In the 1990s, Congress put in place a statutory framework to address the long-standing weaknesses in federal operations, improve federal management practices, and provide greater accountability for achieving results. This framework included as its essential elements the Results Act and key financial management and information technology reform legislation: the Chief Financial Officers Act of 1990 (CFO)—as expanded by the Government Management Reform Act of 1994 (GMRA)—and the Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996, respectively. Taken together, these legislative initiatives seek to respond to a need for accurate, reliable, and integrated budget, financial, and program information for congressional and executive branch decisionmaking, information that much of our prior work has shown to be badly lacking. The goal-setting and performance measurement and improvement system envisioned by the Results Act is the centerpiece of this framework and starts with the requirement that each executive agency develop and periodically update a strategic plan to lay out its mission, long-term goals and objectives, and strategies for achieving those goals and objectives. Under the Results Act, the first of these plans were due by September 30, 1997. Next, each agency is to develop an annual performance plan, beginning with the agency’s plan for fiscal year 1999, which covers each program activity set forth in the agency’s budget. Agencies were to submit their fiscal year 1999 annual performance plans to OMB in the fall of 1997 with their fiscal year 1999 budget requests and are to submit those plans to Congress after the President’s fiscal year 1999 budget is provided to Congress in February 1998. Among other things, agencies’ annual performance plans are to contain their programs’ goals and measures for fiscal year 1999. Finally, each agency is to report publicly on its programs’ performance, specifically on the degree to which the goals that are laid out in the agency’s annual performance plan are being met and on actions it plans to take to achieve unmet goals. The first of these reports, on programs’ performance for fiscal year 1999, is due by March 31, 2000; subsequent reports are due by March 31 for the years that follow. (For a detailed description of the Results Act’s requirements, see app. I.) The CFO Act and GMRA are intended to strengthen the reliability of agencies’ financial and programmatic performance information and the reporting of such information by, among other things, having agencies develop better performance measures and cost information and design results-oriented reports that integrate budget, accounting, and program information.Finally, the Paperwork Reduction Act and Clinger-Cohen Act seek to help agencies address long-standing weaknesses in their use of information technology. Under this legislation, each agency is to better link its technology plan and information technology use to achieving the agency’s desired results. In addition, long-standing concerns about the program and financial management of credit programs have prompted Congress to enact important budget and credit management reform initiatives over the last 15 years. These initiatives include the Debt Collection Act of 1982 (DCA) and amendments, the Debt Collection Improvement Act of 1996 (DCIA), and the Federal Credit Reform Act of 1990 (FCRA). DCA and DCIA are significant pieces of credit management legislation designed to, among other things, facilitate federal efforts to decrease delinquencies and increase collections. Under DCA, agencies were to annually report to the Director of OMB and the Secretary of the Treasury on the status of their debt collection activities. Under DCIA, agencies are now to annually report on those activities only to the Secretary of the Treasury, who in turn is to annually report to Congress, beginning no later than 1999, on such activities governmentwide. FCRA changed the budget treatment of direct loans and loan guarantees made on or after October 1, 1991, to (1) facilitate more accurate reporting by credit agencies on the full cost to the government in the budget for the year in which the programs made or guaranteed the loans so that executive branch and congressional decisionmakers might consider such costs when making budget decisions and (2) permit appropriate cost comparisons between direct and guaranteed credit programs and between credit and noncredit programs intended to achieve similar purposes. Guided by these legislative initiatives, since 1992, OMB has encouraged federal credit agencies to improve their credit programs’ financial and programmatic performance measures and to adopt a set of common performance measures for those programs. According to OMB and the Federal Credit Policy Working Group, common measures should help credit program managers and other decisionmakers assess how similar functions are performed and promote an atmosphere of cooperation and a sharing of ideas among agency officials on how to improve the performance of credit programs. In response to the increasing importance being placed on agencies’ integration of performance measurement with budgeting, management improvement, and overall agency accountability, the Working Group has focused since July 1995 on developing common performance measures for credit programs. To do so, the Working Group established a task force to develop measures for credit programs consistent with the Results Act and credit and financial management reform initiatives. In August 1997 we reported that agencies’ annual planning under the Results Act could be used as a vehicle for developing, where appropriate, common performance measures for permitting future comparisons of similar programs’ results and the methods those programs used to achieve those results. To meet our first objective—to identify goals and measures established by the selected credit programs that related to the programs’ intended purposes and determine whether the programs had set target levels of performance for assessing their progress in achieving their desired results—we compared the programs’ goals and measures to their respective intended purposes, as identified by the programs or their respective agencies. We interviewed agency officials about the programs’ intended purposes and asked those officials to comment on the relationships we identified between the programs’ goals and measures and intended purposes. To determine whether the programs had set target levels of performance for assessing their progress in achieving their desired results, we identified those measures for which the programs had either (1) identified fiscal year 1998 targets or (2) reported prior year baseline data for those measures and indicated how performance on those measures was to change (i.e., increase or decrease) in fiscal year 1998 relative to the baseline. The programs’ goals and performance measures that we used for our assessment were those established by the programs as of May 1, 1997, which, according to agency officials, were generally the same ones the programs submitted with their respective agencies’ fiscal year 1998 budget presentations to OMB and Congress. The programs also were proposing to include these goals and measures for their agencies’ fiscal year 1999 annual performance plans under the Results Act. Although we make observations about differences in goals and measures among the programs, our review did not address the reasonableness of the processes or methods the programs used to determine how to assess progress or establish target levels toward achieving the programs’ intended purposes; determine whether other, more appropriate measures existed; or evaluate the feasibility of the targets the programs established. To meet our second objective—to identify the challenges agency officials cited in developing performance information, including goals and measures, for the selected programs and any approaches those programs were taking to address those challenges—we asked agency officials responsible for and involved in the development of goals and measures for those programs to rate how great a challenge it was to perform each of 49 activities we identified as associated with developing performance information. Examples of these activities included “determining a realistic target level of performance for annual performance goals” and “developing measures for assessing the net effect of the program compared with what would have occurred in the absence of the program.” To identify these activities, we referred to key steps and practices identified in our Executive Guide: Effectively Implementing the Government Performance and Results Act and other work that we had under way assessing the challenges agencies were facing in implementing performance measurement. We asked officials to use a five-point scale to rate the 49 activities, ranging from “little to no” challenge to a “very great” challenge for the selected credit programs in their agencies. For purposes of this report, we refer to activities that any of the agency officials rated as a “great” or “very great” challenge as significantly challenging activities. We then interviewed agency officials about why they rated certain activities associated with developing performance information as significantly challenging. We analyzed their responses and related documentation to identify general challenges that led agency officials to report those activities as significantly challenging for the selected programs. To identify any approaches those programs were taking to address the challenges they have been facing, we talked with agency officials about such approaches and analyzed agency documentation. We also considered prior and ongoing work we have done on the efforts of VA, Education, USDA, and other credit agencies to implement various credit and financial management reforms. To meet our third objective—to describe the status of the Working Group’s effort to develop common performance measures for federal credit programs—we reviewed various documentation from OMB and members of the Working Group that described this effort and agency officials’ views about those measures. We also talked to OMB officials and members of the Working Group, including agency officials at those agencies administering the programs we selected for our review, to obtain their views of the common performance measures proposed. Our review did not address the reasonableness of the processes or methods the Working Group’s task force used in determining how to assess progress for federal credit programs or determine whether other measures existed that may be more appropriate. (For a more detailed discussion on our objectives, scope, and methodology, see app. II.) We did our work from September 1996 to December 1997, in Washington, D.C., in accordance with generally accepted government auditing standards. We requested comments on a draft of this report from the Director of OMB, the Secretaries of Education and Agriculture, and the Acting Secretary of VA or their designees. Comments were provided orally by designees of the four agencies, and those comments are discussed at the end of this report. In their efforts to implement the Results Act, the five credit programs established goals and performance measures that appeared to be generally related to the programs’ intended purposes. In some cases, the programs established goals or measures that addressed intermediate results that the programs expected to lead to their intended purposes.