BUREAU OF THE PUBLIC DEBT

U.S. Department of the Treasury

STRATEGIC PLAN

2003 – 2008

September 2003
This strategic plan for Public Debt sets an exciting and challenging course that is filled with promise—for our

programs and for our customers. The directions that we outline here are far-reaching and are the latest

products of a long-standing process in our organization—strategic thinking supported by continuous

improvement.

Once a formal planning process becomes ingrained, as it has here in Public Debt, I think we can too easily

forget to give our commitment to planning the credit it deserves. For more than twenty years, our Bureau has

used a structured process for looking down the road. Our process has worked well for us and for our

customers. What can make one organization’s planning work better than another’s? It would be convenient

and would stroke some egos to suggest that the people doing the planning are somehow smarter or more

visionary than those performing similar functions elsewhere. With all due respect, I don’t think that’s the

case. I do, however, have a view on what might be the difference.

Although it’s been refined quite a bit over the years, one principle remains fundamental to our approach to

planning—planning is the personal responsibility of senior managers. On the surface this may seem to be an

obvious, and almost trivial, statement but I don’t think it is. It’s easy to acknowledge that of course top level

managers should be involved in planning but then actually behave as if the planning is somehow less

important or less deserving of senior managers’ time than “doing real work” or reacting to the most recent

and visible crisis. This is understandable because of the forces that reward near-term thinking. These forces

place a higher priority on successfully fighting the forest fire rather than thinning the forest. After all fighting

the fire is visible, its priority is obvious, and its claim on resources is undeniable. However the ongoing

efforts to thin the forest are not newsworthy, are easily delayed in the face of other work, and are perceived

as weaker justification for financial resources.

I am proud to be associated with an extraordinary group of Federal managers here at Public Debt—managers

who regularly raise the bar for performance and who, through our planning, help to set new and challenging

goals for our Bureau. I am equally proud to be associated with our outstanding employees—employees who

are committed to the best in customer service and who, year after year take up the challenge presented by

our strategic planning and, in the true spirit of continuous improvement, turn our plans into product. We are

fortunate in that we are given the opportunity to thin the forest and clear the way for our employees to

continuously improve the service delivered to our customers.

The directions outlined in this plan will keep us busy for some time and will enable us to deliver better

service. The theme in this plan—and the prime source of our cost efficiencies—is the effective use of

information technology. Most of the directions we have set build on our already extensive use of IT. Our

approach to IT is simple: bring it to bear in virtually all situations where it makes sense and, to really

leverage its benefit, place as much of our technology in the hands of our customers as possible. We have

been offering our customers electronic ways to conduct business with us for many years and, as we execute

this plan, we will further empower them to manage their own auction bids, retail securities holdings,

government agency investments, and administrative transactions.

This plan—more than any that have preceded it—demands that the various offices in Public Debt work even

more closely together to achieve the results envisioned. Based on our organization’s past performance, I

know that will happen and that the future described in this plan will soon become our new foundation for

even more significant improvements.

MESSAGE FROM THE COMMISSIONER
TABLE OF CONTENTS

Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

A Guide to Our Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . .2

At the Highest Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Strategic Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Approaches for Achieving Our Program Goals . . . . . . . . . .4

What We're About . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Key External Factors for Public Debt Operations . . . . . . . .6

Program Directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Wholesale Securities Services . . . . . . . . . . . . . . . . . . . . . . .7

Government Agency Investment Services . . . . . . . . . . . . .10

Retail Securities Services . . . . . . . . . . . . . . . . . . . . . . . . . .12

Summary Debt Accounting . . . . . . . . . . . . . . . . . . . . . . . . .16

Franchise Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Our Use of Program Evaluations . . . . . . . . . . . . . . . . . . . . .19

Our Approach to Management Supports the President’s

Management Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

The President’s Management Agenda . . . . . . . . . . . . . . . .23

The Federal Reserve Connection . . . . . . . . . . . . . . . . . . . .26

Our Commitment to Customer Service . . . . . . . . . . . . . . . .27

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
1

“The United States debt, foreign and domestic, was the price of

liberty. The faith of America has been repeatedly pledged for it ...

Among ourselves, the most enlightened friends of good government

are those whose expectations of prompt payment are the highest.

To justify and preserve their confidence; to promote the increasing

respectability of the American name; to answer the calls of justice;

to restore landed property to its due value; to furnish new

resources, both to agriculture and commerce; to cement more

closely the Union of the States; to add to their security against

foreign attack; to establish public order on the basis of an upright

and liberal policy; these are the great and invaluable ends to be

secured by a proper and adequate provision, at the present period,

for the support of public credit.”

Alexander Hamilton, 1790

First Report on the Public Credit

The mission of Public Debt is to borrow the money needed to operate

the Federal Government and to account for the resulting debt.

Article I, Section 8 of the Constitution empowers the Congress to

borrow money on the credit of the United States. This authority has

been delegated to the Secretary of the Treasury. As an organizational

entity within Treasury's Fiscal Service, the Bureau of the Public Debt is

authorized to conduct such borrowing for the Federal Government.

Heritage

MISSION

Mission

Authority
2

This is Public Debt’s strategic plan for fiscal years (FY) 2003 through

2008. The plan outlines where we’re headed over the next few years.

The first section, At the Highest Level, presents a 30,000-foot view: a

concise statement of what will guide us during the next five years.

In the What We’re About section, we pause to give you some

background on the scope of what we do at Public Debt and how we get

our work done. In this section, you’ll get a glimpse of how we break

down our responsibilities into five program areas. This short summary

may help those readers who do not know much about us even though

they, and tens of millions of others, may be our customers.

We get a bit more detailed in Program Directions. Here’s where you’ll

find the specifics of how the broad objectives become program

initiatives. The section begins with a brief description of each of our

programs and continues with specific information about each area’s

future.

Our Use of Program Evaluations describes how we’ve evaluated our past

performance, how those evaluations influenced our direction, and plans

for some future evaluations. We regularly evaluate how we are doing—

from customer surveys through program reviews to audit reports. And

we pay attention to the information we get.

The next section, Our Approach to Management Supports the President’s

Management Agenda, describes the management improvements sought

by the Administration and our management philosophy and practices.

We’ve met nearly all the Administration’s reform goals, and we explain

how we have met them. In other areas, we explain what we’ll do to

reach them.

In the Federal Reserve Connection section, we describe our relationship

with the Federal Reserve Banks, that serve as Treasury’s fiscal agents.

In this capacity, the Federal Reserve provides Treasury with continuous

market contact and significant operational flexibility in administering

the public debt.

The final section, Our Commitment to Customer Service, briefly

summarizes our approach to customer service. We have many

customers—large financial institutions, Federal agencies, State and

local governments, and individuals—who deserve and receive quality

customer service.

A GUIDE TO OUR STRATEGIC PLAN
3

Strategic Objectives:

Effectively Finance Government Operations

Means and Strategies:

• Borrow what is necessary to meet the monetary needs of the

Government.

• Minimize the cost of the Federal government’s borrowing

activities.

• Provide mechanisms for participation by a wide range of

investors in Treasury debt financing.

Fulfill Customer Expectations

Means and Strategies:

• Protect investors through effective regulation of the government

securities market.

• Provide quality customer service and transaction processing for

investors in Treasury securities.

• Provide accurate and timely payments to investors in Treasury

securities.

• Provide quality administrative and information technology

services to external franchise customers.

Effectively Account for the Debt of the Federal Government

Means and Strategies:

• Provide accurate and timely public debt accounting information.

AT THE HIGHEST LEVEL
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Approaches for Achieving Our Program Goals

• Educate existing and potential customers on Treasury securities

products, services, and investment considerations.

• Simplify the regulations and procedures that our customers must

follow to conduct business with us.

• Make and receive as many of our payments electronically as

possible.

• Encourage our retail customers to establish a direct account

relationship with us for all of their Treasury securities holdings.

• Enable investors to purchase securities, manage their accounts,

and conduct transactions electronically.

• Expand our use of the Internet to educate our customers and

communicate with them.

• Deploy secured technology in support of our operations using an

open architecture, emphasizing business process reengineering,

and applying the principles of rapid application development.

• Accomplish administrative transactions electronically.
5

Public Debt has responsibility for five programs:

Wholesale Securities Services

Government Agency Investment Services

Retail Securities Services

Summary Debt Accounting

Franchise Services

In managing these programs, we regulate the primary and secondary

Treasury securities markets and ensure that reliable systems and

processes are in place for buying and transferring Treasury securities.

Annually, we auction and issue $4 trillion in marketable securities and

issue and redeem more than 100 million savings bonds. We also service

securities worth more than $400 billion in retail investment accounts

and $3 trillion in investments for government entities. We account for

the Public Debt of the United States and report on it timely and

accurately. As part of the Treasury’s Franchise Fund, we offer a wide

range of administrative and technology services, on a fully

reimbursable basis, to many other Federal agencies.

While our headquarters office is in Washington DC, most of our

employees are located in Parkersburg, West Virginia, where we maintain

our primary operations and computer center.

Federal Reserve Banks operate critical systems in support of our

programs and perform a wide range of transaction processing and

customer service functions. Their services are essential to the

accomplishment of our mission. We also rely on private-sector financial

institutions and other organizations to provide indispensable, front-line

transaction services to our savings bond customers at more than

40,000 locations.

We rely extensively on automated systems to carry out our functions

and deliver services online. We’ve developed and continually enhance

systems to auction Treasury securities, process a wide range of

servicing transactions, initiate billions of dollars in customer payments,

and account for the public debt at the detail and summary level.

We place a priority on customer service. We want investors to use our

electronic systems and services to purchase securities and manage

their holdings online. Our website (www.treasurydirect.gov) provides

these services and is a prime source of information for investors. At the

same time, we’re committed to providing exemplary personal

assistance when investors request it. 

Our operations are funded by an annual appropriation for

Administering the Public Debt and permanent-indefinite appropriations

for Federal Reserve Bank services and Interest on the Public Debt. The

services that we provide to our franchise customers are self-funded.

WHAT WE’RE ABOUT
6

The primary external factors that affect our operations are changes in

interest rates, events occurring in the financial markets, the statutory

limit on the amount of debt that the Federal government can incur, and

whether the government is running a deficit or a surplus. One of the

benefits of our long-standing strategic planning process is that we have

been able to make significant operational improvements over the years

that have made us substantially less sensitive to workload changes that

occur as a result of these external forces.

Our experience has shown that increases in interest rates generally

make Treasury securities more attractive, both in their own right and

in relation to other investments. As a result, we have historically

experienced an increase in the number of customers purchasing our

securities during periods of increasing interest rates.

Financial market events that cause investors concern about the safety

of their savings and investments also affect our programs. Our retail

products—savings bonds and direct-access marketable securities—are

attractive to individual investors because they are backed by the full

faith and credit of the United States. In periods of market uncertainty,

investors tend to seek safer instruments and are more selective in

choosing where to hold their securities. This is often referred to as a

“flight to quality.” Under these circumstances, we may experience a

substantial increase in retail securities sales activity.

Generally, Public Debt is permitted to borrow whatever amount is

necessary for the government to meet its financial obligations. The

exception is when we near the statutory debt limit, which specifies a

maximum amount for the public debt. Periodically, the limit must be

increased by Congress to permit necessary borrowing and the

continued funding of government operations. If this increase does not

occur timely, our financing operations are substantially disrupted.

A budget deficit or surplus can also affect our debt financing

operations. When there is a significant deficit, we increase the

frequency of auctions, the types of securities offered, and the amount

borrowed per offering. A budget surplus, on the other hand, tends to

have the opposite effect.

Key External Factors for Public Debt

Operations
7

This section describes the future directions and areas of emphasis for

our securities and accounting programs, as well as our franchise

program. 

Wholesale Securities Services

The Wholesale Securities Services program ensures that the

government’s critical financing needs are met and that the integrity and

efficiency of primary and secondary markets for Treasury securities are

maintained. It also includes our regulatory responsibilities. This

program includes all activities related to the sale and issuance of 

$4 trillion in Treasury securities each year, as well as responsibilities

for the operation of Treasury and Federal Reserve systems that

support the $3.5 trillion of Treasury securities currently held by

institutional investors and their customers. Using the regulatory

authority of the Government Securities Act of 1986, we promote the

integrity and efficiency of the secondary market for Treasury securities.

We also identify the securities that can be pledged to the government

as collateral and determine how these securities are valued. This work

ensures that both government funds on deposit at commercial banks

and private-sector contracts with the government are secured.

Treasury’s objective is to meet the government’s financing needs at the

lowest cost over time. Our efforts to support this objective include

activities such as educating bidders about the auction process and our

products, listening to our customers, making it easier to participate in

auctions, and expanding our customer base. Through increased use of

technology, we’ll continue to improve the reliability and transparency

of our debt financing operations. We’ll also issue regulations and

guidance in plain language to ensure the safety and soundness of the

primary and secondary markets. Additionally, we continually strive to

achieve a balance in regulation—a balance that maintains market

liquidity and efficiency, while preserving market integrity and

protecting investors.

Our strategic directions for the Wholesale Securities Services

program are:

• Minimize Treasury's cost of borrowing by expanding participation

in Treasury auctions.

• Maintain flawless Treasury financing operations.

• Ensure that our regulations remain viable and effective as product

offerings, market structures, and systems evolve.

• Support and advise the Treasury Department in developing

positions on evolving financial market issues.

• Ensure that collateral we designate as eligible to protect Federal

agencies from financial loss is appropriate and properly valued.

Our long-term goal for this program is: Increase the number of

bidders in Treasury auctions by 15% by FY 2010.

PROGRAM DIRECTIONS
8

Minimize Treasury's cost of borrowing by expanding participation in

Treasury auctions. Although Treasury securities are attractive

investments and arguably the most liquid investments in the world, we

can’t simply expect that the current participants in our securities

auctions will always be there in sufficient strength to keep the auctions

competitive. In short, we can’t take our customers for granted. To

continue to finance Treasury debt at the lowest possible cost for the

taxpayer, we’ll expand the base of customers who buy securities at our

auctions directly or through intermediaries. We’ll expand participation

by listening to our current customers and using their suggestions to

improve our auction processes. We’ll lower or eliminate operational

and automation barriers to direct auction bidding. Expanding our

auction customer base will allow us to continue to meet Treasury’s

borrowing needs, regardless of amount, while keeping borrowing costs

at the lowest possible level.

Maintain flawless Treasury financing operations. It’s crucial that we

perform our financing operations timely and without error. In our

efforts to keep our financing costs low and sustain the extraordinary

confidence that financial market participants have in the integrity of

Treasury’s borrowing, we must strive to perform without error and

ensure that the information we give to the public can be relied upon

without exception. To maintain flawless performance and, at the same

time, handle an increasing number of bidders is an unrelenting

challenge. We need to make sure that our employees are well trained

and empowered to act, and that our operating procedures are

streamlined and appropriately flexible. Moreover, we need to continue

to rely even more on the performance of our automated systems and reduce our dependency on human intervention. This is, of course,

especially true during those critical seconds between the close of an

auction or buyback and the release of results to the public. We’ll

continue the substantial reengineering of our auction process with the

total redesign and replacement of the Treasury Automated Auction

Processing System. We’ll use the latest technologies to accomplish this reengineering in the shortest feasible time, and keep in mind that any

new processing environment must operate reliably and without error.

While critical, auctioning and issuing our securities is just the start. We

must ensure that our securities are held in a secure, reliable, and

accessible holding and transfer system that instills investor confidence

and contributes to secondary-market liquidity for Treasury debt. We’ll

work closely with the Federal Reserve to make sure that the National

Book-Entry System for holding and transferring securities is

continuously enhanced to ensure its reliability and to meet customer

expectations. These efforts will contribute to Treasury securities retaining their premier status in the financial marketplace.

Ensure that our regulations remain viable and effective as product

offerings, market structures, and systems evolve. Unlike most issuers

of securities, Treasury is also a regulator—it issues securities and also

writes regulations for the government securities market. This dual role requires us to balance the goals of fostering a liquid and efficient

market while preserving market integrity and protecting investors. In

doing this over the next few years, we will need to take into account

evolving market structures, such as a shrinking number of primary
9

dealers, and evolving market systems, such as those that support

greater use of electronic trading and faster settlement of securities

trades. We’ll ensure that our auction rules remain flexible,

accommodate a wide range of both direct and indirect participants,

and do not retard market innovation. We’ll also make sure that our

auction regulations can accommodate new types of securities that may

be needed to help the government finance expanded borrowing needs.

Support and advise the Treasury Department in developing positions

on evolving financial market issues. We have both an operational and

a market regulation perspective in the Wholesale Securities Services

program. One of our key responsibilities is to support Treasury’s

policymakers. Although we can predict some of the support that may

be needed, this strategic direction largely consists of ongoing

preparation for dealing with unpredictable and unscheduled events and

short turnaround times for work products. We’re committed to

ensuring that we have knowledgeable and experienced people who are

available to assist debt managers on a wide variety of legal, regulatory,

and technical subjects. We’ll continue to expand our understanding of

the securities markets in general and the government securities market

specifically, so that we can ably assist Treasury officials and other

agencies. Two key areas that will receive our continuing attention are

the robustness and adaptability of the clearing and settlement systems

for government securities and the broad issue of contingency planning

in both the primary and secondary markets.

Ensure that collateral we designate as eligible to protect Federal

agencies from financial loss is appropriate and properly valued.

Treasury requires that public funds on deposit at financial institutions

be collateralized to protect the government from financial loss.

Collateral can also be pledged to a Federal agency for other purposes,

such as to ensure performance of a contractor. Our responsibility is to

evaluate the assets that could potentially be used as collateral, identify

those assets that Treasury will accept, and specify how the value of the

collateral will be determined. Proper valuation generally means that the

value is adjusted at specified intervals to reflect up-to-date market

values. As markets evolve and new instruments are created, we’ll

evaluate whether additional types of instruments should be made

eligible to collateralize public monies and specify how they should be

valued.
10

Government Agency Investment Services

This program includes three distinct services: Federal Investments;

State and Local Government Investments; and Treasury Loans

Receivable. Because these investments and borrowings are based on a

broad range of statutes and a diverse customer base, our challenge is

to ensure that we meet both statutory requirements and customer

needs, while providing the most efficient operations possible. 

Federal Investments: We administer investments in Government

Account Series securities, which are special-purpose securities issued

only to Federal agencies that manage trust, deposit and other special

funds. These agencies must have specific statutory authority to invest

in these securities. Our duties include issuing, paying interest on, and

redeeming the securities held by each Federal fund, as well as handling

all of the debt-related accounting and reporting for these securities on

the Consolidated Financial Statement of the Federal government. There

are nearly 200 Federal funds that invest in these special purpose

securities. For a small number of these funds for which the Secretary of

the Treasury serves as trustee, we also provide additional accounting

services. Examples of funds that invest in these securities, and may be

the most familiar to the public, are the Social Security Trust Funds. In

2003, nearly $3 trillion were invested in Government Account Series

securities. 

State and Local Government Securities: We administer investments in

State and Local Government Series securities (SLGS), which are specialpurpose securities offered to State and local government entities that

need to invest certain funds and still comply with Federal tax rules on

arbitrage. We issue, pay interest on, and redeem these securities, as

well as handle all debt-related reporting and accounting. On average,

there are approximately 5,000 government entities that hold

investments in these securities. The amount invested in SLGS generally

runs about $150 billion.

Treasury Loans Receivable: We account for and report on both the

borrowings from and repayments to Treasury by nearly 80 Federal

agencies. These agencies are statutorily authorized to borrow from

Treasury to make loans for a broad range of purposes, such as

education, housing, and small business support. In 2003, outstanding

borrowings were about $240 billion

Our strategic directions for the Government Agency Investment

Services program are:

• Improve financial reporting of Federal agency investment

transactions.

• Pursue standard legislative language for Federal agency

investments.

• Actively promote compliance with Treasury’s Investment policies

for Federal agencies.

Our long-term goal for this program is: Conduct 80% of Government

Agency customer initiated transactions online by the end of FY 2008.
11

Improve financial reporting of Federal agency investment

transactions. Errors in the reporting of transactions conducted

between Federal agencies, which are supposed to offset and eliminate

each other in the roll-up of agency financial statements into the Federal

government’s Consolidated Financial Statement, continue to be an

impediment to obtaining a clean audit opinion on this statement. We

play a unique role in accounting for a very significant amount of the

liability side on this statement, including Government Account Series

securities issued to Federal agencies. The many Federal agencies that

invest in these securities need to properly report their offsetting assetside transactions for this “elimination” to occur.

We’ll continue to pursue a two-pronged approach to support Treasury’s

goal of obtaining a clean audit opinion on the Consolidated Financial

Statement. First, we’ll continue to assist in the development of clear

reporting rules and help our counterpart agencies understand them.

Second, we’ll enhance the functionality of our web-based investment

accounting system and encourage Federal agencies to avail themselves

of the data we can offer them online to properly report their side of

intra-governmental transactions they conduct with us. 

Pursue standard legislative language for Federal Agency investments.

The Secretary must have legal authority, either from a statute or a

treaty, to invest moneys held in a government account. Over the years,

many different Congressional actions have created a hodgepodge of

authorizing statutes. This leaves Treasury with the daunting task of

interpreting and honoring congressional intent. The lack of consistent

investment language is a major challenge to administering the Federal

Investment Program. We support Treasury’s initiative to encourage

standard investment language for all new funds. We’ll continue to

provide Treasury’s preferred investment language to drafters of

proposed legislation as those opportunities emerge. We’ll also assist

Treasury in obtaining technical amendments to any legislation that

contains ambiguous investment provisions. 

Actively promote compliance with Treasury’s Investment policies for

Federal agencies. We recognize that we have an important role in

promoting compliance with Treasury investment policies by our

Federal agency customers. Effective communication of business rules

and agencies’ responsibilities is essential for compliance with

Treasury’s policies. Treasury’s Investment Fund Operating Circular is

an important reference tool for investing agencies. We’ll work with

other Treasury offices to ensure that this circular remains current. We’ll

continue to conduct annual forums to educate Federal agencies about

the investment policies. We’ll also participate in a multi-year Treasury

review of each of the investment trust funds and work with the

responsible program agencies to document their specific

responsibilities and procedures for administering their funds’

investments. Additionally, we’ll expand our monitoring of agencies’

investment activities to identify potential violations of Treasury’s

investment policies. This oversight will include transaction monitoring,

individual customer consultations, and annual visits to key program

agency offices. 

Enable and encourage our Federal, State and local government

customers to conduct their business with us online. We’ll expand the

functionality that we offer to investing Federal, State and local
12

governments to enable them to completely manage their securities

portfolios online. By completing the automation of our Loans

Receivable process, we will improve accounting controls and enable

Federal agencies borrowing from Treasury to manage their accounts

online. We’ll continue to promote the use of our web-based

applications to all these entities. We’ll also ensure that our applications

supporting Federal agency transactions will interface seamlessly with

the Government-Wide Accounting application that is being developed

to process intra-governmental transfers of funds more efficiently and

effectively.

Retail Securities Services

Our Retail Securities program includes all of the services and activities

related to savings and marketable Treasury securities purchased and

held directly with Public Debt. The centerpiece of our strategic

planning for retail securities is TreasuryDirect—a web-accessible

system which, when fully implemented, will enable our retail investors

to purchase the full range of Treasury securities and manage their

holdings through a single online account.

The four components of our Retail Securities Services program are:

TreasuryDirect: TreasuryDirect is an automated system that was

launched in October 2002 with the introduction of the first-ever

electronic savings bond, Series I. The system was expanded in May

2003 to include electronic Series EE bonds. TreasuryDirect allows

investors to manage these paperless savings bonds through a single,

convenient account accessed via the Internet. Additional products

and services will be made available to the public in a series of system

enhancements. Investors can establish accounts, purchase securities,

and manage their holdings online in a secure environment.

Paper Savings Bonds: This service includes all Public Debt, Federal

Reserve, and agent activity involved in issuing, servicing, and

redeeming paper savings bonds. Some 55 million people hold paper

savings bonds worth nearly $200 billion.

Direct-Access Marketable Securities: This service encompasses all

Public Debt and Federal Reserve activity related to establishing and

maintaining accounts for marketable securities held in our legacy

book-entry system. More than $65 billion is held in approximately

500,000 accounts in this system.

Other Definitive Securities: This service includes all activity related

to transactions in bearer (coupon) securities, miscellaneous nonmarketable securities (such as Armed Forces Leave Bonds and Postal

Savings Bonds), and paper registered marketable securities. These

registered securities have not been issued since 1986 and there are

fewer than 10,000 accounts and $300 million in value remaining

outstanding. The last of these securities will mature in 2016.
13

Our strategic directions in the Retail Securities Services program

are:

• Continuously improve the products and services in TreasuryDirect

to meet the needs of our retail investors.

• Position Treasury to be able to eliminate new issues of paper

savings bonds.

• Encourage retail owners of outstanding Treasury securities to

convert their holdings to TreasuryDirect.

• Consolidate Federal Reserve Bank retail securities operations.

• Foster strategic relationships and partnerships that will support

our evolving retail programs.

• Maximize investor self-sufficiency and, when needed, provide

personal customer service.

Our long-term goal for this program are: Hold 50% of Treasury’s

retail debt in our new TreasuryDirect System by FY 2011 and

complete 90% of customer service transactions within 10 business

days by FY 2010.

Continuously improve the products and services in TreasuryDirect to

meet the needs of our retail investors. We’re committed to promoting

a direct financial relationship through TreasuryDirect that meets the

investing needs of our customers. Our goals are to make it easy for

them to understand how to purchase and hold securities directly with

Treasury and to have the information they need about our products

and services.

Our website will become the primary means for communicating with

our TreasuryDirect customers. The site will allow investors to access

information about our products and services and help them to make

informed decisions about investing in Treasury securities. They will be

able to establish accounts where they can buy and hold marketable and

savings securities in book-entry form. Investors will access their

accounts, submit bids, purchase securities, and manage their holdings

online in a secure environment. Customer identity will be validated, and

transactions will be processed electronically whenever possible;

communications will occur via e-mail; payments will be made

electronically; and investors will access statements, confirmations, and

tax information online.

TreasuryDirect is a work in progress and will continue to be so for

many years to come. It was designed to be incrementally enhanced and

modified to meet our investors’ needs. In the near term we will add

additional forms of registration and streamline existing system

functionality. Next we will add a payroll feature that will allow investors

to authorize their employers to regularly direct a portion of their

earnings to their TreasuryDirect accounts to purchase securities. Down

the road we’ll expand TreasuryDirect to offer marketable Treasury

securities and permit investors who hold securities in our legacy directaccess system to move their holdings to a TreasuryDirect account.

We’ll continue to enhance the system to incorporate additional features

and services.
14

Position Treasury to be able to eliminate new issues of paper savings

bonds. Treasury is committed to offering savings securities to the

public, and our responsibility is to do so as efficiently as possible.

Since paper savings bonds are more costly to issue than electronic

bonds, we will begin to realize operational savings when we can stop

issuing paper bonds. This means that we should move to all-electronic

issues as soon as practicable. We believe that investors will move from

other sales channels to TreasuryDirect as quickly as their access to the

Internet and their willingness to manage money online permit. We also

believe that these services will be attractive to new customers already

comfortable with online business transactions. That said, we will

continue to offer both paper EE and I bonds through conventional

channels during a transition period. This will allow us to gauge investor

acceptance of TreasuryDirect and to ensure that our customers are

aware that we offer an electronic alternative to paper before we set a

date to discontinue new issues of paper savings bonds.

To accelerate this process and encourage investors to move to

electronic savings bonds, we’re taking steps to phase out the purchase

of paper savings bonds online. At the end of December 2003 we will

stop the credit card sales of paper savings bonds on our website. At

the same time we’ll also begin to phase out EasySaver, which enables

individuals to arrange for the recurring purchase of paper savings

bonds. We’ll maintain existing EasySaver accounts through March 2005.

The TreasuryDirect system provides investors with the same services

available in these two sales channels. In mid-2004 we’ll stop issuing

Series HH savings bonds, which are paper securities no longer issued in

large volumes.

Encourage retail owners of outstanding Treasury securities to

convert their holdings to TreasuryDirect. This undertaking will have

both investor education and operational dimensions. We’ll develop an

effective communications plan to inform those holding paper savings

bonds of the benefits of converting them to book-entry form in

TreasuryDirect. Providing information and guidance on the

TreasuryDirect website will be one of the ways we will do this, but we

will explore other means as well, such as enlisting the assistance of

financial institutions and reaching out through the media. Because the

paper bonds were issued under regulations that entitle the purchaser

to a physical certificate, the conversion to book entry will be voluntary.

The potential workload of processing conversion transactions is quite

large since there are 700 million paper savings bonds outstanding. The

effort will be worth it, however, because of the benefit to our customers

and because every paper bond we convert is one we will never have to

handle again.

A variant of the savings bond conversion will apply to those who hold

marketable securities—bills, notes, and bonds—in our legacy bookentry system. Once the functionality to handle marketable securities is

added to TreasuryDirect, we’ll begin an effort to encourage legacy

direct-access customers to move their securities into TreasuryDirect.

As with savings bonds, this move must be voluntary on the part of the

investor. Unlike savings bonds, our efforts to encourage these investors

to move to TreasuryDirect will be much more targeted. Since we

currently maintain accounts—and contact information—for these

investors in our legacy system, we can communicate with them

directly. 
15

Consolidate Federal Reserve Bank retail securities operations. Full

TreasuryDirect implementation (including the conversion of paper

savings bonds and legacy direct-access accounts) will have a significant

impact on the services performed by Federal Reserve Banks. Paper

savings bond processing is consolidated at five Federal Reserve Bank

sites. They process virtually all over-the-counter purchase orders, issue

more than half of the bonds sold through payroll savings plans, and

handle a wide-variety of customer service functions. Two sites inscribe

and mail bonds, and one of these sites controls unissued bonds and

completes the processing of bonds redeemed by more than 40,000

paying agents. Our legacy direct-access system for book-entry

marketable bills, notes, and bonds is operated by a single Federal

Reserve Bank. Three other sites receive and process tenders, conduct

account maintenance and other transactions, and provide general

customer support.

As retail securities sales and transactions migrate to TreasuryDirect,

Federal Reserve sites will see their workload decrease. Savings bond

issues will decline first as investors choose electronic bonds over

paper when purchasing over-the-counter and via payroll deduction and

as we discontinue Savings Bond Direct, phase out EasySaver, and

withdraw the Series HH offering. Original issue activity will not cease

altogether until we stop selling paper bonds. Reissue and redemption

transactions and customer inquiries will decline gradually as investors

hold fewer paper bonds that require servicing. Sales, account

maintenance, and customer service transactions in the legacy directaccess system processed by Federal Reserve sites will decline when we

make marketable securities available in TreasuryDirect and legacy

system investors move their holdings to the new system.

These workload reductions will not occur immediately but, over time,

fewer Federal Reserve resources and locations will be needed to

support our retail securities program. With support from the Federal

Reserve, we’re undertaking a study to determine the number and

location of Federal Reserve sites that will continue to be involved in

retail securities processing after these significant program changes

have been implemented. Following the site selections we will look to

the Federal Reserve to plan for and implement the consolidation of

work to the selected locations.

Foster strategic relationships and partnerships that will support our

evolving retail programs. Until paper savings bonds are withdrawn

from sale, we’ll issue electronic bonds in TreasuryDirect and paper

bonds through conventional channels. As we proceed through this

phase we will need to maintain the support of the network of savings

bond issuing and paying agents and employers who offer payroll

savings plans. TreasuryDirect will place fewer requirements on

employers than current payroll arrangements, and we’ll work with them

to transition their employees to the new approach for payroll savings.

We want financial institutions to continue to sell paper bonds over-thecounter as we encourage our customers to embrace purchasing

electronic securities online. One factor that will influence how quickly

we’re able to stop new issues of paper savings bonds is our customers’

access to the Internet. We plan to identify alternatives for those

customers who may not have convenient personal Internet access, and

we anticipate that this exploration may very well present opportunities

for some strategic partnerships with other organizations. Lastly, we’ll
16

need the support of our paying agents to redeem paper savings bonds

for many years to come. Some 55 million individuals currently hold

more than 700 million bonds. Even when we’re no longer issuing paper

bonds, it’s important that we continue to make it convenient for

investors to redeem bonds locally.

Maximize investor self-sufficiency and, when needed, provide

personal customer service. Our goal is to enable investors to manage

their routine securities investment transactions without help from us.

At the same time, we will offer our customers superior, personal

customer service for those times when they need assistance.

TreasuryDirect offers a wide range of account management tools that,

with few exceptions, permit customers to manage their accounts and

holdings on their own. In those situations where they need help

understanding our products and services or assistance in completing

transactions, we’ll provide quality customer support by phone, e-mail,

or postal mail.

We’ll continuously improve TreasuryDirect based on customer

feedback, available technology, and our resources. In doing so, we will

take every opportunity to give our customers the tools they need to

actively manage their Treasury portfolio and to do business with us

when and where they want to.

SUMMARY DEBT ACCOUNTING

This program includes accounting for and reporting on all financial

activity related to the Public Debt of the United States. The program

provides accounting controls for funds received from the sale of

securities, for funds disbursed as interest and principal payments, and

for the accurate and timely reporting of debt financing operations in

compliance with all requirements.

The Chief Financial Officers Act of 1990 and other related legislation

require the preparation of annual, audited financial statements of the

public debt. The readers of our financial statements represent a

collection of interested parties beyond Treasury that we work with

closely to present informative and timely data. We’ve established the

highest standards for our accounting operations and have an important

external measure of our success in meeting these standards. We’ve

received clean audits every year since we’ve been required to produce

financial statements. We are also complying with the Office of

Management and Budget’s requirement to produce audited financial

statements by November 15 each year, well in advance of OMB’s

mandated FY 2004 effective date.

Our strategic directions for the Summary Debt Accounting program

are:

• Improve the clarity, utility, and availability of Federal debt financial

information.

• Support and influence the Financial Management Service’s

initiative to modernize government-wide accounting.

• Actively participate in the development of Federal debt and loans

receivable accounting standards.

Our long-term goal for this program is to: Produce daily public debt

financial statements by FY 2007.
17

Improve the clarity, utility, and availability of Federal debt financial

information. Through our financial statements, we’ve been successful

in producing timely and accurate presentations of the public debt—one

of the largest liabilities in the Consolidated Financial Statement of the

United States. We’ll work to improve the clarity of our presentation of

Federal debt information and make our statements more useful to all

readers by seeking advice from OMB, the General Accounting Office,

the Office of the Inspector General, and other Treasury offices.

Support and influence the Financial Management Service’s initiative

to modernize government-wide accounting. FMS is working on a multiyear government-wide initiative to modernize the Federal government’s

accounting processes. FMS plans on accomplishing this by providing

agencies with accounting data on a near-real time basis at the lowest

level of detail needed to provide useful information. We’ll continue to

participate actively in this initiative by providing input and helping to

test throughout the various phases of the project. In particular, we’ll

seek to influence the design of modules that deal with our

responsibilities for debt accounting, Federal fund investments, and

agency borrowings from Treasury.

Actively participate in the development of Federal debt and loans

receivable accounting standards. Because of our primary role in

managing the Federal debt and loans receivable programs, we’re

directly affected by accounting standards developed for these

programs and are uniquely positioned to assist in the creation or

revision of these standards. We will look for opportunities to influence

standards as they are being developed, and specifically we’ll continue

to participate in the standards development efforts of the Federal

Accounting Standards Advisory Board and other related entities, such

as OMB’s Credit Reform Steering Committee.

FRANCHISE SERVICES

This program provides reimbursable administrative and information

technology services to a variety of Federal government entities. These

services are provided through our Administrative Resource Center

(ARC) in conjunction with our Office of Information Technology (OIT).

ARC operates as a member of the Department of Treasury’s Franchise

Fund. The Franchise Fund was established in 1996 to foster

entrepreneurial government initiatives designed to provide highly

effective services to Federal agencies at the lowest practical cost.

The types of services we provide, as well as the number of agencies

that we serve, have grown steadily since the inception of our franchise

program in FY 1997. While our initial venture into the field of

franchising focused on administrative functions such as financial

accounting, travel services, the full range of human resource activities,

and procurement, we have since expanded our service lines to include

information technology support and investment accounting. We’re

committed, not only to continuing to provide high-quality, low-cost

service to our current customers, but also to making our services

available to other agencies, thereby reducing costs and improving

efficiency throughout the Federal government.
18

Our strategic direction is to:

• Continue to offer high-quality services to Federal agencies on a

competitive, fee-for-service basis.

• Expand our customer base and the types of services we offer.

Our long-term goal for the Franchising program is: Continue to

provide the high quality services and competitive prices that will

enable us to expand our business.

Continue to offer high-quality services to Federal agencies on a

competitive, fee-for-service basis. We recognize that our ability to

attract customer agencies is contingent on providing quality services at

competitive prices. As a member of the Treasury Franchise Fund ARC

receives no direct appropriation, but instead relies on customer

payments to fund all of its operations. To attract and retain customers

we’ve made quality of service our top priority from the outset of the

program. This will continue to be our foremost goal. Not only do our

employees strive to deliver excellent service and outputs to our

customers, we’re also committed to constantly improving and, as

necessary, replacing the automated systems that allow us to deliver

high-quality services. We’ll continue to take advantage of the

capabilities offered by new technologies to provide excellent service at

reasonable prices.

We recognize that continued growth in the field of franchising will

depend primarily on the availability of a highly motivated staff with a

strong customer service orientation. Accordingly, we’ll make use of a

variety of employment programs to ensure the continued intake of

highly qualified employees committed to providing outstanding

customer service.

We’re committed to maintaining a price structure for franchise services

that is equitable for both our customer agencies and for Public Debt.

We’ll continue to work with our customers to determine their individual

needs and to ensure that our prices fairly represent the costs of

providing the services.

Expand our customer base and the types of services we offer. With

only “word-of-mouth” advertising by our customers, we’ve attracted

more than 40 Treasury and non-Treasury customers for our

administrative services during the first several years of our franchise

program. Beginning in FY 2001, we expanded our franchise business

lines to include information technology offerings, such as web services,

application hosting, security services, communication services, PC

configuration, database administration, and contingency and recovery

services. During the next few years, we plan to expand our service

offerings to include network monitoring, security plan review in

support of the Federal Information Security Management Act, and

application and system development. We’ll continue to explore other

possibilities as needs are expressed by our customers.

While we’re committed to expanding our customer base, we recognize

that the essence of our franchise success is exemplary service. We will

not sacrifice quality of services delivered to existing customers in favor

of increasing the quantity of customers. We intend to continue our

policy of controlled growth to ensure that our first priority remains

quality of service. 
Many one-time and ongoing program evaluations have influenced the

directions and objectives in this strategic plan. The more significant

evaluations are briefly described.

Long-Range Planning: Our most important continuing program

evaluation is our long-range planning process. This process, in use

since 1980, consists of one or two formal meetings of our planning

team each year as well as ongoing “pulse-checks” of program direction

and performance throughout the year. This process works well for us

because our mission is focused and our programs are well understood

by all of our senior executives, who work as a collaborative planning

team and are able to contribute to direction-setting beyond their

individual program responsibilities. As one significant example that is

reflected in this strategic plan, our planning team evaluated our

existing retail securities programs a few years ago and determined that

substantial changes were needed to better serve our customers and

deliver our retail securities products more efficiently and effectively.

Out of this evaluation grew a vision for a single “retail securities

program”, described in more detail in the Program Directions section of

this plan. This vision has been driving our shift from productorientation to customer-orientation including: a major reorganization of

our operations that support our retail services; our offering of

paperless savings bonds; our development of TreasuryDirect, through

which our retail customers will ultimately be able to purchase the full

range of Treasury securities and manage their holdings through an

online account; and a restructuring of our budget activities.

Customer Surveys: These surveys enable us to assess the wants and

needs of our customers as well as their level of satisfaction with our

services. For example we have regularly surveyed our retail customers

through mailed surveys and, in addition to learning that a very high

percentage of our customers are satisfied with our services, we have

also received valuable suggestions that we act on, for improving our

services. One thing we have learned is that an ever-increasing number

of our customers prefer the ease of giving us feedback electronically.

This has led to the inclusion of simple exit surveys that our customers

can choose to complete, after using our online services, to register

their level of satisfaction with our services. We also make it easy for

our customers to email us with their suggestions for improving our

services. Our website is now a valuable tool for getting customer

feedback and assessing their satisfaction with the information and

services that we provide.

We plan to conduct a series of surveys to measure savings bond

customers’ awareness and acceptance of book-entry savings bonds in

TreasuryDirect. These surveys will help Treasury to determine the

appropriate time to discontinue sales of paper savings bonds.

Financial Statement Audits: The most visible ongoing evaluations of

our performance are the annual audits and reviews of our financial

operations, conducted by the General Accounting Office, the Inspector

General, and private-sector accounting firms that conduct an

independent review of our operations. These audits and reviews

scrutinize our accounting for and reporting on: (1) the Schedule of the

Federal Debt, one of the largest liabilities of the Federal government;

19

OUR USE OF PROGRAM EVALUATIONS
20

(2) the Schedule of Loans Receivable; (3) the Federal Investment

program; and (4) a subset of that program, the Treasury-managed trust

funds. The audit of the Federal debt includes a rigorous review and

testing of controls over our key financial systems. We’ve received

unqualified opinions on each of these audits since their inception in 

FY 1997 and have established a performance measure to continue this

track record into the future.

Federal Investment Program Review: In November 2000, Treasury

completed a general review of the overall Federal Investment Fund

process as directed by the Secretary. While concluding that Treasury

has exercised appropriate diligence in the performance of its duties,

the review did result in a number of recommendations to improve

ongoing operations and to strengthen Treasury's control and oversight.

These recommendations include more active monitoring of fund

investment activity, adopting standardized agreements between

Treasury and the program agencies that define responsibilities, and

strengthening of some internal controls. We play a key role in working

with other Federal agencies to implement these recommendations. We

are also deeply involved with Treasury’s more detailed review of the 

15 Treasury-managed trust funds which is underway.

FRB Consolidation: A decade ago 36 Federal Reserve offices

processed Treasury securities transactions for us. In the early 1990’s as

we were able to take advantage of more centralized processing through

increased automation of our operations, we began the first of several

evaluations of Federal Reserve Bank support. Each of these has led to

an increased consolidation of operations that the Federal Reserve

conducts on our behalf. Each consolidation has produced cost-savings

as well as an improvement in controls and delivery of service. As we

implement our vision for the retail securities program, we expect that

over the next few years, we will further consolidate the Federal

Reserve operations supporting us in order to gain additional

efficiencies.

Disaster Recovery and Continuity of Operations Planning: In recent

years disaster recovery and continuity of operations planning have

risen to the forefront of the Federal government’s responsibilities. We’ve developed comprehensive disaster recovery and continuity of

operations plans, and we’re focusing our future work in three areas.

First, beginning in FY 2004, Disaster Recovery/Continuity of Operations

will be adopted as an assessable unit under our Management Control

Program. This unit will be subject to a Federal Managers’ Financial

Integrity Act review on a five-year revolving cycle. This review will

address the adequacy of our plans and their ability to provide

continued operating capabilities if an operational disruption occurs in

key business functions. Second, we’re partnering with the Financial

Management Service for mainframe disaster recovery services. To

ensure continuity of operations we’ll use an FMS operations center as a remote hot site and for the real-time updating of our mainframe data.

Finally, our Office of Financing, which is responsible for auctioning and

issuing over $4 trillion in Treasury marketable securities yearly, has set

up a third operations site. When fully functional this site will be able to routinely perform all aspects of auction work in a production

environment or contingency situation.
21

Employee Satisfaction: We recently began a formal process of

assessing employee satisfaction. In June 2002 we conducted our first

employee satisfaction survey, and we will repeat these surveys

annually. The response rate for the initial survey exceeded 80 percent,

and 70 percent of our employees responded that they were satisfied

with their jobs. The survey results were provided to senior program

officials and separately presented to managers at our annual meeting.

We will learn from each survey, use them to stay in touch with how our

employees feel about their jobs, and track our progress in improving

employee job satisfaction.
22

Public Debt’s approach to management is consistent with the

philosophy that government should be citizen-centered, resultsoriented, and market-based. Our securities and accounting programs

are all about delivering results and providing quality service to millions

of citizens—service that is in every way competitive with the best that

other government agencies and the private sector have to offer.

Our organizational values provide a foundation for our service delivery.

We work to foster an atmosphere of quality awareness that encourages

all employees not to accept things as they are, but to look for ways to

improve accuracy, timeliness, and customer service. We also expect

employees to look for ways to cut costs and improve productivity. Such

efficiencies are important to Public Debt and must be actively pursued.

However, our ability to carry out our primary program responsibilities

will not be sacrificed in our pursuit of savings.

Integrity is an important element of government service and is

particularly important to us because of the financial nature of our

mission and the confidentiality of our investor information. We value

integrity in our employees and expect each employee to meet the

highest standards of ethical conduct. Our customers deserve nothing

less.

Public Debt is managed informally and we expect that communication

throughout the organization will be open, informal, and candid.

Delegations of authority will be made to the lowest practicable levels.

Efforts will be made to reach consensus in decision-making so that we

can take advantage of all appropriate perspectives and benefit from the

employee commitment and buy-in that flows from inclusion.

We’ll ensure that this informal and candid approach to doing business

extends to our general relationship and individual dealings with the

National Treasury Employees Union. We recognize that working with

NTEU is important to the efficient accomplishment of our mission. We’ll

involve NTEU in identifying problems and implementing solutions to

better enable us to carry out our long-term initiatives and achieve our

performance goals. Our managers are expected to deal with NTEU

openly and without undue formality, to involve NTEU early in matters

of mutual interest, and to actively promote a climate of shared

information, mutual trust, and cooperation.

We expect our managers to understand their operations and systems

and how they relate to our overall mission. We expect their

understanding to be sufficient to allow them to have a constant and

accurate sense of the "health" of their operations, to be able to

effectively explain their operations to others, and to personally provide

direction and leadership for their programs.

OUR APPROACH TO MANAGEMENT

SUPPORTS THE PRESIDENT’S

MANAGEMENT AGENDA
23

The President's Management Agenda

The President's Management Agenda, announced in the summer of

2001, is an aggressive strategy to reform the Federal government to

make it more accountable to citizens. It focuses on five areas of

management across the government where improvements and the most

progress can be made: Strategic Management of Human Capital,

Competitive Sourcing, Improved Financial Performance, Expanded

Electronic Government, and Budget and Performance Integration.

Public Debt is well positioned with respect to the agenda expectations

but, like other agencies, must view the expectations as ongoing and not

the focus of a single scorecard or evaluation. 

➣ Strategic Management of Human Capital: The talent, expertise, and

dedication of our employees are remarkable, and they are clearly our

most valuable assets. Most of our employees are located in

Parkersburg, West Virginia, where we are a major employer. We’re

fortunate to be able to draw from a strong and relatively deep talent

pool for positions in this primary location. As a result of this strong

competitive position and the meaningful work that we have to do, we

rarely experience significant difficulties in filling positions with

capable and dedicated people. 

We have high expectations of all our employees and recognize the

value of their contributions. Our performance appraisal system uses

general standards of performance that are supplemented with specific

expectations appropriate to the individual employee and current

priorities. As a result, our employees know what is expected of them

and how the expectations relate to Public Debt’s mission, objectives,

and performance goals. Our appraisals effectively distinguish between

various levels of performance.

Our managers are expected to give continuous attention to their

staffing needs and to succession planning. Where appropriate we

competitively select high-potential employees and place them in

management cadre positions to gain experience. Filling management

positions this way serves the organization and substantially eases the

transition when multiple vacancies or retirements are anticipated, or

even when they occur unexpectedly. 

We’re sensitive to employee concerns and expectations and manage

in a manner that supports recruitment and increases retention,

productivity, and morale. Diversity is important to us and we value its

benefits. Our recruitment programs, relocation policies, and diversity

programs are designed to introduce new ideas, experiences, and

perspectives into our workforce.

➣ Competitive Sourcing: Public Debt has met all competitive sourcing

expectations. We’ve prepared an inventory of commercial and

inherently governmental functions that is continually refined and

updated. We’ve met all of our interim goals for job competitions

using direct conversions and a streamlined competition process, and

we expect to use both streamlined and full competitions in the

future. Our workforce is capable, committed to service, and

productive—a combination that positions us to be very competitive

when our costs are compared to those of private sector

organizations. We anticipate that we will have the resources required
24

to conduct the necessary competitions for those positions remaining

on our inventory and that, as such competitions are done, the

productivity of our staff will be demonstrated. 

➣ Improved Financial Performance: It is, of course, a key responsibility

for any agency to demonstrate sound financial performance and to

demonstrate that it is an effective steward of financial resources.

Since our mission is to borrow the money needed to run the Federal

government and account for the resulting debt, strong financial

performance and effective accounting controls are at the center of

our mission and have always been our priority. Our employees do a

great job in this area, and we’re proud of the role we play and, in

fact, the example that we set. All of our financial systems are well

controlled; the financial systems we use to account for the public

debt comply with the Federal Financial Management Improvement

Act and are audited routinely. Our systems are subject to both

external audit and review by the General Accounting Office and other

auditors as well as periodic examination as part of our internal review program. As a result of our attention to financial performance

we have received unqualified opinions on all of our financial

statements audits. Our expectation is that we will continue to do so.

➣ Expanding Electronic Government: All Federal agencies are called on

to provide citizens with access to electronic services that lessen an

agency’s costs and improve service delivery. Well before this

expectation was the norm, we had adopted a citizen-centered

approach to electronic government. We have been offering our

customers convenient electronic access to information for years and

have gone well beyond the provision of static information. In all of

our major program areas our customers can process transactions

with us electronically, and the strategic program directions in this

plan will take us even further. These directions describe specific

initiatives that will make sure that our customers benefit as much as

possible from additional electronic access and that we benefit

through reduced operating costs. We have a solid foundation in

place on which we can continue to build additional electronic

government services.

Because a lot of the information we maintain relates to financial

transactions and the investments of our customers, we’re especially

aware of the sensitivity of the information. We’ll continue to take the

necessary security measures to safeguard our data, protect its

confidentiality, and ensure that our systems are secure. We’ll ensure that our investments in information technology serve

our program needs and provide accurate, useful, and timely

information. We’ll also look to information technology to continue to

act as a catalyst for business process reengineering and drive

operational improvements, including expanded electronic

government initiatives.

➣ Budget and Performance Integration: Strategic planning lies at the

heart of this initiative and we’ve used a formal strategic planning

process for more than twenty years. We use strategic planning as a

structured and consistent way to set program direction and establish

priorities. This process tests our initiatives, enabling us to determine

the degree to which new ideas support the plan. It also forms the
25

basis for later management decisions. Our planning team, comprising

senior program officials, develops our strategic plan and annual

performance targets as part of an ongoing planning and program

evaluation process.

We’ll continue to improve the linkage between our strategic planning

and our budget. We’ve restructured our budget activities to reflect

the same program areas identified in this plan. This will enable us to

more easily associate budget requests with the strategic program

directions and supporting initiatives. Our plan also presents several

key, long-term performance goals that will be challenging to

accomplish. Our progress toward these goals will also be fully

integrated into our ongoing planning process, will receive significant

attention from Public Debt management, and will directly affect

future budget requests and resource allocation decisions.
26

THE FEDERAL RESERVE CONNECTION

The Federal Reserve Banks, as our fiscal agents, are a necessary and

integral element in the accomplishment of our mission. We’ll continue

to make effective use of the Federal Reserve's capabilities to meet our

responsibilities to individual and institutional investors in Treasury

securities.

While our relationship with Federal Reserve Banks is technically one

of principal and agent, it is in practice a dynamic partnership based

on common goals of delivery of high quality service and efficiency of

operations. This longstanding relationship, together with the Federal

Reserve’s association with financial institutions and its unique set of

responsibilities for open market operations, provides the Federal

government with continuous market contact and significant

operational flexibility in administering the public debt.

We’ll maintain an active, executive linkage with the Federal Reserve

Board of Governors, Reserve Bank officials, and appropriate

organizations within the Federal Reserve System to assist us in

identifying policy issues, developing program direction, resolving

problems, and exploring new ideas. We’ll continue to involve the

Federal Reserve at an early stage in significant issues of mutual

concern and expect them to reciprocate.

Through our oversight program we’ll provide Federal Reserve Banks

with standards for quality and expectations for performance;

determine appropriate reporting requirements; and monitor costs,

productivity, and results achieved. In doing so we’ll recognize the

value of the collaborative relationship, respect the Banks’ individual

responsibilities, and preserve their flexibility in managing day-to-day

operations. We’ll continue to furnish the Federal Reserve Banks with

effective and useful feedback concerning operational performance

and the quality of services they provide to us.

We’re responsible for the work that the Banks perform for us and are

accountable for the costs they incur on our behalf. We’ll continue to

validate the accuracy and appropriate allocation of their costs and

certify payments. We support the principle of fully reimbursing the

Federal Reserve Banks for the costs of activities conducted as our

fiscal agents. We’ll reimburse Banks to the extent authorized, and

we’ll report to Congress the full costs incurred for administering the

public debt, including Federal Reserve services.

Our decisions regarding the work that we request the Banks to do will

continue to be based on our assessment of where the work can best

be performed. We are committed to having the work done where it

can be performed most effectively and efficiently, while maintaining

high quality customer service. We will direct Banks to perform work

for us only when such work is, in our view, clearly appropriate under

the fiscal agency relationship.
27

OUR COMMITMENT TO 

CUSTOMER SERVICE

Public Debt has a wide variety of customers. We provide service to a

broad range of individual and institutional investors in Treasury

securities. Other customers include government securities brokers and

dealers, Federal agencies, State and local governments, and a diverse

array of market participants and others who rely on our public debt

accounting information. We’re committed to determining the priorities

and expectations of our customers and providing them with the best

service possible.

We recognize the important role our customers play in the success of

our programs and the accomplishment of our mission. We’ll

communicate directly with our customers to understand their

expectations and assess their satisfaction with our performance. We’ve

established high standards for customer service and we’ll continue to

seek investors’ feedback about our performance. We will provide our

customers the ability to provide immediate feedback to us for all of our

online services. 

We’ll strive to achieve the proper balance between the range of services

provided to our customers and the costs of providing them. Where

necessary we’ll choose to limit the variety of services we offer rather

than reduce their quality and efficiency.
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APPENDIX: Linkage of Treasury and Public Debt

Strategic Goals and Objectives

Bureau Strategic Objectives:

1. Effectively finance government

operations

2. Fulfill customer expectations

3. Effectively account for the

debt of the Federal

government

Treasury Strategic Goal: Manage the Government’s finances effectively

Treasury Strategic Objective: Manage Federal debt effectively and efficiently (1, 2)

Treasury Means and Strategies:

Efficiently meet the borrowing needs of the Federal government (1B, 2E)

Effectively finance government operations (1A, 1C, 2D, 2E, 2F)

Move to a 100% paperless savings bond program (1B, 1C, 2E, 2F)

Get to “2 minute auction” performance levels at BPD (1B, 2E)

Treasury Strategic Goal: Manage the Government’s finances effectively

Treasury Strategic Objective: Optimize cash management and effectively administer the government’s

financial systems (2, 3)

Treasury Means and Strategies:

Improve the clarity, utility, and availability of Federal debt financial information (2E, 3H)

Support and influence the Financial Management Service’s initiative to modernize governmentwide accounting (2E, 3H)

Actively participate in the development of Federal debt and loans receivable accounting 

standards (3H)

Bureau Means and Strategies:

A. Borrow what is necessary to meet the monetary needs of the

government

B. Minimize the cost of the Federal government’s borrowing activities

C. Provide mechanisms for participation by a wide range of investors

in Treasury debt financing

D. Protect investors through effective regulation of the government

securities market

E. Provide quality customer service and transaction processing for

investors in Treasury securities

F. Provide accurate and timely payments to investors in Treasury

securities

G. Provide quality administrative and information technology services

to external franchise customers

H. Provide accurate and timely public debt accounting information
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