Major Management Challenges and Program Risks: A Governmentwide
Perspective (Letter Report, 01/01/2001, GAO/GAO-01-241).

This report, part of GAO's high risk series, discusses the major
management challenges and program risks facing the federal government.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-241
     TITLE:  Major Management Challenges and Program Risks: A
	     Governmentwide Perspective
      DATE:  01/01/2001
   SUBJECT:  Risk management
	     Accountability
IDENTIFIER:  High Risk Series 2001
	     GAO High Risk Program

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GAO-01-241

Performance and Accountability Series

January 2001 Major Management Challenges and Program Risks

A Governmentwide Perspective

GAO- 01- 241

Lett er

January 2001 The President of the Senate The Speaker of the House of
Representatives

This report addresses a range of governmentwide challenges and opportunities
to enhance the performance and accountability of the federal government and
position our country for the future. It is intended to help the new Congress
and administration

consider the actions needed to support the transition to a more results-
oriented and accountable federal government. It should also stimulate
dialogue about a number of long- term fiscal and policy challenges facing
the nation.

This report is part of a special series, first issued in January 1999,
entitled the Performance and Accountability Series: Major Management
Challenges

and Program Risks. In the 1999 series, GAO advised Congress that it planned
to reassess the methodologies and criteria used to determine which federal
government programs and functions should be highlighted and designated as
“high risk.” GAO

completed the assessment, considered comments provided on a publicly
available exposure draft, and published its guidance document, Determining
Performance and Accountability Challenges and High Risks (GAO- 01- 159SP),
in November 2000. The criteria and methodology described in that document
were used as the basis for designating certain programs and functions as
high- risk in the series.

In addition to this governmentwide perspective on performance and
accountability challenges, the 2001 Performance and Accountability Series
contains separate reports on 21 agencies- covering each cabinet

department, most major independent agencies, and the U. S. Postal Service.
As a companion volume to this series, GAO is issuing an update on those
major government operations and programs that its work identified as
“high risk” because of their greater vulnerabilities to waste,
fraud, abuse, and mismanagement. David M. Walker

Comptroller General of the United States

Major Management Challenges and Program Risks: A Governmentwide Perspective

As our nation moves into the 21st century, the 107th Congress and the new
administration face an array of challenges and opportunities to enhance the
performance and accountability of the federal government and position our
country for the future. Increased globalization, rapid technological
advances, shifting demographics, changing security threats, and various
quality of life considerations are prompting

fundamental changes in the environment in which the government operates.
These trends are placing a premium on increasing strategic planning, using
integrated approaches, enhancing results- orientation, improving
responsiveness, and ensuring accountability within the federal government.

At the same time, the current projected trend of budget surpluses presents
both an opportunity and an obligation for the legislative and executive
branches of government to look at a range of fundamental policy and fiscal
issues in advance of the forthcoming demographic tidal wave associated with
the retirement of the “baby boom” generation. This includes
comprehensively reassessing what government does and how government does
business in the 21st century. It also includes

focusing on the longer term fiscal implications of current programs and
policies and a range of existing and emerging major management challenges
and program risks confronting the federal government. We have many
initiatives under way to help Congress and the executive branch meet the
challenges to the well- being and financial security of the American people,
address security threats facing our nation, and deal with the issues raised
by global interdependence. 1 This special performance and accountability
series is devoted to framing the actions needed to support the

1 GAO Strategic Plan 2000- 2005, Serving the Congress and the Nation.

transition to a more results- oriented and accountable federal government.
It also is intended to stimulate dialogue on seizing the opportunity to
reassess government programs and make decisions with an eye toward a number
of long- term fiscal and policy challenges. With regard to improving
government performance and accountability, the main actions needed to shape
an efficient and effective federal government for the 21st

century are as follows: ? First, give high priority to fully implementing
existing legislative reforms essential to modernizing performance
management, financial accountability, and information technology practices.

? Second, address the urgent need to revamp the federal government's entire
strategic approach to human capital (people) management before the

erosion of government's capacity to perform more dramatically undermines
agencies' abilities to efficiently and effectively serve the American
people. ? Third, continue to attack government activities at

particular risk of fraud, waste, abuse, and mismanagement in order to save
billions of dollars, improve services and programs, and strengthen public
confidence and trust in government.

? Fourth, confront critical challenges facing individual departments and
agencies in carrying out their missions. ? Fifth, pursue organizational
approaches that

recognize the reality of evolving global, technological, workforce, and
other dynamics and needs associated with a transition to a knowledgebased
economy. Beyond addressing this fundamental management foundation, however,
lie certain added dimensions to

the challenge of governing in the 21st century. Among these are: ? promoting
a more sustainable longer term budget and economic outlook to help safeguard
the ability of future generations to afford the commitments of today and
make decisions regarding the role of the

federal government in the future given our aging society; and ? taking
advantage of the window of opportunity presented by the current improvement
in the federal government's financial position not only to reassess fiscal
policies, but also to (1) review options for improving the efficiency and
effectiveness of individual federal programs, (2) thoroughly reassess

what government does and how government does business, and (3) revisit
targeting approaches that distribute assistance to beneficiaries by
recognizing the differences between wants, needs, and affordability.
Finally, it is important to reach consensus on needed changes and forge
executive/ legislative partnerships to promote effective implementation of
agreed upon goals- both on the policy front and with regard to certain
management reforms that are central to strengthening the performance and
accountability of our federal government. For example, progress achieved to
date in improving financial and information management and a results-
oriented focus has only been attained through the use of a solid legislative
framework and concerted, sustained executive and congressional

attention. In this regard, congressional oversight is essential to further
progress. Now is the opportune time to review, revise, and reinvigorate the
oversight process to help address today's challenges and prepare our

country for tomorrow.

Build on Progress Over the last decade, Congress and the executive branch
Already Made in

have worked hard to implement a statutory framework Implementing a to
improve the performance and accountability of the Management executive
branch and to enhance executive branch and congressional decisionmaking. 2
This framework

Framework includes as its core elements

? results- oriented management legislation, especially the Government
Performance and Results Act (GPRA), which 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; ?
financial management reforms, including the Chief

Financial Officers (CFO) Act and related legislation, that have established
the foundation for the routine generation of timely, accurate, and useful
financial

and cost information crucial to informed decisionmaking, adequate
stewardship over valuable public resources, and basic accountability; ?
information technology (IT) reform legislation,

including the Paperwork Reduction and ClingerCohen Acts, which attempts to
ensure that agencies' information technology projects are implemented within
reasonable cost and time frames and that costly investments contribute to
tangible improvements in performance.

As a result of this framework, the last few years have seen substantial
progress in establishing the basic infrastructure needed to create high-
performing federal organizations. However, much work remains before this
framework is effectively implemented across the government. Agencies are
still in the early stages of 2 Managing for Results: The Statutory Framework
for Performance- Based Management and Accountability (GAO/ GGD/ AIMD- 98-
52, Jan.

28, 1998).

transforming their organizational cultures to improve decisionmaking and
strengthen performance and accountability. This transformation is not an
easy one. It will require investments of time and resources as well as
sustained commitment and attention from key leaders

within the executive and legislative branches of government. However, the
return on these investments is potentially very great. These reforms, with
their focus on results- oriented and accountability- based management
approaches, are helping to build a government that is better equipped to
deliver economical, efficient, and effective programs and services to the
American people. Strong and consistent messages of support from the new
administration and continued active support by Congress are critical if the
government is to build on the important progress that it has already made.
Our thoughts on how to do this follow. Results- Oriented In the
approximately 3 and a half years since federal Management agencies began
implementing GPRA, new and valuable information on the plans, goals, and
strategies of federal agencies has been provided. As Congress expected in
crafting the legislation, each successive cycle of annual

performance planning has seen improvements on prior years' efforts.
Congressional and executive branch decisionmakers are using the information
more and more. Additionally, the issuance of agencies' annual performance
reports each March now represents a new and potentially more substantive
stage in the implementation of GPRA- the opportunity to assess federal
agencies' actual performance for a specific fiscal year and to consider what
steps are needed to improve

performance and reduce costs in the future.

Our assessments of GPRA have identified a set of continuing implementation
challenges. 3

Articulating and reinforcing a results orientation ? Coordinating
crosscutting programs ? Understanding performance consequences of

budget decisions ? Ensuring daily operations contribute to results ?
Building the capacity to gather and use

performance information

Addressing these challenges requires strong support and sustained commitment
by top leadership. On the basis of the results of our 1997 and 2000
governmentwide surveys of federal managers, as shown in figure 1, only about
one- half of the federal managers perceived, to a great or very great
extent, that their agencies' top leadership demonstrated a strong commitment
to achieving results. 4 3 See, for example, Managing for Results:
Opportunities for Continued Improvements in Agencies' Performance Plans
(GAO/ GGD/ AIMD- 99- 215, July 20, 1999) and Managing for Results: An Agenda
to Improve the Usefulness of Agencies' Annual Performance Plans (GAO/ GGD/
AIMD- 98- 228, Sept. 8, 1998).

4 For details on our surveys see Managing for Results: Federal Managers
Views Show Need for Ensuring Top Leadership Skills (GAO- 01- 127, Oct. 20,
2000).

Figure 1: Federal Managers' Views on Agency Top Leadership's Demonstrated
Commitment to Achieving Results Percentage responding that top leadership
demonstrated a strong commitment to a "great" or "very great" extent

100 80 60

57% 53%

40 20

0 1997 2000

Note: The change between 1997 and 2000 is not statistically significant.
Source: GAO survey data.

To build leadership commitment and help ensure that managing for results
becomes the standard way of doing business, some agencies are using
performance agreements to define accountability for specific goals, monitor
progress, and evaluate results. Congress has recognized the role that
performance agreements can play in holding organizations and executives
accountable for results. For example, in 1998, Congress chartered the Office
of Student Financial Assistance as a performance- based organization, and
required it to implement performance agreements. Our work has

identified five common emerging benefits from the use of results- oriented
performance agreements. 5

? Strengthens alignment of results- oriented goals with daily operations

? Fosters collaboration across organizational boundaries

? Enhances opportunities to discuss and routinely use performance
information to make program improvements

? Provides results- oriented basis for individual accountability

? Maintains continuity of program goals during leadership transitions

Care must be taken to ensure that GPRA does not become an overly burdensome
annual paperwork exercise. Performance agreements can be effective vehicles
for ensuring that day- to- day activities are targeted squarely on achieving
results and that the proper mix of program strategies and budget and human
capital resources are in place to meet organizational goals.

Financial Agencies continue to make progress implementing the Management
improvements called for by financial management reform legislation. These
efforts will have to be sustained and built upon to attain the “end
game” of having timely, accurate, and useful financial, program 5
Managing for Results: Emerging Benefits From Selected Agencies' Use of
Performance Agreements (GAO- 01- 115, Oct. 30, 2000).

costs, and other important management information in order to make decisions
and monitor government performance every day. One important milestone toward
this end game is for each agency to receive an unqualified or
“clean” opinion on its annual financial

statements. As shown in figure 2, steady progress is being made in the
number of agencies that have been able to do so.

Figure 2: Number of the 24 CFO Agencies With Unqualified Opinions on
Financial Statements 24

Unqualified opinions 20 16

15

12

12 11 8

6

4 0

1996 1997 1998 1999 Fiscal years

Source: Agencies' financial statements audit reports. Attaining clean audit
opinions is essential to providing an annual public scorecard. Producing
auditable financial statements is also important in order to have sound
financial information available for use by

Congress in overseeing agency programs, agency managers in maintaining
accountability and managing operations, and the Department of the Treasury
in

preparing the legislatively required U. S. government financial statements.
Although real progress has been made, several major departments are not yet
able to produce auditable financial statements on a consistent basis. The
most significant in this regard is the Department of Defense

(DOD), which represents a large percentage of the government's assets,
liabilities, and net costs. While DOD has made progress and is working hard
to correct its financial management systems and internal control weaknesses,
it is not yet able to comply with generally accepted accounting principles
and pass the test of an independent financial audit. Our high- risk update
details

the substantial and long- standing financial management problems at those
agencies with the most significant financial management problems- DOD, the
Forest Service, the Federal Aviation Administration (FAA), and the Internal
Revenue Service (IRS). Because of deficiencies discussed in our most recent
audit of the

U. S. government's financial statements, we have been unable to render an
opinion on the reliability of those statements for each of the last 3 years.
6 Further, many agencies have only been able to obtain unqualified audit
opinions through heroic efforts, which include using extensive ad hoc
procedures and making billions of dollars in adjustments to derive numbers
as of a single point in time- the end of the fiscal year. These efforts are
often completed months after the end of the fiscal year. The fundamental
problem is that these agencies' financial systems cannot dependably and

routinely produce annual financial statements and other 6 Financial Audit:
1999 Report of the United States Government (GAO/ AIMD- 00- 131, Mar. 31,
2000).

information needed to manage day- to- day operations. For fiscal year 1999,
agency financial auditors have reported that 21 of 24 major agencies'
financial systems do not comply substantially with federal accounting

standards or financial systems and other requirements. To help agencies
effectively implement financial management reforms, in April 2000, we issued
an executive guide that describes best practices in financial management in
leading private sector and state

government organizations. 7 ? Build a foundation of control and
accountability ? Develop systems that support the partnership

between finance and operations ? Translate financial data into meaningful
information ? Develop a financial team with the right mix of skills

and competencies

It will be especially important for the new administration to sustain and
expand current improvement efforts. Successfully achieving financial
management reform will involve modernizing systems, improving internal
control and financial reporting, and strengthening financial management
operations and 7 Executive Guide: Creating Value Through World- Class
Financial Management (GAO/ AIMD- 00- 134, Apr. 2000).

human capital policies and practices. With a concerted effort, the federal
government can continue to progress toward meeting the end goal of having
reliable, useful, and timely financial and other information available on a
regular basis. Ultimately, providing data in meaningful, user- friendly
reports is key to ensuring adequate accountability, managing for results,
and helping

decisionmakers make timely, well- informed judgments. Information The rapid
pace of technological change and innovation Technology

offers unprecedented opportunities for government to Management use IT to
enhance service to citizens through improved performance and at reduced
costs. To the extent that the billions of dollars in planned IT expenditures
can be spent more wisely and the management of such technology improved,
federal programs will be better prepared to meet mission goals and support
national priorities.

A recent success that has yielded important lessons for IT management was
the Year 2000 (Y2K) conversion challenge. In September 2000, 8 we reported
that although the Year 2000 issue was finite, it led to the development of
partnerships, initiatives, processes, methodologies, and experiences that
can assist in resolving ongoing management challenges. It is critical that
the momentum generated by the government's Year 2000 efforts not be lost and
that the lessons learned be considered in addressing other pressing IT
challenges.

8 Year 2000 Computing Challenge: Lessons Learned Can Be Applied to Other
Management Challenges (GAO/ AIMD- 00- 290, Sept. 12, 2000).

? Strengthening agency information security ? Improving the collection, use,
and dissemination of

government information ? Pursuing opportunities for electronic government ?
Constructing sound enterprise architectures ? Fostering mature systems
acquisition,

development, and operational practices ? Ensuring effective agency IT
investment practices ? Developing IT human capital strategies

To help address such challenges and improve IT management, Congress has
enacted legislation to instill a results orientation in the acquisition and
development of information systems. Federal agencies have also undertaken a
variety of initiatives to enable citizens to conduct business with the
government electronically,

and therefore more quickly and easily. Nevertheless, several large
modernization efforts that are key to delivering critical services continue
to be at risk. As detailed in our high- risk series update, these include
projects under way to provide safe and efficient air travel, modernize tax
processing and customer service operations, and support national defense. 9
Since these projects were designated high- risk in 1995, we

9 High- Risk Series: An Update (GAO- 01- 263, January 2001).

have continued to monitor them and recommend ways to ensure that they are
successful in improving service and reducing costs. FAA, IRS, and DOD are
taking steps to implement modernization- management capabilities to address
our recommendations, but these projects continue to face challenges that
threaten their ultimate cost, schedules, and performance. We further
designated information security as a governmentwide high- risk area in 1997
because growing evidence indicated that controls over computerized federal
operations were not effective and the related risks were escalating. As
discussed in detail in our highrisk series update, while many actions have
been taken, current activity is not keeping pace with the growing threat.
Consequently, critical operations, assets, and sensitive information
gathered from the public and other

sources continue to be vulnerable to disruptions, data tampering, fraud, and
inappropriate disclosure. We and various agency inspectors general have made
scores of recommendations to agencies regarding specific steps needed to
make their security programs more effective. Most agencies have heeded these
recommendations and taken at least some corrective

actions. However, more needs to be done, especially in the area of security
program management, which continues to be a widespread and fundamental
weakness. Our May 1998 guide, Information Security Management: Learning From
Leading Organizations, 10 provides a road map for managing risks through an
ongoing cycle of activities coordinated by a central focal point; over the
last 2 years, its concepts have become widely adopted throughout the federal
government. The government information security reform provisions of the FY
2001 Defense Authorization Act require agencies 10 Information Security
Management: Learning From Leading Organizations (GAO/ AIMD- 98- 68, May
1998).

to adopt these risk management practices along with annual management
evaluations and independent audits of agency security programs. Effective
implementation of these legislative reforms would significantly lessen
agencies' vulnerability. In order to improve IT performance governmentwide
and effectively address the remaining challenges, sustained and focused
central leadership is also essential. Accordingly, we continue to believe
that a federal Chief Information Officer (CIO) is needed. Such a position
could provide strong focus and attention to the full range of governmentwide
information resources

management and technology issues. 11 Revamp Federal After a decade of
government downsizing and curtailed Strategic Human investments in the
federal government's human capital, Capital it is becoming increasingly
clear that today's federal Management

human capital strategies are not appropriately constituted to meet the
current and emerging needs of government and the nation's citizens. This is
not

surprising because the federal management reforms of the 1990s addressed
most- but not all- of the essential elements of high performing
organizations: financial management, information technology management, and
results- oriented goal- setting and performance measurement. However, human
capital reforms have yet to find the broad conceptual acceptance or
political consensus needed for comprehensive reform to occur, and in this
sense effective human capital management remains the missing link in the
federal management framework. 11 Federal Chief Information Officer:
Leadership Needed to Confront Serious Challenges and Emerging Issues (GAO/
T- AIMD- 00- 316, Sept. 12, 2000).

The lack of attention to strategic human capital management has created a
governmentwide risk- one that is fundamental to the federal government's
ability to effectively serve the American people now and in the future.
Stated simply, human capital problems are pervasive and lead to programmatic
problems and risks. As our performance and accountability series reports and
High- Risk Series update make clear, human capital shortfalls are eroding
the ability of many agencies- and threaten the ability of others- to
economically, efficiently, and effectively perform their missions.
Consequently, we have designated strategic human capital management a high-
risk area that urgently needs

greater attention to ensure maximum government performance and
accountability for the benefit of the American public in the 21st century.
High- performing organizations in the private and public sectors have long
understood the relationship between effective “people
management” and organizational success. An organization's human
capital is its most critical asset in managing for results. However, the
federal government has often acted as if people were costs to be cut rather
than assets to be valued.

Today's nonpostal civilian federal workforce is smaller than it was a decade
ago. The federal workforce was reduced from approximately 2.3 million
federal employees in fiscal year 1990 to fewer than 1. 9 million by fiscal
year 1999. At the same time, federal outlays

grew from $1. 5 trillion in fiscal year 1990 to $1. 7 trillion in fiscal
year 1999. 12 But what happened- or more importantly, did not happen- as
this downsizing was being accomplished was just as significant as the
downsizing itself. For example, initial rounds of the downsizing were set in
motion without sufficient 12 Outlays provided in constant 1999 dollars.

planning relating to the longer term effects on agencies' performance
capacity. At the same time, the federal government reduced permanent new
hires from 118, 000 in fiscal year 1990 to about 74, 000 in fiscal year
1999. A number of individual agencies drastically reduced or froze their
hiring efforts for extended periods. This helped reduce the size of
agencies' workforces, but it also reduced the influx of new people with new
skills,

new knowledge, new energy, and new ideas- the reservoir of future agency
leaders and managers. In confronting challenges such as these, it is
critical for agencies to engage in effective recruiting and succession
planning strategies. This includes attracting and retaining skilled and
knowledgeable individuals whose performance meets or exceeds expectations,
regardless of their age. All decisions with regard to recruiting and
retention must be based on clearly defined, well documented, consistently
applied, and transparent criteria that are nondiscriminatory and merit-
based. As shown in this series' high- risk update, agencies' strategic

human capital management challenges involve such key areas as strategic
human capital planning and organizational alignment; leadership continuity
and succession planning; acquiring and developing staffs whose size, skills,
and deployment meet agency needs; and creating results- oriented
organizational cultures. Appendix I of this report provides examples of the
federal government's pervasive human capital

challenges, ranging from military recruitment shortfalls at DOD, staff and
skills losses at NASA, to inadequate workforce planning at EPA. The key step
for agencies is to focus on human capital as

a strategic asset. Agencies can begin by assessing how well their existing
human capital approaches support their missions, goals, and other
organizational needs. A useful assessment tool is our human capital
framework, which identifies a number of human capital elements and
underlying values that are common to high

performing organizations. This framework is shown in table 1 and also
presented in Human Capital: A SelfAssessment Checklist for Agency Leaders.
13 We have used the framework to guide our recent inquiries into human
capital issues across the federal government and at specific agencies, some
of which are using the

framework in their human capital planning efforts.

Table 1: GAO's Human Capital Framework Strategic Planning Establish the
agency's mission, vision for the future, core values, goals and objectives,
and strategies. ? Shared vision ? Human capital focus

Organizational Alignment Integrate human capital strategies with the
agency's core business practices. ? Improving workforce planning ?
Integrating the human resources function

Leadership Foster a committed leadership team and provide for reasonable
continuity through succession planning. ? Defining leadership ? Building
teamwork and communications ? Ensuring continuity

Talent Recruit, hire, develop, and retain employees with the skills needed
for mission accomplishment. ? Recruiting and hiring ? Training and
professional development ? Workforce deployment ? Compensation ? Employee-
friendly workplace

Performance Culture Empower and motivate employees while ensuring
accountability and fairness in the workplace. ? Performance management ?
Performance incentives ? Continuous learning and improvement ? Managers and
supervisors ? Job processes, tools, and mission support ? Information
technology ? Inclusiveness ? Employee and labor relations 13 Human Capital:
A Self- Assessment Checklist for Agency Leaders (GAO/ OCG- 00- 14G,
September 2000).

Although some improvements in the civil service will require legislative
reforms, federal agencies must not wait to modernize their human capital
policies and

practices. Agencies can and must take the initiative to be more competitive
in attracting new employees with critical skills; create the kinds of
performance incentives and training programs that motivate and empower
employees; and build labor- management relationships that are based on
common interests and the public trust. To shape human capital strategies
that support their specific needs and circumstances, agencies must give
strategic human capital management the enhanced and sustained attention it
deserves, modernize their existing human capital policies and practices, and
identify the flexibilities available to them under current law. The Office
of Management and Budget (OMB), the

Office of Personnel Management (OPM), and Congress have all taken recent
steps to underscore the importance of this issue. For example, the
President's

fiscal year 2001 budget gave new prominence to human capital management by
making “align Federal human resources to support agency goals” a
Priority Management Objective. OMB's latest Circular No. A- 11 guidance on
preparing annual performance plans states that agencies' fiscal year 2002
annual performance plans should set goals in such areas as recruitment,
retention, training, appraisals linked to program performance, workforce
diversity, streamlining, and family- friendly programs. In addition, OPM has
begun stressing to agencies the importance of integrating strategic human
capital management with agency planning and has also been focusing more
attention on developing tools to help agencies, such as new Senior Executive
Service performance standards

and a workforce planning model with associated Webbased research tools. In
addition, OPM has helped achieve incremental legislative reforms to help
attract and retain federal employees, such as compensation flexibility for
selected specialist positions and employee

benefit enhancements. While OMB's and OPM's actions are encouraging, the
scope and magnitude of the federal government's human capital challenges
will require additional action on a range of issues, as well as

sustained and forceful leadership to fulfill the promise of these
initiatives. One of the most encouraging developments over the past 2 years
has been the visibility given the human capital issue by the Senate
Governmental Affairs

Committee and the Subcommittee on Oversight of Government Management,
Restructuring, and the District of Columbia. In addition, Congress recently
passed legislation that enables federal agencies to provide some education-
related debt relief in exchange for government service. This is a positive
step; however, additional legislative actions will ultimately be needed to
attract and retain a skilled, knowledgeable, diverse, and performance-
oriented workforce in the future.

Ultimately, Congress may wish to consider comprehensive legislative reform
in the human capital area to address the missing link in the performance
management portfolio, giving agencies the tools and reasonable flexibilities
they need to manage effectively while providing appropriate safeguards to
prevent

abuse. As part of this effort, Congress may also wish to consider the extent
to which traditional “civil service” approaches- structures,
oversight mechanisms, rules and regulations, and direction- setting- make
sense for a government that is largely a knowledge- based enterprise that
has adopted and is now implementing modern performance management
principles.

Overall, the following steps summarize some key actions that can be taken.

Agencies: (1) Focus on human capital as a strategic asset. (2) Apply GAO's
human capital self- assessment. (3) Make appropriate use of flexibilities
available under current law and, if changes to current requirements are
requested, build a sound business case.

? OMB and OPM: Provide sustained and forceful leadership to make the promise
of recent initiatives a reality, including leading benchmarking and best
practices efforts within the executive branch. OMB needs to ensure that
agencies view strategic human capital issues as a critically important
element in their overall planning, management, and budgeting efforts. ?
Congress: Use the confirmation, oversight and appropriations, and
legislative processes

to ensure that agencies recognize their responsibilities and have the tools
and resources to manage their people.

Continue to Attack Since 1990, we have periodically reported on Activities
at Risk of government operations that we have identified as
“highrisk”

Waste, Fraud, because of their greater vulnerability to waste, Abuse, and

fraud, abuse, and mismanagement. Also, these Mismanagement

operations generally result in inefficient, ineffective, or uneconomical
practices in programs that involve substantial government resources and
provide critical services to the public. Since our last high- risk update in
January 1999 agencies

have taken additional steps and Congress has addressed several areas we
designated as being high risk. Additionally, we have continued to work
constructively to assess progress and make recommendations

necessary to resolve these risks. We also have looked across government to
identify emerging high- risk areas that need attention.

In the high- risk update that is part of this current series, we discuss (1)
five areas for which the high- risk designation is being removed, (2) one
area- strategic human capital management across government- that is

being added to our list, (3) three program areas for which the high- risk
focus is being modified, and (4) the important progress being made to
further resolve the

remaining high- risk areas and challenges that are yet to be addressed in
resolving them. Overall, agencies are taking these problems seriously and
making progress in trying to correct them. Congress also has acted to
address several individual high- risk areas through hearings and
legislation. Continued perseverance in addressing high- risk areas will
ultimately yield significant benefits. Lasting solutions to high- risk
problems offers the potential to save billions of dollars, dramatically
improve service to the American public, strengthen public confidence and
trust in the

performance and accountability of our national government, and ensure the
ability of government to deliver on its promises. Over time, as high- risk
operations have been corrected and other risks have emerged, we have removed
areas from the list and added new ones to keep Congress current on areas
needing attention. Information on the total additions to, and removals from,
our high- risk list over the past 11 years is shown in table 2.

Table 2: Overall Changes in GAO's High- Risk List, 1990 to 2001 Changes 1990
2001 Number of Areas

Original high- risk list in 1990 14 High- risk areas added since 1990 19
High- risk areas removed since 1990 11 Current high- risk list in 2001 22

Changes 1999 2001 High- risk list in 1999 26

High- risk areas added in 2001 a 1 High- risk areas removed in 2001 b 5
Current high- risk list in 2001 22

a In 2001, the focus of a previously designated IRS- related high- risk area
was expanded. b In 2001, the focus of a previously designated HUD- related
high- risk area was reduced, and another IRS- related area was narrowed.
Source: GAO analysis.

For our 2001 high- risk update, we have determined that five high- risk
areas warrant removal from the list. They include the Year 2000 computing
challenge and the 2000 Census, which were both dependent on time- related
events that have elapsed. Also, legislative and agency actions, including
those in response to our recommendations, were significant enough to remove
the high- risk designations for the farm loan programs managed by the
Department of Agriculture and for the Superfund program, which are programs
we have monitored as high- risk for the past 11 years. Additionally, the
National Weather Service (NWS) has acted to implement our recommendations to
better manage its information technology modernization, which we designated
high risk in 1995. NWS' modernization is critical to weather forecasting to
enhance public safety.

Since our high- risk program began in 1990, we have removed the high- risk
designations from 11 areas, which are listed in table 3. Six of these areas
were among the 14 programs and operations we determined to be highrisk at
the outset of our efforts to monitor such programs. These results
demonstrate that the sustained attention and commitment by Congress and
agencies to resolve serious, long- standing high- risk problems has paid
off, as the root causes of the government's exposure for almost half of our
original high- risk list have been successfully addressed.

Table 3: High- Risk Designations Removed High- Risk Area Year Added Year
Removed

Pension Benefit Guaranty Corporation 1990 1995

State Department Management of Overseas Real Property 1990 1995

Federal Transit Administration Grant Management 1990 1995

Bank Insurance Fund 1991 1995

Resolution Trust Corporation 1990 1995

Customs Service Financial Management a 1991 1999

The Year 2000 Computing Challenge 1997 2001

The 2000 Census 1997 2001

Superfund Program 1990 2001

Farm Loan Programs 1990 2001

National Weather Service Modernization 1995 2001

a Originally part of a broader high- risk area designated as Managing the
Customs Service. Source: GAO analysis.

In addition to adding human capital as a high- risk area, we are also
continuing to monitor 21 other areas we previously designated as high risk.
For three of these areas, the focus of our high- risk work has been
modified. In the case of the Department of Housing and

Urban Development (HUD), we are reducing the number of HUD program areas
deemed to be high risk due to progress made by the agency. Also, the focus
of the previously designated IRS Tax Filing Fraud high- risk area is being
narrowed to better define the scope of our concern, which is Earned Income
Credit noncompliance. For another IRS program, previously designated IRS
receivables, we are expanding our focus

to now cover the collection of unpaid taxes. We are redefining this area
because some key collection actions have declined since 1997, and IRS lacks
a measure of voluntary compliance to help assess the impact of such declines
on compliance.

The 22 areas that comprise our current high- risk list are identified in
table 4. These areas cover a range of key government operations and
functions including governmentwide information security; several major
technology investments; basic financial accountability at large departments
and agencies; and the management of major benefit, lending, procurement, and
other

important programs across government. These high- risk issues are detailed
in our high- risk series update and are included in the accompanying reports
on specific departments and agencies included in this performance and
accountability series. These reports highlight the

recommendations we have made to help improve these operations, the steps
that agencies are taking to resolve high- risk problems, and additional
actions that need to be taken.

Table 4: GAO's 2001 High- Risk List 2001 High- Risk Areas Year Designated

High Risk Addressing Governmentwide High- Risk Areas

Strategic Human Capital Management 2001

Information Security 1997 Ensuring Major Technology Investments Improve
Services

FAA Air Traffic Control Modernization 1995

IRS Tax Systems Modernization 1995

DOD Systems Modernization 1995 Providing Basic Financial Accountability

DOD Financial Management 1995

Forest Service Financial Management 1999

FAA Financial Management 1999

IRS Financial Management 1995 Reducing Inordinate Program Management Risks

Medicare Program 1990

Supplemental Security Income 1997

Earned Income Credit Noncompliance 1995

Collection of Unpaid Taxes 1990

DOD Infrastructure Management 1997

DOD Inventory Management 1990

HUD Single Family Mortgage Insurance and Rental Housing Assistance Program
Areas 1994

Student Financial Aid Programs 1990

Asset Forfeiture Programs 1990 Managing Large Procurement Operations More
Efficiently

DOD Weapon Systems Acquisition 1990

DOD Contract Management 1992

Department of Energy Contract Management 1990

NASA Contract Management 1990

Source: GAO analysis.

Confront Critical Many federal departments and agencies easily rival in
Challenges Facing size and complexity some of our nation's largest
Individual corporations, and strong leadership and sound Departments and

management are central to the effective implementation Agencies in of any
public policy or program agenda. As listed in Carrying Out Their appendix II
to this report, our performance and Missions accountability and high- risk
series identified the major management challenges and program risks
confronting the individual departments and agencies. Addressing these
challenges is central to agencies effectively, efficiently, and economically
accomplishing their

missions and achieving better results for the benefit of the American
people. The challenges and risks presented in this series are intended to
assist the new Congress and administration in shaping their management and
oversight agendas and establishing priorities. Our series is therefore
organized by agency to better permit Members of Congress or

executive branch officials to focus on the major management challenges and
program risks relating to their particular interests. While many of the
management challenges that agencies face are similar, each agency also has
unique programs and issues as

outlined in this series. Pursue

Virtually all of the results that the federal government Organizational
strives to achieve require the concerted and coordinated Approaches That
efforts of two or more agencies. This shared Recognize

responsibility is an outgrowth of several factors, Changing Dynamics

including the piecemeal evolution of federal programs and service delivery
efforts. Moreover, the evolving environment in which federal programs are
designed and implemented is increasingly demanding integrated and
multidisciplinary approaches that cut across

traditional programmatic and functional boundaries. There are several key
trends that form this environment

and that will increasingly affect the well- being and security of the United
States and its people. 14 ? Globalization-- the increasing interdependence
of enterprises, economies, and national

governments and its consequences ? New and Diffuse Security Threats-- a
growing awareness of vulnerability, with a specific emphasis on new and
diffuse threats to the security of the nation, the economy, and individuals

? Known Demographic Trends-- a continuing, fundamental shift in the age and
composition of the population and the impact of that shift on retirement,
health care, and the economy

? Quality of Life Concerns-- the expectations and realities of living
conditions affecting the world, countries, communities, families, and
individuals

? Technology and the Knowledge- Based Economy-- the opportunities and
threats posed by rapid changes in technology's capability

? Focusing Performance and Accountability on Results-- the growing emphasis
on responsible stewardship and accountability in the delivery of public
services

For example, as the evolution to a knowledge- based economy continues,
education, job training, immigration, and retirement programs must be
closely coordinated, not only among federal agencies, but also between the
federal and state and local levels of government. At the same time, the
shift to a knowledgebased economy poses human capital challenges for the
federal government in attracting and retaining a federal workforce that is
sophisticated in using new 14 Executive Summary: GAO Strategic Plan 2000-
2005.

technologies, flexible, open to continuous learning, and focused on
achieving results. Our work has repeatedly shown that mission fragmentation
and program overlap are widespread in the federal government and that
crosscutting program efforts are not well coordinated. 15 There are over 40
program areas across the government, which are related

to a dozen federal mission areas, where our work suggests that mission
fragmentation and program overlap exist. Crosscutting program areas that are
not effectively coordinated waste scarce funds, confuse and

frustrate program customers, and undercut the overall effectiveness of the
federal effort. The following examples are presented in more detail in the
respective agency volumes of this series.

? International trade: Several federal agencies have responsibility for
overseeing the implementation of over 400 trade agreements the nation has
entered into since the mid 1980s, but we found that their ability to monitor
and enforce trade agreements was limited. 16 Agencies lacked sufficient
numbers of staff with the right expertise; did not always get needed
analytical or other types of support from other

agencies; and sometimes had difficulty obtaining balanced, comprehensive
input from the private sector. As a result of these problems, U. S.
businesses may not have been able to take full advantage of the benefits
secured by trade agreements in accessing foreign markets, and the government
may not have 15 Managing for Results: Barriers to Interagency Coordination
(GAO/ GGD- 00- 106, Mar. 29, 2000), and Managing for Results: Using the
Results Act to Address Mission Fragmentation and Program Overlap (GAO/ AIMD-
97- 146, Aug. 29, 1997).

16 International Trade: Strategy Needed to Better Monitor and Enforce Trade
Agreements (GAO/ NSIAD- 00- 76, Mar. 14, 2000).

been realizing the full benefits of increasing U. S. exports. 17 ? Food
safety: The current food safety system is highly fragmented, with as many as
12 different federal agencies administering over 35 laws regarding food
safety. Until this system is focused under a single agency that uses a risk-
based inspection system, the U. S. food safety system will continue to
suffer from inconsistent oversight, poor coordination, and inefficient
allocation of resources. We have pointed out that the government could
redirect its resources

to areas with greater potential for increasing the safety of our food
supply. For example, if Congress provided the Department of Agriculture more
flexibility in conducting inspections, the Department could revise its
current policy of inspecting each animal carcass, and thus additional
resources could be available for more critical food safety needs. 18

? Improving children's education: State and local program flexibility and
limitations in the Department of Education's research and evaluation have
made it difficult for it to gather information about outcomes in elementary
and secondary education programs. Education must address these challenges to
achieve the goal of assessing how well all children reach challenging
academic standards through

encouraging states to improve performance information and upgrading federal
evaluations. We have recommended that Education conduct additional
activities to facilitate the exchange of information among states and
improve the quality, timeliness, and specificity of state assessment data,

and also that Education implement additional 17 Major Management Challenges
and Program Risks: Department of Commerce (GAO- 01- 243, January 2001). 18
Major Management Challenges and Program Risks: Department of Agriculture
(GAO- 01- 242, January 2001).

measures to improve research on the effectiveness of educational services.
19 ? Federal land management issues: The missions of the

four major federal land management agencies- the National Park Service, the
Bureau of Land Management, the Fish and Wildlife Service, and the Forest
Service- have become more similar over time. Moreover, issues that these
agencies address, such as managing forested areas and controlling wildfires,
transcend their administrative boundaries and require increased
collaboration with each other and other entities, such as states and private
landowners. For example, since 1995, federal land management agencies have
sought to reduce the

threat of catastrophic wildfires in forested areas by using prescribed burns
to reduce the over accumulation of vegetation. However, management problems
have hindered this effort, and the need for fuels reduction was reemphasized
after huge wildfires in the western United States burned 6.9 million acres,
or twice the 10- year average, in 2000. The Cerro Grande (Los Alamos)
wildfire- which started as a prescribed burn, got out of control, and
ultimately burned 48,000 acres, destroying many homes and causing about $1
billion in damages- highlights the management problems inherent in the
prescribed burns program and raises concerns about the readiness of the
federal land management agencies to support and administer prescribed burns.
20 19 Major Management Challenges and Program Risks: Department of Education
(GAO- 01- 245, January 2001). 20 Major Management Challenges and Program
Risks: The Department of the Interior (GAO- 01- 249, January 2001), and
Major Management Challenges and Program Risks: Department of Agriculture
(GAO- 01- 242, January 2001).

More broadly, GPRA offers a structured and governmentwide means for
rationalizing crosscutting efforts. 21 The strategic and annual planning
processer

under GPRA provide opportunities for agencies to work together to ensure
that agency goals for crosscutting programs complement those of other
agencies; program strategies are mutually reinforcing; and as appropriate,
common performance measures are used. Interagency councils are another
approach that can help foster communication across the executive branch,
build commitment to reform efforts, tap talents that exist within agencies,
and focus attention on management issues. For example, the President's

Management Council, which comprises the chief operating officers in each of
the major agencies (generally the Deputy Secretary or equivalent), has
served as a top- level forum for identifying and addressing crosscutting
management issues. The Chief Financial Officers (CFO) Council has had a
central role

in sharing best practices and expertise among agencies to help improve
financial management practices. Similarly, the Chief Information Officers
(CIO) Council provides a forum for senior officials to work together toward
achieving strategic information technology performance goals; improving work
processes; integrating information technology architectures; and
strengthening IT knowledge, skills, and capabilities.

We continue to work with the CFO and CIO councils and various other groups
to implement management reforms that enhance government performance and
accountability. While the councils serve important roles, they cannot, and
should not, be expected to make up for an absence of OMB leadership.
Therefore, it is vital that OMB assert strong leadership over the range of
ongoing

21 Managing for Results: Barriers to Interagency Coordination (GAO/ GGD- 00-
106, Mar. 29, 2000).

reforms, as well as over areas that have not received nearly the attention
they deserve, such as strategic human capital management.

Repositioning As the nation inaugurates the first new Congress and

Government for the administration of the 21st century, the federal 21st
Century

government has a unique window of opportunity to address many long- standing
challenges to program performance and service delivery. The management
reform agenda established during the 1990s is beginning to bear fruit by
stimulating the systematic provision of new information on costs and
performance of existing programs and operations. This management framework

can be used by both Congress and the executive branch to enhance program
services and reduce related risks. Building on this management foundation,
they can now seize the opportunity provided by current and projected budget
surpluses to more fundamentally reassess what government does and how
government does business. This can help enhance the capacity of government
to better respond to emerging needs, as well as help safeguard the capacity
of future generations to afford the commitments of today and tomorrow in an
aging

society. In short, today's surpluses create a window of opportunity to
position the government and the nation for the future. Long- Term Fiscal The
current and projected budget surpluses provide an Challenges opportunity to
better position the government and the nation to address both current needs
as well as the longer term budget and economy we will hand to succeeding
generations. The combination of recent sustained economic growth and tough
budget choices has slain the deficit dragon- at least for the near term.
Both OMB and CBO project ever- growing surpluses

throughout the next decade. These surpluses offer a welcome opportunity to
meet some pent- up demands held in abeyance during the years of fighting
deficits. At

the same time, longer term fiscal pressures are likely to overwhelm
surpluses as the nation struggles to finance the retirement of the baby boom
generation. Consequently, these surpluses should prompt our policymakers to
strike a balance between the opportunities to address today's unmet needs
and their

stewardship obligation to hand a strong economy and sustainable fiscal
policies to future generations. In considering how to allocate surpluses,
choices involve a continuum of fiscal actions balancing today's unmet needs
with tomorrow's fiscal challenges. Allocating surpluses among debt
reduction, new spending, and tax cuts is an inherently political decision.
How these decisions affect our future fiscal outlook is one of several
factors that must be weighed in this process.

Absent further policy changes, projected growth in spending on the federal
government's major health and retirement programs-- Social Security,
Medicare, and Medicaid-- will dominate the long- run budget outlook. The
expected surge in health and retirement spending stems from three dynamic
and known factors. First, the large baby boom generation will begin to reach

retirement age within the next decade or so and become eligible to receive
Social Security and Medicare benefits. Second, people are likely to live
longer than they did in the past and spend more time in retirement. Third,
advances in medical technology will probably keep pushing up the cost of
providing health care.

Figure 3: Aged Population as a Share of Total U. S. Population Continues to
Grow 25

Percentage of total population 20 15 10

5 0

1950 1975 2000 2025 2050 2075

Population aged 65 and over Note: Projections based on intermediate
assumptions of The 2000 Annual Report of the Board of Trustees of the
Federal Old- Age and Survivors Insurance and Disability Insurance Trust
Funds.

Source: The 2000 Annual Report of the Board of Trustees of the Federal Old-
Age and Survivors Insurance and Disability Insurance Trust Funds.

Our long- term simulations illustrate the consequences of these dynamics for
the federal budget. To move into the future without making changes to
federal retirement and health programs is to envision a very different role
for the federal government. For example, assuming Congress and the President
adhere to the often- stated goal of saving the entire Social Security
surplus but spend the entire on- budget surplus through either tax

cuts and/ or spending increases, by 2030 our long- term model shows a world
in which Social Security, Medicare, and Medicaid would require nearly three-
quarters of total federal revenue. This is the case even assuming no future
benefit enhancements such as, for example,

adding a prescription drug benefit to Medicare. 22 Budgetary flexibility
would be drastically constrained, and little room would be left for such
programs as national defense, educating our nation's youth, modernizing the
nation's physical infrastructure, and law enforcement. These simulations are
a useful benchmark because they demonstrate the magnitude of the fiscal
challenges associated with our aging society and the significance of the
related challenges that government will be called upon to address.

22 These simulation results use the Medicare Trustees' April 2000
projections of future program costs. The results do not reflect a higher
long- term cost growth assumption recently recommended by an

expert panel advising the Medicare Trustees. Use of this assumption would
dramatically add to the program's projected long- term deficits and would
yield simulation results showing even less flexibility in future federal
budgets.

Figure 4: Composition of Spending as a Share of GDP Under the Save the
Social Security Surpluses Simulation 40

Percentage of GDP 30

Revenue

20 10

0 2000 2030 2050

All other spending Net interest Medicare and Medicaid Social Security

Note: Revenue as a share of GDP declines from its 2000 level of 20.5 percent
due to unspecified permanent policy actions that reduce revenue and increase
spending to eliminate the non- Social Security surpluses. Source: GAO's July
2000 analysis.

Moreover, the federal government undertakes a wide range of other activities
and responsibilities that may draw on future resources. Some of the costs
may be uncertain and difficult to measure, but they nonetheless merit
attention. In addition to the need to plan for demographic and technological
trends affecting the

nation's Social Security and health care programs, there are other looming
fiscal pressures. These range from explicit liabilities such as
environmental clean- up costs

from federal installations to implicit expectations for future federal
spending on emerging needs such as modernizing physical infrastructure.
Expectations for improved access to higher education and health care for

the uninsured are among the many challenges that will compete for a share of
the fiscal pie in the future. These competing claims highlight the
government's stewardship responsibility to provide future generations with
sufficient budgetary flexibility and an economic base sufficient to finance
current commitments as well as future needs.

Of course, a wide range of pent- up demands addressing today's economic and
social needs are competing for a share of the current and projected surplus.
Few people believe it is realistic to save 100 percent of the unified
surplus for debt reduction and indeed there are many legitimate claims for
federal actions on both the tax and the spending side of the federal budget,
particularly for the non- Social Security portion. Since these different
proposals in part reflect different priorities and different views about the
role of government, the debate over them appropriately takes place in the
political arena.

While each individual proposal should be considered on its own merits, it is
important to also consider the aggregate consequences of our overall fiscal
policy choices for the long- term outlook.

From the longer term perspective, certain steps can be taken today to help
future generations by alleviating the burdens of existing commitments and
providing them with greater economic resources and budgetary flexibility to
address their own priorities and needs. For instance, saving a portion of
the surplus for debt reduction can enhance fiscal flexibility and economic
growth. As figure 5 shows, traditionally in our fiscal history, periods of
high deficits and debt buildup have

been followed by periods of surplus and reduced debt- usually from a
combination of fiscal restraint and economic growth.

Figure 5: Deficit/ Surplus as a Share of GNP/ GDP over History 10

Percentage of GNP/ GDP 5 0 -5 -10 -15 -20 -25 -30 -35

1799 1819 1839 1859 1879 1899 1919 1939 1959 1979 1999 Fiscal years

Surplus Deficit

Note: Data until 1940 are shown as a percentage of gross national product
(GNP); data from 1940 to present are shown as a percentage of GDP. Sources:
Budget of the U. S. Government, Fiscal Year 2001 and Department of Commerce
Reducing publicly held debt helps lift future fiscal burdens by freeing up
budgetary resources encumbered for interest payments, which currently
represent more than 12 cents of every federal dollar spent, and by enhancing
the pool of economic resources available for

private investment and long- term economic growth. This is particularly
crucial in view of the known fiscal pressures that will begin bearing down
on future budgets in about 10 years as the baby boomers start to retire. In
fact, the emerging consensus to save the Social Security surpluses, if
maintained over the years, would entirely eliminate the publicly held debt
in about 15 years.

Our long- term budget simulations suggest, however, that debt reduction or
elimination, while important, is not sufficient by itself to promote a
sustainable fiscal future.

Even if all public debt is eliminated, as would occur by saving the entire
Social Security surpluses, federal budgets will nonetheless be increasingly
consumed by the growth of Medicare, Medicaid, and Social Security spending,
as shown in figure 4. Ultimately, deficits and debt would return as the
nation struggles to finance these increasing costs of an aging society.
Accordingly, modifying these programs through substantive reforms

will be critical to recapturing the fiscal flexibility to finance a wide
range of needs in a changing society for the longer term. Early action to
change these programs would yield the highest fiscal dividends for the
federal budget and would provide a longer period for prospective
beneficiaries to make adjustments in their own planning. The longer we wait,
the more painful and difficult the choices will become. Moreover, many argue
that some tax cuts and/ or spending programs may also enhance longer term
growth depending in part on how they are designed and financed. For
instance, funding for well- chosen infrastructure, human capital, and
research and

development programs can improve productivity and longer term economic
growth. Similarly, tax changes that increase incentives to work and save can
enhance economic efficiency and future economic growth.

Notwithstanding the choices made in allocating the surplus among debt
reduction, tax cuts, and spending increases, the structure and
implementation of those

choices can serve either to increase or decrease the risk to our long- term
fiscal outlook. When we looked at how other countries responded to budget
surpluses, 23 we discovered that both spending and tax proposals can be seen
on a continuum by the degree of long- term fiscal risk they present to the
budget outlook. For instance, in contrast to “one- time”
actions, permanent changes to the budgetary baseline- on either the spending
or revenue side of the budget- carry long- term implications. However, there
are approaches to tax and spending changes that may mitigate the risk to the
long term. These approaches might include “one- time” or
temporary actions; automatic adjustments on the revenue and/ or spending
sides of the budget in response to actual fiscal results, as some states
have done; and sunset provisions that offer the potential for
reconsideration and updating of commitments.

Recognizing the many pent- up demands for new federal programs, it is also
important to screen new commitments by applying stringent performance and

cost benefit criteria. Proposed new programs and resources, accordingly,
should be carefully scrutinized to permit decisionmakers to distinguish the
infinite variety of “wants” from those investments that promise

to effectively address more critical “needs.” Unfortunately,
recent experiences ranging from information technology projects to major
weapon systems illustrate that the benefits achieved have often been
disappointing. Poorly conceived projects based on incomplete or inaccurate
information and projections have prompted huge cost overruns and limited
performance gains. The following illustrates the kinds of 23 Budget
Surpluses: Experiences of Other Nations and Implications for the United
States (GAO/ AIMD- 00- 23, Nov. 2, 1999).

questions that should be addressed, as applicable, when considering any new
program or project: ? Does the proposal promise to contribute to a key
federal mission and is its need supported by reliable and systematic needs
assessment and cost- benefit analysis? ? Is government intervention
justified by some kind of market failure that has led to compelling economic
or social shortfalls in services or performance?

? Does the proposal warrant a federal- as opposed to a state or local-
government response, and would it prompt those governments to reduce their
own program investments as a consequence? ? Is the proposal integrated with
other related federal,

state, local, or private initiatives to reduce the potential for
duplication, overlap, and fragmentation? ? Is the proposal the most cost-
effective way to

achieve the objective when compared to other approaches? ? Are benefits
targeted to those recipients or clients

with the greatest need and the least likelihood of funding the program on
their own? ? Are the proposal's time frames, cost projections, and promises
realistic in light of past experience and the capacity of administrators and
other agents to implement? Has a systematic risk assessment been

performed to identify potential problems under different scenarios?

Surpluses challenge our nation to develop a new fiscal paradigm to prompt
greater attention to the long- term implications of current program or
policy choices. Government should strive to make information about the long-
term fiscal exposures associated with today's

policies more transparent in financial reporting and budget processes. We
have suggested, for example, budgeting for the fully accrued costs for
insurance and pensions in current budgets to reflect the future

commitments made in current programs. 24 Other nations have recognized the
value of adopting alternative fiscal targets such as debt- to- GDP ratios as
a guide for decisionmaking in a world where budget balance alone no longer
provides a sufficient fiscal compass. Ultimately, the federal government
needs a decisionmaking framework that permits it to evaluate fiscal good
fortune and choices against both today's

needs and the longer term fiscal future we wish to hand on to future
generations.

Fundamental Review In considering competing demands on the surplus, if of
Federal Programs careful scrutiny is given only to proposed new actions, and
Activities policymakers will miss a golden opportunity to shape the
government for the 21st century. Our newfound budget surpluses provide the
opportunity to rise out of years of preoccupation with annual budget
deficits to undertake a fundamental reexamination of the legacy of existing
activities and processes.

Many federal programs- their goals, organizations, and processes- were
designed years ago to respond to earlier challenges. As we enter a new
century, we have been reminded of how much things change. For

perspective, it is useful to recall that students who started college this
fall were 11 when the Soviet Union broke apart and have no memory of the
Cold War; their lifetimes have always known microcomputers and AIDS.

Yet many of our programs were designed long before those students were born.
It should not be threatening to any federal program or activity to question
its relevance or “fit” in today's world and for the future. 24
Accrual Budgeting: Experiences of Other Nations and Implications for the
United States (GAO/ AIMD- 00- 57, Feb. 18, 2000), and Budget Issues:
Budgeting for Federal Insurance Programs (GAO/ AIMD- 97- 16, Sept. 30,
1997).

The broad- based and rapid changes facing government today call for a
fundamental review of existing programs and operations. Several important
benefits can be expected from such a review. First, policymakers could
create much- needed budget flexibility to address emerging needs by weeding
out programs that have proven to be outdated and no longer relevant to our
changing society. Second, those activities that remain relevant could be
updated and modernized by improving their targeting and efficiency through
such actions as redesigning allocation and cost sharing formulas,
consolidating facilities and programs, and streamlining and reengineering
operations and processes.

This fundamental reexamination entails broadening the focus for
congressional and executive oversight to address a range of fundamental
questions:

? Do the conditions that caused the program to be created still exist? ?
Would we design the same program in the same way if we were designing it
today? ? Are there other government programs or policies

that are not coordinated with or are working at cross- purposes to this
program? ? Is the program operating in the most economical,

efficient, and effective manner? ? Is the program affordable and sustainable
both now and over the longer term?

? Is the program targeted appropriately to the beneficiaries most in need of
federal assistance? As Congress and the executive branch undertake this
reassessment, approaches must recognize that most key performance goals
transcend the boundaries of any one program, agency, or even level of
government. Many federal mission areasfrom low- income housing assistance to
food safety to counterterrorismare addressed by a wide range of mandatory
and

discretionary spending programs, tax expenditures, and regulatory approaches
that cut across many agencies and congressional committees, as illustrated
by the pie charts in figure 6. For instance, as estimated for fiscal year
2000, 25 federal health care included about 8 percent,

or $37 billion, in discretionary budget authority; 72 percent, or $323
billion, in entitlement outlays; less than one- tenth of a percent, or $100
million, in loan guarantees; and 20 percent, or $89 billion in tax
expenditures. Frequently, these elements are viewed independently rather
than as a part of an overall federal approach to health care. Yet the
outcomes achieved by each of these tools are highly interdependent, and any
debate on governmental performance should consider the full range of policy
tools.

25 As shown in the Budget of the United States Government, Fiscal Year 2001.

Figure 6: Relative Reliance on Policy Tools in Selected Federal Budget
Functions Commerce and Housing Credit Health 1%

8%

20% 46%

53% 72%

Education, Training, International Affairs Employment and Social Services

29% 27%

34% 44%

19% 24%

9% 11% 3% Discretionary spending Mandatory spending Direct loans Guaranteed
loans Tax expenditures

Note: Health includes both the health and Medicare budget functions. Source:
Budget of the United States Government, Fiscal Year 2001.

Moreover, the federal government has come to rely on a wide range of third
partiesstate and local governments, not- for- profit entities, and for-
profit businessesas the workhorses of the federal system. Coordination and

collaboration, therefore, is essential, and the choice of and design of
federal tools used to engage these entitiesgrants, loans, tax expenditures
and regulationsplay a large role in influencing the level of performance
actually achieved. Over the years the federal government has sought to
manage programs indirectly. At the same time, federal goals have become more
ambitious and delivery networks more complex. As a result, the relationship
between program goals and actual outcomes has become more complicated. GPRA
can help agencies and Congress better sort out and measure the effects of
federal policy tools on performance by focusing oversight on outcomes

achieved through the actions of the many actors in the system and improving
the quality of information on program results.

This is a challenging agenda that will call for a broader and more strategic
focus for congressional and executive policymaking and oversight. Addressing
these

issues calls for hard choices and persistent attention. There are few
examples of “low hanging fruit,” as most programs and activities
provide important benefits for their stakeholders. A systematic process that
examines the claims of each activity with the help of new performance and
cost information should help highlight the need for change and the
opportunity for

decisionmakers, stakeholders, and the broader public to achieve a more
effective, responsive, and relevant government portfolio of programs and
services for the future. The reports on each agency in this performance and
accountability series provide an inventory of serious performance issues
that serve as one basis for such a reexamination. We also periodically
provide Congress

with budgetary options to address significant performance problems with
existing programs and operations as identified in our ongoing audit and
evaluation work. 26 Improving

The beginning of a new Congress and administration Performance and makes
this an especially opportune time for each to Strengthening carefully
consider how it will take additional advantage Accountability of and
leverage the new information and perspectives

Through Strategic coming from the management reforms now under way. and
Constructive Over the last decade, Congress has been an institutional
Oversight

champion for improving government performance and accountability by
establishing in statute much of the basic federal management framework
needed to create

high performing organizations across the federal government. As noted
earlier, the current missing link is the human capital dimension. More
recently, Congress has expanded its oversight of agencies' major management
challenges and program risks and has

shown a real willingness to consider statutory changes to help agencies
address their human capital and other management challenges.

The working partnership that Congress, the administration, federal agencies,
and others formed to address the Year 2000 challenge, for example, suggests
a

successful model. In the case of Congress, sustained bipartisan and
bicameral congressional leadership was demonstrated. Congress held agencies
responsible for demonstrating progress and heightened public awareness of
the problem by holding over 100 hearings.

In particular, the Senate Special Committee on the Year 2000 Technology
Problem and the House Year 2000 Task Force- co- chaired by the Subcommittee
on 26 Budget Issues: Budgetary Implications of Selected GAO Work for Fiscal
Year 2001 (GAO/ OCG- 00- 8, Mar. 31, 2000).

Government Management, Information and Technology of the Committee on
Government Reform, and the Subcommittee on Technology of the Committee on
Science- played major leadership roles. Congress also passed legislation to
facilitate the nation's Year 2000 work. Additionally, congressional and
executive branch attention shown to GPRA, financial management reform, and
information technology management underscores the common understanding that
the effective implementation of the statutory framework, although important,
is not an end in itself. Rather, the implementation of the framework is a
means to an end- improved federal performance and accountability through
enhanced congressional and executive branch decisionmaking. In short,
performance improvements within an agency are not occurring just because the
agency published its strategic plan or the results of its financial
statements audit. Rather, performance improvements are occurring as
congressional and executive branch decisionmakers use these and other
documents- and the management systems and processes that generate them- to
inform their decisions, stimulate their actions, and thereby improve

government. The progress that has been- and is being- made suggests that the
wealth of information that is being produced under the legislative framework
that Congress has enacted to improve government performance and
accountability provides new opportunities to strengthen congressional
oversight and decisionmaking. Drawing on GPRA strategic plans and
performance plans and reports, financial audit results, our performance and

accountability and high- risk series, annual federal budget reviews, major
government reports, major open our recommendations, and the work of
inspectors general, affords Congress a broad perspective on performance in
areas such as:

? the most meaningful challenges faced in a specific agency or across
government in broad functional or mission areas; ? cuts and investments that
would contribute to a government more efficient, effective, and economical
in meeting the wants and needs that

Americans can afford; and ? the tools, such as regulations, legislation, tax

incentives, loan guarantees, enforcement options, or direct spending, that
appear to be the most effective in furthering a given government mission.
Congress should also consider the need for mechanisms that allow it to more
systematically focus its oversight on problems with the most serious
weaknesses and risks. For example, the President is required by GPRA to
prepare and submit to Congress as part of the annual

budget submission a governmentwide performance plan that provides a
“single cohesive picture of the annual performance goals for the
fiscal year.” First submitted with the fiscal year 1999 budget, the
governmentwide performance plan includes fiscal, management, and program
performance expectations. It provides a means to present performance goals
for the varied missions of government and to identify the relative
contributions of a wide range of agencies, programs, and strategies to
address those mission- based performance goals. 27 At present, Congress has
no direct mechanism to respond to and provide a congressional perspective

upon the President's governmentwide performance plan. For example, Congress
has no established mechanism to articulate performance goals for the broad,
crosscutting missions of government, to assess alternative strategies that
offer the most promise for achieving these goals, or to define an oversight
agenda targeted on the most 27 The Results Act: Assessment of the
Governmentwide Performance Plan for Fiscal Year 1999 (GAO/ AIMD/ GGD- 98-
159, Sept. 8, 1998).

pressing crosscutting performance and management issues. Congress may
therefore wish to consider whether a more structured oversight mechanism is
needed to permit a coordinated congressional perspective on governmentwide
performance matters. One possible approach would involve modifying the
current budget resolution. Already organized by budget function, similar to
the program performance section of the President's governmentwide
performance plan, the resolution could be adapted to permit Congress to
respond to, and present a coordinated congressional

perspective on, the President's governmentwide performance plan. As this
report has noted, the current fiscal climate and long- term trends create
both an opportunity and an obligation to undertake a reexamination and
serious debate about what government does, how government does business, and
who benefits from these activities. In that regard, continued congressional
and executive

branch efforts to effectively implement and use the statutory management
framework; develop and implement a strategic approach to human capital
management appropriate for the federal government in

the 21st Century; continue to attack high- risk problems; confront
individual agencies' major management challenges; and pursue organizational
approaches to respond to the new environment must be at the center of any
serious effort to maximize the performance and ensure the accountability of
the federal government for the benefit of the American people.

Appendix I: Examples of Agencies With Human Capital Challenges

Agency Human Capital Challenges

Agriculture Organizational culture problems, including resistance from
affected USDA agencies and employees, have hampered departmentwide
reorganization and modernization efforts. Further, the nation's food safety
system, in which USDA plays a major role, continues to suffer from
inconsistent oversight, poor coordination, and inefficient deployment of
resources. Bureau of Indian

Untrained and inexperienced staff hamper effective management of $3 billion
in Affairs Indian trust funds.

Commerce A lack of sufficient numbers of experienced staff with the right
expertise limits the ability of Commerce and two other trade agencies to
monitor and enforce trade agreements. DOD In the past 2 years, the military
services have struggled to meet recruiting goals. Attrition among first-
time enlistees has reached an all- time high. The services face shortages
among junior officers, and problems in retaining intelligence analysts,
computer programmers, and pilots. On the civilian side, skills and
experience

imbalances following downsizing are jeopardizing acquisitions and logistics
capabilities. Energy Headquarters and field staff have lacked contract
management skills to oversee

large projects, such as the cleanup of radioactive and hazardous waste
sites. EPA EPA has not yet implemented any systematic means of determining
the right size, skills needs, or deployment of its workforce to carry out
its mission and achieve its strategic goals and objectives, despite the
demand for new skills due to technological changes and the shift in EPA's
regional environmental responsibilities to the states, as well as growing
retirement eligibilities in its workforce. FAA Air traffic control
modernization is fraught with cost, schedule, and performance

problems due in part to an organizational culture that impaired the
acquisition process.

Health Care Medicare's leadership problems include the lack of any official
whose sole

Financing responsibility it is to run the program. Further, frequent
leadership changes at Administration

HCFA have hampered long- term Medicare initiatives and the pursuit of a
consistent management strategy. HCFA's workforce lacks skills needed to meet
recent legislative requirements. The mismatch between HCFA's administrative
capacity and its mandate could leave Medicare unprepared to handle future
population growth and medical technology advances. HUD As HUD's
reorganization moves into its final phases, workload imbalances pose
programmatic challenges to several specialty centers and field offices.
Single family mortgage insurance programs administered by HUD's Federal
Housing Administration have been marked by a number of human capital
challenges, including insufficient staff. Further, insufficient or
inexperienced staff led to problems in quality assurance reviews for 203( k)
home rehabilitation loans and

oversight of appraisers and mortgage lenders. Immigration Lack of staff to
perform intelligence functions and unclear guidance for retrieving and
Naturali and analyzing information hamper efforts to combat the growing
problem of alien

zation Service smuggling.

Interior and U. S. Difficulties replacing experienced fire personnel
threaten firefighting capabilities Forest Service during catastrophic
events.

(Continued From Previous Page)

Agency Human Capital Challenges

IRS IRS lacks reliable cost and operational information to measure the
effectiveness of its tax collection and enforcement programs and to judge
whether it is appropriately allocating its staff resources among competing
management priorities. NASA Staff and skills losses following downsizing
pose potentially serious problems for

the safety and planned flight rate of the space shuttle. National Park
Historically, the Park Service's decentralized priority- setting and
accountability Service systems left it without the means to monitor progress
toward achieving its goals or

hold park managers accountable for the results of park operations. The park
concessions program continues to face management problems, including
inadequate qualifications and training of the agency's concession
specialists and concessions contracting staff. Insufficient fire safety
training has contributed to fire safety risks at visitor centers, hotels,
and other national park buildings. Nuclear

NRC's organizational culture is struggling with the agency's new
“risk- informed” Regulatory regulatory approach. Further, NRC's
ability to maintain the skills needed to achieve Commission

its mission and fill the gaps created by growing retirement eligibilities
could be threatened by the decline in university enrollments in nuclear
engineering and other fields related to nuclear safety.

Pension Because the agency did not adequately link its contracting decisions
to long- term Benefit

strategic planning, it may not have the cost- effective mix of contractor
and federal Guaranty

employees needed to meet future workload challenges. Further, PBGC employees
Corporation

who monitor contractors lack adequate guidance and policies essential to
monitoring contractor performance. SSA Increasing demand for services,
imminent retirement of a large part of its workforce, changing customer
expectations, and mixed success in past technology

investments will challenge SSA's ability to meet its service delivery
demands, which include faster and more accurate benefit claims
determinations and increased emphasis on returning the disabled to work.
State Issues related to the quality of life at overseas posts, career
development opportunities, and talent management are hampering recruitment
and retention of Foreign Service Officers. Efforts to determine the right
size and composition of overseas posts have begun; but State faces
challenges in aligning its workforce

with new economic, political, security, and technological requirements.
Also, staffing shortfalls are hampering counternarcotics programs and
efforts to combat visa fraud. USAID Staffing shortfalls in the procurement
area have hampered the agency's ability to

initiate and monitor contracts, thus delaying reconstruction assistance in
the wake of natural disasters in Central America and the Caribbean. Veterans
Affairs A national nursing shortage could adversely affect VA's efforts to
improve patient safety in VA facilities and put veterans at risk. Further,
VA's training and recruitment programs may not be adequate to ensure a
sufficient workforce of competent claims processors, which would likely
undermine efforts to reduce current problems of claims processing backlogs
and errors.

Source: Performance and Accountability Series agency reports.

Appendix II: Major Management Challenges and Program Risks at 21 Federal
Agencies

Agency Challenges

Department of Agriculture ? USDA's farm loan programs remain vulnerable to
loss, but high- risk areas have been addressed ? Delivery of services to
farmers has improved, but challenges remain ? USDA needs to effectively and
efficiently provide food assistance benefits to eligible individuals while
maintaining program integrity ? Fundamental changes are needed to minimize
foodborne illnesses

? USDA needs to strengthen Department- wide information security ? USDA
continues to lack financial accountability

over billions of dollars in assets ? The Forest Service must provide the
Congress and the public with a clear understanding of what it accomplishes
with appropriated funds

? Problems persist in processing discrimination complaints

Department of Commerce ? Increase the access of U. S. businesses to
international markets ? Ensure that the United States is secure from the

proliferation of dual- use commodities and chemical weapons ? Ensure that
weather forecasts and severe weather warnings are accurate and timely

? Improve the economy in distressed areas ? Address other challenges to
building a highperforming organization

Department of Defense ? Developing strategic plans that lead to desired
mission outcomes ? Hiring, supporting, and retaining military and civilian
personnel with the skills to meet mission needs ? Establishing financial
management operations that provide reliable information and foster

accountability ? Effectively managing information technology investments

? Reforming acquisition processes while meeting military needs ? Improving
processes and controls to reduce

contract risk ? Creating an efficient and responsive support infrastructure

? Providing logistics support that is economical and responsive

(Continued From Previous Page)

Agency Challenges

Department of Education ? Ensure access to postsecondary education while
reducing the vulnerability of student aid programs to fraud, waste, error,
and mismanagement ? Encourage states to improve performance information and
upgrade federal evaluations used to assess how well all children reach
challenging academic standards ? Promote coordination with other federal
agencies and school districts to help build a solid

foundation of learning for all children ? Improve financial management to
help build a

high- performing agency Department of Energy ? Address project management,
planning, and

other issues to maintain nuclear weapons capabilities ? Sustain management
attention to correct pervasive weaknesses in security controls

? Improve priority- setting of nonproliferation programs and coordination
among programs in the former Soviet Union ? Improve management tools and
integration of activities to clean up radioactive and hazardous

wastes ? Resolve problems in contract management that place it at high risk
for fraud, waste, abuse, and

mismanagement ? Improve financial management

Department of Health and Human Services ? Provide current and future
generations with a well- designed and well- administered Medicare program

? Better safeguard the integrity of the Medicare program ? Improve oversight
of nursing homes so that residents receive quality care ? Ensure the safety
and efficacy of medical

products ? Enhance the economic independence and wellbeing of children and
families

Department of Housing and Urban Development ? Continued improvements needed
to reduce HUD's single- family insurance risk ? Continued improvements
needed to ensure HUD's rental housing assistance programs are used
effectively and efficiently ? Resolution needed for a range of information
and financial management systems and human capital issues

Department of the Interior ? Improve management of national parks ? Address
persistent management problems in Indian trust programs

? Improve management of ecosystem restoration efforts ? Address challenges
in managing an expanding

land base

(Continued From Previous Page)

Agency Challenges

Department of Justice ? Improve the enforcement of immigration laws and
provision of immigration and naturalization services ? Better manage
programs designed to support state and local efforts to reduce crime

? Develop measurable performance targets to help the Drug Enforcement Agency
determine its progress in reducing the availability of illegal drugs ?
Achieve excellence in financial management, including, but not limited to, a
departmentwide

unqualified opinion for fiscal year 2000 and beyond ? Improve management and
accountability over

Justice's asset forfeiture program Department of Labor ? Increasing the
employment and earnings of America's workforce ? Protecting the benefits of
workers

? Fostering safe and healthy workplaces Department of State ? Improve the
security and maintenance of U. S. facilities overseas

? Help decrease the level of illegal drugs entering the United States ?
Address the threats illegal immigration continues to pose to Americans at
home

? Address additional challenges to building a highperforming organization

Department of Transportation ? Improve the safety and security of air,
highway, and pipeline transportation ? Enhance the management of aviation
and Coast Guard acquisitions and obsolete ship disposal to maximize
investment of public funds

? Increase the accountability for financial management activities ? Improve
the oversight of highway and transit projects to provide maximum
transportation

services for the federal dollars invested ? Strengthen the financial
condition of Amtrak ? Enhance competition and consumer protection in
aviation and freight rail industries to ensure

reasonable fares, rates, and service

(Continued From Previous Page)

Agency Challenges

Department of the Treasury ? Modernize the Internal Revenue Service to
better help taxpayers meet their tax responsibilities and to increase
overall compliance with tax laws ? Improve the U. S. Customs Service's
regulation of commercial trade while ensuring that it protects against the
entry of illegal goods at U. S. borders

? Achieve sound financial management through significant management
attention and priority ? Improve the Bureau of Alcohol, Tobacco and

Firearms' performance measures to better determine its progress in reducing
criminals' access to firearms ? Improve the management of Treasury's asset
forfeiture program Department of Veterans Affairs ? Ensure timely and
equitable access to quality VA health care

? Maximize VA's ability to provide health care within available resources ?
Process veterans' disability claims promptly and

accurately ? Develop sound agencywide management strategies to build a high-
performing organization

Agency for International Development ? Human capital management issues
impact USAID strategic objectives ? Better performance data could help USAID

assess programs and allocate resources ? Additional challenges to building a
highperforming organization

Environmental Protection Agency ? Improve environmental and performance
information management to set priorities and measure results ? Place greater
emphasis on developing a comprehensive human capital approach ? Strengthen
working relationships with the states

National Aeronautics and Space Administration ? Correcting weaknesses in
contract management ? Controlling International Space Station development
and support costs ? Effectively implementing the faster- bettercheaper
approach to space exploration projects ? Integrating a human capital
approach into NASA's workforce management strategies

Nuclear Regulatory Commission ? Resolve numerous issues to implement a
riskinformed regulatory approach for commercial nuclear power plants ?
Overcome inherent difficulties to apply a riskinformed approach to nuclear
material licensees ? Continue efforts to cope with significant human

capital challenges, resolve financial management issues, and effectively
develop and implement new information technology

(Continued From Previous Page)

Agency Challenges

Small Business Administration ? Continue to improve oversight of SBA's
lending partners to correct oversight weaknesses ? Focus the 8( a) program
on helping firms obtain contracts to increase procurement opportunities ?
Streamline and automate disaster loan processing to improve timeliness ?
Strengthen human capital, information technology, budget, and financial
management practices to help modernize SBA

Social Security Administration ? Play an active research, evaluation, and
policy development role ? Improve SSA's disability determination process and
return people to work ? Sustain management and oversight of longstanding,
high- risk Supplemental Security Income (SSI) issues

? Better position SSA for future service delivery challenges ? Further
strengthen controls to protect SSA

information U. S. Postal Service ? Remain self- supporting while providing

affordable, high- quality universal service ? Control costs and improve
productivity ? Address long- term human capital issues ? Provide complete
and reliable performance

information ? Address legal and regulatory issues

Source: Performance and Accountability Series agency reports.

Performance and Accountability Series

Major Management Challenges and Program Risks: A Governmentwide Perspective
(GAO- 01- 241)

Major Management Challenges and Program Risks: Department of Agriculture
(GAO- 01- 242)

Major Management Challenges and Program Risks: Department of Commerce (GAO-
01- 243)

Major Management Challenges and Program Risks: Department of Defense (GAO-
01- 244)

Major Management Challenges and Program Risks: Department of Education (GAO-
01- 245)

Major Management Challenges and Program Risks: Department of Energy (GAO-
01- 246)

Major Management Challenges and Program Risks: Department of Health and
Human Services (GAO- 01247)

Major Management Challenges and Program Risks: Department of Housing and
Urban Development (GAO01- 248)

Major Management Challenges and Program Risks: Department of the Interior
(GAO- 01- 249)

Major Management Challenges and Program Risks: Department of Justice (GAO-
01- 250)

Major Management Challenges and Program Risks: Department of Labor (GAO- 01-
251)

Major Management Challenges and Program Risks: Department of State (GAO- 01-
252)

Major Management Challenges and Program Risks: Department of Transportation
(GAO- 01- 253)

Major Management Challenges and Program Risks: Department of the Treasury
(GAO- 01- 254)

Major Management Challenges and Program Risks: Department of Veterans
Affairs (GAO- 01- 255)

Major Management Challenges and Program Risks: Agency for International
Development (GAO- 01- 256)

Major Management Challenges and Program Risks: Environmental Protection
Agency (GAO- 01- 257)

Major Management Challenges and Program Risks: National Aeronautics and
Space Administration (GAO- 01- 258)

Major Management Challenges and Program Risks: Nuclear Regulatory Commission
(GAO- 01- 259)

Major Management Challenges and Program Risks: Small Business Administration
(GAO- 01- 260)

Major Management Challenges and Program Risks: Social Security
Administration (GAO- 01- 261)

Major Management Challenges and Program Risks: U. S. Postal Service (GAO-
01- 262)

High- Risk Series: An Update (GAO- 01- 263)

(450005) Lett er

GAO United States General Accounting Office

Page 1 GAO- 01- 241 A Governmentwide Perspective

Contents Letter 3 Major Management Challenges and Program Risks

6 Appendix I: Examples of Agencies With Human Capital Challenges

58 Appendix II: Major Management Challenges and Program Risks

at 21 Federal Agencies

60 Performance and Accountability Series

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Comptroller General of the United States

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