United States General Accounting Office 

GAO Report to the Subcommittee on 

Government Efficiency and Financial 

Management, Committee on Government 

Reform, House of Representatives 

January 2004 BUDGET ISSUES 

Agency 

Implementation of 

Capital Planning 

Principles Is Mixed 

GAO-04-138 

a
Highlights of GAO-04-138, a report to the 

Subcommittee on Government Efficiency 

and Financial Management, Committee on 

Government Reform, House of 

Representatives 

In fiscal year 2002, the federal 

government spent nearly 

$100 billion on capital investments 

intended to yield long-term benefits 

for its own operations. Interested 

in ensuring that good investment 

decisions are made, the Chairman 

and Ranking Minority Member, 

Subcommittee on Government 

Efficiency and Financial 

Management, House Committee on 

Government Reform, asked GAO to 

evaluate agency experiences with 

the capital planning principles 

embodied in the Office of 

Management and Budget’s (OMB) 

Capital Programming Guide and 

GAO’s Executive Guide on leading 

state, local, and private sector 

capital investment practices. This 

report examines selected agencies’ 

implementation of this guidance 

and OMB’s use of long-term capital 

planning data. 

GAO recommends that OMB 

(1) require that agencies comply 

with the principles and practices of 

its Capital Programming Guide 

and (2) require that long-term 

capital plans be submitted to OMB 

and provided to congressional 

decision makers. GAO also 

recommends various specific 

improvements that could help the 

Department of Veterans Affairs 

(VA), the National Park Service 

(Park Service), the Bureau of 

Prisons (BOP) and the National 

Oceanic and Atmospheric 

Administration (NOAA) in fully 

implementing the capital planning 

principles. 

www.gao.gov/cgi-bin/getrpt?GAO-04-138. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Susan J. Irving 

at (202) 512-9142 or irvings@gao.gov. 

January 2004 

BUDGET ISSUES 

Agency Implementation of Capital 

Planning Principles Is Mixed 

VA, the Park Service, BOP, and NOAA have had mixed success with 

implementing the planning phase principles found in OMB’s Capital 

Programming Guide and GAO’s Executive Guide. The agencies’ capital 

planning processes generally link to their strategic goals and objectives, 

and they all consider a range of alternatives to bridge an identified 

performance gap—including nonownership options where appropriate. 

Most have established processes to review and select from competing 

project proposals—including the use of senior-level review boards and 

established criteria to rank project proposals—strongly emphasizing 

linkage to strategic goals. However, case study agencies have had limited 

success with using agencywide asset inventory systems and data on asset 

condition to identify performance gaps. Also, none of them prepares an 

agencywide long-term capital investment plan. Some have long-term 

capital planning documents that could serve as a base for development of 

a comprehensive agencywide plan. While two case study agencies 

indicated plans to develop agencywide asset inventories and condition 

data—one of these making substantial progress—only one plans to 

develop a comprehensive agencywide long-term capital plan. 

OMB resource management office (RMO) staff varied in their expectations 

about agency use of OMB’s Capital Programming Guide. The RMO staff 

for the four case study agencies consider numerous factors in reviewing 

agency requests for capital funding, including strategic plans, obligation 

rates, and the overall budget request. OMB does not require long-term 

capital plans from agencies, but RMOs receive various documents for 

individual capital projects. 

Case Study Agencies Conformance with Capital Planning Guidance 
Contents 

Letter 1 

Executive Summary 2 

Purpose 2 

Background 3 

Results in Brief 4 

Principal Findings 6 

Recommendations for Executive Action 13 

Agency Comments 13 

Chapter 1 15 

Importance of Governmentwide Capital Investment Spending 16 Capital Planning Is the Background 21 

Core of the Capital Case Study Agencies 38 

Decision-Making 

Framework 

Chapter 2 43 

Capital Investments Link to Strategic Plans 43 Agency Capital Agency Guidance Requires That Capital Investment Proposals Link 

Planning Processes to Strategic Goals and Objectives 46 

Link to Strategic Goals Agency Criteria Used to Rank and Select Capital Investments 

Include Strategic Linkage 48 

and Objectives Conclusion 49 

Chapter 3 

Agency Processes for 

Assessing Capital 

Needs Reflect OMB 

and GAO Guidance to 

Varying Degrees 

50 

VA Has a Formal Process for Assessing Its Needs, but Lacks 

Agencywide Asset Condition Data and an Inventory of Capital 

Assets 51 

The National Park Service Has a Formal Process for Assessing Its 

Needs, but Lacks Agencywide Comprehensive Information on 

Asset Condition 55 

NOAA Has a Process for Assessing Its Needs and Maintains an 

Agencywide Asset Inventory, but Lacks Current Information on 

Asset Condition 59 

BOP Maintains an Inventory of Capital Assets and Information on 

Asset Condition; However, the Basis for Its Long-term 

Performance Gap Is Unclear 62 

Agency Use of Integrated Project Teams 66 

Page i GAO-04-138 Agency Capital Planning 
Contents 

Conclusion 66 

Recommendations for Executive Action 67 

Agency Comments 68 

Chapter 4 

Agencies Consider 

Alternatives but 

Processes to Rank and 

Select Investments and 

Produce Long-term 

Capital Plans Need 

Attention 

69 

Agencies Have Processes to Consider Various Options for 

Addressing Their Performance Gaps—Generally a Range of 

Alternatives, Including Noncapital Options 69 

Case Study Agency Processes for Ranking and Selecting Proposed 

Capital Investments Vary, but Most Have a Formal Review and 

Approval Framework 78 

Case Study Agencies Did Not Prepare Long-term Capital Plans, but 

Two Had Various Long-term Planning Documents 91 

Conclusion 96 

Recommendations for Executive Action 97 

Agency Comments 97 

Chapter 5 

Agencies and Budget 

Decision Makers Agree 

That Capital Planning 

Is Useful, but 

Implementation 

Challenges Exist 

99 

Agencies Have Mixed Opinions about Usefulness of OMB Capital 

Guidance 99 

Agencies Identified Challenges in Implementing the Principles of 

OMB’s Capital Programming Guide 101 

OMB and Congressional Perspectives on Long-term Capital Planning 

Information and Views on Agency Processes 102 

Conclusion 105 

Recommendations for Executive Action 106 

Agency Comments 106 

Appendixes 

Appendix I: 

Appendix II: 

Appendix III: 

Objectives, Scope, and Methodology 108 

Department of Veterans Affairs 112 

Background/ Organizational Structure 112 

Types of Assets 112 

Capital Spending 113 

Capital Planning Process 113 

Challenges 116 

Prior GAO Work at VA 116 

The Future of VA 117 

Some Related GAO Reports 117 

National Park Service 119 

Page ii GAO-04-138 Agency Capital Planning 
Contents 

Background/ Organizational Structure 119 

Types of Assets 119 

Capital Spending 119 

Capital Planning Process 120 

Challenges 124 

Prior GAO Work at Park Service 125 

The Future of the Park Service 126 

Some Related GAO Reports 126 

Appendix IV: National Oceanic and Atmospheric Administration 128 

Background/ Organizational Structure 128 

Types of Assets 128 

Capital Spending 128 

Capital Planning Process 129 

Challenges 133 

Prior GAO Work at NOAA 133 

The Future of NOAA 134 

Some Related GAO Reports 135 

Appendix V: Bureau of Prisons 136 

Background/ Organizational Structure 136 

Types of Assets 136 

Capital Spending 136 

Capital Planning Process 137 

Challenges 140 

Prior GAO Work at BOP 141 

The Future of BOP 142 

Some Related GAO Reports 142 

Appendix VI: OMB Guidance 143 

Appendix VII: Comments from the Department of Veterans Affairs 144 

Appendix VIII: Comments from the Bureau of Prisons 148 

Appendix IX: Comments from the National Oceanic and Atmospheric 

Administration 151 

Appendix X: GAO Contact and Staff Acknowledgments 153 

GAO Contact 153 

Acknowledgments 153 

Related GAO Products 154 

Page iii GAO-04-138 Agency Capital Planning 
Contents 

Figures Figure 1: 

Figure 2: 

Figure 3: 

Figure 4: 

Figure 5: 

Figure 6: 

Figure 7: 

Figure 8: 

Figure 9: 

Case Study Agencies’ Conformance with Capital Planning 

Guidance 

Governmentwide Major Public Physical Capital 

Investment Outlays 

Governmentwide Major Public Physical Capital 

Investment Outlays as a Percentage of Total Outlays 

Governmentwide Major Public Physical Capital 

Investment Outlays as a Percentage of GDP 

Case Study Agencies Major Public Physical Capital 

Investment Outlays 

OMB Capital Programming Cycle 

Capital Decision-Making Framework, Principles and 

Practices 

OMB Decision Tree for Analyzing Agency Programs and 

Investments 

Example of Agency Process Illustrating Elements of 

Planning Phase Guidance 

5 

17 

18 

19 

20 

24 

26 

31 

37 

71 

76 

80 

81 

82 

89 

113 

120 

129 

137 

Figure 10: VA Enhanced-Use Authority 

Figure 11: Value Analysis Use at the Park Service 

Figure 12: VA Use of the Analytical Hierarchy Process 

Figure 13: AHP Criteria Weights 

Figure 14: VA’s Review and Selection Process 

Figure 15: Park Service Capital Investment Review and Selection 

Process 

Figure 16: VA Capital Outlays for Fiscal Years 1993 

through 2002 

Figure 17: Park Service Capital Outlays for Fiscal Years 1993 

through 2002 

Figure 18: NOAA Capital Outlays for Fiscal Years 1993 

through 2002 

Figure 19: BOP Capital Outlays for Fiscal Years 1993 

through 2002 

Abbreviations 

ACP Agency Capital Plan 

AHP Analytical Hierarchy Process 

ASC Administrative Support Centers 

BOP Bureau of Prisons 

CAMS Capital Asset Management System 

Page iv GAO-04-138 Agency Capital Planning 
Contents 

CARES Capital Asset Realignment for Enhanced Services 

CBA Choosing By Advantage 

CIP Capital Investment Panel 

CMMS Computerized Maintenance Management System 

CPM Construction Program Management Office 

DAB Development Advisory Board 

DOD Department of Defense 

DOI Department of the Interior 

DOJ Department of Justice 

EIS environmental impact statement 

FASA Federal Acquisition Streamlining Act of 1994 

FIRB Finance and Investment Review Board 

FMSS Facilities Management Software System 

GDP gross domestic product 

GSA General Services Administration 

GMP general management plan 

GPRA Government Performance and Results Act of 1993 

ICE Bureau of Immigration and Customs Enforcement 

INS Immigration and Naturalization Service 

IPT integrated project teams 

IT information technology 

LROBP Long-Range Overseas Buildings Plan 

M&R modernization and repair 

MSN memorial service network 

NAPA National Academy for Public Administration 

NASA National Aeronautics and Space Administration 

NCA National Cemetery Administration 

NEPA National Environmental Policy Act 

NESDIS National Environmental Satellite, Data, and Information Service 

NLC National Leadership Council 

NMFS National Marine Fisheries Service 

NOAA National Oceanic and Atmospheric Administration 

NOS National Ocean Service 

NPOESS National Polar-Orbiting Operational Environmental Satellite 

System 

NWS National Weather Service 

OAEM Office of Asset Enterprise Management 

OAR Office of Oceanic and Atmospheric Research 

OFA Office of Finance and Administration 

OIG Office of Inspector General 

OMAO Office of Marine and Aviation Operations 

OMB Office of Management and Budget 

Page v GAO-04-138 Agency Capital Planning 
Contents 

PAC procurement, acquisition, and construction 

PMIS Project Management Information System 

POES Polar-Orbiting Operational Environmental Satellite 

RMO resource management office 

SMC Strategic Management Council 

TRSO Technical Resource Support Office 

TVA Tennessee Valley Authority 

UNOLS University-National Oceanographic Laboratory System 

USMS United States Marshals Service 

VA Department of Veterans Affairs 

VBA Veterans Benefits Administration 

VHA Veterans Health Administration 

VISN Veterans Integrated Service Network 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

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other material, permission from the copyright holder may be necessary if you wish to 

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Page vi GAO-04-138 Agency Capital Planning 
Page 1 GAO-04-138 Agency Capital Planning 

A

United States General Accounting Office 

Washington, D.C. 20548 

January 16, 2004 

The Honorable Todd R. Platts 

Chairman 

The Honorable Edolphus Towns 

Ranking Minority Member 

Subcommittee on Government Efficiency and Financial Management 

Committee on Government Reform 

House of Representatives 

This report responds to your request that we evaluate agency experiences 

with implementing the capital planning principles embodied in the Office of 

Management and Budget’s (OMB) Capital Programming Guide and GAO’s 

Executive Guide: Leading Practices in Capital Decision-Making. As 

requested, we (1) determined the extent to which selected agencies have 

implemented the planning phase principles and concepts described in the 

capital guidance, (2) identified problems selected agencies have 

encountered in implementing the guidance principles and concepts, and 

(3) determined the extent to which OMB uses long-term capital planning 

information in reviewing agency budget requests and supporting budget 

justifications to the Congress. We are making recommendations to the 

Director of the Office of Management and Budget and selected federal 

agency heads directed at improving agency conformance to OMB and GAO 

capital planning guidance. 

We are sending copies of this report to the Director of the Office of 

Management and Budget, the Secretary of Veterans Affairs, the Director of 

the National Park Service, the Under Secretary of Commerce for Oceans 

and Atmosphere, the Director of the Federal Bureau of Prisons, and 

selected federal agencies. We will also make copies available to others 

upon request. This report will also be available at no charge on the GAO 

Web site at http://www.gao.gov. Major contributors to this report are listed 

in appendix X. If you have any questions concerning this report, please call 

me on (202) 512-9142. 

Susan J. Irving 

Director, Federal Budget Analysis 

Page 1 GAO-04-138 Agency Capital Planning 
Executive Summary 

Purpose In fiscal year 2002, the federal government spent nearly $100 billion on 

capital investments intended to yield long-term benefits for its own 

operations. During 2002, the National Oceanic and Atmospheric 

Administration spent $787 million on such investments—a 15-fold increase 

in real terms from the $51 million it spent in 1993. The Department of 

Veterans Affairs spent $2.1 billion in 2002—a substantial increase from the 

$1.4 billion in real terms it spent in 1993. Both because large sums of 

taxpayer funds are spent on capital assets and because their performance 

affects how well agencies are able to achieve their missions, goals, and 

objectives and provide service to the public, effective planning for capital 

investments is a very important task. The Congress, the Office of 

Management and Budget (OMB), and GAO all have identified the need for 

effective capital planning. In addition, budgetary pressures and demands to 

improve performance in all areas put pressure on agencies to make sound 

capital acquisition choices. Recently, GAO added federal real property 

management to its list of high-risk areas. Prior GAO studies found that 

many federal assets are not effectively aligned with agencies’ changing 

missions and the problems are compounded by the lack of reliable 

governmentwide data for strategic asset management. In the overall capital 

programming process, planning is the first phase—and arguably the most 

important—since it drives the remaining phases of budgeting, 

procurement, and management. 

The Chairman and Ranking Minority Member, Subcommittee on 

Government Efficiency and Financial Management, House Committee on 

Government Reform, asked GAO to evaluate agency experiences with 

OMB’s and GAO’s capital investment guidance. This report specifically 

addresses the extent to which selected agencies have implemented the 

planning phase principles of the OMB Capital Programming Guide and 

the practices described in the GAO Executive Guide: Leading Practices in 

Capital Decision-Making. The report identifies challenges agencies have 

faced with implementing the principles and practices and describes the 

extent to which OMB uses long-term capital planning information in 

reviewing agency budget requests and supporting justifications to the 

Congress. Using a case study approach, GAO evaluated the experiences of 

the Department of Veterans Affairs (VA), the National Park Service (Park 

Service), the Bureau of Prisons (BOP), and the National Oceanic and 

Atmospheric Administration (NOAA). GAO also surveyed officials in eight 

additional agencies with significant capital investment spending to obtain 

their views on the usefulness of OMB’s Capital Programming Guide. 

Page 2 GAO-04-138 Agency Capital Planning 
Executive Summary 

Background Federal government spending on capital investments can be divided into 

two categories: that which provides long-term benefits to the nation as a 

whole—increasing the nation’s overall capital stock for economic growth— 

and that which improves the efficiency of internal federal agency 

operations—capital investment for the government as an operating entity. 

This report, like OMB’s Capital Programming Guide, focuses on the 

latter—those assets the government acquires for its own use. They are 

defined as land, structures, equipment, and intellectual property (including 

software) that have an estimated useful life of 2 years or more. Examples 

are office buildings, hospitals, prisons, ships, satellites, motor vehicles, 

information technology, and parklands. 

During the 1990s, the Congress enacted legislation to help move agencies 

toward improving their capital planning processes. The Congress enacted 

the Federal Acquisition Streamlining Act of 1994 to improve the federal 

acquisition process and the Clinger-Cohen Act in 1996 to improve the 

implementation and management of information technology investments. 

OMB has issued various guidance and requirements for agencies to follow 

and use in developing disciplined capital programming processes, 

including the 1997 Capital Programming Guide, to provide agencies a 

basic reference for establishing an effective process for making investment 

decisions. The Capital Programming Guide integrates executive office 

and statutory asset management initiatives into a single, integrated process 

to ensure that capital investments contribute to the achievement of agency 

goals and objectives. While agencies are provided flexibility in how they 

implement the guidance principles and practices, they are expected to 

comply with existing statutes for planning and funding new capital asset 

acquisitions. In 1998, GAO issued its Executive Guide based on a study of 

leading state and local government and private sector capital investment 

practices. The GAO Guide summarizes 12 fundamental practices (shown in 

ch. 1, fig. 7) that have been successfully implemented by organizations that 

are recognized for their outstanding capital decision-making practices and 

provides examples of leading practices from which the federal government 

may draw lessons and ideas. 

This report focuses on the principles and practices that underlie the 

planning phases of both OMB’s Capital Programming Guide and GAO’s 

Executive Guide. They start with linking the capital planning process to the 

organization’s mission, goals, and objectives and culminate with the 

development of a long-term capital investment plan and are described in 

this report as strategic linkage, needs assessment and gap identification, 

Page 3 GAO-04-138 Agency Capital Planning 
Executive Summary 

alternatives evaluation, establishment of a review and approval framework 

(using established criteria to rank and select proposed projects), and 

development of a long-term capital plan. 

Results in Brief Case study agencies have experienced mixed success with implementing 

the planning phase principles and practices described in OMB’s Capital 

Programming Guide and GAO’s Executive Guide. GAO found that agency 

capital planning processes generally link to the agencies’ strategic goals 

and objectives and consider a range of alternatives to bridge any identified 

performance gaps. GAO also found that most case study agencies have 

formal processes for ranking and selecting proposed capital investments. 

However, not all agencies have been successful in developing and using 

agencywide asset inventories and asset condition data to assess capital 

needs and identify performance gaps. Also, none of the case study agencies 

has developed a comprehensive, agencywide, long-term capital investment 

plan. Some agencies have long-term planning documents, but none has a 

comprehensive plan that defines its long-term investment decisions. Figure 

1 shows the case study agencies’ varying degrees of implementation of the 

planning phase guidance. GAO makes recommendations in this report 

directed at improving agency conformance to OMB and GAO capital 

planning guidance. 

Page 4 GAO-04-138 Agency Capital Planning 
Executive Summary

Page 5 GAO-04-138 Agency Capital Planning

Figure 1: Case Study Agencies’ Conformance with Capital Planning Guidance

Some of the capital guidance also has presented a challenge for the eight 

additional agencies GAO surveyed, and the degree to which the surveyed 

agencies and GAO’s case study agencies follow the capital guidance varies. 

As mentioned, some of the GAO case study agencies have successfully 

implemented many of the principles and practices described in both OMB’s 

and GAO’s guidance but have not been successful in implementing others. 

The survey agencies have been challenged by some of the guidance 

principles and practices—specifically, those agencies whose activities 

Planning guidance

Strategic linkage

Link capital investment planning to agency 

mission, strategic goals, and objectives 

(See ch. 2)

Needs assessment and gap identification

Conduct comprehensive assessment of needs 

to achieve results—evaluating the capacity of 

existing assets and determining the 

performance gap between current and needed 

capabilities (See ch. 3)

Alternatives evaluation

Identify and evaluate multiple alternatives to 

bridge the performance gap, including 

noncapital options (See ch. 4)

Review and approval framework with 

established criteria for selecting capital 

investments

Establish a review and approval framework to 

oversee the process of ranking and selecting 

capital investments using established selection 

criteria (See ch. 4)

Long-term capital plan

Develop a comprehensive long-term capital 

investment plan that defines agencywide capital 

investment decisions (See ch. 4)

VA BOP

Park 

Service NOAA

Agency practices conform to guidance 

Agency practices partially conform to guidance

Agency practices do not conform to guidance

Source: GAO analysis of agency data.
Executive Summary

Page 6 GAO-04-138 Agency Capital Planning

involve research and development or scientific pursuits. Despite the 

challenges experienced, agencies generally agree that the guidance is 

helpful for developing an effective capital decision-making process. 

OMB’s reliance on long-term capital planning information for budget 

review and its expectations for agency use of its capital guidance varied by 

OMB resource management office (RMO) staff. OMB RMO staff for GAO’s 

four case study agencies consider a number of factors—but not long-term 

capital plans—when reviewing agency budget requests for capital projects.

However, based on GAO’s work at leading private and state and local 

entities, long-term capital plans, as well as all the other leading practices, 

result in better capital decisions. Since these practices embedded in the 

OMB Guide have demonstrated benefits to leading organizations, GAO 

makes recommendations in this report directed at requiring agency use of 

OMB’s Capital Programming Guide.

Principal Findings

Case Study Agencies Have 

Successfully Implemented 

Some of the Capital 

Guidance Principles and 

Practices

Both OMB and GAO guidance stress the importance of linking capital asset 

investments to an organization’s overall mission and long-term strategic 

goals. The guidance also strongly emphasizes evaluating a full range of 

alternatives to bridge any identified performance gap. Further, the 

guidance calls for a comprehensive decision-making framework to review, 

rank, and select from among competing project proposals. Such a 

framework should include appropriate levels of management review and 

selections should be based on the use of established criteria. 

Case study agency capital planning processes do consider strategic goals as 

decisions are made about capital investments. Current presidential 

administration and departmental priorities are communicated throughout 

the planning processes. In some cases, the strategic linkage is 

demonstrated by specific projects that implement long-term agency goals. 

In other cases, the linkage is evident in agency guidance for developing 

capital project proposals and the criteria used to rank and select among 

competing project proposals.

When a performance gap—a gap between resources needed and the 

capacity of existing resources to achieve goals and objectives—is 

identified, case study agencies consider various alternatives for acquiring 
Executive Summary

Page 7 GAO-04-138 Agency Capital Planning

new capital assets and often choose such alternatives, including 

nonownership options, where appropriate. This consideration of 

alternatives is one of the practices in OMB’s Capital Programming Guide. 

VA departmental guidance requires that four alternative approaches be 

considered to bridge any performance gap—leasing; status quo; new 

construction; and rehabilitation, repair, or expansion of existing facilities. 

For BOP, one strategy to achieve its goals is to acquire needed prison 

capacity through cooperative arrangements with state and local 

governments, contracts with private providers of correctional services, and 

alternatives to traditional confinement where appropriate. 

The Park Service conducts extensive alternatives analysis at various stages 

of a project proposal’s development and review. Park Service alternatives 

considered and used include renovating and rehabilitating existing 

facilities and partnering with other governments for land acquisitions and 

with the private sector and nonprofit entities. 

NOAA has converted excess U.S. Navy vessels to its own use as an 

alternative to new ship construction. Also, one of NOAA’s strategic goals is 

to pursue partnerships with entities in the public and private sectors. To 

accomplish this, NOAA has partnered with universities for the use of 

excess university vessels and shares a radar system with the Department of 

Defense and the Federal Aviation Administration.

Most case study agencies have an established framework to review and 

select from among competing capital investment proposals. These 

processes are formal and include the use of senior-level review boards and 

committees and established criteria for selecting proposed projects. VA has 

a department-level process that considers projects for all VA 

administrations. It has various levels of review and uses established criteria 

and group-enabled software to rank proposed investments. The ranking 

and selection process is managed by a multidisciplinary assessment team 

and uses evaluation factors applied to each proposed investment. The Park 

Service also has a formal review and selection process that includes both 

internal and external senior-level review boards. Like VA, the Park Service

ranking process is managed by a multidisciplinary assessment team and 

uses evaluation factors applied to each proposed investment. NOAA’s 

review process uses multiple NOAA-level review boards that are aligned 

with NOAA’s strategic goals. These boards each use a separate set of 

established criteria to rank capital investment proposals—criteria aligned 
Executive Summary

Page 8 GAO-04-138 Agency Capital Planning

with specific strategic goals. While BOP’s review and selection process 

includes the use of senior-level committees, it is not formal, is not well 

documented, and does not appear to use formal selection criteria. 

Case Study Agencies 

Generally Assess Their 

Capital Needs and Identify 

Performance Gaps, but Not 

All Agencies Have Asset 

Inventories and Sufficient 

Information on Asset 

Condition

Both OMB and GAO guidance stress the importance of conducting a 

baseline assessment of the resources needed and current capacity of 

existing resources to achieve results-oriented goals and objectives. This 

assessment should include the use of an inventory of all existing assets and 

current information on asset condition in order to identify any performance 

gaps. Asset inventory and current condition data should be available to all 

program managers and decision makers involved in the capital decisionmaking process. One GAO case study agency, VA, has neither an 

agencywide inventory of existing capital assets nor agencywide 

information on the condition of those assets, although it is in the process of 

creating a data management system to inventory capital assets and 

measure their performance against VA portfolio goals. A second case study 

agency, the Park Service, has just recently developed an asset inventory, 

and while the agency has made some progress toward determining the 

condition of its assets, comprehensive condition assessments will not be 

completed for some time. A third case study agency, NOAA, has an 

agencywide inventory of its assets but lacks current information on the 

condition of those assets. The fourth GAO case study agency, BOP, 

maintains an asset inventory and information on asset condition but lacks a 

clear basis for its long-term performance gap.

VA’s Veterans Health Administration (VHA) maintains information on the 

type, number, and use of facilities and other assets at the network level, but 

until March 2003, the data on facilities were not readily available to other 

networks or headquarters personnel. Therefore, decision makers cannot 

readily identify assets available for sharing across networks. Similarly, 

although VHA facility employees have routinely conducted condition 

assessments of the facilities under their control, the results were 

maintained at each facility or, in some cases, at the health care network 

level and were not available to other VHA networks or headquarters 

decision makers. VA’s National Cemetery Administration (NCA) maintains 

an inventory system of its assets and facilities, including information on 

condition, as well as a separate database of major asset items at each 

cemetery. While these data are used as part of NCA’s 5-year planning 

process and are used to identify program performance gaps and options for 

addressing the gaps, the information is not readily available to VA 

headquarters managers. Officials told GAO that VA is in the process of 
Executive Summary

Page 9 GAO-04-138 Agency Capital Planning

developing an agencywide inventory system and that inventory data will be 

available to all VA managers at the department and bureau levels. VA 

officials also told GAO that VHA has conducted a nationwide building-bybuilding survey of each facility in each VHA health care network, and the 

survey data will be available to facility managers VA-wide. 

Historically, the Park Service has maintained asset inventories at the park 

level with varying levels of detailed information. Some national park units 

have a limited inventory covering the assets under their control. For 

example, the Grand Canyon National Park has an inventory of real property 

assets and an inventory of what it calls “formal” property, including assets 

with an acquisition value of $15,000 or more. Each division within the park 

has an inventory of so-called “informal” property valued below $15,000. 

Until just recently this individual park information was not available 

servicewide. Since asset condition assessments were not required in the 

past, condition information historically had not been available servicewide 

to capital planners and decision makers. Asset condition is monitored on a 

park-by-park basis at the park level, and priority capital projects were 

determined based on the institutional knowledge of park management and 

visual inspections of park assets. However, these visual inspections were 

not based on any systematic criteria and there was little documentation 

available. 

Also, until just recently, for two decades the Park Service lacked the benefit 

of a comprehensive asset inventory by age, type, size, and number of 

assets. As a result, the physical condition, functionality, suitability, and life 

expectancy of its facilities and the backlog of deferred maintenance 

requirements were not adequately documented. The Park Service is in the 

process of implementing an asset management process that is designed to 

include a comprehensive inventory of park assets and comprehensive data 

on the condition of those assets. This asset information will be captured in 

a centralized database for the entire park system. According to the Park 

Service, the agency recently completed the asset inventory phase of the 

process and has completed visual inspections on all but nine of the larger 

parks in the park system. The agency also is concurrently performing the 

more detailed comprehensive condition assessments, but these 

assessments will not be completed for some time. 
Executive Summary

Page 10 GAO-04-138 Agency Capital Planning

NOAA has separate asset inventories for its real and personal property1 but 

maintains no asset condition data. NOAA headquarters and the Department 

of Commerce’s administrative support centers maintain a single inventory 

of real property assets, including data on leased properties. The personal 

property inventory is centralized and maintained by NOAA’s finance and 

administration office. While information on asset type, size and age of 

facility, and current physical location is available to decision makers, 

NOAA currently maintains no comprehensive data on the condition of its 

real or personal property assets. In past years, NOAA regularly performed 

asset condition assessments for its real property assets; however, those 

assessments have been suspended. Officials at NOAA told GAO that a new 

process for conducting assessments of real property assets is scheduled to 

begin in fiscal year 2003. However, NOAA has no process for assessing the 

condition of its personal property assets. An official told GAO that NOAA 

line and program offices do not perform assessments of personal property 

assets because it is believed that if regular asset maintenance is performed, 

condition assessments and inspections are not necessary. 

The BOP new construction program follows a centralized long-term 

capacity planning process with the goal of ensuring sufficient institution 

capacity while maintaining prison crowding at safe and secure targeted 

levels. Along with data from BOP’s asset inventory and maintenance 

systems, the process uses the concept of rated capacity, which is a 

standard that considers a stated level, or percentage, of double bunking 

(overcrowding) in inmate living quarters to arrive at an institution’s inmate 

capacity level. However, BOP is unable to demonstrate the basis for what it 

considers an acceptable level of systemwide overcrowding. Officials told 

GAO that over the past two decades, the overcrowding goal has increased 

from 10 to 15 percent and more recently to about 30 percent. They say the 

increases are the result of what is believed to be acceptable percentages of 

double bunking. BOP officials could not provide any studies or 

documentation supporting what the agency considers an acceptable level 

of double bunking or crowding above rated capacity levels. According to 

officials, the change in targeted levels or increased goal levels appears to 

have had no effect on managing the prison population.

1

Real property assets consist of land; facilities; and anything constructed on, growing on, or 

attached to land. Personal property is all property other than real property. It includes items 

such as ships, aircraft, satellites, and computers.
Executive Summary

Page 11 GAO-04-138 Agency Capital Planning

None of the Case Study 

Agencies Have Developed 

Long-term Capital 

Investment Plans

Both OMB and GAO guidance emphasize the importance of developing a 

long-term capital investment plan. Similar to long-term strategic plans, 

long-term capital plans covering 5 to 6 years guide the implementation of 

organizational goals and objectives and help decision makers establish 

priorities over time. The long-term plan is considered the ultimate product 

of an organization’s planning phase activities and should clearly describe 

an entity’s performance gap and the resources needed to bridge it. It also 

should provide a clear justification for new acquisitions proposed for 

funding—linking proposed investments to an organization’s long-term 

strategic goals. Although two of the four case study agencies have longterm planning documents, none have single agencywide long-term capital 

plans that define agency capital investment decisions.

VA has prepared 1-year plans in the past that served as the department’s 

annual budget request for capital acquisitions. VA’s NCA prepares a 5-year 

facilities plan that is driven by its strategic plan. Although NCA’s planning 

documents are available to VA decision makers, VA does not produce a 

long-term plan that integrates all of the department’s capital needs. 

Officials told GAO that the department has begun a process to develop a 

comprehensive long-term plan for all of VA. Like VA, NOAA lacks a longterm capital plan that integrates the capital needs for its major line and 

program offices although some offices have planning documents that 

reflect OMB and GAO guidance to varying degrees. For example, NOAA’s 

Office of Marine and Aviation Operations officials told GAO that the office 

prepares an unpublished plan that is a 10-year chart of cost estimates and 

dates for major repairs and replacements to its ships. Officials at NOAA 

had no plans to develop an agencywide NOAA long-term capital plan. 

BOP prepares three long-term documents that viewed together, provide a 

sense of how BOP plans to achieve its current overcrowding goal; however, 

there is no single document that culminates its capital planning process. 

The Park Service prepares a servicewide 5-year construction plan that 

results from its rigorous review and selection process; however, the plan 

itself is merely a list of planned projects with estimated costs and schedule 

data rather than a narrative justification supporting an identified 

performance gap and linkage to organizational goals. In addition, the Park 

Service construction plan does not include all of the agency’s construction 

needs or its major equipment and land acquisitions.
Executive Summary

Page 12 GAO-04-138 Agency Capital Planning

Some Agencies Are 

Challenged by Aspects of 

OMB’s Guide, and Agencies 

Vary in the Extent to Which 

They Use It

The OMB Capital Programming Guide was intended to assist agencies 

with developing a disciplined capital programming process. OMB strongly 

encourages agencies to use its guidance but does not require it, and the 

degree to which agencies use OMB’s guidance varies. Some agencies have 

found it difficult to implement some of the guidance principles. Surveyed 

agencies, such as the Tennessee Valley Authority, find it challenging to 

quantify benefits of capital projects over several years. Also, the National 

Aeronautics and Space Administration (NASA) found the guidance 

inconsistent with the research and development nature of its programs. As 

mentioned, not all GAO case study agencies have successfully developed 

and used asset inventories or developed agencywide long-term capital 

plans. While some agencies have had difficulties, other survey and case 

study agency officials told GAO they generally find the guidance helpful in 

developing an effective process for capital decision making. Some have 

successfully incorporated many of the guidance principles into their 

processes. For example, the Indian Health Service told GAO that many of 

the OMB guidance principles are included in its Health Care Facilities 

Construction Priority System. While NASA found the guidance inconsistent 

with its research and development activities, officials told GAO that the 

agency has implemented the guidance principles for selected information 

technology projects. NOAA’ s National Weather Service officials cite the 

establishment of its senior-level review board as stemming from the OMB 

guidance.

Use of Long-term Capital 

Planning Information by 

Budget Decision Makers 

Varies by Agency 

When the OMB Capital Programming Guide was developed, a general 

presumption was that OMB would only consider recommending for 

funding in the President’s Budget priority capital investments that comply 

with good capital programming principles. However, expectations for 

agencies to use OMB’s Guide and reliance on long-term capital planning 

information varied by OMB RMO staff. OMB does not require long-term 

capital plans from agencies, but RMO staff solicit and receive various 

documents for individual capital projects. OMB staff told GAO that they 

place more emphasis on the required OMB Exhibit 300 (Capital Asset Plan 

and Business Case for Major Acquisitions) when reviewing agency funding 

requests. OMB requires Exhibit 300 for each requested asset as part of an 

agency’s budget submission. It is an individual asset plan for each major 

new and ongoing project, system, or acquisition, but it is not a long-term 

capital plan that defines the agency’s long-term investment decisions. An 

agency could have many Exhibits 300 but have no comprehensive capital 

plan to pull them all together over the long term. 
Executive Summary

Page 13 GAO-04-138 Agency Capital Planning

VA’s OMB RMO receives thorough business case packages for VA 

construction projects, and BOP’s RMO receives regular long-term planning 

information from BOP and independently performs research to obtain 

more information. OMB views its role as that of integrator of specific 

capital project proposals into the larger budget process. All of the RMO 

staff told GAO that they consider other factors, such as agency obligation 

rates, the overall budget request, and agency strategic plans, when 

reviewing agency budget requests for capital acquisitions.

While OMB RMOs receive some capital planning information for use during 

budget review, staff told GAO that they are pushing agencies to consider 

more alternatives as part their capital planning processes. The BOP RMO 

staff person said she would like to see more consideration of state facilities 

as an alternative to new prison construction and has urged BOP to consider 

more contracting opportunities.

Since long-term capital plans have not been routinely provided to 

congressional decision makers, GAO cannot assess their actual use. 

However, congressional staff indicated that long-term capital planning 

information could help them identify what the agencies viewed as 

important. They also said that the planning process and analyses required 

for developing a long-term plan can help ensure that agencies make wellinformed decisions. 

The Department of State’s 2003 Long-Range Overseas Buildings Plan, 

which provides a strategic road map for State’s overseas buildings 

operations, states that fiscal year 2003 budget decisions were based on the 

2001 long-range plan.

Recommendations for 

Executive Action

GAO makes several recommendations to case study agency management 

regarding increased emphasis and implementation of specific practices 

from OMB’s Capital Programming Guide. GAO also recommends that the 

Director of OMB require that agencies comply with the principles and 

practices of its guide, including development of long-term agency capital 

plans.

Agency Comments OMB’s Assistant General Counsel provided us with oral comments on the 

draft report, saying that OMB agreed with our recommendations. A few 

technical comments were also provided and have been incorporated where 
Executive Summary

Page 14 GAO-04-138 Agency Capital Planning

appropriate. We received written comments from our four case study 

agencies—VA, the Park Service, BOP, and NOAA. Our case study agencies 

either agreed with our conclusions and recommendations or did not 

directly address them. Most case study agencies indicated some actions 

planned or taken to address our recommendations. Written comments 

provided from VA, BOP, and NOAA are reprinted in appendixes VII, VIII, 

and IX, respectively. A number of technical comments were also provided 

by our case study agencies and have been incorporated in this report as 

appropriate.
Page 15 GAO-04-138 Agency Capital Planning

Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework Chapte1r

Federal government spending on capital investments is spending that 

yields long-term benefits. Its purpose may be to increase the nation’s 

overall capital stock for economic growth or to improve the efficiency of 

internal federal agency operations—capital investment for the government 

as an operating entity. This study focused on the capital assets the 

government acquires for its own use. They are defined as land, structures, 

equipment, and intellectual property (including software) with an 

estimated useful life of 2 years or more. Examples include office buildings, 

hospitals, prisons, ships, satellites, motor vehicles, information technology, 

and parklands. Both because large sums of taxpayer funds are spent on 

capital assets and because their performance affects how well agencies are 

able to achieve their missions and goals and provide service to the public, 

effective planning for the acquisition and management of federal capital 

assets is an important task. In the overall capital programming process, 

planning is the first step—and arguably the most important since it drives 

the remaining phases of budgeting, procurement, and management.

The objectives of this study were to (1) determine the extent to which 

selected agencies have implemented the Planning Phase principles of the 

Office of Management and Budget’s (OMB) Capital Programming Guide 

(OMB Guide)

1

 and the leading practices in capital decision making 

described in GAO’s Executive Guide (GAO Guide);2 (2) identify what, if 

any, problems or issues exist with implementing the principles and 

practices; and (3) determine the extent to which OMB uses long-term 

capital planning information in reviewing agency budget requests and 

supporting budget justifications to the Congress. Using a case study 

approach, we evaluated the experiences of the Department of Veterans 

Affairs (VA), the National Park Service (Park Service), the Bureau of 

Prisons (BOP), and the National Oceanic and Atmospheric Administration 

(NOAA).3 We also surveyed officials in eight additional agencies with 

significant capital spending to obtain their perceptions of OMB’s Capital 

1

Office of Management and Budget, Capital Programming Guide, Version 1.0, Supplement 

to Office of Management and Budget Circular A-11, Part 3: Planning, Budgeting, and 

Acquisition of Capital Assets, 1997. (Note: Since its issuance, the guide is now found as a 

supplement to Circular A-11, Part 7, Planning, Budgeting, Acquisition, and Management 

of Capital Assets).

2

U.S. General Accounting Office, Executive Guide: Leading Practices in Capital DecisionMaking, GAO/AIMD-99-32 (Washington, D.C.: December 1998).

3

In this report, we use the terms “agency” and “agencies” and the phrase “case study 

agencies” to describe VA, Park Service, BOP, and NOAA.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 16 GAO-04-138 Agency Capital Planning

Guide. Appendix I contains a detailed discussion of our objectives, scope, 

and methodology.

Separate chapters in this report address each principle as applied by the 

case study agencies. Appendixes II through V each describe the case study 

agency’s processes in greater detail.

Importance of 

Governmentwide 

Capital Investment 

Spending 

A review of recent historical trends can provide some perspective on the 

magnitude and overall pattern of spending for federally owned capital asset 

investments.4 For the 10-year period 1993 through 2002, direct 

governmentwide capital investment outlays as reported in the President’s 

Budget and adjusted for inflation by GAO were sizable, but as shown in 

figure 2, show only a slight increase from $97.5 billion to $97.9 billion, in 

real terms. Real defense capital outlays decreased from $77.3 billion to 

about $68.3 billion, while real nondefense outlays increased from 

$19.8 billion to $29.5 billion over the 10-year period.

4

OMB requires agencies to code their net outlays each year according to various investment 

categories or character classes. Investment outlays are defined by OMB as spending that is 

intended primarily to yield benefits in the future—whether to the nation as a whole or to the 

federal government. Investments may be in the form of either direct federal spending or 

grants to state and local governments, and may be for either tangible or intangible assets. 

The investment categories that encompass capital assets used by the federal government 

are those for direct spending on physical assets. These categories are Construction and 

Rehabilitation (1312 and 1314), Major Equipment (1322 and 1324), and Purchases and Sales 

of Land and Structures (1340). Major Equipment includes capital purchases of information 

technology but excludes the support services related to information technology purchases.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 17 GAO-04-138 Agency Capital Planning

Figure 2: Governmentwide Major Public Physical Capital Investment Outlays

0

20

40

60

80

100

120

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Constant 2002 dollars in billions

Total direct capital outlays

Defense direct capital outlays

Nondefense direct capital outlays

Source: Fiscal Year 2004, Historical Tables, Budget of the United States Government.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 18 GAO-04-138 Agency Capital Planning

However, as figure 3 shows, as a percentage of total federal outlays, direct 

governmentwide capital investment outlays fell sharply from 6.8 percent to 

4.9 percent. Most of this decline was in the defense portion of 

governmentwide capital outlays, which fell from 5.4 percent to 3.4 percent. 

Although the nondefense portion fluctuated some, it was basically 

unchanged at 1.4 percent in 1993 and 1.5 percent in 2002.

Figure 3: Governmentwide Major Public Physical Capital Investment Outlays as a 

Percentage of Total Outlays

0

1

2

3

4

5

6

7

8

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Percentage

Total direct capital outlays as a percentage of total outlays

Defense direct capital outlays as a percentage of total outlays

Nondefense direct capital outlays as a percentage of total outlays

Source: Fiscal Year 2004, Historical Tables, Budget of the United States Government.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 19 GAO-04-138 Agency Capital Planning

Finally as figure 4 shows, as a share of gross domestic product (GDP), both 

governmentwide capital outlays and defense capital outlays fell by 0.6 

percentage points during the 4-year period 1993 through 1997 and then 

remained basically unchanged through 2002. Nondefense capital outlays 

fluctuated during the 10-year period 1993 through 2002 but ended the 

period at the same 0.3 percent of GDP. The stability of nondefense capital 

outlays goes back further. As a percentage of total outlays and as a 

percentage of GDP, nondefense capital outlays have not changed 

considerably since we reported 30-year spending trends in 1996.5

Figure 4: Governmentwide Major Public Physical Capital Investment Outlays as a 

Percentage of GDP

Historical data for our four case study agencies show that capital outlays 

fluctuated considerably in real terms over the 10-year period 1993 through

5

U.S. General Accounting Office, Budget Issues: Budgeting for Federal Capital, GAO/AIMD97-5 (Washington, D.C: Nov. 12, 1996).

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Percentage

Total direct capital outlays as a percentage of GDP

Defense direct capital outlays as a percentage of GDP

Nondefense direct capital outlays as a percentage of GDP

Source: Fiscal Year 2004, Historical Tables, Budget of the United States Government.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 20 GAO-04-138 Agency Capital Planning

2002.6 VA’s capital outlays varied considerably throughout the 10-year 

period but showed an increase from $1.4 billion in 1993 to $2.1 billion in 

2002. The Park Service’s capital outlays fluctuated during the 10-year 

period and showed an increase from $395 million in 1993 to $496 million in 

2002. BOP’s capital outlays fluctuated from $399 million to $481 million 

during the period 1993 through 2001, with a sharp drop to $34 million in 

fiscal year 1998, and then a sharp increase to $795 million. NOAA’s capital 

outlays increased more than15-fold over the 10-year period, from 

$51 million to $787 million. This increase was primarily due to funding the 

modernization of NOAA weather facilities and systems, satellite systems, 

the first planned fisheries research vessel, and new laboratories and 

science centers. Figure 5 shows these case study agency outlay trends.

Figure 5: Case Study Agencies Major Public Physical Capital Investment Outlays 

6

Historical data were derived from GAO’s Budget Database. The database contains data 

taken from OMB’s MAX System—the computerized system used to collect and process 

information needed to prepare the President’s Budget.

0

500

1000

1500

2000

2500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Constant 2002 dollars in millions

NOAA

BOP

VA

Park Service

Source: GAO Budget Database.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 21 GAO-04-138 Agency Capital Planning

Background Federal spending on capital assets can be divided into two categories: that 

which provides benefits to the government’s own operations and that 

which provides long-term benefits to the nation as a whole. This report, like 

OMB’s Capital Programming Guide, focuses on the former—those capital 

assets owned and used by the federal government primarily to deliver 

federal services. These assets are those used by the government as an 

operating entity.

The Congress, OMB, and GAO all have identified the need for effective 

planning and management of capital asset investments. In addition, 

increasing budget pressures and demands to improve performance in all 

areas puts pressure on agencies to make the most effective capital 

acquisition choices. OMB has issued various guidance and requirements for 

agencies to follow and use in developing disciplined capital programming 

processes. We conducted a study of leading state and local government and 

private sector practices that can provide lessons for the federal experience. 

More recently, we added federal real property to our list of high-risk areas. 

In the high-risk report,7

 we describe how many federal assets are no longer 

effectively aligned with, or responsive to, agencies’ changing missions; how 

many assets are in an alarming state of deterioration; and how the 

problems are compounded by the lack of reliable governmentwide data for 

strategic asset management.

The Congress enacted legislation during the 1990s to help move agencies 

toward improving their capital planning processes. The Congress enacted 

the Federal Acquisition Streamlining Act of 1994 (FASA) to improve the 

federal acquisition process. Title V of FASA was designed to foster the 

development of (1) measurable cost, schedule, and performance goals and 

(2) incentives for acquisition personnel to reach these goals. Civilian 

agencies and Department of Defense agencies are required to report 

annually on whether major and nonmajor programs are achieving 90 

percent of program goals and to identify suitable action if goals are not 

being met. The Congress enacted the Clinger-Cohen Act in 1996 to improve 

the implementation and management of information technology projects 

by requiring that agencies engage in capital planning and performance- and 

results-based management. The Government Performance and Results Act 

of 1993 (GPRA) requires agencies to develop mission statements, long7

U.S. General Accounting Office, High-Risk Series: Federal Real Property, GAO-03-122

(Washington, D.C.: January 2003).
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 22 GAO-04-138 Agency Capital Planning

range strategic goals and objectives, and annual performance plans. It also 

emphasizes identifying and measuring outcomes, including benefits.

Effective capital programming requires long-range planning and a 

disciplined decision-making process as the basis for managing a portfolio 

of assets to achieve performance goals and objectives with minimal risk, 

lowest life-cycle costs, and greatest benefits to the agency's business. OMB 

has provided certain requirements and guidance to agencies regarding 

capital programming in Circular A-11 and its supplement. This circular and 

an executive order on investments are described in appendix VI. 

In July 1997, OMB issued the Capital Programming Guide to provide 

federal agencies a basic reference for establishing an effective process for 

making investment decisions. The guide stresses long-term capital planning 

and the importance of having a formal capital asset infrastructure. It 

suggests that like agency strategic plans, capital planning should span 5 

years and the process should provide agency management with accurate 

information on acquisition and life-cycle costs, schedules, and performance 

of current and proposed capital assets. OMB’s Guide also stresses that a 

formal asset management infrastructure helps establish clear lines of 

authority, responsibility, and accountability for the management of capital 

assets. This infrastructure should include an executive review committee 

that reviews the agency’s entire capital portfolio periodically and the use of 

an integrated project team.

The OMB Guide provides detailed guidance to federal agencies on 

planning, budgeting, acquisition, and management of capital assets. The 

guide is organized in four phases of capital programming—Planning, 

Budgeting, Procurement, and Management-In-Use—and includes 

information from linking capital decisions to strategic goals and objectives, 

to analyzing and ranking potential investments, to making informed 

decisions based on the full cost and risk of a project. Each of the four 

phases of the capital programming process is composed of a number of 

steps. Planning Phase steps range from strategic linkage to the 

development of a long-term agency capital plan. The Budgeting Phase 

begins with the agency’s budget submission to OMB and ends with 

congressional approval and OMB apportionment of funding. The 

Procurement Phase of the capital process begins with acquisition planning, 

includes contract award and contract management, and ends with testing 

and acceptance of the asset—ensuring that the asset meets the 

requirements of the contract. The Management-In-Use Phase begins with 

operational analysis and includes the execution of an operation and 
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 23 GAO-04-138 Agency Capital Planning

maintenance plan, a postimplementation review—to evaluate the overall 

effectiveness of the agency’s capital planning and acquisition process, and 

the execution of an asset disposal plan.

The Capital Programming Guide integrates executive office and statutory 

asset management initiatives, including GPRA, the Clinger-Cohen Act, and 

FASA, into a single, integrated process to ensure that capital investments 

contribute to the achievement of agency goals and objectives. The OMB 

Guide supplements the requirements of OMB Circular A-11, part 7, by 

providing procedural and analytic guidelines. While agencies are provided 

flexibility in how they implement the key principles and concepts of the 

OMB Guide, they are expected to comply with existing statutes for 

planning and funding new capital assets and achieving cost, schedule, and 

performance goals.8

 Figure 6 illustrates the four phases of capital 

programming as presented in the OMB Guide.

8

We participated in the development of OMB’s Capital Programming Guide and have 

provided OMB with examples of leading organization capital practices for inclusion in a 

subsequent version of the guide. 
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 24 GAO-04-138 Agency Capital Planning

Figure 6: OMB Capital Programming Cycle

In December 1998, we issued an Executive Guide on capital decision 

making based on extensive research to identify leading practices used by 

state and local governments and private sector organizations. Our 

Executive Guide summarizes 12 fundamental practices that have been 

successfully implemented by organizations that were recognized for their 

outstanding capital decision-making practices and provides examples of 

leading practices from which the federal government may draw lessons and 

ideas. To help consider the applicability to the federal government 

experience, our Executive Guide includes information from one federal 

agency.

Budgeting

Procurement

Planning

Capital Programming Cycle

Management

In Use

Operational Analysis

Execution of Operation and

 Maintenance Plan

Post-Implementation Evaluation

Execution of Asset Disposal Plan

Agency Submission

Passback

Agency Revision

Approved for President’s Budget

Congressional Approval and OMB

 Apportionment

Strategic and Program 

 Performance Linkage

Baseline Assessment

Functional Requirements

Alternatives to Capital Assets

Choosing the Best Capital Asset

The Agency Capital Plan

Validate Planning Decision

Manage the Procurement Risk

Consider Tools

Select Pricing Mechanism

Issue the Solicitation

Proposal Evaluation and Negotiation

Contract Award

Contract Management

Acquisition Analysis

Acceptance

Source: Office of Management and Budget, Capital Programming Guide.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 25 GAO-04-138 Agency Capital Planning

Our Executive Guide presents an overall framework for effective capital 

decision making and identifies organizational attributes that are important 

to the decision-making process as a whole. Leading organizations 

described vision and leadership, strategic planning, good information and 

data systems, and clear communication as critical to the success of their 

capital decision-making process. Our Guide is organized around five 

general principles that leading organizations used to make capital 

investment decisions: (1) integrate organizational goals into the capital 

decision-making process, (2) evaluate and select capital assets using an 

investment approach, (3) balance budgetary control and managerial 

flexibility when funding capital projects, (4) use project management 

techniques to optimize project success, and (5) evaluate results and 

incorporate lessons learned into the decision-making process. To help 

translate these principles into actions and to provide concrete examples of 

how agencies and the Congress can apply these principles, we identify 

practices used by the leading organizations that best demonstrate each 

principle. Figure 7 illustrates the capital decision-making framework 

principles and practices.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 26 GAO-04-138 Agency Capital Planning

Figure 7: Capital Decision-Making Framework, Principles and Practices

Although our Guide focuses on fundamental practices rather than detailed 

guidance, the practices represent actions and steps to be taken. In addition, 

the examples presented in the guide illustrate and complement many of the 

phases and specific steps contained in the OMB Capital Programming 

Guide. There is a great deal of overlap between the OMB and GAO guides 

since both suggest similar fundamental practices that are essential to 

making effective capital investment decisions. Because of the importance 

V. Evaluate results and incorporate

 lessons learned into the

 decision-making process

1. Conduct comprehensive assessment of needs to

 meet results-oriented goals and objectives

2. Identify current capabilities, including the use of

 an inventory of assets and their condition, and

 determine if there is a gap between current and

 needed capabilities

3. Decide how best to meet the gap by identifying

 and evaluating alternative approaches (including

 noncapital approaches)

4. Establish review and approval framework

 supported by analyses

5. Rank and select projects based on established

 criteria

6. Develop a long-term capital plan that defines

 capital asset decisions

7. Budget for projects in useful segments

8. Consider innovative approaches to full up-front

 funding

9. Monitor project performance and establish

 incentives for accountability

10. Use cross-functional teams to plan for and

 manage projects

11. Evaluate results to determine if organizationwide

 goals have been met

12. Evaluate the decision-making process:

 reappraise and update to ensure that goals are

 met

Principles Practices

I. Integrate organizational goals

 into the capital

 decision-making process

II. Evaluate and select capital

 assets using an investment

 approach

III. Balance budgetary control and

 managerial flexibility when

 funding capital projects

IV. Use project management

 techniques to optimize project

 success

Source: GAO/AIMD-99-32.
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 27 GAO-04-138 Agency Capital Planning

of planning, this study focuses on agencies’ implementation of the concepts 

that underlie the planning phase of OMB’s Guide and support principle I 

and principle II of our Executive Guide. The planning phase, as the driver 

of the following phases, is key to making effective capital investment 

decisions. The concepts start with linking the capital planning process to 

the organization’s overall mission, goals, and objectives and culminate in 

the development of a long-term organization capital plan. They are 

described in this report as 

• strategic linkage,

• needs assessment and gap identification,

• alternatives evaluation,

• establishment of a review and approval framework,

• establishment and use of criteria to rank and select proposed projects, 

and

• development of a long-term capital plan. 

The planning phase is the crux of the capital decision-making process. The 

products that result from this phase are used throughout the remaining 

phases of the process, and failure during this stage may have repercussions 

throughout.

Strategic Linkage Strategic planning can be defined as a structured process through which an 

organization translates a vision and makes fundamental decisions that 

shape and guide both what the organization is and what it does. Both OMB 

and GAO guidance emphasize the importance of linking capital asset 

investments, funding, and management to an organization’s overall mission 

and long-term strategic goals. OMB’s Guide describes capital planning as 

an integral part of an agency’s strategic planning process within the 

framework established by GPRA. It states that capital assets should be 

planned for, acquired, and managed based on their ability to contribute to 

accomplishing program outputs and outcomes as described in an agency’s 

strategic plan. It further states that an effective strategic plan should 

identify major capital assets that are critical to the plan’s implementation 

and should define the outcomes that the assets will help to realize. Our 

Guide describes how leading organizations also view strategic planning as 
Chapter 1

Capital Planning Is the Core of the Capital 

Decision-Making Framework

Page 28 GAO-04-138 Agency Capital Planning

the vehicle that guides decision making for all spending. These 

organizations use their strategic planning processes to assess the needs of 

clients and constituents and the political and economic environment in 

which they are operating and to link the expected outcomes of projects, 

including capital projects, to the organization’s overall strategic goals and 

objectives.

Needs Assessment and 

Performance Gap 

Identification

Conducting a comprehensive assessment of resources needed or an 

analysis of program requirements is an important first step in an 

organization’s capital decision-making process. A comprehensive needs 

assessment identifies the resources needed to fulfill both immediate 

requirements and anticipated future needs based on the results-oriented 

goals and objectives that flow from the organization’s mission. The needs 

assessment is results oriented in that it determines what is needed to 

obtain specific outcomes rather than what is needed to maintain or expand 

existing capital stock. A comprehensive assessment of needs considers the 

capability of existing resources and makes use of an accurate and up-todate inventory of capital assets and facilities as well as current information 

on asset condition. Using this information, an organization can properly 

determine any performance gap between current and needed capabilities.

OMB’s Capital Programming Guide describes the needs assessment and 

gap identification process in terms of an assessment of the existing 

performance baseline that covers both those capital assets currently in use 

and those assets in the procurement process. It includes all assets 

regardless of how they are being acquired—purchase, lease, or service 

contract. OMB guidance suggests the criteria for the baseline assessment 

include each asset’s current or anticipated functionality, full life-cycle 

costs,9

 the affordability of full life-cycle costs, associated risks, and the 

agency’s capacity to manage the asset. OMB guidance further states that a

performance gap should be defined in terms of the functional requirements 

to be achieved and that such functional requirements should consider the

9

OMB’s Capital Programming Guide defines life-cycle costs of an asset as all direct and 

indirect initial costs, including planning and other costs of procurement; all periodic or 

continuing costs of operation and maintenance; and costs of decommissioning and disposal.
Chapter 1

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Page 29 GAO-04-138 Agency Capital Planning

capabilities of other assets with which the function or proposed asset must 

interact in order to achieve its goal, objective, or mission.10 Our Guide

describes how leading organizations conduct a comprehensive needs 

assessment (variously referred to as needs determination, needs study, or 

mission analysis). This is often the first step in an organization’s capital 

planning and budgeting process and includes an assessment of an entity’s 

internal and external environments and an examination of its primary role 

and organizational structure.

Our Guide also describes how leading organizations track the use and 

performance of existing assets and facilities to help assess current 

capabilities and establish a baseline. These organizations maintain asset 

inventory and tracking systems that not only identify the location and 

status of assets and facilities but also track and report asset and facility 

condition and deferred maintenance needs. Information about existing 

assets is also used in determining what capital resources are currently 

available and what resources are needed in order for the organization to be 

able to meet its goals and objectives. The data and the information 

provided by well planned information systems give organizations the ability 

to build comprehensive measures, collect relevant data, and perform 

analyses that can be used to support strategic as well as operational 

budgeting decisions. Using a variety of automated systems that are 

frequently updated, leading organizations provide managers and decision 

makers with timely, current, and useful information to assess the 

availability and condition of existing assets. 

For example, one large state government we studied maintained three 

levels of inventory systems to identify and control its capital assets and 

facilities: a statewide inventory, individual agency inventories, and an 

inventory of deferred maintenance. The state also required routine asset 

and facility condition assessments. The statewide inventory was 

maintained through the state’s fixed asset accounting and control system 

and was updated at least annually to reflect new assets acquired and old 

assets disposed of. Reports generated by this inventory system identified 

assets within a given agency that were available for use by other 

departments or divisions and surplus assets within the state that may be 

10For example, a requirement to meet a program’s goal of providing a warning about 

hurricanes within a certain number of hours may indicate a new satellite with the latest 

technology as a solution. However, if the program’s ground stations use obsolete technology, 

merely improving the satellite’s functional capacity will not enable the program 

performance to reach its full potential.
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available for any agency’s use. Some agency inventory systems also 

contained asset condition assessment data in addition to data on asset 

existence. Agencies included asset condition assessment data when 

submitting their capital project requests to the state’s planning and 

budgeting department. When requesting funding for new assets or facilities, 

agency managers were required to fully describe the agency’s current 

assets and facilities, including information on the adequacy of existing 

assets and facilities to meet current and future program demands.

Alternatives Evaluation When a performance gap between needed and current capabilities has been 

identified, it is important that organizations carefully consider how best to 

bridge the gap by identifying and evaluating alternative approaches, 

including noncapital options. OMB’s Guide suggests that once detailed 

requirements are defined, management should answer the “Three Pesky 

Questions” before planning to acquire capital assets. These questions are as 

follows: 

1. Does the investment in a major capital asset support core/priority 

mission functions that need to be performed by the federal 

government?

2. Does the investment need to be undertaken by the requesting agency 

because no alternative private sector or governmental source can 

better support the function?

3. Does the investment support work processes that have been simplified 

or otherwise redesigned to reduce costs, improve effectiveness, and 

make maximum use of commercial-off-the-shelf technology?

If the answer to all three questions is yes, according to the OMB Guide, 

management should still consider options other than acquiring new assets 

to bridge the performance gap. The guide suggests that management also 

consider meeting the objectives through regulation or user fees or by using 

human capital instead of physical capital assets. OMB’s Guide encourages 

the use of benefit-cost or cost-effectiveness analysis to determine if 

acquiring a new asset is the best way to reduce an identified performance 

gap. In addition, the guide encourages agencies to consider modifying 

existing assets or some other method. Figure 8 illustrates the use of OMB’s 

“Three Pesky Questions.”
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Figure 8: OMB Decision Tree for Analyzing Agency Programs and Investments

Is the function central to the achievement of the

agency’s mission?

Can this agency accomplish this function better

than the private sector or another government

entity?

Yes

Yes

No

No

Direct to

private 

sector

Terminate

function

Devolve to 

state and local

governments

Spin off to

other federal

agency

Partnerships

with state 

and local

governments

Cross 

service

with federal

agencies

Contract 

entire 

function 

with private

sector

Introduce

competition

...consider the kind of capital assets

needed, if any, and how they will be acquired

Have work processes been reengineered to

reduce costs and improve effectiveness?

Source: Office of Management and Budget, Capital Programming Guide.

No Yes

Cut red tape, 

empower

employees, and 

put customers 

first
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Our Guide describes how leading organizations consider a wide range of 

alternatives to bridge a performance gap, including noncapital alternatives, 

before choosing to purchase or construct a capital asset or facility. 

Managers carefully consider options such as contracting out and 

privatizing the activity as well as nonownership options such as leasing. 

Leading organizations also consider engaging in joint venture projects with 

other organizations to minimize the amount invested and reduce the 

organization’s risk. If it is determined that a capital asset is needed to 

bridge a performance gap, leading organizations first consider the use of 

existing assets before choosing to purchase or construct new assets. 

Information obtained from an organization’s asset inventory system 

facilitates considering the use of existing assets. One local government we 

studied considered many alternatives, and renovating or expanding an 

existing facility was the option used most frequently. 

Establishment of a Review 

and Approval Framework

Establishing a decision-making framework (which encourages the 

appropriate levels of management review and approval) is a critical factor 

in making sound capital investment decisions. A framework supported by 

the proper financial, technical, and risk analyses can mean capital 

investment decisions are made more efficiently and supported by better 

information. OMB’s Capital Programming Guide suggests that each 

agency establish a formal process for senior management review and 

approval of proposed capital assets. The cost of a proposed asset and its 

importance to achieving the agency mission should be considered when 

defining criteria for executive review. Also, the number of times a project 

proposal is reviewed should be based on the level of risk involved in the 

acquisition.

GAO’s Executive Guide describes how leading organizations use decisionmaking processes to help them assess where they should invest for the 

greatest benefit. Some organizations have processes that determine the 

level of review and analysis based on the size, complexity, and cost of a 

proposed investment or its organizationwide impact. One multinational 

company we studied had various levels of review based on the business 

and economic significance of the proposed capital project. This company 

used its corporate executive council for some project decisions while 

managers within the company’s business groups reviewed and approved 

other projects. The company’s chief executive officer was involved only 

when proposed investments were of strategic significance to the company 

as a whole or were very large and capital intensive. This company also 

categorized proposed projects as “mandatory,” “necessary,” or “would like 
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to do.” Projects required by law or regulation were considered mandatory 

and were subject to less up-front analysis and management review. Projects 

defined as necessary were usually more strategic in nature and involved 

either benefits to the organization or cost savings. Depending on the scope 

and risk involved, “necessary” projects required a greater level of analysis 

or review. This was also true of “would like to do” projects, which were 

projects that were desired but not critical to the organization’s goals.

As part of the capital investment review and approval process, leading 

organizations develop a decision or investment package to justify capital 

project requests. These packages—referred to as business cases or project 

requests—generally include detailed economic and financial analyses and 

other documents to support the proposed investment. The types of analysis 

ranged from a complete cost-benefit analysis—which included full lifecycle costing—to an analysis that compared alternatives and 

recommended the most cost-effective option. Decision packages also show 

how a proposed investment is linked to an organization’s strategic goals.

Establishment and Use of 

Criteria to Rank and Select 

Projects

Capital investments should be compared to one another to create a 

portfolio of major assets ranked in priority order. Much like individuals 

selecting a diverse portfolio of investments, agencies invest in a diverse 

portfolio of capital assets. While investor returns are measured in 

dividends or capital gains, the costs and benefits of capital asset 

investments should be quantified both in monetary terms as well as in 

terms of outputs and outcomes. It is generally beneficial, if not necessary, 

to rank proposed projects because the number of requested projects often 

exceeds available funding. OMB’s guidance suggests that agencies choose 

portfolios of capital investments that maximize return to the taxpayer and 

the government—at an acceptable level of risk. The guide provides one 

approach to devising a ranked list of projects drawn from multiple best 

practices organizations: the use of a scoring mechanism that assigns a 

range of values based on project strengths and weaknesses. Higher scores 

are given to projects that meet or exceed positive aspects of the decision 

criteria. Such a ranking process might produce three groups of projects—

likely winners, likely dropouts, and projects that warrant a closer look. 

Also, such a process may be used iteratively—in multiple steps—to limit 

the number of projects to be considered by an executive decision-making 

body.

GAO’s Executive Guide describes processes used by leading organizations 

for ranking and selecting proposed capital projects. These organizations 
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determined the appropriate mix of projects by viewing all proposed 

investments and existing capital assets as a portfolio. They selected 

projects based on preestablished criteria and a relative ranking of 

investment proposals. The organizations used their overall missions and 

strategic objectives as a basis for establishing decision-making criteria. 

These criteria, such as increased cost savings, market growth, and link to 

organizational strategies, were used to rank projects. Senior-level managers 

were involved both in developing the criteria and communicating the 

criteria throughout the organization. For example, a state government we 

studied used a scoring process that ranked all projects across all agencies. 

Using criteria based on the governor’s strategic goals and objectives, 

projects received scores ranging from 0 to 700 (in specified increments). 

Critical projects, which addressed life safety emergencies and legal 

obligations, typically received the maximum score. Noncritical projects 

were assigned points based on factors such as the linkage to the agency’s 

mission, the priority assigned by the requesting agency, and whether the 

project would result in operating savings or increased efficiencies.

Development of a Long-term 

Capital Plan

The long-term capital asset plan is the final product resulting from the 

various steps and stages of the planning phase of capital investment 

decision making. The capital plan should be the result of an executive 

review process that has determined the proper mix of existing assets and 

new investments needed to fulfill the organization’s mission, goals, and 

objectives. Long-term capital plans, covering 5 to 6 years, guide the 

implementation of organizational goals and objectives and help decision 

makers establish priorities over time. While long-term plans must respond 

to changing requirements and priorities, they are based on the 

organization’s long-range vision embodied in its strategic plan. Thus, any 

year-to-year changes should be driven by strategic decisions that are 

consistent with the organization’s long-term goals.

OMB’s Capital Programming Guide encourages each agency to develop a 

capital plan defining the agency’s long-term capital needs consistent with 

its strategic plan. The guide states that the plan should include an analysis 

of the portfolio of assets—both those currently owned by the agency and 

those in the procurement stage—and of any performance gap and 

capability needed to bridge it. The plan should be the central document, or 

group of documents, used by the agency for capital asset planning. OMB’s 

Guide further encourages agencies to use a summary of the capital plan in 

their budget justifications to OMB, in their requests for congressional 

authorizations of projects, and in their justifications of estimates for 
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appropriations to the Congress. While there is no required format for the 

capital plan, certain elements should be included, such as a statement of 

agency mission, goals, and objectives; a description of the planning phase; 

a baseline assessment and performance gap; and a project risk mitigation 

plan.

The GAO Executive Guide describes how leading organizations stress the 

importance of developing a long-term capital plan. These organizations 

prepare long-term plans to document specific planned investments, plan 

for resource use over the long term, and establish priorities for project 

implementation. These capital plans typically cover a 5-, 6-, or 10-year 

period and are updated either annually or biennially. Most state 

governments we studied required that all capital project requests be 

included in an agency’s long-term capital plan. In leading private sector 

companies, planned capital expenditures are aligned with long-range 

business plans. The business plans are usually based on a product’s life 

cycle, market conditions, or corporate goals and objectives. 

One state government we studied prepared a 5-year capital plan that assists 

the government in refining the scope and cost estimate of individual 

projects. Requested projects generally go into the plan in year 5, and 

agencies are required to resubmit project applications and obtain approval 

each year until the project reaches the first year of the capital plan, which 

is the budget request for the upcoming year. Resubmission of requests is 

the only way a project could move forward from year 5 to year 4, and from 

year 4 to year 3, and so forth. Only very small project requests generally 

appeared for the first time in the budget year. The annual review of capital 

project applications allowed the state budget office to determine if a 

project request continued to meet the goals and objectives outlined in the 

agencies’ strategic plans. It also allowed a project’s scope and cost to be 

refined each year over a 5-year period, which kept project costs within 

specified resource limits. State officials believed that the continual review 

was a key factor in why the state had limited cost overruns and few 

surprises once project funding was approved.

Long-term planning requires that decision makers rank capital investment 

needs and promotes the making of informed choices about managing the 

organization’s resources. It also requires the organization to weigh and 

balance the need to maintain existing assets against the demand for new 

ones. Some congressional staff indicated it could be useful to have longterm capital planning information to see what an entity viewed as 

important. Further, they said that the process and analyses involved in 
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developing a plan are effective in ensuring that well-informed decisions are 

made at the agency level. They believe that the lack of good information 

sometimes leads to situations in which other considerations drive 

decisions. Other congressional staff noted that comparisons of plans over 

several years might provide a basis for questioning projects that appear in 

budget requests without having been in the previous years’ long-term plans 

and that having more information, such as that contained in a long-term 

capital plan, also would be useful in oversight. In addition to providing their 

views on long-term capital plans, the staff commented that improved asset 

inventory systems and condition assessments should be a reasonable 

expectation of government agencies.

In summary, the planning phase of capital decision making should contain 

certain elements to help ensure well-informed decisions. Figure 9 

illustrates a process that a geographically dispersed organization could 

follow using the elements of OMB’s and GAO’s capital guidance.
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Figure 9: Example of Agency Process Illustrating Elements of Planning Phase Guidance

Source: GAO.

Field office Field office Field office Field office Field office Field office

Regional office

Proposals compiled

from field

Regional office

Proposals compiled

from field

Management

guidance

Based on long-term

strategic goals 

and annual 

administration and 

agency head

priorities

Asset

inventory

+

Condition

data

Central staff office

Proposals compiled from regional offices and assessed

Central management

Alternatives evaluated and projects compared

Long-term

capital plan

Office of

Management

and Budget

U.S. Congress

Long-term strategic goals

1st year of 

plan + urgent 

needs is agency 

budget request

Regional office

Proposals compiled

from field

Evaluation 

criteria

Strategic linkage

life/safety

Cost-benefit analysis

Operational efficiency
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Case Study Agencies Our four case study agencies have varied missions and program 

responsibilities that require the use of different types of capital assets to 

fulfill their goals and objectives. These agencies acquire land, buildings and 

other structures, ships, satellites, and major equipment, including 

information technology (IT) assets. The following provides a brief 

discussion of each agency’s mission, organizational structure, unique 

characteristics, recent capital spending in 2002 dollars, and any noteworthy 

changes to its capital decision-making process.

Department of Veterans 

Affairs

With a budget of over $50 billion, VA is one of the world’s largest health 

care, medical research, and insurance benefits organizations. VA is a 

cabinet-level department whose primary mission is to serve America’s 

veterans and their families, ensuring that they receive medical care, 

benefits, social support, and lasting memorials. VA consists of three 

separate administrations—the Veterans Health Administration, the 

Veterans Benefits Administration, and the National Cemetery 

Administration—and the staff offices of VA’s central office.

VA capital assets vary by administration and consist of VA-owned buildings 

and real estate, VA-leased buildings, enhanced-use and sharing agreements 

pertaining to capital assets, major equipment, and IT infrastructure and 

software. These include hospitals, clinics, cemeteries, office buildings, fire 

departments, and medical equipment. 

In recent years, a rapidly increasing patient base has challenged VA, along 

with the aging of the veteran population and their changing health care 

needs. Also, veterans are finding it increasingly difficult to obtain VA care 

in selected geographic regions, challenging VA to maintain services and 

facilities where they are most needed. VA’s total capital spending for fiscal 

years 2001 and 2002 was $1.4 billion and $2.1 billion, respectively.

VA’s capital planning process has evolved over the years, with management 

making a concerted effort to ensure that VA’s practices were in keeping 

with industry best practices and OMB guidance. VA began a rigorous effort 

to develop a model capital investment process shortly after the issuance of 

OMB’s Capital Programming Guide by contracting for a study of its thencurrent process and implementing a number of the contractor’s 

recommendations. One of the key improvements to its process was the 

creation of a centralized (department level) office to strengthen its process 

and ensure coordination of planning and investment decisions. The Office 
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of Asset Enterprise Management (OAEM) was created in July 2001 and is 

responsible for developing capital asset policy, providing guidance and 

oversight, and ensuring a consistent and cohesive agency approach to 

capital asset acquisition, management, and disposal. Another key 

improvement to the agency’s process is the use of a decision-support 

software program that evaluates and ranks projects based on agency goals 

and financial measures—an improvement for which VA received a best 

practices award from OMB.

More recently, OAEM has devised an approach to streamline the process 

for developing capital investment proposals. This new process involves the 

submission and review of investment proposal data in increasing levels of 

detail. It is believed that this streamlined approach will reduce the 

laborious data collection associated with developing proposals that are not 

funded and allow proposal developers more time to provide senior 

management with the most accurate cost and schedule data. VA’s 

leadership states that its process has evolved from a vertical stovepipe 

process with minimal crosscutting proposals to one that is horizontally 

integrated between the administrations and staff offices and encourages 

projects that cut across departmental lines. See appendix II for additional 

detail on VA’s process.

National Park Service The Park Service, a bureau within the Department of the Interior, exists to 

preserve the natural and cultural resources of the nation’s park system for 

the enjoyment, education, and inspiration of this and future generations.

The park system is organized into seven geographic regions, contains 388 

park units of widely varying size and nature, and covers 80 million acres of 

land. Park Service assets include roads; trails; campgrounds; park visitor 

centers; other buildings and employee housing; utility systems; marine and 

dock structures; signs and information structures; and special features 

assets, such as monuments, statutes, memorials, and viewing structures.

Park units vary considerably and range from large landscapes such as the 

Grand Canyon and Yosemite national parks, to historic structures such as 

Philadelphia’s Independence Hall, to the granite faces of Mount Rushmore.

Visitation rates at national parks have grown considerably over the past 

two decades—from about 220 million visitors in 1980 to close to 290 million 

today. This growth has required expansion of Park Service facilities and 

presented a challenge to many of the park’s transportation infrastructures. 

The park system also has been challenged by the need to preserve 

increasing numbers of historic park properties and the expense to maintain 
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them. Park Service total capital spending for fiscal years 2001 and 2002 was 

$334 million and $496 million, respectively.

The Park Service’s capital programming and asset management process is 

evolving, and some current practices are largely the result of implementing 

a number of recommendations from a 1998 National Academy for Public 

Administration (NAPA) study. At the request of the Department of the 

Interior, NAPA conducted a study of the Park Service’s line-item 

construction program. The NAPA report made several recommendations 

focused on the Denver Service Center, which has a primary role in 

implementing the Park Service’s construction program. One key 

recommendation was the establishment of an external review group to 

assess line-item construction projects for suitability and cost-effectiveness.

This advisory group meets concurrently with the Park Service’s senior-level 

review board and reviews every facility project with an estimated cost 

greater than $500,000. The advisory group provides its findings directly to 

the Park Service Director. Also in 1998, spurred by congressional concerns 

and new federal accounting standards for plant, property, and equipment, 

the Park Service initiated the design of a new asset management process. 

The new process is intended to provide better overall management of the 

agency’s asset inventory. See appendix III for additional information on the 

Park Service’s process.

National Oceanic and 

Atmospheric Administration

NOAA describes and predicts changes in the Earth's environment and 

conserves and manages the nation's coastal and marine resources. NOAA is 

a bureau within the Department of Commerce and accomplishes its overall 

mission through five major line offices with diverse missions and numerous 

program offices. These line offices are the National Weather Service 

(NWS); the National Environmental Satellite, Data, and Information 

Service (NESDIS); the National Marine Fisheries Service; the National 

Ocean Service; and the Office of Oceanic and Atmospheric Research. Key 

among the NOAA program offices is the Office of Marine and Aviation 

Operations. Some line offices are users of other NOAA line-office products 

(e.g., NESDIS produces satellites for NWS’s weather prediction). NOAA 

uses various types of assets, including satellites, ground systems, aircraft, 

water vessels, buildings, and vehicles. Many of NOAA’s assets are 

specialized and unique to NOAA’s mission, making the consideration of 

alternatives to acquiring some needed assets—such as ships and 

satellites—difficult to do. NOAA’s capital spending for fiscal years 2001 and 

2002 was $602 million and $787 million, respectively. 
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Most of NOAA’s capital planning occurs at the line-office level. The various 

service lines and program offices have separate planning processes that are 

consistent with both the goals of NOAA and of the Department of 

Commerce. A recent improvement to the NWS process was the 

establishment of an executive board—the Finance and Investment Review 

Board (FIRB) in fiscal year 2000, which created a formal process for 

management review and prioritization of capital investment proposals in 

support of NWS strategic goals. FIRB reviews capital projects costing 

$1 million or more and consists of five voting members and three nonvoting 

advisor members. The board reviews and evaluates capital investment 

proposal justifications, scores capital investments according to established 

criteria, and ranks the approved investments. The FIRB charter cites OMB’s 

Capital Programming Guide as one of the reasons for its creation. NOAA’s 

capital investments are funded through a single budget account—the 

procurement, acquisition, and construction (PAC) account. The PAC 

account was established 5 years ago. See appendix IV for additional 

information on NOAA and its capital planning process.

Bureau of Prisons BOP is an agency of the Department of Justice (DOJ) responsible for 

providing for the safe, secure, and humane confinement of persons in 

federal custody. The agency consists of six geographical regions with 102 

facilities, and its activities encompass two areas of responsibility—

detention and incarceration. While detention responsibilities are shared 

with the U.S. Marshals Service and the Bureau of Immigration and Customs 

Enforcement (formerly the Immigration and Naturalization Service), 

incarceration is the sole responsibility of BOP. In addition to housing the 

federal inmate population, BOP provides inmates with basic services, such 

as food, clothing, and health care and an array of educational, vocational, 

and other programs. The federal inmate population has increased sixfold in 

the last two decades, from approximately 25,000 inmates and 41 

institutions in 1980 to more than 160,000 inmates and 102 institutions in 

2002. Most of these inmates were confined in BOP-operated facilities while 

more than 27,000 were assigned to privately managed institutions, state and 

local facilities through intergovernmental agreements, community 

corrections centers, or home confinement. BOP’s acquires capital assets 

such as facilities and other buildings, major equipment, and vehicles.

BOP has limited control over the size of its inmate population as this is 

influenced by other parts of the criminal justice system, including the 

aggressiveness of law enforcement policies and the length of sentences 

imposed. In 1997, BOP was required to absorb the District of Columbia 
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inmate population,11 which necessitated the construction of some 

additional facilities. It is unclear what impact the September 11, 2001, 

terrorist attacks may have on BOP facility needs.

BOP’s capital spending for fiscal years 2001 and 2002 was $481 million and 

$795 million, respectively. Funding for BOP capital projects competes with 

other DOJ programs. DOJ has a Strategic Management Council (SMC) that 

is chaired by the Attorney General. Its members are the directors of all of 

the DOJ agencies. BOP’s Director is the only career-service member—the 

others are political appointees. SMC meets to discuss the entire DOJ 

budget request, and each director defends his or her agency’s request. SMC 

then makes recommendations to the Attorney General for the entire DOJ 

budget submission to OMB. See appendix V for additional information on 

BOP and its process.

11Title XI of the Balanced Budget Act of 1997, Pub. L. No. 105-33, August 5, 1997.
Page 43 GAO-04-138 Agency Capital Planning

Chapter 2

Agency Capital Planning Processes Link to 

Strategic Goals and Objectives Chapte2r

Both the Office of Management and Budget (OMB) and GAO guidance 

emphasize the importance of linking capital asset investments to an 

organization’s overall mission and long-term strategic goals. Therefore, the 

capital decision-making process must reflect both the results of an 

organization’s long-term strategic planning process and short-term goals 

and objectives. OMB’s Capital Programming Guide suggests that an 

agency’s capital planning process be an integral part of the strategic 

planning process—stressing that capital assets should be planned for and 

acquired in light of their ability to contribute to the accomplishment of 

outcomes as described in an agency’s strategic plan. Our study found that 

leading organizations also view strategic planning as the instrument that 

guides decision making for all spending. Case study agencies’ capital 

planning processes considered strategic goals as decisions were made 

about capital investments, and administration and departmental priorities 

were communicated throughout the processes. 

Capital Investments 

Link to Strategic Plans

Case study agencies engage in strategic planning, but strategic plans vary. 

Some agencies prepare administration- or bureau-level strategic plans 

while others prepare strategic plans at various levels within the 

administrations or bureaus. Although the Government Performance and 

Results Act of 1993 (GPRA) only requires that agency heads prepare 

strategic plans, bureau-level planning at all of the case study agencies is 

usually accomplished in support of departmental strategic plans. For 

example, the Department of Veterans Affairs’ (VA) National Cemetery 

Administration (NCA) develops its own corporate-level strategic plan. NCA 

also engages in strategic and business planning at the memorial service 

network (MSN) and cemetery levels, respectively. There are five MSNs and 

each prepares a strategic plan that draws from and supports the NCA 

strategic plan. Individual cemeteries then prepare business plans that 

support the strategic plan for their MSNs and help to identify specific 

capital asset requirements throughout NCA. These cemetery- and MSNlevel plans support the NCA strategic plan that is ultimately linked to VA’s 

strategic plan.

One of the primary goals for NCA under the VA Strategic Framework is to 

meet the burial needs of veterans and their eligible family members. 

Strategies to achieve this include establishing additional national 

cemeteries or expanding existing cemeteries in underserved areas—with 

the long-term objective of providing a burial option within 75 miles of a 

veteran’s home to 90 percent of the veteran population. NCA prepares a 5-

year construction plan identifying its planned major and minor 
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Page 44 GAO-04-138 Agency Capital Planning

construction projects, which are driven by the goals and objectives of the 

NCA strategic plan. 

Strategic planning for VA’s Veterans Health Administration (VHA) is also 

done at the network level. There are 21 Veterans Integrated Service 

Networks and each prepares a VHA network-level strategic plan. Like NCA, 

these network plans are driven by and support the VA departmental 

strategic plan. Among other things, the VHA network-level plans address 

the capital proposals and infrastructure needed to support the network 

goals and objectives. VHA future capital needs are likely to be largely 

driven by the results of the ongoing Capital Asset Realignment for 

Enhanced Services studies being conducted in each network (discussed 

later in this report).

While VA does not prepare an overarching department-level long-term 

capital plan (discussed in ch. 4), it does evaluate both individual cemetery 

projects from the 5-year NCA construction plan and VHA medical facility 

projects for funding along with other VA project proposals. Those of 

highest priority are ultimately included in the annual budget submission to 

OMB and the Congress.

The National Park Service (Park Service) prepares a servicewide strategic 

plan, and individual national parks prepare park-level strategic plans that 

cover a 5-year time frame and discuss the capital facilities needed to 

support individual park strategic goals. The strategic goals of the Park 

Service are consistent with and contribute primarily to the Department of 

the Interior’s (DOI) goals to protect the environment and preserve our 

nation’s natural and cultural resources and to provide recreation for 

America. The Park Service prepares a servicewide 5-year line-item 

construction plan, which is a list of planned capital projects in priority 

order and reflects the criteria used to rank and select the projects—criteria 

based on the agency’s strategic goals. According to officials, each national 

park has specific goals pursuant to GPRA that support the servicewide 

Park Service goals and each has park-specific goals to better align with its 

own mission. Individual park strategic plans, such as the Cape Cod 

National Seashore’s plan for fiscal years 2000 through 2005, list the capital 

facilities and infrastructure—such as visitor centers, bathhouses, paved 

roads, and employee housing—needed to accomplish the park’s strategic 

goals of providing for the public use and visitor enjoyment of parks and 

reducing the number of poor employee housing units for that period. 

Officials also stated that each park prepares a general management plan 
Chapter 2

Agency Capital Planning Processes Link to 

Strategic Goals and Objectives

Page 45 GAO-04-138 Agency Capital Planning

that covers a 10- to 20-year period and contains elements of both a strategic 

plan and a long-term capital plan. 

At the National Oceanic and Atmospheric Administration (NOAA), both a 

NOAA-level strategic plan and individual line and program office-level 

strategic plans are prepared. All of them support the vision and long-term 

goals of the Department of Commerce, as shown by clearly articulated 

interrelationships between NOAA and Commerce goals. The strategy for 

fulfilling NOAA’s mission consists of seven interrelated goals. According to 

NOAA’s strategic plan for 1995 through 2005, each goal is a coherent unit, 

but there also are crosscutting relationships that according to the plan, 

enable the implementation of Commerce and NOAA objectives. The plan 

describes its seven goals and the strategies to achieve them in general 

terms. NOAA’s line offices implement the strategies and conduct the work 

to achieve these goals. The line and program office strategic plans discuss

the capital needed to support each office’s goals and programs. 

As an example, the National Weather Service (NWS) line office strategic 

plan for weather, water, and climate services for fiscal years 2000 through 

2005 supports one of two primary missions of NOAA—Environmental 

Assessment and Prediction—and contains three of the seven NOAA goals 

and a number of objectives to fulfill this mission. One of the NWS 

objectives includes the planned deployment of the Advanced Hydrologic 

Prediction System to 50 percent of river forecast sites by the year 2005. 

Another includes expanding the number of International Emergency 

Weather Network receiving stations by 50 percent by the year 2005. 

In addition to its strategic plan, the National Environmental Satellite, Data, 

and Information Service (NESDIS) line office prepares a 5-year capital plan 

to guide the acquisition of its satellite ground systems—a primary 

responsibility of NESDIS. This capital plan outlines NESDIS current 

operations and planned capital acquisitions—including 7-year cost 

estimates—to bridge its performance gap in support of the strategic goals 

established in its strategic plan. The Office of Marine and Aviation 

Operations (OMAO) program office, which is responsible for improving the 

quality and efficiency of NOAA’s ship and aircraft operations, prepares a 

strategic plan that also addresses its capital issues. For instance, its 

strategic plan for fiscal years 2000 through 2005 describes the need to 

acquire three additional fisheries ships to meet program expectations over 

the next decade. The plan also describes the impending critical need for 

replacement aircraft capability.
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Agency Capital Planning Processes Link to 

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The Bureau of Prison’s (BOP) strategic planning documents describe the 

capital projects planned and in progress to support its current goals and 

objectives. The activities of the federal prison system support the 

Department of Justice’s (DOJ) strategic goal VI—protect American society 

by providing for the safe, secure, and humane confinement of persons in 

federal custody. This strategic goal is supported by four DOJ objectives that 

drive the BOP strategic goals and objectives. The DOJ strategic plan for 

fiscal years 2001 through 2006 contains strategies to achieve the objectives 

of ensuring sufficient prison capacity and maintaining prison operations. 

The strategies describe the activation of two recently completed facilities, 

the ongoing construction of four additional facilities with expected 

activation in fiscal years 2002 and 2003, and the planned design and 

construction of seven new facilities expected to be activated in fiscal year 

2004. The DOJ plan also describes the use of privately managed facilities 

and cooperative arrangements to maximize prison capacity, which 

illustrates the consideration of alternatives to new construction. In 

addition, the DOJ plan describes the strategies for maintaining prison 

operations, which include an extensive modernization and repair program. 

BOP’s strategic planning documents provide additional detail on the 

ongoing and planned new facilities—providing facility location and the 

expected increase in rated prison capacity.

Agency Guidance 

Requires That Capital 

Investment Proposals 

Link to Strategic Goals 

and Objectives

Agency spring budget calls (call memorandums) for proposed capital 

investments contain clear guidance for proposal development that includes 

top-level guidance on adhering to agency goals, objectives, and 

administration priorities. For example, VA’s departmental requests for 

capital investment proposals require that all VA administration and staff 

office proposals be linked to the department’s current strategic goals and 

objectives. The guidance also illustrates current presidential and 

departmental priorities. The capital investment request for proposals for 

fiscal year 2004 required that any proposed capital projects support one or 

more of the priorities of the VA Secretary or the President—priorities that 

are aligned with VA’s strategic goals and objectives. Attached memorandum 

guidance described the President’s management agenda and the VA 

Secretary’s priority areas and the performance measures associated with 

both. The guidance also detailed the priority areas for all three VA 

administrations and included the associated performance measures. For 

proposed capital projects that were not related to priorities of the 

Secretary or the President, staff were required to explain which of VA’s 

strategic goals the project would support and how. The guidance referred 

staff to VA’s current strategic plan for additional information.
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At BOP, capital project requests also must include descriptions of how 

strategic goals will be supported, and the guidance reinforces the Attorney 

General’s current priority objectives. The BOP Director’s budget call 

memorandum for fiscal year 2003 directed assistant and regional directors 

to be mindful of the Attorney General’s priority objectives when developing 

proposed budget initiatives. The guidance also required that proposals 

reference the BOP strategic planning goal that would be supported and the 

current BOP objective. It further required the proposals to estimate costs 

and identify performance indicators to measure if the goals are achieved. 

The BOP Facilities Management Branch’s memorandum for fiscal year 2004 

capital requests required that line item and major project requests (projects 

with costs of $300,000 or more) be documented in the requesting 

institution’s strategic plan.

NOAA’s capital investment proposals are developed within the strategic 

themes that have been established to achieve NOAA’s mission. Strategic 

themes are a grouping of crosscutting multi-line-office programs that are 

aligned with NOAA goals and priorities. The themes, representing major 

areas of concentration, are organized around line offices. A working group 

established for each theme and led by one of the line offices it supports 

implements their objectives. These working groups function as internal 

review boards, reviewing line-office proposals and preparing initiatives for 

consideration by NOAA’s budget office. All programs, including capital 

investment proposals submitted to the themes’ work group must be 

justified in terms of how they support the theme. 

At the Park Service, administration and departmental priorities influence 

projects initiated at individual parks. The annual budget call memorandum 

issued by the Park Service’s Washington Office informs the park regions 

and ultimately the individual parks of current priorities. For the past 

several years, the administration’s priority has been to reduce the backlog 

of deferred maintenance projects. More recently, increased visitor health 

and safety has become another priority after the September 2001 terrorist 

attacks.
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Page 48 GAO-04-138 Agency Capital Planning

Agency Criteria Used 

to Rank and Select 

Capital Investments 

Include Strategic 

Linkage

Case study agency processes for ranking and selecting proposed capital 

investments give great weight to strategic goals and objectives as well as 

current administration and organizational priorities. As discussed further 

in chapter 4, VA’s process includes the use of a computerized decision 

software package and established criteria to rank proposed capital 

investments. This comprehensive process scores capital proposals based 

on the assigned weights of a set of 9 core criteria and 19 subcriteria, 1 of 

which is the proposal’s alignment to the strategic plan’s goals. The 

established criteria used by the process are reviewed each year, updated, 

and aligned with VA’s mission and current administration and Secretary 

priorities.

At the Park Service, proposed capital investments and projects intended to 

enhance or maintain existing infrastructure are rated against their support 

of Park Service and DOI strategic goals. Project data entered by individual 

parks into the Park Service Project Management Information System 

(discussed in ch. 3) include the proposed project’s link to specific longterm goals and the associated performance measures and benefits based on 

outcomes. The regional and national-level project review and ranking 

process uses a scoring system that considers evaluation factors linked to 

the Park Service’s mission and strategic goals. The scores in the various 

evaluation categories allow the Park Service’s construction office to 

respond to the Park Service, DOI, and administration priorities and 

strategic direction. A detailed discussion of this review and selection 

process and the factors used is presented in chapter 4.

Strategic linkage is also an important factor used by NOAA to rank and 

select from its competing capital investment proposals. Chapter 4 presents 

a detailed discussion of this process and its use of review boards that 

implement the objectives of strategic themes, aligned with and established 

to help ensure that NOAA’s mission, long-term goals, and current priorities 

are fulfilled. Project proposals submitted to each theme’s review board 

must be justified in terms of the specific goals the project will support. For 

example, the Infrastructure, Maintenance, Safety and Human Capital theme 

review board used a set of criteria to rank project proposals. The criteria 

included, among others, contribution to agency mission, productivity 

improvement, operational efficiency, and the likelihood of the project’s 

success. Similar criteria permeated the other NOAA themes’ processes, and 

although each theme’s review board has a distinct process for ranking 

proposals, the criteria include how well the proposal is aligned with 

NOAA’s mission.
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Conclusion Although we did not evaluate agencies’ actual practices or the resulting 

decisions about capital acquisitions, the case study agencies’ capital 

planning processes appear to consider overall organizational goals and 

current administration and departmental priorities when planning for 

capital asset acquisitions and evaluating projects intended to improve, 

enhance, or maintain existing asset infrastructure. In some cases, the 

strategic linkage is demonstrated by specific projects that implement longterm goals. In other cases, the linkage is apparent in agency guidance for 

developing capital project proposals and the criteria used to rank and 

select among competing proposed projects.
Page 50 GAO-04-138 Agency Capital Planning

Chapter 3

Agency Processes for Assessing Capital Needs 

Reflect OMB and GAO Guidance to Varying 

Degrees Chapte3r

Both the Office of Management and Budget (OMB) and GAO guidance 

emphasize the importance of conducting a baseline assessment of the 

resources needed and current capacity of existing resources to achieve 

results-oriented goals and objectives. This assessment should involve the 

use of an inventory of existing assets and current information on asset 

condition in order to identify any performance gap. A comprehensive 

inventory of assets that includes current and accurate data on asset 

condition can provide proposal developers with information to use in 

determining if an actual performance gap exists. It also can help decision 

makers when they consider options for addressing an identified 

performance gap. For example, data on unused or underused facilities can 

prompt decision makers to consider renovating or converting an existing 

facility to address the new need. When a performance gap is identified, 

guidance also suggests that detailed functional requirements be identified 

in order to adequately evaluate options for reducing the gap. OMB guidance 

recommends the use of integrated project teams to manage this and other 

aspects of the capital programming process.

Agencies’ processes for assessing needed resources and identifying a 

performance gap reflect OMB and GAO guidance in some areas but not in 

others. The Department of Veterans Affairs (VA) lacks agencywide asset 

condition data and an inventory of assets, although it is in the process of 

creating a data management system to inventory capital assets and 

measure their performance against VA portfolio goals. The National Park 

Service (Park Service) has just recently developed an inventory of its 

assets, but lacks agencywide comprehensive information on the condition 

of those assets. The National Oceanic and Atmospheric Administration 

(NOAA) maintains an agencywide asset inventory but lacks complete 

information on asset condition. Although the Bureau of Prisons (BOP) 

maintains both an inventory of assets and information on facility condition, 

the basis for determining its long-term performance gap is unclear.
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VA Has a Formal 

Process for Assessing 

Its Needs, but Lacks 

Agencywide Asset 

Condition Data and an 

Inventory of Capital 

Assets 

VA’s capital needs are generally identified at the Veterans Integrated Service 

Network (VISN)1

 level by network personnel. Major capital project 

requests are developed in response to the departmental spring budget call 

for project proposals. Minor project proposals (projects with estimated 

costs under $4 million) are developed in response to a separate call for 

proposals. Facility employees of the Veterans Health Administration (VHA) 

have routinely conducted condition assessments of facilities under their 

control, but until March 2003, the results were maintained at the facilities, 

or in some cases at the VISN level, and were not available to other VHA 

networks or headquarters decision makers. Similarly, data on the type and 

number of other assets are maintained at the VISN level, and the data are 

not readily available to other VISNs or headquarters personnel. Therefore, 

decision makers cannot readily identify assets to share across networks.

In response to a fundamental change in VA’s mission from hospital-based to 

outpatient-based services, a GAO testimony2

 on VHA’s operations and 

maintenance of its capital infrastructure and a congressional hearing,3 VHA 

established the Capital Asset Realignment for Enhanced Services (CARES) 

process in October 2000. The CARES process is designed to assess 

veterans’ health care needs and identify planning initiatives to meet those 

needs in the future. Under CARES, VA’s Undersecretary for Health has 

directed VISNs to develop asset-restructuring plans to guide any future 

capital investment decisions that would involve constructing new facilities 

or renovating or closing existing ones in order to deliver health care more 

efficiently in existing locations or closer to where veterans live. The 

CARES process—involving a study of each VHA VISN—consists of nine 

steps, including defining market areas, analyzing needs, developing market 

plans, implementing the plans, and integrating the plans into the strategic 

planning cycle. Phase I of the program, completed in August 2002, was a 

pilot test (study) of the Great Lakes network. A recent GAO study of VA’s 

management of vacant buildings in the Great Lakes CARES pilot found that 

VA has developed or implemented alternative use or disposal plans for 21

1

VHA is geographically divided into 21 VISNs, and National Cemetery Administration is 

divided into five memorial service networks.

2

U.S. General Accounting Office, VA Health Care: Capital Asset Planning and Budgeting 

Need Improvement, GAO/T-HEHS-99-83 (Washington, D.C.: Mar. 10, 1999).

3

The hearing was held on July 22, 1999, by the Subcommittee on Oversight and 

Investigations, Committee on Veterans’ Affairs, House of Representatives.
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of its 30 unneeded, vacant buildings in the Great Lakes VISN.4 Despite the 

efforts of VISN officials, the lack of interest in the remaining 9 vacant 

buildings has been an obstacle to finding alternate uses for these 

properties. VISN officials believe that maintaining ownership of the vacant 

buildings is the least expensive course of action, given the relatively high 

demolition costs compared to annual maintenance costs and considerable 

uncertainties about VA’s potential costs to transfer the properties to the 

General Services Administration (GSA). In August 2003, we reported on 

how VA and two other federal agencies identify vacant and underutilized 

properties and the numbers, types, and locations of these properties.5

 The 

report describes VA’s efforts to address these properties and presents an 

analysis of information on vacant and underutilized properties at VHA. 

Among other actions being taken by VA, VHA future capital needs and 

program resources are expected to be largely driven by the results of the 

CARES studies. The remaining 20 VISN studies are ongoing and the entire 

process is scheduled for completion in fiscal year 2003. 

As part of CARES, VHA has conducted a functional space and use survey 

through a nationwide building-by-building survey of each facility in each 

VHA network. According to officials, the surveys are intended to document 

each facility’s usable space (square footage and acreage), the programs it 

supports, and the functional ability of the facilities to support those 

programs. The results of these surveys were collected in a database at the 

VHA level and were planned to include data on vacant properties, including 

swing-space.6

 Officials said the surveys were planned to consist of three 

types of facility assessments: a technical assessment—assessing, for 

example, whether a building has a sufficient number of windows and the 

condition of its mechanical systems; a functional assessment—assessing, 

for example, whether services provided at a building’s location are capable 

of handling a patient workload similar to a private sector facility; and a 

space assessment covering things such as whether there is sufficient space 

in the patient waiting rooms or whether the number and location of patient 

exam rooms provide for adequate privacy. Standards for these assessments 

are generally based on the standards for comparable private sector 

4

U.S. General Accounting Office, VA Health Care: Improved Planning Needed for 

Management of Excess Real Property, GAO-03-326 (Washington, D.C.: Jan. 29, 2003).

5

U.S. General Accounting Office, Federal Real Property: Vacant and Underutilized 

Properties at GSA, VA, and USPS, GAO-03-747 (Washington, D.C.: Aug. 19, 2003).

6

Swing-space is vacant space that is available temporarily.
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Page 53 GAO-04-138 Agency Capital Planning

facilities. According to one official, the VHA functional space and use 

surveys will provide a comprehensive inventory of all VHA assets, and data 

on these assets will be available VHA-wide. The official also stated that 

while data on the National Cemetery Administration (NCA) and Veterans 

Benefits Administration facilities and properties have been included in the 

survey, a facility (building-by-building) walk-through has not been 

performed and the programmatic use of the facilities has not been 

documented. According to the official, the data from the survey database 

helped VHA develop planning initiatives associated with the CARES 

program. While the focus of the survey database was to complement the 

CARES program today, capital planners in both the field and headquarters 

offices can use it in the future. 

This will be helpful since today facility managers within the various VHA 

networks are knowledgeable about the assets and facilities under their 

control, but have no process or system for knowing the availability and 

condition of assets in other networks. A facility or network manager has to 

call other network managers to inquire about available assets and facilities. 

Likewise, the condition and functional use of any available asset would 

have to be researched, as this information currently is not readily available 

in any systematic way. A VHA official in VISN 7, a regional area that has 

recently experienced substantial growth in veteran population, said his 

network generally follows the headquarters capital planning process but 

recently began its own 3-year planning process to assess its own 

infrastructure needs. As part of that process, facility managers were 

required to think about their capital asset needs and the current condition 

of existing facilities and start developing proposals for 3 to 4 years into the 

future. As discussed below, other VA networks are also in the process of 

identifying their assets and facilities and collecting information on their 

condition, and a VA-wide system is being developed that will allow facility 

managers to obtain information on the availability and condition of assets 

VA-wide.

The lack of a comprehensive agencywide asset management system has 

been an area of concern for VA headquarters managers. In a briefing on the 

agency’s process, they noted that VA lacks an adequate portfolio 

management function, does not have good information on existing assets, 

and lacks a system to manage its leases—one that allows for automatic 

updates of new leases and rate changes. As a result, independent from the 

CARES effort, in early 2002 VA’s asset management office began the 

process of developing a system that will allow VA to inventory, monitor, 

and maximize the use of its capital assets. The office solicited a contract 
Chapter 3

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Varying Degrees

Page 54 GAO-04-138 Agency Capital Planning

for a study that would provide VA with information on industry best 

practices, strategies for developing and maintaining an optimal capital 

asset portfolio, and strategies for developing an optimal long-range capital 

asset plan. The office has since decided to develop the asset portfolio using 

VA staff. The capital asset portfolio, the Capital Asset Management System 

(CAMS), is being designed as a database umbrella that will sit atop and 

interact with existing databases—allowing programmed data to be drawn 

from them and new data to be entered directly into CAMS. The database is 

to include all VA-owned buildings and land, leased real estate, information 

technology, capital equipment, and sharing agreements. The system was to 

be developed in two phases, with the first phase scheduled for activation at 

the end of January 2003 and the second phase scheduled for activation at 

the end of February 2003. However, as of September 2003, VA officials had 

not replied to our request for information on whether and when CAMS had 

been activated. The survey database being developed under the CARES 

effort will complement CAMS.

While VA currently lacks agencywide asset inventory and condition data, 

NCA maintains an asset inventory and information on the condition of its 

assets and facilities. Moreover, these data are used as part of its 5-year 

planning process. The NCA inventory of national cemeteries includes 

information on current and future cemetery capacity. NCA also maintains a 

computerized database of major asset items at each cemetery. This 

information is available to NCA managers at the administration level and is 

used to identify program performance gaps and options for addressing the 

gaps. NCA facility managers and contractors routinely conduct asset and 

facility condition assessments. Field staff in each cemetery in the five 

memorial service networks perform the initial assessment of cemetery 

buildings and grounds to determine the need for maintenance; renovation; 

and if appropriate, replacement of cemetery structures. The assessment

results are forwarded to NCA headquarters for review. To supplement the 

assessments routinely performed, NCA contracted early in 2001 for an 

extensive condition assessment and needs determination at each cemetery. 

The process involved both visual inspections and use of a standard 

methodology to determine the costs for cemetery upgrades.

NCA’s guidance for preparing its 5-year facilities plan explicitly states that 

construction planning should consider existing assets and their condition. 

The guidance further stresses that routine assessments of current assets, 

including equipment and buildings, should include a determination of 

changes in mission needs, whether existing cemetery features continue to 
Chapter 3

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Page 55 GAO-04-138 Agency Capital Planning

fulfill current and expected mission needs, and whether the assets should 

continue to be used in the same manner.

The National Park 

Service Has a Formal 

Process for Assessing 

Its Needs, but Lacks 

Agencywide 

Comprehensive 

Information on Asset 

Condition

The Park Service’s capital needs are identified at the park level—through a 

process that produces a general management plan (GMP) for each park and 

an ongoing process in which individual projects are input to a project 

management database and extracted from the database in response to the 

annual budget call for project proposals. Some capital projects are initiated 

as a result of funding becoming available from specific project funding 

sources; other projects are initiated in response to departmental or 

administration priorities. While individual parks historically have 

maintained asset inventories with varying levels of detail, the Park Service 

has just recently completed the servicewide asset inventory phase of its 

new asset management process. Also, the agency lacks servicewide 

comprehensive data on the condition of its assets. While the new asset 

management process is designed to include comprehensive asset inventory 

and condition data as key components, only limited asset inspections have 

been performed so far and the more detailed comprehensive assessments 

will not be completed for some time. 

GMPs are linked to Park Service strategic goals and define long-term park 

direction. The plans provide a broad overview of park needs and identify 

areas for major improvements and performance gaps in service. The 

planning process also identifies maintenance deficiencies at the park level. 

GMPs cover a 10- to 20-year period and usually are general in nature so they 

do not become outdated before associated projects actually receive 

funding. A plan typically begins with an overview discussion of the park’s 

mission—why the park exists—and then identifies park performance gaps 

and the resources required to fill those gaps. Some older plans, such as the 

August 1995 Grand Canyon GMP, are more detailed than plans developed in 

recent years. For example, the Grand Canyon GMP not only describes longterm objectives for the entire park area, but also identifies and describes 

specific capital projects to achieve the objectives. Producing a GMP can 

take 2 to 6 years and involves intense consultation and review by the public 

and other agencies, regional office and headquarters program staff, and 

Park Service and Department of the Interior managers and senior 

executives. Only after all major issues are discussed and resolved, does a 

park’s regional director approve the GMP.

The capital needs identified at the park level are entered into the 

servicewide Project Management Information System (PMIS)—an 
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automated tracking system containing thousands of proposed capital 

projects. Projects are entered into the servicewide system throughout the 

year and are extracted in response to budget calls for project proposals.

Projects also may be entered into PMIS for the first time in response to 

budget calls for project proposals. According to Park Service officials, 

PMIS is a list of identified needs containing a mix of projects that have been 

initiated and those that have not. Using PMIS, decision makers are able to 

access the specific project information, including justifications; link to 

agency goals, and estimated costs; and begin the ranking and selection 

phase of the capital decision-making process. PMIS is discussed further in 

chapter 4.

Capital project proposals are generally developed independent of funding 

sources and entered into the PMIS database as described above. However, 

some annual budget call memorandums solicit capital projects tied to 

specific funding sources such as funding provided through the recreational 

fee demonstration (fee-demo) program,7

 line-item construction and 

maintenance program, and park concessions franchise fees. Each funding 

source can fund specific types of projects. Annual budget calls may also 

solicit project proposals for a specific type of project, such as road repair 

and maintenance, even though parks may have needs that differ from these 

sources and categories. According to Park Service officials, when OMB sets 

the target amounts available from the various sources, that determines the 

types of project proposals submitted by the Park Service for that year. The 

parks, in conjunction with the regional offices, determine which proposals 

to put forth based on the needs linked to strategic goals that best fit within 

the criteria and funding limits established in the call letter. Parks may have 

needs that differ from those permitted to be funded by the specified 

funding source. For example, officials say there is a severe need for 

employee housing at the Grand Canyon National Park, but fee-demo 

funding cannot be used for that purpose. Also, departmental and 

administration priorities can influence projects initiated at individual 

parks. For example, for the past several years the administration’s priority 

has been to reduce the backlog of deferred maintenance. This continues to 

be a priority, while more recently the current administration has made 

visitor security a priority after the terrorist attacks of September 11, 2001.

7

The fee-demo program asks visitors to pay recreation user fees while in some parks, in 

order to engage in certain activities requiring additional services or facilities or to mitigate 

impacts. The types of fees range from campground to boat launching fees.
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Until just recently, the Park Service did not have a servicewide inventory of 

its capital assets and facilities. Prior to this, it has not had the benefit of a 

comprehensive asset inventory of all its assets. As a result, the physical 

condition, functionality, suitability, and life expectancy of facilities and the 

backlog of deferred maintenance requirements were not adequately 

documented. Some national park units maintained limited inventories 

covering the assets under their control. For example, the Grand Canyon 

National Park has an inventory of what it calls “formal” property, including 

capitalized assets with an acquisition value of $15,000 or more, and each 

division within the park has an inventory of so-called “informal” property 

valued below $15,000 with an estimated useful life of 2 years or more. This 

individual park information had not been available servicewide. As part of 

its new asset management process (discussed below), the Park Service 

says it recently completed its asset inventory and trained its staff on the use 

of the required computer software. 

The Park Service also historically has not had servicewide asset condition 

data or systematic criteria for individual park managers to use in making 

assessments for their parks. According to Park Service officials, condition 

assessments were not required in the past; as a result, asset condition 

information historically has not been available to servicewide capital 

planners and decision makers. Condition is monitored at the park level. For 

example, the Grand Canyon National Park management team, which 

includes the park superintendent and other managers, determines project 

priorities for the park based on its knowledge of park facilities. According 

to one park official, there is an extensive amount of institutional memory 

within the management team and that institutional knowledge of the park 

and its functions, along with visual inspections of the condition of the 

park’s assets, is used to make needs assessment decisions. However, these 

visual inspections were not based on systematic criteria and there was little 

documentation available. Making progress toward implementing another 

component of the new asset management process, the Park Service says it 

has completed visual inspections on all but nine of the larger parks in the 

park system. However, the more detailed, comprehensive condition 

assessments will not be completed until the end of fiscal year 2006.

As planned, the Park Service’s new asset management process will, for the 

first time, provide the agency with a reliable inventory of its assets; a 

process for reporting on the condition of those assets; and a consistent, 

systemwide methodology for estimating deferred maintenance costs. The 

cornerstone of the new asset management process is the Facility 

Management Software System (FMSS)—a commercial-off-the-shelf 
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integrated software system currently used by other federal agencies. FMSS 

will allow Park Service managers to track cost and maintenance data for 

each asset in the agency’s inventory. The system requires each park to enter 

all of its assets and information on their condition into a centralized 

database for the entire park system. Parks also will be required to conduct 

annual condition assessments of their assets and more comprehensive 

condition assessments regularly. The annual condition assessments—

which are essentially “eyeball” inspections—are designed to identify 

obvious and apparent asset deficiencies, while the comprehensive 

condition assessments are more in-depth inspections and designed to 

identify hard-to-find problems, such as hidden structural defects in building 

foundations, roofs, or walls. 

In April 2002 we reported8 that when fully developed and implemented as 

planned, the new asset management process would enable the Park Service 

to provide agency managers and the Congress with much more accurate 

and reliable information on the amount of deferred maintenance 

throughout the park system. In July 2003, we reported9

 on the Park 

Service’s progress with implementing its new process. We found that the 

agency had completed, or nearly completed, a number of substantial and 

important steps toward implementing the new process. As mentioned, the 

Park Service says it has completed an inventory of its assets and the annual 

condition assessments (eyeball inspections) have been performed on all 

but nine of the larger parks in the park system. The remaining annual 

assessments are under way and planned for completion by the fall of 2003.

While the Park Service says it is concurrently performing the more 

comprehensive (detailed, in-depth) assessments, these comprehensive 

assessments will not be completed until the end of fiscal year 2006. At that 

time, according to the schedule, the entire process is to be fully 

implemented. However, the capital asset plan and justification (OMB 

Exhibit 300)10 for this system shows an estimated completion date of 

September 2007. 

8

U.S. General Accounting Office, National Park Service: Status of Efforts to Develop Better 

Deferred Maintenance Data, GAO-02-568R (Washington, D.C.: Apr. 12, 2002).

9

U.S. General Accounting Office, National Park Service: Status of Agency Efforts to 

Address Its Maintenance Backlog, GAO-03-992T (Washington, D.C.: July 8, 2003).

10Exhibit 300 is required by OMB. Agencies must submit a capital asset plan for each new 

and ongoing major project, system, acquisition, and operational (steady-state) asset 

included in their capital asset portfolios.
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Whether fully implemented in fiscal year 2006 or 2007, the new asset 

management process using FMSS is expected to allow for improved 

prioritization of capital projects by providing more centralized, quantifiable 

data. According to Park Service officials, the backlog of maintenance 

identified through this system will be imported into PMIS and ranked for 

funding and accomplishment. The reports generated by the system, 

including work order reports, requisition forms, and condition assessment 

and asset management reports, would be available to capital planners and 

decision makers servicewide.

This new process for managing the nation’s historic treasures and other 

assets sounds promising but will require years of sustained commitment by 

the Park Service and other stakeholders. Comprehensive data on the 

condition of assets in the Park Service portfolio is critical not only to 

identifying deferred maintenance needs but also to determining an asset’s 

true functionality and ability to achieve long-term goals and objectives.

NOAA Has a Process 

for Assessing Its Needs 

and Maintains an 

Agencywide Asset 

Inventory, but Lacks 

Current Information on 

Asset Condition 

NOAA’s capital needs are identified at the line office and major program 

office levels and flow from the individual line and program offices’ strategic 

planning processes. As discussed in chapter 2, NOAA line and major 

program offices prepare separate strategic plans in support of NOAA’s 

strategic goals and the long-term goals of the Department of Commerce. 

Capital resources needed to support these goals are identified in the 

individual offices’ current strategic plans and operating plans. For example, 

the current strategic plan for the Office of Marine and Aviation Operations 

(OMAO) identifies its mission and long-term goals and describes how 

investments in capital assets play a key role in addressing these goals. The 

plan describes the operational requirements that must be met, which could 

require major refurbishment of old platforms, converting existing ones 

obtained from other government agencies, or building new platforms to 

replace older ones. The plan further states that new cost-efficient and more 

technically capable assets must be considered as part of future capital 

plans, and the plan identifies important functional requirements, such as 

the need for technically advanced platforms to meet the growing public 

demand for services. Further, the strategic plan describes OMAO’s goal of 

expanding public and private partnerships to best meet NOAA business 

objectives. This discussion of such alternatives is continued in chapter 4.

In another example, the strategic plan for the National Environmental 

Satellite, Data, and Information Service describes the replacement of polarorbiting satellites needed to continue NOAA’s tracking of global variables 
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that affect weather and climate. The planned new polar-orbiting satellites 

are being acquired through partnership with other federal agencies that 

have the same needs—the Department of Defense (DOD) and the National 

Aeronautics and Space Administration (NASA). Taking an integrated 

approach to identifying and meeting the operational satellite needs for both 

the civil and national security communities, the new system—the National 

Polar-Orbiting Operational Environmental Satellite System (NPOESS) will 

replace polar systems currently operated by NOAA and DOD and is 

expected to save the government an estimated $1.8 billion over the life of 

the program. NOAA, DOD, and NASA established a joint Integrated 

Program Office to develop, manage, acquire, and operate NPOESS. Each 

participating agency is responsible for one of three primary functional 

areas. NOAA has overall responsibility for the converged system and is also 

responsible for satellite operation. 

The other NOAA line offices have separate processes for identifying their 

capital needs—each in accordance with its current strategic plan, which in 

turn is linked to the NOAA strategic plan and long-term Commerce goals. 

Also, individual line and program offices have ranking processes that occur 

at the line and program office levels before proposed investments are 

submitted to NOAA review boards and, ultimately, to NOAA headquarters 

management for approval. These processes are discussed in chapter 4.

NOAA maintains separate inventories of real and personal property assets 

but maintains no asset condition data on real or personal property.11 A 

single inventory of real property assets is maintained by NOAA 

headquarters and the four Commerce Administrative Support Centers 

(ASC). Each regularly updates the inventory for the assets under its 

purview. NOAA Headquarters and the ASCs receive input from internal 

realty specialists on acquired and disposed properties and update the real 

property inventory monthly. The inventory also contains information on 

properties leased by NOAA and GSA. NOAA officials can generate reports 

from the real property inventory, which show basic information such as 

acquisition cost and the size and age of facilities. According to a NOAA 

official, the real property inventory is difficult to use and decision makers 

do not regularly consult it. NOAA’s personal property inventory also 

contains basic asset information. The inventory identifies each personal 

11Real property assets consist of land; facilities; and anything constructed on, growing on, or 

attached to land. Personal property is all property other than real property. It includes items 

such as ships, aircraft, satellites, and computers.
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property asset by a unique identifier and briefly describes the asset; 

provides its date of acquisition, acquisition cost, useful life, and current 

physical location; and notes whether the asset is owned or leased. This 

inventory is centralized and maintained by NOAA’s Office of Finance and 

Administration (OFA). NOAA’s line and program offices provide OFA with 

data on their respective assets and OFA enters the data into its database. 

The personal property inventory includes both capitalized personal 

property (assets costing $200,000 or more) and noncapitalized property 

(assets costing less than $200,000). Noncapitalized property is mostly 

computer equipment.

In the past, NOAA regularly performed asset condition assessments for its 

real property assets; however, these assessments have been suspended for 

several years while identified asset deficiencies are addressed. An official 

said that previous condition assessments for real property assets were very 

exhaustive and costly and the condition data aged very quickly. A new 

process for assessing asset condition is scheduled to begin in fiscal year 

2003 and will involve a facility rating and prioritization process performed 

by a contracted firm. 

According to an OFA official, NOAA has no standard process for 

performing condition assessments for personal property assets. OFA 

conducts what it refers to as an annual assessment of property condition 

for capitalized personal property only. However, this assessment merely 

consists of OFA asking the line and program offices if there is any deferred 

maintenance on their equipment and other assets. According to the official, 

the answer is generally “no.” The official further stated that the line and 

program offices themselves do not perform condition assessments because 

it is believed that if regular asset maintenance is performed, routine 

condition assessments or inspections are not necessary.

In addition to the new process for assessing the condition of real property 

assets, NOAA is implementing a new real property inventory system. 

Commerce has purchased a system that is presently running parallel to 

NOAA’s present inventory. It contains the same information as the present 

inventory, although according to an official, it is Web based and will be 

easier to update than the present inventory. The new inventory will not 

collect asset condition information but could be expanded to include it in 

the future. At the time of our study, it was not fully deployed but was 

scheduled to be fully operational by fiscal year 2003. The current personal 

property inventory was implemented in the fall of 2002. 
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BOP Maintains an 

Inventory of Capital 

Assets and Information 

on Asset Condition; 

However, the Basis for 

Its Long-term 

Performance Gap Is 

Unclear 

BOP capital needs are determined through the use of a number of separate 

parallel processes. Capital projects are identified in response to the BOP 

Director’s spring budget memorandum, through routine inspections of 

facilities, and through a long-term capacity planning process. 

Modernization and repair (M&R) projects are identified as a result of 

routine physical inspections of correctional institutions or in response to 

legal requirements, such as the need to provide access for the physically 

challenged. M&R projects also are identified as a result of contractor 

surveys of facilities that are more than 50 years old. These surveys of older 

institutions determine the extent of renovation needed and if replacement 

of the facility is more cost effective than renovation. Projects that require 

construction of new institutions—which represent the bulk of BOP’s 

capital spending—are identified through a centralized process that is 

driven by future inmate population projections with the goal of keeping 

prison crowding at targeted manageable levels. 

BOP maintains an automated inventory system to track, control, and 

depreciate both real and personal property capital assets—its Real 

Property Management System, which tracks all BOP-owned land, buildings, 

other structures, and related improvements, and a Personal Property 

Management System which tracks and depreciates all BOP-owned personal 

property. BOP’s capital asset inventory is a nationwide system run on a 

mainframe computer, and its data are available nationally to all capital 

planners and decision makers. Numerous reports are generated from this 

system, including a list of operational correctional facilities at any given 

point in time and individual asset records showing detailed asset 

information such acquisition date, accumulated depreciation, and current 

book value. According to capacity planning officials, the real property 

inventory data are considered in the overall needs assessment process. For 

example, when population increases occur, the existing inventory of 

correctional facilities and their current populations are first considered in 

determining how to maintain or achieve a targeted population level.

Likewise, capital asset condition data are available to regional and 

headquarters capital planners and decision makers. BOP’s policy is to 

inspect its institutions either quarterly, semiannually, or annually 

depending on the institution’s age. Correctional institution staff throughout 

each of the six regions perform the inspections, and the results are 

compiled to form an institution-specific list of infrastructure maintenance 

needs. These institution lists are forwarded to each regional office where 

they are consolidated for evaluation by regional staff. At least annually 
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regional offices rank the needed projects and forward the ranked lists to 

headquarters staff. BOP’s Facilities Management Branch consolidates the 

six regional project lists with additional requests received in response to 

the Director’s spring budget call. More extensive condition assessment 

surveys are performed for facilities over 50 years old with the oldest 

institutions and facilities that have not had major renovations in years 

being surveyed first. 

BOP also relies on its Computerized Maintenance Management System 

(CMMS) to track preventive maintenance, equipment history, 

recommended replacement schedules, and costs related to institution 

maintenance. In addition to the project repair lists, facility condition survey 

reports, and reports generated by CMMS, BOP units are required to provide 

current asset condition data when responding to the Director’s spring 

budget call. For the fiscal year 2004 budget cycle, the Chief of Facilities 

Management issued a memo, in addition to the BOP Director’s memo, with 

instructions for developing the buildings and facilities budget request. The 

memo required that current asset condition be fully explained in all 

requests—including the likely consequences of not receiving funding for 

the requested project. While this requirement indicates that asset condition 

could be seriously considered in the budget process, BOP officials could 

not provide us with any completed requests containing this information.

BOP also considers a program’s functional requirements when determining 

its performance gap. As suggested in OMB guidance, a performance gap 

should be defined in terms of the functional requirements to be achieved. 

An important requirement in BOP’s program is a policy decision to house 

prison inmates within 500 miles of their homes. Therefore, BOP planners 

and decision makers consider how best to meet this requirement when 

evaluating various alternatives to bridging an identified performance gap.

Although asset inventory and condition data are available for considering 

the use of existing assets when identifying a performance gap and 

determining how best to fill the gap, BOP is not able to support the basis of 

its estimated overall long-term performance gap. While BOP considers a 

number of factors, as described below, it lacks studies to support its 

judgment about the acceptable level of overcrowding.

BOP’s new construction program follows a centralized long-term capacity 

planning process with the goal of ensuring sufficient institution capacity 

while maintaining prison crowding at safe and secure targeted levels. The 

agency’s Office of Research and Evaluation generates projections of future 
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inmate population levels using a microsimulation computer program and 

data from the Administrative Office of the U.S. Courts and the U.S. 

Sentencing Commission. These projections are influenced by factors such 

as increased resources for law enforcement and prosecutorial agencies and 

estimated increases in the number of Immigration and Naturalization 

Service (INS) detainees. The Office of Research and Evaluation continually 

monitors population growth and the projections are updated regularly. The 

population projections are subdivided by inmate security level—minimum, 

medium, and maximum security—and geographic region. BOP’s capacity 

planning staff also monitors inmate population growth and current and 

estimated prison capacity levels. Long-term rates of prison overcrowding 

are regularly generated using a formula that considers an institution’s 

“rated capacity” and the expected prison population. This results in an 

overcrowding percentage, which is the inmate population amount above 

the institution’s rated capacity.

The concept of rated capacity is a standard that uses a stated level or 

percentage of double bunking (crowding) in inmate living quarters to arrive 

at an institution’s inmate capacity level. In recent years, BOP has sought to 

operate at 25 percent double bunking for high-security-level inmates, 50 

percent for medium-security-level inmates, and 100 percent for lowsecurity-level inmates.12 These percentages of double bunking are 

multiplied by the number of inmates the institutions were designed to 

accommodate to arrive at the institution’s rated capacity. For example, a 

high-security institution designed to accommodate 768 inmates (768 beds) 

with 25 percent double bunking would have a rated capacity of 960 (768 x 

1.25). A low-security institution designed to accommodate 768 inmates 

with 100 percent double bunking would have a rated capacity of 1,536 (768 

x 2.00). The rated capacity numbers are then compared to an institution’s 

projected population to arrive at the institution’s percentage of 

overcrowding. Therefore, a high-security institution with a population of 

1,100 and a rated capacity of 960 would have an overcrowding rate of about 

15 percent (1,100-960/960=14.6).

12Twenty-five percent double bunking means 25 percent of inmate cells have twice the 

number of inmates they were designed to accommodate. The percentages of double 

bunking at the various security levels are based on BOP’s own judgment as to the 

appropriate mix of single- versus double-bunked cells. In the past, BOP, in determining rated 

capacity, had generally followed a single-bunking standard advanced by the American 

Correctional Association (ACA) but has transitioned to a double-bunking standard to 

accommodate overcrowding. ACA considers single bunking a nonmandatory standard and 

will accredit institutions that use double bunking as long as its other mandatory standards 

are followed.
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The institution numbers are aggregated to determine an overall systemwide 

percentage of overcrowding in BOP-operated facilities. A long-term 

capacity plan is regularly generated, which shows these overcrowding 

percentages by security level and inmate gender over a 9-year period. For 

example, the capacity plan dated April 30, 2002, shows that mediumsecurity institutions housing male prisoners are estimated to be 

overcrowded by 52 percent in fiscal year 2003. The same capacity plan 

shows that systemwide BOP overcrowding is expected to be around 30 

percent through fiscal year 2009.

While BOP planning and budget documents suggest that record inmate 

population increases over the past few years will likely continue, BOP is 

unable to demonstrate the basis for what it considers an acceptable level of 

systemwide overcrowding. Officials say that over the past two decades the 

overcrowding goal has increased from 10 to 15 percent to an actual goal of 

around 30 percent. They say this goal is a result of gradual increases in 

what the previous administration believed were acceptable percentages of 

double bunking. According to budget and capacity planning staff, during 

the early 1980s a goal of 10 percent overcrowding was established, but 

population growth never allowed them to maintain that level. In the 1993-94 

time frame, the goal was set at 15 percent, but the funding needed to attain 

15 percent was never provided. Also, the absorption of felons sentenced in 

the District of Columbia and INS long-term detainees made attaining this 

goal unlikely. 

More recently, according to BOP officials, the Department of Justice (DOJ) 

decided that BOP would, at least temporarily, try to manage the prison 

population at 85 percent double bunking in penitentiary cells (maximum 

security) and 95 percent in medium-security facilities. These levels of 

double bunking the forecasted prison population translate to a systemwide 

overcrowding rate of around 30 percent through fiscal year 2009. DOJ’s 

fiscal year 2001 Performance Report,

13 which includes the fiscal year 2003 

performance targets, states that the BOP systemwide overcrowding goal is 

37 percent for fiscal year 2003 and 31 percent for fiscal year 2006.

BOP officials could not provide any studies or documentation supporting 

what the agency considers an acceptable level of double bunking or 

crowding above rated capacity levels. As mentioned, the goal has changed 

13U.S. Department of Justice, FY 2001 Performance Report and FY 2002 Revised Final, FY 

2003 Performance Plan.
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over the past two decades and, according to BOP officials, it appears that 

the prison population has been adequately managed at the varying levels of 

overcrowding. To justify the need to construct new facilities, expand 

existing facilities, or even enter into additional contracts with privately run 

facilities, it is reasonable to expect the long-term need to be based on 

standard criteria, supported by studies or analyses that discuss some 

correlation between levels of overcrowding and problems in controlling 

and managing the prison population.

Agency Use of 

Integrated Project 

Teams

With the exception of NOAA and VA, the use of integrated project teams 

(IPT), suggested by OMB guidance, was not generally evident in the 

planning phase of case study agencies’ processes. It is hard to judge the 

impact of this since our study of the practices of leading organizations 

found that often such teams were not used until later, while organizations 

were managing the implementation of capital projects. NOAA’s OMAO 

formed an IPT to facilitate its ship replacement process—a team consisting 

of mission, acquisition, and program managers. Stakeholders of the 

fisheries vessels were also consulted in the process. The team operated 

under NOAA’s Administrative Order that prescribes general procedures for 

developing requirements for major systems. The working group began with 

unconstrained requirements discussions, but through the process of 

feasibility design studies, the final ship design met the most critical 

requirements. This IPT developed a set of requirements for the new vessels, 

and an acquisition team began a pilot ship design. 

VA’s capital guidance strongly emphasizes the use of IPTs. Its fiscal year 

2002 guide amended prior guidance to define the acronym, IPT, as the 

“Investment Proposal Team,” a multidisciplinary team that includes subject 

matter experts on the investment being requested. Generally, the VA IPT is 

composed of disciplines such as the local facility planner; facility engineer; 

finance, budget, and information technology staff; and representatives 

from clinical disciplines defined in the project scope.

Conclusion While case study agencies have successfully begun their capital planning 

processes by recognizing their primary missions and long-term goals and 

identifying resources needed to fulfill their goals, only BOP has been 

successful at maintaining a current inventory of its assets and information 

on asset condition. VA and the Park Service have struggled to develop and 

maintain agencywide comprehensive inventories of capital assets and 
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current data on asset condition; however, the Park Service says it has 

recently completed an inventory of its assets and is making progress 

toward assessing the condition of those assets. NOAA has not maintained 

current information on the condition of assets under its control. This lack 

of current information on asset availability and condition may have 

hindered these agencies’ ability to properly identify current capabilities and 

the actual gaps between their current and needed capabilities. The lack of 

accurate inventory and condition data also may have prevented a thorough 

evaluation of available alternatives to bridging performance gaps. Case 

study agencies recognize the value of maintaining up-to-date and 

comprehensive asset information and appear to have begun processes to 

improve this deficiency. It is important that agency management diligently 

proceed with the development and implementation of these needed asset 

management systems.

Recommendations for 

Executive Action

We recommend that the Secretary of Veterans Affairs continue to 

emphasize and support the timely development and implementation of 

CAMS currently under way agencywide. Decision makers should use the 

asset inventory and condition information as an integral part of VA’s capital 

planning process when both determining a need for a new capital asset and 

considering options for filling a performance gap. 

We recommend that the Director of the National Park Service ensure that 

asset inventory and current asset condition data from FMSS are available 

to assist capital planners and decision makers when determining future 

capital needs and alternatives to bridging identified performance gaps.

We further recommend that the Director of the Bureau of Prisons require 

that studies be undertaken to determine the relationship between different 

levels of overcrowding and problems with managing prison populations, 

and that such studies be used in determining needs.

Finally, we recommend that the Under Secretary for Oceans and 

Atmosphere, Department of Commerce, (NOAA Administrator) resume 

regularly scheduled asset condition assessments for real property assets 

and develop a standard process for assessing the condition of personal 

property assets.
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Agency Comments We provided a draft of this report to VA, the Park Service, BOP, and NOAA. 

In its written comments, reprinted in appendix VII, VA said it agreed with 

our conclusions and concurred with our recommendation to continue the 

development of CAMS and incorporate facility condition assessment 

information when making capital investment decisions. VA also described 

the progress it has made thus far with implementing a life cycle portfolio 

management approach and the development of CAMS to facilitate this 

effort. In addition, VA provided a number of technical comments, which 

have been incorporated in this report as appropriate.

The Department of the Interior did not directly address our conclusion and 

recommendation regarding the Park Service. It provided a number of 

technical comments, which have been incorporated in this report as 

appropriate.

In its written comments, reprinted in appendix VIII, BOP did not directly 

address our conclusion or recommendation. It said that over the years, a 

number of corrections authorities have undertaken studies on the issue of 

overcrowding in prisons, and the analysis and findings from those studies 

and its own operational experience are factored into its population and 

capacity planning process. 

In its written comments, reprinted in appendix IX, NOAA agreed with our 

recommendation to resume regularly scheduled asset condition 

assessments for real property assets and develop a standard process for 

assessing the condition of personal property assets. NOAA stated that it 

implemented real property asset condition assessment surveys in fiscal 

year 2003 and has implemented a program requiring annual condition and 

maintenance assessments for all capitalized personal property assets.
Page 69 GAO-04-138 Agency Capital Planning

Chapter 4

Agencies Consider Alternatives but Processes 

to Rank and Select Investments and Produce 

Long-term Capital Plans Need Attention Chapte4r

Both Office of Management and Budget (OMB) and GAO guidance stress 

that when a performance gap between needed and current capabilities has 

been identified, it is important that organizations carefully consider how 

best to bridge the gap by identifying and evaluating a full range of 

alternatives to constructing or purchasing a new capital asset. The 

guidance also emphasizes the need to have a comprehensive decisionmaking framework to review, rank, and select from among competing 

project proposals. Such a framework should include appropriate levels of 

management review and approval, and selections should be based on the 

use of established criteria. Capital planning guidance also emphasizes the 

importance of documenting the selected projects in a long-term capital 

asset plan. The capital plan should define the organization’s long-term 

capital acquisitions needed to support its long-term goals and objectives.

Case study agencies have processes through which to consider various 

alternatives to acquiring new capital assets and often choose such 

alternatives, including nonownership options. Case study agencies have 

various processes for the review and selection of proposed capital 

investments, but most have established frameworks. The process used at 

the Bureau of Prisons is less formal than other agencies’ processes and is 

not well documented. None of the case study agencies have developed 

long-term capital plans that describe the goals and objectives to be 

achieved, baseline assessment of the current conditions and performance 

gaps to be filled, and justification for new acquisitions proposed for 

funding.

Agencies Have 

Processes to Consider 

Various Options for 

Addressing Their 

Performance Gaps—

Generally a Range of 

Alternatives, Including 

Noncapital Options

While it is almost always possible to hypothesize more alternatives for any 

given need than may have been seriously considered by agencies, all of the 

case study agencies considered a reasonable number of alternatives to 

address any identified performance gaps.
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Processes to Rank and Select Investments 

and Produce Long-term Capital Plans Need 

Attention

Page 70 GAO-04-138 Agency Capital Planning

Department of Veterans 

Affairs

The Department of Veterans Affairs’ (VA) departmental guidance requires 

its facility staff to answer OMB’s “Three Pesky Questions”1 when 

developing capital investment project proposals. These questions seek to 

ensure that the function to be supported by the investment is mission 

critical, no other governmental or private entity can perform the function 

better, and agency business processes have been reengineered to optimize 

performance at the least cost. The Veterans Health Administration (VHA) 

and the National Cemetery Administration (NCA) follow department-level 

guidance and consider a range of alternatives to address identified 

performance gaps. There are four alternatives that must be considered—

leasing; status quo; new construction; and rehabilitation, repair, or 

expansion of existing facilities. Enhanced-use leasing and contracting with 

a university hospital to share assets are nonownership options considered 

by VHA. NCA has the authority to partner with state governments through 

the use of federal grants to establish, expand, or improve state-owned and 

operated veterans’ cemeteries. When researching alternatives, NCA also 

considers the expansion of existing memorial sites through the purchase of 

adjacent cemetery land. 

VA was given the authority to enter into enhanced-use leasing2

arrangements to address some of its facility needs. Under these 

arrangements, originally authorized in 1991, VA leases its land to a private 

or public developer. The developer constructs a facility on this VA-owned 

land and assumes ownership of the facility. The developer may lease the 

whole or part of the facility back to VA at below-market rent and the facility 

owner can solicit other tenants for space not used by VA. This arrangement 

can be structured to require only a 2-year financial commitment on behalf 

of the government. VA has used enhanced-use leasing for clinics, regional 

offices, research facilities, and office buildings, and VA is looking to expand 

enhanced-use leasing into other areas, such as equipment investments. 

Figure 10 describes VA’s enhanced-use authority.

1

See ch. 1.

2

38 U.S.C. § 8161-8169.
Chapter 4

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Processes to Rank and Select Investments 

and Produce Long-term Capital Plans Need 

Attention

Page 71 GAO-04-138 Agency Capital Planning

Figure 10: VA Enhanced-Use Authority

While VHA considers alternatives within its general scope of delivering 

services, it defines its range of alternatives within the rubric of maintaining 

service to all future expected enrollees. It has given some attention to 

alternatives, such as provision of services to veterans by non-VA health 

care facilities. For example, some VA medical centers have agreements 

with military treatment facilities to exchange patient care and support 

services. Also, VA and the Department of Defense (DOD) have pooled 

resources to construct a joint medical facility or to make use of an existing 

facility.

Enhanced-use authority is derived from 38 U.S.C. §8161-8169. Among the other flexibilities, the 

enhanced-use authority allows VA to outlease its property to private or other public entities for up to 

75 years. The leased property may be developed for VA and non-VA uses. Each enhanced-use lease 

shall be for fair consideration, as determined by the Secretary, and consideration may be provided in 

whole or in part through consideration in-kind, including provision of goods or services of benefit to 

the department, such as construction, repair, remodeling, or other physical improvements of 

department facilities; maintenance of department facilities; or provision of office, storage, or other 

usable space. VA also has the option to use “minor” construction funds of up to $4 million as a 

capital contribution in connection with an enhanced-use lease. In return for the lease of its land, VA 

may purchase services, space, or facilities in connection with the enhanced-use lease. If VA 

chooses to lease space, the enhanced-use facilities can house tenants in addition to VA. The funds 

received from the developer’s lease payments, in excess of VA’s space lease expenses, are 

deposited into the Health Services Improvement Fund for the benefit of the local medical center that 

coordinates the enhanced-use lease. The authority also allows VA to deduct expenses associated 

with establishing an enhanced-use lease from the proceeds of the developer’s lease payments. In 

this case, the local medical center and Veterans Integrated Service Network deposit any remaining 

funds into the Health Services Improvement Fund for use. 

Unlike traditional federal leases in which lease payments are deposited into the Department of the 

Treasury’s general fund account, VA retains enhanced-use payments. VA says the ability to receive 

in-kind benefits or to keep excess funds from lease payments creates an economic incentive for VA 

and its property managers to fully use existing capital assets and to begin to view these assets as 

potential resources to fund needed programs or facility requirements. 

VA views enhanced-use leasing as useful for certain properties and has used its enhanced-use 

authority for a variety of projects. For example, in Indiana VA leased underutilized medical facility 

land to the state government for its use to build a health care facility. In Houston, Texas, VA leased 

underutilized land for a regional office, which reduces the department’s expenses for rental of office 

space it occupies, and provides a revenue stream from the rental of space to non-VA users. In 

Washington, D.C., VA leased land to a child care provider for the construction and operation of a 

child development center, which provides services to VA employees at a discount.

Source: VA.
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Bureau of Prisons The Bureau of Prisons (BOP) considers a range of alternatives to address 

the performance gap identified through its capacity planning process. One 

of the Department of Justice’s (DOJ) strategic objectives is to ensure the 

existence of sufficient and cost-effective prison capacity. BOP’s strategy to 

attain this objective includes acquiring needed capacity through 

cooperative arrangements with state and local governments, contracts with 

private providers of correctional services, and alternatives to traditional 

confinement where appropriate. BOP also considers the expansion of 

existing BOP facilities and the acquisition and conversion of nonprison 

facilities to prison use.

Where the inmate security level is appropriate and for certain prison 

populations, BOP contracts with private companies and state and local 

governments to provide prison capacity as an alternative to new 

construction. In 1996, BOP began using privately managed facilities in a 5-

year demonstration project to evaluate the potential effectiveness of 

privatizing future BOP facilities. Under authority provided in DOJ’s fiscal 

year 1997 appropriations act, BOP contracted with a private firm to operate 

a correctional institution for low- and medium-security inmates in Taft, 

California, to help reduce crowding in the facilities of BOP’s western 

region. In 1997, the Congress also required the use of private contract 

facilities to house felons sentenced in the District of Columbia who were 

transferred to BOP custody.3

 As of April 30, 2002, 27,000 of the 

approximately 162,000 inmates in federal custody were assigned to either 

privately managed institutions, state or local facilities through 

intergovernmental agreements, community corrections centers, or home 

confinement. DOJ’s fiscal year 2001 performance report4

 includes reducing 

overcrowding as one of BOP’s fiscal year 2003 performance targets. The 

stated strategy for attaining this goal includes the aggressive analysis of 

existing private and other correctional facilities for sale, which may offer a 

more timely and affordable alternative to new prison construction.

Alternatives to construction of new facilities also include the expansion of 

existing correctional institutions. For example, BOP received 

congressional approval in fiscal year 2001 to reprogram funds for the initial 

design and then included in its fiscal year 2003 budget request construction 

funding for three expansion projects. These projects are expected to 

3

Title XI of the Balanced Budget Act of 1997, Pub. L. No. 105-33, August 5, 1997.

4

U.S. Department of Justice.
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expand the existing bed space at institutions BOP currently operates. 

Budget documents state that the agency also tries to accommodate its 

prison population through acquiring military and other properties and 

converting them to prison use. Officials stated that the agency has also 

considered the use of former university campuses as alternatives to 

construction of new prison facilities.

Although BOP has considered and used numerous alternatives to 

construction of new prison facilities, new construction is still a key part of 

DOJ’s strategy for meeting its bed space needs for persons in federal 

custody. The fiscal year 2003 budget request included a request to fund 

construction of a 512-bed secure unit for female inmates on land already 

owned by BOP. The requested new facility is expected to provide housing 

specifically designed for the special needs of women inmates, such as 

special rooms for visiting children—something BOP sees as an important 

functional program requirement. The budget justification says that planned 

construction of this facility at an existing site is cost effective since it will 

allow for shared services, such as administrative, utility, and medical 

services. Additional new construction plans include awarding contracts for 

the design and construction of 7 facilities for activation in fiscal year 2004 

(adding 8,192 beds) and beginning or continuing environmental review, 

design, or design-build activities for 13 new facilities to add prison capacity 

of 14,720 beds in fiscal years 2004 through 2007.

National Park Service The National Park Service (Park Service) considers a range of alternatives 

to address an identified performance gap—including noncapital options as 

appropriate. It also conducts extensive alternatives analysis at various 

stages of a project proposal’s development and review. The nature of the 

Park Service’s activities, the type of capital project being considered, and 

the strategic goal that is being accomplished drive the consideration of 

alternatives and the level and type of alternatives analysis performed. For 

some routine capital projects, such as life and safety deferred maintenance, 

which has been an administration priority for some time, limited 

alternatives are available. Although the Park Service considers alternatives 

such as renovating and rehabilitating existing facilities where possible, 

specific circumstances may limit the range of alternatives. For example, 

renovating or rehabilitating a surplus or underused facility at a remote 

location would not be considered an alternative for a new visitor center 

that would use existing adjacent trails, the current transportation system, 

and other adjacent structures. Park facilities may also have specific 

functional requirements that limit the types of buildings or locations 
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considered during the alternatives evaluation process. For example, the 

new Grand Canyon National Park visitors center must serve visitors 24 

hours a day in all weather conditions.

The Park Service considers partnering with other governments for land 

acquisitions and has partnership programs with the private sector and 

nonprofit entities to share the burden of funding costly projects. For 

example, according to an official, the Park Service recently sought a 

partner for the Mesa Verde National Park curatorial facility and visitors 

center. Although the project is estimated to cost $40 to $60 million, the Park 

Service wanted to limit its share of the funding to $5 to $15 million. A local 

foundation expressed interest in providing the remaining funding for the 

project. The Park Service also tries to partner with other federal agencies.

In its August 1995 general management plan (GMP), the Grand Canyon 

National Park said it was working closely with the Forest Service 

concerning specifics of a land exchange environmental impact statement 

(EIS). The GMP stated that the Park Service worked with the Forest 

Service to (1) help ensure that the land exchange would not adversely 

affect the national park and (2) determine if needed park housing, 

community services, and possible gateway information, staging/parking, 

and public transit facilities could be a part of the development. 

The Park Service may share equipment with other federal agencies and 

does consider leasing some assets where appropriate. For example, the 

Grand Canyon National Park shares some equipment with the Forest 

Service and leases most of its vehicles through the General Services 

Administration. Operating funds typically fund vehicle acquisitions.

The Park Service conducts alternatives analysis at three points in time: 

(1) during the program formulation phase in which the Park Service uses 

Department of the Interior (DOI) criteria in conjunction with the Choosing 

By Advantages process (discussed later in this chapter) to rank projects for 

inclusion in the servicewide 5-year construction program; (2) as part of a 

value analysis5

 process during project predesign and design; and (3) during 

5

Value analysis, also known as value engineering and value planning, is a value management 

methodology that refers to a systematic and orderly problem-solving approach that 

emphasizes improved value, quality, and performance. It identifies essential functions 

necessary to accomplish an activity, analyzes those functions, and generates alternatives to 

secure them at their greatest worth, on a life-cycle benefit-to-cost basis. (See OMB’s Capital 

Programming Guide.)
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development of compliance documentation such as the EIS, environmental 

assessment, and categorical exclusion.

Value-based decision making or value analysis is an important component 

of the Park Service’s project planning process. It compares alternatives to 

select the best value. Value analysis is being increasingly used during 

general management planning, implementation planning, and project 

formulation. A project’s predesign team develops alternatives and uses 

value analysis to select the best alternative during its predesign activities. 

The Park Service’s value analysis process allows proposal alternatives to be 

compared to each other in terms of variations on space, site location, and 

impact on resources and visitor experience. Value analysis in the predesign 

stages does not always consider status quo as an alternative because it is 

presumed that if the project advances to the value analysis phase, there is a 

compelling reason to require action other than the status quo. An example 

of a value analysis review of alternatives would be choosing to construct an 

outdoor visitors center where the exhibits are maintained outdoors and 

maintenance is cheaper compared to constructing an indoor visitors center 

that requires heating, air conditioning, and other maintenance. 

The Park Service servicewide senior-level review board, the Development 

Advisory Board (DAB), which evaluates project proposals prior to their 

submission to OMB (discussed later in this chapter), will not review 

proposals that lack value analysis studies. Completion of these studies is 

mandatory for proposals above certain dollar thresholds, and the number 

of value analysis studies has increased from 17 in fiscal year 1997 to 113 in 

fiscal year 2001. DAB discusses the value analysis results for all 

alternatives—both those recommended for selection and the other 

alternatives that are analyzed. The proposal presentations include a 

discussion of why the alternatives not recommended were not chosen and 

the benefits of the recommended alternatives. Figure 11 further describes 

value analysis use in the Park Service. 
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Figure 11: Value Analysis Use at the Park Service

The National Environmental Policy Act (NEPA)6 requires that each Park 

Service project have appropriate compliance activities completed that 

must include an alternatives analysis to determine the various impacts of a 

considered option. Status quo is considered as an alternative as part of the 

NEPA compliance process because the other alternatives will affect the 

environment in different ways. The Park Service must also consult with the 

U.S. Fish and Wildlife Service and other agencies during the review of 

alternatives.

National Oceanic and 

Atmospheric Administration

The National Oceanic and Atmospheric Administration (NOAA) considers 

many alternatives at its line and program office levels and at the NOAA 

bureau level to address identified performance gaps. Each line and 

program office has its own requirements for considering alternatives to 

new acquisitions of proposed capital investments. One of NOAA’s program 

offices, the Office of Marine and Aviation Operations (OMAO), considers 

6

National Environmental Policy Act of 1969 § 102 (codified at 42 U.S.C. 4332).

OMB Circular No. A-131 states that value analysis is a technique directed toward analyzing the 

functions of an item or process to determine “best value,” or the best relationship between worth and 

cost. “Best value” is represented by an item or process that consistently performs the required basic 

function and has the lowest total cost.

Value analysis use at the Park Service comes under the direction of the Park Service Director’s 

Order 90. That order states that all Park Service programs, projects, and activities over $500,000 will 

use value analysis as a management and decision-making tool in performing or contracting for 

planning, design, construction, and repair and rehabilitation/renovation of facilities. Recreational fee 

demonstration projects that exceed $430,000 and administrative and management program 

projects exceeding $1 million are required to have value analysis studies as well.

The Park Service value analysis process has several elements. They include consideration of a 

project’s purpose, functional analysis, alternatives analysis, structured evaluation factors that may 

include Choosing By Advantage, initial cost and life-cycle cost analysis, benefit/cost analysis, 

independent perspective, and documentation of the decision. The predesign value analysis study is 

typically conducted using a qualified value study leader and a team that typically consists of park 

staff, the design team, and independent experts. The results of the value analysis study are 

summarized with project-specific information in the DAB project review report and are reviewed by 

DAB during national proposal review.

Source: GAO analysis of Park Service information.
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alternatives to purchasing new capital assets as one means of fulfilling one 

of the goals in its strategic plan—the goal of pursuing partnerships with the 

public and private sector. OMAO officials said that they partner with 

universities in the University-National Oceanographic Laboratory System 

(UNOLS) for excess university vessels when this is the best approach. 

OMAO may also contract for services with the private sector. In fiscal year 

2002, NOAA was expected to acquire approximately 3,800 operating days of 

ship support through outsourcing with the private sector and UNOLS, 

while NOAA ships also would provide approximately 3,800 operating days 

of ship support. OMAO also has purchased excess Navy vessels and 

converted them for its use. At the time of our study, OMAO had converted 

two Navy T-AGOS vessels for its use and was in the process of converting 

two others. OMAO’s strategic plan and interviews with officials 

demonstrate its continued efforts to repair and maintain aging vessels.

The National Weather Service (NWS) shares some assets with other NOAA 

entities. For example, many Weather Field Offices colocate with other 

NOAA line offices as an alternative to acquiring or constructing new 

facilities. Also, the NEXRAD (Next Generation Radar) system is shared 

with both DOD and the Federal Aviation Administration. When projects are 

proposed to the NWS Finance and Investment Review Board (FIRB), their 

justifications must clearly articulate the alternatives considered to address 

the identified performance gap, including the costs and benefits of the 

proposed alternative. The “alternatives examined” is one criterion in the 

highest weighted criteria group used by the review board. For each 

alternative compared to the original investment considered, the proposal 

must document how it is different from other alternatives. Each alternative 

must consider different program scales, methods of provision, and degrees 

of government involvement. Project proposals must also describe selection 

of the best alternatives based on benefit-cost analysis. The analysis must be 

summarized in quantitative terms presenting the total benefit-cost 

advantages and disadvantages associated with each alternative. In cases 

where benefits cannot be fully monetized, staff are instructed to quantify 

the benefits in terms of physical measurements, for example, flash flood 

warning lead-time improvement in minutes or percentage of the U.S. 

population covered by national weather radio.

NOAA’s line and program offices are required to document alternatives at 

the administration level as well. Budget formulation guidance for project 

proposals requires line offices to consider alternatives. The guidance 

requires proposals to consider outsourcing (contracting) and partnerships 
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with other agencies or with other line offices before proposals are 

reviewed by NOAA-level review boards.

Case Study Agency 

Processes for Ranking 

and Selecting Proposed 

Capital Investments 

Vary, but Most Have a 

Formal Review and 

Approval Framework 

Department of Veterans 

Affairs

VA has an established framework to review and approve proposed capital 

investments. VA’s process is well documented and the roles of managers 

are clearly defined. The review and approval framework is a departmentlevel process that considers projects for all VA administrations. It consists 

of various levels of review and uses established criteria, multiattribute 

decision analyses, and group-enabled software to rank proposed 

investments.

VHA, which had the largest number of proposed capital investments in VA’s 

fiscal year 2003 budget request, has its own separate process for reviewing 

project proposals before they are submitted to the department-level 

process. For the fiscal year 2003 budget request, VHA’s Office of Facilities 

Management, Technical Resource Support Office (TRSO) issued a call 

letter to field offices (VA networks) for capital asset proposals prior to 

issuance of VA departmental guidance. This was intended to allow network 

staff advance time to develop project proposals. Also, according to one 

VHA official, the early call and proposal guidance was issued because the 

development of project proposals—a 3-inch business case package—

requires considerable time and resources. Business cases submitted by the 

field staff were subjected to an initial cursory review by VHA officials.

Feedback from this allowed network personnel to incorporate additional 

data and resubmit the updated business cases.

After a more detailed review by the Capital Asset Management and 

Planning Service (which assumed the major program from TRSO), VHA 

formed an administration-level panel to review the capital project 
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proposals. The panel used four criteria to rank proposals: (1) the extent to 

which the project is consistent with and supports the intentions of the 

Capital Asset Realignment for Enhanced Services (CARES) program 

(discussed in ch. 3), (2) the extent to which the project involved a seismic 

improvement (repair or prevention of earthquake damage), (3) the extent 

to which the project fulfilled the criteria set forth in H.R. 811,7

 and (4) the 

general quality of the proposal. For this cycle, the panel cleared 25 

proposals and forwarded them for department-level review. The Veterans 

Benefits Administration (VBA) and NCA also have structured processes to 

generate capital project proposals for inclusion in VA’s department-level 

review.

VA’s Office of Asset Enterprise Management (OAEM) and the Capital 

Investment Panel (CIP)8

 conduct the initial VA department-level review of 

business cases submitted from the three VA administrations and VA’s staff 

offices. OAEM first ensures that proposal packages pass a validity 

assessment—a quality index check that ensures the proposal is complete 

with the required documents, that OMB’s “Three Pesky Questions” are 

answered, and that there is rationale for including it in the project scoring 

process. OAEM may allow network staff an opportunity to improve their 

business case packages if needed before further review. Proposals that 

pass the validity assessment are then scored by CIP on each of the 

subcriterion and main criterion in VA’s Analytical Hierarchy Process (AHP) 

before they are forwarded to VA’s Strategic Management Council (SMC)9

for validation. According to a VA official, this scoring is done to ensure that 

all VA internal stakeholders have similar views on the merits of a project 

proposal. After CIP project scores are complete, CIP prepares a “Board

7

H.R. 811 was introduced in the 107th Congress as the Veterans Hospital Emergency Repair 

Act. If enacted, it would have authorized VA to update its facilities through various 

construction projects. The bill included specific criteria for such projects, and VA added the 

H.R. 811 criteria to its factors for ranking and selecting proposed projects.

8

CIP consists of six members, each from a major departmental unit, who are either senior 

managers or executives. 

9

SMC is a deputy undersecretary-and assistant secretary-level committee chaired by VA’s 

Deputy Secretary.
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Book”10 for use by SMC during its review and deliberation. CIP assigns the 

weights of the subcriteria and SMC assigns the weights of the main criteria 

using AHP. Figure 12 describes AHP. 

Figure 12: VA Use of the Analytical Hierarchy Process

After subcriteria and main criteria weights are assigned, project proposal

scores are entered into a decision software package titled Expert Choice 

that ranks the project proposals based on the assigned weights of the suband main criteria. The proposals with the highest scores are listed highest 

on VA priorities. The criteria used by AHP and Expert Choice are reviewed 

each year, updated, and aligned with the VA’s mission and current 

administration and secretary’s priorities. The criteria have evolved over 

time and most recently have emphasized seismic (earthquake-related) 

10A “Board Book” is a synopsis of project proposals reviewed and scored by CIP. It contains 

an executive summary of each proposed project with information such as project scope, 

cost estimates (acquisition and life-cycle costs), schedule, how the project scored on each 

criteria, and panel recommendations, as well as technical and policy issues needing SMC 

attention.

AHP is a type of decision analysis that considers nonmonetary quantitative and qualitative attributes 

in addition to common economic evaluation measures (e.g., life-cycle costing and net benefits) that 

VA uses for capital investment prioritization. VA uses the structured analysis of AHP to force proposal 

developers to assess their capital investment proposal’s strategic linkage to agency goals and to 

departmental priorities. AHP has three significant strengths: it weights pair wise comparisons; it 

contains hierarchical descriptions of attributes that restrain the number of pair wise comparisons, 

thus keeping them manageable; and it allows computerized software to facilitate its use.

AHP uses a hierarchical model consisting of a goal, criteria, subcriteria, and alternative outcomes or 

conditions for each problem or decision. After establishing a hierarchy of decision criteria based on 

strategic and performance goals, alternatives, cost-effectiveness, risk, and other specific criteria, VA 

decision makers then evaluate the proposed capital investments and determine how these 

investments will enable the department to meet the stated goals. AHP establishes priorities by 

requiring the users (e.g., CIP) to make pair wise comparisons among different decision criteria at 

each level in the hierarchy and rate the relative importance of each decision criterion. By performing 

comparisons of the decision criteria, it is possible for VA to derive quantitative weights for criteria and 

alternatives and leave an audit trail of the decision process. The standardized application of AHP 

creates a decision model that drives decision making toward investments that optimize the 

opportunities to achieve strategic goals. VA uses Expert Choice as the analytical tool to accomplish 

AHP. Expert Choice is group-enabled computer software that allows multiple decision makers a 

structured analysis of priorities, making use of both quantitative and qualitative criteria. 

Source: VA.
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projects and other administration priorities; however, “One-VA customer 

service”11 remains the most heavily weighted criterion. For fiscal year 2003, 

the total assessment process scored proposals against 9 main criteria and 

19 subcriteria. Figure 13 shows a comparison of weights of different 

criteria used from fiscal year 2000 to fiscal year 2003.

Figure 13: AHP Criteria Weights

a The weight for alternatives analysis is part of return on taxpayer investment for this year.

The rank ordered list of project proposals resulting from AHP and Expert 

Choice is then validated by SMC and forwarded to the VA Executive Board 

for the next level of review. The Executive Board consists of the VA 

Secretary (chair); Deputy Secretary; Chief of Staff; General Counsel; and 

Under Secretaries for Health, Benefits, and Memorial Affairs. The board’s 

final selections are included in VA’s budget request forwarded to OMB.

Figure 14 provides an overview of VA’s review and selection process for 

proposed capital investments.

11“One-VA customer service” refers to VA’s goal of being more customer focused and 

functioning as a seamless organization to deliver seamless “one stop” service to its 

customers.

Criteria (subcriteria not included) Weight

 2000 2001 2002 2003

One-VA customer service .555 .173 .243 .239

Return on taxpayer investment .194 .088 .063 .050

High-performing workforce .140 .065 .089 .078

Risk analysis .061 .087 .050 .034

Alternatives analysis .050 .074 In ROIa In ROIa 

Seismic/life safety .301 .274 .209

Special emphasis .212 .149 .153

Strategic alignment .133 .103

Other priorities .134

Source: GAO analysis of VA data.
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Figure 14: VA’s Review and Selection Process

Officials reported to us VHA staff and managers’ immense frustration over 

the amount of resources spent to develop comprehensive project proposals

and the subsequent low levels of construction funding received. OAEM 

developed a more streamlined process for fiscal year 2004 proposals. To 

allow for better use of staff resources, a three-step process was developed.

First, an initial concept paper is prepared providing a high-level, conceptual 

description of a proposed project and broadly identifying project goals, 

benefits, risks, estimated costs, and project schedule. According to VA 

officials, the concept paper allows for early project agreement with 

stakeholders and agency officials. It also serves as the initial review step.

VA Office of Asset

Enterprise Mgmt.

Capital Investment

Panel

Strategic 

Management Council

Veterans Benefits 

Administration

Veterans Health 

Administration

National Cemetery

Administration

VA

staff offices

CIP assigns the weights of the

subcriteria and SMC assigns 

the weights of the main criteria.

Validity assessment conducted:

1. Check for project proposal

 completeness.

2. Check for answers to 

 OMB “Three Pesky Questions.”

3. Check for rationale for 

 inclusion in scoring process.

1. Proposals scored on each 

 AHP process subcriteria 

 and main criteria using 

 Expert Choice decision- 

 making software.

2. Board book prepared for 

 SMC.

VA

Executive Board

Office of Management

and Budget

Source: GAO analysis of VA data.

1. Scored proposals reviewed.

2. Rank-ordered list validated

 and forwarded to VA 

 Executive Board.
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Proposal concepts that survive this initial review are then expanded, and 

staff will develop a more detailed proposal with refined cost and schedule 

estimates, identified performance measures, limited risk and alternatives 

analyses, and technical requirements. This “300 Planning” proposal would 

be in a form similar to OMB’s Exhibit 300, Capital Asset Plan and 

Justification (discussed in ch. 3), that OMB requires for capital investment 

proposals, but with less detail. If approved for use by OMB, the 300 

Planning proposal would be used for requesting design funding for major 

construction proposals rather than the full Exhibit 300. According to VA 

officials, the 300 Planning document allows decision makers to weed out 

proposals that do not fit VA strategic objectives or are not viable to proceed 

at this time.

For those that survive this level, the final step in the new process would be 

the preparation of a comprehensive Exhibit 300, or a “300 Acquisition.” The 

300 Acquisition is more detailed and provides insight based on experiences 

with planning and piloting. The 300 Acquisition is a comprehensive project 

proposal with a detailed project plan; in-depth risk, alternatives, costeffectiveness, and earned-value analysis; and primary source 

documentation. It would be required after the design/concept funding is 

provided in the President’s Budget. A complete proposal or business case 

would be required only for construction projects that are likely to receive 

full funding. VA guidance allows for staff to bypass the 300 Planning and 

submit a 300 Acquisition after a concept paper has been approved—

resulting in an accelerated two-step process. This would serve as the 

complete Exhibit 300 required by OMB Circular A-11, Part 7. The 300 

Planning and Acquisition applications, as well as electronic templates for 

risk, alternatives, cost-effectiveness, and earned-value analysis, are VA 

Web-based documents and easily accessible by all VA staff.

This new three-step process allows for better-developed proposals as well 

as a reduced number of proposals subjected to the AHP scoring process 

because proposals that are not viable can be removed earlier in the 

process. The three-step process also advances efficient use of staff 

resources by eliminating the development of full proposals for projects that 

are likely to be rejected. The motivation behind this new process is to 

devote resources to development of a capital plan with realistic proposals, 

rather than simply a wish list. 

Bureau of Prisons Although BOP has a process for the review, ranking, and selection of 

proposed capital investments, the process is not formal, is not well 
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documented, and does not appear to use formal selection criteria. It is 

unclear what documents selection officials use to decide which capital 

investment proposals are to be forwarded to OMB. 

Leading organizations select projects based on pre-established criteria and 

a relative ranking of investment proposals. OMB’s Capital Programming 

Guide provides one approach for devising a ranked listing of projects using 

a scoring mechanism that assigns a range of values based on project 

strengths and weaknesses. Project proposals that meet or exceed positive 

aspects of the decision criteria are given higher scores. An outcome of such 

a ranking process might produce multiple groups of projects, and such a 

process may be used more than once—in multiple steps—to limit the 

number of projects being considered by an executive review board.

BOP’s Capacity Planning Committee is responsible for proposing new 

construction projects and consists of senior-executive-level staff from the 

Administration; Correctional Programs; and Information, Policy, and Public 

Affairs Divisions. Subject matter experts—chiefs of Capacity Planning, 

Design and Construction, and Budget Development of the Administration 

Division—also attend committee meetings. The agency also has a Longrange Planning Committee that ranks new construction proposals and 

makes specific project recommendations to the BOP Director for funding. 

With a few exceptions, the same individuals are members of both 

committees.

BOP officials told us that proposed capital projects for its new construction 

and modernization and repair (M&R) programs are separately ranked and 

selected. For new construction projects, the Long-range Planning 

Committee meets regularly and uses inmate capacity plans (resulting from 

the capacity planning process discussed in ch. 3), site recommendations, 

and construction progress on ongoing projects to determine which capital 

projects to recommend for funding. According to officials, the committee 

ranks new construction proposals based on need, funding, and the speed at 

which facilities can be constructed. This information is used to develop 

options to be considered by the BOP Director for the DOJ spring budget 

call. For M&R projects, the Facilities Management Branch (Administration 

Division) receives separate lists of proposed projects in response to the 

Director’s spring budget memorandum to all BOP units, an annual call to 

regional offices from Facilities Management, and project initiatives 

submitted by contractors as a result of surveys of older institutions 

(discussed in ch. 3). These lists are reviewed and consolidated by the 

facilities management staff and ranked according to need. According to 
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officials, this ranked list generally includes thousands of projects, and the 

highest priority projects are those that are included in the multiyear M&R 

plan. The criteria used to rank these projects assign life safety projects the 

highest priority followed by accessibility projects; building and institution 

infrastructure projects—roofs, utilities, and structural repairs; projects for 

facilities over 50 years old; and general M&R. Once the projects are ranked, 

the facilities management branch staff determine a cutoff for the project 

list based on anticipated resources.

While officials state that formal weighted criteria are used to rank M&R 

projects, the criteria used to rank new construction projects appear to be 

very informal. In addition, neither the criteria for new construction nor the 

criteria for M&R projects are applied systematically, nor are BOP officials 

either willing or able to provide the results of any scoring process using the 

criteria. Furthermore, neither of these processes is well documented. BOP 

officials were unable or unwilling to provide a summary report or 

documents otherwise showing the results of the ranking and selection 

processes. Moreover, they could not provide any instructions to guide 

deliberations or any standard agenda for the Long-range Planning 

Committee’s meetings. This is a concern because, at the time of our study, 

BOP had 800 ongoing M&R projects, which officials said is rather typical, 

and 28 major construction projects, which officials said is rather high.

This lack of a documented process makes it difficult to determine exactly 

what documents are used by BOP decision makers to choose among 

numerous potential capital investments. For example, the BOP Director’s 

fiscal year 2003 spring budget call memorandum required BOP assistant 

directors and regional directors to prepare a separate program request 

form for each “initiative,” including construction projects. The memo 

further required that each form identify and explain the goals to be 

achieved, provide estimated costs, justify the need, and identify 

performance indicators to measure if the goals are achieved. The memo 

included a two-page attachment with separate sections to provide this 

information and requested that the forms be returned to the Budget 

Development Branch of the Administration Division. After numerous 

requests, BOP officials were unable or unwilling to provide an example of a 

completed budget request form for a fiscal year 2003 new construction 

project request. However, officials did provide a copy of an M&R project 

request; it was a one-page memo listing three projects with estimated costs 

totaling $11.3 million and no other support or justification. Further, there 

appears to be no standardized form that succinctly provides information 

needed by decision makers. Thus, BOP could not show that capital project 
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request packages were actually prepared for most capital projects or that 

detailed information was provided to the Long-range Planning Committee 

for its selection decisions. 

National Park Service The Park Service has an established framework for the review and 

selection of proposed capital investments. This framework includes two 

senior-level review boards and a formal system to rank projects using 

established criteria and to consider alternatives. It allows for (1) initial 

review and winnowing out of projects at the park and regional levels and 

(2) the use of an external advisory group that reviews individual projects 

that have completed the predesign sequence and reports directly to the 

Park Service Director.

As discussed in chapter 3, individual parks enter proposed capital projects 

into the servicewide Project Management Information System (PMIS). 

There were approximately 40,000 projects in PMIS in fiscal year 2002. PMIS 

data fields allow a park to provide project description, justification of the 

expected improvements by the proposed projects tied to specific Park 

Service mission and long-term goals, proposed performance measures, a 

cost estimate, benefits based on outcomes, asset condition information for 

existing assets, and other project data. PMIS is designed to include all of 

the key project proposal information needed to make the evaluation and 

ranking decisions. Capital project proposals developed by the individual 

parks are submitted to the regional offices for initial evaluation and ranking 

within their units. These proposals are subjected to preliminary scoring on 

the regional level based on the same criteria that are used for official 

scoring at the national level later in the process. The regional offices 

develop a ranked list of project proposals and forward their priority list to 

the Park Service Construction Program Management Office (CPM) for 

evaluation and ranking in the servicewide program. CPM reviews the 

submitted proposals for completeness and compliance with the line-item 

construction program eligibility criteria before the proposals are submitted 

for further evaluation at the national level. Regional managers and CPM 

managers can access PMIS for any needed information on an individual 

proposed capital project.

Capital project proposals evaluated and ranked at the regional level and 

conforming to the initial CPM review are then formally reviewed and 

evaluated on a national level, systemwide, using the Choosing By
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Advantage (CBA)12 process. CBA uses specific evaluation factors to 

compare proposed projects to one another. The five factors recently used 

in CBA were (1) provide safe visits and working conditions; (2) protect 

cultural and natural resources; (3) improve visitor enjoyment through 

better services and educational and recreational opportunities; (4) improve 

operational efficiency, reliability, and sustainability; and (5) provide costeffective, environmentally responsible, and otherwise beneficial 

development for the national park system. CBA involves a relative 

comparison of every project proposal by each factor. 

A multidisciplinary assessment team led by CPM is assembled to manage 

the CBA process and apply the evaluation factors to each project, 

producing an individual project ranking. The project with the best score on 

any particular factor sets the scale for that factor, and the other projects 

are scored relative to that best score. Each project’s score is divided by its 

cost to arrive at an advantage-to-cost ratio. That ratio (results of costbenefit analysis) is a major determinant of the project’s priority ranking in 

the 5-year construction program or plan and DOI and OMB policy direction. 

At times, the call letter for a project proposal will specify a certain project 

type (e.g., life and safety) for which funding is specifically available. This 

restriction on the type of project likely to be funded may narrow the list of 

projects for comparison. 

Recently, as a result of negotiations between DOI and Park Service senior 

executives, an additional step was added to the rating and ranking process 

to place greater emphasis on DOI priority areas—a project rating method 

based on a set of weighted-factor data that focuses on deferred 

maintenance and public health and safety. The rating method requires that 

proposed capital projects be grouped into bands as follows: (1) projects 

with a DOI score from 1,000 to 800 points (to be funded first), (2) projects 

with a DOI score from 799 to 500 points (to be funded second), and 

(3) projects with scores from 499 to 100 points (to be funded last). Within 

the project bands created by the DOI scores, projects are then ranked using 

the CBA process and the advantage-to-cost ratio. According to the Park 

Service, this approach is intended to result in early funding of projects that 

are of high priority with the DOI Secretary and the President while 

preserving an ability to address the full range of cost-effective projects that 

address the Park Service mission and goals.

12The CBA factors were developed by CPM and adopted by DAB, the National Leadership 

Council, and the Park Service Director.
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The Park Service’s DAB reviews proposed capital projects vetted and 

ranked by the agency’s CBA process. DAB is composed of four Park 

Service associate directors, three regional directors, and two senior 

executive service park superintendents. DAB has two responsibilities: 

(1) policy, which involves reviewing the proposed 5-year construction 

program and thus recommending projects for inclusion in the construction 

program, and (2) reviewing individual projects at the end of predesign 

development. With some exceptions, DAB reviews every project with 

estimated costs greater than $500,000 regardless of the funding source. 

Without DAB’s approval, project managers cannot proceed with design 

efforts or initiate construction activities. DAB reviews approximately 120 

projects per year primarily focusing on the review of projects that have 

completed the planning and predesign activities that are precursors to 

formal requests to OMB for review and to the Congress for funding. 

However, DAB has multiple opportunities to see project proposals at 

various levels of development. 

Once projects proposed for inclusion in the 5-year plan clear DAB, they are 

forwarded to the National Leadership Council (NLC). NLC is composed of 

the Park Service Director, deputy directors, associate directors, and 

regional directors, and it meets bimonthly to consult on major policy and 

program issues confronting the Park Service. Projects proposed for 

inclusion in the 5-year plan are reviewed by NLC, and its members provide 

any comments or concerns about the ranking and rating of projects directly 

to the Park Service Director for consideration before final approval of the 

5-year plan. Projects reviewed by DAB that have completed planning and 

predesign activities are not forwarded to NLC; they are instead advanced 

directly to the Park Service Director for approval.

The Park Service external advisory group was established to assess lineitem construction projects for suitability and cost-effectiveness. The fivemember group is composed of private citizens appointed by the Park 

Service Director. The group’s members have experience in areas such as 

engineering, architecture, historic preservation, and budgeting. They 

provide an independent review of Park Service construction projects. The 

advisory group meets concurrently with DAB to review projects that have 

completed predesign and reviews every line-item construction project with 

an estimated cost greater than $500,000. This review is required before a 

project can proceed with design efforts. The advisory group provides its 

findings directly to the Park Service Director. Figure 15 shows the Park 

Service review and selection process for proposed capital investments.
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Figure 15: Park Service Capital Investment Review and Selection Process

Regional offices

Construction Program Management Office (CPM) Development Advisory Board (DAB) External Advisory Group

National Leadership Council (NLC) Park Service Director Department of the Interior

Proposals reviewed, scored, 

and ranked at regional office level,

by applying criteria at right, 

producing a “ranked project list.” 

CPM applies the CBA ranking criteria

to generate a servicewide listing

of ranked proposals.

OMB

Submit annual 

project proposals. 

NLC reviews proposed projects 

recommended by DAB and provides 

comments on project ranking to 

Park Service Director.

Park Service Director reviews proposed projects for 

inclusion in draft 5-year construction plan. Draft 

5-year plan forwarded to Department of the Interior and 

OMB for review and approval.

CPM screens all 

proposals from “ranked 

project list” for 

completeness and 

compliance with CPM 

eligibility criteria before 

submission for 

national-level review.

DAB recommends 

proposed projects 

for inclusion in 

5-year construction 

plan and forwards 

list to National 

Leadership Council.

Individual park units 

Ranking criteria (Choosing By Advantage factors)

1. Provide safe visits and working conditions. 

2. Protect cultural and natural resources.

3. Improve visitor enjoyment. 

4. Improve operational efficiency, reliability, and sustainability. 

5. Provide cost-effective, environmentally responsible park 

 development. 

Screening National-level review process Current proposals

Source: GAO analysis of Park Service data.

Choosing By Advantage Process (CBA) 

multidisciplinary team lead by CPM

1. CBA evaluation factors are applied to list.

2. Each proposal is compared to each factor.

3. Proposal with best score on any CBA factor sets 

 the scale for that factor and other proposals are 

 then scored against best score.

4. Each proposal score is divided by its estimated 

 cost to arrive at advantage-to-cost ratio.

External Advisory 

Group concurrently 

reviews projects that 

have completed 

planning/predesign 

sequence and makes 

recommendations 

directly to Park Service 

Director.

DAB reviews 

projects that have 

completed 

planning/ 

predesign 

sequence and 

makes 

recommendations 

directly to Park 

Service Director.

Proposals completing predesign stage
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National Oceanic and 

Atmospheric Administration

NOAA also has an established framework to rank and select proposed 

capital investments. NOAA’s line and program offices individually initiate 

the ranking processes before the administration-level review boards review 

investment proposals. For example, one of NOAA’s line offices, NWS, 

formed a review board, FIRB, in fiscal year 2000 to establish a formal 

process for management review and ranking of capital investment 

proposals in support of strategic goals. FIRB reviews projects costing 

$1 million or more. The FIRB charter cites OMB’s Capital Programming 

Guide as one of the reasons for its creation. FIRB consists of five voting 

members and three nonvoting advisor members who review and evaluate 

capital investment proposal justifications, score capital investments 

according to established criteria, and rank the approved investments.

NWS’s budget formulation and program analysis division, among its other 

roles, assists the various units of NWS in developing project justification 

materials and provides professional assessments on proposals to FIRB. 

FIRB will, through quarterly or more frequent meetings, approve a portfolio 

of investments ready for final approval in the budget process. The criteria 

that FIRB uses to evaluate the proposals are publicized and include 

alternatives considered, contribution to improved agency performance, 

and contribution to NWS mission. Projects submitted to FIRB must 

document alternatives and the cost and benefits of the best alternative. If 

all the costs and benefits cannot be monetized, then projects must be 

quantified in terms of other “physical measurements.” Approved projects 

are forwarded to the administration level for review.

NOAA’s administration-level review boards—working groups established to 

foster implementation of NOAA’s strategic themes—are aligned with 

NOAA’s strategic goals and priorities as outlined in the fiscal year 2001 

Department of Commerce Performance Report and fiscal year 2003 

Annual Performance Plan. These review boards receive proposals ranked 

by line and program offices, such as NWS proposals ranked by its FIRB. 

The strategic themes represent major areas of concentration and consist of 

multi-line-office programs. NOAA line and program offices draft the 

guiding principles for each strategic theme; however, NOAA management 

has the final say on theme development. For the fiscal year 2004 budget, 

NOAA’s budget office met with NOAA management to finalize the themes. 

The themes included in the fiscal year 2004 budget process were 

(1) Climate Change, Research, Observations and Services; (2) Ecosystem 

Forecasting and Management; (3) Environmental Monitoring and 

Prediction; (4) Energy and Commerce; (5) Homeland Security; and 

(6) Infrastructure, Maintenance, Safety and Human Capital. For fiscal year 
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2005, a new NOAA strategic plan will become the underpinning of budget 

formulation and budget requests. 

The review boards representing the strategic themes rank proposed 

investments for management review. A different NOAA line office is 

designated as a lead for each theme’s review board. The lead line office, in 

conjunction with the other line offices represented, is required to prepare 

program initiatives for review by NOAA’s budget office and NOAA 

management. Project proposals submitted to the themes’ review boards 

must be justified in terms of how they support the theme. The boards are to 

review funding requests for both new and ongoing projects. 

The strategic themes’ review boards use established criteria to rank and 

select proposed projects. According to a NOAA official, the Infrastructure, 

Maintenance, Safety and Human Capital theme’s board used the following

criteria to rank submitted project proposals: (1) contribution to agency 

mission, (2) cost development of the proposal, (3) productivity 

improvement, (4) operational efficiency, (5) improving efficiency, and

(6) the likelihood of success. Similar criteria permeated the other themes’ 

processes, although each theme’s review board had a distinct process for 

ranking proposals. According to a NOAA official, the similar criteria 

included (1) the cost proposal is well developed, (2) the proposal is aligned 

with NOAA’s mission, and (3) the proposal increases worker productivity.

Once this internal review is complete, the review boards recommend 

project proposals to NOAA’s Budget Office and NOAA senior management 

for inclusion in the budget. 

Case Study Agencies 

Did Not Prepare Longterm Capital Plans, but 

Two Had Various Longterm Planning 

Documents

Under OMB’s Capital Programming Guide, the Agency Capital Plan (ACP) 

is the ultimate product of the planning phase. The ACP should include an 

analysis of the portfolio of assets already owned by the agency and those in 

procurement, the agency’s performance gap, and justification for new 

acquisitions proposed for funding. Leading organizations develop longterm capital plans to guide implementation of organizational goals and 

objectives and help decision makers establish priorities over the long term. 

Although the long-term capital plan is the culmination of the planning 

phase guidance and is an industry best practice, none of the case study 

agencies had a single long-term plan. However, two agencies—BOP and the 

Park Service—developed long-term planning documents that contain 

aspects of a long-term capital plan. 
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Seven of the eight additional agencies we surveyed reported that they had 

some type of long-term planning information.13 However, with the 

exception of a copy from the Department of State’s Bureau of Overseas 

Buildings Operations, we did not obtain copies of any capital planning 

documents and therefore cannot comment on their content or extent to 

which they constitute best practice documents. The National Aeronautics 

and Space Administration said that its long-term capital plan takes the form 

of an annual 5-year budget submitted to OMB. The U.S. Coast Guard 

reported that it prepares an ACP that includes appendixes, one of which is 

a Capital Investment Plan. According to the Coast Guard, the Capital 

Investment Plan has been provided to OMB and the Congress as required 

by the Transportation and Related Agencies Appropriations Acts. Another 

appendix is its Long-range Resource Allocation Plan to project needs 

beyond the 5-year horizon. The Tennessee Valley Authority (TVA) reported 

that its project justification process requires the development of a detailed 

3-year capital plan and inclusion of a 5-year plan within the annual 

performance plans. Project details within these plans are submitted 

quarterly for review and approval by the Project Review Committee. TVA 

said it also projects 10 years of capital spending for planning purposes 

using validated benchmarks and escalation factors.

We obtained a copy of the State’s Bureau of Overseas Building Operations’ 

Long-Range Overseas Buildings Plan (LROBP) for fiscal years 2003 through 

2008. The plan is a comprehensive outline of the State’s facilities 

requirements—new construction, major renovations, and other 

programs—with a focus on resources needed to support the department’s 

priority diplomatic readiness goal in the long term. In addition to providing 

a narrative description of and rationale for each proposed capital project, 

estimated total project costs, and expected fiscal year for requesting 

project funding, the plan includes a description of the bureau’s capital 

planning process and its specific goals, strategies, and performance 

measures. The LROBP document is updated annually and rolled forward 

each year to include a new planning year.

13The agencies are the U.S. Coast Guard, the Department of State, the General Services 

Administration, the Indian Health Service, the National Aeronautics and Space 

Administration, the Tennessee Valley Authority, and the Bureau of Reclamation. 
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Department of Veterans 

Affairs

VA does not have a long-term capital plan, but officials have recognized 

that one is needed. The 1-year plans VA completed in the past did not 

contain information on longer-term needs to fill its performance gaps. In 

2002, VA solicited a contract for a study of industry best practices in the 

development of a long-term capital plan. However, the effort was 

suspended as the agency focused on the VHA CARES implementation. As 

described in chapter 3, the capital asset needs of VA’s VHA (where the bulk 

of VA’s capital assets are acquired and used) are likely to be largely driven 

by the results of the ongoing CARES process. A VA long-term capital plan 

would have to consider the individual network asset restructuring plans.

Although VA currently does not have an agencywide long-term capital plan, 

one administration—NCA—prepares a 5-year facilities plan that is driven 

by its strategic plan. NCA’s facilities plan contains long-term project cost 

estimates for both major and minor projects that extend to fiscal year 2006.

The major construction plan lists projects needing advance planning funds, 

design funds, and construction funds. Both the major and minor 

construction plans identify each project by location and its proposed cost.

Although NCA provides long-term planning documents to VA decision 

makers, VA does not produce a long-term capital plan for the entire 

department that integrates NCA, VHA, and VBA capital needs. 

Bureau of Prisons BOP has three documents that it considers long-term capital planning 

documents for major capital investments—the Capacity Plan, the Buildings 

and Facilities Status of Construction report, and a report of the rated 

capacity of facilities partially or fully funded by anticipated fiscal year of 

activation.

The Capacity Plan provides inmate population projections and rates of 

prison overcrowding typically for a 9-year period. It is generated by a 

system that also contains data for additional future years, but officials 

caution that data reliability is low because the projections change 

frequently. The Capacity Plan provides population and overcrowding 

projections categorized by the institution security level, whether the 

facilities are BOP-operated or contractor facilities, and whether the 

inmates are male or female. The data contained in the Capacity Plan are 

updated weekly, and reports can be generated at any time. OMB receives 

the weekly update of this report, and a version is included in the budget 

submission to the Congress.
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The Buildings and Facilities Status of Construction report provides the 

status of construction for major projects that have received some level of 

funding, including both new construction and expansion of existing 

facilities projects. The report also shows projects initiated to house District 

of Columbia inmates and Immigration and Naturalization Service long-term 

detainees. The May 2002 report showed 28 ongoing new construction 

projects—which an official said is an atypically high number—and 7 

existing facility expansion projects. The report provides amounts funded 

by fiscal year, total project cost estimates, funding obligated to date, 

estimated facility activation date, and a brief status of each project. It is 

updated monthly and is provided to OMB and to the Congress as part of the 

budget submission. 

BOP’s third long-term capital planning document—the report of rated 

capacity of planned facilities that have received some level of funding—

shows facility capacity levels for planned projects for a 7-year period, 

including the budget year and 4 years beyond. The report shows the level of 

capacity added for each fiscal year that a group of facilities are activated 

and is also a part of the annual budget submission to the Congress. 

These documents, viewed together, provide a sense of how BOP plans to 

achieve its current overcrowding goal. However, there is no single 

document that culminates its capital planning process, pulls these three 

documents together, and so defines its long-term capital investment 

decisions.

National Park Service The Park Service has a servicewide 5-year construction plan (also referred 

to as the line-item construction program), a GMP at each national park, and 

park action plans. While it is not publicly available, the Park Service 5-year 

construction plan is reviewed and approved by OMB. It is the only 

servicewide capital asset planning document and provides a cost schedule 

and rating for each line-item construction project. It is the result of the CBA 

process discussed earlier in this chapter. Projects included in the 5-year 

construction plan are at various phases of completion—planning, 

predesign, design, and construction. The data needed to prepare a longterm capital plan with detailed narrative are likely available since they are 

used in the ranking and selection process; however, the current 5-year 

construction plan is solely a list of projects, estimated costs, and schedule 

data. After the plan is completed at the Park Service, DOI and OMB review 

it, sometimes reordering priorities and inserting programs. Approximately 

3 months of negotiations between the Park Service, DOI, and OMB center 
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on reordering project priorities for the final 5-year plan. The plan is 

dynamic because unexpected events, such as the terrorist attacks of 

September 11, 2001, can affect the priority of projects. For example, in 

fiscal year 2003 as a result of the terrorist attacks, several security-related 

projects were moved up in priority, pushing some non-security-related 

projects into fiscal year 2004 for initiation. 

GMPs define the long-term direction at each individual park. The plans 

provide a broad overview of individual park needs and identify areas for 

major improvements and performance gaps in service. The planning 

process also identifies maintenance deficiencies at the park level. GMPs 

cover 10- to 20-year periods and are general in nature. Some older GMPs 

(such as the Grand Canyon National Park GMP) are relatively detailed as 

compared to newer ones. A plan begins with an overview discussion of the 

park’s mission—why the park exists—and then identifies park 

performance gaps and the resources required to fill those gaps. The GMP 

process results in new concepts for capital projects rather than specific 

projects themselves. The August 1995 Grand Canyon National Park GMP, 

for example, describes the concept of developing two visitor orientation 

centers to help visitors understand and appreciate the park’s major 

interpretive themes and to plan their visits. This effort addresses issues 

identified in the plan regarding visitor difficulty in locating the existing 

center and that center’s inadequate orientation process. 

While these plans together provide a general outlook of future Park Service 

capital needs, there is no central document or group of documents that 

describes the agency’s existing baseline assessment, analyses involved in 

developing the plan, and the performance gap being filled by the planned 

capital projects. Specifically, while the 5-year construction plan is the 

culmination of a rigorous review and selection process, it does not include 

all of the Park Service’s needs identified in PMIS. Also absent from the 5-

year plan are equipment investments and land acquisitions. Equipment and 

about 28 other categories of projects, such as rehabilitation, repairs, and 

cyclical maintenance, are funded through allocations from the Special 

Emphasis Projects Allocation System. Land acquisitions are made through 

a separate process that follows each park’s land protection plan.

National Oceanic and 

Atmospheric Administration

NOAA does not prepare a comprehensive long-term capital plan defining its 

capital investment decisions. The budget office does not require long-term 

plans from line and program offices, but it does have information on 
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ongoing and proposed capital projects that were not funded within the past 

2 years.

NOAA’s line and program offices have planning documents that reflect 

planning guidance to varying degrees. Although one of NOAA’s line offices 

has a long-term capital plan, none of the other line offices or NOAA overall

has a long-term capital plan that defines its capital investment decisions. 

OMAO’s program office completes an unpublished plan that is a 10-year 

chart of tentative dates and cost estimates for major repairs and 

replacements to NOAA’s ships. OMAO officials said this information has 

been useful for planning purposes, but would not provide a copy. OMAO 

officials also said this unpublished plan is discussed with NOAA 

management. At the request of NOAA’s management, OMAO is currently 

drafting a 10-year plan for ships and aircraft. 

The NWS line office’s FIRB charter says that capital investment proposals 

that are approved, vetted, and ranked in order of priority, in conjunction 

with the NWS strategic plan and information technology target architecture 

plan, will form NWS’s capital asset plan. In practice, NWS said that its 

capital plan is reflected in its fiscal year 2003 and fiscal year 2004 NWS 

budget request, which is included in NOAA’s Procurement, Acquisition and 

Construction account. NWS said that it maintains budget information on 

the capital investments but does not see the value of rewriting the 

information in a separate Capital Asset Plan.

The National Environmental Satellite, Data, and Information Service 

(NESDIS) line office prepares a satellite ground systems 5-year plan. This 

plan identifies the resources NESDIS requires to operate and maintain 

satellite ground systems to monitor and control on-orbit operational 

satellites and to acquire, process, and distribute environmental data to 

users. The plan outlines the useful life of components typically used in 

ground system operations and maintenance activities. The plan also 

outlines NESDIS current ground system capability by satellite and includes 

the launch dates for planned satellites and what those satellites will 

accomplish. In addition, this plan outlines the ground resources needed by 

NESDIS to fulfill its performance gap. The NESDIS line office considers its 

plan a long-term plan that reflects OMB guidance. 

Conclusion Case study agencies present a mixed picture. Their capital processes 

include consideration of numerous alternatives for addressing 

performance gaps. Noncapital options are also considered and used, where 
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appropriate. Most agencies have review and approval frameworks that 

include the establishment and use of formal review boards and committees 

and established criteria for selecting proposed projects. However, none of 

our case study agencies has developed a single document that can be 

considered a long-term capital asset plan that defines its long-term capital 

investment decisions, although some agencies have long-term planning 

documents and long-term construction plans for approved projects. Only 

VA informed us of plans to develop an agencywide long-term capital plan. 

Recommendations for 

Executive Action

We recommend that the Secretary of Veterans Affairs continue to 

emphasize the importance of efforts currently under way to develop a 

departmentwide long-term agency capital plan that will reflect all VA longterm capital investment decisions and results of the asset-restructuring 

plans developed by VHA networks under the CARES process. The 

Secretary should make the long-term plan available to OMB and 

congressional decision makers.

We recommend that the Director of the Bureau of Prisons require the 

development of a long-term agency capital plan in the form of a single, 

central document that defines long-term investment decisions of the 

bureau and includes a clear discussion of the basis for any long-term 

performance gap leading to proposals for the construction of new prison 

facilities. The Director should make the long-term plan available to OMB 

and congressional decision makers.

We recommend that the Director of the National Park Service require that 

the 5-year construction plan be expanded to include a narrative description 

of the performance gap that a planned project would fulfill and the analysis 

leading to its inclusion in the 5-year plan. The Director should make the 

long-term plan available to congressional decision makers.

Finally, we recommend that the Under Secretary for Oceans and 

Atmosphere, Department of Commerce (NOAA Administrator), require the 

development of a long-term agency capital plan that defines the capital 

investment decisions for all of NOAA’s line offices and program offices and 

make it available to OMB and congressional decision makers.

Agency Comments In its written comments, reprinted in appendix VII, VA agreed with our 

conclusions and concurred with our recommendation on the need to 
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develop a long-term capital plan. VA further described its efforts under way 

to develop a plan with a 5-year strategy that will be submitted to the 

Congress in the spring of 2004.

DOI did not directly address our conclusions and recommendations 

regarding the Park Service. It provided a number of technical comments, 

which have been incorporated in this report as appropriate. It also noted 

that the 5-year construction plan includes project data sheets (usually a one 

page narrative description of the project and its benefits) that accompany 

the spreadsheet format when the plan is submitted to DOI, OMB, and the 

Congress, although these documents were never provided to us.

In its written comments, reprinted in appendix VIII, BOP agreed with our 

recommendation to develop a long-term agency capital plan in the form of 

a single, central document that defines its long-term investment decisions. 

BOP further stated that it recognizes the value of a single document and 

will develop a consolidated document containing all of its current capital 

planning documents.

In its written comments, reprinted in appendix IX, NOAA agreed with our 

recommendation to develop a long-term agency capital plan that defines 

the capital investment decisions for all of NOAA. It further stated that since 

our study was conducted, NOAA has completed 10-year ship and aircraft 

platform requirements plans and has developed a Facilities Master Plan.
Page 99 GAO-04-138 Agency Capital Planning

Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist Chapte5r

Agencies have mixed perceptions of the usefulness of the Office of 

Management and Budget (OMB) capital programming guidance, and the 

degree to which it is used varies by agency. Some of our case study 

agencies have successfully implemented many of the principles and 

practices described in both OMB’s Capital Programming Guide and our 

Executive Guide. While some of the OMB guidance has presented a 

challenge for case study agencies and the other agencies we surveyed, 

agencies generally agree that it is helpful for developing an effective capital 

decision-making process. OMB’s expectations for agency use of its capital 

guidance and its reliance on long-term capital planning information varied 

by the OMB resource management office (RMO) staff person. The OMB 

RMO staff for our case study agencies consider a number of factors—but 

not long-term capital plans—when reviewing agency budget requests for 

capital projects. Congressional staff indicated that long-term capital 

planning information could be useful for reviewing budget requests and for 

oversight.

Agencies Have Mixed 

Opinions about 

Usefulness of OMB 

Capital Guidance

Agencies are aware of and use various aspects of OMB’s Capital 

Programming Guide. Although OMB strongly encourages but does not 

require agencies to use the guide, its principles have been implemented in 

agency capital planning programs. Many of the principles and practices 

described in GAO’s Executive Guide also have been successfully used by 

case study agencies. 

Since the use of OMB’s Capital Programming Guide is not required, the 

degree to which agencies use it varies, but officials say they generally find 

the guide helpful in developing a process for effective capital decision 

making. For example, the National Oceanic and Atmospheric 

Administration’s (NOAA) National Weather Service (NWS) officials cite the 

establishment of a senior-level review board as stemming from guidance in 

the Capital Programming Guide. Also, NWS capital investment proposals 

must answer OMB’s “Three Pesky Questions” and must contain alternatives 

to address the performance gap. NWS’s written guidance says that projects 

that its review board approves will culminate in or become part of its 

agency capital plan,1

 which mirrors the guide’s planning phase steps. 

1

As discussed in ch. 4, NWS does not have a formal long-term capital plan.
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 100 GAO-04-138 Agency Capital Planning

The Department of Veterans Affairs (VA) formulated its current process 

based on the principles and practices contained in the OMB guidance. Its 

process includes multiple levels of review, including the use of an 

executive review board, and generally mirrors the Capital Programming 

Guide; however, VA has had limited success with developing an 

agencywide long-term capital plan. 

Bureau of Prisons (BOP) officials say they do not use the Capital 

Programming Guide to assist their decision-making process. BOP officials 

say the BOP process preceded the guide, but they believe the process is 

consistent with OMB’s guidance. 

Aspects of the National Park Service’s (Park Service) capital planning 

process are based on recommendations from a 1998 National Academy of 

Public Administration study rather than on the OMB Guide, but the process 

is consistent with OMB’s guidance. A key feature of the Park Service 

process is the establishment of an external review group required to review 

each line-item construction project proposal with an estimated cost greater 

than $500,000. 

Eight other agencies2 with high levels of capital spending provided 

information on their experiences with OMB’s Capital Programming 

Guide. These agencies indicated that they were aware of the guide and had 

implemented some of its principles. Different portions of the guide were 

cited as useful by different agencies. For example, the Indian Health 

Service said that many of the planning phase principles in the guide are 

included in its Health Care Facilities Construction Priority System. The 

U.S. Coast Guard said that it found the planning phase guidance on 

formulating a strong strategic system of evaluating and replacing capital 

assets most useful. The State Department said that the guide’s language 

regarding alignment with the mission function of the federal government 

was helpful. The National Aeronautics and Space Administration (NASA) 

said it has implemented the guide’s principles for selected information 

technology projects. 

2

The agencies are the U.S. Coast Guard, the Department of State, the General Services 

Administration, the Indian Health Service, the National Aeronautics and Space 

Administration, the Tennessee Valley Authority, the Army Corps of Engineers, and the 

Bureau of Reclamation.
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 101 GAO-04-138 Agency Capital Planning

Agencies Identified 

Challenges in 

Implementing the 

Principles of OMB’s 

Capital Programming 

Guide

Case study agencies have different views on how OMB’s Capital 

Programming Guide could be made more useful. While VA has modeled its 

process on OMB guidance and industry best practices, including GAO’s 

Executive Guide, a VA National Cemetery Administration official 

commented that OMB's Guide could be streamlined somewhat. He stated 

that the process of developing extensive business cases VA uses during its 

ranking and selection process is relatively burdensome. The difficulty and 

amount of time spent preparing OMB’s required Exhibit 300,3

 Capital Asset 

Plan and Business Case for major acquisitions, was also cited by some. The 

Park Service officials would like the OMB Exhibit simplified. NOAA’s NWS 

officials said that although it spends considerable resources preparing 

Exhibits 300, the process essentially mirrors the budget justification 

process. NWS also said that the planning guidance is a challenge to 

implement because NOAA is a scientific agency and it is sometimes 

difficult to quantify benefits of certain projects. 

The eight other agencies we surveyed also identified challenges to 

implementing OMB’s Capital Programming Guide principles. Like NOAA, 

NASA said the guide did not seem to fit the research and development 

nature of its programs because it seems more applicable to longer-term 

operational acquisitions. Also like NOAA, the Tennessee Valley Authority 

(TVA) said it has difficulty with quantifying benefits of capital projects. 

Current processes require the project manager to estimate, based on failure 

history or other means, the cost savings/benefits (prorated based on 

probability) associated with a particular project. These savings/benefits 

form the basis of cost/benefit analysis and prioritization of projects. In 

addition, performance measures are established for all projects to 

determine their level of success upon completion. TVA said that identifying 

specific benefits to multiple projects over several years is difficult, and it 

prefers to look at the overall performance improvement due to all of the 

projects. Similarly, the Coast Guard said it has found formulating 

meaningful strategic and performance goals that can stand the test of time 

against changes in executive and legislative branch priorities to be a 

challenge. 

3

Exhibit 300 is required by OMB. Agencies must submit a capital asset plan for each major 

new and ongoing project, system, or acquisition and operational (steady-state) asset 

included in an agency's capital asset portfolio.
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 102 GAO-04-138 Agency Capital Planning

The challenges identified by the agencies stem from the variety of missions 

and activities undertaken. A strong, analytical review process that uses 

established criteria has allowed case study agencies to adjust selected 

project proposals by changing the relative weights of criteria to adjust for 

changing priorities. Such processes and weighted criteria may help other 

agencies address the challenges in implementing the principles of the guide 

that they identified. Linking capital planning to strategic planning allows 

for a transparent and systematic process in which all acquisitions support 

the vision and strategic direction of the agency. A long-term capital plan is 

an important final step in the capital programming process; however, as 

discussed in chapter 4, agencies have had mixed success with developing 

plans. Although we were not able to validate the contents of the long-term 

plans to which the survey respondents referred, this long-term focus is 

encouraging. 

OMB and 

Congressional 

Perspectives on Longterm Capital Planning 

Information and Views 

on Agency Processes

OMB’s Capital Programming Guide stresses the importance of linking 

planning for capital asset investments with an agency’s strategic plan. The 

guide also says that planning for capital assets should take a long-term 

view, possibly the same 5-year horizon as the agency strategic plan.

Further, the guide states that agencies are encouraged to prepare long-term 

agency capital plans that define long-term agency capital investment 

decisions. As reported in our Executive Guide, leading organizations 

develop long-term capital plans and use them to guide implementation of 

their investment decisions. 

OMB staff were universally familiar with the Capital Programming Guide, 

yet their expectations for agency use of the guide and their reliance on 

long-term capital planning information varied across OMB RMOs. OMB 

does not require long-term capital plans from agencies, but RMO staff 

solicit and receive various documents for individual capital projects. OMB 

staff said they place more emphasis on the Capital Asset Plan and Business 

Case (i.e., Exhibit 300) when agencies request funding for capital projects 

than on long-term agency capital plans. For example, NOAA completes 

Exhibits 300 for all of its major systems acquisitions. Similarly, the Park 

Service completes Exhibits 300 for major projects over $10 million, for 

multiyear projects, or when the OMB RMO staff requests them. BOP 

completes Exhibits 300 only for information technology (IT) projects. VA 

completes Exhibits 300 for both IT and non-IT projects and provides 

comprehensive business case packages for construction projects. While 

Exhibits 300 and VA’s business cases contain multiyear cost estimates and 

project schedule information for single major acquisitions, they are not 
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 103 GAO-04-138 Agency Capital Planning

long-term planning documents and they do not place those acquisitions in 

the context of an agency’s long-term capital needs and investment 

decisions. 

Each OMB RMO works slightly differently with its agency. For example, 

VA’s RMO works closely with VA on capital investment issues because of 

recent changes to VA’s capital planning process and the Capital Asset 

Realignment Enhanced Services (CARES) process discussed earlier. The 

results of the CARES studies are expected to drive future VHA non-IT 

capital investments. When completed, OMB envisions that VA will submit 

Exhibits 300 for non-IT capital assets that will be used as a management 

tool and for long-term planning. 

The Park Service RMO staff has also worked closely with the Park Service 

and has been instrumental in revamping its capital planning process. Until 

recently, the Park Service did not have a system to rank projects or a 

uniform system to assess asset condition at national parks. 

BOP’s RMO receives regular long-term planning information from BOP and 

independently performs additional research to obtain more information. 

BOP provides the RMO with weekly projections of inmate population 

changes and current and future inmate capacity. BOP also provides the 

RMO with the monthly status of construction reports and regular reports 

on unobligated balances.

OMB RMO staff said they are pushing agencies to consider more 

alternatives as part their capital planning processes. The BOP RMO staff 

person would like to see more consideration of state facilities as an 

alternative to new prison construction. She has urged BOP specifically to 

pursue more contracting opportunities and the use of any available excess 

capacity in state facilities. The Department of Justice’s fiscal year 2003 

performance plan states that one of BOP’s strategies to reduce prison 

crowding is to aggressively analyze existing private and other correctional 

facilities for sale, which may offer a more timely and affordable alternative 

to new prison construction. This is important because our analysis of 

BOP’s capacity planning data showed that in fiscal year 2002 about 17 

percent of inmates were assigned to non-BOP facilities, and that 

percentage is expected to drop to about 14.5 percent by 2009. NOAA’s RMO 

staff person said he wants NOAA to consider more alternatives rather than 

simply replacing assets, such as vessels. VA’s RMO staff person said that 

recent funding has been minimal for new construction because VA is 

waiting until the results of the CARES studies are implemented, which will 
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 104 GAO-04-138 Agency Capital Planning

allow VA to consider, among other things, sharing resources with the 

Department of Defense health system.

OMB’s role in agencies’ internal processes is limited, but OMB does have 

strong views on the products of agencies’ processes. OMB does not get 

involved in initial processes, in which agencies develop ranking and 

selection criteria. VA’s RMO staff person said that some facilities’ managers 

add facility upgrades to high-priority seismic projects, but rather than 

reject these projects outright, OMB tries to find a compromise solution.

The Park Service, for example, makes its trade-offs between visitor 

services and preservation of resources independent of input from the OMB 

RMO, although OMB may inquire as to the weight given to specific criteria 

in the selection process to ensure they align with those of the 

administration. OMB staff are aware that many of the Capital 

Programming Guide’s planning principles have been implemented by the 

agencies. However, one RMO staff person cautioned that many of the 

documents agencies submit out of their processes are of variable quality 

and that a distinction should be made between the process and the quality 

of those documents. 

OMB views its role as the integrator of specific capital project proposals 

into the larger budget process. RMO staff said they consider a number of 

other factors when recommending funding for agency capital projects, 

including agency obligation rates, the overall agency budget request, and 

agency strategic plans. They may also consider future events that will 

affect capital needs, such as the completion of the CARES process in the 

case of VA. OMB staff said they have an idea of the long-term needs of 

agencies, but are reluctant to publish these needs because it could imply a 

future financial commitment on the part of the administration.

Some congressional staff indicated that it could be useful to have long-term 

capital planning information to see what an entity viewed as important. 

Further, they said that the process and analyses involved in developing a 

plan are an effective way to ensure that well-informed decisions are made 

at the agency level. They believe that sometimes the lack of good 

information leads to situations in which other considerations drive 

decisions. They agreed that comparisons of plans over several years might 

provide a basis for questioning projects that appear in budget requests 

without having been in the previous years’ long-term plans, and that having 

more information, such as that contained in a long-term capital plan, also 

would be useful in oversight. 
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 105 GAO-04-138 Agency Capital Planning

State’s 2003 Long-Range Overseas Buildings Plan (LROBP) states that fiscal 

year 2003 budget decisions were based on the 2001 LROBP. The letter from 

the Director of the Bureau of Overseas Buildings Operations that 

accompanied the 2003 LROBP includes a statement that while the LROBP 

is not a budget document, it is an important tool to inform the budget 

decision-making process. The plan gives all stakeholders a road map of 

where the department is headed.

Conclusion OMB’s Capital Programming Guide is guidance and not a requirement for 

federal agencies. However, agencies are aware of its principles and 

practices, and some of the principles have been implemented in agency 

capital decision-making processes. While the degree to which agencies 

have used the guide varies and some agencies have had difficulty 

implementing some principles, they generally find the guide useful. Some 

agency difficulties stem from their varied missions and program 

responsibilities.

OMB RMOs do not require agencies to submit long-term agency capital 

plans, but instead rely on OMB Exhibit 300 submissions for individual 

capital projects and other types of long-term planning documents. Some 

RMOs have worked closely with their respective agencies on capital 

investment issues and have been involved with recent changes to agency 

processes. OMB RMO staff would like agencies to consider more 

alternatives to the acquisition of new capital assets and would like to see 

improvements in some of the documents submitted as a result of agency 

processes. Although OMB RMOs receive some capital planning documents 

during budget review, our work at leading private and state and local 

entities showed that long-term capital plans, as well as all the other leading 

practices, result in better capital decisions. Since these practices 

embedded in the OMB Capital Programming Guide have demonstrated 

benefits to leading organizations, they would prove beneficial to federal 

agencies as well.

Congressional decision makers could make use of long-term capital plans 

when reviewing agency budget requests. The plans also can provide the 

basis for questioning agencies about their real property management, an 

area we recently identified as high risk.4

4

U.S. General Accounting Office, High-Risk Series: Federal Real Property, GAO-03-122

(Washington, D.C.: January 2003).
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 106 GAO-04-138 Agency Capital Planning

Recommendations for 

Executive Action

We recommend that the Director of the Office of Management and Budget 

require that agencies comply with the principles and practices of its 

Capital Programming Guide. The Director should further require that 

long-term agency capital plans developed pursuant to the guide be 

submitted to OMB and provided to congressional decision makers.

We further recommend that the Director of the Office of Management and 

Budget work with agencies to update the Capital Programming Guide to 

address agency implementation challenges and increase its usefulness by 

streamlining some of the requirements so they are not so burdensome to 

agencies.

Agency Comments We requested comments on a draft of this report from the Director of OMB 

or his designated representative. The Assistant General Counsel said that 

OMB agreed with our recommendations. A few technical comments were 

also provided and have been incorporated where appropriate.

In addition to the case study agencies, we requested comments on a draft 

of this report from the U.S. Coast Guard, the Department of State, the 

General Services Administration, the Indian Health Service, the National 

Aeronautics and Space Administration, the Tennessee Valley Authority, the 

Army Corps of Engineers, and the Bureau of Reclamation. 

The Coast Guard disagreed with our recommendation that OMB should 

require that long-term agency capital plans be submitted to OMB and 

congressional decision makers. The Coast Guard believes it has met the 

spirit of our recommendation by providing OMB and the Congress a 5-year 

Capital Investment Plan. The Coast Guard also provided technical 

comments, which have been incorporated where appropriate. TVA 

commented that it should not be required to comply with OMB’s Capital 

Programming Guide because all of its capital requirements are funded 

from its operating income. TVA also provided technical comments, which 

have been incorporated as appropriate.

The Department of State, the General Services Administration, the Army 

Corps of Engineers, and the Department of Interior on behalf of the Bureau 

of Reclamation, had no comments on the draft report. None of the other 

agencies disagreed with our conclusions and recommendations related to 

long-term agency capital plans. The Indian Health Service said the OMB 

Guide is very helpful, but because federal capital assets have so many 
Chapter 5

Agencies and Budget Decision Makers Agree 

That Capital Planning Is Useful, but 

Implementation Challenges Exist

Page 107 GAO-04-138 Agency Capital Planning

different purposes, making the guide a requirement as written would 

change the way agencies developed strategic objectives—which may be 

less driven by mission and more by OMB requirements. The Indian Health 

Service also said if the guide is made a requirement, it would be helpful to 

have an extended implementation schedule in order to make changes to the 

long-term planning process.
Page 108 GAO-04-138 Agency Capital Planning

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

The objectives of this study were to determine (1) the extent to which 

selected agencies have implemented the capital programming principles 

and concepts described in the planning phase of the Office of Management 

and Budget’s (OMB) Capital Programming Guide and have followed the 

planning practices of leading organizations as described in our Executive 

Guide when acquiring capital assets; (2) what, if any, problems or issues 

selected agencies have encountered in implementing the principles and 

concepts of these guides; and (3) the extent to which OMB uses long-term 

capital planning information in reviewing agency budget requests and 

supporting budget justifications to the Congress.

This study focused on major capital assets acquired by the federal 

government primarily to benefit the government’s own operations. They 

are defined as land, structures, equipment, and intellectual property 

(including software) that are used by the federal government and have an 

estimated useful life of 2 years or more. Capital assets exclude items 

acquired for resale in the ordinary course of operations or held for the 

purpose of physical consumption, such as operating materials and supplies. 

Specific capital assets acquired by the case study agencies in this study 

include land, buildings and other structures, medical facilities and 

equipment, satellites, ships, aircraft, prison facilities, and parklands. We 

limited the general scope of our work to the planning processes used to 

acquire and manage investments other than those in information 

technology, so we did not identify the principles and practices specific to 

information technology acquisitions. We looked only at the planning 

processes used to acquire major capital assets as defined by the case study 

agencies, including major modifications or enhancements to existing 

structures.

To select our case study agencies, we used character class data from OMB’s 

MAX1

 system to identify agencies with substantial capital expenditures 

over a 10-year period. 

As described in chapter 1, agencies code their net outlays each year 

according to various investment categories or character classes. The OMB 

1

MAX is the computer system used to collect and process information needed to prepare the 

President’s Budget.
Appendix I

Objectives, Scope, and Methodology

Page 109 GAO-04-138 Agency Capital Planning

categories used to select our case study agencies are those for direct 

spending on physical assets.2

We first sorted the agencies from highest to lowest level of capital outlays 

for fiscal year 2000. We then excluded the Department of Defense military 

outlays and extracted the top 23 agencies whose capital expenditures 

represented 87 percent of total nondefense capital outlays for fiscal year 

2000. From this list of 23, we excluded certain agencies—such as the 

Federal Bureau of Investigation and the Federal Aviation Administration—

that could pose access difficulties due to recent national security concerns. 

We also excluded agencies such as the Department of Energy and the 

Environmental Protection Agency because of their heavy dependence on 

contractors to manage their capital. This resulted in a list of 12 agencies 

whose capital outlays represented 54 percent of nondefense capital outlays 

for fiscal year 2000: the Department of Veterans Affairs (VA), the National 

Aeronautics and Space Administration, the Indian Health Service, the 

Bureau of Prisons (BOP), the Bureau of Reclamation, the U.S. Coast Guard, 

the Tennessee Valley Authority, the National Oceanic and Atmospheric 

Administration (NOAA), the Army Corps of Engineers, the National Park 

Service (Park Service), the General Services Administration, and the 

Department of State. 

We examined the characteristics of the 12 agencies, including their 

missions, the types of assets acquired, and recent related studies, and again 

considered the timing of our study with respect to the ability to gain access 

to agency information. We reviewed our past work and other literature, 

organizational data available on the Internet, departmental strategic and 

annual performance plans, and agency accountability reports. We then 

selected four agencies for case studies: VA, BOP, the Park Service, and 

NOAA. This final selection was based on the goal of having diversity in 

agency missions, the types of assets acquired, and the volume of capital 

spending.

To accomplish our objectives, we conducted extensive interviews with 

officials at various levels of management, including planning, budget, and 

facilities staff; construction, asset, and property management staff; and 

2

These categories are Construction and Rehabilitation (1312 and 1314), Major Equipment 

(1322 and 1324), and Purchases and Sales of Land and Structures (1340). Major Equipment 

includes capital purchases of information technology but excludes the support services 

related to information technology purchases.
Appendix I

Objectives, Scope, and Methodology

Page 110 GAO-04-138 Agency Capital Planning

operations and maintenance personnel. We also obtained and reviewed 

various forms of agency documentation, including asset planning, budget, 

and program documents; strategic plans; annual performance plans; budget 

requests; and capital project proposals. We made site visits to the Park 

Service’s Denver Service Center Construction Program Management 

Office, Intermountain Region (also located in Denver, Colorado), and the 

Grand Canyon National Park. Although the information we gathered and 

our work at Grand Canyon National Park may not be representative of that 

of all Park Service units, it provides insights into the capital planning 

processes of the agency’s large national parks. 

Our work at VA focused primarily on the activities of the Veterans Health 

Administration where the bulk of VA’s capital assets are acquired and used. 

However, we also reviewed documents and interviewed staff of the 

National Cemetery Administration and Veterans Benefits Administration. 

In addition, we interviewed and obtained documentation from VA 

departmental office staff responsible for coordinating capital asset 

planning for the entire department. Our work at NOAA focused on the 

service lines and program offices that acquire and use the bulk of NOAA’s 

major capital assets—the National Weather Service, the National 

Environmental Satellite, Data and Information Service, the Office of Marine 

and Aviation Operations, and NOAA’s facilities office. 

The findings of our study and agency acquisition practices described in this 

report are based on testimonial evidence and our review of documentation 

provided by agency officials. We did not observe or evaluate the processes 

in operation, nor did we evaluate the effectiveness of the specific elements 

of agency processes or assess the outcomes or decisions made as the result 

of agency planning efforts. Our work documented the agency practices and 

whether they conformed to OMB guidance and the practices of leading 

organizations. Governmentwide capital spending data presented in chapter 

1 were obtained from the historical tables of the President’s Budget for 

Fiscal Year 2004 and adjusted for inflation using fiscal year 2002 as the base 

year and the composite outlay deflators for direct capital. Capital spending 

data in appendixes II through V were derived from OMB’s MAX system and 

adjusted for inflation using fiscal year 2002 as the base year and the 

composite deflators for direct capital as presented in the President’s 

Budget for Fiscal Year 2004.

To add context to the information obtained from case study agencies, we 

surveyed the remaining 8 agencies from our list of 12 to obtain their views 

on the usefulness of OMB’s capital guidance and to learn if they had 
Appendix I

Objectives, Scope, and Methodology

Page 111 GAO-04-138 Agency Capital Planning

developed long-term agency capital plans. We sent a survey with five 

structured questions to each of the remaining 8 agencies and received 

responses from all of them. We did not verify agency responses to the 

survey nor did we request from them or receive documentation supporting 

their responses. The 8 survey agencies were the U.S. Coast Guard, the 

Department of State, the General Services Administration, the Indian 

Health Service, the National Aeronautics and Space Administration, the 

Tennessee Valley Authority, the Army Corps of Engineers, and the Bureau 

of Reclamation. 

We met with each of the OMB resource management officers responsible 

for our case study agencies to determine what long-term capital planning 

data OMB receives and how they are used in reviewing budget 

justifications. In addition, we interviewed staff of the House and Senate 

Budget Committees about their interest in having long-term capital 

planning data from agencies. 

We held an exit briefing with each of the case study agencies to convey our 

findings and request comments on a draft of this report. Our work was 

conducted from August 2001 through September 2002 in accordance with 

generally accepted government auditing standards.
Page 112 GAO-04-138 Agency Capital Planning

Appendix II

Department of Veterans Affairs ApendxiI

Background/ 

Organizational 

Structure

The mission of the Department of Veterans Affairs (VA) is to serve 

America’s veterans and their families with dignity and compassion and be 

their principal advocate in ensuring that they receive medical care, 

benefits, social support, and lasting memorials. VA is a cabinet-level agency 

with a budget of over $50 billion and is one of the world’s largest health 

care, medical research, and insurance benefits organizations. VA is 

geographically dispersed and consists of four components: the Veterans 

Health Administration (VHA), the Veterans Benefits Administration (VBA),

the National Cemetery Administration (NCA), and the staff offices of VA’s 

central office. VHA, VBA, and NCA are separate administrations within VA 

and each operates as a distinct entity. VHA—the largest VA 

administration—is divided into 21 Veterans Integrated Service Networks 

(VISN), and NCA is divided into five memorial service networks. There are 

more than 100 service markets including markets with multiple VA facilities 

and markets with only one VA facility. The overall veteran population is 

estimated to be about 25 million, and over 4 million of them received VHA 

health care services in fiscal year 2002. VA’s capital programs include major 

construction (cost over $4 million), minor construction, nonrecurring 

maintenance, medical equipment, enhanced-use leasing, enhanced-sharing 

(space and facilities), energy investments, and information technology 

initiatives. VA activities and its capital spending are influenced by 

numerous veterans advocacy groups and other stakeholder groups, such as 

medical schools and unions.

Types of Assets VA acquires many different types of capital assets. Its current portfolio 

consists of VA-owned buildings and real estate, VA-leased buildings, 

enhanced-use leases and sharing agreements, major equipment, and 

information technology infrastructure and software. The assets specifically 

include hospitals, clinics, cemeteries, office buildings, fire departments, 

computers, and medical equipment. VA owns 162 hospitals, more than 130 

nursing homes, over 650 outpatient clinics, about 4,900 buildings, and 

about 15,600 acres of land. VA also leases 500 additional buildings.

VA construction is divided into major construction—for projects costing 

$4 million or more—and minor construction. VA’s recent appropriations for 

major capital investments were for seismic projects, which are required to 

comply with industry building standards. Projects in VA’s minor 

construction program are ranked and selected based on the availability of 

funds within the total appropriation for minor construction.
Appendix II

Department of Veterans Affairs

Page 113 GAO-04-138 Agency Capital Planning

Capital Spending VHA acquires the bulk of VA’s capital assets. As illustrated in figure 16, VA’s 

capital outlays varied considerably throughout the 10-year period but 

showed an increase in real terms from $1.4 billion in 1993 to $2.1 billion in 

2002 (in 2002 dollars). The lowest levels of outlays during this 10-year 

period occurred in fiscal years 1994 and 1999 when capital outlays 

decreased in real terms to about $1 billion but then rose dramatically in 

fiscal year 2000 to $1.8 billion.

Figure 16: VA Capital Outlays for Fiscal Years 1993 through 2002 

Capital Planning 

Process

VA’s capital planning process is formal and contains considerable guidance 

and documentation. VA has made commendable efforts to revise and 

improve its capital planning process in recent years although VA does not 

have a long-term capital plan. Efforts to improve its process include 

establishing a new department-level office to centralize the review of 

capital project proposals and coordinate capital investments for the 

department. Also, in recent years, VA has contracted for two studies of its 

process and industry best practices; the current process is based on the 

results of those studies and the guidance contained in our Executive 

Guide. In addition, VA implemented most of the principles contained in the 

Office of Management and Budget’s (OMB) capital planning guidance when 

0

500

1,000

1,500

2,000

2,500

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Constant 2002 dollars in millions

Source: GAO Budget Database.
Appendix II

Department of Veterans Affairs

Page 114 GAO-04-138 Agency Capital Planning

it revamped its planning process. VA continues to refine its capital planning 

efforts. Its process begins with and is directed by departmental guidance 

and oversight—from the development of capital project proposals to the 

ranking and selection of final projects. The process begins with a call 

memorandum from VA headquarters to its administrations and culminates 

with proposals scored based on their compliance with weighted criteria 

developed by central VA decision makers. 

VA requires that proposed capital projects clearly document the needed 

investment, although the three administrations accomplish this in different 

ways. NCA maintains an asset inventory and information on the condition 

of its assets that assists its proposal developers in justifying the 

performance gap. NCA also completes a 5-year facilities plan with project 

cost estimates for both major and minor projects. Conversely, VHA facility 

and VISN employees do not have complete asset inventories or readily 

available asset condition data that are available VHA-wide. VHA conducts 

condition assessments of facilities and maintains that information at the 

facility and VISN level. As discussed in chapter 3, VHA initiated the Capital 

Asset Realignment for Enhanced Services (CARES) program in October 

2000 to assess veterans’ health care needs and identify planning initiatives 

to meet those needs in the future. VHA future capital needs and program 

resources are expected to be largely driven by the results of the CARES 

studies being conducted for each VISN. 

Capital project proposals must identify alternatives considered throughout 

the planning process. The budget call memorandum issued by VA 

headquarters requires proposal developers to first vet their proposals 

through internal bureau processes—being mindful of administration-level

and department-level strategic goals. Following departmental guidance, 

VHA, NCA, VBA, and staff offices are required to consider a range of 

alternatives to address an identified performance gap. At least four 

alternatives—leasing (and enhanced-use leasing); status quo; new 

construction; and rehabilitation, repair, or expansion of existing facilities 

must be considered. Once proposals pass administration-level processes,
Appendix II

Department of Veterans Affairs

Page 115 GAO-04-138 Agency Capital Planning

VA departmental guidance requires its facility staff to answer OMB’s “Three 

Pesky Questions”1

 when developing capital investment project proposals.

VA’s Analytical Hierarchy Process (AHP), discussed in chapter 4, forms the 

foundation of its department-level review. VA’s Office of Asset Enterprise 

Management and Capital Investment Panel (CIP) conduct the initial VA 

department-level review of capital project proposals (business cases) 

submitted from the three primary administrations and the staff offices to 

ensure that proposal packages pass a validity assessment—ensuring that 

proposals are complete with the required documents, that OMB’s “Three 

Pesky Questions” are answered, and that there is rationale for including it 

in the project scoring process. Project proposals that pass the validity 

assessment are scored by CIP on each of the subcriterion and main 

criterion in AHP before they are forwarded to VA’s Strategic Management 

Council (SMC) for validation. CIP prepares a “Board Book” (a synopsis of 

proposals reviewed and scored) for SMC’s use during its review and 

deliberation.

Project proposal scores are then fed into a decision software package 

called Expert Choice, which is based on AHP, that ranks the proposals 

based on assigned weights of major criteria (established by SMC) and 

subcriteria (established by CIP). The established criteria used by AHP and 

Expert Choice are reviewed each year, updated, and realigned with VA’s 

mission and current administration’s and Secretary’s priorities. The 

established criteria have evolved over time. According to a VA official, the 

Return on Investment criterion was added at OMB’s request and the Special 

Emphasis criterion2

 was congressionally mandated. The ranked list of 

proposals generated by Expert Choice is validated by SMC and forwarded 

to VA’s Executive Board. The Executive Board reviews the ranked results 

of AHP and determines which projects are forwarded to OMB for funding 

in the President’s Budget. 

1

The three questions are (1) Does the investment in a major capital asset support 

core/priority mission functions that need to be performed by the federal government? 

(2) Does the investment need to be undertaken by the requesting agency because no 

alternative private sector or governmental source can better support the function? and 

(3) Does the investment support work processes that have been simplified or otherwise 

redesigned to reduce costs, improve effectiveness, and make maximum use of commercialoff-the-shelf technology?

2

The Special Emphasis criterion is used to evaluate project proposals that support special 

emphasis programs, such as spinal cord injury, chronic mental illness, and posttraumatic 

stress disorder.
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Challenges VA is confronted with diverse challenges in planning for and maintaining 

the infrastructure needed to support its programs and activities. VA owns a 

large number of very old buildings, pieces of equipment, and facilities. VA 

officials expressed frustration that in recent years, after it expended 

considerable resources to develop the business cases and other 

paperwork, many of its project proposals were not funded. VA officials also 

stated that VA lacks sufficient staff to prepare business cases within the 

given time frames and that some staff lack the technical expertise to 

develop project proposals properly. In those cases, VA has had to rely on 

contractors to develop major capital investment proposals.

VA also faces challenges that are not within its control. The United States 

has a growing, aging veteran population. Veterans’ health care needs have 

changed over the last several decades, and VA must now adjust its services 

and supporting facilities where the age of the infrastructure is more than 50 

years to meet those changing needs. Female veterans are increasing in 

number but most inpatient or outpatient facilities were not designed to 

accommodate their needs. Additionally, VA is challenged by the 

geographical movement of the nation’s veteran population, resulting in 

some service markets lacking sufficient facilities and others having 

facilities that are underused.

Prior GAO Work at VA We have previously reported3

 that VA needs to modify its infrastructure to 

support its increased reliance on outpatient health care services. In August 

1999, we recommended that VA develop asset-restructuring plans for its 

health care markets to guide its planning and management of health care 

assets. In response, VA established the CARES program. We also have 

reported4

 that VA and the Department of Defense (DOD) should increase 

their joint activities to maximize federal health care resources. In an effort 

to save federal health care dollars, VA and DOD have sought ways to work 

jointly to gain efficiencies. For example, local VA medical centers and 

military treatment facilities have entered into agreements to exchange 

inpatient, outpatient, and specialty care services, as well as support 

3

U.S. General Accounting Office, VA Health Care: Capital Asset Planning and Budgeting 

Need Improvement, GAO/T-HEHS-99-83 (Washington, D.C.: Mar. 10, 1999).

4

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Veterans Affairs, GAO-03-110 (Washington, D.C.: January 2003).
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Page 117 GAO-04-138 Agency Capital Planning

services. Some local VA and DOD facilities have entered into joint 

ventures—pooling resources to build a joint medical facility or benefit from 

an existing facility. Additional related GAO reports are listed at the end of 

this appendix and at the end of this report.

The Future of VA VA has made considerable progress toward improving its capital planning 

process and developing a process that conforms to OMB guidance and 

implements GAO capital planning recommendations. VA officials said they 

are dedicated to further improving their process and ensuring conformance 

to industry best practices. OMB staff said they are actively assisting VA in 

achieving this desired outcome. Future capital acquisitions and overall 

plans would depend on the results of the CARES studies.

Some Related GAO 

Reports

Federal Real Property: Vacant and Underutilized Properties at GSA, VA, 

and USPS. GAO-03-747. Washington, D.C.: August 19, 2003.

Department of Veterans Affairs: Key Management Challenges in Health 

and Disability Programs. GAO-03-756T. Washington, D.C.: May 8, 2003.

VA Health Care: Improved Planning Needed for Management of Excess 

Real Property. GAO-03-326. Washington, D.C.: January 29, 2003.

Major Management Challenges and Program Risks: Department of 

Veterans Affairs. GAO-03-110. Washington, D.C.: January 2003.

Managing for Results: Efforts to Strengthen the Link Between Resources 

and Results at the Veterans Health Administration. GAO-03-10. 

Washington, D.C.: December 10, 2002.

VA Health Care: Challenges Facing VA in Developing an Asset 

Realignment Process. GAO/T-HEHS-99-173. Washington, D.C.: July 22, 

1999.

Veterans’ Affairs: Observations on Selected Features of the Proposed 

Veterans’ Millennium Health Care Act. GAO/T-HEHS-99-125. Washington, 

D.C.: May 19, 1999.

VA Health Care: Capital Asset Planning and Budgeting Need 

Improvement. GAO/T-HEHS-99-83. Washington, D.C.: March 10, 1999.
Appendix II

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Page 118 GAO-04-138 Agency Capital Planning

Major Management Challenges and Program Risks: Departments of 

Defense, State, and Veterans Affairs. GAO/T-NSIAD/HEHS/AIMD-99-104. 

Washington, D.C.: February 1999.

VA Health Care for Women: Progress Made in Providing Services to 

Women Veterans. GAO/HEHS-99-38. Washington, D.C.: January 29, 1999.

Veterans’ Health Care: Challenges Facing VA’s Evolving Role in Serving 

Veterans. GAO/T-HEHS-98-194. Washington, D.C.: June 17, 1998.

VA Hospitals: Issues and Challenges for the Future. GAO/HEHS-98-32. 

Washington, D.C.: April 30, 1998.

VA Health Care: Closing a Chicago Hospital Would Save Millions and 

Enhance Access to Services. GAO/HEHS-98-64. Washington, D.C.: April 16, 

1998.
Page 119 GAO-04-138 Agency Capital Planning

Appendix III

National Park Service ApendxiI

Background/ 

Organizational 

Structure

The mission of the National Park Service (Park Service) is to preserve, 

unimpaired, the natural and cultural resources and values of the national 

park system for the enjoyment, education, and inspiration of this and future 

generations. A bureau of the Department of the Interior (DOI), the Park 

Service is organized into seven geographic regions and 388 national park 

units and covers 84 million acres of land. In 1995, the Park Service regions 

were reorganized—making the Intermountain Region the largest region 

covering eight states and 89 parks units. 

Types of Assets Park Service assets include roads; trails; campgrounds; park visitor 

centers; other buildings and houses; utility systems; marine and dock 

structures; signs and information structures; and special features assets, 

such as statues, memorials, and viewing structures. In every category of 

these assets, there are both general and stewardship facilities.1

 These 

assets consist of over 18,000 permanent structures, 8,000 miles of roads, 

1,800 bridges and tunnels, 4,400 housing units, about 700 water and 

wastewater systems, 200 radio systems, more than 400 dams, and 200 solid 

waste operations and include numerous cultural and historic buildings and 

structures. There is considerable diversity within the park system, with 

assets ranging from large landscapes such as the Grand Canyon and 

Yosemite national parks, to historic structures such as Philadelphia’s 

Independence Hall, to the granite faces of Mount Rushmore. 

Grand Canyon National Park assets include visitor centers, maintenance 

facilities, employee housing, roads and parking facilities, other structures, 

and utility systems. The Grand Canyon Park is very much like a small city, 

and is responsible for maintaining its own infrastructure, utilities, 

employee housing, and services for residents and visitors. 

Capital Spending The bulk of Park Service capital spending is for major projects, including 

new construction, rehabilitation, and maintenance projects, costing 

$500,000 or more. Some capital spending is accomplished through funding 

provided by the Park Service fee demonstration program, the franchise fee 

1

General facilities are general property, plant, and equipment (PP&E) used in providing 

goods or services. Stewardship facilities include heritage assets of historical, natural, 

cultural, educational, or artistic significance and land other than that acquired for, or in 

connection with, general PP&E.
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program, and the road improvement program—in addition to the line-item 

construction budget. Some national parks—generally the larger parks—are 

given authority to collect fees from the public to finance various capital 

projects. Such parks are referred to as 80 percent parks because they are 

allowed to retain 80 percent of the fees collected. The remaining parks—

referred to as 20 percent parks—do not collect fees from the public but can 

request part of the remaining 20 percent of fees collected by the other 

parks for their capital projects. The Park Service fee demonstration 

program began in 1997 and has grown to where it now provides the Park 

Service approximately $100 million annually for new projects.

As illustrated in figure 17, the Park Service’s capital outlays fluctuated 

during the 10-year period 1993 through 2002 but grew in real terms from 

$395 million in 1993 to $496 million in 2002. The lowest level of capital 

outlays—$184 million—occurred in fiscal year 1999.

Figure 17: Park Service Capital Outlays for Fiscal Years 1993 through 2002 

Capital Planning 

Process

The Park Service’s capital planning and asset management process is 

evolving. Some of its current practices—such as the establishment of an 

external advisory group—stem from recommendations of a 1998 National 

0

100

200

300

400

500

600

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Constant 2002 dollars in millions

Source: GAO Budget Database.
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National Park Service

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Academy for Public Administration (NAPA) study of the agency’s line-item 

construction program. The NAPA report’s recommendations focused on 

the Park Service’s Denver Service Center, which has a primary role in 

implementing the service’s construction program. The advisory group 

meets concurrently with the Park Service’s senior-level internal review 

board, reports directly to the Park Service Director, and reviews every 

facility project with an estimated cost greater than $500,000. Also in 1998, 

spurred by congressional concerns and new federal accounting standards 

for plant, property, and equipment, the Park Service initiated the design of 

a new asset management process. The cornerstone of the process is a 

facility management software system that is intended to help the Park 

Service achieve better overall management of its portfolio of capital assets.

Park Service capital planning begins at the park level with individual park 

general management plans that cover a 10- to 20-year period and contain 

elements of both a strategic plan and long-term capital plan. Individual 

park-level strategic plans also are prepared that cover a 5-year period and 

discuss the capital facilities needed to support park strategic goals. These 

individual park-level strategic plans drive the servicewide Park Service 

strategic plan. Current administration and departmental priorities also 

influence capital projects initiated at individual national parks. Current 

priorities are communicated to park regions and individual parks via the 

annual budget call memorandum issued by the Park Service’s Washington 

Office. Examples of administration priorities are life and safety and facility 

deferred maintenance (discussed later)—which have been priorities for 

several years—and, more recently, increased visitor safety after the 

terrorist attacks of September 11, 2001.

Capital needs identified at individual parks are entered into and tracked 

within the Park Service’s servicewide Project Management Information 

System (PMIS). PMIS is an automated system containing thousands of 

identified capital projects. According to Park Service officials, in fiscal year 

2002, there were approximately 40,000 projects in the PMIS database. 

Identified needs are entered into the system throughout the year and 

extracted in response to annual budget calls for capital project proposals.

Projects also may be entered into PMIS for the first time in response to a 

budget call. According to Park Service officials, PMIS is a list of identified 

needs containing a mix of capital projects—some that have been initiated 

and others that have not. These projects are all labeled as nonrecurring 

needs and are identified in the system by a unique identification code. 

When parks such as the Grand Canyon National Park respond to budget 

calls, the PMIS code is used to inform decision makers of which projects 
Appendix III

National Park Service

Page 122 GAO-04-138 Agency Capital Planning

the park is proposing to initiate. Using the PMIS code, decision makers are 

then able to access the specific project information, including project 

justifications, link to agency goals, and estimated costs, and begin the 

ranking and selection phase of the capital decision-making process. To 

assist with identifying and documenting capital needs, some national parks 

have asset inventories with varying levels of detail, but the Park Service has 

only recently developed a servicewide asset inventory. Also, the Park 

Service has just recently completed visual inspections of assets in a large 

number of its parks; however, it does not have servicewide comprehensive 

information on the condition of its assets.

When capital needs are identified, the Park Service considers a range of 

alternatives to address them. Extensive alternatives analyses are 

conducted during the development of a capital project proposal. The type 

of capital project being considered and strategic goal being accomplished 

drives the level and type of alternatives analyses conducted. For capital 

projects involving life and safety or facility deferred maintenance, there are 

limited alternatives available. When appropriate, the Park Service 

considers renovating and/or upgrading an existing facility or structure. At 

times, a park facility’s specific functional requirements may limit the type 

of facility or location considered during the alternatives evaluation 

process. For example, the Grand Canyon National Park’s new visitor center 

must be open 24 hours a day, 7 days per week, in all weather conditions. 

Therefore, it required a design that would permit indoor and outdoor 

access to visitor information, regardless of whether park personnel staff 

the facility. Upgrading an existing facility would not fulfill this requirement. 

The Park Service also considers partnering with other governments for 

land acquisitions and has partnered with the private sector and nonprofit 

entities to share the funding of costly projects. In addition, the Park Service 

considers partnering with other federal agencies, sharing equipment with 

the Forest Service, and leasing some assets where appropriate.

Value analysis is an important component of the Park Service capital 

planning and alternative evaluation processes. It is used to select the best 

alternative during a project’s initial planning and predesign stages. Value 

analysis is completed for project proposals above the $500,000 threshold, 

and the Park Service senior-level review board will not review projects that 

lack such studies. From fiscal years 1997 through 2001, the number of value 

analysis studies increased from 17 to 113.

The Park Service’s capital planning process includes an established 

framework for ranking and selecting proposed capital investments—a 
Appendix III

National Park Service

Page 123 GAO-04-138 Agency Capital Planning

framework that consists of two senior-level review boards, an external 

advisory group, and a formal system to rank projects using established 

criteria. Capital project needs extracted from the PMIS database are 

forwarded to the regional offices for initial evaluation and ranking within 

their regions. These project proposals are subjected to preliminary scoring 

on the regional level based on the same criteria used for scoring at the 

national level later in the process. The regional offices develop a ranked 

listing of proposals and forward their priority lists to the Park Service’s 

Construction Program Management Office (CPM) for evaluation and 

ranking in the servicewide program. CPM reviews the submitted proposals 

for completeness and compliance with the line-item construction program 

eligibility criteria before the proposals are submitted for further evaluation 

at the national level.

Capital project proposals evaluated and ranked at the regional level and 

those conforming to the initial CPM review are then formally evaluated on 

a national level, park system-wide, using DOI criteria and the Park Service 

Choosing By Advantage (CBA) process. CBA uses a series of evaluation 

factors to compare proposed projects to one another. The five factors 

recently used in CBA were (1) provide safe visits and working conditions; 

(2) protect cultural and natural resources; (3) improve visitor enjoyment 

through better services and educational and recreational opportunities; 

(4) improve operational efficiency, reliability, and sustainability; and 

(5) provide cost-effective, environmentally responsible, and otherwise 

beneficial development for the national park system. CBA involves a 

relative comparison of every project proposal by each factor and produces 

an individual project ranking. The project with the best score on any 

particular factor sets the scale for that factor, and the other projects are 

scored relative to that best score. Each project’s score is divided by its cost 

to arrive at an advantage-to-cost ratio. A multidisciplinary assessment team 

led by CPM is assembled to manage the CBA process and apply the 

evaluation factors to each project.

Recently, an additional step was added to the Park Service process that 

required proposed projects be grouped into three bands using DOI criteria 

that emphasize the Secretary of the Interior’s and the President’s priority 

areas. Within the project bands created by the DOI criteria, projects were 

then ranked using the CBA process.

Capital projects receive a number of high-level reviews as part of the 

decision-making process. The senior-level Park Service Development 

Advisory Board (DAB) reviews proposed capital projects vetted and 
Appendix III

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Page 124 GAO-04-138 Agency Capital Planning

ranked by the CBA process. DAB is composed of four Park Service 

associate directors, three regional directors, and two senior executive 

service park superintendents. It has two responsibilities: (1) policy, which 

involves reviewing the proposed 5-year construction program plan and thus 

recommending projects for inclusion in the construction program, and 

(2) reviewing individual projects at the end of predesign development. With 

some exceptions, DAB reviews every project with estimated costs greater 

than $500,000. Without the approval of DAB, project managers cannot 

proceed with design efforts or initiate construction activities. DAB reviews 

approximately 120 projects per year. Once projects proposed for inclusion 

in the 5-year plan clear DAB, they are forwarded to the National Leadership 

Council (NLC). NLC is composed of the Park Service Director, deputy 

directors, associate directors, and regional directors and meets bimonthly 

to consult on major policy and program issues confronting the Park 

Service. Projects proposed for inclusion in the 5-year plan are reviewed by 

NLC, and its members provide any comments or concerns about the 

ranking and rating of projects directly to the Park Service Director for 

consideration before final approval of the 5-year plan. Projects reviewed by 

DAB that have completed predesign activities are advanced directly to the 

Park Service Director for approval.

In addition, the Park Service’s external advisory group was established to 

provide an independent review of Park Service construction projects—

assessing line-item construction projects for suitability and costeffectiveness. The five-member group is composed of private citizens 

appointed by the Park Service Director. Members of the group have 

experience in areas such as engineering, architecture, historic 

preservation, and budgeting. The group meets concurrently with DAB to 

review projects that have completed predesign activities and provides its 

findings directly to the Park Service Director. 

Capital project proposals rated through CBA and approved at the national 

level form the Park Service 5-year construction plan. The 5-year 

construction plan is the only Park Service-wide capital asset planning 

document. It provides a cost schedule and rating for each line-item 

construction project.

Challenges The Park Service is confronted with a number of challenges in planning for 

and maintaining its assets and infrastructure. The Park Service owns and is 

responsible for maintaining numerous prehistoric and historic facilities and 

structures. Historic preservation is expensive, and the number of 
Appendix III

National Park Service

Page 125 GAO-04-138 Agency Capital Planning

properties designated as historic is increasing. Officials commented that 

the cost to repair and renovate historic properties is usually greater than 

the cost to tear down and rebuild them. As discussed below, the Park 

Service deferred maintenance backlog has long been a challenge due to 

inadequate data and a low priority for funding maintenance needs. The 

maintenance backlog is expected to continue to challenge the agency. 

The Park Service also faces challenges that are outside of its control.

Visitation rates at national parks have grown substantially over the past 20 

years—from about 220 million visitors per year in 1980 to almost 290 

million visitors in recent years. This growth has required the expansion of 

Park Service facilities and presented a significant challenge to many of the 

parks’ transportations systems. Since September 2001, the Park Service has 

given increased attention to park visitor safety and security, which presents 

an additional challenge.

Prior GAO Work at 

Park Service

We have reported2 that the Park Service frequently did not have baseline 

information about the condition of its natural and cultural resources, 

including historic structures, making it difficult for park managers to 

clearly ascertain the condition of resources and whether resources are 

deteriorating, improving, or staying the same. At the same time, many park 

resources face significant threats, including air pollution, vandalism, and 

nearby land development. According to the Park Service, steps have been 

taken to improve the situation. Specifically, the Congress is funding the 

Park Service’s Natural Resources Inventory and Monitoring Program to a 

level sufficient to develop needed information on basic natural resource 

inventories. Also, the Park Service has begun efforts to preserve many 

prehistoric and historic sites.

We have also reported that the Park Service, along with other bureaus 

within DOI, is challenged with maintaining its facilities and infrastructure 

and is not meeting its safety responsibilities in many of its structures.

These assets include some deteriorating facilities for which repair and 

maintenance have been a low priority for funding. These unfunded repair 

and maintenance needs are referred to as the deferred maintenance 

backlog. In February 2002, DOI estimated that the Park Service deferred 

maintenance backlog was from $4.08 billion to $6.8 billion. However, we 

2

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of the Interior, GAO-03-104 (Washington, D.C.: January 2003).
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Page 126 GAO-04-138 Agency Capital Planning

also reported that the Park Service has yet to assess or define the scope of 

it maintenance needs accurately. Factors contributing to this situation 

included the agency’s lack of an accurate inventory of the assets that need 

to be maintained and inaccurate data on the condition of these assets. In 

May 2000, we reported that the structural fire safety efforts in several 

national parks were not effective.3

 The gaps in the Park Service’s efforts 

include inadequate employee training and fire inspections and—for many 

buildings—inadequate or nonexistent fire detection or suppression 

systems. Additional related GAO reports are listed at the end of this 

appendix and at the end of this report.

The Future of the Park 

Service

As discussed earlier, the Park Service is in the process of implementing an 

asset management process that is intended to enable the agency to have a 

reliable inventory of its assets and a process for documenting and reporting 

on the condition of each asset. The cornerstone of the new process is the 

Facility Management Software System that also will provide a systemwide 

methodology for estimating deferred maintenance costs. Like most other 

federal agencies, the Park Service will be affected by increased attention to 

homeland security. This may require Park Service management to balance 

competing priorities while accomplishing its strategic goals and, at the 

same time, providing increased park visitor safety and security.

Some Related GAO 

Reports

National Park Service: Status of Agency Efforts to Address Maintenance 

Backlog. GAO-03-992T. Washington, D.C.: July 8, 2003.

National Park Service: Status of Efforts to Develop Better Deferred 

Maintenance Data. GAO-02-568R. Washington, D.C.: April 12, 2002.

Recreation Fees: Management Improvements Can Help the 

Demonstration Program Enhance Visitor Services. GAO-02-10. 

Washington, D.C.: November 26, 2001.

Park Service: Visitor Center Project Costs, Size, and Functions Vary 

Widely. GAO-01-781. Washington, D.C.: July 24, 2001.

3

U.S. General Accounting Office, Park Service: Agency Is Not Meeting Its Structural Fire 

Safety Responsibilities, GAO/RCED-00-154 (Washington, D.C.: May 22, 2000).
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Page 127 GAO-04-138 Agency Capital Planning

Park Service: Need to Address Management Problems That Plague the 

Concessions Program. GAO/RCED-00-70. Washington, D.C.: March 31, 

2000.

National Park Service: Efforts to Link Resources to Results Suggest 

Insights for Other Agencies. GAO/AIMD-98-113. Washington, D.C.: 

April 10, 1998.

Park Service: Managing for Results Could Strengthen Accountability.

GAO/RCED-97-125. Washington, D.C.: April 10, 1997.

National Parks: Park Service Needs Better Information to Preserve and 

Protect Resources. GAO/T-RCED-97-76. Washington, D.C.: February 27, 

1997.
Page 128 GAO-04-138 Agency Capital Planning

Appendix IV

National Oceanic and Atmospheric 

Administration ApendxiIV

Background/ 

Organizational 

Structure

The mission of the National Oceanic and Atmospheric Administration 

(NOAA) is to describe and predict changes in the Earth's environment and 

to conserve and wisely manage the nation's coastal and marine resources.

NOAA is a bureau within the Department of Commerce; it accomplishes its 

mission through five major line offices and numerous program units. The 

five line offices are the National Weather Service (NWS); the National 

Environmental Satellite, Data and Information Service (NESDIS); the 

National Marine Fisheries Service (NMFS); the National Ocean Service 

(NOS); and the Office of Oceanic and Atmospheric Research (OAR). Key 

among the program units is the Office of Marine and Aviation Operations 

(OMAO). Some line offices and program units function as users of other 

NOAA line-office products (e.g., NESDIS produces satellites for NWS use in 

weather prediction). 

NOAA’s line and program offices have diverse missions and are 

geographically diffuse. NWS provides weather, hydrologic, and climate 

forecasts and warnings for the United States, its territories, adjacent 

waters, and ocean areas and has 122 weather forecasting offices in six 

regions, including Alaska and the Pacific Islands of Hawaii and Guam.

NESDIS acquires and manages the nation's operational environmental 

satellites, operates the four national data centers, provides data and 

information services, and conducts related research. NMFS scientists study 

the life history, stock, size, and ecology of economically important 

fisheries. NOS develops the national foundation for coastal and ocean 

science, management, response, restoration, and navigation. NOAA's 

research, conducted through OAR, is the driving force behind NOAA’s 

environmental products and services intended to protect life and property 

and to promote sustainable economic growth. OMAO operates a wide 

variety of specialized aircraft and ships used in NOAA's environmental and 

scientific missions. 

Types of Assets NOAA acquires and uses various types of assets to accomplish its mission, 

including satellites, radars, ground systems, aircraft, ships and other water 

vessels, computers, and facilities. Many of NOAA’s assets are specialized 

and unique to NOAA’s mission.

Capital Spending NOAA’s capital investments are funded through a single budget account, 

the procurement, acquisition, and construction (PAC) account. The PAC 

account was created 5 years ago with the goal of smoothing the capital 
Appendix IV

National Oceanic and Atmospheric 

Administration

Page 129 GAO-04-138 Agency Capital Planning

investment funding among the various line and program offices to avoid 

large year-to-year fluctuations in funding requests. As illustrated in figure 

18, NOAA’s capital outlays grew dramatically in real terms over the 10-year 

period 1993 through 2002, from $51 million in 1993 to $787 million in 2002—

a more than 15-fold increase. While outlays fluctuated some over the 1993 

through 1996 period, capital spending grew substantially in the following 

years and almost tripled from $213 million in 1997 to $617 million in 1999.

This increase was primarily due to funding the modernization of NOAA 

weather facilities and systems, satellite systems, the first planned fisheries 

research vessel, and new laboratories and science centers. While outlays 

dropped some in fiscal year 2000 to $536 million, they significantly 

increased in the last 2 years. 

Figure 18: NOAA Capital Outlays for Fiscal Years 1993 through 2002 

Capital Planning 

Process

The capital planning processes within each of NOAA’s line and program 

offices are driven by their unique activities and specific needs as outlined in 

their current individual strategic plans. For example, NWS’s current focus 

is the continued routine maintenance of recently modernized assets. In the 

1980s, NWS began a nationwide modernization program to upgrade 

weather-observing systems, such as satellites and radars; to design and 

develop advanced computer workstations for forecasters; and to 

0

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600

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800

900

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Constant 2002 dollars in millions

Source: GAO Budget Database.
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Page 130 GAO-04-138 Agency Capital Planning

reorganize its field office structure. Its current focus is to maintain these 

upgrades. Other examples are OMAO’s replacement of its aging fleet of 

ships and NESDIS’s planned procurement of satellites near the end of this 

decade. 

At NOAA, both a NOAA-level and individual line and program office 

strategic plans are prepared. All of them support the vision and long-term 

goals of Commerce as shown by clearly articulated interrelationships 

between NOAA and Commerce goals. NOAA’s mission is supported by 

seven interrelated goals—each goal is separate but the goals have 

crosscutting relationships that enable NOAA and Commerce to accomplish 

their goals and objectives. NOAA’s line offices implement the strategies and 

conduct the work to achieve these goals and objectives. The line and 

program office strategic plans discuss the capital needed to support each 

office’s program, goals, and objectives. For example, NWS’s strategic plan 

supports one of two primary missions of NOAA and contains three of the 

seven NOAA goals. Capital investments needed to achieve these goals 

include weather prediction and receiving systems. NESDIS prepares a 5-

year capital plan to guide the acquisition of its satellite ground systems—to 

bridge its performance gap in support of the strategic goals established in 

its strategic plan. OMAO’s strategic plan describes its current vessels and 

aircraft capabilities, and identifies the minimum number of these assets 

needed for OMAO to operate safely. 

The process for assessing NOAA’s capital asset needs can also vary by line 

and program office. For example, OMAO current capital needs are based 

on its current strategic plan. The plan describes the need to acquire three 

additional fisheries ships to meet program expectations over the next 

decade and the impending critical need for replacement aircraft capability. 

OMAO formed an integrated project team (IPT) consisting of mission and 

program managers and directed the team to develop a ship proposal that 

would satisfy most fisheries needs with one common design. NESDIS also 

formed an IPT to develop its newest satellite system—coordinating 

activities within NOAA and the other agencies participating in its 

development.

To assist with identifying and assessing capital needs, NOAA maintains 

separate inventories of its real and personal property. NOAA headquarters 

and Commerce’s administrative support centers maintain a single inventory 

of real property assets, which includes improvements to land, buildings, 

and building systems. NOAA officials can generate reports from the real 

property inventory that show basic information such as acquisition cost 
Appendix IV

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Administration

Page 131 GAO-04-138 Agency Capital Planning

and the size and age of facilities. The inventory also contains information 

on NOAA leased and General Services Administration (GSA) assigned 

property. NOAA does not maintain asset condition data in the real property 

inventory or in any other location. Asset condition assessments were 

conducted in the past, but have been suspended until the existing identified 

asset deficiencies are addressed. NOAA’s personal property inventory 

contains all other capital assets, such as satellites, antennas, and 

computers. NOAA has a formal process for keeping its personal property 

inventory up to date. 

Commerce and NOAA are in the process of deploying a Web-based facilities 

management system that will track information similar to the present real 

property inventory but is expected to be easier to use. According to a 

NOAA official, the real property inventory is difficult to use and decision 

makers do not regularly consult it. 

NOAA considers many alternatives to address an identified performance 

gap—both at the line and program office level and at the administration 

level. For example, OMAO has purchased excess Navy ships and converted 

them for its needs. OMAO also considers alternatives to purchasing new 

capital assets as one means of fulfilling one of the goals in its strategic 

plan—the goal of pursuing partnerships with the public and private sectors. 

According to officials, in fiscal year 2002, NOAA expected to acquire 

approximately 3,800 operating days of ship support through outsourcing 

with the private sector and the University-National Oceanographic 

Laboratory System. NWS officials said that some of its operations colocate 

or share resources with other federal agencies as an alternative to 

acquiring or constructing new facilities. NWS requires that project 

proposals forwarded to the Finance and Investment Review Board (FIRB), 

its internal review board, document alternatives considered, the cost and 

benefits of the best alternative, and how the various alternatives differ. In 

order to receive the highest score in the FIRB review, the proposal must 

include an explanation of alternatives considered. 

NOAA budget formulation guidance for project proposals requires line 

offices to consider alternatives. The guidance requires proposals to 

consider outsourcing (contracting) and partnerships with other agencies or 

with other line offices before review by administration-level review boards. 

The NOAA Facilities Office may also require construction proposals to 

identify alternatives, although the Facilities Office’s involvement is not 

routine. If the Facilities Office does become involved, it is most often 

during the initial phase of a proposal development. During this review, the 
Appendix IV

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Administration

Page 132 GAO-04-138 Agency Capital Planning

Facilities Office has a standard set of alternatives each proposal must 

consider—purchasing existing assets, new construction, leasing, and the 

use of university facilities. 

NOAA’s line and program offices have individual ranking processes that 

precede the review by the administration-level review boards. For example, 

NWS formed FIRB in fiscal year 2000 to establish a formal process for 

management review and ranking of capital investment proposals in support 

of strategic goals. The FIRB members review and evaluate capital 

investment proposal justifications, score capital investments according to 

established criteria, and rank the approved investments. The criteria used 

include alternatives considered, contribution to improved agency 

performance, and contribution to NWS mission. FIRB evaluates the 

approved portfolio of capital investments for inclusion in the NWS budget 

submission. NESDIS managers solicit project proposals based on NOAA’s 

annual goals. Brief conceptual proposals are initially reviewed and ranked. 

Proposal developers then prepare more detailed proposals, and the 

selected proposals are forwarded to the NOAA boards for review.

NOAA’s six administration-level review boards—working groups 

representing NOAA’s strategic themes—consider administration priorities 

and goals when reviewing proposals ranked by line and program offices. 

Each project proposal submitted to the themes’ review board must be 

justified in terms of how it supports the theme. The review boards are 

confronted with funding requests for both new and ongoing projects and 

conduct their own internal reviews for ranking and selection prior to NOAA 

management review. According to a NOAA official, the Infrastructure, 

Maintenance, Safety and Human Capital theme used the following set of 

criteria to rank submitted project proposals: (1) contribution to agency 

mission, (2) cost development of the proposal, (3) productivity 

improvement, (4) operational efficiency, (5) improving efficiency, and 

(6) the likelihood of success. Similar criteria permeated the other themes’ 

processes. Once this internal review is complete, review boards

recommend the highest ranked project proposals to NOAA’s senior 

management and the NOAA budget office for inclusion in the Commerce 

budget submission to the Office of Management and Budget (OMB). 

NOAA does not prepare a long-term capital asset plan, but long-term 

planning information exists at the line-office level. The budget office does 

not require long-term plans from the line offices but says it has information 

about ongoing projects and proposed projects that were not funded within 

the past 2 years. Two line offices have longer-range documents—OMAO 
Appendix IV

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Administration

Page 133 GAO-04-138 Agency Capital Planning

completes an “unofficial” (unpublished) long-range plan and NESDIS 

prepares a 5-year satellite ground systems plan. The OMAO plan is a 10-

year chart of tentative dates and cost estimates of major repairs and 

replacements of NOAA ships. The NESDIS plan identifies the resources it 

requires to operate and maintain satellite ground systems to monitor and 

control on-orbit operational satellites, and to acquire, process, and 

distribute environmental data to users. It outlines the ground resources 

NESDIS needs to fulfill its gap and follows the principles of OMB’s 

guidance. NWS officials said that the NWS plan for capital investments was 

reflected in its fiscal year 2003 and 2004 budget requests.

Challenges NOAA is tasked with serving the nation’s continuing need for weather and 

water information. On average, hurricanes, tornadoes, and other severe 

weather events cause $11 billion in damages per year, and early warning 

systems can reduce such damage. Weather is directly linked to public 

safety, and about one-third of the U.S. economy (about $3 trillion) is 

weather sensitive. With so much at stake, NOAA’s role in observing, 

forecasting, and warning of environmental events is expanding, and the 

agency is challenged by the need to increase its number of new multiuse 

observation systems.

Also, safe and efficient transportation systems are crucial economic 

lifelines for the nation. The Department of Transportation’s U.S. Marine 

Transportation System ships over 95 percent of the tonnage and more than 

20 percent by value of the nation’s foreign trade through America’s ports.

Waterborne cargo contributes more than $740 billion to the U.S. gross 

domestic product and creates employment for over 13 million citizens. As

U.S. dependence on surface and air transportation grows over the next 20 

years and with the projected doubling of maritime trade, better navigation 

and weather information will be critical to saving lives, cargo, and the 

environment. NOAA’s information products and services are essential to 

the safe and efficient transport of goods and people at sea, in the air, and on 

land.

Prior GAO Work at 

NOAA

We have reported in the past on the difficulties NOAA’s NWS encountered 

with its modernization program to upgrade its weather observing systems, 

satellites, and radars. We made numerous recommendations, and NWS has 

acted to implement them. For example, in response to our 

recommendations, NWS established an overall systems architecture, 
Appendix IV

National Oceanic and Atmospheric 

Administration

Page 134 GAO-04-138 Agency Capital Planning

improved the availability of its Next Generation Weather Radar, and 

enhanced its Advanced Weather Interactive Processing System software 

development process. Since 2001, NWS has made plans to further improve 

weather forecasts and warnings through upgrades to its supercomputer 

and future enhancements to weather satellites.1

Also, GAO has urged NOAA to aggressively pursue cost-effective 

alternatives to its in-house fleet of ships. According to NOAA, it has taken 

steps to improve the cost efficiency of its fleet, such as removing some 

ships from service, bringing new and converted Navy ships into service, 

and negotiating contracts outside NOAA to meet some of its needs.2

Additional related GAO reports are listed at the end of this appendix and at 

the end of this report.

The Future of NOAA As discussed earlier, NOAA is making improvements to its ability to track 

and control its capital assets. Commerce is deploying a Web-based 

inventory system that is currently operating parallel to NOAA’s present 

property inventory. The new system is expected to be easier to update and 

use than the present inventory. It was scheduled to be fully operational in 

fiscal year 2003. A new asset condition assessment process was also 

scheduled to begin in fiscal year 2003. A NOAA working group is currently 

reviewing the strategy to initiate a new round of condition assessments.

NOAA wants to improve its condition assessment process because 

previous asset condition data aged very quickly and were of limited use. 

NOAA’s draft strategic plan for fiscal years 2003 through 2008 states that its 

core missions of environmental prediction and management are manifested 

in more than 80 capabilities that support America’s efforts to prepare for 

and, if necessary, respond to terrorist attacks. Among the best known are 

NOAA’s hazardous materials spill response, rapid on-site weather forecasts 

to support emergency operations, and civil emergency alert relay through 

NOAA Weather Radio. NOAA is also prepared to provide its other 

resources—ships, aircraft, global observation systems, and professional 

law enforcement officers—to serve the nation when the need arises.

1

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Commerce, GAO-03-97 (Washington, D.C.: January 2003).

2

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Commerce, GAO-01-243 (Washington, D.C.: January 2001).
Appendix IV

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Administration

Page 135 GAO-04-138 Agency Capital Planning

Through these core capabilities and strategic investments, NOAA plans to 

expand its support for homeland security by coordinating delivery of its 

products and services to federal, state, and local emergency managers and 

responders, and strengthening its own infrastructure to protect agency 

personnel, facilities, and information services. 

Some Related GAO 

Reports

Polar-Orbiting Environmental Satellites: Status, Plans, and Future Data 

Management Challenges. GAO-02-684T. Washington, D.C.: July 24, 2002.

Department of Commerce: Status of Achieving Key Outcomes and 

Addressing Major Management Challenges. GAO-01-793. Washington, 

D.C.: June 15, 2001.

National Oceanic and Atmospheric Administration: National Weather 

Service Modernization and Weather Satellite Program. GAO/T-AIMD-00-

86. Washington, D.C.: March 29, 2000.
Page 136 GAO-04-138 Agency Capital Planning

Appendix V

Bureau of Prisons ApendxiV

Background/ 

Organizational 

Structure

The mission of the Bureau of Prisons (BOP), an agency of the Department 

of Justice (DOJ), is to protect society by confining persons convicted of 

federal crimes and sentenced to incarceration in the controlled 

environments of prisons and community-based facilities that are safe, 

humane, and appropriately secure. The agency consists of six geographical 

regions with 102 facilities. In addition to housing the federal inmate 

population, BOP provides inmates with basic services, such as food, 

clothing, and health care and an array of educational, vocational, and other 

programs. The agency fulfills its incarceration function using a range of 

BOP-operated institutions with varying security levels as well as privately 

managed institutions, state and local facilities, community corrections 

centers, and home confinement. While BOP shares federal detention 

responsibilities with the United States Marshals Service (USMS) and the 

Bureau of Immigration and Customs Enforcement (ICE) (formerly the 

Immigration and Naturalization Service (INS)), incarceration is the sole 

responsibility of BOP. In 2002, BOP was responsible for more than 160,000 

federal inmates—of which 27,000, or about 17 percent, were housed in nonBOP-operated facilities.

Types of Assets BOP’s capital assets consist of land, prison facilities, other buildings and 

structures, major equipment, and motor vehicles.

Capital Spending While new construction represents the bulk of BOP’s capital outlays, 

modernization and repair of existing facilities are a significant part of 

BOP’s annual Building and Facilities appropriation. New construction 

outlays include costs associated with the acquisition, construction, and 

leasing of prison facilities. Modernization and repair outlays include costs 

associated with rehabilitation and renovation of buildings, necessary 

facility modifications to accommodate new correctional programs, 

rehabilitation and replacement of utility systems, and repair projects at 

existing facilities.

As illustrated in figure 19, BOP’s capital outlays fluctuated from

$400 million to $500 million in real terms from 1993 to 2001, with a sharp 

drop to $34 million in fiscal year 1998 and then a sharp increase to $795 

million in 2002. The sharp decrease in 1998 is somewhat misleading since it 

reflects reimbursements from nonfederal sources that offset BOP’s gross 

capital outlays for that year. 
Appendix V

Bureau of Prisons

Page 137 GAO-04-138 Agency Capital Planning

Figure 19: BOP Capital Outlays for Fiscal Years 1993 through 2002 

Capital Planning 

Process

BOP’s capital acquisitions support a DOJ strategic goal—to protect society 

by providing for the safe, secure, and humane confinement of persons in 

federal custody. This goal is supported by a number of objectives, including 

ensuring sufficient prison capacity and maintaining prison operations. BOP 

strategic planning documents provide details about the ongoing projects 

and new facilities planned to achieve and maintain sufficient prison 

capacity. BOP budget call guidance requires that capital project proposals 

describe how each project will support the agency’s goals and objectives. 

The guidance also reinforces the Attorney General’s current priority 

objectives. For the fiscal year 2004 budget submission, guidance from 

BOP’s facilities management unit required that major project requests—

projects with estimated costs of $300,000 or more—be documented in the 

requesting institution’s strategic plan.

The BOP Director issues an annual spring budget request memorandum to 

all BOP regional and assistant directors. The fiscal year 2003 memorandum 

asked that units develop separate program funding requests for initiatives 

to be included in the annual budget submission to DOJ. Individual units 

were required to prepare a separate “program request form” for each 

initiative, which identified and explained the goals to be achieved, 

0

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800

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Fiscal year

Constant 2002 dollars in millions

Source: GAO Budget Database.
Appendix V

Bureau of Prisons

Page 138 GAO-04-138 Agency Capital Planning

estimated costs, justified the need, and identified performance indicators 

to measure whether the goals are achieved. The program request forms 

were to be forwarded to the Budget Development Branch at BOP 

headquarters and were to include funding requests for both capital projects 

and operational expenses. Capital project responses are included in the 

Buildings and Facilities budget request.

In addition to the annual budget call, capital project needs are identified 

and requested through a long-term capacity planning process and routine 

inspections of existing facilities. BOP’s new construction program follows 

a centralized long-term capacity planning process that uses information 

from its Office of Research and its Capacity Planning staff. Prison inmate 

population levels and institution capacity are tracked daily, and reports are 

regularly generated by facility, geographic region, and inmate security level. 

The research office also generates projections and reports of future inmate 

population levels in the same categories using a microsimulation computer 

program and data from the Administrative Office of the U.S. Courts. These 

projections are continually monitored and regularly updated, and weekly 

reports of institution overcrowding are generated using a measure of rated 

capacity. New construction project requests are forwarded to BOP’s Design 

and Construction Branch for review. 

Through regular inspections of existing facilities, BOP institutions identify 

essential rehabilitation, renovation, and repair needs and request 

modernization and repair (M&R) funding. Legal mandates, such as the 

Architectural Barriers Act, which requires access for the physically 

challenged, also can result in requests for M&R funding. Institution staff 

develop lists of identified M&R capital projects and forward the lists to 

their respective regional offices. More extensive M&R projects are 

identified through contractor surveys of older BOP facilities. Institutions 

over 50 years old are comprehensively surveyed for needed renovations 

and to determine whether the cost to renovate exceeds the replacement 

cost of such facilities. The six regional offices evaluate and consolidate the 

project lists, including those identified by contractor surveys, and forward 

them to BOP’s Facility Management Branch for consideration. 

BOP capital planners and decision makers consider numerous alternatives 

to address an identified performance gap. They use information from BOP’s 

nationwide inventory system to assist them in considering some options. 

One DOJ objective is to ensure sufficient and cost-effective prison capacity, 

and BOP’s strategy to accomplish this includes contracts with private 

sector providers of correctional services, state and local cooperative 
Appendix V

Bureau of Prisons

Page 139 GAO-04-138 Agency Capital Planning

agreements, and alternatives to traditional inmate confinement where 

appropriate. BOP also considers the expansion of existing facilities and the 

acquisition and conversion of nonprison facilities to prison use. 

Having an accurate and up-to-date inventory of institutions and other 

assets helps with evaluating the expanded use of existing correctional 

facilities. BOP maintains both a Real Property Management System to track 

all BOP-owned land, buildings, other structures, and related improvements, 

and a Personal Property Management System to track all BOP-owned 

personal property (e.g., vehicles, computers, and other equipment). The 

real property inventory tracks all buildings, structures, and related 

improvements with an acquisition value of $100,000 or more and tracks all 

BOP-owned land regardless of its value. Depreciation is calculated monthly 

over a 30-year period for buildings and a 20-year period for structures. 

BOP-owned personal property depreciation is calculated monthly over a 

10-year period for assets with an acquisition value of $5,000 or more, with 

the exception of vehicles, which are depreciated over a 6- to10-year period, 

depending on the vehicle type.

BOP has two planning committees that are involved in the capital decisionmaking process. The Capacity Planning Committee consists of seniorexecutive-level staff from the Administration; Correctional Programs; and 

Information, Policy, and Public Affairs Divisions and subject matter 

experts, such as chiefs of capacity planning, design and construction, and 

budget development from the Administration Division. The Capacity 

Planning Committee proposes new construction projects. The Long-range 

Planning Committee consists of members from the Administration Division 

who are senior executive staff, senior managers, and branch chiefs. The 

Long-range Planning Committee ranks the new construction project 

proposals made by the Capacity Planning Committee and makes specific 

funding recommendations to the BOP Director. New construction 

proposals are ranked based on need, funding, and the speed at which 

facilities can be constructed. The criteria for ranking M&R project 

proposals assign life and safety the highest priority followed by 

accessibility projects, building and institution infrastructure projects, 

projects for facilities over 50 years old, and general repair. The resulting 

new construction and M&R proposals are combined to form the BOP 

annual Buildings and Facilities budget request.

BOP has three long-term capital planning documents for major capital 

investments: (1) the Capacity Plan, (2) the Building and Facilities Status of 

Construction report, and (3) a report of the rated capacity of facilities that 
Appendix V

Bureau of Prisons

Page 140 GAO-04-138 Agency Capital Planning

have received some funding by anticipated year of activation. The Capacity 

Plan provides inmate population projections and rates of prison 

overcrowding, categorized by institution security level, whether the 

facilities are BOP-operated or contractor facilities, and whether the 

inmates are male or female, typically for a 9-year period. The data 

contained in the Capacity Plan are updated weekly and reports can be 

generated from the system that produces them at any time. The Office of 

Management and Budget (OMB) receives the weekly update of this report, 

and a version is included in the annual budget submission to the Congress. 

The Buildings and Facilities Status of Construction report provides the 

status of construction for major projects that have received some level of 

funding, including both new construction and institution expansion 

projects. The report provides amounts funded by fiscal year, total project 

cost estimates, funding obligated to date, estimated facility activation date, 

and a brief status of the project. This report is updated monthly and is 

provided to OMB and to the Congress as part of the annual budget 

submission. The report of rated capacity of planned facilities that have 

received some level of funding shows facility capacity levels for planned 

projects for a 7-year period. The report shows the level of capacity added 

for each fiscal year a group of facilities are activated and is also a part of 

the annual budget submission to the Congress. 

Challenges BOP is confronted with a number of challenges in ensuring sufficient and 

cost-effective prison capacity and maintaining prison operations. The 

major determinants of the need for prison capacity are outside of BOP’s 

control. The agency is required to continually monitor not only its current 

and long-term projected inmate population, but the composition of its 

population as well—the security level required and inmate gender. The 

federal inmate population has increased sixfold over the past 20 years, 

from approximately 25,000 inmates in 1980 to more than 160,000 inmates in 

2002. Since BOP is required to provide the level of secure inmate 

confinement consistent with the needs of the inmate population, the 

number of correctional institutions has increased from 41 to 102. 

BOP’s inmate population is directly influenced by new laws, mandatory 

sentencing guidelines, and increases in law enforcement efforts. The 

agency must respond to quickly changing requirements and the need to 

balance the protection of American society with providing for the safe and 

humane confinement of persons in federal custody. For example, as of 

December 2001, more than 8,000 felons sentenced in the District of 
Appendix V

Bureau of Prisons

Page 141 GAO-04-138 Agency Capital Planning

Columbia were transferred to BOP custody. This required the rapid 

construction of additional facilities to attain sufficient capacity.

While managing the unique problems that accompany the long-term 

custody and care of federal inmates, BOP is also a major provider of 

detention bed space and operates several metropolitan detention centers. 

Inmates awaiting sentencing and persons charged with federal crimes 

awaiting trial are primarily the responsibility of USMS; however, USMS 

does not operate detention centers and obtains some of its needed bed 

space from BOP. Also, while ICE (formerly INS) has its own detention 

centers, some of its detainees are housed at BOP facilities. 

Prior GAO Work at 

BOP

In 1995, we reported on challenges to the federal prison system.1 GAO 

reported that new criminal justice policies and demographic changes in the 

prison population have created challenges for BOP as well as state and 

local correctional systems. These challenges were caused by increasing 

numbers of prison inmates, inmates serving longer sentences, demands on 

the health care systems from a more diverse population, and increased 

financial burdens on government systems to pay for correctional costs. We 

concluded that the principal barrier to BOP accomplishing its objective of 

confining offenders in appropriate facilities and environments would be the 

ability to afford to provide the level of service it intended.

In 1996, we reported on studies comparing the operational costs and/or 

quality of service between public and private prisons.2

 The report noted 

that the comparisons of operational costs indicated little difference and/or 

mixed results and the comparisons of quality were unclear. In December 

1999, we reported on issues important or unique to managing the female 

inmate populations.3

 The report noted that since 1980, the female prison 

population had increased over 500 percent and that while some progress 

had been made, the U.S. correctional systems continued to face challenges 

1

U.S. General Accounting Office, Bureau of Prisons: Recent Concerns and Challenges for 

the Future, GAO/T-GGD-95-177 (Washington, D.C.: June 8, 1995).

2

U.S. General Accounting Office, Private and Public Prisons: Studies Comparing 

Operational Costs and/or Quality of Service, GAO/GGD-96-158 (Washington, D.C.: Aug. 16, 

1996).

3

U.S. General Accounting Office, Women in Prison: Issues and Challenges Confronting 

U.S. Correctional Systems, GAO/GGD-00-22 (Washington, D.C.: Dec. 28, 1999).
Appendix V

Bureau of Prisons

Page 142 GAO-04-138 Agency Capital Planning

in addressing the unique needs of female inmates. Specific needs included 

child-related responsibilities and gender-specific health care. Additional 

related reports are listed at the end of this appendix and at the end of this 

report.

The Future of BOP While the terrorist attacks of September 11, 2001, have redefined the 

mission of DOJ, it is unclear what direct impact the nation’s war on 

terrorism will have on the responsibilities and activities of BOP. The DOJ 

Office of Inspector General (OIG) included Detention Space and 

Infrastructure in its December 2001 list of top 10 management challenges 

facing DOJ. This has been cited as a material weakness since 1989 because 

both USMS and ICE are experiencing a rapidly growing need for detention 

space. The OIG also addressed the possibility that the DOJ role in the war 

on terrorism will create an even greater need for detention space.

Some Related GAO 

Reports

Bureau of Prisons: Recent Concerns and Challenges for the Future.

GAO/T-GGD-95-177. Washington, D.C.: June 8, 1995.

Private and Public Prisons: Studies Comparing Operational Costs and/or 

Quality of Service. GAO/GGD-96-158. Washington, D.C.: August 16, 1996.

Women in Prison: Issues and Challenges Confronting U.S. Correctional 

Systems. GAO/GGD-00-22. Washington, D.C.: December 28, 1999.

Federal Prison Expansion: Overcrowding Reduced but Inmate 

Population Growth May Raise Issue Again. GAO/GGD-94-48. Washington, 

D.C.: December 14, 1993.

Prison Costs: Opportunities Exist to Lower the Cost of Building Federal 

Prisons. GAO/GGD-92-3. Washington, D.C.: October 25, 1991.

Private Prisons: Cost Savings and BOP’s Statutory Authority Need to Be 

Resolved. GAO/GGD-91-21. Washington, D.C.: February 7, 1991.
Page 143 GAO-04-138 Agency Capital Planning

Appendix VI

OMB Guidance ApendxiVI

Office of Management and Budget (OMB) Circular A-11, Parts 7 and 8, 

outlines agency budget formulation and execution requirements for capital 

asset investments. Part 7, titled Planning, Budgeting, Acquisition, and 

Management of Capital Assets, requires agencies to establish and maintain 

capital programming processes that link mission needs and capital assets 

effectively and efficiently. To facilitate this process, Part 7 requires that 

agencies submit capital asset plans and business cases, also known as an 

OMB Exhibit 300, that are products of agency capital programming and 

investment processes. Agencies must submit a capital asset plan for each 

new and ongoing major project, system, or acquisition and operational 

(steady-state) asset included in their capital asset portfolios. For major 

information technology projects, agencies must also complete OMB 

Exhibit 53, pursuant to Circular A-11, section 53. 

OMB Circular A-11, Part 8, Managing Federal Assets, is the first step in the 

current administration’s recent initiative to improve agency asset 

management. Beginning with their fiscal year 2004 budget submissions, 

agencies were to conduct self-assessments of their ability to manage their 

physical and financial assets. To improve asset management, Part 8 states 

that agencies should have physical asset management processes that 

(1) adequately track real property assets through their respective life 

cycles, (2) determine whether assets are being utilized properly and 

identify assets suitable for disposal, and (3) provide accurate asset 

valuation information for financial statement purposes. 

Executive Order 12893, Principles for Federal Infrastructure 

Investments,1

 requires agencies to conduct systematic analyses of the 

expected benefits and costs of infrastructure investments—including both 

quantitative and qualitative measures, encourages agencies to conduct 

periodic reviews of the operation and maintenance of existing facilities, 

and requires agencies to seek private sector participation in infrastructure 

investment and management.

1

Exec. Order 12893, 59 Fed. Reg. 4233 (Jan. 26, 1994).
Page 144 GAO-04-138 Agency Capital Planning

Appendix VII

Comments from the Department of Veterans 

Affairs ApendxiVI
Appendix VII

Comments from the Department of Veterans 

Affairs 

Page 145 GAO-04-138 Agency Capital Planning
Appendix VII

Comments from the Department of Veterans 

Affairs 

Page 146 GAO-04-138 Agency Capital Planning
Appendix VII

Comments from the Department of Veterans 

Affairs 

Page 147 GAO-04-138 Agency Capital Planning
Page 148 GAO-04-138 Agency Capital Planning

Appendix VIII

Comments from the Bureau of Prisons ApendxiVI
Appendix VIII

Comments from the Bureau of Prisons

Page 149 GAO-04-138 Agency Capital Planning
Appendix VIII

Comments from the Bureau of Prisons

Page 150 GAO-04-138 Agency Capital Planning
Page 151 GAO-04-138 Agency Capital Planning

Appendix IX

Comments from the National Oceanic and 

Atmospheric Administration ApendxiIX
Appendix IX

Comments from the National Oceanic and 

Atmospheric Administration

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Page 153 GAO-04-138 Agency Capital Planning

Appendix X

GAO Contact and Staff Acknowledgments ApendxiX

GAO Contact Christine Bonham, (202) 512-9576

Acknowledgments In addition to the contact person named above, Trina Lewis made 

significant contributions to this report. Brendan Culley and Brodi Fontenot 

also made key contributions to this report.
Page 154 GAO-04-138 Agency Capital Planning

Related GAO Products

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