GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-277789 

August 21, 1997

The Honorable Richard K. Armey

Majority Leader

House of Representatives

The Honorable John R. Kasich

Chairman

Committee on the Budget

House of Representatives

The Honorable Dan Burton

Chairman

Committee on Government Reform and Oversight

House of Representatives

The Honorable Bob Livingston

Chairman

Committee on Appropriations

House of Representatives

Subject: The Results Act: Observations on the Office of Management and

Budget’s July 1997 Draft Strategic Plan

On June 12, 1997, you asked us to review the draft strategic plans

submitted by the cabinet departments and selected major agencies for

consultation with the Congress as required by the Government

Performance and Results Act of 1993 (the Results Act). This letter is our

response to that request concerning the Office of Management and Budget

(OMB).

In reviewing OMB’s draft plan, it is important to recognize that the agency

has two distinct but parallel roles. OMB supports the President by preparing

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

providing policy analysis and advice. This role poses certain challenges in

designing measurable, results-oriented goals and specific performance

measures. Many statutes have also assigned to OMB a leadership role for a

variety of governmentwide responsibilities in areas such as financial,

information resources, and general management as well as regulatory and

procurement policy. For example, OMB is responsible for overseeing

implementation of the Results Act, and its guidance forms an essential part

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of the criteria against which we have evaluated its and other agencies’

draft strategic plans.

Objectives, Scope,

and Methodology

Specifically, you asked us to review OMB’s draft plan and assess

(1) whether it would fulfill the requirements of the Results Act and its

overall quality, (2) whether it reflects OMB’s key statutory authorities,

(3) whether it reflects interagency coordination for crosscutting programs,

activities, or functions that are similar to or complementary with those of

other federal agencies, (4) whether it addresses management problems

that we have previously identified, and (5) the adequacy of OMB’s data and

information systems for providing reliable information for measuring

results.

OMB prepared a draft strategic plan based on Results Act requirements, and

we analyzed the version of the plan that OMB provided to congressional

committees on July 23, 1997. Our overall assessment of this plan was

based on our knowledge of OMB’s operations and programs, our past

reviews of OMB, and other existing information available at the time of our

assessment. The criteria we used to determine whether OMB’s draft

strategic plan would comply with the requirements of the Results Act were

the act itself, supplemented by OMB’s guidance to agencies on developing

strategic plans (Circular A-11, Part 2, Preparation and Submission of

Strategic Plans and Annual Performance Plans). To make judgments about

the overall quality of the draft plan and its components, we used our

May 1997 guidance for congressional review of the plans as a tool.1

 As

requested, in determining whether OMB’s draft strategic plan reflects its

major statutory responsibilities, we coordinated our review with the

Congressional Research Service. To determine whether the draft plan

contained information on interagency coordination and addressed

management problems that we previously identified, we relied on our

general knowledge of OMB’s operations and programs and the results of

our previous work. Our work was performed in July and August 1997. We

obtained comments on a draft of this letter from OMB. These comments are

discussed in the “Agency Comments” section and are reprinted in

enclosure I.

It is important to recognize that OMB’s final plan is not due to the Congress

until September 30, 1997. Furthermore, the Results Act anticipated that it

may take several planning cycles to perfect the process and that the final

1

Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional Review

(GAO/GGD-10.1.16, May 1997).

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plan would be continually refined as future planning cycles occur. Thus,

our findings reflect a snapshot status of the plan at this time. We recognize

that developing a strategic plan is a dynamic process and that OMB is

continuing to revise this draft with input from congressional staff and

other stakeholders.

Background As a staff office to the President, OMB develops and executes the federal

budget, oversees implementation of the President’s policies and programs,

and advises and assists the President. It also develops and oversees

implementation of various governmentwide legislative and administrative

initiatives. OMB was established under presidential reorganization authority

in 1970, in part to increase the attention given to management issues in the

federal government. In fiscal year 1996, OMB obligated $56 million and

employed over 500 staff.

OMB plays a key role in both the presidential and congressional budget

processes. In addition to preparing and submitting the President’s budget

to the Congress, it monitors the congressional budget process to assess

how congressional budget decisions address presidential policies. Once

the Congress appropriates funds, OMB oversees the execution of budget

authority to ensure compliance with applicable laws and presidential

policies. The Budget Enforcement Act of 1990, moreover, gives OMB

authority to enforce enacted spending ceilings and constraints.

OMB also is responsible 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

agencies. The Chief Financial Officers (CFO) Act of 1990 established CFOs in

24 major agencies to provide financial leadership and mandated significant

reforms, which include increasing the accuracy of financial information,

modernizing underlying systems, developing reliable cost and

performance data, integrating budget and accounting information, and

upgrading the quality of financial management personnel. The CFO Act also

requires OMB to provide an annual report on progress made in achieving

the act’s objectives. Additionally, the act established a Controller in OMB to

head an Office of Federal Financial Management as well as a Deputy

Director for Management within OMB to be the government’s key official

for financial management. Later, the Government Management Reform Act

of 1994 expanded the CFO requirements by charging OMB with (1) providing

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guidance for the annual preparation of financial statements by the 24

major federal agencies and (2) coordinating with the Secretary of the

Treasury in the preparation of audited governmentwide financial

statements.

The original Paperwork Reduction Act (PRA) of 1980, as well as the recent

1995 reauthorization, requires the Director of OMB to oversee the use of

information resources to improve the efficiency and effectiveness of

government operations. Specifically, the 1995 act requires the Director, in

consultation with agency heads, to set annual goals for reducing

information collection burdens imposed on the public and for improving

agencies’ use of information resources to increase the productivity,

efficiency, and effectiveness of their programs. The Director is also to

report to the Congress each year on how well agencies have achieved their

goals. The Clinger-Cohen Act of 1996 builds on the PRA by making the

Director of OMB responsible for improving the acquisition and use of

information technology by federal agencies and for developing, as part of

the budget process, a process for OMB to use in analyzing, tracking, and

evaluating the risks and results of all major capital investments for agency

information systems.

Under the Results Act, OMB is charged with overseeing and guiding

agencies’ strategic and annual performance planning and reporting and is

responsible for preparing an annual governmentwide performance plan

that presents a single cohesive picture of federal performance goals. The

act also required OMB to designate pilot projects on performance

measurement, managerial accountability and flexibility, and performance

budgeting and prepare a summary on the results of the pilot projects.

OMB has responsibilities for other management policies as well. The

Federal Acquisition Streamlining Act, for instance, requires that executive

agency heads set cost, performance, and schedule goals for major

acquisition programs and that OMB report to the Congress on agencies’

progress in meeting these goals. Under the PRA, the Director of OMB is

assigned several responsibilities related to federal information collection

and dissemination, including reviewing and approving proposed agency

collections of information and developing and overseeing the

implementation of governmentwide policies on statistical data.

In addition to its statutory management responsibilities, OMB is also

responsible for implementing presidential initiatives set forth in executive

orders and directives. For example, Executive Order 12866 directs OMB to

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coordinate the review of agencies’ rules and regulations to ensure that

they impose the least burden, are consistent between agencies, focus on

results over process, and are based on sound cost/benefit analysis. Since

1967, OMB has been responsible, through its Circular A-76, for carrying out

executive branch policy to rely on competition between the federal

workforce and the private sector for providing commercial goods and

services.

OMB faces perennial challenges in carrying out these management

responsibilities in an environment where its budgetary role necessarily

remains a vital and demanding part of its mission. At one time, its

management functions were carried out largely by separate staff units. In

1994, OMB undertook a major reorganization and process change, known as

OMB 2000, intended to integrate OMB’s budget analysis, management review,

and policy development roles. OMB 2000 created resource management

offices (RMOs) that are assigned integrated responsibilities for examining

agency management, budget, and policy issues and overseeing agency

implementation. The RMOs are supported by three statutory offices that

are responsible for developing governmentwide management policies: the

Office of Federal Financial Management, the Office of Federal

Procurement Policy, and the Office of Information and Regulatory Affairs.

Under the Results Act, executive agencies are required to develop

(1) strategic plans covering a period of at least 5 years by September 30,

1997, (2) annual performance plans for fiscal year 1999 and beyond, and

(3) annual performance reports, with the first report due by March 31,

2000. Each strategic plan is to include 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) 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.

Results in Brief OMB’s strategic plan provides a beginning framework to articulate how OMB

proposes to meet the wide range of presidential, congressional, and

federal agency expectations for its leadership on federal budget and

management issues. The plan includes four of the elements required by the

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Results Act—a mission statement, long-term goals and objectives,

strategies to achieve the goals and objectives, and key external

factors—but these elements could be enhanced to better reflect the

purposes of the Results Act and to permit an assessment of OMB’s

contribution to the many objectives the agency serves. For instance, while

defining specific results for OMB’s role as presidential advisor is

challenging, a more explicit definition of expected results and

accomplishments for many of OMB’s objectives could better highlight its

priorities and goals, particularly for governmentwide management

responsibilities. Similarly, the draft plan could be strengthened by more

explicitly describing how goals are to be achieved, in many cases drawing

on strategies OMB has articulated in other documents. For example, the

Congress and the President might be better able to determine OMB’s ability

to meet its objective of ensuring clean audit opinions on financial

statements if specific actions to achieve this objective, such as those in

OMB’s federal financial management status report and 5-year plan, were

identified.

Achieving many of the objectives in the draft plan will require attention to

several critical crosscutting and organizational issues. Strategies for

addressing governmentwide management issues, such as computer

security, agencies’ Year 2000 programs to change computer systems to

accommodate dates beyond 1999, and reorientation of the regulatory

process toward achievement of results, are not fully discussed in the draft

plan. Addressing crosscutting goals depends heavily on collaboration

between affected federal agencies, and the draft plan could more explicitly

define OMB’s strategies for promoting such interagency coordination. The

draft plan also does not discuss how OMB will use evaluations to develop

and assess progress toward its own goals or how it will use and encourage

agencies’ program evaluations to help make more informed budget and

management choices. Moreover, the draft plan does not describe how OMB

will ensure that it has the organizational capacity to provide the

multidisciplinary leadership needed to address critical budget and

management issues. It is important that OMB continue its ongoing efforts to

refine its draft strategic plan to provide a road map for achieving its own

objectives and a model for other agencies to follow as they develop their

own strategic plans.

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OMB’s Draft Strategic

Plan Includes Four of

Six Required

Elements, but

Enhancements Could

Be Made

OMB’s draft plan includes elements addressing its mission, goals and

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

enhancements could help make the plan more useful in guiding OMB and

serving as a basis for assessing the agency’s performance. For example,

more explicit discussions of the expected results and accomplishments for

many of OMB’s objectives could better highlight its strategies and priorities

as well as permit a more informed analysis of the agency’s contributions to

public budgeting and management. The plan does not meet Results Act

requirements for 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.

Mission Statement The Results Act requires that each strategic plan contain a comprehensive

mission statement covering the major functions and operations of the

agency. According to OMB Circular A-11, Part 2, the statement should

define the basic purpose of the agency, with a particular focus on its core

programs and activities. The guidance also notes that the mission

statement may include a concise discussion of enabling or authorizing

legislation.

OMB’s mission statement begins with a description of its role—“to help the

President in carrying out his constitutional and statutory duties.” The

statement then lists the agency’s principal functions—policy-making,

overseeing execution of laws, and advising the President—and ends with

the statement, “Simply put, OMB helps to create policy and manage

execution, and provides analysis and advice.” Throughout this mission

statement, there is no reference to broader results that OMB seeks to

achieve or has been directed to achieve through legislation or presidential

decision. Specifically, the plan would be more useful if OMB explicitly

stated the linkage between what it does and what it wants to achieve.

Because hundreds of statutory authorities and executive orders have

assigned various responsibilities to OMB, the draft plan’s mission statement

is broad and general in its discussion of OMB’s purpose. OMB could consider

providing additional specificity to its mission statement as the plan is

further revised by, for example, discussing the major results expected

from key governmentwide management statutes. The breadth of OMB’s

mission makes it especially important that OMB develop 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.

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Long-Term Goals and

Objectives

Under the Results Act, a strategic plan is to list general goals and

objectives, including outcome-related goals and objectives, for the major

functions and operations of the agency. OMB’s guidance states that the plan

should contain long-term programmatic, policy, and management goals for

the agency and outline planned accomplishments and the schedule for

their implementation. The guidance further provides that goals and

objectives, even if not quantifiable, should be stated in a manner that will

allow a future assessment of whether the goals were or are being

achieved.

Developing results-oriented goals for OMB will be challenging but critical.

Many of OMB’s responsibilities involve coordinating or facilitating the work

of others to achieve an end. Although OMB may not control an outcome, its

actions will, and are expected to, influence the results. Similarly, 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.

Following the guidance in Circular A-11, the plan’s goals need not all be

quantitative, but they should be expressed in a manner permitting

subsequent assessment.

OMB’s draft plan sets four goals: (1) assist the President in creating policies

that allocate resources within the federal government, and establish

legislative and regulatory programs to achieve fiscal, economic, and

investment goals in a cost-effective manner, (2) ensure the faithful

execution of the enacted budget, programs, regulations, and policies,

(3) assist the President by providing analysis and advice on other

significant issues, and (4) improve OMB’s development and use of its

human resources and enhance its means of accomplishing work. Each

goal is supported by three or more objectives.

Some of OMB’s goals and objectives articulate explicit results and can be

evaluated to determine if they have been achieved. For example, one

objective is to achieve and sustain the agreement to balance the budget by

2002. OMB also commits to assuring reliable financial information capable

of generating clean audit opinions on financial statements.

Other objectives, such as assisting the President in developing the budget

and legislative agenda, could be stated in a more results-oriented manner.

OMB has objectives espoused outside this strategic plan that could guide

budget preparation. For example, a stated goal of OMB 2000 was to

integrate the review of management issues in the budget process—a goal

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that is amenable to assessment, as suggested by our 1995 report.2 Further

specification of the draft plan’s budget preparation goal could include the

use of financial statement data in budget reviews where appropriate and

the use of investment criteria when reviewing information technology

projects—both objectives OMB has articulated in other published

documents.3

 Another potential budget preparation activity that could be

included in a strategic plan involves the analyses OMB conducts for the

Analytical Perspectives volume of the President’s budget covering such

areas as public investment, credit programs, tax expenditures, and the

long-term outlook for the budget and the economy; OMB could articulate

the kinds of issues that will become the focus of future analyses. OMB’s

responsibility for overseeing the implementation of accrual-based

estimates under the Federal Credit Reform Act of 1990 could also be

presented as a strategic activity with significant implications for the

budget estimation function.

The plan does state several other objectives with a bearing on budget

preparation and review, including providing for capital planning and

addressing programs with similar goals spanning multiple agencies. For

capital planning, no specific accomplishments or schedules are articulated

in the plan. In guidance to agencies, however, OMB has developed an

extensive set of criteria for the development and review of agency capital

plans and has articulated a potentially measurable standard of up-front

funding for capital items.4

 With regard to multiple programs, the objective

is not sufficiently specified to indicate which areas OMB plans to address or

what criteria it has in mind for improving overall program effectiveness.

Identifying results-oriented goals and objectives and needed

accomplishments is especially important to determine whether OMB’s

statutory management mandates are being achieved. For example, OMB

reflects its specific statutory responsibilities for overseeing the use of

information resources to improve the efficiency and effectiveness of

government operations in a single objective to “obtain agency solutions to

identified mission-critical problems including the effective and efficient

use of information and information technology by agencies to support

their mission.” This objective could be strengthened if it briefly described

related problems or issues and relevant statutory authorities as well as a

concise schedule and accomplishments needed to fulfill OMB’s statutory

2

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

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

3

See, for example, the OMB documents Evaluating Information Technology Investments (November

1995) and Federal Financial Management Status Report and Five-Year Plan (June 1997).

4

See, for example, OMB Circular A-11, Part 3 (June 1997).

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responsibilities in this area. OMB’s strategy for overseeing sound

technology investments under the Clinger-Cohen Act could be discussed,

including how OMB will evaluate the results of and enforce accountability

for agency investment decisions.

Similarly, OMB’s Office of Federal Procurement Policy (OFPP) is by law

responsible for prescribing governmentwide procurement policies and

providing leadership, coordination, and oversight in the formulation and

implementation of executive branch positions on procurement-related

issues. It also has responsibility for (1) overseeing the collection,

development, and dissemination of procurement data through the Federal

Procurement Data System and (2) developing innovative procurement

methods and procedures to be tested by selected executive agencies. OMB

reflects these authorities in one objective—to “achieve savings, improve

quality, and increase customer satisfaction in agency procurement

programs”—without providing a brief discussion of accomplishments

needed to fulfill its statutory responsibilities.

Strategies to Achieve Goals

and Objectives

The Results Act requires that each strategic plan describe how the

long-term goals and objectives are to be achieved, including a description

of the processes, skills and technology, and other resources required to

meet the goals and objectives. OMB’s guidance also states that agencies are

to include schedules for completing significant actions and any underlying

assumptions or projections. The guidance states that this section of the

plan should outline the process for communicating goals and objectives

throughout the agency and for assigning accountability to managers and

staff to achieve objectives.

In narrative following each goal statement, OMB describes some general

strategies, such as issuing guidance and reviewing regulations, that will be

used to achieve its goals. For certain policy-making and advisory goals,

this description may be all that is needed to explain how goals and

objectives will be achieved. However, for goals related to long-term

management responsibilities, the plan could be strengthened by adding a

concise, organized statement of actions and resources needed to achieve a

specific goal or objective. For example, OMB could mention the specific

initiatives it is using to promote objectives, such as the effective utilization

of personnel across the government and achieving savings and quality

improvements in procurement. Clarifying and linking strategies to goals

and objectives is especially important because achieving many of OMB’s

goals depends on its acting in concert with other agencies.

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OMB’s draft plan briefly describes overall resource requirements and refers

the reader to separate capital and operating plans for details on the

information technology and human resource capabilities needed to

achieve its goals. The draft plan is predicated on an assumption of stable

funding and staffing levels and emphasizes the need for a high-quality,

diverse staff and the wise use of human, financial, and technological

resources. However, the draft plan does not discuss whether any specific

technology or training initiatives will be necessary. For example, OMB’s

effectiveness in overseeing the implementation of recent federal IRM

reforms will depend greatly on its staff’s capacity to produce sound

evaluations of the agencies’ information technology investment portfolios.

The draft plan does not indicate that any major training or outside support

is needed to build this capacity.

OMB’s strategies generally are not associated with defined time frames.

Although such time frames may be statutorily- or self-defined for regular

activities such as budget preparation and policy advising, they are needed

for determining progress in achieving the longer-term expectations of

statutory mandates. The draft plan could be improved if critical actions

among its many activities were identified and ordered into steps needed to

achieve a goal or objective. For example, in its 5-year plan on

governmentwide efforts related to financial management, OMB has

identified priorities and milestones for its CFO Act efforts, but these

priorities and milestones are not mentioned or referred to in OMB’s draft

strategic plan.5

While OMB’s draft plan indicates that staff and managers were involved in

developing goals and strategies, it is not clear (1) how the final goals and

strategies will be communicated throughout OMB or to other agencies and

(2) how managers and staff will be held accountable. An OMB strategic plan

steering group invited all staff to meetings on identifying strategic issues,

and OMB held a “standdown day” where staff devoted a day to discussing

their units’ operating plans and the draft strategic plan. However, OMB’s

draft plan does not explain how managers and staff, or other agencies, will

be made aware of and held accountable for the goals that are ultimately

developed. As a result of OMB’s reorganization (OMB 2000) and various

governmentwide management reform legislation, OMB’s staff and managers

have a wide, expanded scope of responsibilities. They also generally have

more influence than control over the ultimate outcome of OMB’s work.

Additionally, many of OMB’s goals depend on concerted actions with other

agencies, but little mention is made of strategies to leverage the actions of

5

See Federal Financial Management Status Report and Five-Year Plan (June 1997).

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other agencies to achieve OMB’s goals. In this operating environment,

communicating results and priorities, and assigning responsibility for

achieving them, are critical.

Relationship Between

Long-term Goals and

Objectives and Annual

Performance Goals

The Results Act requires that each strategic plan describe how the

agency’s annual performance goals will be related to its general, or

long-term, goals and objectives. OMB guidance states that agencies should

briefly outline (1) the type, nature, and scope of the performance goals to

be included in a performance plan, (2) the relation between the

performance goals and the long-term goals and objectives, and (3) the

relevance and use of performance goals in helping determine the

achievement of long-term goals and objectives.

Especially for OMB’s statutory responsibilities, linking long-term goals and

objectives and annual performance goals can (1) help clarify the meaning

of its long-term goals and objectives and (2) ensure that OMB’s day-to-day

operations produce desired long-term results. The section of OMB’s draft

plan entitled, “Relation of Annual Performance Goals to General Goals and

Objectives,” states OMB’s capability to meet its goals and measure its

performance, but it does not describe any relationship between annual and

long-term goals.

However, other sections of the draft plan discuss selected performance

measures for each of the long-term goals that might form the basis for

annual goals. For example, OMB lists several performance measures for its

goal of ensuring “faithful execution of the enacted budget, programs,

regulations and policies,” including the number of agency strategic plans

that comply with the Results Act and the receipt of clean audit opinions on

agency and governmentwide financial statements. Each of these measures

could be associated with specific performance indicators during the

development of the annual performance plan. It can be expected that the

relationship between long-term and annual performance goals will be

further defined as the Results Act planning process continues.

Key External Factors The Results Act stipulates that the strategic plan must identify those key

factors external to the agency and beyond its control that could

significantly affect the agency’s ability to achieve its goals and objectives.

OMB’s guidance states that these factors may be economic, demographic,

social, or environmental and may result from action by the Congress, other

federal agencies, states, local governments, or other nonfederal entities.

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The guidance states that the strategic plan is to briefly describe each key

external factor, indicate its link with a particular goal, and describe how

each factor could affect achievement of a goal.

Throughout its draft plan, OMB acknowledges that its work is affected by

several outside factors. For example, OMB recognizes that national

economic circumstances, as well as different views about the appropriate

roles of government, can affect such goals as assisting the President in

resource allocation and fiscal and economic policy-making. However,

OMB’s plan does not consistently or completely discuss important external

factors. For instance, the plan does not discuss the potential influence that

the Federal Reserve Board or international economic developments can

have in achieving fiscal and economic policies. With regard to OMB’s goal

of executing statutory management policies, the plan could discuss the

need for the Congress to actively support the use of performance

measures in budget decisions and the impact of rapidly changing

technologies on agency information resources management.

For each goal, the plan discusses major barriers to achievement. Some of

these barriers include agency administrative capacity and cooperation and

the diversion of OMB staff to temporal crises. Although these factors clearly

constitute barriers to the achievement of several goals, it is not clear that

they are invariably beyond OMB’s control or influence. The short-term

pressures of the budget process clearly absorb significant staff and

management attention within OMB, but the strategic plan can outline

approaches to help sustain policy and management priorities in this

environment. For example, in fiscal year 1996, the OMB Director articulated

clear priorities for OMB’s examiners to consistently address agencies’

streamlining plans and performance information throughout that budget

cycle, and our evaluation showed that this direction transcended

immediate budgetary concerns and resulted in greater attention to

management issues.6

 Statutory offices, such as the Office of Federal

Financial Management and the Office of Information and Regulatory

Affairs, also provide the expertise and longer-term focus to address certain

key policy and management issues throughout the year. With regard to

agency cooperation, OMB could discuss in its draft plan how it uses such

mechanisms as councils, task forces, and the engagement of agency

Inspectors General to gain agency input and support.

6

GAO/GGD/AIMD-96-50, December 29, 1995.

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Program Evaluation Under the Results Act, agencies’ strategic plans are to describe the

program evaluations used in establishing or revising long-term goals and

objectives, with a schedule for future program evaluations. Program

evaluation is defined by the Results Act as an assessment, through

objective measurement and systematic analysis, of the manner and extent

to which federal programs achieve their intended objectives. According to

OMB guidance, the strategic plan should describe the evaluations that were

used in preparing the plan and outline the general scope and methodology

for future evaluations, key issues to be addressed, and when such

evaluations are to occur.

OMB’s draft plan does not provide a description of program evaluations

used to prepare the plan nor does it include a schedule for future program

evaluations. In its draft plan, OMB states that it does not administer

programs and, therefore, “no program evaluations, as that term is usually

defined, were available for use in preparing the plan.” OMB’s plan, however,

could address the need for program evaluations in at least two ways. First,

OMB could address evaluations of its own internal operations and

programs. Second, OMB could be considered a consumer of agencies’

program evaluations to better inform its resource allocation role and, in

this capacity, could become a catalyst to enhance agencies’ evaluation

capabilities.

Evaluations are especially critical for OMB because it is charged with

overseeing and implementing some of the most critical managerial

functions of government. Such evaluations can provide a critical 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 overseen by OMB. In recent

years, we have conducted assessments of OMB’s functions or programs,

with particular emphasis on its management role and the factors

associated with sustaining attention to management issues in the budget

process.7

Additionally, OMB’s draft plan discusses a number of activities that would

benefit from program evaluation. The draft plan states that issuing

guidance to agencies is one strategy for its goal of ensuring the faithful

execution of the enacted budget, programs, regulations, and policies.

However, the draft plan is silent on whether OMB will assess the

effectiveness of its guidance to agencies. For example, the policy of

7

See, for example, GAO/GGD/AIMD-96-50, December 29, 1995, and Managing the Government: Revised

Approach Could Improve OMB’s Effectiveness (GAO/GGD-89-65, May 4, 1989).

Page 14 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

contracting out to the private sector for providing commercial goods and

services is embodied in OMB Circular A-76. This circular’s effectiveness has

been questioned both in the executive branch and in dozens of

congressional hearings. Because OMB views Circular A-76 as a tool for

achieving needed efficiencies in agency operations, an assessment of its

effectiveness would help determine how this guidance is working and

whether other changes are needed.

OMB is also statutorily required to undertake evaluations similar to those

intended under the Results Act. For example, the Paperwork Reduction

Act of 1995 requires the Director of OMB to “evaluate statistical program

performance and agency compliance with Governmentwide policies,

principles, standards, and guidelines.” Further, the act requires OMB, in

conjunction with four other federal agencies, to assess the efficiency and

effectiveness of agency IRM activities. The Federal Financial Management

Improvement Act of 1996 requires the Director of OMB to submit an annual

report to the Congress regarding implementation of the act. None of these

evaluation-related requirements are explicitly mentioned in OMB’s draft

strategic plan.

OMB’s draft plan could also discuss how it will use agencies’ program

evaluations to further its goals in both budgeting and management.

Improving program evaluation across government is vital for promoting

more informed budget choices in an environment of scarce resources. As

we have reported earlier this year,8

 the lack of results-oriented

performance information will hamper Results Act implementation.

Furthermore, our review of other agencies’ draft strategic plans showed

that many agencies had not yet addressed the need for program

evaluations in their plans.

Draft Plan Generally

Reflects Most of

OMB’s Key Statutory

Authorities

OMB’s draft strategic plan generally reflects and identifies many of OMB’s

key statutory authorities, but it could be improved if the goals and

objectives were more clearly linked to the underlying statutory authorities

upon which they rest. For the most part, the draft plan focuses much more

on OMB’s responsibilities to advise and assist the President and on its

managerial and policy-making roles than it does on the specific statutory

requirements OMB must carry out. While the former responsibilities are

critically important, the draft plan could be improved if it contained an

8

The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be

Uneven (GAO/GGD-97-109, June 2, 1997).

Page 15 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

enhanced discussion and reflected greater recognition of the specific

statutory mandates for which OMB is responsible.

Crosscutting Issues

Could Be More Fully

Discussed

OMB’s draft plan states that achieving its goals and objectives depends

heavily on “input from and the collaborative efforts of all Federal

agencies.” Many of OMB’s activities, in addition to its annual collaboration

with agencies to prepare the President’s Budget, involve coordination with

other agencies or facilitating coordination among agencies to address

crosscutting issues. Crosscutting issues have several dimensions for OMB.

OMB must engender the cooperation of all agencies to achieve many key

goals, such as financial and information management. For certain policies,

OMB shares leadership responsibility with one or more agencies, requiring

collaborative approaches to promote goals. Finally, several issues OMB

must address are interrelated and require cooperation across various

offices and functions within OMB.

Crosscutting goals and objectives require concerted efforts and strategies,

but it is unclear whether OMB coordinated with other agencies in preparing

this draft plan. OMB’s description of its draft plan development process

does not mention that its plan was shared with any other agencies or that

any external stakeholders were consulted. The draft plan also does not

explicitly mention coordination with other agencies that have related

functions. For example, OMB’s draft plan could recognize that other

entities—for example, the Department of the Treasury; the National

Economic Council; and the administration’s major management

improvement initiative, the National Performance Review; and two other

central management agencies, the Office of Personnel Management and

the General Services Administration—share its mission of creating policy,

managing execution, and providing analysis and advice to the President.

When OMB’s goals or objectives point to coordinated efforts, OMB’s draft

plan could be strengthened by referencing the plans of other agencies and

by discussing strategies to gain the cooperation and support of these

agencies. For example, the Paperwork Reduction Act of 1995 requires the

Director of OMB, in consultation with agency heads, to (1) set annual

governmentwide goals for reducing information collection burdens by at

least 10 percent during each of fiscal years 1996 and 1997 and 5 percent

during each of fiscal years 1998, 1999, 2000, and 2001 and (2) set annual

agency goals for reducing information collection burdens on the public to

the maximum extent practical. Although one of OMB’s objectives is to

review current and proposed policies to ensure consistency with the

Page 16 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

President’s information collection policy priorities, the draft plan does not

describe how OMB will ensure burden reduction goals are incorporated in

agencies’ plans and hold agencies accountable for their actions to meet

these agency burden reduction goals.

OMB’s draft plan could better describe how it will achieve the coordination

needed to address other crosscutting issues as well. In the financial

management area, the draft plan articulates the objective of improving

financial management information to attain clean audit opinions.

However, it does not discuss OMB’s role and specific goals in working with

agencies to improve financial management practices throughout the

government. A separate document, the Federal Financial Management

Status Report and Five-Year Plan, contains objectives and strategies that

OMB might draw from for its strategic plan. This financial management plan

discusses strategies for working with agencies, councils, and other groups

and sets specific objectives and milestones for financial management

reform. For example, the financial management plan proposes such

specific tasks as issuing guidance on managerial cost accounting system

requirements, training agencies to implement audit guidance, and

providing guidance for the forthcoming governmentwide financial

statement audit. OMB’s strategic plan could note whether OMB intends to

review agencies’ strategic and financial management plans to ensure its

financial management objectives are also reflected in agency plans.

In the information management area, the draft plan proposes to promote

effective and efficient use of information resources but does not discuss

how it will work with agencies to resolve critical crosscutting issues. OMB

does not describe its strategy for carrying out its expanded responsibilities

in overseeing the effective implementation of PRA and the Clinger-Cohen

Act and for addressing specific issues, such as agencies’ Year 2000

programs to change computer systems to accommodate dates beyond

1999 and information security. We have previously reported on actions

OMB needs to take to implement sound technology investment in federal

Page 17 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

agencies.9 Additionally, given the urgent need to accelerate federal

agencies’ year 2000 programs, the plan can specify how OMB intends to

monitor critical aspects of this problem. Similarly, in light of the increasing

importance of information security and the widespread security problems

that have already emerged, we have previously suggested that OMB, as

chair of the Chief Information Officers Council, take the lead in prompting

agencies to identify weaknesses and take corrective actions.10

In the regulatory management area, the draft plan notes that OMB reviews

agencies’ regulations and conducts certain analyses, but does not fully

discuss what those reviews and analyses are intended to achieve. The draft

plan states that OMB seeks to maximize the public benefits while

minimizing the public burden of regulations and that OMB reviews agency

documents for consistency. Additionally, Executive Order 12866 gives OMB

direct responsibility for ensuring that agencies’ regulations focus on

results instead of process and are based on sound economic analysis.

Delineating these kinds of outcomes in OMB’s plan would give the Congress

and others clear criteria that could be used to evaluate how well OMB is

carrying out its crosscutting regulatory management responsibilities.

The draft plan does not discuss most of the 25 issues we have identified as

high risk because of vulnerabilities to waste, fraud, abuse, and

mismanagement. OMB recently discontinued its high-risk list because it

determined that more progress could be made on these issues by helping

agencies focus on system changes and management challenges. The draft

plan could specify how OMB will provide the leadership needed to help

resolve high-risk problems. Although the plan discusses some of OMB’s

responsibilities related to recent management reform legislation, which, if

implemented successfully, will help resolve some of these problems, the

9

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

Minimize Risks (GAO/AIMD-96-64, September 30, 1996) and Information Management and Technology

(GAO/HR-97-9, February 1997), we reported that OMB needs to take action on several fronts to help

implement sound technology investment decision-making processes at federal agencies, including

(1) requiring agencies to use explicitly defined criteria in deciding what technology projects to fund,

(2) ensuring that agencies’ technology investment control processes comply with the new information

resources management legislation and OMB guidance, (3) improving OMB staff’s capacity to analyze

the soundness of the agencies’ technology portfolios, and (4) establishing an internal evaluation

process to determine whether its reviews of the agencies’ investment processes and results are having

an effect on reducing the risks and improving the returns on federal information technology

investments. OMB’s strategy for overseeing the implementation of the IRM reforms should also include

continuing to monitor the appointment of chief information officers and their efforts to develop and

implement integrated agencywide information architectures; build their agencies’ capacity to acquire

needed systems and deal with emerging technology issues; and devise effective performance measures

for OMB to assess the progress their agencies are making in using information technology to achieve

stated goals.

10See Information Security: Opportunities for Improved OMB Oversight of Agency Practices

(GAO/AIMD-96-110, September 24, 1996).

Page 18 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

high-risk areas involve long-standing problems that can be corrected only

with sustained management attention and congressional oversight.

Tackling crosscutting issues will also require extensive collaboration

between offices and functions within OMB, which the plan could discuss in

more detail. The draft strategic plan contains an objective to use internal

interdisciplinary and interagency work groups to address issues in more

depth but does not provide any specific strategies for or areas where these

groups will be used. OMB recognized the importance of integrating

management into the budget process through its 1994 reorganization

where RMOs were assigned responsibilities for examining agency

management issues during the budget review process.

Recent statutory management initiatives will challenge OMB to mount an

effective organizationwide effort. For example, collaboration across units

within OMB will be necessary to bring financial information systems into

compliance with both the Federal Financial Management Improvement

Act and the Clinger-Cohen Act. We have testified that the performance

information produced by the Results Act will be most useful to

congressional and executive branch decisionmakers if it is integrated with

accurate cost data drawn from agency financial accounting systems; OMB

has efforts underway to develop accountability reports that consolidate

and integrate the separate reporting requirements of the Results Act, CFO

Act, and other specified acts that could be discussed in its plan. Similarly,

preparation of the governmentwide performance plan under the Results

Act, due in early 1998, will call for OMB to draw on expertise across many

units within the agency.

Major Management

Challenges Are Not

Fully Addressed

We and other organizations have evaluated OMB’s ability to provide

leadership on critical budget and management issues. Although some of

the major challenges we have raised are mentioned in the draft plan, OMB

could more specifically describe how these challenges will be addressed.

Our 1989 report on OMB11 examined the agency’s repeated reorganizations

and management improvement efforts and concluded that OMB had been

unable to coordinate its management and budget functions effectively and

had not established a stable management capacity. We found that OMB’s

short-term, budget-driven focus often made it difficult for the agency to

address long-term management problems. OMB’s internal 1994 review of its

operations reached similar conclusions.

11GAO/GGD-89-65, May 4, 1989.

Page 19 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

We made recommendations to improve the agency’s effectiveness in

addressing management and budget issues, and OMB has implemented

some of them. For example, we recommended that a second Deputy

Director position be established to enhance OMB’s leadership role on

management issues, and OMB has filled this position, which was created by

the CFO Act. We also recommended that OMB budget divisions be explicitly

charged with overseeing agency implementation of selected management

improvement efforts, evaluating the effectiveness of the management of

individual agencies and programs, and ensuring that corrective action is

taken to solve identified problems. OMB’s 1994 reorganization (OMB

2000) was intended to integrate its budget analysis, management review,

and policy development roles.

In our 1995 review of OMB 2000,12 we observed that this approach has the

potential to improve the agency’s capacity to address management issues,

but it will require a sustained focus to institutionalize an integrated

approach over the longer term. 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. 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 would address issues raised by the reorganization. However, such a

review is not described in OMB’s draft plan and neither of the two concerns

we raised is explicitly discussed.13

Furthermore, OMB’s draft plan does not discuss initiatives to improve its

working relationship with other federal agencies and the Congress—a key

factor in its ability to effectively carry out its mission and responsibilities.

In our 1989 review of OMB’s management leadership, agency officials told

us that OMB is most effective when it serves as a catalyst and provides

leverage for officials to get attention within their agencies. These officials

also stressed the importance of consistent communication and

involvement of agency officials in formulating policies. A National

12GAO/GGD/AIMD-96-50, December 29, 1995.

13For a discussion of other management challenges, see GAO/GGD/AIMD-96-50, December 29, 1995.

Page 20 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

Academy of Public Administration study also supported a consultative

relationship for agencies and OMB. As previously mentioned in this

correspondence, OMB is working in such a manner with various

interagency councils, and its draft plan could discuss more of these

groups’ initiatives and responsibilities.

Similarly, we found that obtaining congressional cooperation has been an

important factor in OMB’s success. Our discussions with congressional staff

in conducting the 1989 study indicated that OMB could gain more support

for its initiatives through earlier and more frequent contact with the

Congress and a clearer communication of its priorities. OMB’s draft plan

recognizes the need to work cooperatively with the Congress but could

specify what changes, if any, it will seek in its relationship with the

Congress.

Capacity to Provide

Reliable Information

on Achievement of

Goals

OMB’s draft plan indicates that it will need a variety of measures to

determine whether its goals are being achieved. The draft plan suggests

that many of its goals will be measured qualitatively. For example, OMB

suggests performance in identifying less effective programs, improved

personnel utilization, and timeliness of analysis as potential performance

indicators. OMB will need reliable tracking systems to support the

performance indicators it chooses. Additionally, determining whether

some of OMB’s objectives, such as savings in agency procurement

programs, have been achieved will depend on the quality of information

generated by agencies’ information systems. We have not reviewed OMB’s

financial and information systems in recent years; therefore, we cannot

comment on the capacity of OMB’s current systems or any plans to develop

such systems.

Agency Comments

and Our Evaluation

We requested comments on a draft of this letter from the Director of OMB.

On August 15, the OMB Acting Deputy Director for Management provided

written comments. (A copy of those comments is included in enclosure I.)

OMB’s comments characterized our letter as a comprehensive assessment

of OMB’s draft strategic plan and said that it contained constructive and

helpful suggestions for improving the plan. OMB also commented on our

observations regarding two elements missing from its strategic plan: (1) a

description of the relationship between general goals and objectives and

annual performance goals and (2) a discussion of the use of and future

schedule for program evaluations. Our response to OMB’s comments is

included in enclosure I.

Page 21 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
B-277789 

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

earlier, we plan no further distribution of this correspondence until 30

days from its issue date. At that time, we will send copies to the Minority

Leader of the House of Representatives, the Ranking Minority Members of

your Committees, and the Director of the Office of Management and

Budget. We will also send copies to the Chairmen and Ranking Minority

Members of the Senate Appropriations, Budget, and Governmental Affairs

Committees. Copies will be made available to others upon request.

Please contact Nye Stevens at (202) 512-8676 or Paul Posner at

(202) 512-9573 if you or your staffs have any questions concerning this

letter. Major contributors to this report are listed in enclosure II.

L. Nye Stevens

Director, Federal Management and Workforce Issues

Paul L. Posner

Director, Budget Issues

Enclosures

Page 22 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Page 23 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure I 

Comments From the Office of Management

and Budget

Note: GAO comments

supplementing those in

the letter appear at the

end of this enclosure.

See comment 1.

See comment 2.

Page 24 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure I 

Comments From the Office of Management

and Budget

Page 25 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure I 

Comments From the Office of Management

and Budget

The following are GAO’s comments on the Office of Management and

Budget’s letter dated August 15, 1997.

GAO’s Comments 1. OMB commented on our observation that its draft plan did not describe

the relationship between general goals and objectives and performance

goals. OMB said that its plan contains such a description. OMB also said that

an additional description of this relationship will be included in its annual

performance plan. OMB noted that the strategic plan should outline the

type, nature, and scope of the annual performance goals, but it was not

intended that the plan present a comprehensive list of specific measures.

We agree that strategic plans are not intended to provide comprehensive

listings of specific performance measures. However, our letter notes that

the section of OMB’s draft plan entitled “Relation of Annual Performance

Goals to General Goals and Objectives” does not describe any relationship

between annual and long-term goals. Thus, we continue to believe that

OMB’s plan could be more useful if it discussed the relationship between

the performance goals and the long-term goals and objectives and the

relevance and use of performance goals in helping determine the

achievement of long-term goals and objectives.

2. OMB commented on our observation that its draft plan did not include a

discussion of the use of and schedule for program evaluations. OMB

reiterated that it does not run programs and therefore it “did not use

Program Evaluations” to develop its plan. OMB said that “many evaluations.

. .while not technically Program Evaluations,” were used in developing its

strategic plan and that it “continues to be a strong supporter of Program

Evaluation.”

We note that the Senate report that accompanied the Results Act

described program evaluation in broad terms, specifically “including

evaluations of . . . operating policies and practices when the primary

concern is about these issues rather than program outcome.” In this

context, we believe that evaluations are especially critical for OMB because

it is charged with overseeing and implementing some of the most critical

managerial functions of government. Thus, we continue to believe that

OMB’s strategic plan could be more useful if OMB provided more

information on its use of program evaluations in developing its plan.

Page 26 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
Enclosure II 

Major Contributors to This Letter

Accounting and

Information

Management Division,

Washington D.C.

Gloria L. Jarmon, Director

Michael J. Curro, Assistant Director

John P. Finedore, Assistant Director

Danny R. Latta, Assistant Director

Denise M. Fantone, Senior Evaluator

Laura E. Hamilton, Senior Evaluator

General Government

Division, Washington

D.C.

J. Christopher Mihm, Acting Associate Director

Joseph S. Wholey, Senior Advisor for Evaluation Methodology

Curtis W. Copeland, Assistant Director

John K. Needham, Assistant Director

Office of General

Counsel

Alan N. Belkin, Assistant General Counsel

Carlos E. Diz, Attorney

(935240/410179) Page 27 GAO/AIMD/GGD-97-169R OMB’s Draft Strategic Plan
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