft report is dated March 26, 2002.

The action item required for item 153 was:

The Department restructuring plan will address appropriate numbers of
organizational layers.

The action item required for item 154 was:

The Department will address its supervisory ratio.

The action item required for item 155 was:

The Department's restructuring plan will review positions to improve
citizen access to services.

All three of these action items were listed as completed based upon the
completion of the One-ED Report on June 18, 2002. Because these actions
items are so closely related, we are combining them for the purpose of
this inspection.

### Objective 1: Were the action items completed as described for Numbers 153, 154, and 155?

The One-ED report does not contain a restructuring plan that addresses
appropriate numbers of organizational layers, it does not address the
Department's supervisory ratio and it does not review positions to
determine how to improve citizen access to services.

The Assistant Secretary for the Office of Management (OM), responding to
a request for documentation on these three action items, stated: "We
decided not to develop a restructuring plan but rather focus on our work
and the way we do it....the proper organizational structure will be what
it ought to be to best support our work." Absent a five-year
restructuring plan, we reviewed the business case analyses completed in
Phase I of the One-ED process to determine the extent to which these
three issues were addressed in those plans.

In One-ED, teams are guided through the Strategic Investment Process
(SIP), which culminates in the issuance of a written business case
analysis. The business case analysis format uses an all-inclusive
template, touching on every aspect of a function. There is, however, no
particular focus on appropriate numbers of organizational layers,
supervisory ratio or a review to improve citizen access to services.
According to team members, they were instructed to examine functions
within their areas that needed improvement in order to propose
reengineering solutions. They did not examine overall organizational
issues and they were not instructed to address the issues contained in
items 153, 154 and 155.

Even if a comprehensive analysis had been included in the business
cases, however, because of the methodology of the One-ED process, the
result would not have been a comprehensive analysis of organizational
layers, supervisory ratio or improving citizen access. Each of the nine
business cases focused on only one business function, rather than the
total mission of each office. The One-ED strategic investment process,
which will take some time to complete, will not result in a Department
wide, strategic examination of any of these issues.

In response to the OMB request, other agencies undertook a comprehensive
approach to workforce planning. The U.S. Department of Commerce, for
example, requested from each bureau a detailed plan responding to each
point in the President's Management Agenda. Included in each bureau's
plan is a chart of the current organization and a chart showing the
organization as it is projected to look at the end of fiscal year 2007.
The Internal Revenue Service's response includes a multi-year staffing
plan, which matches approved, funded positions and captures attrition,
migration and programmatic change to project five-year hiring plans.

Objective 2: As completed, do the actions taken help the Department
towards its stated Blueprint objective (advancing the strategic
management of human capital)?

The Department did not develop a restructuring plan and did not address
numbers of organizational layers, supervisory ratio or how to improve
citizen access to services. The individual One-ED business cases
likewise did not develop plans to address these issues, and given their
limited focus would not have a viable vehicle for such an analysis. The
Department does not have an overarching human capital strategy nor does
it have a comprehensive Human Capital Plan that addresses these issues.

### Recommendations

1.  The Department should reconsider listing these action steps as
    "completed." If the EMT believes that these actions are unnecessary,
    the action items should be designated as "closed."

2.  The Department should re-examine its reliance on One-ED to address
    the Department's need for a well-articulated human capital strategy
    and a comprehensive human capital plan.

## MIT Comments

The MIT acknowledged that not all of the activities outlined in One-ED
have been accomplished. As a result, the EMT is currently evaluating the
issue of human capital and is identifying activities that need to be
taken to address human capital issues throughout the Department. In
addition, the EMT is currently evaluating lessons learned from the
original implementation of the Strategic Investment Process and is
considering alternative approaches to implementation. The MIT response
is included as an attachment to this memorandum.

**OIG Response**

OIG has not modified its recommendations.