GAO

United States General Accounting Office

Report to Ranking Minority Member, 

Committee on Governmental Affairs, 

U.S. Senate

July 2001 OFFICE OF 

PERSONNEL 

MANAGEMENT

Status of Achieving 

Key Outcomes and 

Addressing Major 

Management 

Challenges

GAO-01-884
Page i GAO-01-884 OPM: Status of Achieving Key Outcomes

Letter 1

Results in Brief 2

Background 6

Assessment of OPM’s Progress and Strategies in Achieving

Selected Key Outcomes 7

Comparison of OPM’s Fiscal Year 2000 Performance Report and

Fiscal Year 2002 Performance Plan With the Prior Year Report

and Plan for Selected Key Outcomes 14

OPM’s Efforts to Address Its Major Management Challenges

Identified by GAO 16

Conclusions 17

Recommendations for Executive Action 17

Scope and Methodology 18

Agency Comments 18

Appendix I Observations on OPM’s Efforts to Address Its Major

Management Challenges 20

Appendix II Comments From the Office of Personnel Management 25

Table

Table 1: Major Management Challenges 21

Contents
Page ii GAO-01-884 OPM: Status of Achieving Key Outcomes

Abbreviations

CFO Chief Financial Officers

CSRS Civil Service Retirement System

EDP electronic data processing

FEHBP Federal Employees Health Benefits Program

FERS Federal Employees Retirement System

FFMIA Federal Financial Management Improvement Act

GPRA Government Performance and Results Act

MSPB Merit Systems Protection Board

OIG Office of the Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

RF revolving fund

RIS Retirement and Insurance Service

S&E salaries and expenses
Page 1 GAO-01-884 OPM: Status of Achieving Key Outcomes

July 9, 2001

The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

Dear Senator Thompson,

As you requested, we reviewed the Office of Personnel Management’s

(OPM) fiscal year 2000 performance report and fiscal year 2002

performance plan required by the Government Performance and Results

Act of 1993 (GPRA) to assess the agency’s progress in achieving selected

key outcomes that you identified as important mission areas for the

agency.1

 Four of the five outcomes are the same ones we addressed in our

June 2000 review of the agency’s fiscal year 1999 performance report and

fiscal year 2001 performance plan to provide a baseline by which to

measure the agency’s performance from year to year.2

 These selected key

outcomes are:

• The federal government has an appropriately constituted workforce with

the proper skills to carry out its missions.

• Federal employees are evaluated, rewarded, and otherwise held

accountable for their performance.

• Federal agencies adhere to merit system principles.3

• There is less fraud and error in the Federal Employees Health Benefits

Program.

• Retirement and insurance services are timely and accurate.

As agreed, using the selected key outcomes for OPM as a framework, we

(1) assessed the progress OPM has made in achieving these outcomes and

 1

This report is one of a series of reports on the 24 Chief Financial Officers (CFO) Act

agencies’ fiscal year 2000 performance reports and fiscal year 2002 performance plans.

2 Observations on the Office of Personnel Management’s Fiscal Year 1999 Performance

Report and Fiscal Year 2001 Performance Plan (GAO/GGD-00-156R, June 30, 2000). The

last outcome, “Retirement and insurance services are timely and accurate,” is new.

3

Section 2301 of Title V of the U.S. Code 2301 stipulates that federal personnel management

should be implemented consistent with nine merit system principles including recruiting or

promoting employees based on merit, retaining or separating employees based on

performance, and protecting employees from improper influence.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-884 OPM: Status of Achieving Key Outcomes

the strategies the agency has in place to achieve them and (2) compared

OPM’s fiscal year 2000 performance report and fiscal year 2002

performance plan with the agency’s prior year performance report and

plan for these outcomes. Additionally, we agreed to analyze how OPM has

addressed its major management challenges, including the

governmentwide high-risk areas of strategic human capital management

and information security that we and OPM’s Inspector General have

identified. Appendix I provides detailed information on how OPM has

addressed these challenges. (App. II contains OPM’s comments on a draft

of our report).

Attention to strategic human capital management is important because

building agency employees’ skills, knowledge, and individual performance

must be a cornerstone of any serious effort to maximize the performance

and ensure the accountability of the federal government. Because strategic

human capital management is a pervasive challenge across the federal

government, we recently identified it as a governmentwide high-risk area.4

Addressing the federal government’s human capital challenges is a

responsibility shared by many parties in addition to the individual

agencies. For example, we noted that OPM and the Office of Management

and Budget have substantial roles to play in fostering a more resultsoriented approach to strategic human capital management across the

government. OPM’s sustained commitment and attention will be

particularly critical to making a real difference in the way federal agencies

manage human capital. It is likely that OPM will continue moving from

“rules to tools,” and that its most valuable contributions in the future will

come less from traditional compliance and approval activities than from

its initiatives for assisting agencies as a strategic partner.5

 OPM’s revised 5-

year strategic plan, issued in September 2000, supports this changed focus.

OPM provides human resource management policies, guidance, and

assistance to executive agencies to help with their human capital

management, but the results of OPM’s efforts largely take place at federal

agencies outside of the direct control of OPM. The basic strategic

challenges confronting OPM are similar to those confronting other

agencies: developing a set of performance goals and measures for events

 4 High-Risk Series: An Update (GAO-01-263, January 2001).

5

Managing for Results: Human Capital Management Discussions in Fiscal Year 2001

Performance Plans (GAO-01-236, April 24, 2001).

Results in Brief
Page 3 GAO-01-884 OPM: Status of Achieving Key Outcomes

that occur beyond the direct control of the agency and understanding how

the agency’s programs and day-to-day activities contribute to the

achievement of those outcomes. OPM clearly recognizes the strategic

challenges it faces, has committed to responding to them, and has

important initiatives underway in that regard. Nevertheless, for the most

part, OPM’s performance report and plan do not measure strategic human

capital management at executive agencies or how OPM’s programs and

initiatives contributed to the achievement of those outcomes. OPM has

recognized that such measures are needed and is developing a series of

agency outcome-based measures for use in future performance reports

and plans.

OPM recognizes the importance of achieving the five outcomes that you

asked us to examine and includes many goals and strategies in its

performance report and plan that are related to these outcomes. However,

assessing progress towards these outcomes is difficult. Specifically:

• Planned outcome: The federal government has an appropriately

constituted and skilled workforce. Because the fiscal year 2000 report and

2002 plan do not contain measures of the appropriateness or skill level of

the workforce, we are not able to assess progress made in achieving this

outcome. However, OPM does report progress in preparing a model for

workforce planning—the essential first step for agencies to take to

address their workforce skill needs. Other information indicates that

shortcomings in these areas are common among federal agencies. Our

January 2001 high-risk update provided numerous examples of how poor

strategic human capital management was harming mission

accomplishment.

• Planned outcome: Federal employees are held accountable for their

performance. As with the first outcome, OPM, for the most part, does not

have measures that assess whether federal employees are held

accountable for performance. OPM’s report and plan contain goals and

strategies to provide performance guidance and to post performance

management studies on its web site, as well as goals and accomplishments

to support alignment of individual performance management and

recognition with achieving agency strategic goals. Our fiscal year 2000

survey of federal managers found that few believe employees in their

agencies have received positive recognition for helping agencies

accomplish strategic goals.6

 6

Managing for Results: Federal Managers’ Views Show Need for Ensuring Top

Leadership Skills (GAO-01-127, October 20, 2000).
Page 4 GAO-01-884 OPM: Status of Achieving Key Outcomes

• Planned outcome: Federal agencies adhere to merit system principles.

OPM’s progress on achieving this outcome is mixed. OPM reports that

OPM periodic reviews of agencies identified no systemic merit principle

weaknesses. However, OPM’s survey of employees indicates that a

sizeable proportion of employees think that some merit principles are not

followed. For example, the survey shows that only slightly more than half

of federal employees believe that federal employees are managed

efficiently and effectively, and less than half believe federal employees are

provided equal pay for equal work and are rewarded for excellent

performance. The fiscal year 2000 survey shows no significant change

from the previous year.

• Planned outcome: There is less fraud and error in the Federal Employees

Health Benefits Program. We could not assess whether there is less fraud

and error in the Federal Employees Health Benefits Program. OPM’s

Office of the Inspector General (OIG) had a goal and measures (such as

number of debarments, convictions, and fines) to assess progress in

detecting and addressing fraud. But OPM has no program office goals,

strategies, or performance measures for reducing fraud in the health

benefits program. However, although the OIG efforts would contribute to

less fraud and fewer errors in the health benefits program, these efforts

have led more to identifying fraud after it has happened rather than

preventing it from occurring. In addition, there are no baseline indicators

of the dollar amount of fraud and errors, or quantitative targets (other than

for fraud detection) against which to measure progress. OPM says it

recognizes that it needs to establish performance indicators regarding this

issue and has committed to developing them for the fiscal year 2003

performance plan. Also, OPM says it will report this information in future

performance reports, beginning with the report for fiscal year 2001.

• Planned outcome: Retirement and insurance services are timely and

accurate. OPM’s performance report indicates a generally high level of

customer satisfaction for its retirement and insurance services. However,

the timeliness of retirement claims processing has decreased. OPM is

addressing this challenge and says it has already seen improvements in

fiscal year 2001. For the long term, OPM is implementing a retirement

systems modernization project in phases and expects that it will realize

significant business benefits each year as well as significantly improve all

aspects of the delivery of retirement services. However, OPM will continue

to face potential retirement claims processing delays because the

modernized retirement system is being implemented in phases and is not

expected to be fully operational until 2009.

Within OPM, strategic human capital management and information

security, the governmentwide high-risk areas designated by GAO, are
Page 5 GAO-01-884 OPM: Status of Achieving Key Outcomes

addressed in both the fiscal year 2000 performance report and fiscal year

2002 performance plan. However, both areas could be strengthened.

Specifically, OPM has established several goals to address its internal

human capital management, including employee education and training.

To make these goals more useful they should be linked to specific OPM

programs. For example, OPM’s plan calls for continuing to increase the

employee-to-supervisor ratio, but it does not discuss how this change will

impact OPM programs or what human capital strategies might be needed

to address the reduction in the number of supervisors. Regarding

information security, OPM included a goal related to information security

in its report and plan. The fiscal year 2000 report states that progress on

improving information security is sufficient to indicate that the specific

goal has been accomplished; however, the report also continues to report

that there are remaining information security issues. In fact the audit of

OPM’s fiscal year 2000 financial statements included a reportable

condition7

 related to several information security weaknesses.

As OPM has recognized, it needs to link its strategic and performance

goals to outcome measures that assess the actual state of strategic human

capital management in the federal government. Even though OPM does

not directly control these outcomes in federal agencies, OPM understands

it needs to measure the results to assess the effectiveness of its programs.

Building on its ongoing efforts, OPM needs to make other improvements to

its performance report and plan, including (1) improving the reliability of

its performance measures, (2) linking its internal human capital goals to

specific OPM programs, and (3) establishing a Retirement and Insurance

Service goal to assess fraud in the Federal Employees Health Benefits

Program. We are making recommendations to address these issues.

OPM’s Acting Director, in providing comments on a draft of our report,

generally agreed with the results of our review, including our

recommendations. He also expressed appreciation for our recognition of

the strategic challenges OPM faces with regard to human capital

management as well as its efforts to improve its measurement framework,

including the shift to measuring governmentwide outcomes. OPM also

provided specific comments to clarify information we presented on four of

 7

A reportable condition is a matter that in the auditor’s opinion should be communicated

because it represents a significant deficiency in the design or operation of internal controls,

which could adversely affect the organization’s ability to record, process, summarize, and

report financial data consistent with the assertions of management in the financial

statements.
Page 6 GAO-01-884 OPM: Status of Achieving Key Outcomes

the five selected key outcomes. Accordingly, we made several changes to

this report to address these comments.

GPRA is intended to shift the focus of government decision-making,

management, and accountability from activities and processes to the

results and outcomes achieved by federal programs. New and valuable

information on the plans, goals, and strategies of federal agencies has been

provided since federal agencies began implementing GPRA. Under GPRA,

annual performance plans are to clearly inform the Congress and the

public of (1) the annual performance goals for agencies’ major programs

and activities, (2) the measures that will be used to gauge performance,

(3) the strategies and resources required to achieve the performance goals,

and (4) the procedures that will be used to verify and validate

performance information. These annual plans, issued soon after

transmittal of the president’s budget, provide a direct linkage between an

agency’s longer-term goals and mission and day-to-day activities.8 Annual

performance reports are to subsequently report on the degree to which

performance goals were met. The issuance of the agencies’ performance

reports, due by March 31, represents a new and potentially more

substantive phase in the implementation of GPRA—the opportunity to

assess federal agencies’ actual performance for the prior fiscal year and to

consider what steps are needed to improve performance and reduce costs

in the future.9

OPM’s mission is to support the federal government’s ability to have the

best workforce possible to do the best job possible. OPM is to accomplish

this mission by leading federal agencies in shaping human resources

management systems to effectively recruit, develop, manage, and retain a

high-quality and diverse workforce; protecting national values embodied in

law, including merit principles and veterans’ preference; serving federal

agencies, employees, retirees, their families, and the public through

technical assistance, employment information, pay administration, and

benefits delivery; and safeguarding employee benefit trust funds. The

results of OPM’s efforts largely take place at federal agencies outside of

the direct control of OPM.

 8

The fiscal year 2002 performance plan is the fourth of these annual plans under GPRA.

9

The fiscal year 2000 performance report is the second of these annual reports under

GPRA.

Background
Page 7 GAO-01-884 OPM: Status of Achieving Key Outcomes

This section discusses our analysis of OPM’s performance in achieving its

selected key outcomes and the strategies it has in place, particularly

strategic human capital management10 and information technology, for

accomplishing these outcomes. In discussing these outcomes, we have

also provided information drawn from our prior work on the extent to

which the agency provided assurance that the performance information it

is reporting is credible.

We cannot assess progress made by OPM in contributing to the outcome

that the federal government has an appropriately constituted workforce

with the proper skills to carry out its missions. OPM has several goals that

relate to this outcome, but none that focus squarely on the degree to

which the federal workforce has the right skill mix. Specifically, OPM’s

fiscal year 2000 performance report includes goals that “federal human

resources management policies and programs are merit-based, missionfocused, and cost effective” and “a model for workforce planning . . . is in

place” for use by agencies. OPM’s performance report states that both of

these goals were met. OPM states that the first goal was met because it

produced a few studies that contributed to human resource policy or

program proposals. The second goal was met, according to the OPM fiscal

year 2000 performance report, because OPM has provided the workforce

planning model to several agencies. This model, and other important steps

OPM has taken to support better workforce planning—including

developing research tools and launching a website to facilitate information

sharing about workforce planning issues—could prove helpful to agencies

in addressing their individual strategic human capital challenges. As a next

step, OPM needs to measure, for example, how the studies and workforce

planning model actually contributed to improved strategic human capital

management at the agencies. Specifically, as an intermediate outcome,

OPM could measure the number of agencies that were able to identify skill

shortages and solutions as a result of using workforce planning.

Previously, we have reported that OPM should take a more proactive role

in agency workforce planning efforts, and our April 2001 report on

 10Key elements of modern strategic human capital management include strategic human

capital management planning and organizational alignment; leadership continuity and

succession planning; acquiring and developing staffs whose size, skills, and deployment

meet agency needs; and creating results-oriented organizational cultures.

Assessment of OPM’s

Progress and

Strategies in

Achieving Selected

Key Outcomes

An Appropriately

Constituted and Properly

Skilled Workforce
Page 8 GAO-01-884 OPM: Status of Achieving Key Outcomes

expected trends in federal employee retirements further highlights the

need for improved workforce planning.11

Other information indicates that this outcome is not commonly being

achieved. Our high-risk series gave many examples of agencies not having

the appropriate workforce to carry out its mission. For example, the

Department of Energy did not have employees with adequate contract

management skills to oversee the clean up of hazardous waste sites, and

nursing shortages at Veterans Affairs facilities could put veterans at risk.12

OPM’s fiscal year 2002 plan contains several strategies that, for the most

part, appear to be reasonable. For example, OPM plans to obtain input

from agencies on how workforce policies need to be changed and to

explore policies on dual compensation and phased retirement to bolster

retention of federal employees. Determining whether these strategies are

successful will require OPM to develop indicators of whether federal

agencies and departments have appropriately skilled workforces and how

these strategies are being used to build workforce skills.

As is the case with the first outcome, OPM’s performance report does not

contain sufficient outcome measures to fully assess the extent to which

federal employees are held accountable for their performance. OPM’s

performance report contains several goals related to this outcome. For

example, OPM is to develop performance-oriented approaches to

employee compensation and to provide assistance in developing

performance management systems. OPM measures goal achievement by

such indicators as the number of workshops offered, the number of

performance studies available on the OPM Website, and whether

performance management guidance is issued in a timely manner.

Other information indicates that much more needs to be done to improve

performance management at federal agencies. For example, in our

October 2000 report, we noted that surveys we had administered to

managers showed that only 26 percent in 1997 and 31 percent in 2000

 11Senior Executive Service: Retirement Trends Underscore the Importance of Succession

Planning (GAO/GGD-00-113BR, May 2000) and Federal Employee Retirements: Expected

Increase Over the Next 5 Years Illustrates Need for Workforce Planning (GAO-01-509,

April 27, 2001).

12High-Risk Series: An Update (GAO-01-263, January 2001).

Employee Performance

Accountability
Page 9 GAO-01-884 OPM: Status of Achieving Key Outcomes

reported that employees in their agencies had received positive

recognition to a great or very great extent for helping agencies accomplish

their strategic goals.13 Also, the Merit Systems Protection Board (MSPB)

and we have previously reported that holding employees accountable for

their job performance continues to be perceived as a challenge because

employees perceive the process as cumbersome.14

OPM’s plan identifies a variety of strategies for achieving goals that relate

to the outcome of evaluating, rewarding, and otherwise holding federal

employees accountable for their performance. The strategies call for

providing guidance and information to agencies, including information on

best practices, as well as working with internal and external stakeholders

to identify needed changes in compensation and performance policies and

programs. Although the strategies appear reasonable, how they will help

to achieve the outcome of holding employees accountable for

performance is not always clear. For example, a strategy OPM cited to

help achieve its goal of identifying options for performance-oriented

approaches to compensation was to maintain comprehensive research on

best practices in private and public sector compensation systems and tools

that the federal government can use. But OPM offers no explanation of

how the use of such systems and tools will aid the federal government in

holding employees accountable for their performance.

OPM has made mixed progress on the outcome that federal agencies

adhere to merit system principles. On the one hand, OPM’s fiscal year 2000

performance report states that OPM’s periodic reviews of agencies have

identified no systemic merit principle weaknesses. On the other hand, the

results of OPM’s government-wide survey of federal employees conducted

in fiscal years 1999 and 2000 indicate that a sizable percentage of

employees think that certain merit principles are not being followed. The

fiscal year 2000 performance report includes goals related to the overall

adherence to merit principles by agencies, including agencies with

 13Managing for Results: Federal Managers’ Views Show Need for Ensuring Top

Leadership Skills (GAO-01-127, October 20, 2000).

14Performance Management: How Well Is the Government Dealing With Poor Performers

(GAO/GGD-91-7, October 2, 1990); Veterans Health Administration: Performance and

Conduct Issues Involving Senior Managers at VA Medical Centers (GAO/GGD-98-92, April

30, 1998); The Changing Federal Workplace: Employee Perspectives, Merit Systems

Protection Board, March 1998; and Federal Supervisors and Poor Performers, Merit

Systems Protection Board, July 1999.

Adherence to Merit System

Principles
Page 10 GAO-01-884 OPM: Status of Achieving Key Outcomes

delegated examining authority.15 OPM uses a variety of measures to

determine if this outcome is being achieved, including (1) the results of

merit system reviews of federal agencies, (2) agencies’ satisfaction with

the reviews, and (3) the views of federal employees regarding adherence

to merit principles. OPM’s report states that the reviews indicated that

agencies, including those with delegated examining authority, were

adhering to merit principles. According to the performance report, the

problems found in OPM’s reviews were not systemic. Once problems were

identified in the review, OPM worked with the agency to resolve the

problems. In its reviews, OPM also identified best practices and shared

them with other agencies.

The views of federal employees on adherence to the nine merit system

principles, as provided in an OPM survey, indicated that there was no

significant change from the fiscal year 1999 survey. OPM’s goal was to

increase by two percentage points the percentage of federal employees

who believed each of the merit principles were being adhered to by their

agencies. There are a variety of factors that influence employees’

responses to this question, including governmentwide economic, cultural,

and social conditions. For this reason, OPM expects substantive change in

the perceptions of these principles to take place over several years. This

year’s survey indicates that a relatively large portion of federal employees

believed that employees maintain a high standard of integrity and concern

for the public and that employees are protected from improper political

influence. But on the other hand less than half believe that employees are

protected against reprisal for the lawful disclosure of information or are

provided equal pay for equal work and rewarded for excellent

performance; and only a little more than half think that employees are

managed efficiently and effectively. Similar results were reported in the

merit system principles survey conducted by MSPB in 2000.16

OPM’s fiscal year 2002 performance plan identifies a variety of strategies

that are consistent with its current efforts. The current strategies should

help OPM achieve its goals as well as contribute to the outcome of

ensuring that agencies adhere to the merit system principles. For example,

to help ensure that personnel practices are carried out in accordance with

 15Title 5 U.S.C. Section 1104 provides OPM authority to delegate to agencies the

competitive examining process used to fill most federal civil service positions.

16Issues of Merit, Merit Systems Protection Board, Office of Policy and Evaluation,

February 2001.
Page 11 GAO-01-884 OPM: Status of Achieving Key Outcomes

these principles, OPM’s strategies include conducting nationwide agency

merit system oversight reviews, auditing agencies with delegated

examining authority and reviewing reports filed by these agencies to

identify any training needs, and reviewing all agency selections for initial

career Senior Executive Service appointments for compliance with merit

system principles.

OPM does not include coordination with MSPB as a strategy for achieving

performance goals within its Office of Merit Systems Oversight and

Effectiveness—the program office that is responsible for leading the

federal government’s efforts in overseeing the merit system. MSPB’s

mission, in part, is to ensure that agencies make employment decisions in

accordance with the merit system principles. In support of its mission,

MSPB hears and decides cases involving abuses of the merit system. It

also administers the merit principles survey to gather data on the “health”

of the federal civil service. OPM’s strategy should also consider MSPB’s

decisions and merit principles survey in helping to achieve this outcome.

However, even though both agencies administer programs and conduct

similar activities that share a common purpose, OPM’s strategic plan for

fiscal years 2000 through 2005 states that coordination with MSPB is

limited to adjudicatory issues.

We could not fully assess the progress OPM is making to reduce fraud and

error in the Federal Employees Health Benefits Program. The OPM OIG

has identified health care fraud in the Federal Employees Health Benefits

Program as one of the most serious management challenges facing OPM.

The fiscal year 2000 performance report contains an OIG goal to have

fraud against OPM programs detected and prevented. This goal has several

measures, including the number of convictions for health benefit program

fraud (51 in fiscal year 2000) and the number of health benefit providers

who are debarred and not allowed to participate in the Federal Employees

Health Benefits Program (2,706 in fiscal year 2000). Although these are

measures for the OIG, there were no goals or strategies related to the

detection and prevention of fraud at the programmatic level for the

Federal Employees Health Benefits Program in the Office of Retirement

and Insurance Service (RIS), whose mission, in part, is to provide accurate

Fraud and Error in the

Federal Employees Health

Benefits Program
Page 12 GAO-01-884 OPM: Status of Achieving Key Outcomes

and cost-efficient benefit services.17 For example, there were no goals or

strategies to decrease the number of errors or fraud cases to a minimum.

In addition, there were no baseline indicators of the dollar amount of fraud

or errors found in the health benefits program or quantitative targets

against which to measure progress. OPM believes that measures identified

by the OIG are consistent with RIS’ expectations and says that RIS has

worked in unison with the OIG to minimize fraud and abuse in the Federal

Employees Health Benefits Program. While we recognize this, we believe

that OPM needs to develop goals and measures within RIS for detecting

and preventing fraud and errors in the health benefits program.

The fiscal year 2002 performance plan contains a strategy to have the

employee benefit trust funds be models of excellence and integrity in

financial stewardship. The OIG includes strategies related to reducing

fraud and errors, such as pursuing debarment of untrustworthy health care

providers and conducting aggressive investigations where fraud and abuse

are suspected, which seem reasonable. The RIS had no goals or

performance indicators related to fraud and errors in the health benefits

program, but included strategies such as (1) working with carriers

participating in health benefits to ensure that audits are performed and

(2) conducting financial statement audits to reduce the incidence of

payment errors, which in part will help detect fraud and errors in the

health benefits program. Although these strategies generally will help

detect and reduce fraud and errors, it is unclear how this will be

accomplished and how they plan to measure progress because there were

no baseline indicators for the dollar amount of fraud or errors found in the

health benefits program, or performance indicators against which to

measure progress.18 In addition, performance indicators for the OIG

measured progress in processing cases (debarments, indictments, and

convictions) once the fraud is discovered but did not address measures for

preventing it.

 17For examples and case illustrations of information that federal agencies should consider

when developing strategies and planning and implementing actions that will help prevent

and detect fraud and errors, refer to our exposure draft: Strategies to Manage Improper

Payments: Learning From Public and Private Sector Organizations (GAO-01-703G, May

2001).

18See footnote 17.
Page 13 GAO-01-884 OPM: Status of Achieving Key Outcomes

The fiscal year 2000 performance report describes mixed progress in the

provision of timely and accurate retirement and insurance services. OPM’s

retirement and insurance program continues to receive high satisfaction

ratings from its customers, but timeliness of retirement claims processing

has declined. The fiscal year 2000 performance report outlines several

outcome-oriented goals that include increasing customer satisfaction with

services and reducing processing times. Customer satisfaction with OPM’s

retirement and insurance programs remained high during fiscal year 2000.

For example, more than 90 percent of new retirees said they were very or

generally satisfied with how their claims were handled. Claims processing

times, however, did not meet target levels, particularly the time to process

Federal Employees Retirement System (FERS) claims. Specifically, Civil

Service Retirement System (CSRS) claims processing time increased to 44

days from 32 days in fiscal year 1999 and FERS processing time increased

to more than 6 months from 3 months in fiscal year 1999. The goal for

CSRS processing time is 25 days and for FERS processing time is 60 days.

OPM recognizes that it needs to address lagging times in retirement claims

processing, and the fiscal year 2002 performance plan contains strategies

that could improve claims processing timeliness. The plan states that the

current processing is based on “aging technology, paper-based business

processes, and a heavy reliance on human resources.” One of the

strategies cited in OPM’s plan for reducing claims processing times is to

add more resources to the processing of FERS claims. OPM’s measure of

its success in achieving this goal is to gradually reduce processing times

for these claims from a fiscal year 2000 level of 6 months to 5 months in

fiscal year 2001 and 3 months in fiscal year 2002. The number of FERS

claims is expected to increase by nearly 40 percent between fiscal year

2000 and fiscal year 2002. The number of employees seeking retirement

services is expected to dramatically increase beyond 2002. To address

long-term needs, OPM is implementing a Retirement Systems

Modernization project that is expected to significantly reengineer and

automate retirement claims processing. OPM is implementing the

modernization of the retirement systems in phases and expects to realize

significant business benefits each year. OPM says it has already seen

improvements. For example, OPM says it implemented a prototype FERS

Benefit Calculator that has helped to reduce processing times and the

balance of aged cases. However, the modernized retirement systems will

not be fully operational until 2009. Reducing claims processing times with

an increasing workload will be a significant challenge for OPM.

Retirement and Insurance

Services
Page 14 GAO-01-884 OPM: Status of Achieving Key Outcomes

OPM has made some improvements to its fiscal year 2000 performance

report and fiscal year 2002 performance plan over previous years.

However, a number of weaknesses continue that OPM recognizes. This

section describes improvements and remaining weaknesses in OPM’s

(1) fiscal year 2000 performance report in comparison with its fiscal year

1999 report, and (2) fiscal year 2002 performance plan in comparison with

its fiscal year 2001 plan.

OPM’s fiscal year 2000 performance report represents an improvement

over the fiscal year 1999 report, but opportunities remain for additional

improvements. In our June 2000 report we indicated that OPM’s fiscal year

1999 performance report did not identify the most critical performance

measures towards goal achievement.19 The fiscal year 2000 report clearly

identifies the most critical measures of the several measures that are

included under most goals. If the critical indicator was met, then OPM

considered the goal met. Last year we noted a number of performance

report weaknesses, including the use of activity-based indicators instead

of outcome-based indicators and the lack of specific target measures for

goals. Again for fiscal year 2000, many indicators are activity based or do

not contain specific targets. The following are examples of activity-based

measures or those without targets:

• To determine whether delegated examining is conducted in accordance

with merit system laws, OPM measured the number of reviews conducted

of agency-delegated examining activities.

• An OPM measure is to ensure that the OPM workforce is well trained for

current and future needs; however, there is no target identified to

determine when this has been achieved.

• In measuring customer or employee satisfaction, OPM uses terms such as

“high degree” of satisfaction without defining what constitutes a “high

degree” of satisfaction. OPM does not identify which positive feedback

 19Observations on the Office of Personnel Management’s Fiscal Year 1999 Performance

Report and Fiscal Year 2001 Performance Plan (GAO/GGD-00-156R, June 30, 2000).

Comparison of OPM’s

Fiscal Year 2000

Performance Report

and Fiscal Year 2002

Performance Plan

With the Prior Year

Report and Plan for

Selected Key

Outcomes

Comparison of

Performance Reports for

Fiscal Years 1999 and 2000
Page 15 GAO-01-884 OPM: Status of Achieving Key Outcomes

rate (e.g., 80 percent or 90 percent) is judged to be “high satisfaction” for

the particular indicator.

• A performance management goal is for OPM to formulate performanceoriented approaches to compensation. OPM considered this goal met

because it disseminated information on state-of-the-art compensation

practices.

Even though these measures indicate positive activity, they are not

measures of actual goal achievement, and without specific targets it is not

possible to determine whether the goal was met.

The fiscal year 2000 performance report also contains some measures that

were not considered reliable by the OPM OIG. The performance report

states that the Inspector General reviewed 116 of the 458 performance

measures and found that 59 percent were based on reliable information

and 17 percent were based on unreliable information; for 24 percent of the

measures, the OIG could not determine their reliability. Further, concerns

exist about the reliability of key surveys that are used by OPM as measures

for goal achievement throughout the performance report. The low

participation rates for the current Human Resources Directors’ Survey and

the earlier Human Resources Specialists Survey (which was not conducted

in fiscal year 2000) pose a material risk that the respondents may not be

representative of the overall survey population. In addition, in the case of

the Human Resources Directors’ Survey, the low participation rate caused

a margin of error of 9.9 percent, limiting the usefulness of the results.

The fiscal year 2002 performance plan continues with several of the

strengths of the 2001 plan. The plan is directly linked to the OPM strategic

plan and is integrated with the OPM Congressional Budget Justification.

The plan also includes a resource summary by major OPM strategic goal,

including the dollars and full-time equivalents requested by goal. The fiscal

year 2002 plan, like the fiscal year 2000 report, contains a number of OPM

activity-based, rather than outcome-based, goals and measures or

indicators. The fiscal year 2002 plan continues to rely on the results of

some governmentwide surveys and secondary anecdotal information to

measure whether target levels established in the previous years’ plans

have been met. The 2002 plan discusses steps that OPM will take to

address some of the weaknesses with these surveys and anecdotal

information. For example, OPM states in its 2002 plan that it discontinued

several indicators that were based on unreliable data sources. The

reliability and validity of informal feedback has inherent limitations that

Comparison of

Performance Plans for

Fiscal Years 2001 and 2002
Page 16 GAO-01-884 OPM: Status of Achieving Key Outcomes

cannot be made more reliable and statistically valid by the planned

enhancement of procedures to collect and track the information.

OPM is proceeding with the implementation of a new measurement

framework. It plans to conduct more formal evaluations of the outcomes

of specific policies and programs, identify agency-level performance

measures, use agency-level measures as the primary basis of performance

reporting, and tie the measures more closely to the strategic goals.

This section discusses the extent to which OPM is internally addressing

strategic human capital management and information security. Both

OPM’s performance report, as well as its plan, address these challenges

within the agency. Regarding OPM’s internal strategic human capital

management, we found that the fiscal year 2002 performance plan

contains several goals and measures related to OPM’s internal strategic

human capital management, and OPM’s fiscal year 2000 performance

report describes progress in resolving some of these OPM-level strategic

human capital management challenges. For example, both the report and

the plan contained goals related to recruiting, retaining, and managing a

workforce to meet OPM program needs. Of particular note was the

requirement that all employee performance plans be linked to agency

strategic goals and the establishment of baseline data to measure the rate

of retention among employees who complete career development

programs. To further improve its strategic human capital management

goals and strategies, OPM needs to link these strategies to specific OPM

programs. For example, the OPM performance plan states that OPM has

significantly changed its ratio of employees to supervisors to now exceed

the governmentwide average. OPM’s performance plan also states that it

wants to further increase this ratio. The plan needs to also discuss what

impact this ratio change will have on program outcomes and what

additional human capital strategies might be needed to address the

reduction in the number of supervisors. OPM also could establish the

relationship of impending retirements to OPM succession planning

processes to ensure that critical competencies and leadership are available

for mission-critical activities.

With respect to information security, we found that OPM’s fiscal year 2002

performance plan contains a goal and measures related to information

security, and the agency’s fiscal year 2000 performance report explains its

progress in resolving its information security challenges. OPM reports that

in fiscal year 2000, it met its goal of ensuring that the information security

program provided adequate computer security commensurate with the

OPM’s Efforts to

Address Its Major

Management

Challenges Identified

by GAO
Page 17 GAO-01-884 OPM: Status of Achieving Key Outcomes

risk and magnitude of harm that could result from loss or compromise of

mission-critical information technology systems. However, the results of

the independent public accountant’s audit of OPM’s fiscal year 2000

consolidated financial statements show that a reportable condition

continues to exist in the electronic data processing general control

environment.20 The audit noted weaknesses in (1) entity-wide security,

(2) access control, (3) control over application changes and software

development, and (4) service continuity planning. The target date for

describing the corrective action taken to resolve these deficiencies is fiscal

year 2001. The fiscal year 2002 performance plan includes a goal to

enhance information security. The plan states that the absence of critical

security problems is the critical indicator for achieving this goal.

OPM’s mission, in part, is to provide strategic human capital management

leadership and services to federal agencies. OPM’s fiscal year 2000

performance report and fiscal year 2002 performance plan contain many

goals that measure the extent of their activities, but there are few goals

and measures that assess the actual state of strategic human capital

management in the federal government or the specific contributions that

OPM’s programs and initiatives make. Even though OPM does not directly

control these outcomes in federal agencies, it needs to measure the results

to assess how well its leadership and services are working. OPM has

recognized this weakness and is working with federal department and

agency human resource directors to develop a series of human capital

measures.

OPM also needs to make other improvements to its report and plan,

including strengthening goals and measures to improve their reliability,

linking its internal human capital goals to OPM programs, and establishing

a program management performance goal to assess fraud and error in the

Federal Employees Health Benefits Program.

To better assess OPM programs, we recommend that as a part of OPM’s

continued strengthening of its efforts to clearly define goals, measure its

performance, and provide leadership over strategic human capital

management, the Director of OPM

 20OPM’s Fiscal Year 2000 Financial Statements and accompanying audit report are included

in the OPM Fiscal Year 2000 Performance Report.

Conclusions

Recommendations for

Executive Action
Page 18 GAO-01-884 OPM: Status of Achieving Key Outcomes

• develop goals and measures that assess the state of human capital at

federal departments and agencies,

• replace informal feedback measures with indicators that are more reliable,

and

• better link internal strategic human capital management goals to specific

OPM programs and outcomes.

In addition, we also recommend that the Director of OPM develop goals

and measures that assess the prevention and detection of fraud and errors

in the Federal Employees Health Benefits Program, perform a risk

assessment to identify areas most vulnerable to fraud and errors, and

institute internal controls to prevent and detect occurrences.

Our evaluation was generally based on the requirements of GPRA, the

Reports Consolidation Act of 2000, guidance to agencies from the Office of

Management and Budget (OMB) for developing performance plans and

reports (OMB Circular A-11, Part 2), previous reports and evaluations by

us and others, our knowledge of OPM’s operations and programs, our

identification of best practices concerning performance planning and

reporting, and our observations on OPM’s other GPRA-related efforts. We

also discussed our review with OPM officials and with OPM’s OIG. The

agency outcomes that were used as the basis for our review were

identified by the Ranking Minority Member, Senate Governmental Affairs

Committee as important mission areas for the agency and generally reflect

the outcomes for all of OPM’s programs or activities. The major

management challenges confronting OPM—including the governmentwide

high-risk areas of strategic human capital management and information

security that we identified in our January 2001 performance and

accountability series and high-risk update—were identified by us and by

OPM’s OIG in December 2000. We did not independently verify the

information contained in the performance report and plan, although we

did draw from other GAO work in assessing the validity, reliability, and

timeliness of OPM’s performance data. We conducted our review from

April 2001 through June 2001 in accordance with generally accepted

government auditing standards.

We provided a draft of this report to OPM for its review and comment.

OPM’s Acting Director provided written comments, which are reprinted in

appendix II. Overall, he agreed with the results our review, including our

recommendations, and appreciated our recognizing the strategic

challenges OPM faces with regard to human capital management as well

Scope and

Methodology

Agency Comments
Page 19 GAO-01-884 OPM: Status of Achieving Key Outcomes

as its efforts to improve its measurement framework, including the shift to

measuring governmentwide outcomes. OPM also provided specific

comments to clarify information we presented on four of the five selected

key outcomes. We made several changes to this report in response to

these comments. Our responses are given in appendix II as well as in

various sections of this report.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after the

date of this letter. At that time, we will send copies to appropriate

congressional committees; the Acting Director of OPM, and the Director of

OMB. Copies will also be made available to others on request.

If you or your staff have any questions, please call me at (202) 512-6806.

Key contributors to this report were Bill Doherty, Danielle Holloman,

Linda Lambert, Mary Martin, Elizabeth Martinez, Ben Ritt, Ed Stephenson,

and Scott Zuchorski.

Sincerely yours,

J. Christopher Mihm

Director, Strategic Issues
Appendix I: Observations on

OPM’s Efforts to Address Its

Major Management Challenges

Page 20 GAO-01-884 OPM: Status of Achieving Key Outcomes

Table 1 identifies the major management challenges confronting OPM,

which include the governmentwide high-risk areas of strategic human

capital management and information security. The first column lists the

challenges that we and/or OPM’s OIG have identified. The second column

discusses what progress, as discussed in its fiscal year 2000 performance

report, OPM has made in resolving its challenges. The third column

discusses the extent to which OPM’s fiscal year 2002 performance plan

includes performance goals and measures to address the challenges that

we and/or OPM’s OIG identified.

We found that OPM’s performance report discussed the agency’s progress

in resolving all challenges. Of the agency’s seven major management

challenges, its performance plan had goals and measures that were

directly related to all seven of the challenges. OPM can build upon its

efforts by more clearly identifying the specific strategies that it is using to

address its challenges. Such information is important to help OPM, the

Congress, and other decisionmakers determine whether the best mix of

strategies is in place and to help pinpoint improvement opportunities.

Appendix I: Observations on OPM’s Efforts to

Address Its Major Management Challenges
Appendix I: Observations on

OPM’s Efforts to Address Its

Major Management Challenges

Page 21 GAO-01-884 OPM: Status of Achieving Key Outcomes

Table 1: Major Management Challenges

Major management challenge

Progress in resolving major management

challenge as discussed in the fiscal year 2000

performance report

Applicable goals and measures

in the fiscal year 2002

performance plan

GAO-designated governmentwide high-risk

Strategic human capital management:

GAO has identified shortcomings at

multiple agencies involving key elements

of modern strategic human capital

management, including strategic human

capital management planning and

organizational alignment; leadership

continuity and succession planning;

acquiring and developing staffs whose

size, skills, and deployment meet agency

needs; and creating results-oriented

organizational cultures.

The report contains several goals for OPM’s Office

of Human Resources and Equal Employment

Opportunity. These include:

• recruiting and training a diverse workforce to

meet OPM needs;

• helping OPM employees achieve top

performance, productivity, and job satisfaction;

and

• linking all individual performance plans to

agency strategic goals.

The report discusses progress in meeting these

goals. These are positive but should be better

linked to the specific human capital requirements

of individual OPM programs and outcomes.

The plan has several goals directly

applicable to this challenge. For

example,

• OPM manages and aligns its

workforce to support OPM

strategic goals;

• recruiting and staffing are based

on workforce planning;

• innovative employee education

and training results in a flexible,

optimally-trained workforce; and

• OPM’s work environment values

diversity.

However, these goals could be

better linked to individual OPM

program and outcome needs.

Information Security: Our January 2001

high-risk update noted that the agencies’

and governmentwide efforts to strengthen

information security have gained

momentum and expanded. Nevertheless,

recent audits continue to show federal

computer systems are riddled with

weaknesses that make them highly

vulnerable to computer-based attacks and

place a broad range of critical operations

and assets at risk of fraud, misuse, and

disruption.

OPM reports that in fiscal year 2000 it met its goal,

which ensured that the information security

program provided adequate computer security

commensurate with the risk and magnitude of

harm that could result from loss or compromise of

mission-critical information technology systems. In

particular, the one measure stated that few security

programs were identified as being problematic

during internal and external evaluations and those

issues that were identified were not material

weaknesses and were rectified promptly.

According to the performance report, the results of

the independent public accountant’s audit of

OPM’s consolidated financial statements and

individual statements of the programs as of and for

the year ended September 30, 2000, noted that the

electronic data processing (EDP) general control

environment continues to be a reportable

condition. OPM further reported that the following

four areas of EDP general control need to be

strengthened: (1) entity-wide security, (2) access

control, (3) control over application changes and

software development, and (4) service continuity

planning.

The target date for describing the corrective action

taken to resolve these deficiencies is fiscal year

2001.

OPM has a performance goal that

mission-critical systems,

infrastructure, and information are

protected by a robust IT security

program. Performance indicators

include:

• Few security problems are

identified during internal and

external evaluations and those

that are identified are not

material weaknesses and are

rectified promptly.

• Staff are trained in computer

security, as necessary, based

on assessment of needs.

• A tested disaster-recovery

capability is in place for OPM’s

information technology support

systems.

The plan does not include any

numerical targets or projections

regarding the achievement of the

goal. However, the fiscal year 2002

plan shows that during fiscal year

2001 progress has been made in

ensuring that few security

problems are identified during

internal and external evaluations.
Appendix I: Observations on

OPM’s Efforts to Address Its

Major Management Challenges

Page 22 GAO-01-884 OPM: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major management

challenge as discussed in the fiscal year 2000

performance report

Applicable goals and measures

in the fiscal year 2002

performance plan

Additionally, in June 2000, OPM’s OIG presented

the results of an external audit of Blue Shield of

California, which was conducted to obtain

reasonable assurance that proper controls over the

integrity, confidentiality, and availability of

computerized data associated with OPM’s Federal

Employees Health Benefits Program contracts had

been implemented. As a result of the audit, the

OIG identified several areas in need of

improvement, including developing a

comprehensive security plan and strengthening

internal controls for safeguarding assets and data.

IG-designated major management challenges

Deficiencies in the Revolving Fund (RF)

and Salaries and Expenses (S&E)

Accounts: Deficiencies include

(1) inadequate controls over the

reconciliation of the RF and S&E expense

cash account with its fund balance with

Treasury, (2) inadequate controls over

data entered into general ledgers for the

RF and S&E accounts, and (3) inadequate

financial statement preparation and

noncompliance with the Federal Financial

Management Improvement Act (FFMIA).

OPM stated in its performance report that

deficiencies in RF and S&E general ledgers, and

their non-compliance with FFMIA, should be

addressed with the replacement of the financial

management system. The new system is expected

to be fully operational by fiscal year 2003.

However, OPM’s performance plan target dates to

correct these deficiencies are fiscal years 2001

and 2002.

The report also states that the goal of reconciling

Treasury accounts in 30 days was met. However,

the report does not address the correction of

outstanding differences and if there is a goal to

reduce these differences to a specific amount.

OPM’s fiscal year 2002

performance plan included a goal

to have the trust funds financial

systems in substantial compliance

with FFMIA and all financially

related management challenges

addressed. In addition, the Office

of the Chief Financial Officer

included two related annual goals:

(1) Prepare financial statement by

statutory date and earn an

unqualified audit opinion on the

OPM financial statement.

Performance indicators include:

• improved accounting, including

reconciling Treasury accounts in

30 days;

• eliminating material

weaknesses; and

• improving IG and GAO audit

results.

(2) Modernize OPM’s

administrative financial

management systems.

Performance indicators include:

• Implementation of new core

accounting systems proceeds

on schedule. SGL and

Budget/Funds Management

modules are installed and

implemented for FY 2002.

OPM’s Financial Management Oversight

of the Federal Employees Health Benefits

Program (FEHBP): OPM’s oversight and

monitoring of enrollment and premium

reconciliations with community-rate

carriers need to be strengthened. OPM’s

OPM stated in its performance report that it is

working with a contractor to implement a

centralized enrollment system that will greatly

facilitate the enrollment and premium reconciliation

process in the program. Systems requirements are

being defined and a pilot process is expected to be

OPM’s fiscal year 2002

performance plan reported a goal

to have the trust funds financial

systems in substantial compliance

with FFMIA and all financially

related management challenges
Appendix I: Observations on

OPM’s Efforts to Address Its

Major Management Challenges

Page 23 GAO-01-884 OPM: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major management

challenge as discussed in the fiscal year 2000

performance report

Applicable goals and measures

in the fiscal year 2002

performance plan

systems are not adequately designed to

centrally reconcile monies paid for

insurance with the respective enrollees.

completed in the next year. OPM expects to

resolve this deficiency in FY 2001.

addressed.

Performance indicators include:

• FY 2001 financial statement

audits receive unqualified

opinions for all three benefit

programs.

• OPM’s FY 2001 FFMIA

assurance letter shows that

identified material weaknesses,

such as the reconciliation of

FEHBP premiums and

enrollments and other related

deficiencies, are resolved.

Health Care Fraud and Abuse in the

Federal Employees Health Benefits

Program: OPM OIG’s ability to investigate

and prosecute health care fraud and

abuse continues to be adversely affected

by the exclusion of FEHBP from certain

civil enforcement provisions of the Health

Insurance Portability and Accountability

Act of 1996, which apply to all of the other

health care programs.

OPM reported that it has been working to amend

existing law to include language that would allow

the Health Benefits Program to investigate and

prosecute fraud. Several congressional bills now

have the necessary language, although to date

none have been reported outside of their

respective committees.

The performance indicators for OIG’s goal to have

fraud against OPM programs prevented and

detected showed that the number of investigations

resulting in referrals to the Department of Justice,

and positive dispositions (arrest, convictions, etc.),

increased in FY 2000. However, these indicators

relate to the processing of fraud cases once

discovered and do not address preventing fraud

cases from occurring. In addition, the report did not

discuss agency programs goals for preventing

fraud.

The OPM performance plan

includes an OIG goal to have fraud

against OPM programs detected

and prevented. It includes

performance indicators such as the

number of investigative referrals,

arrests, indictments, and

debarments. However,

performance plan strategies relate

to the processing of fraud cases

once discovered and do not

address preventing fraud cases

from occurring. In addition, agency

programs do not include strategies

for preventing fraud, such as plans

to establish programs or new

techniques for preventing fraud.

Retirement Systems Modernization: The

Retirement Systems Modernization is

OPM’s central strategy to meet the longterm customer services and financial

management objectives for the Civil

Service and Federal Employees

Retirement Systems.

One of the goals of OPM’s Retirement and

Insurance Service addresses this challenge in that

it calls for accelerated information technology

solutions for a modernized retirement system to be

designed, developed, and implemented. According

to OPM’s performance report, the agency met the

goals and objectives related to this challenge that

were envisioned for fiscal year 2000. Namely,

OPM reported that it had (1) completed the new

business model that it plans to use for the

modernization and (2) developed four of six

planned core process blueprints and (3) begun

working on the technology blueprint.

OPM changed the goal associated

with this management challenge to

performing acquisition planning and

beginning implementation of the

redesigned business processes

and supporting technology for the

modernized retirement system.

OPM reported that it planned to

implement its new business model

in a phased approach beginning in

fiscal year 2002. In addition, OPM

stated that it would adhere to

(1) commitments and project

timetables, such as completing the

first phase overall planning

segments for customer service,
Appendix I: Observations on

OPM’s Efforts to Address Its

Major Management Challenges

Page 24 GAO-01-884 OPM: Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major management

challenge as discussed in the fiscal year 2000

performance report

Applicable goals and measures

in the fiscal year 2002

performance plan

annuitant service, and

recordkeeping and (2) cost

management (i.e., fiscal year 2002

activities are to be completed within

allocated funding).

Human resources management: Human

resources management and accountability

will continue to be a demanding,

government-wide challenge for the

foreseeable future as the labor market

becomes more competitive, large numbers

of employees become eligible for and are

expected to retire, the need for better skills

in technological positions increases, and

performance management awareness

increases. Although OPM plays a key role

in leading and ensuring accountability in

the management of the federal

government’s human resources, meeting

this challenge is more than an OPM issue.

It requires the effective planning and

participation of each individual agency.

(See section of this report on our assessment of

OPM’s progress in achieving the first three

outcomes identified by the Senate Governmental

Affairs Committee—an appropriately constituted

and properly skilled federal workforce, employee

performance accountability, and adherence to

merit system principles.)

Human resources management

includes recruiting, developing, and

retaining a qualified workforce, as

well as assessing the performance

of these functions. OPM’s fiscal

year 2002 plan contains several

activity-based goals and measures

that are aimed at helping agencies

recruit, develop, manage, and

retain the workforce necessary to

accomplish their missions while

also adhering to the merit system

principles. For example, OPM has

a goal to develop and implement

employment policies and initiatives

that are sound, innovative, and

flexible in order to recruit and retain

a high quality and diverse federal

workforce.

Performance indicators include:

• Informal feedback and favorable

ratings on the Customer

Satisfaction Survey of Human

Resource Directors show an

increase in the level of agency

human resource directors’

satisfaction with OPM’s

employment policy leadership.

• A favorable perception of

employees governmentwide that

staffing is conducted in

accordance with the first merit

system principle—“recruit,

select, and advance on the basis

of merit.”

• Meetings are held with

stakeholders to share

information and gather ideas

about improving OPM-provided

services.
Appendix II: Comments From the Office of Personnel

Management

Page 25 GAO-01-884 OPM: Status of Achieving Key Outcomes

Appendix II: Comments From the Office of

Personnel Management

Note: GAO comments

supplementing those in

the report text appear at

the end of this appendix.
Appendix II: Comments From the Office of Personnel

Management

Page 26 GAO-01-884 OPM: Status of Achieving Key Outcomes

See comment 2.

See comment 1.
Appendix II: Comments From the Office of Personnel

Management

Page 27 GAO-01-884 OPM: Status of Achieving Key Outcomes

See comment 3.

See comment 4.
Appendix II: Comments From the Office of Personnel

Management

Page 28 GAO-01-884 OPM: Status of Achieving Key Outcomes

See comment 5.
Appendix II: Comments From the Office of

Personnel Management

Page 29 GAO-01-884 OPM: Status of Achieving Key Outcomes

The following are GAO’s comments on the specific comments contained in

the enclosure to OPM’s letter dated June 26, 2001.

1. We revised this report to show that the retirement systems

modernization project is being implemented in phases and that it will

not be fully operational until 2009.

2. In the draft of this report provided to OPM for comment, we stated

that OPM’s goal for fiscal year 2000 was to make the workforce

planning model available to agencies for their use and that this goal

was met. Although making the model available to agencies is a useful

activity, OPM’s performance report and plan do not make clear what

the outcome or result was from this activity. For example, neither

document provides information on how agencies have used this model

to help ensure that they have an appropriately constituted, properly

skilled workforce to carry out their missions. OPM comments “there is

already real evidence that the model has been of assistance, as all

Federal agencies are meeting a deadline of June 29, 2001, to provide

the Office of Management and Budget with individual workforce

analyses as a first step in meeting the President’s initiative to use

human capital planning to streamline Government.” The basis upon

which OPM makes this statement is unclear, because although OPM

says the workforce planning model has been of assistance to agencies,

it does not say how many agencies actually used it in responding to

OMB’s directive.

3. We recognize that OPM’s goal for fiscal year 2000 was to complete its

research on private and public sector best practices in compensation

systems and tools. However, OPM does not describe in its fiscal year

2000 performance report or 2002 performance plan what outcome or

result was expected for this activity-based goal in terms of ensuring

employee performance accountability. Thus, we continue to believe

that OPM needs to have goals, measures, and strategies in place that

will show how the use of the compensation systems and tools

identified as a result of its research will aid the federal government in

holding employees accountable for their performance.

4. We changed the report to recognize OPM’s belief that the measures the

OIG identified for detecting fraud and error in the Federal Employees

Health Benefits Program are consistent with RIS’ expectations.

However, as we have stated in this report, the OIG’s measures relate to

detecting fraud after it has occurred rather than preventing it.

Accordingly, we continue to believe that OPM needs to develop goals

GAO’s Comments
Appendix II: Comments From the Office of

Personnel Management

Page 30 GAO-01-884 OPM: Status of Achieving Key Outcomes

and measures within the program office, RIS, for detecting and

preventing fraud and errors in the health benefits program. OPM

commented that it will look for ways to develop additional programwide goals and measures relating to fraud and errors in the federal

health benefits program.

5. In addition to the changes described in comment 1, we changed the

report to reflect that the retirement systems modernization project has

not been delayed. We also cited an example of improvements OPM has

seen thus far in implementing the modernized retirement systems.

(450036)
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Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• E-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

Ordering Information

To Report Fraud,

Waste, and Abuse in

Federal Programs