Department of Agriculture: Status of Achieving Key Outcomes and Addressing Major Management Challenges
Published: 2001-08-23T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: The Department of Agriculture's (USDA) fiscal year 2000 performance report and fiscal year 2002 performance plan have the potential for focusing the department's missions, but these efforts are compromised in several areas. USDA's goals and measures are too general to give insight into what USDA is actually trying to achieve. It is difficult to assess USDA's progress when it uses unrealistic goals to achieve strategic outcomes and when it uses untimely data that has not been consistently verified. In two areas--strategic human capital management and information security--progress in measuring USDA's performance has been frustrated by the lack of goals and measures for identified issues. Finally, by not sharing information about the major management challenges identified by its own Inspector General, USDA's agencies miss the opportunity to develop strategies and plans to respond to these issues.

section_title: Letter
paragraphs: As you requested, we reviewed the U. S. Department of Agriculture’s (USDA) fiscal year 2000 performance report and fiscal year 2002 performance plan required by the Government Performance and Results Act of 1993 (GPRA) to assess the agency’s progress in achieving selected key outcomes that you identified as important mission areas for the agency. USDA presented one performance report with agency-by-agency coverage and 1 departmental and 24 agency and office performance plans. We reviewed the same outcomes we addressed in our June 2000 review of the agency’s fiscal year 1999 performance report and fiscal year 2001 performance plans to provide a baseline by which to measure the agency’s performance from year-to-year. These selected key outcomes are ensuring an adequate and reasonably priced food supply;  opening, expanding, and maintaining global market opportunities for reducing hunger and ensuring food for the hungry; ensuring a safe and wholesome food supply; and reducing food stamp fraud and error.
As agreed, using the selected key outcomes for USDA as a framework, we (1) assessed the progress USDA has made in accomplishing these outcomes and the strategies the agency has in place to achieve them; and (2) compared USDA’s fiscal year 2000 performance report and fiscal year 2002 performance plan with the agency’s previous year performance report and plan for these outcomes. Additionally, we agreed to analyze how USDA addressed its major management challenges, including the governmentwide high-risk areas of strategic human capital management and information security, that we and USDA’s Office of Inspector General identified. Appendix I provides detailed information on how USDA addressed these challenges.
subsections: section_title: Background
paragraphs: GPRA is intended to shift the focus of government decisionmaking, management, and accountability from activities and processes to the results and outcomes achieved by federal programs. New and valuable information on the plans, goals, and strategies of federal agencies has been provided since federal agencies began implementing GPRA. The fiscal year 2002 performance plan is the fourth of these annual plans under GPRA. The fiscal year 2000 performance report is the second of these annual reports under GPRA. The issuance of the agencies’ performance reports, due by March 31, 2001, represents a new and potentially more substantive phase in the implementation of GPRA—the opportunity to assess federal agencies’ actual performance for the prior fiscal year and to consider what steps are needed to improve performance and reduce costs in the future.
USDA is one of the nation’s largest federal agencies, employing over 110,000 people and managing a budget of over $78 billion. Its agencies and offices are responsible for operating more than 200 programs. These programs support the profitability of farming, promote domestic agricultural markets and the export of food and farm products, provide food assistance for the needy, ensure the safety of the nation’s food supply, manage the national forests, protect the environment, conduct biotechnological and other agricultural research, and improve the well being of rural America.
section_title: Assessment of USDA’s Progress and Strategies in Achieving Selected Key Outcomes
paragraphs: This section discusses our analysis of USDA’s performance in achieving the selected key outcomes and the strategies the agency has in place to achieve these outcomes, particularly for strategic human capital management and information technology. In discussing these outcomes, we have also provided information drawn from our prior work on the extent to which the department provided assurance that its reported performance information is credible.
subsections: section_title: An Adequate And Reasonably Priced Food Supply
paragraphs: USDA’s fiscal year 2000 performance report, which was issued in March 2001, indicated that the department continued to make some progress toward achieving this outcome. For example, USDA reported that it met its goals for stabilizing peanut and tobacco prices and maintaining the economic viability of peanut and tobacco producers. However, it is difficult to assess USDA’s progress because the department did not provide an overall evaluation of this outcome in its report. According to the performance report, USDA met about 72 percent of the performance goals related to this outcome, less than last year when USDA reported it met over 80 percent of its goals.
USDA did not select the outcome of providing an adequate and reasonably priced food supply as a key departmental strategic goal in its fiscal year 2002 performance plan, which was issued in June 2001. Some of USDA’s efforts to achieve this outcome are discussed under the top ranked departmental strategic goal of expanding economic and trade opportunities for U.S. agricultural producers and a USDA official stated that this outcome continues to be important for the department. USDA’s discussion of this strategic goal stated that farming and ranching is being transformed by changes in biological and information technology, environmental and conservation concerns, greater threats from pests and diseases spreading across continents, natural disasters and the industrialization of agriculture, and globalization of markets. Under this goal, USDA chose as its first objective to provide an effective safety net and to promote a strong, sustainable U.S. farm economy. USDA explained that if it is to achieve its goal of promoting a strong farm economy that is less dependent of government support, then it must also place a heavy emphasis on helping farmers proactively manage the risks inherent in agriculture and improve farmers income. USDA’s second objective under this strategic goal is to expand export markets—USDA illustrated the opportunity for exports by estimating that 96 percent of American agriculture’s potential customers reside outside the United States. Some of the performance goals presented for this strategic goal are to improve farmers’ incomes, reduce pest and disease outbreaks, and expand international sales opportunities.
section_title: Opening, Expanding, and Maintaining Global Market Opportunities for Agricultural Producers
paragraphs: USDA reported progress in fiscal year 2000 that was similar to its performance last year in that it met some of its goals and indicators for this outcome. USDA stated that it exceeded its targets for two key goals. The gross trade value of markets created, expanded, or retained annually due to market access activities reached $4.35 billion, significantly higher than its $2 billion target. USDA attributed $2 billion of this gain to negotiations on China’s accession to the World Trade Organization in fiscal year 2000. Similarly, annual sales, which were reported by U.S. exporters from on-site sales at international trade shows, reached $367 million in fiscal year 2000, compared to USDA’s target of $250 million. Despite these successes, USDA fell short in meeting other goals. The department reported $837 million in U.S. agricultural exports resulted from the implementation of trade agreements under the World Trade Organization, below its target of $2 billion. It also reported that the total value of U.S. agricultural exports supported by its export credit guarantee programs reached $3.1 billion, falling short of its $3.8 billion target.
USDA uses a questionable methodology for measuring the success of its efforts to expand and maintain global markets for U.S. agricultural products. USDA’s goals and indicators emphasize growth in the U.S. share of the global agricultural market—measured by changes in the dollar value of exports resulting from the implementation of trade agreements, market access enhancements, sales from annual trade shows, and agricultural exports. Yet, the dollar value of exports is subject to powerful external variables that transcend USDA’s authority and ability to affect change in international trade. These variables include exchange rates, government policies, global and national economic conditions, climactic changes, and numerous other factors over which USDA has no control or strategies to address. For example, the decrease in the value and volume of U.S. agricultural exports over the last several years is generally recognized by economists, government officials, and private sector representatives to be the result of deteriorating economic conditions, particularly in the Asian market, over which USDA has no control. USDA’s Economic Research Service has consistently held that U.S. agricultural export performance results more from market forces, which include multiple variables beyond the control of USDA, than from the actions of the U.S. government to expand international market opportunities. Along with other research institutions, it has confirmed that the decline in the value of U.S. agricultural exports from $60 billion in fiscal year 1996 to $50.9 billion in fiscal year 2000 was not attributable to U.S. government trade policies, programs, and activities.  It further observed that USDA programs typically have a limited effect on the dollar value of U.S. exports and market share. We have previously raised questions about the extent of the relationship between USDA’s export policies and programs and increased exports.
USDA’s fiscal year 2002 plan is based on the assumption that government policies, programs, and activities have a significant influence on the U.S. share of the global agricultural market. USDA has set a goal to increase exports by $14 billion by fiscal year 2010, or about 22 percent of the global market. This level would return the United States to the same global market share it held in the early 1990s. USDA’s plan is consistent with the assumption that the government’s impact is enhanced when the government works with the private sector to create a facilitative environment to expand sales of agricultural products abroad. USDA’s strategies are to include a long-range integrated marketing plan, which would provide a generalized framework that goes beyond the traditional narrow and short-term programmatic and reactive export oriented approaches. Among its goals are those for (1) developing a long-range marketing plan that enlists USDA’s network of domestic and foreign field offices in an effort to assist U.S. producers in capturing new market opportunities, (2) partnering with private U.S. market development groups to leverage resources aimed at expanding market opportunities abroad for U.S. food and agricultural products, (3) expanding U.S. access to foreign markets through active participation in the World Trade Organization and international trade forums, and (4) continuing to monitor international trade agreements and negotiating new agreements to open overseas markets to U.S. food and agricultural products. However, what is not yet spelled out are the key elements of the integrated marketing plan that will move beyond a generalized concept to the reality of specific actions that will lead to success. Among the elements that could be further addressed would be the organizational structure, the human capital and technological resources, and the operational concepts and methods that will actually enable USDA to meet its global marketing objectives.
USDA’s Foreign Agricultural Service said that its plans are necessarily generalized at this point in time and should be considered as their first steps in developing an integrated marketing plan.  The Service also said that it would be instituting quarterly reporting to track progress.  In addition, the Service disagreed with our views about its departmental level strategic performance goal to affect U.S. market share, and said that it believed it had selected the ultimate measure of change for international agricultural markets.  However, as previously discussed, we disagree with the selection of this goal because USDA’s activities have little influence on the overall level of international market shares.  Since the GPRA was designed to lead to better insights into the performance of government, USDA will need to adopt a realistic departmental performance goal to meet this purpose.
section_title: Food for the Hungry
paragraphs: According to its performance report, USDA reported continued progress toward this outcome and met about 80 percent of its goals.  USDA’s performance exceeded that of fiscal year 1999. For example, the department reported meeting its goals for distributing food nutrition education information to low-income Americans, for increasing the number of schools that meet USDA’s dietary guidelines, and for improving the effectiveness and efficiency of commodity acquisition and distribution to support domestic and international food assistance programs. Some of the goals do not have specific performance targets, so it is not always clear what USDA is actually accomplishing. For example, USDA determined that it is meeting its goal of improving the nutritional status of Americans by such actions as distributing revised dietary guidelines and by promoting media coverage, and observing seminar attendance and web-page usage related to improved nutrition and diet. These measures of performance do not tell us whether USDA’s actions are improving Americans’ nutritional status.
USDA’s fiscal year 2002 departmental performance plan contains many general strategies for achieving its goals and measures. For example, one general strategy called for reallocating funds from areas with excess funds to areas with high demand for the Special Supplemental Nutrition Program for Women, Infants, and Children. However, some of the general strategies make it difficult to assess USDA’s progress. For example, USDA’s goal to improve food security for children and low-income individuals calls for expanding program access to the needy—and the plan’s strategies for doing this involves “effectively delivering assistance” and “continuing efforts” to ensure that the Food Stamp Program is accessible. Such strategies provide little insight into the specific actions USDA intends to take to achieve its goals. In addition, at the time of our review, USDA’s Food and Nutrition Service, the agency primarily responsible for this outcome, had yet to draft a performance plan for fiscal year 2002. The detailed goals and strategies that the agency level plan would contain are needed to support USDA’s departmental plan. The Acting Administrator of the Food and Nutrition Service reported that the agency is assembling a policy team and will issue a draft performance plan after the team is selected.
section_title: A Safe and Wholesome Food Supply
paragraphs: According to its performance report, USDA met or exceeded nearly all of its fiscal year 2000 performance goals for ensuring a safe and wholesome food supply. USDA stated that it met its goals for key areas, such as the percentage of federally inspected meat and poultry slaughter and/or processing plants that had implemented the basic hazard analysis and critical control points (HACCP) requirements. GAO issued a report on this subject in 1997. USDA also reported that it exceeded its goal for the number of reviews it conducted of foreign meat and poultry food safety programs to ensure their compliance with U.S. safety standards. GAO also issued a report on this subject in 1998. When performance goals were not met, USDA generally provided specific explanations, including describing external factors when applicable, for not achieving the performance goals. For example, USDA reported that it fell short of meeting its goal for deploying 607 computers to state inspection programs because 4 states did not have the funding available to meet their 50-percent share of the computers’ costs. In another example, USDA did not meet its goal to perform 68,000 laboratory tests, falling short of its target by 8,000 tests. USDA did not provide any additional strategies for achieving this goal in the following fiscal year, but it stated that it believed many of the difficulties in meeting the goal have been alleviated by the implementation of the new HACCP system.
USDA’s fiscal year 2002 performance plan describes several strategies to ensure a safe and wholesome food supply. Such strategies include (1) strengthening laboratory and risk assessment capabilities, (2) implementing a HACCP system for eggs, and (3) strengthening its foreign food safety program efforts. These strategies generally provided a clear description of USDA’s approach for reaching its performance goals. For example, USDA described a strategy that seeks to improve its foreign food safety program review efforts by intensifying reviews of animal feeds, animal identification, and process control systems in countries exporting meat and poultry products to the United States. However, the strategies did not show how USDA plans to address and overcome the fundamental problem it faces in this area—the current food safety system is fragmented with as many as 12 different federal agencies administering over 35 laws regarding food safety. USDA’s plan states that the creation of a single federal food safety agency, as previously recommended by us, extends beyond the legal scope of any one federal agency. We have maintained that until this fragmented system is replaced with a risk-based single food agency, the U.S. food safety system will continue to under perform. USDA pointed out that it does not have the authority to merge with other federal agencies and form a single food safety agency. (See app. I.)
section_title: Food Stamp Fraud and Error
paragraphs: According to its performance report, USDA met or exceeded many of its fiscal year 2000 goals and made progress toward reducing food stamp fraud and error.  The department, for example, reported exceeding its goal for payment accuracy rate in the delivery of Food Stamp Program benefits and stated that it would support continued improvements by seeking opportunities to simplify program rules—a recommendation made by us in a recent report on reducing payment errors. It also reported collecting about $219 million in overpayments to recipients in fiscal year 2000, which exceeded its original target of collecting about $194 million. In some instances, USDA fell short of meeting its goals for this outcome. For example, USDA did not meet its goal for increasing the percentage of debt owed by retailers who were delinquent on their food stamp payments that was referred to Treasury, and it narrowly missed its goal for the number of retailers sanctioned for not meeting regulatory requirements. In those instances when goals were not met, USDA generally provided specific explanations for not achieving them. For example, the department reported that it did not meet its goal for referring to the Treasury Department cases of food stamp retailers with delinquent debts for collection because it did not submit cases in a timely manner and because of shortcomings in the processing of such referrals.
USDA did not base its fiscal year 2000 performance report assessments on actual performance data in some cases. For example, for two performance goals—maintain payment accuracy in the delivery of Food Stamp Program benefits and the number of states qualifying for enhanced funding based on high payment accuracy—the department reported progress from fiscal year 1999, and it stated that it would meet its fiscal year 2000 performance goals based on “early indications” and planned activities. USDA also recognized that actual data would be available 3 months after the performance report was issued, which represents an improvement in data reporting.  Nevertheless, the absence of timely performance data makes it difficult for USDA and others to annually assess performance and determine if changes in strategies are needed.
USDA’s fiscal year 2002 departmental performance plan contained several strategies for reducing food stamp fraud and error. USDA stated that it intended to continue to improve the accuracy and consistency of its quality control system and support state efforts to improve food stamp benefit accuracy through technical assistance and by using the best practices for information-sharing. However, the departmental plan did not have specific strategies to demonstrate how USDA would achieve its strategic goals and objectives. In some instances, a discussion of goals, objectives, and strategies directly related to this key outcome were not included. For example, the plan did not include a discussion of how it would deal with retail stores that violate program requirements. A recent Food and Nutrition Service study estimated that stores each year illegally provided cash for benefits (trafficking of benefits) totaling about $660 million. USDA’s departmental plan also did not specifically discuss the Food and Nutrition Service’s targets or measures for reducing trafficking in food stamps, and it does not contain details on the strategies to be used to reduce fraud and error in the Food Stamp Program. The details of these strategies may be included in the Food and Nutrition Service’s agency level performance plan for fiscal year 2002, which has not yet been prepared. Additionally, we have identified efforts to reduce fraud and error in the food stamp program as a major management challenge. (See app. I.)
section_title: Comparison of USDA’s Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance Plan With the Prior Year Report and Plan for Selected Key Outcomes
paragraphs: For the selected key outcomes, this section describes major improvements or remaining weaknesses in USDA’s (1) fiscal year 2000 performance report in comparison with its fiscal year 1999 report, and (2) fiscal year 2002 performance plan in comparison with its fiscal year 2001 plan. It also discusses the degree to which the agency’s fiscal year 2000 report and fiscal year 2002 plan addresses concerns and recommendations by the Congress, GAO, USDA’s OIG and others.
subsections: section_title: Comparison of Performance Reports for Fiscal Years 1999 and 2000
paragraphs: USDA’s fiscal year 2000 performance report presentation has remained largely unchanged compared with the prior year’s report. Specifically, the report continued to be an agency-by-agency discussion of its progress without an overview presenting a picture of the department’s overall performance. As discussed previously, the fiscal year 2000 performance report has limitations such as its reliance on narrative measures that track agency actions but that do not provide information about the impacts of the agency’s performance. There are also areas where the data is limited and of questionable reliability—USDA has reported that the vast scale and complexity of its programs present major management challenges in terms of the availability of accurate, credible, and timely performance data. For example: (1) the Foreign Agricultural Service reported that it has limited resources for tracking issues related to the World Trade Organization and barriers in foreign markets leading to errors and limitations in data verification; (2) USDA’s estimates of the populations that are participating in food stamp and other nutrition assistance programs are generally not available in time for preparing its annual performance reports; (3) USDA has relied on data about school food services that is collected informally and without standardized procedures because of opposition to the collection of this data; and (4) USDA reported that its data on agricultural producers’ awareness of risk management alternatives had not been collected consistently from state to state.
In addition, the fiscal year 2000 performance report varied from providing a detailed discussion of USDA’s data verification and validation efforts, to little or no information about its data accuracy. In many cases, USDA did not provide information on the steps that were taken to verify and validate the data. For example, concerning the performance goal to eradicate a common animal disease, the report simply stated that staff members are responsible for ensuring the reliability and accuracy of the data. Also, UDSA did not report on the reliability of the information reported by the Cooperative State Research, Education, and Extension Service, which relies on the accomplishments and results reported by the universities receiving its research funds.
section_title: Comparison of Performance Plans for Fiscal Years 2001 and 2002
paragraphs: USDA developed a new departmental plan for fiscal year 2002 that is significantly different than its 2001 plan. The fiscal year 2002 plan provided, for the first time, a departmentwide approach to performance management. This streamlined presentation consolidated the more than 1,700 agency specific performance goals and measures it presented in 2001 into 5 departmental strategic goals, 56 annual performance goals, and 79 measures for fiscal year 2002. The departmental strategic goals USDA selected were as follows: (1) expand economic and trade opportunities for U.S. agricultural producers; (2) promote health by providing access to safe, affordable, and nutritious food; (3) maintain and enhance the nation’s natural resources and environment; (4) enhance the capacity of all rural residents, communities, and businesses to prosper; and (5) operate an efficient, effective, and discrimination-free organization. The new departmental plan is supported by agency-level annual performance plans that offer more detailed information on evolving strategies, priorities, and resource needs.
We found USDA’s new plan to be a work-in-progress, as discussed throughout this report. USDA did not consistently provide the detailed strategies that were needed for achieving its departmental goals. Of the 56 annual performance goals in the departmental plan, 33 goals do not contain overall performance targets against which to measure overall progress. For each of these 33 goals, USDA provided various performance indicators, some of which contain performance targets that are representative measures of progress. Also, there were goals that were substantially affected by external factors beyond the scope of USDA’s activities. Examples include the goals to (1) grow the U.S share of the global agriculture market, even though USDA’s programs have a limited effect on the total dollar value of U.S. exports, and (2) enhance the capacity of all rural residents, communities, and businesses to prosper, when the scope of USDA’s rural assistance programs is not designed to provide for a comprehensive federal effort in this area. Moreover, in the Secretary’s message transmitting the fiscal year 2002 plan, the Secretary stated that she had not thoroughly reviewed the new strategic plan, did not have a full leadership team in place, and recognized that more needed to be done. The Secretary also stated that once USDA’s full leadership team is in place, it will be working to conduct a top-to-bottom review of the department’s programs, and will develop new strategic and annual performance goals to carry out this administration’s priorities.
Additionally, in response to our prior GPRA reviews, USDA included two new sections in its 2002 performance plan—one that includes a discussion of data verification and validation by each performance goal and one that recognizes major management challenges identified by GAO. The discussion of USDA’s data and its sources is a valuable addition to USDA’s plan because it provides a more consistent picture of the data USDA uses, the steps USDA takes to verify its data, and the limitations that need to be taken into account.
section_title: USDA’s Efforts to Address its Major Management Challenges Identified by GAO
paragraphs: GAO has identified two governmentwide high-risk management challenges: strategic human capital management and information security. Regarding human capital management, USDA’s plan contains a key outcome—to ensure USDA has a skilled, satisfied workforce and strong prospects for retention of its best employees. The plan recognized emerging skill gaps, high retirement eligibility rates, and the need for staff to shift to a greater use of technology as departmental strategic issues. However, USDA has identified only one human capital performance measure—an employee satisfaction survey—which would not measure the closing of skill gaps, the retention of critical employees, or changes related to the use of new technology. Furthermore, the extent of the discussion of human capital strategies in USDA’s individual agency plans varies. For example, the plans of the Farm Service Agency and the Food Safety and Inspection Service did not discuss human capital issues, and the Food and Nutrition Service has not completed a plan. With respect to information security, we found that the Chief Information Officer’s performance report did not explain its progress in implementing its August 1999 action plan for improving departmentwide information security, or time frames and milestones for doing so. In addition, USDA’s performance plan did not have departmental goals and measures related to this important area.  In commenting on a draft of this report, USDA officials stated that progress had been made in implementing their August 1999 action plan to strengthen information security and agreed that USDA’s annual performance plan could be improved by including information security performance goals and measures.
GAO has also identified 10 major management challenges facing USDA. USDA’s performance report discussed the agency’s progress in resolving many of its challenges, and its performance plan had (1) goals and measures that were directly related to seven of the challenges, (2) goals and measures that were indirectly applicable to two of the challenges, and (3) no goals and measures related to one of the challenges. Appendix I provides detailed information on how USDA addressed these challenges and high-risk areas as identified by both GAO and the agency’s Inspector General. However, USDA did not recognize or address some of the management challenges identified by its own Inspector General because according to USDA officials, the Office of the Inspector General did not send a copy of its letter to the affected USDA agencies.
section_title: Conclusions
paragraphs: USDA’s fiscal year 2000 performance report and fiscal year 2002 performance plan have the potential for focusing the department’s missions, but these efforts are compromised in a number of areas.  USDA’s goals and measures are too general to give insight into the actual achievements that USDA is striving to make.  In particular, it is difficult to assess USDA’s progress when it uses unrealistic goals to achieve strategic outcomes and when it uses untimely data that has not been consistently verified.  In two particular areas—strategic human capital management and information security—the process of measuring USDA’s performance could be improved by including goals and measures in USDA’s annual performance plan.  Finally, USDA missed the opportunity to develop strategies and plans to respond to the major management challenges identified by the OIG.
section_title: Recommendations for Executive Action
paragraphs: To improve USDA’s performance reporting and planning, we recommend that the Secretary of Agriculture (1) set priorities for improving the timeliness of the data that USDA is using for measuring its performance; (2) improve USDA’s performance report by including more consistent discussions of data verification and validation; (3) better match the department’s goals and outcomes with its capabilities for expanding and maintaining global market opportunities; (4) include performance goals and measures for strategic human capital management issues and information security issues in the departmental performance plan; (5) make reducing food stamp trafficking an annual performance goal in USDA’s plan; and (6) address and include the Office of Inspector General’s major management challenges in future performance plans.  To facilitate our last recommendation, we also recommend that the Inspector General work with the Chief Financial Officer and USDA agency officials in identifying and including major management challenges in USDA’s performance plans.
section_title: Agency Comments
paragraphs: We provided USDA with a draft of this report for its review and comment. USDA chose to meet with us to provide oral comments, and we met with the Acting Chief Financial Officer and other officials from the department on August 13, 2001, to discuss these comments.  The Acting Chief Financial Officer said that the department generally agreed with the information presented in the draft report.  USDA officials also provided the following comments.
Regarding major management challenges, USDA agency officials questioned whether there is a requirement for USDA to report on major management challenges as part of its performance plan and to include related performance goals.  Our review, as requested, included an assessment of USDA’s progress in addressing its major management challenges.  In addition, OMB Circular A-11 states that federal agencies should include a discussion of major management challenges in their annual performance plans and present performance goals for these challenges.
USDA’s OIG disagreed with our recommendation calling for the OIG to distribute future OIG letters on major management challenges to affected USDA agencies.  The OIG commented that its audit reports already identify management challenges and that these are discussed with the affected agencies.  The OIG also stated that its letter to congressional requesters identifying major management challenges was provided informally to the department and that the OIG is required by Public Law 106-531 to report on the most serious management challenges in USDA’s annual report to the president and the Congress.
We are well aware that the OIG identifies management challenges in audit reports and reports separately on these challenges.  Nevertheless, as stated in our draft report, our recommendation is directed at facilitating the inclusion and discussion of the OIG identified major management challenges in USDA’s annual performance plan.  The OIG’s reporting of the management challenges to congressional requesters in December 2000 appeared to us to be a document that could have served as a timely starting point for the major management challenge section of USDA’s departmental annual performance plan.  We continue to believe that the OIG should play a role in facilitating the major management challenge section of the departmental performance plan, and have modified our recommendation to directly call for the OIG to participate in the development of this section of USDA’s plan.
The Foreign Agricultural Service disagreed with our recommendation to better match the department’s goals and outcomes with its capabilities for expanding global market opportunities.  It stated that the measure it is using—global market share—is the ultimate performance measure for describing overall changes in international markets and that the Congress is interested in U.S. international market share.  However, in discussing this concern, the Service itself acknowledged that market forces are the principal cause of changes in exports rather than its activities.  Therefore, we continue to believe that it would be appropriate to use more realistic goals for performance that are more closely related to the outcomes that USDA activities can achieve.  The Service’s agency level performance plan contains some performance indicators that are more limited and better reflect the government’s role in changing export values and market share.
The Foreign Agricultural Service also expressed concern that if it were to make detailed information on its strategies available to the public, it could be used by foreign competitors to offset U.S. efforts.  Because of the limited federal role in affecting international market share, we believe that more specific information on U.S. role and activities would not compromise U.S. efforts.
USDA officials stated that that they had made progress in improving information security and strategic human capital management. Specifically, USDA officials said that progress had been made in implementing their August 1999 action plan to strengthen information security.  However, USDA officials recognized that this information, along with information security goals and measures, was generally not included in the department’s performance plan or report and that the process of measuring USDA’s performance would be improved by including it. Also, concerning strategic human capital management, USDA’s performance report and plan did not summarize key actions that USDA officials said have been taken on workforce planning, recruitment, and the retention of employees.  USDA will have the opportunity to summarize its progress in these areas in its future performance reports and plans.
Department officials also provided technical clarifications, which we made as appropriate.
section_title: Scope and Methodology
paragraphs: As agreed, our evaluation was generally based on a review of the fiscal year 2000 performance report and the fiscal year 2002 performance plan and the requirements of GPRA, the Reports Consolidation Act of 2000, guidance to agencies from the Office of Management and Budget (OMB) for developing performance plans and reports (OMB Circular A-11, Part 2), previous reports and evaluations by us and others, our knowledge of USDA’s operations and programs, GAO identification of best practices concerning performance planning and reporting, and our observations on USDA’s other GPRA-related efforts. We also discussed our review with agency officials in the Office of the Chief Financial Officer and with the USDA Office of Inspector General. The agency outcomes that were used as the basis for our review were identified by the Ranking Minority Member of the Senate Governmental Affairs Committee as important mission areas for the agency and generally reflect the outcomes for key USDA programs or activities. The major management challenges confronting USDA, including the governmentwide high-risk areas of strategic human capital management and information security, were identified by us in our January 2001 performance and accountability series and high-risk update or were identified by USDA’s Office of Inspector General in December 2000. We did not independently verify the information contained in the performance report and plan, although we did draw from our other work in assessing the validity, reliability, and timeliness of USDA’s performance data. We conducted our review from April 2001 through August 2001 in accordance with generally accepted government auditing standards.
As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this letter. At that time, we will send copies to appropriate congressional committees; the Secretary of Agriculture; and the Director of the Office of Management and Budget. Copies will also be made available at to others on request.
If you or your staff have any questions, please call me at (202) 512-9692. Key contributors to this report are listed in appendix II.
section_title: Appendix I: Observations on the U.S. Department of Agriculture’s Efforts to Address Its Major Management Challenges
paragraphs: The following table identifies the major management challenges confronting the U.S. Department of Agriculture (USDA), which includes the government-wide high-risk areas of strategic human capital management and information security. USDA has one performance report and a departmentwide plan with supporting plans from the department’s individual agencies. The first column lists the challenges identified by our office and USDA’s Office of Inspector General. The second column discusses what progress, as discussed in its fiscal year 2000 performance report, USDA made in resolving its challenges. The third column discusses the extent to which USDA’s fiscal year 2002 performance plan includes performance goals and measures to address the challenges that we and the USDA’s OIG identified. While USDA’s fiscal year 2000 performance report addressed progress in resolving some of the 17 management challenges, the department did not have goals for the following: strategic human capital management, information security, Forest Service land exchange program, grant agreement administration, grant competitiveness, research funding accountability, and Rural Business Cooperative Service and therefore did not discuss progress in resolving these challenges. USDA’s fiscal year 2002 performance plans provided some goals and measures or strategies for all but five of its management challenges. USDA did not have goals for the management challenges involving the Forest Service land exchange program, grant agreement administration, grant competitiveness, research funding accountability, and Rural Business Cooperative Services. For the remaining 12 major management challenges, its performance plan had (1) goals and measures that were directly related to 8 of the challenges, (2) goals and measures that were indirectly applicable to 3 of the challenges, or (3) had no goals and measures related to 1 of the challenges, but discussed strategies to address it.  In commenting on a draft of this report, USDA stated that it made additional progress in resolving its management challenges that had not been reflected in its fiscal year 2000 performance report and fiscal year 2002 performance plan.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: Erin Barlow, Andrea Brown, Jacqueline Cook, Thomas Cook, Charles Cotton, Angela Davis, Andrew Finkel, Judy Hoovler, Erin Lansburgh, Carla Lewis, Sue Naiberk, Stephen Schwartz, Richard Shargots, Mark Shaw, Ray Smith, Alana Stanfield, Phillip Thomas, and Ronnie Wood.