Major Management Challenges and Program Risks: Department of Labor
(Letter Report, 01/01/2001, GAO/GAO-01-251).

This report, part of GAO's high risk series, discusses the major
management challenges and program risks facing the Department of Labor
(DOL). These challenges include (1) increasing the employment and
earnings of America's workforce, (2) protecting the benefits of workers,
and (3) fostering safe and healthy workplaces.

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

 REPORTNUM:  GAO-01-251
     TITLE:  Major Management Challenges and Program Risks: Department
	     of Labor
      DATE:  01/01/2001
   SUBJECT:  Accountability
	     Risk management
	     Employment or training programs
	     Internal controls
	     Labor law
	     Occupational safety
	     Performance measures
	     Strategic planning
IDENTIFIER:  Employment and Training Assistance Program
	     Veterans Employment Program
	     DOL One-Stop Operating System
	     DOL Migrant and Seasonal Farmworkers Program
	     Unemployment Insurance Program
	     DOL H-2A Program
	     DOL H-1B Visa Program
	     Black Lung Disability Trust Fund
	     DOL Job Corps Program
	     High Risk Series 2001
	     GAO High Risk Program

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GAO-01-251

Performance and Accountability Series

January 2001 Major Management Challenges and Program Risks

Department of Labor

GAO- 01- 251

Letter 3 Overview 6 Major

11 Performance and Accountability Challenges

Related GAO 29

Products Performance

32 and Accountability Series

Lett er

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

This report addresses the major performance and accountability challenges
facing the Department of Labor as it seeks to promote the welfare and
economic security of the nation's workforce and ensure that workplaces are
safe and healthy. It includes a summary of actions that Labor has under way
to address these challenges and outlines further actions that GAO

believes are needed. This analysis should help the new Congress and
administration carry out their responsibilities and improve government for
the benefit of the American people. 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 that series, GAO advised the Congress that it planned
to reassess the methodologies and criteria used to determine which federal
government operations and functions should be highlighted and which should
be 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. This 2001 Performance and Accountability Series contains
separate reports on 21 agenciescovering each cabinet department, most major
independent agencies, and the U. S. Postal Service. The series also includes
a governmentwide perspective on performance

and management challenges across the federal government. As a companion
volume to this series, GAO is issuing an update on those 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

Overview The Department of Labor is responsible for promoting the welfare
and economic security of the nation's workforce and ensuring that workplaces
are safe. With a budget estimated at more than $39 billion in fiscal year
2001, Labor oversees a wide array of activities that affect more than 100
million workers and more than 10 million employers. These myriad activities
are managed through a decentralized agency structure that includes 22
offices, more than 1,000 field offices, and shared program responsibility
with numerous state organizations and as many as 14 federal entities.

Labor must carry out its responsibilities in a rapidly changing environment.
Significant changes stemming from increasing workforce diversity and new
developments in technology are rapidly transforming the workplace and the
ways in which employers do business. In addition, slow workforce growth and

increasing retirements by baby boomers will likely result in tight labor
markets continuing in the future. Employers are responding to these changes
by seeking more highly skilled workers and creating new types of work
arrangements, such as allowing employees to telecommute and hiring
contingent workers. Over the past decade, the country has experienced
substantial growth and low unemployment, and millions more Americans are
enjoying economic success. Yet many people have not been able to share in
this prosperity.

Because employment opportunities increasingly favor those with higher levels
of education and training, those lacking the skills necessary to meet
employers' needs may be left behind. Also, if laws and regulations do not
keep up with the changing workplace, workers may not have adequate benefits
or workplace protections.

In this context, our work has shown that Labor faces several key challenges:
to improve opportunities for productive employment, which would include
retraining workers to better meet rapidly changing workplace needs; protect
workers' benefits as they pertain to

wages, unemployment income, and retirement income, among other things; and
ensure safe and healthy working conditions. Labor is aware of these
challenges and, in response to GAO recommendations, has taken action to
address them. For example, Labor has changed its procedures to verify wage
data to improve the accuracy and timeliness of prevailing wage rates. Labor
has also initiated actions to strengthen its

management of pension plans. Many opportunities for improvement remain,
however. Labor can improve its performance measurement, strategic planning,
and organizational alignment to better meet its challenges. For example,
Labor needs better data to effectively measure program performance.

Better strategic planning by Labor would improve program service delivery
and ensure that regulations and procedures keep up with changes in the
workplace. Labor must also improve coordination with other agencies that
have similar responsibilities to increase program effectiveness, ensure
worker protections, and minimize employers' compliance burdens. If Labor
takes action to address these issues, it will be in a stronger position to
increase the employment and

earnings of America's workers, protect the benefits of workers, and ensure
safe and healthy working conditions.

Increasing the employment and earnings of America's workforce

? Protecting the benefits of workers ? Fostering safe and healthy workplaces

Employment and Given the rapid changes in the workplace and the need
Earnings for employees to enhance their skills, one of Labor's key
challenges is to increase the employment and earnings

of the workforce. Toward that end, Labor is helping states implement the
Workforce Investment Act (WIA) to integrate employment and training programs
and provide access to a broad range of employment- related services in a
single location. However, we have identified problems with data collection,
performance

measurement, and a lack of strategic planning that hinder efforts to measure
performance and integrate services, which, if remedied, could help a wide
variety of individuals obtain employment and increase their earnings. For
example, the lack of systemwide performance measures precludes states from
evaluating the effectiveness of its one- stop system under WIA. In addition,
the lack of accurate, useful data collected on employment and training
services for migrant youth

aged 14 to 17 and for veterans prevents Labor from accurately assessing
program performance and tracking improvements over time. We recommended that
Labor develop better performance data on migrant youth and

pointed out areas in which it could improve the quality of data on veterans'
services. Worker Benefits To protect workers' benefits and rights, such as
pensions and the appropriate wage, Labor must ensure that its programs keep
up with changes in the workplace, such as the increasingly diverse workforce
and the growth of small businesses and virtual

workplaces. Based on recommendations made by us and others, the agency has
made a number of improvements to enhance compliance with labor standards and
protect worker benefits, such as increasing the accuracy and timeliness of
wage rate determinations, ensuring proper payments to compensate longshore
and harbor workers, and

strengthening internal controls to minimize fraud and abuse in the federal
workers' compensation program. However, our work has shown that Labor's
programs

that protect labor standards and worker benefits remain subject to
weaknesses in performance measurement, organizational alignment, strategic
planning, and financial and contract management. For example, in October
2000, we reported that the lack of credible, timely performance data in the
federal workers' compensation program made it difficult to determine
progress toward its goals and recommended that the

agency collect better data and establish performance measures. We also found
that inadequate organizational alignment and strategic planning in programs
managed by multiple agencies may result in inefficiencies in program
administration or enforcement that can

increase the burden of compliance for employers or reduce protections for
workers. We recommended eliminating particular agency responsibilities to
simplify the process and realigning program authority to increase the
effectiveness of enforcement. In September 2000, we identified weaknesses in
performance and contract management that could affect Labor's ability to
serve the

financial needs of pension plan participants efficiently and effectively and
made several recommendations to address these problems.

Safe Workplaces Given the dramatic increase in the number of workers needing
workplace protection, changing working conditions, global competition, and
other factors that may affect workplace conditions, Labor must ensure that
laws protecting the work environment are enforced so that workplaces are
safe and healthy. While the agency made progress in improving procedures to
detect violations of agricultural child labor and establishing safety and
health programs at residential training centers for disadvantaged youth,
Labor must do more to improve its data and performance measurement and
organizational alignment. Our work has shown that Labor lacks the data
necessary to determine the extent of violations regarding children working
in agriculture. We recommended that Labor take steps to improve its data
collection to better identify and track these violations. Our work has also
shown that organizational

and coordination problems limit the effectiveness of Labor's efforts to
protect workers. Labor agencies, such as the Occupational Safety and Health
Administration (OSHA) and the Wage and Hour Division (WHD), have not
coordinated effectively with other agencies to enforce laws regulating
hazardous materials, potentially endangering employee safety, or to enforce
laws protecting children working in agriculture, reducing the potential to
detect child labor violations. We recommended various ways that OSHA and WHD
could

improve coordination to better enforce these laws.

Major Performance and Accountability Challenges

With a budget estimated at more than $39 billion in fiscal year 2001, much
of which is nondiscretionary, Labor is charged with preparing the nation's
workforce for new and better jobs, providing and protecting worker rights
and benefits, and ensuring safety in the nation's

workplaces. To carry out its mission, the agency oversees a broad array of
programs, ranging from those that help students' transition into the
workforce to those that ensure the integrity of pension plans for retirees.
These activities affect more than 100 million workers and more than 10
million employers. Labor's responsibility for managing these activities is
decentralized across 22 offices and more than 1,000 field offices. In
addition, Labor can share program

responsibility with as many as 14 entities in other federal agencies and
with numerous state organizations.

Although Labor has been making changes to carry out its responsibilities
more effectively, it faces the following significant performance and
accountability challenges: (1) increasing the employment and earnings of
America's workforce, (2) protecting workers' benefits, and (3) fostering
safe and healthy workplaces. Several weaknesses, however, may prevent Labor
from meeting these challenges, such as the lack of useful, accurate data to
measure performance, inadequate planning to ensure more effective service
delivery and adapt regulations to the changing workplace, and

insufficient organizational alignment and coordination to ensure worker
protections while minimizing employers' compliance burden.

Increasing the Given the continuing advances in technology, low Employment
and unemployment, employer demands for highly skilled

Earnings of workers, and an increasingly diverse workforce, it is America's

essential that Labor seek ways to help increase the Workforce

employment and earnings opportunities of America's workforce. The Employment
and Training

Administration (ETA), the primary agency at Labor responsible for helping
people prepare for and enter the workforce, oversees a variety of employment
and training programs whose clients range from unemployed youth to
dislocated workers to older workers seeking employment assistance. Labor's
Veterans' Employment and Training Service (VETS) helps veterans obtain

employment and training. Labor provides funds for these programs to state
and local organizations, which are largely responsible for administering
them. Many of these programs are now required to provide services through a
single service delivery system under the Workforce Investment Act (WIA). In
its efforts to increase the employment and earnings of America's workforce,
Labor has made progress in helping states implement WIA. However,
performance measurement and strategic planning problems continue to affect
the success of employment and training programs, including those programs
under WIA. In the 1990s, we documented fragmentation and

program overlap among the $20 billion in federally funded programs and
concluded that consolidation of these programs was needed. In 1998, WIA was
enacted to integrate multiple employment and training programs in Labor and
other federal agencies into a single local delivery system (known as the
one- stop system) to provide services more efficiently. Despite WIA's goal
to consolidate programs, we recently reported that the existence of a large
number of programs focused on providing employment and training
opportunities limits the integration and coordination of program services.
In an October 2000 report, we identified 40 federally funded employment and
training programs administered by 7 different federal agencies whose primary
goal is to help people find work or improve their job skills. Many programs

served the same target group and provided similar services for groups such
as Native Americans, youth,

and veterans, creating the potential for wasted funds, administrative
inefficiencies and duplication of, or gaps in, services that frustrate
customers (see fig. 1).

Figure 1: Programs Serving Target Groups

Number of Programs 10

8 6 4 2 0

Native Americans Youths

Veterans, Including Disabled

Veterans Persons With Disablities

Unemployed Welfare

Recipients Target group

To a limited degree, Labor's 2001 performance plan discusses efforts to
coordinate with other federal agencies and includes goals that indirectly
address coordination. In addition, Labor is providing technical assistance
to states to help them make the transition to WIA and to facilitate the
integration and streamlining of services through the one- stop system. In
June 2000, we reported that states were developing integrated service

delivery approaches that showed promise. However, it is too soon to
determine how well states and local agencies are integrating services
through the one- stop system.

We found that states' ability to integrate services under WIA may also be
limited by performance measurement and associated data problems. Labor is
developing a performance accountability system to implement WIA's
requirement to assess the effectiveness of state and local service delivery.
Labor developed a computer

system called the One- Stop Operating System (OSOS) that states could use to
support WIA- required data collection, facilitate case management, and share
performance data and client information among partners. We found, however,
that OSOS was not flexible enough to meet states' needs. As currently
configured, it will not incorporate non- Labor programs that must also
provide services at a one- stop center, such as the Department of
Education's Adult Education and Literacy programs. 1 As a result, it will be
difficult to collect performance data and track client participation

for all WIA programs that are required to offer services through the one-
stop center. In addition, no systemwide performance measures exist,
precluding the states'

ability to measure and evaluate one- stop performance. Labor's Office of
Inspector General (OIG) concluded that, if Labor is to evaluate program
effectiveness, it is essential to use unemployment insurance and Social
Security Administration wage records that provide data on employment
outcomes. However, because Labor has limited access to these wage records
for program evaluation purposes, OIG believes it must have the statutory
authority to obtain these records easily.

1 Of the 17 programs that are required to provide services through the one-
stop system under WIA, 12 are funded by Labor.

We also found that VETS, a partner in one- stop centers, cannot accurately
assess its performance nationally or track performance improvements over
time for a number of reasons. For example, state- reported data on veterans'
services and employment outcomes vary significantly across states, limiting
the usefulness of these data for performance measurement. In addition,
differences in how states count services provided to veterans affect
national data reported to VETS, which is used to measure progress. In
September 2000 testimony, we pointed out that the agency needs to address
these

inadequacies in its data collection efforts. Labor's OIG also determined
that VETS had problems with the reliability of its data and the quality of
its performance measures. VETS is working to develop additional performance
measures and is considering replacing its

primary data system. However, it is unclear if these efforts will resolve
inconsistencies in measurement among states and yield useful national data,
and no replacement schedule for the data system has been established. We
also found problems with the performance data Labor used to measure the
effectiveness of services provided to migrant youth under its Migrant and
Seasonal Farmworker Program. Because the program targets migrant and
seasonal agricultural workers and the children of such workers, it has
traditionally focused on adult employment needs. As a result, Labor
aggregates outcome data for 14- to 21- year olds, even though youth under 18
have different training and educational needs from those over 18. Because
Labor has not established specific outcome measures for youth aged 14 to 17,
we do not know if the needs of these youth are being met. In August 1998, we
recommended that Labor develop and analyze data on these services to
determine the number of 14- to 17- year olds served, the services provided,
and the outcomes experienced by these youth. While Labor agreed it would be
useful to collect these data and that WIA

would allow it to implement this recommendation as the agency works with its
partners to develop reporting requirements, it is not clear how these data
will be collected and reported under WIA's performance measurement system.
Strategic planning weaknesses have also limited the integration of Labor's
employment and training services under WIA. The numerous agencies that
provide employment and training services must develop partnerships that
require agencies to determine how

they will offer services in a new, integrated setting. This has been
problematic for some Labor programs. For example, in September 2000, we
reported that VETS' current strategic plan does not adequately address how
it will incorporate its programs into WIA and provide services at one- stop
centers. With the expansion of onestop

centers providing a greater number of service delivery points and the
traditionally high turnover of VETS staff, we noted that it is crucial that
VETS develop a strategic plan that lays out how it will integrate its
services at one- stop centers. In addition, we pointed out that, until VETS
identifies the problems veterans have in finding jobs, it is unable to
determine the type of assistance it should provide.

WIA's one- stop system also faces problems that result from multiple program
requirements and insufficient guidance. WIA regulations requiring each
program participating in the one- stop system to contribute a fair share of
the operating costs hinder the integration of employment and training
services. Because each

program has restrictions on the use of its money and specific requirements
for reporting, states must track and report costs separately for each
program. Many onestop

systems reported problems determining how partners would share costs, thus
delaying efforts to complete Memorandums of Understanding (MOU) required by
WIA to include cost allocation plans and ways to coordinate services.
Labor's OIG concluded that

funding limitations across programs and the lack of guidance from state and
federal agencies make it difficult for states and local areas to allocate
costs fairly and properly. It determined that considerable work needs to be
done to implement adequate systems to allocate costs among the one- stop
partner programs and agencies. Key Contact Sigurd R. Nilsen, Director

Education, Workforce, and Income Security Issues (202) 512- 7215 nilsens@
gao. gov Protecting the

Several agencies are responsible for protecting workers' Benefits of rights
and benefits, including unemployment insurance,

America's Workers prevailing wages, and pension and health plans. For

example, ETA and the states administer the federal- state Unemployment
Insurance (UI) program estimated to pay out about $25 billion in benefits in
fiscal year 2001. The Office of Workers' Compensation Programs (OWCP)
provides workers' compensation and medical benefits under the Federal
Employees' Compensation Act (FECA) to injured civilian employees in federal

workplaces, and the Wage and Hour Division (WHD) is responsible for ensuring
that workers receive the wages to which they are entitled under the law,
such as prevailing wages. The Pension Benefit Guaranty Corporation (PBGC), a
self- financed, government corporation within Labor, protects the retirement
income of 43 million workers in defined benefit pension plans. Labor's
Pension and Welfare Benefits Administration protects the integrity of
pensions, health plans, and other employee benefits for more than 150
million people.

Some of these agencies have taken or initiated action to improve protections
for workers. For example, in response to concerns we raised about the
accuracy and timeliness of its wage rate determination process under the
Davis- Bacon Act, WHD increased the efficiency and effectiveness of its wage
data verification procedures to ensure greater accuracy and timeliness in
the wage data used to determine prevailing wages. Labor has also taken
action to ensure appropriate workers' compensation payments to longshore and
harbor workers and to strengthen internal controls that mitigate the
vulnerability of the federal workers'

compensation program to fraud and abuse. Finally, PBGC is taking steps to
strengthen its contract and procurement management. Nevertheless, Labor's
challenge in protecting the benefits of workers continues to be affected by
a number of weaknesses in

performance measurement, strategic planning, organizational alignment, and
contract and financial management.

We found that performance data were often insufficient to help Labor
determine the progress made toward its goals. Despite OWCP's efforts to
improve its customer communications systems, we found inadequate levels of
customer service in a recent review of OWCP. For example, in some district
offices, more than half of all telephone calls made to OWCP failed to reach
its

telephone system, and the customers' ability to speak to an OWCP employee
varied significantly across districts. We also found that the agency does
not have an adequate system for collecting credible and timely performance
data to make informed decisions about its

customer service operations. Because the information it tracked on telephone
and written responses to customers was not always timely, consistent, or
comprehensive, OWCP could not determine what progress it had made toward
achieving its customer service goals. In October 2000, we recommended that
OWCP collect better performance data, use these and

other data for continuous improvement, and establish goals for telephone and
written communications with customers. Labor agreed with these
recommendations and said it would continue to explore ways to improve
customer communications.

To adapt programs to the modern workplace, Labor must address weaknesses in
strategic planning and the problems in organizational alignment that result.
A number of agencies manage programs that address the growing need for
workers in specific industries by providing employers with temporary foreign
workers

through, for example, the H- 2A program for agriculture workers and the H-
1B program for highly skilled workers such as information technology
workers. However, we found that having multiple agencies manage the H- 2A
and H- 1B programs resulted in program inefficiencies that confuse
participants and delay the process. In a December 1997 report, we
recommended that the Immigration and Naturalization Service (INS) be
eliminated from the H- 2A application process to reduce the cost and burden
on employers and simplify the application process. Labor and INS agreed and
issued a final rule in the Federal Register in July 2000 to delegate
authority to approve H- 2A visa petitions from INS to Labor, but this rule
has not yet taken effect. In a September 2000 report, we noted that Congress

should consider eliminating Labor's role in the H- 1B process because
Labor's review of employer petitions for H- 1B workers is limited by law,
and INS duplicates much of Labor's review. Labor did not agree, stating that
Congress should expand its role to be more substantive,

while ensuring the process is timely. In both cases, we also found that
limitations in Labor's enforcement authority left these programs vulnerable
to abuse and fraud by employers or workers, and we made recommendations to
address this limited authority. Because two separate Labor agencies are
responsible for the H- 2A program, we recommended that Labor

consolidate program authority into one agency to increase the effectiveness
of enforcement. Labor proposed this consolidation to Congress as part of its
fiscal year 2000 budget, but it was not approved. Our H1B report noted that
limitations on Labor's H- 1B enforcement authority restrict its ability to
adequately detect noncompliance or abuse. Labor's OIG identified cases in
which employers and individuals filed

fraudulent H- 1B petitions with Labor. Labor has urged Congress to expand
Labor's enforcement authority for this program.

In our review of the white- collar exemption under the Fair Labor Standards
Act (FLSA), which determines whether an employee is paid by the hour and is
eligible for overtime pay or is a salaried employee and thus exempt from
overtime pay rules, we found that implementation of the exemption had not
kept pace with the changing workforce and changing work arrangements. Over
the past 2 decades, the number of American workers exempt from overtime
rules has increased by 9 million mostly due to the rapidly growing services
sector, which has a higher proportion of exempt workers than other sectors,
and the influx of women into full- time white- collar exempt positions.
Despite these shifts in the American workplace, the rules determining
whether workers are exempt from FLSA have remained largely unchanged since
the Act was passed in 1938. For employers, the current rules are too rigid
and inflexible, particularly in view of technological advances in the
workplace. For employees, inflation and oversimplification of exemption
requirements have reduced protections formerly provided by the regulations.
In September 1999, we recommended that Labor comprehensively review current
regulations and

restructure exemptions for white- collar workers to accommodate today's
workplace. While Labor has made a commitment to open a review of these
regulations for the purpose of updating them, it has not yet begun this
effort.

Fiscal year 1999 marked the third consecutive year in which Labor achieved
an unqualified audit opinion on its consolidated financial statements with
no material internal control weaknesses. We encourage Labor to maintain its
high level of financial performance and to continue working to ensure that
all financial systems

substantially comply with the Federal Financial Management Improvement Act,
which requires agency financial management systems to comply with certain
federal financial and accounting standards.

In addition to Labor's unqualified audit opinions, Labor has made
improvements to the longshore and harbor workers' compensation trust fund
by, for example, ensuring that payments are no longer made to deceased
individuals and strengthening internal controls in its federal workers'
compensation program. However, other Labor programs that provide or protect
workers' benefits may still have weak internal controls and be subject to
financial management weaknesses, such as the Unemployment Insurance program.
Labor's OIG has identified a range of schemes by individuals and employers
to defraud the UI program. For example, electronic filing and mail- in UI
claims processes allow individuals to create false identities through the
use of fraudulent or unissued social security numbers and to defraud
multiple states from a single location, resulting in substantial losses to
the trust fund. The OIG

recommended increased training for state UI employees in fraud detection
techniques and improvements in internal controls and enforcement. Although
ETA's 2001 performance plan contains several goals to reduce program
vulnerability, it does not address all of the

OIG's concerns, such as the need for increased training and better
enforcement. Over the years, Labor's OIG has raised concerns about the
security of pension plan assets. First, because the Employee Retirement
Income Security Act, which establishes certain minimum standards for pension
and

welfare benefit plans, exempts certain pension plan assets from audit
coverage, almost one- half of pension plan audits cannot receive an audit
opinion on their financial statements. To strengthen oversight, the OIG
recommended that this exemption be repealed and that serious violations be
reported directly to Labor. Second, the OIG noted the vulnerability of
pension plan assets to fraud or organized criminal activity. Its
investigations have uncovered abuse by financial investment advisors and
pension plan administrators involved in the investment activity of pension
assets. Abuses by financial investment service providers, who typically
control the investment of hundreds of millions of dollars

of pension funds, can result in huge dollar losses because they usually
provide investment or financial advice to more than one plan. Labor's
continued support for the enforcement efforts of OIG and the Pension and

Welfare Benefits Administration against corrupt service providers is
necessary to provide a credible deterrent against abuses. In September 2000,
we reported that the Black Lung Disability Trust Fund, which provides
disability benefits and medical services to eligible workers in the coal
mining industry, continues to go into debt. The fund's shortfall was $6.3
billion in fiscal year 1999 and will increase to a projected $58 billion by
fiscal year 2040.

According to Labor's OIG, which also identified this problem, the debt
resulted from advances originally obtained to cover benefit payments that
coal taxesthe primary source of fund revenuescould not provide. Although the
tax now generates sufficient revenue to cover benefits, the trust fund must
continue to borrow money to pay interest on past advances. Labor, in
conjunction with the Treasury Department, drafted a legislative proposal to
authorize a refinancing of the outstanding debt, extend excise tax levels,
and provide for a payment to compensate Treasury for the foregone prepayment
premium that was sent to Congress in

October 2000. Labor will continue to pursue this legislation in the next
congressional session.

Finally, we found weaknesses in the Pension Benefit Guaranty Corporation's
contract management and procurement planning that could affect its ability
to serve the financial needs of millions of pension plan participants
efficiently and effectively. Faced with a

significant number of large pension plan failures beginning in the mid-
1980s, PBGC contracted out for services rather than seeking more federal
staff to address the large backlog of benefit determinations. Because the
agency's goal was to obtain needed services

quickly, it did not adequately link its contracting decisions to long- term
strategic planning. As a result, the agency cannot determine if it has a
cost- effective mix of contractor and federal employees or if it will be
prepared for future workload changes. We also found that PBGC did not have a
sound business rationale for its decision to consolidate the competition for
services at three separate field offices into one procurementand may have
limited competitionand

did not do enough to stimulate competition for other field office
procurements.

We made several recommendations to address PBGC's need to manage its longer-
term contracting needs more strategically and take action to address
operational and procedural weaknesses. For example, we recommended that PBGC
undertake a comprehensive review to better link staffing and contracting
decisions to its long- term strategic planning process, establish a
comprehensive

set of procedural guidance for staff who monitor contracts, and compile
essential performance data in a central location to monitor contractor
performance. To achieve more effective procurement planning and practices so
that the agency does not risk paying too much for contracted services and
receiving inferior performance, we recommended that the agency consider
using fixed- price rather than labor- hour

contractswhich entail more oversight and riskand foster more competition by
conducting market research to identify additional potential offerors and by
seeking

more opportunities to increase competition for contracts. In response, PBGC
plans to take action in several areas. For example, PBGC plans to develop
additional centralized performance data to manage its contractors; use more
fixed- price contracts, where appropriate; and open additional contracts to
competition and expand its market research efforts to identify additional
potential offerors. It is important that PBGC sustain these efforts and
fully implement these actions.

Key Contact Sigurd R. Nilsen, Director Education, Workforce, and Income
Security Issues

(202) 512- 7215 nilsens@ gao. gov Fostering Safe and At least three Labor
agencies are responsible for Healthy Workplaces

enforcing laws to protect the working conditions of employees: the
Occupational Safety and Health Administration (OSHA), the Mine Safety and
Health Administration (MSHA), and WHD. These agencies oversee worker health
and safety in most workplaces, often sharing enforcement with state and
federal agencies. Although Job Corps has begun to establish safety and
health programs at Job Corps centers, and

OSHA and WHD are making efforts to obtain better data and coordinate
enforcement, these agencies face a number of performance measurement and
organizational weaknesses that affect their ability to foster safe and
healthy workplaces. We found performance measurement problems in WHD's
enforcement of child labor laws. WHD does not know the true extent of
violations involving children

working in agriculture because of the way it tracks child labor violations.
Currently, these violations are not tracked as child labor violations, but
as recordkeeping violations, in which employers are cited for not having
valid proof of a child's age on file as FLSA requires. In addition, although
it is well known that many children work in agriculture and that workplace
violations occur, WHD does not know the number of children involved in

other types of labor law violations, such as housing and minimum wage laws.
In August 1998, we recommended that Labor improve its data collection
regarding the number of recordkeeping violations from children working in
agriculture without employers having proof of age and the number of minimum
wage and other labor law violations involving individuals under 18. Although
WHD is developing a case management and tracking system for wage and hour
investigations, it is behind schedule due to implementation problems. OSHA
and WHD's efforts to protect workers also suffer from organizational and
coordination problems resulting from the numerous federal and state agencies
sharing responsibility for these missions. In January 2000, we reported that
6 executive agencies and 15 component agencies are responsible for enforcing
at least 37 different federal laws governing workplace safety and health for
private sector workers (see fig. 2). According to OSHA, it has 53 MOUs with
other federal agencies regarding workplace safety and health.

Figure 2: Workplace Safety and Health Laws Enforced by Responsible Agencies

30 Number of laws

24 18 12

6 0

Labor DOT EPA NRC DOE Treasury Responsible agency

Note: The number of laws each agency is responsible for enforcing adds up to
more than 37 because a law may be enforced by more than one agency. However,
in October 2000, we reported that OSHA was

not following the MOUs it had signed with at least three other federal
agencies, resulting in greater employer compliance burden and potentially
endangering worker safety. We also found that OSHA and the other agencies
were not coordinating requirements, such as training for hazardous material
workers. We recommended various ways that OSHA could improve coordination,
such as

determining whether the MOUs were effective and consolidating training
requirements. Labor acknowledged points of overlap regarding worker training
and did not object to the recommendations. In August 1998, we found that WHD
was not adhering to requirements in established agreements with state and
federal agencies, allowing potential agricultural child labor violations to
go undetected. We recommended that Labor issue national enforcement
procedures that inspectors should follow when verifying a child's age and
take steps to ensure that procedures specified in agreements with other
agencies to coordinate enforcement are being followed and documented. WHD
revised its inspection procedures to require such coordination but continues
to lack a quality control system to ensure that field investigators adhere
to these procedures.

Similarly, in September 2000, Labor's OIG found problems with Job Corps'
implementation of an MOU establishing safety and health programs for its
centers. The OIG concluded that, although the Job Corps had established
performance standards to reduce injuries

and illnesses in compliance with the MOU, other responsibilities were
largely unmet and the number of injuries and illnesses had not declined. For
example, safety officers did not have the training necessary to administer
the program, and inspections were not always documented. Neither were there
adequate

systems to ensure that violations were abated properly and in a timely
manner and that the data used to measure progress were based on incomplete
and

inconsistent practices. The OIG made recommendations to address these
problems, such as ensuring that officers take all required training courses,
inspections meet all requirements and are supplemented by greater
supervision of student activities, and abatements are

more timely. Labor is taking steps to address many of these recommendations.

Our review of child labor law enforcement in August 1998 indicated a lack of
strategic planning, making it difficult to ensure that laws and regulations
keep up with the changing workplace. The report concluded that FLSA may not
be up to date, given changes in the agricultural sector, such as the
increased dominance of large agricultural producers and growing reliance on
mechanization and pesticides. Because of the inadequate protections for
children working as hired migrant and seasonal agricultural workers, we
recommended that Congress reevaluate whether FLSA adequately protects these
children. Although some members of Congress have expressed interest in this
issue, no action has been taken. Key Contact Robert E. Robertson, Director
Education, Workforce, and Income Security Issues (202) 512- 7215 robertsonr@
gao. gov

Related GAO Products Increasing the

Multiple Employment and Training Programs: Employment and Overlapping
Programs Indicate Need for Closer Earnings of Examination of Structure (GAO-
01- 71, Oct. 13, 2000). America's

Veterans' Employment and Training Service: Better Workforce Planning Needed
to Address Future Needs (GAO/ T- HEHS- 00- 206, Sept. 27, 2000).

Observations on the Department of Labor's Fiscal Year 1999 Performance
Report and Fiscal Year 2001 Performance Plan (GAO/ HEHS- 00- 125R, June 30,
2000). Workforce Investment Act: Implementation Status and the Integration
of TANF Services (GAO/ T- HEHS- 00- 145, June 29, 2000). Veterans'
Employment and Training Service: Strategic and Performance Plans Lack Vision
and Clarity (GAO/ T- HEHS- 99- 177, July 29, 1999).

Multiple Employment Training Programs: Major Overhaul Needed to Reduce
Costs, Streamline the Bureaucracy, and Improve Results (GAO/ T- HEHS- 95-
53, Jan. 10, 1995).

Protecting the Office of Workers' Compensation Programs: Goals and

Benefits of Monitoring Are Needed to Further Improve Customer Workers
Communications (GAO- 01- 72T, Oct. 3, 2000).

The Black Lung Disability Trust Fund: Briefing to the Staff of the House
Subcommittee on Workforce Protections (Sept. 28, 2000).

Pension Benefit Guaranty Corporation: Contract Management Needs Improvement
(GAO/ T- HEHS- 00- 199, Sept. 21, 2000).

Pension Benefit Guaranty Corporation: Contracting Management Needs
Improvement (GAO/ HEHS- 00- 130, Sept. 18, 2000). H- 1B Foreign Workers:
Better Controls Needed to Help Employers and Protect Workers (GAO/ HEHS- 00-
157, Sept. 7, 2000). H- 2A Agricultural Guestworkers: Status of Changes to
Improve Program Services (GAO/ T- HEHS- 00- 134, June 15, 2000). Fair Labor
Standards Act: White- Collar Exemptions Need Adjustments for Today's Work
Place (GAO/ T- HEHS- 00- 105, May 3, 2000).

Internal Controls: Oversight of Longshore Special Fund Needs Improvement
(GAO/ AIMD- 00- 15, Oct. 29, 1999). Fair Labor Standards Act: White- Collar
Exemptions in the Modern Workplace (GAO/ HEHS- 99- 164, Sept. 30, 1999).
Davis- Bacon Act: Labor Now Verifies Wage Data, but Verification Process
Needs Improvement (GAO/ HEHS- 99- 21, Jan. 11, 1999).

H- 2A Agricultural Guestworker Program: Changes Could Improve Services to
Employers and Better Protect Workers (GAO/ HEHS- 98- 20, Dec. 31, 1997).
Fostering Safe and Worker Protection: Better Coordination Can Improve
Healthy Workplaces

Safety at Hazardous Material Facilities (GAO- 01- 62, Oct. 26, 2000).
Occupational Safety and Health: Federal Agencies Identified as Promoting
Workplace Safety and Health (GAO/ HEHS- 00- 45R, Jan. 31, 2000).

Child Labor in Agriculture: Changes Needed to Better Protect Health and
Educational Opportunities (GAO/ HEHS- 98- 193, Aug. 21, 1998).

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- 01- 247)

Major Management Challenges and Program Risks: Department of Housing and
Urban Development (GAO- 01- 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)

GAO United States General Accounting Office

Page 1 GAO- 01- 251 Labor Challenges

Contents

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Comptroller General of the United States

Page 3 GAO- 01- 251 Labor Challenges United States General Accounting Office

Washington, D. C. 20548

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Overview Page 7 GAO- 01- 251 Labor Challenges

Overview Page 8 GAO- 01- 251 Labor Challenges

Overview Page 9 GAO- 01- 251 Labor Challenges

Overview Page 10 GAO- 01- 251 Labor Challenges

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Major Performance and Accountability Challenges Page 12 GAO- 01- 251 Labor
Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Challenges

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Related GAO Products Page 30 GAO- 01- 251 Labor Challenges

Related GAO Products Page 31 GAO- 01- 251 Labor Challenges

Page 32 GAO- 01- 251 Labor Challenges

Performance and Accountability Series

Page 33 GAO- 01- 251 Labor Challenges

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