United States General Accounting Office

GAO Testimony

Before the Subcommittee on Government

Management, Information and Technology

Committee on Government Reform and Oversight

House of Representatives

For Release on Delivery

Expected at

10:30 a.m.

Monday,

October 6, 1997

MANAGING FOR RESULTS

Observations on OMB’s

September 1997 Strategic

Plan

Statement of Paul L. Posner

Director, Budget Issues

Accounting and Information Management Division

and

J. Christopher Mihm, Acting Associate Director

Federal Management and Workforce Issues

General Government Division

GAO/T-AIMD/GGD-98-10

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to provide our observations on the Office

of Management and Budget’s (OMB) strategic plan submitted to the

Congress on September 30, 1997. As you requested, our testimony today

will discuss how well this strategic plan addresses the Government

Performance and Results Act (the Results Act) requirements. We will also

identify some of the challenges remaining for OMB to address in future

planning efforts.

The Results Act is intended to improve the efficiency and effectiveness of

federal programs by establishing a system to set goals for program

performance and to measure results. Specifically, the Act requires

executive agencies to prepare multiyear strategic plans, annual

performance plans, and annual performance reports. OMB has a crucial and

multifaceted role to play in the successful implementation of the Results

Act. Under the Act, OMB is charged with overseeing and guiding agencies’

strategic and annual performance planning and reporting. OMB has also

prepared its own strategic plan based on Results Act requirements. OMB’s

strategic plan is important as both a statement of the agency’s objectives

and to underscore to other federal agencies the importance of effectively

implementing the Results Act.

Our comments today are based on our review of OMB’s strategic plan and

our body of work on OMB and the issues the agency is responsible for

addressing. In July 1997, OMB prepared a draft strategic plan, and we

reviewed it to assess whether it met Results Act requirements and

provided information useful for congressional decision-making.1

 On

September 30, 1997, we obtained the strategic plan OMB submitted to the

Congress to comply with the Results Act. Our testimony will provide

preliminary observations on the September plan.

Since the July draft, OMB has made changes to the plan based on its

continuing planning efforts, congressional consultations, and comments

from others. Overall, OMB’s September plan addresses all required

elements of the Results Act and reflects several of the enhancements we

suggested in our review of the July draft. Specific improvements include

(1) goals and objectives that show a clearer results-orientation, (2) more

clearly defined strategies for achieving these goals and objectives, and

(3) an increased recognition of some of the crosscutting issues OMB needs

1

The Results Act: Observations on the Office of Management and Budget’s July 1997 Draft Strategic

Plan (GAO/AIMD/GGD-97-169R, Aug. 21, 1997).

Page 1 GAO/T-AIMD/GGD-98-10
to address. However, additional enhancements to several of the plan’s

required elements and a fuller discussion of major management challenges

confronting the federal government could help make the plan more useful

to the Congress and OMB. For example, the plan could provide a more

explicit discussion of OMB’s strategies on such subjects as information

technology, high-risk issues, overlap among federal missions and

programs, and strengthening program evaluation.

OMB’s strategic plan indicates that the agency will use its annual

performance plan, the governmentwide performance plan, other

functional management plans, and the President’s Budget to provide

additional information about how it plans to address some of these and

other critical management issues. To support the needs of this and other

committees, we will continue to review OMB’s plans and proposals as

additional detail concerning objectives, time frames, and priorities is

established. Our intention is to apply an integrated perspective in looking

at these plans, consistent with the intent of the Results Act, to ensure that

OMB achieves the results expected by its statutory authorities.

Background Since its creation in 1970, OMB has had two distinct but parallel roles. OMB

serves as a principal staff office to the President by preparing the

President’s budget, coordinating the President’s legislative agenda, and

providing policy analysis and advice. The Congress has also assigned OMB

specific responsibilities for ensuring the implementation of a number of

statutory management policies and initiatives. Most importantly, it is the

cornerstone agency for overseeing a framework of recently enacted

financial, information resources, and performance management reforms

designed to improve the effectiveness and responsiveness of federal

departments and agencies. This framework includes the 1995 Paperwork

Reduction Act and the 1996 Clinger-Cohen Act; the 1990 Chief Financial

Officers Act, as expanded by the 1994 Government Management Reform

Act; and the 1993 Government Performance and Results Act.

OMB faces perennial challenges in carrying out these and other

management responsibilities in an environment where its budgetary role

necessarily remains a vital and demanding part of its mission. OMB’s

resource management offices (RMOs) have integrated responsibilities for

examining agency management, budget, and policy issues. The RMOs are

supported by three statutory offices whose responsibilities include

developing governmentwide management policies: the Office of Federal

Financial Management, the Office of Federal Procurement Policy, and the

Page 2 GAO/T-AIMD/GGD-98-10
Office of Information and Regulatory Affairs. In fiscal year 1996, OMB

obligated $56 million and employed over 500 staff to carry out its budget

and management responsibilities.

The Results Act requires a strategic plan that includes six elements: (1) a

comprehensive agency mission statement, (2) long-term goals and

objectives for the major functions and operations of the agency,

(3) approaches or strategies to achieve goals and objectives and the

various resources needed to do so, (4) a discussion of the relationship

between long-term goals/objectives and annual performance goals, (5) an

identification of key external factors beyond agency control that could

significantly affect achievement of strategic goals, and (6) a description of

how program evaluations were used to establish or revise strategic goals

and a schedule for future program evaluations.

Although OMB’s July draft included elements addressing its mission, goals

and objectives, strategies, and key external factors affecting its goals, we

suggested that these elements could be enhanced to better reflect the

purposes of the Results Act and to more explicitly discuss how OMB will

achieve its governmentwide management responsibilities. Furthermore,

the July draft plan did not contain a discussion of two elements required

under the Results Act: (1) the relationship between the long-term and

annual performance goals and (2) the use of program evaluation in

developing goals.

OMB’s Strategic Plan

Reflects the Purposes

of the Results Act, but

Challenges Remain

The structural and substantive changes OMB made to its July 1997 strategic

plan constitute a significant improvement in key areas. In general, OMB’s

revised plan provides a more structured and explicit presentation of its

objectives, strategies, and the influence of external factors. Each objective

contains a discussion of these common elements, facilitating an

understanding of OMB’s goals and strategies. OMB’s September plan

addresses the six required elements of the Results Act. At the same time,

enhancements could make the plan more useful to OMB and the Congress

in assessing OMB’s progress in meeting its goals.

The September plan’s mission statement recognizes both OMB’s statutory

responsibilities and its responsibilities to advise the President, and the

goals and objectives are more results-oriented and comprehensive than in

the July draft. For example, the plan contains a new, results-oriented

objective—“maximize social benefits of regulation while minimizing the

costs and burdens of regulation”—for its key statutory responsibility

Page 3 GAO/T-AIMD/GGD-98-10
regarding federal regulation review. The breadth of OMB’s mission makes it

especially important that OMB emphasize well-defined and results-oriented

goals and objectives that address OMB’s roles in both serving the President

and overseeing the implementation of statutory governmentwide

management policies.

OMB more clearly defines its strategies for reaching its objectives in the

September plan, particularly with regard to some of its management

objectives. For example, in the draft plan, OMB did not discuss the

accomplishments needed to fulfill its statutory procurement

responsibilities. In contrast, the September plan lays out OMB’s long-term

goal to achieve a federal procurement system comparable to those of high

performing commercial enterprises. It says that OMB will identify annual

goals to gauge OMB’s success, and discusses the means and strategies (such

as working with agencies to promote the use of commercial buying

practices) it will use to accomplish this goal. OMB also commits to working

with the Federal Acquisition Regulation Council to revise regulations and

publish a best practices document. In the area of regulatory reform, OMB

also commits to improving the quality of data and analyses used in

regulatory decision-making and to developing a baseline measure of the

net benefits for Federal regulations. OMB’s clear and specific description of

its strategies for its procurement and regulatory review objectives could

serve as models for developing strategies for its Results Act and

crosscutting objectives.

Although strategies to provide management leadership in certain areas are

more specific, other strategies could benefit from a clearer discussion of

time frames, priorities, and expected accomplishments. For example, to

meet its objective of working within and across agencies to identify

solutions to mission-critical problems, OMB states it will work closely with

agencies and a list of other organizations to resolve these issues. However,

OMB does not describe specific problems it will seek to address in the

coming years or OMB’s role and strategies for solving these issues.

In defining its mission, goals and objectives, and strategies, OMB’s plan

recognizes its central role in “managing the coordination and integration

of policies for cross-cutting interagency programs.” The plan states that in

each year’s budget, major crosscutting and agency-specific management

initiatives will be presented along with approaches to solving them. The

plan also provides a fuller discussion than was included in the July draft of

the nature and extent of interagency groups that OMB actively works with

in addressing a variety of functional management issues. Specific

Page 4 GAO/T-AIMD/GGD-98-10
functional management areas, such as procurement, financial, and

information management, are incorporated as long-term objectives.

However, OMB’s plan could more specifically address how OMB intends to

work with agencies to resolve long-standing management problems and

high-risk issues with governmentwide implications.2

 For example, in the

information management area, OMB’s September plan refers to critical

information technology issues, but it does not provide specific strategies

for solving these issues. OMB discusses the ability of agencies’ computer

systems to accommodate dates beyond 1999 (the Year 2000 problem) as a

potential performance measure and states how it will monitor agencies’

progress. However, the plan does not describe any specific actions OMB

will take to ensure this goal is met. We have previously reported on

actions OMB needs to take to implement sound technology investment in

federal agencies.3

 In a related area, OMB has elsewhere defined strategies

and guidance for agency capital plans that are not explicitly discussed in

the strategic plan.

With respect to programmatic crosscutting issues, questions dealing with

mission and program overlap are discussed only generically as

components of broader objectives (such as working with agencies to

identify solutions or to carry out the Results Act). The Congress and a

large body of our work have identified the fragmented nature of many

federal activities as the basis for a fundamental reexamination of federal

programs and structures. Our recent report identified fragmentation and

overlap in nearly a dozen federal missions and over 30 programs.4

 Such

unfocused efforts can waste scarce funds, confuse and frustrate program

customers, and limit overall program effectiveness. The OMB plan states

that the governmentwide performance plan, which OMB must prepare and

submit as part of its responsibilities under the Results Act, will provide the

“context for cross-cutting analyses and presentations,” but provides no

additional specification.

OMB’s strategic plan also does not explicitly discuss how goals and

objectives will be communicated to staff and how staff will be held

accountable. For example, OMB’s plan states that OMB staff are expected to

2

High-Risk Series: An Overview (GAO/HR-97-1, Feb. 1997).

3

Information Technology Investment: Agencies Can Improve Performance, Reduce Costs, and

Minimize Risks (GAO/AIMD-96-64, Sept. 30, 1996) and High-Risk Series: Information Management and

Technology (GAO/HR-97-9, Feb. 1997).

4

Managing for Results: Using the Results Act to Address Mission Fragmentation and Program Overlap

(GAO/AIMD-97-146, Aug. 29, 1997).

Page 5 GAO/T-AIMD/GGD-98-10
provide leadership for and to be catalysts within interagency groups. Yet,

the plan does not explain how OMB’s managers and staff will be made

aware of and held accountable for this or other strategies for achieving

OMB’s goals. As we noted in our review of the July draft plan, OMB’s staff

and managers have a wide and expanded scope of responsibilities, and

many of OMB’s goals depend on concerted actions with other agencies. In

particular, tackling crosscutting issues will also require extensive

collaboration between offices and functions within OMB, which the plan

could discuss in more detail. In this environment, communicating results

and priorities and assigning responsibility for achieving them are critical.

The September plan more consistently discusses the relationship between

annual and long-term goals as part of a discussion of each of its objectives.

The plan provides useful descriptions of the performance measures OMB

may use to assess its progress in its annual performance plan. For

example, the plan suggests that “clean audit opinions” could measure how

OMB is achieving its objective in the area of financial management. Such

efforts are noteworthy because some of OMB’s activities, such as

developing the President’s budget or coordinating the administration’s

legislative program, present challenges for defining quantifiable

performance measures and implementation schedules.

Although the September plan provides a more consistent and thorough

treatment of key external factors in achieving its goals, OMB could explain

how it can mitigate the consequences of these factors. For example, OMB

states that its goal of ensuring timely, accurate, and high-quality budget

documents depends on the accuracy and timeliness of agency submissions

of technical budget information. However, there is a role for OMB in

assisting agencies to improve the accuracy and timeliness of data,

particularly for such complex issues as estimating subsidy costs for loan

and loan guarantee programs.

OMB’s discussion of program evaluation could provide more information

about how evaluations were used in developing its plan and how

evaluations will be used to assess OMB’s and federal agencies’ capacity and

progress in achieving the purposes of the Results Act. In preparing its

strategic plan, OMB states that it reviewed and considered several studies

of its operations prepared by OMB, GAO, and other parties. The plan also

states that OMB will continue to prepare studies of its operational

processes, organizational structures, and workforce utilization and

effectiveness. However, OMB does not indicate clearly how prior studies

were used, and OMB does not provide details on a schedule for its future

Page 6 GAO/T-AIMD/GGD-98-10
studies, both of which are required by the Results Act. OMB officials have

said it would be worthwhile to more fully discuss the nature and

dimension of program evaluation in the context of the Results Act. As we

noted in our review of the July draft plan, evaluations are especially

critical for providing a source of information for the Congress and others

to ensure the validity and reasonableness of OMB’s goals and strategies and

to identify factors likely to affect the results of programs and initiatives.

A clearer discussion of OMB’s responses to and plans for future evaluations

could also provide insight into how the agency intends to address its major

internal management challenges. For example, a critical question facing

OMB is whether the approach it has adopted toward integrating

management and budgeting, as well as its implementation of statutory

management responsibilities, can be sustained over the long term. In view

of OMB’s significant and numerous management responsibilities and the

historic tension between the two concepts—of integrating or segregating

management and budget responsibilities—we believe it is important that

OMB understand how the reorganization has affected its capacity to provide

sustained management leadership.5

In our 1995 review of OMB’s reorganization, we recommended that OMB

review the impact of its reorganization as part of its planned broader

assessment of its role in formulating and implementing management

policies for the government.6

 We suggested that the review focus on

specific concerns that need to be addressed to promote more effective

integration, including (1) the way OMB currently trains its program

examiners and whether this is adequate given the additional management

responsibilities assigned to these examiners and (2) the effectiveness of

the different approaches taken by OMB in the statutory offices to

coordinate with its resource management offices and provide program

examiners with access to expertise. In commenting on our

recommendation, OMB agreed that its strategic planning process offered

opportunities to evaluate this initiative and could address issues raised by

the reorganization. Although OMB’s plan states that it will increase the

opportunities for all staff to enhance their skills and capabilities, it does

not describe the kinds of knowledge, skills, and abilities needed to

accomplish its mission nor a process to identify alternatives to best meet

those needs.

5

Managing the Government: Revised Approach Could Improve OMB’s Effectiveness (GAO/GGD-89-65,

May 4, 1989).

6

Office of Management and Budget: Changes Resulting From the OMB 2000 Reorganization

(GAO/GGD/AIMD-96-50, Dec. 29, 1995).

Page 7 GAO/T-AIMD/GGD-98-10
In summary, OMB has made significant improvements in its strategic plan.

However, much remains to be done in improving federal management. We

will be looking to OMB to more explicitly define its strategies to address

important management issues and work with federal agencies and the

Congress to resolve these issues.

Mr. Chairman, this concludes our statement this morning. We would be

pleased to respond to any questions you or other Members of the

Subcommittee may have.

(935246/410194) Page 8 GAO/T-AIMD/GGD-98-10
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