**Archive**Executive Guide: Effectively Implementing the Government Performance andResults Act (Other Written Prod., 06/01/96, GAO/GGD-96-118).GAO published an executive guide on implementing the GovernmentPerformance and Results Act (GPRA). GAO noted that: (1) GPRA forcesfederal agencies to focus on their missions and goals, how to achievethem, and how to improve their structural organizations and businessprocesses; (2) agencies must define their missions and desired outcomes,use strategic planning, involve stakeholders, assess their environments,and align their activities, core processes, and resources to supportmission-related outcomes; (3) agencies need to measure their performanceto ensure that they are meeting their goals and making informeddecisions; (4) performance measures need to be based on program-relatedcharacteristics and performance data must be sufficiently complete,accurate, and consistent; (5) agencies must use performance data toimprove organizational processes, identify performance gaps, and setimprovement goals; and (6) GPRA success depends on strong leadershippractices that devolve decisionmaking authority with accountability,create incentives, build expertise, and integrate management reforms.--------------------------- Indexing Terms ----------------------------- REPORTNUM:  GGD-96-118     TITLE:  Executive Guide: Effectively Implementing the Government              Performance and Results Act      DATE:  06/01/96   SUBJECT:  Federal agency reorganization             Strategic planning             Agency missions             Data integrity             Management information systems             Information resources management             Reengineering (management)             Total quality management             Productivity             AccountabilityIDENTIFIER:  EPA National Environmental Goals Project             NHTSA Fatal Accident Reporting System             NHTSA General Estimates System             Coast Guard Marine Safety and Security Program             VA Robert W. 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For further details, please   **** send an e-mail message to:                                   ****                                                              ****                                            ****                                                              **** with the message 'info' in the body.                         ********************************************************************Cover================================================================ COVERComptroller General of the United StatesJune 1996EXECUTIVE GUIDE - EFFECTIVELYIMPLEMENTING THE GOVERNMENTPERFORMANCE AND RESULTS ACTGAO/GGD-96-118Government Performance and Results Act(246089)Abbreviations=============================================================== ABBREV  ARL - Army Research Laboratory  CFO - Chief Financial Officers Act  DOD - Department of Defense  EPA - Environmental Protection Agency  FEMA - Federal Emergency Management Agency  GMRA - Government Management Reform Act  GPRA - Government Performance and Results Act  NHTSA - National Highway Traffic Safety Administration  NOAA - National Oceanic and Atmospheric Administration  OMB - Office of Management and Budget  VA - Department of Veterans Affairs  VHA - Veterans Health AdministrationPREFACE============================================================ Chapter 0In recent years, an understanding has emerged that the federalgovernment needs to be run in a more businesslike manner than in thepast.  As companies are accountable to shareholders, the federalgovernment is accountable to taxpayers, and taxpayers are demandingas never before that the dollars they invest in their government bemanaged and spent responsibly. As countless studies by GAO have long noted, federal agencies oftenfail to appropriately manage their finances, identify clearly whatthey intend to accomplish, or get the job done effectively and with aminimum of waste.  After decades of seeing these problems recur inagency after agency, Congress moved to address this endemic situationon a governmentwide basis.  Major statutes now in their first yearsof implementation hold substantial promise for creating a moreaccountable and effective federal government. The Chief Financial Officers (CFO) Act of 1990 provided for chieffinancial officer positions in 24 major agencies and required annualreports on the financial condition of government entities and thestatus of management controls.  Under the CFO Act, federal agencieswill be subject to the same kinds of financial reporting that havelong been required in the private sector and by state and localgovernments. The Information Technology Management Reform Act of 1996 requires,among other things, that agencies set goals, measure performance, andreport on progress in improving the efficiency and effectiveness ofoperations through the use of information technology. And, most fundamentally, under the Government Performance and ResultsAct of 1993 (GPRA), every major federal agency must now ask itselfsome basic questions:  What is our mission?  What are our goals andhow will we achieve them?  How can we measure our performance?  Howwill we use that information to make improvements?  GPRA forces ashift in the focus of federal agencies--away from such traditionalconcerns as staffing and activity levels and toward a singleoverriding issue:  results.  GPRA requires agencies to set goals,measure performance, and report on their accomplishments. This will not be an easy transition, nor will it be quick.  And forsome agencies, GPRA will be difficult to apply.  But GPRA has thepotential for adding greatly to government performance--aparticularly vital goal at a time when resources are limited andpublic demands are high.  To help Congress and federal managers putGPRA into effect, we have identified key steps that agencies need totake toward its implementation, along with a set of practices thatcan help make that implementation a success.  We learned of thesepractices from organizations that successfully have taken initiativessimilar to the ones required by the act.  Several federal agenciesthat have already put these practices to use are represented in thecase illustrations that are part of this guide. This guide is a companion to our Executive Guide:  Improving MissionPerformance Through Strategic Information Management and Technology,which outlined a number of information management approaches thatfederal agencies can take to improve their overall performance. Improving the management of federal agencies will require responsibleactions in several areas at once.  Success will demand concertedeffort and long-term commitment, but the returns should beconsiderable.  And American taxpayers deserve no less for theirinvestment. Charles A.  BowsherComptroller General of the United StatesINTRODUCTION============================================================ Chapter 1   A CHANGING ENVIRONMENT DEMANDS   FEDERAL MANAGEMENT REFORM---------------------------------------------------------- Chapter 1:1Over the past several years, Congress has taken steps tofundamentally change the way federal agencies go about their work. Congress took these steps in response to management problems socommon among federal agencies that they demanded governmentwidesolutions.  In addition, two contemporary forces converged to spurcongressional action:  year-in, year-out budget deficits that had tobe brought down and a public now demanding not only that federalagencies do their jobs more effectively, but that they do so withfewer people and at lower cost. This was--and remains--an enormous challenge.  For one thing, many ofthe largest federal agencies find themselves encumbered withstructures and processes rooted in the past, aimed at the demands ofearlier times, and designed before modern information andcommunications technology came into being.  These agencies are poorlypositioned to meet the demands of the 1990s.\1 Moreover, many ofthese agencies find themselves without a clear understanding of whothey are or where they are headed.  Over the years, as new social oreconomic problems emerged, Congress assigned many agencies new andunanticipated program responsibilities.  These additions may havemade sense when they were made, but their cumulative effect has beento create a government in which many agencies cannot say just whatbusiness they are in. In some cases, agencies' legislative mandates have grown so muddledthat Congress, the executive branch, and other agency stakeholdersand customers cannot agree on program goals, worthwhile strategies,or appropriate measures of success.  Our work has shown that theeffectiveness of federal program areas as diverse as employmentassistance and training, rural development, early childhooddevelopment, and food safety has been plagued by fragmented oroverlapping efforts.\2 A frequently cited example of overlap andineffectiveness is the federal food safety system, which took shapeunder as many as 35 laws and was administered by 12 differentagencies yet had not effectively protected the public from majorfoodborne illnesses.\3Traditionally, federal agencies have used the amount of moneydirected toward their programs, or the level of staff deployed, oreven the number of tasks completed as some of the measures of theirperformance.  But at a time when the value of many federal programsis undergoing intense public scrutiny, an agency that reports onlythese measures has not answered the defining question of whetherthese programs have produced real results.  Today's environment isresults-oriented.  Congress, the executive branch, and the public arebeginning to hold agencies accountable less for inputs and outputsthan for outcomes, by which is meant the results of governmentprograms as measured by the differences they make, for example, inthe economy or program participants' lives.  A federal employmenttraining program can report on the number of participants.  Thatnumber is an output.  Or it can report on the changes in the realwages of its graduates.  That number is an outcome.  The differencebetween the two measures is the key to understanding governmentperformance in a results-oriented environment. --------------------\1 Improving Government:  Need to Reexamine Organization andPerformance (GAO/T-GGD-93-9, Mar.  11, 1993). \2 Government Reorganization:  Issues and Principles(GAO/T-GGD/AIMD-95-166, May 17, 1995). \3 Food Safety:  A Unified, Risk-Based Safety System Needed toEnhance Food Safety (GAO/T-RCED-94-71, Nov.  4, 1993).    LEGISLATIVE REQUIREMENTS   SUPPORT MANAGING FOR RESULTS---------------------------------------------------------- Chapter 1:2Congress' determination to make agencies accountable for theirperformance lay at the heart of two landmark reforms of the 1990s: the Chief Financial Officers (CFO) Act of 1990 and the GovernmentPerformance and Results Act of 1993 (GPRA).  With these two laws,Congress imposed on federal agencies a new and more businesslikeframework for management and accountability.  In addition, GPRAcreated requirements for agencies to generate the informationcongressional and executive branch decisionmakers need in consideringmeasures to improve government performance and reduce costs. The CFO Act was designed to remedy decades of serious neglect infederal financial management operations and reporting.  It providedfor chief financial officers in the 24 largest federal departmentsand agencies, which together account for about 98 percent of thegovernment's gross budget authority.  In 1994, Congress followed upon the CFO Act with the Government Management Reform Act of 1994. The latter extended to all 24 CFO Act agencies the requirement,beginning with fiscal year 1996, to prepare and have auditedfinancial statements for their entire operations. While the CFO Act established the foundation for improving managementand financial accountability among the agencies, GPRA is aimed moredirectly at improving their program performance.  GPRA requires firstthat agencies consult with Congress and other stakeholders to clearlydefine their missions.  It requires that they establish long-termstrategic goals, as well as annual goals that are linked to them. They must then measure their performance against the goals they haveset and report publicly on how well they are doing.\4 Federalagencies also are to apply these principles--goal setting,performance measurement, and reporting--to their informationtechnology efforts, under the Information Technology ManagementReform Act of 1996.  For example, agencies are to establishperformance measures to gauge how well their information technologysupports their program efforts. --------------------\4 For a more detailed description of GPRA's requirements, seeappendix I.    EXPERIENCES OF LEADING   ORGANIZATIONS SHOW A WAY---------------------------------------------------------- Chapter 1:3At the request of Congress, we studied a number of leading publicsector organizations that were successfully pursuing managementreform initiatives and becoming more results-oriented.\5 We studiedstate governments, such as Florida, Oregon, Minnesota, NorthCarolina, Texas, and Virginia; and foreign governments, such asAustralia, Canada, New Zealand, and the United Kingdom.  Many ofthese organizations found themselves in an environment similar to theone confronting federal managers today--one in which they were calledupon to improve performance while simultaneously reducing costs. Congress asked whether the experiences of these organizations couldyield worthwhile lessons for federal agencies as they attempt toimplement GPRA. Each of the organizations we studied set its agenda for managementreform according to its own environment, needs, and capabilities. Yet despite their differing approaches to reform, all theseorganizations were seeking to become more result-oriented, and theycommonly took three key steps.  These were to (1) define clearmissions and desired outcomes, (2) measure performance to gaugeprogress, and (3) use performance information as a basis fordecisionmaking.  Although the organizations we studied were notacting under GPRA, their three key steps were consistent with GPRA'srequirements.  That is, the first step--define mission and desiredoutcomes--corresponds to the requirement in GPRA for federal agenciesto develop strategic plans containing mission statements andoutcome-related strategic goals; the second step--measureperformance--corresponds to the GPRA requirement for federal agenciesto develop annual performance plans with annual performance goals andindicators to measure performance; and the third step--useperformance information--although much broader, includes therequirement in GPRA for federal agencies to prepare annualperformance reports with information on the extent to which theagency has met its annual performance goals. Along with each step, certain practices proved especially importantto the success of their efforts.  In addition to these steps, theseorganizations also found that certain top leadership practices werecentral to making the changes needed for the organizations to becomemore results-oriented. Taken together, the key steps and practices drawn from theorganizations we studied provide a useful framework for federalagencies working to implement GPRA.  The key steps and practices areshown in figure 1.    Figure 1:  Implementing GPRA:    Key Steps and Critical   Practices   (See figure in printed   edition.)In this executive guide, we discuss the three key steps and theirrelationship to GPRA, along with the practices associated with eachstep.\6 In the final section of this executive guide, we discuss therole of top leadership and the practices it can follow if it hopes tomake GPRA a driving force in an organization.  Accompanying thediscussion of each practice is a case illustration involving afederal agency that has made progress in incorporating the practiceinto its operations.  The fact that an organization is profiled for aparticular practice is not meant to imply success or lack of successin other dimensions.  Moreover, underscoring the fact thatimplementing management changes required by GPRA will not comequickly, most of the agencies profiled began their results-orientedmanagement before GPRA was enacted. The experiences of leading organizations suggest that the successfulimplementation of GPRA may be as difficult as it is important.  Forexample, obtaining agreement among often competing stakeholders isnever easy, particularly in an environment where available resourcesare declining.  In addition, measuring the federal contribution tooutcomes that require the coordinated effort of numerous public andprivate entities--such as improvements in education, employment, orhealth--can require sophisticated and costly program evaluations. To help ensure the success of GPRA, the CFO Council, which the CFOAct created to provide the leadership foundation necessary toeffectively carry out the Chief Financial Officers' responsibilities,established a GPRA Implementation Committee.  The Committee isproviding guidance and information to Chief Financial Officers andmanagers in the 24 agencies covered by the CFO Act.  The Committeerecognized that uncertainty or fear of failure may immobilize anagency's efforts to implement GPRA and that its implementation isevolutionary in that proficiency comes with time and experience.  Toassist federal managers, the Committee published guiding principlesand key issues for implementing GPRA.\7 Our guide is intended tocomplement the Committee's work in assisting managers as theyimplement GPRA.  Our work has shown that although the steps andpractices discussed in this guide don't come quickly or easily, theycan serve as the fundamental building blocks to creating aresults-oriented organization. --------------------\5 See, for example, Transforming the Civil Service:  Building theWorkforce of The Future, Results Of A GAO-Sponsored Symposium(GAO/GGD-96-35, Dec.  26, 1995); Managing for Results:  ExperiencesAbroad Suggest Insights for Federal Management Reform(GAO/GGD-95-120, May 2, 1995); Managing For Results:  StateExperiences Provide Insights for Federal Management Reforms(GAO/GGD-95-22, Dec.  21, 1994); Government Reform:  Goal-Setting andPerformance (GAO/AIMD/GGD-95-130R, Mar.  27, 1995); Executive Guide: Improving Mission Performance Through Strategic InformationManagement and Technology (GAO/AIMD-94-115, May 1994).  Also see ourreports and testimonies included as footnotes and the Related GAOProducts section of this guide. \6 For a detailed discussion of our objectives, scope, andmethodology, see appendix II. \7 Implementation of the Government Performance and Results Act(GPRA), A Report on the Chief Financial Officer's Role and OtherIssues Critical to the Governmentwide Success of GPRA, ChiefFinancial Officers Council, GPRA Implementation Committee, May 1995. STEP 1:  DEFINE MISSION ANDDESIRED OUTCOMES============================================================ Chapter 2   Figure 2:  Define Mission and   Desired Outcomes   (See figure in printed   edition.)GPRA requires that federal agencies, no later than September 30,1997, develop strategic plans covering a period of at least 5 yearsand submit them to Congress and the Office of Management and Budget(OMB).  OMB provided guidance on the preparation and submission ofstrategic plans as a new part of its Circular No.  A-11--the basicinstructions for preparing the President's Budget--to underscore theessential link between GPRA and the budget process.  OMB requiredagencies to submit major parts of their strategic plans by June 7,1996. Strategic plans are intended to be the starting point for eachagency's performance measurement efforts.  Each plan must include acomprehensive mission statement based on the agency's statutoryrequirements, a set of outcome-related strategic goals, and adescription of how the agency intends to achieve these goals.  Themission statement brings the agency into focus.  It explains why theagency exists, tells what it does, and describes how it does it.  Thestrategic goals that follow are an outgrowth of this clearly statedmission.  The strategic goals explain the purposes of the agency'sprograms and the results they are intended to achieve. In crafting GPRA, Congress recognized that federal agencies do notexist in a vacuum.  As agencies develop their mission statements andestablish their strategic goals, they are required by the act toconsult with both Congress and their other stakeholders.  Further,agencies must be alert to the environment in which they operate; intheir strategic plans, they are required to identify the externalfactors that could affect their ability to accomplish what they setout to do. We found that leading results-oriented organizations consistentlystrive to ensure that their day-to-day activities support theirorganizational missions and move them closer to accomplishing theirstrategic goals.  In practice, these organizations see the productionof a strategic plan--that is, a particular document issued on aparticular day--as one of the least important parts of the planningprocess.  This is because they believe strategic planning is not astatic or occasional event.  It is, instead, a dynamic and inclusiveprocess.  If done well, strategic planning is continuous and providesthe basis for everything the organization does each day. For strategic planning to have this sort of impact, three practicesappear to be critical.  Organizations must (1) involve theirstakeholders; (2) assess their internal and external environments;and (3) align their activities, core processes, and resources tosupport mission-related outcomes.    PRACTICE 1:  INVOLVE   STAKEHOLDERS---------------------------------------------------------- Chapter 2:1Successful organizations we studied based their strategic planning,to a large extent, on the interests and expectations of theirstakeholders.  These organizations recognize that stakeholders willhave a lot to say in determining whether their programs succeed orfail.  Among the stakeholders of federal agencies are Congress andthe administration, state and local governments, third-party serviceproviders, interest groups, agency employees, and, of course, theAmerican public. In the federal government, stakeholder involvement is particularlyimportant as federal agencies face a complex political environment inwhich legislative mandates are often ambiguous.  Thus, the basicquestions that must be answered in crafting a mission statement--whatis our purpose, what products and services must we deliver to meetthat purpose, and how will that be done--will present a significantchallenge for many agencies.  While statutory requirements are to bethe starting point for agency mission statements, Congress, theexecutive branch, and other interested parties may all disagreestrongly about a given agency's mission and goals.  GPRA seeks toaddress such situations by requiring agencies to consult withCongress and other stakeholders to clarify their missions and reachagreement on their goals.  Full agreement among stakeholders on allaspects of an agency's efforts is relatively uncommon becausestakeholders' interests can differ often and significantly. Still, stakeholder involvement is important to help agencies ensurethat their efforts and resources are targeted at the highestpriorities.  Just as important, involving stakeholders in strategicplanning efforts can help create a basic understanding among thestakeholders of the competing demands that confront most agencies,the limited resources available to them, and how those demands andresources require careful and continuous balancing.  Because of itspower to create and fund programs, the involvement of Congress isindispensable to defining each agency's mission and establishing itsgoals.\8 This may entail identifying legislative changes that areneeded to clarify or modify Congress' intent and expectations or toaddress differing conditions and citizens' needs that have occurredsince the initial statutory requirements were established. Congressional consultations also may include additional guidance onCongress' priorities in those frequent cases where agencies have morethan one statutory mission. Involving customers is important as well.  An agency's customers arethe individuals or organizations that are served by its programs. This is not to say that contact between a federal agency and itscustomers is always direct.  Many federally mandated or federallyfunded services are dispensed through third parties, such as stateagencies, banks, or medical insurance providers.  In such cases,federal agencies face the particularly challenging task of balancingthe needs of customers, service providers, and other stakeholders,who at times may have differing or even competing goals. In our reviews of successful results-oriented organizations, we foundnumerous examples of organizations that achieved positive results byinvolving customers and other stakeholders in defining their missionsand desired outcomes.\9 Oregon, for one, developed consensus on itsstatewide strategic plan by bringing together such diversestakeholders as legislators, state agency officials, county and localgovernment officials, and community group representatives.  TheMinnesota Trade Office, for another, used surveys to obtain itsstakeholders' views on the degree to which the office wascontributing to its customers' export activities.  On the basis ofthe data it obtained, the Trade Office made program changes andimproved both its performance and its responsiveness. --------------------\8 Managing for Results:  Achieving GPRA's Objectives Requires StrongCongressional Role (GAO/T-GGD-96-79, Mar.  6, 1996). \9 GAO/GGD-95-22, Dec.  21, 1994.    CASE ILLUSTRATION:    ENVIRONMENTAL PROTECTION AGENCY---------------------------------------------------------- Chapter 2:2The Environmental Protection Agency (EPA) was established in 1970under a presidential reorganization plan in response to publicconcerns over unhealthy air, polluted rivers, unsafe drinking water,and haphazard waste disposal.  Congress gave EPA responsibility forimplementing federal environmental laws.  From the start, however,EPA lacked an overarching legislative mission, and its environmentalresponsibilities have yet to be integrated with one another.  As aresult, EPA could not ensure that it was directing its efforts towardthe environmental problems that were of greatest concern to citizensor posed the greatest risk to the health of the population or theenvironment itself.  Therefore, EPA decided in 1992 to launch theNational Environmental Goals Project, a long-range planninginitiative under which it would involve its stakeholders indeveloping measurable goals for EPA to pursue in improving thequality of the nation's environment. EPA designed its National Environmental Goals Project to produce aset of long-range environmental goals, including milestones to beachieved by 2005.  The agency recognized that while environmentalgoals should be grounded in science and factual analysis, they shouldbe based, as well, on the needs and expectations of the nation'scitizens.  In 1994, EPA initiated a series of nine public meetings tohear their views.  The meetings were held around the country andincluded environmental organizations, businesses, state and localgovernments, tribal governments, and other stakeholders.  To providea basis for discussion, EPA drafted and distributed to participants aset of goal statements and descriptive information on the 13 broadenvironmental goal areas that its staff considered to be of thegreatest national importance. EPA used the information it received at these public meetings torevise and better define these goals.  For example, the agency addedmilestones for managing and cleaning up radioactive waste, restoringcontaminated sites to productive use, and slowing habitat losses. Further, it added the goal of improving its dissemination ofenvironmental information and its other education efforts.  EPA foundthat its stakeholders' interests included how EPA does its coreprocesses--for example, the amount of flexibility it can offer to theregulated community.  EPA recognized these stakeholder interests in asummary report of its revised goals that it sent to Congress and itsother stakeholders in February 1995. EPA continued to involve stakeholders in the National EnvironmentalGoals Project by soliciting comments on the summary report.  Many ofEPA's stakeholders are businesses or other regulated entities thatwanted the agency to address such matters as the procedural costs ofenvironmental regulations.  EPA responded with a discussion of theoverall costs and benefits of controlling pollution.  At itsstakeholders' request, it provided trend data and laid out strategiesfor achieving its environmental milestones.  EPA recognizes thatinvolving stakeholders is an ongoing effort that needs to becontinued.  The proposed goals are to be sent again to federal,state, local, and tribal government stakeholders for another round ofreview later this year, and plans are being made for public review.   PRACTICE 2:  ASSESS THE   ENVIRONMENT---------------------------------------------------------- Chapter 2:3Good managers have understood for a long time that many forces--bothinside and outside their organizations--can influence their abilityto achieve their goals.  But even managers who try to stay alert tothese forces often gather their information anecdotally orinformally.  In contrast, the successful organizations we studiedmonitor their internal and external environments continuously andsystematically.  Organizations that do this have shown an ability toanticipate future challenges and to make adjustments so thatpotential problems do not become crises.\10 By building environmentalassessment into the strategic planning process, they are able to stayfocused on their long-term goals even as they make changes in the waythey intend to achieve them. Both the external and internal environments are important, andneither can be viewed independently of the other.  Assessing theexternal environment is particularly important, in part because somany external forces that fall beyond an organization's influence canpowerfully affect its chances for success.  For organizations bothpublic and private, external forces can include newly emergingeconomic, social, and technological trends and new statutory,regulatory, and judicial requirements.  An organization's internalforces include its culture, its management practices, and itsbusiness processes.  Today, federal agencies find that monitoringthese internal forces is especially important, given the effects offunding reductions and reorganizations.  The tools available toorganizations assessing the internal environment include programevaluations, employee surveys, independent audits, and reviews ofbusiness processes. --------------------\10 For a discussion of environmental monitoring as a critical aspectof strategic thinking, see Henry Mintzberg, The Fall and Rise ofStrategic Planning (New York:  Free Press and Prentice HallInternational, 1994).    CASE ILLUSTRATION:  UNITED   STATES CUSTOMS SERVICE---------------------------------------------------------- Chapter 2:4The missions of the Customs Service--the oldest federal agency--areto ensure that goods and persons entering and exiting the UnitedStates comply with all U.S.  laws and regulations, while alsofacilitating the legitimate movement of goods and persons throughU.S.  ports.  But long-standing management problems, includingweaknesses in strategic planning, had threatened the agency's abilityto adapt to changing demands.  Customs' strategic planning effortsnow focus on the dramatic changes occurring in its external andinternal environments and on the equally dramatic changes the agencywill need to make in response. Recognizing that the international trade environment has undergonemany changes in recent years, the Customs Service identified the newchallenges these changes brought it in its 1993 strategic plan.  Theclearest challenge for Customs would be to manage a workload that wasgrowing rapidly and that could not be expected to taper off.  Fromfiscal year 1986 to 1995, for example, total import entries increasedby 242 percent, from 11.1 million to 38.0 million.  During the sameperiod, passenger arrivals increased by 42 percent, from 304 millionto 431 million.  Customs anticipated that world trade would alsocontinue to accelerate.  During 1995 alone, approximately $761billion in merchandise was imported into the United States.  For therest of the decade, Customs expects that figure to grow by more than10 percent each year. Customs anticipated that trade issues would assume greater prominencein the coming years as developing countries continue toindustrialize, corporations continue to expand internationally, andtrade barriers continue to fall.  Further, the proliferation ofinternational trade agreements, such as the U.S.-Canada Free TradeAgreement of 1989, the North American Free Trade Agreement, and theGeneral Agreement on Tariffs and Trade, should lead to furtherincreases in trade and travel volume. Internally, Customs anticipated that as public pressures to reducethe federal deficit continued, no real growth would occur in theagency's funding.  Customs also anticipated attrition among its staffand a loss of valuable expertise due to that attrition.  Itdetermined that by 1998 about 10 percent, or about 2,000 employees,would be eligible to retire. All of these forces--external and internal--have caused the CustomsService to begin to reengineer its core processes, including thoserelated to the movement of people and cargo into the United Statesand the movement of cargo out of the United States.  For example, theagency is undertaking a major reorganization structured from theground up, using its 301 ports as its foundation.  While headquartersstaffing is to be streamlined, the staffing levels at the ports areto be maintained or increased.  Under the reorganization, portdirectors are to be given some of the authority previously exercisedat the district or regional levels. It is too soon to tell how effective Customs' reorganization will bein responding to the pressures it faces.  But by assessing itsexternal and internal environments, the agency came to see that itstraditional ways of pursuing its mission were no longer viable andthat major changes would be needed.    PRACTICE 3:  ALIGN ACTIVITIES,   CORE PROCESSES, AND RESOURCES---------------------------------------------------------- Chapter 2:5Leading organizations recognize that sound planning is not enough toensure their success.  An organization's activities, core processes,and resources must be aligned to support its mission and help itachieve its goals.  Such organizations start by assessing the extentto which their programs and activities contribute to meeting theirmission and desired outcomes.  As the organizations became moreresults-oriented, they often found it necessary to fundamentallyalter activities and programs so that they more effectively andefficiently produced the services to meet customers' needs andstakeholders' interests.  For example, we have traced the managementproblems of many federal agencies to organizational structures thatare obsolete and inadequate to modern demands.\11 As federal agenciesbecome more outcome-oriented, they will find that outmodedorganizational structures must be changed to better meet customerneeds and address the interests of stakeholders. As agencies align their activities to support mission-related goals,they should also make better linkages between levels of funding andtheir anticipated results.  Under a series of initiatives calledConnecting Resources to Results, OMB is seeking to adopt a greaterfocus on agencies' goals and performance in making funding decisions. For example, OMB fiscal year 1996 budget preparation guidance saidagencies were to identify key features of their streamlining plans(e.g., increased span of control, reduced organizational layers,and/or milestones for full-time equivalents) and encouraged agenciesto include performance goals and indicators in their budgetjustifications.\12 Whereas the agencies' fiscal year 1995 documentsdiscussed streamlining primarily in terms of the number of positionsto be eliminated, the fiscal year 1996 budget documents includeddiscussions about how proposed staff reductions could affect theagencies' performance.  Under OMB's guidance, agencies' fiscal year1997 budget requests were to contain a significantly greater amountof performance information to help define funding levels andprojected program results.  For the fiscal year 1998 budget, OMBplans to continue to increase the role of performance goals andinformation in guiding funding decisions. We also have found that leading organizations strive to ensure thattheir core processes efficiently and effectively supportmission-related outcomes.  These organizations rely increasingly on awell-defined mission to form the foundation for the key businesssystems and processes they use to ensure the successful outcome oftheir operations.  For example, many successful public and privateorganizations integrate their human resource management activitiesinto their organizational missions, rather than treating them as anisolated support function.\13 This sort of integrated approach mayinclude tying individual performance management, career developmentprograms, and pay and promotion standards to organizational mission,vision, and culture. Information management is another activity that organizations mustaddress in aligning their activities and processes.\14 Moderninformation management approaches, coupled with new informationtechnology, can make success more or less likely--depending on theway they are handled.  We found that successful organizations pursuesomething called strategic information management--that is,comprehensive management of information and information technology tomaximize improvements in mission performance.  Strategic informationmanagement will be an important part of any federal agency's attemptto implement GPRA successfully.  Managing better requires thatagencies have, and rely upon, sound financial and programinformation.  Strategic information management would lead to systemsthat would better provide federal agencies the data they need inconsidering ways to realign their processes, reduce costs, improveprogram effectiveness, and ensure consistent results with a lessbureaucratic organization.  Lacking these data, the agencies would bemissing one of the indispensable ingredients of successfulmanagement. --------------------\11 Government Management Issues (GAO/OCG-93-3TR, Dec.  1992). \12 Office of Management and Budget:  Changes Resulting From the OMB2000 Reorganization (GAO/GGD/AIMD-96-50, Dec.  29, 1995). \13 GAO/GGD-96-35, Dec.  26, 1995. \14 GAO/AIMD-94-115, May 1994.    CASE ILLUSTRATION:  FEDERAL   EMERGENCY MANAGEMENT AGENCY---------------------------------------------------------- Chapter 2:6Established in 1979, the Federal Emergency Management Agency (FEMA)is responsible for the coordination of civil emergency planning andmitigation as well as the coordination of federal disaster relief. FEMA is responsible for responding to floods, hurricanes,earthquakes, and other natural disasters.  Hurricane Hugo and theLoma Prieta earthquake in 1989 generated intense criticism of thefederal response effort.  Hurricane Andrew, which leveled much ofSouth Florida in 1992, raised further doubts as to whether FEMA wascapable of responding to disasters.  In 1993, FEMA's new Directorrefocused the agency on meeting its mission and aligning itsactivities to better serve the public. Since FEMA issued its mission statement in April 1993, it has beenreexamining its approach to limiting deaths and property losses fromdisasters.  Traditionally, FEMA had concentrated its efforts onpost-disaster assistance.  But after taking a hard look at itsperformance, FEMA concluded that it could better fulfill its missionby addressing the range of activities available before, during, andafter disaster strikes. As part of its first agencywide strategic planning effort, FEMAcomprehensively reviewed its programs and structures and initiated amajor reorganization in November 1993.  FEMA concluded that allemergencies share certain common traits, pose some common demands,and ought to be approached functionally.  FEMA's new, "all-hazard"mission takes a multifaceted, sequential approach to managingdisasters:  mitigation, preparedness, response, and recovery. FEMA now focuses its disaster planning and response processes onsteps that need to be taken, not just during and after the event, butin advance.  To build preparedness, FEMA now seeks to buildpartnerships with other federal, state, and local organizations.  Forexample, the agency is working with local governments and thebuilding industry to strengthen building codes so that structureswill be better able to withstand disasters.  It has also launched aneffort to increase the number of flood insurancepolicyholders--something that had not been a traditional focus of theagency but that is now understood as being critical to helpingindividuals recover from disasters.  By more closely aligning itsactivities, processes, and resources with its mission, FEMA appearstoday to be better positioned to accomplish that mission. STEP 2:  MEASURE PERFORMANCE============================================================ Chapter 3   Figure 3:  Measure Performance   (See figure in printed   edition.)The second key step that successful results-oriented organizations westudied take--after defining their missions and desired outcomes--isto measure their performance.  Measuring performance allows theseorganizations to track the progress they are making toward theirgoals and gives managers crucial information on which to base theirorganizational and management decisions.  Leading organizationsrecognize, as well, that performance measures can create powerfulincentives to influence organizational and individual behavior. GPRA incorporates performance measurement as one of its mostimportant features.  Under the act, executive branch agencies arerequired to develop annual performance plans that use performancemeasurement to reinforce the connection between the long-termstrategic goals outlined in their strategic plans and the day-to-dayactivities of their managers and staff.  The annual performance plansare to include performance goals for an agency's program activitiesas listed in the budget, a summary of the necessary resources toconduct these activities, the performance indicators that will beused to measure performance, and a discussion of how the performanceinformation will be verified.  For the first time, GPRA requires thatagencies' annual program performance planning efforts be linkeddirectly to their budget estimates and obligations.  This linkage isachieved by requiring performance goals and measures for agencies'program activities that are included in their budget requests. Congress recognized that the activity structure in the budget of theUnited States government is not consistent across various programs. As a result, Congress expects agencies to consolidate, aggregate, ordisaggregate the lists of program activities appearing in the budgetaccounts. The first of these annual performance plans is to cover fiscal year1999; each agency is to submit its plan to OMB in the fall of 1997. However, OMB is requiring descriptions of the proposed performancegoals and indicators for fiscal year 1999 with the agency's fiscalyear 1998 budget request. In developing GPRA, Congress recognized that federalagencies--unaccustomed as they are to the practice--may find thatdeveloping performance measures is a difficult and time-consumingtask.  As a result, it provided for selected agencies and programs topilot GPRA's goal-setting and performance measurement requirementsbefore these are applied governmentwide.  Our work with leadingresults-oriented organizations confirmed that many agencies may needyears to develop a sound set of performance measures. We learned, as well, that agencies that were successful in measuringtheir performance generally had applied two practices.  First, theydeveloped performance measures based on four characteristics.  Thesemeasures were (1) tied to program goals and demonstrated the degreeto which the desired results were achieved, (2) limited to a vitalfew that were considered essential for producing data fordecisionmaking, (3) responsive to multiple priorities, and (4)responsibility-linked to establish accountability for results. Second, recognizing that they must balance their ideal performancemeasurement systems against real-world considerations, such as thecost and effort involved in gathering and analyzing data, theorganizations we studied made sure that the data they did collectwere sufficiently complete, accurate, and consistent to be useful indecisionmaking.    PRACTICE 4:  PRODUCE A SET OF   PERFORMANCE MEASURES AT EACH   ORGANIZATIONAL LEVEL THAT   DEMONSTRATE RESULTS, ARE   LIMITED TO THE VITAL FEW,   RESPOND TO MULTIPLE PRIORITIES,   AND LINK TO RESPONSIBLE   PROGRAMS---------------------------------------------------------- Chapter 3:1As the leading organizations we studied strive to align theiractivities and resources to achieve mission-related goals, they alsoseek to establish clear hierarchies of performance goals andmeasures.  Under these hierarchies, the organizations try to link thegoals and performance measures for each organizational level tosuccessive levels and ultimately to the organization's strategicgoals.  They have recognized that without clear, hierarchicallylinked performance measures, managers and staff throughout theorganization will lack straightforward roadmaps showing how theirdaily activities can contribute to attaining organizationwidestrategic goals and mission.  Federal agencies that are developingsuch hierarchies for their organizations are finding thatorganizationwide performance measurement efforts take time andrequire the active involvement of staff at all organizational levels. The experiences of leading state, foreign, and federal governmentsshow that at least four characteristics are common to successfulhierarchies of performance measures.\15These characteristics include the following: Demonstrate results:  Performance measures should tell eachorganizational level how well it is achieving its goals.  Yet, simpleas this principle may appear, it poses an especially difficultchallenge for federal managers, for whom the link between federalefforts and desired outcomes is often difficult to establish and maynot, in fact, be apparent for years.  Research programs provide oneexample.  So do many health and welfare programs that are deliveredjointly with state and local governments and third-party servicedeliverers. Limited to the vital few:  The number of measures for each goal at agiven organizational level should be limited to the vital few.  Thosevital few measures should cover the key performance dimensions thatwill enable an organization to assess accomplishments, makedecisions, realign processes, and assign accountability. Organizations that seek to manage an excessive number of performancemeasures may risk creating a confusing excess of data that willobscure rather than clarify performance issues.  Limiting the numberof performance measures to the vital few at each organizational levelwill not only keep the focus where it belongs, it will help ensurethat the costs involved in collecting and analyzing the data do notbecome prohibitive.  As a result, lower organizational levels may usedifferent measures and goals from those meaningfully or appropriatelyincluded in the organization's annual performance plan.  Likewise,agencies will have more goals and measures than can be meaningfullyor appropriately included in the governmentwide performance plan OMBwill develop under GPRA.  However, as performance plans are compiledfor higher organizational levels, the consolidation and possibleexclusion of some goals and measures does not mean that those goalsand measures are not important to guide the efforts of the lowerlevels and should still be monitored. Respond to multiple priorities:  Government agencies often face avariety of interests whose competing demands continually forcepolicymakers and managers to balance quality, cost, customersatisfaction, stakeholder concerns, and other factors.  Performancemeasurement systems must take these competing interests into accountand create incentives for managers to strike the difficult balanceamong competing demands.  Performance measurement efforts thatoveremphasize one or two priorities at the expense of the others mayskew the agency's performance and keep its managers from seeing thewhole picture. Link to responsible programs:  Performance measures should be linkeddirectly to the offices that have responsibility for making programswork.  A clear connection between performance measures and programoffices helps to both reinforce accountability and ensure that, intheir day-to-day activities, managers keep in mind the outcomes theirorganization is striving to achieve.  This connection at the programoffice helps to lay the groundwork for accountability as measuresadvance through the agency.  By helping to lay the groundwork foraccountability, a connection between performance measures and programoffices also provides a basis for determining the appropriate degreeof operational authority for various organizational levels.  Managersmust have the authority and flexibility for achieving the results forwhich they are to be held accountable. --------------------\15 Managing for Results:  Critical Actions for Measuring Performance(GAO/T-GGD/AIMD-95-187, June 20, 1995).    CASE ILLUSTRATION:  NATIONAL   OCEANIC AND ATMOSPHERIC   ADMINISTRATION---------------------------------------------------------- Chapter 3:2The mission of the National Oceanic and Atmospheric Administration(NOAA) is to describe and predict changes in the earth's environment,as well as to conserve and manage the nation's coastal and marineresources to ensure sustainable economic opportunities.  NOAAconcluded in its 1995 strategic plan that the nation's ability toprepare for severe weather events, including tornadoes,thunderstorms, hurricanes, and flash flooding, depends on the qualityand timeliness of the agency's observations, assessments, andinformation delivery.  Through strategic planning, NOAA evaluated howbest to accomplish its mission and then put into place thoseperformance measures essential to demonstrating the extent to whichit was attaining its desired outcomes. NOAA determined that the most important business of its short-termwarning and forecast weather services was to predict the time andlocation of weather events and to do so with accuracy.  Rather thansimply count the number of forecasts it made--that is, to simplygather data on its activity level--NOAA began to measure the extentto which it could increase the lead time or advance notice it gavethe public prior to severe weather events.  It decided, in otherwords, to measure what counts. NOAA reported that from fiscal year 1993 to fiscal year 1995, itslead time for predicting tornadoes increased from 7 minutes to 9minutes, and the accuracy of its predictions increased from 47percent of the time to 60 percent of the time.  For fiscal year 1996,NOAA has set targets of 10 minutes and 64 percent, respectively. NOAA also measured how accurately it could predict the range wherehurricanes would reach land, given a 24-hour lead time.  From fiscalyear 1993 to fiscal year 1995, its accuracy improved from 185kilometers (115 miles) to 134 kilometers (83 miles).  It credited theimprovement to its installation in June 1995 of a new hurricanetracking model.  On the basis of fiscal year 1995 performance, NOAArevised its fiscal year 1996 target from 155 kilometers (96 miles) to150 kilometers (93 miles).  Although the new fiscal year 1996 targetof 150 kilometers is higher than the fiscal year 1995 actualperformance of 134 kilometers, NOAA wants to test the new modelthrough at least another hurricane season before radically revisingits targets for future years. The significance of earlier and more accurate hurricane warnings isenormous.  Most importantly, they help prevent deaths and injuries. But they also save money, because earlier and more accuratepredictions of hurricane tracks and intensities can reduce the sizeof the warning areas in which people are advised to prepare for theevent.  NOAA calculated that for each hurricane, the public'spreparation and evacuation costs exceed $50 million, but improvedpredictions can cut that cost by $5 million.  In addition, NOAAofficials believe that the public takes more accurate forecasts moreseriously--which helps lessen loss of life and property.    PRACTICE 5:  COLLECT   SUFFICIENTLY COMPLETE,   ACCURATE, AND CONSISTENT DATA---------------------------------------------------------- Chapter 3:3As the organizations we examined developed their performancemeasures, they paid special attention to issues relating to datacollection.  Although they recognized that adequate and reliableperformance data are indispensable to decisionmaking, they were alsoaware that collecting the data can be costly and difficult.  As aresult, as agencies implement GPRA, they will have to balance thecost of data collection efforts against the need to ensure that thecollected data are complete, accurate, and consistent enough todocument performance and support decisionmaking at variousorganizational levels. As the experiences of these organizations demonstrated, managersstriving to reach organizational goals must have information systemsin place to provide them with needed information.\16 In Texas, forexample, officials said that the state restructured its statewideinformation systems to include the missions and goals of itsagencies, specific strategies for achieving objectives, and measuresof progress.  The system also linked budgeted expenditures,accounting information, and performance data. Our work has shown consistently that the federal government's basicfinancial and information management systems are woefully out of dateand incapable of meeting modern needs for fast, reliable, andaccurate information--particularly as these needs relate to financialreporting and program costs.  As the leading organizations we studiedbecame more results-oriented, many of them made significantinvestments in their information management systems.  Many federalagencies will need to do the same.  But agencies can keep costs downby applying the performance measurement principles these leadingorganizations have employed and also--where they can--by buildingperformance data collection into the processes that govern dailyoperations, rather than creating entirely new and separate datacollection systems. --------------------\16 GAO/GGD-95-22, Dec.  21, 1994.    CASE ILLUSTRATION:  NATIONAL   HIGHWAY TRAFFIC SAFETY   ADMINISTRATION---------------------------------------------------------- Chapter 3:4The National Highway Traffic Safety Administration's (NHTSA) missionis to reduce casualties and economic losses resulting from motorvehicle crashes.  To accomplish its mission, NHTSA pursues two mainstrategies:  setting and enforcing safety performance standards formotor vehicles and promoting safe driving behavior.  After it wasestablished in 1970, NHTSA concluded that reliable crash statisticsdatabases were needed.  The need was twofold:  to help in identifyingand analyzing traffic safety problems and for evaluating theeffectiveness of motor vehicle safety standards and highway safetyinitiatives.  To fill this need, NHTSA developed data collectionsystems derived from existing data sources and has taken steps toensure the completeness, accuracy, and consistency of these data. NHTSA has developed two data systems that, taken together, serve as asingle source of motor vehicle crash statistics.  The Fatal AccidentReporting System has enabled NHTSA to document that the rate for oneof its desired outcomes--reduction in the fatality rate--decreasedfrom 2.3 to an estimated 1.7 per 100 million vehicle miles of travelfrom 1988 to 1995.\17 Also, NHTSA has used data from the GeneralEstimates System to document another one of its desired outcomes--areduction in injury rates--from 169 to an estimated 138 injuries per100 million vehicle miles of travel from 1988 to 1995. The Fatal Accident Reporting System contains accident data providedby the 50 states, Puerto Rico, and the District of Columbia. According to NHTSA documents, throughout the states, Puerto Rico, andthe District of Columbia, trained state employees gather and transmitthese data to NHTSA's central computer database in a standard format. State employees obtain data solely from each state's existingdocuments--including police accident reports, vehicle registrationfiles, and vital statistics records--and then enter them into acentral computer database.  NHTSA analysts periodically review asample of the cases. The General Estimates System contains data from a nationallyrepresentative sample of police-reported accidents.  To compile thedatabase, NHTSA data collectors randomly sample about 48,000 reportseach year from approximately 400 police jurisdictions in 60 sitesacross the country, according to NHTSA documents.  NHTSA staff theninterpret and code the data directly from the reports into a centralelectronic data file.  The data are checked for consistency duringboth coding and subsequent processing. NHTSA has recognized that its data have limitations.  For example,the General Estimates System is based on police reports, but varioussources suggest that about half of the motor vehicle crashes in thecountry are not reported to police, and the majority of theseunreported crashes involve only minor property damage and nosignificant injury.  A NHTSA study of the costs of motor vehicleinjuries estimated the total count of nonfatal injuries at over 5million compared to the General Estimates System estimate for thatyear of 3.2 million.  NHTSA intends to study the unreported injuryproblem. --------------------\17 Vehicle miles of travel is published by the Federal HighwayAdministration, as reported by state highway agencies, and is basedon formal guidance provided by the Administration. STEP 3:  USE PERFORMANCEINFORMATION============================================================ Chapter 4   Figure 4:  Use Performance   Information   (See figure in printed   edition.)The third key step in building successful results-orientedorganizations--after establishing an organizational mission and goals and building aperformance measurement system--is to put performance data to work. Managers should use performance information to continuously improveorganizational processes, identify performance gaps, and setimprovement goals.\18When the CFO Act and GPRA are fully implemented, decisionmakers areto routinely receive the performance and cost information they needto assess their programs and make informed decisions.  Congressionaldecisionmaking should also benefit.  GPRA was intended, in part, toimprove congressional decisionmaking by giving Congress comprehensiveand reliable information on the extent to which federal programs arefulfilling their statutory intent.  The act requires that each agencyreport annually to the President and to Congress on itsperformance--specifically, on the extent to which it is meeting itsannual performance goals and the actions needed to achieve or modifythose goals that have not been met.  Annual performance reports areintended to provide important information to agency managers,policymakers, and the public on what each agency accomplished withthe resources it was given.  The first of these reports, coveringfiscal year 1999, is due by March 31, 2000. In crafting GPRA, Congress recognized that different informationusers would have differing information needs.  Federal agencies mustdetermine what information is both relevant and essential todifferent internal and external information users and include onlythe information the users require.\19 Most important, agency managersneed performance information to ensure that programs meet intendedgoals, assess the efficiency of processes, and promote continuousimprovement.  Congress needs information on whether and in whatrespects a program is working well or poorly to support its oversightof agencies and their budgets.\20 Agencies' stakeholders needperformance information to accurately judge program effectiveness. In short, we have found that leading organizations that progressedthe farthest to results-oriented management did not stop afterstrategic planning and performance measurement.  They applied theiracquired knowledge and data to identify gaps in their performance,report on that performance, and finally use that information toimprove their performance to better support their missions. --------------------\18 GAO/T-GGD/AIMD-95-187, June 20, 1995. \19 Chief Financial Officers Council, Streamlining GovernmentwideStatutory Reports (Jan.  17, 1995). \20 Managing for Results:  Status of the Government Performance andResults Act (GAO/T-GGD-95-193, June 27, 1995); and ProgramEvaluation:  Improving the Information Flow to the Congress(GAO/PEMD-95-1, Jan.  30, 1995).    PRACTICE 6:  IDENTIFY   PERFORMANCE GAPS---------------------------------------------------------- Chapter 4:1Performance data can have real value only if they are used toidentify the gap between an organization's actual performance leveland the performance level it has identified as its goal.  Once theperformance gaps are identified for different program areas, managerscan determine where to target their resources to improve overallmission accomplishment.  When managers are forced to reduce theirresources, the same analysis can help them target reductions to keepto a minimum the threat to their organization's overall mission. The leading organizations we studied recognized that improvementgoals should flow from a fact-based performance analysis and berooted in organizational missions.\21Such organizations typically assess which of their processes are ingreatest need of improvement in terms of cost, quality, andtimeliness.  By analyzing the gap between where they are and wherethey need to be to achieve desired outcomes, management can targetthose processes that are in most need of improvement, set realisticimprovement goals, and select an appropriate process improvementtechnique.\22 One technique these organizations used isbenchmarking--comparing their processes with those of private andpublic organizations that are thought to be the best in their fields. By benchmarking its own processes against those of the best in thebusiness, an organization can learn how much change it needs to makeand what changes might be the right ones. --------------------\21 Government Reform:  Using Reengineering and Technology to ImproveGovernment Performance (GAO/T-OCG-95-2, Feb.  2, 1995). \22 GAO/T-GGD/AIMD-95-187, June 20, 1995.    CASE ILLUSTRATION:  VETERANS   HEALTH ADMINISTRATION---------------------------------------------------------- Chapter 4:2The Veterans Health Administration (VHA) in the Department ofVeterans Affairs runs one of the nation's largest medical caredelivery systems, consisting of a network of medical centers, nursinghomes, domiciliaries, and outpatient clinics that provide health careservices to nearly 2.8 million patients each year.  VHA recognizesthat its ability to survive growing market pressures, answercriticisms of health care quality, and sustain and improve servicesto an aging veteran population depends on its ability to analyze datato pinpoint areas needing change and improvement.  VHA has initiatednumerous studies to identify performance gaps.  With better data inhand, VHA is taking actions to improve its products and services. VHA has provided medical care to veterans for over 60 years. Traditionally, however, the agency has lacked the sort of data neededto assess the quality, cost, and effectiveness of its care.  VHA'scurrent data analysis efforts are structured to provide caregiverswith improved data on medical outcomes.  It has begun to use thisperformance information to improve service to veterans. An example is VHA's effort to benchmark the success of cardiacsurgeries in VHA facilities.  VHA's database, which contains over51,000 records on cardiac surgical outcomes, is risk-adjusted forseverity of illness on the basis of 54 variables, including age andprevious medical history, collected prior to surgery.  VHA was ableto identify the differences in surgical outcomes among the 43 VHAmedical centers performing cardiac surgery.  On the basis of theseanalyses, VHA recommended a number of techniques and processes forshortening the postoperative hospital stay, decreasing excessivediagnostic testing, and reducing the risk of postoperative infectionsor complications.  According to VHA, because it adopted these andother techniques, the performance data show that cardiac teamslowered their mortality rates for all cardiac procedures over thelast 8 years by an average of 13 percent. Another VHA data analysis effort is the External Peer Review Program. The program compares VHA medical centers' performances againstestablished community standards.  As part of the effort, panelscomposed of physicians not affiliated with VHA review medical recordsto determine if community standards have been met.  One performancegap VHA identified through this benchmarking was the low vaccinationrate of elderly and chronically ill VHA patients who are at high riskfor contracting one type of potentially fatal pneumonia.  VHA hasworked with the National Institute on Aging in the Department ofHealth and Human Services and the American Lung Association to raiseits pneumonia immunization rate for these patients from 19 percent to29 percent over the past 2 years. VHA also is analyzing performance data to switch some of its focusfrom inpatient to ambulatory care.  For example, according to VHA,after careful data analysis, its medical center in Little Rock,Arkansas, determined that only a small percentage of the patientsadmitted to its 28-day inpatient detoxification program needed acutemedical attention.  As a result, the program was converted in fiscalyear 1995 to an outpatient program with only a small inpatientcapacity.  The center reportedly now serves more patients with eightfewer full-time staff members and anticipates that savings from thefirst year of the new outpatient program will be $600,000--with nolessening in the quality of patient care.    PRACTICE 7:  REPORT PERFORMANCE   INFORMATION---------------------------------------------------------- Chapter 4:3No picture of what the government is accomplishing with thetaxpayers' money can be complete without adequate program cost andperformance information.  But this information must be presented in away that is useful to the many audiences who rely on it to help themassess and manage federal programs.\23 Viewing program performance inlight of program costs--for instance, by establishing the unit costper output or outcome achieved--can be important on at least twolevels.  First, it can help Congress make informed decisions. Second, it can give the taxpayers a better understanding of what thegovernment is providing in return for their tax dollars. Consistent with GPRA's requirement that annual performance plans betied to budget requests, the annual performance reports, which are toreport progress toward achieving the goals established in the plans,are to link levels of performance to the budget expenditures. Directly calculating unit cost information will likely become morewidespread when the Government Management Reform Act of 1994 (GMRA)is implemented.  GMRA authorized OMB, upon proper notification toCongress, to consolidate and simplify management reports.  The CFOCouncil has proposed that agencies prepare two annual reports:  aPlanning and Budgeting Report and an Accountability Report.  The twoconsolidated reports would be used to present each agency's pastfinancial and program performance and provide a roadmap for itsfuture planning and budgeting actions.  At present, OMB is having sixagencies produce Accountability Reports on a pilot basis.  TheAccountability Report would eliminate the separate requirements undervarious laws--such as GPRA, the Federal Managers' Financial IntegrityAct, the CFO Act, and the Prompt Payment Act. --------------------\23 Financial Management:  Continued Momentum Essential to AchieveCFO Act Goals (GAO/T-AIMD-96-10, Dec.  14, 1995).    CASE ILLUSTRATION:  GPRA PILOT   PROJECTS' FISCAL YEAR 1994   PERFORMANCE REPORTS---------------------------------------------------------- Chapter 4:4GPRA requires that each federal agency report annually on itsperformance-- specifically, on the degree to which the agency ismeeting its annual performance goals and on the actions needed toachieve those goals that have not been met.  Under GPRA, OMB wasrequired to select agencies to pilot GPRA performance planning andreporting requirements.  Forty-four pilot projects submitted reportsfor the first round of performance reporting in 1995.  We identifiedsome individual features that when viewed as a whole, appear to havethe potential for enhancing the general usefulness of futureperformance reports in providing decisionmakers and the public withthe information needed to assess progress.\24 These features wouldalso be appropriate for GMRA accountability reports. Our initial observations suggest that GPRA performance reports arelikely to be more useful if they  -- describe the relationship between the agency's annual     performance and its strategic goals and mission,  -- include cost information,  -- provide baseline and trend data,  -- explain the uses of performance information,  -- incorporate other relevant information, and  -- present performance information in a user-friendly manner. By describing how the annual performance information it has reportedrelates to its strategic goals and mission, an agency can help itscustomers and stakeholders understand the relationship between theyear's accomplishments and the agency's long-range goals and reasonfor existence.  By including cost information--ideally, unit cost peroutput or outcome--the agency can demonstrate the cost-effectivenessand productivity of its program efforts.  In addition, by providingbaseline and trend data--which show the agency's progress overtime--the agency can give decisionmakers a more historicalperspective within which to compare the year's performance withperformance in past years.  Similarly, by explaining the uses of theperformance information--such as the actions the agency has taken oridentified as needed, based on the data--the agency can helpdecisionmakers judge the reasonableness of its performance goals anddecide upon actions they may need to take to improve the agency'sperformance.  The report should include any other information that isrelevant--such as the limitations in the quality of the reporteddata--that users of the report may need to help them betterunderstand the performance data and its context.  It is important, aswell, that the text be understandable to the nontechnicalreader--that it use clearly defined terms and appropriate,user-friendly tables and graphs to convey information as readily aspossible. --------------------\24 GPRA Performance Reports (GAO/GGD-96-66R, Feb.  14, 1996).    PRACTICE 8:  USE PERFORMANCE   INFORMATION TO SUPPORT MISSION---------------------------------------------------------- Chapter 4:5As efforts continue to reduce federal spending, policymakers and thepublic alike are reexamining the federal government's spendingpriorities.  Federal agencies are feeling the pressure to demonstratethat they are putting the taxpayers' money to sound use.  They areexpected to demonstrate improved performance even as they cutcosts--two simultaneous demands that are driving the trend towardresults-oriented government. As they focus on the outcomes they hope to achieve, federal managersincreasingly are finding that the traditional ways they measuredtheir success--and thus the traditional ways they did business andprovided services--are no longer appropriate or practical.  Forexample, the new focus on outcomes is prompting some federal agenciesto alter the approach of their programs, including working moreclosely with states and local governments and businesses.  Asagencies create information systems to provide them with cost andperformance data, they discover that having the facts gives them abasis for focusing their efforts and improving their performance.    CASE ILLUSTRATION:  COAST GUARD---------------------------------------------------------- Chapter 4:6The mission of the Coast Guard's Office of Marine Safety, Securityand Environmental Protection is to protect the public, theenvironment, and U.S.  economic interests through the prevention andmitigation of marine incidents.  In the past, the Coast Guard'smarine safety program concentrated on the physical condition ofvessels, through activities such as inspections and certifications. The program focused less attention on the human factors thatcontribute to marine safety.  But as the office became moreoutcome-oriented and made more extensive use of performanceinformation, it began to redirect its safety efforts.  Coast Guarddata indicate that its mission-effectiveness is now dramaticallyimproved. Traditionally, the Coast Guard based its marine safety efforts oninspections and certifications of vessels.  It measured itsperformance by counting outputs, such as the number of priorinspections and outstanding inspection results.  But the data onmarine casualties indicated that accidents were often caused, not bydeficiencies in the vessels or other factors, but by human error. For example, towing industry data for 1982 through 1991 showed that18 percent of reported casualties were caused by equipment andmaterial failures, 20 percent by environmental and other factors, and62 percent by human factors. Putting this information to use, the Coast Guard changed the focus ofits marine safety program from outputs to outcomes in its firstbusiness plan, dated January 1994.  After all, it came to recognize,the mission of the marine safety program was not to do more andbetter inspections of vessels, but to save lives.  As a result, theCoast Guard shifted its resources and realigned its processes awayfrom inspections and toward other efforts to reduce marinecasualties.  In addition, it identified a significant role for thetowing industry in the marine safety program and looked foropportunities to work with its stakeholders in the towing industry toreduce casualties in their field. The Coast Guard and the towing industry worked to build the knowledgeand skills of entry-level crew members in the industry.  The CoastGuard and the towing industry jointly developed training andvoluntary guidelines to reduce the causes of fatalities.  This jointeffort contributed to a significant decline in the reported towingindustry fatality rate:  from 91 per 100,000 industry employees in1990 to 27 per 100,000 in 1995. The marine safety program apparently not only improved its missioneffectiveness, but did so with fewer people and at lower cost.  Sincethe Coast Guard's marine safety program became a GPRA pilot programin fiscal year 1994, the number of direct program personnel declinedand its budget was reduced by 2 percent.  According to the CoastGuard, the program achieved its results by giving field commandersgreater authority and by investing in activities and processes thatwent most directly to the goal of reducing risks on the water. LEADERSHIP PRACTICES REINFORCEGPRA IMPLEMENTATION============================================================ Chapter 5   Figure 5:  Leadership Practices   Reinforce GPRA Implementation   (See figure in printed   edition.)GPRA will not succeed without the strong commitment of the federalgovernment's political and senior career leadership.  Only they canensure that each agency's strategic planning and performancemeasurement efforts will become the basis for its day-to-dayoperations.  Moreover, only they can ensure that results-orientedmanagement will endure despite the customarily high rate of turnoveramong political appointees.\25 Some of the practices they can take toreinforce results-oriented management are to  -- devolve decisionmaking authority within a framework of     mission-oriented processes in exchange for accountability for     results,  -- create incentives to encourage a focus on outcomes,  -- build expertise in the necessary skills, and  -- integrate management reforms. If GPRA is to thrive over the long run, its concepts need to be madea part of organizational culture.  For that to happen, the topleadership in each agency has to initiate results-orientedmanagement, keep the agency focused on it, and embed its principlesin the organization's basic approach to doing business.\26--------------------\25 Political Appointees:  Turnover Rates in Executive SchedulePositions Requiring Senate Confirmation (GAO/GGD-94-115FS, Apr.  21,1994). \26 Organizational Culture:  Techniques Companies Use to Perpetuateor Change Beliefs and Values (GAO/NSIAD-92-105, Feb.  27, 1992).    PRACTICE 9:  DEVOLVE   DECISIONMAKING WITH   ACCOUNTABILITY---------------------------------------------------------- Chapter 5:1Leading organizations we studied create a set of mission-relatedprocesses and systems within which to operate, but they then givetheir managers extensive authority to pursue organizational goalswhile using those processes and systems.  These organizations investthe time and effort to understand their processes and how thoseprocesses contribute to or hamper mission accomplishment.  They thenseek to ensure their processes provide managers at eachorganizational level with the authority and flexibility they need tocontribute to the organization's mission.  Allowing managers to bringtheir judgment to bear in meeting their responsibilities, rather thanhaving them merely comply with overly rigid rules and standards, canhelp them make the most of their talents and lead to more effectiveand efficient operations. In our work with foreign countries that have adopted results-orientedmanagement, we found that two reforms in particular were aimed atenhancing accountability among line managers:  simplifying the rulesfor such things as budgeting and human resource management whiledevolving decisionmaking authority.\27 These two reforms wereundertaken in exchange for managers assuming greater accountabilityfor the results of their programs.  Managers generally welcomed theirnew authority to make spending, personnel, and operational decisionsthat had formerly been made by central authorities.  But althoughthese countries were generally satisfied with the progress they hadmade, they continued to struggle with a number of important issues,such as the acceptable level of risk and the extent to whichdecisionmaking authority should be devolved to a given organizationallevel. --------------------\27 GAO/GGD-95-120, May 2, 1995.    CASE ILLUSTRATION:  ARMY CORPS   OF ENGINEERS---------------------------------------------------------- Chapter 5:2The U.S.  Army Corps of Engineers' Civil Works Directorate'sOperation and Maintenance Program is responsible for the stewardshipof dams, levees, and other parts of the water resourcesinfrastructure constructed by the Corps.  Operation and maintenanceexpenditures had become by fiscal year 1990 the single largestindividual program item in the Corps' budget.  In 1991, faced withrising budget pressures, a growing project inventory, and the need tobecome more results-oriented, the Corps initiated a comprehensivereview of its civil operation and maintenance program. One major finding of the Corps' 1993 plan of improvement was theburdensome number of internal levels of review.  At the majority ofproject sites, for example, procurement of items costing less than$25,000 required between one and five signatures; each approvalbeyond the first one added to the time required for the procurementand created inefficiency, revenue loss, and a potential danger to thestaff and public when safety corrections were delayed. To remedy this situation, the Corps changed its processes bydecentralizing its organizational structure and giving projectmanagers new decisionmaking authority to help them achieve thedesired outcomes.  The intent of these changes was to put keyoperational decisions in the hands of the managers who were closestto the point of customer service.  These managers could now focus on,and be held accountable for, achieving goals instead of merelycomplying with rules.  Now procurements of up to $25,000 can beapproved by a single individual. As part of this new approach, the Corps reformed its processes,revising its policies and procedures to ensure that only those thatwere necessary remained.  It achieved this reduction, by and large,by indicating "what" was to be accomplished and leaving the "how" tothe initiative of project staff.  Eighty-nine engineering regulationswere thereby consolidated into 7, and the number of pages of Corps'regulations was reduced from 1,596 to 306. This streamlining of its organization and processes allowed the Corpsto reduce the number of its management levels.  By the Corps'estimate, the savings created amounted to about $6 million annuallyand a reduction of 175 full-time equivalent staff years.    PRACTICE 10:  CREATE INCENTIVES---------------------------------------------------------- Chapter 5:3Across government, the best incentive Congress and the executivebranch can apply to foster results-oriented management is to useperformance measurement data in their policy, program, and resourceallocation decisions and to provide agencies with the authority andflexibility to achieve results.  Like Congress and the executivebranch, an agency's top political and career leadership can encouragea greater accountability for results by providing managers at eachlevel in the organization with the appropriate authority andflexibility to obtain those results. Successful organizations we studied defined their missions clearlyand communicated them to their employees--particularly to theirmanagers--so that each one would understand his or her contribution. At both the organizational and managerial levels, accountabilityrequires results-oriented goals and appropriate performance measuresthrough which to gauge progress.  Our study of several leadingforeign governments, however, showed that although there was generalagreement on how to hold organizations accountable for results, therewas as yet no such agreement on how best to hold individual managersaccountable.\28 New Zealand and the United Kingdom held their programmanagers accountable for efficiently providing specific goods andservices.  Australia and Canada, on the other hand, hold theirprogram managers accountable for evaluating the overall effectivenessof their programs. Congress and the executive branch continue to explore formal ways tohold individual managers accountable for results.  At the agencylevel, however, informal incentives are available to leaders toencourage results-oriented management.  Through meetings and personalcontacts, for example, leaders can let managers and staff know oftheir commitment to achieving the agency's goals and to keeping thesegoals in mind as they pursue their day-to-day activities. --------------------\28 GAO/GGD-95-120, May 2, 1995.    CASE ILLUSTRATION:  DEPARTMENT   OF VETERANS AFFAIRS---------------------------------------------------------- Chapter 5:4The Department of Veterans Affairs (VA) comprises three agencies thatprovide services and benefits to veterans.  The elevation of VA tocabinet-level status in 1989 spurred the department to make internalmanagement improvements.  To recognize and reinforce results-orientedmanagement, VA instituted in 1992 a formal recognition program forquality achievement. The Robert W.  Carey Quality Award is VA's most prestigious award forquality achievement.  It is named for Robert W.  Carey, who, as theDirector of VA's Philadelphia Regional Office, was a "Quality Leader"and champion of excellence in the federal government.  The CareyAward helps promote quality management within VA by giving thedepartment a prominent means of recognizing high-performing offices,encouraging outcome-oriented practices, and educating VA employeesabout the benefits of results-oriented management and customerservice.  According to a VA official, the Carey Award is valuable, inpart, because VA offices that want it must apply for it and theapplication itself becomes a useful self-assessment tool. VA announced its first Carey Award in 1992.  There is one overalltrophy winner annually along with several category winners.  Therehave been 20 winners to date.    PRACTICE 11:  BUILD EXPERTISE---------------------------------------------------------- Chapter 5:5To make the most of results-oriented management, staff at all levelsof the organization must be skilled in strategic planning,performance measurement, and the use of performance information indecisionmaking.  Training has proven to be an important tool foragencies that want to change their cultures.\29 Australian governmentemployees, for example, cited training as one of the factors thatcontributed the most to making reforms succeed in their areas.\30Results-oriented managers view training as an investment rather thanan expense.  And as human resource management experts at leadingprivate and public organizations have pointed out, organizationallearning must be continuous in order to meet changing customer needs,keep skills up to date, and develop new personal and organizationalcompetencies.\31 But at a time when overall agency budgets are underpressure, training budgets are unlikely to increase.  Therefore, itis important that agencies develop innovative and less costly ways totrain their staffs--remembering as well that the level of return forinvesting in the skills needed for results-oriented management willdepend largely on how well employees are encouraged to put thoseskills to use. Recognizing the value of training, especially for the people at thetop of the organization, the CFO Council's GPRA ImplementationCommittee has begun an outreach effort directed toward seniormanagers in the 24 CFO Act agencies.  The council's goals are tofamiliarize these leaders with GPRA's fundamentals and with theimportance of these fundamentals for the future of federalmanagement. In addition, in response to an initiative of the American Society forPublic Administration and with the encouragement of OMB, over 30 casestudies are being developed on the agencies' use of strategicplanning or performance measurement.  These case studies, to becompleted in the summer of 1996, are to be made publicly available. --------------------\29 Organizational Culture:  Use of Training to Help Change DODInventory Management Culture (GAO/NSIAD-94-193, Aug.  30, 1994). \30 GAO/GGD-95-120, May 2, 1995. \31 GAO/GGD-96-35, Dec.  26, 1995.    CASE ILLUSTRATION:  DEPARTMENT   OF DEFENSE---------------------------------------------------------- Chapter 5:6The Department of Defense (DOD) is responsible for the militaryforces needed to deter war and protect the security of our country. DOD's major service branches--the Army, Navy, Marine Corps, and AirForce--consist of about 1.5 million men and women on active duty, 1million members of the reserve components, and about 900,000 civilianemployees.  As with other federal agencies, performance informationis becoming an increasingly important part of DOD's budget process. DOD's leadership has come to recognize that if the Department is tomake results-oriented management a success, it must train itsemployees in strategic planning, performance measurement, and the useof performance information. DOD officials recognized when they were considering various methodsto deliver GPRA training that the costs--in both money and time--ofproviding training through traditional, live classroom instructionwould be prohibitive.  As an alternative, DOD is now testing thefeasibility of training staff at its GPRA pilot agencies viasatellite.  This interactive approach can reach widely dispersedaudiences less expensively than traditional methods.  The GPRA courseoriginates out of a studio and has been broadcast simultaneously toup to 20 sites around the country.  Since the first class inSeptember 1995, the GPRA training has been delivered 3 times viasatellite to 38 sites and has reached 760 people. In developing its GPRA training, DOD decided to go beyond thetraditional lecture approach to instruction.  GPRA training hasincluded exercises and panel discussions designed to make traineesthink the way they will need to when the training is over and thereal work of implementing GPRA begins.  Participants have been asked,for instance, to develop mission statements for their homeorganizations and to develop strategic goals and performancemeasures.  According to a DOD official, the classes have been wellreceived. DOD is also developing a self-paced GPRA course accessible on theInternet and is considering the use of CD-ROM technology.    PRACTICE 12:  INTEGRATE   MANAGEMENT REFORMS---------------------------------------------------------- Chapter 5:7Within a given federal agency, the management reforms now under waymay spring from various sources.  Some of these reforms may beself-initiated, others may have been mandated by legislation, stillothers may be the result of administration initiatives such as theNational Performance Review.  All of this reform activity needs to beintegrated, as the CFO Council urged in May 1995:      Existing planning, budgeting, program evaluation and fiscal     accountability processes should be integrated with GPRA     requirements to ensure consistency and reduce duplication of     effort.  In addition, other management improvement efforts, such     as implementation of the CFO Act, and FMFIA [Federal Managers'     Financial Integrity Act], customer service initiatives,     reengineering, and Total Quality Management, etc., should be     incorporated into the GPRA framework to capitalize on the     synergy and availability of key information and to improve     responsiveness to customers and other stakeholders.\32Another management reform initiative that provides a legislativebasis for measuring performance is the Information TechnologyManagement Reform Act of 1996, which requires each federal agency toensure that performance measures are prescribed for informationtechnology that it will use or acquire and that the performancemeasures assess how well the information technology supports agencyprograms.  In addition, the Federal Acquisition Streamlining Act of1994 requires the head of each executive agency to approve or definethe cost, performance, and schedule goals for major agencyacquisition programs. Taken together, these reforms can help redirect an organization'sculture from the traditional focus on inputs and activities to a newfocus on defining missions and achieving results.\33 Our work hasshown, however, that the top leadership of each federal agency needsto meld these various reforms into a coherent, unified effort.\34Top leadership--both political and career--needs to make clear itscommitment to the fundamental principles of results-orientedmanagement and ensure that managers and staff at all levels recognizethat they must do the same.  Traditionally, the danger to anymanagement reform is that it can become a hollow, paper-drivenexercise.  Leaders who integrate results-oriented management into theculture and day-to-day activities of their organizations will helpavoid that danger. --------------------\32 Implementation of the Government Performance and Results Act(GPRA), Chief Financial Officers Council, May 1995. \33 Improving Government:  Actions Needed to Sustain and EnhanceManagement Reforms (GAO/T-OCG-94-1, Jan.  27, 1994). \34 See, for example, Managing IRS:  Important Strides Forward Since1988 but More Needs to Be Done (GAO/GGD-91-74, Apr.  29, 1991);General Services Administration:  Status of Management ImprovementEfforts (GAO/GGD-91-59, Apr.  3, 1991); and Management of VA: Implementing Strategic Management Process Would Improve Service toVeterans (GAO/HRD-90-109, Aug.  31, 1990).    CASE ILLUSTRATION:  ARMY   RESEARCH LABORATORY---------------------------------------------------------- Chapter 5:8The Army Research Laboratory (ARL) was established in October 1992 asa result of a realignment of a number of Army research anddevelopment organizations.  It is now the central laboratory of theArmy Materiel Command.  At a time when both staffing levels andfunding had been in decline since fiscal year 1989, ARL was given amajor technological challenge--digitizing the battlefield for theU.S.  Army.  ARL concluded that to ensure that it had the capabilityto meet the new challenge and continue to conduct its mission ofbasic and applied research, it had to work in partnership withuniversities and the private sector, as well as operate moreeffectively and efficiently.  This "Federated Laboratory" conceptguided ARL as it integrated the various management reforms. As a GPRA pilot program, ARL developed a strategic plan that includeda mission statement and long-range goals.  In addition, it hasproduced two yearly products:  a performance plan with key measuresand a report detailing its progress in meeting its goals.  The annualreports have been integrated into ARL's planning and budgetingprocesses and are discussed by agency leadership at the Director'squarterly meetings.  In addition, the reports have been tied intoDOD's Planning, Programming, Budget, and Execution System.  ARL'sperformance measures gauge the relevance of ARL's current work to theagency's long-term goals and give ARL's leaders indicators ofproductivity and quality.  As part of its performance measurementefforts, ARL established customer service standards and sent surveysto its customers to obtain feedback on the quality of its work. As a National Performance Review "reinvention laboratory," ARL hasbeen granted waivers by DOD and the Army from internal regulations inorder to streamline its processes.  For example, one such waiverallowed ARL to eliminate redundant reviews of certain procurements,thereby saving 5 workdays on each procurement.  Saving time onadministrative processes frees staff to perform the principal missionof the laboratory. -------------------------------------------------------- Chapter 5:8.1Facing pressures similar to those confronting federal managers toreduce costs and improve performance, leading state and foreigngovernments have responded by implementing management reform effortsconsistent with GPRA.  The experiences of these governments--andthose of the federal GPRA pilots--demonstrate that each federalagency will need to chart its own course in response to its specificenvironment as it seeks to implement GPRA and become moreresults-oriented.  Nonetheless, the experiences of the leadingorganizations suggest that the steps and practices discussed in thisguide can assist agencies in successfully implementing GPRA.  Federalagencies that apply the practices may find that their transition to aresults orientation is quicker, smoother, and, most important, moresuccessful in providing the effective and efficient government theAmerican people deserve. OVERVIEW OF THE GOVERNMENTPERFORMANCE AND RESULTS ACT=========================================================== Appendix IThe Government Performance and Results Act (GPRA) is the primarylegislative framework through which agencies will be required to setstrategic goals, measure performance, and report on the degree towhich goals were met.  It requires each federal agency to develop, nolater than by the end of fiscal year 1997, strategic plans that covera period of at least 5 years and include the agency's missionstatement; identify the agency's long-term strategic goals; anddescribe how the agency intends to achieve those goals through itsactivities and through its human, capital, information, and otherresources.  Under GPRA, agency strategic plans are the starting pointfor agencies to set annual goals for programs and to measure theperformance of the programs in achieving those goals. Also, GPRA requires each agency to submit to the Office of Managementand Budget (OMB), beginning for fiscal year 1999, an annualperformance plan.  The first annual performance plans are to besubmitted in the fall of 1997.  The annual performance plan is toprovide the direct linkage between the strategic goals outlined inthe agency's strategic plan and what managers and employees doday-to-day.  In essence, this plan is to contain the annualperformance goals the agency will use to gauge its progress towardaccomplishing its strategic goals and identify the performancemeasures the agency will use to assess its progress.  Also, OMB willuse individual agencies' performance plans to develop an overallfederal government performance plan that OMB is to submit annually toCongress with the president's budget, beginning for fiscal year 1999. GPRA requires that each agency submit to the President and to theappropriate authorization and appropriations committees of Congressan annual report on program performance for the previous fiscal year(copies are to be provided to other congressional committees and tothe public upon request).  The first of these reports, on programperformance for fiscal year 1999, is due by March 31, 2000, andsubsequent reports are due by March 31 for the years that follow. However, for fiscal years 2000 and 2001, agencies' reports are toinclude performance data beginning with fiscal year 1999.  For eachsubsequent year, agencies are to include performance data for theyear covered by the report and 3 prior years. In each report, an agency is to review and discuss its performancecompared with the performance goals it established in its annualperformance plan.  When a goal is not met, the agency's report is toexplain the reasons the goal was not met; plans and schedules formeeting the goal; and, if the goal was impractical or not feasible,the reasons for that and the actions recommended.  Actions needed toaccomplish a goal could include legislative, regulatory, or otheractions or, when the agency found a goal to be impractical orinfeasible, a discussion of whether the goal ought to be modified. In addition to evaluating the progress made toward achieving annualgoals established in the performance plan for the fiscal year coveredby the report, an agency's program performance report is to evaluatethe agency's performance plan for the fiscal year in which theperformance report was submitted (for example, in their fiscal year1999 performance reports, due by March 31, 2000, agencies arerequired to evaluate their performance plans for fiscal year 2000 onthe basis of their reported performance in fiscal year 1999).  Thisevaluation will help to show how an agency's actual performance isinfluencing its plans.  Finally, the report is to include the summaryfindings of program evaluations completed during the fiscal yearcovered by the report. Congress recognized that in some cases not all of the performancedata will be available in time for the March 31 reporting date.  Insuch cases, agencies are to provide whatever data are available, witha notation as to their incomplete status.  Subsequent annual reportsare to include the complete data as part of the trend information. In crafting GPRA, Congress also recognized that managerialaccountability for results is linked to managers having sufficientflexibility, discretion, and authority to accomplish desired results. GPRA authorizes agencies to apply for managerial flexibility waiversin their annual performance plans beginning with fiscal year 1999. The authority of agencies to request waivers of administrativeprocedural requirements and controls is intended to provide federalmanagers with more flexibility to structure agency systems to bettersupport program goals.  The nonstatutory requirements that OMB canwaive under GPRA generally involve the allocation and use ofresources, such as restrictions on shifting funds among items withina budget account.  Agencies must report in their annual performancereports on the use and effectiveness of any GPRA managerialflexibility waivers that they receive. GPRA calls for phased implementation so that selected pilot projectsin the agencies can develop experience from implementing GPRArequirements in fiscal years 1994 through 1996 before implementationis required for all agencies.  As of June 1996, 68 pilot projects forperformance planning and performance reporting were under way in 24agencies.  OMB also is required to select at least five agencies fromamong the initial pilot agencies to pilot managerial accountabilityand flexibility for fiscal years 1995 and 1996; however, as of June1996 it had not done so. Finally, GPRA requires OMB to select at least five agencies, at leastthree of which have had experience developing performance plansduring the initial GPRA pilot phase, to test performance budgetingfor fiscal years 1998 and 1999.  Performance budgets to be preparedby pilot projects for performance budgeting are intended to provideCongress with information on the direct relationship between proposedprogram spending and expected program results and the anticipatedeffects of varying spending levels on results. OBJECTIVES, SCOPE, AND METHODOLOGY========================================================== Appendix IIOur objectives were to (1) identify and describe the practices mosthelpful to successfully implementing GPRA and relatedresults-oriented management initiatives and (2) provide caseillustrations of federal organizations that have made progress inimplementing each practice.  This report builds on (1) our 1994report profiling leading private and public sector organizations thathave successfully improved mission performance and program outcomesthrough the innovative use of information management and technologyand (2) our 1995 report on the human resource management principlesemployed by selected public and private organizations to build andsustain high levels of organizational performance.\35 Together, thesereports are intended to suggest frameworks for Congress and federalagencies to use in implementing GPRA and related results-orientedmanagement initiatives. To meet our first objective, we reviewed the experiences of leadingpublic sector organizations that were successfully changing theirmanagement and accountability practices to be more results-oriented. As part of that effort, we issued separate reports on the experiencesof six leading U.S.  state and four foreign governments.\36 We alsoreviewed the management studies of 23 large federal departments andagencies that we did during the last decade as well as a broad arrayof our other management and program work.  To supplement our worklooking at leading organizations, we identified and reviewed a largebody of literature on management reform, strategic planning, andperformance measurement.  From our work, we identified a number ofpractices common to successful efforts to become moreresults-oriented.  We obtained input from a wide range of federalexecutives and managers and experts in public sector strategicplanning, performance measurement, and program and policy evaluation,including those from the Departments of Defense, Commerce,Transportation, and the Treasury; OMB; the Office of PersonnelManagement; the National Academy of Public Administration; the UrbanInstitute; and the University of Southern California.  On the basisof their comments and our continuing reviews of leadingorganizations, we consolidated and refined the list of practices tothose presented in this guide. To meet our second objective, we identified those federal agenciesthat were instituting results-oriented management from our ongoingwork on the implementation of GPRA at 24 departments and largeagencies (covering about 98 percent of the federal government'sfiscal year 1994 outlays) and OMB's identification of agencies makingearly progress in implementing selected aspects of GPRA.  In thisway, we targeted our work toward agencies that would provide examplesillustrating each of the practices.  The fact that an organization isprofiled for a particular practice is not meant to imply theorganization's success or lack of success in meeting other practices. Moreover, underscoring the fact that implementing management changesrequired by GPRA will not come quickly, most of the agencies profiledbegan their results-oriented management before GPRA was enacted.  Weinterviewed agency officials in program offices, strategic planningand quality management offices, and planning and evaluation offices. We also reviewed agency documents, such as strategic plans,performance plans, performance reports, program descriptions anddocumentation, and other related documents. We did our work on this guide from January 1995 to March 1996 inWashington, D.C., in accordance with generally accepted governmentauditing standards.  The steps and practices presented in thisexecutive guide are largely a synthesis of previously publishedinformation and analysis. We provided a draft of this guide to OMB, the CFO Council's GPRAImplementation Committee, and to the individual agencies profiled inthe case illustrations for their review and comment.  OMB noted thatthe guide and the practices suggested in it will help federalagencies as they implement GPRA.  OMB also expressed support for theguide's focus on agency use of performance information to improvemanagement and program performance and to demonstrate that federalagencies are using taxpayers' money effectively.  OMB concurred withour observation that the federal government is at the beginning,rather than the end, of the process of turning itself into a moreaccountable, better managed, more effective organization.  Finally,OMB noted that the development and refinement of performance measureswill be an ongoing process. We also provided copies of a draft of this guide for comment to theagency representatives on the CFO Council's GPRA ImplementationCommittee and incorporated their individual comments as appropriate. Generally, their comments suggested that the steps and practices weidentified from the leading organizations studied were valid andcomplete, and that the case illustrations were accurate to the bestof their knowledge.  We also asked officials in each of the agenciesprofiled as case illustrations to verify the accuracy of theinformation presented on their respective agencies; however, we didnot independently verify the accuracy of that information. --------------------\35 GAO/AIMD-94-115, May 1994; and GAO/GGD-96-35, Dec.  26, 1995,respectively. \36 GAO/GGD-95-22, Dec.  21, 1994; and GAO/GGD-95-120, May 2, 1995. The methodologies for selecting these leading governments aredetailed in the respective reports. MAJOR CONTRIBUTORS TO THISEXECUTIVE GUIDE========================================================= Appendix IIIL.  Nye Stevens, Director, Federal Management and Workforce Issues, (202) 512-8676Michael Brostek, Associate Director, (202) 512-9039J.  Christopher Mihm, Assistant Director, (202) 512-3236Lisa R.  Shames, Project Manager, (202) 512-2649Stephen AltmanThomas M.  BeallBarbara H.  BordelonJanet C.  EackloffCarolyn J.  HillDonna M.  LeissVictoria M.  O'DeaDorothy L.  SelfKatherine M.  WheelerRELATED GAO PRODUCTS============================================================ Chapter 6Managing for Results:  Achieving GPRA's Objectives Requires StrongCongressional Role (GAO/T-GGD-96-79, Mar.  6, 1996). GPRA Performance Reports (GAO/GGD-96-66R, Feb.  14, 1996). Office of Management and Budget:  Changes Resulting From the OMB 2000Reorganization (GAO/GGD/AIMD-96-50, Dec.  29, 1995). Transforming the Civil Service:  Building the Workforce of theFuture, Results of a GAO-Sponsored Symposium (GAO/GGD-96-35, Dec. 26, 1995). Financial Management:  Continued Momentum Essential to Achieve CFOAct Goals (GAO/T-AIMD-96-10, Dec.  14, 1995). Block Grants:  Issues in Designing Accountability Provisions(GAO/AIMD-95-226, Sept.  1, 1995). Managing for Results:  Status of the Government Performance andResults Act (GAO/T-GGD-95-193, June 27, 1995). Managing for Results:  Critical Actions for Measuring Performance(GAO/T-GGD/AIMD-95-187, June 20, 1995). Managing for Results:  The Department of Justice's Initial Efforts toImplement GPRA (GAO/GGD-95-167FS, June 20, 1995). Government Reorganization:  Issues and Principles(GAO/T-GGD/AIMD-95-166, May 17, 1995). Managing for Results:  Steps for Strengthening Federal Management(GAO/T-GGD/AIMD-95-158, May 9, 1995). Managing for Results:  Experiences Abroad Suggest Insights forFederal Management Reforms (GAO/GGD-95-120, May 2, 1995). Government Reform:  Goal-Setting and Performance(GAO/AIMD/GGD-95-130R, Mar.  27, 1995). Block Grants:  Characteristics, Experience, and Lessons Learned(GAO/HEHS-95-74, Feb.  9, 1995). Program Evaluation:  Improving the Flow of Information to theCongress (GAO/PEMD-95-1, Jan.  30, 1995). Managing for Results:  State Experiences Provide Insights for FederalManagement Reforms (GAO/GGD-95-22, Dec.  21, 1994). Management Reforms:  Examples of Public and Private Innovations toImprove Service Delivery (GAO/AIMD/GGD-94-90BR, Feb.  11, 1994). Performance Budgeting:  State Experiences and Implications for theFederal Government (GAO/AFMD-93-41, Feb.  17, 1993). *** End of document. ***