    [Analytical Perspectives]
    [Performance and Management Assessments]
    [2. Budget and Performance Integration and the Program Assessment RatingTool (PART)]
    [From the U.S. Government Printing Office, www.gpo.gov]

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                      2. BUDGET AND PERFORMANCE INTEGRATION

                                I.  INTRODUCTION

      Good Government--a government fiscally responsible to the people--must
    have as one of its core purposes the achievement of results for the
    taxpayers. Taxpayers expect the Federal Government to implement programs
    that will ensure the Nation's security and provide critical services.
    Taxpayers want their money spent wisely and used to gain maximum
    benefit. Taxpayers have the right to hold the Federal Government
    accountable for its actions. To exercise this right, the taxpayers must
    have clear, candid, and up-to-date information about each program's
    successes and failures. For the second straight year, the Administration
    is providing this type of information to all Americans on
    ExpectMore.gov, a user-friendly government website that describes which
    programs are performing, which ones are not, and in both situations,
    what is being done to improve them. (Greater detail about ExpectMore.gov
    will be provided in a subsequent section.)
      The Administration is making the Federal Government increasingly
    effective by making program budget decisions based on program
    performance. The objective of the President's Budget and Performance
    Integration (BPI) Initiative is to ensure that Federal dollars produce
    the greatest results. Under the BPI Initiative, agencies and OMB
    identify which programs work well, which are deficient, and what can be
    done to improve performance of each program. In some cases, the
    Administration may find it necessary to reallocate funding from less
    effective programs to more effective ones. The final decisions about the
    scope of programs and the size of program budgets are ultimately made
    jointly by the Congress and the President. The BPI Initiative provides
    information on program performance to help the Executive and Legislative
    branches make better, more informed decisions. Information about program
    performance is now readily available and accessible to the public on
    ExpectMore.gov.
      The BPI Initiative measures a program's success in two principal ways:
         Improved Program Performance: The initiative requires each
              agency to identify opportunities to improve program management
              and design, and then develop and implement clear, aggressive
              plans to get more for tax dollars every year. Agencies have
              ready access to program performance information by using the
              results of the Program Assessment Rating Tool (PART)
              assessments of each program, program evaluations,
              investigations, audits, and analyses from a variety of
              sources.
         Greater Investment in Successful Programs: Overall, there
              are now more program-funding needs and thus fewer resources to
              be allocated to each funded program. These scarce resources
              need to be allocated to programs that benefit the Nation most
              effectively and efficiently. Though performance is not the
              only factor used to decide the size of a program's budget,
              Congress and the President can utilize information about a
              program's effectiveness and efficiency in decision-making so
              that taxpayer dollars are invested in programs that provide
              the greatest return to the Nation. If poor performing programs
              are unable to demonstrate improved results, then their
              resources may be reallocated to programs that can demonstrate
              greater success and returns to the taxpayer.
      Currently, the BPI Initiative is showing great progress toward the
    first goal. Programs are becoming more efficient and more effective
    through implementation of meaningful improvement plans.
      Many programs are demonstrating improved results. For example:
        The Social Security Administration increased agency
              productivity by 13.1 percent since 2001 through increased use
              of information technology and improved business processes. SSA
              would have required $800 million more in 2006 to process the
              same work if productivity improvements had not been realized.
        In 2005, the Bureau of Prisons reduced the construction cost
              per bed in high security facilities, saving an estimated $54
              million.
        The Federal Transit Administration implemented its plan to
              process Formula Grants faster. In the past, the highest
              reported processing time for processing grants was 90 days.
              FTA now expects to process such grants within only 36 days.
      Agencies are identifying additional actions to improve the performance
    of each of their programs. All agencies, regardless of whether their
    programs perform poorly or well, strive for increased program
    performance each year.
      Progress toward the second goal of improving resource allocation has
    been slow, but this year, the administration had greater success. We
    have been successful in terminating some low-performing programs and
    better at targeting resources to well-performing programs. In 2006,
    seven programs were terminated, saving $230 million. Four programs were
    reduced, saving $300 million. Though no decision is based purely on
    performance, overall, high performing programs received larger funding
    increases than those that did not perform as well.

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        II.  HOW THE BUDGET AND PERFORMANCE INTEGRATION INITIATIVE WORKS

      Several aspects of the Budget Performance Integration (BPI) Initiative
    are designed to maximize program performance. They include:
        Assessment of performance with the PART (Program Assessment
              Rating Tool);
        Publishing a Scorecard to hold agencies accountable for
              managing for results, addressing PART findings, and
              implementing follow-up actions;
        Broadcasting results to the public on ExpectMore.gov; and
        Facilitating program improvement through interagency
              collaboration and cooperation.

     Comprehensive Assessment with the Program Assessment Rating Tool (PART)

      How do we ensure that Federal programs are improving every year?
    First, we assess their current performance. In order to improve a
    program's outcomes, it is critical to have a good understanding of how
    the program is currently performing. To date, we have assessed the
    performance of nearly 1,000 programs, comprising 96 percent of all
    Federal programs, using the PART.

                               History of the PART

      The Federal Government spends trillions of dollars on programs
    annually, but until the advent of the PART, there was not a uniform
    basis for assessing how well these programs actually work. For example,
    were the billions of taxpayer dollars the Federal Government spent on
    foster care actually preventing the maltreatment and abuse of children?
    Are Federal efforts to reduce air pollution successful? Previous
    administrations from President Johnson to President Clinton and Congress
    have grappled with this problem. Each prior administration has tried to
    come up with means by which government programs are measured for
    results. The most significant advance in bringing accountability to
    government programs was the Government Performance and Results Act of
    1993 (GPRA). This law requires Federal agencies to identify both annual
    and long-term goals and collect and report performance data. For the
    first time, agencies were required to explicitly identify measures and
    goals for judging the performance of each of their programs and to
    collect information on an annual basis in order to determine if they
    were meeting those goals.
      This Administration built upon GPRA requirements by creating the PART
    (Program Assessment Rating Tools), an objective, evidence-based and
    easy-to-understand questionnaire about program design, planning,
    management, and performance. Objectivity is paramount to a PART rating.
    For example, when the development of the PART began in 2002, the first
    draft included a question relating to whether a particular program
    served an appropriate federal role. Because many people believed that
    the answer to that question would vary depending on the reviewer's
    philosophical outlook, the question was removed.
      Public and private sector entities have reviewed the PART. Private
    sector reviewers have praised the PART assessment process for its
    transparency and objectivity and have also raised concerns that OMB has
    striven to address. For instance, some reviewers found assessments of
    different programs lack consistency in the answers to the same
    questions. OMB now audits all draft assessments to correct any obvious
    inconsistencies. Reviewers also found that agencies did not always agree
    with the final assessment of their programs. Agencies can now appeal to
    a high level subcommittee of the President's Management Council to
    dispute answers with which they disagree. To address concerns that OMB
    and agencies were not doing enough to involve Congress in the assessment
    process, agencies are now required to brief and consult their
    Congressional appropriators, authorizers, and overseers before the
    annual assessments begin.
      The accompanying timeline provides a history of the development of the
    PART.

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    ------------------------------------------------------------------------

                                          What is the PART and How is it Used?

    The PART helps assess the management and performance of individual programs. With the PART, agencies and OMB
     evaluate a program's purpose, design, planning, management, results, and accountability to determine its
     overall effectiveness. Agencies then identify and complete follow-up actions to improve program results.

    To reflect the fact that Federal programs deliver goods and services using different mechanisms, the PART is
     customized by program type. The seven PART types are: Direct Federal, Competitive Grant, Block/Formula Grant,
     Research and Development, Capital Assets and Service Acquisition, Credit, and Regulatory. The PART types apply
     to both discretionary and mandatory programs. ExpectMore.gov also classifies each program by its specific
     program area (such as environment, transportation, education, etc.) to facilitate comparison so we can
     accelerate the improved performance of programs with similar missions.

    Each PART includes 25 basic questions and there are additional questions tailored to the different program
     types. The questions are divided into four sections. The first section of questions gauges whether a program
     has a clear purpose and is well designed to achieve its objectives. The second section evaluates strategic
     planning, and weighs whether the agency establishes outcome-oriented annual and long-term goals for its
     programs. The third section rates the management of an agency's program, including the quality of efforts to
     improve efficiency. The fourth section assesses the results programs can report with accuracy and consistency.

    The answers to questions in each of the four sections result in a numerical score for each section from 0 to 100
     (100 being the best score). Because reporting a single weighted numerical rating could suggest false precision,
     or draw attention away from the very areas most in need of improvement, numerical scores are combined and
     translated into qualitative ratings. The bands and associated ratings are as follows:

    ------------------------------------------------------------------------
                                Rating                               Range
    ------------------------------------------------------------------------
    Effective....................................................     85-100

    Moderately Effective.........................................      70-84

    Adequate.....................................................      50-69

    Ineffective..................................................       0-49
    ------------------------------------------------------------------------

    Regardless of overall score, programs that do not have acceptable performance measures or have not yet collected
     performance data generally receive a rating of ``Results Not Demonstrated.'' This rating suggests that not
     enough information and data are available to make an informed determination about whether a program is
     achieving results.

    PART ratings do not result in automatic decisions about funding. Clearly, over time, funding should be targeted
     to programs that can prove they achieve measurable results. In some cases, a PART rating of ``Ineffective'' or
     ``Results Not Demonstrated'' may suggest that greater funding is necessary to overcome identified shortcomings,
     while a funding decrease may be proposed for a program rated ``Effective'' if it is not a priority or has
     completed its mission. However, most of the time, an ``Effective'' rating is an indication that the program is
     using its funding well and that major changes are not needed.

    ------------------------------------------------------------------------

                Publish a Scorecard To Hold Agencies Accountable

      Agencies are achieving greater results with the help of the habits and
    disciplines established through the BPI Initiative. These agencies
    recognize that the PART can be a useful tool to drive improvement in the
    performance of their programs.
      Agency success is judged by clear, Government-wide goals or standards
    for Budget and Performance Integration. Agencies have developed and are
    implementing detailed, aggressive action plans to achieve these goals.
    Most importantly, agencies are held publicly accountable for adopting
    these disciplines. To meet the Standards for Success for the BPI
    Initiative, an agency must:
        Demonstrate that senior agency managers meet at least
              quarterly to examine reports that integrate financial and
              performance information that covers all major responsibilities
              of the Department;
        Have strategic plans that contain a limited number of
              outcome-oriented goals and objectives. Annual budget and
              performance documents incorporate measures identified in the
              PART and focus on the information used in the senior
              management report described in the first criterion;
        Report the full cost of achieving performance goals
              accurately in budget and performance documents and accurately
              estimate the marginal cost of changing performance goals;

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        Have at least one efficiency measure for all PARTed
              programs;
        Use PART evaluations to direct program improvements and hold
              managers accountable for those improvements, and PART findings
              and performance information are used consistently to justify
              funding requests, management actions, and legislative
              proposals; and
        Have less than 10 percent of agency programs receive a
              Results Not Demonstrated rating for two years in a row.
       Each quarter, agencies receive two ratings. First, they are rated on
    their status in achieving the overall goals for each initiative. They
    are then given a green, yellow or red rating to clearly announce their
    performance. Green status is for success in achieving each of the
    criteria listed earlier; yellow is for an intermediate level of
    performance; and red is for unsatisfactory performance.
      Second, agency progress toward reaching the Budget and Performance
    Integration standards is assessed separately. This is reviewed on a
    case-by-case basis against the work plan and related time lines
    established for each agency. Progress is also given a color rating.
    Green is given when implementation is proceeding according to plans
    agreed upon with the agencies; Yellow for when some slippage or other
    issues require adjustment by the agency in order to achieve the
    initiative objectives on a timely basis; and Red when the Initiative is
    in serious jeopardy. In this case, it is unlikely to realize objectives
    absent significant management intervention.
      As of December 31, 2006, fifteen agencies achieved green status on the
    Budget and Performance Integration Initiative Scorecard. The agencies at
    green are:
    1.          Department of Agriculture
    2.          Department of Commerce
    3.          Department of Education
    4.          Department of Energy
    5.          Department of Justice
    6.          Department of Labor
    7.          Department of Transportation
    8.          Department of State
    9.          General Services Administration
    10.         National Aeronautics and Space Administration
    11.         National Science Foundation
    12.         Small Business Administration
    13.         Smithsonian
    14.         Social Security Administration
    15.         U.S. Agency for International Development
      The Scorecard is an effective accountability tool to ensure agencies
    manage the performance of their programs. Although a scorecard rating is
    not directly linked to any specific consequences, it is quickly
    understood at the highest levels of the Administration as an indicator
    of an agency's strength or weakness.
      The Government-wide scorecard reporting on individual agency progress
    is published quarterly at www.results.gov/agenda/scorecard.html.

                       Broadcast Results on ExpectMore.gov

       ExpectMore.gov provides Americans with candid information about which
    programs work, which do not, and what all programs are doing to get
    better every year.
      Up until the launch of ExpectMore.gov last year, Americans had limited
    access to information on how well the Federal Government performed. Now,
    every American can see for themselves how their government is
    performing. In many cases, the Federal Government performs well. In some
    cases, it performs better than the private sector.
       ExpectMore.gov contains PART summaries for all programs that have
    been assessed to date. The site provides the program information that a
    concerned citizen would need to assess a program's performance. Each
    assessment includes a brief description of the program's purpose, its
    overall rating, some highlights about its performance and the steps it
    will take to improve in the future. For individuals interested in more
    information, the site also provides links to the detailed program
    assessment, as well as that program's website and the assessment
    summaries of other similar programs. The detailed PART assessment
    includes the answer to each PART question with an explanation and
    supporting evidence. It also includes the performance measures for the
    program along with current performance information. In addition, there
    is an update on the status of follow-up actions to improve program
    performance.
      A visitor to the site may find, at least initially, programs are not
    performing as well as they should or program improvement plans are not
    sufficiently ambitious. We expect this site to help change that. The
    website has a variety of benefits, including:
        Increased public attention to performance;
        Greater scrutiny of agency action (or inaction) to improve
              program results:
         --Improvement plans will be transparent
         --Statements about goals and achievements will be clearer; and
        Demand for better quality and more timely performance data.

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                   Implement Inter-Agency Program Improvement

      The Administration continues to look for new ways to improve the
    performance of programs with similar purposes or designs by using the
    PART to analyze performance across agencies (i.e., cross-cutting
    analysis) and State and local levels. Cross-cutting analysis can improve
    coordination and communication by getting managers from multiple
    agencies to agree to a common set of goals and placing the focus on
    quantifiable results. This type of analysis breaks down barriers across
    the Federal, State, and local levels so that all entities work toward
    the same goal. Only topics that are expected to yield meaningful results
    are selected for cross-cutting analyses. This past year the
    Administration completed cross-cutting analysis of the government's math
    and science programs as part of the ACC (Academic Competitiveness
    Council).
      Academic Competitiveness Council. The ACC set out to identify all
    Federal education programs with a science, technology, engineering, and
    math focus; clarify the goals of these programs; identify the extent to
    which the programs have undergone independent, external evaluation based
    on sound, scientific principles and have quantitative evidence of
    achieving their goals; and identify better ways to measure and evaluate
    these programs and efficiently integrate and coordinate Federal spending
    on Science, Technology, Engineering, and Mathematics (STEM) education
    programs.
      The ACC first identified 109 STEM education programs funded in 2006
    for a total of $3.13 billion. Within that total, elementary and
    secondary programs received approximately $640 million (20 percent of
    the total), postsecondary programs, including graduate and postdoctoral
    programs, nearly $2.4 billion (76 percent) and informal education and
    outreach programs close to $103 million (4 percent). The group agreed on
    common goals for the programs, but found that few had been rigorously
    evaluated and determined to be effective. These programs, like many
    managed by the Federal Government, must do more to gather and report
    evidence of what activities are most effective at achieving common
    goals.

                                  III.  RESULTS

      As mentioned above, the BPI Initiative measures its success according
    to two measures:
        Improved Program Performance; and
        Greater Investment in Successful Programs
      There has been greater success in achieving the goals of the first
    measure. The BPI Initiative has caused agencies to think more
    systematically about how they measure and improve program performance.
    Though there are many factors that impact program performance, it is
    clear that the BPI Initiative has framed the discussion around results.
    Agencies have developed ways to measure their efficiency so they can
    figure out how to achieve more with Americans' tax dollars.
      This marks the fifth year that the PART was used to (1) assess program
    performance, (2) take steps to improve program performance, and (3) help
    link performance to budget decisions. To date, the Administration has
    assessed nearly 1000 programs, representing approximately 96 percent of
    the Federal budget. Over the next year, the Administration will use the
    PART to assess the performance and management of most of the remaining
    Federal programs.

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      With the help of the PART, we have improved program performance and
    transparency. There has been a substantial increase in the total number
    of programs rated either ``Effective'', ``Moderately Effective'', or
    ``Adequate''. This increase came from both re-assessments and newly
    PARTed programs. The chart below shows the percentage of programs by
    ratings category.

      These results demonstrate that the BPI Initiative has been very
    successful in focusing Agencies' attention on program performance. For
    example, approximately:
        14 percent of programs improved their performance rating
              overall;
        80 percent of programs have acceptable performance measures;
        74 percent have achieved their long-term goals and 80
              percent have achieved their annual goals; and
        90 percent of programs have efficiency measures and about
              half of them have achieved their efficiency targets.
      Unfortunately, there has not been a similar level of accomplishment in
    the second measure: Greater Investment in Successful Programs. Though
    congressional use of performance information has been limited, most in
    the Congress are aware of the PART. This topic was discussed extensively
    in a Government Accountability Office (GAO) report issued last year.
      GAO recommends that OMB select PART reassessments and crosscutting
    reviews based on factors that include the relative priorities, costs,
    and risks associated with clusters of related programs, and reflect
    congressional input. Additionally, GAO recommended OMB solicit
    congressional views on the performance issues and program areas most in
    need of review; the most useful performance data and the presentation of
    those data. As mentioned above, OMB is using the PART to improve the
    performance of similar programs in areas that are expected to yield
    meaningful results. OMB and agencies are also actively soliciting the
    views of the Congress in PART assessments, on improvement plans, and
    oversight efforts.

                                 IV.  NEXT STEPS

      The BPI Initiative has identified several activities to improve its
    effectiveness over the coming year:
       Ensure Plans are Aggressive and Result in Improved Performance.--
    Rigorous follow-up on recommendations from the PART will accelerate
    improvements in the performance of Federal programs. This will ensure
    that the hard work done through the PART produces performance and
    management improvements. Additionally, implementation of these plans
    must be tracked and reported.
       Expand Cross-Cutting Analyses.--Use the PART to facilitate cross-
    cutting analysis where there is a higher return than approaching
    programs individually. The goal of these efforts is to increase
    efficiency and save dollars, building on the success of previous cross-
    cutting analyses. Congressional guidance will be a factor in

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    choosing topics for the next group of cross-cutting analyses.
       Maximize ExpectMore.gov Impact.--The Federal Government should be
    accountable to the public for its performance. This web-based tool
    provides candid information on how programs are performing and what they
    are doing to improve. The BPI Initiative will work to increase the reach
    and impact of this valuable information to improve program performance
    and accountability for results.
      Note.--A table with summary information for all programs that have
    been reviewed using the Program Assessment Rating Tool (PART) is
    available at: www.whitehouse.gov/omb/budget/fy2008/sheets/part.pdf. This
    table provides program ratings, section scores, funding levels, and
    other information. Additionally, a complete data file and data model of
    all assessments on ExpectMore.gov is available at: www.whitehouse.gov/
    omb/expectmore/whatsnew.htm. This is a comma-separated values file that
    academics and researchers can use to analyze performance data.