AOC is responsible for the maintenance, renovation, and new construction of the buildings and grounds primarily located within the Capitol Hill complex. Organizationally, AOC consists of a centralized staff that performs administrative functions and separate “jurisdictions” responsible for the day-to-day operations at the U.S. Capitol Building, the Senate Office Buildings, the House Office Buildings, the Library of Congress Buildings and Grounds, the Supreme Court Buildings and Grounds, the Capitol Grounds, the Capitol Power Plant, and the Botanic Garden. The historic nature and high profile of many of these buildings creates a complex environment in which to carry out AOC’s mission. AOC must perform its duties in an environment that requires balancing the divergent needs of congressional leadership, committees, individual members of Congress, congressional staffs, and the visiting public. The challenges of operating in this environment were complicated by the events of September 11, 2001, and the resulting need for increased security. We issued a report in January 2003 that contained 35 recommendations to assist AOC in establishing a strategic management and accountability framework, including strong management infrastructure and controls, to drive its agency transformation effort, and to address long-standing program issues. As a part of ongoing work to monitor AOC’s efforts to implement the recommendations, we issued a report in January 2004 that covered the agency’s progress from January 18, 2003, through November 30, 2003. In our January 2004 report, we reiterated that many of AOC’s management problems are long-standing and that organizational transformation would take time to accomplish. Not surprisingly, AOC’s efforts to address the 35 recommendations were, at that time, very much a work in progress. We highlighted the agency’s first steps to develop a management and accountability framework, including the issuance of a draft strategic plan and efforts to strengthen individual accountability for goals. We noted, however, that additional steps were needed to enhance communications with congressional and other stakeholders and employees. In addition, we found that AOC began to draft new human capital policies and procedures and developed three broad-based action plans to help institutionalize financial management best practices, although many of the actions were not scheduled for completion until 2007. We also reported that AOC was making progress developing an agencywide approach to information technology (IT) management, although additional steps were needed to ensure that, for example, mature information security management, investment management, and enterprise architecture (EA) management processes are implemented. In addition, we found that AOC was beginning to address worker safety concerns by developing a hazard assessment and control policy, although it is not expected to be fully implemented until May 2006; was taking steps to establish a project prioritization framework for better management and accountability; and was progressing toward adopting a more strategic approach to recycling. Overall, we concluded that AOC fulfilled three recommendations, and we made four additional recommendations—which brought to 36 the number of open recommendations. This report is part of our effort under a congressional mandate to monitor AOC’s progress to establish a strategic management and accountability framework, improve its management infrastructure and internal control, and address long-standing areas of concern. Our first objective was to assess AOC’s progress over the 6-month period from December 1, 2003, through May 31, 2004, on eight key issues that deserve near-term attention and focus: (1) stakeholder involvement, (2) employee communications, (3) auditable financial statements and related internal controls, (4) financial reporting for operating units and cost accounting, (5) information security management, (6) worker safety performance measures, (7) Capitol complex master planning, and (8) strategic management of recycling. Our second objective, which was mandated by the Consolidated Appropriations Resolution, 2003 (Public Law 108-7), was to assess AOC’s COO action plan that was issued in December 2003. To address our first objective, we collected documentation to determine AOC’s progress on addressing each key issue and the 16 corresponding prior recommendations. For example, we reviewed documents such as AOC’s 5-year strategic and annual performance plans; strategic communications plan; process manuals; funds control administration order; policy for inventory management; security risk management policy; information security training, education, and awareness policy; IT security metrics policy; inspection, audit, and evaluation policy; and updated occupational safety and health program plan. We also interviewed AOC officials responsible for implementing the 16 recommendations and other related improvement efforts under way at AOC. To address our second objective, we reviewed and analyzed several documents, including (1) the requirements of the Deputy Architect/Chief Operating Officer Action Plan described in the legislation; (2) the Report to the Congress from the Deputy Architect/Chief Operating Officer, dated December 22, 2003; (3) the Deputy Architect/Chief Operating Officer Action Plan, dated December 22, 2003; and (4) the Architect of the Capitol Strategic Plan, dated December 15, 2003. We conducted our work in Washington, D.C., from April 2004 through July 2004 in accordance with generally accepted government auditing standards. AOC must perform its duties in an environment that requires balancing the divergent needs of congressional leadership, committees, individual members of Congress, congressional staffs, and the visiting public. The challenges of operating in this environment were complicated by the events of September 11, 2001, and the resulting need for increased security. As we stated in our January 2003 and January 2004 reports, it is critical for AOC to engage Congress and other stakeholders to ensure that its strategic and other planning efforts fully consider the interests and expectations of these stakeholders. Successful stakeholder involvement requires continuously engaging Congress and other stakeholders to obtain their input and feedback for organizational or operational changes at AOC, ensuring that AOC’s finite resources are efficiently targeted at the highest project priorities, and fostering a basic understanding with Congress and other stakeholders of how to balance competing demands. Successful stakeholder involvement also includes improving AOC’s accountability reporting, which helps communicate what AOC has accomplished and its plan for continued progress. In our January 2003 report, we made three recommendations that would help AOC improve its relations with Congress and other stakeholders: Improve strategic planning and organizational alignment by involving key congressional and other external stakeholders in AOC’s strategic planning efforts and in any organizational changes that may result from these efforts. Develop a comprehensive strategy to improve internal and external communications by improving annual accountability reporting through annual performance planning and reporting. Develop a comprehensive strategy to improve internal and external communications by completing the development of congressional protocols by involving stakeholders. As noted in our January 2004 report, AOC improved its strategic planning process and provided more specificity to its strategic goals and objectives, as well as developed milestone dates and actions to assist AOC in monitoring its progress. AOC also made progress in improving annual accountability reporting by implementing a strategic management framework, which includes issuing a strategic plan every 2 years, developing an annual performance plan, and developing an annual performance report that discusses how AOC is progressing on meeting its goals, as well as holding midyear status briefings. An AOC official stated the agency recognizes that the next step in the strategic planning process is to more fully incorporate outcome- and performance-based measures into the agency’s strategic and performance plans, and AOC has recently developed a statement of work to seek assistance in developing both quantitative and qualitative performance measures to demonstrate progress toward its strategic goals and objectives. In addition, we noted that AOC was partially addressing the development of congressional protocols. To further assist these efforts, we made an additional recommendation for AOC to conduct a pilot of its congressional protocols in one or more of its jurisdictions to determine how well its protocols would work in addressing customer requests for service while balancing the needs of multiple requests with the requirements of the strategic plan and corresponding project priorities of the agency. During the 6-month review period, AOC did not fully engage its congressional and other stakeholders. For example, AOC has not reached agreement with Congress on how best to develop a clear, transparent, and documented understanding of how AOC sets project priorities and how progress will be assessed. In addition, as detailed in other sections of this report, AOC needs to expand Congress’ involvement in the development of the Capitol complex master plan and the mission and goals for the agency’s recycling program. AOC did take some steps to inform these stakeholders by delivering planning documents to Congress, responding to requests for information, and attending monthly or biweekly meetings with congressional stakeholders. AOC officials stated that they delivered AOC’s final strategic plan, performance plan, and COO action plan to congressional stakeholders in December 2003 to inform them of planned activities. (See our assessment of the COO action plan below.) AOC also generated a detailed report, at the request of its congressional stakeholders, that outlined AOC’s progress in implementing our recommendations. Furthermore, AOC did take some steps to communicate with congressional and other stakeholders by attending monthly meetings held by House leadership; biweekly meetings with other House stakeholders, such as the House Clerk and Sergeant At Arms; monthly meetings with the Senate Rules Committee; and bimonthly meetings with the Senate Sergeant At Arms. AOC is also preparing to issue its third building services customer satisfaction survey in June 2004 to measure the agency’s performance. However, it has yet to release the results of the 2003 survey, which was originally scheduled for December 2003, because it has yet to be approved by several AOC jurisdictions. As we reported in January 2003, AOC drafted an initial set of congressional protocols to help AOC work with its congressional customers using clearly defined, consistently applied, and transparent policies and procedures. Since then, AOC completed draft congressional protocols and submitted them to key congressional stakeholders. An AOC official stated that, based on stakeholder feedback, the protocols are not viable because congressional stakeholders do not believe they are applicable to the operation of and services conducted by AOC.