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[Senate Prints 106-63]
[From the U.S. Government Publishing Office]

106th Congress                                                  S. Prt.
 2d Session                 COMMITTEE PRINT                     106-63
_______________________________________________________________________

                              R E P O R T

                                   of

                         SENATOR FRED THOMPSON

                            Chairman of the

         COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE

                                   on

                      MAJOR MANAGEMENT CHALLENGES

                       FACING FEDERAL DEPARTMENTS

                              AND AGENCIES

                                     

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     

                              OCTOBER 2000

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
67-658                     WASHINGTON : 2000

                            C O N T E N T S

                                 ______

                                                                   Page

Preface..........................................................     1

  I. Executive Summary................................................3

 II. Introduction and Background......................................5

III. Designation of Major Management Challenges and High-Risk Programs6

 IV. Agency Efforts to Develop Performance Goals and Measures for 
     Management Challenges...........................................11

  V. Agency Actions and Plans to Address Unmet Goals.................14

 VI. Agency Efforts to Respond to GAO and IG Recommendations Related to 
     Management Challenges...........................................15

VII. Conclusions and Recommendations.................................16

VIII.Appendix: Summary of Major Management Challenges and High-Risk 
     Programs for 24 Federal Departments and Agencies..................

                                                                     19

        Department of Agriculture (USDA).........................    19

        Department of Commerce (DOC).............................    20

        Department of Defense (DOD)..............................    22

        Department of Education..................................    23

        Department of Energy (DOE)...............................    25

        Department of Health and Human Services (HHS)............    27

        Department of Housing and Urban Development (HUD)........    29

        Department of the Interior...............................    31

        Department of Justice (DOJ)..............................    32

        Department of Labor (DOL)................................    34

        Department of State......................................    35

        Department of Transportation (DOT).......................    37

        Department of the Treasury...............................    38

        Department of Veterans Affairs (VA)......................    40

        Agency for International Development (USAID).............    41

        Environmental Protection Agency (EPA)....................    43

        Federal Emergency Management Agency (FEMA)...............    44

        General Services Administration (GSA)....................    45

        National Aeronautics and Space Administration (NASA).....    46

        National Science Foundation (NSF)........................    48

        Nuclear Regulatory Commission (NRC)......................    49

        Office of Personnel Management (OPM).....................    51

        Small Business Administration (SBA)......................    52

        Social Security Administration (SSA).....................    53

                                PREFACE

    Waste, fraud, and abuse in the Federal Government have 
become a cliche. The tremendous growth in the amount of money 
the Federal Government wastes each year is too predictable. 
Stories in the press have numbed the American public to the 
fact that billions of dollars are squandered as the result of 
mismanagement or malfeasance.
    Last year, I released a report by the General Accounting 
Office chronicling a disturbing trend in many Federal 
programs--improper payments. The report tallied improper 
payments in Federal programs at $19 billion for fiscal year 
1998 alone. This year, such overpayments were estimated at 
almost $21 billion. And because only 14 programs actually 
estimate the amount of improper payments they make, the number 
is likely higher--much, much higher. But because there was 
scarcely a mention of the report in the press, commentator Paul 
C. Light, The Brookings Institution, mused in Government 
Executive magazine, ``Perhaps Americans simply believe the war 
on waste cannot be won.''
    Other problems plaguing government operations are equally 
systemic. In 1990, the GAO began to compile a ``high-risk 
list'' of Federal programs and activities that were most 
vulnerable to waste, fraud, and abuse. This high-risk list 
started with 14 problem areas and has been expanded with every 
update issued by the GAO, listing problems like poor financial 
management, weak information security, and shoddy oversight of 
government contractors. The current list, released in 1999, 
includes 26 Federal agency problem areas. Although new areas 
are added regularly, few qualify for removal. In fact, only one 
high-risk area has been removed since 1995. Ten of the 14 
original high-risk areas in 1990 remain on the list, despite 
the pressure to solve the problems.
    A similar pattern is found in the reports of agency 
Inspectors General. In each of the past 3 years, the IGs of 
major Federal agencies reported to Congress the most serious 
performance problems their agencies faced. The problems 
identified by the IGs--like poor management of personnel, 
disastrous handling of major information technology projects, 
and ineffective controls over grant programs--remain much the 
same year after year.
    The effect of this waste and mismanagement year after year 
is not inconsequential. Opinion polls consistently show low 
levels of public trust and confidence in the Federal 
Government. These low expectations of Federal performance are 
the result of the constant barrage of information showing that 
Washington is wasting a significant proportion of the tax 
dollars Americans pay each year. In 1998, a survey conducted by 
the Washington-based Pew Research Center found that 64 percent 
of Americans view the government--with a burgeoning budget of 
over $2 trillion--as ``inefficient and wasteful.''
    The key component lacking in Federal Government management 
is accountability. The Federal Government is so large and its 
policies are so cumbersome that no one is held accountable for 
the ineptitude with which its resources are managed. Until 
someone is held accountable for the mess the current government 
is in and until Congress stops throwing good money after bad, 
the problems will go on.
    To its credit, Congress in 1993 enacted a law that attempts 
to make Federal agencies more accountable to the American 
people about how their resources are managed. The Government 
Performance and Results Act--the Results Act--tells agencies to 
define their mission, set goals, and report on the extent to 
which they are achieving them. I saw this as a chance to make 
agencies set goals to solve their major management problems and 
report on their progress to the Governmental Affairs Committee, 
which has responsibility for the efficiency of government 
operations.
    In August 1999, I wrote to each major agency head and 
listed in detail the major management problems that have 
plagued their department or agency and asked them what they 
were doing about them. In my letter, I wrote that ``it is 
essential that agency heads and other managers commit 
themselves to tangible steps that will eventually lead to 
solutions and that they accept accountability for following 
through on these commitments.'' The letter continued, ``Without 
specific and measurable performance goals, it is difficult if 
not impossible to assess progress in addressing major 
management problems and to hold agencies accountable.'' After 
receiving agency responses, Committee staff met with 
representatives from each agency, their respective IGs, and 
GAO. This report recounts the experience of the Committee in 
gauging the progress of agencies in solving their major 
management problems.
    It is clear to me from this process that there are pockets 
of progress throughout the Federal Government. Generally, where 
such progress is occurring it is the result of dedicated civil 
servants and political appointees working diligently to instill 
performance based management in their agency. That is what it 
will take to solve many of these problems.
    Unfortunately, in many agencies there is insufficient 
attention to the problems that are stifling effectiveness and 
draining precious resources. In those cases, agency leaders 
either don't realize the severity of the problems or don't 
think such ``management minutiae'' deserves their attention.
    This report recounts the process by which we interviewed 
agency officials and provides some conclusions about the 
current state of management in the Federal Government. Sound 
management policies are critical to the future success of this 
government in the new economy. We have a long way to go.

            Fred Thompson,
              Chairman

 
  MAJOR MANAGEMENT CHALLENGES FACING FEDERAL DEPARTMENTS AND AGENCIES

                              ----------                              

                          I. EXECUTIVE SUMMARY

    Since enactment of the Government Performance and Results 
Act--also known as ``GPRA'' or ``the Results Act''--several 
independent assessments have shown that government-wide 
implementation of GPRA has been uneven. One area where there 
have been too few results is addressing major management 
challenges that seem to persist year after year at many 
agencies. Senator Fred Thompson, Chairman of the Senate 
Governmental Affairs Committee, has urged Federal agencies to 
apply GPRA's results-oriented principles--goal setting, 
performance measurement, and reporting--to address these major 
management problems. Without the consistent development and use 
of such goals and measures, it is difficult for Congressional 
decisionmakers to assess agencies' progress in addressing these 
problems.

                 Chairman's Letters to 24 Agency Heads

    On August 17, 1999, Chairman Thompson wrote individual 
letters to the heads of the 24 largest Federal agencies to 
request information on what actions they were taking to address 
their long-standing management challenges and to determine the 
extent to which agencies were using GPRA as a means to address 
these management problems. In these letters to the agencies, 
Chairman Thompson detailed each agency's most serious 
management problems as identified by the General Accounting 
Office (GAO) and by each agency's Inspector General (IG). Each 
letter contained an analysis by Committee staff of how well 
each of the 24 agencies' annual Results Act Performance Plans 
for fiscal year 2000 addressed the agency's major management 
challenges and how well the agency was responding to unresolved 
GAO and IG audit recommendations designed to remedy these major 
problems. In his letters to the agencies, Chairman Thompson 
requested that representatives of each agency meet with 
Committee staff to discuss the agency's response to the 
Chairman's letter and to follow up on the agency's progress in 
using performance planning and reporting to address major 
management challenges and high-risk programs.

                 Follow-up Meetings by Committee Staff

    From November 1999 through June 2000, Committee staff met 
with management officials from each of the 24 agencies. The 
Committee staff's meetings with agency officials and the 
reviews of agency documents revealed that agencies have not 
consistently developed performance goals and associated 
measures that directly address their respective management 
challenges and high-risk programs. The Committee staff found 
that 11 of the 24 agencies reported few, if any, specific and 
readily identifiable goals and measures that directly address 
their major management problems. Eight of the 24 agencies 
reported a moderate level of such goals and measures for these 
management challenges. Only five of the 24 agencies reported 
more extensive goals and measures that directly address these 
challenges.

                            Recommendations

    The Committee staff's review of agencies' efforts 
unfortunately shows that the attention to management problems 
has been insufficient to meet the challenges they pose. Poor 
management of Federal agencies and programs still causes 
tremendous waste of Federal dollars and, in many cases, 
prevents the government from achieving its missions. To address 
continued concerns about agencies' efforts to address their 
major management challenges, the Committee staff has identified 
some recommendations for improvement. These recommended actions 
include the following:

         OMB should clarify and strongly enforce its 
        Results Act guidance that requires agencies to develop 
        and report on performance goals and measures that 
        directly address major management challenges and high-
        risk programs. Although there has been some progress in 
        this area, there are clearly too few goals and measures 
        to address the many major challenges that exist today. 
        In cases where agencies have valid reasons for not 
        developing such goals and measures, the agency should 
        describe how it is monitoring the progress in resolving 
        these management challenges and how it is being held 
        accountable to address these challenges.

         Agencies should ensure that they include in 
        their Performance Reports specific and credible 
        information on how they plan to meet unmet goals in the 
        future. The review of agencies' Performance Reports 
        clearly showed that some agencies were less than 
        thorough in reporting this information.

         OMB should develop and publish goals and 
        measures for the Priority Management Objectives and 
        report on the Federal Government's progress toward 
        meeting these goals. Each year, OMB designates this 
        list of significant management problems but currently 
        monitors progress without the benefit of specific and 
        publicly available measures.

         Agencies should incorporate performance 
        measures for major management challenges into the 
        performance agreements of agency leaders and program 
        managers. The success of the Results Act and 
        performance-based management in Federal agencies 
        depends in large part on the extent to which agency 
        officials and employees understand the goals set forth 
        by the agency and are held accountable for achieving 
        them.

         The IGs and GAO should take more direct and 
        frequent action to follow up on what the agencies have 
        done to respond to IG and GAO recommendations, 
        particularly on key recommendations addressing critical 
        management problems. The IGs should also provide more 
        information on open recommendations in their semiannual 
        reports, especially as such recommendations relate to 
        the IG top 10 management challenges. Although many 
        agencies are doing a respectable job in responding to 
        GAO and IG recommendations, some agencies will require 
        more active follow-up by the IGs and GAO on outstanding 
        recommendations.

    By implementing these recommendations, the Federal 
Government can redouble its efforts to bring about a culture 
that values a results-oriented approach to managing Federal 
agencies and programs. Although establishing specific and 
measurable goals for these major management challenges can be a 
complex undertaking, the development and reporting of such 
goals is one of the most effective methods for ensuring 
accountability for achieving results.

                    II. INTRODUCTION AND BACKGROUND

    During the 1990's, Congress enacted a broad statutory 
framework to improve the management and accountability of 
Federal agencies. At its centerpiece is the Government 
Performance and Results Act of 1993 (Public Law 103-62)--also 
known as ``GPRA'' or ``the Results Act.'' GPRA is intended to 
improve the efficiency and effectiveness of Federal programs by 
establishing a system to set goals for program performance and 
to measure results. GPRA requires that Federal agencies 
establish long-term strategic goals, develop annual performance 
goals, measure their performance against those goals, and 
report publicly on how well they are doing. Agencies are to 
meet these requirements through the preparation of multiyear 
strategic plans, Annual Performance Plans, and Annual 
Performance Reports.
    Since GPRA's enactment, several independent assessments 
have shown that government-wide implementation of GPRA has been 
uneven. One area where there have been too few results is 
addressing major management challenges that seem to persist 
year after year at many agencies. Committee Chairman Thompson 
has urged Federal agencies to apply results-oriented 
principles--goal setting, performance measurement, and 
reporting--to address these major management problems. Without 
the consistent development and use of such goals and measures, 
it is difficult for Congressional decisionmakers to assess 
agencies' progress in addressing these problems.
    The Federal Government's response to the Year 2000 (Y2K) 
computer problem is illustrative of how a significant 
management challenge can be successfully addressed. With 
heightened public and media interest and a firm deadline of 
January 1, 2000, Congressional and Executive Branch 
decisionmakers were committed to dedicating sufficient 
resources to address the problem. Federal managers provided 
strong project leadership and sustained attention. 
Congressional oversight throughout the remedial phases of the 
Y2K effort also continued to ensure focus and attention on the 
issue. Lessons learned from the Y2K computer problem can 
clearly assist Federal managers in resolving many of these 
other management challenges and high-risk programs that 
continue to plague agencies year after year.
    On August 17, 1999, Chairman Thompson wrote individual 
letters to the heads of the 24 largest Federal agencies to 
request information on what actions they were taking to address 
their long-standing management challenges and to determine the 
extent to which agencies were using GPRA as a means to address 
these management problems. In these letters to the agencies, 
Chairman Thompson detailed each agency's most serious 
management problems as identified by the General Accounting 
Office (GAO) and by each agency's Inspector General (IG). Each 
letter contained an analysis by Committee staff of how well 
each of the 24 agencies' annual Results Act Performance Plans 
for fiscal year 2000 addresses the agency's major management 
challenges and how well the agency is responding to unresolved 
GAO and IG audit recommendations designed to remedy these major 
problems. In his letters to the agencies, Chairman Thompson 
requested that representatives of each agency meet with 
Committee staff to discuss the agency's response to the 
Chairman's letter and to follow up on the agency's progress in 
using performance planning and reporting to address major 
management challenges and high-risk programs.
    From November 1999 through June 2000, Committee staff met 
with management officials from each of the 24 agencies. This 
report was prepared primarily on the basis of these meetings 
along with the Committee's examination of agencies' Performance 
Plans and Performance Reports as well as analyses by GAO, the 
IGs, and the Congressional Research Service (CRS). Most, if not 
all, of the management challenges described in this report have 
been the subject of recurring reports by GAO, the IGs, and 
others.

 III. DESIGNATION OF MAJOR MANAGEMENT CHALLENGES AND HIGH-RISK PROGRAMS

    The IGs, GAO, and the Office of Management and Budget (OMB) 
each periodically designate a list of Federal programs and 
activities that represent significant challenges or are deemed 
to be at high risk for fraud, waste, abuse, and mismanagement. 
Some of the management challenges on these lists are common 
government-wide issues such as financial management and 
information security. Other areas on the lists are distinctly 
agency- and program-focused. As one would expect, there is 
general consensus duplication in these lists of major 
management challenges in the Federal Government.
    To assess agencies' progress in using performance planning 
and reporting to address mission-critical problems, the 
Committee staff relied on the IG- and GAO-designated management 
challenges and high-risk programs for each agency. The appendix 
of this report contains a summary for each of the 24 Federal 
departments and independent agencies on their efforts in using 
performance planning and reporting to address their major 
management challenges. The following is a discussion about the 
designation of management challenges on the part of the IGs, 
GAO, and OMB.
IG Designations of Agencies' Major Management Challenges
    In December 1998, Chairman Thompson requested the IGs for 
the 24 largest agencies to provide information on the most 
serious management challenges facing their respective agencies. 
Each IG responded to the Chairman with a list of these 
management challenges, with many IGs designating 10 challenges 
and referring to their designations as the ``top 10'' list. 
These management challenges served are the bases for the 
Chairman's August 17, 1999, letters to the heads of the 24 
agencies requesting additional information about how the 
agencies were addressing their management challenges and high-
risk programs. In September 1999, Chairman Thompson asked the 
same IGs to provide updated information on the fiscal year 2000 
major management challenges at their agencies. These updated 
IG-identified management challenges are included in the summary 
presented in the appendix of this report.
    In April 2000, the President's Council on Integrity and 
Efficiency (PCIE), which is comprised of all Presidentially 
appointed Inspectors General, released the results of an 
analysis of the various management challenges identified by the 
IGs of the 24 agencies. As part of its analysis, the PCIE 
identified seven challenges that have applicability across the 
Federal Government. In order of most frequently identified by 
the IGs, these management challenges are as follows:

         Financial Management and Financial Statements

         Information and Technology Resources

         Security and Data Integrity

         GPRA Compliance, Implementation and 
        Accountability

         Procurement and Grant Management

         Personal Security and Safety

         Human Capital and Staffing

    The PCIE undertook this analysis to assist the IG community 
in looking for opportunities to improve communications in 
pursuing solutions to these complex, government-wide issues.
GAO's Designation of High-Risk Federal Programs and Activities
    In 1990, GAO began an initiative to place special emphasis 
on ``high-risk'' Federal programs and activities that it 
considered to be particularly vulnerable to fraud, waste, 
abuse, and mismanagement. The GAO's original high-risk list 
consisted of 14 areas. Over time, as some high-risk government 
operations were corrected and other risks emerged, GAO removed 
some risks from the list and added new ones to maintain focus 
on areas that needed sustained management attention. Since 
1995, however, GAO has removed only one problem from its high-
risk list. Today, GAO's high-risk list has grown to 26 problem 
areas, and 10 of the 14 original high-risk problems from 1990 
remain on the list.
    GAO's most recent high-risk list, \1\ which was issued in 
January 1999, is presented in table 1. Also included is the 
respective year in which GAO designated the problem as high 
risk. GAO is expected to update this list of high-risk areas at 
the start of the new Congress in early 2001.
---------------------------------------------------------------------------
    \1\ General Accounting Office, High-Risk Series: An Update (GAO/HR-
99-1, January 1999), pp. 170-171.

Table 1: GAO-Designated High-Risk Programs and Activities in the Federal
                               Government
------------------------------------------------------------------------
                                                               Year
             High-risk program or activity                  designated
------------------------------------------------------------------------
  Providing Basic Financial Accountability
     DOD Financial Management..................            1995
     Forest Service Financial Management.......            1999
     FAA Financial Management..................            1999
     IRS Financial Management..................            1995
     IRS Receivables...........................            1990
 
  Ensuring Major Technology Investments Improve
 Services
 
     Air Traffic Control Modernization.........            1995
     Tax Systems Modernization.................            1995
     National Weather Service Modernization....            1995
     DOD Systems Development and Modernization             1995
 Efforts...............................................
 
    Resolving Serious Information Security Weaknesses..            1997
 
    Addressing Urgent Year 2000 Computing Challenge....            1997
 
  Managing Large Procurement Operations More
 Efficiently
 
     DOD Inventory Management..................            1990
     DOD Weapon Systems Acquisition............            1990
     DOD Contract Management...................            1992
     Department of Energy Contract Management..            1990
     Superfund Contract Management.............            1990
     NASA Contract Management..................            1990
 
  Reducing Inordinate Program Management Risks
 
     Medicare..................................            1990
     Supplemental Security Income..............            1997
     IRS Tax Filing Fraud......................            1995
     DOD Infrastructure Management.............            1997
     HUD Programs..............................            1994
     Student Financial Aid Programs............            1990
     Farm Loan Programs........................            1990
     Asset Forfeiture Programs.................            1990
     The 2000 Census...........................            1997
------------------------------------------------------------------------
Source: GAO.

OMB's Designation of the Federal Government's Major Management Problems
    In 1989, OMB initiated its own high-risk program, which was 
featured in detailed reports in the President's annual budget. 
In 1996, however, OMB dropped this high-risk program. In its 
place, beginning with the fiscal year 1999 budget cycle, OMB 
designated the government's most significant management 
problems as Priority Management Objectives (PMO's). According 
to the President's fiscal year 1999 budget, the establishment 
of PMO's would allow the Administration to ``provide management 
leadership to ensure the faithful execution of the enacted 
budget, programs, regulations, and policies,'' and to ``work 
within and across agencies to identify solutions to mission 
critical problems.''
    OMB issued its first set of PMO's as part of its initial 
fiscal year 1999 Government-wide Performance Plan submitted 
under GPRA. For fiscal year 1999, OMB identified 22 key 
management objectives and developed performance measures or 
commitments for each of the 11 government-wide and 11 agency- 
or program-specific PMO's. OMB developed additional sets of 
PMO's as part of the Government-wide Performance Plan for both 
fiscal years 2000 and 2001. The lists for years 2000 and 2001 
each included a total of 24 PMO's, with 12 having a government-
wide focus and the other 12 being agency- or program-focused. 
For each year, some new management objectives are typically 
added and other areas are dropped. Table 2 lists the OMB-
designated PMO's to be targeted in fiscal year 2001.\2\
---------------------------------------------------------------------------
    \2\ Absent from OMB's fiscal year 2001 list of PMO's are ``Better 
management of real property'' and ``Improve management of the Census.'' 
In each case, agencies did not directly solve the issues that made the 
areas management challenges. Rather, they drafted proposals (General 
Services Administration) or tested procedures (Bureau of the Census), 
actions that do not represent adequate measures to solve major 
management challenges.

------------------------------------------------------------------------
  Table 2: OMB's Priority Management Objectives (PMO's) for Fiscal Year
                                  2001
-------------------------------------------------------------------------
                Strengthening Government-wide Management
   Use performance information to improve program management and
 budget decisionmaking.
   Improve financial management information.
   Use capital planning and investment control to better
 management information technology.
   Provide for computer security and protect critical
 information infrastructure.
   Strengthen statistical programs.
   Implement acquisition reforms.
   Implement electronic government initiatives.
   Better manage Federal financial portfolios.
   Align Federal human resources to support agency goals.
   Verify that the right person is getting the right benefit.
   Streamline and simplify Federal grants management.
   Capitalize on Federal energy efficiency.
 
                    Improving Program Implementation
   Modernize student aid delivery.
   Improve DOE program and contract management.
   Strengthen HCFA's management capacity.
   Implement HUD reform.
   Reform management of Indian trust funds.
   Implement FAA management reforms.
   Implement IRS reforms.
   Streamline SSA's disability claims process.
   Revolutionize DOD business affairs.
   Manage risks in building the International Space Station.
   Improve security and management of overseas presence.
   Reengineer the naturalization process and reduce the
 citizenship application backlog.
------------------------------------------------------------------------
Source: OMB.

    Unlike the PMO's for fiscal year 1999, OMB did not 
designate specific and readily identifiable performance goals 
and measures for fiscal years 2000 and 2001. In an April 12, 
2000, letter to the OMB Director, Chairman Thompson encouraged 
OMB to develop and report specific commitments for the PMO's. 
In his response, the OMB Director stated that the establishment 
and dissemination of specific goals and measures for the PMO's 
was not necessary, and that OMB officials ``work through the 
problems internally to achieve the objectives in whatever way 
is most effective.'' Nevertheless, establishing and reporting 
specific commitments for the PMO's will ensure a more 
coordinated and sustained effort in these significant 
challenges and will instill within OMB and the agencies a 
greater level of accountability for achieving results.
Agencies' Agreement With IG- and GAO-Designated Management Challenges
    In their written responses and the meetings with Committee 
staff, agency officials generally agreed with the management 
challenges and high-risk programs that GAO and the respective 
IGs had identified for each agency. Agency officials stated 
that IG and GAO attention on these management problems has 
challenged agency managers to draw toward a common focus in 
resolving these issues. But some agency officials also pointed 
out that many of these management challenges are long-standing 
because they are often complex and difficult to resolve.
    Committee staff noted some exceptions to this general 
agreement concerning the designation of management challenges. 
In these cases, agencies generally claimed that although 
specific designated areas were indeed challenges for the 
agency, these challenges were not deemed to be ``mission-
critical.'' For example, the General Services Administration 
(GSA) said that for its designated list of management 
challenges, many of the areas did ``not merit being categorized 
as a major problem.'' In its written response, the National 
Aeronautics and Space Administration (NASA) disagreed with the 
``mission critical'' designation of two areas identified by GAO 
and the IG as management problems (i.e., aerospace test 
facility cooperation with the Department of Defense and the 
development and use of launch vehicles).
    A few agency officials at these meetings expressed some 
frustration that when a particular management problem is 
resolved, the agency's IG typically designates another new 
``top 10'' challenge to replace it. Thus, it can appear that 
the agency is not making progress when some issues are actually 
being resolved. Agency officials also pointed out that since 
GAO updates its ``high-risk'' list every 2 years, these 
problems could have been resolved and still remain on GAO's 
list, thus giving the appearance that it is still a problem. 
Officials noted, for example, that the Federal Government made 
significant progress on the Y2K computer problem, but this 
challenge is still on GAO's high-risk list because GAO will not 
likely update the list again until 2001.
    In limited cases, the IG may agree that an issue placed on 
its management challenges list is not deemed to be ``mission 
critical.'' For example, the National Science Foundation's 
(NSF) fiscal year 1999 Performance Report and fiscal year 2001 
Performance Plan discussed two of the 10 major management 
challenges identified by NSF's IG but did not address the other 
eight challenges. Of these remaining eight challenges, the NSF 
IG said that it no longer considers four of them to be 
significant enough to require inclusion in NSF's Performance 
Report or Performance Plan. The IG, however, continued to 
stress the need for NSF to be alert to emerging situations that 
could result in them becoming a problem.
    Notwithstanding agencies' claims that certain GAO- and IG-
designated problems are not mission-critical, unless the IG or 
GAO specifically conclude that a management challenge is not 
deemed to be mission-critical, the major management challenges 
identified by the independent auditors should receive 
heightened management attention and should have specific and 
measurable performance goals where possible and practicable. 
Moreover, although an IG may add other management challenges to 
its ``top 10'' list as an agency resolves previous challenges, 
these changes in the listing of management challenges 
demonstrate that an agency is indeed making progress on 
important activities and programs.

   IV. AGENCY EFFORTS TO DEVELOP PERFORMANCE GOALS AND MEASURES FOR 
                         MANAGEMENT CHALLENGES

    The Results Act requires that agencies establish (1) 
performance goals to define the level of performance to be 
achieved and (2) performance measures to be used in assessing 
the progress in meeting these goals. Federal agencies in the 
past have often used inferior measures to assess the progress 
they were making in operating various programs and activities. 
For example, agencies often measured performance by such 
indicators as the amount of money directed toward a program, 
the number of personnel deployed, or the number of proposals 
developed. Under GPRA, agency leaders and managers should, 
where possible and practicable, use outcome-oriented goals and 
measures that demonstrate how well a program or activity is 
doing in achieving its intended results.
    In its guidance to Federal agencies for the preparation and 
submission of Annual Performance Plans, OMB states that 
agencies should develop and incorporate performance goals to 
address management problems, particularly for those problems 
whose resolution is mission-critical or which could potentially 
impede achievement of program goals.\1\ Independent observers 
have also commented on the importance of establishing such 
goals. For example, in a report identifying and describing 
practices that might improve the usefulness of agencies' Annual 
Performance Plans, GAO noted that the value of Performance 
Plans could be increased if agencies more fully included 
performance goals to address mission-critical management 
problems that may exist.\2\ GAO also reported that Performance 
Plans containing specific strategies to resolve mission-
critical management problems more clearly provide Congressional 
and other decisionmakers with an understanding of how the 
agency plans to improve its management.\3\ Clearly, weaknesses 
in internal management processes and systems undermine the 
achievement of program results, and discussing the most 
critical management problems ensures that those problems that 
would have the greatest impact on results receive the most 
attention.
---------------------------------------------------------------------------
    \1\ OMB Circular No. A-11, Part 2, subsection 220.0(e).
    \2\ General Accounting Office, Agency Performance Plans: Examples 
of Practices That Can Improve Usefulness to Decisionmakers, (GGD/AIMD-
99-69, February 1999) p. 14.
    \3\ Id., p. 26.
---------------------------------------------------------------------------
    The Committee staff's meetings with agency officials and 
the reviews of agency documents revealed that agencies have not 
consistently developed performance goals and associated 
measures that directly address their respective management 
challenges and high-risk programs. To show the progress of the 
24 agencies, Committee staff categorized the extent to which 
the agencies developed and reported such goals and measures in 
their fiscal year 2001 Performance Plans. Agencies that 
reported direct goals for less than 30 percent of their major 
management challenges were classified as reporting ``few, if 
any'' such goals; agencies that reported direct goals for 
between 30 and 69 percent of their challenges were classified 
as reporting a ``moderate'' level of such goals; and agencies 
that reported direct goals for 70 percent or more of their 
challenges were classified as reporting ``more extensive'' 
goals. As shown in table 3, the Committee staff found that 11 
of the 24 agencies reported few, if any, specific and readily 
identifiable goals and measures that directly address their 
major management problems. Eight of the 24 agencies reported a 
moderate level of such goals and measures for these management 
challenges. Only five of the 24 agencies reported more 
extensive goals and measures that directly address these 
challenges.

     Table 3: Performance Goals that Directly Address the Management
             Challenges for the 24 Departments and Agencies
------------------------------------------------------------------------
                                   Extent of goals       Percentage of
                                    that directly         goals  that
   Department or independent        address  major     directly address
             agency                   management       major management
                                      challenges          challenges
------------------------------------------------------------------------
  Department of Health and                   8 of 8            100
 Human Services................
  Federal Emergency Management             10 of 12             83
 Agency........................
  Department of Defense........              7 of 9             78
  Office of Personnel                        7 of 9             78
 Management....................
  Department of Transportation.             7 of 10             70
  Department of Justice........             9 of 15             60
  National Aeronautics and                  6 of 10             60
 Space Administration..........
  Department of Energy.........             8 of 14             57
  Social Security                            5 of 9             56
 Administration................
  U.S. Department of                        7 of 13             54
 Agriculture...................
  Department of State..........              3 of 6             50
  Department of Housing and                 5 of 11             45
 Urban Development.............
  Department of the Interior...             4 of 11             36
  Environmental Protection                  3 of 11             27
 Agency........................
  Department of Education......             3 of 11             25
  Department of Labor..........             3 of 12             25
  Department of Commerce.......              2 of 9             22
  National Science Foundation..             2 of 10             20
  Department of Veterans                    2 of 11             18
 Affairs.......................
  Department of the Treasury...             3 of 21             14
  General Services                           0 of 6              0
 Administration................
  U.S. Agency for International              0 of 7              0
 Development...................
  Small Business Administration              0 of 8              0
  Nuclear Regulatory Commission             0 of 13              0
 
------------------------------------------------------------------------
Source: Committee staff analysis, based on review of agencies' fiscal
  year 2001 Performance Plans and GAO reports.

    Some of the 24 departments and agencies have made concerted 
efforts to use Results Act performance goals to help resolve 
their major management problems. Most notably, the fiscal year 
2001 Performance Plan for the Department of Health and Human 
Services (HHS) includes goals that directly address all of the 
Department's major management challenges as identified by GAO 
and the HHS IG. HHS has coupled disclosure of major Medicare 
overpayments in its annual financial statements with specific 
error-reduction goals in its Performance Plan; this approach 
has achieved impressive results. Although projected 
overpayments rose in fiscal year 1999, the estimated Medicare 
error rate is still dramatically lower now than it was several 
years ago. As shown in table 3, the Federal Emergency 
Management Agency (FEMA), the Department of Defense (DOD), the 
Office of Personnel Management (OPM), and the Department of 
Transportation (DOT), also established performance goals that 
directly addressed many of their core management challenges.
    Although some agencies did a commendable job of including 
goals to address their management challenges, many agencies 
unfortunately did not. Four agencies--GSA, the U.S. Agency for 
International Development (USAID), the Small Business 
Administration (SBA), and the Nuclear Regulatory Commission 
(NRC)--did not develop goals for any of their major management 
problems as identified by GAO and the IGs. Other agencies 
included goals for their management challenges only to a 
moderate extent. The Departments of Agriculture and State, for 
example, only included goals for about 50 percent of their 
challenges.
    While not all major management challenges lend themselves 
to specific performance goals, some agencies failed to 
establish such goals in many areas where they are sorely 
needed. For example, the Treasury Department has performance 
goals for only one of the five GAO-designated ``high-risk'' 
problems at the Department. Even these goals are 
``inadequate,'' according to GAO. GAO also raised concerns 
about the efforts of the Department of Education's Office of 
Student Financial Assistance (OSFA), which was recently 
established as a ``performance-based organization.'' GAO 
reported that OSFA failed to establish any performance goals to 
address the problems necessary to remove fraud and error in 
student aid programs from the high-risk list.\4\ A number of 
other agencies likewise have failed to establish any 
performance goals to address well-documented and serious 
problems, such as contractor overpayments at DOD and fraud and 
error in the Federal Employee Health Benefits Program at OPM.
---------------------------------------------------------------------------
    \4\ General Accounting Office, Education's FY 1999 Performance 
Report and FY 2001 Performance Plan, (GAO/HEHS-00-128R, June 30, 2000) 
pp. 1-2.
---------------------------------------------------------------------------
    The Environmental Protection Agency (EPA) and SBA are 
examples of agencies that described the general actions they 
planned to take to address their management problems even 
though they did not establish and report specific performance 
goals and measures for these challenges. For example, although 
EPA's fiscal year 2001 Performance Plan identified specific 
goals and measures for only three of its 11 major management 
challenges, EPA did describe planned strategies to resolve the 
remaining eight challenges. Similarly, SBA's fiscal year 2001 
Performance Plan reported specific goals and measures for none 
of its eight management challenges. Like EPA's Performance 
Plan, however, SBA's Performance Plan did include a description 
of strategies for addressing these management challenges.
    For those agencies that did not fully develop and report 
performance goals and measures for their major management 
problems, agency officials offered varied reasons for not doing 
so. Some agency officials continued to report difficulties in 
developing goals and measures for their management challenges. 
They stated that in dealing with the major management 
challenges--just as with other agency efforts--the link between 
Federal programs and desired outcomes is sometimes difficult to 
establish. The agencies said that in some cases they are still 
challenged by the sometimes limited or indirect influence that 
the Federal Government has in determining whether a desired 
result is achieved, which complicates the effort to measure the 
discrete Federal contribution to a specific result. GAO's work 
has shown that measuring the Federal contribution is 
particularly challenging for regulatory programs, scientific 
research programs, and programs that deliver services to 
taxpayers through third parties, such as State and local 
governments.\5\
---------------------------------------------------------------------------
    \5\ General Accounting Office, Government Performance and Results 
Act: 1997 Implementation Will Be Uneven, (GAO/GGD-97-109, June 1997) 
pp. 12-13.
---------------------------------------------------------------------------
    Although establishing specific and measurable goals can be 
a complex undertaking, the development and reporting of such 
goals is one of the most effective methods for ensuring 
accountability for achieving results. Even in cases where 
agencies experience difficulties in developing more results-
oriented performance goals for some of their management 
problems, OMB's guidance to agencies states that performance 
goals for management problems can readily be expressed as 
milestone events for specific remedial steps.\6\ Unless an 
agency that is not fully developing and reporting performance 
goals for these management problems can offer an alternative 
approach for both instilling accountability for results and 
demonstrating steady progress to resolve these problems, 
Congressional committees overseeing these efforts will have 
little information on which to assess an agency's progress.
---------------------------------------------------------------------------
    \6\ OMB Circular No. A-11, Part 2, subsection 220.0(e).
---------------------------------------------------------------------------

           V. AGENCY ACTIONS AND PLANS TO ADDRESS UNMET GOALS

    In the Annual Performance Report required under the Results 
Act, each agency must report the actual level of performance 
for each performance goal and compare these results to the 
target level of performance outlined in the agency's Annual 
Performance Plan. For every performance goal whose target level 
was not achieved, the agency should describe and explain (1) 
why the goal was not met, (2) the plans and schedules to meet 
the unmet goal in the future, and (3) if a performance goal is 
found to be impractical or infeasible, the reason that the 
particular goal is not practical or feasible and 
recommendations for a course of action for the goal. OMB's 
guidance on preparing Annual Performance Reports states that 
agencies must provide this explanation ``even if the difference 
between the goal target level and actual performance is 
slight.''
    The Committee staff's review of the fiscal year 1999 
Performance Reports of the 24 agencies showed that agencies 
were not always straightforward in their methods of designating 
whether they had indeed met the level of targeted performance. 
For example, the Commerce Department defined a goal as ``met'' 
if performance came within 10 percent of the target level and 
defined a goal as ``substantially met'' if performance exceeded 
two-thirds of the target level. NSF limited descriptions of its 
performance to ``successful'' or ``marginally effective,'' 
ignoring ``unsuccessful'' or ``unmet'' as options.
    A review of the Performance Reports also showed that 
agencies had mixed results in describing and explaining the 
reasons and future plans for unmet goals, including those 
related to major management challenges. The Performance Reports 
for DOT and USAID are good examples of agencies that seemed to 
make a concerted effort to address unmet goals. For each of 
their unmet goals--including management problems and high-risk 
programs--both DOT and USAID described and explained why the 
program was unable to achieve the goal and what actions they 
planned to take to meet the goal in the future. These two 
agencies demonstrated that a clear and thorough 
characterization of unmet goals is important to convince 
Congressional decisionmakers and the public that agency 
management can adequately and appropriately respond to 
performance shortfalls.
    Other agencies, however, were less than thorough in their 
Performance Reports in addressing unmet goals. The Justice 
Department, for example, repeatedly dismissed performance 
shortfalls in its Performance Report by using boilerplate 
statements that the deviation from targeted performance was 
``slight and did not affect overall program performance.'' FEMA 
also neglected to provide the reader of its Performance Report 
with much information about plans to address its unmet goals. 
The Commerce Department's report described specific reasons for 
some unmet goals but provided little information about other 
unmet goals. For its goal related to the average processing 
time for export control license applications, the Commerce 
Department's Performance Report provided details about why the 
average processing time had increased to 40 days in 1999. 
However, for its goals related to patent and trademark 
services, Commerce often simply stated that ``[m]eeting the 
target remains a challenge.''

VI. AGENCY EFFORTS TO RESPOND TO GAO AND IG RECOMMENDATIONS RELATED TO 
                         MANAGEMENT CHALLENGES

    Corrective action taken by agency management on findings 
and recommendations from GAO and IG audit reports is essential 
to improving the effectiveness and efficiency of Federal 
Government operations and resolving many long-standing 
management problems. In its guidance to Federal agencies,\1\ 
OMB states that management officials are responsible for 
receiving and analyzing GAO and IG audit reports, providing 
timely responses to the audit organization, and taking 
corrective action on the recommendations as appropriate. OMB 
notes that audit followup is an integral part of good 
management and that each agency should establish systems to 
assure the prompt and proper resolution and implementation of 
audit recommendations.
---------------------------------------------------------------------------
    \1\ OMB Circular A-50.
---------------------------------------------------------------------------
    In his August 1999 letters to Federal agencies, Chairman 
Thompson stressed the need for agencies to resolve and 
implement audit recommendations related to each agency's major 
management problems. He noted that according to information 
provided to the Committee by the respective IGs and GAO, many 
agencies continued to have a number of open audit 
recommendations that addressed these major management problems. 
In these letters, the Chairman also asked the agencies whether 
they disagreed with these GAO and IG recommendations and 
requested that the agencies comment on the specific actions 
that they were taking to implement those recommendations with 
which they generally agreed.
    On the basis of agency responses to the Chairman's letters 
and Committee staff meetings with agency officials, most 
agencies appear to have made some progress in taking timely and 
appropriate action to deal with the IG and GAO recommendations 
on management problems and in regularly tracking these open 
recommendations. The Interior Department, the Social Security 
Administration (SSA), and the Internal Revenue Service (IRS) 
are examples of agencies that have made concerted efforts to 
implement and clear open audit recommendations. Some agencies 
have established specific performance goals related to 
implementing audit recommendations. For example, the Interior 
Department has set a goal for fiscal year 2001 to complete 
implementation of 75 percent of IG and GAO audit 
recommendations within 1 year of referral, and complete 80 
percent of corrective action plans for material weaknesses by 
their original target date.\2\
---------------------------------------------------------------------------
    \2\ Department of Interior Fiscal Year 2001 Annual Performance 
Plan, p. 101.
---------------------------------------------------------------------------
    Some agencies, however, have been less attentive to 
resolving open recommendations with auditors. For example, the 
Department of Energy (DOE) demonstrated favorable progress in 
clearing open recommendations from the DOE IG but was less 
vigilant in clearing open GAO recommendations. DOE and GAO 
officials found that DOE had often taken remedial action but 
had not readily communicated the Department's efforts to GAO to 
allow for the timely removal of the issue from GAO's inventory 
of open recommendations. In another case, EPA's IG informed 
Committee staff that, although EPA is generally receptive to 
the findings of the IG's audit reports, the agency does not 
generally implement these recommendations in a prompt and 
timely manner.

                  VII. CONCLUSIONS AND RECOMMENDATIONS

    On the basis of meetings with agency officials and reviews 
of agency documents, the staff of the Senate Governmental 
Affairs Committee found that the 24 largest Federal agencies 
have not consistently developed performance goals and 
associated measures that directly address the agencies' major 
management challenges and high-risk programs. The Committee 
staff's analysis showed that 11 of the 24 reviewed agencies 
reported few, if any, specific and readily identifiable goals 
and measures that directly address their major management 
problems. Eight of the 24 agencies reported a moderate level of 
such goals and measures for these management challenges. Only 
five of the 24 agencies reported more extensive goals and 
measures that directly address these challenges.
    Although the move toward performance-based government is 
positive, the attention to long-standing management problems 
unfortunately has been insufficient to meet the challenges they 
pose. Poor management of Federal agencies and programs still 
causes tremendous waste of Federal dollars and, in many cases, 
prevents the government from achieving its missions. The 
Federal Government must concentrate its efforts to bring about 
a culture that values a results-oriented approach to managing 
Federal agencies and programs--one that emphasizes 
accountability and rewards results. Recommendations that will 
help in these efforts include the following:

         OMB should clarify and strongly enforce its 
        Results Act guidance requiring agencies to develop and 
        report on performance goals and measures that directly 
        address major management challenges and high-risk 
        programs. Although there has been some progress in this 
        area, there are clearly too few goals and measures to 
        address the many major challenges that exist today. In 
        cases where agencies have valid reasons for not 
        developing such goals and measures, the agency should 
        describe how it is monitoring the progress in resolving 
        these management challenges and how it is being held 
        accountable to address these challenges.

         Agencies should ensure that they include in 
        their Performance Reports specific and credible 
        information on how they plan to meet unmet goals in the 
        future. The review of agencies' Performance Reports 
        clearly showed that some agencies were less than 
        thorough in reporting this information.

         OMB should develop and publish goals and 
        measures for the Priority Management Objectives and 
        report on the Federal Government's progress toward 
        meeting these goals. OMB currently monitors progress on 
        the PMO's without the benefit of specific and publicly 
        available measures.

         Agencies should incorporate performance 
        measures for major management challenges into the 
        performance agreements of agency leaders and program 
        managers. The success of the Results Act and 
        performance-based management in Federal agencies 
        depends in large part on the extent to which agency 
        officials and employees understand the goals set forth 
        by the agency and are held accountable for achieving 
        them.

         The IGs and GAO should take more direct and 
        frequent action to follow up on what the agencies have 
        done to respond to IG and GAO recommendations, 
        particularly on key recommendations addressing critical 
        management problems. The IGs should also provide more 
        information on open recommendations in their semiannual 
        reports, especially as such recommendations relate to 
        the IG top 10 management challenges. Although many 
        agencies are doing a respectable job in responding to 
        GAO and IG recommendations, some agencies will require 
        more active follow-up by the IGs and GAO on outstanding 
        recommendations.

 VIII. APPENDIX: SUMMARY OF MAJOR MANAGEMENT CHALLENGES AND HIGH-RISK 
           PROGRAMS FOR 24 FEDERAL DEPARTMENTS AND AGENCIES:

                              ----------                              

                       DEPARTMENT OF AGRICULTURE

    Chairman Thompson's August 1999 letter to the U.S. 
Department of Agriculture (USDA) listed the following 16 major 
management challenges at USDA that GAO and the agency's IG had 
identified:

         USDA's obsolete and inefficient field 
        structure,

         Fundamental changes needed to improve food 
        safety,

         Inefficiency and waste throughout the Forest 
        Service's operations,

         Carrying a high level of delinquent farm loan 
        debt and writing off large amounts of unpaid loans,

         Food Stamp program overpayments,

         Lack of financial accountability over 
        billions of dollars in assets,

         Poor management of telecommunications 
        investments,

         Weaknesses in managing information technology 
        investments,

         Y2K computer conversion,

         Crop insurance program administration,

         Conservation Reserve Program administration,

         Abuses in the Child and Adult Care Food 
        Program,

         Pollution cleanup and abatement management 
        practices,

         Research funding accountability,

         Civil rights complaints, and

         Fraud and abuse in the Rural Rental Housing 
        Program.

    The Chairman's letter noted that improving Forest Service 
financial management and improving farm loan program 
administration and management were two challenges of particular 
concern at USDA. The Chairman also noted GAO's finding that 
USDA's fiscal year 2000 Performance Plan contained specific 
performance goals to address only five of the 16 problem areas.
    By a letter dated December 14, 1999, USDA Secretary 
Glickman responded to the Chairman's letter. The Secretary's 
response agreed with the GAO and IG designations of major 
management challenges at USDA. However, he expressed the view 
that not every challenge warranted a specific performance goal. 
Rather, he stated, resolution of many management challenges was 
embedded in broader program performance goals.
    In December 1999, the IG submitted to the Committee an 
updated list of the most serious management problems at USDA. 
The updated list consisted of the following 12 items:

         Federal Crop Insurance,

         Farm Credit programs,

         Food Stamp program,

         Child and Adult Care Food program,

         Food safety,

         Forest Service management and program 
        delivery,

         Research funding accountability,

         Competitive grants program compliance,

         Rural Rental Housing program,

         Civil rights complaints,

         Financial management, and

         Information resources management.

    On March 24, 2000, the Committee staff met with USDA 
officials, along with GAO and IG representatives, to follow up 
on the Chairman's letter and the agency's response. USDA 
officials expressed agreement with the GAO and IG designations 
of major management challenges and provided a briefing on their 
actions to address each of the challenges. The officials 
emphasized the difficulty of obtaining the resources necessary 
to resolve some management challenges. For example, they 
estimated that about $50 million dollars would be needed to fix 
USDA's financial management systems. Ironically, they noted 
that about $50 million in USDA appropriated funds expires each 
year without being obligated.
    GAO found that USDA's Performance Plan for fiscal year 2001 
contained goals that directly addressed seven of the current 
management problems at USDA.

                         DEPARTMENT OF COMMERCE

    Chairman Thompson's August 1999 letter to the Department of 
Commerce (DOC) referenced the following 10 management 
challenges for the Department as identified by the DOC IG:

         Increase the accuracy and control the cost of 
        the 2000 decennial census.

         Obtain a clean opinion on the Department's 
        consolidated financial statements.

         Address Y2K computer problem.

         Successfully implement the Advanced Weather 
        Interactive Processing System (AWIPS).

         Successfully implement a Department-wide 
        financial management system.

         Reassess the mission and financial viability 
        of the National Technical Information Service (NTIS).

         Expand private sector participation in the 
        National Oceanic and Atmospheric Administration's 
        (NOAA) Marine and Aeronautical data gathering.

         Manage the Patent and Trademark Office's 
        (PTO) space requirements and lease costs.

         Maximize competition in the Department's 
        financial assistance programs.

         Continue to improve the Department's 
        strategic planning and performance measurement in 
        accordance with GPRA.

    The Chairman's letter references two specific DOC 
activities that are included on GAO's list of high risk Federal 
programs and are also included on the IG's list of management 
challenges: The National Weather Service Modernization Program 
(which includes AWIPS) and the 2000 Census. The IG identified 
essentially the same top challenges in its updated assessment 
of the Department's major management challenges for fiscal year 
2000.
    In its response to the Chairman's request for information, 
DOC's letter provided an overview of the Department's efforts 
to address management challenges, but it did not provide 
details of the Department's actions to implement 
recommendations made by GAO and the IG. In the response, the 
Commerce Secretary stated that he had been directly involved in 
two problem areas identified on GAO's high-risk list--the 
Decennial Census and the modernization of the National Weather 
Service--and that he was satisfied with the progress that the 
Department had made in both cases. The response also stated 
that the Department was exploring possible ways to include IG 
inspections and evaluations in the existing tracking and 
reporting process for IG audits. According to the response, the 
Secretary stated that DOC currently tracks IG audits every six 
months and was taking a look at tracking GAO evaluations in the 
Department in a similar manner.
    On April 27, 2000, Committee staff met with representatives 
from DOC, the DOC IG, and GAO at the DOC's headquarters 
building. During this meeting, Committee staff noted that, 
although DOC's Performance Report often provided a description 
of strategies for addressing some of the Department's 
management challenges, the Performance Report often did not 
provide information on specific goals and measures that could 
be used to assess progress on these management challenges. DOC 
officials told Committee staff that the Department had not 
adopted specific and measurable goals to address all the major 
management problems because officials believed that Performance 
Plans should primarily concentrate on program outcomes and not 
specific management efforts. Nonetheless, DOC officials said 
that the Department would likely establish a management 
strategic goal in future GPRA planning efforts to complement 
DOC's program goals. According to DOC officials, such a new 
management strategic goal would link to annual performance 
goals and measures that specifically address the major 
management challenges and high-risk programs for the 
Department. Also at this meeting, officials from the 
Department's IG informed the Committee staff that DOC is 
generally making progress on addressing the management 
challenges that confront the Department.
    Overall, DOC has made only minor improvements over the 
previous year in its development and use of specific goals and 
measures for its major management problems. Although DOC has 
developed such goals and measures to a moderate extent, greater 
management attention is needed to address all of the 
significant challenges and problems that were identified by the 
IG and GAO. DOC should move forward with its plans to establish 
a new management strategic goal to ensure that all the 
Department's major management challenges are incorporated into 
future GPRA planning efforts.

                         DEPARTMENT OF DEFENSE

    In his August 1999 letter to the Department of Defense 
(DOD), Chairman Thompson asked for an update on the agency's 
progress toward solving the following 10 management challenges 
identified by both GAO and the DOD IG:

         The Year 2000 computer problem,

         Information security,

         Financial management,

         Weapons systems acquisition,

         Contract management,

         Defense infrastructure,

         Inventory management,

         Military personnel,

         Military readiness, and

         Turbulence from change.

    The DOD's IG submitted to the Committee a new list of the 
top 10 management challenges facing the Department after 
Chairman Thompson's letter. In addition to the Year 2000 issue, 
contract management and military personnel were removed from 
the list. Added were management, health care, and ``other 
security concerns management.''
    The DOD's response to Chairman Thompson's letter included 
individual letters from the many departmental components that 
were the subject of outstanding recommendations for which 
insufficient action had been taken. These included responses 
from the Defense Information Systems Agency, the Defense 
Logistics Agency, the Defense Finance and Accounting Service, 
and the Coordinator for Drug Enforcement Policy and Support. 
The number of the responses made it difficult to gauge the 
status of many of the outstanding recommendations.
    Many of the management challenges that beset DOD are 
difficult and longstanding. DOD is responsible for roughly $1.3 
trillion in assets; operates 638 major installations and 
thousands of small sites around the world; and currently has 
about 700,000 civilian employees and 2.4 million military 
personnel in the active forces or the Ready and Standby 
Reserves. The DOD IG's overall assessment of the Department's 
responsiveness to management problems is that the DOD has 
seldom before, if ever, been so committed to across the board 
management improvement. However, even after several years of 
concerted effort, much more needs to be done to cut costs and 
improve effectiveness.
    DOD continues to be unable to prepare auditable financial 
statements. For fiscal year 1998, as in previous years, only 
the Military Retirement Trust Fund received a favorable audit 
opinion. The DOD financial statements for fiscal year 1998 were 
less timely than ever and a record $1.7 trillion of unsupported 
adjustments were made in preparing the statements. The lack of 
adequate systems continues to be the major impediment to 
achieving favorable audit opinions and producing reliable 
financial reporting.
    Information Technology problems at DOD include: Too many 
systems, block obsolescence, insufficient interoperability, 
security vulnerabilities, inconsistent budgeting and reporting, 
noncompliance with policies on data standardization, 
documentation and configuration management, user 
dissatisfaction, frequent system acquisition schedule slippage 
and cost overruns, and disconnects between evolving business 
practices and their supporting system projects. The Defense 
Appropriations Act for Fiscal Year 2000 levied stringent new 
requirements on the Department to ensure a complete break with 
overly decentralized and often inefficient past practices for 
reviewing, approving, monitoring and funding information system 
acquisition projects. In addition to improving management of 
system acquisition, the Department needs to modernize and cut 
support costs for communications and other information 
technology infrastructure.
    Of nine major management challenges, DOD includes in its 
fiscal year 2001 Performance Plan only seven specific and 
measurable performance goals. According to GAO, ``Defense's 
Performance Report and Plan contain no goals, measures, or 
assessment on whether it is achieving a reduction in erroneous 
payments to contractors,'' a key measure for DOD's success in 
contract management.

                        DEPARTMENT OF EDUCATION

    Chairman Thompson's August 1999 letter to the Secretary of 
Education listed the following 12 major management challenges 
that had been identified by GAO and the agency's IG:

         Inadequate effort to ensure access to 
        postsecondary institutions while protecting Federal 
        financial interests,

         Lack of a sound, integrated information 
        technology strategy,

         Lack of adequate financial data for 
        management of student financial aid programs,

         Y2K computer conversion,

         Balancing oversight of programs and program 
        flexibility,

         Implementation of an effective performance-
        based organization to operate student financial aid 
        programs,

         Lack of information technology staff with the 
        technical expertise to negotiate and oversee systems 
        contracts,

         Start-up and data integrity problems with the 
        agency's ``EDCAPS'' financial management system,

         ``Gatekeeping'' and institutional monitoring 
        in the student financial aid programs,

         Implementing legislation authorizing a data 
        match with the Internal Revenue Service to improve 
        student financial aid eligibility determinations,

         Controls over ``paperless'' systems for 
        student financial aid fund delivery, and

         Performance reporting under the Results Act.

    The Chairman's letter expressed concern that, based on the 
GAO's analysis, Education's Performance Plan for fiscal year 
2000 had no specific goals to address seven of these 12 problem 
areas. The Chairman also noted that many of the problems 
related to different aspects of student financial aid, a GAO 
``high risk'' area, and had persisted for years.
    In its September 23, 1999 response, Education disputed the 
GAO analysis and stated that its Performance Plan addressed all 
12 management challenges. The agency also noted that the 
default rate for student loans had declined for 6 consecutive 
years and was now at a record low 9.6 percent.
    In December 1999, the Education IG provided to the 
Committee an updated list of what they considered to be the 
Agency's most serious management challenges. The updated list 
included most of the items mentioned above, but consolidated 
them into the following nine areas:

         Financial management,

         Year 2000 computer readiness,

         Information systems security,

         Implementation of the Student Financial 
        Assistance Modernization Blueprint and Performance 
        Plan,

         Controls over ``paperless'' systems for 
        student financial aid fund delivery,

         Implementation of the Clinger-Cohen Act to 
        improve information technology management,

         Performance reporting under the Results Act,

         Balancing compliance monitoring and technical 
        assistance for Elementary and Secondary Education 
        Programs, and

         Implementing legislation authorizing a data 
        match with the Internal Revenue Service to improve 
        student financial aid eligibility determinations.

    On April 4, 2000, Committee staff met with Education 
officials, along with representatives from GAO and the IG's 
office, to follow up on the Chairman's letter and the agency's 
response. Education officials stated their agreement with the 
nine management challenges identified in the IG's December 1999 
submission. They discussed actions the agency was taking to 
address each of these problems. Of particular note, Education 
has undertaken impressive efforts to enhance the performance 
data it uses for Results Act purposes. Given the nature of its 
programs, the agency must rely on State and local governments 
as well as other outside sources to supply much of the data 
needed to assess performance under its outcome goals and 
measures. It is working with these entities to improve the 
timeliness and consistency of data. Education also has adopted 
a performance measure to require agency managers to attest that 
the data used for their program's performance measurement are 
reliable, valid and timely, or have plans for improvement.
    Education has not done a good job of establishing specific 
and measurable performance goals to address its management 
problems. As noted above, its fiscal year 2000 Performance Plan 
set such goals for only three of its management challenges. 
According to GAO and the IG, its fiscal year 2001 Performance 
Plan likewise has goals for only three of the problems.\1\ 
These goals address financial management, information 
technology management, and performance data improvement. Not 
surprisingly, the lack of performance goals is reflected in the 
Education's Performance Report for fiscal year 1999. The Report 
demonstrates no progress toward resolving any of Education's 
problems beyond these three.
---------------------------------------------------------------------------
    \1\ One of the problems from last year, resolving the Y2K 
conversion, was resolved and is no longer applicable.
---------------------------------------------------------------------------
    As GAO notes, the absence of performance goals is 
particularly disturbing in the case of the Office of Student 
Financial Assistance. This Office, which was recently 
established as a ``performance-based organization'' within the 
Education Department, has not established performance goals or 
objectives to address the problems necessary to remove fraud 
and error in student aid programs from the high-risk list. The 
Office also seems to be dragging its feet in addressing one of 
the IG's key designated problems--implementing the data match 
with the Internal Revenue Service. In 1998, Congress enacted a 
law specifically designed to improve student aid eligibility 
determinations by enabling Education to verify income 
information with IRS.\2\ This law remains unimplemented nearly 
2 years after its enactment, while Education, the Treasury 
Department, and the Office of Management and Budget engage in 
seemingly intractable discussions over what to do. Evidently, 
they believe the language of the law may be inadequate to 
accomplish its obvious purpose. Nevertheless, they seem unable 
to come to closure on the legal issues--either by resolving 
these issues or submitting proposed amendments to the Congress.
---------------------------------------------------------------------------
    \2\ Section 484(q) of the Higher Education Act, as amended, 20 
U.S.C. Sec. 1091(q).
---------------------------------------------------------------------------

                          DEPARTMENT OF ENERGY

    Chairman Thompson's August 1999 letter to the Department of 
Energy (DOE) listed the following 14 major management 
challenges at DOE that GAO and the agency's IG had identified:

         Y2K computer conversion,

         Information security,

         Contract management,

         Difficulty completing large projects,

         Slow transition to external regulations,

         DOE's ineffective organizational structure,

         DOE's staff lack technical and management 
        skills,

         Environmental compliance and waste management 
        problems at DOE facilities,

         Nuclear and occupational safety and health 
        deficiencies,

         Delays in disposal of radioactive waste,

         Extensive inventories of nuclear and 
        nonnuclear materials that may no longer be necessary,

         Poor condition of DOE's infrastructure,

         Deficiencies in control over government 
        personal property, and

         Access to sensitive materials, areas, and 
        information, and physical security.

    Among other things, the Chairman's letter noted that 
contract management at DOE had been on GAO's high-risk list 
since the inception of the list in 1990. This is a particularly 
serious problem since DOE relies on contractors to perform 
about 90 percent of its work. The Chairman's letter also noted 
GAO's finding that DOE's fiscal year 2000 Performance Plan 
contained specific performance goals to address nine of the 14 
problem areas identified by GAO and the IG.
    By a letter dated November 11, 1999, DOE responded to the 
Chairman's letter. DOE did not indicate disagreement with the 
Chairman's list of major management problems. DOE stated many 
of the ``open'' GAO and IG audit recommendations dealing with 
the major management problems actually are resolved. It said 
DOE would work with GAO and the IG to sort out the status of 
these recommendations. DOE's letter further stated that its 
fiscal year 2001 Performance Plan would include goals for the 
two management problems related to security. DOE maintained 
that the others don't require fiscal year 2001 goals since they 
were expected to be addressed in fiscal year 2000.
    In December 1999, the IG submitted to the Committee an 
updated list of the most serious management problems at DOE. 
The only change from the previous year's list was the deletion 
of Y2K readiness. The IG designated three of the management 
challenges--security, project management, and contract 
management--as special emphasis areas for the coming year. 
According to the IG, DOE's recent performance in these areas 
had been of particular concern.
    On February 25, 2000, the Committee staff met with DOE 
officials, along with GAO and IG representatives, to follow up 
on the Chairman's letter and the agency's response. A number of 
DOE's management problems were discussed. DOE officials 
maintained that some of the problems had been resolved. For 
others, they maintained that they had process improvements in 
place and therefore did not need a performance goal. They 
disagreed with the Committee staff's suggestion that it would 
be difficult to determine whether the process improvements were 
working unless they were tracked against performance goals.
    With reference to contract management, the Committee staff 
noted that DOE had provisions in its contracts to enforce 
contractor accountability and asked what DOE was doing to 
enforce these provisions. The DOE officials said they did not 
have information on the extent to which DOE was enforcing these 
contract provisions. Both GAO and the IG regarded contract 
management as a continuing problem and questioned whether DOE 
had done enough to enhance contractor accountability.
    GAO found that DOE's Performance Plan for fiscal year 2001 
contained goals that directly addressed eight of the current 
management problems. However, GAO concluded that insufficient 
progress had been made to consider any of them resolved. GAO 
also questioned the adequacy of some DOE's goals to address its 
management problems. For example, GAO said DOE's goals relating 
to timely completion of large projects focus on procedures 
rather than outcomes.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Chairman Thompson's August 1999 letter to the Secretary of 
Health and Human Services (HHS) listed the following 14 major 
management challenges that had been identified by GAO and the 
agency's IG:

         Y2K computer readiness,

         Information security,

         Medicare payment errors, in general,

         Improper Medicare payments for mental health 
        services,

         Inadequate controls over Medicare managed 
        care,

         Inadequate controls over Medicare home health 
        benefits,

         Implementation of payment reforms for nursing 
        facilities from Balanced Budget Act,

         Implementation of other Balanced Budget Act 
        provisions,

         Child support enforcement,

         Additional Medicare reforms needed,

         Scope and complexity of programs, including 
        the need for coordination, oversight and performance 
        measures,

         Lack of reliable and comprehensive 
        performance data and data systems,

         Lack of reliable and timely financial 
        statements, and

         Other program integrity issues.\3\
---------------------------------------------------------------------------
    \3\ In a December 1999 letter to Chairman Thompson, the HHS IG 
updated its list of the most serious management challenges facing the 
agency. Most of the challenges were the same or similar to those in 
Chairman Thompson's August 1999 letter, although two challenges were 
added. The new challenges were Medicare contractor oversight and 
Medicare payments for rehabilitation services.

    In her October 14, 1999 response to Chairman Thompson's 
letter, HHS Secretary Shalala stated that HHS was making good 
progress on major management challenges. In particular, she 
cited progress on financial statements and reducing Medicare 
error. She agreed that Results Act performance goals should be 
established to address major management challenges, and she 
noted that HHS had established such goals for most of the 
challenges.
    Secretary Shalala further stated that HHS is ``in general 
agreement with almost every GAO or IG recommendation and major 
management challenge'' that Chairman Thompson's August letter 
listed as a concern. She said that GAO and IG recommendations 
have been significantly integrated into HHS component agency 
performance plans and many are covered directly by performance 
goals.
    Committee staff met with HHS officials on April 25, 2000, 
to follow up on the Chairman's August letter and the 
Secretary's response. Representatives from GAO and the agency's 
IG also participated. The HHS officials agreed that the major 
management challenges identified by the Chairman, GAO, and the 
IG are ``on target.'' They stressed that more resources are 
needed to resolve many of these problems. There needs to be a 
consensus in the Executive Branch and Congress on the 
importance of addressing these problems, and funding must be 
provided. They cited the resolution of the Y2K problem as an 
example of how this combination worked well. They suggested 
that some form of separate or ``fenced off'' funding that would 
be available only to resolve major management problems might 
help. The IG endorsed this concept, noting dedicated funding 
for management improvements should be regarded as an 
``investment.''
    With regard to specific management challenges, the HHS 
officials noted that the agency got a ``clean'' audit opinion 
on its financial statements for the first time, as did some HHS 
components such as the Health Care Financing Administration 
(HCFA). However, they recognized that clean audit opinions are 
not in themselves solutions to financial management problems. 
It is important to get financial systems in place that produce 
useful information for real time management. The agency is 
taking implementation of the Clinger-Cohen Act very seriously 
and is developing a 3-year plan for computer security.
    There was also lengthy discussion of the agency's progress 
in resolving the many management problems associated with 
Medicare and other health care programs. For example, HHS is 
obtaining outside audits on Medicare contractors. There is a 
need to enact Medicare contractor reforms. HHS has been 
estimating Medicare error for the past few years since 
milestones and measures are key to reducing error rates. HCFA 
officials noted that the availability of adequate nursing home 
care is ``an impending crisis.'' Four of the 10 major nursing 
home chains are in bankruptcy, and another one is in trouble. 
There is much fraud in nursing home care.
    The IG representatives stated that HHS is making good 
progress in combating Medicare error, but much remains to be 
done. Many Medicare payment areas have error rates exceeding 50 
percent. Both the IG and GAO representatives expressed 
satisfaction with the receptivity of HHS to their work and 
recommendations concerning major management problems.
    HHS faces daunting management challenges, the majority of 
which relate to the activities of HCFA. Most notably, the 
Medicare fee-for-service program has error rates exceeding $10 
billion annually. The estimated error rate for fiscal year 1999 
was $13.5 billion, or about 8 percent of total program 
expenditures. However, it is clear that HHS is serious about 
resolving these challenges and is taking concrete steps in that 
direction. HHS was one of the first agencies to provide an 
estimate for major overpayments (Medicare) in its annual 
financial statements. It coupled this disclosure with specific 
performance goals to reduce the Medicare error rate in recent 
years. The agency has been very successful with this approach 
since the estimated Medicare fee-for-service error rate is 
dramatically lower than it was several years ago. Nevertheless, 
much more needs to be done.\4\
---------------------------------------------------------------------------
    \4\ For example, the estimated error rate actually rose in fiscal 
year 1999 from the previous year. Also, GAO has reported that 
improvements are needed in the way HHS estimates Medicare error. See 
Medicare Improper Payments: Challenges for Measuring Potential Fraud 
and Abuse Remain Despite Planned Enhancements, (GAO/T-AIMD/OSI-00-251, 
July 12, 2000).
---------------------------------------------------------------------------
    The HHS Performance Report for fiscal year 1999 
demonstrated progress toward resolving several of its major 
management problems. Furthermore, HHS deserves special credit 
for establishing goals in its fiscal year 2001 Performance Plan 
that directly address all of the major management challenges 
that have been identified by GAO and the agency's IG. Also, the 
fiscal year 2001 Plan (pages 53-55) provides specific responses 
to each of the management challenges identified by Chairman 
Thompson.
    One major improvement HHS could make is to develop error 
estimates and error-reduction goals for Medicaid. HHS would 
have to work with the States to accomplish this. However, the 
need is as great as it was for Medicare and, one would hope, 
similar results could be obtained. Indeed, it is likely 
Medicaid erroneous payments also amount to tens of billions of 
dollars annually.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Chairman Thompson's August 1999 letter to the Secretary of 
the Department of Housing and Urban Development (HUD) listed 
the following 11 major management challenges at HUD that GAO 
and the agency's IG had identified:

         Year 2000 computer challenge,

         Information security,

         Internal control weaknesses,

         Information and financial management systems,

         Organizational problems,

         Insufficient mix of staff with proper skills,

         Bringing on-line the Real Estate Assessment 
        Center,

         Restructuring project mortgages to bring them 
        to market levels,

         Defining relationship between Community 
        Builders and Public Trust Officers,

         Section 8 program problems, and

         Management of real estate owned properties.

    The Chairman's letter noted that HUD had been a GAO-
designated ``high-risk'' area since 1994 because of four 
serious, long-standing department-wide problems: Internal 
control weaknesses; unreliable information and financial 
management systems; organizational deficiencies; and an 
insufficient mix of staff with the proper skills. The 
Chairman's letter acknowledged that HUD had established a 
``2020 Management Reform Plan'' to resolve its major management 
problems, but expressed concern about the reportedly slow place 
in implementing the 2020 reforms. He noted, in this regard, the 
IG's assessment that the 2020 Reform Plan was ``still a work in 
progress'' while ``disclosures of fraud, waste, and abuse 
continue unabated.'' The Chairman also referenced GAO's finding 
that HUD's fiscal year 2000 Performance Plan contained specific 
performance goals to address only three of the 11 problem areas 
identified by GAO and the IG.
    By a letter dated October 18, 1999, HUD Secretary Cuomo 
responded to the Chairman's letter. Secretary Cuomo stated that 
the key elements of the 2020 Reform Plan were now in place. He 
further stated that only mission-critical management problems 
should be covered by GPRA performance goals, and that HUD had 
established many such goals in its fiscal year 2000 Performance 
Plan under a section entitled ``Restore Public Trust in HUD.'' 
Management challenges were also discussed in other parts of the 
Performance Plan.
    In December 1999, the IG submitted to the Committee an 
updated list of the most serious management problems at HUD. 
The IG's updated list consisted of the following nine items:

         HUD 2020 Management Reform Plan development 
        and execution,

         Staff resources,

         Single family property disposition program,

         Single family loss mitigation activities,

         Troubled Agency Recovery Centers not 
        operating as intended,

         Real estate assessment system,

         Financial management systems,

         Procurement systems, and

         Section 8 program administration.

    On May 23, 2000, the Committee staff met with HUD 
officials, along with GAO and IG representatives, to follow up 
on the Chairman's letter and the agency's response. HUD 
officials stated that they use the eight material weaknesses 
from the agency's financial statement audits as the proxy for 
its major management challenges. According to HUD, these eight 
material weaknesses relate to the Department's general control 
environment and provide the basis for GAO's high-risk 
designation. However, neither GAO nor IG representatives were 
satisfied that these eight areas captured HUD's core management 
problems. GAO recommended that HUD conduct a full-blown, 
department-wide, program-by-program internal control risk 
assessment to fully identify the management challenges. The IG 
described HUD's management challenges as ``staggering.'' She 
emphasized information technology system problems, lack of 
adequate staff with proper skills, and contractor oversight. 
She said HUD needed to prioritize and concentrate on the most 
serious problems, rather than trying to deal with everything at 
once.
    The Committee staff noted that HUD's fiscal year 2001 
Performance Plan discusses the eight material weaknesses, but 
doesn't include specific and measurable performance goals to 
address them. HUD emphasized that greater specificity was 
provided by internal accountability measures. For example, HUD 
ties progress on these problems to performance standards for 
senior managers. However, the Committee staff emphasized that 
while internal accountability measures are good, they don't 
substitute for specific performance goals that will be tracked 
in Annual Performance Reports. In particular, such goals would 
provide greater transparency, accountability and impact 
externally. The Committee staff and GAO recommended that HUD 
develop goals to resolve material weaknesses to complement the 
agency's goal to get a clean opinion on its financial 
statement. The HUD officials expressed a willingness to 
consider more specific performance goals for the next GPRA 
cycle.
    GAO found that HUD's Performance Plan for fiscal year 2001 
contained goals that directly addressed five of the 11 
management problems listed in Chairman Thompson's August 1999 
letter.

                       DEPARTMENT OF THE INTERIOR

    In his August 1999 letter to the Interior Department, 
Chairman Thompson asked for an update on the agency's progress 
toward solving the following 10 management challenges 
identified by both GAO and the Interior's IG:

         Streamlining agencies,

         Resource management,

         Better guidance and oversight,

         Management of Tribal and Indian programs,

         Bureau of Land Management ALMRS Project,

         Financial management,

         Land clean-up,

         Revenue collection,

         Land exchanges, and

         Year 2000 computer problem.

    Soon after Chairman Thompson wrote to Interior, the 
Interior IG submitted a new list of Interior's top 10 
management challenges. The only item that was eliminated from 
the list was the Year 2000 computer problem. New to the list 
was the management of the automated records system.
    In its response, Interior agreed that performance goals and 
measures are appropriate ways to address major management 
challenges. John Berry, Assistant Secretary for Policy, 
Management, and Budget, described in his letter to Chairman 
Thompson the process Interior has in place to track progress in 
the Department's attempts to cure management problems. Mr. 
Berry wrote, ``Interior has a system in place to track all 
these issues at the departmental level, even though most of the 
actions to resolve these issues are carried out by Interior's 
bureaus and offices.''
    On May 17, 2000, Committee staff met with Mr. Berry, other 
Interior officials, the IG, and representatives from GAO to 
discuss Interior's progress in addressing management 
challenges. One of the major concerns expressed by both 
Department officials and the IG was the decentralization of 
Interior and the difficulty that poses for management. The 
discussion at the meeting centered on the Department's attempts 
to overcome the problems associated with such decentralization.
    Financial mismanagement, like in many other Federal 
agencies, has been a problem at Interior. For instance, the 
Bureau of Indian Affairs and insular area governments have been 
unable to adequately account for revenues and expenditures 
associated with their operations. Interior has shown 
improvement in this area. Despite disclosing a number of 
material weaknesses, the IG gave Interior's financial 
statements an unqualified opinion. However, in the meeting with 
Interior officials, the IG warned that he would be more closely 
scrutinizing the financial systems in place at Interior to 
ensure that the financial statements were produced in a more 
timely fashion.
    Problems with Interior's management of Tribal and Indian 
programs are well documented. According to GAO, ``the $3 
billion Indian Trust Fund has long been characterized by 
inadequate accounting and information systems, untrained and 
inexperienced staff, and a host of other problems.'' In its 
response, Interior stated, ``The Department has developed a 
High Level Implementation Plan that provides a general roadmap 
to the 13 related projects which collectively comprise the 
Department's Trust Management Improvement Program.'' In 
addition, it listed several areas where it was making progress 
in addressing longstanding problems with the management of the 
trust funds.
    GAO analyzed the extent to which Interior's fiscal year 
2001 Performance Plan set specific and measurable goals to 
address its management challenges. According to GAO, the 
Performance Plan includes only four specific and measurable 
performance goals to address Interior's management challenges.

                         DEPARTMENT OF JUSTICE

    Chairman Thompson's August 1999 letter to the Attorney 
General listed the following 16 major management challenges at 
the Department of Justice (DOJ) that had been identified by GAO 
and the agency's IG:

         Y2K computer readiness,

         Information security,

         Management of forfeited assets,

         Immigration and Naturalization Service (INS) 
        organizational structure,

         INS internal communications and coordination 
        problems,

         INS financial management,

         The effectiveness of INS' southwest border 
        strategy,

         INS process for removing criminal aliens,

         INS procedures for granting citizenship,

         Justice-wide financial management problems,

         Internal control weaknesses within the Drug 
        Enforcement Administration (DEA),

         Prison overcrowding,

         Detention space and infrastructure for 
        criminals and illegal migrants,

         INS' ineffective program to remove illegal 
        aliens,

         INS' automation system vulnerability to waste 
        and abuse, and

         Failed information systems planning and 
        implementation.

    The letter pointed out that DOJ's Performance Plan for 
fiscal year 2000 had performance goals directly addressing 
eight of the 16 problems. The letter also noted a particular 
concern over management of forfeited assets by the Department 
of Justice and the Treasury Department. The two departments 
maintain separate forfeited asset funds that have inventories 
totaling about $1.8 billion. GAO designated forfeited asset 
management at both Departments as a ``high-risk'' area in its 
original 1990 high-risk list. According to GAO, there is no 
acceptable reason for the long delays in completing the actions 
necessary to remove this high-risk designation. Furthermore, 
Justice and Treasury have refused to implement a GAO 
recommendation dating back to 1991 to consolidate the 
management and disposition of properties. Indeed, Justice and 
Treasury maintain separate contractors to handle seized assets 
at some of the same locations.
    By a letter dated October 13, 1999, DOJ responded to the 
Chairman's letter. Among other things, the response discussed 
actions DOJ was taking on the designated management challenges. 
In December 1999, the DOJ IG submitted to the Committee an 
updated list of the most serious management problems at DOJ. 
Because of to the DOJ's efforts in testing and renovating 
mission critical computer systems, the IG removed Y2K from the 
list. In addition, INS automation system problems has been 
merged into information systems planning and implementation due 
to the similarity of the two issues. Finally, the IG added two 
new management challenges: Grants management and human capital.
    On December 17, 1999, the Committee staff met with DOJ 
officials, as well as GAO and IG representatives, to follow up 
on the Chairman's letter and DOJ's response. The Committee 
staff asked DOJ to do a study to see if the consolidation of 
the management of the assets would be cost-effective. According 
to GAO, such a study should look at: (1) the cost of storing 
the assets in each location, (2) the administration costs of 
one contract instead of two, and (3) which company would give 
more back to the government after the selling of the assets. 
The DOJ officials agreed to look into the possibility of doing 
such a study.
    The meeting also covered a discussion of DOJ's other 
management challenges, including financial management and the 
many problems at INS. The DOJ officials expressed their 
commitment to continuing the Department's efforts to fully 
address existing management challenges.
    GAO's latest review concluded that 15 of the 16 items 
listed in the Chairman's August letter remain management 
challenges at DOJ. The only item that is no longer a problem is 
the Y2K conversion. GAO found that DOJ's Performance Plan for 
fiscal year 2001 contains goals that directly address nine of 
the 15 problems. Management challenges that are not addressed 
include internal control weaknesses at DEA and concerns about 
the effectiveness of INS' organizational structure and internal 
communications. Also, DOJ has no goals to address the high-risk 
area of forfeited assets management. DOJ has not responded to 
the Committee's request for a study on consolidating management 
of DOJ and Treasury forfeited asset funds.

                          DEPARTMENT OF LABOR

    Chairman Thompson's August 1999 letter to the Department of 
Labor (DOL) referenced the following 10 management challenges 
for the Department as identified by DOL's IG:

         Effectiveness of Welfare-to-Work initiative,

         Accounting for Employment and Training 
        Administration (ETA) grant and contract funds,

         Quality of program results data,

         Y2K computer problem,

         Security of pension assets,

         Protection of worker benefit funds,

         Collection and disbursement of back wages and 
        related penalties,

         Compliance with new financial management 
        requirements,

         Stewardship over DOL information technology 
        resources, and

         Accounting for equity in real property.

    DOL's IG dropped the Y2K computer problem from last year's 
list of management challenges and added a new challenge for 
fiscal year 2000--Implementation of the Workforce Investment 
Act. In addition, GAO identified three additional management 
challenges for the Department. Specifically, GAO found that DOL 
(1) lacked accurate and reliable information to assess program 
performance; (2) had not effectively leveraged its limited 
resources by using alternative enforcement strategies; and (3) 
had limited capacity to effectively coordinate the activities 
of the many units at the Federal, State, and local levels that 
share responsibility for implementing worker protection 
programs.
    In response to the Chairman's August 1999 letter, DOL sent 
a December 22, 1999, letter to the Committee acknowledging 
receipt of the Chairman's request for information. The 
acknowledgment letter stated that the Department was reviewing 
the Department's major management issues in detail and would 
respond to the Chairman's request in greater detail at a later 
date. The Chairman did not receive DOL's written response until 
April 14, 2000. In this response, DOL provided details 
explaining how each of the management challenges had been 
addressed in the Department's performance planning process and, 
where not specifically addressed in the plans, the actions that 
the Department was taking to resolve these management 
challenges and problems. The response also included comments on 
DOL's actions to address GAO and IG audit recommendations in 
1999.
    Although the Committee had yet to receive a written 
response from the Department, Committee staff met with 
representatives from DOL, DOL's IG, and GAO, at DOL 
headquarters on April 7, 2000. DOL had recently issued its 
fiscal year 1999 Performance Report and its fiscal year 2001 
Performance Plan. During the meeting, Committee staff discussed 
both of these documents as they related to management 
challenges confronting the Department. Committee staff pointed 
out that DOL's Performance Report did not directly nor 
comprehensively address the Department's progress in resolving 
major management challenges and included only a limited and 
general discussion of strategies to be implemented in improving 
mission performance as it related to these management 
challenges. In its 2001 Performance Plan, DOL discussed some of 
the program improvement opportunities identified by GAO and the 
IG but again did not comprehensively address these management 
challenges. DOL said that it did not believe that the GPRA 
planning and reporting process was appropriate for addressing 
some of its management challenges. Labor said it believes that 
some of the challenges identified by the IG are of an 
administrative nature and are already addressed within existing 
audit resolution processes.
    Overall, a review of DOL's efforts to use performance 
measurement to address its management problems shows that the 
Department did not comprehensively develop and use specific and 
measurable goals for its major management challenges. The 
Department also made only minor improvements in its development 
and use of such goals and measures when compared to the 
previous year. The Department needs to place additional 
emphasis on developing more outcome-based indicators and using 
performance planning and reporting as a basis to address its 
long-standing major management problems.

                          DEPARTMENT OF STATE

    In his August 1999 letter to the State Department, Chairman 
Thompson asked for an update on the State Department's progress 
toward solving the following eight management challenges 
identified by both GAO and the State Department's IG:

         Worldwide security,

         Meeting Year 2000 computer challenges,

         Information security,

         Management of information resources,

         Visa Processing System,

         Financial management,

         Reorganization of foreign affairs agencies, 
        and

         Human capital management.

    Since the date of Chairman Thompson's August letter, the 
State Department's IG updated the list of the State 
Department's top 10 management challenges. Gone from the list 
were the Visa Processing System and Reorganization of Foreign 
Affairs Agencies. Added to the list were Safeguarding U.S. 
Borders, Maintaining Effective Export Controls, Improving Real 
Property Management and Maintenance, and Strategic Planning.
    The State Department responded to Chairman Thompson's 
letter with a brief discussion of its progress in addressing 
management challenges. The letter simply listed a number of 
management challenges and stated that progress was being made 
in those areas without specifying what that progress was.
    Committee staff met with officials from the State 
Department on January 14, 2000. Present from the Department 
were officials representing the Office of Management and 
Planning, the Chief Financial Officer, the Bureau of Consular 
Affairs, the Bureau of Administration, the Bureau of Diplomatic 
Security, the Office of Foreign Buildings Operations, the 
Bureau of Information Resource Management, the Bureau of 
Political-Military Affairs, and the Office of Resources, Plans, 
and Policy.
    One of the key areas of concern for the State Department is 
in the area of security. Notable progress has been made in a 
number of areas, including reestablishing operations in more 
secure facilities at some locations, delivering technical 
security equipment, and hiring and training staff. Although 
there is a capital investment program in place, as well as a 
major building program, the majority of missions remain 
vulnerable to threats.
    Like in the area of security, progress has been made to 
address weaknesses in financial management at the State 
Department. According to the IG, however, much work remains to 
be done. Financial statements need to be issued more timely. 
Internal controls must be strengthened. The Department's 
financial and accounting system should comply with relevant 
laws and regulations.
    One area where there is disagreement between the IG and the 
State Department is in the area of real property management and 
maintenance. The Department holds 12,000 properties with a 
value of approximately $4 billion. The current condition of 
many of these properties has been described as ``shocking.'' 
The Department believes that its current plans to address the 
backlog of maintenance projects have cured this as a ``material 
weakness'' under the Federal Financial Managers' Integrity Act. 
The IG adamantly disagrees and believes that this problem 
requires continued and heightened scrutiny.
    GAO analyzed the extent to which the State Department 
adopted in its fiscal year 2001 Performance Plan specific and 
measurable goals to address the Department's management 
challenges. According to that analysis, the Department adopted 
goals for only three of its six major management challenges.

                      DEPARTMENT OF TRANSPORTATION

    Chairman Thompson's August 1999 letter to the Department of 
Transportation (DOT) referenced the following 12 management 
challenges for the Department as identified by DOT's IG:

         Aviation safety,

         Surface transportation safety,

         Air traffic control modernization,

         Federal Aviation Administration (FAA) 
        financing and reauthorization,

         Surface, marine and airport infrastructure,

         Transportation and computer security,

         Y2K computer problem,

         Financial accounting and Chief Financial 
        Officers Act,

         Amtrak financial viability and modernization,

         Coast Guard Deepwater capability replacement 
        project,

         Ship disposal program, and

         GPRA implementation.

    GAO, which also identified many of the above issues as 
significant challenges for DOT, noted an additional challenge 
for DOT relating to the lack of aviation competition 
contributing to high fares and poor service for some 
communities. In its fiscal year 2000 update to its list of 
management challenges for the Department, DOT's IG deleted the 
``Y2K computer problem'' challenge because of significant 
progress on the issue. The IG also separated the 
``transportation and computer security'' challenge into two 
items on the updated list because the IG believed that both of 
these security issues are significant and warrant a high level 
of attention.
    In response to Chairman Thompson's August 1999 request for 
information, DOT provided the Committee with a listing of 
specific actions that the Department was taking to resolve the 
management challenges along with an estimate of how long it 
would likely take to complete the planned actions. The DOT 
response also provided a summary of the various GAO and IG 
recommendations and the status of the Department's efforts to 
resolve and close these recommendations.
    On March 21, 2000, Committee staff met with representatives 
of DOT, DOT IG, and GAO. The participants discussed each of the 
Department's management challenges and obtained a current 
status of the Department's efforts. The DOT official leading 
the Department's GPRA planning and reporting efforts told the 
Committee staff that the Department was working on 
incorporating specific milestones for its management challenges 
into its updated Strategic Plan. She stated that this 
additional information will give the reader of DOT's Strategic 
Plan more of a detailed perspective on targeted performance 
rather than only relying on the short-term focus of targets and 
milestones in the DOT's Annual Performance Plan.
    On April 3, 2000, DOT Secretary Slater publicly announced 
the results of the Department's efforts as reported in its 
fiscal year 1999 Performance Report. A review of the 
Performance Report shows that it addressed many of the 
management challenges identified by GAO and DOT's IG. To 
highlight its responses to these major management problems, the 
DOT Performance Report included a table identifying these 
management challenges and the pages in the report on which each 
is discussed. Where the DOT management challenge relates to an 
outcome, the associated goal page is referenced. For most of 
the management challenges, the Performance Report included 
performance measures that directly related to the challenge or 
related to a portion of the challenge. However, GAO pointed out 
that, regarding the challenge related to the poor financial 
condition of Amtrak, the DOT report did not address Amtrak's 
continuing net losses and its ability to reach operational 
self-sufficiency by the year 2002.
    Overall, DOT has made considerable progress in the 
developing goals and measures for its major management problems 
and in using performance measurement to improve performance and 
accountability. The Committee staff believe that DOT's 
successful GPRA efforts should serve as a model for other 
departments and agencies.

                       DEPARTMENT OF THE TREASURY

    Chairman Thompson's August 1999 letter to the Department of 
the Treasury referenced the following management challenges for 
the Department:

         Information technology (IT) investment 
        management,

         Integration and reliability of financial 
        management systems,

         Preparation of department-wide financial 
        statements,

         Preparation of reliable consolidated 
        financial statements for the government,

         Financial management and compliance with the 
        Federal Financial Management Improvement Act (FFMIA),

         Accountability, internal controls and 
        reporting for asset forfeiture program,

         Computer security controls,

         Implementation of Treasury's responsibilities 
        under the Debt Collection Improvement Act of 1996 
        (DCIA),

         Implementation of electronic funds transfer 
        accounts as required by DCIA,

         Restructuring IRS' organization and business 
        practices,

         IRS' systems modernization efforts,

         Internal controls over taxpayer receipts and 
        sensitive taxpayer data,

         Internal controls over unpaid tax 
        assessments,

         Collection of Federal tax receivables and 
        other unpaid assessments,

         IRS' inability to rely on general ledger to 
        support financial statements,

         IRS' efforts to reduce filing fraud,

         Security controls over information systems 
        that place taxpayer data at risk,

         Y2K computer problem,

         Access and security controls in Customs' 
        automated systems, and

         Customs' development of the Automated 
        Commercial Environment (ACE) system.

    With the recent establishment of the Treasury Inspector 
General for Tax Administration (TIGTA) to conduct audits of 
IRS' operations and activities, both the Treasury IG and TIGTA 
each developed a list of management challenges for their 
respective jurisdictional audit responsibilities within the 
Department. For the fiscal year 2000 update to its list of 
management challenges, the Treasury IG removed two areas from 
the challenges list: Implementation of Treasury's debt 
collection initiatives and electronic funds/benefits transfers. 
TIGTA removed one challenge from its list of management 
challenges: IRS efforts to select and control returns for 
examination.
    In response to Chairman Thompson's August 1999 request for 
further information, Secretary Summers' letter stated that 
Department officials believe they ``have made considerable 
progress in addressing many of the problems and challenges that 
have been identified.'' The letter stated that the Department 
had sent instructions to its bureaus to address the high-risk 
areas and management challenges in their fiscal year 2001 
Performance Plans. The Secretary also stated that the 
Department had recently met with representatives from GAO to 
discuss ways to measure progress in these areas. The response 
included a detailed enclosure that explained the Treasury's 
corrective actions to clear the audit recommendations made by 
the IGs and GAO.
    Committee staff met with representatives of Treasury, 
Treasury IG, and GAO in the Committee's hearing room on 
February 15, 2000. Agency officials discussed many of the 
management challenges confronting the Department and provided a 
status of the progress they were making in resolving them. 
Treasury's officials said they recognized that, in some cases, 
the associated performance measures in their Performance Plan 
did not clearly link to the objectives as described in the 
Performance Plan. However, they said that this linkage would be 
fully addressed as the Department worked overtime to improve 
its performance measures.
    In March 2000, Treasury released its fiscal year 1999 
Performance Report, which broadly discussed the Department's 
major management challenges. In its recent review of Treasury's 
fiscal year 2001 Performance Plan, GAO noted that the 
Department included a new report section that discusses, in 
varying depth, the Department's major management challenges. 
Specifically, GAO found that of the total 21 management 
challenges, Treasury (1) established goals and measures that 
were directly applicable to three of its challenges, (2) 
established goals and measures that were indirectly applicable 
to five of its challenges, (3) did not establish goals and 
measures but provided strategies to address 10 of its 
challenges, and (4) did not establish goals and measures for 
three of its challenges.
    Overall, Treasury has made moderate progress in developing 
and implementing performance goals and measures for its major 
management problems. Treasury appears to have made some 
improvements in its latest Performance Plan but more needs to 
be done to ensure that the Department adequately addresses all 
its management challenges in its GPRA planning and reporting 
processes. For instance, according to GAO, Treasury included in 
its fiscal year 2001 Performance Plan specific and measurable 
goals for only three of 21 major management challenges. 
Treasury still has performance goals for only one of the five 
GAO-designated ``high-risk'' problems at the Department.

                     DEPARTMENT OF VETERANS AFFAIRS

    Chairman Thompson's August 1999 letter to the Department of 
Veterans Affairs (VA) listed the following 11 major management 
challenges at the VA that GAO and the Agency's IG had 
identified:

         Inability of VA's health care infrastructure 
        to meet its current or future needs,

         Lack of adequate information to ensure that 
        veterans have access to needed health care,

         Lack of outcome measures and data to assess 
        the impact of managed care initiatives,

         Difficulties in managing non-health benefits 
        programs,

         Need for more effective information systems 
        management,

         Health care quality management,

         Debt prevention and collection,

         Timeliness and quality of medical 
        examinations for compensation and pension (C&P) claims,

         Ineffective management of the Federal 
        Employees Compensation Act (FECA) program,

         Need to more effectively identify 
        inappropriate benefit payments, and

         Lack of credible performance data to support 
        GPRA.

    The Chairman's letter noted that resolving serious 
information security weaknesses was an area of particular 
concern at the VA. The Chairman's letter also noted that VA's 
fiscal year 2000 Performance Plan contained specific 
performance goals to address only two of the problem areas 
identified by GAO and the IG.
    By a letter dated October 15, 1999, VA Secretary West 
responded to the Chairman's letter. The Secretary's response 
emphasized the Agency's commitment to resolving major 
management problems identified by GAO and the IG. He stated 
that the Agency's fiscal year 2001 Performance Plan would 
include a description of the specific steps the Agency was 
taking to address such problems.
    In December 1999, the IG submitted to the Committee an 
updated list of the most serious management problems at the VA. 
The IG listed the following nine items:

         Health care quality management and patient 
        safety;

         Resource allocation;

         Claims processing, appeals processing, and 
        timeliness and quality of C&P medical examinations;

         Inappropriate benefit payments;

         GPRA data validity;

         Security of information systems and data;

         Financial management;

         Debt management; and

         FECA costs.

    The IG dropped Y2K computer readiness from the list of 
major management challenges. He further observed that while the 
VA has made concerted efforts to achieve its goals and 
objectives, the IG's work has questioned whether some areas of 
operation have been fully successful in accomplishing intended 
results. These programs and functions include: The ability to 
manage, bill and collect debts; the function of accurately and 
appropriately paying veterans benefits in a timely manner; the 
attainment of a Department-wide cost accounting system; and the 
management of an economically sound system of inventory and 
supply management.
    On February 23, 2000, the Committee staff met with the VA 
officials, along with GAO and IG representatives, to follow up 
on the Chairman's letter and the Agency's response. The VA 
officials described the actions they were taking to address 
their major management challenges and how they were resolving 
GAO and IG recommendations pertaining to these challenges. They 
generally agreed with the areas identified by GAO and the IG. 
However, they disagreed with the IG's designation of debt 
collection as a top 10 management challenge.
    GAO found that the VA's Performance Plan for fiscal year 
2001 contained goals that directly addressed two of the 11 
management problems. According to GAO, the VA made some 
progress in improving veterans' access to health care services. 
However, it did not make significant progress in addressing 
such problems as restructuring its health care infrastructure 
or improving the timeliness and accuracy of compensation and 
benefit claims.

                  AGENCY FOR INTERNATIONAL DEVELOPMENT

    In his August 1999 letter to the U.S. Agency for 
International Development (USAID), Chairman Thompson asked for 
an update on the Agency's progress toward solving the following 
management challenges identified by both GAO and the USAID IG:

         Financial management,

         Management of information resources,

         Year 2000 computer readiness,

         Information security, and

         Performance reporting.

    Since the date of the August letter, the USAID IG provided 
to the Committee a more comprehensive list of the top 10 
management challenges confronting USAID. In addition to the 
five areas listed above, the USAID IG included the Direct Loan 
Program, New Management System Reporting and Resource 
Management, Human Resources Capabilities, and the fact that 
USAID's Management Mandate is too broad. Both GAO and the IG, 
however, recognize that USAID has made substantial progress 
toward addressing many of its major management challenges.
    In his response to Chairman Thompson's letter, USAID 
Administrator J. Brady Anderson stated his commitment to 
``ensuring that USAID delivers the best possible results to our 
citizens.'' USAID recognized its continuing weaknesses in 
several important management areas, and described what actions 
it was taking to address each one.
    On March 17, 2000, the Committee staff met with officials 
from USAID, its IG, and GAO. USAID presented its ``Reform 
Roadmap'' and briefed Committee staff on changes to its results 
reporting. Both Agency officials and those from the IG staff 
stated that there was a good working relationship between the 
IG and the Agency, which made it easier to set priorities for 
addressing major management challenges.
    USAID recognizes the challenges it faces with respect to 
financial management. After receiving a disclaimer of opinion 
for its fiscal year 1999 financial statements, USAID now has a 
remediation plan in place that provides for system replacements 
or modernizations to be completed by 2002. Although the IG is 
concerned about the adequacy of the remediation plan or how 
data from the old system will be integrated into the new 
system, the IG acknowledges the difficulty of this challenge 
and the seriousness with which USAID is undertaking to solve 
it.
    With respect to the management of information resources and 
information security, there is evidence that USAID is seeking 
to control the information technology investment process and 
make sure it fits within an architectural framework. In 
addition, USAID expects to achieve full computer security by 
fiscal year 2003. The risk to loss from waste, fraud, and abuse 
will continue until these plans are implemented.
    Because USAID is engaged in a quest to provide assistance 
and encourage the development of democracy throughout the 
developing world, its progress toward achieving goals can be 
difficult to measure. Administrator Anderson gave Chairman 
Thompson his assurances that ``management goals will be more 
specifically articulated in USAID's fiscal year 2001 
Performance Plan.'' Unfortunately, the plan does not include 
any specific and measurable annual goals to address the 
management challenges that beset USAID.

                    ENVIRONMENTAL PROTECTION AGENCY

    Chairman Thompson's August 1999 letter to the Environmental 
Protection Agency (EPA) referenced the following management 
challenges for EPA as identified by EPA's IG and GAO:

         Environmental information,

         Regulatory reinvention,

         EPA and State relations,

         Superfund program management,

         Greater accountability,

         Oversight of enforcement activities,

         Use of inefficient contract types,

         Oversight of assistance agreements,

         Agency's relationship with contractors,

         Enhancing employee competencies, and

         Quality assurance plans.

    In its fiscal year 2000 update to its list of management 
challenges, EPA's IG deleted three items based on EPA's 
progress: The Agency's relationship with contractors, use of 
inefficient contract types, and quality assurance plans. The IG 
added four new items: Quality of laboratory data, agency 
process for preparing financial statements, Superfund 5-year 
reviews, and the Great Lakes Program.
    In its response to the Chairman's request for information, 
EPA said that it agreed with the IG and GAO designations of 
management problems and was using a variety of tools to focus 
resources and senior managers' time on their resolution. EPA 
also said that the IG's areas of concern directly related to 
prior IG audits for which the Agency already had specific plans 
in place to resolve problems.
    Committee staff met with officials from EPA, the EPA IG and 
GAO on April 6, 2000. EPA officials informed Committee staff 
that they had struggled to develop goals and measures for the 
management challenges. The officials said that this difficulty 
was due in part to the fact that such measures would increase 
the proportion of output measures to outcome measures that EPA 
would be required to report on. GAO's review of EPA's fiscal 
year 2001 Performance Plan said that EPA identified specific 
goals and measures to address three of its 11 challenges. GAO 
said that while EPA did not provide specific goals and measures 
for the remaining eight management challenges, it did provide 
strategies to address these challenges.
    Overall, EPA has made modest progress in developing and 
implementing performance goals and measures for its major 
management challenges. Without a comprehensive and honest 
discussion of management challenges in both its Performance 
Plan and Performance Report, EPA cannot readily communicate to 
stakeholders that it is making progress to resolve these 
significant--and, in some cases, long-standing--management 
problems.

                  FEDERAL EMERGENCY MANAGEMENT AGENCY

    Chairman Thompson's August 1999 letter to the Federal 
Emergency Management Agency (FEMA) referenced the following 10 
management challenges for FEMA as identified by FEMA's IG:

         GPRA implementation,

         Financial management,

         Information technology management,

         Grants management,

         Disaster response and recovery program,

         State and local preparedness program,

         Flood insurance program,

         Mitigation program,

         National security support program, and

         Fire administration program.

    The Chairman's letter also noted two additional challenges 
for the Agency as identified by GAO: FEMA needed to (1) resolve 
the Year 2000 computer problem, and (2) establish that 
information security issues have been addressed within the 
Agency. In its fiscal year 2001 update of the management 
challenges, FEMA's IG deleted two items from the previous 
year's list--disaster declaration criteria and flood mapping 
modernization.
    In its response to the Chairman's request for information, 
FEMA provided information on its efforts to address the 
management challenges that confront the Agency. FEMA indicated 
that the IG audit recommendations associated with all but one 
of FEMA's management challenges had been satisfactorily 
resolved.
    Committee staff met with representatives of FEMA, the FEMA 
IG, and GAO at FEMA's headquarters building on April 14, 2000. 
During this meeting, Agency officials discussed FEMA's actions 
to resolve its various management problems. Committee staff 
pointed out that FEMA's recently issued Performance Report for 
fiscal year 1999 did not comprehensively report on the Agency's 
major management challenges as designated by GAO and the FEMA 
IG. The Performance Report only contained broad references to 
FEMA's activities that related to these management challenges. 
As with the other programs and activities covered in FEMA's 
Performance Report, the information was so poor that assessment 
of results was difficult.
    In its analysis, GAO reported that FEMA's fiscal year 2001 
Performance Plan is significantly more comprehensive in showing 
that the Agency is attempting to address its major management 
challenges. The Performance Plan shows that FEMA established 
performance goals and measures directly applicable to 10 of the 
Agency's 12 management challenges.
    Overall, FEMA has made progress in developing goals and 
measures for its major management problems as shown in its 2001 
Performance Plan. FEMA should, however, ensure that it more 
comprehensively reports on its progress in resolving these 
problems in its Annual Performance Report. This reporting will 
more greatly assist Congressional and other stakeholders in 
assessing FEMA's efforts to improve performance and 
accountability in dealing with these management challenges.

                    GENERAL SERVICES ADMINISTRATION

    In his August 1999 letter to the General Services 
Administration (GSA), Chairman Thompson asked for an update on 
the Agency's progress toward solving the following management 
challenges identified by both GAO and the GSA IG:

         Management of supply depots,

         Physical security,

         General fraud, waste, and mismanagement,

         Multiple award schedules,

         Computer security,

         Developing new computer systems,

         Organization and management structure,

         Corporate knowledge and expertise, and

         Year 2000 computer problem.

    The challenges facing GSA are severe. With the 2,000 
buildings under its jurisdiction, GAO has reported that GSA is 
not in a good position to know how adequate its building 
security is. Years of neglect put the cost of bringing those 
buildings up to acceptable quality, health and safety standards 
at more than $4 billion. With respect to computer security, 
according to the GSA IG, GSA's information security features 
``may not be adequate to ensure the security of the system and 
data in this emerging and volatile environment.''
    In its response, GSA stated that it agreed with the 
designation of supply depots and physical security as major 
management problems. However, GSA stated that it disagreed with 
seven of those designations, specifically general fraud, waste, 
and mismanagement; multiple award schedules; computer security; 
developing new computer systems; organization and management 
structure; corporate knowledge and expertise; and the year 2000 
computer problem.
    Committee staff met with officials from GSA, the GSA IG, 
and GAO on March 15, 2000 in the Committee's hearing room. The 
discussion revolved around the Agency's response to the August 
1999 letter from Chairman Thompson, with a special emphasis on 
the degree to which the Agency disagreed with GAO and IG 
designations of major management challenges.
    Where GSA did agree with GAO and IG designations of major 
management challenges--supply depots and physical security--it 
gave Committee staff a status report on progress toward solving 
these problems. For instance, with respect to physical 
security, Agency staff briefed the Committee staff on its 
efforts to implement a risk assessment of the 2,000 buildings 
under GSA's jurisdiction. This includes penetrations by Navy 
SEALS and Delta teams which will result in recommendations for 
improvement of existing security practices and procedures.
    With respect to issues where GSA disagreed with GAO and IG 
designations of major management problems, GSA's discussion was 
not always satisfactory. For instance, GSA claims that it has a 
``program in place to address computer security'' and states 
that in the area of developing new computer systems, ``a major 
impetus to . . . progress has been the creation of the GSA 
Chief Information Officer.'' While it appears that GSA has 
taken some action in these areas, the Committee is without an 
adequate explanation of what GSA attempts to achieve through 
these actions.
    Unfortunately, according to GAO, GSA did not act on 
Chairman Thompson's recommendation to adopt performance goals 
and measures to address its major management challenges. In a 
recent evaluation of GSA's fiscal year 1999 Performance Report 
and fiscal year 2001 Performance Plan, GAO wrote, ``With regard 
to the management challenges, neither the 1999 Performance 
Report nor the 2001 Performance Plan has goals that effectively 
respond to them.'' According to GAO's analysis, GSA did not 
adopt any goals to resolve its major management challenges. It 
is unclear why GSA continues to insist that setting performance 
goals to address major management challenges would not be 
helpful to gauge progress in resolving them.
    As Chairman Thompson wrote in his letter to GSA, without 
specific and measurable goals for many of these major 
management challenges, it will be difficult to assess progress 
in addressing many of these areas. The Committee will continue 
to urge agencies to set such goals in their Annual Performance 
Plans.

             NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    In his August 1999 letter to the National Aeronautics and 
Space Administration (NASA), Chairman Thompson asked for an 
update on the Agency's progress toward solving the following 
management challenges identified by both GAO and the NASA IG:

         Safety and mission assurance,

         Procurement/contract management,

         International Space Station,

         Year 2000 computer problem,

         Information technology security,

         Integrated Financial Management Project,

         Launch vehicles,

         International agreements,

         Earth Observing System Data and Information 
        Systems,

         Environmental issues, and

         Aerospace test facility cooperation with DOD.

    Like many other agencies, the management challenges facing 
NASA are formidable. NASA has an annual budget of $14 billion, 
most of which is spent on contracting its many complex 
endeavors in space and research. Many of the challenges 
confronting NASA have existed for some time.
    According to the most recent assessment of the top 10 
management issues at NASA by its IG, Information Technology 
Security and the Year 2000 problem are no longer on the list. 
The Year 2000 issues is resolved by the passage of time. 
However, Information Security is incorporated into the issue of 
Information Technology generally.
    NASA's response to Chairman Thompson's letter provided a 
comprehensive breakdown of the major management challenges, a 
description of the extent to which NASA was addressing the 
problem, as well as a discussion of areas where NASA disagreed 
with the IG's or GAO's assessment of a problem as a ``major 
challenge.'' In many instances, NASA agreed that it should 
monitor progress toward solving major management challenges 
with specific and measurable goals. However, there is some 
disagreement about how to institute goals and measures to 
address some of these areas. In its letter to Chairman 
Thompson, NASA states, ``In some instances, GAO and IG concerns 
are either too general to lend themselves to a single summary 
measurement or so specific that they are subsumed under other 
targets.''
    GAO and the IG assessed the extent to which agencies 
addressed major management challenges in their fiscal year 1999 
Performance Report. Results for many of the targets related to 
management challenges were mixed. For others, however, 
according to GAO, NASA's Performance Report does not ``provide 
enough specific information on some of these management 
challenges to fully assess NASA's actions.'' For example, 
according to GAO, NASA does not ``frontally address issues such 
as cost control, risk mitigation activities, and contingency 
planning'' with respect to the International Space Station. 
Similarly, NASA does not address in its Performance Report 
GAO's recommendations to cooperate more closely with the 
Department of Defense in aerospace testing facilities. NASA 
wrote in its letter to Chairman Thompson that it did not 
consider the issue to be ``mission critical.''
    Committee staff met with NASA officials on June 9, 2000 at 
NASA headquarters. It is clear that NASA takes seriously its 
effort to instill performance management principles throughout 
the organization. The meeting covered most of the issues 
considered by GAO and the IG to be major challenges for NASA.
    One of the seemingly intractable challenges for NASA seems 
to be financial management. Although NASA has received a 
``clean opinion'' on its financial statements and is one of 
only three agencies in compliance with the Federal Financial 
Management Improvement Act, it does not have an integrated 
financial management system. After two failed attempts to 
implement such a system, NASA is starting over from scratch. As 
early as January 1999, GAO wrote, ``Until the financial 
management system is operational, performance assessments 
relying on cost data may be incomplete.'' System implementation 
is critical to the furtherance of sound management at NASA.
    Like many agencies, NASA has substantial problems 
maintaining information security. According to the IG, 
``Because NASA relies so heavily on computers and networks, the 
Agency is vulnerable to attacks that could seriously disrupt 
vital programs and activities.'' Unfortunately, the IG believes 
the system NASA has in place is ``fragmented'' and ``without 
clear lines of authority, inadequate policies and guidelines, 
and ineffective enforcement of existing policies and 
guidelines.'' NASA should heed the recommendations of the IG 
and GAO to address their concerns. Unfortunately, according to 
GAO, NASA's Performance Report ``provides no specifics to judge 
the success of the effort to improve IT security.'' That 
weakness remains in the fiscal year 2001 Performance Plan.
    According to GAO's analysis of NASA's fiscal year 2001 
Performance Plan, NASA included goals for only six of its major 
management challenges. As Chairman Thompson wrote in his letter 
to NASA, without specific and measurable goals for many of 
these major management challenges, it will be difficult to 
assess progress in addressing many of these areas. The 
Committee will continue to urge agencies to set such goals in 
their Annual Performance Plans.

                      NATIONAL SCIENCE FOUNDATION

    In his August 1999 letter to the National Science 
Foundation (NSF), Chairman Thompson asked for an update on the 
Agency's progress toward solving the following management 
challenges identified by both GAO and the NSF IG:

         NSF's review system is and needs to remain a 
        model of best practice for the evaluation of research 
        proposals.

         NSF needs to capitalize on its strengths when 
        responding to increased expectations.

         NSF should use the Results Act as a tool to 
        manage NSF and ensure that the process is not unduly 
        burdensome.

         NSF received a ``qualified'' opinion on its 
        fiscal year 1997 financial statements because it was 
        unable to offer adequate information for some areas.

         NSF needs to effectively convert to its new 
        electronic system to process proposal and award 
        information.

         Managing the Antarctic program is an ongoing 
        challenge.

         NSF must focus on sustaining its academic 
        integrity and standards.

         Spending funds effectively and efficiently is 
        a concern.

         NSF needs to find an effective system for 
        cost sharing.

         The management of salaries and administrative 
        resources is weak.

    The only item added to the IG's list of top 10 management 
challenges was NSF's management of its Merit Review System. All 
other issues remained on the list.
    NSF's letter to Chairman Thompson specifically addresses 
each of the challenges listed by the IG. In addition, NSF's 
letter recounts the IG's assessment that NSF is ``well 
managed.'' Indeed, NSF does not appear to suffer significant 
management deficiencies. Like any organization, however, NSF 
must focuses on continuous improvement which presents ongoing 
challenges.
    Because of the remote location and hostile environment, 
managing the Antarctic program is an ongoing challenge. Over 
the last several years, NSF implemented arrangements with a new 
provider of flight operations to and from Antarctica. NSF will 
soon be entering into a new contract for logistics support 
associated with the U.S. Antarctic Program. Past practices 
should be carefully evaluated and the transition carefully 
implemented to maximize economy and efficiency in all aspects 
of procuring, transporting and maintaining material, personnel, 
and facilities for the program.
    Another challenge for NSF is its effort to convert to 
electronic processing of proposal and award information, 
including obtaining peer review through an electronic process 
and ensuring that applicants and awardees can effectively 
obtain access to and use information they need. The hurdles 
associated with this effort include transitioning to this new 
electronic environment while responding to concerns from those 
customers who are not comfortable with electronic media; 
developing a cost-effective and efficient mechanism to process 
proposals with differing color, font and symbols; and 
developing a legally-effective and practicable mechanism to 
obtain electronic signatures and enforce the commitments 
expressed by them.
    Committee staff met with officials from NSF, its IG, and 
GAO on November 30, 1999. Most present at the meeting agreed 
that it appeared that NSF had its challenges under control. In 
many cases, the NSF IG stated that NSF was taking effective 
steps to respond to its challenges and, in many cases, did not 
need to include them in the Performance Report or future 
Performance Plans.
    GAO analyzed NSF's fiscal year 2001 Performance Report to 
discern the extent to which it addressed NSF's management 
challenges. According to GAO, NSF discussed two of the 10 major 
management challenges: Managing an effective merit review 
system and implementing a new electronic proposal and award 
information system. It did not address directly or indirectly 
the other eight challenges.

                     NUCLEAR REGULATORY COMMISSION

    In his August 1999 letter to the Nuclear Regulatory 
Commission (NRC) Chairman Thompson asked for an update on the 
Agency's progress toward solving the following management 
challenges identified by both GAO and the NRC IG:

         Lacks assurance that nuclear plants are safe,

         Slow to require corrective action,

         Culture and organizations structure impede 
        effective actions,

         Risk-informed, performance-based approach to 
        regulatory oversight,

         Developing information management systems,

         Responding to the impact of industry 
        deregulation and license transfers,

         Administrating and overseeing agency 
        procurement under government contracting rules,

         Ability to effectively communicate with the 
        public and industry,

         Maintaining unqualified financial statement,

         Ensuring that NRC's processes are responsive 
        to industry needs,

         Ensuring that NRC's enforcement program has 
        an appropriate safety focus and reflects improved 
        licensee performance,

         Refocusing NRC's research program to reflect 
        a mature industry, and

         Responding to external influences for 
        changing NRC's operations.

    NRC's IG updated its list of top 10 management challenges 
after the date of Chairman Thompson's letter. Not on the new 
list were the IG statements that NRC lacks assurance that 
nuclear plants are safe, is slow to require corrective action, 
and has a culture and organization structure that impede 
effective actions. New to the list was NRC's ability to 
administer and oversee agency procurement under government 
contracting rules.
    In its response, NRC stated that it has activities underway 
to address the management challenges. However, NRC did not 
elaborate or adequately describe these activities. Committee 
staff met with officials from NRC, its IG, and GAO on March 16, 
2000 to discuss its response to Chairman Thompson's letter and 
the status of its efforts to address major management 
challenges.
    Clearly, the greatest challenge facing the NRC is to 
allocate its resources in a way that targets those facilities 
with the greatest risk. According to NRC, it now has in place 
an oversight program that focuses on inspection, assessing 
results, and enforcement. The purpose of this program, the 
Reactor Oversight Program, is to make the procedures and 
inspectors more risk informed so that the focus is put on 
systems that are more at risk.
    NRC did not agree to address many of the major management 
challenges by setting a performance goal to solve it. Indeed, 
NRC did not agree that some of the areas were ``major.'' 
Rather, NRC simply agreed that some of the areas represent 
activities ``that can be improved.'' For those areas, NRC did 
not agree to craft a performance indicator to gauge its success 
in addressing many of these major management challenges.
    In its analysis of NRC's fiscal year 2001 Performance Plan, 
GAO found that, indeed, NRC did not include goals to address 
any of its 13 major management challenges. As Chairman Thompson 
wrote in his letter to NRC, without specific and measurable 
goals for many of these major management challenges, it will be 
difficult to assess progress in addressing many of these areas. 
The Committee will continue to urge agencies to set such goals 
in their Annual Performance Plans.

                     OFFICE OF PERSONNEL MANAGEMENT

    Chairman Thompson's August 1999 letter to the Office of 
Personnel Management (OPM) referenced the following 12 
management challenges for OPM as identified by OPM's IG and 
GAO:

         Implementation of GPRA,

         Retirement systems modernization,

         Financial management policies and practices,

         Controls over the accuracy of annuity 
        payments,

         Debt collection and accounts receivable 
        processing,

         Internal controls related to the accuracy and 
        completeness of payroll withholdings and information 
        provided by other agencies,

         Financial management oversight over the 
        Federal Employees Health Benefits Program (FEHBP),

         Reconciliation of OPM's Fund Balance with the 
        Treasury Department,

         Accounts payable,

         Controls over investments,

         Year 2000 computer readiness, and

         Information security.

    When the OPM IG updated its list of management challenges 
for fiscal year 2000, the IG dropped two issues from its list: 
Controls over the accuracy of annuity payments and internal 
controls related to the accuracy and completeness of payroll 
withholdings. OPM considers the Y2K readiness issue to have 
been resolved, thus leaving nine major management challenges to 
be addressed.
    In its response to the Chairman's request for information, 
OPM enclosed a detailed summary of the actions that OPM had 
underway to address each of the open audit recommendations for 
major management areas identified by OPM's IG. The letter said 
that OPM generally concurred with the OPM IG's audit 
recommendations that were included with the Chairman's letter. 
The response also noted that Congressional stakeholders would 
find that OPM's fiscal year 2001 Performance Plan would reflect 
improvements in OPM's performance planning that address the 
issues that GAO reported in its recent analysis of OPM's fiscal 
year 2000 Performance Plan.
    Committee staff met with representatives from OPM, the OPM 
IG and GAO at OPM's headquarters building on March 22, 2000. 
OPM officials said that they generally agreed with the 
management challenges that the OPM IG had identified for the 
agency. At the meeting, OPM officials provided the Committee 
staff with information about the progress on each of these 
management challenges.
    OPM's 1999 Performance Report did not include a 
comprehensive discussion of the Agency's efforts to address its 
major management challenges. Of the nine management challenges 
designated for OPM, OPM's fiscal year 1999 Performance Report 
addressed seven, with varying degrees of information provided 
on strategies and measures. Two challenges were not addressed 
in the Performance Report: (1) the need to improve oversight of 
FEHBP and (2) controls over investments. One management 
challenge that was covered extensively involved the Agency's 
efforts to improve its financial management, including a 
discussion on the financial audits undertaken by the OPM IG.
    Overall, OPM has developed goals and measures for its major 
management challenges to a generally moderate extent. OPM has 
made progress over last year's efforts to address management 
challenges in its performance planning and reporting, 
particularly as demonstrated in its fiscal year 2001 
Performance Plan. For example, in its review of OPM's 2001 
Performance Plan, GAO noted that OPM showed enhanced attention 
to the challenge of detecting and preventing fraud and error in 
FEHBP.

                     SMALL BUSINESS ADMINISTRATION

    Chairman Thompson's August 1999 letter to the Small 
Business Administration (SBA) referenced the following 
management challenges for SBA as identified by SBA's IG:

         Lenders are not held accountable for errors 
        in loan processing and servicing,

         Borrowers are not held accountable for misuse 
        of funds,

         Recoveries in servicing and liquidation are 
        not maximized,

         Fraud deterrence and detection require 
        continued emphasis,

         Contract dollars are concentrated among 
        relatively few companies in SBA's 8(a) minority 
        business development program whose owners remain in the 
        program after amassing substantial wealth,

         SBA does not enforce its own rules precluding 
        excessive subcontracting,

         SBA's monitoring of companies in its 8(a) 
        minority business development program is mismanaged,

         SBA needs to develop and implement a program-
        based cost accounting system,

         Information system controls need improvement, 
        and

         The Paperwork Reduction Act and the Privacy 
        Act need to be rationalized with the Government 
        Performance and Results Act to permit effective 
        measurement of performance outcomes.

    In response to the Chairman's letter, SBA agreed with seven 
of the management challenges identified by the IG and partially 
agreed with the remaining three challenges. The three 
challenges that SBA said had been reduced to minor challenges 
are those relating to lender accountability for errors, 
recoveries in serving and liquidation, and fraud deterrence and 
detection.
    Committee staff met with officials from SBA, the SBA IG and 
GAO on March 27, 2000. During this meeting, SBA officials 
discussed the Agency's actions to address each of its major 
management challenges. Committee staff asked SBA officials why 
the vast majority of reported performance measures were 
activity-based or output-oriented rather than results oriented. 
SBA officials said that they recognized that they needed to 
develop and report more outcome-oriented goals in future 
performance planning and reporting.
    In its fiscal year 1999 Performance Report, SBA discussed 
the major management problems identified by the Agency's IG. 
For each management problem, the Performance Report included a 
summary of the IG's recommended actions along with the Agency's 
plans and actions to address the IG's concerns. The Performance 
Report did not, however, include specific and measurable goals 
for these management challenges. In its review of SBA's fiscal 
year 2001 Performance Plan, GAO also noted that the Performance 
Plan did not contain performance goals and measures that 
directly relate to the management challenges confronting SBA. 
For two of the management challenges--concentration of 8(a) 
contract dollars among relatively few companies and fraud 
deterrence and detection--the Performance Plan contains 
performance goals that indirectly relate to the challenges. As 
with its Performance Report, however, SBA's Performance Plan 
does discuss the strategies that the Agency planned to use to 
address its management challenges.
    SBA has made moderate progress over the previous year by 
identifying and reporting some goals and measures for its 
management challenges and by reporting more comprehensive 
information on the strategies that it plans to use in resolving 
its management challenges. Overall, however, SBA has not 
comprehensively developed specific goals and measures for the 
management challenges that confront the agency. SBA needs to 
devote enhanced attention to establishing specific and 
measurable goals that address its management challenges and 
also needs to make these goals more explicit in its performance 
planning and reporting.

                     SOCIAL SECURITY ADMINISTRATION

    Chairman Thompson's August 1999 letter to the Social 
Security Administration (SSA) listed the following 12 major 
management challenges at SSA that GAO and the Agency's IG had 
identified:

         Year 2000 computer conversion,

         Information security,

         Supplemental Security Income (SSI) fraud and 
        error,

         Ensuring the long-term solvency of the Social 
        Security System,

         Redesign of the disability claims process and 
        focusing on return to work,

         Implementing new information technology,

         Systems security and controls,

         Program complexity,

         Challenges to meeting GPRA commitments,

         Employee performance and productivity,

         Discrepancies in annual wage reporting, and

         Service to the public.

    The Chairman's letter noted that one problem of particular 
concern at SSA was overpayments of SSI benefits, a GAO-
designated ``high-risk'' area since 1997. In fiscal year 1998, 
current and former SSI recipients owed SSA more than $3.3 
billion in overpaid benefits, including $1.2 billion in newly 
detected overpayments for that year alone. One GAO report 
identified $5 million in erroneous SSI payments to prisoners. 
The Chairman's letter also noted GAO's finding that SSA's 
fiscal year 2000 Performance Plan contained specific 
performance goals to address five of the 12 problem areas 
identified by GAO and the IG.
    By a letter dated November 4, 1999, the SSA Commissioner 
responded to the Chairman's letter. The Commissioner's response 
expressed agreement with the list of major management problems 
in the Chairman's letter and indicated that SSA would establish 
specific and measurable performance commitments to address each 
one.
    In December 1999, the IG submitted to the Committee an 
updated list of the most serious management problems at SSA. 
Because of recently enacted legislation that designated the 
Social Security number (SSN) as a universal identifier, the IG 
added two new challenges: SSN Misuse and Identity Theft. The IG 
dropped the Year 2000 computer issue and employee performance 
and productivity as major management problems. Although 
management still needed to focus on these challenges, the IG 
considered them a lower priority than the two problems that 
were added.
    On April 12, 2000, the Committee staff met with SSA 
officials, along with GAO and IG representatives, to follow up 
on the Chairman's letter and the Commissioner's response. The 
meeting covered each of SSA's major management problems. Among 
other things, the participants noted that one challenge in the 
systems security area is the dispersed nature of SSA 
information systems. State offices and numerous SSA field 
offices directly use SSA systems. On another issue, the IG 
noted that SSA faces three challenges in implementing GPRA: 
Weaknesses in data sources, inadequate performance indicators, 
and resource constraints.
    In terms of improving payment accuracy, both SSA and IG 
officials stated that the administrative protocols under the 
Computer Matching Act pose a barrier to more effective data 
sharing. SSA needs to get data from States and financial 
institutions, particularly in electronic form. It has the legal 
authority to do this, but needs to develop procedures. A State 
may have given to another Federal agency the same information 
that SSA would like to obtain; however, SSA cannot get this 
data without working with the State on a unique agreement. A 
large part of the problem with Disability Insurance 
overpayments is that, by law, SSA must continue payments while 
appeals are pending. Also, resource constraints are a major 
barrier to reducing improper payments. For example, SSA can 
recover at least six times the costs of continuing disability 
reviews. However, these are not budget savings that accrue to 
the agency, so they do not offset the costs of the reviews.
    GAO found that SSA's Performance Plan for fiscal year 2001 
contains goals that directly address five of the nine 
management problems known to it at the time it submitted the 
Performance Plan in December 1999. According to GAO, however, 
there is room for improvement both in measuring and achieving 
progress to resolve each of these problems. SSA has some 
performance goals related to improving the accuracy of some of 
its major payment programs. However, it did not establish 
specific targets for reducing error rates for SSI or the other 
programs.
      

                                  
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