Office of Personnel Management: Status of Achieving Key Outcomes
and Addressing Major Management Challenges (09-JUL-01,
GAO-01-884).
This report reviews the Office of Personnel Management's (OPM)
fiscal year 2000 performance report and fiscal year 2002
performance plan. OPM's mission, in part, is to provide strategic
human capital management leadership and services to federal
agencies. OPM's fiscal year 2000 performance report and fiscal
year 2002 performance plan contain many goals that measure the
extent of their activities, but there are few goals and measures
that assess the actual state of strategic human capital
management in the federal government or the specific
contributions that OPM's programs and initiatives make. Although
OPM does not directly control these outcomes in federal agencies,
it needs to measure the results to assess how well its leadership
services are working. OPM recognizes this weakness and is working
with human resource directors at federal agencies to develop a
series of human capital measures. In its report and plan, OPM
also need to strengthen goals and measures to improve their
reliability, link its internal human capital goals to OPM
programs, and establishing a program management performance goal
to assess fraud and error in the Federal Employees Health
Benefits Program.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-884
ACCNO: A01372
TITLE: Office of Personnel Management: Status of Achieving Key
Outcomes and Addressing Major Management Challenges
DATE: 07/09/2001
SUBJECT: Performance measures
Personnel management
Program evaluation
Reporting requirements
Strategic planning
GPRA
Government Performance and Results Act
Federal Employees Health Benefits
Program
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GAO-01-884
GAO United States General Accounting Office
Report to Ranking Minority Member, Committee on Governmental Affairs, U. S.
Senate
July 2001 OFFICE OF PERSONNEL MANAGEMENT
Status of Achieving Key Outcomes and Addressing Major Management Challenges
GAO- 01- 884
Page i GAO- 01- 884 OPM: Status of Achieving Key Outcomes Letter 1
Results in Brief 2 Background 6 Assessment of OPM?s Progress and Strategies
in Achieving
Selected Key Outcomes 7 Comparison of OPM?s Fiscal Year 2000 Performance
Report and
Fiscal Year 2002 Performance Plan With the Prior Year Report and Plan for
Selected Key Outcomes 14 OPM?s Efforts to Address Its Major Management
Challenges
Identified by GAO 16 Conclusions 17 Recommendations for Executive Action 17
Scope and Methodology 18 Agency Comments 18
Appendix I Observations on OPM?s Efforts to Address Its Major Management
Challenges 20
Appendix II Comments From the Office of Personnel Management 25
Table
Table 1: Major Management Challenges 21 Contents
Page ii GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Abbreviations CFO Chief Financial Officers CSRS Civil Service Retirement
System EDP electronic data processing FEHBP Federal Employees Health
Benefits Program FERS Federal Employees Retirement System FFMIA Federal
Financial Management Improvement Act GPRA Government Performance and Results
Act MSPB Merit Systems Protection Board OIG Office of the Inspector General
OMB Office of Management and Budget OPM Office of Personnel Management RF
revolving fund RIS Retirement and Insurance Service S& E salaries and
expenses
Page 1 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
July 9, 2001 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate
Dear Senator Thompson, As you requested, we reviewed the Office of Personnel
Management?s (OPM) fiscal year 2000 performance report and fiscal year 2002
performance plan required by the Government Performance and Results Act of
1993 (GPRA) to assess the agency?s progress in achieving selected key
outcomes that you identified as important mission areas for the agency. 1
Four of the five outcomes are the same ones we addressed in our June 2000
review of the agency?s fiscal year 1999 performance report and fiscal year
2001 performance plan to provide a baseline by which to measure the agency?s
performance from year to year. 2 These selected key outcomes are:
The federal government has an appropriately constituted workforce with the
proper skills to carry out its missions.
Federal employees are evaluated, rewarded, and otherwise held accountable
for their performance.
Federal agencies adhere to merit system principles. 3
There is less fraud and error in the Federal Employees Health Benefits
Program.
Retirement and insurance services are timely and accurate. As agreed,
using the selected key outcomes for OPM as a framework, we (1) assessed the
progress OPM has made in achieving these outcomes and
1 This report is one of a series of reports on the 24 Chief Financial
Officers (CFO) Act agencies? fiscal year 2000 performance reports and fiscal
year 2002 performance plans. 2 Observations on the Office of Personnel
Management?s Fiscal Year 1999 Performance Report and Fiscal Year 2001
Performance Plan (GAO/ GGD- 00- 156R, June 30, 2000). The last outcome,
?Retirement and insurance services are timely and accurate,? is new.
3 Section 2301 of Title V of the U. S. Code 2301 stipulates that federal
personnel management should be implemented consistent with nine merit system
principles including recruiting or promoting employees based on merit,
retaining or separating employees based on performance, and protecting
employees from improper influence.
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
the strategies the agency has in place to achieve them and (2) compared
OPM?s fiscal year 2000 performance report and fiscal year 2002 performance
plan with the agency?s prior year performance report and plan for these
outcomes. Additionally, we agreed to analyze how OPM has addressed its major
management challenges, including the governmentwide high- risk areas of
strategic human capital management and information security that we and
OPM?s Inspector General have identified. Appendix I provides detailed
information on how OPM has addressed these challenges. (App. II contains
OPM?s comments on a draft of our report).
Attention to strategic human capital management is important because
building agency employees? skills, knowledge, and individual performance
must be a cornerstone of any serious effort to maximize the performance and
ensure the accountability of the federal government. Because strategic human
capital management is a pervasive challenge across the federal government,
we recently identified it as a governmentwide high- risk area. 4 Addressing
the federal government?s human capital challenges is a responsibility shared
by many parties in addition to the individual agencies. For example, we
noted that OPM and the Office of Management and Budget have substantial
roles to play in fostering a more resultsoriented approach to strategic
human capital management across the government. OPM?s sustained commitment
and attention will be particularly critical to making a real difference in
the way federal agencies manage human capital. It is likely that OPM will
continue moving from
?rules to tools,? and that its most valuable contributions in the future
will come less from traditional compliance and approval activities than from
its initiatives for assisting agencies as a strategic partner. 5 OPM?s
revised 5year strategic plan, issued in September 2000, supports this
changed focus.
OPM provides human resource management policies, guidance, and assistance to
executive agencies to help with their human capital management, but the
results of OPM?s efforts largely take place at federal agencies outside of
the direct control of OPM. The basic strategic challenges confronting OPM
are similar to those confronting other agencies: developing a set of
performance goals and measures for events
4 High- Risk Series: An Update (GAO- 01- 263, January 2001). 5 Managing for
Results: Human Capital Management Discussions in Fiscal Year 2001
Performance Plans (GAO- 01- 236, April 24, 2001). Results in Brief
Page 3 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
that occur beyond the direct control of the agency and understanding how the
agency?s programs and day- to- day activities contribute to the achievement
of those outcomes. OPM clearly recognizes the strategic challenges it faces,
has committed to responding to them, and has important initiatives underway
in that regard. Nevertheless, for the most part, OPM?s performance report
and plan do not measure strategic human capital management at executive
agencies or how OPM?s programs and initiatives contributed to the
achievement of those outcomes. OPM has recognized that such measures are
needed and is developing a series of agency outcome- based measures for use
in future performance reports and plans.
OPM recognizes the importance of achieving the five outcomes that you asked
us to examine and includes many goals and strategies in its performance
report and plan that are related to these outcomes. However, assessing
progress towards these outcomes is difficult. Specifically:
Planned outcome: The federal government has an appropriately constituted
and skilled workforce. Because the fiscal year 2000 report and 2002 plan do
not contain measures of the appropriateness or skill level of the workforce,
we are not able to assess progress made in achieving this outcome. However,
OPM does report progress in preparing a model for workforce planning- the
essential first step for agencies to take to address their workforce skill
needs. Other information indicates that shortcomings in these areas are
common among federal agencies. Our January 2001 high- risk update provided
numerous examples of how poor strategic human capital management was harming
mission accomplishment.
Planned outcome: Federal employees are held accountable for their
performance. As with the first outcome, OPM, for the most part, does not
have measures that assess whether federal employees are held accountable for
performance. OPM?s report and plan contain goals and strategies to provide
performance guidance and to post performance management studies on its web
site, as well as goals and accomplishments to support alignment of
individual performance management and recognition with achieving agency
strategic goals. Our fiscal year 2000 survey of federal managers found that
few believe employees in their agencies have received positive recognition
for helping agencies accomplish strategic goals. 6
6 Managing for Results: Federal Managers? Views Show Need for Ensuring Top
Leadership Skills (GAO- 01- 127, October 20, 2000).
Page 4 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Planned outcome: Federal agencies adhere to merit system principles. OPM?s
progress on achieving this outcome is mixed. OPM reports that OPM periodic
reviews of agencies identified no systemic merit principle weaknesses.
However, OPM?s survey of employees indicates that a sizeable proportion of
employees think that some merit principles are not followed. For example,
the survey shows that only slightly more than half of federal employees
believe that federal employees are managed efficiently and effectively, and
less than half believe federal employees are provided equal pay for equal
work and are rewarded for excellent performance. The fiscal year 2000 survey
shows no significant change from the previous year.
Planned outcome: There is less fraud and error in the Federal Employees
Health Benefits Program. We could not assess whether there is less fraud and
error in the Federal Employees Health Benefits Program. OPM?s Office of the
Inspector General (OIG) had a goal and measures (such as number of
debarments, convictions, and fines) to assess progress in detecting and
addressing fraud. But OPM has no program office goals, strategies, or
performance measures for reducing fraud in the health benefits program.
However, although the OIG efforts would contribute to less fraud and fewer
errors in the health benefits program, these efforts have led more to
identifying fraud after it has happened rather than preventing it from
occurring. In addition, there are no baseline indicators of the dollar
amount of fraud and errors, or quantitative targets (other than for fraud
detection) against which to measure progress. OPM says it recognizes that it
needs to establish performance indicators regarding this issue and has
committed to developing them for the fiscal year 2003 performance plan.
Also, OPM says it will report this information in future performance
reports, beginning with the report for fiscal year 2001.
Planned outcome: Retirement and insurance services are timely and
accurate. OPM?s performance report indicates a generally high level of
customer satisfaction for its retirement and insurance services. However,
the timeliness of retirement claims processing has decreased. OPM is
addressing this challenge and says it has already seen improvements in
fiscal year 2001. For the long term, OPM is implementing a retirement
systems modernization project in phases and expects that it will realize
significant business benefits each year as well as significantly improve all
aspects of the delivery of retirement services. However, OPM will continue
to face potential retirement claims processing delays because the modernized
retirement system is being implemented in phases and is not expected to be
fully operational until 2009.
Within OPM, strategic human capital management and information security, the
governmentwide high- risk areas designated by GAO, are
Page 5 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
addressed in both the fiscal year 2000 performance report and fiscal year
2002 performance plan. However, both areas could be strengthened.
Specifically, OPM has established several goals to address its internal
human capital management, including employee education and training. To make
these goals more useful they should be linked to specific OPM programs. For
example, OPM?s plan calls for continuing to increase the employee- to-
supervisor ratio, but it does not discuss how this change will impact OPM
programs or what human capital strategies might be needed to address the
reduction in the number of supervisors. Regarding information security, OPM
included a goal related to information security in its report and plan. The
fiscal year 2000 report states that progress on improving information
security is sufficient to indicate that the specific goal has been
accomplished; however, the report also continues to report that there are
remaining information security issues. In fact the audit of OPM?s fiscal
year 2000 financial statements included a reportable condition 7 related to
several information security weaknesses.
As OPM has recognized, it needs to link its strategic and performance goals
to outcome measures that assess the actual state of strategic human capital
management in the federal government. Even though OPM does not directly
control these outcomes in federal agencies, OPM understands it needs to
measure the results to assess the effectiveness of its programs. Building on
its ongoing efforts, OPM needs to make other improvements to its performance
report and plan, including (1) improving the reliability of its performance
measures, (2) linking its internal human capital goals to specific OPM
programs, and (3) establishing a Retirement and Insurance Service goal to
assess fraud in the Federal Employees Health Benefits Program. We are making
recommendations to address these issues.
OPM?s Acting Director, in providing comments on a draft of our report,
generally agreed with the results of our review, including our
recommendations. He also expressed appreciation for our recognition of the
strategic challenges OPM faces with regard to human capital management as
well as its efforts to improve its measurement framework, including the
shift to measuring governmentwide outcomes. OPM also provided specific
comments to clarify information we presented on four of
7 A reportable condition is a matter that in the auditor?s opinion should be
communicated because it represents a significant deficiency in the design or
operation of internal controls, which could adversely affect the
organization?s ability to record, process, summarize, and report financial
data consistent with the assertions of management in the financial
statements.
Page 6 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
the five selected key outcomes. Accordingly, we made several changes to this
report to address these comments.
GPRA is intended to shift the focus of government decision- making,
management, and accountability from activities and processes to the results
and outcomes achieved by federal programs. New and valuable information on
the plans, goals, and strategies of federal agencies has been provided since
federal agencies began implementing GPRA. Under GPRA, annual performance
plans are to clearly inform the Congress and the public of (1) the annual
performance goals for agencies? major programs and activities, (2) the
measures that will be used to gauge performance, (3) the strategies and
resources required to achieve the performance goals, and (4) the procedures
that will be used to verify and validate performance information. These
annual plans, issued soon after transmittal of the president?s budget,
provide a direct linkage between an agency?s longer- term goals and mission
and day- to- day activities. 8 Annual performance reports are to
subsequently report on the degree to which performance goals were met. The
issuance of the agencies? performance reports, due by March 31, represents a
new and potentially more substantive phase in the implementation of GPRA-
the opportunity to assess federal agencies? actual performance for the prior
fiscal year and to consider what steps are needed to improve performance and
reduce costs in the future. 9
OPM?s mission is to support the federal government?s ability to have the
best workforce possible to do the best job possible. OPM is to accomplish
this mission by leading federal agencies in shaping human resources
management systems to effectively recruit, develop, manage, and retain a
high- quality and diverse workforce; protecting national values embodied in
law, including merit principles and veterans? preference; serving federal
agencies, employees, retirees, their families, and the public through
technical assistance, employment information, pay administration, and
benefits delivery; and safeguarding employee benefit trust funds. The
results of OPM?s efforts largely take place at federal agencies outside of
the direct control of OPM.
8 The fiscal year 2002 performance plan is the fourth of these annual plans
under GPRA. 9 The fiscal year 2000 performance report is the second of these
annual reports under GPRA. Background
Page 7 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
This section discusses our analysis of OPM?s performance in achieving its
selected key outcomes and the strategies it has in place, particularly
strategic human capital management 10 and information technology, for
accomplishing these outcomes. In discussing these outcomes, we have also
provided information drawn from our prior work on the extent to which the
agency provided assurance that the performance information it is reporting
is credible.
We cannot assess progress made by OPM in contributing to the outcome that
the federal government has an appropriately constituted workforce with the
proper skills to carry out its missions. OPM has several goals that relate
to this outcome, but none that focus squarely on the degree to which the
federal workforce has the right skill mix. Specifically, OPM?s fiscal year
2000 performance report includes goals that ?federal human resources
management policies and programs are merit- based, missionfocused, and cost
effective? and ?a model for workforce planning . . . is in place? for use by
agencies. OPM?s performance report states that both of these goals were met.
OPM states that the first goal was met because it produced a few studies
that contributed to human resource policy or program proposals. The second
goal was met, according to the OPM fiscal year 2000 performance report,
because OPM has provided the workforce planning model to several agencies.
This model, and other important steps OPM has taken to support better
workforce planning- including developing research tools and launching a
website to facilitate information sharing about workforce planning issues-
could prove helpful to agencies in addressing their individual strategic
human capital challenges. As a next step, OPM needs to measure, for example,
how the studies and workforce planning model actually contributed to
improved strategic human capital management at the agencies. Specifically,
as an intermediate outcome, OPM could measure the number of agencies that
were able to identify skill shortages and solutions as a result of using
workforce planning. Previously, we have reported that OPM should take a more
proactive role in agency workforce planning efforts, and our April 2001
report on
10 Key elements of modern strategic human capital management include
strategic human capital management 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. Assessment of OPM?s
Progress and Strategies in Achieving Selected Key Outcomes
An Appropriately Constituted and Properly Skilled Workforce
Page 8 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
expected trends in federal employee retirements further highlights the need
for improved workforce planning. 11
Other information indicates that this outcome is not commonly being
achieved. Our high- risk series gave many examples of agencies not having
the appropriate workforce to carry out its mission. For example, the
Department of Energy did not have employees with adequate contract
management skills to oversee the clean up of hazardous waste sites, and
nursing shortages at Veterans Affairs facilities could put veterans at risk.
12
OPM?s fiscal year 2002 plan contains several strategies that, for the most
part, appear to be reasonable. For example, OPM plans to obtain input from
agencies on how workforce policies need to be changed and to explore
policies on dual compensation and phased retirement to bolster retention of
federal employees. Determining whether these strategies are successful will
require OPM to develop indicators of whether federal agencies and
departments have appropriately skilled workforces and how these strategies
are being used to build workforce skills.
As is the case with the first outcome, OPM?s performance report does not
contain sufficient outcome measures to fully assess the extent to which
federal employees are held accountable for their performance. OPM?s
performance report contains several goals related to this outcome. For
example, OPM is to develop performance- oriented approaches to employee
compensation and to provide assistance in developing performance management
systems. OPM measures goal achievement by such indicators as the number of
workshops offered, the number of performance studies available on the OPM
Website, and whether performance management guidance is issued in a timely
manner.
Other information indicates that much more needs to be done to improve
performance management at federal agencies. For example, in our October 2000
report, we noted that surveys we had administered to managers showed that
only 26 percent in 1997 and 31 percent in 2000
11 Senior Executive Service: Retirement Trends Underscore the Importance of
Succession Planning (GAO/ GGD- 00- 113BR, May 2000) and Federal Employee
Retirements: Expected Increase Over the Next 5 Years Illustrates Need for
Workforce Planning (GAO- 01- 509, April 27, 2001).
12 High- Risk Series: An Update (GAO- 01- 263, January 2001). Employee
Performance
Accountability
Page 9 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
reported that employees in their agencies had received positive recognition
to a great or very great extent for helping agencies accomplish their
strategic goals. 13 Also, the Merit Systems Protection Board (MSPB) and we
have previously reported that holding employees accountable for their job
performance continues to be perceived as a challenge because employees
perceive the process as cumbersome. 14
OPM?s plan identifies a variety of strategies for achieving goals that
relate to the outcome of evaluating, rewarding, and otherwise holding
federal employees accountable for their performance. The strategies call for
providing guidance and information to agencies, including information on
best practices, as well as working with internal and external stakeholders
to identify needed changes in compensation and performance policies and
programs. Although the strategies appear reasonable, how they will help to
achieve the outcome of holding employees accountable for performance is not
always clear. For example, a strategy OPM cited to help achieve its goal of
identifying options for performance- oriented approaches to compensation was
to maintain comprehensive research on best practices in private and public
sector compensation systems and tools that the federal government can use.
But OPM offers no explanation of how the use of such systems and tools will
aid the federal government in holding employees accountable for their
performance.
OPM has made mixed progress on the outcome that federal agencies adhere to
merit system principles. On the one hand, OPM?s fiscal year 2000 performance
report states that OPM?s periodic reviews of agencies have identified no
systemic merit principle weaknesses. On the other hand, the results of OPM?s
government- wide survey of federal employees conducted in fiscal years 1999
and 2000 indicate that a sizable percentage of employees think that certain
merit principles are not being followed. The fiscal year 2000 performance
report includes goals related to the overall adherence to merit principles
by agencies, including agencies with
13 Managing for Results: Federal Managers? Views Show Need for Ensuring Top
Leadership Skills (GAO- 01- 127, October 20, 2000). 14 Performance
Management: How Well Is the Government Dealing With Poor Performers
(GAO/ GGD- 91- 7, October 2, 1990); Veterans Health Administration:
Performance and Conduct Issues Involving Senior Managers at VA Medical
Centers (GAO/ GGD- 98- 92, April 30, 1998); The Changing Federal Workplace:
Employee Perspectives, Merit Systems Protection Board, March 1998; and
Federal Supervisors and Poor Performers, Merit Systems Protection Board,
July 1999. Adherence to Merit System
Principles
Page 10 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
delegated examining authority. 15 OPM uses a variety of measures to
determine if this outcome is being achieved, including (1) the results of
merit system reviews of federal agencies, (2) agencies? satisfaction with
the reviews, and (3) the views of federal employees regarding adherence to
merit principles. OPM?s report states that the reviews indicated that
agencies, including those with delegated examining authority, were adhering
to merit principles. According to the performance report, the problems found
in OPM?s reviews were not systemic. Once problems were identified in the
review, OPM worked with the agency to resolve the problems. In its reviews,
OPM also identified best practices and shared them with other agencies.
The views of federal employees on adherence to the nine merit system
principles, as provided in an OPM survey, indicated that there was no
significant change from the fiscal year 1999 survey. OPM?s goal was to
increase by two percentage points the percentage of federal employees who
believed each of the merit principles were being adhered to by their
agencies. There are a variety of factors that influence employees? responses
to this question, including governmentwide economic, cultural, and social
conditions. For this reason, OPM expects substantive change in the
perceptions of these principles to take place over several years. This
year?s survey indicates that a relatively large portion of federal employees
believed that employees maintain a high standard of integrity and concern
for the public and that employees are protected from improper political
influence. But on the other hand less than half believe that employees are
protected against reprisal for the lawful disclosure of information or are
provided equal pay for equal work and rewarded for excellent performance;
and only a little more than half think that employees are managed
efficiently and effectively. Similar results were reported in the merit
system principles survey conducted by MSPB in 2000. 16
OPM?s fiscal year 2002 performance plan identifies a variety of strategies
that are consistent with its current efforts. The current strategies should
help OPM achieve its goals as well as contribute to the outcome of ensuring
that agencies adhere to the merit system principles. For example, to help
ensure that personnel practices are carried out in accordance with
15 Title 5 U. S. C. Section 1104 provides OPM authority to delegate to
agencies the competitive examining process used to fill most federal civil
service positions. 16 Issues of Merit, Merit Systems Protection Board,
Office of Policy and Evaluation, February 2001.
Page 11 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
these principles, OPM?s strategies include conducting nationwide agency
merit system oversight reviews, auditing agencies with delegated examining
authority and reviewing reports filed by these agencies to identify any
training needs, and reviewing all agency selections for initial career
Senior Executive Service appointments for compliance with merit system
principles.
OPM does not include coordination with MSPB as a strategy for achieving
performance goals within its Office of Merit Systems Oversight and
Effectiveness- the program office that is responsible for leading the
federal government?s efforts in overseeing the merit system. MSPB?s mission,
in part, is to ensure that agencies make employment decisions in accordance
with the merit system principles. In support of its mission, MSPB hears and
decides cases involving abuses of the merit system. It also administers the
merit principles survey to gather data on the ?health?
of the federal civil service. OPM?s strategy should also consider MSPB?s
decisions and merit principles survey in helping to achieve this outcome.
However, even though both agencies administer programs and conduct similar
activities that share a common purpose, OPM?s strategic plan for fiscal
years 2000 through 2005 states that coordination with MSPB is limited to
adjudicatory issues.
We could not fully assess the progress OPM is making to reduce fraud and
error in the Federal Employees Health Benefits Program. The OPM OIG has
identified health care fraud in the Federal Employees Health Benefits
Program as one of the most serious management challenges facing OPM. The
fiscal year 2000 performance report contains an OIG goal to have fraud
against OPM programs detected and prevented. This goal has several measures,
including the number of convictions for health benefit program fraud (51 in
fiscal year 2000) and the number of health benefit providers who are
debarred and not allowed to participate in the Federal Employees Health
Benefits Program (2,706 in fiscal year 2000). Although these are measures
for the OIG, there were no goals or strategies related to the detection and
prevention of fraud at the programmatic level for the Federal Employees
Health Benefits Program in the Office of Retirement and Insurance Service
(RIS), whose mission, in part, is to provide accurate Fraud and Error in the
Federal Employees Health Benefits Program
Page 12 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
and cost- efficient benefit services. 17 For example, there were no goals or
strategies to decrease the number of errors or fraud cases to a minimum. In
addition, there were no baseline indicators of the dollar amount of fraud or
errors found in the health benefits program or quantitative targets against
which to measure progress. OPM believes that measures identified by the OIG
are consistent with RIS? expectations and says that RIS has worked in unison
with the OIG to minimize fraud and abuse in the Federal Employees Health
Benefits Program. While we recognize this, we believe that OPM needs to
develop goals and measures within RIS for detecting and preventing fraud and
errors in the health benefits program.
The fiscal year 2002 performance plan contains a strategy to have the
employee benefit trust funds be models of excellence and integrity in
financial stewardship. The OIG includes strategies related to reducing fraud
and errors, such as pursuing debarment of untrustworthy health care
providers and conducting aggressive investigations where fraud and abuse are
suspected, which seem reasonable. The RIS had no goals or performance
indicators related to fraud and errors in the health benefits program, but
included strategies such as (1) working with carriers participating in
health benefits to ensure that audits are performed and (2) conducting
financial statement audits to reduce the incidence of payment errors, which
in part will help detect fraud and errors in the health benefits program.
Although these strategies generally will help detect and reduce fraud and
errors, it is unclear how this will be accomplished and how they plan to
measure progress because there were no baseline indicators for the dollar
amount of fraud or errors found in the health benefits program, or
performance indicators against which to measure progress. 18 In addition,
performance indicators for the OIG measured progress in processing cases
(debarments, indictments, and convictions) once the fraud is discovered but
did not address measures for preventing it.
17 For examples and case illustrations of information that federal agencies
should consider when developing strategies and planning and implementing
actions that will help prevent and detect fraud and errors, refer to our
exposure draft: Strategies to Manage Improper Payments: Learning From Public
and Private Sector Organizations (GAO- 01- 703G, May 2001).
18 See footnote 17.
Page 13 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
The fiscal year 2000 performance report describes mixed progress in the
provision of timely and accurate retirement and insurance services. OPM?s
retirement and insurance program continues to receive high satisfaction
ratings from its customers, but timeliness of retirement claims processing
has declined. The fiscal year 2000 performance report outlines several
outcome- oriented goals that include increasing customer satisfaction with
services and reducing processing times. Customer satisfaction with OPM?s
retirement and insurance programs remained high during fiscal year 2000. For
example, more than 90 percent of new retirees said they were very or
generally satisfied with how their claims were handled. Claims processing
times, however, did not meet target levels, particularly the time to process
Federal Employees Retirement System (FERS) claims. Specifically, Civil
Service Retirement System (CSRS) claims processing time increased to 44 days
from 32 days in fiscal year 1999 and FERS processing time increased to more
than 6 months from 3 months in fiscal year 1999. The goal for CSRS
processing time is 25 days and for FERS processing time is 60 days.
OPM recognizes that it needs to address lagging times in retirement claims
processing, and the fiscal year 2002 performance plan contains strategies
that could improve claims processing timeliness. The plan states that the
current processing is based on ?aging technology, paper- based business
processes, and a heavy reliance on human resources.? One of the strategies
cited in OPM?s plan for reducing claims processing times is to add more
resources to the processing of FERS claims. OPM?s measure of its success in
achieving this goal is to gradually reduce processing times for these claims
from a fiscal year 2000 level of 6 months to 5 months in fiscal year 2001
and 3 months in fiscal year 2002. The number of FERS claims is expected to
increase by nearly 40 percent between fiscal year 2000 and fiscal year 2002.
The number of employees seeking retirement services is expected to
dramatically increase beyond 2002. To address long- term needs, OPM is
implementing a Retirement Systems Modernization project that is expected to
significantly reengineer and automate retirement claims processing. OPM is
implementing the modernization of the retirement systems in phases and
expects to realize significant business benefits each year. OPM says it has
already seen improvements. For example, OPM says it implemented a prototype
FERS Benefit Calculator that has helped to reduce processing times and the
balance of aged cases. However, the modernized retirement systems will not
be fully operational until 2009. Reducing claims processing times with an
increasing workload will be a significant challenge for OPM. Retirement and
Insurance
Services
Page 14 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
OPM has made some improvements to its fiscal year 2000 performance report
and fiscal year 2002 performance plan over previous years. However, a number
of weaknesses continue that OPM recognizes. This section describes
improvements and remaining weaknesses in OPM?s (1) fiscal year 2000
performance report in comparison with its fiscal year 1999 report, and (2)
fiscal year 2002 performance plan in comparison with its fiscal year 2001
plan.
OPM?s fiscal year 2000 performance report represents an improvement over the
fiscal year 1999 report, but opportunities remain for additional
improvements. In our June 2000 report we indicated that OPM?s fiscal year
1999 performance report did not identify the most critical performance
measures towards goal achievement. 19 The fiscal year 2000 report clearly
identifies the most critical measures of the several measures that are
included under most goals. If the critical indicator was met, then OPM
considered the goal met. Last year we noted a number of performance report
weaknesses, including the use of activity- based indicators instead of
outcome- based indicators and the lack of specific target measures for
goals. Again for fiscal year 2000, many indicators are activity based or do
not contain specific targets. The following are examples of activity- based
measures or those without targets:
To determine whether delegated examining is conducted in accordance with
merit system laws, OPM measured the number of reviews conducted of agency-
delegated examining activities.
An OPM measure is to ensure that the OPM workforce is well trained for
current and future needs; however, there is no target identified to
determine when this has been achieved.
In measuring customer or employee satisfaction, OPM uses terms such as
?high degree? of satisfaction without defining what constitutes a ?high
degree? of satisfaction. OPM does not identify which positive feedback 19
Observations on the Office of Personnel Management?s Fiscal Year 1999
Performance Report and Fiscal Year 2001 Performance Plan (GAO/ GGD- 00-
156R, June 30, 2000). Comparison of OPM?s
Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance Plan
With the Prior Year Report and Plan for Selected Key Outcomes
Comparison of Performance Reports for Fiscal Years 1999 and 2000
Page 15 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
rate (e. g., 80 percent or 90 percent) is judged to be ?high satisfaction?
for the particular indicator.
A performance management goal is for OPM to formulate performanceoriented
approaches to compensation. OPM considered this goal met because it
disseminated information on state- of- the- art compensation practices.
Even though these measures indicate positive activity, they are not measures
of actual goal achievement, and without specific targets it is not possible
to determine whether the goal was met.
The fiscal year 2000 performance report also contains some measures that
were not considered reliable by the OPM OIG. The performance report states
that the Inspector General reviewed 116 of the 458 performance measures and
found that 59 percent were based on reliable information and 17 percent were
based on unreliable information; for 24 percent of the measures, the OIG
could not determine their reliability. Further, concerns exist about the
reliability of key surveys that are used by OPM as measures for goal
achievement throughout the performance report. The low participation rates
for the current Human Resources Directors? Survey and the earlier Human
Resources Specialists Survey (which was not conducted in fiscal year 2000)
pose a material risk that the respondents may not be representative of the
overall survey population. In addition, in the case of the Human Resources
Directors? Survey, the low participation rate caused a margin of error of
9.9 percent, limiting the usefulness of the results.
The fiscal year 2002 performance plan continues with several of the
strengths of the 2001 plan. The plan is directly linked to the OPM strategic
plan and is integrated with the OPM Congressional Budget Justification. The
plan also includes a resource summary by major OPM strategic goal, including
the dollars and full- time equivalents requested by goal. The fiscal year
2002 plan, like the fiscal year 2000 report, contains a number of OPM
activity- based, rather than outcome- based, goals and measures or
indicators. The fiscal year 2002 plan continues to rely on the results of
some governmentwide surveys and secondary anecdotal information to measure
whether target levels established in the previous years? plans have been
met. The 2002 plan discusses steps that OPM will take to address some of the
weaknesses with these surveys and anecdotal information. For example, OPM
states in its 2002 plan that it discontinued several indicators that were
based on unreliable data sources. The reliability and validity of informal
feedback has inherent limitations that Comparison of
Performance Plans for Fiscal Years 2001 and 2002
Page 16 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
cannot be made more reliable and statistically valid by the planned
enhancement of procedures to collect and track the information.
OPM is proceeding with the implementation of a new measurement framework. It
plans to conduct more formal evaluations of the outcomes of specific
policies and programs, identify agency- level performance measures, use
agency- level measures as the primary basis of performance reporting, and
tie the measures more closely to the strategic goals.
This section discusses the extent to which OPM is internally addressing
strategic human capital management and information security. Both OPM?s
performance report, as well as its plan, address these challenges within the
agency. Regarding OPM?s internal strategic human capital management, we
found that the fiscal year 2002 performance plan contains several goals and
measures related to OPM?s internal strategic human capital management, and
OPM?s fiscal year 2000 performance report describes progress in resolving
some of these OPM- level strategic human capital management challenges. For
example, both the report and the plan contained goals related to recruiting,
retaining, and managing a workforce to meet OPM program needs. Of particular
note was the requirement that all employee performance plans be linked to
agency strategic goals and the establishment of baseline data to measure the
rate of retention among employees who complete career development programs.
To further improve its strategic human capital management goals and
strategies, OPM needs to link these strategies to specific OPM programs. For
example, the OPM performance plan states that OPM has significantly changed
its ratio of employees to supervisors to now exceed the governmentwide
average. OPM?s performance plan also states that it wants to further
increase this ratio. The plan needs to also discuss what impact this ratio
change will have on program outcomes and what additional human capital
strategies might be needed to address the reduction in the number of
supervisors. OPM also could establish the relationship of impending
retirements to OPM succession planning processes to ensure that critical
competencies and leadership are available for mission- critical activities.
With respect to information security, we found that OPM?s fiscal year 2002
performance plan contains a goal and measures related to information
security, and the agency?s fiscal year 2000 performance report explains its
progress in resolving its information security challenges. OPM reports that
in fiscal year 2000, it met its goal of ensuring that the information
security program provided adequate computer security commensurate with the
OPM?s Efforts to
Address Its Major Management Challenges Identified by GAO
Page 17 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
risk and magnitude of harm that could result from loss or compromise of
mission- critical information technology systems. However, the results of
the independent public accountant?s audit of OPM?s fiscal year 2000
consolidated financial statements show that a reportable condition continues
to exist in the electronic data processing general control environment. 20
The audit noted weaknesses in (1) entity- wide security, (2) access control,
(3) control over application changes and software development, and (4)
service continuity planning. The target date for describing the corrective
action taken to resolve these deficiencies is fiscal year 2001. The fiscal
year 2002 performance plan includes a goal to enhance information security.
The plan states that the absence of critical security problems is the
critical indicator for achieving this goal.
OPM?s mission, in part, is to provide strategic human capital management
leadership and services to federal agencies. OPM?s fiscal year 2000
performance report and fiscal year 2002 performance plan contain many goals
that measure the extent of their activities, but there are few goals and
measures that assess the actual state of strategic human capital management
in the federal government or the specific contributions that OPM?s programs
and initiatives make. Even though OPM does not directly control these
outcomes in federal agencies, it needs to measure the results to assess how
well its leadership and services are working. OPM has recognized this
weakness and is working with federal department and agency human resource
directors to develop a series of human capital measures.
OPM also needs to make other improvements to its report and plan, including
strengthening goals and measures to improve their reliability, linking its
internal human capital goals to OPM programs, and establishing a program
management performance goal to assess fraud and error in the Federal
Employees Health Benefits Program.
To better assess OPM programs, we recommend that as a part of OPM?s
continued strengthening of its efforts to clearly define goals, measure its
performance, and provide leadership over strategic human capital management,
the Director of OPM
20 OPM?s Fiscal Year 2000 Financial Statements and accompanying audit report
are included in the OPM Fiscal Year 2000 Performance Report. Conclusions
Recommendations for Executive Action
Page 18 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
develop goals and measures that assess the state of human capital at
federal departments and agencies,
replace informal feedback measures with indicators that are more reliable,
and
better link internal strategic human capital management goals to specific
OPM programs and outcomes.
In addition, we also recommend that the Director of OPM develop goals and
measures that assess the prevention and detection of fraud and errors in the
Federal Employees Health Benefits Program, perform a risk assessment to
identify areas most vulnerable to fraud and errors, and institute internal
controls to prevent and detect occurrences.
Our evaluation was generally based on the requirements of GPRA, the Reports
Consolidation Act of 2000, guidance to agencies from the Office of
Management and Budget (OMB) for developing performance plans and reports
(OMB Circular A- 11, Part 2), previous reports and evaluations by us and
others, our knowledge of OPM?s operations and programs, our identification
of best practices concerning performance planning and reporting, and our
observations on OPM?s other GPRA- related efforts. We also discussed our
review with OPM officials and with OPM?s OIG. The agency outcomes that were
used as the basis for our review were identified by the Ranking Minority
Member, Senate Governmental Affairs Committee as important mission areas for
the agency and generally reflect the outcomes for all of OPM?s programs or
activities. The major management challenges confronting OPM- including the
governmentwide high- risk areas of strategic human capital management and
information security that we identified in our January 2001 performance and
accountability series and high- risk update- were identified by us and by
OPM?s OIG in December 2000. We did not independently verify the information
contained in the performance report and plan, although we did draw from
other GAO work in assessing the validity, reliability, and timeliness of
OPM?s performance data. We conducted our review from April 2001 through June
2001 in accordance with generally accepted government auditing standards.
We provided a draft of this report to OPM for its review and comment. OPM?s
Acting Director provided written comments, which are reprinted in appendix
II. Overall, he agreed with the results our review, including our
recommendations, and appreciated our recognizing the strategic challenges
OPM faces with regard to human capital management as well Scope and
Methodology Agency Comments
Page 19 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
as its efforts to improve its measurement framework, including the shift to
measuring governmentwide outcomes. OPM also provided specific comments to
clarify information we presented on four of the five selected key outcomes.
We made several changes to this report in response to these comments. Our
responses are given in appendix II as well as in various sections of this
report.
As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Acting Director of OPM, and the Director of
OMB. Copies will also be made available to others on request.
If you or your staff have any questions, please call me at (202) 512- 6806.
Key contributors to this report were Bill Doherty, Danielle Holloman, Linda
Lambert, Mary Martin, Elizabeth Martinez, Ben Ritt, Ed Stephenson, and Scott
Zuchorski.
Sincerely yours, J. Christopher Mihm Director, Strategic Issues
Appendix I: Observations on OPM?s Efforts to Address Its Major Management
Challenges
Page 20 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Table 1 identifies the major management challenges confronting OPM, which
include the governmentwide high- risk areas of strategic human capital
management and information security. The first column lists the challenges
that we and/ or OPM?s OIG have identified. The second column discusses what
progress, as discussed in its fiscal year 2000 performance report, OPM has
made in resolving its challenges. The third column discusses the extent to
which OPM?s fiscal year 2002 performance plan includes performance goals and
measures to address the challenges that we and/ or OPM?s OIG identified.
We found that OPM?s performance report discussed the agency?s progress in
resolving all challenges. Of the agency?s seven major management challenges,
its performance plan had goals and measures that were directly related to
all seven of the challenges. OPM can build upon its efforts by more clearly
identifying the specific strategies that it is using to address its
challenges. Such information is important to help OPM, the Congress, and
other decisionmakers determine whether the best mix of strategies is in
place and to help pinpoint improvement opportunities. Appendix I:
Observations on OPM?s Efforts to
Address Its Major Management Challenges
Appendix I: Observations on OPM?s Efforts to Address Its Major Management
Challenges
Page 21 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Table 1: Major Management Challenges Major management challenge
Progress in resolving major management challenge as discussed in the fiscal
year 2000 performance report
Applicable goals and measures in the fiscal year 2002 performance plan GAO-
designated governmentwide high- risk
Strategic human capital management: GAO has identified shortcomings at
multiple agencies involving key elements of modern strategic human capital
management, including strategic human capital management 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.
The report contains several goals for OPM?s Office of Human Resources and
Equal Employment Opportunity. These include:
recruiting and training a diverse workforce to meet OPM needs;
helping OPM employees achieve top performance, productivity, and job
satisfaction; and
linking all individual performance plans to agency strategic goals.
The report discusses progress in meeting these goals. These are positive but
should be better linked to the specific human capital requirements of
individual OPM programs and outcomes.
The plan has several goals directly applicable to this challenge. For
example,
OPM manages and aligns its workforce to support OPM strategic goals;
recruiting and staffing are based on workforce planning;
innovative employee education and training results in a flexible,
optimally- trained workforce; and
OPM?s work environment values diversity.
However, these goals could be better linked to individual OPM program and
outcome needs. Information Security: Our January 2001 high- risk update
noted that the agencies? and governmentwide efforts to strengthen
information security have gained momentum and expanded. Nevertheless, recent
audits continue to show federal computer systems are riddled with weaknesses
that make them highly vulnerable to computer- based attacks and place a
broad range of critical operations and assets at risk of fraud, misuse, and
disruption.
OPM reports that in fiscal year 2000 it met its goal, which ensured that the
information security program provided adequate computer security
commensurate with the risk and magnitude of harm that could result from loss
or compromise of mission- critical information technology systems. In
particular, the one measure stated that few security programs were
identified as being problematic during internal and external evaluations and
those issues that were identified were not material weaknesses and were
rectified promptly.
According to the performance report, the results of the independent public
accountant?s audit of OPM?s consolidated financial statements and individual
statements of the programs as of and for the year ended September 30, 2000,
noted that the electronic data processing (EDP) general control environment
continues to be a reportable condition. OPM further reported that the
following four areas of EDP general control need to be strengthened: (1)
entity- wide security, (2) access control, (3) control over application
changes and software development, and (4) service continuity planning.
The target date for describing the corrective action taken to resolve these
deficiencies is fiscal year 2001.
OPM has a performance goal that mission- critical systems, infrastructure,
and information are protected by a robust IT security program. Performance
indicators include:
Few security problems are identified during internal and external
evaluations and those that are identified are not material weaknesses and
are rectified promptly.
Staff are trained in computer security, as necessary, based on assessment
of needs.
A tested disaster- recovery capability is in place for OPM?s information
technology support systems.
The plan does not include any numerical targets or projections regarding the
achievement of the goal. However, the fiscal year 2002 plan shows that
during fiscal year 2001 progress has been made in ensuring that few security
problems are identified during internal and external evaluations.
Appendix I: Observations on OPM?s Efforts to Address Its Major Management
Challenges
Page 22 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Major management challenge Progress in resolving major management
challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the fiscal year 2002 performance plan
Additionally, in June 2000, OPM?s OIG presented the results of an external
audit of Blue Shield of California, which was conducted to obtain reasonable
assurance that proper controls over the integrity, confidentiality, and
availability of computerized data associated with OPM?s Federal Employees
Health Benefits Program contracts had been implemented. As a result of the
audit, the OIG identified several areas in need of improvement, including
developing a comprehensive security plan and strengthening internal controls
for safeguarding assets and data.
IG- designated major management challenges
Deficiencies in the Revolving Fund (RF) and Salaries and Expenses (S& E)
Accounts: Deficiencies include (1) inadequate controls over the
reconciliation of the RF and S& E expense cash account with its fund balance
with Treasury, (2) inadequate controls over data entered into general
ledgers for the RF and S& E accounts, and (3) inadequate financial statement
preparation and noncompliance with the Federal Financial Management
Improvement Act (FFMIA).
OPM stated in its performance report that deficiencies in RF and S& E
general ledgers, and their non- compliance with FFMIA, should be addressed
with the replacement of the financial management system. The new system is
expected to be fully operational by fiscal year 2003. However, OPM?s
performance plan target dates to correct these deficiencies are fiscal years
2001 and 2002.
The report also states that the goal of reconciling Treasury accounts in 30
days was met. However, the report does not address the correction of
outstanding differences and if there is a goal to reduce these differences
to a specific amount.
OPM?s fiscal year 2002 performance plan included a goal to have the trust
funds financial systems in substantial compliance with FFMIA and all
financially related management challenges addressed. In addition, the Office
of the Chief Financial Officer included two related annual goals: (1)
Prepare financial statement by statutory date and earn an unqualified audit
opinion on the OPM financial statement. Performance indicators include:
improved accounting, including reconciling Treasury accounts in 30 days;
eliminating material weaknesses; and
improving IG and GAO audit results. (2) Modernize OPM?s administrative
financial management systems. Performance indicators include:
Implementation of new core accounting systems proceeds on schedule. SGL
and Budget/ Funds Management modules are installed and implemented for FY
2002. OPM?s Financial Management Oversight of the Federal Employees Health
Benefits Program (FEHBP): OPM?s oversight and monitoring of enrollment and
premium reconciliations with community- rate carriers need to be
strengthened. OPM?s
OPM stated in its performance report that it is working with a contractor to
implement a centralized enrollment system that will greatly facilitate the
enrollment and premium reconciliation process in the program. Systems
requirements are being defined and a pilot process is expected to be
OPM?s fiscal year 2002 performance plan reported a goal to have the trust
funds financial systems in substantial compliance with FFMIA and all
financially related management challenges
Appendix I: Observations on OPM?s Efforts to Address Its Major Management
Challenges
Page 23 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Major management challenge Progress in resolving major management
challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the fiscal year 2002 performance plan
systems are not adequately designed to centrally reconcile monies paid for
insurance with the respective enrollees.
completed in the next year. OPM expects to resolve this deficiency in FY
2001. addressed.
Performance indicators include:
FY 2001 financial statement audits receive unqualified opinions for all
three benefit programs.
OPM?s FY 2001 FFMIA assurance letter shows that identified material
weaknesses, such as the reconciliation of FEHBP premiums and enrollments and
other related deficiencies, are resolved.
Health Care Fraud and Abuse in the Federal Employees Health Benefits
Program: OPM OIG?s ability to investigate and prosecute health care fraud
and abuse continues to be adversely affected by the exclusion of FEHBP from
certain civil enforcement provisions of the Health Insurance Portability and
Accountability Act of 1996, which apply to all of the other health care
programs.
OPM reported that it has been working to amend existing law to include
language that would allow the Health Benefits Program to investigate and
prosecute fraud. Several congressional bills now have the necessary
language, although to date none have been reported outside of their
respective committees.
The performance indicators for OIG?s goal to have fraud against OPM programs
prevented and detected showed that the number of investigations resulting in
referrals to the Department of Justice, and positive dispositions (arrest,
convictions, etc.), increased in FY 2000. However, these indicators relate
to the processing of fraud cases once discovered and do not address
preventing fraud cases from occurring. In addition, the report did not
discuss agency programs goals for preventing fraud.
The OPM performance plan includes an OIG goal to have fraud against OPM
programs detected and prevented. It includes performance indicators such as
the number of investigative referrals, arrests, indictments, and debarments.
However, performance plan strategies relate to the processing of fraud cases
once discovered and do not address preventing fraud cases from occurring. In
addition, agency programs do not include strategies for preventing fraud,
such as plans to establish programs or new techniques for preventing fraud.
Retirement Systems Modernization: The Retirement Systems Modernization is
OPM?s central strategy to meet the longterm customer services and financial
management objectives for the Civil Service and Federal Employees Retirement
Systems.
One of the goals of OPM?s Retirement and Insurance Service addresses this
challenge in that it calls for accelerated information technology solutions
for a modernized retirement system to be designed, developed, and
implemented. According to OPM?s performance report, the agency met the goals
and objectives related to this challenge that were envisioned for fiscal
year 2000. Namely, OPM reported that it had (1) completed the new business
model that it plans to use for the modernization and (2) developed four of
six planned core process blueprints and (3) begun working on the technology
blueprint.
OPM changed the goal associated with this management challenge to performing
acquisition planning and beginning implementation of the redesigned business
processes and supporting technology for the modernized retirement system.
OPM reported that it planned to implement its new business model in a phased
approach beginning in fiscal year 2002. In addition, OPM stated that it
would adhere to (1) commitments and project timetables, such as completing
the first phase overall planning segments for customer service,
Appendix I: Observations on OPM?s Efforts to Address Its Major Management
Challenges
Page 24 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Major management challenge Progress in resolving major management
challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the fiscal year 2002 performance plan
annuitant service, and recordkeeping and (2) cost management (i. e., fiscal
year 2002 activities are to be completed within allocated funding). Human
resources management: Human resources management and accountability will
continue to be a demanding, government- wide challenge for the foreseeable
future as the labor market becomes more competitive, large numbers of
employees become eligible for and are expected to retire, the need for
better skills in technological positions increases, and performance
management awareness increases. Although OPM plays a key role in leading and
ensuring accountability in the management of the federal government?s human
resources, meeting this challenge is more than an OPM issue. It requires the
effective planning and participation of each individual agency.
(See section of this report on our assessment of OPM?s progress in achieving
the first three outcomes identified by the Senate Governmental Affairs
Committee- an appropriately constituted and properly skilled federal
workforce, employee performance accountability, and adherence to merit
system principles.)
Human resources management includes recruiting, developing, and retaining a
qualified workforce, as well as assessing the performance of these
functions. OPM?s fiscal year 2002 plan contains several activity- based
goals and measures that are aimed at helping agencies recruit, develop,
manage, and retain the workforce necessary to accomplish their missions
while also adhering to the merit system principles. For example, OPM has a
goal to develop and implement employment policies and initiatives that are
sound, innovative, and flexible in order to recruit and retain a high
quality and diverse federal workforce.
Performance indicators include:
Informal feedback and favorable ratings on the Customer Satisfaction
Survey of Human Resource Directors show an increase in the level of agency
human resource directors? satisfaction with OPM?s employment policy
leadership.
A favorable perception of employees governmentwide that staffing is
conducted in accordance with the first merit system principle-? recruit,
select, and advance on the basis of merit.?
Meetings are held with stakeholders to share information and gather ideas
about improving OPM- provided services.
Appendix II: Comments From the Office of Personnel Management
Page 25 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
Appendix II: Comments From the Office of Personnel Management
Note: GAO comments supplementing those in the report text appear at the end
of this appendix.
Appendix II: Comments From the Office of Personnel Management
Page 26 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
See comment 2. See comment 1.
Appendix II: Comments From the Office of Personnel Management
Page 27 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
See comment 3. See comment 4.
Appendix II: Comments From the Office of Personnel Management
Page 28 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
See comment 5.
Appendix II: Comments From the Office of Personnel Management
Page 29 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
The following are GAO?s comments on the specific comments contained in the
enclosure to OPM?s letter dated June 26, 2001.
1. We revised this report to show that the retirement systems modernization
project is being implemented in phases and that it will not be fully
operational until 2009.
2. In the draft of this report provided to OPM for comment, we stated that
OPM?s goal for fiscal year 2000 was to make the workforce planning model
available to agencies for their use and that this goal was met. Although
making the model available to agencies is a useful activity, OPM?s
performance report and plan do not make clear what the outcome or result was
from this activity. For example, neither document provides information on
how agencies have used this model to help ensure that they have an
appropriately constituted, properly skilled workforce to carry out their
missions. OPM comments ?there is already real evidence that the model has
been of assistance, as all Federal agencies are meeting a deadline of June
29, 2001, to provide the Office of Management and Budget with individual
workforce analyses as a first step in meeting the President?s initiative to
use human capital planning to streamline Government.? The basis upon which
OPM makes this statement is unclear, because although OPM says the workforce
planning model has been of assistance to agencies, it does not say how many
agencies actually used it in responding to OMB?s directive.
3. We recognize that OPM?s goal for fiscal year 2000 was to complete its
research on private and public sector best practices in compensation systems
and tools. However, OPM does not describe in its fiscal year 2000
performance report or 2002 performance plan what outcome or result was
expected for this activity- based goal in terms of ensuring employee
performance accountability. Thus, we continue to believe that OPM needs to
have goals, measures, and strategies in place that will show how the use of
the compensation systems and tools identified as a result of its research
will aid the federal government in holding employees accountable for their
performance.
4. We changed the report to recognize OPM?s belief that the measures the OIG
identified for detecting fraud and error in the Federal Employees Health
Benefits Program are consistent with RIS? expectations. However, as we have
stated in this report, the OIG?s measures relate to detecting fraud after it
has occurred rather than preventing it. Accordingly, we continue to believe
that OPM needs to develop goals GAO?s Comments
Appendix II: Comments From the Office of Personnel Management
Page 30 GAO- 01- 884 OPM: Status of Achieving Key Outcomes
and measures within the program office, RIS, for detecting and preventing
fraud and errors in the health benefits program. OPM commented that it will
look for ways to develop additional programwide goals and measures relating
to fraud and errors in the federal health benefits program.
5. In addition to the changes described in comment 1, we changed the report
to reflect that the retirement systems modernization project has not been
delayed. We also cited an example of improvements OPM has seen thus far in
implementing the modernized retirement systems.
(450036)
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Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm
E- mail: fraudnet@ gao. gov
1- 800- 424- 5454 (automated answering system) Ordering Information
To Report Fraud, Waste, and Abuse in Federal Programs
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