Mr. Chairman and Members of the Committee: I am pleased to be here today to assist the Committee in its review of the draft strategic plans of the five federal regulators of depository institutions. These consultations are a step in implementing the Government Performance and Results Act of 1993 (GPRA or Results Act) whose purpose is to reduce the cost and improve the performance of the federal government. Mr. Chairman, you asked that we provide analyses and observations about the agencies’ draft strategic plans, including the strengths and weaknesses of each plan, the extent to which the agencies are experiencing particular challenges that face regulatory agencies in their attempts to measure performance, and any suggestions we might have for improvements in these draft plans before they are finalized and submitted to Congress in September. As its title indicates, the Results Act’s focus is on results. In crafting the Act, Congress recognized that congressional and executive branch decisionmaking had been severely handicapped in many agencies by the absence of the basic underpinnings of well-managed organizations. These agencies lacked clear missions; results-oriented performance goals; well-conceived agency strategies to meet those goals; and accurate, reliable, and timely program performance and cost information to measure progress in achieving program results. In recent years, Congress has established a statutory framework for addressing these long-standing challenges and for helping Congress and the executive branch make the difficult trade-offs that are necessary for effective policymaking.Improving management in the federal sector will not be easy, but the Results Act can assist in accomplishing this task. period of 1997 through 2002. The Results Act requires agencies to consult with Congress and solicit the input of others as they develop these strategic plans. Beginning with fiscal year 1999, executive agencies are then to use their strategic plans to prepare annual performance plans. These performance plans are to include annual goals linked to the activities displayed in budget presentations as well as to the indicators the agency will use to measure performance against the results-oriented goals. Agencies are subsequently to report each year on the extent to which these goals were met, provide an explanation if these goals were not met, and present the actions needed to meet any unmet goals. Congress can use the Results Act to provide the vital information that it needs to better make decisions. The congressional consultations on agencies’ strategic plans provide an important opportunity for Congress and the executive branch to work together to ensure that agencies’ missions are focused, goals are results-oriented and clearly established, and strategies and funding expectations are appropriate and reasonable. One of the reasons we are here today is to provide our perspective on these plans. We note that, although these strategic plans are not due until September, each agency we reviewed had prepared a draft plan. Overall, we found that each agency had made an effort to adhere to the Results Act, and we recognize that agency officials are still in the process of updating and revising the draft plans. addressed major management challenges and included indications of interagency coordination. On the basis of our review of the draft plans, we found that each plan contained most of the components required by the Results Act. Three of the draft plans had all six components, and two draft plans had five of the components. In general, the draft plans reflected the statutory authorities and responsibilities of the federal regulators with respect to the institutions and matters within their jurisdictions. On the whole, the draft plans showed little evidence of interagency coordination. Our analysis of individual plan components showed that the draft plans had mission statements that broadly defined the purpose of the agency and goals and objectives that were somewhat results-oriented and appropriate to the agency’s mission. The content of other components varied across agencies. For example, some agencies had useful discussions of approaches and strategies to achieve the goals and objectives, while others could have benefitted from more discussion of the resources needed. Each agency discussed key external factors but only one discussed how those factors would affect the achievement of its goals. None of the plans discussed how the external factors would be addressed. In general, two sections were most in need of improvement. Each agency could strengthen its section on the relationship between strategic and annual goals by explicitly discussing the link between these two types of goals. Also, each agency could improve its section on how program evaluations were used and a schedule for future evaluations. Due to the complex set of factors that determine regulatory outcomes, measuring the impact of a regulatory agency’s programs will be a difficult challenge going forward. However, the use of program evaluations both to derive results-oriented goals and to measure the extent those goals are achieved is a key part of the process. components, we used our May 1997 guidance for congressional review of the plans as a tool. To determine whether the draft plan contained information on interagency coordination and addressed management problems we had previously identified, we relied on our general knowledge of each agency’s operations and programs and the results of our previous work. The requirements of the Results Act and OMB guidance indicate that the following factors should be addressed within the six components of strategic plans: (1) The comprehensive mission statement should be brief and define the basic purpose of the agency and focus on core programs and activities. (2) The description of general goals and objectives should contain general goals and objectives for the major functions and operations of the agency, elaborate on how the agency is carrying out its mission, contain a number of outcome-type goals, and be stated in a manner that allows a future assessment to be made on whether the goals are being achieved. (3) The description of how the general goals and objectives will be achieved is to include discussion of operational processes, staff skills, and technologies as well as the human, capital, information, and other resources that are needed to achieve the goals and objectives and outline how the agency will communicate strategic goals throughout the organization and hold managers and staff accountable for achieving these goals. (4) A strategic plan is to describe how the performance goals included in the agency’s annual performance plans are related to the goals and objectives in its strategic plan. (5) A strategic plan is to identify and discuss key factors external to the agency and beyond its control, which could occur during the time periods covered by the plan and significantly affect the agency’s achievement of its strategic goals. The plan is to briefly describe each key external factor, indicate its link with a particular strategic goal or goals, and describe how the factor could affect the achievement of the goals. (6) Program evaluations—objective and formal assessments of the results, impact, or effects of a program or policy—are to include assessments of the implementation and results of programs, operating policies, and practices. The plan’s program evaluation section should briefly describe program evaluations that were used in preparing the strategic plan; evaluation methodologies, scopes, and issues addressed; and a schedule for future evaluations. As shown in figure 1, each of the agencies’ draft plans that we reviewed contained most of the six required components of the Results Act. Our assessment of whether the plans’ components met the requirements of the Act follows the figure. comment on whether the documents had outcome-oriented measures and performance goals or whether they could measure achievement of intended objectives. The draft plan did not include a schedule for future program evaluations, outlines of methodologies used, descriptions of evaluation scope, or details about particular issues to be addressed. merger of the Bank Insurance Fund and the Savings Association Insurance Fund and the resolution of differences in statutory and regulatory rules governing banking and thrift industries. Also, FDIC’s draft plan reviewed several internal factors, including those related to financial accountability, organizational, and human resource issues. However, the link between key internal and external factors and particular goals and objectives was not described, and it was unclear whether and how key factors would influence goal achievement. FDIC’s draft plan did not describe how program evaluations were used and a schedule for future evaluations. FDIC cited a quarterly performance reporting process, GAO and Inspector General reports, cost-benefit analyses, surveys of stakeholders, and other processes. However, the extent to which these reports and processes had been or would be used to develop or revise goals and objectives is unclear. Also, although the plan made reference to quarterly and ongoing program evaluation, the draft plan did not include a schedule for future program evaluations. OCC’s draft plan discussed all six components required by the Results Act. The time frame covered by OCC’s draft plan was from 1997 to 2002. The draft plan’s mission statement broadly defined the basic purpose of the agency, which is to charter, regulate, and supervise national banks. The goals and objectives were results-oriented and seemed appropriate to meet the agency’s mission. For instance, one of OCC’s goals was to improve the efficiency of bank supervision and reduce the burden on banks by streamlining supervisory procedures and regulations. The approaches and strategies to achieve the goals and objectives, while not under the section labeled “description of how general goals and objectives are to be achieved,” were discussed to some extent in the draft plan under the seven objectives that OCC designed to meet its four goals. The objectives generally described the processes needed to meet goals. However, most of the objectives did not include a description of the resources OCC will need to meet the objectives and goals. The draft plan outlined performance goals to be included in the annual performance plan as an effort to address the component relationship between strategic goals and annual performance goals. For instance, the draft plan listed some output-related performance measures. However, the plan did not relate these measures to the goals. In addition, the plan lacked specific performance measures for some of the goals, such as promoting competition and ensuring fair access to financial services. The draft plan identified some key external factors that could affect the achievement of the goals and objectives, and also provided a link as to how these factors might affect the achievement of the goals and objectives. These factors included the following: industry consolidation, electronic money and banking activities, and competitive environment changes.